<PAGE>
<PAGE>
As filed with the Securities and Exchange Commission on April 30, 1998
REGISTRATION FILE NOS. 2-17226, 811-994
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. 66 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 28 [X]
(Check appropriate box or boxes)
THE BURNHAM FUND INC.
(Exact name of registrant as specified in charter)
1325 AVENUE OF THE AMERICAS, 17TH FLOOR
NEW YORK, NEW YORK 10019
(Address of Principal Executive Offices) (Zip Code)
(800) 874-FUND
(Registrant's Telephone Number, Including Area Code)
JON M. BURNHAM
1325 AVENUE OF THE AMERICAS, 17TH FLOOR
NEW YORK, NEW YORK 10019
(Name and Address of Agent for Service)
COPY TO:
PHILIP H. HARRIS
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
Approximate date of proposed public offering:
It is proposed that this filing will become effective (check appropriate box)
<TABLE>
<S> <C>
X immediately upon filing pursuant to paragraph (b), or on (date) pursuant to paragraph (b), or
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60 days after filing pursuant to paragraph (a)(1), or on (date) pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2), or on (date) pursuant to paragraph (a)(2) of Rule 485.
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</TABLE>
REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF ITS SHARES OF BENEFICIAL
INTEREST PURSUANT TO RULE 24f-2 UNDER THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED, AND HAS FILED A RULE 24f-2 NOTICE WITH THE COMMISSION FOR ITS MOST
RECENT FISCAL YEAR ENDED DECEMBER 31, 1997.
<PAGE>
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495)
<TABLE>
<CAPTION>
FORM N-1A
ITEM NO. LOCATION
PART A
<S> <C> <C>
Item 1. Cover Page.................................... Cover Page
Item 2. Synopsis...................................... Fee Table; Hypothetical Investment
Item 3. Condensed Financial Information............... Financial Highlights; Performance Information
Item 4. General Description of Registrant............. The Fund; The Fund's Investment Objectives and Policies;
Risk Factors; Organization of the Fund
Item 5. Management of the Fund........................ Cover Page; The Fund; Management; Distribution;
Services for Shareholders
Item 5A. Management's Discussion
of Fund Performance........................... Annual Report to Shareholders
Item 6. Capital Stock and Other Securities............ Net Asset Value, Dividends, Capital Gains
Distributions and Taxes; Services for Shareholders;
Purchase of Shares; Alternative Purchase Arrangements
Item 7. Purchase of Securities Being Offered.......... Cover Page; Purchase of Shares; Net Asset Value,
Dividends, Capital Gains Distributions and
Taxes; Alternative Purchase Arrangements;
Distribution; Services for Shareholders
Item 8. Redemption or Repurchase...................... Redemption of Shares; Purchase of Shares; Alternative
Purchase Arrangements
Item 9. Legal Proceedings............................. Not Applicable
PART B
Item 10. Cover Page.................................... Cover Page
Item 11. Table of Contents............................. Table of Contents
Item 12. General Information and History............... Not Applicable
Item 13. Investment Objective and Policies............. Investment Techniques; Investment Restrictions
Item 14. Management of the Fund........................ Directors and Officers of the Fund
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
FORM N-1A
ITEM NO. LOCATION
PART B
<S> <C> <C>
Item 15. Control Persons and Principal
Holders of Securities......................... Directors and Officers of the Fund
Item 16. Investment Advisory and
Other Services................................ Investment Management and Other Services;
Services for Shareholders
Item 17. Brokerage Allocation and
Other Practices............................... Portfolio Turnover and Brokerage
Item 18. Capital Stock and Other Securities............ Purchase and Redemption of Shares
Item 19. Purchase, Redemption and Pricing of
Securities Being Offered...................... Cover Page; Purchase and Redemption of Shares;
Services for Shareholders; Net Asset Value,
Dividends, Capital Gains Distributions and Taxes
Item 20. Tax Status.................................... Net Asset Value, Dividends, Capital Gains
Distributions and Taxes
Item 21. Underwriters.................................. Portfolio Turnover and Brokerage
Item 22. Calculations of Performance Data.............. Determination of Performance
Item 23. Financial Statements.......................... Financial Statements
</TABLE>
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.
2
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<PAGE>
BURNHAM
----
Fund
THE BURNHAM FUND INC. (the "Fund") is a diversified, open-end management
investment company whose principal investment objective is capital
appreciation, mainly long-term. Income generally will be of lesser
importance.
The Fund offers alternative purchase arrangements that provide investors with
the option of purchasing shares (i) subject to a front-end sales charge and a
Rule 12b-1 plan distribution fee ("Class A shares"); (ii) subject to a
contingent deferred sales charge ("CDSC") if held for less than six years, a
Rule 12b-1 plan distribution fee and a service fee ("Class B shares"); or
(iii) subject to a CDSC if held for less than one year, a Rule 12b-1 plan
distribution fee and a service fee ("Class C shares"). The Fund's multi-class
distribution system is described more fully under the headings "Alternative
Purchase Arrangements", "Purchase of Shares - Terms of Purchase", "Redemption
of Shares", and "Distribution - Distribution Plan and Use of Distribution and
Service Fees".
The purpose of offering different classes of shares is to provide investors
with options so that each may choose a method of purchasing the Fund's shares
most suited to his or her specific investment needs and preferences. The
proceeds from the sales of the three classes of shares are jointly invested
in the Fund's investment portfolio. Each class of shares represents an
identical interest in the portfolio, except as to class-specific distribution
related matters and any other matters relating only to a particular class.
Each class of shares has identical voting, dividend, liquidation and other
rights except as described in "Alternative Purchase Arrangements".
Burnham Asset Management Corporation (the "Adviser"), an affiliate of Burnham
Securities Inc. (the "Distributor"), the Fund's principal distributor, serves
as the Fund's investment adviser.
This Prospectus sets forth concisely the information you should know before
investing in the Fund. You should read it and keep it for future reference. A
Statement of Additional Information, dated April 30, 1998, has been filed
with the Securities and Exchange Commission (the "Commission") and contains
further information about the Fund. The Statement of Additional Information
is hereby incorporated by reference into this Prospectus. You can obtain a
copy without charge by contacting your account executive or certified
financial planner at a dealer authorized to sell shares of the Fund or by
calling or writing the Distributor at the telephone numbers and address
as described in "Services for Shareholders".
================================================================================
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY
BANK OR OTHER DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF
THE PRINCIPAL AMOUNT INVESTED.
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.
BURNHAM Securities Inc.
PRINCIPAL DISTRIBUTOR
1325 Avenue of the Americas, 17th Floor,
New York, New York 10019
April 30, 1998
<PAGE>
<PAGE>
BURNHAM
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Fund
Fee Table
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------------------------------
<S> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Front-end Sales Charge 5.00%(1) None None
Maximum Front-end Sales Charge imposed on Reinvested Dividends None None None
Maximum Contingent Deferred Sales Charge None 5.00%(2) 1.00%(2)
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 0.63% 0.63% 0.63%
Distribution Fees(3) 0.25% 0.75% 0.75%
Service Fees None 0.25% 0.25%
Other Expenses (after expense reimbursement) 0.42% 0.42%(4) 0.42%(4)
------ ------ ------
Total Operating Expenses 1.30% 2.05% 2.05%(5)
====== ====== ======
</TABLE>
(1) Class A shares have reduced initial sales charges for purchases in excess of
$50,000. Certain purchases of Class A shares of $ 1 million or more are not
subject to front-end sales charges, but a contingent deferred sales charge is
imposed on the proceeds of such shares equal to 1% if the shares are redeemed
within the first 12 months after the end of the calendar month of their
purchase, and .5 of 1% if redeemed within the next 12 months. See "Purchase of
Shares -- Initial Sales Charges (Class A Shares)".
(2) The contingent deferred sales charge on Class B shares declines from 5%
during the first year to 0% in the sixth year after the date of purchase.
Deferred sales charge on Class C shares applies only if a redemption of shares
occurs within 12 months from the purchase date. See "Redemption of Shares".
(3) The National Association of Securities Dealers, Inc. (the "NASD") imposes a
maximum limit on asset-based sales charges, which include distribution fees.
Long-term shareholders may pay more than the economic equivalent of the maximum
front-end sales charges permitted by the NASD. See "Distribution -- Distribution
Plan and Use of Distribution and Service Fees".
(4) The Adviser has voluntarily agreed to reimburse expenses of the Class B and
Class C shares in order to limit expenses. The Adviser reserves the right to
discontinue this policy at any time. The Adviser reimbursed Class C shares
$386 in 1997.
(5) The expense information for Class B and Class C shares has been restated to
reflect current fees that would have been applicable had they been in effect
during the previous fiscal year. Had the Investment Adviser not agreed to
reimburse Class B and Class C shares for expenses in excess of the expense
limitation described under "Management", the ratios of expenses for the periods
ended December 31, 1997 would have been 2.5% for Class C shares.
Hypothetical Investment
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------- --------------- --------------- ----------------
SHARE CLASS: A B C A B C A B C A B C
- - - - - - - - - - - -
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
You would pay the following expenses
on a $1,000 investment, assuming
(1) Payment of the Maximum Sales Charge,
(2) a 5% annual return, and
(3) redemption of shares at the end of the period.
10 YEAR FIGURES FOR CLASS B ASSUME CONVERSION
TO CLASS A SHARES AFTER EIGHT YEARS $63 $71 $31 $89 $94 $64 $117 $130 $110 $199 $219 $238
You would pay the following expenses
on the same $1,000 investment, assuming
(1) Payment of the Maximum Sales Charge,
(2) a 5% annual return, and
(3) no redemptions at the end of the time period.
10 YEAR FIGURES FOR CLASS B SHARES ASSUME CONVERSION
TO CLASS A SHARES AFTER EIGHT YEARS $63 $21 $21 $89 $64 $64 $117 $110 $110 $199 $219 $238
</TABLE>
The purpose of the foregoing table is to assist you in understanding the various
costs and expenses that an investor in the Fund will bear directly or
indirectly. The examples provided are intended to show the dollar amount of
expenses that would be incurred over the indicated periods on a hypothetical
$1,000 investment in the Fund, assuming a 5% annual return and assuming that the
Fund's expenses continue at the rates shown in the table. However, the actual
return on an investment in the Fund may be greater or less than 5%. The examples
should not be considered as representative of past or future expenses; actual
expenses may be greater or less than those shown.
2
<PAGE>
<PAGE>
BURNHAM
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Fund
Financial Highlights
The following table shows, on a per share basis, the changes in net asset
value, total return and ratios/supplementary data of the Class A shares for each
of the ten years in the period ended December 31, 1997, and for the Class B and
Class C shares for the period October 18, 1993 (inception date) through December
31, 1993, and years ended December 31, 1994, 1995, 1996 and 1997, and may be
used to trace the performance of the shares of the Fund. Further information
regarding the Fund's performance is contained in the Fund's Annual Report to
Shareholders which may be obtained upon request and without charge.
The information for each of the ten years in the period ended December 31,
1997 was audited by Coopers & Lybrand L.L.P., the Fund's independent
accountants.(1)
<TABLE>
<CAPTION>
Class A Shares
----------------------------------------------------------------------------------------------
Year ended December 31, 1997 1996 1995 1994 1993 1992 1991 1990 1989(3) 1988
------ ------- -------- -------- -------- -------- -------- --------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
Beginning of Year $25.65 $23.19 $19.88 $21.86 $21.95 $22.16 $20.01 $23.62 $20.89 $19.58
Income from Investment
Operations
Net Investment Income 0.45 0.51 0.71 0.75 0.81 0.88 1.07 1.19 1.25 0.19
Net Gains or Losses on
Securities (both realized
and unrealized) 5.54 3.36 3.91 (1.15) 1.11 0.69 2.36 (1.62) 3.23 1.09
---------------------------------------------------------------------------------------------------
Total from Investment
Operations 5.99 3.87 4.62 (0.40) 1.92 1.57 3.43 (0.43) 4.48 2.28
LESS DISTRIBUTIONS
Dividends (from net
investment income) (0.44) (0.55) (0.75) (0.87) (0.90) (1.12) (1.06) (1.24) (1.25) (0.75)
Distributions (from
capital gains) (1.16) (0.86) (0.56) (0.71) (1.11) (0.66) (0.22) (1.94) (0.50) (0.22)
---------------------------------------------------------------------------------------------------
Total Distributions (1.60) (1.41) (1.31) (1.58) (2.01) (1.78) (1.28) (3.18) (1.75) (0.97)
---------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $30.04 $25.65 $23.19 $19.88 $21.86 $21.95 $22.16 $20.01 $23.62 $20.89
===================================================================================================
Total Return(2) 24.74% 17.60% 24.45% (1.77%) 9.35% 7.70% 17.98% (1.76%) 22.75% 11.89%
---------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets (in $millions),
End of Year 136.4 117.4 112.0 101.8 118.5 117.2 125.4 123.7 161.3 184.7
Ratio of Expenses (net)
to Average Net Assets 1.1% 1.3% 1.5% 1.5% 1.5% 1.2% 1.1% 1.2% 1.2% 1.1%
Ratio of Net Income to
Average Net Assets 1.6% 2.1% 3.3% 3.7% 3.7% 4.1% 5.0% 5.6% 5.3% 5.6%
Average Commission Rate(5) $0.0749 $0.0726 -- -- -- -- -- -- -- --
Portfolio Turnover Rate 59.4% 61.5% 78.3% 87.9% 54.1% 68.5% 120.8% 107.4% 92.5% 94.4%
<CAPTION>
Class B Class C
Shares Shares
------------------------------------------------------ ---------------------------------------------
Year ended December 31, 1997 1996 1995 1994 1993*`DD' 1997 1996 1995 1994 1993*`DD'
--------- --------- ---------- ------ ----------- ----- ------ ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
Beginning of Year $26.31 $23.45 $19.94 $21.84 $22.17 $25.69 $23.10 $19.89 $21.87 $22.17
Income from Investment
Operations
Net Investment Income 0.13 0.21 0.41 0.49 0.13 0.13 0.29 0.54 0.72 0.15
Net Gains or Losses on
Securities (both realized
and unrealized) 5.75 3.69 4.10 (1.04) (0.46) 5.62 3.37 3.91 (1.15) (0.45)
------------------------------------------------------------------------------------------------------
Total from Investment
Operations 5.88 3.90 4.51 (0.55) (0.33) 5.75 3.66 4.45 (0.43) (0.30)
LESS DISTRIBUTIONS
Dividends (from net
investment income) (0.28) (0.18) (0.44) (0.64) -0- (0.19) (0.21) (0.68) (0.84) -0-
Distributions (from
capital gains) (1.16) (0.86) (0.56) (0.71) -0- (1.16) (0.86) (0.56) (0.71) -0-
-----------------------------------------------------------------------------------------------------
Total Distributions (1.44) (1.04) (1.00) (1.35) -0- (1.35) (1.07) (1.24) (1.55) -0-
-----------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $30.75 $26.31 $23.45 $19.94 $21.84 $30.09 $25.69 $23.10 $19.89 $21.87
=====================================================================================================
Total Return(2) 23.60% 17.34% 23.54% (2.52%) (1.49%) 23.59% 16.56% 23.51% (1.95%) (1.35%)
------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets (in $millions),
End of Year 1.6 1.0 0.6 0.3 0.2 0.1 0.00** 0.0** 0.0** 0.0**
Ratio of Expenses (net)
to Average Net Assets(4) 2.0% 2.1% 2.2% 2.3% 2.2%`D' 2.0% 2.2% 2.3% 1.5% 1.5%`D'
Ratio of Net Income to
Average Net Assets 0.7% 1.3% 2.5% 2.9% 3.9%`D' 0.5% 1.2% 2.5% 3.6% 3.5%`D'
Average Commission Rate(5) $0.0749 $0.0726 -- -- -- $0.0749 $0.0726 -- -- --
Portfolio Turnover Rate 59.4% 61.5% 78.3% 87.9% 54.1% 59.4% 61.5% 78.3% 87.9% 54.1%
</TABLE>
* The Fund commenced offering Class B shares and Class C shares on October
18, 1993. `D' Annualized. `DD' Based on average shares outstanding.
** Less than $100,000 of net assets.
(1) The information for each of the last five years has been audited by Coopers
& Lybrand L.L.P., whose unqualified report thereon is included in the
Fund's Annual Report to Shareholders, which is incorporated by reference
into the Statement of Additional Information. The remaining figures, which
have also been audited, are not covered by the accountants' current report.
(2) Total return does not reflect the maximum initial sales charge on Class A
shares.
(3) At the close of business on September 6, 1989, the management of the Fund
was assumed by Burnham Asset Management Corporation, see "Management".
(4) Had the Investment Adviser not agreed to reimburse Class B and Class C
shares for expenses in excess of the expense limitation, the ratios of
expenses for the periods ended December 31, 1997, 1996, 1995 and 1994 would
have been 2.1%, 2.5% and 2.5% for Class B shares, and 2.5%, 2.5%, 2.5% and
2.5% for Class C shares, respectively.
(5) Disclosure effective for fiscal year 1996 and all periods thereafter.
3
<PAGE>
<PAGE>
BURNHAM
----
Fund
The Fund
The Burnham Fund Inc. is an open-end, diversified management investment
company. The Fund's shares are sold on a continuous basis and the Fund invests
the proceeds from the sale of its shares in a portfolio of securities. This
permits the Fund's shareholders to combine their investments in a professionally
managed portfolio consisting of many different securities. Set forth below is
information concerning the investment objectives and policies of the Fund and
the alternative arrangements for purchases and redemptions based on the three
classes of shares currently offered by the Fund. The shares of each class of
shares offered by the Fund represent interests in the same underlying portfolio
of securities.
The Fund's Investment
Objectives and Policies
INVESTMENT OBJECTIVES. The Fund's principal investment objective is capital
appreciation, mainly long-term. Income generally will be of lesser importance.
The Fund may invest in securities without regard to income when, in the judgment
of the Adviser, such investments have a greater potential for growth. The Fund
may invest in income-producing securities without limitation if, in the judgment
of the Adviser, market or general economic conditions warrant greater emphasis
on income either as a temporary defensive position or because the Adviser
determines that, for a given period of time, greater overall growth may be
realized through investment in income-producing securities. There can be no
assurance that the Fund's investment objectives will be achieved.
INVESTMENT POLICIES. The Fund's investments normally will consist of common
stock or convertible securities, including convertible preferred stock and
convertible debentures, and readily marketable securities such as rights and
warrants which derive their value from common stock. However, when the Adviser
determines that a temporary defensive position is warranted or that greater
overall growth may be realized through investment in income-producing
securities, it may invest without limitation in fixed income securities. The
Fund seeks to achieve its income objective by investing in various income
producing securities including, but not limited to, dividend paying equity
securities and fixed income securities. The portion of the Fund invested from
time to time in equity securities, fixed income securities and money market
securities will vary depending on market conditions, and there may be extended
periods of time when the Fund is primarily invested in one of them. In addition,
the amount of income generated from the Fund will fluctuate depending on, among
other things, the composition of the Fund's holdings and the level of interest
and dividend income paid on those holdings. Investments in common stocks in
general are subject to market risks that may cause their prices to fluctuate
over time. Therefore, an investment in the Fund may be more suitable for
long-term investors who can bear the risk of these fluctuations. For temporary
defensive purposes, the Fund may also invest in cash items. The Fund will not
concentrate more than 25% of the value of its total assets in any one industry.
As a diversified fund, it will invest at least 75% of its total assets in cash,
cash items and government securities and in other securities which represent an
investment of no more than 5% of the value of the Fund's total assets in any one
issuer.
The Fund's investment objectives and policies are fundamental and may not be
changed without approval of the holders of a majority of the Fund's outstanding
voting securities, as defined in the Investment Company Act of 1940, as amended
(the "1940 Act"), as the lesser of either (i) 67% or more of the Fund's voting
securities present at a meeting of shareholders if the holders of more than 50%
of the Fund's outstanding voting securities are present or represented by proxy,
or (ii) more than 50% of the Fund's outstanding voting securities.
In addition to common stocks and other securities referred to in "Investment
Policies" herein, the Fund may make the following investments. For additional
4
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BURNHAM
----
Fund
information on the following investments and on other types of investments which
the Fund may make, see the Statement of Additional Information.
ILLIQUID SECURITIES. The Fund may invest up to 10% of its total assets in
illiquid securities, which are securities that cannot be expected to be sold
within seven days at approximately the price at which they are valued. Due to
the absence of an active trading market, the Fund may experience difficulty in
valuing or disposing of illiquid securities. The Adviser will monitor the
liquidity of the securities, under supervision of the Board of Directors of the
Fund. Securities that have legal or contractual restrictions on resale but have
a readily available market are not deemed illiquid for purposes of this
limitation.
RESTRICTED SECURITIES AND RULE 144A SECURITIES. The Fund may invest in
restricted securities and Rule 144A securities. Restricted securities cannot be
sold to the public without registration under the Securities Act of 1933 (the
"1933 Act"). Unless registered for sale, these securities can be sold only in
privately negotiated transactions or pursuant to an exemption from registration.
Restricted securities are generally illiquid. Rule 144A securities, although not
registered, may be resold to qualified institutional buyers in accordance with
Rule 144A under the 1933 Act. The Adviser, acting pursuant to guidelines
established by the Board of Directors, may determine that some restricted
securities are liquid.
FOREIGN SECURITIES. The Fund may invest up to 15% of the value of its total
assets in foreign securities. Foreign securities are those of issuers organized
and doing business principally outside the United States, including non-U.S.
governments, their agencies and instrumentalities. The 15% limitation does not
apply to foreign securities that are denominated in U.S. dollars, including
American Depository Receipts ("ADRs"). Investments in foreign securities may be
subject, among other things, to adverse or unfavorable changes resulting from
changed economic or monetary policies in this country or abroad, or changed
conditions in dealings between nations. Foreign companies may not be subject to
accounting standards or governmental supervision comparable to U.S. companies,
and there may be less public information about their operations. In addition,
foreign markets may be less liquid or more volatile than U.S. markets and may
offer less protection to investors.
OPTIONS CONTRACTS. The Fund may write covered call options, buy put options, buy
call options and write put options, without limitation except as noted in this
paragraph. Such options may relate to particular securities or to various
indexes and may or may not be listed on a national securities exchange and
issued by the Options Clearing Corporation. The Fund may invest up to 4% of the
value of its net assets in such instruments.
Options trading is a highly specialized activity which entails greater than
ordinary investment risks. A call option for a particular security gives the
purchaser of the option the right to buy, and the writer the obligation to sell,
the underlying security at the stated exercise price at any time prior to the
expiration of the option, regardless of the market price of the security. The
premium paid to the writer is in consideration for undertaking the obligations
under the option contract. A put option for a particular security gives the
purchaser the right to sell the underlying security at the stated exercise price
at any time prior to the expiration date of the option, regardless of the market
price of the security. In contrast to an option on a particular security, an
option on an index provides the holder with the right to make or receive a cash
settlement upon exercise of the option. The amount of this settlement will be
equal to the difference between the closing price of the index at the time of
exercise and the exercise price of the option expressed in dollars, times a
specified multiple. Transactions in option contracts generally involve
short-term trading that may cause higher than usual portfolio turnover rates.
REPURCHASE AGREEMENTS. In a repurchase agreement, the Fund buys a security from
a Federal Reserve
5
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<PAGE>
BURNHAM
----
Fund
member bank and simultaneously agrees to sell back such security at a higher
price, at a specified date, usually less than a week later. The underlying
securities must fall within the Fund's investment policies and limitations. The
use of repurchase agreements involves certain risks. For example, in the event a
seller of securities under a repurchase agreement defaults on its repurchase
obligation, the Fund might suffer a loss to the extent that the proceeds from
the sale of the collateral were less than the repurchase price. If the seller
becomes the subject of bankruptcy proceedings, the Fund might be delayed or
incur additional costs in selling the collateral. To minimize these risks, the
Fund requires continual maintenance of collateral with the Custodian in an
amount equal to, or in excess of, the market value of the securities which are
the subject of a repurchase agreement plus any accrued interest. The Fund may
invest temporarily up to 5% of its total assets in repurchase agreements.
Year 2000 Update
The Fund's operations depend on the seamless functioning of computer systems
in the financial services industry, including those of the Adviser, the
Custodian, Fund Accounting Agent and the Transfer Agent. The failure of Computer
Systems to properly process date-related information after December 31, 1999
because of the method by which dates are encoded could adversely affect the
handling of Securities trades, pricing and account servicing for the Fund. The
Adviser has made year 2000 Compliance a high priority and is taking steps that
it believes are reasonably designed to address Year 2000 issues with respect to
its computer systems. The Adviser also has been informed that comparable steps
are being taken by the Fund's other major service providers. The Adviser does
not currently anticipate that the Year 2000 issues will have a material impact
on its ability to fulfill its duties as investment adviser to the Fund.
Alternative Purchase
Arrangements
The Fund offers Class A, Class B and Class C shares to all investors. Class A
shares are sold with an initial sales charge that declines for larger orders.
Purchases of $1 million or more of Class A shares are sold without an initial
sales charge but are subject to a contingent deferred sales charge if held for
less than two years. Class B shares are sold without an initial sales charge but
are subject to a CDSC if held for less than six years. Class B shares are
available to investors purchasing less than $250,000 in the aggregate. Class C
shares are sold without an initial sales charge but are subject to a CDSC if
held for less than one year. Class C shares are available for investors
purchasing less than $1 million in the aggregate. Each class is described below
in greater detail. The different classes of the Fund provide the investor with
alternative purchase methods of acquiring shares and the investor should
determine which class is best suited to his specific needs and preferences.
Dealers may be compensated at different rates for selling Class A, Class B or
Class C shares.
CLASS A SHARES. Class A shares are sold at net asset value plus a sales charge
of up to 5% at the time of purchase. This initial sales charge may be reduced or
waived for certain purchases (see "Purchase of Shares"). Class A shares are
subject to a distribution fee at an annual rate of 0.25% of the average daily
net asset value of the Class A shares.
CLASS B SHARES. Class B shares are sold at net asset value without a sales
charge at the time of purchase. If shares are redeemed within six years from
their date of purchase, the investor will be subject to a CDSC up to a maximum
of 5% of the net asset value of such shares at the time of purchase or the net
asset value of such shares at the time of redemption, whichever is lower (see
"Class B Shares Purchases"). Class B shares are only available to investors who
purchase less than $250,000. Class B shares are subject to a distribution fee
and a service fee of 0.75% and 0.25% per annum, respectively, of the average
daily net asset value of the Class B shares. Class B shares will automatically
convert to Class A shares of the Fund eight years after the end of the calendar
month in which the purchase order was accepted, on the basis of the relative net
asset values of the two classes, subject to the terms described under
"Conversion of Class B shares".
CLASS C SHARES. Class C shares are sold at net asset value without an initial
sales charge. If shares are redeemed within 12 months from their date of
purchase, the investor will be subject to a CDSC of 1% of the net asset value of
such shares at the time of purchase or the net asset value of such shares at the
time of redemption, whichever is lower. Class C shares are only available to
investors purchasing less than $1,000,000. Class C shares are subject to a
distribution fee and a service fee of 0.75% and 0.25% per annum, respectively,
of the average daily net asset value of the Class C shares.
The alternative purchase arrangements permit an investor to choose the method
of purchasing shares that is most beneficial given the length of time the
investor may expect to hold the shares, the investor's
6
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Fund
expected overall level of investment in the Fund and other circumstances.
Investors should consider whether during the anticipated life of their
investment in the Fund the accumulated distribution and service fees
attributable to Class B and Class C shares would be less than the initial sales
charge and accumulated distribution fees of Class A shares if purchased at the
same time. The prospective investor should consider these fees plus the
applicable sales charge alternatives in choosing the method of purchasing
shares. The tables under the captions "Fee Table" and "Hypothetical Investment"
set forth examples of the fees and expenses applicable to each class of shares.
Class A shares are subject to lower ongoing distribution fees and, to the
extent that dividends are paid, will have greater per share dividends than Class
B and Class C shares, which have higher ongoing expenses. The deduction of an
initial sales charge at the time of purchase of Class A shares, however, will
result in the investor not having all of his funds invested initially, and the
investor will own fewer shares initially than if Class B or Class C shares were
purchased. Certain investors may determine that it would be advantageous to
purchase Class B and Class C shares in order to have all their funds invested
initially, although remaining subject to higher ongoing expenses. Class A shares
with an initial sales charge may be more desirable for investors who qualify for
significantly reduced sales charges or who expect to hold their investments for
an extended period of time.
The proceeds from sales of the three classes of shares are jointly invested
in the same portfolio of investments of the Fund. The classes have identical
voting, dividend, liquidation and other rights, except (1) the amount of sales
charges and the amount and type of fees permitted by the different distribution
and service plans; (2) voting rights on matters concerning Rule 12b-1 plans,
related service agreements and any other miscellaneous matters relevant only to
a particular class, as opposed to the Fund generally; (3) each class of shares
bears any expenses that the Fund's Board of Directors (the "Board" or "Board of
Directors") determines should be allocated or charged on a class basis; (4) the
designation of such classes; (5) the fact that a class may have a conversion
feature; and (6) different exchange privileges for different classes.
For further information regarding the Rule 12b-1 distribution plans of the
respective classes, reference is hereby made to "Distribution - Distribution
Plan".
Risk Factors
There are two types of risk generally associated with owning equity
securities: market risk and financial risk. Market risk is the risk associated
with the movement of the stock market in general. Financial risk is associated
with the financial condition and profitability of the underlying company.
Smaller capitalization companies may experience higher growth rates and higher
failure rates than do larger capitalization companies. The trading volume of
securities of smaller capitalization companies is normally less than that of
larger capitalization companies and, therefore, may disproportionately affect
their market price, tending to make them rise more in response to buying demand
and fall more in response to selling pressure than is the case with larger
capitalization companies.
There are two types of risk associated with owning debt securities: interest
rate risk and credit risk. Interest rate risk relates to fluctuations in market
value arising from changes in interest rates. If interest rates rise, the value
of debt securities will normally decline and if interest rates fall, the value
of debt securities will normally increase. All debt securities, including U.S.
Government securities, which are generally considered to be the most
creditworthy of all debt obligations, are subject to interest rate risk.
Securities with longer maturities generally will have a more pronounced reaction
to interest rate changes than shorter term securities.
Credit risk relates to the ability of the issuer to make periodic interest
payments and ultimately repay principal at maturity. Bonds rated Baa3 by Moody's
Investors Services Inc. ("Moody's") or
7
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BURNHAM
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Fund
BBB- by Standard & Poor's Corporation ("S&P"), are described by those rating
agencies as having speculative elements. If a debt security is rated below
investment grade by one rating agency and as investment grade by a different
rating agency, the Adviser will make a determination as to the debt security's
investment grade quality. The Adviser currently has no pre-set limits as to the
percentage of the Fund's portfolio which may be invested in equity securities,
debt securities (including "junk bonds" as described below), or cash
equivalents. The Adviser's opinions are based upon analysis and research, taking
into account, among other factors, the relationship of book value to market
value of the securities, cash flow and multiples of earnings of comparable
securities.
Debt securities in which the Fund invests (such as corporate and U.S.
government bonds, debentures and notes) may or may not be rated by rating
agencies such as Moody's or S&P, and, if rated, such rating may range from the
very highest to the very lowest, currently C for Moody's and D for S&P. Medium
and lower-rated debt securities in which the Fund expects to invest are commonly
known as "junk bonds". The Fund may be subject to investment risks as to these
unrated or lower rated securities that are greater in some respects than the
investment risks incurred by a fund which invests only in securities rated in
higher categories. In addition, the secondary market for such securities may be
less liquid and market quotations less readily available than higher rated
securities, thereby increasing the degree to which judgment plays a role in
valuing such securities. The general policy of the Fund is to invest in debt
securities, including junk bonds, for the same reasons as investments in
equities. Consequently, the Adviser's own analysis of a debt instrument
exercises a greater influence over the investment decision than the stated
coupon rate or credit rating. Although such debt securities may pose a greater
risk than higher rated debt securities of loss of principal, the debt securities
of reorganizing or restructuring companies typically rank senior to the equity
securities of such companies. See "Investment Techniques - Medium to Lower Rated
Corporate Debt Securities" in the Statement of Additional Information.
The Fund is authorized to lend portfolio securities, borrow money from banks
as a temporary measure for extraordinary or emergency purposes in an amount not
to exceed 10% of the value of the Fund's total assets, and pledge up to 15% of
the value of its total assets to secure such borrowings. The Fund has no current
intention to engage in such activities to an extent exceeding 5% of the value of
the Fund's total assets.
Investors are advised to read the Statement of Additional Information for a
more complete description of the securities in which the Fund invests and their
risks.
Net Asset Value, Dividends, Capital
Gains Distributions and Taxes
NET ASSET VALUE. The Fund's net asset value per share is calculated separately
for each class of shares once daily as of the close of trading on the New York
Stock Exchange (the "NYSE") (excluding days on which the NYSE is closed). In
general, the net asset value per share is determined by adding the current value
of the Fund's portfolio securities and all other assets, subtracting its
liabilities, and dividing the remainder by the number of the Fund's outstanding
shares. The total of such liabilities allocated to a particular class, plus that
class' distribution fee and any other expenses specifically allocated to that
class are then deducted from the class' proportionate interest in the Fund's
assets, and the resulting amount for each class is divided by the number of
shares of that class outstanding to produce the "net asset value" per share.
Because of certain expenses attributable only to Class B and Class C shares,
e.g., a higher distribution fee, a service fee, and certain class-specific
expenses that may exceed those allocated to the other classes (see "Alternative
Purchase Arrangements"), the net income attributable to and the dividends
payable on
8
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Fund
Class B and Class C shares will be lower than the net income attributable to and
the dividends payable on Class A shares. For additional information regarding
the computation of net asset value, see "Net Asset Value, Dividends, Capital
Gains Distributions and Taxes -- Net Asset Value" in the Statement of Additional
Information.
Portfolio securities are valued at market value if quotations are available,
at fair value as determined in good faith by the Board of Directors if
quotations are not readily available or circumstances otherwise warrant, or in
some cases at cost.
DIVIDENDS. In addition to any increase in the value of shares as a result of
increases in the value of the Fund's investments, the Fund may earn income in
the form of dividends and interest on its investments. It is the Fund's policy
to distribute substantially all of this income, less expenses, to its
shareholders quarterly. Unless cash dividends are requested by shareholders,
dividends are automatically reinvested in additional shares of the same class of
shares at net asset value on the ex-dividend date.
CAPITAL GAINS DISTRIBUTIONS. Capital gains or losses are the result of the
Fund's sales of its portfolio securities at prices that are higher or lower than
the prices paid by the Fund for such securities. Generally, total profits from
such sales, less losses, represent net capital gain. The Fund distributes net
capital gains, if any, to shareholders annually. Unless cash distributions are
requested by shareholders, capital gains distributions are automatically
reinvested in additional shares of the same class of shares at net asset value
on the ex-dividend date.
TAXES. The Fund has qualified and intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). Accordingly, no Federal income or excise taxes
will be payable by the Fund so long as it annually distributes substantially all
of its investment company taxable income and net capital gains. For Federal
income tax purposes, the Fund's distributions of net investment income and
short-term capital gains are treated in the hands of the shareholders as
ordinary income, and distributions of long-term capital gains are treated as
long-term capital gains, whether paid in cash or reinvested in additional Fund
shares. The Fund will annually mail to each shareholder a statement that sets
forth such shareholders proportionate share of long-term capital gains and
losses and short- term capital gains and losses. Tax-exempt shareholders will
not be required to pay tax on amounts distributed to them unless the purchase of
their shares is debt-financed. A dividend declared by the Fund in October,
November or December of any calendar year (but not distributed in that year),
payable to shareholders of record on a specified date in such a month, will be
deemed to have been received by the shareholders on December 31 of such calendar
year provided that the dividend is actually paid by the Fund during January of
the following year. Ordinary income distributions may be eligible in part for
the 70% dividends received deduction for corporate shareholders. Any loss with
respect to shares that were held for six months or less will be treated as a
long-term capital loss to the extent of any long-term capital gains
distributions received from the Fund with respect to such shares. Distributions
and the proceeds of redemptions may in certain limited circumstances be subject
to backup withholding at the rate of 31%. For a fuller description of tax
consequences to shareholders, see "Net Asset Value, Dividends, Capital Gains
Distributions and Taxes - Taxation of Shareholders" in the Statement of
Additional Information.
Purchase of Shares
TERMS OF PURCHASE. The Fund's shares are sold on a continuous basis.
Investors in all three classes of shares may open an account by making an
initial investment of $1,000. Subsequent investments of at least $250 may be
made. The minimum in each instance is waived for all types of individual
retirement accounts ("IRA's"). There are no minimums for shares purchased under
an Automatic Investment Plan. The Fund reserves the right to waive or change
minimums or to decline any order to purchase its shares. Sales of all classes
will be suspended during any period when the determination of the net asset
value is suspended,
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Fund
and may be suspended by the Board of Directors of the Fund whenever the Board
judges it to be in the best interest of the Fund to do so. Share certificates
will be issued only upon a shareholder's written request to the Fund. IRAs or
other tax-qualified retirement plans approved by the Internal Revenue Service
are available from the Fund or the Distributor.
You may make purchases either through the Distributor or other participating
dealers, or directly through the Fund's transfer agent, State Street Bank and
Trust Company ("State Street"). Shares may be purchased on any day the NYSE is
open for business. Shares are entitled to dividends beginning on the trade date,
the day the purchase order is received.
The Fund is available through the Charles Schwab & Co., Inc. Institutional
Mutual Fund OneSource(R) program. In addition, the Fund is also available
through the discount brokerage firms no-transaction fee ("NTF") programs.
Generally, these programs do not require customers to pay a transaction fee in
connection with purchases or sales, except in certain circumstances. These and
other organizations that have entered into agreements with the Fund or its agent
may enter purchase orders on behalf of customers by phone, with payment to
follow no later than the Fund's pricing on the following business day. Purchases
may be made at net asset value provided such purchases are placed through a
discount broker that maintains an omnibus account with the Fund and such
purchases are made by the following: (1) investment advisors or financial
planners who place trades for their own accounts or the accounts of their
clients and who charge a management, consulting or other fee for their services;
and clients of such investment advisors or financial planners who place trades
for their own accounts if the accounts are linked to the master accounts of such
investment advisor or financial planner on the books and records of the broker
or agent; (2) retirement and deferred compensation plans and trusts used to fund
those plans, including but not limited to, those defined in section 401(a),
403(b) or 457 of the Internal Revenue Code and "rabbi trusts".
Your check or money order should be forwarded to the Distributor or to your
participating dealer. Orders received by the Distributor or participating
dealers prior to the close of regular trading on the NYSE are confirmed at the
public offering price determined on that day, provided that the order is
received by the Distributor prior to the Distributor's close of business.
Payment for Fund shares currently is due on the third business day after the
trade date (the "settlement date"). Because the Distributor or your securities
dealer will forward purchasers' funds on the settlement date, it may benefit
from the temporary use of funds where payment is made to it prior to the
settlement date. A confirmation statement of the purchase will be forwarded by
the Fund to the shareholder.
TRANSFER AGENT. Shareholder Servicing Agent and Dividend Distributing Agent.
State Street serves as the Fund's transfer agent, shareholder servicing agent
and dividend distributing agent. State Street has delegated to Boston Financial
Data Services, Inc. ("BFDS"), a 50% owned subsidiary, responsibility for the
shareholder servicing and dividend distributing functions. You may contact BFDS
for shareholder inquiries, toll free at 1-800-462-2392.
PURCHASES THROUGH STATE STREET. Send your purchase order (by means of the
Fund's Application Form attached to this Prospectus) along with your check
or money order payable to
- --------------------------------------------------------------------------------
"STATE STREET BANK AND TRUST COMPANY" TO THE BURNHAM FUND INC., [NAME OF
CLASS], C/O STATE STREET BANK AND TRUST COMPANY, P.O. BOX 8505, BOSTON,
MASSACHUSETTS 02266-8505.
- --------------------------------------------------------------------------------
All purchases made by check should be in U.S. dollars and made payable to
The Burnham Fund Inc. or State Street Bank and Trust Company. Third party
checks which are payable to an existing shareholder of The Burnham Fund who
is a natural person (as opposed to a corporation or partnership) and
endorsed over to the Fund or State Street Bank and Trust Company will not
be accepted. When purchases are made by check or periodic automatic investment,
redemptions will not be allowed until the investment being redeemed has been
in the account for fifteen (15) business days. Orders sent directly to State
Street, with payment, will be executed at the offering price next determined
after the order is accepted.
INITIAL SALES CHARGES (CLASS A SHARES). Class A shares are sold at an "Offering
Price" (equal to net asset value plus the initial sales charge) applicable to
purchases made at one time by a single purchaser, by an individual, his or her
spouse and their children under age 21, or by a single trust account, based on
the net
10
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BURNHAM
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Fund
asset value per share plus a maximum initial sales charge of 5% of the Offering
Price, which declines to 0% of the Offering Price, depending upon the amount
invested, as follows:
<TABLE>
<CAPTION>
DEALER CONCESSION
AS A % OF AS A % OF AS A % OF
OFFERING PRICE NET ASSET OFFERING PRICE
OF SHARES VALUE OF SHARES OF SHARES
AMOUNT INVESTED PURCHASED PURCHASED PURCHASED*
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000..........................5.00% 5.26% 4.50%
$50,000 but less than $100,000.............4.50% 4.71% 4.00%
$100,000 but less than $250,000............4.00% 4.17% 3.50%
$250,000 but less than $500,000............3.00% 3.09% 2.75%
$500,000 but less than $1,000,000..........2.00% 2.04% 1.75%
$1,000,000 or more**.......................0.00% 0.00% 0.00%
</TABLE>
* The entire sales charge may be re-allowed to dealers who achieve certain
levels of sales or who have rendered coordinated sales support efforts. Such
dealers may be deemed to be "underwriters."
**See "Purchases of Class A Shares of $1 Million or More".
PURCHASES OF CLASS A SHARES OF $1 MILLION OR MORE. On purchases by a single
purchaser aggregating $1 million or more, the investor will not pay an initial
sales charge, and the distributor will pay authorized dealers an amount equal to
1% of the first $2 million of such purchases, plus .8 of 1% of the next $1
million, plus .40 of 1% on amount over $3 million. A CDSC will be imposed on the
proceeds of the redemptions of shares purchased aggregating $ 1 million or more
if they are redeemed within 24 months of the end of the calendar month of their
purchase, in an amount equal to 1% if the redemption occurs within the first 12
months and equal to .50 of 1% if the redemption occurs within the next 12
months, of the lesser of (a) the net asset value of the shares at the time of
purchase or (b) the net asset value of the shares at the time of redemption. The
CDSC will be deducted from the redemption proceeds otherwise payable to the
shareholders and will be retained by the Distributor.
WAIVERS OF SALES CHARGE (CLASS A SHARES). Class A shares may be purchased at net
asset value, without an initial sales charge, by or on behalf of any officer,
director, account executive or full-time employee (or a member of the immediate
family of any such person) of the Fund, the Adviser or the Distributor, or any
company affiliated with the Adviser or the Distributor, or by or on behalf of
any employee (or a member of the immediate family of any employee) of any NASD
member. Class A shares purchased by any employees' trusts, pension,
profit-sharing or other employee benefit plan for employees of the Distributor
and its affiliates or of any NASD member are sold at their net asset value,
without an initial sales charge. The sales charge will also be waived for
individuals purchasing Class A shares with the proceeds of distributions from
tax-deferred savings plans and retirement plans such as a regular Individual
Retirement Account ("IRA"), a ROTH IRA and a Simplified Employee Pension IRA
("SEP-IRA"). However, any such Class A shares redeemed within 90 days of
purchase will be subject to a sales charge (payable upon redemption to the
Distributor) at the rate otherwise applicable to purchases of the Class A
shares on the lesser of the net asset value of such shares at the time of
purchase or the net asset value of such shares at the time of redemption.
The Fund may waive the initial sales charge with respect to Class A shares
for shareholders of unaffiliated funds that charge a front-end sales charge
upon redemption of the unaffiliated fund shares within 90 days of purchase
upon proof (satisfactory to the Fund) of such purchase. In order to
qualify for this option please contact the Distributor. The sales charge
will be waived for purchases by trust companies and bank trust departments
for funds over which they exercise exclusive discretionary
investment authority and charge an account management fee and which are held in
a fiduciary, agency, advisory, custodial or
11
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BURNHAM
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Fund
similar capacity; and purchases by registered investment advisers for their
clients for whom they charge an account management fee. No such sales charge
will be imposed on any increase in net asset value, or on dividends or capital
gain distributions, or on reinvestment of distributions in additional Class A
shares. In determining whether the sales charge is payable, it will be deemed
that the first Class A shares redeemed are those, if any, on which a sales
charge was paid at the time of purchase, and that the remaining Class A shares
are redeemed in the order in which they were purchased. Class B and Class C
shares will not be sold to investors who qualify to purchase Class A shares at
net asset value.
RIGHTS OF ACCUMULATION (CLASS A SHARES). The scale of reduced sales charges set
forth above for purchases of Class A shares is applicable on a cumulative basis
to qualifying purchases if the dollar amount thereof plus the value of the Class
A shares then held of record by the purchaser is $50,000 or more. In such event,
the sales charge on the Class A shares being purchased will be at the rate
applicable to the aggregate amount in accordance with the scale set forth above.
Although the Distributor's policy is to give investors the lowest commission
rate possible under the sales charge structure, there can be no assurance that
an investor will receive the rights of accumulation to which he may be entitled
unless, at the time of placing his purchase order, the investor or the dealer
through whom he has purchased his shares makes a request for the discount and
gives the Distributor sufficient information to determine and confirm whether
the purchase will qualify for the discount. The rights of accumulation may be
amended or terminated at any time as to all purchases occurring thereafter.
LETTER OF INTENT (CLASS A SHARES). If you intend to purchase Class A shares
valued at $50,000 or more during a 13-month period, you may make the purchase
under a Letter of Intent so that the initial Class A shares you purchase qualify
for the reduced sales charge applicable to the aggregate amount of your
projected purchase. Your initial purchase must be at least 5% of the intended
purchase. Purchases made within 90 days prior to the signing of the Letter of
Intent may be included in such total amount and will be valued on the date of
the Letter of Intent. The Letter of Intent will not be a binding obligation on
either the purchaser or the Fund. During the period of the Letter of Intent,
State Street will hold shares representing 3% of the intended purchase in escrow
to provide payment of additional sales charges that may have to be paid if the
Letter of Intent is reduced. These shares will be released upon completion of
the intended investment. If the total Class A shares stated in the Letter of
Intent are not purchased, a price adjustment is made, depending upon the actual
amount invested within the period covered by the Letter of Intent, by a
redemption of sufficient shares held in escrow for the account of the investor.
A Letter of Intent can be amended: (a) during the 13-month period if the
purchaser files an amended Letter of Intent with the same expiration date as the
original; and (b) automatically after the end of the period, if the total
purchases of Class A shares credited to the Letter of Intent qualify for an
additional reduction in the sales charge. For more information concerning the
Letter of Intent, see the Application Form or contact the Distributor.
REDUCED SALES CHARGES FOR GROUP PURCHASES AND EXISTING SHAREHOLDERS
GROUP PURCHASES (CLASS A SHARES). A reduced sales charge is available to
employees (and partners) of the same employer as a group, provided that each
participant makes the required initial minimum investment. The sales charge
applicable to each participant of such a group will be determined in accordance
with the table set forth below under "Reduced Sales Charges -- Class A Shares,"
based on the aggregate sales of Class A shares to, and shares holdings of, all
members of the group. To be eligible for such reduced sales charges, all
purchases must be pursuant to an employer or partnership-sanctioned plan meeting
certain requirements: one such requirement is that the plan must be open to
specified partners or employees of the employer and its subsidiaries, if any.
Such plan may, but is not required to provide for payroll
12
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<PAGE>
[LOGO] GENERAL APPLICATION FORM
THIS APPLICATION WILL NOT ESTABLISH AN IRA OR QUALIFIED RETIREMENT PLAN
Please use this form if you would like to purchase The Burnham Fund shares
through Burnham Securities Inc. (The Burnham Fund's distributor) or through
State Street Bank and Trust Company (The Burnham Fund's transfer agent). If you
are a customer of another investment firm or financial intermediary, contact
your account executive. FOR A REGULAR IRA, A ROTH IRA, A SEP IRA, A MONEY
PURCHASE PENSION PLAN OR A PROFIT SHARING PLAN APPLICATION YOU CAN CALL BURNHAM
SECURITIES INC. TOLL-FREE AT 1-800-874-FUND OR STATE STREET BANK AND TRUST
COMPANY AT 1-800-462-2392.
[ ] EXISTING ACCOUNT NUMBER ______________________________ [ ] NEW ACCOUNT
1. OPENING YOUR ACCOUNT
Be sure to consult the Fund's prospectus under "Purchase of Shares" for details
regarding sales charges, Rights of Accumulation, Letters of Intent and minimum
purchase requirements. Letters of intent may be submitted with this application
or within 90 days of this initial purchase. If you are establishing a Letter of
Intent (available for Class A Shares only) please check this box [ ].
<TABLE>
<S> <C>
PURCHASE METHOD (Check one only) [ ] CLASS A SHARES (FRONT-END SALES CHARGE)
[ ] CLASS B SHARES (CONTINGENT DEFERRED SALES CHARGE) [ ] CLASS C SHARES (LEVEL-CONTINGENT DEFERRED SALES CHARGE)
CHECK IS ENCLOSED FOR: $____________________________________ Minimum initial requirement is $1,000 (unless
otherwise provided in the Prospectus). For Letter of Intent the minimum must equal 5% of the intended amount.
PLEASE MAKE YOUR CHECK PAYABLE TO "STATE STREET BANK AND TRUST COMPANY" AND MAIL TO: P.O. BOX 8505, BOSTON, MA 02266-8505.
PLEASE INDICATE CLASS A, B OR C ON YOUR CHECK.
2. ACCOUNT REGISTRATION
[ ] INDIVIDUAL _____________________________________________________________________________________________________________
First Name, Middle Initial, Last Name
[ ] JOINT OWNER(S) ______________________________________________________________________________________________________________
(if Applicable) First Name, Middle Initial, Last Name
______________________________________________________________________________________________________________
(if Applicable) First Name, Middle Initial, Last Name
JOINT TENANCY WITH RIGHTS OF SURVIVORSHIP WILL BE PRESUMED UNLESS OTHERWISE SPECIFIED.
[ ] UGMA/UTMA LIST ONLY ONE CUSTODIAN AND ONE MINOR PER ACCOUNT. PROVIDE MINOR'S SOCIAL SECURITY NUMBER
________________________________________________________________________________________________________________________
Custodian's First Name, Middle Initial, Last Name
________________________________________________________________________________________________________________________
Minor's First Name, Middle Initial, Last Name
[ ] UNIFORM GIFTS TO MINORS ACT [ ] UNIFORM TRANSFERS TO MINORS ACT UNDER THE STATE WHERE THE GIFT IS MADE:_______
---------- - ------- - ---------- ----- - ---------------------
(Social Security Number) (Tax Identification Number)
[ ] CORPORATION, PARTNERSHIP, IF CORPORATION, A CERTIFIED COPY OF THE CORPORATE RESOLUTION MUST BE PROVIDED WITH THIS APPLICATION.
OR OTHER ENTITY
____________________________________________________________________________________________________________
(Print Exact Name of the Organization)
<PAGE>
<PAGE>
[LOGO]
[ ] TRUST IF A TRUST, A CERTIFIED COPY OF THE TRUST AGREEMENT MUST BE PROVIDED WITH THIS APPLICATION.
NAME OF TRUST: ______________________________________________________________________________________
DATE OF TRUST INSTRUMENT (MO. - DAY - YR.): _____-_____-_____
NAME OF TRUSTEE(S): _________________________________________________________________________________
FOR THE BENEFIT OF: __________________________________________________________________________________
3. MAILING ADDRESS
( )
____________________________________________________ ________________________
Street Address Business Phone
( )
____________________________________________________ ________________________
City State Zip Code Home Phone
[ ] U.S. Citizen [ ] Non-U.S. Citizen [ ] U.S. Citzen Abroad (Country:______________________________________)
4. DIVIDENDS AND CAPITAL GAINS
All distributions will be reinvested into the Fund unless you elect otherwise.
[ ] REINVEST ALL INCOME DIVIDENDS AND CAPITAL GAINS
[ ] CASH PAYMENT FOR INCOME DIVIDENDS AND CAPITAL GAINS
[ ] REINVEST ONLY CAPITAL GAINS AND PAY INCOME DIVIDENDS IN CASH
CASH DISTRIBUTIONS WILL BE MAILED TO ADDRESS OF RECORD UNLESS YOU INDICATE OTHERWISE UNDER "PAYMENTS TO OTHERS".
5. DEALER/BROKER INFORMATION Please have your broker agent complete thr following:
DEALER NAME:____________________________________________________________________________________________________________
DEALER ADDRESS (BRANCH OFFICE):_________________________________________________________________________________________
______________________________________________________ ____________________________________________________________
City, State, Zip Dealer Branch Office # Phone #
______________________________________________________ ____________________________________________________________
Dealer Authorization Signature REP # Rep Last Name, First Name
_______________________________________
Dealer Code (If unknown, leave blank)
</TABLE>
<PAGE>
<PAGE>
[LOGO]
6. SHAREHOLDER ACCOUNT OPTIONS
[ ] A. COMBINED PURCHASE AND RIGHTS OF ACCUMULATION (ROA)(CLASS A SHARES ONLY)
Shares may be purchased at the offering price applicable to the total of
(a) dollar amount then being purchased plus (b) the combined holdings
(valued at their current offering price) of the purchaser, his or her
spouse, their children under the age of 21 and certain others of shares
of the Fund as stated in the Prospectus. In order for this cumulative
quantity discount to be made available, the shareholder or his or her
securities dealer must disclose the shareholder's total holdings in the
Fund each time an order is placed.
LIST THE RELATED ACCOUNT INFORMATION, EMPLOYER'S INFORMATION OR THE FUND
ACCOUNT NUMBER(S) THAT YOU OR YOUR IMMEDIATE FAMILY
ALREADY OWN:___________________________________________________________
[ ] B. LETTER OF INTENT (CLASS A SHARES ONLY)
I agree to the statement of intention and escrow terms set forth under
"Letter of Intent" in the Prospectus. Although I am not obligated to do
so, it is my intention to make investments over a 13 month period in
shares of The Burnham Fund Inc. which will equal or exceed:
<TABLE>
<S> <C>
[ ] $50,000 [ ] $100,000 [ ] $250,000 [ ] $500,000 [ ] $1,000,000
Purchases made within the last 90 days will be included.
EXISTING ACCOUNT NUMBER(S)____________________________________________________________________________
[ ] C. NAV PURCHASES (INCLUDE EMPLOYEE OR BROKER NUMBER OF PERSON THROUGH WHOM ELIGIBILITY IS CLAIMED)
</TABLE>
[ ] Check this box if you are an officer, director, account executive or
full-time employee (or an immediate family member of any such person) of
The Burnham Fund Inc., Burnham Asset Management Corporation, Burnham
Securities Inc. or any affiliate thereof.
[ ] Check this box if you are any employee of an NASD member firm. If
checked, please state name and address of your
employer:______________________________________________________________
[ ] D. AUTOMATIC CASH WITHDRAWAL PLAN (FOR ACCOUNTS OF $ 5,000 OR MORE)
<TABLE>
<S> <C>
You are hereby authorized and instructed to send a check for $___________________________________________minimum $25)
[ ] Monthly, on approximately the 20th day OR [ ] Quarterly, on approximately the 20th day of January, April, July and
October
[ ] CHECK THIS BOX and complete Section 7 "Payments to Others" ONLY IF your withdrawal check is to be made payable
to person(s) other than registered owner. PAYEE:_______________________________________________________________________
[ ] E. AUTOMATIC INVESTMENT PROGRAM
[ ] You are hereby authorized and instructed to draw on my bank account, on approximately
THE [ ] 5TH OR [ ] 15TH of the following Month:___________________________________ and be repeated
($50 monthly minimum)
[ ] each month OR [ ] each quarter until further notice.
</TABLE>
* If the 5th or 15th of the month is not a business day, the withdrawal
from your bank account will be made on the next business day. (The
investment in the Fund will be made within 3 business days after each
withdrawal).
PLEASE COMPLETE BANK INFORMATION ON THE FOLLOWING PAGE IF YOU ARE
PARTICIPATING IN THE AUTOMATIC INVESTMENT PROGRAM.
<PAGE>
<PAGE>
BANK INFORMATION: NOTE: YOUR BANK MUST BE A MEMBER OF NACHA (SEE "SERVICES FOR
SHAREHOLDERS - AUTOMATIC INVESTMENT PROGRAM" IN THE PROSPECTUS). PLEASE CALL
YOUR BANK IF YOU ARE UNSURE.
_______________________________________________________________________________
Bank Name and Branch Address
___________________________________ _________________________________________
City State Zip Code Bank Transit Routing Number (ABA Number) *
* This nine digit-number used to identify your bank to the NACHA can be found on
the lower left-hand corner of your bank check or deposit slip. If your account
is with a Savings Bank or Credit Union, you must contact the institution to
obtain their ABA Number.
<TABLE>
<S> <C>
TYPE OF BANK ACCOUNT: (CHECK ONE)
[ ] CHECKING ACCOUNT [ ] NOW ACCOUNT/ MONEY MARKET DEPOSIT [ ] SAVING ACCOUNT**
BANK ACCOUNT NUMBER:____________________ ** Passbook Savings accounts are NOT eligible.
</TABLE>
7. PAYMENTS TO OTHERS Complete if checks are to be made payable to someone
other than the registered owner(s).
[ ] DISTRIBUTION CHECKS [ ] SYSTEMATIC WITHDRAWAL CHECKS
MAKE CHECKS PAYABLE TO:
______________________________________________________________________
(First Name) (Middle Initial) (Last Name)
_____________________________________________________________________
(Street Address) (Apt #)
__________________________ ________________________________________
(City) (State) (Zip Code) (Account Number, if applicable)
PLEASE MAKE PAYMENTS TO THE FOLLOWING BANK ACCOUNT:
NAME OF DEPOSITOR (as it appears on Bank Records)_____________________
BANK A/C NO. (Attach a voided check)_________________________________
SIGNATURE GUARANTEE (if required)_____________________________________
8. TAXPAYER INDENTIFICATION NUMBER/SIGNATURE(S)
IN ACCORDANCE WITH THE LAW, UNLESS THIS FORM IS COMPLETED AND SIGNED, YOUR
ACCOUNT WILL BE SUBJECT TO A 31% BACKUP WITHHOLDING.
PART 1. TAXPAYER IDENTIFICATION NUMBER:
Please enter the taxpayer identification number in the appropriate area. For
most individual taxpayers this is the social security number.
-------- - ----- - --------- -------- - ----- - ---------
SOCIAL SECURITY NUMBER TAXPAYER IDENTIFICATION NUMBER (TIN)
PART 2. BACKUP WITHHOLDING: [ ] Check the box if you are not subject
to backup withholding because (1) you have not been notified that you are
subject to backup withholding as a result to report all interest or dividends
(2) the Internal Revenue Service has notified you that you are no longer subject
to backup withholding.
CERTIFICATION: Under penalties of perjury, I certify that the information
provided on this form is true, correct and complete.
x
____________________________________________ _________________
SIGNATURE DATE
<PAGE>
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BURNHAM
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Fund
deductions, IRAs or investments pursuant to retirement plans under Section 401
or 408 of the Code.
The Distributor may also offer a reduced sales charge for aggregating related
fiduciary accounts under such conditions that the Distributor will realize
economies of scale in its sales efforts and sales-related expenses.
A qualified purchase is one that (i) relates to an investment in the Fund
held for more than six months, (ii) is not made solely for the purpose of
acquiring shares at a discount, and (iii) satisfies certain uniform criteria
that enable the Distributor to realize economies of scale in its costs and
expenses of the distribution of Fund shares. A qualified group must have more
than 10 members, must make those members available for group meetings with
representatives of the Fund and must agree to include sales materials and other
materials relating to the Fund in its publications or other regular periodic
communications to its members at no cost to the Distributor (other than its
normal expenses associated with the production, printing and distribution of
such materials).
In order to obtain such reduced sales charge, the purchaser must provide
sufficient information at the time of purchase to permit verification that the
purchase qualifies for the reduced sales charge. Approval of group purchases at
a reduced sales charge is subject to the discretion of the Distributor.
EXISTING SHAREHOLDERS (CLASS A SHARES). The Board has determined until further
notice that shareholders who purchased Class A shares before April 28, 1995
("existing Class A shares") are subject to a reduced initial sales charge of up
to 3% for Class A shares as follows.
<TABLE>
<CAPTION>
Reduced Sales Charge Table -- Class A Shares
DEALER CONCESSION OR
AS A PERCENTAGE AS A PERCENTAGE AGENCY COMMISSION
OF OFFERING PRICE OF NET ASSET VALUE AS A PERCENTAGE OF
AMOUNT INVESTED OF SHARES PURCHASED OF SHARES PURCHASED OFFERING PRICE*
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000 3.00% 3.09% 2.50%
$100,000 but less than $250,000 2.75% 2.83% 2.25%
$250,000 but less than $500,000 2.25% 2.30% 1.75%
$500,000 but less than $1,000,000 1.75% 1.78% 1.50%
$1,000,000 or more 0.00% 0.00% 0.00%
</TABLE>
* The entire sales charge may be re-allowed to dealers who achieve certain
levels of sales or who have rendered coordinated sales support efforts.
Such dealers may be deemed to be "underwriters." The third column sets
forth the dealer concession received by dealers other than the Distributor
for selling Class A shares. The Distributor retains the balance of the
initial sales charge.
CLASS B SHARES PURCHASES. Purchases of Class B shares will be processed at net
asset value next determined after receipt of your purchase order for less than
$250,000. Class B shares are not subject to an initial sales charge but may be
subject to a CDSC upon redemption.
If Class B shares of the Fund are redeemed within six years after the end of
the calendar month in which a purchase order for Class B shares was accepted, a
CDSC will be imposed by applying the appropriate percentage indicated below to
the lesser of: (1) the net asset value of such shares at the time of purchase or
(2) the net asset value of such shares at the time of redemption. The CDSC will
be deducted from the redemption proceeds otherwise payable to the shareholder
and retained by the Distributor. The CDSC to be imposed on such share
redemptions will be assessed according to the following schedule:
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE ORDER APPLICABLE CLASS B
OF LESS THAN $250,000 CONTINGENT DEFERRED
WAS ACCEPTED SALES CHARGE
- ------------ ------------
<S> <C>
Up to one year 5.00%
One year but less than two years 4.00%
Two years but less than four years 3.00%
Four years but less than five years 2.00%
Five years but less than six years 1.00%
Six years or more None
</TABLE>
13
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BURNHAM
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Fund
CONVERSION OF CLASS B SHARES. Class B shares will automatically convert to Class
A shares of the Fund eight years after the calendar month in which the purchase
order for Class B shares was accepted, on the basis of the relative net asset
values of the two classes and subject to the following terms: Class B shares
acquired through the reinvestment of dividends and distributions ("reinvested
Class B shares") will be converted to Class A shares on a pro-rata basis only
when Class B shares not acquired through reinvestment of dividends or
distributions ("purchased Class B shares") are converted. The portion of
reinvested Class B shares to be converted will be determined by the ratio that
the purchased Class B shares eligible for conversion bear to the total amount of
purchased Class B shares in the shareholder's account. For the purposes of
calculating the holding period, Class B shares will be deemed to have been
issued on the date on which the issuance of Class B shares occurred. This
conversion to Class A shares will relieve Class B shares that have been
outstanding for at least eight years ( a period of time sufficient for the
distributor to have been compensated for distribution expenses related to such
Class B shares) from the higher ongoing distribution fee paid by Class B shares.
Only Class B shares have this conversion feature. Conversion of Class B shares
to Class A shares is contingent on a determination that such conversion does not
constitute a taxable event for the shareholder under the Internal Revenue Code.
If such determination is no longer available, conversion of Class B shares to
Class A shares would have to be suspended, and Class B shares would continue to
be subject to the Class B distribution fee until redeemed. The Fund intends
voluntarily to allow existing Class B shares to have the conversion privilege
permitting holders of existing Class B shares to convert to Class A shares as
described above.
CLASS C SHARES PURCHASES. Purchases of Class C shares will be processed at net
asset value next determined after receipt of your purchase order for less than
$1,000,000. Class C shares are not subject to an initial sales charge but may be
subject to a CDSC upon redemption.
If Class C shares are redeemed within one year after the end of the calendar
month in which a purchase order for Class C shares was accepted, a CDSC of 1.00%
is imposed on the lesser of (1) the net asset value of such shares at the time
of purchase or (2) the net asset value of such shares at the time of redemption.
The CDSC will be deducted from the redemption proceeds otherwise payable to the
shareholder and will be retained by the distributor.
EXEMPTIONS FROM CDSC (ALL CLASSES). No CDSC will be imposed when a shareholder
redeems Class A, Class B or Class C shares in the following instances: (a)
shares or amounts representing increases in the value of an account above the
net cost of the investment due to increases in the net asset value per share;
(b) shares acquired through reinvestment of income dividends or capital gains
distributions; (c) Class A shares purchases in the amount of $1 million or more
held for more than 24 months, Class B shares held for more than six years or
Class C shares held for more than one year from the end of the calendar month in
which the purchase order was accepted.
The CDSC will not apply to purchases of Class A shares at net asset value
described under "Waivers of Sales Charge" above and will be waived in the case
of redemptions of Class A, Class B and Class C shares in connection with (i)
distributions to participants or beneficiaries of plans qualified under Section
401(a) of the Code or from custodial accounts under Code Section 403(b)(7),
individual retirement accounts under Code Section 408(a), deferred compensation
plans under Code Section 457 and other employee benefit plans ("plans"), (ii)
withdrawals under an automatic withdrawal plan where the annual withdrawal does
not exceed 10% of the opening value of the account (only for Class B shares);
and (iii) following the death or disability of a shareholder. If the Board
determines to discontinue the waiver of the CDSC, the disclosure in the Fund's
Prospectus will be appropriately revised.
14
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BURNHAM
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Fund
In determining whether the Class A, Class B or Class C shares CDSC is
payable, it will be assumed that shares not subject to a CDSC are redeemed first
and that other shares are then redeemed in the order purchased. A shareholder
will be credited with any CDSC paid in connection with the redemption of any
Class A, Class B or Class C shares if within 90 days after such redemption, the
proceeds are invested in the same Class of shares of the Fund.
OTHER DEALER COMPENSATION. The Distributor may provide additional non-cash
compensation to dealers in connection with the sale of shares to the extent
permitted by the NASD Rules of Fair Practice established from time to time which
include gifts currently not exceeding $100 per year, occasional meals, tickets
to entertainment events and payments or reimbursements in connection with
meetings held by the Fund or a dealer for training and educational purposes.
Redemption of Shares
An investor of the Fund may redeem shares on any day the Fund is open for
business - normally when the NYSE is open - using the proper procedures
described below. See "Net Asset Value" in the Statement of Additional
Information for a listing of the days on which the NYSE will be closed.
1. THROUGH THE DISTRIBUTOR OR OTHER PARTICIPATING DEALERS. If your account has
been established by the Distributor or a participating dealer, contact the
Distributor or your account executive at a participating dealer who will assist
you with your redemption. Requests received by your dealer prior to the Close of
the NYSE and transmitted to the Transfer Agent by its close of business that day
will receive that day's net asset value per share.
2. REGULAR REDEMPTION THROUGH TRANSFER AGENT. Redemption requests may be sent by
mail to the Transfer Agent and will receive the net asset value of the shares
being redeemed which is next determined after the request is received in "good
form". "Good form" means that the request is signed in the name in which the
account is registered and the signature is guaranteed by an eligible guarantee.
Eligible guarantors include member firms of a national securities exchange,
certain banks and saving associations and, credit unions, as defined by the
Federal Deposit Insurance Act. You should verify with the Transfer Agent that
the institution is an acceptable (eligible) guarantor prior to signing. The
Transfer Agent reserves the right to request additional confirmation from
guarantor institutions, on a case by case basis, to establish eligibility. A
GUARANTEE FROM A NOTARY PUBLIC IS NOT ACCEPTABLE. In the case of redemption
requests by a corporation, trust fiduciary, executor or administrator, where the
name and title of the individual(s) authorizing such redemption is not shown in
the account registration, a copy of the corporate resolution or other legal
documentation appointing the authorized signer and certified within the prior 60
days must accompany the redemption request. Shareholders may obtain from the
Distributor, the Fund or the Transfer Agent, forms of resolutions and other
documentation which have been prepared in advance to assist in your compliance
with the Fund's procedures.
If you do hold certificates for your shares, you must submit your duly
endorsed certificates with an appropriate guarantee of the signature(s) on the
certificates in addition to your written instructions, and in accordance with
the requirements listed below.
The Distributor does not charge for its services in connection with the
redemption of Fund shares, but upon prior notice may charge for such services in
the future. Other securities firms may charge their clients a fee for their
services in effecting redemptions of shares of the Fund.
TERMS OF REDEMPTION. The amount of your redemption proceeds will be based on the
net asset value per share next computed after the Distributor, the Fund or the
Transfer Agent receives the redemption request in proper form. Payment for your
redemption normally will be mailed to you, except as provided below. If you have
purchased shares by check, your
15
<PAGE>
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BURNHAM
----
Fund
redemption proceeds and any from which any applicable CDSC will have been
deducted, will normally be mailed or wired the day after your redemption is
processed. Your redemption proceeds may be delayed until the check used to make
the purchase has cleared, which may take fifteen or more days. This potential
delay can be avoided by purchasing shares with Federal funds or a certified
check.
Beneficial owners of shares held of record in the name of the Distributor or
a participating dealer may only redeem their shares through that firm. The Fund
is prepared to redeem its shares on any day the NYSE is open for business.
However, the right of redemption may be suspended or the date of payment
postponed under certain emergency or extraordinary situations, such as
suspension of trading on the NYSE, or when trading in the markets the Fund
normally uses is restricted or an emergency exists, as determined by the
Commission, so that disposal of the Fund's assets or determination of its net
asset value is not reasonably practicable, or for such other periods as the
Commission by order may permit.
If a certificate presented for redemption or a redemption request represents
all shares you own except for additional shares of less than $100 value for
which no certificates were issued, those additional shares will also be redeemed
unless you specifically exclude them in writing when you make your redemption
request.
REINSTATEMENT PRIVILEGE (CLASS A SHARES). A shareholder of Class A shares who
has redeemed such shares and has not previously exercised the reinstatement
privilege may reinvest any portion or all the redemption proceeds in Class A
shares at net asset value, provided that such reinstatement occurs within 60
calendar days after such redemption and the account meets the minimum account
size. This privilege may be modified or terminated at any time by the Fund.
In order to obtain such privilege, the shareholder must clearly indicate by
written request to the Fund that the purchase represents a reinvestment of a
prior redemption of Class A shares. If a shareholder realizes a capital gain on
redemption of its shares, such gain is taxable for Federal income tax purposes
even though all of such proceeds are reinvested. If a shareholder incurs a
capital loss on a redemption and reinvests the proceeds in the Fund, part or all
of such loss may not be deductible for such purposes.
The reinstatement privilege may be used by shareholders once, irrespective of
the number of shares redeemed or repurchased, except that the privilege may be
used without limit in connection with transactions for the sole purpose of
transferring a shareholder's interest in the Fund to his or her Individual
Retirement Account or other tax-qualified retirement plan account.
The Fund reserves the right to redeem your account if its value is less than
$500 due to redemptions. The Fund will give the shareholder 30 days' notice to
increase the account value to at least $500. Redemption proceeds will be mailed.
Organization of the Fund
The Fund was originally organized as a Delaware corporation in 1960; on
September 7, 1989, it was reincorporated in Maryland under the name The Burnham
Fund Inc.
As permitted under Maryland corporate law, the Fund does not hold annual
meetings of shareholders. There normally are no meetings of shareholders for the
purpose of electing directors. At such time as less than a majority of the
directors holding office has been elected by shareholders, the directors then in
office will call a shareholders' meeting for the election of directors.
Applicable law requires the Secretary to call a meeting of shareholders when
requested in writing to do so by the holders of record of not less than 25% of
the Fund's outstanding shares. In addition, the Board will call a meeting of
shareholders for the purpose of voting upon the question of removal of any
director or directors when requested in writing to do
16
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BURNHAM
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Fund
so by the record holders of not less than 10% of the Fund's outstanding shares.
The Fund has an authorized capital of 40 million shares of common stock, par
value $.10 per share, which are presently divided into four classes of shares,
of which three classes are presently issued by the Fund. Except for conversion
privileges or features, shares of one class are not convertible into, or
exchangeable for, shares of any other class.
Each class of shares represents an identical interest in the Fund's
investment portfolio. As such, they have the same rights, privileges and
preferences, except with respect to the:
(a) designation of each class, (b) effect of the respective sales charges, if
any, for each class, (c) distribution fees borne by each class, (d) expenses
allocable exclusively to each class, and (e) voting rights on matters
exclusively affecting a single class of the Fund. When issued, the shares of
each class are fully paid and nonassessable and have no preemptive, conversion
or exchange rights. The shares are transferable without restriction. The Board
of Directors is authorized to classify or reclassify any unissued shares of
stock of the Fund and to increase or decrease the number of authorized shares of
any class, without shareholder approval.
Management
Under the laws of the State of Maryland, the board of directors is responsible
for managing the business and affairs of the Fund. Acting pursuant to an
Investment Advisory Agreement entered into with the Fund, Burnham Asset
Management Corporation (the "Adviser") serves as the investment manager of the
Fund. Its principal place of business is 1325 Avenue of the Americas, 17th
Floor, New York, New York 10019. The Adviser has been providing investment
advisory services to the Fund since 1989.
The Adviser provides research and statistical services and makes investment
recommendations to the Fund. Together with the Distributor, the Adviser supplies
a staff trained in accounting and shareholder services to aid in the Fund's
administration and day-to-day operations. For the Fund's fiscal year ended
December 31, 1997, the fee paid to the Adviser was paid monthly based on an
annual rate of 0.625 of 1% of the Fund's average daily net asset value.
The Adviser will assume expenses of each class of the Fund in the event that
aggregate ordinary expenses incurred in any fiscal year exceed the most
restrictive expense limitations imposed upon the Fund in states in which shares
are then eligible for sale. Currently, the most restrictive expense limitation,
which excludes certain distribution fees from operating expenses, is 2 1/2% of
the first $30 million of average net assets, 2% of the next $70 million of
average net assets and 1 1/2% of the remaining average net assets. The Adviser
has agreed to voluntarily reimburse expenses of Class A, Class B and Class C
shares in order to limit such expenses (as defined above.) The Adviser reserves
the right to discontinue this policy at any time.
INVESTMENT MANAGEMENT. The Adviser utilizes an Investment Committee which is
comprised of five members of the Adviser to supervise and provide investment
management to the Fund. The investment management of the Fund involves four
closely related activities: economic research, industry and company analysis,
portfolio recommendation and investment action - the decision to buy, sell or
hold securities.
Mr. Jon M. Burnham has the primary responsibility for the day-to-day management
of the Fund's investment portfolio. Mr. Burnham is the President, Chief
Executive Officer and Director of the Fund. He has functioned in his role as
portfolio manager with the Fund since 1995. Currently, Mr. Burnham is the
Chairman and Chief Executive Officer of the Adviser and Distributor. The Adviser
and the Distributor are owned and/or controlled by Messrs. I.W. Burnham, II and
Jon M. Burnham.
17
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Fund
Distribution
PRINCIPAL DISTRIBUTOR. Burnham Securities Inc. serves as principal distributor
of shares of the Fund on a "best efforts" basis. Subject to review by the Board
of Directors, the Fund executes certain purchases and sales of portfolio
securities through the Distributor.
DISTRIBUTION PLAN. Each Class of shares of the Fund has adopted a Distribution
Plan and Agreement (the "Plan(s)") pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Under the Plans, Class A, Class B and Class C shares of the
Fund are authorized to pay the Distributor a distribution fee for expenses
incurred in connection with the distribution of shares of the Fund and for
shareholder servicing.
Each Plan provides that the Fund will pay the Distributor a distribution fee
based on the average daily net asset value of the relevant class of the Fund's
shares, as compensation in connection with the promotion, offering and sale of
the shares, and related activities. The Plans are classified as "compensation
plans" because the Fund will pay the distribution fees regardless of the amount
of actual distribution expenses. To the extent that the distribution fees exceed
the actual distribution expenses of the Distributor, any excess may be
considered direct compensation to the Distributor. At any given time, the
Distributor may incur expenses in distributing shares of the Fund which are in
excess of the total payments made by the Fund pursuant to the Plans. Because
there is no requirement under the Plans that the Distributor be reimbursed for
all its expenses or any requirement that the Plans be continued from year to
year, this excess amount does not constitute a liability of the Fund. For a
further description of the Plans, see "Investment Management and Other Services
- -- Distribution Plans" in the Statement of Additional Information.
CLASS A SHARES. Class A shares of the Fund pay the Distributor a distribution
fee at an annual rate of 0.25% of the average daily net asset value of Class A
shares. Pursuant to the Plan for Class A shares, commencing at the end of the
first calendar quarter following each sale, dealers will be paid quarterly
payments equal to 0.25% per annum of the average daily net asset values of Class
A shares.
CLASS B SHARES. Class B shares of the Fund pay the Distributor a distribution
fee at the annual rate of 0.75% of the average daily net asset value of Class B
shares. Class B shares will also pay a service fee at the annual rate of 0.25%
of the average daily net asset value of Class B shares.
Dealers will receive from the Distributor a fee equal to 5% of the gross
proceeds from the sale of Class B shares at the time a sale is settled. Pursuant
to the Plan for Class B shares and the related selling and service agreement,
commencing at the end of the 1st calendar quarter following each sale, Dealers
will be paid quarterly payments equal to 0.25% per annum of the average daily
net asset value of Class B shares.
CLASS C SHARES. Class C shares of the Fund pay the Distributor a distribution
fee at the annual rate of 0.75% of the average daily net asset value of Class C
shares. Class C shares will also pay a service fee at the annual rate of 0.25%
of the average daily net asset value of Class C shares.
Dealers will receive from the Distributor a fee equal to 1% of the gross
proceeds from the sale of Class C shares at the time a sale is settled. Pursuant
to the Plan for Class C shares and the related service agreement, commencing at
the end of the thirteenth (13th) month following each sale of shares, Dealers
will be paid quarterly payments equal to 0.85% per annum of the average daily
net asset value of Class C shares.
USE OF DISTRIBUTION AND SERVICE FEES. All or a portion of the distribution fees
paid by either Class A, Class B or Class C shares of the Fund may be used by the
Distributor to pay costs of printing reports and prospectuses for potential
investors and all or a portion of the distribution and/or service fees may be
paid to broker-dealers or others for the provision of personal continuing
services to shareholders,
18
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BURNHAM
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Fund
including such matters as responding to shareholder inquiries concerning the
status of their accounts and assistance in account maintenance reports such as
change in address.
Broker-dealers, financial planners and similar financial intermediaries that
sell shares of the Fund will be compensated differently depending on the class
of shares an investor chooses. In addition, the Distributor or its affiliates
may, from their own resources, and without limitation, compensate their
employees for sales of shares of any class.
Services for Shareholders
SHAREHOLDER ACCOUNTS. The Transfer Agent maintains a share account that reflects
the current holdings of each shareholder. Share certificates will be issued only
upon specific written requests. Each shareholder is sent a detailed confirmation
for each transaction in shares of the Fund.
PAYMENT OF DIVIDENDS AND DISTRIBUTIONS BY CHECK. Unless you direct otherwise,
your income dividends and capital gains distributions are automatically
reinvested in additional shares of the same class at net asset value on the
ex-dividend date. You may elect to receive payment of all dividends and
distributions by check by contacting your account executive if your account is
maintained at the Distributor, or by giving written notice to the Transfer
Agent. Commencing ten business days after the Transfer Agent receives such
notice, all future dividends and distributions will be paid to you by check.
AUTOMATIC INVESTMENT PROGRAM. The Automatic Investment Program gives you the
convenience of automatically investing in the Fund on a monthly or quarterly
basis. There are no initial minimum requirements for shares purchased under the
Automatic Investment Program. You may choose any amount of at least $50.00 for
automatic investments in your Fund account from your bank account.
Your monthly or quarterly investments will be made by electronic funds
transfer from your bank account if your bank is a member of a National Automatic
Clearing House Association ("NACHA"). This service is subject to the rules of
the bank account, NACHA and the Fund. Presently, there is no charge for this
service. The Fund may modify or terminate this service by written notice to you.
For further details, see the application form attached to this Prospectus or
call BFDS (1-(800) 462-2392) or the Distributor (1-(800) 874-FUND).
AUTOMATIC CASH WITHDRAWAL PLAN. An Automatic Cash Withdrawal Plan is available
for shareholders who wish to receive a specific amount of cash either monthly or
quarterly. You may subscribe to this service by contacting your account
executive or by completing an Application Form, or by calling the Distributor at
the telephone numbers set forth on the cover page of this Prospectus, and by
depositing with the Distributor or the Transfer Agent a minimum of $5,000 in
Fund shares at their current net asset value. All dividend and capital gains
distributions will be reinvested.
The Distributor, participating dealers or the Transfer Agent will make
payments to you either monthly or quarterly in amounts of not less than $25. To
provide funds for these payments, the Distributor or the Transfer Agent will
redeem a sufficient number of your shares held in uncertificated form at the net
asset value at the close of business of the NYSE on or about the 20th day of
each payment month (or, if that day is not a regular business day for the NYSE,
then on or about the next regular business day). A check will be mailed to you
not later than three days following the date the shares are redeemed. Since
withdrawal payments represent the proceeds from the sale of
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Fund shares, the amount of the shareholder's investment in the Fund will be
reduced to the extent that withdrawal payments exceed dividends and other
distributions paid and reinvested. Any gain or loss on such sales will be
subject to income tax. You may terminate the Plan at any time by written notice
to the Transfer Agent or the Transfer Agent may terminate the Plan at any time
upon receiving directions to that effect from the Fund. The Transfer Agent will
also terminate the Plan upon receipt of evidence satisfactory to it of your
death or legal incapacity.
Upon termination of the Plan by you, the Transfer Agent, or the Fund, shares
remaining unredeemed will be held in an uncertificated account in your name, and
the account will continue as a dividend-reinvestment account unless and until
proper instructions are received from you, your executor or guardian, or as
otherwise appropriate. The Transfer Agent shall incur no liability to you for
any action taken or omitted by the Transfer Agent in good faith. In the event
that State Street shall cease to act as transfer agent for the Fund, you will be
deemed to have appointed any successor tranfer agent as your Agent in
administering the Plan.
RETIREMENT PLANS. Tax-qualified retirement plans and IRAs may invest
contributions thereto in shares of the Fund. Brochures which provide further
information about and include (1) tax-qualified retirement plans, their related
Trust Agreement and application forms, and (2) IRAs, a contribution deposit
form, and the "disclosure" statement required by Treasury regulations, are
available from the Fund by calling the telephone numbers listed on the cover
page of this Prospectus. You can call to request our Universal Individual
Retirement Account Information Kit. The Kit includes information and forms which
will enable you to establish (i) a Regular IRA, (ii) a ROTH IRA, and (iii) a
Simplified Employee Pension IRA (SEP-IRA). Investors are urged to consult their
own tax advisors regarding the tax consequences of participation in tax-
qualified retirement plans or IRAs. Presently, the Fund does not offer
Educational IRAs or Simple IRAs.
You may purchase shares through tax-qualified retirement plans or IRAs only
by sending payment with a properly completed application directly to State
Street, which will provide custodian services. After receipt of payment, State
Street will make all purchases.
SHAREHOLDER INQUIRIES. YOU MAY TELEPHONE 1-800-462-2392 FOR INQUIRIES CONCERNING
THE FUND, INCLUDING INQUIRIES RELATING TO PURCHASING AND REDEEMING SHARES OF THE
FUND, AS WELL AS INQUIRIES CONCERNING DIVIDENDS AND ACCOUNT STATEMENTS. If you
prefer, you may write to State Street Bank and Trust Company, P.O. Box 8505,
Boston, Massachusetts 02266-8505. Inquiries concerning management and investment
policies of the Fund may be directed to Burnham Asset Management Corp., 1325
Avenue of the Americas, 17th Floor, New York, New York 10019 or by telephone at
1(800) 874-FUND.
POSSIBLE CONFLICTS OF INTEREST BETWEEN CLASSES. The Board of the Fund has
determined that currently no conflict of interest exists among Class A, Class B
and Class C shares of the Fund. On an ongoing basis, the Board shall monitor the
Fund for the existence of any material conflicts of interest among the classes
of outstanding shares. The Board shall take such action as is reasonably
necessary to eliminate any such conflict that may develop.
CUSTODIAN. Investor Fiduciary Trust Company, 801 Pennsylvania, Kansas City,
MO 64105.
SHAREHOLDER SERVICING AGENT. Boston Financial Data Services, Inc., 2 Heritage
Drive, North Quincy, MA 02171.
TRANSFER AGENT AND DIVIDEND PAYING AGENT. State Street Bank and Trust Company,
P.O. BOX 8505, Boston, MA 02266-8505.
INDEPENDENT ACCOUNTANTS. Coopers & Lybrand L.L.P., 1301 Avenue of the Americas,
New York, NY 10019.
COUNSEL. Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue, New York, NY
10022.
APPLICATION TERMS.
TAX IDENTIFICATION NUMBERS. Because of certain changes to the Internal Revenue
Code of 1986, as amended, the failure to provide a tax identification number by
an investor will subject your account to special Federal income tax
withholdings; the law will require the Fund to withhold 31% of each taxable
dividend or capital gain distribution paid to you in cash or reinvested in your
account and will require the Fund to withhold 31% of any redemption. The
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amount withheld is paid to the Internal Revenue Service toward the amount of
Federal income taxes you owe. The Fund will not return to you an amount withheld
due to your failure to provide a correct certified number. In addition, you may
be subject to a $50 I.R.S. penalty. Therefore, please include your correct
Social Security number or Taxpayer Identification Number on the Fund
Application.
The following sets forth examples of what identification numbers to list:
TYPE OF ACCOUNT TAXPAYER NUMBER
- --------------- ---------------
Individual Account...................Social Security Number of Applicant
Joint Account.....................................Social Security Number
of Person Reporting Tax
Custodian Account for a Minor...........Social Security Number of Minor
Corporation, Partnership, Trust,
Estate, Pension, Broker, etc. ............Taxpayer Identification Number
Nonresident Alien..........................................None Required
MISCELLANEOUS. The terms of the Application shall be construed according to the
laws of the State of New York.
The broker-dealer represented on the Fund Application must have an effective
sales agreement with the Distributor signed by a principal of the firm. The
broker-dealer further represents that it has informed the investor of the terms
and conditions relating to the options elected.
If the investor does not sign the Application, the broker-dealer represents
that the form is completed in accordance with the investor's instructions and
agrees to indemnify the Fund, its servicing agent, and the Distributor for any
loss or liability resulting from acting upon such instructions.
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<TABLE>
<CAPTION>
Table of Contents
<S> <C>
Fee Table.....................................2
Hypothetical Investment.......................2
Financial Highlights..........................3
The Fund......................................4
The Fund's Investment Objectives and
Policies....................................4
Alternative Purchase Arrangements.............6
Risk Factors..................................7
Net Asset Value, Dividends, Capital Gains
Distributions and Taxes.....................8
Purchase of Shares............................9
Redemption of Shares.........................15
Organization of the Fund.....................16
Management...................................17
Distribution.................................18
Services for Shareholders....................19
</TABLE>
Prospectus
April 30, 1998
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THE BURNHAM FUND INC. (the "Fund") is a diversified, open-end
management investment company whose principal investment
objective is capital appreciation, mainly long-term. Income
generally will be of lesser importance.
Burnham Asset Management Corporation (the "Adviser"), an
affiliate of Burnham Securities Inc. (the "Distributor"), serves
as investment adviser.
This Statement of Additional Information, which should be kept
for future reference, is not a prospectus. It should be read in
conjunction with the Prospectus of the Fund, dated April 30,
1998, which can be obtained without cost by contacting the dealer
through whom you purchased shares or by calling or writing the
Distributor at the telephone number and address printed on this
page. This Statement of Additional Information is intended to
provide you with additional information regarding the activities
and operations of the Fund.
The Fund offers alternative purchase arrangements that provide
investors with the option of purchasing shares (i) subject to a
front-end sales charge and a Rule 12b-1 plan distribution fee
("Class A shares"); (ii) subject to a contingent deferred sales
charge ("CDSC") if held for less than six years, a Rule 12b-1
plan distribution fee and a service fee ("Class B shares"); or
(iii), subject to a CDSC if held for less than one year, a Rule
12b-1 plan distribution fee and a service fee ("Class C shares").
The Fund's multi-class distribution system is described more
fully in the Prospectus under the headings "Alternative Purchase
Arrangements," "Purchase of Shares - Terms of Purchase,"
"Redemption of Shares," and "Distribution - Distribution Plans."
Reference is made to the Fund's investment objectives and
policies set forth in the Fund's Prospectus under the heading
"The Fund's Investment Objectives and Policies." The Fund's
investment techniques and investment restrictions are set forth
herein.
BURNHAM Securities Inc.
PRINCIPAL DISTRIBUTOR
1325 Avenue of the Americas, 17th Floor,
New York, New York 10019
April 30, 1998
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Investment Techniques
In seeking to achieve its investment objectives, the Fund may, to a limited
extent, purchase listed put and call options, write "secured" listed put and
"covered" listed call options, invest in foreign securities and warrants and
lend its portfolio securities.
WARRANTS. The Fund may invest in warrants, subject to the limitations described
below. The holder of a warrant has the right to purchase a given number of
shares of a particular company at a specified price until expiration. Such
investments generally can provide a greater potential for profit or loss than
investment of an equivalent amount in the underlying common stock. The prices of
warrants do not necessarily move parallel to the prices of the underlying
securities. If the holder does not sell the warrant, he risks the loss of his
entire investment if the market price of the underlying stock does not, before
the expiration date, exceed the exercise price of the warrant plus the cost
thereof. It should be understood that investing in warrants is a speculative
activity. Warrants pay no dividends and confer no rights (other than the right
to purchase the underlying stock) with respect to the assets of the corporation
issuing them. The Fund may not invest more than 5% of the value of its net
assets in warrants, or invest more than 2% of the value of its net assets in
warrants not traded on a national securities exchange. However, these
restrictions on the purchase of warrants by the Fund do not apply to warrants
attached to or otherwise included in a unit with other securities.
OPTIONS. To maximize potential gains, which, however, may also result in greater
losses, from a given commitment of investment dollars, the Fund may purchase
listed put and call options on stocks and stock indexes and write "secured"
listed put and "covered" listed call options on stocks and stock indexes up to
an aggregate of 4% of the value of its net assets, subject to any further
restrictions imposed by state securities regulations.
PURCHASING LISTED PUT AND CALL OPTIONS. Listed put and call options are
relatively short-term contracts (generally with a life of nine months or less).
By purchasing a call option, the Fund obtains the right during the term of the
option to purchase or otherwise participate in the value of the underlying
security or securities at a specified price. Similarly, a put option entitles
the holder to sell or otherwise participate in the value of the underlying
security or securities at a specified price. To achieve gains on such
investments, the option must be sold before its expiration at more than its cost
or exercised under advantageous conditions (as when the call price is less than
current market value or the put price exceeds current market value of the
underlying securities). Otherwise, the purchase of the option results in a loss.
Put and call options on stocks and stock indexes are traded on the American
Stock Exchange, Chicago Board Options Exchange, Philadelphia Stock Exchange,
Pacific Stock Exchange and New York Stock Exchange ("NYSE"). The national
securities exchanges on which such options are listed ordinarily will provide a
market for the sale of the options owned by the Fund. In certain instances, such
a market may not be available, as when the price of the security underlying a
call has declined too far below the exercise price. The prices of options do not
necessarily move parallel to the prices of the underlying securities. Investing
in option contracts is a speculative activity and there are no dividend or
interest payments on funds so invested.
WRITING LISTED PUT AND CALL OPTIONS ON STOCKS. The Fund is authorized to write
"covered" listed call options on stocks; that is, options on securities the Fund
holds in its portfolio or has an absolute and immediate right to acquire,
without additional cash consideration, upon conversion or exchange of securities
currently held in the Fund's portfolio. A call option gives the purchaser of the
option the right to buy, and a writer has the obligation to sell, the underlying
security at the exercise price during the option period. So long as the
obligation of a writer of a call continues, he may be given an exercise notice
by the broker-dealer through whom such option was sold, requiring him to deliver
the underlying securities against payment of the exercise price. This obligation
terminates upon (1) expiration of the option, or (2) such earlier time at which
the writer effects a closing transaction through purchase of such option on an
exchange. Once a writer
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has been given an exercise notice in respect of a call option, he will
thereafter be unable to effect a closing purchase transaction on that option. To
secure his obligation to deliver the underlying security, a writer of a call
option is required to deposit in escrow the underlying security or other assets
in accordance with the rules of the Options Clearing Corporation and of the
various options exchanges.
By writing call options on its securities portfolio, the Fund may realize,
through the receipt of premiums, a greater current return than would be realized
on its securities alone. As a covered option writer, the Fund, in return for the
premium, gives up the opportunity for profit from a price increase in the
underlying security above the exercise price so long as its obligation as a
writer continues, but retains the risk of loss should the price of the security
decline. Unlike one who owns securities not subject to an option, the Fund, as a
covered call option writer, has no control over when it might be required to
sell its securities covered by the option, since it might be given an exercise
notice at any time prior to the expiration of its obligation as a writer. If one
of its call options expires unexercised, the Fund realizes a gain in the amount
of the premium. Such a gain, of course, might be offset by a decline in the
market value of the underlying security during the option period. If one of its
call options is exercised, the Fund realizes a gain or loss from the sale of the
underlying security. The sales proceeds are increased by the amount of the
premium.
By writing a put option on a stock, the Fund is obligated to purchase a given
security at a specified price. As a put option writer, the Fund has no control
over when it might be required to purchase the underlying security, since it
might be given an exercise notice at any time prior to the expiration of its
obligation as a writer. If a put option written by the Fund expires unexercised,
the Fund realizes a gain in the amount of the premium. Put options involve the
risk that the Fund will be required to purchase a security at a price above the
prevailing market, although the cost to the Fund is reduced to the extent of the
premium received by it, less transaction charges.
At the time of writing put options, the Fund will establish a segregated
account consisting of cash, U.S. Government securities or other appropriate
high-grade debt securities equal to the exercise price, i.e., the price at which
the Fund is obligated to purchase the underlying security. The Fund has
undertaken, so long as its shares are registered under certain state securities
regulations, to engage in the writing of put options only as an investment
technique used to further the objectives and policies of the Fund, and not as a
means of generating principal income.
To the extent that a secondary market is available on the exchanges, the
Fund, as an option writer, is able to liquidate its position prior to the
assignment of an exercise notice by purchasing in a closing purchase transaction
an option of the same series as the option previously written. Of course, the
cost of such a liquidation purchase plus transaction costs may be greater than
the premium received upon writing the original option.
OPTIONS ON STOCK INDEXES. The Fund may also purchase and sell put and call
options on stock indexes traded on national securities exchanges. Currently,
options on stock indexes are traded on the national securities exchanges listed
above under "Purchasing Listed Put and Call Options." Options on stock indexes
are similar to options on specific stocks except that, rather than the right to
take or make delivery of stock at a specified price, an option on a stock index
gives the holder the right to receive, upon exercise of the option, an amount of
cash if the closing level of the stock index upon which the option is based is
greater than, in the case of a call, or less than, in the case of a put, the
exercise price of the option. This amount of cash is equal to the difference
between the closing price of the index and the exercise price of the option
expressed in dollars times a specified multiple. The writer of the option is
obligated, in return for the premium received, to make delivery of this amount.
Because the value of an index option depends upon movements in the level of
the index rather than the price of a particular stock, gain or loss from the
purchase or writing of index options depends upon movements in the
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level of stock prices in the stock market generally or, in the case of certain
indexes, in an industry or segment of the market, rather than movements in the
price of a particular stock. Accordingly, successful use by the Fund of stock
index options will be subject to the ability of the Adviser correctly to predict
movements in the direction of the stock market generally or of a particular
industry or market segment.
The Fund may write only "covered" call options and "secured" put options. A
call option on a stock index is "covered" if the Fund holds a call option on the
same index as the call option written where the exercise price of the call
option held is equal to or less than the exercise price of the call option
written, or greater than the exercise price of the call option written if the
difference is maintained by the Fund in cash, Treasury bills or other high-grade
short-term obligations in a segregated account. A put option on a stock index is
"secured" if the Fund holds a put option on the same index as the put option
written where the exercise price of the put option held is equal to or greater
than the exercise price of the put option written, or less than the exercise
price of the put option written if the difference is similarly maintained by the
Fund in a segregated account.
REPURCHASE AGREEMENTS. The Fund may enter into "repurchase agreements" with
State Street Bank and Trust Company (the "Custodian"). Repurchase agreements are
agreements pursuant to which securities are acquired by the Fund from a third
party with the understanding that the securities will be repurchased by the
seller at a fixed price on an agreed date. Repurchase agreements permit the Fund
to keep all of its assets at work while retaining "overnight" flexibility in
pursuit of investments of a longer term nature. The use of repurchase agreements
involves certain risks. For example, in the event a seller of securities under a
repurchase agreement defaults on its repurchase obligation, the Fund might
suffer a loss to the extent that the proceeds from the sale of the collateral
were less than the repurchase price. If the seller becomes the subject of
bankruptcy proceedings, the Fund might be delayed or incur additional costs in
selling the collateral. To minimize these risks, the Fund requires continual
maintenance of collateral with the Custodian in an amount equal to, or in excess
of, the market value of the securities which are the subject of a repurchase
agreement plus any accrued interest.
LENDING PORTFOLIO SECURITIES. To generate extra interest income, the Fund may
lend portfolio securities to a limited extent. Such loans entitle the Fund to
cash collateral, and the extra cash thus obtained may be invested in short-term,
interest-bearing securities. The Fund may make such loans only to brokers or
dealers who are members of the NYSE, or who have net capital, under the rules
and regulations applicable to such broker or dealer, of at least $10,000,000.
Such loans will not be made against less than 100% cash collateral, and the
borrower will be required to maintain the collateral at 100% of the market value
(marked-to-market daily) of the securities on loan. No such loan will be made
which would cause the aggregate market value of all securities loaned by the
Fund to exceed 15% of the value of the Fund's total assets. Loans will be made
only if: (1) the Fund retains the right to obtain any dividend, interest or
other distribution benefits on the securities and any increase in their market
value; and (2) the Fund is able to terminate the loan at any time (such right of
termination will be exercised, among other things, to obtain the return of the
securities on loan for the purpose of voting on any matters considered material
by the Fund's management). To date, the Fund has never made loans of its
portfolio securities.
MEDIUM TO LOWER RATED CORPORATE DEBT SECURITIES. The Fund may invest in
securities that are rated in the medium to lowest rating categories by Standard
& Poor's Corporation ("S&P") and Moody's Investor Services Inc. ("Moody's") some
of which may be so-called "junk bonds". The Fund has historically invested in
securities of distressed issuers when the intrinsic values of such securities
have, in the opinion of the Adviser, warranted such investment. Corporate debt
securities rated Baa are regarded by Moody's as being neither highly protected
nor poorly secured. Interest payments and principal security appears adequate
to Moody's for the present, but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time. Such
securities are regarded by Moody's as lacking
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outstanding investment characteristics and having speculative characteristics.
Corporate debt securities rated BBB are regarded by S&P as having adequate
capacity to pay interest and repay principal. Such securities are regarded by
S&P as normally exhibiting adequate protection parameters, although adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for securities in this
rating category than in higher rated categories.
Corporate debt securities which are rated B are regarded by Moody's as
generally lacking characteristics of the desirable investment. In Moody's view,
assurance of interest and principal payments or of maintenance of other terms of
the security over any long period of time may be small. Corporate debt
securities rated BB, B, CCC, CC and C are regarded by S&P on balance as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. In S&P's view,
although such securities likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions. BB and B are regarded by S&P as indicating the
two lowest degrees of speculation in this group of ratings. Securities rated D
by S&P or C by Moody's are in default and are not currently performing. The Fund
will rely on the Adviser's judgment, analysis and experience in evaluating such
debt securities. In this evaluation, the Adviser will take into consideration,
among other things, the issuer's financial resources, its sensitivity to
economic conditions and trends, its operating history, the quality of the
issuer's management and regulatory matters as well as the price of the security.
The Adviser may also consider, although it does not rely primarily on, the
credit ratings of Moody's and S&P in evaluating lower rated corporate debt
securities. Such ratings evaluate only the safety of principal and interest
payments, not market value risk. Additionally, because the creditworthiness of
an issuer may change more rapidly than is able to be timely reflected in changes
in credit ratings, the Adviser monitors the issuers of corporate debt securities
held in the Fund's portfolio. The credit rating assigned to a security is a
factor considered by the Adviser in selecting a security for the Fund, but the
intrinsic value in light of market conditions and the Adviser's analysis of the
fundamental values underlying the issuer are of at least equal significance.
Because of the nature of medium and lower rated corporate debt securities,
achievement by the Fund of its investment objective when investing in such
securities is dependent on the credit analysis of the Adviser. If the Fund
purchased primarily higher rated debt securities such risks would be
substantially reduced.
A general economic downturn or a significant increase in interest rates could
severely disrupt the market for medium and lower grade corporate debt securities
and adversely affect the market value of such securities. Securities in default
are relatively unaffected by such events or by changes in prevailing interest
rates. In addition, in such circumstances, the ability of issuers of medium and
lower grade corporate debt securities to repay principal and to pay interest, to
meet projected business goals and to obtain additional financing may be
adversely affected. Such consequences could lead to an increased incidence of
default for such securities and adversely affect the value of the corporate debt
securities in the Fund's portfolio. The secondary market prices of medium and
lower grade corporate debt securities are less sensitive to changes in interest
rates than are higher rated debt securities, but are more sensitive to adverse
economic changes or individual corporate developments. Adverse publicity and
investor perceptions, whether or not based on rational analysis, may also affect
the value and liquidity of medium and lower grade corporate debt securities,
although such factors also present investment opportunities when prices fall
below intrinsic values. Yields on debt securities in the Fund's portfolio that
are interest rate sensitive can be expected to fluctuate over time. In addition,
periods of economic uncertainty and changes in interest rates can be expected to
result in increased volatility or market price of any medium or lower grade
corporate debt securities in the Fund's portfolio and thus could have an effect
on the net asset value of the Fund if other types of securities did not show
offsetting changes in value. The secondary market value of corporate debt
securities structured as zero coupon
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securities or payment in kind securities may be more volatile in response to
changes in interest rates than debt securities which pay interest periodically
in cash. Because such securities do not pay current interest, but rather, income
is accreted, to the extent that the Fund does not have available cash to meet
distribution requirements with respect to such income, it could be required to
dispose of portfolio securities that it otherwise would not. Such disposition
could be at a disadvantageous price. Failure to satisfy distribution
requirements could result in the Fund failing to qualify as a pass-through
entity under the Internal Revenue Code of 1986, as amended (the "Code").
Investment in such securities also involves certain other tax considerations.
The Adviser values the Fund's investments pursuant to guidelines adopted and
periodically reviewed by the Board of Directors. See "Net Asset Value,
Dividends, Capital Gains Distributions and Taxes" in the Prospectus. To the
extent that there is no established retail market for some of the medium or low
grade corporate debt securities in which the Fund may invest, there may be thin
or no trading in such securities and the ability of the Adviser to accurately
value such securities may be adversely affected. Further, it may be more
difficult for the Fund to sell such securities in a timely manner and at their
stated value than would be the case for securities for which an established
retail market does exist. During periods of reduced market liquidity and in
the absence of readily available market quotations for medium and lower grade
corporate debt securities held in the Fund's portfolio, the responsibility of
the Adviser to value the Fund's securities becomes more difficult and the
Adviser's judgment may play a greater role in the valuation of the Fund's
securities due to a reduced availability of reliable objective data. To the
extent that the Fund purchases illiquid corporate debt securities which are
restricted as to resale, the Fund may incur additional risks and costs.
Illiquid and restricted securities may be particularly difficult to value and
disposition may require greater effort and expense than more liquid securities.
Further, the Fund may be required to incur costs in connection with the
registration of restricted securities in order to dispose of such securities,
although under Rule 144A under the Securities Act of 1933 certain securities
may be determined to be liquid pursuant to procedures adopted by the Fund's
Board of Directors under applicable guidelines.
Investment Restrictions
The Fund has adopted certain fundamental investment restrictions, under which
the Fund may not:
1. Borrow money, except from banks as a temporary measure for extraordinary
or emergency purposes, and then not in an amount in excess of 10% of the value
of the Fund's total assets, inclusive of the amount borrowed. The Fund has not
borrowed money and does not currently intend to borrow money to an extent
exceeding 5% of its total assets. If the value of the Fund's assets (including
the amount borrowed), less its liabilities not including any borrowing, becomes
at any time less than 300% of the amount of any outstanding bank debt, the Fund,
within three business days, will reduce its bank debt to the extent necessary to
meet the required 300% asset coverage. Such a reduction is required by the
provisions of the Investment Company Act of 1940, as amended (the "1940 Act").
This may require sales at a time when it is disadvantageous to do so. The amount
of any borrowing will be limited by any applicable margin limitations imposed by
Federal Reserve Board regulations.
2. Engage in short sales, other than short sales "against the box". Short
sales occur "against the box" when the Fund contemporaneously owns the
underlying securities or securities substantially identical to, or convertible
into, securities equivalent in kind and amount to those sold short.
3. Make loans of money to other persons, except that this restriction shall
not prohibit (a) the purchase of a portion of an issue of publicly distributed
debt securities, (b) the loan of portfolio securities and (c) the entry into
repurchase agreements or the sale of securities coupled with a simultaneous
agreement to repurchase them from the buyer. Under current interpretations of
the staff of the Securities and Exchange Commission (the "Commission"), and
subject to changes in such
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Fund
interpretations, the Fund may enter into such repurchase or resale agreements
having a duration of more than seven days only to an extent which, when added to
all other illiquid assets, would not exceed 10% of the Fund's total assets.
Other than the purchase of publicly distributed debt securities, the Fund has
not engaged in such investments or entered into repurchase or resale agreements
having a duration of more than seven days and does not currently intend to do
so.
4. Issue any senior securities, except insofar as bank borrowings might be
considered as the issuance of senior securities.
5. Invest in companies for the purpose of exercising control or management of
such companies.
6. Invest in the securities of other investment companies, unless acquired in
connection with a plan of reorganization.
7. Invest in the securities of any issuer if, at the time of the Fund's
purchase or holding thereof, any of the officers or directors of the Fund or of
the Adviser owns beneficially more than 1/2 of 1%, and such officers and
directors owning more than 1/2 of 1% together own beneficially more than 5%, of
the issuer's securities.
8. Purchase securities on margin, except that the Fund may obtain such
short-term credits as are necessary for the clearance of transactions. For
purposes of this restriction, the making of margin deposits in connection with
transactions in options is not deemed to be a purchase of securities on margin.
9. Purchase and sell limited partnership interests, real estate, commodities
or commodity contracts except in connection with a merger, consolidation or
reorganization of a corporation or other organization in which the Fund has an
investment, or in satisfaction of a debt. Any limited partnership interests,
real estate, commodities or commodity contracts so acquired will be disposed of
as soon as reasonably practicable consistent with the best interests of the
Fund's shareholders.
10. Write or purchase options or warrants or lend portfolio securities in
excess of the limitations specified, respectively, under "Warrants," "Options"
and "Lending Portfolio Securities," above.
11. Pledge, mortgage or hypothecate its assets, except when necessary to
secure borrowings of money, but then not in an amount in excess of 15% of the
value of the Fund's net assets. However, the Fund's Board of Directors (the
"Board" or the "Board of Directors") currently has a policy, which is subject to
change without shareholder approval, not to pledge, mortgage or hypothecate its
assets in excess of 10% of its net assets at market value. The Fund does not
currently intend to pledge its assets. For purposes of this restriction,
collateral or escrow arrangements with respect to the writing of options are not
deemed to be pledges of assets.
12. Underwrite the securities of other issuers, or acquire restricted
securities which the Fund may not be free to sell to the public without
registration of the securities under the Securities Act of 1933, as amended (the
"1933 Act"), if such acquisition would cause the Fund to have more than 10% of
the value of its total assets invested in such securities. It shall be a
condition of any such investment that the issuer of the securities purchased by
the Fund will, upon specified circumstances, file a registration statement
relating to the securities and the seller or issuer will pay the cost of such
registration statement. However, at the present time, the Board of Directors has
a policy which is subject to change at any time without shareholder approval
which limits such investments to 5% of the value of the Fund's net assets.
13. Invest more than 5% of the value of its total assets in the equity
securities of any one issuer.
14. Invest in more than 10% of the outstanding voting securities of any one
issuer or in more than 10% of any class of securities of any one issuer (except
government obligations).
15. Invest more than 5% of the value of its total assets in securities of
companies which (with their predecessors) have not had at least three years of
continuous operations. The Board of Directors has adopted a policy which is
subject to change at any time,
7
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BURNHAM
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Fund
that this restriction includes equity securities which, at the time of purchase,
the Fund believes will not be resalable within a reasonable period of time at
prices reasonably related to the market for such securities.
In addition to the restrictions listed above, it is the policy of the Board
of Directors (subject to change without shareholder approval) not to invest in
interests in oil, gas or other mineral exploration or development programs.
Except with respect to the 300% asset coverage required in the case of
borrowing, whenever any investment restriction states a maximum percentage of
the Fund's assets which may be invested in any security or other property, it is
intended that such maximum percentage limitations shall be determined at the
time of the acquisition of such security or property and shall not be violated
by subsequent increases in the value thereof relative to other assets held by
the Fund.
The Fund's fundamental investment restrictions may be changed only by the
approval of the holders of a majority of the Fund's outstanding voting
securities (defined in the 1940 Act as the lesser of: (1) 67% or more of the
Fund's voting securities present at a meeting if the holders of more than 50% of
the Fund's outstanding voting securities are present or represented by proxy, or
(2) more than 50% of the Fund's outstanding voting securities). As indicated
above, certain restrictions are not fundamental and are subject to change by the
Board of Directors without shareholder approval.
Purchase and Redemption of Shares
Reference is made to the materials in the Prospectus under the headings
"Purchase of Shares" and "Redemption of Shares," which describe the methods of
purchase and redemption of shares and discuss the calculation of the Offering
Price, for shares of the respective classes. The Fund receives the full net
asset value per share and the Distributor receives any initial sales charge or
CDSC. The Distributor may reallow a portion of any initial sales charge to
dealers, as set forth under "Purchase of Shares -- Initial Sales Charges (Class
A Shares)" in the Prospectus.
The redemption price of the Fund's shares may, under certain circumstances,
be paid in whole or in part in portfolio securities if deemed advisable by the
Board of Directors. Any securities thus paid to the shareholder would be valued
as described under "Net Asset Value, Dividends, Capital Gains Distributions and
Taxes." The subsequent sale of such securities of the shareholder may require
payment of a brokerage commission.
REINVESTMENT PRIVILEGE (CLASS B & CLASS C SHARES). A shareholder who has made a
partial or complete redemption of Class B or Class C shares may reinvest
all or part of the redemption proceeds and receive a pro rata credit towards the
purchase of Class B or Class C shares of the amount of any CDSC paid, provided
such reinvestment is made within 30 days after the redemption. Such reinvestment
will be made at the net asset value next determined after receipt of the
reinvestment order.
This privilege may be exercised only once by a shareholder. If the
shareholder has realized a gain on the redemption, the transaction is taxable
and reinvestment will not alter any capital gains tax payable. If there has been
a loss on the redemption, some or all of the loss may not be allowed as a tax
deduction depending on the amount reinvested.
For purposes of determining the amount of CDSC payable on any subsequent
redemptions, the purchase payment made through exercise of the reinvestment
privilege will be deemed to have been made at the time of the initial purchase
(rather than at the time the reinvestment was effected).
Net Asset Value, Dividends, Capital Gains
Distributions and Taxes
The following supplements the material in the Prospectus under the same
heading.
NET ASSET VALUE. As described in the Prospectus, the net asset value of shares
of each class of the Fund is computed once daily as of the close of trading on
the NYSE Monday through Friday (excluding days on which the NYSE is closed). The
NYSE is closed on the following holidays:
8
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BURNHAM
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Fund
New Year's Day, Martin Luther King's Day, President's Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Determination of the Fund's total assets is made in accordance with generally
accepted accounting principles, ordinarily valuing each listed security in the
Fund's portfolio at its last sale price on the day of valuation on the principal
exchange on which it is traded, or if there was no sale on such day, at the mean
of the last reported bid and asked prices (rounded down to the lower eighth).
Each security traded in the over-the-counter market (including securities listed
on exchanges the primary market for which is believed to be over-the-counter) is
valued at the mean of the last reported bid and asked prices (rounded down to
the lower eighth). When the Fund sells short against a security which it has a
right to acquire, it will value its liability at the asked price for that
security. Investments for which market quotations are not readily available and
investments which the Fund might not be able to sell without registration of the
securities under the 1933 Act are valued on the basis of fair value as
determined in good faith by the Board of Directors. Securities primarily traded
as a unit will be valued at the unit price. Short-term money market instruments
which have a maturity of more than 60 days are valued at prices based on market
quotations for securities of similar type, yield and maturity. Short-term money
market instruments which have a maturity of 60 days or less are valued at
amortized cost which approximates value.
TAX STATUS. The Fund intends to pay dividends representing its realized income
and gains within certain time periods specified in the Code. By doing so and by
meeting certain requirements including diversification of assets, the Fund
intends to qualify as a regulated investment company under Subchapter M of the
Code. Since the Fund will distribute annually its investment company taxable
income, net capital gains, and capital gains net income, it will not be subject
to income or excise taxes otherwise applicable to undistributed income of a
regulated investment company. If the Fund were to fail to distribute all its
income and gains in a timely manner, it would be subject to income tax and, in
certain circumstances, a 4% excise tax.
TAXATION OF SHAREHOLDERS. Dividends from net investment income and distributions
from short-term capital gains are taxable to shareholders as ordinary income
whether such dividends are paid in cash or in additional shares of the Fund.
Distributions from net long-term capital gains are taxable to shareholders as
long-term capital gains regardless of the length of time the shares in respect
of which such distributions are received have been held.
Distributions reflecting the Fund's qualifying dividend income from domestic
corporations will generally qualify for the 70% dividends received deduction
available to corporate shareholders if the Fund does not sell the underlying
stock before satisfying a 46-day holding period requirement (91 days for certain
preferred stock) and the shareholder holds the Fund shares for at least 46 days.
For this purpose, the holding period is reduced for periods during which the
Fund reduces its risk of loss from holding the stock (e.g., by entering into
options contracts).
Individuals and other non-exempt payees will be subject to a 31% backup
Federal withholding tax on dividends and other distributions from the Fund, as
well as on the proceeds of redemptions of Fund shares, if the Fund is not
provided with the shareholder's correct taxpayer identification number and
certification that the shareholder is not subject to such backup withholding, or
if the Internal Revenue Service notifies the Fund that the shareholder has
failed to report properly interest or dividends. For most individuals, the
taxpayer identification number is the taxpayer's social security number.
TAX TREATMENT OF CERTAIN TRANSACTIONS. In general, if the Fund enters into
combinations of investment positions by virtue of which its risk of loss from
holding an investment position is reduced on account of one (or more) other
positions, losses or deductions realized on one position may be deferred to the
extent of any unrecognized gain on another position and long-term capital gains
or short-term capital losses may be
9
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BURNHAM
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Fund
recharacterized, respectively, as short-term gains and long-term losses.
Investments in foreign currency denominated instruments or securities may
generate, in whole or in part, ordinary income or loss.
The Federal income tax treatment of gains and losses realized from options
transactions entered into by the Fund will be as follows: Gain or loss from a
closing transaction with respect to options sold by the Fund, or gain from the
lapse of any such option, will be treated as short-term capital gain or loss;
gain or loss from the sale or exchange of put or call options that the Fund
purchases, and loss attributable to the lapse of such options, will be treated
as capital gain or loss. (The capital gain or loss will be long or short-term
depending upon whether or not the affected option has been held for more than
one year.) For this purpose, an unexercised option will be deemed to have been
sold on the date it expired.
Any listed stock index option held by the Fund at the close of its taxable
year will be treated as sold for its fair market value on the last business day
of such taxable year. Sixty percent of any gain or loss with respect to such
deemed sales, as well as the gain or loss from the termination during the
taxable year of the Fund's obligation (or rights) with respect to such options
by offsetting, by exercise or being exercised, by assignment or being assigned,
by lapse, or otherwise, will be treated as long-term capital gain or loss and
the remaining forty percent will be treated as short-term capital gain or loss.
In addition to the Federal income tax consequences described above relating
to an investment in the Fund, there may be other Federal, state, local or
foreign tax considerations that depend upon the circumstances of each particular
investor. Prospective shareholders are therefore urged to consult their tax
advisors with respect to the effects of this investment on their specific
situations.
Investment Management and Other Services
THE INVESTMENT ADVISER. The Fund's investment adviser is Burnham Asset
Management Corporation, an affiliate of Burnham Securities Inc., the Fund's
principal distributor. Its address is 1325 Avenue of the Americas, New York, New
York 10019.
FUND OPERATIONS AND ADMINISTRATION. Subject to the supervision of the Board of
Directors, the Fund's administration and day-to-day operations are run by a
staff, trained in accounting and shareholder services, which is provided by the
Adviser and the Distributor, with compensation as established by the Investment
Advisory Contract (as defined below) between the Fund and the Adviser. Such
personnel are responsible for all internal accounting services, as well as the
overall review of the administrative services, including but not limited to
bookkeeping, pricing of Fund securities, pricing sales and redemptions of the
Fund's shares, communication with shareholders, responding to shareholder and
broker inquiries, maintenance of records, coordination of portfolio activities,
preparation of shareholder reporting and regulatory requirements (including
quarterly reports, annual reports, proxy material, prospectuses and transmission
of information for newspaper and statistical services) and periodic reports and
portfolio analysis for the Board and the Adviser.
The Investment Advisory Contract between the Fund and the Adviser (the
"Investment Advisory Contract") requires the Adviser to furnish research and
statistical services, advice, reports and recommendations for the Fund's
portfolio. The Adviser also acts as the Fund's financial agent, and furnishes
the Fund with office space, other facilities and administrative and clerical
services and personnel as indicated above.
The Investment Advisory Contract requires that the Adviser give equitable
treatment to the Fund under the circumstances in supplying information,
recommendations and other services, but provides that the Adviser is not
required to give the Fund preferential treatment as compared with the treatment
given any other client.
For its services, the Adviser receives a monthly fee at an annual rate of 5/8
of 1% of the Fund's average daily net asset values. The advisory fee voluntarily
will be reduced (but not below zero), if necessary, to comply with certain state
securities regulations which currently
10
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BURNHAM
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Fund
limit the annual expenses of the Fund, including the advisory fee but excluding
taxes, brokerage, interest and certain distribution, custodial and extraordinary
expenses to 2.5% of the first $30,000,000 of the Fund's average net assets, 2%
of the next $70,000,000 and 1.5% of the remaining average net assets. For the
year ended December 31, 1997, the Fund incurred investment advisory fees in the
amount of $811,886. The Fund's expenses did not exceed the expense limitation.
During the year ended December 31, 1996, the Fund paid investment advisory fees
in the amount of $711,676. During the year ended December 31, 1995, the Fund
paid investment advisory fees in the amount of $658,253. The Adviser has
voluntarily agreed to reimburse expenses of the Class B and Class C shares in
order to limit expenses to an annual rate of 2.3% and 2.3%, respectively.
Accordingly for the year ended December 31, 1997, the Adviser has reimbursed the
and Class C shares $386. The Adviser reserves the right to discontinue this
policy at any time.
Under the Investment Advisory Contract, the Fund pays all of its own expenses
other than such as are the responsibility of the Adviser (including office space
and compensation of directors, officers and employees who are affiliated with
the Adviser or the Distributor). Expenses payable by the Fund include, but are
not limited to, the following: the fees of directors who are not affiliated with
the Adviser or the Distributor, the fees of its custodian, transfer agent,
independent accountants and legal counsel; franchise, income and similar taxes
imposed on the Fund as a corporation; expenses of preparing, printing and
mailing shareholder communications; and other expenses of operating the Fund as
a corporation.
The Investment Advisory Contract was initially approved by the shareholders
on August 9, 1989, and by the Board of Directors on June 7, 1989, and will
continue in effect until terminated if approved annually by a majority of the
Board, including a majority of the directors who are not "interested persons"
(as defined in the 1940 Act) of the Adviser, or of the Fund, by votes cast in
person at a meeting called for the purpose of voting on such approval. The Board
of Directors last approved the Investment Advisory Contract on June , 1997. On
60 days' written notice, the Investment Advisory Contract is terminable
by either party thereto, and, in the case of the Fund, by the Board or by
the vote of the holders of a majority of the Fund's outstanding voting
securities, as defined previously. The Investment Advisory Contract will
terminate automatically in the event of any assignment.
The Investment Advisory Contract provides that the Adviser shall be liable
for willful misfeasance, bad faith, gross negligence, or reckless disregard of
its obligations under the contract and provides that the Adviser, subject to the
foregoing, shall not be liable for any action taken or omitted on advice of
counsel obtained in good faith, provided such counsel is satisfactory to the
Fund.
DISTRIBUTOR. Under the Distribution Contract between the Fund and the
Distributor, as amended (the "Distribution Contract"), the Distributor acts as
the principal distributor of the Fund's shares. The initial sales charges and
CDSCs received by the Distributor are described in the Prospectus under
"Purchase of Shares" and "Redemption of Shares". The Distributor also is
compensated under the Rule 12b-1 distribution plans as described in the
Prospectus under "Distribution -- Distribution Plan", and as described more
fully below.
DISTRIBUTION PLANS. The Fund has adopted a distribution plan for each of the
Class A shares, Class B shares and Class C shares of the Fund (a "Plan") in
accordance with Rule 12b-1 under the Act, to compensate the Distributor for the
services it provides and for the expenses it bears under the Distribution
Contract.
A report of the amounts so expended must be made to the Board and reviewed by
the Board at least quarterly. In addition, each Plan provides that it may not be
amended to increase materially the costs which the Fund may bear for
distribution pursuant to the Plan without shareholder approval and that other
material amendments to the Plan must be approved by a majority of the Board,
including a majority of the Board who are neither "interested persons" of the
Fund (as defined in the Act) nor have any direct or indirect financial interest
in the operation of the Plan (the "Qualified Directors"),
11
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BURNHAM
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Fund
by vote cast in person at a meeting called for the purpose of considering such
amendments.
Each Plan is subject to annual approval by a majority of the Board, including
a majority of the Qualified Directors, by vote cast in person at a meeting
called for the purpose of voting on the Plan. Each Plan is terminable at any
time by vote of a majority of the Qualified Directors or by vote of a majority
of the shares of the applicable class. Pursuant to each Plan, any new directors
who are not "interested persons" must be nominated by existing directors who are
not "interested persons." Each Plan will continue from year to year, provided
that such continuance is approved annually by a vote of the Board in the manner
described above.
If a Plan is terminated (or not renewed) with respect to any one or more
classes, another Plan may continue in effect with respect to any class as to
which it has not been terminated (or has been renewed).
Because amounts paid pursuant to a Plan are paid to the Distributor, the
Distributor and its officers, directors and employees may be deemed to have a
direct or indirect financial interest in the operation of the Plan. None of the
Fund's directors who is not an interested person of the Fund has a direct or
indirect financial interest in the operation of any Plan.
Benefits from the Plans may accrue to the Fund and its shareholders from the
growth in assets due to increased sales of shares to the public pursuant to the
Plans. Increases in net assets from sales pursuant to the Plans may benefit
shareholders by reducing per share expenses, permitting increased investment
flexibility and diversification of assets, and facilitating economies of scale
(e.g., block purchases) in securities transactions.
The Plans for Class A, Class B and Class C shares were most recently approved
as adopted by the Board, including a majority of the Qualified Directors, at a
meeting of the Board held on June 26, 1997. Prior to approving the adoption of
the Plans, the Board requested and received from the Distributor all the
information which it deemed necessary to arrive at an informed determination as
to whether the Plans should be adopted. In making its determination to adopt the
Plans, the Board considered, among other factors: trends in pricing structures
for funds distributed through dealer networks and determined that the ability to
compensate third party broker-dealers for promoting and selling the Fund's
shares would likely increase sales, enhance the Fund's ability to maintain
accounts and therefore improve asset retention. The Board also concluded that
third party marketing efforts under the Plans, if successful, could increase the
Fund's ability to maintain a stable level of net assets, which could in turn
contribute to the stability of the Fund's portfolio positions and afford greater
flexibility in pursuing the Fund's investment objectives. The Board, and in
particular, the Qualified Directors, recognized that they are able to monitor
the nature, manner and amount of expenditures under the Plans by reviewing, on a
quarterly basis, reports of the Distributor's expenditures, and that, at any
time, they could terminate the Plans and thereby end all obligations of the Fund
to make payments thereunder, if they deemed it appropriate under the
circumstances. Based upon its review, the Board, including each of the Qualified
Directors, determined that adoption of the Plans would be in the best interest
of the Fund, and that there was a reasonable likelihood that adoption of the
Plans would benefit the Fund and its shareholders. In the Board's quarterly
review of the Plans, they will consider their continued appropriateness and the
level of compensation provided therein.
Although there is no legal obligation for the Fund to pay expenses incurred
by the Distributor in excess of payments made to the Distributor under the
Plans, if for any reason the Plans are terminated, the Board will consider at
that time the manner in which to treat such expenses. Any cumulative expenses
incurred by the Distributor but not yet recovered through distribution fees may
or may not be recovered through future distribution fees. If the Distributor's
actual distribution expenditures in a given year are less than Rule 12b-1
payments it receives from the Fund for that year, and no effect is given to
previously accumulated distribution expenditures in excess of the Rule 12b-1
payments borne by the Distributor out of its own resources in other years,
12
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BURNHAM
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Fund
the difference could be viewed as "profit" to the Distributor for that year.
Under the Distribution Contract, the Distributor bears the cost of the
expenses of printing all sales literature and prospectuses required for the
Distributor's purposes; however, the Distributor may apply amounts retained from
sales commissions, CDSCs and distribution fees towards such expenses. The costs
of printing the Fund's reports to shareholders and maintaining a current
prospectus, and related accounting and legal fees, are paid by the Fund. The
Distributor earned $147,149, $127,402 and $183,771 in brokerage commissions from
Fund transactions and $11,564, $12,067 and $11,368 in sales commissions from the
distribution of Fund shares for the years ended December 31, 1997, 1996 and
1995.
The Distribution Contract was approved initially by the Board on June 7,
1989, was amended as of July 1, 1993, and will continue in effect from year to
year if approved at least annually by the Board or by the vote of a majority of
the outstanding voting securities of the Fund, as well as, in either case, by
the vote of a majority of those directors who are not parties to the
Distribution Contract or interested persons of either such party. The Board last
approved the Distribution Contract, as amended, on June 26, 1997
CUSTODIAN. Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City,
MO 64105. Investors Fiduciary Trust Company serves as custodian of the Fund's
securities and cash.
TRANSFER AGENT AND DIVIDEND PAYING AGENT. State Street Bank and Trust Company,
P.O. Box 8505, Boston, Massachusetts 02266-8505. State Street serves as
custodian of the Fund's securities and cash and as transfer agent and dividend
paying agent for the Fund. Compensation for such services is based on schedules
of charges agreed on by the Fund and State Street from time to time.
INDEPENDENT ACCOUNTANTS. Coopers & Lybrand L.L.P., 1301 Avenue of the Americas,
New York, New York, has been selected as independent accountants for the Fund
for its fiscal year ending December 31, 1998. In addition to reporting annually
on the financial statements of the Fund, the Fund's accountants will provide
assistance and consultation with respect to the preparation of certain filings
of the Fund with the Commission. The selection of independent accountants is
subject to annual ratification by the Board of Directors.
Directors and Officers of the Fund
The overall direction and supervision of the Fund is the responsibility of
the Board of Directors, which has the primary duty of seeing that the Fund's
general investment policy and programs are carried out and that the Fund's
portfolio is properly administered. The directors and officers of the Fund and
their principal occupations during at least the past five years are:
I.W. BURNHAM, II *, Chairman and Director, 1325 Avenue of the Americas, New
York, New York. Honorary Chairman of the Board of Burnham Asset Management
Corporation and Burnham Securities Inc.
JON M. BURNHAM*, President, Chief Executive Officer and Director, 1325 Avenue of
the Americas, New York, New York. Chairman, Chief Executive Officer and Director
of Burnham Asset Management Corporation and Burnham Securities Inc. Son of
I.W. Burnham, II.
CLAIRE B. BENENSON, Director, 870 United Nations Plaza, New York, New York.
Consultant on Financial Conferences; Trustee of Zweig Series Trust. Trustee
Euclid Market Neutral Fund. Former Trustee Simms Global Fund and former Director
of Financial Conferences and Chairman, Department of Business and Financial
Affairs, The New School for Social Research.
LAWRENCE N. BRANDT, Director, 2510 Rockcreek Drive, N.W., Washington, D.C.
President of Lawrence N. Brandt, Inc. (Real Estate Development).
ALVIN P. GUTMAN, Director, 8350 Fisher Rd., Elkins Park, Pennsylvania. Chairman
of the Board of Pressman-Gutman Co., Inc. (textile converters).
13
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BURNHAM
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Fund
WILLIAM W. KARATZ, Director, 700 Park Avenue, New York. Senior counsel to, and
formerly a partner in, the law firm of Winthrop, Stimson, Putnam & Roberts.
JOHN C. MCDONALD, Director, 49035 Avenida Fernando, La Quinta, CA. President of
MBX Inc. (telecommunications).
DONALD B. ROMANS, Director, 233 East Wacker Drive, Chicago, Illinois. President
of Romans and Company (Private Investors and Financial Consultants); Chairman of
Merlin Corp. Trustee of Zweig Series Trust. Trustee of Euclid Market Neutral
Fund.
ROBERT F. SHAPIRO, Director, 787 Seventh Avenue, New York, New York. Vice
Chairman and Partner of Klingenstein, Fields & Co., Inc. President of RFS &
Associates, Inc. (investment and consulting firm). Former Chairman, New Street
Capital Corp.
ROBERT M. SHAVICK, Director, 601 Bayport Way, Longboat Key, Florida. Legal
Consultant; Member, Panel of Arbitrators, American Arbitration Association, New
York Stock Exchange, American Stock Exchange and National Association of
Securities Dealers, Inc. Former Director of Florida Business Journal, Public
Trustee-Pension Funds for employees of the Town of Longboat Key, Florida,
Hearing Officer Sarasota Manatee Airport Authority and Mediator, Circuit and
County Courts, Florida.
DAVID H. SOLMS, Director, Coventry House 7301 Coventry Avenue, Melrose Park,
Pennsylvania. Retired. Former consultant to GMAC Mortgage Corporation, and
former President of the Investment Adviser to GMAC Mortgage and Realty Trust.
ROBERT S. WEINBERG, Director, 265 North Union Boulevard, St. Louis, Missouri.
President of R.S. Weinberg & Associates (management consultants) and former
Professor of Marketing Management, John M. Olin School of Business, Washington
University in St. Louis, Mo.
ROBERT J. WILBUR, Director, 5141 S.E. Brandywine Way, Stuart, Florida. Retired.
Former Vice President and General Manager of the Nassau Branch of Morgan
Guaranty Trust Company.
MICHAEL E. BARNA, Executive Vice President, Chief Financial Officer, Treasurer
and Secretary, 1325 Avenue of the Americas, New York, New York. Executive Vice
President and Assistant Secretary of Burnham Asset Management Corporation.
RONALD M. GEFFEN, Vice President, 1325 Avenue of the Americas, New York, New
York. Managing Director of Burnham Asset Management Corporation and Burnham
Securities Inc.
DEBRA B. HYMAN, Executive Vice President, 1325 Avenue of the Americas, New York,
New York. Vice President of Burnham Asset Management Corporation and Burnham
Securities Inc. Daughter of Jon M. Burnham and granddaughter of I.W. Burnham,
II.
FRANK A. PASSANTINO, Vice President and Assistant Secretary, 1325 Avenue of the
Americas, New York, New York. Vice President of Burnham Asset Management
Corporation and Burnham Securities Inc.
LOUIS S. ROSENTHAL, Vice President, 30 South 17th Street, Philadelphia,
Pennsylvania. First Vice President of Prudential Securities Inc.
14
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Fund
- --------------------------------------------------------------------------------
* Every director who is an "interested person" of the Fund, as such term is
defined in the 1940 Act, is indicated by an asterisk.
As of December 31, 1997, the officers and directors of the Fund, as a group,
owned less than 4% of the outstanding shares of the Fund.
The officers and directors of the Fund affiliated with the Distributor or the
Adviser receive no direct compensation from the Fund for their services to it.
Each director of the Fund who is not so affiliated receives $3,000 per annum,
plus $500 and expenses for each Board of Directors meeting attended. In
addition, the Fund does not offer pension or retirement benefits to directors
and officers of the Fund. During the fiscal year ended December 31, 1997, the
directors of the Fund who were not so affiliated received an aggregate of
$67,588 as directors' fees and expenses.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Compensation
from Registrant
Aggregate Estimated and Fund
Compensation Pension Retirement Annual Complex Paid to
Name of Person, from Registrant for Benefits Accrued as Benefits upon Trustees for
Position Fiscal Year Part of Fund Expense Retirement Calendar Year
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Claire B. Benenson, Director $6,000 0 0 $6,000
Lawrence N. Brandt, Director 0 0
William W. Karatz, Director $5,000 0 0 $5,000
John C. McDonald, Director $5,000 0 0 $5,000
Donald B. Romans, Director $6,000 0 0 $6,000
Robert F. Shapiro, Director $6,000 0 0 $6,000
Robert M. Shavick, Director $5,000 0 0 $5,000
David H. Solms, Director $5,000 0 0 $5,000
Robert S. Weinberg, Director $4,500 0 0 $4,500
Robert J. Wilbur, Director $5,000 0 0 $5,000
</TABLE>
As of April 15, 1998, to the knowledge of management, each of the following
persons beneficially owned more than 5% of the outstanding shares with respect
to Class B and C shares of the Fund. The percentage of ownership is noted
beside the specific class of shares held in the Fund.
THE BURNHAM FUND-CLASS B SHARES The Burnham Fund Class C Shares
<TABLE>
<CAPTION>
Registration Name % of Fund Held Registration Name % of Fund Held
- ----------------- -------------- ----------------- ---------------
<S> <C> <C> <C>
Lewco Securities Corp. Donaldson, Lufkin Jenrette
34 Exchange Place, 4th Fl. Securities Corporation Inc.
Jersey City, NJ 07302-3901 35.39% P.O. Box 2052
Jersey City, NJ 07303-2052 89.96%
Donaldson, Lufkin Jenrette
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303-2052 16.34%
</TABLE>
With respect to Class A shares, no shareholder maintains a controlling
interest of more than 5% of the total outstanding shares of Class A shares.
Services for Shareholders
The following information supplements the material in the Prospectus under
the heading "Services for Shareholders."
SHAREHOLDER ACCOUNTS. For the convenience of investors, no stock certificates
ordinarily will be issued by the Fund, although stock certificates will be
issued upon the written request of any shareholder. Instead, when an investor
15
<PAGE>
<PAGE>
BURNHAM
----
Fund
makes his initial purchase of shares, an account will be opened for him on the
books of the Fund and his shares will be held by State Street as Transfer Agent.
With the initial purchase, the investor appoints State Street as his agent to
receive all dividends and distributions and to reinvest them in additional full
and fractional shares of the same class of shares of the Fund. The distribution
or dividends is automatically reinvested, at a price equal to net asset value,
in shares of the class from which the distribution was made, as of the
ex-dividend date. State Street adds these shares to the shareholder's account,
and sends the shareholder a transaction advice. The $250 minimum requirement for
subsequent investments does not apply to reinvestments of dividends or
distributions. Under the automatic investment program, dividends and
distributions from shares of one class may not be reinvested in shares of any
other class. Shares of one class may not be exchanged for shares of any other
class.
Shareholders who do not wish to have their dividends and distributions
automatically reinvested may, at any time, notify State Street to that effect
and, commencing ten business days after receipt by State Street of such notice,
all future dividends and distributions will be paid to the shareholder by check.
Portfolio Turnover and Brokerage
PORTFOLIO TURNOVER. There are no fixed limitations regarding the Fund's
portfolio turnover rate. Securities initially satisfying the basic policies and
objectives of the Fund may be disposed of when they are no longer deemed to be
suitable. Brokerage costs to the Fund are commensurate with the rate of
portfolio activity. In computing the portfolio turnover rate, all securities,
the maturities or expiration dates of which at the time of acquisition are one
year or less, are excluded. Subject to this exclusion, the turnover rate is
calculated by dividing (A) the lesser of purchases or sales of portfolio
securities for the fiscal year by (B) the monthly average of the value of
portfolio securities owned by the Fund during the fiscal year. For the years
ended December 31, 1997 and 1996, the Fund's portfolio turnover rates were 59.4%
and 61.5%, respectively.
PLACEMENT OF PORTFOLIO BROKERAGE. As a general matter, purchases and sales of
portfolio securities of the Fund are placed by the Adviser with brokers and
dealers who in its opinion will provide the Fund with the best combination of
price (inclusive of brokerage commissions) and execution for its orders.
However, pursuant to the Investment Advisory Contract, consideration may be
given in the selection of broker-dealers to research provided and payment may be
made of a fee higher than that charged by another broker-dealer which does not
furnish research services or which furnishes research services deemed to be of
lesser value, so long as the criteria of Section 28(e) of the Securities
Exchange Act of 1934, as amended (the "1934 Act") are met. Section 28(e) of the
1934 Act specifies that a person with investment discretion shall not be "deemed
to have acted unlawfully or to have breached a fiduciary duty" solely because
such person has caused the account to pay a higher commission than the lowest
available under certain circumstances. To obtain the benefit of Section 28(e),
the person so exercising investment discretion must make a good faith
determination that the commissions paid are reasonable in relation to the value
of the brokerage and research services provided viewed in terms of either that
particular transaction or his overall responsibilities with respect to the
accounts as to which he exercises investment discretion.
Currently, it is not possible to determine the extent to which commissions
that reflect an element of value for research services might exceed commissions
that would be payable for execution services alone, nor generally can the value
of research services to the Fund be measured. Research services furnished might
be useful and of value to the Adviser and its affiliates in serving other
clients as well as the Fund, but on the other hand any research service obtained
by the Adviser or the Distributor from the placement of portfolio brokerage of
other clients might be useful and of value to the Adviser in carrying out its
obligation to the Fund.
As a general matter, it is the Fund's policy to execute purchases and sales
of listed portfolio securities through the Distributor only if, in the judgment
of the Fund and without obligation to seek competitive bidding, the
16
<PAGE>
<PAGE>
BURNHAM
----
Fund
Distributor is qualified to obtain the best combination of price (inclusive of
brokerage commissions) and execution on the particular transaction. However,
under the Investment Advisory Contract, the Distributor is entitled to charge
the Fund brokerage commissions and derive a profit therefrom, subject to
approval of the amounts so paid by the Fund's "non-interested" directors in the
course of their review of the Fund's advisory and brokerage arrangements. The
Board of Directors may thus permit the payment to the Distributor of brokerage
commissions which, though possibly higher than the lowest otherwise available,
nevertheless result in overall payments to the Distributor and the Adviser
which, together, are deemed reasonable and consistent with their fiduciary
responsibilities to the Fund. The Board has adopted procedures pursuant to Rule
17e-1 under the 1940 Act, in order to ascertain that the brokerage commissions
paid to the Distributor are fair and reasonable in accordance with the criteria
set forth in such Rule.
No transactions may be effected by the Fund with the Distributor acting as
principal for its own account. Over-the-counter purchases and sales normally are
made with principal marketmakers except where, in the opinion of management, the
best executions are available elsewhere. The Distributor may act as broker for
the Fund in over-the-counter trading. In executing transactions for the Fund,
the Distributor treats the Fund in the same manner as any other public customer,
and Fund orders are accorded priority over those received by the Distributor for
its own account or for the account of any of its officers, directors or
employees.
The Fund may from time to time allocate brokerage commissions to firms other
than the Distributor which furnish research and statistical information to the
Adviser. The supplementary research that may be provided by such firms will be
useful in varying degrees and of indeterminable value. Such research may, among
other things, include advice regarding economic factors and trends, advice as to
occasional transactions in specific securities, and similar information relating
to securities. No formula has been established for the allocation of business to
such brokers. The Distributor will not participate in the brokerage commissions
allocated to these firms. Officers and directors of the Fund and of the Adviser
who are also officers or directors of the Distributor receive indirect benefits
from the Fund as a result of its usual and customary brokerage commissions which
the Distributor may receive for acting as broker to the Fund in the purchase and
sale of portfolio securities. The Investment Advisory Contract does not provide
for a reduction of the advisory fee by any portion of the brokerage commissions
generated by portfolio transactions of the Fund which the Distributor may
receive.
During the year ended December 31, 1997, the Fund paid total brokerage
commissions of $216,771. The amount paid to the Distributor for the year ended
December 31, 1997 was $147,149, which represented 67.88% of the total brokerage
commissions paid.
Determination of Performance
From time to time, the Fund may quote its performance in terms of "total
return" in reports or other communications to shareholders, or in advertising
material. Total return ("T") is calculated by finding the average compounded
rate of return over the number of years in a given period ("n") that would
equate a hypothetical initial investment of $1,000 ("P") to the ending
redeemable value ("ERV"), according to the following formula:
P (1 + T)`pp'n = ERV
In calculating the above, it is assumed that the maximum sales load (or other
charges deducted from payments) is deducted from the initial $1,000 payment and
all recurring fees that are charged to all shareholder accounts are included.
The average annual total return of the Class A shares of the Fund, assuming
the reinvestment of dividends, for the one, five and ten year periods ended
December 31, 1997, was 18.50%, 13.25% and 12.31%, respectively. The average
annual returns of the Class B and Class C shares of the Fund, assuming the
reinvestment of dividends for the one year periods ended December 31, 1997 and
the
17
<PAGE>
<PAGE>
BURNHAM
----
Fund
life of the class period (October 18, 1993 to December 31, 1997) were 19.60% and
13.47%, and 23.59% and 13.93%, respectively.
The Fund's performance will vary from time to time depending on market
conditions, the composition of its portfolio and its operating expenses. Actual
results for each class of the Fund's shares will vary depending upon the level
of the class' expenses. Thus, at any point in time, investment yields, current
distributions or total returns may be either higher or lower than past results,
and there is no assurance that any historical performance record will continue.
Furthermore, with respect to Class B shares, the investment results will be
reduced for any investor if a contingent deferred sales charge is imposed on the
redemption of the shares. Consequently, any given performance quotation should
not be considered representative of the Fund's performance for any specified
period in the future.
Financial Statements
The audited financial statements of the Fund for the fiscal year ended
December 31, 1997 and the report of the Fund's independent accountants in
connection therewith are included in the Fund's 1997 Annual Report to
Shareholders. The report is incorporated by reference into this Statement of
Additional Information. You can obtain a copy of the Fund's 1997 Annual Report
by writing or calling the Distributor at the address or telephone numbers set
forth on the cover of this Statement of Additional Information.
18
<PAGE>
<PAGE>
BURNHAM
----
Fund
[THIS PAGE LEFT INTENTIONALLY BLANK.]
19
<PAGE>
<PAGE>
BURNHAM
----
Fund
[THIS PAGE LEFT INTENTIONALLY BLANK.]
20
<PAGE>
<PAGE>
BURNHAM
----
Fund
Table of Contents
<TABLE>
<CAPTION>
PAGE
- -----
<S> <C>
The Burnham Fund .......................................................... 1
Investment Techniques ..................................................... 2
Investment Restrictions ................................................... 6
Purchase and Redemption of Shares ......................................... 8
Net Asset Value, Dividends, Capital Gains
Distributions and Taxes ............................................... 8
Investment Management and Other Services .................................. 10
Directors and Officers of the Fund ........................................ 13
Services for Shareholders ................................................. 15
Portfolio Turnover and Brokerage .......................................... 16
Determination of Performance .............................................. 17
Financial Statements ...................................................... 18
</TABLE>
Statement of Additional
Information
April 30, 1998
21
<PAGE>
<PAGE>
THE BURNHAM FUND INC.
Post-Effective Amendment No. 66
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
The following report and financial statements are incorporated in
Part B by reference to the Fund's Annual Report to Shareholders
for the year ended December 31, 1997:
Report of Independent Accountants for the year ended
December 31, 1997; Statement of Net Assets at December 31, 1997;
Statement of Assets and Liabilities at December 31, 1997;
Statement of Operations for the year ended December 31, 1997;
Statement of Changes in Net Assets for each of the two years in
the period ended December 31, 1997; Notes to Financial
Statements.
(b) Exhibits:
(1) (a) Articles of
Incorporation.
(b) Articles of Amendment, dated
October 15, 1993.
(2) Amended and Restated By-Laws dated
April 21, 1993.
(4) Specimen stock certificates for Class A
shares, Class B shares and Class C shares
of the Fund.
(5) Investment Advisory Contract, as
amended through July 1, 1993.
(6) (a) Distribution Contract, as
amended through July 1, 1993.
(b) Specimen Selling and Service
Agreement.
C-1
<PAGE>
<PAGE>
(8) Custodian Contract.
(9) Transfer Agency Agreement.
(11) Consent of independent accountants.
(14) (a) The Burnham Fund Inc. Money
Purchase Pension Plan/Profit
Sharing Plan.
(b) The Burnham Fund Universal
Individual Retirement Account
Information Kit.
(15) Form of Rule 12b-1 Plans for Class A
shares, Class B shares and Class C shares
of the Fund.
(17) Financial Data Schedule
(18) Rule 18f-3 Multiple Class Plan
C-2
<PAGE>
<PAGE>
Item 25. Persons Controlled by or Under Common Control
with the Fund.
To the knowledge of the Fund, it does not control, is not
controlled by, and is not under common control with any other
person.
Item 26. Number of Holders of Securities.
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class as of March 31, 1998
- -------------- ------------------------
<S> <C>
Class A Shares 6,706
Class B Shares 80
Class C Shares 14
</TABLE>
Item 27. Indemnification.
All officers, directors, employees and agents of the Fund will be
indemnified to the fullest extent permitted by law for any
liabilities of any nature whatsoever incurred in connection with
the affairs of the Fund, except in cases where willful
misfeasance, bad faith, gross negligence or reckless disregard of
duties to the Fund is established. See Article NINTH of
Registrant's Articles of Incorporation for a more complete
description of matters related to indemnification. To this end,
the Fund maintains an Officers' and Directors' Errors and
Omissions Policy.
Item 28. Business and Other Connections of Investment Adviser.
Burnham Asset Management Corporation (the "Adviser"), a Delaware
corporation, engages in no business other than that of investment
counseling for clients, including the Registrant. The business
address for the directors and officers of the Adviser is 1325
Avenue of the Americas, 17th Floor, New York, New York 10019.
The officers and directors of the Adviser and their relationships
with the Fund and with Burnham Securities Inc. (the
"Distributor") are as follows:
C-3
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Position with Position with Position with
Name Adviser the Fund the Distributor
- ---- ------------------------ ------------------------ ------------------------
<S> <C> <C> <C>
I.W. Burnham, II Honorary Chairman of Chairman Honorary Chairman of
the Board and Director and Director the Board and
Director
Jon M. Burnham Chairman of the Board, President, Chief Executive Chairman of the
Chief Executive Officer Officer and Director Board, Chief Execu-
and Director tive Officer and
Director
George Stark Senior Vice President None Senior Vice President
Debra B. Hyman Vice President and Executive Vice President Vice President
Director
Michael E. Barna Executive Vice President Executive Vice President, None
and Assistant Secretary Chief Financial
Officer, Secretary
and Treasurer
Frank A. Passantino Vice President Vice President and Vice President
Assistant Secretary
George Sommerfeld Executive Vice None Executive Vice
President and Chief President and Chief
Operating Officer Operating Officer
Ronald M. Geffen Managing Director Vice President Managing Director
</TABLE>
The principal business employment of each officer and director is as
indicated above and as indicated in Part A of this Registration Statement under
"Directors and Officers of the Fund."
C-4
<PAGE>
<PAGE>
Item 29. Principal Underwriters.
(a) Burnham Securities Inc. is the principal distributor
of the Registrant's shares.
(b) The officers and directors of the Distributor who
also serve the Fund are as follows:
<TABLE>
<CAPTION>
Position with Position with
Name Distributor Fund
- ---- ------------- -------------
<S> <C> <C>
I.W. Burnham, II Honorary Chairman of Honorary Chairman of
the Board and the Board and
Director Director
Jon M. Burnham Chairman of the President, Chief
Board, Chief Executive Executive Officer
Officer and Director and Director
Debra B. Hyman Vice President Executive Vice
and Director President
Ronald M. Geffen Managing Director Vice President
Frank A. Passantino Vice President Vice President and
Assistant Secretary
</TABLE>
The principal business address of all such persons is 1325 Avenue of
the Americas, 17th Floor, New York, New York 10019.
(c) No commissions or other compensation have been paid by the
Fund, directly or indirectly, to any principal underwriter
who is not an affiliated person of the Fund or an
affiliated person of such an affiliated person during the
last fiscal year.
Item 30. Location of Accounts and Records.
Burnham Asset Management Corporation
1325 Avenue of the Americas, 17th Floor
New York, New York 10019
Investors Fiduciary Trust Company
801 Pennsylvania
Kansas City, MO 64105
Item 31. Management Services.
The Fund has not entered into any management-related service
contracts not discussed in Part A or B of this Registration
Statement.
C-5
<PAGE>
<PAGE>
Item 32. Undertakings.
(a) The Fund undertakes that, for as long as it does
not hold annual meetings for the election of
directors, the Board of Directors shall promptly call a
meeting of shareholders for the purpose of voting
upon the question of removal of any director or
directors when requested in writing to do so by the
record holders of not less than 10 percent of the
outstanding shares of common stock of the Fund.
The Fund further undertakes not to issue shares
for consideration other than cash.
(b) The Fund undertakes to provide its Annual Report to
Shareholders to each person that receives the Fund's
prospectus upon request and without charge.
C-6
<PAGE>
<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 Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and) has duly caused this
Post-Effective Amendment to be signed on its behalf by the undersigned thereunto
duly authorized in the City and State of New York on the 25th day of April,
1998.
THE BURNHAM FUND INC.
By /s/ Michael E. Barna
--------------------
Michael E. Barna
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Post-Effective Amendment No. 66 to the Registration Statement on
Form N-1A has been signed below by the following persons in the capacities and
on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ I.W. Burnham, II* Chairman April 25, 1998
- ---------------------------------------- and Director
I.W. Burnham, II
/s/ Jon M. Burnham* President Chief April 25, 1998
- ---------------------------------------- Executive Officer
Jon M. Burnham and Director
/s/ Claire B. Benenson* Director April 25, 1998
- ----------------------------------------
Claire B. Benenson
/s/ Alvin P. Gutman* Director April 25, 1998
- ----------------------------------------
Alvin P. Gutman
/s/ William W. Karatz* Director April 25, 1998
- ----------------------------------------
William W. Karatz
/s/ John C. McDonald* Director April 25, 1998
- ----------------------------------------
John C. McDonald
- --------
* By /s/ Michael E. Barna
------------------------
Michael E. Barna
Attorney-in-fact under
powers previously filed.
</TABLE>
C-7
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Donald B. Romans* Director April 25, 1998
Donald B. Romans
/s/ Robert F. Shapiro* Director April 25, 1998
Robert F. Shapiro
/s/ Robert M. Shavick* Director April 25, 1998
Robert M. Shavick
/s/ David H. Solms* Director April 25, 1998
David H. Solms
/s/ Robert S. Weinberg* Director April 25, 1998
Robert S. Weinberg
/s/ Robert J. Wilbur* Director April 25, 1998
Robert J. Wilbur
</TABLE>
C-8
STATEMENT OF DIFFERENCES
------------------------
The degree symbol shall be expressed as............................... [d]
<PAGE>
<PAGE>
The Burnham Fund Inc.
File No. 2-17226
EXHIBITS
TO
POST-EFFECTIVE AMENDMENT NO. 66
TO
REGISTRATION STATEMENT ON
FORM N-lA
<PAGE>
<PAGE>
ARTICLES OF INCORPORATION
OF
THE BURNHAM FUND INC.
FIRST: The undersigned, Robert I. Jones, whose post office address is
c/o Kramer, Levin, Nessen, Kamin & Frankel, 919 Third Avenue, New
York, New York 10022, being eighteen years of age or older, does
hereby form a corporation under the general laws of the State of
Maryland.
SECOND: The name of the corporation (hereinafter called the
"Corporation") is THE BURNHAM FUND INC.
THIRD: The purposes for which the Corporation is formed are as follows:
(1) To engage in any legal activity or business permitted
under the General Laws of the State of Maryland.
(2) To conduct, operate and carry on the business of an
investment company.
(3) To subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer,
exchange, distribute or otherwise dispose of goods and
commodities of every type and description, and securities
of every type and description including, but not limited
to, stocks, bonds, debentures, notes and other negotiable
or non-negotiable instruments; obligations and evidences
of indebtedness issued or guaranteed as to principal and
interest by the United States Government, by any state or
local government, or by any foreign government, or by any
agency or instrumentality of any of the foregoing, or by
any corporation organized under the laws of the United
States or any state, territory or possession thereof or of
any foreign country or state, territory, subdivision or
possession thereof; to pay for the same in cash or by the
issue of stock, including treasury stock, bonds or notes
of the Corporation, or otherwise; and to exercise any and
all rights, powers and privileges of ownership or interest
in respect of any and all such investments of every kind
and description, including, without limitation, the right
to consent and otherwise act with respect thereto, with
power to designate one or more persons, forms,
associations or corporations to exercise any of said
rights, powers and privileges in respect of any said
instruments.
1
<PAGE>
<PAGE>
(4) To borrow money or otherwise obtain credit and to secure
the same by mortgaging, pledging or otherwise subjecting
as security the assets of the Corporation, and to endorse,
guarantee or undertake the performance of any obligation,
contract, or engagement of any other person, firm,
association or corporation.
(5) To issue, sell, repurchase, redeem, retire, cancel,
acquire, hold, resell, reissue, dispose of, transfer and
otherwise deal in, shares of stock of the Corporation,
including shares of stock of the Corporation in fractional
denominations, and to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of
shares of stock of the Corporation any funds or property
of the Corporation, whether capital or surplus or
otherwise, to the full extent now or hereafter permitted
by the laws of the state of Maryland and by these Articles
of Incorporation.
(6) To conduct research and investigations in respect of
securities, organizations, business and general business
and financial conditions of the United States of America
and elsewhere for the purpose of obtaining information
pertinent to the investment and employment of the assets
of the Corporation and to procure any or all of the
foregoing to be done by others as independent contractors
and to pay compensation therefor.
(7) To conduct its business, promote its purposes and carry on
its operations in any and all of its branches and maintain
offices both within and without the State of Maryland, in
any and all States of the United States of America, in the
District of Columbia and in any or all commonwealths,
territories, dependencies, colonies, possessions, agencies
or instrumentalities of the United States of America and
of foreign governments.
(8) To carry out all or any part of the foregoing purposes or
objects as principal or agent, or in conjunction with any
other person, firm, association, corporation or other
entity, or as a partner or member of a partnership,
syndicate or joint venture or otherwise, and in any part
of the world to the same extent and as fully as natural
persons might or could do.
2
<PAGE>
<PAGE>
(9) To do all and everything necessary, suitable, convenient
or proper for the conduct, promotion and attainment of any
of the business and purposes herein specified, or which at
any time may be incidental thereto or may appear conducive
to or expedient for the accomplishment of any of such
business and purposes, and which might be engaged in or
carried on by a corporation incorporated or organized
under the Maryland General Corporation Law; and to have
and exercise all of the powers conferred by the laws of
the State of Maryland upon corporations incorporated or
organized under the Maryland General Corporation Law.
The foregoing provisions of this Article THIRD
shall be construed both as purposes and powers and each as
an independent purpose and power. The foregoing
enumeration of specific purposes and powers shall not be
held to limit or restrict in any manner the purposes and
powers of the Corporation, and the purposes and powers
herein specified shall, except when otherwise provided in
this Article THIRD, be in no wise limited or restricted by
reference to, or inference from, the terms of any
provision of this or any other Article of these Articles
of Incorporation, provided, that the Corporation shall not
conduct any business, promote any purpose or exercise any
power or privilege within or without the State of Maryland
which, under the laws thereof, the Corporation may not
lawfully conduct, promote or exercise.
FOURTH: (1) The post office address of the principal office of the
Corporation in the State of Maryland is c/o The
Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21201.
(2) The name of the resident agent of the Corporation within
the State of Maryland is The Corporation Trust
Incorporated, a corporation of the State of Maryland, and
the post office address of the resident agent is 32 South
Street, Baltimore, Maryland 21201.
FIFTH: (1) The total number of shares of stock which the Corporatlon
has authority to issue is Forty Million (40,000,000), all
of which are of a par value of Ten Cents ($0.10) each, and
are designated as Common Stock.
(2) The aggregate par value of all the authorized shares of
Common Stock is Four Million Dollars ($4,000,000).
3
<PAGE>
<PAGE>
(3) The stock of the Corporation and the holders thereof shall
be subject to the following provisions:
(a) The Corporation may issue shares of its
stock in fractional denominations to the
same extent as its whole shares, and shares
in fractional denominations shall be shares
of stock having proportionately to the
respective fractions represented thereby all
the rights of whole shares, including,
without limitation, the right to vote, the
right to receive dividends and
distributions, and the right to participate
upon liquidation of the Corporation, but
excluding the right to receive a stock
certificate representing fractional shares.
(b) The Corporation, either directly or through
an agent, may purchase its shares out of
funds legally available therefor, upon such
terms and conditions and for such
consideration as the Board of Directors
shall deem advisable.
(c) In the absence of any specification as to
the purpose for which shares of stock of the
Corporation are redeemed or purchased by it,
all shares so redeemed or purchased shall be
deemed to be "purchased for retirement" in
the sense contemplated by the laws of the
State of Maryland, and the number of the
authorized shares of stock of the
Corporation shall not be reduced by the
number of any shares redeemed or purchased
by it.
(d) Each holder of stock of the Corporation,
upon request to the Corporation (accompanied
by surrender of the appropriate stock
certificate or certificates in proper form
for transfer, if any certificates have been
issued for such shares), shall be entitled
to require the Corporation to redeem, to the
extent that the Corporation may lawfully
effect such redemption under the laws of the
State of Maryland, all or any part of the
shares of stock standing in the name of such
holder on the books of the Corporation at a
price per share equal to the net asset value
per share, determined in accordance with
Article SIXTH hereof, less, to the extent
consistent with disclosures
4
<PAGE>
<PAGE>
made by the Corporation as required by the
Securities Act of 1933 and in compliance
with the Investment Company Act of 1940, a
charge not to exceed two per cent (2%) of
such net asset value if and as fixed, from
time to time, by resolution of the Board of
Directors of the Corporation, and take all
other steps deemed necessary or advisable in
connection therewith. The redemption price
shall be payable in cash, except to the
extent that the Board of Directors may from
time to time determine that it may be
payable in kind.
(e) Payment by the Corporation for shares of
stock of the Corporation surrendered to it
for redemption or purchase shall be made by
the Corporation within seven business days
of surrender of appropriate stock
certificates in proper form for transfer, if
any certificates have been issued to
represent such shares, or within seven
business days as of the time the redemption
price of such shares is determined, out of
the funds legally available therefor,
provided, that the Corporation may suspend
the right of the holders of stock of the
Corporation to redeem shares of stock and
may postpone the right of such holders to
receive payment for any shares (i) for any
period during which the New York Stock
Exchange, Inc. is closed other than
customary weekend and holiday closings or
during which trading on the New York Stock
Exchange, Inc. is restricted, as determined
by the rules and regulations of the
Securities and Exchange Commission or any
successor thereto;(ii) for any period during
which any emergency, as determined by the
rules and regulations of the Securities and
Exchange Commission or any successor
thereto, exists as a result of which
disposal by the Corporation of securities
owned by it is not reasonably practicable or
as a result of which it is not reasonably
practicable for the Corporation to fairly
determine the value of its net assets: or
(iii) for such other periods as the
Securities and Exchange Commission or any
successor thereto by order may permit for
the protection of security holders of the
Corporation.
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(f) The right of any holder of stock of the
Corporation redeemed or purchased by the
Corporation as provided in subparagraph (d)
of this Article FIFTH to receive dividends
thereon and all other rights of such holder
with respect to such shares shall terminate
at the time as of which the redemption or
purchase price of such shares is determined,
except the right of such holder to receive
(i) the redemption or purchase price of such
shares from the Corporation or its
designated agent and (ii) any dividend or
distribution to which such holder has
previously become entitled as the record
holder of such shares on the record date for
such dividend or distribution.
(g) The Board of Directors of the Corporation is
authorized to classify or to reclassify,
from time to time, any unissued shares of
stock of the Corporation, whether now or
hereafter authorized, by setting, changing
or eliminating the preference, conversion or
other rights, voting powers, restrictions,
limitations as to dividends, and
qualifications or terms and conditions of or
rights to require redemption of the stock
and, pursuant to such classification or
reclassification, to increase or decrease
the number of authorized shares of any
class, but the number of shares of any class
shall not be reduced by the Board of
Directors below the number of shares thereof
then outstanding.
Without limiting the generality of the foregoing, the dividends and
distributions of investment income and capital gains with respect to the stock
of the Corporation, and with respect to each class that hereafter may be
created, shall be in such amount as may be declared from time to time by the
Board of Directors, and such dividends and distributions may vary from class to
class to such extent and for such purposes as the Board of Directors may deem
appropriate, including, but not limited to, the purpose of complying with
requirements of regulatory or legislative authorities.
(h) All persons who shall acquire stock or other
securities of the Corporation shall acquire
the same subject to the provisions of these
Articles of Incorporation, as amended from
time to time.
SIXTH: For the purposes of the computation of net asset value referred
to in these Articles of Incorporation, the following rules shall
apply:
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(1) The net asset value of each share of stock of the
Corporation issued or sold at its net asset value shall be
the net asset value per share of the Corporation's stock
when next determined as provided in paragraph (4) of this
Article SIXTH following acceptance by the Corporation of
the application or other agreement with respect to the
issue or sale of such share.
(2) The net asset value of each share of stock of the
Corporation redeemed by the Corporation at the request of
its holder shall be the net asset value per share of the
Corporation's stock when next determined as provided in
paragraph (4) of this Article SIXTH following the time the
Corporation receives a request for redemption of such
share, in good order with all appropriate documentation,
including stock certificates, it any, duly endorsed for
transfer.
(3) The net asset value of each share of stock of the
Corporation purchased or redeemed by it otherwise than
upon request for redemption by its holder shall be the net
asset value per share of the Corporation's stock when next
determined as provided in paragraph (4) of this Article
SIXTH following the Corporation's determination or
agreement to purchase or redeem such share, the expiration
of any notice period and fulfillment of any other
conditions precedent to such purchase or redemption, or
such other price per share as may be specified in the
agreement, if any, with the stockholder for the purchase
or redemption of the stockholder' shares.
(4) The net asset value of a share of stock of the Corporation
as at the time of a particular determination shall be the
quotient obtained by dividing the value at such time of
the net assets of the Corporation (i.e., the value of the
assets of the Corporation less its liabilities exclusive
of capital stock and surplus) by the total number of
shares of stock outstanding at such time, all determined
and computed as provided in the Corporation's by-laws or
otherwise established from time to time by the Board of
Directors.
(5) The Corporation shall determine the net asset value per
share of its stock on such days and at such times as may
be prescribed by the rules and regulations of the
Securities and Exchange Commission or any successor
thereto. The Corporation may also determine such net asset
value at other times.
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(6) The Corporation may suspend the determination of net asset
value during any period when it may suspend the right of
its stockholders to require the Corporation to redeem
their shares.
(7) Without limiting any other powers it may have, the Board
of Directors is specifically empowered, in its absolute
discretion, to establish or alter the methods for
determining net asset value whenever deemed by it to be
necessary in order to enable the Corporation to comply
with, or deemed by it to be desirable and consistent with,
any provision of the Investment Company Act of 1940 or any
successor Act or any rule or regulation thereunder,
including without limitation, any rule or regulation made
or adopted pursuant to Section 22 of the Investment
Company Act of 1940 by the Securities and Exchange
Commission or any securities association registered under
the Securities Exchange Act of 1934 or any successor Act.
SEVENTH: (1) The number of directors of the Corporation, until such
number shall be increased pursuant to the by-laws of the
Corporation, is one. The number of directors shall
never be less than the number prescribed by the Maryland
General Corporation Law.
(2) The name of the person who currently is the director of
the Corporation and who will act as such until the first
annual meeting or until his successor is duly chosen and
qualifies is as follows:
Oskar P. Lewnowski
EIGHTH: The following provisions are hereby adopted for the
purpose of defining, limiting and regulating the powers of
the Corporation and of the directors and stockholders:
(1) The initial by-laws of the Corporation shall
be adopted by the Board of Directors at
their organization meeting or by their
informal written action, an the case may be.
Thereafter, the power to make, alter or
repeal the by-laws of the Corporation shall
be vested in the Board of Directors of the
Corporation.
(2) The Corporation reserves the right to amend,
alter, change or repeal any provision
contained in these Articles of
Incorporation, in the manner now or
hereafter prescribed by statute, and all
rights conferred upon stockholders herein
are granted subject to this reservation.
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(3) Notwithstanding any provision of the
Maryland General Corporation Law requiring a
greater proportion than a majority of the
votes entitled to be cast in order to take
or authorize any action, any such action may
be taken or authorized upon the concurrence
of at least a majority of the aggregate
number of votes entitled to be cast thereon,
except as otherwise provided in these
Articles of Incorporation.
(4) The Board of Directors of the Corporation is
hereby empowered, subject to applicable
provisions of law, of these Articles of
Incorporation and of the by-laws, to
authorize the issuance from time to time of
shares of the Corporation's stock of any
class, whether now or hereafter authorized,
or securities convertible into shares of its
stock of any-class or classes, whether now
or hereafter authorized, in such amounts, on
such terms and conditions and for such
consideration as the Board of Directors
deems advisable.
(5) No stockholder of the Corporation shall by
reason of such stockholder's holding shares
of stock of any class have any preemptive or
preferential right to purchase or subscribe
to any shares of stock of any class of the
Corporation, now or hereafter to be
authorized, or any notes, debentures, bonds
or other securities convertible into or
carrying options or warrants to purchase
shares of stock of any class, now or
hereafter to be authorized (other than such
rights, if any, as the Board of Directors in
its discretion from time to time may grant),
whether or not the issuance of any such
shares of stock, or such notes, debentures,
bonds or other securities, would adversely
affect the dividend or voting rights of such
stockholders: and the Board of Directors may
issue shares of stock of any class of the
Corporation, or any notes, debentures, bonds
or other securities convertible into or
carrying options or warrants to purchase
shares of stock of any class, without
offering any such shares of stock of any
class, either in whole or in part, to the
existing stockholders of any class.
(6) Any determination made in good faith by or
pursuant to the direction of the Board of
Directors, as to the amount of the assets,
debts, obligations or liabilities of the
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Corporation, as to the amount of any
reserves or charges set up and the propriety
thereof, as to the time of or purpose for
creating such reserves or charges, as to the
use, alteration or cancellation of any
reserves or charges (whether or not any
debt, obligation or liability for which such
reserves or charges shall have been created
shall have been paid or discharged or shall
be then or thereafter required to be paid or
discharged), as to the price or closing bid
or asked price of any investment owned or
held by the Corporation, as to the value of
or the method of valuing any investment
owned or held by the Corporation, as to the
market value of any investment or fair value
of any other asset of the Corporation, as to
the number of shares of the Corporation
outstanding, as to the estimated expense to
the Corporation in connection with purchases
of its shares, as to the ability to
liquidate investments in an orderly fashion,
as to the extent to which it is practicable
to deliver a cross-section or any part of
the portfolio of the Corporation in payment
for any such shares, as to any other matters
relating to the issue, sale, purchase and/or
other acquisition or disposition of
investments or shares of the Corporation, or
as to the determination of the net asset
value of the Corporation's stock or the
declaration and payment of dividends or
distributions shall be final and conclusive,
and shall be binding upon the Corporation
and all holders of its shares, past, present
and future, and shares of the Corporation
are issued and sold on the condition and
understanding that any and all such
determinations shall be binding as
aforesaid.
(7) Except to the extent prohibited by the
Investment Company Act of 1940, as from time
to time in effect, or rules, regulations or
orders thereunder of the Securities and
Exchange Commission or any successor
thereto, no contract or other transaction
between the Corporation and any other
corporation, partnership, individual or
other entity ant no act of this Corporation
shall in any way be affected or invalidated
by the fact that any of the director. of
this Corporation are directors, principals,
partners or officers of such other entity,
or are pecuniarily or otherwise interested
in such contract, transaction or act,
provided, that (i) the existence of such
relationship or such interest shall be
disclosed to the Board of Directors, or to a
committee of the
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Board of Directors if the matter involves a
committee decision, and the contract,
transaction or act shall be authorized,
approved or ratified by a majority of
disinterested directors on the Board or on
such committee, as the case may be, even if
the number of disinterested directors
constitutes less than a quorum, (ii) the
contract, transaction or act shall be
authorized, ratified or approved in any
other manner permitted by the Maryland
General Corporation Law or (iii) the
contract, transaction or act is fair and
reasonable to the Corporation.
NINTH: (1) To the fullest extent that limitations on the liability of
directors and officers are permitted by the Maryland
General Corporation Law, no director or officer of the
Corporation shall have any liability to the Corporation or
its stockholders for damages. This limitation on liability
applies to events occurring at the time a person serves as
a director or officer of the Corporation whether or not
such person is a director or officer at the time of any
proceeding in which liability is asserted.
(2) The Corporation shall indemnify and advance expenses to
its currently acting and its former directors to the
fullest extent that indemnification of directors is
permitted by the Maryland General Corporation Law. The
Corporation shal1 indemnify and advance expenses to its
officers to the same extent as its directors and to such
further extent as is consistent with law. The Board of
Directors may by by-law, resolution or agreement make
further provisions for indemnification of directors,
officers, employees and agents to the fullest extent
permitted by the Maryland General Corporation Law.
(3) No provision of this Article NINTH shall be effective to
protect or purport to protect any director or officer of
the corporation against any liability to the Corporation
or its security holders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved
in the conduct of his office.
(4) References to the Maryland General Corporation Law in this
Article NINTH are to the law as from time to time amended.
No further amendment to the Articles of Incorporation of
the Corporation shall affect any right of any person under
this Article based on any event, omission or proceeding
prior to such amendment.
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(5) The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a
director, officer or agent of the Corporation, or is or
was serving at the request of the Corporation as a
director, officer or agent of another corporation,
partnership, joint venture, trust or other enterprise,
against any liability asserted against that person and
incurred by that person in any such capacity, or arising
out of that person's status as such, whether or not the
Corporation would have the power to indemnify that person
against liability under paragraph (2) of this Article
NINTH.
IN WITNESS WHEREOF, I have signed these Articles of Incorporation and
acknowledge the same to be my act on
June 26, 1989.
Robert I. Jones
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THE BURNHAM FUND INC.
ARTICLES OF AMENDMENT
The Burnham Fund Inc., a Maryland corporation, having its principal
office in the State of Maryland in Baltimore City (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The Charter of the Corporation is hereby amended as follows:
A. Article FIFTH, subparagraphs (1) and (2), are amended to read:
(1) The total number of shares which the
Corporation has authority to issue is forty million
(40,000,000), all of which are shares of Common
Stock of a par value of ten cents ($.10) each. The
Common Stock shall be classified into four classes,
consisting of fifteen million (15,000,000) shares
of Class A Common Stock, ten million (10,000,000)
shares of Class B Common Stock, ten million
(10,000,000) shares of Class C Common Stock, and
five million (5,000,000) shares of Class D Common
Stock.
(2) The aggregate par value of all the authorized
shares of Common Stock of all classes is Four
Million Dollars ($4,000,000).
B. Article FIFTH, subparagraph (3)(d), is amended by deleting the
following words:
"less, to the extent consistent with disclosures
made by the Corporation as required by the
Securities Act of 1933 and in compliance with the
Investment Company Act of 1940, a charge not to
exceed two per cent (2%) of such net asset value if
and as fixed, from time to time, by resolution of
the Board of Directors of the Corporation"
C. Article FIFTH, subparagraph (3)(e), is amended by deleting the
word "business" between the words "seven" and "days" in both
places where it so appears.
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D. Article FIFTH, subparagraph (3)(h), is relettered as
subparagraph (3)(l) and new subparagraphs (3)(h), (i), (j) and
(k) are inserted in Article FIFTH, paragraph (3), to read as
follows:
(h) The Class A Common Stock, Class B Common Stock,
Class C Common Stock and Class D Common Stock shall
all represent interests in the same portfolio of
investments and there may be other classes of
Common Stock of the Corporation hereafter created
that may also represent interests in such
portfolio. Except as otherwise set forth in these
Articles of Incorporation and subject to the Board
of Directors' authority under Article FIFTH,
subparagraph (3)(g), each of the aforesaid classes
of Common Stock shall have the same preferences,
conversion and other rights, voting powers,
restrictions, limitations as to dividends,
qualifications and terms and conditions of and
rights to require redemption.
(i) The liabilities and expenses of each of the
classes of Common Stock of the Corporation
representing interests in the same portfolio of
investments may be determined separately from those
of the other classes of Common Stock and,
accordingly, the net asset value, the dividends and
distributions payable to holders, and the amounts
distributable in the event of liquidation of the
Corporation to holders of shares of the
Corporation's stock, may vary from class to class.
The allocation of investment income, capital gains,
expenses and liabilities of the Corporation among
the classes of Common Stock representing interests
in the same portfolio of investments, and the
respective net asset value of such classes, shall
be determined in a manner that is consistent with
an order (the "Order") that was issued by the
Securities and Exchange Commission in response to
an application for exemption filed by the
Corporation, Burnham Asset Management Corporation
and Burnham Securities Inc. relating to the
issuance and sale of multiple classes of shares of
the Corporation, and any amendment to such Order,
or any provision of (or any rule or interpretation
under) the Investment Company Act
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of 1940 that has the effect of supplementing,
modifying, replacing, superseding, or supplanting,
with respect to the Corporation, such Order. Such
allocations and determinations of net asset value
shall be reviewed annually by the Board of
Directors. Article SIXTH of these Articles of
Incorporation shall be interpreted and applied in
a manner consistent with the foregoing.
(j) Except as may otherwise be required by law
pursuant to the Order, any statute, or any
applicable order, rule or interpretation issued by
the Securities and Exchange Commission or
otherwise, the holders of any particular class of
the Corporation's Common Stock shall have (i)
exclusive voting rights with respect to approval
of any distribution plan and related agreement
pursuant to Rule 12b-1 under the Investment Company
Act of 1940 (a "Plan") applicable to that class of
Common Stock and any matter submitted to a vote of
stockholders that affects only holders of that
class of Common Stock, and (ii) no voting rights
with respect to the approval of any Plan applicable
to another class of the Corporation's Common Stock,
or any matter submitted to a vote of stockholders
that does not affect that class of Common Stock.
(k) The proceeds of the redemption, within a
specified period of time after the issuance
thereof, of a share of Class B Common Stock
(including a fractional share) to be paid to a
holder of the share of Class B Common Stock shall
be reduced by the amount of any contingent deferred
sales charge applicable to such redemption pursuant
to the terms of issuance of such share of Class B
Common Stock.
E. Article EIGHTH, paragraph (3), is amended by inserting the
following at the beginning thereof:
The presence in person or by proxy of stockholders
entitled to cast one third of all the votes
entitled to be cast at the meeting (without regard
to class) shall constitute a quorum at any
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meeting of the stockholders. With respect to any
matter which under the charter of the Corporation
or any statutes or regulatory requirements
applicable to the Corporation requires approval by
a particular class of stock, the presence in
person or by proxy of the stockholders entitled to
cast one third of the votes of such class entitled
to vote on the matter shall constitute a quorum.
SECOND: The designation of each share of Common Stock of the Corporation
outstanding immediately prior to the effective time of these Articles of
Amendment shall be changed as of the effective time of these Articles of
Amendment from "Common Stock" to "Class A Common Stock." Outstanding
certificates theretofore representing shares of Common Stock shall thereafter
represent the same number of shares of Class A Common Stock. Certificates
reflecting the designation "Class A Common Stock" need not be issued to holders
of certificates reflecting the designation "Common Stock" until certificates
reflecting the designation "Common Stock," if issued, have been received by the
Corporation or its agent duly endorsed for transfer.
THIRD: The amendments of the Articles of Incorporation of the
Corporation as hereinabove set forth have been duly advised by the Board of
Directors of the Corporation and approved by the stockholders of the Corporation
in the manner and by the vote required by law.
FOURTH:These Articles of Amendment shall become effective at 5 p.m on
September 30, 1993.
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its President and witnessed by its
Secretary. The undersigned President of the Corporation acknowledges these
Articles of Amendment to be the corporate act of the Corporation and states that
to the best of his knowledge, information and belief, the matters and facts set
forth herein with respect to the authorization and approval hereof are true in
all material respects and that this statement is made under
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penalties of perjury.
WITNESS: THE BURNHAM FUND INC.
Oskar P. Lewnowski, Secretary By: I.W. Burnham, II
President
Date: September 23, 1993
Date: September 23, 1993
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Amended and Restated as of April 21, 1993
BY-LAWS
OF
THE BURNHAM FUND INC.
BY-LAW ONE: OFFICES
Article 1.1. Offices. The Company shall maintain a principal office in
the State of Maryland as required by law. The Company may also have an office or
offices at such other place or places, within or without the State of Maryland,
as the Board of Directors may from time to time designate.
BY-LAW TWO: STOCKHOLDERS
Article 2.1. Place of Meetings. All meetings of the stockholders shall
be held at such place within the United States, whether within or outside the
State of Maryland, as the Directors shall determine, which shall be stated in
the notice of the meeting, or in a duly executed waiver of notice thereof.
Article 2.2. Annual Meeting. Annual meetings of the stockholders of the
Company need not be held unless the election of directors is required to be
acted upon under the Investment Company Act of 1940. If an annual meeting of the
stockholders of the Company is held, it shall be held between June 15 and July
15 on a date to be fixed by the Board of Directors or, if required to be held
for the purpose of electing directors, no later than 120 days after the
occurrence of the event requiring the meeting. At the annual meeting, the
stockholders shall elect a Board of Directors by a plurality vote and transact
such other business as may properly come before the meeting. Any business of the
Company may be transacted at the annual meeting without being specially
designated in the notice thereof except as otherwise provided by law, by the
Article of Incorporation or by these By-Laws.
Article 2.3. Special Meetings. Special meetings of the stockholders for
any purpose or purposes, unless otherwise prescribed by statute or by the
Articles of Incorporation, may be called by resolution of the Board of Directors
or by the President. Business transacted at special meetings shall be confined
to the objects stated in such call.
Article 2.4. Notice. Written notice of every meeting of stockholders,
stating the time when and the place where it is to be held, and, in the case of
a special meeting, the purpose or purposes for which the meeting is called,
shall be served, either personally or by mail, not less than ten nor more than
ninety days before the meeting, upon each stockholder as of the record date
fixed for the meeting and who is entitled to vote at such meeting. If mailed (1)
such notice shall be directed to a stockholder at his address as it shall appear
on the books of the Company (unless he shall have filed with the Transfer Agent
of the Company a written request that notices intended for him be mailed to some
other address in which case it shall be mailed
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to the address designated in such request and (2) such notice shall be
deemed to have been given as of the date when it is deposited in the United
States mail with first class postage thereon prepaid. Irregularities in the
notice or in the giving thereof, as well as the accidental omission to give
notice of any meeting to, or the non-receipt of any such notice by, any of the
stockholders shall not invalidate any action otherwise properly taken by or at
any such meeting.
Article 2.5. Quorum.The presence in person or by proxy of stockholders
entitled to cast one third of all the votes entitled to be cast at the meeting
(without regard to class) shall constitute a quorum at any meeting of the
stockholders, unless a greater quorum is required under any applicable law,
including the Investment Company Act of 1940. With respect to any matter which
under the Charter of the Corporation or any statutes or regulatory requirements
applicable to the Corporation requires approval by a particular class of stock,
the presence in person or by proxy of the stockholders entitled to cast one
third of the votes of such class entitled to vote on the matter shall constitute
a quorum, unless a greater quorum is required under any applicable law,
including the Investment Company Act of 1940. If a quorum shall not be present
or represented, the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting from time to time,
without notice other than the announcement at the meeting until a quorum shall
be present or represented. At such adjourned meeting at which a quorum shall be
present or represented any business may be transacted which might have been
transacted at the meeting as originally notified.
Article 2.6. Vote of the Meeting. When a quorum is present at any
meeting, the affirmative vote of a majority of the votes cast, or, with respect
to any matter requiring a class vote, the affirmative vote of a majority of the
votes cast of each class entitled to vote as a class on the matter, shall decide
any question brought before such meeting, unless the question is one upon which
by express provisions of law, the Articles of Incorporation, or these By-Laws, a
different vote is required, in which case such express provisions shall govern
and control the decision of such question. At any meeting of stockholders held
for the election of directors, a plurality of all the votes cast shall be
sufficient to elect a director.
Article 2.7. Proxies. Every proxy must be executed in writing by the
stockholder or by his duly authorized attorney-in-fact. No proxy shall be valid
after the expiration of eleven months from the date of its execution unless it
shall have specified therein its duration. Every proxy shall be revocable at the
pleasure of the person executing it or of his personal representatives or
assigns, unless otherwise provided therein. At all meetings of stockholders,
unless the voting is conducted by inspectors, all questions relating to the
qualification of voters and the validity of proxies and the acceptance or
rejection of votes shall be decided by the chairman of the meeting.
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Article 2.8. Action Without a Meeting. Any action required or permitted
to be taken at any meeting of stockholders may be taken without a meeting, if a
consent in writing, setting forth such action, is signed by all the stockholders
entitled to vote on the subject matter thereof and any other stockholders
entitled to notice of a meeting of stockholders but not to vote thereat have
waived in writing any rights which they may have to dissent from such action,
and such consent and waiver are filed with the records of stockholders meetings.
BY-LAW THREE: DIRECTORS
Article 3.1. Size of Board of Directors. The number of directors of the
Corporation shall be not less than three; provided, however, that such number
may be increased and thereafter decreased from time to time by vote of a
majority of the entire Board of Directors to a number not exceeding twenty (20).
A majority of the entire Board of Directors may alter the number of directors
within the aforementioned limits, but such action shall not affect the tenure of
office of any director. Each director shall be elected to hold office until his
successor is duly elected and qualified. Directors need not be stockholders. If
the number of directors is increased, the additional directors may be elected by
a majority of the entire Board of Directors at the time of the increase or,
where required under the Investment Company Act of 1940, by a majority of the
directors specified thereunder for such purpose. Directors elected shall serve
until their successors are duly elected and qualified.
Article 3.2. Vacancies. If the office of any director or directors
becomes vacant for any reason (other than increase in the number of places on
the Board as provided in Article 3.1 herein), such vacancy may be filled by a
majority of the remaining directors, whether or not sufficient to constitute a
quorum, or, where required under the Investment Company Act of 1940, by a
majority of the directors specified thereunder for such purpose. The director or
directors so elected shall hold office until a successor or successors are
elected and qualify.
Article 3.3. Powers of the Board of Directors. The business of this
Company shall be managed under the direction of its Board of Directors which may
exercise all such powers of the Company and do all such lawful acts and things
as are not required by law, by the Articles of Incorporation or by these By-Laws
to be exercised or done by the stockholders.
Article 3.4. Place of Meetings. The directors may hold their meetings at
the principal office of the Company, or at such other places, either within or
without the State of Maryland, as they may from time to time determine.
Article 3 5. Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at such date and time as shall from time to
time be determined by resolution of the Board of Directors.
Article 3.6. Special Meetings. Notice of the place and time of every
special meeting of the Board of Directors shall be given to each director
personally, sent to him by facsimile, telegraph or mail, or left at his
residence or usual place of business. Personal notice shall include notice given
orally or by telephone. If mailed, such notice shall be deemed to be given when
deposited in the United States mail
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addressed to the director at his post office address as it appears on the
records of the Company, with postage thereof prepaid. Special meetings may be
called by the chief executive officer of the Company and shall be called by the
Secretary on the written request of two directors.
Article 3.7. Quorum. At all meetings of the Board of Directors the
presence of one-third of the entire number of directors then in office (but not
less than two directors, or one director if there is only one director then in
office) shall be necessary to constitute a quorum and sufficient for the
transaction of business, and any act if a majority present at a meeting, at
which there is a quorum, shall be the act of the Board of Directors, except as
may be otherwise specifically provided by law, by the Articles of Incorporation
or by these By-Laws. If a quorum shall not be present at any meeting of the
Board of Directors, the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present.
Article 3.8. Informal Action by Directors and Committees. Any action
required or permitted to be taken at any meeting of the Board of Directors or
any Committee of the Board of Directors may, except as otherwise required by
law, be taken without a meeting if a written consent to such action is signed by
all members of the Board of Directors, or of such Committee, as the case may be,
and filed with the minutes of the proceedings of the Board of Directors or of
such Committee. Subject to the Investment Company Act of 1940, as amended,
members of the Board of Directors or a Committee thereof may participate in a
meeting by means of a conference telephone or similar communications equipment,
providing all persons participating in the meeting can hear each other at the
same time.
Article 3.9. Executive Committee. There may be an Executive Committee of
two or more directors appointed by the Board of Directors who may meet at stated
times or on notice to all by any of their own number. They shall consult with
and advise the officers of the Company in the management of its business and
exercise such powers of the Board of Directors as may be lawfully delegated by
the Board of Directors. The members of the Executive Committee present at any
meeting, whether or not they constitute a quorum, may appoint another director
to act in the place of an absent member. Vacancies shall be filled by the Board
of Directors at any regular or special meeting. The Executive Committee shall
keep regular minutes of its proceedings and report the same to the Board of
Directors when required.
Article 3.10. Other Committees. The Board of Directors may appoint other
committees which shall in each case consist of such number of members (not less
than two) and shall have and may exercise, to the extent permitted by law, such
powers as the Board of Directors may determine in the resolution appointing
them. A majority of all members of any such committee may determine its action,
and fix the time and place of its meetings, unless the Board of Directors shall
otherwise provide. The members of any such committee present at any meeting,
whether or not they constitute a quorum, may appoint another director to act in
the place of an absent member. The Board of Directors shall have power at any
time to change the members and, to the extent permitted by law, the powers of
any such committee, to fill vacancies, and to discharge any such committee. Each
committee shall keep regular minutes of its proceedings and report the same to
the Board of Directors when required.
Article 3.11. Compensation of Directors. The directors may be paid, by
resolution of the
<PAGE>
<PAGE>
Board of Directors, their expenses, if any, of attendance at each meeting
of the Board of Directors. A director may be paid, by resolution of the Board of
Directors, a fixed sum for attendance at each meeting of the Board of Directors
or a stated salary as director, or both such fixed sum and stated salary, in
such amounts as determined by the Board of Directors. No such payment shall
preclude any director from serving the Company in any other capacity and
receiving compensation therefor. Members of committees may be paid, by
resolution of the Board of Directors, like compensation for attending committee
meetings.
Article 3.12. Removal of Directors. At any meeting of stockholders, duly
called and at which a quorum is present, the stockholders may, by the
affirmative vote of the holders of a majority of the votes entitled to be cast
for the election of directors, remove any director or directors from office.
BY-LAW FOUR: OFFICERS
Article 4.1. Officers. The officers of the Company shall consist of a
President, one or more Vice-Presidents (any of whom may be designated an
Executive, Senior or First Vice-President), a Secretary and a Treasurer. Any two
offices, except those of President and Vice President, may be held by the same
person, but no officer shall execute, acknowledge or verify any instrument in
more than one capacity, if such instrument is required by law, the Articles of
Incorporation or these By-Laws to be executed, acknowledged or verified by two
or more officers.
Article 4.2. Appointment of Officers. The directors, annually, shall
appoint the officers of the Company, who need not be members of the Board of
Directors.
Article 4.3. Salaries of Officers. The salaries of all officers of the
Company shall be fixed by the Board of Directors.
Article 4.4. Additional Officers. The officers of the Company shall be
fixed by the Board of Directors. The Board of Directors, at any regular or
special meeting, may appoint such other officers and agents as it shall deem
necessary who shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors.
Article 4.5. Term, Removal, Vacancies. The officers of the Company shall
hold office for one year and until their successors are duly chosen and
qualified, provided, however, that such term of office shall not create any
contract rights in the officer. Any officer elected or appointed by the Board of
Directors may be removed at any time by the Board of Directors. If the officer
of any officer becomes vacant for any reason, the vacancy may be filled by the
Board of Directors.
Article 4.6. President. The President (who may also be President of the
Company's investment manager) shall preside at meetings of the stockholders and
of the Board of Directors unless the directors elect a Chairman of the Board, in
which event the President shall only preside in the absence of the Chairman.
Except as otherwise determined by the Board of Directors, the President shall be
the chief executive officer of the Company and, in that capacity, shall be in
charge of the management of the business of the Company and see that all orders
and resolutions of the Board of Directors are carried into effect. The
<PAGE>
<PAGE>
President shall also perform such other duties as the Board of Directors
shall prescribe.
Article 4.7. Vice-Presidents. The Vice-President, in the absence or
disability of the President, shall (in order of seniority specified by the Board
of Directors or, failing such specification, in order of seniority in service)
perform the duties and exercise the powers of the President and shall perform
such other duties as the Board of Directors shall prescribe .
Article 4.8. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Company and shall deposit
all moneys and other valuable effects in the name and to the credit of the
Company in such depositories as may be designated by the Board of Directors. He
shall disburse the funds of the Company as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and shall render to
the President and directors at the regular meetings of the Board of Directors,
or whenever they may require it, an account of all his transactions as Treasurer
and of the financial condition of the Company.
If required by the Board of Directors, the Treasurer shall give the
Company a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Company, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the Company.
Article 4.9. Secretary. The Secretary shall attend meetings of the
stockholders and of the Board of Directors and record all votes and the minutes
of all proceedings in a book to be kept for that purpose, and shall perform like
duties for the Executive Committee of the Board when required. He shall give or
cause to be given notice of all meetings of stockholders and special meetings of
the Board of Directors and shall perform such other duties as may be prescribed
by the Board of Directors. He shall keep in safe custody the seal of the Company
and affix it to any instrument when authorized by the Board of Directors.
Article 4.10. Assistant Officers. Notwithstanding anything express or
implied to the contrary in the foregoing provisions of By-Law Four, the
President, at any time, may appoint any Assistant Vice-Presidents and, if not
previously appointed by the Board of Directors, one or more Assistant
Secretaries and Assistant Treasurers, as he shall deem necessary. Such officers
shall hold office for such time as determined by the President and may be
removed at any time by the President or the Board of Directors.
Article 4.11. Duties of Assistant Officers. The duties of Assistant
Officers, whether appointed by the President or by the Board of Directors, shall
be as follows:
(1) The Assistant Vice-President (s) shall have such duties as the
President or Board of Directors shall prescribe.
(2) The Assistant Treasurer(s) shall assist the Treasurer and act in the
Treasurer's behalf at the direction of the Treasurer or whenever the Treasurer
shall be unavailable to act and have such other duties as the President or Board
of Directors shall prescribe.
(3) The Assistant Secretary(s) shall assist the Secretary and act in the
Secretary's behalf at the Secretary's direction or whenever the Secretary shall
be unavailable to act, and shall have such other duties
<PAGE>
<PAGE>
as the President or Board of Directors shall prescribe.
BY-LAW FIVE: GENERAL PROVISIONS
Article 5.1. Waiver of Notice. Whenever the stockholders or the Board of
Directors are authorized to take any action after notice by law, the Articles of
Incorporation or these By-Laws, such notice may be waived, in writing, before or
after the holding of the meeting, by the person or persons entitled to such
notice, or, in the case of a stockholder, by his attorney duly authorized
thereunto.
Article 5.2. Checks.All checks or demands for money and notes of the
Company shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Article 5.3. Fiscal Year. The fiscal year of the Company shall be
determined by resolution of the Board of Directors.
Article 5.4. Seal. The seal of the Company shall be circular in form and
contain the name of the Company, the year of its organization and the words
"Corporate Seal, Maryland". The seal may be used by causing it to be impressed
directly on the instrument or writing to be sealed, or upon adhesive substance
affixed thereto. The seal on any corporate obligation for the payment of money
may be a facsimile, engraved or printed.
BY-LAW SIX: CERTIFICATES OF STOCK
Article 6.1. Certificates of Stock or Book Shares. The certificates of
stock of the Company shall be numbered and entered in the books of the Company
as they are issued. They shall exhibit the holder's name and the number of whole
shares and shall be signed by the President or a Vice-President and the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary,
and shall bear the corporate seal. Such seal may be a facsimile, engraved or
printed. Where any such certificate is signed by a Transfer Agent or by a
Registrar, the signatures of any such officer may be facsimile, engraved or
printed. In case any of the officers of the Company whose manual or facsimile
signature appears on any stock certificate delivered to a Transfer Agent of the
Company shall cease to be such officer prior to the issuance of such
certificate, the Transfer Agent may nevertheless countersign and deliver such
certificate as though the person signing the same or whose facsimile signature
appears thereon had not ceased to be such officer, unless written instructions
of the Company to the contrary are delivered to the Transfer Agent.
Notwithstanding the foregoing, the issue of whole and/or fractional
shares of the Company's stock may be in all respects validly effected and
evidenced for all purposes without certificates by means of book entries
recorded and maintained by the Company's Transfer Agent in the Company's stock
register.
Article 6.2. Lost Certificates. The Board of Directors, President,
Treasurer or Secretary may direct a new certificate or certificates to be issued
in place of any certificate or certificates theretofore issued by the Company,
alleged to have been lost or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost or destroyed.
When authorizing such issue of a new certificate or certificates, the Board of
Directors, President, Treasurer or Secretary may, as a condition
<PAGE>
<PAGE>
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it or they shall require and/or give the Company a bond in
such sum and with such surety or sureties as it or they may direct as indemnity
against any claim that may be made against the Company with respect to the
certificate alleged to have been lost or destroyed, and may impose such further
reasonable conditions as the Board of Directors shall determine.
Article 6.3. Transfer of Stock. Upon surrender to the Company or the
Transfer Agent of the Company of a certificate of stock or stock power or letter
of instructions duly endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, it shall be the duty of the Company to
issue a new certificate or to record as book shares upon the Company's stock
register to the person entitled thereto, and cancel the old certificate; every
such transfer of stock shall be entered in the stock book of the Company.
Article 6.4. Registered Holder. The Company shall be entitled to treat
the holder of record of any share or shares of stock as the holder in fact
thereof and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person
whether or not it shall have express or other notice thereof, except as
expressly provided by law.
Article 6.5. Record Date. The Board of Directors may fix a time not less
than ten or more than ninety days prior to the date of any meeting of
stockholders or prior to the last day on which the consent or dissent of
stockholders may be effectively expressed for any purpose without a meeting, as
the time as of which stockholders entitled to notice of and to vote at such a
meeting or whose consent or dissent is required or may be expressed for any
purpose, as the case may be, shall be determined; and all persons who were
holders of record of voting stock at such time and no other shall be entitled to
notice of and to vote at such meeting or to express their consent or dissent, as
the case may be. The Board of Directors may also fix a time not exceeding ninety
days preceding the date fixed for the payment of any dividend or the making of
any distribution, or for the delivery of evidence of rights, or evidence of
interests arising out of any change, conversion or exchange of capital stock, as
a record time for the determination of the stockholders entitled to receive any
such dividend, distribution, rights or interests.
Article 6.6. Stock Ledger. The Company shall maintain at the office of
its Transfer Agent outside the State of Maryland an original or duplicate stock
ledger containing the names and addresses of all stockholders and the number of
shares of each class held by each stockholder. Such stock ledger may be in
written form or any other form capable of being converted into written form
within a reasonable time for visual inspection.
BY-LAW SEVEN: AMENDMENTS
Article 7.1. By Directors. The Board of Directors shall have the power
at any meeting thereof to make, adopt, alter or repeal any By-Law without the
approval of the stockholders.
<PAGE>
<PAGE>
NO. SHARES
CLASS A COMMON STOCK
THE BURNHAM FUND INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
ACCOUNT NO. ALPHA CODE SEE REVERSE FOR
CERTAIN DEFINITIONS
-----------------
CUSIP 122306 10 3
-----------------
THIS IS TO CERTIFY THAT IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF CLASS A COMMON STOCK OF THE PAR VALUE OF
$0.10 EACH of THE BURNHAM FUND INC. (hereinafter called the "Corporation"),
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney, upon surrender of this certificate properly
endorsed. This Certificate and the shares represented hereby are issued and
shall be held subject to all of the provisions of the Articles of Incorporation,
as amended, and the By-Laws, as amended, of the Corporation, copies of which are
available for inspection at the principal office of the Corporation in the State
of Maryland, to all of which the holder by acceptance hereby assents.
This certificate is not valid until countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Corporation and the signature of its duly
authorized officers.
DATED:
/s/ Michael E. Barna THE BURNHAM FUND INC. /s/ Jon M. Burnham
Secretary CORPORATE President
SEAL
1989
MARYLAND
Countersigned:
STATE STREET BANK AND TRUST COMPANY
(BOSTON) TRANSFER AGENT
By
AUTHORIZED SIGNATURE
<PAGE>
<PAGE>
The Corporation will furnish, without charge, to each stockholder who so
requests a statement of the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption of the stock of each class which the Corporation is
authorized to issue.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM --- as tenants in common
TEN ENT --- as tenants by the entireties
JT TEN --- as joint tenants with right of survivorship and not as tenants in common
UNIF GIFT MIN ACT ---_______________CUSTODIAN________________UNDER UNIFORM GIFTS
(Cust) (Minor)
TO MINORS ACT________________________
(State)
TR/UDT ---AS TRUSTEE UNDER DECLARATION OF TRUST_____________________
(dated)
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED THOUGH NOT IN THE ABOVE LIST.
</TABLE>
FOR VALUE RECEIVED, __________ HEREBY SELL, ASSIGN AND TRANSFER UNTO
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- -----------------------------
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------- SHARES
REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY CONSTITUTE AND
APPOINT ____________________________________ ATTORNEY TO TRANSFER THE SAID
SHARES ON THE BOOKS OF THE WITHIN NAMED CORPORATION WITH FULL POWER SUBSTITUTION
IN THE PREMISES.
DATED________________19_____
IN PRESENCE OF
_______________________________ ___________________________
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE
FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
<PAGE>
<PAGE>
NO. SHARES
CLASS B COMMON STOCK
THE BURNHAM FUND INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
ACCOUNT NO. ALPHA CODE SEE REVERSE FOR
CERTAIN DEFINITIONS
-----------------
CUSIP 122306 20 2
-----------------
THIS IS TO CERTIFY THAT IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF CLASS B COMMON STOCK OF THE PAR VALUE OF
$0.10 EACH of THE BURNHAM FUND INC. (hereinafter called the "Corporation"),
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney, upon surrender of this certificate properly
endorsed. This Certificate and the shares represented hereby are issued and
shall be held subject to all of the provisions of the Articles of Incorporation,
as amended, and the By-Laws, as amended, of the Corporation, copies of which are
available for inspection at the principal office of the Corporation in the State
of Maryland, to all of which the holder by acceptance hereby assents.
This certificate is not valid until countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Corporation and the signature of its duly
authorized officers.
DATED:
/s/ Michael E. Barna THE BURNHAM FUND INC. /s/ Jon M. Burnham
Secretary CORPORATE President
SEAL
1989
MARYLAND
Countersigned:
STATE STREET BANK AND TRUST COMPANY
(BOSTON) TRANSFER AGENT
By
AUTHORIZED SIGNATURE
<PAGE>
<PAGE>
The Corporation will furnish, without charge, to each stockholder who so
requests a statement of the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption of the stock of each class which the Corporation is
authorized to issue.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM --- as tenants in common
TEN ENT --- as tenants by the entireties
JT TEN --- as joint tenants with right of survivorship and not as tenants in common
UNIF GIFT MIN ACT ---_______________CUSTODIAN________________UNDER UNIFORM GIFTS
(Cust) (Minor)
TO MINORS ACT________________________
(State)
TR/UDT ---AS TRUSTEE UNDER DECLARATION OF TRUST_____________________
(dated)
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED THOUGH NOT IN THE ABOVE LIST.
</TABLE>
FOR VALUE RECEIVED, __________ HEREBY SELL, ASSIGN AND TRANSFER UNTO
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- -----------------------------
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------- SHARES
REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY CONSTITUTE AND
APPOINT ____________________________________ ATTORNEY TO TRANSFER THE SAID
SHARES ON THE BOOKS OF THE WITHIN NAMED CORPORATION WITH FULL POWER SUBSTITUTION
IN THE PREMISES.
DATED________________19_____
IN PRESENCE OF
_______________________________ ___________________________
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE
FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
<PAGE>
<PAGE>
NO. SHARES
CLASS C COMMON STOCK
THE BURNHAM FUND INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
ACCOUNT NO. ALPHA CODE SEE REVERSE FOR
CERTAIN DEFINITIONS
-----------------
CUSIP 122306 30 1
-----------------
THIS IS TO CERTIFY THAT IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF CLASS C COMMON STOCK OF THE PAR VALUE OF
$0.10 EACH of THE BURNHAM FUND INC. (hereinafter called the "Corporation"),
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney, upon surrender of this certificate properly
endorsed. This Certificate and the shares represented hereby are issued and
shall be held subject to all of the provisions of the Articles of Incorporation,
as amended, and the By-Laws, as amended, of the Corporation, copies of which are
available for inspection at the principal office of the Corporation in the State
of Maryland, to all of which the holder by acceptance hereby assents.
This certificate is not valid until countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Corporation and the signature of its duly
authorized officers.
DATED:
/s/ Michael E. Barna THE BURNHAM FUND INC. /s/ Jon M. Burnham
Secretary CORPORATE President
SEAL
1989
MARYLAND
Countersigned:
STATE STREET BANK AND TRUST COMPANY
(BOSTON) TRANSFER AGENT
By
AUTHORIZED SIGNATURE
<PAGE>
<PAGE>
The Corporation will furnish, without charge, to each stockholder who so
requests a statement of the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption of the stock of each class which the Corporation is
authorized to issue.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM --- as tenants in common
TEN ENT --- as tenants by the entireties
JT TEN --- as joint tenants with right of survivorship and not as tenants in common
UNIF GIFT MIN ACT ---_______________CUSTODIAN________________UNDER UNIFORM GIFTS
(Cust) (Minor)
TO MINORS ACT________________________
(State)
TR/UDT ---AS TRUSTEE UNDER DECLARATION OF TRUST_____________________
(dated)
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED THOUGH NOT IN THE ABOVE LIST.
</TABLE>
FOR VALUE RECEIVED, __________ HEREBY SELL, ASSIGN AND TRANSFER UNTO
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- -----------------------------
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------- SHARES
REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY CONSTITUTE AND
APPOINT ____________________________________ ATTORNEY TO TRANSFER THE SAID
SHARES ON THE BOOKS OF THE WITHIN NAMED CORPORATION WITH FULL POWER SUBSTITUTION
IN THE PREMISES.
DATED________________19_____
IN PRESENCE OF
_______________________________ ___________________________
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE
FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
<PAGE>
<PAGE>
SEPTEMBER 7, 1989, AS AMENDED JULY 1, 1993
INVESTMENT ADVISORY
CONTRACT
BURNHAM ASSET MANAGEMENT CORPORATION
1345 Avenue of the Americas
New York, NY 10105
Gentlemen:
The undersigned, The Burnham Fund Inc., a Maryland corporation
(the "Fund"), is an investment company registered under the Investment Company
Act of 1940 ("1940 Act"). The Fund invests and reinvests its assets in a
portfolio of securities and investments. The Fund hereby engages you to act as
its Investment Adviser and financial agent, subject to the terms and conditions
herein set forth.
SECTION 1. INVESTMENT ADVISORY SERVICES.
You shall use your staff and other facilities to conduct and
maintain a continuous review of the Fund's portfolio of securities and
investments, and shall from time to time recommend to the Fund what securities,
in your opinion, should be purchased or sold by the Fund, what portion of the
assets of the Fund should remain uninvested, and the extent to which the Fund
should lend its securities and otherwise use its investment powers. In
conducting such review and making such recommendations, you shall be guided by
the Fund's investment policy as delineated and limited by the statements
contained in documents filed with the Securities and Exchange Commission as
amended from time to time, by policies adopted by the Board of Directors, and by
the provisions of the 1940 Act and the rules promulgated thereunder, so that at
all times the Fund shall be in compliance with its policies and the 1940 Act.
The Fund agrees to supply you with copies of all such documents and to notify
you of any changes in its investment policies and restrictions.
In rendering such investment advisory services to the Fund
pursuant to this Agreement, you may employ, retain or otherwise avail yourself
of the services or facilities of other persons or organizations, for the purpose
of providing you or the Fund with such statistical and other factual
information, such advice regarding economic factors and trends, such advice as
to occasional transactions in specific securities or such other information,
advice or assistance as you may deem necessary, appropriate or convenient for
the discharge of your obligations hereunder or otherwise helpful to the Fund or
in the discharge of your over-all responsibilities with respect to the other
accounts which you or your affiliates serve as investment adviser.
You and any person performing executive, administrative or
trading functions for the Fund, whose services were made available to the Fund
by you, are specifically authorized to allocate brokerage and principal business
to firms that provide such services or facilities to cause the Fund to pay a
member of a securities exchange or any other securities broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another member of an exchange, broker or dealer would have
charged for effecting that transaction, if you or such person determine in good
faith that such amount of commission is reasonable in relation to the value of
the brokerage and research services (as such services are defined in Section
28(e) of the Securities Exchange Act of 1934) provided by such member, broker or
dealer, viewed in terms of either that particular transaction or your or such
person's overall responsibilities with respect to the accounts as to which you
or such person exercise investment discretion (as that term is defined in
Section 3(a)(35) of the Securities Exchange Act of 1934).
<PAGE>
<PAGE>
SECTION 2. RESUMES AND REPORTS, ETC.
You shall maintain a continuous record of all the investments and
securities which comprise the Fund's portfolio and shall furnish to the Board of
Directors of the Fund (the "Board)'), at its regularly scheduled meetings, and
at such other times as the Board may reasonably request, a resume of the
portfolio and report on all matters pertaining to your services as Investment
Adviser and financial agent hereunder. In addition, you shall furnish the Fund
with such reports and other data as the Board shall request, including, without
being limited to, industry surveys, news of recent developments, statistical
data, and such other information as may keep the Board properly informed on
developments relating to the Fund's portfolio, or similar data relating to
securities which you recommend for inclusion in the portfolio of the Fund.
SECTION 3. DUTIES AS FINANCIAL AGENT OF THE FUND.
You shall keep the books and financial records of the Fund in
accordance with Section 31 under the 1940 Act and the rules and regulations
promulgated thereunder, and, on behalf of the Fund, you shall compute the net
asset value of the Fund's shares (in accordance with the By-Laws of the Fund as
from time to time amended and the instructions of the Board pursuant thereto),
and shall perform such other services as are reasonably incidental to the
foregoing duties. You shall furnish to the Fund and the Distributor any
statements with respect to the net asset value of the Fund and the net asset
value per share, at such times, and in such forms, as the Fund may prescribe.
SECTION 4. ADDITIONAL SERVICES TO BE FURNISHED.
When and if the Board so requests, you shall furnish the Fund
with the services of and shall pay the compensation of the officers and
employees of the Fund and of a person or persons satisfactory to the Fund whose
duties shall include (except for the legal and auditing aspects thereof) the
supervision of the Fund's financial statements and reports, the preparation of
reports to shareholders and others, registration statements, prospectuses, and
any other statements required by regulatory authorities of the United States, or
states thereof in which the Fund has qualified or undertakes to qualify its
shares for sale. In addition, you shall furnish to the Fund office space
reasonably suited to its operations.
It is the intent of this contract that through your staff you
shall supply such services as are deemed by the Board to be necessary or
desirable and proper for the continuous operation of the Fund, except those
services rendered by the Board and the officers, and those services customarily
performed by the custodian, distributor, transfer agent and registrar, dividend
disbursing agent, independent accountants, any broker or dealer and legal
counsel.
SECTION 5. MULTIPLE CAPACITIES.
Nothing contained in this contract shall be deemed to prohibit
you from acting, and being separately compensated from acting, in one or more
capacities on behalf of the Fund including, but not limited to, the capacities
of broker and distributor. The Fund understands that you may act as investment
adviser or in other capacities as aforesaid on behalf of other investment
companies and customers. While information and recommendations you supply to the
Fund shall in your judgment be appropriate under the circumstances and in light
of the investment objectives of the Fund, they may be different from the
information and recommendations you supply to other investment companies and
customers. You shall give the Fund equitable treatment under the circumstances
in supplying information, recommendations and any other services requested of
you, but you shall not be required to give preferential treatment to the Fund as
compared with the treatment given to any other investment company or customer.
Whenever you shall act in multiple capacities on behalf of the Fund, you shall
maintain the appropriate separate accounts and records for each such capacity.
All information and advice supplied by you to the Fund hereunder shall be for
its own use exclusively.
SECTION 6. PAYMENT OF EXPENSES.
You shall assume and pay all of your own costs and expenses under
this contract. The Fund shall assume and pay, or reimburse you for, all expenses
incurred in the operation of the Fund (to the extent not allocable to you
hereunder) including, without limitation, taxes, brokerage commissions, expenses
of printing and mailing communications to the Fund's shareholders, and the fees
of the Fund's custodian, transfer agent and registrar, dividend disbursing
agent, directors not affiliated with you, independent accountants and legal
counsel.
2
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SECTION 7. COMPENSATION FOR SERVICES.
Except as provided below, you shall receive such compensation for
your services as is provided for in this Section, and such payments shall be the
only compensation to which you shall be entitled under this contract. However,
nothing herein shall preclude you or your affiliates from executing brokerage
transactions for the Fund, charging the Fund brokerage commissions therefor and
deriving profit therefrom, provided such payments to you by the Fund are
considered and approved at each annual continuation hereof required by the 1940
Act and Section 10 below.
Subject to the provisions for reduction in the paragraph below,
the Fund will pay to you, on the last day in each month on which the Fund's net
asset value per share is computed for purposes of sale, repurchase and
redemption of Fund shares, a monthly fee at an annual rate of .625% on the
average net asset value of the Fund during such month. The average net asset
value for the month shall be based on the net asset value used in determining
the price at which Fund shares are sold, repurchased or redeemed on each day of
the month.
The advisory fee as described in the preceding paragraph shall be
reduced in each fiscal year of the Fund to the extent necessary to comply with
any securities regulations in force in states in which the distributor of the
Fund shall have elected to qualify shares of the Fund for sale from time to
time. Reductions shall be made at the time of each monthly payment on an
estimated basis if appropriate, and an adjustment to reflect the reduction on an
annual basis shall be made, if necessary, in the fee payable with respect to the
last month in any fiscal year. You shall promptly refund any amount therefor
paid in excess of the fee determined to be due for such year.
If this contract shall become effective subsequent to the first
day of a month, or shall terminate before the last day of a month, your
compensation for such fraction of the month shall be determined by applying the
foregoing percentages to the average daily net asset value of the Fund during
such fraction of a month and in the proportion that such fraction of a month
bears to the entire month.
SECTION 8. LIABILITY OF THE INVESTMENT ADVISER, ETC.
You shall be liable for your own acts and omissions caused by
your willful misfeasance, bad faith, or gross negligence in the performance of
your duties or by your reckless disregard of your obligations under this
contract, and nothing herein shall protect you against any such liability to the
Fund or its security holders. You shall not be liable for the acts and omissions
of any agent employed by you, nor for those of any bank, trust company, broker
or other person with whom or into whose hands any moneys, shares of the Fund or
securities and investments may be deposited or come, pursuant to the provisions
of this contract. You shall not be liable for any defect in title of any
property acquired, nor for any loss unless it shall occur through your own
willful default. Subject to the first sentence of this section, you shall not be
liable for any action taken or omitted on advice, obtained in good faith, of
counsel provided such counsel is satisfactory to the Fund.
SECTION 9. TERMINATION OF CONTRACT, ASSIGNMENT, ETC.
This contract may be terminated at any time without the payment
of any penalty upon 60 days' written notice by the terminating party to the
other party, by you or by the Fund acting pursuant to a resolution adopted by
the Board, or by the vote of the holders of the lesser of (1) 67% of the Fund's
voting shares present at a meeting if the holders of more than 50% of the
outstanding shares are present in person or by proxy, or (2) more than 50% of
the outstanding shares of the Fund.
This contract shall automatically terminate in the event of its
assignment. Termination shall not affect rights of the parties which have
accrued prior thereto.
SECTION 10. DURATION OF CONTRACT.
Unless sooner terminated, this contract shall continue in effect
for two years, and thereafter until terminated, provided that the continuation
of the contract and the terms thereof are specifically approved annually in
accordance with the requirements of the 1940 Act by a majority of the Fund's
Directors, including a majority of the Directors who are not interested persons
of you or of the Fund, cast in person at a meeting called for the purpose of
voting on such approval.
3
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SECTION 11. DEFINITION.
The terms "assignment" and interested person" when used in this
contract shall have the meanings given such terms in the 1940 Act.
SECTION 12. CONCERNING APPLICABLE PROVISIONS OF LAW, ETC.
This contract shall be subject to all applicable provisions of
law, including, without being limited to the applicable provisions of the 1940
Act, and to the extent that any provisions herein contained conflict with any
such applicable provisions of law, the latter shall control.
SECTION 13. EFFECTIVE DATE.
This contract is effective upon such date on or after its initial
approval in accordance with the 1940 Act as may be agreed by the parties hereto
consistent with the 1940 Act.
Very truly yours,
THE BURNHAM FUND INC.
PAUL J. FERGUSON
By:
MICHAEL E. BARNA
ATTEST
Accepted:
BURNHAM ASSET MANAGEMENT CORPORATION
OSKAR P. LEWNOWSKI
Attest:
MICHAEL E. BARNA
4
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September 7, 1989, as amended July 1, 1993
THE BURNHAM FUND INC.
DISTRIBUTION CONTRACT
BURNHAM SECURITIES INC.
1345 Avenue of the Americas
New York, New York 10105
Gentlemen:
The undersigned, The Burnham Fund Inc., a Maryland corporation (the
"Fund"), is an open-end investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"). The Fund may sell its shares
to, and repurchase or redeem its shares from, the public. The Fund may authorize
and issue multiple classes of shares pursuant to an order of the Securities and
Exchange Commission (the "SEC").
Section 1. GENERAL DUTIES AS DISTRIBUTOR OF THE FUND'S SHARES.
It is hereby agreed that you shall act as principal distributor for the
Fund ("Distributor"), with the exclusive right to purchase, as principal, from
the Fund, shares of each class authorized and issued by the Fund and that during
the term of this contract, you will use your best efforts to solicit or
otherwise cause sales of the shares of each class authorized and which such
shares are registered or qualified for sale. You agree, as agent for the Fund,
to repurchase, and accept for redemption, the shares of each class authorized
and issued by the Fund; whenever the officers of the Fund deem it advisable for
the protection of Fund shareholders, they may suspend or cancel such authority.
In the performance of these duties you shall be guided by the requirements of
this contract, the applicable provisions of the Fund's Articles of
Incorporation, By-Laws, and applicable federal and state law, all as amended
and/or supplemented from time to time, and the Fund's then-current Prospectus
and Statement of Additional Information, which are from time to time in effect
under the Fund's Registration Statement fled with the SEC under the Securities
Act of 1933, as amended (the 1933 Act"), and the 1940 Act.
Section 2. DEALERS.
You may solicit qualified dealers for orders to purchase, as principal,
shares of the Fund and may enter into dealer agreements with any such dealers,
the form thereof to be as mutually agreed upon and approved by the Fund and you.
Section 3. SALES LITERATURE AND ADVERTISEMENTS.
All sales literature and advertisements used by you in connection with
the sale of the Fund's shares must be submitted to the Fund for its advance
approval. In connection with the sale or arranging for the sale of the Fund's
shares, you are authorized to give only such information and to make only such
statements or representations as are contained in the Fund's Prospectus which is
from time to time in effect under the Fund's
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Registration Statement on Form N-1A, or any superseding form, filed with the SEC
under the 1933 Act and 1940 Act, or in sales literature or advertisements
approved by the Fund.
Section 4. LIMITATION UPON INITIAL INVESTMENT IN THE FUND BY SHAREHOLDERS.
You shall not accept any initial investment in shares of the Fund of
less than $1,000, nor any subsequent investment of less than $250, except in the
case of retirement plans or group plans as described in the Fund's then-current
Prospectus. The Fund may issue one or more classes of shares for which the
minimum investments exceed the amount described above, pursuant to the terms of
issuance and sale set forth in the Fund's then current Prospectus. The Fund's
Board-of Directors (the "Board") may increase, modify or eliminate any such
investment limitations, on written notice to you.
Section 5. OFFERING PRICE. NET ASSET VALUE PER SHARE.
All of the shares of the Fund sold under this contract shall be sold
only at the Offering Price in effect at the time of such sale, as described in
the then-current Prospectus and Statement of Additional Information of the Fund
as the same may be supplemented from time to time, and the Fund shall receive
not less than the full net asset value thereof. It is agreed that any front-end
sales charge payable upon purchases and any contingent deferred sales charge
("CDSC") payable on redemptions shall be retained by you, it being understood
that such amounts will not exceed those set forth in the Fund's then-current
Prospectus. You may re-allow to dealers all or any part of the discount you are
allowed.
Any reference to "net asset value per share" shall refer to the
Fund's net asset value per share computed in accordance with the Fund's charter,
then-current Prospectus and Statement of Additional Information and the
instructions of the Board, all as changed or amended from time to time. The Fund
or its investment adviser will advise you as promptly as practicable of the
Fund's net asset value per share on each day on which it is determined.
Section 6. DUTIES UPON SALE OR REPURCHASE OR REDEMPTION OF SHARES OF THE FUND.
You shall remit to the Custodian of the Fund the net asset value
per share of all shares of the Fund sold by you. The Fund will, as promptly as
practicable, cause the account of the purchaser to be credited with the number
of shares purchased, or upon request will cause certificates for the shares so
purchased to be delivered to you or the purchaser, or the nominee of by you.
You shall process or cause to be processed requests received from
Fund shareholders for repurchase or redemption of their shares, in the manner
prescribed from time to time by the Board. Subject to Section 5 hereof, shares
redeemed shall be redeemed at their net asset value per share next computed
after receipt of the redemption request. You shall arrange for payment to such
shareholders from the Fund's account with its custodian. Any share certificates
delivered to you in proper form for such purpose shall be deposited with the
transfer agent for cancellation. You shall reimburse the Fund for any loss
caused by the failure of a shareholder to confirm in writing any repurchase or
redemption order accepted by you. In the
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event that orders for the purchase or repurchase or redemption of shares of the
Fund are placed and subsequently canceled, you shall pay to the Fund, on at
least an annual basis, an amount equal to the losses (net of any gains) realized
by the Fund as a result of such cancellations.
Section 7. INFORMATION RELATING TO THE FUND.
The Fund will keep you fully informed with regard to its affairs,
and will furnish you with a certified copy of all financial statements and a
signed copy of each report prepared by its independent public accountants, and
will cooperate fully with you in your efforts to sell the Fund's shares, and in
the performance by you of all of your duties under this contract.
Section 8. FILING OF REGISTRATION STATEMENTS ETC.
The Fund will from time to time file (and furnish you with copies
of) such registration statements, amendments thereto, and reports or other
documents as may be required under the 1933 Act, the 1940 Act, or the laws of
the states in which you desire to sell Fund shares.
Section 9. MULTIPLE CAPACITIES.
Nothing contained in this contract shall be deemed to prohibit
you from acting, and being separately compensated for acting, in one or more
capacities on behalf of the Fund, including, but not limited to, the capacities
of investment adviser, broker and distributor. The Fund understands that you may
act in one or more such capacities on behalf of other investment companies and
customers. You shall give the Fund equitable treatment under the circumstances
in supplying services in any capacity, but the Fund recognizes that it is not
entitled to receive preferential treatment from you as compared with the
treatment given to any other investment company or customer. Whenever you shall
act in multiple capacities on behalf of the Fund, you shall maintain the
appropriate separate account and records for each such capacity.
Section 10. PAYMENT OF FEES AND EXPENSES.
The Fund shall assume and pay, or reimburse you for, all expenses
arising from this contract, except that the following expenses shall be
allocated to you, and you shall pay for (i) expenses of printing all sales
literature of the Fund, including shareholder reports and prospectuses required
for your purposes (expenses of printing quarterly and annual reports and of
maintaining and printing a current Prospectus for Fund shareholders will be paid
for by the Fund); and (ii) any payments by you to other persons for selling
shares of the Fund. The foregoing allocations to you shall not, however, be
deemed to limit (i) your right to receive and retain any front-end sales charges
or CDSCs referred to in Section 5 hereof, (ii) the fees payable to you in
accordance with any plans adopted by the Fund (or a class of shares of the Fund)
pursuant to Rule 12b-1 under the 1940 Act, as set forth in the Fund's
then-current Prospectus and Statement of Additional
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Information, which you shall be entitled to receive for your services as
Distributor in accordance with such plans, or (iii) the amount of any service
fees payable to you by the Fund to be used to compensate persons for providing
personal service to shareholders and maintaining shareholder accounts, as set
forth in the Fund's then-current Prospectus and Statement of Additional
Information.
Section 11. LIABILITY OF THE DISTRIBUTOR. ETC.
You shall be liable for your own acts and omissions caused by your
willful misfeasance, bad faith, or gross negligence in the performance of your
duties, or by your reckless disregard of your obligations under this contract,
and nothing herein shall protect you against any such liability to the Fund or
its shareholders. Subject to the first sentence of this section, you shall not
be liable for any action taken or omitted on advice, obtained in good faith, of
counsel, provided such counsel is satisfactory to the Fund.
Section 12. USE OF WORD "BURNHAM" IN NAME OF FUND.
The word "Burnham" in the name of the Fund is understood to be used by
the Fund with your consent, and the Fund is hereby granted a non-exclusive
license to use the name "The Burnharn Fund Inc." provided that the Fund may use
such name only so long as (i) Burnham Asset Management Corporation ("Adviser"),
which currently acts as investment adviser of the Fund, shall continue to be
retained by the Fund as its investment adviser pursuant to an investment
advisory contract between the Fund and the Adviser, as from time to time amended
or supplemented, or (ii) you shall specifically consent in writing to such
continued use. Any such use by the Fund shall in no way prevent you or any of
your successors or assigns from using or permitting the use of the name "The
Burnham Fund Inc." along or with any other word or business, other than the Fund
or its business, whether or not the same directly or indirectly competes or
conflicts with the Fund or its business in any manner. To the extent permitted
by the 1940 Act and the rules and regulations thereunder, and Investment Company
Act Release No. 5510, in the event that the Adviser shall cease to be the
investment adviser of the Fund, the Fund, upon your written request, shall take
such further action as may be necessary to delete from its name the word
"Burnham" and thereafter (i) cease to use the name "The Burnham Fund Inc." or
any name deceptively similar thereto or to "Burnham Securities Inc." in any way
whatsoever, and (ii) for such period and in such manner as may reasonably be
required by you, on all letterheads and other material designed to be read or
used by salesmen, distributors or investors, state in a prominent position and
prominent type that Burnham Asset Management Corporation has ceased to be the
investment adviser of the Fund.
Section 13. TERMINATION OF CONTRACT ASSIGNMENT. ETC.
This contract may be terminated at any time, without the payment of any penalty,
on 60 days, written notice (i) by you; (ii) by the Fund, acting pursuant to a
resolution adopted by the Board; or (iii) by the vote of the holders of the
lesser of (1) 67% of the Fund's shares present at a meeting if the holders of
more than 50% of the outstanding shares are present in person or represented by
proxy, or (2) more than 50% of the outstanding shares of the Fund. This contract
shall automatically terminate in the event of its assignment. Termination shall
not affect the rights of the parties which have accrued prior thereto.]
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Section 14. DURATION OF CONTRACT.
Unless sooner terminated, this contract shall continue in effect for two
years, and thereafter until terminated, provided that the continuation of this
contract and the terms thereof are specifically approved annually in accordance
with the requirements of the 1940 Act by a majority of the Fund's Directors,
including a majority of the Directors who are not interested persons of you or
of the Fund, cast in person at a meeting called for the purpose of voting on
such approval.
Section 15. DEFINITION.
The terms "assignment" and "interested person" when used in this
contract shall have the meanings given such terms in the 1940 Act.
Section 16. CONCERNING APPLICABLE PROVISIONS OF LAW, ETC.
This contract shall be subject to all applicable provisions of law,
including, without being limited to, the applicable provisions of the 1940 Act,
the 1933 Act, and the Securities Exchange Act of 1934, as amended; and to the
extent that any provisions of law, the latter shall control.
This contract is executed and delivered in New York, and the laws of the
State of New York shall, except to the extent that any applicable provisions of
some other laws shall be controlling, govern the construction, validity and
effect of this contract.
If the contract set forth herein is acceptable to you, please so
indicate by executing my enclosed copy of this letter and returning the same to
the undersigned, whereupon this letter shall constitute a binding contract
between the parties hereto effective upon such date on or after its initial
approval in accordance with the 1940 Act as may be agreed by the Fund and
Distributor consistent with the requirements of the 1940 Act.
Very truly yours,
THE BURNHAM FUND INC.
Paul J. Ferguson
Accepted:
BURNHAM SECURITIES INC.
By: Oskar P. Lewnowski
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SELLING AND SERVICE AGREEMENT
for the sale of shares
of
THE BURNHAM FUND INC.
1. hereby agrees to effect transactions in shares of The
Burnham Fund Inc. (the "Fund"), in accordance with the terms of this Agreement.
In all transactions covered by this Agreement you shall act only as agent solely
upon the order and for the account of your customers and in no transaction shall
you have authority to act as agent for the Fund, or any representative or agent
thereof.
2. Orders received from you will be accepted by State Street
Bank and Trust Company (the "Transfer Agent") or us only at the public offering
price applicable to each order, as established by the then-current prospectus of
the Fund. Upon receipt from you of any order to purchase shares of the Fund, we
or the Transfer Agent shall confirm the terms thereof to you by phone, wire, or
via computer facilities. You or your agent will assume responsibility for
providing confirmations and prospectuses to your customers. All orders are
subject to acceptance or rejection by us in our sole discretion. We will not
accept from you any conditional orders for shares. It is agreed and understood
that, except where you are purchasing shares for your own bona Ode investment,
the customer will have full beneficial ownership of the Fund share, whether
shares are registered in the purchaser's name, in your name or in the name of
your nominee.
3. When accepted, a purchase order will be confirmed at the
public offering price, as determined in accordance with the Fund's then-current
prospectus. For your services hereunder in connection with the sale of shares of
the Fund to your customers, you will be entitled to receive the concessions
and/or fees set forth under paragraph 4 below. Distribution fees are paid in
accordance with the respective distribution plans for the Class A, Class B and
Class C Shares of the Fund adopted by the Board of Directors of the Fund
pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended (the
"Rule 12b-1 Plans").
4. Subject to the terms of this agreement:
(i) For your services hereunder in connection with the sale of Class A
Shares to your customers, you are entitled to receive a sales concession based
on the applicable percentage of the public offering price set forth in the fee
schedule attached hereto as Exhibit A, in the Fund's thencurrent prospectus and
statement of additional information. In addition, you will receive a Rule 12b-1
distribution fee with respect to Class A Shares, as set forth in the Fee
schedule attached hereto as Exhibit A and in the Fund's then-current prospectus
and statement of additional inforrnation,paid quarterly commencing with the
beginning of the next calendar quarter following the sale.
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(ii) For your services hereunder in connection with each sale
of Class B Shares to your customers, you are entitled to receive a fee for sales
related activities, a Rule 12b- 1 distribution fee, and a service fee as set
forth in the Fee schedule attached hereto as Exhibit A and in the Fund's
then-current prospectus and statement of additional information.
Service fees shall be paid to compensate you for
providing continuous personal service to Class B shareholders, such as
responding to shareholder inquiries, quoting net asset values and attending to
other shareholder, administrative and record keeping matters.
(iii) For your services hereunder in connection with each
sale ofClass _ Shares to your customers, you are entitled to receive a fee for
sales related activities, a Rule 12b-1 distribution fee and a service fee as set
forth in the fee schedule attached hereto as Exhibit A AND in the Fund's
then-current prospectus and statement of additional information, and the
Compliance Standards set forth in Exhibit B.
Service fees shall be paid TO COMPENSATE YOU FOR
PROVIDING continuous personal services to Class C shareholders such as
responding to shareholder inquiries and attending to other shareholder,
administrative and record keeping matters.
5. (a) You understand that the Class A, Class B and Class C
Rule 12b-1 fees, and all other fees and concessions set forth above relating to
the Class A, Class B and Class C Shares, shall be payable to you only if and to
the extent actually received by us from the Fund, and with respect to the fee
set forth in subparagraph 4 (ii) above, such fee shall be payable only upon the
Fund's receipt of the full public offering price of the related purchase of
shares, and we shall have no obligation to make any disbursement thereof to you
until after receipt of funds from the Fund. We reserve the right at any time
without notice to modify, suspend, or terminate such payments hereunder. All
such payments shall be subject to our continued authority to distribute the
Fund's shares and its authority to terminate or modify its distribution
arrangements with us.
(b) All payments due to you hereunder are contingent upon
your compliance with the terms hereof, including the annexed Compliance
Standards. In particular, your right to receive service fees pursuant to
subparagraph 4 (ii) above is contingent upon your provision of the ongoing
services described therein to Class B shareholders.
(c) The Compliance Standards attached hereto as Exhibit B
are applicable to all sales of Class A and Class B Shares of the Fund and are
incorporated herein by reference.
6. By accepting this Agreement you hereby agree that:
(a) You will order shares of the Fund for your customers only from us or our
designated agents, and solely upon the order and for the account of your
customers.
(b) You will order shares of the Fund from us or our designated agent only to
cover purchase order already received from your customers or for your bona
fide investment.
(c) You will not withhold placing orders received from your customers so as to
profit yourself as a result of such withholding, and you will place
orders for purchases and redemptions promptly upon receipt from your
customers.
(d) You will not sell shares of the Fund pursuant to this Agreement unless the
then-current prospectus is furnished to the purchaser in connection with
the offer and consistent with applicable legal and regulatory requirements.
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(e) You will comply with the Compliance Standards applicable to the sale of the
Fund's shares, as the same may be amended unilaterally by the Fund from time to
time, the present version of which is attached hereto as Exhibit B.
7. By accepting this Agreement, you represent that you
(i) are registered as a broker-dealer under the Securities Exchange Act of 1934,
as amended; (ii) are qualified to act as a dealer in each jurisdiction in which
you will offer shares of the Fund; (iii) are a member in good standing of the
National Association of Securities Dealers, Inc.; and (iv) will maintain such
registrations, qualifications and memberships throughout the term of this
Agreement. You shall comply with all applicable federal laws, the laws of each
jurisdiction in which you will offer shares of the Fund and the rules and
regulations of the National Association of Securities Dealers, Inc. and any
self-regulatory organization to which you, the Fund or we are subject. You shall
not be entitled to any compensation during any period in which you have been
suspended or expelled from membership in the National Association of Securities
Dealers, Inc. You further agree that you will not make available shares of the
Fund in any state or other jurisdiction in which such shares may not be
lawfully offered for sale.
8. By accepting this Agreement, you shall assume full
responsibility for thorough and prior training of your representatives
concerning the selling methods to be used in connection with the offer and sale
of shares of the Fund, giving special emphasis to the principles of full and
fair disclosure to prospective investors and the terms and principles set forth
in the Compliance Standards.
9. Payment of the public offering price for shares
ordered by you shall be remitted to us (as to Class A shares, net of any
applicable sales commissions, as set forth in subparagraph 4 (i) hereof), and
shall be in New York clearing house funds received by the Fund's Transfer Agent,
State Street Bank and Trust Company, not later than five business days after our
acceptance of your order with proper transfer instructions. If such payment is
not received, we reserve the right, without notice, forthwith to cancel the
sale, in which case you agree to be responsible for any loss, including loss of
profit, suffered by the Fund or us as a result of your failure to make such
payment.
10. Shares of the Fund sold through you hereunder shall
be made available as described in the Fund's then-current prospectus.
11. If any shares confirmed to you and your customer
under the terms of this Agreement are repurchased by the Fund or by us or are
tendered to the Fund for redemption or repurchase within seven (7) business
days after the date of the condonation of the original purchase order, you shall
forthwith refund to us any monies paid or allowed to you with respect to such
shares under this Agreement. We will notify you of any such repurchase within
ten (lO) business days of such repurchase.
12. No person is authorized to make any representations
concerning shares of the Fund except those contained in the then-current
prospectus of the Fund and in printed information subsequently issued by the
Fund or by us as information supplemental to such prospectus. We will furnish
additional copies of the Fund's prospectus and any sales literature and other
information issued by us or the Fund, in reasonable quantities upon request.
If you wish to use your own advertising material such as mailers, brochures,
prospecting letters, etc. with respect to the Fund, all such advertising must be
submitted to us for review and approval prior to use. You shall be responsible
for filing and obtaining any approvals of such advertising as may be required by
applicable law or regulation.
13. We reserve the right, in our discretion, without
notice, to suspend sales or withdraw the offering of shares entirely or to
change the sales charges or fees payable hereunder. In addition, we reserve the
right, upon prior notice, to modify, cancel or change any other terms of this
Agreement.
14. You shall make available for your customers such
administrative services as are necessary or appropriate for providing
information and services to your customers. Such information services and
assistance may
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include, but shall not be limited to, establishment and maintenance of
accounts and records, processing purchase and redemption transactions, answering
routine inquiries, and such other services as may be agreed upon from time to
time and as may be permitted by applicable statute, rule or regulation. You
shall promptly answer all written complaints received by you relating to Fund
accounts and forward such complaints to Burnham Securities Inc., 1325 Avenue of
the Americas, New York, New York 10019, Attn: Office of the President.
15. YOU AGREE TO INDEMNIFY, DEFEND AND HOLD US AND OUR
SEVERAL OFFICERS and directors, and the Fund and its several officers and
directors, and any person who controls us and/or the Fund within the meaning of
Section 15 of the Securities Act of 1933, as amended, free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims and any counsel fees incurred in
connection therewith) which we or our several officers and directors, and any
such controlling person, as aforesaid, may incur arising out of or based upon
(i) any breach of any representation, warranty or covenant made by you herein,
(ii) any failure by you to perform your obligations as set forth herein, or
(iii) any violation of any law, rule or regulation, which violation may result
in liability to us or to the Fund. In the event that we or the Fund determine to
refund any amounts paid by an investor by reason of your breach, failure or
violation, you shall return to us or the Fund any concession or fee previously
paid to you by us with respect to the transaction or transactions for which the
refund is being made. This section shall survive termination of this Agreement.
16. In soliciting purchases of shares of the Fund, you
shall act as an independent contractor and not as our agent. Neither party
hereto shall be deemed to be the agent of the other.
17. (a) Any notice or other instrument in writing,
authorized or required by THIS AGREEMENT TO BE GIVEN TO US SHALL BE SUFFICIENTLY
GIVEN IF ADDRESSED TO US AND MAILED OR DELIVERED TO US AT OUR ADDRESS SET FORTH
ON THE FIRST PAGE HEREOF, TO THE ATTENTION OF THE PRESIDENT, OR AS MAY OTHERWISE
FROM TIME TO TIME BE DESIGNATED IN WRITING TO YOU. ANY NOTICE OR OTHER
INSTRUMENT IN WRITING, AUTHORIZED OR REQUIRED BY THIS AGREEMENT TO BE GIVEN TO
YOU, SHALL BE sufficiently given if addressed to you and mailed or delivered to
you at your offices at:
Address
City, State, Zip
Phone#:
Contact:
Fax#:
or at such other place as you may from time to time designate in writing to us.
(b) Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Fund shall be
sufficiently given if addressed to the Fund and mailed or delivered to it at its
offices at 1325 Avenue of the Americas, New York New York 10019 or at such other
place as the Fund may from time to time designate in writing.
(c) Any notice or other instrument in writing
authorized or required by this Agreement to be given to the Fund's Transfer
Agent, State Street Bank and Trust Company, shall be sufficiently given if
addressed to The Burnham Fund Inc., c/o State Street Bank & Trust Company, P. O.
Box 8505, Boston, Massachusetts 02266-8505, or such other place as State Street
Bank & Trust Company may from time to time designate in writing.
(d) All notices shall be effective upon receipt.
<PAGE>
<PAGE>
18. This Agreement constitutes the entire agreement
between the parties hereto with regard to its subject matter and supersedes any
prior agreement related to the subject matter hereunder.
19. NEITHER PARTY SHALL TRANSFER OR ASSIGN THIS
AGREEMENT, OR ANY right or obligation under it, by operation of law or
otherwise, to any entity without the other party's prior written consent and any
such attempted assignment shall be VOID.
20. No failure or delay (in whole or in part) on the
part of either party hereto to exercise any right or remedy hereunder shall
impair any such right or remedy, operate as a waiver thereof, or affect any
other right or remedy hereunder. All rights and remedies hereunder are
cumulative and are not exclusive of any of the rights or remedies provided
hereunder or by law or equity.
21. If any of the provisions contained in this
Agreement is or becomes invalid, illegal or unenforceable in whole or in part,
such invalidity, illegality or unenforceability shall not affect the remaining
provisions and portions of this Agreement with respect to the subject matter
hereof. This Agreement may not be modified except by written instrument executed
by both parties.
22. This Agreement shall be governed and construed in accordance with the laws
of the State of New York without reference to principles of conflicts of law.
Burnham Securities Inc.
By:
We have read the foregoing Agreement and accept and agree to the terms and
conditions thereof:
(Dealer Name)
By:
(Sign Here)
Title:
Date:
(Print Here)
<PAGE>
<PAGE>
EXHIBIT A
FEE SCHEDULE
TO
SELLING AND SERVICE AGREEIVIENT
THE BURNHAM FUND INC.
<TABLE>
<CAPTION>
SALES CHARGE RULE 12b-1 FEE SERVICE FEE
<S> <C> <C> <C>
CLASS A* Sales concession of .25% per annum of none
(5)% of public average daily net
offering price. assets.
[Full dealer re-allowance]
Purchases of $1 Million or More.
CLASS B** Dealers will receive .75% per annum of .25% per annum
from the Distributor a fee of average daily net of average net
S'O of the gross proceeds assets. assets.
from the sale at the time [Full dealer
of settlement. A CDSC.- will be re-allowance]
imposed on and deducted from
proceeds of Class B shares
if redeemed within six years.
CLASS C Dealers will receive .75% per annum of .25% per annum
from the Distributor a fee of average daily net of average net
1% of the gross proceeds assets. assets.
from the sale at the time [.60% dealer re-allowance [Full dealer
of settlement. A CDSC...... will be commencing at the end of re-allowance
imposed on and deducted from the thirteenth (13) month commencing at
proceeds of Class C shares following each sale of shares.] the end of the
if redeemed within I year. thirteenth ( 13)
month following
each sale of
shares.]
</TABLE>
* Shareholders who purchased Class A shares before April 28, 1995 are subject to
a reduced sales load of up to 3% for Class A Shares.
** Class B shares purchased before April 28, 1995 are subject to no CDSC unless
shares ARE REDEEMED within 18 MONTHS of purchase; in which case a CDSC of
1.25% will be IMPOSED.
On purchases by a single purchaser aggregating $1 million or more, the
investor will not pay a load at the time of purchase. The Distributor will pay
authorized dealers an amount equal to: 1.00% of the first $2 million; 0.80%
on the next million; and 0.40% on any amount over $3 Million. If the client
redeems these million dollar assets the fund will impose a CDSC based upon a
24 month period as follows: first 12 months 1.00% CDSC; next 12 months 0.50%
CDSC.
The CDSC will be deducted from the redemption proceeds otherwise payable to the
shareholder and will be retained by the distributor.
<PAGE>
<PAGE>
COMPLIANCE STANDARDS
FOR THE SALE OF SHARES OF
THE BURNHAM FUND INC.
EXHIBIT B
As distributor of The Burnham Fund Inc. (the "Fund"), which offers its shares on
both a front-end and deferred sales charge basis, it is incumbent upon Burnham
Securities Inc. ("BSI~) to establish compliance standards setting forth the
basis upon which shares of the Fund may be sold. These standards are designed
for each broker/dealer ("dealer") which distributes shares of the Fund and for
each dealer's financial advisers/registered representatives.
Since shares of the Fund are offered with different alternative purchase
arrangements, it is important for an investor to choose a sales financing method
that best suits his particular situation. To assist clients of those firms which
distribute the Fund in these decisions and to ensure proper supervision of
purchase recommendations regarding the Fund, BSI is instituting the following
compliance standards to which dealers must adhere when selling shares of the
Fund:
(1) Any purchase for less than $50,000 may be either subject to a front-end or
contingent deferred sales charge.
(2) Any purchase order for $100,000 or more but less than $1 million is subject
to review prior to entry by the branch office manager and such review must be
writing. The dealer's branch officer manager (or other appropriate reviewing of
ricer) must review for suitability the purchase order ticket for shares subject
to either a front-end or contingent deferred sales charge, given the relevant
facts and circumstances, including, but not limited to:
(a) the specific purchase order dollar amount;
(b) the length of time the investor expects to hold his shares; and
(c) any other relevant circumstances, such as the availability of purchases
under letter of intention or rights of accumulation.
(3) Any purchase order of more than $ 1 million should be for Class A shares
which are subject to no front-end sales charge at the time of purchase but are
subject to a contingent deferred sales charge over a 24 month period from the
time of purchase.
(4) The maximum investment per shareholder account for Class B shares is
$250,000.
(5) THE MAXIMUM INVESTMENT PER SHAREHOLDER ACCOUNT ~ CLASS (shares is
$1,000,000.
<PAGE>
<PAGE>
GENERAL GUIDELINES
The alternative purchase arrangements of the Fund permit an investor to
choose the method of purchasing shares that is most beneficial given the length
of time the investor may expect to hold the shares, the investor's expected
overall level of investment in the Fund and other circumstances. Investors
should consider whether during the anticipated life of their investment in the
Fund the accumulated distribution and service fees attributable to Class B and C
shares would be less than the initial sales charge and accumulated distribution
fees of Class A shares if purchased at the same time. The prospective investor
should consider these fees plus the applicable sales charge alternatives in
choosing the method of purchasing shares.
Responsibilities of the Branch Office Manager (or other appropriate reviewing
officer)
The dealer's branch office manager or other appropriate reviewing
officer (the "Reviewing Officer") must ensure that the financial
adviser/registered representative has advised the client of the available
alternative purchase arrangements offered by the Fund, and the impact of
choosing one method over another. In certain instances, it may be appropriate
for the Reviewing Officer to discuss the purchase directly with the client. The
foregoing guidelines, as well as the examples cited above, should assist the
Reviewing Officer in reviewing purchase orders in the $100,000 to less than $1
million range.
Effectiveness and Amendments
These compliance guidelines are effective immediately upon receipt hereof by the
dealer.
Questions relating to these compliance guidelines should be directed by
the dealer to its national mutual fund sales and marketing group or its Legal
Department or Compliance Director. BSI will advise dealers in writing of any
future changes in these guidelines.
<PAGE>
<PAGE>
CUSTODY AND INVESTMENT ACCOUNTING AGREEMENT
THIS AGREEMENT is made effective the 22nd day of April, 1998, by and between
INVESTORS FIDUCIARY TRUST COMPANY, a trust company chartered under the laws of
the state of Missouri, having its principal office and place of business at 801
Pennsylvania Avenue, Kansas City, Missouri 64105 ("IFTC"), and THE BURNHAM FUND
INC., a Maryland corporation, having its principal office and place of business
at 1325 Avenue of the Americas, New York, NY 10019 (the "Fund") and (each
registered investment company listed on Schedule A hereto, as it may be amended
from time to time, incorporated herein by this reference, each having its
principal office and place of business at 1325 Avenue of the Americas, New York,
NY 10019 (each a "Fund")).
WITNESSETH:
WHEREAS, Fund desires to appoint IFTC as custodian of the assets of the
Fund's investment portfolio or portfolios (each a "Portfolio", and collectively
the "Portfolios") and as its agent to perform certain investment accounting and
recordkeeping functions; and
WHEREAS, IFTC is willing to accept such appointment on the terms and
conditions hereinafter set forth;
NOW THEREFORE, for and in consideration of the mutual promises contained
herein, the parties hereto, intending to be legally bound, mutually covenant and
agree as follows:
1. APPOINTMENT OF CUSTODIAN AND AGENT. The Fund hereby constitutes
and appoints IFTC as:
A. Custodian of the investment securities, interests
in loans and other non-cash investment property,
and monies owned by each of the Portfolios and
delivered to IFTC as custodian hereunder
("Assets"); and
B. Agent to perform certain accounting and
record-keeping functions relating to portfolio
transactions required of a duly registered
investment company under Rule 31a of the Investment
Company Act of 1940, as amended (the " 1940 Act")
and to calculate the net asset value of the
Portfolios.
2. REPRESENTATIONS AND WARRANTIES.
A. Fund hereby represents, warrants and acknowledges
to IFTC:
1. That it is a registered investment company duly
organized and existing and in good standing under
the laws of its state of organization, and that it
is registered under the 1940 Act; and
2. That it has the requisite power and authority
under applicable state law and under its Articles
of Incorporation and By-laws to enter into this
Agreement; that it has taken all the requisite
action necessary to appoint IFTC as custodian and
investment accounting and recordkeeping agent; that
this Agreement has been duly executed and delivered
by the Fund; and that this Agreement constitutes a
legal, valid and binding obligation of the Fund,
enforceable in accordance with its terms.
B. IFTC hereby represents, warrants and acknowledges
to Fund:
1. That it is a trust company duly organized and
existing and in good standing under the laws of the
State of Missouri; and
2. That it has the requisite power and authority
under applicable law, its charter and its bylaws to
enter into and perform this Agreement; that this
Agreement has been duly executed and delivered
<PAGE>
<PAGE>
by IFTC; and that this Agreement constitutes a
legal, valid and binding obligation of IFTC,
enforceable in accordance with its terms.
3. DUTIES AND RESPONSIBILITIES OF THE PARTIES.
A. Delivery of Assets. To the extent permitted by
the 1940 Act, the Fund will deliver or cause to be
delivered to IFTC on the effective date hereof, or
as soon thereafter as practicable, and from time to
time thereafter, all Assets acquired by, owned by
or from time to time coming into the possession of
each of the Portfolios during the term hereof. IFTC
has no responsibility or liability whatsoever for
or on account of assets not so delivered.
B. Delivery of Accounts and Records. The Fund will
turn over or cause to be turned over to IFTC all
accounts and records needed by IFTC to fully and
properly perform its duties and responsibilities
hereunder. IFTC may rely conclusively on the
completeness and correctness of such accounts and
records.
C. Delivery of Assets to Third Parties. IFTC will
receive delivery of and keep safely the Assets of
each Portfolio segregated in a separate account.
IFTC will not deliver, assign, pledge or
hypothecate any such Assets to any person except as
permitted by the provisions hereof or any agreement
executed according to the terms of Section 3.P
hereof. Upon delivery of any such Assets to a
subcustodian appointed pursuant hereto (hereinafter
referred to as "Subcustodian"), IFTC will create
and maintain records identifying such Assets as
belonging to the applicable Portfolio. IFTC is
responsible for the safekeeping of the Assets only
until they have been transmitted to and received by
other persons as permitted under the terms hereof,
except for Assets transmitted to Subcustodians, for
which IFTC remains responsible to the extent
provided herein. IFTC may participate directly or
indirectly through a subcustodian in the Depository
Trust Company (DTC), Treasury/Federal Reserve Book
Entry System (Fed System), Participant Trust
Company (PTC) or other depository approved by Fund
(as such entities are defined at 17 CFR Section
270.17f-4(b)) (each a "Depository" and collectively
the "Depositories"). IFTC will be responsible to
the Fund for any loss, damage or expense suffered
or incurred by the Fund resulting from the actions
or omissions of any Depository only to the same
extent such Depository is responsible to IFTC.
D. Registration. IFTC will at all times hold
registered Assets in the name of IFTC as custodian,
the applicable Portfolio, or a nominee of either of
them, unless specifically directed by Instructions,
as hereinafter defined, to hold such registered
Assets in so called "street name;" provided that,
in any event, IFTC will hold all such Assets in an
account of IFTC as custodian containing only Assets
of the applicable Portfolio, or only assets held by
IFTC as a fiduciary or custodian for customers; and
provided further, IFTC's records will at all times
indicate the Portfolio or other customer for which
such Assets are held and the respective interests
therein. If, however, the Fund directs IFTC to
maintain Assets in "street name", notwithstanding
anything contained herein to the contrary, IFTC
will be obligated only to utilize its best efforts
to timely collect income due the Portfolio on such
2
<PAGE>
<PAGE>
Assets and to notify the Portfolio of relevant
information, such as maturities and pendency of
calls, and corporate actions including, without
limitation, calls for redemption, tender or
exchange offers, declaration, record and payment
dates and amounts of any dividends or income,
reorganization, recapitalization, merger,
consolidation, split-up of shares, change of par
value, or conversion ("Corporate Actions"). All
Assets and the ownership thereof by the Portfolio
will at all times be identifiable on the records of
IFTC. The Fund agrees to hold IFTC and its nominee
harmless for any liability as a shareholder of
record of securities held in custody.
E. Exchange. Upon receipt of Instructions, IFTC
will exchange, or cause to be exchanged, Assets
held for the account of a Portfolio for other
Assets issued or paid in connection with any
Corporate Action or otherwise, and will deposit any
such Assets in accordance with the terms of any
such Corporate Action. Without Instructions, IFTC
is authorized to exchange Assets in temporary form
for Assets in definitive form, to effect an
exchange of shares when the par value of stock is
changed, and, upon receiving payment therefor, to
surrender bonds or other Assets at maturity or when
advised of earlier call for redemption, except that
IFTC will receive Instruction prior to surrendering
any convertible security.
F. Purchases of Investments -- Other Than Options
and Futures. On each business day on which a
Portfolio makes a purchase of Assets other than
options and futures, the Fund will deliver to IFTC
Instructions specifying with respect to each such
purchase:
1. If applicable, the name of the Portfolio
making such purchase;
2. The name of the issuer and description of
the Asset;
3. The number of shares and the principal
amount purchased, and accrued interest,
if any;
4. The trade date;
5. The settlement date;
6. The purchase price per unit and the
brokerage commission, taxes and other
expenses payable in connection with the
purchase
7. The total amount payable upon such
purchase;
8. The name of the person from whom or the
broker or dealer through whom the
purchase was made; and
9. Whether the Asset is to be received in
certificated form or via a specified
Depository.
In accordance with such Instructions, IFTC will pay for out of monies
held for the purchasing Portfolio, but only insofar as such monies are available
for such purpose, and receive the Assets so purchased by or for the account of
such Portfolio, except that IFTC, or a Subcustodian, may in its sole discretion
advance funds to such Portfolio which may result in an overdraft because the
monies held on behalf of such Portfolio are insufficient to pay the total amount
payable upon such purchase. Except as otherwise instructed by the Fund, IFTC
will make such payment only upon receipt of Assets: (a) by IFTC; (b) by a
clearing corporation of a national exchange of which IFTC is a member; or (c) by
a Depository. Notwithstanding the foregoing, (i) IFTC may release funds to a
Depository prior to the receipt of advice from the Depository that the Assets
underlying a repurchase agreement have been transferred by book-entry into the
account
3
<PAGE>
<PAGE>
maintained with such Depository by IFTC on behalf of its customers;
provided that IFTC's instructions to the Depository require that the Depository
make payment of such funds only upon transfer by book-entry of the Assets
underlying the repurchase agreement in such account; (ii) IFTC may make payment
for time deposits, call account deposits, currency deposits and other deposits,
foreign exchange transactions, futures contracts or options, before receipt of
an advice or confirmation evidencing said deposit or entry into such
transaction; and (iii) IFTC may make, or cause a Subcustodian to make, payment
for the purchase of Assets the settlement of which occurs outside of the United
States of America in accordance with generally accepted local custom and market
practice.
G. Sales and Deliveries of Investments -- Other
Than Options and Futures. On each business day on
which a Portfolio makes a sale of Assets other than
options and futures, the Fund will deliver to IFTC
Instructions specifying with respect to each such
sale:
1. If applicable, the name of the Portfolio
making such sale;
2. The name of the issuer and description of
the Asset;
3. The number of shares and principal amount
sold, and accrued interest, if any;
4. The date on which the Assets sold were
purchased or other information
identifying the Assets sold and to be
delivered;
5. The trade date;
6. The settlement date;
7. The sale price per unit and the brokerage
commission, taxes or other expenses
payable in connection with such sale;
8. The total amount to be received by the
Portfolio upon such sale; and
9. The name and address of the broker or
dealer through whom or person to whom the
sale was made
IFTC will deliver or cause to be delivered the Assets thus designated as
sold for the account of the selling Portfolio as specified in the Instructions.
Except as otherwise instructed by the Fund, IFTC will make such delivery upon
receipt of: (a) payment therefor in such form as is satisfactory to IFTC; (b)
credit to the account of IFTC with a clearing corporation of a national
securities exchange of which IFTC is a member; or (c) credit to the account
maintained by IFTC on behalf of its customers with a Depository. Notwithstanding
the foregoing: (i) IFTC will deliver Assets held in physical form in accordance
with "street delivery custom" to a broker or its clearing agent; or (ii) IFTC
may make, or cause a Subcustodian to make, delivery of Assets the settlement of
which occurs outside of the United States of America upon payment therefor in
accordance with generally accepted local custom and market practice.
H. Purchases or Sales of Options and Futures.
On each business day on which Portfolio makes a
purchase or sale of the options and/or futures
listed below, the Fund will deliver to IFTC
Instructions specifying with respect to each such
purchase or sale:
If applicable, the name of the Portfolio
making such purchase or sale;
In the case of security options:
a. The underlying security;
b. The price at which purchased or sold;
4
<PAGE>
<PAGE>
c. The expiration date;
d. The number of contracts;
e. The exercise price;
f. Whether the transaction is an
opening, exercising, expiring or
closing transaction;
g. Whether the transaction involves a
put or call;
h. Whether the option is written or
purchased;
i. Market on which option traded; and
j. Name and address of the broker or
dealer through whom the sale or
purchase was made.
In the case of options on indices:
a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
f. The expiration date;
g. Whether the transaction is an
opening, exercising, expiring or
closing transaction;
h. Whether the transaction involves a
put or call;
i. Whether the option is written or
purchased; and
j. The name and address of the broker or
dealer through whom the sale or
purchase was made, or other
applicable settlement instructions.
In the case of security index futures
contracts
a) The last trading date specified in
the contract and, when available, the
closing level, thereof;
b) The index level on the date the
contract is entered into;
c) The multiple;
d) Any margin requirements;
e) The need for a segregated margin
account (in addition to Instructions,
and if not already in the possession
of IFTC, Fund will deliver a
substantially complete and executed
custodial safekeeping account and
procedural agreement, incorporated
herein by this reference); and
f) The name and address of the futures
commission merchant through whom the
sale or purchase was made, or other
applicable settlement instructions.
5
<PAGE>
<PAGE>
In the case of options on index future
contracts:
a) The underlying index future contract;
b) The premium;
c) The expiration date;
d) The number of options;
e) The exercise price;
f) Whether the transaction involves an
opening, exercising, expiring or
closing transaction;
g) Whether the transaction involves a
put or call;
h) Whether the option is written or
purchased; and
i) The market on which the option is
traded.
I. Assets Pledged or Loaned. If specifically
allowed for in the prospectus of a Portfolio, and
subject to such additional terms and conditions as
IFTC may require:
1. Upon receipt of Instructions, IFTC will release
or cause to be released Assets to the designated
pledgee by way of pledge or hypothecation to
secure any loan incurred by a Portfolio;
provided, however, that IFTC will release Assets
only upon payment to IFTC of the monies
borrowed, except that in cases where additional
collateral is required to secure a borrowing
already made, further Assets may be released
or caused to be released for that purpose.
Upon receipt of Instructions, IFTC will
pay, but only from funds available for such
purpose, any such loan upon redelivery to it
of the Assets pledged or hypothecated therefor
and upon surrender of the note or notes
evidencing such loan.
2. Upon receipt of Instructions, IFTC will release
Assets to the designated borrower; provided,
however, that the Assets will be released only
upon deposit with IFTC of full cash collateral
as specified in such Instructions, and that the
lending Portfolio will retain the right to any
dividends, interest or distribution on such
loaned Assets. Upon receipt of Instructions and
the loaned Assets, IFTC will release the cash
collateral to the borrower.
J. Routine Matters. IFTC will, in general, attend
to all routine and mechanical matters in connection
with the sale, exchange, substitution, purchase,
transfer, or other dealings with the Assets except
as may be otherwise provided herein or upon
Instruction from the Fund.
K. Deposit Accounts. IFTC will open and maintain
one or more special purpose deposit accounts for
each Portfolio in the name of IFTC in such banks or
trust companies (including, without limitation,
affiliates of IFTC) as may be designated by it or
the Fund in writing ("Accounts"), subject only to
draft or order by IFTC upon receipt of
Instructions. IFTC will deposit all monies received
by IFTC from or for the account of a Portfolio in
an Account maintained for such Portfolio. Subject
to Section 5.K hereof, IFTC agrees:
6
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<PAGE>
1. To make Fed Funds available to the
applicable Portfolio at 9:00 a.m. CST, on
the second business day after deposit of
any check into an Account, in the amount
of the check;
2. To make funds available immediately upon
a deposit made by Federal Reserve wire;
and
3. To make funds available on the next
business day after deposit of ACH wires.
L. Income and Other Payments. IFTC will:
1. Collect, claim and receive and deposit
for the account of the applicable
Portfolio all income (including income
from the Accounts) and other payments
which become due and payable on or after
the effective date hereof with respect to
the Assets, and credit the account of
such Portfolio in accordance with the
schedule attached hereto as Exhibit A.
If, for any reason, a Portfolio is
credited with income that is not
subsequently collected, IFTC may reverse
that credited amount. If monies are
collected after such reversal, IFTC will
credit the Portfolio in that amount;
2. Execute ownership and other certificates
and affidavits for all federal, state and
local tax purposes in connection with the
collection of bond and note coupons; and
3. Take such other action as may be
necessary or proper in connection with
(a) the collection, receipt and deposit
of such income and other payments,
including but not limited to the
presentation for payment of all coupons
and other income items requiring
presentation; and all other Assets which
may mature or be called, redeemed,
retired or otherwise become payable and
regarding which IFTC has actual
knowledge, or should reasonably be
expected to have knowledge; and (b) the
endorsement for collection, in the name
of the Fund or a Portfolio, of all
checks, drafts or other negotiable
instruments.
IFTC, however, will not be required to institute suit or take other
extraordinary action to enforce collection except upon receipt of Instructions
and upon being indemnified to its satisfaction against the costs and expenses of
such suit or other actions. IFTC will receive, claim and collect all stock
dividends, rights and other similar items and will deal with the same pursuant
to Instructions.
M. Proxies and Notices. IFTC will promptly deliver
or mail or have delivered or mailed to the Fund all
proxies properly signed, all notices of meetings,
all proxy statements and other notices, requests or
announcements affecting or relating to Assets and
will, upon receipt of Instructions, execute and
deliver or mail (or cause its nominee to execute
and deliver or mail) such proxies or other
authorizations as may be required. Except as
provided herein or pursuant to Instructions
hereafter received by IFTC, neither it nor its
nominee will exercise any power inherent in any
such Assets, including any power to vote the same,
or execute any proxy, power of attorney, or other
similar instrument voting any of such Assets, or
give any consent, approval or waiver with respect
thereto, or take any other similar action.
N. Disbursements. IFTC will pay or cause to be
paid, insofar as funds are available for the
purpose, bills, statements and other obligations of
each Portfolio (including but not limited to
obligations in connection with the conversion,
exchange or surrender of Assets, interest charges,
7
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<PAGE>
dividend disbursements, taxes, management fees,
custodian fees, legal fees, auditors' fees,
transfer agents' fees, brokerage commissions,
compensation to personnel, and other operating
expenses of such Portfolio) pursuant to
Instructions setting forth the name of the person
to whom payment is to be made, and the amount and
purpose of the payment.
O. Daily Statement of Accounts. IFTC will, within a
reasonable time, render to the Fund a detailed
statement of the amounts received or paid and of
Assets received or delivered for the account of
each Portfolio during each business day. IFTC will
maintain such books and records as are necessary to
enable it to render, from time to time upon request
by Fund, a detailed statement of the Assets. IFTC
will permit, and upon Instruction will cause any
Subcustodian to permit, such persons as are
authorized by the Fund, including the Fund's
independent public accountants, reasonable access
to such records or will provide reasonable
confirmation of the contents of such records, and
if demanded, IFTC will permit, and will cause any
Subcustodian to permit, federal and state
regulatory agencies to examine the Assets, books
and records of the Portfolio.
P. Appointment of Subcustodians. Notwithstanding
any other provisions hereof:
1. All or any of the Assets may be held in
IFTC's own custody or in the custody of one
or more other banks or trust companies
(including, without limitation, affiliates
of IFTC) acting as Subcustodians as may be
selected by IFTC. Any such Subcustodian
selected by IFTC must have the
qualifications required for a custodian
under the 1940 Act. IFTC will be responsible
to the applicable Portfolio for any loss,
damage or expense suffered or incurred by
such Portfolio resulting from the actions or
omissions of any Subcustodians selected and
appointed by IFTC (except Subcustodians
appointed at the request of the Fund and as
provided in Subsection 2 below) to the same
extent IFTC would be responsible to the Fund
hereunder if it committed the act or
omission itself.
2. Upon request of the Fund, IFTC will
contract with other Subcustodians reasonably
acceptable to IFTC for purposes of (a)
effecting third-party repurchase
transactions with banks, brokers, dealers,
or other entities through the use of a
common custodian or subcustodian, or (b)
providing depository and clearing agency
services with respect to certain variable
rate demand note securities, or (c) for
other reasonable purposes specified by the
Fund; provided, however, that IFTC will be
responsible to the Fund for any loss, damage
or expense suffered or incurred by the Fund
resulting from the actions or omissions of
any such Subcustodian only to the same
extent such Subcustodian is responsible to
IFTC. The Fund may review IFTC's contracts
with such Subcustodians.
Q. Foreign Custody Manager.
1. Delegation to IFTC as FCM. The Fund, pursuant to
resolution adopted by its Board of Trustees or
Directors (the "Board"), hereby delegates to IFTC,
subject to Section (b) of Rule 17f-5, the
responsibilities set forth in this Section Q with
respect to Foreign Assets held outside the United
States, and IFTC hereby accepts such delegation, as
FCM of each Portfolio. It is understood and agreed
that IFTC will sub-contract the performance of its
responsibilities hereunder with State Street Bank &
Trust Company. IFTC will be responsible to the
applicable Portfolio for any loss, damage or
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expense suffered or incurred by such Portfolio
resulting from the actions or omissions of State
Street Bank & Trust Company to the same extent IFTC
would be responsible to the Fund hereunder if it
committed the act or omission itself. References
herein to "FCM" shall include IFTC and State Street
Bank & Trust Company.
2. Definitions. Capitalized terms in this
Section Q have the following meanings:
"Country Risk" means all factors reasonably
related to the systemic risk of holding
Foreign Assets in a particular country
including, but not limited to, such
country's political environment; economic
and financial infrastructure (including
financial institutions such as any Mandatory
Securities Depositories operating in the
country); prevailing or developing custody
and settlement practices; and laws and
regulations applicable to the safekeeping
and recovery of Foreign Assets held in
custody in that country.
"Eligible Foreign Custodian" has the meaning
set forth in section (a)(1) of Rule 17f-5,
except that the term does not include
Mandatory Securities Depositories.
"Foreign Assets" means any of the
Portfolios' investments (including foreign
currencies) for which the primary market is
outside the United States and such cash and
cash equivalents in amounts deemed by the
Fund to be reasonably necessary to effect
the Portfolios' transactions in such
investments.
"Foreign Custody Manager" or "FCM" has the
meaning set forth in section (a)(2) of Rule
17f-5.
"Mandatory Securities Depository" means a
foreign securities depository or clearing
agency that, either as a legal or practical
matter, must be used if the Fund determines
to place Foreign Assets in a country outside
the United States (i) because required by
law or regulation; (ii) because securities
cannot be withdrawn from such foreign
securities depository or clearing agency; or
(iii) because maintaining or effecting
trades in securities outside the foreign
securities depository or clearing agency is
not consistent with prevailing or developing
custodial or market practices.
3. Countries Covered. The FCM is responsible for
performing the delegated responsibilities defined
below only with respect to the countries and
custody arrangements for each such country listed
on Exhibit D hereto, which may be amended from time
to time by the FCM. The FCM will list on Exhibit D
the Eligible Foreign Custodians selected by the FCM
to maintain the assets of each Portfolio. Mandatory
Securities Depositories are listed on Exhibit E
hereto, which Exhibit E may be amended from time to
time by the FCM. The FCM will provide amended
versions of Exhibits D and E in accordance with
subsection 7 of this Section Q.
Upon the receipt by the FCM of Instructions
to open an account, or to place or maintain
Foreign Assets, in a country listed on
Exhibit D, and the fulfillment by the Fund
of the applicable account opening
requirements for such country, the FCM is
deemed to have been
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delegated by the Board responsibility as FCM
with respect to that country and to have
accepted such delegation. Following the
receipt of Instructions directing the FCM to
close the account of a Portfolio with the
Eligible Foreign Custodian selected by the
FCM in a designated country, the delegation
by the Board to IFTC as FCM for that country
is deemed to have been withdrawn and IFTC
will immediately cease to be the FCM of the
Portfolio with respect to that country.
The FCM may withdraw its acceptance of
delegated responsibilities with respect to a
designated country upon written notice to
the Fund. Thirty (30) days (or such longer
period as to which the parties agree in
writing) after receipt of any such notice by
the Fund, IFTC will have no further
responsibility as FCM to a Portfolio with
respect to the country as to which IFTC's
acceptance of delegation is withdrawn.
4. Scope of Delegated Responsibilities.
a. Selection of Eligible Foreign
Custodians. Subject to the
provisions of this Section Q, the
FCM may place and maintain the
Foreign Assets in the care of the
Eligible Foreign Custodian selected
by the FCM in each country listed on
Exhibit D, as amended from time to
time.
In performing its delegated
responsibilities as FCM to place or
maintain Foreign Assets with an
Eligible Foreign Custodian, the FCM
will determine that the Foreign
Assets will be subject to reasonable
care, based on the standards
applicable to custodians in the
country in which the Foreign Assets
will be held by that Eligible
Foreign Custodian, after considering
all factors relevant to the
safekeeping of such assets,
including, without limitation, those
set forth in Rule 17f-5(c)(1)(I)
through (iv).
b. Contracts With Eligible Foreign
Custodians. The FCM will determine
that the contract (or the rules or
established practices or procedures
in the case of an Eligible Foreign
Custodian that is a foreign
securities depository or clearing
agency) governing the foreign
custody arrangements with each
Eligible Foreign Custodian selected
by the FCM will provide reasonable
care for the Foreign Assets held by
that Eligible Foreign Custodian
based on the standards applicable to
custodians in the particular
country. Each such contract will
include the provisions set forth in
Rule 17f-5(c)(2)(I)(A) through(F),
or, in lieu of any or all of the
provisions set forth in said (A)
through (F), such other provisions
that the FCM determines will
provide, in their entirety, the same
or greater level of care and
protection for the Foreign Assets as
the provisions set forth in said (A)
through (F) in their entirety.
c. Monitoring. In each case in which
the FCM maintains Foreign Assets
with an Eligible Foreign Custodian
selected by the FCM, the FCM will
establish a system to monitor (a)
the appropriateness of maintaining
the Foreign Assets with such
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Eligible Foreign Custodian and
(b) the contract governing the
custody arrangements established by
the FCM with the Eligible Foreign
Custodian. In the event the FCM
determines that the custody
arrangements with an Eligible
Foreign Custodian it has selected
are no longer appropriate, the FCM
will notify the Board in accordance
with subsection 7 of this Section Q.
5. Guidelines for the Exercise of Delegated
Authority. For purposes of this Section Q, the
Board will be solely responsible for considering
and determining to accept such Country Risk as is
incurred by placing and maintaining the Foreign
Assets in each country for which IFTC is serving as
FCM of a Portfolio, and the Board will be solely
responsible for monitoring on a continuing basis
such Country Risk to the extent that the Board
considers necessary or appropriate. The Fund, on
behalf of the Portfolios, and IFTC each expressly
acknowledge that the FCM will not be delegated any
responsibilities under this Section Q with respect
to Mandatory Securities Depositories.
6. Standard of Care as FCM of a Portfolio. In
performing the responsibilities delegated to it,
the FCM agrees to exercise reasonable care,
prudence and diligence such as a person having
responsibility for the safekeeping of assets of
management investment companies registered under
the 1940 Act would exercise.
7. Reporting Requirements. The FCM will report the
withdrawal of the Foreign Assets from an Eligible
Foreign Custodian and the placement of such Foreign
Assets with another Eligible Foreign Custodian by
providing to the Board amended Exhibits D and E at
the end of the calendar quarter in which an
amendment to either Schedule has occurred. The FCM
will make written reports notifying the Board of
any other material change in the foreign custody
arrangements of a Portfolio described in this
Section Q after the occurrence of the material
change.
8. Representations with Respect to Rule 17f-5.
The FCM represents to the Fund that it is a U.S.
Bank as defined in section (a)(7) of Rule 17f-5.
The Fund represents to IFTC that the Board
has determined that it is reasonable for the
Board to rely on IFTC and State Street Bank
& Trust Company to perform the
responsibilities delegated pursuant to this
Contract to IFTC and State Street Bank &
Trust Company as the FCM of each Portfolio
and that IFTC has been granted the authority
by Fund to delegate to State Street Bank &
Trust Company the FCM functions to which
IFTC has been appointed by Fund.
9. Effective Date and Termination of IFTC as FCM.
The Board's delegation to IFTC as FCM of a
Portfolio will be effective as of the date hereof
and will remain in effect until terminated at any
time, without penalty, by written notice from the
terminating party to the non-terminating party.
Termination will become effective thirty (30) days
after receipt by the non-terminating party of such
notice. The provisions of subsection 3 of this
Section Q govern the delegation to and termination
of IFTC as FCM of the Fund with respect to
designated countries.
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R. Accounts and Records. IFTC will prepare and maintain, with
the direction and as interpreted by the Fund, the Fund's or
Portfolio's accountants and/or other advisors, in complete,
accurate and current form all accounts and records: (1) required
to be maintained by the Fund with respect to portfolio
transactions under Section 31(a) of the 1940 Act and the rules
and regulations from time to time adopted thereunder; (2)
required to be maintained as a basis for calculation of each
Portfolio's net asset value; and (3) as otherwise agreed upon
by the parties. The Fund will advise IFTC in writing of all
applicable record retention requirements, other than those set
forth in the 1940 Act. IFTC will preserve such accounts and
records in the manner and for the periods prescribed in the 1940
Act or for such longer period as is agreed upon by the parties.
The Fund will furnish, in writing or its electronic or digital
equivalent, accurate and timely information needed by IFTC to
complete such accounts and records, including Corporate Actions,
when such information is not readily available from generally
accepted securities industry services or publications.
S. Accounts and Records Property of the Fund. IFTC acknowledges
that all of the accounts and records maintained by IFTC pursuant
hereto are the property of the Fund, and will be made available
to the Fund for inspection or reproduction within a reasonable
period of time, upon demand. IFTC will assist the Fund's
independent auditors, or upon approval of the Fund, or upon
demand, any regulatory body, in any requested review of the
Fund's accounts and records but the Fund will reimburse IFTC for
all expenses and employee time invested in any such review
outside of routine and normal periodic reviews. Upon receipt from
the Fund of the necessary information or instructions, IFTC will
supply information from the books and records it maintains for
the Fund that the Fund needs for tax returns, questionnaires,
periodic reports to shareholders and such other reports and
information requests as the Fund and IFTC agree upon from time to
time.
T. Adoption of Procedures. IFTC and the Fund hereby adopt the
Funds Transfer Operating Guidelines attached hereto as Exhibit B.
IFTC and the Fund may from time to time adopt such additional
procedures as they agree upon, and IFTC may conclusively assume
that no procedure approved or directed by the Fund, the Fund's or
Portfolio's accountants or other advisors conflicts with or
violates any requirements of the prospectus, articles of
incorporation, bylaws or any applicable law, rule or regulation,
or any order, decree or agreement by which the Fund may be bound.
The Fund will be responsible for notifying IFTC of any changes in
statutes, regulations, rules, requirements or policies which
might necessitate changes in IFTC's responsibilities or
procedures.
U. Calculation of Net Asset Value. The Fund will give
Instructions to IFTC specifying the outside pricing sources to be
utilized as sources of Asset prices ("Pricing Sources"). In the
event that the Fund specifies Reuters America, Inc., it will
enter into the Agreement attached hereto as Exhibit C. IFTC will
calculate each Portfolio's net asset value, in accordance with
the Portfolio's prospectus. IFTC will price the Assets, including
foreign currency holdings, of each Portfolio for which market
quotations are available from the Pricing Sources; all other
Assets will be priced in accordance with the Fund's Instructions.
V. Advances. The Fund will pay on demand any advance of cash or
securities made by IFTC or any Subcustodian, in its sole
discretion, for any purpose (including but not limited to
securities settlements, purchase or sale of foreign exchange or
foreign exchange contracts and assumed settlement) for the
benefit of any Portfolio. Any such cash advance will be subject
to an overdraft charge at the rate set forth in the then-current
fee schedule from the date advanced until the date repaid. As
security for each such advance, the Fund hereby grants IFTC and
such Subcustodian a lien on and security interest in all Assets
at any time held for the account of the applicable Portfolio,
including without
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limitation all Assets acquired with the amount advanced. Should
the Fund fail to promptly repay the advance, IFTC and such
Subcustodian may utilize available cash and dispose of such
Portfolio's Assets pursuant to applicable law to the extent
necessary to obtain reimbursement of the amount advanced and any
related overdraft charges.
W. Exercise of Rights: Tender Offers. Upon receipt of
Instructions, IFTC will: (1) deliver warrants, puts, calls,
rights or similar securities to the issuer or trustee thereof, or
to the agent of such issuer or trustee, for the purpose of
exercise or sale, provided that the new Assets, if any, are to be
delivered to IFTC; and (2) deposit securities upon invitations
for tenders thereof, provided that the consideration for such
securities is to be paid or delivered to IFTC or the tendered
securities are to be returned to IFTC.
X. Fund Shares.
1. The Fund will deliver to IFTC Instructions with respect to
the declaration and payment of any dividend or other
distribution on the shares of capital stock of a Portfolio
("Fund Shares") by a Portfolio. On the date specified in
such Instruction, IFTC will pay out of the monies held for
the account of the Portfolio, insofar as it is available
for such purposes, and credit to the account of the
Dividend Disbursing Agent for the Portfolio, the amount
specified in such Instructions.
2. Whenever Fund Shares are repurchased or redeemed by a
Portfolio, Portfolio or its agent will give IFTC
Instructions regarding the aggregate dollar amount to be
paid for such shares. Upon receipt of such Instruction,
IFTC will charge such aggregate dollar amount to the
account of the Portfolio and either deposit the same in
the account maintained for the purpose of paying for the
repurchase or redemption of Fund Shares or deliver the
same in accordance with such Instruction. IFTC has no
duty or responsibility to determine that Fund Shares have
been removed from the proper shareholder accounts or that
the proper number of Fund Shares have been canceled and
removed from the shareholder records.
3. Whenever Fund Shares are purchased from the Fund, the Fund
will deposit or cause to be deposited with IFTC the amount
received for such shares. IFTC has no duty or
responsibility to determine that Fund Shares purchased
from the Fund have been added to the proper shareholder
account or that the proper number of such shares have been
added to the shareholder records.
4. INSTRUCTIONS.
A. The term "Instructions", as used herein, means written
(including telecopied, telexed, or electronically
transmitted) or oral instructions which IFTC reasonably
believes were given by a designated representative of the
Fund. The Fund will deliver to IFTC, prior to delivery of
any Assets to IFTC and thereafter from time to time as
changes therein are necessary, written Instructions
naming one or more designated representatives to give
Instructions in the name and on behalf of the Fund, which
Instructions may be received and accepted by IFTC as
conclusive evidence of the authority of any designated
representative to act for the Fund and may be considered
to be in full force and effect until receipt by IFTC of
notice to the contrary. Unless such written Instructions
delegating authority to any person to give Instructions
specifically limit such authority to specific matters or
require that the approval of anyone else will first have
been obtained, IFTC will be under no obligation to
inquire into the right of such person, acting alone, to
give any Instructions whatsoever. If the Fund fails to
provide IFTC any such Instructions naming designated
representatives, any Instructions received
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by IFTC from a person reasonably believed to be an
appropriate representative of the Fund will constitute
valid and proper Instructions hereunder. "Designated
representatives" may include the Fund's or a Portfoliois
employees and agents, including investment managers and
their employees.
B. No later than the next business day immediately following
each oral Instruction, the Fund will send IFTC written
confirmation of such oral Instruction. At IFTC's sole
discretion, IFTC may record on tape, or otherwise, any
oral Instruction whether given in person or via telephone,
each such recording identifying the date and the time of
the beginning and ending of such oral Instruction.
C. The Fund will provide, upon IFTC's request, a certificate
signed by an officer or designated representative of the
Fund, as conclusive proof of any fact or matter required
to be ascertained from Fund hereunder. The Fund will also
provide IFTC Instructions with respect to any matter
concerning this Agreement requested by IFTC. If IFTC
reasonably believes that it could not prudently act
according to the Instructions, or the instruction or
advice of the Fund's or a Portfolio's accountants or
counsel, it may in its discretion, with notice to the
Fund, not act according to such Instructions.
5. LIMITATION OF LIABILITY OF IFTC. IFTC is not responsible or
liable for, and the Fund will indemnify and hold IFTC harmless
from and against, any and all costs, expenses, losses, damages,
charges, counsel fees, payments and liabilities which may be
asserted against or incurred by IFTC or for which IFTC may be
held to be liable, arising out of or attributable to:
A. IFTC's action or omission to act pursuant hereto; provided
that IFTC has acted in good faith and with due diligence
and reasonable care; and provided further, that IFTC is
not liable for consequential, special, or punitive damages
in any event.
B. IFTC's payment of money as requested by the Fund, or the
taking of any action which might make it or its nominee
liable for payment of monies or in any other way;
provided, however, that nothing herein obligates IFTC to
take any such action or expend its own monies in its sole
discretion.
C. IFTC's action or omission to act hereunder upon any
Instructions, advice, notice, request, consent,
certificate or other instrument or paper appearing to it
to be genuine and to have been properly executed,
including any Instructions, communications, data or other
information received by IFTC by means of the Systems, as
hereinafter defined, or any electronic system of
communication.
D. IFTC's action or omission to act in good faith reliance on
the advice or opinion of counsel for the Fund or of its
own counsel with respect to questions or matters of law,
which advice or opinion may be obtained by IFTC at the
expense of the Fund, or on the Instructions, advice or
statements of any officer or employee of the Fund, or the
Fund's accountants or other authorized individuals, and
other persons believed by it in good faith to be expert in
matters upon which they are consulted.
E. The purchase or sale of any securities or foreign currency
positions. Without limiting the generality of the
foregoing, IFTC is under no duty or obligation to inquire
into:
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1. The validity of the issue of any securities
purchased by or for any Portfolio, or the
legality of the purchase thereof or of
foreign currency positions, or evidence of
ownership required by the Fund to be
received by IFTC, or the propriety of the
decision to purchase or the amount paid
therefor;
2. The legality of the sale of any securities
or foreign currency positions
by or for any Portfolio, or the propriety
of the amount for which the
same are sold; or
3. The legality of the issue or sale of any
Fund Shares, or the sufficiency of the
amount to be received therefor, the legality
of the repurchase or redemption of any Fund
Shares, or the propriety of the amount to be
paid therefor, or the legality of the
declaration of any dividend by the Fund, or
the legality of the issue of any Fund Shares
in payment of any stock dividend.
F. Any error, omission, inaccuracy or other deficiency in any
Portfolio's accounts and records or other information
provided by or on behalf of a Portfolio to IFTC, including
the accuracy of the prices quoted by the Pricing Sources
or for the information supplied by the Fund to price the
Assets, or the failure of the Fund to provide, or provide
in a timely manner, any accounts, records, or information
needed by IFTC to perform hereunder.
G. The Fund's refusal or failure to comply with the terms
hereof (including without limitation the Fund's failure to
pay or reimburse IFTC under Section 5 hereof), the Fund's
gross negligence or willful misconduct, or the failure of
any representation or warranty of the Fund hereunder to be
and remain true and correct in all respects at all times.
H. The use or misuse, whether authorized or unauthorized, of
the Systems or any electronic system of communication used
hereunder, by the Fund or by any person who acquires
access to the Systems or such other systems through the
terminal device, passwords, access instructions or other
means of access to such Systems or such other system which
are utilized by, assigned to or otherwise made available
to the Fund, except to the extent attributable to any
gross negligence or willful misconduct by IFTC.
I. Any money represented by any check, draft, wire transfer,
clearinghouse funds, uncollected funds, or instrument for
the payment of money to be received by IFTC on behalf of a
Portfolio until actually received; provided, however, that
IFTC will advise the Fund promptly if it fails to receive
any such money in the ordinary course of business and will
cooperate with the Fund toward the end that such money is
received.
J. Except as provided in Section 3.P hereof, loss occasioned
by the acts, neglects, defaults or insolvency of any
broker, bank, trust company, or any other person with whom
IFTC may deal.
K. The failure or delay in performance of its obligations
hereunder, or those of any entity for which it is
responsible hereunder, arising out of or caused, directly
or indirectly, by circumstances beyond the affected
entity's reasonable control, including, without
limitation: any interruption, loss or malfunction of any
utility, transportation, computer (hardware or software)
or communication service; inability to obtain labor,
material, equipment or transportation, or a delay in
mails; governmental or exchange action, statute,
ordinance, rulings,
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regulations or direction; war, strike, riot, emergency,
civil disturbance, terrorism, vandalism, explosions, labor
disputes, freezes, floods, fires, tornados, acts of God or
public enemy, revolutions, or insurrection.
6. COMPENSATION. In consideration for its services hereunder, the
Fund will pay to IFTC the compensation set forth in a separate
fee schedule, incorporated herein by this reference, to be agreed
to by the Fund and IFTC from time to time, and reimbursement for
IFTC's cash disbursements and reasonable out-of-pocket costs and
expenses, including attorney's fees, incurred by IFTC in
connection with the performance of services hereunder, on demand.
IFTC may charge such compensation against monies held by it for
the account of the portfolios. IFTC will also be entitled to
charge against any monies held by it for the account of the
portfolios the amount of any loss, damage, liability, advance,
overdraft or expense for which it is entitled to reimbursement
from the Fund, including but not limited to fees and expenses due
to IFTC for other services provided to the Fund by IFTC. IFTC
will be entitled to reimbursement by the Fund for the losses,
damages, liabilities, advances, overdrafts and expenses of
subcustodians only to the extent that (a) IFTC would have been
entitled to reimbursement hereunder if it had incurred the same
itself directly, and (b) IFTC is obligated to reimburse the
subcustodian therefor.
7. TERM AND TERMINATION. The initial term of this agreement is for a
period of one (1) year. thereafter, the Fund or IFTC may
terminate the same by notice in writing, delivered or mailed,
postage prepaid, to the other party and received not less than
ninety (90) days prior to the date upon which such termination
will take effect. upon termination hereof:
A. The Fund will pay IFTC its fees and compensation due
hereunder and its reimbursable disbursements, costs and
expenses paid or incurred to such date;
B. The Fund will designate a successor investment accounting
and recordkeeping agent (which may be the Fund) by
Instruction to IFTC;
C. The Fund will designate a successor custodian by
Instruction to IFTC. In the event no such Instruction has
been delivered to IFTC on or before the date when such
termination becomes effective, then IFTC may, at its
option, (i) choose as successor custodian bank or trust
company meeting the qualifications for custodian set forth
in the 1940 Act and having not less than Two Million
Dollars ($2,000,000) aggregate capital, surplus and
undivided profits, as shown by its last published report,
or (ii) apply to a court of competent jurisdiction for the
appointment of a successor or other proper relief, or take
any other lawful action under the circumstances; provided,
however, that the Fund will reimburse IFTC for its costs
and expenses, including reasonable attorney's fees,
incurred in connection therewith; and
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D. IFTC will, upon payment of all sums due to IFTC from the
Fund hereunder or otherwise, deliver at IFTC's office (i)
all accounts and records to the successor investment
accounting and recordkeeping agent or, if none, to the
Fund; and (ii) all Assets, duly endorsed and in form for
transfer, to the successor custodian, or as specified by
the court. IFTC will cooperate in effecting changes in
book-entries at all Depositories. Upon delivery to a
successor or as specified by the court, IFTC will have no
further obligations or liabilities hereunder. Thereafter
such successor will be the successor hereunder and will be
entitled to reasonable compensation for its services.
In the event that accounts, records or Assets remain in the
possession of IFTC after the date of termination hereof for any
reason other than IFTC's failure to deliver the same, IFTC is
entitled to compensation as provided in the then-current fee
schedule for its services during such period, and the provisions
hereof relating to the duties and obligations of IFTC will remain
in full force and effect.
8. NOTICES. Notices, requests, instructions and other writings
addressed to the Fund at the address set forth above, or at such
other address as the Fund may have designated to IFTC in writing,
will be deemed to have been properly given to the Fund hereunder.
notices, requests, instructions and other writings addressed to
IFTC at the address set forth above, attention: custody
department, or to such other address as it may have designated to
the Fund in writing, will be deemed to have been properly given
to IFTC hereunder.
9. THE SYSTEMS: CONFIDENTIALITY.
A. If IFTC provides the Fund direct access to the
computerized investment portfolio custody, record-keeping
and accounting systems used by IFTC ("Systems") or if IFTC
and the Fund agree to utilize any electronic system of
communication, the Fund agrees to implement and enforce
appropriate security policies and procedures to prevent
unauthorized or improper access to or use of the Systems
or such other system.
B. The Fund will preserve the confidentiality of the Systems
and the tapes, books, reference manuals, instructions,
records, programs, documentation and information of, and
other materials relevant to, the Systems and the business
of IFTC ("Confidential Information"). The Fund agrees that
it will not voluntarily disclose any such Confidential
Information to any other person other than its own
employees who reasonably have a need to know such
information pursuant hereto. The Fund will return all such
Confidential Information to IFTC upon termination or
expiration hereof.
C. The Fund has been informed that the Systems are licensed
for use by IFTC from one or more third parties
("Licensors"), and the Fund acknowledges that IFTC and
Licensors have proprietary rights in and to the Systems
and all other IFTC or Licensor programs, code, techniques,
know-how, data bases, supporting documentation, data
formats, and procedures, including without limitation any
changes or modifications made at the request or expense or
both of the Fund (collectively, the '"Protected
Information"). The Fund acknowledges that the Protected
Information constitutes confidential material and trade
secrets of IFTC and Licensors. The Fund will preserve the
confidentiality of the Protected Information, and Fund
hereby acknowledges that any unauthorized use, misuse,
disclosure or taking of Protected Information, residing or
existing internal or external to a computer, computer
system, or computer network, or the knowing and
unauthorized accessing or causing to be accessed of any
computer, computer system, or computer network, may be
subject to civil liabilities and criminal penalties under
applicable law. Fund will so inform employees
17
<PAGE>
<PAGE>
and agents who have access to the Protected Information or
to any computer equipment capable of accessing the same.
Licensors are intended to be and are third party
beneficiaries of Fund's obligations and undertakings
contained in this Section.
D. The Fund hereby represents and warrants to IFTC that it
has determined to its satisfaction that the Systems are
appropriate and suitable for its use. The systems are
provided on an as is, as available basis. IFTC 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.
10. MULTIPLE PORTFOLIOS. If the Fund is comprised of more than one
Portfolio:
A. Each Portfolio will be regarded for all purposes hereunder
as a separate party apart from each other Portfolio.
Unless the context otherwise requires, with respect to
every transaction covered hereby, every reference herein
to the Fund is deemed to relate solely to the particular
Portfolio to which such transaction relates. Under no
circumstances will the rights, obligations or remedies
with respect to a particular Portfolio constitute a right,
obligation or remedy applicable to any other Portfolio.
The use of this single document to memorialize the
separate agreement of each Portfolio is understood to be
for clerical convenience only and will not constitute any
basis for joining the Portfolios for any reason.
B. The Fund may appoint IFTC as its custodian and investment
accounting and record-keeping agent for additional
Portfolios from time to time by written notice, provided
that IFTC consents to such addition. Rates or charges for
each additional Portfolio will be as agreed upon by IFTC
and the Fund in writing.
11. MISCELLANEOUS.
A. This Agreement will be construed according to, and the
rights and liabilities of the parties hereto will be
governed by, the laws of the State of Missouri without
reference to the choice of laws principles thereof.
B. All terms and provisions hereof will be binding upon,
inure to the benefit of and be enforceable by the parties
hereto and their respective successors and permitted
assigns.
C. The representations and warranties, the indemnifications
extended hereunder, and the provisions of Section 10
hereof are intended to and will continue after and survive
the expiration, termination or cancellation hereof.
D. No provisions hereof may be amended or modified in any
manner except by a written agreement properly authorized
and executed by each party hereto.
E. The failure of either party to insist upon the performance
of any terms or conditions hereof or to enforce any rights
resulting from any breach of any of the terms or
conditions hereof, including the payment of damages, will
not be construed as a continuing or permanent waiver of
any such terms, conditions, rights or privileges, but the
same will continue and remain in full force and effect as
if no such forbearance or waiver had occurred. No waiver,
release or discharge of any party's rights hereunder will
be effective unless contained in a written instrument
signed by the party sought to be charged.
F. The captions herein are included for convenience of
reference only' and in no way define or limit any of the
provisions hereof or otherwise affect their construction
or effect.
18
<PAGE>
<PAGE>
G. This Agreement may be executed in two or more
counterparts, each of which is deemed an original but all
of which together constitute one and the same instrument.
H. If any provision hereof is determined to be invalid,
illegal, in conflict with any law or otherwise
unenforceable, the remaining provisions hereof will be
considered severable and will not be affected thereby, and
every remaining provision hereof will remain in full force
and effect and will remain enforceable to the fullest
extent permitted by applicable law.
I. This Agreement may not be assigned by either party
hereto without the prior written
consent of the other party.
J. Neither the execution nor performance hereof will be
deemed to create a partnership or joint venture by and
between IFTC and the Fund or any Portfolio.
K. Except as specifically provided herein, this Agreement
does not in any way affect any other agreements entered
into among the parties hereto and any actions taken or
omitted by either party hereunder will not affect any
rights or obligations of the other party hereunder.
L. Notice is hereby given that a copy of the Fund's Articles
of Incorporation and all amendments thereto is on file
with the Secretary of State of the state of its
organization; that this Agreement has been executed on
behalf of the Fund by the undersigned duly authorized
representative of the Fund in his/her capacity as such and
not individually; and that the obligations of this
Agreement are binding only upon the assets and property of
the Fund and not upon any director, officer or shareholder
of the Fund individually.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized officers.
INVESTORS FIDUCIARY TRUST THE BURNHAM FUND INC.
COMPANY
By: Robert G. Triano By: Michael E. Barna
_______________________ _____________________
Title: Vice President Title: Executive Vice President
____________________ ________________________
19
<PAGE>
<PAGE>
EXHIBIT A -- INCOME AVAILABILITY SCHEDULE
FOREIGN--Income will be credited contractually on pay day in the markets noted
with Contractual Income Policy. The markets noted with Actual income policy will
be credited income when it is received.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
MARKET INCOME POLICY MARKET INCOME POLICY MARKET INCOME POLICY
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Argentina Actual Hong Kong Contractual Poland Actual
- ------------------------------------------------------------------------------------------------------
Australia Contractual Hungary Actual Portugal Contractual
- ------------------------------------------------------------------------------------------------------
Austria Contractual India Actual Russia Actual
- ------------------------------------------------------------------------------------------------------
Bahrain Actual Indonesia Actual Singapore Contractual
- ------------------------------------------------------------------------------------------------------
Bangladesh Actual Ireland Actual Slovak Republic Actual
- ------------------------------------------------------------------------------------------------------
Belgium Contractual Israel Actual South Africa Actual
- ------------------------------------------------------------------------------------------------------
Bermuda Actual Italy Contractual South Korea Actual
- ------------------------------------------------------------------------------------------------------
* Bolivia Actual Ivory Coast Actual Spain Contractual
- ------------------------------------------------------------------------------------------------------
Botswana Actual * Jamaica Actual Sri Lanka Actual
- ------------------------------------------------------------------------------------------------------
Brazil Actual Japan Contractual Swaziland Actual
- ------------------------------------------------------------------------------------------------------
Canada Contractual Jordan Actual Sweden Contractual
- ------------------------------------------------------------------------------------------------------
Chile Actual Kenya Actual Switzerland Contractual
- ------------------------------------------------------------------------------------------------------
China Actual Lebanon Actual Taiwan Actual
- ------------------------------------------------------------------------------------------------------
Colombia Actual Luxembourg Actual Thailand Actual
- ------------------------------------------------------------------------------------------------------
Cyprus Actual Malaysia Actual * Trinidad Actual
& Tobago
- ------------------------------------------------------------------------------------------------------
Czech
Republic Actual Mauritius Actual * Tunisia Actual
- ------------------------------------------------------------------------------------------------------
Denmark Contractual Mexico Actual Turkey Actual
- ------------------------------------------------------------------------------------------------------
Ecuador Actual Morocco Actual United Kingdom Contractual
- ------------------------------------------------------------------------------------------------------
Egypt Actual Namibia Actual United States See Attached
- ------------------------------------------------------------------------------------------------------
**Euroclear Contractual/ Netherlands Contractual Uruguay Actual
Actual
- ------------------------------------------------------------------------------------------------------
Euro CDs Actual New Zealand Contractual Venezuela Actual
- ------------------------------------------------------------------------------------------------------
Finland Contractual Norway Contractual Zambia Actual
- ------------------------------------------------------------------------------------------------------
France Contractual Oman Actual Zimbabwe Actual
- ------------------------------------------------------------------------------------------------------
Germany Contractual Pakistan Actual
- ------------------------------------------------------------------------------------------------------
Ghana Actual Peru Actual
- ------------------------------------------------------------------------------------------------------
Greece Actual Philippines Actual
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Market is not 17F-5 eligible
** For Euroclear, contractual income paid only in markets listed with Income
Policy of Contractual.
20
<PAGE>
<PAGE>
UNITED STATES--
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
INCOME TYPE DTC FED PTC PHYSICAL
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dividends Contractual N/A N/A Actual
- ------------------------------------------------------------------------------------------------------
Fixed Rate
Interest Contractual Contractual N/A Actual
- ------------------------------------------------------------------------------------------------------
Variable Rate
Interest Contractual Contractual N/A Actual
- ------------------------------------------------------------------------------------------------------
GNMA I N/A N/A Contractual PD +1 N/A
- ------------------------------------------------------------------------------------------------------
GNMA II N/A N/A Contractual PD *** N/A
- ------------------------------------------------------------------------------------------------------
Mortgages Actual Contractual Contractual Actual
- ------------------------------------------------------------------------------------------------------
Maturities Actual Contractual N/A Actual
- ------------------------------------------------------------------------------------------------------
</TABLE>
Exceptions to the above Contractual Income Policy include securities that are:
Involved in a trade whose settlement either failed, or is pending over
the record date, (excluding the United States);
On loan under a self directed securities lending program other than
IFTCs own vendor lending program;
Known to be in a condition of default, or suspected to present a risk of
default or payment delay;
In the asset categories, without limitation, of Private Placements,
Derivatives, Options, Futures, CMOs, and Zero Coupon Bonds.
Securities whose amount of income and redemption cannot be calculated in
advance of payable date, or determined in advance of actual collection,
examples include ADRs;
Payments received as the result of a corporate action, not limited to,
bond calls, mandatory or optional puts, and tender offers.
*** For GNMA II securities, if the 19th day of the month is a business day,
Payable/Distribution Date is the next business day. If the 19th is not a
business day, but the 20th is a business day, Payable/Distribution date is the
first business day after the 20th. If both the 19th and 20th are not business
days, Payable/Distribution will be the next business day thereafter
21
<PAGE>
<PAGE>
EXHIBIT B -- FUNDS TRANSFER OPERATING GUIDELINES
1 OBLIGATION OF THE SENDER: IFTC is authorized to promptly debit Fund's
(A Client's) account(s) upon the receipt of a payment order in compliance with
any of the Security Procedures chosen by the Client, from those offered on the
attached selection form (and any updated selection forms hereafter executed by
the Client), for funds transfers and in the amount of money that IFTC has been
instructed to transfer. IFTC is hereby instructed to accept funds transfer
instructions only via the delivery methods and Security Procedures indicated on
the attached selection form (and any updated executed by the Client). The Client
agrees that the Security Procedures are reasonable and adequate for its wire
transfer transactions and agrees to be bound by any payment orders, amendments
and cancellations, whether or not authorized, issued in its name and accepted by
IFTC after being confirmed by any of the selected Security Procedures. The
Client also agrees to be bound by any other valid and authorized payment order
accepted by IFTC. IFTC shall execute payment orders in compliance with the
selected Security Procedures and with the Client's/Investment Manager's
instructions on the execution date provided that such payment order is received
by the customary deadline for processing such a request, unless the payment
order specifies a later time. IFTC will use reasonable efforts to execute on the
execution date payment orders received after the customary deadline, but if it
is unable to execute any such payment order on the execution date, such payment
order will be deemed to have been received on the next business day.
2 SECURITY PROCEDURES: The Client acknowledges that the selected Security
Procedures were selected by the Client from Security Procedures offered by IFTC.
The Client shall restrict access to confidential information relating to the
Security Procedures to authorized persons as communicated in writing to IFTC.
The Client must notify IFTC immediately if it has reason to believe unauthorized
persons may have obtained access to such information or of any change in the
Clients authorized personnel. IFTC shall verify the authenticity of all
instructions according to the selected Security Procedures.
3 ACCOUNT NUMBERS: IFTC shall process all payment orders on the basis of the
account number contained in the payment order. In the event of a discrepancy
between any name indicated on the payment order and the account number, the
account number shall take precedence and govern. Financial institutions that
receive payment orders initiated by IFTC at the instruction of the Client may
also process payment orders on the basis of account numbers, regardless of any
name included in the payment order. IFTC will also rely on any financial
institution identification numbers included in any payment order, regardless of
any financial institution name included in the payment order.
4 REJECTION: IFTC reserves the right to decline to process or delay the
processing of a payment order which (a) is in excess of the collected balance in
the account to be charged at the time of IFTC's receipt of such payment order;
(b) if initiating such payment order would cause IFTC, in IFTC's sole judgment,
to exceed any applicable volume, aggregate dollar, network, time, credit or
similar limits upon wire transfers; or (c) if IFTC, in good faith, is unable to
satisfy itself that the transaction has been properly authorized.
5 CANCELLATION OR AMENDMENT: IFTC shall use reasonable efforts to act on all
authorized requests to cancel or amend payment orders received in compliance
with the selected Security Procedures provided that such requests are received
in sufficient time to afford IFTC a reasonable opportunity to act prior to
executing the payment order. However, IFTC assumes no liability if the request
for amendment or cancellation cannot be satisfied by IFTC's reasonable efforts.
6 ERRORS: IFTC shall assume no responsibility for failure to detect any
erroneous payment order provided that IFTC complies with the payment order
instructions as received and IFTC complies with the selected Security
Procedures. The Security Procedures are established for the purpose of
authenticating payment orders only and not for the detection of errors in
payment orders.
7 INTEREST AND LIABILITY LIMITS: IFTC shall assume no responsibility for lost
interest with respect to the refundable amount of any unauthorized payment
order, unless IFTC is notified of the unauthorized payment order within thirty
(30) days of notification by IFTC of the acceptance of such payment order. In no
event (including but not limited to failure to execute a payment order) shall
IFTC be liable for special, indirect or consequential damages, even if advised
of the possibility of such damages.
8 AUTOMATED CLEARING HOUSE ("ACH") CREDIT ENTRIES/PROVISIONAL PAYMENTS: When the
Client initiates or receives ACH credit and debit entries pursuant to these
Guidelines and the rules of the National Automated Clearing House Association
and the Mid-America Payment Exchange or other similar body, IFTC or its agent
will act as an Originating Depository Financial Institution and/or Receiving
Depository Financial Institution, as the case may be, with respect to such
entries. Credits given with respect to an ACH credit entry are provisional
22
<PAGE>
<PAGE>
until final settlement for such entry is received from the Federal Reserve Bank.
If such final settlement is not received, the Client agrees to promptly refund
the amount credited to the Client in connection with such entry, and the party
making payment to the Client via such entry shall not be deemed to have paid the
amount of the entry.
9 CONFIRMATIONS: Confirmation of IFTC's execution of payment orders shall
ordinarily be provided within 24 hours. Notice may be delivered through IFTC's
account statements, advices, information systems, or by facsimile or callback.
The Client must report any objections to the execution of a payment order within
30 days.
10 MISCELLANEOUS: IFTC may use the Federal Reserve System Fedwire to execute
payment orders, and any payment order carried in whole or in part through
Fedwire will be subject to applicable Federal Reserve Board rules and
regulations. IFTC and the Client agree to cooperate to attempt to recover any
funds erroneously paid to wrong parties, regardless of any fault of IFTC or the
Client, but the party responsible for the erroneous payment shall bear all costs
and expenses incurred in trying to effect such recovery. These Guidelines may
not be amended except by a written agreement signed by the parties.
23
<PAGE>
<PAGE>
SECURITY PROCEDURES SELECTION FORM
Please select one or more of the funds transfer security procedures indicated
below.
[] SWIFT SWIFT (Society for Worldwide Interbank Financial Telecommunication)
is a cooperative society owned and operated by member financial
institutions that provides telecommunication services for its membership.
Participation is limited to securities brokers and dealers, clearing and
depository institutions, recognized exchanges for securities, and
investment management institutions. SWIFT provides a number of security
features through encryption and authentication to protect against
unauthorized access, loss or wrong delivery of messages, transmission
errors, loss of confidentiality and fraudulent changes to messages.
Selection of this security procedure would be most appropriate for
existing SWIFT members.
[] REMOTE BATCH TRANSMISSION Wire transfer instructions are delivered via
Computer-to-Computer (CPU-CPU) data communications between the Client
and/or its agent and IFTC and/or its agent. Security procedures include
encryption and/or the use of a test key by those individuals authorized as
Automated Batch Verifiers or a callback procedure to those individuals.
Clients selecting this option should have an existing facility for
completing CPU-CPU transmissions. This delivery mechanism is typically
used for high-volume business such as shareholder redemptions and dividend
payments.
[] TELEPHONE CONFIRMATION (CALL BACK) This procedure requires Clients to
designate individuals as authorized initiators and authorized verifiers.
IFTC will verify that the instruction contains the signature of an
authorized person and prior to execution of the payment order, will
contact someone other than the originator at the Client's location to
authenticate the instruction. Selection of this alternative is appropriate
for Clients who do not have the capability to use other security
procedures.
[] TEST KEY Test Key confirmation will be used to verify all non-repetitive
funds transfer instructions received via facsimile or phone. IFTC will
provide test keys if this option is chosen. IFTC will verify that the
instruction contains the signature of an authorized person and prior to
execution of the payment order, will authenticate the test key provided
with the corresponding test key at IFTC. Selection of this alternative is
appropriate for Clients who do not have the capability to use other
security procedures.
[] REPETITIVE WIRES For situations where funds are transferred periodically
from an existing authorized account to the same payee (destination bank
and account number) and only the date and currency amount are variable, a
repetitive wire may be implemented. Repetitive wires will be subject to a
$10 million limit. If the payment order exceeds the $10 million limit, the
instruction will be confirmed by telephone or test key prior to execution.
Repetitive wire instructions must be reconfirmed annually. Clients may
establish Repetitive Wires by following the agreed upon security
procedures as described by Telephone Confirmation (Call Back) or Test Key.
This alternative is recommended whenever funds are frequently transferred
between the same two accounts.
24
<PAGE>
<PAGE>
[ ] STANDING INSTRUCTIONS Funds are transferred by IFTC to a counter party on
the Client's established list of authorized counter parties. Only the date
and the dollar amount are variable. Clients may establish Standby
Instructions by following the agreed upon security procedures as described
by Telephone Confirmation (Call Back) or Test Key. This option is used for
transactions that include but are not limited to Foreign Exchange
Contracts, Time Deposits and Tri-Party Repurchase Agreements.
[ ] AUTOMATED CLEARING HOUSE (ACH) IFTC or its agent receives an automated
transmission from a Client for the initiation of payment (credit) or
collection (debit) transactions through the ACH network. The transactions
contained on each transmission or tape must be authenticated by the
Client. The transmission is sent from the Client's or its agent's system
to IFTC's or its agent's system with encryption.
KEY CONTACT INFORMATION
Whom shall we contact to implement your selection(s)?
CLIENT OPERATIONS CONTACT ALTERNATE CONTACT
- ----------------------------------- ---------------------------------
Name Name
- ----------------------------------- ---------------------------------
Address Address
- ----------------------------------- ---------------------------------
City/State/Zip Code City/State/Zip Code
- ----------------------------------- ---------------------------------
Telephone Number Telephone Number
- -----------------------------------
Facsimile Number
- -----------------------------------
SWIFT Number
________________________ (Fund Name)
By:________________________________
Title:_____________________________
Date:______________________________
25
<PAGE>
<PAGE>
EXHIBIT C--REUTERS DATA SERVICE AGREEMENT
The undersigned acknowledges and agrees that some of the data being provided in
the service by IFTC to Fund contains information supplied to IFTC by Reuters
America Inc. ("Reuters") (the "Data"). Fund agrees that:
(i) although Reuters makes every effort to ensure the accuracy and
reliability of the Data, Fund acknowledges that Reuters, its
employees, agents, contractors, subcontractors, contributors and
third party providers will not be liable for any loss, cost or
damage suffered or incurred by Fund arising out of any fault,
interruption or delays in the Data or out of any inaccuracies,
errors or omissions in the Data however such faults, interruptions,
delays, inaccuracies, errors or omissions arise, unless due to the
gross negligence or willful misconduct of Reuters;
(ii) it will not transfer, transmit, recirculate by digital or analogue
means, republish or resell all or part of the Data; and
(iii) certain parts of the Data are proprietary and unique to Reuters.
The undersigned further agrees that the benefit of this clause will inure to the
benefit of Reuters.
_________________________ (Fund Name)
By:__________________________________
Title: ______________________________
Date: _______________________________
26
<PAGE>
<PAGE>
EXHIBIT D
STATE STREET GLOBAL CUSTODY NETWORK SUBCUSTODIANS AND OPTIONAL DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN OPTIONAL DEPOSITORIES
<S> <C> <C> <C>
Argentina Citibank, N.A. --
Australia Westpac Banking Corporation --
Austria GiroCredit Bank Aktiengesellschaft der Sparkassen --
Bahrain The British Bank of the Middle East --
(as delegate of the Hongkong and Shanghai
Banking Corporation Limited)
Bangladesh Standard Chartered Bank --
Belgium Generale Bank --
Bermuda The Bank of Bermuda Limited --
Bolivia Banco Boliviano Americano --
Botswana Barclays Bank of Botswana Limited --
Brazil Citibank, N.A. --
Canada Canada Trustco Mortgage Company --
Chile Citibank, N.A. --
People's The Hongkong and Shanghai Banking Corporation --
Republic of Limited Shanghai and Shenzhen branches
China
Colombia Cititrust Colombia S.A.Sociedad Fiduciaria --
Croatia Privredana banka Zagreb d.d --
Cyprus Barclays Bank PLC Cyprus Offshore Banking Unit --
Czech Ceskoslovenska Obchodni Banka A.S. --
Republic
Denmark Den Danske Bank --
Ecuador Citibank, N.A. --
Egypt National Bank of Egypt --
Estonia Hansabank --
Finland Merita Bank Limited --
France Banque Paribas --
Germany Dresdner Bank AG --
Ghana Barclays Bank of Ghana Limited --
</TABLE>
27
<PAGE>
<PAGE>
EXHIBIT D
STATE STREET GLOBAL CUSTODY NETWORK SUBCUSTODIANS AND OPTIONAL DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN OPTIONAL DEPOSITORIES
<S> <C> <C> <C>
Greece National Bank of Greece S.A Bank of Greece
Hong Kong Standard Chartered Bank --
Hungary Citibank Budapest Rt. --
India Deutsche Bank AG;The Hongkong and Shanghai --
Banking Corporation Limited
Indonesia Standard Chartered Bank --
Ireland Bank of Ireland --
Israel Bank Hapoalim B.M. --
Italy Banque Paribas --
Ivory Coast Societe Generale de Banques en Cote d'Ivoire --
Jamaica Scotiabank Trust and Merchant Bank --
Japan The Daiwa Bank, Limited; The Fuji Bank Limited
Japan Securities Depository
The Sumitomo Trust & Banking Co., Ltd.
Jordan The British Bank of the Middle East --
(as delegate of the Hongkong and Shanghai
Banking Corporation Limited)
Kenya Barclays Bank of Kenya Limited --
Republic of Citibank, N.A. --
Korea
Lebanon The British Bank of the Middle East
Custodian and Clearing Center of
Financial Instruments for Lebanon Shanghai Banking
(as delegate of the Hongkong and
Corporation Limited) (MIDCLEAR) S.A.L.;
Malaysia Standard Chartered Bank Malaysia Berhad --
Mauritius The Hongkong and Shanghai Banking --
Corporation Limited
Mexico Citibank Mexico, S.A. --
Morocco Banque Commerciale du Maroc --
Namibia (via) Standard Bank of South Africa --
Netherlands MeesPierson N.V. --
New Zealand ANZ Banking Group (New Zealand) Limited --
Norway Christiania Bank og Kreditkasse --
</TABLE>
28
<PAGE>
<PAGE>
EXHIBIT D
STATE STREET GLOBAL CUSTODY NETWORK SUBCUSTODIANS AND OPTIONAL DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN OPTIONAL DEPOSITORIES
<S> <C> <C> <C>
Oman The British Bank of the Middle East --
(as delegate of the Hongkong and Shanghai
Banking Corporation Limited)
Pakistan Deutsche Bank AG --
Peru Citibank, N.A. --
Philippines Standard Chartered Bank --
Poland Citibank Poland S.A. --
Portugal Banco Comercial Portugues --
Romania ING Bank, N.V. --
Russia Credit Suisse First Boston, Zurich via Credit --
Suisse First Boston Limited, Moscow
Singapore The Development Bank of Singapore Ltd. --
Slovak Ceskoslovenska ObchodnaBanka A.S. --
Republic
South Africa Standard Bank of South Africa Limited --
Spain Banco Santander, S.A. --
Sri Lanka The Hongkong and Shanghai Banking Corporation Limited --
Swaziland Barclays Bank of Swaziland Limited --
Sweden Skandinaviska Enskilda Banken --
Switzerland Union Bank of Switzerland --
Taiwan - Central Trust of China --
R.O.C.
Thailand Standard Chartered Bank --
Trinidad Republic Bank Ltd. --
& Tobago
Tunisia Banque Internationale Arabe de Tunisie --
Turkey Citibank, N.A. --
United State Street Bank and Trust --
Kingdom
Uruguay Citibank, N.A. --
Venezuela Citibank, N.A. --
</TABLE>
29
<PAGE>
<PAGE>
EXHIBIT D
STATE STREET GLOBAL CUSTODY NETWORK SUBCUSTODIANS AND OPTIONAL DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN OPTIONAL DEPOSITORIES
<S> <C> <C> <C>
Zambia Barclays Bank of Zambia Limited --
Zimbabwe Barclays Bank of Zimbabwe Limited --
Euroclear (The Euroclear System)
Cedel (Cedel Bank, societe anonyme)
INTERSETTLE (for EASDAQ Securities)
30
<PAGE>
<PAGE>
EXHIBIT E
STATE STREET GLOBAL CUSTODY NETWORK MANDATORY DEPOSITORIES
</TABLE>
<TABLE>
<S> <C>
COUNTRY MANDATORY DEPOSITORIES (INCLUDES ENTITIES FOR WHICH USE IS MANDATORY AS
A MATTER OF LAW OR EFFECTIVELY MANDATORY AS A MATTER OF MARKET PRACTICE)
Argentina -Caja de Valores S.A.;
-CRYL
Australia -Austraclear Limited;
-Reserve Bank Information and Transfer System
Austria -Oesterreichische Kontrollbank AG (Wertpapiersammelbank Division)
Belgium -Caisse Interprofessionnelle de Depots et de Virements de Titres S.A.;
-Banque Nationale de Belgique
Brazil -Bolsa de Valores de Sao Paulo;
-Bolsa de Valores de Rio de Janeiro
- All SSB clients presently use Calispa
-Central de Custodia e de Liquidacao Financeira de Titulos
-Banco Central do Brasil, Systema Especial de Liquidacao e Custodia
Canada -The Canadian Depositoryfor Securities Limited; West Canada
Depository Trust Company [depositories linked]
People's Republic -Shanghai Securities Central Clearing and Registration Corporation;
of China -Shenzhen Securities Central Clearing Co., Ltd.
Croatia Ministry of Finance
Czech Republic -Stredisko cennych papiru[d];
-Czech National Bank
Denmark -Vaerdipapircentralen - The Danish Securities Center
Egypt -Misr Company for Clearing, Settlement, and Central Depository
Estonia -Eesti Vaartpaberite Keskdepositooruim
Finland -The Finnish Central Securities Depository
France -Societe Interprofessionnelle pour la Compensation des Valeurs Mobilieres;
-Banque de France, Saturne System
Germany -The Deutscher Kassenverein AG
Greece -The Central Securities Depository (Apothetirion Titlon A.E.);
Hong Kong -The Central Clearing and Settlement System;
-The Central Money Markets Unit
Hungary -The Central Depository and Clearing House (Budapest) Ltd.[Mandatory for
Gov't Bonds only; SSB does not use for other securities]
Indonesia -Bank of Indonesia
Ireland -The Central Bank of Ireland, The Gilt Settlement Office
</TABLE>
31
<PAGE>
<PAGE>
EXHIBIT E
STATE STREET GLOBAL CUSTODY NETWORK MANDATORY DEPOSITORIES
<TABLE>
<S> <C>
COUNTRY MANDATORY DEPOSITORIES (INCLUDES ENTITIES FOR WHICH USE IS MANDATORY AS
A MATTER OF LAW OR EFFECTIVELY MANDATORY AS A MATTER OF MARKET PRACTICE)
Israel -The Clearing House of the Tel Aviv Stock Exchange;
-Bank of Israel
Italy -Monte Titoli S.p.A.;
-Banca d'Italia
Japan -Bank of Japan Net System
Republic of Korea -Korea Securities Depository
Lebanon -The Central Bank of Lebanon
Malaysia -Malaysian Central Depository Sdn. Bhd.;
-Bank Negara Malaysia, Scripless Securities Trading and Safekeeping Systems
Mauritius -The Central Depository & Settlement System
Mexico -S.D. INDEVAL, S.A. de C.V.(Instituto para el Deposito de Valores);
Netherlands -Nederlands Centraal Instituut voor Giraal Effectenverkeer B.V. (ANECIGEF)
[** It is planned that as of 1/1/98 NBNV will no longer hold government
securities, all securities will be transferred to NECIGEF];
-De Nederlandsche Bank N.V. (ANBNV)**
New Zealand -New Zealand Central Securities Depository Limited
Norway -Verdipapirsentralen - The Norwegian Registry of Securities
Oman -Muscat Securities Market
Peru -Caja de Valores y Liquidaciones (CAVALI, S.A.)
Philippines -The Philippines Central Depository Inc.
-The Book-Entry-System of Bangko Sentral ng Pilipinas;
-The Registry of Scripless Securities of the Bureau of the Treasury
Poland -The National Depository of Securities (Krajowy Depozyt Papierow Wartosciowych);
-National Bank of Poland
Portugal -Central de Valores Mobiliarios
Romania -National Securities Clearing, Settlement and Depository Co.;
-Bucharest Stock Exchange;
-National Bank of Romania
Singapore -The Central Depository (Pte) Limited;
-Monetary Authority of Singapore
Slovak Republic -Stredisko Cennych Papierov;
-National Bank of Slovakia
South Africa -The Central Depository Limited
Spain -Servicio de Compensacion y Liquidacion de Valores, S.A.;
</TABLE>
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EXHIBIT E
STATE STREET GLOBAL CUSTODY NETWORK MANDATORY DEPOSITORIES
<TABLE>
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COUNTRY MANDATORY DEPOSITORIES (INCLUDES ENTITIES FOR WHICH USE IS MANDATORY AS
A MATTER OF LAW OR EFFECTIVELY MANDATORY AS A MATTER OF MARKET PRACTICE)
-Banco de Espana, Anotaciones en Cuenta
Sri Lanka -Central Depository System (Pvt) Limited
Sweden -Vardepapperscentralen VPC AB - The Swedish Central Securities Depository
Switzerland -Schweizerische Effekten - Giro AG;
Taiwan - R.O.C. -The Taiwan Securities Central Depository Company, Ltd.
Thailand -Thailand Securities Depository Company Limited
Tunisia -STICODEVAM;
-Central Bank of Tunisia;
-Tunisian Treasury
Turkey -Takas ve Saklama Bankasi A.S.;
-Central Bank of Turkey
United Kingdom -The Bank of England, The Central Gilts Office; The Central Moneymarkets Office;
The European Settlements Office;
-First Chicago Clearing Centre
Uruguay -Central Bank of Uruguay
Zambia -Lusaka Central Depository
</TABLE>
33
<PAGE>
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT BETWEEN
THE BURNHAM FUND, INC. AND STATE STREET BANK AND
TRUST COMPANY
<PAGE>
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the day ____ of ____, 1989, by and between THE
BURNHAM FUND, INC., a Maryland corporation, having its principal office and
place of business at 25 Broadway, New York, New York, 10004 (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 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 1 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 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 therefor to
the Custodian of the Fund authorized pursuant to the Articles of
Incorporation 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 therefor to
the Custodian;
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<PAGE>
(iv) 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;
(v) Effect transfers of Shares by the registered owners thereof upon
receipt of appropriate instructions;
(vi) Prepare and transmit payments for dividends and distributions
declared by the Fund;
(vii) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(viii) 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. 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 not in lieu of the services set forth in the
above paragraph (a), the Bank shall: (i) perform all of the
customary services of a transfer agent, dividend disbursing agent
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,
receiving and tabulating 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
<PAGE>
<PAGE>
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) identity 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.
Procedures applicable to certain of these services may be
established from time to time by agreement between the Fund and
the Bank.
ARTICLE 2 FEES AND EXPENSES
2.01 For 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 (excluding legal fees) 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.
The Fund agrees to pay all fees and reimbursable expenses within five
days following the mailing of the respective billing notice. Postage for
mailing of dividends, proxies, Fund reports and other mailings to all
shareholder accounts shall be paid to the Bank by the Fund within five
days of mailing of billing notice.
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<PAGE>
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 end 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 corporation duly organized and existing and in good standing under
the laws of Maryland.
4.02 It is empowered under applicable laws and by its Articles of Incorporation
and By-Laws to enter into and perform this Agreement.
4.03 All corporate proceedings required by said Articles of Incorporation 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.
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<PAGE>
4.05 A registration statement under the Securities Act of 1933 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 INDEMNIFICATION
5.01 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 refusal or failure to comply with the terms of this
Agreement, or which arise out of the Fund's lack of good faith,
negligence or willful misconduct or 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 and documents which (i) are received by the
Bank or its agents or subcontractors and furnished to it by or on
behalf of the Fund, and (ii) have been prepared and/or maintained
by the Fund or any other person or firm on behalf of the Fund.
(d) The reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests of the Fund, unless
such agents or subcontractors have exhibited lack of good faith,
negligence or willful misconduct.
(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.
<PAGE>
<PAGE>
5.02 The Bank shall indemnify and hold the Fund harmless from and against any
and all losses, damages, costs, charges, counsel fees, payments, expenses
and liability arising out of or attributable to any action or failure or
omission to act by the Bank as a result of the Bank's lack of good faith,
negligence or willful misconduct.
5.03 At any time the Bank may apply to any of officer of the Fund for
instructions, and may consult with qualified 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 registrar, or of a co-transfer agent or co-registrar.
5.04 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.
5.05 Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any act
or failure to act hereunder.
5.06 In order that the indemnification provisions contained in this Article 5
shall apply, upon the assertion of a claim for which either party may be
required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the
other party advised with respect to all developments concerning such
claim. The party who may be required to indemnify shall have the
<PAGE>
<PAGE>
option to participate with the party seeking indemnification in the
defense of such claim. The party seeking indemnification shall in no case
confess any claim or make any compromise in any case in which the other
party may be required to indemnify it except with the other party's prior
written consent.
ARTICLE 6 COVENANTS OF THE FUND AND THE BANK
6.01 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 Articles of Incorporation and By-Laws of the Fund and
all amendments thereto.
6.02 The Bank hereby agrees to establish and maintain facilities, systems 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.
6.03 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.
6.04 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 jaw.
6.05 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
<PAGE>
<PAGE>
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 7 TERMINATION OF AGREEMENT
7.01 This Agreement may be terminated by either party upon one hundred twenty (
120) days written notice to the other.
7.02 Should the Fund exercise its right to terminate, all out-of-pocket
expenses (excluding legal fees) 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 one (1) months'
fees.
ARTICLE 8 ASSIGNMENT
8.01 Except as provided in Section 8.03 below, neither this Agreement nor any
rights or obligations hereunder may be assigned by either party without
the written consent of the other party.
8.02 This Agreement shall inure to the benefit of be binding and upon the
parties and their respective permitted successors and assigns.
8.03 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)(l) of the Securities Exchange
Act of 1934 ("Section 17A(c)(1)"), (ii) a BFDS subsidiary duly registered
as a transfer agent pursuant to Section 17A(c)(l) 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.
<PAGE>
<PAGE>
ARTICLE 9 AMENDMENT
9.01 This Agreement may be amended or modified by a written agreement executed
by troth parties and authorized or approved by a resolution of the Board
of Directors of the Fund.
ARTICLE 10 MASSACHUSETTS LAW TO APPLY
10.01 This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of The Commonwealth of
Massachusetts.
ARTICLE 11 MERGER OF AGREEMENT
11.01 This Agreement constitutes the entire agreement between the parties hereto
and supercedes any prior agreement with respect-to the subject matter
hereof whether oral or written.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized of ficers, as of the day and year first above written.
THE BURNHAM FUND INC.
By: Oskar P. Lewnowski
-------------------
ATTEST:
PAUL J. FERGUSON
STATE STREET BANK AND TRUST COMPANY
By:________________________________
ATTEST:
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<PAGE>
_______________________
Assistant Secretary
TRANSFER AGENCY AND SERVICE AGREEMENT BETWEEN THE BURNHAM FUND, INC. AND
STATE STREET BANK AND TRUST COMPANY............................................1
TRANSFER AGENCY AND SERVICE AGREEMENT..........................................2
Article 1 Terms of Appointment; Duties of the Bank...........................2
Article 2 Fees and Expenses..................................................4
Article 3 Representations and Warranties of the Bank.........................5
Article 4 Representations and Warranties of the Fund.........................5
Article 5 Indemnification....................................................6
Article 6 Covenants of the Fund and the Bank.................................8
Article 7 Termination of Agreement...........................................9
Article 8 Assignment.........................................................9
Article 9 Amendment..........................................................9
Article 10 Massachusetts Law to Apply........................................10
Article 11 Merger of Agreement...............................................10
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in Post-Effective
Amendment No. 66 to the Registration Statement of The Burnham Fund
Inc. on Form N-1A of our report dated January 30, 1998 on our audit of the
financial statements and financial highlights of The Burnham Fund Inc.
which report is included in its Annual Report to Shareholders which is
also incorporated by reference in this Post-Effective Amendment to
the Registration Statement. We also consent to the references to our
Firm in the Prospectus under the captions "Financial Highlights" and
"Independent Accountants" and in the Statement of Additional
Information under the captions "Independent Accountants" and
"Financial Statements."
COOPERS & LYBRAND L.L.P.
New York, New York
April 29, 1998
<PAGE>
<PAGE>
MONEY PURCHASE PENSION AND PROFIT SHARING PLAN
BASIC DOCUMENT #01
<PAGE>
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MONEY PURCHASE PENSION AND PROFIT SHARING PLAN.............................................................1
BASIC DOCUMENT #01.........................................................................................1
ARTICLE ONE GENERAL....................................................................................2
PURPOSE.................................................................................................2
1.2 TRUST..............................................................................................2
ARTICLE 2 DEFINITIONS...................................................................................2
2.1 ACCOUNT............................................................................................2
2.2 ADOPTION AGREEMENT.................................................................................2
2.3 AFFILIATED EMPLOYERS...............................................................................2
2.4 BENEFICIARY........................................................................................2
2.5 BREAK IN SERVICE...................................................................................3
2.6 CODE...............................................................................................3
2.7 COMPENSATION.......................................................................................3
2.8 CUSTODIAN..........................................................................................3
2.9 DETERMINATION DATE.................................................................................3
2.10 EARLY RETIREMENT DATE............................................................................3
2.11 EARNED INCOME....................................................................................4
2.12 EFFECTIVE DATE...................................................................................4
2.13 ELIGIBILITY COMPUTATION PERIOD...................................................................4
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..................................................................................5
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............................................................8
2.25 NON-KEY EMPLOYEE.................................................................................9
2.26 NORMAL RETIREMENT AGE............................................................................9
2.27 OWNER-EMPLOYEE...................................................................................9
2.28 PARTICIPANT......................................................................................9
2.29 PLAN.............................................................................................9
2.30 PLAN ADMINISTRATOR..............................................................................10
2.31 PLAN YEAR.......................................................................................10
2.32 SELF-EMPLOYED INDIVIDUAL........................................................................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...........................................................................................10
2.38 TRUST AGREEMENT.................................................................................10
2.39 TRUSTEE.........................................................................................11
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2.40 VALUATION DATE..................................................................................11
2.41 VESTING COMPUTATION PERIOD......................................................................11
2.42 YEAR OF SERVICE.................................................................................11
ARTICLE 3 ELIGIBILITY AND YEARS OF SERVICE.............................................................11
3.1 ELIGIBILITY REQUIREMENTS..........................................................................11
3.2 PARTICIPATION AND SERVICE UPON REEMPLOYMENT.......................................................12
3.3 PREDECESSOR EMPLOYERS.............................................................................12
ARTICLE 4 CONTRIBUTIONS................................................................................12
4.1 EMPLOYER CONTRIBUTIONS............................................................................12
4.2 PAYMENT...........................................................................................13
4.3 NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS BY PARTICIPANTS.............................................13
4.4 ROLLOVERS.........................................................................................13
4.5 DIRECT TRANSFERS..................................................................................14
ARTICLE 5 ALLOCATIONS..................................................................................14
5.1 INDIVIDUAL ACCOUNTS...............................................................................15
5.2 MINIMUM ALLOCATION................................................................................15
5.3 ALLOCATION OF EMPLOYER CONTRIBUTIONS AND FORFEITURES..............................................16
5.4 COORDINATION OF SOCIAL SECURITY INTEGRATION.......................................................17
5.5 WITHDRAWALS AND DISTRIBUTIONS.....................................................................17
5.6 DETERMINATION OF VALUE OF TRUST FUND AND OF NET EARNINGS OR LOSSES................................18
5.7 ALLOCATION OF NET EARNINCIS OR LOSSES.............................................................18
5.8 RESPONSIBILITIES OF THE PLAN ADMINISTRATOR........................................................18
ARTICLE 6 LIMITATIONS ON ALLOCATIONS...................................................................19
6.1 EMPLOYERS WHO DO NOT MAINTAIN OTHER QUALIFIED PLANS...............................................19
6.2 EMPLOYERS WHO MAINTAIN OTHER QUALIFIED MASTER OR PROTOTYPE DEFINED CONTRIBUTION PLANS.............20
6.3 EMPLOYERS WHO, IN ADDITION TO THIS PLAN, MAINTAIN OTHER QUALIFIED PLANS WHICH ARE DEFINED
CONTRIBUTION PLANS OTHER THAN MASTER OR PROTOTYPE PLANS...........................................21
6.4 EMPLOYERS WHO, IN ADDITION TO THIS PLAN, MAINTAIN A QUALIFIED DEFINED BENEFIT PLAN................21
6.5 DEFINITIONS.......................................................................................21
ARTICLE 7 TRUST FUND...................................................................................25
7.1 RECEIPT OF CONTRIBUTIONS BY TRUSTEE...............................................................25
7.2 INVESTMENT RESPONSIBILITY.........................................................................25
7.3 INVESTMENT LIMITATIONS............................................................................26
ARTICLE 8 VESTING......................................................................................26
8.1 NONDEDUCTIBLE VOLUNTARV CONTRIBUTIONS AND EARNINGS................................................26
8.2 ROLLOVERS, TRANSFERS AND EARNINGS.................................................................26
8.3 EMPLOYER CONTRIBUTIONS AND EARNINGS...............................................................26
8.4 AMENDMENTS TO VESTING SCHEDULE....................................................................27
8.5 DETERMINATION OF YEARS OF SERVICE.................................................................28
8.6 FORFEITURE OF NON-VESTED AMOUNTS..................................................................28
8.7 REINSTATEMENT OF BENEFIT..........................................................................29
ARTICLE 9 JOINT AND SURVIVOR ANNUITY REQUIREMENTS......................................................29
9.1 GENERAL...........................................................................................29
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9.2 QUALIFIED JOINT AND SURVIVOR ANNUITY..............................................................29
9.3 QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY.........................................................29
9.4 DEFINITIONS.......................................................................................29
9.5 NOTICE REQUIREMENTS...............................................................................31
9.6 SAFE HARBOR RULES.................................................................................33
9.7 TRANSITIONAL RULES................................................................................34
ARTICLE 10 DISTRIBUTION PROVISIONS...................................................................36
10.1 VESTING ON DISTRIBUTION BEFORE BREAK IN SERVICE.................................................36
10.2 RESTRICTIONS ON IMMEDIATE DISTRIBUTIONS.........................................................37
10.3 COMMENCEMENT OF BENEFITS........................................................................39
10.4 EARLY RETIREMENT WITH AGE AND SERVICE REQUIREMENT...............................................39
10.5 NONTRANSFERABILITY OF ANNUITIES.................................................................39
10.6 CONFLICTS WITH ANNUITY CONTRACTS................................................................39
ARTICLE 11 TIMING AND MODES OF DISTRIBUTION..........................................................39
11.1 GENERAL RULES...................................................................................40
11.2 REQUIRED BEGINNING DATE.........................................................................40
11.3 LIMITS ON DISTRIBUTION PERIODS..................................................................40
11.4 DETERMINATION OF AMOUNT TO BE DISTRIBUTED EACH YEAR.............................................40
11.5 DEATH DISTRIBUTION PROVISIONS...................................................................41
11.6 DESIGNATION OF BENEFICIARY......................................................................42
11.7 DEFINITIONS.....................................................................................43
11.8 TRANSITIONAL RULE...............................................................................45
11.9 OPTIONAL FORMS OF BENEFIT.......................................................................46
ARTICLE 12 WITHDRAWALS...............................................................................48
12.1 WITHDRAWAL OF -NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS............................................48
12.2 HARDSHIP WITHDRAWALS............................................................................48
12.3 MANNER OF MAKING WITHDRAWALS....................................................................49
12.4 LIMITATIONS ON WITHDRAWALS......................................................................49
ARTICLE 13 LOANS.....................................................................................49
13.1 GENERAL PROVISIONS..............................................................................49
13.2 ADMINISTRATION OF LOAN PROGRAM..................................................................51
13.3 AMOUNT OF LOAN..................................................................................51
13.4 MANNER OF MAKING LOANS..........................................................................51
13.5 TERMS OF LOAN...................................................................................51
13.6 SECURITY FOR LOAN...............................................................................52
13.7 SEGREGATED INVESTMENT...........................................................................52
13.8 REPAYMENT OF LOAN...............................................................................52
13.9 DEFAULT ON LOAN.................................................................................52
13.10 UNPAID AMOUNTS..................................................................................52
ARTICLE 14 INSURANCE.................................................................................52
14.1 INSURANCE.......................................................................................52
14.2 POLICIES........................................................................................52
14.3 BENEFICIARY.....................................................................................53
14.4 PAYMENT OF PREMIUMS.............................................................................53
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14.5 LIMITATION ON INSURANCE PREMIUMS................................................................53
14.6 INSURANCE COMPANY...............................................................................54
14.7 DISTRIBUTION OF POLICIES........................................................................54
14.8 POLICY FEATURES.................................................................................55
14.9 CHANGED CONDITIONS..............................................................................55
14.10 CONFLICTS.......................................................................................55
ARTICLE 15 ADMINISTRATION............................................................................55
15.1 DUTIES AND RESPONSIBILITIES OF FIDUCIARY ALLOCATION OF FIDUCIARY RESPONSIBILITY.................55
15.2 POWERS AND RESPONSIBILITIES OF THE PLAN ADMINISTRATOR...........................................55
15.3 ALLOCATION OF DUTIES AND RESPONSIBILITIES.......................................................57
15.4 APPOINTMENT OF THE PLAN ADMINISTRATOR...........................................................57
15.5 EXPENSES........................................................................................57
15.6 LIABILITIES.....................................................................................57
15.7 CLAIMS PROCEDURE................................................................................57
ARTICLE 16 AMENDMENT, TERMINATION AND MERGER.........................................................58
16.1 SPONSOR'S POWER TO AMEND........................................................................58
16.2 AMENDMENT BY ADOPTING EMPLOYER..................................................................58
16.3 VESTING UPON PLAN TERMINATION...................................................................58
16.4 VESTING UPON COMPLETE DISCONTINUANCE OF CONTRIBUTIONS...........................................58
16.5 MAINTENANCE OF BENEFITS UPON MERGER.............................................................59
16.6 SPECIAL AMENDMENTS..............................................................................59
ARTICLE 17 MISCELLANEOUS.............................................................................60
17.1 EXCLUSIVE BENEFIT OF PARTICIPANTS AND BENEFICIARIES.............................................60
17.2 NONQUARANTEE OF EMPLOYMENT......................................................................60
17.3 RIGHTS TO TRUST ASSETS..........................................................................60
17.4 NONALIENATION OF BENEFITS.......................................................................60
17.5 AGGREGATION RULES...............................................................................60
17.6 FAILURE OF QUALIFICATION........................................................................61
17.7 APPLICABLE LAW..................................................................................61
</TABLE>
iv
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ARTICLE ONE GENERAL 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 book-keeping sub-accounts established
for each Participant, as provided in section
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 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 persons 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.
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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.
Compensation will mean all of each Participant's W-2 earnings. For any
self-employed individual covered under the Plan, Compensation will mean Earned
Income. Compensation shall include only that Compensation that is actually paid
to the Participant during the Plan Year.
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.
The annual Compensation of each Participant taken into account under the
Plan for any year shall not exceed two hundred thousands 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 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.
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.
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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.
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.
4
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<PAGE>
2.19 HOUR OF SERVICE.
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
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.
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.
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.
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.
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
by reason of the pregnancy of an Employee;
by reason of the birth of a child of an Employee;
by reason of the placement of a child with the Employee in
connection with adoption; or
for purposes of caring for such a child for a period
immediately following such birth or placement.
5
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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.
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.
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
(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.
6
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2.20 INTEGRATION LEVEL.
The Taxable Wage Base or such lesser amount elected by the Employer in
the Adoption Agreement.
2.21 KEY EMPLOYEE.
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).
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.
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 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
7
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(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:
If the Integration Level is
<TABLE>
<CAPTION>
The Applicable
More Than But Not More Than Percentage Is:
- --------- ----------------- --------------
<S> <C> <C>
$0 X'D' 5.7%
X of TWB 80% of TXB 4.3%
80% of TWB Y'DD' 5.4%
</TABLE>
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:
- --------
'D' X= the greater of $10,000 or 20% of the Taxable Wage Base.
'DD' 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.
8
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<PAGE>
If the Integration Level is
<TABLE>
<CAPTION>
The Applicable
More Than But Not More Than Percentage Is:
- --------- ----------------- ---------------
<S> <C> <C>
$0 X'D' 2.7%
X of TWB 80% of TXB 1.3%
80% of TWB Y'DD' 2.4%
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.
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.
- --------
'D' X= the greater of $10,000 or 20% of the Taxable Wage Base.
'DD' 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.
9
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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.
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.
10
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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.
(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.
11
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<PAGE>
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.
ARTICLE 4 CONTRIBUTIONS
4.1 EMPLOYER CONTRIBUTIONS.
(a) Money Purchase Pension Contributions. For each Plan Year, the
Employer shall contribute to the I 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
12
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<PAGE>
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.
4.3 NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS BY PARTICIPANTS.
(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 non-forfeitable 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
13
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<PAGE>
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 sub-account 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.
(b) Any transfer of assets accepted under this section shall be credited
to the Participant's direct transfer sub-account 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 pre-retirement
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
non-forfeitable.
(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
14
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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 sub-accounts:
(a) A money purchase pension contribution sub-account 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 invest of the
assets of the Trust; (iii) distributions; and dividends, capital gain
distributions and other earnings received on any Shares credited to the
Participant's sub-account;
(b) A profit sharing contribution sub-account 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 sub-account;
(c) A nondeductible voluntary contribution sub-account 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 sub-account;
(d) A direct transfer sub-account 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 sub-account;
(e) A rollover sub-account 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 sub-account.
5.2 MINIMUM ALLOCATION.
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
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plan.
(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
non-forfeitable 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
sub-account 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 sub-account 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:
(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
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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
sub-account 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.
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 Adoption 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
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section 403(a) of the Code, or any withdrawal by a Participant shall be charged
to the appropriate sub-account(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 sub-account, (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.
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 sub-account, (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 sub-account) 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.
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 Participant's sub-account.
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
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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.
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;
(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
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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.
(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.
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(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 section 6.1(d).
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
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(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.
(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
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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.
(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.'
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
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of the Plan made after May 5, 1986, but using the section 415 limitation
applicable tothe 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 Part pant's Annual
Addition for the Limitation Year over 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.
(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
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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
(1) 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.
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 record-keeping 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) It 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
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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.
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 VOLUNTARV CONTRIBUTIONS AND EARNINGS.
The Participant's nondeductible voluntary contribution sub-account 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.
8.2 ROLLOVERS, TRANSFERS AND EARNINGS.
The Participant's rollover sub-account and direct transfer sub-account
shall be fully vested and non-forfeitable 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
sub-account and profit sharing contribution sub-account shall be fully vested
and non-forfeitable upon the Participant's death, disability, attainment of
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 Part pant's money purchase
contribution sub-account and profit sharing contribution sub-account shall vest
accordance with a minimum vesting schedule specified in Adoption Agreement. The
schedule must be at least favorable to Participants as either schedule (a) or
below.
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<PAGE>
(a) Graduated vesting according to the following
</TABLE>
<TABLE>
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
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%
</TABLE>
(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
non-forfeitable 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
non-forfeitable 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.
(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
27
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<PAGE>
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 non-forfeitable 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 non-forfeitable percentage of
the Participant's Employer Contribution sub-accounts, 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.
8.6 FORFEITURE OF NON-VESTED 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 non-forfeitable.
(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 non-vested portion of the
Participant's Account has not yet been forfeited in accordance with paragraph
(a) above:
(i) a separate remainder sub-account 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
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<PAGE>
<PAGE>
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.
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
9.2 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 PRE-RETIREMENT 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 (35) and ends on the date of the
Participant's death. If a Participant separates from service prior to the Plan
Year in which age thirty-five with respect to the Account balance as of the date
of separation, the Election Period shall begin on the date of separation.
29
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<PAGE>
(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 pre-retirement 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 pre-retirement survivor annuity in such terms as are comparable to the
explanation required under section 9.5. Qualified pre-retirement 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 pre-retirement survivor annuity. Any waiver of a Qualified Joint and
Survivor Annuity or a qualified pre-retirement 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.
(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.
30
<PAGE>
<PAGE>
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.
31
<PAGE>
<PAGE>
(b) In the case of a qualified pre-retirement 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 pre-retirement 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.
(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 pre-retirement survivor annuity; and
(ii) the Plan does not allow the Participant to waive the
Qualified Joint and Survivor Annuity or qualified pre-retirement survivor
annuity and does not allow a married Participant to designate a non-spouse
Beneficiary.
32
<PAGE>
<PAGE>
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.
33
<PAGE>
<PAGE>
(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.
(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 pre-retirement 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 7~(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.
34
<PAGE>
<PAGE>
(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).
(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.
(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
payableon death. If the Participant elects survivor annuity, payments under such
annuity must not be less than the payments which would have been made under the
Qualified Joint and Survivor Annutiy if the Participant had retired on the day
before his or
35
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<PAGE>
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
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 non-vested 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.
(b) If an Employee terminates service and elects, in accordance with
this ARTICLE, to receive the value of his Vested Account Balance, the non-vested
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 non-vested portion that will be
treated as a forfeiture is the total non-vested 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
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<PAGE>
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
re-employed 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.
(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 Participant'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).
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(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.
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 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 REQUIREMENT
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.
ARTICLE 11 TIMING AND MODES OF DISTRIBUTION
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<PAGE>
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.
(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
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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:
(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 I 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
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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.
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 Participant'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.
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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.
(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
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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.
(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.
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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.
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,
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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).
(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;
(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
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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 CONTRIBUTIONS.
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 sub-account.
12.2 HARDSHIP WITHDRAWALS.
If the Adoption Agreement so provides and the Employer elects, this
section applies only to the profit sharing contribution sub-account 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 sub-account
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 sub-account.
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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.
(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.
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(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(6)(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
h6ld 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 non-forfeitable
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
sub-account(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.
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.
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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.
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.
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
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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 Administrator 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 sub-accounts
up to the maximum amount of such sub-accounts permitted to be applied toward
such premium payments, as provided in section 14.5. If a Participant's
sub-accounts 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.
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 sub-accounts 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 sub-accounts 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.
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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.
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 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 sub-accounts (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 sub-accounts, 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 sub-accounts 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 sub-account 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 I amount to be paid. Upon receipt of such payment said policy shall
be assigned and delivered to the Participant 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
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ARTICLE 5.
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 sub-accounts 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 sub-account 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 FIDUCIARY 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 ADMINISTRATOR.
(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
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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.
(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.
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
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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.
(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 Administrator 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.
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 CONTRIBUTIONS.
In the event of a complete discontinuance of contributions under the
Plan, the Account balance of each affected Participant will be nonforfeitable.
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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.
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ARTICLE 17 MISCELLANEOUS
17.1 EXCLUSIVE BENEFIT OF PARTICIPANTS AND BENEFICIARIES.
(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:
(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 NONQUARANTEE 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.
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.
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(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.
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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PROFIT SHARING ADOPTION AGREEMENT
FOR PROTOTYPE PAIRED DEFINED CONTRIBUTION PLAN
# 001 SPONSORED BY THE BURNHAM FUND INC.
ADOPTION AGREEMENT #001
This Adoption Agreement for paired defined contribution plan #001 of Basic Plan
Document # 01, which is a combined prototype profit sharing/money purchase
pension defined contribution plan. This adoption agreement may be adopted either
singly or in combination with paired defined contribution plan #002, a prototype
money purchase pension plan.
NOTE. Before executing this Adoption Agreement,
the Employer should consult with a tax advisor or
attorney. Failure to properly complete this
Adoption Agreement may result in Plan
disqualification.
********************************************************************************
The Employer hereby establishes a profit sharing plan and a trust upon the
respective terms and conditions contained in the prototype paired defined
contribution plan (the "Plan") and the Trust Agreement annexed hereto and
appoints as Trustee of such trust the person(s) who have executed this Adoption
Agreement evidencing their acceptance of such appointment. The Plan, the Trust
Agreement, and the Custody Agreement, if applicable, shall be supplemented and
modified by the terms and conditions contained in this Adoption Agreement and
shall be effective on the Effective Date.
The Sponsor will inform the Employer of any amendments made to the Plan or
discontinuance or abandonment of the Plan.
I. SPONSOR
THE BURNHAM FUND INC.
1325 AVENUE OF THE AMERICAS
17TH FLOOR
NEW YORK, NY 10019
(800) 874-3863
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EMPLOYER DATA
-------------
<TABLE>
<C> <C>
A.
------------------------------------------------------------------------------
Name of Employer and Employer Identification Number
B.
------------------------------------------------------------------------------
Address
------------------------------------------------------------------------------
C. ( )
------------------------------------------------------------------------------
Telephone Number
D.
------------------------------------------------------------------------------
Employer's Taxable Year End
E.
------------------------------------------------------------------------------
Plan Year End
F. The Employer is: [ ] A corporate entity
[ ] A noncorporate entity
[ ] A corporation electing to be taxed under Subchapter S
G.
------------------------------------------------------------------------------
Effective Date (should be first day of a Plan Year)
H. If this is an amendment of an existing plan, complete the following:
------------------------------------------------------------------------------
Effective Date of Amendment (should be first day of a Plan Year)
------------------------------------------------------------------------------
Name of Prior Plan
------------------------------------------------------------------------------
Effective Date of Prior Plan
I.
------------------------------------------------------------------------------
Limitation Year, if different from E., above
**************************************************************************************
</TABLE>
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II. ELIGIBILITY
A. Employees shall be eligible to participate in the Plan upon completion
of the eligibility requirements (complete 1 and 2) (Plan section 3.1):
1. Years of Service. The Employee must complete (check one
box):
[ ] One Year of Service.
[ ] ______ Years of Service. (You can require less than or
more than one Year of Service, but not more than
two (2). If you select more than one Year of
Service, the Employee must be 100% vested once he
becomes eligible, and you must select vesting
schedule B in section X of this Adoption
Agreement. If the Year of service is or includes
a fractional year, an Employee will not be
required to complete any specified number of
Hours of Service (section IV, A of this Adoption
Agreement) to receive credit for such fractional
year.
2. Age. The Employee must attain age _ (not greater than
age 21).
B. The following Employees will not be eligible to participate in the Plan
(Plan section 3.1):
[ ] Union Employees. Employees included in a unit of
employees covered by a collective bargaining
agreement between the Employer and Employee
representatives (as defined in section 3.1(b)(i)
of the Plan), if retirement benefits were the
subject of good faith bargaining.
[ ] Nonresident Aliens. Employees who are nonresident
aliens and who receive no earned income from the
Employer which constitutes income from sources
within the United States.
For purposes of this section III, the term "Employee"
includes all employees of this Employer or any
employer aggregated with this Employer under
sections 414(b), (c) or (m) or (o)
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of the Code and individuals who are Leased
Employees required to be considered Employees of
any such employer under section 414(n) or (o) of
the Code.
IV. CREDITED SERVICE
A. The Plan provides that a Year of Service requires at least 1,000 hours
during any Plan Year. If a lower number of hours is desired, state the
number here: (Plan section 2.42).
B. The Plan permits Hours of Service to be determined by the use of service
equivalencies under one of the methods selected below (choose one
method) (Plan section 2.19):
1. [ ] On the basis of actual hours for which an Employee is
paid or entitled to payment.
2. [ ] On the basis of days worked. An Employee will be
credited with ten (10) Hours of Service if under
section 2.19 of the Plan such Employee would be
credited with at least one (1) Hour of Service during
the day.
3. [ ] On the basis of weeks worked. An Employee
will be credited with forty-five (45) Hours
of Service if under section 2.19 of the Plan such
Employee would be credited with at least one (1) Hour
of Service during the week.
4. [ ] On the basis of semimonthly payroll periods. An
Employee will be credited with ninety-five (95) Hours
of Service if under section 2.19 of the Plan such
Employee would be credited with at least one (1) Hour
of service during the semimonthly payroll period.
- or -
5. [ ] On the basis of months worked. An Employee
will be credited with one hundred ninety
(190) Hours of Service if under section 2.19 of the
Plan such Employee would be credited with at least one
(1) Hour of service during the month.
C. Service with a predecessor employer (choose 1 or 2) (Plan sections 3.3.
and 8.5):
1. [ ] No credit will be given for service with a
predecessor employer.
4
<PAGE>
<PAGE>
- or -
2. [ ] Credit will be given for service with the following
predecessor employer(s):
----------------------------------------------------------------
----------------------------------------------------------------
NOTE: The Plan provides that if this is a continuation of a predecessor plan,
service under the predecessor plan must be counted.
********************************************************************************
V. COMPENSATION
A. Compensation (choose 1 or 2) (Plan section 2-7):
1. [ ] shall include
- or -
2. [ ] shall not include
Employer Contributions made pursuant to a salary reduction
agreement which are not includable in the gross income of the
Employee under sections 125, 402(a)(8), 402(h) or 403(b) of the
Code.
B. The effective date of the election in A. above shall be ________________
(but not earlier than the first day of the first Plan Year beginning
after 1986).
VI. CONTRIBUTIONS
A. Profit sharing plan formulas (choose 1 or 2) (Plan section 4.1(b)):
1. [ ] Discretionary pursuant to Employer resolution.If no
resolution is adopted, then % of Participants'
compensation.
- or -
2. [ ] % of Participants' Compensation, plus discretionary
amount, if any, by Employer resolution.
5
<PAGE>
<PAGE>
NOTE: Each of these formulas is subject to maximum
limitations on contributions as provided in the Plan
and the Internal Revenue Code. In no event may the
Employer Contribution exceed 15% of the aggregate
compensation of all Participants for the year, plus
up to 10% credit carryover in certain circumstances.
Additional limitations are included in the Plan
where the Employer also has another qualified
retirement plan. An individual Participant's limit
on contributions and forfeitures, per year is
generally the lesser of 25% of compensation or
$30,000.
I
VII. ALLOCATION OF EMPLOYER CONTRIBUTIONS
A. Formula -- Choose 1 or 2 (Plan section 5.3(b)). NOTE: If you
provide for hardship withdrawals you must use Formula 1.
1. [ ] Nonintegrated Plan -- Employer contributions shall
be allocated to the accounts of all eligible
Participants prorated upon compensation.
- or -
2. [ ] Integrated Plan -- Employer contributions and
forfeitures shall be integrated with Social Security
and allocated in accordance with the provisions of
Plan section 5.3(b). The Plan's Integration Level
shall be (choose (a), (b) or (c)):
(a) [ ] Taxable Wage Base. (The maximum amount
considered as wages for such year under
section 3121(a)(1) of the Internal Revenue
Code (the Social Security taxable wage base)
as of the beginning of the Plan Year).
- or -
(b) $______ (a dollar amount not to exceed the Taxable
Wage Base).
- or -
6
<PAGE>
<PAGE>
(c) ____% of the Taxable Wage Base (not to exceed 100%).
NOTE: If you maintain any other plan in addition to this Plan, only one plan may
be integrated with Social Security.
B. Contribution eligibility (choose 1 or 2) (Plan
section 4.1(c)):
1. [ ] The Plan provides that a Participant will share in
Employer Contributions for the Plan Year only if he
(i) retires, dies, or becomes totally and
permanently disabled, or (ii) completes 500 Hours of
Service and is employed on the last day in such
year. If a lesser number of hours is desired, state
the number here:
- or -
2. [ ] A Participant will share in Employer contributions
for the Plan Year in which he terminates employment
prior to the end of such year if he completes 500
Hours of Service in such year. If a lesser number of
hours is desired, state the number here:
_____________.
VIII. DISTRIBUTIONS
A. Normal Retirement Age is (choose 1 or 2) (Plan
section 2.26):
1. [ ] The date a Participant reaches age __ (not more than
65 or less than 55). If no age is indicated, normal
retirement age shall be 65.
- or -
2. [ ] The later of age _ (not more than 65) or the _ (not
more than 5th) anniversary of the day the
Participant commenced participation in the Plan. The
participation commencement date is the first day of
the first Plan Year in which the Participant
commenced participation in the Plan.
B. Early Retirement (choose 1 or 2) (Plan section
2.10):
1. [ ] Early Retirement Date is the first day of the month
coincident with or next following the date upon
which a Participant reaches age _ (not less than 55)
and completes,_ years of service (not more than 15).
7
<PAGE>
<PAGE>
- or -
2. [ ] Early Retirement will not be permitted under the
Plan.
********************************************************************************
IX. OPTIONAL FEATURES
A. Hardship withdrawals (choose 1 or 2) (Plan
section 12.2):
1. [ ] The Plan permits hardship withdrawals.
- or -
2. [ ] The Plan does not permit hardship withdrawals.
NOTE: The Plan may not provide hardship withdrawals if
integration with Social Security is elected in section
VII.A.2.
B. Loans (choose 1 or 2) (Plan-ARTICLE 13):
1. [ ] The Plan permits loans to Participants.
- or -
2. [ ] The Plan does not permit loans to Participants.
NOTE: The Plan may not permit loans to Owner-Employees of
noncorporate entities or to Shareholder-Employees of
subchapter S corporations. If Plan loans are permitted,
the Trustee designated in section XVI of this Adoption
Agreement may not be the Sponsor's designated Trustee.
********************************************************************************
X. VESTING
Employer Contributions will become vested if the Participant terminates
employment for any reasons other than retirement, death, or disability
pursuant to the following schedule (choose A, B, C or D) (Plan section
8.3):
8
<PAGE>
<PAGE>
A. [ ] Years of
Service Vested Percentage
------- -----------------
1 year 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
B. [ ] 100% vesting immediately after
satisfaction of the eligibility requirements.
NOTE: If a service requirement greater than one year is
chosen for eligibility in section III.A.1. of this
Adoption Agreement, vesting schedule B must be chosen.
C. [ ] 100% vesting after years of service (not to exceed three).
D. [ ] Years of
Service Vested Percentage
------- -----------------
1 year ________%
2 years ________% (not less than 20)
3 years ________% (not less than 40)
4 years ________% (not less than 60)
5 years ________% (not less than 80)
6 years ________% (not less than 100)
********************************************************************************
XI. INVESTMENT CHOICES
Investment of Trust assets may be selected only from Shares or other
investments offered by the Sponsor.
********************************************************************************
9
<PAGE>
<PAGE>
XII. INVESTMENT AUTHORITY
Contributions to the Plan shall be invested by the Trustee in accordance
with instructions of the Employer or Plan Administrator except that
(choose A or B (Plan section 7.2):
A. [ ] No exceptions; the Employer or Plan
Administrator shall make all investment selections.
- or -
B. [ ] Each Participant [ ] may, [ ] shall direct that:
[ ] Amounts voluntarily contributed by such Participant
pursuant to section 4.3 of the Plan, rollover
contributions pursuant to section 4.4 of the Plan
and direct transfers pursuant to section 4.5 of the
Plan, if any,
- and/or -
2. [ ] Employer Contributions on the Participant's behalf
shall be invested in specified investments offered
by the Sponsor. Participants may make or change such
directions by giving written notice to the Plan
Administrator. Reasonable restrictions may be
imposed on this privilege by the Plan Administrator
or the Sponsor for purposes of administrative
convenience.
********************************************************************************
10
<PAGE>
<PAGE>
XIII. TOP-HEAVY PROVISIONS
Participants who are eligible to receive the minimum allocation provided
by section 5.2 of the Plan shall receive a minimum allocation of
contributions and forfeitures under this Plan equal to 3% of
Compensation, or if lesser, the largest percentage of Compensation
allocated on behalf of any Key Employee for the Plan Year.
NOTE: If the Participant also participates in paired defined
contribution plan #002 (the money purchase pension plan), the required
minimum allocation must be made under paired defined contribution plan
#002 (the money purchase pension plan).
XIV. ALLOCATION LIMITATIONS
COMPLETE THIS SECTION ONLY IF YOU MAINTAIN OR EVER MAINTAINED ANOTHER
QUALIFIED PLAN (OTHER THAN PAIRED PLAN #002) IN WHICH ANY PARTICIPANT IN THIS
PLAN IS (OR WAS) A PARTICIPANT OR COULD BECOME A PARTICIPANT. THIS SECTION MUST
ALSO BE COMPLETED IF THE EMPLOYER MAINTAINS A WELFARE BENEFIT FUND, AS DEFINED
IN SECTION 419(e) OF THE CODE, OR AN INDIVIDUAL MEDICAL ACCOUNT, AS DEFINED IN
SECTION 415(l)(2) OF THE CODE, UNDER WHICH AMOUNTS ARE TREATED AS ANNUAL
ADDITIONS WITH RESPECT TO ANY PARTICIPANT IN THIS PLAN.
A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a master
or prototype plan (choose either 1 or 2) (Plan section 6.3):
1. [ ] The provisions of section 6.2 will apply as if the
other plan were a master or prototype plan.
- or -
2. [ ] (On an attachment, provide the method under which
the plans will limit total annual additions to the
maximum permissible amount, and will properly reduce
any excess amounts, in a manner that precludes
Employer discretion).
B. If the Participant is or has ever been a participant in a defined
benefit plan maintained by the Employer attach an explanation of
the method under which the Plan involved will satisfy the 1.0
limitation in a manner that precludes Employer discretion.
11
<PAGE>
<PAGE>
XV. ADMINISTRATION
A. The Plan Administrator of the Plan will be (choose 1, 2, or 3
(Plan sections 2.30 and 15.4):
1. [ ] The Employer
- or -
2. [_] An individual Plan Administrator designated by
the Employer
____________________________________________________
Name
____________________________________________________
Address
____________________________________________________
- or -
3. [ ] A committee of two or more Employees designated by
the Employer:
____________________________________________________
Name & Title
____________________________________________________
Signature
____________________________________________________
Name & Title
____________________________________________________
Signature
____________________________________________________
Name & Title
____________________________________________________
Signature
12
<PAGE>
<PAGE>
NOTE: If no Plan Administrator has been designated or
serving at any time, the Employer will be deemed the
Plan Administrator (Plan section 15.4).
B. The Plan Administrator (including all members of a committee, if
a committee is named) is a Named Fiduciary for the Plan. If other
persons are also to be Named Fiduciaries, their names and
addresses are:
Name: ___________________________________________________________
Address: ________________________________________________________
________________________________________________________
Name: ___________________________________________________________
Address: ________________________________________________________
________________________________________________________
Name: ___________________________________________________________
Address: ________________________________________________________
________________________________________________________
C. The Named Fiduciaries have all of the powers set forth in the
Plan. If any powers or duties are to be allocated among them, or
delegated to third parties, indicate below what the powers or
duties are and to whom they are to be delegated (Plan section
15.3):
_________________________________________________________________
_________________________________________________________________
********************************************************************************
13
<PAGE>
<PAGE>
XVI. THE TRUSTEE
The Employer hereby appoints the Sponsor's designated trustee to serve
as Trustee:
State Street Bank and Trust Company
P.O. Box 1912
Boston, Massachusetts 02205
Dated:______________________________________
____________________________________________
(Signature of) Trustee
********************************************************************************
XVII. EMPLOYER SIGNATURE
The Employer acknowledges receipt of the current prospectus of the
investment companies designated by the Employer for its initial investments
under the Plan and represents that it has delivered a copy thereof to each
Participant in the Plan, and that it will deliver to each Participant making
contributions and each new Participant, a copy of the then current prospectus of
such investment companies. The Employer further represents that the information
in this Adoption Agreement shall become effective only when approved and
countersigned by the Trustee. The right to reject this Adoption Agreement for
any reason is reserved.
This Adoption Agreement must be used only in conjunction with basic
plan document #01.
NOTE: An Employer who has ever maintained or who later adopts any
plan (including, after December 31, 1985, a welfare benefit fund,
as defined in section 419(e) of the Code, which provides
post-retirement medical benefits allocated to separate accounts
for Key Employees, as defined in section 419A(d)(3) of the Code,
or an individual medical account, as defined in section 415(l)(2)
of the Code), in addition to this Plan (other than paired defined
contribution plan #002), may not rely on the opinion letter
issued by the National office of the Internal Revenue Service as
evidence that this Plan is qualified under section 401 of the
Internal Revenue Code. If the Employer who adopts or maintains
multiple plans wishes to obtain reliance that the plans are
qualified, application for a determination letter should be made
to the appropriate Key District Director of Internal Revenue.
14
<PAGE>
<PAGE>
This Adoption Agreement consists of 15 pages.
IN WITNESS WHEREOF, the Employer has caused this Adoption
Agreement to be executed by its duly authorized officers this _ day of
______________________.
(Name of Employer)
BY:
Date:
(Name & Title)
The following space is provided for amendments necessary to
satisfy section 412 of the code in the event of a waiver of the minimum funding
requirements.
15
<PAGE>
<PAGE>
MONEY PURCHASE PENSION
ADOPTION AGREEMENT
FOR PROTOTYPE PAIRED DEFINED CONTRIBUTION PLAN
#002 SPONSORED BY THE BURNHAM FUND INC.
ADOPTION AGREEMENT #002
This Adoption Agreement for paired defined contribution plan #002 of Basic Plan
Document # 01, which is a combined prototype profit sharing/money purchase
pension defined contribution plan. This adoption agreement may be adopted either
singlv or in combination with paired defined contribution plan #001, a prototype
profit sharing plan.
NOTE: Before executing this Adoption Agreement,
the Employer should consult with a tax advisor or
attorney. Failure to properly complete this
Adoption Agreement may result in Plan
disqualification.
********************************************************************************
The Employer hereby establishes a money purchase pension plan and a trust upon
the respective terms and conditions contained in the prototype paired defined
contribution plan ( the "Plan" ) and the Trust Agreement annexed hereto and
appoints as Trustee of such trust the person(s) who have executed this Adoption
Agreement evidencing their acceptance of such appointment. The Plan, the Trust
Agreement, and the Custody Agreement, if applicable, shall be supplemented and
modified by the terms and conditions contained in this Adoption Agreement and
shall be effective on the Effective Date.
The Sponsor will inform the Employer of any amendments made to the Plan or
discontinuance or abandonment of the Plan.
I. SPONSOR
THE BURNHAM FUND INC.
1325 AVENUE OF THE AMERICAS
17TH FLOOR
NEW YORK, NY 10019
(800) 874-3863
********************************************************************************
16
<PAGE>
<PAGE>
Employer Data
<TABLE>
<C> <S>
A.
--------------------------------------------------------------------------------------
Name of Employer and Employer Identification Number
B.
--------------------------------------------------------------------------------------
Address
--------------------------------------------------------------------------------------
C. ( )
--------------------------------------------------------------------------------------
Telephone Number
D.
--------------------------------------------------------------------------------------
Employer's Taxable Year End
E.
--------------------------------------------------------------------------------------
Plan Year End
F. The Employer is: [ ] A corporate entity
[ ] A noncorporate entity
[ ] A corporation electing to be taxed under Subchapter S
G.
--------------------------------------------------------------------------------------
Effective Date (should be first day of a Plan Year)
H. If this is an amendment of an existing plan, complete the following:
--------------------------------------------------------------------------------------
Effective Date of Amendment (should be first day of a Plan Year)
--------------------------------------------------------------------------------------
Name of Prior Plan
______________________________________________________________________________________
Effective Date of Prior Plan
I.
--------------------------------------------------------------------------------------
Limitation Year, if different from E., above
**********************************************************************************************
</TABLE>
17
<PAGE>
<PAGE>
III. ELIGIBILITY
A. Employees shall be eligible to participate in the Plan upon completion
of the eligibility requirements (complete 1 and 2) (Plan section 3.1):
1. Years of Service. The Employee must complete (check one
box):
[ ] One Year of Service.
[ ] ______ Years of Service. (You can require less than or
more than one Year of Service, but not more than
two (2). If you select more than one Year of
Service, the Employee must be 100% vested once he
becomes eligible, and you must select vesting
schedule B in section X of this Adoption
Agreement. If the Year of service is or includes
a fractional year, an Employee will not be
required to complete any specified number of
Hours of Service (section IV, A of this Adoption
Agreement) to receive credit for such fractional
year.
2. Age. The Employee must attain age _ (not greater than
age 21).
B. The following Employees will not be eligible to participate in the Plan
(Plan section 3.1):
[ ] Union Employees. Employees included in a unit of
employees covered by a collective bargaining
agreement between the Employer and Employee
representatives (as defined in section 3.1(b)(i)
of the Plan), if retirement benefits were the
subject of good faith bargaining.
[ ] Nonresident Aliens. Employees who are nonresident
aliens and who receive no earned income from the
Employer which constitutes income from sources
within the United States.
For purposes of this section III, the term "Employee"
includes all employees of this Employer or any
employer aggregated with this Employer under
sections 414(b), (c) or (m) or (o)
18
<PAGE>
<PAGE>
of the Code and individuals who are Leased
Employees required to be considered Employees
of any such employer under section 414(n) or
(o) of the Code.
IV. CREDITED SERVICE
A. The Plan provides that a Year of Service requires at least 1,000 hours
during any Plan Year. If a lower number of hours is desired, state the
number here: (Plan section 2.42).
B. The Plan permits Hours of Service to be determined by the use of service
equivalencies under one of the methods selected below (choose one
method) (Plan section 2.19):
1. [ ] On the basis of actual hours for which an
Employee is paid or entitled to payment.
2. [ ] On the basis of days worked. An Employee will be
credited with ten (10) Hours of Service if under
section 2.19 of the Plan such Employee would be
credited with at least one (1) Hour of Service
during the day.
3. [ ] On the basis of weeks worked. An Employee
will be credited with forty-five (45) Hours
of Service if under section 2.19 of the Plan such
Employee would be credited with at least one (1)
Hour of Service during the week.
4. [ ] On the basis of semimonthly payroll periods. An
Employee will be credited with ninety-five (95)
Hours of Service if under section 2.19 of the
Plan such Employee would be credited with at
least one (1) Hour of service during the
semimonthly payroll period.
- or -
5. [ ] On the basis of months worked. An Employee
will be credited with one hundred ninety
(190) Hours of Service if under section 2.19 of
the Plan such Employee would be credited with at
least one (1) Hour of service during the month.
C. Service with a predecessor employer (choose 1 or 2) (Plan sections 3.3.
and 8.5):
1. [ ] No credit will be given for service with a
predecessor employer.
19
<PAGE>
<PAGE>
- or -
2. [ ] Credit will be given for service with the
following predecessor employer(s):
--------------------------------------------------
--------------------------------------------------
NOTE: The Plan provides that if this is a continuation of a predecessor plan,
service under the predecessor plan must be counted.
********************************************************************************
20
<PAGE>
<PAGE>
VI. CONTRIBUTIONS
A. Formulas (choose 1 or 2) (Plan section 4.1(a)):
1. [ ] Plan not integrated with Social Security
The Employer will contribute % of compensation for
each Participant (not less than 3% if the profit
sharing Adoption Agreement is also adopted and, in
any event, not more than 25%).
2. [ ] Integrated Plan -- The Employer will contribute
an amount equal to % (base contribution percentage,
not less than 3) of each Participant's Compensation
(as defined in section 2.7 of the Plan) for the
Plan Year, up to the Integration Level plus - %
(not less than 3% and not to exceed the base
contribution percentage by more than the lesser of:
(1) the base contribution percentage, or (2) the
Maximum Disparity Rate of such Participant's
Compensation in excess of the Integration Level.
a. [ ] Taxable Wage Base. (The maximum amount
considered as wages for such year under
section 3121(a) of the Internal Revenue
Code (the Social Security taxable wage
base) as of the beginning of the Plan
Year).
- or -
b. [ ] $___________ (a dollar amount not to
exceed the Taxable Wage Base).
- or -
c. [ ] _______% of the Taxable Wage Base (not
to exceed 100%).
NOTE: If you maintain any other plan in addition to
this Plan, only one plan may be integrated with
Social Security.
3. [ ] The Employer will contribute % (not to exceed 25%
minus the Integration
21
<PAGE>
<PAGE>
Percentage) of compensation for each Participant.
If you maintain any other plan in addition to this
Plan, only one plan may be integrated with Social
Security.
B. Forfeitures for a given Plan Year (choose 1 or 2) (Plan section
5.3(a)):
1. [ ] Shall be applied 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 -
2. [ ] Shall be added to the Employer Contribution and
allocated accordingly.
C. Contribution Eligibility (choose 1 or 2) (Plan section 4.1(c)):
1. [ ] The Plan provides that a Participant will share in
Employer Contributions for the Plan Year only if he
(i) retires, dies or becomes totally and permanently
disabled, or (ii) complete 500 Hours of Service and is
employed on the last day in such year. If a lesser
number of hours is desired, state the number here
_______________:
- or -
2. [ ] A Participant will share in Employer Contributions for
the Plan Year in which he terminates employment prior
to the end of such year if he completes 500 Hours of
service in such year. If a lesser number of hours is
desired, state the number here:
VII. DISTRIBUTIONS
A. Normal Retirement Age is (choose 1 or 2) (Plan section 2.26):
1. [ ] The date a Participant reaches age _ (not more than 65
or less than 55). If no age is indicated, normal
retirement age shall be 65.
22
<PAGE>
<PAGE>
- or -
2. [ ] The later of age (not more than 65) or the (not more
than 5th) anniversary of the date the Participant
commenced participation in the Plan. The participation
commencement date is the first day of the first Plan
Year in which the Participant commenced participation
in the Plan.
B. Early Retirement (choose 1 or 2) (Plan section 2.10):
1. [ ] Early Retirement Date is the first day of the month
coincident with or next following the date upon which
a Participant reaches age _ (not less than 55) and
completes years of service (not more than 15).
- or -
2. [ ] Early Retirement will not be permitted under the Plan.
********************************************************************************
VIII. OPTIONAL PEATURES
Loans (choose A or B) (Plan ARTICLE 13):
A. [ ] The Plan permits loans to Participants.
- or -
B. [ ] The Plan does not permit loans to Participants.
NOTE: The Plan may not permit loans to Owner-Employees of
noncorporate entities or to Shareholder-Employees of
subchapter S corporations. If Plan loans are permitted, the
Trustee designated in section XV of this Adoption Agreement
may not be the Sponsor's designated Trustee.
IX. VESTING
Employer Contributions will become vested if the Participant terminates
employment for any reasons other than retirement, death, or disability
pursuant to the following schedule (choose A, B, C or D) (Plan section
8.3):
23
<PAGE>
<PAGE>
A. Years of
Service Vested Percentage
------- -----------------
1 year 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
B. [ ] 100% vesting immediately after satisfaction of the
eligibility requirements.
NOTE: If a service requirement greater than one year is
chosen for eligibility in section III.A.1. of this
Adoption Agreement, vesting schedule B must be chosen.
C. [ ] 100% vesting after __________ years of service (not to
exceed three).
- or -
D. Years of
Service Vested Percentgge
-------------------------------
1 year _____%
2 years _____% (not less than 20)
3 years _____% (not less than 40)
4 years _____% (not less than 60)
5 years _____% (not less than 80)
6 years _____% (not less than 100)
********************************************************************************
X. INVESTMENT CHOICES
Investment of Trust assets may be selected only from Shares or other
investments offered by the Sponsor.
................................................................................
24
<PAGE>
<PAGE>
XI. INVESTMENT AUTHORITY
Contributions to the Plan shall be invested by the trustee in accordance with
instructions of the Employer or Plan Administrator except that (choose A, B or
C) (Plan section 7.2):
A. [ ] No exceptions; the Employer or Plan Administrator shall
make all investment selections.
- or -
B. [ I Each Participant [ ] may, [ ] shall direct that:
1. [ ] Amounts voluntarily contributed by such Participant
pursuant to section 4.3 of the Plan, rollover contributions
pursuant to section 4.4 of the Plan, and direct transfers
pursuant to section 4.5 of the Plan, if any,
- and/or -
2. [ ] Employer Contributions on the Participant's behalf shall be
invested in specified investments offered by the Sponsor.
Participants may make or change such directions by giving
written notice to the Plan Administrator. Reasonable
restrictions may be imposed on this privilege by the Plan
Administrator or the Sponsor for purposes of administrative
convenience.
XII. TOP-HEAVY PROVISIONS
Participants who are eligible to receive the minimum allocation provided
by section 5.2 of the Plan shall receive a minimum contribution under
this Plan equal to 3% of Compensation, or if lesser, the largest
percentage of compensation allocated on behalf of any Key Employee for
the Plan Year under this Plan and paired defined contribution plan #001.
NOTE: If the Participant also participates in paired defined
contribution plan #001 (the profit sharing plan), the required minimum
contribution must be made under this Plan, even if the integrated plan
combination formula is selected.
................................................................................
25
<PAGE>
<PAGE>
XIII. ALLOCATION LIMITATIONS
COMPLETE THIS SECTION ONLY IF YOU MAINTAIN OR EVER MAINTAINED
ANOTHER QUALIFIED PLAN (OTHER THAN PAIRED PLAN #001) IN WHICH ANY PARTICIPANT IN
THIS PLAN IS (OR WAS) A PARTICIPANT OR COULD BECOME A PARTICIPANT. THIS SECTION
MUST ALSO BE COMPLETED IF THE EMPLOYER MAINTAINS A WELFARE BENEFIT FUND, AS
DEFINED IN SECTION 419(e) OF THE CODE, OR AN INDIVIDUAL MEDICAL ACCOUNT, AS
DEFINED IN SECTION 415(l)(2) OF THE CODE, UNDER WHICH AMOUNTS ARE TREATED AS
ANNUAL ADDITIONS WITH RESPECT TO ANY PARTICIPANT IN THIS PLAN.
A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a
master or prototype plan (choose either 1 or 2) (Plan section
6.3):
1. [ ] The provisions of section 6.2 will apply as if the
other plan were a master or prototype plan.
- or -
2. [ ] (On an attachment, provide the method under which
the plans will limit total annual additions to the
maximum permissible amount, and will properly
reduce any excess amounts, in a manner that
precludes Employer discretion.)
B. If the Participant is or has ever been a participant in a defined
benefit plan maintained by the Employer attach an explanation of
the method under which the plan involved will satisfy the 1.0
limitation in a manner that precludes employer discretion.
********************************************************************************
26
<PAGE>
<PAGE>
XIV. ADMINISTRATION
A. The Plan Administrator of the Plan will be (choose 1, 2, or 3)
(Plan sections 2.30 and 15.4):
1. [ ] The Employer
- or -
2. [ ] An individual Plan Administrator designated by the
Employer
____________________________________________________
Name
____________________________________________________
Address
____________________________________________________
- or -
3. [ ] A committee of two or more Employees designated by
the Employer:
____________________________________________________
Name & Title
____________________________________________________
Signature
____________________________________________________
Name & Title
____________________________________________________
Signature
____________________________________________________
Name & Title
____________________________________________________
Signature
27
<PAGE>
<PAGE>
NOTE: If no Plan Administrator has been designated or serving at any time, the
Employer will be deemed the Plan Administrator (Plan section 15.4).
B. The Plan Administrator (including all members of a committee, if
a committee is named) is a Named Fiduciary for the Plan. If other
persons are also to be Named Fiduciaries, their names and
addresses are:
Name: ___________________________________________________________
Address: ________________________________________________________
Name: ___________________________________________________________
Address: ________________________________________________________
Name: ___________________________________________________________
Address: ________________________________________________________
C. The Named Fiduciaries have all of the powers set forth in the
Plan. If any powers or duties are to be allocated among them, or
delegated to third parties, indicate below what the powers or
duties are and to whom they are to be delegated (Plan section
15.3):
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
********************************************************************************
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XV. THE TRUSTEE
The Employer hereby appoints the Sponsor's designated trustee to serve
as Trustee:
State Street Bank and Trust Company
P.O. Box 1912
Boston, Massachusetts 02205
_________________________
Dated: ______________________________________________ (Signature of) Trustee
********************************************************************************
XVI. EMPLOYER SIGNATURE
The Employer acknowledges receipt of the current prospectus of the
investment companies designated by the Employer for its initial investments
under the Plan and represents that it has delivered a copy thereof to each
Participant in the Plan, and that it will deliver to each Participant making
contributions and each new Participant, a copy of the then current prospectus of
such investment companies. The Employer further represents that the information
in this Adoption Agreement shall become effective only when approved and
countersigned by the Trustee. The right to reject this Adoption Agreement for
any reason is reserved.
This adoption Agreement must be used only in conjunction with
basic plan document #01.
NOTE: An Employer who has ever maintained or who later adopts any
plan (including a welfare benefit fund, as defined in section
419(e) of the Code, which provides post retirement medical
benefits allocated to separate accounts for Key Employees, as
defined in section 419A(d)(3) of the Code, or an individual
medical account as defined in section 415(l)(2) of the Code), in
addition to this Plan (other than paired plan #001), may not rely
on the opinion letter issued by the National Office of the
Internal Revenue Service as evidence that this Plan is the
Internal or qualified under section 401 of Revenue Code . If the
Employer who adopts maintains multiple plans wishes to obtain
reliance that the plans are qualified, application for a
determination letter should be made to the appropriate Key
District Director of Internal Revenue.
This Adoption Agreement consists of 14 pages.
29
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<PAGE>
IN WITNESS WHEREOF, the Employer has caused this Adoption
Agreement to be executed by its duly authorized officers this ______ day of
_________________.
__________________________________
(Name of Employer)
By: ______________________________
(Name and Title)
Date: __________________________
The following space is provided for amendment necessary to
satisfy section 412 in the event of a waiver of the minimum funding
requirements.
30
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<PAGE>
- ----------------------------------------------------------------
"1-401 (a) (31) Model Amendment" /"401 (a) (17) Model Amendment"
- ----------------------------------------------------------------
INTERNAL REVENUE SERVICE
Plan Description: Prototype Standardized Profit Sharing Plan
FFN- 50263435001-001 Case- 900493S EIM: 13-3S36115
BPD- 01 Plan - 001 Letter Serial No: 0247376a
BURNHAM FUND INC
1345 AVENUE OF THE AMERICAS
NEW YORK, NY 10015
Date 04/20/90
Dear Applicant:
In our opinion; the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit of
their employees. This opinion relates only to the acceptability of the form of
the plan under the Internal Revenue Code. It is not an opinion of the effect of
other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). An employer who adopts this plan will be considered to have a plan
qualified under Code section 401(a) provided all the terms of the plan are
followed, and the eligibility requirements and contribution or benefit
provisions are not more favorable for officers, owners, or highly compensated
employees than for other employees. Except as stated below, the Key District
Director will not issue a determination letter with regard to this plan.
Our opinion does not apply to the form of the plan for purposes of Code sectiori
401(a)(16) if: (1) an employer ever maintained another qualified plan for one or
more employees who are covered by this plan, other than a specified paired plan
within the meaning of section 7 of Rev. Proc. 89-9, 1989-6 I.R.B. 14; or (2)
after December 31. 198S, the employer maintains a welfare benefit fund defined
in Code section 419(e), which provides postretirement radical benefits allocated
to separate accounts for key employees as defined in Code section 419A(d)(3). In
such situations, the employer, should request a determination as to whether the
plan, considered all related qualified plans and benefits and contributions in
Code section 415.
If you, the plan sponsor, have any questions concerning the IRS processing of
this case, Please call the above telephone number. This number is only for use
should contact the plan sponsor. The plan's adoption agreement
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<PAGE>
must include the sponsor's address and telephone number for inquiries by
adopting employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial Number
and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify as if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
Chief, Employee Plans Qualifications Branch
32
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<PAGE>
- ----------------------------------------------------------------
"401 (a) (31) Model Amendment" / "401 (a) (17) Model Amendment"
- ----------------------------------------------------------------
INTERNAL REVENUE SERVICE
Plan Description Prototvpe Standardized Money Purchase Pension Plan
FFN 50263435001-002 Case 9004936 EIN: 13-3536115
BPD 01 Plan: 002 Letter Serial No: D247377a
BURNHAM FUND INC
1345 AVENUE OF THE AMERICAS
NEW YORK NY 10015
Date 4/26/90
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit
of their employees. This opinion relates only to the acceptability of the
form of the plan under the Internal Revenue Code. It is not an opinion of the
effect of other Federal or local statutes.
You must furnish a copy of this letter to each, employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). An employer who adopts this plan will be considered to have a plan
qualified under Code section 401(a) provided all the terms of the plan are
followed, and the highly compensated employees than for other employees. Except
as stated below, the Key District' Director will not issue a determination
letter with regard to this plan.
Our opinion does not apply to the form of the plan for purposes of Code section
401(a)(16) if. (1) an employer ever maintained another qua1ified plan for one or
more employees who are covered by this plan, other than a specified paired plan
within the meaning of section 7 of Rev. Proc. 89-9, 1989-6 I.R.B. 14; or (2)
after December 31, 1985, the employer maintains a welfare benefit fund defined
in Code section 419(e), which provides postretirement medical benefits allocated
to separate accounts for key employees as defined in Code section 419A(d)(3). In
such situations, the employer should request a determination as to, whether the
plan considered with all related qualified plans and, if appropriate, welfare
benefit funds, satisfies the requirements of Code section 401(a)(16) as to
limitations on benefits and contributions in Code section 415.
33
<PAGE>
<PAGE>
If you, the plan sponsor, have any questions concerning the IRS processing of
this case, please call the above telephone number. This number is only for use
of the plan sponsor. Individual participants and/or adopting employers must
include the sponsor's address and telephone number for inquiries by adopting
employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial Number
and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
Chief, Employee Plans Qualifications Branch
34
<PAGE>
<PAGE>
AMENDMENT TO THE
INVESTMENT COMPANY INSTITUTE
PROTOTYPE MONEY PURCHASE PENSION AND PROFIT SHARING PLAN
BASIC DOCUMENT #01
FIRST
The Plan is hereby amended by the word-for-word adoption of the
model language contained in Revenue Procedure 93-12, for distributions made on
or after January 1, 1993, as follows:
Notwithstanding any provision of the Plan to the contrary
that would other I wise limit a Distributee's election.
under this provision, a Distributee may elect, at the time
and in the manner prescribed by the Plan Administrator, to
have any portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan specified by the
Distributee in a Direct Rollover.
Definitions
(a) Eligible Rollover Distribution. An Eligible Rollover Distribution is
any distribution of all or any portion of the balance to the credit
of the Distributee, except that an Eligible Roll over Distribution
does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the Distributee
or the joint the Distributee's designated Beneficiary, or for a
specified period of ten (10) years or more; any distribution to the
extent such distribution is required under section 401(a)(9) of the
Code; and the portion of any distribution that is not includable in
the gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
(b) Eligible Retirement Plan. An Eligible Retirement Plan is an
individual retirement account described in section 408 (a) of the
Code, an individual retirement annuity described in section 408(b) of
the Code, an annuity plan described in section 403 (a) of the Code, or
a qualified trust described in section 40 1 (a) of the Code, that
accepts the Distributee's Eligible Rollover Distribution. However, in
the case of ia Eligible Rollover Distribution to the surviving spouse,
an Eligible Retirement PIW1 is an individual retirement account or
individual retirement annuity.
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<PAGE>
(c) Distributee. A Distributee includes an Employee or former Employee.
In addition, the Employee's or former Employee's surviving spouse and
the Employee's or former Employee's spouse or former spouse who is
the alternate payee under a qualified domestic relations order, as
defined in section 414(p) of the Code, are Distributees with regard
to the interest of the spouse or former spouse.
36
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<PAGE>
TRUST AGREEMENT
The Employer has established a Plan for the benefit of Participants
therein pursuant to section 401 of the Internal Revenue Code of 1986. As part of
the Plan, the Employer has requested such person or persons (individual,
corporate, or other entity), as may be designated in the Adoption Agreement, to
serve as Trustee pursuant to the Trust established for the investment of
contributions under the Plan upon the terms and conditions set forth in this
Trust Agreement.
Unless the context of this Trust Agreement clearly indicates otherwise,
the terms defined in ARTICLE 2 of the Plan entered into by the Employer, of
which this Trust Agreement forms a part, shall, when used herein, have the same
meaning as in the Plan.
ARTICLE I ACCOUNTS
1.1 ESTABLISHING ACCOUNTS.
The Trustee shall open and maintain a Trust account for the Plan and, as
part thereof, Participants' Accounts for such individuals as the Plan
Administrator shall, from time to time, give written notice to the Trustee as
being Participants in the Plan. The Trustee shall also open and maintain such
other sub-accounts as may be appropriate or desirable to aid in the
administration of the Plan. Separate sub-accounts shall be maintained for each
Participant and shall be credited with the contributions made by the Employer
and with forfeitures allocated to each such Participant pursuant to the Plan
(and all earnings thereon). If nondeductible voluntary contributions by
Participants are permitted by the Plan, the Trustee shall open and maintain as a
part of the Trust a separate sub-account for each Participant who makes such
nondeductible voluntary contributions, each such sub-account to be credited with
the Participant's voluntary contributions (and all earnings attributable to such
contributions). If trustee transfers or rollover contributions from another
qualified plan are received, the Trustee shall open and maintain a separate
rollover sub-account for each Participant, each such sub-account to be credited
with the Participant's trustee transfers or rollover contributions (and all
earnings attributable to such contributions).
1.2 CHARGES AGAINST ACCOUNTS.
Upon receipt of written instructions from the Administrator, the Trustee
shall charge
37
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<PAGE>
ARTICLE III INVESTMENT POWERS OF THE TRUSTEE
3.1 INVESTMENT OF ACCOUNT ASSETS.
The Trustee shall invest the amount of each contribution made hereunder
and all earnings on the Trust in full and fractional Shares in accordance with
the current prospectus for such Shares, in such amounts and proportions as shall
from time to time be designated by the Plan Administrator on forms provided by
the Sponsor, and shall credit such Shares to.the Accounts of each Participant on
whose behalf or by whom the contributions are made and any forfeitures are
allocated. All dividends and capital gain distributions received on the Shares
held by the Trustee in each Account, shall, if received in cash, be reinvested
in such Shares in accordance with the current prospectus for such Shares and
shall in any event be credited to such Account. If any distribution on Shares
may be received at the election of the shareholder in additional Shares, the
Trustee shall so elect. The Trustee shall deliver, or cause to be executed and
delivered, to the Plan Administrator, all notices, prospectuses, financial
statements, proxies, and proxy soliciting materials relating to Shares held
hereunder. The Trustee shall not vote any of the Shares held hereunder, except
in accordance with the written instructions of the Plan Administrator. If no
such written instructions are received, such Shares shall not be voted. The
obligations of the Trustee hereunder may be delegated by it as provided in
sections 9.1 and 9.2.
The Trustee shall sell Shares and purchase Shares to accomplish any
change in investments desired by the Employer as indicated on any amended
Adoption Agreement or other instructions in accordance with the terms of the
Plan.
Notwithstanding the above, if periodic. payments are being made to a
Participant pursuant to ARTICLE IV hereof, any dividends received on Shares held
in such Participant's Account, which dividends are invested at an offering price
which includes a sales charge, need not be invested in additional Shares but may
be held for distribution to the Participant in periodic payments. In such
instances, the Trustee may make any election necessary to receive any such
dividends in cash.
3.2 DIRECTED INVESTMENTS.
When so instructed by the Plan Administrator, the Trustee shall invest
all or any portion of the individual Account of any Participant in accordance
with the direction of the Employer or such Participant in lieu of participation
in the general assets of the Trust. Such directed investments shall be accounted
for separately for each Participant. Except as otherwise provided herein, the
Trustee shall not have any discretion, and is specifically prohibited from
exercising any control or discretion, with respect to such directed investments.
Each participant who directs the investment of his Account shall be solely and
absolutely responsible for the investment or reinvestment of all directed
investment assets held on his behalf in the Trust,
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<PAGE>
and, except as otherwise provided herein, the Trustees shall not question any
such direction, review any securities or other such assets, or make suggestions
with respect to the investment retention or disposition of any such assets;
provided that:
(a) If any contributions are transmitted to or otherwise received or
held as directed investment assets without investment directions
from the Participant, the Trustee may retain such amounts in a
non-interest bearing savings account in a federally insured
institution for the benefit of the Participant.
(b) The Trustee may establish such reasonable rules and regulations,
applied on a uniform basis to all Participants, with respect to
the requirements for, and the form and manner of, effectuating
any transaction with respect to directed investment assets
including, without limitation, minimum amounts, rules applicable
to conversion of directed investments into general assets of the
Trust, and appropriate adjustments (based on fair market values)
to Accounts to reflect any such conversion, as the Trustees shall
determine to be consistent with the purposes of the Plan. Any
such rules and regulations shall be binding upon all persons
interested in the Trust.
(c) The Trustees may establish a procedure for the periodic review of
directed investment assets to determine, in light of the facts
and circumstances reasonably known to it, whether any actual or
proposed investment of such assets constitutes or would
constitute a prohibited transaction as that term is defined in
sections 406-408 of ERISA and the corresponding provisions of the
Code. If the Trustee determines that any investment constitutes
or would constitute a prohibited transaction, the Trustee shall
promptly communicate this determination to the Plan
Administrator, and shall recommend that the investment be
prevented or disposed of, as the case may be, and may recommend
any other action authorized or required by law, to prevent or
remedy the transaction.
(d) In accordance with and pursuant to uniform and nondiscriminatroy
rules established under and in accordance with the Plan, the
Trustee may deny the Plan Administrator's application to allow a
directed investment proposed by a Participant.
(e) Notwithstanding anything herein to the contrary, in no event
shall the Trustee engage in any transaction that would be
prohibited under ERISA.
3.3 GENERAL INVESTMENT POWERS.
Subject to any investment limitations or minimum requirements for
investments in Shares imposed by the Sponsor, and subject to investment
instructions given by the Employer, the Trustee shall be authorized and
empowered to invest and reinvest all or any part of the Trust in any property,
real or personal or mixed,
39
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<PAGE>
including, but not being limited to, capital or common stock (whether voting or
nonvoting or whether or not currently paying a dividend), preferred or
preference stock (whether voting or nonvoting or whether or not currently paying
a dividend), Shares of regulated investment companies, convertible securities,
corporate and governmental obligations, leaseholds, ground rents, mortgages, and
other. interests in realty, trust, and participation certificates, oil, mineral
or gas properties, royalty interests or rights, including equipment pertaining
thereto, notes and other evidences of indebtedness or ownership, secured or
unsecured, contracts, choses in action, and warrants, and other instruments
entitling the owner thereof to subscribe to or purchase any of the aforesaid.
Subject to any investment limitations or requirements imposed by the Sponsor
relating to the type of permissible investments in the Trust or the minimum
percentage of Trust assets to be invested in Shares, and subject to the
provisions of ARTICLE VIII hereof, in making and retaining such investments and
reinvestments pursuant hereto, the Trustee shall not be bound as to the
character of any investments by any statute, rule of court, or custom governing
the investment of Trust funds.
3.4 INVESTMENT IN COMBINED FUNDS.
If the Trustee is a banking institution, subject to any investment
limitations or minimum requirements for investment in Shares imposed by the
Sponsor, and subject to investment instructions given by the Employer, it may,
subject to the election of the Sponsor or the Employer, cause funds of this
Trust to be invested in its commingled funds for qualified employee benefit plan
trusts and such commingled funds are hereby adopted and made a part of the Plan
of which this Trust is a part, and any funds of this Trust invested in any such
commingled funds shall be subject to all the provisions thereof, as the same may
be amended from time to time.
3.5 OTHER POWERS OF THE TRUSTEE.
(a) Subject to any investment limitations or minimum requirements for
investment in Shares imposed by the Sponsor, and subject to
investment instructions given by the Employer, to sell, exchange,
convey, transfer, or otherwise dispose of, either at public or
private sale, any property, real or personal or mixed, at any
time held by it, for such consideration and on such terms and
conditions as to credit or otherwise as the Trustee may deem
best.
(b) Subject to the provisions of section 3.1, to vote in person or by
proxy any stocks, bonds, or other securities held by it; to
exercise any options appurtenant to any stocks, bonds, or other
securities, or to exercise any rights to subscribe for additional
stocks, bonds, or other securities, and to make any and all
necessary payments therefor, to join in, or to dissent from, and
to oppose, the reorganizations, consolidation, liquidation, sale,
or merger of corporations, or properties in which it may be
interested as Trustee, upon such terms and conditions as it may
deem wise.
40
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(c) To make, execute, acknowledge, and deliver any and all documents
of transfer and conveyance and any and all other instruments that
may be necessary or appropriate to carry out the powers herein
granted.
(d) To register any investment held in the Trust in the name of the
Trust or in the name of a nominee, and to hold any investment in
bearer form, but the books and records of the Trustee shall at
all times show that all such investments are part of the Trust.
(e) To employ suitable agents and counsel (who may also be agents
and/or counsel for the Employer or the Sponsor) and to pay their
reasonable expenses and compensation.
(f) To borrow or raise monies for the purpose of the Trust from any
source and, for any sum so borrowed to issue its promissory note
as Trustee and to secure the repayment thereof by pledging all or
any part of the Trust fund, but nothing herein contained shall
obligate the Trustee to render itself liable individually for the
amount of any such borrowing; and no person loaning money to the
Trustee shall be bound to see to the application of money loaned
or to inquire into the validity or propriety of any such
borrowing.
Each and all of the foregoing powers may be exercised without a court
order or approval. No one dealing with the Trustee need inquire concerning the
validity or propriety of anything that is done or need see to the application of
any money paid or property transferred to or upon the order of the Trustee.
3.6 GENERAL POWERS.
The Trustee shall have all of the powers necessary or desirable to do
all acts, take all such proceedings, and exercise all such rights and
privileges, whether or not expressly authorized herein, which it may deem
necessary or proper for the administration and protection of the property of the
Trust and to accomplish any action provided for in the Plan.
3.7 VALUATION OF TRUST.
The Trustee, as of the Valuation Date, and at such other time or times
as it determines, shall determine the net worth of the assets of the Trust. In
determining such net worth, the assets of the Trust shall be evaluated at their
fair market value and all expenses shall be deducted. The Trustee may adopt such
methods of valuation as it deems advisable.
3.8 BONDING.
Except to the extent otherwise required by law, the Trustee shall not be
required to obtain any bonds in
41
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<PAGE>
connection with its duties hereunder. The cost of any bond obtained may be
charged as an expense of the Trust, but if not so charged, shall be paid by the
Employer.
3.9 DUTIES NOT ASSIGNED.
The duties of the Trustee with respect to the Plan are limited to those
assumed by the Trustee by the terms of this Trust. The Trustee shall not be
deemed, by virtue hereof, to be the administrator or sponsor of the Plan, and
shall not be responsible for filing reports, returns or disclosures with any
government agency except as may otherwise be required by its duties as Trustee
under applicable law.
ARTICLE IV DISTRIBUTIONS FROM A PARTICIPANT'S ACCOUNT
Distributions from the Trust shall be made by the Trustee in accordance
with proper written directions of the Plan Administrator in accordance with the
provisions of section 15.2 of the Plan, and the Plan Administrator shall have
the sole responsibility for determining that the directions given conform to
provisions of the Plan and applicable law, including (without limitation)
responsibility for calculating the vested interests of the Participant, for
calculating the amounts payable to a Participant pursuant to ARTICLE 11 of the
Plan, and for determining the proper person to whom benefits are payable under
the Plan. Except to the extent otherwise provided in the Plan, the interest of
Participants and Beneficiaries in the Trust and in the net earnings and profits
thereof may not be assigned or used by a Participant or Beneficiary as
collateral for a loan and shall not be subject to garnishment, attachment, levy
or execution of any kind for the debts or defaults of the Trustee or of any
person, natural or legal, having interest in the Trust.
ARTICLE V REPORTS OF THE TRUSTEE AND THE PLAN ADMINISTRATOR
The Trustee shall keep accurate and detailed records of all receipts,
investments, disbursements, and other transactions required to be performed
hereunder with respect to the Trust. The Trustee shall file with the Plan
Administrator a written report or reports reflecting the receipts,
disbursements, and other transactions effected by it with respect to the Trust
during such Plan Year and the assets and liabilities of the Trust at the close
of the Plan Year. Such report or reports shall be open to inspection by any
Participant for a period of one hundred eighty (180) days immediately following
the date on which it is filed with the Plan Administrator. Except as otherwise
prescribed by ERISA, upon the expiration of such one hundred eighty (180) day
period, the Trustee shall be forever released and discharged from all liability
and accountability to anyone with respect to its acts, transactions, duties,
obligations, or responsibilities as shown in or reflected by such report, except
with respect to any such acts or transactions as to which the Plan Administrator
shall have filed written objections with the Trustee within one hundred eighty
(180) day period, and except for willful misconduct or lack of good faith on the
part of the Trustee.
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ARTICLE VI TRUSTEE'S FEES AND EXPENSES OF THE TRUST
The Trustee's fees for performing its duties hereunder shall be such
reasonable amounts as shall be respectively established by it from time to time.
The Trustee shall furnish the Employer with its current schedule of fees and
shall give written notice to the Employer whenever its fees are changed or
revised. Such fees, any taxes of any kind whatsoever which may be levied or
assessed upon or in respect of the Trust, to the extent incurred by the Trustee
and any and all expenses incurred by the Trustee in the performance of its
duties, including fees for legal services rendered to the Trustee, shall, unless
paid by the Employer, be paid from the Trust in the manner provided in the Plan.
Unless paid by the Employer, all fees of the Trustee and taxes and other
expenses charged to a Participant's Account may be collected by the Trustee from
the amount of any contribution to be credited or distribution to be charged to
such Account or may be paid by redeeming or selling assets credited to such
Account.
ARTICLE VII DUTIES OF THE EMPLOYER AND THE PLAN ADMINISTRATOR
7.1 INFORMATION AND DATA TO BE FURNISHED THE TRUSTEE.
In addition to making the contributions called for in ARTICLE II hereof,
the Employer, through the Plan Administrator, agrees to furnish the Trustee with
such information and data relative to the Plan as is necessary for the proper
administration of the Trust established hereunder.
7.2 LIMITATION OF DUTIES.
Neither the Employer nor any of its officers, directors, or partners,
nor the Plan Administrator shall have any duties or obligations with respect to
this Trust Agreement, except those expressly set forth herein and in the Plan.
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ARTICLE VII LIABILITY OF THE TRUST
8.1 TRUSTEE'S LIABILITY.
(a) The Employer shall indemnify and save the Trustee (including its
affiliates, representatives and agents) harmless from and against any
liability, cost or other expense, including, but not limited to, the
payment of attorneys' fees that the Trustee may incur in connection
with this Trust Agreement or the Plan unless such liability, cost or
other expense (whether direct or indirect) arises from the Trustee's
own willful misconduct or gross negligence. The Employer recognizes
that a burden of litigation may be imposed upon the Trustee as a result
of some act or transaction for which it has no responsibility or over
which it has no control under this Trust Agreement. Therefore, the
Employer agrees to indemnify and hold harmless and, if requested,
defend the Trustee (including its affiliates, representatives and
agents) from any expenses (including specific direction from the
Employer shall be selected to diversify the investments of the Trust
fund so as to minimize the risk of large losses, unless in the
circumstances it is clearly prudent not to do so. The Trustee shall
perform its duties in accordance with this Trust Agreement insofar as
this Trust Agreement is consistent with the provisions of ERISA. To the
extent not prohibited by ERISA, the Trustee shall not be responsible in
any way
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for any action or omission of the Employer or the Plan Administrator with
respect to the performance of their duties and obligations set forth in the
Plan. To the extent not prohibited by ERISA, the Trustee shall not be
responsible for any action or omission of any of its agents, or with respect to
reliance upon advice of its counsel (whether or not such counsel is also counsel
to the Employer or to the Plan Administrator), provided that such agents or
counsel were prudently chosen by the Trustee and that the Trustee relied in good
faith upon the action of such agent or the advice of such counsel. The Trustee
shall be indemnified and held harmless by the Employer against liability or
losses occurring by reason of any act or omission of the Trustee under this.
Trust Agreement, unless such act or omission is due to its own willful
nonfeasance, malfeasance, or misfeasance or other breach of duty under ERISA, to
the extent that such indemnification does not violate ERISA or any other federal
or state laws.
ARTICLE IX DELEGATION OF POWERS
9.1 DELEGATION BY THE TRUSTEE.
With respect to Shares held by the Plan, the Trustee hereby delegates to
the custodian or other agent designated by the Sponsor the functions designated
in (a) through (d) hereunder, other than the investment, management or control
of the Trust assets. With respect to assets other than Shares, the Trustee may
delegate in writing pursuant to a procedure permitted and established by the
Sponsor, to a person (individual, corporate, or other entity) designated by the
Sponsor as an agent, or custodian, any of the powers or functions of the
Trustee, hereunder other than the investment, management or control of the Trust
assets, including (without limitation):
(a) custodianship of all or any part of the assets of the
Trust;
(b) maintaining and accounting for the Trust and for
Participants and other Accounts as a part thereof;
(c) distribution of benefits as directed by the Plan
Administrator; and
(d) preparation of the annual report on the status of the
Trust.
The agent or custodian so appointed may act as agent for the Trustee,
without investment responsibility, for fees to be mutually agreed upon
by the Employer and the agent or custodian and paid in the same manner
as Trustee's fees. The Trustee shall not be responsible for any act or
omission of the agent or custodian arising from any such delegation,
except to the extent provided in Section 8.1.
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9.2 DELEGATION WITH EMPLOYER APPROVAL.
The Trustee (whether or not a bank or trust company) and the Employer
may, by mutual agreement, arrange for the delegation by the Trustee to the Plan
Administrator or any agent of the Employer of any powers or functions of the
Trustee hereunder other than the investment and custody of the Trust assets. The
Trustee shall not be responsible for any act or omission of such person or
persons arising from any such delegation, except to the extent provided in
ARTICLE VIII.
ARTICLE X AMENDMENT
As provided in section 16.1 of the Plan, and subject to the limitations
set forth therein, the prototype Adoption Agreement, Plan and Trust Agreement
may be amended at any time, in whole or in part, by the Sponsor. The Trustee
hereby delegates authority to the Sponsor, and to any successor Sponsor, to so
amend the prototype Adoption Agreement, Plan and Trust Agreement and the Trustee
hereby agrees that it shall be deemed to have consented to any amendment so made
which does not increase the duties of the Trustee without its consent.
ARTICLE XI RESIGNATION OR REMOVAL OF TRUSTEE
The Trustee may resign at any time upon thirty (30) days notice in
writing to the Employer, and may be removed by the Sponsor or Employer at any
time upon thirty (30) days notice in writing to the Trustee. Upon such
resignation or removal, the Sponsor or Employer shall appoint a successor
Trustee or Trustees. Upon receipt by the Trustee of written acceptance of such
appointment by the successor Trustee, the Trustee shall transfer and pay over to
such successor the assets of the Trust and all records pertaining thereto,
provided that any successor Trustee shall agree not to dispose of any such
records without the Trustee's consent. The successor Trustee shall be entitled
to rely on all accounts, records, and other documents received by it from the
Trustee, and shall not incur any liability whatsoever for such reliance. The
Trustee is authorized, however, to reserve such sum of money or property as it
may deem advisable for payment of all its fees, compensation, costs, and
expenses, or for payment of any other liabilities constituting a charge on or
against the assets of the Trust or on or against the Trustee, with any balance
of such reserve remaining after the payment of all such items to be paid over to
the successor Trustee. Upon the assignment, transfer, and payment over of the
assets of the Trust, and obtaining a receipt thereof from the successor Trustee,
the Trustee shall be released and discharged from any and all claims, demands,
duties, and obligations arising out of the Trust and its management thereof,
excepting only claims based upon the Trustee's willful misconduct or lack of
good faith. The successor Trustee shall hold the assets paid over to it under
terms similar to those of this Trust Agreement under a trust that will qualify
under section 401 of the Code. If within thirty (30) days after the Trustee's
resignation or removal, the Employer or Sponsor has not appointed a successor
Trustee which has accepted such appointment, the Trustee shall, unless it elects
to terminate the Trust pursuant to ARTICLE XII, appoint such successor itself.
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ARTICLE XII TERMINATION OF THE TRUST
12.1 TERM OF THE TRUST.
This Trust shall continue as to the Employer so long as the Plan is in
full force and effect. If the Plan ceases to be in full force and effect, this
Trust shall thereupon terminate unless expressly extended by the Employer.
12.2 TERMINATION BY THE TRUSTEE.
The Trustee may elect to terminate the Trust if within thirty (30) days after
its resignation or removal pursuant to ARTICLE XI the Employer or Sponsor has
not appointed a successor Trustee which has accepted such appointment.
Termination of the Trust shall be effected by distributing all assets thereof to
the Participants or other persons entitled thereto pursuant to the directions of
the Plan Administrator (or, in the absence of such direction, as determined by
the Trustee) as provided in section 16.3 of the Plan, subject to the Trustee's
right to reserve funds as provided in ARTICLE XI hereof. Upon the completion of
such distribution, the Trustee shall be returned to the Employer within one (1)
year after the disallowance, if the Administrator so directs.
ARTICLE XIII MISCELLANEOUS
13.1 NO DIVERSION OF ASSETS.
At no time shall it be possible for any part of the assets of the Trust
to be used for or diverted to purposes other than for the exclusive benefit of
Participants and their Beneficiaries or revert to the Employer, except as
specifically provided in the Plan or this Trust Agreement.
13.2 NOTICES.
Any notice from the Trustee to the Employer or from the Employer to the
Trustee provided for in the Plan and Trust shall be effective if sent by first
class mail to their respective last address of record.
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13.3 MULTIPLE TRUSTEES.
In the event that there shall be two (2) or more Trustees serving
hereunder, any action taken or decision made by any such Trustee may be taken or
made by a majority of them with the same effect as if all had joined therein, if
there be more than two (2), or unanimously if there be two (2).
13.4 CONFLICT WITH PLAN
In the event of any conflict between the provisions of the Plan and
those of this Trust Agreement, the Plan shall prevail.
13.5 APPLICABLE LAW
Except to the extent otherwise required by ERISA, as amended, this Trust
Agreement shall be construed in accordance with the laws of the state where the
Trustee has its principal place of business.
13.6 RETURNED CONTRIBUTIONS
(a) a contribution made by the Employer by a mistake of fact shall,
if the Administrator so directs, be returned to the Employer
within one (1) year after its payment. The Administrator shall,
in its sole discretion, determine whether the contribution was
made by mistake of fact based upon such evidence as it deems
appropriate.
(b) A contribution made by the Employer that is conditioned on
deductibility under section 404 of the Code shall, to the extent
such deduction is disallowed, be returned to the Employer within
one (1) year after the disallowance, if the Administrator so
directs.
13.7 GENERAL UNDERTAKING.
All parties to this Trust and all persons claiming any interest
whatsoever hereunder agree to perform any and all acts and execute any and all
documents and papers which may be necessary or desirable for the carrying out of
the Trust or any of its provisions.
13.8 INVALIDITY OF CERTAIN PROVISIONS.
If any provision of this Trust shall be held invalid or unenforceable,
such invalidity or unenforceability shall not affect any other provisions hereof
and the Trust shall be construed and enforced as if such provisions
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had not been included.
13.9 COUNTERPART ORIGINALS.
This Trust may be executed in one or more counterpart originals.
IN WITNESS WHEREOF, the Employer and the Trustee(s) have signed this
Trust effective as of the date specified in the Adoption Agreement.
______________________________
[NAME OF EMPLOYER]
Attest:
__________________________________ By: _____________________________________
Secretary President
TRUSTEE(S)
__________________________________
__________________________________
__________________________________
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}
}
} ss
I, ______________________________, a notary public in and for the
jurisdiction above name, do hereby certify that ________________________________
________________________________________________________________________________
________________________________________________________________________________
did personally appear before me and do acknowledge that they executed the
foregoing Trust as their free act and deed.
Subscribed and sworn to before me this __________________________ day of
______________, 19___.
____________________________
Notary Public
My Commission Expires on: _______________
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State Street Bank and Trust Company
Universal IRA Information Kit
INTRODUCTION
What's new in the world of IRAS?
An Individual Retirement Account ("IRA") has always provided an
attractive means to save money for the future on a tax-advantaged basis. Recent
changes to Federal tax law have now made the IRA an even more flexible
investment and savings vehicle. Among the new changes is the creation of the
Roth Individual Retirement Account ("Roth IRA"), which will be available for use
after January 1, 1998. Under a Roth IRA, the earnings and interest on an
individual's nondeductible contributions grow without being taxed, and
distributions may be tax-free under certain circumstances. Most taxpayers
(except for those with very high income levels) will be eligible to contribute
to a Roth IRA. A Roth IRA can be used instead of a Regular IRA, to replace an
existing Regular IRA, or complement a Regular IRA you wish to continue
maintaining.
Taxpayers with adjusted gross income of up to $100,000 are eligible to
convert existing IRAs into Roth IRAs. The details on conversion are found in the
description of Roth IRAs in this booklet.
Congress has also made significant changes to Regular IRAs. First,
Congress increased the income levels at which IRA holders who participate in
employer-sponsored retirement plans can make deductible Regular IRA
contributions. Also the rules for deductible contributions by an IRA holder
whose spouse is a participant in an employer-sponsored retirement plan have been
liberalized. Second, the 10% penalty tax for premature withdrawals (before age
59 1/2) will no longer apply in the case of withdrawals to pay certain higher
education expenses or certain first-time homebuyer expenses.
What's in this kit?
In this Kit you will find detailed information about Roth IRAs and about
the changes that have been made to Regular IRAs. You will also find everything
you need to establish and maintain either a Regular or Roth IRA, or to convert
all or part of an existing Regular IRA to a Roth IRA.
The first section of this Kit contains the instructions and forms you
will need to open a new Regular or Roth IRA, to transfer from another IRA to a
State Street Bank and Trust IRA, or to convert a Regular IRA to a Roth IRA.
The second section of this Kit contains our Universal IRA Disclosure
Statement. The Disclosure Statement is divided into three parts:
Part One describes the basic rules and benefits which are specifically
applicable to your Regular IRA.
Part Two describes the basic rules and benefits which are specifically
applicable to your Roth IRA.
Part Three describes important rules and information applicable to all IRAs.
The third section of this Kit contains the Universal IRA Custodial
Agreement. The Custodial Agreement is also divided into three parts:
Part One contains provisions specifically applicable to Regular IRAs.
Part Two contains provisions specifically applicable to Roth IRAs.
Part Three contains provisions applicable to all IRAs (Regular and Roth).
This Universal Individual Retirement Custodial Account Kit contains
information and forms for both Regular IRAs and Roth IRAs. However, you may use
the Adoption Agreement in this Kit to establish only one Regular IRA or one Roth
IRA; separate Adoption Agreements must be completed if you want to establish
multiple (Roth or Regular) IRA accounts.
What's the difference between a Regular IRA and a Roth IRA?
With a Regular IRA, an individual can contribute up to $2,000 per year
and may be able to deduct the contribution from taxable income, reducing income
taxes. Taxes on investment growth and dividends are deferred until the money is
withdrawn. Withdrawals are taxed as additional ordinary income when received.
Nondeductible contributions, if any, are withdrawn tax-free. Withdrawals before
age 59 1/2 are assessed a 10% penalty in addition to income tax, unless an
exception applies.
With a Roth IRA, the contribution limits are essentially the same as
Regular IRAs, but there is no tax deduction
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for contributions. All dividends and investment growth in the account are
tax-free. Most important with a Roth IRA: there is no income tax on qualified
withdrawals from your Roth IRA. Additionally, unlike a Regular IRA, there is no
prohibition on making contributions to Roth IRAs after turning age 70 1/2, and
there's no requirement that you begin making minimum withdrawals at that age.
The chart on page 3 highlights some of the major differences between a
Regular IRA and a Roth IRA.
Is a Roth or a Regular IRA right for me?
We cannot act as your legal or tax advisor and so we cannot tell you
which kind of IRA is right for you. The information contained in this Kit is
intended to provide you with the basic information and material you will need if
you decide whether a Regular or Roth IRA is better for you, or if you want to
convert an existing Regular IRA to a Roth IRA. We suggest that you consult with
your accountant, lawyer or other tax advisor, or with a qualified financial
planner, to determine whether you should open a Regular or Roth IRA or convert
any or all of an existing Regular IRA to a Roth IRA. Your tax advisor can also
advise you as to the state tax consequences that may affect whether a Regular or
Roth IRA is right for you.
SEPs
The State Street Bank Regular IRA may be used in connection with a
simplified employee pension (SEP) plan maintained by your employer. To establish
a Regular IRA as part of your Employer's SEP plan, complete the Adoption
Agreement for a Regular IRA, indicating in the proper box that the IRA is part
of a SEP plan. A Roth IRA should not be used in connection with a SEP plan.
Other points to note
The Disclosure Statement in this Kit provides you with the basic
information that you should know about State Street Bank and Trust Company
Regular IRAs and Roth IRAs. The Disclosure Statement provides general
information about the governing rules for these IRAs and the benefits and
features offered through each type of IRA. However, the State Street Bank and
Trust Company Adoption Agreement and the Custodial Agreement, are the primary
documents controlling the terms and conditions of your personal State Street
Bank and Trust Company Regular or Roth IRA, and these shall govern in the case
of any difference with the Disclosure Statement.
You or your when used throughout this Kit refer to the person for whom
the State Street Bank and Trust Company Regular or Roth IRA is established. A
Roth IRA is either a State Street Bank and Trust Company Roth IRA or any Roth
IRA established by any other financial institution. A Regular IRA is any
non-Roth IRA offered by State Street Bank and Trust Company or any other
financial institution.
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<TABLE>
<CAPTION>
Characteristics Regular IRA Roth IRA
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Eligibility Individuals (and their spouses) who Individuals (and their spouses) who
receive compensation receive compensation
Individuals age 70 1/2 and over may Individuals age 70 1/2 and over may
not contribute contribute
- ----------------------------------------------------------------------------------------------------------------------
Tax Treatment of Contributions Subject to limitations, contributions No deduction permitted for amounts
are deductible contributed
- ----------------------------------------------------------------------------------------------------------------------
Contribution Limits Individuals may contribute up to Individuals may generally contribute
$2,000 annually (or 100% of up to $2,000 (or 100% of compensation,
compensation, if less) if less)
Deductibility depends on income level Ability to contribute phases out at
for individuals who are active income levels of $95,000 to $110,000
participants in an employer-sponsored (individual taxpayer) and $150,000 to
retirement plan $160,000 (married taxpayers)
Overall limit for contributions to all
IRAs (Regular and Roth combined) is
$2,000 annually (or 100% of
compensation, if less)
- ----------------------------------------------------------------------------------------------------------------------
Earnings Earnings and interest are not taxed Earnings and interest are not taxed
when received by your IRA when received by your IRA
- ----------------------------------------------------------------------------------------------------------------------
Rollover/Conversion Individual may rollover amounts held Rollovers from other Roth IRAs or
in employer-sponsored retirement Regular IRAs only
arrangements (401(k), SEP IRA, etc.) Amounts rolled over (or converted)
tax free to Regular IRA from another Regular IRA are subject
to income tax in the year rolled over
or converted
Tax on amounts rolled over or
converted in 1998 is spread over four
year period (1998-2001)
- ----------------------------------------------------------------------------------------------------------------------
Withdrawals Total (principal + earnings) taxable Not taxable as long as a qualified
as income in year withdrawn (except distribution--generally, account open
for any prior non-deductible for 5 years, and age 59 1/2
contributions) Minimum withdrawals not required after
Minimum withdrawals must begin after age 70 1/2
age 70 1/2
</TABLE>
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THE BURNHAM FUND INC.
State Street Bank and Trust Company Universal Individual Retirement
Custodial Account
Instructions for Opening your Regular IRA or Roth IRA
I. Read carefully the applicable sections of the Universal IRA Disclosure
Statement contained in this Kit, the Regular or Roth Individual Retirement
Custodial Account document (as applicable), the Adoption Agreement, and the
prospectus(es) for any Fund(s) you are considering. Consult your lawyer or other
tax adviser if you have any questions about how opening a Regular IRA or Roth
IRA will affect your financial and tax situation.
This Universal Individual Retirement Custodial Account Kit contains
information and forms for both Regular IRAs and Roth IRAs. However, you may use
the Adoption Agreement to establish only one Regular IRA or one Roth IRA;
separate Adoption Agreements must be completed if you want to establish multiple
(Roth or Regular) IRA accounts.
II. Complete the Adoption Agreement
A. Print the identifying information where requested in Part 1 of the
Adoption Agreement.
B. For a Regular IRA, check the box for Part A and check the other boxes in
Part A to specify the type of Regular IRA you are opening and provide the
registered information.
If this is an IRA to which you expect to make contributions each year,
check Box 1 and enclose a check in the amount of your first contribution.
Be sure to indicate whether this is a contribution for last year or for the
current year.
If this is a transfer directly from another IRA custodian or trustee, check
Box 2. Check the appropriate box to indicate whether the funds transferred
were originally from contributions to an employee qualified plan or a
403(b) arrangement, or whether any of the funds were originally from your
annual contributions to the IRA. Complete and sign the Universal IRA
Transfer of Assets Form.
If this is a rollover of amounts distributed to you from another IRA or an
employer qualified plan or a 403(b) arrangement, check Box 3. Check the
appropriate box to indicate whether the transfer is coming from a qualified
plan or 403(b) arrangement, or an IRA that held only funds that were
originally from contributions to a qualified plan or 403(b), or whether any
of the funds were originally from your annual contributions to the IRA.
Enclose a check for the rollover contribution amount.
If this is a direct rollover from a qualified plan or 403(b) arrangement,
check Box 4. Complete and sign the Universal IRA Transfer of Assets Form.
Check Box 5 if applicable (for an IRA that will be used to receive employer
contributions under an employer's simplified employee pension (or "SEP")
plan or under a grandfathered salary reduction SEP plan (or "SARSEP")).
C. For a Roth IRA, check the box for Part B. Check the other boxes in Part
B to specify the type of Roth IRA you are opening and provide the requested
information.
If this is a Roth IRA to which you expect to make contributions each year,
enclose a check in the amount of your first contribution. Be sure to
indicate whether this is a contribution for last year or for the current
year. Only annual contributions may be accepted in an annual contribution
Roth IRA account. NOTE: Roth IRAs are available starting January 1, 1998,
so you cannot make a contribution for 1997.
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If you are converting an existing Regular IRA with State Street Bank and
Trust as IRA custodian or trustee, check Box 2. Indicate your current IRA
account number and how much you are converting. Conversion of an existing
Regular IRA will result in inclusion of taxable amounts in the existing
Regular IRA on your income tax return. Note: If a conversion, rollover or
transfer from a Regular IRA to a Roth IRA is being made, only amounts
converted, rolled over or transferred during the same tax year will be
accepted in a single Roth IRA. A separate Roth IRA must be established to
hold such amounts from a different tax year. Annual contributions may never
be deposited in a Roth IRA holding such converted, rolled over or
transferred amounts.
If you are making a rollover or a transfer from an existing Regular IRA
with a different custodian or trustee, check Box 3. A rollover or transfer
from an existing Regular IRA means that the taxable amount in the existing
Regular IRA will be treated as additional income on your income tax return.
If you are making a rollover or a transfer from another Roth IRA with a
different trustee or custodian, check Box 4. Put the requested information
where indicated.
D. In Part 3, indicate your investment choices.
E. In Part 4, indicate your Primary and Alternate Beneficiaries. (Spousal
waiver must be signed if beneficiary is other than your spouse.)
F. Sign and date the Adoption Agreement in Part 5 at the end.
III. If you are transferring assets from an existing IRA to this IRA, complete
the Universal Transfer of Assets Form.
IV. The Custodian fees for maintaining your IRA are listed in the FEES AND
EXPENSES section of Part Three of the Disclosure Statement or in the Adoption
Agreement. If you are paying by check, enclose a check for the correct amount
payable as specified below. If you do not pay by check, the correct amount will
be taken from your account.
V. Check to be sure you have properly completed all necessary forms and
enclosed a check for the Custodian's fees (unless being withdrawn from your
account) and a check for the first contribution to your Regular or Roth IRA (if
applicable). Your Regular IRA or Roth IRA cannot be accepted without the
properly completed documents or the Custodian fees.
All checks should be payable to THE BURNHAM FUND INC.
Send the completed forms and checks to:
THE BURNHAM FUND
P.O. Box 8505
Boston MA 02266
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THE BURNHAM FUND INC.
State Street Bank and Trust Company
Individual Retirement Custodial Account Adoption Agreement
I, the person signing this Adoption Agreement (hereinafter called the
"Depositor"), establish an Individual Retirement Account (IRA), which is either
a Regular IRA or a Roth IRA, as indicated below, (the "Account") with State
Street Bank and Trust Company as Custodian ("Bank"). A Regular IRA operates
under Internal Revenue Code Section 408(a). A Roth IRA operates under Internal
Revenue Code Section 408A. I agree to the terms of my Account, which are
contained in the applicable provisions of the document entitled "State Street
Bank and Trust Company Universal Individual Retirement Custodial Account" and
this Adoption Agreement. I certify the accuracy of the information in this
Adoption Agreement. My Account will be effective upon acceptance by Bank.
Part 1. Depositor Information
_________________________________ _________________________________
Print Full Name Social Security Number
_________________________________ _________________________________
Address Date of Birth
_________________________________ _________________________________
City State Zip Daytime Telephone No.
Part 2. IRA Election
INSTRUCTIONS: To establish a Regular IRA, check Box A and complete Part A. To
establish a Roth IRA, check Box B and complete Part B. (In either case, complete
Part 3 to select your investment choices, and sign at the end of Part 5.)
[ ] A. REGULAR IRA
By checking this box, I designate my Account as a Regular IRA under Code Section
408(a). (Complete 1, 2, 3 or 4 below to indicate the type of Regular IRA you are
opening. Check box 5, if applicable.)
1. [ ] Annual Contributions
Current Contribution for the year $__________________.
Check enclosed for $_________________. This contribution does not exceed
the maximum permitted amount as described in the Regular IRA Disclosure
Statement.
2. [ ] Transfer of existing Regular IRA directly from current Custodian or
Trustee. Complete the Universal IRA Transfer of Assets Form.
[ ] The transferring IRA held annual contributions by me (or amounts
transferred or rolled over from another IRA holding annual
contributions).
[ ] The transferring IRA held only amounts that were originally
contributions to an employer qualified plan or 403(b) plan.
3. [ ] Rollover
The requirements for a valid rollover are complex. See the Regular IRA
Disclosure Statement for additional information and consult your tax
advisor for help if needed.
Check enclosed the amount of $__________________.
[ ] Rollover of a qualifying rollover distribution to Depositor from an
employer plan or 403(b) arrangement, or rollover from another Regular IRA
which held only assets distributed to Depositor from an employer plan or
403(b) arrangement and to which Depositor made no direct contributions.
[ ] Rollover of distribution to Depositor from another Regular IRA that
held amounts that originated from annual contributions by the Depositor.
4. [ ] Direct Rollover
[ ] Direct rollover of an eligible distribution from a qualified plan.
[ ] Direct rollover of an eligible distribution from a 403(b) account or
annuity. Direct rollovers are described in the Regular IRA Disclosure
Statement.
5. [ ] SEP Provision Check here if the Depositor intends to use this Account in
connection with a SEP Plan or grandfathered SARSEP Plan established by
the Depositor's employer.
See over
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[ ] B. ROTH IRA
By checking this box, I designate my Account as a Roth IRA under Code Section
408A. (Complete 1, 2, 3 or 4 below to indicate the type of Roth IRA you are
opening.)
1. [ ] Annual Contributions
Current Contribution for the year $ ____________________
Check enclosed for $ _______________________
This contribution does not exceed the maximum permitted amount as
described in the Roth IRA Disclosure Statement.
2. [ ] Conversion of existing Regular IRA with Bank as Custodian or Trustee to a
Roth IRA with Bank.
Current Regular IRA
Account No.: _______________________________________
Amount Converted: [ ] All [ ] Part
(Specify how much): $ _______________________
3. [ ] Rollover or Transfer from existing Regular IRA with a custodian or
trustee other than Bank to a Roth IRA with Bank.
4. [ ] Rollover or Transfer from existing Roth IRA with another custodian or
trustee to a Roth IRA with Bank. Date existing Roth IRA was originally
opened:
________________________________________________________________________
Indicate whether any amount in the existing Roth IRA represents amounts
converted or transferred from a Regular IRA into such other Roth IRA:
[ ] Yes [ ] No
If yes, date of the most recent conversion or transfer into such other
Roth: _____________________________
Complete the Universal IRA Transfer of Assets Form if either 3 or 4 is checked
and the transaction is a transfer (as opposed to a rollover).
Note: If a conversion, rollover or transfer from a Regular IRA to a Roth IRA is
being made, only amounts converted, rolled over or transferred during the same
tax year will be accepted in a single Roth IRA. A separate Roth IRA must be
established to hold such amounts from a different tax year. Annual contributions
may not be deposited in a Roth IRA holding such converted, rolled over or
transferred amounts.
Part 3. Investments
Invest contributions to my Account as follows: (check one)
[ ] Class A shares
[ ] Class B shares
[ ] Class C shares
I acknowledge that I have sole responsibility for my investment choice and that
I have received a current prospectus for the Fund which describes the class of
shares I have selected. Please read the prospectus of the Fund before investing.
Please detach form at perforation and return in enclosed envelope
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Part 4. Designation of Beneficiary
As Depositor, I hereby make the following designation of beneficiary in
accordance with the State Street Bank and Trust Company Regular Individual
Retirement Custodial Account, or Roth Individual Retirement Custodial Account:
In the event of my death, pay any interest I may have under my Account to the
following Primary Beneficiary or Beneficiaries who survive me. Make payment in
the proportions specified below (or in equal proportions if no different
proportions are specified). If any Primary Beneficiary predeceases me, his share
is to be divided among the Primary Beneficiaries who survive me in the relative
proportions assigned to each such surviving Primary Beneficiary.
Primary Beneficiary or Beneficiaries:
Name Relationship Date of Birth Social Security Number Proportion
_______________ _____________ _______________ _______________________ __________
_______________ _____________ _______________ _______________________ __________
_______________ _____________ _______________ _______________________ __________
_______________ _____________ _______________ _______________________ __________
If none of the Primary Beneficiaries survives me, pay any interest I may have
under my Account to the following Alternate Beneficiary or Beneficiaries who
survive me. Make payment in the proportions specified below (or in equal
proportions if no different proportions are specified). If any Alternate
Beneficiary predeceases me, his share is to be divided among the Alternate
Beneficiaries who survive me in the relative proportions assigned to each such
surviving Alternate Beneficiary.
Alternate Beneficiary or Beneficiaries:
Name Relationship Date of Birth Social Security Number Proportion
_______________ _____________ _______________ _______________________ __________
_______________ _____________ _______________ _______________________ __________
_______________ _____________ _______________ _______________________ __________
_______________ _____________ _______________ _______________________ __________
IMPORTANT: This Designation of Beneficiary may have important tax or estate
planning effects. Also, if you are married and reside in a community property or
marital property state (Arizona, California, Idaho, Louisiana, Nevada, New
Mexico, Texas, Washington or Wisconsin), you may need to obtain your spouse's
consent if you have not designated your spouse as primary beneficiary for at
least half of your Account. See your lawyer or other tax professional for
additional information and advice.
SPOUSAL CONSENT
(This section should be reviewed if the account holder is married and
designates a beneficiary other than the spouse. It is the account
holder's responsibility to determine if this section applies. The
account holder may need to consult with legal counsel. Neither the
Custodian nor the Sponsor are liable for any consequences resulting
from a failure of the account holder to provide proper spousal
consent.)
I am the spouse of the above-named account holder. I acknowledge that
I have received a full and reasonable disclosure of my spouse's
property and financial obligations. Due to any possible consequences
of giving up my community property interest in this IRA, I have been
advised to see a tax professional or legal advisor.
I hereby consent to the beneficiary designation(s) indicated above. I
assume full responsibility for any adverse consequence that may
result. No tax or legal advice was given to me by the Custodian or
Sponsor.
________________________________________________________________________________
SIGNATURE OF SPOUSE DATE
________________________________________________________________________________
SIGNATURE OF WITNESS FOR SPOUSE DATE
See over
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Part 5. Certifications and Signatures
If the Depositor has indicated a Regular IRA Rollover or Direct Rollover above,
Depositor certifies that the contribution does not include any employee
contributions to any qualified plan (other than accumulated deductible employee
contributions) or 403(b) arrangement; that any assets transferred in kind by
Depositor are the same assets received by the Depositor in the distribution
being rolled over; if the distribution is from another Regular IRA, that
Depositor has not made another rollover within the one-year period immediately
preceding this rollover; that such distribution was received within 60 days of
making the rollover to this Account; and that no portion of the amount rolled
over is a required minimum distribution under the required distribution rules.
If Depositor has indicated a Conversion, Transfer or a Rollover of an existing
Regular IRA to a Roth IRA, Depositor acknowledges that the amount converted will
be treated as taxable income (except for prior nondeductible contributions) for
federal income tax purposes. If Depositor has indicated a Rollover from another
Roth IRA (Item 4 of Part B above), Depositor certifies that the information
given in Item 4 is correct and acknowledges that adverse tax consequences or
penalties could result from giving incorrect information.
Depositor has received and read the applicable sections of the "State Street
Bank and Trust Company Universal Individual Retirement Account Disclosure
Statement" relating to this Account (including the Custodian's fee schedule),
the Custodial Account document, and the "Instructions" pertaining to this
Adoption Agreement. Depositor acknowledges receipt of the Universal Individual
Retirement Custodial Account document and Universal IRA Disclosure Statement at
least 7 days before the date inscribed below and acknowledges that Depositor has
no further right of revocation.
Depositor acknowledges and understands that the beneficiaries named herein may
be changed or revoked at any time by filing a new designation in writing with
the Custodian. All forms must be acceptable to the Custodian and dated and
signed by the Depositor.
__________________________________________
SIGNATURE OF DEPOSITOR
__________________________________________
DATE
Custodian Acceptance. State Street Bank and Trust Company will accept
appointment as Custodian of the Depositor's Account. However, this Agreement is
not binding upon the Custodian until the Depositor has received a statement of
the transaction. Receipt by the Depositor of a confirmation of the purchase of
the Fund shares indicated above will serve as notification of State Street Bank
and Trust Company's acceptance of appointment as Custodian of the Depositor's
Account.
STATE STREET BANK AND TRUST COMPANY, CUSTODIAN
__________________________________________
BY
__________________________________________
DATE
If the Depositor is a minor under the laws of the Depositor's state of
residence, a parent or guardian must also sign the Adoption Agreement here.
Until the Depositor reaches the age of majority, the parent or guardian will
exercise the powers and duties of the Depositor.
__________________________________________
SIGNATURE OF PARENT OR GUARDIAN
RETAIN A PHOTOCOPY OF THE COMPLETED ADOPTION AGREEMENT FOR YOUR RECORDS
Please detach form at perforation and return in enclosed envelope
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THE BURNHAM FUND INC.
State Street Bank and Trust Company Individual Retirement Custodial Account
Universal IRA Transfer of Assets Form
1. NAME AND ADDRESS OF DEPOSITOR
_________________________________ _________________________________
Print Full Name Social Security Number
_________________________________ _________________________________
Address Daytime Telephone No.
_________________________________
City State Zip
2. IDENTIFICATION OF RECEIVING ACCOUNT
This a transfer to a State Street Bank and Trust Company
[ ] Regular IRA* [ ] SEP IRA* [ ] Roth IRA**
* You may not transfer from a Roth IRA to a Regular IRA or a simplified
employee pension (SEP) IRA. Transfers to a Regular IRA or SEP IRA may be made
from another Regular IRA or SEP IRA, qualified employer plan, 403(b)
arrangement or a SIMPLE IRA account (but not until at least 2 years after the
first contribution to your SIMPLE IRA account).
** Transfers to a Roth IRA are possible only from another Roth IRA or from a
Regular IRA, not from other types of tax-deferred accounts. A transfer from a
Regular IRA will trigger federal income tax on the taxable amount transferred
from the Regular IRA. Note: If a conversion, rollover or transfer from a
Regular IRA to a Roth IRA is being made, only amounts converted, rolled over
or transferred during the same tax year will be accepted in a single Roth
IRA. A separate Roth IRA must be established to hold such amounts from a
different tax year. Annual contributions may not be deposited in a Roth IRA
holding such converted, rolled over or transferred amounts.
If you already have a Regular IRA, SEP IRA or Roth IRA, indicate the Account
No.__________________________
3. INSTRUCTIONS TO PRESENT IRA CUSTODIAN OR TRUSTEE (Completed by Depositor)
_____________________________________________________________________________
Name of Custodian/Trustee
_____________________________________________________________________________
Attn: Mr./Ms.
_____________________________________________________________________________
Address City State Zip
Identification of Sending Account, including Account No._____________________
Please transfer assets from the above account to State Street Bank and Trust
Company. Transfer should be in cash according to the following instructions:
[ ] Transfer the total amount in my Account (or) [ ] Transfer
$___________________ and retain the balance.
Make check payable to:
THE BURNHAM FUND INC.
Indicate class of shares: [ ] Class A [ ] Class B [ ] Class C
See over
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4. INVESTMENT INSTRUCTIONS TO STATE STREET BANK AND TRUST COMPANY
Depositor, check one box and complete if necessary.
[ ] Invest the transferred amount in accordance with the investment
instructions in the Adoption Agreement for my State Street Bank and Trust
Company Individual Retirement Custodial Account.
[ ] Invest the transferred amount as follows (check one):
[ ] Class A shares [ ] Class B shares [ ] Class C shares
See the enclosed prospectus for details on the various classes offered.
I acknowledge that I have sole responsibility for my investment choices and
that I have received a current prospectus for each Fund I select. Please read
the prospectus(es) of the Fund(s) you select before investing.
I understand that the requirements for a valid transfer to a Regular IRA, SEP
IRA, Roth IRA or SIMPLE IRA are complex and that I have the responsibility
for complying with all requirements and for the tax results of any such
transfer.
5. SIGNATURE OF DEPOSITOR
The undersigned certifies to the present IRA custodian or trustee that the
undersigned has established a successor Individual Retirement Custodial
Account meeting the requirements of Internal Revenue Code Section 408(a),
408(p) or 408A (as the case may be) to which assets will be transferred, and
certifies to State Street Bank and Trust Company that the IRA from which
assets are being transferred meets the requirements of Internal Revenue Code
Section 408(a), 408(p) or 408A (as the case may be).
_____________________________________________________________________________
SIGNATURE OF DEPOSITOR DATE
SIGNATURE GUARANTEE (only if required by current Custodian or Trustee)
Signature guaranteed by:
_____________________________________________________________________________
NAME OF BANK OR DEALER FIRM
_____________________________________________________________________________
SIGNATURE OF OFFICER AND TITLE
6. ACCEPTANCE BY NEW CUSTODIAN (completed by State Street Bank and Trust
Company)
State Street Bank and Trust Company agrees to accept transfer of the above
amount for deposit to the Depositor's State Street Bank and Trust Company
Individual Retirement Custodial Account, and requests the liquidation and
transfer of assets as indicated above.
_____________________________________________________________________________
_____________________________________________________________________________
BY:
Please detach form at perforation and return in enclosed envelope
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State Street Bank and Trust Company Universal Individual Retirement Account
Disclosure Statement
Part One: Description of Regular IRAs
SPECIAL NOTE
Part One of the Disclosure Statement describes the rules applicable to
Regular IRAs beginning January 1, 1998. IRAs described in these pages are called
"Regular IRAs" to distinguish them from the new "Roth IRAs" first available
starting in 1998. Roth IRAs are described in Part Two of this Disclosure
Statement.
For Regular IRA contributions for 1997 (including contributions made up to
April 15, 1998 but designated as contributions for 1997), there are different
rules for determining the deductibility of your contribution on your federal tax
return. For contributions for 1997, the "active participant" limits on
deductibility (described below) apply if either spouse is an active participant
in an employer-sponsored plan. Also, the adjusted gross income ("AGI") levels
for partially deductible or nondeductible Regular IRA contributions (described
below) are lower for 1997 ($25,000 for single taxpayers, with no deduction if
your AGI is above $35,000; and $40,000 for married taxpayers filing jointly,
with no deduction if your AGI is above $50,000). Also, the exceptions to the 10%
early withdrawal penalty for withdrawals to pay certain higher education or
first-time homebuyer expenses do not apply to withdrawals in 1997.
This Part One of the Disclosure Statement describes Regular IRAs. It does
not describe Roth IRAs, a new type of IRA available starting in 1998.
Contributions to a Roth IRA are not deductible (regardless of your AGI), but
withdrawals that meet certain requirements are not subject to federal income
tax, so that dividends and investment growth on amounts held in the Roth IRA can
escape federal income tax. Please see Part Two of this Disclosure Statement if
you are interested in learning more about Roth IRAs.
Regular IRAs described in this Disclosure Statement may be used as part of
a simplified employee pension (SEP) plan maintained by your employer. Under a
SEP your employer may make contributions to your Regular IRA, and these
contributions may exceed the normal limits on Regular IRA contributions.
YOUR REGULAR IRA
This Part One contains information about your Regular Individual Retirement
Custodial Account with State Street Bank and Trust Company as Custodian. A
Regular IRA gives you several tax benefits. Earnings on the assets held in your
Regular IRA are not subject to federal income tax until withdrawn by you. You
may be able to deduct all or part of your Regular IRA contribution on your
federal income tax return. State income tax treatment of your Regular IRA may
differ from federal treatment; ask your state tax department or your personal
tax advisor for details.
Be sure to read Part Three of this Disclosure Statement for important
additional information, including information on how to revoke your Regular IRA,
investments and prohibited transactions, fees and expenses, and certain tax
requirements.
ELIGIBILITY
What are the eligibility requirements for a Regular IRA?
You are eligible to establish and contribute to a Regular IRA for a year
if:
You received compensation (or earned income if you are self employed)
during the year for personal services you rendered. If you received taxable
alimony, this is treated like compensation for IRA purposes.
You did not reach age 70 1/2 during the year.
Can I contribute to a Regular IRA for my spouse?
For each year before the year when your spouse attains age 70 1/2, you can
contribute to a separate Regular IRA for your spouse, regardless of whether your
spouse had any compensation or earned income in that year. This is called a
"spousal IRA." To make a contribution to a Regular IRA for your spouse, you must
file a joint tax return for the year with your spouse. For a spousal IRA, your
spouse must set up a different Regular IRA, separate from yours, to which you
contribute.
CONTRIBUTIONS
When can I make contributions to a Regular IRA?
You may make a contribution to your existing Regular IRA or establish a new
Regular IRA for a taxable year by the due date (not including any extensions)
for your federal income tax return for the year. Usually this is April 15 of the
following year.
How much can I contribute to my Regular IRA?
For each year when you are eligible (see above), you can contribute up to
the lesser of $2,000 or 100% of your compensation (or earned income, if you are
self-employed). However, under the tax laws, all or a portion of your
contribution may not be deductible.
If you and your spouse have spousal Regular IRAs, each spouse may
contribute up to $2,000 to his or her IRA for a year as long as the combined
compensation of both spouses for the year (as shown on your joint income tax
return) is at least $4,000. If the combined compensation of both spouses is less
than $4,000, the spouse with the higher amount of compensation may contribute up
to that spouse's compensation amount, or $2,000 if less. The spouse with the
lower compensation amount may contribute any amount up to that spouse's
compensation plus any excess of the other spouse's compensation over the other
spouse's IRA contribution. However, the maximum contribution to either spouse's
Regular IRA is $2,000 for the year.
If you (or your spouse) establish a new Roth IRA and make contributions to
both your Regular IRA and a Roth IRA, the combined limit on contributions to
both your (or your spouse's) Regular IRA and Roth IRA for a single calendar year
is $2,000.
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How do I know if my contribution is tax deductible?
The deductibility of your contribution depends upon whether you are an
active participant in any employer-sponsored retirement plan. If you are not an
active participant, the entire contribution to your Regular IRA is deductible.
If you are an active participant in an employer-sponsored plan, your
Regular IRA contribution may still be completely or partly deductible on your
tax return. This depends on the amount of your income (see below).
Similarly, the deductibility of a contribution to a Regular IRA for your
spouse depends upon whether your spouse is an active participant in any
employer-sponsored retirement plan. If your spouse is not an active participant,
the contribution to your spouse's Regular IRA will be deductible. If your spouse
is an active participant, the Regular IRA contribution will be completely,
partly or not deductible depending upon your combined income.
An exception to the preceding rules applies to high-income married
taxpayers, where one spouse is an active participant in an employer-sponsored
retirement plan and the other spouse is not. A contribution to the non-active
participant spouse's Regular IRA will be only partly deductible at an adjusted
gross income level on the joint tax return of $150,000, and the deductibility
will be phased out as described below over the next $10,000 so that there will
be no deduction at all with an adjusted gross income level of $160,000 or
higher.
How do I determine my or my spouse's "active participant" status?
Your (or your spouse's) Form W-2 should indicate if you (or your spouse)
were an active participant in an employer-sponsored retirement plan for a year.
If you have a question, you should ask your employer or the plan administrator.
In addition, regardless of income level, your spouse's "active participant"
status will not affect the deductibility of your contributions to your Regular
IRA if you and your spouse file separate tax returns for the taxable year and
you lived apart at all times during the taxable year.
What are the deduction restrictions for active participants?
If you (or your spouse) are an active participant in an employer plan during a
year, the contribution to your Regular IRA (or your spouse's Regular IRA) may be
completely, partly or not deductible depending upon your filing status and your
amount of adjusted gross income ("AGI"). If AGI is any amount up to the lower
limit, the contribution is deductible. If your AGI falls between the lower limit
and the upper limit, the contribution is partly deductible. If your AGI falls
above the upper limit, the contribution is not deductible.
FOR ACTIVE PARTICIPANTS - 1998
<TABLE>
<CAPTION>
===================================================================================================
If You Are Single If You Are Married Filing Jointly Then Your Regular IRA Contribution Is
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Up to Up to Fully Deductible
Lower Limit Lower Limit
($30,000 for 1998) ($50,000 for 1998)
---------------------------------------------------------------------------------------------------
Adjusted More than Lower Limit More than Lower Limit Partly Deductible
Gross but less than but less than
Income Upper Limit Upper Limit
(AGI) Level ($40,000 for 1998) ($60,000 for 1998)
---------------------------------------------------------------------------------------------------
Upper Limit or more Upper Limit or more Not Deductible
---------------------------------------------------------------------------------------------------
</TABLE>
The Lower Limit and the Upper Limit will change for 1999 and later years. The
Lower Limit and Upper Limit for these years are shown in the following table.
Substitute the correct Lower Limit and Upper Limit in the table above to
determine deductibility in any particular year. (Note: if you are married but
filing separate returns, your Lower Limit is always zero and your Upper Limit is
always $10,000).
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TABLE OF LOWER AND UPPER LIMITS
================================================================================
Year Single Married Filing Jointly
- --------------------------------------------------------------------------------
Lower Limit Upper Limit Lower Limit Upper Limit
- --------------------------------------------------------------------------------
1999 $31,000 $41,000 $51,000 $61,000
2000 $32,000 $42,000 $52,000 $62,000
2001 $33,000 $43,000 $53,000 $63,000
2002 $34,000 $44,000 $54,000 $64,000
2003 $40,000 $50,000 $60,000 $70,000
2004 $45,000 $55,000 $65,000 $75,000
2005 $50,000 $60,000 $70,000 $80,000
2006 $50,000 $60,000 $75,000 $85,000
2007 and later $50,000 $60,000 $80,000 $100,000
- --------------------------------------------------------------------------------
How do I calculate my deduction if I fall in the "partly deductible" range?
If your AGI falls in the partly deductible range, you must calculate the
portion of your contribution that is deductible. To do this, multiply your
contribution by a fraction. The numerator is the amount by which your AGI
exceeds the lower limit (for 1998: $30,000 if single, or $50,000 if married
filing jointly). The denominator is $10,000 (note that the denominator for
married joint filers is $20,000 starting in 2007). Subtract this from your
contribution and then round down to the nearest $10. The deductible amount is
the greater of the amount calculated or $200 (provided you contributed at least
$200). If your contribution was less than $200, then the entire contribution is
deductible.
For example, assume that you make a $2,000 contribution to your Regular IRA
in 1998, a year in which you are an active participant in your employer's
retirement plan. Also assume that your AGI is $57,555 and you are married,
filing jointly. You would calculate the deductible portion of your contribution
this way:
1. The amount by which your AGI exceeds the lower limit of the
partly-deductible range: ($57,555-$50,000) = $7,555
2. Divide this by $10,000: $ 7,555 = 0.7555
-------
$10,000
3. Multiply this by your contribution limit: 0.7555 x $2,000 = $1,511
4. Subtract this from your contribution: ($2,000 - $1,551) = $489
5. Round this down to the nearest $10: = $480
6. Your deductible contribution is the greater of this amount or $200.
Even though part or all of your contribution is not deductible, you may still
contribute to your Regular IRA (and your spouse may contribute to your spouse's
Regular IRA) up to the limit on contributions. When you file your tax return for
the year, you must designate the amount of non-deductible contributions to your
Regular IRA for the year. See IRS Form 8606.
How do I determine my AGI?
AGI is your gross income minus those deductions which are available to all
taxpayers even if they don't itemize. Instructions to calculate your AGI are
provided with your income tax Form 1040 or 1040A.
What happens if I contribute more than allowed to my Regular IRA?
The maximum contribution you can make to a Regular IRA generally is $2,000
or 100% of compensation or earned income, whichever is less. Any amount
contributed to the IRA above the maximum is considered an "excess contribution."
The excess is calculated using your contribution limit, not the deductible
limit. An excess contribution is subject to excise tax of 6% for each year it
remains in the IRA.
How can I correct an excess contribution?
Excess contributions may be corrected without paying a 6% penalty. To do
so, you must withdraw the excess and any earnings on the excess before the due
date (including extensions) for filing your federal income tax return for the
year for which you made the excess contribution. A deduction should not be taken
for any excess contribution. Earnings on the amount withdrawn must also be
withdrawn. The earnings must be included in your income for the tax year for
which the contribution was made and may be subject to a 10% premature withdrawal
tax if you have not reached age 59 1/2.
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What happens if I don't correct the excess contribution by the tax return due
date?
Any excess contribution withdrawn after the tax return due date (including
any extensions) for the year for which the contribution was made will be subject
to the 6% excise tax. There will be an additional 6% excise tax for each year
the excess remains in your account.
Under limited circumstances, you may correct an excess contribution after
tax filing time by withdrawing the excess contribution (leaving the earnings in
the account). This withdrawal will not be includable in income nor will it be
subject to any premature withdrawal penalty if (1) your contributions to all
Regular IRAs do not exceed $2,000 and (2) you did not take a deduction for the
excess amount (or you file an amended return (Form 1040X) which removes the
excess deduction).
How are excess contributions treated if none of the preceding rules apply?
Unless an excess contribution qualifies for the special treatment outlined
above, the excess contribution and any earnings on it withdrawn after tax filing
time will be includable in taxable income and may be subject to a 10% premature
withdrawal penalty. No deduction will be allowed for the excess contribution for
the year in which it is made.
Excess contributions may be corrected in a subsequent year to the extent
that you contribute less than your maximum amount. As the prior excess
contribution is reduced or eliminated, the 6% excise tax will become
correspondingly reduced or eliminated for subsequent tax years. Also, you may be
able to take an income tax deduction for the amount of excess that was reduced
or eliminated, depending on whether you would be able to take a deduction if you
had instead contributed the same amount.
Are the earnings on my Regular IRA funds taxed?
Any dividends on or growth of the investments held in your Regular IRA are
generally exempt from federal income taxes and will not be taxed until withdrawn
by you, unless the tax exempt status of your Regular IRA is revoked (this is
described in Part Three of this Disclosure Statement).
TRANSFERS/ROLLOVERS
Can I transfer or roll over a distribution I receive from my employer's
retirement plan into a Regular IRA?
Almost all distributions from employer plans or 403(b) arrangements (for
employees of tax-exempt employers) are eligible for rollover to a Regular IRA.
The main exceptions are:
$ payments over the lifetime or life expectancy of the participant (or
participant and a designated beneficiary),
$ installment payments for a period of 10 years or more,
$ required distributions (generally the rules require distributions
starting at age 70 1/2 or for certain employees starting at
retirement, if later), and
$ payments of employee after-tax contributions.
If you are eligible to receive a distribution from a tax qualified retirement
plan as a result of, for example, termination of employment, plan
discontinuance, or retirement, all or part of the distribution may be
transferred directly into your Regular IRA. This is a called a "direct
rollover." Or, you may receive the distribution and make a regular rollover to
your Regular IRA within 60 days. By making a direct rollover or a regular
rollover, you can defer income taxes on the amount rolled over until you
subsequently make withdrawals from your IRA.
The maximum amount you may roll over is the amount of employer
contributions and earnings distributed. You may not roll over any after-tax
employee contributions you made to the employer retirement plan. If you are over
age 70 1/2 and are required to take minimum distributions under the tax laws,
you may not roll over any amount required to be distributed to you under the
minimum distribution rules. Also, if you are receiving periodic payments over
your or your and your designated beneficiary's life expectancy or for a period
of at least 10 years, you may not roll over these payments. A rollover to a
regular IRA must be completed within 60 days after the distribution from the
employer retirement plan to be valid.
NOTE: A qualified plan administrator or 403(b) sponsor MUST WITHHOLD 20% OF YOUR
DISTRIBUTION for federal income taxes UNLESS you elect a direct rollover. Your
plan or 403(b) sponsor is required to provide you with information about direct
and traditional rollovers and withholding taxes before you receive your
distribution and must comply with your directions to make a direct rollover.
The rules governing rollovers are complicated. Be sure to consult your tax
advisor or the IRS if you have a question about rollovers.
Once I have rolled over a plan distribution into a Regular IRA, can I
subsequently roll over into another employer's qualified retirement plan?
Yes. Part or all of an eligible distribution received from a qualified plan
may be transferred from the Regular IRA holding it to another qualified plan.
However, the IRA must have no assets other than those which were previously
distributed to you from the qualified plan. Specifically, the IRA cannot contain
any contributions by you (or your spouse). Also, the new qualified plan must
accept rollovers. Similar rules apply to Regular IRAs established with rollovers
from 403(b) arrangements.
Can I make a traditional rollover from my Regular IRA to another Regular IRA?
You may make a rollover from one Regular IRA to another Regular IRA you
have or you establish to receive the rollover. Such a rollover must be completed
within 60 days after the withdrawal from your first Regular IRA. After making a
traditional rollover from one Regular IRA to another, you must wait a full year
(365 days) before you can make another such rollover. (However, you can instruct
a Regular IRA custodian to transfer amounts directly to another Regular IRA
custodian; such a direct transfer does not count as a rollover.)
What happens if I combine rollover contributions with my normal contributions in
one IRA?
If you wish to make both a normal annual contribution and a rollover
contribution, you may wish to open two separate Regular IRAs by completing two
Adoption Agreements and two sets of forms. You should consult a tax advisor
before making your annual contribution to the IRA you established with rollover
contributions (or make a rollover contribution to the IRA to which you make your
annual contributions). This is because combining your annual contributions and
rollover contributions originating from an employer plan distribution would
prohibit the future rollover out of the IRA into another qualified plan. If
despite this, you still wish to combine a rollover contribution
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and the IRA holding your annual contributions, you should establish the account
as a Regular IRA on the Adoption Agreement (not a Rollover IRA or Direct
Rollover IRA) and make the contributions to that account.
How do rollovers affect my contribution or deduction limits?
Rollover contributions, if properly made, do not count toward the maximum
contribution. Also, rollovers are not deductible and they do not affect your
deduction limits as described above.
What about converting my Regular IRA to a Roth IRA?
The rules for converting a Regular IRA to a new Roth IRA, or making a
rollover from a Regular IRA to a new Roth IRA, are described in Part Two below.
WITHDRAWALS
When can I make withdrawals from my Regular IRA?
You may withdraw from your Regular IRA at any time. However, withdrawals
before age 59 1/2 may be subject to a 10% penalty tax in addition to regular
income taxes (see below).
When must I start making withdrawals?
If you have not withdrawn your entire IRA by the April 1 following the year
in which you reach 70 1/2, you must make minimum withdrawals in order to avoid
penalty taxes. The rule allowing certain employees to postpone distributions
from an employer qualified plan until actual retirement (even if this is after
age 70 1/2) does not apply to Regular IRAs.
The minimum withdrawal amount is determined by dividing the balance in your
Regular IRA (or IRAs) by your life expectancy or the combined life expectancy of
you and your designated beneficiary. The minimum withdrawal rules are complex.
Consult your tax advisor for assistance.
The penalty tax is 50% of the difference between the minimum withdrawal
amount and your actual withdrawals during a year. The IRS may waive or reduce
the penalty tax if you can show that your failure to make the required minimum
withdrawals was due to reasonable cause and you are taking reasonable steps to
remedy the problem.
How are withdrawals from my Regular IRA taxed?
Amounts withdrawn by you are includable in your gross income in the taxable
year that you receive them, and are taxable as ordinary income. Lump sum
withdrawals from a Regular IRA are not eligible for averaging treatment
currently available to certain lump sum distributions from qualified employer
retirement plans.
Since the purpose of a Regular IRA is to accumulate funds for retirement,
your receipt or use of any portion of your Regular IRA before you attain age 59
1/2 generally will be considered as an early withdrawal and subject to a 10%
penalty tax.
The 10% penalty tax for early withdrawal will not apply if:
The distribution was a result of your death or disability.
The purpose of the withdrawal is to pay certain higher education
expenses for yourself or your spouse, child, or grandchild. Qualifying
expenses include tuition, fees, books, supplies and equipment required for
attendance at a post-secondary educational institution. Room and board
expenses may qualify if the student is attending at least half-time.
The withdrawal is used to pay eligible first-time homebuyer expenses.
These are the costs of purchasing, building or rebuilding a principal
residence (including customary settlement, financing or closing costs). The
purchaser may be you, your spouse, or a child, grandchild, parent or
grandparent of you or your spouse. An individual is considered a
"first-time homebuyer" if the individual (or the individual's spouse, if
married) did not have an ownership interest in a principal residence during
the two-year period immediately preceding the acquisition in question. The
withdrawal must be used for eligible expenses within 120 days after the
withdrawal. (If there is an unexpected delay, or cancellation of the home
acquisition, a withdrawal may be redeposited as a rollover).
There is a lifetime limit on eligible first-time homebuyer expenses of
$10,000 per individual.
The distribution is one of a scheduled series of substantially equal
periodic payments for your life or life expectancy (or the joint lives or
life expectancies of you and your beneficiary).
If there is an adjustment to the scheduled series of payments, the 10%
penalty tax may apply. The 10% penalty will not apply if you make no change
in the series of payments until the end of five years or until you reach
age 59 1/2, whichever is later. If you make a change before then, the
penalty will apply. For example, if you begin receiving payments at age 50
under a withdrawal program providing for substantially equal payments over
your life expectancy, and at age 58 you elect to receive the remaining
amount in your Regular IRA in a lump-sum, the 10% penalty tax will apply to
the lump sum and to the amounts previously paid to you before age 59 1/2.
The distribution does not exceed the amount of your deductible medical
expenses for the year (generally speaking, medical expenses paid during a
year are deductible if they are greater than 72% of your adjusted gross
income for that year).
The distribution does not exceed the amount you paid for health
insurance coverage for yourself, your spouse and dependents. This exception
applies only if you have been unemployed and received federal or state
unemployment compensation payments for at least 12 weeks; this exception
applies to distributions during the year in which you received the
unemployment compensation and during the following year, but not to any
distributions received after you have been reemployed for at least 60 days.
How are nondeductible contributions taxed when they are withdrawn?
A withdrawal of nondeductible contributions (not including earnings) will
be tax-free. However, if you made both deductible and nondeductible
contributions to your Regular IRA, then each distribution will be treated as
partly a return of your nondeductible contributions (not taxable) and partly a
distribution of deductible contributions and earnings (taxable). The nontaxable
amount is the portion of the amount withdrawn which bears the same ratio as your
total nondeductible Regular IRA contributions bear to the total balance of all
your Regular IRAs (including rollover IRAs and SEPs, but not including Roth
IRAs).
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For example, assume that you made the following Regular IRA contributions:
Year Deductible Nondeductible
-----------------------------------------
1995 $2,000
1996 $2,000
1997 $1,000 $1,000
1998 $1,000
---------------------------
$5,000 $2,000
In addition assume that your Regular IRA has total investment earnings through
1998 of $1,000. During 1998 you withdraw $500. Your total account balance as of
12-31-98 is $7,500 as shown below.
Deductible Contributions $5,000
Nondeductible Contributions $2,000
Earnings On IRA $1,000
Less 1998 Withdrawal $ 500
------
Total Account Balance as of 12/31/98 $7,500
To determine the nontaxable portion of your 1998 withdrawal, the total 1998
withdrawal ($500) must be multiplied by a fraction. The numerator of the
fraction is the total of all nondeductible contributions remaining in the
account before the 1998 withdrawal ($2,000). The denominator is the total
account balance as of 12-31-98 ($7,500) plus the 1998 withdrawal ($500) or
$8,000. The calculation is:
Total Remaining
Nondeductible Contributions $2,000 x $500 = $125
- --------------------------- ------
Total Account Balance $8,000
Thus, $125 of the $500 withdrawal in 1998 will not be included in your
taxable income. The remaining $375 will be taxable for 1998. In addition, for
future calculations the remaining nondeductible contribution total will be
$2,000 minus $125, or $1,875.
A loss in your Regular IRA investment may be deductible. You should consult
your tax advisor for further details on the appropriate calculation for this
deduction if applicable.
Is there a penalty tax on certain large withdrawals or accumulations in my IRA?
Earlier tax laws imposed a "success" penalty equal to 15% of withdrawals
from all retirement accounts (including IRAs, 401(k) or other employer
retirement plans, 403(b) arrangements and others) in a year exceeding a
specified amount (initially $150,000 per year). Also, there was a 15% estate tax
penalty on excess accumulations remaining in IRAs and other tax-favored
arrangements upon your death. These 15% penalty taxes have been repealed.
Important: Please see Part Three below which contains important information
applicable to all State Street Bank and Trust Company IRAs.
Part Two: Description of Roth IRAs
SPECIAL NOTE
Part Two of the Disclosure Statement describes the rules generally
applicable to Roth IRAs beginning January 1, 1998.
Roth IRAs are a new kind of IRA available for the first time in 1998.
Contributions to a Roth IRA for 1997 are not permitted. Contributions to a Roth
IRA are not tax-deductible, but withdrawals that meet certain requirements are
not subject to federal income taxes. This makes the dividends on and growth of
the investments held in your Roth IRA tax-free for federal income tax purposes
if the requirements are met.
Regular IRAs, which have existed since 1975, are still available.
Contributions to a Regular IRA may be tax-deductible. Earnings and gains on
amounts while held in a Regular IRA are tax-deferred. Withdrawals are subject to
federal income tax (except for prior after-tax contributions which may be
recovered without additional federal income tax).
This Part Two does not describe Regular IRAs. If you wish to review
information about Regular IRAs, please see Part One of this Disclosure
Statement.
This Disclosure Statement also does not describe IRAs established in
connection with a SIMPLE IRA program or a Simplified Employee Pension (SEP) plan
maintained by your employer. Roth IRAs may not be used in connection with a
SIMPLE IRA program or a SEP plan.
YOUR ROTH IRA
Your Roth IRA gives you several tax benefits. While contributions to a Roth
IRA are not deductible, dividends on and growth of the assets held in your Roth
IRA are not subject to federal income tax. Withdrawals by you from your Roth IRA
are excluded from your income for federal income tax purposes if certain
requirements (described below) are met. State income tax treatment of your Roth
IRA may differ from federal treatment; ask your state tax department or your
personal tax advisor for details.
Be sure to read Part Three of this Disclosure Statement for important
additional information, including information on how to revoke your Roth IRA,
investments and prohibited transactions, fees and expenses and certain tax
requirements.
ELIGIBILITY
What are the eligibility requirements for a Roth IRA?
Starting with 1998, you are eligible to establish and contribute to a Roth
IRA for a year if you received compensation (or earned income if you are self
employed) during the year for personal services you rendered. If you received
taxable alimony, this is treated like compensation for IRA purposes.
In contrast to a Regular IRA, with a Roth IRA you may continue making
contributions after you reach age 70 1/2.
Can I Contribute to Roth IRA for my spouse?
Starting with 1998, if you meet the eligibility requirements you can not
only contribute to your own Roth IRA, but also to a separate Roth IRA for your
spouse out of your compensation or earned income, regardless of whether your
spouse had any compensation or earned income in that year. This is called a
"spousal Roth IRA." To make a contribution to a Roth IRA for your spouse, you
must file a joint tax return for the year with your spouse. For a spousal Roth
IRA, your spouse must set up a different Roth IRA, separate from yours, to which
you contribute.
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Of course, if your spouse has compensation or earned income, your spouse
can establish his or her own Roth IRA and make contributions to it in accordance
with the rules and limits described in this Part Two of the Disclosure
Statement.
CONTRIBUTIONS
When can I make contributions to a Roth IRA?
You may make a contribution to your Roth IRA or establish a new Roth IRA
for a taxable year by the due date (not including any extensions) for your
federal income tax return for the year. Usually this is April 15 of the
following year. For example, you will have until April 15, 1999 to establish and
make a contribution to a Roth IRA for 1998.
Caution: Since Roth IRAs are available starting January 1, 1998, you may not
make a contribution by April 15, 1998 to a Roth IRA for 1997.
How much can I contribute to my Roth IRA?
For each year when you are eligible (see above), you can contribute up to
the lesser of $2,000 or 100% of your compensation (or earned income, if you are
self-employed).
Annual contributions may be made only to a Roth IRA annual contribution
account which does not contain converted or transferred funds from a Regular
IRA.
Your Roth IRA limit is reduced by any contributions for the same year to a
Regular IRA. For example, assuming you have at least $2,000 in compensation or
earned income, if you contribute $500 to your Regular IRA for 1998, your maximum
Roth IRA contribution for 1998 will be $1,500.
If you and your spouse have spousal Roth IRAs, each spouse may contribute
up to $2,000 to his or her Roth IRA for a year as long as the combined
compensation of both spouses for the year (as shown on your joint income tax
return) is at least $4,000. If the combined compensation of both
spouses is less than $4,000, the spouse with the higher amount of compensation
may contribute up to that spouse's compensation amount, or $2,000 if less. The
spouse with the lower compensation amount may contribute any amount up to that
spouse's compensation plus any excess the other spouse's compensation over the
other spouse's Roth IRA contribution. However, the maximum contribution to
either spouse's Roth IRA is $2,000 for the year.
As noted above, the spousal Roth IRA limits are reduced by any
contributions for the same calendar year to a Regular IRA maintained by you or
your spouse.
For taxpayers with high income levels, the contribution limits may be
reduced (see below).
Are contributions to a Roth IRA tax deductible?
Contributions to a Roth IRA are not deductible. This is a major difference
between Roth IRAs and Regular IRAs. Contributions to a Regular IRA may be
deductible on your federal income tax return depending on whether or not you are
an active participant in an employer-sponsored plan and on your income level.
Are the earnings on my Roth IRA funds taxed?
Any dividends on or growth of investments held in your Roth IRA are
generally exempt from federal income taxes and will not be taxed until withdrawn
by you, unless the tax exempt status of your Roth IRA is revoked. If the
withdrawal qualifies as a tax-free withdrawal (see below), amounts reflecting
earnings or growth of assets in your Roth IRA will not be subject to federal
income tax.
Which is better, a Roth IRA or a Regular IRA?
This will depend upon your individual situation. A Roth IRA may be better
if you are an active participant in an employer-sponsored plan and your adjusted
gross income is too high to make a deductible IRA contribution (but not too high
to make a Roth IRA contribution). Also, the benefits of a Roth IRA vs. a Regular
IRA may depend upon a number of other factors including: your current income tax
bracket vs. your expected income tax bracket when you make withdrawals from your
IRA, whether you expect to be able to make nontaxable withdrawals from your Roth
IRA (see below), how long you expect to leave your contributions in the IRA, how
much you expect the IRA to earn in the meantime, and possible future tax law
changes.
Consult a qualified tax or financial advisor for assistance on this
question.
Are there any restrictions on contributions to my Roth IRA?
Taxpayers with very high income levels may not be able to contribute to a
Roth IRA at all, or their contribution may be limited to an amount less than
$2,000. This depends upon your filing status and the amount of your adjusted
gross income (AGI). The following table shows how the contribution limits are
restricted:
ROTH IRA CONTRIBUTION LIMITS
<TABLE>
<CAPTION>
===================================================================================
If You Are Single If You Are Married Filing Jointly Then You May Contribute
-----------------------------------------------------------------------------------
<S> <C> <C> <C>
Up to Up to Full Contribution
$95,000 $150,000
-----------------------------------------------------------------------------------
Adjusted Gross More than $95,000 More than $150,000 Reduced Contribution
Income (AGI) but less than but less than (see explanation below)
Level $110,000 $160,000
-----------------------------------------------------------------------------------
$110,000 and up $160,000 and up Zero (No Contribution)
-----------------------------------------------------------------------------------
</TABLE>
Note: If you are a married taxpayer filing separately, your maximum Roth IRA
contribution limit phases out over the first $15,000 of adjusted gross income.
If your AGI is $15,000 or more you may not contribute to a Roth IRA for the
year. (Note: Pending legislation in Congress may reduce this number from $15,000
to $10,000. Consult your tax advisor or the IRS for the latest developments.)
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How do I calculate my limit if I fall in the "reduced contribution" range?
If your AGI falls in the reduced contribution range, you must calculate
your contribution limit. To do this, multiply your normal contribution limit
($2,000 or your compensation if less) by a fraction. The numerator is the amount
by which your AGI exceeds the lower limit of the reduced contribution range
($95,000 if single, or $150,000 if married filing jointly). The denominator is
$15,000 (single taxpayers) or $10,000 (married filing jointly). Subtract this
from your normal limit and then round down to the nearest $10. The contribution
limit is the greater of the amount calculated or $200.
For example, assume that your AGI for the year is $157,555 and you are
married, filing jointly. You would calculate your Roth IRA contribution limit
this way:
1. The amount by which your AGI exceeds the lower limit of the reduced
contribution deductible range:
($157,555-$150,000) = $7,555
2. Divide this by $10,000: $7,555
-------
$10,000 = 0.7555
3. Multiply this by $2,000 (or your compensation for the year, if less):
0.7555 x $2,000 = $1,511
4. Subtract this from your $2,000 limit: ($2,000 - $1,551) = $489
5. Round this down to the nearest $10 = $480
6. Your contribution limit is the greater of this amount or $200.
Remember, your Roth IRA contribution limit of $2,000 is reduced by any
contributions for the same year to a Regular IRA. If you fall in the reduced
contribution range, the reduction formula applies to the Roth IRA contribution
limit left after subtracting your contribution for the year to a Regular IRA.
How do I determine my AGI?
AGI is your gross income minus those deductions which are available to all
taxpayers even if they don't itemize. Instructions to calculate your AGI are
provided with your income tax Form 1040 or 1040A.
There are two additional rules when calculating AGI for purposes of Roth
IRA contribution limits. First, if you are making a deductible contribution for
the year to a Regular IRA, your AGI is reduced by the amount of the deduction.
Second, if you are converting a Regular IRA to a Roth IRA in a year (see below),
the amount includable in your income as a result of the conversion is not
considered AGI when computing your Roth IRA contribution limit for the year.
(Note: a bill pending in Congress might affect the first rule--consult your tax
advisor or the IRS for the latest developments.)
What happens if I contribute more than allowed to my Roth IRA?
The maximum contribution you can make to a Roth IRA generally is $2,000 or 100%
of compensation or earned income, whichever is less. As noted above, your
maximum is reduced by the amount of any contribution to a Regular IRA for the
same year and may be further reduced if you have high AGI. Any amount
contributed to the Roth IRA above the maximum is considered an "excess
contribution."
An excess contribution is subject to excise tax of 6% for each year it
remains in the Roth IRA.
How can I correct an excess contribution?
Excess contributions may be corrected without paying a 6% penalty. To do
so, you must withdraw the excess and any earnings on the excess before the due
date (including extensions) for filing your federal income tax return for the
year for which you made the excess contribution. Earnings on the amount
withdrawn must also be withdrawn. The earnings must be included in your income
for the tax year for which the contribution was made and may be subject to a 10%
premature withdrawal tax if you have not reached age 59 1/2 (unless an exception
to the 10% penalty tax applies).
What happens if I don't correct the excess contribution by the tax return due
date?
Any excess contribution withdrawn after the tax return due date (including
any extensions) for the year for which the contribution was made will be subject
to the 6% excise tax. There will be an additional 6% excise tax for each year
the excess remains in your account.
Unless an excess contribution qualifies for the special treatment outlined
above, the excess contribution and any earnings on it withdrawn after tax filing
time will be includable in taxable income and may be subject to a 10% premature
withdrawal penalty.
You may reduce the excess contributions by making a withdrawal equal to the
excess. Earnings need not be withdrawn. To the extent that no earnings are
withdrawn, the withdrawal will not be subject to income taxes or possible
penalties for premature withdrawals before age 59 1/2. Excess contributions may
also be corrected in a subsequent year to the extent that you contribute less
than your Roth IRA contribution limit for the subsequent year. As the prior
excess contribution is reduced or eliminated, the 6% excise tax will become
correspondingly reduced or eliminated for subsequent tax years.
CONVERSION OF EXISTING REGULAR IRA
Can I convert an existing Regular IRA into a Roth IRA?
Yes, starting in 1998 you can convert an existing Regular IRA into a Roth
IRA if you meet the adjusted gross income (AGI) limits described below.
Conversion may be accomplished either by establishing a Roth IRA and then
transferring the amount in your Regular IRA you wish to convert to the new Roth
IRA. Or, if you want to convert an existing Regular IRA with State Street Bank
as custodian to a Roth IRA, you may give us directions to convert.
You are eligible to convert a Regular IRA to a Roth IRA if, for the year of
the conversion, your AGI is $100,000 or less. The same limit applies to married
and single taxpayers, and the limit is not indexed to cost-of-living increases.
Married taxpayers are eligible to convert a Regular IRA to a Roth IRA only if
they file a joint income tax return; married taxpayers filing separately are not
eligible to convert.
Note: No contributions other than Roth IRA conversion contributions made
during the same tax year may be deposited in a single Roth IRA conversion
account.
Caution: You should be extremely cautious in converting an existing IRA
into a Roth IRA early in a year if there is any possibility that your AGI for
the year will exceed $100,000. Although a bill pending in Congress would permit
you to transfer amounts back to your Regular IRA if your AGI exceeds $100,000,
under the current rules, if you have already converted during a year and you
turn out to have more than $100,000 of AGI, there may be adverse tax results for
you. Consult your tax advisor or the IRS for the latest developments.
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What are the tax results from converting?
The taxable amount in your Regular IRA you convert to a Roth IRA will be
considered taxable income on your federal income tax return for the year of the
conversion. All amounts in a Regular IRA are taxable except for your prior
non-deductible contributions to the Regular IRA.
If you make the conversion during 1998, the taxable income is spread over
four years. In other words, you would include one quarter of the taxable amount
on your federal income tax return for 1998, 1999, 2000 and 2001.
Should I convert my Regular IRA to a Roth IRA?
Only you can answer this question, in consultation with your tax or
financial advisors. A number of factors, including the following, may be
relevant. Conversion may be advantageous if you expect to leave the converted
funds on deposit in your Roth IRA for at least five years and to be able to
withdraw the funds under circumstances that will not be taxable (see below). The
benefits of converting will also depend on whether you expect to be in the same
tax bracket when you withdraw from your Roth IRA as you are now. Also,
conversion is based upon an assumption that Congress will not change the tax
rules for withdrawals from Roth IRAs in the future, but his cannot be
guaranteed.
TRANSFERS/ROLLOVERS
Can I transfer or roll over a distribution I receive from my employer's
retirement plan into a Roth IRA?
Distributions from qualified employer-sponsored retirement plans or 403(b)
arrangements (for employees of tax-exempt employers) are not eligible for
rollover or direct transfer to a Roth IRA. However, in certain circumstances it
may be possible to make a direct rollover of an eligible distribution to a
Regular IRA and then to convert the Regular IRA to Roth IRA (see above). Consult
your tax or financial advisor for further information on this possibility.
Can I make a Rollover from my Roth IRA to another Roth IRA?
You may make a rollover from one Roth IRA to another Roth IRA you have or
you establish to receive the rollover. Such a rollover must be completed within
60 days after the withdrawal from your first Roth IRA. After making a rollover
from one Roth IRA to another, you must wait a full year (365 days) before you
can make another such rollover. (However, you can instruct a Roth IRA custodian
to transfer amounts directly to another Roth IRA custodian; such a direct
transfer does not count as a rollover.)
How do rollovers affect my Roth IRA contribution limits?
Rollover contributions, if properly made, do not count toward the maximum
contribution. Also, you may make a rollover from one Roth IRA to another even
during a year when you are not eligible to contribute to a Roth IRA (for
example, because your AGI for that year is too high).
WITHDRAWALS
When can I make withdrawals from my Roth IRA?
You may withdraw from your Roth IRA at any time. If the withdrawal meets
the requirements discussed below, it is tax-free. This means that you pay no
federal income tax even though the withdrawal includes earnings or gains on your
contributions while they were held in your Roth IRA.
When must I start making withdrawals?
There are no rules on when you must start making withdrawals from your Roth
IRA or on minimum required withdrawal amounts for any particular year during
your lifetime. Unlike Regular IRAs, you are not required to start making
withdrawals from a Roth IRA by the April 1 following the year in which you reach
age 70 1/2.
After your death, there are IRS rules on the timing and amount of
distributions. In general, the amount in your Roth IRA must be distributed by
the end of the fifth year after your death. However, distributions to a
designated beneficiary that begin by the end of the year following the year of
your death and that are paid over the life expectancy of the beneficiary satisfy
the rules. Also, if your surviving spouse is your designated beneficiary, the
spouse may defer the start of distributions until you would have reached age 70
1/2 had you lived.
What are the requirements for a tax-free withdrawal?
To be tax-free, a withdrawal from your Roth IRA must meet two requirements.
First, the Roth IRA must have been open for 5 or more years before the
withdrawal. Second, at least one of the following conditions must be satisfied:
You are age 59 1/2 or older when you make the withdrawal.
The withdrawal is made by your beneficiary after you die.
You are disabled (as defined in IRS rules) when you make the withdrawal.
You are using the withdrawal to cover eligible first time homebuyer
expenses. These are the costs of purchasing, building or rebuilding a
principal residence (including customary settlement, financing or closing
costs). The purchaser may be you, your spouse or a child, grandchild,
parent or grandparent of you or your spouse. An individual is considered a
"first-time homebuyer" if the individual (or the individual's spouse, if
married) did not have an ownership interest in a principal residence during
the two-year period immediately preceding the acquisition in question. The
withdrawal must be used for eligible expenses within 120 days after the
withdrawal (if there is an unexpected delay, or cancellation of the home
acquisition, a withdrawal may be redeposited as a rollover).
There is a lifetime limit on eligible first-time homebuyer expenses of
$10,000 per individual.
For a Roth IRA that you set up with amounts rolled over or converted from a
Regular IRA, the 5 year period begins with the year in which the conversion or
rollover was made. (Note: a bill pending in Congress might affect this
rule--consult your tax advisor or the IRS for the latest developments.)
For a Roth IRA that you started with a normal contribution, the 5 year
period starts with the year for which you make the initial normal contribution.
How are withdrawals from my Roth IRA taxed if the tax-free requirements are not
met?
If the qualified withdrawal requirements are not met, a withdrawal
consisting of your own prior contribution amounts to your Roth IRA will not be
considered taxable income in the year you receive it, nor will the 10% penalty
apply. To the extent that the nonqualified withdrawal consists of dividends or
gains while your contributions were held in your Roth IRA, the withdrawal is
includable in your gross income in the taxable year you receive it, and may be
subject to the 10% with-
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drawal penalty. All amounts withdrawn from your Roth IRA are considered
withdrawals of your contributions until you have withdrawn the entire amount you
have contributed. After that, all amounts withdrawn are considered taxable
withdrawals of dividends and gains.
Note that, for purposes of determining what portion of any distribution is
includable in income, all of your Roth IRA accounts are considered as one single
account. Amounts withdrawn from any one Roth IRA account are deemed to be
withdrawn from contributions first. Since all your Roth IRAs are considered to
be one account for this purpose, withdrawals from Roth IRA accounts are not
considered to be from earnings or interest until an amount equal to all
contributions made to all of an individual's Roth IRA accounts is withdrawn. The
following example illustrates this:
A single individual contributes $1,000 a year to his State Street Bank and
Trust Company Roth IRA account and $1,000 a year to the Brand X Roth IRA account
over a period of ten years. At the end of 10 years his account balances are as
follows:
Principal Earnings
Contributions
State Street Bank Roth IRA $10,000 $10,000
Brand X Roth IRA $10,000 $10,000
------- -------
Total $20,000 $20,000
At the end of 10 years, this person has $40,000 in both Roth IRA accounts,
of which $20,000 represents his contributions (aggregated) and $20,000
represents his earnings (aggregated). This individual, who is 40, withdraws
$15,000 from his Brand X Roth IRA (not a qualified withdrawal). We look to the
aggregate amount of all principal contributions--in this case $20,000--to
determine if the withdrawal is from contributions, and thus non-taxable. In this
example, there is no ($0) taxable income as a result of this withdrawal because
the $15,000 withdrawal is less than the total amount of aggregated contributions
($20,000). If this individual then withdrew $15,000 from his State Street Bank
Roth IRA, $5,000 would not be taxable (the remaining aggregate contributions)
and $10,000 would be treated as taxable income for the year of the withdrawal,
subject to regular income taxes and the 10% premature withdrawal penalty (unless
an exception applies).
Note: If passed, a bill currently pending in Congress will change the rules
and the results discussed above. Under the proposed legislation, in general,
separate Roth IRAs established for annual contributions and conversions for
separate years are not aggregated as explained above to determine the tax on
withdrawals. See your tax advisor for more information and the latest
developments.
Taxable withdrawals of dividends and gains from a Roth IRA are treated as
ordinary income. Withdrawals of taxable amounts from a Roth IRA are not eligible
for averaging treatment currently available to certain lump sum distributions
from qualified employer-sponsored retirement plans, nor are such withdrawals
eligible for taxable gains tax treatment.
Your receipt of any taxable withdrawal from your Roth IRA before you attain
age 59 1/2 generally will be considered as an early withdrawal and subject to a
10% penalty tax.
The 10% penalty tax for early withdrawal will not apply if any of the
following exceptions applies:
The withdrawal was a result of your death or disability.
The withdrawal is one of a scheduled series of substantially equal periodic
payments for your life or life expectancy (or the joint lives or life
expectancies of you and your beneficiary).
If there is an adjustment to the scheduled series of payments, the 10%
penalty tax will apply. For example, if you begin receiving payments at age
50 under a withdrawal program providing for substantially equal payments
over your life expectancy, and at age 58 you elect to withdraw the
remaining amount in your Roth IRA in a lump-sum, the 10% penalty tax will
apply to the lump sum and to the amounts previously paid to you before age
59 1/2 to the extent they were includable in your taxable income.
The withdrawal is used to pay eligible higher education expenses. These are
expenses for tuition, fees, books, and supplies required to attend an
institution for post-secondary education. Room and board expenses are also
eligible for a student attending at least half-time. The student may be
you, your spouse, or your child or grandchild. However, expenses that are
paid for with a scholarship or other educational assistance payment are not
eligible expenses.
The withdrawal is used to cover eligible first time homebuyer expenses (as
described above in the discussion of tax-free withdrawals).
The withdrawal does not exceed the amount of your deductible medical
expenses for the year (generally speaking, medical expenses paid during a
year are deductible if they are greater than 72% of your adjusted gross
income for that year).
The withdrawal does not exceed the amount you paid for health insurance
coverage for yourself, your spouse and dependents. This exception applies
only if you have been unemployed and received federal or state unemployment
compensation payments for at least 12 weeks; this exception applies to
distributions during the year in which you received the unemployment
compensation and during the following year, but not to any distributions
received after you have been reemployed for at least 60 days.
What about the 15 percent penalty tax?
The rule imposing a 15% penalty tax on very large withdrawals from
tax-favored arrangements (including IRAs, 403(b) arrangements and qualified
employer-sponsored plans), or on excess amounts remaining in such tax-favored
arrangements at your death, has been repealed. This 15% tax no longer applies.
Important: The discussion of the tax rules for Roth IRAs in this Disclosure
Statement is based upon the best available information. However, Roth IRAs are
new under the tax laws, and the IRS has not issued regulations or rulings on the
operation and tax treatment of Roth IRA accounts. Also, if enacted, legislation
now pending in Congress will change some of the rules. Therefore, you should
consult your tax advisor for the latest developments or for advice about how
maintaining a Roth IRA will affect your personal tax or financial situation.
Also, please see Part Three below which contains important information
applicable to all State Street Bank and Trust Company IRAs.
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Part Three: Rules for All IRAs
(Regular and Roth)
GENERAL INFORMATION
IRA Requirements
All IRAs must meet certain requirements. Contributions generally must be
made in cash. The IRA trustee or custodian must be a bank or other person who
has been approved by the Secretary of the Treasury. Your contributions may not
be invested in life insurance or collectibles or be commingled with other
property except in a common trust or investment fund. Your interest in the
account must be nonforfeitable at all times. You may obtain further information
on IRAs from any district office of the Internal Revenue Service.
May I revoke my IRA?
You may revoke a newly established Regular or Roth IRA at any time within
seven days after the date on which you receive this Disclosure Statement. A
Regular or Roth IRA established more than seven days after the date of your
receipt of this Disclosure Statement may not be revoked.
To revoke your Regular or Roth IRA, mail or deliver a written notice of
revocation to the Custodian at the address which appears at the end of this
Disclosure Statement. Mailed notice will be deemed given on the date that it is
postmarked (or, if sent by certified or registered mail, on the date of
certification or registration). If you revoke your Regular or Roth IRA within
the seven-day period, you are entitled to a return of the entire amount you
originally contributed into your Regular or Roth IRA, without adjustment for
such items as sales charges, administrative expenses or fluctuations in market
value.
INVESTMENTS
How are my IRA contributions invested?
You control the investment and reinvestment of contributions to your
Regular or Roth IRA. Investments must be in one or more of the Fund(s) available
from time to time as listed in the Adoption Agreement for your Regular or Roth
IRA or in an investment selection form provided with your Adoption Agreement or
from the Fund Distributor or Service Company. You direct the investment of your
IRA by giving your investment instructions to the Distributor or Service Company
for the Fund(s). Since you control the investment of your Regular or Roth IRA,
you are responsible for any losses; neither the Custodian, the Distributor nor
the Service Company has any responsibility for any loss or diminution in value
occasioned by your exercise of investment control. Transactions for your Regular
or Roth IRA will generally be at the applicable public offering price or net
asset value for shares of the Fund(s) involved next established after the
Distributor or the Service Company (whichever may apply) receives proper
investment instructions from you; consult the current prospectus for the Fund(s)
involved for additional information.
Before making any investment, read carefully the current prospectus for any
Fund you are considering as an investment for your Regular IRA or Roth IRA. The
prospectus will contain information about the Fund's investment objectives and
policies, as well as any minimum initial investment or minimum balance
requirements and any sales, redemption or other charges.
Because you control the selection of investments for your Regular or Roth
IRA and because mutual fund shares fluctuate in value, the growth in value of
your Regular or Roth IRA cannot be guaranteed or projected.
Are there any restrictions on the use of my IRA assets?
The tax-exempt status of your Regular or Roth IRA will be revoked if you
engage in any of the prohibited transactions listed in Section 4975 of the tax
code. Upon such revocation, your Regular or Roth IRA is treated as distributing
its assets to you. The taxable portion of the amount in your IRA will be subject
to income tax (unless, in the case of a Roth IRA, the requirements for a
tax-free withdrawal are satisfied). Also, you may be subject to a 10% penalty
tax on the taxable amount as a premature withdrawal if you have not yet reached
the age of 59 1/2.
Any investment in a collectible (for example, rare stamps) by your Regular
or Roth IRA is treated as a withdrawal; the only exception involves certain
types of government-sponsored coins or certain types of precious metal bullion.
What is a prohibited transaction?
Generally, a prohibited transaction is any improper use of the assets in
your Regular or Roth IRA. Some examples of prohibited transactions are:
Direct or indirect sale or exchange of property between you and your
Regular or Roth IRA.
Transfer of any property from your Regular or Roth IRA to yourself or from
yourself to your Regular or Roth IRA.
Your Regular or Roth IRA could lose its tax exempt status if you use all or
part of your interest in your Regular or Roth IRA as security for a loan or
borrow any money from your Regular or Roth IRA. Any portion of your Regular or
Roth IRA used as security for a loan will be treated as a distribution in the
year in which the money is borrowed. This amount may be taxable and you may also
be subject to the 10% premature withdrawal penalty on the taxable amount.
FEES AND EXPENSES
Custodian's Fees
The following is a list of the fees charged by the Custodian for
maintaining either a Regular IRA or a Roth IRA.
Account Installation Fee $10.00
Annual Maintenance Fee per mutual fund $10.00
Termination, Rollover, or Transfer of
Account to Successor Custodian $10.00
General Fee Policies
Fees may be paid by you directly, or the Custodian may deduct them from
your Regular or Roth IRA.
Fees may be changed upon 30 days written notice to you.
The full annual maintenance fee will be charged for any calendar year
during which you have a Regular or Roth IRA with us. This fee is not
prorated for periods of less than one full year.
If provided for in this Disclosure Statement or the Adoption Agreement,
termination fees are charged when your account is closed whether the funds
are distributed to you or transferred to a successor custodian or trustee.
The Custodian may charge you for its reasonable expenses for services not
covered by its fee schedule.
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Other Charges
There may be sales or other charges associated with the purchase or
redemption of shares of a Fund in which your Regular IRA or Roth IRA is
invested. Before investing, be sure to read carefully the current
prospectus of any Fund you are considering as an investment for your
Regular IRA or Roth IRA for a description of applicable charges.
TAX MATTERS
What IRA reports does the custodian issue?
The Custodian will report all withdrawals to the IRS and the recipient on
the appropriate form. For reporting purposes, a direct transfer of assets to a
successor custodian or trustee is not considered a withdrawal.
The Custodian will report to the IRS the year-end value of your account and
the amount of any rollover (including conversions of a Regular IRA to a Roth
IRA) or regular contribution made during a calendar year, as well as the tax
year for which a contribution is made. Unless the Custodian receives an
indication from you to the contrary, it will treat any amount as a contribution
for the tax year in which it is received. It is most important that a
contribution between January and April 15th for the prior year be clearly
designated as such.
What tax information must I report to the IRS?
You must file Form 5329 with the IRS for each taxable year for which you
made an excess contribution or you take a premature withdrawal that is subject
to the 10% penalty tax, or you withdraw less than the minimum amount required
from your Regular IRA. If your beneficiary fails to make required minimum
withdrawals from your Regular or Roth IRA after your death, your beneficiary may
be subject to an excise tax and be required to file Form 5329.
For Regular IRAs, you must also report each nondeductible contribution to
the IRS by designating it a nondeductible contribution on your tax return. Use
Form 8606. In addition, for any year in which you make a nondeductible
contribution or take a withdrawal, you must include additional information on
your tax return. The information required includes: (1) the amount of your
nondeductible contributions for that year; (2) the amount of withdrawals from
Regular IRAs in that year; (3) the amount by which your total nondeductible
contributions for all the years exceed the total amount of your distributions
previously excluded from gross income; and (4) the total value of all your
Regular IRAs as of the end of the year. If you fail to report any of this
information, the IRS will assume that all your contributions were deductible.
This will result in the taxation of the portion of your withdrawals that should
be treated as a nontaxable return of your nondeductible contributions.
Which withdrawals are subject to withholding?
Roth IRA
Federal income tax will be withheld at a flat rate of 10% of any taxable
withdrawal from your Roth IRA, unless you elect not to have tax withheld.
Withdrawals from a Roth IRA are not subject to the mandatory 20% income tax
withholding that applies to most distributions from qualified plans or 403(b)
accounts that are not directly rolled over to another plan or IRA.
Regular IRA
Federal income tax will be withheld at a flat rate of 10% from any
withdrawal from your Regular IRA, unless you elect not to have tax withheld.
Withdrawals from a Regular IRA are not subject to the mandatory 20% income tax
withholding that applies to most distributions from qualified plans or 403(b)
accounts that are not directly rolled over to another plan or IRA.
ACCOUNT TERMINATION
You may terminate your Regular IRA or Roth IRA at any time after its
establishment by sending a completed withdrawal form (or other withdrawal
instructions in a form acceptable to the Custodian), or a transfer authorization
form, to:
STATE STREET BANK AND TRUST COMPANY
P.O. Box 8505
Boston, MA 02266
Your Regular IRA or Roth IRA with State Street Bank will terminate upon the
first to occur of the following:
The date your properly executed withdrawal form or instructions (as
described above) withdrawing your total Regular IRA or Roth IRA balance is
received and accepted by the Custodian or, if later, the termination date
specified in the withdrawal form.
The date the Regular IRA or Roth IRA ceases to qualify under the tax code.
This will be deemed a termination.
The transfer of the Regular IRA or Roth IRA to another custodian/trustee.
The rollover of the amounts in the Regular IRA or Roth IRA to another
custodian/trustee.
Any outstanding fees must be received prior to such a termination of your
account.
The amount you receive from your IRA upon termination of the account will
be treated as a withdrawal, and thus the rules relating to Regular IRA or Roth
IRA withdrawals will apply. For example, if the IRA is terminated before you
reach age 59 1/2, the 10% early withdrawal penalty may apply to the taxable
amount you receive.
IRA DOCUMENTS
Regular IRA
The terms contained in Articles I to VII of Part One of the State Street
Bank and Trust Company Universal Individual Retirement Custodial Account
document have been promulgated by the IRS in Form 5305-A for use in establishing
a Regular IRA Custodial Account that meets the requirements of Code Section
408(a) for a valid Regular IRA. This IRS approval relates only to the form of
Articles I to VII and is not an approval of the merits of the Regular IRA or of
any investment permitted by the Regular IRA.
Roth IRA
The terms contained in Articles I to VII of Part Two of the State Street
Bank and Trust Company Universal Individual Retirement Account Custodial
Agreement have been promulgated by the IRS in Form 5305-RA for use in
establishing a Roth IRA Custodial Account that meets the requirements of Code
Section 408A for a valid Roth IRA. This IRS approval relates only to the form of
Articles I to VII and is not an approval of the merits of the Roth IRA or of any
investment permitted by the Roth IRA.
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Based on our legal advice relating to current tax laws and IRS meetings, State
Street Bank believes that the use of a Universal Individual Retirement Account
Information Kit such as this, containing information and documents for both a
Regular IRA or a Roth IRA, will be acceptable to the IRS. However, if the IRS
makes a ruling, or if Congress enacts legislation, regarding the use of
different documentation, State Street Bank will forward to you new documentation
for your Regular IRA or a Roth IRA (as appropriate) for you to read and, if
necessary, an appropriate new Adoption Agreement to sign. By adopting a Regular
IRA or a Roth IRA using these materials, you acknowledge this possibility and
agree to this procedure if necessary. In all cases, to the extent permitted
State Street Bank will treat your IRA as being opened on the date your account
was opened using the Adoption Agreement in this Kit.
ADDITIONAL INFORMATION
For additional information you may write to the following address or call the
following telephone number:
The Burnham Fund Inc.
c/o State Street Bank and Trust
P.O. Box 8505
Boston MA 02266
1-800-462-2392
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State Street Bank and Trust Company
Universal Individual Retirement Account Custodial Agreement
Part One: Provisions Applicable to Regular IRAs
The following provisions of Articles I to VII are in the form promulgated
by the Internal Revenue Service in Form 5305-A for use in establishing an
individual retirement custodial account.
Article I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(c)(but only after December 31, 1992),
403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified
employee pension plan as described in section 408(k). Rollover contributions
before January 1, 1993 include rollovers described in section 402(a)(5),
402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8) or 408(d)(3) of the Code or an
employer contribution to a simplified employee pension plan as described in
section 408(k).
Article II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
Article III
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5) of the Code).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m) except as otherwise permitted by section 408(m)(3)
which provides an exception for certain gold and silver coins and coins issued
under the laws of any state.
Article IV
1. Notwithstanding any provisions of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be made
in accordance with the following requirements and shall otherwise comply with
section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section
1.401(a)(9)-2, the provisions of which are incorporated by reference.
2. Unless otherwise elected by the time distributions are required to begin
to the Depositor under paragraph 3, or to the surviving spouse under paragraph
4, other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the Depositor
and the surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
3. The Depositor's entire interest in the custodial account must be, or
begin to be, distributed by the Depositor's required beginning date, the April 1
following the calendar year end in which the Depositor reaches age 70 1/2. By
that date, the Depositor may elect, in a manner acceptable to the Custodian, to
have the balance in the custodial account distributed in:
(a) A single-sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last
survivor lives of the Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period
that may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified period
that may not be longer than the joint life and last survivor
expectancy of the Depositor and his or her designated beneficiary.
4. If the Depositor dies before his or her entire interest is distributed
to him or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her interest
has begun, distribution must continue to be made in accordance with
paragraph 3.
(b) If the Depositor dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the
Depositor or, if the Depositor has not so elected, at the election of
the beneficiary or beneficiaries, either
(i) Be distributed by the December 31 of the year containing the
fifth anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over the
life or life expectancy of the designated beneficiary or
beneficiaries starting by December 31 of the year following the
year of the Depositor's death. If, however, the beneficiary is
the Depositor's surviving spouse, then this distribution is not
required to begin before December 31 of the year in which the
Depositor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has
irrevocably commenced, distributions are treated as having begun on
the Depositor's required beginning date, even though payments may
actually have been made before that date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse,
no additional cash contributions or rollover contributions may be
accepted in the account.
5. In the case of distribution over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment for
each year, divide the Depositor's entire interest in the custodial account as of
the close of business on December 31 of the pre-
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ceding year by the life expectancy of the Depositor (or the joint life and last
survivor expectancy of the Depositor and the Depositor's designated beneficiary,
or the life expectancy of the designated beneficiary, whichever applies.) In the
case of distributions under paragraph 3, determine the initial life expectancy
(or joint life and last survivor expectancy) using the attained ages of the
Depositor and designated beneficiary as of their birthdays in the year the
Depositor reaches age 70 1/2. In the case of a distribution in accordance with
paragraph 4(b)(ii), determine life expectancy using the attained age of the
designated beneficiary as of the beneficiary's birthday in the year
distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
Article V
1. The Depositor agrees to provide the Custodian with information necessary
for the Custodian to prepare any reports required under section 408(i) and
Regulations sections 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor as prescribed by the Internal Revenue Service.
Article VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with section 408(a) and the related
regulations will be invalid.
Article VII
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear on the Adoption
Agreement.
Part Two: Provisions Applicable to Roth IRAs
The following provisions of Articles I to VII are in the form promulgated
by the Internal Revenue Service in Form 5305-RA for use in establishing a Roth
Individual Retirement Custodial Account.
Article I
1. If this Roth IRA is not designated as a Roth Conversion IRA, then,
except in the case of a rollover contribution described in section 408A(e), the
Custodian will accept only cash contributions and only up to a maximum amount of
$2,000 for any tax year of the Depositor.
2. If this Roth IRA is designated as a Roth Conversion IRA, no
contributions other than IRA Conversion Contributions made during the same tax
year will be accepted.
Article IA
The $2,000 limit described in Article I is gradually reduced to $0 between
certain levels of adjusted gross income (AGI). For a single Depositor, the
$2,000 annual contribution is phased out between AGI of $95,000 and $110,000;
for a married Depositor who files jointly, between AGI of $150,000 and $160,000;
and for a married Depositor who files separately, between $0 and $10,000. In
case of a conversion, the Custodian will not accept IRA Conversion Contributions
in a tax year if the Depositor's AGI for that tax year exceeds $100,000 or if
the Depositor is married and files a separate return. Adjusted gross income is
defined in section 408A(c)(3) and does not include IRA Conversion Contributions.
Article II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
Article III
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3), which provides an exception for certain gold, silver, and platinum
coins, coins issued under the laws of any state, and certain bullion.
Article IV
1. If the Depositor dies before his or her entire interest is distributed
to him or her and the Depositor's surviving spouse is not the sole beneficiary,
the entire remaining interest will, at the election of the Depositor or, if the
Depositor has not so elected, at the election of the beneficiary or
beneficiaries, either:
(a) Be distributed by December 31 of the year containing the fifth
anniversary of the Depositor's death, or
(b) Be distributed over the life expectancy of the designated beneficiary
starting no later than December 31 of the year following the year of
the Depositor's death.
If distributions do not begin by the date described in (b), distribution
method (a) will apply.
2. In the case of distribution method 1(b) above, to determine the minimum
annual payment for each year, divide the Depositor's entire interest in the
trust as of the close of business on December 31 of the preceding year by the
life expectancy of the designated beneficiary using the attained age of the
designated beneficiary as of the beneficiary's birthday in the year
distributions are required to commence and subtract 1 for each subsequent year.
3. If the Depositor's spouse is the sole beneficiary on the Depositor's
date of death, such spouse will then be treated as the Depositor.
Article V
1. The Depositor agrees to provide the Custodian with information necessary
for the Custodian to prepare any reports required under sections 408(i) and
408A(d)(3)(E), and Regulations section 1.408-5 and
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1.408-6, and under guidance published by the Internal Revenue Service.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor as prescribed by the Internal Revenue Service.
Article VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through IV and this sentence will be controlling. Any
additional articles that are not consistent with section 408A, the related
regulations, and other published guidance will be invalid.
Article VII
This agreement will be amended from time to time to comply with the
provisions of the Code, related regulations, and other published guidance. Other
amendments may be made with the consent of the persons whose signatures appear
below.
Part Three: Provisions Applicable to both Roth IRAs and Regular IRAs
Article VIII
1. As used in this Article VIII the following terms have the following
meanings:
"Account" or "Custodial Account" means the individual retirement account
established using the terms of either Part One or Part Two and, in either event,
Part Three of this State Street Bank and Trust Company Universal Individual
Retirement Account Custodial Agreement and the Adoption Agreement signed by the
Depositor. The Account may be a Regular Individual Retirement Account or a Roth
Individual Retirement Account, as specified by the Depositor. See Section 24
below.
"Custodian" means State Street Bank and Trust Company.
"Fund" means any registered investment company which is advised, sponsored
or distributed by Sponsor; provided, however, that such a mutual fund or
registered investment company must be legally offered for sale in the state of
the Depositor's residence.
"Distributor" means the entity which has a contract with the Fund(s) to
serve as distributor of the shares of such Fund(s).
In any case where there is no Distributor, the duties assigned hereunder to
the Distributor may be performed by the Fund(s) or by an entity that has a
contract to perform management or investment advisory services for the Fund(s).
"Service Company" means any entity employed by the Custodian or the
Distributor, including the transfer agent for the Fund(s), to perform various
administrative duties of either the Custodian or the Distributor.
In any case where there is no Service Company, the duties assigned
hereunder to the Service Company will be performed by the Distributor (if
any) or by an entity specified in the second preceding paragraph.
"Sponsor" means [insert fund management company or other fund entity that
is making Fund(s) available under this Agreement and has the power to appoint a
successor Custodian.]
2. The Depositor may revoke the Custodial Account established hereunder by
mailing or delivering a written notice of revocation to the Custodian within
seven days after the Depositor receives the Disclosure Statement related to the
Custodial Account. Mailed notice is treated as given to the Custodian on date of
the postmark (or on the date of Post Office certification or registration in the
case of notice sent by certified or registered mail). Upon timely revocation,
the Depositor's initial contribution will be returned, without adjustment for
administrative expenses, commissions or sales charges, fluctuations in market
value or other changes.
The Depositor may certify in the Adoption Agreement that the Depositor
received the Disclosure Statement related to the Custodial Account at least
seven days before the Depositor signed the Adoption Agreement to establish the
Custodial Account, and the Custodian may rely upon such certification.
3. All contributions to the Custodial Account shall be invested and
reinvested in full and fractional shares of one or more Funds. Such investments
shall be made in such proportions and/or in such amounts as Depositor from time
to time in the Adoption Agreement or by other written notice to the Service
Company (in such form as may be acceptable to the Service Company) may direct.
The Service Company shall be responsible for promptly transmitting all
investment directions by the Depositor for the purchase or sale of shares of one
or more Funds hereunder to the Funds' transfer agent for execution. However, if
investment directions with respect to the investment of any contribution
hereunder are not received from the Depositor as required or, if received, are
unclear or incomplete in the opinion of the Service Company, the contribution
will be returned to the Depositor, or will be held uninvested (or invested in a
money market fund if available) pending clarification or completion by the
Depositor, in either case without liability for interest or for loss of income
or appreciation. If any other directions or other orders by the Depositor with
respect to the sale or purchase of shares of one or more Funds for the Custodial
Account are unclear or incomplete in the opinion of the Service Company, the
Service Company will refrain from carrying out such investment directions or
from executing any such sale or purchase, without liability for loss of income
or for appreciation or depreciation of any asset, pending receipt of
clarification or completion from the Depositor.
All investment directions by Depositor will be subject to any minimum
initial or additional investment or minimum balance rules applicable to a Fund
as described in its prospectus.
All dividends and capital gains or other distributions received on the
shares of any Fund held in the Depositor's Account shall be (unless received in
additional shares) reinvested in full and fractional shares of such Fund (or of
any other Fund offered by the Sponsor, if so directed).
4. Subject to the minimum initial or additional investment, minimum balance
and other exchange rules applicable to a Fund, the Depositor may at any time
direct the Service Company to exchange all or a specified portion of the shares
of a Fund in the Depositor's Account for shares and fractional shares of one or
more other Funds. The Depositor shall give such directions by written notice
acceptable to the Service Company, and the Service Company will process such
directions as soon as practicable after receipt thereof (subject to the second
paragraph of Section 3 of this Article VIII).
5. Any purchase or redemption of shares of a Fund for or from the
Depositor's Account will be effected at the public offering price or net asset
value of such Fund (as described in the then effective prospectus for such Fund)
next established after the Service Company has transmitted the Depositor's
investment directions to the transfer agent for the Fund(s).
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Any purchase, exchange, transfer or redemption of shares of a Fund for or
from the Depositor's Account will be subject to any applicable sales, redemption
or other charge as described in the then effective prospectus for such Fund.
6. The Service Company shall maintain adequate records of all purchases or
sales of shares of one or more Funds for the Depositor's Custodial Account. Any
account maintained in connection herewith shall be in the name of the Custodian
for the benefit of the Depositor. All assets of the Custodial Account shall be
registered in the name of the Custodian or of a suitable nominee. The books and
records of the Custodian shall show that all such investments are part of the
Custodial Account.
The Custodian shall maintain or cause to be maintained adequate records
reflecting transactions of the Custodial Account. In the discretion of the
Custodian, records maintained by the Service Company with respect to the Account
hereunder will be deemed to satisfy the Custodian's recordkeeping
responsibilities therefor. The Service Company agrees to furnish the Custodian
with any information the Custodian requires to carry out the Custodian's
recordkeeping responsibilities.
7. Neither the Custodian nor any other party providing services to the
Custodial Account will have any responsibility for rendering advice with respect
to the investment and reinvestment of Depositor's Custodial Account, nor shall
such parties be liable for any loss or diminution in value which results from
Depositor's exercise of investment control over his Custodial Account. Depositor
shall have and exercise exclusive responsibility for and control over the
investment of the assets of his Custodial Account, and neither Custodian nor any
other such party shall have any duty to question his directions in that regard
or to advise him regarding the purchase, retention or sale of shares of one or
more Funds for the Custodial Account.
8. The Depositor may in writing appoint an investment advisor with respect
to the Custodial Account on a form acceptable to the Custodian and the Service
Company. The investment advisor's appointment will be in effect until written
notice to the contrary is received by the Custodian and the Service Company.
While an investment advisor's appointment is in effect, the investment advisor
may issue investment directions or may issue orders for the sale or purchase of
shares of one or more Funds to the Service Company, and the Service Company will
be fully protected in carrying out such investment directions or orders to the
same extent as if they had been given by the Depositor.
The Depositor's appointment of any investment advisor will also be deemed
to be instructions to the Custodian and the Service Company to pay such
investment advisor's fees to the investment advisor from the Custodial Account
hereunder without additional authorization by the Depositor or the Custodian.
9. Distribution of the assets of the Custodial Account shall be made at
such time and in such form as Depositor (or the Beneficiary if Depositor is
deceased) shall elect by written order to the Custodian. Depositor acknowledges
that any distribution of a taxable amount from the Custodial Account (except for
distribution on account of Depositor's disability or death, return of an "excess
contribution" referred to in Code Section 4973, or a "rollover" from this
Custodial Account) made earlier than age 59 1/2 may subject Depositor to an
"additional tax on early distributions" under Code Section 72(t) unless an
exception to such additional tax is applicable. For that purpose, Depositor will
be considered disabled if Depositor can prove, as provided in Code Section
72(m)(7), that Depositor is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment which can
be expected to result in death or be of long-continued and indefinite duration.
It is the responsibility of the Depositor (or the Beneficiary) by appropriate
distribution instructions to the Custodian to insure that any applicable
distribution requirements of Code Section 401(a)(9) and Article IV above are
met. If the Depositor (or Beneficiary) does not direct the Custodian to make
distributions from the Custodial Account by the time that such distributions are
required to commence in accordance with such distribution requirements, the
Custodian (and Service Company) shall assume that the Depositor (or Beneficiary)
is meeting the minimum distribution requirements from another individual
retirement arrangement maintained by the Depositor (or Beneficiary) and the
Custodian and Service Company shall be fully protected in so doing. The
Depositor (or the Depositor's surviving spouse) may elect to comply with the
distribution requirements in Article IV using the recalculation of life
expectancy method, or may elect that the life expectancy of the Depositor and/or
the Depositor's surviving spouse, as applicable, will not be recalculated; any
such election may be in such form as the Depositor (or surviving spouse)
provides (including the calculation of minimum distribution amounts in
accordance with a method that does not provide for recalculation of the life
expectancy of one or both of the Depositor and surviving spouse and instructions
for withdrawals to the Custodian in accordance with such method).
Notwithstanding paragraph 2 of Article IV, unless an election to have life
expectancies recalculated annually is made by the time distributions are
required to begin, life expectancies shall not be recalculated. Neither the
Custodian nor any other party providing services to the Custodial Account
assumes any responsibility for the tax treatment of any distribution from the
Custodial Account; such responsibility rests solely with the person ordering the
distribution.
10. The Custodian assumes (and shall have) no responsibility to make any
distribution except upon the written order of Depositor (or Beneficiary if
Depositor is deceased) containing such information as the Custodian may
reasonably request. Also, before making any distribution or honoring any
assignment of the Custodial Account, Custodian shall be furnished with any and
all applications, certificates, tax waivers, signature guarantees and other
documents (including proof of any legal representative's authority) deemed
necessary or advisable by Custodian, but Custodian shall not be responsible for
complying with any order or instruction which appears on its face to be genuine,
or for refusing to comply if not satisfied it is genuine, and Custodian has no
duty of further inquiry. Any distributions from the Account may be mailed,
first-class postage prepaid, to the last known address of the person who is to
receive such distribution, as shown on the Custodian's records, and such
distribution shall to the extent thereof completely discharge the Custodian's
liability for such payment.
11.(a) The term "Beneficiary" means the person or persons designated as such by
the "designating person" (as defined below) on a form acceptable to the
Custodian for use in connection with the Custodial Account, signed by
the designating person, and filed with the Custodian. The form may name
individuals, trusts, estates, or other entities as either primary or
contingent beneficiaries. However, if the designation does not
effectively dispose of the entire Custodial Account as of the time
distribution is to commence, the term "Beneficiary" shall then mean the
designating person's estate with respect to the assets of the Custodial
Account
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not disposed of by the designation form. The form last accepted
by the Custodian before such distribution is to commence, provided it
was received by the Custodian (or deposited in the U.S. Mail or with a
reputable delivery service) during the designating person's lifetime,
shall be controlling and, whether or not fully dispositive of the
Custodial Account, thereupon shall revoke all such forms previously
filed by that person. The term "designating person" means Depositor
during his/her lifetime; after Depositor's death, it also means
Depositor's spouse, but only if the spouse elects to treat the Custodial
Account as the spouse's own Custodial Account in accordance with
applicable provisions of the Code.
(b) When and after distributions from the Custodial Account to Depositor's
Beneficiary commence, all rights and obligations assigned to Depositor
hereunder shall inure to, and be enjoyed and exercised by, Beneficiary
instead of Depositor.
12.(a) The Depositor agrees to provide information to the Custodian at such
time and in such manner as may be necessary for the Custodian to prepare
any reports required under Section 408(i) or Section 408A(d)(3)(E) of
the Code and the regulations thereunder or otherwise.
(b) The Custodian or the Service Company will submit reports to the Internal
Revenue Service and the Depositor at such time and manner and containing
such information as is prescribed by the Internal Revenue Service.
(c) The Depositor, Custodian and Service Company shall furnish to each other
such information relevant to the Custodial Account as may be required
under the Code and any regulations issued or forms adopted by the
Treasury Department thereunder or as may otherwise be necessary for the
administration of the Custodial Account.
(d) The Depositor shall file any reports to the Internal Revenue Service
which are required of him by law (including Form 5329), and neither the
Custodian nor Service Company shall have any duty to advise Depositor
concerning or monitor Depositor's compliance with such requirement.
13.(a) Depositor retains the right to amend this Custodial Account document in
any respect at any time, effective on a stated date which shall be at
least 60 days after giving written notice of the amendment (including
its exact terms) to Custodian by registered or certified mail, unless
Custodian waives notice as to such amendment. If the Custodian does not
wish to continue serving as such under this Custodial Account document
as so amended, it may resign in accordance with Section 17 below.
(b) Depositor delegates to the Custodian the Depositor's right so to amend,
provided (i) the Custodian does not change the investments available
under this Custodial Agreement and (ii) the Custodian amends in the same
manner all agreements comparable to this one, having the same Custodian,
permitting comparable investments, and under which such power has been
delegated to it; this includes the power to amend retroactively if
necessary or appropriate in the opinion of the Custodian in order to
conform this Custodial Account to pertinent provisions of the Code and
other laws or successor provisions of law, or to obtain a governmental
ruling that such requirements are met, to adopt a prototype or master
form of agreement in substitution for this Agreement, or as otherwise
may be advisable in the opinion of the Custodian. Such an amendment by
the Custodian shall be communicated in writing to Depositor, and
Depositor shall be deemed to have consented thereto unless, within 30
days after such communication to Depositor is mailed, Depositor either
(i) gives Custodian a written order for a complete distribution or
transfer of the Custodial Account, or (ii) removes the Custodian and
appoints a successor under Section 17 below.
Pending the adoption of any amendment necessary or desirable to
conform this Custodial Account document to the requirements of any
amendment to any applicable provision of the Internal Revenue Code or
regulations or rulings thereunder, the Custodian and the Service
Company may opera the Depositor's Custodial Account in accordance with
such requirements to the extent that the Custodian and/or the Service
Company deem necessary to preserve the tax benefits of the Account.
(c) Notwithstanding the provisions of subsections (a) and (b) above, no
amendment shall increase the responsibilities or duties of Custodian
without its prior written consent.
(d) This Section 13 shall not be construed to restrict the Custodian's right
to substitute fee schedules in the manner provided by Section 16 below,
and no such substitution shall be deemed to be an amendment of this
Agreement.
14.(a) Custodian shall terminate the Custodial Account if this Agreement is
terminated or if, within 30 days (or such longer time as Custodian may
agree) after resignation or removal of Custodian under Section 17,
Depositor or Sponsor, as the case may be, has not appointed a successor
which has accepted such appointment. Termination of the Custodial
Account shall be effected by distributing all assets thereof in a single
payment in cash or in kind to Depositor, subject to Custodian's right to
reserve funds as provided in Section 17.
(b) Upon termination of the Custodial Account, this custodial account
document shall have no further force and effect (except for Sections
15(f), 17(b) and (c) hereof which shall survive the termination of the
Custodial Account and this document), and Custodian shall be relieved
from all further liability hereunder or with respect to the Custodial
Account and all assets thereof so distributed.
15.(a) In its discretion, the Custodian may appoint one or more contractors or
service providers to carry out any of its functions and may compensate
them from the Custodial Account for expenses attendant to those
functions. In the event of such appointment, all rights and privileges
of the Custodian under this Agreement shall pass through to such
contractors or service providers who shall be entitled to enforce them
as if a named party.
(b) The Service Company shall be responsible for receiving all instructions,
notices, forms and remittances from Depositor and for dealing with or
forwarding the same to the transfer agent for the Fund(s).
(c) The parties do not intend to confer any fiduciary duties on Custodian or
Service Company (or any other party providing services to the Custodial
Account), and none shall be implied. Neither shall be liable (or assumes
any responsibility) for the collection of contributions, the proper
amount, time or tax treatment of any contribution to the Custodial
Account or the propriety of any contributions under this Agreement, or
the purpose, time, amount (including any minimum distribution amounts),
tax treat-
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ment or propriety of any distribution hereunder, which matters
are the sole responsibility of Depositor and Depositor's Beneficiary.
(d) Not later than 60 days after the close of each calendar year (or after
the Custodian's resignation or removal), the Custodian or Service
Company shall file with Depositor a written report or reports reflecting
the transactions effected by it during such period and the assets of the
Custodial Account at its close. Upon the expiration of 60 days after
such a report is sent to Depositor (or Beneficiary), the Custodian or
Service Company shall be forever released and discharged from all
liability and accountability to anyone with respect to transactions
shown in or reflected by such report except with respect to any such
acts or transactions as to which Depositor shall have filed written
objections with the Custodian or Service Company within such 60 day
period.
(e) The Service Company shall deliver, or cause to be delivered, to
Depositor all notices, prospectuses, financial statements and other
reports to shareholders, proxies and proxy soliciting materials relating
to the shares of the Funds(s) credited to the Custodial Account. No
shares shall be voted, and no other action shall be taken pursuant to
such documents, except upon receipt of adequate written instructions
from Depositor.
(f) Depositor shall always fully indemnify Service Company, Distributor, the
Fund(s), Sponsor and Custodian and save them harmless from any and all
liability whatsoever which may arise either (i) in connection with this
Agreement and the matters which it contemplates, except that which
arises directly out of the Service Company's, Distributor's, Fund's,
Sponsor's or Custodian's bad faith, gross negligence or willful
misconduct, (ii) with respect to making or failing to make any
distribution, other than for failure to make distribution in accordance
with an order therefor which is in full compliance with Section 10, or
(iii) actions taken or omitted in good faith by such parties. Neither
Service Company nor Custodian shall be obligated or expected to commence
or defend any legal action or proceeding in connection with this
Agreement or such matters unless agreed upon by that party and
Depositor, and unless fully indemnified for so doing to that party's
satisfaction.
(g) The Custodian and Service Company shall each be responsible solely for
performance of those duties expressly assigned to it in this Agreement,
and neither assumes any responsibility as to duties assigned to anyone
else hereunder or by operation of law.
(h) The Custodian and Service Company may each conclusively rely upon and
shall be protected in acting upon any written order from Depositor or
Beneficiary, or any investment advisor appointed under Section 8, or any
other notice, request, consent, certificate or other instrument or paper
believed by it to be genuine and to have been properly executed, and so
long as it acts in good faith, in taking or omitting to take any other
action in reliance thereon. In addition, Custodian will carry out the
requirements of any apparently valid court order relating to the
Custodial Account and will incur no liability or responsibility for so
doing.
16.(a) The Custodian, in consideration of its services under this Agreement,
shall receive the fees specified on the applicable fee schedule. The fee
schedule originally applicable shall be the one specified in the
Adoption Agreement or Disclosure Statement, as applicable. The Custodian
may substitute a different fee schedule at any time upon 30 days'
written notice to Depositor. The Custodian shall also receive reasonable
fees for any services not contemplated by any applicable fee schedule
and either deemed by it to be necessary or desirable or requested by
Depositor.
(b) Any income, gift, estate and inheritance taxes and other taxes of any
kind whatsoever, including transfer taxes incurred in connection with
the investment or reinvestment of the assets of the Custodial Account,
that may be levied or assessed in respect to such assets, and all other
administrative expenses incurred by the Custodian in the performance of
its duties (including fees for legal services rendered to it in
connection with the Custodial Account) shall be charged to the Custodial
Account. If the Custodian is required to pay any such amount, the
Depositor (or Beneficiary) shall promptly upon notice thereof reimburse
the Custodian.
(c) All such fees and taxes and other administrative expenses charged to the
Custodial Account shall be collected either from the amount of any
contribution or distribution to or from the Account, or (at the option
of the person entitled to collect such amounts) to the extent possible
under the circumstances by the conversion into cash of sufficient shares
of one or more Funds held in the Custodial Account (without liability
for any loss incurred thereby). Notwithstanding the foregoing, the
Custodian or Service Company may make demand upon the Depositor for
payment of the amount of such fees, taxes and other administrative
expenses. Fees which remain outstanding after 60 days may be subject to
a collection charge.
17.(a) Upon 30 days' prior written notice to the Custodian, Depositor or
Sponsor, as the case may be, may remove it from its office hereunder.
Such notice, to be effective, shall designate a successor custodian and
shall be accompanied by the successor's written acceptance. The
Custodian also may at any time resign upon 30 days' prior written notice
to Sponsor, whereupon the Sponsor shall notify the Depositor (or
Beneficiary) and shall appoint a successor to the Custodian. In
connection with its resignation hereunder, the Custodian may, but is not
required to, designate a successor custodian by written notice to the
Sponsor or Depositor (or Beneficiary), and the Sponsor or Depositor (or
Beneficiary) will be deemed to have consented to such successor unless
the Sponsor or Depositor (or Beneficiary) designates a different
successor custodian and provides written notice thereof together with
such a different successor's written acceptance by such date as the
Custodian specifies in its original notice to the Sponsor or Depositor
(or Beneficiary) (provided that the Sponsor or Depositor (or
Beneficiary) will have a minimum of 30 days to designate a different
successor).
(b) The successor custodian shall be a bank, insured credit union, or other
person satisfactory to the Secretary of the Treasury under Code Section
408(a)(2). Upon receipt by Custodian of written acceptance by its
successor of such successor's appointment, Custodian shall transfer and
pay over to such successor the assets of the Custodial Account and all
records (or copies thereof) of Custodian pertaining thereto, provided
that the successor custodian agrees not to dispose of any such records
without the Custodian's consent. Custodian is authorized, however, to
reserve such sum of money or property as it may deem advisable for
payment of all its fees, compensation, costs, and expenses, or for
payment of any other liabilities constituting a charge on or against the
assets of the Custodial Account or on or against the Custodian, with any
balance of such reserve remaining after the
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payment of all such items to be paid over to the successor custodian.
(c) Any Custodian shall not be liable for the acts or omissions of its
predecessor or its successor.
18. References herein to the "Internal Revenue Code" or "Code" and sections
thereof shall mean the same as amended from time to time, including
successors to such sections.
19. Except where otherwise specifically required in this Agreement, any notice
from Custodian to any person provided for in this Agreement shall be
effective if sent by first-class mail to such person at that person's last
address on the Custodian's records.
20. Depositor or Depositor's Beneficiary shall not have the right or power to
anticipate any part of the Custodial Account or to sell, assign, transfer,
pledge or hypothecate any part thereof. The Custodial Account shall not be
liable for the debts of Depositor or Depositor's Beneficiary or subject to
any seizure, attachment, execution or other legal process in respect
thereof except to the extent required by law. At no time shall it be
possible for any part of the assets of the Custodial Account to be used for
or diverted to purposes other than for the exclusive benefit of the
Depositor or his/her Beneficiary except to the extent required by law.
21. When accepted by the Custodian, this Agreement is accepted in and shall be
construed and administered in accordance with the laws of the state where
the principal offices of the Custodian are located. Any action involving
the Custodian brought by any other party must be brought in a state or
federal court in such state.
If in the Adoption Agreement, Depositor designates that the Custodial
Account is a Regular IRA, this Agreement is intended to qualify under Code
Section 408(a) as an individual retirement Custodial Account and to entitle
Depositor to the retirement savings deduction under Code Section 219 if
available. If in the Adoption Agreement Depositor designates that the
Custodial Account is a Roth IRA, this Agreement is intended to qualify
under Code Section 408A as a Roth individual retirement Custodial Account
and to entitle Depositor to the tax-free withdrawal of amounts from the
Custodial Account to the extent permitted in such Code section.
If any provision hereof is subject to more than one interpretation or any
term used herein is subject to more than one construction, such ambiguity
shall be resolved in favor of that interpretation or construction which is
consistent with the intent expressed in whichever of the two preceding
sentences is applicable.
However, the Custodian shall not be responsible for whether or not such
intentions are achieved through use of this Agreement, and Depositor is
referred to Depositor's attorney for any such assurances.
22. Depositor should seek advice from Depositor's attorney regarding the legal
consequences (including but not limited to federal and state tax matters)
of entering into this Agreement, contributing to the Custodial Account, and
ordering Custodian to make distributions from the Account. Depositor
acknowledges that Custodian and Service Company (and any company associated
therewith) are prohibited by law from rendering such advice.
23. If any provision of any document governing the Custodial Account provides
for notice, instructions or other communications from one party to another
in writing, to the extent provided for in the procedures of the Custodian,
Service Company or another party, any such notice, instructions or other
communications may be given by telephonic, computer, other electronic or
other means, and the requirement for written notice will be deemed
satisfied.
24. The legal documents governing the Custodial Account are as follows:
(a) If in the Adoption Agreement the Depositor designated the Custodial
Account as a Regular IRA under Code Section 408(a), the provisions of
Part One and Part Three of this Agreement and the provisions of the
Adoption Agreement are the legal documents governing the Depositor's
Custodial Account.
(b) If in the Adoption Agreement the Depositor designated the Custodial
Account as a Roth IRA under Code Section 408A, the provisions of Part
Two and Part Three of this Agreement and the provisions of the
Adoption Agreement are the legal documents governing the Depositor's
Custodial Account.
(c) In the Adoption Agreement the Depositor must designate the Custodian
Account as either a Roth IRA or a Regular IRA, and a separate account
will be established for such IRA. One Custodial Account may not serve
as a Roth IRA and a Regular IRA (through the use of subaccounts or
otherwise).
25. Articles I through VII of Part One of this Agreement are in the form
promulgated by the Internal Revenue Service as Form 5305-A. It is
anticipated that, if and when the Internal Revenue Service promulgates
changes to Form 5305-A, the Custodian will amend this Agreement
correspondingly.
Articles I through VII of Part Two of this Agreement are in the form
promulgated by the Internal Revenue Service as Form 5305-RA. It is
anticipated that, if and when the Internal Revenue Service promulgates
changes to Form 5305-RA, the Custodian will amend this Agreement
correspondingly.
The Internal Revenue Service has endorsed the use of documentation
permitting a Depositor to establish either a Regular IRA or Roth IRA (but
not both using a single Adoption Agreement), and this Kit complies with the
requirements of the IRS guidance for such use. If Internal Revenue Service
subsequently determines that such an approach is not permissible, or that
the use of a "combined" Adoption Agreement does not establish a valid
Regular IRA or a Roth IRA (as the case may be), the Custodian will furnish
the Depositor with replacement documents and the Depositor will if
necessary sign such replacement documents. Depositor acknowledge and agrees
to such procedures and to cooperate with Custodian to preserve the intended
tax treatment of the Account.
26. If the Depositor maintains an Individual Retirement Account under Code
section 408(a), Depositor may convert or transfer such other IRA to a Roth
IRA under Code section 408A using the terms of this Agreement and the
Adoption Agreement by completing and executing the Adoption Agreement and
giving suitable directions to the Custodian and the custodian or trustee of
such other IRA. Alternatively, the Depositor may convert or transfer such
other IRA to a Roth IRA by use of a reply card or by telephonic, computer
or electronic means in accordance with procedures adopted by the Custodian
or Service Company intended to meet the requirements of Code section 408A,
and the Depositor will be deemed to have exe-
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cuted the Adoption Agreement and adopted the provisions of this Agreement
and the Adoption Agreement in accordance with such procedures.
27. The Depositor acknowledges that he or she has received and read the current
prospectus for each Fund in which his or her Account is invested and the
Individual Retirement Account Disclosure Statement related to the Account.
The Depositor represents under penalties of perjury that his or her Social
Security number (or other Taxpayer Identification Number) as stated in the
Adoption Agreement is correct.
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Table of Contents State Street Bank
and Trust Company
Introduction 1
Universal Individual Retirement
Instructions for opening your Account Information Kit
Regular IRA or Roth IRA 5
Individual Retirement Custodial Account Effective January 1, 1998
Adoption Agreement 7
Universal IRA Transfer of Assets Form 11
Disclosure Statement 13
Description of Regular IRAs 13
Description of Roth IRAs 18
Rules for All IRAs 23
Custodial Agreement 26
Provisions Applicable to Regular IRAs 26
Provisions Applicable to Roth IRAs 27
Provisions Applicable to
both Roth IRAs and Regular IRAs 28
Burnham Securities Inc.
Principal Distributor Burnham Securities Inc.
1325 Avenue of the Americas, 17th Floor Principal Distributor
New York, New York 10019
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THE BURNHAM FUND INC.
RULE 12b-1 DISTRIBUTION PLAN
Class A Shares
WHEREAS, THE BURNHAM FUND INC., a Maryland corporation (the
"Fund") engages in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, the Fund has issued and is authorized to issue shares of
Common Stock ("Shares");
WHEREAS, Burnham Securities Inc. (the "Distributor") presently
serves as the principal distributor of the Shares pursuant to the Distribution
Contract between the Fund and the Distributor dated September 7, 1989 and
amended as of April 26, 1995, which Distribution Contract, as amended, has been
duly approved by the Board of Directors (the "Board") of the Fund, in accordance
with the requirements of the Act (the "Distribution Contract");
WHEREAS, the Fund has established and plans to offer shares of
its common stock denominated as Class A shares, pursuant to Rule 18f-3 under the
Act that permits the Fund to imple-
<PAGE>
<PAGE>
ment a multiple distribution system providing investors with the option of
purchasing shares of various classes;
WHEREAS, the Board as a whole, and the directors who are not
interested persons of the Fund (as defined in the Act) and who have no direct or
indirect financial interest in the operation of the Rule 12b-1 plan provided for
herein (the "Plan") or any agreements related to the Plan (the "Qualified
Directors"), have determined, after review of all information and consideration
of all pertinent facts reasonably necessary to an informed determination of
whether the Plan should be implemented, in the exercise of reasonable business
judgment and in light of their fiduciary duties, that there is a reasonable
likelihood that the Plan will benefit the Fund and the shareholders of the Class
A Shares of the Fund, and have accordingly approved the Plan by votes cast in
person at a meeting called for the purpose of voting on the Plan; and
WHEREAS, this Plan governs the Class A Shares of the Fund ("Class
A") and does not relate to any class of shares which may be offered and sold by
the Fund other than Class A.
NOW, THEREFORE, in consideration of the foregoing, the
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Fund hereby adopts the Plan in accordance with Rule 12b-1 under the Act on the
following terms and conditions:
1. The Fund shall pay to the Distributor, as the principal
distributor of the Shares, a distribution fee at the rate of up to .25% per
annum of the average daily net asset value of the Class A Shares. The fee shall
be calculated and accrued daily and paid monthly or at such other intervals as
the Board shall determine.
2. The amount set forth in paragraph 1 of the Plan shall be paid
for the Distributor's services and expenses as the principal distributor of the
Class A Shares and shall be used by the Distributor to furnish, or cause or
encourage others to furnish, services and incentives in connection with the
promotion, offering and sale of the Class A Shares, and where suitable and
appropriate, the retention of Class A Shares by shareholders, and in connection
therewith may be spent by the Distributor, in its discretion, on, among other
things, compensation to and expenses (including overhead and telephone expenses)
of account executives or other employees of the Distributor or of other
broker-dealers who engage in or support the distribution of the Class A Shares;
printing of prospectuses and reports for other
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than existing shareholders; advertising; preparation, printing and distribution
of sales literature; and allowances to other broker-dealers.
3. The Plan shall not take effect until it has been approved by
(a) a vote of at least "a majority of the outstanding voting securities" (as
defined in the Act) of the Fund, and (b) a majority vote of both (i) the Board,
and (ii) the Qualified Directors, cast in person at a meeting called for the
purpose of voting on the Plan.
4. The Plan and any related agreements shall continue in effect
for so long as such continuance is specifically approved at least annually by a
majority of both (i) the Board, and (ii) the Qualified Directors, cast in person
at a meeting called for the purpose of voting thereon.
5. In each year that the Plan remains in effect, any person
authorized to direct the disposition of monies paid or payable by the Fund
pursuant to the Plan or any related agreement shall prepare and furnish to the
Board, and the Board shall review, at least quarterly, written reports,
complying with the requirements of Rule 12b-1 under the Act, of the amounts
expended
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under the Plan and the purposes for which such expenditures were made.
6. The Plan may be terminated at any time by a majority vote of
the Qualified Directors or by a "vote of a majority of the outstanding voting
securities" (as defined in the Act) of the Fund.
7. The Plan may not be amended in order to increase materially
the amount of distribution expenses provided for in paragraph 1 above unless
such amendment is approved by the shareholders in the manner provided in
subparagraph 3(a) above, and no material amendment to the Plan shall be made
unless approved by the Board and the Qualified Directors in the manner provided
in subparagraph 3(b) above.
8. While the Plan shall be in effect, the selection and
nomination of directors of the Fund who are not "interested persons" (as defined
in the Act) of the Fund shall be committed to the discretion of the directors
then in office who are not "interested persons" of the Fund.
9. The Fund shall preserve copies of this Plan and
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any related agreements and all reports made pursuant to paragraph 5 hereof, for
a period of not less than six years from the date of this Plan, or the
agreements or such reports, as the case may be, the first two years in an easily
accessible place.
Dated: April 26, 1995
The Burnham Fund Inc.
By:__________________________
Name:
Title:
Burnham Securities Inc.
By:__________________________
Name:
Title:
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<PAGE>
THE BURNHAM FUND INC.
RULE 12b-1 DISTRIBUTION PLAN
Class B Shares
WHEREAS, THE BURNHAM FUND INC., a Maryland corporation (the
"Fund") engages in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, the Fund has issued and is authorized to issue shares of
Common Stock ("Shares");
WHEREAS, Burnham Securities Inc. (the "Distributor") presently
serves as the principal distributor of the Shares pursuant to the Distribution
Contract between the Fund and the Distributor dated September 7, 1989 and
amended as of April 26, 1995, which Distribution Contract, as amended, has been
duly approved by the Board of Directors (the "Board") of the Fund, in accordance
with the requirements of the Act (the "Distribution Contract");
WHEREAS, the Fund has established and plans to offer shares of
its common stock denominated as Class B shares, pursuant to Rule 18f-3 under the
Act that permits the Fund to imple-
<PAGE>
<PAGE>
ment a multiple distribution system providing investors with the option of
purchasing shares of various classes;
WHEREAS, the Board as a whole, and the directors who are not
interested persons of the Fund (as defined in the Act) and who have no direct or
indirect financial interest in the operation of the Rule 12b-1 plan provided for
herein (the "Plan") or any agreements related to the Plan (the "Qualified
Directors"), have determined, after review of all information and consideration
of all pertinent facts reasonably necessary to an informed determination of
whether the Plan should be implemented, in the exercise of reasonable business
judgment and in light of their fiduciary duties, that there is a reasonable
likelihood that the Plan will benefit the Fund and the shareholders of the Class
B Shares of the Fund, and have accordingly approved the Plan by votes cast in
person at a meeting called for the purpose of voting on the Plan; and
WHEREAS, this Plan governs the Class B Shares of the Fund ("Class
B") and does not relate to any class of shares which may be offered and sold by
the Fund other than Class B.
NOW, THEREFORE, in consideration of the foregoing, the
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Fund hereby adopts the Plan in accordance with Rule 12b-1 under the Act on the
following terms and conditions:
1. The Fund shall pay to the Distributor, as the principal
distributor of the Shares, a distribution fee at the rate of up to .75% per
annum of the average daily net asset value of the Class B Shares and a service
fee at a rate of up to .25% per annum of the average daily net asset value of
the Class B Shares. Each fee shall be calculated and accrued daily and paid
monthly or at such other intervals as the Board shall determine.
2. The amount set forth in paragraph 1 of the Plan shall be paid
for the Distributor's services and expenses as the principal distributor of the
Class B Shares and shall be used by the Distributor to furnish, or cause or
encourage others to furnish, services and incentives in connection with the
promotion, offering and sale of the Class B Shares, and where suitable and
appropriate, the retention of Class B Shares by shareholders, and in connection
therewith may be spent by the Distributor, in its discretion, on, among other
things, compensation to and expenses (including overhead and telephone expenses)
of account executives or other employees of the Distributor or of other
broker-dealers who engage in or support the distribution of the
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Class B Shares; printing of prospectuses and reports for other than existing
shareholders; advertising; preparation, printing and distribution of sales
literature; and allowances to other broker-dealers.
3. The Plan shall not take effect until it has been approved by
(a) a vote of at least "a majority of the outstanding voting securities" (as
defined in the Act) of the Fund, and (b) a majority vote of both (i) the Board,
and (ii) the Qualified Directors, cast in person at a meeting called for the
purpose of voting on the Plan.
4. The Plan and any related agreements shall continue in effect
for so long as such continuance is specifically approved at least annually by a
majority of both (i) the Board, and (ii) the Qualified Directors, cast in person
at a meeting called for the purpose of voting thereon.
5. In each year that the Plan remains in effect, any person
authorized to direct the disposition of monies paid or payable by the Fund
pursuant to the Plan or any related agreement shall prepare and furnish to the
Board, and the Board shall review, at least quarterly, written reports,
complying with the
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requirements of Rule 12b-1 under the Act, of the amounts expended under the Plan
and the purposes for which such expenditures were made.
6. The Plan may be terminated at any time by a majority vote of
the Qualified Directors or by a "vote of a majority of the outstanding voting
securities" (as defined in the Act) of the Fund.
7. The Plan may not be amended in order to increase materially
the amount of distribution expenses provided for in paragraph 1 above unless
such amendment is approved by the shareholders in the manner provided in
subparagraph 3(a) above, and no material amendment to the Plan shall be made
unless approved by the Board and the Qualified Directors in the manner provided
in subparagraph 3(b) above.
8. While the Plan shall be in effect, the selection and
nomination of directors of the Fund who are not "interested persons" (as defined
in the Act) of the Fund shall be committed to the discretion of the directors
then in office who are not "interested persons" of the Fund.
5
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9. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 5 hereof, for a period of
not less than six years from the date of this Plan, or the agreements or such
reports, as the case may be, the first two years in an easily accessible place.
Dated: April 26, 1995
The Burnham Fund Inc.
By:__________________________
Name:
Title:
Burnham Securities Inc.
By:__________________________
Name:
Title:
6
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THE BURNHAM FUND INC.
RULE 12b-1 DISTRIBUTION PLAN
Class C Shares
WHEREAS, THE BURNHAM FUND INC., a Maryland corporation (the
"Fund") engages in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, the Fund has issued and is authorized to issue shares of
Common Stock ("Shares");
WHEREAS, Burnham Securities Inc. (the "Distributor") presently
serves as the principal distributor of the Shares pursuant to the Distribution
Contract between the Fund and the Distributor dated September 7, 1989 and
amended as of April 26, 1995, which Distribution Contract, as amended, has been
duly approved by the Board of Directors (the "Board") of the Fund, in accordance
with the requirements of the Act (the "Distribution Contract");
WHEREAS, the Fund has established and plans to offer shares of
its common stock denominated as Class C shares, pursuant to Rule 18f-3 under the
Act that permits the Fund to imple-
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<PAGE>
ment a multiple distribution system providing investors with the option of
purchasing shares of various classes;
WHEREAS, the Board as a whole, and the directors who are not
interested persons of the Fund (as defined in the Act) and who have no direct or
indirect financial interest in the operation of the Rule 12b-1 plan provided for
herein (the "Plan") or any agreements related to the Plan (the "Qualified
Directors"), have determined, after review of all information and consideration
of all pertinent facts reasonably necessary to an informed determination of
whether the Plan should be implemented, in the exercise of reasonable business
judgment and in light of their fiduciary duties, that there is a reasonable
likelihood that the Plan will benefit the Fund and the shareholders of the Class
C Shares of the Fund, and have accordingly approved the Plan by votes cast in
person at a meeting called for the purpose of voting on the Plan; and
WHEREAS, this Plan governs the Class C Shares of the Fund ("Class
C") and does not relate to any class of shares which may be offered and sold by
the Fund other than Class C.
NOW, THEREFORE, in consideration of the foregoing, the
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Fund hereby adopts the Plan in accordance with Rule 12b-1 under the Act on the
following terms and conditions:
1. The Fund shall pay to the Distributor, as the principal
distributor of the Shares, a distribution fee at the rate of up to .75% per
annum of the average daily net asset value of the Class C Shares and a service
fee at a rate of up to .25% per annum of the average daily net asset value of
the Class C Shares. Each fee shall be calculated and accrued daily and paid
monthly or at such other intervals as the Board shall determine.
2. The amount set forth in paragraph 1 of the Plan shall be paid
for the Distributor's services and expenses as the principal distributor of the
Class C Shares and shall be used by the Distributor to furnish, or cause or
encourage others to furnish, services and incentives in connection with the
promotion, offering and sale of the Class C Shares, and where suitable and
appropriate, the retention of Class C Shares by shareholders, and in connection
therewith may be spent by the Distributor, in its discretion, on, among other
things, compensation to and expenses (including overhead and telephone expenses)
of account executives or other employees of the Distributor or of other
broker-dealers who engage in or support the distribution of the
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<PAGE>
Class C Shares; printing of prospectuses and reports for other than existing
shareholders; advertising; preparation, printing and distribution of sales
literature; and allowances to other broker-dealers.
3. The Plan shall not take effect until it has been approved by
(a) a vote of at least "a majority of the outstanding voting securities" (as
defined in the Act) of the Fund, and (b) a majority vote of both (i) the Board,
and (ii) the Qualified Directors, cast in person at a meeting called for the
purpose of voting on the Plan.
4. The Plan and any related agreements shall continue in effect
for so long as such continuance is specifically approved at least annually by a
majority of both (i) the Board, and (ii) the Qualified Directors, cast in person
at a meeting called for the purpose of voting thereon.
5. In each year that the Plan remains in effect, any person
authorized to direct the disposition of monies paid or payable by the Fund
pursuant to the Plan or any related agreement shall prepare and furnish to the
Board, and the Board shall review, at least quarterly, written reports,
complying with the
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<PAGE>
requirements of Rule 12b-1 under the Act, of the amounts expended under the Plan
and the purposes for which such expenditures were made.
6. The Plan may be terminated at any time by a majority vote of
the Qualified Directors or by a "vote of a majority of the outstanding voting
securities" (as defined in the Act) of the Fund.
7. The Plan may not be amended in order to increase materially
the amount of distribution expenses provided for in paragraph 1 above unless
such amendment is approved by the shareholders in the manner provided in
subparagraph 3(a) above, and no material amendment to the Plan shall be made
unless approved by the Board and the Qualified Directors in the manner provided
in subparagraph 3(b) above.
8. While the Plan shall be in effect, the selection and
nomination of directors of the Fund who are not "interested persons" (as defined
in the Act) of the Fund shall be committed to the discretion of the directors
then in office who are not "interested persons" of the Fund.
5
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<PAGE>
9. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 5 hereof, for a period of
not less than six years from the date of this Plan, or the agreements or such
reports, as the case may be, the first two years in an easily accessible place.
Dated: April 26, 1995
The Burnham Fund Inc.
By:__________________________
Name:
Title:
Burnham Securities Inc.
By:__________________________
Name:
Title:
6
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<PAGE>
AMENDED AS OF JUNE 26, 1997
THE BURNHAM FUND INC.
Form of
Multiple Class Distribution Plan
Pursuant to Rule 18f-3
Under the Investment Company Act of 1940
1. The Plan. This Multiple Class Distribution Plan ("Plan") is the written plan
contemplated by Rule 18f-3 (the "Rule") under the Investment Company Act of
1940, as amended (the "1940 Act") of The Burnham Fund Inc. This Plan sets forth
the separate arrangement and expense allocation of classes that may be issued
under the Fund's multiple class distribution system.
2. General. The Fund reserves the right to increase, decrease or waive the
contingent deferred sales charge ("CDSC") imposed on any existing or future
classes of shares within the ranges permissible under applicable rules and
regulations of the Securities and Exchange Commission (the "Commission"),
including in particular Rule 18f-3 and Rule 6c-10, and the rules of the National
Association of Securities Dealers, Inc. (the "NASD"), as such rules and
regulations may be amended, modified or adopted from time to time. The Fund
currently intends to: (1) increase the maximum initial sales charge for Class A
shares to 5.00% and assess a CDSC with respect to Class A shares of up to 1% for
redemptions made within 24 months after purchase (on purchases of $1 million or
more or by employer-sponsored retirement plans with at least 200 eligible
employees); (2) assess a CDSC with respect to Class B shares of up to 5.00% that
declines over time for shares held less than six years and add a conversion
feature to the Class B shares to automatically convert Class B shares to Class A
shares after a specified period as described in the Fund's then current
Prospectus (currently eight years); (3) to assess a CDSC with respect to Class C
shares of 1% for the first 12 months, to increase the Rule 12b-1 fee with
respect to Class C shares to 0.75% and to impose a service fee of 0.25%. The
foregoing description reflects the Fund's current intention, but such terms are
not meant to limit the Fund's ability in the future to alter the terms of
existing
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<PAGE>
classes or create new classes in compliance with applicable rules and
regulations of the Commission and the NASD (as such rules and regulations may be
amended, modified or adopted).
3. Attributes of Classes. Under the Plan, each share of the Fund will represent
an equal pro rata interest in the Fund, regardless of class, and will have
identical voting, dividend, liquidation and other rights, except for: (1) the
amount and type of fees permitted by different Rule 12b-1 distribution plans and
the terms of service plans, if applicable; (2) voting rights on matters
concerning Rule 12b-1 Plans; (3) each class of shares will bear any expenses
which the Board determines should be allocated or charged on a class basis
("Class Expenses"), which are currently limited to (a) expenses related to a
class' Rule 12b-1 Plan or service plan (and any other costs relating to
obtaining shareholder approval of the Rule 12b-1 Plan for that class or an
amendment to its Rule 12b-1 Plan), (b) transfer agency fees as identified by the
transfer agent as attributable to a specific class, (c) printing and postage
expenses relating to preparing and distributing material such as shareholder
reports, prospectuses and proxies to current shareholders, (d) Commission
registration fees incurred by a class of shares, (e) the expenses of
administrative personnel and services as required to support the shareholders of
a specific class, (f) litigation or other legal expenses relating solely to one
class of shares, (g) directors' fees incurred as a result of issues relating to
one class of shares and (h) other expenses that are subsequently identified and
determined to be properly allocated to one class of shares; (4) the designation
of such classes; and (5) the different exchange privileges of the various
classes of shares; (6) the fact that a class may have a conversion feature.
4. Class A Shares. The Fund currently intends that the Class A shares will be
offered subject to a front-end sales load of up to 5.00% of the public offering
price and a distribution fee under a Rule 12b-1 Plan of 0.25%. Purchases
aggregating $1,000,000.00 or more or by employer-sponsored retirement plans with
at least 200 eligible employees will be subject to a CDSC of 1.00% if redeemed
within the first 12 months and .5 of 1.00% if the redemption occurs in the next
12 months, of the
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<PAGE>
lesser of (a) the net asset value of the shares at the time of purchase or (b)
the net asset value at the time of redemption. The front-end sales load of up to
5.00% will decline with the amount invested as follows: 5.00% for amounts less
than $50,000; 4.5% for amounts at least $50,000 but less than $100,000; 4.00%
for amounts at least $100,000 but less than $250,000; 3.00% for amounts at least
$250,000 but less than $500,000; 2.00% for amounts at least $500,000 but less
than $1,000,000. All shareholders who purchased Class A shares before 4/28/95
shall be subject to a sales charge of up to 3% decreasing with the size of
purchase to 0% for purchases of $1,000,000 or more. The Fund currently will not
assess a sales load for purchases by trust companies and bank trust departments
for funds over which they exercise exclusive discretionary investment authority
and charge an account maintenance fee and which are held in a fiduciary, agency,
advisory, custodial or similar capacity and purchases by registered investment
advisers for their clients whom they charge an account maintenance fee.
5. Class B Shares. The Fund currently intends that Class B shares will be
offered without imposition of a front-end sales load, but will be subject to a
CDSC that declines over time for shares held less than six years. The CDSC will
be assessed as follows: 5.00% for shares held up to one year; 4.00% for shares
held up to one year or more but less than two years; 3.00% for shares held two
or more years but less than four years; 2.00% for shares held four or more years
but less than five years; 1.00% for shares held five or more years but less than
six years; 0.00% for shares held six years or more. Class B shares purchased
before April 28, 1995 ("existing Class B shares") are subject to no CDSC unless
shares are redeemed within eighteen (18) months of their purchase in which case
a CDSC of 1.25% will be imposed. The Fund currently intends that the CDSC will
be waived (1) for distribution to participants or beneficiaries of certain
qualified plans, (2) for withdrawals under a systematic withdrawal plan where
the annual withdrawal does not exceed 10% of the opening value of the account
and (3) following the death or disability of a shareholder or in connection with
certain benefit distributions as discussed below. Class B shares will continue
to pay the Distribution fee pursuant to the Rule 12b-1 Plan equal to 0.75% of
the average daily net asset value of the Class B
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<PAGE>
shares and will continue to pay broker-dealers and other NASD members a service
fee of 0.25% of the average daily net asset value of Class B shares, as
discussed above. The maximum investment amount for Class B shares will be
$250,000.
The Fund proposes to implement a conversion feature with respect
to the Class B shares. Class B shares will automatically convert to Class A
shares after a specified period (currently eight years). The Fund intends to
voluntarily grant an irrevocable exchange privilege permitting holders of
existing Class B shares to elect to have their shares convert to Class A shares
after a specified period under the same conditions.
6. Class C Shares. The Fund currently intends that Class C shares will be
offered to all investors, unlike existing Class C shares which have been offered
by Financial Planners or similar institutional intermediaries whose clients have
invested or are reasonably expected to invest an aggregate amount of not less
than $1,000,000 in the Fund. Class C shares will be subject to a CDSC of 1.00%
if redeemed within the first 12 months after purchase, imposed on the lesser of
the net asset value (a) at the time of purchase or (b) at the time of
redemption. The maximum investment for Class C shares will be $1,000,000. The
Fund currently intends that the CDSC will be waived in connection with (1)
distribution to participants or beneficiaries of certain qualified plans and (2)
following the death or disability of a shareholder or in connection with certain
benefit distributions as discussed below. The Fund does not currently intend
that Class C shares will have an automatic conversion feature, although the Fund
may in the future add a conversion feature to Class C shares or any other class
of shares.
7. CDSC Waiver. No CDSC will be imposed when a shareholder redeems Class A, B or
C shares in the following instances: (a) shares or amounts representing
increases in the value of an account above the net cost of the investment due to
increases in the net asset value per share; (b) shares acquired through
reinvestment of income dividends or capital gains distributions; (c) Class A
shares purchases in the amount of $1 million or more or by employer-sponsored
retirement plans with at least 200
4
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<PAGE>
eligible employees, held for more than 24 months, Class B shares held for more
than six years or Class C shares held for more than one year from the end of the
calendar month in which the purchase order was accepted. The CDSC will not apply
to purchases of Class A shares at net asset value as described above and will be
waived in the case of redemptions of Class A, B or C shares in connection with
(i) distributions to participants or beneficiaries of plans qualified under
Section 401(a) of the Internal Revenue Code (the "Code") or from custodial
accounts under Code Section 403(b)(7), individual retirement accounts under Code
Section 408(a), deferred compensation plans under Code Section 457 and other
employee benefit plans, (ii) withdrawals under an automatic withdrawal plan
where the annual withdrawal does not exceed 10% of the opening value of the
account with respect to Class B shares, and (iii) following the death or
disability of a shareholder. The Board may determine to discontinue the waiver
of the CDSC in compliance with Rule 18f-3 and Rule 6c-10 and other applicable
rules and regulations of the Commission.
8. Conversion Feature. The Fund may issue one or more than one class of shares
(each a "Purchase Class") that may convert to another class ("Target Class")
after a specified period of time on the basis of the relative net asset value
per share of the two classes without the imposition of an additional sales load,
fee, or other charge. Shares of a Target Class will be subject to a lower
distribution expense and/or service expense, in the aggregate, than the shares
of the Purchase Class that converts to such Target Class.
If a Fund offers both Class A and Class B shares, Class B shares
will have a conversion feature providing for automatic conversion to Class A
shares. On the first business day of the month after a specified period
(currently the eighth anniversary of the issuance of Class B shares), Class B
shares (except those purchased through the reinvestment of dividends and other
distributions) will automatically convert to Class A shares of such Fund at the
relative net asset values of each of the classes. All shares in a shareholder's
Fund account that were purchased through the reinvestment of dividends and other
distributions paid in respect of Class B shares will be considered to be held in
a separate sub-account. Each time any Class B shares in the
5
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shareholder's Fund account (other than those in the sub-account) convert to
Class A shares, a pro rata portion of the Class B shares then held in the
sub-account also will convert to Class A shares based on the ratio that the
shareholder's Class B shares converting to Class A shares bears to the
shareholder's total Class B shares not acquired through dividends and
distributions. For purposes of calculating the period required for conversion to
Class A shares, such previously purchased shares will be deemed to have been
acquired as if the new CDSC schedule were in effect on the date such shares
originally were purchased. Class B shares will be deemed to include Fund shares
purchased prior to April 28, 1995, that were subject to a CDSC. The Fund intends
voluntarily to allow all existing Class B shares to have a conversion privilege
permitting holders of Existing Class B shares to convert their shares to Class A
shares as described herein. The conversion privilege for Existing Class B shares
is subject to the same terms as Class B shares purchased on or after April 28,
1995. Although the Fund currently intend to implement a conversion feature with
respect to Class B shares, they may add a conversion feature to any existing or
future class consistent with the rules and regulations of the Commission.
The actual terms of a conversion feature would be determined on a
class by class basis. Any class of shares with a conversion feature will convert
into another class of shares on the basis of the relative net asset values of
the two classes, without the imposition of any sales load, fee, or other charge.
After a conversion, the converted shares will be subject to an asset-based sales
charge and/or service fee (as those terms are defined in article III, section 26
of the NASD rules of fair practice), if any, that in the aggregate are lower
than the asset-based sales charge and service fee to which they were subject to
prior to the conversion. Any conversion feature will be subject to a
determination that the conversion of shares does not constitute a taxable event
under federal tax law. If such a determination is no longer available,
conversion of Class B shares to Class A shares would have to be suspended and
Class B shares would continue to be subject to the Class B distribution fee
until redeemed. Any conversion feature adopted by a Fund will be fully disclosed
in the Fund's then-current prospectus.
6
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<PAGE>
9. Exchange Privileges. Another difference between Class A shares, Class B
shares, Class C shares and any future shares will be the terms of the exchange
privilege applicable to such shares. Currently, shareholders of the Fund do not
enjoy exchange privileges. The Fund, however, reserves the right to offer
shareholders the ability to exchange shares, for any other Fund as may be
described in such Fund's prospectus. In order to qualify for the exchange
privilege without the approval of a Fund it is required that the shares being
exchanged have a net asset value of at least the minimum amount required to make
an initial investment in the fund for which the exchange is being made.
Class A shares of each series of the Fund similarly will be
exchangeable for shares of the other funds which are sold subject to a front-end
sales load, and for shares of other funds sponsored by the Distributor that are
sold subject to a front-end sales load, and for shares of money market funds, if
any were to be offered by the Distributor and which offer an exchange privilege.
In addition, a holder of shares of other funds sponsored by the Distributor that
are sold subject to a front-end sales load (or a holder of money market fund
shares acquired through an exchange of such shares were such funds to be
offered) which offer an exchange privilege will be able to exchange his or her
shares for Class A shares of [any series of] the Fund as described above. Class
B shares of the series of the Fund will be exchangeable only for similar shares
offered pursuant to a Deferred Option by any other series or fund in the complex
which offers an exchange privilege. Class C shares of [the series of] the Fund
will be exchangeable only for similar shares offered pursuant to a level-load
deferred option by any other series or fund in the complex which offers an
exchange privilege. Any other class of shares that may in the future be offered
of the series of the Fund will be exchangeable only for similar shares offered
by any other series or fund in the complex which offers an exchange privilege.
10. Conflicts of Interest. The Fund does not believe that the implementation of
the Plan, will give rise to any conflicts of interest. The Board will continue
to monitor, on an ongoing basis, the Fund for the existence
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of any material conflicts among the interests of the holders of the various
classes of shares and will take any action reasonably necessary to eliminate any
such conflicts that may develop. The Fund also believe that the interests of the
various classes of shares as to the investment advisory fees of the Fund are the
same and not in conflict. These fees are used to compensate the Adviser for
providing investment advisory services that are common to all investors,
regardless of the class of shares.
11. Net Asset Value. Under the Plan, all expenses incurred by the Fund will
continue to be allocated among the various classes of shares based upon the net
assets of the Fund attributable to each class, except that shares of a
particular class will continue to bear the Class Expenses incurred by such
class. Consequently, the net income of, and the dividends payable with respect
to, each particular class would generally differ from the net income of, and the
dividends payable with respect to, the other classes of shares of the Fund.
Therefore, the net asset value per share of the classes will differ at times.
Expenses of the Fund allocated to a class of shares will continue to be borne on
a pro rata basis by each outstanding share of that class.
12. Accountants' Procedures. The methodology and procedures for calculating
the net asset value, dividend and distributions of the classes of shares and the
proper allocation of income and expenses among the classes established by the
Fund is incorporated by reference to the application filed on April 14, 1993
pursuant to which an exemptive order was granted on September 1, 1993 (SEC
Release No. IC-19671).
13. Maintenance of Records. The Fund will continue to maintain the records of
calculations of net asset value, dividend and distributions, expenses and
allocation of income and expenses in connection with the classes of shares of
the Fund for a period of not less than six years, the first two in an easily
accessible place. As provided herein, such calculations will continue to be
available for inspection by the staff of the Commission during this period of
time.
14. Compensation for Broker-Dealers and Financial Plan-
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<PAGE>
ners. Broker-dealers and Financial Planners that sell shares of the Fund will
continue to be compensated differently depending on the class of shares an
investor chooses. In the case of Class A shares, broker-dealers currently are
compensated primarily on the sale of shares at the point of sale based upon the
amount of the initial sales load. For the sale of Class B shares, broker-dealers
currently receive from the Distributor a fee equal to 5.00% of the gross
proceeds on the sale of such shares at the point of sale. In addition,
commencing at the end of the first quarter of the second year that an investor
holds Class B shares, a portion of the 0.75% distribution fee may be reallocated
to broker-dealers selling such shares. Also, at the end of the first quarter of
the second year that an investor holds Class B shares, broker-dealers are paid
quarterly a service fee at an annual rate of 0.25% of the average daily net
assets of the Class B shares for as long as the investor holds such shares. In
the case of Class C shares, commencing at the end of the first quarter of the
second year that an investor holds such shares, Financial Planners receive a
distribution fee equal to 0.25% per annum of the average daily net assets of the
Class C shares for as long as an investor holds such shares.
Under the Plan, herein, brokers will be compensated with respect
to Class A shares for purchases over $1 million under the following proposed
sales structure: 1% of the first $2 million, .8 of 1% of the next $1 million,
plus .4 of 1% on amounts over $3 million. The dealer concession with respect to
Class B shares will be 5% at the time of purchase and an ongoing allocation of
0.25% per annum. The dealer concession with respect to Class C shares will be 1%
at the time of sale and an ongoing allocation of 0.85% after the first year. The
foregoing broker-dealer compensation reflects the Fund's current intentions, but
may change as disclosed in the Fund's then current Prospectus and will be
subject to applicable rules and regulations of the Commission and the NASD, as
such rules and regulations may be amended, modified or adopted.
15. Distribution and Other Fees. As described above, the Distributor is paid,
pursuant to proposed Rule 12b-1 Plans, a distribution fee of 0.75% of the
average daily net assets of the Class B shares and a distribution fee
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<PAGE>
of 0.25% of the average daily net assets of the Class A and C shares for
distribution expenses it incurs in promoting and distributing shares of the
Fund. All or a portion of the distribution fee may be reallocated to
broker-dealers and others selling shares of the Fund. In the case of Class B and
C shares, such reallocation will commence at the end of the first quarter in the
second year that an investor holds such shares. Class B shares of the Fund also
pay a service fee at an annual rate of 0.25% of their average daily net assets.
The service fee is used by the Distributor to compensate broker-dealers and
other NASD members (including the Distributor during the first year) for
rendering continuing, ongoing service to shareholders of the Fund, similar to an
account maintenance fee. Distribution arrangements for the proposed classes of
shares will remain the same, except that: (i) Proposed Class C shares will be
subject to a 0.75% distribution fee of the average daily net assets of the Class
C shares and Proposed Class C shares will pay a service fee at an annual rate of
0.25% of their average daily net assets. Distributors will receive from the
Distributor a fee equal to 5% of the gross proceeds from the sale of proposed
Class B shares at the time a sale is settled and dealers will be paid quarterly
payments equal to 0.25% per annum of the average daily net asset value of the
proposed Class B shares; and (ii) dealers will receive from the Distributor a
fee equal to 1% of the gross proceeds from the sale of proposed Class C shares
at the time a sale is settled and commencing at the end of the thirteenth month
following each sale of shares, dealers will be paid quarterly payments equal to
0.85% per annum of the average daily net asset value of Class C shares.
The NASD Rules of Fair Practice (the "NASD Rules") subject
"asset-based" distribution charges, including Rule 12b-1 fees, to regulation as
sales charges under those rules. Among other things, the NASD Rules limit the
annual "asset-based" distribution charges that an investment company is able to
impose to 0.75% of the company's average net assets. However, a fund imposing
this type of fee would also be able to impose an additional annual 0.25%
"service fee" if that amount is attributable to ongoing payment made to
broker-dealers for providing personal service and/or maintenance of shareholder
accounts. In addition to the annual
10
<PAGE>
<PAGE>
limitation, all Rule 12b-1 fees and sales charges paid to a fund's underwriter
would be subject to an ongoing cap of 6.25% of aggregate net sales plus
interest.
The adoption and implementation of Rule 12b-1 Plan provisions
with respect to any class of shares of the Fund will continue to be independent
of, and not conditioned upon, the adoption or implementation of Rule 12b-1 Plan
provisions with respect to any other class of shares. The provision of
promotional and distribution services under a Rule 12b-1 Plan for a particular
class will continue to augment, and not be duplicative of, services otherwise
provided under any other Rule 12b-1 Plan provisions for any other class or the
advisory or distribution contracts or any other service contract entered into in
connection with the service plan. The level of payments made pursuant to a Rule
12b-1 Plan may vary based upon an independent determination by the Board with
respect to a particular class. The distribution and servicing expenses of a
particular class will continue to be borne solely by that class and the Fund
will continue to not use fees charged to one class to support the marketing or
servicing relating to any other class of shares. The Board will adopt such
reasonable rules as may be necessary to determine the expenses properly
allocable to each class. Charges under a Rule 12b-1 Plan relating to any class
of shares will continue to be deducted only from the assets of that class. The
difference among classes will continue to relate to the different distribution
and administrative costs of making sales to, and servicing the accounts of,
investors through different distribution channels.
16. Rule 12b-1 Plans. Payments from the Rule 12b-1 Plans for the Class A and B
shares will continue to primarily be used to compensate the Distributor for
service and distribution expenses it incurs in promoting and distributing shares
of the Fund. Such fees may be reallocated to broker-dealers for their
distribution efforts as described above. Under the Class C Rule 12b-1 Plan, Rule
12b-1 fees are used currently to reimburse Financial Planners or similar
institutional intermediaries for distribution expenses incurred in connection
with their sales of Class C shares. Under the Class C Rule 12b-1 Plan as
modified, payments will be used primarily to compensate the Distributor for
service and
11
<PAGE>
<PAGE>
distribution expenses it incurs in promoting and distributing Class
C shares of the Fund, as has been the case with existing Class A and Class B
shares.
The Distributor will continue to furnish the Directors with
quarterly reports detailing amounts expended by the Distributor (for the quarter
and on a cumulative basis) as sales commissions, related financing costs and, to
the extent relevant, other appropriate distribution expenses, including possible
allocations of the Distributor's general overhead costs (the "Statements"), to
enable the Directors to fulfill their responsibilities pursuant to paragraph (d)
of Rule 12b-1 under the Investment Company Act, and to make findings required by
paragraph (e) of Rule 12b-1. The Statements will also continue to include
service and distribution fees and CDSC payments received by the Distributor (for
the quarter and on a cumulative basis). The Statements will continue to comply
with the requirements of paragraph (b)(3)(ii) of Rule 12b-1.
17. This Plan is hereby approved by a majority of the directors of the Fund,
including a majority of the directors who are not interested persons of the Fund
(collectively, the "Directors"). The Directors have found that this Plan,
including the expense allocation, is in the best interests of each class
individually and the Fund as a whole. The Directors have made this determination
after requesting and evaluating such information as may be reasonably necessary
to evaluate this Plan.
This Plan is intended to conform to Rule 18f-3 and Rule 6c-10 under the
1940 Act (the "Rules")and any inconsistencies shall be read to conform with the
Rules.
Dated: June 26, 1997
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BURNHAM
FUND ANNUAL REPORT DATED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH ANNUAL REPORT.
</LEGEND>
<CIK> 0000030126
<NAME> THE BURNHAM FUND INC.
<SERIES>
<NUMBER> 001
<NAME> CLASS A SHARES
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 93,452,821
<INVESTMENTS-AT-VALUE> 140,428,098
<RECEIVABLES> 217,733
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 140,645,831
<PAYABLE-FOR-SECURITIES> 2,314,250
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 180,349
<TOTAL-LIABILITIES> 2,494,599
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 82,944,585
<SHARES-COMMON-STOCK> 4,541,504
<SHARES-COMMON-PRIOR> 4,577,959
<ACCUMULATED-NII-CURRENT> 593,535
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,637,835
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 46,975,277
<NET-ASSETS> 138,151,232
<DIVIDEND-INCOME> 2,384,042
<INTEREST-INCOME> 1,149,339
<OTHER-INCOME> 0
<EXPENSES-NET> 1,446,126
<NET-INVESTMENT-INCOME> 2,087,255
<REALIZED-GAINS-CURRENT> 7,595,669
<APPREC-INCREASE-CURRENT> 18,745,136
<NET-CHANGE-FROM-OPS> 28,428,060
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,041,644)
<DISTRIBUTIONS-OF-GAINS> (5,310,408)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 70,028
<NUMBER-OF-SHARES-REDEEMED> (363,191)
<SHARES-REINVESTED> 256,708
<NET-CHANGE-IN-ASSETS> 19,683,146
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 811,886
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,446,512
<AVERAGE-NET-ASSETS> 128,206,864
<PER-SHARE-NAV-BEGIN> 25.65
<PER-SHARE-NII> 0.45
<PER-SHARE-GAIN-APPREC> 5.54
<PER-SHARE-DIVIDEND> (0.44)
<PER-SHARE-DISTRIBUTIONS> (1.16)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 30.04
<EXPENSE-RATIO> 1.1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BURNHAM
FUND INC. ANNUAL REPORT DATED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH ANNUAL REPORT.
</LEGEND>
<CIK> 0000030126
<NAME> THE BURNHAM FUND INC.
<SERIES>
<NUMBER> 002
<NAME> CLASS B SHARES
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 93,452,821
<INVESTMENTS-AT-VALUE> 140,428,098
<RECEIVABLES> 217,733
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 140,645,831
<PAYABLE-FOR-SECURITIES> 2,314,250
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 180,349
<TOTAL-LIABILITIES> 2,494,599
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 82,944,585
<SHARES-COMMON-STOCK> 52,413
<SHARES-COMMON-PRIOR> 39,490
<ACCUMULATED-NII-CURRENT> 593,535
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,637,835
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 46,975,277
<NET-ASSETS> 138,151,232
<DIVIDEND-INCOME> 2,384,042
<INTEREST-INCOME> 1,149,339
<OTHER-INCOME> 0
<EXPENSES-NET> 1,446,126
<NET-INVESTMENT-INCOME> 2,087,255
<REALIZED-GAINS-CURRENT> 7,595,669
<APPREC-INCREASE-CURRENT> 18,745,136
<NET-CHANGE-FROM-OPS> 28,428,060
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (12,430)
<DISTRIBUTIONS-OF-GAINS> (45,808)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,773
<NUMBER-OF-SHARES-REDEEMED> (1,130)
<SHARES-REINVESTED> 2,280
<NET-CHANGE-IN-ASSETS> 19,683,146
<ACCUMULATED-NII-PRIOR> 2,427,853
<ACCUMULATED-GAINS-PRIOR> 3,531,157
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 811,886
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,446,512
<AVERAGE-NET-ASSETS> 1,373,441
<PER-SHARE-NAV-BEGIN> 26.31
<PER-SHARE-NII> 0.13
<PER-SHARE-GAIN-APPREC> 5.75
<PER-SHARE-DIVIDEND> (0.28)
<PER-SHARE-DISTRIBUTIONS> (1.16)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 30.75
<EXPENSE-RATIO> 2.0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BURNHAM
FUND INC. ANNUAL REPORT DATED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH ANNUAL REPORT.
</LEGEND>
<CIK> 0000030126
<NAME> THE BURNHAM FUND INC.
<SERIES>
<NUMBER> 003
<NAME> CLASS C SHARES
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 93,452,821
<INVESTMENTS-AT-VALUE> 140,428,098
<RECEIVABLES> 217,733
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 140,645,831
<PAYABLE-FOR-SECURITIES> 2,314,250
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 180,349
<TOTAL-LIABILITIES> 2,494,599
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 82,944,585
<SHARES-COMMON-STOCK> 3,188
<SHARES-COMMON-PRIOR> 131
<ACCUMULATED-NII-CURRENT> 593,535
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,637,835
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 46,975,277
<NET-ASSETS> 138,151,232
<DIVIDEND-INCOME> 2,384,042
<INTEREST-INCOME> 1,149,339
<OTHER-INCOME> 0
<EXPENSES-NET> 1,446,126
<NET-INVESTMENT-INCOME> 2,087,255
<REALIZED-GAINS-CURRENT> 7,595,669
<APPREC-INCREASE-CURRENT> 18,745,136
<NET-CHANGE-FROM-OPS> 28,428,060
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (122)
<DISTRIBUTIONS-OF-GAINS> (152)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,071
<NUMBER-OF-SHARES-REDEEMED> (25)
<SHARES-REINVESTED> 10
<NET-CHANGE-IN-ASSETS> 19,683,146
<ACCUMULATED-NII-PRIOR> 2,427,853
<ACCUMULATED-GAINS-PRIOR> 3,531,157
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 811,886
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,446,512
<AVERAGE-NET-ASSETS> 38,624
<PER-SHARE-NAV-BEGIN> 25.69
<PER-SHARE-NII> 0.13
<PER-SHARE-GAIN-APPREC> 5.62
<PER-SHARE-DIVIDEND> (0.19)
<PER-SHARE-DISTRIBUTIONS> (1.16)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 30.09
<EXPENSE-RATIO> 2.0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
