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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
Keystone America Omega Fund, Inc.
(Name of Registrant as Specified in its Charter)
John Hand, Esq.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[x] $125 per Exchange Act Rule 0-11(c)(l)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transactions applies:
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:\1/
4) Proposed maximum aggregate value of transaction:
\1/ Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] 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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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KEYSTONE AMERICA OMEGA FUND, INC.
200 BERKELEY STREET
BOSTON, MASSACHUSETTS 02116-5034
TELEPHONE NUMBER (617) 338-3200
NOTICE OF MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL , 1995
To the Stockholders:
A meeting of the stockholders of Keystone America Omega Fund, Inc. (the
"Fund") will be held at the offices of the Fund, 200 Berkeley Street, Boston,
Massachusetts, on April , 1995, at 4:00 p.m., Eastern time, for the purpose of
considering and acting upon the following proposals:
1. To approve a reorganization of the Fund as a Massachusetts business trust
by adopting an Agreement and Plan of Reorganization under which (i) all
of the assets and liabilities of the Fund will be sold to, and assumed
by, respectively, Keystone America Omega Fund, a Massachusetts business
trust (the "Trust"), in exchange for Shares of beneficial interest of the
Trust, which will carry on the business of the Fund, (ii) the
Shareholders of the Fund will receive Shares of beneficial interest of
the Trust of the same classes of Shares of Common Stock held by them in
the Fund in exchange for their Shares of Common Stock of the Fund and
(iii) the Fund will be dissolved, all substantially as described in the
accompanying Proxy Statement.
2. To approve a new Investment Advisory and Management Agreement between the
Fund and Keystone Custodian Funds, Inc., substantially as described in
the accompanying Proxy Statement, if said Agreement and Plan of
Reorganization is not consummated.
3. To ratify the selection of KPMG Peat Marwick as the independent public
accountant of the Fund for the Fund's 1995 fiscal year.
4. To transact such other business as may properly come before the meeting
and all adjournments thereof.
Stockholders of record at the close of business on March , 1995 are entitled
to notice of and to vote at this meeting and any adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS
KEYSTONE AMERICA OMEGA FUND, INC.
Rosemary D. Van Antwerp
Secretary
March , 1995
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PLEASE FILL IN, DATE AND SIGN YOUR PROXY - NOW - AND MAIL IT - TODAY - IN THE
STAMPED ENVELOPE ENCLOSED FOR YOUR CONVENIENCE. IN ORDER TO AVOID UNNECESSARY
EXPENSE OR DELAY, YOUR PROMPT RESPONSE IS REQUESTED, NO MATTER WHAT SIZE YOUR
HOLDINGS MAY BE. THANK YOU.
APPRAISAL RIGHTS
"If the action proposed in Item 1 is approved by the Shareholders at the
meeting and effected by the Fund, any stockholder (1) who files with the
corporation before the taking of the vote on the approval of such action,
written objection to the proposed action stating that he intends to demand
payment for his shares if the action is taken and (2) whose shares are not voted
in favor of such action has or may have the right to demand in writing from the
corporation (or, in the case of a consolidation or merger, the name of the
resulting or surviving corporation shall be inserted), within twenty days after
the date of mailing to him of notice in writing that the corporate action has
become effective, payment for his shares and an appraisal of the value thereof.
Such corporation and any such stockholder shall in such cases have the rights
and duties and shall follow the procedure set forth in sections 88 to 98,
inclusive, of chapter 156B of the General Laws of Massachusetts."
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KEYSTONE AMERICA OMEGA FUND, INC.
200 BERKELEY STREET
BOSTON, MASSACHUSETTS 02116-5034
TELEPHONE NUMBER (617) 338-3200
PROXY STATEMENT
FOR THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL , 1995
The accompanying Proxy is solicited by the Board of Directors of Keystone
America Omega Fund, Inc. (the "Fund"), a New York corporation, for use at a
special meeting of stockholders of the Fund (the "Meeting"). If the Proxy is
signed and returned, the shares of common stock of the Fund ("Shares")
represented thereby will be voted in accordance with the specifications thereon.
In the absence of such specification with respect to each proposal (a
"Proposal"), the Proxy will authorize the persons named therein to vote in favor
of such Proposal. Any stockholder may revoke his or her Proxy at any time before
it is voted by (i) giving written notice of revocation to the Secretary of the
Fund, (ii) proper execution of a later-dated Proxy, or (iii) appearing in person
at the Meeting to vote his or her Shares. This proxy material is being mailed to
stockholders on or about March , 1995.
The Board of Directors knows of no business which will be presented for
consideration at the Meeting other than that mentioned in Items 1, 2 and 3 of
the Notice of Meeting. If any other matters are properly presented, it is the
intention of the persons designated to vote such Proxies in accordance with
their judgment on such matters.
The Fund currently issues three classes of Shares, $1.00 par value,
representing the Common Stock of the Fund. Each outstanding Share ranks equally
with every other outstanding Share and each Share is entitled to one vote on
matters subject to stockholder vote, subject to class differences. Holders of
Shares of record at the close of business on March , 1995 are entitled to notice
of and to vote at the Meeting. On that date there were Shares outstanding
and entitled to vote at the Meeting.
Approval of Proposal 1 requires the affirmative vote of the holders of 66
2/3% of the outstanding Shares. Approval of Proposals 2 and 3 each requires the
affirmative vote of the lesser of (i) a majority (over 50%) of the outstanding
Shares, or (ii) a majority of the Shares represented at the meeting if 67% of
the outstanding Shares are represented.
The Fund's most recent Annual Report will be furnished without charge to any
requesting Shareholder. In addition to the above address for such requests the
toll free number 1-800-2898 is also available.
DEFINITIONS USED IN THIS PROXY STATEMENT
"12b-1 Plan" A Distribution Plan adopted by the Fund or a class of
Shares pursuant to Rule 12b-1 under the 1940 Act.
"1933 Act" The Securities Act of 1933, as amended.
"1934 Act" The Securities Exchange Act of 1934, as amended.
"1940 Act" The Investment Company Act of 1940, as amended.
"Board" The Board of Directors of the Fund or the Board of
Trustees of the Trust, as the context indicates, each
consisting of the same individuals.
"Closing Date" The completion date of the transactions contemplated by
the Reorganization Agreement.
"FICO" Fiduciary Investment Company, Inc., 200 Berkeley
Street, Boston, Massachusetts 02116-5034, a
wholly-owned subsidiary of Keystone. FICO is the
principal underwriter of 2 Keystone Group Funds.
"Fund" Keystone America Omega Fund, Inc. or Keystone American
Hartwell Growth Fund, Inc., as the context indicates,
200 Berkeley Street, Boston, Massachusetts 02116-5034.
"Independent Directors" Those Directors of the Fund or Trustees of the Trust
or "Trustees" who are not "interested persons" of the Fund or the
Trust as defined in the 1940 Act.
"KDI" Keystone Distributors, Inc., 200 Berkeley Street,
Boston, Massachusetts 02116-5034, a wholly-owned
subsidiary of Keystone. KDI is the principal
underwriter of the Fund and, prospectively, of the
Trust, and of most of the other Keystone Group Funds.
"Keystone" Keystone Custodian Funds, Inc., 200 Berkeley Street,
Boston, Massachusetts 02116-5034, a wholly-owned
subsidiary of Keystone Group. Contemporaneously with
the Meeting, is the Fund's sub-adviser and will be the
Trust's investment manager under the Trust's Management
Agreement (or, if the Reorganization is not consummated
and the proposed new Management Agreement is approved,
the Fund's investment manager).
"Keystone Group" Keystone Group, Inc., 200 Berkeley Street, Boston,
Massachusetts 02116-5034. Keystone Group owns all of
the outstanding shares of Keystone. Keystone Group is
owned by an investor group composed of members of
Management.
"Keystone Group Funds" Over 30 mutual funds with varying investment
objectives, managed, advised or administered by
Keystone and its affiliates.
"Keystone Management" Keystone Management, Inc., 200 Berkeley Street, Boston,
Massachusetts 02116-5034. Keystone Management is a
wholly-owned subsidiary of Keystone and is manager of a
number of Keystone Group Funds including the Fund.
"KG Shares" Shares of voting common stock of Keystone Group.
"KIRC" Keystone Investor Resource Center, Inc., 101 Main
Street, Cambridge, Massachusetts 02142, a wholly-owned
subsidiary of Keystone. KIRC is the transfer agent and
dividend disbursing agent for each of the Keystone
Group Funds, including the Fund and, prospectively, the
Trust.
"KPMG Peat Marwick" KPMG Peat Marwick, independent public accountant. KPMG
Peat Marwick is the independent public accountant for
each of the Keystone Group Funds, including the Fund.
"Management" Certain current or former officers and employees of
Keystone Group and its affiliates.
"Management Agreement" The existing Investment Advisory and Management
Agreement between the Fund and Keystone Management
under which Keystone Management provides management and
administrative services to the Fund; or the proposed
new substantially identical agreement between the Trust
and Keystone under which Keystone will provide such
services to the Trust if the Reorganization is
consummated; or the proposed new substantially
identical agreement between the Fund and Keystone under
which Keystone will provide such services to the Fund
if the Reorganization is not consummated and such new
agreement is approved; all as the context indicates.
"Meeting" The meeting of stockholders of the Fund to be held in
accordance with the Notice accompanying this proxy
statement, and any adjournments thereof.
"mutual fund(s)" Open-end management investment company(ies) registered
under the 1940 Act.
"Reorganization" The reorganization of the Fund from a Massachusetts
corporation into a Massachusetts business trust.
"Reorganization Agreement and Plan of Reorganization being entered into
Agreement" between the Fund and the Trust.
"SEC" Securities and Exchange Commission.
"Shares" The shares of common stock of the Fund or the shares of
beneficial interest in the Trust, as the context
indicates.
"SubAdvisory Agreement" The existing SubInvestment Advisory Agreement among the
Fund, Keystone Management and Keystone under which
Keystone provides investment advisory services to the
Fund which will not be continued if the Reorganization
or the new Management Agreement is approved.
"Trust" Keystone America Omega Fund, a Massachusetts business
trust into which the Fund is proposed to be
reorganized.
"Underwriting Agreement" The existing Principal Underwriting Agreement between
KDI and the Fund under which KDI provides underwriting
and distribution services to the Fund; or the proposed
new substantially identical agreement under which KDI
will provide such services to the Trust if the
Reorganization is approved; all as the context
indicates.
INTRODUCTION
The Fund, an open-end investment company registered with the SEC under the
1940 Act, was formed as a New York corporation and offers its Shares to the
public.
THE PROPOSALS
The purpose of the Meeting is to submit to the stockholders of the Fund: (1)
a Proposal to approve the Reorganization so that the Fund will operate as a
Massachusetts business trust; (2) a proposal to approve a new Investment
Advisory and Management Agreement between the Fund and Keystone, if the
Reorganization is not consummated; and (3) a proposal to ratify the selection of
KPMG Peat Marwick as the independent public accountant of the Fund for the 1995
fiscal year.
APPROVAL OR DISAPPROVAL OF PROPOSED
REORGANIZATION OF THE FUND AS A MASSACHUSETTS
BUSINESS TRUST
The Board of Directors of the Fund has approved an Agreement and Plan of
Reorganization (the "Plan"), the form of which is Exhibit A hereto, under which,
in exchange for Shares of the Trust, all of the assets, liabilities and
operations of the Fund will be assumed by Keystone America Hartwell Emerging
Growth Fund, a Massachusetts business trust (the "Trust"). The investment
objectives, policies and restrictions of the Trust following the Reorganization
will be identical to those of the Fund. The net asset value of Shares of the
Trust will be the same as the net asset value of Shares of the Fund after the
Reorganization and the Trust will continue to redeem its Shares in the same
manner as the Fund. Keystone, rather than its subsidiary, Keystone Management
will manage the investments and other affairs of the Trust pursuant to an
agreement which will be substantially the same as the agreements therefor
currently in effect.
THE PROPOSED REORGANIZATION
REASONS FOR THE REORGANIZATION. The Board of Directors of the Fund has proposed
the Reorganization in order to achieve a reduction in the operating expenses of
the Fund and to achieve the flexibility of a Massachusetts business trust. As a
Massachusetts corporation the Fund is currently subject to a tax based upon its
income. For its fiscal year ended December 31, 1994, this tax amounted to about
$ . Under current law no similar state or local taxes are payable in
Massachusetts by a Massachusetts business trust. Accordingly, under current law
the Trust would be relieved of this expense following the Reorganization.
In addition, the Reorganization would eliminate, in large part, the expenses
of holding Shareholder meetings. Under Massachusetts corporate law, the Fund is
required to hold Shareholder meetings on an annual basis. In that connection it
incurs various expenses. Based on the approximate number of Shareholders of
record for an Annual Meeting of Shareholders and printing and mailing costs, the
expense of holding a Shareholder meeting is approximately $ . Massachusetts
business trusts, on the other hand, are not required to hold annual meetings.
However, special meetings of Shareholders would be required, for instance, in
order to change fundamental policies or to approve an amended or new investment
advisory contract, and could be called by the Trustees or by 10% of the
Shareholders for various reasons, including removal of any Trustee. The Trust
also will not be subject to the expense ordinarily incurred by a corporation for
the authorization of additional capital stock, because the Trust is empowered to
issue an unlimited number of shares of beneficial interest.
The Board of Directors feels that it is in the best interests of
shareholders for the Fund to have a Massachusetts domicile, largely because the
laws of Massachusetts regarding business trusts are the most developed of any
state, any potential for Shareholder liability is extremely remote (see "Certain
Comparative Information About the Fund and the Trust, Shareholders, Trustee and
Officer Liability") and administrative cost efficiencies will result from a
Massachusetts versus another state domicile.
The Board of Directors of the Fund recommends that the Shareholders vote for
the approval of the Agreement and Plan of Reorganization described below. Under
Massachusetts law the affirmative vote of the holders of two-thirds of the
outstanding Shares of Common Stock of the Fund entitled to vote at the meeting
is required for such approval.
SUMMARY OF THE AGREEMENT AND PLAN OF REORGANIZATION. The following
discussion summarizes the important terms of the Agreement and Plan of
Reorganization (the "Plan") between the Fund and the Trust. This summary is
qualified in its entirety by reference to the Plan itself, the form of which is
included as Exhibit A to this Proxy Statement.
To accomplish the Reorganization, the Fund will transfer all of its assets
and liabilities to the Trust in exchange for a number of shares of beneficial
interest of the Trust equal to the number of shares of Common Stock of the Fund
then outstanding. Immediately thereafter the Fund will distribute the Trust
shares to its shareholders in complete liquidation. Thereupon, each shareholder
of the Fund will be owner of a number of full and fractional Shares of the
Trust, having a net asset value equal to those of the Shares of the Fund held by
the Shareholder immediately prior to the Reorganization.
The Plan authorizes, and requires as a condition to its consummation, that
the Fund, as the sole Shareholder of the Trust, or by its Board, as may be
required by law, prior to the Reorganization: (i) elect Trustees and approve an
Investment Advisory and Management Agreement between the Trust and Keystone, a
Distribution Agreement between the Trust and KDI and Rule 12b-1 Plans, in each
case substantially identical to the comparable documents currently in effect
with respect to the Fund; and (ii) appoint and ratify the selection of KPMG, as
independent public accountant of the Trust.
The obligations of the Fund and the Trust under the Plan are subject to
various conditions, as stated therein. To provide against unforeseen events, the
Plan may be terminated or amended at any time prior to the closing of the
Reorganization by action of the Board of Directors of the Fund and the Trustees
of the Trust, notwithstanding the approval of the Plan by the Shareholders of
the Fund. The Fund and the Trust may at any time waive compliance with any of
the covenants and conditions contained in the Plan.
CONTINUATION OF THE SHAREHOLDERS ACCOUNTS; SHARE CERTIFICATES. The Trust
will establish an account for each Shareholder containing the appropriate number
and class of Shares. Such accounts will be identical in all respects to the
accounts currently maintained by the Fund for each Shareholder. Shareholders who
have elected or who may elect to reinvest dividends at net asset value will be
able to continue to do so.
It will not be necessary for Shareholders of the Fund to whom certificates
have been issued to surrender their certificates, and such certificates will
represent Shares of the Trust following the Reorganization.
FEDERAL INCOME TAX CONSEQUENCES. The Fund has received advice from Sullivan
& Worcester which will be confirmed by an opinion at or before completion of the
Reorganization, that, on the basis of the existing provisions of the Internal
Revenue Code, Treasury regulations, current administrative rules, and court
decisions, for federal income tax purposes: (i) no gain or loss will be
recognized by the Fund or the Trust as a result of the Reorganization; (ii) the
basis of the assets of the Fund in the hands of the Trust will be the same as
the basis of those assets in the hands of the Fund immediately prior to the
Reorganization; (iii) the holding period of the Fund's assets in the hands of
the Trust will include the period during which the assets were held by the Fund;
(iv) no gain or loss will be recognized by Shareholders of the Fund as a result
of the Reorganization; (v) the basis of Trust Shares received by Fund
Shareholders will be the same as the basis of Fund Shares surrendered therefor;
and (vi) the holding period of Trust Shares received by Fund Shareholders will
include the holding period during which Fund Shares surrendered in exchange
therefor were held, provided that such Shares were held as a capital asset in
the hands of such Fund Shareholders on the date of the Reorganization.
Shareholders of the Fund should consult their tax advisers regarding the
effect, if any, of the proposed Reorganization in light of their individual
circumstances. Since the foregoing discussion relates only to the federal income
tax consequences of the Reorganization, Shareholders of the Fund should also
consult their tax advisers as to the state and local tax consequences, if any,
of the Reorganization.
EXPENSES. All expenses relating to the Meeting and the proposed
Reorganization will be borne by the Fund and, if the Reorganization is
consummated, will be assumed by the Trust. Such expenses will be charged against
the income of the Fund and, if the Reorganization is consummated, of the Trust
for the current year. If the Reorganization is consummated, it is expected that
realization of the expected expense savings will take several years.
APPRAISAL RIGHTS. Shareholders of the Fund who object to the Reorganization
in writing before the Meeting and do not vote in favor of the Reorganization
have the right under Massachusetts law to receive payment for their Shares from
the Fund and an appraisal thereof upon compliance with the procedures specified
in Sections of Chapter 156B 88 through 98 of the Massachusetts business
corporation laws. A vote against the Reorganization or the execution of a proxy
directing such a vote will not satisfy the requirements of those provisions. A
failure to vote against the Reorganization will not constitute a waiver of such
rights.
For federal income tax purposes dissenting Shareholders obtaining payment
for their Shares will recognize gain or loss measured by the difference between
any such payment and the tax basis for their Shares. Shareholders are advised to
consult their personal tax advisers as to the tax consequences of dissenting.
Shareholders of the Fund will, of course, continue to be able to redeem
their Shares at the current net asset value until the close of business on the
effective date of the Reorganization. Redemption requests received by the Fund
thereafter will be treated as requests for the redemption of Shares of the Trust
received by the Shareholder in the Reorganization.
CERTAIN COMPARATIVE INFORMATION
ABOUT THE FUND AND THE TRUST
STRUCTURE OF THE TRUST. The Trust has been established under Massachusetts
law as a trust with transferable Shares of beneficial interest -- commonly known
as a "Massachusetts business trust" -- pursuant to an Agreement and Declaration
of Trust (the "Declaration of Trust") dated March 18, 1992, the form of which
accompanies this Proxy Statement as Exhibit C. All descriptions herein of the
provisions of the Trust are qualified by reference to the specific terms set
forth therein. Prior to the Reorganization, the Fund will be the sole holder of
the beneficial interest of the Trust, and the Trust will have only nominal
assets. Following the Reorganization, the Trust will assume and carry on the
operations of the Fund with the same investment objective, policies and
restrictions.
As a Massachusetts business trust, the Trust's operations will be governed
by the Declaration of Trust rather than by the Massachusetts business
corporation law. Certain differences between the two forms of organization are
summarized below. The operations of the Trust would continue to be subject to
the provisions of the 1940 Act and the Rules and Regulations of the SEC.
TRUSTEES AND OFFICERS OF THE TRUST. Subject to the provisions of the
Declaration of Trust, the business of the Trust is managed by its Trustees who
have all powers necessary or convenient to carry out that responsibility. The
responsibilities, powers and fiduciary duties of the Trustees are substantially
the same as those of the Directors of the Fund.
The Trustees of the Trust will be those persons who are currently Directors
of the Fund. It is anticipated that the present officers of the Fund will be
elected to serve as officers of the Trust and will perform the same functions
following the Reorganization as they now perform on behalf of the Fund. See,
"Information Relating to Directors/Trustees and Officers" herein.
SHARES OF THE TRUST. The beneficial interest in the Trust is represented by
transferable Shares without par value. The Declaration of Trust permits the
Trustees to issue an unlimited number of Shares. As a New York business
corporation, the Fund is authorized to issue only that number of Shares
specified in its Certificate of Incorporation, which may be amended only with
Shareholder approval. The Trustees have authority to issue an unlimited number
of Shares of beneficial interest as separate classes and series having separate
assets, liabilities and earnings, if desired. The Trust has no present intention
of issuing Shares of any additional series, although the Shares issued in the
Reorganization and thereafter will mirror substantially the existing classes of
Shares of the Fund.
Each Share of the Trust represents an equal proportionate interest in its
series or class of Shares of the Trust with each other such Share and is
entitled to such dividends and distributions out of the income of such series or
class of Shares of the Trust as are declared by the Trustees, all currently
subject to the same class differences as exist for the Fund's Shares. Upon any
liquidation of the Trust, Shareholders thereof are entitled to share pro rata,
in the net assets of the Trust available for distribution, subject to the same
series (there is only one series) or class differences as exist for the Fund's
Shares. Shareholders have the right to vote on any and all matters on which by
law or the provisions of the Declaration of Trust they may be entitled to vote,
in each case in the manner required thereby.
VOTING RIGHTS OF SHAREHOLDERS. The Declaration of Trust provides that
Shareholders shall have power to vote only on the following matters:
(i) to elect Trustees at any meeting of Shareholders called for the
purpose;
(ii) with respect to the approval of any contract for investment
advisory or management services or, as applicable, any plan of distribution
under Rule 12b-1 under the 1940 Act;
(iii) with respect to any amendment of the Declaration of Trust (by
affected classes or series) which adversely affects any class or series
(other than amendments which the Trustees alone may authorize, including
amendments having the purpose of supplying any omission, curing any
ambiguity or curing, correcting or supplementing any defective or
inconsistent provision contained therein or, if they deem it necessary, to
conform the Declaration to the requirements of applicable federal laws or
regulations or the requirements of the regulated investment company
provisions of the Internal Revenue Code, or to eliminate or reduce any
federal, state or local taxes, which are or may be payable by the Trust or
the Shareholders).
(iv) to the same extent as the Shareholders of a Massachusetts business
corporation as to whether or not a court action, proceeding or claim should
or should not be brought or maintained derivatively or as a class action on
behalf of the Trust or its Shareholders; and
(v) with respect to such additional matters relating to the Trust as may
be required by applicable law, or by the Declaration of Trust, any by-law of
the Trust or any undertaking filed by the Trust with the Securities and
Exchange Commission or with any state, or as to which the Trustees, in their
discretion, shall otherwise determine such Shareholder vote to be required
by law or otherwise to be necessary or appropriate or advisable.
The Declaration of Trust further provides that no person shall serve as
Trustee after the holders of record of not less than two-thirds of the
outstanding Shares of beneficial interest in the Trust have declared that he be
removed from that office either by declaration in writing filed with the
custodian of the securities of the Trust or by votes cast in person or by proxy
at a meeting called for the purpose.
The Trust, like the Fund, will operate as a diversified open-end investment
company registered with the Securities and Exchange Commission under the
Investment Company Act of 1940. Pursuant to this registration and in addition to
the specific voting rights described above, Shareholders of the Trust will
continue to be entitled, under current law as applicable, to vote on changes in
fundamental investment policies and restrictions of the Trust and on the
ratification of the selection by the Trustees of the independent public
accountant for the Trust.
As a New York business corporation, any merger or consolidation of the Fund,
any sale, lease or exchange of substantially all of its property and assets and
any dissolution of the Fund requires the vote of the holders of two-thirds of
the Shares entitled to vote. Under the Declaration of Trust such actions may be
authorized by action of the Trustees.
Shares of the Trust are divided into classes having characteristics
identical to those of the Fund. Like Shares of the Fund, each whole Share of the
Trust is entitled to one vote with each fraction being entitled to a
proportionate fractional vote. Neither the Shares of the Fund nor the Shares of
the Trust have cumulative voting rights in the election of Trustees. Shares
entitle their holders to one vote per Share (with proportionate voting for
fractional Shares); however, on amendments to the Declaration of Trust which
adversely affect an individual class or series, a separate affirmative vote of a
majority of the outstanding Shares of that class or series is required
(authorization of additional series or classes is not deemed to adversely affect
any existing series or class). Shareholders of a class or series are not
entitled to vote on any matter which does not affect that class or series and
requires only a separate affirmative vote of a majority of the outstanding
Shares of one of the other classes or series. Approval of an investment advisory
agreement and a change in fundamental policies would be regarded as matters
requiring separate votes by classes or series, as appropriate.
Under Massachusetts corporation law Shareholders have the right to vote (by
classes if only such classes are affected) with respect to any amendment of the
Articles of Organization of the Fund.
SHAREHOLDER, TRUSTEE AND OFFICER LIABILITY. Under Massachusetts law,
Shareholders of a Massachusetts business trust could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Declaration of Trust disclaims Shareholder liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given in
each agreement, obligation, or instrument entered into or executed by the Trust
or the Trustees. The Declaration of Trust provides for indemnification out of
Trust property for all loss and expense of any Shareholder held personally
liable for the obligations of the Trust. Thus, the risk of a Shareholder
incurring financial loss on account of Shareholder liability is considered
remote since it is limited to circumstances in which a disclaimer is
insufficient or is inoperative as a matter of law and the Trust itself would be
unable to meet its obligations. Since the Fund is organized as a business
corporation, its Shareholders currently have no personal liability for its acts
or obligations, except to the extent of any improper dividend payments received
by them and certain statutory obligations to employees.
The Declaration of Trust or the By-Laws of the Trust will contain
substantially the same provisions regarding indemnification of its Trustees and
officers as are presently applicable to the Fund.
BOARD RECOMMENDATION
The Board of Directors recommends that Shareholders vote FOR the
Reorganization.
INFORMATION AS TO DIRECTORS/TRUSTEES AND OFFICERS
The Directors of the Fund are Directors or Trustees of all Keystone Group
Funds and will be the Trustees of the Trust.
DIRECTORS/TRUSTEES
NAME (AGE) PRINCIPAL OCCUPATION DURING LAST FIVE YEARS AND
(DIRECTOR SINCE) DIRECTORSHIPS IN OTHER PUBLICLY HELD COMPANIES
- - ---------------- -----------------------------------------------
Frederick Amling (67) Professor, Finance Department, George Washington
(1993) University; President, Amling & Company
(investment advice); Member, Board of Advisers,
Credito Emiliano (banking); and former Economics
and Financial Consultant, Riggs National Bank.
Charles A. Austin III (60) Managing Director, Seaward Management
(1993) Corporation (investment advice); and former
Director, Executive Vice President and
Treasurer, State Street Research & Management
Company (investment advice).
George S. Bissell (65)* Officer of various Keystone Group companies and
(1990) funds. He is currently Chairman of the Board and
Director or Trustee of all Keystone Group funds,
including the Fund; and Chairman of the Board
and Director, Keystone Group. He is also
Chairman of the Board and Trustee of Anatolia
College; Trustee of University Hospital (and
Chairman of its Investment Committee); He was
formerly a Director; Chairman of the Board and
Chief Executive Officer of Keystone Group and
all Keystone Group funds including the Fund.
Edwin D. Campbell (67) Executive Director, Coalition of Essential
(1993) Schools, Brown University; Director and former
Executive Vice President, National Alliance of
Business; former Vice President, Educational
Testing Services; and former Dean, School of
Business, Adelphi University.
Charles F. Chapin (65) Former Group Vice President, Textron Corp.; and
(1993) former Director, Peoples Bank.
Albert H. Elfner, III (50)* Officer of various Keystone Group companies and
(1993) funds. He is currently: President, Chief
Executive Officer and Director or Trustee of all
Keystone Group funds, including the Fund;
Director, Chairman of the Board, President and
Chief Executive Officer of Keystone Group;
Keystone Management and Keystone Software, Inc.;
Director and Chairman of the Board of Keystone
Investment Management Corporation and Keystone
Fixed Income Advisers, Inc.; Director of KDI and
FICO and Keystone Investor Resource Services,
Inc.; Director and Vice President of Robert Van
Partners, Inc.; and various other Keystone Group
companies. He is also: Director of Boston
Children's Services Association and Trustee of
Anatolia College, Middlesex School, Middlebury
College and Neworld Bank; Member, Board of
Governors, New England Medical Center; former
Director and President of Harbor Keystone
Advisers, Inc. and former President of Keystone.
K. Dun Gifford (56) Chairman of the Board, Director and Executive
(1990) Vice President, The London Harness Company;
Managing Partner, Roscommon Capital Corp.;
Trustee, Cambridge College; Chairman Emeritus
and Director, American Institute of Food and
Wine; Chief Executive Officer, Gifford Gifts of
Fine Foods; Chairman, Gifford, Drescher &
Associates (environmental consulting);
President, Oldways Preservation and Exchange
Trust (education); and former Director,
Keystone.
Leroy Keith, Jr. (55) Former President, Morehouse College; Director of
(1993) Phoenix Total Return Fund and Equifax, Inc.;
Trustee of Phoenix Series Fund, Phoenix
Multi-Portfolio Fund and The Big Edge Series
Fund.
F. Ray Keyser, Jr. (67) Of Counsel, Keyser, Crowley & Meub, P.C.;
(1990) Member, Governor's (VT) Council of Economic
Advisers; Chairman of the Board and Director,
Central Vermont Public Service Corporation and
Hitchcock Clinic; Director, Vermont Yankee
Nuclear Power Corporation, Vermont Electric
Power Company, Inc., Grand Trunk Corporation,
Central Vermont Railway, Inc., S.K.I. Ltd.,
Sherburne Corporation, Union Mutual Fire
Insurance Company, New England Guaranty
Insurance Company, Inc. and Investment Company
Institute; former Governor of Vermont; former
Director and President, Associated Industries of
Vermont; former Chairman and President, Vermont
Marble Company; former Director of Keystone; and
former Director and Chairman of the Board, Green
Mountain Bank.
David M. Richardson (53) Executive Vice President, DHR International,
(1993) Inc. (executive recruitment); former Senior Vice
President, Boyden International Inc. (executive
recruitment); and Director, Commerce and
Industry Association of New Jersey, 411
International, Inc. and J & M Cumming Paper Co.
Richard J. Shima (55) Consultant, Russell Miller, Inc. (investment
(1993) bankers) and Drake Beam Morin, Inc. (executive
outplacement); Director, Connecticut Natural Gas
Corporation, Trust Company of Connecticut,
Hartford Hospital, Old State House Association
and Enhanced Financial Services, Inc.; Member,
Georgetown College Board of Advisors; Chairman,
Board of Trustees, Hartford Graduate Center;
Trustee, Kingswood-Oxford School and Greater
Hartford YMCA; former Director, Executive Vice
President and Vice Chairman of The Travelers
Corporation; and former Managing Director of
Russell Miller, Inc.
Andrew J. Simons (55) Partner, Farrell, Fritz, Caemmerer, Cleary,
(1993) Barnosky & Amentano, P.C.; President, Nassau
County Bar Association; former Associate Dean
and Professor of Law, St. John's University
School of Law.
- - ---------
*May be considered an "interested person" within the meaning of the 1940 Act.
Messrs. Bissell and Elfner are "interested persons" of the Fund by virtue of
their positions as officers of the Fund and as officers and/or Directors of
Keystone Group and several of its affiliates, including Keystone, Hartwell
Keystone, KDI and Keystone Investor Resources Corporation, and because of their
direct or indirect ownership of or options on KG Shares. Mr. Bissell is Director
of Keystone Group. Mr. Elfner is Chairman of the Board, President and Chief
Executive Officer of Keystone Group.
During the fiscal year ended December 31, 1994, the Fund held Board
meetings, and all of the Directors attended at least 75% of the meetings held
while they were Directors. For the fiscal year ended December 31, 1994, the
Fund's Independent Directors each received annual retainers of $1,000 plus $30
for each Directors' or Committee meeting attended. Such retainers and fees paid
by the Fund totalled $13,860 for the year. Such fees for each Independent
Director paid by all Keystone Group funds totalled $ for the year.
The Nominating Committee is composed of all Independent Directors acting as
a committee of the whole. The Nominating Committee's recommendations for
nominees for election as Independent Directors are voted on by the Independent
Directors. The Fund currently has no formal procedure to consider persons
recommended by stockholders for nomination to the Board of Directors.
Messrs. , and represent the Fund on the Audit Committee
for the Keystone Group Funds. The Audit Committee for the Keystone Group Funds
reviews the services performed by KPMG Peat Marwick on behalf of the Fund and
the other Keystone Group Funds.
During the fiscal year ended December 31, 1994, the Audit Committee's two
meetings were attended by all the Committee's existing members.
The executive officers of the Fund will be the executive officers of the
Trust. These officers and the period for which each has served the Fund are:
George S. Bissell, Chairman of the Board and Albert H. Elfner, III, President
(since 1990) and Chief Executive Officer (since 1995). Other officers are:
Rosemary D. Van Antwerp (since 1994), Edward F. Godfrey, James R. McCall, Senior
Vice Presidents; Donald C. Dates, John M. Hartwell and William C. Miller, Vice
Presidents; Ms. Van Antwerp, Secretary; and Kevin J. Morrissey, Treasurer.
The executive officers of the Fund have been officers of Keystone, or its
affiliates for at least five years. Because of their positions with Keystone,
Keystone Group, KDI or their affiliates and/or their direct or indirect
ownership of KG Shares or options on KG Shares, Directors and officers of the
Fund who are officers or employees of Keystone Group or its affiliates benefit,
or will benefit, from the management and other fees paid, or to be paid, by the
Fund or the Trust to Keystone or Keystone Management or their affiliates. The
officers of the Fund serve until their successors are elected and qualified.
INFORMATION RELATING TO THE MANAGEMENT
AGREEMENT AND THE SUBADVISORY AGREEMENT
The Trust will be advised and managed pursuant to an agreement substantially
identical to the existing Management Agreement after consummation of the
Reorganization, except as to the parties to the Agreements.
THE MANAGEMENT AGREEMENT
Pursuant to the Fund's Management Agreement, dated August 19, 1993, Keystone
Management acts as investment manager to the Fund. The form of such agreement is
Exhibit B to this proxy statement. The Management Agreement was last approved by
the stockholders of the Fund on July 27, 1993 in connection with Management's
acquisition of control of Keystone Group.
By the terms of the Management Agreement, Keystone Management is required to
manage and administer the operation of the Fund, and to manage the investment
and reinvestment of the Fund's assets in conformity with the Fund's investment
objectives and restrictions, subject to the supervision of the Directors of the
Fund, as well as to provide office space, all necessary office facilities,
equipment and personnel in connection with its services under the Management
Agreement, and to pay or reimburse the Fund for the compensation of officers and
Directors of the Fund who are affiliated with Keystone Management and all
expenses of Keystone Management incurred in connection with its investment
management and advisory services. All charges and expenses other than those
specifically referred to as being borne by Keystone Management are paid by the
Fund, including, but not limited to, custodian charges and expenses, bookkeeping
and auditors charges and expenses, transfer agent charges and expenses, fees of
Independent Directors, brokerage commissions, brokers' fees and expenses, issue
and transfer taxes, costs and expenses under the 12b-1 Plans, interest, taxes
and corporate fees payable to governmental agencies, the cost of Share
certificates, fees and expenses of the registration and qualification of the
Fund and its Shares with the SEC or under state or other securities laws,
expenses of preparing, printing and mailing prospectuses, statements of
additional information, notices, reports and proxy materials to stockholders of
the Fund, expenses of stockholders' and Directors' meetings, charges and
expenses of legal counsel for the Fund and for the Directors of the Fund on
matters relating to the Fund, charges and expenses of filing annual and other
reports with the SEC and other authorities, and all extraordinary charges and
expenses of the Fund.
In executing portfolio transactions and selecting broker-dealers, Keystone
Management is required under the Management Agreement to use its best efforts to
seek best execution on behalf of the Fund. In evaluating the best execution
available, Keystone Management may consider all factors it deems relevant,
including brokerage and research services provided to the Fund and other
accounts over which Keystone Management and its affiliates exercise investment
discretion, and may pay a broker-dealer who provides such services higher
commissions than those charged by other broker-dealers, in accordance with
section 28(e) of the 1934 Act.
As compensation for the services and facilities provided to the Fund
pursuant to the Management Agreement, Keystone Management is entitled to a fee
at the annual rate of:
AGGREGATE AVERAGE DAILY
NET ASSET VALUE
OF THE SHARES
MANAGEMENT FEE OF THE FUND
- - ------------------------------------------------------------------------------
0.75% of the first $ 250,000,000, plus
0.675% of the next $ 250,000,000, plus
0.60% of the next $ 500,000,000, plus
0.50% of amounts over $1,000,000,000,
computed as of the close of business on each business day and paid daily or
monthly as Keystone Management may from time to time specify. As of December 31,
1994, the Fund had net assets of $ .
For the fiscal year ended December 31, 1994, the fee paid to Keystone
Management for its services under the Management Agreement was $ .
The Management Agreement contains provisions permitting Keystone Management
to enter into an agreement with Keystone, under which Keystone, as subadviser,
would, for compensation paid by Keystone Management, provide substantially all
the services to be provided by Keystone Management under the Management
Agreement, and would delegate to Keystone substantially all of Keystone
Management's rights, duties and obligations to provide investment advisory
services under the Management Agreement. Keystone Management has entered into
such an agreement with Keystone. See "The SubAdvisory Agreement" herein.
The Management Agreement provides that it will continue only if approved at
least annually by the Board of Directors of the Fund or by a vote of a majority
of the outstanding Shares, and such renewal has been approved by the vote of a
majority of the Independent Directors cast in person at a meeting called for the
purpose of voting on such approval. The continuation of the Management Agreement
was last approved at a meeting of the Board of Directors on June 15, 1994. The
Management Agreement may be terminated, without penalty, on 60 days' written
notice by the Board of Directors or by a vote of a majority of the outstanding
Shares. The Management Agreement will terminate automatically upon its
"assignment" as that term is defined in the 1940 Act.
THE SUBADVISORY AGREEMENT
Pursuant to the Fund's SubAdvisory Agreement, dated July 27, 1993, Keystone
acts as investment adviser to the Fund as permitted by the Management Agreement.
The SubAdvisory Agreement was last approved by the stockholders of the Fund on
July 27, 1993 in connection with the acquisition of control of Keystone Group by
Management. The continuation of the SubAdvisory Agreement was last approved at a
meeting of the Board of Directors on June 15, 1994.
The terms of the SubAdvisory Agreement are substantially identical to terms
of the Management Agreement except that the SubAdvisory Agreement (i) does not
contain a provision allowing Keystone to enter into another agreement with an
investment adviser under which such investment adviser would provide
substantially all the services required by Keystone to the Fund, and (ii) is
among the Fund, Keystone Management and Keystone rather than between the Fund
and Keystone and contains technical provisions relating to the difference in
parties. Under the SubAdvisory Agreement, Keystone Management pays to Keystone
85% of the fee it receives from the Fund under the Management Agreement.
For the fiscal year ended December 31, 1993 the fee paid by Keystone
Management to Keystone for its services under the SubAdvisory Agreement was $ .
The SubAdvisory Agreement is automatically renewed for successive one-year
periods unless either party to it has given the other at least sixty days'
written notice of its intention to terminate the SubAdvisory Agreement at the
end of the contract period then in effect, provided, however, that the
continuation of the SubAdvisory Agreement for more than two years is subject to
the receipt of annual approvals of the Fund's Board of Directors or stockholders
in accordance with the 1940 Act and the rules thereunder. Approval of such
continuation was last given by the Board of Directors of the Fund on June 15,
1994. The SubAdvisory Agreement may be terminated at any time, without penalty,
by the Fund's Board of Directors or a majority of the Fund's outstanding Shares,
on 60 days' written notice to Hartwell Management. The SubAdvisory Agreement
automatically terminates upon its "assignment" (as defined in the 1940 Act) by
either party.
Keystone, which owns all of the capital stock of Keystone Management, will
become the Trust's investment manager under the Trust's substantially identical
Management Agreement, or Keystone will become the Fund's investment manager
under the Fund's substantially identical new Management Agreement, if the
Reorganization is not consummated and the Management Agreement with Keystone is
approved. If both the Reorganization and the Management Agreement with Keystone
are not consummated or approved, as applicable, Keystone Management will remain
the investment manager of the Fund.
KEYSTONE GROUP
Messrs. Bissell and Elfner are Directors and/or Officers of the Fund, and
they and all other Officers of the Fund are shareholders of KG, the parent of
the Fund's investment adviser.
All outstanding KG Shares are held in several voting trusts. The trustees of
the voting trusts (the "Voting Trustees"), George S. Bissell, Albert H. Elfner,
III, Roger T. Wickers, Edward F. Godfrey and Ralph J. Spuehler, Jr., vote all KG
Shares in the voting trusts pursuant to the terms of the underlying voting trust
agreements. The Voting Trustees (1) are required to vote all KG Shares held in
the Management Voting Trust in accordance with the directions of the holders of
a majority of such Shares and (2) have discretion to vote all shares of KG Stock
held in the Employee Voting Trusts. Accordingly, each Voting Trustee is deemed
to be the beneficial owner of those KG Shares held in the Management Voting
Trust allocated to him and of all KG Shares held in the Employee Voting Trusts.
In their capacities as Trustees of the Voting Trusts and in Mr. Bissell's
individual capacity, each of Messrs. Bissell, Elfner, Wickers, Spuehler and
Godfrey owns with voting power, but not otherwise beneficially, 10 percent or
more of the outstanding voting securities of Keystone Group.
During the period January 1, 1994 through December 31, 1994, the following
Directors and/or officers of the Fund engaged in transactions, or were parties
to contracts, relating to more than 1% of KG's outstanding shares as follows:
NUMBER AGGREGATE
NAME TRANSACTION OF SHARES PRICE
- - -------------------------------------------------------------------------------
Mr. Bissell Transfer to trust, which sold to KG.
APPROVAL OF NEW MANAGEMENT AGREEMENT (PROPOSAL (2))
If the Reorganization is not consummated, the existing Management Agreement
is proposed to be replaced with a new agreement and the SubAdvisory Agreement is
proposed to be eliminated. If the Reorganization is approved, the Trust's
similar Management Agreement will be substantially identical to the new
agreement, except for the parties. If the new Management Agreement is not
approved Keystone Management will remain the Fund's investment manager and
Keystone will remain the Fund's subadviser under the current agreements.
BOARD RECOMMENDATION
The Board of Directors recommends a vote FOR approval of each proposed new
agreement, if the Reorganization is not approved.
INFORMATION RELATING TO
INDEPENDENT PUBLIC ACCOUNTANT
A condition of the Reorganization is that KPMG Peat Marwick be the
independent public accountant for the Fund until the Closing Date and for the
Trust thereafter. KPMG Peat Marwick has been so selected by the Directors of the
Fund.
The audit services expected to be provided by KPMG Peat Marwick include work
in connection with the expression of an opinion on the annual financial
statements of the Fund and the Trust and review of the Fund's and the Trust's
Annual Report to stockholders and its filings with the SEC. During its last
fiscal year the Fund paid KPMG Peat Marwick $ for its services.
A representative of KPMG Peat Marwick is expected to attend the Meeting and
will be given an opportunity to make a statement and/or respond to appropriate
questions from stockholders.
PROPOSAL TO RATIFY THE SELECTION OF KPMG PEAT MARWICK AS THE PUBLIC ACCOUNTANT
OF THE FUND FOR ITS CURRENT FISCAL YEAR (PROPOSAL 4)
Proposal 4 is to ratify the selection of KPMG Peat Marwick as the public
accountant of the Fund for its current fiscal year.
BOARD RECOMMENDATION
The Board of Directors recommends a vote FOR such ratification.
INFORMATION RELATING TO KEYSTONE AND
KEYSTONE MANAGEMENT
KEYSTONE
Keystone is a wholly-owned subsidiary of Keystone Group, which is privately
owned by current and former members of Management. As described above, it is
expected that Keystone will replace Keystone Management, which is a subsidiary
of Keystone, as the Fund's investment manager at the time of the Meeting.
The chief executive officer and Directors of Keystone are Albert H. Elfner,
III, Chairman of the Board and Chief Executive Officer, Roger T. Wickers, Edward
F. Godfrey, Ralph J. Spuehler, Jr., Philip M. Byrne and Stephen J. Arpante.
Their address is 200 Berkeley Street, Boston, Massachusetts 02116.
<PAGE>
KEYSTONE MANAGEMENT
Keystone Management was incorporated in Delaware on , 199 and is a
registered investment adviser.
The chief executive officer and Directors of Keystone Management are Albert
H. Elfner, III (Chief Executive Officer and Chairman of the Board), Edward F.
Godfrey and Roger T. Wickers. The address of each is that of the Fund.
ADDITIONAL INFORMATION ABOUT KEYSTONE MANAGEMENT
Although investment advice and management for the various clients of
Keystone Management and Keystone, and their affiliates, are furnished in light
of their respective investment objectives and policies, certain securities owned
by the Fund may also be owned by other clients, and it may occasionally develop
that the same investment advice and decision for more than one client is made at
the same time. Furthermore, it may develop that a particular security is bought
or sold for only some clients even though it might be held or bought or sold for
other clients or that a particular security is bought for some clients when
other clients are selling the security.
CERTAIN OTHER KEYSTONE GROUP FUNDS
The following Keystone Group Funds have the same investment objective as the
Fund (capital appreciation):
<TABLE>
<CAPTION>
ANNUAL FEE RATES
AS PERCENTAGE OF AVERAGE
FUND NET ASSETS ANNUAL DAILY NET ASSETS
- - ---- ---------- ------------------------
<S> <C> <C>
KEYSTONE AMERICA FUNDS
Global Opportunity $ 1% declining to .75%
Hartwell Emerging Growth $ 1% declining to .65% plus .50% incentive fee
(performance vs. S&P 500)
Hartwell Growth $ 1% declining to .65% plus .50% incentive fee
(performance vs. S&P 500)
<CAPTION>
ANNUAL FEE RATES
AS PERCENTAGE OF AVERAGE
FUND NET ASSETS ANNUAL DAILY NET ASSETS
- - ---- ---------- ------------------------
<S> <C> <C>
KEYSTONE CUSTODIAN FUNDS
Series K-2 $ .70% declining to .35%
Series S-1 $ .70% declining to .35%
Series S-3 $ .70% declining to .35%
Series S-4 $ .70% declining to .35%
</TABLE>
ADDITIONAL INFORMATION
PAYMENT OF EXPENSES
The Fund will pay the expenses of the preparation, printing and mailing to
the stockholders of the Fund of the enclosed Proxy, accompanying Notice of
Meeting and Proxy Statement and any supplementary solicitation of the
stockholders.
SUPPLEMENTARY SOLICITATION
Supplementary solicitation may be made by mail, telephone, telegraph or
personal interview by officers of the Fund, by officers or employees of KIRC,
Keystone, Keystone Group or their subsidiaries, by securities dealers through
whom Shares have been sold or by an agency which may be employed by the Fund for
that purpose. If a supplementary solicitation by specially engaged employees or
by an agency should be necessary, the material features of any contract or
arrangement and the parties for any such solicitation are presently unknown. It
is anticipated, however, that, in the event any such solicitation becomes
necessary, its cost will not be substantial.
SUBSTANTIAL SHAREHOLDERS
To the best of the Fund's knowledge, on November 30, 1994, one person
"beneficially owned" more than 5% of the outstanding Shares as follows:
<PAGE>
SHARES % OF
REGISTRATION OWNED FUND
- - ------------ ----- ----
%
On that date, the existing Directors, nominees for election as Directors and
officers of the Fund, together as a group, "beneficially owned" less than 1% of
the outstanding Shares.
The term "beneficially owned" is as defined under Section 13(d) of the 1934
Act. The information as to beneficial ownership is based on statements furnished
to the Fund by the existing Directors, officers of the Fund, nominees for
Director and/or on records of KIRC.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at any Fund or Trust
meeting must be received by the Fund or the Trust for inclusion in the Fund's
Proxy Statement and Proxy within a reasonable time before the meeting.
It is suggested that stockholders submit their proposals by Certified Mail -
Return Receipt Requested. The SEC has adopted certain requirements which apply
to any proposals of stockholders.
March , 1995
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION made this day of 1994
by and between Keystone America Omega Fund, Inc. (the "Fund"), a Massachusetts
corporation, and Keystone America Omega Fund, a Massachusetts business trust
(the "Trust").
1. Plan of Reorganization and Liquidation. (a) The Fund shall assign, sell,
convey, transfer and deliver to the Trust at the closing provided for in Section
2 (the "Closing") all of its then existing assets of every kind and nature. In
consideration therefore, the Trust shall at the Closing (i) assume all of the
Fund's obligations and liabilities then existing, whether absolute, accrued,
contingent or otherwise, including without limitation all liabilities of the
Fund to shareholders who elect to dissent from the transaction and effect their
appraisal rights under New York law and all fees and expenses in connection with
the transactions contemplated hereby and (ii) deliver to the Fund a number of
full and fractional shares of each class of the shares of beneficial interest of
the Trust (the "Trust Shares") equal to the number of full and fractional shares
of each corresponding class of the shares of Common Stock, $1.00 par value, of
the Fund then outstanding.
(b) Upon consummation of the transactions described in paragraph (a) of this
Section 1, the Fund shall distribute in complete liquidation pro rata to its
shareholders of record entitled thereto as of the Closing Date (other than those
shareholders who have objected to the reorganization so as to be eligible to
perfect statutory appraisal rights) the respective Trust Shares of the
respective classes corresponding to the respective classes of shares of the Fund
held by the shareholder of the Fund, received by the Fund. Such distribution
shall be accomplished by the establishment of an account on the share records of
the Trust in the name of each shareholder of the Fund, representing a number and
class of Trust Shares equal to the number and class of shares of the Fund owned
of record by the shareholder at the Closing Date, provided that a shareholder
who has objected to the reorganization so as to be eligible to perfect statutory
appraisal rights shall have no rights with respect to Trust Shares until such
time as he has waived or otherwise relinquished such statutory appraisal rights.
Certificates for shares of the Fund issued prior to the reorganization shall
represent outstanding shares of the Trust following the reorganization.
Certificates representing Trust Shares will be issued only if the shareholder so
requests.
(c) As promptly as practicable after the liquidation of the Fund as
aforesaid, the Fund shall be dissolved pursuant to the provisions of the
Massachusetts business corporation law and its legal existence terminated.
2. CLOSING AND CLOSING DATE. The Closing shall occur at 4:15 p.m. on , 1995
or at such other time and date as the parties may mutually agree upon (the
"Closing Date").
3. CONDITIONS PRECEDENT. The obligations of the Fund and the Trust to effect
the transactions contemplated hereunder shall be subject to the satisfaction of
each of the following conditions:
(a) All filings shall have been made with, and all authority and orders
shall have been received from, the Securities and Exchange Commission (the
"SEC") and state securities commissions as may be necessary to permit the
parties to carry out the transactions contemplated by this Agreement.
(b) Each party shall have received a Private Letter Ruling from the
Internal Revenue Service or an opinion of counsel to the effect that for
federal income tax purposes: in connection with the Reorganization (1) no
gain or loss will be recognized by the Fund upon the transfer of its assets
and liabilities to the Trust; (ii) the tax basis of the assets in the hands
of the Fund immediately prior to the transfer; (iii) the holding period of
the assets of the Fund transferred to the Trust will include the period
during which such assets were held by the Fund; (iv) no gain or loss will be
recognized by the Trust upon the receipt of the assets of the Fund in
exchange for Trust Shares and the assumption by the Trust of the liabilities
and obligations of the Fund; (v) no gain or loss will be recognized by the
shareholders of the Fund upon the receipt of the Trust Shares in exchange
for their shares in the Fund; (vi) the basis of the Trust Shares received by
the shareholders of the Fund will be the same as the basis of the shares of
the Fund, exchanged therefor, provided that at the time of the exchange the
shares of the Fund were held as capital assets;
(c) This Agreement and Plan of Reorganization and the Reorganization
contemplated hereby shall have been adopted and approved by the affirmative
vote of the holders of at least two-thirds of the outstanding shares of
Common Stock, $1.00 par value, of the Fund entitled to vote thereon;
(d) The Trust shall have entered into an Investment Advisory and
Management Agreement with Keystone Custodian Funds, Inc. and a SubInvestment
Advisory Agreement among the Trust, Keystone Custodian Funds, Inc. and J. M.
Hartwell Limited Partnership, a Distribution Agreement with Keystone
Distributors, Inc., a Custodian Agreement with State Street Bank and Trust
Company, and a Transfer Agency Agreement and Shareholder Services Agreement
with Keystone Investor Resource Center, Inc., and shall have adopted Rule
12b-1 Plans, such contracts, agreements and plans to be in each case
substantially identical in form and substance (except for payments of
compensation by the investment manager to the subadviser, under the
SubInvestment Advisory Agreement substantially as described in the Proxy
Statement for the shareholders' meeting of the Fund at which this Agreement
is approved) to those respective documents in effect at the Closing Date
with respect to the Fund, such documents shall have been approved by the
Trustees of the Trust and, to the extent required by law, by the Trustees of
the Trust who are not "interested persons" of the Trust as defined in the
Investment Company Act of 1940 and by the shareholders of the Trust (it
being understood that the Company as sole shareholder of the Trust prior to
the consummation of the reorganization hereby agrees and is authorized to
vote for such approval);
(e) The persons designated in the Proxy Statement as the Directors of
the Fund shall have been elected as the Trustees of the Trust by the
shareholders of the Trust (it being understood that the sole shareholder of
the Trust prior to the consummation of the reorganization agrees and is
authorized to vote for such election); and
(f) The Trustees of the Trust who are not "interested persons" of the
Trust as defined in the Investment Company Act of 1940 shall have selected
as auditors for the Trust KPMG Peat Marwick and such selection shall have
been ratified by the shareholders of the Trust (it being understood that the
Fund as sole shareholder of the Trust prior to the consummation of the
reorganization hereby agrees and is authorized to vote for such
ratification).
At any time prior to the Closing, any of the foregoing conditions may be
waived by the Board of Directors of the Fund and the Trustees of the Trust if,
in their judgment, such waiver will not have a material adverse effect on the
interests of the shareholders of the Fund.
4. AMENDMENT. This Agreement may be amended at any time by action of the
Board of Directors of the Fund and the Trustees of the Trust, notwithstanding
approval thereof by the shareholders of the Fund, provided that no amendment
shall, in their judgment, have a material adverse effect on the interests of the
shareholders of the Fund.
5. TERMINATION. The Board of Directors of the Fund, and the Trustees of the
Trust may terminate this Agreement and abandon the reorganization contemplated
hereby, notwithstanding approval thereof by the shareholders of the Fund, at any
time prior to the Closing, if circumstances should develop that, in their
judgment, makes proceeding with the Agreement unadvisable.
6. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS. A copy of the
Agreement and Declaration of Trust of the Trust is on file with the Secretary of
The Commonwealth of Massachusetts, and notice is hereby given that this
instrument is executed on behalf of the Trustees of The Trust as Trustees and
not individually and that the obligations of this instrument are not binding
upon any of the Trustees or shareholders individually but binding only upon the
assets and property of the Trust.
<PAGE>
IN WITNESS WHEREOF, the parties have hereunto caused this Agreement to be
executed and delivered by their duly authorized officers as of the day and year
first written above.
KEYSTONE AMERICA OMEGA FUND, INC.
By : -----------------------------------------------------------
President
KEYSTONE AMERICA OMEGA FUND
By : -----------------------------------------------------------
President
<PAGE>
EXHIBIT B
FORM OF INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made the 19th day of August 1993, by and between KEYSTONE AMERICA
OMEGA FUND, INC., a Massachusetts corporation (the "Fund"), and KEYSTONE
MANAGEMENT, INC., a Nevada corporation (the "Manager").
WHEREAS, the Fund and the Manager wish to enter into an Agreement setting
forth the terms on which the Manager will perform certain services for the Fund.
THEREFORE, in consideration of the promises and the mutual agreements
hereinafter contained, the Fund and the Manager agree as follows:
1. The Fund hereby employs the Manager to manage and administer the
operation of the Fund, to supervise the provision of services to the Fund by
others, and to manage the investment and reinvestment of the assets of the Fund
in conformity with the Fund's investment objectives and restrictions as may be
set forth from time to time in the Fund's then current prospectus and statement
of additional information, if any, and other governing documents, all subject to
the supervision of the Board of Directors of the Fund, for the period and on the
terms set forth in this Agreement. The Manager hereby accepts such employment
and agrees during such period, at its own expense, to render the services and to
assume the obligations set forth herein, for the compensation provided herein.
The Manager shall for all purposes herein 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.
2. The Manager shall place all orders for the purchase and sale of portfolio
securities for the account of the Fund with broker-dealers selected by the
Manager. In executing portfolio transactions and selecting broker-dealers, the
Manager will use its best efforts to seek best execution on behalf of the Fund.
In assessing the best execution available for any transaction, the Manager shall
consider all factors it deems relevant, including the breadth of the market in
the security, the price of the security, the financial condition and execution
capability of the broker-dealer, and the reasonableness of the commission, if
any (all for the specific transaction and on a continuing basis). In evaluating
the best execution available, and in selecting the broker-dealer to execute a
particular transaction, the Manager may also consider the brokerage and research
services (as those terms are used in Section 28(e) of the Securities Exchange
Act of 1934 (the "1934 Act") provided to the Fund and/or other accounts over
which the Manager or an affiliate of the Manager exercises investment
discretion. The Manager is authorized to pay a broker-dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for the Fund which is in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction if, but only if,
the Manager determines in good faith that such commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker-dealer viewed in terms of that particular transaction or in terms of all
of the accounts over which investment discretion is so exercised.
3. The Manager, at its own expense, shall furnish to the Fund office space
in the offices of the Manager or in such other place as may be agreed upon by
the parties from time to time, all necessary office facilities, equipment and
personnel in connection with its services hereunder, and shall arrange, if
desired by the Fund, for members of the Manager's organization to serve without
salaries from the Fund as officers or, as may be agreed from time to time, as
agents of the Fund. The Manager assumes and shall pay or reimburse the Fund for:
(1) the compensation (if any) of the Directors of the Fund who are affiliated
with the Manager or with its affiliates, or with any adviser retained by the
Manager, and of all officers of the Fund as such, and (2) all expenses of the
Manager incurred in connection with its services hereunder. The Fund assumes and
shall pay all other expenses of the Fund, including, without limitation: (1) all
charges and expenses of any custodian or depository appointed by the Fund for
the safekeeping of its cash, securities and other property; (2) all charges and
expenses for bookkeeping and auditors; (3) all charges and expenses of any
transfer agents and registrars appointed by the Fund; (4) all fees of all
Directors of the Fund who are not affiliated with the Manager or any of its
affiliates, or with any adviser retained by the Manager; (5) all broker's fees,
expenses and commissions and issue and transfer taxes chargeable to the Fund in
connection with transactions involving securities and other property to which
the Fund is a party; (6) all costs and expenses of distribution of its shares
incurred pursuant to a Plan of Distribution adopted under Rule 12b-1 under the
Investment Company Act of 1940 (" 1940 Act"); (7) all taxes and corporate fees
payable by the Fund to Federal, state or other governmental agencies; (8) all
costs of certificates representing shares of the Fund; (9) all fees and expenses
involved in registering and maintaining registrations of the Fund and of its
shares with the Securities and Exchange Commission (the "Commission") and
registering or qualifying its shares under state or other securities laws,
including, without limitation, the preparation and printing of registration
statements, prospectuses and statements of additional information for filing
with the Commission and other authorities; (10) expenses of preparing, printing
and mailing prospectuses and statements of additional information to
shareholders of the Fund; (11) all expenses of shareholders' and Directors'
meetings and of preparing, printing and mailing notices, reports and proxy
materials to shareholders of the Fund; (12) all charges and expenses of legal
counsel for the Fund and for Directors of the Fund in connection with legal
matters relating to the Fund, including, without limitation, legal services
rendered in connection with the Fund's existence, corporate and financial
structure and relations with its shareholders, registrations and qualifications
of securities under Federal, state and other laws, issues of securities,
expenses which the Fund has herein assumed, whether customary or not, and
extraordinary matters, including, without limitation, any litigation involving
the Fund, its Directors, officers, employees or agents; (13) all charges and
expenses of filing annual and other reports with the Commission and other
authorities; and (14) all extraordinary expenses and charges of the Fund. In the
event that the Manager provides any of these services or pays any of these
expenses, the Fund will promptly reimburse the Manager therefor.
The services of the Manager to the Fund hereunder are not to be deemed
exclusive, and the Manager shall be free to render similar services to others.
4. As compensation for the Manager's services to the Fund during the period
of this Agreement, the Fund will pay to the Manager a fee at the annual rate of:
AGGREGATE NET ASSET VALUE
MANAGEMENT FEE OF THE SHARES OF THE FUND
- - ------------------------------------------------------------------------------
0.75% of the first $ 250,000,000, plus
0.675% of the next $ 250,000,000, plus
0.60% of the next $ 500,000,000, plus
0.50% of amounts over $1,000,000,000
computed as of the close of business on each business day.
A pro rata portion of the fee shall be payable in arrears at the end of each
day or calendar month as the Manager may from time to time specify to the Fund.
If and when this Agreement terminates, any compensation payable hereunder for
the period ending with the date of such termination shall be payable upon such
termination. Amounts payable hereunder shall be promptly paid when due.
5. The Manager may enter into an agreement to retain, at its own expense,
Keystone Custodian Funds, Inc. or any other firm or firms ("Adviser") to provide
the Fund all of the services to be provided by the Manager hereunder, if such
agreement is approved as required by law. Such agreement may delegate to such
Adviser all of Manager's rights, obligations and duties hereunder.
6. The Manager shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the performance of
this Agreement, except a loss resulting from the Manager's willful misfeasance,
bad faith, gross negligence or from reckless disregard by it of its obligations
and duties under this Agreement. Any person, even though also an officer,
Director, partner, employee, or agent of the Manager, 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 Manager's duties hereunder), to be
rendering such services to or acting solely for the Fund and not as an officer,
Director, partner, employee, or agent or one under the control or direction of
the Manager even though paid by it. The Fund agrees to indemnify and hold the
Manager harmless from all taxes, charges, expenses, assessments, claims and
liabilities (including, without limitation, liabilities arising under the
Securities Act of 1933, the 1934 Act, the 1940 Act, and any state and foreign
securities and blue sky laws, as amended from time to time) and expenses,
including (without limitation) attorneys' fees and disbursements, arising
directly or indirectly from any action or thing which the Manager takes or does
or omits to take or do hereunder provided that the Manager shall not be
indemnified against any liability to the Fund or to its shareholders (or any
expenses incident to such liability) arising out of a breach of fiduciary duty
with respect to the receipt of compensation for services, willful misfeasance,
bad faith, or gross negligence on the part of the Manager in the performance of
its duties, or from reckless disregard by it of its obligations and duties under
this Agreement.
7. The Fund shall cause its books and accounts to be audited at least once
each year by a reputable independent public accountant or organization of public
accountants who shall render a report to the Fund.
8. Subject to and in accordance with the Articles of Organization of the
Fund, the Articles of Incorporation of the Manager and the governing documents
of any Adviser, it is understood that Directors, officers, agents and
shareholders of the Fund or any Adviser are or may be interested in the Manager
(or any successor thereof) as Directors and officers of the Manager or its
affiliates, as stockholders of Keystone Group, Inc. or otherwise; that
Directors, officers and agents of the Manager and its affiliates or stockholders
of Keystone Group, Inc. are or may be interested in the Fund or any Adviser as
Directors, officers, shareholders or otherwise; that the Manager (or any such
successor) is or may be interested in the Fund or any Adviser as shareholder, or
otherwise; and that the effect of any such adverse interests shall be governed
by said Articles of Organization of the Fund, Articles of Incorporation of the
Manager and governing documents of any Adviser.
9. This Agreement shall continue in effect after July 1, 1994 only so long
as (1) such continuance is specifically approved at least annually by the Board
of Directors of the Fund or by a vote of a majority of the outstanding voting
securities of the Fund, and (2) such renewal has been approved by the vote of a
majority of Directors of the Fund who are not interested persons, as that term
is defined in the 1940 Act, of the Manager or of the Fund, cast in person at a
meeting called for the purpose of voting on such approval.
10. On sixty days' written notice to the Manager, this Agreement may be
terminated at any time without the payment of any penalty by the Board of
Directors of the Fund or by vote of the holders of a majority of the outstanding
voting securities of the Fund; and on sixty days' written notice to the Fund,
this Agreement may be terminated at any time without the payment of any penalty,
by the Manager. This Agreement shall automatically terminate upon its assignment
(as that term is defined in the 1940 Act). Any notice under this Agreement shall
be given in writing, addressed and delivered, or mailed postage prepaid, to the
other party at the main office of such party.
11. This Agreement may be amended at any time by an instrument in writing
executed by both parties hereto or their respective successors, provided that
with regard to amendments of substance such execution by the Fund shall have
been first approved by the vote of the holders of a majority of the outstanding
voting securities of the Fund and by the vote of a majority of Directors of the
Fund who are not interested persons (as that term is defined in the 1940 Act) of
the Manager, any predecessor of the Manager, or of the Fund, cast in person at a
meeting called for the purpose of voting on such approval. A "majority of the
outstanding voting securities of the Fund" shall have, for all purposes of this
Agreement, the meaning provided therefor in the 1940 Act.
12. Any compensation payable to the Manager hereunder for any period other
than a full year shall be proportionately adjusted.
13. The provisions of this Agreement shall be governed, construed and
enforced in accordance with the laws of The Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the day and year first above written.
KEYSTONE AMERICA OMEGA FUND, INC.
By: ------------------------------------------------------
Title:
KEYSTONE MANAGEMENT, INC.
By: ------------------------------------------------------
Title:
<PAGE>
EXHIBIT C
KEYSTONE AMERICA OMEGA FUND
DECLARATION OF TRUST
Dated September 21, 1994
This DECLARATION OF TRUST of Keystone America Omega Fund, made at Boston,
Massachusetts on September 21, 1994 by Charles A. Austin, David M. Richardson,
Richard J. Shima, Andrew J. Simons (hereinafter with their successors referred
to as the "Trustees").
WITNESSETH:
WHEREAS the Trustees have agreed to manage all property received by them as
Trustees in accordance with the provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets which they may from time to time acquire in any
manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the pro rata benefit of the holders from time
to time of Shares in this Trust as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
Section 1. Name. This Trust shall be known as Keystone America Omega Fund
and the Trustees shall conduct the business of this Trust under that name or any
other name as they may from time to time determine.
Section 2. Definitions. Whenever used herein, unless otherwise required by
the context or specifically provided
(a) The terms "Affiliated Person", "Assignment", "Commission", "Interested
Person" and "Principal Underwriter" shall have the meanings given them in the
1940 Act;
(b) The "Trust" refers to the Massachusetts business trust established by
and under this Declaration of Trust;
(c) "Declaration of Trust" shall mean this Declaration of Trust as
amended or restated from time to time;
(d) "Net Asset Value Per Share" means the net asset value per share of
the Trust determined in the manner provided or authorized in Article VI,
Section 4;
(e) "Shareholder" means a record owner of Shares of the Trust;
(f) "Shares" means the equal proportionate units of interest into which
the beneficial interest in the Trust shall be divided from time to time or,
if more than one series ("Series") or more than one class ("Class") of
Shares is authorized by the Trustees, the equal proportionate units into
which each such Series or Class of Shares shall be divided from time to
time, and includes where appropriate fractions of a Share as well as a whole
Share, unless the Trustees provide that there shall be no fractions of any
particular Shares.
(g) "Trustees" refers to the Trustee or Trustees of the Trust who become
such in accordance with Article IV and where appropriate means a majority or
other portion of them acting in accordance with this Declaration of Trust or
the By-laws of the Trust; and
(h) The "1940 Act" refers to the Investment Company Act of 1940 and the
Rules and Regulations thereunder, all as amended from time to time.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to provide investors a continuous source of
managed investments.
ARTICLE III
BENEFICIAL INTEREST
Section 1. Shares of Beneficial Interest. The beneficial interest in the
Trust shall at all times be divided into transferable Shares, without par value,
each of which shall represent an equal proportionate interest in the Trust with
each other Share outstanding, none having priority or preference over another,
except to the extent modified by the Trustees under the provisions of this
Section. The number of Shares which may be issued is unlimited. The Trustees may
from time to time divide or combine the outstanding Shares into a greater or
lesser number without thereby changing the proportionate beneficial interests in
the Trust. Contributions to the Trust may be accepted for, and Shares shall be
redeemed as, whole Shares and/or fractions.
From time to time, as they deem appropriate, the Trustees may create
additional Series and/or Classes of Shares, in addition to the Shares initially
created under this instrument ("Original Series"). References in this
Declaration of Trust to Shares of the Trust shall apply, as appropriate, to each
such Series of Shares and to each such Class of Shares.
Any additional Series of Shares created hereunder shall represent the
beneficial interest in the assets (and related liabilities) allocated by the
Trustees to such Series of Shares and acquired by the Trust only after creation
of the respective Series of Shares and only on account of such Series. If the
Trustees create any additional Series of Shares hereunder, then the Original
Series shall be deemed a separate Series of Shares. Upon creation of each Series
of Shares, the Trustees may designate it appropriately and determine the
investment policies with respect to the assets allocated to such Series of
Shares, redemption rights, dividend policies, conversion rights, liquidation
rights, voting rights, and such other rights and restrictions as the Trustees
deem appropriate, to the extent not inconsistent with the provisions of this
Declaration of Trust.
The Trustees may divide any Series (including the Original Series) into more
than one Class of Shares. Upon creation of each additional Class of Shares the
Trustees may designate it appropriately and determine its rights and
restrictions (including without limitation such redemption rights, dividend
rights, conversion rights, liquidation rights, voting rights, and such other
rights and restrictions as the Trustees deem appropriate).
Section 2. Ownership of Shares. The ownership of Shares shall be recorded in
the books of the Trust or a transfer agent or a similar agent. The Trustees may
make such rules as they consider appropriate for the transfer of Shares and
similar matters. The record books of the Trust as kept by the Trust or any
transfer agent or similar agent, as the case may be, shall be conclusive as to
who are the holders of Shares of each Series or Class and as to the number of
Shares of each Series or Class held from time to time by each.
Section 3. Investments in the Trust. The Trustees shall accept investments
in the Trust from such persons and on such terms and, subject to any
requirements of law, for such consideration as the Trustees from time to time
authorize and may cease offering Shares to the public at any time. After such
acceptance, the number of Shares of the appropriate Series or Class to represent
the contribution may in the Trustees' discretion be considered as outstanding
and the amount receivable by the Trustees on account of the contribution may be
treated as an asset of the Series or Class.
Section 4. No Preemptive Rights. Shareholders shall have no preemptive or
other right to subscribe to any additional Shares or other securities issued
by the Trust.
Section 5. Provisions Relating to Series or Classes of Shares. Whenever no
Shares of a Series or Class are outstanding, then the Trustees may abolish such
Series or Class. Whenever more than one Series or Class of Shares is
outstanding, then the following provisions shall apply:
(a) ASSETS BELONGING TO EACH SERIES OR CLASS. All consideration received
by the Trust for the issue or sale of Shares of a particular Series or
Class, together with all assets in which such consideration is invested or
reinvested, all income, earnings and proceeds thereof, and any funds derived
from any reinvestment of such proceeds, shall, except to the extent
specifically otherwise provided in the provisions adopted by the Board of
Trustees establishing the Series or Class, irrevocably belong to that Series
or Class for all purposes, subject only to the rights of creditors, and
shall be so recorded upon the books of the Trust. In the event there are
assets, income, earnings, and proceeds thereof which are not readily
identifiable as belonging to a particular Series or Class, then the Trustees
shall allocate such items to the various Series or Classes then existing, in
such manner and on such basis as they, in their sole discretion, deem fair
and equitable. The amount of each such item allocated to a particular Series
or Class by the Trustees shall then belong to that Series or Class, and each
such allocation shall be conclusive and binding upon the Shareholders of all
Series or Classes for all purposes.
(b) LIABILITIES BELONGING TO EACH SERIES OR CLASS. The assets belonging
to each particular Series or Class shall, except to the extent specifically
otherwise provided in the provisions adopted by the Board of Trustees
establishing the Series or Class, be charged with the liabilities, expenses,
costs and reserves of the Trust attributable to that Series or Class; and
any general liabilities, expenses, costs and reserves of the Trust which are
not readily identifiable as attributable to a particular Series or Class
shall be allocated by the Trustees to the various Series or Classes then
existing, in such manner and on such basis as they, in their sole
discretion, deem fair and equitable. Each such allocation shall be
conclusive and binding upon the Shareholders of all Series or Classes for
all purposes.
(c) SERIES OR CLASSES OF SHARES, DIVIDENDS AND LIQUIDATION. Each Share
of each respective Class or Series shall, except to the extent specifically
otherwise provided in the provisions adopted by the Board of Trustees
establishing the Series or Class, have the same rights and pro rata
beneficial interest in the assets and liabilities of the Series or Class as
any other such Share. Any dividends paid on the Shares of any Series or
Class shall, except to the extent specifically otherwise provided in the
provisions adopted by the Board of Trustees establishing the Series or
Class, only be payable from and to the extent of the assets (net of
liabilities) belonging to that Series or Class. In the event of liquidation
of a Series or Class, only the assets (less provision for liabilities) of
that Series or Class shall be distributed to the holders of the Shares of
that Series or Class.
(d) VOTING BY SERIES OR CLASS. Except as provided in this Section or as
limited by the rights and restrictions of any Series or Class, each Share of
the Trust may vote with and in the same manner as any other Share on matters
submitted to a vote of the Shareholders entitled to vote thereon, without
differentiation among votes from the separate Series or Classes; provided,
however, that (i) as to any matter with respect to which a separate vote of
any Series or Class is required by the 1940 Act, or otherwise by applicable
law, such requirement as to a separate vote shall apply in lieu of the
voting described above; (ii) in the event that the separate vote
requirements referred to in (i) above apply with respect to one or more
Series or Classes, then, subject to (iii) below, the Shares of all other
Series or Classes shall vote without differentiation among their votes; and
(iii) as to any matter which does not affect the interest of any particular
Series or Class, only the holders of Shares of the one or more affected
Series or Classes shall be entitled to vote.
Section 6. Limitation of Personal Liability. The Trustees shall have no
power to bind any Shareholder personally or to call upon any Shareholder for the
payment of any sum of money or assessment whatsoever other than such as the
Shareholder may at any time personally agree to pay by way of subscription to
any Shares or otherwise. Every note, bond, contract or other undertaking issued
by or on behalf of the Trust or the Trustees relating to the Trust shall include
a recitation limiting the obligation represented thereby to the Trust and its
assets (but the omission of such a recitation shall not operate to bind any
Shareholder).
ARTICLE IV
THE TRUSTEES
Section 1. Number of Trustees. The number of Trustees shall initially be
such number as shall be elected as such by a vote of the shareholders of the
Trust and thereafter shall be such number as shall be fixed from time to time by
action of a majority of the Trustees.
Section 2. Election or Appointment and Term. The initial Trustees shall be
the individuals signing this Declaration in that capacity, who shall have been
previously elected by a vote of the shareholders of the Trust. Thereafter,
subject to Section 16(a) of the 1940 Act, the Trustees may elect themselves or
their successors at such intervals, as they deem proper, and may appoint
Trustees to fill vacancies as provided in Section 4 hereof; provided, that
Trustees shall be elected by vote of a majority of Shares voting thereon at such
time or times as the Trustees shall determine that such action is advisable.
Subject to Section 3 hereof, the Trustees shall have the power to set and alter
the terms of office of the Trustees, and they may at any time lengthen or
shorten their own terms or make their terms of unlimited duration; provided,
that the term of office of any incumbent Trustee shall continue until
terminated, as provided in Section 4 hereof or, if not so terminated, until the
election of such Trustee's successor in office has become effective in
accordance with this Section 2.
Section 3. Resignation and Removal. Any Trustee may resign his trust
(without need for prior or subsequent accounting) by an instrument in writing
signed by him and delivered to the other Trustees, and such resignation shall be
effective upon such delivery or at any later date according to the terms of the
instrument. Any Trustee may be removed by the action of two-thirds of the
remaining Trustees. Upon the resignation or removal of a Trustee, or his
otherwise ceasing to be a Trustee, he shall execute and deliver such documents
as the remaining Trustees shall require for the purpose of conveying to the
Trust or the remaining Trustees any Trust property held in his name. Upon the
incapacity or death of any Trustee, his legal representative shall execute and
deliver on his behalf such documents as the remaining Trustees shall require as
provided in the preceding sentence. However, the execution and delivery of such
documents by a former Trustee or his legal representative shall not be requisite
to the vesting of title to the Trust property in the remaining Trustees.
Section 4. Vacancies. The term of office of a Trustee shall terminate and a
vacancy shall occur in the event of such Trustee's death, resignation, removal,
bankruptcy, adjudicated incompetence or other incapacity to perform the duties
of the office of Trustee. No such vacancy shall operate to annul this
Declaration of Trust or to revoke any existing agency created pursuant to the
terms of this Declaration of Trust. In the case of an existing vacancy,
including a vacancy existing by reason of an increase in the number of Trustees,
subject to applicable law, the remaining Trustees or, if only one Trustee shall
then remain in office, the sole remaining Trustee, shall appoint such individual
to fill such vacancy as they or he, in their or his discretion, shall see fit.
An appointment of a Trustee may be made in anticipation of a vacancy to occur at
a later date by reason of retirement or resignation of a Trustee or an increase
in the number of Trustees; provided, that such appointment shall not become
effective prior to such retirement or resignation or such increase in the number
of Trustees. Whenever a vacancy in the number of Trustees shall occur, until
such vacancy is filled as provided in this Section 4, the Trustees in office,
regardless of their number, shall have all the powers granted to the Trustees
and shall discharge all the duties imposed upon the Trustees by this Declaration
of Trust in the manner provided by this Declaration of Trust. A written
instrument certifying the existence of such vacancy signed by a majority of the
Trustees shall be conclusive evidence of the existence of such vacancy.
Section 5. Management of the Trust. Subject to the provisions of this
Declaration of Trust, the business and affairs of the Trust shall be managed by
the Trustees, and they shall have all powers necessary and desirable to carry
out that responsibility. Action by the Trustees may be taken by majority vote of
the Trustees at a meeting at which a quorum (which shall be a majority of the
Trustees then in office) shall be present, or by a writing signed by a majority
of the Trustees in office.
Without limiting the foregoing, the Trustees may adopt By-Laws not
inconsistent with this Declaration of Trust providing for the conduct of the
business of the Trust and may amend and repeal them to the extent that they do
not reserve that right to any Shareholders; they may elect and remove such
officers and appoint and terminate such agents as they consider appropriate;
they may appoint from their own number and terminate any one or more committees;
they may employ one or more custodians of the assets of the Trust and may
authorize such custodians to employ subcustodians and to deposit all or any part
of such assets in a system or systems for the central handling of securities,
retain a transfer agent or a Shareholder servicing agent, or both, provide for
the distribution of Shares by the Trust, through one or more principal
underwriters or otherwise, set, or otherwise provide for the setting of, record
dates, and in general delegate such authority to do any or all things which the
Trustees may do in the operation of the business of the Trust as they consider
desirable to any officers of the Trust and committees of the Trustees and to any
agent or employee, custodian or underwriter. Any action relating to the
operation of the Trust provided for herein to be taken by the Trustees may be
taken by any other person under authority granted by the Trustees whether or not
specifically so stated, and unless specifically so stated to the contrary. A
specific statement indicating that the Trustees may delegate any authority shall
not give rise to any contrary implication with respect to any provision of this
Declaration of Trust.
Without limiting the foregoing, the Trustees in addition to all powers
granted by law shall have power and authority:
(a) To invest and reinvest cash, and to hold cash uninvested, without in
anywise being bound or limited by any present or future law or custom in
regard to investments by trustees;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate or lease any
or all of the assets of the Trust;
(c) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property, and to execute and deliver
proxies or powers of attorney to such person or persons as the Trustees
shall deem proper, granting to such person or persons such power and
discretion with relation to securities or property as the Trustees shall
deem proper;
(d) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form, or in the Trust's
own name or in the name of a custodian or subcustodian or a nominee or
nominees or otherwise;
(f) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of which
is held in the Trust; to consent to any contract, lease, mortgage, purchase
or sale of property by such corporation or concern, and to pay calls or
subscriptions with respect to any security held in the Trust;
(g) To join with other security holders in acting through a committee,
depository, voting trustee or otherwise, and in that connection to deposit
any security with, or transfer any security to, any such committee,
depository or trustee, and to delegate to them such power and authority with
relation to any security (whether or not so deposited or transferred) as the
Trustees shall deem proper, and to agree to pay, and to pay, such portion of
the expenses and compensation of such committee, depository or trustee as
the Trustees shall deem proper;
(h) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust for any matter in controversy, including but not limited
to claims for taxes; and
(i) To borrow funds.
The Trustees shall not be required to obtain any court order to deal with
any assets of the Trust or take any other action hereunder.
Section 6. Ownership of Assets of the Trust. The assets of the Trust shall
be held separate and apart from any assets now or hereafter held in any capacity
other than as Trustee hereunder by the Trustees or by any successor Trustees.
All of the assets of the Trust shall at all times be considered as vested in the
Trustees. No Shareholder shall be deemed to have a severable ownership in any
individual asset of the Trust or any right of partition or possession thereof,
but each Shareholder shall have a proportionate undivided beneficial interest in
the assets of the Series or Class of Shares of which he is a holder, subject to
any rights or restrictions applicable to any Series or Class of Shares of which
he is a holder.
Section 7. Payment of Expenses. The Trustees shall pay or cause to be paid
out of the principal or income of the Trust, or partly out of principal and
partly out of income, as they deem fair, all expenses, charges, taxes and
liabilities incurred or arising in connection with the Trust, or in connection
with the management thereof, including but not limited to the Trustees'
compensation and such expenses and charges for the services of the Trust's
investment adviser or manager, administrator, auditor, counsel, custodian,
transfer agent, Shareholder servicing agent, and such other agents or
independent contractors and such other expenses and charges as the Trustees may
deem necessary or proper to incur.
Section 8. Investment Management and Other Services. Without limiting the
generality of the powers of the Trustees, subject to applicable law, the
Trustees may enter into a contract with any person or persons, including any
firm, corporation, trust or association in which any Trustee, Shareholder or
officer of the Trust may be interested, to act as investment advisers and/or
managers of the Trust and to provide such investment advice and/or management as
the Trustees may from time to time consider appropriate ("Adviser"). Any such
contract may authorize the Adviser to determine from time to time what
securities shall be acquired, held or disposed of by the Trust and what portion
of assets of the Trust shall be held uninvested and to take, on behalf of the
Trust, actions which the Adviser deems necessary to implement the investment
policies of the Trust, including the placement of all orders for the purchase,
sale or loan of portfolio securities for the Trust's account with brokers or
dealers or others selected by the Adviser and the giving of instructions to the
custodian of the Trust's assets as to deliveries of securities and payments of
cash for the account of the Trust.
Without limiting the generality of the powers of the Trustees, subject to
applicable law, the Adviser may enter into an agreement to retain at its own
expense any person or persons, including any firm, corporation, trust or
association in which any Trustee, Shareholder or officer of the Trust may be
interested, to provide the Trust investment advice and/or management and any
person or persons so retained may be granted all authority which has been
granted to the Adviser under the contract which the Adviser entered into
pursuant to the preceding paragraph.
Without limiting the generality of the powers of the Trustees, the Trustees
may enter into a contract with any person or persons, including any firm,
corporation, trust or association in which any Trustee, Shareholder or officer
of the Trust may be interested, to act as principal underwriter for the Shares.
Section 9. Affiliations of Trustees or Officers, Etc. The fact that (i) any
of the Shareholders, Trustees or officers of the Trust is a shareholder,
Director, officer, partner, Trustee, employee, manager, adviser or distributor
of or for any partnership, corporation, trust, association or other organization
or for any parent or affiliate of any organization, with which any contract
including, without limitation, contracts for services as manager, investment
adviser, distributor, principal underwriter, custodian, transfer agent or
dividend disbursing agent or for related services may have been or may hereafter
be made, or that any such organization, or any parent or affiliate thereof, is a
Shareholder of or has an interest in the Trust, or that (ii) any partnership,
corporation, trust, association or other organization with which a contract
referred to in (i) above may have been or may hereafter be made also has any one
or more of such contracts with one or more other partnerships, corporations,
trusts, associations or other organizations, or has other business or interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its Shareholders.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 1. Voting Powers. The Shareholders shall have power to vote only (i)
for the election of Trustees as provided in Section 2 of Article IV hereof and
the removal of Trustees to the extent provided in Section 16(c) of the 1940 Act,
(ii) with respect to approval or termination in accordance with the 1940 Act of
any investment advisory or management agreement described in Article IV hereof,
(iii) with respect to any amendment of this Declaration of Trust to the extent
and as provided in Section 7 of Article IX hereof, (iv) to the same extent as
the stockholders of a Massachusetts corporation as to whether or not a court
action, proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the Shareholders,
and (v) with respect to such additional matters relating to the Trust as may be
required by this Declaration of Trust or the By-Laws, or as to which the
Trustees in their discretion shall determine such Shareholder vote to be
required by law or otherwise to be necessary, appropriate or advisable.
Each whole Share shall be entitled to one vote as to any matter on which it
is entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by proxy. A proxy with
respect to Shares held in the name of two or more persons shall be valid if
executed by any one of them unless at or prior to exercise of the proxy the
Trust receives a specific written notice to the contrary from any one of them. A
proxy purporting to be executed by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. Until Shares are issued, the Trustees
may exercise all rights of Shareholders and may take any action required by law,
this Declaration of Trust or any By-Laws of the Trust to be taken by
Shareholders.
Section 2. Meetings. Meetings of Shareholders shall be held at such times at
the principal office of the Trust or such other place as the Trustees may
designate. Meetings of the Shareholders may be called by the Trustees or such
other person or persons as may be specified in the By-laws. Shareholders shall
be entitled to at least seven days' notice of any meeting.
Section 3. Quorum and Required Vote. Except as otherwise provided by law, to
constitute a quorum for the transaction of business at a Shareholders' meeting
there must be present, in person or by proxy, holders of a majority of the total
number of Shares of the Trust then outstanding and entitled to vote at the
meeting, but any lesser number shall be sufficient for adjournment, and any
adjourned session or sessions may be held within 90 days after the date set for
the original meeting without the necessity of further notice. Subject to any
applicable requirements of law, a majority of the Shares present and entitled to
vote on a question or election shall decide such question or election, except
when a larger vote is required by any provision of this Declaration of Trust,
the By-Laws of the Trust or any applicable provision of law.
Section 4. Action by Written Consent. Except as otherwise required by law,
any action required or permitted to be taken at any meeting may be taken without
a meeting if a consent in writing setting forth such action is signed by the
Shareholders entitled to vote on the subject matter thereof holding a majority
of the Shares entitled to vote thereon.
Section 5. Additional Provisions. The By-Laws may include further provisions
for Shareholders' votes and meetings and related matters.
ARTICLE VI
DISTRIBUTIONS AND REDEMPTIONS
Section 1. Distributions. The Trustees may, but need not, each year
distribute to the Shareholders of each Series or Class such income and gains as
the Trustees may determine, after providing for actual and accrued expenses and
liabilities (including such reserves as the Trustees may establish) determined
in accordance with generally accepted accounting practices. The Trustees shall
have full discretion to determine which items shall be treated as income and
which items as capital and their determination shall be binding upon the
Shareholders. Distributions of each year's income of each Series or Class, if
any be made, may be made in one or more payments, which shall be in Shares, in
cash or otherwise and on a date or dates and as of a record date or dates
determined by or under the authority of the Trustees. At any time and from time
to time in their discretion the Trustees may distribute to the Shareholders of
any one or more Series or Class as of a record date or dates determined by or
under the authority of the Trustees, in Shares, in cash or otherwise, all or
part of any gain realized on the sale or disposition of property of the Trust or
otherwise, or all or part of any other principal of the Trust. Each distribution
pursuant to this Section 1 shall be made ratably according to the number of
Shares of the Series or Class held by the several Shareholders on the applicable
record date thereof, provided that no distribution need be made on Shares
purchased pursuant to orders received or for which payment is made after such
time or times as may be determined by or under the authority of the Trustees.
Any such distribution paid in Shares will be paid at the net asset value thereof
as determined in accordance with Section 4 hereof.
Section 2. Redemptions. Upon offer by any Shareholder of all or part of the
Shares held by the Shareholder for redemption hereunder, in accordance with such
methods, upon such terms and subject to such conditions as from time to time may
be determined by or under the authority of the Trustees, the Trust shall redeem
the Shares so offered by distributing to the Shareholder the Net Asset Value per
Share thereof determined as of a time fixed by or under the authority of the
Trustees. The Trust shall have the right at its option and at any time to redeem
the Shares of any Shareholder for their Net Asset Value per Share if the
Shareholder owns Shares of a Series or Class having an aggregate net asset value
of less than such minimum amount as may from time to time be prescribed by or
under the authority of the Trustees or if ownership of such Shares by the
Shareholder could create adverse tax consequences for the Trust or any Series or
Class thereof. With respect to all Shares or any Series or Class of Shares, the
right to redemption or the date for payment may, however, be delayed or
suspended by the Trustees if there is an extraordinary closing or restriction of
trading on the New York Stock Exchange as determined under rules and regulations
of the Commission, or an emergency exists as a result of which it is not
reasonably practicable for the Trust to dispose of securities or fairly to
determine the value of its net assets, or as the Commission may permit. The
completion of such distribution on redemption of Shares shall constitute a full
discharge of the Trust and Trustees with respect to such Shares, and the
Trustees may require that any certificate or certificates issued by the Trust to
evidence the ownership of the Shares shall be surrendered to the Trustees for
cancellation or notation. Shares so redeemed shall be cancelled or held by the
Trust for reissue, as the Trustees may from time to time determine.
Section 3. Payment in Kind. Subject to any generally applicable limitation
imposed by the Trustees, any distribution on redemption may, if authorized by
the Trustees, be made wholly or partly in kind, instead of in cash. Such
distribution in kind shall be made by distributing investments constituting, in
the opinion of the Trustees, a fair representation of the various types of
securities then held by the Series or Class of Shares being redeemed (but not
necessarily including a portion of each particular investment) and in each case
having an aggregate value equal to the amount of cash instead of which such
distribution in kind is made.
Section 4. Determination of Net Asset Value per Share. Subject to applicable
law, the Net Asset Value per Share of each Series or Class shall be computed as
of such times as may be determined by or under authority of the Trustees by
determining the value of all the investments of such Series or Class in such
manner as may be determined by or under authority of the Trustees, adding any
other assets of such Series or Class, subtracting all liabilities of such Series
or Class and dividing the result by the number of Shares of such Series or Class
outstanding.
Determination of Net Asset Value per Share so made in good faith and
pursuant to the provisions of the 1940 Act shall be binding on all parties
concerned.
Section 5. Automatic Redemption from Small Accounts. The Trustees shall have
the power to redeem shares at a redemption price determined in accordance with
Section 4 of this Article if at any time the total investment in an account does
not have a value of at least $1,000 or such other minimum amount as the Trustees
may from time to time determine. Before redeeming such Shares, the Shareholder
will be notified that the value of his account is less than the required minimum
amount and be allowed 60 days or such period as is permitted by law to make an
additional investment to bring the total value of such account to such amount or
more.
Section 6. Power to Modify Foregoing Procedures. Notwithstanding any of the
foregoing provisions of this Article VI, the Trustees may prescribe, in their
absolute discretion, such other bases and times for the declaration and payment
of dividends and distributions as they may deem desirable or necessary to enable
the Trust to comply with any provision of the 1940 Act or the Internal Revenue
Code, including any rule or regulation adopted by the Commission or any
securities association registered under the Securities Exchange Act of 1934, or
any order of exemption issued by the Commission or any rule or regulation issued
under the Internal Revenue Code, all as in effect now or as hereafter amended or
modified.
ARTICLE VII
COMPENSATION AND LIMITATION OF LIABILITY OF TRUSTEES
Section 1. Compensation. The Trustees shall be entitled to reasonable
compensation from the Trust; they may fix the amount of their compensation.
Section 2. Limitation of Liability. Provided they have exercised reasonable
care in their selection, the Trustees shall not be responsible or liable in any
event for any neglect or wrongdoing of any officer, agent, employee or Adviser
of the Trust nor shall any Trustee be responsible for the act or omission of any
other Trustee, but nothing herein contained shall protect any Trustee against
any liability to which he would otherwise be subject by reason of wilful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
Every note, bond, contract, instrument, certificate, share or undertaking
and every other act or thing whatsoever executed or done by or on behalf of the
Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been executed or done only in their or his capacity
as Trustees or Trustee, and such Trustees or Trustee shall not be personally
liable thereon.
The Trustees shall use their best efforts to ensure that every note, bond,
contract, instrument, certificate or undertaking made or issued by the Trustees
or by any officers shall give notice of the existence of this Declaration of
Trust and shall recite to the effect that the same was executed or made by or on
behalf of the Trust or by them as Trustees or officers, and not individually,
and is not binding upon any of them or the Shareholders individually, but is
binding only upon the Trust property, or the assets of the particular Series or
Class in question, as the case may be, but the omission thereof shall not
operate to bind any Trustee or officer or Shareholder individually, or to
subject the assets of any Series or Class to the obligations of any other Series
or Class.
ARTICLE VIII
INDEMNIFICATION
Section 1. Trustees, Officers, etc. The Trust shall indemnify each of its
present and former Trustees and officers and may indemnify any of its present or
former employees or agents, and shall indemnify any persons who serve or have
served at the Trust's request as Directors, officers or Trustees of another
organization, and may indemnify persons who serve or have served at the Trust's
request as employees or agents of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise (hereinafter referred to as
a "Covered Person") against all liabilities and expenses, including but not
limited to amounts paid in satisfaction of judgments, in compromise or as fines
and penalties, and counsel fees reasonably incurred by any such Covered Person
in connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office, employed or acting as agent, or thereafter, by
reason of being or having been such a Trustee, officer, Director, employee or
agent, except with respect to any matter as to which such Covered Person shall
have been finally adjudicated in any such action, suit or other proceeding not
to have acted in good faith in the reasonable belief that such Covered Person's
action was in the best interest of the Trust and except that no person shall be
indemnified against any liability to the Trust or its Shareholders to which such
Covered Person shall otherwise be subject by reason of wilful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office. Expenses, including counsel fees so incurred by any
Covered Person, may in the discretion of the Trustees be paid from time to time
by the Trust in advance of the final disposition of any such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such Covered Person
to repay amounts so paid to the Trust if it is ultimately determined that
indemnification against such expenses is not authorized under this Article.
Except as otherwise provided by law, the Trust shall have power to purchase
and maintain insurance on behalf of a Covered Person against any liability
asserted against him and incurred by him in his capacity as a Covered Person, or
arising out of his status as such, whether or not the Trust would have the power
to indemnify him against the liability under the provisions of this Section.
Section 2. Compromise Payment. As to any matter disposed of by a compromise
payment by any Covered Person referred to in Section 1 above, pursuant to a
consent decree or otherwise, no such indemnification either for such payment or
for any other expenses shall be provided unless such compromise shall be
approved as in the best interests of the Trust, after notice that it involved
such indemnification, (a) by a disinterested majority of the Trustees then in
office; or (b) by a majority of the disinterested Trustees then in office; or
(c) by any disinterested person or persons to whom the question may be referred
by the Trustees, provided that in the case of approval pursuant to clause (b) or
(c) there has been obtained an opinion in writing of independent legal counsel
to the effect that such Covered Person appears to have acted in good faith in
the reasonable belief that his action was in the best interests of the Trust and
that such indemnification would not protect such person against any liability to
the Trust to which such person would otherwise be subject by reason of wilful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office; or (d) by vote of a majority of the
Shares voting thereon, exclusive of any Shares beneficially owned by any
interested Covered Person. Approval by the Trustees pursuant to clause (a) or
(b) or any disinterested person or persons pursuant to clause (c) of this
Section shall not prevent the recovery from any Covered Person of any amount
paid to such Covered Person in accordance with any such clauses as
indemnification if such Covered Person is subsequently adjudicated by a court of
competent jurisdiction not to have acted in good faith in the reasonable belief
that such person's action was in the best interests of the Trust or to have been
liable to the Trust or its Shareholders by reason of wilful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office.
Section 3. Indemnification Not Exclusive. The right of indemnification
hereby provided shall not be exclusive or affect any other rights to which any
such Covered Person may be entitled. As used in this Article VIII, the term
"Covered Person" shall include such person's heirs, executors and
administrators. An "interested Covered Person" is one against whom the action,
suit or other proceeding in question or another action, suit or other proceeding
on the same or similar grounds is then or has been pending, and a "disinterested
person" is a person against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or has been pending. Nothing contained in this Article shall
affect any rights to indemnification to which personnel of the Trust other than
Trustees and officers or other persons may be entitled by contract or otherwise
under law.
Section 4. Shareholders. In case any Shareholder or former Shareholder shall
be held to be personally liable solely by reason of his being or having been a
Shareholder and not because of his acts or omissions or for some other reason,
the Shareholder or former Shareholder (or his heirs, executors, administrators
or other legal representatives or in the case of a corporation or other entity,
its corporate or other successor) shall be entitled out of the assets of the
Trust to be held harmless from and indemnified against all loss and expense
arising from such liability.
ARTICLE IX
MISCELLANEOUS
Section 1. Trust Not a Partnership. It is hereby expressly declared that a
trust and not a partnership is created hereby. Neither the Trust nor the
Trustees, nor any officer, employee or agent of the Trust shall have any power
to bind personally either the Trust's Trustees or officers or any Shareholders.
All persons extending credit to, contracting with or having any claim against
the Trust shall look only to the assets of the Trust for payment under such
credit, contract or claim, and neither the Shareholders nor the Trustees, nor
any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefor. Nothing in this Declaration of
Trust shall protect any Trustee against any liability to which such Trustee
would otherwise be subject by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee hereunder.
Section 2. Trustee's Good Faith Action, Expert Advice, No Bond or Surety.
The exercise by the Trustees of their powers and discretions hereunder in good
faith and with reasonable care under the circumstances then prevailing shall be
binding upon everyone interested. Subject to the provisions of Section 1 of this
Article IX, a Trustee shall be liable for his own wilful defaults, and for
nothing else, and shall not be liable for errors of judgment or mistakes of fact
or law. The Trustees may take advice of counsel or other experts with respect to
the meaning and operation of this Declaration of Trust, and subject to the
provisions of said Section 1 shall be under no liability for any act or omission
in accordance with such advice or for failing to follow such advice. The
Trustees shall not be required to give any bond as such, nor any surety if a
bond is required.
Section 3. Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees pursuant hereto
or to see to the application of any payments made or property transferred to the
Trust or upon its order.
Section 4. Duration; Termination of Trust; Amendments; Mergers, etc.
(a) This Trust shall continue without limitation of time but subject to
the provisions of this Section 4.
(b) The Trust (as used in this Section 4 the term "Trust" specifically
also means any Series or Class) may be terminated by action of the Trustees.
(c) Upon the termination of the Trust:
(i) The Trust shall carry on no business except for the purpose of
winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the Trust
and all of the powers of the Trustees under this Declaration of Trust
shall continue until the affairs of the Trust shall have been wound up,
including the power to fulfill or discharge the contracts of the Trust,
collect its assets, sell, convey, assign, exchange, transfer or
otherwise dispose of all or any part of the remaining Trust property to
one or more persons at public or private sale for consideration which
may consist in whole or in part of cash, securities or other property of
any kind, discharge or pay its liabilities, and to do all other acts
appropriate to liquidate its business.
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and
refunding agreements as they deem necessary for their protection, the
Trusteees shall distribute the remaining Trust property, in cash or in
kind or partly each, among the Shareholders according to their
respective rights and interests.
(d) After termination of the Trust and distribution to the Shareholders
as herein provided, a majority of the Trustees shall execute and lodge among
the records of the Trust an instrument in writing setting forth the fact of
such termination, and the Trustees shall thereupon be discharged from all
further liabilities and duties hereunder, and the rights and interests of
all Shareholders shall thereupon cease.
(e) Upon completion of the distribution of the remaining proceeds or the
remaining assets as provided in paragraphs (c) and (d), the Trust shall
terminate and the Trustees shall be discharged of any and all further
liabilities and duties hereunder and the right, title and interest of all
parties shall be canceled and discharged.
Section 5. Filing of Copies, References, Headings. The original or a copy of
this instrument and of each Declaration of Trust supplemental hereto or
Amendment hereof shall be kept at the office of the Trust where it may be
inspected by any Shareholder. Anyone dealing with the Trust may rely on a
certificate by an officer of the Trust as to whether or not any Supplemental
Declaration of Trust or Amendments have been made and as to any matters in
connection with the trust hereunder; and, with the same effect as if it were the
original, may rely on a copy certified by an officer of the Trust to be a copy
of this instrument or of any such Supplemental Declaration of Trust or
Amendment. In this instrument or in any such Amendment or Supplemental
Declaration of Trust, references to this instrument, and all expressions such as
"herein," "hereof," and "hereunder," shall be deemed to refer to this instrument
as amended or affected by any such Supplemental Declaration of Trust or
Amendment. Headings are placed herein for convenience of reference only and in
case of any conflict, the text of this instrument, rather than the headings,
shall control. This instrument may be executed in any number of counterparts
each of which shall be deemed an original.
Section 6. Applicable Law. The Trust set forth in this instrument is made in
The Commonwealth of Massachusetts, and it is created under and is to be governed
by and construed and administered according to the laws of such Commonwealth.
The Trust shall be of the type commonly called a Massachusetts business trust,
and, without limiting the provisions hereof, the Trust may exercise all powers
which are ordinarily exercised by such a trust.
Section 7. Amendments. (a) This Declaration of Trust may be amended by a
vote or written consent of the Trustees. However, if such amendment adversely
affects the rights of any Shares of any Series or any Class with respect to
matters to which such amendment is applicable, such amendment shall be subject
to approval by holders of a majority of the Shares of such Series or Class. An
amendment or other action which provides for an additional Series of Shares
(and/or Class thereof), which Series may vote together with Shares of other
Series (and/or Classes thereof) and makes other provisions with respect to such
Series (and/or Class thereof) and its relation to existing Series (and/or
Classes thereof), shall not be deemed to adversely affect the rights of any
other Series of Shares or Class thereof. The Trustees may also amend this
Declaration of Trust without any Shareholder approval to change the name of the
Trust, to supply any omission, to cure, correct or supplement any ambiguous,
defective or inconsistent provision hereof, or, if they deem it necessary, to
conform this Declaration of Trust to the requirements of applicable federal laws
or regulations or the requirements of the Internal Revenue Code, or to eliminate
or reduce any federal, state or local taxes which are or may be payable by the
Trust or the Shareholders, but the Trustees shall not be liable for failing to
do so.
(b) Nothing contained in this Declaration of Trust shall permit the
amendment of this Declaration of Trust to impair the exemption from personal
liability of the Shareholders, Trustees, officers, employees and agents of the
Trust or to permit assessments upon Shareholders.
(c) A certificate signed by a majority of the Trustees or by the Secretary
or any Assistant Secretary of the Trust, setting forth an amendment by reciting
that it was duly adopted by the Shareholders or by the Trustees as aforesaid, or
a copy of the Declaration of Trust as amended, and executed by a majority of the
Trustees or certified by the Secretary or any Assistant Secretary of the Trust,
shall be conclusive evidence of such amendment when lodged among the records of
the Trust.
Section 8. Merger, Consolidation and Sale of Assets. The Trust may merge
into or consolidate with any other corporation, association, trust or other
organization or may sell, lease or exchange all or substantially all of the
Trust property, including its good will, upon such terms and conditions and for
such consideration when and as authorized by the Trustees.
Section 9. Incorporation. The Trustees may cause to be organized or assist
in organizing a corporation or corporations under the laws of any jurisdiction
or any other trust, partnership, association or other organization to take over
all the Trust property or to carry on any business in which the Trust shall
directly or indirectly have any interest, and to sell, convey and transfer the
Trust property to any such corporation, trust, partnership, association or
organization in exchange for the shares or securities thereof or otherwise, and
to lend money to, subscribe for the shares or securities of, and enter into any
contracts with any such corporation, trust, partnership, association or
organization in which the Trust holds or is about to acquire shares or any other
interest. The Trustees may also cause a merger or consolidation between the
Trust or any successor thereto and any corporation, trust, partnership,
association or other organization if and to the extent permitted by law, as
provided under the law then in effect. Nothing contained herein shall be
construed as requiring approval of Shareholders for the Trustees to organize or
assist in organizing one or more corporations, trusts, partnerships,
associations or other organizations and selling, conveying or transferring the
Trust property to such organizations or entities.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and seals
in the City of Boston, Massachusetts, for themselves and their assigns, as of
the day and year first above written.
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George S. Bissell
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K. Dun Gifford
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John M. Haffenreffer
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Philip B. Harley
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F. Ray Keyser, Jr.
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Everett P. Pope
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James A. Reed
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John W. Sharp
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Spencer R. Stuart
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Russel R. Taylor
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Rodney M. Vining
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Charles M. Williams
