PRELIMINARY PROXY MATERIALS
CANANDAIGUA NATIONAL COLLECTIVE INVESTMENT FUND
FOR QUALIFIED TRUSTS
72 South Main Street
Canandaigua, New York 14424
NOTICE OF ANNUAL MEETING OF UNITHOLDERS
TO BE HELD MARCH 28, 1997
To the Unitholders:
The Annual Meeting of Unitholders of Canandaigua National Collective
Investment Fund for Qualified Trusts (the "Fund") will be held at the
offices of The Canandaigua National Bank and Trust Company ("Canandaigua
National Bank"), 72 South Main Street, Canandaigua, New York on March 28,
1997 at 10:30 A.M., to consider and vote on the following matters described
under the corresponding numbers in the accompanying Proxy Statement:
(1) Election of a Supervisory Committee of five members;
(2) Approval of the investment management agreement with Canandaigua
National Bank;
(3) Ratification of Morga Jones & Hufsmith, P.C. as the independent
accountants for 1997;
(4) Reorganization of the Fund into a Delaware Business Trust; and
(5) Such other matters as may properly come before the meeting.
The Supervisory Committee has fixed the close of business on February
10, 1997 as the record date for the determination of unitholders entitled
to receive notice of and to vote at the meeting.
The proposed business cannot be conducted at the meeting unless the
holders of a majority of the units of each portfolio are present in person
or by proxy. THEREFORE, PLEASE MARK, DATE, SIGN AND RETURN THE ENCLOSED
PROXY, WHICH IS SOLICITED BY THE SUPERVISORY COMMITTEE. THE PROXY IS
REVOCABLE, AND YOUR SIGNING WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON.
By Order of the Supervisory Committee
Robert J. Swartout, Secretary
Canandaigua, New York
March 1, 1997
IT IS IMPORTANT THAT YOU MARK, DATE, SIGN, AND
PROMPTLY MAIL THE ENCLOSED PROXY
PROXY STATEMENT
The enclosed proxy is solicited by the Supervisory Committee of the
Fund in connection with the Annual Meeting of Unitholders to be held on
March 28, 1997 at 10:30 A.M. at the offices of Canandaigua National Bank,
72 South Main Street, Canandaigua, New York. Every proxy returned in time
to be voted at the meeting will be voted, and, if a specification is made
with respect to any Proposal, the proxy will be voted accordingly. If no
directions are indicated, the proxy will be voted FOR the five nominees set
forth in Proposal 1 and FOR Proposals 2, 3 and 4. Anyone having submitted
a proxy may revoke it prior to its exercise, either by filing with the Fund
a written notice of revocation, by delivering a duly executed proxy bearing
a later date, or by voting in person.
At the close of business on February 10, 1997, the record date fixed
by the Supervisory Committee for the determination of unitholders entitled
to notice of and to vote at the meeting, there were outstanding
______________ units of the Fund, the only authorized class of securities
of the Fund. Each unit is entitled to one vote. There is no provision for
cumulative voting. As of February __, 1997, no unitholder owned 5% or
more of the Fund's outstanding units [except Willard B. Becker, 3299 West
Lake Road, Canandaigua, New York, who owned ________ units of the Bond
Portfolio constituting ____% of that Portfolio, Anthony J. Brindisi, 417
Holiday Harbour, Canandaigua, New York, who owned ________ units of the
Bond Portfolio constituting ___% of that Portfolio, and John E. Tyo, 6 East
Main Street, Shortsville, New York, who owned ______ units of the Bond
Portfolio constituting ____% of that Portfolio.]
This Proxy Statement was first mailed to unitholders on or about March
1, 1997, together with the Fund's 1996 Annual Report, which included
financial statements for the Fund for the year ended December 31, 1996.
The Annual Report is not to be regarded as proxy soliciting material or as
part of this Proxy Statement.
With respect to the election of members of the Supervisory Committee
in Proposal 1, the five nominees receiving the highest number of votes
shall be deemed to be elected. The vote required to approve Proposals 2
and 3 is the affirmative vote of the lesser of (a) 67% or more of all units
present and entitled to vote at the meeting, provided the holders of more
than 50% of all units outstanding and entitled to vote are present or
represented by proxy, or (b) more than 50% of all outstanding units (in
either case, a "majority of the units outstanding"). The vote required to
approve Proposal 4 is the affirmative vote of a majority of the units
outstanding of each portfolio voting as a separate series of the Fund.
In the event that sufficient votes are not received by the meeting
date, a person named as proxy may propose one or more adjournments of the
meeting for a period or periods of not more than 30 days in the aggregate
to permit further solicitation of proxies. The persons named as proxies
will vote all proxies in favor of such adjournment. Signed but unmarked
proxies will be voted in favor of all Proposals.
PROPOSAL 1. ELECTION OF SUPERVISORY COMMITTEE MEMBERS.
Five members of the Supervisory Committee are to be elected at the
meeting to hold office until the next meeting of unitholders and until
their successors are elected and qualified. All of the nominees were
originally named in the Declaration of Trust for the Fund. The nominees
were nominated for reelection at a meeting of the Supervisory Committee
held January 6, 1997. Each of the nominees has agreed to serve if
reelected. If, due to presently unforeseen circumstances, any nominee
should not be available for election, the proxies will vote the signed but
unmarked proxies, and those marked for the nominees, for such other persons
as the present members of the Supervisory Committee shall recommend. The
table below sets forth certain information regarding the nominees.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Memberships on
Year First Boards of Other
Current Principal Elected a Registered Investment
Name of Nominee Occupation and Principal Supervisory Companies and
(Position with Fund) Employment During Committee Publicly
AND DATE OF BIRTH PAST FIVE YEARS MEMBER HELD COMPANIES
ROBERT J. CRAUGH Retired 1992 None
(Chairman Supervisory
Committee)
8/16/22
ROBERT N. COE President and Co-owner 1992 None
(Member Supervisory of W.W. Coe & Sons, Inc.
Committee) (Independent insurance
3/1/50 agency)
DONALD C. GREENHOUSE Since 1989, President and 1992 None
(Member Supervisory Owner of Seneca Point
Committee) Associates, Inc. (business
4/29/36 consulting firm);
prior thereto
Executive Vice President,
Voplex Corporation
*GREGORY S. MACKAY Treasurer of Canandaigua 1992 None
(Treasurer, Member National Corporation;
Supervisory Committee) Senior Vice President,
8/3/49 Canandaigua National Bank
*ROBERT J. SWARTOUT Vice President 1992 None
(Secretary, Member and Investment Officer,
Supervisory Committee) Canandaigua National Bank
6/8/61
</TABLE>
______________________________________
* Is an "interested person" as defined in Section 2(a)(19) of the
Investment Company Act of 1940 (the "1940 Act"), on the basis of his
affiliation with the investment adviser, The Canandaigua National Bank
and Trust Company. Mr. Craugh is not an "interested person" as
defined in the 1940 Act, but is considered an "interested person" by
the Office of the United States Comptroller of the Currency (the
"OCC"), which supervises the Investment Adviser.
None of the nominees owns any shares of the Fund.
There were four Supervisory Committee meetings and two Audit Committee
meetings during 1996. Each of the nominees attended at least 75% of all
meetings of the Supervisory Committee and of the committees of which he was
a member. Mr. Coe and Mr. Greenhouse serve as the Fund's Audit Committee.
The Fund has no executive officers who are not members of the
Supervisory Committee.
The Fund does not pay salaries to officers, but pays an investment
advisory fee to Canandaigua National Bank as described below. Messrs.
Craugh, Coe and Greenhouse were paid $200.00 each by the Fund for each
meeting of the Supervisory Committee attended during 1996. For this,
Messrs. [Craugh and Coe ] received $_______ and Mr. [Greenhouse] received $
_______. No officers, directors, or employees of Canandaigua National
Bank, its parent, or its subsidiaries received any remuneration directly
from the Fund.
INFORMATION PERTAINING TO THE INVESTMENT ADVISER AND THE INVESTMENT
MANAGEMENT AGREEMENT
The Fund has retained, as its investment adviser, Canandaigua National
Bank, 72 South Main Street, Canandaigua, New York 14424.
The Investment Adviser was founded in 1887 and currently serves as the
investment adviser to no investment company other than the Fund. Its
research programs encompass both economic and statistical services.
Canandaigua National Corporation, 72 South Main Street, Canandaigua,
New York, 14424, is the parent of the Investment Adviser, owning all of its
outstanding shares of common stock. The following Supervisory Committee
Members of the fund are stockholders of Canandaigua National Corporation:
Mr. Craugh, Mr. MacKay, and Mr. Swartout.
The Board of Directors of Canandaigua National Bank presently consists
of 11 directors, all of whom own securities of Canandaigua National
Corporation. The address and principal occupation of each of these
Directors is indicated below.
<TABLE>
<CAPTION>
DIRECTOR AND ADDRESS PRINCIPAL OCCUPATION
<S> <C>
Patricia Boland Executive Director,
Canandaigua, New York Granger Homestead
David Hamlin, Jr. Farmer
Bloomfield, New York
Frank H. Hamlin Retired
Naples, New York
George W. Hamlin, IV President, CEO and Trust Officer,
Canandaigua, New York Canandaigua National Bank
Stephen D. Hamlin President, Draper Development Corporation
Canandaigua, New York
DIRECTOR AND ADDRESS PRINCIPAL OCCUPATION
Paul R. Kellogg Retired
Canandaigua, New York
Eldred M. Sale Retired
Victor, New York
Robert G. Sheridan Senior Vice President and Cashier,
Canandaigua, New York Canandaigua National Bank
Caroline C. Shipley Educator; Area II, Director, New York
Canandaigua, New York State School Boards Association
Alan J. Stone Managing Partner, Stone Properties
Honeoye, New York Chairman of the Board, Canandaigua
National Bank
Willis F. Weeden, M.D. Retired
Canandaigua, New York
</TABLE>
Mr. MacKay and Mr. Swartout, officers of the Fund, are also officers
and employees of the Investment Adviser.
No purchases and sales of common stock of Canandaigua National
Corporation by and to any officer, director or employee of Canandaigua
National Bank or its affiliates, during the Fund's fiscal year ended
December 31, 1996 involved securities in an amount exceeding 1% of any
outstanding class of shares.
The Investment Management Agreement (the "Agreement") between the Fund
and the Investment Adviser, dated October 6, 1992 was approved by the
Fund's original unitholder and submitted to a vote and unanimously approved
at a Meeting of the Supervisory Committee held October 6, 1992.
Canandaigua National Bank has served as the Investment Adviser since that
date.
The Agreement provides that the Investment Adviser shall furnish
advice to the Fund with respect to its investments and shall, to the extent
authorized by the Supervisory Committee of the Fund, determine what
securities shall be purchased or sold by the Fund. As compensation for its
services to the Fund, the Investment Adviser receives from the Fund an
annual fee, computed daily and paid monthly, of 1% of the Equity
Portfolio's net assets and 0.50% of the Bond Portfolio's net assets.
As of December 31, 1996, the total net assets of the Fund were $
_________. The Fund paid the Investment Adviser $ ______ (0.__% of average
net assets) for the year ended December 31, 1996.
The Agreement provides that the Investment Adviser will reduce the fee
payable to it by the amount by which the Fund's annual ordinary operating
expenses exceed the lower of 1.5% of the average daily value of the net
assets of the Fund, or the most restrictive expense limitation applicable
to the Fund imposed by any jurisdiction in which units of the Fund are
offered for sale. Expenses which are not subject to this limitation are
interest, taxes and extraordinary expenses. Expenditures including costs
incurred in connection with the purchase or sale of portfolio securities,
which are capitalized in accordance with generally accepted accounting
principles applicable to investment companies, are accounted for as capital
items and not as expenses.
The Investment Adviser, in addition to providing investment advisory
services, furnishes the services for and pays the compensation and travel
expenses of persons to perform the executive, administrative, clerical and
bookkeeping functions of the Fund, and provides suitable office space,
necessary small office equipment and utilities, and general purpose
accounting forms, supplies, and postage used at the offices of the Fund.
The Investment Adviser provides transfer agency and shareholder
accounting services for the Fund without additional compensation.
EXECUTION OF PORTFOLIO TRANSACTIONS
Orders for the Fund's portfolio securities transactions are placed by
the Investment Adviser. The Investment Adviser strives to obtain the best
available prices and executions in its portfolio transactions, taking into
account the costs and promptness of executions. There is no agreement or
commitment to place orders with any broker-dealer. In transactions
executed in the over-the-counter market, purchases and sales are transacted
directly with principal market-makers except in those circumstances where,
in the opinion of the Investment Adviser, better prices and executions are
available elsewhere.
Subject to the requirement of seeking the best available prices and
execution, the Investment Adviser may, in circumstances in which two or
more broker-dealers are in a position to offer comparable prices and
execution, give preference to broker-dealers which have provided investment
research, statistical and other related services to the Investment Adviser
for the benefit of the Fund. Such research services may be used by the
Investment Adviser in servicing all of its accounts, including trusts or
investment accounts in the Investment Adviser's trust department.
Therefore, it is possible, although unlikely, that not all such research
services may be used by the Investment Adviser in connection with the Fund.
There are occasions on which portfolio transactions for the Fund may
be executed as part of concurrent authorizations to purchase or sell the
same security for other trusts or investment accounts in the Investment
Adviser's trust department. Although such concurrent authorizations
potentially could be either advantageous or disadvantageous to the Fund,
they are effected only when the Investment Adviser believes that to do so
is in the interest of the Fund. When such concurrent authorizations occur,
the objective is to allocate the executions in an equitable manner.
Brokerage commissions paid on portfolio transactions, including dealer
concessions on underwritings, during the fiscal year ended December 31,
1996, amounted to $ ________ for the Equity Portfolio and $ ______ for the
Bond Portfolio; altogether representing ___% of average net assets of the
Fund. The portfolio turnover ratio for the fiscal year ended December 31,
1996 was _____% for the Equity Portfolio and _____% for the Bond Portfolio.
PROPOSAL 2. APPROVAL OF INVESTMENT MANAGEMENT AGREEMENT
The Investment Management Agreement (the "Agreement") between the Fund
and the Investment Adviser, dated October 6, 1992, is described in part
under "Information Pertaining to the Investment Adviser and the Investment
Management Agreement" above, and a copy of the Agreement is attached as
Exhibit A to this Proxy Statement. Consistent with the 1940 Act, the
Agreement states that it shall remain in effect for two years after October
6, 1992 (the date when it became effective), and from year to year
thereafter, but only so long as such continuance is approved at least
annually either by the vote of a majority of the members of the Supervisory
Committee, including specific approval by a majority of such persons who
are not parties to the Agreement or "interested persons" of any such party
as that term is used in the 1940 Act, or by vote of a majority of the
outstanding units of each investment portfolio. Upon registration of the
Fund with the Securities and Exchange Commission ("SEC"), the Fund
undertook to present the Agreement to the unitholders for their approval at
the next meeting of unitholders held after registration of the Fund. Most
recently, on March 29, 1996, the Agreement was again approved by a majority
of the outstanding units of the Fund.
THE SUPERVISORY COMMITTEE RECOMMENDS THAT YOU VOTE IN FAVOR OF THE
APPROVAL OF THE INVESTMENT MANAGEMENT AGREEMENT.
PROPOSAL 3. RATIFICATION OF INDEPENDENT ACCOUNTANT
Unitholders are requested to ratify the selection by the Supervisory
Committee (including a majority of members who are not "interested persons"
of the Fund as that term is defined in the 1940 Act) of the firm of Morga
Jones & Hufsmith, P.C. as the Fund's independent accountant for 1997. This
firm and its predecessor, Walsh, Morga & Company, P.C., has served as the
Fund's independent accountant since January 1, 1993 when it was unanimously
selected by the Supervisory Committee as the Fund's independent accountant.
No accountant's report on the financial statements of the Fund has ever
contained an adverse opinion or a disclaimer of opinion, or been qualified
or modified as to uncertainty, audit scope or accounting principles. The
Fund has not had any disagreement with its accountant as to any matter and
the accountant has advised the Fund that it has no material direct or
indirect financial interest in the Fund or its affiliates. No
representative of Morga Jones & Hufsmith, P.C. is expected to attend the
meeting of unitholders.
THE SUPERVISORY COMMITTEE RECOMMENDS THAT YOU VOTE IN FAVOR OF THE
RATIFICATION OF THE SELECTION OF MORGA JONES & HUFSMITH, P.C.
AS THE FUND'S INDEPENDENT ACCOUNTANT FOR 1997.
PROPOSAL 4 APPROVAL OF AN AGREEMENT AND PLAN FOR THE FUND PROVIDING FOR ITS
CONVERSION FROM A COLLECTIVE INVESTMENT FUND TO A DELAWARE
BUSINESS TRUST
GENERAL
The Supervisory Committee of the Fund has unanimously approved,
subject to unitholder vote, an Agreement and Plan of Reorganization,
Conversion and Termination (the "Plan of Conversion") in the form attached
to this Proxy Statement as Exhibit B. The Plan of Conversion provides for
the conversion (the "Conversion") of the Equity Portfolio and the Bond
Portfolio from separate series of the Fund, which is a collective
investment fund established in accordance with the regulations of the OCC,
to separate series of a Delaware business trust. For ease of reference in
this Proposal, the current Fund will generally be referred to as the
"Current Trust," and the Equity Portfolio and the Bond Portfolio will each
be referred to as a "Current Portfolio."
The Conversion will entail creating a Delaware business trust (the
"Successor Trust") with two series corresponding to the two Current
Portfolios of the Current Trust. Each series of the Successor Trust is
referred to in this Proposal as a "Successor Fund." Following the
Conversion, the Successor Trust will carry on the business of the Current
Trust and the Conversion will not result in any change in the investment
objectives, policies and restrictions of the Current Portfolios as adopted
by the Successor Funds. A vote FOR Proposals 2 and 3 will also be
considered a vote FOR those Proposals with respect to the Successor Trust.
Some principal differences between a collective investment fund and a
Delaware business trust as forms of organization are discussed below under
the caption "Certain Comparative Information About Collective Investment
Funds and Delaware Business Trusts."
Following the Conversion (and assuming that Proposal 2 is approved),
Canandaigua National Bank will continue to serve as investment adviser for
the Successor Trust under an advisory agreement substantially identical to
the existing advisory agreement with the Current Trust.
REASONS FOR THE PROPOSED CONVERSION
The Current Trust is organized as a collective investment fund under
the regulations of the OCC. As discussed above, the Supervisory Committee
of the Current Trust unanimously recommends conversion of the Current Trust
and each Current Portfolio thereof into a Delaware business trust and
corresponding series thereof which will succeed to the business of the
Current Trust, which will then be terminated as a collective investment
trust. This will enable the Fund to offer its shares for sale to the
public, especially to current customers of Canandaigua National Bank who
have expressed interest in investing in the Current Trust but are
prohibited by definition from doing so in its current form as a collective
investment trust. Additionally, the Supervisory Committee has determined
that Delaware law affords advantages to the operations of mutual funds
greater than those currently available to the Successor Trust under New
York law. Therefore, the Supervisory Committee proposes organizing the
Successor Trust as a Delaware business trust.
Under the OCC's rules governing collective investment funds and the
terms of the Current Trust's Declaration of Trust, the only persons that
are eligible to invest in the Current Trust are tax exempt pension and
profit-sharing plan trusts and individual retirement accounts ("IRAs")
maintained in accordance with the requirements of the Internal Revenue Code
(the "Code"). The Current Trust has received many inquiries from customers
of Canandaigua National Bank and from others who have retirement funds
invested in the Current Trust indicating a high level of interest in being
able to invest directly in the Fund. After reviewing this matter for some
time, the Supervisory Committee determined that it would pursue this matter
with the goal of reorganizing the Fund into a mutual fund in which the
general public can invest.
The Supervisory Committee believes that this reorganization presents
several advantages to the current investors in the Current Trust. First,
by being able to offer its shares to the general public, the Fund should
attract significantly more assets, particularly from current customers of
Canandaigua National Bank and persons whose retirement funds are already
invested in the Fund. This will result in lower fund expenses to all Fund
investors. This in turn will also lead to both lower transaction costs and
improved access to investment research for the Fund.
An aspect of this reorganization that may be viewed as a disadvantage
to the current investors in the Current Trust is that the Successor Trust
will not be required to hold annual meetings to elect its Trustees.
However, the resulting cost savings will benefit all Fund investors.
In planning this reorganization, the Supervisory Committee determined
that establishing the Successor Trust as a Delaware business trust was an
advantageous structure for a public mutual fund for several reasons. A
business trust can provide a more efficient and less expensive vehicle for
organizing a public mutual fund than other available alternatives, such as
a corporation. For example, in contrast to a corporation incorporated in
Delaware, a Delaware business trust pays no franchise or similar taxes on
its organization or operation to the state of Delaware.
Further, a Delaware business trust is not required to hold annual
meetings of its shareholders, saving significant time and expense.
Delaware law affords to the trustees of a Delaware business trust the
ability to adapt a Delaware business trust to future contingencies without
the necessity of holding special shareholder meetings. The Trustees of the
Successor Trust will have the power to amend its Declaration of Trust to
create a class, group or series of beneficial interests that was not
previously outstanding; to incorporate or dissolve the Successor Trust; to
merge or consolidate it with another entity; to sell, lease, exchange,
transfer, pledge or otherwise dispose of all or any part of its assets; to
cause any series to become a separate trust; and to change its domicile -
all without shareholder vote. Thus, while any exercise of authority by the
Trustees of the Successor Trust will be subject to applicable state and
Federal law, the flexibility of a Delaware business trust should help to
assure that the Successor Trust always operates under the most advantageous
form of organization and should reduce the expense and frequency of future
shareholder meetings for non-investment-related operational issues.
For a more detailed comparison of the Current Trust's Declaration of
Trust and the proposed Delaware trust instrument (the "Delaware Declaration
of Trust"), see "Certain Comparative Information About Collective
Investment Funds and Delaware Business Trusts" below.
SUMMARY OF THE PLAN OF CONVERSION
The following discussion summarizes certain terms of the Plan of
Conversion. This summary is qualified in its entirety by the provisions of
the form of Plan of Conversion attached as Exhibit B.
In order to accomplish the Conversion, a Delaware business trust will
be formed pursuant to a Delaware Declaration of Trust, substantially in the
form of Exhibit C hereto. On the closing date of the Conversion (the
"Closing Date"), each Current Portfolio will transfer all of its assets to
its corresponding Successor Fund in exchange for the assumption by the
Successor Fund of all the liabilities of that Current Portfolio and the
issuance to the Current Trust on behalf of that Current Portfolio of shares
of beneficial interest of that Successor Fund ("Successor Fund shares")
equal to the value of that Current Portfolio's net assets on the date of
the exchange as determined by using the procedures set forth in the Current
Trust's current Prospectus. Immediately thereafter, the Current Trust
will distribute the corresponding Successor Fund shares to the account of
each Current Portfolio unitholder pro rata in proportion to such
unitholder's beneficial interest in each Current Portfolio ("Current
Portfolio units") in exchange for his/her/its Current Portfolio units.
After this distribution of Successor Fund shares, each Current Portfolio
will, as soon as practicable thereafter, be wound up and terminated. A
confirmation will be mailed to each Current Portfolio unitholder informing
him/her/it of the number of Successor Fund shares registered to his/her/its
shareholder account. Certificates evidencing Successor Fund shares will
not be mailed to shareholders. UPON COMPLETION OF THE CONVERSION, EACH
CURRENT PORTFOLIO UNITHOLDER WILL BE THE OWNER OF FULL AND FRACTIONAL
SUCCESSOR FUND SHARES EQUAL IN NUMBER AND AGGREGATE NET ASSET VALUE TO THAT
UNITHOLDER'S UNITS IN EACH CURRENT PORTFOLIO AS OF THE DATE OF THE
EXCHANGE.
The Plan of Conversion also authorizes the Current Trust, while the
sole shareholder of each series of the Successor Trust pending distribution
of such shares to the former unitholders of each Current Portfolio: (i) to
elect as Trustees of the Successor Trust the persons who currently serve as
the Supervisory Committee of the Current Trust; (ii) to ratify the
selection of the independent accountants for the Successor Trust; and (iii)
to approve an investment advisory agreement for the Successor Trust.
The newly elected Trustees will hold office without limit in time
except that (i) any Trustee may resign at any time; (ii) any Trustee may be
removed with or without cause by written instrument signed by at least two-
thirds of the number of Trustees prior to removal; (iii) any Trustee who
has become physically or mentally incapacitated or is otherwise unable to
serve may be retired by written instrument signed by a majority of the
other Trustees; and (iv) a Trustee may be removed with or without cause at
any special meeting of the shareholders by a vote of two-thirds of the
outstanding shares of the Successor Trust. In case a vacancy shall for any
reason exist, the remaining Trustees will fill such vacancy by appointing
another Trustee so long as, immediately after such appointment, at least
two-thirds of the Trustees have been elected by shareholders. If, at any
time, less than a majority of the Trustees holding office has been elected
by shareholders, the Trustees then in office will promptly call a
shareholders' meeting for the purpose of electing a Board of Trustees.
Otherwise, there normally will be no annual meeting of shareholders for the
purpose of electing Trustees.
Assuming the Plan of Conversion is approved, it is currently
contemplated that the Conversion will become effective as soon as possible
following receipt of all necessary approvals or waivers from the OCC, the
SEC, and any other regulatory authority with respect to any aspect of the
Conversion, and the effectiveness of all required filings and registration
statements with the SEC.
If, at any time prior to the Closing, the Supervisory Committee
determines that it would not be in the best interest of the Current Trust
or the unitholders to proceed with the execution of the Plan of Conversion,
the Conversion will not go forward, notwithstanding the approval of the
Conversion by the unitholders at this meeting. The obligations of the
Current Trust and the Successor Trust under the Plan of Conversion are
subject to various conditions as stated therein. In order to anticipate
unforeseen events, the Plan of Conversion, once undertaken, may be
terminated or amended at any time prior to the Conversion by action of the
Supervisory Committee, notwithstanding the approval of the Plan of
Conversion by the unitholders, if: (i) there is a material breach of any
representation, warranty or agreement contained in the Plan of Conversion;
(ii) it reasonably appears that a party cannot meet a condition of the Plan
of Conversion; or (iii) the Current Trust is unable to obtain any necessary
approvals or waivers from the OCC, the SEC, and any other regulatory
authority with respect to any aspect of the Conversion or the effectiveness
of all required filings and registration statements with the SEC. The
Current Trust and the Successor Trust may at any time waive compliance with
any of the covenants and conditions contained in, or may amend, the Plan of
Conversion; provided that such waiver or amendment does not materially
adversely affect the interests of Current Trust unitholders.
CONTINUATION OF SHAREHOLDER ACCOUNTS AND PLANS
The Successor Trust's transfer agent will establish accounts for all
Current Trust unitholders containing the appropriate number and
denominations of Successor Fund shares to be received by that unitholder
under the Plan of Conversion. Such accounts will be identical in all
material respects to the accounts currently maintained by the Current Trust
for each unitholder.
EXPENSES OF THE CONVERSION
The Investment Advisor will bear the expenses associated with the
transactions contemplated by the Plan of Conversion, which are presently
estimated to be approximately $35,000.
TAX CONSEQUENCES OF THE CONVERSION
It is a condition to the consummation of the Conversion that the
Current Trust and the Successor Trust receive on or before the Closing Date
an opinion from counsel, Underberg & Kessler LLP, substantially to the
effect that, among other things, the transactions contemplated by the Plan
of Conversion will constitute a tax-free reorganization and that no gain or
loss will be recognized for Federal income tax purposes by the unitholders
of each Current Portfolio upon (1) the transfer of a Current Portfolio's
assets to the corresponding Successor Fund in exchange solely for such
Successor Fund's shares and the assumption by such Successor Fund of that
Current Portfolio's liabilities or (2) the distribution in liquidation of
the shares of each Successor Fund to the corresponding Current Portfolio's
unitholders in exchange for their Current Portfolio units. The opinion
will further provide, among other things, that: (i) the tax basis of the
Successor Fund shares to be received by each Current Portfolio unitholder
will be the same as that of such unitholder's Current Portfolio units
surrendered in exchange therefor; (ii) each Current Portfolio unitholder's
tax holding period for shares in the Successor Fund will include such
unitholder's holding period for units of the Current Portfolio surrendered
in exchange therefor, provided that such Current Portfolio units were held
as capital assets on the date of the exchange; and (iii) (A) under Section
408(e) of the Code with respect to IRA accounts maintained in conformity
with Section 408(a) thereof, or (B) under Section 501(a) of the Code with
respect to single or commingled pension or profit-sharing trusts, including
a single or commingled pension or profit-sharing trust benefitting one or
more self-employed individuals, maintained in conformity with Section
401(a) thereof, the Conversion does not trigger (I) any taxes or penalties
under the Employee Retirement Income Security Act of 1974, as amended,
("ERISA") nor (II) a disqualification of such trusts with respect to their
tax-exempt status under Section 408(e) or 501(a) of the Code, as the case
may be.
SHAREHOLDER SERVICING AGENT, ADMINISTRATOR AND CUSTODIAN
Canandaigua National Bank, 72 South Main Street, Canandaigua, New York
14424, presently serves as shareholder servicing agent for the Current
Trust and will serve in the same capacity for the Successor Trust.
American Data Services, 24 West Carver Street, Huntington, New York 11743,
presently serves as the Administrator for the Current Trust and will serve
in the same capacity for the Successor Trust. Northern Trust Company, 50
South LaSalle Street, Chicago, Illinois 60675, presently serves as the
Custodian for the Current Trust and will serve in the same capacity for the
Successor Trust.
INDEPENDENT PUBLIC ACCOUNTANTS
Morga Jones and Hufsmith, P.C., 25 North Street, Canandaigua, New York
14424, are presently the Independent Public Accountants for the Current
Trust, and will continue to be the Independent Public Accountants for the
Successor Trust, subject to their ratification pursuant to Proposal 3.
CERTAIN REGULATORY MATTERS
Underberg & Kessler LLP has advised the Current Trust that (i)
Successor Trust shares to be issued in exchange for the assets of the
Current Trust are not required to be registered under the Securities Act of
1933 (the "1933 Act"), and (ii) upon the effectiveness of the Conversion,
the Successor Trust will be deemed to have adopted the Current Trust's
registration statement under the 1933 Act and the 1940 Act.
CERTAIN COMPARATIVE INFORMATION ABOUT COLLECTIVE INVESTMENT FUNDS AND
DELAWARE BUSINESS TRUSTS
SUMMARY OF THE TRUST INSTRUMENT
The Successor Trust will be established as a Delaware business trust
pursuant to the Delaware Declaration of Trust under the laws of the State
of Delaware. The investment objectives, policies and restrictions of each
Successor Fund will be the same as those of the respective Current
Portfolio. The Successor Trust's fiscal year will be the same as that of
the Current Trust, although the Trustees may change the fiscal year in
their discretion. Prior to the Conversion, each Successor Fund will not
have any assets or liabilities. During the Conversion, the Current Trust
will be the sole shareholder of each corresponding Successor Fund
immediately prior to distribution of the shares of a Successor Fund to the
unitholders of the corresponding Current Portfolio.
As a series of a Delaware business trust, each Successor Fund's
operations will be governed by the Delaware Declaration of Trust, the
Successor Trust's Bylaws and applicable Delaware law, rather than by the
Current Trust's Declaration of Trust, the rules and procedures of the
Supervisory Committee and applicable New York law. The operation of the
Successor Trust and each Successor Fund will continue to be subject to the
provisions of the 1933 Act and the 1940 Act and the SEC's rules and
regulations thereunder, the rules and regulations of the OCC, certain rules
and regulations promulgated under ERISA, and applicable state securities
laws.
TRUSTEES AND OFFICERS OF THE SUCCESSOR TRUST
Subject to the provisions of the Delaware Declaration of Trust, the
business of the Successor Trust will be supervised by the Trustees of the
Trust, who will serve indefinite terms and who have all powers necessary or
convenient to carry out that responsibility. The responsibilities, powers
and fiduciary duties of the Trustees will be substantially the same as
those of the Supervisory Committee of the Current Trust. The Trustees of
the Successor Trust will be those persons who are being elected under
Proposal 1 above to serve as members of the Supervisory Committee of the
Current Trust.
It is anticipated that the Trustees of the Successor Trust will elect
the officers of the Current Trust to serve as officers of the Successor
Trust and that such persons will perform the same functions following the
Conversion that they now perform on behalf of the Current Trust. For a
discussion of the members of the Supervisory Committee and officers of the
Current Trust, see Proposal 1 above.
DELAWARE BUSINESS TRUST SHAREHOLDER LIABILITY
Generally, Delaware business trust shareholders are not personally
liable for obligations of the Delaware business trust under Delaware law.
The Delaware Business Trust Act provides that a shareholder of a Delaware
business trust shall be entitled to the same limitation of liability as
that extended to shareholders of private for-profit corporations. However,
no similar statutory or other authority limiting business trust shareholder
liability exists in New York or in many other states. This is one reason
the Supervisory Committee recommends that in reorganizing, the Current
Trust be organized as a Delaware business trust. However, to the extent
that a Delaware business trust or a shareholder is subject to the
jurisdiction of courts in such other states, the courts may not apply
Delaware law and may thereby subject the Delaware business trust
shareholders to liability. To guard against this risk, the Delaware
Declaration of Trust (i) contains an express disclaimer of shareholder
liability for acts or obligations of the Successor Trust and requires that
notice of such disclaimer be given in each agreement, obligation and
instrument entered into or executed by the Successor Trust or its Trustees
and (ii) provides for indemnification out of the property of the Successor
Trust of any shareholder held personally liable for the obligations of the
Successor Trust. Thus, the risk of a shareholder of the Successor Trust
incurring financial loss beyond his/her/its investment because of
shareholder liability is limited to circumstances in which all of the
following factors are present: (1) a court refused to apply Delaware law;
(2) the liability arose under tort law or, if not, no contractual
limitation of liability was in effect; and (3) the Successor Trust itself
would be unable to meet its obligations. In light of Delaware law, the
nature of the Successor Trust's business and the nature of its assets, the
Supervisory Committee believes that the risk of personal liability to a
shareholder of the Successor Trust is extremely remote.
Unlike Delaware, in New York there is no business trust act governing
the formation and operation of business trusts. Therefore, the law
governing business trusts in New York is relatively unclear. The Current
Trust's Declaration of Trust, like the Delaware Declaration of Trust,
contains an express disclaimer of unitholder liability and requires that
notice of such disclaimer be given in each agreement entered into or
executed by the Current Trust or its Supervisory Committee. The Current
Trust's Declaration of Trust also provides for indemnification out of the
trust property. Thus, the Supervisory Committee believes the risk of
liability is also remote for unitholders of the Current Trust. However, it
prefers the certainty given this principle under Delaware law.
VOTING RIGHTS OF SHAREHOLDERS OF A COLLECTIVE INVESTMENT FUND AND A
DELAWARE BUSINESS TRUST
Under the terms of the Current Trust's Declaration of Trust and the
rules and procedures of the Supervisory Committee, the Current Trust is
required to hold annual meetings of unitholders to elect the members of the
Supervisory Committee. However, a Delaware business trust is not required
to hold annual shareholder meetings, and as discussed above, it is intended
that the Successor Trust will take advantage of this fact by calling
meetings of shareholders only as necessary to comply with specific
requirements under its Declaration of Trust or the 1940 Act. Under the
Current Trust's Declaration of Trust, except for the right given to
shareholders under Section 16(c) of the 1940 Act to call a special meeting
to vote on the removal of a member of the Supervisory Committee,
unitholders do not have the right generally to call a special meeting of
unitholders. By contrast, the Successor Trust's Declaration of Trust in
substance, provides that a special meeting of shareholders may be called
for any purpose by the holders of 10% or more of its shares.
The Successor Trust, like the Current Trust, will operate as an open-
end management investment company registered with the SEC under the 1940
Act. Shareholders of each Successor Fund will, therefore, have the power
to vote at special meetings with respect to, among other things, (i)
changes in the fundamental investment policies and restrictions of the
Successor Fund, (ii) approval of certain investment advisory contracts,
(iii) ratification of the selection by the Trustees of the independent
public accountants for the Successor Trust and (iv) such additional matters
relating to the Successor Trust as may be required by law or the Trustees
consider desirable. If, at any time, less than a majority of the Trustees
holding office has been elected by shareholders, the Trustees then in
office must promptly call a meeting of shareholders of the Successor Trust
for the purpose of electing a Board of Trustees. The Current Trust must
notify the SEC that the Successor Trust will adopt its existing
registration statement under the 1933 Act with respect to its shares.
As is generally the case under the Current Trust's Declaration of
Trust, the Successor Trust's Declaration of Trust will permit the Trustees
to amend the Delaware Declaration of Trust, subject generally to the
approval of the shareholders of the Successor Trust. Likewise, as is the
case under the Current Trust's Declaration of Trust, the Delaware
Declaration of Trust will provide that a majority of its shares, or shares
of a series thereof, shall constitute a quorum for a meeting of
shareholders.
LIABILITY OF TRUSTEES
As is the case with respect to the Supervisory Committee under the
terms of the Current Trust's Declaration of Trust, the Successor Trust's
Declaration of Trust will provide that the Trustees of the Successor Trust
shall not be liable to any person other than the trust or a shareholder and
that a Trustee shall not be personally liable for any act as a Trustee.
However, nothing in the Delaware Declaration of Trust will protect a
Trustee against any liability to which he or she would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office.
SUPERVISORY COMMITTEE'S EVALUATION AND RECOMMENDATION
THE SUPERVISORY COMMITTEE UNANIMOUSLY RECOMMENDS THAT UNITHOLDERS OF
THE CURRENT TRUST APPROVE THE AGREEMENT AND PLAN FOR THE CONVERSION OF THE
FUND FROM A COLLECTIVE INVESTMENT FUND TO A DELAWARE BUSINESS TRUST.
At a meeting held on February 7, 1997, after considering the matters
discussed above and other matters deemed to be relevant, the Trustees who
are not "interested persons" (as defined in the 1940 Act), have unanimously
approved, and voted to recommend to the shareholders of the Current Trust
that they approve, the Conversion. In taking such action and making such
recommendation, the Supervisory Committee took into consideration the fact
that the Conversion may provide operational efficiencies by reducing costs
to shareholders, provide additional managerial flexibility to the Trustees
and facilitate the introduction of new mutual funds. The Supervisory
Committee believes the Conversion will be beneficial to present
shareholders of the Current Trust as well as to potential investors.
VOTE REQUIRED TO APPROVE CONVERSION
Approval of this Proposal requires the affirmative vote of a majority
of the units (as defined above in the introductory section of this Proxy
Statement) of each Current Portfolio voting separately as an individual
series of the Current Trust.
The Supervisory Committee has determined that the Conversion will not
proceed as described above unless both of the Current Portfolios, voting
separately as individual series of the Current Trust, approve the
Conversion. In the event that either of the Current Portfolios does not
vote in favor of the Conversion, the Supervisory Committee will determine
what further action, if any, to take, including the possibility of
resubmitting the proposal at a later time to the unitholders of the Current
Portfolio that may not have voted in favor of the Conversion.
A vote FOR the Conversion further encompasses authorization of the
Current Trust, as sole shareholder of both series of the Successor Trust:
(i) to elect as Trustees of the Successor Trust the persons who, subject to
their being elected under Proposal 1 above, serve as the members of the
Supervisory Committee of the Current Trust; (ii) to approve an investment
advisory agreement for the Successor Trust as described in Proposal 2
above; and (iii) to ratify the selection of the independent accountants
under Proposal 3 above as the independent accountants for the Successor
Trust.
SHAREHOLDER PROPOSALS
Notice is hereby given that any shareholder proposals which may
properly be included in the proxy solicitation materials for the next
annual meeting must be received by the Fund at its executive offices not
less than 120 days in advance of the anniversary date of this proxy
statement. Any such proposals must comply with the requirements of Rule
14a-8 promulgated under the Securities Exchange Act of 1934.
MISCELLANEOUS
The solicitation of the enclosed proxy is made by and on behalf of the
Supervisory Committee of the Fund. The cost of soliciting proxies,
consisting of printing, handling and mailing of the proxies and related
materials, will be paid this year by Canandaigua National. In addition to
solicitation by mail, certain officers and Supervisory Committee members of
the Fund, who will receive no extra compensation for their services, may
solicit by telephone, telegram or personally.
The Supervisory Committee is not aware of any matters that will be
presented for action at the meeting other than the matters set forth
herein. Should any other matters requiring a vote of unitholders arise,
the proxies in the accompanying form will confer upon the person or persons
entitled to vote the shares represented by such proxy a discretionary
authority to vote the shares with respect to any such other matters in
accordance with their best judgment in the interests of the Fund.
By Order of the Supervisory Committee,
March 1, 1997 Robert J. Swartout
Secretary
G:\UKC\CANNATBK\GENSEC\PROXYSTM\97PXYSTM.DR2
<PAGE>
[FORM OF PROXY CARD]
CANANDAIGUA NATIONAL COLLECTIVE INVESTMENT FUND
FOR QUALIFIED TRUSTS
Proxy Solicited on Behalf of the Supervisory Committee of
the Fund for the Annual Meeting of Unitholders
to be held March 28, 1997
The undersigned hereby appoints [Richard H. Hawks, Jr.] and [James M. Exton] as
lawful agents and proxies, each with full power to appoint a substitute to
represent the undersigned at the aforesaid Annual Meeting of Unitholders to be
held at the offices of The Canandaigua National Bank and Trust Company, 72
South Main Street, Canandaigua, New York on March 28, 1997 at 10:30 A.M., on
all matters coming before said meeting.
1. ELECTION OF SUPERVISORY COMMITTEE MEMBERS
Nominees: Robert J. Craugh, Robert N. Coe, Donald C. Greenhouse,
Gregory S. MacKay and Robert J. Swartout
[ ] VOTE FOR all nominees listed above, except vote withheld
from the following nominees (if any):
_______________________________________________________
_______________________________________________________
OR
[ ] VOTE WITHHELD from all nominees.
2. APPROVAL OF INVESTMENT MANAGEMENT AGREEMENT WITH CANANDAIGUA NATIONAL BANK
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. RATIFICATION OF SELECTION OF MORGA JONES & HUFSMITH, P.C. AS
INDEPENDENT ACCOUNTANT
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. APPROVAL OF CONVERSION OF FUND AND THE PORTFOLIO AS A SERIES THEREOF INTO A
DELAWARE BUSINESS TRUST AND SERIES THEREOF
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In their discretion, upon other matters as may properly come before
the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED UNITHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2, 3 AND 4.
____________________________________________ Date: _________________, 1997
____________________________________________ Date: _________________, 1997
(Please sign exactly as name appears below)
UNITS HELD February 10, 1997: _________________________
EXHIBIT A
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT dated as of October 6, 1992, between CANANDAIGUA NATIONAL
COLLECTIVE INVESTMENT FUND FOR QUALIFIED TRUSTS (the "Trust") and THE
CANANDAIGUA NATIONAL BANK AND TRUST COMPANY, as trustee of the Trust
("Canandaigua National" or the "Trustee").
WHEREAS, the Trust has been established to provide a satisfactory
diversification of investments for various Qualified Trusts established
under trust instruments with Canandaigua National as trustee and maintained
in conformity with Section 401(a) or 408(a) of the Internal Revenue Code;
WHEREAS, the Trust will be registered with the Securities and Exchange
Commission as an open-end diversified investment company under the
Investment Company Act;
WHEREAS, the Supervisory Committee of the Trust desires Canandaigua
National as Trustee of the Trust, to manage the investment of the assets of
the Trust, to make available to certain Qualified Trusts the Units of the
Trust, and to render all other fiduciary services to the Trust, and the
Trustee is willing to render such services; and
WHEREAS, the Trustee of the Trust, in order to comply with the
requirements of the Investment Company act, has assigned responsibility for
these fiduciary services among its divisions and is entering into this
Agreement, subject to the approval of the Supervisory Committee and the
Participating Trusts, to provide for these services;
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein, the parties hereto hereby agree as follows:
SECTION 1
DEFINITIONS
Unless otherwise defined in this Agreement, capitalized terms used in
this Agreement will have the meanings attributed to them in the Declaration
of Trust, dated September 9, 1992, establishing the Trust (the "Declaration
of Trust").
SECTION 2
INVESTMENT ADVISORY SERVICES
(a) AGREEMENT TO ACT AS INVESTMENT ADVISOR. Subject to the direction
of the Supervisory Committee, the Trustee will manage the investment and
reinvestment of the assets of the Trust as follows:
(i) The Trustee will maintain a continuous investment program
for the Trust, not inconsistent with the investment objectives and policies
of the Trust as set forth in the Registration Statement of the Trust on
Form N-1A filed with the Securities and Exchange Commission relating to the
Units, as from time to time amended (the "Registration Statement").
(ii) The Trustee, in the performance of its duties and
obligations under this Section 2, will act in conformity with the
Declaration of Trust, with the policies of the Trust as set forth in the
Registration Statement and with the instructions and directions of the
Supervisory Committee and will comply with the requirements of the federal
and state laws including, without limitation, the applicable regulations
and rulings of the United States Comptroller of the Currency relating to
fiduciary powers of national banks.
(iii) The Trustee will determine the securities to be purchased
or sold by the Trust and will place orders pursuant to its determinations
either directly with the issuer or with any broker or dealer who deals in
the securities in which the Trust is active. In placing orders with
brokers or dealers the Trustee will have the objective of obtaining a
combination of the most favorable commission and the best price obtainable
on each transaction, taking into consideration the quality of execution.
The Trustee will also consider in the allocation of investment transactions
the research and investment information provided by brokers and dealers.
The Trustee will determine what portion of each Investment Fund should be
invested in securities described by the policies of such Investment Fund
and what portion, if any, should be held uninvested.
On occasions when the Trustee deems the purchase or sale of a security
to be in the best interest of the Trust as well as other customers, the
Trustee, to the extent permitted by applicable law, may aggregate the
securities to be so sold or purchased in order to obtain the best execution
or lower brokerage commissions, if any. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Trustee in the manner it considers to be
the most equitable and consistent with its fiduciary obligations to the
Trust and to such other customers.
(iv) The Trustee will maintain books and records with respect
to the Trust's securities transactions and will render to the Supervisory
Committee such periodic and special reports as the Supervisory Committee
may reasonably request.
(v) The investment management services of the Trustee to the
Trust under this Agreement are not to be deemed exclusive, and the Trustee
will be free to render similar services to others.
(vi) The Trustee may have deposit, loan and other commercial
banking relationships with issuers of securities purchased by the Trust,
including outstanding loans to such issuers which may be repaid in whole or
in part with proceeds of securities purchased by the Trust. However, the
Trustee will not purchase securities in registered or unregistered
offerings where the Trustee knows, or should know, that the proceeds of the
offering will be used to repay loans from the Trustee.
(vii) The Trust will have the benefit of the investment
analysis and research, the review of current economic conditions and trends
and the consideration of long-range investment policy now generally
available to investment advisory customers of the Trustee. It is
understood that the Trustee will not use any inside information pertinent
to investment decisions undertaken in connection with this Agreement that
may be in its possession or in the possession of any of its affiliates, nor
will the Trustee seek to obtain any such information.
(b) AVOIDANCE OF INCONSISTENT POSITIONS. In connection with
purchases or sales of securities for the Trust, neither the Trustee nor any
of its directors, officers or employees will act as a principal or agent or
receive any commissions. If the Trustee is called upon to give advice to a
customer concerning the Trust, it may act as investment adviser for such
customer, provided that it discloses its position with respect to the Trust
to such customer.
(c) STANDARD OF CARE
(i) The Trustee shall invest the assets of the Trust in the
manner provided herein and shall have no duty or responsibility with
respect to the diversification of the assets of the Trust, except with
respect to the diversification of the assets of the Trust as contemplated
by the Registration Statement.
(ii) The Trustee will be under no liability or obligation to
anyone with respect to any failure on the part of the Supervisory Committee
to perform any of its obligations under the Declaration of Trust or any
agreement affecting the Trust or under the terms of this Agreement or for
any error or omission whatsoever on the part of the Supervisory Committee.
SECTION 3
AVAILABILITY OF UNITS
(a) AGREEMENT TO MAKE UNITS AVAILABLE. The Trustee agrees to inform
persons or entities who may establish Qualified Trusts with it of the
availability of the Units as an investment option for funds deposited in
Qualified Trusts. The Units will be made available upon the terms and at
the current offering prices described in the Registration Statement.
(b) COMPLIANCE WITH LAWS. In performing its duties under this
Section 3, the Trustee will act in conformity with the Declaration of
Trust, with the policies of the Trust as set forth in the Registration
Statement and with the instructions and directions of the Supervisory
Committee and will comply with the requirements of the Investment Company
Act and all other applicable federal and state laws and regulations.
SECTION 4
OTHER SERVICES
(a) BOOKS, RECORDS AND ACCOUNTS. The Trustee will maintain proper
books of account and complete records of all transactions of each
Investment Fund of the trust in accordance with the Investment Company Act
and with generally accepted accounting principles and will render
statements or copies thereof from time to time as requested by the
Supervisory Committee or as may otherwise be required by law. The Trustee
will calculate the net asset value of the Investment Funds in accordance
with the terms of the Declaration of Trust and the methods and policies
adopted by the Supervisory Committee and will assist in the preparation and
distribution of communications to the Participating Trusts and in all
audits of the Trust.
(b) OFFICE FACILITIES, PERSONNEL, SERVICES, ETC. The Trustee at its
own expense, will furnish to the Trust such personnel, office space and
facilities as may be necessary in the conduct of its business, including
light, heat, telephone service, office equipment and stenographic services
in connection with the operation of such office, and shall make available
and shall provide personnel to the Trust to serve without compensation as
officers of the Trust and as members of the Supervisory Committee.
SECTION 5
EXPENSES
(a) INVESTMENT ADVISORY EXPENSES. During the term of this Agreement,
the Trustee will pay all expenses incurred by it in connection with its
activities under Section 2 of this Agreement other than the cost of, and
taxes and brokerage commissions with respect to, securities purchased for
the Trust.
(b) OTHER EXPENSES. Except for expenses to be paid by the Trustee as
set forth in Sections 4(b) and 5(a), the Trustee shall be reimbursed by the
Trust for all expenses incurred by it pursuant to Sections 2 and 4 of this
Agreement on behalf of the Trust, including, but not limited to, fees and
expenses of members of the Supervisory Committee who are not affiliated
with Canandaigua National; interest charges; taxes; brokerage commissions;
expenses of valuing assets; expenses of issue, withdrawal and exchange of
the Units; fees and disbursements of independent accountants and legal
counsel; expenses of preparing, printing and mailing prospectuses, reports,
proxies, notices and statements sent to Participating Trusts; expenses of
meetings of Participating Trusts; association membership dues; and
insurance premiums. The Trust shall also be liable for nonrecurring
expenses, including litigation to which the Trust is a party.
SECTION 6
COMPENSATION OF THE TRUSTEE
(a) COMPENSATION FOR SERVICES. For all services to be rendered by
the Trustee pursuant to Sections 2 and 4 of this Agreement, the Trust
shall, with respect to each Investment Fund of the Trust, pay to the
Trustee as full compensation the fee set forth in the schedule attached
hereto relating to such Investment Fund.
(b) REIMBURSEMENT OBLIGATION. The Trustee shall reimburse the Trust
out of the compensation received pursuant to Section 6(a) hereof for the
amount, if any, by which the expenses of the Trust, including payments made
to the Trustee hereunder, exceed the lower of (i) 1.5% of the average daily
value of the Trust's net assets during such year and (ii) the most
restrictive expense limitation applicable to the Trust imposed by any
jurisdiction in which Units are offered for sale. Such reimbursement shall
be made by the Trustee promptly upon demand by the Trust.
SECTION 7
MISCELLANEOUS
(a) DURATION AND TERMINATION. This Agreement shall become effective
as to each Investment Fund immediately upon (i) approval by a Majority of
the outstanding Units of such Investment Fund and by a majority of the
members of the Supervisory Committee who are not parties to this Agreement
or "interested persons" of any such party as that term is used in the
Investment Company Act, cast in person at a meeting of the Supervisory
Committee called for the purpose of voting on this Agreement, and (ii) the
subsequent execution by both Canandaigua National and the Trust. This
Agreement shall remain in effect for two (2) years after the date it
becomes effective, and from year to year thereafter, but only so long as
such continuance is approved at least annually either by the vote of a
majority of the members of the Supervisory Committee, including specific
approval by a majority of such persons who are not parties to this
Agreement or "interested persons" of any such party as that term is used in
the Investment Company Act, or by the vote of a Majority of the outstanding
Units of each Investment Fund. This Agreement may be terminated on 60
days' prior written notice, as to any Investment Fund at any time without
the payment of any penalty, by the vote of a majority of the members of the
Supervisory Committee, by the vote of a Majority of the outstanding Units
of such Investment Fund, or by the Trustee. This Agreement shall
automatically and immediately terminate in the event of the assignment of
the Agreement, or of only Section 2 hereof, within the meaning of Section
15(a)(4) of the Investment Company Act.
(b) AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may
be changed, waived, discharged or terminated as to any Investment Fund
orally, but only by an instrument in writing signed by the Trust and
Canandaigua National, and no amendment of this Agreement shall be effective
until approved by the vote of a majority of the members of the Supervisory
Committee who are not parties to this Agreement or "interested persons" of
any such party as that term is used in the Investment Company Act, cast in
person at a meeting called for the purpose of voting on such amendment,
and, if required by the Investment Company Act, the vote of a Majority of
the outstanding Units of each Investment Fund.
(c) QUARTERLY REPORTS. The Trustee will prepare and furnish to the
Supervisory Committee, at least quarterly, written reports setting forth
(i) the amounts paid by the Trust and on behalf of the Trust at the Trust's
expense pursuant to this Agreement or any agreement related to this
Agreement, and (ii) the purposes for which such expenditures were made.
(d) GOVERNING LAW. This Agreement shall be governed by, and
construed by, and construed in accordance with, the laws of the State of
New York.
IN WITNESS WHEREOF, Canandaigua National and the Trust have caused
this Agreement to be executed as of the day and year first above written.
THE CANANDAIGUA NATIONAL BANK
BANK AND TRUST COMPANY
By:_____________________________________
Name: George W. Hamlin, IV
Title: President, Chief Executive Officer
and Trust Officer
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED
TRUSTS
By: The Canandaigua National Bank and
Trust Company, Trustee
By:_____________________________________
Name: Robert J. Craugh
Title: Chairman, Supervisory Committee
NOTE: THIS AGREEMENT HAS BEEN ENTERED INTO BY THE CANANDAIGUA
NATIONAL BANK AND TRUST COMPANY ON BEHALF OF THE CANANDAIGUA NATIONAL
COLLECTIVE INVESTMENT FUND FOR QUALIFIED TRUSTS. AS PROVIDED FOR IN
THE DECLARATION OF TRUST CREATING SUCH TRUST, ANY OBLIGATIONS OR
LIABILITIES CREATED UNDER THIS AGREEMENT BIND ONLY THE TRUST ESTATE.
NONE OF THE OBLIGATIONS CREATED HEREUNDER ARE PERSONALLY BINDING
UPON, NOR SHALL RESORT BE HAD TO, NOR RECOURSE OR SATISFACTION SOUGHT
FROM, THE PROPERTY OF ANY OF THE TRUSTEE, THE UNITHOLDERS OR THE
EMPLOYEES OR AGENTS OF THE TRUSTEE, WHETHER THE CLAIM GIVING RISE TO
A CLAIM AGAINST THE PROPERTY OF ANY OF THE TRUSTEE, THE UNITHOLDERS,
OR THE EMPLOYEES OR AGENTS OF THE TRUSTEE IS BASED ON CONTRACT, TORT
OR OTHERWISE.
<PAGE>
COMPENSATION SCHEDULE
CANANDAIGUA NATIONAL COLLECTIVE INVESTMENT FUND
FOR QUALIFIED TRUST
Investment Funds: Bond Portfolio; Stock Portfolio
Compensation terms expressed as annual rate:
1.00% on the average daily total net assets of the Investment
Fund;
Total net assets shall be determined as of the close of business on each
day that total net assets are determined pursuant to the Declaration of
Trust and on any day for which total net assets are not determined, the
most recent preceding total net asset valuation available shall be used.
Payment shall be made to the Trustee on the last day of each month on which
the Trustee is open for business.
EXHIBIT B
FORM OF AGREEMENT AND PLAN OF
REORGANIZATION, CONVERSION AND TERMINATION
THIS AGREEMENT is made as of the __ day of _________, 1997, by and
between the Canandaigua National Collective Investment Fund for Qualified
Trusts, a collective investment trust duly organized under the regulations
of the U.S. Comptroller of the Currency ("OCC") and the laws of the State
of New York (the "Current Trust"), on behalf of its two portfolios, the
Equity Portfolio and the Bond Portfolio (each a "Current Portfolio" and
collectively the "Current Portfolios") and The _________ Fund, a business
trust duly formed under the laws of the State of Delaware (the "Successor
Trust"), with an equal number of series as the Current Trust.
This Agreement is intended to be and is adopted as a plan of
reorganization within the meaning of Section 368 (a) (1) (F) of the U.S.
Internal Revenue Code of 1986, as amended (the "Code"), and is intended to
effect the conversion of the Current Portfolios, each a separate series of
units of beneficial interest of the Current Trust, into an equal number of
separate series of a Delaware business trust. The conversion will involve
the transfer of all of the assets of each Current Portfolio to a
corresponding series of the Successor Trust (the "Corresponding Series")
solely in exchange (1) by the Corresponding Series for assumption of all
liabilities of that Current Portfolio and (2) for the issuance of shares of
beneficial interest (the "Series Shares") by the Corresponding Series to
the Current Trust, followed by the constructive distribution on the Closing
Date (as defined below) of such Series Shares to the holders of units of
beneficial interest of that Current Portfolio in exchange for their shares
of that Current Portfolio in liquidation and termination of that Current
Portfolio, all upon the terms and conditions hereinafter set forth in this
Agreement.
In consideration of the premises and of the covenants and agreements
hereinafter set forth the parties hereto covenant and agree as follows.
1. TRANSFER OF ASSETS OF EACH CURRENT PORTFOLIO IN EXCHANGE FOR
ASSUMPTION OF LIABILITIES AND ISSUANCE OF SHARES OF THE SUCCESSOR
TRUST; TERMINATION OF THE CURRENT PORTFOLIOS
1.1 Subject to the terms and conditions set forth herein and on the
basis of the representations and warranties contained herein the Current
Trust agrees to transfer the assets of each Current Portfolio as set forth
in paragraph 1.2 to a separate Corresponding Series of the Successor Trust
(each a "Series" of the Successor Trust) established by the Successor Trust
solely for the purpose of acquiring all of the assets of that Current
Portfolio which Series have not issued any Series Shares or commenced
operations. The Successor Trust on behalf of each Series agrees that in
exchange therefor (1) each Series shall assume all of the liabilities of
the Current Portfolio whose assets are acquired by the Corresponding
Series, whether contingent or otherwise, then existing and further (2) the
Successor Trust shall deliver to the Current Trust as trustee for that
Current Portfolio the number of full and fractional Series Shares of each
Corresponding Series equal to the value of the assets of that Current
Portfolio, minus the liabilities assumed, as described in paragraph 3.1 on
the Closing Date provided for in paragraph 3.1. Such transactions shall
take place at the Closing provided for in paragraph 3.1.
1.2 The assets of each Current Portfolio to be acquired by the
Corresponding Series shall include, without limitation, all cash, cash
equivalents, securities, receivables (including interest and dividends
receivable), any claims or rights of action or rights to register shares
under applicable securities laws, any books or records of each Current
Portfolio and other property owned by that Current Portfolio and any
deferred or prepaid expenses shown as assets on the books of that Current
Portfolio on the Closing Date provided for in paragraph 3.1.
1.3 Immediately upon delivery to the Current Trust, on behalf of each
Current Portfolio, of Series Shares of each Corresponding Series, the
Supervisory Committee of the Current Trust or any officer duly authorized
by them as the then sole shareholder of the Successor Trust shall (i) elect
as Trustees of the Successor Trust the persons who currently serve as
members of the Supervisory Committee of the Current Trust; (ii) ratify the
selection of the independent accountants; (iii) approve an investment
advisory agreement for the Successor Trust in the form currently in place
with respect to the Current Trust; and (iv) to adopt for the Corresponding
Series the investment objectives, investment policies and investment
restrictions of each Current Portfolio.
1.4 As provided in paragraph 3.3, on the Closing Date the Current
Trust, on behalf of each Current Portfolio, will distribute in liquidation
to the unitholders of each Current Portfolio the Series Shares received
from the Corresponding Series pro rata in proportion to their respective
shares of beneficial interest in that Current Portfolio to the unitholders
of record of that Current Portfolio determined as of the close of business
on the Closing Date, in exchange for the outstanding units of such Current
Portfolio. Such distribution will be accomplished by the transfer of the
Series Shares then credited to the account of that Current Portfolio on the
share records of the Successor Trust to open accounts on those records in
the names of such Current Portfolio unitholders and representing the
respective pro rata number of the Series Shares received from the
Corresponding Series due such Current Portfolio unitholders. The Successor
Trust shall not issue certificates representing Trust Series Shares in
connection with such distribution. Fractional Trust Series Shares shall be
rounded to the third place after the decimal point.
1.5 Immediately after the distribution of the Series Shares as set
forth in Section 1.4 each Current Portfolio, and the Current Trust, shall
be terminated and any such further actions shall be taken in connection
therewith as are required by applicable law.
1.6 Ownership of the Series Shares of each Series Shareholder shall
be maintained separately on the books of The Canandaigua National Bank and
Trust Company ("Canandaigua National Bank") as the Successor Trust's
transfer agent.
1.7 Any reporting responsibility of the Current Trust with respect to
a Current Portfolio is and shall remain the responsibility of the Current
Trust up to and including the Closing Date, and any later date on which a
Current Portfolio may be terminated.
2. VALUATION
2.1 The value of each Current Portfolio's net assets to be acquired
by the Successor Trust on behalf of the Corresponding Series hereunder
shall be the net asset value computed as of the valuation time provided in
the Current Trust's Prospectus on the Closing Date using the valuation
procedures set forth in that Prospectus or Statement of Additional
Information.
2.2 The value of full and fractional Series Shares of the
Corresponding Series to be issued in exchange for each Current Portfolio's
net assets shall be equal to the value of the net assets of that Current
Portfolio on the Closing Date, and the number of such Series Shares shall
equal the number of full and fractional units of that Current Portfolio
issued and outstanding on the Closing Date.
2.3 All computations of value shall be made by American Data Services
in accordance with its regular practice as Administrator for the Current
Trust.
3. CLOSING AND CLOSING DATE
3.1 The transfer of each Current Portfolio's assets in exchange for
the assumption by the Corresponding Series of that Current Portfolio's
liabilities and the issuance of Series Shares of the Corresponding Series
to that Current Portfolio, as described above, together with related acts
necessary to consummate such acts (the "Closing"), shall occur at the
principal office of the Successor Trust at 72 South Main Street,
Canandaigua, New York 14424 on _______________, 1997 ("Closing Date"), or
at such other place or date as the parties may agree in writing. All acts
taking place at the Closing shall be deemed to take place simultaneously as
of the last daily determination of the net asset value of any Current
Portfolio or at such other time and or place as the parties may agree.
3.2 In the event that on the Closing Date (a) the New York Stock
Exchange is closed to trading or trading thereon is restricted or (b)
trading or reporting of trading on said Exchange or in any market in which
portfolio securities of any Current Portfolio are traded is disrupted so
that accurate appraisal of the value of the total net assets of a Current
Portfolio is impracticable, the Closing shall be postponed until the first
business day upon which trading shall have been fully resumed and reporting
shall have been restored.
3.3 The Current Trust shall deliver at the Closing a certificate or
separate certificates of an authorized officer stating that it has notified
the Custodian, as custodian for the Current Trust and the Successor Trust,
of each Current Portfolio's conversion to a series of the Successor Trust.
3.4 Canandaigua National Bank, as shareholder servicing agent for
each Current Portfolio, shall deliver at the Closing a certificate as to
the conversion on its books and records of each Current Portfolio
unitholder account to an account as a holder of Series Shares of the
Corresponding Series. The Successor Trust shall issue and deliver a
confirmation to each Current Portfolio evidencing the Series Shares to be
credited on the Closing Date or provide evidence satisfactory to the
Current Trust that such Series Shares have been credited to each Current
Portfolio's account on the books of the Successor Trust. At the Closing
each party shall deliver to the other such bills of sale, checks,
assignments, stock certificates, receipts or other documents as such other
party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Current Trust represents and warrants as follows:
(a) The Current Trust is a collective investment trust duly formed
and validly existing under the rules and regulations of the OCC and the
laws of the State of New York; and each Current Portfolio is a duly
established and designated series of the Current Trust;
(b) The Current Trust is duly registered as an open-end management
investment company under the Investment Company Act of 1940, as amended
(the "1940 Act"), and such registration is in full force and effect;
(c) The Current Trust is not, and the execution, delivery and
performance of this Agreement will not result, in violation of any
provision of its Declaration of Trust or the Rules and Procedures of the
Supervisory Committee, as amended or restated from time to time, or, to the
Current Trust's knowledge, of any agreement, indenture, instrument,
contract, lease or other undertaking to which the Current Trust is a party
or by which the Current Trust is bound;
(d) The Current Trust has no material contracts or other commitments
(other than this Agreement) applicable to a Current Portfolio that will not
be terminated without liability to that Current Portfolio or the Current
Trust on or prior to the Closing Date;
(e) To the Current Trust's knowledge, no material litigation or
administrative proceeding or investigation of or before any court or
governmental body presently is pending or threatened against the Current
Trust or any of its properties or assets except as previously disclosed in
writing to the Successor Trust. The Current Trust knows of no facts that
might form the basis for the institution of such proceedings and the
Current Trust is not a party to, or subject to, the provisions of any
order, decree or judgment of any court or governmental body that materially
and adversely affects its business or its ability to consummate the
transactions herein contemplated;
(f) At the date hereof and at the Closing Date all Federal, state and
other tax returns and reports, including information returns and payee
statements, of each Current Portfolio required by law to have been filed or
furnished by such dates shall have been filed or furnished and all Federal,
state and other taxes, interest and penalties shall have been paid so far
as due or provision shall have been made for the payment thereof and to the
best of the Current Trust's knowledge no such return is currently under
audit and no assessment has been asserted with respect to any of such
returns or reports;
(g) All issued and outstanding units of each Current Portfolio are,
and at the Closing Date will be, duly and validly issued and outstanding
and fully paid and non-assessable under New York law;
(h) The information to be furnished by the Current Trust for use in
applications for orders, registration statements, proxy materials and other
documents which may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete and shall comply in all
material respects with Federal securities and other laws and regulations
thereunder applicable thereto;
(i) All of the issued and outstanding units of each Current Portfolio
will at the time of the Closing be held by the persons and in the amounts
as certified in accordance with the provisions of paragraph 3.4;
(j) On the Closing Date each Current Portfolio will have good and
marketable title to its assets to be transferred to the Corresponding
Series pursuant to paragraph 1.2, and the Current Trust will have full
right, power and authority to sell, assign, transfer and deliver such
assets hereunder free of any liens or other encumbrances and upon delivery
and payment for such assets, the Corresponding Series will acquire good and
marketable title thereto;
(k) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action
on the part of the Current Trust and upon its proper execution, this
Agreement will constitute a valid and binding obligation of the Current
Trust enforceable in accordance with its terms, subject to approval of the
unitholders of each Current Portfolio, and will not conflict with the
Current Trust's Declaration of Trust or Rules and Procedures of the
Supervisory Committee, or any provision of any agreement to which the
Current Trust is a party or by which it is bound or, to the knowledge of
the Current Trust, result in the acceleration of any obligation or the
imposition of any penalty under any agreement, judgment or decree to which
the Current Trust is a party or by which it is bound;
(l) To the Current Trust's knowledge, no consent, approval,
authorization or order of any court or governmental authority is required
for the consummation by the Current Trust of the transactions contemplated
herein, except such as shall have been obtained prior to the Closing Date
under (i) the Securities Act of 1933, as amended (the "1933 Act"), the
Securities Exchange Act of 1934, as amended (the "1934 Act") and the 1940
Act; (ii) the OCC; (iii) the Pension and Welfare Benefits Administration of
the U. S. Department of Labor ("PWBA"); and (iv) such as may be required
under state securities laws.
(m) The Statements of Assets and Liabilities and Operations, the
Statement of Changes in Net Assets, Per Share Data and Ratios, and the
Schedule of Investments of each Current Portfolio at (copies of which have
been furnished to the Successor Trust) have been audited by Morga Jones and
Hufsmith, P.C., independent public accountants, in accordance with
generally accepted auditing standards. Such financial statements are
presented in accordance with generally accepted accounting principles, and
fairly present, in all material respects, the financial condition of each
Current Portfolio as of such date, and there are no material known
liabilities of any Current Portfolio at such date (contingent or otherwise)
not disclosed therein; and
(n) Since _____________, there has not been any material adverse
change in any Current Portfolio's financial condition, assets, liabilities
or business, other than changes occurring in the ordinary course of
business, or any incurrence by a Current Portfolio of indebtedness maturing
more than one year from the date such indebtedness was incurred, except as
otherwise disclosed to and accepted by the Successor Trust;
(o) A meeting of the Current Trust's unitholders was held on March
28, 1997 to consider and act upon this Agreement and all other actions
necessary to obtain unitholder approval of the transactions contemplated
hereby have been completed.
4.2 The Successor Trust represents and warrants as follows:
(a) The Successor Trust is a Delaware business trust duly organized,
validly existing and in good standing under the laws of the State of
Delaware; that the Successor Trust has filed its Certificate of Trust with
the Secretary of State of Delaware; and that each Series is a duly
established and designated series of the Successor Trust established and
designated by resolution of the Successor Trustees of the Successor Trust;
(b) Each Series is a duly established Series of the Successor Trust.
(c) The Successor Trust is not, and the execution, delivery and
performance of this Agreement will not result, in violation of any
provision of the Declaration of Trust or Bylaws of the Successor Trust or,
to the Successor Trust's knowledge, of any agreement, indenture,
instrument, contract, lease or other undertaking to which the Successor
Trust is a party or by which the Successor Trust is bound;
(d) To the Successor Trust's knowledge, no material litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or threatened against the Successor
Trust or any of its properties or assets, except as previously disclosed in
writing to the Current Trust. The Successor Trust knows of no facts that
might form the basis for the institution of such proceedings, and the
Successor Trust is not a party to, or subject to, the provisions of any
order, decree or judgment of any court or governmental body that materially
and adversely affects its business or its ability to consummate the
transactions herein contemplated;
(e) The Successor Trust intends for each Series to be a regulated
investment company under Section 851 of the Code;
(f) Prior to the Closing Date, there shall be no issued and
outstanding Successor Trust Series Shares or any other securities issued by
the Series;
(g) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action
on the part of the Successor Trust, and, upon its proper execution, this
Agreement will constitute a valid and binding obligation of the Successor
Trust enforceable against the Series in accordance with its terms;
(h) The Series Shares at the Closing will have been duly authorized
and, when so issued and delivered, will be duly and validly issued shares
of the Series, fully paid and non-assessable under Delaware law;
(i) The information to be furnished by the Successor Trust with
respect to each Series for use in applications for orders, registration
statements, proxy materials and other documents which may be necessary in
connection with the transactions contemplated hereby shall be accurate and
complete and shall comply in all material respects with Federal securities
and other laws and regulations applicable thereto;
(j) The Successor Trust, on behalf of each Series, shall use all
reasonable efforts to obtain the approvals and authorizations required by
the 1933 Act, the 1940 Act and such state securities laws as it may deem
appropriate in order to operate after the Closing Date;
(k) To the Successor Trust's knowledge, no consent, approval,
authorization or order of any court or governmental authority is required
for the consummation by each Series of the transactions contemplated
herein, except such as shall have been obtained prior to the Closing Date
under the 1933 Act, the 1934 Act and the 1940 Act and such as may be
required under state securities laws.
5. COVENANTS OF THE CURRENT TRUST AND THE SUCCESSOR TRUST
5.1 The Current Trust covenants that the Series Shares are not being
acquired for the purpose of making any distribution thereof, other than in
accordance with the terms of this Agreement.
5.2 The Current Trust covenants that it will assist the Successor
Trust in obtaining such information as the Successor Trust reasonably
requests concerning the beneficial ownership of the units of each Current
Portfolio.
5.3 The Current Trust will, from time to time, as and when requested
by the Successor Trust execute and deliver, or cause to be executed and
delivered, all such assignments and other instruments, and will take or
cause to be taken such further action, as the Successor Trust may deem
necessary or desirable in order to vest in, and confirm to, the Successor
Trust on behalf of each Series, title to, and possession of, all the assets
of each Current Portfolio to be sold, assigned, transferred and delivered
to the Corresponding Series hereunder and otherwise to carry out the intent
and purpose of this Agreement.
5.4 The Successor Trust will, from time to time as and when requested
by the Current Trust, execute and deliver or cause to be executed and
delivered all such assignments and other instruments, and will take or
cause to be taken such further action, as the Current Trust may deem
necessary or desirable in order to vest in, and confirm to, the Current
Trust, title to, and possession of, the Series Shares issued, sold,
assigned, transferred and delivered hereunder and otherwise to carry out
the intent and purpose of this Agreement.
5.5 Subject to the provisions of this Agreement, the Successor Trust
and the Current Trust each will take, or cause to be taken, all action and
will do or cause to be done all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by
this Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE CURRENT TRUST
The obligations of the Current Trust to consummate the transactions
provided for herein shall be subject to the performance by the Successor
Trust of all the obligations to be performed by the Successor Trust
hereunder on or before the Closing Date and, in addition thereto, to the
following further conditions:
6.1 All representations and warranties of the Successor Trust
contained in this Agreement shall be true and correct in all material
respects as of the date hereof and except as they may be affected by the
transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date, and
6.2 The Successor Trust shall have delivered on the Closing Date to
the Current Trust a certificate executed in the Successor Trust's name by
its President or Vice President, in form and substance satisfactory to the
Current Trust, dated as of the Closing Date, to the effect that the
representations and warranties of the Successor Trust made in this
Agreement are true and correct at and as of the Closing Date, except as
they may be affected by the transactions contemplated by this Agreement,
and as to such other matters as the Company shall reasonably request.
Each of the foregoing conditions precedent may be waived by the Current
Trust.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SUCCESSOR TRUST
The obligations of the Successor Trust to consummate the transactions
provided for herein shall be subject to the performance by the Current
Trust of all the obligations to be performed by the Current Trust hereunder
on or before the Closing Date and, in addition thereto, to the following
further conditions:
7.1 All representations and warranties of the Current Trust contained
on this Agreement shall be true and correct in all material respects as of
the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date, with the same force
and effect as if made on and as of the Closing Date;
7.2 The Current Trust shall have delivered to the Successor Trust on
the Closing Date a statement of its assets and liabilities, prepared in
accordance with generally accepted accounting principles consistently
applied, together with a certificate of the Treasurer or Assistant
Treasurer of the Current Trust as to the aggregate asset value of each
Current Portfolio's portfolio securities as of the Closing Date; and
7.3 The Current Trust shall have delivered to the Successor Trust on
the Closing Date a certificate executed in the Current Trust's name by its
President or Vice President, in form and substance satisfactory to the
Successor Trust, dated as of the Closing Date, to the effect that the
representations and warranties of the Current Trust made in this Agreement
are true and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement, and as to such
other matters as the Successor Trust shall reasonably request.
Each of the foregoing conditions precedent may be waived by the Successor
Trust.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE CURRENT TRUST AND
THE SUCCESSOR TRUST
The obligations of the Current Trust and the Successor Trust are each
subject to the further conditions that on or before the Closing Date:
8.1 This Agreement and the transactions contemplated herein with
respect to each Current Portfolio and its Corresponding Series shall have
been approved by the requisite vote of the unitholders of each Current
Portfolio in accordance with applicable law;
8.2 On the Closing Date no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit or to obtain damages or other relief in connection
with, the transactions contemplated hereby;
8.3 All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities (including those
of the Securities and Exchange Commission, the OCC, the PWBA, and of state
securities authorities) deemed necessary by the Successor Trust or the
Current Trust to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except where
failure to obtain any such consent, order or permit would not involve a
risk of a material adverse effect on the assets or properties of the
Successor Trust or the Current Trust, provided that either party hereto may
for itself waive any of such conditions;
8.4 The Successor Trust shall have taken all necessary action so that
it shall be a registered open-end investment company under the 1940 Act.
8.5 The Current Trust and the Successor Trust shall have received on
or before the Closing Date an opinion of Underberg & Kessler LLP
satisfactory to the Current Trust and the Successor Trust, substantially to
the effect that for Federal income tax purposes:
(a) The acquisition of all of the assets of a Current Portfolio by
the Corresponding Series solely in exchange for the issuance of Series
Shares of such Series to the Current Trust on behalf of that Current
Portfolio and the assumption of that Current Portfolio's liabilities by
such Series, followed by the distribution in liquidation by the Current
Trust of such Series Shares to the unitholders of that Current Portfolio in
exchange for their units of that Current Portfolio and the liquidation and
termination of that Current Portfolio, will constitute a reorganization
within the meaning of Section 368 (a) (1) of the Code (the
"Reorganization"), and that Current Portfolio and the Corresponding Series
will each be "a party to a reorganization" within the meaning of Section
368(b) of the Code;
(b) No gain or loss will be recognized by each Current Portfolio (i)
upon the transfer of all of its assets to the Corresponding Series solely
in exchange for the issuance of Series Shares of the Corresponding Series
to the Current Trust on behalf of such Current Portfolio and the assumption
by the Corresponding Series of that Current Portfolio's liabilities and
(ii) the distribution by the Current Trust of such Series Shares to the
shareholders of such Current Portfolio;
(c) No gain or loss will be recognized by any Series upon its receipt
of a Current Portfolio's assets solely in exchange for the issuance of the
Series Shares of such Series to the corresponding Current Portfolio and the
assumption by that Series of the liabilities of the corresponding Current
Portfolio;
(d) The tax basis of each Current Portfolio's assets in the hands of
the Corresponding Series will be, in each instance, the same as the basis
of those assets in that Current Portfolio's hands immediately before the
transfer;
(e) Each Series' tax holding period for the assets transferred to
such Series by a Current Portfolio will, in each instance, include the
Current Portfolio's tax holding period for those assets;
(f) No gain or loss will be recognized by a Current Portfolio
unitholder upon the exchange of all of their units in a Current Portfolio
solely for Series Shares as part of the transaction;
(g) The tax basis of the Series Shares to be received by unitholders
of a Current Portfolio will be the same as the tax basis of the Current
Portfolio units surrendered in exchange therefor;
(h) The tax holding period of the Series Shares to be received by
Current Portfolio unitholders will include, for each Current Portfolio
unitholder, his tax holding period for the Current Portfolio units
surrendered in exchange therefor, provided that the units of such Current
Portfolio were held as capital assets on the date of the exchange; and
(i) (A) under Section 408(e) of the Code with respect to IRA accounts
maintained in conformity with Section 408(a) thereof, or (B) under Section
501(a) of the Code with respect to single or commingled pension or profit-
sharing trusts, including a single or commingled pension or profit-sharing
trust benefitting one or more self-employed individuals, maintained in
conformity with Section 401(a) thereof, the Reorganization does not trigger
(I) any taxes or penalties under the Employee Retirement Income Security
Act of 1974, as amended, nor (II) a disqualification of such trusts with
respect to their tax-exempt status under Section 408(e) or 501(a) of the
Code, as the case may be.
The Current Trust and Successor Trust each agree to make and provide
representations with respect to the Current Portfolios and the
Corresponding Series which are reasonably necessary to enable Underberg &
Kessler LLP to deliver an opinion substantially as set forth in this
paragraph 8.5.
Each of the foregoing conditions precedent to the obligations of a
party may be waived by that party.
9. ENTIRE AGREEMENT
The Successor Trust and the Current Trust agree that neither party has
made any representation, warranty or covenant not set forth herein and that
this Agreement constitutes the entire agreement between the parties. The
representations, warranties and covenants contained herein or in any
document delivered pursuant hereto or in connection herewith shall survive
the consummation of the transactions contemplated hereunder.
10. TERMINATION
10.1 This Agreement may be terminated by the mutual agreement of the
Successor Trust and the Current Trust. In addition, either the Successor
Trust or the Current Trust may at its option terminate this Agreement at or
prior to the Closing Date because:
(a) A material breach by the other of any representations,
warranties or agreements contained herein to be performed at or prior
to the Closing Date; or
(b) A condition herein express to be precedent to the
obligations of the terminating party has not been met and it
reasonably appears that it will not or cannot be met.
10.2 In the event of any such termination, there shall be no liability
for damages on the part of the Successor Trust or the Current Trust, or
their respective trustees or officers, to the other party or its trustees
or officers.
11. AMENDMENT
This Agreement may be amended, modified or supplemented in such manner
as may be mutually agreed upon in writing by the parties; provided,
however, that following the Shareholders' Meeting called by the Current
Trust pursuant to paragraph 5.1, no such amendment may have the effect of
changing the provisions for determining the number of Series Shares to be
paid to the unitholders of the Current Trust under this Agreement to their
detriment without their further approval.
12. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
12.1 The article and paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement.
12.2 This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
12.3 This Agreement shall be governed by and construed in accordance
with the rules and regulations of the OCC and the laws of the State of
Delaware.
12.4 This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations hereunder
shall be made by any party without the written consent of the other party.
Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm or corporation other than the parties
hereto and their respective successors and assigns any rights or remedies
under or by reason of this Agreement.
12.5 The parties hereto recognize that the Current Trust is a
collective investment trust and the Successor Trust is a business trust and
all parties agree that any claim arising hereunder or by reason hereof
shall not be enforceable against the Supervisory Committee of the Current
Trust, the unitholders of the Current Trust, the Successor Trustees or the
Successor Trust but only against the assets of the applicable Current
Portfolio and of its Corresponding Series, respectively.
C:\TPY\CNB\REORGPLN.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officer.
Canandaigua National Collective Investment Fund for
Qualified Trusts
By:_________________________________
Title:_________________________________
The _______________________ Fund
By:________________________________
Title:________________________________
C:\TPY\CNB\REORGPLN.
EXHIBIT C
FORM OF DECLARATION OF TRUST
THE _________ FUND
[March __, 1997]
DECLARATION OF TRUST, made as of [March __, 1997] by Robert J.
Craugh, Robert N. Coe, Donald C. Greenhouse, Gregory S. MacKay and Robert
J. Swartout (each a "Trustee," and collectively, the "Trustees"):
WHEREAS, the Trustees desire to establish a trust fund for the
investment and reinvestment of funds contributed thereto;
NOW, THEREFORE, the Trustees declare that all monEY and property
contributed to the trust fund hereunder shall be held and managed under
this Declaration of Trust as herein set forth below.
I.
NAME
This trust shall be known as THE _________ FUND (hereinafter called
the "Trust"), and the Trustees shall conduct the business of the Trust
under that name or any other name as they shall from time to time
determine.
II.
DEFINITIONS
2.1 Definition of Certain Terms. As used in this Declaration of
Trust, the terms set forth below shall have the following meanings:
A. The "1940 Act" refers to the Investment Company Act of 1940,
as now or hereafter amended, to the rules and regulations adopted from time
to time thereunder and to any order or orders thereunder which may from
time to time be applicable to the Trust.
B. The "1933 Act" refers to the Securities Act of 1933, as now
or hereafter amended, to the rules and regulations adopted from time to
time thereunder and to any order or orders thereunder which may from time
to time be applicable to the Trust.
C. The terms "affiliated person," "assignment" and "interested
person" shall have the respective meanings set forth in the 1940 Act. The
term "vote of a majority of outstanding Shares" shall mean the "vote of a
majority of the outstanding voting securities" as defined in Section
2(a)(42) of the 1940 Act.
D. The "Bylaws" shall refer to the Bylaws of the Trust as
adopted and amended from time to time.
E. The "Declaration of Trust" shall mean this Declaration of
Trust as amended or restated from time to time.
F. "Person" shall mean a natural person, a corporation, a
partnership, an association, a joint-stock company, a trust, a fund or any
organized group of persons whether incorporated or not.
G. "Shares" means the equal proportionate transferable units of
interest of each class into which the beneficial interest in the Trust may
be classified or reclassified from time to time by the Trustees acting
under this Declaration of Trust, or in the absence of such action, means
the equal proportionate transferable units of interest into which the
entire beneficial interest in the Trust shall be divided from time to time,
and includes fractions of Shares as well as whole Shares.
H. "Shareholder" means a record owner of Shares in the Trust.
I. The "Trustees" refers to the individual trustees of the
Trust named herein or elected in accordance with Article VI hereof in their
capacity as trustees here under and not as individuals and to their
successor or successors while serving in office as a trustee of the Trust,
and includes a single trustee.
J. "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.
III.
PURPOSE OF TRUST; AGENT FOR SERVICE
The Trust is a Delaware business trust of the type described in Title
12, Section 3801 of the Code of the State of Delaware formed for the
purpose of acting as an open-end diversified management investment company
under the 1940 Act; PROVIDED, HOWEVER, that the Trust may exercise all
powers which are ordinarily exercised by or permissible for Delaware
business trusts.
IV.
OWNERSHIP OF ASSETS OF THE TRUST
The assets of the Trust shall be held separate and apart from any
assets now or hereafter held in any capacity, other than as Trustees
hereunder, by the Trustees, including without limitation any successor
Trustees. Legal title to all the assets of the Trust shall be vested in
the Trustees as joint tenants except that the Trustees shall have power to
cause legal title to any assets of the Trust 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
reasonably determine. The right, title and interest of the Trustees in the
assets of the Trust shall vest automatically in each person who may
hereafter become a Trustee. Upon the resignation, removal or death of a
Trustee, such Trustee shall automatically cease to have any right, title or
interest in any of the assets of the Trust, and the right, title and
interest of such Trustee in the assets of the Trust shall vest
automatically in the remaining Trustees. Such vesting and cessation of
title shall be effective regardless of whether conveyancing documents
(pursuant to Section 6.6 hereof or otherwise) have been executed and
delivered. Except to the extent otherwise required by Article V hereof, no
Shareholder shall be deemed to have severable ownership in any individual
asset of the Trust or any right of partition or possession thereof, or
shall be called upon to assume any loss of the Trust nor can he be called
upon to assume any loss of the Trust or suffer an assessment of any kind by
virtue of his/her ownership of Shares, but each Shareholder shall have a
proportionate undivided beneficial interest in the assets belonging to the
class of Shares held by such Shareholder. 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 of Trust. Shares shall not entitle any
holder thereof to preference, preemptive, appraisal, conversion or exchange
rights, except as the Trustees may determine pursuant to Article V hereof.
V.
SHAREHOLDERS; BENEFICIAL INTEREST IN THE TRUST;
PURCHASE AND REDEMPTION OF SHARES
5.1 SHARES IN THE TRUST.
A. The beneficial interest in the Trust may at all times be
divided into an unlimited number of full and fractional transferable Shares
with $.001 par value. All Shares shall be of one class, PROVIDED that
subject to this Declaration of Trust and the requirements of applicable
law, the Trustees shall have the power to classify or reclassify any
unissued Shares into any number of additional classes of Shares by setting
or changing in any one or more respects, from time to time before the
issuance thereof, their designations, preferences, conversion or other
rights, voting powers, restrictions, limitations, qualifications or terms
or conditions of redemption, PROVIDED FURTHER that the investment
objectives, policies and restrictions governing the management and
operations of the Trust, including the management of assets belonging to
any class of Shares, may from time to time be changed or supplemented by
the Trustees, subject to the requirements of the 1940 Act. The power of
the Trustees to classify or reclassify Shares shall include, without
limitation, the power to classify or reclassify any class of Shares into
one or more series of such class. All references to Shares in this
Declaration of Trust which are not accompanied by a reference to any
particular class of Shares shall be deemed to apply to all outstanding
Shares of any and all classes. All references in this Declaration of Trust
to any class of Shares shall include and refer to the Shares of any series
thereof.
Upon the issuance of the first Share of a second class of Shares
classified or reclassified by the Trustees pursuant to this Section 5.1,
all Shares theretofore issued and outstanding shall automatically represent
Shares of a separate class having the preferences, conversion and other
rights, voting powers, restrictions, limitations, qualifications and terms
and conditions of redemption provided for in this Declaration of Trust with
respect to any class of Shares. The Trustees may from time to time divide
or combine the outstanding Shares of the Trust or of any class into a
greater or lesser number without thereby changing the proportionate
beneficial interest of the Shares in the Trust so divided or combined or in
the assets belonging to such class as the case may be.
At any time that there are no Shares outstanding of any
particular class previously established and designated, the Trustees may
abolish that class and the establishment and designation thereof.
B. Subject to the power of the Trustees to classify and
reclassify any unissued Shares pursuant to subsection A of this Section
5.1, Shares of the Trust shall have the following preferences, conversion
and other rights, voting powers, restrictions, limitations, qualifications
and terms and conditions of redemption:
(1) ASSETS BELONGING TO A CLASS. All consideration
received by the Trust for the issue or sale of Shares of any class,
together with all income, earnings, profits and proceeds derived from the
investment thereof, including any proceeds derived from the sale, exchange
or liquidation of such investments, any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, and any
general assets of the Trust not belonging to a particular class which the
Trustees may, in their sole discretion, allocate to a class, shall
irrevocably belong to the class of Shares with respect to which such
assets, payments or funds were received or allocated for all purposes,
subject only to the rights of creditors, and shall be so handled upon the
books of account of the Trust. Such assets and the income, earnings,
profits and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation thereof, and any assets derived from any
reinvestment of such proceeds in whatever form, are herein referred to as
"assets belonging to" such class. Shareholders of any class of Shares
shall have no right, title or interest in or to the assets belonging to any
other class.
(2) LIABILITIES BELONGING TO A CLASS. Subject to the
provisions of Article IX hereof, the assets belonging to any class of
Shares shall be charged with the direct liabilities in respect of such
class and shall also be charged with such class's proportionate share of
the general liabilities of the Trust as determined by comparing, before the
allocation of the general liabilities, the net asset value of such class
with the aggregate net asset value of all of the several classes of shares.
The liabilities so charged to a class are herein referred to as
"liabilities belonging to" such class.
(3) DIVIDENDS AND DISTRIBUTIONS. Shares of each class
shall be entitled to such dividends and distributions, in Shares or in cash
or both, as may be declared from time to time by the Trustees, acting in
their sole discretion, with respect to such class, PROVIDED that dividends
and distributions on Shares of a particular class shall be paid only out of
the lawfully available "assets belonging to" such class as such term is
defined in subsection C(l) of this Section 5.1.
(4) LIQUIDATING DISTRIBUTIONS. In the event of the
termination of the Trust and the winding up of its affairs, the
Shareholders of each class shall be entitled to receive, as a class, out of
the assets of the Trust available for distribution to Shareholders, but
other than general assets , not belonging to any particular class of
Shares, the assets belonging to such class; and the assets so distributable
to the Shareholders of any class shall be distributed among such
Shareholders in proportion to the number of Shares of such class held by
them and recorded in their name on the books of the Trust. In the event
that there are any general assets not belonging to any particular class of
Shares and available for distribution, such distribution shall be made to
the Shareholders of all classes in proportion to the relative net assets of
the respective classes determined as hereinafter provided and the number of
Shares of such class held by them and recorded in their name on the books
of the Trust.
(5) VOTING. The holder of each Share shall be entitled to
one vote for each full Share, and a proportionate fractional vote for each
fractional Share, irrespective of the class, then recorded in his/her name
on the books of the Trust, to the extent provided in Article VIII hereof.
(6) PRE-EMPTIVE RIGHTS. Shareholders shall have no pre-
emptive or other rights to subscribe to any additional Shares or other
securities issued by the Trust.
(7) CONVERSION RIGHTS. The Trustees shall have the
authority to provide from time to time that the holders of Shares of any
class shall have the right to convert or exchange said Shares for or into
Shares of one or more other classes in accordance with such requirements
and procedures as may be established from time to time by the Trustees.
(8) REDEMPTION OF SHARES. To the extent that the assets of
the Trust are legally available for such redemptions, a Shareholder of the
Trust shall have the right to require the Trust to redeem his/her full and
fractional Shares of any class out of assets belonging to such class at a
redemption price equal to the net asset value per Share next determined
after receipt of a request to redeem in proper form as determined by the
Trustees, subject to the right of the Trustees to suspend the right of
redemption of Shares or postpone the date of payment of such redemption
price in accordance with the provisions of applicable law. The Trustees
shall establish such rules and procedures as they deem appropriate for the
redemption of Shares, provided that all redemptions shall be in accordance
with the 1940 Act. Without limiting the generality of the foregoing, the
Trust shall, to the extent permitted by applicable law, have the right at
any time to redeem the Shares owned by any holder thereof (a) in connection
with the termination of any class of Shares as provided hereunder; (b) if
the value of such Shares in the account or accounts maintained by the Trust
or its transfer agent for any class or classes of Shares is less than the
value determined from time to time by the Trustees as the minimum required
for an account or accounts of such class or classes, PROVIDED that the
Trust shall provide a Shareholder with written notice at least fifteen (15)
days prior to effecting a redemption of Shares as a result of not
satisfying such requirement; (c) to reimburse the Trust for any loss it has
sustained by reason of the failure of such Shareholder to make full payment
for Shares purchased by such Shareholder; (d) 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 relating to
such Shares; or (e) if the net income with respect to any particular class
of Shares should be negative or it should otherwise be appropriate to carry
out the Trust's responsibilities under the 1940 Act, in each case subject
to such further terms and conditions as the Trustees may from time to time
establish. The redemption price of Shares in the Trust shall, except as
otherwise provided in this section, be the net asset value thereof as
determined by the Trustees from time to time in accordance with the
provisions of applicable law, less such redemption fee or other charge, if
any, as may be fixed by the Trustees. When the net income of any class
with respect to which the Trustees have, in their discretion, established a
policy of maintaining a constant net asset value per Share is negative or
whenever deemed appropriate by the Trustees in order to carry out the
Trust's responsibilities under the 1940 Act, the Trust may, without payment
of compensation but in consideration of the interests of the Trust and the
holders of Shares of such class in maintaining a constant net asset value
per Share of such class, redeem pro rata from each holder of record on such
day, such number of full and fractional Shares of such class as may be
necessary to reduce the aggregate number of outstanding Shares in order to
permit the net asset value thereof to remain constant. Payment of the
redemption price, if any, shall be made in cash by the Trust at such time
and in such manner as may be determined from time to time by the Trustees
unless, in the opinion of the Trustees, which shall be conclusive,
conditions exist which make payment wholly in cash unwise or undesirable;
in such event the Trust may make payment in the assets belonging or
allocable to the class of the Shares redemption of which is being sought,
the value of which shall be determined as provided herein.
(9) TERMINATION OF A CLASS. Without the vote of the Shares
of any class then outstanding (unless otherwise required by applicable
law), the Trustees may:
(a) Sell and convey the assets belonging to a class of
Shares to another trust or corporation that is an open-end diversified
management investment company (as defined in the 1940 Act) and is organized
under the laws of any state of the United States for consideration which
may include the assumption of all outstanding obligations, taxes and other
liabilities, accrued or contingent, belonging to such class and which may
include securities issued by such trust or corporation. Following such
sale and conveyance, and after making provision for the payment of any
liabilities belonging to such class that are not assumed by the purchaser
of the assets belonging to such class, the Trust may, at the Trustees'
option, redeem all outstanding shares of such class at the net asset value
thereof as determined by the Trustees in accordance with the provisions of
applicable law, less such redemption fee or other charge, if any, as may be
fixed by the Trustees. Notwithstanding any other provision of this
Declaration of Trust to the contrary, the redemption price may be paid in
cash or by distribution of the securities or other consideration received
by the Trust for the assets belonging to such class upon such conditions as
the Trustees deem, in their sole discretion, to be appropriate consistent
with applicable law and this Declaration of Trust;
(b) Sell and convert the assets belonging to a class
of Shares into money and, after making provision for the payment of all
obligations, taxes and other liabilities, accrued or contingent, belonging
to such class, the Trust may, at the Trustees' option, (i) redeem all
outstanding shares of such class at the net asset value thereof as
determined by the Trustees in accordance with the provisions of applicable
law, less such redemption fee or other charge, if any, as may be fixed by
the Trustees upon such conditions as the Trustees deem, in their sole
discretion, to be appropriate consistent with applicable law and this
Declaration of Trust; or (ii) combine the assets belonging to such class
following such sale and conversion with the assets belonging to any one or
more other classes of Shares pursuant to and in accordance with subsection
C of this Section 5.9; or
(c) Combine the assets belonging to a class of Shares
with the assets belonging to any one or more other classes of Shares if the
Trustees reasonably determine that such combination will not have a
material adverse effect on the Shareholders of any class participating in
such combination. In connection with any such combination of assets the
Shares of any class then outstanding may, if so determined by the Trustees,
be converted into shares of any other class or classes of Shares with
respect to which conversion is permitted by applicable law, or may be
redeemed, at the option of the Trustees, at the net asset value thereof as
determined by the Trustees in accordance with the provisions of applicable
law, less such redemption fee or other charge, or conversion cost, if any,
as may be fixed by the Trustees upon such conditions as the Trustees deem,
in their sole discretion, to be appropriate consistent with applicable law
and this Declaration of Trust. Notwithstanding any other provision of this
Declaration of Trust to the contrary, any redemption price, or part
thereof, paid pursuant to this subsection may be paid in Shares of any
other existing or future class or classes.
In connection with the termination of a class of Shares and the
winding up of its affairs, all of the powers of the Trustees under this
Declaration of Trust shall continue until the affairs of such class shall
have been wound up, including the power to fulfill or discharge the
contracts of the Trust relating to such class, to collect assets belonging
to such class, to sell, convey, assign, exchange, transfer or otherwise
dispose of all or any part of the remaining assets belonging to such class
to one or more persons at public or private sale for consideration that may
consist in whole or in part of cash, securities or other property of any
kind, to discharge or pay the liabilities belonging to such class, and to
do all other acts appropriate to liquidate the business of such class,
provided that the holders of Shares of any class shall not be entitled in
any liquidation to receive any distribution upon the assets belonging to
any other class.
After the excess of the assets belonging to any class over the
liabilities belonging to such class have been distributed among the
Shareholders of such class in proportions to the numbers of Shares held by
them and recorded on the books of the Trust, the Trustees may authorize the
termination of such class of Shares.
5.2 PURCHASE OF SHARES. The Trustees may accept investments in the
Trust from such persons for such consideration, including cash or property,
and on such other terms as they may from time to time authorize and the
Trustees may in such manner acquire other assets (including the acquisition
of assets subject to, and in connection with, the assumption of
liabilities) and businesses. The Trustees may in their discretion reject
any order for the purchase of Shares.
5.3 NET ASSET VALUE PER SHARE. The net asset value per Share of any
class of Shares shall be computed at such time or times as the Trustees may
specify pursuant to the 1940 Act. Assets shall be valued and net asset
value per Share shall be determined by such person or persons as the
Trustees may appoint under the supervision of the Trustees in such manner
as the Trustees may determine not inconsistent with the 1940 Act.
5.4 OWNERSHIP OF SHARES. The ownership of Shares shall be recorded
on the record books of the Trust. The Trustees may make such rules and
regulations as they consider appropriate for the issuance of Share
certificates, the transfer of Shares and similar matters. Certificates
certifying the ownership of Shares may be issued as the Trustees may
determine from time to time, PROVIDED that the Trustees shall have the
power to call outstanding Share certificates and to replace them with book
entries. The record books of the Trust shall be conclusive as to the
identity of holders of Shares and as to the number of Shares held by each
Shareholder.
VI.
THE TRUSTEES
6.1 MANAGEMENT OF THE TRUST. The affairs of the Trust shall be
managed by the Trustees and they shall have all powers necessary or
desirable to carry out such responsibility, including without limitation
the appointment of and delegation of responsibility to such officers,
employees, agents, and contractors as they may select.
6.2 NUMBER AND TERM OF OFFICE. The number of Trustees shall be
determined from time to time by the Trustees themselves, but shall not be
less than five nor more than ten. Subject to the provisions of this
section relating to resignation or removal, 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 6.5 hereof,
or, if not so terminated until the election of such Trustee's successor in
office has become effective in accordance with this section. A Trustee
shall qualify by accepting in writing his/her election or appointment and
agreeing to be bound by the provisions of this Declaration of Trust.
Except as otherwise provided herein in the case of vacancies, Trustees
(other than the Initial Trustees provided in Section 6.3 hereof) shall be
elected by the Shareholders at such time or times as the Trustees shall
determine that such election is required under Section 16(a) of the 1940
Act or is otherwise advisable. Notwithstanding the foregoing, (a) any
Trustee may resign as a Trustee by written instrument signed by him/her and
delivered to the other Trustees at the principal business office of the
Trust (without need for prior or subsequent accounting), which shall take
effect upon such delivery or upon such later date as is specified therein;
(b) any Trustee may be removed at any time with or without cause by written
instrument, signed by at least two-thirds of the number of Trustees prior
to such removal, specifying the date when such removal shall become
effective; (c) any Trustee may be removed at any time with or without cause
by the action of at least two-thirds of the outstanding Shares of the
Trust; (d) any Trustee who has become incapacitated by illness or injury
may be retired by written instrument signed by a majority of the other
Trustees; and (e) the term of a Trustee shall terminate at his/her death,
resignation, removal or adjudicated incompetency.
6.3 INITIAL TRUSTEEs. The initial Trustees shall be Robert J. Craugh,
Robert N. Coe, Donald C. Greenhouse, Gregory S. MacKay and Robert J.
Swartout, who, by their execution hereof, have agreed to be bound by the
provisions of this Declaration of Trust.
6.4 QUORUM. At all meetings of the Trustees, a majority of the
Trustees shall constitute a quorum for the transaction of business and the
action of a majority of the Trustees present at any meeting at which a
quorum is present shall be the action of the Trustees unless the
concurrence of a greater proportion is required for such action by law, the
Bylaws or this Declaration of Trust. If a quorum shall not be present at
any meeting of Trustees, the Trustees present thereat may by a majority
vote adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present. Meetings may
be held by means of a conference telephone circuit or similar
communications equipment by means of which all persons participating may
hear each other. The Trustees may also act without a meeting, unless
provided otherwise in this Declaration of Trust or required by law, by
written consents of a majority of the Trustees. As used herein, a
"majority of the Trustees" shall mean a majority of the Trustees in office
at the time in question or if there shall be only one Trustee then in
office, then such term shall mean such Trustee.
The Trustees may appoint committees of Trustees and delegate powers to
them as provided in the Bylaws. Any committee of the Trustees, including
an executive committee, if any, may act with or without a meeting. A
quorum for all meetings of any such committee shall be a majority of the
members thereof. Unless provided otherwise in this Declaration of Trust,
any action of any such committee may be taken at a meeting by vote of a
majority of the members present (a quorum being present) or without a
meeting by unanimous written consent of the members.
6.5 VACANCIES. In case a vacancy shall exist by reason of an
increase in number, or for any other reason, the remaining Trustees may
fill such vacancy by appointing such other person as they in their
discretion shall select. An appointment of a Trustee may be made in
anticipation of a vacancy to occur at a later date by reason of retirement
or resignation of a Trustee or an increase in the number of Trustees;
provided, that such appointment will 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, the Trustees in office, regardless of
their number, shall have all the powers granted to the Trustees and shall
discharge all the duties imposed on the Trustees by the Declaration of
Trust. A written instrument certifying the existence of such vacancy
signed by a majority of the Trustees shall be conclusive evidence of the
existence of such vacancy. Such appointment shall be evidenced by a
written instrument signed by a majority of the then Trustees but the
appointment shall not take effect until the individual so named shall have
qualified by accepting in writing the appointment and agreeing to be bound
by the terms of this Declaration of Trust. A vacancy may also be filled by
the Shareholders in an election held at an annual or special meeting. As
soon as any Trustee so appointed or elected shall have qualified, the Trust
estate shall vest in the new Trustee or Trustees, together with the
continuing Trustees, without any further act or conveyance.
6.6 EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE. The death,
resignation, removal, or incapacity of the Trustees, or any one of them,
shall not operate to annul the Trust or to revoke any existing agency
created pursuant to the terms of this Declaration of Trust. Upon the
resignation or removal of a Trustee, or his/her otherwise ceasing to be a
Trustee, he/she shall execute and deliver such documents as the remaining
Trustees shall require for the purpose of conveying to the Trust or the
remaining Trustees any Trust property held in the name of the resigning or
removed Trustee. Upon the incapacity or death of any Trustee, his/her
legal representative shall execute and deliver on his/her behalf such
documents as the remaining Trustees shall require as provided in the
preceding sentence. The failure to request or deliver such documents shall
not affect the operation of the provisions of Article IV hereof.
6.7 POWERS. The Trustees in all instances shall act as principals
and are and shall be free from the control of the Shareholders. The
Trustees shall have full power and authority to do any and all acts and to
make and execute any and all contracts and instruments that they may
consider necessary or desirable in connection with the management of the
Trust. The Trustees shall not be bound or limited by present or future
laws or customs in regard to Trust investments, but shall have full
authority and power to make any and all investments which they, in their
uncontrolled discretion, shall deem proper to accomplish the purpose of
this Trust. Without limiting the foregoing, and subject to any applicable
limitation in this Declaration of Trust or the Bylaws, the Trustees shall
have power and authority:
A. To conduct, operate and carry on, either directly or through
one or more wholly-owned subsidiaries, the business of an investment
company or any other lawful business activity which the Trustees, in their
sole and absolute discretion, consider to be (1) incidental to the business
of the Trust or such class of Shares as an investment company, (2)
conducive to or expedient for the benefit or protection of the Trust or the
Shareholders of such class of Shares, or (3) calculated in any other manner
to promote the interests of the Trust or the Shareholders of such class of
Shares.
B. To adopt Bylaws not inconsistent with this Declaration of
Trust providing for the conduct of the affairs of the Trust and to amend
and repeal them to the extent that they do not reserve that right solely to
the Shareholders.
C. To issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in Shares
of the Trust; and to apply to any such repurchase, redemption, retirement,
cancellation or acquisition of Shares, 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; and to divide or
combine Shares without thereby changing the proportionate beneficial
interest in the Trust.
D. To issue, acquire, hold, resell, convey, write options on,
and otherwise deal in securities, debt instruments and other instruments
and rights of a financial character and to apply to any acquisition of
securities any property of the Trust whether from capital or surplus or
otherwise.
E. To invest and reinvest cash, and to hold cash uninvested.
F. To borrow money, issue guarantees of indebtedness or
contractual obligations of others, to sell, exchange, lend, pledge,
mortgage, hypothecate, write options on and lease any or all of the Trust
Property.
G. To act as a distributor of Shares and as underwriter of, or
broker or dealer in, securities or other property.
H. To vote or give assent, or exercise any rights of ownership,
with respect to stock or other securities or property; and to execute and
deliver proxies or powers of attorney to such Person or Persons as the
Trustees shall deem proper, granting to such Person or Persons such power
and discretion with relation to securities or property as the Trustees
shall deem proper.
I. To exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities.
J. To hold any security or property in a form not indicating
any trust, whether in bearer, unregistered or other negotiable form, or in
the name of the Trustees or of the Trust or in the name of a custodian,
sub-custodian or other depositary or a nominee or nominees or otherwise.
K. To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer; any
security of which is or was held in the Trust; and consent to any contract,
lease, mortgage, purchase or sale of property by such corporation or
issuer; and to pay calls or subscriptions with respect to any security held
in the Trust.
L. To join with other security holders in acting through a
committee, depositary, voting trustee or otherwise, and in that connection
to deposit any security with, or transfer any security to, any such
committee, depositary or trustee, and to delegate to them such power and
authority with relation to any security (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree to pay, and to
pay, such portion of the expenses and compensation of such committee,
depositary or trustee as the Trustees shall deem proper.
M. To enter into joint ventures, general or limited
partnerships and any other combinations or associations.
N. To enter into contracts of any kind and description.
O. To collect all property due to the Trust, to pay all claims,
including taxes, against the assets belonging to the Trust, to prosecute,
defend, compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited
to, claims for taxes, 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.
P. To retain and employ any Person or Persons to serve on
behalf of the Trust as investment adviser, administrator, transfer agent,
custodian, underwriter, distributor or in such other capacities as they
consider desirable and to delegate such power and authority as they
consider desirable to any such Person or Persons.
Q. To indemnify any person with whom the Trust has dealings.
R. To purchase and pay for entirely out of Trust Property such
insurance as they may deem necessary or appropriate for the conduct of the
business, including without limitation, insurance policies insuring the
Trust Property and payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, investment advisers or managers, principal
underwriters, or independent contractors of the Trust individually against
all claims and liabilities of every nature arising by reason of holding,
being or having held any such office or position, or by reason of any
action alleged to have been taken or omitted by any such person as
Shareholder, Trustee, officer, employee, agent, investment adviser or
manager, principal underwriter, or independent contractor, including any
action taken or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such Person
against such liability.
S. 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, claims, 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.
T. To establish pension, profit sharing, Share purchase, and
other retirement, incentive and benefit plans for any Trustees, officers,
employees and agents of the Trust.
U. To determine and change the fiscal year of the Trust and the
method by which its accounts shall be kept.
V. To establish in their absolute discretion in accordance with
the provisions of applicable law the basis or method for determining the
value of the assets belonging to any class of Shares, the value of the
liabilities belonging to any class of Shares, the allocation of any assets
or liabilities to any class of Shares, the net asset value of any class of
Shares, the times at which Shares of any class shall be deemed to be
outstanding or no longer outstanding and the net asset value of each Share
of any class for purposes of sales, redemptions, repurchases of Shares or
otherwise.
W. To determine in accordance with generally accepted
accounting principles and practices what constitutes net profits or net
earnings, and to determine what accounting periods shall be used by the
Trust for any purpose, whether annual or any other period, including daily;
to set apart out of the assets belonging to any class of Shares such
reserves of funds for such purposes as it shall determine and to abolish
the same; to declare and pay any dividends and distributions to any class
of Shares in cash, securities or other property from any assets legally
available therefor, at such intervals (which may be as frequently as daily)
or on such other periodic basis, as it shall determine; to declare such
dividends or distributions by means of a formula or other method of
determination, at meetings held less frequently than the frequency of the
effectiveness of such declaration; to establish payment dates for dividends
or any other distributions on any basis, including dates occurring less
frequently than the effectiveness of declarations thereof; and to provide
for the payment of declared dividends on a date earlier or later than the
specified payment date in the case of Shareholders redeeming their entire
ownership of Shares of any class.
X. To engage in any other lawful act or activity in which a
Delaware business trust or a corporation organized under the Delaware
General Corporation Law may engage.
No one dealing with the Trustees shall be under any obligation to
make any inquiry concerning the authority of the Trustees, or to see to the
application of any payments made or property transferred to the Trustees or
upon their order.
6.8 TRUSTEES AND REPRESENTATIVES AS SHAREHOLDERS. Any Trustee,
representative or other agent of the Trust may acquire, own and dispose of
Shares of the Trust to the same extent as if he/she were not a Trustee,
representative or agent; and the Trust may issue and sell or cause to be
issued and sold Shares of the Trust to, and may buy such Shares from, any
person with which such Trustee, representative or agent is affiliated
subject only to the general limitations herein contained as to the sale and
purchase of such Shares; all subject to any restrictions which may be
contained in the Bylaws.
6.9 EXPENSES; TRUSTEE REIMBURSEMENT. The Trustees shall have the
power to incur and to pay (or shall be reimbursed) from the Trust Property
all expenses and disbursements of the Trust, including, without limitation,
interest expense, compensation payable to Trustees and representatives of
the Trust, taxes, fees and commissions of every kind incurred in connection
with the affairs of the Trust, expenses of issue, repurchase and redemption
of Shares, expenses of registering and qualifying the Trust and its Shares
under Federal and State securities laws and regulations, charges of
custodians, transfer agents, investment advisers, administrators and
registrars, expenses of preparing and printing and distributing
prospectuses, auditing and legal expenses, expenses of reports to
Shareholders, expenses of meetings of Shareholders and proxy solicitations
therefor, insurance expense, association membership dues and such non-
recurring items as may arise, including costs and expenses of litigation to
which the Trust is a party, and for all losses and liabilities by them
incurred in administering the Trust, PROVIDED that expenses, disbursements,
losses and liabilities incurred in connection with a class of Shares or in
connection with the management of the assets belonging to such class shall
be payable solely out of the assets belonging to such class, and PROVIDED
FURTHER that the Trustees shall have a lien on the Trust Property prior to
any rights or interests of the Shareholders thereto for the payment of any
expenses, disbursements, losses and liabilities of the Trust.
6.10 POWER TO CARRY OUT TRUST'S PURPOSES; PRESUMPTIONS. The Trustees
shall have power to carry out any and all acts consistent with the Trust's
purposes through branches and offices both within and without the State of
New York, in any and all states of the United States of America, in the
District of Columbia, and in any and all commonwealths, territories,
dependencies, 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. The Trustees shall not be required to obtain any court
order to deal with the Trust Property.
6.11 DETERMINATIONS BY TRUSTEES. Any determination made in good faith
and, so far as accounting matters are involved in accordance with generally
accepted accounting principles, by or pursuant to the direction of the
Trustees as to the amount and value of assets, obligations or liabilities
of the Trust or any class of Shares, as to the amount of net income of the
Trust or any class of Shares from dividends and interest for any period or
amounts at any time legally available for the payment of dividends, as to
the amount of any reserves or charges set up and the propriety thereof, as
to the time of or purpose for creating reserves or as to the use,
alteration or cancellation of any reserves or charges (whether or not any
obligation or liability for which such reserves or charges shall have been
created shall have been paid or discharged or shall be then or thereafter
required to, be paid or discharged), as to the value of any security owned
by the Trust or any class of Shares, as to the allocation of any assets or
liabilities to a class or classes of Shares, as to the times at which
Shares of any class shall be deemed to be outstanding or no longer
outstanding, or as to any other matters relating to the issuance, sale,
redemption or other acquisition or disposition of securities or Shares, and
any reasonable determination made in good faith by the Trustees as to
whether any transaction constitutes a purchase of securities on "margin," a
sale of securities "short," or any underwriting of the sale of, or a
participation in any underwriting or selling group in connection with the
public distribution of, any securities, shall be final and conclusive, and
shall be binding upon the Trust and all Shareholders, past, present and
future, and Shares are issued and sold on the condition and understanding,
evidenced by the purchase of Shares or acceptance of Share certificates,
that any and all such determinations shall be binding as aforesaid.
6.12 SERVICE IN OTHER CAPACITIES. Any Trustee, representative,
employee or agent of the Trust, including any investment adviser, transfer
agent, administrator, distributor, custodian or underwriter for the Trust,
may serve in any other capacity on his/her or its own behalf or on behalf
of others, and may engage in other business activities in addition to
his/her or its services on behalf of the Trust, PROVIDED that such other
activities do not materially interfere with the performance of his/her or
its duties for or on behalf of the Trust.
VII.
AGREEMENTS WITH INVESTMENT ADVISER, DISTRIBUTOR,
ADMINISTRATOR, TRANSFER AGENT, CUSTODIAN AND OTHERS
7.1 INVESTMENT ADVISER. The Trustees may, on such terms and
conditions as they may in their discretion determine, enter into a written
investment advisory agreement or agreements with any Person or Persons
providing for portfolio management, investment advisory, statistical and
research facilities and other services pertaining to the assets belonging
to one or more classes of Shares. Notwithstanding any other provision
hereof, the Trustees may authorize such an investment adviser (subject to
such general or specific instructions as the Trustees may adopt) to effect
purchases, sales or exchanges of portfolio securities of such class(es) on
behalf of the Trustees and to determine the net asset value and net income
of such class(es) or may authorize any representative or Trustee to effect
such purchases, sales or exchanges pursuant to the recommendations of such
investment adviser (all without further action by the Trustees). Any such
purchases, sales and exchanges so effected shall be deemed to have been
authorized by all of the Trustees.
7.2 ADMINISTRATOR. The Trustees may, on such terms and conditions as
they may in their-discretion determine, enter into one or more agreements
with any Person or Persons providing for administrative services to one or
more classes of Shares, including assistance in supervising the affairs of
such class(es) and performance of administrative, clerical and other
services considered desirable by the Trustees.
7.3 DISTRIBUTOR. The Trustees may, on such terms and
conditions as they may in their discretion determine, enter into one or
more distribution agreements with any Person or Persons providing for the
sale of Shares of one or more classes at a price at least equal to the net
asset value per Share of such class(es) and providing for sale of the
Shares of such class(es) pursuant to arrangements by which the Trust may
either agree to sell the Shares of such class(es) to the other party to the
agreement or appoint such other party its sales agent for such Shares.
Such agreements may also provide for the repurchase of Shares of such
class(es) by such other party as principal or as agent of the Trust, and
may authorize the other party to enter into agreements with others for the
purpose of the distribution or repurchase of Shares of such class(es).
7.4 TRANSFER AGENT. The Trustees may, on such terms and conditions
as they may in their discretion determine, enter into one or more
agreements with any Person or Persons providing for transfer agency and
other services to Shareholders of any class.
7.5 CUSTODIAN. The Trustees may, on such terms and conditions as
they may in their discretion determine, enter into one or more agreements
with any Person or Persons providing for the custody and safekeeping of the
property of the Trust or any class of Shares.
7.6 SERVICE AND DISTRIBUTION PLANS. The Trustees may, on such terms
and conditions as they may in their discretion determine, adopt one or more
plans pursuant to which Persons may be compensated directly or indirectly
by the Trust for Shareholder servicing, administration or distribution with
respect to one or more classes of Shares, including without limitation
plans subject to Rule 12b-1 under the 1940 Act, and the Trustees may enter
into agreements pursuant to such Plans.
7.7 PARTIES TO AGREEMENTS. The same Person may be employed in
multiple capacities under Sections 7.1 through 7.6 of this Article VII and
may receive compensation from the assets belonging to a particular class in
as many capacities in which such persons shall serve such class. The
Trustees may enter into any agreement of the character described in this
Article VII with any Person, including any Person in which any Trustee,
representative, employee or Shareholder of the Trust may be interested, 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 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.
VIII.
SHAREHOLDERS' VOTING POWERS AND MEETINGS
8.1 VOTING POWERS. The Shareholders shall have power to vote (a) for
the election of Trustees as provided in Section 6.2 hereof, (b) to the same
extent as the shareholders of a Delaware business corporation when
considering whether a court action, proceeding or claim should or should
not be brought or maintained derivatively or as a class action on behalf of
the Trust or the Shareholders, (c) with respect to any of the matters and
to the extent provided in Article X hereof, (d) with respect to such
additional matters relating to the Trust as may be required by law, by this
Declaration of Trust, the Bylaws of the Trust, by any requirement
applicable to or agreement of the Trust, and as the Trustees may consider
desirable. Every Shareholder of record shall have the right to one vote
for every whole Share (other than Shares held in the treasury of the Trust)
standing in his/her or its name on the books of the Trust, and to have a
proportional fractional vote for any fractional Share, as to any matter on
which the Shareholder is entitled to vote. There shall be no cumulative
voting. Shares may be voted in person or by proxy. Until Shares are
issued, the Trustees may exercise all rights of Shareholders and may take
any action required or permitted to be taken by Shareholders by law, this
Declaration of Trust or the Bylaws.
8.2 MEETINGS. No annual or regular meetings of Shareholders are
required. Special meetings of Shareholders may be called by the Trustees
as provided in the Bylaws and shall be called by the Trustees upon the
written request of Shareholders owning at least ten percent of the
outstanding Shares entitled to vote.
8.3 QUORUM AND REQUIRED VOTE. At any meeting of Shareholders a
quorum for the transaction of business shall consist of a majority of the
Shares of each class outstanding and entitled to vote appearing in person
or by proxy, PROVIDED that at any meeting at which the only actions to be
taken are actions required by the 1940 Act to be taken by vote of all
outstanding Shares of all classes entitled to vote thereon, irrespective of
class, a quorum shall consist of a majority of the Shares (without regard
to class) entitled to vote thereon, and that at any meeting at which the
only actions to be taken shall have been determined by the Board of
Trustees to affect the rights and interests of one or more but not all
classes of outstanding Shares, a quorum shall consist of a majority of the
outstanding Shares of that class or classes so affected, PROVIDED FURTHER
that reasonable adjournments of such meeting until a quorum is obtained may
be made by vote of the Shares present in person or by proxy.
The Trustees 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 class of outstanding Shares entitled to vote
thereon, PROVIDED that (a) when required by the 1940 Act, actions of
Shareholders shall be taken by vote of all outstanding Shares of all
classes entitled to vote thereon, irrespective of class, with all
outstanding Shares of all classes voting as a single class and (b) 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 classes of outstanding Shares, only the Shareholders of the class or
classes so affected will be entitled to vote thereon.
A majority of Shares voting of any class of Shares entitled to vote on
any question shall determine such question, subject to any requirements of
the 1940 Act or other applicable law or this Declaration of Trust. In the
election of Trustees, a plurality of Shares voting, irrespective of class,
shall elect a Trustee, to the extent the 1940 Act or other applicable law
requires that voting shall be irrespective of class; otherwise, a plurality
of each class entitled to vote shall elect a Trustee.
8.4 SHAREHOLDER ACTION BY WRITTEN CONSENT. Any action which may be
taken by Shareholders may be taken without a meeting if not less than a
majority of the Shareholders entitled to vote on the matter consent to the
action in writing and the written consents are filed with the records of
the meetings of Shareholders. Such consent shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
8.5 BYLAWS. The Bylaws may include further provisions not
inconsistent with this Declaration of Trust for meetings of Shareholders,
votes, record dates, notices of meetings and related matters.
IX.
LIMITATIONS OF LIABILITY AND INDEMNIFICATION
9.1 LIABILITIES OF A CLASS. Liabilities belonging to any class of
Shares, including, without limitation, expenses, fees, charges, taxes, and
liabilities incurred or arising in connection with a particular class, or
in connection with the management thereof, shall be paid only from the
assets belonging to such class.
9.2 LIMITATION OF TRUSTEE LIABILITY. Every act or thing done or
omitted, and every power exercised or obligation incurred by the Trustees
or any of them in the administration of this Trust or in connection with
any affairs, property or concerns of the Trust, whether ostensibly in their
own names or in their Trust capacity, shall be done, omitted, exercised or
incurred by them as Trustees and not as individuals. Every person
contracting or dealing with the Trustees or having any debt, claim or
judgment against them or any of them shall look only to the funds and
property of the Trust for payment or satisfaction. No Trustee or Trustees
of the Trust shall ever be personally liable for or on account of any
contract, debt, tort, claim, damage, judgment or decree arising out of or
connected with the administration or preservation of the Trust Property or
the conduct of any of the affairs of the Trust. Every note, bond,
contract, order or other undertaking issued by the Trust or the Trustees
relating to the Trust shall include the notice set forth in Section 9.5 of
this Article IX (but the omission thereof shall not be construed as a
waiver of the foregoing provision, and shall not render the Trustees
personally liable).
No Trustee shall be subject to any personal liability whatsoever to
any person 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) except that nothing in this Declaration of Trust shall
protect any Trustee from any liability to the Trust or its Shareholders to
which he/she would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of his/her duties, or by
reason of reckless disregard of his/her obligations and duties as Trustee;
and that all persons shall look solely to the Trust Property belonging to a
class of Shares for satisfaction of claims of any nature arising in
connection with the affairs of such class of the Trust.
9.3 INDEMNIFICATION OF TRUSTEES, OFFICERS, REPRESENTATIVES AND
EMPLOYEES.
A. The Trust shall indemnify any person who was or is a party
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 an action by or in the right of the Trust) by
reason of the fact that he/she is or was a Trustee, employee or officer of
the Trust or is or was serving at the request of the Trust as a director or
officer of another corporation, or as an official of a partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him/her in connection with such action, suit or
proceeding if he/she acted in good faith and in a manner he/she 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/her conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon a
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/she reasonably believed to be in, or not opposed to, the best interests
of the Trust, or, with respect to any criminal action or proceedings, that
he/she had reasonable cause to believe that his/her conduct was unlawful.
B. The Trust shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Trust to procure a judgment in its
favor by reason of the fact that he/she is or was a Trustee, employee or
officer of the Trust or is or was serving at the request of the Trust as a
director or officer of another corporation, or as an official of a
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him/her in
connection with the defense or settlement of such action or suit if he/she
acted in good faith and in a manner he/she reasonably believed to be in, or
not opposed to, the best interests of the Trust, EXCEPT, however, that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable for negligence
or misconduct in the performance of his/her duty to the Trust unless and
only to the extent that an appropriate court shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the court shall deem proper.
C. To the extent that a Trustee, employee or officer of the
Trust has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections A or B of this
Section 9.3 in defense of any claim, issue or matter therein, he/she shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him/her in connection therewith.
D. Except as provided in subsection C of this Section 9.3, any
indemnification under subsection A or B of this Section 9.3 (unless ordered
by a court) shall be made by the Trust only as permitted under any
applicable provisions of Title I of the Employee Retirement Income Security
Act of 1974, as amended, and as authorized in the specific case upon a
determination that indemnification of a Trustee, employee or officer is
proper in the circumstances because he/she has met the applicable standard
of conduct set forth in subsection A, B or H of this Section 9.3. Such
determination shall be made (1) by the Trustees by a majority vote of a
quorum consisting of Trustees who were not parties to such action, suit or
proceeding, or (2) if such a quorum is not obtainable, or, even if such a
quorum is obtainable and such quorum so directs, by independent legal
counsel in a written opinion.
E. Expenses (including attorneys' fees) incurred in defending a
civil or criminal action, suit or proceeding may be paid by the Trust in
advance of the final disposition of such action, suit or proceeding as
authorized by the Trustees upon receipt of an undertaking by or on behalf
of the Trustee, employee or officer to repay such amount unless it shall
ultimately be determined that he/she is entitled to be indemnified by the
Trust as authorized in this Section 9.3; provided that such an undertaking
must be secured by a surety bond or other suitable insurance.
F. The indemnification provided by this Section 9.3 shall not
be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any rule, agreement, vote of the
Shareholders or disinterested Trustees or otherwise, both as to actions in
his/her official capacity and as to actions in any capacity while holding
such office, and shall continue as to a person who has ceased to be a
Trustee, employee or officer and shall inure to the benefit of the heirs,
executors and administrators of such a person.
G. The Trust may purchase and maintain insurance on behalf of
any person who is or was a Trustee, employee or officer of the Trust, or is
or was serving at the request of the Trust as a director or officer of
another corporation, or as an official of a partnership, joint venture,
trust or other enterprise against any liability asserted against him/her
and incurred by him/her in any such capacity, or arising out of his/her
status as such; provided, however, that the Trust shall not purchase or
maintain any such insurance in contravention of any applicable provision of
Title I of the Employee Retirement Income Security Act of 1974, as amended.
H. Anything to the contrary in the foregoing subsections A
through G of this Section 9.3 notwithstanding, no Trustee, employee or
officer of the Trust shall be indemnified against any liability to the
Trust or the Shareholders to which he/she would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his/her office, and no
Trustee, employee or officer of the Trust shall be indemnified in any other
case in which the 1940 Act would restrict or prohibit such indemnification.
9.4 RELIANCE ON EXPERTS, ETC. Each Trustee and representative of the
Trust shall, in the performance of his/her 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 satisfactory to the Trust,
or upon reports made to the Trust by any of its representatives or
employees or by the investment adviser, the principal underwriter, selected
dealers, accountants, appraisers or other experts or consultants selected
with reasonable care by the Trustees or representatives of the Trust,
regardless of whether such counsel or expert may also be a Trustee.
9.5 LIMITATION OF SHAREHOLDER LIABILITY. Shareholders shall not be
subject to any personal liability in connection with the assets of the
Trust for the acts or obligations of the Trust. The Trustees shall have no
power to bind any Shareholder personally or to call upon any Shareholder
for the payment of any sum of money or assessment whatsoever other than
such as the Shareholder may at any time personally agree to pay by way of
subscription to any Shares or otherwise. Every obligation, contract,
instrument, certificate, Share, other security of any class of Shares or
undertaking, and every other act whatsoever executed in connection with the
Trust or any class of Shares shall be conclusively presumed to have been
executed or done by the executors thereof only in their capacities as
Trustees under the Declaration of Trust or in their capacity as officers,
employees or agents of the Trust and not individually. Every note, bond,
contract, order or other undertaking issued by or on behalf of the Trust or
the Trustees relating to the Trust or any class of Shares, and the
stationery used by the Trust, shall include a recitation limiting the
obligation represented thereby to the Trust and its assets (but the
omission of such a recitation shall not operate to bind any Shareholder),
as follows:
"The names 'The _________ Fund' and 'Trustees of The _________
Fund' refer respectively to the Trust created and the Trustees, as
trustees but not individually or personally, acting from time to
time under a Declaration of Trust dated March __, 19[97] which is
hereby referred to and a copy of which is on file at the office of
the Secretary of State of the State of Delaware and at the
principal office of the Trust. The obligations of 'The _________
Fund' entered into in the name or on behalf thereof by any of the
Trustees, representatives or agents are made not individually, but
in such capacities, and are not binding upon any of the Trustees,
Shareholders or representatives of the Trust personally, but bind
only the Trust property, and all persons dealing with any class of
shares of the Trust must look solely to the Trust property
belonging to such class for the enforcement of any claims against
the Trust."
The rights accruing to a Shareholder under this Section 9.5 shall not
exclude any other right to which such Shareholder may be lawfully entitled,
nor shall anything herein contained restrict the right of the Trust to
indemnify or reimburse a Shareholder in any appropriate situation even
though not specifically provided for herein, PROVIDED that a Shareholder of
any class of Shares shall be indemnified only from assets belonging to such
class.
9.6 INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder or
former Shareholder shall be held to be personally liable solely by reason
of his/her being or having been a Shareholder and not because of his/her
acts or omissions outside such capacity or for some other reason, the
Shareholder or former Shareholder (or his/her heirs, executors,
administrators or other legal representatives or, in the case of a
corporation or other entity, its corporate or other general successor)
shall be entitled out of the assets belonging to the class(es) of Shares
owned by such Shareholder to be held harmless from and indemnified against
all loss and expense arising from such liability. The Trust shall, upon
request, by the Shareholder, assume the defense of any claim made against
any Shareholder for any act or obligations of the Trust and satisfy any
judgment thereon from such assets.
X.
MISCELLANEOUS
10.1 TRUST NOT A PARTNERSHIP. It is hereby expressly declared that a
Delaware business trust and not a partnership, joint venture, corporation,
joint stock company or any form of legal relationship other than a trust is
created hereby. Nothing herein shall be construed to make the
Shareholders, either by themselves or with the Trustees, partners or
members of a joint stock association. No Trustee hereunder shall have any
power to bind personally either a representative of the Trust or any
Shareholder. All persons extending credit to, contracting with or having
any claim against the Trust or the Trustees shall look only to the assets
of the Trust for payment under such credit, contract or claim; and neither
the Shareholders nor the Trustees, whether past, present or future, shall
be personally liable therefor.
10.2 NO BOND OR SURETY. The Trustees shall not be required to give
any bond as such, nor any surety if a bond is required.
10.3 DURATION OF TRUST. This Trust shall continue without limitation
of time, provided that the Trust or any class of Shares may be terminated
at any time in accordance with the provisions of this Declaration of Trust
and applicable law.
10.4 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 of the holders of not
less than two-thirds of the Shares outstanding and entitled to vote, voting
separately by class except to the extent that the 1940 Act may require
voting without regard to class, or by an instrument or instruments in
writing without a meeting consented to by the holders of not less than two-
thirds of such Shares, voting separately by class except to the extent that
the 1940 Act may require voting without regard to class, and by the vote or
written consent of the holders of two-thirds of the Shares of each class of
Shares, provided that if such merger, consolidation, sale, lease or
exchange is recommended by the Trustees, such may be approved by a vote of
the majority of the outstanding Shares of each class, voting separately by
class.
10.5 INCORPORATION. With the approval of the holders of a majority of
the outstanding Shares, voting separately by class except to the extent
that the 1940 Act may require voting without regard to class, the Trustees
may cause to be organized, or assist in organizing, a corporation or
corporations under the laws of any jurisdiction, to carry on any affairs in
which the Trust shall directly or indirectly have any interest, and to
transfer the Trust Property to any such Person in exchange for any 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 Person
in which the Trust holds or is about to acquire securities or any other
interest. The Trustees may also cause a merger or consolidation between
the Trust or any successor thereto and any such Person if and to the extent
permitted by law. 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 Person(s).
10.6 FILING OF COPIES, REFERENCES, HEADINGS. The original instrument
of this Declaration of Trust and of each amendment hereto shall be filed
with the Secretary of State of the State of Delaware and copies thereof
shall be kept at the office of the Trust where they may be inspected by any
Shareholder. Each amendment so filed shall be accompanied by a certificate
signed and acknowledged by a Trustee or by the Secretary or any Assistant
Secretary of the Trust stating that such action was duly taken in the
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. A restated Declaration of
Trust, integrating into a single instrument all of the provisions of the
Declaration of Trust that 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 State of the State of Delaware, be conclusive evidence of
all amendments contained therein and may thereafter be referred to in lieu
of the initial Declaration of Trust and the various amendments thereto.
Anyone dealing with the Trust may rely on a certificate by a representative
of the Trust as to whether or not any such amendment hereto may have been
made and as to any matters in connection with the Trust hereunder, with the
same effect as if it were the original, and may rely on a copy certified by
a representative of the Trust to be a copy of this instrument or of any
amendment thereto. Headings are placed herein for convenience of reference
only and in the case of any conflict, the text of this instrument, rather
than the headings, shall control. This instrument may be executed in any
number of counterparts each of which shall be deemed an original. All
signatures to this instrument need not appear on the same page.
10.7 APPLICABLE LAW. The Trust set forth in this instrument is to be
governed by and construed and administered according to the laws of the
State of Delaware.
10.8 PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS.
A. No provision of this Declaration of Trust shall be effective
to:
(1) Require a waiver of compliance with any provision of
the 1933 Act, as amended, or the 1940 Act, as amended, or of any valid
rule, regulation or order of the Securities and Exchange Commission
thereunder; or
(2) Protect or purport to protect any Trustee or officer of
the Trust 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/her office.
B. The provisions of this Declaration of Trust 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, Chapter 38 of Title 12 of
the Delaware Code Annotated or with any other applicable law or regulation,
then in such event the conflicting provision shall be deemed never to have
constituted a part of this Declaration of Trust, PROVIDED that such
determination shall not affect any of the remaining provisions of this
Declaration of Trust or render invalid or improper any action taken or
omitted prior to such determination.
C. If any provision of this Declaration of Trust shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach 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 of Trust in any jurisdiction.
10.9 AMENDMENT OF DECLARATION OF TRUST.
A. This Declaration of Trust may be amended upon a resolution
to that effect being adopted by the Trustees and approved by the
affirmative vote of the holders of not less than a majority of the
outstanding Shares, voting separately by class except to the extent that
the 1940 Act may require voting without regard to class.
B. Notwithstanding any other provision hereof, until such time
as a Registration Statement under the 1933 Act, as amended, covering the
first public offering of securities of the Trust shall have become
effective, this Declaration of Trust may be terminated or amended in any
respect by the affirmative vote of a majority of the Trustees.
C. The Trustees may amend this Declaration of Trust without a
vote of Shareholders to change the name of the Trust or to cure any error
or ambiguity or if they deem it necessary to conform this Declaration of
Trust to the requirements of applicable state or federal laws or
regulations, including without limitation the requirements of the regulated
investment company provisions of the Internal Revenue Code, but the
Trustees shall not be liable for failing so to do.
D. Notwithstanding any other provision hereof, this Declaration
of Trust may not be amended in any manner whatsoever that would impair the
exemption from personal liability of the Trustees and Shareholders of the
Trust or that would permit an assessment upon any Shareholder.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Declaration of
Trust as Trustees and not individually, as of [March __, 1997].
________________________________
Robert J. Craugh, Trustee
________________________________
Robert N. Coe, Trustee
________________________________
Donald C. Greenhouse, Trustee
________________________________
Gregory S. MacKay, Trustee
________________________________
Robert J. Swartout, Trustee
C:\TPY\CNB\DELBUSTR.DR3 DRAFT 2/6/97
<PAGE>
STATE OF NEW YORK)
COUNTY OF ONTARIO) SS.:
On the ____ day of ______________, 1997, before me personally came
Robert J. Craugh, to me known and known to me to be the individual
described in, and who executed the foregoing document, and he duly
acknowledged to me that he executed the same.
________________________________
Notary Public
STATE OF NEW YORK)
COUNTY OF ONTARIO) SS.:
On the ____ day of ______________, 1997, before me personally came
Robert N. Coe, to me known and known to me to be the individual described
in, and who executed the foregoing document, and he duly acknowledged to me
that he executed the same.
________________________________
Notary Public
STATE OF NEW YORK)
COUNTY OF ONTARIO) SS.:
On the ____ day of ______________, 1997, before me personally came
Donald C. Greenhouse, to me known and known to me to be the individual
described in, and who executed the foregoing document, and he duly
acknowledged to me that he executed the same.
________________________________
Notary Public
STATE OF NEW YORK)
COUNTY OF ONTARIO) SS.:
On the ____ day of ______________, 1997, before me personally came
Gregory S. MacKay, to me known and known to me to be the individual
described in, and who executed the foregoing document, and he duly
acknowledged to me that he executed the same.
________________________________
Notary Public
STATE OF NEW YORK)
COUNTY OF ONTARIO) SS.:
On the ____ day of ______________, 1997, before me personally came
Robert J. Swartout, to me known and known to me to be the individual
described in, and who executed the foregoing document, and he duly
acknowledged to me that he executed the same.
________________________________
Notary Public
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