SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by Registrant [X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a6(e)
(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to paragraph 240.14a-11(c) or paragraph
240.13a-12
Declaration Fund
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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PRELIMINARY PROXY MATERIAL
DECLARATION FUND
555 NORTH LANE, SUITE 6160
CONSHOHOCKEN, PENNSYLVANIA 19428
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 16, 1998
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NOTICE IS HEREBY GIVEN that a Special Meeting of the Shareholders of
Declaration Fund (the "Company") will be held at 9:00 a.m. (Eastern Time) on
July 16, 1998 at 555 North Lane, Suite 6160, Conshohocken, Pennsylvania 19428 to
consider and to act upon the following matters:
(1) To elect seven ( 7 ) Trustees.
(2) To ratify the engagement of Sanville & Company as independent public
accountants for the Company for the fiscal year ending December
31,1998.
(3) To consider for approval a new Investment Advisory Agreement between
the Company with respect to Declaration Cash Account and Declaration
Investment Advisors, Inc.
(4) To consider and act upon such other matters as may properly come
before the Meeting.
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Only shareholders of record on the books of the Company at the close of
business on June 5, 1998 will be entitled to notice of and to vote at the
Meeting or any adjournment(s) thereof.
BY ORDER OF THE BOARD OF TRUSTEES
STEPHEN B. TILY, III
CHAIRMAN
IMPORTANT
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WE ARE ASKING FOR YOUR PROXY AND YOU ARE REQUESTED TO SEND ONE.
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PRELIMINARY PROXY MATERIALS
Proxy Statement
FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 16, 1998
This Proxy Statement is furnished in connection with matters to be voted
upon at the Special Meeting of Shareholders of Declaration Fund (the "Company")
to be held at 9:00 AM, Eastern Time, on July 16, 1998 at 555 North Lane, Suite
6160, Conshohocken, Pennsylvania 19428 and at any and at all adjournments
thereof with respect to the matters to be voted upon referred to in the
accompanying Notice.
VOTING SECURITIES AND RECORD DATE
The units of interest ("Shares") issued by the Company with respect to
Declaration Cash Account and Michigan Heritage Fund being each a separate series
of the Company, are the only outstanding voting securities. Holders of record at
the close of business on June 5, 1998 are entitled to Notice of the Meeting and
to vote at the Meeting and any adjournment(s) thereof. At the close of business
on June 5, 1998_________ shares of Declaration Cash Account and
______________shares of Michigan Heritage Fund were issued, outstanding and
entitled to vote. Each share entitles the holder thereof on the record date to
one vote at the Meeting.
This Proxy Statement is first being sent to Shareholders on or about June
10, 1998.
QUORUM
The presence, in person or by proxy, of the holders of a majority of the
outstanding voting securities of each series with respect to matters affecting
only the series is necessary to constitute a quorum and a majority of the
outstanding voting securities of the Company with respect to matters affecting
the Company is necessary to constitute a quorum at the Special Meeting. Approval
of the proposals to be presented at the meeting will require the affirmative
vote of a majority of the outstanding voting securities of the affected series
or of the Company, as appropriate, present at the Meeting.
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MATTERS AFFECTING THE COMPANY GENERALLY
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ELECTION OF TRUSTEES
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MEMBERS OF THE BOARD OF TRUSTEES
OF DECLARATION FUND AND TRUSTEE NOMINEES
ARTHUR S. FILEAN
TRUSTEE
Mr. Filean is a Trustee of Declaration Fund. Mr. Filean has served as a
Trustee of Declaration Fund during the period from December 8, 1988 to the
present. From 1983 to 1990, Mr. Filean served as a Second Vice-President of
Principal Mutual Life Insurance Company. From 1976 to the present , he has
served as Secretary of the mutual funds making up the Principal Mutual Fund
Group. In addition, he is currently Vice- President of each of the Principal
Funds. He is also a Vice President of Principal Management Corporation and of
Princor Financial Services Corporation (a principal underwriter and dealer for
mutual funds). From 1981-1986, he served as President, Treasurer and a Director
of Princor Financial Services Corporation. Age 59
STEPHEN B. TILY, III
CHAIRMAN OF THE BOARD AND TRUSTEE
PRESIDENT
Mr. Tily is a Trustee of Declaration Fund. Mr. Tily has served as a Trustee
of Declaration Fund during the period from September 1988 to the present. From
December 1988 until December 1997, he served as President of Declaration Fund.
From December 1983 until December, 1988, he served as Chairman of the Board of
Directors and Secretary of Declaration Investment Advisors, Inc. (the investment
manager of Declaration Cash Account , a series of Declaration Fund) and as
Chairman of the Board of Declaration Holdings, Inc. ( the parent company of
Declaration Investment Advisors, Inc.). >From 1981 to January 1, 1992, Mr. Tily
served as President, Chief Executive Officer and a Director of Delaware Charter
Guarantee & Trust Company ("Delaware Charter"). He became Chairman and Chief
Executive Officer of Delaware Charter on January 1, 1992. Effective December 31,
1993, Mr. Tily terminated his relationship with Delaware Charter. Age 60
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THOMAS S. STEWART, III , CFA
TRUSTEE
Mr. Stewart became a Trustee of Declaration Fund in 1994. He is the
managing principal of Stewart Associates a firm providing consulting services in
the areas of strategic planning, investment management and retirement planning.
He organized Stewart Associates upon his retirement in 1994 from service with
PNC Bank, Philadelphia, Pennsylvania. While in the employ of the Bank over a
period of thirty years, he was responsible for the management of personal and
institutional investment portfolios, was Director of Economic and Investment
Research and was responsible for the management of the Investment and Trust
lines of business. He served as Chairman of Provident Capital Management, Inc.
and Advanced Investment Management, Inc., two registered investment advisors
serving the institutional investment market. Mr. Stewart has also served as
Chairman of the Executive Committee of the American Bankers Association's Trust
and Management Division and as Chairman of its Asset Management Committee. He is
the former President of the Corporate Fiduciaries Association of Philadelphia, a
former member of the Pennsylvania Bankers Association Trust and Investment
Committee and the Philadelphia Securities Association and a former Director of
Philadelphia Financial Analysts. he is presently a member of the Association for
Investment Management and Research. Age 59
GEORGE R. STASEN*
TRUSTEE NOMINEE
Mr. Stasen is a nominee for election as a Trustee of Declaration Fund. Mr.
Stasen has served as a director or advisor to government units, foundations and
public corporations. He has structured and provided financing and investment
guidance to major corporations, investment companies, development enterprises
and municipalities. Mr. Stasen co-founded Mentor Capital Partners, Ltd., a
prominent Philadelphia based merchant banking firm in 1993. Prior to returning
to the Philadelphia area, Mr. Stasen was chief operating officer, from 1987 to
1993, of the Rushmore Group of Bethesda, Maryland, a diversified financial
services firm engaged in the management of mutual funds, institutional money
management, financial advisory services, banking and securities brokerage. From
1984 to 1987, Mr. Stasen was President and Chief Operating Officer of American &
European Investment Corporation, an international financial and investment
advisory firm headquartered in Washington, DC. From 1978 to 1984, Mr. Stasen
served as Vice President of Provident Institutional Management Corporation
(PIMC) responsible for portfolio management, investment strategy and product
development. PIMC, the advisory subsidiary of Provident National Bank,
Philadelphia, PA provided institutional investment management services,
principally to banks. Prior to joiningPIMC he was employed by Merrill Lynch &
Co., Inc. Mr. Stasen presently serves as Chairman of Gwynedd Resources, Ltd., a
Delaware holding company and Declaration Holdings, Inc. Age 52
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A. LOUIS DENTON
TRUSTEE NOMINEE
Mr. Denton is a nominee for election as a Trustee of Declaration Fund.
During the period from 1989 to the present he has been employed by Philadelphia
Corporation for Investment Services, Philadelphia, PA ( a firm providing
financial advice and services)and is currently its President and Chief Executive
Officer. Mr. Denton is a member of, among others, the Philadelphia Securities
Association, The Bond Club of Philadelphia and the Securities Industry
Association CEO Roundtable. He is also a Board Member of a number of business,
educational and charitable organizations including, First Commercial Bank of
Philadelphia, London Life Reinsurance Company, Montgomery County Community
College Foundation, The Pennington School, Chapin Memorial Home for the Aged
Blind and the National Kidney Foundation of the Delaware Valley. He is an
attorney and a former member of the Board of Governors of the Philadelphia
Securities Association. Age 39
DOW W. STEWART
TRUSTEE NOMINEE
Mr. Stewart is a nominee for election as a Trustee of Declaration Fund.
During the period from 1997 to the present, he has served as President and Chief
Executive Officer of Prime Capital Holdings, Stone Harbor, NJ ( a provider of
financial structuring,research and consulting services). From 1995 to 1996, he
served as Chief Operating Officer and Treasurer of Stone & McCarthy Research
Associates, Princeton, NJ ( a global financial markets and economic research
firm) and from 1990 to 1995 he co-founded and acted as Senior Managing Partner
and Chief Financial Officer of R.J.Walls & Company, Princeton, NJ ( an
institutional broker-dealer and an investment management firm specializing in
institutional fixed income and private client equity business). Age 53
TERENCE P. SMITH*
TRUSTEE NOMINEE
PRESIDENT
Mr. Smith is a nominee for election as a Trustee of Declaration Fund. He
was elected President of Declaration Fund in December, 1997 and continues to
serve in that capacity. From September 1988 to the present, Mr. Smith has served
as President and Chief Operating Officer of the Declaration Group of companies.
He is a Director of Declaration Distributors, Inc., a registered broker-dealer.
He is also a Trustee, Chief Financial Officer and Secretary of Pauze' Funds, a
registered investment company; from February 13, 1996 through the present.
FromSeptember 1987 to September 1988, he served as Vice- President Operations of
Declaration Holdings, Inc. ( the parent company of Declaration Investment
Advisors, Inc.) From 1984 to 1987, Mr. Smith was Executive Vice- President of
Review Management Corp. ( investment manager of the former Over- The - Counter
Securities Group, Inc. and the distributor of its shares). From 1981 to
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1984, he served on the tax and audit staff of the Philadelphia office of KPMG
Peat Marwick LLP. ( an international accounting firm). Mr. Smith is a certified
public accountant. Age 51
*: Interested person of Declaration Fund, as that term is defined in the
Investment Company Act of 1940. The term includes persons having close familial
or substantial professional or financial relationships with an investment
company or its investment advisor, principal underwriter, officers or employees.
Mr. Smith and Mr. Stasen are interested persons because each is the owner of a
beneficial interest in securities issued by Declaration Holdings, Inc., a
control person of Declaration Investment Advisors, Inc., the investment adviser
to Declaration Cash Account and because Mr. Smith is President of Declaration
Fund. There are no family relationships existing between any of the Trustee
nominees.
For the year ended December 31, 1997 fees and expenses in the amount of $8,522.
were paid to or for the non-interested Trustees of Declaration Fund. Declaration
Fund did not pay any officer salaries. The address of each Trustee and Officer
of Declaration Fund is 555 North Lane Suite 6160 Conshohocken, PA 19428. Each
non-interested Trustee is compensated at an annual rate of $2,000 plus $500 for
each meeting attended and is also reimbursed for out of pocket expenses.
Declaration Fund held 3 meetings in 1997; all of the Trustees attended at least
75% of the aggregate number of meetings.
Committees of the Board of Trustees
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The business of the Company is under the general management of the Board of
Trustees as provided by the laws of the Commonwealth of Pennsylvania. Pursuant
to authority which is granted by the Company's Bylaws, the Board has established
an audit committee. Mr. Arthur Filean is Chairman of the audit committee.
The audit committee meets with the Company's independent public accountants
for consultation if the committee deems it advisable and meets with the
accountants annually to discuss the scope and results of the annual audit of the
Company and on such other matters as the committee deems appropriate or
desirable. During 1997, the audit committee met with the independent public
accountants on one occasion.
It is intended that the shares represented by the accompanying proxy will
be voted for the election of the nominees, unless otherwise instructed on the
proxy card. If one or more of the nominees should at the time of the meeting, be
unavailable or unable to serve as a Trustee, the shares represented by the
proxies will be voted to elect the remaining nominees and any substitute nominee
or nominees designated by the Board. TheBoard does not know of any reason why
any of the nominees will be unavailable or unable to serve.
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RATIFICATION OF THE ENGAGEMENT OF AUDITORS
The accounts of the Company for the fiscal year ended December 31,1998 will
be audited by Sanville & Company( "Sanville"). The Board approved the selection
of Sanville & Company as the Company's independent accountants to audit the
accounts of the Company for the fiscal year ended December 31, 1998 at its
meeting held on December 19,1997.
A representative of Sanville & Company will be present at the meeting to
answer any questions that may arise.
Sanville & Company served as Declaration Fund's independent public
accountants for the calendar year that ended on December 31, 1997.
THE BOARD RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS RATIFY THE SELECTION
OF SANVILLE & COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998. THE VOTE OF
A MAJORITY OF THE SHARES PRESENT OR REPRESENTED BY PROXY AT THE MEETING IS
REQUIRED TO RATIFY THE SELECTION OF SANVILLE & COMPANY.
THE FOLLOWING MATTER RELATES ONLY TO DECLARATION CASH ACCOUNT
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Since December 19, 1997 Mr. Terence P. Smith, the President of the Company,
has been the sole provider of investment advisory services to Declaration Cash
Account ("Cash Account"). Mr. Smith has performed these services without
compensation. Before that date, Declaration Investment Advisers, Inc.
("Declaration I/A") served as investment manager of Cash Account pursuant to a
written agreement between the Company and Declaration I/A (the "Agreement").
Declaration I/A is a wholly owned subsidiary of Declaration Holdings, Inc.
("Holdings"). Prior to August 21, 1997, Stephen B. Tily, III and WMB Holdings,
Inc owned all of the outstanding voting stock of Holdings. On August 21, 1997,
all of the outstanding voting stock of Holdings was transferred to Terence P.
Smith, then the Secretary of the Company. On October 22, 1997, Mr. Smith
transferred 20% of the stock to Mentor Special Situations Fund (a venture
capital limited partnership), and 5% to Messers. George Stasen and Edward Sager
(the principals of Mentor Special Situations Fund). Mr. Smith now owns 75%,
Mentor Special Situations 20% and Messrs. Stasen and Sager 2 1/2 % each. The
address of each of the owners is 555 North Lane Suite 6160 Conshohocken,
Pennsylvania 19428.
Because of the change in ownership of Declaration I/A in August 1997,
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Shareholder approval of a new Agreement was required within one hundred twenty
(120) days of the change. At their December 19, 1997 Board Meeting, the
Company's Board of Trustees determined it was unlikely a quorum of Shareholders
would be present at the Shareholder Meeting which was scheduled to immediately
follow the Board of Trustee's meeting. In the event a quorum of Shareholders was
not present at the Shareholder Meeting to approve a new Agreement, and in order
to provide continued advisory services; the Board, after consultation with
counsel, determined to retain Mr. Smith as an employee of the Company to invest
and reinvest the assets of Cash Account, to serve without compensation, and at
the pleasure of the Board or until Shareholder approval of a new Agreement could
be obtained. The scheduled Shareholder Meeting was called to order, and
adjourned due to lack of a quorum.
At their meeting on May 20,1998, the Board members deemed it important that
Cash Account again have the services of Declaration I/A.
APPROVAL OF NEW INVESTMENT MANAGEMENT AGREEMENT
Under the terms of the new Investment Management Agreement (the "New
Agreement"), Declaration I/A (i) will determine the composition of Cash
Account's portfolio, the nature and timing of the changes therein and the manner
of implementing such changes and (ii) provide Cash Account and/or the Board of
Trustees with such investment advisory research and related services as Cash
Account and /or the Board of Trustees may, from time to time, reasonably
require. Declaration I/A will furnish, without cost to the Company, the services
of those of Declaration I/A's officers and full-time employees who may be duly
elected executive officers or Trustees of the Company and shall pay all
salaries, fees and expenses of the Company's interested Trustees, president,
vice-presidents, secretary and treasurer andall personnel who perform services
related to research and investment activities. Declaration I/A has also agreed
that if the aggregate expenses of the Company including the management fee but
excluding taxes, interest, brokerage commissions and extraordinary items should
exceed 2 % of the first 100,000,000 dollars of the average net assets of Cash
Account and 1 1/2 % of all in excess of 100,000,000 dollars then such excess
expenses will be paid to the Fund by Declaration I/A but only to the extent of
the management fee.
For providing such services, Declaration I/A will receive a fee, which
shall be accrued daily and paid monthly, at an annual rate of 1/2 of 1% on the
first $500,000,000 of the average net assets of Cash Account; thereafter
declining as the amount of assets increases. For the periods ending December 31,
1995, 1996 and 1997, the management fees paid to Declaration I/A were reimbursed
by Declaration I/A under an expense reimbursement provision similar to the one
set forth in the preceding paragraph.
The New Agreement will be identical in all material respects with the old
Agreement.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE APPROVAL OF THE NEW
INVESTMENT ADVISORY AGREEMENT FOR DECLARATION CASH ACCOUNT. THE VOTE REQUIRED
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TO APPROVE THE AGREEMENT IS THAT OF A MAJORITY OF THE OUTSTANDING VOTING
SECURITIES OF DECLARATION CASH ACCOUNT. A COPY OF THE PROPOSED INVESTMENT
MANAGEMENT AGREEMENT IS ATTACHED.
SECURITY HOLDERS' PROPOSALS
For those years in which annual shareholder meetings are held, proposals
which shareholders of Declaration Fund intend to present for inclusion in the
proxy materials with respect to the annual meeting of shareholders must be
received by the Fund within a reasonable period of time before the solicitation
is made.
A COPY OF THE SEMI-ANNUAL REPORT AND THE ANNUAL REPORT OF THE COMPANY FOR
THE PERIODS ENDING JUNE 30, 1997 AND DECEMBER 31, 1997, RESPECTIVELY, MAY BE
OBTAINED BY SHAREHOLDERS WITHOUT CHARGE BY WRITING TO THE COMPANY AT 555 NORTH
LANE, SUITE 6160, CONSHOHOCKEN, PENNSYLVANIA 19428 OR BY CALLING THE COMPANY AT
1-800-423-2345
ADDITIONAL INFORMATION
As of June 5, 1998, no shareholder is known to own 5% or more of the
outstanding voting securities of Declaration Fund.
In order for there to be a quorum of shares of Declaration Fund and the
shares relating to Declaration Cash Account (with respect to those matters which
relate to Declaration Cash Account)
PROMPT EXECUTION AND RETURN OF THE PROXY IS REQUESTED.
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The Board of Trustees of Declaration Fund
By: Terence P. Smith, President
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PRELIMINARY PROXY MATERIAL
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DECLARATION FUND
PROXY
KNOW ALL MEN BY THESE PRESENTS that the undersigned holder of shares of
beneficial interest of the Declaration Cash Account series and the Michigan
Heritage Fund series issued by Declaration Fund (the"Company"), a Pennsylvania
Business Trust, does hereby constitute and appoint Stephen B. Tily, III and
Terence P. Smith, or either of them , the attorneys and proxies of the
undersigned with full power of substitution and appointment, collectively and as
individuals, for and in the name, place and stead of the undersigned on the
Company's books on June 5, 1998 at the Special Meeting of the Shareholders of
the Company to be held at 555 North Lane Suite 6160 Conshohocken, Pennsylvania
19428 on July 16, 1998 at 9:00 AM and at any and all adjournments thereof upon
the following matters as indicated on the reverse side.
THIS PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT OF THE COMPANY, IT WILL
BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE HEREIN OR, IF NO
SPECIFICATION IS MADE, IT WILL BE VOTED TO ELECT AS TRUSTEES THE PERSONS NAMED
HEREAFTER; FOR THE RATIFICATION OF SANVILLE & COMPANY AS AUDITORS FOR THE
COMPANY FOR 1998, AND FOR THE APPROVAL OF THE INVESTMENT ADVISORY AGREEMENT
BETWEEN THE COMPANY WITH RESPECT TO DECLARATION CASH ACCOUNT AND DECLARATION
INVESTMENT ADVISORS, INC.;, AND AS TO ANY OTHER MATTERS WHICH MAY BE PROPERLY BE
BROUGHT BEFORE THE SPECIAL MEETING IN THE BEST JUDGMENT OF THE PERSONS NAMED
ABOVE.
PLEASE MARK BOXES IN BLUE OR BLACK INK.
1. The election of the following nominees for Trustee who shall hold office
until the next Annual Meeting of Shareholders and until their successors
are elected and qualify:
Arthur S. Filean George P. Stasen. Stephen B. Tily, III
Thomas S. Stewart, III Terence P. Smith Dow W. Stewart
A. Louis Denton
Vote for Nominees Vote withheld from nominees
You may withhold authority to vote for any nominee by lining through or
otherwise striking out his name.
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2. The ratification of Sanville & Company as Auditors for the calendar year
1998
For Against Abstain
THE FOLLOWING PROPOSAL ONLY CONCERNS DECLARATION CASH ACCOUNT SHAREHOLDERS
3. Approval of the Investment Advisory Agreement between the Trust with
respect to Declaration Cash Account and Declaration Investment Advisors,
Inc.
For Against Abstain
4. To transact any and all other business which may properly come before the
Meeting any adjournment(s) thereof; hereby ratifying and confirming all
that said attorneys and proxies may lawfully do by virtue hereof and hereby
revoking all former proxies.
Kindly sign proxy exactly as your name(s) appear(s) hereon. When signing as an
attorney, executor, administrator, trustee or guardian, please give your full
title as such. If a corporation, please sign the full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person. If the shares are held jointly, all
holders must sign.
Dated_________________1998
_____________________________
_____________________________
Signature(s) of Stockholder(s)
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE
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INVESTMENT ADVISORY AGREEMENT
BETWEEN
DECLARATION TRUST
AND
DECLARATION INVESTMENT ADVISORS, INC.
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This AGREEMENT made this 16th day of July, 1998 by and between DECLARATION
TRUST, a Pennsylvania business trust (hereinafter called the "Fund"), and
DECLARATION INVESTMENT ADVISORS, INC., a Pennsylvania corporation (hereinafter
called the "Advisor").
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 Declaration Cash Account
(the "Portfolio"); and
WHEREAS, the Advisor 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 the Advisor to render certain
investment management services to the Portfolio and the Advisor is willing to
render such services;
NOW THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows;
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1. DUTIES OF THE ADVISOR. The Advisor shall, during the term and subject to
the provision of this Agreement, (i) determine the composition of the Portfolio,
the nature and timing of the changes therein and the manner of implementing such
changes and (ii) provide the Fund and/or the Board of Trustees with such
investment advisory research and related services as the Fund and/or the Board
of Trustees may, from time to time, reasonably require. The Advisor shall
perform such duties in accordance with the applicable provisions of the Fund's
Declaration of Trust, By-Laws and current prospectus and statement of additional
information, and any directions it may receive from the Fund's Board of
Trustees.
2. EXPENSES PAYABLE BY THE FUND. The Fund shall pay all administrative and
other costs and expenses attributable to its operations and transactions,
including, without limitation, transfer agent and custodian fees; legal and
audit expenses; expenses relating to the redemption of its shares; expenses of
holding annual shareholder meetings; expenses relating to the servicing of
shareholder accounts; fees and expenses incurred in connection with the printing
and distribution of its proxy statements, stockholders reports and notices;
trade association fees, cost of supplies and postage; fees and expenses relating
to the registration of the Fund's shares under federal and state laws and
regulations; applicable federal, state and local taxes; insurance premiums; the
costs of personnel necessary to maintain the Fund's records, perform daily
pricing and service shareholder requests; interest and brokerage commissions;
and such non-recurring expenses as may arise including actions, suits or
proceedings to which the Fund is a party
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and the legal obligation that the Fund may have to indemnify its officers and
trustees with respect thereto.
The Fund will pay the fees and expenses of the non-interested Trustees of
the Fund.
3. EXPENSES PAYABLE BY THE ADVISOR. The Advisor shall furnish, without
expense to the Fund, the services of those of the Advisor's officers and
full-time employees who may be duly elected executive officers or trustees of
the Fund, subject to their individual consent to serve and to any limitations
imposed by law, and shall pay all of the salaries, fees and expenses of the
Fund's interested Trustees, president, vice-presidents, secretary and treasurer
and all personnel who perform services related to research and investment
activities.
Advisor has agreed that if the aggregate expenses of the Portfolio
including the management fee but excluding taxes, interest, brokerage
commissions and extraordinary items, should exceed 2.0% of the first $100
million of the average net assets of the Fund and 1.5% of the balance of such
average net asset value in excess of $100 million (based on a determination of
the Fund's net asset value on the last business day of each month of the year)
then such excess expenses will be paid to the Fund by the Advisor but only to
the extent of the management fee.
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4. COMPENSATION OF THE ADVISOR. The Fund shall pay to the Advisor and the
Advisor shall accept as compensation for the services provided by the Advisor a
fee calculated as follows:
.50% of the first $500 million dollars in average net assets;
.45% of the next $500 million dollars in average net assets;
.40% of the next $500 million dollars in average net assets;
and .35% of average net assets in excess of $1.5 billion.
The fee shall be accrued for each calendar day and the sum of the daily fee
accruals shall be paid monthly to the advisor on the first business day of the
next succeeding calendar month. If this Agreement becomes effective or
terminates before the end of any month, the fee for the period from the
effective date to the end of such month or from the beginning of such month to
the date of termination, as the case may be, shall be prorated according to the
proportion which such period bears to the full month in which such effectiveness
or termination occurs.
5. BROKERAGE COMMISSIONS. The Advisor or any sub-investment advisor, in
carrying out its duties, is hereby authorized, to the fullest extent now or
hereafter permitted by law, to cause the Fund to pay a member of a national
securities exchange, or a broker/dealer, an amount of commission for effecting a
securities transaction in excess of the amount of commission another member of
such exchange, or broker/dealer would have charged for effecting that
transaction, if the Advisor determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
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research services (as such services are defined under Section 28(e) of the
Securities Exchange Act of 1934, as amended) provided by such member, or
broker/dealer, viewed in terms of either that particular transaction or the
Advisor's overall responsibilities with respect to the accounts as to which it
exercises investment discretion (as such term is defined in the Securities
Exchange Act of 1934, as amended).
6. LIMITATIONS ON THE EMPLOYMENT OF THE ADVISOR. The services of the
Advisor to the Fund shall not be deemed exclusive, and the Advisor may engage in
any other business or render similar or different services to others so long as
its services to the Fund hereunder are not impaired thereby, and nothing in this
Agreement shall limit or restrict the right of any director, officer or employee
of the Advisor to engage in any other business or to devote its time and
attention in part to any other business, whether of a similar or dissimilar
nature. So long as this Agreement or any extension, renewal or amendment remains
in effect, the Advisor shall be the only investment advisor to the Fund, subject
to the Advisor's right to enter into sub-advisory agreements. The Advisor
assumes no responsibility under this Agreement other than to render the services
called for hereunder, and shall not be responsible for any action of or
direction by the Fund's Board of Trustees, or any committee thereof, or any
omission by any of them, unless such action or omission has been caused by the
Advisor's gross negligence, willful malfeasance, bad faith or reckless disregard
of its obligations and duties under this Agreement.
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7. EFFECTIVENESS, DURATION AND TERMINATION OF AGREEMENT. This Agreement
shall become effective on the day and year first above written, the requirements
of the Investment Company Act of 1940 having first been satisfied, and shall
continue in effect until December 31, 1999, unless sooner terminated. It shall
continue automatically for successive annual periods, provided that such
continuance is specifically approved at least annually by (a) the vote of the
Fund's Board of Trustees, or (b) the vote of a majority of the Fund's
outstanding voting shares, provided that in either event the continuance is also
approved by a majority of such Trustees who are not parties to this Agreement or
"interested persons" (as such term is defined in the Investment Company Act of
1940) of any such party, cast in person at a meeting called for the purpose of
voting on such approval. This Agreement may be terminated at any time, without
the payment of any penalty, on 60 days prior written notice by the vote of a
majority of the Fund's 'outstanding voting securities or by the vote of a
majority of the Fund's Board of Trustees or by the Advisor, and will
automatically terminate in the event of its "assignment" (as such term is
defined in the Investment Company Act of 1940). Any notice under this Agreement
shall be given in writing, addressed and delivered or mailed postage prepaid, to
the other party at its principal office.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
Declaration Trust
/s/ Terence P. Smith
By: __________________________
President
Declaration Investment Advisors, Inc.
/s/ Terence P. Smith
By: ___________________________
President
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