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As filed with the Securities and Exchange Commission on May 3, 1996
Securities Act Registration No. 333 - 02111
Investment Company Registration No. 811 - 7581
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 1 [X]
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Post-Effective Amendment No. [ ]
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 1 [X]
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(Check appropriate box or boxes)
MEYERS SHEPPARD INVESTMENT TRUST
(A DELAWARE BUSINESS TRUST)
(Exact Name of Registrant as Specified in Charter)
9107 WILSHIRE BOULEVARD, SUITE 700
BEVERLY HILLS, CALIFORNIA 90210
(Address of Principal Executive Offices)
(310) 288-3720
(Registrant's Telephone Number, including Area Code)
SHELLY J. MEYERS
9107 WILSHIRE BOULEVARD, SUITE 700
BEVERLY HILLS, CALIFORNIA 90210
(Name and Address of Agent for Service)
With Copies to:
JOHN M. WOODBURY, JR., ESQ. BETH R. KRAMER, ESQ.
ANDREW F. POLLET, ESQ. MAYER BROWN & PLATT
POLLET & WOODBURY 1675 BROADWAY, SUITE 1900
10900 WILSHIRE BOULEVARD, SUITE 500 NEW YORK, NEW YORK 10019
LOS ANGELES, CALIFORNIA 90024
Approximate date of proposed public offering: May 31, 1996
It is proposed that this filing will become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485
Pursuant to Rule 24f-2(a)(1) under the Investment Company Act of 1940, the
Registrant hereby declares that an indefinite number of its Shares of Beneficial
Interest (par value $0.00001 per share) is being registered by this Registration
Statement.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the Registration Statement shall
become effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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MEYERS SHEPPARD PRIDE FUND
CROSS REFERENCE SHEET
Pursuant to Rule 495
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PART A. LOCATION IN PROSPECTUS
Item 1 Cover Page .................................................. Front Cover Page
Item 2. Synopsis .................................................... Prospectus Summary; Expense Summary
Item 3. Condensed Financial Information ............................. Not Applicable
Item 4. General Description of Registrant ........................... Front Cover Page; Prospectus Summary; Investment And
Social Objectives and Policies
Item 5. Management of the Fund ...................................... Prospectus Summary; Management And Service Providers;
Inside Back Cover Page; Other Information Concerning
Shares of the Fund
Item 5A. Management's Discussion of Fund Performance ................. Not Applicable
Item 6. Capital Stock and Other Securities .......................... Other Information Concerning Shares of the Fund; Tax
Matters
Item 7. Purchase of Securities Being Offered ........................ Purchases and Redemptions of Shares; Other Information
Concerning Shares of the Fund;
Item 8. Redemption or Repurchase .................................... Purchases and Redemptions of Shares
Item 9. Pending Legal Proceedings ................................... Not Applicable
PART B LOCATION IN STATEMENT OF ADDITIONAL INFORMATION
Item 10. Cover Page .................................................. Front Cover Page
Item 11. Table of Contents ........................................... Front Cover Page
Item 12. General Information and History ............................. The Fund
Item 13. Investment Objectives and Policies .......................... Investment And Social Objectives, Policies And
Restrictions
Item 14. Management of the Fund ...................................... Management Of And Service Providers For The Trust And
The Fund
Item 15. Control Persons and Principal Holders of Securities ......... Management Of And Service Providers For The Trust And
The Fund
Item 16. Investment Advisory and Other Services ...................... Management Of And Service Providers For The Trust And
The Fund; Independent Auditors
Item 17. Brokerage Allocation and Other Practices .................... Fund Transactions and Brokerage Commissions
Item 18. Capital Stock and Other Securities .......................... Description of Shares, Voting Rights and Liabilities
Item 19. Purchase, Redemption and Pricing of Securities Being Offered. Determination of Net Asset Value; Valuation of Fund
Securities
Item 20. Tax Status .................................................. Taxation
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Item 21. Underwriter ................................................. Management Of And Service Providers For The Trust And
The Fund
Item 22. Calculation of Performance Data ............................. Performance Information
Item 23. Financial Statements ........................................ Financial Statements*
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PART C.
Information required to be included in Part C is set forth under the
appropriately numbered item in Part C of this registration statement.
* To be supplied by amendment prior to effective date of this Registration
Statement.
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THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED MAY 3, 1996
MEYERS SHEPPARD PRIDE FUND
The Meyers Sheppard Pride Fund (the "Fund") is organized as a separate
series of the Meyers Sheppard Investment Trust (the "Trust"), a business trust
organized under the laws of the State of Delaware. The Fund is an open-ended
no-load diversified mutual fund whose overall investment objective is to attain
long-term capital appreciation through investing in a diversified portfolio of
equity securities of under-valued but nevertheless fundamentally sound companies
identified as generally having progressive policies towards gays and lesbians.
See "Investment And Social Objectives And Policies" herein. There can be no
assurance that the Fund will achieve its investment objective.
The Investment Manager for the Fund is Meyers, Sheppard & Co., LLC, a
California limited liability company. The Distributor for the Fund is Furman
Selz LLC, a Delaware limited liability company. Furman Selz LLC is also the
Administrator, Fund Accounting Agent and Transfer Agent of the Fund. The
Custodian of the Fund is Wells Fargo Bank, N.A..
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This Prospectus sets forth concisely the information concerning the
Fund that a prospective investor should know before investing. Investors should
read this Prospectus and retain it for future reference.
The Fund has filed with the Securities and Exchange Commission a
Statement of Additional Information, dated May 31, 1996, as amended from time to
time, which contains more detailed information about the Fund and the Trust and
is incorporated into this Prospectus by reference. An investor may obtain a copy
of the Statement of Additional Information without charge by contacting the
Distributor of the Fund, Furman Selz LLC (see the inside back cover page of this
Prospectus for address).
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY BANK OR OTHER DEPOSITORY INSTITUTION, AND THE SHARES ARE NOT INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
OTHER FEDERAL, STATE OR OTHER GOVERNMENTAL AGENCY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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May 31, 1996
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TABLE OF CONTENTS
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Prospectus Summary ...................................................... 3
Expense Summary ......................................................... 5
Investment And Social Objectives And Policies ........................... 6
Risk Factors ............................................................ 10
Management And Service Providers ........................................ 12
Purchases and Redemptions of Shares ..................................... 15
Tax Matters ............................................................. 19
Other Information Concerning Shares of the Fund ......................... 20
Performance Information ................................................. 21
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PROSPECTUS SUMMARY
WHAT IS THE FUND
The Meyers Sheppard Pride Fund (the "Fund") is organized as a separate
series of the Meyers Sheppard Investment Trust (the "Trust"), a business trust
organized under the laws of the State of Delaware on March 25, 1996. The Fund is
an open-ended no-load diversified management investment company whose overall
investment objective is to attain long-term capital appreciation through
investing in a diversified portfolio of equity securities of under-valued but
nevertheless fundamentally sound companies identified by the Investment Manager
as generally having progressive policies towards gays and lesbians, but at a
minimum having in place specifically stated policies against discrimination in
hiring and promotion based upon sexual orientation. See "Investment And Social
Objectives And Policies" herein.
The Fund is the first series to be established under the Trust. As a
diversified fund, the Fund is required, by the Investment Company Act of 1940,
as amended (the "Investment Company Act"), with respect to 75% of its assets, to
invest no more than 5% of its assets in the securities of any one issuer, and
not more than 10% of the outstanding voting securities of an issuer may be
owned.
The Fund's investment and social objectives and policies, including the
identification of companies which have progressive policies towards gays and
lesbians, are determined by the Investment Manager of the Fund, subject to the
Board of Trustees providing broad supervision over the affairs of both the Fund
and the Trust. The determination of which companies have progressive policies
toward gays and lesbians is generally based upon criteria determined from
time-to-time by the Investment Manager and approved by the Board of Trustees.
The Investment Manager has, to date, identified over 325 publicly-traded
companies meeting this criteria, most of which are listed on the Standard &
Poor's 500 Composite Stock Price Index (the "S&P 500"). For further information
about the Board of Trustees, see "Management And Service Providers" herein. A
majority of the Board of Trustees are not affiliated with the Investment
Manager.
WHO IS THE FUND'S INVESTMENT MANAGER
The Investment Manager of the Fund, Meyers, Sheppard & Co. LLC, a
California limited liability company ("Meyers Sheppard"), serves as the Fund's
manager and investment adviser pursuant to an Investment Management Agreement.
The Investment Manager generally supervises (subject to the overall authority of
the Board of Trustees and officers of the Trust) the overall administration of
the Fund, including its various agents and service providers, including those
providing distribution, fund accounting, dividend disbursement, transfer agent
and custodian services. The Investment Manager also manages the investments of
the Fund on a day to day basis in accordance with the Fund's investment and
social objectives and policies, and determines the composition of the securities
in which the Fund may invest (i.e., those companies identified as having
anti-discrimination policies in place and demonstrating other progressive
policies towards gays and lesbians). For its management and investment advisory
services, the Investment Manager receives from the Fund a monthly fee equal, on
an annual basis, to 1% of the Fund's average daily net assets. See "Management
And Service Providers" herein.
HOW DO YOU PURCHASE AND REDEEM SHARES OF THE FUND
Shares of the Fund are sold continuously by the Distributor of the
Fund, Furman Selz LLC ("Furman Selz"), at the next determined net asset value
per share. The minimum initial investment in the Fund is $1,000, and subsequent
investments are $100. A lower initial investment of $250 is permitted for
Automatic Investment Plans, with subsequent investments allowed at a minimum of
$50.
The Trust, on behalf of the Fund, has adopted a Distribution Plan which
permits reimbursement of certain expenses incurred by the Distributor in
connection with the distribution of shares of the Fund, up to a maximum of 0.25%
of net asset value annually. See "Management And Service Providers" and "Plan Of
Distribution," herein.
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The Fund offers to redeem shares of the Fund from its shareholders at
any time at next determined net asset value per share. The redemption price may
be more or less than the purchase price.
No sales load is charged with respect to either the purchase or
redemption of Fund shares. An investor should contact the Distributor regarding
any further information describing the procedures under which Fund shares may be
purchased and redeemed. See "Purchases And Redemptions" herein.
WHEN DOES THE FUND PAY DIVIDENDS AND MAKE DISTRIBUTIONS
The Fund will distribute substantially all of its net investment income
and capital gains annually, generally in December. Dividends or distributions
declared in December but actually paid the following January will be includable
in an investor's income as of the record date (usually in December) of such
dividends or distributions. See "Taxation" herein.
ADMINISTRATIVE SERVICES
Furman Selz is the Administrator, Fund Accounting Agent and Transfer
Agent of the Fund. In its capacity as the Fund's Administrator, Furman Selz
provides certain administrative and managerial support services to the Fund, in
consideration of which Furman Selz is paid an Administration Fee per year equal
to 0.15% of the first $100 million in aggregate Fund assets, 0.10% for the next
$400 million, 0.07% for the next $500 million, and 0.06% for aggregate Fund
assets in excess of $1 billion. As Fund Accounting Agent, Furman Selz calculates
the Fund's net asset value on a daily basis, in consideration of which it is
paid a Fund Accounting Fee of $35,000 per year plus reimbursement of
out-of-pocket expenses. In its capacity as Transfer Agent for the Fund, Furman
Selz provides dividend disbursing, registrar and transfer agency services to the
Fund and its shareholders, in consideration of which it is paid a Transfer
Agency Fee equal to $15 per year per each shareholder of the Fund, subject to a
$12,000 per year minimum. Furman Selz is entitled to receive a minimum of
$150,000 per year for provision of the aforesaid services. See "Management And
Service Providers" herein.
RISK FACTORS
There can be no assurance that the Fund will be able to achieve its
investment objective. Since the Fund will limit its investments to equity
securities of companies which have anti-discrimination policies in place and
demonstrate other progressive policies towards gays and lesbians, such social
policy will tend to limit the availability of investment opportunities to the
Fund compared to that for other investment companies that have a comparable
investment objective to that of the Fund. See "Investment And Social Objectives
And Policies" herein.
Common stocks, the most familiar type of equity securities, represent
an equity (ownership) interest in a corporation. Although equity securities have
a history of long-term growth in value, their prices fluctuate based on changes
in a company's financial condition and on overall market, economic and political
conditions. Smaller companies are especially sensitive to these factors.
Investments of the Fund's assets in "illiquid securities," i.e.,
securities that are restricted in their transfer or for which market quotations
are otherwise not readily available or repurchase agreements over seven days,
may restrict the ability of the Fund to dispose of its investments in a timely
fashion and for a favorable price. The risks associated with illiquidity are
particularly acute in situations in which the Fund's operations require cash,
such as when the Fund redeems for shares of beneficial interests or pays
distributions, and may result in the Fund borrowing to meet short-term cash
requirements or incurring capital losses on the sale of such investments.
As a recently created entity, the Trust will be subject to all the
risks incident to the creation of a new business, including the absence of a
history of operation, and there can be no guarantee that the investment
objective of the Fund will be attained.
There are market risks inherent in any investment, and there is no
assurance that the primary investment objective of the Fund will be achieved or
that any income will be earned. Moreover, the application of the investment
policies is dependent upon the judgment of the Investment Manager. A prospective
purchaser of shares
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of the Fund should realize there are risks in any policy dependent upon such
judgment and that no representation is made that the investment objective of the
Fund will be accomplished or that there may not be substantial loses in any
particular investment. At any time, the value of the Fund's shares may be more
or less than the cost of such shares to the investor. See "Investment And Social
Objectives And Policies" herein.
Some of the securities included in the Fund may be those of foreign
issuers (provided that the securities are publicly-traded in the United States
in the form of American Depositary Receipts or similar instruments the market
for which is denominated in United States dollars). Securities of foreign
issuers may represent a greater degree of risk (e.g., as a result of exchange
rate fluctuation, tax provisions, war or expropriation) than do securities of
domestic issuers. See "Risk Factors" herein.
EXPENSE SUMMARY
The following table provides a summary of estimated Shareholder
Transaction Expenses relating to purchases and sales of shares of the Fund, and
the aggregate Annual Operating Expenses for the Fund, which an investor will
directly or indirectly incur as a shareholder of the Fund. All of the Fund's
Annual Operating Expenses are paid out of the Fund's assets.
SHAREHOLDER TRANSACTION EXPENSES:
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Maximum Sales Load Imposed on Purchases............................... None
Sales Load Imposed on Reinvested Dividends ........................... None
Deferred Sales Load Imposed on Redemptions............................ None
Exchange Fees......................................................... None
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Total Shareholder Transaction Expenses............................. None
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ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS):
Investment Management Fees(1)......................................... 1.00%
Distribution 12b-1 Fees(2)............................................ 0.25%
Other Expenses (estimated, after expense reimbursements)(3)........... 1.00%
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Total Annual Operating Expenses(4)................................. 2.25%
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(1) The Fund will pay the Investment Manager, Meyers Sheppard, a
monthly investment management fee equal, on an annual basis, to 1.0% of the
Fund's average daily net assets. The Investment Manager has undertaken to waive
the portion of its investment management fee necessary to maintain Total Annual
Operating Expenses at no more than 2.25% of average daily net assets. In
addition to the foregoing waiver, the Investment Manager reserves the right at
anytime to reduce and/or waive all or part of its investment management fee.
(2) Pursuant to the terms of the Distribution Plan, the Fund will pay
its Distributor, Furman Selz, up to 0.25% of the Fund's average daily net assets
in reimbursement of, or in anticipation of, expenses incurred by the Distributor
in connection with the sale of shares of the Fund. A long-term shareholder in
the Fund may, as a result of the Distribution Plan, pay more than the economic
equivalent of the maximum distribution charges permitted by the rules of the
National Association of Securities Dealers, Inc. See "Management And Service
Providers" herein.
(3) As of the date of this Prospectus, the Fund has not commenced
operations. The amount set forth under "Other Expenses" for the Fund is
therefore based on estimates for the first fiscal year assuming $30 million in
average daily assets. "Other Expenses" include fees to be paid to Furman Selz
in its capacities as Administrator, Fund Accounting Agent and Transfer Agent
for the Fund as follows: (1) for administrative services, per year, 0.15% of
the first $100 million in aggregate Fund assets, 0.10% for the next $400
million, 0.07% for the next $500 million, and 0.06% for aggregate Fund assets
in excess of $1 billion; (2) for fund accounting services, $35,000 per year
plus reimbursement of out-of-pocket expenses; and (3) for transfer agency
services, $15 per year per each shareholder, subject to a $12,000 per year
minimum. Furman Selz is entitled to receive a minimum of $150,000 per year for
the provision of the aforesaid services. Furman Selz reserves the right at any
time to reduce and/or waive all or part of such fees. "Other Expenses" also
includes fees to be paid to Wells Fargo for its services as Custodian, per
year, as follows: an amount equal to 0.10% of the first $20 million in
aggregate Fund assets, and 0.04% for aggregate Fund assets in excess of $20
million, subject to a $15,000 per year minimum. See "Management And Service
Providers" herein.
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(4) Amounts set forth above for Investment Management Fees and Other
Expenses do not reflect any waivers of fees. Were the Investment Manager to
waive all of its Investment Management Fee, and were Furman Selz to waive all of
its fees for administrative, fund accounting and transfer agency services, the
Investment Management Fees, Other Expenses and Total Annual Operating Expenses
for the Fund as set forth above would be 0% , 0.60% and %, respectively. See
"Management And Service Providers" herein.
EXAMPLE:
A shareholder of the Fund would pay the following estimated expenses on
a $1,000 investment in the Fund, assuming (i) a 5% annual return and (ii) the
redemption of the investment at the end of each time period:
1 year ....................................................... $______
3 years ...................................................... $______
The Example set forth above is hypothetical and should not be considered a
representation of past or future expenses of the Fund. Moreover, the Fund's
actual performance will vary and may result in actual returns that are greater
or less than 5%. The foregoing table has not been audited by the Fund's
independent accountants. For more information with respect to the expenses of
the Fund, see "Management And Service Providers" herein.
INVESTMENT AND SOCIAL OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVE AND SOCIAL OBJECTIVE
The overall investment objective of the Fund (the "Investment
Objective") is to attain long-term capital appreciation by investing in a
diversified portfolio of equity securities of undervalued but nevertheless
fundamentally sound companies which have been identified as having met the
Social Objective. The "Social Objective" is defined as companies which, in
general, have been identified as having progressive policies towards gays and
lesbians, but at a minimum have in place specifically stated policies against
discrimination in hiring and promotion based upon sexual orientation (the
"Fundamental Social Criteria").
The Fund believes that enterprises which exhibit a social awareness of
gay and lesbian issues should be better prepared, than those companies that do
not, to meet future social needs for goods and services, and may also be less
likely to incur certain legal liabilities that may be incurred when an
enterprise is found to discriminate against the gay and lesbian community. Such
enterprises should over the longer term be able to generate additional goodwill
and stockholder value as an indirect result of the greater investment in such
enterprises, through the Fund, by the gay and lesbian community (which, per
capita, is one of the wealthiest demographic groups in the United States), and
supporters of the gay and lesbian community.
INVESTMENT STRATEGY
In order to achieve the Investment Objective, the Fund will use a
value-based investment approach focusing on a longer-term market cycle (at least
three to five years), consistent with moderate levels of risk, wherein the
Investment Manager will identify companies exhibiting the following investment
characteristics: (1) low or inexpensive current value relative to earnings
estimates, cash flow, book value and/or break-up value, (2) good management, (3)
strong business fundamentals, and (4) positive earnings momentum.
The securities the Fund may invest in include common stocks, preferred
stocks and warrants, and certain debt instruments convertible into stock,
primarily in publicly-traded companies. Publicly-traded companies refers to
companies whose equity securities are traded over a national stock exchange or
over-the-counter through the National Association of Securities Dealers
Automatic Quotation ("NASDAQ") system or the National Association of Securities
Dealers, Inc. ("NASD") Electronic Bulletin Board.
Since it is anticipated that most equity securities will be held for
the longer-term using this strategy, the Investment Manager anticipates there
will likely be a low rate of portfolio turnover, and estimates portfolio turn-
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over in the first year of the Fund will be approximately 30% to 60%.
The Investment Manager expects that under normal market conditions the
Fund will invest a substantial portion of its assets (and sometimes virtually
all of its assets) in the securities described above. However, under distressed
market conditions, or conditions in which the Investment Manager believes stock
is generally overvalued, the Fund may maintain its assets in cash or
cash-equivalents, or invest in money-market instruments or obligations of the
United States government or government-sponsored enterprises and other types of
government-backed securities. Such investments would be temporary in nature and
would not be expected to exceed 15% of the Fund's net assets. Although returns
on these assets are historically less than investment in equity and other
non-governmental types of securities, the risk of loss in investing in such
instruments is lower as well.
IDENTIFICATION OF COMPANIES WHICH SATISFY SOCIAL OBJECTIVE
The determination of which companies have satisfied the Social
Objective, and may therefore be considered as appropriate investment vehicles
for the Fund, is based upon recommendations of the Investment Manager and the
approval by the Board of Trustees. As of the date of this Prospectus, over 325
publicly-traded companies have been identified as having satisfied the Social
Objective, most of which companies are listed on the S&P 500.
In making its recommendations, the Investment Manager evaluates
companies based upon (1) the Fundamental Social Criteria and (2) such additional
criteria and considerations consistent with the Social Objective as are
determined reasonable by the Investment Manager from time-to-time in its sole
discretion, and approved in general by the Board of Trustees (the
"Non-Fundamental Social Criteria"). Such methodology is, by its nature,
subjective.
As of the date of this Prospectus, the Non-Fundamental Social Criteria
consists of two separate areas of general focus, employee relations and
corporate citizenship.
In evaluating a company's gay and lesbian employee relations, the
Investment Manager evaluates the company's record and policies with respect to
labor matters affecting gay and lesbian employees, such as: (1) the company's
commitment to equal employment opportunity for gays and lesbians (reflected, for
example, in the number of gays and lesbians employed overall and the number of
gays and lesbians in executive positions) and the scope of the company's
policies against discrimination based upon sexual orientation; (2) the breadth,
quality and innovation of the company's employee benefit programs and their
positive effect on gay and lesbian employees (including inclusion of gay and
lesbian partners and families in employee benefit programs); and (3) the
company's relationships with gay and lesbian suppliers, vendors, and customers.
In evaluating a company's corporate citizenship, the Investment Manager
reviews the company's record on gay and lesbian related charitable giving and
other philanthropic activities and its interaction with the gay and lesbian
community, such as advertising in gay and lesbian directed publications or other
media.
It is not necessary that a company satisfy all of the factors and
considerations described above as part of the Non-Fundamental Social Criteria in
order to be identified as having satisfied the Social Objective. However, every
company must satisfy the Fundamental Social Criteria in order to be included on
the list of approved companies.
The Investment Manager uses publicly available information in
evaluating companies, including information disseminated by the Human Rights
Campaign, the largest national gay and lesbian organization. The Investment
Manager also directly reviews company policies and, in certain cases, discusses
those policies with the company's management.
The Investment Manager intends to vote proxies of companies included in
the Fund's portfolio consistent with the Social Objective. The inclusion of a
company on the Fund's list of approved companies with progressive policies
towards gays and lesbians does not imply that the company has requested it be
included on the list or approved such inclusion, has sought the approval of the
Fund with respect to the development and implementation of the company's
employment or corporate citizenship policies, or is affiliated with the Fund in
any manner.
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INVESTMENT POLICIES
The Fund will diversify its holdings to reduce the risks of investing.
As a diversified Fund, the Fund is required, by the Investment Company Act with
respect to 75% of its assets, to invest no more than 5% of its assets into the
securities of any one issuer, and not more than 10% of the outstanding voting
securities of an issuer may be owned. In addition, the Fund may not invest more
than 25% of its total assets in any one industry.
The Fund may invest up to 10% of its total assets in convertible
securities, including bonds, debentures, notes, preferred stocks, warrants or
other securities that may be converted into or exchanged for a prescribed amount
of common stock of the same or a different issuer within a particular period of
time at a specified price or formula. Certain convertible securities may in
addition be callable, in whole or in part, at the option of the issuer. A
convertible security entitles the holder to receive interest paid or accrued on
debt or the dividend paid on preferred stock until the convertible security
matures or is redeemed, converted or exchanged. Before conversion, convertible
securities have characteristics similar to nonconvertible debt securities in
that they ordinarily provide a stable stream of income with generally higher
yields than those of common stocks of the same or similar issuers. Convertible
securities rank senior to common stock in a corporation's capital structure but
are usually subordinated to comparable nonconvertible securities.
The Fund may not invest more than 15% of its net assets in securities
that are illiquid by virtue of the absence of a readily available market or
legal or contractual restrictions on resale (including repurchase agreements
which have a maturity of longer than seven days). Securities that have legal or
contractual restrictions on resale but have a readily available market are not
considered illiquid for purposes of this limitation.
Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
securities which are otherwise not readily marketable, and repurchase agreements
having a maturity of longer than seven days. Securities which have not been
registered under the Securities Act are referred to as privately placed or
restricted securities and are purchased directly from the issuer or in the
secondary market. Mutual funds do not typically hold a significant amount of
these restricted or other illiquid securities because of the potential for
delays on resale and uncertainty in valuation. Limitations on resale may have an
adverse effect on the marketability of portfolio securities and a mutual fund
might be unable to dispose of restricted or other illiquid securities promptly
or at reasonable prices and might thereby experience difficulty satisfying
redemptions within seven days. A mutual fund might also have to register such
restricted securities in order to dispose of them resulting in additional
expense and delay. Adverse market conditions could impede such a public offering
of securities.
Restricted securities include those that are subject to restrictions
contained in the securities laws of other countries. However, securities that
are freely marketable in the country in which they are principally traded would
not be considered illiquid. The Fund will treat any securities that are held in
countries with restrictions on repatriation of more than seven days, as illiquid
securities for purposes of the 15% limitation.
In recent years, a large institutional market has developed for certain
securities that are not registered under the Securities Act, including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale to the general public or
to certain institutions may not be indicative of the liquidity of such
investments.
Rule 144A under the Securities Act establishes a "safe harbor" from the
registration requirements of the Securities Act for resales to qualified
institutional buyers of certain securities otherwise subject to restriction on
resale to the general public. The Investment Manager anticipates that the market
for certain restricted securities will expand further under Rule 144A as a
result of the development of automated systems for the trading, clearance and
settlement of unregistered securities of domestic and foreign issuers, such as
the PORTAL System sponsored by the NASD.
The Investment Manager will monitor the liquidity of restricted
securities in the Fund under the supervision of the Board of Trustees. In
reaching liquidity decisions, the Investment Manager may consider, inter alia,
the following factors: (1) the unregistered nature of the security; (2) the
frequency of trades and quotes for the security; (3) the number of dealers
wishing to purchase or sell the security and the number of other potential
purchasers;
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<PAGE> 12
(4) dealer undertakings to make a market in the security; and (5) the nature of
the security and the nature of the marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers and the mechanics of
the transfer).
The Fund may invest cash reserves in (1) direct obligations and/or
short-term debt securities (i.e., securities having a remaining maturity of one
year or less) issued by agencies or instrumentalities of the United States
Government and/or (2) bankers' acceptances, commercial paper or certificates of
deposit, provided that the issuer satisfies the Social Objective of the Fund.
Although the U.S. government provides financial support to U.S. government
sponsored agencies or instrumentalities, no assurance can be given that it will
always do so. The U.S. government and its agencies and instrumentalities do not
guarantee the market value of their securities; consequently, the value of such
securities will fluctuate. The Fund's policy is to hold its assets in such
securities pending readjustment of its portfolio holdings of stocks in order to
meet anticipated redemption requests.
In accordance with the Investment Company Act, the Fund may invest a
maximum of up to 10% of the value of its total assets in securities of other
investment companies, and the Fund may own up to 3% of the total outstanding
voting stock of any one investment company. In addition, up to 5% of the value
of the Fund's total assets may be invested in the securities of any one
investment company.
The Fund will readjust its securities holdings periodically to the
extent the Investment Manager deems it prudent to do so, and subject to the
overall supervision and approval of the Board of Trustees. The timing and extent
of adjustments in the holdings of the Fund will reflect the Investment Manager's
judgment as to (1) the appropriate portfolio mix to achieve the investment
performance objective of the Fund, (2) the appropriate balance between the goal
of correlating the holdings of the Fund with its Social Objective, (3) the goals
of minimizing transaction costs and keeping sufficient reserves available for
anticipated redemptions of shares, and (4) compliance with certain restrictions
of the Fund imposed by the Fund's investment policies, including those mandated
by the Investment Company Act. See "Fundamental Investment Policies And
Restrictions" herein. There can be no assurance that any portfolio enhancement
strategies will be successful, and the performance of the Fund may as a result
be worse than if such strategies were not undertaken. The Board of Trustees of
the Fund will receive and review, at least quarterly, a report prepared by the
Investment Manager evaluating the performance of the Fund, and will consider
what action, if any, should be taken in the event of a significant change in the
performance of the Fund.
The Fund's primary consideration in placing securities transactions
with broker-dealers for execution is to obtain, and maintain the availability
of, execution at the most favorable prices and in the most effective manner
possible. For further discussion regarding securities trading by the Fund, see
the Statement of Additional Information.
The Fund may make short sales of securities or maintain a short
position in securities provided such investment is otherwise consistent with the
Fund's Investment Objective and Social Objective. Pursuant to the Investment
Company Act, the Fund will maintain government securities and certain other
assets in amounts sufficient to cover the fair market value of such sales and
positions and margin posted with brokers for such sales and positions. No more
than 25% of the Fund's net assets will be used as collateral for such short
positions at any one time.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Certain of the Fund's investment policies and restrictions are
"fundamental" and, as such, are subject to change only with shareholder
approval. All policies stated throughout this Prospectus, other than those
identified in this section as fundamental, may be changed without shareholder
approval. The Fund's fundamental policies include its Investment Objective,
certain restrictions on its investments under applicable securities laws, and
its Fundamental Social Criteria. Although adherence to the Fundamental Social
Criteria is a fundamental policy, the other factors and considerations used by
the Investment Manager in making its recommendations consistent with the overall
Social Objective and the Board in approving such recommendations are
discretionary and non- fundamental.
The fundamental policies and restrictions may not be changed without
the approval of the holders of a majority of the Fund's shares (which, as used
in this Prospectus, means the lesser of (1) more than 50% of the outstanding
shares of the Fund, or (2) 67% or more of the outstanding shares of the Fund
present at a meeting
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<PAGE> 13
at which holders of more than 50% of the Fund's outstanding shares are
represented in person or by proxy). If there were a change in the Fund's
fundamental policies and restrictions, shareholders should consider whether the
Fund remains an appropriate investment in light of their then-current financial
positions and needs.
The Statement of Additional Information includes a complete discussion
of the foregoing matters as well as other investment policies and a listing of
specific investment restrictions which govern the Fund's investment policies. In
order to permit the sale of the Shares in certain states, the Fund reserves the
right to may make commitments more restrictive than the investment policies and
restrictions set forth above. If the Fund determines that any such commitment is
not in its best interests, it may choose not to sell the Shares in these states
or seek a waiver in certain states.
RISK FACTORS
INVESTMENT OBJECTIVE
There can be no assurance that the Fund will be able to achieve its
Investment Objective. It should be noted that the limitation of the Fund's
investments to equity securities of companies identified as meeting the Social
Objective will tend to limit the availability of investment opportunities to the
Fund compared to that for other investment companies that have a comparable
investment objective to that of the Fund.
COMMON STOCKS
Common stocks, the most familiar type of equity securities, represent
an equity (ownership) interest in a corporation. Although equity securities have
a history of long-term growth in value, their prices fluctuate based on changes
in a company's financial condition and on overall market, economic and political
conditions. Smaller companies are especially sensitive to these factors.
CONVERTIBLE SECURITIES
Investments in convertible securities of a corporation generally entail
less risk than the corporation's common stock, although the extent to which such
risk is reduced depends in large measure upon the degree to which the
convertible security sells above its value as a fixed income security.
Convertible securities have unique investment characteristics in that they
generally (1) have higher yields than common stocks, but lower yields than
comparable non-convertible securities, (2) are less subject to fluctuation in
value than the underlying stock since they have fixed income characteristics,
and (3) provide the potential for capital appreciation if the market price of
the underlying common stock increases. The investment value of a convertible
security is influenced by changes in interest rates, with investment value
declining as interest rates increase and increasing as interest rates decline.
The credit standing of the issuer and other factors also may have an effect on
the convertible security's investment value. The conversion value of a
convertible security is determined by the market price of the underlying common
stock. If the conversion value is low relative to the investment value, the
price of the convertible security is governed principally by its investment
value. Generally, the conversion value decreases as the convertible security
approaches maturity. To the extent the market price of the underlying common
stock approaches or exceeds the conversion price, the price of the convertible
security will be increasingly influenced by its conversion value. A convertible
security generally will sell at a premium over its conversion value by the
extent to which investors place value on the right to acquire the underlying
common stock while holding a fixed income security. The Fund only intends to
invest in convertible securities where the value of the option is minimal and
the convertible security trades on the basis of its coupon.
ILLIQUID AND RESTRICTED SECURITIES
Investments of the Fund's assets in illiquid securities, (i.e.,
securities that are restricted in their transfer or for which market quotations
are otherwise not readily available or repurchase agreements over seven days),
may restrict the ability of the Fund to dispose of its investments in a timely
fashion and for a favorable price. The risks
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<PAGE> 14
associated with illiquidity are particularly acute in situations in which the
Fund's operations require cash, such as when the Fund redeems for shares of
beneficial interests or pays distributions, and may result in the Fund borrowing
to meet short-term cash requirements or incurring capital losses on the sale of
such investments.
SECURITIES OF FOREIGN ISSUERS
Some of the securities included in the Fund may be those of foreign
issuers (provided that the securities are publicly-traded in the United States
in the form of American Depositary Receipts or similar instruments the market
for which is denominated in United States dollars). Securities of foreign
issuers may represent a greater degree of risk (e.g., as a result of exchange
rate fluctuation, tax provisions, war or expropriation) than do securities of
domestic issuers.
LOANS OF SECURITIES
The Fund has reserved the authority to lend its securities to brokers,
dealers and financial institutions provided, among other things, that the loan
is secured continuously by collateral consisting of U.S. Government securities
or cash or letters of credit, which is marked to the market daily to ensure that
each loan is fully collateralized at all times. Loans of securities involve a
risk that the borrower may fail to return the securities or may fail to provide
additional collateral.
OPTIONS
The Fund may enter into certain transactions involving stock options
for the purpose of hedging against possible increases in the value of securities
which are expected to be purchased by the Fund or possible declines in the value
of securities which are held by the Fund. Were the Fund to establish an option
position for the purpose of hedging against investment risks, and would do so
only if there appears to be a liquid secondary market therefor, there can be no
assurance that such a market will exist for any particular option contract at
any specific time. In that event, it may not be possible to close out a position
held by the Fund, and the Fund could be required to purchase or sell the
instrument or instruments underlying an option, make or receive a cash
settlement or meet ongoing variation margin requirements. The inability to close
out option positions also could have an adverse impact on the Fund's ability
effectively to hedge its portfolio.
SHORT POSITIONS
Short selling or short positions by the Fund involves the Fund selling
a security that it does not own or it borrows from a broker. When the fund
purchases the security to replace the borrowed security, if the value of the
security declines as anticipated, the Fund will profit to the extent of the
difference between the purchase price and the sales price. If the price of the
security increases, the Fund will suffer a loss. Short selling or short
positions by the Fund involve a risk that the price of the security will not
decrease, as anticipated, and the Fund will suffer a loss.
HISTORY OF OPERATIONS; EXPERIENCE OF INVESTMENT MANAGER
As a recently created entity, the Trust will be subject to all the
risks incident to the creation of a new business, including the absence of a
history of operation, and there can be no guarantee that the Investment
Objective of the Fund will be attained. Prior to the commencement of the Fund,
the Investment Manager had no previous experience in providing investment
management services to an investment company. See "Management And Service
Providers - Investment Manager" below.
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<PAGE> 15
INVESTMENT RISKS
There are market risks inherent in any investment, and there is no
assurance that the Fund will attain its Investment Objective or that any income
will be earned. Moreover, the application of the investment policies is
dependent upon the judgment of the Investment Manager. A prospective investor in
the Fund should realize there are risks in any policy dependent upon such
judgment and that no representation is made that the Investment Objective of the
Fund will be attained or that there may not be substantial loses in any
particular investment. At any time, the value of the Fund's shares may be more
or less than the cost of such shares to the investor.
MANAGEMENT AND SERVICE PROVIDERS
The Board of Trustees of the Fund provide broad supervision over the
affairs of the Fund. The Fund has engaged Meyers Sheppard to provide management
and investment advisory services to the Fund, Furman Selz to provide
administration, fund accounting, transfer agent and distribution services to
the Fund, and Wells Fargo to provide custodial services to the Fund.
BOARD OF TRUSTEES AND OFFICERS
The Board of Trustees is responsible for the overall management and
supervision of the Fund's business. The Board of Trustees consists of Ms. Shelly
J. Meyers, Mr. Leslie C. Sheppard, Ms. Gwendolyn H. Baba, Mr. Jay W. Gendron,
Mr. Robert E. Gipson and Professor Leonard Greenhalgh. None of the Trustees,
with the exception of Ms. Meyers and Mr. Sheppard, are considered "interested
persons" of the Fund as defined by the Investment Company Act.
The Board of Trustees is responsible for deciding matters of general
policy and reviewing actions of the Fund's contractors and agents, including the
actions of the Investment Manager, the Administrator, the Fund Accounting Agent,
the Transfer Agent, the Distributor, and the Custodian. The officers of the
Trust conduct and supervise the Fund's daily business operations. The Board of
Trustees also has broad supervisory authority over the Investment Manager's
determination of which companies satisfy the Social Objective, and are therefore
eligible to be considered for an investment by the Fund.
Ms. Shelly J. Meyers, the Chairman of the Board of Trustees, is also a
principal owner of and a Manager and the President of the Investment Manager,
Meyers Sheppard. Ms. Meyers has a background as a research analyst and assistant
portfolio manager for The Boston Company Asset Management, Inc., a registered
investment company, and has also been a lead analyst for the Chevron Corporation
and a certified public accountant engaged in private practice. See "Management
and Service Providers - Investment Manager" below. Ms. Meyers received her
Bachelor of Arts Degree from the University of Michigan and her Masters of
Business Administration from the Amos Tuck School of Business Administration at
Dartmouth College. Ms. Meyers is a member of the Executive Board of Directors of
the Gay and Lesbian Community Services Center located in Los Angeles,
California, and is also a member of the Human Rights Campaign, the largest
national gay and lesbian organization.
Mr. Leslie C. Sheppard, who is also a principal owner of and a Manager
and the Executive Vice President of the Investment Manager, has a background in
real estate marketing and management. From 1993 until he became a principal in
March 1996 with Meyers Sheppard, Mr. Sheppard was Marketing Representative and
Asset Manager for Fannie Mae, where he managed all aspects of a 300 property
real estate inventory worth over $40 million. Prior to his employment with
Fannie Mae, Mr. Sheppard was a principal of and the real estate asset manager
for Takenaka & Co. where he was responsible for real estate acquisitions,
management, marketing and government compliance. Mr. Sheppard received his
Bachelor of Science degree in Business Administration and his Master of Business
Administration in Finance from the University of Southern California.
Ms. Gwendolyn H. Baba, a former investment banker, is general partner
of several real estate management and development partnerships, and holds a M.A.
degree in Management from the University of Redlands and a B.A. degree in
Philosophy from Lewis & Clark College. Ms. Baba is a member of the Board of
Directors of the Gay and Lesbian Community Services Center, and is also on the
Board of Directors (and is past President) of ANGLE (Access Now For Gay And
Lesbian Equality), a political fund raising organization, both located in Los
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<PAGE> 16
Angeles, California. Ms. Baba also holds appointments to the California
Democratic State Central and Los Angeles County Committees, and has been
nominated to the Board of Directors of the Human Rights Campaign.
Mr. Jay W. Gendron, an entertainment attorney, is Vice President, Legal
Affairs, of Warner Bros. Television Productions (formerly Lorimar Productions).
Mr. Gendron received his Juris Doctor degree from Duke University School of Law
and his B.A. degree in Government & International Studies from the University of
Notre Dame. Mr. Gendron in on the Board of Directors of the Camp Laurel
Foundation (which provides camping opportunities for children with HIV and AIDs)
and the Angels On My Shoulder Foundation (which provides support for
care-providers for cancer patients).
Mr. Robert E. Gipson, a business, corporate and tax attorney, is a
shareholder of and an attorney with Gipson Hoffman & Pancione, a Los Angeles law
firm. Mr. Gipson received his Juris Doctor degree from Yale Law School and his
A. B. degree in Government from Harvard College. Mr. Gipson is the founder and
initial president of the Los Angeles Venture Association (also known as LAVA),
and is on the Board of Directors of the City Scholars Foundation (which
promotes excellence in inner-city education), the James Redford Institution
(active in organ transplant issues), the Sundance Film Institute (which
promotes independent film development) and the Westwood United Methodist
Church.
Professor Leonard Greenhalgh is Professor of Management at the Amos
Tuck School of Business Administration at Dartmouth College, and has also taught
at Stanford University and Cornell University. In addition to teaching,
Professor Greenhalgh also provides executive education, research and consulting
services to large corporations and organizations. Professor Greenhalgh received
a Ph.D. degree from Cornell University, a Masters in Business Administration
degree from , and B.S. degree in engineering from .
For further information about the Board of Trustees and the officers of
the Fund, including their general business experience, see "Management Of And
Service Providers For The Trust And Fund" in the Statement of Additional
Information.
INVESTMENT MANAGER
The Fund has engaged the Investment Manager, Meyers Sheppard, to serve
as both the manager and the investment adviser for the Fund pursuant to an
Investment Management Agreement approved by the Board of Trustees. The
Investment Manager is a California limited liability company organized on
January 23, 1996. The managers and principal owners of the Investment Manager
are Ms. Shelly J. Meyers and Mr. Leslie C. Sheppard. The officers of the
Investment Manager are Ms. Meyers, President, Mr. Sheppard, Senior Vice
President, and Mr. Philip McKinley, Operations Manager. Prior to the
commencement of the Fund, the Investment Manager had no previous experience in
providing investment management services to an investment company. Ms. Meyers,
who is the person designated by the Investment Manager to act as portfolio
manager for the Fund, has performed analytical and portfolio management duties
for investment companies and institutional asset management clients. Mr. Philip
McKinley, the Operations Manager of the Investment Manager, also has performed
compliance services for investment companies and institutional investors. See
"Risk Factors - History Of Operations; Experience Of Investment Manager" above
and "Management Of And Service Providers For The Trust And The Fund" in the
Statement of Additional Information.
As part of its management function, the Investment Manager oversees
(subject to the overall authority of the Board of Trustees) the overall
operations and administration of the Fund, including the supervision of
professional services rendered by others, including the Distributor,
Administrator, Transfer Agent, and Custodian, as well as accounting, auditing,
legal and other services.
As part of its investment advisory function, the Investment Manager
implements the investment strategy of the Fund and manages the Fund's
investments subject to the Fund's Investment Objective and Fundamental Social
Criteria and the overall supervision by the Board of Trustees. Specifically, the
Investment Manager determines, from amongst the companies who have been
identified as satisfying the Social Objective, which companies the Fund should
invest in, what the appropriate mix of investments amongst such companies should
be, and the timing and extent of adjustments in the holdings of the Fund to
satisfy the requirements of diversification and the need to maintain sufficient
reserves for anticipated redemptions of shares. The Investment Manager also
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<PAGE> 17
has sole discretion to select brokers for purchases and sales. Although the
Investment Manager's activities are subject to general oversight by the Trustees
and officers of the Fund, neither the Trustees nor officers of the Fund evaluate
the merits of the Investment Manager's selection of individual securities from
amongst approved companies.
The Investment Management Agreement provides that the Investment
Manager shall not be liable and shall be indemnified, for any error of judgment
or mistake of law or for any loss suffered by the Fund in connection with the
matters to which the Investment Management Agreement relates, except liability
resulting from willful misfeasance, bad faith or gross negligence in the
performance of duties specified in the Investment Management Agreement or from
reckless disregard of the Investment Manager's obligations thereunder.
The Investment Manager has been registered as an investment adviser
under the Investment Advisers Act of 1940, as amended, since March 7, 1996. Ms.
Shelly J. Meyers has been designated by the Investment Manager as its "portfolio
manager" for the Fund, in which capacity she is responsible for providing all
investment advisory services to the Fund on behalf of the Investment Manager.
Ms. Meyers received her Bachelor of Arts Degree from the University of Michigan
and her Masters of Business Administration from the Amos Tuck School of Business
Administration at Dartmouth College. From July, 1994 through February, 1995, Ms.
Meyers was Assistant Vice President, Institutional Asset Management for The
Boston Company Asset Management, Inc., in which capacity she acted as an equity
research analyst and assistant portfolio manager for the institutional
investment group and was the lead equity analyst for the entertainment,
communications, apparel, specialty retail, and energy industries. In that
capacity Ms. Meyers was responsible for analyzing portfolios containing
investments valued at up to $1.2 billion. From June, 1993 through September,
1993, Ms. Meyers was an Analyst with The Boston Company Asset Management, Inc.
From June, 1989 through September, 1992, Ms. Meyers was Lead Analyst,
International Audit, with the Chevron Corporation, in which capacity, she led
the analysis and review of various projects and operations throughout the world
and reported her findings to executive management. Ms. Meyers is a certified
public accountant in the State of California.
Pursuant to the terms of the Investment Management Agreement, the Fund
pays the Investment Manager for its management and investment advisory services,
a monthly fee equal, on an annual basis, to 1% of the Fund's average daily net
assets.
ADMINISTRATION, FUND ACCOUNTING AND TRANSFER AGENTS
The Fund has entered into agreements with Furman Selz to provide the
Fund with administrative, fund accounting, and dividend disbursing and transfer
agency services, pursuant to an Administration Agreement, Fund Accounting
Agreement, and Transfer Agency Agreement, respectively. The agreements are each
renewable annually. Although each agreement provides for different methods or
rates of compensation to Furman Selz as discussed below, the Fund has agreed to
pay Furman Selz a minimum payment of $150,000 per year for all of the aforesaid
services.
Pursuant to the Administration Agreement, Furman Selz generally assists
the Fund and the Investment Manager in all aspects of the Fund's administration
and operations including the following: maintaining administrative office
facilities on behalf of the Fund; monitoring the performance and billings of the
independent contractors and agents of the Fund to the extent requested by the
Investment Manager; assisting with the preparation and filing of documents
required for compliance by the Fund with applicable federal and state laws and
regulations and stock exchanges, including financial statements and semi-annual
and annual reports to shareholders and proxy statements; maintaining the books
and records of the Fund as required under the Investment Company Act and other
applicable federal and state laws and regulations; performing secretarial
services such as the preparation of agendas, notices and minutes for meetings of
the Fund's Board of Trustees and its shareholders; and providing advice and
assistance in connection with the preparation of Fund sales literature. Furman
Selz also provides persons satisfactory to the Board of Trustees of the Fund to
serve as officers of the Fund. Such officers, as well as certain other employees
and Trustees of the Fund, may be directors, officers or employees of Furman Selz
or its affiliates. As compensation for these services, the Fund pays Furman
Selz, per year, an amount equal to 0.15% of the first $100 million in aggregate
Fund assets, 0.10% for the next $400 million, 0.07% for the next $500 million,
and 0.06% for aggregate Fund assets in excess of $1 billion.
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<PAGE> 18
Pursuant to the Fund Accounting Agreement, Furman Selz calculates the
Fund's net value on a daily basis, in consideration of which the Fund pays
Furman Selz the sum of $35,000 per year, plus reimbursement of out-of-pocket
expenses.
Pursuant to the Transfer Agency Agreement, Furman Selz provides
dividend disbursement, registrar and transfer agency services to the Fund, in
consideration of which the Fund pays Furman Selz the sum of $15 per year per
each shareholder, subject to a $12,000 per year minimum.
PLAN OF DISTRIBUTION
The Trustees of the Trust have adopted a Plan of Distribution (the
"Distribution Plan") with respect to the Fund in accordance with Rule 12b-1
under the Investment Company Act after having concluded that there is a
reasonable likelihood that the Distribution Plan will benefit the Fund and its
shareholders. As contemplated by the Distribution Plan, Furman Selz acts as
agent of the Fund in connection with the offering of shares of the Fund pursuant
to the Distribution Agreement. Pursuant to the Distribution Agreement, Furman
Selz also acts as the Fund's Distributor, and is responsible for facilitating
the continuous sale or redemption of Fund shares. Solely for the purpose of
reimbursing Furman Selz for activities primarily intended to result in the sale
of Fund shares, the Trust has, on behalf of the Fund, adopted the Distribution
Plan wherein, pursuant to Rule 12b-1 of the Investment Company Act, the Fund is
authorized to spend up to 0.25% of net asset value annually for Furman Selz's
services in connection with the distribution of shares of the Fund. The
Distribution Plan was approved by the independent trustees of the Trust as well
as the Fund's initial shareholders.
Furman Selz acts as the principal underwriter of shares of the Fund and
bears the compensation of personnel necessary to provide such services and all
costs of travel, office expense (including rent and overhead) and equipment.
Under the Distribution Plan, Furman Selz may receive a fee from the Fund at an
annual rate up to but not to exceed 0.25% of the Fund's average daily net assets
in anticipation of, or as reimbursement for, costs and expenses incurred in
connection with the sale of shares of the Fund, such as payments to
broker-dealers who advise shareholders regarding the purchase, sale or retention
of shares of the Fund, payments to employees of Furman Selz, advertising
expenses and the expenses of printing and distributing prospectuses and reports
used for sales purposes, expenses of preparing and printing sales literature and
other distribution-related expenses. Furman Selz will provide to the Board of
Trustees a quarterly written report of amounts expended by it under the
Distribution Plan and the purposes for which such expenditures were made.
CUSTODIAN
The Fund has engaged Wells Fargo to act as custodian of the assets of
the Fund, pursuant to a Custodian Agreement. The Custodian's responsibilities
include safeguarding and controlling the Fund's cash and securities, handling
the receipt and delivery of securities, collecting interest on the Fund's
investments, and maintaining books of original entry for fund accounting
purposes. As compensation for its services, the Fund pays Wells Fargo, per year,
an amount equal to 0.10% of the first $20 million in aggregate Fund assets, and
0.04% for aggregate Fund assets in excess of $20 million, subject to a $15,000
per year minimum.
PURCHASES AND REDEMPTIONS OF SHARES
PURCHASES
Shares of the Fund may be purchased without a sales load at the net
asset value next determined after an order for shares is received and accepted
by the Fund. The minimum initial investment in the Fund is $1,000 (except that
the minimum initial investment when selecting the Automatic Investment Plan is
$250). The minimum subsequent investment is $100 ($50 for the Automatic
Investment Plan).
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<PAGE> 19
INITIAL INVESTMENTS BY MAIL
Subject to acceptance by the Fund, investors desiring to purchase
shares of the Fund by mail should complete an Account Application and mail the
Application to the Fund at the address noted below, together with a check in
U.S. dollars ($1,000 minimum), payable to "Meyers Sheppard Pride Fund":
The Meyers Sheppard Pride Fund
c/o Furman Selz LLC
237 Park Avenue
New York, New York 10017
Subject to acceptance by the Fund, payment for the purchase of shares
received by mail will be credited to a shareholder's account at the net asset
value per share of the Fund next determined after receipt. Such payment need not
be converted into federal funds (monies credited to the bank of the Fund's
Custodian by a Federal Reserve Bank) before acceptance by the Fund.
INITIAL INVESTMENTS BY WIRE
Subject to acceptance by the Fund, shares of the Fund may be purchased
by wiring federal funds ($1,000 minimum generally, $250 minimum for the
Automatic Investment Plan) to Investors Fiduciary Trust Company (see
instructions below). A completed Account Application should be forwarded to the
Fund at the address noted above under "Initial Investments by Mail" in advance
of the wire. Notification must be given to the Fund at 1- 800-410-3337 prior to
4:00 p.m., New York time, on the business date prior to the date the purchase
monies will be wired. (Prior notification should also be received from investors
with existing accounts). Funds must be paid in U.S. dollars. Funds should be
wired through the Federal Reserve System to:
Investors Fiduciary Trust Company
Kansas City, MO 64105
ABA # 1010-0362-1
Account #
F/B/O the Meyers Sheppard Pride Fund
Federal funds purchases will be accepted only on days in which the
Fund, the Distributor and Investors Fiduciary Trust Company are open for
business. Currently, days in which the Fund, the Distributor and the Custodian
are not open are those days on which the New York Stock Exchange is closed.
ADDITIONAL INVESTMENTS
Additional investments may be made at any time (minimum investment of
$100 {$50 for the Automatic Investment Plan}) by purchasing shares of the Fund
at net asset value by mailing a check to the Fund at the address noted above
under "Initial Investments by Mail" (payable to the "Meyers Sheppard Pride Fund"
or by wiring monies to Investors Fiduciary Trust Company as outlined above under
"Initial Investments by Wire"). For a wire purchase, notification must be given
to the Fund at 1-800-410-3337 prior to 4:00 p.m., New York time, on the business
day prior to the day the purchase monies will be wired.
INVESTMENTS THROUGH SHAREHOLDER ORGANIZATIONS
Shares may also be purchased through a broker, a bank, or other
institutions or investment professionals ("Shareholder Organizations").
Shareholder Organizations may impose minimum customer account and other
requirements in addition to those of the Fund. Investors purchasing or redeeming
shares may be charged a transaction-based fee and other charges for the services
of the Shareholder Organization. Each Shareholder Organization is responsible
for transmitting to its customers a schedule of its fees and information
regarding any additional or different conditions regarding purchases or
redemptions. Customers of Shareholder Organizations should read this Prospectus
in light of the terms governing accounts with their organization. If an investor
purchases shares through a Shareholder Organization, the Shareholder
Organization must promptly transmit such order to the Fund so that the order
receives the net asset value next determined following receipt of the order. The
Fund does not pay to or receive compensation from Shareholder Organizations for
the sale of Fund shares.
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INVESTMENTS THROUGH IRAS AND OTHER QUALIFIED RETIREMENT PLANS
The Fund has available special forms which enable an investor to
purchase Fund shares through his or her Individual Retirement Account (IRA). The
Fund may be used as a qualifying medium for IRAs and other qualified retirement
plans ("Plans"). The minimum initial investment for an IRA or a Plan is $250. An
IRA may be established through a custodial account with Investors Fiduciary
Trust Company. Completion of a special application is required in order to
create such a account. A $5.00 establishment fee and an annual $12.00
maintenance and custody fee is payable with respect to each IRA; in addition
there will be charged a $10.00 termination fee when the account is closed. Fund
shares may also be purchased for IRAs and Plans established with other
authorized custodians. Contributions to IRAs are subject to prevailing amount
limits set by the Internal Revenue Service. For more information about IRAs and
other Plan accounts, contact the Fund.
Investors may also, in certain circumstances, be able to invest in the
Fund through other types of retirement plans, such as through simplified
employee pension plans ("SEPs"), qualified pension plans and tax deferred
annuity plans sponsored by their employers. Investors considering investments
through an IRA or other types of retirement plans should write or telephone the
Fund for further information and the appropriate form of application.
INVESTMENTS THROUGH AUTOMATIC INVESTMENT PLAN
The Fund also has available special forms enabling an investor to
regularly invest, through his or her bank, specified dollar amounts in periodic
intervals into the Fund (the "Automatic Investment Plan"). The minimum initial
investment under the Automatic Investment Plan is $250, and minimum subsequent
investments are $50. Payments under the Automatic Investment Plan are automatic
and will continue until such time as the Fund and the investor's bank are
notified to discontinue further investments. Due to the varying procedures to
prepare, process and to forward the bank withdrawal information to the Fund,
there may be a delay between the time of the bank withdrawal and the time the
money reaches the Fund. The investment in the Fund will be made at the
next-determined net asset value per share after receipt of the funds and bank
withdrawal data are received in the form required by the Fund. Investors
regarding investments through the Automatic Investment Plan should write or
telephone the Fund for further information and the appropriate form of
application.
OTHER PURCHASE INFORMATION
The Fund reserves the right, in its sole discretion, to cease offering
its shares for sale at any time or to reject any order for the purchase of its
shares when, in the judgment of the Board of Trustees or officers of the Fund,
such suspension or rejection is in the best interests of the Fund. The Fund and
the Distributor also reserve the right to modify the minimum investment
requirement, the subsequent investment requirement, or the manner in which
shares are offered.
For each shareholder of record, the Fund establishes an open account to
which all shares purchased are credited together with any dividends and capital
gain distributions which are paid in additional shares. See "Other Information
Concerning Shares Of The Fund - Dividends And Capital Gain Distributions,"
herein. Purchases of Fund shares will be made in full and fractional shares of
the Fund calculated to three decimal places. In the interest of economy and
convenience, certificates for shares will not be issued.
REDEMPTIONS
Shares of the Fund may be redeemed by mail, or, if authorized, by
telephone, subject to certain procedures. The value of the shares redeemed may
be more or less than the shareholder's purchase price, depending on the Fund's
performance during the period the shareholder owned its shares. A shareholder
owing $12,000 or more of shares of the Fund may elect to have periodic
redemptions made from his or her account to be paid on a monthly, quarterly,
semiannual or annual basis. The maximum payment per year is 12% of the account
value at the time of the election. A sufficient number of shares to make the
scheduled redemption will normally be redeemed on the date selected by the
shareholder. Depending on the size of the payment requested and fluctuation in
the net asset value, if any, of the shares redeemed, redemptions for the purpose
of making such payments may reduce or even exhaust the account. A shareholder
may request that these payments be sent to a predesignated bank or other
designated party. Capital gains and dividend distributions paid to the account
will
17
<PAGE> 21
automatically be reinvested at net asset value on the distribution payment date.
Redemptions of shares are taxable events on which the shareholder may recognize
a gain or a loss.
BY MAIL
The Fund will redeem the shares at the net asset value per share next
determined after a redemption request is received in "good order." The net asset
value per share of the Fund is determined as of 4:00 p.m., New York time, on
each day that the Fund, the Transfer Agent and the New York Stock Exchange are
open for business. Requests should be addressed to:
Meyers Sheppard Pride Fund c/o Furman Selz LLC
237 Park Avenue
New York, New York 10017
Requests in "good order" must include the following documentation:
(1) a letter of instruction, if required, or a stock assignment
specifying the number of shares or dollar amount to be redeemed, signed by all
registered owners of the shares in the exact names in which they are registered
(if the shares are in street name, the investor may be required to sell the
shares through his or her investment professional);
(2) any required signature guarantees (see "Signature Guarantees"
below); and
(3) other supporting legal documents, if required, in the case of
estates, trusts, guardianships, custodianships, corporations, pension and profit
sharing plans and other organizations.
SIGNATURE GUARANTEES
To protect shareholder accounts, the Fund and the Transfer Agent from
fraud, signature guarantees are required to enable the Transfer Agent to verify
the identity of the person who has authorized a redemption from an account. The
signature must be guaranteed by a member firm of the New York, American, Boston,
Midwest, Philadelphia or Pacific Stock Exchange or by a commercial bank (not a
savings bank) which is a member of the Federal Deposit Insurance Corporation.
Notarization by a notary public is not acceptable. Signature guarantees are
required for (1) redemptions where proceeds are to be sent to someone other than
the registered shareholder(s) and the registered address, and (2) share transfer
requests. Shareholders may contact the Transfer Agent at 1- 800-410-3337 for
further details.
BY TELEPHONE
Provided the Telephone Redemption Option has been authorized by
initialling the appropriate box in the Account Application, a redemption of
shares may be requested by calling the Transfer Agent at 1-800-410-3337 and
requesting that the redemption proceeds be mailed to the primary registration
address or wired per the authorized instructions. Shares cannot be redeemed by
telephone if shares certificates for the redeemed shares are issued. If the
Telephone Redemption Option is authorized, the Fund and the Transfer Agent may
act on telephone instructions from the person representing himself or herself to
be a shareholder and believed by the Fund or the Transfer Agent to be genuine.
The Transfer Agent's records of such instructions are binding and the
shareholders, not the Fund or the Transfer Agent, bear the risk of any loss,
liability, cost or expense for acting upon telephone instructions believed to be
genuine. The Fund will employ reasonable procedures to confirm that instructions
communicated are genuine and, if it does not, it may be liable for any losses
due to unauthorized or fraudulent instructions. The procedures employed by the
Fund in connection with transactions initiated by telephone include tape
recording of telephone instructions and requiring some form of personal
identification prior to acting upon instructions received by telephone. The
following information must be supplied by the shareholder or broker at the time
a request for a telephone redemption is made: (1) the shareholder's account
number, (2) the shareholder's social security number, and (3) the name and
account number of the shareholder's designated securities dealer or bank.
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<PAGE> 22
PAYMENT
Redemption proceeds for shares of the Fund recently purchased by check
may not be distributed until payment for the purchase has been collected, which
may take up to 15 business days from the purchase date.
Other than described above, payment of the redemption proceeds will be
made by check mailed within seven days after receipt of an order for a
redemption. Investors may request that payment be made by wire transfer to the
investor's designated account at a commercial bank.
A shareholder owing $12,000 or more of shares of the Fund may elect to
have periodic redemptions made from his or her account to be paid on a monthly,
quarterly, semiannual or annual basis. The maximum payment per year is 12% of
the account value at the time of the election. A sufficient number of shares to
make the scheduled redemption will normally be redeemed on the date selected by
the shareholder. Depending on the size of the payment requested and fluctuation
in the net asset value, if any, of the shares redeemed, redemptions for the
purpose of making such payments may reduce or even exhaust the account. A
shareholder may request that these payments be sent to a predesignated bank or
other designated party. Capital gains and dividend distributions paid to the
account will automatically be reinvested at net asset value on the distribution
payment date.
The right of any shareholder to receive payment with respect to any
redemption may be suspended or the payment of the redemption proceeds postponed
during any period in which the New York Stock Exchange or the Fund or the
Transfer Agent are closed (in addition to weekends or holidays) or trading on
such Exchange is restricted, or under any emergency circumstances as determined
by the Securities and Exchange Commission.
If the Board of Trustees determines that it would be detrimental to the
best interests of the remaining shareholders of the Fund to make payment wholly
in cash, the Fund may pay the redemption proceeds in whole or in part by a
distribution in-kind of readily marketable securities held by the Fund in lieu
of cash in conformity with applicable rules of the Securities and Exchange
Commission. Investors generally will incur brokerage charges on the sale of Fund
securities so received in payment of redemptions.
OTHER REDEMPTION INFORMATION
The Fund and the Transfer Agent reserve the right, in their sole
discretion, to suspend the right of telephone redemptions in general or to
reject a telephone redemption with respect to any individual shareholder in
particular, either before, during or after the call, when, in the judgment of
the Board of Trustees or officers of the Fund, such suspension or rejection is
in the best interests of the Fund. The Fund and the Distributor also reserve the
right to modify the redemption procedures from time-to-time including, without
limitation, requiring signature guarantees for all redemption requests.
The Fund reserves the right to redeem involuntary on at least 30 days'
notice the balance in a shareholder's account having a current value of not less
than $250, but not if an account falls below $250 due to a change in the market
value of the Fund's shares.
TAX MATTERS
The Fund intends to qualify and elect to be treated as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). To qualify as such, the Fund must satisfy certain
requirements relating to its sources of income, diversification of its assets,
and distribution of its income. As a regulated investment company, the Fund will
not be required to pay any federal income or excise taxes on any net investment
income and net realized capital gains that are distributed to its shareholders
in accordance with certain timing requirements imposed by the Code.
Shareholders of the Fund normally will have to pay federal income
taxes, and any state or local taxes, on the dividends and any realized net
capital gain distributions they receive from the Fund. At the end of each
calendar year, each shareholder receives information for tax purposes on the
dividends and any realized net capital gain distributions received during that
calendar year including the portion taxable as ordinary income, the portion
taxable as capital gains, the portion, if any, representing a return of capital
(which generally is free of current taxes
19
<PAGE> 23
but results in a basis reduction) and the amount of dividends eligible for the
dividends-received deduction for corporations.
Distributions of net long-term capital gains (i.e., the excess of net
long-term capital gains over net short- term capital losses) will cause any
short-term capital loss realized on the disposition by a shareholder of Fund
shares held for six or fewer months to be recharacterized, to the extent of
those distributions, as long-term capital loss. Under the back-up withholding
rules of the Code, certain shareholders may be subject to 31% withholding of
federal income tax on distributions and payments made by the Fund. Generally,
shareholders are subject to back-up withholding if they have not provided the
Fund with a correct taxpayer identification number and certain other
certifications. Individuals, corporations and other shareholders who are not
U.S. persons under the Code are generally subject to withholding at the rate of
30% (or lower rate provided by an applicable tax treaty) on dividends from the
Fund.
In addition to federal taxes, a shareholder may be subject to state,
local or foreign taxes on payments received from the Fund.
Under current law, the Fund is not liable for any income or franchise
tax in the State of Delaware as long as the Fund qualifies as a regulated
investment company under the Code. The Fund's fiscal year-end is May 31.
The foregoing discussion is intended for general information only. A
prospective shareholder should consult with its own tax adviser as to the tax
consequences of an investment in the Fund including the status of distributions
from the Fund under applicable state or local law. See "Taxation" in the
Statement of Additional Information for a more detailed discussion of the
federal, state and local income tax consequences of investing in the Fund
shares.
OTHER INFORMATION CONCERNING SHARES OF THE FUND
DETERMINATION OF NET ASSET VALUE OF SHARES
The Fund determines the net asset value of the shares of the Fund on
each Fund business day. This determination is made once during each such day as
of 4:00 P.M. on regular trading days of the New York Stock Exchange by deducting
the amount of the Fund's liabilities from the value of its assets and dividing
the difference by the number of shares of the Fund outstanding. A share's net
asset value is effective for orders received by the Fund prior to the close of
the business day on which such net asset value is determined.
Equity securities held by the Fund are valued at the last sale price on
the exchange on which they are primarily traded or on the NASDAQ system for
unlisted national market issues, or at the last quoted bid price for securities
in which there were no sales during the day or for unlisted securities not
reported on the NASDAQ system. Short-term obligations with remaining maturities
of less than sixty days are valued at amortized cost, which are valued at fair
value as determined by the Board of Trustees of the Fund. Fund securities (other
than short-term obligations with remaining maturities of less than sixty days)
for which there are no such quotation or valuations are valued at fair value as
determined in good faith by or at the direction of the Fund's Board of Trustees.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Substantially all of the Fund's net income from dividends and interest
is paid to the Fund's shareholders annually as a dividend, usually in December.
For this purpose, the Fund's net income from dividends and interest consists of
all income from dividends and interest accrued on the assets of the Fund, less
all actual and accrued expenses of the Fund determined in accordance with
generally accepted accounting principles.
The Fund also declares a long-term capital gain distribution to its
shareholders on an annual basis, usually in December, if the Fund's profits
during the year from the sale of securities held for longer than the applicable
long-term capital gains holding period exceeds the Fund's losses during such
year from the sale of securities together with the Fund's net capital losses
carried forward from prior years (to the extent not used to offset short-
20
<PAGE> 24
term capital gains). The Fund's net short-term capital gains realized during
each fiscal year will also be distributed at that time.
The Fund will also make additional distributions to its shareholders to
the extent necessary to avoid application of the 4% non-deductible excise tax
created by the Tax Reform Act of 1986 on certain undistributed income and net
capital gains of mutual funds.
A shareholder of the Fund may receive dividends and capital gain
distributions either in cash or in additional shares of the Fund.
EXPENSES
All expenses incurred in the operation of the Fund will be borne by the
Fund. These expenses include: organizational costs; taxes; the execution,
recording and settlement of security transactions including brokerage fees and
commissions; fees of members of the Board of Trustees who are not officers,
managers, employees or holders of 5% or more of the membership interests of the
Fund or its affiliates; expenses relating to the issuance, registration and
qualification of shares of the Fund including Securities and Exchange Commission
fees and state Blue Sky qualification fees and the preparation, printing and
mailing of prospectuses for such purposes; fees to the Investment Manager for
its services as investment adviser and manager; fees to Furman Selz for its
administration, fund accounting, dividend disbursement, registration and
transfer agent services; fees to Well Fargo for its custodial agent services;
reimbursements to Furman Selz for its distribution expenses pursuant to the
Distribution Agreement (subject to the cap set forth in the Distribution Plan);
certain insurance premiums; industry association fees; outside auditing and
legal expenses; costs of maintaining the Fund's existence; costs of independent
pricing services; costs attributable to investor services (other than those
arranged by Furman Selz pursuant to Distribution Agreement); costs of
shareholders reports and meetings; costs of preparing, printing and mailing
certain prospectuses, reports, notices, proxy statements and statements of
additional information to shareholders; and any extraordinary expenses.
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Trust Instrument permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest (par value $0.00001 per
share) and to divide or combine the shares into a greater or lesser number of
shares without thereby changing the proportionate beneficial interests in the
Fund. To date the Fund is the only series of shares issued under the Trust.
However, the Trust reserves the right to create and issue additional series of
shares, in which case the shares of each series would participate equally in the
dividends and assets of the particular series. The Trust may establish
additional classes of any series of shares. For example, the Trust may offer
another class of shares that has lower annual distribution fees or shareholder
servicing fees. Prior to offering another series of shares, the Trust would
either issue a new Prospectus and Statement of Additional information or amend
this Prospectus and the Statement of Additional Information to reflect such
issuances.
Each share of the Fund represents an equal proportionate interest in
the Fund with each other share. Shares have no preference, preemptive,
conversion or similar rights. Shares when issued are fully paid and
nonassessable, except as set forth below. Shareholders are entitled to one vote
for each share held on matters on which they are entitled to vote. There is no
requirement for the Trust, and the Board of Trustees has no current intention,
of holding annual meetings of shareholders of the Fund, although the special
meetings of Fund shareholders may be held when, in the judgment of the Board of
Trustees, it is necessary or desirable to submit matters for a shareholder vote.
Shares of each series will vote separately to approve matters specifically
concerning such series such as amendments to any plan of distribution under
Section 12b-1 of the Investment Company Act, any changes in fundamental
investment policies or restrictions of such series, and the approval of any
investment management or advisory contract pertaining to such series (unless any
of such matters also affect other series, in which case all of such affected
series shall vote together). In any event, shares of all series will vote
together in the following matters: (1) the removal of Trustees, (2) the
termination of the Trust, (3) certain amendments of the Trust Instrument, and
(4) on such additional matters relating to the Trust as may be required or
authorized by law, the Trust Instrument or the By-laws. If holders of 10% or
more of the Fund's outstanding shares so request, a meeting of the Fund
shareholders will be called. The Trust will assist in shareholder communications
as required by Section 16(c) of the Investment Company Act.
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<PAGE> 25
The Trust is an entity of the type commonly known as a "Delaware
Business Trust." Under Delaware law, shareholders of such a business trust are
entitled to the same limitation of personal liability extended to stockholders
of a corporation. Under the Trust Instrument, no shareholder shall be personally
liable for the debts, liabilities, obligations and expenses incurred by,
contracted for, or otherwise existing with respect to the Trust or any series.
The Trust Instrument contains an express disclaimer of shareholder liability for
acts or obligations of the Trust and provides for indemnification and
reimbursement of expenses out of Fund property for any shareholder held
personally liable for the obligations of a Fund or the Trust solely by reason of
his or her being or having been a shareholder. The Trust Instrument also
provides for the maintenance, by or on behalf of the Trust and the Fund, of
appropriate insurance (for example, fidelity bond and errors and omissions
insurance) for the protection of the Trust and the Fund, their shareholders,
trustees, officers, employees and agents, covering possible tort and other
liabilities. Thus, the risk of a shareholder incurring financial loss on account
of shareholder liability is limited to circumstances in which Delaware law did
not apply, inadequate insurance existed, and the Fund itself was unable to meet
its obligations.
The Fund's Statement of Additional Information contains more detailed
information about the Fund, including information related to (1) investment
policies and restrictions of the Fund, (2) the Trustees, officers, Investment
Manager, Administrator, Fund Accounting Agent, Transfer Agent and Custodian of
the Fund, (3) portfolio transactions, (4) the Fund's shares, including rights
and liabilities of shareholders, (5) additional performance information,
including the method used to calculate yield and total rate of return quotations
of the Fund, (6) determination of the net asset value of shares of the Fund, and
(7) the audited Statement of Assets and Liabilities of the Fund as of May ,
1996.
PERFORMANCE INFORMATION
Performance information concerning the Fund may from time-to-time be
used in advertisements, shareholder reports or other communications to
shareholders. The Fund may provide period and average annualized "total rates of
return" with respect to the Fund. The "total rate of return" of the Fund refers
to the change in the value of an investment in a Fund over a stated period based
on any change in net asset value per share and includes the value of any shares
purchasable with any dividends or capital gain distributions declared during
such period. Period total rates of return may be annualized. An annualized total
rate of return is a compounded total rate of return which assumes that the
period total rate of return is generated over a 52-week period, and that all
dividends and capital gain distributions are reinvested. An annualized total
rate of return will be slightly higher than a period total rate of return if the
period is shorter than one year, because of the effect of compounding.
Historical total return information for any period or portion thereof
prior to the establishment of the Fund will be that of the Fund, adjusted to
assume that all charges, expenses and fees of the Fund which are presently in
effect were deducted during such periods.
The Fund may provide "yield" quotations with respect to the Fund. The
"yield" of the Fund refers to the income generated by an investment in the Fund
over a 30-day or one-month period (which period shall be stated in any
advertisement or communications with a shareholder). This income is then
"annualized," that is, the amount of income generated by the investment over the
period is assumed to be generated over a 52-week period and is shown as a
percentage of investment. A "yield" quotation, unlike a total rate of return
quotation, does not reflect changes in net asset value.
From time-to-time the Fund may also quote fund rankings from various
sources, such as Lipper Analytical Services, Inc., and may compare its
performance to that of unmanaged securities indices, such as the S&P 500
(Standard & Poor's 500 Composite Stock Price Index) and the Dow Jones Industrial
Average. "Standard & Poors," "S&P" and "Standard & Poor's 500" are trademarks of
Standard & Poor's Corporation. See the Statement of Additional Information for
further information concerning the calculation of yield and any total rate of
return quotations. Since the Fund's yield and total rate of return quotations
are based on historical earnings and since such yield and rates of return
fluctuate over time, such quotations should not be considered as an indication
or representation of the future performance of the Fund.
22
<PAGE> 26
MEYERS SHEPPARD INVESTMENT TRUST
MEYERS SHEPPARD PRIDE FUND
<TABLE>
<S> <C>
TRUSTEES AND OFFICERS INVESTMENT MANAGER
Shelly J. Meyers Meyers, Sheppard & Co., LLC
Trustee (Chairman of the Board) and President 9107 Wilshire Boulevard, Suite 700
Beverly Hills, California 90210
Leslie C. Sheppard
Trustee and Executive Vice President ADMINISTRATOR, FUND ACCOUNTING AGENT
AND TRANSFER AGENT
Gwendolyn H. Baba
Trustee Furman Selz LLC
230 Park Avenue
Jay W. Gendron, Esq. New York, New York 10169
Trustee
DISTRIBUTOR
Robert E. Gipson, Esq.
Trustee Furman Selz LLC
230 Park Avenue
Leonard Greenhalgh, M.B.A., Ph.D. New York, New York 10169
Trustee
CUSTODIAN
John J. Pileggi
Vice President and Treasurer Wells Fargo Bank, N.A.
P.O. Box 63084
Joan V. Fiore San Francisco, California 94163
Vice President and Secretary
LEGAL COUNSEL
Gordon M. Forrester
Assistant Treasurer Pollet & Woodbury, a Law Corporation
10900 Wilshire Boulevard, Suite 500
Philip McKinley Los Angeles, California 90024
Assistant Secretary
LEGAL COUNSEL FOR THE INDEPENDENT TRUSTEES
Sheryl Hirschfeld
Assistant Secretary Mayer, Brown & Platt
1675 Broadway, Suite 1900
New York, New York 10019
INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick LLP
345 Park Avenue
New York, New York 10154
</TABLE>
<PAGE> 27
PART B
<PAGE> 28
SUBJECT TO COMPLETION, DATED MAY 3, 1996
MEYERS SHEPPARD PRIDE FUND
a separate portfolio of the Meyers Sheppard Investment Trust
9107 Wilshire Boulevard, Suite 700
Beverly Hills, California 90210
Telephone Number: (310) 288-3720
Facsimile Number: (310) 288-3726
STATEMENT OF ADDITIONAL INFORMATION
MAY 31, 1996
The Meyers Sheppard Pride Fund (the "Fund") is organized as a separate
series of the Meyers Sheppard Investment Trust (the "Trust"), a business trust
organized under the laws of the State of Delaware. The Fund is an open-ended
no-load diversified mutual fund whose overall investment objective is to attain
long-term capital appreciation through investing in a diversified portfolio of
equity securities of under-valued but nevertheless fundamentally sound companies
which have been identified as generally having progressive policies towards gays
and lesbians, and at a minimum having in place specifically stated policies
against discrimination in hiring and promotion based upon sexual orientation.
See "Investment And Social Objectives, Policies And Restrictions" herein.
This Statement of Additional Information sets forth information which
may be of interest to investors but which is not necessarily included in the
Prospectus for the Fund dated May 31, 1996, as amended or supplemented from time
to time. This Statement of Additional Information should be read in conjunction
with the Prospectus dated May 31, 1996, a copy of which may be obtained by an
investor without charge by contacting Furman Selz LLC, the Fund's Distributor,
at 230 Park Avenue, New York, New York 10169, or at (800) . This Statement of
Additional Information has been incorporated into the Prospectus.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY AN EFFECTIVE PROSPECTUS AND SHOULD BE READ ONLY IN CONJUNCTION
WITH SUCH PROSPECTUS.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
The Fund................................................................ 2
Investment And Social Objectives, Policies and Restrictions............. 3
Tax Sheltered Retirement Plans.......................................... 11
Investment Programs..................................................... 13
Performance Information................................................. 13
Determination of Net Asset Value; Valuation of Fund Securities.......... 15
Management Of And Service Providers For The Trust And The Fund.......... 16
Independent Auditors.................................................... 21
Code of Ethics.......................................................... 21
Taxation ............................................................... 21
Fund Transactions And Brokerage Commissions............................. 22
Description Of Shares, Voting Rights And Liabilities.................... 24
Financial Statements.................................................... 25
</TABLE>
B-1
<PAGE> 29
THE FUND
The Meyers Sheppard Pride Fund (the "Fund") is organized as a separate
series of the Meyers Sheppard Investment Trust (the "Trust"), a business trust
organized under the laws of the State of Delaware on March 25, 1996. The Fund is
an open-ended no-load diversified management investment company whose overall
investment objective is to attain long-term capital appreciation through
investing in a diversified portfolio of equity securities of under-valued but
nevertheless fundamentally sound companies. The Fund will invest in securities
of selected companies which have been identified by Meyers, Sheppard & Co., LLC
("Meyers Sheppard"), the Investment Manager of the Fund, as generally having
progressive policies towards gays and lesbians, but at a minimum having in place
specifically stated policies against discrimination in hiring and promotion
based upon sexual orientation. See "Investment And Social Objectives, Policies
And Restrictions" herein.
The Fund is the first series to be established under the Trust. As a
diversified fund, the Fund is required, by the Investment Company Act of 1940,
as amended (the "Investment Company Act"), with respect to 75% of its assets, to
invest no more than 5% of its assets in the securities of any one issuer and not
more than 10% of the outstanding voting securities of an issuer may be owned.
The Fund's investment and social objectives and policies, including the
identification of companies which have progressive policies towards gays and
lesbians, are, with the exception of certain fundamental policies, determined by
the Investment Manager, subject to the Board of Trustees providing broad
supervision over the affairs of both the Fund and the Trust. The Fund has, to
date, identified over 325 publicly-traded companies meeting this criteria, most
of which are listed on the Standard & Poor's 500 Composite Stock Price Index
(the "S&P 500"). A majority of the Board of Trustees are not affiliated with the
Investment Manager.
The Investment Manager serves as the Fund's manager and investment
adviser pursuant to an Investment Management Agreement. As part of its
management function, the Investment Manager generally supervises (subject to the
overall authority of the Board of Trustees and officers of the Trust) the
overall administration of the Fund, including its various agents and service
providers, including those providing distribution, fund accounting, dividend
disbursement, transfer agent and custodian services. As part of its investment
advisory function, the Investment Manager manages the investments of the Fund
day-to-day in accordance with the Fund's investment and social objectives and
policies, and determines the composition of the securities which the Fund may
invest (i.e., which companies designated by the Investment Manager as having
anti-discrimination policies in place and otherwise demonstrating progressive
policies towards gays and lesbians). For its management and investment advisory
services, the Investment Manager receives from the Fund a monthly fee equal, on
an annual basis, to 1% of the Fund's average daily net assets. See "Management
Of And Service Providers For The Trust And Fund" herein.
Shares of the Fund are sold continuously by the Distributor of the
Fund, Furman Selz LLC, a Delaware limited liability company ("Furman Selz"), at
the next determined net asset value per share. The minimum initial investment in
the Fund is generally $1,000, and subsequent investments are generally $100. A
lower initial investment of $250 is permitted for Automatic Investment Plans
with subsequent investments allowed at a minimum of $50. The Trust, on behalf of
the Fund, has adopted a Distribution Plan which permits reimbursement of certain
expenses incurred by the Distributor in connection with the distribution of
shares of the Fund, up to a maximum of 0.25% of net asset value annually.
The Fund offers to redeem shares of the Fund from its shareholders at
any time at next determined net asset value per share. The redemption price may
be more or less than the purchase price.
No sales load is charged with respect to either the purchase or
redemption of Fund shares. An investor should contact the Distributor regarding
any further information describing the procedures under which Fund shares may be
purchased and redeemed. See "Purchases And Redemptions" in the Prospectus.
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INVESTMENT AND SOCIAL OBJECTIVES, POLICIES AND RESTRICTIONS
INVESTMENT OBJECTIVE AND SOCIAL OBJECTIVE
The overall investment objective of the Fund (the "Investment
Objective") is to attain long-term capital appreciation by investing in a
diversified portfolio of equity securities of undervalued but nevertheless
fundamentally sound companies which have been identified as having met the
Social Objective. The "Social Objective" is defined as companies which, in
general, have been identified as having progressive policies towards gays and
lesbians, but at a minimum have in place specifically stated policies against
discrimination in hiring and promotion based upon sexual orientation (the
"Fundamental Social Criteria").
The Fund believes that enterprises which exhibit a social awareness of
gay and lesbian issues should be better prepared, than those companies that do
not, to meet future social needs for goods and services, and may also be less
likely to incur certain legal liabilities that may be incurred when an
enterprise is found to discriminate against the gay and lesbian community. Such
enterprises should over the longer term be able to generate additional goodwill
and stockholder value as an indirect result of the greater investment in such
enterprises, through the Fund, by the gay and lesbian community (which, per
capita, is one of the wealthiest demographic groups in the United States), and
supporters of the gay and lesbian community.
INVESTMENT STRATEGY
In order to achieve the Investment Objective, the Fund will use a
value-based investment approach focusing on a longer-term market cycle (at least
three to five years), consistent with moderate levels of risk, wherein the
Investment Manager will identify companies exhibiting the following investment
characteristics: (1) low or inexpensive current value relative to earnings
estimates, cash flow, book value and/or break-up value, (2) good management, (3)
strong business fundamentals, and (4) positive earnings momentum.
The securities the Fund may invest in include common stocks, preferred
stocks and warrants, and certain debt instruments convertible into stock,
primarily in publicly-traded companies. Publicly-traded companies refers to
companies whose equity securities are traded over a national stock exchange or
over-the-counter through the National Association of Securities Dealers
Automatic Quotation ("NASDAQ") system or the National Association of Securities
Dealers, Inc. ("NASD") Electronic Bulletin Board.
Since it is anticipated that most equity securities will be held for
the longer-term using this strategy, the Investment Manager anticipates there
will likely be a low rate of portfolio turnover, and estimates portfolio
turnover in the first year of the Fund will be approximately 30% to 60%.
The Investment Manager expects that under normal market conditions the
Fund will invest a substantial portion of its assets (and sometimes virtually
all of its assets) in the securities described above. However, under distressed
market conditions, or conditions in which the Investment Manager believes stock
is generally overvalued, the Fund may maintain its assets in cash or
cash-equivalents, or invest in money-market instruments or obligations of the
United States government or government-sponsored enterprises and other types of
government-backed securities. Such investments would be temporary in nature and
would not be expected to exceed 15% of the Fund's net assets. Although returns
on these assets are historically less than investment in equity and other
non-governmental types of securities, the risk of loss in investing in such
instruments is lower as well.
IDENTIFICATION OF COMPANIES WHICH SATISFY SOCIAL OBJECTIVE
The determination of which companies have satisfied the Social
Objective, and may therefore be considered as appropriate investment vehicles
for the Fund, is based upon recommendations of the Investment Manager and the
approval by the Board of Trustees. As of the date of this Prospectus, over 325
publicly-traded companies have been identified as having satisfied the Social
Objective, most of which companies are listed on the S&P 500.
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In making its recommendations, the Investment Manager evaluates
companies based upon (1) the Fundamental Social Criteria and (2) such additional
criteria and considerations consistent with the Social Objective as are
determined reasonable by the Investment Manager from time-to-time in its sole
discretion, and approved in general by the Board of Trustees (the
"Non-Fundamental Social Criteria"). Such methodology is, by its nature,
subjective.
As of the date of this Prospectus, the Non-Fundamental Social Criteria
consists of two separate areas of general focus, employee relations and
corporate citizenship.
In evaluating a company's gay and lesbian employee relations, the
Investment Manager evaluates the company's record and policies with respect to
labor matters affecting gay and lesbian employees, such as: (1) the company's
commitment to equal employment opportunity for gays and lesbians (reflected, for
example, in the number of gays and lesbians employed overall and the number of
gays and lesbians in executive positions) and the scope of the company's
policies against discrimination based upon sexual orientation; (2) the breadth,
quality and innovation of the company's employee benefit programs and their
positive effect on gay and lesbian employees (including inclusion of gay and
lesbian partners and families in employee benefit programs); and (3) the
company's relationships with gay and lesbian suppliers, vendors, and customers.
In evaluating a company's corporate citizenship, the Investment Manager
reviews the company's record on gay and lesbian related charitable giving and
other philanthropic activities and its interaction with the gay and lesbian
community, such as advertising in gay and lesbian directed publications or other
media.
It is not necessary that a company satisfy all of the factors and
considerations described above in the Non- Fundamental Social Criteria in order
to be identified as having satisfied the Social Objective. However, every
company must satisfy the Fundamental Social Criteria in order to be included on
the list of approved companies.
The Investment Manager uses publicly available information in
evaluating companies, including information disseminated by the Human Rights
Campaign, the largest national gay and lesbian organization. The Investment
Manager also directly reviews company policies and, in certain cases, discusses
those policies with the company's management.
The Investment Manager intends to vote proxies of companies included in
the Fund consistent with the Social Objective. The inclusion of a company on the
Fund's list of approved companies with progressive policies towards gays and
lesbians does not imply that the company has requested it be included on the
list or approved such inclusion, has sought the approval of the Fund with
respect to the development and implementation of the company's employment or
corporate citizenship policies, or is affiliated with the Fund in any manner.
INVESTMENT POLICIES
The Fund will diversify its holdings to reduce the risks of investing.
See "Fundamental Investment Restrictions" and "Non-Fundamental State And Federal
Restrictions" below relative to the Fund's threshold diversification
requirements. If the Fund were to concentrate its investments in a single
industry, the Fund would be more susceptible to any single economic, political
or regulatory occurrence than would be another investment company which was not
so concentrated. See "Risk Factors" below,
The Fund may invest up to 10% of its total assets in convertible
securities, including bonds, debentures, notes, preferred stocks, warrants or
other securities that may be converted into or exchanged for a prescribed amount
of common stock of the same or a different issuer within a particular period of
time at a specified price or formula. Certain convertible securities may in
addition be callable, in whole or in part, at the option of the issuer. A
convertible security entitles the holder to receive interest paid or accrued on
debt or the dividend paid on preferred stock until the convertible security
matures or is redeemed, converted or exchanged. Before conversion, convertible
securities have characteristics similar to nonconvertible debt securities in
that they ordinarily provide a stable stream of income with generally higher
yields than those of common stocks of the same or similar issuers. Convertible
securities rank senior to common stock in a corporation's capital structure but
are usually subordinated to comparable nonconvertible securities. See
"Fundamental Investment Restrictions" and "Non-
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Fundamental State And Federal Restrictions" below relative to the maximum
percentage of Fund assets which can be invested in convertible securities. Also
see "Risk Factors" below.
The Fund may purchase a publicly-traded company's "restricted
securities." These securities are not registered for sale to the general public
or are offered in an exempt non-public offering under the Securities Act of
1933, as amended (the "Securities Act"), including securities offered and sold
to "qualified institutional buyers" under Rule 144A under the Securities Act.
See "Fundamental Investment Restrictions" and "Non-Fundamental State And Federal
Restrictions" below relative to the maximum percentage of Fund assets which can
be invested in restricted securities. Also see "Risk Factors" below.
The Fund may invest cash reserves in (1) direct obligations and/or
short-term debt securities (ie., securities having a remaining maturity of one
year or less) issued or guaranteed by agencies or instrumentalities of the
United States Government and/or (2) bankers' acceptances, commercial paper or
certificates of deposit, provided that the issuer satisfies the Social Criteria
of the Fund. The Fund's policy is to hold its assets in such securities pending
readjustment of its portfolio holdings of stocks in order to meet anticipated
redemption requests. Although the U.S. government provides financial support to
U.S. government sponsored agencies or instrumentalities, no assurance can be
given that it will always do so. The U.S. government and its agencies and
instrumentalities do not guarantee the market value of their securities;
consequently, the value of such securities will fluctuate.
The Fund has reserved the authority to lend its securities to brokers,
dealers and financial institutions, provided that (1) the loan is secured
continuously by collateral consisting of U.S. Government securities or cash or
letters of credit, which is marked to the market daily to ensure that each loan
is fully collateralized at all times, (2) the Fund may at any time call the loan
and obtain the return of the securities loaned within five business days, (3)
the Fund will receive any interest or dividends paid on the securities loaned,
and (4) the aggregate market value of securities loaned will not at any time
exceed 30% of the total assets of the Fund. The Fund will earn income for
lending its securities because cash collateral pursuant to these loans will be
invested in short-term money market instruments. In connection with lending
securities, the Fund may pay reasonable finders, administrative and custodial
fees. No such fees will be paid to any person if it or any of its affiliates is
affiliated with the Fund or the Investment Manager. See "Risk Factors" below.
The Fund has the authority to enter into certain transactions
in stock options for the purpose of hedging against possible increases in the
value of securities which are expected to be purchased by the Fund or possible
declines in the value of securities which are held by the Fund.
Generally, the Fund would only enter into such transactions on a short-term
basis pending readjustment of its holdings of underlying stocks. The purchase of
an option on an equity security provides the holder with the right, but not the
obligation, to purchase the underlying security, in the case of a call option,
or to sell the underlying security, in the case of a put option, for a fixed
price at any time up to a stated expiration date. The holder is required to pay
a non-refundable premium, which represents the purchase price of the option. The
holder of an option can lose the entire amount of the premium, plus related
transaction costs, but not more. Upon exercise of the option, the holder is
required to pay the purchase price of the underlying security in the case of a
call option, or deliver the security in return for the purchase price in the
case of a put option. Prior to exercise or expiration, an option position may be
terminated only by entering into a closing purchase or sale transaction. This
requires a secondary market on the exchange on which the position was originally
established. Each exchange on which option contracts are traded has established
a number of limitations governing the maximum number of positions which may be
held by a trader, whether acting alone or in concert with others. The Investment
Manager does not believe that these trading and position limits would have an
adverse impact on the possible use of hedging strategies by the Fund. See "Risk
Factors" below.
To the extent practicable, the Fund will attempt to be fully invested.
The ability of the Fund to meet its performance goals will depend to some extent
on the size and timing of cash flows into and out of the Fund as well as the
Fund's expenses. Adjustments in the securities holdings of the Fund to
accommodate cash flows will result in brokerage expenses. There can, of course,
be no assurance that the Fund will attain the Investment Objective. The
investment strategies used by the Fund to attain the Investment Objective may be
changed without approval by the shareholders of the Fund.
The Fund will readjust its securities holdings periodically to the
extent the Investment Manager deems it prudent to do so. The timing and extent
of adjustments in the holdings of the Fund will reflect the Investment
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Manager's judgment as to (1) the appropriate portfolio mix to achieve the
Investment Objective of the Fund, (2) the appropriate balance between the goal
of correlating the holdings of the Fund with the Social Criteria of the Fund,
(3) the goals of minimizing transaction costs and keeping sufficient reserves
available for anticipated redemptions of shares, and (4) compliance with certain
restrictions of the Fund imposed by the Fund's investment policies, including
those mandated by the Investment Company Act. See "Fundamental Investment
Restrictions" below. There can be no assurance that any portfolio enhancement
strategies will be successful, and the performance of the Fund may as a result
be worse than if such strategies were not undertaken. The Board of Trustees of
the Fund will receive and review, at least quarterly, a report prepared by the
Investment Manager's evaluating the performance of the Fund, and will consider
what action, if any, should be taken in the event of a significant change in the
performance of the Fund.
The Fund may make short sales of securities or maintain short positions
in securities provided an investment in the subject securities is otherwise
consistent with the Fund's Investment Objective and Social Objective. Pursuant
to the Investment Company Act, the Fund will maintain government securities and
certain other assets in amounts sufficient to cover the fair market value of
such sales and positions and margin posted with brokers for such sales and
positions. No more than 25% of the Fund's net assets will be used as collateral
for such short positions at any one time.
[/R]
FUNDAMENTAL INVESTMENT RESTRICTIONS
The Fund has adopted the following fundamental investment policies
which may not be changed without approval by holders of a majority of the
outstanding shares of the Fund, which as used in this Statement of Additional
Information means the vote of the lesser of (1) 67% or more of the outstanding
"voting securities" of the Fund (as such term is defined in the Investment
Company Act), present at a meeting, if the holders of more than 50% of the
outstanding "voting securities" of the Fund are present or represented by proxy,
or (2) more than 50% of the outstanding "voting securities" of the Fund. The
Fund will not as a matter of operating policy:
(1) borrow money, except from banks, and except that as a temporary
measure for extraordinary or emergency purposes the Fund may borrow an amount
not to exceed one-third of the current value of the net assets of the Fund
including the amount borrowed, moreover, the Fund may not purchase any
securities at any time at which borrowings exceed 5% of the total assets of the
Fund, taken in each case at market value (it is intended that the Fund would
borrow money only from banks and only to accommodate requests for the withdrawal
of all or a portion of a beneficial interest in the Fund while effecting an
orderly liquidation of securities) (for additional related restrictions, see
clause (i) under the caption "Non-Fundamental State and Federal Restrictions"
below); In the event that the asset coverage for the Fund's borrowings falls
below 300%, the Fund will reduce within three days the amount of its borrowings
in order to provide for 300% asset coverage;
(2) purchase any security or evidence of interest therein on margin,
except that the Fund may obtain such short-term credit as may be necessary for
the clearance of purchases and sales of securities and except that the Fund may
make deposits of initial deposit and variation margin in connection with the
purchase, ownership, holding or sale of options;
(3) write any put or call option or any combination thereof, provided
that this shall not prevent (i) the purchase, ownership, holding or sale of
warrants where the grantor of the warrants is the issuer of the underlying
securities, or (ii) the purchase, ownership, holding or sale of options on
securities;
(4) underwrite securities issued by other persons, except insofar as
the Fund may technically be deemed an underwriter in selling a security;
(5) make loans to other persons except (i) through the lending of
securities held by the Fund and provided that any such loans not exceed 30% of
its total assets (taken in each case at market value), or (ii) through the use
of repurchase agreements or the purchase of short-term obligations and provided
that not more than 10% of the Fund's net assets will be invested in repurchase
agreements maturing in more than seven days (for additional related
restrictions, see paragraph (6) immediately following);
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(6) invest in securities which are subject to legal or contractual
restrictions on resale (other than repurchase agreements maturing in not more
than seven days and other than securities which may be resold pursuant to Rule
144 and/or Rule 144A under the Securities Act of 1933 if the Investment Manager,
determines that a liquid market exists for such securities) if, as a result
thereof, more than 15% of its net assets (taken at market value) would be so
invested (including repurchase agreements maturing in more than seven days);
(7) purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or interests therein),
interests in oil, gas or mineral leases, commodities or commodity contracts in
the ordinary course of business (the Fund reserves the freedom of action to hold
and to sell real estate acquired as a result of the ownership of securities by
the Fund);
(8) make short sales of securities or maintain a short position
unless (1) at all times when a short position is open the Fund owns an equal
amount to such securities or securities convertible into or exchangeable,
without payment of any further consideration, for securities of the same issue
as, and equal in amount to, the securities sold short, and (2) the Fund complies
with the collateral requirements of the Investment Company Act and not more than
25% of the Fund's net assets (taken in each case at market value) is held as
collateral for such sales at any one time;
(9) issue any senior security (as that term is defined in Section
18(f) of the Investment Company Act) if such issuance is specifically prohibited
by the Investment Company Act or the rules and regulations promulgated
thereunder, except as appropriate to evidence a debt incurred without violating
paragraph (1) above;
(10) as to 75% of the Fund's assets, purchase securities of any issuer
if such purchase at the time thereof would cause more than 5% of the Fund's
assets (taken at market value) to be invested in the securities of such issuer
(other than securities or obligations issued or guaranteed by the United States
or any agency or instrumentality of the United States), except that for purposes
of this restriction the issuer of an option shall not be deemed to be the issuer
of the security or securities underlying such contract; or
(11) invest more than 25% of the Fund's assets in any one industry.
The Fund's fundamental policies also include its Investment Objective
and adherence to the Fundamental Social Criteria. Although adherence to the
Fundamental Social Criteria is a fundamental policy, the other factors and
considerations used by the Investment Manager in making its recommendations
consistent with the overall Social Objective and the Board in approving such
recommendations are discretionary and non-fundamental.
Whenever the Fund is requested to vote on a change in the investment
restrictions of the Fund, or the Investment Objective, the Fund will hold a
meeting of the shareholders of the Fund and will cast its vote as instructed by
the Fund's shareholders.
NON-FUNDAMENTAL STATE AND FEDERAL RESTRICTIONS
In order to comply with certain state and federal statutes and
regulatory policies, the Fund will not as a matter of operating policy:
(i) borrow money for any purpose in excess of 10% of the total assets
of the Fund (taken in each case at cost) (moreover, the Fund will not purchase
any securities at any time at which borrowings exceed 5% of its total assets
{taken at market value});
(ii) pledge, mortgage or hypothecate for any purpose in excess of 10%
of the net assets of the Fund (taken in each case at market value), provided
that collateral arrangements with respect to options, including deposits of
initial deposit and variation margin, are not considered a pledge of assets for
purposes of this restriction;
(iii) sell any security which the Fund does not own unless by virtue of
its ownership of other securities it has at the time of sale a right to obtain
securities, without payment of further consideration, equivalent in kind and
amount to the securities sold, and provided that if such right is conditional
the sale is made upon the same conditions;
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(iv) invest for the purpose of exercising control or management;
(v) purchase securities issued by any registered investment company,
except by purchase in the open market where no commission or profit to a sponsor
or dealer results from such purchase other than the customary broker's
commission, or except when such purchase, though not made in the open market, is
part of a plan of merger or consolidation; provided, however, the Fund will not
purchase the securities of any registered investment company if such purchase at
the time thereof would cause more than 10% of the total assets of the Fund
(taken at the greater of cost or market value) to be invested in the securities
of such issuers or would cause more than 3% of the outstanding voting securities
of any such issuer to be held by the Fund; and provided, further, that the Fund
may also purchase securities issued by any open-end investment company provided,
however, that the Fund will not purchase the securities of any registered
investment company if such purchase at the time thereof would cause more than
10% of the total assets of the Fund (taken at the greater of cost or market
value) to be invested in the securities of such issuers or would cause more than
3% of the outstanding voting securities of any such issuer to be held by the
Fund; and provided, further, that the Fund shall not purchase securities issued
by any open-end investment company;
(vi) invest more than 15% of the net assets of the Fund (taken at the
greater of cost or market value) in securities that are illiquid or not readily
marketable (defined as a security that cannot be sold in the ordinary course of
business within seven days at approximately the value at which the Fund has
valued the security);
(vii) invest more than 10% of the net assets of the Fund (taken at the
greater of cost or market value) in securities that are restricted as to resale
by the Securities Act of 1933, as amended (including Rule 144 and Rule 144A
securities);
(viii) invest more than 10% of the net assets of the Fund (taken at the
greater of cost or market value) in securities that are issued by issuers which
(including the period of operation of any predecessor company or unconditional
guarantor of such issuer) have been in operation less than three years
(including predecessors);
(ix) purchase securities of any issuer if such purchase at the time
thereof would cause it to hold more than 10% of any class of securities of such
issuer, for which purposes all indebtedness of an issuer shall be deemed a
single class and all preferred stock of an issuer shall be deemed a single
class, except that option contracts shall not be subject to this restriction;
(x) purchase or retain any securities issued by an issuer any of
whose officers, directors, trustees or security holders is an officer or Trustee
of the Fund, or is an officer or director of the Investment Manager (the
investment adviser and manager of the Fund), if after the purchase of the
securities of such issuer by the Fund one or more of such persons owns
beneficially more than 1/2 of 1% of the shares or securities, or both, all taken
at market value, of such issuer, and such persons owning more than 1/2 of 1% of
such shares or securities together own beneficially more than 5% of such shares
or securities, or both, all taken at market value;
(xi) invest more than 5% of the Fund's net assets in warrants (valued
at the lower of cost or market), but not more than 2% of the Fund's net assets
may be invested in warrants not listed on the New York Stock Exchange or the
American Stock Exchange (notwithstanding the foregoing, warrants attached to
other securities are not subject to this limitation; or
(xii) make short sales of securities or maintain a short position,
unless at all times when a short position is open, the Fund owns an equal
amount of such securities or securities convertible into or exchangeable,
without payment of any further consideration, for securities of the same issue
and equal in amount to the securities sold short, unless not more than 25%
of the Fund's net assets (taken at market value) is represented by such
securities, or securities convertible into or exchangeable for such securities,
at any one time.
Restrictions (i) through (xii) are not fundamental and may be changed
with respect to the Fund by the Board of Trustees without approval by the Fund's
shareholders or its other investors. The Fund will comply with the state
securities laws and regulations of all states in which it is registered.
In order to permit the sale of the Shares in certain states, the Fund
reserves the right to may make
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commitments more restrictive than the investment policies and restrictions set
forth above. If the Fund determines that any such commitment is not in its best
interests, it may choose not to sell the Shares in these states or seek a waiver
in certain states.
PERCENTAGE RESTRICTIONS
If a percentage restriction on investment or utilization of assets set
forth above or referred to in the Prospectus is adhered to at the time an
investment is made or assets are so utilized, a later change in percentage
resulting from changes in the value of the securities held by the Fund will not
be considered a violation of policy; provided that if at any time the ratio of
borrowings of the Fund to the net asset value of the Fund exceeds the ratio
permitted by Section 18(f) of the Investment Company Act, the Fund will take the
corrective action required by Section 18(f).
RISK FACTORS
INVESTMENT OBJECTIVE
There can be no assurance that the Fund will be able to attain its
Investment Objective. It should be noted that the limitation of the Fund's
investments to equity securities of companies with progressive policies towards
gays and lesbians will tend to limit the availability of investment
opportunities to the Fund compared to that for other investment companies that
have a comparable investment objective to that of the Fund.
COMMON STOCKS
Common stocks, the most familiar type of equity securities, represent
an equity (ownership) interest in a corporation. Although equity securities have
a history of long-term growth in value, their prices fluctuate based on changes
in a company's financial condition and on overall market, economic and political
conditions. Smaller companies are especially sensitive to these factors.
CONVERTIBLE SECURITIES
While no securities investment is completely without risk, investments
in convertible securities of a corporation generally entail less risk than the
corporation's common stock, although the extent to which such risk is reduced
depends in large measure upon the degree to which the convertible security sells
above its value as a fixed income security. Convertible securities have unique
investment characteristics in that they generally (1) have higher yields than
common stocks, but lower yields than comparable non-convertible securities, (2)
are less subject to fluctuation in value than the underlying stock since they
have fixed income characteristics, and (3) provide the potential for capital
appreciation if the market price of the underlying common stock increases. The
investment value of a convertible security is influenced by changes in interest
rates, with investment value declining as interest rates increase and increasing
as interest rates decline. The credit standing of the issuer and other factors
also may have an effect on the convertible security's investment value. The
conversion value of a convertible security is determined by the market price of
the underlying common stock. If the conversion value is low relative to the
investment value, the price of the convertible security is governed principally
by its investment value. Generally, the conversion value decreases as the
convertible security approaches maturity. To the extent the market price of the
underlying common stock approaches or exceeds the conversion price, the price of
the convertible security will be increasingly influenced by its conversion
value. A convertible security generally will sell at a premium over its
conversion value by the extent to which investors place value on the right to
acquire the underlying common stock while holding a fixed income security. The
Fund only intends to invest in convertible securities where the value of the
option is minimal and the convertible security trades on the basis of its
coupon.
ILLIQUID AND RESTRICTED SECURITIES
The Fund may purchase a publicly-traded company's "restricted
securities." Restricted securities may not be traded on the public market except
in accordance with Rule 144 under the Securities Act, which mandates certain
holding periods, information dissemination requirements, and certain other
conditions, or Rule 144A to qualified institutional investors. Investing in
restricted securities will impair the liquidity of the Fund's portfolio
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to the extent they cannot be publicly traded under Rule 144 or, if applicable,
qualified institutional investors become, for a time, uninterested in purchasing
these securities.
SECURITIES OF FOREIGN ISSUERS
Some of the securities included in the Fund may be those of foreign
issuers (provided that the securities are publicly-traded in the United States
in the form of American Depositary Receipts or similar instruments the market
for which is denominated in United States dollars). Securities of foreign
issuers may present a greater degree of risk (e.g., as a result of exchange rate
fluctuation, tax provisions, war or expropriation) than do securities of
domestic issuers.
LOANS OF SECURITIES
The Fund has reserved the authority to lend its securities to brokers,
dealers and financial institutions provided, among other things, that the loan
is secured continuously by collateral consisting of U.S. Government securities
or cash or letters of credit, which is marked to the market daily to ensure that
each loan is fully collateralized at all times. Loans of securities involve a
risk that the borrower may fail to return the securities or may fail to provide
additional collateral.
OPTIONS
The Fund may enter into certain transactions involving stock options
for the purpose of hedging against possible increases in the value of securities
which are expected to be purchased by the Fund or possible declines in the value
of securities which are held by the Fund. Were the Fund to establish an option
position for the purpose of hedging against investment risks, it would do so
only if there appears to be a liquid secondary market therefor, there can be no
assurance that such a market will exist for any particular option contract at
any specific time. In that event, it may not be possible to close out a position
held by the Fund, and the Fund could be required to purchase or sell the
instrument or instruments underlying an option, make or receive a cash
settlement or meet ongoing variation margin requirements. The inability to close
out option positions also could have an adverse impact on the Fund's ability to
effectively hedge its portfolio.
SHORT POSITIONS
Short selling or short positions by the Fund involves the Fund selling
a security that it does not own or it borrows from a broker. When the fund
purchases the security to replace the borrowed security, if the value of the
security declines as anticipated, the Fund will profit to the extent of the
difference between the purchase price and the sales price. If the price of the
security increases, the Fund will suffer a loss. Short selling or short
positions by the Fund involve a risk that the price of the security will not
decrease, as anticipated, and the Fund will suffer a loss.
HISTORY OF OPERATIONS; EXPERIENCE OF INVESTMENT MANAGER
As a recently created entity, the Trust will be subject to all the
risks incident to the creation of a new business, including the absence of a
history of operation, and there can be no guarantee that the Investment
Objective of the Fund will be attained. Prior to the commencement of the Fund,
the Investment Manager had no previous experience in providing investment
management services to an investment company. See "Management Of And Service
Providers For The Trust And The Fund - Investment Manager" below.
INVESTMENT RISKS
There are market risks inherent in any investment, and there is no
assurance that the Fund will attain its Investment Objective or that any income
will be earned. Moreover, the application of the investment policies is
basically dependent upon the judgment of the Investment Manager. A prospective
purchaser of shares of the Fund should realize there are risks in any policy
dependent upon such judgment and that no representation is made that the
Investment Objective of the Fund will be attained or that there may not be
substantial loses in any particular investment. At any time, the value of the
Fund's shares may be more or less than the cost of such shares to the investor.
B-10
<PAGE> 38
TAX-SHELTERED RETIREMENT PLANS
The Trust does not offer a prototype tax-sheltered retirement plan.
However, banks, broker-dealers and other financial intermediaries may offer such
plans through which shares of the Fund may be purchased. These plans are more
fully described below. Persons who wish to establish a tax-sheltered retirement
plan should consult their financial institutions as to availability of such
plans and their own tax advisers or attorneys regarding their eligibility to do
so and the laws applicable thereto, such as the fiduciary responsibility
provisions and diversification requirements and the reporting and disclosure
obligations under the Employee Retirement Income Security Act of 1974. The Trust
is not responsible for compliance with such laws. Further information regarding
the retirement plans, including applications and fee schedules, may be obtained
upon request to the Fund.
INDIVIDUAL RETIREMENT ACCOUNT AND SPOUSAL INDIVIDUAL RETIREMENT ACCOUNT
The IRA is available to all individuals, including self-employed
individuals, who receive compensation for services rendered and wish to purchase
shares of the Fund. An IRA may also be established pursuant to a simplified
employee pension plan ("SEP"). Spousal Individual Retirement Accounts ("SPIRA")
are available to individuals who are otherwise eligible to establish an IRA for
themselves and whose spouses are treated as having no compensation of their own.
In general, the maximum deductible contribution to an IRA which may be
made for any one year is $2,000 or 100% of annual compensation includable in
gross income, whichever is less. If an individual establishes a SPIRA, the
maximum deductible amount that the individual may contribute annually is the
lesser of $2,250 or 100% of such individuals compensation includable in his or
her gross income for such year; provided, however, that no more than $2,000 per
year for either individual may be contributed to either the IRA or SPIRA.
Contributions to a SEP (discussed below) are excluded from an employee's gross
income and are subject to different limitations.
All taxpayers, including those who are active participants in
employer-sponsored retirement plans, will be able to make fully deductible IRA
contributions at the same levels discussed above, if their adjusted gross income
is less than the following levels: $25,000 for single taxpayers and $40,000 for
married taxpayers who file joint returns.
Married taxpayers who file joint tax returns will generally be deemed
to be active participants if either spouse is an active participant under an
employer-sponsored retirement plan. In the case of taxpayers who are active
participants in employer-sponsored retirement plans and who have adjusted gross
income which exceeds the specified levels, deductible IRA contributions will be
phased out on the basis of adjusted gross income between $25,000 and $35,000 for
single taxpayers adjusted gross income of $10,000 and under for married
taxpayers who file separate returns, and combined adjusted gross income between
$40,000 and $50,000 for married taxpayers who file joint returns. The $2,000 IRA
deduction is reduced by $200 for each $1,000 of adjusted gross income in excess
of the following levels: $25,000 for single taxpayers, $40,000 for married
taxpayers who file joint returns, and $0 for married taxpayers who file separate
returns. In the case of a taxpayer who contributes to an IRA and a SPIRA, the
$2,250 IRA deduction is reduced by $225 for each $1,000 of adjusted gross income
in excess of $40,000.
Individuals who are ineligible to make fully deductible contributions
may make nondeductible contributions up to an aggregate of $2,000 in the case of
contributions (deductible and nondeductible) to an IRA and up to an aggregate of
$2,250 in the case of contributions (deductible and nondeductible) to an IRA and
SPIRA and the income upon all such contributions will accumulate tax free until
distribution.
In addition, a separate IRA may be established by a "rollover"
contribution, which may permit the tax- free transfer of assets from qualified
retirement plans under specified circumstances. A "rollover contribution"
includes a lump sum distribution received by an individual, because of severance
of employment, from a qualified plan and paid into an individual retirement
account within 60 days after receipt.
B-11
<PAGE> 39
Dividends and capital gains earned on amounts invested in either an IRA
or SPIRA are automatically reinvested by the Trustee in shares of the Fund and
accumulate tax-free until distribution. Distributions from either an IRA or
SPIRA prior to age 59 1/2, unless made as a result of disability or death, may
result in adverse tax consequences and penalties. In addition, there is a
penalty on contributions in excess of the contribution limits and other
penalties are imposed on insufficient payouts after age 70 1/2.
SIMPLIFIED EMPLOYEE PENSION PLAN
A SEP may be utilized by employers to provide retirement income to
employees by making contributions to employees SEP IRAs. Owners and partners may
qualify as employees. The employee is always 100% vested in contributions made
under a SEP. The maximum contribution to a SEP-IRA (an IRA established to
receive SEP contributions) is the lesser of $30,000 or 150% of compensation,
excluding contributions made pursuant to a salary reduction arrangement. Subject
to certain limitations, an employer may also make contributions to a SEP-IRA
under a salary reduction arrangement by which the employee elects contributions
to a SEP-IRA in lieu of immediate cash compensation. The maximum amount which
may be contributed to a SEP-IRA (for 1995) under a salary reduction agreement is
the lesser of $30,000 (as adjusted for cost of living increases) or 15% of
compensation up to a current annual compensation limit of $150,000.
Contributions by employers under a SEP arrangement up to the maximum
permissible amounts are deductible for federal income tax purposes.
Contributions up to the maximum permissible amounts are not includable in the
gross income of the employee. Dividends and capital gains on amounts invested in
SEP-IRAs are automatically reinvested in shares of the Fund and accumulate
tax-free until distribution. Contributions in excess of the maximum permissible
amounts may be withdrawn by the employee from the SEP-IRA no later than April 15
of the calendar year following the year in which the contribution is made
without tax penalties. Such amounts will, however, be included in the employee's
gross income. Withdrawals of such amounts after April 15 of the year next
following the year in which the excess contributions is made and withdrawals of
any other amounts prior to age 59 1/2, unless made as a result of disability or
death, may result in adverse tax consequences.
QUALIFIED PENSION PLANS
The Qualified Pension Plan can be utilized by self-employed
individuals, partnerships and corporations and their employees who wish to
purchase shares of a Fund under a retirement program.
The maximum contribution which may be made to a Qualified Pension Plan
in any one year on behalf of a participant is, depending on the benefit formula
selected by the Employer, up to the lesser of $30,000 or 25% of compensation
(net earned income in the case of a self-employed individual). Contributions by
Employers to Qualified Pension Plans up to the maximum permissible amounts are
deductible for Federal income tax purposes. Contributions in excess of
permissible amounts will result in adverse tax consequences and penalties to the
Employer. Dividends and capital gains earned on amounts invested in Qualified
Pension-Plans are automatically reinvested in shares of the Fund and accumulate
tax-free until distribution. Withdrawals of contributions prior to age 59 1/2,
unless made as a result of disability, death or early retirement, may result in
adverse tax consequences and penalties.
403(B)(7) PROGRAM
The Tax-Deferred Annuity Program and Custodial Account offered by the
Fund (the "403(b)(7) Program") allows employees of certain tax exempt
organizations and schools to have a portion of their compensation set aside for
their retirement years in shares held in an investment company custodial
account.
In general, the maximum limit on annual contributions for each employee
is the lesser of $30,000 per year (as adjusted by the IRS for cost-of-living
increases), 25% of the employee's compensation or the employee's exclusion
allowance specified in Section 403(b) of the Code. However, an employee's salary
reduction contributions to a 403(b)(7) Program may not exceed $9,500 a year
(1995) (as adjusted for cost of living expenses and may be further adjusted if
the employee participates in another plan). Contributions in excess of
permissible
B-12
<PAGE> 40
amounts may result in adverse tax consequences and penalties. Dividends and
capital gains on amounts invested in the 403(b)(7) Program are automatically
reinvested in shares of the Fund. It is intended that dividends and capital
gains on amounts invested in the 403(b)(7) Program will accumulate tax-free
until distribution.
Employees will receive distributions from their accounts under the
403(b)(7) Program following termination of employment by retirement or at such
other time as the employer shall designate, but in no case later than an
employee's reaching age 65. Withdrawals of contributions prior to age 59 1/2,
unless made as a result of disability, death or early retirement, may result in
adverse tax consequences and penalties. Employees will also receive
distributions from their accounts under the 403(b)(7) Program in the event they
become disabled.
INVESTMENT PROGRAMS
AUTOMATIC INVESTMENT PLAN
Investors may periodically invest, through banks, broker-dealers and
other financial intermediaries offering automatic payment services, a specified
dollar amounts in periodic intervals into the Fund (the "Automatic Investment
Plan"). The minimum initial investment under the Automatic Investment Plan is
$250, with subsequent minimum investments of $50. Payments under the Automatic
Investment Plan are automatic and will continue until such time as the Fund and
the investor's financial institution are notified to discontinue further
investments. See "Purchases And Redemptions Of Shares" in the Prospectus.
PERFORMANCE INFORMATION
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Performance Information."
TOTAL RETURN
For purposes of quoting and comparing the performance of the Fund to
that of other mutual funds and to stock or other relevant indices in
advertisements or in reports to shareholders, performance may be stated in terms
of total return. Under the rules of the Securities and Exchange Commission, a
fund's advertising performance must include total return quotes calculated
according to the following formula:
P((1 + T) to the nth power) = ERV
Where: P = a hypothetical initial payment of
$1,000
T = average annual total return
n = number of years (1, 5 or 10)
ERV = ending redeemable value at the
end of the 1, 5 or 10 year
periods (or fractional portion
thereof) of a hypothetical $1,000
payment made at the beginning of
the 1, 5 or 10 year periods.
Under the foregoing formula, the time periods used in advertising will
be based on rolling calendar quarters, updated to the last day of the most
recent quarter prior to submission of the advertisement for publication, and
will cover one, five and ten year periods or a shorter period dating from the
effectiveness of the Fund's registration statement. Total return, or "T" in the
formula above, is computed by finding the average annual compounded rates of
return over the 1, 5 and 10 year periods (or fractional portion thereof) that
would equate the initial amount invested to the ending redeemable value. The
Fund may also from time to time include in such advertising an aggregate total
return figure or a total return figure that is not calculated according to the
formula
B-13
<PAGE> 41
set forth above in order to compare more accurately the Fund's performance with
other measures of investment return. For example, in comparing the Fund's total
return with data published by Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc. or Weisenberger Investment Company Service, or with the
performance of the Standard & Poor's 500 Stock Index or the Dow Jones Industrial
Average, as appropriate, the Fund may calculate its aggregate and/or average
annual total return for the specified periods of time by assuming the investment
of $1,000 in Fund shares and assuming the reinvestment of each dividend or other
distribution at net asset value on the reinvestment date. Such alternative total
return information will be given no greater prominence in such advertising than
the information prescribed under the rules of the Securities and Exchange
Commission, and all advertisements containing performance data will include a
legend disclosing that such performance data represent past performance and that
the investment return and principal value of an investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost.
YIELD
The Fund may also advertise its yield. Under the rules of the
Securities and Exchange Commission, the Fund's advertised yield must be
calculated using the following formula:
YIELD = 2[((a-b +1)to the 6th power) - 1]
---
cd
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of
reimbursement).
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends.
d = the maximum offering price per share on the last day
of the period.
Under the foregoing formula, yield is computed by compounding
semi-annually, the net investment income per share earned during a 30 day period
divided by the maximum offering price per share on the last day of the period.
For the purpose of determining the interest earned (variable "a" in the formula)
on debt obligations that were purchased by the Fund, the formula generally calls
for amortization of the discount or premium; the amortization schedule will be
adjusted monthly to reflect changes in the market values of the debt
obligations.
Yield may fluctuate daily and does not provide a basis for determining
future yields. Because the yields will fluctuate, they cannot be compared with
yields on savings account or other investment alternatives that provide an
agreed to or guaranteed fixed yield for a stated period of time. However, yield
information may be useful to an investor considering temporary investments in
money market instruments. In comparing the yield of one money market fund to
another, consideration should be given to each fund's investment policies,
including the types of investments made, lengths of maturities of the Fund
securities (the method used by the Fund to compute the yield methods may differ)
and whether there are any special account charges which may reduce the effective
yield.
The yields on certain obligations are dependent on a variety of
factors, including general money market conditions, conditions in the particular
market for the obligation, the financial condition of the issuer, the size of
the offering, the maturity of the obligation and the ratings of the issue. The
ratings of Moody's and Standard & Poor represent their respective opinions as to
the quality of the absolute standards of quality. Consequently, obligations with
the same rating, maturity and interest rate may have different market prices. In
addition, subsequent to its purchase by the Fund, an issue may cease to be rated
or may have its rating reduced below the minimum required for purchase. In such
an event, the Investment Manager will consider whether the Fund should continue
to hold the obligation.
B-14
<PAGE> 42
DETERMINATION OF NET ASSET VALUE;
VALUATION OF FUND SECURITIES
The net asset value of each share of the Fund is determined each day on
which the New York Stock Exchange is open for trading (a "Fund Business Day").
(As of the date of this Statement of Additional Information, the New York Stock
Exchange is open for trading every weekday except for the following holidays:
New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day). This determination of net asset
value of shares of the Fund is made once during each such day at 4:00 p.m. New
York time by dividing the value of the Fund's net assets (i.e., the value of its
investment in the Fund and any other assets less its liabilities, including
expenses payable or accrued) by the number of shares outstanding at the time the
determination is made. Purchases and redemptions will be effected at the time of
determination of net asset value next following the receipt of any purchase or
redemption order deemed to be in good order. See "Purchases And Redemptions Of
Shares" in the Prospectus.
Equity securities held by the Fund are valued at the last sale price on
the exchange on which they are primarily traded or on the NASDAQ system for
unlisted national market issues, or at the last quoted bid price for securities
in which there were no sales during the day or for unlisted securities not
reported on the NASDAQ system. If the Fund purchases option contracts, such
option contracts which are traded on commodities or securities exchanges are
normally valued at the settlement price on the exchange on which they are
traded. Short-term obligations with remaining maturities of less than sixty days
are valued at amortized cost, which constitutes fair value as determined by the
Board of Trustees of the Fund. Fund securities (other than short-term
obligations with remaining maturities of less than sixty days) for which there
are no such quotations or valuations are valued at fair value as determined in
good faith by or at the direction of the Fund's Board of Trustees.
A determination of value used in calculating net asset value must be a
fair value determination made in good faith utilizing procedures approved by the
Fund's Board of Trustees. While no single standard for determining fair value
exists, as a general rule, the current fair value of a security would appear to
be the amount which the Fund could expect to receive upon its current sale.
Some, but not necessarily all, of the general factors which may be considered in
determining fair value include: (1) the fundamental analytical data relating to
the investment; (2) the nature and duration of restrictions on disposition of
the securities; and (3) an evaluation of the forces which influence the market
in which these securities are purchased and sold. Without limiting or including
all of the specific factors which may be considered in determining fair value,
some of the specific factors include: type of security, financial statements of
the issuer, cost at date of purchase, size of holding, discount from market
value, value of unrestricted securities of the same class at the time of
purchase, special reports prepared by analysts, information as to any
transactions or offers with respect to the security, existence of merger
proposals or tender offers affecting the security, price and extent of public
trading in similar securities of the issuer or comparable companies, and other
relevant matters.
Interest income on short-term obligations held by the Fund is
determined on the basis of interest accrued less amortization of premium.
B - 15
<PAGE> 43
MANAGEMENT OF AND SERVICE PROVIDERS FOR THE TRUST AND THE FUND
Trustees and Officers of the Fund
The Trustees and officers of the Fund and their ages and principal
occupations during the past five years are set forth below. Asterisks indicate
that those Trustees and officers are "interested persons" (as defined by the
Investment Company Act) of the Fund. Unless otherwise indicated below, the
address of each Trustee and officer is 9107 Wilshire Boulevard, Suite 700,
Beverly Hills, California 90210.
<TABLE>
<CAPTION>
POSITIONS(S) HELD
NAME AND ADDRESS AGE WITH REGISTRANT OCCUPATION(S) DURING PAST 5 YEARS
- ---------------- --- ----------------- ---------------------------------
<S> <C> <C> <C>
Shelly J. Meyers* 36 Trustee (Chairman Manager and President of Meyers,
of the Board) and Sheppard & Co., LLC, since February
President 1996; Assistant Vice President,
Institutional Asset Management for The
Boston Company Asset Management, Inc.,
from July, 1994 through February,
1995; Associate, The Boston Company
Asset Management, Inc., June 1993 to
September 1993; Lead Analyst,
International Audit, Chevron
Corporation, from June, 1989 through
September, 1992.
Leslie C. Sheppard* 42 Trustee and Manager and Executive Vice President
Executive Vice of Meyers, Sheppard & Co., LLC,
President since February 1996; Marketing
Representative/ Asset Manager -
Real Estate Fannie Mae, from 1993
through February 1996; Investment Banking
Principal and Asset Manager - Real
Estate, Takenaka & Co., from 1989
through 1992.
Gwendolyn H. Baba 39 Trustee General Partner of Baba-Malouf
4470 Sunset Blvd., #187 Properties, Community Storage Company,
Los Angeles, CA 90027 and Droubie Properties, since 1991.
Jay W. Gendron, Esq. 39 Trustee Vice President, Legal Affairs, and attorney,
300 Television Plaza Warner Bros. Television Production
Burbank, CA 91505 (formerly Lorimar Television),
since 1987.
Robert E. Gipson, Esq. 49 Trustee Attorney, Gipson, Hoffman & Pancione,
Gipson Hoffman & Pancione a Professional Corporation, since 1982.
1900 Avenue of the Stars
Suite 1100
Los Angeles, CA 90067
Leonard Greenhalgh, Ph.D. 51 Trustee Professor of Management, Amos Tuck
Amos Tuck School of School of Business Administration,
Business Administration at Dartmouth College, since 1978.
Dartmouth College
Hanover, NH 03755
John J. Pileggi* 37 Vice President and Director of Furman Selz LLC since
Furman Selz LLC Treasurer 1994; Senior Managing Director of
230 Park Avenue Furman Selz since 1992; Managing
New York, N.Y. 10169 Director of Furman Selz from 1984
through 1992.
</TABLE>
B - 16
<PAGE> 44
<TABLE>
<CAPTION>
POSITIONS(S) HELD
NAME AND ADDRESS AGE WITH REGISTRANT OCCUPATION(S) DURING PAST 5 YEARS
- ---------------- --- ----------------- ---------------------------------
<S> <C> <C> <C>
Joan V. Fiore* 39 Vice President and Managing Director and Counsel of
Furman Selz LLC Secretary Furman Selz LLC since 1991; Attorney
230 Park Avenue with the U.S. Securities and Exchange
New York, N.Y. 10169 Commission, Division of Investment
Management, from 1986 to 1991.
Gordon M. Forrester* 35 Assistant Managing Director of Furman Selz LLC
Furman Selz LLC Treasurer since 1995; Director of Furman Selz
230 Park Avenue LLC from 1994 to 1995; Associate
New York, N.Y. 10169 Director of Furman Selz from 1991 to
1994.
Philip McKinley* 37 Assistant Operations Manager of Meyers, Sheppard
Secretary & Co., LLC, since April, 1996; Vice
President, Compliance, of Griffen
Financial Services and The Griffen
Funds from September 1994 to March
1996; Vice President, Investments, of
Mercantile National Bank, March 1991
to September 1994.
Sheryl Hirschfeld* 35 Assistant Director of Corporate Secretary
Furman Selz LLC Secretary Services of Furman Selz LLC since
230 Park Avenue 1994; Assistant to the General
New York, N.Y. 10169 Corporate Secretary and General
Counsel at The Dreyfus Corporation
from 1982 to 1994.
</TABLE>
For further information about the Board of Trustees, see "Management
And Service Providers - Board Of Trustees And Officers" in the Prospectus.
[/R]
COMPENSATION TABLE
The following table shows the compensation paid by the Trust to the
Trustees:
<TABLE>
<CAPTION>
PENSION OR RETIREMENT TOTAL COMPENSATION
AGGREGATE BENEFITS ACCRUED AS ESTIMATED ANNUAL FROM TRUST AND FUND
COMPENSATION FROM PART OF FUND BENEFITS UPON COMPLEX PAID TO
NAME OF TRUSTEE THE FUND EXPENSES RETIREMENT TRUSTEES
- --------------- ----------------- --------------------- ---------------- -------------------
<S> <C> <C> <C> <C>
Shelly J. Meyers None None None None
Leslie C. Sheppard None None None None
Gwendolyn H. Baba None None None None
Jay W. Gendron None None None None
Robert E. Gipson None None None None
Leonard Greenhalgh None None None None
</TABLE>
The Trust pays $2,000 in fees per annum to each Trustee who is not a
manager, officer, employee or holder of 5% or more of the Investment Manager,
its affiliates, or any Fund service provider, plus $250 per meeting attended by
such Trustee, together with such Trustees' out-of-pocket expenses related to
attendance at meetings of the Board of Trustees. Executive officers of the Trust
receive no compensation from the Trust for their services as such. The Trust
does not have a pension or retirement plan applicable to Trustees or officers of
the Trust.
B - 17
<PAGE> 45
INVESTMENT MANAGER
The Fund has engaged the Investment Manager, Meyers Sheppard, to serve
as both the manager and the investment adviser for the Fund pursuant to an
Investment Management Agreement approved by the Board of Trustees. The
Investment Manager is a California limited liability company organized on
January 23, 1996. The managers and principal owners of the Investment Manager
are Ms. Shelly J. Meyers and Mr. Leslie C. Sheppard. The officers of the
Investment Manager are Ms. Meyers, President, Mr. Sheppard, Senior Vice
President, and Mr. Philip McKinley, Operations Manager. Prior to the
commencement of the Fund, the Investment Manager had no previous experience in
providing investment management services to an investment company. Ms. Shelly J.
Meyers, who is the person designated by the Investment Manager to act as
portfolio manager for the Fund, has performed analytical and portfolio
management duties for investment companies and institutional asset management
clients. Mr. Philip McKinley, the Compliance Officer of the Investment Manager,
also has performed compliance services for investment companies and
institutional investors. See "Investment And Social Objectives, Policies
Restrictions - Risk Factors - History Of Operations; Experience Of Investment
Manager" in the Prospectus.
The Investment Manager provides its services as the Fund's manager and
investment adviser pursuant to an Investment Management Agreement approved by
the Board of Trustees.
As the Fund's manager, the Investment Manager oversees (subject to the
overall authority of the Board of Trustees) the overall operations and
administration of the Fund, including the supervision of professional services
rendered by others, including the Distributor, Administrator, Transfer Agent,
and Custodian, as well as accounting, auditing and other services.
As the Fund's investment adviser, the Investment Manager implements the
Investment Strategy of the Fund and manages the Fund's investments subject to
the Fund's Investment Objective and Fundamental Social Criteria and the overall
supervision and approval by the Board of Trustees. Specifically, the Investment
Manager determines, from amongst the universe of companies identified as
satisfying the Social Objective, which companies the Fund should invest in, what
the appropriate mix of investments amongst such companies should be, and the
timing and extent of adjustments in the holdings of the Fund to satisfy the
requirements of diversification and the need to maintain sufficient reserves for
anticipated redemptions of shares. The Investment Manager also has sole
discretion to select brokers for purchases and sales. Although the Investment
Manager's investment advisory activities are subject to general oversight by the
Trustees and officers of the Fund, neither the Trustees nor officers of the Fund
evaluate the merits of the Investment Manager's selection of individual
securities from amongst designated companies with progressive policies towards
gays and lesbians.
The Investment Manager furnishes at its own expense all facilities and
personnel necessary in connection with providing these services.
The Investment Management Agreement will continue in effect if such
continuance is specifically approved at least annually by the Fund's Board of
Trustees or by a majority vote of the shareholders of the Fund at a meeting
called for the purpose of voting on the Investment Management Agreement (with
the vote of each being in proportion to the amount of their investment), and, in
either case, by a majority of the Fund's Trustees who are not parties to the
Investment Management Agreement or interested persons of any such party at a
meeting called for the purpose of voting on the Investment Management Agreement.
The Investment Management Agreement provides that the Investment
Manager may render both management and investment advisory services to others.
The Investment Management Agreement is terminable without penalty on not more
than 60 days written notice by the Fund when authorized either by majority vote
of the shareholders in the Fund (with the vote of each being in proportion to
the amount of their investment) or by a vote of a majority of its Board of
Trustees, or by the Investment Manager, and will automatically terminate in the
event of its assignment. The Investment Management Agreement provides that
neither the Investment Manager nor its personnel shall be liable for any error
of judgment or mistake of law or for any loss arising out of any investment or
for any act or omission in its services to the Fund, except for willful
misfeasance, bad faith or gross negligence or reckless disregard of its or their
obligations and duties under the Investment Management Agreement.
B - 18
<PAGE> 46
Pursuant to the terms of the Investment Management Agreement, the Fund
pays the Investment Manager for its management and investment advisory services,
a monthly fee equal, on an annual basis, to 1% of the Fund's average daily net
assets. The Investment Advisor reserves the right of any time to reduce and/or
waive all or part of its fees. The Investment Manager agrees to reimburse the
Fund or make other arrangements to limit Fund expenses to the extent required by
expense limitations imposed by certain states. The most restrictive expense
limitation imposed by states provide that annual expenses (as defined) may not
exceed 2 1/2% of the first $30 million dollars of the average value of the
Fund's net assets, plus 2% of the next $70 million, plus 1 1/2% of such assets
in excess of $100 million. Whether expense limitations apply to the Fund and in
what amounts depends upon the particular regulations of such states.
ADMINISTRATOR, FUND ACCOUNTING AGENT AND TRANSFER AGENT
The Fund has entered into agreements with Furman Selz to provide the
Fund with administrative, fund accounting, and registrar, dividend disbursing
and transfer agency services, pursuant to an Administration Agreement, Fund
Accounting Agreement, and Transfer Agency Agreement, respectively. Although each
agreement provides for different methods or rates of compensation to Furman
Selz, as hereinbelow discussed, the Fund has agreed to pay Furman Selz a minimum
payment of $150,000 per year for all of the aforesaid services. Furman Selz
reserves the right at any time to reduce and/or waive all or part of its fees.
These fees are separate from any fees paid to Furman Selz in its capacity as the
Fund's Distributor.
ADMINISTRATOR
As the Fund's Administrator pursuant to the Administration Agreement,
Furman Selz generally assists the Fund and the Investment Manager in all aspects
of the Fund's administration and operations including the following: maintaining
administrative office facilities on behalf of the Fund; monitoring the
performance and billings of the independent contractors and agents of the Fund
to the extent requested by the Investment Manager; preparing or assisting in the
preparation of, and filing of, documents required for compliance by the Fund
with applicable federal and state laws and regulations and stock exchanges,
including financial statements and semi-annual and annual reports to
shareholders and proxy statements; maintaining the books and records of the Fund
as required under the Investment Company Act and other applicable federal and
state laws and regulations; performing secretarial services such as the
preparation of agendas, notices and minutes for meetings of the Fund's Board of
Trustees and its shareholders; and providing advice and assistance in connection
with the preparation of Fund sales literature.
As compensation for administration services, the Fund pays Furman Selz,
per year, an amount equal to 0.15% of the first $100 million in aggregate Fund
assets, 0.10% for the next $400 million, 0.07% for the next $500 million, and
0.06% for aggregate Fund assets in excess of $1 billion.
Furman Selz will not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the matters relating
to the Administration Agreement, except a loss from willful misfeasance, bad
faith, or gross negligence on its part in the performance of its duties or from
reckless disregard by Furman Selz of its obligations and duties. Any person,
even though also an officer, director, partner, employee or agent of Furman
Selz, shall be deemed, when rendering services to the Fund, or acting on any
Fund (other than services or business in connection with Furman Selz' duties as
Administrator) to be acting solely for the Fund and not as an officer, director,
partner, employee, or agent of Furman Selz or under its control or discretion.
The Administration Agreement shall continue until terminated by the
Fund or Furman Selz on sixty days written notice.
FUND ACCOUNTING AGENT
As the Fund Accounting Agent pursuant to the Fund Accounting Agreement,
Furman Selz maintains in accordance with Rule 31a-1 under the Investment Company
Act, the following accounts and records relating to the business of the Fund:
cash receipts journal; cash disbursements journal; dividends paid record;
purchase and sale journal-portfolio securities; subscription and redemption
journals; security ledger; broker-dealer ledger; general ledger; daily expense
accruals; daily interest accruals; securities and monies borrowed or loaned and
collateral
B - 19
<PAGE> 47
therefor; daily trial balances; and investment income journal. Furman Selz shall
promptly supply the Fund with daily and periodic reports as agreed to by the
Fund and Furman Selz.
Furman Selz is also obligated under the Fund Accounting Agreement to
perform the ministerial calculations necessary to calculate the Fund's net asset
value on a daily basis, and shall perform such calculations in accordance with
the Fund's then current prospectus except where the Fund has given other
instructions to utilize a different method of calculation. If quotes are not
available, Furman Selz shall give such portfolio securities values as the Fund
provides to Furman Selz by instruction. The Fund will indemnify Furman Selz for
any inaccurate or incomplete information provided to Furman Selz by the Fund or
its agents, and Furman Selz shall not be liable for any such inaccuracies.
Furman Selz shall incur no liability for, reasonable actions of Furman
Selz taken or omitted to be taken in good faith, and Furman Selz shall be
indemnified and held harmless by the Fund for any loss, liability or expense
arising out of its performance of this agreement except a loss which results
from the gross negligence or willful misconduct of its officers, agents and
employees in such performance.
The Fund Accounting Agreement may be terminated by either Furman Selz
or the Fund on sixty days written notice.
In consideration of its services under the Fund Accounting Agreement,
the Fund will pay Furman Selz the sum of $35,000 per year, plus reimbursement of
its out-of-pocket expenses.
TRANSFER AGENT
As the Transfer Agent of the Fund pursuant to the Transfer Agency
Agreement, Furman Selz provides dividend disbursement, registrar and transfer
agency services to the Fund, in consideration of which the Fund pays Furman Selz
the sum of $15 per year per each shareholder, subject to a $12,000 per year
minimum. Furman Selz shall also be reimbursed by the Fund for all costs of any
forms, including bank checks and proxies, used to communicate with shareholders
of the Trust or its services under the Transfer Agency Agreement, as well as
costs of postage, telephone, and telegraph.
The Transfer Agency Agreement may be terminated by Furman Selz or the
Fund on sixty days written notice.
DISTRIBUTOR
The Fund has entered into a Distribution Agreement with Furman Selz as
the Fund's Distributor. Under the Distribution Agreement, Furman Selz is
responsible for facilitating the continuous sale or redemption of Fund shares.
Solely for the purpose of reimbursing Furman Selz for activities
primarily intended to result in the sale of Fund shares, the Trust has, on
behalf of the Fund and with the approval of the Board of Trustees, adopted a
Plan of Distribution (the "Distribution Plan") pursuant to Rule 12b-1 of
Investment Company Act. Under the Distribution Plan, the Fund is authorized to
spend up to 0.25% of net asset value annually for Furman Selz's services in
anticipation of, or as reimbursement for, expenses incurred in connection with
the sale of shares of the Fund, such as payments to broker-dealers who advise
shareholders regarding the purchase, sale or retention of shares of the Fund,
payments to employees of the Distributor, advertising expenses and the expenses
of printing and distributing prospectuses and reports used for sales purposes,
expenses of preparing and printing sales literature and other
distribution-related expenses. If the fee received by the Distributor exceeds
its expenses, it may realize a profit from these arrangements. The Distribution
Plan was approved by the initial shareholders of the Fund on May , 1996.
The Distribution Plan will continue in effect indefinitely if such
continuance is specifically approved at least annually by a vote of both a
majority of the Fund's Trustees and a majority of the Fund's Trustees who are
not "interested persons of the Fund" and who have no direct or indirect
financial interest in the operation of the
B - 20
<PAGE> 48
Distribution Plan or in any agreement related to such Plan (the "Qualified
Trustees"). The Distributor will provide to the Trustees of the Fund a quarterly
written report of amounts expended by it under the Distribution Plan and the
purposes for which such expenditures were made. The Distribution Plan further
provides that the selection and nomination of the Fund's Qualified Trustees
shall be committed to the discretion of the disinterested Trustees of the Fund.
The Distribution Plan may be terminated upon sixty days written notice by a vote
of a majority of the Fund's Qualified Trustees or by a vote of the shareholders
of the Fund on the one hand, or by sixty days written notice by Furman Selz on
the other hand. The Distribution Plan may not be amended to increase materially
the amount of permitted expenses thereunder without the approval of shareholders
and may not be materially amended in any case without a vote of the majority of
both the Fund's Trustees and the Fund's independent Trustees. The Distributor
will preserve copies of any plan, agreement or report made pursuant to the
Distribution Plan for a period of not less than six years from the date of the
Distribution Plan, and for the first two years the Distributor will preserve
such copies in an easily accessible place.
CUSTODIAN
The Fund has entered into a Custodian Agreement with Wells Fargo Bank,
N.A. ("Wells Fargo") pursuant to which Wells Fargo acts as custodian for the
Fund. The Custodian's responsibilities include safeguarding and controlling the
Fund's cash and securities, handling the receipt and delivery of securities,
collecting interest on the Fund's investments, and maintaining books of original
entry for fund accounting purposes. As compensation for its services, the Fund
pays Wells Fargo, per year, an amount equal to 0.10% of the first $20 million in
aggregate Fund assets, and 0.04% for aggregate Fund assets in excess of $20
million, subject to a minimum of $15,000 per year.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP is the independent auditors for the Fund and the
Fund, providing audit services, tax return preparation, and assistance and
consultation with respect to the preparation of filings with the Securities and
Exchange Commission.
CODE OF ETHICS
The Trust, on behalf of the Fund, adopted a Code of Ethics (the "Code
of Ethics"), which establishes standards by which certain access persons of the
Trust must abide relating to personal securities trading conduct. The Code of
Ethics provides that access persons shall place the interests of the
shareholders of the Fund first, shall avoid potential or actual conflicts of
interest with the Fund, and shall not take unfair advantage of their
relationship with the Fund. Access persons will be required by the Code of
Ethics to file quarterly reports of personal securities investment transactions.
The Code of Ethics provides that certain designated supervisory person(s) will
be appointed by the Trust, and shall supervise implementation and enforcement of
the Code of Ethics and shall, at their sole discretion, grant or deny approval
of transactions required by the Code of Ethics.
TAXATION
Each year the Fund intends to qualify the Fund and elect to be treated
as a "regulated investment company" under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), by meeting all applicable requirements of
Subchapter M, as to the nature of the Fund's gross income, the amount of Fund
distributions and the composition and holding period of the Fund's assets.
Because the Fund intends to distribute all of its net investment income and net
realized capital gains to shareholders in accordance with the timing
requirements imposed by the Code, it is not expected that the Fund will be
required to pay any federal income or excise taxes. If the Fund should fail to
qualify as a "regulated investment company" in any year, the Fund would incur a
regular
B - 21
<PAGE> 49
corporate federal income tax upon its taxable income and Fund distributions
would generally be taxable as ordinary dividend income to the shareholders.
Shareholders of the Fund will have to pay federal income taxes and any
state or local income taxes on the dividends and capital gain distributions they
receive from the Fund. Dividends from ordinary income and any distributions from
net short-term capital gains are taxable to shareholders as ordinary income for
federal income tax purposes, whether the distributions are made in cash or in
additional shares. A portion of the Fund's ordinary income dividends is normally
eligible for the dividends received deduction for corporations if the recipient
otherwise qualifies for that deduction with respect to its holding of Fund
shares. Availability of the deduction for a particular shareholder is subject to
certain limitations, and deducted amounts may be subject to the alternative
minimum tax and result in certain basis adjustments. Distributions of net
capital gains (i.e., the excess of net long-term capital gains over net short
term capital losses), whether made in cash or in additional shares, are taxable
to shareholders as long-term capital gains without regard to the length of time
the shareholders have held their shares.
Amounts not distributed on a timely basis in accordance with the
calendar year distribution requirement are subject to a nondeductible 4% excise
tax. To prevent imposition of the excise tax, the Fund must, and intends to,
distribute during each calendar year substantially all of its ordinary income
for that year and substantially all of its capital gain in excess of its capital
losses for that year, plus any undistributed ordinary income and capital gains
from previous years. Any Fund dividend that is declared in October, November or
December of any calendar year, that is payable to shareholders of record in such
a month, and that is paid the following January will be treated as if received
by the shareholders on December 31 of the year in which the dividend is
declared. The Fund will notify shareholders regarding the federal tax status of
its distributions after the end of each calendar year.
Any Fund distribution will have the effect of reducing the per share
net asset value of shares in the Fund by the amount of the distribution.
Shareholders purchasing shares shortly before the record date of any
distribution may thus pay the full price for the shares and then effectively
receive a portion of the purchase price back as a taxable distribution.
In general, any gain or loss realized upon a taxable disposition of
shares of the Fund by a shareholder that holds-such shares as a capital asset
will be treated as long-term capital gain or loss if the shares have been held
for more than twelve months and otherwise as a short-term capital gain or loss.
However, any loss realized upon a disposition of shares in the Fund held for six
months or less will be treated as a long-term capital loss to the extent of any
distributions of net capital gain made with respect to those shares. Any loss
realized upon a disposition of shares may also be disallowed under rules
relating to wash sales.
The Fund is organized as a Delaware business trust and, under current
law, is not liable for any income or franchise tax in the State of Delaware as
long as the Fund qualifies as a regulated investment company under the Code. The
Fund's fiscal year-end is May 31.
Fund shareholders may be subject to state and local taxes on Fund
distributions to them. Shareholders are advised to consult with their tax
advisers with respect to the particular tax consequences to them of an
investment in the Fund.
FUND TRANSACTIONS AND BROKERAGE COMMISSIONS
Specific decisions to purchase or sell securities for the Fund are made
by a portfolio manager who is an employee of the Investment Manager and who is
appointed and supervised by its senior officers. Changes in the Fund's
investments are reviewed by its Board of Trustees. The portfolio manager serving
the Fund on behalf of the Investment Manager, may serve other clients of the
Investment Manager in a similar capacity.
The Fund's primary consideration in placing securities transactions
with the broker-dealer for execution is to obtain and maintain the availability
of execution at the most favorable prices and in the most effective manner
possible. The Investment Manager attempts to achieve this result by selecting a
broker-dealer to execute
B - 22
<PAGE> 50
transactions on behalf of the Fund and other clients of the Investment Manager
based upon various relevant factors, including but not limited to, the size and
type of transaction, execution efficiency, the basis of their professional
capability, the value and quality of their brokerage services, and the
reasonableness of their brokerage commissions. In the case of securities traded
in the over-the-counter market (where no stated commissions are paid but the
prices include a dealer's markup or markdown), the Investment Manager normally
seeks to deal directly with the primary market makers, unless in its opinion,
best execution is available elsewhere. In the case of securities purchased from
underwriters, the cost of such securities generally includes a fixed
underwriting commission or concession. From time-to-time, soliciting dealer fees
are available to the Investment Manager on the tender of the Fund's securities
in so-called tender or exchange offers. Such soliciting dealer fees are in
effect recaptured for the Fund by the Investment Manager. At present no other
recapture arrangements are in effect. Consistent with the foregoing primary
consideration, the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and such other policies as the Trustees of the Fund may
determine, the Investment Manager may consider sales of shares of the Fund and
of securities of other investors as a factor in the selection of broker-dealers
to execute the Fund's securities transactions.
Under the Investment Management Agreement with the Investment Manager,
and as permitted by Section 28(e) of the Securities Exchange Act of 1934, as
amended, Meyers Sheppard may cause the Fund to pay a broker-dealer acting on an
agency basis which provides brokerage and research services to the Investment
Manager an amount of commission for effecting a securities transaction for the
Fund in excess of the amount other broker-dealers would have charged for the
transaction if the Investment Manager determines in good faith that the greater
commission is reasonable in relation to the value of the brokerage and research
services provided by the executing broker-dealer viewed in terms of either a
particular transaction or the Investment Manager's overall responsibilities to
the Fund or to its other clients. Not all of such services are useful or of
value in advising the Fund.
The term "brokerage and research services" includes advice as to the
value of securities, the advisability of investing in, purchasing, or selling
securities, and the availability of securities or of purchasers or sellers of
securities; furnishing analyses and reports concerning issues, industries,
securities, economic factors and trends, portfolio strategy and the performance
of accounts; and effecting securities transactions and performing functions
incidental thereto such as clearance and settlement.
Although commissions paid on every transaction will, in the judgment of
the Investment Manager, be reasonable in relation to the value of the brokerage
services provided, commissions exceeding those which another broker might charge
may be paid to broker-dealers who were selected to execute transactions on
behalf of the Fund and the Investment Manager's other clients, in part for
providing advice as to the availability of securities or of purchasers or
sellers of securities and services in effecting securities transactions and
performing functions incidental thereto such as clearance and settlement.
Certain broker-dealers may be willing to furnish statistical, research and other
factual information or services to the Investment Manager for no consideration
other than brokerage or underwriting commissions.
The Investment Manager attempts to evaluate the quality of research
provided by brokers. The Investment Manager sometimes uses evaluations resulting
from this effort as a consideration in the selection of brokers to execute
portfolio transactions. However, the Investment Manager is able to quantify the
amount of commissions which are paid as a result of such research because a
substantial number of transactions are effected through brokers which provide
research but which are selected principally because of their execution
capabilities.
The fees that the Fund pays to the Investment Manager will not be
reduced as a consequence of the Fund's receipt of brokerage and research
services. To the extent the Fund's securities transactions are used to obtain
brokerage and research services, the brokerage commissions paid by the Fund will
exceed those that might otherwise be paid for such portfolio transactions and
research, by an amount which cannot be presently determined. Such services may
be useful and of value to the Investment Manager in serving both the Fund and
other clients and, conversely, such services obtained by the placement of
brokerage business of other clients may be useful to the Investment Manager in
carrying out its obligations to the Fund. While such services are not expected
to reduce the expenses of the Investment Manager, the Investment Manager would,
through use of the services, avoid the additional expenses which would be
incurred if it should attempt to develop comparable information through its own
staff.
B - 23
<PAGE> 51
The Fund will not engage in brokerage transactions with the Investment
Manager (Meyers Sheppard) or the Administrator (Furman Selz) or any of their
respective affiliates or any affiliate of the Fund except to the extent, within
the meaning of Rule 17e-1 of the Investment Company Act, any commissions, fees
or other remunerations payable in connection with such transactions do not
exceed the usual and customary commission or fee of such broker and are
reasonable and fair compared to those which could be obtained by other brokers
in comparable transactions.
In certain instances there may be securities which are suitable for the
Fund as well as for one or more of the Investment Manager's other clients.
Investment decisions for the Fund and for the Investment Manager's other clients
are made with a view to achieving their respective investment objectives. It may
develop that a particular security is bought or sold for only one client even
though it might be held by, or bought or sold for, other clients. Likewise, a
particular security may be bought for one or more clients when one or more
clients are selling that same security. Some simultaneous transactions are
inevitable when several clients receive investment advice from the same
investment adviser, particularly when the same security is suitable for the
investment objectives of more than one client. When two or more clients are
simultaneously engaged in the purchase or sale of the same security, the
securities are allocated among clients in a manner believed to be equitable to
each. It is recognized that in some cases this system could have a detrimental
effect on the price or volume of the security as far as the Fund is concerned.
However, it is believed that the ability of the Fund to participate in volume
transactions will produce better executions for the Fund.
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Fund is a Delaware Business Trust established under a Certificate
of Trust dated March 20, 1996 and filed with the Delaware Secretary of State on
March 25, 1996, and governed by a Trust Instrument dated as of March 26, 1996.
Its authorized capital consists of an unlimited number of shares of beneficial
interest of $0.00001 par value, issued in separate series. Each share of each
series represents an equal proportionate interest in that series with each other
share of that series.
The assets of the Fund received for the issue or sale of the shares of
each fund and all income, earnings, profits and proceeds thereof, subject only
to the rights of creditors, are specifically allocated to such series and
constitute the underlying assets of such series. The underlying assets of each
series are segregated on the books of account, and are to be charged with the
liabilities in respect to such series and with such a share of the general
liabilities of the Fund. If a series was unable to meet its obligations, the
assets of only that series, and no other series, will be available to creditors
for that purpose. General liabilities, expenses, costs, charges or reserves
which are not readily identifiable as belonging to any particular series shall
be allocated and charged by the Trustees between or among any one or more of the
series in such manner as the Trustees deem fair and equitable. In the event of
the dissolution or liquidation of the Fund or any series, the holders of the
shares of any series are entitled to ratably receive, as a class, the value of
the underlying assets of such shares available for distribution to shareholders.
However, the payment to the holders may be reduced by any fees, expenses or
charges allocated to that series.
Shares of the Fund entitle their holder to one vote per share; however,
separate votes are taken by each series on matters affecting an individual
series. For example, a change in investment policy for a series would be voted
upon only by shareholders of the series involved.
The Trustees of the Fund have the authority to designate additional
series and to designate the relative rights and preferences as between the
different series. There is presently one series so designated. All shares issued
and outstanding will be fully paid and nonassessable by the Fund, and redeemable
as described in this Statement of Additional Information and in the Prospectus.
The Trust Instrument provides that obligations of the Fund are not
binding upon the Trustees individually but only upon the property of the Fund,
that the Trustees and officers will not be liable for errors of judgment or
mistakes of fact or law, and that the Fund will indemnify its Trustees and
officers against liabilities and expenses incurred in connection with litigation
in which they may be involved because of their offices with the Fund unless,
B - 24
<PAGE> 52
as to liability to Fund or Fund shareholders, it is finally adjudicated that
they engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in their offices, or unless with respect to any
other matter it is finally adjudicated that they did not act in good faith in
the reasonable belief that their actions were in the best interests of the Fund.
In the case of settlement, such indemnification will be provided unless it has
been determined by a court or other body approving the settlement or other
disposition, or by a reasonable determination, based upon a review of readily
available facts, by vote of a majority of disinterested Trustees or in a written
opinion of independent counsel, that such officers or Trustees have engaged in
willful misfeasance, bad faith, gross negligence or reckless disregard of their
duties.
The Trust Instrument contains an express disclaimer of shareholder
liability for acts or obligations of the Trust and provides for indemnification
and reimbursement of expenses out of Fund property for any shareholder held
personally liable for the obligations of a Fund solely by reason of his or her
being or having been a shareholder. The Trust Instrument also provides for the
maintenance, by or on behalf of the Trust and the Fund, of appropriate insurance
(for example, fidelity bond and errors and omissions insurance) for the
protection of the Trust and the Fund, their shareholders, trustees, officers,
employees and agents, covering possible tort and other liabilities. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which Delaware law did not apply,
inadequate insurance existed and the Fund itself was unable to meet its
obligations.
FINANCIAL STATEMENTS
The Statement of Assets and Liabilities of the Fund dated as of May ,
1996 included herein have been so included in reliance upon the report of KPMG
Peat Marwick LLP, independent auditors, as experts in accounting and auditing.
B - 25
<PAGE> 53
PART C.
OTHER INFORMATION
MEYERS SHEPPARD PRIDE FUND
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
* Statement of Assets and Liabilities
* Report of Independent Accountants
(b) Exhibits:
Exhibit
Number Description of Exhibit
1 Certificate of Trust dated March 20, 1996, and filed
by the Delaware Secretary of State on March 25, 1996
2 By-Laws adopted on March 26, 1996
3 None
4 Trust Instrument dated March 26, 1996
5 Form of Investment Management Agreement dated as of
May 9, 1996 Between the Registrant and Meyers,
Sheppard & Co., LLC
6 Form of Distribution Agreement dated as of May 9,
1996 between the Registrant and Furman Selz LLC
7 None
8 Form of Custodian Agreement dated as of May 9, 1996
between the Registrant and Wells Fargo Bank, N.A.
9(a) Form of Administration Agreement dated as of May 9,
1996 between the Registrant and Furman Selz LLC
9(b) Form of Fund Accounting Agreement dated as of May 9,
1996 between the Registrant and Furman Selz LLC
9(c) Form of Transfer Agency Agreement dated as of May 9,
1996 between the Registrant and Furman Selz LLC
9(d) Form of Omnibus Agreement dated as of May 9,
1996 between the Registrant and Furman Selz LLC
10 Opinion and Consent of Pollet & Woodbury, a Law
Corporation
11 Consent of independent accountants
12 None
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<PAGE> 54
13 Form of Subscription Letter for $100,000 Seed Capital
14 None
15 Form of Plan of Distribution adopted by the
Registrant on May 9, 1996
16 None
* 17 Electronic Data Schedules
18 None
* 19 Powers of Attorney from
* To be provided by subsequent amendment prior to the effective
date of this Registration Statement.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
<TABLE>
<CAPTION>
TITLE OF CLASS:
SHARES OF BENEFICIAL INTEREST NUMBER OF RECORD HOLDERS
(PAR VALUE $0.00001) AT MAY , 1996
------------------------------------- --------------------------
<S> <C>
Series 1: Meyers Sheppard Pride Fund ---
</TABLE>
ITEM 27. INDEMNIFICATION.
Reference is made to Article IX of Registrant's Trust
Instrument.
Registrant, its Trustees and officers are insured against
certain expenses in connection with the defense of claims, demands, actions,
suits, or proceedings, and certain liabilities that might be imposed as a result
of such actions, suits or proceedings.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Securities Act"), may be permitted to
directors, trustees, officers and controlling persons of the Registrant and the
principal underwriter pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, trustee, officer, or
controlling person of the Registrant and the principal underwriter in connection
with the successful defense of any action, suite or proceeding) is asserted
against the Registrant by such director, trustee, officer or controlling person
or principal underwriter in connection with the shares being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
C - 2
<PAGE> 55
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
The list required by this Item 28 of the managers and officers
of Meyers, Sheppard & Co., LLC, together with information as to any other
business, profession, vocation or employment of a substantial nature engaged in
by such managers and officers during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by Meyers, Sheppard & Co., LLC,
pursuant to the Advisers Act (SEC File No. 801-51437).
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) Furman Selz LLC, a Delaware limited liability company,
is the distributor (the "Distributor") for the shares of the Registrant. The
Distributor also serves as the principal underwriter or placement agent for the
Minerva Funds, Inc., a registered open-ended investment company.
(b) The following are the directors and officers of the
Distributor. The principal business address of these individuals is 230 Park
Avenue, New York, New York 10169, unless otherwise noted. None of these persons
are an officer or trustee of the Fund.
<TABLE>
<S> <C>
Edmund A. Hajim Chairman & CEO
Roy L. Furman President
Bernard T. Selz Executive Vice President
Steven D. Blecher Executive Vice President/Secretary
Elizabeth Q. Solazzo Executive Vice President/Assistant Secretary
John Steinhardt Executive Vice President
Michael C. Petrycki Executive Vice President
William Schutzer Executive Vice President
Brian P. Friedman Executive Vice President
Fred Fraenkel Executive Vice President
Michael Weisberg Executive Vice President
William P. Collins Executive Vice President
Thalia Cody Assistant Secretary
Robert J. Miller Treasurer
</TABLE>
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940, as amended
(the "Investment Company Act"), and the Rules thereunder will be maintained at
the offices of:
(1) Records relating to management and investment
advisement functions:
Meyers Sheppard Pride Fund
c/o Meyers Sheppard Investment Trust
9107 Wilshire Boulevard, Suite 700
Beverly Hills, California 90210
(2) Records relating to administration, fund accounting,
distribution and registrar/Transfer agency functions:
Furman Selz LLC
237 Park Avenue
New York, New York 10017
(3) Records relating to custodial functions:
Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, California 94163
C - 3
<PAGE> 56
ITEM 31. MANAGEMENT SERVICES.
The Registrant is not a party to any management related service
contract not discussed in Part A or Part B of this Registration Statement.
ITEM 32. UNDERTAKINGS.
1. The Registrant undertakes to file a post-effective amendment,
using financial statements which need not be certified, within four to six
months following the effective date of this registration statement. The
financial statements included in such amendment will be as of and for the time
period ended on a date reasonably close or as soon as practicable to the date of
the filing of the amendment.
2. The Registrant undertakes to comply with Section 16(c) of the
Investment Company Act as though such provisions of the Investment Company Act
were applicable to the Registrant, except that the request referred to in the
third full paragraph thereof may only be made by shareholders who hold in the
aggregate at least 10% of the outstanding shares of the Registrant, regardless
of the net asset value of shares held by such requesting shareholders.
3. If the information called for by Item 5A is contained in the
latest annual report to shareholders, an undertaking to furnish each person to
whom a prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders upon request and without change.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the Registrant has duly
caused this Amendment No. 1 to Registration Statement on Form N-1A to be signed
on its behalf by the undersigned, thereto duly authorized, in the City of
Beverly Hills, State of California, on May 3, 1996.
MEYERS SHEPPARD INVESTMENT TRUST
(Registrant)
By: /s/ Shelly J. Meyers
----------------------------------
Name: Shelly J. Meyers
Title: Chairman, Trustee and President
C - 4
<PAGE> 57
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to Registration Statement on Form N-1A has been signed
below by the following persons in the capacities indicated on May 3, 1996.
Signatures Title
- ---------- -----
By: /s/ Shelly J. Meyers Chairman, Trustee and President
-----------------------
Shelly J. Meyers
By: /s/ Leslie C. Sheppard Trustee and Executive Vice President
-----------------------
Leslie C. Sheppard
By: /s/ John J. Pileggi Vice President and Treasurer
-----------------------
John J. Pileggi
* To be executed by amendment prior to the effective date of
this Registration Statement (but after initial appointment of
these Trustees).
C - 5
<PAGE> 58
MEYERS SHEPPARD PRIDE FUND
a separate portfolio of the Meyers Sheppard Investment Trust
9107 Wilshire Boulevard, Suite 700
Beverly Hills, California 90210
Telephone Number: (310) 288-3720
Facsimile Number: (310) 288-3726
VOLUME II
EXHIBITS FILED ELECTRONICALLY VIA EDGAR ON MAY 3, 1996 UNDER:
- Pre-effective Amendment No. 1 to Registration Statement under
the Securities Act of 1933 (securities act registration no.
333 - 02111); And
- Pre-effective Amendment No. 1 To Registration Statement under
the Investment Company Act of 1940 (Investment Company
Registration No. 811 - 7581)
<PAGE> 59
FILED EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------- ----------------------
1 Certificate of Trust dated March 20, 1996, and filed by the
Delaware Secretary of State on March 25, 1996
2 By-Laws adopted on March 26, 1996
4 Trust Instrument dated March 26, 1996
5 Form of Investment Management Agreement dated as of May 9,
1996 Between the Registrant and Meyers, Sheppard & Co., LLC
6 Form of Distribution Agreement dated as of May 9, 1996
between the Registrant and Furman Selz LLC
8 Form of Custodian Agreement dated as of May 9, 1996 between
the Registrant and Wells Fargo Bank, N.A.
9(a) Form of Administration Agreement dated as of May 9, 1996
between the Registrant and Furman Selz LLC
9(b) Form of Fund Accounting Agreement dated as of May 9, 1996
between the Registrant and Furman Selz LLC
9(c) Form of Transfer Agency Agreement dated as of May 9, 1996
between the Registrant and Furman Selz LLC
9(d) Form of Omnibus Agreement dated as of May 9, 1996 between
the Registrant and Furman Selz LLC
10 Opinion and Consent of Pollet & Woodbury, a Law Corporation
13 Form of Subscription Agreement for $100,000 Seed Capital
15 Form of Plan of Distribution adopted by the Registrant on May
9, 1996
<PAGE> 1
Exhibit 1
Certificate of Trust dated March 20, 1996, and filed by the Delaware Secretary
of State on March 25, 1996
<PAGE> 2
CERTIFICATE OF TRUST
OF
MEYERS SHEPPARD INVESTMENT TRUST
This Certificate of Trust ("Certificate") is filed in accordance with
the provisions of the Delaware Business Trust Act (12 Del. Code Ann. Tit. 12
Section 3810 et. seq.) and sets forth the following:
1. The name of the trust is: Meyers Sheppard Investment Trust
("Trust").
2. The business address of the registered office of the Trust and of
the registered agent of the Trust is:
Paracorp Incorporated
15 East North Street
Dover, Delaware 19901
3. This Certificate is effective upon filing.
4. The Trust is a Delaware business trust which intends to be
registered under the Investment Company Act of 1940. Notice is hereby given that
the Trust shall consist of one or more series. The debts, liabilities,
obligations and expenses incurred, contracted for or otherwise existing with
respect to a particular series of the Trust shall be enforceable against the
assets of such series only, and not against the assets of the Trust generally or
any other series.
IN WITNESS WHEREOF, the undersigned, being the initial Trustees, have
executed this Certificate on this 20th day of March, 1996.
/s/ Shelly J. Meyers
----------------------------------------------------
Shelly J. Meyers, as Trustee and not individually
/s/ Leslie C. Sheppard
----------------------------------------------------
Leslie C. Sheppard, as Trustee and not individually
<PAGE> 1
Exhibit 2
By-Laws adopted on March 26, 1996
<PAGE> 2
MEYERS SHEPPARD INVESTMENT TRUST
BY-LAWS
These By-Laws are made as of the 26th day of March, 1996 and adopted
pursuant to Article III, Section 1(c) of the Trust Instrument establishing the
Meyers Sheppard Investment Trust (the "Trust") dated March 26, 1996, as from
time to time amended (the "Trust Instrument"). All words and terms capitalized
in these By-Laws shall have the meaning or meanings set forth for such words or
terms in the Trust Instrument.
ARTICLE I
MEETINGS OF SHAREHOLDERS
SECTION 1.1. SPECIAL MEETINGS. Special meetings of the Shareholders in
the Trust, which may be held on such dates and at such hours as may from time to
time be designated by the Board of Trustees and stated in the notice of such
meeting, are required to be held if certain actions must be taken by the
Shareholders as set forth in Article VI, Section 1 of the Trust Instrument, or
if the Trustees consider it necessary or desirable.
SECTION 1.2. CHAIRMAN. The Chairman of the Board of Trustees or, in his
or her absence, the President or, in his or her absence, the Vice President
shall act as chairman at all meetings of the Shareholders and, in the absence of
all of them, the Trustee or Trustees present at the meeting may elect a
temporary chairman for the meeting, who may be one of themselves or an officer
of the Trust.
SECTION 1.3. PROXIES; VOTING. Shareholders may vote either in person or
by duly executed proxy, all as provided in Article VI, Section 1 of the Trust
Instrument. No proxy shall be valid after eleven (11) months from the date of
its execution, unless a longer period is expressly stated in such proxy.
SECTION 1.4. FIXING RECORD DATES. For the purpose of determining the
Shareholders who are entitled to notice of or to vote or act at a meeting,
including any adjournment thereof, or who are entitled to participate in any
distributions, or for any other proper purpose, the Trustees may from time to
time fix a record date in the manner provided in Article X, Section 4 of the
Trust Instrument. If the Trustees do not, prior to any meeting of the
Shareholders, so fix a record date, then the date of mailing notice of the
meeting shall be the record date.
SECTION 1.5. INSPECTORS OF ELECTION. In advance of any meeting of the
Shareholders, the Trustees may appoint inspectors of election to act at the
meeting or any adjournment thereof (the "Inspectors of Election"). If Inspectors
of Election are not so appointed, the chairman, if any, of any meeting of the
Shareholders may, and on the request of any Shareholder or his or her proxy
shall, appoint Inspectors of Election of the meeting. The number of Inspectors
of Election shall be either one or more. In case any person appointed as
Inspector of Election fails to appear or fails or refuses to act, the vacancy
may be filled by appointment made by the Trustees in advance of the convening of
the meeting or at the meeting by the person acting as chairman. The Inspectors
of Election shall determine the Shares owned by Shareholders, the Shares
represented at the meeting, the existence of a quorum, the authenticity,
validity and effect of proxies, shall receive votes, ballots or consents, shall
hear and determine all challenges and questions in any way arising in connection
with the right to vote, shall count
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and tabulate all votes or consents, determine the results, and do such other
acts as may be proper to conduct the election or vote with fairness to all
Shareholders. If there are three or more Inspectors of Election, the decision,
act or certificate of a majority is effective in all respects as the decision,
act or certificate of all. On request of the chairman, if any, of the meeting,
or of any Shareholder or his or her proxy, the Inspectors of Election shall make
a report in writing of any challenge or question or matter determined by them
and shall execute a certificate of any facts found by them.
SECTION 1.6. RECORDS OF MEETINGS OF SHAREHOLDERS. At each meeting of
the Shareholders there shall be open for inspection the minutes of the last
previous meeting of Shareholders and a list of the Shareholders, certified to be
true and correct by the Secretary or other proper agent of the Trust, as of the
record date of the meeting. Such list of Shareholders shall contain the name of
each Shareholder in alphabetical order, the Shareholder's address and Shares
owned by such shareholder. Shareholders shall have the right to inspect books
and records of the Trust during normal business hours for any purpose not
harmful to the Trust.
ARTICLE II
TRUSTEES
SECTION 2.1 ANNUAL AND REGULAR MEETINGS. The Trustees shall hold an
annual meeting of the Trustees for the transaction of business which may come
before such meeting. Regular meetings of the Trustees may be held without call
or notice at such place or places and times as the Trustees may by resolution
provide from time to time.
SECTION 2.2 SPECIAL MEETINGS. Special Meetings of the Trustees shall be
held upon the call of the chairman, if any, the President, the Secretary, or any
two Trustees, at such time, on such day and at such place, as shall be
designated in the notice of the meeting.
SECTION 2.3 NOTICE. Notice of a meeting shall be given by United States
mail (which term shall include overnight mail) or by electronic transmission
(which term shall include without limitation by telephone, cablegram or
telefacsimile) or delivered personally, to each Trustee at his or her business
address as set forth in the records of the Trust. If notice is given by mail, it
shall be mailed not later than 72 hours preceding the meeting and if given by
electronic transmission or personally, such notice shall be delivered not later
than 24 hours preceding the meeting. Notice of a meeting of Trustees may be
waived before or after any meeting by signed written waiver. Neither the
business to be transacted at, nor the purpose of, any meeting of the Board of
Trustees need be stated in the notice or waiver of notice of such meeting, and
no notice need be given of action proposed to be taken by written consent. The
attendance of a Trustee at a meeting shall constitute a waiver of notice of such
meeting except where a Trustee attends a meeting for the express purpose of
objecting, at the commencement of such meeting, to the transaction of any
business on the ground that the meeting has not been lawfully called or
convened.
SECTION 2.4 CHAIRMAN; RECORDS. The Trustees shall appoint a Chairman of
the Board from among their number. Such Chairman of the Board shall act as
chairman at all meetings of the Trustees; in his or her absence the President
shall act as chairman; and, in the absence of all of them, the Trustees present
shall elect one of their number to act as temporary chairman. The results of all
actions taken at a meeting of the Trustees, or by written consent of the
Trustees, shall be recorded by the Secretary.
SECTION 2.5 COMMITTEES. The Board of Trustees may, by the affirmative
vote of a majority of the entire Board, appoint from its members an Audit
Committee composed of two or more Trustees
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<PAGE> 4
who are not "interested persons" (as defined in the 1940 Act) of the Trust, as
the Board may from time to time determine. The Board of Trustees may, by the
affirmative vote of a majority of the entire Board, appoint from among its
members a Nomination Committee, an Executive Committee or other committees
composed of two or more of its Trustees which shall have such powers as may be
delegated or authorized by the resolution appointing them.
SECTION 2.6 COMMITTEE PROCEDURES. The Board of Trustees may at any time
change the members of any committee, fill vacancies or discharge any committee.
In the absence of any member of any committee, the member or members thereof
present at any meeting, whether or not they constitute a quorum, may unanimously
appoint to act in the place of such absent member a member of the Board who,
except in the case of the Executive Committee, is not an "interested person" of
the Trust as the Board may from time to time determine. Each committee may fix
its own rules of procedure and may meet as and when provided by those rules.
Copies of the minutes of all meetings of committees other than the Nominating
Committee and the Executive Committee shall be distributed to the Board unless
the Board shall otherwise provide.
SECTION 2.7. ACTION BY CONSENT. Unless restricted by the Trust
Instrument or these By-Laws, any action required or permitted to be taken by the
Trustees or any committee may, but only to the extent permitted under the 1940
Act, be taken without a meeting if all of the Trustees or such committee consent
in writing to the adoption of a resolution authorizing the action.
SECTION 2.8. TELEPHONIC MEETING. Unless restricted by the Trust
Instrument or these ByLaws, any one or more Trustees or any member of any
committee may, but only to the extent permitted under the 1940 Act, participate
in a meeting of the Trustees or such committee by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation by such means
shall constitute presence in person at a meeting.
ARTICLE III
OFFICERS
SECTION 3.1 OFFICERS OF THE TRUST; COMPENSATION. The officers of the
Trust shall consist of a President, a Secretary, a Treasurer and such other
officers or assistant officers, including Vice Presidents, as may be elected by
the Trustees. Any two or more of the offices may be held by the same person. The
Trustees may designate a Vice President as an Executive Vice President and may
designate the order in which the other Vice Presidents may act. No officer of
the Trust need be a Trustee. The Board of Trustees may determine what, if any,
compensation shall be paid to officers of the Trust.
SECTION 3.2 ELECTION AND TENURE. At the initial organizational meeting,
the Trustees shall elect the Chairman, President, Secretary, Treasurer and such
other officers as the Trustees shall deem necessary or appropriate in order to
carry out the business of the Trust. The Chairman of the Board and such officers
shall hold office until resignation or removal in accordance with Section 3.3
below, and until their successors have been duly elected and qualified. The
Trustees may fill any vacancy in or add any additional officers at any time.
SECTION 3.3 REMOVAL OF OFFICERS; RESIGNATION. Any officer may be
removed at any time, with or without cause, by action of a majority of the
Trustees. This provision shall not prevent the making of a contract of
employment for a definite term with any officer. Any officer may resign at any
time by notice in writing signed by such officer and delivered or mailed to the
President or Secretary, and
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<PAGE> 5
such resignation shall take effect immediately, or at a later date according to
the terms of such notice in writing.
SECTION 3.4 BONDS AND SURETY. Any officer may be required by the
Trustees to be bonded for the faithful performance of his or her duties in such
amount and with such sureties as the Trustees may determine.
SECTION 3.5 PRESIDENT AND VICE-PRESIDENTS. The President shall be the
chief executive officer of the Trust and, subject to the control of the
Trustees, shall have general supervision, direction and control of the business
of the Trust and of its employees and shall exercise such general powers of
management as are usually vested in the office of president of a corporation.
The President shall preside at all meetings of the Shareholders and, in the
absence of the Chairman of the Board, the President shall preside at all
meetings of the Trustees. The President shall be, ex officio, a member of all
standing committees. Subject to direction of the Trustees, the President shall
have the power, in the name and on behalf of the Trust, to execute any and all
loan documents, contracts, agreements, deeds, mortgages, and other instruments
in writing, and to employ and discharge employees and agents of the Trust.
Unless otherwise directed by the Trustees, the President shall have full
authority and power, on behalf of all of the Trustees, to attend and to act and
to vote, on behalf of the Trust at any meetings of business organizations in
which the Trust holds an interest, or to confer such powers upon any other
persons, by executing any proxies duly authorizing such persons. The President
shall have such further authorities and duties as the Trustees shall from time
to time determine. In the absence or disability of the President, the Vice
Presidents in order of their rank or the Vice President designated by the
Trustees, shall perform all of the duties of President, and when so acting shall
have all the powers of and be subject to all of the restrictions upon the
President. Subject to the direction of the President, the Treasurer and each
Vice President shall have the power in the name and on behalf of the Trust to
execute any and all loan documents, contracts, agreements, deeds, mortgages and
other instruments in writing, and, in addition, shall have such other duties and
powers as shall be designated from time to time by the Trustees, the Chairman,
or the President.
SECTION 3.6 SECRETARY. The Secretary shall keep the minutes of all
meetings of, and record all votes of, Shareholders, Trustees and any committees
of Trustees, provided that, in the absence or disability of the Secretary, the
Trustees may appoint any other person to keep the minutes of a meeting and
record votes. The Secretary shall attest the signature or signatures of the
officer or officers executing any instrument on behalf of the Trust. The
Secretary shall also perform any other duties commonly incident to such office
in a Delaware corporation, and shall have such other authorities and duties as
the Trustees shall from time to time determine.
SECTION 3.7 TREASURER. Except as otherwise directed by the Trustees,
the Treasurer shall have the general supervision of the monies, funds,
securities, notes receivable and other valuable papers and documents of the
Trust, and shall have and exercise under the supervision of the Trustees and of
the Chairman and the President all powers and duties normally incident to his or
her office. The Treasurer may endorse for deposit or collection all notes,
checks and other instruments payable to the Trust or to its order. The Treasurer
shall deposit all funds of the Trust as may be ordered by the Trustees, the
Chairman or the President. The Treasurer shall keep accurate account of the
books of the Trust's transactions which shall be the property of the Trust and
which, together with all other property of the Trust in his or her possession,
shall be subject at all times to the inspection and control of the Trustees.
Unless the Trustees shall otherwise determine, the Treasurer shall be the
principal accounting officer of the Trust and shall also be the principal
financial officer of the Trust. The Treasurer shall have such other duties and
authorities as the Trustees shall from time to time determine. Notwithstanding
anything to the contrary herein contained, the Trustees may authorize any
adviser or administrator to maintain bank accounts and deposit and disburse
funds on behalf of the Trust.
4
<PAGE> 6
SECTION 3.8 OTHER OFFICERS AND DUTIES. The Trustees may elect such
other officers and assistant officers as they shall from time to time determine
to be necessary or desirable in order to conduct the business of the Trust.
Assistant officers shall act generally in the absence of the officer whom they
assist and shall assist that officer in the duties of his or her office. Each
officer, employee and agent of the Trust shall have such other duties and
authority as may be conferred upon him by the Trustees or delegated to him by
the President.
ARTICLE IV
CUSTODIAN
SECTION 4.1 APPOINTMENT AND DUTIES. The Trustees shall at all times
employ a custodian or custodians with authority as its agent, but subject to
such restrictions, limitations and other requirements, if any, as may be
contained in these By-Laws:
(1) to hold the securities owned by the Trust and deliver the
same upon written order;
(2) to receive and receipt for any moneys due to the Trust
and deposit the same in its own banking department or elsewhere as the
Trustees may direct;
(3) to disburse such funds upon orders or vouchers;
(4) if authorized by the Trustees, to keep the books and
accounts of the Trust and furnish clerical and accounting services; and
(5) if authorized to do so by the Trustees, to compute the
net income and net assets of the Trust;
all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian. The Trustees may also authorize the custodian to employ one
or more sub-custodians, from time to time, to perform such of the acts and
services of the custodian and upon such terms and conditions as may be agreed
upon between the custodian and such sub-custodian and approved by the Trustee.
SECTION 4.2 CENTRAL CERTIFICATE SYSTEM. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct the
custodian to deposit all or any part of the securities owned by the Trust in a
system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, any such other person or
entity with which the Trustees may authorize deposit in accordance with the 1940
Act, pursuant to which system all securities of any particular class or series
of any issuer deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of such
securities. All such deposits shall be subject to withdrawal only upon the order
of the Trust.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 DEPOSITORIES. In accordance with Article IV of these
By-Laws, the funds of the Trust shall be deposited in such depositories as the
Trustees shall designate and shall be drawn out on
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<PAGE> 7
checks, drafts or other orders signed by such officer, officers, agent or agents
(including any adviser or administrator), as the Trustees may from time to time
authorize.
SECTION 5.2 SIGNATURE. All contracts and other instruments shall be
executed on behalf of the Trust by such officer, officers, agent or agents, as
provided in these By-Laws or as the Trustees may from time to time by resolution
or authorization provide.
SECTION 5.3 FISCAL YEAR. The fiscal year of the Trust shall end on May
31st of each year, subject, however, to change from time to time by the Board of
Trustees.
ARTICLE VI
INTERESTS
SECTION 6.1 SHARES. Except as otherwise provided by law, the Trust
shall be entitled to recognize the exclusive right of a person in whose name
Shares stand on the record of Shareholders as the owners of such Shares for all
purposes, including, without limitation, the rights to receive distributions,
and to vote as such owner, and the Trust shall not be bound to recognize any
equitable or legal claim to or interest in any such interests on the part of any
other person.
SECTION 6.2 REGULATIONS. The Trustee may make such additional rules and
regulations, not inconsistent with these By-Laws, as they may deem expedient
concerning the sale and purchase of Shares of the Trust.
SECTION 6.3 DISTRIBUTION DISBURSING AGENTS AND THE LIKE. The Trustees
shall have the power to employ and compensate such distribution disbursing
agents, warrant agents and agents for the reinvestment of distributions as they
shall deem necessary or desirable. Any of such agents shall have such power and
authority as is delegated to any of them by the Trustees.
ARTICLE VII
AMENDMENT OF BY-LAWS
SECTION 7.1 AMENDMENT AND REPEAL OF BY-LAWS. In accordance with Article
III, Section 1(c) of the Trust Instrument, the Trustees shall have the power to
alter, amend or repeal the By-Laws or adopt new By-Laws at any time. The
Trustees shall in no event adopt By-Laws which are in conflict with the Trust
Instrument, the Delaware Business Trust Act, the 1940 Act or applicable federal
securities laws.
SECTION 7.2 NO PERSONAL LIABILITY. The Trust Instrument provides that
no Trustee, officer, employee or agent of the Sheppard Meyers Investment Trust
shall be held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of the Sheppard Meyers Investment Trust.
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<PAGE> 1
Exhibit 4
Trust Instrument dated March 26, 1996
<PAGE> 2
MEYERS SHEPPARD INVESTMENT TRUST
TRUST INSTRUMENT
This TRUST INSTRUMENT is made on March 26, 1996, by the Trustees, to
establish a business trust for the investment and reinvestment of funds
contributed to the Trust by investors. The Trustees declare that all money and
property contributed to the Trust shall be held and managed in trust pursuant to
this Trust Instrument. The name of the Trust created by this Trust Instrument is
the "Meyers Sheppard Investment Trust."
ARTICLE I
DEFINITIONS
Unless otherwise provided or required by the context:
(a) "By-laws" means the By-laws of the Trust adopted by the
Trustees, as amended from time to time.
(b) "Class" means the class of Shares of a Series established
pursuant to Article IV.
(c) "Commission," "Interested Person," and "Principal Underwriter"
have the meaning provided in the 1940 Act.
(d) "Covered Person" means a person so defined in Article IX,
Section 2.
(e) "Delaware Act" means Chapter 38 of Title 12 of the Delaware
Code entitled "Treatment of Delaware Business Trusts," as amended from time to
time.
(f) "Majority Shareholder Vote" means "the vote of a majority of
the outstanding voting securities" as defined in the 1940 Act.
(g) "Net Asset Value" means the net asset value of each Series of
the Trust, determined as provided in Article V, Section 3.
(h) "Outstanding Shares" means Shares shown in the books of the
Trust or its transfer agent as then issued and outstanding, but does not include
Shares which have been repurchased or redeemed by the Trust and which are held
in the treasury of the Trust.
(i) "Series" means a series of Shares established pursuant to
Article IV.
(j) "Shareholder" means a record owner of Outstanding Shares.
(k) "Shares" means the equal proportionate transferable units of
interest into which the beneficial interest of each Series or Class is divided
from time to time (including whole Shares and fractions of Shares).
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(l) "Trust" means the Meyers Sheppard Investment Trust established
hereby, and reference to the Trust, when applicable to one or more Series,
refers to that Series.
(m) "Trustees" means the person or persons who have signed this
Trust Instrument, so long as they shall continue in office in accordance with
the terms hereof, and all other persons who may from time to time be duly
qualified and serving as Trustees in accordance with Article II, in all cases in
their capacities as Trustees hereunder.
(n) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the Trust or any Series
or the Trustees on behalf of the Trust or any Series.
(o) The "1940 Act" means the Investment Company Act of 1940, as
amended from time to time.
ARTICLE II
THE TRUSTEES
SECTION 1. MANAGEMENT OF THE TRUST. The business and affairs of the
Trust shall be managed by or under the direction of the Trustees, and they shall
have all powers necessary or desirable to carry out that responsibility. The
Trustees may execute all instruments and take all action they deem necessary or
desirable to promote the interests of the Trust. Any determination made by the
Trustees in good faith as to what is in the interests of the Trust shall be
conclusive.
SECTION 2. INITIAL TRUSTEES; ELECTION AND NUMBER OF TRUSTEES. The
Initial Trustees shall be the persons initially signing this Trust Instrument.
The number of Trustees (other than the Initial Trustees) shall be fixed from
time to time by a majority of the Trustees; provided, that there shall be at
least one (1) Trustee. The Shareholders shall elect the Trustees (other than the
Initial Trustees) on such dates as the Trustees may fix from time to time.
SECTION 3. TERM OF OFFICE OF TRUSTEES. Each Trustee shall hold office
for life or until his or her successor is elected or the Trust terminates;
except that (a) any Trustee may resign by delivering to the other Trustees or to
any Trust officer a written resignation effective upon such delivery or a later
date specified therein; (b) any Trustee may be removed with or without cause at
any time by a written instrument signed by at least two-thirds of the other
Trustees, specifying the effective date of removal; (c) any Trustee who requests
to be retired, or who has become physically or mentally incapacitated or is
otherwise unable to serve, may be retired by a written instrument signed by a
majority of the other Trustees, specifying the effective date of retirement; and
(d) any Trustee may be removed at any meeting of the Shareholders by a vote of
at least two-thirds of the Outstanding Shares.
SECTION 4. VACANCIES; APPOINTMENT OF TRUSTEES. Whenever a vacancy shall
exist in the Board of Trustees, regardless of the reason for such vacancy, the
remaining Trustees shall appoint any person as they determine in their sole
discretion to fill that vacancy, consistent with the limitations under the 1940
Act. Such appointment shall be made by a written instrument signed by a majority
of the Trustees or by a resolution of the Trustees, duly adopted and recorded in
the records of the Trust, specifying the effective date of the appointment. The
Trustees may appoint a new Trustee as provided above in anticipation of a
vacancy expected to occur because of the retirement, resignation, or removal of
a Trustee, or an increase in the number of Trustees, provided that such
appointment shall become effective only at or after the expected vacancy occurs.
As soon as any such Trustee has accepted his
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or her appointment in writing, the trust estate shall vest in the new Trustee,
together with the continuing Trustee, without any further act or conveyance, and
he or she shall be deemed a Trustee hereunder. The power of appointment is
subject to Section 16(a) of the 1940 Act.
SECTION 5. TEMPORARY VACANCY OR ABSENCE. Whenever a vacancy in the
Board of Trustees shall occur, until such vacancy is filled, or while any
Trustee is absent from his or her domicile (unless that Trustee has made
arrangements to be informed about, and to participate in, the affairs of the
Trust during such absence), or is physically or mentally incapacitated, the
remaining Trustees shall have all the powers hereunder and their certificate as
to such vacancy, absence, or incapacity shall be conclusive. Any Trustee may, by
power of attorney, delegate his or her powers as Trustee for a period not
exceeding six (6) months at any one time to any other Trustee or Trustees.
SECTION 6. CHAIRMAN. The Trustees may appoint one of their number to
be Chairman of the Board of Trustees. The Chairman shall preside at all meetings
of the Trustees.
SECTION 7. ACTION BY THE TRUSTEES. The Trustees shall act by majority
vote at a meeting duly called (including at a telephonic meeting, unless the
1940 Act requires that a particular action be taken only at a meeting of
Trustees in person) at which a quorum is present or by written consent of a
majority of Trustees (or such greater number as may be required by applicable
law) without a meeting. A majority of the Trustees shall constitute a quorum at
any meeting. Meetings of the Trustees may be called orally or in writing by the
Chairman of the Board of Trustees or by any Trustee. Notice of time, date and
place of all Trustees meetings shall be given to each Trustee in accordance with
the By-laws. Notice need not be given to any Trustee who attends the meeting
without objection to the lack of notice or who signs a waiver of notice either
before or after the meeting. Subject to the requirements of the 1940 Act, the
Trustees by majority vote may delegate to any Trustee or Trustees authority to
approve particular matters or take particular actions on behalf of the Trust.
Any written consent or waiver may be provided and delivered to the Trust by
facsimile or other similar electronic mechanism.
SECTION 8. OWNERSHIP OF TRUST PROPERTY. The Trust Property of the Trust
and of each Series shall be held separate and apart from any assets now or
hereafter held in any capacity other than as Trustee hereunder by the Trustees
or any successor Trustees. All of the Trust Property and legal title thereto
shall at all times be considered as vested in the Trustees on behalf of the
Trust, except that the Trustees may cause legal title to any Trust Property to
be held by or in the name of the Trust, or in the name of any person as nominee.
No Shareholder shall be deemed to have a severable ownership in any individual
asset of the Trust or of any series or any right of partition or possession
thereof, but each Shareholder shall have, as provided in Article IV, a
proportionate undivided beneficial interest in the Trust or Series represented
by Shares.
SECTION 9. EFFECT OF TRUSTEES NOT SERVING. The death, resignation,
retirement, removal, incapacity, or inability or refusal to serve of the
Trustees, or any one of them, shall not operate to annul the Trust or to revoke
any existing agency created pursuant to the terms of this Trust Instrument.
SECTION 10. TRUSTEES, ETC. AS SHAREHOLDERS. Subject to any restrictions
in the By-laws, any Trustee, officer, agent or independent contractor of the
Trust may acquire, own and dispose of Shares to the same extent as any other
Shareholder; the Trustees may issue and sell Shares to and buy Shares from any
such person or any firm or company in which such person is interested, subject
only to any general limitations herein.
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ARTICLE III
POWERS OF THE TRUSTEES
SECTION 1. POWERS. The Trustees in all instances shall act as
principals, free of control of the Shareholders. The Trustees shall have full
power and authority to take or refrain from taking any action and to execute any
contracts and instruments that they may consider necessary or desirable in the
management of the Trust. The Trustees shall not in any way be bound or limited
by current or future laws or customs applicable to trust investments, but shall
have full power and authority to make any investments which they, in their sole
discretion, deem proper to accomplish the purposes of the Trust. The Trustees
may exercise all of their powers without recourse to any court or other
authority. Subject to any applicable limitation herein or in the By-laws or
resolutions of the Trust, the Trustees shall have power and authority, without
limitation:
(a) To invest and reinvest cash and other property, and to hold cash
or other property uninvested, without in any event being bound or limited by any
current or future law or custom concerning investments by trustees, and to sell,
exchange, lend, pledge, mortgage, hypothecate, write options on the lease any or
all of the Trust Property; to invest in obligations and securities of any kind,
and without regard to whether they may mature before the possible termination of
the Trust; and without limitation to invest all or any part of its cash and
other property in securities issued by a registered investment company or series
thereof, subject to the provisions of the 1940 Act;
(b) To operate as and carry on the business of a registered investment
company, and exercise all the powers necessary and proper to conduct such a
business;
(c) To adopt By-laws not inconsistent with this Trust Instrument
providing for the conduct of the business of the Trust and to amend and repeal
them to the extent such right is not reserved to the Shareholders;
(d) To elect and remove such officers and appoint and terminate such
agents as they deem appropriate;
(e) To employ as custodian of any assets of the Trust, subject to any
provisions herein or in the By-laws, one or more banks, trust companies or
companies that are members of a national securities exchange, or other entities
permitted by the Commission to serve as such;
(f) To retain one or more transfer agents and Shareholder servicing
agents, or both;
(g) To establish a registered office and have a registered agent in
the State of Delaware;
(h) To provide for the distribution of Shares either through a
Principal Underwriter as provided herein or by the Trust itself, or both, or
pursuant to a distribution plan of any kind;
(i) To set record dates in the manner provided for herein or in the
By-laws;
(j) To delegate such authority as they consider desirable to any
officers of the Trust and to any agent, independent contractor, manager,
investment advisor, custodian or underwriter;
(k) To sell or exchange any or all of the assets of the Trust, subject
to Article X, Section 5;
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(l) To vote or give assent, or exercise any rights of ownership, with
respect to other securities or property; and to execute and deliver powers of
attorney delegating such power to other persons;
(m) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities;
(n) To hold any security or other property (i) in a form not
indicating any trust, whether in bearer, book entry, unregistered or other
negotiable form, or (ii) either in the Trust's or Trustees' own name or in the
name of a custodian or a nominee or nominees, subject to safeguards according to
the usual practice of business trusts or investment companies;
(o) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes, and with
separate Shares representing beneficial interests in such Series, and to
establish separate Classes, all in accordance with the provisions of Article IV;
(p) To the full extent permitted by Section 3804 of the Delaware Act,
to allocate assets, liabilities and expenses of the Trust to a particular Series
and liabilities and expenses to a particular Class or to apportion the same
between or among two or more Series or Classes, provided that any liabilities or
expenses incurred by a particular Series or Class shall be payable solely out of
the assets belonging to that Series or Class as provided for in Articles IV,
Section 4;
(q) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern whose securities are held
by the Trust; to consent to any contract, lease, mortgage, purchase, or sale of
property by such corporation or concern; and to pay calls or subscriptions with
respect to any security held in the Trust;
(r) To compromise, arbitrate, or otherwise adjust claims in favor of
or against the Trust or any matter in controversy including, but not limited to,
claims for taxes;
(s) To make distributions of income and of capital gains to
Shareholders in the manner hereinafter provided for;
(t) To borrow money;
(u) To establish, from time to time, a minimum total investment for
Shareholders, and to require the redemption of the Shares of any Shareholders
whose investment is less than such minimum upon giving notice to such
Shareholder;
(v) In accordance with the By-laws, to establish committees for such
purposes, with such membership, and with such responsibilities as the Trustees
may consider proper, including a committee consisting of fewer than all of the
Trustees then in office, which may act for and bind the Trustees and the Trust
with respect to the institution, prosecution, dismissal, settlement, review or
investigation of any legal action, suit or proceeding, pending or threatened;
(w) To issue, sell, repurchase, redeem, cancel, retire, acquire, hold,
resell, reissue, dispose of and otherwise deal in Shares; to establish terms and
conditions regarding the issuance sale repurchase, redemption, cancellation,
retirement, acquisition, holding resale, reissuance, disposition of or dealing
in Shares; and, subject to Articles IV and V, to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of Shares any funds or
property of the Trust or of the particular series with respect to which such
Shares are issued; and
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(x) To carry on any other business in connection with or incidental to
any of the foregoing powers, to do everything necessary or desirable to
accomplish any purpose or to further any of the foregoing powers, and to take
every other action incidental to the foregoing business or purposes, objects or
powers.
The clauses above shall be construed as objects and powers, and the
enumeration of specific powers shall not limit in any way the general powers of
the Trustees. Any action by one or more of the Trustees in their capacity as
such hereunder shall be deemed an action on behalf of the Trust or the
applicable Series, and not an action in an individual capacity. No one dealing
with the Trustees shall be under any obligation to make any inquiry concerning
the authority of the Trustees, or to see to the application of any payments made
or property transferred to the Trustees or upon their order. In construing this
Trust Instrument, the presumption shall be in favor of a grant of power to the
Trustees.
SECTION 2. CERTAIN TRANSACTIONS. Except as prohibited by applicable
law, the Trustees may, on behalf of the Trust, buy any securities from or sell
any securities to, or lend any assets of the Trust to, any Trustee or officer of
the Trust or any firm of which any such Trustee or officer is a member acting as
principal, or have any such dealings with any investment adviser, administrator,
distributor or transfer agent for the Trust or with any Interested Person of
such person. The Trust may employ any such person or entity in which such person
is an Interested Person, as broker, legal counsel, registrar, investment
adviser, administrator, distributor, transfer agent, dividend disbursing agent,
custodian or in any other capacity upon customary terms.
ARTICLE IV
SERIES: CLASSES: SHARES
SECTION 1. ESTABLISHMENT OF SERIES OR CLASS. The Trust shall consist of
one or more Series. The Trustees hereby establish the Series listed in Schedule
A attached hereto and made a part hereof. Each additional Series shall be
established by the adoption of a resolution of the Trustees. The Trustees may
designate the relative rights and preferences of the Shares of each Series. The
Trustees may divide the Shares of any Series into Classes. In such case each
Class of a Series shall represent interests in the assets of that Series and
have identical voting, dividend, liquidation and other rights and the same terms
and conditions, except as may be provided in the instrument establishing the
rights and preferences of the Class and except that expenses allocated to a
Class may be borne solely by such Class as determined by the Trustees and a
Class may have exclusive voting rights with respect to matters affecting only
that Class. The Trust shall maintain separate and distinct records for each
Series and hold and account for the assets thereof separately from the other
assets of the Trust or of any other Series. A Series may issue any number of
Shares and need not issue Shares. Each Share of a Series shall represent an
equal beneficial interest in the net assets of such Series. Each holder of
Shares of a Series shall be entitled to receive his or her pro rata share of all
distributions made with respect to such Series. Upon redemption of his or her
Shares, such Shareholder shall be paid solely out of the funds and property of
such Series. The Trustees may change the name of any Series or Class.
SECTION 2. SHARES. The beneficial interest in the Trust shall be
divided into Shares of one or more separate and distinct Series or Classes
established by the Trustees. The number of Shares of each Series and Class is
unlimited and each Share shall have a par value of $0.00001 per Share. All
Shares issued hereunder shall be fully paid and nonassessable. Shareholders
shall have no preemptive or other right to subscribe to any additional Shares or
other securities issued by the Trust. The Trustees shall have full power and
authority, in their sole discretion and without obtaining Shareholder approval:
to issue original or additional Shares at such times and on such terms and
conditions as they deem
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appropriate; to issue fractional Shares and Shares held in the treasury; to
establish and to change in any manner Shares of any Series or Classes with such
preferences, terms of conversion, voting powers, rights and privileges as the
Trustees may determine (but the Trustees may not change Outstanding Shares in a
manner materially adverse to the Shareholders of such Shares); to divide or
combine the Shares of any Series or Classes into a greater or lesser number; to
classify or reclassify any unissued Shares of any Series or Classes into one or
more Series or Classes of Shares; to abolish any one or more Series or Classes
of Shares; to issue Shares to acquire other assets (including assets subject to,
and in connection with, the assumption of liabilities) and businesses; and to
take such other action with respect to the Shares as the Trustees may deem
desirable. Shares held in the treasury shall not confer any voting rights on the
Trustees and shall not be entitled to any dividends or other distributions
declared with respect to the Shares.
SECTION 3. INVESTMENT IN THE TRUST. The Trustees shall accept
investments in any Series from such persons and on such terms as they may from
time to time authorize. At the Trustees' discretion, such investments, subject
to applicable law, may be in the form of cash or securities in which that Series
is authorized to invest, valued as provided in Article V, Section 3. Investments
in a Series shall be credited to each Shareholder's account in the form of full
Shares at the Net Asset Value per Share next determined after the investment is
received or accepted as may be determined by the Trustees; provided, however,
that the Trustees may, in their sole discretion, (a) impose a sales charge upon
investments in any Series or Class, (b) issue fractional Shares, or (c)
determine the Net Asset Value per Share of the initial capital contribution. The
Trustees shall have the right to refuse to accept investments in any Series at
any time without any cause or reason therefor whatsoever.
SECTION 4. ASSETS AND LIABILITIES OF SERIES. All consideration received
by the Trust for the issue or sale of Shares of a particular Series, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof (including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may
be), shall be held and accounted for separately from the other assets of the
Trust and every other Series and are referred to as "assets belonging to" that
Series. The assets belonging to a Series shall belong only to that Series for
all purposes, and to no other Series, subject only to the rights of creditors of
that Series.
Any assets, income, earnings, profits, and proceeds thereof, funds, or
payments which are not readily identifiable as belonging to any particular
Series shall be allocated by the Trustees between and among one or more Series
as the Trustees deem fair and equitable. Each such allocation shall be
conclusive and binding upon the Shareholders of all Series for all purposes, and
such assets, earnings, income, profits or funds, or payments and proceeds
thereof shall be referred to as assets belonging to that Series. The assets
belonging to a Series shall be so recorded upon the books of the Trust, and
shall be held by the Trustees in trust for the benefit of the Shareholders of
that Series. The assets belonging to a Series shall be charged with the
liabilities of that Series and all expenses, costs, charges and reserves
attributable to that Series, except that liabilities and expenses allocated
solely to a particular Class shall be borne by that Class. Any general
liabilities, expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular Series or Class shall be
allocated and charged by the Trustees between or among any one or more of the
Series or Classes in such manner as the Trustees deem fair and equitable. Each
such allocation shall be conclusive and binding upon the Shareholders of all
Series or Classes for all purposes.
Without limiting the foregoing, but subject to the right of the
Trustees to allocate general liabilities, expenses, costs, charges or reserves
as herein provided, the debts, liabilities, obligations and expenses incurred,
contracted for or otherwise existing with respect to a particular Series shall
be enforceable against the assets of such Series only, and not against the
assets of the Trust generally or
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of any other Series. Notice of this contractual limitation on liabilities among
Series may, in the Trustees' discretion, be set forth in the certificate of
trust of the Trust (whether originally or by amendment) as filed or to be filed
in the Office of the Secretary of State of the State of Delaware pursuant to the
Delaware Act, and upon the giving of such notice in the certificate of trust,
the statutory provisions of Section 3804 of the Delaware Act relating to
limitations on liabilities among Series (and the statutory effect under Section
3804 of setting forth such notice in the certificate of trust) shall become
applicable to the Trust and each Series. Any person extending credit to,
contracting with or having any claim against any Series may look only to the
assets of that Series to satisfy or enforce any debt with respect to that
Series. No Shareholder or former Shareholder of any Series shall have a claim on
or any right to any assets allocated or belonging to any other Series.
SECTION 5. OWNERSHIP AND TRANSFER OF SHARES. The Trust shall maintain a
register containing the names and addresses of the Shareholders of each Series
and Class thereof, the number of Shares of each Series and Class held by such
Shareholders, and a record of all Share transfers. The register shall be
conclusive as to the identity of Shareholders of record and the number of Shares
held by them from time to time. The Trustees may authorize the issuance of
certificates representing Shares and adopt rules governing their use. The
Trustees may make rules governing the transfer of Shares, whether or not
represented by certificates.
SECTION 6. STATUS OF SHARES: LIMITATION OF SHAREHOLDER LIABILITY.
Shares shall be deemed to be personal property giving Shareholders only the
rights provided in this Trust Instrument. Every Shareholder, by virtue of having
acquired a Share, shall be held expressly to have assented to and agreed to be
bound by the terms of this Trust Instrument and to have become a party hereto.
No Shareholder shall be personally liable for the debts, liabilities,
obligations and expenses incurred by, contracted for, or otherwise existing with
respect to, the Trust or any Series. Neither the Trust nor the Trustees shall
have any power to bind any Shareholder personally or to demand payment from any
Shareholder for anything, other than as agreed by the Shareholder. Shareholders
shall have the same limitation of personal liability as is extended to
shareholders of a private corporation for profit incorporated in the State of
Delaware. Every written obligation of the Trust or any Series shall contain a
statement to the effect that such obligation may only be enforced against the
assets of the Trust or such Series; however, the omission of such statement
shall not operate to bind or create personal liability for any Shareholder or
Trustee.
ARTICLE V
DISTRIBUTIONS AND REDEMPTIONS
SECTION 1. DISTRIBUTIONS. The Trustees may declare and pay dividends
and other distributions, including dividends on Shares of a particular Series
and other distributions from the assets belonging to that Series. The amount and
payment of dividends or distributions and their form, whether they are in cash,
Shares or other Trust Property, shall be determined by the Trustees. Dividends
and other distributions may be paid pursuant to a standing resolution adopted
once or more often as the Trustees determine. All dividends and other
distributions on Shares of a particular Series shall be distributed pro rata to
the Shareholders of that Series in proportion to the number of Shares of that
Series they held on the record date established for such payment, except that
such dividends and distributions shall appropriately reflect expenses allocated
to a particular Class of such Series. The Trustees may adopt and offer to
Shareholders such dividend reinvestment plans, cash dividend payout plans or
similar plans as the Trustees deem appropriate.
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SECTION 2. REDEMPTIONS. Each Shareholder of a Series shall have the
right at such times as may be permitted by the Trustees to require the Series to
redeem all or any part of his or her Shares at a redemption price per Share
equal to the Net Asset Value per Share at such time as the Trustees shall have
prescribed by resolution. In the absence of such resolution, the redemption
price per Share shall be the Net Asset Value next determined after receipt by
the Series of a request for redemption in proper form less such charges as are
determined by the Trustees and described in the Trust's Registration Statement
for that Series under the Securities Act of 1933, as amended, or the 1940 Act.
The Trustees may specify conditions, prices, and places of redemption, and may
specify binding requirements for the proper form or forms of requests for
redemption. Payment of the redemption price may be wholly or partly in
securities or other assets at the value of such securities or assets used in
such determination of Net Asset Value, or may be in cash. Upon redemption,
Shares may be reissued from time to time. The Trustees may require Shareholders
to redeem Shares for any reason under terms set by the Trustees, including the
failure of a Shareholder to supply a personal identification number if required
to do so, or to have the minimum investment required, or to pay when due for the
purchase of Shares issued to him. To the extent permitted by law, the Trustees
may retain the proceeds of any redemption of Shares required by them for payment
of amounts due and owing by a Shareholder to the Trust or any Series or Class.
Notwithstanding the foregoing, the Trustees may postpone payment of the
redemption price and may suspend the right of the Shareholders to require any
Series or Class to redeem Shares during any period of time when and to the
extent permissible under the 1940 Act.
SECTION 3. DETERMINATION OF NET ASSET VALUE. The Trustees shall cause
the Net Asset Value of Shares of each Series or Class to be determined from time
to time in a manner consistent with applicable laws and regulations. The
Trustees may delegate the power and duty to determine Net Asset Value per Share
to one or more Trustees or officers of the Trust or to a custodian, depository
or other agent appointed for such purpose. The Net Asset Value of Shares shall
be determined separately for each Series or Class at such times as may be
prescribed by the Trustees or, in the absence of action by the Trustees, as of
the close of trading on the New York Stock Exchange on each day for all or part
of which such Exchange is open for unrestricted trading.
SECTION 4. SUSPENSION OF RIGHT OF REDEMPTION. If, as referred to in
Section 2 of this Article, the Trustees postpone payment of the redemption price
and suspend the right of Shareholders to redeem their Shares, such suspension
shall take effect at the time the Trustees shall specify, but not later than the
close of business on the business day next following the declaration of
suspension. Thereafter Shareholders shall have no right of redemption or payment
until the Trustees declare the end of the suspension. If the right of redemption
is suspended, a Shareholder may either withdraw his or her request for
redemption or receive payment based on the Net Asset value per Share next
determined after the suspension terminates.
SECTION 5. REDEMPTIONS NECESSARY FOR QUALIFICATION AS REGULATED
INVESTMENT COMPANY. If the Trustees shall determine that direct or indirect
ownership of Shares of any Series has or may become concentrated in any person
to an extent which would disqualify any Series as a regulated investment company
under the Internal Revenue Code, then the Trustees shall have the power (but not
the obligation) by lot or other means they deem equitable to (a) call for
redemption by any such person of a number, or principal amount, of Shares
sufficient to maintain or bring the direct or indirect ownership of Shares into
conformity with the requirements for such qualification and (b) refuse to
transfer or issue Shares to any person whose acquisition of Shares in question
would, in the Trustees' judgement, result in such disqualification. Any such
redemption shall be effected at the redemption price and in the manner provided
in this Article. Shareholders shall upon demand disclose to the Trustees in
writing such information concerning direct and indirect ownership of Shares as
the Trustees deem necessary to comply with the requirements of any taxing
authority.
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ARTICLE VI
SHAREHOLDERS' VOTING POWERS AND MEETINGS
SECTION 1. VOTING POWERS. The Shareholders shall have power to vote
only with respect to (a) the removal of Trustees as provided in Article II,
Section 3(d); (b) any investment advisory or management contract as provided in
Article VII, Section 1; (c) any termination of the Trust as provided in Article
X, Section 5; (d) the amendment of this Trust Instrument to the extent and as
provided in Article X, Section 9; and (e) such additional matters relating to
the Trust as may be required or authorized by law, this Trust Instrument, or the
By-laws or any registration of the Trust with the Commission or any State, or as
the Trustees may consider desirable.
On any matter submitted to a vote of the Shareholders, all Shares shall
be voted by individual Series or Class, except (a) when required by the 1940
Act, Shares shall be voted in the aggregate and not by individual Series or
Class, and (b) when the Trustees have determined that the matter affects the
interests of more than one Series or Class, then the Shareholders of all such
Series or Classes shall be entitled to vote thereon. 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. There
shall be no cumulative voting in the election of Trustees. Shares may be voted
in person or by proxy or in any manner provided for in the By-laws. The By-laws
may provide that proxies may be given by any electronic or telecommunications
device or in any other manner, but if a proposal by anyone other than the
officers or Trustees is submitted to a vote of the Shareholders of any Series or
Class, or if there is a proxy contest or proxy solicitation or proposal in
opposition to any proposal by the officers or Trustees, Shares may be voted only
in person or by written proxy. Until Shares of a Series are issued, as to that
Series the Trustees may exercise all rights of Shareholders and may take any
action required or permitted to be taken by Shareholders by law, this Trust
Instrument or the Bylaws.
SECTION 2. MEETINGS OF SHAREHOLDERS. Special meetings of the
Shareholders of any Series or Class may be called by the Trustees and shall be
called by the Trustees upon the written request of Shareholders owning at least
ten percent of the Outstanding Shares of such Series or Class entitled to vote.
Shareholders shall be entitled to at least fifteen days' notice of any meeting,
given as determined by the Trustees.
SECTION 3. QUORUM; REQUIRED VOTE. One-third of the Outstanding Shares
of each Series or Class, or one-third of the Outstanding Shares of the Trust,
entitled to vote in person or by proxy shall be a quorum for the transaction of
business at a Shareholders' meeting with respect to such Series or Class, or
with respect to the entire Trust, respectively. Any lesser number shall be
sufficient for adjournments. Any adjourned session of a Shareholders' meeting
may be held within a reasonable time without further notice. Except when a
larger vote is required by law, this Trust Instrument or the Bylaws, a majority
of the Outstanding Shares voted in person or by proxy shall decide any matters
to be voted upon with respect to the entire Trust and a plurality of such
Outstanding Shares shall elect a Trustee; provided, that if this Trust
Instrument or applicable law permits or requires that Shares be voted on any
matter by individual Series or Classes, then a majority of the Outstanding
Shares of that Series or Class (or, if required by law, a Majority Shareholder
Vote of that Series or Class) voted in person or by proxy voted on the matter
shall decide that matter insofar as that Series or Class is concerned.
Shareholders may act as to the Trust or any Series or Class by the written
consent of a majority (or such greater amount as may be required by applicable
law) of the Outstanding Shares of the Trust or of such Series or Class, as the
case may be.
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ARTICLE VII
CONTRACTS WITH SERVICE PROVIDERS
SECTION 1. INVESTMENT ADVISORY SERVICES. Subject to a Majority
Shareholder Vote, the Trustees may enter into one or more investment advisory
contracts on behalf of the Trust or any Series, providing for investment
advisory services, statistical and research facilities and services, and other
facilities and services to be furnished to the Trust or Series on terms and
conditions acceptable to the Trustees. Any such contract may provide for the
investment adviser to effect purchases, sales or exchanges of portfolio
securities or other Trust Property on behalf of the Trustees or may authorize
any officer or agent of the Trust to effect such purchases, sales or exchanges
pursuant to recommendations of the investment adviser. The Trustees may
authorize the investment adviser to employ one or more sub-advisers.
SECTION 2. PRINCIPAL UNDERWRITER. The Trustees may enter into contracts
on behalf of the Trust or any Series or Class, providing for the distribution
and sale of Shares by the other party, either directly or as sales agent, on
terms and conditions acceptable to the Trustees. The Trustees may adopt a plan
or plans of distribution with respect to Shares of any Series or Class and enter
into any related agreements, whereby the Series or Class finances directly or
indirectly any activity that is primarily intended to result in sales of its
Shares, subject to the requirements of Section 12 of the 1940 Act, Rule 12b-1
thereunder, and other applicable rules and regulations.
SECTION 3. TRANSFER AGENCY, SHAREHOLDER SERVICES, AND ADMINISTRATION
AGREEMENTS. The Trustees, on behalf of the Trust or any Series or Class, may
enter into transfer agency agreements, Shareholder service agreements, and
administration and management agreements with any party or parties on terms and
conditions acceptable to the Trustees.
SECTION 4. CUSTODIAN. The Trustees shall at all times place and
maintain the securities and similar investments of the Trust and of each Series
in custody meeting the requirements of Section 17(f) of the 1940 Act and the
rules thereunder. The Trustees, on behalf of the Trust or any Series, may enter
into an agreement with a custodian on terms and conditions acceptable to the
Trustees, providing for the custodian, among other things, to (a) hold the
securities owned by the Trust or any Series and deliver the same upon written
order or oral order confirmed in writing, (b) receive and receipt for any moneys
due to the Trust or any Series and deposit the same in its own banking
department or elsewhere, (c) disburse such funds upon orders or vouchers, and
(d) employ one or more sub-custodians.
SECTION 5. PARTIES TO CONTRACTS WITH SERVICE PROVIDERS. The Trustees
may enter into any contract referred to in this Article with any entity,
although one or more of the Trustees or officers of the Trust may be an officer,
director, trustee, partner, shareholder, or member of such entity, and no such
contract shall be invalidated or rendered void or voidable because of such
relationship. No person having such a relationship shall be disqualified from
voting on or executing a contract in his or her capacity as Trustee and/or
Shareholder, or be liable merely by reason of such relationship for any loss or
expense to the Trust with respect to such a contract or accountable for any
profit realized directly or indirectly therefrom; provided, that the contract
was reasonable and fair and not inconsistent with this Trust Instrument or the
By-laws.
Any contract referred to in Sections 1 and 2 of this Article shall be
consistent with and subject to the applicable requirements of Section 15 of the
1940 Act and the rules and orders thereunder with respect to its continuance in
effect, its termination, and the method of authorization and approval of such
contract or renewal. No amendment to a contract referred to in Section 1 of this
Article shall be
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effective unless assented to in a manner consistent with the requirements of
Section 15 of the 1940 Act, and the rules and orders thereunder.
ARTICLE VIII
EXPENSES OF THE TRUST AND SERIES
Subject to Article IV, Section 4, the Trust or a particular Series
shall pay, or shall reimburse the Trustees from the Trust estate or the assets
belonging to the particular Series, for their expenses and disbursements,
including, but not limited to, interest charges, taxes, brokerage fees and
commissions; expenses of issue, repurchase and redemption of Shares; certain
insurance premiums; applicable fees, interest charges and expenses of third
parties, including the Trust's investment advisers, managers, administrators,
distributors, custodians, transfer agents and fund accountants; fees of pricing,
interest, dividend, credit and other reporting services; costs of membership in
trade associations; telecommunications expenses; funds transmission expenses;
auditing, legal and compliance expenses; costs of forming the Trust and its
Series and maintaining its existence; costs of preparing and printing the
prospectuses of the Trust and each Series, statements of additional information
and Shareholder reports and delivering them to Shareholders; expenses of
meetings of Shareholders and proxy solicitations therefor; costs of maintaining
books and accounts; costs of reproduction, stationary and supplies; fees and
expenses of the Trustees; compensation of the Trust's officers and employees and
costs of other personnel performing services for the Trust or any Series; costs
of Trustee meetings; Commission registration fees and related expenses; state or
foreign securities laws registration fees and related expenses; and for such
non-recurring items as may arise, including litigation to which the Trust or a
Series (or a Trustee or officer of the Trust acting as such) is a party, and for
all losses and liabilities by them incurred in administering the Trust. The
Trustees shall have a lien on the assets belonging to the appropriate Series, or
in the case of an expense allocable to more than one Series, on the assets of
each such Series, prior to any rights or interests of the Shareholders thereto,
for the reimbursement to them of such expenses, disbursements, losses and
liabilities.
ARTICLE IX
LIMITATION OF LIABILITY AND INDEMNIFICATION
SECTION 1. LIMITATION OF LIABILITY. All persons contracting with or
having any claim against the Trust or a particular Series shall look only to the
assets of the Trust or such Series for payment under such contract or claim; and
neither the Trustees nor any of the Trust's officers, employees or agents,
whether past, present or future, shall be personally liable therefor. Every
written instrument or obligation on behalf of the Trust or any Series shall
contain a statement to the foregoing effect, but the absence of such statement
shall not operate to make any Trustee or officer of the Trust liable thereunder.
Provided they have exercised reasonable care and have acted under the reasonable
belief that their actions are in the best interest of the Trust, and Trustees
and officers of the Trust shall not be responsible or liable for any act or
omission or for neglect or wrongdoing of them or any officer, agent, employees,
investment adviser or independent contractor of the Trust, but nothing contained
in this Trust Instrument or in the Delaware Act shall protect any Trustee or
officer of the Trust against liability to the Trust or to Shareholders to which
he or she would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office.
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<PAGE> 14
SECTION 2. INDEMNIFICATION.
(a) Subject to the exceptions and limitations contained in subsection
(b) below:
(i) every person who is, or has been, a Trustee or an
officer, employee or agent of the Trust (a "Covered
Person") shall be indemnified by the Trust or the
appropriate Series to the fullest extent permitted by
law against liability and against all expenses
reasonably incurred or paid by him in connection with
any claim, action, suite or proceeding in which he or
she becomes involved as a party or otherwise by virtue
of his or her being or having been a Covered Person and
against amounts paid or incurred by him in the
settlement thereof;
(ii) as used herein, the words "claim", "action", "suit", or
"proceeding" shall apply to all claims, actions, suits
or proceedings (civil, criminal or other, including
appeals), actual or threatened, and the words
"liability" and "expenses" shall include, without
limitation, attorneys' fees, costs, judgments, amounts
paid in settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided hereunder to a Covered
Person:
(i) who shall have been adjudicated by a court or body
before which the proceeding was brought (A) to be liable
to the Trust or its Shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his
or her office, or (B) not to have acted in good faith in
the reasonable belief that his or her action was in the
best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Covered Person did not engage in
willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct
of his or her office; (A) by the court or other body
approving the settlement; (B) by at least a majority of
those Trustees who are neither Interested Persons of the
Trust nor are parties to the matter based upon a review
of readily available facts (as opposed to a full
trial-type inquiry); or (C) by written opinion of
independent legal counsel based upon a review of readily
available facts (as opposed to a full trial-type
inquiry).
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now or
hereafter be entitled, and shall insure to the benefit of the heirs, executors
and administrators of a Covered Person.
(d) To the maximum extent permitted by applicable law, expenses in
connection with the preparation of a defense to any claim, action, suit or
proceeding of the character described in subsection (a) of this Section may be
paid by the Trust or applicable Series from time to time prior to final
disposition thereof upon receipt of an undertaking by or on behalf of such
Covered Person that such amount will be paid over by him to the Trust or
applicable Series if it is ultimately determined that he or she is not entitled
to indemnification under this Section; provided, however, that either (i) such
Covered Person shall have provided appropriate security for such undertaking,
(ii) the Trust is insured against losses arising out of any such advance
payments or (iii) either a majority of the Trustees who are neither Interested
Persons of the Trust nor parties to the matter, or independent legal counsel in
a
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written opinion, shall have determined, based upon a review of readily available
facts (as opposed to a full trial-type inquiry) that there is reason to believe
that such Covered Person will not be disqualified from indemnification under
this Section.
(e) Any repeal or modification of this Article IX by the Shareholders
of the Trust, or adoption or modification of any other provision of the Trust
Instrument or By-laws inconsistent with this Article, shall be prospective only,
to the extent that such repeal or modification would, if applied
retrospectively, adversely affect any limitation on the liability of any Covered
Person or indemnification available to any Covered Person with respect to any
act or omission which occurred prior to such repeal, modification or adoption.
SECTION 3. INDEMNIFICATION OF SHAREHOLDERS. If any Shareholder or
former Shareholder of any Series shall be held personally liable solely by
reason of his or her being or having been a Shareholder and not because of his
or her acts or omissions or for some other reason, the Shareholder or former
Shareholder (or his or her heirs, executors, administrators or other legal
representatives or in the case of any entity, its general successor) shall be
entitled out of the assets belonging to the applicable Series to be held
harmless from and indemnified against all loss and expense arising from such
liability. The Trust, on behalf of the affected Series, shall, upon request by
such Shareholder, assume the defense of any claim made against such Shareholder
for any act or obligation of the Series and satisfy any judgment thereon from
the assets of the Series.
ARTICLE X
MISCELLANEOUS
SECTION 1. TRUST NOT A PARTNERSHIP. This Trust Instrument creates a
trust and not a partnership. No Trustee shall have any power to bind personally
either the Trust's officers or any Shareholder.
SECTION 2. TRUSTEE ACTION; EXPERT ADVICE; NO BOND OR SURETY. The
exercise by the Trustees of their powers and discretion hereunder in good faith
and with reasonable care under the circumstances then prevailing shall be
binding upon everyone interested. Subject to the provisions of Article IX, the
Trustees shall not be liable for errors of judgment or mistakes of fact or law.
The Trustees may take advice of counsel or other experts with respect to the
meaning and operation of this Trust Instrument, and subject to the provisions of
Article IX, shall not be liable for any act or omission in accordance with such
advice or for failing to follow such advice. The Trustees shall not be required
to give any bond as such, nor any surety if a bond is obtained.
SECTION 3. DERIVATIVE ACTIONS. Shareholders shall have the right to
bring derivative actions to the extent provided in the Delaware Act; provided,
however, that except as required under the 1940 Act, no derivative action my be
brought unless Shareholders owning not less than 10% of the outstanding Shares
of all Series of the Trust, or of the affected Series of the Trust, as the case
may be, join in the bringing of such derivative action.
SECTION 4. RECORD DATES. The Trustees may fix in advance a date up to
ninety (90) days before the date of any Shareholders' meeting, or the date for
the allotment of rights, or the date when any change or conversion or exchange
of Shares shall go into effect as a record date for the determination of the
Shareholders entitled to notice of, and to vote at, any such meeting, or
entitled to receive payment of such dividend or other distribution, or to
receive any such allotment of rights, or to exercise such rights in respect of
any such change, conversion or exchange of Shares.
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SECTION 5. TERMINATION OF THE TRUST.
(a) This Trust shall have perpetual existence. Subject to a Majority
Shareholder Vote of the Trust or of each Series to be affected, the Trustees
may:
(i) sell and convey all or substantially all of the assets
of the Trust or any affected Series to another Series or
to another entity which is an open-end investment
company as defined in the 1940 Act, or is a series
thereof, for adequate consideration, which may include
the assumption of all outstanding obligations, taxes and
other liabilities, accrued or contingent, of the Trust
or any affected Series, and which may include shares of
or interests in such Series, entity, or series thereof;
or
(ii) at any time sell and convert into money all or
substantially all of the assets of the Trust or any
affected Series.
Upon making reasonable provision for the payment of all known
liabilities of the Trust or any affected Series in either (i) or (ii), by such
assumption or otherwise, the Trustees shall distribute the remaining proceeds or
assets (as the case may be) ratably among the Shareholders of the Trust or any
affected Series; however, the payment to any particular Class of such Series may
be reduced by any fees, expenses or charges allocated to that Class.
(b) The Trustees may take any of the actions specified in subsection
(a)(i) and (ii) above without obtaining a Majority Shareholder Vote of the Trust
or any Series if a majority of the Trustees determines that the continuation of
the Trust or Series is not in the best interests of the Trust, such Series, or
their respective Shareholders as a result of factors or events adversely
affecting the ability of the Trust or such Series to conduct its business and
operations in an economically viable manner. Such factors and events may include
the inability of the Trust or a Series to maintain its assets at an appropriate
size, changes in laws or regulations governing the Trust or the Series or
affecting assets of the type in which the Trust or Series invests, or economic
developments or trends having a significant adverse impact on the business or
operations of the Trust or such Series.
(c) Upon completion of the distribution of the remaining proceeds or
assets pursuant to subsection (a), the Trust or affected Series shall terminate
and the Trustees and the Trust shall be discharged of any and all further
liabilities and duties hereunder with respect thereto and the right, title and
interest of all parties therein shall be canceled and discharged. Upon
termination of the Trust, following completion of winding up of its business,
the Trustees shall cause a certificate of cancellation of the Trust's
certificate of trust to be filed in accordance with the Delaware Act, which
certificate of cancellation may be signed by any one Trustee.
SECTION 6. REORGANIZATION. Notwithstanding anything else herein, to
change the Trust's form of organization the Trustees may, without Shareholder
approval, (a) cause the Trust to merge or consolidate with or into one or more
entities, if the surviving or resulting entity is the Trust or another open-end
management investment company registered under the 1940 Act, or a series
thereof, that will succeed to or assume the Trust's registration under the 1940
Act, or (b) cause the Trust to incorporate under the laws of the State of
Delaware. Any agreement of merger or consolidation or certificate of merger may
be signed by a majority of Trustees and facsimile signatures conveyed by
electronic or telecommunication means shall be valid.
Pursuant to and in accordance with the provisions of Section 3815(f) or
the Delaware Act, an agreement of merger or consolidation approved by the
Trustees in accordance with this Section may
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effect any amendment to the Trust Instrument or effect the adoption of a new
trust instrument of the Trust if it is the surviving or resulting trust in the
merger or consolidation.
SECTION 7. TRUST INSTRUMENT. The original or a copy of this Trust
Instrument and of each amendment hereto or Trust Instrument supplemental shall
be kept at the office of the Trust where it may be inspected by any Shareholder.
Anyone dealing with the Trust may rely on a certificate by a Trustee or an
officer of the Trust as to the authenticity of the Trust Instrument or any such
amendments or supplements and as to any matters in connection with the Trust.
The masculine gender herein shall include the feminine and neuter genders.
Headings herein are for convenience only and shall not affect the construction
of this Trust Instrument. This Trust Instrument may be executed in any number of
counterparts, each of which shall be deemed an original.
SECTION 8. APPLICABLE LAW. This Trust Instrument and the Trust created
hereunder are governed by and construed and administered according to the
Delaware Act and the applicable laws of the State of Delaware; provided,
however, that there shall not be applicable to the Trust, the Trustees or this
Trust Instrument (a) the provisions of Section 3540 of Title 12 of the Delaware
Code, or (b) any provisions of the laws (statutory or common) of the State of
Delaware (other than the Delaware Act) pertaining to trusts which relate to or
regulate (i) the filing with any court or governmental body or agency of trustee
accounts or schedules of trustee fees and charges, (ii) affirmative requirements
to post bonds for trustees, officers, agents or employees of a trust, (iii) the
necessity for obtaining court or other governmental approval concerning the
acquisition, holding or disposition of real or personal property, (iv) fees or
other sums payable to trustees, officers, agents or employees of a trust, (v)
the allocation of receipts and expenditures to income or principal, (vi)
restrictions or limitations on the permissible nature, amount or concentration
of trust investments or requirements relating to the titling, storage or other
manner of holding of trust assets, or (vii) the establishment of fiduciary or
other standards of responsibilities or limitations on the acts or powers of
trustees, which are inconsistent with the limitations or liabilities or
authorities and powers of the Trustees set forth or referenced in this Trust
Instrument. The Trust shall be of the type commonly called a Delaware business
trust, and, without limiting the provisions hereof, the Trust may exercise all
powers which are ordinarily exercised by such a trust under Delaware law. The
Trust specifically reserves the right to exercise any of the powers or
privileges afforded to trusts or actions that may be engaged in by trusts under
the Delaware Act, and the absence of a specific reference herein to any such
power, privilege or action shall not imply that the Trust may not exercise such
power or privilege or take such actions.
SECTION 9. AMENDMENTS. The Trustees may, without any Shareholder vote,
amend or otherwise supplement this Trust Instrument by making an amendment, a
Trust Instrument supplemental hereto or an amended and restated Trust
Instrument; provided, that Shareholders shall have the right to vote on any
amendment (a) which would affect the voting rights of Shareholders granted in
Article VI, Section 1; (b) to this Section; (c) required to be approved by
Shareholders by law or by the Trust's registration statement(s) filed with the
Commission; and (d) submitted to them by the Trustees in their discretion. Any
amendment submitted to Shareholders which the Trustees determine would affect
the Shareholders of any Series shall be authorized by vote of the Shareholders
of such Series and no vote shall be required of Shareholders of a Series not
affected. Notwithstanding anything else herein, any amendment to Article IX
which would have the effect of reducing the indemnification and other rights
provided thereby to Trustees, officers, employees, and agents of the Trust or to
Shareholders or former Shareholders, and any repeal or amendment of this
sentence shall each require the affirmative vote of the holders of two-thirds of
the outstanding Shares of the Trust entitled to vote thereon.
SECTION 10. FISCAL YEAR. The fiscal year of the Trust shall end on a
specified date as set forth in the By-Laws. The Trustees may change such fiscal
year without Shareholder approval.
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SECTION 11. SEVERABILITY. The provisions of this Trust Instrument are
severable. If the Trustees determine, with the advice of counsel, that any
provision hereof conflicts with the 1940 Act, the regulated investment company
provisions of the Internal Revenue Code or with other applicable laws and
regulations, the conflicting provision shall be deemed never to have constituted
a part of this Trust Instrument; provided, however, that such determination
shall not affect any of the remaining provisions of this Trust Instrument or
render invalid or improper any action taken or omitted prior to such
determination. If any provision hereof shall be held invalid or unenforceable in
any jurisdiction, such invalidity or unenforceability shall attach only to such
provision only in such jurisdiction and shall not affect any other provision of
this Trust Instrument.
IN WITNESS WHEREOF, the undersigned Trustees have executed this Trust
Instrument as of the date first above written.
/s/ Shelly J. Meyers
----------------------------
Shelly J. Meyers, as
Trustee and not individually
/s/ Leslie C. Sheppard
----------------------------
Leslie C. Sheppard, as
Trustee and not individually
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SCHEDULE A
TO
TRUST INSTRUMENT
FOR
MEYERS SHEPPARD INVESTMENT TRUST
APPROVED SERIES
Meyers Sheppard Pride Fund
A-1
<PAGE> 1
Exhibit 5
Form of Investment Management Agreement dated as of May 9, 1996 Between the
Registrant and Meyers, Sheppard & Co., LLC
<PAGE> 2
INVESTMENT MANAGEMENT AGREEMENT
This INVESTMENT MANAGEMENT AGREEMENT (the "Agreement") is entered into
as of May 9, 1996, by and between Meyers Sheppard Investment Trust (the
"Trust"), a business trust organized under the laws of the State of Delaware,
whose principal place of business is 9107 Wilshire Blvd., Suite 700, Beverly
Hills, California 90210, and Meyers, Sheppard & Co., LLC, a California limited
liability company (the "Investment Manager"), whose principal place of business
is also 9107 Wilshire Blvd., Suite 700, Beverly Hills, California 90210, with
reference to the following facts:
RECITALS
WHEREAS, on or about April 1, 1996, the Trust filed a Registration
Statement on Form N- 1A (File Nos. 33-32111 and 811-7581) (the "Registration
Statement") under the Investment Trust Act of 1940, as amended (the "Investment
Company Act") and the Securities Act of 1933, as amended (the "1933 Act") with
the Securities and Exchange Commission (the "Commission") in connection with the
registration as an open-ended investment company of a separate series of the
beneficial interests of the Trust, par value $.00001 (the "Shares") designated
the Meyers Sheppard Pride Fund (the "Fund");
WHEREAS, the Investment Manager is registered as an investment manager
under the Investment Advisers Act of 1940, as amended (the "Investment Advisers
Act");
WHEREAS, the Trust desires to retain the Investment Manager to provide
general supervision relative to the management and administration of the affairs
of the Trust with respect to the Fund pursuant to the terms and conditions of
this Agreement;
WHEREAS, the Trust also desires to retain the Investment Manager for
the purpose of making investment decisions for the Trust with respect to the
Fund pursuant to the terms and conditions of this Agreement; and
WHEREAS, the Investment Manager desires to provide services to the
Trust with respect to the Fund pursuant to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises contained in this Agreement, the Trust and the Administrator (who are
sometimes individually referred to as a "party" and collectivelyefefred d to as
the "parties") agree as follows:
AGREEMENT
1. EMPLOYMENT
The Trust hereby employs the Investment Manager to provide
general supervision relative to the management and administration of the affairs
of the Trust with respect to the Fund and to also provide investment advisory
services in connection with the Fund, for the compensation and on the terms and
conditions set forth herein.
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<PAGE> 3
2. SCOPE OF MANAGEMENT SERVICES
In providing services to the Trust relative to the management
and administration of the Fund, the Investment Manager shall, subject to the
supervision of the Board of Trustees (the "Trustees" or the "Board") and
officers of the Trust, provide ongoing supervision of the operations and the
functioning of the Trust with respect to the Fund (including other service
providers engaged by the Trust to provide services to the Fund), and consult
with or advise the Board on the policies, procedures and operations relating to
the Fund.
3. PROVISION OF INVESTMENT ADVISORY SERVICES
In providing investment advisory services to the Trust with
respect to the Fund, the Investment Manager shall manage the investment and
reinvestment of the Fund's assets and agrees to use its best professional
judgment to make timely investment decisions in accordance with the provisions
of this Agreement, subject to the direction of the Trustees and officers of the
Trust, for the period, in the manner and on the terms hereinafter set forth. In
providing portfolio management services to the Trust with respect to the Fund,
the Investment Manager shall be subject to the investment objectives, policies
and restrictions relating to the Fund as set forth in the then current
Registration Statement, including current prospectus and statement of additional
information (as they may be modified from time to time), the Trust Instrument
and By-laws and the investment restrictions set forth in the Investment Company
Act and the Rules thereunder (as and to the extent set forth in such
registration statement or in other documentation furnished to the Investment
Manager by the Trust), to the provisions of the Internal Revenue Code applicable
to the Trust as a regulated investment company and to the supervision and
control of the Trustees. The Investment Manager shall not, without the prior
approval of the Trust, effect any transactions which would cause the Trust to be
out of compliance with any of such objectives, restrictions or policies.
4. OTHER OBLIGATIONS AND SERVICES
The Investment Manager shall make available its officers and
employees to the Trustees and officers of the Trust for consultation and
discussions regarding the administration and management of the Trust with
respect to the Fund and its investment activities. The Investment Manager will
adopt a written code of ethics complying with the requirements of Rule 17j-1
under the Investment Company Act and will provide the Trust with a copy of the
code of ethics and evidence of its adoption. Within forty-five (45) days of the
end of the last calendar quarter of each year while this Agreement is in effect,
the President or a Vice President of the Investment Manager shall certify to the
Trust that the Investment Manager has complied with the requirements of Rule
17j-1 during the previous year and that there has been no violation of the
Investment Manager's code of ethics or, if such a violation has occurred, that
appropriate action was taken in response to such violation. Upon the written
request of the Trust, the Investment Manager shall permit the Trust, its
employees or its agents to examine the reports required to be made by the
Investment Manager by Rule 17j-1(c)(1).
5. TRANSACTION PROCEDURES
All portfolio transactions for the Fund will be consummated by
payment to or delivery by the designated custodian of the Fund, Wells Fargo
Bank, N.A., or any successor thereof (the "Custodian"), or such depositories or
agents as may be designated by the Custodian in writing, as custodian for the
Fund, of all cash and/or securities due to or from the Fund, and the Investment
Manager shall not have possession or custody thereof or any responsibility or
liability with respect to such custody. The Investment Manager shall advise and
confirm in writing to the Custodian all investment orders for the Fund placed by
it with brokers and dealers at the time and in the manner set
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<PAGE> 4
forth in Exhibit "A" attached hereto (as amended from time to time). The Trust
shall issue to the Custodian such instructions as may be appropriate in
connection with the settlement of any transaction initiated by the Investment
Manager. The Trust shall be responsible for all custodial arrangements and the
payment of all custodial charges and fees, and, upon giving proper instructions
to the Custodian, the Investment Manager shall have no responsibility or
liability with respect to custodial arrangements or the acts, omissions or other
conduct of the Custodian.
6. BROKERAGE TRANSACTIONS AND ALLOCATIONS
The Investment Manager shall have authority and discretion to
select brokers and dealers to execute Fund transactions initiated by the
Investment Manager, and to select the markets on or in which the transactions
will be executed. The Investment Manager will render regular reports to the
Trust of the total brokerage business placed on behalf of the Fund by the
Investment Manager and the manner in which such brokerage business has been
allocated.
In selecting brokers and dealers to execute Fund transactions,
and in selecting markets, the Investment Manager's primary responsibility shall
be to seek to obtain best net price and execution for the Fund. However, this
responsibility shall not obligate the Investment Manager to solicit competitive
bids for each transaction or to seek the lowest available commission cost to the
Fund, so long as the Investment Manager reasonably believes that the broker or
dealer selected by it can be expected to obtain a "best execution" market price
on the particular transaction and determines in good faith that the commission
cost is reasonable in relation to the value of the brokerage and research
services (as defined in Section 28(e)(3) of the Securities Exchange Act of 1934,
as amended), provided by such broker or dealer to the Investment Manager viewed
in terms of either that particular transaction or of the Investment Manager's
overall responsibilities with respect to its clients, including the Trust and
the Fund, as to which the Investment Manager exercises investment discretion,
notwithstanding that the Trust and/or the Fund may not be the direct or
exclusive beneficiary of any such services or that another broker may be willing
to charge the Trust and/or the Fund a lower commission on the particular
transaction.
The Investment Manager shall not execute any portfolio
transactions for the Fund with a broker or dealer which is an "affiliated
person" (as defined in the Investment Company Act) of the Fund or of the
Investment Manager without the prior written approval of the Fund. The Fund will
provide the Investment Manager with a list of brokers and dealers which are
"affiliated persons" of the Trust and/or the Fund.
7. PROXIES
The Trust will vote all proxies solicited by or with respect
to the issuers of securities in which assets of the Fund may be invested from
time to time. At the request of the Trust, the Investment Manager shall provide
the Trust with its recommendations as to the voting of such proxies.
8. COMPENSATION
(a) INVESTMENT MANAGEMENT FEE. For the services provided
under this Agreement by the Investment Manager, the Trust shall pay the
Investment Manager a fee (the "Investment Management Fee"), calculated on a
daily basis for each day during the effective term of this Agreement, equal to
the sum of the net asset value of the Fund for such day multiplied by a
fraction, the numerator of which is 1.00%, and the denominator of which is 365
(366 in leap years). If the day for which calculation is required is a weekend
or holiday or other day for which the net asset value has not been computed, the
net asset value for the last day prior thereto shall be used for the
calculation. The Trust
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<PAGE> 5
shall determine the amount of the Investment Management Fee on a monthly basis,
and shall pay the Investment Management Fee for each month to the Investment
Manager as promptly as possible after the first business day of the month
following the month of calculation.
(b) REIMBURSEMENT OF EXPENSES. The Trust shall reimburse the
Investment Manager Agent for its reasonable and actual out-of-pocket expenses
incurred in connection with the performance of its duties under this Agreement;
provided, however, the Investment Manager shall not be reimbursed for any
out-of-pocket expenses for travel and lodging incurred for attendance at any
meeting within of the Los Angeles metropolitan area. Each written request for
reimbursement of the Investment Manager's expenses under this paragraph shall be
directed to the President of the Trust and shall show in reasonable detail the
expenditures incurred by the Investment Manager and the purposes therefor,
together with any documentation required by the Trust to verify such payment.
(c) STATE SECURITIES LIMITATIONS. If, in any fiscal year, the
sum of the Fund's expenses (including the fee payable pursuant to Paragraph 8,
but excluding taxes, interest, brokerage commissions relating to the purchase or
sale of portfolio securities, distribution expenses and extraordinary expenses
such as for litigation) exceeds the expense limitations, if any, applicable to
the Fund imposed by state securities administrators, as such limitations may be
modified from time to time, the Investment Manager shall reimburse the Fund in
the amount of it such excess to the extent required by such expense limitations;
provided, however, that the amount of such reimbursement shall not exceed the
amount of the Investment Management Fee during such fiscal year.
(d) WAIVER OF FEES AND EXPENSES. The Investment Manager
reserves the right from time to time in its sole discretion, and without any
obligation to do so, to reduce and/or waive all or a portion of the Investment
Management Fee otherwise payable hereunder and/or undertake to pay or reimburse
the Fund for all or a portion of its expenses not otherwise required to be borne
or reimbursed by the Investment Manager. Any such fee reduction, waiver or
undertaking may be discontinued or modified by the Investment Manager at any
time.
9. EXPENSES OF THE TRUST
It is understood that the Trust will pay all its expenses
other than those expressly assumed by the Investment Manager herein, which
expenses payable by the Trust shall include:
(a) Fees and expenses of the Investment Manager.
(b) Auditing and accounting fees and expenses.
(c) Fees and expenses for transfer agent, registrar,
dividend disbursing agent and shareholder recordkeeping services (including
reasonable fees and expenses payable to the Investment Manager for such
services).
(d) Fees and expenses of the custodian of the Trust's
assets, including expenses incurred in performing fund accounting and
recordkeeping services provided by the custodian.
(e) Expenses of obtaining quotations for calculating the
value of the Fund's net assets.
(f) Salaries and other compensation of any of its
executive officers and employees who are not officers, directors, stockholders
or employees of the Investment Manager or any of its affiliates.
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<PAGE> 6
(g) Taxes and governmental fees levied against the Fund
and the expenses of preparing tax returns and reports.
(h) Brokerage fees and commissions in connection with the
purchase and sale of portfolio securities for the Fund.
(i) Organizational expenses.
(j) Costs, including the interest expense, of borrowing
money.
(k) Costs and/or fees incident to meeting of trustees of
the Trust and/or shareholders of the Fund, the preparation and mailings of proxy
material, prospectuses and reports of the Trust to shareholders of the Fund, the
filing of reports with regulatory bodies, the maintenance of the legal existence
of the Trust and the Fund, membership dues and fees of investment company
industry trade associations, and the registration of Shares with federal and
state securities authorities.
(l) Legal fees and expenses (including reasonable fees for
legal services rendered by the Investment Manager or its affiliates), including
the legal fees related to the registration and continued qualification of the
Shares for sale (and of maintaining the registration of the Fund).
(m) Costs of printing stock certificates, if any, representing
Shares or any other expenses, including clerical expenses of issue, redemption,
or repurchase of Shares.
(n) Trustees' fees and expenses of Trustees who are not
directors, officers, employees or stockholders of the Investment Manager or any
of its affiliates.
(o) Its pro rata portion of the fidelity bond required by
Section 17(g) of the Investment Company Act, or other insurance premiums.
(p) Fees payable to federal and state authorities in
connection with the registration of the Shares.
(q) Litigation and indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of the business of
the Fund or the Trust.
10. OTHER INVESTMENT ACTIVITIES
(a) OTHER ACCOUNTS. The Trust acknowledges that the Investment
Manager or one or more of its affiliates has investment responsibilities,
renders investment advice to and performs other investment advisory services for
other individuals or entities ("Client Accounts"), and that the Investment
Manager, its affiliates or any of its or their directors, officers, agents or
employees may buy, sell or trade in any securities for its or their respective
accounts ("Affiliated Accounts"). Subject to the provisions of Paragraphs 2 and
4 hereof, the Trust agrees that the Investment Manager or its affiliates may
give advice or execute investment responsibility and take such other action with
respect to other Client Accounts and Affiliated Accounts which may differ from
the advice given or the timing or nature of action taken with respect to the
Trust; provided, however, that the Investment Manager acts in good faith;
provided, further, that it is the Investment Manager's policy to allocate,
within its reasonable discretion, investment opportunities to the Trust over a
period of time on a fair and equitable basis relative to the Client Accounts and
the Affiliated Accounts, taking into account the cash position and the
investment objectives and policies of the Trust with respect to the Fund and any
specific investment restrictions applicable thereto. The Trust acknowledges that
one or more Client Accounts and Affiliated
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<PAGE> 7
Accounts may at any time hold, acquire, increase, decrease, dispose of or
otherwise deal with positions in investments in which the Trust and/or the Fund
may have an interest from time to time, whether in transactions which involve
the Trust, the Fund or otherwise. The Investment Manager shall have no
obligation to acquire for the Trust and/or the Fund a position in any investment
which any Client Account or Affiliated Account may acquire, and the Trust shall
have no first refusal, co-investment or other rights in respect of any such
investment, either for the Trust, the Fund or otherwise.
(b) CROSS-INTERESTS. Subject to and in accordance with the
Trust Instrument and By-Laws of the Trust and Section 10(a) of the Investment
Company Act, it is understood that Trustees, officers and agents of the Trust
and shareholders of the Fund are or may be interested in the Investment Manager
or its affiliates as managers, officers, agents or members of the Investment
Manager or its affiliates; that the Investment Manager and its officers, agents
and members or its affiliates are or may be interested in the Trust as Trustees,
officers, agents or otherwise or may be interested in the Fund as shareholders
or otherwise; and that the effect of any such interests shall be governed by
said Trust Instrument, By-Laws and the Investment Company Act.
11. LIMITATION OF LIABILITY OF TRUST
Reference is hereby made to the Trust Instrument dated March
26, 1996 establishing the Trust, as amended, and the Certificate of Trust which
has been filed with the Secretary of State of the State of Delaware on March 26,
1996 and elsewhere as required by law, and to any and all amendments thereto
hereafter filed. The name refers to the Trustees under said Trust Instrument and
Certificate of Trust, as Trustees and not personally, and no Trustee, officer,
agent or employee of the Trust or shareholder of the Fund shall be held to any
personal liability hereunder or in connection with the affairs of the Trust or
the Fund including, without limitation, any claims against or obligations of the
Trust or the Fund. The Trust estate alone shall be liable for any such
liabilities, claims or obligations (with the exception of any Fund for whom the
Investment Manager has not provided services under this Agreement and for which
the claims or obligations therefore do not relate). Without limiting the
generality of the foregoing, neither the Investment Manager nor any of its
managers, officers members, employees or agents shall, under any circumstances,
have recourse or cause or willingly permit recourse to be had directly or
indirectly to any personal, statutory, or other liability of any Trustee,
officer, agent or employee of the Trust or shareholder of any Fund of any
successor of the Trust or any Fund, whether such liability now exists or is
hereafter incurred for claims against the Trust estate or obligations of the
Trust estate, but shall look for payment solely to said Trust estate, or the
assets of such successor of the Trust.
12. LIMITATION OF LIABILITY
(a) LIMITATION. The Investment Manager shall not be liable for
any action taken, omitted or suffered to be taken by it in its reasonable
judgment, in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement, or in
accordance with (or in the absence of) specific directions or instructions from
the Trust or the Trustees or officers of the Trust; provided, however, that such
acts or omissions shall not have resulted from the Investment Manager's willful
misfeasance, bad faith, gross negligence, a violation of the standard of care
established by and applicable to the Investment Manager in its actions under
this Agreement or reckless disregard of its obligations and duties hereunder
(hereinafter "Disabling Conduct").
(b) INDEMNIFICATION. The Fund will indemnify the Investment
Manager against, and hold it harmless from, any and all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and expenses) not
resulting from Disabling Conduct by the Investment Manager. Indemnification
shall be made only following: (i) a final decision on the merits by a court or
other body
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<PAGE> 8
before whom the proceeding was brought that the Investment Manager was not
liable by reason of Disabling Conduct or (ii) in the absence of such a decision,
a reasonable determination, based upon a review of the facts, that the
Investment Manager was not liable by reason of Disabling Conduct by (1) the vote
of a majority of a quorum of Trustees of the Fund who are neither "interested
persons" of the Fund nor parties to the proceeding ("disinterested non-party
Trustees") or (2) an independent legal counsel in a written opinion. The
Investment Manager shall be entitled to advances from the Fund for payment of
the reasonable expenses incurred by it in connection with the matter as to which
it is seeking indemnification in the manner and to the fullest extent
permissible under the Delaware Business Trust Act. The Investment Manager shall
provide to the Fund a written affirmation of its good faith belief that the
standard of conduct necessary for indemnification by the Fund has been met and a
written undertaking to repay any such advance if it should ultimately be
determined that the standard of conduct has not been met. In addition, at least
one of the following additional conditions shall be met: (A) the Investment
Manager shall provide security in form and amount acceptable to the Fund for its
undertaking; (B) the Fund is insured against losses arising by reason of the
advance; or (C) a majority of a quorum of disinterested non-party Trustees, or
independent legal counsel, in a written opinion, shall have determined, based on
a review of facts readily available to the Fund at the time the advance is
proposed to be made, that there is reason to believe that the Investment Manager
will ultimately be found to be entitled to indemnification.
(c) INVESTMENT COMPANY ACT. No provision of this
agreement shall be construed to protect the Investment Manager from liability in
violation of Section 17(i) of the Investment Company Act.
13. ADDITIONAL FUNDS
(a) ESTABLISHMENT OF ADDITIONAL FUNDS. In the event that
the Trust establishes one or more portfolios or series other than the Fund (each
an "Additional Fund") with respect to which it desires retain the Investment
Manager to provide management and investment advisory services pursuant to the
terms of this Agreement, the Trust shall promptly notify the Investment Manager
in writing. If the Investment Manager is willing to render such services with
respect to the Additional Fund, it shall notify the Trust in writing. Upon such
mutual consent by the parties, the provision to the Trust of fund accounting
services by the Investment Manager with respect to the Additional Fund and the
mutual rights and obligations of the parties shall, except as otherwise agreed
upon in writing by the parties, and subject to compliance with the requirements
of the Investment Company Act relative to Trustee and shareholder approval, be
governed by the terms of this Agreement (with the Fund and each Additional Fund
being collectively referred to as the Fund hereunder). The Trust shall have no
obligation to request the Investment Manager administer the Additional Fund
pursuant to the terms of this Agreement or otherwise, and the Investment Manager
shall have no obligation to agree to so administer the Additional Fund.
(b) TERMINATION OF LESS THAN ALL FUNDS. In the event the
Investment Manager provides fund accounting services to more than one Fund under
the terms of this Agreement, this Agreement shall, in the event it is
specifically terminated with respect to less than all of the Funds, remain in
effect with respect to the remaining Funds.
14. REPRESENTATIONS, WARRANTIES AND COVENANTS
(a) BY TRUST. In addition to any other representations,
covenants and warranties of the Trust under this Agreement, the Trust hereby
represents, warrants and covenants to the Investment Manager, each of which is
deemed, as the case may be, to be a separate representation, warranty and
covenant, that:
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<PAGE> 9
(i) Corporate Organization, Power and Authority.
The Trust: (1) is a business trust duly organized, validly existing and
in good standing under the laws of the State of Delaware; (2) has all
requisite corporate power and authority to enter into this Agreement;
(3) has the corporate or other power to own its properties and carry on
its business as the same is now being conducted; and (4) is in good
standing and is qualified to transact business in each jurisdiction in
which the nature of property owned or leased by it or the conduct of
its business requires it to be so qualified, except where the failure
to be in good standing or to be duly qualified to transact business
would not be likely to have a material adverse effect on the business,
assets or financial condition of the Trust taken as a whole.
(ii) Authorization and Validity of Agreement. The
execution and delivery of this Agreement by the Trust and the
performance of the transactions herein contemplated have been duly
authorized by the Board of Trustees of the Trust, and no further
corporate or other action on the part of the Trust is necessary to
authorize this Agreement or the performance of such transactions. This
Agreement has been duly executed and delivered by the Trust and,
assuming due authorization, execution and delivery by the Investment
Manager, is valid or binding upon the Trust in accordance with its
terms (except as limited by (1) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in affect relating to
creditor's rights generally and (2) general principles of equity
{regardless of whether such enforcement is considered in a proceeding
in equity or at law}).
(iii) No Breach or Conflict. Neither the execution
or delivery of this Agreement or the performance by the Trust of the
transactions contemplated herein will breach or conflict with any of
the provisions of the Trust's Certificate of Trust, Declaration of
Trust or By-laws, nor, to the best of the knowledge and belief of the
Board of Trustees of the Trust, with or without the giving of notice or
the lapse of time or both, will (1) violate or constitute an event of
default under any agreement or other instrument or any order, judgment
or ruling of any governmental authority to which the Trust is a party
or by which any of its property is bound, or (2) require the consent or
approval of any other person or governmental authority, except in each
case with respect to any of the foregoing which would not be likely to
have a material adverse effect on the business, assets or financial
condition of the Trust taken as a whole.
(iv) Delivery of Prospectus. The Trust will
deliver to the Investment Manager a true and complete copy of the then
current Registration Statement, including prospectus and statement of
additional information, for the Fund as effective from time to time and
such other documents governing the investment of the Fund's assets and
such other information as is necessary for the Investment Manager to
carry out its obligations under this Agreement.
(b) BY INVESTMENT MANAGER. In addition to any other
representations, covenants and warranties of the Investment Manager under this
Agreement, the Investment Manager hereby represents, warrants and covenants to
the Trust, each of which is deemed, as the case may be, to be a separate
representation, warranty and covenant, that:
(i) Corporate Organization, Power and Authority.
The Investment Manager: (1) is a limited liability company duly
organized, validly existing and in good standing under the laws of the
State of California; (2) has all requisite corporate power and
authority to enter into this Agreement; (3) has the corporate or other
power to own its properties and carry on its business as the same is
now being conducted; and (4) is in good standing and is qualified to
transact business in each jurisdiction in which the nature of property
owned or leased by it or
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<PAGE> 10
the conduct of its business requires it to be so qualified, except
where the failure to be in good standing or to be duly qualified to
transact business would not be likely to have a material adverse effect
on the business, assets or financial condition of the Investment
Manager taken as a whole.
(ii) Authorization and Validity of Agreement. The
execution and delivery of this Agreement by the Investment Manager and
the performance of the transactions herein contemplated have been duly
authorized by the Managers of the Investment Manager, and no further
corporate or other action on the part of the Investment Manager is
necessary to authorize this Agreement or the performance of such
transactions. This Agreement has been duly executed and delivered by
the Investment Manager and, assuming due authorization, execution and
delivery by the Trust, is valid or binding upon the Investment Manager
in accordance with its terms (except as limited by (1) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in affect relating to creditor's rights generally and (2)
general principles of equity {regardless of whether such enforcement is
considered in a proceeding in equity or at law}).
(iii) No Breach or Conflict. Neither the execution
or delivery of this Agreement or the performance by the Investment
Manager of the transactions contemplated herein will breach or conflict
with any of the provisions of the Articles of Organization or Operating
Agreement of the Investment Manager, nor, to the best of the knowledge
and belief of the Managers of the Investment Manager, with or without
the giving of notice or the lapse of time or both, will (1) violate or
constitute an event of default under any agreement or other instrument
or any order, judgment or ruling of any governmental authority to which
the Investment Manager is a party or by which any of its property is
bound, or (2) require the consent or approval of any other person or
governmental authority, except in each case with respect to any of the
foregoing which would not be likely to have a material adverse effect
on the business, assets or financial condition of the Investment
Manager taken as a whole.
(iv) Performance. The Investment Manager will
perform its obligations under this Agreement in accordance with the
standard of care and diligence of the industry.
(v) Registration. It is registered as an
"Investment Adviser" under the Investment Advisers Act.
(vi) Records. It will maintain, keep current and
preserve on behalf of the Trust, in the manner required or permitted by
the Act and the Rules promulgated thereunder, the records identified in
Exhibit "A" attached hereto (as Exhibit "A" may be amended from time to
time). The Investment Manager agrees that such records are the property
of the Trust, and will be surrendered to the Trust promptly upon
request.
(vii) Information. Upon request, the Investment
Manager will promptly supply the Trust with any information concerning
the Investment Manager and its managers, employees, members, agents and
affiliates which the Trust may reasonably require in connection with
the preparation of the registration statement, proxy material, reports,
responses to shareholder inquiries or other documents required to be
filed under the Investment Company Act, the Securities Act of 1933, as
amended, or other applicable securities laws with respect to the Trust.
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<PAGE> 11
15. TERM; EARLY TERMINATION
(a) INITIAL TERM; RENEWALS. This Agreement shall continue
until two years from the date hereof and thereafter for successive one-year
periods; provided, however, such continuance is specifically approved at least
annually by either: (i) a vote of a majority of the Trustees of the Trust or
(ii) a vote of a majority of the outstanding voting securities of the Fund;
provided, however, that in either event the continuance is also approved by a
vote of a majority of those Trustees of the Trust who are not interested persons
Act) of the Trust and who have no direct or indirect financial interest in the
operation of the Plan, in this Agreement or any agreement related to the Plan
(the "Qualified Trustees"), by vote cast in person at a meeting called for the
purpose of voting on such approval.
(b) VOLUNTARY EARLY TERMINATION. This Agreement is
terminable at any time without penalty: (i) by the Trust on not less than sixty
(60) days' prior written notice by vote of a majority of the Qualified Trustees,
or by vote of the holders of a majority of the outstanding voting securities of
the Fund, or (ii) by the Distributor upon not less than sixty (60) days' prior
written notice; provided, however, if requested by the Trust, the Distributor
shall, prior to the effective date of termination, and without waiving its right
to payment of compensation under this Agreement through the effective date of
termination, cease providing distribution services hereunder.
(c) ASSIGNMENT. This Agreement shall terminate
automatically in the event of its "assignment" as that term is defined in
Section 2(a)(4) of the Investment Company Act. The Investment Manager shall
notify the Trust in writing sufficiently in advance of any proposed change of
control, as defined in Section 2(a)(9) of the Investment Company Act, as will
enable the Trust to consider whether an assignment as defined in Section 2(a)(4)
of the Investment Company Act will occur, and whether to take the steps
necessary to enter into a new contract with the Investment Manager. The
Investment Manager shall notify the Trust of any change in the membership of the
Investment Manager within a reasonable time after such change.
(d) DEFINITIONS. As used in this Agreement, the terms
"specifically approved at least annually," "majority of the outstanding voting
securities," and "interested persons" shall either have the same meaning as such
terms have in the Investment Company Act and the Rules thereunder or, if there
is no definition, be construed in a manner consistent with the Investment
Company Act and the Rules thereunder.
(e) COMPENSATION. All accrued but unpaid compensation
under this Agreement due the Investment Manager shall be paid on the effective
date of termination.
16. AMENDMENT
This Agreement may be amended at any time, but only by written
agreement among the Investment Manager and the Trust, which amendment, other
than amendments to Exhibits A and B, is subject to the approval of the Trustees
and the shareholders of the Fund as and to the extent required by the Investment
Company Act.
17. CONSULTANTS
The Investment Manager may, in its discretion in connection
with the rendering of the management services required under this Agreement,
retain such consultants or other parties as it may deem appropriate to furnish
information, clerical and other services and assistance in the performance of
its duties; provided, however, except as otherwise expressly provided in this
Agreement, any fee,
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<PAGE> 12
compensation or expenses to be paid to any such parties shall be paid by the
Investment Manager, and no obligation shall be incurred on the Trust's behalf in
any such respects.
18. CONFIDENTIALITY
The Investment Manager agrees on behalf of itself and its
employees to treat confidentially and as proprietary information of the Trust
all records and other information relative to the Trust, the Fund and the prior,
present or potential shareholders of the Fund, and not to use such records and
information for any purpose other than performance of the Investment Manager's
responsibilities and to obtain approval in writing by the Trust, which approval
shall not be unreasonably withheld and may not be withheld where the Investment
Manager may be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Trust.
19. NON-EXCLUSIVE AGENCY
Nothing contained in this Agreement shall prevent the
Investment Manager, or any affiliated person of the Investment Manager, from
performing services similar to those to be performed hereunder for any other
person, firm, or corporation or for its or their own accounts or for the
accounts of others. The Investment Manager shall not be obligated to give the
Trust more favorable or preferential treatment vis-a-vis its other clients.
20. INDEPENDENT CONTRACTOR
The Investment Manager is an independent contractor of the
Trust and neither the Investment Manager nor any of its managers, officers or
employees is or shall be employees of the Fund in the performance of the
Investment Manager's duties hereunder. The Investment Manager shall be
responsible for its own conduct and the employment, control and conduct of its
employees, and for injury to such employees and agents or to others through
employees and agents. The Investment Manager assumes full responsibility for its
employees and agents under applicable statutes and agrees to pay all employment
taxes thereunder.
21. MISCELLANEOUS
(a) PREPARATION OF AGREEMENT. Each party agrees that the other
party shall not be construed to be solely responsible for the drafting of this
Agreement, and that any ambiguity in this Agreement or the interpretation
thereof shall not be construed against either party as the alleged draftsman of
this Agreement.
(b) COOPERATION. Each party agrees, without further
consideration, to cooperate and diligently perform any further acts, deeds and
things and to execute and deliver any documents that may from time to time be
reasonably necessary or otherwise reasonably required to consummate, evidence,
confirm and/or carry out the intent and provisions of this Agreement, all
without undue delay or expense.
(c) INTERPRETATION.
(i) Entire Agreement/No Collateral
Representations. Each party expressly acknowledges and agrees that this
Agreement: (1) is the final, complete and exclusive statement of the agreement
of the parties with respect to the subject matter hereof; (2) supersedes any
prior or contemporaneous agreements or understandings of any kind, oral or
written (collectively and severally, the "prior agreements"), and that any such
prior agreements are of no force or effect except as expressly
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<PAGE> 13
set forth herein; and (3) may not be varied, supplemented or contradicted by
evidence of prior agreements, or by evidence of subsequent oral agreements.
(ii) Amendment; Waiver; Forbearance. Except as
expressly otherwise provided herein, neither this Agreement nor any of its terms
contained herein may, as the case may be, be amended, supplemented, discharged
or terminated (other than by performance), except by a written instrument or
instruments signed by all of the parties to this Agreement. No waiver of any
acts or obligations hereunder shall be effective unless such waiver shall be in
a written instrument or instruments signed by each party claimed to have given
or consented to such waiver and each party affected by such waiver. No
forbearance by a party to seek a remedy for any noncompliance or breach by
another party hereto shall be deemed to be a waiver by such forbearing party of
its rights and remedies with respect to such noncompliance or breach unless such
waiver shall be in a written instrument or instruments signed by the forbearing
party.
(iii) Remedies Cumulative. The remedies of each
party under this Agreement are cumulative and shall not exclude any other
remedies to which such party may be lawfully entitled.
(iv) Severability. If any term or provision of
this Agreement or the application thereof to any person or circumstance shall,
to any extent, be determined to be invalid, illegal or unenforceable under
present or future laws effective during the term of this Agreement, then and, in
that event: (A) the performance of the offending term or provision (but only to
the extent its application is invalid, illegal or unenforceable) shall be
excused as if it had never been incorporated into this Agreement, and, in lieu
of such excused provision, there shall be added a provision as similar in terms
and amount to such excused provision as may be possible and be legal, valid and
enforceable, and (B) the remaining part of this Agreement (including the
application of the offending term or provision to persons or circumstances other
than those as to which it is held invalid, illegal or unenforceable) shall not
be affected thereby and shall continue in full force and effect to the fullest
extent provided by law.
(v) Time is of the Essence. It is expressly
understood and agreed that time of performance is strictly of the essence with
respect to each and every term, condition, obligation and provision hereof and
that the failure to timely perform any of the terms, conditions, obligations or
provisions hereof by any party shall constitute a material breach and a
noncurable (but waivable) default under this Agreement by the party so failing
to perform.
(vi) No Third Party Beneficiary. Notwithstanding
anything else herein to the contrary, the parties specifically disavow any
desire or intention to create any third party beneficiary obligations, and
specifically declare that no person, other than as set forth in this Agreement,
shall have any rights or remedies of any nature or kind whatsoever under or by
reason of this Agreement.
(vii) No Reliance Upon Prior Representation. Each
party acknowledges that no other party has made any oral representation or
promise which would induce them prior to executing this Agreement to change its
position to its detriment, partially perform, or part with value in reliance
upon such representation or promise; each party acknowledges that it has taken
such action at its own risk; and each party represents that it has not so
changed its position, performed or parted with value prior to the time of their
execution of this Agreement.
(viii) Headings; References; Incorporation;
"Person"; Gender. The headings used in this Agreement are for convenience and
reference purposes only, and shall not be used in construing or interpreting the
scope or intent of this Agreement or any provision hereof. References to this
Agreement shall include all amendments or renewals thereof. All cross-references
in this Agreement, unless specifically directed to another agreement or
document, shall be construed only to
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<PAGE> 14
refer to provisions within this Agreement, and shall not be construed to be
referenced to the overall transaction or to any other agreement or document. Any
exhibit referenced in this Agreement shall be construed to be incorporated in
this Agreement. As used in this Agreement, the term "person" is defined in its
broadest sense as any individual, entity or fiduciary who has legal standing to
enter into any agreement. As used in this Agreement, each gender shall be deemed
to include the other gender, including neutral genders or genders appropriate
for entities, if applicable, and the singular shall be deemed to include the
plural, and vice versa, as the context requires.
(d) ENFORCEMENT.
(i) Interpretation. This Agreement and the
rights and remedies of each party arising out of or relating to this Agreement
(including, without limitation, equitable remedies) shall be solely governed by,
interpreted under, and construed and enforced in accordance with the laws
(without regard to the conflicts of law principles thereof) of the State of
California, as if this Agreement were made, and as if its obligations are to be
performed, wholly within the State of California.
(ii) Attorneys' Fees and Costs. If any party
institutes or should the parties otherwise become a party to any action or
proceeding based upon or arising out of this Agreement including, without
limitation, to enforce or interpret this Agreement or any provision hereof, or
for damages by reason of any alleged breach of this Agreement or any provision
hereof, or for a declaration of rights in connection herewith, or for any other
relief, including equitable relief, in connection herewith, the prevailing party
in any such action or proceeding, whether or not such action or proceeding
proceeds to final judgement or determination, shall be entitled to receive from
the non-prevailing party as a cost of suit, and not as damages, all reasonable
and actual costs and expenses (as defined below) of prosecuting or defending the
action or proceeding, as the case may be, including, without limitation,
reasonable attorneys' and other fees.
(e) SUCCESSORS AND ASSIGNS. Neither party may assign its
rights or delegate any of such party's duties or obligations under this
Agreement, in whole or in part, without the prior written consent of the other
party. Any delegation of a party's obligations under this Agreement shall in no
way release the delegating party from any of its obligations or liabilities
under this Agreement. Subject to the foregoing, all of the representations,
warranties, covenants, conditions and provisions of this Agreement shall be
binding upon and shall inure to the benefit of each party and such party's
respective successors and permitted assigns, spouses, heirs, executors,
administrators, and personal and legal representatives.
(f) NOTICES. Unless otherwise specifically provided in this
Agreement, all notices, demands, requests, consents, approvals or other
communications (collectively and severally called "notices") required or
permitted to be given hereunder, or which are given with respect to this
Agreement, shall be in writing, and shall be given by: (i) personal delivery
(which form of notice shall be deemed to have been given upon delivery), (ii) by
telegraph or by private airborne/overnight delivery service (which forms of
notice shall be deemed to have been given upon confirmed delivery by the
delivery agency), (iii) by electronic or facsimile or telephonic transmission,
provided the receiving party has a compatible device or confirms receipt thereof
(which forms of notice shall be deemed delivered upon confirmed transmission or
confirmation of receipt), or (iv) by mailing in the United States mail by
registered or certified mail, return receipt requested, postage prepaid (which
forms of notice shall be deemed to have been given upon the fifth {5th} business
day following the date mailed). Each party, and their respective counsel, hereby
agree that if notice is to be given hereunder by such party's counsel, such
counsel may communicate directly with all principals, as required to comply with
the foregoing notice provisions. Notices shall be addressed at the addresses
hereinabove set forth in the introductory
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<PAGE> 15
paragraph of this Agreement or to such other address as the receiving party
shall have specified most recently by like notice, with a copy to the other
parties hereto.
(g) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument, binding on all parties
hereto. Any signature page of this Agreement may be detached from any
counterpart of this Agreement and reattached to any other counterpart of this
Agreement identical in form hereto by having attached to it one or more
additional signature pages.
(h) EXECUTION BY ALL PARTIES REQUIRED TO BE BINDING;
ELECTRONICALLY TRANSMITTED DOCUMENTS. This Agreement shall not be construed to
be an offer and shall have no force and effect until this Agreement is fully
executed by all parties hereto. If a copy or counterpart of this Agreement is
originally executed and such copy or counterpart is thereafter transmitted
electronically by facsimile or similar device, such facsimiled document shall
for all purposes be treated as if manually signed by the party whose facsimile
signature appears.
WHEREFORE, the parties hereto have for purposes of this Agreement
executed this Agreement in the City of Beverly Hills, County of Los Angeles,
State of California, effective as of the date first written above.
TRUST:
MEYERS SHEPPARD INVESTMENT TRUST,
A DELAWARE BUSINESS TRUST
By:
----------------------------------------------------
Shelly Meyers, its President and Trustee (and not
individually)
INVESTMENT MANAGER:
MEYERS, SHEPPARD & CO., LLC,
A CALIFORNIA LIMITED LIABILITY COMPANY
By:
----------------------------------------------------
Shelly Meyers, its President and Manager (and
not individually)
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<PAGE> 16
EXHIBIT "A"
INVESTMENT MANAGEMENT AGREEMENT
FOR THE
MEYERS SHEPPARD PRIDE FUND
BETWEEN
MEYERS SHEPPARD INVESTMENT TRUST
AND
MEYERS, SHEPPARD & CO., LLC
OPERATIONAL PROCEDURES
In order to minimize operational problems, it will be necessary for a
flow of information to be supplied to the custodian of the Fund, Wells Fargo
Bank, N.A., or any successor thereof (the "Custodian").
The Investment Manager must furnish the Custodian with daily
information as to executed trades, or, if no trades are executed, a report to
that effect, no later than 5:00 P.M. (Los Angeles Time) on the day of the trade.
The necessary information can be transmitted via facsimile machine to the
Custodian (the direct line to the machine is Attention: ).
Upon receipt of brokers' confirmations, the Investment Manager or the Custodian
must notify the other party if any differences exist. The reporting of trades
by the Investment Manager to the Custodian shall include the following
information:
1. Purchase or sale;
2. Security name and description (see trade ticket);
3. CUSIP Number, NYSE ticker, if applicable or widely recognized
security identifier;
4. Number of shares or units and currency in which the
securities are denominated;
5. Sales price per share or unit;
6. Commission rate per share and aggregate commission or if a
net trade;
7. Executing broker and clearing bank, if any;
8. Trade date;
9. Settlement date;
10. If security is not eligible for DTC;
11. Interest purchased or sold from interest bearing security;
1
<PAGE> 17
12. Total net amount of the transaction;
13. Exchange where sale was executed;
14. Identified tax lot;
15. Name of Fund and the Investment Manager;
16. Location of where security is being held if other than DTC.
When opening accounts with brokers for the Fund, the account must be a
cash account. No margin accounts in the name of the Fund are to be maintained.
The broker should be advised to use the Custodian's DTC ID system number (No.)
to facilitate the receipt of information by the Custodian. In addition, the
Investment Manager should arrange to have duplicate confirmations sent as
follows:
------------------------------
------------------------------
------------------------------
------------------------------
Attention:
--------------------
I. ALL DTC ELIGIBLE SECURITIES
Depository Trust Company (DTC)
Agent Bank Name:
Agent Bank Number:
Agent Bank Clearing Number:
Agent Bank Client Number:
II. DELIVERY INSTRUCTIONS FOR TRANSACTIONS TO BE SETTLED IN [CITY] ARE AS
FOLLOWS:
ALL COMMERCIAL PAPER AND INELIGIBLE DTC SECURITIES - [CITY]
------------------------------
------------------------------
------------------------------
------------------------------
Ref:
--------------------------
III. ALL GOVERNMENT ISSUES DELIVERED THROUGH BOOK ENTRY
Deliver through your area Federal Reserve Bank to:
["Delivery vs payment" in Federal Funds]
A-22
<PAGE> 18
IV. WIRE INSTRUCTIONS:
ABA #
----------------------------
---------------------------------
Attention:
----------------------
(Money amount)
------------------
Text:
---------------------------
Attention:
----------------------
"Delivery vs Payment" in Federal funds on Commercial Paper only and clearing
house funds on ineligible DTC securities.
Telephone instructions shall be provided by separate arrangement with the
Custodian.
V. DELIVERY INSTRUCTIONS FOR TRANSACTIONS TO BE SETTLED IN NEW YORK
PHYSICAL - Stocks, Corporates, Municipal issues, Government, Commercial Paper
------------------------------
------------------------------
------------------------------
Attention:
--------------------
SHIPMENTS
All physical security shipments must be sent as follows:
REGISTERED/INSURED MAIL
------------------------------
------------------------------
------------------------------
------------------------------
COURIER SERVICE
------------------------------
------------------------------
------------------------------
------------------------------
Each security transfer, regardless of transfer method used, must be accompanied
by a transmittal letter, in duplicate, if you require.
----------------------
The Custodian will supply the Investment Manager daily with a cash availability
report. This will normally be done by telephone so that the Investment Manager
may know the amount available for investment purposes.
A-33
<PAGE> 19
EXHIBIT "B"
INVESTMENT MANAGEMENT AGREEMENT
FOR THE
MEYERS SHEPPARD PRIDE FUND
BETWEEN
MEYERS SHEPPARD INVESTMENT TRUST
AND
MEYERS, SHEPPARD & CO., LLC
RECORDS TO BE MAINTAINED BY MEYERS SHEPPARD
1. (Rule 31a-1(b)(5) and (6)) A record of each brokerage order, and all
other portfolio purchases and sales, given by the Investment Manager on
behalf of the Fund for, or in connection with, the purchase or sale of
securities, whether executed or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any modifications
or cancellation thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the persons who placed the order on behalf of the
Fund.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter, completed within
ten (10) days after the end of the quarter, showing specifically the
basis or bases upon which the allocation of orders for the purchase and
sale of portfolio securities to named brokers or dealers was effected,
and the division of brokerage commissions or other compensation on such
purchase and sale orders.
Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Fund by brokers or dealers.
(ii) The supplying of services or benefits by brokers or
dealers to:
(a) The Fund,
(b) The Investment Manager, and
(c) Any person other than the foregoing.
4
<PAGE> 20
(iii) Any other consideration other than the technical
qualifications of the brokers and dealers as such.
B. Shall show the nature of the services or benefits made
available.
C. Shall describe in detail the application of any general or
specific formula or other determinant used in arriving at such
allocation of purchase and sale orders and such division of
brokerage commissions or other compensation.
D. The name of the person responsible for making the
determination of such allocation and such division of
brokerage commissions or other compensation.
3. (Rule 31a-1(b)(10)) A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of portfolio securities. Where an authorization is
made by a committee or group, a record shall be kept of the names of
its members who participate in the authorization. There shall be
retained as part of this record any memorandum, recommendation or
instruction supporting or authorizing the purchase or sale of portfolio
securities and such other information as is appropriate to support the
authorization.*
4. (Rule 31a-1(f)) Such accounts, books and other documents as are
required to be maintained by registered investment managers by rule
adopted under Section 204 of the Investment Advisers Act, to the extent
such records are necessary or appropriate to record the Investment
Adviser's transactions with the Fund.
- ----------------
* Such information might include: the current Form 10-K, annual and
quarterly reports, press releases, reports by analysts and from brokerage
firms (including their recommendation: i.e., buy, sell, hold) or any
internal reports or Investment Adviser reviews.
A-55
<PAGE> 1
Exhibit 6
Form of Distribution Agreement dated as of May 9, 1996 between the Registrant
and Furman Selz LLC
<PAGE> 2
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT (the "Agreement") is entered into as of May
9, 1996 by and between Meyers Sheppard Investment Trust, a Delaware business
trust (the "Trust"), whose principal place of business is 9107 Wilshire Blvd.,
Suite 700, Beverly Hills, California 90210, and Furman Selz LLC, a Delaware
limited liability company (the "Distributor"), whose principal place of business
is 230 Park Avenue, New York, New York 10169, with reference to the following
facts:
RECITALS
WHEREAS, on or about April 1, 1996, the Trust filed a Registration
Statement on Form N- 1A (File Nos. 33-32111 and 811-7581) (the "Registration
Statement") under the Investment Trust Act of 1940, as amended (the "1940 Act")
and the Securities Act of 1933, as amended (the "1933 Act") with the Securities
and Exchange Commission (the "Commission") in connection with the registration
as an open-ended investment company of a separate series of the beneficial
interests of the Trust, par value $.00001 (the "Shares") designated the Meyers
Sheppard Pride Fund (the "Fund");
WHEREAS, the Trust has adopted a Plan of Distribution (the "Plan")
pursuant to Rule 12b- 1 of the 1940 Act which authorizes the Trust to enter into
agreements regarding the distribution of the Shares upon the Registration
Statement being declared effective;
WHEREAS, the Trust desires that the Distributor, a registered
broker-dealer, shall act as the distributor of the Shares pursuant to the terms
and conditions of this Agreement; and
WHEREAS, the Distributor desires to act as distributor of the Shares
pursuant to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises contained in this Agreement, the Trust and the Distributor (who are
sometimes individually referred to as a "party" and collectively referred to as
the "parties") agree as follows:
AGREEMENT
1. SERVICES AS DISTRIBUTOR
(a) PROMOTION AND SOLICITATION OF SHARES. The Distributor
agrees to use its best efforts to appropriately promote the Fund and to solicit
orders for the purchase of the Shares and will undertake such advertising and
promotion as is customary and reasonable in connection with such solicitation in
the jurisdiction or jurisdictions within which the offer and sale of the Shares
is duly registered.
(b) COMPLIANCE. All activities by the Distributor and its
agents and employees as the distributor of the Shares shall comply with all
applicable laws, rules and regulations including, without limitation, all rules
and regulations made or adopted pursuant to the National Association of
Securities Dealers (the "NASD").
(c) SALE OF SHARES; PRICE; SUSPENSION OF ORDERS. The
Distributor will transmit any orders received by it for purchase or redemption
of the Shares to the Trust's President, Investment
1
<PAGE> 3
Manager, Transfer Agent and Custodian. All Shares sold to investors by the
Distributor will be sold at the public offering price. The public offering price
for all accepted subscriptions will be the Fund's net asset value per Share,
next determined, in the manner provided in the Registration Statement as from
time to time in effect under the 1933 Act and the 1940 Act, after the order is
accepted by the Distributor. If and whenever the determination of the Fund's net
asset value is suspended and until such suspension be terminated, no further
order for the Shares shall be accepted by the Distributor except unconditional
orders placed with it before its knowledge of the suspension. In addition, the
Trust reserves the right to suspend sales and the Distributor's authority to
accept orders for the Shares if, in the sole discretion of the Board of
Trustees, it is in the best interests of the Trust to do so and, in that event,
no Shares will be sold by the Distributor while such suspension remains in
effect except for Shares necessary to cover unconditional orders accepted by the
Distributor before the Distributor had knowledge of the suspension.
(d) RESERVATION OF RIGHT TO DECLINE ORDERS; EXCEPTIONS TO
DISTRIBUTOR'S RIGHTS TO MAKE SALES. Whenever in its sole judgment such action is
warranted by unusual market, economic or political conditions, or by abnormal
circumstances of any kind, the Trust may decline to accept any orders for, or
make any sales of the Shares until, such time as the Trust deems it advisable to
accept such orders and to make such sales. Unless the Distributor is otherwise
notified by the Trust, any right granted to the Distributor to accept orders for
the Shares or to make sales on behalf of the Fund or to purchase the Shares for
resale will not apply to: (i) Shares issued in connection with the merger or
consolidation of any other investment company with the Trust or the Fund or the
acquisition by the Trust or the Fund, by purchase or otherwise, of all or
substantially all of the assets of any investment company or substantially all
the outstanding shares of any such company, and (ii) Shares that may be offered
by the Trust to shareholders of the Fund by virtue of their being such
shareholders.
(e) MINIMUM PURCHASE REQUIREMENTS; DEALER SALES. Subject to
the provisions of Paragraph 1(c) above and to such minimum purchase requirements
as may from time to time be indicated in the current prospectus or statement of
additional information for the Fund, the Distributor is authorized to sell, as
agent on behalf of the Trust, Shares duly authorized for issuance and registered
under the 1933 Act. The Distributor may also purchase on its own behalf as
principal Shares at the Fund's net asset value per Share for resale to the
public or qualified retail dealers with whom the Distributor may enter into
dealer agreements. Such sales will be made by the Distributor by accepting
unconditional orders to purchase Shares placed with it by investors and such
purchases will be made by the Distributor only after acceptance by the Trust of
such orders. The Distributor is authorized to purchase Shares of the Fund
presented to it by dealers at the price determined in accordance with, and in
the manner set forth in, the then-current prospectus and statement of additional
information for the Fund.
2. DUTIES OF THE TRUST
(a) EXECUTION OF DOCUMENTS AND PROVISION OF INFORMATION FOR
QUALIFICATION OF SHARES. The Trust agrees at its own expense to execute any and
all documents and to furnish, at its own expense, any and all information and
otherwise to take all actions that may be reasonably necessary in connection
with the qualification of the Shares for sale in such states as the Trust and
the Distributor may mutually designate.
(b) PROVISION OF INFORMATION FOR SALE OF SHARES. The Trust
shall furnish from time to time, for use in connection with the sale of the
Shares, such information with respect to the Trust, the Fund and the Shares as
the Distributor may reasonably request, and the Trust warrants that any such
information shall be true and correct. Upon request, the Trust shall also
provide or cause to be provided to the Distributor: (i) unaudited semi-annual
statements of the Fund's books and accounts, (ii) quarterly
2
<PAGE> 4
earnings statements of the Fund, (iii) a monthly itemized list of the securities
in the Fund, (iv) monthly balance sheets as soon as practicable after the end of
each month, and (v) from time to time such additional information regarding the
financial condition of the Fund as the Distributor may reasonably request.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
(a) BY TRUST. In addition to any other representations,
covenants and warranties of the Trust under this Agreement, the Trust hereby
represents, warrants and covenants to the Distributor, each of which is deemed,
as the case may be, to be a separate representation, warranty and covenant,
that:
(i) Corporate Organization, Power and Authority. The
Trust: (1) is a business trust duly organized, validly existing and in
good standing under the laws of the State of Delaware; (2) has all
requisite corporate power and authority to enter into this Agreement;
(3) has the corporate or other power to own its properties and carry on
its business as the same is now being conducted; and (4) is in good
standing and is qualified to transact business in each jurisdiction in
which the nature of property owned or leased by it or the conduct of
its business requires it to be so qualified, except where the failure
to be in good standing or to be duly qualified to transact business
would not be likely to have a material adverse effect on the business,
assets or financial condition of the Trust taken as a whole (a
"Material Adverse Effect").
(ii) Authorization and Validity of Agreement. The
execution and delivery of this Agreement by the Trust and the
performance of the transactions herein contemplated have been duly
authorized by the Board of Trustees of the Trust, and no further
corporate or other action on the part of the Trust is necessary to
authorize this Agreement or the performance of such transactions. This
Agreement has been duly executed and delivered by the Trust and,
assuming due authorization, execution and delivery by the Distributor,
is valid or binding upon the Trust in accordance with its terms (except
as limited by (1) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in affect relating to creditor's
rights generally and (2) general principles of equity {regardless of
whether such enforcement is considered in a proceeding in equity or at
law}).
(iii) No Breach or Conflict. Neither the execution or
delivery of this Agreement or the performance by the Trust of the
transactions contemplated herein will breach or conflict with any of
the provisions of the Trust's Certificate of Trust, Trust Indenture or
Bylaws, nor, to the best of the knowledge and belief of the Board of
Trustees of the Trust, with or without the giving of notice or the
lapse of time or both, will (1) violate or constitute an event of
default under any agreement or other instrument or any order, judgment
or ruling of any governmental authority to which the Trust is a party
or by which any of its property is bound, or (2) require the consent or
approval of any other person or governmental authority, except in each
case with respect to any of the foregoing which would not be likely to
have a material adverse effect on the business, assets or financial
condition of the Trust taken as a whole.
(iv) Registration Statement. The Registration
Statement (including the prospectus and statement of additional
information contained therein) filed with the Commission and any
amendments and supplements, (1) has been prepared in conformity with
the requirements of the 1933 Act and the 1940 Act and the rules and
regulations of the Commission thereunder; (22) the Registration
Statement, when such becomes effective, will contain all statements
required to be stated therein in conformity with the 1933 Act and the
1940 Act and the rules and
3
<PAGE> 5
regulations of Commission thereunder; (3) that all statements of fact
contained in the Registration Statement will be true and correct when
such becomes effective; and (4) the Registration Statement, when such
becomes effective, will not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a purchaser
of the Shares.
(b) BY DISTRIBUTOR. In addition to any other representations,
covenants and warranties of the Distributor under this Agreement, the
Distributor hereby represents, warrants and covenants to the Trust, each of
which is deemed, as the case may be, to be a separate representation, warranty
and covenant, that:
(i) Corporate Organization, Power and Authority. The
Distributor: (1) is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(2) has all requisite corporate power and authority to enter into this
Agreement; (3) has the corporate or other power to own its properties
and carry on its business as the same is now being conducted; and (4)
is in good standing and is qualified to transact business in each
jurisdiction in which the nature of property owned or leased by it or
the conduct of its business requires it to be so qualified, except
where the failure to be in good standing or to be duly qualified to
transact business would not be likely to have a material adverse effect
on the business, assets or financial condition of the Distributor taken
as a whole.
(ii) Authorization and Validity of Agreement. The
execution and delivery of this Agreement by the Distributor and the
performance of the transactions herein contemplated have been duly
authorized by the Managers of the Distributor, and no further corporate
or other action on the part of the Distributor is necessary to
authorize this Agreement or the performance of such transactions. This
Agreement has been duly executed and delivered by the Distributor and,
assuming due authorization, execution and delivery by the Trust, is
valid or binding upon the Distributor in accordance with its terms
(except as limited by (1) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in affect relating to
creditor's rights generally and (2) general principles of equity
{regardless of whether such enforcement is considered in a proceeding
in equity or at law}).
(iii) No Breach or Conflict. Neither the execution or
delivery of this Agreement or the performance by the Distributor of the
transactions contemplated herein will breach or conflict with any of
the provisions of the Articles of Organization or Operating Agreement
of the Distributor, nor, to the best of the knowledge and belief of the
Managers of the Distributor, with or without the giving of notice or
the lapse of time or both, will (1) violate or constitute an event of
default under any agreement or other instrument or any order, judgment
or ruling of any governmental authority to which the Distributor is a
party or by which any of its property is bound, or (2) require the
consent or approval of any other person or governmental authority,
except in each case with respect to any of the foregoing which would
not be likely to have a material adverse effect on the business, assets
or financial condition of the Distributor taken as a whole.
(iv) Registered Broker-Dealer. The Distributor is a
broker dealer in good standing registered with the Commission under
Section 15 of the Securities Exchange Act of 1934, as amended (the
"1934 Act") and with all appropriate state securities commissioners.
(v) Performance. The Distributor will perform its
obligations under this Agreement in accordance with the standard of
care and diligence of the industry.
4
<PAGE> 6
4. INDEMNIFICATION
(a) BY TRUST. The Trust shall indemnify and hold harmless the
Distributor and each person, if any, who controls the Distributor within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any
loss, liability, claim, damage or expense (including the reasonable cost of
defending any alleged loss, liability, claim, damage or expense and reasonable
and actual counsel fees incurred in connection therewith), arising by reason of
any person acquiring any Shares, which may be based upon the 1933 Act, or on any
other statute or at common law, on the ground that the Registration Statement,
as from time to time amended and supplemented, or any annual or interim report
to shareholders of the Fund, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, unless such statement or omission was made
in reliance upon, and in conformity with, information furnished to the Trust in
connection therewith by or on behalf of the Distributor; provided, however, that
in no case: (i) is the indemnity of the Trust in favor of the Distributor and
any such controlling persons to be deemed to protect the Distributor or any such
controlling persons thereof against any liability to the Trust or its security
holders to which the Distributor or any such controlling persons would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of their obligations and duties under this Agreement or by
reason of the reckless disregard of their obligations and duties under this
Agreement; or (ii) is the Trust to be liable under its indemnity agreement
contained in this paragraph with respect to any claim made against the
Distributor or any such controlling persons, unless the Distributor or such
controlling persons, as the case may be, shall have notified the Trust in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon the
Distributor or such controlling persons (or after the Distributor or such
controlling persons shall have received notice of such service on any designated
agent), but failure to notify the Trust of any such claim shall not relieve it
from any liability which it may have to the person against whom such action is
brought otherwise than on account of its indemnity agreement contained in this
paragraph.
The Trust will be entitled to participate at its own
expense in the defense, or, if it so elects, to assume the defense of any suit
brought to enforce any such liability, but if the Trust elects to assume the
defense, such defense shall be conducted by counsel chosen by it and reasonably
satisfactory to the Distributor or such controlling person or persons, defendant
or defendants in the suit. In the event the Trust elects to assume the defense
of any such suit and retain such counsel, the Distributor or such controlling
person or persons, defendant or defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them, but, in case the Trust does
not elect to assume the defense of any such suit, it will reimburse the
Distributor or such controlling person or persons, defendant or defendants in
the suit, for the reasonable and actual fees and expenses of any counsel
retained by them. The Trust shall promptly notify the Distributor of the
commencement of any litigation or proceed against it or any of its officers or
Trustees in connection with the issuance or sale of any of the Shares.
(b) BY DISTRIBUTOR. The Distributor shall indemnify and hold
harmless the Trust and each of its trustees, officers and each person, if any,
who controls the Trust within the meaning of Section 15 of the 1933 Act, against
any loss, liability, claim, damage or expense arising by reason of any person
acquiring any Shares, which may be based upon the 1933 Act, or on any other
statute or at common law, on the ground that the Registration Statement, as from
time to time amended and supplemented, or any annual or interim report to
shareholders of the Fund, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, but only with respect to statements or
omissions made in reliance upon, and in conformity with, information furnished
to the Trust in writing by or on behalf of the Distributor for use in
5
<PAGE> 7
connection with the Registration Statement, as from time to time amended, or the
annual or interim reports to shareholders.
In case any action shall be brought against the Trust
or any persons so indemnified, in respect of which indemnity may be sought
against the Distributor, the Distributor shall have the rights and duties given
to the Trust, and the Trust and each person so indemnified shall have the rights
and duties given to the Distributor by the provisions of paragraph 4(a).
5. OFFERING OF SHARES
(a) PRIOR TO EFFECTIVENESS OF REGISTRATION STATEMENT. None of
the Shares shall be offered by either the Distributor or the Trust under any of
the provisions of this Agreement, and no orders for the purchase or sale of
Shares hereunder shall be accepted by the Trust, until the Registration
Statement has been declared effective and the Trust has authorized the
Distributor to commence offering the Shares.
(b) AFTER EFFECTIVENESS OF REGISTRATION STATEMENT. None of the
Shares shall be offered by either the Distributor or the Trust under any of the
provisions of this Agreement, and no orders for the purchase or sale of Shares
hereunder shall be accepted by the Trust, after the Registration Statement has
been declared effective and the Trust has authorized the Distributor to commence
offering the Shares, if and so long as the effectiveness of the Registration
Statement then in effect or any necessary amendments thereto shall be suspended
under any of the provisions of the 1933 Act or if and so long as a current
prospectus and statement of additional information for the Fund as required by
Section 10(b)(2) of the 1933 Act is not on file with the Commission; provided,
however, that nothing contained in this paragraph shall in any way restrict or
have any application to or bearing upon the Trust's obligation to repurchase the
Shares from any shareholder of the Fund in accordance with the provisions of the
prospectus or statements of additional information of the Fund, or the
Certificate of Trust or Trust Indenture for the Trust.
6. AMENDMENTS TO REGISTRATION STATEMENT AND OTHER MATERIAL EVENTS
The Trust agrees to advise the Distributor as soon as
reasonably practical by a notice in writing delivered to the Distributor of the
following events: (i) of any request by the Commission for amendments to the
Registration Statement then in effect or for additional information; (ii) in the
event of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement then in effect or the initiation of
any proceeding for that purpose; (iii) of the happening of any event that makes
untrue any statement of a material fact made in the Registration Statement then
in effect or which requires the making of a change in such Registration
Statement in order to make the statements therein not misleading; and (iv) of
all action of the Commission with respect to any amendment to the Registration
Statement which may from time to time be filed with the Commission. For purposes
of this section, informal requests by or acts of the Staff of the Commission
shall not be deemed actions of or requests by the Commission.
7. REIMBURSEMENT OF DISTRIBUTOR
(a) REIMBURSEMENT. As promptly as possible after the first
business day of each month this Agreement is in effect, the Trust shall, for
each day during the effective term of this Agreement, reimburse the Distributor
for its Distribution Expenditures (as such term is hereinbelow defined in
subparagraph (b) of this paragraph 7) incurred during the previous month (but
not for any periods prior to the first day of sale of the Shares to the public)
(the "12b-1 Fees"); provided that
6
<PAGE> 8
payment of the 12b-1 Fees shall be made with respect to any month only to the
extent that such payment, together with any other payments made by the Trust
pursuant to the Plan, shall not exceed an amount (the "12b-1 Fee Cap") equal to
the aggregate of the average daily net assets of the Fund calculated for each
day of such month, multiplied by a fraction, the numerator of which is zero
point one five percent (0.15%), and the denominator of which is 365 (366 in leap
years). If the day for which calculation is required is a weekend or holiday or
other day for which the average daily net assets is not computed, the average
daily net assets for the last day prior thereto shall be used for the
calculation. Any 12b-1 Fees which cannot be paid due to the 12b-1 Cap shall be
borne by the Distributor and accrued as Distribution Expenditures until such
time as 12b-1 Fees are available to pay such unpaid Distribution Expenditures.
The reimbursement by the Trust of Distribution Expenditures incurred by the
Distributor shall be authorized pursuant to the Plan adopted by the Trust under
Rule 12b-1 under the 1940 Act.
(b) DEFINITION OF DISTRIBUTION EXPENDITURES. For purposes of
this Agreement, "Distribution Expenditures" of the Distributor shall mean all
reasonable and actual out-of-pocket expenditures borne by the Distributor or by
any other person with which the Distributor has an agreement approved by the
Trust, which expenditures represent payment for activities primarily intended to
result in the sale of the Shares to the public including, but not limited to,
the following: (i) payments to securities dealers and others engaged in the sale
of the Shares; (ii) expenditures for support services such as telephone
facilities and expenses and shareholder services for the Fund as the Trust may
reasonably request; (iii) formulation and implementation of marketing and
promotional activities for the Fund including, but not limited to, direct mail
promotions and television, radio, newspaper, magazine and other mass media
advertising; (iv) preparation, printing and distribution of sales literature;
(v) preparation, printing and distribution of prospectuses of the Fund and
reports for recipients other than existing shareholders of the Fund; and (vi)
provision to the Trust of such information, analyses and opinion, with respect
to marketing and promotional activities for the Fund as the Trust may, from time
to time, reasonably request; except that Distribution Expenditures shall not
include any expenditures in connection with services which the Distributor, any
of its affiliates, or any other person have agreed to bear without
reimbursement.
(c) DOCUMENTATION. Each written request for reimbursement of
Distribution Expenses under this paragraph shall be directed to the President of
the Trust and shall show in reasonable detail the expenditures incurred by the
Distributor and the purposes therefor, together with any documentation required
by the Trust to verify such payment.
(d) REPORTS. The Distributor shall prepare and deliver reports
to the President of the Trust on a regular, but at least monthly, basis, showing
the Distribution Expenditures incurred pursuant to this Agreement and the Plan
and the purposes therefor, as well as any supplemental reports as the Board of
Trustees of the Trust, from time to time, may reasonably request.
(e) WAIVER OF FEES. The Distributor reserves the right from
time to time in its sole discretion, and without any obligation to do so, to
reduce and/or waive all or a portion of the 12b-1 Fees otherwise payable
hereunder. Any such fee reduction or waiver may be discontinued or modified by
the Distributor at any time.
8. ADDITIONAL FUNDS
(a) ESTABLISHMENT OF ADDITIONAL FUNDS. In the event that the
Trust establishes one or more portfolios or series other than the Fund (each an
"Additional Fund") with respect to which it desires retain the Distributor to
act as the distributor for the Additional Fund pursuant to the terms of this
Agreement, the Trust shall promptly notify the Distributor in writing. If the
Distributor is willing
7
<PAGE> 9
to render such services with respect to the Additional Fund, it shall notify the
Trust in writing. Upon such mutual consent by the parties, the provision to the
Trust of distribution services by the Distributor with respect to the Additional
Fund and the mutual rights and obligations of the parties shall, except as
otherwise agreed upon in writing by the parties, and subject to compliance with
the requirements of the 1940 Act relative to Trustee and shareholder approval,
be governed by the terms of this Agreement (with the Fund and each Additional
Fund being collectively referred to hereunder as the Fund). The Trust shall have
no obligation to request the Distributor provide distribution services with
respect to any Additional Fund pursuant to the terms of this Agreement or
otherwise, and the Distributor shall have no obligation to agree to provide such
services with respect to the Additional Fund.
(b) TERMINATION OF LESS THAN ALL FUNDS. In the event the
Distributor provides distribution to more than one Fund under the terms of this
Agreement, this Agreement shall, in the event it is specifically terminated with
respect to less than all of the Funds, remain in effect with respect to the
remaining Funds.
9. CONFIDENTIALITY
The Distributor agrees on behalf of itself and its employees
to treat confidentially and as proprietary information of the Trust all records
and other information relative to the Trust, the Fund and the prior, present or
potential shareholders of the Fund, and not to use such records and information
for any purpose other than performance of the Distributor's responsibilities and
to obtain approval in writing by the Trust, which approval shall not be
unreasonably withheld and may not be withheld where the Distributor may be
exposed to civil or criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted authorities, or when
so requested by the Trust.
10. NON-EXCLUSIVE AGENCY
Nothing contained in this Agreement shall prevent the
Distributor, or any affiliated person of the Distributor, from performing
services similar to those to be performed hereunder for any other person, firm,
or corporation or for its or their own accounts or for the accounts of others.
11. INDEPENDENT CONTRACTOR
The Distributor is an independent contractor of the Trust and
neither the Distributor nor any of its managers, officers or employees is or
shall be employees of the Fund in the performance of the Distributor's duties
hereunder. The Distributor shall be responsible for its own conduct and the
employment, control and conduct of its employees, and for injury to such
employees and agents or to others through employees and agents. The Distributor
assumes full responsibility for its employees and agents under applicable
statutes and agrees to pay all employment taxes thereunder.
12. TERM
(a) INITIAL TERM; RENEWALS. This Agreement shall continue
until one year from the date hereof and thereafter for successive annual
periods, provided such continuance is specifically approved at least annually
by: (i) a vote of the majority of the Trustees of the Trust, and (ii) a vote of
the majority of those Trustees of the Trust who are not interested persons of
the Trust and who have no direct or indirect financial interest in the operation
of the Plan, in this Agreement or any agreement related to the Plan (the
"Qualified Trustees") by vote cast in person at a meeting called for the purpose
of voting on such approval.
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<PAGE> 10
(b) VOLUNTARY EARLY TERMINATION. This Agreement is terminable
at any time without penalty: (i) by the Trust on not less than sixty (60) days'
prior written notice by vote of a majority of the Qualified Trustees, or by vote
of the holders of a majority of the outstanding voting securities of the Trust
or the Fund(s) as the case may be, or (ii) by the Distributor upon not less than
sixty (60) days' prior written notice; provided, however, if requested by the
Trust, the Distributor shall, prior to the effective date of termination, and
without waiving its right to payment of compensation under this Agreement
through the effective date of termination, cease providing distribution services
hereunder.
(c) ASSIGNMENT. This Agreement shall terminate automatically
in the event of its "assignment" as that term is defined in Section 2(a)(4) of
the 1940 Act. The Distributor shall notify the Trust in writing sufficiently in
advance of any proposed change of control, as defined in Section 2(a)(9) of the
1940 Act, as will enable the Trust to consider whether an assignment as defined
in Section 2(a)(4) of the 1940 Act will occur, and whether to take the steps
necessary to enter into a new contract with the Distributor. The Distributor
shall notify the Trust of any change in the membership of the Distributor within
a reasonable time after such change.
(d) COMPENSATION. All accrued but unpaid fees under this
Agreement due the Distributor shall be paid on the effective date of
termination.
13. AMENDMENT
This Agreement may be amended at any time, but only by written
agreement among the Distributor and the Trust, which amendment is subject to the
approval of the Trustees and the shareholders of the Fund as and to the extent
required by the 1940 Act.
14. RULE 12b-1 SAVING CLAUSE
It is the parties intent that this Agreement and each and
every provision thereof comply with the terms of the Plan and Rule 12b-1 of the
1940 Act and regulatory interpretations thereof, and that this Agreement and
each and every provision thereof be construed to conform to that intent. To the
extent that this any such provision cannot be so construed, such offending
provision shall be severed in accordance with paragraph 16(c)(iv) of this
Agreement. The parties agree they shall, without the payment of any additional
consideration, modify or amend this Agreement as required to: (i) comport with
changes in securities or other laws or rules, regulations or regulatory
interpretations thereof applicable to this Agreement or to comply with stock
exchange rules or requirements and/or (ii) ensure that this Agreement is and
remains in compliance with Rule 12b-1 of the 1940 Act.
15. LIMITATION OF LIABILITY OF TRUST
The Distributor agrees that no shareholder, trustee, officer,
employee or agent of the Trust shall be subject to claims against or obligations
of the Trust to any extent whatsoever, but that the Trust estate alone shall be
liable (with the exception of any Fund for whom the Distributor has not provided
services under this Agreement and for which the claims or obligations therefore
do not relate).
16. MISCELLANEOUS
(a) PREPARATION OF AGREEMENT. Each party agrees that the other
party shall not be construed to be solely responsible for the drafting of this
Agreement, and that any ambiguity in this Agreement or the interpretation
thereof shall not be construed against either party as the alleged draftsman of
this Agreement.
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<PAGE> 11
(b) COOPERATION. Each party agrees, without further
consideration, to cooperate and diligently perform any further acts, deeds and
things and to execute and deliver any documents that may from time to time be
reasonably necessary or otherwise reasonably required to consummate, evidence,
confirm and/or carry out the intent and provisions of this Agreement, all
without undue delay or expense.
(c) INTERPRETATION.
(i) Entire Agreement/No Collateral Representations.
Each party expressly acknowledges and agrees that this Agreement: (1) is the
final, complete and exclusive statement of the agreement of the parties with
respect to the subject matter hereof; (2) supersedes any prior or
contemporaneous agreements or understandings of any kind, oral or written
(collectively and severally, the "prior agreements"), and that any such prior
agreements are of no force or effect except as expressly set forth herein; and
(3) may not be varied, supplemented or contradicted by evidence of prior
agreements, or by evidence of subsequent oral agreements.
(ii) Amendment; Waiver; Forbearance. Except as
expressly otherwise provided herein, neither this Agreement nor any of its terms
contained herein may, as the case may be, be amended, supplemented, discharged
or terminated (other than by performance), except by a written instrument or
instruments signed by all of the parties to this Agreement. No waiver of any
acts or obligations hereunder shall be effective unless such waiver shall be in
a written instrument or instruments signed by each party claimed to have given
or consented to such waiver and each party affected by such waiver. No
forbearance by a party to seek a remedy for any noncompliance or breach by
another party hereto shall be deemed to be a waiver by such forbearing party of
its rights and remedies with respect to such noncompliance or breach unless such
waiver shall be in a written instrument or instruments signed by the forbearing
party.
(iii) Remedies Cumulative. The remedies of each party
under this Agreement are cumulative and shall not exclude any other remedies to
which such party may be lawfully entitled.
(iv) Severability. If any term or provision of this
Agreement or the application thereof to any person or circumstance shall, to any
extent, be determined to be invalid, illegal or unenforceable under present or
future laws effective during the term of this Agreement, then and, in that
event: (A) the performance of the offending term or provision (but only to the
extent its application is invalid, illegal or unenforceable) shall be excused as
if it had never been incorporated into this Agreement, and, in lieu of such
excused provision, there shall be added a provision as similar in terms and
amount to such excused provision as may be possible and be legal, valid and
enforceable, and (B) the remaining part of this Agreement (including the
application of the offending term or provision to persons or circumstances other
than those as to which it is held invalid, illegal or unenforceable) shall not
be affected thereby and shall continue in full force and effect to the fullest
extent provided by law.
(v) Time is of the Essence. It is expressly
understood and agreed that time of performance is strictly of the essence with
respect to each and every term, condition, obligation and provision hereof and
that the failure to timely perform any of the terms, conditions, obligations or
provisions hereof by any party shall constitute a material breach and a
noncurable (but waivable) default under this Agreement by the party so failing
to perform.
(vi) No Third Party Beneficiary. Notwithstanding
anything else herein to the contrary, the parties specifically disavow any
desire or intention to create any third party beneficiary obligations, and
specifically declare that no person, other than as set forth in this Agreement,
shall have any rights or remedies of any nature or kind whatsoever under or by
reason of this Agreement.
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<PAGE> 12
(vii) No Reliance Upon Prior Representation. Each
party acknowledges that no other party has made any oral representation or
promise which would induce them prior to executing this Agreement to change its
position to its detriment, partially perform, or part with value in reliance
upon such representation or promise; each party acknowledges that it has taken
such action at its own risk; and each party represents that it has not so
changed its position, performed or parted with value prior to the time of their
execution of this Agreement.
(viii) Headings; References; Incorporation; "Person";
Gender. The headings used in this Agreement are for convenience and reference
purposes only, and shall not be used in construing or interpreting the scope or
intent of this Agreement or any provision hereof. References to this Agreement
shall include all amendments or renewals thereof. All cross-references in this
Agreement, unless specifically directed to another agreement or document, shall
be construed only to refer to provisions within this Agreement, and shall not be
construed to be referenced to the overall transaction or to any other agreement
or document. Any exhibit referenced in this Agreement shall be construed to be
incorporated in this Agreement. As used in this Agreement, the term "person" is
defined in its broadest sense as any individual, entity or fiduciary who has
legal standing to enter into any agreement. As used in this Agreement, each
gender shall be deemed to include the other gender, including neutral genders or
genders appropriate for entities, if applicable, and the singular shall be
deemed to include the plural, and vice versa, as the context requires.
(d) ENFORCEMENT. This Agreement and the rights and remedies of
each party arising out of or relating to this Agreement (including, without
limitation, equitable remedies) shall be solely governed by, interpreted under,
and construed and enforced in accordance with the laws (without regard to the
conflicts of law principles thereof) of the State of New York, as if this
Agreement were made, and as if its obligations are to be performed, wholly
within the State of New York.
(e) SUCCESSORS AND ASSIGNS. Neither party may assign its
rights or delegate any of such party's duties or obligations under this
Agreement, in whole or in part, without the prior written consent of the other
party. Any delegation of a party's obligations under this Agreement shall in no
way release the delegating party from any of its obligations or liabilities
under this Agreement. Subject to the foregoing, all of the representations,
warranties, covenants, conditions and provisions of this Agreement shall be
binding upon and shall inure to the benefit of each party and such party's
respective successors and permitted assigns, spouses, heirs, executors,
administrators, and personal and legal representatives.
(f) NOTICES. Unless otherwise specifically provided in this
Agreement, all notices, demands, requests, consents, approvals or other
communications (collectively and severally called "notices") required or
permitted to be given hereunder, or which are given with respect to this
Agreement, shall be in writing, and shall be given by: (i) personal delivery
(which form of notice shall be deemed to have been given upon delivery), (ii) by
telegraph or by private airborne/overnight delivery service (which forms of
notice shall be deemed to have been given upon confirmed delivery by the
delivery agency), (iii) by electronic or facsimile or telephonic transmission,
provided the receiving party has a compatible device or confirms receipt thereof
(which forms of notice shall be deemed delivered upon confirmed transmission or
confirmation of receipt), or (iv) by mailing in the United States mail by
registered or certified mail, return receipt requested, postage prepaid (which
forms of notice shall be deemed to have been given upon the fifth {5th} business
day following the date mailed). Each party, and their respective counsel, hereby
agree that if notice is to be given hereunder by such party's counsel, such
counsel may communicate directly with all principals, as required to comply with
the foregoing notice provisions. Notices shall be addressed at the addresses
hereinabove set forth in the introductory paragraph of this Agreement or to such
other address as the receiving party shall have specified most recently by like
notice, with a copy to the other parties hereto.
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<PAGE> 13
(g) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument, binding on all parties
hereto. Any signature page of this Agreement may be detached from any
counterpart of this Agreement and reattached to any other counterpart of this
Agreement identical in form hereto by having attached to it one or more
additional signature pages.
(h) EXECUTION BY ALL PARTIES REQUIRED TO BE BINDING;
ELECTRONICALLY TRANSMITTED DOCUMENTS. This Agreement shall not be construed to
be an offer and shall have no force and effect until this Agreement is fully
executed by all parties hereto. If a copy or counterpart of this Agreement is
originally executed and such copy or counterpart is thereafter transmitted
electronically by facsimile or similar device, such facsimiled document shall
for all purposes be treated as if manually signed by the party whose facsimile
signature appears.
WHEREFORE, the parties hereto have for purposes of this Agreement
executed this Agreement in the City of Beverly Hills, County of Los Angeles,
State of California, effective as of the date first written above.
TRUST:
MEYERS SHEPPARD INVESTMENT TRUST,
A DELAWARE BUSINESS TRUST
By: _____________________________
Shelly Meyers, its President and Trustee (and not
individually)
DISTRIBUTOR:
FURMAN SELZ LLC,
A DELAWARE LIMITED LIABILITY COMPANY
By: _____________________________
Name: _____________________________
Title: _____________________________
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<PAGE> 1
Exhibit 8
Form of Custodian Agreement dated as of May 9, 1996 between the Registrant and
Wells Fargo Bank, N.A.
<PAGE> 2
CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT is entered into as of May 9, 1996 by and
between WELLS FARGO BANK, NATIONAL ASSOCIATION (the "Custodian"), whose
principal place of business is __________________, California 9____ and MEYERS
SHEPPARD INVESTMENT TRUST, a Delaware Business Trust (the "Customer"), whose
principal place of business is 9107 Wilshire Blvd., Suite 700, Beverly Hills,
California 90210, with reference to the following facts:
RECITALS
WHEREAS, the Customer may, from time to time organize one or more
series of shares, in addition to the series set forth in Exhibit "A" attached
hereto and incorporated herein by this reference, each of which shall represent
an interest in a separate portfolio of Securities and Cash (each as hereinafter
defined) (all such existing and additional series now or hereafter listed on
Exhibit "A" being hereinafter referred to individually, as a "Portfolio" and
collectively, as the "Portfolios"); and
WHEREAS, the Customer desires to appoint the Custodian as custodian on
behalf of the Portfolios under the terms and conditions set forth in this
Agreement, and the Custodian has agreed to so act as custodian.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises contained in this Agreement, the Customer and the Custodian (who are
sometimes individually referred to as a "party" and collectively referred to as
the "parties") agree as follows:
AGREEMENT
1. EMPLOYMENT OF CUSTODIAN
The Customer hereby employs the Custodian as custodian of all
assets of each Portfolio which are delivered to and accepted by the Custodian or
any of its sub-custodians (as that term is defined in Section 5) anywhere in the
world (the "Property") pursuant to the terms and conditions set forth herein
and, if applicable, to mutually acceptable operating instructions (including any
amendments and modifications thereto) which upon written agreement by the
parties hereto shall be deemed to be part of and incorporated into this
Agreement as if set forth in full herein. Hereinafter, references to "this
Agreement," "herein" or words of similar effect shall refer to this Agreement
and any mutually acceptable operating instructions then in effect. Without
limitation, such Property shall include stocks and other equity interests of
every type, evidences of indebtedness, other instruments representing same or
rights or obligations to receive, purchase, deliver or sell same and other
non-cash investment property of a Portfolio ("Securities") and cash from
whatever source and in whatever currency ("Cash"). The Custodian shall not be
responsible for any property of a Portfolio held or received by the Customer or
others and not delivered to the Custodian or any of its sub-custodians. Upon
delivery by the Customer to the Custodian of any Property belonging to a
Portfolio, the Customer shall specifically indicate which Portfolio such
Property belongs or if such Property belongs to more than one Portfolio shall
allocate such Property to the appropriate Portfolio all in accordance with
Instructions (as hereinafter defined in Section 13).
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<PAGE> 3
2. CUSTODY ACCOUNT
The Custodian agrees to establish and maintain one or more
custody accounts, each in the name of a Portfolio (individually, an "Account"
and collectively, the "Accounts") for any and all Property from time to time
received and accepted by the Custodian or any of its sub-custodians for the
account of such Portfolio. The Customer acknowledges its responsibility as a
principal for all of its obligations to the Custodian arising under or in
connection with this Agreement, notwithstanding that it may be acting on behalf
of other persons and warrants its authority to deposit in any Account any
Property received therefor by the Custodian or its sub-custodian and to give,
and authorize others to give, instructions relative thereto. The Customer
further agrees that the Custodian shall not be subject to, nor shall its rights
and obligations under this Agreement or with respect to any Account be affected
by, any agreement between the Customer and any other person.
The Custodian shall hold, keep safe and protect as custodian
in the Accounts, on behalf of the Customer, all Property. All transactions,
including, but not limited to, foreign exchange transactions, involving the
Property shall be executed or settled solely in accordance with Instructions,
except that until the Custodian receives Instructions to the contrary, the
Custodian will:
(a) collect all interest and dividends and all other income
and payments, whether paid in cash or in kind, on the Property, as the
same become payable and credit the same to the appropriate Account;
(b) present for payment all Securities held in an Account
which are called, redeemed or retired or otherwise become payable and
all coupons and other income items which call for payment upon
presentation and hold the cash received in such Account pursuant to
this Agreement;
(c) exchange Securities where the exchange is purely
ministerial (including, without limitation, the exchange of temporary
securities for those in definitive form and the exchange of warrants,
or other documents of entitlement to securities, for the Securities
themselves);
(d) (i) whenever notification of a rights entitlement or a
fractional interest resulting from a rights issue, stock dividend or
stock split is received for an Account and such rights entitlement or
fractional interest bears an expiration date, if after endeavoring to
obtain Instructions such Instructions are not received in time for the
Custodian to take timely action, no action shall be taken with respect
thereto; and (ii) when notification of a tender or exchange offer
(other than ministerial exchanges described in (c) above) is received
for an Account, if after endeavoring to receive Instructions, such
Instructions are not received in time for the Custodian to take timely
action, no action shall be taken with respect thereto.
(e) execute in the name of an Account, whenever the Custodian
deems it appropriate, such ownership and other certificates as may be
required to obtain the payment of income from the Property in such
Account; and
(f) pay for each Account, any and all taxes and levies in the
nature of taxes imposed on income on the Property in such Account by
any governmental authority. In the event there is insufficient Cash
available in such Account to pay such taxes and levies, the Custodian
shall notify the Customer of the amount of the shortfall and the
Customer, at its option, may deposit additional Cash in such Account or
take steps to have sufficient Cash available. The Customer agrees, when
and if requested by the Custodian and required in connection with the
payment of any such taxes to cooperate with the Custodian in furnishing
information, executing documents
2
<PAGE> 4
or otherwise.
The Custodian shall deliver subject to Section 17 below any or
all Property in an Account in accordance with Instructions and in connection
therewith, the Customer will accept delivery of equivalent Securities of the
same class, issue and denomination in place of those contained in such Account.
Neither the Custodian nor any sub-custodian shall have any duty or
responsibility to see to the application of any Property withdrawn from any
Account upon Instructions.
Except as otherwise may be agreed upon by the parties hereto,
the Custodian shall not be required to comply with Instructions to settle the
purchase of any Securities for an Account unless there is sufficient Cash in
such Account at the time or to settle the sale of any Securities in such Account
unless such Securities are in deliverable form. Notwithstanding the foregoing,
if the purchase price of such Securities exceeds the amount of Cash in such
Account at the time of such purchase, the Custodian may, in its sole discretion,
advance the amount of the difference in order to settle the purchase of such
Securities. The amount of any such advance shall be deemed a loan from the
Custodian to the Customer on behalf of such Account payable on demand and
bearing interest accruing from the date such loan is made to but not including
the date such loan is repaid at a rate per annum customarily charged by the
Custodian on similar loans.
3. RECORDS, OWNERSHIP OF PROPERTY AND STATEMENTS
The ownership of the Property whether Securities, Cash and/or
other property, and whether held by the Custodian or a sub-custodian or in a
securities depository or clearing agency as hereinafter authorized, shall be
clearly recorded on the Custodian's books as belonging to the appropriate
Account and not for the Custodian's own interest. The Custodian shall keep
accurate and detailed accounts of all investments, receipts, disbursements and
other transactions for such Account. All accounts, books and records of the
Custodian relating thereto shall be open to inspection and audit at all
reasonable times during normal business hours by any person designated by the
Customer. All such accounts shall be maintained and preserved in accordance with
Section 31 of the Investment Company Act of 1940, as amended (the "Investment
Company Act") and Rules 31a-1 and 31a-2 thereunder. The Custodian will supply to
the Customer daily a statement summarizing all cash projections, cash flows,
assets, transactions and entries for each Account including prompt notice of any
transfer of Cash or Securities to or from such Account. The Custodian shall
furnish to the Customer at the beginning of every day a list of the Securities
in each Portfolio showing the market value thereof as of the end of the prior
business day segregated by asset class. In addition to the foregoing, the
Custodian shall furnish to the Customer or the Customer's designated agent all
reports and statements set forth in Exhibit "B" attached hereto and incorporated
herein by this reference. All reports and statements furnished by the Custodian
to the Customer under this Section 3 shall be made in respect of all Property in
all Accounts held by the Custodian or any sub-custodian. All market values to be
used in connection with the lists of the Portfolio Securities to be furnished to
the Customer pursuant to the foregoing provisions of this Section shall be
obtained from sources which the Custodian deems to be reliable. Notwithstanding
the foregoing, neither the Custodian nor any sub-custodian shall be liable for
any inaccuracies in any such market values or any direct or indirect
consequences arising therefrom, including, without limitation, arising out of
any action taken or omitted to be taken in reliance thereon. In the absence of
the filing in writing with the Custodian by the Customer of exceptions or
objections to any such statement within ninety (90) days of the mailing thereof,
the Customer shall be deemed to have approved such statement and such statement
shall be presumed to be for all purposes correct with respect to all information
set forth therein absent manifest error or omissions.
The Customer may elect to participate in any of the electronic
on-line service and communications systems offered by the Custodian which can
provide the Customer, on a daily basis,
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<PAGE> 5
with the ability to view on-line or to print on hard copy various reports of
Account activity and of Securities and/or Cash being held in any Account. To the
extent that such service shall include market values of Securities in an
Account, the Customer hereby acknowledges that the Custodian now obtains and may
in the future obtain information on such values from outside sources that the
Custodian considers to be reliable and the Customer agrees that the Custodian
(i) does not verify nor represent or warrant either the reliability of such
service nor the accuracy or completeness of any such information furnished or
obtained by or through such service and (ii) shall be without liability in
selecting and utilizing such outside sources or furnishing any information
derived therefrom.
4. MAINTENANCE OF PROPERTY OUTSIDE OF THE UNITED STATES
Securities in an Account may be held in a country or other
jurisdiction outside of the United States as may be specified from time to time
in Instructions; provided, however, that such country or other jurisdiction
shall be one in which the principal trading market for such Securities is
located or in which such Securities are to be presented for payment or are
acquired for the Account. Cash in such Account shall be credited to an account
maintained with a sub-custodian in such amounts and in such countries or other
jurisdictions as shall be specified from time to time in Instructions.
Instructions received by the Custodian pursuant to the provisions hereof to
settle purchases and sales of Securities for a specific Portfolio in a
jurisdiction specified therein shall be deemed to be Instructions furnished by
the Customer to the Custodian under this Section 4 authorizing the holding of
such Securities and Cash for such Portfolio in such jurisdiction and shall
further be deemed to be a representation by the Customer that such jurisdiction
has been authorized by the Customer pursuant to Rule 17f-5 ("Rule 17f-5") under
the Investment Company Act as a jurisdiction in which such Portfolio's
Securities and Cash may be held; it being understood that the Custodian shall
have no liability or responsibility for determining whether such authorization
has been proper under such Rule 17f-5.
5. SUB-CUSTODIANS AND SECURITIES DEPOSITORIES
The Custodian may, subject to the provisions set forth below,
employ, directly or indirectly, one or more sub-custodians to assist in the
performance of its obligations hereunder; provided, however, that the employment
of any such sub-custodian (other than any such sub-custodian which is a
securities depository or clearing agency) shall not relieve the Custodian of its
responsibilities or liabilities hereunder; provided further, that with respect
to a sub-custodian which is a securities depository or clearing agency, the
Custodian shall only be responsible or liable for losses arising from such
employment caused by the Custodian's own failure to exercise reasonable care.
The Customer authorizes and instructs the Custodian to hold
the Property in an Account in custody accounts which have been established by
the Custodian with (x) one of its branches, a branch of another U.S. bank, or a
United States securities depository in which the Custodian or a sub-custodian
participates (a "United States third-party agent") or (y) a majority owned
non-U.S. subsidiary of the Custodian or another U.S. bank or bank holding
company acting as custodian, a foreign bank or trust company acting as custodian
or a non-United States securities depository in which the Custodian or
sub-custodian participates (a "non-United States third-party agent"). The
employment of any of the foregoing shall be determined by the Custodian in its
discretion; provided, however, that in each case in which a United States
third-party agent is employed, such third-party agent complies with the
provisions of Section 17(f)(1), Section 17(f)(2), Rule 17f-2 or Rule 17f-4 under
the Investment Company Act provided further, that in each case in which a
non-United States third-party agent is employed, (i) such third-party agent is
an "eligible foreign custodian" within the meaning of Rule 17f-5 or such
third-party agent is the subject of an order granted by the United States
Securities and Exchange Commission exempting such agent or the sub-custody
arrangements with respect thereto from all or part of the provisions of Rule
17f-5 and (ii) such employment and the agreement between the Custodian and such
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<PAGE> 6
third-party agent related thereto (other than the agreement with any such
third-party agent which is a securities depository in which another third-party
agent with which the Custodian has an agreement approved by the Customer as
hereinafter provided participates) have been approved by the Customer for a
specific Portfolio pursuant to Instructions pursuant to Rule 17f-5; it being
understood that the Custodian shall have no liability or responsibility for
determining whether such approval has been proper under such Rule 17f-5. In this
Agreement, the term "sub-custodian" will refer to any third-party agent referred
to in the first sentence of this paragraph which has satisfied, where
applicable, the conditions set forth in the provisos in the second sentence of
this paragraph. The Custodian agrees to promptly notify the Customer after it
learns in its custodial capacity that any sub-custodian no longer meets the
requirements of Rule 17f-5 and to cease the employment of such sub-custodian as
a result thereof upon receipt of Instructions. Upon request of the Customer, the
Custodian shall deliver to the Customer annually a certificate stating: (i) the
identity of each non-United States sub-custodian then acting on behalf of the
Custodian; (ii) the countries in which each such non-United States sub-custodian
is then holding Cash and/or Securities in the Accounts; and (iii) such other
information relating to such nonUnited States sub-custodian as may be reasonably
necessary to permit the Customer's Board of Trustees to review all factors under
Rule 17f-5 and the "notes" thereto. The Custodian shall also furnish annually to
the Customer information concerning such non-United States sub-custodian similar
in kind and scope as that furnished to the Customer in connection with the
initial approval of this Agreement. The Custodian agrees to provide the Customer
with notice of any material adverse changes in the facts or circumstances upon
which such information is based as soon as practicable after it becomes aware of
any such material adverse changes in the normal course of its custodial
activities.
With respect to Property in the Account(s) which are
maintained by the Custodian or any sub-custodian in the custody of a securities
depository pursuant to this section:
(a) The Custodian shall, and the sub-custodian will be
required by its agreement with the Custodian to, identify on its books
such Property as being held for the account of the Custodian or
sub-custodian for its customers.
(b) Any Property held in a securities depository for the
account of the Custodian or a sub-custodian will be subject only to the
instructions of the Custodian or such sub-custodian, as the case may
be.
(c) Property deposited with a securities depository will be
maintained in an account holding only assets for customers of the
Custodian or sub-custodian, as the case may be.
(d) The Custodian shall provide the Customer with any report
obtained by the Custodian on the securities depository's accounting
system, internal accounting control and procedures for safeguarding
securities deposited in the depository.
(e) Upon receipt of Instructions, the Custodian (to the extent
permitted by applicable laws and regulations) shall terminate the use
of a securities depository with respect to the Property as promptly as
practicable and shall take, pursuant to Instructions, all actions
reasonably practicable to establish alternative custody arrangements
for such Property.
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6. USE OF SUB-CUSTODIAN
With respect to Property in the Accounts which are maintained
by the Custodian in the custody of a sub-custodian employed pursuant to Section
5:
(a) The Custodian will maintain adequate records that identify
as belonging to the Customer any Property held by such sub-custodian.
(b) In the event that a sub-custodian permits any of the
Securities placed in its care to be held in a securities depository or
clearing agency, such sub-custodian will be required by its agreement
with the Custodian to identify on its books such Securities as being
held for the account of the Custodian for its customers.
(c) Any Property in the Account, except Securities held by a
sub-custodian on a segregated basis on behalf of the Customer, held by
a sub-custodian will be subject only to the instructions of the
Custodian or its agents unless specifically otherwise authorized by the
Custodian on a exception basis; and any Securities held in a securities
depository or clearing agency for the account of the Custodian or a
sub-custodian will be subject only to the instructions of the Custodian
or such sub-custodian, as the case may be.
(d) Property deposited with a sub-custodian will be maintained
in an account holding only assets for customers of the Custodian.
(e) Any agreement the Custodian shall enter into with a
sub-custodian with respect to the holding of Property shall require
that (i) the Accounts will be adequately indemnified and/or their
assets adequately insured in the event of loss, (ii) the Securities are
not subject to any right, charge, security interest, lien or claim of
any kind in favor of such sub-custodian or its creditors except a claim
for payment for their safe custody or administration and expenses
related thereto, (iii) beneficial ownership of such Securities be
freely transferable without the payment of money or value other than
for safe custody or administration and expenses related thereto, (iv)
adequate records will be maintained identifying the Property held
pursuant to such Agreement as belonging to the Customer and (v)
officers of or auditors employed by, or other representatives of or
designated by, the Custodian, including the independent public
accountants of or designated by, the Customer be given access to the
books and records of such sub-custodian relating to its actions under
its agreement pertaining to any Property held by it thereunder or
confirmation of or pertinent information contained in such books and
records be furnished to such persons designated by the Custodian.
7. HOLDING OF SECURITIES, NOMINEES, ETC.
Securities in an Account which are held by the Custodian or
any sub-custodian may be held by such entity in the name of such Account, in its
own name, in the name of its nominee or in bearer form. Securities which are
held by a sub-custodian or which are eligible for deposit in a securities
depository as provided above may be maintained with the depository in an account
for the Custodian's or sub-custodian's customers. The Custodian or
sub-custodian, as the case may be, may combine certificates representing
Securities held in the Account with certificates of the same issue held by it as
fiduciary or as a custodian. In the event that any Securities in the name of the
Custodian or its nominee or held by one of its sub-custodians and registered in
the name of such sub-custodian or its nominee are called for partial redemption
by the issuer of such Security, the Custodian may, subject to the rules or
regulations pertaining to allocation of any securities depository in which such
Securities have been deposited, allot, or cause to be allotted, the called
portion to the respective beneficial holders of
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such class of security in any manner the Custodian deems to be fair and
equitable.
8. ESTABLISHMENT OF SEGREGATED ACCOUNT
Upon receipt of Instructions, the Custodian shall establish
and maintain on its books a segregated account or accounts for and on behalf of
the Customer, into which account or accounts may be transferred Cash and/or
Securities or other assets of the Customer, including Securities maintained by
the Custodian in a depository, said account or accounts to be maintained (a) for
the purposes of facilitating certain transactions on behalf of the Customer
including but not limited to options, borrowing and foreign exchange
transactions; (b) for the purposes of compliance by the Customer with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of segregated accounts by registered investment
companies; or (c) for such other purposes as set forth from time to time in
Instructions. Notwithstanding any reference to the purpose of establishing one
or more accounts in this Section or in Instructions relating to the
establishment of such accounts, whether such purpose be for compliance with
legal or regulatory requirements or for any other purpose, it is understood and
agreed that the Custodian shall have no liability or responsibility for
compliance with or monitoring compliance with any such purpose.
9. LENDING OF SECURITIES
The Customer may appoint an agent to effect such loans
pursuant to a written agreement as to which the Custodian might be a party,
providing inter alia for marking collateral to market, the call of such loans
and such other terms as may be agreed upon.
10. INDEBTEDNESS
The Customer on behalf of a Portfolio will cause to be
delivered to the Custodian by any bank from which a Portfolio borrows money for
temporary or emergency or other purposes using Securities as collateral for such
borrowings, a notice or undertaking in the form currently employed by any such
bank setting forth the amount which such bank will loan to the Portfolio against
delivery of a stated amount of collateral. The Customer shall promptly deliver
to the Custodian Instructions regarding such borrowing.
11. PROXIES, ETC.
With respect to any proxies, notices, reports or other
communications relative to any of the Securities in the Accounts, the Custodian
shall perform such services and only such services relative thereto as are (i)
set forth in Section 2 of this Agreement, and (iii) as may otherwise be agreed
upon between the Custodian and the Customer. The liability and responsibility of
the Custodian in connection with the Proxy Service referred to in (ii) of the
immediately preceding sentence shall be as set forth in the description of the
Proxy Service and shall not be affected by any other term of this Agreement.
Neither the Custodian nor its nominees or agents shall vote
upon or in respect of any of the Securities in an Account, execute any form of
proxy to vote thereon, or give any consent or take any action (except as
provided in Section 2) with respect thereto except upon the receipt of
Instructions relative thereto.
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12. SETTLEMENT PROCEDURES
Settlement and payment for Securities received for an Account
and delivery of Securities maintained for an Account may be effected in
accordance with the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivering Securities to the
purchaser thereof or to a dealer thereof (or an agent for such purchaser or
dealer) against a receipt with the expectation of receiving later payment for
such Securities from such purchaser or dealer, and in accordance with the
standard operating procedures of the Custodian in effect from time to time for
that jurisdiction or market.
13. INSTRUCTIONS
The term "Instructions" means instructions from the Customer
in respect of any of the Custodian's duties hereunder which have been received
by the Custodian at its address set forth in Section 22 below in writing or by
tested telex or by facsimile signed or given by such one or more person or
persons as the Customer shall have from time to time authorized to give the
particular class of Instructions in question and whose name and (if applicable)
signature and office address have been filed with the Custodian or which has
been transmitted electronically through an electronic on-line service and
communication system offered by the Custodian or other electronic instruction
system, or upon receipt of such other form of instructions as the Customer may
from time to time authorize in writing and which the Custodian agrees to accept.
The Custodian shall have the right to assume in the absence of notice to the
contrary from the Customer that any person whose name is on file with the
Custodian pursuant to this Section has been authorized by the Customer to give
the Instructions in question and that such authorization has not been revoked.
14. STANDARD OF CARE
The Custodian shall be responsible for the performance of only
such duties as are set forth herein or contained in Instructions given to the
Custodian which are not contrary to the provisions of this Agreement. The
Custodian will use reasonable care with respect to the safekeeping of Securities
in each Account and except as expressly otherwise provided in carrying out its
obligations under this Agreement. So long as and to the extent that it has
exercised reasonable care, the Custodian shall not be responsible for the title,
validity or genuineness of any Property or other property or evidence of title
thereto received by it or delivered by it pursuant to this Agreement and shall
be held harmless in acting upon, and may conclusively rely on, without liability
for any loss resulting therefrom, any notice, request, consent, certificate or
other instrument reasonably believed by it to be genuine and to be signed or
furnished by the proper party or parties, including, without limitation,
Instructions, and shall be indemnified by the Customer for any losses, damages,
costs and expenses (including, without limitation, the fees and expenses of
counsel) incurred by the Custodian and arising out of action taken or omitted in
good faith and with reasonable care by the Custodian hereunder or under any
Instructions. The Custodian shall indemnify the Customer for any loss which
shall occur as the result of the failure of a sub-custodian (other than any
sub-custodian which is a securities depository or clearing agency the actions or
omissions for which the Custodian's liability and responsibility is set forth in
the last proviso of the first paragraph of Section 5) to exercise reasonable
care with respect to the safekeeping of such Securities. In the event of any
loss to the Customer by reason of the failure of the Custodian or its
sub-custodian to utilize reasonable care, the Custodian shall be liable to the
Customer to the extent of the Customer's actual damages without reference to any
special conditions or circumstances. In no event shall the Custodian be liable
for any consequential or special damages arising out of its own failure to
exercise reasonable care under any circumstances nor shall the Custodian be
liable for any consequential or special damages arising out of the failure of
any sub-custodian to exercise reasonable care under any
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circumstances unless pursuant to its agreement with the Custodian such
sub-custodian is liable to the Custodian for consequential damages for its
failure to exercise reasonable care in which case the Custodian's liability
hereunder for such consequential damages shall be to pay over to the Customer
the Customer's pro rata share (as determined in the discretion of the Custodian)
of any recovery for such damages from such sub-custodian. The Custodian shall be
entitled to rely, and may act, on advice of counsel (who may be counsel for the
Customer) on all matters and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
In the event the Customer subscribes to an electronic on-line
service and communications system offered by the Custodian, the Customer shall
be fully responsible for the security of the Customer's connecting terminal,
access thereto and the proper and authorized use thereof and the initiation and
application of continuing effective safeguards with respect thereto and agree to
defend and indemnify the Custodian and hold the Custodian harmless from and
against any and all losses, damages, costs and expenses (including the fees and
expenses of counsel) incurred by the Custodian as a result of any improper or
unauthorized use of such terminal by the Customer or by any others.
All collections of funds or other property paid or distributed
in respect of Securities in each Account, including funds involved in
third-party foreign exchange transactions, shall be made at the risk of the
Customer. The Custodian shall have no liability for any loss occasioned by delay
in the actual receipt of notice by the Custodian or by its sub-custodian of any
payment, redemption or other transaction regarding Securities in an Account in
respect of which the Custodian has agreed to take action as provided in Section
2 hereof which is not due to the Custodian's or such sub-custodian's lack of
reasonable care. The Custodian shall not be liable for any loss resulting from,
or caused by, or resulting from acts of governmental authorities (whether de
jure or de facto), including, without limitation, nationalization,
expropriation, and the imposition of currency restrictions; acts of war,
terrorism, insurrection or revolution; strikes or work stoppages; the inability
of a local clearing and settlement system to settle transactions for reasons
beyond the control of the Custodian; hurricane, cyclone, earthquake, volcanic
eruption, nuclear fusion, fission or radioactivity, or other acts of God. Upon
the occurrence of any of the events (other than any of such events which are
acts of God) referred to in the immediately preceding sentence, the Custodian
will consult with the Customer and take such reasonable steps to safeguard the
Property as may be agreed between the Customer and the Custodian; provided that
should the Custodian in good faith determine that the taking of any such steps
would result in the incurrence by the Custodian of costs, expenses and
liabilities, the Custodian need not take any such steps until the Customer shall
have furnished to the Custodian reasonable security or indemnity for such costs,
expenses and liabilities.
The provisions of this Section shall survive termination of
this Agreement.
15. FEES AND EXPENSE
The Customer agrees to pay to the Custodian such compensation
for its services pursuant to this Agreement including, if elected by the
Customer, fees for an electronic on-line service and communications system
offered by the Custodian, as may be mutually agreed upon in writing from time to
time and the necessary and proper disbursements and expenses incurred by the
Custodian in the performance of this Agreement including (but without
limitation) legal fees. The initial fee schedule is attached hereto as Exhibit
"C" and incorporated herein by this reference. The Customer hereby agrees to
hold the Custodian harmless from any liability or loss which is not due to the
Custodian's or a sub-custodian's lack of reasonable care resulting from any
taxes or other governmental charges, and any expense related thereto, which may
be imposed, or assessed with respect to any Property in an Account and also
agrees to hold the Custodian, its sub-custodians, and their respective nominees
harmless from any liability as a record holder of Property in an Account which
is not due to the Custodian's or a sub-
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custodian's lack of reasonable care. The Custodian is authorized to charge an
Account of the Customer for such items. The provisions of this Section shall
survive the termination of this Agreement.
16. PUTS AND CALLS TRADED ON SECURITIES EXCHANGES, NASDAQ OR
OVER-THE COUNTER
The Custodian shall take action as to put options ("puts") and
call options ("calls") purchased or sold (written) by Customer on behalf of a
Portfolio regarding escrow or other arrangements (i) in accordance with the
provisions of any agreement entered into upon receipt of Instructions between
the Custodian, any broker-dealer registered under the Exchange Act and a member
of the National Association of Securities Dealers, Inc. (the "NASD"), and, if
necessary, the Custodian relating to the compliance with the rules of the
Options Clearing Corporation and of any registered national securities exchange,
or of any similar organization or organizations.
Unless another agreement requires it to do so, the Custodian
shall be under no duty or obligation to see that the Customer has deposited or
is maintaining adequate margin, if required, with any broker in connection with
any option, nor shall the Custodian be under duty or obligation to present such
option to the broker for exercise unless it receives Instructions from the
Customer. The Custodian shall have no responsibility for the legality of any put
or call purchased or sold on behalf of the Customer, the propriety of any such
purchase or sale, or the adequacy of any collateral delivered to a broker in
connection with an option or deposited to or withdrawn from a segregated
account. The Custodian specifically, but not by way of limitation, shall not be
under any duty or obligation to: (i) periodically check or notify the Customer
that the amount of such collateral held by a broker or held in a segregated
account is sufficient to protect such broker of the Customer against any loss;
(ii) effect the return of any collateral delivered to a broker; or (iii) advise
the Customer that any option it holds, has or is about to expire. Such duties or
obligations shall be the sole responsibility of the Customer.
The Custodian shall take action as to puts, calls and futures
contracts ("Futures") purchased or sold by the Customer in accordance with the
provisions of any agreement among the Customer, the Custodian and a Futures
Commission Merchant registered under the Commodity Futures Trading Commission
and/or any contract market, or any similar organization or organizations,
regarding account deposits in connection with transactions by the Customer.
17. PERMITTED TRANSACTIONS
The Customer agrees that it will cause transactions to be made
pursuant to this Section only upon Instructions in accordance with Section 13
and only for the purposes listed below:
(a) In connection with the purchase or sale of Securities at
prices as confirmed by Instructions.
(b) When Securities are called, redeemed or retired, or
otherwise become payable.
(c) In exchange for or upon conversion into other securities
alone or other securities and cash pursuant to any plan of merger,
consolidation, reorganization, recapitalization or readjustment.
(d) Upon conversion of Securities pursuant to their terms into
other securities.
(e) Upon exercise of subscription, purchase or other similar
rights represented by the Securities.
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(f) For the payment of interest, taxes, management or
supervisory fees, distributions or operating expenses.
(g) In connection with any borrowings by the Customer
requiring a pledge of Securities, but only against receipt of amounts
borrowed.
(h) In connection with any loans or repurchase agreements, but
only against receipt of adequate collateral as specified in
Instructions which shall reflect any restrictions applicable to the
Customer.
(i) For the purpose of redeeming shares of the capital stock
of the Customer against delivery of the shares to be redeemed to the
Custodian, a sub-custodian or the Customer's transfer agent.
(j) For the purpose of redeeming in kind shares of the
Customer against delivery of the shares to be redeemed to the
Custodian, a sub-custodian or the Customer's transfer agent.
(k) For delivery in accordance with the provisions of any
agreement among the Customer, on behalf of a Portfolio, the Custodian
and a broker-dealer registered under the Securities Exchange Act of
1934, as amended, and a member of the National Association of
Securities Dealers, Inc., relating to compliance with the rules of The
Options Clearing Corporation, the Commodities Futures Trading
Commission and of any registered national securities exchange, or of
any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Customer.
(l) For release of Securities to designated brokers under
covered call options, provided, however, that such Securities shall be
released only upon payment to the Custodian of monies for the premium
due and a receipt for the Securities which are to be held in escrow.
Upon exercise of the option, or at expiration, the Custodian will
receive the Securities previously deposited from broker. The Custodian
will act strictly in accordance with Instructions in the delivery of
Securities to be held in escrow and will have no responsibility or
liability for any such Securities which are not returned promptly when
due other than to make proper request for such return.
(m) For spot or forward foreign exchange transactions to
facilitate security trading or receipt of income from Securities
related transactions.
(n) For other proper purposes.
(o) Upon the termination of this Agreement as set forth in
Section 21.
(p) The Custodian shall have no obligation to verify the
purpose for which a transaction is being effected.
18. TAX RECLAIMS
With respect to withholding taxes deducted and which may be
deducted from any income received from any Property in the Accounts, the
Custodian shall perform such services with respect thereto as are described in
Exhibit "D" attached hereto and incorporated herein by this reference and shall
in connection therewith be subject to the liability and responsibility set forth
in such Exhibit "D". Such liability and responsibility shall not be affected by
any other term of this Agreement.
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19. SECURITY FOR OBLIGATIONS TO CUSTODIAN
If, on behalf of the Customer, the Custodian advances cash or
securities for any purpose for the benefit of the Customer, including in
connection with foreign exchange contracts or options (collectively, an
"Advance"), or if the Custodian or any nominee thereof shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities
(including without limitation reasonable attorneys' fees) in connection with the
performance of this Agreement (collectively, a "Liability"), except such as may
arise from its or such nominee's breach of the relevant standard of conduct set
forth in this Agreement, then in such event any Property at any time held for
the account of the Customer by the Custodian or a sub-custodian shall be
security for such Advance or Liability and if the Customer shall fail to repay
or indemnify the Custodian promptly, the Custodian shall be entitled to utilize
available Cash and to dispose of Property, including Securities, to the extent
necessary to obtain reimbursement or indemnification.
20. TERMINATION
This Agreement may be terminated by the Customer or the
Custodian by ninety (90) days' notice to the other; provided, however, that
notice by the Customer shall specify the names of the persons to whom the
Custodian shall deliver the Securities in each Account and to whom the Cash in
each Account shall be paid. If notice of termination is given by the Custodian,
the Customer shall, within ninety (90) days following the giving of such notice,
deliver to the Custodian a written notice specifying the names of the persons to
whom the Custodian shall deliver the Securities in each Account and to whom the
Cash in each Account shall be paid. In either case, the Custodian will deliver
such Securities and Cash to the persons so specified, after deducting therefrom
any amounts which the Custodian reasonably determines to be owed to it under
Section 15. In addition, the Custodian may in its discretion withhold from such
delivery such Cash and Securities as may be necessary to settle transactions
pending at the time of such delivery. If within ninety (90) days following the
giving of a notice of termination by the Custodian, the Custodian does not
receive from the Customer a written notice specifying the names of the persons
to whom the Custodian shall deliver the Securities in each Account and to whom
the Cash in each Account shall be paid, the Custodian, at its election, may
deliver such Securities and pay such Cash to a bank or trust company doing
business in the State of California to be held and disposed of pursuant to the
provisions of this Agreement, or may continue to hold such Securities and Cash
until a written notice as aforesaid is delivered to the Custodian.
21. PUBLICITY
The Customer shall furnish to the Custodian at its office
referred to in Section 22 above, prior to any distribution thereof, copies of
any material prepared for distribution to any persons who are not parties hereto
that refer in any way to the Custodian. The Customer shall not distribute or
permit the distribution of such materials if the Custodian reasonably objects in
writing within ten (10) business days of receipt thereof (or such other time as
may be mutually agreed) after receipt thereof. The foregoing to the contrary not
withstanding, such prior notification shall not be required with respect to
references to the Custodian in the Prospectus that substantially conforms to the
language contained in Exhibit "E" attached hereto and incorporated herein by
this reference. The provisions of this Section shall survive the termination of
this Agreement.
22. CONFIDENTIALITY
All information and advice furnished by or regarding either
party to this Agreement shall be treated as confidential and shall not be
disclosed to third parties except as required by law or the requirement (whether
or not having the force of law) of any governmental regulatory authority
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having jurisdiction over any of the parties herein. The Custodian shall not use
information or advice received from the Customer to advise its clients or to
enter into securities transactions for its own account.
23. MISCELLANEOUS
(a) PREPARATION OF AGREEMENT. Each party agrees that the other
party shall not be construed to be solely responsible for the drafting of this
Agreement, and that any ambiguity in this Agreement or the interpretation
thereof shall not be construed against either party as the alleged draftsman of
this Agreement.
(b) COOPERATION. Each party agrees, without further
consideration, to cooperate and diligently perform any further acts, deeds and
things and to execute and deliver any documents that may from time to time be
reasonably necessary or otherwise reasonably required to consummate, evidence,
confirm and/or carry out the intent and provisions of this Agreement, all
without undue delay or expense.
(c) INTERPRETATION.
(i) Entire Agreement/No Collateral Representations.
Each party expressly acknowledges and agrees that this Agreement: (1) is the
final, complete and exclusive statement of the agreement of the parties with
respect to the subject matter hereof; (2) supersedes any prior or
contemporaneous agreements or understandings of any kind, oral or written
(collectively and severally, the "prior agreements"), and that any such prior
agreements are of no force or effect except as expressly set forth herein; and
(3) may not be varied, supplemented or contradicted by evidence of prior
agreements, or by evidence of subsequent oral agreements.
(ii) Amendment; Waiver; Forbearance. Except as
expressly otherwise provided herein, neither this Agreement nor any of its terms
contained herein may, as the case may be, be amended, supplemented, discharged
or terminated (other than by performance), except by a written instrument or
instruments signed by all of the parties to this Agreement. No waiver of any
acts or obligations hereunder shall be effective unless such waiver shall be in
a written instrument or instruments signed by each party claimed to have given
or consented to such waiver and each party affected by such waiver. No
forbearance by a party to seek a remedy for any noncompliance or breach by
another party hereto shall be deemed to be a waiver by such forbearing party of
its rights and remedies with respect to such noncompliance or breach unless such
waiver shall be in a written instrument or instruments signed by the forbearing
party.
(iii) Remedies Cumulative. The remedies of each party
under this Agreement are cumulative and shall not exclude any other remedies to
which such party may be lawfully entitled.
(iv) Severability. If any term or provision of this
Agreement or the application thereof to any person or circumstance shall, to any
extent, be determined to be invalid, illegal or unenforceable under present or
future laws effective during the term of this Agreement, then and, in that
event: (A) the performance of the offending term or provision (but only to the
extent its application is invalid, illegal or unenforceable) shall be excused as
if it had never been incorporated into this Agreement, and, in lieu of such
excused provision, there shall be added a provision as similar in terms and
amount to such excused provision as may be possible and be legal, valid and
enforceable, and (B) the remaining part of this Agreement (including the
application of the offending term or provision to persons or circumstances other
than those as to which it is held invalid, illegal or unenforceable) shall not
be affected thereby and shall continue in full force and effect to the fullest
extent provided by law.
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(v) Time is of the Essence. It is expressly
understood and agreed that time of performance is strictly of the essence with
respect to each and every term, condition, obligation and provision hereof and
that the failure to timely perform any of the terms, conditions, obligations or
provisions hereof by any party shall constitute a material breach and a
noncurable (but waivable) default under this Agreement by the party so failing
to perform.
(vi) No Third Party Beneficiary. Notwithstanding
anything else herein to the contrary, the parties specifically disavow any
desire or intention to create any third party beneficiary obligations, and
specifically declare that no person, other than as set forth in this Agreement,
shall have any rights or remedies of any nature or kind whatsoever under or by
reason of this Agreement.
(vii) No Reliance Upon Prior Representation. Each
party acknowledges that no other party has made any oral representation or
promise which would induce them prior to executing this Agreement to change its
position to its detriment, partially perform, or part with value in reliance
upon such representation or promise; each party acknowledges that it has taken
such action at its own risk; and each party represents that it has not so
changed its position, performed or parted with value prior to the time of their
execution of this Agreement.
(viii) Headings; References; Incorporation; "Person";
Gender. The headings used in this Agreement are for convenience and reference
purposes only, and shall not be used in construing or interpreting the scope or
intent of this Agreement or any provision hereof. References to this Agreement
shall include all amendments or renewals thereof. All cross-references in this
Agreement, unless specifically directed to another agreement or document, shall
be construed only to refer to provisions within this Agreement, and shall not be
construed to be referenced to the overall transaction or to any other agreement
or document. Any exhibit referenced in this Agreement shall be construed to be
incorporated in this Agreement. As used in this Agreement, the term "person" is
defined in its broadest sense as any individual, entity or fiduciary who has
legal standing to enter into any agreement. As used in this Agreement, each
gender shall be deemed to include the other gender, including neutral genders or
genders appropriate for entities, if applicable, and the singular shall be
deemed to include the plural, and vice versa, as the context requires.
(d) ENFORCEMENT.
(i) Interpretation. This Agreement and the rights and
remedies of each party arising out of or relating to this Agreement (including,
without limitation, equitable remedies) shall be solely governed by, interpreted
under, and construed and enforced in accordance with the laws (without regard to
the conflicts of law principles thereof) of the State of California, as if this
Agreement were made, and as if its obligations are to be performed, wholly
within the State of California.
(ii) Attorneys' Fees and Costs. If any party
institutes or should the parties otherwise become a party to any action or
proceeding based upon or arising out of this Agreement including, without
limitation, to enforce or interpret this Agreement or any provision hereof, or
for damages by reason of any alleged breach of this Agreement or any provision
hereof, or for a declaration of rights in connection herewith, or for any other
relief, including equitable relief, in connection herewith, the prevailing party
in any such action or proceeding, whether or not such action or proceeding
proceeds to final judgement or determination, shall be entitled to receive from
the non-prevailing party as a cost of suit, and not as damages, all reasonable
and actual costs and expenses (as defined below) of prosecuting or defending the
action or proceeding, as the case may be, including, without limitation,
reasonable attorneys' and other fees.
14
<PAGE> 16
(e) SUCCESSORS AND ASSIGNS. Neither party may assign its
rights or delegate any of such party's duties or obligations under this
Agreement, in whole or in part, without the prior written consent of the other
party. Any delegation of a party's obligations under this Agreement shall in no
way release the delegating party from any of its obligations or liabilities
under this Agreement. Subject to the foregoing, all of the representations,
warranties, covenants, conditions and provisions of this Agreement shall be
binding upon and shall inure to the benefit of each party and such party's
respective successors and permitted assigns, spouses, heirs, executors,
administrators, and personal and legal representatives.
(f) NOTICES. Unless otherwise specifically provided in this
Agreement, all notices, demands, requests, consents, approvals or other
communications (collectively and severally called "notices") required or
permitted to be given hereunder, or which are given with respect to this
Agreement, shall be in writing, and shall be given by: (i) personal delivery
(which form of notice shall be deemed to have been given upon delivery), (ii) by
telegraph or by private airborne/overnight delivery service (which forms of
notice shall be deemed to have been given upon confirmed delivery by the
delivery agency), (iii) by electronic or facsimile or telephonic transmission,
provided the receiving party has a compatible device or confirms receipt thereof
(which forms of notice shall be deemed delivered upon confirmed transmission or
confirmation of receipt), or (iv) by mailing in the United States mail by
registered or certified mail, return receipt requested, postage prepaid (which
forms of notice shall be deemed to have been given upon the fifth {5th} business
day following the date mailed). Each party, and their respective counsel, hereby
agree that if notice is to be given hereunder by such party's counsel, such
counsel may communicate directly with all principals, as required to comply with
the foregoing notice provisions. Notices shall be addressed at the addresses
hereinabove set forth in the introductory paragraph of this Agreement or to such
other address as the receiving party shall have specified most recently by like
notice, with a copy to the other parties hereto.
(g) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument, binding on all parties
hereto. Any signature page of this Agreement may be detached from any
counterpart of this Agreement and reattached to any other counterpart of this
Agreement identical in form hereto by having attached to it one or more
additional signature pages.
(h) EXECUTION BY ALL PARTIES REQUIRED TO BE BINDING;
ELECTRONICALLY TRANSMITTED DOCUMENTS. This Agreement shall not be construed to
be an offer and shall have no force and effect until this Agreement is fully
executed by all parties hereto. If a copy or counterpart of this Agreement is
originally executed and such copy or counterpart is thereafter transmitted
electronically by facsimile or similar device, such facsimiled document shall
for all purposes be treated as if manually signed by the party whose facsimile
signature appears.
15
<PAGE> 17
WHEREFORE, the parties hereto have for purposes of this Agreement
executed this Agreement in the City of Beverly Hills, County of Los Angeles,
State of California, effective as of the date first written above.
CUSTOMER:
MEYERS SHEPPARD INVESTMENT TRUST,
A DELAWARE BUSINESS TRUST
By: _____________________________
Shelly Meyers, its President and Trustee (and not
individually)
CUSTODIAN:
WELLS FARGO BANK, NATIONAL ASSOCIATION
By: _____________________________
Name: _____________________________
Title: _____________________________
16
<PAGE> 18
EXHIBIT "A"
PORTFOLIOS
Meyers Sheppard Pride Fund
<PAGE> 19
EXHIBIT "B"
REPORTS
Pursuant to Section 3 of the Custodian Agreement dated as of May 9, 1996 between
Wells Fargo Bank, National Association (the "Custodian") and Meyers Sheppard
Investment Trust (the "Customer"), the Custodian will furnish or make available
to the Customer the following additional reports:
1. On-Line Reporting and Downloads
The Customer will be able to view on-line and/or download formatted or
spreadsheet ready information on the Accounts on a daily basis through the
Custodian's communication vehicles. The Customer may request, among other things
any of the following common reporting features:
- Daily Activity Report: a summary of the prior business day's
activity available for on-line viewing or downloading.
Information detailed in this report should include:
a. Cash Statement for each currency with beginning cash
balance, all cash transactions and ending cash
balance.
b. Current Interest Rate paid on cash balances for each
major currency.
c. Cash Projection for 5 business days with expected
settlements, maturities and income payments.
d. Assets Received/Disbursed listing of all non-cash
transactions.
e. Foreign Exchange confirmation of all deals executed
the prior day.
f. Failed Trade Report of all transactions past
contractual settlement date which have not settled
and the reason the trade has failed.
- Position Report: display and download of a portfolio's
holdings as of the prior day's close of business in base and
local currency. Information should be accessed at a summary
or detailed individual holding level for each of the previous
7 business days and should be produced on a traded or settled
basis. Currency and security positions should be priced daily
based on EXTEL Financial Services pricing or other comparable
pricing services; less commonly held securities should be
priced at least monthly, or if not practicable, on a best
efforts basis, with the date of the last price included as
part of the holding detail. Data available in this report
should include:
Par value or shares (traded and settled),
Security description,
Security i.d. (SEDOL)
Security price, FX rate and date of each,
Extended market value.
For inquiry into a subset of the portfolio, selection criteria
should include: country code, holding type, and security i.d.
(SEDOL). Security prices in this report should be unaudited.
<PAGE> 20
- Posted Transactions Report: should provide information on the
full range of transactions posted to the portfolio within the
last 90 days. Access should be available to all transactions.
If the Customer desires, it should be able to limit its
selection using criteria such as currency code, transactions
type, or security I.D. Data available in this report should
include:
Transaction type,
Number of shares or par value,
Security i.d. (SEDOL),
Trade, settlement, posted and value date,
Price,
Currency Code,
Commissions, taxes, fees and miscellaneous expenses,
Total cash amount,
Broker and clearing broker,
Bank and client's unique reference numbers.
- Pending Transaction Report: should provide access to all
transactions due to be posted to the portfolio which have
either failed or will be posted at a future date. Income
payments and corporate actions should be shown from ex-date.
Access and data should be similar to the posted transaction
report.
2. Monthly Statement of Currency Activity (Hard Copy): Should detail for
each Account foreign currency cash balances and earnings on balances
for each day and for the month in total.
3. Monthly Bank Statement (Hard Copy): Should provide for each Account for
each currency:
beginning cash balance
all cash transactions
ending cash balance
a listing of all non-cash transactions.
<PAGE> 21
EXHIBIT "C"
WELLS FARGO BANK CUSTODY FEES
FOR
MEYERS SHEPPARD INVESTMENT TRUST
ANNUAL CHARGE ON ASSETS
Assets (In aggregate)
.10% on first $20 million
.04% over $20 million
$15,000 minimum
TRANSACTIONS
ANNUAL CUSTODY REPORTING
Notes:
<PAGE> 22
EXHIBIT "D"
TAX RECLAIMS
Pursuant to Section 18 of the Custodian Agreement dated as of May 9,
1996 between Wells Fargo Bank (the "Custodian") and Meyers Sheppard Investment
Trust (the "Customer") the Custodian shall perform the following services with
respect to withholding taxes imposed or which may be imposed on income from
Property in the Accounts.
When withholding tax has been deducted with respect to any Property in
an Account, Custodian will actively pursue the reclaim process and will provide
fully detailed advices/vouchers to support reclaims submitted to the local
authorities by the Custodian or its designee. In all cases of withholding,
Custodian will provide full details to the Customer. If exemption from
withholding at the source can be obtained in the future, Custodian will notify
the Customer and advise what documentation, if any, is required to obtain the
exemption. Upon receipt of such documentation from the Customer, the Custodian
will file for exemption on the Customer's behalf and notify Customer when it has
been obtained.
In connection with providing the foregoing services, the Custodian has
relied primarily on professional tax services published by one of the major
international accounting firms and advice received from sub-custodians in the
jurisdictions in question. In addition, the Custodian may seek the advice of
counsel or other professional tax advisers in such jurisdictions. The Custodian
is entitled to rely, and may act, on information set forth in such services and
on advice received from its sub-custodians, counsel or other professional tax
advisers and shall be without liability to the Customer for any action
reasonably taken or omitted pursuant to information contained in such services
or such advice.
<PAGE> 23
EXHIBIT "E"
PROSPECTUS
THE CUSTODIAN
The Trust, on behalf of the Fund, has entered into a Custodian
Agreement with Wells Fargo Bank, National Association (the "Custodian") for the
provision of custodian services for the securities and cash of the Fund. The
custody fee schedule is based primarily on the net amount of assets held during
the period for which payment is being made plus a per transaction fee for
transactions during the period.
<PAGE> 1
Exhibit 9(a)
Form of Administration Agreement dated as of May 9, 1996 between the Registrant
and Furman Selz LLC
<PAGE> 2
ADMINISTRATION AGREEMENT
THIS ADMINISTRATION AGREEMENT (the "Agreement") is entered into as of
May 9, 1996 by and between Meyers Sheppard Investment Trust, a Delaware business
trust (the "Trust"), whose principal place of business is 9107 Wilshire Blvd.,
Suite 700, Beverly Hills, California 90210, and Furman Selz LLC, a Delaware
limited liability company (the "Administrator"), whose principal place of
business is 230 Park Avenue, New York, New York 10169, with reference to the
following facts:
RECITALS
WHEREAS, on or about April 1, 1996, the Trust filed a Registration
Statement on Form N- 1A (File Nos. 33-32111 and 811-7581) (the "Registration
Statement") under the Investment Trust Act of 1940, as amended (the "1940 Act")
and the Securities Act of 1933, as amended (the "1933 Act") with the Securities
and Exchange Commission (the "Commission") in connection with the registration
as an open-ended investment company of a separate series of the beneficial
interests of the Trust, par value $.00001 (the "Shares") designated the Meyers
Sheppard Pride Fund (the "Fund");
WHEREAS, the Trust desires to retain the Administrator to provide
certain administration services with respect to the Fund pursuant to the terms
and conditions of this Agreement; and
WHEREAS, the Administrator desires to provide such administration
services pursuant to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises contained in this Agreement, the Trust and the Administrator (who are
sometimes individually referred to as a "party" and collectively referred to as
the "parties") agree as follows:
AGREEMENT
1. APPOINTMENT
The Trust hereby appoints the Administrator to provide the
Trust certain administration services pertaining to the Fund for the period and
on the terms set forth in this Agreement. The Administrator accepts such
appointment and agrees to furnish the services herein set forth in return for
the compensation as provided in Paragraph 4 of this Agreement.
2. DELIVERY OF DOCUMENTS
The Trust has or will furnish the Administrator with copies
properly certified or authenticated of each of the following:
(a) Resolutions of the Trust's Board of Trustees authorizing
and approving the appointment of the Administrator to provide certain
administration services pursuant to this Agreement;
(b) A copy of the Trust Instrument for the Trust dated as of
March 26, 1996, and all amendments thereto (the "Trust Instrument");
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<PAGE> 3
(c) A copy of the Trust's Certificate of Trust filed with the
Delaware Secretary of State on March 26, 1996 and all amendments thereto (the
"Certificate of Trust");
(d) The Trust's By-Laws and all amendments thereto (the
"By-Laws");
(e) The Investment Management Agreement between Meyers
Sheppard & Co., LLC, a California limited liability company and the Trust dated
as of May 9, 1996;
(f) The Fund Accounting Agreement between Furman Selz LLC, a
Delaware limited liability company (the "Accounting Agent"), and the Trust dated
as of May 9, 1996;
(g) The Distribution Agreement between Furman Selz LLC, a
Delaware limited liability company (the "Distributor"), and the Trust dated as
of May 9, 1996;
(h) The Custodian Agreement between Wells Fargo Bank, N.A.
(the "Custodian") and the Trust dated as of May 9, 1996;
(i) The Transfer Agency Agreement between Furman Selz LLC, a
Delaware limited liability company (the "Transfer Agent"), and the Trust dated
as of May 9, 1996;
(j) The Trust's Notification of Registration with respect to
the Fund filed pursuant to Section 8(a) of the 1940 Act on Form N-8A under the
1940 Act as filed with the Commission on or about April 1, 1996;
(k) The Registration Statement as filed with the Commission on
April 1, 1996, and any amendments thereto;
(l) The Trust's most recent prospectus and statement of
additional information with respect to the Fund and any amendments and
supplements thereto (the "Prospectus"); and
(m) The Trust's Plan of Distribution adopted pursuant to Rule
12b-1 under the 1940 Act by the Board of Trustees of the Trust on May 9, 1996
and any amendments and supplements thereto (the "Plan").
The Trust will furnish the Administrator from time to time
with copies, properly certified or authenticated, of all amendments of or
supplements to the foregoing, if any.
3. SERVICES AND DUTIES
Subject to the supervision and control of the Board of
Trustees of the Trust, the President of the Trust, the Administrator will
provide assistance to the Trust with respect to various aspects of the
administrative operations relating to the Fund and, to the extent required by
the Trust and its President, provide or assist or cause to be provided or
assisted the following services or arranging other parties to provide or assist
such services:
(a) Providing office facilities in the offices of the
Administrator or a corporate affiliate;
(b) Furnishing statistical and research data, clerical, and
stationery and office supplies;
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<PAGE> 4
(c) Preparing and filing with the Commission Post-Effective
Amendments to the Trust's Registration Statement;
(d) Preparing reports to the shareholders of record of the
Fund and filing such reports with the Commission including, but not necessarily
limited to, Notices of Annual or Special Meetings of Shareholders of the Fund
and Proxy materials relating to such Meetings; and accumulating information for
and, subject to approval by the President of the Trust, assisting in preparing
Semi-Annual Reports on Form N-SAR, and Notices pursuant to Rule 24f-2 of the
1940 Act;
(e) Preparing and filing various reports or other documents
required by federal, state and other applicable laws and regulations and by
stock exchanges on which the Shares are listed other than those required to be
filed by the Trust's Accounting Agent, Custodian or Transfer Agent, including
all Commission required annual, semi-annual and quarterly shareholder reports,
quarterly broker security transaction summaries and monthly securities
transaction listings.
(f) Reviewing and, to the extent requested by the Trust,
preparing or causing to be prepared, all sales literature (e.g., advertisements,
brochures and shareholder communications) with respect to the Fund and
coordinating sales literature with the Distributor and, if necessary, on behalf
of the Trust, filing such sales literature with appropriate regulatory
authorities to ensure conformity with applicable laws, regulations and National
Association of Securities Dealers, Inc. measures.
(g) Performing corporate secretarial duties which will
include, among other things: (i) maintaining the necessary corporate records and
the good standing status of the Trust in all states in which it is qualified to
do business; (ii) preparing agendas, notices and minutes for meetings of the
Trust's Board of Directors and shareholders of the Fund; (iii) preparing
resolutions to be voted upon by the Board of Trustees; and (iv) preparing and/or
supporting information for such meetings;
(h) Assisting in monitoring and development of compliance
procedures which will include, among other matters, procedures to monitor
compliance with the Fund's investment objectives, policies, restrictions, tax
matters and applicable Federal and State laws and regulations, including the
Fund's status under the 1940 Act and Subchapter M of the Internal Revenue Code
of 1986, as amended;
(i) Monitoring any arrangements the Trust may enter into with
respect to services provided by financial institutions which are, or wish to
become, shareholder servicing agents for the Fund ("Shareholder Servicing
Agents") including, without limitation: (i) monitoring and reviewing the
services rendered by Shareholder Servicing Agents to their customers, who are
the beneficial owners of the Shares, pursuant to agreements between the Trust
and such Shareholder Servicing Agents ("Shareholder Servicing Agreements"); (ii)
reviewing the qualifications of financial institutions wishing to be Shareholder
Servicing Agents; (iii) assisting in the execution and delivery of Shareholder
Servicing Agreements; (iv) reporting to the President and other officers of the
Trust and the Board of Trustees with respect to the amounts paid or payable by
the Trust from time to time under the Shareholder Servicing Agreements and the
nature of the services provided by Shareholder Servicing Agents; and (iv)
maintaining appropriate records in connection with its monitoring duties;
(j) Determining the jurisdictions in which the Shares shall be
registered or qualified for sale and, in connection therewith, maintaining the
registration or qualification of the Shares for sale under the securities laws
of any state (payment of share registration fees and any fees for qualifying or
continuing the qualification of the Fund as a dealer or broker shall be made by
the Fund);
(k) Providing the services of certain persons, if required,
who may be appointed as officers of the Trust by the Trust's Board of Directors
for the purpose of facilitating the performance
3
<PAGE> 5
of the Administrator's obligations hereunder including, without limitation, the
Treasurer, Assistant Treasurer, Secretary and Assistant Secretary of the Trust;
(l) Preserving for the periods prescribed by Rule 31a-2 under
the 1940 Act the records required to be maintained by Rule 31a-1 under said Act,
as well as any other applicable provision of the Act not covered by another
service contract; and
(m) Assisting the Trust with respect to regulatory matters
under Federal and State securities laws including, without limitation:
monitoring regulatory and legislative developments which may affect the Trust
and assisting in the strategic response to such developments, counseling and
assisting the Trust in routine regulatory examinations or investigations of the
Trust, and working closely with outside counsel to the Trust in connection with
any legal and regulatory filings or in response to any litigation or regulatory
matters.
In performing its administrative duties under this Agreement,
the Administrator will (i) exercise reasonable care and diligence, (iii) act in
good faith in accordance with the Trust Instrument, Certificate of Trust,
By-Laws, Prospectus and with the instructions and directions of the Board of
Directors of the Trust and the President of the Trust, (iv) conform to and
comply with the requirements of the 1940 Act and all other applicable federal or
state laws and regulations, and (v) consult with legal counsel to the Trust, as
necessary and appropriate.
4. DESIGNATED OFFICERS
The employment by the Trust of the officers provided by the
Administrator pursuant to paragraph 3(k) above (the "Designated Officers") shall
be governed by the following:
(a) The employment of any Designated Officer by the Trust
shall not be exclusive or full-time; provided, however, the Designated Officer
shall devote so much business time, effort, energy, abilities and attention to
the performance of his or her duties hereunder as are reasonable and necessary
to perform such duties in an exemplary manner.
(b) The Designated Officers shall perform their services at
the offices provided by the Administrator, whom shall provide the Designated
Officers with such support staff, facilities, equipment and supplies as are
reasonably necessary or suitable for the adequate performance of the Designated
Officer's duties and obligations under this Agreement, including technical and
secretarial help.
(c) In performing their duties as an officer of the Trust, the
Designated Officers shall report to the President of the Trust and, upon its
request, to the Board of Trustees of the Trust, and shall act in accordance with
and subject to the instructions and directions of the President of the Trust and
the Board of Trustees, and shall perform such other duties consistent with the
terms of this Agreement which may from time to time be prescribed by the
President of the Trust and/or the Board of Trustees.
(d) In performing their duties as an officer of the Trust: (i)
the Designated Officers shall at all times loyally, conscientiously, diligently
and, to the best of their ability, perform all of their duties, and otherwise
promote the interests and welfare of the Trust and the Fund all consistent with
the highest and best standards of the Trust's industry; (ii) strictly comply
with and adhere to all applicable laws, and the Company's Certificate of Trust,
Trust Instrument and Bylaws, and Registration Statement (including the
prospectus and statement of additional information contained therein); (iii)
obey all reasonable rules and regulations now in effect or as subsequently
modified governing the conduct of employees of the Trust; and (iv) not commit
any acts of gross negligence, willful misconduct,
4
<PAGE> 6
dishonesty, fraud or misrepresentation, racism, sexism or other discrimination
as would tend to bring the Trust or the Fund into public scandal, ridicule, or
would otherwise result in material harm to the Trust's or the fund's business or
reputation.
(e) Either the President of the Trust or the Board of Trustees
may, at any time, with or without cause, and with or without prior notice,
terminate the services of the Designated Officers, without any liability
whatsoever, it being understood that the Designated Officers have been employed
as "at will" employees of the Trust pursuant to the terms of this Agreement to
facilitate the performance of the Administrator's administrative functions
hereunder. There is no express or implied promise of continued employment of the
Designated Officers and their employment will, in any event, terminate upon
termination of this Agreement. The Designated Officers shall be entitled to no
compensation from the Trust for their services, it being agreed that all
compensation (including, without limitation, benefits, vacation pay, disability
pay, and employment taxes) for the provision of such services shall be paid by
the Administrator without charge against the Trust.
(f) The Trust acknowledges that the Designated Officer is
principally employed by the Administrator, and may also be employed by other
mutual funds pursuant to agreements on similar nature to this Agreement, and
hereby waives any conflict of interest resulting from such dual employment, and
further agrees that none of the aforesaid provisions in this paragraph 4 shall
have any affect or application whatsoever to the Designated Officer's employment
with any of such parties.
5. COMPENSATION
(a) ADMINISTRATION FEE. For the services provided and expenses
assumed under this Agreement by the Administrator, the Trust shall pay the
Administrator a monthly fee (the "Administration Fee") at the annual rate of
0.15% of the first $100 million of the average daily net assets of the Fund,
0.10% of the next $400 million of such assets, 0.07% of the next $500 million of
such assets, and 0.06% of such assets in excess of $1 billion.
(b) WAIVER OF FEES AND EXPENSES. The Administrator reserves
the right from time to time in its sole discretion, and without any obligation
to do so, to reduce and/or waive all or a portion of the Administration Fee
otherwise payable hereunder. Any such fee reduction or waiver may be
discontinued or modified by the Admininstrator at any time.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS
(a) BY TRUST. In addition to any other representations,
covenants and warranties of the Trust under this Agreement, the Trust hereby
represents, warrants and covenants to the Administrator, each of which is
deemed, as the case may be, to be a separate representation, warranty and
covenant, that:
(i) Corporate Organization, Power and Authority. The
Trust: (1) is a business trust duly organized, validly existing and in
good standing under the laws of the State of Delaware; (2) has all
requisite corporate power and authority to enter into this Agreement;
(3) has the corporate or other power to own its properties and carry on
its business as the same is now being conducted; and (4) is in good
standing and is qualified to transact business in each jurisdiction in
which the nature of property owned or leased by it or the conduct of
its business requires it to be so qualified, except where the failure
to be in good standing or to be duly qualified to transact business
would not be likely to have a material adverse effect on the business,
assets or financial condition of the Trust taken as a whole.
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<PAGE> 7
(ii) Authorization and Validity of Agreement. The
execution and delivery of this Agreement by the Trust and the
performance of the transactions herein contemplated have been duly
authorized by the Board of Trustees of the Trust, and no further
corporate or other action on the part of the Trust is necessary to
authorize this Agreement or the performance of such transactions. This
Agreement has been duly executed and delivered by the Trust and,
assuming due authorization, execution and delivery by the
Administrator, is valid or binding upon the Trust in accordance with
its terms (except as limited by (1) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
affect relating to creditor's rights generally and (2) general
principles of equity {regardless of whether such enforcement is
considered in a proceeding in equity or at law}).
(iii) No Breach or Conflict. Neither the execution or
delivery of this Agreement or the performance by the Trust of the
transactions contemplated herein will breach or conflict with any of
the provisions of the Trust's Certificate of Trust, Trust Instrument or
Bylaws, nor, to the best of the knowledge and belief of the Board of
Trustees of the Trust, with or without the giving of notice or the
lapse of time or both, will (1) violate or constitute an event of
default under any agreement or other instrument or any order, judgment
or ruling of any governmental authority to which the Trust is a party
or by which any of its property is bound, or (2) require the consent or
approval of any other person or governmental authority, except in each
case with respect to any of the foregoing which would not be likely to
have a material adverse effect on the business, assets or financial
condition of the Trust taken as a whole.
(b) BY ADMINISTRATOR. In addition to any other
representations, covenants and warranties of the Administrator under this
Agreement, the Administrator hereby represents, warrants and covenants to the
Trust, each of which is deemed, as the case may be, to be a separate
representation, warranty and covenant, that:
(i) Corporate Organization, Power and Authority. The
Administrator: (1) is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of
Delaware; (2) has all requisite corporate power and authority to enter
into this Agreement; (3) has the corporate or other power to own its
properties and carry on its business as the same is now being
conducted; and (4) is in good standing and is qualified to transact
business in each jurisdiction in which the nature of property owned or
leased by it or the conduct of its business requires it to be so
qualified, except where the failure to be in good standing or to be
duly qualified to transact business would not be likely to have a
material adverse effect on the business, assets or financial condition
of the Administrator taken as a whole.
(ii) Authorization and Validity of Agreement. The
execution and delivery of this Agreement by the Administrator and the
performance of the transactions herein contemplated have been duly
authorized by the Managers of the Administrator, and no further
corporate or other action on the part of the Administrator is necessary
to authorize this Agreement or the performance of such transactions.
This Agreement has been duly executed and delivered by the
Administrator and, assuming due authorization, execution and delivery
by the Trust, is valid or binding upon the Administrator in accordance
with its terms (except as limited by (1) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
affect relating to creditor's rights generally and (2) general
principles of equity {regardless of whether such enforcement is
considered in a proceeding in equity or at law}).
(iii) No Breach or Conflict. Neither the execution or
delivery of this Agreement or the performance by the Administrator of
the transactions contemplated herein will
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<PAGE> 8
breach or conflict with any of the provisions of the Articles of
Organization or Operating Agreement of the Administrator, nor, to the
best of the knowledge and belief of the Managers of the Administrator,
with or without the giving of notice or the lapse of time or both, will
(1) violate or constitute an event of default under any agreement or
other instrument or any order, judgment or ruling of any governmental
authority to which the Administrator is a party or by which any of its
property is bound, or (2) require the consent or approval of any other
person or governmental authority, except in each case with respect to
any of the foregoing which would not be likely to have a material
adverse effect on the business, assets or financial condition of the
Administrator taken as a whole.
(iv) Performance. The Administrator will perform its
obligations under this Agreement in accordance with the standard of
care and diligence of the industry.
7. LIMITATION OF LIABILITY OF ADMINISTRATOR
The Administrator shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust in connection
with the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement. Any person, even though also an officer,
manager, member, employee or agent of the Administrator, shall be deemed, when
rendering services to the Trust or acting on any business of the Trust (other
than services or business of in connection with the Administrator's duties as
Administrator hereunder, the Distributor's duties under the Distribution
Agreement, or the Transfer Agent's duties under the Transfer Agency Agreement),
to be acting solely for the Trust and not as an officer, manager, member,
employee or agent of the Administrator or one under control or discretion of the
Administrator.
8. LIMITATION OF LIABILITY OF TRUST
The Administrator agrees that no shareholder, trustee,
officer, employee or agent of the Trust shall be subject to claims against or
obligations of the Trust to any extent whatsoever, but that the Trust estate
alone shall be liable (with the exception of any Fund for whom the Administrator
has not provided services under this Agreement and for which the claims or
obligations therefore do not relate).
9. DISASTER RECOVERY
The Administrator shall maintain a commercially reasonable
plan to provide for the recovery of data in the event of an emergency due to
equipment failures or the like. In the event of equipment failures, the
Administrator shall, at no additional expense to the Fund, take reasonable steps
to minimize service interruptions but shall not have liability with respect to
losses that result despite the taking of such steps.
10. TERM
(a) TERM. This Agreement is terminable at any time without
penalty by either party hereto on not less than sixty (60) days' prior written
notice by such terminating party; provided, however, if requested by the Trust,
the Administrator shall, prior to the effective date of termination, and without
waiving its right to payment of compensation under this Agreement through the
effective date of termination, cease providing administration services
hereunder.
(b) ASSIGNMENT. This Agreement shall terminate automatically
in the event of its "assignment" as that term is defined in Section 2(a)(4) of
the 1940 Act. The Administrator shall notify
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the Trust in writing sufficiently in advance of any proposed change of control,
as defined in Section 2(a)(9) of the 1940 Act, as will enable the Trust to
consider whether an assignment as defined in Section 2(a)(4) of the 1940 Act
will occur, and whether to take the steps necessary to enter into a new contract
with the Administrator. The Administrator shall notify the Trust of any change
in the membership of the Administrator within a reasonable time after such
change.
(c) COMPENSATION. All accrued but unpaid compensation under
this Agreement due the Administrator shall be paid on the effective date of
termination.
11. ADDITIONAL FUNDS
(a) ESTABLISHMENT OF ADDITIONAL FUNDS. In the event that the
Trust establishes one or more portfolios or series other than the Fund (each an
"Additional Fund") with respect to which it desires retain the Administrator to
act as administrator pursuant to the terms of this Agreement, the Trust shall
promptly notify the Administrator in writing. If the Administrator is willing to
render such services with respect to the Additional Fund, it shall notify the
Trust in writing. Upon such mutual consent by the parties, the provision to the
Trust of administrative services by the Administrator with respect to the
Additional Fund and the mutual rights and obligations of the parties shall,
except as otherwise agreed upon in writing by the parties, be governed by the
terms of this Agreement (with the Fund and each Additional Fund being
collectively referred to as the Fund hereunder). The Trust shall have no
obligation to request the Administrator administer the Additional Fund pursuant
to the terms of this Agreement or otherwise, and the Administrator shall have no
obligation to agree to so administer the Additional Fund.
(b) TERMINATION OF LESS THAN ALL FUNDS. In the event more than
one Fund is being administered by the Administrator under the terms of this
Agreement, this Agreement shall, in the event it is specifically terminated with
respect to less than all of the Funds, remain in effect with respect to the
remaining Funds.
12. ACCESS TO AND RETURN OF RECORDS
The Accounting Agent agrees that all records, reports or
documents which it maintains for the Trust are the property of the Trust and
further agrees to provide access at all times to the Trust and its officers,
Investment Manager and agents to such records, reports and documents and to
surrender promptly to the Trust any of such records, reports or documents upon
the Trust's request.
13. CONFIDENTIALITY
The Administrator agrees on behalf of itself and its employees
to treat confidentially and as proprietary information of the Trust all records
and other information relative to the Trust, the Fund and the prior, present or
potential shareholders of the Fund, and not to use such records and information
for any purpose other than performance of the Administrator's responsibilities
and to obtain approval in writing by the Trust, which approval shall not be
unreasonably withheld and may not be withheld where the Administrator may be
exposed to civil or criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted authorities, or when
so requested by the Trust.
14. NON-EXCLUSIVE AGENCY
Nothing contained in this Agreement shall prevent the
Administrator, or any affiliated person of the Administrator, from performing
services similar to those to be performed hereunder for
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any other person, firm, or corporation or for its or their own accounts or for
the accounts of others.
15. INDEPENDENT CONTRACTOR
The Administrator is an independent contractor of the Trust
and neither the Administrator nor any of its managers, officers or employees is
or shall be employees of the Fund in the performance of the Administrator's
duties hereunder (except those specifically appointed as officers of the Trust
pursuant to paragraph 1(k) of this Agreement, subject to paragraph 4 of this
Agreement). The Administrator shall be responsible for its own conduct and the
employment, control and conduct of its employees, and for injury to such
employees and agents or to others through employees and agents (except those
specifically appointed as officers of the Trust pursuant to paragraph 1(k) of
this Agreement, subject to paragraph 4 of this Agreement). The Administrator
assumes full responsibility for its employees and agents under applicable
statutes and agrees to pay all employment taxes thereunder, including those
specifically appointed as officers of the Trust pursuant to paragraphs 1(k) and
4 of this Agreement).
16. MISCELLANEOUS
(a) PREPARATION OF AGREEMENT. Each party agrees that the other
party shall not be construed to be solely responsible for the drafting of this
Agreement, and that any ambiguity in this Agreement or the interpretation
thereof shall not be construed against either party as the alleged draftsman of
this Agreement.
(b) COOPERATION. Each party agrees, without further
consideration, to cooperate and diligently perform any further acts, deeds and
things and to execute and deliver any documents that may from time to time be
reasonably necessary or otherwise reasonably required to consummate, evidence,
confirm and/or carry out the intent and provisions of this Agreement, all
without undue delay or expense.
(c) INTERPRETATION.
(i) Entire Agreement/No Collateral Representations.
Each party expressly acknowledges and agrees that this Agreement: (1) is the
final, complete and exclusive statement of the agreement of the parties with
respect to the subject matter hereof; (2) supersedes any prior or
contemporaneous agreements or understandings of any kind, oral or written
(collectively and severally, the "prior agreements"), and that any such prior
agreements are of no force or effect except as expressly set forth herein; and
(3) may not be varied, supplemented or contradicted by evidence of prior
agreements, or by evidence of subsequent oral agreements.
(ii) Amendment; Waiver; Forbearance. Except as
expressly otherwise provided herein, neither this Agreement nor any of its terms
contained herein may, as the case may be, be amended, supplemented, discharged
or terminated (other than by performance), except by a written instrument or
instruments signed by all of the parties to this Agreement. No waiver of any
acts or obligations hereunder shall be effective unless such waiver shall be in
a written instrument or instruments signed by each party claimed to have given
or consented to such waiver and each party affected by such waiver. No
forbearance by a party to seek a remedy for any noncompliance or breach by
another party hereto shall be deemed to be a waiver by such forbearing party of
its rights and remedies with respect to such noncompliance or breach unless such
waiver shall be in a written instrument or instruments signed by the forbearing
party.
(iii) Remedies Cumulative. The remedies of each party
under this Agreement are cumulative and shall not exclude any other remedies to
which such party may be lawfully entitled.
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(iv) Severability. If any term or provision of this
Agreement or the application thereof to any person or circumstance shall, to any
extent, be determined to be invalid, illegal or unenforceable under present or
future laws effective during the term of this Agreement, then and, in that
event: (A) the performance of the offending term or provision (but only to the
extent its application is invalid, illegal or unenforceable) shall be excused as
if it had never been incorporated into this Agreement, and, in lieu of such
excused provision, there shall be added a provision as similar in terms and
amount to such excused provision as may be possible and be legal, valid and
enforceable, and (B) the remaining part of this Agreement (including the
application of the offending term or provision to persons or circumstances other
than those as to which it is held invalid, illegal or unenforceable) shall not
be affected thereby and shall continue in full force and effect to the fullest
extent provided by law.
(v) Time is of the Essence. It is expressly
understood and agreed that time of performance is strictly of the essence with
respect to each and every term, condition, obligation and provision hereof and
that the failure to timely perform any of the terms, conditions, obligations or
provisions hereof by any party shall constitute a material breach and a
noncurable (but waivable) default under this Agreement by the party so failing
to perform.
(vi) No Third Party Beneficiary. Notwithstanding
anything else herein to the contrary, the parties specifically disavow any
desire or intention to create any third party beneficiary obligations, and
specifically declare that no person, other than as set forth in this Agreement,
shall have any rights or remedies of any nature or kind whatsoever under or by
reason of this Agreement.
(vii) No Reliance Upon Prior Representation. Each
party acknowledges that no other party has made any oral representation or
promise which would induce them prior to executing this Agreement to change its
position to its detriment, partially perform, or part with value in reliance
upon such representation or promise; each party acknowledges that it has taken
such action at its own risk; and each party represents that it has not so
changed its position, performed or parted with value prior to the time of their
execution of this Agreement.
(viii) Headings; References; Incorporation; "Person";
Gender. The headings used in this Agreement are for convenience and reference
purposes only, and shall not be used in construing or interpreting the scope or
intent of this Agreement or any provision hereof. References to this Agreement
shall include all amendments or renewals thereof. All cross-references in this
Agreement, unless specifically directed to another agreement or document, shall
be construed only to refer to provisions within this Agreement, and shall not be
construed to be referenced to the overall transaction or to any other agreement
or document. Any exhibit referenced in this Agreement shall be construed to be
incorporated in this Agreement. As used in this Agreement, the term "person" is
defined in its broadest sense as any individual, entity or fiduciary who has
legal standing to enter into any agreement. As used in this Agreement, each
gender shall be deemed to include the other gender, including neutral genders or
genders appropriate for entities, if applicable, and the singular shall be
deemed to include the plural, and vice versa, as the context requires.
(d) ENFORCEMENT. This Agreement and the rights and remedies of
each party arising out of or relating to this Agreement (including, without
limitation, equitable remedies) shall be solely governed by, interpreted under,
and construed and enforced in accordance with the laws (without regard to the
conflicts of law principles thereof) of the State of New York, as if this
Agreement were made, and as if its obligations are to be performed, wholly
within the State of New York.
(e) SUCCESSORS AND ASSIGNS. Neither party may assign its
rights or delegate any of such party's duties or obligations under this
Agreement, in whole or in part, without the prior written consent of the other
party. Any delegation of a party's obligations under this Agreement shall in no
way
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release the delegating party from any of its obligations or liabilities under
this Agreement. Subject to the foregoing, all of the representations,
warranties, covenants, conditions and provisions of this Agreement shall be
binding upon and shall inure to the benefit of each party and such party's
respective successors and permitted assigns, spouses, heirs, executors,
administrators, and personal and legal representatives.
(f) NOTICES. Unless otherwise specifically provided in this
Agreement, all notices, demands, requests, consents, approvals or other
communications (collectively and severally called "notices") required or
permitted to be given hereunder, or which are given with respect to this
Agreement, shall be in writing, and shall be given by: (i) personal delivery
(which form of notice shall be deemed to have been given upon delivery), (ii) by
telegraph or by private airborne/overnight delivery service (which forms of
notice shall be deemed to have been given upon confirmed delivery by the
delivery agency), (iii) by electronic or facsimile or telephonic transmission,
provided the receiving party has a compatible device or confirms receipt thereof
(which forms of notice shall be deemed delivered upon confirmed transmission or
confirmation of receipt), or (iv) by mailing in the United States mail by
registered or certified mail, return receipt requested, postage prepaid (which
forms of notice shall be deemed to have been given upon the fifth {5th} business
day following the date mailed). Each party, and their respective counsel, hereby
agree that if notice is to be given hereunder by such party's counsel, such
counsel may communicate directly with all principals, as required to comply with
the foregoing notice provisions. Notices shall be addressed at the addresses
hereinabove set forth in the introductory paragraph of this Agreement or to such
other address as the receiving party shall have specified most recently by like
notice, with a copy to the other parties hereto.
(g) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument, binding on all parties
hereto. Any signature page of this Agreement may be detached from any
counterpart of this Agreement and reattached to any other counterpart of this
Agreement identical in form hereto by having attached to it one or more
additional signature pages.
(h) EXECUTION BY ALL PARTIES REQUIRED TO BE BINDING;
ELECTRONICALLY TRANSMITTED DOCUMENTS. This Agreement shall not be construed to
be an offer and shall have no force and effect until this Agreement is fully
executed by all parties hereto. If a copy or counterpart of this Agreement is
originally executed and such copy or counterpart is thereafter transmitted
electronically by facsimile or similar device, such facsimiled document shall
for all purposes be treated as if manually signed by the party whose facsimile
signature appears.
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WHEREFORE, the parties hereto have for purposes of this Agreement
executed this Agreement in the City of Beverly Hills, County of Los Angeles,
State of California, effective as of the date first written above.
TRUST:
MEYERS SHEPPARD INVESTMENT TRUST,
A DELAWARE BUSINESS TRUST
By: _____________________________
Shelly Meyers, its President and Trustee (and not
individually)
ADMINISTRATOR:
FURMAN SELZ LLC,
A DELAWARE LIMITED LIABILITY COMPANY
By: _____________________________
Name: _____________________________
Title: _____________________________
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<PAGE> 1
Exhibit 9(b)
Form of Fund Accounting Agreement dated as of May 9, 1996 between the Registrant
and Furman Selz LLC
<PAGE> 2
FUND ACCOUNTING AGREEMENT
THIS FUND ACCOUNTING AGREEMENT (the "Agreement") is entered into as of
May 9, 1996 by and between Meyers Sheppard Investment Trust, a Delaware business
trust (the "Trust"), whose principal place of business is 9107 Wilshire Blvd.,
Suite 700, Beverly Hills, California 90210, and Furman Selz LLC, a Delaware
limited liability company (the "Accounting Agent"), whose principal place of
business is 230 Park Avenue, New York, New York 10169, with reference to the
following facts:
RECITALS
WHEREAS, on or about April 1, 1996, the Trust filed a Registration
Statement on Form N- 1A (File Nos. 33-32111 and 811-7581) (the "Registration
Statement") under the Investment Trust Act of 1940, as amended (the "1940 Act")
and the Securities Act of 1933, as amended (the "1933 Act") with the Securities
and Exchange Commission (the "Commission") in connection with the registration
as an open-ended investment company of a separate series of the beneficial
interests of the Trust, par value $.00001 (the "Shares") designated the Meyers
Sheppard Pride Fund (the "Fund");
WHEREAS, the Trust desires to retain the Accounting Agent to maintain
and keep current the Trust's accounting records with respect to the Fund,
including all journals, the general ledger and other records of original entry
relating to the business of the Fund as set forth in paragraph 2(a) of this
Agreement (the "Accounts and Records") and to perform certain daily functions in
connection with such Accounts and Records pursuant to the terms and conditions
of this Agreement; and
WHEREAS, the Accounting Agent desires to perform such functions
pursuant to the terms and conditions of this Agreement; and
WHEREAS, the Trust will cause to be provided certain information to the
Accounting Agent as set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises contained in this Agreement, the Trust and the Accounting Agent (who
are sometimes individually referred to as a "party" and collectively referred to
as the "parties") agree as follows:
AGREEMENT
1. APPOINTMENT
The Trust hereby appoints the Accounting Agent as the
accounting services agent for the Fund and the Accounting Agent hereby accepts
such appointment, all in accordance with the terms and conditions of this
Agreement.
2. MAINTENANCE ACCOUNTS AND RECORDS
(a) MAINTENANCE OF ACCOUNTS AND RECORDS. To the extent it
receives the necessary information from the Trust and its agents by Written or
Oral Instructions (as defined in paragraph 4 below), the Accounting Agent shall
maintain all Accounts and Records the Fund is required to keep pursuant to and
in accordance with Rule 31a-l under the 1940 Act, and any other applicable laws,
rules, policies or procedures of governmental authorities (including, without
limitation, the 1933 Act and the
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<PAGE> 3
Securities Exchange Act of 1934, as amended) applicable to the types of services
to be performed by the Accounting Agent hereunder, including the following
Accounts and Records relating to the business of the Fund, in such form as may
be mutually agreed to between the Trust and the Accounting Agent:
(i) Cash Receipts Journal;
(ii) Cash Disbursements Journal;
(iii) Dividends Paid Record;
(iv) Purchase and Sales Journal - Portfolio
Securities;
(v) Subscription and Redemption Journals;
(vi) Security Ledgers;
(vii) Broker-Dealer Ledger;
(viii) General Ledger;
(ix) Daily Expense Accruals;
(x) Daily Interest Accruals;
(xi) Securities and Monies borrowed or loaned and
collateral therefor;
(xii) Daily Trial Balances;
(xiii) Investment Income Journal; and
(xiv) Performance Results/Yield Calculations.
(b) DAILY PROVISION OF INFORMATION. The Trust will, prior to
4:00 p.m., Eastern time, on each business day in accordance with the Fund's
current prospectus and the directions of the Board of Trustees of the Fund,,
furnish the Accounting Agent with Written or Oral Instructions containing all
necessary information (exclusive of portfolio prices) to perform the above
functions and to calculate the net asset value of the Fund, as provided below.
The Trust shall indemnify and hold harmless the Accounting Agent from and
against any liability arising from any discrepancy between the Written or Oral
Instructions received by the Accounting Agent and used in such calculations and
any subsequent information received from the Trust or any of its designated
agents; provided, however, that the Accounting Agent shall notify the Fund when
such a discrepancy exists within a reasonable period of time after such
discrepancy becomes known to the Accounting Agent.
(c) DIVIDENDS AND SPECIAL ACTIONS. It shall be the
responsibility of the Trust to furnish or cause to be furnished to the
Accounting Agent, the declaration, record, payment dates and amounts of any
dividends or income and any other special actions required on or concerning each
of its portfolio securities.
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<PAGE> 4
3. CALCULATION OF NET ASSET VALUE
The Accounting Agent shall perform the ministerial
calculations necessary to calculate the net asset value of the Fund, on each
business day in accordance with the Fund's current prospectus and the directions
of the Board of Trustees of the Fund, except where the Trust has given or caused
to be given specific Written or Oral Instructions to utilize a different method
of calculation, including in cases where market prices for stocks are not
readily available. The Accounting Agent shall have no responsibility or
liability for the accuracy of prices as provided above except to exercise
reasonable care and diligence in its computations and communication to
publications. The Accounting Agent shall not be liable for the accuracy of the
information supplied by the Trust or for any loss, liability, damage or cost
arising out of any inaccuracy of such information provided by the Trust. The
Accounting Agent shall have no responsibility or duty to include information or
valuations to be provided by the Trust or its designated agent in any
computation unless and until it is timely supplied to the Accounting Agent in
useable form. Unless the necessary information to calculate the net asset value
daily is furnished by Written or Oral Instructions from the Trust or its
designated agent in a time reasonably sufficient to permit the Accounting Agent
to perform its duties hereunder, the Accounting Agent shall incur no liability,
and the Trust shall indemnify and hold harmless the Accounting Agent from and
against any liability arising from any failure to provide complete information
or from any discrepancy between the information received by the Accounting Agent
and used in such calculation and any subsequent information received from the
Trust or any of its designated agents by Oral or Written Instruction.
4. WRITTEN AND ORAL INSTRUCTIONS
The term "Written Instructions" is defined as a writing signed
or initialled by one or more person or persons as the Board of Trustees shall
have from time to time authorized (the "Authorized Person"). Each such writing
shall set forth the specific transaction or type of transaction involved,
including a specific statement of the purpose for which such action is
requested. The term "Oral Instructions" is defined as instructions given orally
that will be considered proper instructions if the Accounting Agent reasonably
believes them to have been given by an Authorized Person. The Trust shall cause
all Oral Instructions to be confirmed in writing pursuant to the terms of
paragraph 5 below. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Trustees of the
Trust, Oral Instructions may include communications effected directly between
electro mechanical or electronic devices provided that the Board of Trustees and
the Accounting Agent are satisfied that such procedures afford adequate
safeguards for the Fund's assets.
5. RELIANCE ON INSTRUCTIONS
For all purposes under this Agreement, the Accounting Agent is
authorized to act upon receipt of the first of any Written or Oral Instruction
it receives from the Trust or its agents on behalf of the Fund where such
instruction reasonably appears proper. In cases where the first Instruction is
an Oral Instruction, a confirmatory Written Instruction shall be delivered, and
in cases where the Accounting Agent receives an Instruction, whether Written or
Oral, to enter a portfolio transaction on the records, the Trust shall cause the
Broker-Dealer to send a written confirmation to the Accounting Agent. The
Accounting Agent shall be entitled to rely on the first Instruction received,
where such instruction reasonably appears proper, and for any act or omission
undertaken in compliance therewith shall be free of liability and fully
indemnified and held harmless by the Trust; provided, however, that in the event
a Written or Oral Instruction received by the Accounting Agent is countermanded
by a later Written or Oral Instruction received by the Accounting Agent prior to
acting upon such countermanded Instruction, the Accounting Agent shall act upon
such later Written or Oral Instruction. The sole obligation of the Accounting
Agent with respect to any follow-up or confirmatory Written Instruction, Oral
Instruction in documentary or written form, or Broker-Dealer written
confirmation (which otherwise
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<PAGE> 5
appears reasonably proper) shall be to make reasonable efforts to detect any
discrepancy between the original Instruction and such confirmation and to report
such discrepancy to the Trust. The Trust shall be responsible, at the Trust's
expense, for taking any action, including any reprocessing, necessary to correct
any discrepancy or error, and to the extent such action requires the Accounting
Agent to act, the Trust shall give the Accounting Agent specific Written
Instructions as to the action required.
6. MONTHLY STATEMENTS
At the end of each month, the Trust shall cause the
then-acting custodian of the Fund to forward to the Accounting Agent a monthly
statement of cash and portfolio transactions, which will be reconciled with the
Accounting Agent's Accounts and Records maintained for the Trust. The Accounting
Agent will report any discrepancies to the custodian, and report any
unreconciled items to the Trust.
7. PERIODIC REPORTS
(a) PERIODIC REPORTS. Subject to paragraph 2(a) above, the
Accounting Agent shall promptly supply daily and periodic reports to the Trust
or its agents as requested by the Trust and agreed upon by the Accounting Agent.
The Accounting Agent shall prepare and maintain work papers to support the
following accounts: cash reconciliation, portfolio of investments, accrued
interest, amounts due to/from brokers, subscriptions and redemptions of the
Shares, Share reconciliation and dividends payable.
(b) FINANCIAL REPORTS. The Accounting Agent will prepare the
following financial reports with respect to the Fund:
(i) Daily Trial Balances;
(ii) Statement of assets and liabilities (balance
sheet);
(iii) Statement of operations (income and expense
statement);
(iv) Statement of changes in net assets; and
(v) Schedules of purchases and sales of securities.
8. SHARE INFORMATION
The Trust shall, and shall require each of its agents
(including without limitation its Transfer Agent and its Custodian), to provide
the Accounting Agent as of the close of each business day, or on such other
schedule as the Trust determines is necessary, (to be delivered to the
Accounting Agent by 10:00 a.m. the next following business day) all data and
information necessary for the Accounting Agent to maintain the Fund's Accounts
and Records and the Accounting Agent may conclusively assume that the
information it receives is complete and accurate. Among the information to be
received by the Accounting Agent are reports of Share purchases, redemptions,
and total Shares outstanding on the next business day after each net asset
valuation. If supplied by the Trust, any such information shall be supplied by
Written or Oral Instructions or as otherwise agreed by the Trust and the
Accounting Agent.
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<PAGE> 6
9. AVAILABILITY OF ACCOUNTS AND RECORDS
The Accounts and Records, in the agreed upon format,
maintained by the Accounting Agent shall be the property of the Trust, and shall
be made available to the Trust promptly upon request and shall be maintained for
the periods prescribed in Rule 31a-2 under the 1940 Act. The Accounting Agent
shall assist the Trust's independent auditors, or upon approval of the Trust, or
upon proper demand, any regulatory body, in any requested review of the Fund's
Accounts and Records, but shall be reimbursed for all expenses and employee time
invested in any such review outside of routine and normal periodic reviews. Upon
receipt from the Trust of the necessary information, the Accounting Agent shall
supply the necessary data for the accountant's completion of any necessary tax
returns, questionnaires, periodic reports to shareholders of the Fund and such
other reports and information requests as the Trust and the Accounting Agent
shall agree upon from time to time.
10. FURNISHING OF EXISTING ACCOUNTS AND RECORDS
The Trust shall promptly turn over to the Accounting Agent
such of the Accounts and Records of the Fund previously maintained by or for it
as are necessary for the Accounting Agent to perform its functions under this
Agreement. The Trust authorizes the Accounting Agent to rely on such Accounts
and Records turned over to it and hereby indemnifies and holds the Accounting
Agent, its successors and assigns, harmless of and from any and all expenses,
damages, claims, suits, liabilities, actions, demands and losses whatsoever
arising out of or in connection with any error, omission, inaccuracy or other
deficiency of such Accounts and Records or in the failure of the Trust to
provide any portion of such or to provide any information needed by the
Accounting Agent to knowledgeably perform its functions.
11. OTHER PROCEDURES
The Accounting Agent and the Trust may from time to time adopt
such procedures as they agree upon in writing, and the Accounting Agent may
conclusively rely on a determination by the Trust that any procedure approved by
the Trust or directed by the Trust, does not conflict with or violate any
requirements of the Certificate of Trust, Trust Indenture or-Laws of the Trust,
the Registration Statement, as it may be amended, or any prospectus or statement
of additional information for the Fund then in effect, or any rule or regulation
of any regulatory body or governmental agency. The Accounting Agent shall be
responsible for keeping apprised of and notifying the Trust of any changes in
regulations or rules which might necessitate changes in the Accounting Agent's
procedures, and for working out with the Trust such changes.
12. LIMITATION OF LIABILITY OF ACCOUNTING AGENT AND
INDEMNIFICATION
The Accounting Agent, in performing under the terms and
conditions of this Agreement, shall incur no liability for its status hereunder
or for any reasonable actions taken or omitted in good faith and the Trust
hereby agrees to indemnify and hold the Accounting Agent harmless from any and
all loss, liability and expense, including any reasonable and indemnifiable
legal expenses, arising out of the Accounting Agent's performance, or status, or
any act or omission of the Accounting Agent except such as shall result from the
Accounting Agent's gross negligence or willful misconduct or that of its
officers, agents and employees in the performance of this Agreement. In
connection with the foregoing:
(a) The Accounting Agent shall not be liable for any action
taken in good faith reliance upon any Written Instruction or certified copy of
any resolution of the Board of Trustees of the
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<PAGE> 7
Trust, and the Accounting Agent may rely upon the genuineness of any such
document or copy thereof reasonably believed in good faith by the Accounting
Agent to have been validly executed.
(b) The Accounting Agent may act upon any Oral Instruction
which it receives and which it believes in good faith was transmitted by the
person or persons authorized by the Board of Trustees of the Trust to give such
Oral Instructions. The Accounting Agent shall have no duty or obligation to make
any inquiry or effort of certification of such Oral Instruction.
(c) The Accounting Agent may rely and shall be protected in
acting upon any signature, instruction, request, letter of transmittal,
certificate, opinion of counsel, statement, instrument, report, notice, consent,
order, or other paper document believed by it to be genuine and to have been
signed or presented by any purchaser, the Trust or other proper party or
parties.
(d) If The Accounting Agent is in doubt as to any action it
should or should not take, the Accounting Agent may request directions or
advice, including Oral and Written Instructions, from the Trust.
(e) If the Accounting Agent shall be in doubt as to any
question of law pertaining to any action it should or should not take, the
Accounting Agent may request advice at its own cost from such counsel of its own
choosing (who may be counsel for the Trust, the Investment Manager or the
Accounting Agent, at the option of the Accounting Agent), and the Accounting
Agent shall not be liable to anyone for any actions taken in good faith upon
such advice.
(f) If authorized by the Trust to seek advice of accountants,
brokers and other persons (other than legal counsel) believed by the Accounting
Agent in good faith to be expert in the matters upon which they are consulted,
the Accounting Agent shall not be liable to anyone for any actions taken in good
faith upon such advice;
(g) In the event of a conflict between directions, advice or
Oral or Written Instructions the Accounting Agent receives for the Trust, and
the advice it receives from counsel, the Accounting Agent shall be entitled to
rely upon and follow the advice of counsel.
Nothing in this paragraph shall be construed so as to impose
an obligation upon the Accounting Agent: (i) to seek such directions, advice or
Oral or Written Instructions, or (ii) to act in accordance with such directions,
advice or Oral or Written Instructions unless, under the other provisions of
this Agreement, the same is a condition of the Accounting Agent's properly
taking or not taking such action.
13. LIMITATION OF LIABILITY OF TRUST
The Accounting Agent agrees that no shareholder, trustee,
officer, employee or agent of the Trust shall be subject to claims against or
obligations of the Trust to any extent whatsoever, but that the Trust estate
alone shall be liable (with the exception of any Fund for whom the Accounting
Agent has not provided services under this Agreement and for which the claims or
obligations therefore do not relate).
14. BASE CURRENCY
All financial data provided to, processed by, and reported by
the Accounting Agent under this Agreement shall be stated in United States
dollars or currency. The Accounting Agent shall have
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no obligation to convert to, equate, or deal in foreign currencies or values,
and expressly assumes no liability for any currency conversion or equation
computations relating to the affairs of the Series.
15. DISASTER RECOVERY
The Administrator shall maintain a commercially reasonable
plan to provide for the recovery of data in the event of an emergency due to
equipment failures or the like. In the event of equipment failures, the
Accounting Agent shall, at no additional expense to the Fund, take reasonable
steps to minimize service interruptions but shall not have liability with
respect to losses that result despite the taking of such steps.
16. COMPENSATION
(a) ACCOUNTING AGENCY FEE; COSTS. For the services provided
under this Agreement by the Accounting Agent, the Trust shall, commencing the
first day of sale of the Shares to the public, pay the Accounting Agent the sum
of thirty five thousand dollars ($35,000) per year, payable on a monthly basis
(the "Accounting Agency Fee"), plus its reasonable and actual out-of-pocket
expenses incurred in connection with the performance of its duties under this
Agreement. The Accounting Agency Fee shall be pro-rated for any month during
which this Agreement is in effect for only a portion of the month. Each written
request for reimbursement of the Accounting Agent's expenses under this
paragraph shall be directed to the President of the Trust and shall show in
reasonable detail the expenditures incurred by the Accounting Agent and the
purposes therefor, together with any documentation required by the Trust to
verify such payment.
(b) WAIVER OF FEE. The Accounting Agent reserves the right
from time to time in its sole discretion, and without any obligation to do so,
to reduce and/or waive all or a portion of the Accounting Agency Fee otherwise
payable hereunder. Any such fee reduction or waiver or undertaking may be
discontinued or modified by the Accounting Agent at any time.
17. ADDITIONAL FUNDS
(a) ESTABLISHMENT OF ADDITIONAL FUNDS. In the event that the
Trust establishes one or more portfolios or series other than the Fund (each an
"Additional Fund") with respect to which it desires retain the Accounting Agent
to act as accounting agent pursuant to the terms of this Agreement, the Trust
shall promptly notify the Accounting Agent in writing. If the Accounting Agent
is willing to render such services with respect to the Additional Fund, it shall
notify the Trust in writing. Upon such mutual consent by the parties, the
provision to the Trust of fund accounting services by the Accounting Agent with
respect to the Additional Fund and the mutual rights and obligations of the
parties shall, except as otherwise agreed upon in writing by the parties, be
governed by the terms of this Agreement (with the Fund and each Additional Fund
being collectively referred to as the Fund hereunder). The Trust shall have no
obligation to request the Accounting Agent administer the Additional Fund
pursuant to the terms of this Agreement or otherwise, and the Accounting Agent
shall have no obligation to agree to so administer the Additional Fund.
(b) TERMINATION OF LESS THAN ALL FUNDS. In the event the
Accounting Agent provides fund accounting services to more than one Fund under
the terms of this Agreement, this Agreement shall, in the event it is
specifically terminated with respect to less than all of the Funds, remain in
effect with respect to the remaining Funds.
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18. DAYS OF SERVICE
Nothing contained in this Agreement is intended to or shall
require the Accounting Agent, in any capacity hereunder, to perform any
functions or duties on any day on which the New York Stock Exchange is closed or
any of the following additional days in which the Accounting Agent is not open:
_____________________. Functions or duties normally scheduled to be performed on
such days shall be performed on, and as of, the next scheduled business day on
which both the New York Stock Exchange and the Accounting Agent are open.
Notwithstanding the foregoing, the Accounting Agent shall compute the net asset
value of the Trust on each day required pursuant to Rule 22c-l promulgated under
the 1940 Act.
19. REPRESENTATIONS, WARRANTIES AND COVENANTS
(a) BY TRUST. In addition to any other representations,
covenants and warranties of the Trust under this Agreement, the Trust hereby
represents, warrants and covenants to the Accounting Agent, each of which is
deemed, as the case may be, to be a separate representation, warranty and
covenant, that:
(i) Corporate Organization, Power and Authority. The
Trust: (1) is a business trust duly organized, validly existing and in
good standing under the laws of the State of Delaware; (2) has all
requisite corporate power and authority to enter into this Agreement;
(3) has the corporate or other power to own its properties and carry on
its business as the same is now being conducted; and (4) is in good
standing and is qualified to transact business in each jurisdiction in
which the nature of property owned or leased by it or the conduct of
its business requires it to be so qualified, except where the failure
to be in good standing or to be duly qualified to transact business
would not be likely to have a material adverse effect on the business,
assets or financial condition of the Trust taken as a whole.
(ii) Authorization and Validity of Agreement. The
execution and delivery of this Agreement by the Trust and the
performance of the transactions herein contemplated have been duly
authorized by the Board of Trustees of the Trust, and no further
corporate or other action on the part of the Trust is necessary to
authorize this Agreement or the performance of such transactions. This
Agreement has been duly executed and delivered by the Trust and,
assuming due authorization, execution and delivery by the Accounting
Agent, is valid or binding upon the Trust in accordance with its terms
(except as limited by (1) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in affect relating to
creditor's rights generally and (2) general principles of equity
{regardless of whether such enforcement is considered in a proceeding
in equity or at law}).
(iii) No Breach or Conflict. Neither the execution or
delivery of this Agreement or the performance by the Trust of the
transactions contemplated herein will breach or conflict with any of
the provisions of the Trust's Certificate of Trust, Trust Indenture or
Bylaws, nor, to the best of the knowledge and belief of the Board of
Trustees of the Trust, with or without the giving of notice or the
lapse of time or both, will (1) violate or constitute an event of
default under any agreement or other instrument or any order, judgment
or ruling of any governmental authority to which the Trust is a party
or by which any of its property is bound, or (2) require the consent or
approval of any other person or governmental authority, except in each
case with respect to any of the foregoing which would not be likely to
have a material adverse effect on the business, assets or financial
condition of the Trust taken as a whole.
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<PAGE> 10
(b) BY ACCOUNTING AGENT. In addition to any other
representations, covenants and warranties of the Accounting Agent under this
Agreement, the Accounting Agent hereby represents, warrants and covenants to the
Trust, each of which is deemed, as the case may be, to be a separate
representation, warranty and covenant, that:
(i) Corporate Organization, Power and Authority. The
Accounting Agent: (1) is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of
Delaware; (2) has all requisite corporate power and authority to enter
into this Agreement; (3) has the corporate or other power to own its
properties and carry on its business as the same is now being
conducted; and (4) is in good standing and is qualified to transact
business in each jurisdiction in which the nature of property owned or
leased by it or the conduct of its business requires it to be so
qualified, except where the failure to be in good standing or to be
duly qualified to transact business would not be likely to have a
material adverse effect on the business, assets or financial condition
of the Accounting Agent taken as a whole.
(ii) Authorization and Validity of Agreement. The
execution and delivery of this Agreement by the Accounting Agent and
the performance of the transactions herein contemplated have been duly
authorized by the Managers of the Accounting Agent, and no further
corporate or other action on the part of the Accounting Agent is
necessary to authorize this Agreement or the performance of such
transactions. This Agreement has been duly executed and delivered by
the Accounting Agent and, assuming due authorization, execution and
delivery by the Trust, is valid or binding upon the Accounting Agent in
accordance with its terms (except as limited by (1) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in affect relating to creditor's rights generally and (2)
general principles of equity {regardless of whether such enforcement is
considered in a proceeding in equity or at law}).
(iii) No Breach or Conflict. Neither the execution or
delivery of this Agreement or the performance by the Accounting Agent
of the transactions contemplated herein will breach or conflict with
any of the provisions of the Articles of Organization or Operating
Agreement of the Accounting Agent, nor, to the best of the knowledge
and belief of the Managers of the Accounting Agent, with or without the
giving of notice or the lapse of time or both, will (1) violate or
constitute an event of default under any agreement or other instrument
or any order, judgment or ruling of any governmental authority to which
the Accounting Agent is a party or by which any of its property is
bound, or (2) require the consent or approval of any other person or
governmental authority, except in each case with respect to any of the
foregoing which would not be likely to have a material adverse effect
on the business, assets or financial condition of the Accounting Agent
taken as a whole.
(iv) Performance. The Accounting Agent will perform
its obligations under this Agreement in accordance with the standard of
care and diligence of the industry.
20. TERM
(a) TERM. This Agreement is terminable at any time without
penalty by either party hereto on not less than sixty (60) days' prior written
notice by such terminating party; provided, however, if requested by the Trust,
the Accounting Agent shall, prior to the effective date of termination, and
without waiving its right to payment of compensation under this Agreement
through the effective date of termination, cease providing accounting services
hereunder.
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(b) ASSIGNMENT. This Agreement shall terminate automatically
in the event of its "assignment" as that term is defined in Section 2(a)(4) of
the 1940 Act. The Accounting Agent shall notify the Trust in writing
sufficiently in advance of any proposed change of control, as defined in Section
2(a)(9) of the 1940 Act, as will enable the Trust to consider whether an
assignment as defined in Section 2(a)(4) of the 1940 Act will occur, and whether
to take the steps necessary to enter into a new contract with the Accounting
Agent. The Accounting Agent shall notify the Trust of any change in the
membership of the Accounting Agent within a reasonable time after such change.
(c) COMPENSATION. All accrued but unpaid compensation under
this Agreement due the Administrator shall be paid on the effective date of
termination.
21. ACCESS TO AND RETURN OF RECORDS
The Accounting Agent agrees that all records which it
maintains for the Trust are the property of the Trust and further agrees to
provide access at all times to the Trust and its officers, its Investment
Manager and its agents to such records and to surrender promptly to the Trust
any of such records upon the Trust's request.
22. CONFIDENTIALITY
The Accounting Agent agrees on behalf of itself and its
employees to treat confidentially and as proprietary information of the Trust
all records and other information relative to the Trust, the Fund and the prior,
present or potential shareholders of the Fund, and not to use such records and
information for any purpose other than performance of the Accounting Agent's
responsibilities and to obtain approval in writing by the Trust, which approval
shall not be unreasonably withheld and may not be withheld where the Accounting
Agent may be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Trust.
23. NON-EXCLUSIVE AGENCY
Nothing contained in this Agreement shall prevent the
Accounting Agent, or any affiliated person of the Accounting Agent, from
performing services similar to those to be performed hereunder for any other
person, firm, or corporation or for its or their own accounts or for the
accounts of others.
24. INDEPENDENT CONTRACTOR
The Accounting Agent is an independent contractor of the Trust
and neither the Accounting Agent nor any of its managers, officers or employees
is or shall be employees of the Fund in the performance of the Accounting
Agent's duties hereunder. The Accounting Agent shall be responsible for its own
conduct and the employment, control and conduct of its employees, and for injury
to such employees and agents or to others through employees and agents. The
Accounting Agent assumes full responsibility for its employees and agents under
applicable statutes and agrees to pay all employment taxes thereunder.
25. MISCELLANEOUS
(a) PREPARATION OF AGREEMENT. Each party agrees that the other
party shall not be construed to be solely responsible for the drafting of this
Agreement, and that any ambiguity in this
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Agreement or the interpretation thereof shall not be construed against either
party as the alleged draftsman of this Agreement.
(b) COOPERATION. Each party agrees, without further
consideration, to cooperate and diligently perform any further acts, deeds and
things and to execute and deliver any documents that may from time to time be
reasonably necessary or otherwise reasonably required to consummate, evidence,
confirm and/or carry out the intent and provisions of this Agreement, all
without undue delay or expense.
(c) INTERPRETATION.
(i) Entire Agreement/No Collateral Representations.
Each party expressly acknowledges and agrees that this Agreement: (1) is the
final, complete and exclusive statement of the agreement of the parties with
respect to the subject matter hereof; (2) supersedes any prior or
contemporaneous agreements or understandings of any kind, oral or written
(collectively and severally, the "prior agreements"), and that any such prior
agreements are of no force or effect except as expressly set forth herein; and
(3) may not be varied, supplemented or contradicted by evidence of prior
agreements, or by evidence of subsequent oral agreements.
(ii) Amendment; Waiver; Forbearance. Except as
expressly otherwise provided herein, neither this Agreement nor any of its terms
contained herein may, as the case may be, be amended, supplemented, discharged
or terminated (other than by performance), except by a written instrument or
instruments signed by all of the parties to this Agreement. No waiver of any
acts or obligations hereunder shall be effective unless such waiver shall be in
a written instrument or instruments signed by each party claimed to have given
or consented to such waiver and each party affected by such waiver. No
forbearance by a party to seek a remedy for any noncompliance or breach by
another party hereto shall be deemed to be a waiver by such forbearing party of
its rights and remedies with respect to such noncompliance or breach unless such
waiver shall be in a written instrument or instruments signed by the forbearing
party.
(iii) Remedies Cumulative. The remedies of each party
under this Agreement are cumulative and shall not exclude any other remedies to
which such party may be lawfully entitled.
(iv) Severability. If any term or provision of this
Agreement or the application thereof to any person or circumstance shall, to any
extent, be determined to be invalid, illegal or unenforceable under present or
future laws effective during the term of this Agreement, then and, in that
event: (A) the performance of the offending term or provision (but only to the
extent its application is invalid, illegal or unenforceable) shall be excused as
if it had never been incorporated into this Agreement, and, in lieu of such
excused provision, there shall be added a provision as similar in terms and
amount to such excused provision as may be possible and be legal, valid and
enforceable, and (B) the remaining part of this Agreement (including the
application of the offending term or provision to persons or circumstances other
than those as to which it is held invalid, illegal or unenforceable) shall not
be affected thereby and shall continue in full force and effect to the fullest
extent provided by law.
(v) Time is of the Essence. It is expressly
understood and agreed that time of performance is strictly of the essence with
respect to each and every term, condition, obligation and provision hereof and
that the failure to timely perform any of the terms, conditions, obligations or
provisions hereof by any party shall constitute a material breach and a
noncurable (but waivable) default under this Agreement by the party so failing
to perform.
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(vi) No Third Party Beneficiary. Notwithstanding
anything else herein to the contrary, the parties specifically disavow any
desire or intention to create any third party beneficiary obligations, and
specifically declare that no person, other than as set forth in this Agreement,
shall have any rights or remedies of any nature or kind whatsoever under or by
reason of this Agreement.
(vii) No Reliance Upon Prior Representation. Each
party acknowledges that no other party has made any oral representation or
promise which would induce them prior to executing this Agreement to change its
position to its detriment, partially perform, or part with value in reliance
upon such representation or promise; each party acknowledges that it has taken
such action at its own risk; and each party represents that it has not so
changed its position, performed or parted with value prior to the time of their
execution of this Agreement.
(viii) Headings; References; Incorporation; "Person";
Gender. The headings used in this Agreement are for convenience and reference
purposes only, and shall not be used in construing or interpreting the scope or
intent of this Agreement or any provision hereof. References to this Agreement
shall include all amendments or renewals thereof. All cross-references in this
Agreement, unless specifically directed to another agreement or document, shall
be construed only to refer to provisions within this Agreement, and shall not be
construed to be referenced to the overall transaction or to any other agreement
or document. Any exhibit referenced in this Agreement shall be construed to be
incorporated in this Agreement. As used in this Agreement, the term "person" is
defined in its broadest sense as any individual, entity or fiduciary who has
legal standing to enter into any agreement. As used in this Agreement, each
gender shall be deemed to include the other gender, including neutral genders or
genders appropriate for entities, if applicable, and the singular shall be
deemed to include the plural, and vice versa, as the context requires.
(d) ENFORCEMENT. This Agreement and the rights and remedies of
each party arising out of or relating to this Agreement (including, without
limitation, equitable remedies) shall be solely governed by, interpreted under,
and construed and enforced in accordance with the laws (without regard to the
conflicts of law principles thereof) of the State of New York, as if this
Agreement were made, and as if its obligations are to be performed, wholly
within the State of New York.
(e) SUCCESSORS AND ASSIGNS. Neither party may assign its
rights or delegate any of such party's duties or obligations under this
Agreement, in whole or in part, without the prior written consent of the other
party. Any delegation of a party's obligations under this Agreement shall in no
way release the delegating party from any of its obligations or liabilities
under this Agreement. Subject to the foregoing, all of the representations,
warranties, covenants, conditions and provisions of this Agreement shall be
binding upon and shall inure to the benefit of each party and such party's
respective successors and permitted assigns, spouses, heirs, executors,
administrators, and personal and legal representatives.
(f) NOTICES. Unless otherwise specifically provided in this
Agreement, all notices, demands, requests, consents, approvals or other
communications (collectively and severally called "notices") required or
permitted to be given hereunder, or which are given with respect to this
Agreement, shall be in writing, and shall be given by: (i) personal delivery
(which form of notice shall be deemed to have been given upon delivery), (ii) by
telegraph or by private airborne/overnight delivery service (which forms of
notice shall be deemed to have been given upon confirmed delivery by the
delivery agency), (iii) by electronic or facsimile or telephonic transmission,
provided the receiving party has a compatible device or confirms receipt thereof
(which forms of notice shall be deemed delivered upon confirmed transmission or
confirmation of receipt), or (iv) by mailing in the United States mail by
registered or certified mail, return receipt requested, postage prepaid (which
forms of notice shall be deemed to have been given upon the fifth {5th} business
day following the date mailed). Each party,
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and their respective counsel, hereby agree that if notice is to be given
hereunder by such party's counsel, such counsel may communicate directly with
all principals, as required to comply with the foregoing notice provisions.
Notices shall be addressed at the addresses hereinabove set forth in the
introductory paragraph of this Agreement or to such other address as the
receiving party shall have specified most recently by like notice, with a copy
to the other parties hereto.
(g) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument, binding on all parties
hereto. Any signature page of this Agreement may be detached from any
counterpart of this Agreement and reattached to any other counterpart of this
Agreement identical in form hereto by having attached to it one or more
additional signature pages.
(h) EXECUTION BY ALL PARTIES REQUIRED TO BE BINDING;
ELECTRONICALLY TRANSMITTED DOCUMENTS. This Agreement shall not be construed to
be an offer and shall have no force and effect until this Agreement is fully
executed by all parties hereto. If a copy or counterpart of this Agreement is
originally executed and such copy or counterpart is thereafter transmitted
electronically by facsimile or similar device, such facsimiled document shall
for all purposes be treated as if manually signed by the party whose facsimile
signature appears.
WHEREFORE, the parties hereto have for purposes of this Agreement
executed this Agreement in the City of Beverly Hills, County of Los Angeles,
State of California, effective as of the date first written above.
TRUST:
MEYERS SHEPPARD INVESTMENT TRUST,
A DELAWARE BUSINESS TRUST
By: _____________________________
Shelly Meyers, its President and Trustee (and not
individually)
ACCOUNTING AGENT:
FURMAN SELZ LLC,
A DELAWARE LIMITED LIABILITY COMPANY
By: _____________________________
Name: _____________________________
Title: _____________________________
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<PAGE> 1
Exhibit 9(c)
Form of Transfer Agency Agreement dated as of May 9, 1996 between the Registrant
and Furman Selz LLC
<PAGE> 2
TRANSFER AGENCY AGREEMENT
THIS TRANSFER AGENCY AGREEMENT (the "Agreement") is entered into as of
May 9, 1996 by and between Meyers Sheppard Investment Trust, a Delaware business
trust (the "Trust"), whose principal place of business is 9107 Wilshire Blvd.,
Suite 700, Beverly Hills, California 90210, and Furman Selz LLC, a Delaware
limited liability company (the "Transfer Agent"), whose principal place of
business is 230 Park Avenue, New York, New York 10169, with reference to the
following facts:
RECITALS
WHEREAS, on or about April 1, 1996, the Trust filed a Registration
Statement on Form N- 1A (File Nos. 33-32111 and 811-7581) (the "Registration
Statement") under the Investment Trust Act of 1940, as amended (the "1940 Act")
and the Securities Act of 1933, as amended (the "1933 Act") with the Securities
and Exchange Commission (the "Commission") in connection with the registration
as an open-ended investment company of a separate series of the beneficial
interests of the Trust, par value $.00001 (the "Shares") designated the Meyers
Sheppard Pride Fund (the "Fund");
WHEREAS, the Trust desires to retain the Transfer Agent to provide
transfer agent, registrar and dividend disbursement services for the Fund
pursuant to the terms and conditions of this Agreement; and
WHEREAS, the Transfer Agent desires to perform such functions pursuant
to the terms and conditions of this Agreement; and
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises contained in this Agreement, the Trust and the Transfer Agent (who are
sometimes individually referred to as a "party" and collectively referred to as
the "parties") agree as follows:
AGREEMENT
1. DOCUMENTS
The Trust shall provide the Transfer Agent with copies of the
following documents:
(a) Specimens of all forms of certificates for Shares in the
forms approved by the Board of Trustees of the Trust (if any);
(b) Specimens of all account application forms and other
documents relating to shareholders' accounts; and
(c) Specimens of all amendments to any of the foregoing
documents.
2. INSTRUCTIONS AND ADVICE
Unless otherwise provided in this Agreement, the Transfer
Agent shall act only upon Oral and Written Instructions (as such term is
hereinbelow defined in paragraph . The Transfer Agent shall be entitled to rely
upon any Oral and Written Instructions it receives from an Authorized Person (as
such terms in hereinbelow defined in paragraph 3), or from a person reasonably
believed by the Transfer Agent to be an Authorized Person, pursuant to this
Agreement. The Transfer Agent may assume that any Oral or Written Instruction
received hereunder is not in any way inconsistent with
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<PAGE> 3
the provisions or organizational documents or this Agreement or of any vote,
resolution or proceeding of the Board of Trustees of the Trust or of the
shareholders of the Fund.
The Fund agrees to forward to the Transfer Agent Written
Instructions confirming Oral Instructions so that the Transfer Agent receives
the Written Instructions by the close of business on the same day that such Oral
Instructions are received. The fact that such confirming written Instructions
are not received by the Transfer Agent shall in no way invalidate the
transactions or enforceability of the transactions authorized by the Oral
Instructions. The Fund further agrees that the Transfer Agent shall incur no
liability to the Fund in acting upon Oral or Written Instructions provided such
instructions reasonably appear to have been received from an Authorized Person.
If the Transfer Agent is in doubt as to any action it should
or should not take, the Transfer Agent may request directions or advice,
including Oral or Written Instructions, from the Fund. If the Transfer Agent
shall be in doubt as to any questions of law pertaining to any action it should
or should not take, the Transfer Agent may request advice at its own cost from
such counsel of its own choosing (who may be counsel for the Fund, the Fund's
investment adviser or the Transfer Agent, at the option of the Transfer Agent).
In the event of a conflict between directions, advice or Oral or Written
Instructions the Transfer Agent receives from the Fund, and the advice it
receives from counsel, the Transfer Agent shall be entitled to rely upon and
follow the advice of counsel.
Nothing in this section shall be construed so as to impose an
obligation upon the Transfer Agent (i) to seek such directions, advice or Oral
or Written Instructions, or (ii) to act in accordance with such directions,
advice or Oral or Written Instructions unless, under the other provisions of
this Agreement, the same is a condition of the Transfer Agent's properly taking
or not taking such action.
3. WRITTEN AND ORAL INSTRUCTIONS
The term "Written Instructions" is defined as a writing signed
or initialled by one or more person or persons as the Board of Trustees shall
have from time to time authorized (the "Authorized Person"). Each such writing
shall set forth the specific transaction or type of transaction involved,
including a specific statement of the purpose for which such action is
requested. The term "Oral Instructions" is defined as instructions given orally
that will be considered proper instructions if the Transfer Agent reasonably
believes them to have been given by an Authorized Person. The Trust shall cause
all Oral Instructions to be confirmed in writing pursuant to the terms of
paragraph 3 above. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Trustees of the
Trust, Oral Instructions may include communications effected directly between
electro mechanical or electronic devices provided that the Board of Trustees and
the Transfer Agent are satisfied that such procedures afford adequate safeguards
for the Fund's assets.
4. SERVICES WITH RESPECT TO THE REGISTRATION OF SHARES
Furman Selz shall act as registrar of the Shares. On each day
on which an issuance or redemption of the Shares of the Fund occurs, the
Transfer Agent shall prepare with respect to the Fund account records opening,
crediting, debiting and closing affected shareholder's accounts as necessary to
reflect the issuances or redemptions occurring on that day. All credits to
shareholders' accounts shall be for the price of the Shares at the time of
purchase, determined in accordance with the Trust's current prospectuses and
proper instructions of the Fund.
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<PAGE> 4
5. SERVICES WITH RESPECT TO RECORDING OF TRANSFERS
On each day on which the Trust receives proper instructions to
transfer the Shares, accompanied by the surrender of any certificates which may
have been issued with respect to the Shares to be transferred, the Transfer
Agent shall prepare for the Trust, as necessary to reflect the transfer, account
records debiting and, if appropriate, closing and, upon cancellation of any
certificates which may have been surrendered in connection with the transfer,
crediting and, if appropriate, opening affected shareholder accounts.
6. RECEIPT OF FUNDS AND APPLICATIONS
Upon receipt at the office designated by the Trust of any
check or other order drawn or endorsed to the Fund or otherwise identified as
being for the account of the Fund, and, in the case of a new account,
accompanied by a new account application or sufficient information to establish
an account as provided in the Trust's then current prospectus for the Fund, the
Transfer Agent shall stamp the transmittal document accompanying such check or
other order with the name of the Fund and the time and date of receipt and shall
forthwith deposit the same in the custodial account of the Fund.
7. RETURNED CHECKS
In the event that any check or other order for the purchase of
the Shares is returned unpaid for any reason, the Transfer Agent shall, in the
absence of other instructions from the Trust, advise the Trust of the returned
check and prepare such documents and information as may be necessary to cancel
promptly any Shares purchased on the basis of such returned check and any
accumulated income dividends and capital gains distributions paid on such
Shares.
8. DIVIDENDS AND DISTRIBUTIONS
Upon being advised by the Trust of the declaration of any
income dividend or capital gains distribution on account of the Shares, the
Transfer Agent shall compute and prepare with respect to the Fund records
crediting such distributions to shareholders or shall mail to shareholders
income dividends and distributions of long-term or short-term capital gains
declared by the Trust. Such dividends and distributions shall be paid in cash or
reinvested in full and fractional Shares in accordance with the currently
effective election of each shareholder made in the manner provided in the
Trust's then current prospectus. Furman Selz shall, on or before the payment
date of any such dividend or distribution, notify the Trust and the Trust's
custodian of the estimated amount required to any portion of said dividend or
distribution which is payable in cash, and thereupon the Trust shall, on or
before the payment date of such dividend or distribution, instruct the custodian
to make available to the Transfer Agent sufficient funds for the payment of such
cash amount. If a shareholder of the Fund has elected to reinvest any such
distribution in additional full and fractional Shares, the Transfer Agent shall
prepare with respect to the Fund records making appropriate credits to such
shareholder's account or, upon the request of such shareholder as provided
above, shall issue and deliver for the Trust to such shareholder at his address
as set forth on the transfer books of the Trust, share certificates representing
full Shares purchased pursuant to such election.
9. REDEMPTIONS
As to each request received by the Trust from or on behalf of
a shareholder for the redemption of the Shares, and unless the right of
redemption has been suspended as contemplated in the Trust's current prospectus
or statement of additional information, the Transfer Agent shall, within seven
days after receipt of such redemption request, either (i) mail a check in the
amount of the proceeds of
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such redemption to the person designated by the shareholder or other person to
receive such proceeds or, (ii) in the event redemption proceeds are to be wired
through the Federal Reserve Wire System or by bank wire pursuant to the
procedures described in the Trust's then current prospectuses for the Fund,
cause such proceeds to be wired in federal funds to the bank or trust account
designated by the shareholder to receive such proceeds. Redemptions in kind
shall be made only in accordance with the current prospectus of the Fund and
proper written instructions as the Transfer Agent may receive from the Trust.
The requirements as to instruments of transfer and other documentation, the
determination of the appropriate redemption price, and the time of payment shall
be as provided in the then current prospectuses of the Fund, subject to such
additional requirements consistent with such prospectus as may be established by
mutual agreement between the Trust and the Transfer Agent. In the case of a
request for redemption that does not comply in all respects with the
requirements for redemption, the Transfer Agent shall promptly so notify the
shareholder and shall effect such redemption at the price in effect at the time
of receipt of the documents complying with such requirements. The Transfer Agent
shall notify the custodian of the Fund on each business day of the amount of
cash required to meet payments made pursuant to the provisions of this paragraph
and thereupon the Trust shall instruct the custodian to make available to the
Transfer Agent in timely fashion sufficient funds therefor.
Procedures and standards for effecting and accepting
redemption orders from shareholders by telephone or by such check writing
service as the Trust may institute may be established by mutual agreement
between the Transfer Agent and the Trust consistent with the then current
prospectus of the Fund.
10. TAX-RETURNS AND WITHHOLDING
The Transfer Agent shall prepare, file with the Internal
Revenue Service and with appropriate state agencies, and, if required, mail to
shareholders of the Fund such returns for reporting income dividends and capital
gains distributions as are required by Federal and state law to be so filed or
mailed, and shall withhold from the payment to shareholders of the Fund such
dividends and distributions such amounts as are required by Federal and State
law to be withheld under applicable law.
11. BOOKS AND RECORDS
The Transfer Agent shall prepare and maintain for the Trust
records showing for each shareholder's account in the Fund the following:
(a) The name, address and tax identification number of such
shareholder;
(b) The number of Shares held by such shareholder;
(c) Historical information including dividends paid and date
and price for all transactions;
(d) Any stop or restraining order placed against such account;
(e) Information with respect to the withholding of any portion
of income dividends or capital gains, distributions as provided in paragraph 8
above;
(f) Any dividend or distribution reinvestment election,
withdrawal plan application, and correspondence relating to the current
maintenance of the account;
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(g) The certificate numbers and denominations of any share
certificates issued to such shareholder; and
(h) Any additional information required by the Transfer Agent
to perform the services contemplated by this Agreement.
Any such records required to be maintained by the Trust
pursuant to Rule 31a-1 of the General Rules and Regulations under the 1940 Act
or any successor rule shall be preserved by the Transfer Agent for the periods
prescribed by Rule 31a-2 of said rules or any successor or amended rule thereof.
Such record retention shall be at the expense of the Trust. The Transfer Agent
may, at its option at any time, turn over to the Trust and cease to retain
records created and maintained by the Transfer Agent pursuant to this Agreement
which are no longer required by the Transfer Agent to perform the services
contemplated by such Agreement.
12. INFORMATION TO BE FURNISHED TO THE TRUST
The Transfer Agent shall furnish to the Trust periodically as
agreed upon between them the following information created and maintained by the
Transfer Agent for the Fund:
(a) Copies of all dividend, distribution and reinvestment
blotters;
(b) Schedules of the quantities of Shares distributed in each
state for purposes of any state's laws or regulations as specified in
instructions given to the Transfer Agent from time to time by the Trust or its
agents; and
(c) Such other information, including shareholder lists, and
statistical information as may be agreed upon from time to time by the Trust and
the Transfer Agent.
13. CONFIRMATION AND STATEMENT OF ACCOUNT
The Transfer Agent shall prepare and mail to each shareholder
of the Fund at his or her address as set forth on the transfer books of the Fund
such confirmations of the Trust for each purchase or sale of Shares by each
shareholder and periodic statements of such shareholder's account with the Fund
as may be required by applicable laws or regulations or specified from time to
time by the Trust. Duplicate confirmations shall be provided to any
shareholder's broker-dealer.
14. CORRESPONDENCE; COMMUNICATION WITH SHAREHOLDERS
The Transfer Agent shall respond for the Trust to
correspondence from shareholders relating to their accounts with the Fund and
such other correspondence concerning the Fund as may from time to time be
mutually agreed upon by the Trust and the Transfer Agent.
15. PROXIES
The Transfer Agent shall mail to shareholders notices of
meetings, proxy statements, forms of proxy and other material supplied to it by
the Trust in connection with shareholder meetings for the Fund and shall
solicit, receive, examine and tabulate returned proxies and certify such
tabulations to the Trust in such written form as the Trust may require.
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16. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS
(a) BY TRUST. The Trust agrees that it shall be solely
responsible for ensuring that each prospectus and statement of additional
information of the Trust complies with all applicable provisions of, or
regulations adopted pursuant to, the 1940 Act and the 1933 Act, or any other
laws, rules and regulations of federal, state or foreign governmental
authorities having jurisdiction in connection with the offering or sale of
Shares.
(b) BY TRANSFER AGENT. The Transfer Agent agrees to conduct
its transfer agency responsibilities in full compliance with all applicable
state and Federal laws, regulations, rules, policies and procedures, including,
without limitation, the Securities Exchange Act of 1934, as amended (the "1934
Act") and the 1940 Act.
17. REPRESENTATIONS, WARRANTIES AND COVENANTS
(a) BY TRUST. In addition to any other representations,
covenants and warranties of the Trust under this Agreement, the Trust hereby
represents, warrants and covenants to the Transfer Agent, each of which is
deemed, as the case may be, to be a separate representation, warranty and
covenant, that:
(i) Corporate Organization, Power and Authority. The
Trust: (1) is a business trust duly organized, validly existing and in
good standing under the laws of the State of Delaware; (2) has all
requisite corporate power and authority to enter into this Agreement;
(3) has the corporate or other power to own its properties and carry on
its business as the same is now being conducted; and (4) is in good
standing and is qualified to transact business in each jurisdiction in
which the nature of property owned or leased by it or the conduct of
its business requires it to be so qualified, except where the failure
to be in good standing or to be duly qualified to transact business
would not be likely to have a material adverse effect on the business,
assets or financial condition of the Trust taken as a whole.
(ii) Authorization and Validity of Agreement. The
execution and delivery of this Agreement by the Trust and the
performance of the transactions herein contemplated have been duly
authorized by the Board of Trustees of the Trust, and no further
corporate or other action on the part of the Trust is necessary to
authorize this Agreement or the performance of such transactions. This
Agreement has been duly executed and delivered by the Trust and,
assuming due authorization, execution and delivery by the Transfer
Agent, is valid or binding upon the Trust in accordance with its terms
(except as limited by (1) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in affect relating to
creditor's rights generally and (2) general principles of equity
{regardless of whether such enforcement is considered in a proceeding
in equity or at law}).
(iii) No Breach or Conflict. Neither the execution or
delivery of this Agreement or the performance by the Trust of the
transactions contemplated herein will breach or conflict with any of
the provisions of the Trust's Certificate of Trust, Trust Indenture or
Bylaws, nor, to the best of the knowledge and belief of the Board of
Trustees of the Trust, with or without the giving of notice or the
lapse of time or both, will (1) violate or constitute an event of
default under any agreement or other instrument or any order, judgment
or ruling of any governmental authority to which the Trust is a party
or by which any of its property is bound, or (2) require the consent or
approval of any other person or governmental authority, except in each
case with respect to any of the foregoing which would not be likely to
have a material adverse effect on the business, assets or financial
condition of the Trust taken as a whole.
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(b) BY TRANSFER AGENT. In addition to any other
representations, covenants and warranties of the Transfer Agent under this
Agreement, the Transfer Agent hereby represents, warrants and covenants to the
Trust, each of which is deemed, as the case may be, to be a separate
representation, warranty and covenant, that:
(i) Corporate Organization, Power and Authority. The
Transfer Agent: (1) is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of
Delaware; (2) has all requisite corporate power and authority to enter
into this Agreement; (3) has the corporate or other power to own its
properties and carry on its business as the same is now being
conducted; and (4) is in good standing and is qualified to transact
business in each jurisdiction in which the nature of property owned or
leased by it or the conduct of its business requires it to be so
qualified, except where the failure to be in good standing or to be
duly qualified to transact business would not be likely to have a
material adverse effect on the business, assets or financial condition
of the Transfer Agent taken as a whole.
(ii) Authorization and Validity of Agreement. The
execution and delivery of this Agreement by the Transfer Agent and the
performance of the transactions herein contemplated have been duly
authorized by the Managers of the Transfer Agent, and no further
corporate or other action on the part of the Transfer Agent is
necessary to authorize this Agreement or the performance of such
transactions. This Agreement has been duly executed and delivered by
the Transfer Agent and, assuming due authorization, execution and
delivery by the Trust, is valid or binding upon the Transfer Agent in
accordance with its terms (except as limited by (1) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in affect relating to creditor's rights generally and (2)
general principles of equity {regardless of whether such enforcement is
considered in a proceeding in equity or at law}).
(iii) No Breach or Conflict. Neither the execution or
delivery of this Agreement or the performance by the Transfer Agent of
the transactions contemplated herein will breach or conflict with any
of the provisions of the Articles of Organization or Operating
Agreement of the Transfer Agent, nor, to the best of the knowledge and
belief of the Managers of the Transfer Agent, with or without the
giving of notice or the lapse of time or both, will (1) violate or
constitute an event of default under any agreement or other instrument
or any order, judgment or ruling of any governmental authority to which
the Transfer Agent is a party or by which any of its property is bound,
or (2) require the consent or approval of any other person or
governmental authority, except in each case with respect to any of the
foregoing which would not be likely to have a material adverse effect
on the business, assets or financial condition of the Transfer Agent
taken as a whole.
(iv) Registered Transfer Agent. The Transfer Agent is
a "registered transfer agent" (as such term is defined in the 1934 Act)
in good standing registered with the Commission under the 1934 Act and
any other appropriate Federal or state authority;
(v) Performance. The Transfer Agent will perform its
obligations under this Agreement in accordance with the standard of
care and diligence of the industry.
18. COMPENSATION; COSTS
(a) TRANSFER AGENCY FEE; REIMBURSEMENT. For the services
provided under this Agreement by the Transfer Agent, the Trust shall pay the
Transfer Agent an annualized fee at the rate of fifteen dollars ($15) per year
per shareholder of the Fund (the "Transfer Agency Fee"); provided,
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however, in the event the Transfer Agency Fee is less than twelve thousand
dollars ($12,000) for the year, the Trust shall pay the Transfer Agent the sum
of twelve thousand dollars ($12,000). The Transfer Agency Fee shall not be
payable for, and therefore shall not accrue with respect to, any periods prior
to the first day of sale of the Shares to the public. The Transfer Agency Fee
shall be pro-rated for any month during which this Agreement is in effect for
only a portion of the month.
(b) WAIVER OF FEE. The Transfer Agent reserves the right from
time to time in its sole discretion, and without any obligation to do so, to
reduce and/or waive all or a portion of the Transfer Agency Fee otherwise
payable hereunder. Any such fee reduction or waiver may be discontinued or
modified by the Transfer Agent at any time.
19. REIMBURSEMENT
The Trust shall reimburse the Transfer Agent for the cost of
any and all forms, including bank checks and proxies, used by it in
communicating with shareholders of the Fund or especially prepared for use in
the connection with its services hereunder, as well as the reasonable and actual
cost of postage, telephone and telegraph (or similar electronic media) used in
communicating with shareholders of the Trust. Each written request for
reimbursement of the Transfer Agent's expenses under this paragraph shall be
directed to the President of the Trust and shall show in reasonable detail the
expenditures incurred by the Transfer Agent and the purposes therefor, together
with any documentation required by the Trust to verify such payment. The
Transfer Agent shall, prior to ordering any form in such supply as it estimates
will be adequate for more than three (3) months use, obtain written consent of
the Trust. All forms for which the Transfer Agent has received reimbursement
from the Trust shall be property of the Trust.
20. DISASTER RECOVERY
The Administrator shall maintain a commercially reasonable
plan to provide for the recovery of data in the event of an emergency due to
equipment failures or the like. In the event of equipment failures, the Transfer
Agent shall, at no additional expense to the Fund, take reasonable steps to
minimize service interruptions but shall not have liability with respect to
losses that result despite the taking of such steps.
21. FORCE MAJEURE.
Subject to paragraph 20, the Transfer Agent shall not be
liable for the loss of all or part of any record maintained or preserved by it
pursuant to this Agreement or for any delays or errors occurring by reason of
circumstances beyond its control including, but not limited to, acts of civil or
military authorities, national emergencies, fire, flood or catastrophe, acts of
God, insurrection, war, riot, or failure of transportation, communication or
power supply, except to the extent that the Transfer Agent shall have failed to
use its best efforts to minimize the likelihood of occurrence of such
circumstances or to mitigate any loss or damage to the Trust caused by such
circumstances.
22. LIMITATION OF LIABILITY OF TRANSFER AGENT
The Transfer Agent shall at all times act reasonably and in
good faith and agrees to use its best efforts to insure the accuracy of all
services performed under this Agreement, but shall not be liable for loss or
damage due to error unless such inaccuracy or error is caused by its gross
negligence, bad faith or willful misconduct or that of its employees, officers
and/or agents.
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23. INDEMNIFICATION
The Trust shall indemnify and hold the Transfer Agent harmless
from all loss, cost, damage and expense, including reasonable expenses for
counsel, incurred by it resulting from any claim, demand, action or suit in
connection with the performance of its duties hereunder, or as a result of
acting upon any instruction reasonably believed by it to have been properly
given by a duly authorized officer of the Trust, or upon any information, data,
records or documents provided to the Transfer Agent or its agents by computer
tape, telex, CRT data entry or other similar means authorized by the Trust;
provided, however, that this indemnification shall not apply to actions or
omissions of the Transfer Agent in cases of its own bad faith, willful
misconduct or gross negligence, and provided further that if in any case the
Trust may be asked to indemnify or hold the Transfer Agent harmless pursuant to
this paragraph, the Trust shall have been fully and promptly advised by the
Transfer Agent of all material facts concerning the situation in question. The
Trust shall have the option to defend the Transfer Agent against any claim which
may be the subject of this indemnification, and in the event that the Trust so
elects it will so notify the Transfer Agent, and thereupon the Trust shall
retain competent counsel to undertake defense of the claim, and the Transfer
Agent shall in such situations incur no further legal or other expenses for
which it may seek indemnification under this paragraph. The Transfer Agent shall
in no case confess any claim or make any compromise in any case in which the
Trust may be asked to indemnify the Transfer Agent except with the Trust's prior
written consent.
24. LIMITATION OF LIABILITY OF TRUST
The Transfer Agent agrees that no shareholder, trustee,
officer, employee or agent of the Trust shall be subject to claims against or
obligations of the Trust to any extent whatsoever, but that the Trust estate
alone shall be liable (with the exception of any Fund for whom the Transfer
Agent has not provided services under this Agreement and for which the claims or
obligations therefore do not relate).
25. TERM
(a) TERM. This Agreement is terminable at any time without
penalty by either party hereto on not less than sixty (60) days' prior written
notice by such terminating party; provided, however, if requested by the Trust,
the Transfer Agent shall, prior to the effective date of termination, and
without waiving its right to payment of compensation under this Agreement
through the effective date of termination, cease providing transfer agent
services hereunder.
(b) ASSIGNMENT. This Agreement shall terminate automatically
in the event of its "assignment" as that term is defined in Section 2(a)(4) of
the 1940 Act. The Transfer Agent shall notify the Trust in writing sufficiently
in advance of any proposed change of control, as defined in Section 2(a)(9) of
the 1940 Act, as will enable the Trust to consider whether an assignment as
defined in Section 2(a)(4) of the 1940 Act will occur, and whether to take the
steps necessary to enter into a new contract with the Transfer Agent. The
Transfer Agent shall notify the Trust of any change in the membership of the
Transfer Agent within a reasonable time after such change.
(c) COMPENSATION. All accrued but unpaid compensation under
this Agreement due the Transfer Agent shall be paid on the effective date of
termination.
26. ACCESS TO AND RETURN OF RECORDS
The Transfer Agent agrees that all records which it maintains
for the Trust are the property of the Trust and further agrees to provide access
at all times to the Trust and its officers, its
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Investment Manager and its agents to such records and to surrender promptly to
the Trust any of such records upon the Trust's request.
27. CONFIDENTIALITY
The Transfer Agent agrees on behalf of itself and its
employees to treat confidentially and as proprietary information of the Trust
all records and other information relative to the Trust, the Fund and the prior,
present or potential shareholders of the Fund, and not to use such records and
information for any purpose other than performance of the Transfer Agent's
responsibilities and to obtain approval in writing by the Trust, which approval
shall not be unreasonably withheld and may not be withheld where the Transfer
Agent may be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Trust.
28. NON-EXCLUSIVE AGENCY
Nothing contained in this Agreement shall prevent the Transfer
Agent, or any affiliated person of the Transfer Agent, from performing services
similar to those to be performed hereunder for any other person, firm, or
corporation or for its or their own accounts or for the accounts of others.
29. INDEPENDENT CONTRACTOR
The Transfer Agent is an independent contractor of the Trust
and neither the Transfer Agent nor any of its managers, officers or employees is
or shall be employees of the Fund in the performance of the Transfer Agent's
duties hereunder. The Transfer Agent shall be responsible for its own conduct
and the employment, control and conduct of its employees, and for injury to such
employees and agents or to others through employees and agents. The Transfer
Agent assumes full responsibility for its employees and agents under applicable
statutes and agrees to pay all employment taxes thereunder.
30. MISCELLANEOUS
(a) PREPARATION OF AGREEMENT; COSTS AND EXPENSES. Each party
agrees that the other party shall not be construed to be solely responsible for
the drafting of this Agreement, and that any ambiguity in this Agreement or the
interpretation thereof shall not be construed against either party as the
alleged draftsman of this Agreement. Except as expressly set forth in this
Agreement, each party shall pay all legal and other costs and expenses incurred
or to be incurred by such party in negotiating and preparing this Agreement, in
performing any transactions contemplated by this Agreement, and otherwise
complying with such party's representations, warranties, covenants, agreements
and conditions contained herein.
(b) COOPERATION. Each party agrees, without further
consideration, to cooperate and diligently perform any further acts, deeds and
things and to execute and deliver any documents that may from time to time be
reasonably necessary or otherwise reasonably required to consummate, evidence,
confirm and/or carry out the intent and provisions of this Agreement, all
without undue delay or expense.
(c) INTERPRETATION.
(i) Entire Agreement/No Collateral Representations.
Each party expressly acknowledges and agrees that this Agreement: (1) is the
final, complete and exclusive statement of the
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agreement of the parties with respect to the subject matter hereof; (2)
supersedes any prior or contemporaneous agreements or understandings of any
kind, oral or written (collectively and severally, the "prior agreements"), and
that any such prior agreements are of no force or effect except as expressly set
forth herein; and (3) may not be varied, supplemented or contradicted by
evidence of prior agreements, or by evidence of subsequent oral agreements.
(ii) Amendment; Waiver; Forbearance. Except as
expressly otherwise provided herein, neither this Agreement nor any of its terms
contained herein may, as the case may be, be amended, supplemented, discharged
or terminated (other than by performance), except by a written instrument or
instruments signed by all of the parties to this Agreement. No waiver of any
acts or obligations hereunder shall be effective unless such waiver shall be in
a written instrument or instruments signed by each party claimed to have given
or consented to such waiver and each party affected by such waiver. No
forbearance by a party to seek a remedy for any noncompliance or breach by
another party hereto shall be deemed to be a waiver by such forbearing party of
its rights and remedies with respect to such noncompliance or breach unless such
waiver shall be in a written instrument or instruments signed by the forbearing
party.
(iii) Remedies Cumulative. The remedies of each party
under this Agreement are cumulative and shall not exclude any other remedies to
which such party may be lawfully entitled.
(iv) Severability. If any term or provision of this
Agreement or the application thereof to any person or circumstance shall, to any
extent, be determined to be invalid, illegal or unenforceable under present or
future laws effective during the term of this Agreement, then and, in that
event: (A) the performance of the offending term or provision (but only to the
extent its application is invalid, illegal or unenforceable) shall be excused as
if it had never been incorporated into this Agreement, and, in lieu of such
excused provision, there shall be added a provision as similar in terms and
amount to such excused provision as may be possible and be legal, valid and
enforceable, and (B) the remaining part of this Agreement (including the
application of the offending term or provision to persons or circumstances other
than those as to which it is held invalid, illegal or unenforceable) shall not
be affected thereby and shall continue in full force and effect to the fullest
extent provided by law.
(v) Time is of the Essence. It is expressly
understood and agreed that time of performance is strictly of the essence with
respect to each and every term, condition, obligation and provision hereof and
that the failure to timely perform any of the terms, conditions, obligations or
provisions hereof by any party shall constitute a material breach and a
noncurable (but waivable) default under this Agreement by the party so failing
to perform.
(vi) No Third Party Beneficiary. Notwithstanding
anything else herein to the contrary, the parties specifically disavow any
desire or intention to create any third party beneficiary obligations, and
specifically declare that no person, other than as set forth in this Agreement,
shall have any rights or remedies of any nature or kind whatsoever under or by
reason of this Agreement.
(vii) No Reliance Upon Prior Representation. Each
party acknowledges that no other party has made any oral representation or
promise which would induce them prior to executing this Agreement to change its
position to its detriment, partially perform, or part with value in reliance
upon such representation or promise; each party acknowledges that it has taken
such action at its own risk; and each party represents that it has not so
changed its position, performed or parted with value prior to the time of their
execution of this Agreement.
(viii) Headings; References; Incorporation; "Person";
Gender. The headings used in this Agreement are for convenience and reference
purposes only, and shall not be used in
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construing or interpreting the scope or intent of this Agreement or any
provision hereof. References to this Agreement shall include all amendments or
renewals thereof. All cross-references in this Agreement, unless specifically
directed to another agreement or document, shall be construed only to refer to
provisions within this Agreement, and shall not be construed to be referenced to
the overall transaction or to any other agreement or document. Any exhibit
referenced in this Agreement shall be construed to be incorporated in this
Agreement. As used in this Agreement, the term "person" is defined in its
broadest sense as any individual, entity or fiduciary who has legal standing to
enter into any agreement. As used in this Agreement, each gender shall be deemed
to include the other gender, including neutral genders or genders appropriate
for entities, if applicable, and the singular shall be deemed to include the
plural, and vice versa, as the context requires.
(d) ENFORCEMENT. This Agreement and the rights and remedies of
each party arising out of or relating to this Agreement (including, without
limitation, equitable remedies) shall be solely governed by, interpreted under,
and construed and enforced in accordance with the laws (without regard to the
conflicts of law principles thereof) of the State of New York, as if this
Agreement were made, and as if its obligations are to be performed, wholly
within the State of New York.
(e) SUCCESSORS AND ASSIGNS. Neither party may assign its
rights or delegate any of such party's duties or obligations under this
Agreement, in whole or in part, without the prior written consent of the other
party. Any delegation of a party's obligations under this Agreement shall in no
way release the delegating party from any of its obligations or liabilities
under this Agreement. Subject to the foregoing, all of the representations,
warranties, covenants, conditions and provisions of this Agreement shall be
binding upon and shall inure to the benefit of each party and such party's
respective successors and permitted assigns, spouses, heirs, executors,
administrators, and personal and legal representatives.
(f) NOTICES. Unless otherwise specifically provided in this
Agreement, all notices, demands, requests, consents, approvals or other
communications (collectively and severally called "notices") required or
permitted to be given hereunder, or which are given with respect to this
Agreement, shall be in writing, and shall be given by: (i) personal delivery
(which form of notice shall be deemed to have been given upon delivery), (ii) by
telegraph or by private airborne/overnight delivery service (which forms of
notice shall be deemed to have been given upon confirmed delivery by the
delivery agency), (iii) by electronic or facsimile or telephonic transmission,
provided the receiving party has a compatible device or confirms receipt thereof
(which forms of notice shall be deemed delivered upon confirmed transmission or
confirmation of receipt), or (iii) by mailing in the United States mail by
registered or certified mail, return receipt requested, postage prepaid (which
forms of notice shall be deemed to have been given upon the fifth {5th} business
day following the date mailed). Each party, and their respective counsel, hereby
agree that if notice is to be given hereunder by such party's counsel, such
counsel may communicate directly with all principals, as required to comply with
the foregoing notice provisions. Notices shall be addressed at the addresses
hereinabove set forth in the introductory paragraph of this Agreement or to such
other address as the receiving party shall have specified most recently by like
notice, with a copy to the other parties hereto.
(g) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument, binding on all parties
hereto. Any signature page of this Agreement may be detached from any
counterpart of this Agreement and reattached to any other counterpart of this
Agreement identical in form hereto by having attached to it one or more
additional signature pages.
(h) EXECUTION BY ALL PARTIES REQUIRED TO BE BINDING;
ELECTRONICALLY TRANSMITTED DOCUMENTS. This Agreement shall not be construed to
be an offer and shall have no force and effect
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until this Agreement is fully executed by all parties hereto. If a copy or
counterpart of this Agreement is originally executed and such copy or
counterpart is thereafter transmitted electronically by facsimile or similar
device, such facsimiled document shall for all purposes be treated as if
manually signed by the party whose facsimile signature appears.
WHEREFORE, the parties hereto have for purposes of this Agreement
executed this Agreement in the City of Beverly Hills, County of Los Angeles,
State of California, effective as of the date first written above.
TRUST:
MEYERS SHEPPARD INVESTMENT TRUST,
A DELAWARE BUSINESS TRUST
By: _____________________________
Shelly Meyers, its President and Trustee (and not
individually)
ACCOUNTING AGENT:
FURMAN SELZ LLC,
A DELAWARE LIMITED LIABILITY COMPANY
By: _____________________________
Name: _____________________________
Title: _____________________________
13
<PAGE> 1
Exhibit 9(d)
Form of Omnibus Agreement dated as of May 9, 1996 between the Registrant and
Furman Selz LLC
<PAGE> 2
OMNIBUS FEE AGREEMENT
THIS OMNIBUS FEE AGREEMENT (the "Agreement") is made by and between
Meyers Sheppard Investment Trust, a Delaware business trust (the "Trust"), whose
principal place of business is 9107 Wilshire Blvd., Suite 700, Beverly HIlls,
California 90210, and Furman Selz LLC, a Delaware limited liability company
("Furman Selz"), whose principal place of business is 230 Park Avenue, New York,
New York 10169, with reference to the following facts:
RECITALS
WHEREAS, on or about April 1, 1996, the Trust filed a Registration
Statement on Form N- 1A (File Nos. 33- and 811- ) (the "Registration Statement")
under the Investment Trust Act of 1940, as amended (the "1940 Act") and the
Securities Act of 1933, as amended (the "1933 Act") with the Securities and
Exchange Commission (the "Commission") in connection with the registration as an
open-ended investment company of a separate series of the beneficial interests
of the Trust, par value $.00001 (the "Shares") designated the Meyers Sheppard
Pride Fund (the "Fund");
WHEREAS, pursuant to the terms of an Administration Agreement of even
date herewith, the Trust engaged Furman Selz to provide certain administration
services with respect to the Fund;
WHEREAS, pursuant to the terms of a Fund Accounting Agreement of even
date herewith, the Trust engaged Furman Selz to provide certain fund accounting
services with respect to the Fund;
WHEREAS, pursuant to the terms of a Transfer Services Agreement of even
date herewith, the Trust engaged Furman Selz to provide certain transfer agency
services with respect to the Fund;
WHEREAS, the Trust and Furman Selz have agreed that Furman Selz shall
be paid a miniminum monthly fee in connection with the services performed by
Furman Selz pursuant to the terms of the aforesaid agreements.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises contained in this Agreement, the Trust and Furman Selz (who are
sometimes individually referred to as a "party" and collectively referred to as
the "parties") agree as follows:
AGREEMENT
1. COMPENSATION
For the services provided by Furman Selz under the
Administration Agreement, the Fund Accounting Agreement and the Transfer
Services Agreement (collectively, the "Base Agreements"), the Trust shall,
commencing the first day of sale of the Shares to the public, pay Furman Selz,
in addition to the compensation provided for in the Base Agreements, the sum of
one hundred fifty thousand dollars ($150,000) per year, payable on a monthly
basis (the "Additional Fee"). The Additional Fee shall not be effective until
the first day of sale of the Shares to the public, and shall be pro-rated for
any month during which this Agreement is in effect for only a portion of the
month.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS
(a) BY TRUST. In addition to any other representations,
covenants and warranties of the Trust under this Agreement, the Trust hereby
represents, warrants and covenants to Furman Selz,
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<PAGE> 3
each of which is deemed, as the case may be, to be a separate representation,
warranty and covenant, that:
(i) Corporate Organization, Power and Authority. The
Trust: (1) is a business trust duly organized, validly existing and in
good standing under the laws of the State of Delaware; (2) has all
requisite corporate power and authority to enter into this Agreement;
(3) has the corporate or other power to own its properties and carry on
its business as the same is now being conducted; and (4) is in good
standing and is qualified to transact business in each jurisdiction in
which the nature of property owned or leased by it or the conduct of
its business requires it to be so qualified, except where the failure
to be in good standing or to be duly qualified to transact business
would not be likely to have a material adverse effect on the business,
assets or financial condition of the Trust taken as a whole.
(ii) Authorization and Validity of Agreement. The
execution and delivery of this Agreement by the Trust and the
performance of the transactions herein contemplated have been duly
authorized by the Board of Trustees of the Trust, and no further
corporate or other action on the part of the Trust is necessary to
authorize this Agreement or the performance of such transactions. This
Agreement has been duly executed and delivered by the Trust and,
assuming due authorization, execution and delivery by Furman Selz, is
valid or binding upon the Trust in accordance with its terms (except as
limited by (1) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in affect relating to creditor's
rights generally and (2) general principles of equity {regardless of
whether such enforcement is considered in a proceeding in equity or at
law}).
(iii) No Breach or Conflict. Neither the execution or
delivery of this Agreement or the performance by the Trust of the
transactions contemplated herein will breach or conflict with any of
the provisions of the Trust's Certificate of Trust, Declaration of
Trust or By-laws, nor, to the best of the knowledge and belief of the
Board of Trustees of the Trust, with or without the giving of notice or
the lapse of time or both, will (1) violate or constitute an event of
default under any agreement or other instrument or any order, judgment
or ruling of any governmental authority to which the Trust is a party
or by which any of its property is bound, or (2) require the consent or
approval of any other person or governmental authority, except in each
case with respect to any of the foregoing which would not be likely to
have a material adverse effect on the business, assets or financial
condition of the Trust taken as a whole.
(b) BY FURMAN SELZ. In addition to any other representations,
covenants and warranties of Furman Selz under this Agreement, Furman Selz hereby
represents, warrants and covenants to the Trust, each of which is deemed, as the
case may be, to be a separate representation, warranty and covenant, that:
(i) Corporate Organization, Power and Authority.
Furman Selz: (1) is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(2) has all requisite corporate power and authority to enter into this
Agreement; (3) has the corporate or other power to own its properties
and carry on its business as the same is now being conducted; and (4)
is in good standing and is qualified to transact business in each
jurisdiction in which the nature of property owned or leased by it or
the conduct of its business requires it to be so qualified, except
where the failure to be in good standing or to be duly qualified to
transact business would not be likely to have a material adverse effect
on the business, assets or financial condition of Furman Selz taken as
a whole.
2
<PAGE> 4
(ii) Authorization and Validity of Agreement. The
execution and delivery of this Agreement by Furman Selz and the
performance of the transactions herein contemplated have been duly
authorized by the Managers of Furman Selz, and no further corporate or
other action on the part of Furman Selz is necessary to authorize this
Agreement or the performance of such transactions. This Agreement has
been duly executed and delivered by Furman Selz and, assuming due
authorization, execution and delivery by the Trust, is valid or binding
upon Furman Selz in accordance with its terms (except as limited by (1)
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in affect relating to creditor's rights generally
and (2) general principles of equity {regardless of whether such
enforcement is considered in a proceeding in equity or at law}).
(iii) No Breach or Conflict. Neither the execution or
delivery of this Agreement or the performance by Furman Selz of the
transactions contemplated herein will breach or conflict with any of
the provisions of the Articles of Organization or Operating Agreement
of Furman Selz, nor, to the best of the knowledge and belief of the
Managers of Furman Selz, with or without the giving of notice or the
lapse of time or both, will (1) violate or constitute an event of
default under any agreement or other instrument or any order, judgment
or ruling of any governmental authority to which Furman Selz is a party
or by which any of its property is bound, or (2) require the consent or
approval of any other person or governmental authority, except in each
case with respect to any of the foregoing which would not be likely to
have a material adverse effect on the business, assets or financial
condition of Furman Selz taken as a whole.
(iv) Performance. Furman Selz will perform its
obligations under the Base Agreements in with the terms of such
Agreements and in accordance with the standard of care and diligence of
the industry.
3. LIMITATION OF LIABILITY OF TRUST
Furman Selz agrees that no shareholder, trustee, officer,
employee or agent of the Trust shall be subject to claims against or obligations
of the Trust to any extent whatsoever, but that the Trust estate alone shall be
liable (with the exception of any Fund for whom Furman Selz has not provided
services under this Agreement and for which the claims or obligations therefore
do not relate).
4. TERM
This Agreement is terminable at any time without penalty by
either party hereto on not less than sixty (60) days' prior written notice by
such terminating party. This Agreement will also terminate automatically (i) in
the event of the termination of any Base Agreement and (ii) its assignment
unless such termination is waived or deferred by the non-assigning party.
5. MISCELLANEOUS
(a) PREPARATION OF AGREEMENT. Each party agrees that the other
party shall not be construed to be solely responsible for the drafting of this
Agreement, and that any ambiguity in this Agreement or the interpretation
thereof shall not be construed against either party as the alleged draftsman of
this Agreement.
(b) COOPERATION. Each party agrees, without further
consideration, to cooperate and diligently perform any further acts, deeds and
things and to execute and deliver any documents that may from time to time be
reasonably necessary or otherwise reasonably required to consummate, evidence,
3
<PAGE> 5
confirm and/or carry out the intent and provisions of this Agreement, all
without undue delay or expense.
(c) INTERPRETATION.
(i) Entire Agreement/No Collateral Representations.
Each party expressly acknowledges and agrees that this Agreement, together with
the Base Agreements: (1) is the final, complete and exclusive statement of the
agreement of the parties with respect to the subject matter hereof; (2)
supersedes any prior or contemporaneous agreements or understandings of any
kind, oral or written (collectively and severally, the "prior agreements"), and
that any such prior agreements are of no force or effect except as expressly set
forth herein; and (3) may not be varied, supplemented or contradicted by
evidence of prior agreements, or by evidence of subsequent oral agreements.
(ii) Amendment; Waiver; Forbearance. Except as
expressly otherwise provided herein, neither this Agreement nor any of its terms
contained herein may, as the case may be, be amended, supplemented, discharged
or terminated (other than by performance), except by a written instrument or
instruments signed by all of the parties to this Agreement. No waiver of any
acts or obligations hereunder shall be effective unless such waiver shall be in
a written instrument or instruments signed by each party claimed to have given
or consented to such waiver and each party affected by such waiver. No
forbearance by a party to seek a remedy for any noncompliance or breach by
another party hereto shall be deemed to be a waiver by such forbearing party of
its rights and remedies with respect to such noncompliance or breach unless such
waiver shall be in a written instrument or instruments signed by the forbearing
party.
(iii) Remedies Cumulative. The remedies of each party
under this Agreement are cumulative and shall not exclude any other remedies to
which such party may be lawfully entitled.
(iv) Severability. If any term or provision of this
Agreement or the application thereof to any person or circumstance shall, to any
extent, be determined to be invalid, illegal or unenforceable under present or
future laws effective during the term of this Agreement, then and, in that
event: (A) the performance of the offending term or provision (but only to the
extent its application is invalid, illegal or unenforceable) shall be excused as
if it had never been incorporated into this Agreement, and, in lieu of such
excused provision, there shall be added a provision as similar in terms and
amount to such excused provision as may be possible and be legal, valid and
enforceable, and (B) the remaining part of this Agreement (including the
application of the offending term or provision to persons or circumstances other
than those as to which it is held invalid, illegal or unenforceable) shall not
be affected thereby and shall continue in full force and effect to the fullest
extent provided by law.
(v) Time is of the Essence. It is expressly
understood and agreed that time of performance is strictly of the essence with
respect to each and every term, condition, obligation and provision hereof and
that the failure to timely perform any of the terms, conditions, obligations or
provisions hereof by any party shall constitute a material breach and a
noncurable (but waivable) default under this Agreement by the party so failing
to perform.
(vi) No Third Party Beneficiary. Notwithstanding
anything else herein to the contrary, the parties specifically disavow any
desire or intention to create any third party beneficiary obligations, and
specifically declare that no person, other than as set forth in this Agreement,
shall have any rights or remedies of any nature or kind whatsoever under or by
reason of this Agreement.
(vii) No Reliance Upon Prior Representation. Each
party acknowledges that no other party has made any oral representation or
promise which would induce them prior to executing
4
<PAGE> 6
this Agreement to change its position to its detriment, partially perform, or
part with value in reliance upon such representation or promise; each party
acknowledges that it has taken such action at its own risk; and each party
represents that it has not so changed its position, performed or parted with
value prior to the time of their execution of this Agreement.
(viii) Headings; References; Incorporation; "Person";
Gender. The headings used in this Agreement are for convenience and reference
purposes only, and shall not be used in construing or interpreting the scope or
intent of this Agreement or any provision hereof. References to this Agreement
shall include all amendments or renewals thereof. All cross-references in this
Agreement, unless specifically directed to another agreement or document, shall
be construed only to refer to provisions within this Agreement, and shall not be
construed to be referenced to the overall transaction or to any other agreement
or document. Any exhibit referenced in this Agreement shall be construed to be
incorporated in this Agreement. As used in this Agreement, the term "person" is
defined in its broadest sense as any individual, entity or fiduciary who has
legal standing to enter into any agreement. As used in this Agreement, each
gender shall be deemed to include the other gender, including neutral genders or
genders appropriate for entities, if applicable, and the singular shall be
deemed to include the plural, and vice versa, as the context requires.
(d) ENFORCEMENT. This Agreement and the rights and remedies of
each party arising out of or relating to this Agreement (including, without
limitation, equitable remedies) shall be solely governed by, interpreted under,
and construed and enforced in accordance with the laws (without regard to the
conflicts of law principles thereof) of the State of New York, as if this
Agreement were made, and as if its obligations are to be performed, wholly
within the State of New York.
(e) SUCCESSORS AND ASSIGNS. Neither party may assign its
rights or delegate any of such party's duties or obligations under this
Agreement, in whole or in part, without the prior written consent of the other
party. Any delegation of a party's obligations under this Agreement shall in no
way release the delegating party from any of its obligations or liabilities
under this Agreement. Subject to the foregoing, all of the representations,
warranties, covenants, conditions and provisions of this Agreement shall be
binding upon and shall inure to the benefit of each party and such party's
respective successors and permitted assigns, spouses, heirs, executors,
administrators, and personal and legal representatives.
(f) NOTICES. Unless otherwise specifically provided in this
Agreement, all notices, demands, requests, consents, approvals or other
communications (collectively and severally called "notices") required or
permitted to be given hereunder, or which are given with respect to this
Agreement, shall be in writing, and shall be given by: (A) personal delivery
(which form of notice shall be deemed to have been given upon delivery), (B) by
telegraph or by private airborne/overnight delivery service (which forms of
notice shall be deemed to have been given upon confirmed delivery by the
delivery agency), (C) by electronic or facsimile or telephonic transmission,
provided the receiving party has a compatible device or confirms receipt thereof
(which forms of notice shall be deemed delivered upon confirmed transmission or
confirmation of receipt), or (D) by mailing in the United States mail by
registered or certified mail, return receipt requested, postage prepaid (which
forms of notice shall be deemed to have been given upon the fifth {5th} business
day following the date mailed). Each party, and their respective counsel, hereby
agree that if notice is to be given hereunder by such party's counsel, such
counsel may communicate directly with all principals, as required to comply with
the foregoing notice provisions. Notices shall be addressed at the addresses
hereinabove set forth in the introductory paragraph of this Agreement or to such
other address as the receiving party shall have specified most recently by like
notice, with a copy to the other parties hereto.
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<PAGE> 7
(g) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument, binding on all parties
hereto. Any signature page of this Agreement may be detached from any
counterpart of this Agreement and reattached to any other counterpart of this
Agreement identical in form hereto by having attached to it one or more
additional signature pages.
(h) EXECUTION BY ALL PARTIES REQUIRED TO BE BINDING;
ELECTRONICALLY TRANSMITTED DOCUMENTS. This Agreement shall not be construed to
be an offer and shall have no force and effect until this Agreement is fully
executed by all parties hereto. If a copy or counterpart of this Agreement is
originally executed and such copy or counterpart is thereafter transmitted
electronically by facsimile or similar device, such facsimiled document shall
for all purposes be treated as if manually signed by the party whose facsimile
signature appears.
WHEREFORE, the parties hereto have for purposes of this Agreement
executed this Agreement in the City of Beverly Hills, County of Los Angeles,
State of California, effective as of the date first written above.
TRUST:
MEYERS SHEPPARD INVESTMENT TRUST,
A DELAWARE BUSINESS TRUST
By:_________________________________
SHELLY MEYERS,
FURMAN SELZ:
FURMAN SELZ LLC,
A DELAWARE LIMITED LIABILITY COMPANY
By:_________________________________
Name:_______________________________
Title:______________________________
6
<PAGE> 1
Exhibit 10
Opinion and Consent of Pollet & Woodbury, a Law Corporation
<PAGE> 2
POLLET & WOODBURY
A Law Corporation
10900 Wilshire Boulevard, Suite 500
Los Angeles, California 90024-6525
Telephone (310) 208-1182
Telecopier (310) 208-1154
May , 1996
To The Board of Trustees
of Meyers Sheppard Investment Trust:
We have acted as counsel for Meyers Sheppard Investment Trust (the
"Trust") in connection with the proposed offering of an unlimited number of
shares of beneficial interest, par value $.00001 per share (the "Shares"), of
that separate series of the Trust to be designated the "Meyers Sheppard Pride
Fund." On the basis of such investigation as we have deemed reasonably
necessary, including examination of the Trust's Certificate of Trust and Trust
Indenture, each dated as of March 26, 1996, the Trust's By-Laws, unanimous
written consents of the Trust's Board of Trustees dated March 26, 1996,
resolutions adopted by the Trust's Board of Trustees at a meeting held on May 9,
1996, a specimen Stock certificate and the Registration Statement on Form N-1A
(File Nos. 33-32111 and 811-7581) filed in connection with the offering of the
Shares with the Securities and Exchange Commission on April 1, 1996 and
pre-effective amendment no. 1 thereto (the "Registration Statement"), we are of
the opinion that the Shares, when sold, will be validly issued, fully paid and
non-assessable.
We express no opinion herein as to the laws of any jurisdiction, except
the Federal laws of the United States and the laws of the State of Delaware. The
opinion expressed herein has been rendered at your request and is solely for
your benefit and may not be relied upon in any manner by any other person or by
you for any other purpose.
We consent to the filing of this opinion as an Exhibit to the
Registration Statement.
Very truly yours,
/s/ POLLET & WOODBURY,
A LAW CORPORATION
<PAGE> 1
Exhibit 13
Form of Subscription Agreement for $100,000 Seed Capital
<PAGE> 2
__________________________
__________________________
__________________________
Date
Meyers Sheppard Investment Trust
9107 Wilshire Boulevard, Suite 700
Beverly Hills, California 90210
Telephone Number: (310) 288-3720
RE: CAPITAL CONTRIBUTION TO MEYERS SHEPPARD PRIDE FUND
Ladies and Gentlemen:
With respect to the undersigned's purchase from you of
_____________________ (_________________ ) shares of beneficial interest (the
"Shares") of the Meyers Sheppard Pride Fund (the "Fund"), currently the sole
series of the Meyers Sheppard Investment Trust, a Delaware Business Trust, for
the sum of _____________________________ dollars ($________ ,000), the
undersigned hereby represents to you as follows: (i) he or she is purchasing
the Shares for investment, with no present intention to dispose of them either
through resale to others or redemption by the Trust; (ii) he or she understands
that the monies to purchase the Shares are part of the initial $100,000 in seed
capitalization for Fund, and the Shares are therefore subject to certain
holding requirements mandated by the Investment Company Act of 1940, as amended
(the "Act"), and the Rules thereunder, before the Shares may be redeemed, and
that he or she shall be required to furnish the Company with an opinion of our
counsel in form and substance reasonably satisfactory to the Fund and its legal
counsel to the effect that such disposition is allowed under the 1940 Act; and
(iii) that the amount paid by the Fund on any redemption of the Shares by the
undersigned, or any other current holder of the Shares, will be reduced by the
pro rata portion of any unamortized organization expenses which the number of
such Shares redeemed bears to the total number of the other shares relating to
the $100,000 initial capitalization of the Fund outstanding immediately prior
to such redemption.
The undersigned further represents and acknowledges that he or she has
received from the Fund a current copy of the Fund's Form N-1A, including
Prospectus, and Statement of Additional Information (the "Registration
Statement"), as filed with the United States Securities and Exchange Commission
("SEC"). The undersigned acknowledges that he or she understand that the
Registration Statement has not yet been approved by the SEC, or any applicable
state securities commission, nor is there any guarantee that such approval will
be obtained.
The undersigned further represents and acknowledges that except as set
forth in the Registration Statement, no other representations or warranties
regarding the Fund, or his or her investment in the Shares, have been made to
the undersigned by the Fund, or any representative thereof.
The undersigned further represents and acknowledges that he or she has
had the opportunity to review the purchase of the Shares, and the terms and
conditions thereof, with his or her legal and financial advisors.
Very Truly Yours:
By: ________________________
Name: ______________________
Title: _____________________
<PAGE> 1
Exhibit 15
Form of Plan of Distribution adopted by the Registrant on May 9, 1996
[/R]
<PAGE> 2
PLAN OF DISTRIBUTION
OF THE
MEYERS SHEPPARD PRIDE FUND
A SEPARATE SERIES OF THE
MEYERS SHEPPARD INVESTMENT TRUST
WHEREAS, Meyers Sheppard Investment Trust (the "Trust") is a business
trust organized under the laws of the State of Delaware; and
WHEREAS, on or about April 1, 1996, the Trust filed a Registration
Statement on Form N-1A (File Nos. 33-32111 and 811-7581) (the "Registration
Statement") under the Investment Trust Act of 1940, as amended (the "1940 Act")
and the Securities Act of 1933, as amended (the "1933 Act") with the Securities
and Exchange Commission (the "Commission") in connection with the registration
as an open-ended investment company of a separate series of the beneficial
interests of the Trust, par value $.00001 (the "Shares") designated the Meyers
Sheppard Pride Fund (the "Fund"); and
WHEREAS, it has been proposed by the Board of Trustees of the Trust
that the Trust engage a distributor to be selected by the Board to distribute
the Shares and, in connection therewith, the expenses for services performed and
expenses incurred by such distributor in connection with the distribution of the
Shares be paid in accordance with a plan of distribution adopted pursuant to
Rule 12b-1 of the 1940 Act.
NOW, THEREFORE, the Trust hereby adopts this Plan of Distribution (the
"Plan") for distribution of the Shares in accordance with Rule 12b-1 under the
1940 Act and on and subject to the following terms and conditions:
1. DISTRIBUTION AGREEMENT
Upon adoption of this Plan in accordance with paragraphs 4 and
5 below, the Trust is hereby authorized to enter into a distribution agreement
(the "Distribution Agreement") with a Distributor to be selected by the Board of
Trustees (the "Distributor") wherein the Trust will compensate the Distributor,
from the assets of the Fund, for services performed and expenses incurred by the
Distributor in connection with the distribution of the Shares and for providing
certain services to the shareholders of the Fund. The Distribution Agreement
shall be in writing and shall contain such provisions as the Trust determines to
be reasonable and necessary consistent, however, with the terms and conditions
and limitations of this Plan.
2. COMPENSATION
The amount of compensation paid to the Distributor pursuant to
the terms of the Distribution Agreement during any one year for such year shall
not exceed 0.25% of the average daily net assets of the Fund. For the purposes
of determining the fees payable under this Plan, the value of the net assets of
the Fund shall be computed in the manner specified in the Registration Statement
(including prospectus and statement of additional information) as then in
effect. Such compensation shall be calculated and accrued daily and paid monthly
or at such other intervals as the Board of Trustees may determine.
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<PAGE> 3
3. SERVICES AND EXPENSES
The types of distribution services and expenses for which the
Distributor may be compensated under this Plan shall include, without limitation
but in all cases in compliance with Rule 12b-1: (i) compensation to and expenses
of brokers or dealers who are members of the National Association of Securities
Dealers, Inc. or their officers, sales representatives or employees; (ii)
compensation to and expenses of the Distributor and any of its officers, sales
representatives and employees, including allocable overhead, travel and
telephone expenses, who engage in or support distribution of the Shares; (iii)
printing of prospectuses and reports for other than existing shareholders; and
(iv) preparation, printing and distribution of sales literature and advertising
materials.
4. APPROVAL BY BOARD OF TRUSTEES
This Plan shall not take effect until approved by vote of a
majority of both (i) the Board of Trustees of the Trust and (ii) those Trustees
of the Trust who are not "interested persons" of the Trust (as defined by the
1940 Act) and whom have no direct or indirect financial interest in the
operation of this Plan or any agreements related to it including, without
limitation, the Distribution Agreement (the "Rule 12b-1 Trustees") cast in
person at a meeting (or meetings) called for the purpose of voting on this Plan
and such related agreements.
5. APPROVAL BY SHAREHOLDERS
This Plan shall not take effect until approved by a vote of at
least a majority (as defined in the 1940 Act) of the outstanding voting
securities of the Fund.
6. SELECTION AND NOMINATION OF TRUSTEES
While this Plan is in effect, the selection and nomination of
the Trustees who are not interested persons (as defined in the 1940 Act) of the
Trust shall be committed to the discretion of the Trustees who are not such
interested persons.
7. REPORTS FROM DISTRIBUTOR
The Distributor shall provide to the Board of Trustees of the
Trust, at least quarterly, and the Board shall review, at least quarterly, a
written report of the amounts paid hereunder and the purposes for which they
were incurred.
8. PRESERVATION OF PLAN RECORDS
The Fund shall preserve copies of this Plan and any related
agreements (including any Distribution Agreement) and all reports made pursuant
to paragraph 7 hereof, for a period of not less than six years from the date of
the Plan. Any such agreement or any such report, as the case may be, will be
kept for the first two years in an easily accessible place.
9. TERM OF PLAN AND RELATED AGREEMENTS
This Plan shall remain in effect no longer than one year from
the date of the adoption of this Plan, and shall continue in effect thereafter
so long as such continuance is specifically approved at least annually by the
Board of Trustees in the manner provided for approval of this Plan in paragraph
4. Any agreements related to this Plan (including any Distribution Agreement)
shall provide that they shall remain in effect no longer than one year from the
date of the adoption of this Plan, and
2
<PAGE> 4
shall continue in effect thereafter so long as such continuance is specifically
approved at least annually by the Board of Trustees in the manner provided for
approval of this Plan in paragraph 4.
10. TERMINATION OF PLAN AND RELATED AGREEMENTS
This Plan may be terminated at any time by vote of a majority
of (i) the Rule 12b-1 Trustees or (ii) the outstanding voting securities of the
Fund. Any agreements related to this Plan (including any Distribution
Agreement), shall provide (i) that it may be terminated at any time without the
payment of penalty on not more than sixty days written notice by a vote of a
majority of (A) the Rule 12b-1 Trustees or (B) the outstanding voting securities
of the Fund, and (ii) that it shall terminate automatically in the event of its
assignment.
11. AMENDMENT OF PLAN
This Plan, together with any related agreement (including any
Distribution Agreement), (i) may not be materially amended unless such amendment
is approved by its Board of Trustees in the manner provided for the initial
approval of this Plan in paragraph 4 hereof, and (ii) if such amendment relates
to a material increase in the amount of compensation payable to the Distributor
pursuant to paragraph 2 hereof, unless such amendment is also approved by the
shareholders of the Fund in the manner provided for initial approval of this
Plan in paragraph 5 hereof.
12. ADOPTION OF PLAN TO OTHER SERIES
This Plan not be adopted with respect to any separate series
or portfolio of the Trust other than the Fund (each a "New Fund") unless and
until (i) such adoption is approved by the Board of Trustees in the manner
provided for the initial approval of this Plan in paragraph 4 hereof, and (ii)
such adoption is also approved by the shareholders of the New Fund in the manner
provided for initial approval of this Plan in paragraph 5 hereof.
13. RULE 12B-1 SAVING CLAUSE
It is the intent of the Trust that this Plan, and each and
every provision hereof, comply with Rule 12b-1 of the 1940 Act and regulatory
interpretations thereof, and that each and every provision of this Plan be
interpreted and construed to conform to that intent. To the extent that any such
provision cannot be so construed, such offending provision shall be severed in
accordance with paragraph 15 of this Plan.
14. SEVERABILITY
If any term or provision of this Plan or the application
thereof to any person or circumstance shall, to any extent, be determined to be
invalid, illegal or unenforceable under present or future laws effective during
the term of this Plan, and/or not in compliance with Rule 12b-1 of the 1940 Act,
then and, in that event: (i) the performance of the offending term or provision
(but only to the extent its application is invalid, illegal or unenforceable
and/or, if applicable, not in compliance with Rule 12b-1 of the 1940 Act) shall
be excused as if it had never been incorporated into this Plan, and, in lieu of
such excused provision, there shall be added a provision as similar in effect
and operation to such excused provision as may be possible and be legal, valid
and enforceable and/or, if applicable, in compliance with Rule 12b-1, and (ii)
the remaining part of this Plan (including the application of the offending term
or provision to persons or circumstances other than those as to which it is held
invalid, illegal or unenforceable and/or, if applicable, not in compliance with
Rule 12b-1) shall not be affected thereby and shall continue in full force and
effect to the fullest extent provided by law.
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15. LIMITATION OF LIABILITY
The name Meyers Sheppard Investment Trust is the designation
of the Trustees under a Declaration of Trust dated March 26, 1996, as amended
from time to time, and a Certificate of Trust filed March 26, 1996, as amended
from time to time, and all persons dealing with the Trust must look solely to
the property of such Trust for enforcement of any claims against such Trust as
neither the Trustees, officers or agents of the Trust or shareholders of any
fund under the Trust assume any personal liability for obligations entered into
by the Trust.
* * * * *
The undersigned, the duly appointed Secretary of the Trust,
hereby certifies that on May 9, 1996 the foregoing Plan of Distribution was
unanimously adopted by each of: (i) the Board of Trustees of the Trust, (ii) the
Trustees of the Trust who are not interested persons of the Trust and whom have
no direct or indirect financial interest in the operation of the Plan of
Distribution or any agreement related to the Plan of Distribution (including any
Distribution Agreement), and (iii) the shareholders of the Fund.
------------------------------------
Joan V. Fiore, Secretary
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