As filed with the Securities and Exchange
Commission on June 29, 1998
Registration No. 33-8441
File No. 811-4828
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 16 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 18 [X]
BAILARD, BIEHL & KAISER FUND GROUP
(Exact name of registrant as specified in charter)
950 Tower Lane, Suite 1900
Foster City, California 94404-2131
(Address of principal executive offices)
Registrant's telephone number, including area code: (800) 882-8383
THOMAS E. BAILARD, Chairman
BAILARD, BIEHL & KAISER FUND GROUP
950 Tower Lane, Suite 1900
Foster City, California 94404-2131
(Name and address of agent for service of process)
Copies to:
ANDRE W. BREWSTER, ESQ.
HOWARD, RICE, NEMEROVSKI, CANADY, FALK & RABKIN, A PROFESSIONAL CORPORATION
Three Embarcadero Center, 7th Floor
San Francisco, CA 94111-4065
Approximate date of proposed public offering: As soon as practicable after the
effective date of this registration statement.
It is proposed that this filing will become effective (check appropriate
box):
[X] Immediately upon filing pursuant to paragraph (b)
[_] On __(date)____, pursuant to paragraph (b) of Rule 485
[_] 60 days after filing pursuant to paragraph (a)(1)
[_] On (date) , pursuant to paragraph (a)(1)
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] On __(date)____, pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[_] This post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933:
An indefinite number of shares of Registrant's common stock are being registered
by this post-effective amendment to Registrant's registration statement in
accordance with Rule 24f-2 under the Investment Company Act of 1940. The
non-refundable fee required by paragraph (a)(3) of Rule 24f-2 has already been
paid to the Commission. Registrant's most recent Rule 24f-2 Notice was filed on
or about December 15, 1997.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant certifies that it meets
the requirements of effectiveness of the Amendment under Rule 485(b) under the
Securities Act of 1933 and that the registrant has duly caused this Amendment to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Foster City, State of California, on the 21st day of May, 1998.
BAILARD, BIEHL & KAISER FUND GROUP
By: /s/Thomas E. Bailard
--------------------------------
Thomas E. Bailard
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/Thomas E. Bailard Chairman and Trustee May 21, 1998
- ---------------------------------------
Thomas E. Bailard(1)
/s/Burnice E. Sparks, Jr. President and Trustee May 21, 1998
- ---------------------------------------
Burnice E. Sparks, Jr.
/s/Barbara V. Bailey Treasurer May 21, 1998
- ---------------------------------------
Barbara V. Bailey(2)
/s/Shirley L. Clayton Trustee May 21, 1998
- ---------------------------------------
Shirley L. Clayton
/s/Scott F. Wilson Trustee May 21, 1998
- ---------------------------------------
Scott F. Wilson
/s/James C. Van Horne Trustee May 21, 1998
- ---------------------------------------
James C. Van Horne
- --------
(1) Principal Executive Officer
(2) Principal Financial Officer
</TABLE>
The Commonwealth of Massachusetts
[GRAPHIC OMITTED] Office of the Secretary of State
State House, Boston 02133
November 17, 1986
TO WHOM IT MAY CONCERN:
I hereby certify that
BB&K FUND GROUP
is a voluntary association with transferable shares organized and existing under
and by virtue of the laws of said Commonwealth of Massachusetts; that a copy of
its Declaration of Trust dated as of August 27 , 1986 was filed in this office
on August 29, 1986 pursuant to Chapter 182 of the laws of said Commonwealth of
Massachusetts, and subsequent thereto copies of amendments to said Declaration
of Trust were filed hereinafter indicated as follows:
2. Appointment of resident agent &
incumbency 8-29-86
and that said association has filed the necessary certificates required to be
filed tinder said Chapter 182 and paid the necessary fees due thereon; and that
said association is at the date of this certificate duly, authorized to exercise
in said Commonwealth of Massachusetts all of the powers recited in said
Declaration of Trust, as amended, and to transact business in said Commonwealth
of Massachusetts.
IN TESTIMONY of which, I have hereunto affixed
the Great Seal of the Commonwealth on
the date first above written.
[SEAL]
/s/ [ILLEGIBLE]
Secretary of State
<PAGE>
--------------------------------------
DECLARATION OF TRUST
OF
BB&K FUND GROUP
AUGUST 27, 1986
---------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I -- Name and Definitions ............................................ 1
--------------------
Section 1.1 Name ..................................................... 1
Section 1.2 Definitions .............................................. 1
ARTICLE II -- Trustees ....................................................... 4
--------
Section 2.1 Number of Trustees ....................................... 4
Section 2.2 Election or Appointment and Term ......................... 4
Section 2.3 Resignation and Removal .................................. 5
Section 2.4 Vacancies ................................................ 5
ARTICLE III -- Powers of Trustees ............................................ 6
------------------
Section 3.1 General .................................................. 6
Section 3.2 Business and Investments ................................. 7
Section 3.3 Legal Title .............................................. 8
Section 3.4 Issuance and Repurchase
of Securities ....................................... 9
Section3.5 Borrowing Money;
Lending Trust Assets................................. 9
Section 3.6 Delegation; Committees ................................... 9
Section 3.7 Collection and Payment ................................... 9
Section 3.8 Expenses ................................................. 9
Section 3.9 Litigation ...............................................10
Section3.10 Miscellaneous Powers .....................................10
Section3.11 Manner of Acting; By-Laws ................................11
ARTICLE IV -- Investment Adviser, Distributor, Custodian
-------------------------------------------
and Shareholder Servicing Agent ...............................11
-------------------------------
Section 4.1 Investment Adviser .......................................11
Section 4.2 Distributor ..............................................12
Section 4.3 Shareholder Servicing Agent ..............................12
Section 4.4 Custodian ................................................12
Section 4.5 Parties to Agreements ....................................12
ARTICLE V -- Limitations of Liability of Shareholders,
-------------------------------------------
Trustees and Others........ ...................................13
-------------------
Section 5.1 No Personal Liability of
Shareholders, Trustees, etc..........................13
Section 5.2 Non-Liability of Trustees, etc............................14
(i)
<PAGE>
PAGE
----
Section 5.3 Indemnification ..........................................14
Section 5.4 No Protection Against Certain
1940 Act Liabilities ................................14
Section 5.5 No Bond Required of Trustees .............................15
Section 5.6 No Duty of Investigation;
Notice in Trust Instruments, etc. ...................15
Section 5.6 Reliance on Experts, etc. ................................15
ARTICLE VI - Shares of Beneficial Interest ...................................16
-----------------------------
Section 6.1 Beneficial Interest ......................................16
Section 6.2 Rights of Shareholders ...................................16
Section 6.3 Trust Only ...............................................17
Section 6.4 Issuance of Shares .......................................17
Section 6.5 Voting Powers ............................................17
Section 6.6 Series of Shares .........................................18
ARTICLE VII -- Redemptions ...................................................21
-----------
Section 7.1 Redemptions ..............................................22
Section 7.2 Redemption of Shares for Tax
Purposes; Disclosure of Holding .....................22
Section 7.3 Redemptions to Reimburse Trust
for Loss on Nonpayment for
Shares or for Other Charges .........................22
Section 7.4 Redemptions Pursuant to Constant
Net Asset Value Policy ..............................23
Section 7.5 Payment for Redeemed Shares
in Kind .............................................23
Section 7.6 Repurchase of Shares by Agreement
with Shareholder ....................................23
Section 7.7 Mandatory Redemption .....................................24
ARTICLE VIII -- Determination of Net Asset Value,
--------------------------------
Net Income and Dividends and
----------------------------
Distributions ...............................................24
-------------
Section 8.1 Net Asset Value ..........................................24
Section 8.2 Net Income ...............................................24
Section 8.3 Dividends and Distributions ..............................24
Section 8.4 Power to Modify Foregoing
Procedures ..........................................25
ARTICLE IX -- Duration; Termination of Trust;
-------------------------------
Amendment; Mergers, etc........................................25
-----------------------
Section 9.1 Duration .................................................25
Section 9.2 Termination of Trust .....................................25
Section 9.3 Amendment Procedure ......................................26
(ii)
<PAGE>
PAGE
----
Section 9.4 Merger, Consolidation and
Sale of Assets ......................................27
Section 9.5 Incorporation ............................................28
ARTICLE X -- Reports to Shareholders .........................................28
-----------------------
ARTICLE XI -- Miscellaneous ..................................................28
-------------
Section 11.1 Filing ...................................................28
Section 11.2 Resident Agent ...........................................29
Section 11.3 Governing Law ............................................29
Section 11.4 Counterparts .............................................29
Section 11.5 Reliance by Third Parties ................................29
Section 11.6 Provisions in Conflict with
Law or Regulations ..................................30
Section 11.7 Use of the Name "BB&K ....................................30
SIGNATURE PAGE ...............................................................31
(iii)
<PAGE>
DECLARATION OF TRUST
OF
BB&K FUND GROUP
August 27, 1986
DECLARATION OF TRUST of BB&K Fund Group first made the 27th
day of August, 1966, by the persons named at the foot of this Declaration of
Trust, as trustees (such individuals, so long as they shall continue in office
in accordance with the provisions of this Declaration of Trust, and all other
individuals who may hereafter be duly elected or appointed, qualified and
serving as trustees in accordance with the provisions hereof, being hereinafter
called "Trustees").
THE TRUSTEES hereby declare that all money and property
contributed to the trust established hereby shall be held and managed in trust
for the benefit of the holders from time to time of the shares of beneficial
interest issued hereunder and subject to the provisions hereof, to wit:
ARTICLE I
---------
NAME AND DEFINITIONS
--------------------
Section 1.1. Name. The name of the trust established hereby
(the "Trust") is the "BB&K Fund Group" and so far as may be practicable the
Trustees shall conduct the Trust's activities, execute all documents and sue or
be sued under that name, which name (and the word "Trust" wherever herein used)
shall refer to the Trustees as trustees, and not as individuals, or personally,
and shall not refer to the officers, agents, employees or Shareholders of the
Trust. if the Trustees determine that the Trust's use of such name is not
advisable or if the Trust is required to discontinue the use of such name
pursuant to Section 11.7 hereof, then subject to that section the Trustees may
adopt such other name for the Trust as they deem proper and the Trust may hold
its property and conduct its activities under such other name.
Section 1.2. Definitions. Wherever they are used herein, the
following terms have the respective meanings assigned to them below
<PAGE>
(a) the terms "Affiliated Person" and "Commission" have the
meanings assigned to them in the 1940 Act.
(b) "By-Laws" means the By-Laws referred to in Section 3.11
hereof, as amended and in effect from time to time.
(c) "Declaration" means this Declaration of Trust, as amended
and in effect from time to time. Reference in this Declaration of Trust
to "Declaration, "hereof," "herein, 11 "hereby" and "hereunder" shall
be deemed to refer to this Declaration rather than the article or
section in which such words appear.
(d) "Distributor" means the party, other than the Trust, to
the agreement described in Section 4.2 hereof.
(e) "Fundamental Policies" as used with respect to any Series
of shares of the Trust, means the investment policies and restrictions
applicable to such Series which are set forth in the Prospectus or the
Statement of Additional Information relating to such Series and are
designated therein as fundamental policies.
(f) "Investment Adviser" means the party, other than the
Trust, to the agreement described in Section 4.1 hereof.
(g) "Majority Shareholder Vote," as used with respect to the
election of any Trustee at a meeting of Shareholders, means the vote
for the election of such Trustee of a plurality of all outstanding
Shares of the Trust represented in person or by proxy and entitled to
vote thereon, provided that a quorum (as determined in accordance with
the By-Laws) is present, and as used with respect to any other action
required or permitted to be taken by Shareholders, means the vote for
such action of the holders of that majority of all outstanding Shares
(or, where a separate vote of Shares of any particular Series is to be
taken, the affirmative vote of that majority of the outstanding Shares
of that Series) of the Trust which consists of: (i) a majority of all
Shares (or of Shares of the particular Series) represented in person or
by proxy and entitled to vote on such action at the meeting of
Shareholders at which such action is to be taken, provided that a
quorum (as determined in accordance with the By-Laws) is present; or
(ii) if such action is to be taken by written consent of Shareholders,
a majority of all Shares (or of Shares of the particular Series) issued
and outstanding and entitled to vote on
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<PAGE>
such action; provide , that (iii) as used with respect to any action
requiring the affirmative vote of "a majority of the outstanding voting
securities" of the Trust, as the quoted phrase is defined in the 1940
Act, "Majority Shareholder Vote" means the Vote for such action at a
meeting of Shareholders of the smallest majority of all outstanding
Shares (or of Shares of the particular Series) of the Trust entitled to
vote on such action which satisfies such 1940 Act voting requirement.
(h) "1940 Act" means the provisions of the Investment Company
Act of 1940 and the rules and regulations thereunder as amended from
time to time and any order or orders thereunder which may from time to
time be applicable to the Trust.
(i) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities,
whether or not legal entities, and governments and agencies and
political subdivisions thereof.
(j) "Prospectus" as used with respect to any Series of the
Trust, means the prospectus relating to such Series, which constitutes
part of the currently effective Registration Statement of the Trust
under the Securities Act of 1933, as such prospectus may be amended or
supplemented from time to time.
(k) "Series" means the Shares representing the beneficial
interest in one of the separately managed components of the assets of
the Trust which is established and designated in Section 6.1 hereof or
which may be established and designated from time to time by the
Trustees pursuant to that section.
(1) "Shareholder" means a record holder of outstanding Shares.
(m) "Shareholder Servicing Agent" means the party, other than
the Trust, to the agreement described in Section 4.3 hereof.
(n) "Shares" means the units of interest into which the
beneficial interest in the Trust shall be divided from time to time,
including the Shares of any and all Series which may be established and
designated hereby or by the Trustees hereunder, and includes fractions
of Shares as well as whole Shares. All references to Shares in this
Declaration which are not accompanied by a reference to any particular
Series of Shares shall be
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<PAGE>
deemed to apply to all outstanding Shares of any or all Series.
(o) "Single Class Voting " as used with respect to any matter
to be acted upon at a meeting or by written consent of Shareholders,
means that on such matter each holder of one or more Shares shall be
entitled to one Vote for each Share standing in his or her name on the
records of the Trust, irrespective of Series, and all outstanding
Shares of all Series vote as a single class.
(p) "Statement of Additional Information" as used with respect
to any Series of the Trust, means the statement of additional
information relating to such Series, which constitutes part of the
currently effective Registration Statement of the Trust under the
Securities Act of 1933, as such statement of additional information may
be amended or supplemented from time to time.
(q) "Trust" means the trust established hereby by whatever
name it may then be known.
(r) "Trust Property" means any and all assets and property,
real or personal, tangible or intangible, which is owned or held by or
for the account of the Trust or the Trustees.
(s) "Trustees" means the individuals who have signed this
Declaration, so long as they shall continue in office in accordance
with the provisions hereof, and all other individuals who may from time
to time by duly elected or appointed, qualified and serving as Trustees
in accordance with the provisions hereof, and reference herein to a
Trustee or the Trustees shall refer to such individual or individuals
in their capacity as trustees hereunder.
ARTICLE II
----------
TRUSTEES
--------
Section 2.1. Number of Trustees. The number of Trustees shall
be such number as shall be fixed from time to time by a written instrument
signed by a majority of the Trustees, provide , however, that the number of
Trustees shall not be less than one (1) nor more than nine (9).
Section 2.2. Election or Appointment and Term. The initial
Trustees shall be the individuals signing this Declaration in that capacity.
Thereafter, subject to Section 16(a) of the 1940 Act, the Trustees may elect
themselves or
4
<PAGE>
their successors at such regular intervals if any, as they deem proper, and may
appoint Trustees to fill vacancies as provided in Section 2.4 hereof; provided -
d, that Trustees shall be elected by a Majority Shareholder Vote and at such
time or times as the Trustees shall determine that such action is required under
Section 16(a) of 1940 Act or, if not so required, that such action is advisable.
Subject to Section 2.3 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 2.4 hereof, or, if not so terminated until the election
of such Trustee's successor in office has become effective in accordance with
this Section 2.2.
Section 2.3. 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 of the Trustees may be removed by the action of
two-thirds of the remaining Trustees; provide , that if the removal of one or
more Trustees would have the effect of reducing the number of remaining Trustees
below the minimum number prescribed by Section 2.1 hereof, then subject to
Section 16(a) of the 1940 Act, at the time of the removal of such Trustee or
Trustees, the remaining Trustees shall elect or appoint a number of additional
at least sufficient to increase the number of holding office to the minimum
number prescribed by 2.1 hereof. Upon the resignation or removal of a or his
otherwise ceasing to be a Trustee, he shall 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 as provided in
Section 3.3 hereof.
Section 2.4. 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 or to revoke any existing
5
<PAGE>
agency created pursuant to the terms of this Declaration. In the case of an
existing vacancy, including a vacancy existing by reason of an increase in the
number of Trustees, subject to the provisions of Section 16(a) of the 1940 Act,
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; provide , 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 number of Trustees shall occur, until such vacancy is
filled as provided in this Section 2.4, 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. 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.
ARTICLE III
-----------
POWERS OF TRUSTEES
------------------
Section 3.1. General. The Trustees shall have exclusive and
absolute e control over the Trust Property and over the business of the Trust to
the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without The Commonwealth of Massachusetts,
in any and all states of the United States of America, in the District of
Columbia, and in any and all commonwealths, territories, dependencies, colonies,
possessions, agencies or instrumentalities of the United States of America and
of foreign governments, and to do all such other things and execute all such
instruments as they deem necessary, proper or desirable in order to promote the
interests of the Trust although such things are not herein specifically
mentioned. Any determination as to what is in the interests of the Trust made by
the Trustees in good faith shall be conclusive. In construing the provisions of
this Declaration, the presumption shall be in favor of a grant of power to the
Trustees.
The enumeration of any specific power herein shall not be
construed as limiting the aforesaid power. Such powers
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<PAGE>
of the Trustees may be exercised without order of or resort to any court.
Section 3.2. Business and Investments. The Trustees shall have
the power with respect to the Trust or any Series of the Trust:
(a) to conduct, operate and carry on the business of an
investment company, either directly or through one or more wholly owned
subsidiaries, and, in connection therewith
(i) to subscribe for, purchase or otherwise acquire and
invest and reinvest in, to hold for investment or
otherwise, to sell, transfer, assign, negotiate,
exchange, lend or otherwise dispose of, and to turn
to account or realize upon and generally deal in and
with (a) securities (which term, securities," shall
include without limitation any and all bills, notes,
bonds, debentures or other obligations or evidences
of indebtedness, certificates of deposit, bankers
acceptances, commercial paper, repurchase agreements
or other money market instruments; stocks, shares or
other equity ownership interests; and warrants,
options or other instruments representing rights to
subscribe for, purchase, receive or otherwise acquire
or to sell, transfer, assign or otherwise dispose of,
and scrip, certificates, receipts or other
instruments evidencing any ownership rights or
interests in any of the foregoing), "when issued" and
"delayed delivery" contracts for securities, issued,
guaranteed or sponsored by any governments, political
subdivisions or governmental authorities, agencies or
instrumentalities, by any individuals, firms,
companies, corporations, syndicates, associations or
trusts, or by any other organizations or entities
whatsoever, irrespective of their forms or the names
by which they may be described, whether or not they
be organized and operated for profit, and whether
they be domestic or foreign with respect to The
Commonwealth of Massachusetts or the United States of
America, and options or other instruments entered
into on a national securities exchange relating to
foreign currencies, (b) precious metals and other
minerals, contracts to purchase and sell, and other
interests of every nature and kind in,
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<PAGE>
such metals or minerals and (c) rare coins and other
numismatic items; and
(ii) to acquire and become the owner of or interested in
any securities by delivering or issuing in exchange
or payment therefor, in any lawful manner, any of the
Trust Property belonging to such Series or any Shares
of such Series; and
(iii) to exercise while the owner of any securities or
interests therein any and all of the rights, powers
and privileges of ownership of such securities or
interests, including without limitation any and all
voting rights and rights of assent, consent or
dissent pertaining thereto, and to do any and all
acts and things for the preservation, protection,
improvement and enhancement in value thereof.
The Trustees shall not be limited to investing in securities maturing before the
possible termination of the Trust, nor shall the Trustees be limited by any law
limiting the investments which may be made by fiduciaries; and
(b) to conduct, operate and carry on any other lawful business
and engage in any other lawful business activity which the Trustees, in
their sole and absolute discretion, consider to be (i) incidental to
the business of the Trust or such Series of the Trust as an investment
company, (ii) conducive to or expedient for the benefit or protection
of the Trust or the Shareholders of such Series of the Trust, or (iii)
calculated in any other manner to promote the interests of the Trust or
the Shareholders or the Shareholders of such Series of the Trust.
Section 3.3. Legal Title. Legal title to all the Trust
Property shall be vested in the Trustees as joint tenants, except that the
Trustees shall have power to cause legal title to any Trust Property to be held
by or in the name of one or more of the Trustees, or in the name of the Trust,
or in the name of any other Person as nominee, on such terms as the Trustees may
determine, provide that the interest of the Trust therein is appropriately
protected. The right, title and interest of the Trustees in the Trust Property
shall vest automatically in each Person who may hereafter become a Trustee. Upon
the termination of the term of office of a Trustee as provided in Section 2.2 or
2.4 hereof, such Trustee shall automatically cease to have any right, title or
interest in any of the Trust Property, and the right, title and
8
<PAGE>
interest of such Trustee in the Trust Property shall vest automatically in the
remaining Trustees. Such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered as
provided in Section 2.3 hereof.
Section 3.4. Issuance and Repurchase of Securities. The
Trustees shall have the power to issue, sell, repurchase, redeem, retire,
cancel, acquire, hold, resell, reissue, dispose of, transfer, and otherwise deal
in Shares the Trust, and, subject to Articles VII, VIII and IX hereof, to apply
to any such repurchase, redemption, retirement, cancellation or acquisition of
Shares of any Series of the Trust, any funds or other assets of the Trust,
whether constituting capital or surplus or otherwise, to the full extent now or
hereafter permitted by applicable law.
Section 3.5. Borrowing Money; Lending Trust Assets. Subject to
any applicable Fundamental Policies of the Trust or any applicable provision of
the By-Laws, the Trustees shall have power to borrow money or otherwise obtain
credit and to secure the same by mortgaging, pledging or otherwise subjecting as
security the assets of the Trust, to endorse, guarantee, or undertake the
performance of any obligation, contract or engagement of any other Person and to
lend Trust Property.
Section 3.6. Delegation; Committees. The Trustees shall have
power, consistent with their continuing exclusive authority over the management
of the Trust and the Trust Property, to delegate from time to time to such
committee or committees as they may from time to time appoint from among their
own number or to such officers, employees or agents of the Trust as they may
from time to time designate the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Trustees or
otherwise as the Trustees may deem expedient.
Section 3.7. Collection and Payment. The Trustees shall have
power to collect all property due to the Trust; to pay all claims, including
taxes, against the Trust Property; to prosecute, defend, compromise or abandon
any claims relating to the Trust Property; to foreclose any security interest
securing any obligations by virtue of which any property is owed to the Trust;
and to enter into releases, agreements and other instruments.
Section 3.8. Expenses. The Trustees shall have the power to
incur and pay any expenses which, in the opinion of the Trustees, are necessary
or incidental to carry out any of the purposes of this Declaration, and to pay
reasonable
9
<PAGE>
compensation from the funds of the Trust to themselves as Trustees. The Trustees
shall fix the compensation of all officers, employees and Trustees of the Trust.
Section 3.9. Litigation. 7 The Trustees shall have the power
to engage in and to prosecute, defend, compromise, abandon, or adjust, by
arbitration or otherwise, any actions, suits, proceedings, disputes, claims, and
demands relating to the Trust or the Trust Property, and, out of the Trust
Property, to pay or to satisfy any debts, claims or expenses incurred in
connection therewith, including those of litigation, and such power shall
include without limitation the power of the Trustees or any appropriate
committee thereof, in the exercise of their or its good faith business judgment,
consenting to dismiss any action, suit, proceeding, dispute, claim, or demand,
derivative or otherwise, brought by any person, including a Shareholder in such
Shareholder's own name or in the name of the Trust, whether or not the Trust or
any of the Trustees may be named individually therein or the subject matter
arises by reason of business for or on behalf of the Trust.
Section 3.10. Miscellaneous Powers. The Trustees shall have
the power to: (a) employ or contract with such Persons as the Trustees may deem
desirable for the transaction of the business of the Trust; (b) enter into joint
ventures, partnerships and any other combinations or associations; (c) remove
Trustees or fill vacancies in or add to their number, subject to and in
accordance with Sections 2.3 and 2.4 hereof; elect and remove at will such
officers and appoint and terminate such agents or employees as they consider
appropriate; and appoint from their own number and terminate at will any one or
more committees which may exercise some or all of the power and authority of the
Trustees as the Trustees may determine; (d) purchase, and pay for out of Trust
Property, insurance policies insuring the Trust Property, and, to the extent
permitted by law and not inconsistent with any applicable provision of this
Declaration or the By-Laws, insuring the Shareholders, Trustees, officers,
employees, agents, investment advisers, distributors, selected dealers or
independent contractors of the Trust against all claims arising by reason of
holding any such position or by reason of any action taken or omitted to be
taken by any such Person in such capacity, whether or not constituting
negligence, or whether or not the Trust would have the power to indemnify such
Person against such liability; (e) establish pension, profit sharing, Share
purchase, and other retirement, incentive and benefit plans for any Trustees,
officers, employees and agents of the Trust; (f) indemnify any person with whom
the Trust has dealings, including the Shareholders, Trustees, officers,
employees, agents, investment advisers,
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distributors, selected dealers and independent contractors of the Trust, to such
extent permitted by law and not inconsistent with any applicable provision of
the By-Laws as the Trustees shall determine; (g) guarantee indebtedness or
contractual obligations of others; (h) determine and change the fiscal year of
the Trust and the method by which its accounts shall be kept; and (i) adopt a
seal for the Trust, but the absence of such seal shall not impair the validity
of any instrument executed on behalf of the Trust.
Section 3.11. Manner of Acting; By-Laws. Except as otherwise
provided herein, in the By-Laws or in any applicable provision of law, any
action to be taken by the Trustees may be taken by a majority of the Trustees
present at a meeting of Trustees (a quorum being present), including any meeting
held by means of a conference telephone circuit or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, or by written consent or consents of all the Trustees. The Trustee
shall adopt By-Laws not inconsistent with this Declaration to provide for the
conduct of the business of the Trust and may amend or repeal such By-Laws to the
extent such power is not reserved to the Shareholders by express provision of
such By-Laws.
ARTICLE IV
----------
INVESTMENT ADVISER, DISTRIBUTOR, CUSTODIAN
AND SHAREHOLDER SERVICING AGENT
-------------------------------
Section 4.1. Investment Adviser. The Trustees may in their
discretion from time to time enter into an investment advisory or management
agreement whereby the Investment Adviser which is the other party to such
contract shall undertake to furnish the Trust such management, investment
advisory or supervisory, administrative, accounting, legal, statistical and
research facilities and services, and such other facilities and services, if
any, as the Trustees shall from time to time consider desirable, all upon such
terms and conditions as the Trustees may in their discretion determine to be not
inconsistent with this Declaration, the applicable provisions of the 1940 Act
and any applicable provisions of the By-Laws of the Trust. Any such advisory or
management agreement and any amendment thereto shall be subject to approval by a
Majority Shareholder Vote at a meeting of the Shareholders to the Trust.
Notwithstanding any provisions of this Declaration, the Trustees may authorize
the Investment Adviser (subject to such general or specific instructions as the
Trustees may from time to time adopt) to effect purchases, sales, loans or
exchanges of portfolio securities of the Trust on behalf of the Trustees or may
authorize any officer or
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employee of the Trust or any Trustee to effect such purchases, sales, loans or
exchanges pursuant to recommendations of the Investment Adviser (and all without
further action by the Trustees). Any such purchases, sales, loans and exchanges
shall be deemed to have been authorized by all of the Trustees. The Trustees
may, in their sole discretion, call a meeting of Shareholders in order to submit
to a vote of Shareholders at such meeting the approval of continuance of any
such investment advisory or management agreement. If the Shareholders of any one
or more of the Series of the Trust should fail to approve any such investment
advisory or management agreement, the Investment Adviser may nonetheless serve
as Investment Adviser with respect to any Series whose Shareholders approve such
contract.
Section 4.2. Distributor. The Trustees may in their discretion
from time to time enter into an agreement providing for the sale of Shares to
net the Trust not less than the net asset value per Share (as described in
Article VIII hereof) and pursuant to which the Trust may appoint the other party
to such agreement as its sales agent for the distribution of such Shares. The
agreement shall contain such terms and conditions as the Trustees may in their
discretion determine to be not inconsistent with this Declaration, the
applicable provisions of the 1940 Act and any applicable provisions of the
By-Laws of the Trust.
Section 4.3. Shareholder Servicing Agent. The Trustees may in
their discretion enter into a shareholder servicing agreement whereby the other
party to such agreement shall undertake to furnish transfer agency, shareholder
and dividend disbursing services to the Trust and its Shareholders. The
agreement shall contain such terms and conditions as the Trustees may in their
discretion determine to be not inconsistent with this Declaration and any
applicable provisions of the 1940 Act and the By-Laws of the Trust.
Section 4.4. Custodian. The Trustees may appoint a bank or
trust company having an aggregate capital, surplus and undivided profits (as
shown in its last published report) of at least two million dollars ($2,000,000)
as custodian of the securities and cash of the Trust. The agreement shall
contain such terms and conditions as the Trustees in their discretion determine
to be not inconsistent with this Declaration, the applicable provisions of the
1940 Act and any applicable provisions of the By-Laws of the Trust.
Section 4.5. Parties to Agreements. The Trustees may enter
into any agreement of the character described in Section 4.1, 4.2, 4.3 or 4.4 of
this Article IV and into any
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lawfully entitled, nor shall anything herein contained restrict the right of the
Trust to indemnify or reimburse Shareholder in any appropriate situation even
though not specifically provided herein.
Section 5.2. Non-Liability of Trustees, etc. Subject to
Section 5.4 hereof, no Trustee, officer, employee or agent of the Trust shall be
liable to the Trust or to any Shareholder, Trustee, officer, employee or agent
of the Trust for any action or failure to act (including without limitation the
failure to compel in any way any former or acting Trustee to redress any breach
of trust).
Section 5.3. Indemnification.
(a) Subject to Section 5.4 hereof, the Trustees shall provide
for indemnification by the Trust of every Person who is, or has been, a
Trustee, officer, employee or agent of the Trust against all liability
and against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in which he
becomes involved as a party or otherwise by virtue of his being or
having been a Trustee, officer, employee or agent and against amounts
paid or incurred by him in the settlement thereof, in such manner, to
such extent and subject to such conditions and limitations as the
Trustees may provide from time to time in the By-Laws; provided, that,
to the extent any claim, action, suit or proceeding involves any act or
omission of such Person in respect of one or more particular Series of
Shares of the Trust or the assets or operations of such one or more
Series, such indemnification shall be provided only from the assets (or
proceeds thereof or income therefrom) of such one or more Series and
not from the assets (or proceeds thereof or income therefrom) of any
other Series of Shares of the Trust.
(b) The words "claim," "action," "suit," or proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal, or
other, including appeals), actual or threatened; and the words
"liability" and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities.
Section 5.4. No Protection Against Certain 1940 Act
Liabilities. Nothing contained in Sections 5.1, 5.2 or 5.3 hereof or in any
provision of the By-Laws described in Section 5.3 hereof shall protect any
Trustee or officer of the Trust from any liability to the Trust or its
Shareholders for which he would otherwise be subject by reason of willful
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misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. Nothing contained in Sections 5.1, 5.2 or
5.3 hereof or in any agreement of the character described in Section 4.1 or 4.2
hereof shall protect any Investment Adviser to the Trust or Distributor of its
Shares against any liability to the Trust or its Shareholders to which he or it
would otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of his or its duties to the Trust, or by reason of
his or its reckless disregard of his or its obligations and duties under the
agreement pursuant to which he or it serves as Investment Adviser to the Trust
or Distributor of its Shares.
Section 5.5. No Bond Required of Trustees. No Trustee shall be
obligated to give any bond or other security for the performance of any of his
duties hereunder.
Section 5.6. No Duty of Investigation; Notice in Trust
Instruments, etc. No purchaser, lender or other Person dealing with the Trustees
or with any officer, employee or agent of the Trust shall be bound to make any
inquiry concerning the validity of any transaction purporting to be made by the
Trustees or by said officer, employee or agent or be liable for the application
of money or property paid, loaned, or delivered to or on the order of the
Trustees or of said officer, employee or agent. Every contract, undertaking,
instrument, certificate, Share or obligation or other security of the Trust, and
every other act or thing whatsoever executed in connection with the Trust, shall
be conclusively presumed to have been executed or done by the executors thereof
only in their capacity as Trustees under this Declaration or in their capacity
as officers, employees or agents of the Trust. Every written agreement,
contract, instrument, undertaking, certificate, Share or other security of the
Trust executed, made or issued by the Trustees shall recite that the same is
executed, made or issued by them not individually, but as Trustees under this
Declaration, and that the obligations created or evidenced thereby are not
binding upon any of the Trustees or Shareholders individually, but bind only the
Trust Property, and may contain any further recital which they or he may deem
appropriate, but the omission of such recital shall not operate to bind the
Trustees or Shareholders individually.
Section 5.7. Reliance on Experts, etc. Each Trustee, officer
or employee of the Trust shall, in the performance of his duties, be fully and
completely justified and protected with regard to any act or any failure to act
resulting from reliance in good faith upon the books of account or other records
of the Trust, upon an opinion of counsel, or upon reports made to the Trust by
any of its
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other agreement although one or more of the Trustees or officers of the Trust
may be an officer, director, trustee, shareholder or member of, or otherwise
interested in, any other party to the agreement, and no such agreement shall be
invalidated or rendered voidable by reason of the existence of any such
relationship; nor shall any Person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of said agreement or accountable for any profit realized directly or
indirectly therefrom. The same Person or an Affiliated Person of any Person may
be the other party to two or more of the agreements entered into pursuant to
Sections 4.1, 4.2, 4.3 or 4.4 above or otherwise, and any individual may be
financially interested in or otherwise affiliated with any Person who is party
to any of the agreements mentioned in this Section 4.5.
ARTICLE V
---------
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
-------------------
Section 5.1. No Personal Liability of Shareholders, Trustees,
etc. No Shareholder shall be subject to any personal liability whatsoever to any
Person in connection with Trust Property or the acts, obligations or affairs of
the Trust. Subject to Section 5.4 hereof, no Trustee, officer, employee or agent
of the Trust shall be subject to any personal liability whatsoever to any
Person, other than the Trust or its Shareholders, in connection with Trust
Property or the affairs of the Trust, and all such Persons shall look solely to
the Trust Property for satisfaction of claims of any nature arising in
connection with the affairs of the Trust. If any Shareholder, Trustee, officer,
employee or agent, as such, of the Trust is made a party to any suit or
proceeding to enforce any such liability, he shall not, on account thereof, be
held to any personal liability. The Trust shall indemnify and hold each
Shareholder harmless from and against all claims and liabilities to which such
Shareholder may become subject by reason of his being or having been a
Shareholder, and shall reimburse such Shareholder for all legal and other
expenses reasonably incurred by him in connection with any such claim or
liability; provided that such indemnity or reimbursement shall be made from
assets (or proceeds thereof or income therefrom) of the one or more Series of
Shares of the trust of which such Shareholder is a holder of Shares and in
respect of which such claim or liability arose and not from the assets (or
proceeds or income therefrom) of any other Series of Shares of the Trust. The
rights accruing to a Shareholder under this Section 5.1 shall not exclude any
other right to which such Shareholder may be
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officers or employees or by the Investment Adviser, the Distributor, Shareholder
Servicing Agent, selected dealers, accountants, appraisers or other experts or
consultants selected with reasonable care by the Trustees, officers or employees
of the Trust, regardless of whether such counsel or expert may also be a
Trustee.
ARTICLE VI
----------
SHARES OF BENEFICIAL INTEREST
-----------------------------
Section 6.1. Beneficial Interest. The interest of the Trust
shall be divided into transferable units to be called Shares of Beneficial
Interest, $0.01 par value. The number of such Shares of Beneficial Interest
authorized hereunder is unlimited. Except as otherwise provided in this Section
6.1 and in Section 6.6 hereof, each Share shall represent an equal proportionate
share in the net assets of the Trust. Without limiting the authority of the
Trustees set forth herein to establish and designate any further Series, there
is hereby established one Series of Shares to be known as the "BB&K Diversa
Fund". Each Share of any Series shall represent an equal proportionate share in
the assets of that Series with each other Share in that Series. The Trustees may
divide or combine the shares of any Series into a greater or lesser number of
shares of that Series without thereby changing the proportionate interests in
the assets of that Series. Subject to the provisions of Section 6.6 hereof, the
Trustees may also authorize the creation of additional Series of Shares (the
proceeds of which may be invested in separate, independently managed
portfolios). All Shares issued hereunder including, without limitation, Shares
issued in connection with a dividend in Shares or a division of Shares, shall be
fully paid and nonassessable.
Section 6.2. Rights of Shareholders. The ownership of the
Trust Property of every description and the right to conduct any business
hereinbefore described shall be vested exclusively in the Trustees, and the
Shareholders shall have no interest therein other than the beneficial interest
conferred by their Shares, and they shall have no right to call for any
partition or division of any property, profits, rights or interests of the Trust
nor can they be called upon to assume any losses of the Trust or suffer an
assessment of any kind by virtue of their ownership of Shares. The Shares shall
be personal property giving only the rights specifically set forth in this
Declaration. Shares shall not entitle any holder thereof to preference,
preemptive, appraisal, conversion or exchange rights, except as the Trustees may
determine.
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Section 6.3. Trust Only . It is the intention of the Trustees
to create only the relationship of Trustee and beneficiary between the Trustees
and each Shareholder from time to time. It is not the intention of the Trustees
to create a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in this Declaration shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.
Section 6.4. Issuance of Shares. The Trustees in their
discretion may, from time to time without vote of the Shareholders, issue Shares
of any Series in addition to the then issued and outstanding Shares and Shares
held in the treasury, to such party or parties and for consideration in such
amount not less than the greater of the par value and the net asset value per
Share (determined as set forth in Article VIII hereof) and of such type,
including cash or property, at such time or times and on such terms as the
Trustees may deem fitting, and may in such manner acquire other assets
(including the acquisition of assets subject to, and in connection with, the
assumption of liabilities) and businesses. In connection with any issuance of
Shares, the Trustees may issue fractional Shares. Reductions in the number of
outstanding Shares of any Series with respect to which the Trustees shall have
established a policy of maintaining a constant net asset value per Share of such
Series may be made pursuant to the provisions of Section 7.4 hereof in order to
maintain the constant net asset value per share of such Series. Contributions to
the Trust may be accepted for, and Shares shall be redeemed as, whole Shares and
fractions of a Share as described in the Prospectus or the Statement of
Additional Information.
Section 6.5. Voting Powers. The Shareholders shall have power
to vote only (i) for the election of Trustees as provided in Section 2.2 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 Section 4.1
hereof, (iii) with respect to termination of the Trust as provided in Section
9.2 hereof, (iv) with respect to any amendment of this Declaration to the extent
and as provided in Section 9.3 hereof, (v) with respect to any merger,
consolidation or sale of assets as provided in Section 9.4 hereof, (vi) with
respect to incorporation of the Trust to the extent and as provided in Section
9.5 hereof, (vii) to the same extent as the stockholders of a Massachusetts
business corporation as to whether or not a court action, proceeding or claim
should or should not be
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brought or maintained derivatively or as a class action on behalf of the Trust
or the Shareholders, and (viii) with respect to such additional matters relating
to the Trust as may be required by this Declaration, the By-Laws or any
undertaking filed by the Trust with the Commission (or any successor agency) or
with any state, 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, except that Shares held in the
treasury of the Trust as of the record date, as determined in accordance with
the By-Laws, shall not be voted. If and to the extent that the Trustees shall
determine that such action is necessary, appropriate or advisable in order to
permit the respective Series of Shares to be treated as separate corporations
for Federal income tax purposes or that such action is otherwise required by
law, they shall cause each matter required or permitted to be voted upon at a
meeting or by written consent of Shareholders to be submitted to a separate vote
of each Series of outstanding Shares entitled to vote thereon; provide , that
(i) when required by the 1940 Act, actions of Shareholders shall be taken by
Single Class Voting of all outstanding Shares of all Series entitled to vote
thereon; and (ii) when the Trustees determine that any matter to be submitted to
a vote of Shareholders affects only the rights or interests of one or more but
not all Series of outstanding Shares then only the Shareholders of the Series so
affected shall be entitled to vote thereon. There shall be no cumulative voting
of Shares in any election of Trustees. Until Shares are issued, the Trustees may
exercise all rights of shareholders and may take any action required by law,
this Declaration or the By-Laws to be taken by Shareholders. The By-Laws may
include further provisions relating to Shareholders' votes and meetings and
related matters.
Section 6.6. Series of Shares. The following provisions are
applicable regarding the Series of Shares of the Trust established and
designated by Section 6.1 hereof and shall be applicable if the Trustees shall
establish and designate additional Series as provided in that section:
(a) The number of authorized shares and the number of shares
of each Series that may be issued shall be unlimited. The Trustees may
classify or reclassify any unissued shares or any shares previously
issued and reacquired of any Series into one or more Series that may be
established and designated from time to time. The Trustees may hold as
treasury shares (of the same or some other Series), reissue for such
consideration not less
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than the greater of the par value and the net asset value per Share (as
described in Article VIII hereof) and on such terms as they may
determine or cancel any Shares of any Series reacquired by the Trust in
their discretion from time to time.
(b) The power of the Trustees to invest and reinvest the Trust
Property shall be governed by Section 3.2 of this Declaration with
respect to any one or more Series which represent the beneficial
interest in the Trust immediately prior to the establishment of any
additional Series and the power of the Trustees to invest and reinvest
assets applicable to any other Series shall be as set forth in the
instrument of the Trustees establishing such Series which is
hereinafter described.
(c) All consideration received by the Trust for the issue or
sale of Shares of a particular Series, together with all assets in
which such consideration is invested or reinvested, all income,
earnings, profits and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or
payments derived from reinvestment of such proceeds in whatever form
the same may be, shall irrevocably belong to that Series for all
purposes subject only to the rights of creditors, and shall be so
recorded upon the books of account of the Trust. In the event that
there are any assets, income, earnings, profits, and proceeds thereof,
funds or payments which are not readily identifiable as belonging to
any particular Series, the Trustees shall allocate them among any one
or more of the Series established and designated from time to time in
such manner and on such basis as they, in their sole discretion, deem
fair and equitable. Each such allocation by the Trustees shall be
conclusive and binding upon the Shareholders of all Series for all
purposes.
(d) The assets belonging to each particular Series shall be
charged with the liabilities of the Trust in respect of that Series and
all expenses, costs, charges and reserves attributable to that Series,
and any general liabilities, expenses, costs, charges or reserves of
the Trust which are not readily identifiable as belonging to any
particular Series shall be allocated and charged by the Trustees to and
among any one or more of the Series established and designated from
time to time in such manner and on such basis as the Trustees in their
sole discretion deem fair and equitable. Each allocation of
liabilities, expenses, costs, charges and reserves by the
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Trustees shall be conclusive and binding upon the holders of all Series
for all purposes.
(e) The power of the Trustees to pay dividends and to make
distributions shall be governed by Section 8.3 of this Declaration with
respect to any one or more Series which represent the beneficial
interests in separately managed components of the Trust assets
immediately prior to the establishment and designation of any
additional Series. With respect to any other Series, dividends and
distributions on Shares of a particular Series may be paid with such
frequency as the Trustees may determine, which may be daily or
otherwise, pursuant to a standing resolution or resolutions adopted
only once or with such frequency as the Trustees may determine, to the
holders of such Shares of that Series, from such of the income and
capital gains, accrued or realized, from the assets belonging to that
Series as the Trustees may determine, after providing for actual and
accrued liabilities belonging to that Series. All dividends and
distributions on Shares of a particular Series shall be distributed pro
rata to the holders of that Series in proportion to the number of
Shares of that Series held by such holders at the date and time of
record established for the payment of such dividends or distributions.
(f) The Trustees shall have the power to determine the
designations, preferences, privileges, limitations and rights,
including voting and dividend rights, of each Series of Shares. Subject
to the provisions of this Section 6.6, all Shares of all Series shall
have identical rights and privileges, except insofar as variations
thereof among Series shall have been determined and fixed by the
Trustees.
(g) Subject to compliance with the requirements of the 1940
Act, the Trustees shall have the authority to provide that the holders
of Shares of any Series shall have the right to convert or exchange
said Shares for or into Shares of one or more other Series in
accordance with such requirements and procedures as may be established
by the Trustees.
(h) The establishment and designation of any Series of Shares
in addition to those established and designated in Section 6.1 hereof
shall be effective upon the execution by a majority of the then
Trustees of an instrument setting forth such establishment and
designation and the relative rights, preferences, voting powers,
restrictions, limitations as to dividends, qualifications, and terms
and conditions of redemption of
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such Series or as otherwise provided in such instrument. At any time
that there are no shares outstanding of any particular Series
previously established and designated, the Trustees may by an
instrument executed by a majority of their number abolish that Series
and the establishment and designation thereof. Each instrument referred
to in this paragraph shall constitute an amendment to this Declaration.
(i) In the event of the liquidation of a particular Series,
the Shareholders of that Series which has been established and
designated and which is being liquidated shall be entitled to receive,
when and as declared by the Trustees, the excess of the assets
belonging to that Series over the liabilities belonging to that Series.
The holders of Shares of any Series shall not be entitled thereby to
any distribution upon liquidation of any other Series. The assets so
distributable to the Shareholders of any Series shall be distributed
among such Shareholders in proportion to the number of Shares of that
Series held by them and recorded on the books of the Trust. The
liquidation of any particular Series in which there are Shares then
outstanding may be authorized by an instrument in writing, without a
meeting, signed by a majority of the Trustees then in office, subject
to the affirmative vote of "a majority of the outstanding voting
securities" of that Series, as the quoted phrase is defined in the 1940
Act.
(j) Notwithstanding any other provision of this Declaration,
the Trustees shall have the power to establish two or more Classes of
shares within each Series prior to the issuance of any shares of such
Series and to determine the designations, preferences, privileges,
limitations and rights, including voting and dividend rights, of each
such Class, and all shares of each such Class shall have identical
rights and privileges except, insofar as variations thereof among such
Classes have been determined and fixed by the Trustees.
ARTICLE VII
-----------
REDEMPTIONS
-----------
Section 7.1. Redemptions. Each Shareholder of a particular
Series shall have the right, at such times as may be permitted by the Trust, to
require the Trust to redeem all or any part of his Shares of that Series, upon
and subject to the terms and conditions provided in this Article VII. The Trust
shall, upon application of or pursuant to authorization
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from any Shareholder, redeem from such Shareholder outstanding Shares for an
amount per Share determined by the Trustees in accordance with the 1940 Act;
provide , that (i) such amount per Share shall not exceed the cash equivalent of
the proportionate interest of each Share or of any Series of Shares in the Trust
Property at the time of the redemption, and (ii) if so authorized by the
Trustees, the Trust may, at any time and from time to time charge fees for
effecting such redemption, at such rates as the Trustees may establish, if and
to the extent permitted under the 1940 Act, and may, at any time and from time
to time, pursuant to the 1940 Act suspend such right of redemption. Redemption
and suspension and resumption of redemption of Shares shall be effected in
accordance with the procedures, and payment for Shares redeemed shall be made in
the manner, set forth in the Prospectus or the Statement of Additional
Information relating to such Shares.
Section 7.2. Redemption of Shares for Tax Purposes; Disclosure
of Holding. If the Trustees shall, at any time and in good faith, be of the
opinion that direct or indirect ownership of Shares of the Trust (or of any
Series of Shares of the Trust) has or may become concentrated in any Person to
an extent which would disqualify the Trust (or such Series) as a regulated
investment company under the Internal Revenue Code, then the Trustees shall have
the power by lot or other means deemed equitable by them (i) to call for
redemption from any such Person a number, or principal amount, of Shares of the
Trust (or of such Series) sufficient, in the opinion of the Trustees, to
maintain or bring the direct or indirect ownership of Shares of the Trust (or of
such Series) into conformity with the requirements for such qualification, and
(ii) to refuse to transfer or issue Shares of the Trust (or of such Series) to
any person whose acquisition of the Shares of the Trust (or of such Series)
would, in the opinion of the Trustees, result in such disqualification. The
redemption shall be effected at a redemption price determined in accordance with
Section 7.1 hereof.
The holders of Shares of the Trust shall upon demand disclose
to the Trustees in writing such information with respect to direct and indirect
ownership of Shares of the Trust as the Trustees deem necessary to comply with
the provisions of the Internal Revenue Code, or to comply with the requirements
of any other authority.
Section 7.3. Redemptions to Reimburse Trust for Loss on
Nonpayment for Shares or for Other Charges. The Trustees shall have the power to
redeem Shares owned by any Shareholder to the extent necessary (i) to reimburse
the Trust for any loss it has sustained by reason of the failure of such
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Shareholder to make full payment for Shares purchased by such Shareholder, or
(ii) to collect any charge relating to a transaction effected for the benefit of
such Shareholder which is applicable to Shares as provided in the Prospectus.
Any such redemption shall be effected at the redemption price determined in
accordance with Section 7.1 hereof.
Section 7.4. Redemptions Pursuant to Constant Net Asset Value
Policy . The following provisions shall apply to any Series of Shares of the
Trust during any period that the Trustees, in their discretion, establish a
policy of maintaining a constant net asset value per Share. If for any reason
the net income of the Trust attributable to such Series shall, at the time of
any determination thereof in accordance with Section 8.3 hereof, be a negative
amount, then the Trustees shall have power to cause the number of outstanding
Shares of such Series to be reduced by requiring each Shareholder to contribute
to the capital of the Trust such Shareholder's proportionate part of the total
number of Shares of such Series which have an aggregate current net asset value
equal as nearly as may be practicable to the negative amount of the Trust's net
income. Each Shareholder, by becoming a registered holder of Shares, agrees to
make any such contribution which may be required.
Section 7.5. Payment for Redeemed Shares in Kind. Subject to
any applicable provisions of the 1940 Act, payment for any Shares redeemed
pursuant to Section 7.1 or 7.2 hereof may, at the option of the Trustees or such
officer or officers of the Trust as they may authorize for the purpose, be made
in cash or in kind, or partially in cash and partially in kind, and, in case of
full or partial payment in kind, the Trustees or such authorized officer or
officers shall have absolute discretion to determine the securities or other
assets of the Trust and the amount thereof to be distributed in kind. For such
purpose, the value of any securities or other noncash assets delivered in
payment for Shares redeemed shall be determined in the same manner as the value
of such securities or other noncash assets are determined in accordance with
Section 8.1 hereof for purposes of determining the net asset value per Share
applicable to such Shares, as of the same time that the net asset value per
Share applicable to such Shares is determined.
Section 7.6. Repurchase of Shares by Agreement with
Shareholder. The Trust may repurchase its Shares from any Shareholder directly
or through an agent designated by it for the purpose, by agreement with such
Shareholder, at a price not exceeding the redemption price of such Shares
determined pursuant to Section 7.1 hereof.
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Section 7.7. Mandatory Redemption . The Trustees may by
resolution authorize the mandatory redemption of all the Shares in any
Shareholder account in which the net asset value of those Shares is less than
one half of the minimum initial investment for that Shareholder in accordance
with such guidelines as the Trustees shall establish.
ARTICLE VIII
------------
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DIVIDENDS AND DISTRIBUTIONS
------------------------------------------
Section 8.1. Net Asset Value. Subject to the applicable
provisions of the 1940 Act, the Trustees shall have the power and duty to cause
the net asset value per Share of each Series of outstanding Shares of the Trust
to be determined in such manner, with such frequency and at such specific time
of day as shall be set forth in or prescribed by the Trustees in accordance with
the By-Laws. The Trustees may delegate the power and duty to determine the net
asset value per Share of any Series of outstanding Shares to one or more of
their number, or to one or more officers of the Trust, or to any Investment
Adviser, custodian, Shareholder Servicing Agent, or other agent appointed for
the purpose by the Trust.
Section 8.2. Net Income. Subject to any applicable provisions
of the 1940 Act, the Trustees shall have the power and duty to cause the net
income attributable to each Series of Shares of the Trust to be determined on an
accrual basis with the same frequency and at the same time of day as the net
asset value per Share of such Series of outstanding Shares of the Trust is
determined in accordance with Section 8.1 hereof. The Trustee shall have full
discretion, to the extent whether any not inconsistent with the 1940 Act, to
determine cash or property of the Trust shall be treated as income or as
principal and whether any item of expense shall be charged to the income or the
principal account, and their determination made in good faith shall be
conclusive upon the Shareholders.
In the case of stock dividends received, the Trustees shall
have full discretion to determine, in the light of the particular circumstances,
how much, if any, of the value thereof shall be treated as income, and the
balance, if any, shall be treated as principal.
Section 8.3. Dividends and Distributions. The Trustees shall
have the power to declare and pay ratably to the Shareholders of any Series, as
dividends or distributions on their Shares, such proportion of the net income,
capital gains, surplus (including paid-in surplus), capital or assets of such
Series as the Trustees may deem proper. Dividends and
24
<PAGE>
distributions on any Series of Shares may be paid with such frequency (which may
be daily or at such other intervals as shall be specified in a standing
resolution or resolutions adopted by the Trustees) and may be paid in cash or
other property, or in additional Shares, in such manner, at such times, and on
such terms as the Trustees shall determine. Dividends and distributions may be
paid to the Shareholders of record at the time of declaring the dividend or
distribution or to the Shareholders of record at such later date as the Trustees
shall determine. The Trustees may always retain from the net income of the Trust
such amount as they may deem necessary to pay debts or expenses or to meet
obligations of the Trust or as they may deem desirable to use in the conduct of
the affairs or to retain for future requirements of the business of the Trust.
Inasmuch as the computation of net income and gains or Federal
income tax purposes may vary from the computation thereof on the books of the
Trust, the foregoing provisions of this Section 8.3 shall be interpreted to give
the Trustees the power in their discretion to distribute for any fiscal year as
income dividends and as capital gains distributions, respectively, additional
amounts sufficient to enable the Trust to avoid or reduce liability for taxes.
Section 8.4. Power to Modify Foregoing Procedures.
Notwithstanding any of the foregoing provisions of this Article VIII, the
Trustees may prescribe, in their absolute discretion, such other bases and times
for determining the net asset value per Share of outstanding Shares, the net
income of the Trust, or for the declaration and payment of dividends and
distributions, as they may deem necessary or desirable to enable the Trust to
comply with any provision of the 1940 Act, including without limitation any rule
or regulation adopted pursuant to Section 22 of the 1940 Act by the Commission.
ARTICLE IX
----------
DURATION; TERMINATION OF
TRUST; AMENDMENT; MERGERS, ETC.
-------------------------------
Section 9.1. Duration. The Trust shall continue without
limitation of time but subject to the provisions of this Article IX.
Section 9.2. Termination of Trust. (a) The Trust may be
terminated upon the recommendation of a majority of the Trustees, subject to
approval by the affirmative vote of "a majority of the outstanding voting
securities" of the Trust, as the quoted phrase is defined in the 1940 Act, taken
by Majority Shareholder Vote at a meeting of Shareholders or by
25
<PAGE>
such greater vote of Shareholders as may be established by the Trustees with
respect to any Series of Shares. 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 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; provided that
any sale, conveyance, assignment, exchange, transfer
or other disposition of all or substantially all of
the Trust Property shall require Shareholder approval
in accordance with Section 9.4 hereof.
(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
Trustees may distribute the remaining Trust Property,
in cash or in kind or partly each, among the
Shareholders according to their respective rights and
interests.
(b) After termination of the Trust and distribution of 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.
Section 9.3. Amendment Procedure. (a) This Declaration may be
amended by a vote or written consent of the Trustees, subject to and upon
approval of such amendment by a Majority Shareholder Vote. The Trustees may
amend this Declaration without such Shareholder approval to change the name of
the Trust, to establish and designate additional
26
<PAGE>
Series of Shares pursuant to Sections 6.1 and 6.6(h) hereof, 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 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, but the Trustees shall
not be liable for failing to do so.
(b) No amendment may be made under this Section 9.3 which
would change any rights with respect to any Shares of the Trust by
reducing the amount payable thereon upon liquidation of the Trust or by
diminishing or eliminating any voting rights pertaining thereto, except
with the vote or written consent by Single Class Voting of the holders
of two-thirds of the Shares outstanding and entitled to vote, and by
the vote or written consent of the holders of two-thirds of the Shares
of any Series of Shares affected by such amendment. Nothing contained
in this Declaration shall permit the amendment of this Declaration 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 and reciting that it was duly adopted by the Shareholders or
by the Trustees as aforesaid or a copy of the Declaration, 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 9.4. 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 vote or written
consent of the Trustees and approved by the affirmative vote by Single Class
Voting of the holders of not less than two-thirds of the Shares outstanding and
entitled to vote, or by an instrument or instruments in writing without a
meeting consented to by Single Class Voting by the holders of not less than
two-thirds of such Shares, and by the vote or written consent of the holders of
two-thirds of the Shares of each of the Series of Shares; provide , however,
that, if such merger, consolidation, sale, lease or exchange is recommended
27
<PAGE>
by the Trustees, a Majority Shareholder Vote shall be sufficient authorization.
Section 9.5. Incorporation. Subject to approval by a Majority
Shareholder Vote, or by such other vote as may be established by the Trustees
with respect to any Series of Shares, 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 of 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 such
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 a portion of the Trust Property to such organization or
entities.
ARTICLE X
---------
REPORTS TO SHAREHOLDERS
-----------------------
The Trustees shall at least semiannually submit to the
Shareholders of each Series a written financial report meeting the requirements
of the 1940 Act. Shareholders shall be entitled to inspect the books and records
of the Trust at the discretion of the Trustees.
ARTICLE XI
----------
MISCELLANEOUS
-------------
Section 11.1. Filing. This Declaration and amendment hereto
shall be filed in the office of the Secretary of The Commonwealth of
Massachusetts and in such other places as may be required under the laws of The
Commonwealth of Massachusetts and may also be filed or recorded in such other
places as the Trustees deem appropriate. Each amendment so filed shall be
accompanied by a certificate signed and
28
<PAGE>
acknowledged by a Trustee or by the Secretary or any Assistant Secretary of the
Trust stating that such action was duly taken in a manner provided herein, and
unless such amendment or such certificate sets forth some later time for the
effectiveness of such amendment, such amendment shall be effective upon its
filing with the Secretary of The Commonwealth of Massachusetts. A restated
Declaration, integrating into a single instrument all of the provisions of this
Declaration which are then in effect and operative, may be executed from time to
time by a majority of the Trustees and shall, upon filing with the Secretary of
The Commonwealth of Massachusetts, be conclusive evidence of all amendments
contained therein and may thereafter be referred to in lieu of the original
Declaration and the various amendments thereto.
Section 11.2. Resident Agent. To the extent required, the
Trustees shall have power to appoint a resident agent for the Trust in the
Commonwealth of Massachusetts, and from time to time to replace the resident
agent so appointed.
Section 11.3. Governing Law. This Declaration is executed by
the Trustees with reference to the laws of The Commonwealth of Massachusetts,
and the rights of all parties and the validity and construction of every
provision hereof shall be subject to and construed according to the laws of said
Commonwealth.
Section 11.4. Counterparts. The Declaration may be
simultaneously executed in several counterparts, each of which shall be deemed
to be an original, and such counterparts, together, shall constitute one and the
same instrument, which shall be sufficiently evidenced by any such original
counterpart.
Section 11.5. Reliance by Third Parties. Any certificate
executed by an individual who, according to the records of the Trust, appears to
be a Trustee hereunder, or Secretary or Assistant Secretary of the Trust,
certifying to: (a) the number or identity of Trustees or Shareholders, (b) the
due authorization of the execution of any instrument or writing, (c) the form of
any vote passed at a meeting of Trustees or Shareholders, (d) the fact that the
number of Trustees or Shareholders present at any meeting or executing
Declaration, (e) the form of any By-Laws adopted by or the identity of any
officers elected by the Trustees, or (f) the existence of any fact or facts
which in any manner relate to the affairs of the Trust, shall be conclusive
evidence as to the matters so certified in favor of any Person dealing with the
Trustees and their successors.
29
<PAGE>
Section 11.6. Provisions in Conflict with Law or Regulations.
(a) The provisions of this Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company provisions of the
Internal Revenue Code or with other applicable laws and regulations, the
conflicting provisions shall be deemed superseded by such law or regulation to
the extent necessary to eliminate such conflict; provide , however, that such
determination shall not affect any of the remaining provisions of this
Declaration or render invalid or improper any action taken or omitted prior to
such determination.
(b) If any provision of this Declaration shall be held invalid
or unenforceable in any jurisdiction, such invalidity or
unenforceability shall pertain only to such provision in such
jurisdiction and shall not in any manner affect such provision in any
other jurisdiction or any other provision of this Declaration in any
jurisdiction.
Section 11.7. Use of the Name "BB&K". Bailard, Biehl & Kaiser,
Inc. (the "Company") has consented to the use by the Trust of the identifying
name "BB&K", which is a property right of the Company. The Trust will only use
the name "BB&K" as a component of its name and for no other purpose, and will
not purport to grant to any third party the right to use the name "BB&K" for any
purpose. The Company or any of its corporate affiliates may use or grant to
others the right to use the name "BB&K", as all or a portion of a corporate or
business name or for any commercial purpose, including a grant of such right to
any other investment company. At the request of the Company, the Trust will take
such action as may be required to provide its consent to the use by the Company,
or any of its corporate affiliates, or by any person to whom the Company or an
affiliate of the Company shall have granted the right to the use of the name
"BB&K". Upon the termination of any investment advisory or management agreement
or underwriting agreement into which the Company or any of its affiliates and
the Trust may enter, the Trust shall, upon request by the Company, cease to use
the name "BB&K" as a component of its name, and shall not use such name as a
part of its name or for any other commercial purpose, and shall cause its
officers and Trustees to take any and all actions which the Company may request
to effect the foregoing and to reconvey to the Company or such corporate
affiliate any and all rights to such name.
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<PAGE>
IN WITNESS WHEREOF the undersigned has executed this
instrument this 27 day of August, 1986.
/s/ Ronald W. Kaiser
------------------------------
Ronald W. Kaiser
Sole Trustee
BY- LAWS
OF
BB&K FUND GROUP
(As adopted on August 27, 1986)
ARTICLE I
Definitions
-----------
The terms "Affiliated Person," "Commission," "Declaration,"
"Distributor," "Investment Adviser," "Majority Shareholder Vote," "1940 Act,"
"Series," "Shareholder," "Shareholder Servicing Agent," "Shares, it "Trust,"
"Trust Property," and "Trustees" have the respective meanings given them in the
Declaration of Trust of the BB&K Fund Group dated August 27, 1986, as amended
from time to time.
ARTICLE II
Offices
-------
Section 2.1. Principal Office. The principal office of the Trust in The
Commonwealth of Massachusetts shall be located at the principal place of
business in The Commonwealth of the individual, firm or corporation acting as
the Trust's resident agent in The Commonwealth of Massachusetts.
Section 2.2. Other Offices. In addition to its principal office in The
Commonwealth of Massachusetts, the Trust may have an office or offices at such
other places within or without The Commonwealth of Massachusetts as the Trustees
may from time to time designate or the business of the Trust may require.
ARTICLE III
Shareholders' Meetings
----------------------
Section 3.1. Time and Place of Meetings. All meetings of Shareholders
shall be held at such time and place, whether within or without The Commonwealth
of Massachusetts, as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
<PAGE>
Section 3.2. Meetings. Meetings of Shareholders shall be held whenever
a vote of Shareholders is required by the Declaration and at such other times as
the Trustees may determine to be necessary, appropriate or advisable. Meetings
of Shareholders to consider any matter as to which a vote of Shareholders is
required by the 1940 Act or is permitted by Section 15(a)(3), 16(a) or 32(a)(3)
of, or Rule 12b-l(b)(3)(iii) under, the 1940 Act and as to which the Trustees
have not called a meeting of Shareholders shall be called by the secretary upon
the written request of the holders of Shares entitled to cast not less than
twenty five percent (25%) of all the votes then entitled to be cast at a meeting
of Shareholders without regard to Series. Such request shall state the purpose
or purposes of such meeting and the matters proposed to be acted on thereat. The
secretary shall inform such Shareholders of the estimated reasonable cost of
preparing and mailing such notice of the meeting. Upon payment to the Trust of
such costs, the secretary shall give notice stating the purpose or purposes of
the meeting to each Shareholder entitled to vote at such meeting. Unless
requested by Shareholders entitled to cast a majority of all votes entitled to
be cast at a meeting of Shareholders without regard to Series, a meeting need
not be called to consider any matter which is substantially the same as a matter
voted on at any meeting of Shareholders held during the preceding twelve (12)
months.
Section 3.3. Notice of Meetings. Written notice of each meeting of
Shareholders stating the place, date and hour thereof, and in the case of a
special meeting specifying the purpose or purposes thereof, shall be given to
each Shareholder entitled to vote thereat not less than ten (10) nor more than
sixty (60) days prior to the meeting either by mail or by presenting it to such
Shareholder personally or by leaving it at his residence or usual place of
business. if mailed, such notice shall be deemed to be given when deposited in
the United States mail, postage prepaid, addressed to the Shareholder at his
post office address as it appears on the records of the Trust.
Section 3.4. Quorum; Adjournments. Except as otherwise provided by law,
by the Declaration or by these By-Laws, at all meetings of Shareholders the
holders of a majority of the Shares issued and outstanding and entitled to vote
thereat without regard to Series, present in person or represented by proxy,
shall be requisite and shall constitute a quorum for the transaction of
business; but this section shall not affect any applicable requirement of law or
the Declaration for the vote necessary for the adoption of any measure. In the
absence of a quorum, the Shareholders present in person or represented by proxy
and entitled to vote thereat
2
<PAGE>
shall have power to adjourn the meeting from time to time without notice other
than announcement at the meeting until such quorum shall be present; and at any
meeting at which a quorum shall be present, the holders of Shares entitled to
cast not less than a majority of all the votes entitled to be cast at such
meeting without regard to Series shall have the power to adjourn the meeting
from time to time without notice other than announcement at such meeting;
provided, however, that written notice shall be given as required by Section 3.3
if such meeting is adjourned to a date more than one hundred twenty (120) days
after the record date originally scheduled with respect to the meeting. At any
such adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted had a quorum been present at the
time originally fixed for the meeting.
Section 3.5. Vote Required. Except as otherwise provided by law, by the
Declaration or by these By-Laws, at each meeting of Shareholders at which a
quorum is present, all matters shall be decided by Majority Shareholder Vote.
Section 3.6. Voting. At any meeting of Shareholders, each Shareholder
having the right to vote shall be entitled to vote in person or by proxy, and
each Shareholder of record shall be entitled to one vote for each Share and to
the fractional portion of one vote for each fractional Share entitled to vote so
registered in his name on the records of the Trust on the date fixed as the
record date for the determination of Shareholders entitled to vote at such
meeting.
Section 3.7. Proxies. Each proxy shall be in writing executed by the
Shareholder giving the proxy or by his duly authorized attorney. No proxy shall
be valid after the expiration of three (3) years from its date, unless a longer
period is provided for in the proxy.
Section 3.8. Inspectors. The Trustees may, in advance of any meeting of
Shareholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If the inspectors shall not be so appointed or if any of
them shall fail to appear or act, the chairman of the meeting may, and on the
request of any Shareholder entitled to vote thereat shall, appoint inspectors.
Each inspector, before entering upon the discharge of his duties, shall take and
sign an oath to execute faithfully the duties of inspector at such meeting with
strict impartiality and according to the best of his ability.
The inspectors shall determine the number of Shares outstanding and the
voting power of each, the number of Shares
3
<PAGE>
represented at the meeting, the existence of a quorum, the validity and effect
of the proxies, and shall receive votes, ballots or consents, hear and determine
all challenges and questions arising in connection with the right to vote, count
and tabulate all votes, ballots or consents, and determine the result.
On request of the chairman of the meeting or any Shareholder entitled
to vote thereat, the inspectors shall make a report in writing of any challenge,
request or matter determined by them and shall execute a certificate of any fact
found by them. No Trustee or candidate for the office of Trustee shall act as
inspector of an election of Trustees.
Section 3.9. Procedures at Meetings. Except as otherwise provided
herein, at all meetings of Shareholders, all questions relating to the order and
manner in which matters are submitted to a vote, and all other matters relating
to questions of procedure shall be decided by the chairman of the meeting, in a
manner consistent with these By-Laws.
Section 3.10. Informal Action by Shareholders. Any action required or
permitted to be taken at a meeting of Shareholders may be taken without a
meeting if a consent in writing, setting forth such action, is signed by each
Shareholder entitled to vote on the matter, and such consents are filed with the
records of the Trust.
ARTICLE IV
Trustees
--------
Section 4.1. Annual Meetings of the Trustees. An annual meeting of the
Trustees, commencing with the year 1986, shall be held on such date, not less
than sixty (60) nor more than one hundred eighty (180) days after the end of the
Trust's last preceding fiscal year, as the Trustees shall prescribe. At each
annual meeting, the Trustees shall elect officers, appoint committees, consider
approving the continuation of any agreement between the Trust and an Investment
Adviser or Distributor and of any distribution plan of the Trust pursuant to
Rule 12b-1 under the 1940 Act, take any action which the Trustees are required
to take annually by the 1940 Act and transact such other business as may
properly come before the meeting.
Section 4.2. Regular and Special Meetings of the Trustees. The Trustees
may in their discretion provide for regular or special meetings of the Trustees.
Regular meetings
4
<PAGE>
of the Trustees may be held without further notice at such' time and place as
shall be fixed in advance by the Trustees. Special meetings of the Trustees may
be called at any time by the chief executive officer and shall be called by the
chief executive officer or the secretary upon the written request of any two (2)
Trustees.
Section 4.3. Notice of Special Meetings. Notice of any special meeting
of the Trustees shall be given by written notice delivered personally,
telegraphed or mailed to each Trustee at his business or residence address or by
telephone. Personally delivered or telegram notices shall be given at least
forty-eight (48) hours prior to the meeting. Telephone notice shall be given at
least twenty-four (24) hours prior to the meeting. Notice by mail shall be given
at least four (4) days prior to the meeting. If mailed, such notice will be
deemed to be given when deposited in the United States mail properly addressed,
with postage prepaid thereon. If notice is given by telegram, such notice shall
be deemed to be given when the telegram is delivered to the telegraph company.
Neither the business to be transacted at, nor the purpose of, any special
meeting of the Trustees need be stated in the notice, unless specifically
required by the 1940 Act. If all Trustees are present at a meeting, such meeting
shall be duly constituted whether any notice thereof shall have been given.
Section 4.4. Quorum; Adjournments. A majority of the number of Trustees
(but not fewer than two (2) Trustees) shall constitute a quorum for transaction
of business at any meeting of the Trustees; provide, that if less than a
majority of such number of Trustees is present at any such meeting, a majority
of the Trustees present or the sole Trustee present may adjourn the meeting from
time to time without further notice until a quorum is present.
Section 4.5. Voting. The action of a majority of the Trustees present
at a meeting at which a quorum is present shall be the action of the Trustees,
unless the concurrence of a greater proportion or of any specified group of
Trustees is required for such action by law, the Declaration or these By-Laws.
Section 4.6. Executive and Other Committees. The Trustees may designate
one or more committees, each committee to consist of two (2) or more Trustees
and to have such title as the Trustees may consider to be properly descriptive
of its function, except that not more than one committee shall be designated as
the Executive Committee. Each such committee shall serve at the pleasure of the
Trustees.
5
<PAGE>
In the absence of any member of such committee, the members thereof
present at any meeting, whether or not they constitute a quorum, may appoint a
Trustee to act in the place of such absent member.
The Trustees may delegate to any of the committees appointed under this
Section 4.6 any of the powers of the Trustees, except the power to: (a) amend
the Declaration; (b) authorize the merger or consolidation of the Trust or the
sale, lease or exchange of all or substantially all of the Trust Property; (c)
approve the incorporation of the Trust; (d) approve the termination of the
Trust; (e) declare dividends or distributions on Shares; (f) issue Shares except
pursuant to a general formula or method specified by the Trustees by resolution;
(g) amend these By-Laws; or (h) elect or appoint or remove Trustees.
Each committee shall keep minutes or other appropriate written evidence
of its meetings or proceedings and shall report the same to the Trustees as and
when requested by the Trustees, and shall observe such other procedures with
respect to its meetings as may be prescribed by the Trustees in the resolution
appointing such committee, or, if and to the extent not so prescribed, as are
prescribed in these By-Laws with respect to meetings of the Trustees.
Section 4.7. Participation in Meetings by Telephone. Any Trustee may
participate in a meeting of the Trustees or of any committee of the Trustees by
means of conference telephone or similar communications equipment if all persons
participating in the meeting can hear each other at the same time. Except as
required by the 1940 Act, participation in a meeting by these means shall
constitute presence in person at the meeting.
Section 4.8. Informal Action by Trustees. Any action required or
permitted to be taken at any meeting of the Trustees or of any committee of the
Trustees may be taken without a meeting, if a consent in writing to such action
is signed by each Trustee in the case of a meeting of Trustees, or each Trustee
who is a member of the committee, in the case of a meeting of a committee, and
such written consent is filed with the minutes of proceedings of the Trustees or
of the committee.
Section 4.9. Compensation. The Trustees shall determine and from time
to time fix by resolution the compensation payable to Trustees for their
services to the Trust in that capacity. Such compensation may consist of a fixed
annual fee or a fixed fee for attendance at meetings of the Trustees or of any
committee of the Trustees of which the
6
<PAGE>
Trustees receiving such fees are members, or a combination of a fixed annual fee
and a fixed fee for attendance. In addition, the Trustees may authorize the
reimbursement of Trustees for their expenses for attendance at meetings of the
Trustees or of any committee of the Trustees of which they are members. Nothing
herein contained shall be construed to preclude any Trustee from serving the
Trust in any other capacity and receiving compensation therefor.
ARTICLE V
Waiver of Notice
----------------
Whenever any notice is required to be given pursuant to law, the
Declaration or these By-Laws, a waiver thereof in writing, signed by the person
or persons entitled to such notice, or, in the case of any waiver of notice of
any meeting of Shareholders, signed by the proxy for a person entitled to notice
thereof, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Neither the business to be transacted
at nor the purpose of any meeting need be set forth in the waiver of notice,
unless specifically required by law, the Declaration or these By-Laws. The
attendance of any person at any meeting in person, or, in the case of a meeting
of Shareholders, by proxy, shall constitute a waiver of notice of such meeting,
except where such person attends a meeting for the express purpose of objecting
to the transaction of any business on the ground that the meeting is not
lawfully called or convened.
ARTICLE VI
Officers
--------
Section 6.1. Executive Officers. The executive officers of the Trust
shall be a chief executive officer, a president, a chief financial officer, and
a secretary, and one or more vice-presidents. If the Trustees shall elect a
chairman pursuant to Section 6.7, then the chairman shall be the chief executive
officer of the Trust. If the Trustees shall elect one or more vice-presidents,
each such vice-president shall be an executive officer. The chairman, if there
is one, shall be elected from among the Trustees, but no other executive officer
need be a Trustee. Any two or more executive offices, except those of the chief
executive officer, the president and vice-president, may be held by the same
person. A person holding more than one office may not act in more than one
capacity to execute, acknowledge or verify on behalf of the Trust an instrument
required by law to
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be executed, acknowledged or verified by more than one officer. The executive
officers of the Trust shall be elected at each annual meeting of Trustees.
Section 6.2. Other Officers and Agents. The Trustees may also elect or
may delegate to the chief executive officer or the president or both the
authority to appoint, remove, or fix the duties, compensation or terms of office
of one or more assistant vice-presidents and assistant secretaries, and such
other officers and agents as the Trustees or their delegates shall at any time
and from time to time deem to be advisable.
Section 6.3. Tenure, Resignation and Removal. Each officer of the Trust
shall hold office until his successor is elected or appointed or until his
earlier displacement from office by resignation, removal or otherwise; provide,
that if the term of office of any officer elected or appointed pursuant to
Section 6.2 shall have been fixed by the Trustees or by the chief executive
officer or by the president, such officer shall cease to hold such office no
later than the date of expiration of such term, regardless of whether any other
person shall have been elected or appointed to succeed him. Any officer of the
Trust may resign at any time by written notice to the Trust. Any officer or
agent of the Trust may be removed at any time by the Trustee or by the chief
executive officer or the president acting under authority delegated by the
Trustees pursuant to Section 6.2 if in their or his judgment the best interests
of the Trust would be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Election or
appointment of an officer or agent shall not of itself create contract rights
between the Trust and such officer or agent.
Section 6.4. Vacancies. If the office of any officer becomes vacant for
any reason, the vacancy may be filled by the Trustees or by the chief executive
officer or the president acting under authority delegated by the Trustees
pursuant to Section 6.2. Each officer elected or appointed to fill a vacancy
shall hold office for the balance of the term for which his predecessor was
elected or appointed.
Section 6.5. Compensation. The compensation, if any, of all officers of
the Trust shall be fixed by the Trustees or by the chief executive officer or
the president acting under authority delegated by the Trustees pursuant to
Section 6.2.
Section 6.6. Authority and Duties. All officers as between themselves
and the Trust shall have such powers,
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perform such duties and be subject to such restrictions, if any, in the
management of the Trust as may be provided in these By-Laws, or, to the extent
not so provided, as may be prescribed by the Trustees or by the chief executive
officer or the president acting under authority delegated by the Trustees
pursuant to Section 6.2.
Section 6.7. Chairman and Chief Executive Officer. When and if the
Trustees deem such action to be necessary or appropriate, they may elect a
chairman from among the Trustees who shall also be the chief executive officer
of the Trust. The chairman may preside at meetings of the Shareholders and of
the Trustees, and he shall have such other powers and duties as may be
prescribed by the Trustees. The chairman shall in the absence or disability of
the president exercise the powers and perform the duties of the president.
Section 6.8. President. The president of the Trust shall have general
and active management of the business of the Trust, shall see to it that all
orders, policies and resolutions of the Trustees are carried into effect, and,
in connection therewith, shall be authorized to delegate to any vice-president
of the Trust such of his powers and duties as president and at such times and in
such manner as he shall deem advisable. In the absence or disability or at the
election of the chairman, or if there is no chairman, the president shall
preside at all meetings of the Shareholders and of the Trustees; and he shall
have such other powers and perform such other duties as are incident to the
office of a president and as the Trustees may from time to time prescribe.
Section 6.9. Vice-Presidents. The vice-president, if any, or, if there
is more than one, then the vice-presidents, of the Trust shall assist the
president in the management of the business of the Trust and the implementation
of orders, policies and resolutions of the Trustees at such times and in such
manner as the president may deem to be advisable. If there is more than one
vice-president, the Trustees may designate one as the executive vice-president,
in which case he shall be first in order of seniority, and the Trustees may also
grant to other vice-presidents such titles as shall be descriptive of their
respective functions or indicative of their relative seniority. In the absence
or disability of both the president and the chairman, or in the absence or
disability of the president if there is no chairman, the vice-president, or, if
there is more than one, the vice-presidents in the order of their relative
seniority, shall exercise the powers and perform the duties of those officers;
and the vice-president or vice-presidents shall have such other powers and
perform
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such other duties as from time to time may be prescribed by the chief executive
officer, the president or by the Trustees.
Section 6.10. Assistant Vice-Presidents. The assistant vice-president,
if any, or if there is more than one, the assistant vice-presidents, of the
Trust shall perform such duties as may from time to time be prescribed by the
Trustees or by the chief executive officer or by the president acting under
authority delegated by the Trustees pursuant to Section 6.2.
Section 6.11. Secretary. The secretary shall (a) keep the minutes of
the meetings and proceedings and any written consents evidencing actions of the
Shareholders, the Trustees and any committees of the Trustees in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these By-Laws or as required by law; (c) be
custodian of the business records and of the seal of the Trust, and, when
authorized by the Trustees, cause the Seal of the Trust to be affixed to any
document requiring it, and when so affixed attested by his signature as
secretary or by the signature of an assistant secretary; and (d) in general,
perform such other duties as from time to time may be assigned to him by the
chief executive officer or the president or by the Trustees.
Section 6.12. Assistant Secretaries. The assistant secretary, if any,
or, if there is more than one, the assistant secretaries of the Trust in the
order determined by the Trustees or by the chief executive officer or the
president, shall in the absence or disability of the secretary exercise the
powers and perform the duties of the secretary, and he or they shall perform
such other duties as the Trustee, the chief executive officer, the president or
the secretary may from time to time prescribe.
Section 6.13. Chief Financial Officer. The chief financial officer of
the Trust shall keep full and accurate accounts of receipts and disbursements in
books belonging to the Trust, shall deposit all moneys and other valuable
effects in the name and to the credit of the Trust in such depositories as may
be designated by the Trustees, and shall render to the Trustees and the
president, at regular meetings of the Trustees or whenever they or the president
may require it, an account of all his transactions as chief financial officer
and of the financial condition of the Trust.
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ARTICLE VII
Contracts, Checks and Drafts
----------------------------
Section 7.1. Contracts. The Trustees may authorize any officer or agent
to enter into any contract or to execute and deliver any instrument in the name
and on behalf of the Trust, and such authority may be general or confined to
specific instances. All contracts entered into on behalf of the Trust shall
comply with Section 5.6 of the Declaration.
Section 7.2. Checks and Drafts. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Trust shall be signed by such officer or officers or agent or agents
of the Trust and in such manner as shall from time to time be determined by the
Trustees.
ARTICLE VIII
Shares of Beneficial Interest
-----------------------------
Section 8.1. Certificates of Shares. For any Series of Shares for which
the Trustees shall issue Share certificates each Shareholder of such Series
shall be entitled, upon written request made to the Trust or any Shareholder
Servicing Agent, to a certificate or certificates which shall represent and
certify the number of Shares held by him in the Trust. Each certificate shall be
signed by the chairman, if there is one, the chief executive officer or a
vice-president and countersigned by the secretary or an assistant secretary or
the chief financial officer and may be sealed with the seal of the Trust. The
signatures and seal, if any, on a certificate may be either manual or facsimile.
A certificate is valid and may be issued whether or not an officer who signed it
is still an officer when it is issued. A full record of the issuance of each
certificate and the identifying number assigned thereto shall be made on the
books and records of the Trust usually kept for the purpose or required by
statute.
Section 8.2. Transfers of Shares. Upon surrender to the Trust or the
Shareholder Servicing Agent of a certificate duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, the Trust
shall issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books. Shares of the Trust not
represented by certificate shall be transferred by recording the transaction on
the books of the Trust maintained by the Shareholder Servicing Agent
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upon presentation of proper evidence of succession, assignment or authority to
transfer.
The Trust shall be entitled to treat the holder of record of any Share
or Shares as the holder in fact thereof and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such Share or Shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by applicable law.
Section 8.3. Lost Certificates. The Trustees may by resolution
establish procedures pursuant to which a new certificate may be issued in place
of any certificate theretofore issued by the Trust which has been mutilated or
which is alleged to have been lost, stolen or destroyed, upon presentation of
each such mutilated certificate, or the making by the person claiming any such
certificate to have been lost, stolen or destroyed if an affidavit as to the
fact and circumstances of the loss, theft or destruction thereof. The Trustees,
in their discretion and as a condition precedent to the issuance of any new
certificate, may include among such procedures a requirement that the owner of
any certificate alleged to have been lost, stolen or destroyed, or his legal
representative, furnish the Trust with a bond, in such sum and with such surety
or sureties as they may direct, as indemnity against any claim that may be made
against the Trust in respect of such lost, stolen or destroyed certificate.
Section 8.4. Fixing of Record Date. For the purpose of determining the
Shareholders entitled to notice of, or to vote at, any meeting of Shareholders
or at any adjournment thereof in respect of which a new record date is not
fixed, or to express written consent to or dissent from the taking of action by
Shareholders without a meeting, or for the purpose of determining the
Shareholders entitled to receive payment of any dividend or other distribution
or allotment of any rights, or to exercise any rights in respect of any change,
conversion or exchange of Shares, or for the purpose of any other lawful action,
the Trustees may fix, in advance, a date as the record date for any such
determination of Shareholders. Such date shall not be more than sixty (60) days,
and in case of a meeting of Shareholders not less than ten (10) days, before the
date on which the meeting or particular action requiring such determination of
Shareholders is to be held or taken. If no record date is fixed, (a) the record
date for the determination of Shareholders entitled to notice of or to vote at a
meeting of Shareholders shall be the later of: (i) the close of business on the
day on which the notice of meeting is first mailed to any Shareholder; or (ii)
the thirtieth (30th) day before the meeting; (b) the
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record date for determining the Shareholders entitled to express written consent
to the taking of any action without a meeting, when no prior action by the
Trustees is necessary, shall be the day on which the first written consent is
expressed; and (c) the record date for the determination of Shareholders
entitled to receive payment of a dividend or other distribution or an allotment
of any other rights shall be at the close of business on the day on which the
resolution of the Trustees, declaring the dividend, distribution or allotment of
rights, is adopted.
ARTICLE IX
Fiscal Year
-----------
The fiscal year of the Trust shall be fixed and may from time to time
be changed by resolution of the Trustees; provide , that if a different fiscal
year shall not have been fixed by the Trustees on or before June 30, 1987, the
first fiscal year of the Trust shall end on that date, and thereafter, unless
the Trustees shall fix a different fiscal year, it shall be the period of twelve
(12) consecutive calendar months ending on the 30th day of June in each year.
ARTICLE X
Seal
----
The Trustees shall adopt a seal, which shall be in such form and shall
have such inscription thereon as the Trustees may from time to time provide. The
seal of the Trust may be affixed to any document, and the seal and its
attestation may be lithographed, engraved or otherwise printed on any document.
ARTICLE XI
Indemnification and Insurance
-----------------------------
Section 11.1. The Trust shall indemnify any person who is a present or
former Trustee or officer of the Trust and who, by reason of his position as
such, was, is or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than any action or suit by or in the right of the Trust)
against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement, actually and reasonably incurred by him in
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connection with the claim, action, suit or proceeding, if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction or
upon the plea of nolo contendere or its equivalent shall not, of itself, create
a presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
Section 11.2. The Trust shall indemnify any person who is a present or
former Trustee or officer of the Trust and who, by reason of his position as
such, was, is or is threatened to be made a party to any threatened, pending or
completed action or suit by or on behalf of the Trust to obtain a judgment or
decree in its favor against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the defense or settlement of the
action or suit, if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Trust; provided, that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person has been adjudged to be liable for negligence or misconduct in
the performance of his duty to the Trust, except to the extent that the court in
which the action or suit was brought determines upon application that, despite
the adjudication of liability but in view of all circumstances of the case, such
person is fairly and reasonably entitled to indemnity for those expenses which
the court shall deem proper, and such person is not adjudged to be liable by
reason of his willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
Section 11.3. To the extent that a Trustee or officer of the Trust has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Section 11.1 or 11.2 or in defense of any claim, issue
or matter therein, he shall be indemnified against expenses, including
attorneys' fees, actually and reasonably incurred by him in connection
therewith.
Section 11.4. Unless a court orders otherwise, any indemnification
under Section 11.1 or 11.2 may be made by the Trust only as authorized in the
specific case after a determination that indemnification of the person to be
indemnified is proper under the circumstances because he has
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met the applicable standard of conduct set forth in Section 11.1 or 11.2. The
determination shall be made by: (a) the Trustees, by a majority vote of a quorum
consisting of Trustees who were not parties to the action, suit or proceeding;
or (b) if the required quorum is not obtainable or if a quorum of Trustees who
are not "interested persons" of the Trust, as defined in Section 2(a)(19) of the
1940 Act, so directs, an independent legal counsel in a written opinion.
Nothing contained in this Article XI shall be construed to protect any
person against any liability to the Trust or its Shareholders to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office (any such conduct being hereinafter referred to as "Disabling Conduct").
No indemnification shall be made pursuant to this Article XI unless:
(a) There is a final determination on the merits by a court or other
body before whom the action, suit or proceeding was brought that the person to
be indemnified was not liable by reason of Disabling Conduct; or
(b) In the absence of such a judicial determination, there is a
reasonable determination, based upon a review of the facts, that such person was
not liable by reason of Disabling Conduct, which determination shall be made by:
(i) A majority of a quorum of Trustees who are neither
"interested persons" of the Trust, as defined in Section 2(a)(19) of the 1940
Act, nor parties to the action, suit or proceeding; or
(ii) An independent legal counsel in a written opinion.
Section 11.5. Notwithstanding any provision of this Article XI, any
advance payment of expenses by the Trust to any person to be indemnified
hereunder shall be made only upon the undertaking by or on behalf of such person
to repay the advance unless it is ultimately determined that he is entitled to
indemnification as above provided, and only if one of the following conditions
is met:
(a) The person to be indemnified provides a security for his
undertaking; or
(b) The Trust is insured against losses arising by reason of any lawful
advances; or
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(c) There is a determination, based on a review of readily-available
facts, that there is reason to believe that the person to be indemnified
ultimately will be entitled to indemnification, which determination shall be
made by:
(i) A majority of a quorum of Trustees who are neither
"interested persons" of the Trust, as defined in Section 2(a)(19) of the 1940
Act, nor parties to the action, suit or proceeding; or
(ii) An independent legal counsel in a written opinion.
Section 11.6. The indemnification provided by this Article XI shall
continue as to a person who has ceased to be a Trustee or officer of the Trust
and inure to the benefit of the legal representatives of such person and shall
not be deemed exclusive of any other rights to which such person may be entitled
under any agreement, vote of Trustees or otherwise, both as to action in his
official capacity and as to action in another capacity while holding office;
provided, that no person may satisfy any right of indemnity granted herein or to
which he may be otherwise entitled, except out of the Trust Property, and no
Shareholder shall be personally liable with respect to any claim for indemnity.
Section 11.7. The Trust may purchase and maintain insurance on behalf
of any person who is or was a Trustee, officer, employee or agent of the Trust
or who may be indemnified by the Trust under the 1940 Act, against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such. However, the Trust shall not purchase insurance to indemnify
any person against liability for any conduct in respect of which the 1940 Act
prohibits the Trust itself from indemnifying him.
ARTICLE XII
Net Asset Value
---------------
The Trustees shall by resolution prescribe the manner, frequency and
time of day for determining the net asset value per Share of each Series of the
outstanding Shares of the Trust.
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ARTICLE XIII
Federal Supremacy
-----------------
If at a time when the Trust is registered as an investment company
under the 1940 Act, any of the foregoing provisions of these By-Laws or of the
Declaration or the law of The Commonwealth of Massachusetts relating to business
trusts shall conflict or be inconsistent with any applicable provision of the
1940 Act, the applicable provision of the 1940 Act shall be controlling and the
Trust shall not take any action which is in conflict or inconsistent therewith.
ARTICLE XIV
Amendments
----------
These By-Laws may be amended, altered or repealed, or new By-Laws may
be adopted by the Trustees. The Trustees shall in no event adopt By-Laws which
are in conflict with the Declaration and, subject to Article XIII of these
By-Laws, any apparent inconsistency shall be construed in favor of the related
provisions in the Declaration.
ARTICLE XI
Declaration of Trust
--------------------
The Declaration of Trust establishing the Trust, dated August 27, 1986,
a copy of which, together with all amendments thereto, is on file in the office
of the Secretary of The Commonwealth of Massachusetts, provides that the name
"BB&K Fund Group" refers to the Trustees under the Declaration collectively as
Trustees, but not as individuals or personally; and no Trustee, Shareholder,
officer, employee or agent of the Trust shall be held personally liable, nor
shall resort be had to their private property for the satisfaction of any
obligation or claim or otherwise, in connection with the affairs of the Trust,
but the Trust Property only shall be liable.
17
AMENDED INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
AGREEMENT made as of this 15th day of March, 1990 by and between
Bailard, Biehl & Kaiser Fund Group, a Massachusetts business trust (the
"Trust"), on behalf of the Bailard, Biehl & Kaiser Diversa Fund series of the
Trust (the "Fund"), and Bailard, Biehl & Kaiser, Inc. a California corporation
(the "Advisor").
WHEREAS, the Trust is registered as a diversified open-end management
investment company under the Investment Company Act of 1940 (the 1940 Act"); and
WHEREAS, the Advisor is registered as an investment advisor under the
Investment Advisers Act of 1940, and is engaged in the business of providing
investment advising and other services; and
WHEREAS, on December 19, 1986, the Trust and the Advisor entered into
an Investment Advisory and Management Agreement pursuant to which the Trust, on
behalf of the Fund, retained the Advisor to render investment advisory and other
services to the Fund; and
WHEREAS, the Trust, the Fund and the Advisor desire to amend and
restate the Investment Advisory and Management Agreement pursuant to and on the
terms and conditions hereinafter set forth; and
WHEREAS, both the Trust and the Advisor have been duly authorized to
enter into this Agreement;
NOW, THEREFORE,
in consideration of the foregoing and of the premises and covenants hereinafter
contained, the Trust and the Advisor agree as follows:
1. The Fund hereby retains the Advisor to provide investment advisory,
statistical and research facilities and services, to supervise the composition
of the Fund's portfolio, to determine the nature and timing of changes therein
and the manner of effectuating such changes and to cause the purchase and sale
of portfolio securities, all subject to the overall supervision by the Board of
Trustees of the Trust, for the period and on the terms set forth in this
Agreement. The Advisor hereby accepts such retention and
<PAGE>
agrees to render the services and to assume the obligations herein set forth,
for the compensation herein provided.
2. From and after the effectiveness hereof, the Advisor shall:
(a) Furnish to the Fund reasonable research and statistical and other
factual information and reports with respect to securities held by the Fund or
which the Fund might purchase. It will also furnish to the Fund such reasonable
information as may be appropriate concerning developments which may affect
issuers of securities held by the Fund or which the Fund might purchase or the
businesses in which such issuers may be engaged. Such statistical and other
factual information and reports shall include information and reports on
industries, businesses, corporations and all types of securities which the Fund
is empowered to purchase, whether or not the Fund has at any time any holdings
in such industries, businesses, corporations or securities.
(b) Furnish to the Fund, from time to time, advice, information and
recommendations with respect to the acquisition, holding, or disposal by the
Fund of securities in which the Fund is permitted to invest in accordance with
its investment objectives, policies and limitations ("Eligible Securities"), and
subject to overall supervision of the Board of Trustees of the Trust, effect
purchases and sales of Eligible Securities on behalf of the Fund.
(c) Review the selection of firms to effect portfolio transactions or
participate in portfolio transactions on behalf of the Fund, review commissions
paid on portfolio transactions for the Fund and review the execution of
portfolio transactions for the Fund.
(d) Furnish to the Fund necessary assistance in:
(i) The preparation of all reports now or hereafter required
by Federal or other laws.
(ii) The preparation of prospectuses, registration statements
and amendments thereto that may be required by Federal or other laws or
by the rule or regulation of any duly authorized commission or
administrative body.
(e) If desired by the Fund, arrange for officers or employees of the
Advisor to serve, without compensation from the Fund, as officers or employees
of the Fund.
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3. (a) In hereunder, the Advisor no less favorably than providing
services to the Fund agrees that the Fund shall be treated any other client. In
the event a decision is made by the Advisor that it is in the best interest of
the Fund to purchase or sell securities for the Fund and for others for whom the
Advisor provides investment management or research services, allocations of
securities so purchased or sold and priorities of such purchases or sales shall
(to the extent the Advisor has the discretion to control such purchases or
sales) be fairly and equitably allocated among all accounts without any special
advantage to any, and to the extent permissible by applicable Federal securities
laws, the Advisor will combine orders for purchases and sales to achieve better
overall execution if in the reasonable judgment of the Advisor such better
overall execution can be attained.
(b) The Advisor agrees to use its best efforts in acting as investment
advisor and rendering investment supervisory services to the Fund as provided in
this Agreement, and shall maintain, without cost to the Fund, such staff and
facilities as it shall consider requisite for such purposes. However, at no
charge to the Fund, the Advisor may employ, retain or otherwise avail itself of
the services or facilities of other persons or organizations for the purpose of
providing the Advisor or the Fund with such statistical and other factual
information, such advice regarding economic factors and trends, such advice as
to occasional transactions in specific securities or such other information,
advice or assistance as the Advisor may deem necessary, appropriate or
convenient for the discharge of its obligations hereunder or otherwise helpful
to the Fund. The Advisor and any person performing executive, administrative, or
trading functions for the Fund, whose services were made available to the Fund
by the Advisor, are specifically authorized to allocate portfolio brokerage and
portfolio principal transactions business to firms that provide such services or
facilities and to cause the Fund to pay a member of a securities exchange, or
any other securities broker or dealer, an amount of commission for effecting a
securities transaction in excess of the amount of commission another member of
an exchange, broker or dealer would have charged for effecting that transaction,
if the Advisor or such person determines in good faith that such amount of
commission is reasonable in relation to the commissions paid by other similarly
situated investors and the value of the brokerage and research services (as such
services are defined in Section 28(e) of the Securities Exchange Act of 1934)
provided by such member, broker or dealer, viewed in terms of either that
particular transaction or the overall responsibilities of the Advisor with
respect to the Fund and other accounts over which the Advisor has investment
3
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discretion. The authority to pay higher brokerage commissions, as provided in
the preceding sentence, shall not apply with respect to portfolio transactions
the commission rates for which are fixed, rather than negotiated.
4. Except as otherwise expressly provided herein, the Fund assumes and
shall pay or cause to be paid all expenses of the Fund, including, without
limitation: (a) all costs and expenses incident to (i) the registration of the
Fund under the 1940 Act or (ii) any public offering of Capital Stock ("Shares")
of the Fund, for cash or otherwise, including costs and expenses relating to the
registration of Shares under the Securities Act of 1933 (the "1933 Act"), the
qualification of Shares under state securities laws, the printing or other
reproduction and distribution of any registration statement (and all amendments
thereto) under the 1933 Act, the preliminary and final prospectuses included
therein, and any other necessary documents incident to such public offering
(other than costs and expenses incident to the reproduction and distribution of
prospectuses to prospective new investors and the advertising of Shares, which
are payable by the Advisor); (b) the charges and expenses of any custodian
appointed by the Fund for the safekeeping of its cash, portfolio securities and
other property; (c) the charges and expenses of auditors and bookkeepers; (d)
the charges and expenses of any Share transfer, dividend agent or registrar
appointed by the Fund; (e) broker's commissions chargeable to the Fund in
connection with portfolio securities transactions to which the Fund is a party;
(f) all taxes, including securities issuance and transfer taxes, and
organizational fees payable by the Fund to Federal, state or other governmental
agencies; (g) the costs and expenses of engraving or printing of certificates
representing Shares of the Fund; (h) fees involved in registering and
maintaining registrations of the Fund and of Shares with the Securities and
Exchange Commission and various states and other jurisdictions; (i) all expenses
of meetings of shareholders and Trustees of the Fund and of preparing, printing
and mailing proxy statements and quarterly, semi-annual, annual and any other
reports to shareholders; (j) fees and travel expenses of Trustees and Officers
of the Fund; (k) all fees and expenses incident to any dividend or distribution
reinvestment program; (1) charges and expenses of legal counsel in connection
with matters relating to the Fund, including without limitation, legal services
rendered in connection with the Fund's organization, financial structure and
relations with its shareholders, issuance of Shares, and registrations and
qualifications of Shares under Federal, state and other laws; (m) association
dues; (n) interest payable on Fund borrowings; (o) fees and expenses of
obtaining any exemptions from any provisions of any Federal, state or other
securities laws; (p) fees or
4
<PAGE>
expenses incurred incident to the obtaining of any rulings of, or advice from,
the U.S. Internal Revenue Service or any other taxing authority incident to the
taxation of the Fund or its shareholders; (q) costs of information obtained from
sources other than the Advisor or its affiliated persons (as defined in the 1940
Act) relating to the pricing and valuation of securities; and (r) postage.
5. The Advisor agrees to reduce the investment management fee payable
to it under this Agreement by the amount by which the expenses of the Fund for
any fiscal year of the Fund shall exceed the most stringent limits prescribed by
any state in which the Shares are offered for sale. Expenses shall be excluded
from the calculation of the applicable expense limitations to the fullest extent
authorized by applicable law. Costs incurred in connection with the purchase or
sale of portfolio securities, including brokerage fees and commissions, which
are capitalized in accordance with generally accepted accounting principles
applicable to investment companies, shall be accounted for as capital items and
not expenses. Proper accruals shall be made by the Fund for any projected
reduction hereunder and corresponding amounts shall be withheld from the fees
paid by the Fund to the Advisor subject to recovery by the Advisor of any amount
withheld in excess of the actual reduction required for any fiscal year. Any
additional reduction computed at the end of the fiscal year shall be deducted
from the fee for the last month of such fiscal year.
6. For the services to be rendered, the Fund shall pay to the Advisor
compensation calculated in U.S. dollars commencing on the day following
effectiveness hereof equal to the following amounts of the net assets of the
Fund on an annual basis: .95% of the average net assets of the Fund up to $75
million, .80% of the next $75 million, and .65% of the average net assets in
excess of $150 million. Except as hereinafter set forth, compensation under this
Agreement shall be calculated two times each month, as of the 15th day of each
month and the last day of each month on which the New York Stock Exchange is
open, by applying the annual rate to the net assets of the Fund, valued as of
the close of business of the New York Stock Exchange on the date of a
calculation, and dividing the amount so computed by 24; provided, however, that
by action of the Board of Trustees of the Trust the time of day as of which the
Fund's net assets are valued, for purposes of this Agreement, may be changed. If
the 15th day of a month is not a day on which the New York Stock Exchange is
open, then the fee to be calculated on such day shall be calculated as of the
first day following the 15th day on which the New York Stock Exchange is open.
If this Agreement shall become effective subsequent to the first day of a
half-month fee
5
<PAGE>
period on which the New York Stock Exchange is open, the fee for such period
shall be prorated based upon (i) the number of days during such period on which
this Agreement is in effect on which the New York Stock Exchange is open and
(ii) the number of days during such period on which the New York Stock Exchange
is open. For purposes of the preceding sentence and the subsequent sentence, a
half-month fee period shall be deemed to commence on the first day of a month
and the 16th day of a month whether or not the New York Stock Exchange is open
on such day. If this Agreement should terminate before the last day of a
half-month fee period on which the New York Stock Exchange is open, the fee for
such period shall be prorated as provided in the second preceding sentence and
shall be based upon the value of the net assets of the Fund as of the last
effective date of this Agreement on which the New York Stock Exchange is open.
Accrued fees will be payable in U.S. dollars as promptly as possible after the
end of each month during which this Agreement is in effect.
7. The services of the Advisor to the Fund are not to be deemed
exclusive, and the Advisor shall be free to engage in any other business or to
render investment advisory or management services of any kind to any other
corporation, firm, trust, individual or association, including any other
investment company, so long as its services hereunder be not impaired thereby.
Nothing in this Agreement shall limit or restrict the right of any director,
officer or employee of the Advisor to engage in any other business or to devote
his time and attention in part to the management or other aspects of any other
business, whether of a similar or dissimilar nature.
8. The Advisor assumes no responsibility under this Agreement other
than to render the services called for hereunder in good faith. The Advisor
shall not be responsible for any action of the Trustees of the Trust or any
committee thereof in following or declining to follow any advice or
recommendation of the Advisor. The Advisor shall be entitled to rely on written
instructions of any duly-authorized officer of the Trust. Neither the Advisor,
nor any director, officer, agent or employee of the Advisor shall be liable or
responsible to the Fund or its shareholders excepting matters as to which they
shall be finally adjudged to have been guilty of willful misfeasance, bad faith,
gross negligence, reckless disregard of duty or breach of fiduciary duty (all as
used in the 1940 Act) or otherwise in violation of applicable law.
9. This Agreement shall remain in effect until December 31, 1991, and
shall continue in effect from year to year thereafter provided its continuance
is specifically approved at least annually by vote of a majority of the
outstanding voting securities (within the meaning of the 1940
6
<PAGE>
Act) of the Trust or by vote of the Board of Trustees of the Trust, and by a
majority of the Trustees of the Trust who are not parties to this Agreement or
interested persons (as defined in the 1940 Act) of any party to this Agreement,
which vote must be cast in person at a meeting called for the purpose of voting
on approval of the terms of this Agreement and its continuance; provided,
however, that (a) the Trust may, at any time and without the payment of any
penalty, terminate this Agreement on sixty days prior written notice to the
Advisor either by majority vote of the Trustees of the Trust or by the vote of a
majority of the outstanding voting securities (within the meaning of the 1940
Act) of the Trust; (b) this Agreement shall immediately terminate in the event
of its assignment (within the meaning of the 1940 Act) unless such automatic
termination shall be prevented by an exemptive order of the Securities and
Exchange Commission; and (c) the Advisor may terminate this Agreement, at any
time and without payment of penalty, on not less than 180 days prior written
notice to the Trust. All notices or communications hereunder shall be in writing
and, if sent to the Advisor shall be mailed by certified or registered mail, or
delivered, or telegraphed or faxed and confirmed in writing to the Advisor at
2755 Campus Drive, San Mateo, California 94403, Attn: Thomas E. Bailard, and if
to the Trust shall be mailed by certified or registered mail, or delivered, or
telegraphed or faxed and confirmed in writing to the Trust at 2755 Campus Drive,
San Mateo, California 94403, Attn: Bryan W. Brown, with a copy to Orrick,
Herrington & Sutcliffe, 400 Sansome Street, San Francisco, California 94111,
Attn: Andre W. Brewster.
10. The Trust agrees (a) not to hold the Advisor or any of its officers
or employees liable for, and (b) to indemnify or insure the Advisor and its
officers and employees ("Indemnified Parties") against, any costs and
liabilities the Indemnified Parties may incur as a result of any claim against
the Indemnified Parties in the good faith exercise of their powers hereunder or
arising out of an act or omission of the custodian of the Trust or of any broker
or agent selected by the Advisor in good faith and in a commercially reasonable
manner, excepting matters as to which the Indemnified Parties shall be finally
adjudged to have been guilty of willful misfeasance, bad faith, gross
negligence, reckless disregard of duty or breach of fiduciary duty (all as used
in the 1940 Act) or otherwise in violation of applicable law.
11. Notice is hereby given of the limitations of the liability of the
Trust's shareholders and Trustees as set forth in the Trust's Declaration of
Trust, as amended, on file with the Secretary of The Commonwealth of
Massachusetts. The obligations assumed by the Trust pursuant to this Agreement
7
<PAGE>
shall be limited in all cases to the Trust and its assets. No party named herein
shall seek satisfaction of any such obligation from the shareholders or any
shareholder of the Trust; nor shall any party named herein seek satisfaction of
any such obligation from the Board of Trustees or any individual Trustee.
12. This Agreement shall be construed in accordance with the laws of
the State of California and the applicable provisions of the 1940 Act. To the
extent applicable law of the State of California, or any of the provisions
herein, conflicts with applicable provisions of the 1940 Act, the latter shall
control.
13. (a) This Agreement has been negotiated at arm's length and between
persons sophisticated and knowledgeable in the matters dealt with in this
Agreement. Accordingly, any rule of law (including California Civil Code section
1654) or legal decision that would require interpretation of any ambiguities in
this Agreement against the party that has drafted it is not applicable and is
waived. The provisions of this Agreement shall be interpreted in a reasonable
manner to effect the purpose of the parties and this Agreement.
(b) Subject in all instances to the provisions of Section 10 hereof,
any controversy or claim arising out of or relating to this Agreement, the
breach thereof, or the transactions contemplated hereby, shall be settled by
arbitration in San Francisco, California in accordance with the then prevailing
Securities Arbitration Rules of the American Arbitration Association and
judgment upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction.
14. This Agreement may be executed simultaneously in two counterparts,
each of which shall be an original and both of which shall constitute but one
and the same instrument.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed -,and delivered
this Agreement as of the day and year first above written in San Mateo,
California.
BAILARD, BIEHL & KAISER FUND
GROUP
By /s/ Bryan Brown
------------------------------
Its Treasurer
-----------------------------
BAILARD, BIEHL & KAISER, INC.
By /s/ Bryan Brown
------------------------------
Its Exec. V.P.
-----------------------------
9
<PAGE>
BAILARD, BIEHL & KAISER
[GRAPHIC OMITTED]
September 5, 1997
950 Tower Lane, Suite 1900
Foster City, CA 94404-2131
Telephone 415 571 5800
Facsimile 415 573 7128
Bailard, Biehl & Kaiser Fund Group
950 Tower Lane, Ste. #1900
Foster City, CA 94404-2131
Re: Amended Investment Advisory & Management Agreement
Ladies and Gentlemen:
Reference is made to the Amended Investment Advisory & Management
Agreement (the "Agreement" ') between Bailard, Biehl & Kaiser, Inc. ("BB&K") and
the Bailard, Biehl & Kaiser Fund Group (the "Client" ') dated March 15, 1990.
With reference to Sections 8 and 10, and any other provisions of the Agreement
which purport to indemnify or hold harmless BB&K or its officers or employees,
BB&K represents and warrants to Client, and Client acknowledges, that Client
does not waive any of its rights of action at common law or under the federal
and state securities laws.
Very truly yours,
Bailard, Biehl & Kaiser, Inc.
By: /s/ [ILLEGIBLE]
---------------------------
Title: President
------------------------
Acknowledged:
Bailard, Biehl & Kaiser Fund Group
By: /s/ [ILLEGIBLE]
-----------------------------
Title: Chairman
--------------------------
OH&S DRAFT
12/07/88
DISTRIBUTION AGREEMENT
----------------------
This Agreement, dated as of December 8, 1988, by and between BB&K Fund
Group, a Massachusetts business trust (the "Trust"), on behalf of the BB&K
Diversa Fund series of the Trust (the "Fund"), and BB&K Fund Services, Inc., a
[California] corporation (the "Distributor"),
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Trust is registered as a diversified, open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Distributor is a broker/dealer licensed to act as a
distributor of securities, is engaged in the business of selling and
distributing securities, including investment company securities, and has the
ability to create appropriate and effective sales literature, advertising and
other sales promotional aids; and
WHEREAS, the Trust desires to retain the Distributor to render such
services to the Fund in the manner and on the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual and
dependent covenants set forth herein, the Trust and the Distributor agree as
follows:
1. Appointment of Distributor. The Trust hereby appoints the
Distributor as its exclusive agent to act as principal underwriter and
distributor of the Shares of Beneficial Interest, $0.01 par value, of the Fund
(the "Shares") during the term of this Agreement.
2. Acceptance of Appointment. The Distributor hereby accepts such
appointment and agrees to use its best efforts lawfully and properly to promote
the sale of the Shares; provided, however, that the Distributor may suspend its
efforts when, in its judgment, sales of Shares are not commercially reasonable.
The Distributor agrees that the Fund may withdraw the offering of the Shares (a)
at any time with the consent of the Distributor or (b) without such consent when
so required by the provisions of any statute, rule, regulation or order of any
governmental body or administrative agency or by order of any court.
3. Term of Agreement. Unless sooner terminated as provided herein, this
Agreement shall be in effect for a
<PAGE>
period of two years from the date hereof and shall continue from year to year
thereafter as long as such is specifically approved at least annually (a) by
either (i) the Board of Trustees of the Trust or (ii) the vote of a majority of
the outstanding voting securities (as defined in the 1940 Act) of the Trust and
(b) by the vote of a majority of the trustees of the Trust who are not parties
to this Agreement or interested persons (as defined in the 1940 Act) of any such
party at a meeting called for the purpose of voting on such continuance.
4. Duties of the Trust.
(a) The Trust shall use its best efforts:
(i) to maintain its registration as a diversified, open-end
management investment company under the 1940 Act and to comply with the
provisions of the 1940 Act and the rules and regulations thereunder;
(ii) to keep authorized and registered under the Securities
Act of 1933, as amended (the "1933 Act"), sufficient Shares to meet the
reasonable requirements of the Distributor; and
(iii) to qualify the Shares for sale and to keep effective and
renew such permits and authorizations as may be required for the sale
thereof in all jurisdictions, as the Distributor may reasonably
request.
(b) The Trust shall not arbitrarily or without reasonable cause refuse
to accept or confirm orders for the purchase of Shares obtained by the
Distributor as agent of the Trust and submitted by the Distributor to the Trust.
The Trust shall confirm each order upon receipt of a duly executed Shareholder
Application Form in the form contained in the prospectus of the Fund, as amended
and supplemented from time to time (the "Prospectus").
(c) The Trust shall not during the term of this Agreement offer any
Shares for sale through any person (as defined in Sections 2(a)(28) and 2(a)(8)
of the 1940 Act) other than the Distributor, although the Trust reserves the
right to sell Shares directly. However, in the event the Distributor is unable
to continue to distribute or sell Shares either generally or in specific
jurisdictions, the Trust may make arrangements for the offer and sale of Shares
generally or within the jurisdiction or jurisdictions in which distribution or
sale thereof by the Distributor has been prevented; provided that, if the
Distributor has removed all
2
<PAGE>
material obstacles to resuming the offer and sale generally or within such
jurisdictions within 90 days from the date it becomes unable to continue such
distribution or sale, then the right of the Trust to distribute Shares through
persons other than the Distributor shall be extinguished, subject only to the
provisions of Section 2 hereof.
5. Duties of the Distributor.
(a) The Distributor is, and shall use its best efforts to continue to
be, a member in good standing of the National Association of Securities Dealers,
Inc. ("NASD"), a broker/dealer registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934 and a broker/dealer
licensed in the jurisdictions in which its activities on behalf of the Fund
require it to be so licensed.
(b) The Distributor shall not purchase any Shares except from or on
behalf of the Fund as agent.
(c) The Distributor shall not directly or indirectly withhold orders
for the purchase of Shares, purchase Shares in anticipation of orders or accept
conditional orders.
(d) The Distributor shall, to the extent it deems necessary in its sole
discretion, prepare, print and distribute advertising and sales literature
relating to the Fund and the Shares and shall pay all costs incurred in
connection therewith, including related travel, telephone and overhead expenses.
Any dissemination by the Distributor of such advertising and sales literature
shall be in compliance with applicable Federal and state securities laws and
regulations. The Distributor shall provide copies of such advertising and sales
literature to the Fund in order to permit the Fund to timely file such
advertising and sales literature with the Securities and Exchange Commission,
the NASD and any other regulatory authorities, as may be required. The
Distributor shall not use any such material to which the Fund reasonably and
promptly objects.
(e) Except with respect to sales and repurchases of Shares, the
Distributor shall act as principal in all matters relating to promotion of the
Fund and shall enter into all of its engagements, agreements and contracts as
principal on its own account.
(f) The Distributor shall perform its duties and obligations hereunder
in a manner that complies with the terms of the registration statement of the
Trust filed with the Securities and Exchange Commission, as amended or
supplemented
3
<PAGE>
from time to time (the "Registration Statement"), the Declaration of Trust and
the By-Laws of the Trust, the requirements of the 1940 Act and the securities
laws and regulations of the United States and of the jurisdictions in which the
Distributor does business or offers Shares on behalf of the Fund, and shall
conduct its affairs in accordance with the Rules of Fair Practice of the NASD.
Unless otherwise expressly provided or authorized, the Distributor shall have no
authority to act for or represent the Trust or the Fund in any way, or otherwise
be deemed an agent of the Trust or the Fund.
(g) The Distributor shall maintain all books and records with respect
to the Fund required by subparagraph (d) of Rule 3la-l under the 1940 Act.
(h) The services provided by the Distributor under this Agreement are
not exclusive, and the Distributor is free to engage in any other business and
may render services similar to those provided hereunder to other issuers,
including other investment companies.
6. Public Offering Price of Shares to be Maintained. The Shares shall
be offered and sold only at the public offering price described in the
Prospectus, which shall be the then current net asset value per Share (as
described in the Prospectus). Provisions of the Prospectus and the Shareholder
Application Form contained therein pertaining to the public offering price are
specifically incorporated herein by reference.
7. Distributor's Compensation. The Distributor shall receive no
distribution fee, sales commission or other payment for its services hereunder.
8. Indemnification.
(a) The Trust shall indemnify and hold harmless the Distributor
(including for purposes of this Section 8(a), each person deemed to be a
controlling person of the Distributor) against any loss, liability, claim,
damage or expense (including the reasonable cost of investigating or defending
any alleged loss, liability, claim, damage or expense and reasonable counsel
fees incurred in connection therewith), based upon the 1933 Act, the 1940 Act or
any state securities statute or at common law, on the ground that the
Registration Statement, or the Prospectus or Statement of Additional Information
contained therein, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
4
<PAGE>
made, not misleading, unless such statement or omission was made in reliance
upon, and in conformity with, written information furnished to the Trust in
connection therewith by or on behalf of the Distributor. However, in no case
shall the Trust indemnify the Distributor against any liability to which the
Distributor is subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of the reckless
disregard of its obligations and duties under this Agreement. The Trust shall
not be liable to indemnify the Distributor pursuant to this Section 8(a) with
respect to any claim made against the Distributor unless the Distributor has
notified the Trust in writing within a reasonable time after service upon it of
first legal process giving information about the nature of the claim, but
failure to notify the Trust of any such claim shall not relieve it from any
liability which it may have to the Distributor otherwise than on account of the
indemnity agreement contained herein. The Trust shall be entitled to participate
at its own expense in the defense, or, if it so elects, to assume the defense of
any suit brought to enforce any such liability, but if the Trust elects to
assume the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Distributor. In the event the Trust elects to assume the
defense of any such suit and retain such counsel, the Distributor shall bear the
fees and expenses of any additional counsel retained by it. If the Trust does
not elect to assume the defense of any such suit, it shall reimburse the
Distributor for the reasonable fees and expenses of any counsel retained by it.
The Trust shall promptly notify the Distributor of the commencement of any
litigation or proceedings against it or any of its officers or trustees in
connection with the issuance or sale of any of the Shares.
(b) The Distributor shall indemnify and hold harmless the Trust and the
Fund (including for purposes of this Section 8(b) each person deemed to be a
controlling person of the Trust or the Fund) against any loss, liability, claim,
damage or expense described in Section 8(a) hereof, but only to the extent that
any such loss, liability, claim, damage or expense relates to material
statements or omissions made in reliance upon, and in conformity with, written
information furnished to the Trust by or on behalf of the Distributor for use in
connection with the Registration Statement, the Prospectus or the Statement of
Additional Information as described in Section 8(a).
9. Termination. This Agreement may be terminated at any time, without
payment of any penalty, by the Board of Trustees of the Trust or by the vote of
a majority of the outstanding voting securities (as defined in the 1940 Act) of
the Fund on not more than 60 days' nor less than 30 days'
5
<PAGE>
written notice to the Distributor, or by the Distributor on like notice to the
Trust. In the absence of the issuance of an order by the Securities and Exchange
Commission providing an exemption from the provisions of Section 15(b) of the
1940 Act, this Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
10. Other Provisions.
(a) This Agreement shall not be construed as authorizing any
broker/dealer or other person (other than the Distributor) to act as agent of
any of the Trust, the Fund or the Distributor.
(b) All records that the Distributor maintains for the Fund are the
property of the Trust, and the Distributor shall surrender promptly to the Trust
any of such records upon the Trust's request. The Distributor will preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act any such records as are
required to be maintained by it pursuant to this Agreement.
(c) Notice is hereby given of the limitations of the liability of the
Trust's shareholders and trustees as set forth in the Trust's Declaration of
Trust on file with the Secretary of The Commonwealth of Massachusetts. The
obligations assumed by the Trust pursuant to this Agreement shall be limited in
all cases to the Trust and its assets. party named herein shall seek
satisfaction of any such obligation from the shareholders or any shareholder of
the Trust; nor shall any party named herein seek satisfaction of any such
obligation from the Board of Trustees or any individual trustee.
6
<PAGE>
(d) This Agreement shall be governed by the laws of the State of
California and the applicable provisions of the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers duly authorized as of the day and year first above
written.
BB&K FUND GROUP
By: /s/ David R. Rabin
-----------------------------
Title: President
--------------------------
BB&K FUND SERVICES, INC.
By: /s Bryan Brown
-----------------------------
Title: Treasurer
--------------------------
7
CUSTODIAN AGREEMENT
AGREEMENT made this 24th day of September, 1990, between BAILARD, BIEHL
& KAISER FUND GROUP, (the "Trust") on behalf of the Bailard, Biehl & Kaiser
Diversa Fund and any other separate portfolio that may be designated from time
to time by the Trust (each referred to as a "Fund"), and Brown Brothers Harriman
& Co. (the "Custodian").
WITNESSETH: That in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
1. The Trust hereby employs and appoints the Custodian as a custodian
for the term and subject to the provisions of this Agreement. The Custodian
shall not be under any duty or obligation to require the Trust to deliver to it
any securities, funds or other property owned by the Trust and shall have no
responsibility or liability for or on account of securities, funds or other
property not so delivered. The Trust will deposit with the Custodian copies of
the Declaration of Trust and By-Laws (or comparable documents) of the Trust and
all amendments thereto, and copies of such votes and other proceedings of the
Trust as may be necessary for, or convenient to, the Custodian in the
performance of its duties.
2. Except for securities and funds held by subcustodians appointed
pursuant to the provisions of Section 3 hereof, the Custodian shall have and
perform the following powers and duties:
- 1 -
<PAGE>
A. Safekeeping - To keep safely the securities, funds and
other-property of-a Fund that have been delivered to the Custodian and from time
to time to receive delivery of securities, funds and other property for
safekeeping.
B. Manner of Holding Securities - To hold securities of each Fund (1)
by physical possession of the share certificates or other instruments
representing such securities in registered or bearer form, or (2) in book-entry
form by a Securities System (as said term is defined in Section 2V).
C. Registered Name; Nominee - To hold registered securities of each
Fund (1) in the name or any nominee name of the Custodian or the Fund, or in the
name or any nominee name of any agent appointed pursuant to Section 6E, or (2)
in street certificate form, so-called, and in any case with or without any
indication of fiduciary capacity.
D. Purchases - Upon receipt of Proper Instructions, as defined in
Section Z on Page 15, insofar as funds are available for the purpose, to pay for
and receive securities and other property purchased for the account of a global
Fund, payment being made only upon receipt of the securities or other property
(1) by the Custodian, or (2) by a clearing corporation of a national securities
exchange of which the Custodian is a member, (3) by a Securities System or (4)
by a Subcustodian. However, (i) in the case of repurchase agreements entered
into by a Fund, the Custodian may release funds to a Securities System or to a
- 2 -
<PAGE>
Subcustodian prior to the receipt of advice from the Securities System or
Subcustodian that the securities underlying such repurchase agreement have been
transferred by book entry into the Account (as defined in Section 2V) of the
Custodian maintained with such Securities System or Subcustodian, so long as the
payment instructions to such Securities System or Subcustodian include a
requirement that delivery is only against payment of securities, and (ii) in the
case of time deposits, call account deposits, currency deposits, and other
deposits, contracts or options pursuant to Sections 2L, 2M and 2N, the Custodian
may make payment therefor without receiving an instrument evidencing said
deposit so long as the payment instructions detail specific securities to be
acquired.
E. Exchanges - Upon receipt of Proper Instructions, to exchange
securities held by it for the account of a Fund for other securities in
connection with any reorganization, recapitalization, split-up of shares,
change of par value, conversion or other event, and to deposit any such
securities in accordance with the terms of any reorganization or protective
plan. Without such instructions, the Custodian may surrender securities in
temporary form for definitive securities, may surrender securities for transfer
into a name or nominee name as permitted in Section 2C, and may surrender
securities for a different number of certificates or instruments representing
the same number of shares or same principal amount of indebtedness,
- 3 -
<PAGE>
provided the securities to be issued are to be delivered to the Custodian and
further provided Custodian shall at the time of surrendering securities or
instruments receive a receipt or other evidence of ownership thereof.
F. Sales of Securities - Upon receipt of Proper Instructions, to make
delivery of securities which have been sold for the account of a Fund, but only
against payment therefor (1) in cash, by a certified check, bank cashier's
check, bank credit, or bank wire transfer, or (2) by credit to the account of
the Custodian with a clearing corporation of a national securities exchange of
which the Custodian is a member, or (3) by credit to the account of the
Custodian or an Agent of the Custodian with a Securities System.
G. Depositary Receipts - Upon receipt of Proper Instructions, to
instruct a subcustodian appointed pursuant to Section 3 hereof (a
"Subcustodian") or an agent of the Custodian appointed pursuant to Section 6E
hereof (an "Agent") to surrender securities to the depositary used by an issuer
of American Depositary Receipts or International Depositary Receipts
(hereinafter collectively referred to as "ADRs") for such securities against a
written receipt therefor adequately describing such securities and written
evidence satisfactory to the Subcustodian or Agent that the depositary has
acknowledged receipt of instructions to issue with respect to such securities
ADRs in the name of the Custodian, or a nominee of the Custodian,
- 4 -
<PAGE>
for delivery to the Custodian in Boston, Massachusetts, or at such other place
as the Custodian may from time to time designate.
Upon receipt of Proper Instructions, to surrender ADRs to the issuer
thereof against a written receipt therefor adequately describing the ADRs
surrendered and written evidence satisfactory to the Custodian that the issuer
of the ADRs has acknowledged receipt of instructions to cause its depositary to
deliver the securities underlying such ADRs to a Subcustodian or an Agent.
H. Exercise of Rights; Tender Offers - Upon timely receipt of Proper
Instructions, to deliver to the issuer or trustee thereof, or to the agent of
either, warrants, puts, calls, rights or similar securities for the purpose of
being exercised or sold, provided that the new securities and cash, if any,
acquired by such action are to be delivered to the Custodian, and, upon receipt
of Proper Instructions, to deposit securities upon invitations for tenders of
securities, provided that the consideration is to be paid or delivered or the
tendered securities are to be returned to the Custodian.
I. Stock Dividends, Rights, Etc. - To receive and collect all stock
dividends, rights and other items of like nature; and to deal with the same
pursuant to Proper Instructions relative thereto.
J. Options - Upon receipt of Proper Instructions, to
- 5 -
<PAGE>
receive and retain confirmations or other documents evidencing the purchase or
writing of an option on a security or securities index by a Fund; to deposit and
maintain in a segregated account, either physically or by book-entry in a
Securities System, securities subject to a covered call option written by the
Fund; and to release and/or transfer such securities or other assets only in
accordance with a notice or other communication evidencing the expiration,
termination or exercise of such covered option furnished by The Options Clearing
Corporation, the securities or options exchange on which such covered option is
traded or such other organization as may be responsible for handling such
options transactions.
K. Borrowings - Upon receipt of Proper Instructions, to deliver
securities of a Fund to lenders or their agents as collateral for borrowings
effected by the Fund, provided that such borrowed money is payable to or upon
the Custodian's order as Custodian for the Fund.
L. Demand Deposit Bank Accounts - To open and operate an account or
accounts in the name of a Fund on the Custodian's books subject only to draft or
order by the Custodian. All funds received by the Custodian from or for the
account of a Fund shall be deposited in said account(s). The responsibilities of
the Custodian to a Fund for deposits accepted on the Custodian's books shall be
that of a U. S. bank for a similar deposit.
If and when authorized by Proper Instructions, the Custodian
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may open and operate an additional account(s) in such other banks or trust
companies as may be designated by a Fund in such instructions (any such bank or
trust company so designated by such Fund being referred to hereafter as a
"Banking Institution"), provided that such account(s) shall be in the name of
the Custodian for account of such Fund and subject only to the Custodian's draft
or order. Such accounts may be opened with Banking Institutions in the United
States and in other countries and may be denominated in either U. S. Dollars or
other currencies as a Fund may determine. All such deposits shall be deemed to
be portfolio securities of a Fund and accordingly the responsibility of the
Custodian therefor shall be the same as and no greater than the Custodian's
responsibility in respect of other portfolio securities of a Fund.
M. Interest Bearing Call or Time Deposits - To place interest bearing
fixed term and call deposits with such banks and in such amounts as a Fund may
authorize pursuant to Proper Instructions. Such deposits may be placed with the
Custodian or with Subcustodians or other Banking Institutions as a Fund may
determine. Deposits may be denominated in U. S. Dollars or other currencies and
need not be evidenced by the issuance or delivery of a certificate to the
Custodian, provided that the Custodian shall include in its records with
respect to the assets of a Fund, appropriate notation as to the amount and
currency of each such deposit, the accepting Banking Institution, and other
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<PAGE>
appropriate details. Such deposits, other than those placed with the Custodian,
shall be deemed portfolio securities of a Fund and the responsibilities of the
Custodian therefor shall be the same as those for demand deposit bank accounts
placed with other banks, as described in Section 2L of this agreement. The
responsibility of the Custodian for such deposits accepted on the Custodian's
books shall be that of a U. S. bank for a similar deposit.
N. Foreign Exchange Transactions - Pursuant to Proper Instructions, to
enter into foreign exchange contracts or options to purchase and sell foreign
currencies for spot and future delivery on behalf and for the account of a Fund.
Such transactions may be undertaken by the Custodian with such Banking
Institutions, including the Custodian and Subcustodian(s) as principals, as
approved and authorized by the Trust. Foreign exchange contracts and options
other than those executed with the Custodian, shall be deemed to be portfolio
securities of a Fund and the responsibilities of the Custodian therefor shall be
the same as those for demand deposit bank accounts placed with other banks as
described in Section 2L of this agreement.
0. Futures Contracts - Upon receipt of Proper Instructions, to receive
and retain confirmations evidencing the purchase or sale of a futures contract
or an option on a futures contract by a Fund; to deposit and maintain in a
segregated account, for the benefit of any futures commission merchant or to pay
to such
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<PAGE>
futures commission merchant, assets designated by a Fund as initial, maintenance
or variation "margin" deposits intended to secure such Fund's performance of its
obligations under any futures contracts purchased or sold or any options on
futures contracts written by such Fund, in accordance with the provisions of any
agreement or agreements among any of a Fund, the Custodian and such futures
commission merchant, designated to comply with the rules of the Commodity
Futures Trading Commission and/or any contract market, the Securities and
Exchange Commission or any similar organization or organizations, regarding such
margin deposits; and to release and/or transfer assets in such margin accounts
only in accordance with any such agreements or rules.
P. Stock Loans - Upon receipt of Proper Instructions, to deliver
securities of a Fund, in connection with loans of securities by a Fund, to the
borrower thereof upon the receipt of the cash collateral, if any, for such
borrowing. In the event U. S. Government securities are to be used as
collateral, the Custodian will not release the securities to be loaned until it
has received confirmation that such collateral has been delivered to the
Custodian. The Custodian and the Funds understand that the timing of receipt of
such confirmation will normally require that the delivery of securities to be
loaned will be made one day after receipt of the U. S. Government collateral.
Q. Collections - To collect, receive and deposit in said account or
accounts all income and other payments with respect to
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the securities held hereunder, and to execute ownership and other certificates
and affidavits for all federal and state tax purposes in connection with receipt
of income or other payments with respect to securities of a Fund or in
connection with transfer of securities, and pursuant to Proper Instructions to
take such other actions with respect to collection or receipt of funds or
transfer of securities which involve an investment decision.
R. Dividends, Distributions and Redemptions - Upon receipt of Proper
Instructions from the Trust, or upon receipt of instructions from the Trust's
shareholder servicing agent or agent with comparable duties (the "Shareholder
Servicing Agent") (given by such person or persons and in such manner on behalf
of the Shareholder Servicing Agent as the Trust shall have authorized), the
Custodian shall release funds or securities to the Shareholder Servicing Agent
or otherwise apply funds or securities, insofar as available, for the payment
of dividends or other distributions to Fund shareholders. Upon receipt of
Proper Instructions from the Trust, or upon receipt of instructions from the
Shareholder Servicing Agent (given by such person or persons and in such manner
on behalf of the Shareholder Servicing Agent as the Trust shall have
authorized), the Custodian shall release funds or securities, insofar as
available, to the Shareholder Servicing Agent or as such Agent shall otherwise
instruct for payment to Fund shareholders who have delivered to such Agent a
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request for repurchase or redemption of their shares of capital stock of the
Fund.
S. Proxies, Notices, Etc. - Promptly to deliver or mail to the Trust
all forms of proxies and all notices of meetings and any other notices or
announcements affecting or relating to securities owned by a Fund that are
received by the Custodian, and upon receipt of Proper Instructions, to execute
and deliver or cause its nominee to execute and deliver such proxies or other
authorizations as may be required. Neither the Custodian nor its nominee shall
vote upon any of such securities or execute any proxy to vote thereon or give
any consent or take any other action with respect thereto (except as otherwise
herein provided) unless ordered to do so by Proper Instructions.
T. Nondiscretionary Details - Without the necessity of express
authorization from the Trust, (1) to attend to all nondiscretionary details in
connection with the sale, exchange, substitution, purchase, transfer or other
dealings with securities, funds or other property of a Fund held by the
Custodian except as otherwise directed from time to time by the Trustees of the
Trust, and (2) to make payments to itself or others for minor expenses of
handling securities or other similar items relating to the Custodian's duties
under this Agreement, provided that all such payments shall be accounted for to
the Trust.
U. Bills - Upon receipt of Proper Instructions, to pay or
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cause to be paid, insofar as funds are available for the purpose, bills,
statements, or other obligations of a Fund.
V. Deposit of Fund Assets in Securities Systems - The Custodian may
deposit and/or maintain securities owned by a Fund in (i) The Depository Trust
Company, (ii) any book-entry system as provided in Subpart 0 of Treasury
Circular No. 300, 31 CFR 306, Subpart B of 31 CFR Part 350, or the book-entry
regulations of federal agencies substantially in the form of Subpart 0, or (iii)
any other domestic clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934 which acts
as a securities depository and whose use the Fund has previously approved in
writing (each of the foregoing being referred to in this Agreement as a
"Securities System"). Utilization of a Securities System shall be in accordance
with applicable Federal Reserve Board and Securities and Exchange Commission
rules and regulations, if any, and subject to the following provisions:
1) The Custodian may deposit and/or maintain Fund securities, either
directly or through one or more Agents appointed by the Custodian (provided
that any such agent shall be qualified to act as a custodian of the Fund
pursuant to the Investment Company Act of 1940 and the rules and regulations
thereunder), in a Securities System provided that such securities are
represented in an account ("Account") of the Custodian or such Agent in the
Securities System which shall not include any
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assets of the Custodian or Agent other than assets held as a fiduciary,
custodian, or otherwise for customers;
2) The records of the Custodian with respect to securities of a Fund
which are maintained in a Securities System shall identify by book-entry those
securities belonging to a Fund;
3) The Custodian-shall pay for securities purchased for the account of
a Fund upon (i) receipt of advice from the Securities System that such
securities have been transferred to the Account, and (ii) the making of an entry
on the records of the Custodian to reflect such payment and transfer for the
account of that Fund. The Custodian shall transfer securities sold for the
account of a Fund upon (i) receipt of advice from the Securities System that
payment for such securities has been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian to reflect such transfer and
payment for the account of a Fund. Copies of all advices from the Securities
System of transfers of securities for the account of a Fund shall identify the
Fund, be maintained for that Fund by the Custodian or an Agent as referred to
above, and be provided to that Fund at its request. The Custodian shall furnish
the Trust confirmation of each transfer to or from the account of a Fund in the
form of a written advice or notice and shall furnish to the Trust copies of
daily transaction sheets reflecting each day's transactions in the Securities
System for the account of a Fund on the next business day;
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4) The Custodian shall provide a Fund with any report obtained by the
Custodian or any Agent as referred to above on the Securities System's
accounting system, internal accounting control and procedures for safeguarding
securities deposited in the Securities System; and the Custodian and such Agents
shall send to such Fund such reports on their own systems of internal accounting
control as the Fund may reasonably request from time to time.
5) At the written request of the Trust, the Custodian will terminate
the use of any such Securities System on behalf of the Trust as promptly as
practicable.
W. Precious Metals - Upon receipt of Proper Instructions from the
Trust, the Custodian shall instruct, by tested telex, a subcustodian appointed
pursuant to Section 3 to pay for and receive precious metals purchased for the
account of a Fund only upon receipt of precious metals by such subcustodian for
the account of such Fund.
Upon receipt of Proper Instructions from the Trust, the
Custodian shall instruct, by tested telex, a Subcustodian appointed pursuant to
Section 3 to make delivery of precious metals which has been sold for the
account of a Fund, but only against receipt of cash proceeds by the Bank for the
account of the Fund.
X. Other Transfers - Upon receipt of Proper Instructions, to deliver
securities, funds and other property of a Fund to a
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<PAGE>
Subcustodian or another custodian of such Fund; and, upon receipt of Proper
Instructions, to make such other disposition of securities, funds or other
property of such Fund in a manner other than or for purposes other than as
enumerated elsewhere in this Agreement, provided that the instructions relating
to such disposition shall include a statement of the purpose for which the
delivery is to be made, the amount of securities, funds or other property to be
delivered and the name of the person or persons to whom delivery is to be made.
Y. Investment Limitations - In performing its duties generally, and
more particularly in connection with the purchase, sale and exchange of
securities made by or for a Fund, the Custodian may assume unless and until
notified in writing to the contrary that Proper Instructions received by it are
not in conflict with or in any way contrary to any provisions of the Trust's
Declaration of Trust or By-Laws (or comparable documents) or votes or
proceedings of the shareholders or Trustees of the Trust. The Custodian shall in
no event be liable to the Trust and shall be indemnified by the Trust for any
violation which occurs in the course of carrying out instructions given by the
Fund of any investment limitations to which the Trust is subject or other
limitations with respect to the Trust's powers to make expenditures, encumber
securities, borrow or take similar actions affecting its portfolio.
Z. Proper Instructions - Proper Instructions shall mean a
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tested telex from the Trust or a written request, direction, instruction or
certification signed or initialed on behalf of the Trust by one or more person
or persons as the Board of Trustees of the Trust shall have from time to time
authorized, provided, however, that no such instructions directing the delivery
of securities or the payment of funds to an authorized signatory of the Trust
shall be signed by such person. Those persons authorized to give Proper
Instructions may be identified by the Board of Trustees by name, title or
position and will include at least one officer empowered by the Board to name
other individuals who are authorized to give Proper Instructions on behalf of
the Trust. Telephonic or other oral instructions given by any one of the above
persons will be considered Proper Instructions if the Custodian reasonably
believes them to have been given by a person authorized to give such
instructions with respect to the transaction involved. Oral instructions will be
confirmed by tested telex or in writing in the manner set forth above but the
lack of such confirmation shall in no way affect any action taken by the
Custodian in reliance upon such oral instructions. The Trust authorizes the
Custodian to tape record any and all telephonic or other oral instructions given
to the Custodian by or on behalf of the Trust (including any of its officers,
Trustees, employees or agents) and will deliver to the Custodian a similar
authorization from any investment manager or adviser or person or entity with
similar responsibilities which is
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authorized to give Proper Instructions on behalf of a Fund to the Custodian.
Proper Instructions may relate to specific transactions or to types or classes
of transactions, and may be in the form of standing instructions.
Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices or systems, in addition to
tested telex, provided that the Trust and the Custodian agree to the use of such
device or system.
3. Securities, funds and other property of a Fund may be held by
subcustodians appointed pursuant to the provisions of this Section 3 (a
"Subcustodian"). The Custodian may, at any time and from time to time, appoint
any bank or trust company or securities depository (meeting the requirements of
a custodian or a foreign custodian under the Investment Company Act of 1940 and
the rules and regulations thereunder) to act as a Subcustodian for a Fund,
provided that the Fund shall have approved in writing (1) any such bank or trust
company or securities depository and the subcustodian agreement to be entered
into between such bank or trust company and the Custodian or any Subcustodian,
and (2) if the subcustodian is a bank, trust company or securities depository
organized under the laws of a country other than the United States, the holding
of securities, cash and other property of the Fund in the country in which it is
proposed to utilize the services of such subcustodian. Upon such approval by the
Trust, the Custodian is authorized on behalf of the Trust to notify each
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Subcustodian of its appointment as such. The Custodian may, at any time in its
discretion, remove any bank or trust company or securities depository that has
been appointed as a Subcustodian but will promptly notify the Fund of any such
action.
Those Subcustodians, their offices or branches which the Trust has
approved to-date are set forth on Appendix A hereto. Such Appendix shall be
amended from time to time as Subcustodians, branches or offices are changed,
added or deleted. The Trust shall be responsible for informing the Custodian
sufficiently in advance of a proposed investment which is to be held at a
location not listed on Appendix A, in order that there shall be sufficient time
for the Trust to give the approval required by the preceding paragraph and for
the Custodian to put the appropriate arrangements in place with such
Subcustodian pursuant to such subcustodian agreement.
Although a Fund does not intend to invest in a country before the
foregoing procedures have been completed, in the event that an investment is
made prior to approval, if practical, such security shall be removed to an
approved location or if not practical such security shall be held by such agent
as the Custodian may appoint. In such event, the Custodian shall be liable to a
Fund for the actions of such agent if and only to the extent the Custodian shall
have recovered from such agent for any damages caused the Fund by such agent and
provided that the Custodian shall pursue its rights against such agent.
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With respect to the securities, funds and other property held by a
Subcustodian, either directly or indirectly, including demand and interest
bearing deposits, currencies or other deposits and foreign exchange contracts as
referred to in Sections 2L, 2M, 2N, or 20 the Custodian shall be liable to a
Fund if and only to the extent that such Subcustodian or any other Subcustodian
is liable to the Custodian and the Custodian recovers under the applicable
subcustodian agreement provided that the Custodian shall pursue its rights
against such Subcustodian. The Custodian shall nevertheless be liable to the
Trust for its own negligence in transmitting any instructions received by it
from the Trust and for its own negligence in connection with the delivery of any
securities, funds or other property held by it to any such Subcustodian.
In the event that any Subcustodian appointed pursuant to the
provisions of this Section 3 fails to perform any of its obligations under the
terms and conditions of the applicable subcustodian agreement, the Custodian
shall use its best efforts to cause such Subcustodian to perform such
obligations. In the event that the Custodian is unable to cause such
Subcustodian to perform fully its obligations thereunder, the Custodian shall
forthwith upon a Fund's request terminate such Subcustodian and, if necessary or
desirable, appoint another subcustodian in accordance with the provisions of
this Section 3. At the election of the Trust, it shall have the right to
enforce, to the
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extent permitted by the subcustodian agreement and applicable law, the
Custodian's rights against any such Subcustodian for loss or damage caused a
Fund by such Subcustodian.
At the written request of the Trust, the Custodian will terminate any
Subcustodian appointed pursuant to the provisions of this Section 3 in
accordance with the termination provisions under the applicable subcustodian
agreement. The Custodian will not amend any subcustodian agreement or agree to
change or permit any changes thereunder except upon the prior written approval
of the Trust.
In the event the Custodian receives a claim from a Subcustodian under
the indemnification provisions of any subcustodian agreement, the Custodian
shall promptly give written notice to the affected Fund of such claim. No more
than thirty days after written notice to such Fund of the Custodian's intention
to make a payment under such indemnification provisions, such Fund will
reimburse the Custodian the amount of such payment except in respect of any
negligence or misconduct of the Custodian or any Subcustodian.
4. The Custodian may assist generally in the preparation of reports to
Fund shareholders and others, audits of accounts, and other ministerial matters
of like nature.
5. The Trust hereby also appoints the Custodian as its financial agent.
With respect to the appointment as financial agent, the Custodian shall have and
perform the following powers and duties:
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A. Records - To create, maintain and retain such records relating to
its activities and obligations under this Agreement as are required under the
Investment Company Act of 1940 and the rules and regulations thereunder
(including Section 31 thereof and Rules 3la-1 and 3la-2 thereunder) and under
applicable Federal and State tax laws. All such records will be the property of
the Trust and in the event of termination of this Agreement shall be delivered
to the successor custodian, and the Custodian agrees to cooperate with the Trust
in execution of documents and other actions necessary or desirable in order to
substitute the successor custodian for the Custodian under this agreement.
B. Accounts - To keep books of account and render statements, including
interim monthly and complete quarterly financial statements, or copies thereof,
from time to time as reasonably requested by Proper Instructions.
C. Access to Records - Subject to security requirements of the
Custodian applicable to its own employees having access to similar records
within the Custodian and such regulations as may be reasonably imposed by the
Custodian, the books and records maintained by the Custodian pursuant to
Sections 5A and 5B shall be open to inspection and audit at reasonable times by
officers of, attorneys for, and auditors employed by, the Trust.
D. Calculation of Net Asset Value - To compute and determine the net
asset value per share of capital stock of each Fund as of
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the close of business on the New York Stock Exchange on each day on which such
Exchange is open, unless otherwise directed by Proper Instructions. Such
computation and determination shall be made in accordance with (1) the
provisions of the Declaration of Trust and By-Laws of the Company, as they may
from time to time be amended and delivered to the Custodian, (2) the votes of
the Board of Trustees of the Trust at the time in force and applicable, as they
may from time to time be delivered to the Custodian, and (3) Proper Instructions
from such officers of the Trust or other persons as are from time to time
authorized by the Board of Trustees of the Trust to give instructions with
respect to computation and determination of the net asset value. On each day
that the Custodian shall compute the net asset value per share of each Fund, the
Custodian shall provide the Trust with written reports which permit the Trust to
verify that portfolio transactions have been recorded in accordance with the
Trust's instructions.
In computing the net asset value, the Custodian may rely upon any
information furnished by Proper Instructions, including without limitation any
information (1) as to accrual of liabilities of a Fund and as to liabilities of
such Fund not appearing on the books of account kept by the Custodian, (2) as to
the existence, status and proper treatment of reserves, if any, authorized by
the Trust, (3) as to the sources of quotations to be used in computing the net
asset value, including those
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listed in Appendix B, (4) as to the fair value to be assigned to any securities
or other property for which price quotations are not readily available, and (5)
as to the sources of information with respect to "corporate actions" affecting
portfolio securities of a Fund, including those listed in Appendix B.
(Information as to "corporate actions" shall include information as to
dividends, distributions, stock splits, stock dividends, rights offerings,
conversions, exchanges, recapitalizations, mergers, redemptions, calls, maturity
dates and similar transactions, including the ex- and record dates and the
amounts or other terms thereof.)
In like manner, the Custodian shall compute and determine the net asset
value as of such other times as the Board of Trustees of the Trust from time to
time may reasonably request.
Notwithstanding any other provisions of this Agreement, including
Section 6C, the following provisions shall apply with respect to the Custodian's
foregoing responsibilities in this Section 5D: The Custodian shall be held to
the exercise of reasonable care in computing and determining net asset value as
provided in this Section 5D, but shall not be held accountable or liable for any
losses, damages or expenses a Fund or any shareholder or former shareholder of
the Fund may suffer or incur arising from or based upon errors or delays in the
determination of such net asset value unless such error or delay was due to the
Custodian's negligence, gross negligence or reckless or willful
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<PAGE>
misconduct in determination of such net asset value. (The parties hereto
acknowledge, however, that the Custodian's causing an error or delay in the
determination of net asset value may, but does not in and of itself, constitute
negligence, gross negligence or reckless or willful misconduct.) In no event
shall the Custodian be liable or responsible to a Fund, any present or former
shareholder of a Fund or any other party for any error or delay which continued
or was undetected after the date of an audit performed by the certified public
accountants employed by the Trust if, in the exercise of reasonable care in
accordance with generally accepted accounting standards, such accountants should
have become aware of such error or delay in the course of performing such audit.
The Custodian's liability for any such negligence, gross negligence or reckless
or willful misconduct which results in an error in determination of such net
asset value shall be limited to the direct, out-of-pocket loss a Fund,
shareholder or former shareholder shall actually incur, measured by the
difference between the actual and the erroneously computed net asset value, and
any expenses a Fund shall incur in connection with correcting the records of a
Fund affected by such error (including charges made by a Fund's registrar and
transfer agent for making such corrections) or communicating with shareholders
or former shareholders of the Fund affected by such error,
Without limiting the foregoing, the Custodian shall not be
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held accountable or liable to a Fund, any shareholder or former shareholder
thereof or any other person for any delays or losses, damages or expenses any of
them may suffer or incur resulting from (1) the Custodian's failure to receive
timely and suitable notification concerning quotations or corporate actions
relating to or affecting portfolio securities of a Fund or (2) any errors in the
computation of the net asset value based upon or arising out of quotations or
information as to corporate actions if received by the Custodian either (i) from
a source which the Custodian was authorized pursuant to the second paragraph of
this Section 5D to rely upon, or (ii) from a source which in the Custodian's
reasonable judgment was as reliable a source for such quotations or information
as the sources authorized pursuant to that paragraph. Nevertheless, the
Custodian will use its best judgment in determining whether to verify through
other sources any information it has received as to quotations or corporate
actions if the Custodian has reason to believe that any such information might
be incorrect.
In the event of any error or delay in the determination of such net
asset value for which the Custodian may be liable, the Fund and the Custodian
will consult and make good faith efforts to reach agreement on what actions
should be taken in order to mitigate any loss suffered by a Fund or its present
or former shareholders, in order that the Custodian's exposure to liability
shall be reduced to the extent possible after taking into account
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all relevant factors and alternatives. Such actions might include a Fund or the
Custodian taking reasonable steps to collect from any shareholder or former
shareholder who has received any overpayment upon redemption of shares such
overpaid amount or to collect from any shareholder who has underpaid upon a
purchase of shares the amount of such underpayment or to reduce the number of
shares issued to such shareholder. It is understood that in attempting to reach
agreement on the actions to be taken or the amount of the loss which should
appropriately be borne by the Custodian, each Fund and the Custodian will
consider such relevant factors as applicable law, the amount of the loss
involved, such Fund's desire to avoid loss of shareholder good will, the fact
that other persons or entities could have been reasonably expected to have
detected the error sooner than the time it was actually discovered, the
appropriateness of limiting or eliminating the benefit which shareholders or
former shareholders might have obtained by reason of the error, and the
possibility that other parties providing services to a Fund might be induced to
absorb a portion of the loss incurred.
E. Disbursements - Upon receipt of Proper Instructions, to pay or cause
to be paid, insofar as funds are available for the purpose, bills, statements
and other obligations of a Fund (including but not limited to interest charges,
taxes, management fees, compensation to Trust officers and employees, and other
operating expenses of a Fund).
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6. A. The Custodian shall not be liable for any action taken or omitted
in reliance upon Proper Instructions believed by it to-be genuine or upon any
other written notice, request, direction, instruction, certificate or other
instrument believed by it to be genuine and signed by the proper party or
parties.
The Secretary or Assistant Secretary of the Trust shall certify to the
Custodian the names, signatures and scope of authority of all persons authorized
to give Proper Instructions or any other such notice, request, direction,
instruction, certificate or instrument on behalf of each Fund, the names and
signatures of the officers of the Trust, the name and address of the Shareholder
Servicing Agent, and any resolutions, votes, instructions or directions of the
Trust's Board of Trustees or shareholders. Such certificate may be accepted and
relied upon by the Custodian as conclusive evidence of the facts set forth
therein and may be considered in full force and effect until receipt of a
similar certificate to the contrary.
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Agreement.
The Custodian shall be entitled, at the expense of a Fund, to receive
and act upon advice of counsel (who may be counsel for a Fund) on all matters,
and the Custodian shall be without
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liability for any action reasonably taken or omitted pursuant to such advice.
B. With respect to the portfolio securities, cash and other property of
a Fund held by a Securities System, the Custodian shall be liable to that Fund
only for any loss or damage to the Fund resulting from use of the Securities
System if caused by any negligence, misfeasance or misconduct of the Custodian
or any of its agents or of any of its or their employees or from any failure of
the Custodian or any such agent to enforce effectively such rights as it may
have against the Securities System.
C. Except as may otherwise be set forth in this Agreement with respect
to particular matters, the Custodian shall be held only to the exercise of
reasonable care and diligence in carrying out the provisions of this Agreement,
provided that the Custodian shall not thereby be required to take any action
which is in contravention of any applicable law. However, nothing herein shall
exempt the Custodian from liability due to its own negligence or willful
misconduct. The Trust agrees to indemnify and hold harmless the Custodian and
its nominees from all claims and liabilities (including counsel fees) incurred
or assessed against it or its nominees in connection with the performance of
this Agreement, except such as may arise from its or its nominee's breach of the
relevant standard of conduct set forth in this Agreement. Without limiting the
foregoing indemnification obligation of the Trust, the Trust agrees to indemnify
the
- 28 -
<PAGE>
Custodian and its nominees against any liability the Custodian or such nominee
may incur by reason of taxes assessed to the Custodian or such nominee or other
costs, liability or expense incurred by the Custodian or such nominee resulting
directly or indirectly from the fact that portfolio securities or other property
of a Fund is registered in the name of the Custodian or such nominee.
In order that the indemnification provisions contained in this Section
6C shall apply, however, it is understood that if in any case the Trust may be
asked to indemnify or hold the Custodian harmless, the Trust shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the Custodian will use all reasonable care to
identify and notify the Trust promptly concerning any situation which presents
or appears likely to present the probability of such a claim for indemnification
against the Trust. The Trust shall have the option to defend the Custodian
against any claim which may be the subject of this indemnification, and in the
event that the Trust so elects it will so notify the Custodian, and thereupon
the Trust shall take over complete defense of the claim, and the Custodian shall
in such situation initiate no further legal or other expenses for which it shall
seek indemnification under this Paragraph 6C. The Custodian shall in no case
confess any claim or make any compromise in any case in which the Trust will be
asked to
- 29 -
<PAGE>
indemnify the Custodian except with the Trust's prior written consent.
It is also understood that the Custodian shall not be liable for any
loss involving any securities, currencies, deposits or other property of a Fund,
whether maintained by it, a Subcustodian, an agent of the Custodian or a
Subcustodian, a Securities System, or a Banking Institution, or a loss arising
from a foreign currency transaction or contract, resulting from a Sovereign
Risk. A "Sovereign Risk" shall mean nationalization, expropriation, devaluation,
revaluation, confiscation, seizure, cancellation, destruction or similar action
by any governmental authority, de facto or de jure; or enactment, promulgation,
imposition or enforcement by any such governmental authority of currency
restrictions, exchange controls, taxes, levies or other charges affecting each
Fund's property; or acts of war, terrorism, insurrection or revolution; or any
other similar act or event beyond the Custodian's control.
D. The Custodian shall be entitled to receive reimbursement from a Fund
on demand, in the manner provided in Section 7, for its cash disbursements,
expenses and charges (including the fees and expenses of any Subcustodian or any
Agent) in connection with this Agreement, but excluding salaries and usual
overhead expenses.
E. The Custodian may at any time or times in its discretion appoint
(and may at any time remove) any other bank or trust
- 30 -
<PAGE>
company as its agent (an "Agent") to carry out such of the provisions of this
Agreement as the Custodian may from time to time direct, provided, however, that
the appointment of such Agent (other than an Agent appointed pursuant to the
third paragraph of Section 3) shall not relieve the Custodian of any of its
responsibilities under this Agreement.
F. Upon request, a Fund shall deliver to the Custodian such proxies,
powers of attorney or other instruments as may be reasonable and necessary or
desirable in connection with the performance by the Custodian or any
Subcustodian of their respective obligations under this Agreement or any
applicable subcustodian agreement.
7. Each Fund shall pay the Custodian a custody fee based on such fee
schedule as may from time to time be agreed upon in writing by the Custodian and
such Fund. Such fee, together with all amounts for which the Custodian is to be
reimbursed in accordance with Section 6D, shall be billed to each Fund in such a
manner as to permit payment by a direct cash payment to the Custodian or by
placing Fund portfolio transactions with the Custodian resulting in an
agreed-upon amount of commissions being paid to the Custodian in an agreed-upon
period of time.
8. This Agreement shall continue in full force and effect until
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid, to the other party, such termination to take effect not sooner
than seventy five (75) days
- 31 -
<PAGE>
after the date of such delivery or mailing. In the event of termination the
Custodian shall be entitled to receive prior to delivery of the securities,
funds and other property held by it all accrued fees and unreimbursed expenses
the payment of which is contemplated by Sections 6D and 7, upon receipt by the
Trust of a statement setting forth such fees and expenses.
In the event of the appointment of a successor custodian, it is agreed
that the funds and securities owned by a Fund and held by the Custodian or any
Subcustodian shall be delivered to the successor custodian, and the Custodian
agrees to cooperate with such Fund in execution of documents and performance of
other actions necessary or desirable in order to substitute the successor
custodian for the Custodian under this Agreement.
9. This Agreement constitutes the entire understanding and agreement of
the parties hereto with respect to the subject matter hereof. No provision of
this Agreement may be amended or terminated except by a statement in writing
signed by the party against which enforcement of the amendment or termination is
sought.
In connection with the operation of this Agreement, the Custodian and
the Trust may agree in writing from time to time on such provisions
interpretative of or in addition to the provisions of this Agreement as may in
their joint opinion be consistent with the general tenor of this Agreement. No
interpretative or additional provisions made as provided in the
- 32 -
<PAGE>
preceding sentence shall be deemed to be an amendment of this Agreement.
10. This instrument is executed and delivered in The Commonwealth of
Massachusetts and shall be governed by and construed according to the laws of
said Commonwealth.
11. Notices and other writings delivered or mailed postage prepaid to a
Fund addressed to the Trust at 2755 Campus Drive, San Mateo, CA 94403 or to such
other address as the Trust may have designated to the Custodian in writing, or
to the Custodian at 40 Water Street, Boston, Massachusetts 02109, Attention:
Manager, Securities Department, or to such other address as the Custodian may
have designated to the Company in writing, shall be deemed to have been properly
delivered or given hereunder to the respective addressee.
12. This Agreement shall be binding on and shall inure to the benefit
of the Trust and the Custodian and their respective successors and assigns,
provided that neither party hereto may assign this Agreement or any of its
rights or obligations hereunder without the prior written consent of the other
party.
13. Notice is hereby given of the limitations of the liability of the
Trust's shareholders and Trustees as set forth in the Trust's Declaration of
Trust, as amended, on file with the Secretary of the Commonwealth of
Massachusetts. The obligations assumed by a Fund or the Trust pursuant to this
Agreement shall be limited in all cases to such Fund and its assets. No party
- 33 -
<PAGE>
named herein shall seek satisfaction of any such obligation from the
shareholders or any shareholder of the Trust; nor shall any party named herein
seek satisfaction of any such obligation from the Board of Trustees or any
individual Trustee of the Trust.
14. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original. This Agreement shall become effective when
one or more counterparts have been signed and delivered by each of the parties.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed in its name and behalf on the day and year first above written.
BAILARD, BIEHL & KAISER BROWN BROTHERS HARRIMAN & CO.
FUND GROUP
on behalf of the
BAILARD, BIEHL & KAISER
DIVERSA FUND
By /s/ [ILLEGIBLE] By [ILLEGIBLE]
--------------------------- -----------------------------
Partner
<PAGE>
BROWN BROTHERS HARRIMAN & CO. - GLOBAL CUSTODY NETWORK
------------------------------------------------------
BAILARD, BIEHL & KAISER DIVERSA FUND
------------------------------------
APPENDIX A
----------
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN(S) DEPOSITORY
------- --------------- ----------
<S> <C> <C>
ARGENTINA CITIBANK, N.A., BUENOS AIRES Caja de Valores
Citibank, N.A., New York Agt. 7/16/81 CRYL
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
AUSTRALIA NATIONAL AUSTRALIA BANK LTD., MELBOURNE Austraclear Ltd.
National Australia Bank Agt. 5/l/85 Reserve Bank of
Australia
Agreement Amendment 2/13/92
Omnibus Amendment 11/22/93
AUSTRIA CREDITANSTALT BANKVEREIN OeKB
Creditanstalt Bankverein Agreement 12/18/89
Omnibus Amendment 1/17/94
BELGIUM BANQUE BRUXELLES LAMBERT CIK
Banque Bruxelles Lambert Agt. 11/15/90 Banque Nationale de
Belgique
Omnibus Amendment 311/94
BERMUDA THE BANK OF N.T. BUTTERFIELD & SON LTD. None
The Bank of N.T. Butterfield & Son Ltd. Agreement 5/27/97
BRAZIL BANKBOSTON, N.A., SAO PAULO BOVESPA
The First National Bank of Boston Agreement 1/5/88 CLC
Omnibus Amendment 2/22/94
Amendment 7/29/96
CANADA CANADIAN IMPERIAL BANK OF COMMERCE Bank of Canada
Canadian Imperial Bank of Commerce Agreement 9/9/88 CDS
Omnibus Amendment 12/1/93
CHILE CITIBANK, N.A., SANTIAGO DCV
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
CZECH REPUBLIC CESKOSLOVENSKA OBCHODNI BANKA, A.S., PRAGUE SCP
Ceskoslovenska Obchodni Banka Agreement 2/28/94 Czech National Bank
DENMARK DEN DANSKE BANK VP
Den Danske Bank Agreement I/l/89
Omnibus Amendment 12/1/93
FINLAND MERITA BANK CSD
Union Bank of Finland Agreement 2/27/89
Omnibus Amendment 4/6/94
FRANCE BANQUE PARIBAS SICOVAM
Morgan Guaranty Trust Company Agreement 4/2/93 Banque de France
Consent and Transfer Agreement 4/4/96
GERMANY DRESDNER BANK DKV
Dresdner Bank Agreement 10/6/95
GREECE CITIBANK, N.A., ATHENS Apothetirion Titlon A.E.
Citibank, N.A., New York Agreement 7/16/81 Bank of Greece
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
11/18/97 PAGE 1 OF 4
</TABLE>
<PAGE>
BROWN BROTHERS HARRIMAN & CO. - GLOBAL CUSTODY NETWORK
------------------------------------------------------
BAILARD, BIEHL & KAISER DIVERSA FUND
------------------------------------
APPENDIX A
----------
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN(S) DEPOSITORY
------- --------------- ----------
<S> <C> <C>
HONG KONG STANDARD CHARTERED BANK, HONG KONG HKSCC
Standard Chartered Bank Agreement 2/18/92
Omnibus Amendment 6/13/94
Appendix 4/8/96
HUNGARY CITIBANK BUDAPEST RT. for CITIBANK, N.A. KELER Ltd.
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank, N.A. Subsidiary Amendment 10/19/95
Citibank, N.A./Citibank Budapest Agreement 1/24/92
INDONESIA CITIBANK, N.A., JAKARTA LPP
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
IRELAND ALLIED IRISH BANKS PLC CrestCo.
Allied Irish Banks Agreement 1/10/89 Gilt
Settlement Office
Omnibus Amendment 4/8/94
ISRAEL BANK HAPOALIM B.M. TASE Clearinghouse Ltd.
Bank Hapoalim. Agreement 8/27/92
ITALY BANCA COMMERCIALE ITALIANAMonte Titoli
Banca Commerciale Italiana Agreement 5/8/89 Banca D'Italia
Agreement Amendment 10/8/93
Omnibus Amendment 12/14/93
JAPAN SUMITOMO TRUST & BANKING COMPANY, LTD. JASDEC
Sumitomo Trust & Banking Agreement 7/17/92 Bank of Japan
Omnibus Amendment 1/13/94
KOREA CITIBANK, N.A., SEOUL KSD
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank, Seoul Agreement Supplement 10/28/94
MALAYSIA HONGKONG BANK MALAYSIA BERHAD Bank Negara Malaysia
Hongkong & Shanghai Banking Corp. Agt. 4/19/91 MCD
Omnibus Supplement 12/29/93
Schedule 5/14/96
Malaysia Subsidiary Supplement 5/23/94
Side letter Agreement dated 7/28/97
MEXICO CITIBANK MEXICO, S. A. Indeval
Citibank, N.A., New York Agreement 7/16/81 Banco de Mexico
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank Mexico, S.A. Amendment 2/7/95
NETHERLANDS ABN-AMRO BANK NECIGEF
ABN-AMRO Agreement 12/19/88 De Nederlandsche Bank
NEW ZEALAND NATIONAL AUSTRALIA BANK LTD., AUCKLAND Reserve Bank of New Zealand
National Australia Bank Agreement 5/1/85
Agreement Amendment 2/13/92
Omnibus Amendment 11/22/93
New Zealand Addendum 3n189
</TABLE>
11/18/97 PAGE 2 OF 4
<PAGE>
BROWN BROTHERS HARRIMAN & CO. - GLOBAL CUSTODY NETWORK
------------------------------------------------------
BAILARD, BIERL & KAISER DIVERSA FUND
------------------------------------
APPENDIX A
----------
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN(S) DEPOSITORY
------- --------------- ----------
<S> <C> <C>
NORWAY DEN NORSKE BANK VPS
Den norske Bank Agreement 11/16/94
PERU CITIBANK, N.A., LIMA CAVALI
Citibank, N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
PHILIPPINES CITIBANK, N.A., MANILA PCD
Citibank, N.A., New York Agreement 7/16/81 ROSS
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
POLAND CITIBANK (POLAND), S.A. for CITIBANK, N.A. NDS
Citibank, N.A., New York Agreement 7/16/81 National Bank of
Poland
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
Citibank Subsidiary Amendment 10/19/95
Citibank, N.A./Citibank Poland S.A. Agt. 11/6/92
PORTUGAL BANCO ESPIRITO SANTO E COMERCIALInterbolsa
DE LISBOA, S.A.
BESCL Agreement 4/26/89
Omnibus Amendment 2/23/94
SINGAPORE STANDARD CHARTERED BANK, SINGAPORE CDP
Standard Chartered Bank Agreement 2/18/92
Omnibus Amendment 6/13/94
Appendix 4/8/96
SOUTH AFRICA FIRST NATIONAL BANK OF SOUTHERN AFRICA CD
First National Bank of Southern Africa Agt. 8/7/91
SPAIN BANCO SANTANDER SCLV
Banco Santander Agreement 12/14/88 Banco de Espana
SWEDEN SKANDINAVISKA ENSKILDA BANKEN VPC
Skandinaviska Enskilda Banken Agreement 2/20/89
Omnibus Amendment 12/3/93
SWITZERLAND SWISS BANK CORPORATION SEGA
Swiss Bank Corporation Agreement 3/1/94
TAIWAN STANDARD CHARTERED BANK, TAIPEI TSCD Standard
Chartered Bank Agreement 2/18/92 Omnibus Amendment
6/13/94 Appendix 4/8/96
THAILAND HONGKONG & SHANGHAI BANKING CORP.LTD., BANGKOK TSDC
Hongkong & Shanghai Banking Corp. Agt. 4/19/91
Omnibus Amendment 12/29/93
Schedule 5/14/96
TRANSNATIONAL BROWN BROTHERS HARRIMAN & CO. Cedel
Euroclear
TURKEY CITIBANK, N.A., ISTANBUL Takasbank
Citibank, N.A., New York Agreement 7/16/81 Central Bank of
Turkey
New York Agreement Amendment 8/31/90
New York Agreement Amendment 7/26/96
</TABLE>
11/18/97 PAGE 3 OF 4
<PAGE>
BROWN BROTHERS HARRIMAN & CO. - GLOBAL CUSTODY NETWORK
------------------------------------------------------
BAILARD, BIERL & KAISER DIVERSA FUND
------------------------------------
APPENDIX A
----------
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN(S) DEPOSITORY
------- --------------- ----------
<S> <C> <C>
UNITED KINGDOM RBS TRUST BANK LTD. CGO
Royal Bank of Scotland Agreement 5/24/96 CM0
CrestCo.
</TABLE>
I HEREBY CERTIFY THAT AT ITS MEETING ON THE BOARD APPROVED THE
COUNTRIES, SUBCUSTODIANS, AGREEMENTS, AND CENTRAL DEPOSITORIES LISTED ON THIS
APPENDIX,
- ----------------------------- ------------------
(SIGNATURE) (DATE)
- -----------------------------
(TITLE)
11/18/97 PAGE 4 OF 4
<PAGE>
AMENDMENT TO THE
----------------
CUSTODIAN AGREEMENT
-------------------
Amendment made as of December 22, 1995 (the "Amendment"), between
Bailard, Biehl & Kaiser Fund Group (the "Company") and Brown Brothers Harriman &
Co. (the "Custodian") to the Custodian Agreement dated September 24, 1990, on
behalf of Bailard, Biehl & Kaiser Diversa Fund (the "Fund") and any other
separate portfolio that may be designated from time to time by the Company and
Brown Brothers Harriman & Co.
In consideration of the mutual covenants and agreements herein
contained, the Fund and the Custodian agree that the Custodian Agreement is
hereby amended as follows:
1 . Section [y], Proper Instructions, is amended in its entirety as
follows:
"[y]. Proper Instructions - Proper instructions shall include, in order
of preference, authenticated electro-mechanical communications including SWIFT
and tested telex; a written request signed by two or more authorized persons as
set forth below; telefax transmissions and oral instructions. Each of the
foregoing methods of communicating proper instructions is described and defined
below and may from time to time be further described and defined in written
operating memoranda between the Custodian and the Fund.
Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices or systems, including
authenticated SWIFT and tested telex transmissions. The media through which such
Proper Instructions shall be transmitted and the data which must be contained in
such Proper Instructions in order for such instruction to be complete shall be
set forth in certain operating memoranda to which the Custodian and the Fund
shall from time to time agree. The Fund shall be responsible for sending
instructions which meet the requirements set forth therein and the Custodian
shall be only be responsible for acting on instructions which meet such
requirements. The Custodian shall not be liable for direct or consequential
losses resulting from technical failures of any kind in respect of instructions
sent via electro-mechanical or electronic communications.
<PAGE>
Proper Instructions shall include a written request, direction,
instruction or certification signed or initialed on behalf of the Fund by two or
more persons as the Board of Trustees or Directors of the Fund shall have from
time to time authorized, provided, however, that no such instructions directing
the delivery of securities or the payment of funds to an authorized signatory of
the Fund shall be signed by such persons. Those persons authorized to give
proper instructions may be identified by the Board of Trustees or Directors by
name, title or position and will include at least one officer empowered by the
Board to name other individuals who are authorized to give proper instructions
on behalf of the Fund. Telephonic or other oral instructions or instructions
given by facsimile transmission may be given by any one of the above persons and
will be considered proper instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved.
With respect to telefax. transmissions, the Fund and the Custodian
hereby acknowledge that (i) receipt of legible instructions cannot be assured,
(ii) the Custodian cannot verify that authorized signatures on telefax
instructions are original, and (iii) the Custodian shall not be responsible for
losses or expenses incurred through actions taken in reliance on such telefax
instructions.
The Custodian may act on oral instructions provided such instructions
will be confirmed by authenticated electro-mechanical communications in the
manner set forth above but the lack of such confirmation shall in no way affect
any action taken by the Custodian in reliance upon such oral instructions. The
Fund authorizes the Custodian to tape record any and all telephonic or other
oral instructions given to the Custodian by or on behalf of the Fund (including
any of its officers, Directors, Trustees, employees or agents or any investment
manager or adviser or person or entity with similar responsibilities which is
authorized to give proper instructions on behalf of the Fund to the Custodian.)
Proper instructions may relate to specific transactions or to types or
classes or transactions, and may be in the form of standing instructions."
<PAGE>
Except as amended above, all the provisions of the Custodian Agreement
as hereto effect shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date set forth above.
Bailard, Biehl & Kaiser Fund Group, Inc. BROWN BROTHERS HARRIMAN & CO.
on behalf of Bailard, Biehl and Kaiser
Diversa Fund
_____________________________________ __________________________________
(signature)
_____________________________________
(name/title)
ADMINISTRATION AGREEMENT
------------------------
THIS AGREEMENT is made as of the 1st day of April 1994 by and between
the Bailard, Biehl & Kaiser Diversa Fund (the "Fund"), a separate series of the
Bailard, Biehl & Kaiser Fund Group, a Massachusetts Business Trust (the
"Trust"), and INVESTMENT COMPANY ADMINISTRATION CORPORATION, a New Jersey
Corporation (the "Administrator");
WITNESSETH
WHEREAS, the Fund is a diversified series of an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust wishes to retain the Administrator to provide
certain administrative services in connection with the management of the Fund's
operations and the Administrator is willing to furnish such services:
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Trust hereby appoints the Administrator to provide
certain administrative services, hereinafter enumerated, in connection with the
management of the Fund's operations for the period and on the terms set forth in
this Agreement. The Administrator accepts such appointment and agrees to comply
with all relevant provisions of the 1940 Act, applicable rules and regulations
thereunder, and other applicable law.
2. Services on a Continuing Basis. Subject to the overall supervision
of the Board of Trustees of the Trust and Bailard, Biehl & Kaiser Inc., (the
"Manager"), the Administrator will perform the following services on a regular
basis which would be daily, weekly or as otherwise appropriate:
A) perform the services in Schedule 1 attached; and
B) such additional services as may be agreed upon by the Fund and the
Administrator.
3. Responsibility of the Administrator. The Administrator shall be
under no duty to take any action on behalf of the Fund except as set forth
herein or as may be agreed to by the Administrator in writing. In the
performance of its duties hereunder, the Administrator shall be obligated to
exercise reasonable care and diligence and to act in good faith and to use its
best efforts. Without limiting the generality of the foregoing or any other
provision of this Agreement, the
<PAGE>
Administrator shall not be liable for delays or errors or loss of data occurring
by reason of circumstances beyond the Administrator's control.
4. Reliance Upon Instructions. The Trust agrees that the Administrator
shall be entitled to rely upon any instructions, oral or written, actually
received by the Administrator from the Board of Trustees of the Trust and shall
incur no liability to the Trust or the Trust's Manager in acting upon such oral
or written instructions, provided such instructions reasonably appear to have
been received from a person duly authorized by the Board of Trustees of the
Trust to give oral or written instructions on behalf of the Fund.
5. Confidentiality. The Administrator agrees on behalf of itself and
its employees to treat confidentially all records and other information relative
to the Fund and all prior, present or potential shareholders of the Fund, except
after prior notification to, and approval of release of information in writing
by, the Fund, which approval shall not be unreasonably withheld where the
Administrator may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Fund.
6. Equipment Failures. In the event of equipment failures or the
occurrence of events beyond the Administrator's control which render the
performance of the Administrator's functions under this Agreement impossible,
the Administrator shall take reasonable steps to minimize service interruptions
and is authorized to engage the services of third parties (at the
Administrator's expense) to prevent or remedy such service interruptions.
7. Compensation. As compensation for services rendered by the
Administrator during the term of this agreement, the Fund will pay to the
Administrator an annual fee equal to $40,000, payable monthly by the fifth day
of the next month.
8. Indemnification. The Fund agrees to indemnify and hold harmless the
Administrator from all taxes, filing, fees, charges, expenses, assessments,
claims and liabilities (including without limitation, liabilities arising under
the Securities Act of 1933, the Securities Exchange Act of 1934, the 1940 Act,
and any state and foreign securities laws, all as amended from time to time) and
expenses, including (without limitation) reasonable attorneys fees and
disbursements, arising directly or indirectly from any action or thing which the
Administrator takes or does or omits to take or do at the request of or in
reliance upon the advice of the Board of Trustees of the Trust, provided, that
the Administrator will not be indemnified against any liability to the Fund or
to shareholders of the Fund (or any expenses incident to such liability) arising
out of the Administrator's own willful misfeasance, bad faith, gross negligence
or reckless disregard of its duties and obligations under this Agreement. The
Administrator agrees to indemnify and hold harmless the Fund, the Trust, and
each of its Trustees from all claims and liabilities (including, without
limitation, liabilities arising under the Securities Act of 1933, the Securities
Exchange Act of 1934, the 1940 Act, and any state and foreign securities laws,
all as amended from time to time) and expenses, including (without limitation)
reasonable attorneys fees and disbursements, arising directly or indirectly from
any action or thing which the Administrator takes or does or omits to take or do
which is in violation of this Agreement or not in accordance with instructions
properly given to the Administrator, or arising out
<PAGE>
of the Administrator's own willful misfeasance, bad faith, gross negligence or
reckless disregard of its duties and obligations under this Agreement. No fund
or other series of the Trust shall be liable for any claim against, or expense
of, any other fund or series of the Trust.
9. Duration and Termination. This Agreement shall continue until
termination by the Fund (through the Board of Trustees of the Trust) or the
Administrator on 60 days' written notice to the other. All notices and other
communications hereunder shall be in writing. This Agreement cannot be assigned
without the prior written consent of the other party hereto.
10. Amendments. This Agreement or any part hereof may be changed or
waived only by instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
11. Miscellaneous. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the services to be
performed hereunder, and supersedes all prior agreements and understandings
relating to the subject matter hereof, including the letter agreement relating
to blue sky services dated June 24, 1993. The captions in this Agreement are
included for convenience of reference only and in no way define or limit any of
the provisions hereof or otherwise affect their construction or effect. This
Agreement shall be deemed to be a contract made in California and governed by
California law. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of this Agreement
will not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
12. Limitation on Liability. Notice is hereby given of the limitations
of the liability of the Trust's shareholders and Trustees as set forth in the
Trust's Declaration of Trust, as amended, on file with the Secretary of the
Commonwealth of Massachusetts. The obligations assumed by the Trust pursuant to
this Agreement shall be limited in all cases to the Trust and its assets. No
party named herein shall seek satisfaction of any such obligation from the
shareholders or any shareholder of the Trust; nor shall any party named herein
seek satisfaction of any such obligation from the Board of Trustees or any
individual Trustee.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this their officers
designated below on the day and year first written above
BAILARD, BIEHL & KAISER
FUND GROUP
By: /s/ Tina Thomas
-----------------------------
Title: Treasurer
--------------------------
INVESTMENT COMPANY ADMINISTRATION
CORPORATION
By: /s/ Eric Banhazl
-----------------------------
Title: Vice President
--------------------------
<PAGE>
Schedule I
Services
A. Administration
1. Legal
a. Draft and file in conjunction with Funds' counsel the
Post-Effective Amendment and any supplements ("stickers") to
the Registration Statement for each Fund.
b. File State Registrations
c. Maintain corporate and blue sky calendars covering the
matters referred to herein.
d. Monitor Blue Sky summary reports.
e. Order checks for states that have to be renewed or amended.
f. Complete various State forms for renewals or amendments.
g. Complete blue sky sales reports for states where required.
h. Mail out copies of prospectuses and annual reports when new
ones are printed.
i. Notify all states of any change to any Fund.
j. Assist in obtaining required Fidelity Bond and Directors and
Officers Insurance, and monitor on a monthly basis compliance
with levels of Fidelity Bond Insurance required by the
Investment Company Act.
k. Prepare and distribute materials for all directors, including
annual 1099's.
l. Prepare required and pro-forma data for annual approvals of
advisory, distribution and administrative services contracts.
m. File Rule 24F-2 Notice annually.
n. Assist in the negotiations of any contracts covering the
matters referred to herein.
o. Draft and file proxy statements in conjunction with Funds'
counsel.
p. Recommend items covering the matters referred to herein for
the agenda for the Board of Directors Meetings.
<PAGE>
q. Prepare or compile all exhibits for related agenda items
(i.e. contracts, reports, schedules).
r. Prepare and file NSAR semi-annually.
s. Coordinate the activities of the Funds' Advisers, Transfer
Agents, Custodians, Legal Counsel and Independent
Accountants, as they relate to the Administrator's oversight,
recordkeeping and reporting responsibilities hereunder.
2. Operations & Administration
a. Prepare and file periodic reports to shareholders and
coordinate each proof copy with printers, independent
accountants, and attorneys prior to production of the final
product.
b. Monitor daily and periodic compliance with respect to
Investment Company Act, Internal Revenue Code, and Prospectus
guidelines and restrictions, which includes the items
identified in Appendix A (attached) performed on a periodic
basis.
c. Frequent audit of all income and expense accruals, sales and
redemptions of capital shares, and capital shares
outstanding.
d. Evaluate expenses, project future expenses, determine
accruals, and process payments of expenses.
<PAGE>
Addendum to Administration Agreements
-------------------------------------
Effective July 1, 1995, the Administration Agreements between
Investment Company Administration Corporation and Bailard Biehl & Kaiser Fund
Group and Bailard, Biehl & Kaiser International Fund Group, Inc., dated April 1,
1994 and October 1, 199 1, respectively, are hereby amended as follows:
1. Paragraph 7 of the Agreements.
------------------------------
7. Compensation. As compensation for services rendered by the
Administrator during the term of this agreement, each Fund will pay to
the Administrator an annual fee equal to $32,500, payable monthly by
the fifth day of the next month.
2. Schedule 1 of the Agreements.
-----------------------------
A. Administration
1. Legal
Paragraphs b., d., e., f., g. and I. are omitted from the
schedule of services to be provided. Paragraph c. is revised to read as
follows:
c. Maintain corporate calendars covering the matters referred
to herein.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below on the day and year first written
above.
BAILARD, BIEHL & KAISER FUND GROUP and
BAILARD, BIEHL & KAISER INTERNATIONAL FUND GROUP, INC
By: /s/ Tina Thomas
-----------------------------
Title: Treasurer
--------------------------
INVESTMENT COMPANY ADMINISTRATION CORPORATION
By: /s/ Eric Banhazl
-----------------------------
Title: Sr. Vice President
--------------------------
LAW OFFICES
ORRICK, HERRINGTON & SUTCLIFFE
600 MONTGOMERY STREET
SAN FRANCISCO CALIFORNIA 94111
TELEPHONE (415) 392-1122
TELECOPIER (415) 954 3759 TELEX 70-3520
<TABLE>
<S> <C> <C> <C>
NEW YORK NEW YORK 10036 SAN JOSE CALIFORNIA 95113 SACREMENTO CALIFORNIA 95814 LOS ANGELES CALIFORNIA 90017
1211 AVENUE OF THE AMERICAS 55 ALMADEN BOULEVARD 555 CAPITAL MALL 444 SOUTH FLOWER STREET
TELEPHONE (212) 704-9680 TELEPHONE (408) 298-8800 TELEPHONE (916) 447-9200 TELEPHONE (213) 624-2470
</TABLE>
WRITERS DIRECT DIAL NUMBER
December 17, 1986
BB&K Fund Group
951 Mariner's Island Boulevard
Suite 700
San Mateo, CA 94404
Re: BB&K Fund Group/
Form N-1A Registration Statement
--------------------------------
Dear Sirs:
We have acted as counsel to BB&K Fund Group, a Massachusetts
business trust (the "Trust 11), in connection with the preparation and filing of
a Registration Statement on Form N-1A under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended (the "Registration
Statement"), covering an unlimited number of shares of beneficial interest,
$0.01 par value (the "Shares"), of the series of shares authorized by the
Declaration of Trust dated August 27, 1986.
We have reviewed the proceedings and actions of the Trust in
connection with these matters and have examined such documents, trust records
and other instruments as we have deemed necessary for purposes of this opinion.
We have assumed the genuineness of signatures on, and the authenticity of, all
documents furnished to us, and the conformity to the originals of documents
submitted to us as copies, which facts we have not independently verified.
Based on the foregoing, it is our opinion that the Shares,
when duly sold, issued and paid for as contemplated by the Registration
Statement, will be validly and legally issued, fully paid and nonassessable by
the Trust, except to the extent that the shareholders of a Massachusetts
business trust may under some circumstances
<PAGE>
be subject to assessment at the instance of creditors to pay the obligations of
such trust in the event that its assets are insufficient for the purpose.
In rendering the foregoing opinion, we have relied on the
opinion of Sullivan & Worcester, annexed hereto as Exhibit A, with respect to
the matters addressed therein.
We hereby consent to the use of our name under the caption
"What Else Should I Know About the Fund?" in the Prospectus included in the
Registration Statement, and to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement.
Very truly yours,
ORRICK, HERRINGTON & SUTCLIFFE
By /s/ Andre W. Brewster
---------------------------------
Andre W. Brewster
<PAGE>
SULLIVAN & WORCESTER
ONE POST OFFICE SOUARE
BOSTON, MASSACHUSETTS 02109
<TABLE>
<S> <C> <C>
IN WASHINGTON.DC. (617) 338-2800 IN NEW YORK CITY
1025 CONNECTICUT AVENUE, N.W, 767 THIRD AVENUE
WASHINGTON, D.C.20038 TELECOPIER NO. 617-338-2880 NEW YORK, NEW YORK 10017
(202) 775-8190 (212) 486-8200
TELECOPIER NO 202-293-2275 TWX: 710-321-1976 TELECOPIER NO 212-758-2151
</TABLE>
November 19, 1986
BB&K Fund Group
951 Mariner's Island Boulevard
Suite 700
San Mateo, CA 94404
Re: Registration Statement on Form N-lA
File No. 33-8441
-----------------------------------
Dear Sirs:
Your counsel, Orrick, Herrington & Sutcliffe, have requested our
opinion with respect to certain matters of Massachusetts law relating to the
organization of BB&K Fund Group, a Massachusetts business trust with
transferable shares (the "Trust") established under a Declaration of Trust dated
August 27, 1986 (the "Declaration").
We have acted as Massachusetts counsel to the Trust in connection with
the execution and delivery of the Declaration, and the actions taken by the
Trustees of the Trust to organize the Trust and to authorize the issuance and
sale of an indefinite number of its shares of beneficial interest, $0.01 par
value per share, of the series of shares authorized by the Declaration (the
"Shares"). In this connection we have participated in the drafting of, and are
familiar with, the Declaration and the By-laws of the Trust, and we have
examined the Prospectus and Statement of Additional Information included in the
Trust's Registration Statement on Form N-lA (the "Registration Statement"),
substantially in the form in which the Registration Statement has become, or
is.about to become, effective, the records of the actions of the Trustees of the
Trust to organize the Trust and to authorize the issuance of the Shares,
certificates of Trustees and officers of the Trust and of public officials as to
matters of fact, and such other documents and instruments, certified or
otherwise identified to our satisfaction, and such questions of law and fact, as
we have considered necessary or appropriate for purposes of the opinion
expressed herein. We have assumed the genuineness of the signatures on, and the
authenticity of, all documents furnished
<PAGE>
BB&K Fund Group
November 19, 1986
Page 2
to us, and the conformity to the originals of documents submitted to us as
certified copies, which facts we have not independently verified.
Based upon and subject to the foregoing, we hereby advise you that in
our opinion, under the laws of The Commonwealth of Massachusetts, the Shares,
when duly sold, issued and paid for as contemplated by,the Prospectus and
Statement of Additional Information included in the Trust's Registration
Statement, will be validly and legally issued, fully paid and nonassessable by
the Trust.
With respect to the opinion stated above, we wish to point out that the
shareholders of a Massachusetts business trust may under some circumstances be
subject to assessment at the instance of creditors to pay the obligations of
such trust in the event that its assets are insufficient for the purpose.
This letter expresses our opinion as to the provisions of the
Declaration and the laws of The Commonwealth of Massachusetts applying to
business trusts generally, but does not extend to the Massachusetts Securities
Act, or to federal securities or other laws.
Orrick, Herrington & Sutcliffe may rely upon the foregoing opinion in
rendering their opinion letter on the same matters which is to be filed as an
exhibit to the Registration Statement to the same extent as if a counterpart of
this letter had been addressed to them, and we consent to the filing of this
letter as an exhibit to the Registration Statement and to the reference to us
under the heading "What Else Should I Know About the Fund?" in the Prospectus
included in the Registration Statement.
Very truly yours,
/s/ Sullivan & Worcester
SULLIVAN & WORCESTER
November 11 , 1986
BB&K Diversa Fund
951 Mariner's Island Boulevard
Suite 700
San Mateo, California 94404,
Re: BB&K Diversa Fund -- Purchase of Shares
---------------------------------------
Ladies and Gentlemen:
In connection with my purchase of 10,000 shares of beneficial
interest (the "Shares") of the BB&K Diversa Fund (the "Fund"), a series of BB&K
Fund Group, a Massachusetts business trust, at a price of $10 per share, I
represent, warrant and agree as follows:
(a) I am purchasing the Shares for my own account for
investment and not with a view to, or for resale in connection with, any
distribution thereof. I have no present intention of selling or otherwise
disposing of the Shares, and no other person will have any legal or beneficial
interest in the Shares.
(b) I understand that the Shares have not been
registered under the Securities Act of 1933, as amended (the "Act"), and that
the Shares have not been qualified for sale pursuant to the California Corporate
Securities Law of 1968, by reason of specific exemptions therefrom, both of
which exemptions depend, among other things, upon the bona fide nature of my
investment intent as expressed herein.
(c) I acknowledge that the Shares must be held
indefinitely and cannot be resold unless they are registered and qualified under
the Act and applicable state securities laws or an exemption from such
registration and qualification is available, and that the Fund is under no
obligation to register or qualify the Shares under the Act or any applicable
state securities law or to assist me in complying with any such exemption.
(d) I agree not to make any disposition of all or any
portion of the Shares unless and until:
(1) 1 have notified the Fund of the proposed
disposition and have furnished the Fund with a detailed statement of the
circumstances surrounding the proposed disposition; and
EXHIBIT 13
<PAGE>
(2) If reasonably requested by the Fund, I
have furnished the Fund with an opinion of counsel, reasonably satisfactory to
the Fund, that such disposition will comply with the Act and any applicable
state securities laws.
(e) I understand that if I redeem any of the Shares
during the five year period beginning with the commencement of operations of the
Fund, the net asset value payable with respect to such redeemed Shares will be
reduced by the pro-rata portion (based on the proportion of Shares being
redeemed to the total number of Shares outstanding) of the then unamortized
deferred organization expenses of the Fund as of the date of such redemption.
(f) I understand that any certificates representing
the Shares will be endorsed with legends in substantially the following forms:
(1) THE SHARES REPRESENTED HEREBY HAVE
NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED,
AND ACCORDINGLY, MAY BE TRANSFERRED
ONLY IN A TRANSACTION WHICH IS
REGISTERED UNDER SUCH ACT OR IS, TO
THE SATISFACTION OF THE ISSUER,
EXEMPT FROM SUCH RECISTRATION
REQUIREMENT.
(2) THE NET ASSET VALUE PAYABLE UPON
REDEMPTION OF THE SHARES
REPRESENTED HEREBY IS SUBJECT TO
REDUCTION IN ACCORDANCE WITH AN
INVESTMENT LETTER DATED NOVEMBER ,
1986 EXECUTED BY THE ORIGINAL
SHAREHOLDER.
(3) Any legend required by applicable
state securities laws.
(g) I understand that the Fund will make a notation
in its records and advise any transfer agent of the restrictions on transfer
contained in the foregoing legends and will instruct the transfer agent to place
a stop-transfer order in the Fund's stock books respecting transfer of the
Shares.
(h) I have received and carefully reviewed a draft of
Pre-Effective Amendment No. I to the Form N-1A Registration Statement relating
to the Shares, filed with the Securities and Exchange Commission on October 28,
1986 (the
2
<PAGE>
"Registration Statement"). In evaluating the suitability of this investment, I
have not relied on any representation, oral or written, other than as set forth
in the Registration Statement and no such representation has been made to me.
(i) I have had an opportunity to discuss the Fund's
operations and financial condition with its management, to- ask questions and
receive answers concerning the terms and conditions of the offering and to
obtain any additional information which the Fund possesses or could acquire
without unreasonable effort or expense necessary to verify the accuracy of the
information contained in the Registration Statement.
(j) I understand that an investment in the Shares
involves certain risks, and that no federal or state agency has recommended or
endorsed an investment in the Shares or made any determination as to the
fairness of such investment.
(k) I have a preexisting business relationship with
Ronald W. Kaiser, a trustee and chief executive officer of the Fund.
(l) 1 have such knowledge and experience in business
and financial matters, and particularly in investment matters, that I am capable
of evaluating the Fund and the proposed activities thereof, and the risks and
merits of this investment.
(m) I am able to bear the economic risk of this
investment for an indefinite period of time and can afford the complete loss of
this investment. I have a joint net worth (exclusive of home, home furnishings
and automobiles) with my spouse in excess of $1,000,000.
(n) I have carefully considered, and have, to the
extent I believe necessary, discussed with my legal, tax and/or financial
advisers, the suitability of an investment in the Shares for my particular
financial and tax situation and have determined in light of the foregoing that
the Shares are a suitable investment for me.
(o)All information contained herein and provided by
me is complete and accurate as of the date hereof, and I will notify the Fund
immediately in writing of any change in such information prior to the acceptance
of this subscription by the Fund.
(p) I understand that the sale of the Shares to me
will be based upon the representations, warranties and
3
<PAGE>
agreements set forth above, and I agree to indemnify and hold harmless the Fund
and its officers, trustees, employees and control persons from and against any
and all loss, damage, liability or expense, including costs and attorneys' fees,
which any of them may incur by reason of any misrepresentation made by me in
this agreement, any breach by me of any warranty contained herein or any failure
by me to fulfill any agreement set forth herein or arising out of the sale or
other disposition of the Shares by me in violation of the Act or any applicable
state securities laws.
(q) I am a resident of the State of California.
Very truly yours,
/s/ E. Diane Schneider
E. Diane Schneider
Accepted:
BB&K FUND GROUP, on behalf of
the BB&K Diversa Fund
By /s/ [SIGNATURE ILLEGIBLE]
-------------------------
Dated: November 12, 1986
4
OH&S DRAFT
11/22/86
BB&K IRA
DISCLOSURE STATEMENT FOR CONTRIBUTIONS REPORTED ON
TAX RETURNS FOR 1987 AND LATER YEARS
The following information concerning the Bailard, BB&K Fund Group
Individual Retirement Custodial Account (the "BB&K IRA") is provided pursuant to
the requirements of Section 408(i) of the Internal Revenue Code of 1986 and the
regulations thereunder (the "Code").
1. How does an IRA work?
An individual may make contributions to his or her IRA during his or
her working career. The contributions may be tax deductible (see Q&A 3). Any
income earned or gain realized on the contributions is not subject to income tax
until withdrawn. When the individual retires, amounts are withdrawn from the IRA
as retirement benefits. At that time, amounts withdrawn are fully taxable and
includible in the gross income of the individual for the year in which the
amounts withdrawn are received. However, if the individual has made
nondeductible contributions to any IRA after 1986, a portion of any withdrawal
may be excludible from gross income (see Q&A 6).
2. How much may be contributed to an IRA?
An individual may contribute cash to an IRA each year up to an amount
equal to the lesser of $2,000 or 100% of earned income or compensation,
regardless of marital status and community property laws. The contribution must
be made during, or on or before April 15 of the year following, the year for
which it is made. However, contributions to an IRA are not allowed during or
after the year in which the individual attains age 70-1/2.
* * * * *
NOTE: This disclosure statement describes the rules in effect for IRA
contributions made for tax years beginning after December 31, 1986.
Fully deductible contributions may be made for 1986 under the IRA rules
in effect before 1987 if they are made (postmarked) on or before April
15, 1987.
EXHIBIT 14
<PAGE>
3. Can an IRA contribution still be deducted?
Yes, but the 1986 tax law has reduced or eliminated the deduction for
individuals who are covered by an employer sponsored retirement plan. For 1987
and later years, an individual is allowed a deduction for the full amount of his
.or her IRA contribution only if:
(a) the individual is not an "active participant," or (if he or she is
married and files a joint return) neither the individual nor his or her
spouse is an "active participant," in an employer-sponsored retirement plan
(see Q&A 4); or
(b) the individual's adjusted gross income ("AGI") is equal to or less
than the amount shown below:
Tax Filing Status AGI
----------------- ---
Single: $25,000
Married, filing --
Jointly: $40,000
Separately: $0
If both spouses of a married couple filing a joint return have earned income or
compensation for the year, then both may contribute to an IRA (see Q&A 17).
However, both may deduct the full amount of their IRA contributions only if
their combined AGI is equal to or less than $40,000.
If an individual who is single or married and filing separately is an
"active participant," or if either spouse of a married couple filing jointly is
an "active participant,11 then NO deduction for an IRA contribution is available
if the indivi7-dual's AGI, or the couple's AGI in the case of a married couple
filing jointly, equals or exceeds the amount shown below:
Tax Filing Status AGI
----------------- ---
Single: $35,000
Married, filing --
Jointly: $50,000
Separately: $10,000
An individual who is an "active participant," or either or both spouses of a
married couple filing jointly where either spouse is an "active participant,"
and whose AGI falls between the amounts specified in the above tables is allowed
only a partial deduction, as shown below in the following chart:
2
<PAGE>
AGI, Single AGI, Couple Maximum Deduction Couple Filing Separately
Taxpayer Filing Jointly Regular Spousal AGI Max. Deduct.
- ----------- -------------- ------- ------- ------------- ------------
$25,000 $40,000 $2,000 $2,000 $ 0 $ 0
26,000 41,000 1,800 2,025 1,000 1,000
27,000 42,000 1,600 1,800 2,000 1,600
28,000 43,000 1,400 1,575 3,000 1,400
29,000 44,000 1,200 1,350 4,000 1,200
30,000 45,000 1,000 1,125 5,000 1,000
31,000 46,000 800 900 6,000 800
32,000 47,000 600 675 7,000 600
33,000 48,000 400 550 8,000 400
34,000 49,000 200 325 9,000 200
35,000 50,000 200 200 10,000 200
35,001 50,001 0 0 10,001 0
*/ Spousal IRAs are available only to married couples filing jointly. The
BB&K IRA does not accept spousal IRA contributions (see Q&A 18).
For AGI amounts between those noted above, the allowable deduction is determined
by interpolation and rounded down to the nearest $10. AGI for this purpose is
determined after taking into account the passive loss limitations but without
regard to any deductible IRA contributions for the year.
4. Who is an "active participant" for purposes of the new
limitations on the IRA deduction?
The IRA deduction is reduced or eliminated (see Q&A 3) for an
individual if, for any portion of the plan year ending with or within the tax
year for which the IRA contribution is made, the individual is an "active
participant" in (a) a tax-qualified pension, profit-sharing or stock bonus plan
or an ESOP, (b) a government plan, (c) a tax sheltered annuity contract or
custodial account under Section 403(b) of the Code (a "Section 403(b) Plan"), or
(d) a simplified employee pension ("SEP"). An individual's status as an flactive
participant" does not depend on whether or not his or her rights under the plan
are vested. Participation by an employee of a government or tax-exempt
organization in an eligible unfunded deferred compensation plan under Section
457 of the Code does not make the employee an "active participant" under these
rules.
Special rules apply with respect to certain plans. An individual is an
"active participant" in:
(1) A defined benefit pension plan, if he or she is not excluded under
the plan's eligibility rules (unless the plan has been "frozen" or
terminated), but active
3
<PAGE>
participant status cannot be avoided by waiving the right to participate;
(2) A defined contribution pension plan, if an employer contribution
or forfeiture is required to be allocated to the individual's account for
the plan year, even if he or she is not employed during the tax year for
which the IRA contribution Is made;
(3) A profit-sharing or stock bonus plan, an ESOP, a Section 403(b)
Plan or a SEP, if an employer contribution or forfeiture is actually
allocated to the individual's account during the tax year for which the IRA
contribution is made; and
(4) A cash or deferred ("Section 401(k)") plan, if the individual
makes elective deferrals during the tax year for which the IRA contribution
is made.
5. Can an individual make an IRA contribution on a nondeductible
basis?
Yes. Generally, an individual whose IRA deduction is reduced or
eliminated under the new limitations (see Q&As 3 and 4) can make the IRA
contribution on a nondeductible basis. The amount that can be contributed on a
nondeductible basis is the same as the amount the individual is precluded by the
new rules from contributing on a deductible basis.
For example, the new rules reduce from $2,000 to $1,200 the IRA
deduction available to a married individual who files a joint return and has
$44,000 in AGI (see Q&A 3). That individual could make an additional IRA
contribution of $800 on a nondeductible basis.
An individual must make an election on his or her Federal tax return in
order to designate an IRA contribution as nondeductible. Otherwise deductible
contributions may be designated as nondeductible in the same manner. (These
elections can be made on an amended return as well.)
6. How are IRA distributions taxed if an individual has made any
nondeductible contributions to an IRA?
If an individual has properly designated any of his or her IRA
contributions as nondeductible when made (see Q&A 5), a portion,of any
distribution the individual later receives from any IRA, including rollover IRAs
(see Q&A 16), SEP-IRAs and IRAs maintained with other IRA sponsors, may be
excludible from gross income. The excludible portion is
4
<PAGE>
determined by the ratio of (a) the individual's aggregate nondeductible
contributions to all IRAs, to (b) the total value of all his or her IRAs.
All IRA distributions are presumed to be fully taxable under the
normal rules (see Q&A 14). The burden is on a taxpayer to maintain sufficient
records to prove the amount of any nondeductible IRA contributions which the
taxpayer asserts as justification for excluding any portion of an IRA
distribution from taxation. The information required for this purpose includes
the amount of any nondeductible contributions made, the amount of any IRA
distributions received and the aggregate balance of all the individual's IRAs at
the end of the year. Neither BB&K nor the custodian of the BB&K IRA, nor any
other IRA sponsor or custodian, can maintain the records needed for this
purpose.
A penalty of $100 applies to any individual who overstates the amount
of his or her nondeductible IRA contributions for any year, unless it is shown
that the overstatement was due to reasonable cause. Finally, the Internal
Revenue Service ("IRS") requires that all IRA distributions be treated as
subject to Federal income tax withholding, although any distributee can elect
not to have any tax withheld.
7. What advantage is there in making IRA contributions on a
nondeductible basis?
As before, all amounts held in an IRA are exempt from Federal income
tax as long as they remain in the IRA. The effect of this tax shelter for
earnings generated within an IRA can be very significant over time. Thus, both
deductible and nondeductible IRAs can outperform regular savings over
the-long-term. Indeed, if the yield spread is great enough, nondeductible IRAs
can even outperform municipal bonds over the long-term.
The following table illustrates those points:
Comparing IRAs and Other Investments
------------------------------------
The table shows amounts accumulated (after taxes) if withdrawn in the
years shown by a taxpayer in the 28% tax bracket depositing the same amount
annually in each investment. A full $2,000 annual contribution is made each year
only to a deductible IRA. Other deposits are shown in after-tax dollars ($2,000
x 28% = $560; $2,000 - $560 = $1,440).
[Table continued on next page]
5
<PAGE>
[Table continued from prior page]
PART A: IRA Used for Long-Term Retirement Purposes Only:
------------------------------------------------
Regular 100% Deduct- NONdeduct- Municipal
Savings ible IRA ible IRA Bonds
(8% Yield) (8% Yield) (8% Yield) (6% Yield)
---------- ------------ ---------- ----------
Annual
Deposit: $1,440 $ 2,000 $ 1,440 $ 1,440
Withdrawal
in year: 5 $9,984 $10,564 $ 10,025 $ 10,044
10 21,289 23,970 21,693 21,559
15 36,247 43,667 37,891 36,968
20 56,038 72,609 60,746 57,590
30 116,875 177,618 140,384 122,114
PART B: IRA Used Only as a Short-Term Savings Account:
---------------------------------------------
Regular 100% Deduct- NONdeduct Municipal
Savings ible IRA */ ible IRA */ Bonds
(8% Yield) (8% Yield) (8% Yield-) (6% Yield)
---------- ------------ ----------- ----------
Annual
Deposit: $1,440 $2,000 $1,440 $ 1,440
Withdrawal
in year: 5 $9,984 $ 9,097 $ 9,833 $ 10,044
10 21,289 20,640 20,880 21,559
14 32,911 33,669 32,449 33,517
19 51,625 56,745 51,800 52,971
20 56,038 62,524 56,509 57,590
30 116,875 152,949 127,086 122,114
*/ The IRA figures take into account the impact of the 10% early
withdrawal penalty on premature distributions (see Q&A 12).
Source: Arthur Andersen & Co./The New York Times
Part A of the Table shows (using one set of assumptions) that both deductible
and nondeductible IRAs can provide a greater return than other forms of
investment, as long as no funds are withdrawn from the IRA before age 59-1/2 (so
that the 10% premature withdrawal penalty is avoided). Part B of the Table shows
(using one set of assumptions) that, even when the 10% premature withdrawal
penalty is applied, both deductible and nondeductible IRAs can provide a greater
return than other
6
<PAGE>
forms of investment, but only if the contributions are held in the IRA for a
sufficient number of years.
8. May an individual revoke a BB&K IRA?
Yes. An individual has seven days after executing .his or her IRA
application to revoke the IRA and have all amounts paid with the IRA application
returned. The request must be made in writing and must be delivered or mailed
within seven days after the date the IRA is established to:
AIM Financial Services, Inc. as Agent for
U.S. Trust Company, Custodian
P.O. Box 2798
Boston, MA 02208-9990.
9. When may retirement benefits be withdrawn from an IRA?
Withdrawals may begin without penalty at any time after age 59-1/2.
Withdrawals must begin on or before the April 1 that next follows the year in
which the individual attains age 70-1/2.
10. How may retirement benefits be withdrawn?
Retirement benefits may be withdrawn either in a lump sum or in
substantially equal monthly, quarterly or annual installments. If the
installment method is selected, installment distributions may be spread over a
time period which does not exceed one of the following:
(a) The individual's lifetime; or
(b) The combined lifetimes of the individual and his or her spouse; or
(c) A specified period not extending beyond the individual's life
expectancy or the combined life expectancy of the individual and his or her
spouse.
If the installment method is used, the entire value of the IRA must be
distributed within the time period selected.
If distributions have begun and are being made over a specified
period, but the individual dies before the full value of the IRA has been
distributed, the distributions may simply be continued, or the remaining value
of the IRA may be paid in a single lump sum. If distributions have not begun,
the remaining value of the IRA must be distributed within five
7
<PAGE>
years after the individual's death, or the death of his or her surviving spouse.
If distributions have begun to the beneficiary, but the beneficiary
dies, the distributions may be continued over the specified period, or the
remaining value of the IRA may be paid in a single lump sum. If both the
individual and the beneficiary die before distributions have begun, the
remaining value of the IRA must be distributed within five years after the
surviving beneficiary's death, using one of the methods listed above.
11. What if the full value of an IRA is not distributed in a lump sum
or in installments in the minimum required amounts?
If the actual distributions from an IRA are less than the minimum
amounts (described in Q&A 10), a 50% excise tax is imposed on the amount by
which the minimum required distribution exceeds the amount actually distributed
for the year the individual reaches age 70-1/2 and for any year after that.
12. May benefits be withdrawn before age 59-1/2?
In the event of death or disability, withdrawals may be made from an
IRA without penalty before age 59-1/2. As with any withdrawal, however, the full
amount withdrawn is includible in the gross income of the recipient for Federal
income tax purposes, except to the extent that a portion of the withdrawal is
attributable to prior nondeductible IRA contributions (see Q&A 6). Withdrawals
made before age 59-1/2 (premature distributions), for any reason other than the
death or disability of the individual, are not only includible for Federal
income tax purposes in the gross income of the recipient for the year withdrawn
(but see Q&A 6), but are also subject to a 10% penalty tax.
13. May an individual borrow from his or her IRA or pledge it as
collateral for a loan?
No. Borrowing from an IRA is a prohibited transaction and causes
disqualification of the entire IRA. The total value of the IRA is includible in
gross income and subject to Federal income tax for the year in which the
prohibited transaction occurs. In addition, if a loan is made prior to age
59-1/2, the amount borrowed is treated as a premature distribution. Moreover, if
a portion of an IRA is pledged as collateral or security for a loan, the amount
pledged is treated as a distribution and is taxed accordingly.
8
<PAGE>
14. How are IRA distributions taxed?
Unless rolled over to another IRA or eligible retirement plan within
60 days from receipt (see Q&A 16), all distributions from an IRA are fully
taxable to the recipient at ordinary income rates in the year received, except
to the .extent that a portion of the withdrawal is attributable to prior
nondeductible IRA contributions (see Q&A 6). The special treatment for taxing
lump sum distributions from certain qualified plans, including the special
five-year averaging treatment available under Section 402(e) of the Code, does
not apply to distributions from an IRA.
15. What is an excess contribution, and how is it taxed?
An excess contribution is the amount by which the total contribution
(whether or not deductible) an individual makes to all IRAs for a year exceeds
the lesser of $2,000 or 100% of earned income or compensation (see Q&A 2).
"Rollover" contributions are an exception (see Q&A 16). The amount of any excess
contribution, plus any earnings on such excess, must be withdrawn by an
individual before the date a Federal income tax return is filed by the
individual for the year for which the excess contribution was made. If an excess
contribution remains in an IRA and is not timely withdrawn, a 6% nondeductible
excise tax is imposed on the excess contribution for each and every year in
which the excess remains in the IRA. Excess contribution penalties must be
reported by the individual IRA beneficiary on IRS Form 5329. If the excess
contribution is removed before the tax return i filed for the year for which the
contribution was made, any earnings from the excess contribution must also be
removed and included in the individual's gross income for that year. These
earnings may be subject to the 10% early withdrawal tax penalty (see Q&A 12).
16. What are the IRA "rollover" rules?
An individual may "roll over" (i.e., transfer) to an IRA, and thereby
avoid any current Federal income tax liability on, (1) a distribution he or she
receives from another IRA, or (2) a lump sum distribution (representing at least
50% of the individual's accrued benefit) he or she receives from a tax-qualified
pension, profit-sharing or Keogh plan or a Section 403(b) Plan, provide that the
transfer is made within 60 days after the date of receipt. The following special
rules apply to "rollover" IRAs:
(a) If property other than money is distributed, the same property or
the proceeds received from the
9
<PAGE>
liquidation of the property must be transferred to the 11rollover" IRA.
Certain limitations apply regarding the property that may be transferred
into any BB&K IRA.
(b) A tax-free "rollover" is allowed only once during any 12-month
period. Tax-free transfers may be made directly between IRA custodians more
frequently.
(c) Any lump sum distribution transferred from a tax-qualified plan to
a "rollover" IRA may not include nondeductible voluntary contributions made
to the qualifiea plan.
(d) The assets of a "rollover" IRA should ordinarily not be commingled
with a contributory IRA. The assets of a "rollover" IRA established with
money or property an individual received from a tax-qualified plan or a
Section 403(b) Plan may subsequently be transferred, without any current
tax liability, to another such plan for which the individual may become
eligible. However, that type of "rollover" transfer cannot be made if any
IRA contributions (whether or not deductible) were made to the "rollover"
IRA directly by the IRA beneficiary.
The rules on IRA "rollovers" are complicated, and not all of those rules are
described above. Therefore, it is suggested that you consult your tax adviser if
you believe you may qualify for an IRA "rollover."
17. Can a husband and wife each make IRA contributions?
Yes. Anyone who has received earned income or compensation from
employment (or self-employment) may contribute to an IRA. The limitation on the
amount that may be contributed (see Q&A 2) is computed separately for each
spouse. However, the maximum amount of the IRA deduction available to either
spouse is affected by whether the couple files a joint return or separate
returns and whether either spouse is an "active participant" in an
employer-sponsored retirement plan and (if so) the total amount of couple's
combined adjusted gross income ("AGI") (see Q&A 3 and 4).
18. If one spouse contributes to an IRA and the other spouse doesn't
work, can the working spouse contribute to a separate IRA on
behalf of the nonworking spouse?
Yes, but only if the couple files a joint return. The total amount
that may be contributed to both IRAs is limited to the lesser of $2,250 or 100%
of the working
10
<PAGE>
spouse's earned income or compensation. Even if both spouses are employed (or
self-employed), contributions may be made under this rule for spousal IRAs, but
the maximum IRA deduction shown on the couple's joint return must be limited to
$2,250 in such a case. In addition, while equal amounts do not have to be
contributed to each IRA, the total amount .contributed to either IRA cannot
exceed $2,000. (The BB&K IRA does not accept contributions of less than $2,000.)
Finally, if either spouse is an "active participant" in an employersponsored
retirement plan, the maximum amount of the spousal IRA deduction is $2,250 if
the couple's combined AGI is $40,000 (or less), between $2,250 and $200 if their
combined AGI is between $40,000 and $50,000, and $0 if their combined AGI
exceeds $50,000 (see Q&A 4).
19. Has the IRS approved the BB&K IRA?
Yes. The BB&K IRA Custodial Agreement Uses the form prescribed by the
IRS. Thus, Articles I through VIII of the BB&K IRA Agreement are automatically
approved by the IRS. The IRS approval, however, does not represent a
determination as to the merits of the Agreement, or any investments made with
assets of the BB&K IRA.
20. What are the costs associated with a BB&K IRA?
A set-up fee of $________ is currently charged by U.S. Trust Company,
as Custodian, when a BB&K IRA is established. An annual maintenance fee is due
on the anniversary date of the IRA, and transaction and other fees may be
imposed by a BB&K or others in connection with the processing of various
transactions or the registration of investments transferred in kind. Refer to
the BB&K IRA Fee Schedule for current charges and billing procedures.
BB&K may waive any portion of its fees on a uniform basis for
designated classes of depositors or allocate any portion to other persons
providing services. Refer to the appropriate prospectus of any series of the
BB&K Fund Group for the sales charges and expenses associated with each purchase
of shares of that series.
21. How are earnings on the BB&K IRA computed?
Dividends or distributions, if any, from each series of the BB&K Fund
Group are declared and paid according to the policy stated in the current
prospectus for such series. There is no fixed distribution rate from any
investment in shares of any series of the BB&K Fund Group, and there car be no
assurance as to the payment of any dividend or distribution, or the appreciation
of any such investment.
11
<PAGE>
Furthermore, growth in the value of investments made by the BB&K IRA is neither
guaranteed nor projected.
22. How can additional information on the BB&K IRA be obtained?
Additional information may be obtained from the BB&K Fund Group at
(415) 571-5800. Additional general information concerning IRAs may be obtained
from any district office of the IRS. For further information regarding charges,
dividends, distributions, investment objectives, policies and restrictions
applicable to each series of the BB&K Fund Group which may be applicable to BB&K
IRAs, refer to the current prospectus of the appropriate series.
12
<PAGE>
OHS DRAFT
11/22/86
BB&K IRA
DISCLOSURE STATEMENT FOR
CONTRIBUTIONS REPORTED ON TAX RETURNS FOR 1986
The following information concerning the BB&K Fund Group Individual
Retirement Custodial Account (the 11BB&K IRA") is provided pursuant to the
requirements of Section 408(i) of the Internal Revenue Code of 1986 and the
regulations thereunder (the "Code").
1. How does an IRA work?
An individual may make contributions to his or her IRA during his or
her working career. The contributions are tax deductible. Any income earned or
gain realized on the contributions is not subject to income tax until withdrawn.
When the individual retires, amounts are withdrawn from the IRA as retirement
benefits. At that time, amounts withdrawn are fully taxable and includible in
the gross income of the individual for the year in which the amounts withdrawn
are received.
2. How much may be contributed to an IRA and deducted?
The cash contributed each year by an individual to an IRA is tax
deductible (regardless of marital status and community property laws) from gross
income up to an amount equal to the lesser of $2,000 or 100% of earned income or
compensation if the contribution is made during, or on or before April 15 of the
year following, the year for which it is made. Moreover, the deduction for an
IRA is allowable whether or not an individual itemizes deductions. However,
contributions to an IRA are not allowed during or after the tax year in which
the individual attains age 70-1/2.
3. When do the new rules take effect?
The Tax Reform Act of 1986 imposes new restrictions on IRA deductions.
The new rules do not apply to IRA contributions which are made for 1986 and
contributed on or before April 15, 1987. An IRA contribution postmarked after
April 15, 1987, will be subject to new restrictions which are NOT described in
this disclosure statement.
<PAGE>
OHS DRAFT
11/22/86
4. May an individual revoke a BB&K IRA?
Yes. An individual has seven days after executing his or her IRA
application to revoke the IRA and have all amounts paid with the IRA application
returned. The request must be made in writing and must be delivered or mailed
within seven days after the date the IRA is established:
AIM Financial Services, Inc. as Agent for
U.S. Trust, Custodian
P.O. Box 2798
Boston, MA 02208-9990.
5. When may retirement benefits be withdrawn from an IRA?
Withdrawals may begin without penalty at any time after age 59-1/2.
Withdrawals must begin on or before the April 1 that next follows the year in
which the individual attains age 70-1/2.
6. How may retirement benefits be withdrawn?
Retirement benefits may be withdrawn either in a lump sum or in
substantially equal monthly, quarterly or annual installments. If the
installment method is selected, installment distributions may be spread over a
time period which does not exceed one of the following:
(a) The individual's lifetime; or
(b) The combined lifetimes of the individual and his or her spouse; or
(c) A specified period not extending beyond the individual's life
expectancy or the combined life expectancy of the individual and his or her
spouse.
If the installment method is used, the entire value of the IRA must be
distributed within the time period selected.
If distributions have begun and are being made over a specified
period, but the individual dies before the full value of the IRA has been
distributed, the distributions may simply be continued, or the remaining value
of the IRA may be paid in a single lump sum. If distributions have not begun,
the remaining value of the IRA must be distributed within five years after the
individual's death, or the death of his or her surviving spouse.
2
<PAGE>
OHS DRAFT
11/22/86
If distributions have begun to the beneficiary, but the beneficiary
dies, the distributions may be continued over the specified period, or the
remaining value of the IRA may be paid in a single lump sum. If both the
individual and the beneficiary die before distributions have begun, the
remaining value of the IRA must be distributed within five years after .the
surviving beneficiary's death using one of the methods listed above.
7. What if the full value of an IRA is not distributed in a lump sum
or in installments in the minimum required amounts?
If actual distributions from an IRA are less than the minimum amounts
(described in Q&A 6), a 50% excise tax is imposed on the amount by which the
minimum required distribution exceeds the amount actually distributed for the
year the individual reaches age 70-1/2 and for any year after that.
8. May benefits be withdrawn before age 59-1/2?
In the event of death or disability, withdrawals may be made from an
IRA without penalty before age 59-1/2. As with any withdrawal, however, the full
amount withdrawn is includible in the gross income of the recipient for Federal
income tax purposes. Withdrawals made before age 59-1/2 (premature
distributions), for any reason other than the death or disability of the
individual, are not only includible for Federal income tax purposes in the gross
income of the recipient for the year withdrawn, but are also subject to a 10%
penalty tax.
9. May an individual borrow from his or her IRA or pledge it as
collateral for a loan?
No. Borrowing from an IRA is a prohibited transaction and causes
disqualification of the entire IRA. The total value of the IRA is includible in
gross income and subject to Federal income tax for the year in which the
prohibited transaction occurs. In addition, if a loan is made prior to age
59-1/2, the amount borrowed is treated as a premature distribution. Moreover, if
a portion of an IRA is pledged as collateral or security for a loan, the amount
pledged is treated as a distribution and is taxed accordingly.
10. How are IRA distributions taxed?
All distributions from an IRA are fully taxable to the recipient at
ordinary income rates in the year received,
3
<PAGE>
OHS DRAFT
11/22/86
unless rolled over to another IRA or eligible retirement plan within 60 days
from receipt (see Q&A 12). The special treatment for taxing lump sum
distributions from certain qualified plans, including the capital gains and
special 10-year (or five-year) averaging treatments available under Section
402(a)(2) and (e) of the Code, do not apply to -distributions from an IRA.
11. What is an excess contribution, and how is it taxed?
An excess contribution is the amount by which the total contribution
an individual makes to an IRA for a year exceeds the lesser of $2,000 or 100% of
earned income or compensation (see Q&A 3). "Rollover" contributions are an
exception (see Q&A 12). The amount of any excess contribution, plus any earnings
on such excess, must be withdrawn by an individual before the date a Federal
income tax return is filed by the individual for the year for which the excess
contribution was made. If an excess contribution remains in an IRA and is not
timely withdrawn, a 6% nondeductible excise tax is imposed on the excess
contributions for each and every year in which the excess remains in the IRA.
Excess contribution penalties must be reported by the participant on IRS Form
5329. If the excess contribution is removed before the tax return is filed for
the year for which the contribution was made, any earnings from the excess
contribution must also be removed and included in the individual's gross income
for that year. These earnings may be subject to the 10% early withdrawal tax
penalty (see Q&A 8).
12. What are the IRA "rollover" rules?
An individual may "roll over" (i.e., transfer) to an IRA, and thereby
avoid any current Federal income tax liability on, (1) a distribution he or she
receives from another IRA, or (2) a lump sum distribution (representing at least
50% of the individual's accrued benefit) he or she receives from a tax-qualified
pension, profit-sharing or Keogh plan or a tax sheltered annuity contract or
custodial account under Section 403(b) of the Code (a "Section 403(b) Plan"),
provide that the transfer is made within 60 days after the date of receipt. The
following special rules apply to 9.1rollover" IRAs:
(a) If property other than money is distributed, the same property or
the proceeds received from the liquidation of the property must be
transferred to the 11rollover" IRA. Certain limitations apply regarding the
property that may be transferred into any BB&K IRA.
4
<PAGE>
OHS DRAFT
11/22/86
(b) A tax-free "rollover" is allowed only once during any 12-month
period (although tax-free transfers may be made directly between IRA
custodians more frequently).
(c) Any lump sum distribution transferred from a tax-qualified plan to
a "rollover" IRA may not include nondeductible voluntary contributions made
to the qualified plan.
(d) The assets of a "rollover" IRA should ordinarily not be commingled
with a contributory IRA. The assets of a "rollover" IRA established with
money or property an individual received from a qualified plan or a Section
403(b) Plan may subsequently be transferred, without any current tax
liability, to another such plan for which the individual may become
eligible. However, that type of "rollover" transfer cannot be made if any
IRA contributions were made to the "rollover" IRA.
The rules on IRA "rollovers" are complicated, and it is suggested that you
consult your tax adviser if you believe you may qualify for an IRA "rollover."
13. Has the Internal Revenue Service approved the BB&K IRA?
Yes. The BB&K IRA Custodial Agreement uses the form prescribed by the
Internal Revenue Service ("IRS"). Thus, Articles I through VIII of the BB&K IRA
Agreement are automatically approved by the IRS. The IRS approval, however, does
not represent a determination as to the merits of the Agreement, or any
investments made with assets of the BB&K IRA.
14. What are the costs associated with a BB&K IRA?
A set-up fee of $________ is currently charged by U.S. Trust Company,
as Custodian, when a BB&K IRA is established. An annual maintenance fee is due
on the anniversary date of the IRA, and transaction and other fees may be
imposed by a BB&K or others in connection with the processing of various
transactions or the registration of investments transferred in kind. Refer to
the BB&K IRA Fee Schedule for current charges and billing procedures.
BB&K may waive any portion of its fees on a uniform basis for
designated classes of depositors or allocate any portion to other persons
providing services. Refer to the appropriate prospectus of any series of the
BB&K Fund Group for the sales charges and expenses associated with each purchase
of shares of that series.
5
<PAGE>
OHS DRAFT
11/22/86
15. How are earnings on the BB&K IRA computed?
Dividends or distributions, if any, from each series of the BB&K Fund
Group are declared and paid according to the policy stated in the current
prospectus for such series. There is no fixed distribution rate from any
investment in .shares of any series of the BB&K Fund Group, and there can be no
assurance as to the payment of any dividend or distribution, or the appreciation
of any such investment. Furthermore, growth in the value of investments made by
the BB&K IRA is neither guaranteed nor projected.
16. How can additional information on the BB&K IRA be obtained?
Additional information may be obtained from the BB&K Fund Group at
(415) 571-5800. Additional general information concerning IRAs may be obtained
from any district office of the IRS. For further information regarding charges,
dividends, distributions, investment objectives, policies and restrictions
applicable to each series of the BB&K Fund Group which may be applicable to BB&K
IRAs, refer to the current prospectus of the appropriate series.
6
<PAGE>
BB&K IRA APPLICATION
- --------------------------------------------------------------------------------
BB&K FUND GROUP
- --------------------------------------------------------------------------------
How to Establish a BB&K Individual Retirement Custodial Account
- ---------------------------------------------------------------
Please read the attached Disclosure Statement and BB&K Individual
Retirment Custodial Account (11BB&K IRA") Agreement and read the prospectus for
the applicable series of the BB&K Fund Group. Then complete and sign this BB&K
IRA Application. Mail this Application, your checks and any additional forms or
documents required to:
AIM FINANCIAL SERVICES, INC., as Agent
for U.S. Trust Company, Custodian
P.O. Box 2798, Boston, MA 02208-9990
For assistance, call the BB&K Fund Group at (415) 571-5800.
- --------------------------------------------------------------------------------
(Please type or print clearly)
1. TYPE OF IRA. What type of IRA are you opening? (Select one)
[ ] INDIVIDUAL ACCOUNT
[ ] SPOUSAL ACCOUNT
[ ] ROLLOVER ACCOUNT
(See Special Notes)
[ ] TRANSFER IRA
(Complete the BB&K IRA Transfer Request)
[ ] SIMPLIFIED EMPLOYEE PENSION (SEP)
(Requires additional form - See Special Notes)
Special Notes:
o If you are transferring from another IRA, you must complete the BB&K
Transfer Request.
o If you are establishing a Rollover Account and you wish to preserve the
option of rolling it over in the future to another qualified plan, but you
also intend to make regular IRA contributions, you must establish two
accounts by completing two BB&K IRA Applications.
o If you are establishing a SEP Account, please complete IRS Form 5305-SEP
and submit a copy with your BB&K IRA Application.
- --------------------------------------------------------------------------------
<PAGE>
2. ACCOUNT REGISTRATION. Please tell us how you would like your name and
address to appear on your BB&K IRA account. (Please complete all items)
Your Name Phone No.
____________________________________ ___________________________________
Street Address
________________________________________________________________________________
City State Zip Code
____________________________________ ___________________________________
Social Security Number Date of Birth
____________________________________ ___________________________________
- --------------------------------------------------------------------------------
3. INVESTMENT INSTRUCTIONS.
Prospectuses are available from the BB&K Fund Group. Please read them
carefully before you invest.
Please indicate the dollar amount of your direct contribution and the
amount of any cash rollover or transfer you are making to your IRA. The maximum
annual contribution is $2,000 for a regular IRA and the lesser of $30,000 or 15%
of earned income for a SEP Account.
[ ] Contribution to Individual
Retirement Account (IRA) $____________________
[ ] Contribution to Simplified
Employee Pension Account (SEP) $____________________
[ ] Rollover (complete BB&K IRA Transfer
Request, if all or a portion of
the rollover is not cash) $____________________
[ ] Transfer (Complete BB&K IRA
Transfer Request) $____________________
o Total amount of checks enclosed. (Please
make your check payable to AIM Financial
Services, Inc. as Agent for U.S. Trust) $____________________
o Total amount of separate check enclosed
for IRA Establishment Fee (see Section 6,
SIGNATURE AND FEE SCHEDULE) (Please make
your check payable to AIM Financial
Services, Inc.) $____________________
- --------------------------------------------------------------------------------
2
<PAGE>
4. INVESTMENT INSTRUCTIONS:
-----------------------
A. Investment Selection: Please indicate the exact name, sponsor and
dollar amount of the series of the BB&K Fund Group you wish to purchase. Refer
to its Prospectus for minimum initial investment purchase requirements, any
applicable suitability standards or other restrictions. Be sure to use the
precise title of the investment. Unless otherwise indicated, funds accompanying
this BB&K IRA Application will be used to purchase the investments in the order
in which they are listed.
*/ If investment or distribution instructions cannot be carried out for any
reason, (e.g., complete instructions or insufficient funds for minimum
investment requirements), the funds will be deposited in a money market
deposit account in a bank or savings and loan the deposits of which are
federally insured.
BB&B FUND GROUP SERIES AMOUNT
---------------------- ------
___________________________________________________ $____________
___________________________________________________ $____________
___________________________________________________ $____________
___________________________________________________ $____________
$____________
Total Amount of
Investments $____________
- --------------------------------------------------------------------------------
5. BENEFICIARY DESIGNATION.
Primary Beneficiary: Contingent Beneficiary:
- -------------------- -----------------------
I hereby designate the following named In the event the primary
individual(s) to receive equally beneficiary(ies) does(do) not survive
(unless otherwise specified) all me, all such amounts shall be paid
amounts payable from my account by equally to the beneficiaries listed
reason of my death: below (unless otherwise specified) or
to the issue of any such deceased
beneficiary by right of
representation.
[Beneficiary Designation continues on following page]
3
<PAGE>
Primary Beneficiary(ies) Contingent Beneficiary(ies)
- ------------------------ ---------------------------
Name Percentage Name Percentage
______________________________________ ______________________________________
Address Address
______________________________________ ______________________________________
Relationship Birthdate Relationship Birthdate
______________________________________ ______________________________________
______________________________________ ___________________________, 19__
Spouse's signature */ Date
*/ Spouse's signature required in community property state if you are
designating someone other than your spouse as Primary Beneficiary.
If there are additional beneficiaries, please attach a separate page with
the required information, designating clearly whether they are primary or
contingent.
- --------------------------------------------------------------------------------
6. SIGNATURE. (Please read carefully, sign and date)
I hereby establish a BB&K Individual Retirement Custodial Account (IRA)
and appoint U.S. Trust Company as Custodian. I have read the Disclosure
Statement and the BB&K IRA Custodial Agreement. I understand that the Disclosure
Statement and the Custodial Agreement are parts of this Application, and I agree
to their terms.
I understand that certain fees will be charged subject to the posted fee
and collection schedule. If any fees owing are not paid directly by me when due,
I understand that U.S. Trust Company may collect those fees by deducting them
from my account in this order: (a) any uninvested cash; (b) money market deposit
account; and (c) any series of the BB&K Fund Group. If these amounts are
insufficient, the fee will be deducted when cash becomes available within my
account from distributions or future contributions.
I acknowledge that I have received and read the current prospectus for
each investment option I have selected and I understand that U.S. Trust Company
makes no representation as to the wisdom or suitability of any investment
selected by me. I further confirm that I meet the investor suitability
standards, if any, for each investment option I have selected and am aware that
I may be subject to minimum purchase limitations on initial and subsequent
purchase amounts and other restrictions specified in the prospectus for each. I
direct that all contributions to my BB&K IRA be invested as specified by this
Application and that interest, dividends and distributions be directed as
specified herein.
I understand that, if I am establishing a Rollover IRA, by signing below I
certify that I irrevocably elect to treat this contribution as a rollover
4
<PAGE>
contribution. I also understand that any amounts I withdraw before I reach age
59-1/2 will be subject to income taxes and penalties, unless I have become
disabled or transfer the funds to another IRA within 60 days of receipt.
__________________________________________ ____________________, 19__
Signature of Participant Date
- --------------------------------------------------------------------------------
7. ACCEPTANCE.
We hereby accept the individual's appointment of U.S. Trust Company as
Custodian under the BB&K IRA Custodial Agreement.
__________________________________________ ____________________, 19__
U.S. Trust Authorized Signature Date
- --------------------------------------------------------------------------------
CUSTODIAN USE ONLY
[space for ADP, audit, etc. entries]
5
<PAGE>
BB&K IRA SUBSEQUENT INVESTMENT FORM
- --------------------------------------------------------------------------------
BB&K IRA No.________________
o If you have any questions about your account or need assistance in
completing this form, please call:
BB&K Fund Group at (415) 571-5800.
o Mail this Subsequent Investment Form, your check(s) and any additional
forms or documents required to:
AIM Financial Services, Inc. as Agent
for U.S. Trust Company, Custodian
P.O. Box 2798, Boston, MA 02208-9990
- --------------------------------------------------------------------------------
1. ACCOUNT INFORMATION
-------------------
Name___________________________________ Social Security Number__________________
Street Address__________________________________________________________________
__________________________________________________________________
City___________________________________ State_____________ Zip Code_____________
[__] Check if this is a new address.
- --------------------------------------------------------------------------------
2. CONTRIBUTION INFORMATION
------------------------
Please indicate the dollar amount of your contribution and the amount of
any cash rollover you are making to your BB&K IRA. The maximum annual
contribution is $2,000 for a regular IRA and the lesser of $30,000 or 15% of
earned income for a SEP Account.
o Contribution to Individual Retirement
Account (IRA) $_____________
o Contribution to Simplified Employee
Pension Account (SEP) $_____________
o Rollover (complete BB&K IRA
Transfer Request, if all or a
portion of rollover is not cash) $_____________
o Transfer (complete BB&K IRA
Transfer Request) $_____________
Total amount of checks enclosed $_____________
Please make your check(s) payable to: DO NOT SEND CASH.
- ------------------------------------- -----------------
AIM Financial Services, Inc., as Agent
--------------------------------------
for U.S. Trust Company, Custodian.
----------------------------------
<PAGE>
3. INVESTMENT INSTRUCTIONS
-----------------------
A. Please redeem shares from my mutual fund(s) in the amounts
specified below:
BB&K FUND GROUP SERIES AMOUNT
---------------------- ------
______________________________________________ $______________
______________________________________________ $______________
______________________________________________ $______________
______________________________________________ $______________
______________________________________________ $______________
TOTAL: $______________
B. Please invest my contribution(s) and/or proceeds from the
redemption listed above as specified below:
Please indicate the exact name of the BB&K Fund Group series and dollar
amount to be invested in the series you list. Refer to its prospectus
for minimum initial purchase requirements, any applicable suitability
standards or other restrictions. Be sure to use the precise title of the
investment. FAILURE TO PROVIDE THESE WILL DELAY PROCESSING YOUR ORDER.
Unless otherwise indicated, funds accompanying this Subsequent
Investment Form will be used to purchase the investments in the order
indicated.*/
BB&K FUND GROUP SERIES AMOUNT
---------------------- ------
______________________________________________ $______________
______________________________________________ $______________
______________________________________________ $______________
______________________________________________ $______________
______________________________________________ $______________
TOTAL: $______________
Series dividends and capital gain distributions will be reinvested in
additional shares of the same series.
*/ If the above investment or distribution instructions cannot be carried
out for any reason (e.g., incomplete instructions, insufficient funds
for minimum investment requirements) the funds will be deposited in a
money market deposit account in a bank or savings and loan the deposits
of which are federally insured.
4. SIGNATURE
---------
I acknowledge that I have received and read the current Prospectus, if
any, for each of the investment options I have selected and I understand that
2
<PAGE>
U.S. Trust Company makes no representation as to the wisdom or suitability of
any investment selected by me. I further confirm that I meet the investor
suitability standards, if any, for each investment I have selected and am aware
that I may be subject to minimum purchase limitations on initial and subsequent
purchase amounts and other restrictions specified in the Prospectus for each. I
understand that the terms and conditions of the Disclosure Statements and
Custodial Agreement I received and read when establishing my acc * ount, as they
may have been amended from time to time, apply to the transactions and
instructions on this Subsequent Investment Form.
X_______________________________________ _________________, 19__
Signature of Participant Date
- --------------------------------------------------------------------------------
CUSTODIAN USE ONLY
[space for ADP, audit, etc. entries]
3
<PAGE>
BB&K IRA TRANSFER REQUEST
- --------------------------------------------------------------------------------
How to Transfer Assets from an existing Individual Retirement Account
into a BB&K Fund Group Individual Retirement Custodial Account ("BB&K IRA")
- ---------------------------------------------------------------------------
Please complete the BB&K IRA Transfer If you have any questions about the
Request and the BB&K IRA Application BB&K IRA Transfer Request or the BB&K
or Subsequent Investment Form, as IRA Application, please call the BB&K
applicable. Fund Group at (415) 571-5800.
Mail this Transfer Request, your check and the BB&K IRA Application or
Subsequent Investment Form, plus any other f-orms or documents required to:
AIM Financial Services, Inc.
as Agent for U.S. Trust Company, Custodian
P.O. Box 2798
Boston, MA 02208-9990
- --------------------------------------------------------------------------------
(Please type or print clearly)
1. ACCOUNT INFORMATION.
Your Name Phone No.
______________________________________ ______________________________________
Street Address
________________________________________________________________________________
City State Zip Code
______________________________________ ______________________________________
Social Security Number Date of Birth
______________________________________ ______________________________________
________________________________________________________________________________
2. CURRENT CUSTODIAN.
Name of Current Custodian
________________________________________________________________________________
Address
________________________________________________________________________________
City State Zip Code
______________________________________ ______________________________________
<PAGE>
3. CURRENT ACCOUNT REGISTRATION.
Account Name Account Number
___________________________________________________ _________________________
(Check one box only)
This is a [_] Transfer from another IRA directly to the BB&K IRA.
[_] "Rollover" of a distribution received from another IRA or
from a qualified pension, profit-sharing or Keogh plan to
the BB&K IRA.
- --------------------------------------------------------------------------------
4. TRANSFER INSTRUCTIONS. Please indicate which transfer options you wish
to select:
[_] Transfer the cash balance of $__________________ in my account to
U.S. Trust Company, Custodian.
[_] Liquidate and transfer the following to U.S. Trust Company,
Custodian:
Liquidate Date
Name of Investment Immediately At Maturity of Maturity
------------------ ------------------------ -----------
________________________________ [_] [_] ___________
________________________________ [_] [_] ___________
________________________________ [_] [_] ___________
________________________________ [_] [_] ___________
[_] Transfer units/shares of the following IN KIND */ to U.S. Trust
Company, Custodian:
BB&K FUND GROUP SERIES SHARES/$
____________________________________________________ __________________
____________________________________________________ __________________
____________________________________________________ __________________
____________________________________________________ __________________
____________________________________________________ __________________
TOTAL: (specify estimated total dollar amount to be
transferred, including assets to be liquidated) $__________________
*/ Transfers IN KIND are subject to acceptance by the Custodian.
- --------------------------------------------------------------------------------
2
<PAGE>
5. AUTHORIZATION FOR THE TRANSFER OF ASSETS.
To Current Custodian:
I authorize you to transfer [ ] all or [ ] part of my account according
to the instructions shown above to the InTi7vidual Retirement Account I have
established with U.S. Trust Company, Custodian. If this is a rollover from a
qualified pension, profit-sharing or Keogh plan, I hereby appoint U.S. Trust
Company, Custodian, as my agent to receive the distribution and to effect the
rollover to the IRA identified. Please make all checks payable to:
AIM Financial Services, Inc. as Agent for U.S. Trust Company,
Custodian of BB&K IRA of:
___________________________________________________.
(Name of Participant)
X__________________________________________ ________________, 19__
Signature of Participant Date
Signature guarantee (if required by current custodian) Date
________________________________________________________ ____________________
________________________________________________________________________________
6. LETTER OF ACCEPTANCE. (for U.S. Trust Company use only)
To Current Custodian:
The above-named individual has adopted an Individual Retirement Account
(IRS Form 5305-A) for which U.S. Trust Company (EIN ___-_______________) acts as
Custodian. We hereby accept the individual's appointment of U.S. Trust as
Custodian under the BB&K Individual Retirement Account and Custodial Agreement.
Authorized Signature Date
________________________________________________________ ____________________
Please forward the check(s) and lot shares transferred in kind with the
copy of this letter which is enclosed to:
AIM Financial Services, Inc. as Agent for U.S. Trust Company, Custodian
P.O. Box 2798, Boston, MA 02208-9990.
3
<PAGE>
BB&K IRA FEE SCHEDULE
(Effective _______________, 1986)
SET-UP FEE $XX
ACCOUNT ANNUAL MAINTENANCE FEE $XX
DISTRIBUTION FEES -- charged to the account,
unless paid for separately by the participant
Each non-systematic withdrawal $XX
Each premature distribution $XX
Each refund of an excess contribution $XX
RE-REGISTRATION OF INVESTMENTS
Any additional expenses incurred by the Custodian to
re-register investments will be charged to the account,
unless paid for separately by the participant.
AVAILABLE INVESTMENTS UNDER THE BB&K IRA
Any series of the BB&K Fund Group.
BILLING PROCEDURES
The Account Annual Maintenance Fee and Distribution Fees
are due 12 months from the date the account is opened and
on each subsequent anniversary date. You will be billed
for the fee(s) one month before the due date at the time
incurred. If paid by separate check, the fees may be
deductible for income tax purposes.
Fee(s) not paid when due will be collected from your IRA,
by deducting from your account in the following order:
(a) any uninvested cash; (b) money market deposit
account; and (c) any series of the BB&K Fund Group.
If amounts are insufficient, the fee will be deducted
when cash becomes available within the account from
distributions or future contributions.
Additional fees and charges may be associated with
various investments. Read the prospectus for each series
of the BB&K Fund Group before authorizing an investment.
GENERAL INFORMATION
To request information or assistance call Bailard,
Biehl & Kaiser at (415) 571-5800
4
<PAGE>
BB&K CUSTODIAL ACCOUNT IRA
--------------------------
(As required under Section 408(a) of the Internal Revenue Code, the text
of Article I through VIII below and the Section entitled "Instructions"
represent a duplicate of Form 5305-A (November 1983), Department of
Treasury, Internal Revenue Service.)
DO NOT file this form with the Internal Revenue Service.
--------------------------------------------------------
THIS AGREEMENT, entered into on the date stated in the IRA
Application attached hereto and incorporated herein by this reference (the
"Application"), by and between the individual depositor identified in the
Application (the "Depositor"), whose date of birth, Social Security number, and
present residence address are stated in the Application, and U.S. Trust Company
of New York (the "Custodian"), having its principal place of business at 45 Wall
Street, New York, NY 10005.
WHEREAS, the Depositor desires to provide for his or her
retirement and for the support of his or her beneficiaries upon his or her
death;
WHEREAS, to accomplish this purpose, the Depositor desires to
establish an Individual Retirement Account, as described in Section 408(a) of
the Internal Revenue Code of 1986 or any successor statute (the "Code"); and
WHEREAS, a Disclosure Statement has been furnished to the
Depositor as required under the Income Tax Regulations under Section 408(i) of
the Code.
NOW, THEREFORE, the Depositor has deposited with the Custodian
the sum of money stated in the Application, in cash, and the Depositor and the
Custodian hereby agree, as follows:
ARTICLE I
---------
The Custodian may accept additional contributions, in cash,
from or on behalf of the Depositor for a tax year of the Depositor. The total
cash contributions are limited to $2,000 for the tax year unless the
contribution is a rollover contribution described in Section 402(a)(5),
402(a)(7), 403(a)(4), 403(b)(8), or 408(d)(3) of the Code or an employer
contribution to a simplified employee pension plan as described in Section
408(k).
<PAGE>
ARTICLE II
----------
The Depositor's interest in the balance in the custodial
account created by this Agreement (the "Custodial Account") is nonforfeitable.
ARTICLE III
-----------
1. No part of the assets of the Custodial Account shall be
invested in life insurance contracts, nor shall the assets of the Custodial
Account be commingled with other property except in a common trust fund or
common investment fund (within the meaning of Section 408(a)(5) of the Code).
2. No part of the assets of the Custodial Account shall be
invested in collectibles (within the meaning of Section 408(m) of the Code).
ARTICLE IV
----------
1. The Depositor's entire interest in the Custodial Account
shall be, or begin to be, distributed before the end of the tax year in which
the Depositor reaches age 70-1/2. By the end of that tax year, the Depositor may
elect, in a manner acceptable to the Custodian to have the balance in the
Custodial Account distributed in:
(a) a single-sum payment.
(b) an annuity contract that provides equal or substantially
equal monthly, quarterly, or annual payments over the life of the
Depositor. The payments must begin by the end of that tax year.
(c) an annuity contract that provides equal or substantially
equal monthly, quarterly, or annual payments over the joint and last
survivor's life of the Depositor and his or her spouse. The payments
must begin by the end of the tax year.
(d) equal or substantially equal monthly, quarterly, or annual
payments over a specified period that may not be longer than the
Depositor's life expectancy.
(e) equal or substantially equal monthly, quarterly, or annual
payments over a specified period that may not be longer than the joint
life and last survivor expectancy of the Depositor and his or her
spouse.
2
<PAGE>
Even if distributions have begun to be made under Section (d)
or (e), the Depositor may receive a distribution of the balance in the Custodial
Account at any time by giving written notice to the Custodian. If the Depositor
does not choose any of the methods of distribution described above by the end of
the tax year in which he or she reaches age 70-1/2, .distribution to the
Depositor shall be made before the end of that tax year by a single-sum payment.
If the Depositor elects as a means of distribution (b) or (c) above, the annuity
contract must satisfy the requirements of Section 408(b)(1), (3) and (4) of the
Code. If the Depositor elects as a means of distribution (d) or (e) above, the
payments that shall be made in tax years of the Depositor, beginning with the
tax year in which the Depositor reaches 70-1/2 shall be determined as follows:
(i) For the minimum annual payment, divide the Depositor's
entire interest in the Custodial Account at the beginning of each tax
year by the life expect ancy of the Depositor, the joint life and last
survivor expectancy of the Depositor and his or her spouse, or the
period specified in (d) or (e) above (whichever applies). Determine the
life expectancy in either case on the date the Depositor reaches age
70-1/2 and subtract the number of whole years passed since the
Depositor became 70-1/2.
(ii) For the minimum monthly payment, divide the ult in (i)
above by 12.
(iii) For the minimum quarterly payment, divide the result in
(i) above by 4.
2. If the Depositor dies before his or her entire interest in
the Custodial Account is distributed to him or her, or if distribution is being
made, as provided in (e) above, to his or her surviving spouse and the surviving
spouse dies before the entire interest is distributed, the entire remaining
undistributed interest shall within 5 years after the Depositor's death or the
death of the surviving spouse, be distributed to the beneficiary or
beneficiaries of the Depositor or the Depositor's surviving spouse. However, the
preceding distribution is not required if distributions over a specified term
began before the death of the Depositor and the term is for a period permitted
under (d) or (e) above and distributions continue over that period. If the
Depositor dies before his or her entire interest has been distributed and if the
beneficiary is other than the surviving spouse, no additional cash or rollover
contributions may be accepted in the Custodian Account.
3
<PAGE>
ARTICLE V
---------
Unless the Depositor dies, is disabled (as defined in Section
72(m) of the Code), or reaches age 59-1/2 before any amount is distributed from
the Custodial Account, the Custodian must receive from the Depositor a statement
.explaining how he or she intends to dispose of the amount distributed.
ARTICLE VI
----------
1. The Depositor agrees to provide the Custodian with
information necessary for the Custodian to prepare any reports required under
Section 408(i) of the Code and the related regulations.
2. The Custodian agrees to submit reports to the Internal
Revenue Service and the Depositor as prescribed by the Internal Revenue Service.
ARTICLE VII
-----------
Notwithstanding any other paragraph which may be added or
incorporated in this Agreement, the provisions of Articles I through III and
this sentence shall be controlling. Any additional paragraph that is not
consistent with Section 408(a) of the Code and related regulations shall be
invalid.
ARTICLE VIII
------------
This Agreement shall be amended from time to time to comply
with the provisions of the Code and related regulations. Other amendments may be
made by the Custodian with the consent of the Depositor.
ARTICLE IX
----------
1. ROLLOVER CONTRIBUTIONS. With respect to a rollover
contribution described in Article I of this Agreement, the Custodian shall not
accept any such contribution unless it is made in cash and/or in full and
fractional shares of any series of the BB&K Fund Group ("Series").
2. INVESTMENTS. The Depositor shall direct the Custodian with
respect to the investment of all contributions. However, such direction shall be
limited to the purchase of full and fractional shares of any Series, in any
manner in which such shares are being publicly offered. If any such direction
(a) is not received as required, or
4
<PAGE>
(b) is received but, in the opinion of the Custodian, is unclear or cannot be
executed by the Custodian, then all or a portion of the contribution may be held
uninvested without liability for loss of income or appreciation and without
liability for interest pending receipt of the direction or clarification
thereof, or the contribution may be returned. .The Depositor shall direct the
Custodian with respect to the sale or redemption of any asset held in the
Custodial Account, and the proceeds from such sale or redemption may be
reinvested, at the direction of the Depositor, in the same manner as
contributions under this paragraph 2.
3. DEPOSITOR'S ACCOUNT. More than one investment account may
be opened for the Depositor, and separate investment accounts shall be opened
with respect to each Series. These separate investment accounts, which together
with any uninvested cash held under this Agreement shall constitute the
Depositor's Custodial Account, are hereinafter individually referred to as the
"Depositor's Account." The Custodial Account shall be created and held for the
exclusive benefit of the Depositor and his or her beneficiaries.
4. INVESTMENT DISTRIBUTIONS. All dividends and other
distributions received with respect to shares of each Series held in the
Custodial Account shall be reinvested (unless received in additional shares of
the Series) in full and fractional shares of the Series which generated the
distribution and shall be credited to the Depositor's Account. Distributions
received in the form of additional shares shall be credited to the appropriate
Depositor's Account. If any dividend or distribution of a Series may be
received, at the election of the shareholder, in additional shares or in cash or
other property, the Custodian shall elect, on behalf of the Depositor, to
receive such distribution in additional shares.
5. UNINVESTABLE OR UNDIRECTED AMOUNTS. All such amounts as may
be credited to any Depositor's Custodial Account, but which cannot be invested
in shares of a Series because of applicable minimum investment requirements
and/or the absence of a controlling investment direction, shall be invested
within a reasonable period of time in a short-term federally insured deposit
account or with a bank or savings and loan association ("Deposit Account")
pending receipt of further directions from the Depositor. Notwithstanding the
foregoing, a balance of up to $50 of uninvested cash may be maintained in any
Custodial Account for administrative convenience.
6. BENEFICIARIES. The "beneficiary or beneficiaries" referred
to in Paragraph 2 of Article IV of
5
<PAGE>
this Agreement shall be that person or those persons designated by the Depositor
in writing to the Custodian on such form as the Custodian may prescribe. If no
beneficiary has been effectively designated, or if no designated beneficiary
survives the Depositor, then the beneficiary shall be the Depositor's surviving
spouse or, if none, the Depositor's estate.
7. NOTICES AND VOTING. The Custodian shall deliver to the
Depositor all documents including reports, prospectuses, financial statements,
proxies and proxy solicitation material Fund it receives relating to shares of a
Series held in the Custodial Account. The Custodian shall not vote or exercise
any other rights pertaining to any shares of a Series held in the Custodial
Account except in accordance with the written instructions of the Depositor. The
Custodian shall have no obligation to determine or to inquire into the existence
of any such voting or other right or to exercise any such right except upon
timely receipt of interest and appropriate written instruction of the Depositor.
8. FEES AND EXPENSES. The Depositor shall be charged by the
Custodian for its services under this Agreement in accordance with its current
posted fee schedule. The Custodian may substitute a different fee schedule at
any time upon 30 days' notice in writing to the Depositor. Any income taxes or
other taxes of any kind whatsoever that may be levied or assessed upon or in
respect of the Custodial Account, any transfer taxes and all sales charges
incurred in connection with the investment and reinvestment of the assets of the
Custodial Account, all other administrative expenses incurred by the Custodian
in the performance of its duties (including fees for legal services rendered to
the Custodian) with respect to the Custodial Account, and the compensation of
the Custodian shall be paid by the Depositor either from sums pai by the
Depositor and designated for such purpose, from the amount of any contribution
or distribution to be credited to any Custodial Account or, at the option of the
Custodian, by the conversion of assets of the Custodial Account into cash
sufficient to discharge such liability; but the Depositor shall remain liable
for any deficiency. The Custodian may receive a service fee from a depository
bank (provided such bank is not an affiliate of the Custodian) for any Deposit
Account for necessary administrative services that the Custodian performs in
establishing and maintaining records for such accounts.
9. CUSTODIAN'S DUTIES AND OBLIGATIONS. The Custodian shall be
under no duty except for such duties as are specifically set forth in this
Agreement. The Custodian shall have no duty (a) to ascertain whether a rollover
contribution
6
<PAGE>
described in Article I of this Agreement is properly made in accordance with
applicable provisions of the Code or any other retirement plan, account or
arrangement; (b) to determine whether the amount of any contribution exceeds the
limitation contained in Article I of this Agreement; (c) to determine or to
maintain any records whatsoever with respect to the deductibility of any
contribution made pursuant to this Agreement; (d) to ascertain whether a
distribution requested by a Depositor violates the rules contained in Paragraph
1 of Article IV of this Agreement; (e) to make distributions in the form of an
annuity contract under Article IV of this Agreement unless the premium for such
contract is at least $5,000, (f) to ascertain the fact of disability under
Article V of this Agreement; (g) to review or make suggestions with regard to
investment of the assets of the Custodial Account; or (h) to make or dispose of
any investment held in the Custodial Account (except as permitted under
Paragraph 8 of this Article IX) except in accordance with a written direction
made by the Depositor in accordance with Paragraph 2, 4 or 5 of this Article IX.
Whenever the Depositor is responsible for any direction, notice, warranty,
representation or instruction under this Agreement, the Custodian shall be
entitled to assume the truth of any statement made by the Depositor or believed
to have been made by the Depositor, in connection therewith, and the Custodian
shall be under no duty of further inquiry with respect thereto, and shall have
no liability with respect to any action taken in reliance upon the truth of such
statement. The Custodian shall have no duty to determine or to inquire into the
existence of any voting, conversion, redemption, exchange or other right
relating to any Series share and/or Deposit Account, it being understood that it
is the Depositor's responsibility to make all such determinations and to enforce
any and all such rights.
10. AMENDMENT. The Depositor hereby delegates to the Custodian
the power to amend this Agreement, and the Depositor shall be deemed to have
consented to any such amendment. The Depositor shall be furnished a copy of any
such amendment. Notwithstanding the foregoing, the Custodian may not amend this
Agreement in such manner as to permit or cause any assets of the Custodial
Account to be diverted to purposes other than for the exclusive benefit of the
Depositor and his or her beneficiaries, except to the extent that any such
amendment is necessary to conform this Agreement to any .applicable law,
governmental regulation or ruling or to satisfy the requirements of the Code.
11. TERMINATION. This Agreement shall terminate upon the
complete distribution of the Custodial Account to the Depositor or to his or her
beneficiaries or to a successor individual retirement account or annuity. The
Custodian shall
7
<PAGE>
have the right to terminate this Custodial Account upon 90 days' notice in
writing to the Depositor or, in the event of his or her death, to his or her
beneficiaries. In such event, upon expiration of such period, the Custodian
shall distribute the Depositor's Custodial Account (a) to such successor
individual retirement account or annuity as the Depositor (or .his or her
beneficiaries) shall designate, (b) in the absence of such direction, to the
Depositor, or (c) in the event of his or her death, to the beneficiaries, as
their interests shall appear.
12. RESIGNATION. The Custodian may resign at any time upon 90
days' notice in writing to the Depositor, and may be removed by the Depositor at
any time upon 90 days' notice in writing to the Custodian. Upon such resignation
or removal, the Depositor or the Custodian shall appoint a qualified successor
custodian which shall be a bank, as defined in Section 408(n) of the Code, or
another person who has satisfied the requirements of Section 408(n) of the Code
and the regulations thereunder.
13. SUCCESSOR CUSTODIAN. Upon receipt by the Custodian of
written acceptance of such appointment by the successor custodian, the Custodian
shall transfer and pay over to such successor the assets of the Depositor's
Custodial Account and all records pertaining thereto. The Custodian is
authorized, however, to reserve such sum of money or assets, as it may deem
advisable for payment of all of its fees, compensation, costs and expenses, or
for payment of any other liabilities constituting a charge on or against the
assets of the Custodial Account or on or against the Custodian with respect to
the Custodial Account; and any balance of such reserve remaining after the
payment of all such items shall be paid over to the successor custodian. If
securities are retained for the aforesaid reasons, they may be disposed of in
accordance with the provisions of Paragraph 8 of this Article IX. The successor
custodian shall hold the assets paid over to it under terms, similar to those of
this Agreement, that are consistent with Section 408(a) of the Code and the
regulations thereunder.
14. FAILURE OF APPOINTMENT. It shall be a condition'of the
removal of the Custodian that the Depositor shall have appointed a qualified
successor custodian. In the event of the resignation of the Custodian and the
failure to appoint a qualified successor, the Custodian may itself, unless it
elects to terminate this Agreement pursuant to Paragraph 11 of this Article IX,
appoint such successor, and treat the cost of such appointment as an expense
under Paragraph 8 of this Article IX.
8
<PAGE>
15. REQUIRED APPOINTMENT OF SUCCESSOR CUSTODIAN. Pursuant to
the procedures described in Paragraphs 13 and 14 of this Article IX, the
Depositor shall remove the Custodian and appoint a successor custodian upon
notification by the Commissioner of Internal Revenue that the Custodian has
failed to comply with the applicable requirements of the Section -1.401-12(n) of
the Income Tax Regulations or is not keeping such records, making such returns
or rendering such statements as are required by applicable Treasury Regulations
or by forms prescribed by the Internal Revenue Service. If a successor custodian
is appointed under this Paragraph 15, the Depositor shall no longer be a
depositor under this Agreement.
16. AGENTS. The Custodian is authorized to hire one or more
agents to perform certain of its duties under this Agreement, including persons
affiliated with itself, and may allocate any portion of the compensation
received by it (pursuant to Paragraph 8 of this Article IX) to any such agent in
payment for such services. The Depositor hereby agrees that (a) the Custodian
shall be the agent of the Depositor to perform duties conferred on it as
directed by the Depositor, and (b) it is not intended that any fiduciary duties
be conferred by implication or otherwise upon the Custodian under this
Agreement.
17. NOTICES TO THE DEPOSITOR. Any notice sent from the
Custodian to the Depositor shall be effective if sent by mail to the Depositor
at his or her last address of record. If the Custodian is unable to make
distributions to the Depositor or his or her beneficiary within two months after
any such payment is due because the Custodian is unable to determine the
whereabouts of such person by mailing to the last address of record, then the
Custodian may sell or otherwise dispose of any of the assets in the Depositor's
Custodial Account, with no liability to the Custodian and deposit the proceeds
in a Deposit Account until the distribution can be made in accordance with this
Agreement or the proceeds escheat to a governmental agency.
18. SOURCE OF BENEFITS. The Depositor hereby agrees that he or
she shall look solely to the assets of his or her Custodial Account for the
payment of any benefits to which he or she may become entitled under this
Agreement.
19. PENALTIES. The Depositor hereby acknowledges his or her
understanding that: (a) taxes and penalties may be imposed under the Code for
(i) excess contributions; (ii) distributions made before the Depositor dies,
becomes disabled (as defined in Section 72(m) of the Code) or attains the age of
59-1/2, except in the case of rollovers or transfers to other retirement plans,
accounts or arrangements
9
<PAGE>
in accordance with applicable provisions of the Code and the regulations and
rulings thereunder; (iii) distributions which are less than the minimum required
distribution under the Code. and (iv) overstatement by the Depositor of the
amount of his or her nondeductible contributions to the Custodial Account or to
any other individual retirement account or .annuity for any year;and (b) such
taxes and penalties shall be paid by the Depositor.
20. INDEMNIFICATION. The Depositor agrees to indemnify and
hold harmless the Custodian and any depository bank for any Deposit Account and
their respective affiliates, agents, employees, successors and assigns, from and
against any claim or liability arising in connection with the Depositor's
Custodial Account, except in the case of gross negligence or willful misconduct.
21. GOVERNING LAWS. Except to the extent preempted by the Code
or other applicable Federal law, this Agreement shall be governed by and
construed and administered under the laws of the State of California.
22. SEVERABILITY. If any provision of this Agreement is held
invalid or unenforceable, its invalidity or unenforceability shall not affect
any other provisions of this Agreement, and this Agreement shall be construed
and enforced as if such provision had not been included.
23. CAPTIONS. The captions in this Agreement are solely for
convenience and shall not affect the construction of any provision of this
Agreement.
IN WITNESS WHEREOF, the Depositor and the Custodian, to
evidence their acceptance of the terms and conditions of this Agreement, have
duly executed the Application.
INSTRUCTIONS
------------
A. General Instructions
--------------------
The above Agreement may be used by an individual who wishes to
adopt as individual retirement account (IRA) pursuant to Section 408(a) of the
Code. It is not to be filed with the Internal Revenue Service. When the
Agreement and Application are fully executed by the Depositor and the Custodian
not later than the time prescribed by law for filing the Federal income tax
return for the Depositor's tax.year, the Depositor will have an individual
retirement custodial account which meets the requirements of Section 408(a) of
the Code. This IRA Custodial Account must be created in the
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United States for the exclusive benefit of the Depositor and his or her
beneficiaries. The Depositor's Social Security number will serve as the
identification number of his or her individual retirement account. An employer
identification number is not required for each individual retirement account,
nor for a common fund created for individual retirement -accounts. For further
information, refer to the disclosure statement or obtain Publication 590
("Individual Retirement Arrangements (IRAs)") from your local Internal Revenue
Service office.
B. Spousal IRAs
------------
Contributions to an IRA Custodial Account for a non-working
spouse must be contributed to a separate IRA Custodial Account established by
the non-working spouse. IRS Form 5305-A may be used to establish the IRA
custodial account maintained for the non-working spouse.
C. Definitions
-----------
Custodian. The Custodian of an IRA must be a bank or savings
and loan association, as defined in Section 408(n) of the Code, or other person
who has the approval of the Internal Revenue Service to act as custodian.
Depositor. The Depositor is the person who establishes the account.
D. Specific Instructions
---------------------
ARTICLE IV. Distributions made under this Article may be made
in a single sum, periodic payment or a combination of both. The distribution
option should be reviewed in the year the Depositor reaches age 70-1/2 to make
sure the requirements of Section 408(a)(6) of the Code have been met. For
example, if a Depositor elects distributions over a period permitted in (d) or
(e) of Article IV, the period may not extend beyond the life expectancy of the
Depositor at age 70-1/2 (under option (d)) or the joint life and last survivor
expectancy of the Depositor (at age 70-1/2) and the Depositor's spouse (under
option (d)) or the joint life and last survivor expectancy of the Depositor (at
age 70-1/2) and the Depositor's spouse (under option (e)). For this purpose,
life expectancies must be determined by using the expected return multiples in
Section 1.72-9 of the Income Tax Regulations (26 CFR Part 1). The balance in the
Custodial Account as of the beginning of each tax year, beginning on or after
the date the Depositor reaches age 70-1/2, will be used in computing the
payments described in (d) and (e) of Article IV. Article IV does not preclude a
mode of distribution different from those described in (a) through (e) of
Article
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IV prior to the close of the tax year of the Depositor in which he or she
reaches age 70-1/2.
ARTICLE IX. This article and any that follow it may
incorporate additional provisions that are agreed upon by the Depositor and
Custodian to complete the agreement. These may .include, for example:
definitions, investment powers, voting rights, exculpatory provisions, amendment
and termination, removal of Custodian, Custodian's fees, state law requirements,
beginning date of distributions, accepting only cash, treatment of excess
contributions, prohibited transactions with the Depositor, etc.
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