As filed with the Securities and Exchange Commission on July 18, 1996
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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/
Pre-Effective Amendment No. ____
Post-Effective Amendment No. ____
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/
Amendment No.______
CAM BALANCED FUND, INC.
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(Exact Name of Registrant as Specified in Charter)
c/o Rodney Square Management Corporation,
Rodney Square North, 1100 North Market Street,
Wilmington, DE 19890
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(Address of Principal Executive Offices)
(302) 651-8280
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(Registrant's Telephone Number, including Area Code)
J. Kenneth Croney, Jr.
Three Radnor Corporate Center
Suite 300
Radnor, PA 19087
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(Name and Address of Agent for Service)
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With Copies to:
Henry S. Hilles, Jr.
Drinker Biddle & Reath
PNB Building
1345 Chestnut Street
Philadelphia, Pennsylvania 19107-3496
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
It is proposed that this filing will become effective
/ / when declared effective pursuant to section 8(c)
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 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
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Title of Proposed Maximum Proposed Maximum
Securities Being Amount Being Offering Price Aggregate Amount of
Registered Registered Per Unit Offering Price Registration Fee
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<S> <C> <C> <C> <C>
Shares of Common
Stock (par value
$0.001 per share) 1,500,000 $10 $15,000,000 $5,173
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</TABLE>
<PAGE>
CAM BALANCED FUND, INC.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Item Number and Heading
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PART A Caption in Prospectus
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<S> <C> <C>
1. Outside Front Cover Cover Page
2. Outside Back Cover Page Cover Page
3. Fee Table and Synopsis Fee Table; Prospectus Summary
4. Financial Highlights *
5. Plan of Distribution Plan of Distribution; Subscription Procedure
6. Selling Shareholders *
7. Use of Proceeds Use of Proceeds
8. General Description of Registrant Prospectus Summary; Investment Strategies
9. Management Management
10. Capital Stock Long-Term Debt and Other Distributions and Taxes; Automatic Dividend
Securities Reinvestment Plan; Dividends, Voting and Liquidation
Rights
11. Defaults and Arrears on Senior Securities *
12. Legal Proceedings *
13. Table of Contents of the Statement Statement of Additional Information
of Additional Information
<CAPTION>
PART B Caption in Statement of Additional Information
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14. Cover Page Cover Page
15. Table of Contents Table of Contents
16. General Information and History The Fund
17. Investment Objective and Policies Investment Objectives and Policies
18. Management Management
19. Control Persons and Principal Holders Principal Holders of Securities
of Securities
20. Investment Advisory and Other Services Investment Advisory and Other Services
21. Brokerage Allocation and Other Practices Brokerage Allocation and Other Practices
22. Tax Status Tax Status
23. Financial Statements Financial Statements
</TABLE>
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* Not applicable
<PAGE>
Subject to Completion
Preliminary Prospectus dated July __, 1996
A Registration Statement relating to these securities has been filed
with the Securities and Exchange Commission but has not yet become effective.
Information contained herein is subject to completion or amendment. 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 the 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.
<PAGE>
PROSPECTUS
1,500,000 Shares
CAM BALANCED FUND, INC.
Common Stock
CAM Balanced Fund, Inc., (the "Fund") is a newly organized, closed-end
diversified management investment company. The Fund's investment objective is
capital appreciation with a secondary objective of income. The Fund seeks to
achieve its investment objective by investing in a diversified portfolio of
equity and fixed income securities. Under normal conditions, at least 50% of the
Fund's total assets will be invested in equity securities and at least 25 % of
the Fund's assets will be invested in fixed income senior securities. There can
be no assurance the Fund's investment objective will be achieved. See
"Investment Strategies. "
CAM Investment Advisors, Inc. will be the Fund's Investment Advisor and
Wolf, Webb, Burk & Campbell, Inc. will be the Fund's Sub-Advisor. See
"Management." The address of the Fund is c/o Rodney Square Management
Corporation, Rodney Square North, 1100 North Market Street, Wilmington, DE
19890, and its telephone number is (302) 651-8280.
Rodney Square Distributors, Inc. (the "Underwriter") acts as the
principal underwriter of the Fund's shares under a best efforts underwriting
arrangement. See "Plan of Distribution." The shares of the Fund's Common Stock
are being offered subject to the subscription and payment for not less than
1,500,000 shares offered hereby for an initial offering period of 30 days (which
may be extended for an additional 30 days).
Prior to this offering, there has been no public market for the Common
Stock of the Fund. During an initial period, which is not expected to exceed
_____ months from the date of this Prospectus, the Fund's shares will not be
listed on any securities exchange. The Underwriter does not intend to
make a market in the Fund's shares. Consequently, it is anticipated that an
investment in the Fund will be illiquid during such period. The Fund intends to
apply for listing on the American Stock Exchange as soon as practicable after
completion of this offering. There is no assurance, however, that the Common
Stock of the Fund will be accepted for listing.
Shares of closed-end investment companies have in the past frequently
traded at discounts from their net asset values. The risk of loss associated
with this characteristic of closed-end investment companies may be greater for
investors purchasing shares in the initial public offering and expecting to sell
shares soon after the completion thereof.
This Prospectus sets forth concisely the information that stockholders
should consider before investing in the Fund. Stockholders should retain this
Prospectus for future reference.
<PAGE>
Additional information about the Fund, contained in a Statement of Additional
Information, has been filed with the Securities and Exchange Commission and is
available upon request without charge by contacting the Fund at its telephone
number or address shown above. The Statement of Additional Information bears the
same date as, and is incorporated by reference in its entirety into, this
Prospectus. The table of contents of the Statement of Additional Information
appears at the end of this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Proceeds to
Registrant or Other
Price to Public Sales Load(1) Persons(2)
-------------- ------------- -------------------
Per Share $10.00 $0.70 $9.30
Total Minimum(3) $15,000,000 $1,050,000 $13,950,000
Total Maximum(3) $15,000,000 $1,050,000 $13,950,000
- --------------
(1) The Fund and the Investment Advisor have agreed to indemnify the Underwriter
against certain liabilities, including liability under the Securities Act of
1933.
(2) Before deduction of organizational and offering expenses payable by the
Fund, estimated at $100,000.
(3) A minimum of 1,500,000 shares and a maximum of 1,500,000 shares are being
offered by the Fund.
Consummation of the offering is conditioned upon the subscription of at
least 1,500,000 shares by______________, 1996 (subject to extension for up to 30
days in the discretion of the Fund). Subscriptions for shares received
will be placed in an escrow account at Wilmington Trust Company and will remain
uninvested pending the closing of the offering made by this Prospectus. The Fund
has the right to reject any subscription offer, in whole or in part, in which
case an amount equal to the rejected portion of such subscription offer will be
returned to the subscriber. If at least 1,500,000 shares offered hereby are not
subscribed for, all subscription payments held in escrow will be repaid to
subscribers as promptly after the end of the offering period as is practicable.
It is expected that delivery for the Fund shares will be made in
Wilmington, Delaware on or about _______________________ , 1996.
__________________, 1996
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus.
The Fund
CAM Balanced Fund, Inc. (the "Fund") is a newly organized, Maryland
corporation that is a closed-end, diversified management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"). The Fund is a balanced fund which intends to invest in equity securities,
fixed income securities, and cash and cash equivalents. See "Investment
Strategies."
The Offering
The Fund is offering a minimum of 1,500,000 shares and a maximum of
1,500,000 shares of Common Stock, par value $0.001 per share. Fund shares are
being offered on a "best efforts" basis by the Underwriter. If the Fund has not
received subscriptions for at least 1,500,000 shares by_______________ , 1996,
subject to extension for up to 30 days in the discretion of the Fund, all
subscriptions will be returned to the subscribers. See "Plan of Distribution"
and "Dividends, Voting and Liquidation Rights."
Investment Objective
The Fund's investment objective is capital appreciation, with a
secondary objective of income. The Fund seeks to achieve its objective by
investing in a diversified portfolio of equity and fixed income securities.
Under normal conditions, at least 50% of the Fund's total assets will be
invested in equity securities and at least 25% of the Fund's total assets will
be invested in fixed income senior securities. The Fund is designed for
investors seeking long-term capital appreciation. See "Investment Strategies."
Investment Advisor and Sub-Advisor
CAM Investment Advisors, Inc. (the "Investment Advisor"), a registered
investment adviser, will act as the Fund's investment adviser. The Investment
Advisor is a newly organized company and has no previous experience managing
mutual funds. The Investment Advisor has retained Wolf, Webb, Burk & Campbell,
Inc. (the "Sub-Advisor") pursuant to a sub-advisory agreement to assist in the
selection of, and to manage, the Fund's assets. The Sub-Advisor currently
manages over $400 million. Both the Investment Advisor and the Sub-Advisor
are wholly-owned subsidiaries of Consolidated Asset Management, Inc. See
"Management."
<PAGE>
Administrator
Rodney Square Management Corporation (the "Administrator") will act as
the Fund's administrator, and accounting and pricing agent. The Administrator
currently provides administrative services to a number of investment companies.
See "Management."
Custodian and Transfer Agent
Wilmington Trust Company will serve as the Fund's custodian and
transfer and dividend disbursing agent. See "Management."
Listing
The Fund intends to list its shares on the American Stock Exchange. It
is expected that a liquid trading market for the Fund's shares will exist on the
American Stock Exchange and on other markets where such shares are traded.
Shares of closed-end investment companies frequently trade at a discount to net
asset value, but in some cases trade at net asset value or a premium. Because
the market price of the Fund's shares will be determined by factors including
trading volume, general market and economic conditions, and other factors beyond
the control of the Fund, the Fund cannot predict whether its shares will trade
at, below or above their net asset value.
Dividends and Distributions
The Fund intends to distribute its net investment income on a
semi-annual basis and to distribute its net capital gains (if any) at least
annually. See "Distributions and Taxes."
Automatic Dividend Reinvestment Plan
The Fund has an automatic dividend reinvestment plan (the "Plan") under
which all dividends and capital gains distributions are automatically reinvested
in additional shares of the Fund unless a stockholder elects to receive such
dividends and distributions in cash. Stockholders who intend to hold their
shares through a broker or nominee should contact such broker or nominee to
confirm that they may participate in the Plan. See "Automatic Dividend
Reinvestment Plan."
-2-
<PAGE>
FEE TABLE
Shareholder Transaction Expenses
Sales Load (as a percentage of offering price) 7%
Dividend Reinvestment Plan Fees None
Annual Expenses (as a percentage of net assets)
Management Fees 1.00%
Other Expenses 0.52%
----
Total Annual Expenses 1.52%
----
Example 1 year 3 years 5 years 10 years
- ------- ------ ------- ------- --------
You would pay the following
expenses on a $1,000
investment, assuming a 5%
annual return $22 $55 $89 $187
--- --- --- ----
The purpose of the Fee Table is to assist stockholders in understanding
the various costs and expenses that stockholders bear directly or indirectly.
"Other Expenses" are based on estimated amounts for the Fund's current fiscal
year. For a more complete description of these costs and expenses, see
"MANAGEMENT--Expenses of the Fund."
THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR RATES OF RETURN. THE ACTUAL EXPENSES AND RATES OF RETURN MAY
BE MORE OR LESS THAN THOSE SHOWN.
-3-
<PAGE>
PLAN OF DISTRIBUTION
Rodney Square Distributors, Inc. (the "Underwriter") serves as
underwriter of the shares on a "best efforts" basis. The Underwriter's offices
are located at Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890. The Underwriter and its affiliates, Rodney Square Management
Corporation and Wilmington Trust Company also provide administrative, custodial,
accounting and transfer agency services to the Fund. See "Management."
The Fund has been advised by the Underwriter that it proposes to offer
the shares of Common Stock to the public initially at the price to the public
set forth on the cover page of this Prospectus.
The shares offered hereby are being offered and sold by the Fund,
subject to the subscription and payment for not less than 1,500,000 shares
during an initial offering period of 30 days (which may be extended by the Fund,
without notice, for up to an additional 30 day period).
Solicitation of subscriptions for shares is expected to be made through
certain participating broker-dealers approved by the Fund or the Underwriter to
whom the Fund will pay a commission of 7% (or $0.70 per share) for each share
sold through them. It is anticipated that___________ will be participating
broker-dealers. However, there may be other participating broker-dealers in
addition to or in lieu of such broker-dealers. The Fund reserves the right to
terminate the status of participating broker-dealers at any time and/or to
approve additional participating broker-dealers. The Fund has not allotted any
specific amount of shares for sale by any broker-dealer.
The Underwriter is serving in that capacity without compensation from
the Fund. In the Underwriting Agreement, the Fund and the Investment Advisor
have agreed to indemnify the Underwriter against certain liabilities, including
certain liabilities under the Securities Act of 1933, as amended.
Subscriptions for shares, whether solicited by participating
broker-dealers or the Fund, are subject to acceptance by the Fund and to the
sale of the minimum number of shares offered hereby, and subscription payments
will be held in escrow and disbursed, all as described under "Subscription
Procedures."
SUBSCRIPTION PROCEDURES
In order to subscribe for the shares offered hereby, investors will be
required to execute a subscription agreement and deliver the executed
subscription agreement, together with a check payable to Wilmington Trust
Company, as Escrow Agent for CAM Balanced
-4-
<PAGE>
Fund, Inc. in the full amount of the investor's aggregate subscription price,
directly to Wilmington Trust Company (referred to in this Section as the
"Escrow Agent") at the following address:
Wilmington Trust Company, Escrow Agent for
CAM Balanced Fund, Inc.
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Forms of subscription agreements may be obtained from the Fund or from
participating broker-dealers. See "Plan of Distribution." Execution and delivery
of a subscription agreement by an investor to the Escrow Agent for the Fund will
constitute an offer by the investor to subscribe for shares. If a subscription
offer is accepted by the Fund, a counterpart of the subscription agreement or
other notice of acceptance, executed by the Fund, will be mailed to the
investor, until which time the investor's subscription will not be deemed to
have been accepted by the Fund. Neither acknowledgment of receipt of, nor
deposit and collection of, the check delivered by an investor will constitute
acceptance of an investor's subscription offer.
Prior to the Fund's acceptance of an investor's subscription offer, the
Fund will have the right, in its sole discretion, to reject any subscription
offer, in whole or in part, or to reduce the amount of such investor's
subscription. In the event an investor's subscription offer is rejected or the
amount of his subscription is reduced, the Fund will return the amount of the
rejected or reduced portion of his subscription price to the investor.
All checks received from investors will be deposited in a segregated
escrow account with the Escrow Agent, to be held by the Escrow Agent for
the benefit of the investors until the closing of the Fund's shares (the
"Closing"). The funds held by the Escrow Agent will remain uninvested during the
offering period.
If subscriptions for at least 1,500,000 shares have been received by
the Fund prior to the termination of the initial 30-day offering period (which
may be extended by the Fund, without notice, for up to an additional 30-day
period), a Closing will be held in which shares of Common Stock of the Fund will
be issued to subscribers at the public offering price. The Fund will commence
operations following the Closing.
If less than 1,500,000 shares are subscribed for during the initial or
extended offering period, the offering will terminate and all of the
subscribers' funds will be returned to subscribers as soon as practicable.
-5-
<PAGE>
USE OF PROCEEDS
The net proceeds of this offering, after deduction of the
organizational and offering expenses (estimated to be $100,000), will be
invested in accordance with the policies set forth under "Investment
Strategies." A portion of the organization and offering expenses of the Fund has
been advanced by the Investment Advisor and will be repaid by the Fund upon
Closing of this offering.
The Fund estimates that the net proceeds of this offering will be fully
invested in accordance with the Fund's investment objective and policies
within 3 months of the initial offering. Pending such investment, the proceeds
may be invested in securities of the U.S. Government, its agencies or
instrumentalities, and short-term, high quality money market instruments. See
"Investment Strategies. "
INVESTMENT STRATEGIES
The Fund expects to allocate its investments among a diversified
portfolio of equity securities combined with a selection of fixed income
securities (including cash) to provide additional current income and reduced
volatility. The allocation of the Fund's assets among various investment
vehicles will be based primarily on an assessment of the phase of the business
cycle and long-term growth potential of the U.S. and World economies to help
determine those industry sectors in which the Fund should invest. Within such
allocations, the Investment Advisor and Sub-Advisor, will seek to identify
equity and fixed-income investments which are expected to achieve the Fund's
objective.
The Sub-Advisor begins the investment process by examining
approximately 50 key macro-economic and monetary indicators to determine the
current phase of the economic cycle and its outlook for the next several months.
This top-down approach, emphasizing current and prospective economic trends, is
central to its selection of average maturities for fixed income securities and
the allocation of resources between equity and fixed income securities.
Equity Securities. The equity portion of the Fund's portfolio will be
diversified among highly liquid common stocks that, in the Sub-Advisor's
opinion, have above average price appreciation potential at the time of
purchase. In general, these securities are characterized as having above average
dividend yields and below average price earnings ratios relative to the stock
market in general, as measured by the Standard & Poor's 500 Composite Stock
Price Index (the "S&P 500"). Other factors, such as earnings and dividend growth
prospects as well as industry outlook and market share, also are considered.
Under normal conditions, at least 50% of the Fund's assets will be invested in
equity securities, most of which pay regular dividends. No less than 30% of the
Fund's assets will be invested
-6-
<PAGE>
in the common stock of issuers with total market capitalization of $1 billion or
greater at the time of purchase. The majority of the equity securities the Fund
invests in will be domestic issues, although the Fund may invest in American
Depository Receipts ("ADRs") as well. ADRs are receipts issued by a bank or
trust company in the United States evidencing ownership of underlying securities
of a foreign issuer.
The equity selection process begins with the "value" screens. During
this process each industry sector is subjected to a rigorous screening process
that identifies companies which together produce a "universe" of stocks which
the Sub-Advisor believes will compare favorably to many of the stocks included
in the S&P 500 with respect to some or all of the following characteristics: a
lower price to earnings ratio, a higher dividend yield, a lower price to book
value ratio, lower debt levels and a higher return on shareholders' equity.
The second step of the equity selection process is an earnings momentum
screen. During this process the Sub-Advisor reduces the universe by screening
for the companies that exhibit rising earnings expectations and actual earnings
acceleration. This step leads the Sub-Advisor to candidates whose earnings
momentum are expected to generate higher valuations in the near term. The
technical screens support fundamental research and aid in the timing of the
purchase and sale decisions.
The Sub-Advisor has a rigid sell discipline with its equity
investments. The Sub-Advisor thoroughly examines any stock which loses 15% or
more of its value from the time of purchase. The goal is to determine whether
the initial analysis remains valid. A position will normally be sold if the
Sub-Advisor sees any negative fundamental change in the company or its industry.
The Sub-Advisor will also review for sale any position whose price appreciation
has exceeded expectations.
Fixed Income Securities. The fixed income portion of the Fund's
portfolio will be invested in securities of the U.S. Government, its agencies
and instrumentalities, investment grade corporate bonds, debentures,
non-convertible fixed income preferred stocks, mortgage related securities,
government stripped mortgage related securities and other domestic asset backed
securities, Eurodollar certificates of deposit and Eurodollar bonds. The Fund
may invest up to 15% of its assets in "Yankee Bonds" (dollar-denominated bonds
sold in the United States by non-U.S. issuers). The fixed income securities held
by the Fund will be actively managed.
The Fund will limit its investments to securities that are considered
to be "investment grade." Investment grade bonds are bonds that are rated within
the four highest rating categories by a nationally recognized statistical rating
organization, i.e., BBB or better by Standard & Poor's Ratings Group, Division
of McGraw Hill ("S&P") or Baa or better by Moody's Investors Service, Inc.
("Moody's"). Bonds with the lowest investment grade rating (i.e., BBB or Baa) do
not have outstanding investment characteristics and may have speculative
characteristics as well. While bonds rated BBB or Baa are regarded as having
adequate capacity to pay interest and repay principal, adverse economic
conditions or
-7-
<PAGE>
changing circumstances could lead to a weakened capacity to pay interest and
repay principal. Subsequent to its purchase by the Fund, an issue of securities
may cease to be rated or its rating may be reduced below the minimum required
for purchase by the Fund. Neither event will require sale of these securities by
the Fund, but the Sub-Advisor will consider this event in its determination of
whether the Fund should continue to hold the securities.
The market value of the fixed income obligations held by the Fund can
be expected to vary inversely to changes in prevailing interest rates. The
average maturity of the Fund's holdings may be shortened if the Sub-Advisor
anticipates a rise in interest rates. Conversely, the average maturity may be
lengthened if interest rates are expected to decline.
The fixed income selection process employs three decision making
processes. First the Sub-Advisor makes a decision on the desired average
portfolio maturity. Based on its evolving economic outlook, this judgment is
reviewed from time to time. In an effort to reduce downside risk, the
Sub-Advisor will shorten maturities if it believes that interest rates will move
higher. Conversely, it will lengthen maturities as it believes that the prospect
for declining rates increases.
The second step in the process is the sector decision. The Sub-Advisor
will aim to take advantage of perceived valuation and yield disparities by
adjusting portfolio weightings, within the investment guidelines, among
securities of the U.S. government, its agencies and instrumentalities, and
mortgage-related securities, in addition to investment grade corporate issues.
The third part of the decision making process is the individual
security analysis. The Sub-Advisor will endeavor to choose those with the
appropriate characteristics to enhance the Fund. Regarding corporate securities,
the Sub-Advisor utilizes not only traditional fixed income ratios and ratings,
but also the equity outlook for each company under consideration.
Certain Securities, Investment Techniques and Risk Factors
Subject to the Fund's investment objective and policies described
above, the Fund may make certain other investments and use certain investment
practices as described below.
Temporary Investments. For temporary defensive purposes during periods
when the Sub-Advisor believes, in consultation with the Investment Advisor, that
pursuing the Fund's basic investment strategy may be inconsistent with the best
interests of its stockholders, the Fund may invest its assets in the following
money market instruments: securities of the U.S. government, its agencies and
instrumentalities (including those purchased in the form of custodial receipts),
repurchase agreements, certificates of deposit and bankers' acceptances issued
by U.S. banks or savings and loan associations having assets of at least $500
million as of the end of their most recent fiscal year and high quality
commercial paper. In addition, for the same purposes the Sub-Advisor may invest
in obligations issued or guaranteed by
-8-
<PAGE>
foreign governments or by any of their political subdivisions, authorities,
agencies or instrumentalities that are rated at least AA by S&P or Aa by Moody's
or, if unrated, are determined by the Sub-Advisor to be of equivalent quality.
The Fund may also invest in obligations issued by foreign banks, but will limit
its investments in such obligations to U.S. dollar-denominated obligations of
foreign banks which at the time of investment: (i) have assets with a value of
more than $10 billion; (ii) are among the 75 largest foreign banks in the world,
based on gross assets; (iii) have branches in the United States; and (iv) in the
opinion of the Sub-Advisor are of comparable quality to obligations issued by
United States banks identified in the first sentence of this paragraph. See
"Foreign Securities" below. The Fund also may hold a portion of its assets in
money market instruments or cash in amounts designed to pay expenses or pending
investments in accordance with its objectives and policies. Any temporary
investments may be purchased on a when-issued basis.
Repurchase Agreements. The Fund may engage in repurchase agreement
transactions. Under the terms of a typical repurchase agreement, the Fund would
acquire an underlying debt obligation for a relatively short period (usually not
more than one week) subject to an obligation of the seller to repurchase, and
the Fund to resell, the obligation at an agreed-upon price and time, thereby
determining the yield during the Fund's holding period. This arrangement results
in a fixed rate of return that is not subject to market fluctuations during the
Fund's holding period. The Fund may enter into repurchase agreements with member
banks of the Federal Reserve System and certain non-bank dealers approved by the
Board of Directors. Under each repurchase agreement, the selling institution is
required to maintain the value of the securities subject to the repurchase
agreement at not less than their repurchase price. The Sub-Advisor, acting under
the supervision of the Investment Advisor, reviews on an ongoing basis the value
of the collateral and the creditworthiness of those non-bank dealers with whom
the Fund enters into repurchase agreements. In entering into a repurchase
agreement, the Fund bears a risk of loss in the event that the other party to
the transaction defaults on its obligations and the Fund is delayed or prevented
from exercising its rights to dispose of the underlying securities, including
the risk of a possible decline in the value of the underlying securities during
the period in which the Fund seeks to assert its rights to them, the risk of
incurring expenses associated with asserting those rights and the risk of losing
all or a part of the income from the agreement. Repurchase agreements are
considered to be loans under the 1940 Act.
Reverse Repurchase Agreements. The Fund may enter into reverse
repurchase agreements. Pursuant to such agreements, the Fund would sell
portfolio securities to banks and other financial institutions, and agree to
repurchase them at an agreed upon date and price. At the time the Fund enters
into a reverse repurchase agreement, it will place in a segregated custodial
account liquid assets or high grade debt securities having a value equal to or
greater than the repurchase price, and the Sub-Advisor will continuously monitor
the account to ensure that the value is maintained. Reverse repurchase
agreements involve the risk that the market value of the securities sold by the
Fund may decline below the price the
-9-
<PAGE>
Fund is obligated to repurchase. Reverse repurchase agreements are considered to
be borrowings under the 1940 Act.
U.S. Government Obligations. The Fund may invest in securities which
are issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. Some U.S. Government obligations, such as U.S. Treasury
bills, Treasury notes and Treasury bonds, which differ only in their interest
rates, maturities and times of issuance, are supported by the full faith and
credit of the United States. Others are supported by: (i) the right of the
issuer to borrow from the U.S. Treasury, such as securities of the Federal Home
Loan Banks; (ii) the discretionary authority of the U.S. Government to purchase
the agency's obligations, such as securities of the Federal National Mortgage
Association; or (iii) only the credit of the issuer, such as securities of the
Student Loan Marketing Association. No assurance can be given that the U.S.
Government will provide financial support in the future to any agency or
instrumentality if it is not obligated to do so by law.
Securities guaranteed as to principal and interest by the U.S.
Government, its agencies or instrumentalities include: (i) securities for which
the payment of principal and interest is backed by an irrevocable letter of
credit issued by the U.S. Government or any of its agencies or
instrumentalities; and (ii) participations in loans made to foreign governments
or other entities that are so guaranteed. The secondary market for certain of
these participations is limited and, therefore, may be regarded as illiquid.
U.S. Government obligations may include zero coupon securities that may
be purchased when yields are attractive and/or to enhance portfolio liquidity.
Zero coupon U.S. Government obligations are debt obligations that are issued or
purchased at a significant discount from face value. The discount approximates
the total amount of interest the security will accrue and compound over the
period until maturity or the particular interest payment date at a rate of
interest reflecting the market rate of the security at the time of issuance.
Zero coupon U.S. Government obligations do not require the periodic payment of
interest. These investments benefit the issuer by mitigating its need for cash
to meet debt service, but also require a higher rate of return to attract
investors who are willing to defer receipt of cash. These investments may
experience greater volatility in market value than U.S. Government obligations
that make regular payments of interest. The Fund accrues income on these
investments for tax and accounting purchases, which is distributable to
stockholders and which, because no cash is received at the time of accrual, may
require the liquidation of other portfolio securities to satisfy the Fund's
distribution obligations, in which case the Fund will forego the purchase of
additional income producing assets with these funds. Zero coupon U.S. Government
obligations include STRIPS, which are issued by the U.S. Treasury as component
parts of U.S. Treasury bonds and represent scheduled interest and principal
payments on the bonds.
When-Issued and Delayed-Delivery Securities. To secure prices deemed
advantageous at a particular time, the Fund may purchase securities on a
when-issued or delayed-delivery basis, in which case delivery of the securities
occurs beyond the normal
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settlement period; payment for or delivery of the securities would be made prior
to the reciprocal delivery or payment by the other party to the transaction. The
Fund will enter into when-issued or delayed-delivery transactions for the
purpose of acquiring securities and not for the purpose of leverage. When-issued
securities purchased by the Fund may include securities purchased on a "when, as
and if issued" basis under which the issuance of the securities depends on the
occurrence of a subsequent event, such as approval of a merger, corporate
reorganization or debt restructuring. The Fund will establish with its
custodian, or with a designated sub-custodian, a segregated account consisting
of cash or other liquid high grade debt obligations in an amount equal to the
amount of its when-issued or delayed-delivery purchase commitments.
Securities purchased on a when-issued or delayed-delivery basis may
expose the Fund to risk because the securities may experience fluctuations in
value prior to their actual delivery. The Fund does not accrue income with
respect to a when-issued or delayed-delivery security prior to its stated
delivery date. Purchasing securities on a when issued or delayed-delivery basis
can involve the additional risk that the yield available from other securities
when the delivery takes place may be higher than that obtained from the
delivered security.
Mortgage Related Securities. The Fund may invest in mortgage related
securities. There are several risks associated with mortgage related securities
generally. One is that the monthly cash inflow from the underlying loans may not
be sufficient to meet the monthly payment requirements of the mortgage related
security. Prepayment of principal by mortgagors or mortgage foreclosures will
shorten the term of the underlying mortgage pool for a mortgage related
security. Early returns of principal will affect the average life of the
mortgage related securities remaining in the Fund. The occurrence of mortgage
prepayments is affected by factors including the level of interest rates,
general economic conditions, the location and age of the mortgage and other
social and demographic conditions. In periods of rising interest rates, the rate
of prepayment tends to decrease, thereby lengthening the average life of a pool
of mortgage related securities. Conversely, in periods of falling interest rates
the rate of prepayment tends to increase, thereby shortening the average life of
a pool. Reinvestment of prepayments may occur at higher or lower interest rates
than the original investment, thus affecting the yield of the Fund. Because
prepayments of principal generally occur when interest rates are declining, it
is likely that the Fund will have to reinvest the proceeds of prepayments at
lower interest rates than those at which the assets were previously invested.
Thus, mortgage related securities may have less potential for capital
appreciation in periods of falling interest rates than other fixed income
securities of comparable maturity, although these securities may have a
comparable risk of decline in market value in periods of rising interest rates.
To the extent that the Fund purchases mortgage related securities at a premium,
unscheduled prepayments, which are made at par, will result in a loss equal to
any unamortized premium.
Asset-Backed Securities. The Fund may purchase asset-backed securities.
Asset-backed securities consist of undivided fractional interests in pools of
mortgages, consumer loans or receivables held in a trust. Examples include
mortgage-backed securities,
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certificates for automobile receivables (CARS) and credit card receivables
(CARDS). Payments of principal and interest on the mortgages, loans or
receivables are passed through to certificate holders. Asset-backed securities
may be issued by either governmental or nongovernmental entities. Payment on
asset-backed securities of private issuers is typically supported by some form
of credit enhancement, such as a letter of credit, surety bond, limited
guaranty, or subordination. The extent of credit enhancement varies, but usually
amounts to only a fraction of the asset-backed security's par value until
exhausted. Ultimately, asset-backed securities are dependent upon payment of the
mortgages, consumer loans or receivables by individuals, consumer loans or
receivables by individuals, and the certificate holder frequently has no
recourse to the entity that originated the loans or receivables.
Forward Roll Transactions. In order to enhance current income, the Fund
may enter into forward roll transactions with respect to mortgage related
securities issued by the Government National Mortgage Association, the Federal
National Mortgage Association, and the Federal Home Loan Mortgage Corporation.
In a forward roll transaction, the Fund sells a mortgage related security to a
financial institution, such as a bank or broker-dealer, and simultaneously
agrees to repurchase a similar security from the institution at a later date at
an agreed-upon price. The mortgage related securities that are repurchased will
bear the same interest rate as those sold, but generally will be collateralized
by different pools of mortgages with different prepayment histories than those
sold. During the period between the sale and repurchase, the Fund will not be
entitled to receive interest and principal payments on the securities sold.
Proceeds of the sale will be invested in short term instruments, particularly
repurchase agreements, and the income from these investments, together with any
additional fee income received on the sale, is intended to generate income for
the Fund exceeding the yield on the securities sold. Forward roll transactions
involve the risk that the market value of the securities sold by the Fund may
decline below the repurchase price of the securities to be acquired. At the time
the Fund enters into a forward roll transaction, it will place in a segregated
custodial account cash, U.S. Government obligations or high quality debt
obligations having a value equal to the repurchase price (including accrued
interest) and will subsequently monitor the account to insure that the
equivalent value is maintained. Forward roll transactions are considered to be
borrowings under the 1940 Act.
Supranational Entities. The Fund may invest up to 25% of its total
assets in debt securities issued by supranational organizations such as the
International Bank for Reconstruction and Development (commonly referred to as
the World Bank), which was chartered to finance development projects in
developing member countries; the European Community, which is a twelve-nation
organization engaged in cooperative economic activities; the European Coal and
Steel Community, which is an economic union of various European nations' steel
and coal industries; and the Asian Development Bank, which is an international
development bank established to lend funds, promote investment and provide
technical assistance to member nations in the Asian and Pacific regions. As
supranational entities do not possess taxing authority, they are dependent upon
their members' continued support in order to meet interest and principal
payments.
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<PAGE>
Foreign Securities. As noted above, the Fund may invest in ADRs.
Investing in ADRs does not eliminate the risk inherent in investing in the
securities of foreign issuers. However, by investing in ADRs rather than
directly in stock of foreign issuers, the Fund can avoid currency risks during
the settlement period for either purchases or sales. In general, there is a
large, liquid market in the United States for ADRs. The information available
for ADRs is subject to the accounting, auditing and financial reporting
standards of the domestic market or exchange on which they are traded, which
standards are more uniform and more exacting than those to which many foreign
issuers may be subject.
Investing in securities issued by foreign companies and governments
involves considerations and potential risks not typically associated with
investing in domestic securities. Substantially less information may be
available about foreign companies, particularly emerging market country
companies, than about domestic companies and, even when public information about
such companies is available, it may be less reliable than information concerning
U.S. companies. Foreign companies generally are not subject to uniform
accounting, auditing and financial reporting standards and such standards may
differ, in some cases significantly, from standards in other countries,
including the United States. The values of foreign investments are affected by
changes in currency rates or exchange control regulations, restrictions or
prohibitions on the repatriation of foreign currencies, application of foreign
tax laws, including withholding taxes, changes in governmental administration or
economic or monetary policy (in the United States or abroad) or changed
circumstances in dealings between nations. Costs are also incurred in connection
with conversions between various currencies. In addition, foreign brokerage
commissions and custody fees are generally higher than those charged in the
United States, and foreign securities markets may be less liquid, more volatile
and less subject to governmental supervision than in the United States.
Investments in foreign countries could be affected by other factors not present
in the United States, including expropriation, confiscatory taxation, lack of
uniform accounting and auditing standards and potential difficulties in
enforcing contractual obligations and could be subject to extended clearance and
settlement periods.
Certain Investment Policies
The Fund has adopted certain investment restrictions that are
enumerated in detail in the Statement of Additional Information. Among other
restrictions, the Fund may not, with respect to 75% of its total assets taken
at market value, invest more than 5% of its total assets in the securities of
any one issuer, except securities issued by the U.S. Government, its agencies or
instrumentalities, or acquire more than 10% of any class of the outstanding
voting securities of any one issuer. In addition, the Fund may not invest more
than 25% of its total assets in securities of issuers in any one industry. The
Fund may not borrow money or issue senior securities, as defined in the 1940
Act, in an aggregate amount exceeding 33 1/3% of the value of the Fund's total
assets less liabilities (excluding borrowings other than certain temporary
borrowings) or mortgage, pledge, or hypothecate its assets. Forward roll
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<PAGE>
transactions and reverse repurchase agreements will be deemed to be senior
securities for purposes of this calculation.
The investment restrictions identified in the preceding paragraph are
"fundamental" policies, which means that they may not be changed without the
approval of a majority of the outstanding shares of the Fund, as defined in the
1940 Act. Unless otherwise specifically stated, however, the investment policies
and practices of the Fund are not fundamental and may be changed by its Board of
Directors.
Portfolio Turnover
Generally, the Fund will not trade in equity securities for short-term
profits but, when circumstances warrant, securities may be sold without regard
to the length of time held. The Fund may engage in active short-term trading to
benefit from yield disparities among different issues of fixed-income
securities, to seek short-term profits during periods of fluctuating interest
rates or for other reasons. Active trading will increase the Fund's rate of
turnover, certain transaction expenses and the incidence of short-term capital
gain taxable as ordinary income. The Fund expects that its annual turnover rate
will not exceed 50% for both its equity and fixed income investments. An annual
turnover rate of 100% would occur when all the securities held by the Fund are
replaced one time during a period of one year.
MANAGEMENT
Board of Directors
The Board of Directors of the Fund is responsible for the overall
management and operations of the Fund. The Statement of Additional Information
contains information concerning the directors.
Investment Advisor
CAM Investment Advisors, Inc. serves as the investment advisor to the
Fund. The Investment Advisor's address is Three Radnor Corporate Center, Suite
300, Radnor, PA 19087. The Investment Advisor is a newly-organized, wholly-owned
subsidiary of Consolidated Asset Management, Inc. The Investment Advisor has no
previous experience as an advisor.
Subject to the general supervision of the Board of Directors, the
Investment Advisor manages the Fund's portfolio, makes decisions with respect to
and places orders for all purchases and sales of the Fund's securities, and
maintains records relating to such purchases and sales. The Fund pays the
Advisor a monthly fee at the annual rate of 1.00% of the Fund's average weekly
net assets.
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<PAGE>
Sub-Advisor
Wolf, Webb, Burk & Campbell, Inc. (doing business as Wolf, Webb Asset
Management) serves as sub-advisor to the Fund. The Sub-Advisor's address is
1525 Locust Street, 11th Floor, Philadelphia, PA 19102. The Sub-Advisor is a
wholly-owned subsidiary of Consolidated Asset Management, Inc. Wolf, Webb Asset
Management was founded in 1980. Its investment professionals have over 125 years
of combined investment experience in the business of managing fixed income,
equity and balanced portfolios for corporations, governments, unions,
foundations and individuals. The Sub-Advisor currently manages over $400 million
in assets employing its value oriented investment philosophy.
Subject to the supervision of the Investment Advisor, the Sub-Advisor
assists in the selection of, and manages, the Fund's investment portfolio. For
its services to the Fund, the Sub-Advisor is entitled to a fee equal to 80% of
the fees (after subtracting any fee waivers) paid to the Investment Advisor by
the Fund for the preceding calendar month under the investment advisory
agreement, provided, however, that to the extent that the fees (after
subtracting any fee waivers) paid to the Investment Advisor by the Fund in the
preceding twelve calendar months exceed $500,000, the fees payable to the
Sub-Advisor shall be reduced to 20% of the fees (after subtracting any fee
waivers) paid to the Investment Advisor by the Fund for the preceding calendar
month. The Sub-Advisor's fee is paid by the Investment Advisor and not by the
Fund.
Fund Manager
Raymond J. Munsch and Andrew L. Newcomb are the persons primarily
responsible for the day-to-day management of the Fund's investment portfolio.
Mr. Munsch is the President and Chief Investment Officer of the Sub-Advisor. Mr.
Newcomb is a Vice President and portfolio manager of the Sub-Advisor.
Administrator
Rodney Square Management Corporation serves as the Fund's Administrator
pursuant to an Administration and Accounting Services Agreement with the Fund.
The Administrator is a wholly-owned subsidiary of Wilmington Trust Company, the
Fund's custodian and transfer agent, and is affiliated with the Underwriter.
The Administrator's address is Rodney Square North, 1100 North Market Street,
Wilmington, DE 19890. The Administrator supplies office facilities,
non-investment related statistical and research data, stationary and office
supplies, executive and administrative services, corporate secretarial services,
internal auditing and regulatory compliance services to the Fund. The
Administrator prepares information for meetings of the Board of Directors,
assists in the preparation of reports to stockholders, prepares proxy statements
and makes filings with the SEC and state securities authorities. The
Administrator also performs certain accounting and pricing services for the
Fund, including the weekly
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<PAGE>
calculation of the Fund's net asset value, and certain budgeting and financial
reporting and compliance monitoring activities. For its services as
Administrator, Rodney Square receives a fee, payable monthly, at the annual rate
of $35,000 per year, plus 0.05% of the Fund's average weekly net assets in
excess of $50 million. The Administrator also receives reimbursement from the
Fund for out-of-pocket expenses.
Custodian and Transfer Agent
Wilmington Trust Company, Rodney Square North, 1100 North Market
Street, Wilmington, DE 19890, serves as the Fund's custodian and Transfer Agent
and Automatic Dividend Reinvestment Plan Agent.
Expenses of the Fund
The Fund pays all of its expenses other than those expressly assumed by
the Fund's service providers. The expenses payable by the Fund may include,
but are not limited to: advisory fees payable to the Investment Advisor;
administration and accounting services fees payable to the Administrator; audits
by independent public accountants; fees payable to Wilmington Trust Company as
transfer agent and custodian; taxes and the preparation of the Fund's tax
returns; brokerage fees and commissions; interest; cost of director and
stockholder meetings; printing and mailing reports to stockholders; fees for
filing reports with regulatory bodies and the maintenance of the Fund's
existence; membership dues for investment company industry trade associations;
legal fees; fees to federal and state authorities for the registration of
shares; fees and expenses of directors who are not officers, employees or
stockholders of the Investment Advisor or its affiliates; insurance and fidelity
bond premiums; and any extraordinary expenses.
DISTRIBUTIONS AND TAXES
The Fund intends to qualify as a "regulated investment company" under
the Internal Revenue Code of 1986, as amended (the "Code"). This qualification
generally relieves the Fund of liability for federal income taxes to the extent
the Fund's earnings are distributed in accordance with the Code.
Qualification as a regulated investment company under the Code for a
taxable year requires, among other things, that the Fund distribute to its
stockholders an amount equal to at least 90% of its investment company taxable
income for such taxable year. In general, the Fund's investment company taxable
income will be its taxable income, including dividends, interest and the excess,
if any, of net short-term capital gain over net long-term capital loss, subject
to certain adjustments, and excluding the excess, if any, of net long-term
capital gain for the taxable year over net short-term capital loss. Dividends
attributable to investment company taxable income will be taxable to
stockholders as ordinary income, whether the dividends are paid in cash or
reinvested in shares. The dividends received deduction for
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corporations that own shares in the Fund will apply to ordinary income
distributions from the Fund to the extent of such stockholders' ratable share of
the total qualifying dividends received by the Fund from domestic corporations
for the taxable year.
The Fund intends to designate as capital gain dividends any
distributions by the Fund of the excess of net long-term capital gain over net
short-term capital loss. Such capital gain dividends will be taxable to
stockholders as long-term capital gain, regardless of how long the stockholder
has held the Shares and whether such distributions are received in cash or
reinvested in additional shares of Common Stock. Such distributions are not
eligible for the dividends received deduction for corporations.
Any distributions by the Fund in excess of its investment company
taxable income and capital gains generally constitute a nontaxable return of
capital to stockholders to the extent of each stockholder's tax basis in his or
her shares (causing a reduction in such basis), and thereafter, to the extent of
any excess over such basis, capital gain.
Dividends declared in October, November or December of any year payable
to stockholders of record as of a specified date in such months will be deemed
to have been received by stockholders and paid by the Fund on December 31 of
such year, if such dividends are actually paid during January of the following
year.
Prior to purchasing shares, the impact of distributions which are
expected to be declared or have been declared, but have not been paid, should be
carefully considered. Any such distributions although in effect a return of
capital, are subject to tax as discussed above.
A taxable gain or loss may be recognized by a stockholder upon his or
her sale of shares of the Fund depending upon the tax basis and their price at
the time of sale. Generally, a stockholder may include brokerage costs incurred
upon the purchase and/or sale of Fund shares in his or her tax basis for such
shares for the purpose of determining gain or loss on a sale of such shares. If
a stockholder holds shares for six months or less and during that time receives
a capital gain dividend on those shares, any loss recognized on the sale or
exchange of those shares will be treated as long-term capital loss to the extent
of the capital gain dividend.
Stockholders will be advised at least annually as to the federal income
tax consequences of distributions made each year.
The foregoing discussion summarizes some of the important federal tax
considerations generally affecting the Fund and its stockholders who are U.S.
citizens or residents or domestic corporations, and is not intended as a
substitute for careful tax planning. Accordingly, investors in the Fund should
consult their tax advisors with specific reference to their own tax situations.
Stockholders are also advised to consult their tax advisors concerning state and
local taxes, which may differ from the federal income taxes described above.
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AUTOMATIC DIVIDEND REINVESTMENT PLAN
All distributions to stockholders whose shares are registered in their
own names will be automatically reinvested pursuant to the Automatic Dividend
Reinvestment Plan (the "Plan") in additional shares of the Fund, unless
stockholders elect to receive cash as provided below. Stockholders who choose to
hold their shares in the name of a broker or nominee should contact such broker
or nominee to determine whether or how they may participate in the Plan. There
is no service charge for participation in the Plan.
A stockholder may elect to withdraw from the Plan at any time and
thereby elect to receive future dividends in cash in lieu of shares of the Fund.
There will be no penalty for withdrawal from the Plan and stockholders who have
previously withdrawn from the Plan may rejoin it at any time. Changes in
elections must be in writing and should include the stockholder's name and
address as they appear on the Fund's records. They should be sent to the
Wilmington Trust Company (referred to in this Section as the "Agent"). An
election to withdraw from the Plan will, until such election is changed, be
deemed to be an election by a stockholder to take all subsequent distributions
in cash. Elections will only be effective for subsequent distributions with a
record date of at least fifteen (15) days after such elections are received by
the Agent.
Funds credited to a participant's account will be used to purchase
shares of the Fund's Common Stock (the "Purchase"). The Agent will attempt,
commencing on the first trading day and ending on the tenth trading day
following the record date, to acquire shares in the open market at a price, plus
commission, which is less than the net asset value per share most recently
published by the Fund prior to any purchase (the "Net Asset Value"). If and to
the extent that the Agent is unable to acquire sufficient shares of the Fund's
Common Stock at a price plus commission less than the Net Asset Value, the Fund
will issue to the Agent shares of the Fund's Common Stock, valued at the Net
Asset Value, in the aggregate amount of the remaining value of the distribution.
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The automatic reinvestment of dividends and distributions will not
relieve participants of any income taxes that may be payable (or required to be
withheld) on dividends or distributions. See "DISTRIBUTIONS AND TAXES."
Stockholders participating in the Plan may receive benefits not
available to stockholders not participating in the Plan. If the market price
plus commissions of the Fund's shares is above the net asset value, participants
in the Plan will receive shares of the Fund at net asset value, which is less
than they could otherwise purchase them in the open market and will have shares
with a market value greater than the value of any cash distribution they would
have received. There can be no assurance that the market price of the Fund's
shares of common stock will exceed their net asset value.
The Fund will increase the price at which its shares may be issued to
the Plan if the net asset value of the shares is less than 95% of the fair
market value of such shares on the payment date of any distribution of net
investment income or net capital gain, unless the Fund receives a legal
opinion from independent counsel that the issuance of shares at net asset value
under these circumstances will not have a material effect upon the federal
income tax liability of the Fund.
The Fund reserves the right to amend the Plan.
Additional information about the Plan may be obtained from the Agent.
See "MANAGEMENT--Custodian and Transfer Agent."
DIVIDENDS, VOTING AND LIQUIDATION RIGHTS
The Fund has one class of shares of Common Stock, par value $0.001 per
share, of which 100,000,000 shares are authorized. When issued, shares of Common
Stock are fully paid and non-assessable. The Fund's shares have no pre-emptive,
conversion, exchange or redemption rights. Each share of the Fund's Common Stock
has one vote and shares equally in dividends and distributions when and if
declared by the Fund and in the Fund's net assets upon liquidation. All voting
rights for the election of directors are non-cumulative. Consequently, the
holders of more than 50% of the shares can elect 100% of the directors then
nominated for election if they choose to do so and, in such event, the holders
of the remaining shares will not be able to elect any directors.
STATEMENT OF ADDITIONAL INFORMATION
Additional information about the Fund is contained in a Statement of
Additional Information, which is available upon request without charge by
contacting the Fund. Set forth below is the Table of Contents of the Statement
of Additional Information:
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TABLE OF CONTENTS
The Fund
Investment Objectives and Policies
Management
Principal Holders of Securities
Investment Advisory and Other Services
Net Asset Value
Brokerage Allocation and Other Practices
Tax Status
Financial Statements
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===============================================================================
No person has been authorized to give any information or to make any
representation not contained in this Prospectus, and, if given or made, such
information must not be relied upon as having been authorized by the Fund or the
Advisor. The Prospectus does not constitute an offering by the Fund in any
jurisdiction in which such offering may not be lawfully made.
----------------------
TABLE OF CONTENTS
Prospectus Summary................................... 1
Fee Table ........................................... 3
Plan of Distribution ................................ 4
Subscription Procedures ............................. 4
Use of Proceeds ..................................... 6
Investment Strategies ............................... 6
Management .......................................... 14
Distributions and Taxes ............................. 16
Automatic Dividend Reinvestment Plan ................ 18
Dividends, Voting and Liquidation Rights.. .......... 19
Statement of Additional Information ................. 19
===============================================================================
===============================================================================
CAM BALANCED FUND, INC.
--------------
PROSPECTUS
--------------
_____________, 1996
===============================================================================
<PAGE>
CAM BALANCED FUND, INC.
Part B
Statement of Additional Information
_________, 1996
TABLE OF CONTENTS
Page
----
THE FUND................................................................... 2
INVESTMENT OBJECTIVE AND POLICIES.......................................... 2
MANAGEMENT................................................................. 9
PRINCIPAL HOLDERS OF SECURITIES............................................ 11
INVESTMENT ADVISORY AND OTHER SERVICES..................................... 11
NET ASSET VALUE............................................................ 15
BROKERAGE ALLOCATION AND OTHER PRACTICES................................... 15
TAX STATUS................................................................. 16
FINANCIAL STATEMENTS........................................................19
This Statement of Additional Information applies to the CAM Balanced
Fund, Inc. (the "Fund"). This Statement of Additional Information is meant to be
read in conjunction with the Prospectus dated ___________, 1996 (the
"Prospectus"), which describes the Fund. This Statement of Additional
Information is incorporated by reference in its entirety into the Prospectus.
Because this Statement of Additional Information is not itself a prospectus, no
investment in shares of the Fund should be made solely upon the information
contained herein. Copies of the Prospectus may be obtained by calling
___________________, at (__) ___________. Capitalized terms used but not defined
herein have the same meaning as in the Prospectus.
<PAGE>
THE FUND
The Fund is a newly organized Maryland corporation that is a
closed-end, diversified management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act").
INVESTMENT OBJECTIVE AND POLICIES
The Prospectus for the Fund describes the investment objective and
policies of the Fund. The following is a discussion of the various investments
of, and techniques employed by, the Fund. The following information supplements
and should be read in conjunction with the description of the investment
objective and policies of the Fund in the Prospectus.
Portfolio Turnover
The portfolio turnover rate is calculated by dividing the
lesser of purchases or sales of portfolio securities for the year by the monthly
average value of the portfolio securities. The calculation excludes all
securities whose maturities at the time of acquisition were one year or less.
Portfolio turnover may vary greatly from year to year as well as within a
particular year, and may also be affected by requirements which enable the Fund
to receive certain favorable tax treatment. Portfolio turnover will not be a
limiting factor in making portfolio decisions.
Types of Obligations, Investment Risks, and Other Investment Information
The following discussion supplements the description of such
investments in the Prospectus.
Bank Certificates of Deposit, Bankers' Acceptances and
Interest-Bearing Savings Deposits. Certificates of deposit, bankers' acceptances
and interest-bearing savings deposits are eligible investments for the Fund.
Certificates of deposit are negotiable certificates issued against funds
deposited in a commercial bank for a definite period of time and earning a
specified return. Bankers' acceptances are negotiable drafts or bills of
exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Interest-bearing savings deposits are non-negotiable deposits maintained at a
banking institution for a specified period of time at a specified interest rate.
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Commercial Paper. The investment policies of the Fund
permit investment in commercial paper. Commercial paper consists of unsecured
promissory notes issued by corporations. Issues of commercial paper
will normally have maturities of less than nine months and fixed rates of
return, although such instruments may have maturities of up to one year.
Repurchase Agreements. The Fund is permitted to enter into
repurchase agreements with respect to its portfolio securities. Pursuant to such
agreements, the Fund acquires securities from financial institutions such as
banks and broker-dealers as are deemed to be creditworthy subject to the
seller's agreement to repurchase and the agreement of the Fund to resell such
securities at a mutually agreed upon date and price. The repurchase price
generally equals the price paid by the Fund plus interest negotiated on the
basis of current short-term rates (which may be more or less than the rate on
the underlying portfolio security). Securities subject to repurchase agreements
will be held by a custodian or sub-custodian of the Fund or in the Federal
Reserve/Treasury Book-Entry System. The seller under a repurchase agreement will
be required to deliver instruments the value of which is 102% of the repurchase
price (excluding accrued interest), provided that notwithstanding such
requirement, the Investment Advisor or Sub-Advisor shall require that the value
of the collateral, after transaction costs (including loss of interest)
reasonably expected to be incurred on a default, shall be equal to or greater
than the resale price (including interest) provided in the agreement. If the
seller defaulted on its repurchase obligation, the Fund would suffer a loss
because of adverse market action or to the extent that the proceeds from a sale
of the underlying securities were less than the repurchase price under the
agreement. Bankruptcy or insolvency of such a defaulting seller may cause the
Fund's rights with respect to such securities to be delayed or limited.
Repurchase agreements are considered to be loans by the Fund under the 1940 Act.
U.S. Government Obligations. The Fund is permitted to make
investments in U.S. Government obligations. Such obligations include Treasury
bills, certificates of indebtedness, notes and bonds, and issues of such
entities as the Government National Mortgage Association, Export-Import Bank of
the United States, Tennessee Valley Authority, Resolution Funding Corporation,
Farmers Home Administration, Federal Home Loan Banks, Federal Intermediate
Credit Banks, Federal Farm Credit Banks, Federal Land Banks, Federal Housing
Administration, Federal National Mortgage Association, Federal Home Loan
Mortgage Corporation, and the Student Loan Marketing Association. Treasury bills
have maturities of one year or less, Treasury notes have maturities of one to
ten years and Treasury bonds generally have maturities of more than ten years.
Some of these obligations, such as those of the Governmental National Mortgage
Association, are supported by the full faith and credit of the U.S. Treasury;
others, such as those of the Export-Import Bank of
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<PAGE>
the United States, are supported by the right of the issuer to borrow from the
Treasury; others, such as those of the Federal National Mortgage Association,
are supported by the discretionary authority of the U.S. Government to purchase
the agency's obligations; still others, such as those of the Student Loan
Marketing Association, are supported only by the credit of the instrumentality.
No assurance can be given that the U.S. Government would provide financial
support to any agency or instrumentality if it were not obligated to do so by
law.
Asset-Backed Securities. The Fund may invest in asset-backed
securities, including mortgage-backed securities representing an undivided
ownership interest in a pool of mortgages, such as certificates of the
Government National Mortgage Association ("GNMA") and the Federal Home Loan
Mortgage Corporation ("FHLMC"). These certificates are in most cases
pass-through instruments, through which the holder receives a share of all
interest and principal payments from the mortgages underlying the certificate,
net of certain fees. The average life of a mortgage-backed security varies with
the underlying mortgage instruments, which have maximum maturities of 40 years.
The average life is likely to be substantially less than the original maturity
of the mortgage pools underlying the securities as the result of prepayments,
mortgage refinancings or foreclosure. Mortgage prepayment rates are affected by
factors including the level of interest rates, general economic conditions, the
location and age of the mortgage and other social and demographic conditions.
Such prepayments are passed through to the registered holder with the regular
monthly payments of principal and interest and have the effect of reducing
future payments.
The Fund may also invest in non-mortgage backed securities
including interests in pools of receivables, such as motor vehicle installment
purchase obligations and credit card receivables. Such securities are generally
issued as pass-through certificates, which represent undivided fractional
ownership interests in the underlying pools of assets. Such securities may also
be debt instruments, which are also known as collateralized obligations and are
generally issued as the debt of a special purpose entity organized solely for
the purpose of owning such assets and issuing such debt. Non-mortgage backed
securities are not issued or guaranteed by the U.S. Government or its agencies
or instrumentalities; however, the payment of principal and interest on such
obligations may be guaranteed up to certain amounts and for a certain time
period by a letter of credit issued by a financial institution (such as a bank
or insurance company) unaffiliated with the issuers of such securities.
-4-
<PAGE>
The purchase of non-mortgage backed securities raises
considerations peculiar to the financing of the instruments underlying such
securities. For example, most organizations that issue asset-backed securities
relating to motor vehicle installment purchase obligations perfect their
interests in the respective obligations only by filing a financing statement and
by having the servicer of the obligations, which is usually the originator, take
custody thereof. In such circumstances, if the servicer were to sell the same
obligations to another party, in violation of its duty not to do so, there is a
risk that such party could acquire an interest in the obligations superior to
that of the holders of the asset-backed securities. Also, although most of the
obligations grant a security interest in the motor vehicle being financed, in
most states the security interest in a motor vehicle must be noted on the
certificate of title to perfect such security interest against competing claims
of other parties. Due to the large number of vehicles involved, however, the
certificate of title to each vehicle financed, pursuant to the obligations
underlying the asset-backed securities, usually is not amended to reflect the
assignment of the seller's security interest for the benefit of the holders of
the asset-backed securities. Therefore, there is the possibility that recoveries
on repossessed collateral may not, in some cases, be available to support
payments on those securities. In addition, various state and federal laws give
the motor vehicle owner the right to assert against the holder of the owner's
obligation certain defenses such owner would have against the seller of the
motor vehicle. The assertion of such defenses could reduce payments on the
related asset-backed securities. Insofar as credit card receivables are
concerned, credit card holders are entitled to the protection of a number of
state and federal consumer credit laws, many of which give such holders the
right to set off certain amounts against balances owed on the credit card,
thereby reducing the amounts paid on such receivables. In addition, unlike most
other asset-backed securities, credit card receivables are unsecured obligations
of the cardholder.
The development of non-mortgage backed securities is at an
early stage compared to mortgage backed securities. While the market for
asset-backed securities is becoming increasingly liquid, the market for mortgage
backed securities issued by certain private organizations and non-mortgage
backed securities is not as well developed as that for mortgage backed
securities guaranteed by government agencies or instrumentalities.
Reverse Repurchase Agreements. As described in the Prospectus,
the Fund is permitted to borrow funds by entering into reverse repurchase
agreements with such financial institutions as banks and broker-dealers. Reverse
repurchase agreements are considered to be borrowings by the Fund under the 1940
Act. Whenever the Fund enters into a reverse repurchase agreement, it will place
in a segregated account maintained with its custodian liquid assets such as
cash, U.S. Government
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<PAGE>
securities or other liquid high grade debt securities having a value equal to
the repurchase price (including accrued interest) and the Investment Advisor or
Sub-Advisor will subsequently continuously monitor the account for maintenance
of such equivalent value. Reverse repurchase agreements are considered to be
borrowings by the Fund under the 1940 Act.
Foreign Investments. In determining whether to invest in the
securities of foreign issuers, the Investment Advisor or Sub-Advisor will
consider such factors as the characteristics of the particular issuer,
differences between economic trends and the performance of securities markets
within the U.S. and those within other countries, and also factors relating to
the general economic, governmental and social conditions of the country or
countries where the issuer is located. The extent to which the Fund will be
invested in foreign issuers will fluctuate from time to time depending on the
Investment Advisor's or Sub-Advisor's assessment of prevailing market, economic
and other conditions.
Bonds of Supranational Entities. The Fund may invest in bonds
of supranational entities. A supranational entity is an entity established or
financially supported by the national governments of one or more countries to
promote reconstruction or development. Examples of supranational entities
include, among others, the World Bank, the European Economic Community, the
European Coal and Steel Community, the European Investment Bank, the
Inter-American Development Bank, the Export-Import Bank and the Asian
Development Bank.
When-Issued Securities and Delayed Settlements. When the Fund
agrees to purchase securities on a "when-issued" or delayed settlement basis,
its custodian will set aside cash or liquid portfolio securities equal to the
amount of the commitment in a separate account. Normally, the custodian will set
aside portfolio securities to satisfy a purchase commitment. In such a case, the
Fund may be required subsequently to place additional assets in the separate
account in order to assure that the value of the account remains equal to the
amount of the commitment. It may be expected that the net assets of the Fund
will fluctuate to a greater degree when it sets aside portfolio securities to
cover such purchase commitments than when it sets aside cash. The Fund does not
intend to engage in these transactions for speculative purposes but only in
furtherance of its investment objective.
The Fund will purchase securities on a when-issued or delayed
settlement basis only with the intention of completing the transaction. If
deemed advisable as a matter of investment strategy, however, the Fund may
dispose of or renegotiate a commitment after it is entered into, and may sell
securities it has committed to purchase before those securities are delivered to
the Fund on the settlement date. In these cases the Fund may realize a taxable
capital gain or loss.
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<PAGE>
When the Fund engages in when-issued and delayed settlement
transactions, it relies on the other party to consummate the trade. Failure of
such party to do so may result in the Fund's incurring a loss or missing an
opportunity to obtain a price considered to be advantageous.
The market value of the securities underlying a when- issued
purchase to purchase securities, or a delayed settlement and any subsequent
fluctuations in their market value is taken into account when determining the
market value of the Fund starting on the day the Fund agrees to purchase the
securities. The Fund does not earn interest on the securities it has committed
to purchase until they are paid for and delivered on the settlement date.
Other Investment Limitations
The Prospectus for the Fund summarizes certain fundamental
policies that may not be changed with respect to the Fund without the
affirmative vote of the holders of the majority of the Fund's outstanding
shares. The following is a complete list of fundamental policies which may not
be changed with respect to the Fund without such a vote.
The Fund may not:
1. Purchase securities (except securities issued by the U.S.
Government, its agencies or instrumentalities) if, as a result more than 5% of
its total assets will be invested in the securities of any one issuer, except
that up to 25% of its total assets may be invested without regard to this 5%
limitation.
2. Act as a securities underwriter except to the extent that,
in connection with the disposition of portfolio securities, the Fund may be
deemed to be an underwriter under the Securities Act of 1933.
3. Purchase or sell real estate, except that the Fund may
invest in securities and instruments guaranteed by agencies or instrumentalities
of the U.S. Government and securities issued by companies which invest in real
estate or interests therein.
4. Purchase securities on margin (except for such short-term
credits as may be necessary for the clearance of transactions), make short sales
of securities or maintain a short position. For this purpose, the deposit or
payment by the Fund for initial or maintenance margin in connection with futures
contracts is not considered to be the purchase or sale of a security on margin.
-7-
<PAGE>
5. Purchase or sell commodities or commodity contracts, or
invest in oil, gas or mineral exploration or development programs, except that:
(a) it may invest in securities issued by companies which purchase or sell
commodities or commodity contracts or which invest in such programs; and (b) it
may purchase and sell futures contracts and options on futures contracts.
6. Purchase securities of other investment companies, except:
(a) in connection with a merger, consolidation, acquisition or reorganization;
(b) as may otherwise be permitted by the 1940 Act.
7. Purchase any securities which would cause 25% or more of
the value of its total assets at the time of such purchase to be invested in the
securities of one or more issuers conducting their principal business activities
in the same industry; provided, however, that: (a) there is no limitation with
respect to investments in obligations issued or guaranteed by the U.S.
Government and its agencies and instrumentalities; (b) each utility (such as
gas, gas transmission, electric and telephone service) will be considered a
single industry for purposes of this policy; and (c) wholly-owned finance
companies will be considered to be in the industries of their parents if their
activities are primarily related to financing the activities of their parents.
8. Purchase securities of any issuer if as a result it would
own more than 10% of the voting securities of such issuer.
9. Borrow money or issue senior securities, as defined in the
1940 Act, in an amount exceeding 33 1/3% of the value of its total assets less
liabilities (excluding borrowings other than certain temporary borrowings) or
mortgage, pledge, or hypothecate its assets. Forward roll transactions and
reverse repurchase agreements will be deemed to be senior securities for
purposes of this calculation. This restriction shall not apply to temporary
borrowings, transactions in currency, options, futures contracts and options on
futures contracts, or forward commitment transactions.
10. Make loans, except that it may purchase or hold debt
obligations in accordance with its investment objective, policies and
limitations; may enter into repurchase agreements with respect to securities;
and may lend portfolio securities against collateral consisting of cash or
securities of the U.S. Government and its agencies and instrumentalities which
are consistent with its permitted investments.
* * *
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<PAGE>
If a percentage restriction is satisfied at the time of
investment or other action by the Fund, a later increase or decrease in such
percentage resulting from a change in asset value will not constitute a
violation of such restriction.
For the purposes of Investment Limitation 8 above, the Fund
treats, in accordance with the current views of the staff of the Securities and
Exchange Commission (the "SEC") and as a matter of non-fundamental policy that
may be changed without a vote of shareholders, all supranational organizations
as a single industry and each foreign government (and all of its agencies) as a
separate industry.
In order to permit the sale of the Fund's shares in certain
states, the Fund may make commitments more restrictive than the investment
policies and limitations described above.
MANAGEMENT
Directors and Officers of the Fund
The directors and officers of the Fund, their addresses, ages
and principal occupations during the past five years are:
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<TABLE>
<CAPTION>
Name and Address Age Position with Fund Principal Occupations
---------------- --- ------------------ ---------------------
<S> <C> <C> <C>
*J. Kenneth Croney, Jr. 28 Director, President and President, CAM Investment Advisors, Inc. (since
Three Radnor Corporate Treasurer 1996); President, Secretary and Treasurer,
Center Consolidated Asset Management, Inc. (since 1994);
Suite 300 prior thereto, Investment Consultant, Kidder Peabody
Radnor, PA 19087 & Co. (from 1992-1994); Analyst, Viking Graham Inc.
prior thereto.
*John P. McNiff 35 Director, Vice-President Vice-President, CAM Investment Advisors, Inc. (since
Three Radnor Corporate 1996); Shareholder, Consolidated Asset Management,
Center Inc. (since 1994); Director, Lincoln Mortgage Co.
Suite 300 (since 1991); Managing Director, Longwood Partners
Radnor, PA 19087 (registered investment advisor) (since 1993);
Corporate Secretary, WinCup Inc. (manufacturing)
(since 1992); Managing Director, Trinity Capital
Partners, prior thereto.
Michael T. Byrne Director General Partner, Mid Coast Capital (since 1994);
15 Muirfield Ct. prior thereto, Stockbroker, Kidder Peabody & Co.
Medford, NJ 08055
Marvin P. Bush 39 Director President, Winston Partners Group, L.P. (registered
6292 Ft. Hunt Road investment advisor) (since 1993); prior thereto, Vice
Alexandria, VA 22307 President, John Stewert Darrell & Co. (registered
investment advisor) prior thereto; Director, Custom
Paper Group, Inc.; Director, Kerrco, Inc.
Mark R. Graham 38 Director President and Director, Drake, Goodwin & Graham
230 Park Avenue (since 1992); prior thereto, Vice President, Morgan
New York, NY 10169 Stanley & Co.; Vice Chairman and Director, NATC
Holdings USA, Inc.; President and Director, London
Energy, L.L.C.; Chairman of the Board and President,
Millennium III Enterprises, Inc.
Henry S. Hilles, Jr. 56 Secretary Partner in the law firm of Drinker Biddle & Reath.
1345 Chestnut Street
Philadelphia National
Bank Building
Suite 1100
Philadelphia, PA 19107
</TABLE>
- -----------------
* Messrs. Croney and McNiff are "interested directors" of the Fund as defined
in the 1940 Act.
No officer or director of the Fund who is also an officer or
director of the Investment Advisor receives any compensation for services as a
director of the Fund. The Fund pays each director who is not affiliated with the
Investment Advisor an annual fee of $2,000 plus $500 for each meeting attended
in person and $250 for each meeting attended by telephone conference call. Each
director is reimbursed for out-of-pocket expenses incurred as a director.
Drinker Biddle & Reath, of which Mr. Hilles is a partner, receives legal fees as
counsel to the Fund.
The Fund has not completed its first full fiscal year. The
following chart represents the estimated aggregate compensation to be paid to
each director for a fiscal year.
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<PAGE>
<TABLE>
<CAPTION>
Estimated Retirement Total Compensa-
Aggregate Benefits Accrued Estimated Annual tion from
Compensation as part of Fund Benefits upon Registrant Paid
Name of Person/Position from the Fund Expenses Retirement to Director
- ----------------------- ------------- ---------------- ---------------- -----------
<S> <C> <C> <C> <C>
J. Kenneth Croney, Jr. $0 $0 $0 $0
Director
John P. McNiff $0 $0 $0 $0
Director
Michael T. Byrne $4,000 $0 $0 $4,000
Director
Marvin P. Bush $4,000 $0 $0 $4,000
Director
Mark R. Graham $4,000 $0 $0 $4,000
Director
</TABLE>
The Audit Committee of the Board is comprised of the directors
who are not "interested directors." Members of the Audit Committee are entitled
to receive a fee of $500 for each meeting that is not held in conjunction with a
regular meeting of the Board. The Board does not have an Executive Committee.
PRINCIPAL HOLDERS OF SECURITIES
The Directors and Officers as a group own less than 1% of the
common stock of the Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
The Investment Advisor
The Fund's investment advisor is CAM Investment Advisors, Inc.
The Investment Advisor and Sub-Advisor are both wholly-owned subsidiaries of
Consolidated Asset Management, Inc. ("CAM"). CAM is controlled by J. Kenneth
Croney, Jr. and John P. McNiff, directors of the Fund. CAM is a Delaware
corporation founded in 1994 which acquires and consolidates middle market
investment advisors.
In the Investment Advisory Agreement dated ____________, 1996
between the Fund and the Investment Advisor (the "Investment Advisory
Agreement"), the Investment Advisor has agreed to provide a continuous
investment program and strategy for the Fund, including investment research and
management with respect to all of its securities, other investments, and cash
equivalents and to make decisions with respect to and place orders for all
purchases and sales of portfolio securities; provide personnel to act as
officers of the Fund and pay the salaries of such officers; transmit information
concerning purchases and sales of the Fund's portfolio securities to the
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<PAGE>
custodian for proper settlement; supply the Fund and its Board of Directors with
reports and statistical data as requested; and prepare a quarterly brokerage
allocation summary and a monthly security transaction listing for the Fund. The
Investment Advisor has also agreed to pay all expenses incurred by it in
connection with its activities other than the cost of securities, including
brokerage commissions, if any, purchased for the Fund. For the services provided
and the expenses assumed pursuant to the Investment Advisory Agreement, the Fund
has agreed to pay the Investment Advisor a fee, payable monthly, at the annual
rate of 1.00% of the average weekly net assets of the Fund. The Investment
Advisory Agreement also provides that the advisory fee shall be reduced as
required by expense limitations imposed upon the Fund by any state in which
shares of the Fund are sold.
The Investment Advisor is authorized by the Investment Advisory
Agreement to employ or associate with itself such persons as it believes are
appropriate to assist it in the performance of its duties. Any such person is
required to be compensated by the Investment Advisor and not the Fund, and to be
approved by the stockholders of the Fund as required by the 1940 Act.
Additionally, the Investment Advisory Agreement specifies that in the event of
the termination of any sub-advisory relationship for any reason, the Investment
Advisor may provide investment advisory services directly to the Fund without
further stockholder approval.
The Investment Advisory Agreement provides that the Investment Advisor
shall not be liable for any error of judgement or mistake of law or for any loss
suffered by the Fund in connection with the performance of the Investment
Advisory Agreement, except a loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services or a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the Investment
Advisor in the performance of its duties and obligations under the Investment
Advisory Agreement.
The Investment Advisory Agreement provides further that, unless sooner
terminated, it shall continue in effect until ________________________________
________, 1998, and thereafter, shall continue in effect for successive annual
periods, provided such continuance is specifically approved at least annually
(a) by the vote of a majority of those members of the Fund's Board of Directors
who are not interested persons of any party to the Investment Advisory
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Fund's Board of Directors or by vote of a majority of
the outstanding voting securities of the Fund. Notwithstanding the foregoing,
the Investment Advisory Agreement may be terminated at any time, without the
payment of any penalty, by the Fund (by vote of the Fund's Board of Directors or
by vote of a majority of the
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<PAGE>
outstanding voting securities of the Fund), or by the Investment Advisor on
sixty days' written notice. The Investment Advisory Agreement will immediately
and automatically terminate in the event of its assignment.
The Sub-Advisor
As authorized by the Investment Advisory Agreement, the Investment
Advisor has entered into a sub-advisory agreement (the "Sub-Advisory Agreement")
with Wolf, Webb, Burk & Campbell, Inc. (doing business as Wolf, Webb Asset
Management) (the "Sub-Advisor"). Pursuant to the Sub-Advisory Agreement, the
Sub-Advisor is responsible for providing a continuous investment program and
strategy for the Fund, including investment research and management with respect
to all securities and investments and cash equivalents of the Fund, determining
from time to time what securities and other investments will be invested,
reinvested, owned, held or traded by the Fund.
As compensation for its services under the Sub-Advisory Agreement, the
Investment Advisor pays the Sub-Advisor a fee on a monthly basis at the rate of
80% of the first $500,000 in annual investment advisory fees received by the
Investment Advisor, and 20% of the annual investment advisory fees received by
the Investment Advisor in excess of $500,000.
The Sub-Advisory Agreement contains a limitation on the liability of
the Sub-Advisor as is described above similar to that set forth for the
Investment Advisor.
The Sub-Advisory Agreement will be in effect until ______________,
1998, and will continue in effect for successive annual periods, provided such
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Fund's Board of Directors who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Fund's Board
of Directors or by vote of a majority of the outstanding voting securities of
the Fund. Notwithstanding the foregoing, the Sub-Advisory Agreement may be
terminated at any time on sixty days' written notice, without the payment of any
penalty, by the Fund (by vote of the Fund's Board of Directors or by vote of a
majority of the outstanding voting securities of the Fund), by the Investment
Advisor, or by the Sub-Advisor. The Sub-Advisory Agreement will immediately and
automatically terminate in the event of its assignment.
The Administrator
Rodney Square Management Corporation (the "Administrator"), Rodney
Square North, 1100 North Market Street, Wilmington, DE 19890, is a wholly-owned
subsidiary of Wilmington Trust Company. The Administrator also serves as
administrator to several other investment companies.
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<PAGE>
The Administrator provides administrative services to the Fund
as described in the Fund's Prospectus. Under the Administration and Accounting
Services Agreement, the Administrator has also agreed to provide certain
accounting, bookkeeping, pricing, dividend and distribution calculation services
with respect to the Fund. The Fund's Administration and Accounting Services
Agreement will continue in effect until _________, 1999, and thereafter for
successive periods of one year, provided the agreement is not sooner terminated.
The Fund's Administration and Accounting Services Agreement is terminable at any
time with respect to the Fund by the Fund's Board of Directors or by a vote of a
majority of the Fund's outstanding shares upon 60 days' notice to the
Administrator, or by the Administrator upon 180 days' notice to the Fund.
The Fund has agreed to pay the Administrator a fee for its
services as Administrator as described in the Prospectus. In addition, the Fund
has agreed to pay the Administrator a fee for its accounting services, accrued
and payable monthly, at the annual rate of $40,000 per year on the first $100
million in net assets, plus .02% of the average weekly net assets in excess of
$100 million of the average weekly net assets of the Fund.
Custodian and Transfer Agent
Wilmington Trust Company ("WTC") has been appointed custodian
for the Fund. As custodian of the assets of the Fund, WTC: (i) maintains a
separate account or accounts in the name of the Fund; (ii) holds and disburses
portfolio securities; (iii) makes receipts and disbursements of money; (iv)
collects and receives income and other payments and distributions on account of
portfolio securities; (v) responds to correspondence from security brokers and
others relating to its respective duties; and (vi) makes periodic reports
concerning its respective duties. WTC also serves as transfer agent, registrar
and dividend disbursing agent for the Fund.
For its services as custodian of the Fund's assets, WTC
receives a fee, payable monthly, at the annual rate of .02% on the first $50
million of average monthly net assets, .015% on the next $50 million of average
monthly net assets,and .0125% on the assets in excess of $100 million. Such fee
is subject to a minimum of $4,800 per year. For its services as transfer agent,
WTC receives a fee at annual charge of $3 per account. Such fee is subject to a
minimum of $9,000 per year. WTC is also entitled to out-of-pocket expenses for
its services as custodian and transfer agent.
-14-
<PAGE>
Counsel
Drinker Biddle & Reath (of which Henry S. Hilles, Jr.,
Secretary of the Fund, is a partner), 1345 Chestnut Street, Suite 1100,
Philadelphia, Pennsylvania 19107, serves as counsel to the Fund and will pass
upon certain legal matters on its behalf.
Independent Accountants
_________________________, with offices at __________________,
has been selected as independent accountants of the Fund.
NET ASSET VALUE
The net asset value of the Fund will be calculated as of the
close of regular trading hours on the last business day the New York Stock
Exchange is open in each week. The net asset value per share is calculated by
dividing the value of the Fund's assets (including interest and dividends
accrued but not collected), less any liabilities (including accrued expenses but
excluding capital and surplus), by the number of Fund shares outstanding.
Portfolio securities listed on an exchange and
over-the-counter securities quoted on the NASDAQ system shall be valued on the
basis of the last sale on the date as of which the valuation is made or, lacking
any sales, at the closing bid prices, over-the-counter securities not quoted on
the NASDAQ system shall be valued on the basis of the closing bid prices for
that date, securities for which reliable quotations are not readily available
shall be valued at fair value, as determined in good faith and pursuant to
procedures established by the directors, and short-term debt securities and
instruments will be valued according to amortized cost.
BROKERAGE ALLOCATION AND OTHER PRACTICES
Transactions on stock exchanges involve the payment of
negotiated brokerage commissions. There is generally no stated commission in the
case of securities traded in the over-the-counter market, but the price includes
an undisclosed commission or mark-up. The cost of securities purchased by the
Fund from underwriters generally includes an underwriting commission or
concession, and the prices at which securities are purchased from and sold to
dealers include a dealer's mark-up or mark-down.
In executing portfolio transactions and selecting brokers or
dealers, it is the Fund's policy to seek the best overall terms available. The
Investment Advisory and Sub-Advisory Agreements provide that, in assessing the
best overall terms available for any transaction, the Investment Advisor and
Sub-Advisor shall consider factors they deem relevant, including the breadth of
the market in the security, the price of the
-15-
<PAGE>
security, the financial condition and execution capability of the broker or
dealer, and the reasonableness of the commission, if any, for the specific
transaction and on a continuing basis. In addition, the Investment Advisory and
Sub-Advisory Agreements authorize the Investment Advisor and Sub-Advisor to
cause the Fund to pay a broker-dealer which furnishes brokerage and research
services a higher commission than that which might be charged by another
broker-dealer for effecting the same transaction, provided that such commission
is deemed reasonable in terms of either that particular transaction or the
overall responsibilities of the Investment Advisor and Sub-Advisor to the Fund.
Brokerage and research services may include: (1) advice as to the value of
securities, the advisability of investing in, purchasing or selling securities
and the availability of securities or purchasers or sellers of securities; and
(2) analyses and reports concerning industries, securities, economic factors and
trends, portfolio strategy and the performance of accounts.
In allocating purchase and sale orders for portfolio
securities (involving the payment of brokerage commissions or dealer
concessions), the Investment Advisor and Sub-Advisor may consider the sale of
Fund shares by broker-dealers and other financial institutions, provided it
believes the quality of the transaction and the amount of the commission are not
less favorable than what they would be with any other unaffiliated qualified
firm.
It is possible that certain of the brokerage and research
services received will primarily benefit one or more other investment companies
or other accounts for which investment discretion is exercised. Conversely, the
Fund may be the primary beneficiary of the brokerage or research services
received as a result of portfolio transactions effected for such other accounts
or investment companies.
TAX STATUS
Federal
The Fund will be treated as a separate corporate entity under
the Internal Revenue Code of 1986, as amended (the "Code"), and intends to
qualify as a "regulated investment company." By following this policy, the Fund
expects to eliminate or reduce to a nominal amount the federal income taxes to
which it may be subject. If for any taxable year the Fund does not qualify for
the special federal tax treatment afforded regulated investment companies, all
of the Fund's taxable income would be subject to tax at regular corporate rates
(without any deduction for distributions to stockholders). In such event, the
Fund's dividend distributions to stockholders would be taxable as ordinary
income to the extent of the current and accumulated
-16-
<PAGE>
earnings and profits of the Fund and would be eligible for the dividends
received deduction in the case of corporate stockholders.
Qualification as a regulated investment company under the Code
requires, among other things, that the Fund distribute to its stockholders an
amount equal to at least the sum of 90% of its investment company taxable income
(if any) and 90% of its tax-exempt income (if any), net of certain deductions
for each taxable year. In general, the Fund's investment company taxable income
will be its taxable income, including dividends, interest, and short-term
capital gains (the excess of net short-term capital gain over net long-term
capital loss), subject to certain adjustments and excluding the excess of net
long-term capital gain, if any, for the taxable year over the net short-term
capital loss (if any), for such year. The Fund will be taxed on its
undistributed investment company taxable income, if any. As stated, the Fund
intends to distribute at least 90% of its investment company taxable income (if
any) for each taxable year. To the extent such income is distributed by the Fund
(whether in cash or additional shares), it will be taxable to stockholders as
ordinary income.
The Fund will not be treated as a regulated investment company
under the Code if 30% or more of the Fund's gross income for a taxable year is
derived from gains realized on the sale or other disposition of the following
investments held for less than three months (the "Short-Short test"): (1) stock
and securities (as defined in section 2(a)(36) of the 1940 Act); (2) options,
futures and forward contracts other than those on foreign currencies; and (3)
foreign currencies (and options, futures and forward contracts on foreign
currencies) that are not directly related to the Fund's principal business of
investing in stock and securities (and options and futures with respect to
stocks and securities). Interest (including original issue discount and accrued
market discount) received by the Fund upon maturity or disposition of a security
held for less than three months will not be treated as gross income derived from
the sale or other disposition of such security within the meaning of this
requirement. However, any other income that is attributable to realized market
appreciation will be treated as gross income from the sale or other disposition
of securities for this purpose.
Any distribution of the excess of net long-term capital gains
over net short-term capital losses is taxable to stockholders as long-term
capital gains, regardless of how long the stockholder has held Fund shares and
whether such gains are received in cash or additional Fund shares. The Fund will
designate such a distribution as a capital gain dividend in a written notice
mailed to stockholders after the close of the Fund's taxable year. It should be
noted that, upon the sale of Fund shares, if the stockholder has not held such
shares for more
-17-
<PAGE>
than six months, any loss on the sale of those shares will be treated as
long-term capital loss to the extent of the capital gain dividends received with
respect to the shares.
Ordinary income of individuals is taxable at a maximum nominal
rate of 39.6%, but because of limitations on itemized deductions otherwise
allowable and the phase-out of personal exemptions, the maximum effective
marginal rate of tax for some taxpayers may be higher. An individual's long-term
capital gains are taxable at a maximum nominal rate of 28%. For corporations,
long-term capital gains and ordinary income are both taxable at a maximum
nominal rate of 35% (or at a maximum effective marginal rate of 39%, in the case
of corporations having taxable income between $100,000 and $335,000).
A 4% non-deductible excise tax is imposed on regulated
investment companies that fail to currently distribute specific percentages of
their ordinary taxable income and capital gain net income (excess of capital
gains over capital losses). The Fund intends to make sufficient distributions or
deemed distributions of its ordinary taxable income and any capital gain net
income prior to the end of each calendar year to avoid liability for this excise
tax.
The Fund will be required in certain cases to withhold and
remit to the United States Treasury 31% of taxable dividends or 31% of gross
sale proceeds upon sale paid to stockholders (i) who have failed to provide a
correct tax identification number in the manner required, (ii) who are subject
to withholding by the Internal Revenue Service for failure to properly include
on their return payments of taxable interest or dividends or (iii) who have
failed to certify to the Fund either that they are subject to backup withholding
when required to do so or that they are "exempt recipients."
State
Depending upon the extent of activities in states and
localities in which its offices are maintained, in which its agents or
independent contractors are located or in which it is otherwise deemed to be
conducting business, the Fund may be subject to the tax laws of such states or
localities.
Income distributions may be taxable to stockholders under
state or local law as dividend income even though all or a portion of such
distributions may be derived from interest on U.S. government obligations which,
if realized directly, would be exempt from such income taxes. Stockholders are
advised to consult their tax advisers concerning the application of state and
local taxes.
-18-
<PAGE>
FINANCIAL STATEMENTS
Stockholders receive unaudited semi-annual reports describing
the Fund's investment operations and annual financial statements together with
the reports of the independent accountants of the Fund. The financial statements
and related notes thereto for the Fund which appear in this Statement of
Additional Information have been audited by __________________, whose report
thereon also appears herein. Such financial statements and notes thereto have
been included herein in reliance upon the report of _______________, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
-19-
<PAGE>
FINANCIAL STATEMENTS
CAM BALANCED FUND, INC.
Statement of Assets and Liabilities
July ___, 1996
Assets:
Cash $100,003
Deferred organization expenses (Note 3) _______
Total Assets $_______
Liabilities - Accrued expenses $_______
Net Assets (applicable to 10,753 shares of
common stock par value $0.001, issued
and outstanding with 100,000,000 shares
authorized (Note 1)) $100,003
= ========
Net Asset Value Per Share $ 9.30
========
NOTES:
(1) CAM Balanced Fund, Inc. (the "Fund") was organized as a
Maryland corporation on June 3, 1996. The Fund is
registered under the Investment Company Act of 1940 as a
closed-end, diversified management investment company. To
date, the Fund has not had any transactions other than those
relating to organizational matters and the sale of 10,753
shares of common stock to CAM Investment Advisors, Inc. (the
"Investment Advisor").
(2) The Fund intends to enter into an Investment Advisory Agreement with
the Investment Advisor. Certain officers and/or directors of the Fund
are officers and/or directors of the Investment Advisor.
(3) Costs incurred and to be incurred in connection with the organization
are being deferred and will be amortized over a period not to exceed
five years beginning with the commencement of operations of the Fund.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Directors and
Stockholders of
CAM Balanced Fund, Inc.
We have examined the statement of assets and liabilities of
CAM Balanced Fund, Inc. as of July __, 1996. Our examination was made in
accordance with generally accepted auditing standards and, accordingly, included
such tests of the accounting records and such other auditing procedures as we
considered necessary in the circumstances.
In our opinion, the aforementioned statement of assets and
liabilities presents fairly the financial position of CAM Balanced Fund, Inc. at
July __, 1996, in conformity with generally accepted accounting principles.
<PAGE>
CAM BALANCED FUND, INC.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
1. Financial Statements
(a) Included in Part A:
None.
(b) Included in Part B:
(1) Form of Statement of Assets and
Liabilities.
(2) Form of Report of Independent Certified
Public Accountants.
2. Exhibits:
(a) Articles of Incorporation of Registrant.
(b) By-Laws of Registrant.
(c) Inapplicable.
(d) Inapplicable.
(e) Inapplicable.
(f) Inapplicable.
(g) (1) Form of Investment Advisory Agreement
between Registrant and CAM Investment
Advisors, Inc.
(2) Form of Sub-Advisory Agreement between
CAM Investment Advisors, Inc. and Wolf,
Webb, Burk & Campbell, Inc.
(h) (1) Form of Underwriting Agreement between
Registrant and Rodney Square
Distributors, Inc.
(2) Form of Selected Dealer Agreement.*
____________________________
* To be filed by amendment.
<PAGE>
(i) Inapplicable.
(j) Form of Custody Agreement between the
Registrant and Wilmington Trust Company.
(k) (1) Form of Administration and Accounting
Services Agreement between Registrant
and Rodney Square Management
Corporation.
(2) Form of Stock Transfer Agreement between
the Registrant and Wilmington Trust
Company.
(3) Form of Escrow Agreement between the
Registrant and Wilmington Trust Company.*
(l) Opinion of Counsel.*
(m) Inapplicable.
(n) Consent of Auditors.*
(o) Inapplicable.
(p) Form of Share Purchase Agreement.
(q) Inapplicable.
(r) Inapplicable.
Item 25. Marketing Arrangements
Inapplicable.
____________________________
* To be filed by amendment.
<PAGE>
Item 26. Other Expenses of Issuance and Distribution
The following table sets forth the estimated expenses expected
to be incurred in connection with the offering described in
this Registration Statement.
SEC Registration fees .......................................$6,173.00
American Stock Exchange listing fee..........................$
Printing ....................................................$
Fees and expenses of qualification under
state securities laws (including
fees of counsel)....................................$
Accounting fees and expenses.................................$
Legal fees and expenses......................................$
Miscellaneous................................................$
Total......................................$
=========
Item 27. Persons Controlled by or Under Common Control With
Registrant
None.
Item 28. Number of Holders of Securities
As of July 1, 1996:
(1) (2)
Title of Class Number of Record Holders
-------------- ------------------------
Common Stock 0
par value $.001
Item 29. Indemnification
Section 2-418 of the General Corporation Law of Maryland
authorizes the indemnification of directors and officers of
Maryland corporations under specified circumstances.
Article VII, Section 7.3, of the Articles of Incorporation,
which is included as Exhibit (2)(a) hereto, provides that the
Registrant shall indemnify its directors and officers to the
extent permitted by the Maryland General Corporation Law. In
no event will registrant indemnify its directors or officers
against any liability to the Corporation or its security
holders to which such person would otherwise by 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.
<PAGE>
Section 6.2 of the By-Laws, which is included as Exhibit
(2)(b) hereto, provides that the Registrant shall indemnify
its directors and officers to the full extent permissible
under applicable state corporation law, the Securities Act of
1933, or the Investment Company Act of 1940, provided that
such indemnification shall not protect any such person against
any liability to the Corporation or any stockholder thereof to
which such person would otherwise by subject by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
Registrant expects to obtain from an insurance carrier a
directors' and officers' liability policy covering certain
types of errors and omissions.
Indemnification of the Registrant's Administrator and
Accounting Services Agent is provided for in Section 19 of the
Administration and Accounting Services Agreement, included as
Exhibit 2(k)(1) hereto. Indemnification of the Registrant's
Custodian is provided for in Section VIII of the Custody
Agreement, included as Exhibit 2(j) hereto. Indemnification of
Registrant's Transfer Agent is provided for in Section 7 of
the Stock Transfer Agreement, included as Exhibit 2(k)(2)
hereto. In addition, the Registrant and CAM Investment
Advisors, Inc. have agreed to indemnify the Underwriter for
certain liabilities as provided for in Section 9 of the
Underwriting Agreement, included as Exhibit 2(h)(1) hereto.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to the Registrant's
directors, officers, and controlling persons 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 of 1933 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,
officer, or controlling person of the Registrant in the
successful defense of any action, suit, or proceeding) is
asserted by such director, officer, or controlling person in
connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
<PAGE>
court of appropriate jurisdiction the question whether such
indemnification is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final
adjudication of such issue.
Item 30. Business and Other Connections of Investment Advisor
A description of CAM Investment Advisors, Inc. (the
"Investment Advisor") and Wolf, Webb, Burk & Campbell, Inc.
(the "Sub-Advisor") is included in Parts A and B of this
Registration Statement. The Investment Advisor is a newly
organized investment advisory firm with no prior experience.
The Investment Advisor intends to offer advisory services to
the Registrant and possibly other investment advisory clients.
Certain information regarding the business, profession,
vocation, or employment of a substantial nature of the
directors and principal executive officers of the Investment
Advisor for the prior two years is set forth below:
<TABLE>
<CAPTION>
==========================================================================================================================
Position with
Name and Address Investment Advisor Principal Occupation
==========================================================================================================================
<S> <C> <C>
J. Kenneth Croney, Jr. Director, President, President, Secretary
Three Radnor Corporate Secretary and Treasurer and Treasurer of
Center Consolidated Asset
Suite 300 Management, Inc.
Radnor, PA 19087
- --------------------------------------------------------------------------------------------------------------------------
John P. McNiff Vice President Shareholder of
Three Radnor Corporate Consolidated Asset
Center Management, Inc. (since
Suite 300 1994); Managing
Radnor, PA 19087 Director, Longwood
Investment Advisors,
Inc. (until 1994).
==========================================================================================================================
</TABLE>
The Sub-Advisor provides investment advisory services
consisting of portfolio management for a variety of
corporations, governments, unions, foundations and
individuals. It presently has no other registered investment
company clients.
For information as to any other business, vocation or
employment of a substantial nature in which each director or
executive officer of the Sub-Advisor has been engaged in for
his or her own account or in the capacity of director,
officer, employee, partner or trustee, reference is made to
the Form ADV (File #15571) filed by the Sub-Advisor under the
Investment Advisors Act of 1940.
<PAGE>
Item 31. Location of Accounts and Records
(a) CAM Investment Advisors, Inc., Three Radnor Corporate
Center, Suite 300, Radnor, Pennsylvania 19087
(records relating to its functions as investment
advisor).
(b) Wolf, Webb, Burk & Campbell, Inc., 1525 Locust
Street, 11th Floor, Philadelphia, Pennsylvania 19102
(records relating to its function as sub-advisor).
(c) Wilmington Trust Company, Rodney Square North, 1100
North Market Street, Wilmington, Delaware 19809
(records relating to its function as custodian,
transfer agent and dividend reimbursement agent).
(d) Rodney Square Management Corporation, 1100 North
Market Street, Wilmington, Delaware 19809 (records
relating to its function as administrator and
accounting services agent).
(e) Drinker Biddle & Reath, PNB Building, 1345
Chestnut Street, Philadelphia, PA 19107
(Registrant's Articles of Incorporation, By-Laws,
and Minute Books).
Item 32. Management Services
Inapplicable.
Item 33. Undertakings
Registrant undertakes to suspend the offering of shares until
the prospectus is amended if (1) subsequent to the effective
date of its registration statement, the net asset value
declines more than ten percent from its net asset value as of
the effective date of the registration statement or (2) the
net asset value increases to an amount greater than its net
proceeds as stated in the prospectus.
The Registrant undertakes to file a post-effective amendment
with certified financial statements showing the initial
capital received before accepting subscriptions from more than
25 persons, if the Registrant proposes to raise its initial
capital under Section 14(a)(3) of the Investment Company Act
of 1940.
<PAGE>
Registrant undertakes to send by first class mail or other
means designed to ensure equally prompt delivery, within two
business days of receipt of a written or oral request, a
Statement of Additional Information.
<PAGE>
EXHIBIT INDEX
Exhibit No. Page
2(a) Articles of Incorporation...........................................
2(b) By-Laws.............................................................
2(g)(1) Form of Investment Advisory Agreement between
Registrant and CAM Investment Advisors, Inc.........................
(2) Form of Sub-Advisory Agreement between
CAM Investment Advisors, Inc. and Wolf, Webb,
Burk & Campbell, Inc. ..............................................
2(h)(1) Form of Underwriting Agreement between
Registrant and Rodney Square Distributors, Inc. ....................
2(j)(1) Form of Custody Agreement between Registrant
and Wilmington Trust Company........................................
2(k)(1) Form of Administration and Accounting Services
Agreement between Registrant and Rodney Square
Management Corporation..............................................
(2) Form of Stock Transfer Agreement between
Registrant and Wilmington Trust Company.............................
2(p) Form of Share Purchase Agreement....................................
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Philadelphia, Commonwealth of Pennsylvania on the 8th
day of July, 1996.
CAM Balanced Fund, Inc.
By /s/ J. Kenneth Croney, Jr.
--------------------------
J. Kenneth Croney, Jr.
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ J. Kenneth Croney, Jr. Director, President July 8, 1996
- -------------------------- (Principal Executive
J. Kenneth Croney, Jr. Officer) and Treasurer
(Principal Financial
Officer)
/s/ John P. McNiff Director July 8, 1996
- ------------------
John P. McNiff
* Michael T. Byrne Director July 8, 1996
- ------------------
Michael T. Byrne
Director July _, 1996
- ------------------
Marvin P. Bush
Director July _, 1996
- ------------------
Mark R. Graham
*By: /s/ J. Kenneth Croney, Jr. July 8, 1996
--------------------------
J. Kenneth Croney, Jr.
Attorney-In-Fact
<PAGE>
CAM BALANCED FUND, INC.
Power of Attorney
I hereby appoint J. Kenneth Croney, Jr. or John P. McNiff attorney for
me and in my name and on my behalf to sign any Registration Statement or
Amendment thereto of CAM BALANCED FUND, INC. to be filed with the Securities and
Exchange Commission under the Securities Act of 1933, and generally to do and
perform all things necessary to be done in that connection.
I have signed this Power of Attorney on June 20, 1996.
/s/ Michael T. Byrne
--------------------
Michael T. Byrne
<PAGE>
ARTICLES OF INCORPORATION
CAM BALANCED FUND, INC.
(A Maryland Corporation)
ARTICLE I
SECTION 1.1. THE UNDERSIGNED, Henry S. Hilles, Jr., whose
address is Philadelphia National Bank Building, 1345 Chestnut Street,
Philadelphia, Pennsylvania 19107, being at least eighteen years of age, does
hereby act as an incorporator, under and by virtue of the General Laws of the
State of Maryland authorizing the formation of corporations and with the
intention of forming a corporation.
ARTICLE II
SECTION 2.1. The name of the Corporation is:
CAM BALANCED FUND, INC.
ARTICLE III
SECTION 3.1. The purpose for which the Corporation is formed
is to act as a management investment company under the Investment Company Act of
1940.
ARTICLE IV
SECTION 4.1. The Corporation is expressly empowered to invest,
reinvest, own, hold or trade its assets in securities and other investments or
to hold part or all of its assets in cash. The Corporation shall be authorized
to exercise and enjoy all of the powers, rights and privileges granted to, or
conferred upon, corporations by the General Laws of the State of Maryland now or
hereafter in force, and the enumeration of the foregoing shall not be deemed to
exclude any powers, rights or privileges so granted or conferred.
ARTICLE V
SECTION 5.1. The post office address of the principal office
of the Corporation in the State of Maryland is c/o The Corporation Trust,
Incorporated, 32 South Street, Baltimore, Maryland 21202. The name of the
resident agent of the Corporation in this State is The Corporation Trust,
Incorporated,
<PAGE>
a corporation of this State, and the post office address of the resident agent
is 32 South Street, Baltimore, Maryland 21202.
ARTICLE VI
SECTION 6.1. The total number of shares of capital stock which
the Corporation shall have authority to issue is one hundred million
(100,000,000) shares of common stock, of the par value of one-tenth of one cent
($0.001) per share and of the aggregate par value of one hundred thousand
dollars ($100,000).
SECTION 6.2. The Corporation may issue fractional shares. Any
fractional share shall carry proportionately all the rights of a whole share,
excepting any right to receive a certificate evidencing such fractional share,
but including, without limitation, the right to vote and the right to receive
dividends.
SECTION 6.3. No holder of any stock or other security of the
Corporation shall, as such holder, have any preemptive right to purchase or
subscribe for any stock or other security of the Corporation other than such
right, if any, as the Board of Directors, in its discretion, may determine.
ARTICLE VII
SECTION 7.1. The number of initial directors of the
Corporation shall be one provided that: (a) the number of directors of the
Corporation may be increased or decreased pursuant to the By-Laws of the
Corporation but shall never be less than three, except as provided in this
Article VII; (b) if there is no capital stock of the Corporation outstanding the
number of directors may be less than three but not less than one; and (c) if
there is capital stock of the Corporation outstanding and so long as there are
less than three stockholders of the Corporation, the number of directors may be
less than three but not less than the number of stockholders. The name of the
director who shall act until the first annual meeting of stockholders or until
his successor is duly elected and qualified is:
J. Kenneth Croney, Jr.
SECTION 7.2. A director may be removed with or without cause,
but only by action of the shareholders taken by the holders of shares with at
least three-fourths of the votes then entitled to be cast in an election of
directors. Notwithstanding any other provision of these Articles of
Incorporation, this Section 7.2 may not be amended except by action of the
shareholders taken by the holders of shares with at least three-fourths of the
votes then entitled to be cast on the matter.
-2-
<PAGE>
SECTION 7.3. To the fullest extent that limitations on the
liability of directors and officers are permitted by the Maryland General
Corporation Law, no director or officer of the Corporation shall have any
liability to the Corporation or its stockholders for money damages. This
limitation on liability applies to events occurring at the time a person serves
as a director or officer of the Corporation whether or not such person is a
director or officer at the time of any proceeding in which liability is
asserted. The Corporation shall indemnify and advance expenses to its currently
acting and its former directors to the fullest extent that indemnification of
directors is permitted by the Maryland General Corporation Law. The Corporation
shall indemnify and advance expenses to its officers to the same extent as its
directors and to such further extent as is consistent with law. The Board of
Directors may by By-Law, resolution or agreement make further provision for
indemnification of directors, officers, employees and agents to the fullest
extent permitted by the Maryland General Corporation Law. No provision of this
Article shall be effective to protect or purport to protect any director or
officer of the Corporation against any liability to the Corporation or its
security holders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. No further amendment to the Articles of
Incorporation of the Corporation shall affect any right of any person under this
Article based on any event, omission or proceeding prior to such amendment.
ARTICLE VIII
SECTION 8.1. The Corporation reserves the right from time to
time to make any amendments to its Charter which may now or hereafter be
authorized by law, including any amendments changing the terms or contract
rights, as expressly set forth in its Charter, of any of its outstanding stock.
SECTION 8.2. Notwithstanding any provision of the Maryland
General Corporation Law requiring any action to be taken or authorized by the
affirmative vote of the holders of a proportion of the votes of stock of the
Corporation greater than a majority of the votes of all classes or of any class
of stock of the Corporation, such action shall be effective and valid if taken
or authorized by the affirmative vote of the holders of shares with a majority
of all votes entitled to be cast on the matter, except as otherwise required by
applicable law or otherwise provided herein, including, without limitation, as
provided in Section 7.2 hereof.
SECTION 8.3. In furtherance, and not in limitation, of the
powers conferred by the laws of the State of Maryland, the Board of Directors is
expressly authorized:
-3-
<PAGE>
(a) To make, alter or repeal the By-Laws of the
Corporation, except where such power is reserved by the By-Laws to the
stockholders, and except as otherwise required by the Investment Company Act of
1940, as amended.
(b) Without the assent or vote of the
stockholders, to authorize the issuance and sale from time to time of shares of
the stock of the Corporation, whether now or hereafter authorized, and
securities convertible into shares of stock of the Corporation, whether now or
hereafter authorized, for such consideration as the Board of Directors may deem
advisable.
(c) To classify or reclassify any unissued stock,
whether nor or hereafter authorized, by setting or changing the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications, or terms or conditions of redemption of such stock.
IN WITNESS WHEREOF, the undersigned incorporator of CAM
BALANCED FUND, INC. hereby executes the foregoing Articles of
Incorporation and acknowledges the same to be his act.
Dated as of the 31st day of May, 1996.
/s/ Henry S. Hilles, Jr.
--------------------------
Henry S. Hilles, Jr.
-4-
<PAGE>
BY-LAWS
OF
CAM BALANCED FUND, INC.
ARTICLE I
STOCKHOLDERS
SECTION 1.1 Annual Meetings. No annual meeting of stockholders
of the Corporation shall be held unless required by applicable law or otherwise
determined by the Board of Directors. At an annual meeting, the stockholders
shall elect a Board of Directors and transact any other business which may
properly be brought before the meeting.
SECTION 1.2 Special Meetings. Special meetings of the
stockholders for any purpose or purposes, unless otherwise prescribed by statute
or by the Charter, may be held at any place, within or without the State of
Maryland, and may be called at any time by the Board of Directors or by the
President, and shall be called at the request in writing of stockholders
entitled to cast at least twenty-five (25) percent of all the votes entitled to
be cast at such meeting. Such request shall state the purpose or purposes of the
proposed meeting and the matters proposed to be acted on at it; provided,
however, that unless requested by stockholders entitled to cast a majority of
all the votes entitled to be cast at the meeting, a special meeting need not be
called to consider any matter which is substantially the same as a matter voted
on at any special meeting of the stockholders held during the preceding twelve
(12) months. The Secretary shall inform such stockholders of the reasonably
estimated costs of preparing and mailing the notice of the meeting and on
payment of these costs to the Corporation shall notify each stockholder entitled
to notice of the meeting.
SECTION 1.3 Notice of Meetings. Written or printed notice of
the time and place of every meeting, and of the purpose of any special meeting,
of the stockholders shall be given by the Secretary of the Corporation to each
stockholder of record entitled to vote at the meeting and each other stockholder
entitled to notice of the meeting, by placing such notice in the mail at least
ten (10) days, but not more than ninety (90) days, and in any event within the
period prescribed by law, prior to the date named for the meeting addressed to
each stockholder at his address appearing on the books of the Corporation or
supplied by him to the Corporation for the purposes of notice. The notice of
every meeting of stockholders may be accompanied by a form of
<PAGE>
proxy approved by the Board of Directors in favor of such actions or persons as
the Board of Directors may select.
SECTION 1.4 Record Date. The Board of Directors may fix a date
not more than ninety (90) days preceding the date of any meeting of
stockholders, or the date fixed for the payment of any dividend, or the date of
the allotment of rights, as a record date for the determination of stockholders
entitled to notice of, or to vote at, any such meeting (or any adjournment
thereof) or entitled to receive payment of any dividend, or to receive such
allotment of rights. In such case, only stockholders of record at the time so
fixed shall be entitled to vote, to receive notice, or receive dividends or
rights, notwithstanding any subsequent transfer on the books of the Corporation.
The Board of Directors shall not close the books of the Corporation against
transfers of shares during the whole or any part of such period. In the case of
a meeting of stockholders, the record date shall be fixed not less than ten (10)
days prior to the date of the meeting.
SECTION 1.5 Quorum and Shareholder Action. Except as otherwise
provided by statute or by the Charter, the presence in person or by proxy of
stockholders of the Corporation entitled to cast at least a majority of all the
votes entitled to be cast at the meeting shall constitute a quorum and a
majority of all the votes cast at a meeting at which a quorum is present shall
be sufficient to approve any matter which properly comes before the meeting. In
the absence of a quorum, the stockholders present in person or by proxy, by
majority vote and without notice other than by announcement at the meeting, may
adjourn the meeting from time to time as provided in Section 1.7 of this Article
I until a quorum shall attend.
SECTION 1.6 Organization. At every meeting of the
stockholders, the Chairman of the Board, if one has been selected and is present
or, if not, the President, or in the absence of the Chairman of the Board and
the President, a Vice-President, or in the absence of the Chairman of the Board,
the President and all the Vice-Presidents, a chairman chosen by the Board of
Directors of the Corporation or, in the absence of the Chairman, the President,
all the Vice-Presidents and a chairman chosen by the Board of Directors, a
Chairman chosen by the stockholders, shall act as chairman; and the Secretary,
or in his absence, an Assistant Secretary, or in the absence of the Secretary
and all the Assistant Secretaries, a person appointed by the chairman, shall act
as secretary of the meeting.
SECTION 1.7 Adjournment. Any meeting of the stockholders may
be adjourned from time to time, without notice other than by announcement at the
meeting at which such adjournment is taken, and at any such adjourned meeting
at which a quorum shall be present any action may be taken that could have
-2-
<PAGE>
been taken at the meeting originally called; provided, that the meeting may not
be adjourned to a date more than the number of days after the original record
date for the meeting permitted by law, and if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given to each stockholder of record entitled to vote at the adjourned
meeting.
SECTION 1.8 Beneficial Owners. The Board of Directors may
adopt by resolution a procedure by which a stockholder of the Corporation may
certify in writing to the Corporation that any shares of stock registered in the
name of the stockholder are held for the account of a specified person other
than the stockholder.
SECTION 1.9 Notice of Matters to be Raised at Meeting.
(a) Qualification of Nominees for Director. Before
a person to be nominated for election to the Board of Directors may be duly
nominated at any annual or special meeting of the stockholders, the person must
notify the Corporation in writing at least 60 days before the meeting and must
provide such information to the Corporation in writing not later than 30 days
prior to such meeting as the Secretary may reasonably require, including, but
not limited to, such information as may be required to be disclosed under the
Securities Exchange Act of 1934 and the Investment Company Act of 1940 to
stockholders in connection with the solicitation of proxies to be voted for the
election of such proposed nominee.
(b) Other Matters. Before any stockholder may
propose any business for consideration at any annual or special meeting of the
stockholders, other than any matter included in the Corporation's proxy
statement, such stockholder must notify the Corporation in writing at least 60
days before the meeting and must provide such information to the Corporation in
writing not later than 30 days prior to such meeting as than Secretary may
reasonably require.
(c) General. If the notice provided to
stockholders pursuant to Section 1.3 of this Article I is mailed less than 60
days before any annual or special meeting of the stockholders, the notice
required to be sent to the Corporation for purposes of subsections (a) or (b) of
this Section 1.9 must be received by the 10th day following the day on which
notice of the date of the meeting is mailed or otherwise publicly disclosed.
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ARTICLE II
BOARD OF DIRECTORS
SECTION 2.1 Election and Powers. The number of directors shall
be fixed from time to time by resolution adopted by a majority of the entire
Board of Directors; provided, however, that the number of directors shall in no
event be less than three (3) unless there are fewer than three stockholders nor
more than fifteen (15). The business, affairs and property of the Corporation
shall be managed by or under the direction of the Board of Directors, which may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute, the Charter or these By-Laws required to be
exercised or done by the stockholders.
SECTION 2.2 Regular Meetings. Regular meetings of the Board of
Directors may be held without notice on such dates as the Board may from time to
time determine.
SECTION 2.3 Special Meetings. Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board, the
President or by a majority of the directors either in writing or by vote at a
meeting.
SECTION 2.4 Notice of Special Meetings. Notice of the place,
day and hour of every special meeting shall be delivered personally to each
director or telegraphed or cabled at least one (1) day before the meeting or
mailed at least two (2) days before the meeting to his address on the books of
the Corporation. It shall not be requisite to the validity of any meeting of the
Board of Directors that notice thereof shall have been given to any director who
is present thereat, or, if absent, waives notice thereof in writing filed with
the records of the meeting either before or after the holding thereof.
SECTION 2.5 Place of Meetings. The Board of Directors may hold
its regular and special meetings at such place or places within or without the
State of Maryland as the Board may from time to time determine.
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SECTION 2.6 Quorum and Board Action. Except as otherwise
provided by statute or by the Charter: (a) one-third (1/3) of the entire Board
of Directors, but in no case less than two (2) directors, unless there is only
one (1) director, shall be necessary to constitute a quorum for the transaction
of business at each meeting of the Board; (b) the action of a majority of the
directors present at a meeting at which a quorum is present shall be the action
of the Board; and (c) if at any meeting there be less than a quorum present, a
majority of those directors present may adjourn the meeting from time to time,
but not for a period greater than thirty (30) days at any one time, without
notice other than by announcement at the meeting until a quorum shall attend. At
any such adjourned meeting at which a quorum shall be present, any business may
be transacted which might have been transacted at the meeting as originally
scheduled.
SECTION 2.7 Action without Meeting. Except with respect to the
approval of any investment advisory agreement, any action required or permitted
to be taken at a meeting of the Board of Directors or a committee of the Board
may be taken without a meeting if a unanimous consent which sets forth the
action is signed by each member of the Board or committee and is filed with the
minutes of proceedings of the Board or committee.
SECTION 2.8 Organization. At every meeting of the Board of
Directors, the Chairman of the Board, if one has been selected and is present,
and, if not, or in the absence of the Chairman of the Board, a chairman chosen
by a majority of the directors present, shall preside; and the Secretary, or in
his absence, an Assistant Secretary, or in the absence of the Secretary and all
the Assistant Secretaries, a person appointed by the chairman, shall act as
secretary.
SECTION 2.9 Vacancies. Any vacancy on the Board of Directors
occurring by reason of any increase in the number of directors may be filled by
a majority of the entire Board of Directors. Any vacancy on the Board of
Directors occurring for any other cause may be filled by a majority of the
remaining members of the Board of Directors, whether or not these members
constitute a quorum under Section 2.6 of this Article II. Any director so chosen
to fill a vacancy shall hold office until the next annual meeting of
stockholders and until his successor shall have been duly elected and qualified.
SECTION 2.10 Resignations. Any director may resign at any time
by giving written notice to the Board of Directors, the President or the
Secretary. Any such resignation shall take effect at the time of the receipt of
such notice or at any later time specified therein; and unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
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SECTION 2.11 Committees. The Board of Directors may appoint
from among its members an executive and other committees of the Board composed
of two (2) or more directors. To the extent permitted by law, the Board of
Directors may delegate to any such committee or committees any of the powers of
the Board of Directors in the management of the business, affairs and property
of the Corporation. Such committee or committees shall have such name or names
as may be determined from time to time by resolution adopted by the Board of
Directors. Each Committee shall keep regular minutes of its meetings and report
the same to the Board of Directors when required. The members of a committee
present at any meeting, whether or not they constitute a quorum, may appoint a
director to act in the place of an absent member.
SECTION 2.12 Telephone Conference. Except with respect to the
approval of any investment advisory agreement, members of the Board of Directors
or any committee thereof may participate in a meeting of the Board or such
committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other
at the same time and participation by such means shall constitute presence in
person at the meeting.
SECTION 2.13 Compensation of Directors. Any director, whether
or not he is a salaried officer, employee, or agent of the Corporation, may be
compensated for his services as director or as a member of a committee, or as
Chairman of the Board or chairman of a committee, and in addition may be
reimbursed for transportation and other expenses, all in such manner and amounts
as the directors may from time to time determine.
ARTICLE III
OFFICERS
SECTION 3.1 Number. The officers of the Corporation shall be a
President, a Secretary, and a Treasurer, and may include a Chairman of the
Board, one or more Vice-Presidents, one or more Assistant Secretaries, one or
more Assistant Treasurers, and such other officers as the Board of Directors may
from time to time determine. Any officer may hold more than one office in the
Corporation, except that an officer may not serve concurrently is both the
President and a Vice-President.
SECTION 3.2 Election and Term of Office. The officers of the
Corporation shall be elected by the Board of Directors and, subject to earlier
termination of office, each officer shall hold office for one year and until his
successor shall have been elected and qualified.
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SECTION 3.3 Resignations. Any officer may resign at any time by
giving written notice to the Board of Directors or to the President, or the
Secretary of the Corporation. Any such resignation shall take effect at the date
of the receipt of such notice or at any later time specified therein; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
SECTION 3.4 Removal. If the Board of Directors in its judgment
finds that the best interests of the Corporation will be served, the Board may
remove any officer of the Corporation at any time.
SECTION 3.5 Chairman of the Board. The Board of Directors may
at any time appoint one of its members as Chairman of the Board, who shall serve
at the pleasure of the Board and who shall perform and execute such duties and
powers as may be conferred upon or assigned to him by the Board or these
By-laws, but shall not by reason of performing and executing these duties and
powers be deemed an officer or employee of the Corporation.
SECTION 3.6 President. The President shall be the chief
executive officer of the Corporation and shall have general supervision over the
business and operations of the Corporation, subject, however, to the control of
the Board of Directors. He, or such persons as he shall designate, shall sign,
execute, acknowledge, verify, deliver and accept, in the name of the
Corporation, deeds, mortgages, bonds, contracts and other instruments authorized
by the Board of Directors, except in the case where the signing, execution,
acknowledgement, verification, delivery or acceptance thereof shall be delegated
by the Board to some other officer or agent of the Corporation; and, in general,
he shall have general executive powers as well as other powers and duties as
from time to time may be conferred upon or assigned to him by the Board.
SECTION 3.7 The Vice-Presidents. In the absence or disability
of the President, or when so directed by the President, any Vice-President
designated by the Board of Directors may perform any or all of the duties of the
President, and, when so acting, shall have all the powers of, and be subject to
all the restrictions upon, the President; provided, however, that no
Vice-President shall act as a member of or as chairman of any committee of which
the President is a member or chairman by designation of ex-officio, except when
designated by the Board. Each Vice-President shall perform such other duties as
from time to time may be conferred upon or assigned to him by the Board or the
President.
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SECTION 3.8 The Secretary. The Secretary shall record all the
votes of the stockholders and of the directors and the minutes of the meetings
of the stockholders and of the Board of Directors in a book or books to be kept
for that purpose; he shall see that notices of meetings of the stockholders and
the Board of Directors are given and that all records and reports are properly
kept and filed by the Corporation as required by law; he shall be the custodian
of the seal of the Corporation and shall see that it is affixed to all documents
to be executed on behalf of the Corporation under its seal, provided that in
lieu of affixing the corporate seal to any document, it shall be sufficient to
meet the requirements of any law, rule or regulation relating to a corporate
seal to affix the word ("SEAL") adjacent to the signature of the authorized
officer of the Corporation; and, in general, he shall perform all duties
incident to the office of Secretary, and such other duties as from time to time
may be conferred upon or assigned to him by the Board or the President.
SECTION 3.9 Assistant Secretaries. In the absence or disability
of the Secretary, or when so directed by the Secretary, any Assistant Secretary
may perform any or all of the duties of the Secretary, and, when so acting,
shall have all the powers of, and be subject to all restrictions upon, the
Secretary. Each Assistant Secretary shall perform such other duties as from time
to time may be conferred upon or assigned to him by the Board of Directors, the
President or the Secretary.
SECTION 3.10 The Treasurer. The Treasurer, unless another
officer has been so designated, shall be the chief financial officer of the
Corporation. Subject to the provisions of any contract which may be entered into
with any custodian pursuant to authority granted by the Board of Directors, the
Treasurer shall have charge of all receipts and disbursements of the Corporation
and shall have or provide for the custody of its funds and securities; he shall
have full authority to receive and give receipts for all money due and payable
to the Corporation, and to endorse checks, drafts and warrants, in its name and
on its behalf, and to give full discharge for the same; he shall deposit all
funds of the Corporation, except such as may be required for current use, in
such banks or other places of deposit as the Board of Directors may from time to
time designate; and, in general, he shall perform all duties incident to the
office of Treasurer and such other duties as from time to time may be conferred
upon or assigned to him by the Board or the President.
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SECTION 3.11 Assistant Treasurers. In the absence or disability
of the Treasurer, or when so directed by the Treasurer, any Assistant Treasurer
may perform any or all of the duties of the Treasurer and, when so acting, shall
have all the powers of, and be subject to all the restrictions upon, the
Treasurer. Each Assistant Treasurer shall perform all such other duties as from
time to time may be conferred upon or assigned to him by the Board of Directors,
the President or the Treasurer.
SECTION 3.12 Compensation of Officers. The compensation of all
officers shall be fixed from time to time by the Board of Directors, or any
committee or officer authorized by the Board so to do. No officer shall be
precluded from receiving such compensation by reason of the fact that he is also
a director of the Corporation.
ARTICLE IV
STOCK
SECTION 4.1 Ownership of Shares. The ownership of shares shall
be recorded on the Corporation's books. No stock certificates will be issued.
The Corporation's books shall be conclusive as to the identity of record holders
and as to the number of shares held by such stockholder.
SECTION 4.2 Transfer of Shares. Transfers of shares shall be
made on the books of the Corporation at the direction of the person named on the
Corporation's books, or by his attorney lawfully constituted in writing, with
such evidence of the authenticity of such transfer, authorization and such other
matters as the Corporation or its agents may reasonably require, and subject to
such other reasonable terms and conditions as may be required by the Corporation
or its agents; or, if the Board of Directors shall by resolution so provide,
transfer of shares may be made in any other manner provided by law.
SECTION 4.3 Transfer Agents and Registrars. The Corporation may
have one or more Transfer Agents and one or more Registrars of its stock, whose
respective duties the Board of Directors may, from time to time, define. No
certificate of stock shall be valid until countersigned by a Transfer Agent, if
the Corporation shall have a Transfer Agent, or until registered by a Registrar,
if the Corporation shall have a Registrar. The duties of Transfer Agent and
Registrar may be combined.
SECTION 4.4 Stock Ledgers. The Corporation shall not be
required to keep original or duplicate stock ledgers at its principal office in
the City of Baltimore, Maryland, but stock ledgers shall be kept at the
respective offices of the Transfer Agent of the Corporation's capital stock.
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SECTION 4.5 Location of Corporate Books. So long as permitted
by Maryland law, the books of the Corporation may be kept outside the State of
Maryland at such place or places as may be designated from time to time by the
Board of Directors.
ARTICLE V
SEAL
SECTION 5.1 Seal. The seal of the Corporation shall be in such
form as the Board of Directors shall prescribe.
ARTICLE VI
SUNDRY PROVISIONS
SECTION 6.1 Amendments.
(a) By Stockholders. By-Laws may be adopted,
altered, amended or repealed in the manner provided in Section 1.5 of Article I
hereof at any annual or special meeting of the stockholders.
(b) By Directors. By-Laws may be adopted, altered,
amended or repealed in the manner provided in Sections 2.6 or 2.7 of Article II
hereof by the Board of Directors at any regular or special meeting of the Board.
SECTION 6.2 Indemnification of Directors and Officers.
(a) Indemnification. Subject to Section 6.2(b) of
this Article, any person who was or is a party or is threatened to be made a
party in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is a current or former director or officer of the Corporation,
or is or was serving while a director or officer of the Corporation, at the
request of the Corporation, as a director, officer, partner, trustee, employee,
agent or fiduciary of another corporation, partnership, joint venture, trust,
enterprise or employee benefit plan, shall be indemnified by the Corporation
against judgments, penalties, fines, excise taxes, settlements and reasonable
expenses (including attorney's fees) actually incurred by such person in
connection with such action, suit or proceeding to the full extent permissible
under applicable state corporation law, the Securities Act of 1933 and the
Investment Company Act of 1940, as such statutes are now or hereafter in force,
provided, that such indemnification shall not protect any such person against
any liability to the Corporation or any stockholder thereof to which such person
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office ("disabling conduct").
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(b) Determination. Unless a court orders
otherwise, any indemnification made pursuant to Section 6.2(a) of this Article
shall be made by the Corporation only as authorized in the specific case (i)
after a final decision on the merits is made by a court or other body before
whom the proceeding was brought that the person to be indemnified was not liable
by disabling conduct, or (ii) upon a determination, based on a review of the
facts, that the person to be indemnified was not liable by reason of disabling
conduct, which determination shall be made by (A) the vote of a majority of a
quorum of directors who are neither "interested persons" as defined under the
Investment Company Act of 1940 nor parties to the proceeding ("disinterested
non-party directors"), or (B) independent legal counsel in a written opinion.
(c) Advances. Any current or former director or
officer of the Corporation claiming indemnification within the scope of this
Section 6.2 shall be entitled to advances from the Corporation for payment of
the reasonable expenses incurred by him in connection with the proceedings to
which he is a party in the manner and to the full extent permissible under
applicable state corporation law, the Securities Act of 1933 and the Investment
Company Act of 1940, as such statutes are now or hereafter in force, provided,
that (i) he undertakes to repay the advance unless it is ultimately determined
that he is entitled to indemnification, and (ii) (A) he provides a security for
his undertaking, (B) the Corporation is insured against losses arising from a
failure to repay if required pursuant to clause (i), or (C) a majority of a
quorum of disinterested, non-party directors or independent legal counsel in a
written opinion, determine, based on a review of readily available facts, that
there is reason to believe that the person to be indemnified ultimately will be
found entitled to indemnification.
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FORM OF INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of ____________________, 1996 between CAM
BALANCED FUND, INC., a Maryland corporation (the "Fund"), and CAM Investment
Advisors, Inc., a Delaware corporation (the "Investment Advisor").
WHEREAS, the Fund is registered as a closed-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended ("1940 Act"); and
WHEREAS, the Fund desires to retain the Investment Advisor to
furnish investment advisory services to the Fund and the Investment Advisor is
willing to so furnish such services;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints the Investment
Advisor to act as its investment advisor for the period and on the terms set
forth in this Agreement. The Investment Advisor accepts such appointment and
agrees to furnish the services herein set forth, for the compensation herein
provided.
2. Management. Subject to the supervision of the Fund's Board
of Directors, the Investment Advisor will perform the following services:
(i) Provide a continuous investment program
and strategy for the Fund, including investment research and
management with respect to all securities and investments and
cash equivalents in the Fund, determining from time to time
what securities and other investments will be invested,
reinvested, owned, held or traded by the Fund. The Investment
Advisor will provide this service under this Agreement in
accordance with the Fund's investment objective, policies and
restrictions as stated in the Prospectus and resolutions of
the Fund's Board of Directors adopted from time to time;
(ii) The Investment Advisor shall, to the
extent requested by the Board of Directors, provide the
personnel to act as officers of the Fund and pay the salaries
of such officers, and shall furnish office facilities and
equipment, and stenographic services necessary for the
operation of the Fund;
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(iii) Transmit information concerning purchases
and sales of the Fund's portfolio securities to the custodian
for proper settlement;
(iv) Supply the Fund and its Board of
Directors with reports and statistical data as requested; and
(v) Prepare a quarterly brokerage allocation
summary and monthly security transaction listing for the Fund.
3. Other Covenants.
The Investment Advisor further agrees that:
(i) It will conform with all applicable Rules
and Regulations of the Securities and Exchange
Commission;
(ii) It will place orders pursuant to its
investment determinations for the Fund either directly with
the issuer or with any broker or dealer. In executing
portfolio transactions and selecting brokers or dealers, the
Investment Advisor will use its best efforts to seek on behalf
of the Fund the best overall terms available. In assessing the
best overall terms available for any transaction, the
Investment Advisor shall consider all factors that it deems
relevant, including the breadth of the market in the security,
the price of the security, the financial condition and
execution capability of the broker or dealer, and the
reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis. In evaluating
the best overall terms available, and in selecting the broker
dealer to execute a particular transaction, the Investment
Advisor may also consider the brokerage and research services
(as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) provided to the Fund and/or other
accounts over which the Investment Advisor or an affiliate of
the Investment Advisor exercises investment discretion. The
Investment Advisor is authorized to pay to a broker or dealer
who provides such brokerage and research services a commission
for executing a portfolio transaction for the Fund which is in
excess of the amount of commission another broker or dealer
would have charged for effecting that transaction if, but only
if, the Investment Advisor determines in good faith that such
commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or
dealer, viewed in terms of that particular transaction or in
terms of the overall
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responsibilities of the Investment Advisor to the Fund. In
addition, the Investment Advisor is authorized to take into
account the sale of shares of the Fund in allocating to
brokers or dealers purchase and sale orders for the Fund's
portfolio securities, provided that the Investment Advisor
believes that the quality of the transaction and the
commission are comparable to what they would be with other
qualified firms. The Investment Advisor will make investment
decisions for the Fund independently from those of other
clients of the Investment Advisor. However, the same security
may be held in the portfolio of more than one client when the
same security is believed suited for the investment objectives
of more than one client. Should two or more clients of the
Investment Advisor simultaneously be engaged in the purchase
or sale of the same security, to the extent possible, the
transactions will be allocated as to price and amount in a
manner fair and equitable to each client;
(iii) It will maintain or supervise the
maintenance of all books and records with respect to the
securities transactions of the Fund and will furnish the
Fund's Board of Directors with such periodic and special
reports as the Board may request; and
(iv) It will treat confidentially and as
proprietary information of the Fund all records and other
information relative to the Fund and prior, present or
potential shareholders, and will not use such records and
information for any purpose other than performance of its
responsibilities and duties hereunder (except after prior
notification to and approval in writing by the Fund, which
approval may not be withheld where the Investment Advisor
would 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
Fund).
4. Sub-Advisor. It is understood that the Investment Advisor
may, from time to time, employ or associate with itself such person or persons,
which may be affiliates of the Investment Advisor, as the Investment Advisor
believes to be fitted to assist it in the performance of this Agreement (each a
"Sub-Advisor"); provided, however, that the compensation of such person or
persons shall be paid by the Investment Advisor and that the Investment Advisor
shall be as fully responsible to the Fund for the acts and omissions of any such
person as it is for its own acts and omissions; and provided further, that the
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retention of any Sub-Advisor shall be approved as may be required by the 1940
Act. In the event that any Sub-Advisor appointed hereunder is terminated, the
Investment Advisor may provide investment management services pursuant to this
Agreement to the Fund without further shareholder approval.
5. Services Not Exclusive. The investment management services
furnished by the Investment Advisor hereunder are deemed not to be exclusive,
and the Investment Advisor shall be free to furnish similar services to others
so long as its services under this Agreement are not impaired thereby. The
Investment Advisor will for all purposes herein be deemed to be an independent
contractor and will, unless otherwise expressly authorized, have no authority to
act for or represent the Fund in any way or otherwise be deemed to be its agent.
6. Books and Records. In compliance with the requirements of
Rule 31a-3 under the 1940 Act, the Investment Advisor hereby agrees that all
records which it maintains for the Fund are the property of the Fund and further
agrees to surrender promptly to the Fund any of such records upon the Fund's
request. The Investment Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act, and to permit the Fund access to
the Investment Advisor's records upon the Fund's request.
7. Expenses. During the term of this Agreement, the Investment
Advisor will pay all expenses incurred by it in connection with its activities
under this Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the Fund.
8. Compensation. For the services provided to the Fund
pursuant to this Agreement, the Fund will pay to the Investment Advisor and the
Investment Advisor will accept as full compensation therefor, a fee, payable on
or before the tenth (10th) day of each calendar month, at the annual rate of
1.00% of the Fund's average net asset values as of the close of the last
business day in each calendar week during the preceding calendar month. Such
fees shall be reduced as required by expense limitations imposed upon the Fund
by any state in which shares of the Fund are sold. Reductions shall be made at
the time of each monthly payment on an estimated basis, if appropriate, and an
adjustment to reflect the reduction on an annual basis shall be made, if
necessary, in the fee payable with respect to the last month in any calendar
year of the Fund. The Investment Advisor shall within ten (10) days after the
end of each calendar year refund any amount paid in excess of the fee determined
to be due for such year.
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If this Agreement shall become effective subsequent to the
first day of a month, or shall terminate before the last day of a month, the
Investment Advisor's compensation for such fraction of the month shall be
determined by applying the foregoing percentage to the average of the weekly net
asset values of the Fund during such fraction of a month (or, if none, to the
asset value of the Fund as calculated on the last business day of the preceding
month) and in the proportion that such fraction of a month bears to the entire
month.
9. Limitation of Liability. The Investment Advisor shall not
be liable for any error of judgment or mistake of law or for any loss suffered
by the Fund in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Investment Advisor 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,
partner, employee, or agent of the Investment Advisor, who may be or become an
officer, director, employee or agent of the Fund, shall be deemed, when
rendering service to the Fund or acting on any business of the Fund (other than
services or business in connection with the Investment Advisor's duties as
investment advisor hereunder), to be rendering such services to or acting
solely, for, the Fund and not as an officer, partner, employee or agent or one
under the control or direction of the Investment Advisor even though paid by it.
10. Duration and Termination. This Agreement will become
effective on the date first written above, and unless sooner terminated as
provided herein, shall continue in effect for two (2) years. Thereafter, if not
terminated, this Agreement shall continue in effect for successive annual
periods, provided such continuance is specifically approved at least annually
(a) by the vote of a majority of those members of the Fund's Board of Directors
who are not interested persons of any party to this Agreement, cast in person at
a meeting called for the purpose of voting on such approval, and (b) by the
Fund's Board of Directors or by vote of a majority of the outstanding voting
securities of the Fund. Notwithstanding the foregoing, this Agreement may be
terminated at any time, without the payment of any penalty, by the Fund (by vote
of the Fund's Board of Directors or by vote of a majority of the outstanding
voting securities of the Fund), or by the Investment Advisor on sixty days'
written notice. This Agreement will immediately and automatically terminate in
the event of its assignment. (As used in this Agreement, the terms "majority of
the outstanding voting securities," "interested persons" and "assignment" shall
have the same meaning of such terms in the 1940 Act.)
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11. Amendment of this Agreement. No provision of this
Agreement may be changed, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. No amendment of this
Agreement shall be effective until approved by vote of a majority of the
outstanding voting securities of the Fund.
12. Miscellaneous. Any notice made pursuant to this Agreement
shall be given in writing, addressed and delivered or mailed postage prepaid,
return-receipt requested, to the other party to this Agreement at its principal
place of business. Notice given by a party's attorney shall be deemed to be
notice given by the party. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provisions of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Maryland law.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day and
year first above written.
CAM BALANCED FUND, INC.
___________________________________
By:________________________________
Title:_____________________________
CAM INVESTMENT ADVISORS, INC.
___________________________________
By:________________________________
Title:_____________________________
A-6
<PAGE>
FORM OF SUB-ADVISORY AGREEMENT
AGREEMENT made as of ____________________, 1996 between CAM
Investment Advisors, Inc. (the "Investment Advisor"), a Delaware corporation,
and Wolf, Webb, Burk & Campbell, Inc. (the "Sub-Advisor"), a Pennsylvania
corporation.
WHEREAS, CAM Balanced Fund, Inc. (the "Fund"), a Maryland
corporation, is registered as a closed-end, diversified, management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, pursuant to an Investment Advisory Agreement (the
"Investment Advisory Agreement") dated the date hereof, by and between the Fund
and the Investment Advisor, the Investment Advisor has agreed to furnish
investment advisory services to the Fund; and
WHEREAS, the Investment Advisor desires to retain the
Sub-Advisor to furnish investment advisory services to the Fund and the
Sub-Advisor is willing to so furnish such services;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Investment Advisor hereby appoints the
Sub-Advisor to act as its sub-adviser for the period and on the terms set forth
in this Agreement. The Sub-Advisor accepts such appointment and agrees to
furnish the services herein set forth, for the compensation herein provided.
2. Management. Subject to the supervision of the Investment
Advisor and the Fund's Board of Directors, the Sub-Advisor will perform the
following services:
(i) Provide a continuous investment program
and strategy for the Fund, including investment research and
management with respect to all securities and investments and
cash equivalents in the Fund, determining from time to time
what securities and other investments will be invested,
reinvested, owned, held or traded by the Fund. The Sub-Advisor
will provide this service under this Agreement in accordance
with the Fund's investment objective, policies and
restrictions as stated in the Prospectus and resolutions of
the Fund's Board of Directors adopted from time to time;
A-1
<PAGE>
(ii) Transmit information concerning
purchases and sales of the Fund's portfolio securities to the
custodian for proper settlement;
(iii) Supply the Fund and its Board of
Directors with reports and statistical data as requested; and
(iv) Prepare a quarterly brokerage allocation
summary and monthly security transaction listing for the Fund.
3. Other Covenants.
The Sub-Advisor further agrees that:
(i) It will conform with all applicable
Rules and Regulations of the Securities and Exchange
Commission;
(ii) It will place orders pursuant to its
investment determinations for the Fund either directly with
the issuer or with any broker or dealer. In executing
portfolio transactions and selecting brokers or dealers, the
Sub-Advisor will use its best efforts to seek on behalf of the
Fund the best overall terms available. In assessing the best
overall terms available for any transaction, the Sub-Advisor
shall consider all factors that it deems relevant, including
the breadth of the market in the security, the price of the
security, the financial condition and execution capability of
the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a
continuing basis. In evaluating the best overall terms
available, and in selecting the broker-dealer to execute a
particular transaction, the Sub-Advisor may also consider the
brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) provided
to the Fund and/or other accounts over which the Sub-Advisor
or an affiliate of the Sub-Advisor exercises investment
discretion. The Sub-Advisor is authorized to pay to a broker
or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Fund
which is in excess of the amount of commission another broker
or dealer would have charged for effecting that transaction
if, but only if, the Sub-Advisor determines in good faith
that such commission was reasonable in relation to the value
of the brokerage and research services provided by such broker
or dealer, viewed in terms of that particular
A-2
<PAGE>
transaction or in terms of the overall responsibilities of the
Sub-Advisor to the Fund. In addition, the Sub-Advisor is
authorized to take into account the sale of shares of the Fund
in allocating to brokers or dealers purchase and sale orders
for the Fund's portfolio securities, provided the Sub-Advisor
believes that the quality of the transaction and the
commission are comparable to what they would be with other
qualified firms. The Sub-Advisor will make investment
decisions for the Fund independently from those of other
clients of the Sub-Advisor. However, the same security may be
held in the portfolio of more than one client when the same
security is believed suited for the investment objectives of
more than one client. Should two or more clients of the
Sub-Advisor simultaneously be engaged in the purchase or sale
of the same security, to the extent possible, the transactions
will be allocated as to price and amount in a manner fair and
equitable to each client;
(iii) It will maintain or supervise the
maintenance of all books and records with respect to the
securities transactions of the Fund, keep its books of account
and will furnish the Fund's Board of Directors with such
periodic and special reports as the Board may request; and
(iv) It will treat confidentially and as
proprietary information of the Fund all records and other
information relative to the Fund and prior, present or
potential shareholders, and will not use such records and
information for any purpose other than performance of its
responsibilities and duties hereunder (except after prior
notification to and approval in writing by the Fund, which
approval may not be withheld where Sub-Advisor would 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 Fund).
4. Services Not Exclusive. The investment management services
furnished by the Sub-Advisor hereunder are deemed not to be exclusive, and the
Sub-Advisor shall be free to furnish similar services to others so long as its
services under this Agreement are not impaired thereby. The Sub-Advisor will for
all purposes herein be deemed to be an independent contractor and will, unless
otherwise expressly authorized, have no authority to act for or represent the
Fund or the Investment Advisor in any way or otherwise be deemed to be their
agent.
A-3
<PAGE>
5. Books and Records. In compliance with the requirements of
Rule 31a-3 under the 1940 Act, the Sub-Advisor hereby agrees that all records
which it maintains for the Fund are the property of the Fund and further agrees
to surrender promptly to the Fund any of such records upon the Fund's request.
The Sub-Advisor further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1
under the 1940 Act, and to permit the Investment Advisor and the Fund access to
the Sub-Advisor's records upon the Investment Advisor's or Fund's request.
6. Expenses. During the term of this Agreement, the
Sub-Advisor will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities (including
brokerage commissions, if any) purchased for the Fund.
7. Compensation. For the services provided to the Fund
pursuant to this Agreement, the Investment Advisor will pay to the Sub-Advisor
and the Sub-Advisor will accept as full compensation therefor, a fee, payable on
or before the tenth (10th) day of each calendar month, equal to 80% of the fees
(after subtracting any fee waivers) paid to the Investment Advisor by the Fund
for the preceding calendar month under the Investment Advisory Agreement,
provided, however that to the extent that the fees (after subtracting any fee
waivers) paid to the Investment Advisor by the Fund in the preceding twelve
calendar months exceeded $500,000, the fees payable to the Sub-Advisor
hereunder shall be reduced to 20% of the fees (after subtracting any fee
waivers) paid to the Investment Advisor by the Fund for the preceding calendar
month. If this Agreement shall become effective subsequent to the first day of a
month, or shall terminate before the last day of a month, the Sub-Advisor's
compensation for such fraction of the month shall be determined by applying the
foregoing percentage to the average of the weekly net asset values of the Fund
during such fraction of a month (or, if none, to the asset value of the Fund as
calculated on the last business day of the preceding month) and in the
proportion that such fraction of a month bears to the entire month. The Sub-
Advisor understands and agrees that the Fund shall have no liability for payment
of the Sub-Advisor's fee hereunder, and that the Sub-Advisor's sole recourse for
payment of such fee shall be to the Investment Advisor.
8. Limitation of Liability. The Sub-Advisor shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund or the Investment Advisor in connection with the performance of this
Agreement, except a loss resulting from a breach of fiduciary duty with respect
to the receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Sub-Advisor in the
performance of its duties or from reckless
A-4
<PAGE>
disregard by it of its obligations and duties under this Agreement.
9. Duration and Termination. This Agreement will become
effective on the date first written above, and unless sooner terminated as
provided herein, shall continue in effect for two (2) years. Thereafter, if not
terminated, this Agreement shall continue in effect for successive annual
periods, provided such continuance is specifically approved at least annually
(a) by the vote of a majority of those members of the Fund's Board of Directors
who are not interested persons of any party to this Agreement, cast in person at
a meeting called for the purpose of voting on such approval, and (b) by the
Fund's Board of Directors or by vote of a majority of the outstanding voting
securities of the Fund. Notwithstanding the foregoing, this Agreement may be
terminated at any time on sixty days' written notice, without the payment of any
penalty, by the Fund (by vote of the Fund's Board of Directors or by vote of a
majority of the outstanding voting securities of the Fund), by the Investment
Advisor, or by the Sub-Advisor. This Agreement will immediately and
automatically terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested persons" and "assignment" shall have the same meaning of such terms
in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. No amendment of this
Agreement shall be effective until approved by vote of a majority of the
outstanding voting securities of the Fund.
11. Miscellaneous. Any notice made pursuant to this Agreement
shall be given in writing, addressed and delivered or mailed postage prepaid,
return-receipt requested, to the other party to this Agreement at its principal
place of business. Notice given by a party's attorney shall be deemed to be
notice given by the party. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provisions of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Maryland law.
A-5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day and
year first above written.
WOLF, WEBB, BURK & CAMPBELL, INC.
_________________________________
By: _____________________________
Title: __________________________
CAM INVESTMENT ADVISORS, INC.
_________________________________
By: _____________________________
Title: __________________________
A-6
<PAGE>
FORM OF UNDERWRITING AGREEMENT
[CAM BALANCED FUND, INC.]
Rodney Square Distributors, Inc.
Rodney Square North
1100 North Market Street
Wilmington DE 19890-0001
Ladies and Gentlemen:
The undersigned, CAM Balanced Fund, Inc. ("Company"), a corporation organized
under the laws of Maryland and CAM Investment Advisers, Inc. a corporation
organized under the laws of [Delaware] ("Adviser")and, solely with respect to
the provisions of Section 9 hereof, Consolidated Asset Management, Inc., a
corporation organized under the laws of [Delaware], hereby confirm their
agreement with ("Underwriter").
1. Introductory.
The Company has an authorized capitalization of 100,000,000 shares of Common
Stock, par value $0.001 per share ("Shares"), of which [amount of seed capital
shares] are currently issued and outstanding. All such issued and outstanding
shares are held by Adviser. This Agreement contemplates that you shall use your
best efforts to sell, for the account of the Company, Common Shares at a price
of $10.00 per Common Share. Accordingly, the Company and Adviser, hereby agree
with you as follows:
2. Representations, Warranties and Agreements of the Company and Adviser.
The Company and the Adviser severally represent and warrant to, and agree with,
you that:
(a) The Company has filed with the Commission a Form N-8A relating to
the Company and is duly registered with the Commission under the Investment
Company Act of 1940 ("1940 Act") as a closed-end, diversified, management
investment company, all within the meaning of that Act. All statements contained
in the Form N-8A so filed, as of the date hereof, are appropriately responsive
in all respects to the requirement of said form and were, as of the date made,
accurate. The Company has not received any notice from the Commission pursuant
to Section 8(e) of the 1940 Act relating to such Form N-8A.
(b) The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") an initial registration statement (File
No.________ and File No. _______) on Form N-2 covering the registration of the
Shares under the Securities Act of 1933, as amended (the "Securities Act") and
the 1940 Act, and anticipates that it shall file one or more pre-effective
amendments thereto. Such registration statement, including all exhibits thereto
and documents incorporated therein by reference, as finally amended and revised
at the time the Registration Statement becomes effective is herein referred to
as the "Registration Statement." The prospectus (including any preliminary or
"red herring prospectus" and any documents incorporated in the prospectus by
reference) that comprises a part of the Registration Statement is herein
referred to as the "Prospectus," except that, if any prospectus filed by the
Company pursuant to Rule 497 promulgated under the Securities Act shall differ
from the Prospectus, the term "Prospectus" shall mean the Prospectus so filed.
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<PAGE>
(c) When the Registration Statement shall become effective and at all
times subsequent thereto, up to and including the Closing Date (as hereinafter
defined), the Registration Statement shall fully comply with the applicable
provisions of the Securities Act, the 1940 Act and the rules and regulations
promulgated thereunder ("Rules and Regulations"), and shall not contain any
untrue statement of a material fact and shall not omit to state any material
fact required to be stated therein or necessary in order to make the statement
therein not misleading. When the Registration Statement shall become effective
and at all times subsequent thereto up to and including the Closing Date, the
Prospectus (including any preliminary or "red herring prospectus" and the
Prospectus as amended or supplemented, if the Company shall have filed with the
Commission any amendment thereof or supplement thereto) shall fully comply with
the Rules and Regulations and shall not contain any untrue statement of a
material fact and shall not omit to state any 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, provided
that the foregoing does not apply to statements or omissions in the Registration
Statement or the Prospectus, or any amendment or supplement thereto, based upon
written information furnished to the Company by you specifically for use
therein.
(d) In the course of its preparation of the Registration Statement and
Prospectus, nothing came to the attention of the Company that lead the Company
to believe that any information contained in the Registration Statement and
Prospectus was not complete and accurate in all material respects.
(e) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Maryland and the
Company has full power and authority (corporate and other) to own its properties
and conduct its business as described in the Registration Statement and as being
conducted, and is in compliance in all material respects with all laws requiring
its qualification to do business as a foreign corporation in all other
jurisdictions in which the conduct of its business requires such qualification.
As of the date of this Agreement, there are outstanding no pre-emptive,
conversion, or other rights, options, warrants or agreements granted, issued or
binding upon the Company for the purchase or acquisition of the Shares or any
other capital stock of the Company and, as of the Closing Date, no such rights,
options, warrants, or agreements shall be outstanding.
(f) The Shares have been duly authorized, and when issued and delivered
as contemplated by this Agreement, shall have been validly issued and shall be
fully paid and nonassessable, and conform to the description thereof contained
in the Registration Statement. The certificates, if any, used to evidence the
Shares shall be in due and proper form. No further approval or authority of the
stockholders or the Board of Directors of the Company shall be required for the
issuance and sale of the Shares as contemplated herein.
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<PAGE>
(g) This Agreement and the Escrow Agreement (as hereinafter defined)
have each been duly authorized, executed and delivered by the Company and each
of this Agreement and the Escrow Agreement constitutes a legal, valid and
binding obligation of the Company enforceable in accordance with its terms and
is in all respects in full compliance with all applicable provisions of the
Securities Act.
(h) The custodian agreement (the "Custodian Agreement") between the
Company and Wilmington Trust Company has been duly authorized, executed and
delivered on behalf of the Company, constitutes a legal, valid and binding
obligation of the Company enforceable in accordance with its terms.
(i) The execution and delivery of this Agreement and each of the
agreements described or referred to in the Registration Statement or in this
Agreement, including without limitation, the Investment Advisory Agreement
between the Company and the Adviser, and the performance by the Company under
each such Agreement, shall not conflict with, result in a breach or violation
of, or constitute a default under, any agreement or instrument to which the
Company is a party, the Company's corporate charter or by-laws, or any law,
order, rule, regulation, decree or injunction of any jurisdiction, court or
governmental agency or body. No consent, approval, authorization or order of, or
filing with, any court or governmental agency or body is required for the
performance by the Company of any such agreement or the consummation by the
Company of the transactions contemplated under any such agreement, except such
as have been obtained from, or made with, any such agency or body in accordance
with the Securities Act, the 1940 Act, the Securities Exchange Act and such
other Federal securities law or State securities law as may be applicable in
connection with the obligations of the Adviser under this Agreement or the
actions of the Adviser as contemplated hereunder.
(j) The Prospectus, as originally filed or as amended and supplemented
if the Company shall have filed with the Commission any amendment thereof or
supplement thereto, shall fully comply with the applicable provisions of the
Securities Act, the 1940 Act and the Rules and Regulations and shall not contain
any untrue statement of a material fact and shall not omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(k) The Company has not given any information or made any
representation in connection with the offering of the Shares, written or oral,
other than as contained in the Prospectus. No marketing materials or written or
oral information have been or will be provided to any person for use in
connection with the offering of the Shares unless and until such materials have
been reviewed and approved in writing by you. At the time of use or distribution
of any Sales Material, as hereinafter defined, such Sales Material will fully
comply with applicable provisions of the Securities Act, the 1940 Act and the
Rules and Regulations and shall not contain any untrue statement of material
fact and will not omit to state any material fact required to be stated therein
or necessary in order to make the statements there, in light of the
circumstances under which they were made, not misleading. The Company has duly
filed all Sales Material used or distributed prior to the date hereof with the
Commission in accordance with the applicable provisions of the Securities Act,
the 1940 Act and the Rules and Regulations and with the appropriate authorities
3
<PAGE>
in those jurisdictions in which such filings are required, and the Company has
not received any notice of deficiency from the Commission, any such state
authority or any self-regulatory agency with respect to any Sales Materials. For
purposes of this Agreement, the terms "Sales Material" shall include notice,
circular advertisement, letter or other communication, whether written, or
transmitted by radio, television or other electronic means, prepared by or on
behalf of the Company which purports to offer the Shares for sale, other than
the Prospectus and any preliminary or "red herring prospectus." Any
advertisement or other material prepared in reliance upon Rule 482 under the
Securities Act, however, shall be considered Sales Material for purposes of this
Agreement.
3. Representations of the Adviser.
The Adviser represents and warrants to, and agrees with you that:
(a) The Adviser is duly registered with the Commission under the
Investment Advisers Act of 1940 ("Advisers Act") as an investment adviser and in
all material respects complies with and has complied with the terms and
provisions of that Act and the rules and regulation promulgated thereunder. All
statements made in the Form ADV filed with the Commission by the Adviser, and in
each amendment or supplement to such Form ADV so filed, are appropriately
responsive in all respects to the requirements of said form and of such rules
and regulations of the Commission, and the statements contained there in were
accurate as of the date made. Except for the transactions contemplated by this
Agreement, there has been no material change in the business or prospectus of
the Adviser that could reasonably be anticipated to require an amendment of said
form nor any facts or circumstance which could reasonably be anticipated to lead
to any proceeding which would adversely affect the registration or good standing
of the Adviser with the Commission.
(b) The Adviser is duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware and has
full power and authority (corporate and other) to own its properties and conduct
its business as currently being conducted and as described in its Form ADV. The
Adviser is in compliance in all material respects with all laws requiring its
qualification to do business as a foreign corporation in all other jurisdictions
in which the conduct of its business requires such qualification. The Adviser
has all necessary authorizations, approvals, orders, licenses, certificates and
permits of and form all governmental regulatory officials and bodies, to own its
properties and conduct its business as described in the Prospectus and Form ADV.
(c) The articles of incorporation, by-laws, and other agreements,
documents and materials regarding the Adviser furnished or made available to you
or to your attorneys in connection with the sale of the Shares included all
contracts and agreements that are material to the financial condition, business
or prospects of the Adviser, and were true, complete and correct originals or
copies of what they purported to be. There has been no material adverse change
in the condition, business or prospects (financial or otherwise) of the Adviser
that would adversely affect the Adviser's ability to perform its obligations as
contemplated under this Agreement, the Registration Statement and the Investment
Advisory Agreement. No default exists, and no event has occurred
4
<PAGE>
which with notice or lapse of time, or both, would constitute a default, in the
due performance and observance of any term, covenant or condition of any
indenture, mortgage, deed of trust, note, bank load or credit agreement or any
other agreement or instrument to which the Adviser is a party or by which it or
any of its property may be bound or affected in any respect which would have
material adviser effect on the Adviser. There is no litigation or governmental
proceeding before any court, public body or board pending or threatened against,
or involving the properties, franchises or business of the Adviser that would
material and adversely affect the Adviser, except as specifically disclosed in
the Prospectus.
(d) This Agreement has been duly authorized, executed and delivered by
the Adviser, and (assuming due authorization, execution and delivery by you)
constitutes a legal, valid and binding agreement of the Adviser, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws affecting enforcement of
creditors rights generally and to equitable principles that may restrict the
availability of remedies and except as rights to indemnity hereunder may be
limited under the Securities Act.
(e) The execution and delivery of this Agreement by the Adviser and the
performance by the Adviser of its obligations hereunder shall not conflict with,
result in a breach of, or constitute a default under any agreement or instrument
to which the Adviser is a party or any applicable law, order, rule, regulation,
decree or injunction of any jurisdiction, court or governmental agency or body
or the corporate charter or by-laws of the Adviser. No consent, approval,
authorization or order of, or filing with, any court or governmental agency or
body is required in connection with the performance by the Adviser of this
Agreement, or the consummation by the Adviser of the transactions contemplated
hereby, except such as have been obtained from, or made with, any such agency or
body in accordance with the Securities Act, the 1940 Act, the Securities
Exchange Act and such other Federal securities law or State securities law as
may be applicable in connection with the obligations of the Adviser under this
Agreement or the actions of the Adviser as contemplated herein.
(f) The execution and delivery of this Agreement and the Investment
Advisory Agreement between the Company and the Adviser, and the performance by
the Adviser under each such Agreement shall not conflict with, result in a
breach or violation of, or constitute a default under, any agreement or
instrument to which the Adviser is a party, the Adviser's corporate charter or
by-laws, or any law, order, rule, regulation, decree or injunction of any
jurisdiction, court or governmental agency or body, and no consent, approval,
authorization or order of, or filing with, any court or governmental agency or
body is required for the performance by the Adviser of any such agreement or the
consummation by the Adviser of the transactions contemplated under any such
agreement, except such as may be required under the Securities Act, the 1940
Act, or Blue Sky Laws.
(g) This Agreement and the Investment Advisory Agreement have been duly
and validly authorized, executed and delivered by the Adviser and are valid and
binding agreements and obligations of the Adviser, enforceable in accordance
with their terms. The Investment Advisory Agreement complies in all respects
with all applicable provisions of the 1940 Act.
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<PAGE>
(h) In the course of its review of the Registration Statement and
Prospectus, nothing came to the attention of the Adviser that led the Adviser to
believe that any information contained in the Registration Statement and
Prospectus was not complete and accurate in all material respects. The Adviser
has not given any information or made any representation in connection with the
offering of the Shares, written or oral, other than as contained in the
Prospectus.
4. Offering and Sale of the Shares.
(a) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company appoints you as its [exclusive] agent to effect sales of the Shares for
the account of the Company at the offering price of $10.00 per Share and upon
the other terms and conditions set forth herein and in the Prospectus, and you
agree to use your best efforts as such agent to sell the Shares during the term
of this Agreement upon the terms and conditions set forth herein and in the
Prospectus.
(b) It is understood and agreed that subscriptions for Shares may be
solicited by certain officers of the Company and that such activities by such
officers will be conducted in accordance with Rule 3a4-1 under the Securities
Exchange Act of 1934 ("Securities Exchange Act"). In addition, the Company may
use brokers-dealers ("Selected Brokers") not affiliated with you, that wish to
participate in the sale of Shares. It is understood and agreed that each such
Selected Broker, prior to soliciting sales of Shares (including, for this
purpose, subscriptions therefor) will have entered into a written agreement in
the form set forth in Exhibit B, provided that you will have the right to
approve each such Selected Broker, which approval shall not be unreasonably
withheld.
(c) As compensation for your services hereunder, [ ]. Your
appointment shall commence upon the date of the execution of this Agreement, and
shall continue for a period (such period, including any extension thereof as
hereinafter provided, being herein called the "Offering Period") of 30 days from
the effective date (the "Effective Date") of the Registration Statement (and for
a period of up to 60 additional days if extended by agreement of the Company and
you), unless all of the Shares have previously been subscribed for. The offering
shall terminate and all amounts paid by applicants to purchase Shares shall be
promptly returned to them with interest as provided in the Prospectus and the
Escrow Agreement (as hereinafter defined) (i) if subscriptions for at least
1,000,000 Shares have not been received within the Offering Period, (ii) at any
time by agreement of the Company and you or (iii) this Agreement shall be
terminated as provided herein.
(d) You hereby acknowledge that you are a party to the Escrow Agreement
(the "Escrow Agreement") of even date herewith between you [Escrow
Bank/Custodian] ("Escrow Agent") and the Company, a copy of which is attached
hereto as Exhibit A. You shall promptly upon receipt deliver all cash and checks
received by you from applicants to purchase Shares to the Escrow Agent. Such
cash or checks shall be accompanied by one executed copy of the Subscription
Application pursuant to which applications to purchase Shares are made, properly
completed and executed and in the form of Exhibit A to the Prospectus
("Subscription Application"). All such cash or checks and executed copies of
Subscription Application are to be deposited by the Escrow Agent, pursuant to
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<PAGE>
the Escrow Agreement, in Escrow Account No. __________ (the "Escrow Account")
established by the Company with the Escrow Agent. All checks received by you
from applicants to purchase shall be made payable to [the Company's Escrow
Account]. You shall promptly deliver to the Company one photocopy of each
Subscription Agreement deposited in the Escrow Account. Promptly after receipt
of a Subscription Application and the funds therefor by the Escrow Agent and
delivery of a copy of the Subscription Application, the Company shall mail an
interim receipt, in the form annexed to the Escrow Agreement as Exhibit A, to
each such applicant to purchase for the amount deposited in the Escrow Account
on behalf of such applicant to purchase. Any entity selected by you to process
orders for Shares on behalf of applicants to purchase may deliver cash or checks
and Subscription Applications received from such applicants directly to the
Escrow Agent and deliver a photocopy of Subscription Applications so received
directly to the Company. It is understood that you shall have the right to
refuse to forward to the Escrow Agent any Subscription Application, and in such
event you shall promptly remit all funds received by you to the person on whose
behalf such funds were submitted to you.
5. Closing.
Subject to the prior termination of the offering as provided herein, there shall
be a closing (the "Closing") at the offices of [ ] on the fifth
business day immediately following the termination of the Offering Period (or at
such other place or time not later than ten business days thereafter as You and
the Company shall determine) (the "Closing Date"). Such Closing shall include
the following: (i) satisfaction of the conditions set forth in Section 8; (ii)
payment for the Shares to the Company by release of funds from the Escrow
Account and delivery to the Company of properly completed and executed
Subscription Applications to each purchaser; (iii) delivery by the Company of
appropriate evidence of the deposit of Shares purchased for the account of
purchasers; and (iv) payment of interest earned on amounts held in the Escrow
Account to respective purchasers as set forth in the Escrow Agreement. [At
Closing, the Company shall also pay to you, out of the funds held in the Escrow
Account, the commission referred to in Section 4(c) for each Share sold.]
6. Covenants of the Company.
The Company covenants and agrees with you that:
(a) The Company shall use its best efforts to cause the Registration
Statement as filed and any subsequent amendments thereto to become effective as
promptly as possible and shall notify you immediately and confirm in writing (i)
when the Registration Statement and any amendment thereto shall have become
effective or any supplement to the Prospectus or any amended Prospectus shall
have been filed, (ii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of the
institution of any proceedings for that purpose, or of the institution or
threatening by the Commission of any investigation or other proceeding that
might result in the suspension of the use of the Prospectus, or of the
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<PAGE>
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, or of the institution or threatening of any proceedings for any
such purpose or for the purpose of preventing the use of or noticing a
deficiency in the Prospectus, any amended Prospectus or any supplement thereto.
The Company shall not file any pre-effective or post-effective amendment to the
Registration Statement as initially filed with the Commission, or any supplement
or amendment to the Prospectus unless you shall have been timely provided with a
copy thereof, and shall not have reasonably objected thereto.
(b) If prior to the Closing Date or at any time thereafter when a
Prospectus relating to the Shares is required to be delivered under the
Securities Act or the 1940 Act, any event occurs as a result of which the
Prospectus as then amended or supplemented would, in your judgment with the
concurrence of your counsel include an untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or if it
is necessary at any time to amend the Prospectus to comply with the Securities
Act or the 1940 Act, or the Rules and Regulations, the Company promptly shall
prepare and file with the Commission an amendment or supplement which shall
correct such statement or omission or an amendment which shall effect such
compliance and, at the Company's expense, shall prepare and furnish as many
copies of any such amendment or supplement as you may reasonably request.
(c) Not later than sixteen months from the date hereof, the Company
shall make generally available to its securityholders an earnings statement
covering a period of at least twelve months beginning after the effective date
of the Registration Statement which shall satisfy the provisions of Section
11(a) of the Securities Act.
(d) The Company shall furnish to you copies of the Registration
Statement (two of which shall be manually executed and shall include all
exhibits), the Prospectus (including any Preliminary or "red-herring
prospectus") and all amendments and supplements to such documents, in each case
as soon as available and in such quantities as you reasonably request.
(e) The Company shall use its best efforts to arrange for the
qualification of the Shares under the laws of such jurisdictions as you
designate and shall continue such qualifications in effect so long as required
for the offering of the Shares as contemplated herein, provided that the Company
shall not be obligated to file any general consent to service of process, or to
qualify as a foreign corporation or as a dealer in securities in any state in
which it is not now so qualified.
(f) During the period of five years from the date hereof, the Company
shall furnish to you, as soon as practicable after the end of the relevant
fiscal period, a copy of its annual and semi-annual reports to securityholders
for such fiscal year, and during such period the Company shall also furnish to
you (i) as soon as available, a copy of each report or definite proxy statement
of the Company filed with the Commission under the Securities Exchange Act of
1934 (the "Securities Exchange Act") or mailed to securityholders and (ii) from
time to time such other information concerning the Company as you may reasonably
request.
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<PAGE>
(g) The Company shall apply the net proceeds from the sale of the
Shares to be sold by it hereunder for the purposes set forth in the Prospectus.
(h) During the course of the offering of the Shares, the Company shall
not take directly or indirectly any action designed to or that might, in the
future, reasonably be expected to cause or result in stabilization or
manipulation of the price of the Shares.
(i) The Company shall apply for listing and use its best efforts to
list the shares on the American Stock Exchange.
(j) The Company shall not give any information or make any
representation in connection with the offering of the Shares, written or oral,
other than as contained in the Prospectus.
7. Expenses.
Whether or not the transactions contemplated hereunder are consummated, the
Company, to the extent consistent with the 1940 Act, or its Adviser shall pay
all costs and expenses incident to the performance of its obligations hereunder,
including, without limiting the generality of the foregoing, all costs and
expenses incurred in connection with: (i) the issuance, sale and delivery of the
shares being offered hereby (including all transfer and other taxes thereon);
(ii) the preparation, filing, printing, and delivery of the Registration
Statement, the Prospectus (including any Preliminary or "red herring
prospectus"), all exhibits to any such document and all documents incorporated
by reference in any such document, and any amendments thereof and supplements
thereto, and related selling and other documents (including this Agreement) in
connection with the offering; (iii) the filing fees and expenses incurred in
connection with the qualification of the Shares under state securities laws [and
the preparation of the "Blue Sky" memorandum for the offering] and filing fees
in connection with the review of the terms of the public offering of the Shares
by the National Association of Securities Dealers, Inc. ("NASD"); (iv) the fees,
disbursements and expenses of the accountants and counsel for the Company; (v)
the fees of the Company's transfer agent and registrar; (vi) all expenses of
obtaining approval for listing of the Shares on any stock exchange; (vii) the
advertising costs (including tombstone advertisements, newspaper advertising,
direct mailings to potential investors and fees and expenses of marketing
consultants) of the offering; (viii) the costs to you relating to arrangement of
order processing services; and (ix) all fees and expenses regarding the Escrow
Agreement and Escrow Agent fees. It is understood that all expenses associated
with the offering of the Shares, to the extent not expressly assumed by the
Company pursuant to the terms of this Agreement, shall be paid by the Adviser,
and that you shall be reimbursed by the Adviser for all out-of-pocket expenses
incurred in connection with the offering of the Shares.
8. Conditions of Your Obligations.
Your obligations to use your best efforts to sell the Shares as provided herein
and the release of funds from the Escrow Account on the Closing Date shall be
subject to the accuracy of the representations and warranties of the Company as
of the date hereof and at the Closing Date, to the accuracy of the statements of
9
<PAGE>
the officers of the Company and the Adviser made pursuant to the provisions
hereof, to the performance by the Company and the Adviser of their respective
obligations hereunder and to the following additional conditions:
(a) The Registration Statement shall have become effective on the day
of this Agreement, or such later or date as shall have been consented to by you.
No stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been instituted,
or, to the knowledge of the Company, shall be contemplated, by the Commission.
(b) You shall not have advised the Company that the Registration
Statement or Prospectus, or any amendment or supplement thereto, contains an
untrue statement of fact or omits to state a fact which, you have concluded,
after conferring with your counsel, is in either case material and in the case
of an omission is required to be stated therein or is necessary to make the
statements therein not misleading.
(c) You shall have received an opinion of counsel for the Company,
dated the Closing Date, acceptable to you, and substantially in the form of
Exhibit 7(c) to this Agreement. In rendering such opinion, such counsel may rely
as to matters involving the application of laws other than the laws of the
jurisdictions in which such counsel is admitted, to the extent such counsel
deems proper and to the extent specified in such opinion, upon an opinion or
opinions of other counsel, satisfactory to you. The opinion of counsel for the
Company shall also state that the opinion of any other counsel on whom such
counsel is relying is in form and substance satisfactory to such counsel and
that, in such counsel's opinion, you and they are justified in relying thereon.
(d) You shall have received an opinion of counsel for the Adviser,
dated the Closing Date, in form acceptable to you and substantially in the form
of Exhibit 7(d) to this Agreement. In rendering such opinion, such counsel may
rely as to matters involving the application of laws other than the laws of the
jurisdictions in which such counsel is admitted, to the extent such counsel
deems proper and to the extent specified in such opinion, upon an opinion or
opinions of other counsel, satisfactory to you. The opinion of counsel for the
Adviser shall also state that the opinion of any other counsel on whom such
counsel is relying is in form and substance satisfactory to such counsel and
that, in such counsel's opinion, you and they are justified in relying thereon
(e) You shall have received from your counsel, such opinion or
opinions, dated such Closing Date, with respect to matters relating to the
offering of the Shares as you may reasonably request, and the Company shall have
furnished to such counsel such documents as they reasonably request for the
purpose of enabling them to pass upon such matters.
(f) You shall have received a certificate of the chief executive
officer and a principal financial or accounting officer of the Company, dated
the Closing Date, substantially to the effect that:
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(i) The representations and warranties herein of the Company are
true and correct as of the Closing Date with the same force and
effect as if made on that date;
(ii) The Company has performed all of its obligations hereunder to
be performed at or prior to the Closing Date; and
(iii) Since the effective date of the Registration Statement, there
has not occurred any event required to be set forth in an amended
or supplemented Prospectus which has not been so set forth, and any
such amendment or supplement does not include any untrue statement
of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading.
(g) You shall have received a certificate of the chief executive
officer and a principal financial or accounting officer of the Adviser, dated
the Closing Date, substantially to the effect that:
(i) The representations and warranties herein of the Adviser are
true and correct as of the Closing Date with the same force and
effect as if made on that date;
(ii) The Adviser has performed all of its obligations hereunder to
be performed at or prior to the Closing Date; and
(iii) Since the effective date of the Registration Statement, there
has not occurred any event required to be set forth in an amended
or supplemented Prospectus which has not been so set forth, and any
such amendment or supplement does not include any untrue statement
of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading.
(h) At the time of the signing of this Agreement and at the Closing
Date, you shall have received a letter of [the Company's auditors] certified
public accountants, dated the date of this Agreement or the Closing Date,
confirming that they are independent certified public accountants with respect
to the Company within the meaning of the Securities Act and the Rules and
Regulations and stating in effect that:
(i) In their opinion the balance sheet included in the Prospectus
complies as to form in all material respects with the applicable
accounting requirements of the Securities Act and the Rules and
Regulations;
(ii) On the basis of a reading of the latest available interim
financial statements of the Company, inquiries of officials of the
Company responsible for financial and accounting matters and other
specified procedures, nothing came to their attention that caused
them to believe that at the date of the latest available balance
sheet read by such accountants, or at a subsequent specified date
not more than five days prior to the Closing Date, there was any
change in the capital stock or stockholders equity of the Company
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<PAGE>
as compared with amounts shown on the balance sheet included in the
Prospectus, except for such changes as are contemplated by the
Prospectus and as are described in such letter; and
(iii) They have confirmed such procedures with respect to certain
information contained in the Prospectus as were previously agreed
upon by you and them.
(i) The Company and the Adviser shall have furnished to you such
additional certificates, if any, with respect to the representations and
warranties of the Company contained herein as you shall reasonably have
requested.
(j) Since the respective dates as of which information is given in the
Prospectus, there shall not have been any change, or any development involving a
prospective change, in the condition (financial or otherwise) of the Company or
the Adviser, or in any pending action, suit, proceeding or investigation
involving the Company or the Adviser, whether or not arising from transactions
in the ordinary course of business, that, in your reasonable judgment, is
material and renders it impractical or inadvisable to proceed with the
completion of the sale of and payment for the Shares on the Closing Date.
(k) No notice of disapproval shall have been issued or proceedings for
that purpose shall have been instituted by the Commission, the NASD, or any
state securities or Blue Sky authority with respect to the distribution
arrangements relating to the offering of the Shares.
(l) The Company and the Adviser shall furnish you with such conformed
copies of such opinions, certificates, letters and documents as you reasonably
request.
9. Indemnification
(a) By the Company.
(i) Subject to the conditions set forth below, the Company agrees
to indemnify and hold harmless you and each of your directors and
officers and each person, if any, who controls you within the
meaning of Section 15 of the Securities Act against any loss,
liability, claim, damages or expense (including the reasonable cost
of investigating or defending any alleged loss, liability, claim,
damages, or expense and reasonable counsel fees and disbursements
incurred in connection therewith), arising by reason of any person
acquiring any Shares, based upon the ground that the registration
statement, prospectus or other information filed or made public by
the Company (as from time to time amended) included an untrue
statement of a material fact or omitted to state a material fact
required to be stated or necessary in order to make the statements
made not misleading, provided, however, that this Section 9(a)(1)
shall not apply to the extent that the statement or omission was
made in reliance upon, and in conformity with, information
furnished to the Company by or on behalf of you or the Adviser.
(ii) Section 9(a)(1) shall not protect you or any other person
against any liability to the Company or its stockholders to which
you or such person otherwise would be subject by reason of willful
12
<PAGE>
misfeasance, bad faith or gross negligence in the performance of
your or its duties or by reason of its reckless disregard of your
or its obligations and duties under this Agreement. Section 9(a)(1)
shall not apply to any claim made against you or any other person
unless you or such other person shall have notified the Company in
writing of the claim within a reasonable time after the summons or
other first written notification giving information of the nature
of the claim shall have been served upon you or such other person
(or after you or the person shall have received notice of service
on any designated agent), but failure to notify the Company of any
claim shall not relieve the Company from any liability which it may
have to you or any person against whom such action is brought
otherwise than under Section 9(a)(1).
(iii) The Company shall 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 claims subject to the aforesaid
indemnity agreement. If the Company elects to assume the defense of
any such claim, the defense shall be conducted by counsel chosen by
the Company and satisfactory to the indemnified defendants in the
suit, whose approval shall not be unreasonably withheld. In the
event that the Company elects to assume the defense of any suit and
retain counsel, the indemnified defendants shall bear the fees and
expenses of any additional counsel retained by them. If the Company
does not elect to assume the defense of a suit, it will reimburse
the indemnified defendants or the reasonable fees and expense of
any counsel retained by them.
(iv) The Company agrees to notify you promptly of the commencement
of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of any of the
Shares.
(b) By the Adviser and Consolidated Asset Management, Inc.
(i) Subject to the conditions set forth below, the Adviser and
Consolidated Asset Management, Inc. jointly and severally agree to
indemnify and hold harmless you and each of your directors and
officers and each person, if any, who controls you within the
meaning of Section 15 of the Securities Act against any loss,
liability, claim, damages or expense (including the reasonable cost
of investigating or defending any alleged loss, liability, claim,
damages, or expense and reasonable counsel fees and disbursements
incurred in connection therewith), arising by reason of any person
acquiring any Shares, based upon the ground that the registration
statement, prospectus or other information filed or made public by
the Company (as from time to time amended) included an untrue
statement of a material fact or omitted to state a material fact
required to be stated or necessary in order to make the statements
made not misleading, provided, however, that this Section 9(b)(1)
shall not apply to the extent that the statement or omission was
made in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of you.
(ii) Section 9(b)(1) shall not protect you or any other person
against any liability to which you or such person otherwise would
be subject by reason of willful misfeasance, bad faith or gross
13
<PAGE>
negligence in the performance of your or its duties or by reason of
its reckless disregard of your or its obligations and duties under
this Agreement. Section 9(b)(1) shall not apply to any claim made
against you or any other person unless you or such other person
shall have notified the Adviser in writing of the claim within a
reasonable time after the summons or other first written
notification giving information of the nature of the claim shall
have been served upon you or such other person (or after you or the
person shall have received notice of service on any designated
agent), but failure to notify the Adviser of any claim shall not
relieve the Adviser or Consolidated Asset Management, Inc. from any
liability which it may have to you or any person against whom such
action is brought otherwise than under Section 9(b)(1).
(iii) The Adviser shall 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 claims subject to the aforesaid
indemnity agreement. If the Adviser elects to assume the defense of
any such claim, the defense shall be conducted by counsel chosen by
the Adviser and satisfactory to the indemnified defendants in the
suit, whose approval shall not be unreasonably withheld. In the
event that the Adviser elects to assume the defense of any suit and
retain counsel, the indemnified defendants shall bear the fees and
expenses of any additional counsel retained by them. If the Adviser
does not elect to assume the defense of a suit, it will reimburse
the indemnified defendants for the reasonable fees and expenses of
any counsel retained by them.
(iv) The Adviser agrees to notify you promptly of the commencement
of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of any of the
Shares.
(c) By You.
(i) Subject to the conditions set forth below, you agree to
indemnify and hold harmless the Company, the Adviser and
Consolidated Asset Management, Inc., and each of their directors
and officers and each person, if any, who controls any of them
within the meaning of Section 15 of the Securities Act, against any
loss, liability, claim, damages or expense (including the
reasonable cost of investigating or defending any alleged loss,
liability, claims, damages or expense and reasonable counsel fees
incurred in connection therewith) based upon the Securities Act or
any other statute or common law and arising by reason of any person
acquiring any Shares, and alleging a wrongful act by you or any or
your employees or alleging that the registration statement,
prospectus or other information filed or made public by the Company
(as from time to time amended) included an untrue statement of a
material fact or omitted to state a material fact required to be
stated or necessary in order to make the statements not misleading
insofar as the statement or omission was made in reliance upon and
in conformity with information furnished to the Company by or on
behalf or you.
(ii) Section 9(c)(1) shall not protect the Company or any other
person against any liability to which the Company or such other
person would otherwise be subject by reason of willful misfeasance,
14
<PAGE>
bad faith or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations and duties
under this Agreement. Section 9 (c) (1) shall not apply to any
claim made against the Company or any other person unless the
Company or such other person shall have notified you in writing of
the claim within a reasonable time after the summons or other first
written notification giving information of the nature of the claim
shall have been served upon the Company or upon any person (or
after the Company or such person shall have received notice of
service on any designated agent), but failure to notify you of any
claim shall not relieve you from any liability which you may have
to the company or any person against whom the action is brought
otherwise than under Section 9(c)(1).
(iii) You shall be entitled to participate at your own expense in
the defense or, if you so elect, to assume the defense of any suit
brought to enforce any claim subject to the aforesaid indemnity
agreement. If you elect to assume the defense of any such claim,
the defense shall be conducted by counsel chosen by you and
satisfactory to the indemnified defendants, whose approval shall
not be unreasonably withheld. In the event that you elect to assume
the defense of any suit and retain counsel, the defendants in the
suit shall bear the fees and expenses of any additional counsel
retained by them. If you do not elect to assume the defense of a
suit, you will reimburse the indemnified defendants for the
reasonable fees and expenses of any counsel retained by them.
(iv) You agree to notify the Company and the Adviser promptly of
the commencement of any litigation or proceedings against you or
any of your officers or directors in connection with the issue and
sale of any of the Shares.
10. Termination.
You shall have the right to terminate this Agreement and the offering of the
Shares at any time prior to the Closing if, between the date hereof and the
Closing Date, there shall have been any declaration of war by the Government of
the United States, the Armed Forces of the United States shall be engaged in any
major hostilities, or any event shall have occurred resulting in (i) the closing
of the New York Stock Exchange or the American Stock Exchange, (ii) the general
suspension of trading on either such Exchange, (iii) the general establishment
of minimum prices by either such Exchange or by the Commission, or (iv) the
declaration of a bank moratorium by authorities of the United States or of the
State of New York, the effect of which in your judgment makes it impracticable
or inadvisable to proceed with the offering.
11. Representations and Indemnities to Survive Delivery.
The respective indemnities, agreements, representations, warranties and other
statements of Company and its officers set forth in or made pursuant to this
Agreement shall remain in full force and effect, regardless of any
investigation, or statement as to the results thereof, made by or on behalf of
you, the Company or any of its officers, directors or controlling persons, and
shall survive payment to the Company for the Shares. If this Agreement is
15
<PAGE>
terminated pursuant to Section 10 hereof or if for any reason the sale of the
Shares is not consummated, the Company shall remain responsible for the expenses
to be paid or reimbursed by it pursuant to Sections 6 and 7 and to you pursuant
to Section 9 shall remain in effect.
12. Notices.
All communications hereunder shall be in writing and, if sent to you, shall be
mailed, delivered, or telegraphed and confirmed to you at__________________; if
sent to the Company, shall be mailed, delivered, or telegraphed and confirmed to
it at____________________________, Attention: President. If sent to the Adviser,
shall be mailed, delivered, or telegraphed and confirmed to it at
_________________________.
13. Successors.
This Agreement shall inure to the benefit and be binding upon the parties hereto
and their respective successors and the officers, directors and controlling
persons referred to in Section 9, and no other person shall have any right or
obligation hereunder.
14. Governing Law.
This Agreement shall be governed by, and construed in accordance with, the laws
of the State of Delaware.
15. Counterparts.
This Agreement may be executed in counterparts, all of which, taken together,
shall constitute a single agreement.
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicate hereof, whereupon it shall
become a binding agreement among the Company and you in accordance with its
terms.
Very truly yours,
By
--------------------------------
President
The foregoing Underwriting Agreement is herein confirmed and accepted as of the
date first above written.
- ---------------------------------
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FORM OF CUSTODY AGREEMENT
This Agreement is made as of the _____ day of _____________, 1996
between CAM Balanced Fund, Inc., a Maryland corporation organized under the laws
of Maryland (the "Fund"), having its principal place of business in
________________, _______________, and Wilmington Trust Company, a Delaware
corporation (the "Custodian"), having its principal place of business in
Wilmington, Delaware.
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as a closed-end management investment company
and has outstanding shares of common stock, par value $0.001 per share;
WHEREAS, each share of common stock (collectively, "Shares") represents
an undivided interest in the assets of the Fund, subject to the liabilities of
the Fund and the terms and conditions of the Agreement of Fund pursuant to which
the Fund is created and governed;
WHEREAS, the Fund desires to employ the Custodian to provide custody
services; and
WHEREAS, the Custodian is willing to furnish custody services to the
Fund on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound, the parties agree as
follows:
I. Employment of Custodian; Property of the Fund to be Held by the
Custodian
The Fund hereby employs the Custodian as the custodian of its assets.
The Fund agrees to deliver to the Custodian substantially all securities and
cash owned by it from time to time, and substantially all income, principal or
capital distributions or other payments received by it with respect to such
securities, and the cash consideration received for the issuance and sale of
Shares of the Fund from time to time. The Custodian will not be responsible for
any property of the Fund not delivered to the Custodian.
II. Duties of the Custodian with Respect to Property of the Fund Held by
the Custodian
A. Holding Securities
The Custodian will hold, earmark and physically segregate for the
account of the Fund all non-cash property, including all securities owned by the
Fund, other than securities maintained pursuant to Article II, Section J hereof
in a clearing agency which acts as a securities depository or in an authorized
book-entry system authorized by the U.S. Department of the Treasury,
collectively referred to herein as a "Securities System."
B. Delivery of Securities
The Custodian will deliver securities held by the Custodian or in a
Securities System account only upon receipt of proper instructions, which may be
continuing instructions, and only in the following cases:
1. Upon sale of such securities for the account of the Fund and
receipt of payment therefor;
2. Upon receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund;
<PAGE>
3. In the case of a sale effected through a Securities System, in
accordance with the provisions of Article II, Section J
hereof;
4. To the depository agent in connection with tenders or other
similar offers for securities of the Fund;
5. To the issuer thereof, or its agent, when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6. To the issuer thereof, or its agent, for registration or
re-registration pursuant to the provisions of Article II,
Section C hereof; or for exchange for a different number of
certificates or other evidence representing the same aggregate
face amount or number of units; provided that, in any such
case, the new securities are to be delivered to the Custodian;
7. To the broker selling such securities for examination in
accordance with the "street delivery" custom; provided that
the Custodian will maintain procedures to ensure prompt return
to the Custodian by the broker in the event the broker elects
not to accept such securities;
8. For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer or pursuant to
provisions for conversion contained in such securities, or
pursuant to any deposit agreement; provided that, in any such
case, the new securities and cash, if any, are to be delivered
to the Custodian;
9. In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;
10. For delivery in connection with any loans of securities made
by the Fund, but only against receipt of adequate collateral,
as agreed upon from time to time by the Custodian and the
Fund, which may be in the form of cash or obligations issued
by the United States government, its agencies or
instrumentalities;
11. For delivery as security in connection with any borrowing by
the Fund requiring a pledge of assets by the Fund against
receipt of amounts borrowed;
12. Upon receipt of instructions from the transfer agent for the
Fund (the "Transfer Agent") for delivery to the Transfer Agent
or to holders of Shares in connection with distributions in
kind in satisfaction of requests by holders of Shares for
repurchase or redemption; and
13. For any other proper corporate purposes, but only upon receipt
of, in addition to proper instructions, a certified copy of a
resolution of the Board of Directors signed by an officer of
the Fund and certified by the Secretary or an Assistant
Secretary, specifying the securities to be delivered, setting
forth the purpose for which such delivery is to be made,
declaring such purposes to be proper corporate purposes, and
naming the persons to whom delivery of such securities will be
made.
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<PAGE>
C. Registration of Securities
Securities held by the Custodian (other than bearer securities) will be
registered in the name of the Fund, or in the name of any nominee of the Fund,
the Custodian or any Securities System, or in the name or nominee name of any
agent or sub-custodian appointed pursuant to Article II, Section I hereof,
provided that the Custodian will maintain a mechanism for identifying all
securities belonging to the Fund, wherever held or registered. All securities
accepted by the Custodian hereunder will be in "street name" or other good
delivery form.
D. Bank Accounts
If requested by the Fund, the Custodian will open and maintain a
separate bank account or accounts in the name of the Fund, subject only to draft
or order by the Custodian acting pursuant to the terms of this Agreement, and
will hold in such account or accounts, subject to the provisions hereof, all
cash received by it from or for the account of the Fund, other than cash
maintained by the Fund in a bank account established and used in accordance with
Rule 17f-3 under the 1940 Act.
E. Payment for Shares
The Custodian will receive from the distributor of the Fund's Shares or
from the Transfer Agent and deposit into the Fund's custody account payments
received for Shares issued or sold from time to time by the Fund. The Custodian
will provide timely notification to the Fund and the Transfer Agent of any
receipt by it of cash payments for Shares.
F. Collection of Income and Other Payments
The Custodian will collect on a timely basis all income and other
payments with respect to securities held hereunder to which the Fund will be
entitled by law or pursuant to custom in the securities business, and will
credit such income and other payments, as collected, to the Fund's custody
account.
G. Payment of Fund Moneys
Upon receipt of proper instructions, which may be continuing
instructions, the Custodian will pay out moneys on behalf of the Fund in the
following cases only:
1. Upon the purchase of securities for the account of the Fund,
but only (a) against the delivery of such securities to the
Custodian (or any bank, banking firm or trust company doing
business in the United States or abroad which is qualified
under the 1940 Act to act as a custodian and has been
designated by the Fund or by the Custodian as its agent for
this purpose); (b) in the case of a purchase effected through
a Securities System, in accordance with the conditions set
forth in Article II, Section J hereof or; (c) in the case of
repurchase agreements entered into between the Fund and the
Custodian, or another bank, (i) against delivery of securities
either in certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank with such
securities and with an indication on the books of the
Custodian that such securities are held for the benefit of the
Fund, and (ii) against delivery of the receipt evidencing
purchase by the Fund of securities owned by the Custodian or
other bank along with written evidence of the agreement by the
Custodian or other bank to repurchase such securities from the
Fund;
2. In connection with conversion, exchange or surrender of
securities owned by the Fund as set forth in Article II,
Section B hereof;
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<PAGE>
3. For the redemption or repurchase of Shares as set forth in
Article II, Section H hereof;
4. For the payment of any expense or liability incurred by the
Fund, including, but not limited to, the following payments
for the account of the Fund: interest, dividend disbursements,
taxes, trade association dues, advisory, administration,
accounting, transfer agent and legal fees, and operating
expenses allocated to the Fund whether or not such expenses
are to be in whole or part capitalized or treated as deferred
expenses;
5. For the payment of any dividend declared pursuant to the
governing documents of the Fund; and
6. For any other proper corporate purposes, but only upon receipt
of, in addition to proper instructions, a certified copy of a
resolution of the Board of Trustees or Board of Directors of
the Fund signed by an officer of the Fund and certified by its
Secretary or an Assistant Secretary, specifying the amount of
such payment, setting forth the purpose for which such payment
is to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom such payment
is to be made.
H. Payments for Repurchase or Redemptions of Shares of the Fund
From such funds as may be available, the Custodian will, upon receipt
of instructions from the Transfer Agent, make funds available for payment to
holders of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares. In connection with the redemption or
repurchase of Shares, the Custodian is authorized upon receipt of instructions
from the Transfer Agent to wire funds to a commercial bank designated by the
redeeming shareholders.
I. Appointment of Agents
The Custodian may at any time in its discretion appoint, but only in
accordance with an applicable vote by the Board of Directors of the Fund, any
bank or trust company, which is qualified under the 1940 Act to act as a
custodian, as its agent or sub-custodian to carry out such of the provisions of
this Article II as the Custodian may from time to time direct; provided that the
appointment of any such agent or sub-custodian will not relieve the Custodian of
any of its responsibilities or liabilities hereunder. The Custodian is hereby
authorized to deposit, arrange for deposit and/or maintain foreign securities
owned by the Fund on behalf of the Fund(s) with the Custodian's agent Bankers
Trust Company or with the subcustodians or agents of the Custodian's agent.
J. Deposit of Fund Assets in Securities Systems
The Custodian may deposit and/or maintain securities owned by the Fund
in a clearing agency registered with the Securities and Exchange Commission (the
"SEC") under Section 17A of the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies (collectively referred
to herein as a "Securities System") in accordance with applicable Federal
Reserve Board and SEC rules and regulations, if any, and subject to the
following provisions:
1. The Custodian may keep securities of the Fund in a Securities
System provided that such securities are represented in an
account ("Account") of the Custodian in the Securities System
which will not include any assets of the Custodian other than
assets held as a fiduciary, custodian, or otherwise for
customers;
2. The records of the Custodian with respect to securities of the
Fund which are maintained in a
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<PAGE>
Securities System will identify by book-entry those securities
belonging to the Fund;
3. The Custodian will pay for securities purchased for the
account of the Fund upon (i) receipt of advice from the
Securities System that such securities have been transferred
to the Account, and (ii) the making of an entry on the records
of the Custodian to reflect such payment and transfer for the
account of the Fund. The Custodian will transfer securities
sold for the account of the Fund upon (i) receipt of advice
from the Securities System that payment for such securities
has been transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such transfer
and payment for the account of the Fund. The Custodian will
furnish the Fund a monthly account statement showing
confirmation of each transfer to or from the account of the
Fund and each day's transactions in the Securities System for
the account of the Fund;
4. The book-entry system of the Federal Reserve System authorized
by the U.S. Department of the Treasury and the Depository
Trust Company, a clearing agency registered with the SEC, each
are hereby specifically approved as a Securities System,
provided that any changes in these arrangements shall be
subject to the approval of the Board of Trustees or Board of
Directors of the Fund; and
5. The Custodian will be liable to the Fund for any direct loss
or damage to the Fund resulting from use of the Securities
System to the extent caused by the gross negligence,
misfeasance or misconduct of the Custodian or any of its
agents or of any of its or their employees. In no event will
the Custodian be liable for any indirect, special,
consequential or punitive damages.
K. Segregated Accounts for Futures Commission Merchants
The Custodian may enter into separate custodial agreements with various
Futures Commission Merchants ("FCMs") which the Fund uses (each an "FCM
agreement"), pursuant to which the Fund's margin deposits in certain
transactions involving futures contracts and options on futures contracts will
be held by the Custodian in accounts (each an "FCM account") subject to the
disposition by the FCM involved in such contracts in accordance with the
customer contract between FCM and the Fund ("FCM contract"), SEC rules governing
such segregated accounts, Commodities Futures Trading Commission ("CFTC") rules
and the rules of applicable securities or commodities exchanges. Such custodial
agreements will only be entered into upon receipt of written instructions from
the Fund which state that (a) an agreement between the FCM and the Fund has been
entered into, and (b) the Fund is in compliance with all the rules and
regulations of the CFTC. Transfers of initial margin will be made into an FCM
account only upon written instructions; transfers of premium and variation
margin may be made into an FCM account pursuant to oral instructions. Transfers
of funds from an FCM account to the FCM for which the Custodian holds such an
account may only occur upon certification by the FCM to the Custodian that
pursuant to the FCM agreement and the FCM contract, all conditions precedent to
its right to give the Custodian such instructions have been satisfied.
L. Ownership Certificates for Tax Purposes
The Custodian will execute ownership and other certificates and
affidavits for all federal and state tax purposes in connection with receipt of
income or other payments with respect to securities of the Fund held by it and
in connection with transfers of securities.
M. Proxies
The Custodian will cause to be promptly executed by the registered
holder of such securities, if the securities are registered otherwise than in
the name of the Fund or a nominee of the Fund, all proxies, without indication
of the manner in which such proxies are to be voted, and will promptly deliver
to the Fund's
5
<PAGE>
investment advisor (the "Advisor") such proxies, all proxy soliciting materials
and all notices relating to such securities.
N. Communications Relating to Fund Securities
The Custodian will transmit promptly to the Advisor all written
information (including, without limitation, pendency of calls and maturities of
securities and expirations of rights in connection therewith) received by the
Custodian from issuers of the securities being held for the Fund. With respect
to tender or exchange offers, the Custodian will transmit promptly to the
Advisor all written information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the party (or its agents)
making the tender or exchange offer. If the Advisor desires to take action with
respect to any tender offer, exchange offer or any other similar transaction,
the Advisor will notify the Custodian at least five business days prior to the
date on which the Custodian is to take such action.
O. Proper Instructions
"Proper Instructions" as used herein mean a writing signed or initialed
by one or more person or persons in such manner as the Board of Trustees or
Board of Directors will have authorized from time to time. Each such writing
will set forth the transaction involved, including a specific statement of the
purpose for which such action is requested. Oral instructions will be considered
proper instructions if the Custodian reasonably believes them to have been given
by a person authorized to give such instructions with respect to the transaction
involved. The Fund will cause all oral instructions to be confirmed promptly in
writing. Upon receipt of a certificate of the Secretary or an Assistant
Secretary as to the authorization by the Board of Trustees or Board of Directors
of the Fund accompanied by a detailed description of procedures approved by the
Board of Trustees or Board of Directors, proper instructions may include
communications effected directly between electro-mechanical or electronic
devices provided that the Board of Trustees or Board of Directors and the
Custodian are satisfied that such procedures afford adequate safeguards for the
assets of the Funds.
P. Actions Permitted Without Express Authority
The Custodian may in its discretion, without express authority from the
Fund:
1. make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Agreement, provided that all such payments
will be accounted for to the Fund;
2. surrender securities in temporary form for securities in
definitive form;
3. endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments; and
4. in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of the Fund, except as otherwise directed by the Fund or the
Board of Trustees or Board of Directors of the Fund.
Q. Evidence of Authority
The Custodian will be protected in acting upon any instruction, notice,
request, consent, certificate or other instrument or paper reasonably believed
by it to be genuine and to have been properly executed by or on behalf of the
Fund. The Custodian may receive and accept a certified copy of a vote of the
Board of Trustees or Board of Directors of the Fund as conclusive evidence (a)
of the authority of any person to act in accordance
6
<PAGE>
with such vote, or (b) of any determination or of any action by the Board of
Trustees or Board of Directors as described in such vote, and such vote may be
considered as in full force and effect until receipt by the Custodian of written
notice to the contrary.
III. Duties of Custodian with Respect to Books of Account
The Custodian will cooperate with and supply to the entity or entities
appointed to keep the books of account of the Fund such information in the
possession of the Custodian as is reasonably necessary to the maintenance of the
books of account of the Fund.
IV. Records
The Custodian will create and maintain all records relating to its
activities and obligations under this Agreement in such manner as will meet the
obligations of the Fund under the 1940 Act, including, without limitation,
Section 31 thereof and Rules 31a-1 and 31a-2 thereunder. All such records will
be property of the Fund and will at all times during the regular business hours
of the Custodian be open for inspection by duly authorized officers, employees
or agents of the Fund and employees and agents of the SEC. The Custodian will,
upon request, provide the Fund with a tabulation of securities held by the
Custodian on behalf of the Fund, and will, upon request, and for such
compensation as will be agreed upon between the Fund and the Custodian, include
certificate numbers in such tabulations.
V. Opinion of Fund's Independent Accountant
The Custodian will take all reasonable action, as the Fund may from
time to time request, to obtain from year to year favorable opinions from the
Fund's independent accountants with respect to its activities hereunder in
connection with the preparation of the Fund's Form N-1A, Form N-SAR or other
annual or semiannual reports to the SEC and with respect to any other
requirements of the SEC.
VI. Reports to Fund by Auditors
The Custodian will provide the Fund, at such times as the Fund may
reasonably request, with reports by its internal or independent auditors on the
accounting system, internal accounting controls and procedures for safeguarding
securities, including reports available on securities deposited and/or
maintained in a Securities System, relating to the services provided by the
Custodian under this Agreement. Such reports will be of sufficient scope and in
sufficient detail as may reasonably be required by the Fund to provide
reasonable assurance that any material inadequacies would be disclosed, will
state in detail material inadequacies disclosed by such examination, and if
there are no such inadequacies, will so state.
VII. Compensation of Custodian
For the normal services the Custodian provides under this Custody
Agreement, the Custodian will be entitled to reasonable compensation as agreed
to between the Fund and the Custodian from time to time. Until agreed otherwise,
the compensation will be as set forth on Schedule A attached hereto and made
part hereof, as such Schedule may be amended from time to time. The fee set
forth in Schedule A hereto is subject to an annual review and adjustment
process. In the event the Custodian provides any extraordinary services
hereunder, it will be entitled to additional reasonable compensation.
VIII. Responsibility of Custodian/Indemnification
So long as and to the extent that it has exercised reasonable care, the
Custodian will not be responsible for the title, validity or genuineness of any
property or evidence of title thereto received by it or delivered by it pursuant
to this Agreement and will be held harmless in acting upon any notice, request,
consent, certificate or
7
<PAGE>
other instrument reasonably believed by it to be genuine and to be signed by the
proper party or parties.
The Custodian will be entitled to rely on and may act upon written
advice of counsel (who may be counsel for the Fund) on all matters, and will be
without liability for any action reasonably taken or omitted pursuant to such
written advice.
The Custodian will exercise reasonable care in carrying out the
provisions of this Agreement and will be without liability for any action taken
or omitted by it in good faith and without negligence. The Fund will indemnify
the Custodian and hold it harmless from and against all claims, liabilities, and
expenses (including attorneys' fees) which the Custodian may suffer or incur on
account of being Custodian hereunder, except to the extent such claims,
liabilities and expenses are caused by the Custodian's own negligence or bad
faith. Notwithstanding the foregoing, nothing contained in this paragraph is
intended to nor will it be construed to modify the standards of care and
responsibility set forth in Article II, Section I hereof with respect to
sub-custodians and in Article II, Section J(6) hereof with respect to the
Securities System.
If the Fund requires the Custodian to take any action, which involves
the payment of money or which may, in the reasonable opinion of the Custodian,
result in liability or expense for the Custodian or its nominee, the Fund, as a
prerequisite to requiring the Custodian to take such action, will provide
indemnity to the Custodian in an amount and form satisfactory to it.
IX. Effective Period; Termination; Amendment
This Agreement will become effective as of the date hereof and remain
effective until terminated as provided herein. This Agreement may be amended at
any time only by written instrument signed by both parties. This Agreement may
be terminated at any time on ninety (90) days' written notice by either party;
provided that the Fund will not amend or terminate the Agreement in
contravention of any applicable federal or state regulations, or any provision
of the governing documents of the Fund, and further provided, that the Fund may
at any time by action of its Board of Trustees or Board of Directors immediately
terminate this Agreement in the event of the appointment of a conservator or
receiver for the Custodian by the applicable federal regulator or upon the
happening of a like event at the direction of an appropriate regulatory agency
or court of competent jurisdiction. Upon termination of this Agreement, the Fund
will pay to the Custodian any fees incurred as a result of the termination
transfer of assets, and reimburse the Custodian for all costs, expenses and
disbursements that are due as of the date of such termination.
X. Successor Custodian
If a successor custodian is appointed by the Board of Trustees or Board
of Directors of the Fund, the Custodian will, upon termination, deliver to such
successor custodian at the office of the Custodian, duly endorsed and in the
form for transfer, all securities and other assets of the Fund then held by it
hereunder. The Custodian will also deliver to such successor custodian copies of
such books and records relating to the Fund as the Fund and Custodian may
mutually agree.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees or Board of Directors will
have been delivered to the Custodian on or before the date when such termination
will become effective, then the Custodian will have the right to deliver to a
bank or trust company of its own selection, doing business in the state in which
either the principal place of business of the Fund or the Custodian is located
and having an aggregate capital, surplus, and undivided profits of not less than
$25,000,000, all securities, funds and other properties held by the Custodian
under this Agreement. Thereafter, such bank or trust company will be the
successor of the Custodian under this Agreement.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of vote referred to, or
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<PAGE>
of the Board of Trustees or Board of Directors to appoint a successor custodian,
the Custodian will be entitled to fair compensation for its services during such
period as the Custodian and retain possession of such securities, funds and
other properties and the provisions of this Agreement relating to the duties and
obligations of the Custodian will remain in full force and effect.
XI. Interpretive and Additional Provisions
In connection with the operation of this Agreement, the Custodian and
the Fund may from time to time agree on such provisions interpretive of, or in
addition to, the provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. Any such interpretive or
additional provisions will be in writing signed by both parties, provided that
no such interpretive or additional provisions will contravene any applicable
federal or state regulations or any provision of the governing documents of the
Fund.
XII. Delaware Law to Apply
This Agreement will be deemed to be a contract made in Delaware and
governed by Delaware law. If any provision of this Agreement will be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement will not be affected thereby. This Agreement will be binding and
will inure to the benefits of the parties hereto and their respective
successors.
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and on behalf by its duly authorized representative and
its seal to be hereunder affixed as of the date first written above.
CAM BALANCED FUND, INC.
By: ____________________________
( )
President
WILMINGTON TRUST COMPANY
By: ____________________________
( )
Vice President
9
<PAGE>
SCHEDULE A
CAM BALANCED FUND
FEE SCHEDULE
For the services Custodian provides under this Custody Agreement, the
Fund, on behalf of the Fund(s) listed below, agrees to pay to the Custodian a
fee, payable monthly, expressed as follows:
Name of Fund(s) FEE SCHEDULE
CAM Balanced Fund, Inc. An annual fee based upon the average daily
net asset value as follows:
.0200% on the first $50 million
.0150% on the next $50 million and
.0125% on the assets in excess of $100
million,
subject to a minimum fee of $400 per month,
plus, $15 per purchase, sale or maturity of
a portfolio security, except those
requiring physical delivery, which will be
charged at $50 per purchase, sale or
maturity,
plus, $7 for each incoming wire of funds
and $12 for each outgoing wire of funds,
plus any out-of-pocket expenses.
<PAGE>
FORM OF
ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
BETWEEN
RODNEY SQUARE MANAGEMENT CORPORATION
AND
CAM BALANCED FUND, INC.
THIS ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT made this ____day
of __________, 1996, by and between CAM Balanced Fund, Inc., a Maryland
corporation (hereinafter called the "Fund"), having its principal place of
business in Wayne, Pennsylvania, and Rodney Square Management Corporation, a
corporation organized under the laws of the State of Delaware (hereinafter
called "Rodney Square"), having its principal place of business in Wilmington,
Delaware.
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an closed-end management investment
company and has issued for public sale shares of beneficial interest ("Shares"),
par value $1.00 per share;
WHEREAS, the Fund desires to employ Rodney Square to provide certain
administration and accounting services;
WHEREAS, Rodney Square is willing to furnish such services to the Fund
on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the Fund and Rodney Square agree as follows:
1. Appointment. The Fund hereby appoints Rodney Square to provide
certain administration and accounting services to the Fund for the period and on
the terms set forth in this Agreement. Rodney Square accepts such appointment
and agrees to furnish the services herein set forth in return for the
compensation provided for in Section 18 of this Agreement. Rodney Square agrees
to comply with all relevant provisions of the Investment Company Act and
applicable rules and regulations thereunder, and to remain open for business on
any day on which the New York Stock Exchange, the Philadelphia branch office of
the Federal Reserve and Wilmington Fund Company are open for business.
2. Documents. The Fund has furnished Rodney Square with copies properly
certified or authenticated of each of the following:
<PAGE>
a. The Fund's Articles of Incorporation filed with the
Secretary of the State of Maryland on June 3, 1996 and all amendments thereto
and restatements thereof;
b. The Fund's By-laws and all amendments thereto and
restatements thereof (such By-laws, as presently in effect and as they shall
from time to time be amended or restated, are herein called "By-laws");
c. Resolutions of the Fund's Board of Directors authorizing
the appointment of Rodney Square to provide certain administration and
accounting services to the Fund and approving this Agreement;
d. Schedule B identifying and containing the signatures of the
Fund's officers and other persons authorized ("Authorized Persons") to sign
"Written Instructions" (as hereinafter defined) on behalf of the Fund;
e. The Fund's Notification of Registration filed pursuant to
Section 8(a) of the Investment Company Act as filed with the Securities and
Exchange Commission ("SEC") on ___________;
f. The Fund's Registration Statement on Form N-2 under the
Securities Act of 1933 (the "1933 Act") (File No. __________) and under the
Investment Company Act (File No. 811-2201), as filed with the SEC relating to
the Fund's shares of common stock, and all amendments thereto;
g. The executed Fund agreements listed on Schedule C hereto;
and
h. If required, a copy of either (i) a filed notice of
eligibility to claim the exclusion from the definition of "commodity pool
operator" contained in Section 2(a)(1)(A) of the Commodity Exchange Act ("CEA")
that is provided in Rule 4.5 under the CEA, together with all supplements as are
required by the Commodity Futures Trading Commission ("CFTC"), or (ii) a letter
which has been granted the Fund by the CFTC which states that the Fund will not
be treated as a "pool" as defined in Section 4.10(d) of the CFTC's General
Regulations, or (iii) a letter which has been granted the Fund by the CFTC which
states that CFTC will not take any enforcement action if the Fund does not
register as a "commodity pool operator."
The Fund will furnish Rodney Square from time to time with
copies, properly certified or authenticated, of all additions, amendments or
supplements to the foregoing, if any.
<PAGE>
3. Instructions Consistent with Articles of Incorporation, etc.
a. Unless otherwise provided in this Agreement, Rodney Square
shall act only upon Oral and Written Instructions. ("Oral Instructions" used in
this Agreement shall mean oral instructions actually received by Rodney Square
from an Authorized Person or from a person reasonably believed by Rodney Square
to be an Authorized Person. "Written Instructions" used in this Agreement shall
mean written instructions signed by two Authorized Persons delivered by hand,
mail, telegram, cable, telex or facsimile, and received by Rodney Square.
"Authorized Person" used in this Agreement means any officer of the Fund and any
other person, whether or not any such person is an officer of the Fund, duly
authorized by the Board of Directors of the Fund to give Oral and Written
Instructions on behalf of the Fund and certified by the Secretary or an
Assistant Secretary of the Fund or any amendment thereto as may be received by
Rodney Square from time to time.) Although Rodney Square may know of the
provisions of the Articles of Incorporation and By-laws of the Fund, Rodney
Square in its capacity under this Agreement may assume that any Oral or Written
Instructions received hereunder are not in any way inconsistent with any
provisions of such Articles of Incorporation or By-laws or any vote, resolution
or proceeding of the shareholders, or of the Board of Directors, or of any
committee thereof.
b. Rodney Square shall be entitled to rely upon any Oral
Instructions and any Written Instructions actually received by Rodney Square
pursuant to this Agreement. The Fund agrees to forward to Rodney Square Written
Instructions confirming Oral Instructions in such manner that the Written
Instructions are received by Rodney Square, whether by hand delivery, telex,
facsimile or otherwise, by the close of business of the same day that such Oral
Instructions are given to Rodney Square. The Fund agrees that the fact that such
confirming Written Instructions are not received by Rodney Square shall in no
way affect the validity of the transactions or enforceability of the
transactions authorized by the Fund by giving Oral Instructions. The Fund agrees
that Rodney Square shall incur no liability to the Fund in acting upon Oral
Instructions given to Rodney Square hereunder concerning such transactions.
4. Fund Administration. Subject to the direction and control of the
Fund and to the extent not otherwise the responsibility of, or provided by,
the Fund or other supply agents of the Fund, Rodney Square shall provide the
following administrative services:
<PAGE>
a. Supply:
(i) office facilities (which may be in Rodney
Square's or its affiliates' own offices);
(ii) non-investment related statistical and research
data;
(iii) executive and administrative services;
(iv) stationery and office supplies at Fund expense; and
(v) corporate secretarial services, such as the
preparation and distribution of materials at
Fund expense for meetings of the Board of
Directors or shareholders.
b. Prepare and file, if necessary, reports to the Fund's
shareholders and reports with the Securities and Exchange Commission (the "SEC")
including preliminary and definitive proxy materials, post-effective amendments
to the Fund's registration statement, Form N-SAR filings, prospectus supplements
and the fidelity bond;
c. Monitor the Fund's compliance with the investment
restrictions and limitations necessary the Fund to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code") or any successor statute;
d. Prepare and distribute to appropriate parties notices
announcing the declaration of dividends and other distributions to shareholders;
e. Prepare financial statements and footnotes and other
financial information with such frequency and in such format as required to be
included in reports to shareholders and the SEC; and
f. Provide information regarding material developments in
state securities regulations; and
<PAGE>
g. Provide personnel to serve as officers of the Fund if so
elected by the Board of Directors.
5. Fund Accounting.
a. Rodney Square shall provide the following accounting
functions on a daily basis:
(1) Journalize the Fund's investment, capital
share and income and expense activities;
(2) Verify investment buy/sell trade tickets when
received from the Adviser(s) and transmit
trades to the Fund's Custodian for proper
settlement;
(3) Maintain individual ledgers for investment
securities;
(4) Maintain historical tax lots for each security;
(5) Reconcile cash and investment balances of the
Fund with the Custodian, and provide the
Adviser(s) with the beginning cash balance
available for investment purposes;
(6) Update the cash availability throughout the day
as required by the Adviser(s);
(7) Post to and prepare the Fund's Statement of
Assets and Liabilities and Statement
of Operations;
(8) Calculate expenses payable pursuant to the
Fund's various contractual obligations;
<PAGE>
(9) Control all disbursements from the Fund and
authorize such disbursements upon Written
Instructions;
(10) Calculate capital gains and losses;
(11) Determine the Fund's net income;
(12) At the Fund's expense obtain security market
prices or if such market prices are not readily
available, then obtain such prices from
services approved by the Adviser(s), and in
either case calculate the market or fair value
of the Fund's investments;
(13) In the case of debt instruments with remaining
maturities of sixty (60) days or less,
calculate the amortized cost value of those
instruments;
(14) Transmit or mail a copy of the portfolio valuations
to the Adviser(s);
(15) Compute the net asset value of the Fund;
(16) Compute the Fund's yields, total returns, expense
ratios and portfolio turnover rate; and
(17) Prepare and monitor the expense accruals and
notify Fund management of any proposed
adjustments.
<PAGE>
b. In addition, Rodney Square will:
(1) Prepare monthly financial statements, which
will include without limitation the Schedule of
Investments, the Statement of Assets and
Liabilities, the Statement of Operations, the
Statement of Changes in Net Assets, the Cash
Statement, and the Schedule of Capital Gains
and Losses;
(2) Prepare monthly security transactions listings;
(3) Prepare monthly broker security transactions
summaries;
(4) Supply various Fund statistical data as requested
on an ongoing basis;
(5) Assist in the preparation of support schedules
necessary for completion of Federal and state tax
returns;
(6) Assist in the preparation and filing of the Fund's
annual and semiannual reports with the SEC on
Form N-SAR;
(7) Assist in the preparation and filing of the Fund's
annual and semiannual and quarterly reports to
shareholders and any proxy statements;
(8) Assist with the preparation of amendments to
the Fund's registration statements on Form N-2
and other filings relating to the registration
of Shares; and
(9) Monitor the Fund's status as a regulated
investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended from
time to time;
(10) Determine the amount of dividends and other
distributions payable to shareholders as
necessary to, among other things, maintain the
qualification as a regulated investment company
of the Fund under the Code.
<PAGE>
6. Recordkeeping and Other Information. Rodney Square shall create and
maintain all necessary records in accordance with all applicable laws, rules and
regulations, including, but not limited to, records required by Section 31(a) of
the Investment Company Act and the rules thereunder, as the same may be amended
from time to time, pertaining to the various functions (described above)
performed by it and not otherwise created and maintained by another party
pursuant to contract with the Fund. All records shall be the property of the
Fund at all times and shall be available for inspection and use by the Fund or
the Fund's authorized representatives. Upon reasonable request of the Fund,
copies of such records shall be provided by Rodney Square to the Fund or the
Fund's authorized representatives at the Fund's expense. Where applicable, such
records shall be maintained by Rodney Square for the periods and in the places
required by Rule 31a-2 under the Investment Company Act.
7. Liaison With Accountants. Rodney Square shall act as liaison with
the Fund's independent public accountants and shall provide account analysis,
fiscal year summaries and other audit related schedules. Rodney Square shall
take all reasonable action in the performance of its obligations under this
Agreement to assure that the necessary information is made available to such
accountants for the expression of their opinion, as such may be required by the
Fund from time to time.
8. Expenses of the Fund. The Fund agrees that it will pay all the
Fund's expenses other than those expressly stated to be payable by Rodney Square
hereunder, which expenses payable by the Fund shall include, without limitation:
a. Fees payable for investment advisory services provided by
the Fund's Investment Adviser;
b. Fees payable for services provided by the Fund's
independent public accountants;
c. The cost of obtaining quotations for calculating the value
of the Fund's assets;
d. Taxes levied against the Fund;
<PAGE>
e. Brokerage fees, mark-ups and commissions in connection with
the purchase and sale of portfolio securities;
f. Costs, including the interest expense, of borrowing money;
g. Costs and/or fees incident to holding meetings of the Board
of Directors and shareholders, preparation (including typesetting and printing
charges) and mailing of prospectuses, reports and proxy materials to the
existing shareholders of the Fund, filing of reports with regulatory bodies,
maintenance of the Fund's existence, and registration of Fund Shares with
federal and state securities authorities;
h. Legal fees and expenses;
i. Costs of printing share certificates representing Fund
Shares;
j. Fees payable to, and expenses of, members of the Directors
who are not "interested persons" of the Fund;
k. Out-of-pocket expenses incurred in connection with the
provision of administration, accounting, custodial and transfer agency
services;
l. Premiums payable on the fidelity bond required by Section
17(g) of the 1940 Act, and any other premiums payable on insurance policies
related to the Fund's business and the investment activities of its Portfolios;
m. Distribution fees, if any;
n. Service fees, if any, payable by the Fund to the
Distributor for providing personal services to Fund shareholders and for
maintaining shareholder accounts for those shareholders;
o. Fees, voluntary assessments and other expenses incurred in
connection with the Fund's membership in investment company organizations; and
<PAGE>
p. Such non-recurring expenses as may arise, including
actions, suits or proceedings to which the Fund is a party and the legal
obligation which the Fund may have to indemnify its Directors and officers with
respect thereto.
9. Audit, Inspection and Visitation. Rodney Square shall make available
during regular business hours all records and other data created and maintained
pursuant to the foregoing provisions of this Agreement for reasonable audit and
inspection by the Fund, any person retained by the Fund or any regulatory agency
having authority over the Fund.
10. Appointment of Agents. Neither this Agreement nor any rights or
obligations hereunder may be assigned by Rodney Square without the written
consent of the Fund. Rodney Square may, however, at any time or times in its
discretion appoint (and may at any time remove) other parties as its agent to
carry out such of the provisions of this Agreement as Rodney Square may from
time to time direct; provided, however, that the appointment of any such agent
shall not relieve Rodney Square of any of its responsibilities or liabilities
hereunder.
11. Delegation. On thirty (30) days' prior written notice to the Fund,
Rodney Square may assign any part or all its rights and delegate its duties
hereunder to any wholly owned direct or indirect subsidiary of Wilmington Fund
Company provided that (i) the delegate agrees with Rodney Square to comply with
all relevant provisions of the 1940 Act and applicable rules and regulations;
(ii) Rodney Square shall remain responsible for the performance of all of its
duties under this Agreement; (iii) Rodney Square and such delegate shall
promptly provide such information as the Fund may request; and (iv) Rodney
Square shall respond to such questions as the Fund may ask, relative to the
delegation, including (without limitation) the capabilities for the delegate.
12. Use of Rodney Square's Name. The Fund shall not use the name of
Rodney Square or any of its affiliates in any registration statement, sales
literature or other material relating to the Fund in a manner not approved prior
thereto in writing by Rodney Square; provided, however, that Rodney Square shall
approve all uses of its and its affiliates' names that merely refer in accurate
terms to their appointments hereunder or that are required by the SEC; and
further provided, that in no event shall such approval be unreasonably withheld.
<PAGE>
13. Use of Fund's Name. Neither Rodney Square nor any of its affiliates
shall use the name of the Fund or material relating to the Fund on any forms
(including any checks, bank drafts or bank statements) for other than internal
use in a manner not approved prior thereto by the Fund; provided, however, that
the Fund shall approve all uses of its name that merely refer in accurate terms
to the appointment of Rodney Square hereunder or that are required by the SEC;
and further provided, that in no event shall such approval be unreasonably
withheld.
14. Confidentiality. Rodney Square agrees on behalf of itself and its
employees to treat confidentially and as proprietary information of the Fund all
records and other information relative to the Fund and its prior, present or
potential shareholders, and not to use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except, after prior notification to and approval in writing by the Fund, which
approval shall not be unreasonably withheld and may not be withheld where Rodney
Square 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 Fund.
15. Equipment Failure. In the event of equipment failures beyond Rodney
Square's control, Rodney Square shall, at no additional expense to the Fund,
take reasonable steps to minimize service interruptions but shall have no
liability with respect thereto. Rodney Square shall enter into and shall
maintain in effect with appropriate parties one or more agreements making
reasonable provision of emergency use of electronic data processing equipment to
the extent appropriate equipment is available.
16. Right to Receive Advice.
a. Advice of Fund. If Rodney Square shall be in doubt as to
any action to be taken or omitted by it, it may request, and shall receive, from
the Fund Oral or Written Instructions where appropriate.
b. Advice of Counsel. If Rodney Square shall be in doubt as to
any question of law involved in any action to be taken or omitted by Rodney
Square, it may request written advice from counsel of its own choosing (who may
be the regularly retained counsel for the Fund or Rodney Square or the in-house
counsel for Rodney Square, at the option of Rodney Square).
<PAGE>
c. Conflicting Advice. In case of conflict between Oral or
Written Instructions received by Rodney Square pursuant to subsection A of this
Section and written advice received by Rodney Square pursuant to subsection B of
this Section, Rodney Square shall be entitled to rely on and follow the advice
received pursuant to the latter provision alone.
d. Protection of Rodney Square. Rodney Square shall be
protected in any action or inaction which it takes in reliance on any written
advice or Oral or Written Instructions received pursuant to subsections A or B
of this Section. However, nothing in this Section shall be construed as imposing
upon Rodney Square any obligation (i) to seek such written advice or Oral or
Written Instructions, or (ii) to act in accordance with such written advice or
Oral or Written Instructions when received, unless, under the terms of another
provision of this Agreement, the same is a condition to Rodney Square's properly
taking or omitting to take such action. Nothing in this subsection shall excuse
Rodney Square when an action or omission on the part of Rodney Square
constitutes willful misfeasance, bad faith, negligence or reckless disregard by
Rodney Square of its duties under this Agreement.
17. Compliance with Governmental Rules and Regulations. Except as
otherwise expressly provided herein in Sections 5 and 6, the Fund assumes full
responsibility for ensuring that the Fund complies with all applicable
requirements of the 1933 Act, the Securities Exchange Act of 1934 (the "1934
Act"), the 1940 Act, the CEA and any laws, rules and regulations of governmental
authorities having jurisdiction.
18. Compensation. For the performance of its obligations under this
Agreement, the Fund shall pay Rodney Square in accordance with the fee
arrangements described in Schedule A attached hereto, as such schedule
may be amended from time to time.
The Fund shall reimburse Rodney Square for all reasonable out-of-pocket
expenses incurred by Rodney Square or its agents in the performance of its
obligations hereunder. Such reimbursement for expenses incurred in any calendar
month shall be made on or before the tenth day of the next succeeding month.
<PAGE>
19. Indemnification.
a. The Fund agrees to indemnify and hold harmless Rodney
Square, its Directors, officers, employees, agents and representatives from all
taxes, charges, expenses, assessments, claims and liabilities including, without
limitation, liabilities arising under the 1933 Act, the 1934 Act and any
applicable state and foreign laws, and amendments thereto (the "Securities
Laws"), and expenses, including without limitation reasonable attorneys' fees
and disbursements, arising directly or indirectly from any action or omission to
act which Rodney Square takes (i) at the request of or on the direction of or in
reliance on the advice of the Fund or (ii) upon Oral or Written
Instructions,provided however, that neither Rodney Square nor any of the
foregoing persons shall be indemnified against any liability (or any expenses
incident to such liability) arising out of Rodney Square's or its Directors',
officers', employees', agents' or representatives own willful misfeasance, bad
faith, negligence or reckless disregard of their duties and obligations under
this Agreement.
b. Rodney Square agrees to indemnify and hold harmless the
Fund, its Directors, officers, employees, agents and representatives from all
taxes, charges, expenses, assessments, claims and liabilities including without
limitation reasonable attorneys' fees and disbursements, arising directly or
indirectly out of Rodney Square's or its Directors', officers', employees',
agents' or representatives own willful misfeasance, bad faith, negligence or
reckless disregard of their duties and obligations under this Agreement.
<PAGE>
c. In order that the indemnification provisions contained in
this Section 19 shall apply, upon the assertion of a claim for which either
party may be required to indemnify the other, the party seeking indemnification
shall promptly notify the other party of such assertion, and shall keep the
other party advised with respect to all developments concerning such claim. The
party who may be required to indemnify shall have the option to participate with
the party seeking indemnification in the defense of such claim. The party
seeking indemnification shall in no case confess any claim or make any
compromise in any case in which the other party may be required to indemnify it
except with the other party's prior written consent.
20. Responsibility of Rodney Square. Rodney Square shall be under no
duty to take any action on behalf of the Fund except as specifically set forth
herein or as may be specifically agreed to by Rodney Square in writing. In the
performance of its duties hereunder, Rodney Square shall be obligated to
exercise care and diligence and to act in good faith and to use its best efforts
within reasonable limits in performing services provided for under this
Agreement. Rodney Square shall be responsible for its own negligent failure to
perform its duties under this Agreement, but to the extent that duties,
obligations and responsibilities are not expressly set forth in this Agreement,
Rodney Square shall not be liable for any act or omission which does not
constitute willful misfeasance, bad faith or gross negligence on the part of
Rodney Square or reckless disregard by Rodney Square of such duties, obligations
and responsibilities. Without limiting the generality of the foregoing or of any
other provision of this Agreement, Rodney Square in connection with its duties
under this Agreement shall not be under any duty or obligation to inquire into
and shall not be liable for or in respect of (i) the validity or invalidity or
authority or lack thereof of any Oral or Written Instruction, notice or other
instrument which conforms to the applicable requirements of this Agreement, and
which Rodney Square reasonably believes to be genuine; or (ii) delays or errors
or loss of data occurring by reason of circumstances beyond Rodney Square's
control, including acts of civil or military authority, national emergencies,
labor difficulties, fire, mechanical breakdown (except as provided in Section
15), flood or catastrophe, acts of God, insurrection, war, riots or failure of
the mails, transportation, communication or power supply, which circumstances
Rodney Square shall take minimal actions to minimize loss of data therefor.
21. Duration, Termination, etc. The provisions of this Agreement may
not be changed, waived, discharged or terminated orally, but only by written
instrument that shall make specific reference to this Agreement and that shall
be signed by the party against which enforcement of such change, waiver,
discharge or termination is sought.
This Agreement shall become effective as of the date first written
above, and unless terminated as provided, shall continue in force for three (3)
years from the date of its execution and thereafter from year to year. This
Agreement may be terminated after the initial three (3) year period as of any
anniversary date on sixty (60) days' written notice given to Rodney Square or by
Rodney Square by six (6) months' written notice given to the Fund; provided,
however, that the foregoing provisions of this Agreement may be terminated
immediately at any time in the event of a breach of any provision thereof either
by the Fund or by Rodney Square in the event that such breach shall have
remained unremedied for sixty (60) days or more after receipt of written
specification of such breach.
<PAGE>
Upon the termination of this Agreement, the Fund shall pay to Rodney
Square such compensation as may be payable for the period prior to the effective
date of such termination, including reimbursement for any out-of-pocket expenses
reasonably incurred by Rodney Square to such date. In the event that the Fund
designates a successor to any of Rodney Square's obligations hereunder, Rodney
Square shall, at the expense and direction of the Fund, transfer to such
successor all relevant books, records and other data established or maintained
by Rodney Square under the foregoing provisions.
Upon the termination of this Agreement within the initial three (3)
year term by the Fund, the Fund shall pay to Rodney Square such compensation in
liquidated damages in accordance with the fee arrangements described in Schedule
A attached hereto, as such schedule may be amended from time to time.
22. Amendments. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
23. Notice. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed, postage prepaid, to the other party to this
Agreement at its principal place of business.
24. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
25. Further Actions. Each Party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
26. Governing Law. To the extent that state law has not been preempted
by the provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the State of
Delaware.
<PAGE>
27. Miscellaneous. This Agreement embodies the entire agreement and
understanding between the parties thereto, and supersedes all matter hereof,
provided that the parties hereto may embody in one or more separate documents
their agreement, if any, with respect to Written and/or Oral Instructions. The
captions in this Agreement are included for convenience of reference only and in
no way define or delimit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement shall be binding and shall inure to the
benefits of the parties hereto and their respective successors.
IN WITNESS WHEREOF the parties have caused this instrument to be signed
on their behalf by their respective officers thereunto duly authorized all as of
the date first written above.
CAM BALANCED FUND, INC.
By:__________________________________
RODNEY SQUARE MANAGEMENT
CORPORATION
By:__________________________________
Martin L. Klopping, President
<PAGE>
SCHEDULE A
CAM BALANCED FUND, INC.
FEE SCHEDULE
For the services Rodney Square Management Corporation ("Rodney Square")
provides under the Administration and Accounting Services Agreement attached
hereto, CAM Balanced Fund, Inc. (the "Fund") agrees to pay Rodney Square the
following fees for rendering administrative and accounting services:
Administration Fee: $35,000 assets up to $50 million, plus
.05% for assets over $50 million
Accounting Fee: $40,000 assets up to $100 million, plus
.02% for assets over $100 million
These fees shall be payable monthly as soon as practicable after the last day of
each month based on the average of the weekly net assets of the Fund, as
determined at the close of business last day of each week throughout the month.
Out of pocket expenses shall be reimbursed by the Fund to Rodney Square or paid
directly by the Fund.
LIQUIDATED DAMAGES:
In the event of termination of this Agreement within the initial three year term
for any reason other than an uncured breach of any provision thereof, CAM
Balanced Fund, Inc. shall pay Rodney Square liquidated damages in an amount
equal to ninety (90) days of base fees as determined in the manner set forth
above.
A-1
<PAGE>
SCHEDULE B
CAM BALANCED FUND, INC.
AUTHORIZED PERSONS
The following persons have been duly authorized by the Board of
Directors to give Oral and Written Instructions on behalf of the Fund:
(Name) _________________________________
(Name) _________________________________
B-1
<PAGE>
SCHEDULE C
CAM BALANCED FUND, INC.
FUND AGREEMENTS SCHEDULE
1. The Investment Advisory Agreement between CAM Balanced Fund, Inc. (the
"Fund"), a Delaware business trust, and Consolidated Asset Management,
Inc., a Delaware business trust, (the "Adviser"), dated _____________; and
2. The Sub-Advisory Agreement between Consolidated Asset Management, Inc.,
(the "Trust"), a Delaware business trust, and Wolf Webb Asset Management,
Inc., a Pennsylvania corporation, (the "Sub-Adviser"), dated _____________;
and
3. The Custodian and Transfer Agency Agreement between the Fund and Wilmington
Trust Company, a Delaware banking institution, dated _________, 1996.
4. The Administration and Accounting Services Agreement between the Fund and
Rodney Square Management Corporation, a Delaware corporation,
dated _________, 1996.
C-1
<PAGE>
Form 1
Trans/Reg/Dividend
FORM OF STOCK TRANSFER AGREEMENT
THIS AGREEMENT is made as of this _____ day of _______________, 1996,
between WILMINGTON TRUST COMPANY (the "Bank"), a Delaware banking corporation
and CAM BALANCED FUND, INC., a Maryland corporation (the "Corporation").
In consideration of the mutual covenants and agreements contained
herein and intending to be legally bound, the parties agree as follows:
1. Valid Existence. The Bank and the Corporation each represent and
warrant to the other that it is a corporation duly organized and validly
existing under the laws of its state of incorporation and that it has full power
and authority to enter into this Agreement.
2. Appointment. The Bank is hereby appointed Transfer Agent ("Transfer
Agent"), Registrar ("Registrar") and Dividend Disbursing Agent ("Dividend
Disbursing Agent") with respect to the Corporation's stock (the "Securities").
3. Compensation. The Corporation agrees to pay to the Bank compensation
for its services hereunder at such rates as the Bank and the Corporation may
agree from time to time.
4. Specific Duties of Bank. In connection with providing such services,
the following shall apply:
(a) Original Issues of Certificates. The Bank, as Transfer Agent, shall
make original issues of Securities upon the written request of the
Corporation and upon being furnished with (i) a certified copy of a
resolution of the Board of Directors authorizing such issue, (ii) an
opinion of counsel as outlined in paragraph 9(e) below, (iii) necessary
funds for the payment of any original issue tax, or an opinion of
counsel that no tax is payable, and (iv) such further documents as the
Bank may reasonably request.
(b) Transfers of Securities. (1) Transfers of certificated Securities
shall be registered and new certificates issued upon surrender of
outstanding certificates in form deemed by the Bank properly endorsed
for transfer with all necessary endorsers' signatures
<PAGE>
guaranteed in such manner and form as the Bank may require by a
guarantor reasonably believed by the Bank to be responsible,
accompanied by such documentation (i) as the Bank shall deem necessary
or appropriate to evidence the genuineness and effectiveness of each
necessary endorsement, or (ii) as may be required pursuant to Article 8
of the Uniform Commercial Code, or (iii) as may be required by any
other state or federal statute in effect at the time, and upon
cancellation thereof, countersign new certificates for a like amount of
Securities which have been duly signed as aforesaid, and to obtain the
countersignature of the Registrar on such new certificates and to
deliver the same.
(2) The Bank reserves the right to refuse to transfer
securities until it is satisfied that the endorsement on the
certificate is valid and genuine. The Bank also reserves the right to
refuse the transfer of Securities until it is satisfied that the
requested transfer is legally authorized or has received satisfactory
written instructions from the Corporation and such indemnification (and
security therefor) as the Bank may require.
(c) Splits and Dividends. The Bank will issue and mail certificates
representing a Securities dividend or split upon written instruction
from an authorized officer of the Corporation, a certified copy of the
resolutions declaring the dividend or split and authorizing the
issuance of the dividend and distribution of such certificates by the
Bank, and any other applicable documents reasonably requested by the
Bank.
(d) Warrants/Rights. The Bank, as Transfer Agent, will issue and mail
warrants/rights, accept exercises of warrants/rights, and issue
certificates upon receipt of written instructions from any authorized
officer of the Corporation, a certified copy of the resolution
authorizing the issuance of the warrants/rights and the issuance of
Securities upon exercise of warrants/rights, the Bank's acting as agent
with respect thereto, and any other applicable documents reasonably
requested by the Bank.
(e) Agent for Maintenance of Ledgers. The Bank is hereby appointed
Agent for the maintenance of the ledgers for stockholders account,
together with such other records as the Transfer Agent may in its
discretion deem necessary, and may adopt as part of its records all
lists of holders of record of the Securities, books, documents and
records which may have been employed by any former Transfer Agent of
such Securities when certified by an officer of the Corporation to be
true, authentic and complete.
(f) Registration of Original Issue of Certificates. The Bank, as
Registrar, shall register original issues of share certificates upon
presentation to it for that purpose by the
2
<PAGE>
Bank of such certificates properly signed and countersigned, and upon
being furnished with (a) a certified copy of a resolution of the Board
of Directors of the Corporation authorizing such issue; (b) an opinion
of counsel as outlined in paragraph 9(e) below, and (c) if the
Securities are listed on any securities exchange, evidence of
compliance with the applicable requirement of such exchange.
(g) Registration in Transfer. The Bank, as Registrar, shall register
share certificates in the course of transfer upon presentation to it by
the Bank of certificates theretofore issued for a like number of
Securities and not previously discharged from registry in form for
cancellation. The Registrar shall not be responsible for the
genuineness or effectiveness of any endorsement, for compliance with
applicable tax laws, nor for the validity or propriety of any transfer
or registration of transfer of Securities.
(h) Disbursement of Dividends. (1) Upon timely receipt of written
notice from an authorized officer of the Corporation of the declaration
of a dividend, and of funds sufficient for the payment thereof, the
Bank, as Dividend Disbursing Agent, shall distribute cash dividends on
the outstanding Securities of the Corporation. The Corporation agrees
that the Bank, as Dividend Disbursing Agent shall not be required to
make any disbursement of dividends where collected funds in a
sufficient amount have not been received from the Corporation.
(2) The Bank shall also withhold any tax that may be required
under applicable United States revenue laws and pay the same as
required to the Internal Revenue Service, and make any and all other
reports with respect to such dividend, which may be required under
applicable United States revenue laws. The Corporation shall notify the
Bank of any other amounts to be withheld from dividends under any law
or regulation.
(i) Lost, Stolen, Destroyed Certificates. The Bank, as Transfer Agent,
may issue new share certificates and the Bank, as Registrar, may
register new share certificates in place of certificates represented to
have been lost, destroyed, or stolen, upon receiving indemnity
satisfactory to the Transfer Agent, the Corporation and the Registrar,
and may issue and register new certificates in exchange for, and upon
surrender of, mutilated certificates.
5. The Bank May Rely. The Corporation shall protect and hold the
Bank harmless from all liability and expense in relying and acting upon
any signature, certificate or other document
3
<PAGE>
reasonably believed by it to be genuine and to have been signed by the proper
person, or in refusing in good faith to transfer a certificate if it is not
satisfied as to the propriety of the requested transfer, and that
notwithstanding the death, resignation or removal of any officer of the
Corporation authorized to sign certificates, the Bank may continue to
countersign certificates bearing the manual or facsimile signature of such
officer and shall not be held to have notice of any change of authority of any
officer, employee, or agent of the Corporation until receipt of written
notification thereof from the Corporation.
The Bank shall be entitled to rely upon the Corporation's determination
as to the legality or propriety of the transfer of any Securities, whether or
not subject to restrictions under Federal or State securities laws, under
agreements, or otherwise. The Bank shall be under no duty of independent inquiry
or determination.
6. Advice from Counsel. The Bank may apply to any officer of the
Corporation designated in Paragraph 9(f) below for instructions and/or may seek
advice from the legal counsel for the Corporation or, with prior approval of the
Corporation, which approval shall not be unreasonably withheld, from the Bank's
legal counsel, in either case at the expense of the Corporation, with respect to
any matter relating to the Bank as provided in this Agreement. The Bank shall
not be liable and the Corporation shall protect and hold the Bank harmless from
all liability and expense in connection with any action taken or omitted by the
Bank in accordance with such written advice so obtained.
7. Indemnification. So long as the Bank has acted in good faith and
with due diligence and without negligence, the Corporation assumes full
responsibility and shall indemnify the Bank and save it harmless from and
against any and all actions and suits, whether groundless or otherwise; and from
and against any and all losses, damages, costs, charges, counsel fees, payments,
expenses, and liabilities arising directly or indirectly out of its agency
relationship to the Corporation. The Bank shall not be under any obligation to
prosecute or to defend any action or suit in respect of such agency
relationship, that in the opinion of its counsel, may involve it in expense or
liability, unless the Corporation shall, so often as reasonably requested,
furnish the Bank with satisfactory indemnity against such expense or liability.
Further and in particular, the Corporation assumes full responsibility and shall
indemnify the Bank and save it harmless from all liability and against any and
all actions and suits in
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connection with any record differences existing at the time of appointment as
Transfer Agent or that are due to any co-transfer agent failing to act in
accordance with applicable procedures so as to create such record differences.
8. Notice from Documents. The Corporation shall be responsible for, and
hereby warrants to the Bank the accuracy and completeness of, all documentation
and amendments thereto furnished pursuant to this Agreement. Neither the Bank
nor any of its agents shall under any circumstances or conditions be chargeable
with notice or knowledge, actual or constructive, of the contents of any
registration statement or report under the Securities Act of 1933, the
Securities Exchange Act of 1934, or other law requiring registration,
qualification, filing, or reporting with respect to the Securities, or the
contents of any prospectus or offering circular or any exhibit filed therewith,
or any notice, proxy statements, reports, or other material furnished to the
Securities and Exchange commission, any other governmental agency, or the
Security holders. Nor shall the Bank or any of its agents be chargeable with
notice or knowledge, actual or constructive, of whether any act, matter or thing
done or omitted to be done by the Bank or its agents in accordance with this
Agreement is prohibited by, in compliance with or in contravention of any such
registrations statements, notices proxy statements, reports or other material,
any Federal or State Law, or any regulation or order of any governmental agency.
9. Duties of the Corporation. The Corporation agrees that the Secretary
or an Assistant Secretary of the Corporation shall file the following with the
Bank at the time of the Bank's appointment hereunder and/or from time to time as
provided herein:
(a) copies of the authorizing resolution and the by-laws of
the Corporation with all amendments of said by-laws,
certified by the Secretary or an Assistant Secretary;
(b) a copy of the certificate of incorporation of the
Corporation with all amendments, certified by the Secretary
of State of the state of incorporation;
(c) specimens of all forms of stock certificates, including
certificates heretofore issued and exchangeable for present
certificates, adopted by the Corporation and certified to be true and
correct specimens by the Secretary or Assistant Secretary of the
Corporation;
(d) a copy of all permits or authorizations of any State or Federal
agency, commission or administrative body whose consent or authority is
required with respect to the
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issuance of the Securities, together with a copy of any approval of the
appointment of the Bank hereunder, if required, certified in each case
by the Secretary or Assistant Secretary of the Corporation;
(e) written opinion of counsel for the Corporation addressed to and in
a form acceptable to the Bank as to the valid organization and
existence of the Corporation, the due authorization and issuance of the
Securities, the adequacy of the form of the certificates, the
registration (stating the effective date thereof), if required, of the
Securities under the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended and any other applicable federal or
state securities laws, or if exempt therefrom, the basis for such
exemption, and that no order or consent of any governmental or other
regulatory authority is required in connection with the issuance of the
Securities and the appointment of the Bank in accordance with this
Agreement other than as provided in clause (a) above, or if no such
order or consent is required, a statement to that effect.
(f) a certificate containing (i) information as to the authorized and
outstanding Securities of the Corporation, (ii) a list of duly elected
officers of the Corporation authorized to sign certificates and to give
instructions to the Bank, with specimen signatures of such officers,
certified by the Secretary or Assistant Secretary of the Corporation,
(iii) the address to which notices may be sent, (iv) the name and
address of legal counsel to the Corporation, and (v) the names and
addresses of any other Transfer Agents or Registrars of the Securities
of the Corporation. The Bank may rely on said certificate, as altered
from time to time in writing by the Secretary or an Assistant Secretary
of the Corporation;
(g) a list of stockholders showing name and address, certificate number
and number of Securities held by each stockholder and a list of
certificates against which stops have been placed, certified by an
officer of the Corporation. In lieu of a list, the stock ledger,
certified to be correct, may be delivered (required only if appointment
covers Securities already outstanding);
(h) instructions with respect to the persons to whom advices of
original issues and transfer or retirement of certificates for shares
of stock of the Corporation for which the Bank is appointed are to be
sent;
(i) in the event of any future amendment or change in respect of any of
the foregoing, including but not limited to an increase, decrease or
other change in authorized
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Securities, prompt written notification of such change, together with
certified copies of all relevant resolutions, instruments or other
documents, specimen signatures, certificates, opinions or the like as
the Bank may deem necessary or appropriate; and
(j) on any written direction under paragraph 4(a) of this Agreement,
the opinion of counsel and any other documents provided for in
Paragraph 9(d) and 9(e), in respect of the Securities then to be
issued.
10. Acceptance by the Bank. The acceptance by the Bank of the documents
filed with it in connection with its appointment hereunder and thereafter in
connection with its agency shall be subject to the approval of counsel for the
Bank.
11. Agency as to Securities. Unless expressly limited by the resolution
of appointment or by subsequent corporate action, the appointment of the Bank
hereunder shall be with respect to all of the Securities of the class or classes
for which the Bank is so appointed, as the same shall at any time be constituted
or authorized by the Articles of Incorporation, and any subsequent increases in
such class or classes.
12. Resignation or Removal. The Bank may resign at any time by giving
written notice of such resignation to the Corporation at its last known address,
and thereupon its duties as such agent shall cease. The Bank may be removed at
any time by resolution of the Board of Directors of the Corporation, certified
copy of which shall be furnished to the Bank. Upon resignation or removal, the
Bank may, to the extent permitted by law, deliver to its successor or to the
Corporation its records as such agent.
[This space intentially left blank]
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13. Governing Law. This is a Delaware contract and shall be governed by
Delaware law in all respects without regard to conflict of law
provisions.
IN WITNESS WHEREOF the parties have caused this Agreement to be duly
executed all as of the date first above written.
[Corporate Seal] CAM BALANCED FUND, INC.
Attest:_______________________ By:___________________________
(Assistant) Secretary Title:
Address:
______________________________
______________________________
______________________________
Attention:____________________
Telecopy:_____________________
[Corporate Seal] WILMINGTON TRUST COMPANY
Attest:_______________________ By:________________________
(Assistant) Secretary Title:
Address:
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust
Operations
Telecopy: (302) 651-1079
Rev. 8/16/94
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FORM OF SHARE PURCHASE AGREEMENT
CAM Balanced Fund, Inc., a Maryland corporation (the "Fund"),
and CAM Investment Advisors, Inc., a Delaware corporation ("CAM"), hereby agree
with each other as follows:
1. The Fund hereby offers CAM, and CAM hereby agrees to
acquire 10,753 shares of common stock (the "Shares") of the Fund at a purchase
price of $9.30 per share for a total of $100,003. CAM will purchase the Shares
in a private offering prior to the effectiveness of the Registration Statement
on Form N-2 filed by the Fund under the Securities Act of 1933. The Shares are
being purchased pursuant to Section 14 of the Investment Company Act of 1940 to
serve as the seed money for the Fund prior to the commencement of the public
offering of its shares.
2. In connection with such purchase, CAM represents and
warrants to the Fund that: (i) the Shares are being acquired for investment
purposes and not with a view to the distribution thereof; and (ii) such shares
shall, when issued for such consideration, be validly issued, fully paid and
non-assessable by the Fund.
CAM INVESTMENT ADVISORS, INC.
----------------------------------
By:
Title:
CAM BALANCED FUND, INC.
----------------------------------
By:
Title:
