As filed with the Securities and Exchange Commission on April 29, 1996
Registration No. 2-57547
811-2701
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 21 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 16 X
(Check appropriate box or boxes.)
LEXINGTON MONEY MARKET TRUST
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(Exact name of Registrant as specified in Charter)
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
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(Address of principal executive offices)
Registrant's Telephone Number: (201) 845-7300
Lisa Curcio, Secretary
Lexington Money Market Trust
Park 80 West Plaza Two, Saddle Brook, New Jersey 07663
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(Name and address of agent for service)
With a copy to:
Carl Frischling, Esq.
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
919 Third Avenue, New York, New York 10022
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It is proposed that this filing will become effective April 29,
1996 pursuant to Paragraph (b) of Rule 485.
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The Registrant has registered an indefinite number of shares under
the Securities Act of 1933, pursuant to Section 24(f) of the Investment
Company Act of 1940. A Rule 24f-2 Notice for the Registrant's fiscal
year ended December 31, 1995 was filed on February 26, 1996.
<PAGE>
LEXINGTON MONEY MARKET TRUST
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET
PART A
Items in Part A Prospectus
of Form N-1A Prospectus Caption Page Number
- --------------- ------------------ -----------
1. Cover Page Cover Page
2. Synopsis *
3. Condensed Financial Information 2
4. General Description of Registrant 3
5. Management of the Fund 4
6. Capital Stock and Other Securities 11
7. Purchase of Securities Being Offered 5
8. Redemption or Repurchase 6
9. Legal Proceedings *
Note * Omitted since answer is negative or inapplicable
<PAGE>
LEXINGTON MONEY MARKET TRUST
STATEMENT OF ADDITIONAL STATEMENT OF ADDITIONAL
PART B INFORMATION CAPTION INFORMATION PAGE NUMBER
- ------ ------------------- -----------------------
10. Cover Page Cover Page
11. Table of Contents Cover Page
12. General Information and History 11 (Part A)
13. Investment Objectives and Policies 2
14. Management of the Registrant 9
15. Control Persons and Principal Holders 5
of Securities
16. Investment Advisory and Other Services 5
17. Brokerage Allocation and Other Practices 6
18. Capital Stock and Other Securities 11 (Part A)
19. Purchase, Redemption and Pricing of 5, 6 (Part A)
securities being offered
20. Tax Status 7
21. Underwriters 4 (Part A)
22. Calculation of Yield Quotations on Money 3
Market Funds
23. Financial Statements 12
PART C
- ------
Information required to be included in Part C is set
forth under the appropriate Item, so numbered, in Part C
to this Registration Statement.
* Not Applicable
<PAGE>
PROSPECTUS
April 29, 1996
Lexington Money Market Trust
P.O. Box 1515 / Park 80 West Plaza Two, Saddle Brook, New Jersey 07663
Toll Free: Service--1-800-526-0056
24 Hour Account Information--1-800-526-0052
A NO-LOAD MONEY MARKET MUTUAL FUND WITH A PRINCIPAL OBJECTIVE OF HIGH CURRENT
INCOME, CONSISTENT WITH PRESERVATION OF CAPITAL AND LIQUIDITY.
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Lexington Money Market Trust (the "Trust") is a diversified open-end
management investment company, known as a money market mutual fund.
Shareholders may invest, reinvest or redeem shares at any time
without charge or penalty.
The Trust's investment objective is to seek a high level of current
income as is consistent with the preservation of capital and liquidity
by investing in short-term money market instruments as described more
fully on page 3.
Shares of the Trust are not insured or guaranteed by the U.S.
Government and there can be no assurance that the Trust will be able to
maintain a stable net asset value of $1.00 per share.
Shareholders may use free redemption checks provided by the Trust
for amounts of $100.00 or more.
Lexington Management Corporation ("LMC") is the Investment Adviser
of the Trust. Lexington Funds Distributor, Inc. ("LFD") is the
Distributor of shares of the Trust.
This Prospectus concisely sets forth information about the Trust
that you should know before investing. It should be read and retained
for future reference.
A Statement of Additional Information dated April 29, 1996, that
provides a further discussion of certain areas in this Prospectus and
other matters that may be of interest to some investors, has been filed
with the Securities and Exchange Commission and is incorporated herein
by reference. For a free copy, call the appropriate telephone number
above or write to the address listed above.
Mutual fund shares are not deposits or obligations of (or endorsed
or guaranteed by) any bank, nor are they federally insured or otherwise
protected by the Federal Deposit Insurance Corporation ("FDIC"), the
Federal Reserve Board or any other agency. Investing in mutual funds
involves investment risks, including the possible loss of principal, and
their value and return will fluctuate.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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Investors Should Read and Retain this Prospectus for Future Reference
<PAGE>
FEE TABLE
Annual Fund Operating Expenses:
(as a percentage of average net assets) (net of reimbursement):
Management fees ..................................................... 0.50%
Other fees .......................................................... 0.50%
----
Total Fund Operating Expenses ....................................... 1.00%
====
Example: 1 year 3 years 5 years 10 years
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You would pay the following expenses on a
$1,000 investment, assuming
(1) 5% annual return and
(2) redemption at the end of each period.. $10.20 $31.84 $55.25 $122.46
The purpose of the foregoing table is to assist an investor in understanding
the various costs and expenses that an investor in the Fund will bear
indirectly. (For more complete descriptions of the various costs and expenses,
see "Investment Adviser and Distributor" below.) The Expenses and Example
appearing in the table above are based on the Fund's expenses for the period
from January 1, 1995 to December 31, 1995. Absent expense reimbursements, total
Fund operating expenses would have been 1.08% of the Fund's average net assets.
The Example shown in the table above should not be considered a representation
of past or future expenses and actual expenses may be greater or less than those
shown.
FINANCIAL HIGHLIGHTS
The following Financial Highlights Table for each of the years in the five
year period ended December 31, 1995 has been audited by KPMG Peat Marwick LLP,
Independent Auditors, whose report thereon appears in the Statement of
Additional Information. This information should be read in conjunction with the
financial statements and related notes thereto included in the Statement of
Additional Information. The Fund's annual report, which contains additional
performance information, is available upon request and without charge.
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Selected Per Share Data for a share outstanding throughout the period
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment income 0.0495 0.0330 0.0230 0.0299 0.0532 0.0732 0.0828 0.0678 0.0610 0.0616
Less distributions:
Dividends from net
investment income (0.0495) (0.0330) (0.0230) (0.0299) (0.0532) (0.0732) (0.0828) (0.0678) (0.0610) (0.0616)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value,
end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Total return 5.06% 3.35% 2.32% 3.03% 5.45% 7.56% 8.60% 7.00% 6.29% 6.35%
Ratio to average net assets:
Expenses, before
reimbursement 1.08% 1.02% 1.00% 1.03% 1.02% 0.97% 0.99% 0.97% 0.80% 0.91%
Expenses, net of
reimbursement 1.00% 1.00% 1.00% 1.00% 1.00% 0.97% 0.99% 0.97% 0.80% 0.91%
Net investment income,
before reimbursement 4.87% 3.30% 2.30% 2.99% 5.35% 7.32% 8.29% 6.74% 6.13% 6.17%
Net investment income,
net of reimbursement 4.95% 3.32% 2.30% 3.02% 5.37% 7.32% 8.29% 6.74% 6.13% 6.17%
Net assets, end of period
(000's omitted) $88,786 $111,805 $94,718 $111,453 $143,137 $176,127 $182,703 $192,079 $212,487 $196,838
</TABLE>
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2
<PAGE>
YIELD INFORMATION
The yield is computed in accordance with a standardized formula described in
the Statement of Additional Information.
For the seven-day period ended December 31, 1995, the Trust's annualized
current yield was 4.79% and the compounded effective yield was 4.91%. This yield
is subject to market conditions and will fluctuate daily as income earned
fluctuates. The above yield quotations are not an indication or representation
by the Trust of future yields or rates of return. This Prospectus may be in use
for a full year and it can be expected that these yields will fluctuate
substantially over that time. To obtain a current yield quotation for the Trust,
call the appropriate toll free telephone number listed on the cover of this
Prospectus.
The weighted average portfolio maturity on December 31, 1995 was 33 days.
COMPARATIVE PERFORMANCE INFORMATION
Advertisements and communications may compare the Trust's performance with
that of other mutual funds, as reported by Lipper Analytical Services, Inc. or
similar independent services or financial publications. Such performance may be
categorized according to the Trust's asset size as determined by the independent
service. From time to time, the performance of the Trust may be compared to
various investment indicies, including the Dow Jones Industrial Average and
Standard & Poor's 500 Composite Stock Index. Quotations of historical yields are
not indicative of future dividend income, but are an indication of the return to
shareholders only for the limited historical period used. The Trust's yield will
depend on the particular investments in its portfolio, its total operating
expenses and other conditions. For further information, including an example of
the yield calculation, see the Statement of Additional Information.
DESCRIPTION OF THE TRUST
The Trust is a diversified open-end management investment company known as a
money market mutual fund. It is called a no-load fund because its shares are
sold without a sales charge.
INVESTMENT OBJECTIVE
The Trust's investment objective is to seek as high a level of current
income from short-term investments as is consistent with the preservation of
capital and liquidity.
INVESTMENT POLICIES
In order to achieve its objective of as high a level of current income as is
available from short term investments and consistent with the preservation of
capital and liquidity, the Trust will invest its assets in the following money
market instruments: (1) Obligations issued, or guaranteed as to interest and
principal, by the government of the United States or any agency or
instrumentality thereof (2) U.S. dollar denominated time deposits, certificates
of deposit and bankers' acceptances of U.S. banks and their London and Nassau
branches and of U.S. branches of foreign banks, provided that the bank has total
assets of one billion dollars; (3) Commercial paper of U.S. corporations, rated
A1, A2 by Standard & Poor's Corporation or P1, P2 by Moody's Investors Service,
Inc. or, if not rated, of comparable quality to those securities in which the
Trust may invest; (4) Other money market instruments; or (5) Repurchase
agreements under which the Trust may acquire an underlying debt instrument for a
relatively short period subject to the obligation of the seller to repurchase,
and of the Trust to resell, at a fixed price. The underlying security must be of
the same quality as those described herein, although the usual practice is to
use U.S. Government or government agency securities. The Trust will enter into
repurchase agreements only with commercial banks and dealers in U.S. government
securities. Repurchase agreements when entered into with dealers, will be fully
collateralized including the interest earned thereon during the entire term of
the agreement. If the institution defaults on the repurchase agreement, the
Trust will retain possession of the underlying securities. In addition, if
bankruptcy proceedings are commenced with respect to the seller, realization on
the collateral by the Trust may be delayed or limited and the Trust may incur
additional costs. In such case the Trust will be subject to risks associated
with changes in the market value of the collateral securities. The Trust intends
to limit repurchase agreements to institutions believed by LMC to present
minimal credit risk. The Trust will not enter into repurchase agreements
maturing in more than seven days if the aggregate of such repurchase agreements
would exceed 10% of the total assets of the Trust. Securities in the Trust will
consist of
3
<PAGE>
money market instruments that have been rated (or whose issuer's short-term debt
obligations are rated) in one of the two highest categories (i.e. "A1/P1") by
both Standard & Poor's Corporation ("S&P") and Moody's Investors Services, Inc.
("Moody's"), two nationally recognized statistical rating organizations
("NRSRO").
The Trust may invest up to 5% of its assets in any single "Tier 1" security
(other than U.S. Government securities), measured at the time of acquisition;
however, it may invest more than 5% of its assets in a single Tier 1 security
for no more than three business days. A "Tier 1" security is one that has been
rated (or the issuer of such security has been rated) by both S&P and Moody's in
the highest rating category or, if unrated, is of comparable quality. A security
rated in the highest category by only one of these NRSROs is also considered a
Tier 1 security.
In addition, the Trust may invest not more than 5% of its assets in "Tier 2"
securities. A Tier 2 security is a security that is (a) rated in the second
highest category by either S&P or Moody's or (b) an unrated security that is
deemed to be of comparable quality by LMC. The Trust may invest up to 1% of its
assets in any single Tier 2 security.
The Trust may invest only in a money market instrument that has a remaining
maturity of 13 months (397 days) or less, provided that the Trust's average
weighted maturity is 90 days or less.
The Trust is expected to have a high portfolio turnover rate due to the
short maturities of the securities held, but this should not affect net asset
value as brokerage commissions are usually not paid on the purchase or sale of
money market instruments.
FOREIGN BRANCHES OF U.S. BANKS
The obligations of London and Nassau branches of U.S. banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by governmental regulation.
Payment of interest and principal upon these obligations may also be affected by
governmental action in the country of domicile of the branch (generally referred
to as "sovereign risk"). In addition, evidences of ownership of portfolio
securities may be held outside of the U.S., and the Trust may be subject to the
risks associated with the holding of such property overseas. Examples of
governmental actions would be the imposition of currency controls, interest
limitations, seizure of assets, or the declaration of a moratorium. Obligations
of U.S. branches of foreign banks may be general obligations of the parent bank
in addition to the issuing branch, or may be limited by the terms of a specific
obligation and by Federal and state regulation as well as by governmental action
in the country in which the foreign bank has its head office. While the Trust
will carefully consider these factors on making such investments, there are no
limitations on the percentage of the Trust's portfolio which may be invested in
any one type of instrument.
The Investment Policies stated above are fundamental and may not be changed
without shareholder approval. The Trust may not invest in securities other than
the types of securities listed above and is subject to other specific
restrictions as detailed under "Investment Restrictions", below.
MANAGEMENT OF THE TRUST
The business affairs of the Trust are managed under the direction of its
Board of Trustees. There are currently nine trustees (of whom six are
non-affiliated persons) who meet five times each year. The Statement of
Additional Information contains additional information regarding the trustees
and officers of the Trust.
PORTFOLIO MANAGER
Denis P. Jamison, C.F.A. Senior Vice President, Director of Fixed Income
Strategy is responsible for fixed-income portfolio management at LMC. He is a
member of the New York Society of Security Analysts. Mr. Jamison has 24 years
investment experience.
Prior to joining LMC in 1981, Mr. Jamison had spent nine years at Arnold
Bernhard & Company, an investment counseling and financial services
organization. At Bernhard, he was a Vice President supervising the security
analyst staff and managing investment portfolios. He is a specialist in
government, corporate and municipal bonds. Mr. Jamison is a graduate of the City
College of New York with a B.A. in Economics. Mr. Jamison has been the portfolio
manager of the Trust since July of 1981.
INVESTMENT ADVISER, DISTRIBUTOR AND ADMINISTRATOR
LMC, P.O. Box 1515/Park 80 West Plaza Two, Saddle Brook, New Jersey 07663,
is the investment adviser of the Trust. LFD is the distributor of shares of the
Trust. LMC was established in 1938 and currently manages over $3.0 billion in
assets.
4
<PAGE>
LMC serves as investment adviser to other investment companies and private
and institutional investment accounts. Included among these clients are persons
and organizations which own significant amounts of capital stock of LMC's
parent. The clients pay fees which LMC considers comparable to the fee levels
for similarly served clients.
LMC also acts as administrator to the Fund and performs certain
administrative and internal accounting services, including but not limited to,
maintaining general ledger accounts, regulatory compliance, preparation of
financial information for semiannual and annual reports, preparing registration
statements, calculating net asset values, shareholder communications and
supervision of the custodian transfer agent and provides facilities for such
services. The Fund shall reimburse LMC for its actual cost in providing such
services, facilities and expenses.
LMC and LFD are wholly-owned subsidiaries of Lexington Global Asset
Managers, Inc., a Delaware corporation with offices at Park 80 West, Plaza Two,
Saddle Brook, NJ 07663. Descendants of Lunsford Richardson, Sr., their spouses,
trusts and other related entities have a majority voting control of outstanding
shares of Lexington Global Asset Managers, Inc.
For the fiscal year ended December 31, 1995, the Trust paid LMC a monthly
management fee at the annual rate of 1/2 of 1% of the average daily net assets.
For the year ended December 31, 1995 the Trust paid net advisory fees to LMC of
$473,889. See "Investment Adviser and Distributor" in the Statement of
Additional Information.
HOW TO PURCHASE SHARES
Initial Investments: Minimum $1,000. By Wire: (1) Telephone the Trust toll free
1-800-526-0056 and provide the account registration, address, and social
security or tax identification number, the amount being wired, the name of the
wiring bank, and the name and telephone number of the person to be contacted in
connection with the order. You will then be provided with an account number. (2)
Instruct your bank to wire the specified amount, along with the account number
and registration to State Street Bank and Trust Company, (the "Agent") Attn:
Mutual Funds Dept., re: Lexington Money Market Trust, Account No. 99043713. (3)
A completed New Account Application must then be forwarded to the Trust at the
address on the Application.
By Mail: Send a check payable to Lexington Money Market Trust, along with a
completed New Account Application, to the Agent at the address on the
Application.
Subsequent Investments-By Wire: Instruct your bank to wire the specified amount
and appropriate information to State Street Bank and Trust Company (see "Initial
Investments - By Wire" - (2), above).
By Mail-Minimum $50: Send a check payable to Lexington Money Market Trust to the
Agent (see back cover of this prospectus for address), accompanied by either (a)
the detachable form which accompanies the Agent's confirmation of a prior
transaction, or (b) a letter indicating the dollar amount of the shares to be
purchased and identifying the Trust, the account number and registration.
Broker-Dealers: You may invest in shares of the Trust through broker-dealers who
are members of the National Association of Securities Dealers, Inc., and other
financial institutions and who have selling agreements with LFD. Banks and other
financial institutions may be required to register as dealers pursuant to state
law. Broker-dealers and financial institutions who process such purchase and
sale transactions for their customers may charge a transaction fee for these
services. The fee may be avoided by purchasing shares directly from the Trust.
Purchase Price and Effective Date: Shares of the Trust are offered continuously
at net asset value which will normally be constant at $1.00 per share. Net asset
value is determined as of the close of the New York Stock Exchange and on such
other times or days as there is a sufficient degree of trading in the portfolio
securities of the Trust to materially affect its net asset value per share. The
price at which a purchase is effected is based on the next calculation of net
asset value per share after the order is placed. Investments for which market
quotations are not readily available are valued at their fair market value, as
determined by management and approved in good faith by the Board of Trustees.
Trust assets are valued based upon the amortized cost method. No sales charge is
imposed on purchases of shares. There is no assurance that the Trust will
maintain a net asset value per share of $1.00. Orders will become effective when
an investor's wire order or check is converted into federal funds (monies
credited to a bank's account with its registered Federal Reserve Bank). If
payment is transmitted by federal funds wire, the order will become effective
upon receipt. Payments transmitted by bank wire may take longer to be converted
into federal funds. Money transmitted by check will normally be considered to
have been converted into federal funds on the first business day following
receipt by the Agent.
5
<PAGE>
An Open Account: By investing in the Trust, a shareholder appoints the Agent, as
his agent, to establish an Open Account to which all shares purchased will be
credited, together with any dividends and capital gain distributions which are
paid in additional shares (see "Dividend, Distribution and Reinvestment
Policy"). Share certificates will be issued, for full shares only, when
requested in writing. Unless payment for shares is made by certified or
cashier's check or federal funds wire, certificates will not be issued for 30
days. In order to facilitate redemptions and transfers, most shareholders elect
not to receive certificates. After an Open Account is established, payments can
be provided for by "Lex-O-Matic" or other authorized automatic bank check
program accounts (checks drawn on the investor's bank periodically for
investment in the Fund).
Automatic Investing Plan with "Lex-O-Matic": A shareholder may arrange to make
additional purchases of shares automatically on a monthly or quarterly basis.
The investments of $50 or more are automatically deducted from a checking
account on or about the 15th day of each month. The institution must be an
Automated Clearing House (ACH) member. Should an order to purchase shares of a
fund be cancelled because your automated transfer does not clear, you will be
responsible for any resulting loss incurred by that fund. The shareholder
reserves the right to discontinue the Lex-O-Matic program provided written
notice is given ten days prior to the scheduled investment date. Further
information regarding this service can be obtained from Lexington by calling
1-800-526-0056. On payroll deduction accounts administered by an employer and on
payments into qualified pension or profit sharing plans and other continuing
purchases programs, there are no minimum purchase requirements.
Terms of Offering: If an order to purchase shares is cancelled because the
investor's check does not clear, the purchaser will be responsible for any loss
incurred by the Trust. To recover any such loss, the Trust reserves the right to
redeem shares owned by the purchaser, seek reimbursement directly from the
purchaser and may prohibit or restrict the purchaser in placing future orders in
any of the Lexington Funds. The Trust reserves the right to reject any order. An
order to purchase shares is not binding on the Trust until it has been confirmed
by the Agent.
Account Statements: The Agent will send shareholders a confirmation of each
transaction, indicating the date the purchase or redemption was accepted, the
number of shares purchased or redeemed, the price per share and the total amount
invested or redemption proceeds. A statement is also sent to shareholders
quarterly, or when a change in the registration, address, or dividend option
occurs. A statement will be sent to shareholders quarterly advising them of the
income dividends paid in additional shares in the preceding quarter.
Shareholders are urged to retain their account statements for tax purposes.
HOW TO REDEEM SHARES
By Telephone: Shares may be redeemed by telephone. Call the Trust toll free
1-800-526-0056. A redemption authorization, which is contained in the New
Account Application, or a separate authorization form, must be on file with LFD
before a shareholder may redeem in this manner. Shareholders may elect on the
redemption authorization form to have checks in any amount of $200 or more
mailed either to the registered address, to the shareholder's bank account, or
to any other designated person and a new form must be completed whenever these
instructions are revised.
Shareholders may request that redemption proceeds of $1,000 or more be wired
directly to a commercial bank account. The signatures on such a request must be
guaranteed, unless an authorization for redemption by telephone form has been
previously filed with LFD. The Agent presently imposes a $5.00 wire charge.
By Check: Shareholders may effect redemptions by writing checks drawn on the
Trust, payable to the order of any person in any amount of $100 or more up to
$500,000 at no charge. Checks in amounts over $500,000 will not be honored.
Special forms and instructions may be obtained from the Trust or the Agent.
Redemption checks should not be used to close your account. Redemption
checks are free, but the Agent will impose a fee (currently $15.00) for stopping
payment of a redemption check upon your request or if the Agent cannot honor the
redemption check due to insufficient funds, uncollected funds or other valid
reason.
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<PAGE>
Procedures for redemptions by telephone at no charge, or check may only be
used for shares for which share certificates have not been issued, and may not
be used to redeem shares purchased by check which have been on the books of the
Trust for less than 15 days.
By Mail: Send to the Agent (see back cover of this prospectus for address): (1)
a written request for redemption, signed by each registered owner exactly as the
shares are registered including the name of the Fund, account number and exact
registration; (2) share certificates for any shares to be redeemed which are
held by the shareholder; (3) signature guarantees, when required; and (4) the
additional documents required for redemptions by corporations, executors,
administrators, trustees and guardians. Redemptions by mail will not become
effective until all documents in proper form have been received by the Agent. If
a shareholder has any questions regarding the requirements for redeeming shares,
he should call the Trust prior to submitting a redemption request. If a
redemption request is sent to the Trust in New Jersey, it will be forwarded to
the Agent and the effective date of redemption will be the date received by the
Agent.
Checks for redemption proceeds will be mailed within three business days,
but will not be mailed until all checks in payment for the shares to be redeemed
have been cleared. Shareholders who redeem all of their shares will receive a
check representing the value of the shares redeemed plus the accrued dividends
through the date of the redemption. Where shareholders redeem only a portion of
their shares, all dividends declared but unpaid will be distributed on the next
dividend payment date.
Signature Guarantee: Signature guarantees are required in connection with (a)
redemptions by mail involving $25,000 or more; (b) all redemptions by mail,
regardless of the amount involved, when the proceeds are to be paid to someone
other than the registered owner(s); (c) authorizations to effect redemptions by
telephone or check; (d) changes in instructions as to where the proceeds of
redemptions are to be sent; and, (e) share transfer requests.
The Agent requires that the guarantor be either a commercial bank which is a
member of the Federal Deposit Insurance Corporation, a trust company, a savings
and loan association, a savings bank, a credit union, a member firm of a
domestic stock exchange, or a foreign branch of any of the foregoing. A notary
public is not an acceptable guarantor.
With respect to redemption requests submitted by mail, the signature
guarantees must appear either: (a) on the written request for redemption; (b) on
a separate instrument of assignment ("stock power") which should specify the
total number of shares to be redeemed; or (c) on all share certificates tendered
for redemption and, if shares held by the Agent are also being redeemed, on the
letter or stock power.
Redemption Price: The redemption price will be the net asset value per share of
the Trust next determined after receipt by the Agent of a redemption request in
proper form (see "Determination of Net Asset Value" in the Statement of
Additional Information). The right of redemption may be suspended (a) for any
period during which the New York Stock Exchange is closed or the Securities and
Exchange Commission ("SEC") determines that trading on the Exchange is
restricted, (b) when there is an emergency as determined by the SEC as a result
of which it is not reasonably practicable for the Trust to dispose of securities
owned by it or to determine fairly the value of its net assets, or (c) for such
other periods as the SEC may by order permit for the protection of shareholders
of the Trust. Due to the proportionately high cost of maintaining smaller
accounts, the Trust reserves the right to redeem all shares in an account with a
value of less than $500 (except retirement plan accounts) and mail the proceeds
to the shareholder. Shareholders will be notified before these redemptions are
to be made and will have 30 days to make an additional investment to bring their
accounts up to the required minimum.
SHAREHOLDER SERVICES
Transfer: Shares of the Trust may be transferred to another owner. A signature
guarantee of the registered owner is required on the letter of instruction or
accompanying stock power.
Systematic Withdrawal Plan: Shareholders may elect to withdraw cash in fixed
amounts from their accounts at regular intervals. The minimum investment to
establish a Systematic Withdrawal Plan is $10,000. If the proceeds are to be
mailed to someone other than the registered owner, a signature guarantee is
required.
7
<PAGE>
Group Sub-Accounting: To minimize recordkeeping by fiduciaries, corporations,
and certain other investors, the minimum initial investment may be waived.
EXCHANGE PRIVILEGE
Shares of the Trust may be exchanged for shares of the following Lexington
Funds on the basis of relative net asset value per share, next determined at the
time of the exchange. In the event shares of one or more of these Funds being
exchanged by a single investor have a value in excess of $500,000, the shares of
the Fund will not be purchased until the third business day following the
redemption of the shares being exchanged in order to enable the redeeming Fund
to utilize normal securities settlement procedures in transferring the proceeds
of the redemption to the Fund. Exchanges may not be made until all checks in
payment for the shares to be exchanged have been cleared.
Lexington Funds currently available for exchange are:
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC. (NASDAQ Symbol: LEXGX)
LEXINGTON GLOBAL FUND, INC. (NASDAQ Symbol: LXGLX)
LEXINGTON INTERNATIONAL FUND, INC. (NASDAQ Symbol: LEXIX)
LEXINGTON CROSBY SMALL CAP ASIA GROWTH FUND, INC.
LEXINGTON TROIKA DIALOG RUSSIA FUND, INC.
LEXINGTON RAMIREZ GLOBAL INCOME FUND (NASDAQ Symbol: LEBDX)
LEXINGTON GOLDFUND, INC. (NASDAQ Symbol: LEXMX)
LEXINGTON CORPORATE LEADERS TRUST FUND (NASDAQ Symbol: LEXCX)
LEXINGTON GROWTH AND INCOME FUND, INC. (NASDAQ Symbol: LEXRX)
LEXINGTON SMALL CAP VALUE FUND, INC.
LEXINGTON CONVERTIBLE SECURITIES FUND (NASDAQ Symbol: CNCVX)
LEXINGTON GNMA INCOME FUND, INC. (NASDAQ Symbol: LEXNX)
LEXINGTON MONEY MARKET TRUST (NASDAQ Symbol: LMMXX)
LEXINGTON TAX FREE MONEY FUND, INC. (NASDAQ Symbol: LTFXX)
LEXINGTON STRATEGIC INVESTMENTS FUND, INC. (NASDAQ Symbol: STIVX)
LEXINGTON STRATEGIC SILVER FUND, INC. (NASDAQ Symbol: STSLX)
Shareholders in any of these funds may exchange all or part of their shares
for shares of one or more of the other funds, subject to the conditions
described herein. The Exchange Privilege enables a shareholder in any of these
funds to acquire shares in a fund with a different investment objective when the
shareholder believes that a shift between funds is an appropriate investment
decision. Shareholders contemplating an exchange should obtain and review the
prospectus of the fund to be acquired. If an exchange involves investing in a
Lexington Fund not already owned and a new account has to be established, the
dollar amount exchanged must meet the minimum initial investment of the Fund
being purchased. If, however, an account already exists in the Fund being
bought, there is a $500 minimum exchange required. Shareholders must provide the
account number of the existing account. Any exchange between mutual funds is, in
effect, a redemption of shares in one Fund and a purchase in the other Fund.
Shareholders should consider the possible tax effects of an exchange.
Telephone Exchange Provisions-Exchange instructions may be given in writing or
by telephone. Telephone exchanges may only be made if a Telephone Authorization
form has been previously executed and filed with LFD. Telephone exchanges are
permitted only after a minimum of 7 days have elapsed from the date of a
previous exchange. Exchanges may not be made until all checks in payment for the
shares to be exchanged have been cleared. Telephonic exchanges can only involve
shares held on deposit at the Agent; shares held in certificate form by the
shareholder cannot be included. However, outstanding certificates can be
returned to the Agent and qualify for these services. Any new account
established with the same registration will also have the privilege of exchange
by telephone in the Lexington Funds. All accounts involved in a telephonic
exchange must have the same registration and dividend option as the account from
which the shares were transferred and will also have the privilege of exchange
by telephone in the Lexington Funds in which these services are available.
By checking the box on the New Account Application authorizing telephone
exchange services, a shareholder constitutes and appoints LFD as the true and
lawful attorney to surrender for redemption or exchange any and all
non-certificated shares held by the
8
<PAGE>
Agent in account(s) designated, or in any other account with the Lexington
Funds, present or future, which has the identical registration with full power
of substitution in the premises, authorizes and directs LFD to act upon any
instruction from any person by telephone for exchange of shares held in any of
these accounts, to purchase shares of any other Lexington Fund that is
available, provided the registration and mailing address of the shares to be
purchased are identical to the registration of the shares being redeemed, and
agrees that neither LFD, the Agent, nor the Fund(s) will be liable for any loss,
expense or cost arising out of any requests effected in accordance with this
authorization which would include requests effected by imposters or persons
otherwise unauthorized to act on behalf of the account. LFD, the Agent and the
Fund, will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine and if they do not employ reasonable
procedures they may be liable for any losses due to unauthorized or fraudulent
instructions. The following identification procedures may include, but are not
limited to, the following: account number, registration and address, taxpayer
identification number and other information particular to the account. In
addition, all exchange transactions will take place on recorded telephone lines
and each transaction will be confirmed in writing by the Fund. LFD reserves the
right to cease to act as Agent subject to the above appointment upon thirty (30)
days' written notice to the address of record. If the shareholder is an entity
other than an individual, such entity may be required to certify that certain
persons have been duly elected and are now legally holding the titles given and
that the said corporation, trust, unincorporated association, etc. is duly
organized and existing and has power to take action called for by this
continuing Authorization.
Exchange authorization forms, telephone authorization forms and prospectuses
of the other funds may be obtained from LMC.
The Distributor has made arrangements with certain dealers to accept
instructions by telephone to exchange shares of the Trust for shares of one of
the other Lexington funds at net asset value as described above. Under this
procedure, the dealer must agree to indemnify LFD and the Lexington funds from
any loss or liability that any of them might incur as a result of the acceptance
of such telephone exchange orders. A properly signed Exchange Authorization must
be received by the Distributor within five days of the exchange request. In each
such exchange, the registration of the shares of the Fund being acquired must be
identical to the registration of the shares of the Fund exchanged. Shares in
certificate form are not eligible for this type of exchange. LFD reserves the
right to reject any telephone exchange request. Any telephone exchange orders so
rejected may be processed by mail.
A capital gain or loss for Federal income tax purposes may be realized upon
the exchange, depending upon the cost or other basis of the shares exchanged.
This exchange offer is available only in states where shares of the Fund being
acquired may legally be sold and may be modified or terminated at any time by
the Trust. Broker dealers who process exchange orders on behalf of their
customers may charge a fee for their services. Such fee may be avoided by making
requests for exchange directly to the Trust or Agent.
TAX-SHELTERED RETIREMENT PLANS
The Trust offers a Prototype Pension and Profit Sharing Plan, including a
Keogh Plan, IRA's, SEP-lRA's and IRA Rollover Accounts, 401(k) Salary Reduction
Plans, Section 457 Deferred Compensation Plan and 403 (b) (7) Plans. Plan
support services are available through the Shareholder Services Department of
LMC at 1-800-526-0056. (See "Tax-Sheltered Retirement Plans" in the Statement of
Additional Information.)
DIVIDEND, DISTRIBUTION AND REINVESTMENT POLICY
The Trust's policy is to declare dividends from net investment income daily,
reinvest them daily and distribute them monthly. Dividends are distributed in
the form of additional full and fractional shares at net asset value unless
specific instructions otherwise are received by the Dividend Disbursing Agent.
The net income of the Trust (from the time of the immediately preceding
determination thereof) consists of (i) all interest income accrued on the
portfolio assets of the Trust, (ii) plus or minus all realized and unrealized
gains and losses on portfolio assets of the Trust and (iii) less all expenses of
the Trust. Interest income includes discounts earned (including original issue
and market discount) on discount paper accrued ratably to the date of maturity.
TAX MATTERS
The Trust intends to qualify as a regulated investment company by satisfying
the requirements under Subchapter M of the
9
<PAGE>
Internal Revenue Code of 1986, as amended (the "Code"), including requirements
with respect to diversification of assets, distribution of income and sources of
income. It is the Trust's policy to distribute to shareholders all of its
investment income (net of expenses) and any capital gains (net of capital
losses) so that, in addition to satisfying the distribution requirement of
Subchapter M, the Trust will not be subject to federal income tax or the 4%
excise tax.
Distributions by the Trust of its net investment income and any net
short-term capital gain are taxable to shareholders as ordinary income. These
distributions are treated as dividends for federal income tax purposes but do
not qualify for the 70% dividends-received deduction for corporate shareholders.
The Trust is managed so that it will not have any long-term capital gains or
losses.
Distributions to shareholders will be treated in the same manner for federal
income tax purposes whether received in cash or reinvested in additional shares
of the Trust. In general, distributions by the Trust are taken into account by
the shareholders in the year in which they are made. However, certain
distributions made during January will be treated as having been paid by the
Trust and received by the shareholders on December 31 of the preceding year. A
statement setting forth the federal income tax status of all distributions made
or deemed made during the year will be sent to shareholders promptly after the
end of each year. Shareholders purchasing shares of the Trust just prior to the
ex-dividend date will be taxed on the entire amount of the dividend received,
even though the net asset value per share on the date of such purchase reflected
the amount of such dividend.
All or a portion of any loss realized upon a taxable disposition of shares
of the Fund may be disallowed if other shares of the Trust are purchased within
30 days before or after such disposition.
Under the back-up withholding rules of the Code, certain shareholders may be
subject to 31% withholding of federal income tax on ordinary income dividends
paid by the Trust. In order to avoid this back-up withholding, a shareholder
must provide the Trust with a correct taxpayer identification number (which for
most individuals is their Social Security number) or certify that it is a
corporation or otherwise exempt from or not subject to back-up withholding. The
new account application included with this Prospectus provides for shareholder
compliance with these certification requirements.
The foregoing discussion of federal income tax consequences is based on tax
laws and regulations in effect on the date of this Prospectus, and is subject to
change by legislative or administrative action. As the foregoing discussion is
for general information only, a prospective shareholder should also review the
more detailed discussion of federal income tax considerations relevant to the
Trust that is contained in the Statement of Additional Information. In addition,
each prospective shareholder should consult with his own tax adviser as to the
tax consequences of investments in the Trust, including the application of state
and local taxes which may differ from the federal income tax consequences
described above.
CUSTODIAN, TRANSFER AGENT, AND DIVIDEND DISBURSING AGENT
Chase Manhattan Bank N.A., 1211 Avenue of the Americas, New York, New York
10022, has been retained to act as the Custodian for the Trust's investments and
assets. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is the transfer agent and dividend disbursing agent for the
Trust. Neither Chase Manhattan Bank, N.A. nor State Street Bank and Trust
Company have any part in determining the investment policies of the Trust or in
determining which portfolio securities are to be purchased or sold by the Trust
or in the declaration of dividends and distributions.
COUNSEL AND INDEPENDENT AUDITORS
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, 919 Third Avenue, New
York, New York 10022, will pass upon legal matters for the Trust in connection
with the shares offered by this Prospectus.
KPMG Peat Marwick LLP, 345 Park Avenue, New York, New York 10154, has been
selected as independent auditors for the Trust for the fiscal year ending
December 31,1996.
OTHER INFORMATION
The Trust is a trust fund of the type commonly known as a "Massachusetts
business trust". It is a diversified open-end management investment company
registered under the Investment Company Act of 1940, established under
Massachusetts law by
10
<PAGE>
Declaration of Trust dated October 28, 1976. The Declaration of Trust permits
the Trustees to issue an unlimited number of full and fractional shares of a
single class. Each share represents an equal proportionate interest with each
other share. In the event of liquidation of the Trust, shareholders are entitled
to share pro rata in the net assets available for distribution to shareholders.
Shares have no preemptive or conversion rights. Shares are fully paid and non
assessable. Shareholders are entitled to one vote for each share held in the
election of Trustees and on other matters submitted to the vote of shareholders.
Voting rights are not cumulative, so that the holders of more than 50% of the
shares voting in the election of Trustees can, if they choose to do so, elect
all the Trustees. No material amendment may be made to the Declaration of Trust
without the affirmative vote of a majority of the outstanding shares.
Shareholder and Trustee liability: Under Massachusetts law, shareholders of
a Massachusetts business trust may, under certain circumstances, be held
personally liable as partners for the obligations of the Trust. The Declaration
of Trust contains an express disclaimer of shareholder liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given in
each agreement, obligation, or instrument entered into or executed by the Trust
or the Trustees. The Declaration of Trust provides for indemnification out of
the Trust property for any shareholders held personally liable for the
obligations of the Trust, and also provides that the Trust shall, upon request,
assume the defense of any claim made against any shareholder for any act or
obligation of the Trust and satisfy any judgment thereon. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust itself would be unable to meet its
obligations. The Declaration of Trust further provides that the Trustees will
not be liable for errors of judgment or mistakes of fact or law; but nothing in
the Declaration of Trust protects a Trustee against any liability to which he
would otherwise be subject by reason of wilful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.
The Trust was originally organized under the name "Banner Redi-Resources
Trust" and assumed its present name in January 1979.
As a general matter, the Trust will not hold annual or other meetings of
shareholders. Instead meetings of shareholders will be held only: (i) for the
election of trustees; (2) for the approval of any new or amended advisory
agreement; (3) ratification of the selection of the independent auditors; or (4)
approval of the distribution agreement. The Trustees are required to call a
meeting for the purpose of considering the removal of a person serving as
trustee, if requested in writing to do so by the holders of not less than 10% of
the outstanding shares of other voting interests of the Trust. The Trust is
required to assist in shareholder communications.
The Code of Ethics adopted by each of the Adviser and the Fund prohibits all
affiliated personnel from engaging in personal investment activities which
compete with or attempt to take advantage of the Fund's planned portfolio
transactions. The objective of each Code of Ethics is that the operations of the
Adviser and Fund be carried out for the exclusive benefit of the Fund's
shareholders. All organizations maintain careful monitoring of compliance with
the Code of Ethics.
A Registration Statement (herein called the "Registration Statement"), of
which this Prospectus is a part, has been filed with the SEC, Washington, D.C.
under the Securities Act of 1933, as amended.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and in the Trust's
official sales literature in connection with the offer of the Trust's shares,
and, if given or made, such other information or representations must not be
relied upon as having been authorized by the Trust. This Prospectus does not
constitute an offer in any State in which, or to any person to whom, such
offering may not lawfully be made. A "Statement of Additional Information", to
which reference is made in this Prospectus, provides a further discussion of
certain areas in the Prospectus and other matters which may be of interest to
some investors and is available by request without cost as indicated herein. The
Prospectus and the Statement of Additional Information omit certain information
contained in the Registration Statement, to which reference is made, filed with
the Commission. Items which are thus omitted, including contracts and other
documents referred to or summarized herein and therein, may be obtained from the
Commission upon payment of the prescribed fees.
11
<PAGE>
(Left Column)
Investment Adviser
- -----------------------------------------------------------
LEXINGTON MANAGEMENT CORPORATION
P.O. Box 1515/Park 80 West Plaza Two
Saddle Brook, N.J. 07663
Distributor
- -----------------------------------------------------------
LEXINGTON FUNDS DISTRIBUTOR, INC.
P.O. Box 1515/Park 80 West Plaza Two
Saddle Brook, N.J. 07663
All shareholder requests for services of any kind should be
sent to:
Transfer Agent
- -----------------------------------------------------------
STATE STREET BANK AND TRUST COMPANY
c/o National Financial Data Services
Lexington Funds
1004 Baltimore
Kansas City, Missouri 64105
Or call Toll Free:
Service: 1-800-526-0056
24 Hour Account Information: 1-800-526-0052
Table of Contents Page
- -----------------------------------------------------------
Fee Table ............................................. 2
Financial Highlights .................................. 2
Yield Information ..................................... 3
Comparative Performance Information ................... 3
Description of the Trust .............................. 3
Investment Objective .................................. 3
Investment Policies ................................... 3
Foreign Branches of U.S. Banks ........................ 4
Management of the Trust ............................... 4
Portfolio Manager ..................................... 4
Investment Adviser, Distributor and Administrator ..... 4
How to Purchase Shares ................................ 5
How to Redeem Shares .................................. 6
Shareholder Services .................................. 7
Exchange Privilege .................................... 8
Tax-Sheltered Retirement Plans ........................ 9
Dividend, Distribution and Reinvestment Policy ........ 9
Tax Matters ........................................... 9
Custodian, Transfer Agent and
Dividend Disbursing Agent ........................... 10
Counsel and Independent Auditors ...................... 10
Other Information ..................................... 10
(Right Column)
------------------------------------------
L E X I N G T O N
------------------------------------------
------------------------------------------
LEXINGTON
MONEY
MARKET
TRUST
(filled box)
(filled box)No sales charge
(filled box)No redemption fee
(filled box)Free check writing service
(filled box)Free telephone exchange
privilege
(filled box)
The Lexington Group
of
No-Load
Investment Companies
------------------------------------------
P R O S P E C T U S
APRIL 29, 1996
==============
12
<PAGE>
LEXINGTON MONEY MARKET TRUST
STATEMENT OF ADDITIONAL INFORMATION
APRIL 29, 1996
This statement of additional information which is not a prospectus, should
be read in conjunction with the current prospectus of Lexington Money Market
Trust (the "Trust"), dated April 29, 1996, as it may be revised from time to
time. To obtain a copy of the Trust's prospectus at no charge, please write to
the Trust at P.O. Box 1515/Park 80 West - Plaza Two, Saddle Brook, New Jersey
07663 or call the following toll-free numbers:
Shareholder Services:--1-800-526-0056
24 Hour Account Information:--1-800-526-0052
Lexington Management Corporation ("LMC") serves as the Trust's investment
adviser. Lexington Funds Distributor, Inc. ("LFD") serves as distributor of
shares of the Trust.
TABLE OF CONTENTS
PAGE
Investment Policy ......................................................... 2
Investment Restrictions ................................................... 2
Yield Calculation ......................................................... 3
Determination of Net Asset Value .......................................... 3
Tax-Sheltered Retirement Plans ............................................ 4
Investment Adviser, Distributor and Administrator ......................... 5
Portfolio Transactions .................................................... 6
Dividend, Distribution and Reinvestment Policy ............................ 6
Tax Matters ............................................................... 7
Custodian, Transfer Agent and Dividend Disbursing Agent ................... 9
Management of the Trust ................................................... 9
Financial Statements ...................................................... 12
1
<PAGE>
INVESTMENT POLICY
In order to achieve its objective of seeking as high a level of current
income as is available from short term investments and consistent with the
preservation of capital and liquidity, the Trust will invest its assets in the
following money market instruments: (l) Obligations issued, or guaranteed as to
interest and principal, by the Government of the United States or any agency or
instrumentality thereof; (2) U.S. dollar denominated time deposits, certificates
of deposit and bankers' acceptances of U.S. banks and their London and Nassau
branches and of U.S. branches of foreign banks, provided that the bank has total
assets of one billion dollars; (3) Commercial paper of U.S. corporations, rated
Al, A2 by Standard & Poor's Corporation or Pl, P2 by Moody's Investors Service,
Inc. or, if not rated, of such issuers having outstanding debt rated A or better
by either of such services, or debt obligations of such issuers maturing in two
years or less and rated A or better; (4) Repurchase agreements under which the
Trust may acquire an underlying debt instrument for a relatively short period
subject to the obligation of the seller to repurchase, and of the Trust to
resell, at a fixed price. The underlying security must be of the same quality as
those described herein, although the usual practice is to use U.S. Government or
government agency securities. The Trust will enter into repurchase agreements
only with commercial banks and dealers in U.S. Government securities. Repurchase
agreements when entered into with dealers, will be fully collateralized
including the interest earned thereon during the entire term of the agreement.
If the institution defaults on the repurchase agreement, the Trust will retain
possession of the underlying securities. In addition, if bankruptcy proceedings
are commenced with respect to the seller, realization on the collateral by the
Trust may be delayed or limited and the Trust may incur additional costs. In
such case the Trust will be subject to risks associated with changes in the
market value of the collateral securities. The Trust intends to limit repurchase
agreements to institutions believed by LMC to present minimal credit risk. The
Trust will not enter into repurchase agreements maturing in more than seven days
if the aggregate of such repurchase agreements would exceed 10% of the total
assets of the Trust; or (5) Other money market instruments.
Foreign Branches of U.S. Banks
The obligations of London and Nassau branches of U.S. banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by governmental regulation.
Payment of interest and principal upon these obligations may also be affected by
governmental action in the country of domicile of the branch (generally referred
to as "sovereign risk"). In addition, evidences of ownership of portfolio
securities may be held outside of the U.S., and the Trust may be subject to the
risks associated with the holding of such property overseas. Examples of
governmental actions would be the imposition of currency controls, interest
limitations, seizure of assets, or the declaration of a moratorium. Obligations
of U.S. branches of foreign banks may be general obligations of the parent bank
in addition to the issuing branch, or may be limited by the terms of a specific
obligation and by Federal and state regulation as well as by governmental action
in the country in which the foreign bank has its head office. While the Trust
will carefully consider these factors on making such investments, there are no
limitations on the percentage of the Trust's portfolio which may be invested in
any one type of instrument.
The Investment Policies stated above are fundamental and may not be changed
without shareholder approval. The Trust may not invest in securities other than
the types of securities listed above and is subject to other specific
restrictions as detailed under "Investment Restrictions", below.
INVESTMENT RESTRICTIONS
The following investment restrictions adopted by the Trust may not be
changed without the affirmative vote of a majority (defined as the lesser of:
67% of the shares represented at a meeting at which 50% of outstanding shares
are present, or 50% of outstanding shares) of its outstanding shares. The Trust
may not: (l) purchase any securities other than money market instruments or
other debt securities maturing within two years of the date of purchase; (2)
borrow an amount which is in excess of one-third of its total assets taken at
market value (including the amount borrowed); and then only from banks as a
temporary measure for extraordinary or emergency purposes. The Trust will not
borrow to increase income but only to meet redemption requests which might
otherwise require undue disposition of portfolio securities. The Trust will not
invest while it has borrowings outstanding; (3) pledge its assets except in an
amount up to 15% of the value of its total assets taken at market value in order
to secure borrowings made in accordance with number (2) above; (4) sell
securities short unless at all times while a short position is open the Trust
maintains a long position in the same security in an amount at least equal
thereto; (5) write or purchase put or call options; (6) purchase securities on
margin except the Trust may obtain such short term credit as may be necessary
for the clearance of purchases and sales of portfolio securities; (7) make
investments for the purpose of exercising control or management; (8) purchase
securities of other investment companies, except in connection with a merger,
consolidation, acquisition or reorganization; (9) make loans to other persons,
provided that the Trust may purchase money market securities or enter into
repurchase agreements and lend securities owned or held by it as provided
herein; (10) lend its portfolio securities,
2
<PAGE>
except in conformity with the guidelines set forth below; (11) concentrate more
than 25% of its total assets, taken at market value at the time of such
investment, in any one industry, except U.S. Government and U.S. Government
agency securities and U.S. bank obligations; (12) purchase any securities other
than U.S. Government or U.S. Government agency securities, if immediately after
such purchase more than 5% of its total assets would be invested in securities
of any one issuer for more than three business days; (taken at market value)
(13) purchase or hold real estate, commodities or commodity contracts; ( 14 )
invest more than 5% of its total assets (taken at market value) in issues for
which no readily available market exists or with legal or contractual
restrictions on resale except for repurchase agreements; (15) act as an
underwriter (except as it may be deemed such as to the sale of restricted
securities); or (16) enter into reverse repurchase agreements.
Although the Trust has the right to pledge or hypothecate in excess of 10%
of its assets at market value, it will not do so in order to comply with certain
state statutes. Also, the Trust has undertaken not in invest in real estate
limited partnership interests, oil, gas or mineral leases, as well as
exploration or development programs. The Trust will not purchase warrants except
in units with other securities in original issuance thereof or attached to other
securities, if at the time of purchase, the Trust's investment in warrants
valued at the lower of cost or market, would exceed 5% of the Trust's total
assets. Warrants which are not listed on the New York or American Stock
Exchanges shall not exceed 2% of the Trust's net assets. Shares of the Trust
will not be issued for consideration other than cash.
Lending of portfolio securities: As stated in number (10) above, subject to
guidelines established by the Trustees and by the Securities and Exchange
Commission, the Trust, from time-to-time, may lend portfolio securities to
brokers, dealers, corporations or financial institutions and receive collateral
which will be maintained at all times in an amount equal to at least 100% of the
current market value of the loaned securities. Such collateral will be either
cash or fully negotiable U. S. Treasury or agency issues. If cash, such
collateral will be invested in short term securities, the income from which will
increase the return to the Trust. However, a portion of such incremental return
may be shared with the borrower. If securities, the usual procedure will be for
the borrower to pay a fixed fee to the Trust for such time as the loan is
outstanding. The Trust will retain substantially all rights of beneficial
ownership as to the loaned portfolio securities including rights to interest or
other distributions and will have the right to regain record ownership of loaned
securities in order to exercise such beneficial rights. Such loans will be
terminable at any time. The Trust may pay reasonable fees to persons
unaffiliated with it in connection with the arranging of such loans.
YIELD CALCULATION
The Trust provides current yield and effective yield quotations, which are
calculated in accordance with the regulations of the Securities and Exchange
Commission, based upon changes in account value during a recent seven-day base
period.
Current yield quotations are computed by annualizing (on a 365-day basis)
the "base period return". The "base period return" is computed by determining
the net change exclusive of capital changes in the value of the account, divided
by the value of the account at the beginning of the base period. Effective yield
is computed by compounding the "base period return". Based upon dividends
actually credited to the shareholders' accounts (i.e.: based upon net investment
income), the current yield to an investor in the Trust during the last seven
calendar days of its fiscal year ended December 31, 1995 was at an annual rate
of 4.79% and the effective yield was at an annual rate of 4.91%. The average
weighted maturity of investments was 33 days. The current and effective yield
are affected by market conditions, portfolio quality, portfolio maturity, type
of instruments held and operating expenses. The Trust attempts to keep its net
asset value per share at $1.00, but attainment of this objective is not
guaranteed. This Statement of Additional Information may be in use for a full
year and it can be expected that these yields will fluctuate substantially from
the example shown above.
The current and effective yield figures are not a representation of future
yield as the Trust's net income and expenses will vary based on many factors,
including changes in short term money market yields generally and the types of
instruments in the Trust's portfolio. The stated yield of the Trust may be
useful in reviewing the Trust's performance and in providing a basis for
comparison with other investment alternatives. However, unlike bank deposits and
other investments which pay fixed yields for stated periods of time, the yield
of the Trust fluctuates. In addition, other investment companies may calculate
yield on a different basis and may purchase securities for their portfolios
which have different qualities and maturities than those of the Trust's
portfolio securities.
DETERMINATION OF NET ASSET VALUE
The net asset value of the Trust is determined as of the close of trading on
the New York Stock Exchange each day the Exchange is open for business and at
such other times and/or such other days as there is sufficient trading in money
market instruments to affect materially the Trust's net asset value per share.
Substantially all of the Trust's net income
3
<PAGE>
calculated from the immediately preceding determination of net income, is
declared daily as dividends (see "Dividend, Distribution and Reinvestment
Policy").
For the purpose of determining the price at which shares are issued and
redeemed, the net asset value per share is calculated immediately after the
daily dividend declaration by: (a) valuing all securities and instruments as set
forth below; (b) deducting the Trust's liabilities; and (c) dividing the
resulting amount by the number of shares outstanding. As discussed below, it is
the intention of the Trust to maintain a net asset value per share of $1.00. The
Trust's portfolio instruments are valued on the basis of amortized cost. This
involves valuing an instrument at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the security. While this
method provides certainty in valuation, it may result in periods during which
the value, as determined by amortized cost, is higher or lower than the price
the Trust would receive if it sold its portfolio. During periods of declining
interest rates, the daily yield on shares of the Trust computed as described
above may be higher than a like computation made by a fund with identical
investments utilizing a method of valuation based upon market prices and
estimates of market prices for all its portfolio instruments. Thus, if the use
of amortized cost by the Trust results in a lower aggregate portfolio value on a
particular day, a prospective investor in the Trust would be able to obtain a
somewhat higher yield than would result from an investment in a fund utilizing
solely market values, and existing investors in the Trust would receive less
investment income. The converse would apply in a period of rising interest
rates.
The Trust's use of amortized cost and the maintenance of the Trust's per
share net value at $1.00 is based on its election to operate under the
provisions of Rule 2a-7 under the Investment Company Act of 1940. As a condition
of operating under that rule, the Trust must maintain a dollar-weighted average
portfolio maturity of 90 days or less, purchase only instruments having
remaining maturities of thirteen months or less, and invest only in securities
which are determined by the Board of Trustees to present minimal credit risks
and which are of high quality as required by the Rule, or in the case of any
instrument not so rated, considered by the Board of Trustees to be of comparable
quality. Securities in the Trust will consist of money market instruments that
have been rated (or whose issuer's short-term debt obligations are rated) in one
of the two highest categories (i.e. "Al/Pl") by both Standard & Poor's
Corporation ("S&P") and Moody's Investors Services, Inc. ("Moody's"), two
nationally recognized statistical rating organizations ("NRSRO").
The Trust may invest up to 5% of its assets in any single "Tier I" security
(other than U.S. Government securities), measured at the time of acquisition;
however, it may invest more than 5% of its assets in a single Tier 1 security
for no more than three business days. A "Tier I" security is one that has been
rated (or the issuer of such security has been rated) by both S&P and Moody's in
the highest rating category or, if unrated, is of comparable quality. A security
rated in the highest category by only one of these NRSROs is also considered a
Tier 1 security.
In addition, the Trust may invest not more than 5% of its assets in "Tier 2"
securities. A Tier 2 security is a security that is (a) rated in the second
highest category by either S&P or Moody's or (b) an unrated security that is
deemed to be of comparable quality by the Trust's investment advisor. The Trust
may invest up to 1% of its assets in any single Tier 2 security.
The Trust may invest only in a money market instrument that has a remaining
maturity of 13 months (397 days) or less, provided that the Trust's average
weighted maturity is 90 days or less.
The Board of Trustees has also agreed, as a particular responsibility within
the overall duty of care owed to its shareholders, to establish procedures
reasonably designed, taking into account current market conditions and the
Trust's investment objective, to stabilize the net asset value per share as
computed for the purposes of sales and redemptions at $1.00. These procedures
include periodic review, as the Board deems appropriate and at such intervals as
are reasonable in light of current market conditions, of the relationship
between the amortized cost value per share and a net asset value per share based
upon available indications of market value. In such review, investments for
which market quotations are readily available are valued at the most recent bid
price or quoted yield equivalent for such securities or for securities of
comparable maturity, quality and type as obtained from one or more of the major
market makers for the securities to be valued. Other investments and assets are
valued at fair value, as determined in good faith by the Board of Trustees.
TAX-SHELTERED RETIREMENT PLANS
The Trust makes available a variety of Prototype Pension and Profit Sharing
Plans including a 401(k) Salary Reduction Plan and a 403(b)(7) Plan. Plan
services are available by contacting the Shareholder Services Department of LMC
at 1-800-526-0056.
INDIVIDUAL RETIREMENT ACCOUNT (IRA): Individuals may make tax deductible
contributions to their own Individual Retirement Accounts established under
Section 408 of the Internal Revenue Code (the "Code").
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Married investors filing a joint return neither of whom is an active
participant in an employer sponsored retirement plan, or who have adjusted gross
income of $40,000 or less ($25,000 or less for single taxpayers) may continue to
make a $2,000 ($2,250 for spousal IRAs) annual deductible IRA contribution. For
adjusted gross income above $40,000 ($25,000 for single taxpayers), the IRA
deduction limit is generally phased out ratably over the next $10,000 of
adjusted gross income, subject to a minimum $200 deductible contribution.
Investors who are not able to deduct a full $2,000 ($2,250 spousal) IRA
contribution because of the limitations may make a nondeductible contribution to
their IRA to the extent a deductible contribution is not allowed. Federal income
tax on accumulations earned on nondeductible contributions is deferred until
such time as these amounts are deemed distributed to an investor. Rollovers are
also permitted under the Plan. The disclosure statement required by the Internal
Revenue Service ("IRS") is provided by the Trust.
The minimum initial investment to establish a tax-sheltered plan through the
Trust is $250 for retirement plan accounts. Subsequent investments are subject
to a minimum of $50 for each account.
SELF-EMPLOYED RETIREMENT PLAN (HR-10): Self-employed individuals may make tax
deductible contributions to a prototype defined contribution pension plan or
profit sharing plan. There are, however, a number of special rules which apply
when self-employed individuals participate in such plans. Currently purchase
payments under a self-employed plan are deductible only to the extent of the
lesser of (i) $30,000 or (ii) 25% of the individuals earned annual income (as
defined in the Code) and in applying these limitations not more than $200,000 of
"earned income" may be taken into account.
CORPORATE PENSION AND PROFIT SHARING PLANS: The Trust makes available a
Prototype Defined Contribution Pension Plan and a Prototype Profit Sharing Plan.
All purchases and redemptions of Trust shares pursuant to any one of the
Trust's tax sheltered plans must be carried out in accordance with the
provisions of the plan. Accordingly, all plan documents should be reviewed
carefully before adopting or enrolling in the plan. Investors should especially
note that a penalty tax of 10% may be imposed by the IRS on early withdrawals
under corporate, Keogh or IRA plans. It is recommended by the IRS that an
investor consult a tax adviser before investing in the Trust through any of
these plans. An investor participating in any of the Trust's special plans has
no obligation to continue to invest in the Trust and may terminate the plan with
the Trust at any time. Except for expenses of sales and promotion, executive and
administrative personnel, and certain services which are furnished by LMC, the
cost of the plans generally is borne by the Trust; however, each IRA plan
account is subject to an annual maintenance fee of $12.00 charged by State
Street Bank and Trust Company (the "Agent").
INVESTMENT ADVISER, DISTRIBUTOR AND ADMINISTRATOR
LMC, P.O. Box 1515/Park 80 West Plaza Two, Saddle Brook, New Jersey 07663,
is the investment adviser to the Trust and, as such, advises and makes
recommendations to the Trust with respect to its investments and investment
policies.
Under the terms of the investment advisory agreement with LMC, as
compensation for its services to the Trust, LMC receives monthly from the Trust
a fee at the annual rates of 0.5% of that portion of the average daily net
assets of the Trust not exceeding $500 million and 0.45% of the average daily
net assets of the Trust in excess of $500 million, computed monthly. All fees
and expenses are accrued daily and deducted before payment of dividends to
investors. Such agreement provides that if in any fiscal year the aggregate
expenses of the Trust, exclusive of taxes, brokerage, interest and extraordinary
expenses, but including the fees payable to the adviser, exceed 1% of the
average daily net assets, LMC will refund monthly to the Trust or bear any such
excess.
Under the terms of the advisory agreement LMC also pays the Trust's expenses
for office rent, utilities, telephone, furniture and supplies utilized for the
Trust's principal office and the salaries and payroll expense of officers and
trustees of the Trust who are also employees of LMC or its affiliates in
carrying out its duties under the investment advisory agreement. The Trust pays
all its other expenses, including custodian and transfer fees, legal and
registration fees, audit fees, printing of prospectuses, shareholder reports and
communications required for regulatory purposes or for distribution to existing
shareholders, computation of net asset value, mailing of shareholder reports and
communications, portfolio brokerage, taxes and independent trustees' fees, and
furnishes LFD, at printer's overrun cost paid by LFD, such copies of its
prospectus and annual, semi-annual and other reports and shareholder
communications as may reasonably be required for sales purposes. In addition,
the Trust will bear any costs associated with the securities loan program (any
such loans will increase the return to the shareholders).
The investment advisory agreement will automatically terminate if assigned
and may be terminated by either party upon 60 days' notice. The terms of the
agreement and any renewal thereof must be approved at least annually by a
majority of its trustees, including a majority of trustees who are not parties
to the agreement or "interested persons" of such parties, as such term is
defined under the Investment Company Act of 1940, as amended.
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LMC serves as investment adviser to other investment companies and private
and institutional investment accounts. Included among these clients are persons
and organizations which own significant amounts of capital stock of LMC's parent
(see below). These clients pay fees which LMC considers comparable to the fee
levels for similarly served clients. LMC's accounts are managed independently
with reference to the applicable investment objectives and current security
holdings but on occasion more than one fund or counsel account may seek to
engage in transactions in the same security at the same time. To the extent
practicable, such transactions will be effected on a pro-rata basis in
proportion to the respective amounts of securities to be bought and sold for
each portfolio, and the allocated transactions will be averaged as to price.
While this procedure may adversely affect the price or volume of a given Trust
transaction, LMC believes that the ability of the Trust to participate in
combined transactions may generally produce better executions overall.
LFD also serves as distributor for Trust shares under a Distribution
Agreement which is subject to annual approval by a majority of the Trustees,
including a majority of those who are not "interested persons".
LMC also acts as administrator to the Fund and performs certain
administrative and internal accounting services, including but not limited to,
maintaining general ledger accounts, regulatory compliance, preparation of
financial information for semiannual and annual reports, preparing registration
statements, calculating net asset values, shareholder communications and
supervision of the custodian of, transfer agent and provides facilities for such
services. The Fund pays LMC a fee, payable monthly, equal to the pro-rata
portion of LMC(acute accent)Is actual cost in providing such services and
facilities.
Of the trustees, officers or employees ("affiliated persons") of the Trust,
Messrs. Corniotes, DeMichele, Faust, Hisey, Kantor, Jamison, Lavery, Luehs and
Petruski and Mmes. Carnicelli, Carr, Curcio, Gilfillan and Mosca (see
"Management of the Trust") may also be deemed affiliates of LMC by virtue of
being officers, directors or employees thereof. As of March 1, 1996, all
officers and trustees of the Trust as a group were beneficial owners of less
than 1% of the shares of the Trust.
LMC and LFD are wholly-owned subsidiaries of Lexington Global Asset
Managers, Inc., a Delaware corporation with offices at Park 80 West, Plaza Two,
Saddle Brook, New Jersey 07663. Descendants of Lunsford Richardson, Sr., their
spouses, trusts and other related entities have a majority voting control of the
outstanding shares of Lexington Global Asset Managers, Inc.
LMC received from the Trust under the advisory agreement the following net
fees as of the fiscal year ended December 31, 1993, $509,533; December 31, 1994,
$503,124 and December 31, 1995, $473,889.
PORTFOLIO TRANSACTIONS
Portfolio securities are normally purchased directly from the issuer or from
an underwriter or market maker for money market instruments. Therefore, usually
no brokerage commissions were paid by the Trust. Transactions are allocated to
various dealers by LMC in its best judgment. Dealers are selected primarily on
the basis of prompt execution of orders at the most favorable prices. The Trust
has no obligation to deal with any dealer or group of dealers. Particular
dealers may be selected for research or statistical and other services to enable
LMC to supplement its own research and analysis with that of such firms.
Information so received will be in addition to and not in lieu of the services
required to be performed by LMC under the investment advisory agreement and the
expenses of LMC will not necessarily be reduced as a result of the receipt of
such supplemental information.
DIVIDEND, DISTRIBUTION AND REINVESTMENT POLICY
Substantially all of the Trust's net income will be declared as a dividend
daily. The net income of the Trust (from the immediately preceding determination
thereof) consists of: (i) all interest income accrued on the portfolio assets of
the Trust; (ii) plus or minus all realized and unrealized gains and losses on
portfolio assets of the Trust; and (iii) less all expenses of the Trust.
Interest income includes discounts earned (including original issue and market
discount) on discount paper accrued ratably to the date of maturity. All
distributions will be reinvested automatically in additional shares unless
specific instructions otherwise are received by the Agent. Dividends are
declared, reinvested daily and distributed monthly in the form of additional
full and fractional shares at net asset value. Since the net income will be
declared as a dividend each time the net income of the Trust is determined, the
net asset value per share will normally remain at one dollar per share
immediately after each such dividend declaration and determination. If the net
income on any one day is a negative amount (for example, if a sharp rise in
interest rates causes realized and unrealized losses on portfolio assets in
excess of interest income), the Trust will first offset the negative amount
against the accrued dividends of each account. If the negative amount should
exceed such accrued dividends, the Trust will reduce the number of outstanding
shares by treating each shareholder as having contributed to the capital of the
Trust that number of full and fractional shares in the account of such
shareholder which represents the amount of such excess at the time of
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the determination. Each shareholder will be deemed to have agreed to such
contribution in these circumstances by his investment in the Trust. This
procedure will permit the net asset value per share of the Trust to be
maintained at a constant value of $1.00 per share. If in the view of the
Trustees it is inadvisable to continue the practice of maintaining the net asset
value of one dollar per share, the Trustees reserve the right to alter the
procedure. Shareholders will be notified promptly of any such alteration.
Shareholders will be notified annually of the tax status of all distributions.
TAX MATTERS
The following is only a summary of certain additional tax considerations
generally affecting the Trust and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of the Trust or its shareholders, and the discussions here and in the
Prospectus are not intended as substitutes for careful tax planning.
Qualification as a Regulated Investment Company
The Trust has elected to be taxed as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a
regulated investment company, the Trust is not subject to federal income tax on
the portion of its net investment income (i.e., taxable interest, dividends and
other taxable ordinary income, net of expenses) and capital gain net income
(i.e., the excess of capital gains over capital losses) that it distributes to
shareholders, provided that it distributes at least 90% of its investment
company taxable income (i.e., net investment income and the excess of net
short-term capital gain over net long-term capital loss) for the taxable year
(the "Distribution Requirement"), and satisfies certain other requirements of
the Code that are described below. Distributions by the Trust made during the
taxable year or, under specified circumstances, within twelve months after the
close of the taxable year, will be considered distributions of income and gains
of the taxable year and can therefore satisfy the Distribution Requirement.
In addition to satisfying the Distribution Requirement, a regulated
investment company must: (1) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
(to the extent such currency gains are directly related to the regulated
investment company's principal business of investing in stock or securities) and
other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies (the "Income Requirement"); and (2) derive less
than 30% of its gross income (exclusive of certain gains on designated hedging
transactions that are offset by realized or unrealized losses on offsetting
positions) from the sale or other disposition of stock, securities or foreign
currencies (or options, futures or forward contracts thereon) held for less than
three months (the "Short-Short Gain Test"). However, foreign currency gains,
including those derived from options, futures and forwards, will not in any
event be characterized as Short-Short Gain if they are directly related to the
regulated investment company's investments in stock or securities (or options or
futures thereon). Because of the Short-Short Gain Test, the Trust may have to
limit the sale of appreciated securities that it has held for less than three
months. However, the Short-Short Gain Test will not prevent the Trust from
disposing of investments at a loss, since the recognition of a loss before the
expiration of the three-month holding period is disregarded for this purpose.
Interest (including original issue discount) received by the Trust at maturity
or upon the disposition of a security held for less than three months will not
be treated as gross income derived from the sale or other disposition of such
security within the meaning of the Short-Short Gain Test. However, income that
is attributable to realized market appreciation will be treated as gross income
from the sale or other disposition of securities for this purpose.
In general, gain or loss recognized by the Trust on the disposition of an
asset will be a capital gain or loss. However, gain recognized on the
disposition of a debt obligation purchased by the Trust at a market discount
(generally, at a price less than its principal amount) will be treated as
ordinary income to the extent of the portion of the market discount which
accrued during the period of time the Trust held the debt obligation.
Treasury Regulations permit a regulated investment company, in determining
its investment company taxable income and net capital gain (i.e., the excess of
net long-term capital gain over net short-term capital loss) for any taxable
year, to elect (unless it has made a taxable year election for excise tax
purposes as discussed below) to treat all or any part of any net capital loss,
any net long-term capital loss or any net foreign currency loss incurred after
October 31 as if it had been incurred in the succeeding year.
In addition to satisfying the requirements described above, the Trust must
satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of the Trust's
taxable year, at least 50% of the value of the Trust's assets must consist of
cash and cash items, U.S. Government securities, securities of other regulated
investment companies, and securities of other issuers (as to which the Trust has
not
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invested more than 5% of the value of the Trust's total assets in securities of
such issuer and as to which the Trust does not hold more than 10% of the
outstanding voting securities of such issuer), and no more than 25% of the value
of its total assets may be invested in the securities of any one issuer (other
than U.S. Government securities and securities of other regulated investment
companies), or in two or more issuers which the Trust controls and which are
engaged in the same or similar trades or businesses.
If for any taxable year the Trust does not qualify as a regulated investment
company, all of its taxable income (including its net capital gain) will be
subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of the Trust's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate shareholders.
Excise Tax on Regulated Investment Companies
A 4% non-deductible excise tax is imposed on a regulated investment company
that fails to distribute in each calendar year an amount equal to 98% of
ordinary taxable income for the calendar year and 98% of capital gain net income
for the one-year period ended on October 31 of such calendar year (or, at the
election of a regulated investment company having a taxable year ending November
30 or December 31, for its taxable year (a "taxable year election")). The
balance of such income must be distributed during the next calendar year. For
the foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall: (1)
reduce its capital gain net income (but not below its net capital gain) by the
amount of any net ordinary loss for the calendar year; and (2) exclude foreign
currency gains and losses incurred after October 31 of any year (or after the
end of its taxable year if it has made a taxable year election) in determining
the amount of ordinary taxable income for the current calendar year (and,
instead, include such gains and losses in determining ordinary taxable income
for the succeeding calendar year).
The Trust intends to make sufficient distributions or deemed distributions
of its ordinary taxable income and capital gain net income prior to the end of
each calendar year to avoid liability for the excise tax. However, investors
should note that the Trust may in certain circumstances be required to liquidate
portfolio investments to make sufficient distributions to avoid excise tax
liability.
Trust Distributions
The Trust anticipates distributing substantially all of its investment
company taxable income for each taxable year. Such distributions will be taxable
to shareholders as ordinary income and treated as dividends for federal income
tax purposes, but they will not qualify for the 70% dividends-received deduction
for corporate shareholders.
The Trust does not expect to realize any long-term capital gains or losses.
Distributions by the Trust that do not constitute ordinary income dividends or
capital gain dividends will be treated as a return of capital to the extent of
(and in reduction of) the shareholder's tax basis in his shares; any excess will
be treated as gain from the sale of his shares, as discussed below.
Distributions by the Trust will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Trust (or of another fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares received,
determined as of the reinvestment date. In addition, if the net asset value at
the time a shareholder purchases shares of the Trust reflects undistributed net
investment income or recognized capital gain net income, or unrealized
appreciation in the value of the assets of the Trust, distributions of such
amounts will be taxable to the shareholder in the manner described above,
although such distributions economically constitute a return of capital to the
shareholder.
Ordinarily, shareholders are required to take distributions by the Trust
into account in the year in which the distributions are made. However, dividends
declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Trust) on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.
The Trust will be required in certain cases to withhold and remit to the
U.S. Treasury 31% of ordinary income dividends and capital gain dividends, and
the proceeds of redemption of shares, paid to any shareholder (1) who has
provided either an incorrect tax identification number or no number at all, (2)
who is subject to backup withholding by the IRS for failure to report the
receipt of interest or dividend income properly, or (3) who has failed to
certify to the Trust that it is not subject to backup withholding or that it is
a corporation or other "exempt recipient."
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Sale or Redemption of Shares
The Trust seeks to maintain a stable net asset value of $1.00 per share;
however, there can be no assurance that the Trust will do this. In such a case,
a shareholder will recognize gain or loss on the sale or redemption of shares of
the Trust in an amount equal to the difference between the proceeds of the sale
or redemption and the shareholder's adjusted tax basis in the shares. All or a
portion of any loss so recognized may be disallowed if the shareholder purchases
other shares of the Trust within 30 days before or after the sale or redemption.
In general, any gain or loss arising from (or treated as arising from) the sale
or redemption of shares of the Trust will be considered capital gain or loss and
will be long-term capital gain or loss if the shares were held for longer than
one year.
Foreign Shareholders
Taxation of a shareholder who, as to the United States, is a nonresident
alien individual, foreign trust or estate, foreign corporation, or foreign
partnership ("foreign shareholder"), depends on whether the income from the
Trust is "effectively connected" with a U.S. trade or business carried on by
such shareholder.
If the income from the Trust is not effectively connected with a U.S. trade
or business carried on by a foreign shareholder, ordinary income dividends paid
to a foreign shareholder will be subject to U.S. withholding tax at the rate of
30% (or lower treaty rate) upon the gross amount of the dividend. Such a foreign
shareholder would generally be exempt from U.S. federal income tax on gains
realized on the sale of shares of the Trust.
If the income from the Trust is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then ordinary income dividends and
any gains realized upon the sale of shares of the Trust will be subject to U.S.
federal income tax at the rates applicable to U.S. citizens or domestic
corporations.
In the case of foreign noncorporate shareholders, the Trust may be required
to withhold U.S. federal income tax at a rate of 31% on distributions that are
otherwise exempt from withholding tax (or taxable at a reduced treaty rate)
unless such shareholders furnish the Trust with proper notification of its
foreign status.
The tax consequences to a foreign shareholder entitled to claim the benefits
of an applicable tax treaty may be different from those described herein.
Foreign shareholders are urged to consult their own tax advisers with respect to
the particular tax consequences to them of an investment in the Trust, including
the applicability of foreign taxes.
Effect of Future Legislation; Local Tax Considerations
The foregoing general discussion of U.S. federal income tax consequences is
based on the Code and the Treasury Regulations issued thereunder as in effect on
the date of this Statement of Additional Information. Future legislative or
administrative changes or court decisions may significantly change the
conclusions expressed herein, and any such changes or decisions may have a
retroactive effect with respect to the transactions contemplated herein.
Rules of state and local taxation of dividends from regulated investment
companies often differ from the rules for U.S. federal income taxation described
above. Shareholders are urged to consult their tax advisers as to the
consequences of these and other state and local tax rules affecting investment
in the Trust.
CUSTODIAN, TRANSFER AGENT, AND DIVIDEND DISBURSING AGENT
Chase Manhattan Bank, N.A., 1211 Avenue of the Americas, New York, New York
10036, has been retained to act as Custodian for the Trust's investments and
assets. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110 is the transfer agent and dividend disbursing agent for the
Trust. Neither Chase Manhattan Bank, N.A. nor State Street Bank and Trust
Company have any part in determining the investment policies of the Trust or in
determining which portfolio securities are to be purchased or sold by the Trust
or in the declaration of dividends and distributions.
MANAGEMENT OF THE TRUST
The Trustees and executive officers of the Trust and their principal
occupations are set forth below:
*+ROBERT M. DeMICHELE, President and Chairman. P.O. Box 1515, Saddle Brook, N.J.
07663. Chairman and Chief Executive Officer, Lexington Management
Corporation; Chairman and Chief Executive Officer, Lexington Funds
Distributor, Inc.; President and Director, Lexington Global Asset Managers,
Inc.; Director, Unione Italiana Reinsurance; Vice Chairman of Board of
Trustees, Union College; Director, The Navigator's Group, Inc.; Chairman,
Lexington Capital Management, Inc.; Chairman, LCM Financial Services, Inc.;
Director, Vanguard Cellular Systems, Inc.; Chairman of the Board, Market
Systems Research, Inc. and Market Systems Research Advisors, Inc.
(registered investment advisors) and Trustee, Smith Richardson Foundation.
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+BEVERLEY C. DUER, P.E., Trustee. 340 East 72nd Street, New York, N.Y. 10021.
Private Investor. Formerly Manager of Operations Research Department, CPC
International, Inc.
*+BARBARA R. EVANS, Trustee. 5 Fernwood Road, Summit, N.J. 07901. Private
Investor. Prior to May 1989, Assistant Vice President and Securities
Analyst, Lexington Management Corporation; prior to March 1987, Vice
President - Institutional Equity Sales, L.F. Rothschild, Unterberg, Towbin.
*+LAWRENCE KANTOR, Vice President and Trustee. P.O. Box 1515, Saddle Brook, N.J.
07663. Executive Vice President, Managing Director and Director, Lexington
Management Corporation; Executive Vice President and Director, Lexington
Funds Distributor, Inc.
+DONALD B. MILLER, Trustee. 10725 Quail Covey Road, Boynton Beach, Florida
33436. Chairman, Horizon Media, Inc.; Trustee, Galaxy Funds; Director,
Maguire Group of Connecticut; prior to January 1989, President, C.E.O. and
Director, Media General Broadcast Services (advertising firm).
+JOHN G. PRESTON, Trustee. 3 Woodfield Road, Wellesley, Massachusetts 02181.
Associate Professor of Finance, Boston College, Boston, Massachusetts.
+MARGARET W. RUSSELL, Trustee. 55 North Mountain Avenue, Montclair, N.J. 07042.
Private Investor; formerly Community Affairs Director, Union Camp
Corporation.
+PHILIP C. SMITH, Trustee. 87 Lord's Highway, Weston, Connecticut 06883. Private
Investor; Director, Southwest Investors Income Fund, Inc. Government Income
Fund, Inc., U.S. Trend Fund, Inc., Investors Cash Reserve, Plimony Fund,
Inc. (registered investment companies).
+FRANCIS A. SUNDERLAND, Trustee. 309 Quito Place, Castle Pines, Castle Rock,
Colorado 80104. Private Investor.
*+DENIS P. JAMISON, Vice President and Portfolio Manager. P.O. Box 1515, Saddle
Brook, N.J. 07663. Senior Vice President, Director of Fixed Income Strategy,
Lexington Management Corporation. Mr. Jamison is a Chartered Financial
Analyst and a member of the New York Society of Security Analysts.
*+LISA CURCIO, Vice President and Secretary. P.O. Box 1515, Saddle Brook, N.J.
07663. Senior Vice President and Secretary, Lexington Management
Corporation; Vice President and Secretary, Lexington Funds Distributor,
Inc.;
*+RICHARD M. HISEY, Vice President and Treasurer. P.O. Box 1515, Saddle Brook,
N.J. 07663. Chief Financial Officer, Managing Director and Director,
Lexington Management Corporation; Chief Financial Officer, Vice President
and Director, Lexington Funds Distributor, Inc.; Chief Financial Officer,
Market Systems Research Advisors, Inc.;
*+RICHARD LAVERY, CLU ChFC, Vice President. P.O. Box 1515, Saddle Brook, N.J.
07663. Senior Vice President, Lexington Management Corporation; Vice
President, Lexington Funds Distributor, Inc.
*+JANICE A. CARNICELLI, Vice President. P.O. Box 1515, Saddle Brook, N.J. 07663.
*+CHRISTIE CARR, Assistant Treasurer. P.O. Box 1515, Saddle Brook, N.J. 07663.
Prior to October 1992, Senior Accountant, KPMG Peat Marwick LLP.
*+SIOBHAN GILFILLAN, Assistant Treasurer. P.O. Box 1515, Saddle Brook, N.J.
07663.
*+THOMAS LUEHS, Assistant Treasurer. P.O. Box 1515, Saddle Brook, N.J. 07663.
Prior to November, 1993, Supervisor Investment Accounting, Alliance Capital
Management, Inc.
*+SHERI MOSCA, Assistant Treasurer. P.O. Box 1515, Saddle Brook, N.J. 07663.
*+ANDREW PETRUSKI, Assistant Treasurer. P.O. Box 1515, Saddle Brook, N.J. 07663.
Prior to May 1994, Supervising Senior Accountant, NY Life Securities. Prior
to December 1990, Senior Accountant, Dreyfus Corporation.
*+PETER CORNIOTES, Assistant Secretary. P.O. Box 1515, Saddle Brook, N.J. 07663.
Assistant Vice President and Assistant Secretary, Lexington Management
Corporation; Assistant Secretary, Lexington Funds Distributor, Inc.
*+ENRIQUE J. FAUST, Assistant Secretary. P.O. Box 1515, Saddle Brook, N.J.
07663. Prior to March 1994, Blue Sky Compliance Coordinator, Lexington Group
of Investment Companies.
*"Interested person" and/or "affiliated person" of LMC as defined in the
Investment Company Act of 1940, as amended.
+Messrs. Corniotes, DeMichele, Duer, Faust, Hisey, Jamison, Kantor, Lavery,
Luehs, Miller, Petruski, Preston, Smith and Sunderland, and Mmes. Carnicelli,
Carr, Curcio, Evans, Gilfillan, Mosca and Russell hold similar offices with some
or all of the other registered investment companies advised and/or distributed
by Lexington Management Corporation and Lexington Funds Distributor, Inc.
The Board of Trustees met 5 times during the twelve months ended December
31, 1995, and each of the Trustees attended at least 75% of those meetings.
10
<PAGE>
Remuneration of Trustees and Certain Executive Officers:
Each Trustee is reimbursed for expenses incurred in attending each meeting
of the Board of Trustees or any committee thereof. Each Trustee who is not an
affiliate of the advisor is compensated for his or her services according to a
fee schedule which recognizes the fact that each Trustee also serves as a
Trustee of other investment companies advised by LMC. Each Trustee receives a
fee, allocated among all investment companies for which the Trustee serves.
Effective September 12, 1995 each Trustee receives annual compensation of
$24,000. Prior to September 12, 1995, the trustees who were not employed by the
Fund or its affiliates received annual compensation of $16,000.
Set forth below is information regarding compensation paid or accrued during
the period January 1, 1995 to December 31, 1995 for each Trustee:
- --------------------------------------------------------------------------------
Aggregate Total Compensation From Number of
Name of Trustee Compensation from Fund and Fund Complex Directorships in Fund
Fund Complex
- --------------------------------------------------------------------------------
Robert M. DeMichele 0 0 15
- --------------------------------------------------------------------------------
Beverley C. Duer $ 1,456 $22,616 15
- --------------------------------------------------------------------------------
Barbara R. Evans 0 0 14
- --------------------------------------------------------------------------------
Lawrence Kantor 0 0 14
- --------------------------------------------------------------------------------
Donald B. Miller $ 1,456 $22,616 14
- --------------------------------------------------------------------------------
John G. Preston $ 1,456 $22,616 14
- --------------------------------------------------------------------------------
Margaret Russell $ 1,456 $22,616 13
- --------------------------------------------------------------------------------
Philip C. Smith $ 1,456 $22,616 14
- --------------------------------------------------------------------------------
Francis A. Sunderland $ 1,456 $22,616 13
- --------------------------------------------------------------------------------
Retirement Plan for Eligible Directors/Trustees
Effective September 12, 1995, the Trustees instituted a Retirement Plan for
Eligible Directors/Trustees (the "Plan") pursuant to which each Director/Trustee
(who is not an employee of any of the Funds, the Advisor, Administrator or
Distributor or any of their affiliates) may be entitled to certain benefits upon
retirement from the Board. Pursuant to the Plan, the normal retirement date is
the date on which the eligible Director/Trustee has attained age 65 and has
completed at least ten years of continuous and non-forfeited service with one or
more of the investment companies advised by LMC (or its affiliates)
(collectively, the "Covered Funds"). Each eligible Director/Trustee is entitled
to receive from the Covered Fund an annual benefit commencing on the first day
of the calendar quarter coincident with or next following his date of retirement
equal to 5% of his compensation multiplied by the number of such
Director/Trustee's years of service (not in excess of 15 years) completed with
respect to any of the Covered Portfolios. Such benefit is payable to each
eligible Trustee in quarterly installments for ten years following the date of
retirement or the life of the Director/Trustee. The Plan establishes age 72 as a
mandatory retirement age for Directors/Trustees; however, Director/Trustees
serving the Funds as of September 12, 1995 are not subject to such mandatory
retirement. Directors/Trustees serving the Funds as of September 12, 1995 who
elect retirement under the Plan prior to September 12, 1996 will receive an
annual retirement benefit at any increased compensation level if compensation is
increased prior to September 12, 1997 and receive spousal benefits (i.e., in the
event the Director/Trustee dies prior to receiving full benefits under the Plan,
the Director/Trustee's spouse (if any) will be entitled to receive the
retirement benefit within the 10 year period.)
Retiring Trustees will be eligible to serve as Honorary Trustees for one
year after retirement and will be entitled to be reimbursed for travel expenses
to attend a maximum of two meetings.
Set forth in the table below are the estimated annual benefits payable to an
eligible Trustee upon retirement assuming various compensation and years of
service classifications. As of December 31, 1995, the estimated credited years
of service for Trustees Duer, Miller, Preston, Russell, Smith and Sunderland
are 18, 22, 18, 15, 26 and 36, respectively.
Highest Annual Compensation Paid by All Funds
---------------------------------------------
$20,000 $25,000 $30,000 $35,000
Years of
Service Estimated Annual Benefit Upon Retirement
-------- ----------------------------------------
15 $15,000 $18,750 $22,500 $26,250
14 14,000 17,500 21,000 24,500
13 13,000 16,250 19,500 22,750
12 12,000 15,000 18,000 21,000
11 11,000 13,750 16,500 19,250
10 10,000 12,500 15,000 17,500
11
<PAGE>
Independent Auditors' Report
The Board of Trustees and Shareholders
Lexington Money Market Trust:
We have audited the accompanying statements of net assets (including the
portfolio of investments) and assets and liabilities of Lexington Money Market
Trust as of December 31, 1995, the related statement of operations for the year
then ended, the statements of changes in net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the five-year period then ended. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Lexington Money Market Trust as of December 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
each of the years in the five-year period then ended, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
February 5, 1996
12
<PAGE>
Lexington Money Market Trust
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1995
<TABLE>
<CAPTION>
Yield to
Maturity
Principal Maturity on Date of Value
Amount Security Date Purchase (Note 1)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMERCIAL PAPER: 90.0%
$4,000,000 Atlantic Richfield Company ................................ 01/24/96 5.70% $ 3,985,740
4,000,000 Avnet, Inc. ............................................... 01/23/96 5.75 3,986,189
4,000,000 Bellsouth Telecommunications, Inc. ........................ 02/08/96 5.77 3,976,144
4,000,000 Cargill, Inc. ............................................. 02/06/96 5.79 3,977,480
4,000,000 Columbia University ....................................... 01/12/96 5.83 3,993,033
4,100,000 Deutsche Bank Financial, Inc. ............................. 01/22/96 5.85 4,086,368
4,000,000 Echlin, Inc. .............................................. 01/29/96 5.86 3,982,235
4,000,000 Ford Motor Credit Corporation ............................. 01/18/96 5.91 3,989,044
4,100,000 General Electric Capital Corporation ...................... 01/02/96 5.99 4,099,328
2,000,000 Hercules, Inc. ............................................ 02/16/96 5.83 1,985,535
4,500,000 Indianapolis Power & Light Company ........................ 01/30/96 5.84 4,479,338
4,000,000 Interstate Power Company .................................. 01/26/96 5.88 3,984,028
4,000,000 J.C. Penney Funding, Inc. ................................. 01/31/96 5.82 3,981,067
4,000,000 Metlife Funding, Inc. ..................................... 01/19/96 5.80 3,988,680
3,900,000 Midamerican Energy Company ................................ 03/22/96 5.62 3,852,000
3,000,000 National Rural Utility Cooperative Finance Corporation .... 03/15/96 5.72 2,965,775
3,000,000 Prudential Funding Corporation ............................ 01/05/96 6.01 2,998,027
3,700,000 South Carolina Electric and Gas Company ................... 02/05/96 5.70 3,679,928
4,000,000 USAA Capital Corporation .................................. 02/14/96 5.74 3,972,622
4,000,000 Vereinsbank Financial, Inc. ............................... 01/23/96 5.84 3,986,067
4,000,000 Winn-Dixie Stores, Inc. ................................... 02/08/96 5.82 3,976,018
-----------
TOTAL COMMERCIAL PAPER (cost $79,924,646) ................. 79,924,646
-----------
ADJUSTABLE RATE NOTE: 4.5%
4,000,000 Community Health System, Inc. Series A
First Union National Bank* (cost $4,000,000) ............ 10/01/03 6.15 4,000,000
-----------
U.S. GOVERNMENT OBLIGATION: 0.7%
600,000 Treasury Bills (cost $589,223) ............................ 05/02/96 5.54 589,223
-----------
</TABLE>
13
<PAGE>
Lexington Money Market Trust
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1995 (continued)
<TABLE>
<CAPTION>
Yield to
Maturity
Principal Maturity on Date of Value
Amount Security Date Purchase (Note 1)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OTHER U.S. GOVERNMENT OBLIGATIONS: 4.9%
$1,800,000 Federal Home Loan Bank .................................... 02/13/96 5.72% $ 1,788,068
2,600,000 Federal Home Loan Mortgage Corporation .................... 02/05/96 5.73 2,585,895
-----------
TOTAL OTHER U.S. GOVERNMENT OBLIGATIONS
(cost $4,373,963) ....................................... 4,373,963
-----------
TOTAL INVESTMENTS: 100.1% (cost $88,887,832+) 88,887,832
Liabilities in excess of other assets: (0.1%) ............. (101,874)
-----------
TOTAL NET ASSETS: 100.0% (equivalent to
$1.00 per share on 88,785,958 shares outstanding) ....... $88,785,958
===========
*Seven day demand Floating Rate Note.
+Aggregate cost for Federal income tax purposes is identical.
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
14
<PAGE>
Lexington Money Market Trust
Statement of Assets and Liabilities
December 31, 1995
<TABLE>
<S> <C>
Assets
Investments, at value (cost $88,887,832) (Note 1) ............................ $ 88,887,832
Cash (Note 4) ................................................................ 204,111
Receivable for shares sold ................................................... 392,113
Interest receivable .......................................................... 47,791
------------
Total Assets ......................................................... 89,531,847
------------
Liabilities
Due to Lexington Management Corporation (Note 2) ............................. 52,483
Payable for shares redeemed .................................................. 599,920
Accrued expenses ............................................................. 93,486
------------
Total Liabilities .................................................... 745,889
------------
Net Assets (equivalent to $1.00 per share on 88,785,958 shares outstanding)
(Note 3) ................................................................... $ 88,785,958
============
Net Assets consist of:
Shares of beneficial interest-$.10 par value ................................. $ 8,878,596
Additional paid-in capital ................................................... 79,907,362
------------
Net Assets ........................................................... $ 88,785,958
============
</TABLE>
Lexington Money Market Trust
Statement of Operations
Year ended December 31, 1995
<TABLE>
<S> <C> <C>
Investment Income
Interest income .................................................... $ 5,641,637
Expenses
Investment advisory fee (Note 2) ............................... $473,889
Accounting and shareholder services expense (Note 2) ........... 162,060
Custodian and transfer agent expenses .......................... 160,235
Printing and mailing ........................................... 84,420
Directors' fees and expenses ................................... 11,270
Audit and Legal ................................................ 27,117
Registration fees .............................................. 32,330
Computer processing fees ....................................... 18,930
Other expenses ................................................. 51,760
---------
Total expenses ............................................. 1,022,011
Less: expenses recovered under contract with
investment adviser (Note 2) .............................. 73,268 948,743
--------- ------------
Net investment income ...................................... 4,692,894
------------
Increase in Net Assets Resulting from Operations ................... $ 4,692,894
============
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
15
<PAGE>
Lexington Money Market Trust
Statements of Changes in Net Assets
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Net investment income ................................................ $ 4,692,894 $ 3,344,928
Dividends to shareholders from net investment income ................. (4,692,894) (3,344,928)
Increase (decrease) in net assets from share transactions (Note 3) ... (23,018,771) 17,086,315
------------ ------------
Net increase (decrease) in net assets ................................ (23,018,771) 17,086,315
Net Assets
Beginning of period .............................................. 111,804,729 94,718,414
------------ ------------
End of period .................................................... $ 88,785,958 $111,804,729
============ ============
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
Lexington Money Market Trust
Notes to Financial Statements
December 31, 1995 and 1994
1. Significant Accounting Policies
Lexington Money Market Trust (the "Trust") is an open end diversified management
investment company registered under the Investment Company Act of 1940, as
amended. The Trust's investment objective is to seek a high level of current
income from short-term investments as is consistent with the preservation of
capital and liquidity. The following is a summary of significant accounting
policies followed by the Trust in the preparation of its financial statements:
Securities Security transactions are accounted for on a trade date basis.
Investments are valued at amortized cost, which approximates market value. Under
this valuation method, a portfolio instrument is valued at cost and any discount
or premium is amortized on a constant basis to the maturity of the instrument.
Interest income is accrued as earned.
Federal Income Taxes It is the Trust's intention to comply with the
requirements of the Internal Revenue Code applicable to "regulated investment
companies" and to distribute all of its taxable income to its shareholders.
Therefore, no provision for Federal income taxes has been made.
Dividends Dividends are declared daily from net investment income and net
realized gain (loss) on investments.
2. Investment Advisory Fees and Other Transactions with Affiliate
The Trust pays an investment advisory fee to Lexington Management Corporation
(LMC) at the annual rate of 0.50% of that portion of the Trust's average daily
net assets up to $500 million and .45% of its average daily net assets in excess
of $500 million. LMC is required to reimburse the Trust for any expenses,
including the investment adviser's fee but excluding interest and taxes, in
excess of 1% of the Trust's average daily net assets. Reimbursement for the year
ended December 31, 1995 amounted to $73,268 and is set forth in the statement of
operations.
The Trust also reimburses LMC for certain expenses, including accounting and
shareholder servicing costs, which are incurred by the Trust but paid by LMC.
16
<PAGE>
Lexington Money Market Trust
Notes to Financial Statements
December 31, 1995 and 1994 (continued)
3. Shares of Beneficial Interest
Transactions (at $1.00 per share) in shares were as follows:
Year ended Year ended
December 31, December 31,
1995 1994
----------- -----------
Shares sold ........................... 171,612,305 205,550,508
Shares issued to shareholders
on reinvestment of dividends ........ 4,309,282 3,096,009
----------- -----------
175,921,587 208,646,517
Shares redeemed ....................... (198,940,358) (191,560,202)
----------- -----------
Net increase (decrease) ............... (23,018,771) 17,086,315
=========== ===========
4. Cash
In order to facilitate the clearing process for redemptions by check, the Trust
maintains a compensating balance with its transfer agent. At December 31, 1995,
this compensating balance amounted to $112,000 and is included in cash in the
statement of assets and liabilities.
----------------------
Lexington Money Market Trust
Financial Highlights
Selected per share data for a share outstanding throughout the period:
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........ $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income ..................... 0.0495 0.0330 0.0230 0.0299 0.0532
Less distributions:
Dividends from net investment income ...... (0.0495) (0.0330) (0.0230) (0.0299) (0.0532)
------- ------- ------- ------- -------
Net asset value, end of period .............. $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= =======
Total return ................................ 5.06% 3.35% 2.32% 3.03% 5.45%
Ratio to average net assets:
Expenses, before reimbursement .......... 1.08% 1.02% 1.00% 1.03% 1.02%
Expenses, net of reimbursement .......... 1.00% 1.00% 1.00% 1.00% 1.00%
Net investment income,
before reimbursement .................. 4.87% 3.30% 2.30% 2.99% 5.35%
Net investment income,
including reimbursement ............... 4.95% 3.32% 2.30% 3.02% 5.37%
Net assets, end of period (000's omitted) ... $88,786 $111,805 $94,718 $111,453 $143,137
</TABLE>
17
<PAGE>
PART C. OTHER INFORMATION
-----------------
Item 24. Financial Statements and Exhibits - List
----------------------------------------
The Annual Report for the year ending December 31, 1995 was filed
electronically on February 21, 1996 (as form type N-30D). Financial
statements from this 1995 Annual Report have been included in the Statement
of Additional Information.
Page in the Statement
(a) Financial statements: of Additional Information
--------------------- -------------------------
Report of Independent Auditors 12
dated February 5, 1996
Statement of Net Assets (Including 13
the Portfolio of Investments) at
December 31, 1995 (1)
Statement of Assets and Liabilities 14
at December 31, 1995
Statement of Operations for the year 14
ended December 31, 1995 (2)
Statements of Changes in Net Assets for 15
the years ended December 31, 1995
and 1994
Notes to Financial Statements 15
Schedules II-VII and other Financial Statements, for
which provisions are made in the applicable accounting
regulations of the Securities and Exchange Commission,
are omitted because they are not required under the
related instructions, they are inapplicable, or the
required information is presented in the financial
statements or notes thereto.
(1) Includes the information required by Schedule I.
(2) Includes the information required by the Statement of
Realized Gain or Loss on Investments
<PAGE>
ITEM 24. Financial Statements and Exhibits - List
----------------------------------------
(b) Exhibits:
1. Declaration of Trust - filed electronically
2. By-Laws - Filed 11/1/76 - Incorporated by reference
3. Not Applicable
4. Stock Certificate Specimen - Filed 3/26/79 -
Incorporated by reference
5. Investment Advisory Agreement between Registrant
and Lexington Management Corporation - filed electronically
6. Distribution Agreement between Registrant
and Lexington Funds Distributor, Inc. -
Filed 4/30/91 - Incorporated by reference
7. Not Applicable
8. Form of Custodian Agreement between Registrant
and Chase Manhattan Bank, N.A. - Filed
electronically 4/28/95 - Incorporated by reference
9a. Transfer Agency Agreement between Registrant
and State Street Bank and Trust Company - filed electronically
9b. Form of Administrative Services Agreement
between Registrant and Lexington Management
Corporation - Filed electronically 4/28/95 -
Incorporated by reference
10. Opinion of Counsel as to Legality of Securities
being registered - Filed 2/26/82 - Incorporated
by reference
11. Consents
(a) Consent of Counsel filed electronically
(b) Consent of Independent Auditors filed electronically
12. Not Applicable
13. Not Applicable
14. Model Retirement Plan filed electronically
15. Not Applicable
16. Performance Calculation - Filed 5/2/88 -
Incorporated by reference
17. Financial Data Schedule filed electronically
<PAGE>
Item 25. Persons Controlled by or under Common Control with Registrant
-------------------------------------------------------------
Furnish a list or diagram of all persons directly or indirectly
controlled by or under common control with the Registrant and as to each
such person indicate (1) if a company, the state or other sovereign
power under the laws of which it is organized, (2) the percentage of
voting securities owned or other basis of control by the person, if any,
immediately controlling it.
None.
Item 26. Number of Holders of Securities
-------------------------------
State in substantially the tabular form indicated, as of a
specified date within 90 days prior to the date of filing, the number of
record holders of each class of securities of the Registrant.
The following information is given as of March 1, 1996:
Title of Class Number of Record Holders
-------------- ------------------------
Shares of beneficial interest 8,608
($0.01 par value)
Item 27. Indemnification
---------------
State the general effect of any contract, arrangements or statute
under which any director, officer, underwriter or affiliated person of
the Registrant is insured or indemnified in any manner against any
liability which may be incurred in such capacity, other than insurance
provided by any director, officer, affiliated person or underwriter for
their own protection.
Under the terms of the General Laws of the State of Massachusetts
and the Trust's Restated Declaration of Trust, the Trust shall indemnify
each of its Trustees to receive such indemnification (including those
who serve at its request as directors, officers or trustees of another
organization in which it has any interest as a shareholder, creditor or
otherwise), against all liabilities and expenses, including amounts paid
in satisfaction of judgements, in compromise of fines and penalties, and
counsel fees, reasonably incurred by him in connection with the defense
or disposition of any action, suit or other proceeding by the Trust or
any other person, whether civil or criminal, in which he may be involved
or with which he may be threatened, while in office or thereafter, by
reason of this being or having been such a Trustee, officer, employee or
agent, except with respect to any matter as to which he shall have been
adjudicated to have acted in bad faith or with willful misfeasance or
reckless disregard of duties or gross negligence; provided, however,
that as to any matter disposed of by a compromise payment by such
Trustee, officer, employee or agent, pursuant to a consent, decree or
otherwise, no indemnification either for said payment or for any other
expenses shall be provided unless the Trust shall have received a
written opinion from independent counsel approved by the Trustee to the
effect that if the foregoing matter had been adjudicated they would
likely have been adjudicated in favor of such Trustee, officer, employee or
agent. The rights accruing to any Trustee, officer, employee or agent under
these provisions shall not exclude any other right to which he may lawfully be
titled; provided, however, that no Trustee, officer, employee or agent
may satisfy any right of indemnity or reimbursement granted herein or to
which he may otherwise be entitled except out of Trust Property, and no
Shareholder shall be personally liable to any Person with respect to any
claim for indemnity or reimbursement or otherwise. The Trustees may
make advance payments in connection with indemnification under the
Declaration of Trust, provided that the indemnified Trustee, officer,
employee or agent shall have given a written undertaking to reimburse
the Trust in the event it is subsequently determined that he is entitled
to such indemnification.
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
----------------------------------------------------
Describe any other business, profession, vocation or employment of
a substantial nature in which the investment adviser of the Registrant,
and each director, officer or partner of any such investment adviser, is
or has been, at any time during the past two fiscal years, engaged for
his own account or in the capacity of director, officer, employee,
partner or trustee.
See Prospectus Part A and Statement of Additional Information Part
B ("Management of the Fund").
Item 29. Principal Underwriters
----------------------
(a) Lexington Money Market Trust
Lexington Tax Free Money Fund, Inc.
Lexington Growth and Income Fund, Inc.
Lexington GNMA Income Fund, Inc.
Lexington Ramirez Global Income Fund
Lexington Worldwide Emerging Markets Fund, Inc.
Lexington Goldfund, Inc.
Lexington Global Fund, Inc.
Lexington Natural Resources Trust
Lexington Corporate Leaders Trust Fund
Lexington Strategic Investments Fund, Inc.
Lexington Strategic Silver Fund, Inc.
Lexington Convertible Securities Fund
Lexington International Fund, Inc.
Lexington Emerging Markets Fund, Inc.
Lexington Crosby Small Cap Asia Growth Fund, Inc.
Lexington SmallCap Value Fund, Inc.
<PAGE>
29 (b)
Position and Offices Position and
Name and Principal with Principal Offices with
Business Address Underwriter Registrant
- ------------------ -------------------- ------------
Peter Corniotes* Assistant Secretary Asst. Secretary
Lisa Curcio* Vice President and Secretary
Secretary
Robert M. DeMichele* Chief Executive Officer Chairman of the
and Chairman Board and President
Richard M. Hisey* Chief Financial Officer, Vice President and
Vice President & Director Treasurer
Lawrence Kantor* Executive Vice President Trustee & Vice
and Director President
Richard Lavery* Vice President Vice President
Janice Violette* Assistant Treasurer None
(c)
Not Applicable.
*P.O. Box 1515
Saddle Brook, New Jersey 07663
<PAGE>
Item 30. Location of Accounts and Records
--------------------------------
With respect to each account, book or other document
required to be maintained by Section 31(a) of the 1940 Act and the Rules
(17 CFR 270, 31a-1 to 31a-3) promulgated thereunder, furnish the name
and address of each person maintaining physical possession of each such
account, book or other document.
The Registrant, Lexington Money Market Trust, Park 80 West -Plaza Two,
Saddle Brook, New Jersey 07663 will maintain physical possession of each such
account, book or other document of the Company, except for those maintained by
the Registrant's Custodian, Chase Manhattan Bank, N.A., 1211 Avenue of the
Americas, New York, New York 10036, or Transfer Agent, State Street Bank and
Trust Company, c/o National Financial Data Services, 1004 Baltimore, Kansas
City, Missouri 64105.
Item 31. Management Services
-------------------
Furnish a summary of the substantive provisions of any
management-related service contract not discussed in Part A or B of this
Form (because the contract was not believed to be material to a
purchaser of securities of the Registrant) under which services are
provided to the Registrant, indicating the parties to the contract, the
total dollars paid and by whom for the last three fiscal years.
None.
Item 32. Undertakings -
--------------
The Registrant, Lexington Money Market Trust undertakes to
furnish a copy of the Fund's latest annual report, upon
request and without charge, to every person to whom a
prospectus is delivered.
<PAGE>
Registration No. 2-57547
Securities and Exchange Commission
Washington, D.C. 20549
Exhibits
Filed With
Form N-1A
LEXINGTON MONEY MARKET TRUST
<PAGE>
EXHIBIT INDEX
The following documents are being filed electronically as exhibits to
this filing:
Declaration of Trust including amendments thereto
Form of Investment Advisory Agreement with Lexington Managment Coporation
Form of Transfer Agency Agreement with State Street Bank and Trust Company
Consent of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
Consent of independent auditors for the inclusion of their report herein
Model Retirement Plan
Article 6 Financial Data Schedule
Cover
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940 the Registrant certifies that it
meets all of the requirements for effectiveness of this amendment to the
Registration Statement pursuant to Rule 485(b) under the Securities Act
of 1933 and has duly caused this amendment to be signed on its behalf by
the Undersigned, thereunto duly authorized, in the City of Saddle Brook
and State of New Jersey, on the 29th day of April, 1996.
LEXINGTON MONEY MARKET TRUST
/s/ Robert M. DeMichele
________________________________________
By Robert M. DeMichele
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933,
this amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Robert M. DeMichele
__________________________ Chairman of the Board April 29, 1996
Robert M. DeMichele Principal Executive
Officer
/s/ Richard M. Hisey
__________________________ Principal Financial April 29, 1996
Richard M. Hisey and Accounting Officer
/s/ Lisa Curcio
__________________________ Principal Compliance April 29, 1996
Lisa Curcio Officer
*Beverley C. Duer, P.E. Director April 29, 1996
__________________________
Beverley C. Duer, P.E.
*Barbara M. Evans Director April 29, 1996
__________________________
Barbara M. Evans
<PAGE>
Signature Title Date
*Lawrence Kantor Director April 29, 1996
__________________________
Lawrence Kantor
*Donald B. Miller Director April 29, 1996
__________________________
Donald B. Miller
*John G. Preston Director April 29, 1996
__________________________
John G. Preston
*Margaret W. Russell Director April 29, 1996
__________________________
Margaret W. Russell
*Philip C. Smith Director April 29, 1996
__________________________
Philip C. Smith
*Francis A. Sunderland Director April 29, 1996
__________________________
Francis A. Sunderland
/s/ Lisa Curcio
*By: ______________________
Lisa Curcio
Attorney-in-Fact
<PAGE>
Banner Redi-Resources Trust
Amendment No.2
to
Restated Declaration of Trust
Pursuant to sections 1.1 and 13.1 of the Restated Declaration of
Trust of Banner Redi-Resources Trust (the "Trust"), the undersigned,
constituting all of the Trustees, hereby amend said Declaration of Trust
by changing the name of the Trust to:
LEXINGTON MONEY MARKET TRUST
The first sentence of section 1.1 of the Restated Declaration of
Trust is hereby amended by substituting the words "Lexington Money Market
Trust" for the words "Banner Redi-Resources Trust" where they appear
therein.
IN WITNESS WHEREOF, we have duly executed this Amendment this 21st
day of March, 1979.
Charles W. Cheek
________________
Charles W. Cheek
William E.S. Griswold, Jr.
__________________________
William E.S. Griswold, Jr.
Kenneth J. Hanau, Jr.
_____________________
Kenneth J. Hanau, Jr.
Fletcher Hodges III
___________________
Fletcher Hodges III
James J. Needham
________________
James J. Needham
Philip C. Smith
_______________
Philip C. Smith
.........................................................................
Banner Redi-Resources Trust
Amendment No.1
to
Restated Declaration of Trust
Pursuant to Section 13.1 of the Restated Declaration of Trust of
Banner Redi-Resources (the "trust"), the undersigned, constituting all of
the Trustees (it being understood that no shares of the Trust are
presently outstanding), hereby amend said Declaration of Trust as
follows:
1. The par value of Shares of the Trust shall be $.10 per share; and
Section 6.1 and any other section of said Declaration of Trust which
refers to shares of the Trust with a par value of $1.00 is hereby amended
accordingly.
2. Section 4.2(b) is amended in its entirety to read as follows:
(b) May not, except in connection with transactions involving
reverse repurchase agreements, borrow an amount which is in excess
of 15% of its total assets taken at market value (including the
amount borrowed) or an amount which is, in combination with the
amount for which the Trust is obligated in connection with reverse
repurchase agreements, in excess of 1/3 of its total assets taken at
market value (including the amount borrowed and the amount for which
the Trust is obligated) and then only from banks as a temporary
measure for extraordinary or emergency purposes such as to meet
redemption requests which might otherwise require undue dispositions
of portfolio securities. The Trust may not mortgage, pledge,
hypothecate or in any manner transfer, as security for indebtedness,
any securities owned or held by the Trust except in connection with
loans of its portfolio securities as described in (n) below and as
may be necessary in connection with transactions involving reverse
repurchase agreements and borrowings mentioned above, and then,
except in connection with transactions involving reverse repurchase
agreements, such mortgaging, pledging or hypothecation may not
exceed 15% of the Trust's total assets, taken at market value.
3.The first sentence of Section 10.4, Net Asset Value, is amended to read
as follows:
The net asset value of each outstanding share of the Trust shall be
determined, subject to the requirements of the 1940 Act and the
rules and regulations promulgated thereunder, at such times and on
such occasions as the Trustees, by resolution, may determine.
IN WITNESS WHEREOF, the undersigned have caused these presents to
be executed as of the 23rd day of June, 1978.
Joseph E. Miles
_______________
Joseph E. Miles
Paul D. Foote
_____________
Paul D. Foote
Gordon D. Griswold
__________________
Gordon D. Griswold
Gerard van Amerongen
____________________
Gerard van Amerongen
Robert C. Brewer
________________
Robert C. Brewer
.........................................................................
Restated Declaration of Trust
of
BANNER REDI-RESOURCES TRUST
This Restated Declaration of Trust made this 30th day June, 1977 by
JOSEPH E. MILES, CHARLES H. SCHNEIDER, GORDON C. GRISWOLD, PAUL D. FOOTE
and GERARD VAN AMERONGEN.
W I T N E S S E T H :
WHEREAS, the Trustees desire to establish an unincorporated
voluntary association commonly known as a business trust, as described in
the provisions of Chapter 182 of the General Laws of Massachusetts, for
the principal purpose of the investment and reinvestment of funds
contributed thereto; and
WHEREAS, the Trustees desire that such trust be a registered open-
end investment company under the Investment Company Act of 1940; and
WHEREAS, the Trustees have acknowledged the receipt of One Thousand
Dollars ($1,000) and have agreed to hold, invest and dispose of the same
and any property acquired or otherwise added thereto as such Trustees as
hereinafter stated; and
WHEREAS, it is proposed that the beneficial interest in the Trust s
assets shall be divided into transferable shares of beneficial interest,
which shall be evidenced by the Share Register maintained by the Trust or
its agent, or, in the discretion of the Trustees, be evidenced by
certificates therefore, as hereinafter provided;
NOW, THEREFORE, the Trustees hereby declare that they will hold all
property of every type and description which they are acquiring or may
hereafter acquire as such Trustees, together with the proceeds thereof,
in trust, to manage and dispose of the same for the benefit of the
holders of record from time to time of the Shares being issued and to be
issued hereunder and in the manner and subject to the provisions hereof.
ARTICLE I
THE TRUST
1.1 Name. The name of the trust created by this
Declaration of Trust shall be Banner Redi-Resources Trust (hereinafter
called the Trust ) and so far as may be practicable the Trustees shall
conduct the Trust s activities, execute all documents and sue or be sued
under that name, which name (and the word Trust wherever used in this
Declaration of Trust, except where the context otherwise requires) shall
refer to the Trustees in their capacity as Trustees, and not individually
or personally, and shall not refer to the officers, agents, employees or
Shareholders of the Trust or of such Trustees. Should the Trustees
determine that the use of such name is not practicable, legal or
convenient, they may use such other designation or they may adopt such
other name for the trust as they deem proper and the Trust may hold
property and conduct its activities under such designation or name.
1.2 Location. The Trust shall maintain a registered office
in Boston, Massachusetts, and may maintain such other offices or places
of business as the Trustees may from time to time determine.
1.3 Nature of Trust. The Trust shall be of the type
commonly termed a business trust. The Trust is not intended to be,
shall not be deemed to be, and shall not be treated as, a general
partnership, limited partnership, joint venture, corporation or joint
stock company. The Shareholders shall be beneficiaries and their
relationship to the Trustees shall be solely in that capacity in
accordance with the rights conferred upon them hereunder. The Trust is
intended to have the status of a registered open-end investment company
under the Investment Company Act of 1940 and of a regulated investment
company as that term is defined in Section 851 of the Internal Revenue
Code of 1954, and this Declaration of Trust and all actions of the
Trustees hereunder shall be construed in accordance with such intent.
1.4 Definitions. As used in this Declaration of Trust,
the following terms shall have the following meanings unless the context
hereof otherwise requires:
1940 Act shall mean the Investment Company Act of 1940, as
amended from time to time.
Adviser and Distributor shall mean any Person or Persons
appointed, employed or contracted with by the Trustees under the
applicable provisions of Section 3.1 hereof.
Affiliate shall have the same meaning as the term
Affiliated Person under the 1940 Act.
Assignment, Commission, and Prospectus shall have the
meanings given them in the 1940 Act.
Declaration of Trust shall mean this Declaration of Trust
as amended, restated or modified from time to time. References in this
Declaration of Trust to Declaration, hereof, herein, hereby and
hereunder shall be deemed to refer to the Declaration of Trust and
shall not be limited to the particular text, article or section in which
such words appear.
Person shall mean and include individuals, corporations,
limited partnerships, general partnerships, joint stock companies or
associations, joint ventures, associations, companies, trusts, banks,
trust companies, land trusts, business trusts or other entities whether
or not legal entities and governments and agencies and political
subdivisions thereof.
Securities shall mean any stock, shares, voting trust
certificates, bonds, debentures, notes, or other evidences of
indebtedness, secured or unsecured, convertible, subordinated or
otherwise or in general any instruments commonly known as securities or
any certificates of interest, shares or participations in temporary or
interim certificates for , guarantees of or any right to subscribe to,
purchase or acquire any of the foregoing.
Shareholders shall mean as of any particular time all
holders of record of outstanding Shares at such time.
Shares shall mean the shares of beneficial interest of the
Trust as described in Article VI.
Trust Property shall mean as of any particular time any and
all property, real, personal or otherwise, tangible, or intangible, which
is transferred, conveyed or paid to the Trust or Trustees and all income,
profits and gains therefrom and which at such time is owned or held by,
or for the account of, the Trust or the Trustees.
ARTICLE II
POWER OF TRUSTEES
2.1 General. The Trustees shall have, without other or
further authorization, full, exclusive and absolute power, control and
authority over the Trust Property and over the business of the Trust to
the same extent as if the Trustees were the sole and absolute owners of
the Trust Property and business in their own right, and with such powers
of delegation as may be permitted by this Declaration of Trust. The
Trustees may do and perform such acts and things as in their sole
judgement and discretion are necessary and proper for conducting the
business and affairs of the Trust or promoting the interests of the Trust
and the Shareholders. The enumeration of any specific power or authority
herein shall not be construed as limiting the aforesaid power or
authority or any specific power or authority. The Trustees shall have
the power to enter into commitments to make any investment, purchase or
acquisition, or to exercise any power authorized by this Declaration of
Trust. Such powers of the Trustees may be exercised without order of or
resort to any court.
2.2 Investments. The Trustees shall have power, subject in
all respects to Article IV hereof,
(a) to conduct, operate and carry on the business of
an investment company; and
(b) for such consideration as they may deem proper,
to subscribe for, invest in, reinvest in, purchase or otherwise acquire,
hold, pledge, sell, assign, transfer, exchange, distribute or otherwise
deal in or dispose of negotiable or non-negotiable instruments,
obligations, evidences of indebtedness, bankers acceptances,
certificates of deposit or indebtedness, commercial paper, securities
subject to repurchase agreements, and other bank money instruments and
money market securities, including, with limitation, those issued,
guaranteed or sponsored by the United States Government or its agencies
or instrumentalities, or international instrumentalities, or by any of
the several states of the United States of America or their political
subdivisions, agencies or instrumentalities, or by any bank or savings
institution, or by any corporation organized under the laws of the United
States or of any state, territory or possession thereof, or by
corporation organized under foreign laws; and nothing herein shall be
construed to mean the Trustees shall not have the foregoing powers with
respect to any Securities in which the Trust may invest in accordance
with Article IV hereof.
In the exercise of their powers, the Trustees shall not be
limited, except as otherwise provided hereunder, to investing in
Securities maturing before the possible termination of the Trust, not
shall the Trustees be limited by any law now or hereafter in effect
limiting the investments which may be held or retained by trustees or
other fiduciaries, but they shall have full authority and power to make
any and all investments within the limitations of this Declaration of
Trust, that they, in their absolute discretion, shall determine, and
without liability for loss, even though such investments shall be of a
character or in an amount not considered proper for the investment of
trust funds.
2.3 Legal Title. Legal title to all the Trust Property
shall be vested in the Trustees as joint tenants and held by and
transferred to the Trustees, except that the Trustees shall have power to
cause legal title to any trust Property to be held by or in the name of
one or more of the Trustees with suitable reference to their trustee
status, or in the name of the Trust, or in the name of any other Person
as nominee, on such terms, in such manner, and with such powers as the
Trustees may determine, so long as in their judgement the interest of the
Trust is adequately protected.
The right, title and interest of the Trustees in and to the
Trust Property shall vest automatically in all persons who may hereafter
become Trustees upon their due election and qualification without any
further act. Upon the resignation, removal or death of a Trustee, he
(and in the event of his death, his estate) shall automatically cease to
have any right, title or interest in or to any of the Trust Property, and
the right, title and interest of such Trustee in and to the Trust
Property shall vest automatically in the remaining Trustees without any
further act. Such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered.
2.4 Disposition of Assets. Subject in all respects to
Article IV hereof, the Trustees shall have power to sell, lease, exchange
or otherwise dispose of or grant options with respect to any and all
Trust Property free and clear of any and all trusts, at public or private
sale, for cash or on terms, without advertisement, and subject to such
restrictions, stipulations, agreements and reservations as they shall
deem proper, and to execute and deliver any deed or other instrument in
connection with the foregoing. The Trustees shall also have the power,
subject in all respects to Article IV hereof, to:
(a) rent, lease or hire from others or to others for terms
which may extend beyond the termination of this Declaration of Trust any
property or rights to property, real, personal or mixed, tangible or
intangible, and, except for real property, to own, manage, use and hold
such property and such rights;
(b) give consents and make contracts relating to Trust
Property or its use;
(c) grant security interests in or otherwise encumber Trust
Property in connection with borrowings; and
(d) release any Trust Property.
2.5 Taxes. The Trustees shall have power to pay all
taxes or assessments, of whatever kind or nature, imposed upon or against
the Trust or the Trustees in connection with the Trust Property or upon
or against the Trust Property or income or any part thereof, to settle
and compromise disputed tax liabilities, and for the foregoing purposes
to make such returns and do all such other acts and things as may be
deemed by the Trustees to be necessary or desirable.
2.6 Rights as Holder of Securities. The Trustees shall
have the power to exercise all the rights, powers and privileges
appertaining to the ownership of all or any Securities or other property
forming part of the Trust Property to the same extent that any individual
might, and, without limiting the generality of the foregoing, to vote or
give any consent, request or notice or waive any notice either in person
or by proxy or power of attorney with or without power of substitution,
to one or more Persons, which proxies and powers of attorney may be for
meetings or action generally or for any particular meetings or action,
and may include the exercise of discretionary powers.
2.7 Delegation; Committees. The Trustees shall have power,
consistent with their continuing exclusive authority over the management
of the Trust, the conduct of its affairs, and the management and
disposition of Trust Property, to delegate from time to time to such one
or more of their number (who may be designated as constituting a
committee of the Trustees) or to officers, employees or agents of the
Trust the doing of such things and the execution of such instruments
either in the name of the Trust or the names of the Trustees or as their
attorney or attorneys or otherwise as the Trustees may from time to time
deem expedient.
2.8 Collection. The Trustees shall have power to collect,
sue for, receive and receipt for all sums of money or other property due
to the Trust, to consent to extensions of the time for payment, or to the
renewal of any Securities or obligations; to engage or intervene in,
prosecute, defend, compound, compromise, abandon or adjust by arbitration
or otherwise any actions, suits, proceedings, disputes, claims, demands
or things relating to the Trust Property; to foreclose any Security or
other instrument securing any notes, debentures, bonds, obligations or
contracts, by virtue of which any sums of money are owed to the Trust; to
exercise any power of sale held by them, and to convey good title
thereunder free of any and all trusts, and in connection with any such
foreclosure or sale, to purchase or otherwise acquire title to any
property; to be parties to reorganization and to transfer to and deposit
with any corporation, committee, voting trustee or other Person any
Securities or obligations of any corporation, trust, association or other
organization, the Securities of which form a part of the Trust Property,
for the purpose of any reorganization of any such corporation, trust
association or other organization, or otherwise, to participate in any
arrangement for enforcing or protecting the interests of the Trustees as
the owners or holders of such Securities or obligations and to pay any
assessment levied in connection with such reorganization or arrangement;
to extend the time (with or without security) for the payment or delivery
of any debts or property and to execute and enter into releases,
agreements and other instruments; and to pay or satisfy any debts or
claims upon any evidence that the Trustees shall think sufficient.
2.9 Expenses. The Trustees shall have power to incur and
pay any charges or expenses which in the opinion of the Trustees are
necessary or incidental to or proper for carrying out any of the purposes
of this Declaration of Trust, and to reimburse others for the payment
therefore, and to pay appropriate compensation or fees from the funds of
the Trust to themselves as Trustees and to Persons with whom the Trust
has contracted or transacted business. The Trustees shall fix the
compensation of all officers, employees and Trustees. The Trustees may
be paid reasonable compensation for their general services as Trustees
and officers hereunder, and the Trustees may pay themselves or any one or
more of themselves such compensation for special services, including
legal services, as they in good faith may deem reasonable and
reimbursement for expenses reasonably incurred by themselves or any one
or more of themselves on behalf of the Trust.
2.10 Borrowing. The Trustees shall have power to borrow
money only to the extent, for the purposes, and in the manner authorized
by Article IV hereof.
2.11 Deposits. The Trustees shall have power to deposit
any monies or Securities included in the Trust Property with one or more
banks, trust companies or other banking institutions whether or not such
deposits will draw interest. Such deposits are to be subject to
withdrawal in such manner as the Trustees may determine, and the Trustees
shall have no responsibility for any loss which may occur by reason of
the failure of the bank, trust company or other banking institution with
whom the monies or Securities have been deposited.
2.12 Allocation. The Trustees shall have power to determine
whether monies or other assets received by the Trust shall be charged or
credited to income or capital or allocated between income and capital,
including the power to amortize or fail to amortize any part or all of
any premium or discount, to treat any part or all of the profit resulting
from the maturity or sale of any asset, whether purchased at a premium or
at a discount, as income or capital or apportion the same between income
and capital, to apportion the sale price of any asset between income and
capital, and to determine in what manner any expenses or disbursements
are to be borne as between income and capital, whether or not in the
absence of the power and authority conferred by this Section 2.12, such
assets would be regarded as income or as capital or such expense or
disbursement would be charged to income or to capital; to treat any
dividend or other distribution on any investment as income or capital or
apportion the same between income and capital; to provide or fail to
provide reserves for depreciation, amortization or obsolescence in
respect of any Trust Property in such amounts and by such methods and for
such purposes as they shall determine, and to allocate to the share of
beneficial interest account less then all of the consideration received
for Shares (but not less than the par value thereof) and to allocate the
balance thereof to paid-in capital, all as the Trustees may reasonably
deem proper.
2.13 Valuation. The Trustees shall have power to determine
in good faith conclusively the value of any of the Trust Property and of
any services, Securities, assets or other consideration hereafter to be
acquired or disposed of by the Trust, and to revalue the Trust Property.
2.14 Fiscal Year. The Trustees shall have power to
determine the fiscal year of the Trust and the method or form in which
its accounts shall be kept and from time to time to change the fiscal
year or method or form of accounts.
2.15 Concerning the Trust and Certain Affiliates.
(a) The Trust may enter into transactions with any
Affiliate of the Trust or of the Adviser or any Affiliate of any Trustee,
director, officer or employee of the Trust or of the Adviser if (I) each
such transaction has, after disclosure of such affiliation, been approved
or ratified by the affirmative vote of a majority of the Trustees,
including a majority of the Trustees who are not Affiliates of any Person
(other than the Trust) who is a party to the transaction with the Trust,
(ii) such transaction is, in the opinion of the Trustees, on terms fair
and reasonable to the Trust and the Shareholders and at least as
favorable to them as similar arrangements for comparable transactions (of
which the Trustees have knowledge) with organizations unaffiliated with
the Trust or with the Person who is a party to the transaction with the
Trust, and (iii) such transaction is in accordance with the 1940 Act or
an exemption granted thereunder.
(b) Except as otherwise provided by this Declaration
of Trust and in the absence of fraud, a contract, act or other
transaction, between the Trust and any other Person, or in which the
Trust is interested, is valid and no Trustee, officer, employee or agent
of the Trust has any liability as a result of entering into any such
contract, act or transaction even though (a) one or more of the Trustees,
officers, employees or agents of the Trust is directly or indirectly
interested in or affiliated with, or are trustees, partners, directors,
employees, officers or agents of such other Person, or (b) one or more of
the Trustees, officers, employees, or agents of the Trust, individually
or jointly with others, is a party or are parties to or directly
interested in or affiliated with, such contract, act or transaction,
provided that (I) such interest or affiliation is disclosed to the
Trustees and the Trustees authorized such contract, act or other
transaction by a vote of a majority of the unaffiliated Trustees, or (ii)
such interest or affiliation is disclosed to the Shareholders, and such
contract, act or transaction is approved by the Shareholders.
(c) Any Trustee or officer, employee or agent of the Trust
may acquire, own, hold and dispose of Shares for his individual account,
and may exercise all rights of a holder of such Shares to the same extent
and in the same manner as if he were not such a Trustee or officer,
employee or agent. The Trustees shall use their best efforts to obtain
through the Adviser or other Persons a continuing and suitable investment
program, consistent with the investment policies and objectives of the
Trust, and the Trustees shall be responsible for reviewing and approving
or rejecting investment opportunities presented by the Adviser or such
other Persons. Any Trustee or officer, employee, or agent of the Trust
may, in his personal capacity, or in a capacity of trustee, officer,
director, stockholder, partner, member, adviser or employee of any
Person, have business interests and engage in business activities in
addition to those relating to the Trust, which interests and activities
may be similar to those of the Trust and include the acquisition,
syndication, holding, management, operation or disposition, for his own
account or for the account of such Person, and each Trustee officer,
employee and agent of the Trust shall be free of any obligation to
present to the Trust any investment opportunity which comes to him in any
capacity other than solely as Trustee, officer, employee or agent of the
Trust, even if such opportunity is of a character which, if presented to
the Trust, could be taken by the Trust.
Subject to the provisions of Article III hereof, any Trustee
or officer, employee or agent of the Trust may be interested as Trustee,
officer, director, stockholder, partner, member, adviser or employee of,
or otherwise have a direct or indirect interest in, any Person who may be
engaged to render advice or services to the Trust, and may receive
compensation from such Person as well as compensation as Trustee,
officer, employee or agent of the Trust or otherwise hereunder. None of
the activities referred to in this paragraph shall be deemed to conflict
with his duties and powers as Trustee, officer, employee or agent of the
Trust. To the extent that any other provision of this Declaration of
Trust conflicts or is otherwise contrary to the provisions of this
Section 2.15 the provisions of this Section shall be deemed controlling.
2.16 Power to Contract. Subject to the provisions of
Sections 2.7 and 3.1 hereof with respect to delegation of authority by
the Trustees, the Trustees shall have power to appoint, employ, or
contract with any Person (including one or more of themselves and any
corporation, partnership or trust of which one or more of them may be an
Affiliate, subject to the applicable requirements of Section 2.15 hereof)
as the Trustees may deem necessary, or desirable for the transaction of
the business of the Trust including any Person who, under the supervision
of the Trustees, may, among other things: serve as the Trust s investment
adviser and consultant in connection with policy decisions made by the
Trustees; furnish reports to the Trustees and provide research, economic
and statistical data in connection with the Trust s investments; act as
consultants, accountants, technical advisers, attorneys, brokers,
underwriters, corporate fiduciaries, escrow agents, depositories,
custodians or agents for collection, insurers or insurance agents,
transfer agents or registrars for Shares or in any other capacity deemed
by the Trustees necessary or desirable; investigate, select, and, on
behalf of the Trust conduct relations with Persons acting in such
capacities and pay appropriate fees to, and enter into appropriate
contracts with, or employ, or retain services performed or to be
performed by, any of them in connection with the investments acquired,
sold, or otherwise disposed of, or committed, negotiated, or contemplated
to be acquired, sold or otherwise disposed of; substitute any other
Person for any such person; act as attorney-in-fact or agent in the
purchase or sale or other disposition of investments, and in the
handling, prosecuting or settling of any claims of the Trust, including
the foreclosure or other enforcement of any lien or security securing
investments; and assist in the performance of such ministerial functions
necessary in the management of the Trust as may be agreed upon with the
Trustees or officers of the Trust.
2.17 Insurance. The Trustees shall have the power to
purchase and pay for entirely out of Trust Property insurance policies
insuring the Shareholders, Trustees, officers, employees, agents,
investment advisers, including the Adviser, 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 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.
2.18 Pension and Other Plans. The Trustees shall have
the power to pay pensions for faithful service, as deemed appropriate by
the Trustees, and to adopt, establish and carry out pension, profit-
sharing, savings, thrift and other retirement, incentive and benefit
plans, trusts and provisions, including the purchasing of like insurance
and annuity contracts as a means of providing such retirement and other
benefits, for any or all of the Trustees, officers, employees and agents
of the Trust.
2.19 Seal. The Trustees shall have the power to adopt and
use a seal for the Trust, but, unless otherwise required by the Trustees,
it shall not be necessary for the seal to be placed on, and its absence
shall not impair the validity of, any document, instrument or other paper
executed and delivered by or on behalf of the Trust.
2.20 Indemnification. In addition to the mandatory
indemnification provided for in Section 5.3 hereof, the Trustees shall
have power to the extent permitted by law to indemnify or enter into
agreements with respect to indemnification with any Person with whom the
Trust has dealings, including, without limitation, any investment
adviser, including the Adviser, or independent contractor, to such extent
as the Trustees shall determine.
2.21 Remedies. Notwithstanding any provision in this
Declaration of Trust, when the Trustees deem that there is a significant
risk that an obligor to the Trust may default or is in default under the
terms of any obligation to the Trust, the Trustees shall have power to
pursue any remedies permitted by law which, in their sole judgement, are
in the interests of the Trust, and the Trustees shall have the power to
enter into any investment, commitment or obligation of the Trust
resulting from the pursuit of such remedies as necessary or desirable to
dispose of property acquired in the pursuit of such remedies.
2.22 Further Powers. The Trustees shall have power to do
all such other matters and things and execute all such instruments as
they deem necessary, proper or desirable in order to carry out, promote
or advance the interests of the Trust although such matters or things are
not herein specifically mentioned. Any determination as to what is in
the best interests of the Trust made by the Trustees in good faith shall
be conclusive. In construing the provisions of this Declaration of Trust
the presumption shall be in favor of a grant of power to the Trustees.
The Trustees will not be required to obtain any court order to deal with
the Trust Property.
ARTICLE III
ADVISER AND DISTRIBUTOR
3.1 Appointment. The Trustees are responsible for the
general investment policy of the Trust, the distribution of its Shares,
and for the general supervision of the business of the Trust conducted by
officers, agents, employees, investment advisers, distributors, or
independent contractors of the Trust. However, the Trustees are not
required personally to conduct all of the business of the Trust and
consistent with their ultimate responsibility as stated herein, the
Trustees may appoint, employ or contract with an investment adviser (the
Adviser )and/or a distributor and underwriter for the Trust s Shares
(the Distributor ), and may grant or delegate such authority to the
Adviser and/or Distributor (pursuant to the terms of Section 2.16 hereof)
or to any other Person the services of whom are obtained by the Adviser
or Distributor, as the Trustees may, in their sole discretion, deem to be
necessary or desirable, without regard to whether such authority is
normally granted or delegated by trustees.
3.2 Provisions of Agreement. The Trustees shall not
enter into any agreement with the Adviser or Distributor pursuant to the
provisions of Section 3.1 hereof unless such agreement is consistent with
the provisions of Section 15 of the 1940 Act.
3.3 Distribution Arrangements. The Trustees shall have
the power to enter into any agreement with the Adviser or Distributor
which provides for payments by the Adviser or Distributor, out of fees
received from the Trust, to dealers who have sold shares of the Trust;
provided, however, that any such agreement shall be in accordance with
the applicable provisions of the 1940 Act, as amended from time to time,
and the rules and regulations promulgated thereunder.
3.4 Independence of Trustees. Not more than 49% of the
total number of Trustees shall be Affiliates of the Adviser; provided,
however, that if at any time more than 49% of the total number of
Trustees shall be Affiliates of the Adviser because of the death,
resignation, removal or change in affiliation of a Trustee who is not
such an Affiliate, such requirement shall not be applicable for a period
of 60 days, during which time a majority of all the Trustees then in
office shall appoint as Trustee such number of persons who are not
Affiliates of the Adviser as shall be sufficient to bring about
compliance with the above requirement. The Trustees shall at all times
endeavor to comply with such requirement, but failure so to comply shall
not affect the validity or effectiveness of any action of the Trustees.
ARTICLE IV
INVESTMENTS
4.1 Statement of Investment Policy and Objective. Subject
to the prohibitions and restrictions contained in Section 4.2 hereof, the
general investment policy and objective of the Trustees shall be to
provide the Shareholders of the Trust with as high a level of current
income as is consistent with the preservation of capital and liquidity by
investing primarily in money market instruments and other Securities as
may be set forth more fully in the Trust s Prospectus, as amended from
time to time.
4.2 Restrictions. Notwithstanding anything in this
Declaration of Trust which may be deemed to authorize the contrary, the
Trust:
(a) May not issue senior securities except as otherwise
provided by Section 18 of the Investment Company Act of 1940, as amended.
(b) May not borrow amounts in excess of 15% of its total
assets taken at market value (including the amount borrowed), and then
only from banks as a temporary measure for extraordinary or emergency
purposes. The Trust will not borrow to increase income but only to meet
redemption requests which might otherwise require undue dispositions of
portfolio securities. The Trust may not mortgage, pledge, hypothecate or
in any manner transfer, as security for indebtedness, any securities
owned or held by the Trust except in connection with loans of its
portfolio securities as described in (n) below and as may be necessary in
connection with borrowings mentioned above, and then such mortgaging,
pledging or hypothecating may not exceed 15% of the Trust s total assets,
taken at market value.
(c) May not underwrite securities of other issuers except
insofar as it might be deemed to be an underwriter for purposes of the
Securities Act of 1933 in the resale of any securities held in its own
portfolio.
(d) Will not generally concentrate its investments in
Securities of issuers in any particular industry. (other than United
States Government securities, government agency securities, or bank
obligations); provided that, if it is deemed appropriate for the
attainment of its investment objectives, up to 25% of its total assets
(taken at market value at the time of each investment) may be invested in
any one industry.
(e) May not purchase or sell real estate unless acquired as
a result of ownership of securities.
(f) May not purchase or sell commodities or commodity
contracts unless acquired as a result of ownership of securities.
(g) May not make loans to other persons; provided that the
Trust may purchase money market securities, enter into repurchase
agreements and lend securities owned or held by it as described in (n)
below.
(h) May not invest more than 5% of its total assets (taken
at market value at the time of each investment) in the securities of any
one non-bank issuer (other than the United States Government or
government agency securities) or more than 15% of its total assets (taken
at market value at the time of each investment) in the securities of any
one bank or own more than 10% of the outstanding securities of any one
issuer.
(i) May not make investments for the purpose of exercising
control or management.
(j) May not purchase securities of other investment
companies, except in connection with a merger, consolidation, acquisition
or reorganization.
(k) May not purchase any securities on margin, except that
the Trust may obtain such short-term credit necessary for the clearance
of purchases and sales of portfolio securities.
(l) May not make short sales of securities or maintain a
short position unless at all times while a short position is open the
Trust maintains a long position in the same security in an amount at
least equal thereto or write, purchase or sell put or call options.
(m) May not invest in securities with legal or contractual
restrictions on resale (except repurchase agreements) or for which no
readily available market exists if more than 5% of its total assets
(taken at market value) would be invested in such securities.
(n) May not lend its portfolio securities except in
accordance with the guidelines established from time to time by the
Securities and Exchange Commission for such loans and the Board of
Trustees of the Trust including maintaining collateral in cash or cash
equivalence from the borrower equal at all times to act least the current
market value of the securities loaned. Accordingly, the Trust may from
time to time loan securities from its portfolio to brokers, dealers and
financial institutions and receive collateral in cash or U.S. Treasury or
federal agency issues which will be maintained at all times in an amount
equal to at least 100% of the current market value of the loaned
securities. If cash, such collateral will be invested in short-term
securities, the income from which will increase the return to the Trust.
If Securities, the usual procedure will be for the borrower to pay a
fixed fee to the Trust for such time as the loan is outstanding. The
Trust will retain substantially all rights of beneficial ownership as to
the loaned portfolio securities, including rights to interest or other
distributions, and will have the right to regain record ownership of
loaned securities in order to exercise such beneficial rights. Such
loans will be terminable at any time. The Trust may pay reasonable fees
to persons unaffiliated with the Trust in connection with such loan.
(o) May not purchase any securities other than money market
instruments and other debt securities maturing within two years of the
date of purchase.
4.3 Percentage Restrictions. If the percentage
restrictions referred to in Section 4.2 hereof are adhered to at the time
of each investment, a later increase or decrease in percentage resulting
from a change in the value of the Trust s assets is not a violation of
such investment restrictions.
4.4 Amendment of Restrictions. The restrictions set
forth in Section 4.2 hereof are fundamental to the operation and
activities of the Trust and may not be changed without the affirmative
vote of the holders of a majority (as defined in the 1940 Act) of its
Shares.
ARTICLE V
LIMITATIONS OF LIABILITY
5.1 Liability to Third Persons. No Shareholder shall be
subject to any personal liability whatsoever, in tort, contract or
otherwise, to any other Person or Persons in connection with Trust
Property or the affairs of the Trust; and no Trustee, officer, employee
or agent of the Trust shall be subject to any personal liability
whatsoever, in tort, contract or otherwise, to any other Person or
Persons in connection with Trust Property or the affairs of the Trust,
except for that arising from his bad faith, willful misconduct, gross
negligence or reckless disregard of his duties or for his failure to act
in good faith in the reasonable belief that his action was in the best
interest of the Trust; and all such other Persons shall look solely to
the Trust Property for satisfaction of claims of any nature arising in
connection with the affairs of the Trust. If any Shareholder, Trustee,
officer, employee or agent, as such, of the Trust is made a party to any
suit or proceedings to enforce any such liability, he shall not on
account thereof be held to any personal lability.
5.2 Liability to Trust or to Shareholders. No Trustee,
officer, employee or agent of the Trust shall be liable to the Trust or
to any Shareholder, Trustee, officer, employee or agent of the Trust for
any action or failure to act (including, without limitation, the failure
to compel in any way any former or acting Trustee to redress any breach
of trust) except for his own bad faith, willful misfeasance, gross
negligence or reckless disregard of his duties.
5.3 Indemnification. The Trust shall indemnify and hold
each Shareholder harmless from and against all claims and liabilities,
whether they proceed to judgement or are settled or otherwise brought to
a conclusion, to which such Shareholder may become subject by reason of
his being or having been a Shareholder, and shall reimburse such
Shareholder for all legal and other expenses reasonably incurred by him
in connection with any such claim or liability. The rights accruing to a
Shareholder under this Section 5.3 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 herein; provided, however, that the Trust shall
have no liability to reimburse Shareholders for taxes assessed against
them by reason of their ownership of Shares, nor for any losses suffered
by reason of changes in the market value of Shares.
The Trust shall indemnify each of its Trustees and officers,
and employees and agents designated by the Board of Trustees to receive
such indemnification (including those who serve at its request as
directors, officers or trustees of another organization in which it has
any interest as a shareholder, creditor or otherwise), against all
liabilities and expenses, including amounts paid in satisfaction of
judgements, in compromise or as fines and penalties, and counsel fees,
reasonably incurred by him in connection with the defense or disposition
of any action, suit or other proceeding by the Trust or any other Person,
whether civil or criminal, in which he may be involved or with which he
may be threatened, while in office or thereafter, by reason of his being
or having been such a Trustee, officer, employee or agent, except with
respect to any matter as to which he shall have been adjudicated to have
acted in bad faith or with willful misfeasance or reckless disregard of
his duties or gross negligence; provided, however, that as to any matter
disposed of by a compromise payment by such Trustee, officer, employee or
agent, pursuant to a consent decree or otherwise, no indemnification
either for said payment or for any other expenses shall be provided
unless the Trust shall have received a written opinion from independent
counsel approved by the Trustees to the effect that if the foregoing
matters had been adjudicated, they would likely have been adjudicated in
favor of such Trustee, officer, employee or agent. The rights accruing
to any Trustee, officer, employee or agent under these provisions shall
not exclude any other right to which he may be lawfully entitled;
provided, however that no Trustee, officer, employee or agent may satisfy
any right of indemnity or reimbursement granted herein or to which he may
be otherwise entitled except out of the Trust Property, and no
Shareholder shall be personally liable to any Person with respect to any
claim for indemnity or reimbursement or otherwise. The Trustees may make
advance payments in connection with indemnification under this Section
5.3, provided that the indemnified Trustee, officer, employee or agent
shall have given a written undertaking to reimburse the Trust in the
event it is subsequently determined that he is not entitled to such
indemnification.
Any action taken by or conduct on the part of the Adviser, a
Trustee, officer, employee or agent of the Trust in conformity with or in
good faith reliance upon the provisions of Section 2.15 or Section 5.7
shall not, for the purposes of this trust (including, without limitation,
Sections 5.1 and 5.2 and this Section 5.3) constitute bad faith, willful
misfeasance, gross negligence or reckless disregard of his duties.
5.4 Surety Bonds. No Trustee shall, as such, be obligated to
give any bond or surety or other security for the performance of any of
his duties.
5.5 Apparent Authority. No purchaser, lender, transfer
agent or other Person dealing with the Trustees or any officer, employee
or agent of the Trust shall be bound to make any inquiry concerning the
validity of any transaction purporting to be made by the Trustees or by
such officer, employee or agent or make inquiry concerning or be liable
for the application of money or property paid, loaned or delivered to or
on the order of the Trustees or of such officer, employee or agent.
5.6 Recitals. Any written instrument creating an
obligation of the Trust shall be conclusively taken to have been executed
or done by a Trustee or Trustees or an officer, employee or agent of the
Trust only in their or his capacity as Trustees or Trustee under this
Declaration of Trust or in the capacity of officer, employee or agent of
the Trust. Any written instrument creating an obligation of the Trust
shall refer to this Declaration of Trust and contain a recital to the
effect that the obligations thereunder are not personally binding upon,
nor shall resort be had to the private property of, any of the Trustees,
Shareholders, officers, employees or agents of the Trust, but the Trust
Property or a specific portion thereof only shall be bound, and may
contain any further recital which they or he may deem appropriate, but
the omission of such recital shall not operate to impose personal
liability on any of the Trustees, Shareholders, officers, employees or
agents of the Trust.
5.7 Reliance on Experts. Each Trustee and each officer
of the Trust shall, in the performance of his duties, be fully and
completely justified and protected with regard to any act or any failure
to act resulting from reliance in good faith upon the books of account or
other records of the Trust upon an opinion of counsel or upon reports
made to the Trust by any of its officers or employees or by the Adviser,
accountants, appraisers or other experts or consultants selected with
reasonable care by the Trustees or officers of the Trust, regardless of
whether such counsel or expert may also be a Trustee.
5.8 Liability Insurance. The Trustees shall, at all
times, maintain insurance for the protection of the Trust Property, its
Shareholders, Trustees, officers, employees and agents in such amount as
the Trustees shall deem adequate to cover all foreseeable tort liability
to the extent available at reasonable rates.
ARTICLE VI
CHARACTERISTICS OF SHARES
6.1 General. The interest of the Shareholders hereunder
shall be divided into Shares, all of one class and having a par value of
$1.00 per Share. The number of Shares authorized hereunder is unlimited.
All Shares shall have equal non-cumulative voting, distribution,
liquidation and other rights, shall be fully paid and non-assessable, and
shall not entitle the holder to preference, preemptive, appraisal,
conversion, or exchange rights of any kind. Shareholders are entitled to
one vote for each full share and fractional votes for fractional shares.
The ownership of the Trust Property of every description and the right to
conduct any business hereinbefore described are 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 share or
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.
6.2 Issuance of Shares. The Trustees, in their
discretion, may from time to time without vote of the Shareholders issue
Shares, in addition to the then issued and outstanding Shares and Shares
held in the treasury, to such party or parties and for such amount not
less than par value and type of consideration, including cash or
property, at such time or times (including, without limitation, each
business day in accordance with the maintenance of a constant net asset
value per share as set forth in Section 10.5 hereof), and on such terms
as the Trustees may deem best, and may in such manner acquire other
assets (including the acquisition of assets subject to, and in connection
with the assumption of, liabilities) and businesses. In connection with
any issuance of Shares, the Trustees may issue fractional Shares. The
Trustees may from time to time adjust the total number of shares
outstanding without thereby changing the proportionate beneficial
interests in the Trust. Reductions in the number of outstanding Shares
may be made in order to maintain a constant net asset value per share as
set forth in Section 10.5. Shares shall be purchased and redeemed
as whole shares and/or 1/1,000ths of a Share or multiples thereof.
6.3 Evidence of Share Ownership. Evidence of Share
ownership shall be reflected in the Share Register maintained by or on
behalf of the Trust pursuant to Section 7.1 hereof, and the Trust shall
not be required to issue certificates as evidence of Share ownership;
provided, however, that the Trustees may, in their discretion, authorize
the use of certificates as a means of evidencing the ownership of Shares
by setting forth in a resolution provisions for the form of certificates
and regulations governing their execution, issuance and transfer.
Subject to section 6.7 hereof, such certificates shall be treated as
negotiable and title thereto and to the Shares represented thereby shall
be transferred by delivery thereof to the same extent in all respects as
a stock certificate, and the Shares represented thereby, of a
Massachusetts business corporation.
6.4 Death of Shareholders. The death of a Shareholder
during the continuance of the Trust shall not terminate this Declaration
of Trust nor give such Shareholder s legal representatives a right to an
accounting or to take any action in the courts or otherwise against other
Shareholders or the Trustees or the Trust Property, but shall simply
entitle the legal representatives of the deceased Shareholder to require
the recordation of such legal representative s ownership of or rights in
the deceased Shareholder s Shares, and upon the acceptance thereof such
legal representative shall succeed to all the rights of the deceased
Shareholder under this Declaration of Trust.
6.5 Repurchase of Shares. The Trustees may, on behalf of
the Trust, purchase or otherwise acquire outstanding Shares from time to
time for such consideration and on such terms as they may deem proper.
Shares so purchased or acquired by the Trustees for the account of the
Trust shall not, so long as they belong to the Trust, receive
distributions (other than, at the option of the Trustees, distributions
in Shares) or be entitled to any voting rights. Such Shares may in the
discretion of the Trustees be canceled and the number of Shares issued
thereby reduced, or such Shares may in the discretion of the Trustees be
held in the treasury and may be disposed of by the Trustees at such time
or times, to, such party or parties and for such considerations at the
Trustees may determine.
6.6 Trustees as Shareholders. Any Trustee in his
individual capacity may purchase and otherwise acquire or sell and
otherwise dispose of Shares of other Securities issued by the Trust, and
may exercise all the rights of a Shareholder to the same extent as though
he were not a Trustee.
6.7 Redemption and Stop Transfers for Tax Purposes.
If the Trustees shall, at any time and in good faith,
be of the opinion that direct or indirect ownership of Shares or other
securities of the Trust has or may become concentrated in any person to
an extent which would disqualify the Trust as a regulated investment
company under the Internal Revenue Code, then the Trustees shall have the
power by lot or other means deemed equitable by them (I) to call for
redemption a number, or principal amount, of Shares or other Securities
of the Trust sufficient, in the opinion of the Trustees, to maintain or
bring the direct or indirect ownership of Shares or other Securities of
the Trust into conformity with the requirements for such qualification
and (ii) to refuse to transfer or issue Shares or other Securities of the
Trust to any Person whose acquisition of the Shares or other Securities
of the Trust in question would in the opinion of the Trustees result in
such disqualification. The redemption shall be effected at a redemption
price determined in accordance with section 6.9.
6.8 Information from Shareholders. The holders of
Shares or other Securities of the Trust shall, upon demand, disclose to
the Trustees in writing such information with respect to direct and
indirect ownership of Shares or other Securities of the Trust as the
Trustees reasonably deem necessary to comply with the provisions of the
Internal Revenue Code, or to comply with the requirements of any other
taxing authority.
6.9 Redemptions. All outstanding Shares may be
redeemed at the option of the holders thereof, upon and subject to the
terms and conditions provided in this Declaration of Trust. The Trust
shall, upon application of any Shareholder redeem or repurchase from such
Shareholder outstanding Shares for an amount per share determined by the
application of a formula adopted for such purpose by resolution of the
Trustees (which formula shall be consistent with the 1940 Act and the
rules and regulations promulgated thereunder); provided that such amount
per share shall not exceed the cash equivalent of the proportionate
interest of each share in the assets of the Trust at the time of the
purchase or redemption. The procedures for effecting redemption shall be
as adopted by resolution of the Trustees and set forth in the Prospectus
from time to time.
6.10 Suspension of Redemption; Postponement of Payment.
The Trustees may suspend the right of redemption or postpone the date of
payment for the whole or any part of any period (I) during which the New
York Stock Exchange is closed other than customary weekend and holiday
closings, (ii) during which trading on the New York Stock Exchange is
restricted, (iii) during which an emergency exists as a result of which
disposal by the Trust of securities owned by it is not reasonably
practicable or it is not reasonably practicable for the Trust fairly to
determine the value of its net assets, or (iv) during any other period
when the Securities and Exchange Commission (or any succeeding
governmental authority) may for the protection of security holders of the
Trust by order permit suspension of the right of redemption or
postponement of the date of payment on redemption; provided that
applicable rules and regulations of the Commission (or any succeeding
governmental authority) shall govern as to whether the conditions
prescribed in (ii), (iii) or (iv) exist. Such suspension shall take
effect at such time as the Trustees shall specify but not later than the
close of business on the business day next following the declaration of
suspension, and thereafter there shall be no right of redemption or
payment until the Trustees shall declare the suspension at an end, except
that the suspension shall terminate in any event on the first day on
which said stock exchange shall have reopened or the period specified in
(ii) or (iii) shall have expired (as to which in the absence of an
official ruling by said Commission or succeeding authority, the
determination of the Trustees shall be conclusive). In the case of a
suspension of the right of redemption, a Shareholder may either withdraw
his request for redemption or receive payment based on the net asset
value existing after the termination of the suspension.
ARTICLE VII
RECORD AND TRANSFER OF SHARES
7.1 Share Register. A register shall be kept by or on
behalf of the trustees, under the direction of the Trustees, which shall
contain the names and addresses of the Shareholders and the number of
Shares held by them respectively and a record of all transfers thereof.
Such register shall be conclusive as to who are the holders of the
Shares. Only Shareholders whose ownership of Shares is recorded on such
register shall be entitled to vote or to receive distributions or
otherwise to exercise or enjoy the rights of Shareholders. No
Shareholder shall be entitled to receive any distribution, nor to have
notice given to him as herein provided, until he has given his address to
a transfer agent or such other officer or agent of the Trust and shall
keep the register for entry thereon.
7.2 Transfer Agent. The Trustees shall have power to
employ, within or without the Commonwealth of Massachusetts, a transfer
agent or transfer agents and, if they so determine, a registrar or
registrars. The transfer agent or transfer agents may keep the register
and record therein the original issues and transfers of Shares. Any such
transfer agents and registrars shall perform the duties usually performed
by transfer agents and registrars of certificates and shares of stock in
a corporation, except as modified by the Trustees.
7.3 Owner of Record. Any person becoming entitled to any
Shares in consequence of the death, bankruptcy or insolvency of any
Shareholder, or otherwise, by operation of law, shall be recorded as the
holder of such Shares. But until such record is made, the Shareholder of
record shall be deemed to be the holder of such Shares for all purposes
hereof and neither the Trustees nor any transfer agent or registrar nor
any officer or agent of the Trust shall be affected by any notice of such
death, bankruptcy, insolvency or other event.
7.4 Transfers of Shares. Shares shall be transferable on
the records of the Trust (other than by operation of law) only by the
record holder thereof or by his agent thereunto duly authorized in
writing upon delivery to the Trust or a transfer agent of the Trust of a
duly executed instrument of transfer, together with such evidence of the
genuineness of execution and authorization and of other matters as may
reasonably be required by the Trust or the Transfer agent. Upon such
delivery the transfer shall be recorded on the register of the Trust.
But until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereof and neither the
Trustees nor the trust nor any transfer agent or registrar nor any
officer or agent of the Trust shall be affected by any notice of the
proposed transfer. This Section 7.4 and Section 7.3 hereof are subject
in all respects to the provisions of Section 6.7 hereof.
7.5 Limitation of Fiduciary Responsibility. The Trustees
shall not, nor shall the Shareholders or any officer, transfer agent or
other agent of the Trust, be bound to see to the execution of any trust,
express, implied or constructive, or of any charge, pledge or equity to
which any of the Shares or any interest therein is subject, or to
ascertain or inquire whether any sale or transfer of any such Shares or
interest therein by any such Shareholder or his personal representatives
is authorized by such trust, charge, pledge or equity, or to recognize
any Person as having any interest therein except the Persons recorded as
such Shareholders. The receipt of the Person in whose name any Share is
recorded, or, if such Share of any one of such Persons or of the duly
authorized agent of any such Person shall be a sufficient discharge for
all money, Securities and other property payable, issuable or deliverable
in respect of such Share and from all liability to see to the proper
application thereof.
7.6 Notices. Any and all notices to which Shareholders
hereunder may be entitled and any and all communications shall be deemed
duly served or given if mailed, postage prepaid, addressed to
Shareholders of record at their last known post office addresses as
recorded on the Share register provided for in Section 7.1 hereof.
ARTICLE VIII
SHAREHOLDERS
8.1 Meetings of Shareholders.
(a) Annual Meetings. Annual meetings of the
Shareholders shall be held, commencing within six months after the
completion of the Trust s first fiscal year, at such place within or
without the Commonwealth of Massachusetts on such day and at such time as
the Trustees shall designate. The business transacted at such meeting
shall include the election of Trustees and may include the transaction of
such other business as Shareholders may be entitled to vote upon as
hereinafter provided in this Article VIII, or as the Trustees may
determine.
(b) Special Meetings. Special meetings of the
Shareholders may be called at any time by a majority of the Trustees and
shall be called by any Trustee upon written request of Shareholders
holding in the aggregate not less than 10% of the outstanding Shares
having voting rights, such request specifying the purpose or purposes for
which such meeting is to be called. Any such meeting shall be held
within or without the Commonwealth of Massachusetts on such day and at
such time as the Trustees shall designate.
8.2 Quorums. The holders of a majority of outstanding
Shares present in person or by proxy shall constitute a quorum at any
annual or special meeting.
8.3 Notice of Meetings. Notice of all meetings of the
Shareholders, stating the time, place and purposes of the meeting, shall
be given by the Trustees by mail to each Shareholder at his registered
address, mailed at least 10 days and not more than 60 days before the
meeting. Only the business specifically stated in the notice of the
meeting shall be considered at such meeting, unless the notice of meeting
provides otherwise. Any adjourned meeting may be held as adjourned
without further notice.
8.4 Record Date for Meetings. For the purpose of
determining the Shareholders who are entitled to vote or act at any
meeting or any adjournment thereof, or who are entitled to participate in
any dividend or distribution, or for the purpose of any other action, the
Trustees may from time to time close the transfer books for such period,
not exceeding 30 days, as the trustees may determine; or without closing
the transfer books the Trustees may fix a date not more than 60 days
prior to the date of any meeting of Shareholders or other action as a
record date for the determination of Shareholders entitled to vote at
such meeting or any adjournment thereof or to be treated as Shareholders
of record for purposes of such other action, except for dividend payments
which shall be governed by Section 10.1, and any Shareholder who was a
Shareholder at the time so fixed shall be entitled to vote at such
meeting or any adjournment thereof, even though he has since that date
disposed of his Shares, and no Shareholder becoming such after that date
shall be so entitled to vote at such meeting or any adjournment thereof
or to be treated as a Shareholder of record for purposes of such other
action.
8.5 Proxies, etc. At any meeting of Shareholders, any
holder of Shares entitled to vote thereat may vote by proxy, provided
that no proxy shall be voted at any meeting unless it shall have been
placed on file with the Secretary, or with such other officer or agent of
the Trust as the Secretary may direct, for verification prior to the time
at which such vote shall be taken. Pursuant to a resolution of a
majority of the Trustees, proxies may be solicited in the name of one or
more Trustees or one or more of the officers of the Trust. Only
Shareholders of record shall be entitled to vote and each full Share
shall be entitled to one vote and fractional shares shall be entitled to
fractional votes. When any Share is held jointly by several persons, any
one of them may vote at any meeting in person or by proxy in respect of
such Share, but if more than one of them shall be present at such meeting
in person or by proxy, and such joint owners or their proxies so present
disagree as to any vote to be cast, such vote shall not be received in
respect of such Share. A proxy purporting to be executed by or on behalf
of a Shareholder shall be deemed valid unless challenged at or prior to
its exercise, and the burden or proving invalidity shall rest on the
challenger. If the holder of any such Share is a minor or a person of
unsound mind, and subject to guardianship or to the legal control of any
other person as regards the change or management of such Share, he may
vote by his guardian or such other person appointed or having such
control, and such vote may be given in person or by proxy.
8.6 Reports. The Trustees shall cause to be prepared at
least annually a report of operations containing a balance sheet and
statements of income and undistributed income of the Trust prepared in
conformity with generally accepted accounting principles and an opinion
of an independent certified public accountant on such financial
statements based on an examination of the books and records of the Trust,
and made in accordance with generally accepted auditing standards. A
signed copy of such report and opinion shall be filed with the Trustees
within 60 days after the close of the period covered thereby. Copies of
such reports shall be mailed to all Shareholders of record within the
time required by the 1940 Act and in any event within a reasonable period
preceding the annual meeting of Shareholders. The Trustees shall, in
addition, furnish to the Shareholders, at least semi-annually, an interim
report containing an unaudited balance sheet of the Trust as at the end
of such semi-annual period and a statement of income and surplus for the
period from the beginning of the current fiscal year to the end of such
semi-annual period.
8.7 Inspection of Records. The records of the Trust shall
be open to inspection by Shareholders to the same extent as is permitted
shareholders of a Massachusetts business corporation.
8.8 Shareholder Action by Written Consent. Any action
taken by Shareholders may be taken without a meeting if a majority of
Shareholders entitled to vote on the matter (or such larger proportion
thereof as shall be required by any express provision of this Declaration
of Trust) 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.
8.9 Voting Rights of Shareholders. The Shareholders
shall be entitled to vote only upon the following matters: (a) election
of Trustees as provided in Section 9.2 and Section 9.4 hereof; (b)
amendment of this Declaration of Trust or termination of this Trust as
provided in Section 4.4 and Section 13.1 hereof; (c) reorganization of
this Trust as provided in Section 13.2 hereof; (d) agreement with the
Trust s Adviser, or any amendment thereto, to the extent required by
Section 15(a) of the 1940 Act; (e) matters submitted for Shareholder
consideration by the Trustees; and (f) any other matters which require
shareholder action under this Declaration of Trust or under applicable
law. Except with respect to the foregoing matters specified in this
Section 8.9, no action taken by the Shareholders at any meeting shall in
any way bind the Trustees.
ARTICLE IX
TRUSTEES
9.1 Number and Qualification. The number of Trustees
shall be fixed from time to time by written instrument signed by a
majority of the Trustees then in office, provided, however, that the
number of Trustees shall in no event be less than three or more than
fifteen. Subject to the requirements of the 1940 Act and the rules and
regulations promulgated thereunder, any vacancy created by an increase in
Trustees may be filled by the appointment of an individual having the
qualifications described in this Section 9.1 made by a written instrument
signed by a majority of the Trustees then in office. Any such
appointment shall not become effective, however, until the individual
named in the written instrument of appointment shall have accepted in
writing such appointment and agreed in writing to be bound by the terms
of this Declaration of Trust. No reduction in the number of Trustees
shall have the effect of removing any Trustee from office prior to the
expiration of his term. Whenever a vacancy in the number of trustees
shall occur, until such vacancy is filled as provided in Section 9.4
hereof, the Trustees or Trustee continuing in office, regardless of their
number, shall have all the powers granted to the Trustees and shall
discharge all the duties imposed upon the Trustees by this Declaration of
Trust. A Trustee shall be an individual at least 21 years of age who is
not under legal disability. The Trustees, in their capacity as Trustees,
shall not be required to devote their entire time to the business and
affairs of the Trust.
9.2 Terms and Election. Each Trustee named herein, or
elected or appointed as provided in Section 9.1 or 9.4 hereof prior to
the first annual meeting of Shareholders, shall (except in the event of
resignations or removals or vacancies pursuant to Section 9.3 or 9.4
hereof) hold office until his successor has been elected at such meeting
and has qualified to serve as Trustee. Beginning with the Trustees
elected at the first annual meeting of Shareholders, the term of each
Trustee shall expire at the next annual meeting of Shareholders following
the election or appointment of such Trustee and upon the election and
qualification of his successor. Trustees may succeed themselves in
office. Election of Trustees at an annual meeting shall be by the
affirmative vote of the holders of at least a majority of the Shares
entitled to vote present in person or by proxy at such meeting. The
election of any Trustee (other than an individual who was serving as a
Trustee immediately prior to such election) pursuant to this Section 9.2
shall not become effective unless and until such person shall have in
writing accepted his election and agreed to be bound by the terms of this
Declaration of Trust. Trustees may, but need not, own Shares.
9.3 Resignation and Removal. Any Trustee may resign
(without need for prior or subsequent accounting) by an instrument in
writing signed by him and delivered or mailed to the Chairman, the
President of the Secretary (referred to in Section 9.6 hereof) and such
resignation shall be effective upon such delivery, or at a later date
according to the terms of the notice. Any of the Trustees may be removed
(provided the aggregate number of Trustees after such removal shall not
be less than the number required by Section 9.1 hereof) with cause, by
the action of two-thirds of the remaining Trustees. Upon the resignation
or removal of a Trustee, or his otherwise ceasing to be a Trustee, he
shall execute and deliver such documents as the remaining Trustees shall
require for the purpose of conveying to the Trust or the remaining
Trustees any Trust Property held in the name of the resigning or removed
Trustee. Upon the incapacity or death of any Trustee, his legal
representative shall execute and deliver on his behalf such documents as
the remaining Trustees shall require as provided in the preceding
sentence.
9.4 Vacancies. The term of office of a Trustee shall
terminate and a vacancy shall occur in the event of the death,
resignation, bankruptcy, adjudicated incompetence or other incapacity to
exercise the duties of the office, or removal of a Trustee. No such
vacancy shall operate to annul this Declaration of Trust or to revoke any
existing agency created pursuant to the terms of this Declaration of
Trust, and title to any Trust Property held in the name of any Trustee
alone, jointly with one or more of the other Trustees or otherwise,
shall, in the event of the death, resignation, removal, bankruptcy,
adjudicated incompetence or other incapacity to exercise the duties of
the office of such Trustee, vest in the continuing or surviving Trustees
without necessity of any further act or conveyance. In the case of an
existing vacancy (other than by reason of increase in the number of
Trustees) the holders of at lease a majority of the Shares entitled to
vote, acting at any meeting of Shareholders called for the purpose, or
(subject to the requirements of the 1940 Act and the rules and
regulations promulgated thereunder) a majority of the Trustees continuing
in office acting by written instrument or instruments, may fill such
vacancy, and any Trustee so elected by the Trustees shall hold office
until the next annual meeting of Shareholders and until his successor has
been elected and has qualified to serve as Trustee. Upon the
effectiveness of any such appointment as provided in this Section, the
Trust Property shall vest in such new Trustee jointly with the continuing
or surviving Trustees without the necessity of any further act or
conveyance; provided, however, that no such election or appointment as
provided in this Section 9.4 shall become effective unless or until the
new Trustee shall have accepted in writing his appointment and agreed to
be bound by the terms of this Declaration of Trust.
9.5 Meetings. Meetings of the Trustees shall be hold from
time to time upon the call of the Chairman, the President, the Secretary
or any two Trustees. Regular meetings of the Trustees may be held
without call or notice at a time and place fixed by the by-laws or by
resolution of the Trustees. Notice of any other meeting shall be mailed
or otherwise given not less than 48 hours before the meeting but may be
waived in writing by any Trustee either before or after such meeting.
The attendance of a Trustee at a meeting shall constitute a waiver of
notice of such meeting except where a Trustee attends a meeting for the
express purpose of objecting to the transaction of any business on the
ground that the meeting has not been lawfully called or convened. The
Trustees may act with or without a meeting. A quorum for all meetings of
the Trustees shall be a majority of the Trustees. Subject to Section
2.15 hereof and unless specifically provided otherwise in this
Declaration of Trust, any action of the Trustees may be taken at a
meeting by vote of a majority of the Trustees present (a quorum being
present) or without a meeting by written consents of a majority of the
Trustees. Any agreement, or other instrument or writing executed by one
of more of the Trustees or by any authorized Person shall be valid and
binding upon the Trustees and upon the Trust when authorized or ratified
by action of the Trustees as provided in this Declaration of Trust.
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 specifically 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 written consent of a majority of the members.
With respect to actions of the Trustees and
any committee thereof, Trustees who are affiliated within the meaning of
Section 2.15 hereof or otherwise interested in any action to be taken may
be counted for quorum purposes under this Section 9.5 and shall be
entitled to vote to the extent permitted by the 1940 Act.
All or any one or more Trustees may
participate in a meeting of the Trustees or any committee thereof by
utilizing conference, telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each
other and participation in a meeting pursuant to such communications
shall constitute presence in person at such meeting. The minutes of any
meeting of Trustees held by utilizing such communications equipment shall
be prepared in the same manner as a meeting of Trustees held in person.
9.6 Officers. The Trustees shall annually elect a
Chairman from among their number. The Trustees shall annually elect or
appoint, from among their number or otherwise, or may authorize the
Chairman to appoint a President, one or more Vice-Presidents, Treasurer
and Secretary, Comptroller, one or more Assistant Secretaries and
Assistant Treasurers and such other officers or agents, who shall have
such powers, duties and responsibilities as the Trustees may deem to be
advisable. Two or more offices may be held by the same person.
9.7 By-Laws. The Trustees may adopt and from time to
time amend or repeal By-Laws for the conduct of the business of the
Trust, and in such By-Laws may define the duties of the respective
officers, agents, employees and representatives.
ARTICLE X
DISTRIBUTIONS TO SHAREHOLDERS AND
DETERMINATION OF NET ASSET VALUE AND NET INCOME
10.1 General. The Trustees may from time to time declare
and pay to the Shareholders, in proportion to their respective ownership
of Shares, out of net income (including unrealized gains and losses on
the portfolio assets) or surplus (including paid-in capital), capital or
assets in the hands of the Trustees, such dividends or other
distributions as they may determine. The declaration and payment of such
dividends or other distributions and determination of earnings, profits,
surplus (including paid-in capital) and capital available for dividends
and other purposes shall lie wholly in the discretion of the Trustees and
no Shareholder shall be entitled to receive or be paid any dividends or
to receive any distribution except as determined by the Trustees in the
exercise of said discretion. The Trustees may, in addition, from time to
time in their discretion, declare and pay as dividends or other
distributions such additional amounts, whether or not out of earnings,
profits and surplus available therefore, sufficient to enable the Trust
to avoid or reduce its liability for federal income taxes, inasmuch as
the computations of net income and gains for federal income tax purposes
may vary from the computations thereof on the books of the Trust. Any or
all such dividends or other distributions may be made, in whole or in
part, in cash, property, or other assets or obligations of the Trust, as
the Trustees may in their sole discretion from time to time determine.
The Trustees may also distribute to the Shareholders, in proportion to
their respective ownership of Shares, additional Shares issuable
hereunder in such manner and on such terms as they may deem proper. Any
or all such dividends or distributions may be made among the Shareholders
of record at the time of declaring the distribution or among the
Shareholders of record at such later date as the Trustees shall
determine.
10.2 Retained Earnings. The Trustees, except as provided in
Section 10.1 hereof, may always retain from the net profits such amount
as they may deem necessary to pay the debts or expenses of the Trust, to
meet obligations of the Trust, to establish reserves or as they may deem
desirable to use in the conduct of its affairs or to retain for future
requirements or extensions of the business of the Trust.
10.3 Source of Distributions. To the extent required by
the 1940 Act and the rules and regulations promulgated thereunder,
distributions to Shareholders shall be accompanied by a statement in
writing advising the Shareholders of the source of the funds so
distributed so that distributions of ordinary income, return of capital,
and capital gains income will be clearly distinguished.
10.4 New Asset Value. The net asset value of each
outstanding Share of the Trust shall be determined once on each business
day, as of the close of trading on the New York Stock Exchange or at any
other time as the Trustees by resolution may determine and which is in
compliance with the 1940 Act. The method of determination of net asset
value shall be determined by the Trustees and shall be set forth in the
Prospectus. The power and duty to make the daily calculations may be
delegated by the Trustees to the Adviser, the Custodian, the Transfer
Agent, the Distributor or such other person as the Trustees by resolution
may determine. The Trustees may suspend the daily determination of net
asset value to the extent permitted by the 1940 Act.
10.5 Constant Net Asset Value: Reduction of Outstanding
Shares. The Trustees shall have the power to determine the net income
(including unrealized gains and losses on the portfolio assets) of the
Trust once on each business day and at each such determination declare
such net income as dividends with the result that net asset value per
share of the Trust shall remain at a constant dollar amount. The
determination of net income and the resultant declaration of dividends
shall be set forth in the Prospectus of the Trust currently effective
under the Securities Act of 1933, as amended. Fluctuations in value will
be reflected in the number of outstanding Shares in each Shareholder s
account. If there is a net loss, the Trust will first offset such amount
against dividends accrued during the month in each Shareholder account.
To the extent that such a net loss would exceed such accrued dividends,
the Trust will reduce the number of its outstanding Shares in an amount
equal to the amount by which the net loss exceeds accrued dividends by
having each Shareholder contribute to the Trust s capital his pro rata
portion of the total number of shares required to be canceled in order to
permit the net asset value per share of the Trust to be maintained at a
constant dollar amount. Each Shareholder will be deemed to have agreed
to such contribution in these circumstances by his investment in the
Trust. The purpose of the foregoing procedure is to permit the net asset
value per share of the Trust to be maintained at a constant dollar amount
per share.
The Trustees, by resolutions, may discontinue or amend the
practice of maintaining the net asset value per share at a constant
dollar amount at any time and such modification shall be evidenced by
appropriate changes in the Prospectus.
10.6 Power to Modify Foregoing Procedures.
Notwithstanding any of the foregoing provisions of this Article X, the
Trustees may prescribe, in their absolute discretion, such other basses
and times for determining the per share net asset value of the Trust s
Shares or net income, or the declaration and payment of dividends and
distributions as they may deem necessary or desirable to enable the Trust
to comply with any provision of the 1940 Act, or any rule or regulation
thereunder, including any rule or regulation adopted pursuant to Section
22 of the 1940 Act by the Commission or any securities association
registered under the Securities Exchange Act of 1934, or any order of
exemption issued by said Commission, all as in effect now or as hereafter
amended or modified.
ARTICLE XI
CUSTODIAN
11.1 Appointment and Duties. The Trustees shall at all times
employ a bank or trust company organized under the laws of the United
States of America or one of the several states thereof having capital,
surplus and undivided profits of at lease two million dollars
($2,000,000) as Custodian with authority as its agent, but subject to
such restrictions, limitations and other requirements, if any, as may be
contained in the By-Laws of the Trust and the 1940 Act:
(a) to hold the securities owned by the Trust and deliver
the same upon written order;
(b) to receive and receipt for any monies due to the Trust
and deposit the same in its own banking department or elsewhere as the
Trustees may direct;
(c) to disburse such finds upon orders or vouchers; and may
also employ such Custodian as its agent;
(d) if authorized by the Trustees, to keep the books and
accounts of the Trust and furnish clerical and accounting services;
(e) if authorized to do so by the Trustees, to compute the
net income of the Trust;
all upon such basis of compensation as may be agreed upon between the
Trustees and the Custodian.
The Trustees may also authorize the Custodian to employ one
or more Sub-Custodians from time to time to perform such of the acts and
services of the Custodian and upon such terms and conditions, as may be
agreed upon between the Custodian and such Sub-Custodian and approved by
the Trustees, provided that in every case such Sub-Custodian shall be a
bank or trust company organized under the laws of the United States of
America or one of the several states thereof and having capital, surplus
and undivided profits of at lease two million dollars ($2,000,000).
11.2 Central Certificate System. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may
direct the Custodian to deposit all or any part of the Securities owned
by the trust in a system for the central handling of Securities
established by a national securities exchange or a national securities
association registered with the Commission under the Securities Exchange
Act of 1934, or such other person as may be permitted by the Commission,
or otherwise in accordance with the 1940 Act or similar system maintained
by the Federal Reserve System, pursuant to which system (s) all
securities of any particular class or series of any issuer deposited
within the system are treated as fungible and may be transferred or
pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to
withdrawal only upon the order of the Trust.
ARTICLE XII
RECORDING OF DECLARATION OF TRUST
12.1 Recording. This Declaration of Trust and any amendment
hereto shall be filed in the office of the Secretary of the Commonwealth
of Massachusetts and may also be filed or recorded in such other places
as the Trustees deem appropriate. Each amendment so filed shall be
accompanied by a certificate signed and acknowledged by a Trustee stating
that such action was duly taken in a manner provided herein; and unless
such amendment or such certificate filed with the Secretary of the
Commonwealth of Massachusetts set forth some earlier or later time for
the effectiveness of such amendment, such amendment shall be effective
upon its filing with the Secretary of said Commonwealth. An amended
Declaration, containing the original Declaration and all amendments
theretofore made, may be executed any time or from time to time by a
majority of the Trustees and shall, upon filing with the Secretary of the
Commonwealth of Massachusetts, be conclusive evidence of all amendments
contained therein and may thereafter be referred to in lieu of the
original Declaration and the various amendments thereto.
ARTICLE XIII
AMENDMENT OR TERMINATION OF TRUST
13.1 Amendment or Termination. The provisions of this
Declaration of Trust may be amended or altered (except as to the
limitations on personal liability of the Shareholders and Trustees and
the prohibition of assessments upon Shareholders), or the Trust may be
terminated, at any meeting of Shareholders called for the purpose, by the
affirmative vote of the holders of a majority of the Shares then
outstanding and entitled to vote, or by an instrument or instruments in
writing, without a meeting, signed by a majority of the Trustees and the
holders of a majority of such Shares; provided, however, that the
Trustees may, from time to time by a two-thirds vote of the Trustees, and
after 15 days prior written notice to the Shareholders, amend or alter
the provisions of this Declaration of Trust, without the vote or assent
of the Shareholders, to the extent deemed by the Trustees in good faith
to be necessary to conform this Declaration to the requirements of the
regulated investment company provisions of the Internal Revenue Code or
the requirements of applicable federal laws or regulations or any
interpretation thereof by a court or other governmental agency of
competent jurisdiction but the Trustees shall not be liable for failing
so to do. Notwithstanding the foregoing, (I) no amendment may be made
pursuant to this Section 13.1 which would change any rights with respect
to any outstanding Shares of the Trust by reducing the amount payable
thereon upon liquidation of the Trust or by diminishing or eliminating
any voting rights pertaining thereto, except with the vote or written
consent of the holders of two-thirds (2/3) of the outstanding Shares
entitled to vote thereon; and (ii) no amendment may be made with respect
to the investment restrictions contained in Section 4.2 hereof without
the affirmative vote of the holders of a majority (as defined in the 1940
Act) of the Shares. Upon the termination of the Trust pursuant to this
Section 13.1:
(a) The Trust shall carry on no business except for the
purpose of winding up its affairs.
(b) The Trustees shall proceed to wind up the affairs of
the Trust and all of the powers of the Trustees under this Declaration of
Trust shall continue until the affairs of the Trust shall have been wound
up, including the power to fulfill or discharge the contracts of the
Trust, collect its assets, sell, convey, assign, exchange, transfer or
otherwise dispose of all or any part of the remaining Trust Property to
one or more persons at public or private sale for consideration which may
consist in whole or in part of cash, securities or other property of any
kind, discharge or pay its liabilities, and do all other acts appropriate
to liquidate its business; provided that any sale, conveyance,
assignment, exchange, transfer or other disposition of all or
substantially all of the Trust Property shall require approval of the
principal terms of the transaction and the nature and amount of the
consideration by affirmative vote of not less than a majority of all
outstanding Shares entitled to vote.
(c) After paying or adequately providing for the payment of
all liabilities, and upon receipt of such releases, indemnities and
refunding agreements, as they deem necessary for their protection, the
Trustees may distribute the remaining Trust Property, in cash or in kind
or partly of each, among the Shareholders according to their respective
rights.
Upon termination of the Trust and distribution to the
Shareholders as herein provided, a majority of the Trustees shall execute
and lodge among the records of the Trust an instrument in writing setting
forth the fact of such termination, and the Trustees shall thereupon be
discharged from all further liabilities and duties hereunder, and the
right, title and interest of all Shareholders shall cease and be canceled
and discharged.
A certification in recordable form signed by a majority of
the Trustees setting forth an amendment and reciting that it was duly
adopted by the Shareholders or by the Trustees as aforesaid or a copy of
the Declaration, as amended, in recordable form, and executed by a
majority of the Trustees, shall be conclusive evidence of such amendment
when lodged among the records of the Trust.
Notwithstanding any other provision hereof, until such time
as a Registration Statement under the Securities Act of 1933, as amended,
covering the first public offering of Shares 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 or by an instrument
signed by a majority of the Trustees
13.2 Power to Effect Reorganization. The Trustees, by
vote or written approval of a majority of the Trustees, may select or
direct the organization of a corporation, association, trust or other
organization with which the Trust may merge, or which shall take over the
Trust Property and carry on the affairs of the Trust, and after receiving
an affirmative vote of not less than a majority of the outstanding Shares
entitled to vote at any meeting of Shareholders, the notice for which
included a statement of such proposed action, the Trustees may effect
such merger or may sell, convey and transfer the Trust Property to any
such corporation, association, trust or organization in exchange for cash
or shares or securities thereof, or beneficial interest therein with the
assumption by such transferee of the liabilities of the Trust; and
thereupon the Trustees shall terminate the Trust and deliver such cash,
shares, securities or beneficial interest ratably among the Shareholders
of this Trust in redemption of their Shares.
ARTICLE XIV
MISCELLANEOUS
14.1 Governing Law. This Declaration of Trust is executed
by the Trustees and delivered in the Commonwealth of Massachusetts and
with reference to the laws thereof, and the rights of all parties and the
validity, construction and effect of every provision hereof shall be
subject to and construed according to the laws of said Commonwealth and
reference shall be specifically made to the Business Corporation Law of
the Commonwealth of Massachusetts as to the construction of matters not
specifically covered herein or as to which an ambiguity exists.
14.2 Counterparts. This Declaration of Trust may be
simultaneously executed in several counterparts, each of which so
executed shall be deemed to be an original, and such counterparts,
together, shall constitute but one and the same instrument, which shall
be sufficiently evidenced by any such original counterpart.
14.3 Reliance by Third Parties. Any certificate executed
by an individual who, according to the records of the Trust, or of any
recording office in which this Declaration may be recorded, appears to be
a Trustee hereunder, certifying to: (a) the number or identity of
Trustees or Shareholders, (b) the due authorization of the execution of
any instrument or writing, (c) the form of any vote passed at a meeting
of Trustees or Shareholders, (d) the fact that the number of Trustees or
Shareholders present at any meeting or executing any written instrument
satisfies the requirements of this Declaration of Trust, (e) the form of
any By-Law adopted by or the identity of any officers elected by the
Trustees, or (f) the existence of any fact or facts which in any manner
relate to the affairs of the Trust, shall be conclusive evidence as to
the matters so certified in favor of any person dealing with the Trustees
or any of them and the successors of such person.
14.4 Provisions in Conflict with Law or Regulations.
(a) The provisions of this Declaration of Trust are
severable, and if the Trustees shall determine, with the advice of
counsel, that any one or more of such provisions (the Conflicting
Provisions ) are in conflict with the regulated investment company
provisions of the Internal Revenue Code or with other applicable federal
or state laws and regulations, the Conflicting Provisions shall be deemed
never to have constituted a part of this Declaration of Trust; provided,
however, that such determination by the Trustees shall not affect or
impair any of the remaining provisions of this Declaration of Trust or
render invalid or improper any action taken or omitted (including, but
not limited to, the election of Trustees) prior to such determination.
(b) If any provisions 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 or render invalid or
unenforceable such provision in any other jurisdiction or any other
provision of this Declaration of Trust in any jurisdiction.
14.5 Section Headings. Section headings have been inserted
for convenience only and are not a part of this Declaration of Trust.
ARTICLE XV
DURATION OF TRUST
15.1 Duration. Subject to possible termination in
accordance with the provisions of Article XIII hereof, the Trust created
hereby shall continue until the expiration of 20 years after the death of
the last survivor of the following named persons:
Name Address
- ---- -------
Thomas Bradley Miles 440 Canoe Hill Rd. December 18, 1964
New Canaan, CT.
Shawn McCoy Miles 440 Canoe Hill Rd. March 11, 1962
New Canaan, CT.
Ann Marie Summer 13 Esther DePew St. November 19, 1960
Staten Island, NY
Joseph Edward Summer 13 Esther DePew St. November 19, 1960
Staten Island, NY
Karen Elizabeth Summer 13 Esther DePew St. February 16, 1963
Staten Island, NY
Paul Terrance Summer 13 Esther DePew St. December 15, 1965
Staten Island, NY
Jean Ellen Summer 13 Esther DePew St. September 10, 1968
Staten Island, NY
Theresa Joan Summer 13 Esther DePew St. November 19, 1970
Staten Island, NY
John Thomas Summer 13 Esther DePew St. February 2, 1973
Staten Island, NY
Robert Martin Callagy 14 Ridgewood Drive September 25, 1975
Rye, New York
Susan Elizabeth Callagy 14 Ridgewood Drive April 7, 1966
Rye, New York
Sara Alicia Callagy 14 Ridgewood Drive April 3, 1970
Rye, New York
Anne Heather Losey 102 Seven Bridges Rd April 24, 1976
Chappaqua, NY
Jason George Pinkernell 3 Alden Road August 6, 1972
Chappaqua, NY
Tyler Peter Pinkernell 3 Alden Road April 6, 1976
Chappaqua, NY
IN WITNESS WHEREOF, the undersigned have caused these
presents to be executed as of the day and year first above written.
_______________________________
Joseph E. Miles
_______________________________
Charles E. Schneider
_______________________________
Gordon C. Griswold
_______________________________
Paul D. Foote
_______________________________
Gerard van Amerongen
LEXINGTON MONEY MARKET TRUST
Investment Advisory Agreement
AGREEMENT made as of March 21, 1979 between LEXINGTON MONEY MARKET
TRUST, a Massachusetts business trust, with its principal offices at 476
Hudson Terrace, Englewood Cliffs, New Jersey (hereinafter referred to as
the Fund) and LEXINGTON MANAGEMENT CORPORATION, a Delaware corporation,
having an office at 476 Hudson Terrace, Englewood Cliffs, New Jersey
(hereinafter referred to as the Adviser). In consideration of the mutual
agreements herein made the Fund the Adviser understand and agree as
follows:
1. The Adviser shall furnish the Fund with investment research and
advice for the assets of the Fund consistent with the investment policies
set forth in the prospectus of the Fund, as may be current from time to
time, and subject to any specific instruction by the Fund s Board of
Trustees. These services shall include the continuous review of the
portfolio security holdings, the investment program and the investment
policies of the Fund and the making of specific recommendations as to the
purchase and sale of particular portfolio securities.
2. The Fund shall pay to the Adviser, as compensation for all
services rendered hereunder, a fee at the annual rate of 5/10ths of 1% of
the total net assets of the Fund, payable at the end of each month on the
basis of current net asset value at the end of each business day; provided,
however, that such fee shall be reduced with respect to any fiscal year by
the amount that all of the Fund s aggregate expenses for such year,
exclusive of taxes and interest, exceed 1% of the Fund s average net asset
value, calculated daily, during such year. If the total net assets of the
Fund shall exceed $500,000,000 at the end of any business day, the rate of
investment advisory fee payable as to such day shall be at the annual rate
of 9/20ths of 1% of net assets.
3. In addition to providing the investment advisory services
described in paragraph 1, the Adviser shall, during the term of this
Agreement, directly pay:
(a) Fund expense for office rent, utilities, telephone,
furniture and supplies utilized at the Fund s employees
principal office; and
(b) Salaries and payroll expenses of persons serving
as officers or trustees of the Fund who are also employees of
the adviser or any of its affiliates.
Except as specifically provided herein, or as otherwise required by law,
regulation or other agreement, the Fund and the Adviser shall each bear all
of their respective expenses.
4. This Agreement shall remain in full force and effect until two
years from the date hereof and thereafter from year to year to the extent
that such continuance is approved annually by a majority of the Board of
Trustees of the Fund, including a majority of the members of the Board of
Trustees who are not parties to the Agreement or interested persons of any
such party.
5. This Agreement may be terminated without payment of penalty at
any time by either party on sixty days written notice one to the other.
6. The Adviser and its officers and directors shall not effect
short sales of shares of capital shares of the Fund nor take long or short
positions in such shares, except for purchases of such shares for
investment.
7. This Agreement shall be automatically terminated in the event
of its assignment (as defined by the Investment Company Act of 1940) by the
Adviser and shall not be assignable by the Fund except with the written
consent of the Adviser.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers and their respective seals
hereunto affixed and attested.
LEXINGTON MONEY MARKET TRUST
[SEAL]
ATTEST:
___________________________________ BY__________________________________
LEXINGTON MANAGEMENT CORPORATION
[SEAL]
ATTEST:
___________________________________ BY__________________________________
TRANSFER AGENCY AND SERVICE AGREEMENT
between
LEXINGTON MONEY MARKET TRUST
and
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
Article 1 Terms of Appointment; Duties of the Bank
Article 2 Fees and Expenses
Article 3 Representations and Warranties of the Bank
Article 4 Representations and Warranties of the Fund
Article 5 Data Access and Proprietary Information
Article 6 Indemnification
Article 7 Standard of Care
Article 8 Covenants of the Fund and the Bank
Article 9 Termination of Agreement
Article 10 Assignment
Article 11 Amendment
Article 12 Massachusetts Law to Apply
Article 13 Force Majeure
Article 14 Consequential Damages
Article 15 Merger of Agreement
Article 16 Counterparts
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the ___ day of ___________, 19__, by and between
Lexington Money Market Trust, a business trust, having its principal
office and place of business at Park 80 West Plaza Two, Saddle Brook, New
Jersey 07663, (the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company having its principal office and place of
business at 225 Franklin Street, Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Fund desires to appoint the Bank as its transfer agent,
dividend disbursing agent, custodian of certain retirement plans and agent in
connection with certain other activities, and the Bank desires to accept such
appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
Article l Terms of Appointment; Duties of the Bank
1.01 Subject to the terms and conditions set forth in
this Agreement, the Fund hereby employs and appoints the Bank to act as, and
the Bank agrees to act as its transfer agent for the Fund's authorized and
issued shares of its common stock, $____ par value, ("Shares"), dividend
disbursing agent, custodian of certain retirement plans and agent in
connection with any accumulation, open-account or similar plans provided to
the shareholders of the Fund ("Shareholders") and set out in the currently
effective prospectus and statement of additional information ("prospectus")
of the Fund, including without limitation any periodic investment plan or
periodic withdrawal program.
1.02 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Fund and the Bank, the Bank shall:
(i) Receive for acceptance, orders for the purchase of Shares,
and promptly deliver payment and appropriate documentation
thereof to the Custodian of the Fund authorized pursuant to
the Declaration of Trust of the Fund (the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder
account;
(iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof
to the Custodian;
(iv) In respect to the transactions in items (i), (ii) and (iii)
above, the Bank shall execute transactions directly with
broker-dealers authorized by the Fund who shall thereby be
deemed to be acting on behalf of the Fund;
(v) At the appropriate time as and when it receives monies
paid to it by the Custodian with respect to any redemption, pay
over or cause to be paid over in the appropriate manner such
monies as instructed by the redeeming Shareholders;
(vi) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(vii) Prepare and transmit payments for dividends and distributions
declared by the Fund;
(viii)Issue replacement certificates for those certificates
alleged to have been lost, stolen or destroyed upon receipt
by the Bank of indemnification satisfactory to the Bank and
protecting the Bank and the Fund, and the Bank at its option,
may issue replacement certificates in place of mutilated
stock certificates upon presentation thereof and without such
indemnity;
(ix) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(x) Record the issuance of shares of the Fund and maintain
pursuant to SEC Rule 17Ad-10(e) a record of the total number
of shares of the Fund which are authorized, based upon data
provided to it by the Fund, and issued and outstanding. The
Bank shall also provide the Fund on a regular basis with the
total number of shares which are authorized and issued and
outstanding and shall have no obligation, when recording the
issuance of shares, to monitor the issuance of such shares or
to take cognizance of any laws relating to the issue or sale
of such shares, which functions shall be the sole
responsibility of the Fund.
(b) In addition to and neither in lieu nor in contravention of
the services set forth in the above paragraph (a), the Bank shall:
(i) perform the customary services of a transfer agent, dividend disbursing
agent, custodian of certain retirement plans and, as relevant, agent in
connection with accumulation, open-account or similar plans (including
without limitation any periodic investment plan or periodic withdrawal
program), including but not limited to: maintaining all Shareholder
accounts, preparing Shareholder meeting lists, mailing proxies, mailing
Shareholder reports and prospectuses to current Shareholders, withholding
taxes on U.S. resident and non-resident alien accounts, preparing and filing
U.S. Treasury Department Forms 1099 and other appropriate forms required with
respect to dividends and distributions by federal authorities for all
Shareholders, preparing and mailing confirmation forms and statements of
account to Shareholders for all purchases and redemptions of Shares and other
confirmable transactions in Shareholder accounts, preparing and mailing
activity statements for Shareholders, and providing Shareholder account
information and (ii) provide a system which will enable the Fund to monitor
the total number of Shares sold in each State.
(c) In addition, the Fund shall (i) identify to the Bank in
writing those transactions and assets to be treated as exempt from blue sky
reporting for each State and (ii) verify the establishment of transactions
for each State on the system prior to activation and thereafter monitor the
daily activity for each State. The responsibility of the Bank for the Fund's
blue sky State registration status is solely limited to the initial
establishment of transactions subject to blue sky compliance by the Fund and
the reporting of such transactions to the Fund as provided above.
(d) Procedures as to who shall provide certain of these services
in Article 1 may be established from time to time by agreement between the
Fund and the Bank per the attached service responsibility schedule. The Bank
may at times perform only a portion of these services and the Fund or its
agent may perform these services on the Fund's behalf.
(e) The Bank shall provide additional services on behalf of the
Fund (i.e., escheatment services) which may be agreed upon in writing between
the Fund and the Bank.
Article 2 Fees and Expenses
2.01 For the performance by the Bank pursuant to this
Agreement, the Fund agrees to pay the Bank an annual maintenance fee for each
Shareholder account as set out in the initial fee schedule attached hereto.
Such fees and out-of-pocket expenses and advances identified under Section
2.02 below may be changed from time to time subject to mutual written
agreement between the Fund and the Bank.
2.02 In addition to the fee paid under Section 2.01 above, the
Fund agrees to reimburse the Bank for out-of-pocket expenses, including but
not limited to confirmation production, postage, forms, telephone, microfilm,
microfiche, tabulating proxies, records storage, or advances incurred by the
Bank for the items set out in the fee schedule attached hereto. In addition,
any other expenses incurred by the Bank at the request or with the consent of
the Fund, will be reimbursed by the Fund.
2.03 The Fund agrees to pay all fees and reimbursable expenses
within five days following the receipt of the respective billing notice.
Postage for mailing of dividends, proxies, Fund reports and other mailings to
all shareholder accounts shall be advanced to the Bank by the Fund at least
seven (7) days prior to the mailing date of such materials.
Article 3 Representations and Warranties of the Bank
The Bank represents and warrants to the Fund that:
3.01 It is a trust company duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in the
Commonwealth of Massachusetts.
3.03 It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations
under this Agreement.
Article 4 Representations and Warranties of the Fund
The Fund represents and warrants to the Bank that:
4.01 It is a business trust duly organized and existing and in
good standing under the laws of Massachusetts.
4.02 It is empowered under applicable laws and by its Declaration
of Trust and By-Laws to enter into and perform this Agreement.
4.03 All corporate proceedings required by said Declaration of
Trust and By-Laws have been taken to authorize it to enter into and perform
this Agreement.
4.04 It is an open-end and diversified management investment
company registered under the Investment Company Act of 1940, as amended.
4.05 A registration statement under the Securities Act of 1933, as
amended is currently effective and will remain effective, and appropriate
state securities law filings have been made and will continue to be made,
with respect to all Shares of the Fund being offered for sale.
Article 5 Data Access and Proprietary Information
5.01 The Fund acknowledges that the data bases,
computer programs, screen formats, report formats, interactive design
techniques, and documentation manuals furnished to the Fund by the Bank as
part of the Fund's ability to access certain Fund-related data ("Customer
Data") maintained by the Bank on data bases under the control and ownership
of the Bank or other third party ("Data Access Services") constitute
copyrighted, trade secret, or other proprietary information (collectively,
"Proprietary Information") of substantial value to the Bank or other third
party. In no event shall Proprietary Information be deemed Customer Data.
The Fund agrees to treat all Proprietary Information as proprietary to the
Bank and further agrees that it shall not divulge any Proprietary Information
to any person or organization except as may be provided hereunder. Without
limiting the foregoing, the Fund agrees for itself and its employees and
agents:
(a) to access Customer Data solely from locations as may be
designated in writing by the Bank and solely in accordance
with the Bank's applicable user documentation;
(b) to refrain from copying or duplicating in any way the
Proprietary Information;
(c) to refrain from obtaining unauthorized access to any portion
of the Proprietary Information, and if such access is
inadvertently obtained, to inform in a timely manner of such
fact and dispose of such information in accordance with the
Bank's instructions;
(d) to refrain from causing or allowing third-party data acquired
hereunder from being retransmitted to any other computer
facility or other location, except with the prior written
consent of the Bank;
(e) that the Fund shall have access only to those authorized
transactions agreed upon by the parties;
(f) to honor all reasonable written requests made by the Bank to
protect at the Bank's expense the
rights of the Bank in Proprietary Information at common law,
under federal copyright law and under other federal or state
law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Article 5. The obligations of this Article
shall survive any earlier termination of this Agreement.
5.02 If the Fund notifies the Bank that any of the Data Access
Services do not operate in material compliance with the most recently issued
user documentation for such services, the Bank shall endeavor in a timely
manner to correct such failure. Organizations from which the Bank may obtain
certain data included in the Data Access Services are solely responsible for
the contents of such data and the Fund agrees to make no claim against the
Bank arising out of the contents of such third-party data, including, but not
limited to, the accuracy thereof. DATA ACCESS SERVICES AND ALL COMPUTER
PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH ARE
PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS ALL
WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED
TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
5.03 If the transactions available to the Fund include
the ability to originate electronic instructions to the Bank in order to (i)
effect the transfer or movement of cash or Shares or (ii) transmit Shareholder
information or other information (such transactions constituting a "COEFI"),
then in such event the Bank shall be entitled to rely on the validity and
authenticity of such instruction without undertaking any further inquiry as
long as such instruction is undertaken in conformity with security procedures
established by the Bank from time to time.
Article 6 Indemnification
6.01 The Bank shall not be responsible for, and the
Fund shall indemnify and hold the Bank harmless from and against, any and all
losses, damages, costs, charges, counsel fees, payments, expenses and
liability arising out of or attributable to:
(a) All actions of the Bank or its agent or subcontractors
required to be taken pursuant to this Agreement, provided that such actions
are taken in good faith and without negligence or willful misconduct.
(b) The Fund's lack of good faith, negligence or willful
misconduct which arise out of the breach of any representation or warranty of
the Fund hereunder.
(c) The reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or services which (i) are
received by the Bank or its agents or subcontractors, and (ii) have been
prepared, maintained or performed by the Fund or any other person or firm on
behalf of the Fund including but not limited to any previous transfer agent
or registrar.
(d) The reliance on, or the carrying out by the Bank or its agents
or subcontractors of any instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state or in
violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state.
6.02 At any time the Bank may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by the Bank under this
Agreement, and the Bank and its agents or subcontractors shall not be liable
and shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. The
Bank, its agents and subcontractors shall be protected and indemnified in
acting upon any paper or document furnished by or on behalf of the Fund,
reasonably believed to be genuine and to have been signed by the proper
person or persons, or upon any instruction, information, data, records or
documents provided the Bank or its agents or subcontractors by machine
readable input, telex, CRT data entry or other similar means authorized by
the Fund, and shall not be held to have notice of any change of authority of
any person, until receipt of written notice thereof from the Fund. The Bank,
its agents and subcontractors shall also be protected and indemnified in
recognizing stock certificates which are reasonably believed to bear the
proper manual or facsimile signatures of the officers of the Fund, and the
proper countersignature of any former transfer agent or former registrar, or
of a co-transfer agent or co-registrar.
6.03 In order that the indemnification provisions
contained in this Article 6 shall apply, upon the assertion of a claim for
which the Fund may be required to indemnify the Bank, the Bank shall promptly
notify the Fund of such assertion, and shall keep the Fund advised with
respect to all developments concerning such claim. The Fund shall have the
option to participate with the Bank in the defense of such claim or to defend
against said claim in its own name or in the name of the Bank. The Bank
shall in no case confess any claim or make any compromise in any case in
which the Fund may be required to indemnify the Bank except with the Fund's
prior written consent.
Article 7 Standard of Care
7.01 The Bank shall at all times act in good faith and
agrees to use its best efforts within reasonable limits to insure the
accuracy of all services performed under this Agreement, but assumes no
responsibility and shall not be liable for loss or damage due to errors
unless said errors are caused by its negligence, bad faith, or willful
misconduct of that of its employees.
Article 8 Covenants of the Fund and the Bank
8.01 The Fund shall promptly furnish to the Bank the following:
(a) A certified copy of the resolution of the Board of Directors
of the Fund authorizing the appointment of the Bank and the execution and
delivery of this Agreement.
(b) A copy of the Declaration of Trust and By-Laws of the Fund
and all amendments thereto.
8.02 The Bank hereby agrees to establish and maintain facilities
and procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of such certificates,
forms and devices.
8.03 The Bank shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as
amended, and the Rules thereunder, the Bank agrees that all such records
prepared or maintained by the Bank relating to the services to be performed
by the Bank hereunder are the property of the Fund and will be preserved,
maintained and made available in accordance with such Section and Rules, and
will be surrendered promptly to the Fund on and in accordance with its
request.
8.04 The Bank and the Fund agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed
to any other person, except as may be required by law.
8.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Bank will endeavor to notify the Fund
and to secure instructions from an authorized officer of the Fund as to such
inspection. The Bank reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be
held liable for the failure to exhibit the Shareholder records to such person.
Article 9 Termination of Agreement
9.01 This Agreement may be terminated by either party
upon one hundred twenty (120) days written notice to the other.
9.02 Should the Fund exercise its right to terminate,
all out-of-pocket expenses associated with the movement of records and
material will be borne by the Fund. Additionally, the Bank reserves the
right to charge for any other reasonable expenses associated with such
termination and/or a charge equivalent to the average of three (3) months'
fees.
Article 10 Assignment
10.01 Except as provided in Section 10.03 below, neither
this Agreement nor any rights or obligations hereunder may be assigned by
either party without the written consent of the other party.
10.02 This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.
10.03 The Bank may, without further consent on the part of the
Fund, subcontract for the performance hereof with (i) Boston Financial Data
Services, Inc., a Massachusetts corporation ("BFDS") which is duly registered
as a transfer agent pursuant to Section 17A(c)(1) of the Securities Exchange
Act of 1934, as amended ("Section 17A(c)(1)"), (ii) a BFDS subsidiary duly
registered as a transfer agent pursuant to Section 17A(c)(1) or (iii) a BFDS
affiliate; provided, however, that the Bank shall be as fully responsible to
the Fund for the acts and omissions of any subcontractor as it is for its own
acts and omissions.
Article 11 Amendment
11.01 This Agreement may be amended or modified by a
written agreement executed by both parties and authorized or approved by a
resolution of the Board of Directors of the Fund.
Article 12 Massachusetts Law to Apply
12.01 This Agreement shall be construed and the
provisions thereof interpreted under and in accordance with the laws of the
Commonwealth of Massachusetts.
Article 13 Force Majeure
13.01 In the event either party is unable to perform its
obligations under the terms of this Agreement because of acts of God,
strikes, equipment or transmission failure or damage reasonably beyond its
control, or other causes reasonably beyond its control, such party shall not
be liable for damages to the other for any damages resulting from such
failure to perform or otherwise from such causes.
Article 14 Consequential Damages
14.01 Neither party to this Agreement shall be liable to
the other party for consequential damages under any provision of this
Agreement or for any consequential damages arising out of any act or failure
to act hereunder.
Article 15 Merger of Agreement
15.01 This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with respect to
the subject matter hereof whether oral or written.
Article 16 Counterparts
16.01 This Agreement may be executed by the parties
hereto on any number of counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.
LEXINGTON MONEY MARKET TRUST
BY:
___________________________________
Vice President
ATTEST:
_________________________________
STATE STREET BANK AND TRUST COMPANY
BY:
____________________________________
Senior Vice President
ATTEST:
___________________________________
STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES*
Service Performed Responsibility
----------------- --------------
Bank Fund
---- ----
1. Receives orders for the purchase
of Shares.
2. Issue Shares and hold Shares in
Shareholders accounts.
3. Receive redemption requests.
4. Effect transactions 1-3 above
directly with broker-dealers.
5. Pay over monies to redeeming
Shareholders.
6. Effect transfers of Shares.
7. Prepare and transmit dividends
and distributions.
8. Issue Replacement Certificates.
9. Reporting of abandoned property.
10. Maintain records of account.
11. Maintain and keep a current and
accurate control book for each
issue of securities.
12. Mail proxies.
13. Mail Shareholder reports.
14. Mail prospectuses to current
Shareholders.
15. Withhold taxes on U.S. resident
and non-resident alien accounts.
Service Performed Responsibility
----------------- --------------
Bank Fund
---- ----
16. Prepare and file U.S. Treasury
Department forms.
17. Prepare and mail account and
confirmation statements for
Shareholders.
18. Provide Shareholder account
information.
19. Blue sky reporting.
* Such services are more fully described in Article 1.02 (a), (b) and (c)
of the Agreement.
LEXINGTON MONEY MARKET TRUST
BY:
__________________________________
Vice President
ATTEST:
________________________________
STATE STREET BANK AND TRUST COMPANY
BY:
___________________________________
Vice President
ATTEST:
__________________________________
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
9 1 9 T H I R D A V E N U E
NEW YORK, N.Y. 10022 3852
(212) 715 9100
FAX
(212) 715-8000
______
WRITER'S DIRECT
NUMBER
(212) 715-9100
April 17, 1996
Lexington Money Market Trust
Park 80 West
Plaza Two
Saddle Brook, New Jersey 07663
Gentlemen:
We hereby consent to the reference of this Firm as counsel in the
Registration Statement on Form N-1A of the Lexington Money Market Trust.
Very truly yours,
/s/ Kramer, Levin, Naftalis, Nessen,
Kamin & Frankel
KPMG Peat Marwick LLP
345 Park Avenue Telephone 212 758 9700 Telefax 212 758 9819
New York, NY 10154 Telex 428038
Independent Auditors' Consent
The Board of Directors and Shareholders
Lexington Money Market Trust:
We consent to the use of our report dated February 5, 1996, included in the
Registration Statement on form N-1A and to the references to our firm under
the headings Financial Highlights and Counsel and Independent Auditors
in the Prospectus.
/s/ KPMG Peat Marwick LLP
New York, New York
April 22, 1996
LEXINGTON MANAGEMENT CORPORATION
PROTOTYPE
MONEY PURCHASE PENSION AND
PROFIT SHARING PLAN
BASIC DOCUMENT #01
PROTOTYPE
MONEY PURCHASE PENSION AND
PROFIT SHARING PLAN
TABLE OF CONTENTS
Section Page
ARTICLE 1
GENERAL
1.1 Purpose......................................... 1
1.2 Trust........................................... 1
ARTICLE 2
DEFINITIONS
2.1 Account......................................... 1
2.2 Adoption Agreement.............................. 1
2.3 Affiliated Employers............................ 1
2.4 Beneficiary..................................... 2
2.5 Break in Service................................ 2
2.6 Code............................................ 2
2.7 Compensation.................................... 2
2.8 Custodian....................................... 3
2.9 Determination Date.............................. 3
2.10 Early Retirement Date........................... 3
2.11 Earned Income................................... 3
2.12 Effective Date.................................. 3
2.13 Eligibility Computation Period.................. 3
2.14 Employee........................................ 4
2.15 Employer........................................ 4
2.16 Employer Contributions.......................... 4
2.17 Entry Dates..................................... 4
2.18 ERISA........................................... 4
2.19 Hour of Service................................. 4
2.20 Integration Level............................... 7
2.21 Key Employee.................................... 7
2.22 Leased Employee................................. 7
2.23 Maximum Disparity Rate.......................... 8
2.24 Maximum Profit Sharing Disparity Rate........... 9
2.25 Non-Key Employee................................ 9
2.26 Normal Retirement Age........................... 9
2.27 Owner-Employee.................................. 9
2.28 Participant..................................... 10
2.29 Plan............................................ 10
2.30 Plan Administrator.............................. 10
2.31 Plan Year....................................... 10
2.32 Self-Employed Individuals....................... 10
2.33 Shares.......................................... 10
2.34 Sponsor......................................... 10
2.35 Taxable Wage Base............................... 10
2.36 Total and Permanent Disability.................. 10
2.37 Trust........................................... 11
2.38 Trust Agreement................................. 11
2.39 Trustee......................................... 11
2.40 Valuation Date.................................. 11
2.41 Vesting Computation Period...................... 11
2.42 Year of Service................................. 11
ARTICLE 3
ELIGIBILITY AND YEARS OF SERVICE
3.1 Eligibility Requirements........................ 11
3.2 Participation and Service Upon Reemployment..... 12
3.3 Predecessor Employers........................... 12
ARTICLE 4
CONTRIBUTIONS
4.1 Employer Contributions.......................... 13
4.2 Payment......................................... 13
4.3 Nondeductible Voluntary Contributions by
Participants.................................... 14
4.4 Rollovers....................................... 14
4.5 Direct Transfers................................ 14
ARTICLE 5
ALLOCATIONS
5.1 Individual Accounts............................. 15
5.2 Minimum Allocation.............................. 16
5.3 Allocation of Employer Contributions and
Forfeitures..................................... 17
5.4 Coordination of Social Security Integration..... 19
5.5 Withdrawals and Distributions................... 19
5.6 Determination of Value of Trust Fund and of Net
Earnings or Losses.............................. 19
5.7 Allocation of Net Earnings or Losses............ 20
5.8 Responsibilities of the Plan Administrator...... 21
ARTICLE 6
LIMITATIONS ON ALLOCATIONS
6.1 Employers Who Do Not Maintain Other Qualified
Plans........................................... 21
6.2 Employers Who Maintain Other Qualified Master
or Prototype Defined Contribution Plans......... 22
6.3 Employers Who, In Addition to This Plan,
Maintain Other Qualified Plans Which are
Defined Contribution Plans Other Than Master or
Prototype Plans................................. 24
6.4 Employers, Who In Addition To This Plan,
Maintain A Qualified Defined Benefit Plan....... 24
6.5 Definitions..................................... 24
ARTICLE 7
TRUST FUND
7.1 Receipt of Contributions by Trustee............. 29
7.2 Investment Responsibility....................... 29
7.3 Investment Limitations.......................... 30
ARTICLE 8
VESTING
8.1 Nondeductible Voluntary Contributions and
Earnings........................................ 30
8.2 Rollovers, Transfers and Earnings............... 31
8.3 Employer Contributions and Earnings............. 31
8.4 Amendments to Vesting Schedule.................. 31
8.5 Determination of Years of Service............... 32
8.6 Forfeiture of Nonvested Amounts................. 33
8.7 Reinstatement of Benefit........................ 33
ARTICLE 9
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
9.1 General......................................... 34
9.2 Qualified Joint and Survivor Annuity............ 34
9.3 Qualified Preretirement Survivor Annuity........ 34
9.4 Definitions..................................... 34
9.5 Notice Requirements............................. 36
9.6 Safe Harbor Rules............................... 38
9.7 Transitional Rules.............................. 39
ARTICLE 10
DISTRIBUTION PROVISIONS
10.1 Vesting on Distribution Before Break in Service. 41
10.2 Restrictions on Immediate Distributions......... 42
10.3 Commencement of Benefits........................ 44
10.4 Early Retirement With Age and Service Require-
ment............................................ 44
10.5 Nontransferability of Annuities................. 44
10.6 Conflicts With Annuity Contracts................ 44
ARTICLE 11
TIMING AND MODES OF DISTRIBUTION
11.1 General Rules................................... 45
11.2 Required Beginning Date......................... 45
11.3 Limits on Distribution Periods.................. 45
11.4 Determination of Amount to be Distributed Each
Year............................................ 45
11.5 Death Distribution Provisions................... 46
11.6 Designation of Beneficiary...................... 48
11.7 Definitions..................................... 48
11.8 Transitional Rules.............................. 51
11.9 Optional Forms of Benefit....................... 52
ARTICLE 12
WITHDRAWALS
12.1 Withdrawal of Nondeductible Voluntary Contribu-
tions........................................... 54
12.2 Hardship Withdrawals............................ 54
12.3 Manner of Making Withdrawals.................... 55
12.4 Limitations on Withdrawals...................... 55
ARTICLE 13
LOANS
13.1 General Provisions.............................. 55
13.2 Administration of Loan Program.................. 57
13.3 Amount of Loan.................................. 57
13.4 Manner of Making Loans.......................... 57
13.5 Terms of Loan................................... 58
13.6 Security for Loan............................... 58
13.7 Segregated Investment........................... 59
13.8 Repayment of Loan............................... 59
13.9 Default on Loan................................. 59
13.10Unpaid Amounts.................................. 59
ARTICLE 14
INSURANCE
14.1 Insurance....................................... 60
14.2 Policies........................................ 60
14.3 Beneficiary..................................... 60
14.4 Payment of Premiums............................. 60
14.5 Limitation on Insurance Premiums................ 61
14.6 Insurance Company............................... 62
14.7 Distribution of Policies........................ 62
14.8 Policy Features................................. 64
14.9 Changed Conditions.............................. 64
14.10Conflicts....................................... 64
ARTICLE 15
ADMINISTRATION
15.1 Duties and Responsibilities of Fiduciaries;
Allocation of Fiduciary Responsibility.......... 64
15.2 Powers and Responsibilities of the Plan
Administrator................................... 65
15.3 Allocation of Duties and Responsibilities....... 67
15.4 Appointment of the Plan Administrator........... 67
15.5 Expenses........................................ 67
15.6 Liabilities..................................... 67
15.7 Claims Procedure................................ 68
ARTICLE 16
AMENDMENT, TERMINATION AND MERGER
16.1 Sponsor's Power to Amend........................ 69
16.2 Amendment by Adopting Employer.................. 69
16.3 Vesting Upon Plan Termination................... 70
16.4 Vesting Upon Complete Discontinuance of
Contributions................................... 70
16.5 Maintenance of Benefits Upon Merger............. 70
16.6 Special Amendments.............................. 70
ARTICLE 17
MISCELLANEOUS
17.1 Exclusive Benefit of Participants and
Beneficiaries................................... 70
17.2 Nonguarantee of Employment...................... 71
17.3 Rights to Trust Assets.......................... 71
17.4 Nonalienation of Benefits....................... 71
17.5 Aggregation Rules............................... 72
17.6 Failure of Qualification........................ 73
17.7 Applicable Law.................................. 73
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ARTICLE 1
GENERAL
1.1 Purpose. The Employer hereby establishes this Plan to provide
retirement, death and disability benefits for eligible employees and their
Beneficiaries. This Plan is a standardized prototype paired defined
contribution plan and is designed to permit adoption of profit sharing
provisions, money purchase pension provisions, or both. The provisions
herein and the selections made by the Employer by execution of the money
purchase pension or profit sharing Adoption Agreement or Agreements, shall
constitute the Plan. It is intended that the Plan and Trust qualify under
sections 401 and 501 of the Internal Revenue Code of 1986, as amended and
that it comply with the provisions of the Employee Retirement Income
Security Act of 1974, as amended.
1.2 Trust. The Employer has simultaneously adopted a Trust to
receive, invest, and distribute funds in accordance with the Plan.
ARTICLE 2
DEFINITIONS
2.1 Account. The aggregate of the individual bookkeeping
subaccounts established for each Participant, as provided in section 5.1.
2.2 Adoption_Agreement. The written agreement or agreements of
the Employer and the Trustee by which the Employer establishes this Plan
and adopts the Trust Agreement forming a part hereof, as the same may be
amended from time to time. The Adoption Agreement contains all the
options that may be selected by the Employer. The information set forth
in the Adoption Agreement executed by the Employer shall be deemed to be
a part of this Plan as if set forth in full herein.
2.3 Affiliated_Employers. The Employer and any corporation which
is a member of a controlled group of corporations (as defined in section
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414(b) of the Code) which includes the Employer, any trade or business
(whether or not incorporated) which is under common control (as defined
in section 414(c) of the Code) with the Employer, or any service
organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in sections 414(m) and (o) of the
Code) which includes the Employer.
2.4 Beneficiary. The person or persons (natural or otherwise)
designated by a Participant in accordance with section 11.6 to receive any
undistributed amounts credited to the Participant's Account under the Plan
at the time of the Participant's death.
2.5 Break_in_Service. An Eligibility Computation Period or
Vesting Computation Period in which an Employee fails to complete more
than five hundred (500) Hours of Service.
2.6 Code. The Internal Revenue Code of 1986, as amended from time
to time, or any successor statute.
2.7 Compensation.
(a) Compensation will mean all of each Participant's W-2
earnings.
(b) For any self-employed individual covered under the Plan,
Compensation will mean Earned Income.
(c) Compensation shall include only that Compensation that
is actually paid to the Participant during the Plan Year.
(d) Notwithstanding the above, if elected by the Employer
in the Adoption Agreement, Compensation shall include any amount which is
contributed by the Employer pursuant to a salary reduction agreement and
which is not includable in the gross income of the Employee under sections
125, 402(a)(8), 402(h) or 403(b) of the Code. The effective date of this
subsection shall be elected by the Employer in the Adoption Agreement.
(e) The annual Compensation of each Participant taken into
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account under the Plan for any year shall not exceed two hundred thousand
dollars ($200,000), as adjusted by the Secretary at the same time and in
the same manner as under section 415(d) of the Code. In determining the
Compensation of a Participant for purposes of this limitation, the rules
of section 414(q)(6) of the Code shall apply, except in applying such
rules, the term "family" shall include only the Spouse of the Participant
and any lineal descendants of the Participant who have not attained age
nineteen (19) before the close of the year. If, as a result of the
application of such rules, the adjusted two hundred thousand dollar
($200,000) limitation is exceeded, then (except for purposes of
determining the portion of Compensation up to the Integration Level to the
extent this Plan provides for permitted disparity), the limitation shall
be prorated among the affected individuals in proportion to each such
individual's Compensation as determined under this section prior to the
application of this limitation.
(f) The effective date of this subsection shall be the
first Plan Year beginning on or after January 1, 1989.
2.8 Custodian. The custodian, if any, designated in the Adoption
Agreement.
2.9 Determination_Date. With respect to any Plan Year subsequent
to the first Plan Year, the last day of the preceding Plan Year. For the
first Plan Year of the Plan, the last day of that Plan Year.
2.10 Early_Retirement_Date. The first day of the month coincident
with or next following the date upon which the Participant satisfies the
early retirement age and service requirements in the Adoption Agreement;
provided, however, such requirements may not be less than age fifty- five
(55), nor more than fifteen (15) Years of Service.
2.11 Earned_Income. The net earnings from self- employment in the
trade or business with respect to which the Plan is established, for which
personal services of the individual are a material income-producing
factor. Net earnings will be determined without regard to items not
included in gross income and the deductions allocable to such items. Net
earnings are reduced by contributions to a qualified plan to the extent
deductible under section 404 of the Code. Net earnings shall be
determined with regard to the deduction allowed to the Employer by section
164(f) of the Code for taxable years beginning after December 31, 1989.
2.12 Effective_Date. The first day of the first Plan Year for
which the Plan is effective as specified in the Adoption Agreement.
2.13 Eligibility_Computation_Period. For purposes of determining
Years of Service and Breaks in Service for eligibility to participate, the
initial Eligibility Computation Period shall be the twelve (12)
consecutive month period beginning with the day the Employee first
performs an Hour of Service for the Employer (employment commencement
date). The succeeding twelve (12) consecutive month periods commence with
the first anniversary of the Employee's employment commencement date.
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2.14 Employee. Any person, including a Self-Employed Individual,
who is employed by the Employer maintaining the Plan or any other employer
required to be aggregated with such Employer under sections 414(b), (c),
(m) or (o) of the Code. The term "Employee" shall also include any Leased
Employee deemed to be an Employee of any Employer described above as
provided in sections 414(n) or (o) of the Code.
2.15 Employer. The corporation, proprietorship, partnership or
other organization that adopts the Plan by execution of an Adoption
Agreement.
2.16 Employer_Contributions. The contribution of the Employer to
the Plan and Trust as set forth in section 4.1 and the Adoption Agreement.
2.17 Entry_Dates. The Effective Date shall be the first Entry
Date. Thereafter, the Entry Dates shall be the first day of each Plan
Year and the first day of the seventh month of each Plan Year.
2.18 ERISA. The Employee Retirement Income Security Act of 1974,
as amended.
2.19 Hour_of_Service.
(a) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer. These hours
shall be credited to the Employee only for the computation period or
periods in which the duties are performed; and
(b) Each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time during which no
duties are performed (irrespective of whether the employment relationship
has terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty, or leave of absence. No
more than five hundred one (501) Hours of Service shall be credited under
this paragraph to an Employee on account of any single, continuous period
during which the Employee performs no duties (whether or not such period
occurs in a single computation period). Hours under this paragraph will
be calculated and credited pursuant to section 2530.200b-2 of the
Department of Labor regulations which are incorporated herein by this
reference.
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(c) Each hour for which back pay, irrespective of mitigation
of damages, is either awarded or agreed to by the Employer. The same
Hours of Service shall not be credited both under paragraph (a) or
paragraph (b), as the case may be, and under this paragraph (c). These
hours shall be credited to the Employee for the computation period or
periods to which the award or agreement pertains rather than the
computation period in which the award, agreement, or payment is made.
(d) Solely for purposes of determining whether an Employee
has a Break in Service, Hours of Service shall also include an
uncompensated authorized leave of absence not in excess of two (2) years,
or military leave while the Employee's reemployment rights are protected
by law or such additional or other periods as granted by the Employer as
military leave (credited on the basis of forty (40) Hours of Service per
each week or eight (8) Hours of Service per working day), provided the
Employee returns to employment at the end of his leave of absence or
within ninety (90) days of the end of his military leave, whichever is
applicable.
(e) Hours of Service will be credited for employment with
other members of an affiliated service group (under section 414(m)), a
controlled group of corporations (under section 414(b)), or a group of
trades or businesses under common control (under section 414(c)) of which
the adopting Employer is a member, and any other entity required to be
aggregated with the Employer pursuant to section 414(o) and the
regulations thereunder. Hours of Service will also be credited for any
individual considered an Employee for purposes of this Plan under section
414(n) or section 414(o) and the regulations thereunder.
(f) Solely for purposes of determining whether an Employee
has a Break in Service, Hours of Service shall also include absence from
work for maternity or paternity reasons, if the absence begins on or after
the first day of the first Plan Year beginning after 1984. During this
absence, the Employee shall be credited with the Hours of Service which
would have been credited but for the absence, or, if such hours cannot be
determined with eight (8) hours per day. An absence from work for
maternity or paternity reasons means an absence:
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(i) by reason of the pregnancy of an Employee;
(ii) by reason of the birth of a child of the
Employee;
(iii) by reason of the placement of a child with the
Employee in connection with adoption; or
(iv) for purposes of caring for such a child for a
period immediately following such birth or placement.
These Hours of Service shall be credited in the computation period
following the computation period in which the absence begins, except as
necessary to prevent a Break in Service in the computation period in which
the absence begins. However, no more than five hundred one (501) Hours
of Service will be credited for purposes of any such maternity or
paternity absence from work.
(g) The Employer may elect to compute Hours of Service by
the use of one of the service equivalencies in the Adoption Agreement.
Only one method may be selected. If selected, the service equivalency
must be applied to all Employees covered under the Plan.
(h) If the Employer amends the method of crediting service
from the elapsed time method described in section 1.410(a)-7 of the
Treasury regulations to the Hours of Service computation method by the
adoption of this Plan, or an Employee transfers from a plan under which
service is determined on the basis of elapsed time, the following rules
shall apply for purposes of determining the Employee's service under this
Plan up to the time of amendment or transfer:
(i) the Employee shall receive credit, as of the date
of amendment or transfer, for a number of Years of Service equal to the
number of one (1) year periods of service credited to the Employee as of
the date of the amendment or transfer; and
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(ii) the Employee shall receive credit in the
applicable computation period which includes the date of amendment or
transfer, for a number of Hours of Service determined by applying the
weekly service equivalency specified in paragraph (g) to any fractional
part of a year credited to the Employee under this paragraph (h) as of the
date of amendment or transfer. The use of the weekly service equivalency
shall apply to all Employees who formerly were credited with service under
the elapsed time method.
2.20 Integration_Level. The Taxable Wage Base or such lesser
amount elected by the Employer in the Adoption Agreement.
2.21 Key_Employee.
(a) Any Employee or former Employee (and the Beneficiaries
of such Employee) who at any time during the determination period was an
officer of the Employer if such individual's annual Compensation exceeds
fifty percent (50%) of the dollar limitation under section 415(b)(1)(A)
of the Code; an owner (or considered an owner under section 318 of the
Code) of one of the ten (10) largest interests in the Employer if such
individual's Compensation exceeds one hundred percent (100%) of the dollar
limitation under section 415(c)(1)(A) of the Code; a Five Percent (5%)
Owner of the Employer; or a one percent (1%) owner of the Employer who has
annual Compensation of more than one hundred fifty thousand dollars
($150,000).
(b) For purposes of this section, annual Compensation means
compensation as defined in section 415(c)(3) of the Code, but including
amounts contributed by the Employer pursuant to a salary reduction
agreement which are excludable from the Employee's gross income under
sections 125, 402(a)(8), 402(h) or 403(b) of the Code.
(c) For purposes of this section, determination period is
the Plan Year containing the Determination Date and the four (4) preceding
Plan Years.
2.22 Leased_Employee.
(a) Any person (other than an Employee of any of the
Affiliated Employers) who, pursuant to an agreement between any of the
Affiliated Employers and any other person ("leasing organization"), has
performed service for any of the Affiliated Employers (or for any of the
Affiliated Employers and related persons determined in accordance with
section 414(n)(6) of the Code) on a substantially full-time basis for a
period of at least one (1) year and such services are of a type
historically performed by employees in the Affiliated Employer's business
field. Contributions or benefits provided a Leased Employee by the
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leasing organization which are attributable to services performed for the
Affiliated Employer shall be treated as provided by the Affiliated
Employer.
(b) A Leased Employee shall not be considered an Employee
of an Affiliated Employer if:
(i) such employee is covered by a money purchase
pension plan providing:
(1) a nonintegrated employer contribution rate
of at least ten percent (10%) of compensation (as defined in section
415(c)(3) of the Code), but including amounts contributed pursuant to a
salary reduction agreement which are excludable from the employee's gross
income under sections 125, 402(a)(8), 402(h) or 403(b) of the Code;
(2) immediate participation; and
(3) full and immediate vesting.
and
(ii) Leased Employees do not constitute more than
twenty percent (20%) of the Affiliated Employer's non-Highly-Compensated
workforce.
(c) The determination of whether a person is a Leased
Employee will be made pursuant to section 414(n) of the Code.
2.23 Maximum_Disparity_Rate. The lesser of:
(a) five and seven-tenths percent (5.7%);
(b) the applicable percentage determined in accordance with
the table below:
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If the Integration Level is
The Applicable
More_Than But_Not_More_Than Percentage_Is:
$0 X */ 5.7%
X of TWB 80% of TWB 4.3%
80% of TWB Y **/ 5.4%
*/ X = the greater of $10,000 or 20% of the Taxable Wage Base.
**/ Y = any amount more than 80% of the Taxable Wage Base but less than
100% of the Taxable Wage Base.
"TWB" means the Taxable Wage Base.
If the Integration Level used is equal to the Taxable Wage Base, the
applicable percentage is five and seven-tenths percent (5.7%).
2.24 Maximum_Profit_Sharing_Disparity_Rate. The lesser of:
(a) two and seven-tenths percent (2.7%);
(b) the applicable percentage determined in accordance with
the table below:
If the Integration Level is
The Applicable
More_Than But_Not_More_Than Percentage_Is:
$0 X */ 2.7%
X of TWB 80% of TWB 1.3%
80% of TWB Y **/ 2.4%
*/ X = the greater of $10,000 or 20% of the Taxable Wage Base.
**/ Y = any amount more than 80% of the Taxable Wage Base but less than
100% of the Taxable Wage Base.
"TWB" means the Taxable Wage Base.
If the Integration Level used is equal to the Taxable Wage Base, the
applicable percentage is two and seven-tenths percent (2.7%).
2.25 Non-Key_Employee. Any Employee or former Employee who is not
a Key Employee. In addition, any Beneficiary of a Non-Key Employee shall
be treated as a Non- Key Employee.
2.26 Normal_Retirement_Age. The age selected in the Adoption
Agreement, but not less than age fifty-five (55). If the Employer
enforces a mandatory retirement age, the Normal Retirement Age is the
lesser of that mandatory age or the age specified in the Adoption
Agreement.
2.27 Owner-Employee. An individual who is a sole proprietor, or
who is a partner owning more than ten percent (10%) of either the capital
or profits interest of a partnership.
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2.28 Participant. A person who has met the eligibility
requirements of section 3.1 and whose Account hereunder has been neither
completely forfeited nor completely distributed.
2.29 Plan. The prototype paired defined contribution profit
sharing and money purchase pension plan provided under this basic plan
document. References to the Plan shall refer to the profit sharing
provisions, the money purchase pension provisions, or both, as the context
may require.
2.30 Plan_Administrator. The person, persons or entity appointed
by the Employer pursuant to ARTICLE 15 to manage and administer the Plan.
2.31 Plan_Year. The twelve (12) consecutive month period
designated by the Employer in the Adoption Agreement.
2.32 Self-Employed_Individual. An individual who has Earned Income
for the taxable year from the trade or business for which the Plan is
established, or an individual who would have had Earned Income for the
taxable year but for the fact that the trade or business had no net
profits for the taxable year.
2.33 Shares. Shares of stock in any regulated investment company
registered under the Investment Company Act of 1940 that are made
available for investment purposes as an investment option under this Plan.
2.34 Sponsor. The sponsor designated in the Adoption Agreement
which has made this Plan available to the Employer.
2.35 Taxable_Wage_Base. The maximum amount of earnings which may
be considered wages for a year under section 3121(a)(1) of the Code in
effect as of the beginning of the Plan Year.
2.36 Total_and_Permanent_Disability. The inability of the
Participant to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment, which condition, in
the opinion of a physician chosen by the Plan Administrator, can be
expected to result in death or which has lasted or can be expected to last
for a continuous period of not less than twelve (12) months.
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2.37 Trust. The fund maintained by the Trustee for the investment
of Plan assets in accordance with the terms and conditions of the Trust
Agreement.
2.38 Trust_Agreement. The agreement between the Employer and the
Trustee under which the assets of the Plan are held, administered, and
managed. The provisions of the Trust Agreement shall be considered an
integral part of this Plan as if set forth fully herein.
2.39 Trustee. The individual or corporate Trustee or Trustees
under the Trust Agreement as they may be constituted from time to time.
2.40 Valuation_Date. The last day of each Plan Year and such other
dates as may be determined by the Plan Administrator, as provided in
section 5.6 for valuing the Trust assets.
2.41 Vesting_Computation_Period. The Plan Year.
2.42 Year_of_Service. An Eligibility Computation Period, Vesting
Computation Period, or Plan Year, whichever is applicable, during which
an Employee has completed at least one thousand (1,000) Hours of Service
(whether or not continuous). The Employer may, in the Adoption Agreement,
specify a fewer number of hours.
ARTICLE 3
ELIGIBILITY AND YEARS OF SERVICE
3.1 Eligibility_Requirements.
(a) Each Employee of the Affiliated Employers shall become
a Participant in the Plan as of the first Entry Date after the date on
which the Employee has satisfied the minimum age and service requirements
specified in the Adoption Agreement.
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(b) The Employer may elect in the Adoption Agreement to
exclude from participation:
(i) Employees included in a unit of employees covered
by a collective bargaining agreement between the Employer and Employee
representatives, if retirement benefits were the subject of good faith
bargaining. For this purpose, the term "Employee representatives" does
not include any organization more than half of whose members are Employees
who are owners, officers, or executives of the Employer; and
(ii) nonresident aliens who receive no earned income
from the Employer which constitutes income from sources within the United
States.
3.2 Participation_and_Service_Upon_Reemployment. Upon the
reemployment of any Employee, the following rules shall determine his
eligibility to participate in the Plan and his credit for prior service.
(a) Participation. If the reemployed Employee was a
Participant in the Plan during his prior period of employment, he shall
be eligible upon reemployment to resume participation in the Plan. If the
reemployed Employee was not a Participant in the Plan, he shall be
considered a new Employee and required to meet the requirements of section
3.1 in order to be eligible to participate in the Plan, subject to the
reinstatement of credit for prior service under paragraph (b) below.
(b) Credit_for_Prior_Service. In the case of any Employee
who is reemployed before or after incurring a Break in Service, any Hour
of Service and Year of Service credited to the Employee at the end of his
prior period of employment shall be reinstated as of the date of his
reemployment.
3.3 Predecessor_Employers. If specified in the Adoption
Agreement, Years of Service with a predecessor employer will be treated
as service for the Employer for eligibility purposes; provided, however,
if the Employer maintains the plan of a predecessor employer, Years of
Service with such employer will be treated as service with the Employer
without regard to any election.
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ARTICLE 4
CONTRIBUTIONS
4.1 Employer_Contributions.
(a) Money_Purchase_Pension_Contributions. For each Plan
Year, the Employer shall contribute to the Trust an amount equal to such
uniform percentage of Compensation of each eligible Participant as may be
determined by the Employer in accordance with the money purchase pension
contribution formula specified in the Adoption Agreement. Subject to the
limitations of section 5.4, the money purchase pension contribution
formula may be integrated with Social Security, as set forth in the
Adoption Agreement.
(b) Profit_Sharing_Contribution. For each Plan Year, the
Employer shall contribute to the Trust an amount as may be determined by
the Employer in accordance with the profit sharing formula set forth in
the Adoption Agreement.
(c) Eligible_Participants. Subject to the Minimum
Allocation rules of section 5.2 and the exclusions specified in this
section, each Participant shall be eligible to share in the Employer
Contribution. An Employer may elect in the Adoption Agreement that
Participants who terminate employment during the Plan Year with not more
than five hundred (500) Hours of Service and who are not Employees as of
the last day of the Plan Year (other than Participants who die, retire or
become totally and Permanently Disabled during the Plan Year) shall not
be eligible to share in the Employer Contribution. An Employer may
further elect in the Adoption Agreement to allocate a contribution on
behalf of a Participant who completes fewer than five hundred (500) Hours
of Service and is otherwise ineligible to share in the Employer
Contribution. If the Employer fails to specify in the Adoption Agreement
the number of Hours of Service required to share in the Employer
Contribution, the number shall be five hundred (500) Hours of Service.
(d) Contribution_Limitation. In no event shall any Employer
Contribution exceed the maximum amount deductible from the Employer's
income under section 404 of the Code, or the maximum limitations under
section 415 of the Code provided in ARTICLE 6.
4.2 Payment. All Employer Contributions to the Trust for any Plan
Year shall be made either in one lump-sum or in installments in U.S.
currency, by check, or in Shares within the time prescribed by law,
including extensions granted by the Internal Revenue Service, for filing
the Employer's federal income tax return for the taxable year with or
within which such Plan Year ends. All Employer Contributions to the Trust
for a money purchase pension plan for any Plan Year shall be made within
the time prescribed by regulations under section 412(c)(10) of the Code.
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4.3 Nondeductible_Voluntary_Contributions_by_Partici pants.
(a) This Plan will not accept nondeductible Employee
contributions for Plan Years beginning after the Plan Year in which this
Plan is adopted by the Employer. Employee contributions made with respect
to Plan years beginning after December 31, 1986 will be limited so as to
meet the nondiscrimination test of section 401(m).
(b) A separate account shall be maintained by the Trustee
for the nondeductible Employee contributions of each Participant.
(c) Employee contributions and earnings thereon shall be
fully vested and nonforfeitable at all times.
(d) The provisions of this section shall apply to Employee
contributions made prior to the first Plan Year after the Plan Year in
which the Employer adopts this Plan.
4.4 Rollovers.
(a) Subject to the approval of the Plan Administrator, a
participant who has participated in any other qualified plan described in
section 401(a) of the Code or in a qualified annuity plan described in
section 403(a) of the Code shall be permitted to make a rollover
contribution in the form of cash to the Trustee of an amount received by
the Participant that is attributable to participation in such other plan
(reduced by any nondeductible voluntary contributions he made to the
plan), provided that the rollover contribution complies with all
requirements of sections 402(a)(5) or 403(a)(4) of the Code, whichever is
applicable.
(b) Before approving such a Participant rollover, the Plan
Administrator may request from the Participant or the Employer any
documents which the Plan Administrator, in its discretion, deems necessary
for such rollover.
(c) Any rollover contribution to the Trust shall be credited
to the Participant's rollover subaccount established under section 5.1 and
separately accounted for.
4.5 Direct_Transfers.
(a) The Plan shall accept a transfer of assets directly from
another plan qualified under sections 401(a) or 403(a) of the Code only
if the Plan Administrator, in its sole discretion, agrees to accept such
a transfer. In determining whether to accept such a transfer the Plan
Administrator shall consider the administrative inconvenience engendered
by such a transfer and any risks to the continued qualification of the
Plan under section 401(a) of the Code. Acceptance of any such transfer
shall not preclude the Plan Administrator from refusing any subsequent
such transfers.
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(b) Any transfer of assets accepted under this section shall
be credited to the Participant's direct transfer subaccount and shall be
separately accounted for at all times and shall remain subject to the
provisions of the transferor plan (as it existed at the time of such
transfer) to the extent required by section 411(d)(6) of the Code
(including, but not limited to, any rights to Qualified Joint and Survivor
Annuities and qualified preretirement survivor annuities) as if such
provisions were part of the Plan. In all other respects, however, such
transferred assets will be subject to the provisions of the Plan.
(c) Assets accepted under this section shall be fully vested
and nonforfeitable.
(d) Before approving such a direct transfer, the Plan
Administrator may request from the Participant or the Employer (or the
prior employer) any documents the Plan Administrator, in its discretion,
deems necessary for such direct transfer.
ARTICLE 5
ALLOCATIONS
5.1 Individual_Accounts. The Plan Administrator shall establish
and maintain an Account in the name of each Participant. The Account
shall contain the following subaccounts:
(a) A money purchase pension contribution subaccount to
which shall be credited each such Participant's share of (i) Employer
Contributions under section 4.1(a); (ii) the net earnings or net losses
on the investment of the assets of the Trust; (iii) distributions; and
(iv) dividends, capital gain distributions and other earnings received on
any Shares credited to the Participant's subaccount;
(b) A profit sharing contribution subaccount to which shall
be credited each such Participant's share of (i) Employer Contributions
under section 4.1(b); (ii) forfeitures; (iii) the net earnings or net
losses on the investment of the assets of the trust; (iv) distributions;
and (v) dividends, capital gain distributions and other earnings received
on any Shares credited to the Participant's subaccount;
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(c) A nondeductible voluntary contribution subaccount to
which shall be credited (i) nondeductible voluntary contributions by the
Participant under section 4.3; (ii) the net earnings or net losses on the
investment of the assets of the Trust; (iii) distributions; and
(iv) dividends, capital gain distributions and other earnings received on
any Shares credited to the Participant's subaccount;
(d) A direct transfer subaccount to which shall be credited
(i) contributions to the Trust accepted under section 4.5(a); (ii) the net
earnings or net losses on the investment of the assets of the Trust;
(iii) distributions; and (iv) dividends, capital gain distributions and
other earnings received on any Shares credited to the Participant's
subaccount;
(e) A rollover subaccount to which shall be credited
(i) contributions to the Trust accepted under section 4.4(a); (ii) the net
earnings or net losses on the investment of the assets of the Trust;
(iii) distributions; and (iv) dividends, capital gain distributions and
other earnings received on any Shares credited to the Participant's
subaccount.
5.2 Minimum_Allocation.
(a) Except as otherwise provided in this section, the
Employer Contributions and forfeitures allocated on behalf of any
Participant who is not a Key Employee shall not be less than the lesser
of three percent (3%) of such Participant's Compensation or in the case
where the Employer has no defined benefit plan which designates this Plan
to satisfy section 401 of the Code, the largest percentage of Employer
Contributions and forfeitures, as a percentage of the first two hundred
thousand dollars ($200,000) of the Key Employee's Compensation, allocated
on behalf of any Key Employee for that year. The minimum allocation is
determined without regard to any Social Security contribution. This
minimum allocation shall be made even though, under other Plan provisions,
the Participant would not otherwise be entitled to receive an allocation,
or would have received a lesser allocation for the year because of (i) the
Participant's failure to complete one thousand (1,000) Hours of Service
(or any equivalent provided in the Plan); or (ii) the Participant's
failure to make mandatory Employee contributions to the Plan; or
(iii) Compensation less than a stated amount. For purposes of this
subsection, all defined contribution plans required to be included in an
aggregation group under section 416(g)(2)(A)(i) shall be treated as a
single plan.
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(b) For purposes of computing the minimum allocation,
Compensation shall mean Compensation as defined in section 6.5(b) of the
Plan.
(c) The provision in subsection (a) above shall not apply
to any Participant who was not employed by the Employer on the last day
of the Plan Year.
(d) The provision in subsection (a) above shall not apply
to any Participant to the extent the Participant is covered under any
other plan or plans of the Employer and the Employer has provided in the
Adoption Agreement that the minimum allocation or benefit requirement
applicable to top-heavy plans will be met in the other plan or plans.
(e) The minimum allocation required (to the extent required
to be nonforfeitable under section 416(b)) may not be forfeited under
section 411(a)(3)(B) or 411(a)(3)(D).
5.3 Allocation_of_Employer_Contributions_and_Forfeitures.
(a) All money purchase pension contributions for a given
Plan Year shall be allocated to the Account of the Participant for whom
such contribution was made. Any forfeiture from a Participant's money
purchase pension contribution subaccount arising under the Plan for a
given Plan Year shall be applied as specified in the Adoption Agreement,
either: (i) to reduce the Employer Contribution in that year, or if in
excess of the Employer Contribution for such Plan Year, the excess amounts
shall be used to reduce the Employer Contribution in the next succeeding
Plan Year or Years or (ii) to be added to the Employer Contributions and
allocated accordingly.
(b) All profit sharing contributions and forfeitures from
a Participant's profit sharing contribution subaccount will be allocated
to the Account of each Participant in the ratio that such Participant's
Compensation bears to the Compensation of all Participants. However, if
the profit sharing contribution formula selected in the Adoption
Agreement is integrated with Social Security, profit sharing contributions
for the Plan Year plus any forfeitures will be allocated to Participants'
Accounts as follows:
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(i) Step_One. Contributions and forfeitures will be
allocated to each Participant's Account in the ratio that each
Participant's total Compensation bears to all Participants' total
Compensation, but not in excess of three percent (3%) of each
Participant's Compensation. (Step One is not applicable if the Employer
enters into the money purchase pension Adoption Agreement).
(ii) Step_Two. Any contributions and forfeitures
remaining after the allocation in Step One (if any) will be allocated to
each Participant's Account in the ratio that each Participant's
Compensation for the Plan Year in excess of the Integration Level bears
to the excess Compensation of all Participants, but not in excess of three
percent (3%). (Step Two is not applicable if the Employer enters into the
money purchase pension Adoption Agreement).
(iii) Step_Three. Any contributions and forfeitures
remaining after the allocation in Step Two (if any) will be allocated to
each Participant's Account in the ratio that the sum of each Participant's
total Compensation and Compensation in excess of the Integration Level
bears to the sum of all Participants' total Compensation and Compensation
in excess of the Integration Level, but not in excess of whichever of the
following is applicable:
(i) if the Employer has not adopted the money
purchase pension Adoption Agreement, then the Maximum Profit Sharing
Disparity Rate; or
(ii) If the Employer has adopted the money purchase
pension Adoption Agreement, then the lesser of:
(1) the percentage of each Participant's
Compensation for the Plan Year up to the Integration Level determined by
dividing the allocation by such Compensation (the base contribution
percentage); or
(2) the Maximum Disparity Rate.
(iv) Step_Four. Any remaining contributions or
forfeitures will be allocated to each Participant's Account in the ratio
that each Participant's total Compensation for the Plan Year bears to all
Participants' total Compensation for that year.
(c) Notwithstanding anything in (a) or (b) above to the
contrary, forfeitures arising under a Participant's money purchase pension
contribution subaccount will only be used to reduce the contributions of
the Participant's Employer who adopted this Plan, and forfeitures arising
under a Participant's profit sharing contribution subaccount will be
reallocated only for the benefit of Employees of the Participant's
Employer who adopted this Plan.
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5.4 Coordination_of_Social_Security_Integration. If the Employer
maintains plans involving integration with Social Security other than this
Plan, and if any Participant is eligible to participate in more than one
of such plans, all such plans will be considered to be integrated if the
extent of the integration of all such plans does not exceed one hundred
percent (100%). For purposes of the preceding sentence, the extent of
integration of a plan is the ratio (expressed as a percentage) which the
actual benefits, benefit rate, offset rate, or Employer Contribution rate
under the plan bears to the integration limitation applicable to such
plan. If the Employer enters into both the money purchase pension
Adoption Agreement and the profit sharing Adoption Agreement under this
Plan, integration with Social Security may only be selected in one Adop-
tion Agreement.
5.5 Withdrawals_and_Distributions. Any distribution to a
Participant or his Beneficiary, any amount transferred from a
Participant's Account directly to the Trustee of any other qualified plan
described in section 401(a) of the Code or to a qualified annuity plan
described in section 403(a) of the Code, or any withdrawal by a
Participant shall be charged to the appropriate subaccount(s) of the
Participant as of the date of the distribution or the withdrawal.
5.6 Determination_of_Value_of_Trust_Fund_and_of_Net
Earnings_or_Losses. As of each Valuation Date the Trustee shall determine
for the period then ended the sum of the net earnings or losses of the
Trust (excluding with respect to Shares and other assets specifically
allocated to a specific Participant's subaccount, (i) dividends and
capital gain distributions from Shares, (ii) receipts or income
attributable to insurance policies, (iii) income gains and/or losses
attributable to a Participant's loans made pursuant to ARTICLE 13 or to
any other assets) which shall reflect accrued but unpaid interest,
dividends, gains, or losses realized from the sale, exchange or collection
of assets, other income received, appreciation in the fair market value
of assets, depreciation in the fair market value of assets, administration
expenses, and taxes and other expenses paid. Gains or losses realized and
adjustments for appreciation or depreciation in fair market value shall
be computed with respect to the difference between such value as of the
preceding Valuation Date or date of purchase, whichever is applicable, and
the value as of the date of disposition or the current Valuation Date,
whichever is applicable.
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5.7 Allocation_of_Net_Earnings_or_Losses.
(a) As of each Valuation Date the net earnings or losses of
the Trust (excluding with respect to Shares and other assets specifically
allocated to a specific Participant's subaccount, (i) dividends and
capital gain distributions from Shares, (ii) dividends or credits
attributable to insurance policies, (iii) income gains and/or losses
attributable to a Participant's loans made pursuant to ARTICLE 13 or to
any other assets, all of which shall be allocated to such Participant's
subaccount) for the valuation period then ending shall be allocated to the
Accounts of all Participants (or Beneficiaries) having credits in the fund
both on such date and at the beginning of such valuation period. Such
allocation shall be made by the application of a fraction, the numerator
of which is the value of the Account of a specific Participant (or
Beneficiary) as of the immediately preceding Valuation Date, reduced by
any distributions therefrom since such preceding Valuation Date, and the
denominator of which is the total value of all such Accounts as of the
preceding Valuation Date, reduced by any distributions therefrom since
such preceding Valuation Date.
(b) To the extent that Shares and other assets are
specifically allocated to a specific Participant's subaccount:
(i) dividends and capital gain distributions from Shares; (ii) dividends
or credits attributable to insurance policies; and (iii) income gains
and/or losses attributable to a Participant's loans made pursuant to
ARTICLE 13 or to any other assets, all shall be allocated to such Partici-
pant's subaccount.
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5.8 Responsibilities_of_the_Plan_Administrator. The Plan
Administrator shall maintain accurate records with respect to the
contributions made by or on behalf of Participants under the Plan, and
shall furnish the Trustee with written instructions directing the Trustee
to allocate all Plan contributions to the Trust among the separate
Accounts of Participants in accordance with section 5.1 above. In making
any such allocation, the Trustee shall be fully entitled to rely on the
instructions furnished by the Plan Administrator, and shall be under no
duty to make any inquiry or investigation with respect thereto.
ARTICLE 6
LIMITATIONS ON ALLOCATIONS
6.1 Employers_Who_Do_Not_Maintain_Other_Qualified Plans.
(a) If the Participant does not participate in, and has
never participated in another qualified plan or a welfare benefit fund,
as defined in section 419(e) of the Code, maintained by the Employer, or
an individual medical account, as defined in section 415(l)(2) of the
Code, maintained by the Employer, which provides an Annual Addition as
defined in section 6.5(a), the amount of Annual Additions that may be
credited to the Participant's Account for any Limitation Year will not
exceed the lesser of the Maximum Permissible Amount or any other
limitation contained in this Plan. If the Employer Contribution that
would otherwise be contributed or allocated to the Participant's Account
would cause the Annual Additions for the Limitation Year to exceed the
Maximum Permissible Amount, the amount contributed or allocated will be
reduced so that the Annual Additions for the Limitation Year will equal
the Maximum Permissible Amount.
(b) Prior to determining the Participant's actual
Compensation for the Limitation Year, the Employer may determine the
Maximum Permissible Amount for a Participant on the basis of a reasonable
estimation of the Participant's Compensation for the Limitation Year,
uniformly determined for all Participants similarly situated.
(c) As soon as is administratively feasible after the end
of the Limitation Year, the Maximum Permissible Amount for the Limitation
Year will be determined on the basis of the Participant's actual
Compensation for the Limitation Year.
(d) If, pursuant to subsection (c) or as a result of the
allocation of forfeitures, there is an Excess Amount the excess will be
disposed of as follows:
(i) Any nondeductible voluntary Employee
contributions, to the extent they would reduce the Excess Amount, will be
returned to the Participant;
(ii) If after the application of paragraph (i) an
Excess Amount still exists, and the Participant is covered by the Plan at
the end of the Limitation Year, the Excess Amount in the Participant's
Account will be used to reduce Employer Contributions (including any
allocation of forfeitures) for such Participant in the next Limitation
Year, and each succeeding Limitation Year if necessary;
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(iii) If after the application of paragraph (i) an
Excess Amount still exists, and the Participant is not covered by the Plan
at the end of the Limitation Year, the Excess Amount will be held
unallocated in a suspense account. The suspense account will be applied
to reduce future Employer Contributions (including allocation of any
forfeitures) for all remaining Participants in the next Limitation Year,
and each succeeding Limitation Year if necessary;
(iv) If a suspense account is in existence at any time
during the Limitation Year pursuant to this section, it will not
participate in the allocation of the Trust's investment gains and losses.
If a suspense account is in existence at any time during a particular
Limitation Year, all amounts in the suspense account must be allocated and
reallocated to Participants' Accounts before any Employer or any Employee
contributions may be made to the Plan for that Limitation Year. Excess
amounts may not be distributed to Participants or former Participants.
6.2 Employers_Who_Maintain_Other_Qualified_Master_or
Prototype_Defined_Contribution_Plans.
(a) This section applies if, in addition to this Plan, the
Participant is covered under another qualified master or prototype defined
contribution plan maintained by the Employer, a welfare benefit fund, as
defined in section 419(e) of the Code maintained by the Employer or an
individual medical account, as defined in section 415(l)(2) of the Code,
maintained by the Employer which provides an Annual Addition as defined
in section 6.5(a), during any Limitation Year. The Annual Additions that
may be credited to a Participant's Account under this Plan for any such
Limitation Year will not exceed the Maximum Permissible Amount reduced by
the Annual Additions credited to a Participant's Account under the other
plans and welfare benefit funds for the same Limitation Year. If the
Annual Additions with respect to the Participant under other defined
contribution plans and welfare benefit funds maintained by the Employer
are less than the Maximum Permissible Amount and the Employer Contribution
that would otherwise be contributed or allocated to the Participant's
Account under this Plan would cause the Annual Additions for the
Limitation Year to exceed this limitation, the amount contributed or
allocated will be reduced so that the Annual Additions under all such
plans and funds for the Limitation Year will equal the Maximum Permissible
Amount. If the Annual Additions with respect to the Participant under
such other defined contribution plans and welfare benefit funds in the
aggregate are equal to or greater than the Maximum Permissible Amount, no
amount will be contributed or allocated to the Participant's Account under
this Plan for the Limitation Year.
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(b) Prior to determining the Participant's actual
Compensation for the Limitation Year, the Employer may determine the
Maximum Permissible Amount for a Participant in the manner described in
section 6.1(b).
(c) As soon as is administratively feasible after the end
of the Limitation Year, the Maximum Permissible Amount for the Limitation
Year will be determined on the basis of the Participant's actual
Compensation for the Limitation Year.
(d) If, pursuant to section 6.2(c), or as a result of the
allocation of forfeitures, a Participant's Annual Additions under this
Plan and such other plans would result in an Excess Amount for a
Limitation Year, the Excess Amount will be deemed to consist of the Annual
Additions last allocated, except that Annual Additions attributable to a
welfare benefit fund or individual medical account will be deemed to have
been allocated first regardless of the actual allocation date.
(e) If an Excess Amount was allocated to a Participant on
an allocation date of this Plan which coincides with an allocation date
of another plan, the Excess Amount attributed to this Plan will be the
product of:
(i) the total Excess Amount allocated as of such
date, times
(ii) the ratio of (1) the Annual Additions allocated
to the Participant for the Limitation Year as of such date under this Plan
to (2) the total Annual Additions allocated to the Participant for the
Limitation Year as of such date under this and all the other qualified
master or prototype defined contribution plans.
(f) Any Excess Amount attributed to this Plan will be
disposed of in the manner described in section 6.1(d).
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6.3 Employers_Who,_In_Addition_to_this_Plan,_Maintain
Other_Qualified_Plans_Which_Are_Defined_Contribution_Plans
Other_than_Master_or_Prototype_Plans. If the Participant is covered under
another qualified defined contribution plan maintained by the Employer
which is not a Master or Prototype Plan, Annual Additions which may be
credited to the Participant's Account under this Plan for any Limitation
Year will be limited in accordance with section 6.2 as though the other
plan were a Master or Prototype Plan unless the Employer provides other
limitations in the Adoption Agreement.
6.4 Employers_Who,_In_Addition_to_This_Plan,_Maintain
A_Qualified_Defined_Benefit_Plan. If the Employer maintains, or at any
time maintained, a qualified defined benefit plan covering any Participant
in this Plan, the sum of the Participant's Defined Benefit Fraction and
Defined Contribution Fraction will not exceed 1.0 in any Limitation Year.
The Annual Additions which may be credited to the Participant's Account
under this Plan for any Limitation Year will be limited in accordance with
the Adoption Agreement.
6.5 Definitions. Unless otherwise expressly provided herein, for
purposes of this ARTICLE only, the following definitions and rules of
interpretation shall apply:
(a) Annual_Additions. The sum of the following amounts
credited to a Participant's Account for the Limitation Year:
(i) Employer Contributions;
(ii) Employee contributions;
(iii) forfeitures; and
(iv) amounts allocated after March 31, 1984 to an
individual medical account, as defined in section 415(l)(2) of the Code,
which is part of a pension or annuity plan maintained by the Employer, are
treated as Annual Additions to a defined contribution plan. Also, amounts
derived from contributions paid or accrued after December 31, 1985, in
taxable years ending after such date, which are attributable to post-
retirement medical benefits allocated to the separate account of a key
employee, as defined in section 419A(d)(3) of the Code, under a welfare
benefit fund, as defined in section 419(e) of the Code, maintained by the
Employer, are treated as Annual Additions to a defined contribution plan.
For this purpose, any Excess Amount applied under sections 6.1(d) or
6.2(f) in the Limitation Year to reduce Employer Contributions will be
considered Annual Additions for such Limitation Year.
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(b) Compensation. A Participant's earned income, wages,
salaries, and fees for professional services and other amounts received
for personal services actually rendered in the course of employment with
the Employer maintaining the Plan (including, but not limited to,
commissions paid salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips and
bonuses), and excluding the following:
(i) Employer contributions to a plan of deferred
compensation which are not includable in the Employee's gross income for
the taxable year in which contributed, or Employer Contributions under a
simplified employee pension plan to the extent such contributions are
excluded from the Employee's gross income, or any distributions from a
plan of deferred compensation;
(ii) Amounts realized from the exercise of a
nonqualified stock option, or when restricted stock (or property) held by
the Employee either becomes freely transferable or is no longer subject
to a substantial risk of forfeiture;
(iii) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; and
(iv) Other amounts which received special tax
benefits, or contributions made by the Employer (whether or not under a
salary reduction agreement) towards the purchase of an annuity described
in section 403(b) of the Code (whether or not the amounts are actually
excludable from the gross income of the Employee).
For purposes of applying the limitations of this
ARTICLE, Compensation for a Limitation Year is the Compensation actually
paid or includable in gross income during such year.
Notwithstanding the preceding sentence, Compensation for
a Participant in a defined contribution plan who is Totally and
Permanently Disabled (as defined in section 22(e)(3) of the Code) is the
Compensation such Participant would have received for the Limitation Year
if the Participant had been paid at the rate of Compensation paid
immediately before becoming permanently and totally disabled; such imputed
Compensation for the disabled Participant may be taken into account only
if the Participant is not a Highly-Compensated Employee (as defined in
section 414(q) of the Code), and contributions made on behalf of such
Participant are nonforfeitable when made.
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(c) Defined_Benefit_Fraction. A fraction, the numerator of
which is the sum of the Participant's Projected Annual Benefits under all
the defined benefit plans (whether or not terminated) maintained by the
Employer, and the denominator of which is the lesser of one hundred
percent (100%) of the dollar limitation determined for the Limitation Year
under sections 415(b) and (d) of the Code or one hundred forty percent
(140%) of highest average compensation, including any adjustments under
section 415(b) of the Code.
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first Limitation Year beginning
after December 31, 1986, in one or more defined benefit plans maintained
by the Employer which were in existence on May 6, 1986, the denominator
of this fraction will not be less than one hundred twenty-five percent
(125%) of the sum of the annual benefits under such plans which the
Participant had accrued as of the close of the last Limitation Year
beginning before January 1, 1987, disregarding any changes in the terms
and conditions of the Plan after May 5, 1986. The preceding sentence
applies only if the defined benefit plans individually and in the
aggregate satisfied the requirements of section 415 of the Code for all
Limitation Years beginning before January 1, 1987.
(d) Defined_Contribution_Dollar_Limitation. Thirty thousand
dollars ($30,000) or, if greater, one- fourth (1/4) of the defined benefit
dollar limitation set forth in section 415(b)(1) of the Code as in effect
for the Limitation Year.
(e) Defined_Contribution_Fraction. A fraction, the
numerator of which is the sum of the Annual Additions to the Participant's
Account under all the defined contribution plans (whether or not
terminated) maintained by the Employer for the current and all prior
Limitation Years (including the Annual Additions attributable to the
Participant's nondeductible voluntary contributions to all defined benefit
plans, whether or not terminated, maintained by the Employer, and the
Annual Additions attributable to all welfare benefit funds, as defined in
section 419(e) of the Code and individual medical accounts, as defined in
section 415(l)(2) of the Code, maintained by the Employer), and the
denominator of which is the sum of the maximum aggregate amounts for the
current and all prior Limitation Years of service with the Employer
(regardless of whether a defined contribution plan was maintained by the
Employer). The maximum aggregate amount in any Limitation Year is the
lesser of one hundred percent (100%) of the dollar limitation in effect
under section 415(c)(1)(A) of the Code or thirty-five percent (35%) of the
Participant's Compensation for such year.
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If the Participant was a Participant as of the end of the
first day of the first Limitation Year beginning after December 31, 1986,
in one or more defined contribution plans maintained by the Employer which
were in existence on May 6, 1986, the numerator of this fraction will be
adjusted if the sum of this fraction and the Defined Benefit Fraction
would otherwise exceed 1.0 under the terms of this Plan. Under the
adjustment, an amount equal to the product of (1) the excess of the sum
of the fractions over 1.0 times (2) the denominator of this fraction, will
be permanently subtracted from the numerator of this fraction. The
adjustment is calculated using the fractions as they would be computed as
of the end of the last Limitation Year beginning before January 1, 1987,
and disregarding any changes in the terms and conditions of the Plan made
after May 5, 1986, but using the section 415 limitation applicable to the
first Limitation Year beginning on or after January 1, 1987. The Annual
Addition for any Limitation Year beginning before January 1, 1987, shall
not be recomputed to treat all Employee contributions as Annual Additions.
(f) Employer. For purposes of this ARTICLE, Employer shall
mean the employer that adopts this Plan, and all members of a controlled
group of corporations (as defined in section 414(b) of the Code as
modified by section 415(h) of the Code), all commonly controlled trades
or businesses (as defined in section 414(c) of the Code as modified by
section 415(h) of the Code), or affiliated service groups (as defined in
section 414(m) of the Code) of which the adopting Employer is a part and
any other entity required to be aggregated with the Employer pursuant to
regulations under section 414(o) of the Code.
(g) Excess_Amount. The excess of the Participant's Annual
Addition for the Limitation Year over the Maximum Permissible Amount.
(h) Highest_Average_Compensation. The average compensation
for the three consecutive Plan Years that produce the highest average.
(i) Limitation_Year. A Plan Year, or the twelve (12)
consecutive month period elected by the Employer in the Adoption
Agreement. All qualified plans maintained by the Employer must use the
same Limitation Year. If the Limitation Year is amended to a different
twelve (12) consecutive month period, the new Limitation Year must begin
on a date within the Limitation Year in which the amendment is made.
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(j) Master_or_Prototype_Plan. A plan the form of which is
the subject of a favorable opinion letter from the Internal Revenue
Service.
(k) Maximum_Permissible_Amount. The maximum Annual Addition
that may be contributed or allocated to a Participant's Account under the
Plan for any Limitation Year shall not exceed the lesser of:
(a) the Defined Contribution Dollar Limitation;
or
(b) twenty-five percent (25%) of the Participant's
Compensation for the Limitation Year.
The Compensation limitation referred to in subsection (b)
shall not apply to any contribution for medical benefits (within the
meaning of section 401(h) or section 419A(f)(2) of the Code) which is
otherwise treated as an Annual Addition under section 415(l)(1) or section
419A(d)(2) of the Code.
If a short Limitation Year is created because of an amendment
changing the Limitation Year to a different twelve (12) consecutive month
period, the Maximum Permissible Amount will not exceed the Defined
Contribution Dollar Limitation multiplied by the following fraction:
Number of Months in the Short Limitation Year
---------------------------------------------
12
(l) Projected_Annual_Benefit. The annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if such
benefit is expressed in a form other than a straight life annuity or
Qualified Joint and Survivor Annuity) to which the Participant would be
entitled under the terms of the Plan assuming:
(i) the Participant will continue employment until
Normal Retirement Age under the Plan (or current age, if later), and
(ii) the Participant's Compensation for the current
Limitation Year and all other relevant factors used to determine benefits
under the Plan will remain constant for all future Limitation Years.
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ARTICLE 7
TRUST FUND
7.1 Receipt_of_Contributions_by_Trustee. All contributions to the
Trust that are received by the Trustee, together with any earnings
thereon, shall be held, managed and administered by the Trustee named in
the Adoption Agreement in accordance with the terms and conditions of the
Trust Agreement and the Plan. The Trustee may use a Custodian designated
by the Sponsor to perform recordkeeping and custodial functions. The
Trustee shall be subject to the proper directions of the Employer or the
Plan Administrator made in accordance with the terms of the Plan and
ERISA.
7.2 Investment_Responsibility.
(a) If the Employer elects in the Adoption Agreement to
exercise investment authority and responsibility, the selection of the
investments in which assets of the Trust are invested shall be the
responsibility of the Plan Administrator and each Participant will have
a ratable interest in all assets of the Trust.
(b) If the Adoption Agreement so provides and the Employer
elects to permit each Participant or Beneficiary to select the investments
in his Account, no person, including the Trustee and the Plan
Administrator, shall be liable for any loss or for any breach of fiduciary
duty which results from such Participant's or Beneficiary's exercise of
control.
(c) If the Adoption Agreement so provides and the Employer
elects to permit each Participant or Beneficiary to select the investments
in his Account, the Employer or the Plan Administrator must complete a
schedule of Participant designations.
(d) If Participants and Beneficiaries are permitted to
select the investment in their Accounts, all investment related expenses,
including administrative fees charged by brokerage houses, will be charged
against the Accounts of the Participants.
(e) The Plan Administrator may at any time change the
selection of investments in which the assets of the Trust are invested,
or subject to such reasonable restrictions as may be imposed by the
Sponsor for administrative convenience, may submit an amended schedule of
Participant designations. Such amended documents may provide for a
variance in the percentages of contributions to any particular investment
or a request that Shares in the Trust be reinvested in whole or in part
in other Shares.
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7.3 Investment_Limitations. The Sponsor may impose reasonable
investment limitations on the Employer and the Plan Administrator relating
to the type of permissible investments in the Trust or the minimum
percentage of Trust assets to be invested in Shares.
ARTICLE 8
VESTING
8.1 Nondeductible_Voluntary_Contributions_and Earnings. The
Participant's nondeductible voluntary contribution subaccount shall be
fully vested and nonforfeitable at all times and no forfeitures will occur
as a result of an Employee's withdrawal of nondeductible voluntary
contributions.
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8.2 Rollovers,_Transfers_and_Earnings. The Participant's rollover
subaccount and direct transfer subaccount shall be fully vested and
nonforfeitable at all times.
8.3 Employer_Contributions_and_Earnings. Notwithstanding the
vesting schedule elected by the Employer in the Adoption Agreement, the
Participant's money purchase pension contribution subaccount and profit
sharing contribution subaccount shall be fully vested and nonforfeitable
upon the Participant's death, disability, attainment of Normal Retirement
Age, or, if the Adoption Agreement provides for an Early Retirement Date,
attainment of the required age and completion of the required service.
In the absence of any of the preceding events, the Participant's money
purchase contribution subaccount and his profit sharing contribution
subaccount shall vest in accordance with a minimum vesting schedule
specified in the Adoption Agreement. The schedule must be at least as
favorable to Participants as either schedule (a) or (b) below.
(a) Graduated vesting according to the following schedule:
Years_of_Service Vested_Percentage
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
(b) Full one hundred percent (100%) vesting after three (3)
Years of Service.
8.4 Amendments_to_Vesting_Schedule.
(a) If the Plan's vesting schedule is amended, or the Plan
is amended in any way that directly or indirectly affects the computation
of the Participant's nonforfeitable percentage or if the Plan is deemed
amended by an automatic change to or from a top-heavy vesting schedule,
each Participant with at least three (3) Years of Service with the
Employer may elect, within a reasonable period after the adoption of the
amendment or change, to have the nonforfeitable percentage computed under
the Plan without regard to such amendment or change. For any Participants
who do not have at least one (1) Hour of Service in any Plan Year
beginning after December 31, 1988, the preceding sentence shall be applied
by substituting "five (5) Years of Service" for "three (3) Years of
Service" where such language appears.
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(b) The period during which the election may be made shall
commence with the date the amendment is adopted or deemed to be made and
shall end on the latest of:
(i) sixty (60) days after the amendment is adopted;
(ii) sixty (60) days after the amendment becomes
effective; or
(iii) sixty (60) days after the Participant is issued
written notice of the amendment by the Employer or Plan Administrator.
(c) No amendment to the Plan shall be effective to the
extent that it has the effect of decreasing a Participant's accrued
benefit. Notwithstanding the preceding sentence, a Participant's Account
balance may be reduced to the extent permitted under section 412(c)(8) of
the Code. For purposes of this paragraph, a Plan amendment which has the
effect of decreasing a Participant's Account balance or eliminating an
optional form of benefit, with respect to benefits attributable to service
before the amendment shall be treated as reducing an accrued benefit.
Furthermore, if the vesting schedule of a Plan is amended, in the case of
an Employee who is a Participant as of the later of the date such
amendment is adopted or the date it becomes effective, the nonforfeitable
percentage (determined as of such date) of such Employee's right to his
Employer-derived accrued benefit will not be less than his percentage
computed under the Plan without regard to such amendment.
8.5 Determination_of_Years_of_Service. For purposes of
determining the vested and nonforfeitable percentage of the Participant's
Employer Contribution subaccounts, all of the Participant's Years of
Service with the Employer or an Affiliated Employer shall be taken into
account. If specified in the Adoption Agreement, Years of Service with
a predecessor employer will be treated as service for the Employer;
provided, however, if the Employer maintains the plan of a predecessor
employer, Years of Service with such predecessor employer will be treated
as service with the Employer without regard to any election.
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8.6 Forfeiture_of_Nonvested_Amounts.
(a) For Plan Years beginning before 1985, any portion of a
Participant's Account that is not vested shall be forfeited by him as of
the last day of the Plan Year in which a Break in Service occurs. For
Plan Years beginning after 1984, any portion of a Participant's Account
that is not vested shall be forfeited by him as of the last day of the
Plan Year in which his fifth consecutive Break in Service occurs. Any
amounts thus forfeited shall be reallocated as provided in ARTICLE 5 and
shall not be considered part of a Participant's Account in computing his
vested interest. The remaining portion of the Participant's Account will
be nonforfeitable.
(b) If a distribution is made at a time when a Participant
has a vested right to less than one hundred percent (100%) of the value
of the Participant's Account attributable to Employer Contributions and
forfeitures, as determined in accordance with the provisions of section
8.3, and the nonvested portion of the Participant's Account has not yet
been forfeited in accordance with paragraph (a) above:
(i) a separate remainder subaccount shall be
established for the Participant's interest in the Plan as of the time of
the distribution, and
(ii) at any relevant time the Participant's vested
portion of the separate remainder subaccount shall be equal to an amount
("X") determined by the following formula:
X = P(AB + (R x D)) - (R x D)
For purposes of applying the formula: P is the vested
percentage at the relevant time; AB is the Account balance at the relevant
time; D is the amount of the distribution; and R is the ratio of the
Account balance at the relevant time to the Account balance after
distribution.
8.7 Reinstatement_of_Benefit. If a benefit is forfeited because
a Participant or Beneficiary cannot be found, such benefit will be
reinstated if a claim is made by the Participant or Beneficiary.
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ARTICLE 9
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
9.1 General. The provisions of this ARTICLE shall apply to any
Participant who is credited with at least one (1) Hour of Service with the
Employer on or after August 23, 1984, and such other Participants as
provided in section 9.7.
9.2 Qualified_Joint_and_Survivor_Annuity. Unless an optional form
of benefit is selected pursuant to a Qualified Election within the ninety
(90) day period ending on the Annuity Starting Date, a married
Participant's Vested Account Balance will be paid in the form of a
Qualified Joint and Survivor Annuity and an unmarried Participant's Vested
Account Balance will be paid in the form of a life annuity. The
Participant may elect to have such annuity distributed upon attainment of
the Earliest Retirement Age under the Plan.
9.3 Qualified_Preretirement_Survivor_Annuity. Unless an optional
form of benefit has been selected within the Election Period pursuant to
a Qualified Election, if a Participant dies before the Annuity Starting
Date, then the Participant's Vested Account Balance shall be applied
toward the purchase of an annuity for the life of the Surviving Spouse.
The Surviving Spouse may elect to have such annuity distributed within a
reasonable period after the Participant's death.
9.4 Definitions.
(a) Election_Period.
(i) The period which begins on the first day of the
Plan Year in which the Participant attains age thirty-five (35) and ends
on the date of the Participant's death. If a Participant separates from
service prior to the first day of the Plan Year in which age thirty-five
(35) is attained, with respect to the Account balance as of the date of
separation, the Election Period shall begin on the date of separation.
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(ii) A Participant who has not yet attained age
thirty-five (35) as of the end of any current Plan Year may make a special
Qualified Election to waive the qualified preretirement survivor annuity
for the period beginning on the date of such election and ending on the
first day of the Plan Year in which the Participant will attain age
thirty-five (35). Such election shall not be valid unless the Participant
receives a written explanation of the qualified preretirement survivor
annuity in such terms as are comparable to the explanation required under
section 9.5. Qualified preretirement survivor annuity coverage will be
automatically reinstated as of the first day of the Plan Year in which the
Participant attains age thirty-five (35). Any new waiver on or after such
date shall be subject to the full requirements of this ARTICLE.
(b) Earliest_Retirement_Age. The earliest date on which,
under the Plan, the Participant could elect to receive retirement
benefits.
(c) Qualified_Election.
(i) A waiver of a Qualified Joint and Survivor
Annuity or a qualified preretirement survivor annuity. Any waiver of a
Qualified Joint and Survivor Annuity or a qualified preretirement survivor
annuity shall not be effective unless:
(1) the Participant's Spouse consents in
writing to the election;
(2) the election designates a specific
Beneficiary, including any class of Beneficiaries or any contingent
Beneficiaries, which may not be changed without spousal consent (or the
Spouse expressly permits designations by the Participant without any
further spousal consent);
(3) the Spouse's consent acknowledges the
effect of the election; and
(4) the Spouse's consent is witnessed by a Plan
representative or notary public. Additionally, a Participant's waiver of
the Qualified Joint and Survivor Annuity shall not be effective unless the
election designates a form of benefit payment which may not be changed
without spousal consent (or the Spouse expressly permits designations by
the participant without any further spousal consent). If it is
established to the satisfaction of a Plan representative that there is no
Spouse or that the Spouse cannot be located, a waiver will be deemed a
Qualified Election.
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(ii) Any consent by a Spouse obtained under this
provision (or establishment that the consent of Spouse may not be
obtained) shall be effective only with respect to such Spouse. A consent
that permits designations by the Participant without any requirement of
further consent by such Spouse must acknowledge that the Spouse has the
right to limit consent to a specific Beneficiary, and a specific form of
benefit where applicable, and that the Spouse voluntarily elects to
relinquish either or both of such rights. A revocation of a prior waiver
may be made by a Participant without the consent of the Spouse at any time
before the commencement of benefits. The number of revocations shall not
be limited. No consent obtained under this provision shall be valid
unless the Participant has received notice as provided in section 9.5.
(d) Qualified_Joint_and_Survivor_Annuity. An immediate
annuity for the life of the Participant with a survivor annuity for the
life of the Spouse which equals fifty percent (50%) of the amount of the
annuity which is payable during the joint lives of the Participant and the
Spouse and which is the amount of benefit which can be purchased with the
Participant's Vested Account Balance.
(e) Spouse_(Surviving_Spouse). The Spouse or Surviving
Spouse of the Participant, provided that a former spouse will be treated
as the Spouse or Surviving Spouse and a current Spouse will not be treated
as the Spouse or Surviving Spouse to the extent provided under a qualified
domestic relations order as described in section 414(p) of the Code.
(f) Annuity_Starting_Date. The first day of the first
period for which an amount is paid as an annuity or any other form.
(g) Vested_Account_Balance. The aggregate value of the
Participant's Vested Account Balances derived from Employer and Employee
contributions (including rollovers and direct transfers), whether vested
before or upon death, including the proceeds of insurance contracts if
any, on the Participant's life. The provisions of this ARTICLE shall
apply to a Participant who is vested in amounts attributable to Employer
Contributions, Employee contributions (or both) at the time of death or
distribution.
9.5 Notice_Requirements.
(a) In the case of a Qualified Joint and Survivor Annuity,
the Plan Administrator shall no less than thirty (30) days and no more
than ninety (90) days prior to the Annuity Starting Date, provide each
Participant a written explanation of:
(i) the terms and conditions of a Qualified Joint and
Survivor Annuity;
(ii) the Participant's right to make and the effect
of an election to waive the Qualified Joint and Survivor Annuity form of
benefit;
(iii) the rights of a Participant's Spouse; and
(iv) the right to make, and the effect of, a
revocation of a previous election to waive the Qualified Joint and
Survivor Annuity.
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(b) In the case of a qualified preretirement survivor
annuity as described in section 9.3, the Plan Administrator shall provide
each Participant within the applicable period for such Participant a
written explanation of the qualified preretirement survivor annuity in
such terms and in such manner as would be comparable to the explanation
provided for meeting the requirements of subsection (a) applicable to a
Qualified Joint and Survivor Annuity.
(c) The applicable period for a Participant is whichever of
the following periods ends last:
(i) the period beginning with the first day of the
Plan Year in which the Participant attains age thirty-two (32) and ending
with the close of the Plan Year preceding the Plan Year in which the
Participant attains age thirty-five (35);
(ii) a reasonable period ending after the individual
becomes a Participant;
(iii) a reasonable period ending after subsection (e)
ceases to apply to the Participant;
(iv) a reasonable period ending after this ARTICLE
first applies to the Participant. Notwithstanding the foregoing, notice
must be provided within a reasonable period ending after separation from
service in the case of a Participant who separates from service before
attaining age thirty-five (35).
(d) For purposes of applying subsection (c), a reasonable
period ending after the enumerated events described above in subsections
(ii), (iii) and (iv) is the end of the two-year period beginning one (1)
year prior to the date the applicable event occurs, and ending one (1)
year after that date. In the case of a Participant who separates from
service before the Plan Year in which age thirty-five (35) is attained,
notice shall be provided within the two (2) year period beginning one (1)
year prior to separation and ending one (1) year after separation. If
such a participant thereafter returns to employment with the Employer, the
applicable period for such Participant shall be redetermined.
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(e) Notwithstanding the other requirements of this section,
the respective notices prescribed by this section need not be given to a
Participant if:
(i) the Plan "fully subsidizes" the cost of a
Qualified Joint and Survivor Annuity or qualified preretirement survivor
annuity; and
(ii) the Plan does not allow the Participant to waive
the Qualified Joint and Survivor Annuity or qualified preretirement
survivor annuity and does not allow a married Participant to designate a
nonspouse Beneficiary.
For purposes of this subsection, a plan fully subsidizes the
costs of a benefit if no increase in cost, or decrease in benefits to the
Participant may result from the Participant's failure to elect another
benefit.
9.6 Safe_Harbor_Rules.
(a) This section shall apply to a Participant in a profit
sharing plan, and to any distribution, made on or after the first day of
the first Plan year beginning after December 31, 1988, from or under a
separate account attributable solely to accumulated deductible Employee
contributions, as defined in section 72(o)(5)(B) of the Code, and
maintained on behalf of a Participant in a money purchase pension plan
(including a target benefit plan) if the following conditions are
satisfied:
(i) the Participant does not or cannot elect payments
in the form of a life annuity; and
(ii) on the death of a Participant, the Participant's
Vested Account Balance will be paid to the Participant's Surviving Spouse,
but if there is no Surviving Spouse, or if the Surviving Spouse has
consented in a manner conforming to a Qualified Election, then to the
Participant's Designated Beneficiary.
(b) The Surviving Spouse may elect to have distribution of
the Vested Account Balance commence within the ninety (90) day period
following the date of the Participant's death. The Account balance shall
be adjusted for gains or losses occurring after the Participant's death
in accordance with the provisions of the Plan governing the adjustment of
Account balances for other types of distributions.
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(c) This section shall not be operative with respect to a
Participant in a profit sharing plan if the plan is a direct or indirect
transferee of a defined benefit plan, money purchase plan, a target
benefit plan, stock bonus, or profit sharing plan which is subject to the
survivor annuity requirements of sections 401(a)(11) and 417 of the Code.
If this section is operative, then the provisions of this ARTICLE, other
than section 9.7, shall be inoperative.
(d) The Participant may waive the spousal death benefit
described in this section at any time provided that no such waiver shall
be effective unless it satisfies the conditions of section 9.4(c) (other
than the notification requirement referred to therein) that would apply
to the Participant's waiver of the qualified preretirement survivor
annuity.
(e) For purposes of this section, Vested Account Balance
shall mean, in the case of a money purchase pension plan or a target
benefit plan, the Participant's separate Account balance attributable
solely to accumulated deductible Employee contributions within the meaning
of section 72(o)(5)(B) of the Code. In the case of a profit sharing plan,
Vested Account Balance shall have the same meaning as provided in section
9.4(g).
9.7 Transitional_Rules.
(a) Any living Participant not receiving benefits on
August 23, 1984, who would otherwise not receive the benefits prescribed
by the previous sections of this ARTICLE must be given the opportunity to
elect to have the prior sections of this ARTICLE apply if such Participant
is credited with at least one (1) Hour of Service under this Plan or a
predecessor plan in a Plan Year beginning on or after January 1, 1976, and
such Participant had at least ten (10) years of vesting service when he
or she separated from service.
(b) Any living Participant not receiving benefits on
August 23, 1984, who was credited with at least one (1) Hour of Service
under this Plan or a predecessor plan on or after September 2, 1974, and
who is not otherwise credited with any service in a Plan Year beginning
on or after January 1, 1976, must be given the opportunity to have his or
her benefits paid in accordance with subsection (d).
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(c) The respective opportunities to elect (as described in
subsections (a) and (b) above) must be afforded to the appropriate
Participants during the period commencing on August 23, 1984, and ending
on the date benefits would otherwise commence to said Participants.
(d) Any Participant who has elected pursuant to subsection
(b) and any Participant who does not elect under subsection (a) or who
meets the requirements of subsection (a) except that such Participant does
not have at least ten (10) years of vesting service when he or she
separates from service, shall have his or her benefits distributed in
accordance with all of the following requirements if benefits would have
been payable in the form of a life annuity:
(i) Automatic_Joint_and_Survivor_Annuity. If
benefits in the form of a life annuity become payable to a married
Participant who:
(1) begins to receive payments under the Plan
on or after Normal Retirement Age; or
(2) dies on or after Normal Retirement Age
while still working for the Employer; or
(3) begins to receive payments on or after the
qualified early retirement age; or
(4) separates from service on or after
attaining Normal Retirement Age (or the qualified early retirement age)
and after satisfying the eligibility requirements for the payment of
benefits under the Plan and thereafter dies before beginning to receive
such benefits;
then such benefits will be received under this Plan in the form of a
Qualified Joint and Survivor Annuity, unless the Participant has elected
otherwise during the Election Period. The Election Period must begin at
least six (6) months before the Participant attains qualified early
retirement age and end not more than ninety (90) days before the
commencement of benefits. Any election hereunder will be in writing and
may be changed by the Participant at any time.
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(ii) Election_of_Early_Survivor_Annuity. A
Participant who is employed after attaining the qualified early retirement
age will be given the opportunity to elect, during the Election Period,
to have a survivor annuity payable on death. If the Participant elects
the survivor annuity, payments under such annuity must not be less than
the payments which would have been made to the Spouse under the Qualified
Joint and Survivor Annuity if the Participant had retired on the day
before his or her death. Any election under this provision will be in
writing and may be changed by the Participant at any time. The Election
Period begins on the later of (1) the 90th day before the Participant
attains the qualified early retirement age; or (2) the date on which
participation begins, and ends on the date the Participant terminates
employment.
(e) The following terms shall have the meanings specified
herein:
(i) Qualified_Early_Retirement_Age. The latest of:
(1) the earliest date, under the Plan, on which
the Participant may elect to receive retirement benefits;
(2) the first day of the 120th month beginning
before the Participant reaches Normal Retirement Age; or
(3) the date the Participant begins
participation.
(ii) Qualified_Joint_and_Survivor_Annuity. An annuity
for the life of the Participant with a survivor annuity for the life of
the Spouse as described in section 9.4(d).
ARTICLE 10
DISTRIBUTION PROVISIONS
10.1 Vesting_on_Distribution_Before_Break_in_Service.
(a) If an Employee terminates service, and the value of the
Employee's Vested Account Balance derived from Employer and Employee
contributions is not greater than three thousand five hundred dollars
($3,500), the Employee will receive a distribution of the value of the
entire vested portion of such Account balance and the nonvested portion
will be treated as a forfeiture. For purposes of this section, if the
value of an Employee's Vested Account Balance is zero, the Employee shall
be deemed to have received a distribution of such Vested Account Balance.
A Participant's Vested Account Balance shall not include accumulated
deductible Employee contributions within the meaning of section
72(o)(5)(B) of the Code for Plan Years beginning prior to January 1, 1989.
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(b) If an Employee terminates service and elects, in
accordance with this ARTICLE, to receive the value of his Vested Account
Balance, the nonvested portion will be treated as a forfeiture. If the
Employee elects to have distributed less than the entire vested portion
of the Account balance derived from Employer Contributions, the part of
the nonvested portion that will be treated as a forfeiture is the total
nonvested portion multiplied by a fraction, the numerator of which is the
amount of the distribution attributable to Employer Contributions and the
denominator of which is the total value of the vested Employer derived
Account balance.
(c) If an Employee receives a distribution pursuant to this
section and the Employee resumes employment covered under this Plan, the
Employee's Employer- derived Account balance will be restored to the
amount on the date of distribution if the Employee repays to the Plan the
full amount of the distribution attributable to Employer Contributions
before the earlier of five (5) years after the first date on which the
Participant is subsequently reemployed by the Employer, or the date the
Participant incurs five (5) consecutive one (1) year Breaks in Service
following the date of the distribution. If an Employee is deemed to
receive a distribution pursuant to this section, and the Employee resumes
employment covered under this Plan before the date the Participant incurs
five (5) consecutive one (1) year Breaks in Service, upon the reemployment
of such Employee, the Employer-derived Account balance of the Employee
will be restored to the amount on the date of such deemed distribution.
10.2 Restrictions_on_Immediate_Distributions.
(a) If the value of a Participant's Vested Account Balance
derived from Employer and Employee contributions exceeds (or at the time
of any prior distribution exceeded) three thousand five hundred dollars
($3,500) and the Account balance is immediately distributable, the
Participant and the Participant's Spouse (or where either the Participant
or the Spouse has died, the survivor) must consent to any distribution of
such Account balance. The consent of the Participant and the
Participant's Spouse shall be obtained in writing within the ninety (90)
day period ending on the Annuity Starting Date. The Annuity Starting Date
is the first day of the first period for which an amount is paid as an
annuity or any other form. The Plan Administrator shall notify the
Participant and the Participant's Spouse of the right to defer any
distribution until the Participant's Account balance is no longer
immediately distributable. Such notification shall include a general
description of the material features, and an explanation of the relative
values of, the optional forms of benefit available under the Plan in a
manner that would satisfy the notice requirements of section 417(a)(3),
and shall be provided no less than thirty (30) days and no more than
ninety (90) days prior to the Annuity Starting Date.
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(b) Notwithstanding the provisions of subsection (a), only
the Participant need consent to the commencement of a distribution in the
form of a Qualified Joint and Survivor Annuity while the Account balance
is immediately distributable. (Furthermore, if payment in the form of a
Qualified Joint and Survivor Annuity is not required with respect to the
Participant pursuant to section 9.6 of the Plan, only the Participant need
consent to the distribution of an Account balance that is immediately
distributable). Neither the consent of the Participant nor the Partici-
pant's Spouse shall be required to the extent that a distribution is
required to satisfy section 401(a)(9) or section 415 of the Code. In
addition, upon termination of this Plan if the Plan does not offer an
annuity option (purchased from a commercial provider), the Participant's
Account balance may, without the Participant's consent, be distributed to
the Participant or transferred to another defined contribution plan (other
than an employee stock ownership plan as defined in section 4975(e)(7) of
the Code) within the same controlled group.
(c) An Account balance is immediately distributable if any
part of the Account balance could be distributed to the Participant (or
Surviving Spouse) before the Participant attains (or would have attained
if not deceased) the later of Normal Retirement Age or age sixty- two
(62).
(d) For purposes of determining the applicability of the
foregoing consent requirements to distributions made before the first day
of the first Plan Year beginning after December 31, 1988, the
Participant's Vested Account Balance shall not include amounts
attributable to accumulated deductible Employee contributions within the
meaning of section 72(o)(5)(B) of the Code.
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10.3 Commencement_of_Benefits.
(a) Unless the Participant elects otherwise, distribution
of benefits will begin no later than the 60th day after the latest of the
close of the Plan Year in which:
(i) the Participant attains age sixty-five (65) (or
Normal Retirement Age, if earlier);
(ii) the 10th anniversary of the year in which the
Participant commenced participation in the Plan occurs; or
(iii) the Participant terminates service with the
Employer.
(b) Notwithstanding the foregoing, the failure of a
Participant and Spouse to consent to a distribution while a benefit is
immediately distributable, within the meaning of section 10.2 of the Plan,
shall be deemed to be an election to defer commencement of payment of any
benefit sufficient to satisfy this section.
10.4 Early_Retirement_With_Age_and_Service_Require ment. If a
Participant separates from service before satisfying the age requirement
for early retirement, but has satisfied the service requirement, the
Participant will be entitled to elect an early retirement benefit upon
satisfaction of such age requirement.
10.5 Nontransferability_of_Annuities. Any annuity contract
distributed herefrom must be nontransferable.
10.6 Conflicts_With_Annuity_Contracts. The terms of any annuity
contract purchased and distributed by the Plan to a Participant or Spouse
shall comply with the requirements of this Plan.
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ARTICLE 11
TIMING AND MODES OF DISTRIBUTION
11.1 General_Rules.
(a) Subject to ARTICLE 9, the requirements of this ARTICLE
shall apply to any distribution of a Participant's interest and will take
precedence over any inconsistent provisions of this Plan. Unless
otherwise specified, the provisions of this ARTICLE apply to calendar
years beginning after December 31, 1984.
(b) All distributions required under this ARTICLE shall be
determined and made in accordance with the income tax regulations under
section 401(a)(9) of the Code, including the minimum distribution
incidental benefit requirement of section 1.401(a)(9)-2 of the proposed
regulations.
11.2 Required_Beginning_Date. The entire interest of a Participant
must be distributed or begin to be distributed no later than the
Participant's Required Beginning Date.
11.3 Limits_on_Distribution_Periods. As of the first Distribution
Calendar Year, distributions, if not made in a single-sum, may only be
made over one of the following periods (or a combination thereof):
(a) the life of the Participant;
(b) the life of the Participant and a Designated
Beneficiary;
(c) a period certain not extending beyond the Life
Expectancy of the Participant; or
(d) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a Designated Beneficiary.
11.4 Determination_of_Amount_to_be_Distributed_Each Year.
(a) Individual_Account.
(i) If a Participant's Benefit is to be distributed
over (1) a period not extending beyond the Life Expectancy of the
Participant or the joint life and last survivor expectancy of the
Participant and the Participant's Designated Beneficiary or (2) a period
not extending beyond the Life Expectancy of the Designated Beneficiary,
the amount required to be distributed for each calendar year, beginning
with distributions for the first Distribution Calendar Year, must at least
equal the quotient obtained by dividing the Participant's Benefit by the
Applicable Life Expectancy.
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(ii) For calendar years beginning before January 1,
1989, if the Participant's Spouse is not the Designated Beneficiary, the
method of distribution selected must assure that at least fifty percent
(50%) of the present value of the amount available for distribution is
paid within the Life Expectancy of the Participant.
(iii) For calendar years beginning after December 31,
1988, the amount to be distributed each year, beginning with distributions
for the first Distribution Calendar Year shall not be less than the
quotient obtained by dividing the Participant's Benefit by the lesser of
(1) the Applicable Life Expectancy or (2) if the Participant's Spouse is
not the Designated Beneficiary, the applicable divisor determined from the
table set forth in Q&A-4 of section 1.401(a)(9)-2 of the proposed
regulations. Distributions after the death of the Participant shall be
distributed using the Applicable Life Expectancy in subsection (a)(i)
above as the relevant divisor without regard to proposed regulations
section 1.401(a)(9)-2.
(iv) The minimum distribution required for the
Participant's first Distribution Calendar Year must be made on or before
the Participant's Required Beginning Date. The minimum distribution for
other calendar years, including the minimum distribution for the
Distribution Calendar Year in which the Employee's Required Beginning Date
occurs, must be made on or before December 31 of that Distribution
Calendar Year.
(b) Other_Forms. If the Participant's Benefit is
distributed in the form of an annuity purchased from an insurance company,
distributions thereunder shall be made in accordance with the requirements
of section 401(a)(9) of the Code and the proposed regulations thereunder.
11.5 Death_Distribution_Provisions.
(a) Distribution_Beginning_Before_Death. If the Participant
dies after distribution of his or her interest has begun, the remaining
portion of such interest will continue to be distributed at least as
rapidly as under the method of distribution being used prior to the
Participant's death.
(b) Distribution_Beginning_After_Death. If the Participant
dies before distribution of his or her interest begins, distribution of
the Participant's entire interest shall be completed by December 31 of the
calendar year containing the fifth anniversary of the Participant's death
except to the extent that an election is made to receive distributions in
accordance with (i) or (ii) below:
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(i) if any portion of the Participant's interest is
payable to a Designated Beneficiary, distributions may be made over the
life or over a period certain not greater than the Life Expectancy of the
Designated Beneficiary commencing on or before December 31 of the calendar
year immediately following the calendar year in which the Participant
died;
(ii) if the Designated Beneficiary is the
Participant's Surviving Spouse, the date distributions are required to
begin in accordance with (i) above shall not be earlier than the later of
(1) December 31 of the calendar year immediately following the calendar
year in which the Participant died and (2) December 31 of the calendar
year in which the Participant would have attained age seventy and one-half
(70 1/2).
(c) If the Participant has not made an election pursuant to
this section by the time of his or her death, the Participant's Designated
Beneficiary must elect the method of distribution no later than the
earlier of (1) December 31 of the calendar year in which distributions
would be required to begin under this section; or (2) December 31 of the
calendar year which contains the fifth anniversary of the date of death
of the Participant. If the Participant has no Designated Beneficiary, or
if the Designated Beneficiary does not elect a method of distribution,
distribution of the Participant's entire interest must be completed by
December 31 of the calendar year containing the fifth anniversary of the
Participant's death.
(d) For purposes of subsection (b) above, if the Surviving
Spouse dies after the Participant, but before payments to such Spouse
begin, the provisions of subsection (b), with the exception of paragraph
(ii) therein, shall be applied as if the Surviving Spouse were the
Participant.
(e) For purposes of this section, any amount paid to a child
of the Participant will be treated as if it had been paid to the Surviving
Spouse if the amount becomes payable to the Surviving Spouse when the
child reaches the age of majority.
(f) For the purposes of this section, distribution of a
Participant's interest is considered to begin on the Participant's
Required Beginning Date (or, if subsection (d) above is applicable, the
date distribution is required to begin to the Surviving Spouse pursuant
to subsection (b) above). If distribution in the form of an annuity
described in section 11.4(b) above irrevocably commences to the
Participant before the Required Beginning Date, the date distribution is
considered to begin is the date distribution actually commences.
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11.6 Designation_of_Beneficiary. Subject to the rules of
ARTICLE 9, a Participant (or former Participant) may designate from time
to time any person or persons (who may be designated contingently or
successively and may be an entity other than a natural person) as his
Beneficiary who will be entitled to receive any undistributed amounts
credited to the Participant's separate Account under the Plan at the time
of the Participant's death. Any such Beneficiary designation by a
Participant shall be made in writing in the manner prescribed by the Plan
Administrator, and shall be effective only when filed with the Plan
Administrator during the Participant's lifetime. A Participant may change
or revoke his Beneficiary designation at any time in the manner prescribed
by the Plan Administrator. If any portion of the Participant's Account
is invested in insurance pursuant to ARTICLE 14, the Beneficiary of the
benefits under the insurance policy shall be the person or persons
designated under the policy. If the Designated Beneficiary (or each of
the Designated Beneficiaries) predeceases the Participant, the Partici-
pant's Beneficiary designation shall be ineffective. If no Beneficiary
designation is in effect at the time of the Participant's death, his
Beneficiary shall be his estate.
11.7 Definitions.
(a) Applicable_Life_Expectancy. The Life Expectancy (or
joint and last survivor expectancy) calculated using the attained age of
the Participant (or Designated Beneficiary) as of the Participant's (or
Designated Beneficiary's) birthday in the applicable calendar year reduced
by one (1) for each calendar year which has elapsed since the date Life
Expectancy was first calculated. If Life Expectancy is being
recalculated, the Applicable Life Expectancy shall be the Life Expectancy
as so recalculated. The applicable calendar year shall be the first
Distribution Calendar Year, and if Life Expectancy is being recalculated
such succeeding calendar year. If annuity payments commence in accordance
with section 11.4(b) before the Required Beginning Date, the applicable
calendar year is the year such payments commence. If distribution is in
the form of an immediate annuity purchased after the Participant's death
with the Participant's remaining interest, the applicable calendar year
is the year of purchase.
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(b) Designated_Beneficiary. The individual who is
designated as the Beneficiary under the Plan in accordance with section
401(a)(9) and the proposed regulations thereunder.
(c) Distribution_Calendar_Year. A calendar year for which
a minimum distribution is required. For distributions beginning before
the Participant's death, the first Distribution Calendar Year is the
calendar year immediately preceding the calendar year which contains the
Participant's Required Beginning Date. For distributions beginning after
the Participant's death, the first Distribution Calendar Year is the
calendar year in which distributions are required to begin pursuant to
section 11.5 above.
(d) Life_Expectancy.
(i) Life Expectancy and joint and last survivor
expectancy are computed by use of the expected return multiples in
Tables V and VI of section 1.72-9 of the income tax regulations.
(ii) Unless otherwise elected by the Participant (or
Spouse, in the case of distributions described in section 11.5(b)(ii)
above) by the time distributions are required to begin, life expectancies
shall be recalculated annually. Such election shall be irrevocable as to
the Participant (or Spouse) and shall apply to all subsequent years. The
Life Expectancy of a non-Spouse Beneficiary may not be recalculated.
(e) Participant's_Benefit.
(i) The Account balance as of the last valuation date
in the calendar year immediately preceding the Distribution Calendar Year
(valuation calendar year) increased by the amount of any contributions or
forfeitures allocated to the Account balance as of dates in the valuation
calendar year after the valuation date and decreased by distributions made
in the valuation calendar year after the valuation date.
(ii) For purposes of subsection (i) above, if any
portion of the minimum distribution for the first Distribution Calendar
Year is made in the second Distribution Calendar Year on or before the
Required Beginning Date, the amount of the minimum distribution made in
the second Distribution Calendar Year shall be treated as if it had been
made in the immediately preceding Distribution Calendar Year.
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(f) Required_Beginning_Date.
(i) General_Rule. The Required Beginning Date of a
Participant is the first day of April of the calendar year following the
calendar year in which the Participant attains age seventy and one-half
(70 1/2).
(ii) Transitional_Rules. The Required Beginning Date
of a Participant who attains age seventy and one-half (70 1/2) before
January 1, 1988, shall be determined in accordance with (1) or (2) below:
(1) Non-Five-Percent_Owners. The Required
Beginning Date of a Participant who is not a Five Percent (5%) Owner is
the first day of April of the calendar year following the calendar year
in which the later of retirement or attainment of age seventy and one-
half (70 1/2) occurs.
(2) Five_Percent_Owners. The Required
Beginning Date of a Participant who is a Five Percent (5%) Owner during
any year beginning after December 31, 1979, is the first day of April
following the later of:
(A) the calendar year in which the
Participant attains age seventy and one-half (70 1/2); or
(B) the earlier of the calendar year with
or within which ends the Plan Year in which the Participant becomes a Five
Percent (5%) Owner, or the calendar year in which the Participant retires.
The Required Beginning Date of a Participant who is not a Five Percent
(5%) Owner who attains age seventy and one- half (70 1/2) during 1988 and
who has not retired as of January 1, 1989, is April 1, 1990.
(iii) Five_Percent_Owner. A Participant is treated as
a Five Percent (5%) Owner for purposes of this section if such Participant
is a Five Percent (5%) Owner as defined in section 416(i) of the Code
(determined in accordance with section 416 but without regard to whether
the Plan is top-heavy) at any time during the Plan Year ending with or
within the calendar year in which such owner attains age sixty-six and
one-half (66 1/2) or any subsequent year.
(iv) Once distributions have begun to a Five Percent
(5%) Owner under this section, they must continue to be distributed, even
if the Participant ceases to be a Five Percent (5%) Owner in a subsequent
year.
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11.8 Transitional_Rule.
(a) Notwithstanding the other requirements of this ARTICLE
and subject to the requirements of ARTICLE 9, distribution on behalf of
any Employee, including a Five Percent (5%) Owner, may be made in
accordance with all of the following requirements (regardless of when such
distribution commences):
(i) The distribution by the Trust is one which would
not have disqualified such trust under section 401(a)(9) of the Internal
Revenue Code as in effect prior to amendment by the Deficit Reduction Act
of 1984.
(ii) The distribution is in accordance with a method
of distribution designated by the Employee whose interest in the Trust is
being distributed or, if the Employee is deceased, by a Beneficiary of
such Employee.
(iii) Such designation was in writing, was signed by
the Employee or the Beneficiary, and was made before January 1, 1984.
(iv) The Employee had accrued a benefit under the Plan
as of December 31, 1983.
(v) The method of distribution designated by the
Employee or the Beneficiary specifies the time at which distributions will
be made, and in the case of any distribution upon the Employee's death,
the Beneficiaries of the Employee listed in order of priority.
(b) A distribution upon death will not be covered by this
transitional rule unless the information in the designation contains the
required information described above with respect to the distributions to
be made upon the death of the Employee.
(c) For any distribution which commences before January 1,
1984, but continues after December 31, 1983, the Employee, or the
Beneficiary, to whom such distribution is being made, will be presumed to
have designated the method of distribution under which the distribution
is being made if the method of distribution was specified in writing and
the distribution satisfies the requirements in subsections (a)(i) and
(a)(v).
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(d) If a designation is revoked, any subsequent distribution
must satisfy the requirements of section 401(a)(9) of the Code and the
proposed regulations thereunder. If a designation is revoked subsequent
to the date distributions are required to begin, the Trust must distribute
by the end of the calendar year following the calendar year in which the
revocation occurs the total amount not yet distributed which would have
been required to have been distributed to satisfy section 401(a)(9) of the
Code and the regulations thereunder but for the section 242(b)(2)
election. For calendar years beginning after December 31, 1988, such
distributions must meet the minimum distribution incidental benefit
requirements in section 1.401(a)(9)-2 of the proposed regulations. Any
changes in the designation will be considered to be a revocation of the
designation. However, the mere substitution or addition of another
beneficiary (one not named in the designation) under the designation will
not be considered to be a revocation of the designation, so long as such
substitution or addition does not alter the period over which
distributions are to be made under the designation, directly or indirectly
(for example, by altering the relevant measuring life). In the case in
which an amount is transferred or rolled over from one plan to another
plan, the rules in Q&A J-2 and Q&A J-3 shall apply.
11.9 Optional_Forms_of_Benefit.
(a) Except to the extent benefits are required to be paid
in the form of an automatic joint and survivor annuity under ARTICLE 9,
any amount which a Participant shall be entitled to receive under the Plan
shall be distributed in one or a combination of the following ways:
(i) in a lump-sum payment of cash, the amount of
which shall be determined by redeeming all Shares credited to the
Participant's Account under the Plan as of the date of distribution;
(ii) in a lump-sum payment including a distribution
in kind of all Shares credited to the Participant's Account under the Plan
as of the date of distribution;
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(iii) in substantially equal monthly, quarterly, or
annual installment payments of cash, or the distribution of Shares in
kind, over a period certain not to exceed the Life Expectancy of the
Participant or the joint and last survivor Life Expectancy of the
Participant and his Beneficiary, determined in each case as of the earlier
of: (1) the end of the Plan Year in which occurs the event entitling the
Participant to a distribution of benefits, or (2) the date such
installments commence;
(iv) if permitted by the Sponsor, in monthly,
quarterly, or annual installment payments of cash, or the distribution of
Shares in kind, so that the amount distributed in each Plan Year equals
the quotient obtained by dividing the Participant's Account at the
beginning of that Plan Year by the joint and last survivor Life Expectancy
of the Participant and the Beneficiary for that Plan Year. The Life
Expectancy will be computed using the recomputation method described in
section 11.7(d). Unless the Spouse of the retired Participant is the
Beneficiary, the actuarial present value of all expected payments to the
retired Participant must be more than fifty percent (50%) of the actuarial
present value of payments to the retired Participant and the Beneficiary;
or
(v) by application of the Participant's vested
Account to the purchase of a nontransferable immediate or deferred annuity
contract, on an individual or group basis. Unless the Spouse of the
retired Participant is the Beneficiary, the actuarial present value of all
expected payments to the retired Participant must be more than fifty
percent (50%) of the actuarial present value of payments to the retired
Participant and the Beneficiary.
(b) If the Participant fails to select a method of
distribution, except as may be required by ARTICLE 9, all amounts which
he is entitled to receive under the Plan shall be distributed to him in
a lump-sum payment.
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ARTICLE 12
WITHDRAWALS
12.1 Withdrawal_of_Nondeductible_Voluntary_Contribu tions. Subject
to the Qualified Election requirements of ARTICLE 9 and section 12.3, any
Participant who has made nondeductible voluntary contributions may, upon
thirty (30) days notice in writing filed with the Plan Administrator, have
paid to him all or any portion of the fair market value of his
nondeductible voluntary contribution subaccount.
12.2 Hardship_Withdrawals. If the Adoption Agreement so provides
and the Employer elects, this section applies only to the profit sharing
contribution subaccount and only if the profit sharing allocation formula
selected in the Adoption Agreement is not integrated with Social Security.
(a) Demonstration_of_Need. Subject to the Qualified
Election requirements of ARTICLE 9 and section 12.3, if a Participant
establishes an immediate and heavy financial need for funds because of a
hardship resulting from the purchase or renovation of a primary residence,
the education of the Participant or a member of his immediate family
(including special education), the medical or personal expenses of the
Participant or a member of his immediate family, or other demonstrable
emergency as determined by the Plan Administrator on a uniform and
nondiscriminatory basis, the Participant shall be permitted, subject to
the limitations of subsection (b) below, to make a hardship withdrawal of
an amount credited to his profit sharing contribution subaccount under the
Plan.
(b) Amount_of_Hardship_Withdrawal. The amount of any
hardship withdrawal by a Participant under subsection (a) above shall not
exceed the amount required to meet the immediate financial need created
by the hardship and not reasonably available from other resources of the
Participant.
(c) Prior_Withdrawal_of_Nondeductible_Voluntary
Participant_Contributions. A Participant shall not be permitted to make
a hardship withdrawal under subsection (a) above unless he has already
withdrawn, in accordance with section 12.1, any amount credited to his
nondeductible voluntary contributions subaccount.
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12.3 Manner_of_Making_Withdrawals. Any withdrawal by a Participant
under the Plan shall be made only after the Participant files a written
request with the Plan Administrator specifying the nature of the
withdrawal (and the reasons therefor, if a hardship withdrawal), and the
amount of funds requested to be withdrawn. Upon approving any withdrawal,
the Plan Administrator shall furnish the Trustee with written instructions
directing the Trustee to make the withdrawal in a lump-sum payment of cash
to the Participant. In making any withdrawal payment, the Trustee shall
be fully entitled to rely on the instructions furnished by the Plan
Administrator, and shall be under no duty to make any inquiry or
investigation with respect thereto. Unless section 9.6 is applicable, if
the Participant is married, his Spouse must consent to the withdrawal
pursuant to a Qualified Election (as defined in section 9.4(c)) within the
ninety (90) day period ending on the date of the withdrawal.
12.4 Limitations_on_Withdrawals. The Plan Administrator may
prescribe uniform and nondiscriminatory rules and procedures limiting the
number of times a Participant may make a withdrawal under the Plan during
any Plan Year, and the minimum amount a Participant may withdraw on any
single occasion.
ARTICLE 13
LOANS
13.1 General_Provisions.
(a) If the Adoption Agreement so provides and the Employer
so elects, loans shall be made available to any Participant or Beneficiary
who is a party-in-interest (as defined in section 3(14) of ERISA) on a
reasonably equivalent basis. A Participant or Beneficiary who is not a
party-in-interest (as defined in section 3(14) of ERISA) shall not be
eligible to receive a loan under this ARTICLE.
(b) Loans shall not be made available to Highly- Compensated
Employees (as defined in section 414(q) of the Code) in an amount greater
than the amount made available to other Employees.
(c) Loans must be adequately secured and bear a reasonable
interest rate.
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(d) No Participant loan shall exceed the present value of
the Participant's Vested Account Balance.
(e) Unless section 9.6 is applicable, a Participant must
obtain the consent of his or her Spouse, if any, to use of the Account
balance as security for the loan. Spousal consent shall be obtained no
earlier than the beginning of the ninety (90) day period that ends on the
date on which the loan is to be so secured. The consent must be in
writing, must acknowledge the effect of the loan, and must be witnessed
by a Plan representative or notary public. Such consent shall thereafter
be binding with respect to the consenting Spouse or any subsequent Spouse
with respect to that loan. A new consent shall be required if the Account
balance is used for renegotiation, extension, renewal or other revision
of the loan.
(f) In the event of default, foreclosure on the note and
attachment of security will not occur until a distributable event occurs
under the Plan.
(g) Loans will not be made to any shareholder- employee or
Owner-Employee. For purposes of this requirement, a shareholder-employee
means an Employee or officer of an electing small business (subchapter S)
corporation who owns (or is considered as owning within the meaning of
section 318(a)(1) of the Code), on any day during the taxable year of such
corporation, more than five percent (5%) of the outstanding stock of the
corporation.
(h) If a valid spousal consent has been obtained in
accordance with subsection (e), then, notwithstanding any other provision
of this Plan, the portion of the Participant's Vested Account Balance used
as a security interest held by the Plan by reason of a loan outstanding
to the Participant shall be taken into account for purposes of determining
the amount of the Account balance payable at the time of death or
distribution, but only if the reduction is used as repayment of the loan.
If less than one hundred percent (100%) of the Participant's Vested
Account Balance (determined without regard to the preceding sentence) is
payable to the Surviving Spouse, then the Account balance shall be
adjusted by first reducing the Vested Account Balance by the amount of the
security used as repayment of the loan, and then determining the benefit
payable to the Surviving Spouse.
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13.2 Administration_of_Loan_Program.
(a) The Plan's loan program will be administered by the Plan
Administrator.
(b) Loan requests shall be made on a form prescribed by the
Plan Administrator and shall comply with section 13.4.
(c) Loan requests that comply with all the requirements of
this ARTICLE shall be approved by the Plan Administrator.
(d) The rate of interest to be charged on loans shall be
determined under section 13.5.
(e) The only collateral that may be used as security for a
loan, and the limitations and requirements applicable, are determined
under section 13.6.
(f) The rules regarding defaults are set forth in section
13.9.
13.3 Amount_of_Loan. Loans to any Participant or Beneficiary will
not be made to the extent that such loan, when added to the outstanding
balance of all other loans to the Participant or Beneficiary, would exceed
the lesser of:
(a) fifty thousand dollars ($50,000) reduced by the excess
(if any) of the highest outstanding balance of loans during the one (1)
year period ending on the day before the loan is made, over the
outstanding balance of loans from the Plan on the date the loan is made;
or
(b) one-half (1/2) the present value of the nonforfeitable
accrued benefit of the Participant.
(c) For the purpose of the above limitation, all loans from
all plans of the Employer and other members of a group of employers
described in sections 414(b), 414(c) and 414(m) of the Code are
aggregated.
13.4 Manner_of_Making_Loans. A request by a Participant for a loan
shall be made in writing to the Plan Administrator and shall specify the
amount of the loan, and the subaccount(s) or Shares of the Participant
from which the loan should be made. The terms and conditions on which the
Plan Administrator shall approve loans under the Plan shall be applied on
a uniform and nondiscriminatory basis with respect to all Participants.
If a Participant's request for a loan is approved by the Plan
Administrator, the Plan Administrator shall furnish the Trustee with
written instructions directing the Trustee to make the loan in a lump-sum
payment of cash to the Participant. In making any loan payment under this
ARTICLE, the Trustee shall be fully entitled to rely on the instructions
furnished by the Plan Administrator and shall be under no duty to make any
inquiry or investigation with respect thereto.
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13.5 Terms_of_Loan. Loans shall be made on such terms and subject
to such limitations as the Plan Administrator may prescribe.
Furthermore, any loan shall, by its terms, require that repayment
(principal and interest) be amortized in level payments, not less
frequently than quarterly, over a period not extending beyond five (5)
years from the date of the loan, unless such loan is used to acquire a
dwelling unit which, within a reasonable time (determined at the time the
loan is made) will be used as the principal residence of the Participant.
The rate of interest to be charged shall be determined by the Plan
Administrator in accordance with the rates quoted by representative
financial institutions in the local area for similar loans.
13.6 Security_for_Loan. Any loan to a Participant under the Plan
shall be secured by the pledge of all the Participant's right, title, and
interest in the Trust. Such pledge shall be evidenced by the execution
of a promissory note by the Participant which shall provide that, in the
event of any default by the Participant on a loan repayment, the Plan
Administrator shall be authorized (to the extent permitted by law) to
deduct the amount of the loan outstanding and any unpaid interest due
thereon from the Participant's wages or salary to be thereafter paid by
the Employer, and to take any and all other actions necessary and
appropriate to enforce collection of the unpaid loan. An assignment or
pledge of any portion of the Participant's interest in the Plan and a
loan, pledge, or assignment with respect to any insurance contract
purchased under the Plan, will be treated as a loan under this section.
In the event the value of the Participant's vested Account at any time is
less than one hundred twenty- five percent (125%) of the outstanding loan
balance, the Plan Administrator shall request additional collateral of
sufficient value to adequately secure the repayment of the loan. Failure
to provide such additional collateral upon a request of the Plan
Administrator shall constitute an event of default.
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13.7 Segregated_Investment. Loans shall be considered a
Participant directed investment and, for the limited purposes of
allocating earnings and losses pursuant to ARTICLE 5, shall not be
considered a part of the common fund under the Trust.
13.8 Repayment_of_Loan. The Plan Administrator shall have the sole
responsibility for ensuring that a Participant timely makes all loan
repayments, and for notifying the Trustee in the event of any default by
the Participant on the loan. Each loan repayment shall be paid to the
Trustee and shall be accompanied by written instructions from the Plan
Administrator that identify the Participant on whose behalf the loan
repayment is being made.
13.9 Default_on_Loan.
(a) In the event of a termination of the Participant's
employment with the Affiliated Employers or a default by a Participant on
a loan repayment, all remaining payments on the loan shall be immediately
due and payable. The Employer shall, upon the direction of the Plan
Administrator, to the extent permitted by law, deduct the total amount of
the loan outstanding and any unpaid interest due thereon from the wages
or salaries payable to the Participant by the Employer in accordance with
the Participant's promissory note. In addition, the Plan Administrator
shall take any and all other actions necessary and appropriate to enforce
collection of the unpaid loan. However, attachment of the Participant's
Account pledged as security will not occur until a distributable event
occurs under the Plan.
(b) For purposes of this section, the term "default" shall
mean failure, by a period of at least ten (10) days, to make any loan
payment (whether principal or interest or both) that is due and payable.
Neither the Plan Administrator nor any other fiduciary is required to give
any written or oral notice of default.
13.10 Unpaid_Amounts. Upon the occurrence of a Participant's
retirement or death, or upon a Participant's fifth consecutive Break in
Service or earlier distribution, the unpaid balance of any loan, including
any unpaid interest, shall be deducted from any payment or distribution
from the Trust to which such Participant or his Beneficiary may be
entitled. If after charging the Participant's Account with the unpaid
balance of the loan, including any unpaid interest, there still remains
an unpaid balance of any such loan and interest, then the remaining unpaid
balance of such loan and interest shall be charged against any property
pledged as security with respect to such loan.
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ARTICLE 14
INSURANCE
14.1 Insurance. If the Adoption Agreement so provides and the
Employer elects to allocate or permit Participants to allocate a portion
of their Accounts to purchase life insurance, the ensuing subsections of
this ARTICLE shall apply.
14.2 Policies. The Plan Administrator shall instruct the Trustee
to procure one or more life insurance policies on the Participant's life,
the terms of which shall conform to the requirements of the Plan and the
Code. The policies and the companies which write them shall be subject
to the approval of the Plan Administrator and the Trustee. The Trustee
shall procure and hold such policies in its name or the name of the
nominee. The Trustee shall be the sole owner of all contracts purchased
hereunder, and it shall be so designated in each policy and application
therefor.
14.3 Beneficiary. The Participant shall have the right to name the
Beneficiary and to choose the benefit option under the policy for the
Beneficiary. The Trustee shall designate the Beneficiary of all such
policies in accordance with the written directions of the Plan Adminis-
trator and the policy terms. Such designations may be outlined in the
original application as forwarded to the issuing company. However, the
Plan Administrator shall have available and shall furnish the Participant
with the necessary forms for any Beneficiary designation or change of
Beneficiary and it will keep a copy of all executed designations as part
of its records. Upon a Participant's death, the Plan Administrator will
promptly furnish the Trustee a copy of the last designation and shall
authorize the Trustee to complete such forms as the insurance company may
require in order to effect the benefit option.
14.4 Payment_of_Premiums. Subject to the provisions of sections
7.3 and 14.5, premium payments to the insurer may be made only by the
Trustee with respect to any insurance policy purchased on behalf of a
Participant and shall constitute first an investment of a portion of the
funds of the Participant's Employer Contribution subaccounts up to the
maximum amount of such subaccounts permitted to be applied toward such
premium payments, as provided in section 14.5. If a Participant's
subaccounts lack sufficient assets to pay premiums on a life insurance
policy due on his behalf, the Trustee, at the direction of the Plan
Administrator, acting upon the request of the Participant, shall borrow
under the policy loan provisions, if any, the amount necessary to pay such
premiums, using the cash value of the insurance as security, or the
Trustee may liquidate assets held in the Participant's Account, in the
same order, of sufficient value to pay such premiums. Any loans shall be
repaid by the application of earnings, contributions, or forfeitures to
the Account of the Participant insured by such policy. In the absence of
the Plan Administrator's direction to borrow or to liquidate assets to pay
premiums, the life insurance policy shall be put on a paid-up basis or,
if it has no cash value, cancelled.
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14.5 Limitation_on_Insurance_Premiums. The Trustee shall not pay,
nor shall anyone on behalf of the Trustee pay, any life insurance premium
for any Participant out of the Participant's Employer Contribution
subaccounts unless the amount of such payment, plus all premiums
previously so paid on behalf of the Participant, is less than fifty
percent (50%) of the Employer Contributions and forfeitures allocated to
the Participant's Employer Contribution subaccounts as determined on the
date such premium is paid with respect to reserve life insurance policies
and shall be less than twenty-five percent (25%) thereof with respect to
nonreserve (term) policies, or, if both reserve life and term insurance
are purchased on the life of any Participant, the sum of the term
insurance premium plus one-half (1/2) of the reserve life premiums may not
exceed twenty- five percent (25%) of the Employer Contributions made on
behalf of such Participant. For purposes of these incidental insurance
provisions, reserve life insurance contracts are contracts with both
nondecreasing death benefits and nonincreasing premiums. Dividends
received on life insurance policies shall be considered a reduction of
premiums paid in such computations.
If payment of premiums on a Participant's life insurance
policy is prohibited because of the limitation, the Trustee, as directed
by the Plan Administrator, shall permit the Participant to maintain that
part of the coverage made available by the prohibited premiums, either by
payment of the amount of the prohibited premium by the Participant from
sources other than the Trust or by distributing the policy to the extent
of the Participant's vested interest to the Participant and eliminating
it from the Trust.
Nothing contained in the foregoing provisions of section 14.4
and this section shall be deemed to authorize the payment of any premium
or premiums for any Participant which would result in a failure to
maintain any mandatory investment in Shares required by the Sponsor in the
Account or subaccounts of any such Participant.
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14.6 Insurance_Company. No insurance company which may issue any
policies for the purposes of this Plan shall be required to take or permit
any action contrary to the provisions of said policies, nor shall such
insurance company be deemed to be a party to, or responsible for the
validity of, this Plan for any purpose. No such insurance company shall
be required to look into the terms of this Plan or question any action of
the Trustee hereunder, nor be responsible to see that any action of the
Trustee is authorized by the terms of this Plan. Any such issuing
insurance company shall be fully discharged from any and all liability for
any amount paid to the Trustee or paid in accordance with the direction
of the Trustee, as the case may be, or for any change made or action taken
by such insurance company upon such direction and no such insurance
company shall be obliged to see to the distribution or further application
of any monies paid by it. The certificate of the Trustee signed by one
of its trust officers, assistant secretary, or other authorized
representative thereof, may be received by any insurance company as
conclusive evidence of any of the matters mentioned in this Plan and any
insurance company shall be fully protected in taking or permitting any
action on the faith thereof and shall incur no liability or responsibility
for so doing.
14.7 Distribution_of_Policies. Upon a Participant's death, the
Trustee, upon direction of the Plan Administrator, shall procure the
payment of the proceeds of any policy held by the Participant in
accordance with its terms and this Plan. The Trustee shall be required
to pay over all the proceeds of any policy to the Participant's Designated
Beneficiary in accordance with the distribution provisions of this Plan.
A Participant's Spouse will be the Designated Beneficiary unless a
Qualified Election has been made in accordance with section 9.4(c) of the
Plan. Under no circumstances shall the Trust retain any part of the
proceeds. Subject to the joint and survivor annuity requirements of
ARTICLE 9, the policies shall be converted or distributed upon
commencement of benefits in accordance with the provisions of this
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section. Upon a Participant's retirement at or after his Normal
Retirement Age, unless there is a single sum distribution in which case
any policy shall be distributed, any such policy shall be converted to a
paid-up contract and delivered to the Participant but the Plan
Administrator may, with the Participant's consent, direct that a portion
or all of such cash value of the policy be converted to provide retirement
income as permitted within the terms of the policy and this Plan. Upon
a Participant's retirement due to Total and Permanent Disability, any such
policy shall be held for his account and assigned or delivered to the
Participant in addition to any other benefits provided by this Plan. Upon
a Participant's termination of employment for reasons other than death,
Total and Permanent Disability, or retirement as stated above, to the
extent of life insurance purchased by Employer Contributions, he shall be
entitled to a vested interest in any policy held for his account as his
interest is vested in the remainder of his Employer Contribution
subaccounts (exclusive of any such policy). Whenever the Participant is
entitled to one hundred percent (100%) vesting, then such policy shall be
assigned and delivered to the Participant in accordance with its terms and
the terms of the Plan. Whenever the Participant is entitled to vesting
of less than one hundred percent (100%), then the Participant shall be
entitled to a vested interest of the cash surrender value of any such
policy equal to his percent of vested interest in his Employer
Contribution subaccounts, exclusive of the policy, and one of the
following distribution procedures shall apply:
(a) If the nonvested portion of the cash surrender value of
all policies held for the Participant's Account is less than the amount
of his vested termination benefit exclusive of the policies, then, such
policy shall be assigned to the Participant and the remainder of the
Participant's vested interest in the Participant's Employer Contribution
subaccounts shall be reduced by the cash surrender value of the nonvested
portion of all policies, after which it shall be paid or distributed to
the Participant in accordance with the terms of the Plan; or
(b) If the nonvested portion of the cash surrender value of
all policies held for the Participant's Account exceeds the Participant's
vested interest in the Employer Contribution subaccount exclusive of such
policies, the Participant shall be given the opportunity to purchase such
policies by paying to the Trustee the amount of such excess within thirty
(30) days after notice to him of the amount to be paid. Upon receipt of
such payment said policy shall be assigned and delivered to the Partici-
pant to the full satisfaction of all termination benefits under this Plan.
Any such policy not so purchased shall be surrendered by the Trustee for
its cash value and the proceeds thereof deposited in the Trust for
reallocation pursuant to ARTICLE 5.
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It is the intention hereof that the total termination benefit
of a Participant whose interest is not fully vested shall be equal to the
sum of the vested percentage of his Employer Contribution subaccounts
exclusive of all such policies and the same percentage of the cash value
of all such policies held for his Account. To the extent possible under
the foregoing provisions, such total termination benefits shall be
satisfied by the transfer and delivery to the Participant of one or more
such policies with the balance, if any, to be paid in cash or in kind.
14.8 Policy_Features. The Trustee shall arrange, where possible,
that all policies purchased for the benefit of a Participant shall have
the same dividend option which shall be on the premium reduction plan, and
as nearly as may be possible all policies issued under the Plan shall have
the same anniversary date. To the extent any dividends or credits earned
on insurance policies are not applied toward the next premiums due, they
shall be allocated to the Participant's Employer Contribution subaccount
in the same manner as a Participant's directed investment.
14.9 Changed_Conditions. From time to time because of changed
conditions, the Trustee, acting at the direction of the Plan Administrator
upon the election of the Participant concerned, shall obtain an additional
contract or policy or make such change in the contracts or policies
maintained by the Trustee on the life of the Participant as may be
required by such changed conditions, within the limits permitted by the
insurance company which issued or is requested to issue a contract and the
limits established by this Plan.
14.10 Conflicts. In the event of any conflict between the terms
of the Plan and the provisions of any contract issued hereunder, the terms
of the Plan shall control.
ARTICLE 15
ADMINISTRATION
15.1 Duties_and_Responsibilities_of_Fiduciaries;
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Allocation_of_Fiduciary_Responsibility. A fiduciary of the Plan shall
have only those specific powers, duties, responsibilities, and obligations
as are explicitly given him under the Plan and Trust Agreement. In
general, the Employer shall have the sole responsibility for making
contributions to the Plan required under ARTICLE 4; appointing the Trustee
and the Plan Administrator; and determining the funds available for
investment under the Plan. The Plan Administrator shall have the sole
responsibility for the administration of the Plan, as more fully described
in section 15.2. It is intended that each fiduciary shall be responsible
only for the proper exercise of his own powers, duties, responsibilities,
and obligations under the Plan and Trust Agreement, and shall not be
responsible for any act or failure to act of another fiduciary. A
fiduciary may serve in more than one fiduciary capacity with respect to
the Plan.
15.2 Powers_and_Responsibilities_of_the_Plan_Adminis trator.
(a) Administration_of_the_Plan. The Plan Administrator
shall have all powers necessary to administer the Plan, including the
power to construe and interpret the Plan documents; to decide all
questions relating to an individual's eligibility to participate in the
Plan; to determine the amount, manner, and timing of any distribution of
benefits or withdrawal under the Plan; to approve and ensure the repayment
of any loan to a Participant under the Plan; to resolve any claim for
benefits in accordance with section 15.7; and to appoint or employ
advisors, including legal counsel; to render advice with respect to any
of the Plan Administrator's responsibilities under the Plan. Any
construction, interpretation, or application of the Plan by the Plan
Administrator shall be final, conclusive, and binding. All actions by the
Plan Administrator shall be taken pursuant to uniform standards applied
to all persons similarly situated. The Plan Administrator shall have no
power to add to, subtract from, or modify any of the terms of the Plan,
or to change or add to any benefits provided by the Plan, or to waive or
fail to apply any requirements of eligibility for a benefit under the
Plan.
(b) Records_and_Reports. The Plan Administrator shall be
responsible for maintaining sufficient records to reflect the Eligibility
Computation Periods in which an Employee is credited with one or more
Years of Service for purposes of determining his eligibility to
participate in the Plan, and the Compensation of each Participant for
purposes of determining the amount of contributions that may be made by
or on behalf of the Participant under the Plan. The Plan Administrator
shall be responsible for submitting all required reports and notifications
relating to the Plan to Participants or their Beneficiaries, the Internal
Revenue Service and the Department of Labor.
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(c) Furnishing_Trustee_with_Instructions. The Plan
Administrator shall be responsible for furnishing the Trustee with written
instructions regarding all contributions to the Trust, all distributions
to Participants in accordance with ARTICLE 10, all withdrawals by
Participants in accordance with ARTICLE 12, all loans to Participants in
accordance with ARTICLE 13 and all purchases of life insurance in
accordance with ARTICLE 14. In addition, the Plan Administrator shall be
responsible for furnishing the Trustee with any further information
respecting the Plan which the Trustee may request for the performance of
its duties or for the purpose of making any returns to the Internal
Revenue Service or Department of Labor as may be required of the Trustee.
(d) Rules_and_Decisions. The Plan Administrator may adopt
such rules as it deems necessary, desirable, or appropriate in the
administration of the Plan. All rules and decisions of the Plan
Administrator shall be applied uniformly and consistently to all
Participants in similar circumstances. When making a determination or
calculation, the Plan Administrator shall be entitled to rely upon
information furnished by a Participant or Beneficiary, the Employer, the
legal counsel of the Employer, or the Trustee.
(e) Application_and_Forms_for_Benefits. The Plan
Administrator may require a Participant or Beneficiary to complete and
file with it an application for a benefit, and to furnish all pertinent
information requested by it. The Plan Administrator may rely upon all
such information so furnished to it, including the Participant's or
Beneficiary's current mailing address.
(f) Facility_of_Payment. Whenever, in the Plan
Administrator's opinion, a person entitled to receive a payment of a
benefit or installment thereof is under a legal disability or is
incapacitated in any way so as to be unable to manage his financial
affairs, as determined by a court of competent jurisdiction, it may direct
the Trustee to make payments to such person or to the legal representative
or to a relative or friend of such person for that person's benefit, or
it may direct the Trustee to apply the payment for the benefit of such
person in such manner as it considers advisable.
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15.3 Allocation_of_Duties_and_Responsibilities. The Plan
Administrator may, by written instrument, allocate among its members or
employees any of its duties and responsibilities not already allocated
under the Plan or may designate persons other than members or employees
to carry out any of the Plan Administrator's duties and responsibilities
under the Plan. Any such duties or responsibilities thus allocated must
be described in the written instrument. If a person other than an
Employee of the Employer is so designated, such person must acknowledge
in writing his acceptance of the duties and responsibilities allocated to
him.
15.4 Appointment_of_the_Plan_Administrator. The Employer shall
designate in the Adoption Agreement the Plan Administrator who shall
administer the Employer's Plan. Such Plan Administrator may consist of
an individual, a committee of two or more individuals, whether or not, in
either such case, the individual or any of such individuals are Employees
of the Employer, a consulting firm or other independent agent, the Trustee
(with its consent), or the Employer itself. The Plan Administrator shall
be charged with the full power and the responsibility for administering
the Plan in all its details. If no Plan Administrator has been appointed
by the Employer, or if the person designated as Plan Administrator by the
Employer is not serving as such for any reason, the Employer shall be
deemed to be the Plan Administrator of the Plan. The Plan Administrator
may be removed by the Employer, or may resign by giving notice in writing
to the Employer, and in the event of the removal, resignation, or death,
or other termination of service by the Plan Administrator, the Employer
shall, as soon as practicable, appoint a successor Plan Administrator,
such successor thereafter to have all of the rights, privileges, duties,
and obligations of the predecessor Plan Administrator.
15.5 Expenses. The Employer shall pay all expenses authorized and
incurred by the Plan Administrator in the administration of the Plan
except to the extent such expenses are paid from the Trust.
15.6 Liabilities. The Plan Administrator and each person to whom
duties and responsibilities have been allocated pursuant to section 15.3
may be indemnified and held harmless by the Employer with respect to any
alleged breach of responsibilities performed or to be performed hereunder.
The Employer and each Affiliated Employer shall indemnify and hold
harmless the Sponsor against all claims, liabilities, fines, and
penalties, and all expenses reasonably incurred by or imposed upon him
(including, but not limited to, reasonable attorney's fees) which arise
as a result of actions or failure to act in connection with the operation
and administration of the Plan.
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15.7 Claims_Procedure.
(a) Filing_a_Claim. Any Participant or Beneficiary under
the Plan may file a written claim for a Plan benefit with the Plan
Administrator or with a person named by the Plan Administrator to receive
claims under the Plan.
(b) Notice_of_Denial_of_Claim. In the event of a denial or
limitation of any benefit or payment due to or requested by any
Participant or Beneficiary under the Plan ("claimant"), claimant shall be
given a written notification containing specific reasons for the denial
or limitation of his benefit. The written notification shall contain
specific reference to the pertinent Plan provisions on which the denial
or limitation of his benefit is based. In addition, it shall contain a
description of any other material or information necessary for the
claimant to perfect a claim, and an explanation of why such material or
information is necessary. The notification shall further provide
appropriate information as to the steps to be taken if the claimant wishes
to submit his claim for review. This written notification shall be given
to a claimant within ninety (90) days after receipt of his claim by the
Plan Administrator unless special circumstances require an extension of
time for processing the claim. If such an extension of time for
processing is required, written notice of the extension shall be furnished
to the claimant prior to the termination of said ninety (90) day period,
and such notice shall indicate the special circumstances which make the
postponement appropriate.
(c) Right_of_Review. In the event of a denial or limitation
of his benefit, the claimant or his duly authorized representative shall
be permitted to review pertinent documents and to submit to the Plan
Administrator issues and comments in writing. In addition, the claimant
or his duly authorized representative may make a written request for a
full and fair review of his claim and its denial by the Plan
Administrator; provided, however, that such written request must be
received by the Plan Administrator (or its delegate to receive such
requests) within sixty (60) days after receipt by the claimant of written
notification of the denial or limitation of the claim. The sixty (60) day
requirement may be waived by the Plan Administrator in appropriate cases.
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(d) Decision_on_Review. A decision shall be rendered by the
Plan Administrator within sixty (60) days after the receipt of the request
for review, provided that where special circumstances require an extension
of time for processing the decision, it may be postponed on written notice
to the claimant (prior to the expiration of the initial sixty (60) day
period) for an additional sixty (60) days, but in no event shall the
decision be rendered more than one hundred twenty (120) days after the
receipt of such request for review. Any decision by the Plan Adminis-
trator shall be furnished to the claimant in writing and shall set forth
the specific reasons for the decision and the specific Plan provisions on
which the decision is based.
(e) Court_Action. No Participant or Beneficiary shall have
the right to seek judicial review of a denial of benefits, or to bring any
action in any court to enforce a claim for benefits prior to filing a
claim for benefits or exhausting his rights to review under this section.
ARTICLE 16
AMENDMENT, TERMINATION AND MERGER
16.1 Sponsor's_Power_to_Amend. The Sponsor may amend any part of
the Plan. For purposes of Sponsor's amendments, the mass submitter shall
be recognized as the agent of the Sponsor. If the Sponsor does not adopt
the amendments made by the mass submitter, it will no longer be identical
to or a minor modifier of the mass submitter plan.
16.2 Amendment_by_Adopting_Employer.
(a) The Employer may:
(i) change the choice of options in the Adoption
Agreement;
(ii) add overriding language in the Adoption Agreement
when such language is necessary to satisfy section 415 or section 416 of
the Code because of the required aggregation of multiple plans; and
(iii) add certain model amendments published by the
Internal Revenue Service which specifically provide that their adoption
will not cause the Plan to be treated as individually designed.
(b) An Employer that amends the Plan for any other reason,
including a waiver of the minimum funding requirement under section 412(d)
of the Code, will no longer participate in this prototype plan and will
be considered to have an individually designed plan.
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16.3 Vesting_Upon_Plan_Termination. In the event of the
termination or partial termination of the Plan, the Account balance of
each affected Participant will be nonforfeitable.
16.4 Vesting_Upon_Complete_Discontinuance_of_Contribu tions. In
the event of a complete discontinuance of contributions under the Plan,
the Account balance of each affected Participant will be nonforfeitable.
16.5 Maintenance_of_Benefits_Upon_Merger. In the event of a merger
or consolidation with, or transfer of assets to any other plan, each
Participant will receive a benefit immediately after such merger,
consolidation or transfer (if the Plan then terminated) which is at least
equal to the benefit the Participant was entitled to immediately before
such merger, consolidation or transfer (if the Plan had been terminated).
16.6 Special_Amendments. The Employer may from time to time make
any amendment to the Plan that may be necessary to satisfy section 415 or
416 of the Code. Any such amendment will be adopted by the Employer by
completing overriding Plan language in the Adoption Agreement. In the
event of such an amendment, the Employer must obtain a separate
determination letter from the Internal Revenue Service to continue
reliance on the Plan's qualified status.
ARTICLE 17
MISCELLANEOUS
17.1 Exclusive_Benefit_of_Participants_and_Beneficia ries.
(a) All assets of the Trust shall be retained for the
exclusive benefit of Participants and their Beneficiaries, and shall be
used only to pay benefits to such persons or to pay the fees and expenses
of the Trust. The assets of the Trust shall not revert to the benefit of
the Employer, except as otherwise specifically provided in section
17.1(b).
(b) To the extent permitted or required by ERISA and the
Code, contributions to the Trust under this Plan are subject to the
following conditions:
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(i) If a contribution or any part thereof is made to
the Trust by the Employer under a mistake of fact, such contribution or
part thereof shall be returned to the Employer within one (1) year after
the date the contribution is made.
(ii) In the event the Plan is determined not to meet
the initial qualification requirements of section 401 of the Code,
contributions made in respect of any period for which such requirements
are not met shall be returned to the Employer within one (1) year after
the Plan is determined not to meet such requirements, but only if the
application for the qualification is made by the time prescribed by law
for filing the Employer's return for the taxable year in which the Plan
is adopted, or such later date as the Secretary of the Treasury may
prescribe.
(iii) Contributions to the Trust are specifically
conditioned on their deductibility under the Code and, to the extent a
deduction is disallowed for any such contribution, such amount shall be
returned to the Employer within one (1) year after the date of the
disallowance of the deduction.
17.2 Nonguarantee_of_Employment. Nothing contained in this Plan
shall be construed as a contract of employment between the Employer and
any Employee, or as a right of any Employee to be continued in the
employment of the Employer, or as a limitation of the right of the
Employer to discharge any of its Employees, with or without cause.
17.3 Rights_to_Trust_Assets. No Employee, Participant, or
Beneficiary shall have any right to, or interest in, any assets of the
Trust upon termination of employment or otherwise, except as provided
under the Plan. All payments of benefits under the Plan shall be made
solely out of the assets of the Trust.
17.4 Nonalienation_of_Benefits. No benefit or interest available
hereunder will be subject to assignment or alienation, either voluntarily
or involuntarily. The preceding sentence shall also apply to the
creation, assignment, or recognition of a right to any benefit payable
with respect to a Participant pursuant to a domestic relations order,
unless such order is determined to be a qualified domestic relations
order, as defined in section 414(p) of the Code, or any domestic relations
order entered before January 1, 1985.
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17.5 Aggregation_Rules.
(a) Except as provided in ARTICLE 6, all Employees of the
Employer or any Affiliated Employer will be treated as employed by a
single employer.
(b) If this Plan provides contributions or benefits for one
or more Owner-Employees who control both the business for which this Plan
is established and one or more other trades or businesses, this Plan and
the plan established for other trades or businesses must, when looked at
as a single plan, satisfy sections 401(a) and (d) of the Code for the
Employees of this and all other trades or businesses.
(c) If the Plan provides contributions or benefits for one
or more Owner-Employees who control one or more other trades or
businesses, the employees of the other trades or businesses must be
included in a plan which satisfies sections 401(a) and (d) of the Code and
which provides contributions and benefits not less favorable than provided
for Owner-Employees under this Plan.
(d) If an individual is covered as an Owner- Employee under
the plans of two or more trades or businesses which are not controlled and
the individual controls a trade or business, then the contributions or
benefits of the employees under the plan of the trades or businesses which
are controlled must be as favorable as those provided for him under the
most favorable plan of the trade or business which is not controlled.
(e) For purposes of paragraphs (b), (c) and (d), an Owner-
Employee, or two or more Owner-Employees, will be considered to control
a trade or business if the Owner- Employee, or two or more Owner-Employees
together:
(i) own the entire interest in an unincorporated
trade or business; or
(ii) in the case of a partnership, own more than fifty
percent (50%) of either the capital interest or the profits interest in
the partnership.
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For purposes of the preceding sentence, an Owner- Employee,
or two or more Owner-Employees shall be treated as owning an interest in
a partnership which is owned, directly or indirectly, by a partnership
which such Owner- Employee, or such two or more Owner-Employees, are
considered to control within the meaning of the preceding sentence.
17.6 Failure_of_Qualification. If the Employer's plan fails to
attain or retain qualification, such plan will no longer participate in
this master/prototype plan and will be considered an individually designed
plan.
17.7 Applicable_Law. Except to the extent otherwise required by
ERISA, as amended, this Plan shall be construed and enforced in accordance
with the laws of the state in which the Employer's principal place of
business is located, as specified in the Adoption Agreement.
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<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
The Schedule contains summary financial information extracted from year-
end audited financial statements dated December 31, 1995 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 88,887,832
<INVESTMENTS-AT-VALUE> 88,887,832
<RECEIVABLES> 439,904
<ASSETS-OTHER> 204,111
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 89,531,847
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 745,889
<TOTAL-LIABILITIES> 745,889
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 88,785,958
<SHARES-COMMON-STOCK> 88,785,958
<SHARES-COMMON-PRIOR> 111,804,729
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 88,785,958
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,641,637
<OTHER-INCOME> 0
<EXPENSES-NET> 948,743
<NET-INVESTMENT-INCOME> 4,692,894
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> (23,018,771)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,692,894
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 171,612,305
<NUMBER-OF-SHARES-REDEEMED> 198,940,358
<SHARES-REINVESTED> 4,309,282
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<GROSS-EXPENSE> 1,022,011
<AVERAGE-NET-ASSETS> 94,806,102
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .049
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.049)
<PER-SHARE-DISTRIBUTIONS> 0
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<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
