1933 Act Registration No.333-63279
1940 Act Registration No. 811-8999
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20546
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [1]
Post-Effective Amendment No. ___
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. [1]
AAPEX FUNDS, INC.
(Exact name of registrant as specified in Charter)
141 West Jackson Blvd., Suite 3602
Chicago, Illinois 60604
(Address of Principle Executive Offices and Zip Code)
312-673-2111
(Registrant's Telephone Number including Area Code)
Terence P. Smith
The Declaration Group
555 North Lane, Suite 6160
Conshohocken, PA 19428
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
It is proposed that the securities registered by this filing will be offered to
the public as soon as practicable after this Registration Statement becomes
effective.
Calculation of Registration Fee:
The Registrant hereby declares, pursuant to Rule 24f-2 under the Investment
Company Act of 1940, and the Securities Act of 1933, that an indefinite number
of shares of beneficial interest, no par value, is being registered by this
Registration Statement.
The Registrant declares that this Registration Statement shall become effective
on February 1, 1999 in accordance with Section 8(a) of the Securities Act of
1933 or until the Registration Statement shall became effective on such date as
the Commission, acting pursuant to said Section 8(a), may determine.
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THE AAPEX EQUITY FUND
CROSS-REFERENCE SHEET
(As required by Rule 495)
ITEM NO. ON FORM N-1A CAPTION OR SUBHEADING IN PROSPECTUS
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OR STATEMENT OF ADDITIONAL INFORMATION
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PART A - INFORMATION REQUIRED IN PROSPECTUS
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1. Cover Page. Cover Page
2. Synopsis. Investment Objectives and Policies;
Cover Page
3. Condensed Financial Information. Fees and Expenses
4. General Description General Information; Management of
of Registrant. the Fund
5. Management of the Fund. Management of the Fund; Investment
Adviser
5a. Management's Discussion of Not Applicable
Fund Performance
6. Capital Stock and Other Management of the Fund
Securities.
7. Purchase of Securities Being Purchasing Shares; Plan of Distribution;
Offered. Federal Taxes
8. Redemption or Repurchase Redeeming Shares; Plan of Distribution;
Federal Taxes
9. Legal Proceedings Not Applicable
PART B. STATEMENT OF ADDITIONAL INFORMATION
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10. Cover Page. Cover Page
11. Table of Contents. Table of Contents
12. General Information and History Not covered in Statement of Additional
Information (covered under Item 4 of
Part A)
13. Investment Objectives and Investment Policies and Restrictions
Policies.
14. Management of the Fund. Investment Adviser; Directors and
Officers
15. Control Persons and Principal Directors and Officers; Investment
Holders of Securities. Adviser
16. Investment Advisory and other Investment Adviser; Fund Service
Services. Providers
17. Brokerage Allocation. Portfolio Transactions
18. Capital Stock and Other Capital Stock
Securities.
19. Purchase, Redemption and Pricing Determination of Net Asset Values
of Securities Being Offered (also covered under Items 7 & 8 of
Part A)
20. Tax Status. Tax Information
21. Underwriters Fund Service Providers
and Transfer Agents
22. Calculations of Performance Data. Performance Information
23. Financial Statements Not Applicable. See item 32 of Part C.
PART C
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Information required to be included in PART C is set forth under the appropriate
Item, so numbered, in PART C of the Registration Statement.
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PROSPECTUS
Dated February 1, 1999
The Aapex Equity Fund
141 West Jackson Blvd., Suite 3602
Chicago, Illinois 60604
312-673-2111
The Aapex Funds, Inc.(TM) (the "Company") is a newly organized, diversified
management investment company currently consisting of one portfolio, The Aapex
Equity Fund(TM) (the Fund"). The investment objective of the Fund is growth of
capital. The Fund attempts to achieve its investment objective by investing
primarily in a diversified portfolio of common stocks and securities convertible
into common stocks.
The minimum investment in the Fund is $2,500 for regular accounts and $1000 for
retirement accounts. The minimum subsequent investment is $500 for regular
accounts and $50 for retirement accounts. The Fund is a No-Load Fund. This means
that 100% of your initial investment is invested in shares of the Fund. Fund
shares are thereafter subject to a continuing Rule 12b-1 fee of 0.25% annually.
This Prospectus concisely sets forth the information you should know before you
invest. Please read this Prospectus and keep it for future reference. A
Statement of Additional Information (the "SAI") regarding the Fund, dated
February 1, 1999, has been filed with the Securities and Exchange Commission
("SEC") and is incorporated by reference into this Prospectus. You can get a
copy of the SAI at no charge by writing or calling the Fund at the address or
telephone number listed above. The SEC maintains a web site (www.sec.gov) that
contains the Statement of Additional Information and other information regarding
the Fund.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND IN ANY JURISDICTION
IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
Fees And Expenses.
Investment Objectives And Policies
Primary Investments of the Fund
Risk Factors.
Federal Taxes.
Purchasing Shares.
Redeeming Shares.
Investment Adviser.
Management of the Fund.
Plan of Distribution
General Information.
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FEES AND EXPENSES
Shareholder Transaction Expenses:
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This is a No-Load Fund. This means that 100% of your initial investment is
invested in shares of the Fund.
Sales Loads NONE
Deferred Sales Loads NONE
Charges on Reinvested Dividends NONE
Redemption Fees 1.00%*
*Shares redeemed prior to being held for at least six months will be charged a
redemption fee equal to 1.00% of the NAV. This would have the effect of
increasing the expenses of such shares. This fee is not a fee to finance sales
or sales promotion expenses, but is imposed to discourage short-term trading of
Fund shares. Furthermore, such fees, when imposed, are credited directly to the
assets of the Fund to help defray the expense to the Fund of such short-term
trading activities.
Annual Fund Operating Expenses: (as a percentage of net assets)
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The following table sets forth the regular operating expenses that are paid out
of the Fund's average daily assets. These fees are used to pay for services such
as the investment management of the Fund, maintaining shareholder records and
furnishing shareholder statements. This is a new Fund without a prior operating
history, so the following expense figures are estimates. True expenses may be
greater or lower than those shown below.
Investment Advisory Fee 0.50%
Management Fees. 1.20%
12b-1 Fees. 0.25%
Other Expenses (estimated) 0.05%
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Total Fund Operating Expenses. 2.00%
(Estimated)
1
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Example of Shareholder Expenses Over Time.
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Based on the fee schedule set forth above, you would pay the following expenses
on a $1,000 investment, assuming (1) a 5% annual rate of return and (2)
redemption at the end of each time period;
One Year Three Years
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$------ $-----
The above example is intended to help you understand the various costs and
expenses you might incur over time when you invest in the Fund, but you should
be aware that this is only an example of anticipated future expenses. Actual
expenses may be greater or less than those shown. Because the Fund has no
operating history, the expense figures are based on estimated amounts for the
Fund's first fiscal year. The Fund's Adviser has voluntarily agreed to waive
receipt of its fees and/or assume certain expenses of the Fund, to the extent
possible, to insure that the Fund's total expenses do not exceed 2.00% annually.
If the Adviser waives fees or assumes expenses of the Fund, such actions would
have the effect of lowering the expense ratio and increasing the yield to
investors. Also, the Fund is required by law to use a 5% assumed annual rate of
return in the example. The Fund's actual annual rate of return may be higher or
lower than the example.
INVESTMENT OBJECTIVES AND POLICIES
The Fund is a diversified mutual fund whose primary investment objective is
growth of capital. The Fund seeks to achieve its objective by investing
primarily in a diversified portfolio of common stock and securities convertible
into common stock. There can be no assurance that the Fund's investment
objective will be achieved. Diversification means limiting the amount of Fund
assets invested in any one issuer and limiting the amount of Fund assets
invested in any one industry, thereby reducing the risks of losses incurred by
that issuer or industry.
Under normal circumstances, the Fund intends to invest not less than 65% of its
assets in the common stocks of companies whose stock trades on the New York
Stock Exchange, The American Stock Exchange, and the NASDAQ over-the-counter
market, or securities convertible into such common stocks. The Adviser to the
Fund will seek to invest in stocks that, in the Adviser's opinion, have an
above-average potential for future earnings growth. The Adviser may also take a
short position in certain companies when, in the Adviser's opinion, such
companies are excessively overvalued in relation to their peer group. Taking a
short position means selling a security that you do not own, with the
expectation of buying the security at a later date at a lower price than the
price at which it was sold. The Adviser will take such positions when the
Adviser feels that a particular security is vulnerable to a sudden price decline
due to its price being artificially upheld by unreasonable investor perceptions
or short-term market conditions. The Adviser will only enter into short sales to
the extent that such sales do not exceed 25% of the Funds assets, will engage in
such transaction only with brokers with whom it has entered into agreements
allowing the Fund to simultaneously borrow the shorted security, and will
maintain a segregated account with its Custodian consisting of cash, cash
equivalents, U.S. Government Securities or other high-grade liquid debt
securities, in an amount equal to the aggregate fair market value of its
commitments to such transactions.
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In addition to common stock, the Fund may invest up to 25% of its assets in
foreign equity securities when, in the Adviser's opinion, such investments would
be advantageous to the Fund and help the Fund to achieve its investment
objective.
The Fund may also, from time to time, invest a portion of its assets in other
securities, such as United States Government bonds, bills, and notes; money
market instruments, repurchase agreements, and options and futures on both
equities and selected commodities. The Fund may also hold a portion of its
assets in cash.
The Fund will attempt to take prompt advantage of changes in market conditions.
This means that the Fund will purchase and sell securities without regard to the
length of time such securities have been held, whenever the Adviser believes
such actions will help the Fund achieve its investment objective. You should be
aware that certain purchases and sales of securities might result in the Fund
realizing short-term capital gains that may have an impact on your tax status.
Please see the SAI for a more detailed discussion of taxation issues, and
consult with your tax Adviser to determine what impact the Fund's investment
policies may have on your personal tax situation.
FUND INVESTMENTS
COMMON STOCKS. The Fund will ordinarily invest at least 65% of its assets in
common stock or securities convertible into common stock. Common stock is issued
by companies to raise cash for business purposes and represents a proportionate
equity interest in the issuing companies. Therefore, the Fund participates in
the success or failure of any company in which it holds common stock. The market
value of common stock can fluctuate significantly, reflecting the business
performance of the issuing company, investor perceptions and general economic or
financial market movements. Smaller companies are especially sensitive to these
factors. Despite the risk of price volatility, however, common stocks
historically have offered the greatest potential for gain on investment,
compared to other classes of financial assets.
FOREIGN SECURITIES. The Fund may invest up to 25% of its assets in equity
securities of foreign issuers. Investments in foreign securities may involve
greater risks compared to domestic investments. Foreign companies are not
subject to the regulatory requirements of U.S. companies and, as a result, there
may be less publicly available information about issuers than is available in
the reports and ratings published about companies in the U.S. Additionally,
foreign companies are not subject to uniform accounting, auditing and financial
reporting standards. Dividends and interest on foreign securities may be subject
to foreign withholding taxes. Such taxes may reduce the net return to
shareholders. Although the Fund intends to invest in securities of foreign
issuers domiciled in nations which the Adviser considers as having stable and
friendly governments, there is the possibility of expropriation, confiscation,
taxation, currency blockage or political or social instability which could
affect investments of foreign issuers domiciled in such nations. Further, there
is the risk of loss due to fluctuations in the value of a foreign corporation's
currency relative to the U.S. dollar.
3
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REAL ESTATE INVESTMENT TRUSTS. The Fund may invest in real estate investment
trusts (REITs). Equity REITs invest directly in real property while mortgage
REITs invest in mortgages on real property. REITs may be subject to certain
risks associated with the direct ownership of real estate including declines in
the value of real estate, risks related to general and local economic
conditions, overbuilding and increased competition, increases in property taxes
and operating expenses, and variations in rental income. REITs pay dividends to
their shareholders based upon available funds from operations. It is not unusual
for these dividends to exceed the REITs taxable earnings and profits resulting
in the excess portion of such dividends being designated as a return of capital.
The Fund intends to include the gross dividends from such REITs in its
distribution to its shareholders and, accordingly, a portion of the Fund's
distributions may also be designated as a return of capital. The Fund will not
invest more than 10% of its assets in REITS.
MONEY MARKET FUNDS. The Fund may invest in securities issued by other registered
investment companies that invest in short-term debt securities (i.e., money
market funds). As a shareholder of another registered investment company, the
Fund would bear its pro rata portion of that company's advisory fees and other
expenses. Such fees and expenses will be borne indirectly by the Fund's
shareholders. The Fund may invest in such instruments to the extent that such
investments do not exceed 10% of the Fund's net assets and/or 3% of any
investment company's outstanding securities.
DEBT SECURITIES. The Fund may invest in corporate or U.S. Government debt
securities including zero coupon bonds. Corporate debt securities may be
convertible into preferred or common stock. In selecting corporate debt
securities for the Fund, the Adviser reviews and monitors the creditworthiness
of each issuer and issue. U.S. Government securities include direct obligations
of the U.S. Government and obligations issued by U.S. Government agencies and
instrumentalities. The market value of such securities fluctuates in response to
interest rates and the creditworthiness of the issuer. In the case of securities
backed by the full faith and credit of the United States Government,
shareholders are only exposed to interest rate risk.
Zero coupon bonds do not provide for cash interest payments but instead are
issued at a discount from face value. Each year, a holder of such bonds must
accrue a portion of the discount as income. Because issuers of zero coupon bonds
do not make periodic interest payments, their prices tend to be more volatile
than other types of debt securities when market interest rates change.
REPURCHASE AGREEMENTS. The Fund may invest a portion of its assets in repurchase
agreements ("Repos") with broker-dealers, banks and other financial
institutions, provided that the Fund's custodian always has possession of the
securities serving as collateral for the Repos or has proper evidence of book
entry receipt of said securities. In a Repo, the Fund purchases securities
subject to the seller's simultaneous agreement to repurchase those securities
from the Fund at a specified time (usually one day) and price. The repurchase
price reflects an agreed-upon interest rate during the time of investment. All
Repos entered into by the Fund must be collateralized by U.S. Government
Securities, the market values of which equal or exceed 102% of the principal
amount of the money invested by the Fund. If an institution with whom the Fund
has entered into a Repo enters insolvency proceedings, the resulting delay, if
any, in the Fund's ability to liquidate the securities serving as collateral
could cause the Fund some loss if the securities declined in value prior to
liquidation. To minimize the risk of such loss, the Fund will enter into Repos
only with institutions and dealers considered creditworthy.
4
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OPTIONS AND FUTURES. The Fund may write (i.e. sell) covered put and call
options, and may purchase put and call options, on equity indexes and equity
securities traded on a United States exchange or properly regulated
over-the-counter market. Options contracts can include long-term options with
durations of up to three years. The Fund may also buy and/or sell futures
contracts on equity securities, equity indexes, and United States Treasury
Securities. The Fund will not invest in options or futures on commodities. The
Fund may use futures and options to increase or decrease its exposure to the
effects of changes in security prices, to hedge securities held, to maintain
cash reserves while remaining fully invested, to facilitate trading, to reduce
transaction costs, or to seek higher investment returns when an options or
futures contract is priced more attractively than the underlying security or
index. The Fund may enter into options transactions so long as the value of the
underlying securities on which options contracts may be written at any one time
does not exceed 100% of the net assets of the Fund, and so long as the initial
margin required to enter into such contracts does not exceed ten percent (10%)
of the Fund's total net assets. The Fund may sell futures contracts only if the
Fund has underlying securities against which such contracts may be written of at
least 100% of the initial value of the futures contract. The Fund may purchase
futures contracts so long as the initial margin required to enter into such
contracts does not exceed ten percent (10%) of the Fund's total net assets. When
writing an option contract or selling a futures contract, the Fund will maintain
a segregated account with its Custodian consisting of the securities against
which the options contract has been written or the futures contract sold, or as
appropriate, cash, cash equivalents, U.S. Government Securities or other
high-grade liquid debt securities, denominated in U.S. dollars, in an amount
equal to the aggregate fair market value of its commitments to such
transactions.
RISK FACTORS RELATING TO OPTIONS AND FUTURES. The primary risks associated with
the use of options and futures are; (1) imperfect correlation between a change
in the value of the underlying security or index and a change in the price of
the option or futures contract, and (2) the possible lack of a liquid secondary
market for an options or futures contract and the resulting inability of the
Fund to close out the position prior to the maturity date. Investing only in
those contracts whose price fluctuations are expected to resemble those of the
Fund's underlying securities will minimize the risk of imperfect correlation.
Entering into such transactions only on national exchanges and over-the-counter
markets with an active and liquid secondary market will minimize the risk that
the Fund will be unable to close out a position.
RESTRICTED AND ILLIQUID SECURITIES. The Fund will not invest more than 15% of
its net assets in securities that the Adviser determines, under the supervision
of the Board of Directors, to be illiquid and/or restricted. Illiquid securities
are defined as securities that cannot be liquidated in less than seven days at a
price comparable to the value at which the Fund has priced that security.
Restricted securities are securities, the purchase and sale of which may be
subject to legal restrictions. Illiquid and restricted securities may present a
greater risk of loss than other types of securities due to their lack of an
active secondary market.
5
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WHEN-ISSUED SECURITIES AND DELAYED-DELIVERY TRANSACTIONS. The Fund may purchase
securities on a when-issued basis, and it may purchase or sell securities for
delayed-delivery. These transactions occur when securities are purchased or sold
by the Fund with payment and delivery taking place at some future date. The Fund
may enter into such transactions when, in the Adviser's opinion, doing so may
secure an advantageous yield and/or price to the Fund that might otherwise be
unavailable. The Fund has not established any limit on the percentage of assets
it may commit to such transactions, but to minimize the risks of entering into
these transactions, the Fund will maintain a segregated account with its
Custodian consisting of cash, cash equivalents, U.S. Government Securities or
other high-grade liquid debt securities, denominated in U.S. dollars or non-U.S.
currencies, in an amount equal to the aggregate fair market value of its
commitments to such transactions.
CASH RESERVES. The Fund will invest in debt securities, Repos and money market
funds only to meet liquidity needs or for temporary defensive purposes. The Fund
may also hold a portion of its assets in cash, to maintain liquidity. If, in the
Adviser's opinion, it is appropriate for the Fund to assume a temporary
defensive posture, the Fund may invest up to 100% of its assets in these
instruments.
A complete listing of the Fund's permissible investments, fundamental investment
policies and investment restrictions is contained in the SAI in the Section
entitled, "Investment Policies and Restrictions".
RISK FACTORS
You may lose money by investing in the Fund. The likelihood of loss is greater
if you invest for a shorter period of time. Your investment in the Fund is not a
deposit or obligation of, or insured or guaranteed by, any entity or person,
including the U.S. Government and the Federal Deposit Insurance Corporation. The
Fund may be appropriate for long-term, relatively aggressive investors who
understand the potential risks and rewards of investing in common stocks. The
value of the Fund's investments will vary from day-to-day, reflecting changes in
market conditions, interest rates and other company, political, and economic
news. Over the short-term, stock prices can fluctuate dramatically in response
to these factors. However, over longer time periods, stocks, although more
volatile, have historically shown greater growth potential than other
investments. The Fund will invest in securities traded on the NASDAQ, and such
investments may be exposed to additional risks, such as the risk of illiquidity
in trading positions and wide spreads between purchase and sale prices. The Fund
is not, in itself, a balanced investment plan, and the Fund's lack of an
operating history may present certain additional risks. Further, the Adviser may
take a short position in a company when, in the Adviser's opinion, the company
is excessively overvalued relative to its peer group. Short sales involve
selling a security that the Fund does not presently own with the expectation of
purchasing that security in the future at a lower price. The primary risks
involved in short sales include losses due to the price of the security rising
instead of falling, resulting in a loss to the Fund when the short sale is
covered, the potential inability of the Fund to borrow shorted securities in
order to effect delivery, and the possibility of losses due to excessive
borrowing costs associated with borrowing the securities. The Fund may also
enter into futures and options transactions, the risks of which have been
discussed above. Because of the nature of the Fund's investment policies, the
value of the Fund's shares will fluctuate to a greater degree than the shares of
funds utilizing more conservative investment techniques, or those having as
investment objectives the conservation of capital and/or the realization of
current income. When you sell your Fund shares, they may be worth more or less
than what you paid for them. There is no assurance that the Fund can achieve its
investment objective, since all investments are inherently subject to market
risk.
6
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FEDERAL TAXES
The Fund intends to qualify each year as a regulated investment company under
the rules and regulations of the Internal Revenue Service (IRS). In any fiscal
year in which the Fund qualifies as a regulated investment company and
distributes to shareholders all of its net investment income and net capital
gains, the Fund will not have to pay any federal income tax.
Generally, all dividends and capital gains are taxable whether they are
reinvested or received in cash, unless you are exempt from taxation or entitled
to a tax deferral. The Fund intends to pay out any dividends and/or capital
gains at least annually, usually in December, in order to avoid a 4% excise tax.
Early each following year, you will be notified as to the amount and federal tax
status of all income distributions paid to you from the prior year. Such
distributions may also be subject to state or local taxes. The tax treatment of
redemptions from a retirement plan account may differ from redemptions from an
ordinary shareholder account.
You must provide the Fund with your correct taxpayer identification number, and
certify that you are not subject to backup withholding (your taxpayer
identification number is usually your Social Security number). If you fail to do
so, the IRS may require the Fund to withhold 31% of your taxable distributions
and redemptions. Federal law also requires the Fund to withhold 30% or the
applicable treaty rate from dividends paid to certain nonresident aliens,
non-U.S. partnerships, and non-U.S. corporations.
This is a brief summary of the tax laws that affect your investment in the Fund.
Please see the Section entitled "Tax Information" in the SAI for additional
information, and consult with your own tax Adviser, since every investor's tax
situation is unique.
PURCHASING SHARES
To purchase shares of the Fund, first complete and sign a New Account Purchase
Application and mail it, together with your check for the total purchase price,
to THE AAPEX FUNDS, INC.(TM), C/O DECLARATION SERVICE COMPANY, 555 NOrth LANE,
SUITE 6160, CONSHOHOCKEN, PA 19428. Checks are accepted subject to collection at
full face value in United States currency. If your check does not clear, your
purchase will be cancelled and you will be subject to any losses or fees
incurred by the Fund with respect to the transaction, including but not limited
to expenses and losses, if any, incurred in liquidating positions to effect the
redemption, accounting and transfer agent fees, and fees imposed for early
redemption.. You will receive a statement showing the number of shares
purchased, the net asset value at which your shares were purchased, and the new
balance of Fund shares owned each time you purchase shares of the Fund. The Fund
does not issue stock certificates. All full and fractional shares will be
carried on the books of the Fund.
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Shares of the Fund are purchased at the net asset value next computed after the
receipt and acceptance of your purchase order (See, "Determination of Net Asset
Value." in the SAI). The Fund's share price, also called its net asset value, is
determined as of the close of trading (normally 4:00 p.m., Eastern Time) every
day the New York Stock Exchange is open. The Fund calculates its net asset value
per share by dividing the total value of its assets after subtracting
liabilities by the number of its shares outstanding. The Fund generally
determines the total value of its shares by using market prices for the
securities comprising its portfolio. The Fund is a No-Load Fund. This means that
you will not be charged any sales commissions or underwriting discounts, so 100%
of your initial investment is invested in shares of the Fund. The minimum
initial investment is $2,500 for regular accounts and $1,000 for Individual
Retirement Accounts (IRAs). Minimum subsequent purchases for regular accounts
are $500 and $50 for IRA accounts.
All applications to purchase shares of the Fund are subject to acceptance by
authorized officers of the Fund and are not binding until accepted. The Fund
reserves the right to reject purchase orders under circumstances or in amounts
considered disadvantageous to existing shareholders. Please see the SAI Sections
entitled "Purchasing and Redeeming Shares" and "Tax Information" for more
information concerning share purchases.
Shareholder Inquiries may be made by writing to the Fund or calling the Fund at
the below-listed address and phone number:
THE AAPEX EQUITY FUND
C/O DECLARATION SERVICE COMPANY
555 NORTH LANE, SUITE 6160
CONSHOHOCKEN, PA 19428
1-800-___-____
REDEEMING SHARES
You may redeem your shares in the Fund at any time and for any reason. Upon
receipt by the Fund of a redemption request in proper form, your shares of the
Fund will be redeemed at their next determined net asset value (See the Sections
entitled "Determination of Net Asset Value" and "Purchasing and Redeeming
Shares" in the SAI). IF YOU REDEEM YOUR SHARES WITHIN SIX MONTHS OF PURCHASE,
YOU WILL BE CHARGED A FEE EQUAL TO 1.00 % OF THE VALUE OF THE SHARES REDEEMED AS
AN EARLY REDEMPTION FEE. Redemption requests must be in writing and delivered to
the Fund at THE AAPEX FUNDS, INC.(TM), C/O DECLARATION SERVICE COMPANY, 555
NORTH LANE, SUITE 6160, CONSHOHOCKEN, PA 19428. To be In "proper form," your
redemption request must:
1. Specify the number of shares or dollar amount to be redeemed, if less than
all shares are to be redeemed;
2. Be signed by all owners exactly as their names appear on the account;
3. If required, include a signature guarantee from any "eligible guarantor
institution" as defined by the rules under the Securities Exchange Act of
1934. Eligible guarantor institutions include banks, brokers, dealers,
credit unions, national securities exchanges, registered securities
associations, clearing agencies and savings associations. A notary public
is not an eligible guarantor.
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Further documentation, such as copies of corporate resolutions and instruments
of authority may be requested from corporations, administrators, executors,
personal representatives, trustees, or custodians to evidence the authority of
the person or entity making the redemption request.
Signature Guarantees. A signature guarantee is designed to protect you and the
Fund by verifying your signature. SIGNATURE GUARANTEES ARE REQUIRED WHEN:
(1) establishing certain services after the account is opened;
(2) requesting redemptions in excess of $10,000;
(3) redeeming or exchanging shares, when proceeds are: (i) being mailed to an
address other than the address of record, (ii) made payable to other than
the registered owner(s); or
(4) transferring shares to another owner.
The redemption price per share is net asset value, determined as of the close of
business on the day your redemption order is accepted by the Fund (See the
Sections entitled, "Purchasing and Redeeming Shares" and "Determination of Net
Asset Value" in the SAI). When you redeem your shares, they may be worth more or
less than you paid for them, depending upon the value of the Fund's portfolio
securities at the time of redemption.
If the value of your account falls below $1,000 as a result of previous
redemptions and not market price declines, the Fund may redeem the shares in
your account. However, the Fund will notify you first if such an event occurs,
and you will have 60 days to bring your account balance up to the minimum levels
before the Fund may exercise its option to redeem.
Payment for shares redeemed is made within seven days after receipt by the Fund
of a request for redemption in proper form. If shares are purchased by check and
redeemed by letter within seven business days of purchase, the Fund may hold
redemption proceeds until the purchase check has cleared, which may take up to
fifteen days. You will also be subject to a redemption fee of 1.00% of total
purchase value in such a circumstance. The Fund reserves the right to suspend or
postpone redemptions during any period when (a) trading on any of the major U.S.
stock exchanges is restricted, as determined by the Securities and Exchange
Commission, or that the major exchanges are closed for other than customary
weekend and holiday closings, (b) the Commission has by order permitted such
suspension, or (c) an emergency, as determined by the Commission, exists making
disposal of portfolio securities or valuation of net assets of the Fund not
reasonably practicable.
9
<PAGE>
MANAGEMENT OF THE FUND
The Company, an open-end, diversified management company, was incorporated in
Maryland on September 11, 1998. The Board of Directors approves all significant
agreements between the Company and the persons and companies that furnish
services to the Fund, including agreements with the Fund's custodian, transfer
agent, investment Adviser and administrator. The day-to-day operations of the
Fund are delegated to the Adviser. The Statement of Additional Information
contains background information regarding each of the Company's Directors and
Executive Officers. The Company's Articles of Incorporation permit the Board of
Directors to issue 100,000,000 shares of common stock. The Board of Directors
has the power to designate one or more classes ("series") of shares of common
stock and to classify or reclassify any unissued shares with respect to such
series. Currently, the shares of the Fund are the only class of shares being
offered by the Company. Shareholders are entitled: (i) to one vote per full
share; (ii) to such distributions as may be declared by the Company's Board of
Directors out of funds legally available; and (iii) upon liquidation, to
participate ratably in the assets available for distribution. There are no
conversion or sinking fund provisions applicable to the shares, and the holders
have no preemptive rights and may not cumulate their votes in the election of
directors. The shares are redeemable and are fully transferable. All shares
issued and sold by the Fund will be fully paid and nonassessable.
The Company is aware of a potential problem that may occur when the year changes
from 1999 to 2000. Many computers and computer programs have been built where
dates are calculated using only two digits. As a result, these computers and
programs cannot tell the difference between 1900 and 2000, and when the year
changes from 1999 to 2000, there may be significant problems. The Company has
taken steps to address this problem, specifically by entering into contracts
only with vendors who are aggressively addressing the problem and by updating
the Company's own systems to address the problem. As of the date of this filing,
the Company does not foresee "The Year 2000 Problem" as having any significant
negative impact on the Company or the Fund.
INVESTMENT ADVISER
MANAGEMENT AGREEMENTS. Aapex Equity Advisors, Inc. (the "Adviser") has entered
into an Investment Advisory Agreement (the "Advisory Agreement") with the Fund
to provide investment management services to the Fund. In addition, the Adviser
has entered into an Operating Services Agreement (the "Services Agreement") with
the Fund to provide virtually all day-to-day operational services to the Fund.
As is further explained below, the combined effect of the Advisory Agreement and
the Services Agreement is to place a cap or ceiling on the Fund's ordinary
operating expenses at 1.75 % of daily net asset value of the Fund, excepting
Rule 12b-1 fees, brokerage, interest, taxes, litigation, and other extraordinary
expenses. Roger A. Householder is President and Chief Executive Officer of the
Adviser, and is responsible for all investment decisions relating to the Fund.
Mr. Householder also serves as the President and as a Director of the Company.
SERVICES AGREEMENT. Under the terms of the Services Agreement, the Adviser,
subject to the supervision of the Board of Directors, will provide, or arrange
to provide, day-to-day operational services to the Fund including, but not
limited to, accounting, administrative, legal (except litigation), dividend
disbursing, transfer agent, registrar, custodial, fund share distribution,
shareholder reporting, sub-accounting and record keeping services. The Services
Agreement provides that the Adviser pays all fees and expenses associated with
these and other functions, including, but not limited to, expenses of legal
compliance, shareholder communications, and meetings of the shareholders. Under
the terms of the Services Agreement, the Fund will pay to the Adviser on the
last day of each month a fee equal to an annual rate of 1.25% of the average net
asset value of the Fund, such fee to be computed daily based upon the average
daily net asset value of the Fund. The Adviser has entered into an Investment
Company Services Agreement with Declaration Service Company to provide Transfer
Agent and essentially all administrative services for the Fund.
10
<PAGE>
ADVISORY AGREEMENT. Pursuant to the terms of the Advisory Agreement, the Adviser
manages the investment of the assets of the Fund in accordance with the Fund's
investment objectives, policies, and restrictions. The Adviser receives from the
Fund, as compensation for its services, a fee, accrued daily and payable
monthly, at an annual rate of 0.50% of the Fund's net assets. The Adviser has
voluntarily agreed to waive its fees and/or assume certain expenses of the Fund,
if necessary, in the event that the Fund's total annual expenses, excluding
taxes, interest and extraordinary litigation expenses, during any of its fiscal
years, exceed 2.00% of its average daily net asset value in such year. The Fund
will not be liable in future years for any fee waivers or expense assumptions
made by the Adviser in previous years. If the Adviser waives fees and/or assumes
expenses of the Fund, such actions will have the effect of lowering the Fund's
expense ratios and increasing the Fund's yield during the time in which the
Adviser undertakes such actions.
Under the Contract, the Adviser furnishes at its own expense office space to the
Company and all necessary office facilities, equipment, and personnel for
managing the assets of the Fund. The Fund pays all expenses incident to its
operations and business not specifically assumed by the Adviser, including
expenses relating to custodial, legal, and auditing charges; printing and
mailing of reports and prospectuses to existing shareholders; taxes and
corporate fees; maintaining registration of the Fund under the Investment
Company Act of 1940, and registration of its shares under the Securities Act of
1933; and qualifying and maintaining qualification of its shares under the
securities laws of certain states.
Mr. Householder, the Fund's portfolio manager, has over 22 years experience
managing funds for registered investment companies and private and institutional
clients.
THE "YEAR 2000 ISSUE": Many existing computer programs use only two digits to
identify a year in their date fields. These programs were designed and developed
without considering the impact of the upcoming change in the century. If not
corrected, many computer applications could fail or create erroneous results by
or at the year 2000. The Fund is a new Fund, and the Adviser is a newly formed
company. All of the computer programs purchased by the Adviser for its own use
or for the use of the Fund are new programs and have been warranted as Year 2000
compliant. Further, the Company and the Adviser have entered into agreements
with various third parties to provide services to the Fund, and as part of those
agreements, have received warranties from each such party that its systems are
presently year 2000 compliant, or adequate steps are being undertaken by the
party to insure that compliance is met prior to the turn of the century. The
Fund will not enter into any agreement with a party unless such warranties are
given. Accordingly, at the present time, there do not appear to be any
materially adverse consequences to the Fund relating to the Year 2000 issue.
11
<PAGE>
PLAN OF DISTRIBUTION
The Fund has adopted a Plan of Distribution, or "12b-1 Plan" under which it may
finance activities primarily intended to sell shares. Under the 12b-1 Plan, the
Adviser is paid a distribution fee at an annual rate of 0.25% of average daily
net assets of the Fund for distributing shares of the Fund and for providing
certain shareholder services. These services include, among other things,
processing new shareholder account applications, preparing and transmitting to
the Fund's Transfer Agent computer processable tapes of all transactions by
customers, and serving as the primary source of information to customers in
answering questions concerning the Fund and their transactions with the Fund.
The Distributor may compensate securities dealers (which may include the
Distributor itself) and other financial organizations who provide similar
distribution and shareholder services.
Payments under the 12b-1 Plan are not tied exclusively to the distribution
and/or shareholder servicing expenses actually incurred by the Adviser, and such
payments may exceed the expenses actually incurred. The Company's Board of
Directors evaluates the Plan on a regular basis.
GENERAL INFORMATION
The Fund will not issue stock certificates evidencing shares. Instead, your
account will be credited with the number of shares purchased, relieving you of
responsibility for safekeeping of certificates and the need to deliver them upon
redemption. Written confirmations are issued to you for all purchases of shares.
You will be provided at least semi-annually with a report showing the Fund's
portfolio and other information and annually after the close of the Fund's
fiscal year, which ends December 31, with a report containing audited financial
statements.
In reports or other communications to investors, or in advertising material, the
Fund may describe general economic and market conditions affecting the Fund and
may compare its performance with other mutual funds as listed in the rankings
prepared by Lipper Analytical Services, Inc. or similar nationally recognized
rating services and financial publications that monitor mutual fund performance.
The Fund may also, from time to time, compare its performance to the Standard &
Poors Composite Index of 500 Stocks ("S&P 500"), a widely recognized, unmanaged
index of common stock prices.
According to the law of Maryland, under which the Company is incorporated, and
the Company's bylaws, the Company is not required to hold an annual meeting of
shareholders unless required to do so under the Investment Company Act of 1940.
Inquiries regarding the Fund should be directed to the Fund at its address or
telephone number shown on the front cover of this Prospectus.
The Company will call a meeting of shareholders for the purpose of voting upon
the removal of a director or directors when requested in writing to do so by
record holders of at least 10% of the Fund's outstanding common shares, and in
connection with such meeting will comply with the provisions of section 16(c) of
the Investment Company Act of 1940 concerning assistance with a record
shareholder communication asking other record shareholders to join in that
request.
12
<PAGE>
THE AAPEX EQUITY FUND(TM)
(A No-Load Fund)
Investment Adviser:
- -------------------
Aapex Equity Advisors, Inc.
141 West Jackson Blvd., Suite 3602
Chicago, Illinois 60604
Custodian:
- ----------
First Union National Bank, N.A.
1339 Chestnut Street
Philadelphia, PA 19101-7618
Distributor:
- ------------
Declaration Distributors, Inc.
555 North Lane, Suite 6160
Conshohocken, PA 19428
Management Services:
- --------------------
Aapex Equity Advisors, Inc.
141 West Jackson Blvd., Suite 3602
Chicago, Illinois 60604
Declaration Service Company
555 North Lane, Suite 6160
Conshohocken, PA 19428
Independent Auditors:
- ---------------------
McCurdy & Associates CPA's, Inc.
27955 Clemens Road
Westlake, Ohio 44145
Legal Counsel:
- --------------
The Law Offices of David D. Jones, P.C.
555 North Lane, Suite 6160
Conshohocken, PA 19428
No person has been authorized to give any information or to make any
representations other than those contained in this prospectus, the statement of
additional information or the fund's official sales literature in connection
with the offering of shares of the fund, and if given or made, such other
information or representations must not be relied upon as having been authorized
by the fund.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Dated February 1, 1999
AAPEX FUNDS, INC.
141 West Jackson Blvd., Suite 3602
Chicago, Illinois 60604
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Prospectus of The Aapex Equity Fund, dated February 1,
1999. You may obtain a copy of the Prospectus, free of charge, by writing to
Aapex Funds, Inc, c/o Declaration Service Company, 555 North Lane, Suite 6160,
Conshohocken, PA 19428, phone number 800-___-____..
TABLE OF CONTENTS
Investment Policies and Restrictions Custodian
Investment Adviser Transfer Agent
Directors and Officers Administration
Performance Information Distributor
Purchasing and Redeeming Shares Independent Accountants
Tax Information Independent Auditors Report *
Portfolio Transactions Financial Statements *
* to be filed by amendment
<PAGE>
INVESTMENT POLICIES AND RESTRICTIONS
The Fund's investment objective and the manner in which the Fund pursues its
investment objective are generally discussed in the prospectus under the
captions "Investment Objectives and Policies", "Fund Investments" and "Risk
Factors".
The Fund is a diversified Fund, meaning that as to 75% of the Fund's assets
(valued at the time of investment), the Fund will not invest more than 5% of its
assets in securities of any one issuer, except in obligations of the United
States Government and its agencies and instrumentalities, thereby reducing the
risk of loss. The Fund normally will invest at least 65% of total assets in the
common stock of Companies whose stock trades on the New York Stock Exchange, The
American Stock Exchange, and the NASDAQ over-the-counter market. However, for
temporary and defensive purposes, the Fund may ordinarily invest in a variety of
other securities. The complete list of securities in which the Fund may
ordinarily invest is listed below, along with any restrictions on such
investments, and, where necessary, a brief discussion of any risks unique to the
particular security.
Cash Reserves. Although the Fund normally will invest its assets as described
above, it may, to meet liquidity needs or for temporary defensive purposes,
ordinarily invest a portion of its assets in cash, money market securities such
as short term notes issued by the United States Government, its agencies and/or
instrumentalities, and debt securities. The Fund may also enter into repurchase
agreements. If, in the Adviser's opinion, it is appropriate for the Fund to
assume a temporary defensive posture, the Fund may invest up to 100% of its
assets in these instruments.
The complete list of the Fund's investment restrictions is as follows:
The Fund will not:
1. To the extent of 75% of its assets (valued at time of investment), invest
more than 5% of its assets (valued at the time of investment) in securities
of any one issuer, except in obligations of the United States Government
and its agencies and instrumentalities;
2. Acquire securities of any one issuer that at the time of investment (a)
represent more than 10% of the voting securities of the issuer or (b) have
a value greater than 10% of the value of the outstanding securities of the
issuer;
3. Invest more than 25% of its assets (valued at time of investment) in
securities of companies in any one industry;
4. Borrow money, except from banks for temporary or emergency purposes in
amounts not exceeding 5% of the value of the Fund's assets at the time of
borrowing;
5. Underwrite the distribution of securities of other issuers, or acquire
"restricted" securities that, in the event of a resale, might be required
to be registered under the Securities Act of 1933;
6. Make margin purchases or short sales of securities, except that the Fund
may make short sales of securities to the extent that such sales do not
exceed 25% of the Funds assets, and only so long as the Fund engages in
such transaction only with brokers with whom it has entered into agreements
allowing the Fund to simultaneously borrow the shorted security, and only
so long as the Fund maintains a segregated account with its Custodian
consisting of cash, cash equivalents, U.S. Government Securities or other
high-grade liquid debt securities, in an amount equal to the aggregate fair
market value of its commitments to such transactions.;
7. Invest in companies for the purpose of management or the exercise of
control;
8. Lend money (but this restriction shall not prevent the Fund from investing
in debt securities or repurchase agreements, or lend its portfolio
securities).
9. Acquire or retain any security issued by a company, an officer or director
of which is an officer or director of the Company or an officer, director
or other affiliated person of the Adviser.
10. Invest in oil, gas or other mineral exploration or development programs,
although it may invest in marketable securities of companies engaged in
oil, gas or mineral exploration;
1
<PAGE>
11. Purchase or sell real estate or real estate loans or real estate limited
partnerships, although it may invest in marketable securities of companies
that invest in real estate or interests in real estate.
12. Purchase warrants on securities.
13. Issue senior securities.
14. Invest in commodities, or invest in futures or options on commodities. .
Restrictions 1 through 14 listed above are fundamental policies, and may be
changed only with the approval of a "majority of the outstanding voting
securities" of the Fund as defined in the Investment Company Act of 1940.
The Fund has also adopted the following restrictions that may be changed by the
Board of Directors without shareholder approval:
The Fund may not:
a. Invest more than 25% of its assets (valued at time of investment) in
securities of issuers with less than three years' operation (including
predecessors);
b. Invest more than 15% of its net assets in securities that are not readily
marketable;
c. Acquire securities of other investment companies except (a) by purchase in
the open market, where no commission or profit to a sponsor or dealer
results from such purchase other than the customary broker's commission and
(b) where acquisition results from a dividend or merger, consolidation or
other reorganization.
d. purchase more than 3% of the voting securities of any one investment
company nor invest more than 10% of the Funds assets (valued at time of
investment) in all investment company securities purchased by the Fund;
e. Pledge, mortgage or hypothecate its assets, except for temporary or
emergency purposes and then to an extent not greater than 5% of its total
assets at cost;
INVESTMENT ADVISER
Information on the Fund's investment adviser, Aapex Equity Advisors, Inc., is
set forth in the prospectus under "Investment Adviser," and is incorporated
herein by reference.
Aapex Equity Advisors, Inc. (the "Adviser") was organized under the laws of the
State of Illinois as an investment advisory corporation in September, 1998. The
Adviser registered as an Investment Adviser with the Securities and Exchange
Commission in December, 1998. The Adviser manages the investment portfolio and
the general business affairs of the Fund pursuant to an investment advisory
agreement with the Fund dated January 29, 1999 (the "Agreement").
The Agreement provides that the adviser shall not be liable for any loss
suffered by the Fund or its shareholders as a consequence of any act or omission
in connection with services under the Agreement, except by reason of the
adviser's willful misfeasance, bad faith, negligence, or reckless disregard of
its obligations and duties under the Agreement.
2
<PAGE>
The Agreement has a term of two years, but may be continued from year to year so
long as its continuance is approved annually (a) by the vote of a majority of
the Directors of the Fund who are not "interested persons" of the Fund or the
adviser cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Board of Directors as a whole or by the vote of a
majority (as defined in the 1940 Act) of the outstanding shares of the Fund. The
Agreement will terminate automatically in the event of its assignment (as
defined in the 1940 Act).
DIRECTORS AND OFFICERS
The board of directors has overall responsibility for conduct of the Company's
affairs. The day-to-day operations of the Fund are managed by the Adviser,
subject to the bylaws of the Company and review by the Board of Directors. The
directors of the Company, including those directors who are also officers, are
listed below:
Name, Age, Address, Position Principal Occupation for the
with Fund Last Five Years
- --------------------------------- ----------------------------------------
(1) Roger A. Householder* (46) President of Householder Accounting
President of Company and Services, Inc. Mr. Householder is a CPA,
Adviser. Director providing tax And investment planning
services to firm clients. From 1976
through 1985, Mr. Householder was a
professional trader on the Chicago Board
of Options Exchange, Chicago Board of
Trade, Chicago Mecantile Exchange, and
the Mid-america Commodity Exchange. He
is a graduate of Bowling Green
university with a Bachelor of Science
Degree in Business Administration.
(2) Paul Santonacita* (45) Vice President of Adviser. From 1995 to
Director 1998, Senior Systems Analyst with the
Chicago Mercantile Exchange. From 1990
to 1995, Mr. Santonacita was a Customer
Support analyst for Globex, the
electronic trading network for the
Chicago Mercantile Exchange. He is a
graduate of Glassboro State College with
a Bachelor of Science degree in Finance.
(3) Lourdes T. Pablo* (31) Vice President of Adviser and Secretary.
Director From 1996 to 1998, employed by
Householder Accounting Services, Inc.,
overseeing all administrative aspects of
the firm. For the 8 years prior to
joining householder Accounting services,
Inc., Ms. Pablo worked for several
companies providing accounting and
client services.
3
<PAGE>
(4) Mary Gault (47) Ms. Gault has been employed as a flight
Director attendant with united Airlines since
1973. Ms. Gault is currently completing
the curriculum for Certified Financial
Planner Accreditation at the College of
Financial Planning in Boulder, Colorado.
She completed undergraduate work at the
University of New Mexico and DePaul
University.
(5) William A Radez, Jr. (44) Executive Director of Transportation
Director Services for Claridge Limousine Company,
Inc. since 1995. Mr. Radez previously
worked for a number of companies as a
professional portfolio manager for the
fifteen years prior to joining Claridge.
(6) Wayne O. Woodbury (64) President of Financial Lifestyles, Inc.,
Director a financial marketing advisory group,
since 1990. Mr. Woodbury Is also a
licensed insurance agent in the State of
Illinois.
(7) Vince Notardonato (34) President of the Lago Group, Ltd., a
Director securities trading development firm,
since 1996. For the three years prior to
joining Lago, Mr. Notardonato worked as
a client servicing representative at the
Chicago Mercantile Exchange.
* Indicates an "interested person" as defined in the Investment Company Act of
1940.
Aapex Funds, Inc. (the "Company") was organized as a Maryland Corporation on
September 11, 1998 (See the Sections titled "Management of the Fund" and
"General Information" in the Fund's Prospectus). The table below sets forth the
compensation anticipated to be paid by the Company to each of the directors of
the Company during the fiscal year ending December 31, 1999.
4
<PAGE>
Name of Compensation Pension Annual Total Comp.
Director from Company Benefits Benefits Paid to Director
- --------------------------------------------------------------------------------
Roger A. Householder $0.00 $0.00 $0.00 $0.00
Paul Santonacita $0.00 $0.00 $0.00 $0.00
Lourdes T. Pablo $0.00 $0.00 $0.00 $0.00
Mary Gault $0.00 $0.00 $0.00 $0.00
William A. Radez $0.00 $0.00 $0.00 $0.00
Wayne O. Woodbury $0.00 $0.00 $0.00 $0.00
Vince Notardonato $0.00 $0.00 $0.00 $0.00
Aapex Equity Advisors, Inc intends to purchase 10000 shares of the Fund prior to
the effective date of the Fund's registration and will be deemed initially to
control the Fund.
The Company will call a meeting of shareholders for the purpose of voting upon
the question of removal of a director or directors when requested in writing to
do so by record holders of at least 10% of the Fund's outstanding common shares.
The Company's bylaws contain procedures for the removal of directors by its
stockholders. At any meeting of stockholders, duly called and at which a quorum
is present, the stockholders may by the affirmative vote of the holders of a
majority of the votes entitled to be cast thereon, remove any director or
directors from office and may elect a successor or successors to fill any
resulting vacancies for the unexpired terms of the removed directors.
PERFORMANCE INFORMATION
From time to time the Fund may quote total return figures. "Total Return" for a
period is the percentage change in value during the period of an investment in
Fund shares, including the value of shares acquired through reinvestment of all
dividends and capital gains distributions. "Average Annual Total Return" is the
average annual compounded rate of change in value represented by the Total
Return Percentage for the period.
[n]
Average Annual Total Return is computed as follows: P(1+T) = ERV
Where: P = a hypothetical initial investment of $1000]
T = average annual total return
n = number of years
ERV = ending redeemable value of shares at the end of the period
5
<PAGE>
Yield. The Fund may advertise performance in terms of a 30-day yield quotation.
The 30-day yield quotation is computed by dividing the net investment income per
share earned during the period by the maximum offering price per share on the
last day of the period, according to the following formula:
6
Yield = 2[(a-b/cd + 1) - 1]
Where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursement)
c = the average daily number of shares outstanding during the
period that they were entitled to receive dividends
d = the maximum offering price per share on the last day of the
period
5
<PAGE>
The Fund imposes no sales charge and pays no distribution expenses. The Fund's
performance is a function of conditions in the securities markets, portfolio
management, and operating expenses. Although information such as that shown
above is useful in reviewing the Fund's performance and in providing some basis
for comparison with other investment alternatives, it should not be used for
comparison with other investments using different reinvestment assumptions or
time periods.
In sales literature, the Fund's performance may be compared with that of market
indices and other mutual funds. In addition to the above computations, the Fund
might use comparative performance as computed in a ranking determined by Lipper
Analytical Services, Morningstar, Inc., or that of another service.
PURCHASING AND REDEEMING SHARES
Purchases and redemptions are discussed in the Fund's prospectus under the
headings "Purchasing Shares" and "Redeeming Shares."
Redemptions will be made at net asset value. The Fund's net asset value is
determined on days on which the New York Stock Exchange is open for trading. For
purposes of computing the net asset value of a share of the Fund, securities
traded on security exchanges, or in the over-the-counter market in which
transaction prices are reported, are valued at the last sales price at the time
of valuation or, lacking any reported sales on that day, at the most recent bid
quotations. Securities for which quotations are not available and any other
assets are valued at a fair market value as determined in good faith by the
Adviser, subject to the review and supervision of the board of directors. The
price per share for a purchase order or redemption request is the net asset
value next determined after receipt of the order.
The Fund is open for business on each day that the New York Stock Exchange
("NYSE") is open. The Fund's share price or net asset value per share ("NAV") is
normally determined as of 4:00 p.m., New York time. The Fund's share price is
calculated by subtracting its liabilities from the closing fair market value of
its total assets and dividing the result by the total number of shares
outstanding on that day. Fund liabilities include accrued expenses and dividends
payable, and its total assets include the market value of the portfolio
securities as well as income accrued but not yet received. Since the Fund
generally does not charge sales or redemption fees, the NAV is the offering
price for shares of the Fund. For shares redeemed prior to being held for at
least six months, the redemption value is the NAV less a service fee equal to
0.50% of the NAV.
TAX INFORMATION
The Fund intends to qualify as a regulated investment company under the Internal
Revenue Code so as to be relieved of federal income tax on its capital gains and
net investment income currently distributed to its shareholders. To qualify as a
regulated investment company, the Fund must, among other things, derive at least
90% of its gross income from dividends, interest, payments with respect to
securities loans, gains from the sale or other disposition of stock, securities,
or other income derived with respect to its business of investing in such stock
or securities.
6
<PAGE>
If the Fund qualifies as a regulated investment company and distributes at least
90% of its net investment income, the Fund will not be subject to Federal income
tax on the income so distributed. However, the Fund would be subject to
corporate income tax on any undistributed income other than tax-exempt income
from municipal securities.
The Fund intends to distribute to shareholders, at least annually, substantially
all net investment income and any net capital gains realized from sales of the
Fund's portfolio securities. Dividends from net investment income and
distributions from any net realized capital gains are reinvested in additional
shares of the Fund unless the shareholder has requested in writing to have them
paid by check.
Dividends from investment income and net short-term capital gains are generally
taxable to the shareholder as ordinary income. Distributions of long-term
capital gains are taxable as long-term capital gains regardless of the length of
time shares in the Fund have been held. Distributions are taxable, whether
received in cash or reinvested in shares of the Fund.
Each shareholder is advised annually of the source of distributions for federal
income tax purposes. A shareholder who is not subject to federal income tax will
not be required to pay tax on distributions received.
If shares are purchased shortly before a record date for a distribution, the
shareholder will, in effect, receive a return of a portion of his investment,
but the distribution will be taxable to him even if the net asset value of the
shares is reduced below the shareholder's cost. However, for federal income tax
purposes the original cost would continue as the tax basis.
If a shareholder fails to furnish his social security or other tax
identification number or to certify properly that it is correct, the Fund may be
required to withhold federal income tax at the rate of 31% (backup withholding)
from dividend, capital gain and redemption payments to him. Dividend and capital
gain payments may also be subject to backup withholding if the shareholder fails
to certify properly that he is not subject to backup withholding due to the
under-reporting of certain income.
Taxation of the Shareholder. Taxable distributions generally are included in a
shareholder's gross income for the taxable year in which they are received.
However, dividends declared in October, November and December and made payable
to shareholders of record in such month will be deemed to have been received on
December 31st if paid by the Fund during the following January.
Distributions by the Fund will result in a reduction in the fair market value of
the Fund's shares. Should a distribution reduce the fair market value below a
shareholder's cost basis, such distribution would be taxable to the shareholder
as ordinary income or as a long-term capital gain, even though, from an
investment standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax implications of
buying shares of the Fund just prior to a distribution. The price of such shares
include the amount of any forthcoming distribution so that those investors may
receive a return of investment upon distribution which will, nevertheless, be
taxable to them.
7
<PAGE>
A redemption of shares is a taxable event and, accordingly, a capital gain or
loss may be recognized. Each investor should consult a tax Adviser regarding the
effect of federal, state, local, and foreign taxes on an investment in the Fund.
Dividends. A portion of the Fund's income may qualify for the dividends-received
deduction available to corporate shareholders to the extent that the Fund's
income is derived from qualifying dividends. Because the Fund may earn other
types of income, such as interest, income from securities loans, non-qualifying
dividends, and short-term capital gains, the percentage of dividends from the
Fund that qualifies for the deduction generally will be less than 100%. The Fund
will notify corporate shareholders annually of the percentage of Fund dividends
that qualifies for the dividend received deductions.
A portion of the Fund's dividends derived from certain U.S. Government
obligations may be exempt from state and local taxation. Short-term capital
gains are distributed as dividend income. The Fund will send each shareholder a
notice in January describing the tax status of dividends and capital gain
distributions for the prior year.
Capital Gain Distribution. Long-term capital gains earned by the Fund from the
sale of securities and distributed to shareholders are federally taxable as
long-term capital gains, regardless of the length of time shareholders have held
their shares. If a shareholder receives a long-term capital gain distribution on
shares of the Fund, and subsequently such shares are sold at a loss, the portion
of the loss equal to the amount of the long-term capital gain distribution may
be considered a long-term loss for tax purposes. Short-term capital gains
distributed by the Fund are taxable to shareholders as dividends, not as capital
gains. Taxation issues are complex and highly individual. You should consult
with your tax Adviser concerning the effects of transactions in the Fund.
PORTFOLIO TRANSACTIONS
The Fund will generally purchase and sell securities without regard to the
length of time the security has been held. Accordingly, it can be expected that
the rate of portfolio turnover may be substantial. The Fund expects that its
annual portfolio turnover rate will not exceed 50% under normal conditions.
However, there can be no assurance that the Fund will not exceed this rate, and
the portfolio turnover rate may vary from year to year.
High portfolio turnover in any year will result in the payment by the Fund of
above-average transaction costs and could result in the payment by shareholders
of above-average amounts of taxes on realized investment gains. Distributions to
shareholders of such investment gains, to the extent they consist of short-term
capital gains, will be considered ordinary income for federal income tax
purposes.
8
<PAGE>
Decisions to buy and sell securities for the Fund are made by the Adviser
subject to review by the Company's Board of Directors. In placing purchase and
sale orders for portfolio securities for the Fund, it is the policy of the
Adviser to seek the best execution of orders at the most favorable price. In
selecting brokers to effect portfolio transactions, the determination of what is
expected to result in the best execution at the most favorable price involves a
number of largely judgmental considerations. Among these are the Adviser's
evaluations of the broker's efficiency in executing and clearing transactions.
Over-the-counter securities are generally purchased and sold directly with
principal market makers who retain the difference in their cost in the security
and its selling price. In some instances, the Adviser feels that better prices
are available from non-principal market makers that are paid commissions
directly.
CUSTODIAN
First Union National Bank, N.A., acts as custodian for the Fund pursuant to a
written agreement between itself, the Adviser and the Fund.. As such, the Bank
holds all securities and cash of the Fund, delivers and receives payment for
securities sold, receives and pays for securities purchased, collects income
from investments and performs other duties, all as directed by officers of the
Company. First Union Bank does not exercise any supervisory function over the
management of the Fund, the purchase and sale of securities or the payment of
distributions to shareholders.
TRANSFER AGENT
Declaration Service Company ("DSC") acts as transfer, dividend disbursing, and
shareholder servicing agent for the Fund pursuant to a written agreement with
the Adviser and Fund. Under the agreement, DSC is responsible for administering
and performing transfer agent functions, dividend distribution, shareholder
administration, and maintaining necessary records in accordance with applicable
rules and regulations.
ADMINISTRATION
DSC also provides services as Administrator to the Fund pursuant to a written
agreement with the Adviser and Fund. The Administrator supervises all aspects of
the operations of the Fund except those performed by the Adviser under the
Fund's investment advisory agreement. The Administrator is responsible for:
(a) calculating the Fund's net asset value
(b) preparing and maintaining the books and accounts specified in Rule 31a-1
and 31a-2 of the Investment Company Act of 1940
(c) preparing financial statements contained in reports to stockholders of the
Fund
(d) preparing the Fund's federal and state tax returns
(e) preparing reports and filings with the Securities and Exchange Commission
(f) preparing filings with state Blue Sky authorities
(g) maintaining the Fund's financial accounts and records
9
<PAGE>
DISTRIBUTOR
Declaration Distributors, Inc., 555 North Lane, Suite 6160, Conshohocken, Pa
19428, a wholly-owned subsidiary of The Declaration Group, serves as distributor
and principal underwriter of the Fund's shares pursuant to a written agreement
with the Adviser and Fund.
INDEPENDENT ACCOUNTANTS
McCurdy & Associates CPA's, Inc., 27955 Clemens Road, Westlake, Ohio, 44145 will
serve as the Company's independent auditors for its first fiscal year.
LEGAL COUNSEL
The Law Offices of David D. Jones, P.C., Conshohocken, PA, has passed upon
certain legal matters in connection with the shares offered by this Prospectus,
and also acts as counsel to the Fund.
The Custodian, Transfer Agent, Administrator, Auditors and legal counsel for the
Fund are paid by the Adviser, not the Fund.
FINANCIAL STATEMENTS
<PAGE>
PART C
OTHER INFORMATION
Item 24 Financial Statements and Exhibits
- ------------------------------------------
(a) Financial Statements included in Part B
Independent Auditors Report *
Statement of Assets and Liabilities *
(b) Exhibits
1. Articles of Incorporation of Registrant --- Attached as Exhibit B-1
2. Bylaws of Registrant --- Attached as Exhibit B-2
3. None [Not Applicable]
4. None [See Exhibit 1, Articles of Incorporation, Article IV]
5. Investment Advisory Agreement --- Attached as Exhibit B-3
6. Distribution Agreement between Registrant and Declaration Distributors,
Inc. --- Attached as Exhibit B-4
7. None [Not Applicable]
8. Custodian Agreement between Registrant and First Union National Bank, N.A.
--- Attached as Exhibit B-5
9. Operating Services Agreement between Registrant and Adviser --- Attached as
Exhibit B-6
9.1 Services Agreement between Registrant, Adviser and Declaration Service
Company --- Attached as Exhibit B-7
10. Opinion of Counsel --- Attached as Exhibit B-8
11. Consent of Independent Auditors*
12. Plan of Distribution pursuant to Rule 12b-1 --- Attached as Exhibit B-9
13. Subscription Agreement --- Attached as Exhibit B-10
14. None
15. None [Not Applicable]
16. None [Not Applicable]
17. Financial Data Schedule --- Attached as Exhibit B-11
18. Not Applicable
* to be filed by amendment
Item 25. Persons Controlled by or under Common Control with Registrant.
- ------------------------------------------------------------------------
No person is directly or indirectly controlled by, or under common control with
the Registrant.
Item 26. Number of Holders of Securities.
- -----------------------------------------
As of the date of filing of this registration statement there were no record
holders of capital stock of registrant. The Adviser intends to purchase 10000
shares of the Fund prior to the effective date of the Fund's registration and
will be deemed initially to control the Fund.
<PAGE>
Item 27. Indemnification.
- -------------------------
Section 2-418 of the General Corporation Law of Maryland authorizes the
registrant to indemnify its directors and officers under specified
circumstances. Section 7 of Article VII of the bylaws of the registrant (exhibit
2 to the registration statement, which is incorporated herein by reference)
provides in effect that the registrant shall provide certain indemnification to
its directors and officers. In accordance with section 17(h) of the Investment
Company Act, this provision of the bylaws shall not protect any person against
any liability to the registrant or its shareholders to which he or she would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office.
Item 28. Business and Other Connections of Investment Adviser.
- --------------------------------------------------------------
The Adviser has no other business or other connections.
Item 29. Principal Underwriters.
- --------------------------------
Declaration Distributors, Inc., 555 North Lane, Suite 6160, Conshohocken, PA
will be the Fund's principal underwriter.
Item 30. Location of Accounts and Records.
- ------------------------------------------
Declaration Service Company.
555 North Lane, Suite 6160
Conshohocken, PA
Item 31. Management Services.
- -----------------------------
Declaration Service Company.
555 North Lane, Suite 6160
Conshohocken, PA
Item 32. Undertakings.
- ----------------------
The Registrant will file a post-effective amendment containing financial
statements which need not be certified, within four to six months from the
effective date of this registration statement.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration to
be signed on its behalf by the undersigned, thereto duly authorized, in the City
of Chicago and State of Illinois on the 15th day of January, 1999.
Aapex Funds, Inc.
(Registrant)
By: /s/ Roger A. Householder, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
Name Title Date
/s/ Roger A. Householder Director January 15, 1999
/s/ Paul Santonacita Director January 15, 1999
/s/ Lourdes T. Pablo Director January 15, 1999
/s/ Mary Gault Director January 15, 1999
/s/ William A. Radez Director January 15, 1999
/s/ Wayne O. Woodbury Director January 15, 1999
/s/ Vince Notardonato Director January 15, 1999
EXHIBIT B-1
ARTICLES OF INCORPORATION OF REGISTRANT
ARTICLES OF INCORPORATION
OF
AAPEX FUNDS, INC.
FIRST: The undersigned, Vera M. Norris, whose post office address is 11
East Chase St., Baltimore, MD 21202 being at least eighteen years of age, does
hereby form a corporation under the General Laws of the State of Maryland.
SECOND: The name of the corporation (which is hereinafter called the
Corporation) is:
AAPEX FUNDS, INC.
THIRD: The purpose or purposes of the corporation shall be: Regulated
Investment Company
FOURTH: The post office address of the principal office of the Corporation
in Maryland is 11 East Chase Street, Baltimore, MD 21202. The name and post
office address of the resident agent is CSC-Lawyers Incorporating Service
Company, at the same address. Said resident agent is a domestic corporation of
the State of Maryland.
FIFTH: The total number of shares of stock that the Corporation has
authority to issue is
Five Hundred Million (500,000,000) at 0.0001 par value
SIXTH: THE NUMBER OF DIRECTORS OF THE Corporation shall be 1 which number
may be increased or decreased pursuant to the by-laws of the Corporation, and so
long as there are less than three (3) stockholders, the number of directors may
be less than three (3) but not less than the number of stockholders, and the
name (s) of the director (s) who shall act until their successors are duly
chosen and qualified is (are):
Roger A. Householder
SEVENTH: the duration of the Corporation shall be perpetual.
IN WITNESS WHEREOF, I have signed these Articles of Incorporation on
September 11, 1998, and severally acknowledged the same to be my act.
-----------------------------
Vera M. Norris, Incorporator
ACTION OF SOLE INCORPORATOR
AAPEX FUNDS, INC.
-----------------------------
The undersigned, without a meeting, being the sole incorporator of the
Corporation, does hereby elect the persons listed below to serve as director(s)
of the corporation until the first annual meeting of shareholders and until
their successors are elected and qualify:
ROGER A. HOUSEHOLDER
-----------------------------
Vera M. Norris
Incorporator
Dated: September 11, 1998
EXHIBIT B-2
BY-LAWS OF REGISTRANT
BY-LAWS OF
AAPEX FUNDS, INC.
ARTICLE I
Offices
Section 1. Principal Office. The principal office of the Corporation in the
State of Maryland shall be in the City of Baltimore.
Section 2. Other Offices. The Corporation may have such other offices in
such places as the Board of Directors may from time to time determine.
ARTICLE II
Meetings of Shareholders
Section 1. Annual Meeting. Subject to this Article II, an annual meeting of
Shareholders for the election of Directors and the transaction of such other
business as may properly come before the meeting shall be held at such time and
place as the Board of Directors shall select. The Corporation shall not be
required to hold an annual meeting of its Shareholders in any year in which the
election of directors is not required to be acted upon under the Investment
Company Act of 1940.
Section 2. Special Meetings. Special meetings of Shareholders may be called
at any time by the President, the Secretary or by a majority of the Board of
Directors and shall be held at such time and place as may be stated in the
notice of the meeting.
Special meetings of the Shareholders shall be called by the Secretary upon
receipt of written request of the holders of shares entitled to cast not less
than 10% of the votes entitled to be cast at such meeting, provided that (1)
such request shall state the purposes of such meeting and the matters proposed
to be acted on, and (2) the Shareholders requesting such meeting shall have paid
to the Corporation the reasonably estimated cost of preparing and mailing the
notice thereof, which the Secretary shall determine and specify to such
Shareholders. No special meeting shall be called upon the request of
Shareholders to consider any matter which is substantially the same as a matter
voted upon at any special meeting of the Shareholders held during the preceding
12 months, unless requested by the holders of a majority of all shares entitled
to be voted at such meeting.
Section 3. Place of Meetings. Meetings of Shareholders shall be held at a
location within the Continental United States as the Board of Directors may from
time to time determine.
Section 4. Notice of Meetings; Waiver of Notice. Notice of the place, date
and time of the holding of each Shareholders' meeting and, if the meeting is a
special meeting, the purpose or purposes of the meeting, shall be given
personally or by mail, not less that ten (10) nor more that ninety (90) days
before the date of such meeting, to each Shareholder entitled to vote at such
meeting and to each other shareholder entitled to notice of the meeting. Notice
by mail shall be deemed to be duly given when deposited in the United States
mail addressed to the shareholder at his or her address as it appears on the
records of the Corporation, with postage thereon prepaid.
Notice of any meeting of Shareholders shall be deemed waived by any
shareholder who shall attend such meeting in person or by proxy, or who shall,
either before or after the meeting, submit a signed waiver of notice which is
filed with the records of the meeting.
Section 5. Quorum, Adjournment of Meetings. The presence at any
Shareholders' meeting, in person or by proxy, of Shareholders of one third of
the shares of the stock of the Corporation thereat shall be necessary and
sufficient to constitute a quorum for the transaction of business, except for
any matter which, under applicable statutes or regulatory requirements, requires
approval by a separate vote of one or more classes of stock, in which case the
presence in person or by proxy of Shareholders of one third of the shares of
stock of each class required to vote as a class on the matter shall constitute a
quorum. The holders of a majority of shares entitled to vote at the meeting and
present in person or by proxy, whether or not sufficient to constitute a quorum,
or, any officer present entitled to preside or act as Secretary of such meeting,
may adjourn the meeting without determining the date of a new meeting, or
without notice to a date not more than 120 days after the original record date.
Any business that might have been transacted at the meeting originally called
and so adjourned may be transacted at any such subsequent meeting at which a
quorum is present.
Section 6. Organization. At each meeting of the Shareholders, the Chairman
of the Board (if one has been designated by the Board), or in his or her absence
or inability to act, the President, or in the absence or inability to act of the
Chairman of the Board and the President, the Vice President, shall act as
chairman of the meeting; provided, however, that if no such officer is present
or able to act, a chairman of the meeting shall be elected by a majority of the
Shareholders, present in person or by proxy, at the meeting. The Secretary, or
in his or her absence or inability to act, any person appointed by the chairman
of the meeting, shall act as secretary of the meeting and keep the minutes
thereof.
Section 7. Order of Business. The order of business at all meetings of the
Shareholders shall be as determined by the chairman of the meeting.
Section 8. Voting. Except as otherwise provided by statute or the Articles
of Incorporation, each holder of record of shares of stock of the Corporation
having voting power shall be entitled at each meeting of the Shareholders to one
vote for every full share of such stock, with a fractional vote for any
fractional shares, standing in his or her name on the record of Shareholders of
the Corporation as of the record date determined pursuant to Section 9 of this
Article, or if such record date shall not have been so fixed, then at the later
of (i) the close of business on the day on which notice of the meeting is mailed
or (ii) the thirtieth day before the meeting.
Each shareholder entitled to vote at any meeting of Shareholders may
authorize another person or persons to act for him or her by a proxy signed by
such shareholder or his or her attorney-in-fact. No proxy shall be valid after
the expiration of eleven months from the date thereof, unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the shareholder
executing it, except in those cases where such proxy states that it is
irrevocable and where law permits an irrevocable proxy. Except as otherwise
provided by statute, the Articles of Incorporation or these By-Laws, any
corporate action to be taken by vote of the Shareholders shall be authorized by
a majority of the total votes validly cast at a meeting of Shareholders at which
a quorum is present.
If a vote shall be taken on any question other than the election of
directors, which shall be by written ballot, then unless required by statute or
these By-Laws, or determined by the chairman of the meeting to be advisable, any
such vote need not be by ballot. On a vote by ballot, each ballot shall be
signed by the shareholder voting, or by his or her proxy, if there be such
proxy, and shall state the number of shares voted.
Section 9. Fixing of Record Date. The Board of Directors may fix a time not
less that 10 nor more than 90 days prior to the date of any meeting of
Shareholders or prior to the last day on which the consent or dissent of
Shareholders may be effectively expressed for any purpose without a meeting, as
the time as of which Shareholders entitled to notice of and to vote at such a
meeting or whose consent or dissent is required or may be expressed for any
purpose, as the case may be, shall be determined; and all persons who were
holders of record of voting stock at such time and no other shall be entitled to
notice of and to vote at such meeting or to express their consent or dissent, as
the case may be. If no record date has been fixed, the record date for the
determination of Shareholders entitled to notice of or to vote at a meeting of
Shareholders shall be the later of the close of business on the day on which
notice of the meeting is mailed or the thirtieth day before the meeting, or, if
notice is waived by all Shareholders, at the close of business on the tenth day
next preceding the day on which the meeting is held. The Board of Directors may
fix a record date for determining Shareholders entitled to receive payment of a
dividend or distribution, but such date shall be not more that 90 days before
the date on which such payment is made. If no record date has been fixed, the
record date for determining Shareholders entitled to receive dividends or
distributions shall be the close of business on the day on which the resolution
of the Board of Directors declaring the dividend or distribution is adopted, but
the payment shall not be made more than 60 days after the date on which the
resolution is adopted.
Section 10. Consent of Shareholders in Lieu of Meeting. Except as otherwise
provided by statute or the Articles of Incorporation, any action required to be
taken at any meeting of Shareholders, or any action which may be taken at any
meeting of such Shareholders, may be taken without a meeting, without prior
notice and without a vote, if the following are filed with the records of
Shareholders meetings: (i) a unanimous written consent which sets forth the
action and is signed by each shareholder entitled to vote on the matter, and
(ii) a written waiver of any right to dissent signed by each shareholder
entitled to notice of the meeting but not entitled to vote thereat.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors and all powers of
the Corporation may be exercised by or under the authority of the Board of
Directors.
Section 2. Number of Directors. The number of directors shall be fixed from
time to time by resolution of the Board of Directors adopted by a majority of
the Directors then in office; provided, however, that the number of Directors
shall in no event be less that three (3) nor more than fifteen (15) except that
the Corporation may have less than three (3) but not less than one (1) Director
if there is no stock outstanding, and may have a number of Directors no fewer
than the number of Shareholders so long as there are fewer than three (3)
Shareholders. Any vacancy created by an increase in Directors may be filled in
accordance with Section 6 of this Article III. No reduction in the number of
Directors shall have the effect of removing any Director from office prior to
the expiration of his or her term unless such Director is specifically removed
pursuant to Section 5 of this Article III at the time of such decrease.
Directors need not be Shareholders.
Section 3. Election and Term of Directors. Directors shall be elected
annually, by written ballot at the annual meeting of Shareholders or a special
meeting held for that purpose; provided, however, that if no annual meeting of
the Shareholders of the Corporation is required to be held in a particular year
pursuant to Section 1 of Article II of these By-Laws, Directors shall be elected
at the next annual meeting held. The term of office of each Director shall be
from the time of his or her election and qualification until the election of
Directors next succeeding his or her election and until his or her successor
shall have been elected and shall have qualified.
Section 4. Resignation. A director of the Corporation may resign at any
time by giving written notice of his or her resignation to the Board, or the
Chairman of the Board, or the President, or the Secretary. Any such resignation
shall take effect at the time specified therein or, if the time when it shall
become effective shall not be specified therein, immediately upon its receipt;
and, unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
Section 5. Removal of Directors. Any Director of the Corporation may be
removed by the Shareholders by a vote of a majority of the shares entitled to be
cast for the election of Directors.
Section 6. Vacancies. If any vacancies shall occur in the Board of
Directors (i) by reason of death, resignation, removal or otherwise, the
remaining directors shall continue to act, and, subject to the provisions of the
Investment Company Act of 1940, such vacancies (if not previously filled by the
Shareholders) may be filled by a majority of the remaining Directors, although
less than a quorum, and (ii) by reason of an increase in the authorized number
of Directors, such vacancies (if not previously filled by the Shareholders) may
be filled only by a majority vote of the entire Board of Directors.
Section 7. Offices, Records, Places of Meetings. The Directors may have one
or more offices and may keep the books of the Corporation outside the State of
Maryland, and within or without the United States of America, at any office or
offices of the Corporation or at any other place as they may from time to time
by resolution determine; and in the case of meetings of the Board of Directors,
such meetings may be held at any place, within or without the United States of
America, as the Board may from time to time by resolution determine, or as shall
be specified or fixed in the respective notices or waivers of notice thereof.
Section 8. Regular Meetings. The Board of Directors from time to time may
provide by resolution for the holding of regular meetings and fix their time and
place as the Board of Directors may determine. Notice of such regular meetings
need not be in writing, provided that notice of any change in the time or place
of such fixed regular meetings shall be communicated promptly to each Director
not present at the meeting at which such change was made, in the manner provided
in Section 9 of this Article III for notice of special meetings. Members of the
Board of Directors or any committee designated thereby may participate in a
meeting of such Board or committee by telephone conference or other
communications method 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 a meeting, subject to the requirements of the
Investment Company Act of 1940.
Section 9. Special Meetings. Special meetings of the Board of Directors may
be held at any time or place and for any purpose when called by the President,
the Secretary or two or more of the Directors. Notice of special meetings,
stating the time and place, shall be communicated to each Director personally by
telephone or transmitted to him or her by mail, telegraph, telefax, telex,
cable, e-mail or wireless at least one day before the meeting.
Section 10. Waiver of Notice. No notice of any meeting of the Board of
Directors or a committee of the Board need be given to any Director who is
present at the meeting or who waives notice of such meeting in writing (which
waiver shall be filed with the records of such meeting), either before or after
the time of the meeting.
Section 11. Quorum and Voting. At all meetings of the Board of Directors,
the presence of one third of the entire Board of Directors shall constitute a
quorum unless there are only two or three Directors, in which case two Directors
shall constitute a quorum. If there is only one Director, the sole Director
shall constitute a quorum. At any adjourned meeting at which a quorum was
present, any business may be transacted at a subsequent meeting, at which a
quorum is present, which might have been transacted at the meeting as originally
called.
Section 12. Organization. The Board may, by resolution adopted by a
majority of the entire Board, designate a Chairman of the Board, who shall
preside at each meeting of the Board. In the absence or inability of the
Chairman of the Board to preside at a meeting, the President, or, in his or her
absence or inability to act, another Director chosen by a majority of the
Directors present, shall act as chairman of the meeting and preside thereat. The
Secretary (or, in his or her absence or inability to act, any person appointed
by the Chairman) shall act as secretary of the meeting and keep the minutes
thereof.
Section 13. Written Consent of Directors in Lieu of a Meeting. Subject to
the provisions of the Investment Company Act of 1940, as amended, any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if all members of the Board
or committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of the proceedings of the Board or
committee.
Section 14. Compensation. Directors may receive compensation for services
to the Corporation in their capacities as directors or otherwise in such manner
and in such amounts as may be fixed from time to time by the Board, subject to
any limitations on such compensation as provided in the Investment Company Act
of 1940.
ARTICLE IV
COMMITTEES
Section 1. Organization. By resolution adopted by the Board of Directors,
the Board may designate one or more committees, including an Executive
Committee, composed of two or more Directors. The Board of Directors shall elect
the Chairmen of such committees. The Board of Directors shall have the power at
any time to change the members of such committees and to fill vacancies in the
committees. The Board may delegate to these committees any of its powers, except
the power to authorize the issuance of stock, declare a dividend or distribution
on stock, recommend to Shareholders any action requiring shareholder approval,
amend these By-Laws, or approve any merger or share exchange which does not
require shareholder approval. If the Board of Directors has given general
authorization for the issuance of stock, a committee of the Board, in accordance
with a general formula or method specified by the Board by resolution or by
adoption of a stock option or other plan, may fix the terms of stock subject to
classification or reclassification and the terms on which any stock may be
issued, including all terms and conditions required or permitted to be
established or authorized by the Board of Directors.
Section 2. Proceedings and Quorum. In the absence of an appropriate
resolution of the Board of Directors, each committee may adopt such rules and
regulations governing its proceedings, quorum and manner of acting as it shall
deem proper and desirable. In the event any member of any committee is absent
from any meeting, the members thereof present at the meeting, whether or not
they constitute a quorum, may appoint a member of the Board of Directors to act
in the place of such absent member.
ARTICLE V
OFFICERS, AGENTS AND EMPLOYEES
Section 1. General. The officers of the Corporation shall be a President, a
Secretary and a Treasurer, and may include one or more Vice Presidents,
Assistant Secretaries or Assistant Treasurers, and such other officers as may be
appointed in accordance with the provisions of Section 8 of this Article.
Section 2. Election, Tenure and Qualifications. The officers of the
Corporation, except those appointed as provided in Section 8 of this Article V,
shall be elected by the Board of Directors at its first meeting and thereafter
annually at an annual meeting. If any officers are not chosen at any annual
meeting, such officers may be chosen at any subsequent regular or special
meeting of the Board. Except as otherwise provided in this Article V, each
officer chosen by the Board of Directors shall hold office until the next annual
meeting of the Board of Directors and until his or her successor shall have been
elected and qualified. Any person may hold one or more offices of the
Corporation except the offices of President and Vice President.
Section 3. Removal and Resignation. Whenever in the judgment of the Board
of Directors the best interest of the Corporation will be served thereby, any
officer may be removed from office by the vote of a majority of the members of
the Board of Directors at any regular meeting or at a special meeting called for
such purpose. Any officer may resign his office at any time by delivering a
written resignation to the Board of Directors, the President, the Secretary, or
any Assistant Secretary. Unless otherwise specified therein, such resignation
shall take effect upon delivery.
Section 4. President. The president shall be the chief executive officer of
the Corporation.. Subject to the supervision of the Board of Directors, he or
she shall have general charge of the business, affairs and property of the
Corporation, and general supervision over its officers, employees and agents.
Except as the Board of Directors may otherwise order, he or she may sign in the
name and on behalf of the Corporation all deeds, bonds, contracts, or
agreements. He or she shall exercise such other powers and perform such other
duties as from time to time may be assigned to him or her by the Board of
Directors.
Section 5. Vice president. The Board of Directors may from time to time
elect one or more Vice Presidents who shall have such powers and perform such
duties as from time may be assigned to them by the Board of Directors or the
President. At the request or in the absence or disability of the President, the
Vice President (or, if there are two or more Vice Presidents then the more
senior of such officers present and able to act) may perform all 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. Any Vice President may perform such
duties as the Board of Directors may assign.
Section 6. Treasurer and Assistant Treasurer. The Treasurer shall be the
principal financial and accounting officer of the Corporation and shall have
general charge of the finances and books of account of the Corporation. Except
as otherwise provided by the Board of Directors, he or she shall have general
supervision of the funds and property of the Corporation and of the performance
by the Custodian of its duties with respect thereto. He or she shall render to
the Board of Directors whenever directed by the Board, an account of the
financial condition of the Corporation and of all his or her transactions as
Treasurer; and as soon as possible after the close of each fiscal year, he or
she shall make and submit to the Board of Directors a like report for such
fiscal year. He or she shall perform all acts incidental to the Office of
Treasurer, subject to the control of the Board of Directors.
Any Assistant Treasurer may perform such duties of the Treasurer as the
Treasurer or the Board of Directors may assign, and, in the absence of the
Treasurer, the Assistant Treasurer (or if there are two or more Assistant
Treasurers, then the more senior of such officers present and able to act) may
perform all the duties of the Treasurer.
Section 7. Secretary and Assistant Secretaries. The Secretary shall attend
to the giving and serving of all notices of the Corporation and shall record all
proceedings of the meetings of the Shareholders and Directors in books to be
kept for that purpose. He or she shall keep in safe custody the seal of the
corporation, and shall have charge of the records for the Corporation, including
the stock books and such other books and papers as the Board of Directors may
direct and such books, reports, certificates and other documents required by law
to be kept, all of which shall at all reasonable times be open to inspection by
any Director. He or she shall perform such other duties as appertain to his or
her office or as may be required by the Board of Directors.
Any Assistant Secretary may perform such duties of the Secretary as the
Secretary or the Board of Directors may assign, and, in the absence of the
Secretary, he or she (or if there are two or more Assistant Secretaries, then
the more senior of such officers present and able to act) may perform all the
duties of the Secretary.
Section 8. Subordinate Officers. The Board of Directors from time to time
may appoint such other officers or agents as it may deem advisable, each of whom
shall have such title, hold office for such period, have such authority and
perform such duties as the Board of Directors may determine. The Board of
Directors may from time to time delegate to one or more officers or agents the
power to appoint any such subordinate officers or agents and to prescribe their
rights, terms of office, authorities and duties.
Section 9. Remuneration. The salaries or other compensation of the officers
of the Corporation shall be fixed from time to time by resolution of the Board
of Directors, except that the Board of Directors may by resolution delegate to
any person or group of persons the power to fix the salaries or other
compensation of any subordinate officers or agents appointed in accordance with
the provisions of Section 8 of this Article V.
Section 10. Surety Bonds. The Board of Directors may require any officer or
agent of the Corporation to execute a bond (including, without limitation, any
bond required by the Investment Company Act of 1940, as amended, and the rules
and regulations of the Securities and Exchange Commission) to the Corporation in
such sum and with such surety or sureties as the Board of Directors may
determine, conditioned upon the faithful performance of his or her duties to the
Corporation, including responsibility for negligence and for the accounting of
any of the Corporation's property, funds or securities that may come into his or
her hands.
ARTICLE VI
INDEMNIFICATION
The Corporation shall indemnify (a) its Directors and officers, whether
serving the Corporation or, at its request, any other entity, to the full extent
required or permitted by (i) Maryland law now or hereafter in force, including
the advance of expenses under the procedures and to the full extent permitted by
law, and (ii) the Investment Company Act of 1940, as amended, and (b) other
employees and agents to such extent as shall be authorized by the Board of
Directors and as permitted by law. The foregoing rights of indemnification shall
not be exclusive of any other rights to which those seeking indemnification may
be entitled. The Board of Directors may take such action as is necessary to
carry out these indemnification provisions and is expressly empowered to adopt,
approve and amend from time to time such resolutions or contracts implementing
such provisions or such further indemnification arrangements as may be permitted
by law.
ARTICLE VII
CAPITAL STOCK
Section 1. Stock Certificates. The interest of each shareholder of the
Corporation may be evidenced by certificates for shares of stock in such form as
the Board of Directors may from time to time prescribe. The certificates
representing shares of stock shall be signed by or in the name of the
Corporation by the President or a Vice President and countersigned by the
Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer.
Certificates may be sealed with the actual corporate seal or a facsimile of it
or in any other form. Any or all of the signatures of the seal on the
certificate may be manual or facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate shall be issued, it may be issued by the Corporation
with the same effect as if such officer, transfer agent or registrar were still
in office at the date of issue unless written instructions of the Corporation to
the contrary are delivered to such officer, transfer agent or registrar.
Section 2. Stock Ledgers. The stock ledgers of the Corporation, containing
the names and addresses of the Shareholders and the number of shares held by
them respectively, shall be kept at the principal offices of the Corporation or,
if the Corporation employs a transfer agent, at the offices of the transfer
agent of the Corporation.
Section 3. Transfers of Shares. Transfers of shares of stock of the
Corporation shall be made on the stock records of the Corporation only by the
registered holder thereof, or by his or her attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary or with a transfer
agent or transfer clerk, and on surrender of the certificate or certificates, if
issued, for such shares properly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, with such proof of the
authenticity of the signature as the Corporation or its agents may reasonably
require and the payment of all taxes thereon. Except as otherwise provided by
law, the Corporation shall be entitled to recognize the exclusive right of a
person in whose name any share or shares stand on the record of Shareholders as
the owner of such share or shares for all purposes, including, without
limitation, the rights to receive dividends or other distributions, and to vote
as such owner, and the Corporation shall not be bound to recognize any equitable
or legal claim to or interest in any such share or shares on the part of any
other person. The Board may make such additional rules and regulations, not
inconsistent with these By-Laws, as it may deem expedient concerning the issue,
transfer and registration of certificates for shares of stock of the
Corporation.
Section 4. Transfer Agents and Registrars. The Board of Directors may from
time to time appoint or remove transfer agents and/or registrars of transfers of
shares of stock of the Corporation, and it may appoint the same person as both
transfer agent and registrar. Upon any such appointment being made all
certificates representing shares of capital stock thereafter issued shall be
countersigned by one of such transfer agents or by one of such registrars of
transfers or by both and shall not be valid unless so countersigned. If the same
person shall be both transfer agent and registrar, only one countersignature by
such person shall be required.
Section 5. Lost, Destroyed or Mutilated Certificates. The holder of any
certificates representing shares of stock of the Corporation shall immediately
notify the Corporation of any loss, destruction or mutilation of such
certificate, and the Corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it which the owner thereof shall
allege to have been lost or destroyed or which shall have been mutilated, and
the Board may, in its discretion, require such owner or his or her legal
representatives to give to the Corporation a bond in such sum, limited or
unlimited, and in such form and with such surety or sureties, as the Board in
its absolute discretion shall determine, to indemnify the Corporation against
any claim that may be made against it on account of the alleged loss or
destruction of any certificate, or issuance of a new certificate. Anything
herein to the contrary notwithstanding, the Board, in its absolute discretion,
may refuse to issue any such new certificate, except pursuant to legal
proceedings under the laws of the State of Maryland.
ARTICLE VIII
SEAL
The seal of the Corporation shall be circular in form and shall bear, in
addition to any other emblem or device approved by the Board of Directors, the
name of the Corporation, the year of its incorporation and the words "Corporate
Seal" and "Maryland." The Board of Directors may otherwise alter the form of the
seal. Said seal may be used by causing it or a facsimile thereof to be impressed
or affixed or in any other manner reproduced. Any Officer or Director of the
Corporation shall have the authority to affix the corporate seal of the
Corporation to any document requiring the same.
ARTICLE IX
FISCAL YEAR
The fiscal year of the Corporation shall be determined by resolution of the
Board of Directors.
ARTICLE X
DEPOSITORIES AND CUSTODIANS
Section 1. Depositories. The funds of the Corporation shall be deposited
with such banks or other depositories as the Board of Directors of the
Corporation may from time to time determine.
Section 2. Custodians. All securities and other investments shall be
deposited in the safe keeping of such banks or other companies as the Board of
Directors of the Corporation may from time to time determine. Every arrangement
entered into with any bank or other company for the safe keeping of the
securities and investments of the Corporation shall contain provisions complying
with the Investment Company Act of 1940, as amended, and the general rules and
regulations thereunder.
ARTICLE XI
EXECUTION OF INSTRUMENTS
Section 1. Checks, Notes, Drafts, etc. Checks, notes, drafts, acceptances,
bills of exchange and other orders or obligations for the payment of money shall
be signed by such officer or officers or person or persons as the Board or these
By-Laws provide.
Section 2. Sale or Transfer of Securities. Stock certificates, bonds or
other securities owned by the Corporation may be held on behalf of the
Corporation by a Custodian selected by the Board of Directors, and may be
transferred or otherwise disposed of only as allowed pursuant to these By-Laws
and pursuant to authorization by the Board; and when so authorized to be held on
behalf of the Corporation or sold, transferred or otherwise disposed of, may be
transferred from the name of the Corporation by the signature of the President,
any Vice President or the Treasurer, or pursuant to any procedure approved by
the Board of Directors, subject to applicable law.
ARTICLE XII
INDEPENDENT PUBLIC ACCOUNTANTS
The Corporation shall employ an independent public accountant or a firm of
independent public accountants as its accountants to examine the accounts of the
Corporation and to sign and certify financial statements filed by the
Corporation.
ARTICLE XIII
AMENDMENTS
These By-Laws or any of them may be amended, altered or repealed at any
regular meeting of the Shareholders or at any special meeting of the
Shareholders at which a quorum is present or represented, provided that notice
of the proposed amendment, alteration or repeal be contained in the notice of
such special meeting. These By-Laws may also be amended, altered or repealed by
the affirmative vote of a majority of the Board of Directors, except any
particular By-Law which is specified as not subject to alteration or repeal by
the Board of Directors, subject to the requirements of the Investment Company
Act of 1940, as amended.
EXHIBIT B-3
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT
AAPEX FUNDS, INC.
This Agreement is made and entered into as of the 29th day of January,
1999, by and between Aapex Funds, Inc., a Maryland corporation (the "Fund"), and
Aapex Equity Advisers, Inc., an Illinois corporation (hereinafter referred to as
"Adviser").
WHEREAS, the Fund is a diversified, open-end management investment company,
registered under the Investment Company Act of 1940, as amended (the "Act"), and
authorized to issue shares representing interests in the Shepherd Street Equity
Fund (the "Portfolio"); and
WHEREAS, Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of asset
management; and
WHEREAS, the Fund desires to retain Adviser to render certain investment
management services to the Fund and Adviser is willing to render such services;
NOW THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. OBLIGATIONS OF INVESTMENT ADVISER
(A) SERVICES. Adviser agrees to perform the following services (the
"Services") for the Fund:
(1) manage the investment and reinvestment of the Portfolio's assets;
(2) continuously review, supervise, and administer the investment program
of the Portfolio;
(3) determine, in its discretion, the securities to be purchased, retained
or sold (and implement those decisions);
(4) provide the Fund with records concerning Adviser's activities which
the Fund is required to maintain; and
(5) render regular reports to the Fund's officers and directors concerning
Adviser's discharge of the foregoing responsibilities.
Adviser shall discharge the foregoing responsibilities subject to the
control of the officers and the directors of the Fund and in compliance with
such policies as the directors may from time to time establish, and in
compliance with the objectives, policies, and limitations of the Portfolio set
forth in the Fund's prospectus and statement of additional information, as
amended from time to time, and with all applicable laws and regulations. All
Services to be furnished by Adviser under this Agreement may be furnished
through the medium of any directors, officers or employees of Adviser or through
such other parties as Adviser may determine from time to time.
Adviser agrees, at its own expense or at the expense of one or more of its
affiliates, to render the Services and to provide the office space, furnishings,
equipment and personnel as may be reasonably required in the judgment of the
Board of Directors of the Fund to perform the Services on the terms and for the
compensation provided herein. Adviser shall authorize and permit any of its
officers, directors and employees, who may be elected as directors or officers
of the Fund, to serve in the capacities in which they are elected.
Except to the extent expressly assumed by Adviser herein and except to the
extent required by law to be paid by Adviser, the Fund shall pay all costs and
expenses in connection with its operation and organization.
(B) BOOKS AND RECORDS. All books and records prepared and maintained by
Adviser for the Fund under this Agreement shall be the property of the Fund and,
upon request therefor, Adviser shall surrender to the Fund such of the books and
records so requested.
2. PORTFOLIO TRANSACTIONS. Adviser is authorized to select the brokers or
dealers that will execute the purchases and sales of portfolio securities for
the Portfolio and is directed to use its best efforts to obtain the best net
results as described in the Fund's prospectus from time to time. Adviser may, in
its discretion, purchase and sell portfolio securities from and to brokers and
dealers who provide the Portfolio with research, analysis, advice and similar
services, and Adviser may pay to these brokers and dealers, in return for
research and analysis, a higher commission or spread than may be charged by
other brokers and dealers, provided that Adviser determines in good faith that
such commission is reasonable in terms either of that particular transaction or
of the overall responsibility of Adviser to the Fund and its other clients and
that the total commission paid by the Fund will be reasonable in relation to the
benefits to the Portfolio over the long-term. Adviser will promptly communicate
to the officers and the directors of the Fund such information relating to
portfolio transactions as they may reasonably request.
3. COMPENSATION OF ADVISER. The Fund will pay to Adviser on the last day of
each month a fee at an annual rate equal to 0.50% of the daily average net asset
value of the Portfolio, such fee to be computed daily based upon the net asset
value of the Portfolio as determined by a valuation made in accordance with the
Fund's procedure for calculating Portfolio net asset value as described in the
Fund's Prospectus and/or Statement of Additional Information. During any period
when the determination of a Portfolio's net asset value is suspended by the
directors of the Fund, the net asset value of a share of that Portfolio as of
the last business day prior to such suspension shall, for the purpose of this
Paragraph 3, be deemed to be net asset value at the close of each succeeding
business day until it is again determined.
4. STATUS OF INVESTMENT ADVISER. The services of Adviser to the Fund are
not to be deemed exclusive, and Adviser shall be free to render similar services
to others so long as its services to the Fund are not impaired thereby. Adviser
shall be deemed to be an independent contractor and shall, unless otherwise
expressly provided or authorized, have no authority to act for or represent the
Fund in any way or otherwise be deemed an agent of the Fund. Nothing in this
Agreement shall limit or restrict the right of any director, officer or employee
of Adviser, who may also be a director, officer, or employee of the Fund, to
engage in any other business or to devote his or her time and attention in part
to the management or other aspects of any other business, whether of a similar
nature or a dissimilar nature.
5. PERMISSIBLE INTERESTS. Directors, agents, and stockholders of the Fund
are or may be interested in Adviser (or any successor thereof) as directors,
partners, officers, or stockholders, or otherwise, and directors, partners,
officers, agents, and stockholders of Adviser are or may be interested in the
Fund as directors, stockholders or otherwise; and Adviser (or any successor) is
or may be interested in the Fund as a stockholder or otherwise.
6. LIABILITY OF INVESTMENT ADVISER. Adviser assumes no responsibility under
this Agreement other than to render the services called for hereunder in good
faith. Adviser shall not be liable for any error of judgment or for any loss
suffered by the Fund in connection with the matters to which this Agreement
relates, except a loss resulting from a breach of fiduciary duty with respect to
receipt of compensation for services (in which case any award of damages shall
be limited to the period and the amount set forth in Section 36(b)(3) of the
Investment Company Act of 1940 or a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of, or from reckless
disregard by it of its obligations and duties under, this Agreement.
7. TERM. This Agreement shall remain in effect until not later than January
28, 2001, and from year to year thereafter provided such continuance is approved
at least annually by (1) the vote of a majority of the Board of Directors of the
Fund or (2) a vote of a "majority" (as that term is defined in the Investment
Company Act of 1940) of the Fund's outstanding securities, provided that in
either event the continuance is also approved by the vote of a majority of the
directors of the Fund who are not parties to this Agreement or "interested
persons" (as defined in the Act) of any such party, which vote must be cast in
person at meeting called for the purpose of voting on such approval; provided,
however, that;
(a) the Fund may, at any time and without the payment of any penalty,
terminate this Agreement upon 60 days written notice to Adviser;
(b) the Agreement shall immediately terminate in the event of its
assignment (within the meaning of the Act and the Rules thereunder);
and
(c) Adviser may terminate this Agreement without payment of penalty on 60
days written notice to the Fund; and (d) the terms of paragraph 6 of
this Agreement shall survive the termination of this Agreement.
8. NOTICES. Except as otherwise provided in this Agreement, any notice or
other communication required by or permitted to be given in connection with this
Agreement will be in writing and will be delivered in person or sent by first
class mail, postage prepaid or by prepaid overnight delivery service to the
respective parties as follows:
If to the Fund: If to the Adviser:
Aapex Funds, Inc Aapex Equity Advisers, Inc.
141 West Jackson Street, Suite 3602 141 West Jackson Street, Suite 3602
Chicago, Illinois 60604 Chicago, Illinois 60604
Mr. Roger A. Householder Mr. Roger A. Householder
President President
9. AMENDMENTS. No provision of this Agreement may be changed, waived,
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, and no amendment of this Agreement shall be effective
until approved by vote of the holders of a majority of the Fund's outstanding
voting securities.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and the year first written above.
Aapex Funds, Inc. Aapex Equity Advisers, Inc.
By: ___________________________ By: __________________________
Roger A. Householder Roger A. Householder
President President
ATTEST: ATTEST:
_______________________________ ______________________________
Secretary Secretary
[Corporate Seal] [Corporate Seal]
EXHIBIT B-4
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT
AAPEX FUNDS, INC.
THIS DISTRIBUTION AGREEMENT (the "Agreement") is made as of the 29th day of
January, 1999 by and among Aapex Funds, Inc. (the "Fund"), a Maryland
corporation, Aapex Equity Advisers, Inc. (the "Adviser"), an Illinois
corporation, and Declaration Distributors, Inc. (the "Distributor"), a
Pennsylvania corporation.
WITNESSETH THAT:
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act")
and has registered its shares of common stock (the "Shares") under the
Securities Act of 1933, as amended (the "1933 Act") in one or more distinct
series of Shares (the "Portfolio" or "Portfolios");
WHEREAS, the Adviser has been appointed investment adviser to the Fund;
WHEREAS, the Distributor is a broker-dealer registered with the U.S.
Securities and Exchange Commission (the "SEC") and a member in good standing of
the National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Fund, the Adviser and the Distributor desire to enter into
this Agreement pursuant to which the Distributor will provide distribution
services to the Portfolios of the Fund identified on Schedule A, as may be
amended from time to time, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Fund, the Adviser and the Distributor,
intending to be legally bound hereby, agree as follows:
1. APPOINTMENT OF DISTRIBUTOR. The Fund hereby appoints the Distributor as
its exclusive agent for the distribution of the Shares, and the Distributor
hereby accepts such appointment under the terms of this Agreement. The Fund
shall not sell any Shares to any person except to fill orders for the Shares
received through the Distributor; provided, however, that the foregoing
exclusive right shall not apply: (i) to Shares issued or sold in connection with
the merger or consolidation of any other investment company with the Fund or the
acquisition by purchase or otherwise of all or substantially all of the assets
of any investment company or substantially all of the outstanding shares of any
such company by the Fund; (ii) to Shares which may be offered by the Fund to its
shareholders for reinvestment of cash distributed from capital gains or net
investment income of the Fund; or (iii) to Shares which may be issued to
shareholders of other funds who exercise any exchange privilege set forth in the
Fund's Prospectus. Notwithstanding any other provision hereof, the Fund may
terminate, suspend, or withdraw the offering of the Shares whenever, in its sole
discretion, it deems such action to be desirable, and the Distributor shall
process no further orders for Shares after it receives notice of such
termination, suspension or withdrawal.
2. FUND DOCUMENTS. The Fund has provided the Administrator with properly
certified or authenticated copies of the following Fund related documents in
effect on the date hereof: the Fund's organizational documents, including
Articles of Incorporation and by-laws; the Fund's Registration Statement on Form
N-1A, including all exhibits thereto; the Fund's most current Prospectus and
Statement of Additional Information; and resolutions of the Fund's Board of
Directors authorizing the appointment of the Distributor and approving this
Agreement. The Fund shall promptly provide to the Distributor copies, properly
certified or authenticated, of all amendments or supplements to the foregoing.
The Fund shall provide to the Distributor copies of all other information which
the Distributor may reasonably request for use in connection with the
distribution of Shares, including, but not limited to, a certified copy of all
financial statements prepared for the Fund by its independent public
accountants. The Fund shall also supply the Distributor with such number of
copies of the current Prospectus, Statement of Additional Information and
shareholder reports as the Distributor shall reasonably request.
3. DISTRIBUTION SERVICES. The Distributor shall sell and repurchase Shares
as set forth below, subject to the registration requirements of the 1933 Act and
the rules and regulations thereunder, and the laws governing the sale of
securities in the various states ("Blue Sky Laws"):
a. The Distributor, as agent for the Fund, shall sell Shares to the
public against orders therefor at the public offering price, as
determined in accordance with the Fund's then current Prospectus and
Statement of Additional Information.
b. The net asset value of the Shares shall be determined in the manner
provided in the then current Prospectus and Statement of Additional
Information. The net asset value of the Shares shall be calculated by
the Fund or by another entity on behalf of the Fund. The Distributor
shall have no duty to inquire into or liability for the accuracy of
the net asset value per Share as calculated.
c. Upon receipt of purchase instructions, the Distributor shall transmit
such instructions to the Fund or its transfer agent for registration
of the Shares purchased.
d. The Distributor shall also have the right to take, as agent for the
Fund, all actions which, in the Distributor's judgment, are necessary
to effect the distribution of Shares.
e. Nothing in this Agreement shall prevent the Distributor or any
"affiliated person" from buying, selling or trading any securities for
its or their own account or for the accounts of others for whom it or
they may be acting; provided, however, that the Distributor expressly
agrees that it shall not for its own account purchase any Shares of
the Fund except for investment purposes and that it shall not for its
own account sell any such Shares except for redemption of such Shares
by the Fund, and that it shall not undertake activities which, in its
judgment, would adversely affect the performance of its obligations to
the Fund under this Agreement.
f. The Distributor, as agent for the Fund, shall repurchase Shares at
such prices and upon such terms and conditions as shall be specified
in the Prospectus.
4. DISTRIBUTION SUPPORT SERVICES. In addition to the sale and repurchase of
Shares, the Distributor shall perform the distribution support services set
forth on Schedule B attached hereto, as may be amended from time to time. Such
distribution support services shall include: Review of sales and marketing
literature and submission to the NASD; NASD recordkeeping; and quarterly reports
to the Fund's Board of Directors. Such distribution support services may also
include: fulfillment services, including telemarketing, printing, mailing and
follow-up tracking of sales leads; and licensing Adviser or Fund personnel as
registered representatives of the Distributor and related supervisory
activities.
5. REASONABLE EFFORTS. The Distributor shall use all reasonable efforts in
connection with the distribution of Shares. The Distributor shall have no
obligation to sell any specific number of Shares and shall only sell Shares
against orders received therefor. The Fund shall retain the right to refuse at
any time to sell any of its Shares for any reason deemed adequate by it.
6. COMPLIANCE. In furtherance of the distribution services being provided
hereunder, the Distributor and the Fund agree as follows:
a. The Distributor shall comply with the Rules of Conduct of the NASD and
the securities laws of any jurisdiction in which it sells, directly or
indirectly, Shares.
b. The Distributor shall require each dealer with whom the Distributor
has a selling agreement to conform to the applicable provisions of the
Fund's most current Prospectus and Statement of Additional
Information, with respect to the public offering price of the Shares.
c. The Fund agrees to furnish to the Distributor sufficient copies of any
agreements, plans, communications with the public or other materials
it intends to use in connection with any sales of Shares in a timely
manner in order to allow the Distributor to review, approve and file
such materials with the appropriate regulatory authorities and obtain
clearance for use. The Fund agrees not to use any such materials until
so filed and cleared for use by appropriate authorities and the
Distributor.
d. The Distributor, at its own expense, shall qualify as a broker or
dealer, or otherwise, under all applicable Federal or state laws
required to permit the sale of Shares in such states as shall be
mutually agreed upon by the parties; provided, however that the
Distributor shall have no obligation to register as a broker or dealer
under the Blue Sky Laws of any jurisdiction if it determines that
registering or maintaining registration in such jurisdiction would be
uneconomical.
e. The Distributor shall not, in connection with any sale or solicitation
of a sale of the Shares, or make or authorize any representative,
service organization, broker or dealer to make, any representations
concerning the Shares except those contained in the Fund's most
current Prospectus covering the Shares and in communications with the
public or sales materials approved by the Distributor as information
supplemental to such Prospectus.
7. EXPENSES. Expenses shall be allocated as follows:
a. The Fund shall bear the following expenses: preparation, setting in
type, and printing of sufficient copies of the Prospectus and
Statement of Additional Information for distribution to existing
shareholders; preparation and printing of reports and other
communications to existing shareholders; distribution of copies of the
Prospectus, Statement of Additional Information and all other
communications to existing shareholders; registration of the Shares
under the Federal securities laws; qualification of the Shares for
sale in the jurisdictions mutually agreed upon by the Fund and the
Distributor; transfer agent/shareholder servicing agent services;
supplying information, prices and other data to be furnished by the
Fund under this Agreement; and any original issue taxes or transfer
taxes applicable to the sale or delivery of the Shares or certificates
therefor.
b. The Adviser shall pay all other expenses incident to the sale and
distribution of the Shares sold hereunder, including, without
limitation: printing and distributing copies of the Prospectus,
Statement of Additional Information and reports prepared for use in
connection with the offering of Shares for sale to the public;
advertising in connection with such offering, including public
relations services, sales presentations, media charges, preparation,
printing and mailing of advertising and sales literature; data
processing necessary to support a distribution effort; distribution
and shareholder servicing activities of broker-dealers and other
financial institutions; filing fees required by regulatory authorities
for sales literature and advertising materials; any additional
out-of-pocket expenses incurred in connection with the foregoing and
any other costs of distribution.
8. COMPENSATION. For the distribution and distribution support services
provided by the Distributor pursuant to the terms of the Agreement, the Adviser
shall pay to the Distributor the compensation set forth in Schedule A attached
hereto, which schedule may be amended from time to time. The Adviser shall also
reimburse the Distributor for its out-of-pocket expenses related to the
performance of its duties hereunder, including, without limitation,
telecommunications charges, postage and delivery charges, record retention
costs, reproduction charges and traveling and lodging expenses incurred by
officers and employees of the Distributor. The Adviser shall pay the
Distributor's monthly invoices for distribution fees and out-of-pocket expenses
within ten days of the respective month-end. If this Agreement becomes effective
subsequent to the first day of the month or terminates before the last day of
the month, the Fund shall pay to the Distributor a distribution fee that is
prorated for that part of the month in which this Agreement is in effect. All
rights of compensation and reimbursement under this Agreement for services
performed by the Distributor as of the termination date shall survive the
termination of this Agreement.
9. USE OF DISTRIBUTOR'S NAME. The Fund shall not use the name of the
Distributor or any of its affiliates in the Prospectus, Statement of Additional
Information, sales literature or other material relating to the Fund in a manner
not approved prior thereto in writing by the Distributor; provided, however,
that the Distributor shall approve all uses of its and its affiliates' names
that merely refer in accurate terms to their appointments or that are required
by the Securities and Exchange Commission (the "SEC") or any state securities
commission; and further provided, that in no event shall such approval be
unreasonably withheld.
10. USE OF FUND'S NAME. Neither the Distributor 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 the Distributor hereunder or that are required by the SEC
or any state securities commission; and further provided, that in no event shall
such approval be unreasonably withheld.
11. LIABILITY OF DISTRIBUTOR. The duties of the Distributor shall be
limited to those expressly set forth herein, and no implied duties are assumed
by or may be asserted against the Distributor hereunder. The Distributor 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 matters to which this Agreement
relates, except to the extent of a loss resulting from willful misfeasance, bad
faith or negligence, or reckless disregard of its obligations and duties under
this Agreement. As used in this Section 9 and in Section 10 (except the second
paragraph of Section 10), the term "Distributor" shall include directors,
officers, employees and other agents of the Distributor.
12. INDEMNIFICATION OF DISTRIBUTOR. The Fund shall indemnify and hold
harmless the Distributor against any and all liabilities, losses, damages,
claims and expenses (including, without limitation, reasonable attorneys' fees
and disbursements and investigation expenses incident thereto) which the
Distributor may incur or be required to pay hereafter, in connection with any
action, suit or other proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which the Distributor may be involved as
a party or otherwise or with which the Distributor may be threatened, by reason
of the offer or sale of the Fund shares prior to the effective date of this
Agreement.
Any director, officer, employee, shareholder or agent of the Distributor
who may be or become an officer, director, employee or agent of the Fund, shall
be deemed, when rendering services to the Fund or acting on any business of the
Fund (other than services or business in connection with the Distributor's
duties hereunder), to be rendering such services to or acting solely for the
Fund and not as a director, officer, employee, shareholder or agent, or one
under the control or direction of the Distributor, even though receiving a
salary from the Distributor.
The Fund agrees to indemnify and hold harmless the Distributor, and each
person, who controls the Distributor within the meaning of Section 15 of the
1933 Act, or Section 20 of the Securities Exchange Act of 1934, as amended
("1934 Act"), against any and all liabilities, losses, damages, claims and
expenses, joint or several (including, without limitation, reasonable attorneys'
fees and disbursements and investigation expenses incident thereto) to which
they, or any of them, may become subject under the 1933 Act, the 1934 Act, the
1940 Act or other Federal or state laws or regulations, at common law or
otherwise, insofar as such liabilities, losses, damages, claims and expenses (or
actions, suits or proceedings in respect thereof) arise out of or relate to any
untrue statement or alleged untrue statement of a material fact contained in a
Prospectus, Statement of Additional Information, supplement thereto, sales
literature or other written information prepared by the Fund and provided by the
Fund to the Distributor for the Distributor's use hereunder, or arise out of or
relate to any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading. The Distributor (or any person controlling the Distributor) shall
not be entitled to indemnity hereunder for any liabilities, losses, damages,
claims or expenses (or actions, suits or proceedings in respect thereof)
resulting from (i) an untrue statement or omission or alleged untrue statement
or omission made in the Prospectus, Statement of Additional Information, or
supplement, sales or other literature, in reliance upon and in conformity with
information furnished in writing to the Fund by the Distributor specifically for
use therein or (ii) the Distributor's own willful misfeasance, bad faith,
negligence or reckless disregard of its duties and obligations in the
performance of this Agreement.
The Distributor agrees to indemnify and hold harmless the Fund, and each
person who controls the Fund within the meaning of Section 15 of the 1933 Act,
or Section 20 of the 1934 Act, against any and all liabilities, losses, damages,
claims and expenses, joint or several (including, without limitation reasonable
attorneys' fees and disbursements and investigation expenses incident thereto)
to which they, or any of them, may become subject under the 1933 Act, the 1934
Act, the 1940 Act or other Federal or state laws, at common law or otherwise,
insofar as such liabilities, losses, damages, claims or expenses arise out of or
relate to any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus or Statement of Additional Information or any
supplement thereto, or arise out of or relate to any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, if based upon
information furnished in writing to the Fund by the Distributor specifically for
use therein.
A party seeking indemnification hereunder (the "Indemnitee") shall give
prompt written notice to the party from whom indemnification is sought
("Indemnitor") of a written assertion or claim of any threatened or pending
legal proceeding which may be subject to indemnity under this Section; provided,
however, that failure to notify the Indemnitor of such written assertion or
claim shall not relieve the Indemnitor of any liability arising from this
Section. The Indemnitor shall be entitled, if it so elects, to assume the
defense of any suit brought to enforce a claim subject to this Indemnity and
such defense shall be conducted by counsel chosen by the Indemnitor and
satisfactory to the Indemnitee; provided, however, that if the defendants
include both the Indemnitee and the Indemnitor, and the Indemnitee shall have
reasonably concluded that there may be one or more legal defenses available to
it which are different from or additional to those available to the Indemnitor
("conflict of interest"), the Indemnitor shall not have the right to elect to
defend such claim on behalf of the Indemnitee, and the Indemnitee shall have the
right to select separate counsel to defend such claim on behalf of the
Indemnitee. In the event that the Indemnitor elects to assume the defense of any
suit pursuant to the preceding sentence and retains counsel satisfactory to the
Indemnitee, the Indemnitee shall bear the fees and expenses of additional
counsel retained by it, except for reasonable investigation costs which shall be
borne by the Indemnitor. If the Indemnitor (i) does not elect to assume the
defense of a claim, (ii) elects to assume the defense of a claim but chooses
counsel that is not satisfactory to the Indemnitee or (iii) has no right to
assume the defense of a claim because of a conflict of interest, the Indemnitor
shall advance or reimburse the Indemnitee, at the election of the Indemnitee,
reasonable fees and disbursements of any counsel retained by Indemnitee,
including reasonable investigation costs.
13. DUAL EMPLOYEES. The Adviser agrees that only its employees who are
registered representatives of the Distributor ("dual employees") shall offer or
sell Shares of the Portfolios and further agrees that the activities of any such
employees as registered representatives of the Distributor shall be limited to
offering and selling Shares. If there are dual employees, one employee of the
Adviser shall register as a principal of the Distributor and assist the
Distributor in monitoring the marketing and sales activities of the dual
employees. The Adviser shall maintain errors and omissions and fidelity bond
insurance policies providing reasonable coverage for its employees activities
and shall provide copies of such policies to the Distributor. The Adviser shall
indemnify and hold harmless the Distributor against any and all liabilities,
losses, damages, claims and expenses (including reasonable attorneys' fees and
disbursements and investigation costs incident thereto) arising from or related
to the Adviser's employees' activities as registered representatives of the
Distributor, including, without limitation, any and all such liabilities,
losses, damages, claims and expenses arising from or related to the breach by
such dual employees of any rules or regulations of the NASD or SEC.
14. FORCE MAJEURE. The Distributor shall not be liable for any delays or
errors occurring by reason of circumstances not reasonably foreseeable and
beyond its control, including, but not limited, to acts of civil or military
authority, national emergencies, work stoppages, fire, flood, catastrophe, acts
of God, insurrection, war, riot or failure of communication or power supply. In
the event of equipment breakdowns which are beyond the reasonable control of the
Distributor and not primarily attributable to the failure of the Distributor to
reasonably maintain or provide for the maintenance of such equipment, the
Distributor shall, at no additional expense to the Fund, take reasonable steps
in good faith to minimize service interruptions, but shall have no liability
with respect thereto.
15. SCOPE OF DUTIES. The Distributor and the Fund shall regularly consult
with each other regarding the Distributor's performance of its obligations and
its compensation under the foregoing provisions. In connection therewith, the
Fund shall submit to the Distributor at a reasonable time in advance of filing
with the SEC copies of any amended or supplemented Registration Statement of the
Fund (including exhibits) under the 1940 Act and the 1933 Act, and at a
reasonable time in advance of their proposed use, copies of any amended or
supplemented forms relating to any plan, program or service offered by the Fund.
Any change in such materials that would require any change in the Distributor's
obligations under the foregoing provisions shall be subject to the Distributor's
approval. In the event that a change in such documents or in the procedures
contained therein increases the cost or burden to the Distributor of performing
its obligations hereunder, the Distributor shall be entitled to receive
reasonable compensation therefore.
16. DURATION. This Agreement shall become effective as of the date first
above written, and shall continue in force for two years from that date and
thereafter from year to year, provided continuance is approved at least annually
by either (i) the vote of a majority of the Directors of the Fund, or by the
vote of a majority of the outstanding voting securities of the Fund, and (ii)
the vote of a majority of those Directors of the Fund who are not interested
persons of the Fund, and who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on the approval.
17. TERMINATION. This Agreement shall terminate as follows:
a. This Agreement shall terminate automatically in the event of its
assignment.
b. This Agreement shall terminate upon the failure to approve the
continuance of the Agreement after the initial two year term as set
forth in Section 16 above.
c. This Agreement shall terminate at any time upon a vote of the majority
of the Directors who are not interested persons of the Fund or by a
vote of the majority of the outstanding voting securities of the Fund,
upon not less than 60 days prior written notice to the Distributor.
d. The Distributor may terminate this Agreement upon not less than 60
days prior written notice to the Fund.
Upon the termination of this Agreement, the Fund shall pay to the
Distributor such compensation and out-of-pocket expenses as may be payable for
the period prior to the effective date of such termination. In the event that
the Fund designates a successor to any of the Distributor's obligations
hereunder, the Distributor shall, at the expense and direction of the Fund,
transfer to such successor all relevant books, records and other data
established or maintained by the Distributor pursuant to the foregoing
provisions.
Sections 7, 8, 9, 10, 11, 12, 13, 14, 15, 17, 21, 22, 24, 25 and 26 shall
survive any termination of this Agreement.
18. AMENDMENT. The terms of this Agreement shall not be waived, altered,
modified, amended or supplemented in any manner whatsoever except by a written
instrument signed by the Distributor, the Adviser and the Fund and shall not
become effective unless its terms have been approved by the majority of the
Directors of the Fund or by a "vote of a majority of the outstanding voting
securities" of the Fund and by a majority of those Directors who are not
"interested persons" of the Fund or any party to this Agreement.
19. NON-EXCLUSIVE SERVICES. The services of the Distributor rendered to the
Fund are not exclusive. The Distributor may render such services to any other
investment company.
20. DEFINITIONS. As used in this Agreement, the terms "vote of a majority
of the outstanding voting securities," "assignment," "interested person" and
"affiliated person" shall have the respective meanings specified in the 1940 Act
and the rules enacted thereunder as now in effect or hereafter amended.
21. CONFIDENTIALITY. The Distributor shall treat confidentially and as
proprietary information of the Fund all records and other information relating
to the Fund and prior, present or potential shareholders and shall not use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder, except as may be required by
administrative or judicial tribunals or as requested by the Fund.
22. NOTICE. Any notices and other communications required or permitted
hereunder shall be in writing and shall be effective upon delivery by hand or
upon receipt if sent by certified or registered mail (postage prepaid and return
receipt requested) or by a nationally recognized overnight courier service
(appropriately marked for overnight delivery) or upon transmission if sent by
telex or facsimile (with request for immediate confirmation of receipt in a
manner customary for communications of such respective type and with physical
delivery of the communication being made by one or the other means specified in
this Section 20 as promptly as practicable thereafter). Notices shall be
addressed as follows:
(a) if to the Fund:
Aapex Funds, Inc.
141 West Jackson Street, Suite 3602
Chicago, Illinois 60604
Attention: Roger A. Householder, President
(b) if to the Adviser:
Aapex Equity Advisers, Inc.
141 West Jackson Street, Suite 3602
Chicago, Illinois 60604
Attention: Roger A. Householder, President
(c) if to the Distributor:
Declaration Distributors, Inc.
555 North Lane, Suite 6160
Conshohocken, PA 19428
Attn: Terence P. Smith, Chief Executive Officer
or to such other respective addresses as the parties shall designate by like
notice, provided that notice of a change of address shall be effective only upon
receipt thereof.
23. 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.
24. GOVERNING LAW. This Agreement shall be administered, construed and
enforced in accordance with the laws of the Commonwealth of Pennsylvania to the
extent that such laws are not 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.
25. ENTIRE AGREEMENT. This Agreement (including the Exhibits attached
hereto) contains the entire agreement and understanding of the parties with
respect to the subject matter hereof and supersedes all prior written or oral
agreements and understandings with respect thereto.
26. MISCELLANEOUS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof. 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. This Agreement may be executed in two counterparts,
each of which taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
AAPEX FUNDS, INC.
By:
-------------------------------
Roger A. Householder, President
AAPEX EQUITY ADVISERS, INC.
By:
-------------------------------
Roger A. Householder, Vice President
DECLARATION DISTRIBUTORS, INC.
By:
-------------------------------
Terence P. Smith,
Chief Executive Officer
<PAGE>
SCHEDULE A
AAPEX FUNDS, INC.
Portfolio and Fee Schedule
Portfolios covered by Distribution Agreement:
The Aapex Equity Fund
Fees for distribution and distribution support services on behalf of the
Portfolios:
$20,000.00 per year.
<PAGE>
SCHEDULE B
AAPEX FUNDS, INC.
Distribution Support Services
1. Provide national broker dealer for Fund registration.
2. Review and submit for approval to the NASD all advertising and promotional
materials.
3. Maintain all books and records required by the NASD.
4. Subject to approval of Distributor, license personnel as registered
representatives of the Distributor to distribute no load fund shares
sponsored by the Adviser.
5. Telemarketing services (additional cost- to be negotiated).
6. Fund fulfillment services, including sampling prospective shareholders
inquiries and related mailings (additional cost- to be negotiated).
EXHIBIT B-5
CUSTODIAN AGREEMENT
CUSTODIAN AGREEMENT
SHEPHERD STREET FUNDS, INC.
THIS AGREEMENT, dated as of the 29th day of January, 1999 is by an between
Aapex Funds, Inc. (the "Company"), a corporation duly organized under the laws
of the state of Maryland, Aapex Equity Advisers, Inc., a corporation organized
under the laws of the state of Illinois (the "Adviser"), and First union
National Bank, N.A. (the "Bank")
WHEREAS, the Company and the Adviser have entered into an Operating
Services Agreement wherein the Adviser is obligated to provide, or arrange to
provide, certain services to the Company, including custodial services, and;
WHEREAS, the Adviser desires to appoint the Bank to act as Custodian of the
Company's portfolio securities, cash and other property from time to time
deposited with or collected by the Bank for the Company, and the Company
consents to such appointment, and;
WHEREAS, the Bank is qualified and authorized to act as Custodian for the
Company and the separate series thereof (each a "Fund", and collectively, the
"Funds"), and is willing to act in such capacity upon the terms and conditions
herein set forth;
NOW THERFORE, in consideration of the premises and mutual covenants herein
contained, the parties hereto, intending to be legally bound, do hereby agree as
follows:
SECTION 1. The terms defined in this Section 1, wherever used in this Agreement,
or in any amendment or supplement hereto, shall have the meanings herein
specified unless the context otherwise requires.
CUSTODIAN: The term Custodian shall mean the Bank in its capacity as Custodian
under this Agreement.
DEPOSITORY: The term depository means any depository service which acts as a
system for the central handling of securities where all securities of any
particular class or series of an issuer deposited within the system are treated
as fungible and may be transferred by bookkeeping entry without physical
delivery.
PROPER INSTRUCTIONS: For purposes of this Agreement, the Custodian shall be
deemed to have Proper Instructions upon receipt of written (including
instructions received by means of computer terminals or facsimile
transmissions), telephone or telegraphic instructions from a person or persons
authorized from time to time by the Directors of the Company to give the
particular class of instructions. Telephone or telegraphic instructions shall be
confirmed in writing by such persons as said Directors shall have from time to
time authorized to give the particular instructions without awaiting receipt of
written confirmation, and the Custodian shall not be liable for the Company's
failure to confirm such instructions in writing.
SECURITIES: The term securities means stocks, bonds, rights, warrants and all
other negotiable or non-negotiable paper issued in certificated or book-entry
form commonly known as "Securities" in banking custom or practice.
SHAREHOLDER: The term Shareholder shall mean the registered owner from time to
time of the Shares of the Company in accordance with the registry records
maintained by the Company or any agent on the Company's behalf.
SECTION 2. The Adviser hereby appoints the Custodian as Custodian of the
Company's cash, Securities and other property, to be held by the Custodian as
provided in this Agreement. The Custodian hereby accepts such appointment
subject to the terms and conditions hereinafter provided. The Bank shall open a
separate custodial account in the name of the Company on the books and records
of the Bank to hold the Securities of the Company deposited with, transferred to
or collected by the Bank for the account of each Fund of the Company, and a
separate cash account to which the Bank shall credit monies received by the Bank
for the account of or from each Fund of the Company. Such cash shall be
segregated from the assets of any and all other accounts of the Company and
shall be and remain the sole property of the Company.
SECTION 3. The Company shall from time to time file with the Custodian a
certified copy of each resolution of its Board of Directors authorizing certain
person or persons to give Proper Instructions and specifying the class of
instructions that may be given by each person to the Custodian under this
Agreement, together with certified signatures of such persons authorized to
sign, which shall constitute conclusive evidence of the authority of the
officers and signatories designated therein to act, and shall be considered in
full force and effect with the Custodian fully protected in acting in reliance
thereon until it receives written notice to the contrary; provided, however,
that if the certifying officer is authorized to give Proper Instructions, the
certification shall be also signed by a second officer of the Company.
SECTION 4. The Company will cause to be deposited with the Custodian hereunder
the applicable net asset value of the Shares sold from time to time whether
representing initial issue, other stock or reinvestments of dividends and/or
distributions payable to Shareholders.
SECTION 5. The Bank, acting as agent for the Company, is authorized, directed
and instructed, subject to the further provisions of this Agreement:
(a) to hold Securities issued only on bearer from in bearer form
(b) to register in the name of the nominee of the Bank, the Bank's
Depositories, or sub-custodians, (I) Securities issued only in registered
form, and (ii) Securities issued in both bearer and registered form, which
are freely interchangeable without penalty;
(c) to deposit any securities which are eligible foe deposit (I) with any
domestic or foreign Depository on such terms and conditions as such
Depository may require, including provisions for limitation or exclusion of
liability on the part of the Depository; and (ii) with any sub-custodian
which the Bank uses, including any subsidiary or affiliate of the Bank;
(d) (i) to credit for the account of the Company all proceeds received and
payable on or in respect of the assets maintained hereunder.
(ii) to debit the account of the Company for the cost of acquiring
Securities the Bank has received for the Company, against delivery of
such Securities to the Bank;
(iii)to present for payment Securities and other obligations (including
coupons) upon maturity, when called foe redemption, and when income
payments are due, and
(iv) to make exchanges of Securities which, in the Bank's opinion, are
purely ministerial as, for example, the exchange of Securities in
temporary for Securities in definitive form or the mandatory exchange
of certificates;
(e) to forward to the Company, and/or any other person designated by the
Company, all proxies and proxy materials received by the Bank in connection
with Securities held in the Company's account, which have been registered
in the name of the Bank's nominee , or being held by any Depository, or
sub-custodian, on behalf of the Bank;
(f) to sell any fractional interest of any Securities which the Bank has
received resulting from any stock dividend, stock split, distribution,
exchange, conversion or similar activity;
(g) to release the Company's name, address and aggregate share position to the
issuers of any domestic Securities in the account of the Company, provided
any such information to any issuer;
(h) to endorse and collect all checks, drafts or other orders for the payment
of money received by the Bank for the account of or from the Company;
(i) at the direction of the Company, to enroll designated Securities belonging
to the Company and held hereunder in a program for the automatic
reinvestment of all income and capital gains distributions on those
Securities in new shares (an "Automatic Reinvestment Program"), or instruct
any Depository holding such Securities to enroll those Securities in an
Automatic Reinvestment Program;
(j) At the direction of the Company, to receive, deliver and transfer
Securities and make payments and collections of monies in connection
therewith, enter purchase and sale orders and perform any other acts
incidental or necessary to the performance of the above acts with brokers,
dealer or similar agents selected by the Company, including any broker,
dealer or similar agent affiliated with the Bank, for the account and risk
of the Company in accordance with accepted industry practice in the
relevant market, provided, however, if it so determined that any
certificated Securities transferred to a Depository or sub-custodian, the
Bank, or the Banks nominee, the Bank's sole responsibility for such
Securities under this Agreement shall be to safekeep the Securities in
accordance with Section 11 hereof; and
(k) to notify the Company and/or any other person designated by the Company
upon receipt of notice by the Bank of any call for redemption, render
offer, subscription, rights, merger, consolidation, reorganization or
recapitalization which (I) appears in The Wall Street Journal (New York
edition), The Standard & Poor's Called Bond Record for Preferred Stocks,
Financial Daily Called Bond Service, The Kenny Services, any official
notifications from The Depository Trust Company and such other publications
or services to which the Bank may from time to time subscribe, (ii)
requires the Bank to act in response thereto and (iii) pertain to
Securities belonging to the Company and held hereunder which have been
registered in the name of the Bank's nominee or are being held by a
Depository or sub-custodian on behalf of the Bank. Notwithstanding anything
contained herein to the contrary, the Company shall have the sole
responsibility for monitoring the applicable dates on which Securities with
put option features must be exercised. All solicitation fees payable to the
Bank unless expressly agreed to the contrary in writing by the Bank.
Notwithstanding anything in this Section to the contrary, the Bank is authorized
to hold Securities for the Company which have transfer limitations imposed upon
them by the Securities Act of 1933, as amended , or represent shares of mutual
funds (I) in the name of the Company, (ii) in the name of the Bank's nominee, or
(iii) with any Depository or sub-custodian
SECTION 6. The Custodian's compensation shall be as set forth in Schedule A
hereto attached, or as shall be set forth in amendments to such schedule
approved by the Company and the Adviser and to the extent such compensation
relates to services provided hereunder to such Fund. All expenses and taxes
payable with respect to the Securities in the account of the Company including,
without limitation, commission charges on purchases and sales and the amount of
any loss or liability for stockholders' assessments or otherwise, claimed or
asserted against the Bank's nominee by reason of any registration hereunder
shall be charged to the Adviser.
SECTION 7. In connection with its functions under this Agreement, the Custodian
shall:
(a) render to the Company a daily report of all monies received or paid on
behalf of the Company; and
(b) create, maintain, and retain all records relating to its activities and
obligations under this Agreement in such manner as will meet the
obligations of the Company with respect to the Custodian's activities in
accordance with generally accepted accounting principles. All records
maintained by the Custodian in connection with the performance of its
duties under this Agreement will remain the property of the Company, and in
the event of termination of this Agreement, will be relinquished to the
Company.
SECTION 8. Any Securities deposited with any Depository or with any
sub-custodian will be represented in accounts in the name of the Bank which
include only property held by the Bank as Custodian for customers in which the
Bank acts in a fiduciary or agency capacity.
Should any Securities which are forwarded to the Bank by the Company, and which
are subsequently deposited to the Bank's account in any Depository or with any
sub-custodian, or which the Company may arrange to deposit in the Bank's account
in any Depository or with any sub-custodian, not be deemed acceptable for
deposit by such Depository or sub-custodian, for any reason, and as a result
thereof there is a short position in the account of the Bank with the Depository
for such Security, the Company agrees to furnish the Bank immediately with like
Securities in acceptable form.
SECTION 9. The Company represents and warrants that: (I) it has the legal right,
power and authority to execute, deliver and perform this Agreement and to carry
out all of the transactions contemplated hereby; (ii) it has obtained all
necessary authorizations; (iii) the execution, delivery and performance of this
Agreement and the carrying out of any of the transactions contemplated and
performance of this Agreement and the carrying out of any of the transactions
contemplated hereby will not be in conflict with, result in a breach of or
constitute a default under any agreement or other instrument to which the
Company is a party of which is otherwise known to the Company; (iv) it does not
require the consent of approval of any governmental agency or instrumentality,
except any such consents and approvals which the Company has obtained; (v) the
execution and delivery of this Agreement by the Company will not violate any
law, regulation, charter, by-law, order of any court or governmental agency or
judgement applicable to the Company; and (vi) all persons executing this
Agreement on behalf of the Company are duly authorized to do so.
In the event any of the foregoing representation should become untrue, incorrect
or misleading, the Company agrees to notify the Bank immediately in writing
thereof.
The Adviser represents and warrants that: (I) it has the legal right, power and
authority to execute, deliver and perform this Agreement and to carry out all of
the transactions contemplated hereby; (ii) it has obtained all necessary
authorizations; (iii) the execution, delivery and performance of this Agreement
and the carrying out of any of the transactions contemplated and performance of
this Agreement and the carrying out of any of the transactions contemplated
hereby will not be in conflict with, result in a breach of or constitute a
default under any agreement or other instrument to which the Adviser is a party
of which is otherwise known to the Adviser; (iv) it does not require the consent
of approval of any governmental agency or instrumentality, except any such
consents and approvals which the Adviser has obtained; (v) the execution and
delivery of this Agreement by the Adviser will not violate any law, regulation,
charter, by-law, order of any court of governmental agency or judgement
applicable to the Adviser; and (vi) all persons executing this Agreement on
behalf of the Adviser are duly authorized to do so.
In the event any of the foregoing representation should become untrue, incorrect
or misleading, the Adviser agrees to notify the Bank immediately in writing
thereof.
SECTION 10. The Bank represents and warrants that: (I) it has the legal right,
power and authority to execute, deliver and perform this Agreement and to carry
out all of the transactions contemplated hereby; (ii) it has obtained all
necessary authorizations; (iii) the execution, delivery and performance of this
Agreement and the carrying out of any of the transactions contemplated hereby
will not be in conflict with, result in a breach of or constitute a default
under any agreement or other instrument to which the Bank is a party or which is
otherwise known to the Bank; (iv) it does not require the consent or approval of
any governmental agency or instrumentality, except any such consents or
approvals which the Bank has obtained; (v) the execution and delivery of this
Agreement by the Bank will not violate any law, regulation, charter, by-law,
order of any court or governmental agency or judgement applicable to the Bank;
and (vi) all persons executing this Agreement on behalf of the Bank and carrying
out the transactions contemplated hereby on behalf of the Bank are duly
authorized to do so. In the event that any of the foregoing representations
should become untrue, incorrect or misleading, the Bank agrees to notify the
Company and the Adviser immediately in writing thereof.
SECTION 11. All cash and Securities held by the Bank hereunder shall be kept
with the care exercised as to the Bank's own similar property. The Bank may at
its option insure itself against loss from any cause but shall be under no
obligation to insure for the benefit of the Company.
SECTION 12. No liability of any kind shall by attached to or incurred by the
Custodian by reason of its custody of the Company's assets held by it from time
to time under this Agreement, or otherwise by reason of its position as
Custodian hereunder except only for its own negligence, bad faith, or willful
misconduct in the performance of its duties as specifically set forth in the
this Agreement. Without limiting the generality of the foregoing sentence, the
Custodian:
(a) may rely upon the advice of counsel for the Company; and for any action
taken or suffered in good faith based upon such advice or statements the
Custodian shall not be liable to anyone;
(b) shall not be liable for anything done or suffered to be done in good faith
in accordance with any request or advice of, or based upon information
furnished by, the Company or its authorized officers or agents;
(c) is authorized to accept a certificate of the Secretary or Assistant
Secretary of the Company, or Proper Instructions, to the effect that a
resolution in the form submitted has been duly adopted by its Board of
Directors or by the Shareholders, as conclusive evidence that such
resolution has been duly adopted and is in full force and effect; and
(d) may rely and shall be protected in acting upon any signature, written
(including telegraph or other mechanical) instructions, request, letter of
transmittal, certificate, opinion of counsel, statement, instrument,
report, notice, consent, order, or other paper or document reasonably
believed by it to b genuine and to have been signed, forwarded or presented
by the purchaser, Company or other proper party or parties.
SECTION 13. The Company, its successors and assigns do hereby fully indemnify
and hold harmless the Custodian its successors and assigns, from any and all
loss, liability, claims, demand, actions, suits and expenses of any nature as
the same may arise from the failure of the Company to comply with any law, rule,
regulation, or order of the United States, any state or any other jurisdiction,
governmental authority, body, or board relating to the sale, registration,
qualification of units of beneficial interest in the Company, or from the
failure of the Company to perform any duty or obligation under this Agreement.
Upon written request of the Custodian, the Company shall assume the entire
defense of any claim subject to the foregoing indemnity, or the joint defense
with the Custodian of such claim, as the Custodian shall request. The
indemnities and defense provisions of this Section 13 shall indefinitely survive
termination of this Agreement.
SECTION 14. This Agreement may be amended from time to time without notice to or
approval of the Shareholders by a supplemental agreement executed by the
Company, the Adviser and the Bank amending and supplementing this Agreement in
the manner mutually agreed.
SECTION 15. Either the Company or the Custodian may give one-hundred and twenty
days' (120) written notice to the other of the termination of this Agreement,
such termination to take effect at the time specified in the notice. In case
such notice of termination is given either by the Company or by the Custodian,
the Directors of the Company shall, by resolution duly adopted, promptly appoint
a successor Custodian, (the "Successor Custodian") which Successor Custodian
shall be a bank or a Trust company in good standing, with legal capacity to
accept custody of the cash and Securities of a mutual fund. Upon receipt of
Proper Instructions, the Custodian shall deliver such cash and Securities as it
may then be holding hereunder directly as above provided, the Custodian then
acting shall continue to act as Custodian under this Agreement.
Every Successor Custodian appointed hereunder shall execute and deliver an
appropriate written acceptance of its appointment and shall thereupon become
vested with the rights, powers, obligations and custody of its predecessor
Custodian. The Custodian ceasing to act shall nevertheless, upon request of the
Company and the Successor Custodian and upon payment of its charges and
disbursements, execute and instrument in form approved by its counsel
transferring to the Successor Custodian all the predecessor Custodian's rights,
duties, obligations and custody.
Subject to the provisions of Section 21 hereof, in case the Custodian shall
consolidate with or merge into any other corporation, the corporation remaining
after or resulting from such consolidation or merger shall ipso facto without
the execution or filing of any papers or other documents, succeed to and be
substituted for the Custodian with like effect as though originally named as
such, provided, however, in every case that said Successor corporation maintains
the qualifications set out in Section 17(f) of the Investment Company Act of
1940, as amended.
SECTION 16. This Agreement shall take effect when assets of the Company are
first delivered to the Custodian.
SECTION 17. This Agreement may be executed in two or more counterparts, each of
which when so executed shall be deemed to be an original, but such counterparts
shall together constitute but one and the same instrument.
SECTION 18. A copy of the Articles of Incorporation of the Company is on file
with the Secretary of State of Maryland, and notice is hereby given that this
instrument is executed on behalf of the Company only, and that the obligations
of this instrument are not binding upon any of the Directors, officers or
Shareholders of the Company individually, but binding only upon the assets and
property of the Company. No Fund of the Company shall be liable for the
obligations of any other Fund of the Company.
SECTION 19. The Custodian shall create and maintain all records relating to its
activities and obligations under this Agreement in such manner as will meet the
obligations of the Company under the Investment Company Act of 1940, as amended,
with particular attention to Section 31 thereof and Rules 31a-1 and 31a-2
thereunder, applicable Federal and state tax laws and any other law or
administrative rules or procedures which may be applicable to the Company.
Subject to security requirements of the Custodian applicable to its own
employees having access to similar records within the Custodian, the books and
records of the Custodian pertaining to this Agreement shall be open to
inspection and audit at any reasonable times by officers of, attorneys for, and
auditors employed by, the Company.
SECTION 20. Any sub-custodian appointed hereunder shall be qualified under
Section 17(f) of the 1940 act and will perform its duties in accordance with the
requirements of this Agreement.
SECTION 21. Nothing contained in this Agreement is intended to or shall require
the Custodian in any capacity hereunder to perform any functions or duties on
any holiday or other day of special observance on which the Custodian is closed.
Functions or duties normally scheduled to be performed on such days shall be
performed on, and as of, the next business day the Custodian is open.
SECTION 22. This Agreement shall extent to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Company without the written consent of
the Custodian, or by the Custodian without the written consent of the Company,
authorized or approved by a resolution of its Board of Directors.
SECTION 23. All communications (other that Proper Instructions which are to be
furnished hereunder to either party, or under any amendment hereto, shall be
sent by mail to the address listed below, provided that in the event that the
Bank, in its sole discretion, shall determine that an emergency exists, the Bank
may use such other means of communication as the Bank deems advisable.
To the Company: Aapex Funds, Inc.
141 West Jackson St., Suite 3602
Chicago, Illinois 60604
Attn: Roger A. Householder
To the Adviser: Aapex Equity Advisers, Inc.
141 West Jackson St., Suite 3602
Chicago, Illinois 60604
Attn: Roger A. Householder
To the Bank: First Union National Bank N.A.
530 Walnut St.
Philadelphia, PA 19101-7618
SECTION 24. This Agreement, and any amendments hereto, shall be governed,
construed, and interpreted in accordance with the laws of The Commonwealth of
Pennsylvania applicable to agreements made and to be performed entirely within
such Commonwealth.
SECTION 25. Fees and expenses
As compensation for its services under this Agreement, the Custodian may retain
those fees which are specified in its published or otherwise generally
applicable fee schedule in effect at the time its services are being rendered.
The Company recognizes that this schedule might be changed from time to time
with prior notice to the Company.
MUTUAL FUND CUSTODY ADMINISTRATIVE FEES
1.0 basis points on the first $2.5 billion
.75 basis points on the next $2.5 billion
.50 basis points on the next $5.0 billion
.40 basis points on the remainder
MINIMUM ANNUAL FEE: $3,500
TRANSACTION FEES
$ 4.00 per trade and maturity through Depository Trust Company via DepLink
$10.00 per trade and maturity through Depository Trust Company via non DepLink
$10.00 per trade and maturity clearing book entry through Federal Reserve
$30.00 per transaction for GIC contracts/Physical Securities
$10.00 per trade and maturity clearing through Participants Trust Company
$ 4.00 paydowns on mortgage-backed securities
$ 5.50 Fed wire charge on Repo collateral in/out
$ 5.50/$7.50 other wired transfers in/out
$ 5.50 dividend reinvestment
$ 2.50 Fed charge for sale/return of collateral
$ 8.00 future contracts
$15.00 options
IN WITNESS WHEREOF, The Company, the Adviser and the Custodian have caused this
Agreement to be signed by their respective officers as of the day and year first
above written.
AAPEX FUNDS, INC AAPEX EQUITY ADVISERS, INC.
- ----------------------- ----------------------
By: Roger A. Householder By: Roger A. Householder
President President
FIRSAT UNION NATIONAL BANK N.A.
- ---------------------------
Paul T. Cahill
Vice President
EXHIBIT B-6
OPERATING SERVICES AGREEMENT
OPERATING SERVICES AGREEMENT
AAPEX FUNDS, INC.
THIS AGREEMENT is made and entered into as of the 29th of January, 1999, by
and between Aapex Funds, Inc., a Maryland corporation (the "Fund"), and Aapex
Equity Advisers, Inc., an Illinois corporation (hereinafter referred to as
"Manager").
WHEREAS, the Fund is a diversified, open-end management investment company,
registered under the Investment Company Act of 1940, as amended (the "Act"), and
authorized to issue shares representing interests in The Aapex Equity Fund (the
"Portfolio"); and
WHEREAS, Manager is registered as an investment advisor under the
Investment Advisors Act of 1940, and engages in the business of asset management
and the provision of certain other administrative and record keeping services in
connection therewith; and
WHEREAS, the Fund wishes to engage Manager, to provide, or arrange for the
provision of, certain operational services which are necessary for the
day-to-day operations of the Portfolio in the manner and on the terms and
conditions hereinafter set forth, and Manager wishes to accept such engagement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Fund and Manager agree as follows:
1. OBLIGATIONS OF MANAGER
(a) Services. The Fund hereby retains Manager to provide, or, upon receipt of
written approval of the Fund arrange for other companies to provide, the
following services to the Portfolio in the manner and to the extent that such
services are reasonably necessary for the operation of the Portfolio
(collectively, the "Services"):
(1) accounting services and functions, including costs and expenses of any
independent public accountants;
(2) non-litigation related legal and compliance services, including the
expenses of maintaining registration and qualification of the Fund and
the Portfolio under federal, state and any other applicable laws and
regulations;
(3) dividend disbursing agent, dividend reinvestment agent, transfer
agent, and registrar services and functions (including answering
inquiries related to shareholder Portfolio accounts);
(4) custodian and depository services and functions;
(5) distribution, marketing, and/or underwriting services;
(6) independent pricing services;
(7) preparation of reports describing the operations of the Portfolio,
including the costs of providing such reports to broker-dealers,
financial institutions and other organizations which render services
and assistance in connection with the distribution of shares of the
Portfolio;
(8) sub-accounting and recordkeeping services and functions (other than
those books and records required to be maintained by Manager under the
Investment Advisory Agreement between the Fund and Manager dated
August 15, 1998), including maintenance of shareholder records and
shareholder information concerning the status of their Portfolio
accounts by investment advisors, broker-dealers, financial
institutions, and other organizations on behalf of Manager;
(9) shareholder and board of directors communication services, including
the costs of preparing, printing and distributing notices of
shareholders' meetings, proxy statements, prospectuses, statements of
additional information, Portfolio reports, and other communications to
the Fund's Portfolio shareholders, as well as all expenses of
shareholders' and board of directors' meetings, including the
compensation and reimbursable expenses of the directors of the Fund;
(10) other day-to-day administrative services, including the costs of
designing, printing, and issuing certificates representing shares of
the Portfolio, and premiums for the fidelity bond maintained by the
Fund pursuant to Section 17(g) of the Act and rules promulgated
thereunder (except for such premiums as may be allocated to third
parties, as insureds thereunder).
(b) Exclusions from Service. Notwithstanding the provisions of Paragraph 1(a)
above, the Services shall not include and Manager will not be responsible for
any of the following:
(1) all brokers' commissions, issue and transfer taxes, and other costs
chargeable to the Fund or the Portfolio in connection with securities
transactions to which the Fund or the Portfolio is a party or in
connection with securities owned by the Fund or the Portfolio;
(2) the interest on indebtedness, if any, incurred by the Fund or the
Portfolio;
(3) the taxes, including franchise, income, issue, transfer, business
license, and other corporate fees payable by the Fund or the Portfolio
to federal, state, county, city, or other governmental agents;
(4) the expenses, including fees and disbursements of counsel, in
connection with litigation by or against the Fund or the Portfolio;
and
(5) any other extraordinary expense of the Fund or Portfolio.
(c) Books and Records. All books and records prepared and maintained by Manager
for the Fund under this Agreement shall be the property of the Fund and, upon
request therefor, Manager shall surrender to the Fund such of the books and
records so requested.
(d) Staff and Facilities. Manager assumes and shall pay for maintaining the
staff, personnel, space, equipment and facilities necessary to perform its
obligations under this Agreement.
2. OBLIGATIONS OF THE FUND
(a) Fee. The Fund will pay to Manager on the last day of each month a fee at an
annual rate equal to 1.25% of average net asset of the Portfolio, such fee to be
computed daily based upon the net asset value of the Portfolio as determined by
a valuation made in accordance with the Fund's procedure for calculating
Portfolio net asset value as described in the Fund's Prospectus and/or Statement
of Additional Information. During any period when the determination of a
Portfolio's net asset value is suspended by the directors of the Fund, the net
asset value of a share of that Portfolio as of the last business day prior to
such suspension shall, for the purpose of this Paragraph 2(a), be deemed to be
the net asset value at the close of each succeeding business day until it is
again determined.
(b) Information. The Fund will, from time to time, furnish or otherwise make
available to Manager such information relating to the business and affairs of
the Portfolio as Manager may reasonably require in order to discharge its duties
and obligations hereunder.
3. TERM. This Agreement shall remain in effect until no later than January 29,
2001, and from year to year thereafter provided such continuance is approved at
least annually by (1) the vote of a majority of the Board of Directors of the
Fund or (2) a vote of a "majority" (as that term is defined in the Investment
Company Act of 1940) of the Fund's outstanding securities, provided that in
either event the continuance is also approved by the vote of a majority of the
directors of the Fund who are not parties to this Agreement or "interested
persons" (as defined in the Act) of any such party, which vote must be cast in
person at a meeting called for the purpose of voting on such approval; provided,
however, that;
(a) the Fund, at any time and without the payment of any penalty may
terminate this Agreement upon 60 days written notice to Manager;
(b) the Agreement shall immediately terminate in the event of its
assignment (within the meaning of the Act and the Rules thereunder); and
(c) Manager may terminate this Agreement without payment of penalty on 60
days written notice to the Fund.
4. NOTICES. Except as otherwise provided in this Agreement, any notice or other
communication required by or permitted to be given in connection with this
Agreement will be in writing and will be delivered in person or sent by first
class mail, postage prepaid or by prepaid overnight delivery service to the
respective parties as follows:
If to the Fund: If to the Manager:
-------------- -----------------
Aapex Funds, Inc. Aapex Equity Advisers, Inc.
141 West Jackson Street, Suite 3602 141 West Jackson Street, Suite 3602
Chicago, Illinois 60604 Chicago, Illinois 60604
ATTENTION: Roger A. Householder ATTENTION: Roger A. Householder
President President
5. MISCELLANEOUS
(a) Performance Review. Manager will permit representatives of the Fund,
including the Fund's independent auditors, to have reasonable access to the
personnel and records of Manager in order to enable such representatives to
monitor the quality of services being provided and the level of fees due
Manager pursuant to this Agreement. In addition, Manager shall promptly
deliver to the board of directors of the Fund such information as may
reasonably be requested from time to time to permit the board of directors
to make an informed determination regarding continuation of this Agreement
and the payments contemplated to be made hereunder.
(b) Choice of Law. This Agreement shall be construed in accordance with the
laws of the State of Maryland and the applicable provisions of the Act. To
the extent the applicable law of the State of Maryland or any of the
provisions herein conflict with the applicable provisions of the Act, the
latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written.
Aapex Funds, Inc. Aapex Equity Advisers, Inc.
______________________________ ______________________________
By: Roger A. Householder By: Roger A. Householder
President Vice President
ATTEST: ATTEST:
By: __________________________ By: __________________________
Secretary Secretary
EXHIBIT B-7
INVESTMENT COMPANY SERVICES AGREEMENT
INVESTMENT COMPANY SERVICES AGREEMENT
AAPEX FUNDS, INC.
THIS AGREEMENT, dated as of the 29th day of January, 1999, made by and
between Aapex Funds, Inc. ("Fund"), a corporation operating as an open-end,
management investment company registered under the Investment Company Act of
1940, as amended (the "Act"), duly organized and existing under the laws of the
State of Maryland, Aapex Equity Advisers, Inc. ("Adviser"), a corporation duly
organized under the laws of Illinois, and Declaration Service Company
("Declaration"), a corporation duly organized under the laws of the Commonwealth
of Pennsylvania (collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, the Fund is authorized by its Articles of Incorporation and By-
Laws to issue separate series of shares representing interests in separate
investment portfolios which are identified on Schedule "C" attached hereto and
which Schedule "C" may be amended from time to time by mutual agreement of the
Fund and Declaration; and
WHEREAS, the Fund and the Adviser have entered into an "Operating Services
Agreement" dated as of January 29, 1999, authorizing the Adviser to provide
certain investment company services to the Fund, and which further authorizes
the Adviser to enter into this Investment Company Services Agreement (hereafter
"Agreement") on behalf of the Fund; and
WHEREAS, the Parties desire to enter into an agreement whereby Declaration
will provide the services to the Fund as specified herein and set forth in
particular in Schedule "A" which is attached hereto and made a part hereof.
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, and in exchange for good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, the Parties hereto,
intending to be legally bound, do hereby agree as follows:
GENERAL PROVISIONS
Section 1. Appointment. The Adviser hereby appoints Declaration as
servicing agent to the Fund and Declaration hereby accepts such appointment. In
order that Declaration may perform its duties under the terms of this Agreement,
the Board of Directors of the Fund shall direct the officers, investment
adviser, legal counsel, independent accountants and custodian of the Fund to
cooperate fully with Declaration and, upon request of Declaration, to provide
such information, documents and advice relating to the Fund which Declaration
requires to execute its responsibilities hereunder. In connection with its
duties, Declaration shall be entitled to rely, and will be held harmless by the
Fund when acting in reasonable reliance, upon any instruction, advice or
document relating to the Fund as provided to Declaration by any of the
aforementioned persons on behalf of the Fund. All fees charged by any such
persons acting on behalf of the Fund will be deemed an expense of the Fund.
Any services performed by Declaration under this Agreement will conform to the
requirements of:
(a) the provisions of the Act and the Securities Act of 1933, as amended,
and any rules or regulations in force thereunder;
(b) any other applicable provision of state and federal law;
(c) the provisions of the Articles of Incorporation and the by-laws of the
Fund, as amended from time to time and delivered to Declaration;
(d) any policies and determinations of the Board of Directors of the Fund
which are communicated to Declaration; and
(e) the policies of the Fund as reflected in the Fund's registration
statement as filed with the U.S. Securities and Exchange Commission.
Nothing in this Agreement will prevent Declaration or any officer thereof
from providing the same or comparable services for or with any other person,
firm or corporation. While the services supplied to the Fund may be different
than those supplied to other persons, firms or corporations, Declaration will
provide the Fund equitable treatment in supplying services. The Fund recognizes
that it will not receive preferential treatment from Declaration as compared
with the treatment provided to other Declaration clients.
Section 2. Duties and Obligations of Declaration.
Subject to the provisions of this Agreement, Declaration will provide to
the Fund the specific services as set forth in Schedule "A" attached hereto.
Section 3. Definitions. For purposes of this Agreement:
"Certificate" will mean any notice, instruction, or other instrument in
writing, authorized or required by this Agreement. To be effective, such
Certificate shall be given to and received by the custodian and shall be signed
on behalf of the Fund by any two of its designated officers, and the term
Certificate shall also include instructions communicated to the custodian by
Declaration.
"Custodian" will refer to that agent which provides safekeeping of the
assets of the Fund.
"Instructions" will mean communications containing instructions transmitted
by electronic or telecommunications media including, but not limited to,
Industry Standardization for Institutional Trade Communications,
computer-to-computer interface, dedicated transmission line, facsimile
transmission (which may be signed by an officer or unsigned) and tested telex.
"Oral Instruction" will mean an authorization, instruction, approval, item
or set of data, or information of any kind transmitted to Declaration in person
or by telephone, telegram, telecopy or other mechanical or documentary means
lacking original signature, by a person or persons reasonably identified to
Declaration to be a person or persons so authorized by a resolution of the Board
of Directors of the Fund to give Oral Instructions to Declaration on behalf of
the Fund.
"Shareholders" will mean the registered owners of the shares of the Fund in
accordance with the share registry records maintained by Declaration for the
Fund.
"Shares" will mean the issued and outstanding shares of the Fund.
"Signature Guarantee" will mean the guarantee of signatures by an "eligible
guarantor institution" as defined in Rule 17Ad-15 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Eligible guarantor institutions
include banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations.
Broker-dealers guaranteeing signatures must be members of a clearing corporation
or maintain net capital of at least $100,000. Signature guarantees will be
accepted from any eligible guarantor institution which participates in a
signature guarantee program.
"Written Instruction" will mean an authorization, instruction, approval,
item or set of data or information of any kind transmitted to Declaration in an
original writing containing an original signature or a copy of such document
transmitted by telecopy including transmission of such signature reasonably
identified to Declaration to be the signature of a person or persons so
authorized by a resolution of the Board of Directors of the Fund, or so
identified by the Fund to give Written Instructions to Declaration on behalf of
the Fund.
Concerning Oral and Written Instructions For all purposes under this
Agreement, Declaration is authorized to act upon receipt of the first of any
Written or Oral Instruction it receives from the Fund or its agents. In cases
where the first instruction is an Oral Instruction that is not in the form of a
document or written record, a confirmatory Written Instruction or Oral
Instruction in the form of a document or written record shall be delivered. In
cases where Declaration receives an Instruction, whether Written or Oral, to
enter a portfolio transaction onto the Fund's records, the Fund shall cause the
broker/dealer executing such transaction to send a written confirmation to the
Custodian.
Declaration shall be entitled to rely on the first Instruction received.
For any act or omission undertaken by Declaration in compliance therewith, it
shall be free of liability and fully indemnified and held harmless by the Fund,
provided however, that in the event a Written or Oral Instruction received by
Declaration is countermanded by a subsequent Written or Oral Instruction
received prior to acting upon such countermanded Instruction, Declaration shall
act upon such subsequent Written or Oral Instruction. The sole obligation of
Declaration with respect to any follow-up or confirmatory Written Instruction or
Oral Instruction in documentary or written form shall be to make reasonable
efforts to detect any such discrepancy between the original Instruction and such
confirmation and to report such discrepancy to the Fund. The Fund shall be
responsible and bear the expense of its taking any action, including any
reprocessing, necessary to correct any discrepancy or error. To the extent such
action requires Declaration to act, the Fund shall give Declaration specific
Written Instruction as to the action required. The Fund will file with
Declaration a certified copy of each resolution of the Fund's Board of Directors
authorizing execution of Written Instructions or the transmittal of Oral
Instructions as provided above.
Section 4. Indemnification.
(a) Declaration, its directors, officers, employees, shareholders, and
agents will be liable for any loss suffered by the Fund resulting from the
willful misfeasance, bad faith, gross negligence or reckless disregard on the
part of Declaration in the performance of its obligations and duties under this
Agreement.
(b) Any director, officer, employee, shareholder or agent of Declaration,
who may be or become an officer, director, employee or agent of the Fund, will
be deemed, when rendering services to the Fund, or acting on any business of the
Fund (other than services or business in connection with Declaration' duties
hereunder), to be rendering such services to or acting solely for the Fund and
not as a director, officer, employee, shareholder or agent of, or under the
control or direction of Declaration even though such person may be receiving
compensation from Declaration.
(c) The Fund agrees to indemnify and hold Declaration harmless, together
with its directors, officers, employees, shareholders and agents from and
against any and all claims, demands, expenses and liabilities (whether with or
without basis in fact or law) of any and every nature which Declaration may
sustain or incur or which may be asserted against Declaration by any person by
reason of, or as a result of:
(i) any action taken or omitted to be taken by Declaration except
claims, demands, expenses and liabilities arising from willful misfeasance,
bad faith, negligence or reckless disregard on the part of Declaration in
the performance of its obligations and duties under this Agreement; or
(ii) any action taken or omitted to be taken by Declaration in
reliance upon any Certificate, instrument, order or stock certificate or
other document reasonably believed by Declaration to be genuine and signed,
countersigned or executed by any duly authorized person, upon the Oral
Instructions or Written Instructions of an authorized person of the Fund,
or upon the written opinion of legal counsel for the Fund or Declaration;
or
(iii) the offer or sale of shares of the Fund to any person, natural
or otherwise, which is in violation of any state or federal law.
If a claim is made against Declaration as to which Declaration may seek
indemnity under this Section, Declaration will notify the Fund promptly after
receipt of any written assertion of such claim threatening to institute an
action or proceeding with respect thereto and will notify the Fund promptly of
any action commenced against Declaration within ten (10) days after Declaration
has been served with a summons or other legal process. Failure to notify the
Fund will not, however, relieve the Fund from any liability which it may have on
account of the indemnity under this Section so long as the Fund has not been
prejudiced in any material respect by such failure.
The Fund and Declaration will cooperate in the control of the defense of
any action, suit or proceeding in which Declaration is involved and for which
indemnity is being provided by the Fund to Declaration. The Fund may negotiate
the settlement of any action, suit or proceeding subject to Declaration's
approval, which will not be unreasonably withheld. Declaration reserves the
right, but not the obligation, to participate in the defense or settlement of a
claim, action or proceeding with its own counsel. Costs or expenses incurred by
Declaration in connection with, or as a result of such participation, will be
borne solely by the Fund if: (i) Declaration has received an opinion of counsel
from counsel to the Fund stating that the use of counsel to the Fund by
Declaration would present an impermissible conflict of interest; (ii) the
defendants in, or targets of, any such action or proceeding include both
Declaration and the Fund, and legal counsel to Declaration has reasonably
concluded that there are legal defenses available to it which are different from
or additional to those available to the Fund or which may be adverse to or
inconsistent with defenses available to the Fund (in which case the Fund will
not have the right to direct the defense of such action on behalf of
Declaration); or (iii) the Fund authorizes Declaration to employ separate
counsel at the expense of the Fund.
(d) The terms of this Section will survive the termination of this
Agreement.
Section 5. Representations and Warranties.
(a) Declaration represents and warrants that:
(i) it is a corporation duly organized and existing and in good standing
under the laws of Pennsylvania;
(ii) it is empowered under applicable laws and by its Certificate of
Incorporation and by-laws to enter into and perform this Agreement;
(iii) all requisite corporate proceedings have been taken to authorize
Declaration to enter into and perform this Agreement;
(iv) it has and will continue to have access to the facilities, personnel
and equipment required to fully perform its duties and obligations
hereunder;
(v) no legal or administrative proceedings have been instituted or
threatened which would impair Declaration's ability to perform its duties
and obligations under this Agreement;
(vi) its entrance into this Agreement shall not cause a material breach or
be in material conflict with any other agreement or obligation of
Declaration or any law or regulation applicable to it;
(vii) it is registered as a transfer agent under Section 17A(c)(2) of the
Exchange Act;
(viii) this Agreement has been duly authorized by Declaration and, when
executed and delivered, will constitute valid, legal and binding obligation
of Declaration, enforceable in accordance with its terms.
(b) The Fund represents and warrants that:
(i) it is a corporation duly organized and existing and in good standing
under the laws of the State of Maryland;
(ii) it is empowered under applicable laws and by its Articles of
Incorporation and by-laws to enter into and perform this Agreement;
(iii) all requisite proceedings have been taken to authorize the Fund to
enter into and perform this Agreement;
(iv) no legal or administrative proceedings have been instituted or
threatened which would impair the Fund's ability to perform its duties and
obligations under this Agreement;
(v) the Fund's entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or obligations
of the Fund, or any law or regulation applicable to either;
(vi) the Shares are properly registered or otherwise authorized for
issuance and sale;
(vii) this Agreement has been duly authorized by the Fund and, when
executed and delivered, will constitute valid, legal and binding obligation
of the Fund, enforceable in accordance with its terms.
(c) The Adviser represents and warrants that:
(i) it is a corporation duly organized and existing and in good standing
under the laws of the State of North Carolina;
(ii) it is empowered under applicable laws and by its Articles of
Incorporation and by-laws to enter into and perform this Agreement;
(iii) all requisite proceedings have been taken to authorize the Adviser to
enter into and perform this Agreement;
(iv) no legal or administrative proceedings have been instituted or
threatened which would impair the Adviser's ability to perform its duties
and obligations under this Agreement;
(v) the Adviser's entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or obligations
of the Adviser, or any law or regulation applicable to either;
(vi) this Agreement has been duly authorized by the Adviser and, when
executed and delivered, will constitute valid, legal and binding obligation
of the Adviser, enforceable in accordance with its terms.
(d) Delivery of Documents
The Fund will furnish or cause to be furnished to Declaration the following
documents;
(i) current Prospectus and Statement of Additional Information;
(ii) most recent Annual Report;
(iii) most recent Semi-Annual Report for registered investment companies on
Form N-SAR;
(iv) certified copies of resolutions of the Fund's Board of Directors
authorizing the execution of Written Instructions or the transmittal of
Oral Instructions and those persons authorized to give those Instructions.
(e) Record Keeping and Other Information
Declaration will create and maintain all records required of it pursuant to
its duties hereunder and as set forth in Schedule "A" in accordance with all
applicable laws, rules and regulations, including records required by Section
31(a) of the Act. All such records will be the property of the Fund and will be
available during regular business hours for inspection, copying and use by the
Fund. Where applicable, such records will be maintained by Declaration for the
periods and in the places required by Rule 31a-2 under the Act. Upon termination
of this Agreement, Declaration will deliver all such records to the Fund or such
person as the Fund may designate.
In case of any request or demand for the inspection of the Share records of
the Fund, Declaration shall notify the Fund and secure instructions as to
permitting or refusing such inspection. Declaration may, however, exhibit such
records to any person in any case where it is advised by its counsel that it may
be held liable for failure to do so.
Section 6. Compensation. The Adviser agrees to pay Declaration compensation for
its services, and to reimburse it for expenses at the rates, times, manner and
amounts as set forth in Schedule "B" attached hereto and incorporated herein by
reference and as will be set forth in any amendments to such Schedule "B" agreed
upon in writing by the Parties. Upon receipt of an invoice therefor, the Adviser
agrees to pay such fees within ten (10) business days. In addition, the Adviser
agrees to reimburse Declaration for any out-of-pocket expenses paid by
Declaration on behalf of the Fund within ten (10) calendar days of the Fund's
receipt of an invoice therefor. In the event Adviser is unable to pay such
invoices for services or out- of- pocket expenses, for any reason, the Fund
agrees to pay Declaration the full amount(s) due within ten (10) additional
business days.
For the purpose of determining fees payable to Declaration, the value of
the Fund's net assets will be computed at the times and in the manner specified
in the Fund's Prospectus and Statement of Additional Information then in effect.
During the term of this Agreement, should the Fund seek services or
functions in addition to those outlined below or in Schedule "A" attached
hereto, a written amendment to this Agreement specifying the additional services
and corresponding compensation will be executed by the Parties.
In the event that Adviser is more than thirty (30) days delinquent in its
payments of monthly billings in connection with this Agreement (with the
exception of specific amounts which may be contested in good faith by the Fund),
this Agreement may be terminated upon thirty (30) days' written notice by
Declaration. The Adviser must notify Declaration in writing of any contested
amounts within ten (10) days of receipt of a billing for such amounts. Disputed
amounts are not due and payable while they are being disputed.
Section 7. Days of Operation. Nothing contained in this Agreement is intended to
or will require Declaration, in any capacity hereunder, to perform any functions
or duties on any holiday, day of special observance or any other day on which
the New York Stock Exchange ("NYSE") is closed. Functions or duties normally
scheduled to be performed on such days will be performed on and as of the next
succeeding business day on which the NYSE is open. Notwithstanding the
foregoing, Declaration will compute the net asset value of the Fund on each day
required pursuant to Rule 22c-1 promulgated under the Act.
Section 8. Acts of God, etc. Declaration will not be liable or responsible for
delays or errors caused by acts of God or by reason of circumstances beyond its
control including, acts of civil or military authority, national emergencies,
labor difficulties, mechanical breakdown, insurrection, war, riots, or failure
or unavailability of transportation, communication or power supply, fire, flood
or other catastrophe.
In the event of equipment failures beyond Declaration's control,
Declaration will, at no additional expense to the Fund, take reasonable steps to
minimize service interruptions but will have no liability with respect thereto.
The foregoing obligation will not extend to computer terminals located outside
of premises maintained by Declaration. Declaration has entered into and
maintains in effect agreements making reasonable provision for emergency use of
electronic data processing equipment to the extent appropriate equipment is
available.
Section 9. Inspection and Ownership of Records. In the event of a request or
demand for the inspection of the records of the Fund, Declaration will use its
best efforts to notify the Fund and to secure instructions as to permitting or
refusing such inspection. Declaration may, however, make such records available
for inspection to any person in any case where it is advised in writing by its
counsel that it may be held liable for failure to do so after notice to the
Fund.
Declaration recognizes that the records it maintains for the Fund are the
property of the Fund and will be surrendered to the Fund upon written notice to
Declaration as outlined under Section 10(c) below. The Fund is responsible for
the payment in advance of any fees owed to Declaration. Declaration agrees to
maintain the records and all other information of the Fund in a confidential
manner and will not use such information for any purpose other than the
performance of Declaration' duties under this Agreement.
Section 10. Duration and Termination.
(a) The initial term of this Agreement will be for the period of two (2)
years, commencing on the date hereinabove first written (the "Effective Date")
and will continue thereafter subject to termination by either Party as set forth
in subsection (c) below.
(b) The fee schedules set forth in Schedule "B" attached hereto will be
fixed for the initial term commencing on the Effective Date of this Agreement
and will continue thereafter subject to their review and any adjustment.
(c) After the initial term of this Agreement, a Party may give written
notice to the other (the day on which the notice is received by the Party
against which the notice is made shall be the "Notice Date") of a date on which
this Agreement shall be terminated ("Termination Date"). The Termination Date
shall be set on a day not less than ninety (90) days after the Notice Date. The
period of time between the Notice Date and the Termination Date is hereby
identified as the "Notice Period". Any time up to, but not later than fifteen
(15) days prior to the Termination Date, the Adviser or the Fund will pay to
Declaration such compensation as may be due as of the Termination Date and will
likewise reimburse Declaration for any out-of-pocket expenses and disbursements
reasonably incurred or expected to be incurred by Declaration up to and
including the Termination Date.
(d) In connection with the termination of this Agreement, if a successor to
any of Declaration' duties or responsibilities under this Agreement is
designated by the Fund by written notice to Declaration, Declaration will
promptly, on the Termination Date and upon receipt by Declaration of any
payments owed to it as set forth in Section 10(c) above, transfer to the
successor, at the Adviser's expense, all records which belong to the Fund and
will provide appropriate, reasonable and professional cooperation in
transferring such records to the named successor.
(e) Should the Fund desire to move any of the services outlined in this
Agreement to a successor service provider prior to the Termination Date,
Declaration shall make a good faith effort to facilitate the conversion on such
prior date, however, there can be no guarantee that Declaration will be able to
facilitate a conversion of services prior to the end of the Notice Period.
Should services be converted to a successor service provider prior to the end of
the Notice Period, or if the Fund is liquidated or its assets merged or
purchased or the like with another entity, payment of fees to Declaration shall
be accelerated to a date prior to the conversion or termination of services and
calculated as if the services had remained at Declaration until the expiration
of the Notice Period and shall be calculated at the asset levels on the Notice
Date.
(f) Notwithstanding any other provisions of Paragraph 10, in the event the
Fund deregisters as an Investment Company with the United States Securities and
Exchange Commission ("SEC"), this Agreement may be terminated by the Fund upon
ninety (90) days written notice to Declaration. The Termination Date shall be
ninety (90) days after the receipt of such notice by Declaration. Any time up
to, but not later than fifteen (15) days prior to the Termination Date, the
Adviser or the Fund will pay to Declaration such compensation as may be due as
of the Termination Date and will likewise reimburse Declaration for any out- of-
pocket expenses and disbursements reasonably incurred or expected to be incurred
by Declaration up to and including the Termination Date.
(g) Notwithstanding the foregoing, this Agreement may be terminated at any
time by either Party in the event of a material breach by the other Party
involving negligence, willful misfeasance, bad faith or a reckless disregard of
its obligations and duties under this Agreement provided that such breach shall
have remained unremedied for sixty (60) days or more after receipt of written
specification thereof.
Section 11. Rights of Ownership. All computer programs and procedures developed
to perform services required to be provided by Declaration under this Agreement
are the property of Declaration. All records and other data except such computer
programs and procedures are the exclusive property of the Fund and all such
other records and data will be furnished to the Fund in appropriate form as soon
as practicable after termination of this Agreement for any reason.
Section 12. Amendments to Documents. The Fund will furnish Declaration written
copies of any amendments to, or changes in, the Articles of Incorporation,
by-laws, Prospectus or Statement of Additional Information in a reasonable time
prior to such amendments or changes becoming effective. In addition, the Fund
agrees that no amendments will be made to the Prospectus or Statement of
Additional Information of the Fund which might have the effect of changing the
procedures employed by Declaration in providing the services agreed to hereunder
or which amendment might affect the duties of Declaration hereunder unless the
Fund first obtains Declaration' approval of such amendments or changes.
Section 13. Confidentiality. Both Parties hereto agree that any non-public
information obtained hereunder concerning the other Party is confidential and
may not be disclosed to any other person without the consent of the other Party,
except as may be required by applicable law or at the request of the U.S.
Securities and Exchange Commission or other governmental agency. Declaration
agrees that it will not use any non-public information for any purpose other
than performance of its duties or obligations hereunder. The obligations of the
Parties under this Section will survive the termination of this Agreement. The
Parties further agree that a breach of this Section would irreparably damage the
other Party and accordingly agree that each of them is entitled, without bond or
other security, to an injunction or injunctions to prevent breaches of this
provision.
Section 14. Notices. Except as otherwise provided in this Agreement, any notice
or other communication required by or permitted to be given in connection with
this Agreement will be in writing and will be delivered in person or sent by
first class mail, postage prepaid or by prepaid overnight delivery service to
the respective parties as follows:
If to the Fund: If to Declaration:
Aapex Funds, Inc. Declaration Service Company
141 West Jackson St, Suite 3602 555 North Lane, Suite 6160
Chicago, Illinois 60604 Conshohocken, PA 19428
Attention: Roger A. Householder Attention: Terence P. Smith
President Chief Executive Officer
If to the Adviser:
Aapex Equity Advisers, Inc.
141 West Jackson St, Suite 3602
Chicago, Illinois 60604
Attention: Roger A. Householder
President
Section 15. Amendment. No provision of this Agreement may be amended or modified
in any manner except by a written agreement properly authorized and executed by
the Parties. This Agreement may be amended from time to time by supplemental
agreement executed by the Parties and the compensation stated in Schedule "B"
attached hereto may be adjusted accordingly as mutually agreed upon.
Section 16. Authorization. The Parties represent and warrant to each other that
the execution and delivery of this Agreement by the undersigned officer of each
Party has been duly and validly authorized; and when duly executed, this
Agreement will constitute a valid and legally binding enforceable obligation of
each Party.
Section 17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which when so executed will be deemed to be an original,
but such counterparts will together constitute but one and the same instrument.
Section 18. Assignment. This Agreement will extend to and be binding upon the
Parties hereto and their respective successors and assigns; provided, however,
that this Agreement will not be assignable by any of the parties without the
written consent of the other parties, which consents shall be authorized or
approved by a resolution by its respective Boards of Directors.
Section 19. Governing Law. This Agreement will be governed by the laws of the
State of Pennsylvania.
Section 20. Severability. If any part, term or provision of this Agreement is
held by any court to be illegal, in conflict with any law or otherwise invalid,
the remaining portion or portions will be considered severable and not be
affected and the rights and obligations of the parties will be construed and
enforced as if the Agreement did not contain the particular part, term or
provision held to be illegal or invalid, provided that the basic agreement is
not thereby materially impaired.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
consisting of twenty (13) typewritten pages, together with Schedules "A," "B"
and "C" (Pages 14-21, attached), to be signed by their duly authorized officers
as of the day and year first above written.
Aapex Funds, Inc. Declaration Service Company
- --------------------------- -------------------------------
By: Roger A. Householder By: Terence P. Smith
President Chief Executive Officer
Aapex Equity Advisers, Inc.
- ---------------------------
By: Roger A. Householder
President
<PAGE>
SCHEDULE A
Accounting Services Provided by Declaration Service Company
o Journalize each Portfolio's investment, capital share and income and expense
activities.
o Verify investment buy/sell trade tickets when received from the adviser and
transmit trades to the Fund's custodian for proper settlement.
o Maintain individual ledgers for investment securities.
o Maintain historical tax lots for each security.
o Reconcile cash and investment balances of each Portfolio with the custodian,
and provide the adviser with the beginning cash balance available for
investment purposes.
o Update the cash availability throughout the day as required by the adviser.
o Post to and prepare each Portfolio's Statement of Assets and Liabilities and
Statement of Operations.
o Calculate expenses payable pursuant to the Fund's various contractual
obligations.
o Control all disbursements from the Fund on behalf of each Portfolio and
authorize such disbursements upon instructions of the Fund.
o Calculate capital gains and losses.
o Determine each Portfolio's net income.
o At the Portfolio'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, and in either case calculate the market or fair
value of each Portfolio's investments.
o Where applicable, calculate the amortized cost value of debt instruments.
o Transmit or mail a copy of the portfolio valuations to the adviser.
o Compute the net asset value of each Portfolio.
o Report applicable net asset value and performance data to performance
tracking organizations.
o Compute each Portfolio's yields, total returns, expense ratios and portfolio
turnover rate.
o Prepare and monitor the expense accruals and notify Fund management of any
proposed adjustments.
o 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.
o Prepare monthly security transactions listings.
o Prepare monthly broker security transactions summaries.
o Supply various Fund and Portfolio statistical data as requested on an ongoing
basis.
o Assist in the preparation of support schedules necessary for completion of
Federal and state tax returns.
o Assist in the preparation and filing of the Fund's annual and semiannual
reports with the SEC on Form N-SAR.
o Assist in the preparation and filing of the Fund's annual and semiannual
reports to shareholders and proxy statements.
o Assist with the preparation of amendments to the Fund's Registration
Statements on From N-1A and other filings relating to the registration of
shares.
o Monitor each Portfolio's status as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended from time to
time ("Code").
o 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 each Portfolio of the Fund under the
Code.
o Provide other accounting services as may be agreed upon from time to time in
writing by the Fund and Declaration.
Administrative Services Provided by Declaration Service Company
o Provide overall day-to-day Fund administrative management, including
coordination of investment adviser, custodian, transfer agency, distribution
and pricing and accounting services.
o Preparation and filing of all Federal and State reports including:
o Fund's post-effective amendments under the Securities Act of 1933 and the
Investment Company Act of 1940.
o Form N-SAR - Semi-Annual report for Registered Investment Companies.
o The Fund's Annual and Semi-Annual Report.
o Rule 24f-2 Notice - filing regarding sale(s) of securities.
o Rule 17g-1 filing with the SEC regarding Fidelity Bond coverage.
o Ongoing monitoring and filing of State Blue Sky registrations.
o Prepare and file such reports, applications and documents as may be necessary
or desirable to register the Fund's shares with the Federal and state
securities authorities, and monitor the sale of Fund shares for compliance
with Federal and state securities laws.
o Prepare and file reports to shareholders, including the annual report to
shareholders, and coordinate mailing Prospectuses, notices, proxy statements,
proxies and other reports to shareholders.
o Assist with layout and printing of shareholder communications, including
Prospectuses and reports to shareholders.
o Administer contracts on behalf of the Fund with, among others, the Fund's
investment adviser, custodian, transfer agent/shareholder servicing agent,
distributor, and accounting services agent.
o Prepare and maintain materials for directors/management meetings including,
agendas, minutes, attendance records and minute books.
o Coordinate shareholder meetings, including assisting Fund counsel in
preparation of proxy materials, preparation of minutes and tabulation of
results.
o Monitor and pay Fund bills, maintain Fund budget and report budget expenses
and variances to Fund management.
o Monitor the Fund's compliance with the investment restrictions and
limitations imposed by the 1940 Act and state Blue Sky laws and applicable
regulations thereunder, the fundamental and non-fundamental investment
policies and limitations set forth in the Fund's Prospectuses and Statement
of Additional Information, and the investment restrictions and limitations
necessary for each Portfolio of the Fund to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended,
or any successor statute.
o Prepare and distribute to appropriate parties notices announcing the
declaration of dividends and other distributions to shareholders.
o Provide administrative services as may be agreed from time to time in writing
by Declaration.
Blue Sky Administration
o Produce and mail the following required filings:
o Initial Filings - produce all required forms and follow-up on any
comments, including notification of SEC effectiveness.
o Renewals - produce all renewal documents and mail to states, includes
follow-up to ensure all is in order to continue selling in states.
o Sales Reports - produce all the relevant sales reports for the states and
complete necessary documents to properly file sales reports with states.
o Annual Report Filings - file copies of all annual reports with states.
o Prospectus Filings - file all copies of Definitive SAI & Prospectuses with
the states.
o Post-Effective Amendment Filing - file all Post-Effective Amendments with the
states, as well as, any other required documents.
o On demand additional states - complete filing for any states that you would
like to add.
o Amendments to current permits - file in a timely manner any amendment to
registered share amounts.
o Update and file hard copy of all data pertaining to individual permits.
Transfer Agent, Shareholder Servicing Agent and Dividend Disbursing Agent
Services provided by Declaration Service Company
o Examine and process new accounts, subsequent payments, liquidations,
exchanges, transfers, telephone transactions, check redemptions automatic
withdrawals, and wire order trades.
o Reinvest or pay dividends and make other distributions.
o Answer investor and dealer telephone and/or written inquiries, except as
otherwise agreed by the Transfer Agent and the Fund.
o Process and confirm address changes.
o Process standard account record changes as required, i.e. Dividend Codes,
etc.
o Microfilm and/or store source documents for transactions, such as account
applications and correspondence.
o Perform backup withholding for those accounts in accordance with Federal
regulations.
o Solicit missing taxpayer identification numbers.
o Provide remote access inquiry to Fund records via Fund supplied hardware
(fund responsible for connection line and monthly fee).
o Maintain the following shareholder information in such a manner as the
Transfer Agent shall determine:
o Name and address, including zip code.
o Balance of Shares.
o Number of Shares, issuance date of each share outstanding and cancellation
date of each share no longer outstanding, if issued.
o Balance of dollars available for redemption.
o Dividend code (daily accrual, monthly reinvest, monthly cash or quarterly
cash).
o Type of account code.
o Establishment date indicating the date an account was opened, carrying
forward pre-conversion data as available.
o Original establishment date for accounts opened by exchange.
o W-9 withholding status and periodic reporting.
o State of residence code.
o Social security or taxpayer identification number, and indication of
certification.
o Historical transactions on the account for the most recent 18 months, or
other period as mutually agreed to from time to time.
o Indication as to whether phone transaction can be accepted for this
account. Beneficial owner code, i.e. male, female, joint tenant, etc.
o Provide the following reports and statements:
o Prepare daily journals for Fund reflecting all shares and dollar activity
for the previous day.
o Supply information monthly for Fund's preparation of Blue Sky reporting.
o Supply monthly purchase, redemption and liquidation information for use in
Fund's N-SAR report.
o Provide monthly average daily balance reports for the Fund.
o Prepare and mail copies of summary statements to dealers and investment
advisers.
o Mail transaction confirmation statements daily to investors.
o Address and mail four periodic financial reports (material must be
adaptable to Transfer Agent's mechanical equipment as reasonably specified
by the Transfer Agent).
o Mail periodic statement to investors.
o Compute, prepare and furnish all necessary reports to governmental
authorities: Forms 1099R, 1099DIV, 1099B, 1042 and 1042S.
o Enclose various marketing material as designated by the Fund in statement
mailings, i.e. monthly and quarterly statements (material must be
adaptable to mechanical equipment as reasonably specified by the Transfer
Agent).
o Prepare and mail confirmation statements to dealers daily.
o Prepare certified list of stockholders for proxy mailing.
<PAGE>
SCHEDULE B
Compensation Schedule for Services Provided by Declaration Service Company
Per Portfolio
- -------------
0.20% on first $25 million of average annual assets
0.15% on next $25 million of average annual assets
0.10% on next $50 million of average annual assets
0.075% in excess of $100 million of average annual assets
Transfer Agent/ Shareholder Services:
- -------------------------------------
$ 7.50 per Shareholder Account
Minimum annual fees:
- --------------------
Year one (1) $ 56,000
Year two (2) $ 67,000
Year three (3) $ 78,000
Thereafter $ 89,000
Plus out-of-pocket expenses to include, but not limited to: wire fees, Fund/SERV
and Networking fees, bank service charges, printing, copying, postage, courier,
account statement/ confirmation (including programming costs for specialized
statements/ confirmations), portfolio price quotation service, asset allocation
charges, travel, telephone, registration fees, and other standard miscellaneous
items.
Additional classes of shares per portfolio
Each category of fee ( including annual minimums) increases by 50% for the
second class of shares per portfolio, and by 25% for each additional class of
shares per portfolio.
<PAGE>
SCHEDULE C
Aapex Funds, Inc.
Portfolios covered by this Agreement:
The Aapex Equity Fund
EXHIBIT B-8
OPINION AND CONSENT OF COUNSEL
THE LAW OFFICES OF DAVID D. JONES, P.C.
518 Kimberton, # 134
Phoenixville, PA 19460
(610) 718-5382 (phone)
(610) 528-5391 (fax)
[email protected] (e-mail)
Aapex Funds, Inc. January 15, 1999
141 West Jackson Street, Suite 3602
Chicago, Illinois 60604
Dear Sirs:
As counsel to Aapex Funds, Inc. (the "Company"), a corporation organized under
the laws of the State of Maryland, I have been asked to render my opinion with
respect to the issuance of an indefinite number of shares of beneficial interest
of the Company (the "Shares") representing proportionate interests in the Aapex
Equity Fund (the "Fund"). The Shares of the Fund are a series of the Company
presently consisting of one class of shares, the No-Load Class, all as more
fully described in the Prospectus and Statement of Additional Information
contained in the Registration Statement on Form N-1A, to which this opinion is
an exhibit, to be filed with the Securities and Exchange Commission.
I have examined the Company's Articles of Incorporation, the Prospectus and
Statement of Additional Information contained in the Registration Statement, and
such other documents, records and certificates as deemed necessary for the
purposes of this opinion.
Based on the foregoing, I am of the opinion that the Shares, when issued,
delivered and paid for in accordance with the terms of the Prospectus and
Statement of Additional Information, will be legally issued, fully paid, and
non-assessable by the Company.
Further, I give my permission to use this opinion for whatever purposes needed
by the Company.
Very Truly Yours,
David D. Jones
Attorney & Counselor at Law
EXHIBIT B-9
PLAN OF DISTRIBUTION PURSUANT TO RULE 12B-1
PLAN OF DISTRIBUTION PURSUANT TO RULE 12B-1
Adopted January 29, 1999
RECITALS
1. AAPEX FUNDS, INC, a corporation organized under the laws of the State of
Maryland (the "Company") is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "Act").
2. The Company operates as a "series company" within the meaning of Rule
18f-2 under the Act and is authorized to issue shares of beneficial interest in
various series (collectively the "Funds").
3. Funds of the Company may utilize Fund assets to pay for sales or
promotional services or activities that have been or will be provided in
connection with distribution of shares of the Funds if such payments are made
pursuant to a Plan adopted and continued in accordance with Rule 12b-1 under the
Act.
4. The Aapex Equity Fund, a series of the Company (the "Fund") by virtue of
such arrangement may be deemed to act as a distributor of its shares as provided
in Rule 12b-1 under the Act and desires to adopt a Plan pursuant to such Rule
(the "Plan").
5. The Directors as a whole, and the Directors who are not interested
persons of the Company (as defined in the Act) and who have no direct or
indirect financial interest in the operation of this Plan and any agreements
relating to it (the "Qualified Directors"), having determined, in the exercise
of reasonable business judgement and in light of their fiduciary duties under
state law and under Section 36(a) and (b) of the Act, that there is a reasonable
likelihood that this Plan will benefit the Fund and its shareholders, and have
approved the Plan by votes cast in person at a meeting called for the purpose of
voting on this Plan and agreements related thereto.
6. The shareholder(s) of the Fund have approved the Plan.
PLAN PROVISIONS
SECTION 1. EXPENDITURES
(a) Purposes. Fund assets may be utilized to pay for promotional services
related to the distribution of Fund shares, including personal services provided
to prospective and existing Fund shareholders, which include the costs of:
printing and distribution of prospectuses and promotional materials; making
slides and charts for presentations; assisting shareholders and prospective
investors in understanding and dealing with the Fund; and travel and
out-of-pocket expenses (e.g. copy and long distance telephone charges) related
thereto.
(b) Amounts. The Fund will pay to Aapex Equity Advisers, Inc. (the
"Adviser") a monthly fee at an annual rate of 0.25% of the Fund's net assets,
such fee to be computed daily based on the daily average net assets of the Fund.
The Adviser shall utilize such fees to pay for sales and promotional services
related to the distribution of Fund shares, including personal services provided
to prospective and existing Fund shareholders.
SECTION 2. TERM AND TERMINATION
(a) Initial Term. This Plan shall become effective on January 29, 1999 and
shall continue in effect for a period of one year thereafter unless terminated
or otherwise continued or discontinued as provided in this Plan.
(b) Continuation of the Plan. The Plan and any related agreements shall
continue in effect for periods of one year thereafter for so long as such
continuance is specifically approved at least annually by votes of a majority of
both (a) the Directors of the Company and (b) the Qualified Directors, cast in
person at a meeting called for the purpose of voting on this Plan and such
related agreements.
(c) Termination of the Plan. This Plan may be terminated at any time by
vote of a majority of the Qualified Directors, or by vote of a majority of the
outstanding voting securities of the Fund.
SECTION 3. AMENDMENTS
This Plan may not be amended to increase materially the amount of
distribution expenditures provided for in Section 1 hereof unless such amendment
is approved by a vote of the majority of the outstanding voting securities of
the Fund, and no material amendment to the Plan shall be made unless approved in
the manner provided for annual renewal in Section 2(b) hereof.
SECTION 4. INDEPENDENT DIRECTORS
While this Plan is in effect with respect to the Fund, the selection and
nomination of Directors who are not interested persons of the Company (as
defined in the Act) shall be committed to the discretion of the Directors who
are not interested persons.
SECTION 5. QUARTERLY REPORTS
The Treasurer of the Company shall provide to the Directors and the
Directors shall review, at least quarterly, a written report of the amounts
accrued and the amounts expended under this Plan for distribution, along with
the purposes for which such expenditures were made.
SECTION 6. RECORDKEEPING
The Company shall preserve copies of this Plan and any related agreements
and all reports made pursuant to Section 5 hereof, for a period of not less than
six years from the date of this Plan, the agreements or such report, as the case
may be, the first two years in an easily accessible place.
SECTION 7. AGREEMENTS RELATED TO THIS PLAN
Agreements with persons providing distribution services to be paid for or
reimbursed under this Plan shall provide that:
(a) the agreement will continue in effect for a period of one year and will
continue thereafter only if specifically approved by vote of a majority of
the Directors of the Company;
(b) the agreement may be terminated at any time, without payment of any
penalty, by vote of a majority of (i) the Qualified Directors or (ii) the
outstanding voting securities of the Fund, on not more than sixty (60)
days' written notice to any other party to the agreement;
(c) the agreement will terminate automatically in the event of an
assignment; and
(d) in the event the agreement is terminated or otherwise discontinued, no
further payments will be made by the Fund after the effective date of such
action.
EXHIBIT B-10
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT
Aapex Funds, Inc.
141 West Jackson Street, Suite 3602
Chicago, Illinois 60604
Gentlemen:
The undersigned ("Subscriber") hereby subscribes for and agrees to acquire
from Aapex Funds, Inc., a corporation incorporated under the laws of the State
of Maryland (the "Corporation"), the number of shares of $.0001 par value Common
stock of The Aapex Equity Fund (the "Shares") of the Corporation shown below in
consideration of a cash contribution of $100,000 ($10.00 per share).
Subscriber hereby represents and warrants to the Corporation that:
(a) Subscriber hereby acknowledges and agrees that the shares will be
issued in reliance upon the exemption from registration contained in Section
4(2) of the Securities Act of 1933 (the "Securities Act"), and that such Shares
will or may also be issued in reliance upon the exemptions from registration
contained in relevant sections of the Maryland Securities Act and/or comparable
exemptions contained in the securities laws of other jurisdictions to the extent
applicable, and that the transfer of such shares may be restricted or limited as
a condition to the availability of such exemptions.
(b) The shares are being purchased for investment for the account of the
undersigned and without the intent of participating directly or indirectly in a
distribution of such Shares, and the Shares will not be transferred except in a
transaction that is in compliance with any and all applicable securities laws.
(c) Subscriber has been supplied with, or has had access to, all
information, including financial statements and other financial information, of
the Corporation, to which a reasonable investor would attach significance in
making investment decisions, and has had the opportunity to ask questions of,
and receive answers from, knowledgeable individuals concerning the Corporation
and the Shares.
(d) Subscriber understands that no registration statement or prospectus
with respect to the corporation or the shares is yet effective, and Subscriber
has made his own inquiry and analysis with respect to the Corporation and the
shares.
(e) Subscriber personally, or together with his purchaser representative,
has such knowledge and experience in financial and business matters to be
capable of evaluating the merits and risks of an investment in the Corporation
and the Shares.
(f) Subscriber is financially able to bear the economic risk of this
investment, can afford to hold the shares for an indefinite period and can
afford a complete loss of this investment
Dated as of the _______ day of January, 1999
Shares of
The Aapex Equity Fund Subscribed Purchase Amount
-------------------------------- ---------------
10,000 $100,000
SUBSCRIBED BY:
-------------------------------------
[NAME OF SUBSCRIBER]
ACCEPTED BY:
AAPEX FUNDS, INC.
-------------------------------------
ROGER A. HOUSEHOLDER
PRESIDENT
EXHIBIT B-11
FINANCIAL DATA SCHEDULE
The Company was established on September 11, 1998 and will commence offering
shares of the Fund on February 1, 1999. The Fund is a newly created fund, and as
such, has not yet developed an operating history. Financial Statements of the
Fund will be included in the Statement of Additional Information as they become
available and as required by law, [unless previously provided, in which event
the Company will promptly provide another copy, free of charge, upon request to:
Declaration Service Company, P.O. Box 844, Conshohocken, Pennsylvania
19428-0844.
