EXHIBIT 1
DECLARATION OF TRUST AS AMENDED THROUGH MAY 18, 2000
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AMERICAN FEDERATION OF LABOR
AND CONGRESS OF INDUSTRIAL ORGANIZATIONS
HOUSING INVESTMENT TRUST
DECLARATION OF TRUST
(as amended and restated through May 18, 2000)
DECLARATION OF TRUST made in Washington, D.C. by the original signatories
to this instrument (who, together with their successors in office, are
hereinafter called "Trustees").
WHEREAS, by Declaration of Trust made September 19, 1981, there was
created a trust (the "Trust") as a step in the organization of a new pooled
investment fund to be created under the auspices of the American Federation of
Labor -- Congress of Industrial Organizations ("AFL-CIO"); and
WHEREAS, the Trustees have amended the Declaration of Trust from time to
time to create an investment fund by naming the Trust the "American Federation
of Labor and Congress of Industrial Organizations Housing Investment Trust"
and by restating the Declaration of Trust in its entirety as set forth herein;
and
WHEREAS, certain subscriptions to Units in the Trust hereby created have
been and will be received from the participants whose interests are
hereinafter described,
NOW, THEREFORE, the Trustees declare that they will hold all such
contributions that they have acquired or will acquire as Trustees, together
with the proceeds thereof, in trust, in the manner and subject to the
provisions hereof, for the benefit of any and all contributors to the corpus
of the Trust (hereinafter collectively called "Participants").
ARTICLE I
Purposes
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Section 1.1. The purpose of this Trust shall be to earn a fair and secure
rate of return for its Participants by investing the pooled contributions of
all Participants principally in (a) long-term federally insured or guaranteed
real estate mortgage and construction loans and certificates representing
interests in one or more such loans and (b) obligations issued or guaranteed
by Federal National Mortgage Association ("Fannie Mae") or Federal Home Loan
Mortgage Corporation ("Freddie Mac") and obligations backed by such real
estate mortgages and construction loans. All buildings, structures and other
improvements that are to be built or rehabilitated on mortgaged real estate or
exchanged for such Trust investments must be built or rehabilitated by union
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labor except as otherwise expressly provided in Section 3.3. The Trust may
make investments that are not federally insured or guaranteed only as and to
the extent provided in Section 3.3 hereof.
ARTICLE II
Name and Trustees
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Section 2.1. The Trust shall be named "The American Federation of Labor
and Congress of Industrial Organizations Housing Investment Trust". The
Trustees shall manage the Trust property, execute all instruments in writing,
and do all other things relating to the Trust. Every duly authorized
instrument executed in the name of the Trust shall have the same effect as if
executed in the name of the Trustees.
Section 2.2. There shall be up to twenty-five voting Trustees and such
non-voting members of the Board of Trustees as provided by Section 2.10
hereof.
Section 2.3. (a) Up to twelve of the Trustees (hereinafter the "Union
Trustees") shall be officers or employees of the AFL-CIO or an AFL-CIO member
union; (b) up to twelve of the Trustees (hereinafter the "Management
Trustees") shall be (i) officers or management employees of one or more
organizations contributing directly or indirectly through contractors to an
Eligible Pension Plan as defined in Section 5.2 hereof, or officers or
management employees of such an Eligible Pension Plan, or (ii) with respect to
not more than four of the Management Trustees, an officer, director, or
trustee of an organization connected in whole or in part with the housing,
finance, or real estate development industries, or an elected or appointed
official of the federal or any state or local government or an agency or
instrumentality thereof; and (c) one Trustee (hereinafter the "Chairman")
shall be an individual who is neither an officer, trustee, or employee of any
organization that is a Participant in the Trust. The number of Management
Trustees shall not exceed the number of Union Trustees except as the result of
a vacancy during an unexpired term caused by death or resignation.
Section 2.4. The Union and Management Trustees shall be divided into up
to three classes ("Classes") in respect to term of office, provided that no
new Class shall be established if any existing Class has less than five
Trustees. No Class shall have more than eight Trustees. Each Class shall
have, insofar as the population of Trustees permits, an equal number of Union
and Management Trustees and, upon the appointment of one or more new Trustees,
the Trustees shall alter Class assignments as required to comply with the
provisions of this sentence. The term of the first Class of Trustees shall
expire at the first annual meeting of Participants, the term of the second
Class shall expire at the second annual meeting of Participants, and the term
of the third Class shall expire at the third annual meeting of Participants.
After the expiration of the initial terms as set forth above, the term of each
Class of Trustee shall expire at the third annual meeting following its
election. At each annual meeting, the Participants shall elect a Chairman to
serve until the next annual meeting and such number of Trustees as necessary
to fill vacancies in the Class of Trustees whose terms expire as of such
meeting. Each Trustee shall serve until his successor shall be elected and
shall qualify.
Section 2.5. A Trustee shall be an individual at least twenty-one years
of age who is not under legal disability and who shall have in writing
accepted his or her appointment and agreed to be bound by the terms of this
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Declaration of Trust. The Trustees, in their capacity as Trustees, shall not
be required to devote their entire time to the business and affairs of the
Trust.
Section 2.6. All Trustees shall serve their full terms unless they
resign or die. Any Trustee can resign at any time by giving written notice to
the other Trustees, to take effect upon receipt of the notice or such later
date as the notice specifies.
Section 2.7. Upon the death or resignation of any Union Trustee, the
remaining Union Trustees shall appoint by a majority vote a replacement to
serve out the remainder of the term (with the Chairman, if any, voting only in
case of a tie). Upon the death or resignation of any Management Trustee, the
remaining Management Trustees shall appoint by majority vote a replacement to
serve out the remainder of the term (with the Chairman, if any, voting only in
case of a tie). Upon the death or resignation of the Chairman, the Union and
Management Trustees together shall appoint by majority vote a replacement to
serve out the remainder of the term.
Section 2.8. The death or resignation of one or more Trustees shall not
annul the Trust or revoke any existing agency created pursuant to the terms of
this Declaration of Trust. Whenever a Trustee's position becomes vacant
because of the Trustee's death or resignation the other Trustees shall have
all of the powers specified in this Declaration of Trust until such vacancy is
filled.
Section 2.9. The Chairman, Management Trustees and non-voting members
may be compensated for their services as provided by the Board of Trustees.
No Union Trustee shall receive any compensation or fee for his services as
Trustee. Trustees and non-voting members shall be reimbursed for expenses of
attending meetings of the Board of Trustees and committees thereof.
Section 2.10. The Chief Executive Officer, upon his or her retirement or
resignation, may be appointed by the Executive Committee, subject to approval
by the Board of Trustees, as a non-voting member of the Board of Trustees,
with the right to attend meetings and participate in discussions, for an
initial term not to exceed five years.
ARTICLE III
Powers
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Section 3.1. The Trustees shall have power to do all things proper or
desirable in order to carry out, promote, or advance the purpose of the Trust
even though such things are not specifically mentioned in this Declaration of
Trust. Any determination as to what is in the interests of the Trust made by
the Trustees in good faith shall be conclusive.
Section 3.2. The Trustees shall have without further authorization, full,
exclusive, and absolute power, control, and authority over the Trust property
and over the business of the Trust to the same extent as if the Trustees were
the sole owners of the Trust property and business in their own right, subject
to such delegation as may be permitted in this Declaration of Trust. The
enumeration of any specific powers or authority herein shall not be construed
as limiting the aforesaid powers or authority or any specific power or
authority. In construing the provisions of this Declaration of Trust the
presumption shall be in favor of a grant of power to the Trustees.
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Section 3.3. The Trustees shall have each of the following specific
powers and authority in the administration of the Trust, to be executed in
their sole discretion exercised in accordance with their fiduciary duties
under the Investment Company Act of 1940, as amended ("Investment Company
Act"):
(a) To invest in construction and/or long-term mortgage
loans or mortgage-backed securities that are guaranteed or insured by the
federal government or an agency thereof or interests in such mortgage loans or
securities; and
(b) To invest in securities that are secured by securities
and/or mortgage loans of the type described in paragraph (a) above and that
are rated in one of the two highest rating categories by at least one
nationally recognized statistical rating agency; and
(c) To invest in (i) obligations issued or guaranteed by Fannie
Mae or Freddie Mac, or (ii) securities that are backed by Fannie Mae or
Freddie Mac and are, at the time of their acquisition by the Trust, rated in
one of the two highest rating categories by at least one nationally recognized
statistical rating agency; and
(d) To invest up to 30 percent of the value of all of the
Trust's assets in any of the following:
(i) Construction and/or permanent loans, or securities
backed by construction and/or permanent loans, or interests in such loans or
securities, provided that:
(A) such loans or securities are supported by a
full faith and credit guaranty of a state or local government or agency or
instrumentality thereof that has general taxing authority; or
(B) such loans or securities are issued (with or
without recourse) or guaranteed, as the case may be, by a state or local
housing finance agency designated "top tier" by S&P (or designated comparably
by another nationally recognized statistical rating agency, as determined by
the Executive Committee of the Trust) at the time of acquisition by the Trust;
and are (i) with full recourse (directly or by way of guaranty or indemnity)
to such agency's general credit and assets, or (ii) secured by recourse to
such assets of the agency or by such third party credit enhancement as to
provide, in the judgment of management, protection comparable to a pledge of
the agency's general credit, or (iii) backed by the "moral obligation" of the
state in which such agency is located in the form of the state's commitment to
replenish any insufficiencies in the funds pledged to debt service on the
obligations; or
(C) such loans or securities are supported by a
guaranty of at least the first 75 percent of the principal amount of such
loans or securities under a state insurance or guarantee program by a
state-related agency with a record of creditworthiness as evidenced by a
rating of the agency or the obligations issued or guaranteed by such agency of
at least "A-" by S&P, Fitch Investors Services Inc. ("Fitch") or Duff & Phelps
Inc. ("Duff & Phelps") or at least "A3" by Moody's at the time of their
acquisition by the Trust; or
(D) such loans or securities are issued or
guaranteed, as the case may be, by a state or local housing finance agency
with a general obligation rating of "A" or better by S&P (or a comparable
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rating by another nationally recognized statistical rating agency, as
determined by the Executive Committee of the Trust) at the time of acquisition
by the Trust; and are (i) with full recourse (directly or by way of guaranty
or indemnity) to such agency's general credit and assets or (ii) backed by the
"moral obligation" of the state in which such agency is located, in the form
of the state's commitment to replenish any insufficiencies in the funds
pledged to debt service on the obligations or similar commitment; or
(E) such loans are made by a state or local
government or an agency or instrumentality thereof, including a state or
municipal housing finance agency, and such loans or the securities backed by
such loans are fully collateralized or secured in a manner satisfactory to the
Trust by:
(I) cash placed in trust or in escrow by a
state or local government or agency or instrumentality thereof with an
independent third party satisfactory to the Trust on terms and conditions
satisfactory to the Trust; or
(II) a letter of credit, insurance or other
guaranty from an entity satisfactory to the Trust which has a rating (at the
time of the Trust's acquisition of the related loan, securities or interests
in such loans or securities) which is at least "A" or better from S&P (or a
comparable rating by another nationally recognized statistical rating agency,
as determined by the Executive Committee of the Trust); or
(F) such loans are made by any lender acceptable
to the Trust and such loans or the securities backed by such loans are fully
collateralized or secured in a manner satisfactory to the Trust by:
(I) cash placed in trust or in escrow by a
state or local government or agency or instrumentality thereof with an
independent third party satisfactory to the Trust on terms and conditions
satisfactory to the Trust; or
(II) a letter of credit, insurance or other
guaranty from an entity satisfactory to the Trust which has a rating (at the
time of the Trust's acquisition of the related loan, securities or interests
in such loans or securities) which is at least "A" or better from S&P (or a
comparable rating by another nationally recognized statistical rating agency,
as determined by the Executive Committee of the Trust).
(ii) Construction and/or permanent loans, or
securities backed by construction and/or permanent loans or interests in such
loans or securities, that have evidence of support by a state or local
government or an agency or instrumentality thereof, provided that the total
principal amount of investments made under this section outstanding from time
to time shall not exceed 4 percent of the value of all of the Trust's assets
and all of the following criteria are satisfied:
(A) the loan-to-value ratio of the project shall not
exceed 60 percent, the "value" for such purposes to be determined on the basis
of an independent appraisal by a licensed appraiser acceptable to the Trust,
except that a loan-to-value ratio of up to 75 percent shall be permitted if
(1) mortgage insurance in an amount which will cover all losses down to a 60
percent loan-to-value level has been provided by a mortgage insurance provider
rated at least "A" or better by S&P (or a comparable rating by another
nationally recognized statistical rating agency, as determined by the
Executive Committee of the Trust); or (2) another form of guaranty or credit
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support of the Trust's investment which will cover all losses down to a 60
percent loan-to-value level and which is provided by a guarantor rated "A" or
better by S&P (or a comparable rating by another nationally recognized
statistical rating agency, as determined by the Executive Committee of the
Trust) at the time of acquisition by the Trust; or (3) the project receives
the benefits of low income housing tax credits pursuant to section 42 of the
Internal Revenue Code, as amended, in accordance with the standards adopted by
the Executive Committee;
(B) the state or local government or agency or
instrumentality thereof or a foundation exempt from federal income tax under
Section 501(c) of the Internal Revenue Code of 1986, as amended, must make or
facilitate a financial contribution in the project within guidelines adopted
by the Executive Committee of the Trust, such financial contribution to be in
the form of subordinate financing, an interest rate write-down, a donation of
land, an award of tax credits, grants or other financial subsidy, a form of
insurance or guarantee or some other similar contribution all within
guidelines adopted by the Executive Committee of the Trust;
(C) the development and ownership team of the project
must have a demonstrably successful record of developing or managing
low-income housing projects, in accordance with guidelines to be developed by
the Trust;
(D) the underwriter and servicer of the mortgage loan
for the project must have been approved by the Trust; and
(E) the minimum debt service coverage for the project
must be at least 1.15, based upon projections of future income and expenses
satisfactory to the Trust.
(iii) Bridge loans made to the owners of single family or multifamily
housing developments which are eligible to receive and have allocations or
other rights to receive Low Income Housing Tax Credits under Section 42 of the
Internal Revenue Code of 1986, as amended, or interests in such loans,
provided that all of the following criteria are satisfied:
(A) at the time of the Trust's acquisition of such investment, such
investment must be:
(I) are issued or guaranteed by a state or
local housing finance agency designated "top tier" by S&P (or designated
comparably by another nationally recognized statistical rating agency, as
determined by the Executive Committee of the Trust) with full recourse to the
assets and credit of such agency (or in lieu of such full recourse, secured by
such third party credit enhancement as to provide, in the judgment of
management, security comparable to full recourse to the assets and credit of
such agency); or
(II) issued (with recourse) or guaranteed by a state or local agency
which has a long term credit rating of "A" or better by S&P (or a comparable
rating by another nationally recognized rating agency approved by the
Executive Committee of the Trust) for a bridge loan with a term of longer than
12 months and a short-term rating of A-1 or better by S&P (or a comparable
rating by another nationally recognized rating agency approved by the
Executive Committee of the Trust) for a bridge loan with a term of less than
12 months;
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(III) issued (with recourse) or guaranteed by FHA, GNMA, Fannie Mae,
Freddie Mac or another entity with a credit rating of "AA" or better by S&P
(or a comparable rating by another nationally recognized rating agency
approved by the Executive Committee of the Trust) or fully collateralized by
obligations issued (with recourse) or guaranteed by FHA, GNMA, Fannie Mae or
Freddie Mac or another entity with a credit rating of "AA" or better by S&P
(or a comparable rating by another nationally recognized rating agency
approved by the Executive Committee of the Trust); or
(IV) fully collateralized by a letter of credit or other guaranty by
a bank or other financial entity with a credit rating of "AA" or better by S&P
(or a comparable rating by another nationally recognized rating agency
approved by the Executive Committee of the Trust) or a bank rated in category
"B" or higher by Thomson Bankwatch;
(B) at the time of the Trust's acquisition of such investment, the
Trust is committed to invest in the construction and/or permanent loan for the
related development, unless the permanent loan for the development is
anticipated to have an original principal balance which is less than $1
million or is anticipated to be financed primarily on a tax-exempt basis; and
(C) not more than 5% of the Trust's assets may at any time be
invested in bridge loans (or interests in bridge loans) acquired pursuant to
this Section 3.3(d)(v); and
(e) To invest in mortgage loans, or securities or obligations
backed by mortgage loans, described in paragraph (a) or paragraph (c) of this
Section 3.3 that include provisions:
(i) Requiring the borrower to pay, in addition to all
payments of principal and base interest insured or guaranteed by the federal
government, an agency thereof, or by Fannie Mae or Freddie Mac, additional
interest based on net or gross cash flow and/or net or gross proceeds upon the
sale, refinancing or disposition of the mortgaged real estate properties which
is not guaranteed or insured, or
(ii) Requiring the borrower to pay the principal
balance of the mortgage loan in full prior to its scheduled maturity.
In negotiating investments with participating features or
rights to demand early repayment, the Trust may accept a base interest rate of
up to 2 percent per annum lower than the rate which it would otherwise be
willing to receive in the absence of such features; and
(f) To invest in construction and/or permanent loans, or
securities or obligations backed by construction and/or permanent loans which
are supported, either concurrently or sequentially, by any combination of two
or more of the types of credit enhancement described in paragraphs (a) through
(d) of this section, as long as all of the principal component of such loans
or securities or obligations backed by such loans are fully collateralized by
one or more of the different types of the credit enhancement described in
paragraphs (a) through (d) of this section; provided, however, that the
principal portion of any investment made pursuant to this paragraph which is
secured by one of the types of credit enhancement described in paragraph (d)
of this section shall be subject to the 30 percent limitation set forth in
paragraph (d) of this section; and
(g) If necessary or desirable to facilitate any investment by the
Trust permitted under paragraphs (a) through (f) of this section, to deposit
the purchase price for the loan, securities, interests in loans or other
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obligations to be acquired by the Trust in an escrow account which is
structured and secured in a manner acceptable to the Trust and consistent with
the provisions of the Investment Company Act of 1940, as amended, until the
purchase price is disbursed, either in a lump sum or over time, to fund the
Trust's purchase of such investment, provided that (i) all monies in such
escrow must be invested, as fully and as continuously as practical, in
instruments in which the Trust is permitted to invest under paragraph (m) of
this section or (ii) all monies in such escrow must be secured or supported by
one or more of the different types of credit enhancement described in
paragraphs (a) through (d) of this section; and
(h) To sell any asset held by the Trust; and
(i) To renew or extend (or to participate in the renewal or
extension of) any mortgage construction loan; and
(j) To borrow from any bank, provided that immediately after
such borrowing there is an asset coverage of at least 300 percent of all
borrowings of the Trust and provided further that in the event that such asset
coverage shall at any time fall below 300 percent the Trust shall within three
days thereafter (not including Sundays and holidays) reduce the amount of its
borrowings to an extent that the asset coverage of such borrowings shall be at
least 300 percent; and
(k) To manage, administer, operate, lease for any number of
years, or sell any real estate acquired by reason of foreclosure by the Trust
and to hold such property in the name of the Trust or its nominees; and
(l) To take title to real estate in lieu of its foreclosure
sale; and
(m) To invest money held pending investment in mortgages or
construction loans in any of the following instruments:
(i) United States Treasury issues;
(ii) Federal agency issues;
(iii) Commercial bank time certificates of deposit of
banks whose accounts are insured by the Federal Deposit Insurance Corporation
through its Bank Insurance Fund ("BIF");
(iv) Savings bank deposits (insured by the Federal
Deposit Insurance Corporation through BIF);
(v) Savings and loan association deposits (insured by
the Federal Deposit Insurance Corporation through its Savings Association
Insurance Fund);
(vi) Bankers acceptances;
(vii) Commercial paper rated as category A-1 or P-1 by
S&P or Moody's;
(viii) Collateral loans (including warehousing
agreements) secured by Federal Housing Administration or Veterans
Administration guaranteed single-family or multi-family mortgages;
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(ix) Interests (including repurchase agreements) in
U.S. Government securities pledged by a bank or other borrower to secure
short-term loans from the Trust; and
(x) Securities issued by an investment company
registered under the Investment Company Act that invests predominantly in
United States Treasury issues or Federal agency issues; and
(n) To employ suitable counsel; and
(o) To employ banks or trust companies to act as
depositories or agents; and
(p) To engage in and to prosecute, compound, compromise,
abandon, or adjust by arbitration or otherwise any actions, suits,
proceedings, disputes, claims, or demands relating to the Trust property to
pay any debts, claims, or expenses incurred in connection therewith, including
those of litigation, upon any evidence that the Trustees may deem sufficient
(these powers to apply whether or not the Trust is named as a party or any of
the Trustees are named individually); and
(q) To form corporations, partnerships, or trusts upon such
terms and conditions as the Trustees deem advisable; and
(r) To purchase, sell, and hold legal title to any
securities or other property including Certificates of Interest in the Trust
upon such terms and conditions as the Trustees deem advisable; and
(s) To purchase, lease, or rent suitable offices for the
transaction of the business of the Trust; and
(t) To appoint, employ, or contract with any person or
persons as the Trustees deem necessary or desirable for the transaction of the
business of the Trust, including any person who, under the supervision of the
Trustees and consistent with the Trustees' ultimate responsibility to
supervise the affairs of the Trust, may, among other things:
(i) Administer the day-to-day operations of the Trust;
(ii) Serve as the Trust's adviser and consultant in
connection with policy decisions made by the Trustees;
(iii) Furnish reports to the Trustees and provide
research, economic, and statistical data to the Trustees; and
(iv) Act as accountants, correspondents, technical
advisers, attorneys, brokers, underwriters, fiduciaries, escrow agents,
depositories, insurers or insurance agents, transfer agents, or registrars for
Units, or in any other capacity deemed necessary or desirable by the Trustees;
and
(u) To purchase, maintain and pay for entirely out of Trust
property insurance policies insuring any person who is or was a Trustee,
officer, employee, or agent of the Trust or who is or was serving at the
request of the Trust as a director, officer, employee or agent of another
person individually against any claim or liability of any nature asserted
against him or incurred by him in any such capacity, or arising out of his
status as such, whether or not the Trust would otherwise have the power to
indemnify such person against such liability; and
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(v) To execute and deliver as Trustees hereunder any and
all deeds, leases, mortgages, conveyances, contracts, waivers, releases, and
other instruments in writing necessary or proper for the accomplishment of the
purposes of the Trust; and
(w) To pay out of the funds of the Trust property any and
all taxes or liens imposed upon or against the Trust property or any part
thereof, or imposed upon any of the Trustees herein, individually or jointly,
by reason of the Trust property, or of the business conducted by the Trustees
under the terms of this Declaration of Trust; and
(x) To issue, purchase, or sell Units in the Trust either
for cash or for property whenever and in such amounts as the Trustees deem
desirable, but subject to the limitations specified below; and
(y) To make distributions of net income to Participants, in
the manner specified below; and
(z) To determine whether money or other assets received by
the Trust shall be charged to income or capital or allocated between income
and capital; and
(aa) To determine conclusively the value of any of the
Trust property and of any services, securities, assets, or other consideration
hereafter acquired by the Trust, and to revalue Trust property; and
(bb) To make, adopt, amend, and repeal such rules and
regulations (not inconsistent with the terms of this Declaration of Trust) as
the Trustees deem necessary or desirable for the management of the Trust and
for the government of themselves, their officers, agents, employees, and
representatives; and
(cc) To issue new Units of the Trust in exchange for assets
of the AFL-CIO Mortgage Investment Trust ("Mortgage Trust") on the basis of
relative net asset values, provided that: the Board of Trustees of the Trust
(including a majority of the Trustees who are not interested persons of either
the Trust or the Mortgage Trust) find that the exchange is in the best
interests of the Trust and that the interests of existing Participants in the
Trust will not be diluted as a result of its effecting the transactions; and
provided further that the United States Securities and Exchange Commission
("SEC") issues an Order of Exemption under Section 17 of the Investment
Company Act, having found that: (1) the terms of the proposed transaction,
including the consideration to be paid or received, are reasonable and fair
and do not involve overreaching on the part of any person concerned; (2) the
proposed transaction is consistent with the policy of the Trust and the
Mortgage Trust as recited in their registration statements and reports filed
with the SEC under the Investment Company Act; and (3) the proposed
transaction is consistent with the general purposes of the Investment Company
Act.
ARTICLE IV
Operations
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Section 4.1. The principal office of the Trust shall be in Washington,
D.C., unless changed to another location by a majority vote of the Trustees.
The Trust may have such other office or places of business as the Trustees
determine necessary or expedient.
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Section 4.2. The Chairman shall be the chairman of the Board of
Trustees. The Trustees may select from among themselves an Executive
Committee (chaired by the Chairman) to whom the Trustees may delegate
appropriate power to carry on the business of the Trust. The Trustees may
elect or appoint, from among their number or otherwise, or may authorize the
Chairman to appoint, such other officers or agents to perform functions on
behalf of the Trustees as the Trustees or Chairman deemed advisable.
Section 4.3. The Trustees shall meet at the Chairman's request or as
specified in rules and regulations of the Trustees, but in no event less than
once each year. Action by the Trustees may also be taken by them in writing.
A quorum for doing business shall be a majority of the Trustees entitled to
vote, but never less than three.
Section 4.4. The Trustees may authorize one or more of their number to
sign, execute, acknowledge, and deliver any note, deed, certificate, or other
instrument in the name of, and in behalf of, the Trust, and upon such
authorization such signature, acknowledgment, or delivery shall have full
force and effect as the act of all of the Trustees. The receipt of the
Trustees, or any of them, or any of the officers or agents thereunto
authorized, for money or property paid or delivered to them, or any of them,
shall be an effectual discharge therefor to the person paying or delivering
such money or property.
Section 4.5. This Declaration of Trust may be amended or altered by a
majority of the Trustees at any time. The Trust may be terminated at any time
by the Trustees after notice in writing to all Participants. Upon such
termination, the Trust shall carry on no business except for the purpose of
winding up its affairs, the Trustees shall return all powers given to them
under this Declaration of Trust until the Trust shall have been wound up, and,
after paying or adequately providing for the payment of all liabilities, the
Trustees shall distribute the Trust property to the Participants according to
their respective rights.
Section 4.6. A majority of the Trustees may: (a) select or direct the
organization of a corporation, association, trust, or other organization to
take over the Trust property and carry on the affairs of the Trust; (b) sell,
convey, and transfer the Trust property to any such organization in exchange
for shares, securities, or beneficial interests therein, and the assumption by
such transferee of the liabilities of the Trust; and (c) thereupon terminate
the Trust and deliver such shares, securities, or beneficial interest
proportionately among the Participants in redemption of their Units.
Section 4.7. No Trustee shall be liable for having acted in good faith
in any transaction connected with the Trust or the administration of the
Trust. The Trustees shall be held harmless in acting upon any instrument,
certificate, or paper that they believe to be genuine and to be signed or
presented by the proper person or persons. The Trustees shall have no duty to
make any investigation or inquiry concerning any statement contained in any
such writing. No recourse shall be had at any time upon any note, bond,
contract, instrument, certificate, undertaking, obligation, covenant, or
agreement (whether oral or written) made, issued, or executed by the Trustees
in pursuance of the terms of this Declaration of Trust, or by any officer or
agent of the Trustees, against the Trustees or such officer or agent
individually by legal or equitable proceeding, except only to compel the
proper application or distribution of the Trust property, provided that no
Trustee shall be excused from liability for willful malfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct
of his office ("disabling conduct"). The Trustees shall not be liable for the
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<PAGE> proper application of any part of the Trust property, provided that
distribution are made in accordance with directions provided in this
Declaration of Trust. Nothing contained in this Declaration of Trust shall be
construed as giving power to the Trustees to contract any debt or to do
anything that will bind any Participant personally. Any person, firm,
corporation, or association dealing with the Trustees shall be limited to
satisfying any obligation, liability, or covenant with the Trustees only out
of the Trust property, and not out of the personal property of any
Participant.
Section 4.8. The Trust shall indemnify each Trustee and officer and each
former Trustee and officer of the Trust against fines, judgments, amounts paid
in settlement and expenses, including attorneys' fees, actually and reasonably
incurred in connection with any pending or threatened criminal action, civil
suit or administrative or investigative proceeding (any "matter") against him
or her arising by reason of the fact that he or she is or was a trustee or
officer of the Trust, or by reason of actions taken by him or her as such
Trustee or officer, if it is found that his or her liability does not result
from disabling conduct. The finding that liability does not arise from
disabling conduct may be made in a final decision by a court or other body
before which the matter giving rise to the expense or liability was brought
or, in the absence of such a decision, by (a) the vote of a majority of a
quorum of Trustees who are neither "interested persons" of the Trust as
defined in Section 2(a)(19) of the Investment Company Act nor parties to such
matter ("disinterested non-party Trustees") or (b) an independent legal
counsel in a written opinion. Expenses of the kind eligible for
indemnification may be paid as incurred by a trustee or officer in advance of
final disposition of a matter upon receipt of an undertaking by the recipient
to repay such amount unless it is ultimately determined that he is entitled to
indemnification hereunder if (a) the indemnitee provides security for his or
her undertaking, (b) the Trust is insured for losses arising by reason of any
lawful advances or (c) a majority of a quorum of disinterested non-party
Trustees or independent legal counsel (in a written opinion) determines, based
on a review of readily available facts, that there is reason to believe that
the indemnitee ultimately will be found entitled to indemnification. This
Section is intended to provide indemnification to Trustees and officers to the
full extent permitted by law and shall be construed and enforced to that
extent.
Section 4.9. The Trustees and any employee or agent of the Trustees
(except a bank or trust company) who handles funds or other property of the
Trust shall be bonded for the faithful discharge of his or her duties in such
amount and as otherwise required by applicable law. The expenses of such bond
shall be paid by the Trust.
Section 4.10. No person dealing with the Trustees shall be bound to make
any inquiry concerning the validity of any transaction purporting to be made
by the Trustees, or be liable for the application of money or property paid,
loaned, or delivered. Every note, bond, contract, instrument, certificate, or
undertaking, and every other act or thing executed or done by any Trustee in
connection with the Trust, shall be conclusively taken to have been executed
or done only in his or her capacity as Trustee, and such Trustee shall not be
personally liable thereon. Every such note, bond, contract, certificate or
undertaking made or issued by the Trustees shall recite that it is executed or
made by them not individually, but as Trustees, and that the obligations of
any such instrument are not binding upon any of the Trustees individually, but
bind only the Trust property, and may contain any further recital that they
may deem appropriate, but the omission of such recital shall not operate to
bind the Trustees individually.
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Section 4.11. The Trustees shall be reimbursed from the Trust property
for their expenses and disbursements, including expenses for clerks, transfer
agents, office hire, and counsel fees, and for all losses and liabilities by
them incurred in administering the Trust and for the payment of such expenses,
disbursements, losses, and liabilities, the Trustees shall have a lien on the
Trust property prior to any rights or interests of the Participants.
Section 4.12. This Declaration of Trust shall be construed, regulated,
and administered under the laws of the District of Columbia and in the courts
of the District of Columbia.
ARTICLE VI
Units and Distributions
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Section 5.1. The beneficial interests of the Trust shall be divided into
equal portions ("Units"). In lieu of issuing certificates to evidence
ownership of such Units, the Trustees may establish a book-entry system
whereby Units may be issued and redeemed by bookkeeping entry and without
physical delivery of the securities. The number of Units shall be fixed from
time to time by the Trustees and such number may be increased or reduced by
them. Nothing herein shall be deemed a limitation on the rights of the
Trustees to issue additional Units ranking with the same rights and privileges
as existing Units. The Trustees shall have the right to sell or exchange such
additional Units without offering the same to the holders of the
then-outstanding Units.
Section 5.2. Only Labor Organizations and Eligible Pension Plans as
defined in this section shall be eligible to own Units of the Trust or to hold
Units in the Trust. A "Labor Organization" means any organization of any
kind, any agency, employee representation committee, group, association or
plan in which employees participate directly or through affiliated
organizations, and which exists for the purpose, in whole or in part, of
dealing directly or through affiliated organizations with employers concerning
grievances, labor disputes, wages, rates of pay, hours or other terms or
conditions of employment and any employee benefit plan of such an
organization, or any other organization which is, in the discretion of the
Board of Trustees, affiliated with or sponsored by such an organization. An
"Eligible Pension Plan" is a pension plan constituting a qualified trust under
Section 401(a) of the Internal Revenue Code or any successor statute thereto
which has beneficiaries who are represented by a Labor Organization and the
management of which has the discretionary right to invest funds of
beneficiaries without the direct intervention or control of those
beneficiaries. Units will not be transferable or assignable. No holder of a
Unit will have the authority to pledge its Unit as collateral for any loan.
Section 5.3. The Trust shall be administered and invested as a unit and
shall be valued at fair values as determined by the Trustees as of the close
of business at the end of each calendar month (hereinafter "Valuation Dates").
On the basis of the valuation made on the Valuation Date, the beneficial
interest of each Participant shall be adjusted to reflect the effect of income
(collected or accrued), realized and unrealized gains and losses, expenses,
and all other transactions since the last preceding Valuation Date. Such
valuations and adjustments shall be made so as to preserve for each
Participant its beneficial interest in the Trust.
Section 5.4. The Trustees shall as of each Valuation Date declare
dividends of net income earned during each month. Such distributions will be
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payable after the end of each calendar quarter and will be made in cash,
except that on written request of a Participant, distribution can be made in
Units of the Trust valued as of the distribution date provided that such
automatic reinvestment of income distribution does not subject the Trust to
adverse consequences in the opinion of legal counsel for the Trust.
Section 5.5. Notwithstanding anything to the contrary contained in this
Declaration of Trust or in any amendment thereto, no part of the Trust that
equitably belongs to any Participant (other than such part as is required to
pay the expenses of the Trust) shall be used for any purpose other than the
exclusive benefit of the Participant.
Section 5.6. The Trustees shall render from time to time an accounting
of the Trust's transactions. A copy of such accounting will be made available
to each Participant. No person other than a Participant may require an
accounting or bring any action against the Trustees with respect to the Trust
or because of any Trustee's actions on behalf of the Trust.
Section 5.7. In case of the loss or destruction of any certificate, the
Trustees may, under such terms as they deem expedient, issue a new certificate
in place of the one so lost.
ARTICLE VI
Admissions to and Withdrawals from Trust
Section 6.1. No admission to or withdrawal from the Trust shall be
permitted except in Units. Units shall be issued and redeemed only as of a
Valuation Date and may be issued and redeemed in fractions of a Unit. A
request for issuance of Units must be received by the Trust before the
Valuation Date as of which they are to be issued. A request for redemption of
Units must be received by the Trust at least 15 days before the Valuation Date
as of which they are to be redeemed. No issue of Units will be made to any
new Participant having a value of less than Fifty Thousand Dollars ($50,000).
Any request for redemption of Units made between Valuation Dates will be
considered as having been made 15 days before the next ensuing Valuation Date
and will be honored only as of such date.
Section 6.2. Payment in satisfaction of a duly tendered request for
redemption shall be made as soon as practicable and in any event within seven
days after the net asset value of the Trust is ascertained for the Valuation
Date as of which redemption is effected.
Section 6.3. Upon the agreement of the redeeming Participant, the Trust
may give securities and/or mortgages or other Trust assets in partial or full
satisfaction of a duly tendered request for redemption. Such securities
and/or mortgages will be treated for redemption purposes as being the cash
equivalent of their value of the Valuation Date before the date on which
redemption was requested.
