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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 23, 1999
FILE NO. 811-2611
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
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REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 20 [X]
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VAN KAMPEN EXCHANGE FUND
A CALIFORNIA LIMITED PARTNERSHIP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN THE AGREEMENT OF LIMITED PARTNERSHIP)
1 PARKVIEW PLAZA
PO BOX 5555
OAKBROOK TERRACE, IL 60181-5555
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)(ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (630) 684-6000
DENNIS J. MCDONNELL
EXECUTIVE VICE PRESIDENT
VAN KAMPEN INVESTMENTS INC.
1 PARKVIEW PLAZA
PO BOX 5555
OAKBROOK TERRACE, ILLINOIS 60181-5555
(NAME AND ADDRESS OF AGENT FOR SERVICE)
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Copies to:
WAYNE W. WHALEN, ESQ.
THOMAS A. HALE, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)
333 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60606
(312) 407-0700
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VAN KAMPEN EXCHANGE FUND
PART A
INFORMATION REQUIRED IN A PROSPECTUS
Van Kampen Exchange Fund (the "Registrant") is an open-end diversified
management investment company, registered under the Investment Company Act of
1940, as amended (the "1940 Act"), and formed on December 4, 1975 under the
Uniform Limited Partnership Act of California. Registrant commenced business as
an investment company on December 13, 1976.
Items 1, 2, 3, 5 and 9 of Part A are omitted pursuant to General
Instruction B.2. of Form N-1A.
This Prospectus, which incorporates by reference the entire Statement of
Additional Information, concisely sets forth certain information about the
Registrant that a prospective investor should know before investing in shares of
the Registrant. Shareholders should read this Prospectus carefully and retain it
for future reference. A copy of the Statement of Additional Information may be
obtained without charge by calling (800) 341-2911 or for Telecommunications
Device for the Deaf at (800) 421-2833. The Statement of Additional Information
has been filed with the Securities and Exchange Commission ("SEC") and is
available along with other related materials at the SEC's internet web site
(http://www.sec.gov).
This Prospectus is dated April 23, 1999.
ITEM 4. INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES, AND RELATED
RISKS.
The Registrant's principal investment objective is long-term growth of
capital, while the production of current income is an important secondary
objective. Under normal market conditions, the Registrant seeks to achieve these
objectives by investing primarily in common stocks or convertible securities of
companies believed to have long-term growth potential. The Registrant does not
intend to engage to any significant degree in active or frequent trading of
portfolio securities. The Registrant's portfolio turnover is reported in its
financial statements. The Registrant may, however, for defensive purposes,
temporarily invest all or a portion of its assets in other types of securities,
including investment grade bonds, preferred stocks and money market obligations
such as government securities, certificates of deposit and commercial paper. The
effect of taking a temporary defensive position may be that the Registrant does
not achieve its investment objective. The foregoing policies may not be changed
without approval of a majority of the Registrant's outstanding voting
securities. The Registrant's temporary investments will consist of U.S. Treasury
Bills and U.S. Treasury Bonds, both issued by and supported by the full faith
and credit of the United States Government, and commercial paper rated P-1, if
by Moody's Investors Service, Inc., or A-1 if by Standard & Poor's and
repurchase agreements with domestic banks and broker-dealers.
The Registrant is subject to market risk. Market risk is the possibility
that the market values of securities owned by the Registrant will decline.
Market risk may affect a single issuer, industry, sector of the economy or the
market as a whole. Investments in common stocks and convertible securities
generally are affected by changes in the stock markets, which fluctuate
substantially over time, sometimes suddenly and sharply.
ITEM 6. MANAGEMENT, ORGANIZATION, AND CAPITAL STRUCTURE.
The business and affairs of the Registrant are managed under the direction
of the Board of Managing General Partners of the Registrant. Subject to the
Managing General Partners' oversight, the Adviser (defined below) determines the
investment of Registrant's assets, provides administrative services and manages
Registrant's business and affairs.
Van Kampen Asset Management Inc. ("Asset Management" or the "Adviser"), 1
Parkview Plaza, PO Box 5555, Oakbrook Terrace, Illinois 60181-5555 serves as
investment adviser to Registrant. The Adviser is a wholly owned subsidiary of
Van Kampen Investments Inc. ("Van Kampen Investments"). Van Kampen Investments
is a diversified asset management company with more than two million retail
investor accounts, extensive capabilities for managing institutional portfolios,
and more than $75 billion under management or supervision. Van Kampen
Investments' more than 50 open-end and 39 closed-end funds and more than 2,500
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unit investment trusts are professionally distributed by leading financial
advisers nationwide. Van Kampen Investments is an indirect wholly owned
subsidiary of Morgan Stanley Dean Witter & Co.
Morgan Stanley Dean Witter & Co. and various of its directly or indirectly
owned subsidiaries, including Morgan Stanley Dean Witter Investment Management
Inc., an investment adviser, Morgan Stanley & Co. Incorporated, a registered
broker-dealer and investment adviser, and Morgan Stanley International, are
engaged in a wide range of financial services. Their principal businesses
include securities underwriting, distribution and trading; merger, acquisition,
restructuring and other corporate finance advisory activities; merchant banking;
stock brokerage and research services; credit services; asset management;
trading of futures, options, foreign exchange, commodities and swaps (involving
foreign exchange, commodities, indices and interest rates); real estate advice,
financing and investing; and global custody, securities clearance services and
securities lending.
The Registrant retains the Adviser to manage the investment of its assets
and to place orders for the purchase and sale of its portfolio securities. Under
an investment advisory agreement between the Adviser and the Registrant (the
"Advisory Agreement"), the Registrant pays the Adviser a fee monthly calculated
at the annual rate of 0.50% of average daily net assets of the Registrant. Under
the Advisory Agreement, Registrant also reimburses the Adviser for the cost of
the Registrant's accounting services, which include maintaining its financial
books and records and calculating its daily net asset value. For the fiscal year
ended December 31, 1998, advisory fees paid by the Registrant equaled 0.50% of
the Registrant's average net assets.
The Fund is managed by a management team headed by Jeff New. Mr. New has
been primarily responsible for managing the Fund's investment portfolio since
May 1998. Mr. New has been Senior Vice President and Portfolio Manager of the
Adviser and Van Kampen Investment Advisory Corp. ("Advisory Corp.") since
December 1997. Prior to December 1997, Mr. New was Vice President and Portfolio
Manager of the Adviser and Advisory Corp. Prior to June 1994, Mr. New was
Associate Portfolio Manager of the Adviser. Michael Davis, co-manager since
March 1998, is responsible for the day-to-day management of the Fund's
investment portfolio. Mr. Davis has been Vice President and Portfolio Manager of
the Adviser and Advisory Corp. since March 1998. Mr. Davis has been an
investment professional since 1983 and prior to March 1998 the owner of Davis
Equity, a stock research company.
Operating expenses paid by the Registrant include transfer agency fees,
custodial fees, legal and accounting fees, the costs of reports and proxies to
partners, managing general partners' fees, and all other business expenses not
specifically assumed by the Adviser. For the fiscal year ended December 31,
1998, the Registrant's other operating expenses were 0.24% of average net
assets.
The Registrant and the Adviser have adopted Codes of Ethics designed to
recognize the fiduciary relationship between the Registrant and the Adviser and
its employees. The Codes permit directors, trustees, officers and employees to
buy and sell securities for their personal accounts subject to certain
restrictions. Persons with access to certain sensitive information are subject
to preclearance and other procedures designed to prevent conflicts of interest.
ITEM 7. SHAREHOLDER INFORMATION.
The Registrant has outstanding units of partnership interest ("shares")
with equal rights to participate in distributions made by Registrant and equal
rights to Registrant's assets. Each share is entitled to one vote and there is
no cumulative voting. If the Registrant were unable to pay its liabilities,
partners receiving distributions could be liable to creditors of Registrant to
the extent of such distributions, plus interest.
The Registrant will determine its net asset value as of the close of each
business day on the New York Stock Exchange. The Registrant's net assets equal
the value of its portfolio securities, plus all cash and other assets (including
dividends and interest accrued but not collected) less all liabilities
(including accrued expenses but excluding partner capital contributions). The
Registrant's portfolio securities are valued at the last sales price on the
exchange where principally traded, or, if no sale occurred on that day, at the
mean between the closing bid and asked prices; securities not so traded are
valued in like manner, if market quotations are available, or at the mean
between the highest bid and the lowest asked prices if there is no last
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sales price or closing bid and asked prices. The value of any other securities
and assets is the fair value as determined in good faith by the Adviser based on
procedures approved by the Managing General Partners.
Shareholders may redeem shares at any time, without charge by the
Registrant, at the next determined net asset value per share by submitting a
written request in proper form to the Registrant's transfer agent, Van Kampen
Investor Services, Inc. ("Investor Services"), PO Box 418256, Kansas City, MO
64141-9256, by placing the redemption request through an authorized dealer or by
calling the Registrant. Redemptions are priced at the next computed net asset
value per share after acceptance by Investor Services of the request and any
other necessary documents in proper order and payment for shares redeemed will
be made within seven days thereafter. Redemptions are not made on days during
which the New York Stock Exchange is closed. The right of redemption may be
suspended and the payment therefore may be postponed for more than seven days
during any period when (a) the New York Stock Exchange is closed for other than
customary weekends or holidays; (b) trading on the New York Stock Exchange is
restricted; (c) an emergency exists as a result of which disposal by the
Registrant of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Registrant to fairly determine the value of its
net assets; or (d) the SEC, by order, so permits.
The shares redeemed (other than redemptions under a systematic withdrawal
plan) may be paid in cash or securities, at the option of Registrant, and will
ordinarily be paid in whole or in part in securities. Registrant's valuation
will determine the quantity of securities tendered. Registrant will select
securities for tender in redemptions based on tax or investment considerations.
While there is no charge when shares are redeemed or repurchased through
the Registrant or through Van Kampen Funds Inc., an affiliate of the Adviser,
dealers may make a charge for effecting a repurchase. Payment for shares
redeemed may be postponed or the right of redemption suspended as provided by
the rules of the SEC.
The Registrant makes quarterly distributions of net investment income,
exclusive of capital gains, to the partners. The Managing General Partners
determine each year whether and to what extent any realized capital gains are to
be distributed and such distributions, if any, will be made annually.
Distributions, when made, are made equally among the outstanding shares held by
shareholders. Dividends and capital gains distributions are automatically
applied to purchase additional shares of the Registrant at the next determined
net asset value unless the shareholder instructs otherwise.
The Registrant is classified as a partnership for federal income tax
purposes. Each partner is required to report on his personal federal income tax
return his share of Registrant's income, gains, losses, deductions and expenses
for the taxable year of the Registrant ending within or with his taxable year,
regardless of whether cash or other properties are distributed. For federal
income tax purposes, capital gain or loss is allocated equally among shares
outstanding on the day recognized, and all other items of Registrant's income,
gain, loss, deduction and expense during a year are allocated to each partner in
the proportion which the total number of shares such partner held on each day
during the year bears to the total of the outstanding shares of the Registrant
on each day during the year.
The tax basis to each partner for his shares in Registrant is determined by
reference to the basis of the securities and any money that he contributed to
the Registrant in exchange for his shares, and increased by his share of the
Registrant's taxable income and decreased (but not below zero) principally by
the Registrant's distributions and his share of the Registrant's net losses. If
cash distributed exceeds basis, the excess will be taxable as gain from the sale
of a capital asset. The Registrant's tax basis in the securities contributed by
the partners is the same as that of the partners contributing such securities.
Redemptions for cash will generally be taxable as capital gains to the
extent that such cash exceeds a partner's adjusted tax basis in his shares of
the Registrant. The receipt of securities on redemption is not a taxable event
to the partner or to the Registrant. The partner's basis in securities received
on redemption will be the same as the Registrant's. Net long-term capital gains
realized by the Registrant will be taxable to the partners at the current
capital gain rates.
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ITEM 8. DISTRIBUTION ARRANGEMENTS.
Not Applicable.
A-4
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VAN KAMPEN EXCHANGE FUND
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
ITEM 10. COVER PAGE AND TABLE OF CONTENTS.
This Statement of Additional Information is not a prospectus. This
Statement of Additional Information should be read in conjunction with the Van
Kampen Exchange Fund (the "Registrant") prospectus (the "Prospectus") dated as
of the same date as this Statement of Additional Information. This Statement of
Additional Information does not include all of the information a prospective
investor should consider before purchasing shares of the Registrant. Investors
should obtain and read the Prospectus prior to purchasing shares of the
Registrant. A Prospectus may be obtained without charge by writing or calling
Van Kampen Funds Inc. (the "Distributor") at 1 Parkview Plaza, PO Box 5555,
Oakbrook Terrace, Illinois 60181-5555 at (800) 341-2911.
This Statement of Additional Information is dated April 23, 1999.
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PAGE
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Fund History................................................ B-1
Description of the Fund and its Investment Risks............ B-1
Management of the Fund...................................... B-3
Control Persons and Principal Holders of Securities......... B-10
Investment Advisory and Other Services...................... B-10
Brokerage Allocation and Other Practices.................... B-11
Capital Stock and Other Securities.......................... B-13
Purchase, Redemption and Pricing of Shares.................. B-13
Taxation of the Fund........................................ B-13
Underwriters................................................ B-13
Calculation of Performance Data............................. B-13
Financial Statements........................................ F-1
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ITEM 11. FUND HISTORY.
The Registrant was formed on December 4, 1975 under the Uniform Limited
Partnership Act of California. Registrant commenced business as an investment
company on December 13, 1976 under the name American General Exchange Fund.
On September 9, 1983, the name of the Registrant was changed from American
General Exchange Fund to American Capital Exchange Fund. The name of the
Registrant was changed from American Capital Exchange Fund to Van Kampen
American Capital Exchange Fund (a California Limited Partnership) on April 26,
1996. The Registrant began using its current name on December 9, 1998.
ITEM 12. DESCRIPTION OF THE FUND AND ITS INVESTMENT RISKS.
The Registrant is a diversified open-end management investment company
registered under the Investment Company Act of 1940, as amended ("1940 Act").
The Registrant's principal investment objective is long-term growth of capital,
while the production of current income is an important secondary objective.
Under normal market conditions, the Registrant seeks to achieve these objectives
by investing primarily in common stocks or convertible securities of companies
believed to have long-term growth potential. In seeking to attain its investment
objectives of long-term growth of capital, and, secondarily, production of
income, Registrant will acquire securities for long-term appreciation and does
not intend to engage to any significant degree in short-term trading. Capital
gains taxes will be considered in determining the sale of portfolio securities.
However, sales will be effected whenever believed to be in the best interests of
the Partners, even though capital gains may be recognized thereby.
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Registrant has no present intention of investing in corporate bonds,
preferred stocks or certificates of deposit in an amount in excess of 5% of the
value of its net assets.
Registrant has adopted certain fundamental investment restrictions which
may not be changed without approval by the vote of a majority of its outstanding
voting shares, which is defined by the 1940 Act, as the lesser of (i) 67% or
more of the voting securities present at a meeting, if the holders of more than
50% of the outstanding voting securities are present or represented by proxy, or
(ii) more than 50% of the outstanding voting securities. Registrant may not:
(1) Purchase securities on margin or make short sales.
(2) Purchase or write any options, puts, calls, straddles, spreads or
combinations thereof.
(3) Borrow money, except from banks for a purpose other than the purchase
of securities, such borrowing not to exceed 5% of the Registrant's
total assets at market value at the time of borrowing. Any such
borrowing may be secured provided that not more than 10% of the total
assets at market value at the time of pledging may be used as security
for such borrowings.
(4) Engage in the underwriting of securities or invest in securities
subject to restrictions on resale.
(5) Invest more than 25% of its assets at market value at the time of
purchase in securities of companies all of which conduct their
principal activities in the same industry.
(6) Invest in real estate (including interests in real estate investment
trusts) or invest in oil, gas or mineral exploration or development
programs, except in publicly traded securities of issuers which engage
in such business.
(7) Buy or sell commodities or commodity contracts.
(8) Make loans of money or securities to other persons provided that this
limitation shall not prevent the purchase of a portion of an issue of
bonds, notes, debentures or other debt securities which are publicly
distributed or of a type customarily purchased by institutional
investors.
(9) Invest more than 5% of its total assets at market value at the time of
purchase in the securities of any one issuer (other than obligations of
the United States Government or any instrumentalities thereof).
(10) Purchase securities if such purchase would result in the Registrant
owning more than 10% of the outstanding voting securities of any one
issuer at the time of purchase.
(11) Invest in securities of companies which have a record, together with
their predecessors, of less than three years of continuous operation.
(12) Purchase securities issued by any other investment company or
investment trust.
(13) Purchase or hold securities of any company if any of its General
Partners, or officers or directors of Registrant's investment adviser,
who beneficially own more than 0.50% of the securities of that company
together own beneficially more than 5% of the securities of such
company.
(14) Invest in companies for the purpose of exercising control or
management. (Registrant's officers may be authorized to vote proxies
issued with respect to its portfolio securities consistently with its
investment objectives).
(15) Invest in or hold warrants unless received with respect to securities
held by Registrant.
(16) Invest in foreign securities unless listed at the time of purchase on
the New York Stock Exchange.
(17) Invest more than 5% of its total assets at market value at the time of
purchase in equity securities which are not readily marketable.
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Registrant does not issue senior securities. The Registrant's portfolio had
no turnover during the fiscal year ended December 31, 1998.
ITEM 13. MANAGEMENT OF THE FUND.
The Managing General Partners and executive officers and their principal
occupations for the past five years are listed below.
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NAME AND POSITION HELD PRINCIPAL OCCUPATIONS
ADDRESS WITH REGISTRANT DURING PAST 5 YEARS
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David C. Arch Managing General Chairman and Chief Executive Officer of
1800 Swift Drive Partner Blistex Inc., a consumer health care
Oak Brook, IL 60523 products manufacturer. Director of Elmhurst
Date of Birth: 07/17/45 College and the Illinois Manufacturers'
Assoc. Trustee of each of the other funds in
the Fund Complex (defined below)
Rod Dammeyer Managing General Managing General Partner of Equity Group
Two North Riverside Plaza Partner Corporate Investments, a company that makes
Suite 600 private equity investments in other
Chicago, IL 60606 companies, and Vice Chairman and Director of
Date of Birth: 11/05/40 Anixter International Inc., a value-added
provider of integrated networking and
cabling solutions that support business
information and network infrastructure
requirements (employed by Anixter since
1985). Member of the Board of Directors of
TeleTech Holdings Inc., Metal Management,
Inc., Stericycle, Inc., Transmedia Networks,
Inc., Jacor Communications, Inc., CNA
Surety, Corp., IMC Global Inc., Antec
Corporation and Groupo Azucarero Mexico
(GAM). Prior to 1998, Mr. Dammeyer was a
Director of Lukens, Inc., Capsure Holdings
Corp., Revco D.S., Inc., the Chase Manhattan
Corporation National Advisory Board and
Sealy, Inc. Prior to 1997, President, Chief
Executive Officer and a Director of Great
American Management & Investment, Inc., a
diversified manufacturing company, and a
Director of Santa Fe Energy Resources, Inc.,
Falcon Building Products, Inc., Lomas
Financial Corporation, Santa Fe Pacific
Corporation, Q-Tel, S.A. de C.V. and
Servicios Financieros Quadrum, S.A. Trustee
of each of the other funds in the Fund
Complex.
Howard J Kerr Managing General Prior to 1998, President and Chief Executive
736 North Western Ave. Partner Officer of Pocklington Corporation, Inc., an
P.O. Box 317 investment holding company. Director of
Lake Forest, IL 60045 Canbra Foods, Ltd., a Canadian oilseed
Date of Birth: 11/17/35 crushing, refining, processing and packaging
operation. Trustee of each of the other
funds in the Fund Complex.
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NAME AND POSITION HELD PRINCIPAL OCCUPATIONS
ADDRESS WITH REGISTRANT DURING PAST 5 YEARS
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Dennis J. McDonnell* Chief Executive President, Chief Operating Officer and a
1 Parkview Plaza Officer, Chairman of Director of Van Kampen Asset Management Inc.
PO Box 5555 the Board and Managing ("Asset Management" or the "Adviser"), Van
Oakbrook Terrace, IL 60181-5555 General Partner Kampen Investment Advisory Corp. ("Advisory
Date of Birth: 05/20/42 Corp."), Van Kampen Advisors Inc., and Van
Kampen Management Inc. ("Management Inc.")
(The Adviser, Advisory Corp. and Management
Inc. are collectively referred to herein as
the "Advisers.") Executive Vice President
and Director of Van Kampen Investments Inc.
("Van Kampen Investments"). Prior to July of
1998, Executive Vice President and Director
of VK/AC Holding, Inc. Prior to April of
1998, President and a Director of Van Kampen
Merritt Equity Advisors Corp. Prior to April
of 1997, Director of Van Kampen Merritt
Equity Holdings Corp. Prior to September of
1996, Chief Executive Officer and Director
of MCM Group, Inc., McCarthy, Crisanti &
Maffei, Inc. and Chairman and Director of
MCM Asia Pacific Company Limited and MCM
(Europe) Limited. Prior to July of 1996,
President, Chief Operating Officer and
Trustee of VSM Inc. and VCJ Inc. Chief
Executive Officer and President of certain
open end and closed end investment companies
advised by the Advisers, and President and
Chairman of the Board of Trustees or
Managing General Partners of each of the
funds in the Fund Complex.
Steven Muller, Ph.D. Managing General President Emeritus of The Johns Hopkins
The Johns Hopkins University Partner University. Director of Beneficial
1619 Massachusetts Ave., N.W., Corporation (bank holding company) and
Suite 711 Milpore Corporation (biotechnology). Prior
Washington, D.C. 20036 to December of 1997, Trustee of the Common
Date of Birth: 11/22/27 Sense Trust and Chairman of the 21st Century
Foundation (public affairs). Prior to May of
1997, Director of BT Alex Brown and Sons
(investment banking). Trustee of each of the
funds in the Fund Complex.
Theodore A. Myers Managing General Senior Financial Advisor (and prior to 1996,
550 Washington Avenue Partner an Executive Vice President and Chief
Glencoe, IL 60022 Financial Officer) of Qualitech Steel
Date of Birth: 08/03/30 Corporation, a producer of high quality
engineered steels for automotive,
transportation and capital goods industries.
Director of COVA Series Trust of COVA
Financial Life Insurance (formerly known as
Xerox Life). Prior to 1997, Director of
McClouth Steel and a Member of the Arthur
Anderson Chief Financial Officer Advisory
Committee. Trustee of each of the funds in
the Fund Complex.
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NAME AND POSITION HELD PRINCIPAL OCCUPATIONS
ADDRESS WITH REGISTRANT DURING PAST 5 YEARS
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Don G. Powell Managing General Currently a member of the board of governors
3 Wexford Court Partner and executive committee for the Investment
Houston, TX 77024 Company Institute, and a member of the Board
Date of Birth: 10/19/39 of Trustees of the Houston Museum of Natural
Science. Prior to January 1999, Chairman of
the Investment Company Institute, Chairman
and a Director of Van Kampen Investments,
the Advisers, the Distributor, Van Kampen
Investor Services Inc. ("Investor
Services"), Van Kampen Advisors Inc., Van
Kampen Recordkeeping Services Inc., American
Capital Contractual Services Inc., Van
Kampen Merritt Equity Advisors Corp., Van
Kampen Insurance Agency of Illinois Inc.,
Van Kampen System Inc., Van Kampen Trust
Company, Van Kampen Services Inc. and Van
Kampen Exchange Corp. Prior to July of 1998,
Director and Chairman of VK/AC Holding, Inc.
Prior to 1997, Chairman, President and
Director of American Capital Shareholders
Corporation. Prior to April of 1997,
Chairman, President and Director of Van
Kampen Merritt Equity Holdings Corp. Prior
to July of 1996, Chairman and Director of
VSM Inc. and VCJ Inc. Prior to September
1996, Chairman and Director of McCarthy,
Crisanti & Maffei, Inc. and McCarthy,
Crisanti & Maffei Acquisition Corporation.
Prior to November 1996, President, Chief
Executive Officer and a Director of VK/AC
Holding, Inc. Trustee or Director of other
investment companies advised by the Advisers
and their affiliates and Trustee of each of
the funds in the Fund Complex.
Hugo F. Sonnenschein Managing General President of the University of Chicago.
5801 South Ellis Avenue Partner Member of the Board of Trustees of the
Suite 502 University of Rochester and a member of its
Chicago, IL 60637 investment committee. Member of the National
Date of Birth: 11/14/40 Academy of Sciences and a fellow of the
American Academy of Arts and Sciences.
Trustee of each of the funds in the Fund
Complex.
Wayne W. Whalen* Managing General Partner in the law firm of Skadden, Arps,
333 W. Wacker Dr. Partner Slate, Meagher & Flom (Illinois), legal
Chicago, IL 60606 counsel to the Registrant, and other
Date of Birth: 08/22/39 investment companies advised by the
Advisers. Trustee/Director of other
investment companies advised by the Advisers
and Trustee of each of the funds in the Fund
Complex.
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* Mr. McDonnell is an "interested person" (within the meaning of Section
2(a)(19) of 1940 Act) of the Adviser and the Registrant by reason of his
position with the Adviser. Mr. Whalen is an interested person of the
Registrant by reason of his firm acting as legal counsel to the Registrant.
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OFFICERS
Messrs. Hegel, Wood, Sullivan, Dalmaso, Martin, Wetherell and Hill are
located at 1 Parkview Plaza, PO Box 5555, Oakbrook Terrace, IL 60181-5555. The
Fund's other officers are located at 2800 Post Oak Blvd., Houston, TX 77056.
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POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH THE REGISTRANT DURING PAST 5 YEARS
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Peter W. Hegel.............. Vice President Executive Vice President of the Advisers
Date of Birth: 06/25/56 and Van Kampen Advisors Inc. Prior to
September of 1996, Director of McCarthy,
Crisanti & Maffei, Inc. Prior to July of
1996, Director of VSM Inc. Vice President
of each of the funds in the Fund Complex
and certain other investment companies
advised by the Advisers or their
affiliates.
Curtis W. Morell............ Vice President and Chief Senior Vice President of the Adviser and
Date of Birth: 08/04/46 Accounting Officer Advisory Corp. Vice President and Chief
Accounting Officer of each of the funds in
the Fund Complex and certain other
investment companies advised by the
Advisers or their affiliates.
A. Thomas Smith III......... Vice President and Secretary Executive Vice President, General Counsel,
Date of Birth: 12/14/56 Secretary and Director of Van Kampen
Advisors Inc., the Adviser, Advisory Corp.,
Management Inc., Van Kampen Investments,
Van Kampen Funds Inc., American Capital
Contractual Services, Inc., Van Kampen
Exchange Corp., Van Kampen Recordkeeping
Services Inc., Van Kampen Investor
Services, Inc., Van Kampen Insurance Agency
of Illinois Inc. and Van Kampen System Inc.
From January 1994 through January 1999,
counsel to New York Life Insurance Company,
serving as Vice President and Associate
General Counsel since March of 1997.
Assistant General Counsel of The Dreyfus
Corporation from September 1991 to December
1993 and a Senior Associate of Willkie Farr
& Gallagher from February 1989 to August
1991. From January 1986 to January 1989,
Staff Attorney with the U.S. Securities and
Exchange Commission in the Division of
Investment Management's Office of Chief
Counsel. Vice President and Secretary of
each of the funds in the Fund Complex.
John L. Sullivan............ Vice President, Treasurer Senior Vice President of the Adviser,
Date of Birth: 08/20/55 and Chief Financial Officer Advisory Corp. and Van Kampen Investments.
Treasurer of each of the funds in the Fund
Complex and certain other investment
companies advised by the Advisers or their
affiliates.
</TABLE>
B-6
<PAGE> 12
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH THE REGISTRANT DURING PAST 5 YEARS
------------ --------------------------- ---------------------
<S> <C> <C>
Stephen L. Boyd............. Chief Investment Officer Executive Vice President of the Adviser,
Date of Birth: 11/16/40 Advisory Corp. and Management Inc. Prior to
October 1998, Vice President and Senior
Portfolio Manager with AIM Capital
Management, Inc. Prior to February of 1998,
Senior Vice President and Portfolio Manager
with Van Kampen American Capital Asset
Management, Inc., Van Kampen American
Capital Investment Advisory Corp. and Van
Kampen American Capital Management, Inc.
Vice President of each of the funds in the
Fund Complex and certain other investment
companies advised by the Advisers or their
affiliates.
Paul R. Wolkenberg.......... Vice President Executive Vice President and Director of
Date of Birth: 11/10/44 Van Kampen Investments. Executive Vice
President of the Adviser, Advisory Corp.
and the Distributor. President, Chief
Operating Officer and Director of Van
Kampen Recordkeeping Services Inc.
President, Chief Executive Officer and
Director of Van Kampen Trust Company.
President and Director of Investor
Services. Prior to July of 1998, Executive
Vice President and Director of VK/AC
Holding, Inc. Vice President of each of the
funds in the Fund Complex and certain other
investment companies advised by the
Advisers or their affiliates.
Edward C. Wood III.......... Vice President Senior Vice President of Van Kampen
Date of Birth: 01/11/56 Investments, the Adviser, Advisory Corp.
and Management Inc. Senior Vice President
and Chief Operating Officer of the
Distributor. Vice President of each of the
funds in the Fund Complex and certain other
investment companies advised by the
Advisers or their affiliates.
Tanya M. Loden.............. Financial Officer Vice President of the Adviser, Advisory
Date of Birth: 11/19/59 Corp. and Van Kampen Investments.
Controller of each of the funds in the Fund
Complex and other investment companies
advised by the Advisers or their
affiliates.
Nicholas Dalmaso............ Legal Officer and Assistant Vice President, Associate General Counsel
Date of Birth: 03/01/65 Secretary and Assistant Secretary of Van Kampen
Investments, the Adviser, Advisory Corp.,
the Distributor, Van Kampen Advisors Inc.
and Management Inc. Assistant Secretary of
each of the funds in the Fund Complex and
other investment companies advised by the
Advisers or their affiliates.
</TABLE>
B-7
<PAGE> 13
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH THE REGISTRANT DURING PAST 5 YEARS
------------ --------------------------- ---------------------
<S> <C> <C>
Scott E. Martin............. Legal Officer and Assistant Senior Vice President, Deputy General
Date of Birth: 08/20/56 Secretary Counsel and Assistant Secretary of Van
Kampen Investments. Senior Vice President,
Deputy General Counsel and Secretary of the
Adviser, the Advisory Corp., the
Distributor, Investor Services, American
Capital Contractual Services, Inc.,
Management Inc., Van Kampen Exchange Corp.,
Van Kampen Advisors Inc., Van Kampen
Insurance Agency of Illinois Inc., Van
Kampen System Inc. and Van Kampen
Recordkeeping Services Inc. Prior to July
of 1998, Senior Vice President, Deputy
General Counsel and Assistant Secretary of
VK/AC Holding, Inc. Prior to April of 1998,
Senior Vice President, Deputy General
Counsel and Secretary of Van Kampen Equity
Advisors Corp. Prior to April of 1997,
Senior Vice President, Deputy General
Counsel and Secretary of Van Kampen
American Capital Services, Inc. and Van
Kampen Merritt Holdings Corp. Prior to
September of 1996, Deputy General Counsel
and Secretary of McCarthy, Crisanti &
Maffei, Inc., and prior to July of 1996,
Senior Vice President, Deputy General
Counsel and Secretary of VSM Inc. and VCJ
Inc. Assistant Secretary of each of the
funds in the Fund Complex and other
investment companies advised by the
Advisers or their affiliates.
Weston B. Wetherell......... Legal Officer and Assistant Vice President, Associate General Counsel
Date of Birth: 06/15/56 Secretary and Assistant Secretary of Van Kampen
Investments, the Adviser, Advisory Corp.,
the Distributor, Management Inc. and Van
Kampen Advisors Inc. Assistant Secretary of
each of the funds in the Fund Complex and
other investment companies advised by the
Advisers or their affiliates.
Steven M. Hill.............. Assistant Treasurer Vice President of the Adviser, Advisory
Date of Birth: 10/16/64 Corp., Management Inc. and Van Kampen
Investments. Assistant Treasurer of each of
the funds in the Fund Complex and other
investment companies advised by the
Advisers or their affiliates.
Michael Robert Sullivan..... Assistant Controller Assistant Vice President of the Adviser,
Date of Birth: 03/30/33 Advisory Corp., Management Inc. and Van
Kampen Investments. Assistant Controller of
each of the funds in the Fund Complex and
other investment companies advised by the
Advisers or their affiliates.
</TABLE>
The following table shows aggregate compensation paid to each of the
Registrant's Managing General Partners by the Registrant for the Registrant's
last fiscal year ended December 31, 1998 and from the Fund Complex (defined
below) for the calendar year ended December 31, 1998. The officers and Managing
General Partners act as officers and trustees of other funds in the Fund Complex
(defined below). The compensation of officers and Managing General
Partners/Trustees who are affiliated persons (as defined in
B-8
<PAGE> 14
the 1940 Act) of the Adviser is paid by the Adviser. Funds in the Fund Complex,
including the Registrant, pay compensation to Managing General Partners/Trustees
who are not affiliated with the Adviser or Van Kampen Investments
("Non-Affiliated Trustees"). The funds in the Fund Complex pay (i) an annual
Fund Complex retainer (generally equal to the product of $2,500 times the number
of funds in the Fund Complex), which is then allocated among the funds in the
Fund Complex based on each fund's relative net assets, and (ii) a meeting fee of
$250 per fund per meeting as well as reimbursement of expenses incurred in
connection with such meetings. Each of the funds in Fund Complex other than the
Registrant has adopted a deferred compensation plan for Non-Affiliated Trustees
that allows such trustees to defer receipt of compensation and earn a return on
such deferred amounts based upon the return of common shares of funds in the
Fund Complex as selected by such trustee. Each of the funds in the Fund Complex
other than the Registrant has adopted a retirement plan for Non-Affiliated
Trustees which provides retirement benefits to Non-Affiliated Trustees that have
at least ten years of service for a fund (including years of service prior to
adoption of the retirement plan) and retire at or after attaining the age of 62
equal to $2,500 per fund for each of the ten years following such trustee's
retirement.
COMPENSATION TABLE
<TABLE>
<CAPTION>
FUND COMPLEX
-------------------------------------------------------------
TOTAL
AGGREGATE ESTIMATED AGGREGATE ESTIMATED COMPENSATION
YEAR OF COMPENSATION PENSION OR RETIREMENT AGGREGATE BEFORE DEFERRAL
ELECTION/ FROM THE BENEFITS ACCRUED ANNUAL BENEFITS FROM THE
NAME(1) APPOINTMENT REGISTRANT(2) AS PART OF EXPENSES(3) UPON RETIREMENT(4) FUND COMPLEX(5)
------- ----------- ------------- ---------------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
David C. Arch............. 1998 $2,190 $10,861 $97,500 $160,875
Rod Dammeyer.............. 1998 2,190 19,532 97,500 161,125
Howard J Kerr............. 1998 2,190 37,215 96,250 161,125
Steven Muller............. 1998 2,190 22,683 7,500 161,125
Theodore A. Myers......... 1998 2,190 66,530 81,750 161,125
Hugo F. Sonnenschein...... 1998 2,190 18,878 97,500 161,125
Wayne W. Whalen........... 1998 2,190 22,126 97,500 160,625
</TABLE>
- ---------------
(1) Messrs. McDonnell and Powell are affiliated persons of the Adviser and do
not receive compensation or retirement benefits from the Registrant.
(2) The amounts shown in this column represent the Aggregate Compensation from
the Registrant for each Managing General Partner for the Registrant's
fiscal year ending December 31, 1998.
(3) Funds in the Fund Complex other than the Registrant have adopted retirement
plans for trustees who are not affiliated persons of the Adviser or Van
Kampen Investments. The amounts shown in this column represent the sum of
the estimated pension or retirement benefit accruals expected to be accrued
by such funds for their respective fiscal years ended 1998.
(4) Funds in the Fund Complex other than the Registrant have adopted retirement
plans for trustees who are not affiliated persons of the Adviser or Van
Kampen Investments. The amounts shown in this column represents the sum of
the estimated annual benefits payable per year by such funds for each year
of the 10-year period commencing in the year of such trustee's anticipated
retirement.
(5) The "Fund Complex" currently consists of 42 investment companies (including
the Registrant) advised by the Adviser or its affiliates that have the same
members on each investment company's Board of Trustees/Managing General
Partners. The amounts shown in this column are accumulated from the
Aggregate Compensation of the 42 investment companies in the Fund Complex
for the calendar year ended December 31, 1998 before deferral by the
trustees under the deferred compensation plan. The Adviser also serves as
investment adviser for other investment companies; however, with the
exception of Mr. Whalen, the Non-Affiliated Trustees are not trustees of
other investment companies. Combining the Fund Complex with other
investment companies advised by the Adviser or its affiliates, Mr. Whalen
received Total Compensation of $285,825 for the year ended December 31,
1998.
B-9
<PAGE> 15
Skadden, Arps, Slate, Meagher & Flom (Illinois) serves as legal counsel to the
Registrant.
ITEM 14. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
As of April 6, 1999, no person was known by the Registrant to own
beneficially or to hold of record 5% or more of the outstanding
shares of the Registrant, except as follows:
<TABLE>
<CAPTION>
AMOUNT PERCENTAGE
NAME AND ADDRESS OF HOLDER OF OWNERSHIP OWNERSHIP
-------------------------- ------------ ----------
<S> <C> <C>
Comerica Bank of Detroit and Edward Mardigian, TR 45,045 16.13%
DTD 8/2/77 with Helen Mardigian
Mutual Funds Unit/MC 3446
P.O. Box 75000
Detroit, MI 48275-0001
Richard F. McCarthy and Walter R. McCarthy, 15,000 5.37%
Trustees for the Richard F. McCarthy Trust
DTD 09/27/89
540 Indian Mound St., E 1-D
Wayzata, MN 55391-1745
George O. and Sidney M. Thorson, a partnership 14,863 5.32%
P.O. Box 1847
Friday Harbor, WA 98250-1847
</TABLE>
At April 6, 1999, all Managing General Partners and officers as a
group owned less than 1% of Registrant's outstanding voting
securities.
ITEM 15. INVESTMENT ADVISORY AND OTHER SERVICES.
The Adviser and Investor Services, the Registrant's shareholder service
agent, are wholly owned subsidiaries of Van Kampen Investments, which is an
indirect wholly owned subsidiary of Morgan Stanley Dean Witter & Co. The
Adviser's principal office is located at 1 Parkview Plaza, PO Box 5555, Oakbrook
Terrace, Illinois 60181-5555.
Morgan Stanley Dean Witter & Co. and various of its directly or indirectly
owned subsidiaries, including Morgan Stanley Dean Witter Investment Management
Inc., an investment adviser, Morgan Stanley & Co. Incorporated, a registered
broker and investment adviser, and Morgan Stanley International, are engaged in
a wide range of financial services. Their principal businesses include
securities underwriting, distribution and trading; merger, acquisition,
restructuring and other corporate finance advisory activities; merchant banking;
stock brokerage and research services; credit services; asset management;
trading of futures, options, foreign exchange, commodities and swaps (involving
foreign exchange, commodities, indices and interest rates); real estate advice,
financing and investing; and global custody, securities clearance services and
securities lending.
Registrant and the Adviser are parties to an investment advisory agreement
(the "Agreement"). Under the Advisory Agreement, Registrant pays to the Adviser
as compensation for the services rendered, facilities furnished, and expenses
paid by it a fee payable monthly computed on average daily net assets of
Registrant at annual rate of 0.50%. The Adviser received $392,400, $351,434 and
$264,323, in advisory fees from the Registrant during the fiscal years ended
December 31, 1998, 1997 and 1996, respectively.
The average net asset value is determined by taking the average of all of
the determinations of net asset value for each business day during a given
calendar month. Such fee is payable for each calendar month as soon as
practicable after the end of that month. The fee payable to the Adviser is
reduced by any commissions, tender solicitation and other fees, brokerage or
similar payments received by the Adviser or any other direct or indirect
majority owned subsidiary of Van Kampen Investments, in connection with the
purchase and sale of portfolio investments of the Registrant, less any direct
expenses incurred by such subsidiary of Van Kampen Investments in connection
with obtaining such payments. The Adviser agrees to use its best efforts to
recapture tender solicitation fees and exchange offer fees for the Registrant's
benefit, and to advise the Managing General Partners of Registrant of any other
commissions, fees, brokerage or similar payments which may be possible under
applicable laws for the Adviser or any other direct or indirect majority owned
B-10
<PAGE> 16
subsidiary of Van Kampen Investments to receive in connection with Registrant's
portfolio transactions or other arrangements which may benefit Registrant.
The agreement also provides that, in the event the ordinary business
expenses of Registrant for any fiscal year exceed 1 1/2% of the first $30
million of the Registrant's average net assets, plus one percent of any excess
over $30 million, the compensation due the Adviser will be reduced by the amount
of such excess and that, if a reduction in and refund of the advisory fee is
insufficient, the Adviser will pay the Registrant monthly an amount sufficient
to make up the deficiency, subject to readjustment during the year. Ordinary
business expenses do not include (1) interest and taxes, (2) brokerage
commissions and (3) certain litigation and indemnification expenses as described
in the Advisory Agreement.
The Advisory Agreement may be continued from year to year if specifically
approved at least annually (a)(i) by the Registrant's Managing General Partners
or (ii) by vote of a majority of the Registrant's outstanding voting securities
and (b) by the affirmative vote of a majority of the Managing General Partners
who are not parties to the agreement or interested persons of any such party by
votes cast in person at a meeting called for such purpose. The Advisory
Agreement provides that it shall terminate automatically if assigned and that it
may be terminated without penalty by either party on 30 days written notice.
Under the Agreement, Registrant retains the Adviser to manage the
investment of its assets and to place orders for the purchase and sale of its
portfolio securities. The Adviser is responsible for obtaining and evaluating
economic, statistical, and financial data and for formulating and implementing
investment programs in furtherance of Registrant's investment objectives. The
Adviser also furnishes at no cost to Registrant (except as noted herein) the
services of sufficient executive and clerical personnel for Registrant as are
necessary to prepare registration statements, partner reports, and notices and
proxy solicitation materials. In addition, the Adviser furnishes at no cost to
Registrant the services of a Chief Executive Officer and other executive and
clerical personnel, as needed.
Under the Agreement, Registrant bears the cost of its accounting services,
which includes maintaining its financial books and records and calculating its
daily net asset value. The costs of such accounting services include the
salaries and overhead expenses of the Registrant's Principal Financial and
Accounting Officer and the personnel operating under his direction. For the
fiscal years ended December 31, 1998, 1997 and 1996, the Registrant paid
$37,400, $15,313 and $50,358, respectively, for such services. A portion of
these amounts were paid to the Adviser in reimbursement of personnel, facilities
and equipment costs attributable to the provision of accounting services to
Registrant. The services provided by the Adviser are at cost which is allocated
among the investment companies advised or sub-advised by the Adviser. Registrant
also pays transfer agency fees, custodian fees, legal and auditing fees, the
costs of reports to partners and all other ordinary expenses not specifically
assumed by the Adviser.
The custodian of all the assets of Registrant is State Street Bank and
Trust Company located at 225 Franklin Street, Boston, Massachusetts 02110.
KPMG LLP, 303 East Wacker Drive, Chicago Illinois, the independent
accountants for the Registrant, performs an annual audit of the Registrant's
financial statements.
Van Kampen Investor Services Inc. ("Investor Services"), PO Box 418256,
Kansas City, MO 64141-9256, a wholly owned subsidiary of Van Kampen Investments
serves as shareholder service agent for the Fund. The transfer agency fees are
determined through negotiations with the Fund's Board of Trustees and are based
on competitive market benchmarks. During the fiscal years ended December 31,
1998, 1997 and 1996, Investor Services, shareholder service agent for the
Registrant, received fees aggregating $14,700, $15,000 and $15,000,
respectively.
ITEM 16. BROKERAGE ALLOCATION AND OTHER PRACTICES.
The Adviser is responsible for decisions to buy and sell securities for the
Registrant and for the placement of its portfolio business and the negotiation
of the commissions paid on such transactions. While the Adviser will be
primarily responsible for the placement of the Registrant's portfolio business,
the policies and practices in this regard will at all times be subject to review
by the Managing General Partners of the Registrant. It is
B-11
<PAGE> 17
the policy of the Adviser to seek prompt execution of orders in an effective
manner at the best security price available with respect to each transaction. In
over-the-counter transactions, orders are placed directly with a principal
market maker unless it is believed that a better price and execution can be
obtained by using a broker. Except to the extent that the Registrant may pay
higher brokerage commissions for brokerage and research services (as described
below) on a portion of its transactions executed on securities exchanges, the
Adviser seeks the best security price at the most favorable commission rate. The
Registrant paid no brokerage commissions during the fiscal years ended December
31, 1998, 1997 and 1996, respectively.
In selecting dealers and in negotiating commissions, the Adviser considers
the firm's reliability, the quality of its execution services on a continuing
basis and its financial condition. When more than one firm is believed to meet
these criteria, preference may be given to firms which also provide research
services to Registrant or the Adviser.
The Adviser may cause an account to pay a broker or dealer who supplies
brokerage and research services, a commission for effecting a securities
transaction in excess of the amount of commission another broker or dealer would
have charged for effecting the transaction. Brokerage and research services
include (a) furnishing advice as to the value of securities, the advisability of
investing in, purchasing or selling securities, and the availability of
securities or purchasers or sellers of securities, (b) furnishing analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy, and the performance of accounts, and (c) effecting
securities transactions and performing functions incidental thereto (such as
clearance, settlement and custody).
The Registrant's Managing General Partners have authorized the Adviser to
cause the Registrant to incur brokerage commissions in an amount higher than the
lowest available rate in return for research services provided to the Adviser.
The Adviser is of the opinion that the continued receipt of supplemental
investment research services from dealers is essential to its provision of high
quality portfolio management services to Registrant. The Adviser undertakes that
such higher commissions will not be paid by Registrant unless (a) the Adviser
determines in good faith that the amount is reasonable in relation to the
services in terms of the particular transaction or in terms of the Adviser's
overall responsibilities with respect to the accounts as to which it exercises
investment discretion, (b) such payment is made in compliance with applicable
state and federal laws, and (c) in the opinion of the Adviser, the total
commissions paid by Registrant are reasonable in relation to the expected
benefits to Registrant over the long term. The investment advisory fee paid by
Registrant under the investment advisory agreement is not reduced as a result of
the Adviser's receipt of research services.
The Adviser places portfolio transactions for the Registrant and other
advisory accounts, including other investment companies. Research services
furnished by firms through which Registrant effects its securities transactions
may be used by the Adviser in servicing all of its accounts; not all of such
services may be used by the Adviser in connection with Registrant. In the
opinion of the Adviser, the benefits from research services to each of the
accounts (including Registrant) managed by the Adviser cannot be measured
separately. Because the volume and nature of the trading activities of the
accounts are not uniform, the amount of commissions in excess of the lowest
available rate paid by each account for brokerage and research services will
vary. However, in the opinion of the Adviser, such costs to Registrant will not
be disproportionate to the benefits received by Registrant on a continuing
basis.
The Adviser seeks to allocate portfolio transactions equitably whenever
concurrent decisions are made to purchase or sell securities by Registrant and
another advisory account. In some cases, this procedure could have an adverse
effect on the price or the amount of securities available to Registrant. In
making such allocations among Registrant and other advisory accounts, the main
factors considered by the Adviser are the relative net assets, respective
investment objectives, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment commitments generally held, and opinions of the persons responsible
for recommending the investment.
The Adviser also may place portfolio transactions, to the extent permitted
by law, with brokerage firms affiliated with the Registrant or the Adviser if it
reasonably believes that the quality of execution and the commission are
comparable to that available from other qualified firms. Similarly, to the
extent permitted by
B-12
<PAGE> 18
law and subject to the same considerations on quality of execution and
comparable commission rates, the Adviser may direct an executing broker to pay a
portion or all of any commissions, concessions or discounts to a firm supplying
research or other services.
ITEM 17. CAPITAL STOCK AND OTHER SECURITIES.
See Items 4 and 7.
ITEM 18. PURCHASE, REDEMPTION AND PRICING OF SHARES.
No shares are being offered to the public. The redemption price per share
is equivalent to the net asset value per share as more fully described in Item
7.
ITEM 19. TAXATION OF THE FUND.
See Item 7.
ITEM 20. UNDERWRITERS.
Not Applicable.
ITEM 21. CALCULATION OF PERFORMANCE DATA.
Not Applicable.
B-13
<PAGE> 19
ITEM 22. FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT ACCOUNTANTS
THE PARTNERS OF VAN KAMPEN EXCHANGE FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
We have audited the accompanying statement of assets and liabilities of Van
Kampen Exchange Fund (a California Limited Partnership), including the portfolio
of investments, as of December 31, 1998, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of the
periods presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of Van
Kampen Exchange Fund as of December 31, 1998, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended, and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles.
KPMG LLP
Chicago, Illinois
February 11, 1999
F-1
<PAGE> 20
PORTFOLIO OF INVESTMENTS
December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 95.5%
CONSUMER DISTRIBUTION 1.2%
IKON Office Solutions, Inc. ................................ 86,993 $ 744,878
Unisource Worldwide, Inc. .................................. 43,496 315,346
-----------
1,060,224
-----------
CONSUMER DURABLES 1.2%
Dana Corp. ................................................. 13,677 559,047
SPX Corp. (a)............................................... 6,824 457,208
-----------
1,016,255
-----------
CONSUMER NON-DURABLES 4.4%
International Flavors & Fragrances, Inc. ................... 49,712 2,196,649
McCormick & Co., Inc. ...................................... 48,259 1,631,757
-----------
3,828,406
-----------
CONSUMER SERVICES 0.2%
Luby's Cafeterias, Inc. .................................... 13,367 206,353
-----------
ENERGY 10.1%
Amerada Hess Corp. ......................................... 21,200 1,054,700
Amoco Corp. ................................................ 25,600 1,545,600
Apache Corp. ............................................... 11,406 288,714
Baker Hughes, Inc. ......................................... 25,634 453,402
Halliburton Co. ............................................ 30,320 898,230
Kerr-McGee Corp. ........................................... 10,900 416,925
Mobil Corp. ................................................ 40,262 3,507,827
Schlumberger, Ltd. ......................................... 16,080 741,690
-----------
8,907,088
-----------
FINANCE 3.4%
American International Group, Inc. ......................... 22,234 2,148,360
Household International, Inc. .............................. 21,372 846,866
-----------
2,995,226
-----------
HEALTHCARE 37.3%
Allegiance Corp. ........................................... 2,000 93,250
American Home Products Corp. ............................... 56,000 3,153,500
Baxter International, Inc. ................................. 5,000 321,562
Johnson & Johnson, Inc. .................................... 54,432 4,565,484
Merck & Co., Inc. .......................................... 25,188 3,719,953
Schering-Plough Corp. ...................................... 205,216 11,338,184
Warner-Lambert Co. ......................................... 127,290 9,570,617
-----------
32,762,550
-----------
</TABLE>
See Notes to Financial Statements
F-2
<PAGE> 21
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
------------------------------------------------------------------------------------
<S> <C> <C>
PRODUCER MANUFACTURING 1.2%
AlliedSignal, Inc. ......................................... 12,528 $ 555,147
Fluor Corp. ................................................ 12,831 546,119
-----------
1,101,266
-----------
RAW MATERIALS/PROCESSING INDUSTRIES 8.7%
Air Products & Chemicals, Inc. ............................. 109,090 4,363,600
Alcan Aluminum, Ltd. ....................................... 10,774 291,571
Georgia Pacific Corp. ...................................... 18,688 1,094,416
Georgia Pacific Corp.--Timber Group......................... 18,688 445,008
Louisiana Pacific Corp. .................................... 25,970 475,576
Lubrizol Corp. ............................................. 37,620 966,364
-----------
7,636,535
-----------
TECHNOLOGY 27.8%
Intel Corp. ................................................ 194,478 23,057,798
International Business Machines Corp. ...................... 7,508 1,387,103
-----------
24,444,901
-----------
TOTAL LONG-TERM INVESTMENTS 95.5%
(Cost $7,411,346)................................................ 83,958,804
SHORT-TERM INVESTMENTS 4.5%
(Cost $3,972,792)................................................ 3,972,792
-----------
TOTAL INVESTMENTS 100.0%
(Cost $11,384,138)............................................... 87,931,596
LIABILITIES IN EXCESS OF OTHER ASSETS 0.0%.......................... (14,864)
-----------
NET ASSETS 100.0%................................................... $87,916,732
===========
</TABLE>
(a) Non-income producing security as this stock currently does not declare
dividends.
See Notes to Financial Statements
F-3
<PAGE> 22
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $11,384,138)........................ $87,931,596
Cash........................................................ 6,155
Dividends Receivable........................................ 81,145
Other....................................................... 97,133
-----------
Total Assets.......................................... 88,116,029
-----------
LIABILITIES:
Payables:
Investment Advisory Fee................................... 36,677
Affiliates................................................ 6,498
Income Distributions...................................... 1,486
Managing General Partners' Retirement Plan.................. 123,280
Accrued Expenses............................................ 31,356
-----------
Total Liabilities..................................... 199,297
-----------
NET ASSETS.................................................. $87,916,732
===========
NET ASSETS WERE COMPRISED OF:
276,745 units of limited partnership interest............... $86,783,448
3,395 units of non-managing general partnership interest.... 1,064,618
219 units of managing general partnership interest.......... 68,666
-----------
NET ASSETS.................................................. $87,916,732
===========
NET ASSET VALUE PER UNIT ($87,916,732 divided by 280,359
units of partnership interest outstanding)................ $ 313.59
===========
</TABLE>
See Notes to Financial Statements
F-4
<PAGE> 23
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends................................................... $ 964,747
Interest.................................................... 194,093
-----------
Total Income............................................ 1,158,840
-----------
EXPENSES:
Investment Advisory Fee..................................... 392,398
Managing General Partners' Fees and Expenses................ 51,282
Shareholder Reports......................................... 41,550
Accounting.................................................. 37,424
Custody..................................................... 15,764
Legal....................................................... 5,553
Other....................................................... 41,312
-----------
Total Expenses.......................................... 585,283
-----------
NET INVESTMENT INCOME....................................... $ 573,557
===========
REALIZED AND UNREALIZED GAIN/LOSS
Net Realized Gain........................................... $ 2,475,843
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 59,358,909
End of the Period......................................... 76,547,458
-----------
Net Unrealized Appreciation During the Period............... 17,188,549
-----------
NET REALIZED AND UNREALIZED GAIN............................ $19,664,392
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $20,237,949
===========
</TABLE>
See Notes to Financial Statements
F-5
<PAGE> 24
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1998 and 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1998 December 31, 1997
- --------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................. $ 573,557 $ 564,318
Net Realized Gain..................................... 2,475,843 5,272,722
Net Unrealized Appreciation During the Period......... 17,188,549 6,023,602
----------- -----------
Change in Net Assets from Operations.................. 20,237,949 11,860,642
Distributions from Net Investment Income.............. (366,286) (379,623)
----------- -----------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES... 19,871,663 11,481,019
----------- -----------
FROM PARTNERSHIP UNIT TRANSACTIONS:
Proceeds from Units Issued Through Dividend
Reinvestment........................................ 49,579 50,220
Cost of Units Repurchased............................. (2,278,503) (3,024,080)
----------- -----------
NET CHANGE IN NET ASSETS FROM
PARTNERSHIP UNIT TRANSACTIONS....................... (2,228,924) (2,973,860)
----------- -----------
TOTAL INCREASE IN NET ASSETS.......................... 17,642,739 8,507,159
NET ASSETS:
Beginning of the Period............................... 70,273,993 61,766,834
----------- -----------
End of the Period (Including accumulated undistributed
net investment income of $2,825,384 and $2,618,113,
respectively)....................................... $87,916,732 $70,273,993
=========== ===========
CHANGE IN PARTNERSHIP UNITS OUTSTANDING:
Units Issued Through Dividend Reinvestment............ 180 210
Units Repurchased..................................... (8,376) (12,445)
----------- -----------
Decrease in Partnership Units Outstanding......... (8,196) (12,235)
=========== ===========
</TABLE>
See Notes to Financial Statements
F-6
<PAGE> 25
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one unit of partnership
interest outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31 (a)
--------------------------------------------------
1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period............................. $243.538 $205.349 $ 151.88 $115.36 $111.32
-------- -------- -------- ------- -------
Net Investment Income.............. 2.010 1.908 1.488 1.62 1.62
Net Realized and Unrealized Gain... 69.318 37.561 53.261 36.18 3.70
-------- -------- -------- ------- -------
Total from Investment Operations..... 71.328 39.469 54.749 37.80 5.32
Less Distributions from Net
Investment Income.................. 1.280 1.280 1.280 1.28 1.28
-------- -------- -------- ------- -------
Net Asset Value, End of the Period... $313.586 $243.538 $205.349 $151.88 $115.36
======== ======== ======== ======= =======
Total Return......................... 29.36% 19.23% 36.21% 32.89% 4.82%
Net Assets at End of the Period (In
millions).......................... $ 87.9 $ 70.3 $ 61.8 $ 47.8 $ 37.7
Ratio of Expenses to Average Net
Assets............................. .74% .75% .93% .88% .89%
Ratio of Net Investment Income to
Average Net Assets................. .73% .80% .87% 1.16% 1.45%
Portfolio Turnover................... 0% 0% 0% 0% 0%
</TABLE>
(a) Based on average units outstanding.
See Notes to Financial Statements
F-7
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Exchange Fund (the "Fund"), a California limited partnership, is a
partnership registered under the Investment Company Act of 1940, as amended, as
a diversified open-end investment management company. The Fund seeks capital
appreciation in a portfolio of common stock. The Fund commenced investment
operations on December 16, 1976.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. SECURITY VALUATION--Investments in securities listed on a securities exchange
are valued at their sale price as of the close of such securities exchange.
Fixed income investments are stated at value using market quotations. Unlisted
securities and listed securities for which the last sales price is not available
are valued at the mean between the last reported bid and ask price. For those
securities where quotations or prices are not available, valuations are
determined in accordance with procedures established in good faith by the
Managing General Partners. Short-term securities with remaining maturities of 60
days or less are valued at amortized cost.
B. SECURITY TRANSACTIONS--Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.
The Fund may invest in repurchase agreements which are short-term
investments whereby the Fund acquires ownership of a debt security and the
seller agrees to repurchase the security at a future time and specified price.
The Fund may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other investment
companies advised by Van Kampen Asset Management Inc. (the "Adviser") or its
affiliates, the daily aggregate of which is invested in repurchase agreements.
Repurchase agreements are fully collateralized by the underlying debt security.
The Fund will make payment for such securities only upon physical delivery or
evidence of book entry transfer to the account of the custodian bank.
F-8
<PAGE> 27
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998
- --------------------------------------------------------------------------------
The seller is required to maintain the value of the underlying security at not
less than the repurchase proceeds due the Fund.
C. INVESTMENT INCOME--Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis. Discounts are amortized over
the life of each applicable security. Premiums on debt securities are not
amortized.
D. FEDERAL INCOME TAXES--The Fund has met the qualifications to be classified as
a partnership for federal income tax purposes and intends to maintain this
qualification in the future. A partnership is not subject to federal income tax.
At December 31, 1998, for federal income tax purposes the cost of long- and
short-term investments is $7,048,595; the aggregate gross unrealized
appreciation is $80,883,001 and the aggregate gross unrealized depreciation is
$0, resulting in net unrealized appreciation of $80,883,001.
E. DISTRIBUTION OF INCOME AND GAINS--Quarterly distributions to partners are
recorded on the record date. Net investment income is allocated daily to each
partner, relative to the total number of units held. Capital gains or losses
will be allocated equally among units outstanding on the day recognized.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, the Adviser will
provide facilities and investment advice to the Fund for an annual fee payable
monthly of .50% based on the average daily net assets of the Fund.
For the year ended December 31, 1998, the Fund recognized expenses of
approximately $2,000 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the
Fund is an affiliated person.
For the year ended December 31, 1998, the Fund recognized expenses of
approximately $37,400 representing Van Kampen Inc.'s or its affiliates'
(collectively "Van Kampen") cost of providing accounting services to the Fund.
Van Kampen Investor Services Inc. ("VKIS"), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the year ended
December 31, 1998, the Fund recognized expenses of approximately $14,700.
Beginning in 1998, the transfer
F-9
<PAGE> 28
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1998
- --------------------------------------------------------------------------------
agency fees are determined through negotiations with the Fund's Managing General
Partners and are based on competitive benchmarks.
Managing general partners of the Fund who are not affiliated with the
Adviser are compensated by the Fund at the annual rate of approximately $500
plus a fee of $250 per Board meeting attended.
The Managing General Partners of the Fund instituted a Retirement Plan
effective April 1, 1996. The Plan is not funded, and obligations under the Plan
will be paid solely out of the Fund's general accounts. The Fund will not
reserve or set aside funds for the payment of its obligations under the Plan by
any form of trust or escrow. For the current Managing General Partners not
affiliated with the Adviser, the annual retirement benefit payable per year for
a ten year period is based upon the highest total annual compensation received
in any of the three calendar years preceding retirement. Managing General
Partners with more than five but less than ten years service at retirement will
receive a prorated reduced benefit. Under the Plan, for the Managing General
Partners retiring with the effectiveness of the Plan, the annual retirement
benefit payable per year for a ten year period is equal to 75% of the total
compensation received from the Fund during the 1995 calendar year.
At December 31, 1998, the Adviser and Van Kampen Exchange Corp., as non-
managing general partners of the Fund, owned 354 and 3,019 units of partnership
interest, respectively.
3. PARTNERSHIP UNIT TRANSACTIONS
Partners of the Fund may redeem units at any time. The net asset value of units
redeemed, other than redemptions under a systematic withdrawal plan, may be paid
in cash or securities, at the option of the Fund, and will ordinarily be paid in
whole or in part in securities. The Fund's valuation will determine the quantity
of securities tendered. The Fund will select securities for tender in
redemptions based on tax or investment considerations.
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $262,500 and $2,753,629, respectively.
F-10
<PAGE> 29
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
<TABLE>
<S> <C>
(a) Restated and Amended Certificate and Agreement of Limited
Partnership+
(1) Amendment to Certificate of Limited Partnership, on Form
LP-1(1)
(2) Amendment to Certificate of Limited Partnership, on Form
LP-2(2)
(3) Amendment to Certificate of Limited Partnership, on Form
LP-2(4)
(4) Amendment to Certificate of Limited Partnership, on Form
LP-2+
(b) Bylaws+
(c) Copy of Specimen Certificate+
(d) Investment Advisory Agreement(4)
(e) Not Applicable
(f) Not Applicable
(g)(1) Custodian Contract(3)
(2) Transfer Agency and Service Agreement(4)
(h) Not Applicable
(i) Not Applicable
(j) Consent of Independent Auditors+
(k) Not Applicable
(l) Not Applicable
(m) Not Applicable
(n) Financial Data Schedule+
(o) Not Applicable
</TABLE>
- ---------------
(1) Incorporated herein by reference to Post-Effective Amendment No. 16 to
Registrant's Registration Statement on Form N-1A, File Number 811-2611,
filed April 26, 1995.
(2) Incorporated herein by reference to Post-Effective Amendment No. 17 to
Registrant's Registration Statement on Form N-1A, File Number 811-2611,
filed April 29, 1996.
(3) Incorporated herein by reference to Post-Effective Amendment No. 75 to Van
Kampen American Capital Growth and Income Fund's Registration Statement on
Form N-1A, File Number 2-21657, filed March 27, 1998.
(4) Incorporated herein by reference to Post-Effective Amendment No. 19 to
Registrant's Registration Statement on Form N-1A, File Number 811-2611,
filed April 27, 1998.
+ Filed Herewith.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
ITEM 25. INDEMNIFICATION
Article XIII, Section 13.4 of Registrant's Restated and Amended Certificate
and Agreement of Limited Partnership provides as follows:
"The Partnership shall indemnify each General Partner (including officers
and or directors of a corporate General Partner and including former General
Partners who have not ceased to be liable as General Partners under the
Partnership Act) against judgments, fines, amounts paid in settlement, and
expenses (including attorneys' fees) reasonably incurred by him in any civil,
criminal or investigative proceeding in which he is involved or threatened to be
involved by reason of his being a General Partner of the Partnership, provided
C-1
<PAGE> 30
that he acted in good faith, within what he reasonably believed to be the scope
of his authority, and for a purpose which he reasonably believed to be within
the scope of his authority, and for a purpose which he reasonably believed to be
in the best interests of the Partnership or the Limited Partners. To the extent
that a General Partner has been successful on the merits or otherwise in defense
of any such proceeding or in defense of any claim or matter therein, he shall be
deemed to have acted in good faith and in a manner he believed to be in the best
interests of the Partnership or the Limited Partners. The determination under
any other circumstances as to whether a General Partner acted in good faith,
within what he reasonably believed to be the scope of his authority, and for a
purpose which he reasonably believed to be in the best interests of the
Partnership or the Limited Partners, shall be made by action of the General
Partners who were not parties to such proceedings, or by independent legal
counsel selected by the General Partners (who may be the regular counsel for the
Partnership) in a written opinion. No General Partner shall be indemnified under
this provision against any liability to the Partnership or its Partners 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. The indemnification provided hereunder shall not be deemed exclusive of
any other rights to which those indemnified may be entitled under any applicable
statute, agreement, vote of the General Partners or Limited Partners, or
otherwise."
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
See "Management, Organization and Capital Structure" in Part A and
"Management of the Fund" in the Statement of Additional Information for
information regarding the business of the Adviser. For information as to the
business, profession, vocation and employment of a substantial nature of
directors and officers of the Adviser, reference is made to the Adviser's
current Form ADV (File No. 801-1669) filed under the Investment Advisers Act of
1940, as amended, incorporated herein by reference.
ITEM 27. PRINCIPAL UNDERWRITERS
Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books and other documents required by Section 31(a) of the
Investment Company Act of 1940 and the Rules thereunder to be maintained (i) by
Registrant will be maintained at its offices, located at Van Kampen Investments
Inc., 1 Parkview Plaza, PO Box 5555, Oakbrook Terrace, IL 60181-5555, Van Kampen
Investor Services Inc., 7501 Tiffany Springs Parkway, Kansas City, MO 64153, or
at the State Street Bank and Trust Company, 1776 Heritage Drive, North Quincy,
MA; and (ii) by the Adviser, will be maintained at its offices, located at 1
Parkview Plaza, PO Box 5555, Oakbrook Terrace, Illinois 60181-5555.
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS
Not applicable.
C-2
<PAGE> 31
SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant, Van Kampen Exchange Fund, has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Oakbrook Terrace, and the State of Illinois, on
the 23rd day of April, 1999.
VAN KAMPEN EXCHANGE FUND
By /s/ DENNIS J. MCDONNELL
------------------------------------------
Dennis J. McDonnell
President
<PAGE> 32
VAN KAMPEN EXCHANGE FUND
INDEX TO EXHIBITS TO AMENDMENT NO. 20, FORM N-1A
AS SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 23, 1999
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF
NO. EXHIBIT
- ------- --------------
<S> <C>
(a) Restated and Amended Certificate and Agreement of Limited
Partnership
(a)(4) Amendment to Certificate of Limited Partnership, on Form
LP-2
(b) Bylaws
(c) Copy of Specimen Certificate
(j) Consent of Independent Auditors
(n) Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT (a)
RESTATED
CERTIFICATE AND AGREEMENT OF
LIMITED - PARTNERSHIP
OF
AMERICAN GENERAL EXCHANGE FUND
<PAGE> 2
INDEX
TO
RESTATED CERTIFICATE AND AGREEMENT OF LIMITED PARTNERSHIP
OF
AMERICAN GENERAL EXCHANGE FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1 FORMATION
1.1 Formation ................................................................................. A-1
1.2 Name....................................................................................... A-1
1.3 Principal Place of Business ............................................................... A-2
ARTICLE 2 CHARACTER OF THE PARTNERSHIP BUSINESS
2.1 Purpose ................................................................................... A-2
2.2 Operating Powers .......................................................................... A-2
2.3 Investment Limitations .................................................................... A-3
ARTICLE 3 TERM
3.1 Commencement and Termination .............................................................. A-4
ARTICLES 4 CAPITAL CONTRIBUTIONS AND ACCOUNTS
4.1 General Partners' Contributions ........................................................... A-5
4.2 Limited Partners' Contributions ........................................................... A-5
4.3 Shares of Partnership interest ............................................................ A-6
4.4 Computation ............................................................................... A-6
4.5 Contributions ............................................................................. A-6
4.6 Valuation of Property ..................................................................... A-6
4.7 Use of Contributions ...................................................................... A-6
ARTICLE 5 ALLOCATION AND DISTRIBUTION OF PROFITS AND LOSSES
5.1 Allocation of Partnership Income, Gains, Losses, Deductions and Credits for Tax
Purposes ................................................................................... A-6
5.2 Distributions .............................................................................. A-8
5.3 Fiscal Year................................................................................. A-8
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 6 RECORDS, STATEMENTS AND INCOME TAX INFORMATION
6. 1 Records and Accounting ...................................................................... A-9
6. 2 Statements .................................................................................. A-9
6. 3 Income Tax Information ....................................................................... A-9
ARTICLE 7 MEETINGS OF THE PARTNERS
7.1 Action of the Partners ........................................................................ A-9
7.2 Annual Meeting ................................................................................ A-10
7.3 Special Meetings .............................................................................. A-10
7.4.Notes of Special Meetings ..................................................................... A-10
7.5 Voting Lists ........................ ......................................................... A-10
7.6 Proxies ....................................................................................... A-10
7.7 Number of Votes ............................................................................... A-11
ARTICLE 8 GENERAL PARTNERS
8.1 Number and Identity ............................................................................ A-11
8.2 Managing and Non-Managing General Partners ..................................................... A-11
8.3 Management and Control ......................................................................... A-11
8.4 Action by the Managing General Partners ........................................................ A-12
8.5 Action by the Non-Managing General Partners .................................................... A-12
8.6 Limitations on the Authority of the General Partners ........................................... A-12
8.7 Right of General Partners to Become Limited Partners ........................................... A-13
8.8 Withdrawal of a Managing General Partner........................................................ A-13
8.9 Additional or Successor General Partners........................................................ A-13
8.10 Liability to Limited Partners................................................................... A-14
8.11 No Agency ...................................................................................... A-14
8.12 Agreements with Third Parties .................................................................. A-14
ARTICLE 9 LIMITED PARTNERS
9.1 Identity and Contributions of Limited Partners ................................................. A-14
9.2 No Power to Control Business ................................................................... A-14
9.3 Rights of Limited Partners ..................................................................... A-14
9.4 Limitation of Limited. Partners Liability ...................................................... A-15
9.5 Assignment of Shares and Substitution of Limited Partners ...................................... A-15
9.6 Admission of Additional Limited Partners ....................................................... A-16
9.7 Death of a Limited Partner ..................................................................... A-16
9.8 Representations ................................................................................ A-16
9.9 Notice of Change ............................................................................... A-16
9.10 Information on Securities ...................................................................... A-16
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 10 WITHDRAWAL OF PARTNERS AND RETURN OF CONTRIBUTIONS
10.1 Redemption of Shares of Partnership Interest and Return of Contributions........................ A-17
10.2 Partial Returns of Contributions ............................................................... A-18
10.3 Removal of Investment Advisor .................................................................. A-18
ARTICLE 11 DISTRIBUTION ON DISSOLUTION
11.1 Winding Up ..................................................................................... A-18
11.2 Accountants' Statement ......................................................................... A-19
11.3 Gains or Losses in Process of Liquidation ...................................................... A-19
ARTICLE 12 FUND DOCUMENTATION; AMENDMENT OF CERTIFICATE AND AGREEMENT;POWER OF ATTORNEY
12.1 Certificate and Agreement and Other Documentation .............................................. A-19
12.2 Events Requiring Amendment of Certificate and Agreement ........................................ A-19
12.3 Power of Attorney .............................................................................. A-20
12.4 Power of Attorney by Substituted or Additional Limited Partners................................. A-21
12.5 Amendments Requiring Signature by Less Than All Limited Partners .............................. A-22
ARTICLE 13 MISCELLANEOUS MATTERS
13.1 Independent Activities ........................................................................ A-22
13.2 Interested Partners ............................................. ............................. A-22
13.3 Tax Election .................................................................................. A-22
13.4 Reimbursement and Indemnification ............................................................. A-22
13.5 Insurance ..................................................................................... A-23
13.6 Custodian ..................................................................................... A-23
13.7 Notices ....................................................................................... A-24
13.8 Captions ............................ ......................................................... A-24
13.9 Variations in Pronouns ........................................................................ A-24
13.10 Certificate and Agreement in Counterparts ..................................................... A-24
13.11 Benefit ................... ................................................................... A-24
13.12 Nonrecourse Creditors ......................................................................... A-24
13.13 Agent for Service of Process .................................................................. A-24
13.14 Principles of Construction; Severability ...................................................... A-24
13-15 California Law ........................... .................................................... A-24
13.16 Integrated Agreement .......................................................................... A-24
</TABLE>
(iii)
<PAGE> 5
RESTATED
CERTIFICATE AND AGREEMENT OF LIMITED PARTNERSHIP
OF
AMERICAN GENERAL EXCHANGE FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
This Restated Certificate and Agreement of Limited
Partnership (the "Certificate and Agreement") has been entered into by the
undersigned General Partners and Limited Partner, for the Purpose of forming a
Limited Partnership pursuant to the Uniform Limited Partnership Act as set
forth in the Corporations Code of the State of California ("Partnership Act"),
with respect to the following recitals of fact:
RECITALS
On December 4, 1975 the General Partners and the Limited Partner
(sometimes collectively referred to herein as the "Partners") formed a Limited
Partnership which will be registered as a diversified management type open-end
investment company under the Investment Company Act of 1940 ("1940 Act").
The Partners desire to amend and restate the Certificate and
Agreement of Limited Partnership recorded on December 4, 1975, as Document
Number 2189, Official Records, County of Los Angeles.
Now, therefore, in consideration of the mutual promises and
undertakings hereinafter contained, it is covenanted and agreed as follows:
ARTICLE I
FORMATION
1.1 Formation. The parties hereto form a Limited Partnership
("Partnership") pursuant to the provisions of the Partnership Act.
1.2 Name. The Partnership shall operate under the firm name of
"American General Exchange Fund" a California Limited Partnership. The
Partnership acknowledges that it is adopting its name through permission of
American General Insurance Company and American General Capital Management,
Inc. ("Capital Management" and collectively, the "American General Companies"),
and agrees that if Capital Management, a successor to its business or an
affiliate should, at any time and for any cause, cease to be the investment
advisor to the Partnership, the Partnership shall at the written request of any
of the American General Companies and/or any such successor eliminate the name
"American General" from the Partnership's name and will not thereafter use the
name "American General" in any form or combination whatsoever in the conduct of
the Partnership's business. The Partnership further acknowledges that the
American General Companies reserve the right to grant the non-exclusive use of
the name "American General" to any other entity, including another investment
company, whether now in existence or hereafter created. The foregoing
agreements on the part of the Partnership are hereby made binding upon its
Partners and creditors and all other persons claiming under or through it.
<PAGE> 6
1.3 Principal Place of Business. The principle place of business of the
Partnership shall be located at 201 South Lake Avenue, Pasadena, California
91101. The Managing General Partners (see Section 8.2) may from time to time
establish additional places of business of the Partnership in, such other
locations, inside and outside of California, as they deem necessary or desirable
for the Conduct of the Partnership's business.
ARTICLE 2
CHARACTER OF THE PARTNERSHIP BUSINESS
2.1 Purpose. The purpose of the Partnership is to operate as a
diversified management type open-end investment company pursuant to and in
compliance with the provisions of the 1940 Act.
2.2 Operating Powers. The Partnership shall have the following powers:
(a) To hold, invest and reinvest its funds, and in connection
therewith to hold part or all of its funds in cash, and to purchase or
otherwise acquire, hold for investment or otherwise sell, assign,
negotiate, transfer, exchange or otherwise dispose of or turn to
account or realize upon, securities (including, without limitation,
any stocks, shares, bonds, debentures, notes, mortgages or other
obligations, and any certificates, receipts, warrants or other
instruments representing rights to receive, purchase or subscribe for
the same, or evidencing or representing any other rights or interests
therein, or in any property or assets) created by any issuer
(including, without limitation, any corporation, firm, trust,
association, syndicate, combination organization government or
subdivision); and to exercise, as owner, all rights, powers and
privileges in respect thereof; and to do any and all acts and things
for the preservation, protection, improvement and enhancement in value
of any or all such securities.
(b) To engage personnel and do such other acts and incur such
other expenses on behalf of the Partnership as may be necessary or
advisable in connection with the conduct of Partnership affairs, at
fees which are reasonable for the services performed.
(c) To engage attorneys, accountants, or such other persons as
may be deemed necessary or advisable.
(d) To receive, acquire, buy, sell, exchange, trade and otherwise
deal in and with property needed to carry out the purposes of the
Partnership.
(e) To open, conduct and close accounts with brokers and dealers
and to pay the customary fees and charges applicable to transactions in
all such accounts.
(f) To open, maintain, and close-bank accounts and to draw checks
and other orders for the payment of money.
(g) To enter into, make and perform such contracts, agreements and
other undertakings and to do such other acts, as may be deemed
necessary or advisable, or as may be incidental to or necessary, for
the conduct of the business of the Partnership, including, without
limiting the generality of the foregoing, contracts, agreements,
undertakings, and transactions with any
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Partner or with any other person, firm or corporation having any
business, financial or other relationship with any Partner.
(h) To institute and prosecute litigation arising out of the
regular course of its affairs or in the enforcement of its obligations
due it, including all rights of appeal.
(i) To compromise and settle all any claims against the
Partnership.
(j) To defend any litigation, including all rights of appeal,
whether or not arising in the regular course of its affairs.
(k) To appear before any governmental board or agency or to
otherwise participate in any administrative review or appeal.
(l) To employ one or more investment advisors for the Partnership
to supervise the Partnership's investments and to administer the
affairs of the Partnership subject to the provisions contained in
Section 9.3.
(m) To file and publish all such certificates, notices,
statements or other instruments required by law for the formation and
operation of a limited partnership in any jurisdiction where the
Partnership may elect to do business.
(n) To exercise any and all other powers which may be necessary to
implement the foregoing purposes, policies and powers of the
Partnership and, not inconsistent therewith, including those granted to
limited partnerships under the Partnership Act.
(o) To exercise such other powers as the Managing General
Partners reasonably believe to be necessary to comply with the
provisions of the 1940 Act.
2.3 Investment Limitations. The Partnership may not:
(a) (1) Invest more than 5% of the value of its total assets at
market value at time of purchase in the securities of any one issuer
(other than obligations of the United States government or any
instrumentalities thereof); (2) purchase securities if such purchase
would result in the Partnership owning more than 10% of the outstanding
voting securities of any one issuer at the time of purchase; (3)
invest in securities of companies which have a record, together with
their predecessors, of less than three years of continuous operation
and (4) purchase securities issued by any other investment company or
investment trust.
(b) Purchase or hold securities of any company if, to the
knowledge of the Partnership, any of its General Partners, or officers
or directors of the Partnership's investment advisor, who beneficially
own more than one-half of one percent of the securities of that
company, together own beneficially more than 5% of the securities of
such company.
(c) Borrow money, except from banks for a purpose other than the
purchase of securities, such borrowing not to exceed 5% of the value
of its total assets at market value at the time of borrowing. Any such
borrowing may be secured provided that not more than 10% of the value
of the total assets at market value at the time of pledging may be used
as security for such borrowings.
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(d) Invest in companies for the purpose of exercising control or
management. [The Partnership's Officers may be authorized to vote
proxies issued with respect to its portfolio securities consistent with
its investment objectives.]
(e) Purchase securities on margin or make short sales.
(f) Make loans of money or securities to other persons, provided
that this limitation shall not prevent the purchase of bonds, notes,
debentures or other debt securities which are publicly distributed
or of a type customarily purchased by institutional investors.
(g) Buy or all commodities or commodity contracts.
(h) Invest in real estate (including interests in real estate
investment trusts) or oil or gas mineral exploration or development
programs, except in publicly traded securities of issuers which engage
in such businesses.
(i) Engage in the underwriting of securities except that it may
acquire portfolio securities under circumstances where, if the
securities are later publicly offered or sold by the Partnership, it
might be deemed to be an underwriter for purposes of the Securities Act
of 1933. No more than 10% of the value of the Partnership's net
assets, at the time of acquisition, will be invested in such securities
and in equity securities which are not publicly traded.
(j) Invest more then 25% of its assets at market value at the time
of purchase in securities of companies, all of which conduct theirin
principal activities in the same industry.
(k) Purchase or write any options, puts, calls, straddles, spreads
or combinations thereof.
(1) Invest in or hold warrants unless received with respect to
securities held by the Partnership.
(m) Invest in foreign securities.
The policies and safeguards set forth above may not be changed without a vote of
the Partners, as described in Article 7 hereof.
ARTICLE 3
TERM
3.1 Commencement and Termination. The Partnership shall commence as of the
date of the initial filing of this Certificate and Agreement with the
County Recorder in the County of Los Angeles, of the State of California,
as required by the Partnership Act, and shall continue in existence until
December 31, 2050, unless sooner terminated by the happening of one of the
following events:
(a) The Partnership disposes of all of its assets.
(b) The death, withdrawal, retirement, dissolution, assignment for
the benefit of creditors, filing of a petition for bankruptcy,
adjudication of bankruptcy, insanity or incompetency of any of the
General Partners, except as hereinafter otherwise provided in Section
8.9.
(c) Partners holding a majority of the outstanding shares in the
Partnership vote to terminate the Partnership.
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ARTICLE 4
CAPITAL CONTRIBUTIONS AND ACCOUNTS
4.1 General Partners' Contributions. Each of the initial General
Partners has purchased, and/or irrevocably subscribed for the number of Shares
(as defined in Section 4.3) set forth on Schedule A to this Certificate and
Agreement and incorporated herein by this reference, for which he has, or will,
on or prior to the Exchange Date (as defined in Section 4.5) deliver in cash,
and/or securities at their value, determined in accordance with Sections 4.5 and
4.6, $25 per Share.
The initial General Partners (both Managing and Non-Managing) shall as
a group make a capital contribution which shall not be less than 1% of the total
capital contributions of both the Limited Partners and the General Partners. The
General Partners shall as a group own at all times not less than 1% of all the
outstanding shares of the Partnership held by both the General and Limited
Partners or any assignees thereof. Each General Partner, by execution of this
Certificate and Agreement hereby commits and agrees that so long a he is a
General Partner, his Shares held as General Partner will not be tendered for
redemption, redeemed or assigned, nor will he accept distributions in cash if
Shares held by General Partners as a group would thereby constitute less than 1%
of the outstanding Shares. In the event a General Partner withdraws from the
Partnership and the Partnership is continued as provided herein, if such
withdrawal causes the number of shares held by the General Partners as a group
to be less than 1% of the total outstanding Shares of both the Limited Partners
and General Partners, the Non-Managing General Partner(s) shall contribute to
the capital of the Partnership such additional capital or securities to acquire
at net asset value such number of Shares as may be necessary for the General
Partners as a group to hold 1% of the total outstanding Shares; provided,
however, that if another General Partner makes a capital contribution in such
amount as to cause the outstanding Shares of the General Partners as a group to
be more than said 1%, the Non-Managing General Partner(s) shall be permitted to
redeem such Shares no longer necessary to maintain said 1%.
4.2 Limited Partners' Contributions.
(a) The original Limited Partner has purchased the number of
Shares of the Partnership set forth on Schedule "A" to this Certificate
and Agreement (which Schedule is incorporated herein by this
reference) and has contributed $25 (net of applicable sales charges) in
cash and/or securities to the Partnership for each such Share
purchased. Each Additional Limited Partner shall purchase, pursuant to
the initial public offering of the Partnership's Shares, the number of
Shares, which shall be set forth on an amendment to Schedule "A" and
shall contribute $25 (not of applicable sales charges) in cash and/or
securities to the Partnership for each such Share purchased.
(b) Limited Partners cannot be required to make additional
contributions to the Partnership or to lend funds to the Partnership,
and no Limited Partner shall be liable for any additional assessment
therefor.
(c) A subscription fee not to exceed 8% of the value of securities
and cash contributed may be paid by the Partnership as sales charges,
including commissions to Soliciting Dealers and the Dealer Manager(s)
and organizational expenses; and if so paid, shall be charged to the
subscribing Partner's account, except that no subscription fee shall be
charged upon the sale of interests in
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the Partnership to those persons exempted therefrom by the 1940 Act,
including without limitation, General Partners of the Partnership,
directors and officers of the investment advisor and full-time
employees of such entities.
4.3 Shares of partnership interest. All interests in the
Partnership shall be expressed in units of participation (hereinafter
referred to as "Share" or "Shares") or fractions thereof.
4.4 Computation. Upon completion of the Partnership's initial
public offering of its Shares, the value of each Share shall be $25.
Thereafter, the value of Shares shall be computed at the close of
business on each business day that the New York Stock Exchange is open.
4.5 Contributions. Contributions may only be in cash or
securities which are approved by the Managing General Partners. The
Managing General Partners may maintain a list of acceptable securities,
which list is subject to change without notice. All capital
contributions shall be given effect on the day when such capital
contributions are accepted by the Partnership ("Exchange Date") and
shall be valued as of the close of business on the preceding business
day.
4.6 Valuation of Property. The net asset value per Share shall be
determined once each business day as of the close of business on the
New York Stock Exchange. The market value at the Partnership's
portfolio securities shall be determined by appraising securities
traded on a national securities exchange at the last sale price or, if
no sale occurred on that day, at the mean between the closing bid and
asked prices; by appraising all other securities not so traded in like
manner if market quotations are available (or at the mean between the
highest bid and lowest asked prices if there is to last sale price or
closing bid and asked prices); and by appraising all other securities
at fair value as determined in good faith by the Managing General
Partners. The value of receivables shall be deemed to be their face
amount unless the Managing General Partners shall have determined the
value to be less. Dividends shall be treated as a receivable as of the
ex-dividend date and interest shall be accrued. From the total value of
the assets there shall be deducted all indebtedness, expenses and
management charges accrued to the appraisal date, all contractual
obligations, including unpaid distributions payable to Partners of
record on or before the appraisal date, all reserves for taxes, unpaid
redemptions prior to such valuation date and contingencies, and all
other liabilities. The resulting amount, representing the net assets of
the Partnership, shall be divided by the number of Shares then
outstanding and the quotient shall be deemed to be the net asset value
per Share. The net asset value so determined should be effective as of
the close of business next following the receipt by the Partnership of
a tender of a Share for redemption or an order to purchase or sell a
Share.
4.7 Use of Contributions. The aggregate of all capital
contributions shall be, and hereby is agreed to be, available to the
Partnership to carry out the business of the Partnership.
ARTICLE 5
ALLOCATION AND DISTRIBUTION OF PROFITS AND LOSSES
5.1 Allocation of Partnership Income, Gains, Losses,
Deductions and Credits for Tax Purposes. Except with respect to
allocations to Substituted Limited Partners if the Partnership has made
an election pursuant to Section 754 of the Internal Revenue Code of
1954, as amended ("Code") (see
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Section 9.5), the provisions of this section shall govern the allocation of
income, gain, lots, deduction and credits to the Partners for federal income tax
purposes. The provisions of this section shall not affect the amount payable to,
or the entitlement of, any Partner, in connection with distributions under
Section 5.2, returns of contributions under Articles 10 and 11, or any other
rights or obligations of Partners under this Certificate and Agreement.
(a) Gain on Contributed Securities. It is anticipated that securities
contributed by the Partners to the Partnership ("Contributed Securities")
will have a basis for determining gain of loss under the Code ("tax basis")
which is less than the value of such securities as determined pursuant to
Sections 4.5 and 4.6 ("Exchange Date Value"). Moreover, it is anticipated
that the tax basis of one Partner may be different than that of other
Partners receiving equal numbers of Shares of the Partnership.
(i) In order to reasonably approximate a fair allocation of the tax
from sales of Contributed Securities among Partners with differing tax
bases, 1% of each Contribution Gain, as defined below, resulting from the
sale of Contributed Securities by the Partnership shall be allocated among
General Partners in proportion to their respective shares and 99% of the
Contribution Gain shall be allocated among the Limited Partners in
accordance with the following formula:
Partner's Unrealized
Gain
--------------------
Allocable = Contribution x.99 x
----
Share Gain Aggregate Unrealized,
Gains
(ii) In application of the foregoing formula, the terms used shall have
the following meanings:
(1) "Allocable Share" shall mean the amount of Contribution Gain to be
allocated to a specific Partner.
(2) "Contribution Gain" shall mean the amount of capital gain subject
to formula allocable realized upon sale of Contributed Securities, which
amount shall be equal to the lower of (a) the Exchange Date Value of any
such security, less the tax basis thereof at the date of sale; or (b) the
proceeds from the sale of any such security, less the tax basis thereof at
the date of sale.
(3) "Partner's Unrealized Gain" shall consist of the difference between
the Exchange Date Value of the assets contributed by a Partner to the
Partnership pursuant to Section 4.2 less the tax basis on the Exchange Date
of such Partner in such contributed assets. In the event of redemption of
any Shares (other than Shares issued in distributions), such Partner's
Unrealized Gain shall be reduced by the proportion that such Partner's
Shares redeemed bears to such Partner's Shares held prior to such
redemption.
(4) "Aggregate Unrealized Gains" shall mean the total of all Partners'
Unrealized Gains in the Partnership on the date of sale of any of the
Contributed Securities.
(iii) To the extent that the amount of capital gain realized upon the
sale of any of the Contributed Securities exceeds the Contribution Gain
allocated pursuant to the foregoing formula, such excess amount shall be
allocated equally among the total number of Shares outstanding on the date
of sale.
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(b) Capital Gain and Loss Other Than Contribution Gain. Items of
Partnership capital gain and capital loss not constituting Contribution Gain
shall be allocated equally among the total number of Shares outstanding on
the date such item is realized.
(c) Other Allocations. Items of Partnership income, gain, loss,
deduction and credit ("tax items") arising during any Partnership tax year
which have not been allocated pursuant to subsections (a) and (b) above,
shall be allocated to each Partner in the Partnership at any time during
such year in accordance with the following formula:
Partner's = Item Partner's Day-Shares
x --------------------
Share Amount Partnership Day-Shares
In application of the foregoing formula the terms used shall the the
following meanings:
(1) "Partner's Share" shall mean the amount of a tax item to be
allocated to a specific Partner.
(2) "Item Amount" shall mean the total amount of the tax item being
allocated.
(3) "Partner's Day-Shares" shall mean the sum resulting from adding
together the total number of Shares held by a Partner on such day of the
Partnership tax year.
(4) "Partnership Day-Shares" shall mean the sum resulting from adding
together the total number of Shares outstanding in the Partnership on each
day of the Partnership tax year.
5.2 Distributions. The Managing General Partners shall determine the
amounts to be distributed to the holders of Shares and the time or times, when
such distributions shall be made. A holder of a Share shall be entitled to that
portion of any such distribution computed on the basis of a fraction, the
numerator of which shall be the total number of Share (including fractional
Shares) owned by such holder, and the denominator of which shall be the total
number of Partnership Shares outstanding. For this purpose, a person will be
deemed to be a holder of a Share if he is the record holder of the Share, as
evidenced by the recordation in the office of the County Recorder for the County
of Los Angeles, State of California of an amendment to the Certificate and
Agreement which indicates that such person is a Partner of the Partnership. Only
such record holders of Shares shall be entitled to Partnership distributions.
With respect to capital gains, the Managing General Partners will determine
annually what portion, if any, of the Partnership's capital gains will be
distributed. All distributions shall be made in cash except to those Partners
who have properly elected to receive their distributions in Shares. Any income
distributions in Shares will be paid at the net asset value of such Shares on a
date between the record date and the payable date of the distribution which is
fixed by the Managing General Partners in their declaration of such
distribution. To the extent practicable, income distributions will be made
quarterly.
5.3 Fiscal Year, The fiscal year of the Partnership shall be the calendar
year for financial and for Federal income tax purposes.
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ARTICLE 6
RECORDS, STATEMENTS AND INCOME TAX INFORMATION
6.1 Records and Accounting. At all times during the continuance of the
Partnership, books of account, which shall be adequate and appropriate for the
Partnership business, shall be kept. Such books and records shall be kept in
accordance with generally accepted accounting principles and procedures applied
in a consistent manner. Such books and records shall include such separate and
additional accounts for each Partner as shall be necessary to reflect
accurately the rights and interests of the respective Partners and shall
specifically reflect the name and address of each Partner and the number of
Shares held by him for the purpose of determining recipients of distributions
and notices. Except as are required to be held by the Partnership's Custodian
(see Section 13.6), such books of account, together with a copy of the
Certificate and Agreement and any amendments thereto, all documents relating to
the ownership and condition of title of Partnership properties, and copies of
all Partnership tax returns shall at all times be maintained by the Partnership
and each Partner and his duly authorized representative shall have access to
them and the right to inspect and copy them at all reasonable times.
6.2 Statements. The Partnership shall cause certified annual and
uncertified semi-annual financial statements of the operations of the
Partnership to be prepared and forwarded to the Partners. The financial
statements shall include a balance sheet, statement of income, and such
supporting statements as required by the Managing General Partners and by law,
including, without limitation, those required by the California Administrative
Code, Title 10, Subchapters 1 and 2.
6.3 Income Tax Information. Partnership tax returns shall be prepared using
the accrual method. The Partnership shall provide to each Partner information as
to the Partnership's Federal taxable income or loss and each class of income,
gain, loss, deduction or credit that is relevant to reporting Partnership
income. The information shall, also show each Partner's allocated share of each
class of income, gain, loss, deduction or credit. This information shall be
furnished to the Partners as soon as it is available and in any event within 75
days after the close of the Partnership's taxable year.
ARTICLE 7
MEETINGS OF THE PARTNERS
7.1 Action of the Partners. Actions which require the vote of the Limited
Partners pursuant to Section 9.3 of this Certificate and Agreement shall be
taken at a meeting of both the General and Limited Partners at which a quorum is
present. A quorum shall exist if more than 50% of the outstanding Shares are
present at the meeting in person or by proxy. All such meetings shall be held
within the State of California or at such other place as the Managing General
Partners shall designate. The Partners may vote at any such meeting in person
or by proxy. The election of General Partners and ratification or rejection of
the selection of independent public accountants shall require a majority vote of
the Shares present in person or by proxy at a meeting at which a quorum is
present. Termination of the Partnership shall require the vote specified in
Section 3.1. All other actions of the Partners shall require the vote of the
lesser of (i) a majority of the outstanding Shares, or (ii) 67% or more of the
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Shares represented in person or by proxy at a meeting at which a quorum is
present. In the election of General Partners, those candidates receiving the
highest number of votes cast, at a meeting at which a quorum is present in
person or by proxy, up to the number of General Partners proposed to be elected,
shall be elected as General Partners to serve until the next annual meeting or
until their successors are elected and qualified.
7.2 Annual Meeting. An annual meeting of the Partnership shall be held
during the month of April in each year, beginning in 1977, for the purpose of
electing Managing General Partners, ratifying or rejecting the selection of the
independent public accountants for the Partnership, and taking any other action
which the Limited Partners are permitted to take under this Certificate and
Agreement. Non-Managing General Partner(s) shall not be elected annually but
shall serve in such capacity until it withdraws from the Partnership or is
removed by the vote of the Limited Partners. The annual meeting shall be held at
any place, either within or without the State of California, designated by the
General Partners. Written notice stating the place, day and hour of the meeting
shall be mailed to each Partner entitled to vote at the meeting at his last
known post office address as shown on the books of the Partnership not less
than 10 days nor more than 60 days before the date of the meeting. Failure to
receive notice of such annual meeting on the part of any Partner shall not
affect the validity of any act or proceeding at such annual meeting, provided
there is a lawful quorum present thereat. In the event that the annual meeting
shall not be held in any year in the month specified above, a special meeting in
lieu thereof may be held in accordance with Sections 7.3 and 7.4 hereof with
the same force and effect.
7.3 Special Meetings. Special meetings of the Partnership for the purpose
of taking any action with the Limited Partners are permitted to take under this
Certificate and Agreement may be called (i) by a majority vote of the Managing
General Partners; (ii) by Limited Partners representing 10% of the outstanding
Shares of Limited Partnership interest; or (iii) by a. Non-Managing General
Partner pursuant to Section 8.5.
7.4 Notice of Special Meetings. Written notice of each special meeting
stating the place, day and hour of the meeting and indicating briefly the
object or objects thereof shall be mailed by the Partnership to each Partner
entitled to vote at such meeting at his last known post office address as shown
on the books of the Partnership not less than 10 days nor more than 60 days
before the date of the meeting. Failure to receive notice of such special
meeting on the part of any Partner shall not affect the validity of any act or
proceeding at such special meeting, provided there is a quorum present
thereat.
7.5 Voting Lists. The Partnership shall establish a record date not
exceeding 60 days prior to the date of any meeting of the Partners for purposes
of determining eligibility to vote at such meeting and the number of votes to
which each Partner will be entitled, and shall prepare, at least 10 days prior
to said meeting, a list setting forth the name of each Partner and the number of
votes he will be entitled to cast. This list will be available for examination
at the principal office of the Partnership during regular business hours.
7.6 Proxies. A Partner may vote at any meeting of the Partnership by a
proxy executed in writing by the Partner. All such proxies shall be filed with
the Partnership before or at the time of the meeting. No such proxy shall be
valid after eleven months from the date of its execution. The law of California
pertaining to corporate proxies will govern all Partnership proxies.
Notwithstanding that a valid proxy is outstanding, powers of the proxy holder
will be suspended if the person executing the proxy is present at the meeting
and elects to vote in person.
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7.7 Number of Votes. All Shares shall have equal voting rights. Each
Partner shall have the right to vote the number of full and fractional Shares
standing of record in such Partner's name as of the record date set forth in the
notice of meeting.
ARTICLE 8
GENERAL PARTNERS
8.1 NUMBER AND IDENTITY. THE names of the General Partners, their places of
residence and the number of Shares of Partnership interest owned by each of them
are set forth in Schedule "A" to this Certificate and Agreement and are
incorporated herein by this reference. Each such Share will be held by the
General Partners as a General Partner and not as a limited Partner. The General
Partners are listed separately as Managing General Partners and Non-Managing
General Partners. The Managing General Partners shall determine from time to
time the number of persons to be elected as General Partners, provided, if at
any time the number of Managing General Partners is reduced to less than three,
the remaining Managing General Partners shall, within 120 days, call a meeting
of Partners for the purpose of electing an additional Managing General Partner
or Managing General Partners so as to restore the number of Managing General
Partners to at least three.
8.2 MANAGING AND NON-MANAGING GENERAL Partners. Only individuals may act as
Managing General Partners, and all individual General Partners shall act as
Managing General Partners. Any General Partner which is a corporation,
association, partnership, joint venture or trust shall act as a Non-Managing
General Partner. The Partnership shall at all times have at least one corporate
General Partner; provided, however, that in the event of withdrawal (including
removal), dissolution, assignment for the benefit of creditors, filing of a
petition in bankruptcy or adjudication of bankruptcy of a corporate General
Partner, the remaining General Partners shall, within 60 days of such event,
hold a special meeting of the Partnership in accordance with Sections 7.3 and
7.4 hereof for the purpose of electing a successor corporate General Partner,
and the Partnership may continue without a corporate General Partner until said
meeting is held. The Managing General Partners agree that they will not vote to
dissolve the Partnership if there occurs any of the events described in the
preceding sentence affecting a corporate General Partner. A corporate General
Partner may not withdraw from the Partnership until the earlier of: (a) 24
months from the notice of such withdrawal; or (b) the date a successor corporate
General Partner is elected.
8.3 MANAGEMENT AND CONTROL. Subject to the terms of this Certificate and
Agreement, the Partnership will be managed solely by the Managing General
Partners, who will have complete and exclusive control over the management,
conduct and operation of the Partnership's business, and except as otherwise
specifically provided in this Certificate and Agreement, the Managing General
Partners shall have the rights, powers and authority of partners of a
partnership without limited partners under the Partnership Act. Subject always
to the continuing supervision of the Managing General Partners, the Partnership
may contract with one or more banks, trust companies or investment advisors
(including a Non-Managing General Partner or any affiliate thereof) for
performance of such functions as the Managing General Partners may determine,
including, but not by way of limitation, the investment and reinvestment of all
or part of the Partnership's assets and execution of portfolio transactions, and
any or all adminis-
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<PAGE> 16
trative functions. The Managing General Partners may also appoint agents and
officers to perform such other duties on behalf of the Partnership as the
Managing General Partners deem desirable. Such agents or officers need not be
Managing or Non-Managing General Partners or Limited Partners. The Managing
General Partners shall devote themselves to the Partnership's business to the
extent they may determine necessary for the efficient conduct thereof, which
need not, however, occupy their full time. General Partners may also engage in
other businesses, whether or not similar in nature to the business of the
Partnership, subject to the limitations of the 1940 Act.
8.4 Action by the Managing General Partners. The Managing General Partner's
shall act either by majority vote of the Managing General Partners at a meeting
duly called or by unanimous written consent of the Managing General Partners
without a meeting, unless the 1940 Act requires that a particular action be
taken only at a meeting of the Managing General Partners. No single Managing
General Partner shall have authority to act on behalf of the Partnership or to
bind the Partnership. The Managing General Partners shall have fiduciary
responsibility for the safekeeping and use of all funds and assets of the
Partnership whether or not in their immediate possession and control, and shall
not employ, or permit another to employ such funds or assets in any manner
except for the exclusive benefit of the Partnership. Without limiting the
foregoing, the Managing General Partners shall not engage in any activity of the
type prohibited by the California Administrative Code, Title 10, Chapter 3,
Subchapter 2.
The Managing General Partners shall appoint one of their number to be
Chairman. Meetings of the Managing General Partners may be called by the
Chairman or by any two Managing General Partners. The Chairman shall preside at
all meetings of Partners.
8.5 Action by non-managing General Partner. A Non-Managing General Partner
shall take no part in the management, conduct or operation of the Partnership's
business and shall have no authority to act on behalf of the Partnership or to
bind the Partnership; provided, however, that if the Partnership is without at
least one Managing General Partner, the Non-Managing General Partner (or any of
the Non-Managing General Partners if there be more than one) shall, within 60
days of such condition call a special meeting of the Partners pursuant to the
applicable sections of Article 7 [and until such meeting, shall be authorized to
supervise the continuing operations of the Partnership pursuant to the
directives and policies in effect immediately prior to the occurence of such
event.]
8.6 Limitations on the Authority of the General Partners. The General
Partners shall have authority without the prior vote or written consent or
ratification of all the Limited Partners to:
(a) do any act in contravention of this Certificate and Agreement, as
it may be amended, or which would make it impossible to carry on the
ordinary business of the Partnership;
(b) confess a judgment against the Partnership
(c) possess Partnership property, or assign the Partnership's rights in
specific Partnership property, for other than a Partnership purpose; or
(d) admit a person as a General Partner, except in accordance with
Section 8.5 to which all Partners hereby give their advance written consent
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Nothing herein shall preclude dissolution of the Partnership in accordance
with this Certificate and Agreement. In addition, certain actions of the
Managing General Partners shall be subject to the approval of a majority of the
Limited Partners as provided in Section 9.3 below.
8.7 Right of General Partners to Become Limited Partners. A General Partner
may also become a Limited Partner and thereby become entitled to all of the
rights of a Limited Partner to the extent of the Limited Partnership interest so
acquired, and the consent of the Limited Partners need not be obtained. Such
event would not, however, be deemed to reduce any of the General Partner's
liability hereunder.
8.8 Withdrawal of a Managing General Partner. The interest of a Managing
General Partner shall terminate and such party shall have no further right or
power to act as a Managing General Partner (except to execute any amendment to
this Certificate and Agreement to evidence his termination) if he:
(a) dies;
(b) becomes insane;
(c) voluntarily retires upon not less than 180 days' written notice to
the other General Partner; or
(d) is removed or fails to be re-elected by the Limited Partners, as
provided in Section 9.3 below.
Termination of a person's status as a General Partner shall not affect his
status, if any, as a Limited Partner. A General Partner shall not be entitled to
any special payment from the Partnership as a result of termination of his
status as General Partner. A withdrawing General Partner may, if he chooses to
do so, redeem his Shares of Partnership interest in accordance with Section 10.1
or retain his Shares as a Limited Partner.
8.9 Additional or Successor General Partners. A person may be added or
substituted as a General Partner only upon his election by the Partners as
provided herein. Each General Partner, by becoming a General Partner, consents
to the admission as an added or substituted General Partner of any person
elected by the Partners in accordance with this Certificate and Agreement. Any
General Partner who is elected at a meeting of the Partners in accordance with
Section 7.1 hereof, and who shall not be serving as a General Partner at the
time of such election, shall (a) execute a written acceptance and adoption of
all the terms and provisions of the Certificate and Agreement, as the same may
have been amended on form(s) approved by the Managing General Partners, (b)
acquire on or before admission as a General. Partner, Shares having a net asset
value of at least $5,000, and (c) be admitted to the Partnership as a General
Partner effective as of the date of recordation of an Amendment to the
Certificate and Agreement. Any serving General Partner who is not re-elected at
any such meeting in the manner specified in Section 7.1 shall be deemed to have
withdrawn as of the date of such election in accordance with the provisions of
Section 8.8 hereof,
Each of the General Partners agrees that in the event of the death,
withdrawal, retirement, dissolution, assignment for the benefit of creditors,
filing of a petition for bankruptcy, adjudication of bankruptcy, insanity of
incompetency of any General Partner, the remaining General Partner or Partners
shall elect to continue the business of the Partnership and shall file an
appropriate amendment
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to this Certificate and Agreement within 60 days after the event giving rise to
such election. A corporate General Partner shall not withdraw from the
Partnership except as provided in Section 8.2.
In the event that all General Partners die, withdraw, retire, dissolve,
make an assignment for the benefit of creditors, file a petition for bankruptcy,
are adjudicated to be bankrupt, or become insane or incompetent, the Partnership
shall dissolve.
8.10 Liability to Limited Partners. None of the General Partners shall be
liable to any Limited Partner because of any act or failure to act if the act
or omission is within the scope of authority conferred on General Partners by
this Certificate and Agreement or by law and does not constitute willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. Without limiting the foregoing; the
General Partners shall not: (a) be personally liable for the payment of the
amount standing in the individual accounts of the Limited Partners or any
portion thereof, or (b) be liable to any holder of Shares or to any Limited
Partner by reason of any change in the Federal or State income tax laws, or
interpretations thereof, as they apply to the Partnership and the Limited
Partners, whether such change occurs through legislative, judicial or
administrative action.
8.11 No Agency. Nothing in this Agreement shall be construed as
establishing any General Partner as an agent of any Limited Partner or of the
Partnership except as authorized in Section 8.3 of this Certificate and
Agreement.
8.12 Agreements with Third Parties. The Managing General Partners will, to
the extent they are able, contract on behalf of the Partnership with third
parties on terms which limit such third parties' recourse against the
Partnership to the Partnership's assets.
ARTICLE 9
LIMITED PARTNERS
9.1 Identity and Contributions of Limited Partners. The names of the
Limited Partners, their places of residence and the number of Shares of
Partnership interest owned by each of them are set forth in Schedule "A" to this
Certificate and Agreement and are incorporated herein by this reference
9.2 No Power to Control Business. A Limited Partner shall have no right to
and shall take no part in the control of the Partnership's business and shall
have no right or authority to act for or bind the Partnership, but may exercise
the rights and powers of a Limited Partner under this Certificate and Agreement,
including without limitation, the voting rights and the giving of consents
and approvals provided for hereunder. The exercise of such rights and powers are
deemed to be matters affecting the basic structure of the Partnership and not
the control of its business.
9.3 Rights of Limited Partners. Subject to the preceding subsection, the
Limited Partners shall have the right to vote, in accordance with the provisions
of Section 7.1, only upon the following matters affecting the basic structure of
the Partnership, which include the voting, approval, consent or similar
rights required under the 1940 Act for voting security holders:
(a) to elect and remove General Partner(s) in accordance with Section
7.2;
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(b) to approve or disapprove the sale of all or substantially all of
the assets of the Partnership;
(c) to approve any investment advisory contract or terminate any such
existing contract;
(d) to ratify or reject the appointment and to terminate the employment
of the independent public accountants of the Partnership;
(e) to amend this Certificate and Agreement, other than amendments to
admit Additional or Substituted Limited Partners or to return or reduce the
amount of capital contributions of Partners, including, without limitation,
the right to approve or disapprove proposed changes in the investment
limitations set forth in Section 2.3 herein; and the right to approve or
disapprove proposed changes in the nature of the Partnership's business as
such business is described herein; provided, however, that no such amendment
shall conflict with the 1940 Act or the rules and regulations thereunder so
long as the Partnership intends to remain registered thereunder, nor affect
the liability of the General Partners without their consent nor the limited
liability of the Limited Partners as provided in Section 9.4; and
(f) to terminate the Partnership, as provided in Section 3.1 above.
The initial investment advisory contract will be between the Partnership
and American General Capital Management, Inc. Any investment advisory contract
entered into by the Partnership shall provide that it may be terminated at any
time, without the payment of any penalty, by the Managing General Partners or by
a vote of the Limited Partners in accordance with the provisions of this
Section, or by the investment advisor, on not more than 60 days' written notice
to the other party. If an investment advisory contract is terminated or a new
investment advisory contract is approved, this Certificate and Agreement
shall be amended to reflect such event.
The Limited Partners shall have no right or power to cause the termination
and dissolution of the Partnership except as set forth in this Certificate and
Agreement. No Limited Partner shall have the right to bring an action for
partition against the Partnership.
9.4 Limitation of Limited Partners' Liability. Limited Partners shall not
be liable for the debts, obligations or losses of the Partnership, provided,
however, that the capital contributions of a Limited Partner shall be subject
to the risks of the business of the Partnership, and to the claims of the
Partnership's creditors. However, Limited Partners who have received the
return in whole or in part of their capital contribution may be liable to the
Partnership for any sum, not in excess of such return with interest, necessary
to discharge the Partnership's liability to all creditors who extended credit
or whose claims arose before such return.
9.5 Assignment of Shares and Substitution of Limited Partners. A Limited
Partner may assign the whole or any portion of his Limited Partnership interest
only to an existing Limited Partner or to a person satisfying the conditions set
forth below for admission as a Substituted Limited Partner. In order to effect
an assignment of a Partnership interest and/or a substitution as a Limited
Partner, the following conditions must be satisfied: (a) execution by the
assignor of a written instrument of assignment on form(s) approved by the
Managing General Partners ("Partnership Form(s)"); (b) execution by the assignee
of the Partnership Form(s); which include (i) the assignee's written acceptance
and adoption of all the terms and provisions of the Certificate and Agreement,
as the same may have been
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amended, and (ii) if the assignee is a prospective Substituted Limited Partner,
the execution of a power of attorney granting the powers specified in Sections
12.3 and 12.6 hereof; (c) the Partnership Form(s), executed by both the assignor
and assignee, shall be presented to the transfer agent for the Partnership
together with a guarantee issued by a commercial bank or trust company or by a
member firm of a domestic securities exchange with respect to the genuineness
of the signatures of the assignor and assignee; and (d) the recordation of an
amendment to the Certificate and Agreement as required by the Partnership Act.
For purposes of the allocation of Partnership income, gains, losses,
deductions and credits pursuant to Section 5.1 hereof, a Substituted Limited
Partner's allocation shall be computed by using the same formula applicable to
the assignor of such Partnership interest; provided that if the Substituted
Limited Partner acquired less than all of the assignor's Partnership interest,
such allocation will be in proportion to the percentage of the assignor's full
interest so acquired and the allocation formula will be adjusted accordingly.
The amount so allocated to the Substituted Limited Partner shall be subject to
the effect of any basis adjustment resulting from an election, if made, by the
Partnership under Section 754 of the Code.
9.6 Admission of Additional Limited Partners. The Partnership may offer new
shares at net asset value, as determined at the date of exchange. The Managing
General Partners may admit a purchaser of such shares as a Limited Partner,
upon (i) the execution and acknowledgement by such purchaser of such instrument
or instruments as the Managing General Partners may deem necessary or
desirable to effectuate such admission, (ii) the purchaser's written acceptance
and adoption of all the terms and provisions of this Certificate and Agreement,
as the same may have been amended, and (iii) such purchaser paying or
obligating himself to pay, as the Managing General Partners may determine, all
reasonable expenses connected with such admission. In no event shall the
consent of any of the Limited Partners be required to effectuate such admission.
9.7 Death of a Limited Partner. The death of a Limited Partner shall not
dissolve or terminate the Partnership. In the event of such death, the
personal representative of the deceased Limited Partner shall have all the
rights of the Limited Partner in the Partnership to the extent of the deceased's
interest therein for the purpose of settling his estate, including the right
to assign his Shares and to designate his assignee as a Substituted Limited
Partner, subject to the terms and conditions of this Certificate and
Agreement; and his estate shall be liable for all his liabilities as a Limited
Partner.
9.8 Representations. The General Partners shall require each Limited
Partner to represent that, unless otherwise disclosed in writing to the
Partnership, on the date of the Limited Partner's execution hereof:
(a) my securities which he has contributed are not subject to any
restriction on transferability, including but not limited to any
restriction pursuant to any State or Federal Securities Act or regulation
thereunder as to registration or other condition; and
(b) he has unencumbered ownership of any property contributed to the
Partnership.
9.9 Notice of Change. Each of the undersigned Limited Partners agrees to
notify the Partnership immediately if either of the representations in Section
9.8 should become untrue.
9.10 Information on Securities. Each prospective Limited Partner who
contributes securities to the Partnership shall furnish to the Partnership,
prior to the date of any such contribution, information
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satisfactory to the Central Partners as to his date of acquisition and his
adjusted basis for Federal income tax purposes and shall represent and warrant
the accuracy of such information.
ARTICLE 10
WITHDRAWAL OF PARTNERS AN RETURN OF CONTRIBUTIONS
10.1 Redemption of Shares of Partnership Interest and Return of
Contributions. A Limited Partner or, except as provided in Sections 4.1 and 8.2
hereof, a General Partner may redeem all or part of his Shares at any time by
delivering to the Partnership or its designated agent notice of such redemption
executed by the Partner(s) owning such Shares as their names appear on the
Certificate and Agreement, as amended, stating the number of Shares or dollar
amount to be redeemed, and any Share certificates. The signature of such General
or Limited Partner shall be guaranteed by a commercial bank or trust company or
by a member firm of a domestic securities exchange. As an alternative to
delivery to the Partnership or its designated agent, a Partner redeeming may
deliver such notice to any authorized investment dealer, which delivery will be
complete when the Partnership's designated agent, initially American General
Capital Distributors, Inc., Houston, Texas, receives telephone or wire
confirmation of (i) receipt of such notice and the information contained
therein, and (ii) guarantee by such firm of ,delivery of such notice to the
Partnership.
The Partner shall be entitled to payment of the net asset value of his
Shares next computed after such delivery. Such payment may include the return
of the Partner's contribution to the Partnership with respect to the Shares
to be redeemed. A Partner redeeming Shares may, at the sole election of the
Partnership, be tendered as total or partial payment in redemption, any
securities then in the Partnership portfolio (which may include, in whole or in
part, securities of the same company as originally contributed) with a value
together with any cash paid, equal to the net asset value of the Shares redeemed
at such redemption date. The Managing General Partners shall establish
procedures to determine the amount of cash and/or securities to be distributed
to such withdrawing Partner, which procedures may be changed or modified from
time to time in the sole descretion of the Managing General Partners.
The Partnership may suspend redemption during any period when trading on
the New York Stock Exchange is restricted or such Exchange is closed (other than
weekends or holidays) or the Securities and Exchange Commission has by order
permitted such suspension or an emergency exists making disposal of securities
or determination of the net asset value of the Partnership not reasonably
practicable.
Notwithstanding the foregoing, no Partner shall be entitled to receive the
return of any part of the contribution with respect to his Shares unless all
liabilities of the Partnership, except liabilities to General Partners and
to Limited Partners on account of their contributions, have been paid or there
remains property of the Partnership sufficient to pay them.
The Managing General Partners shall cause this Certificate and Agreement to
be amended to reflect the withdrawal of any Partner or the return, in whole or
in part, of the contribution of any Partner.
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10.2 Partial Returns of Contributions. Except upon redemption of a Share or
dissolution of the Partnership, no holder has the right to demand return of any
part of the contribution with respect to his Shares. The Managing General
Partners may, however, from time to time, elect to make partial pro rata returns
of contributions to holders provided that:
(a) an liabilities of the Partnership to persons other than Partners
have been paid, or in good faith determination of the Managing General
Partners, there remains property of the Partnership sufficient to pay them;
and
(b) the Managing General Partners cause this Certificate and Agreement
to be amended to reflect a reduction in contributions.
Each Limited Partner, by becoming a Limited Partner, consents to any such pro
rata distribution theretofor or thereafter made in accordance with such
provisions. Each General Partner, by becoming a General Partner, consents to any
such pro rata distribution theretofore or thereafter made, authorized in
accordance with Section 8.4.
10.3 Removal of Investment Advisor. The first investment advisor for the
Partnership ("Manager") will manage the Partnership's portfolio securities
pursuant to an agreement which includes a provision permitting its termination
without penalty by either party on 60 days' written notice. If Manager or an
affiliate is removed or otherwise ceases to act as the Partnership's investment
advisor, while acting as a Non-Managing General Partner, such Non-Managing
General Partner(s) shall have the right to withdraw from the Partnership and to
receive the full amount of the capital contributed with respect to its Shares;
provided, however, that neither the Non-Managing General Partners's withdrawal
from the Partnership nor the return of its capital contribution may be effective
until the earlier of: (a) 24 months from the notice of such withdrawal, or (b)
the date a successor corporate General Partner is elected.
ARTICLE 11
DISTRIBUTION ON DISSOLUTION
11.1 Winding up. Upon the dissolution and termination of the Partnership,
the Managing General Partners or trustee, if one is appointed, shall proceed to
wind up the affairs of the Partnership and to liquidate. The Partners shall
continue to share profits and losses during liquidation in the same manner as
before dissolution. The proceeds from such liquidation of the Partnership assets
shall be applied and distributed in the following order of priority:
(a) To the payment of debts and liabilities of the Partnership (other
than any loans or advances which may have been made by any of the Partners
to the Partnership) and the expenses of liquidation.
(b) To the setting up of any reserve which the Managing General
Partners or trustee may deem reasonably necessary for any contingent or
unforeseen liabilities or obligations of the Partnership arising out of or
in connection with the Partnership. Such reserve shall be paid over by the
Managing General Partners or trustee to a commercial bank or trust company
to act as escrow agent or to such other person as may be authorized for
such purpose by the 1940 Act. Any such escrow agent shall hold such
reserves for payment of any of the aforementioned contingencies, and,
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at the expiration of such period as the Managing General Partners or trustee
designate, to distribute the balance thereafter remaining in the manner
hereinafter provided.
(c) To the repayment of any loans or advances that may have been made
by any of the Partners to the Partnership, but if the amount available for
such repayment shall be insufficient, then pro rata on account thereof.
(d) Distribution of the remainder pro rata among the General and
Limited Partners in proportion to the number of Shares of the Partnership
held by each.
11.2 Accountants' Statement. Each of the Partners shall be furnished with a
statement prepared by the Partnership's independent certified public accountants
which shall set forth the assets and liabilities of the Partnership as at the
date of complete liquidation. When the Managing General Partners have complied
with the foregoing distribution plan (including payment over to the escrow
agent), the Limited Partners shall cease to be such, and the Managing General
Partners shall execute, acknowledge, and cause to be filed a Certificate of
Cancellation of the Partnership.
11.3 Gains or Losses in Process of Liquidation. Any gain or loss in
disposition of Partnership properties in the process of liquidation shall be
credited or charged among the outstanding Shares of Partnership interest in the
proportion that a Partner's Shares (including, fractional Shares) bears to the
total number of Shares of Partnership interest outstanding.
ARTICLE 12
FUND DOCUMENTATION; AMENDMENT OF CERTIFICATE
AND AGREEMENT; POWER OF ATTORNEY
12.1 Certificate and Agreement and Other Documentation. This Certificate
and Agreement shall constitute a Certificate of Limited Partnership within the
meaning of the Partnership Act, and the General Partners shall promptly cause
it to be filed and recorded in accordance with the Partnership Act in the
County of Los Angeles, State of California, the location of the Partnership's
principal office, and to the extent required by local law, in the appropriate
place in each state in which the Partnership may hereafter establish a place of
business. The Managing General Partners shall also promptly cause to be filed,
recorded and published such Statements of Fictitious Business Name and other
notices, certificates, statements or other instruments required by a provision
of any applicable law of the United States or any state or other jurisdiction
which governs the formation of the Partnership or the conduct of its business
from time to time.
12.2 Events Requiring Amendment of Certificate and Agreement. This
Certificate and Agreement shall be promptly amended, as hereafter provided,
upon the occurrence of any of the following events:
(a) there is a change in the name of the Partnership or in the amount
or character of the contribution of any Limited Partner;
(b) a person is substituted as a Limited Partner;
(c) an additional Limited Partner is admitted;
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(d) a Limited Partner Withdraws;
(e) a Person is admitted as a General Partner;
(f) a General Partner retires, dies, becomes insane, is removed or
fails to be reelected and the business is continued as permitted by Section
8.9;
(g) there is a change in the character of the business of the
Partnership;
(h) there is a false or erroneous statement in this Certificate and
Agreement;
(i) there is a change in the time as stated in this Certificate and
Agreement for the dissolution of the Partnership or for the return of a
contribution; or
(j) the Partners desire to make a change in any other statement in
this Certificate and Agreement in order that it shall accurately represent
the agreement among them.
12.3 Power of Attorney. With respect to this Partnership or any successor
thereto, each of the Limited Partners hereby makes, constitutes and appoints the
initial Managing General Partners of the Partnership listed In Schedule "A" to
this Certificate and Agreement and any of them and each person who shall
hereafter become a Managing General Partner, and additionally appoints the
transfer agent and any successor transfer agent employed by the Partnership
solely with respect to the matters specified herein, with full power of
substitution, the true and lawful attorney of, and in the name, place and stead
of such Limited Partner, with the power from time to time to execute,
acknowledge, make, swear to, verify, deliver, record, file and/or publish: (a) a
Certificate and Agreement of Limited Partnership or counterpart thereof under
the laws of the State of California or any other jurisdiction, any amendment to
any such Certificate and Agreement of Limited Partnership (including, but not
limited to, amendments reflecting the withdrawal of any Partner or the return,
in whole or in part, of the contribution of any Partner or amendments reflecting
the addition or substitution of Limited Partners), or any other document
required from time to time to admit such Limited Partner, to effect his
substitution as a Limited Partner, or to effect the substitution of the Limited
Partner's assignee as a Limited Partner as to any or all Shares of Limited
Partnership interest of the Limited Partner; (b) any amendment to the
Certificate and Agreement of Limited Partnership or counterpart thereof or any
other document required to reflect any action of the Partners provided for in
the Certificate and Agreement of Limited Partnership whether or not such
Limited Partner voted in favor of or otherwise consented to such action; and (c)
any other instrument, certificate or document as may be required by any
regulatory agency, the laws of the United States, any state or any other
jurisdiction in which the Partnership is doing or intends to do business or
which the Managing General Partners deem advisable to file or record, provided
such instrument, certificate or document is in accordance with the terms of the
Certificate and Agreement as then in effect.
Each of the General Partners hereby makes, constitutes and appoints the
initial Managing General Partners of the Partnership listed in Schedule "A" to
this certificate and Agreement and any of them and each person who shall
hereafter become a Managing General Partner, and additionally appoints the
transfer agent and any successor transfer agent employed by the Partnership
solely with respect to the matters specified herein, with full power of
substitution, the true and lawful attorney of, and in the name, place and stead
of such General Partner, with the powers from time to time to execute,
acknowledge, make, swear to, verify, deliver, record, file and/or publish the
documents specified or contemplated by subparts (a), (b) and (c) of the
preceding paragraph.
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Each of the Limited Partners is aware that the terms of the Certificate
and Agreement permit certain amendments of the Certificate and Agreement to be
effected and certain other actions to be taken or omitted by or with respect to
the Partnership, in each case with the approval of less than all the Limited.
Partners, provided that a specified percentage of the Partners shall have voted
in favor of or otherwise consented to such action. Such actions include, without
limitation, admission of new General Partners duly elected at meetings of the
Partners. In the event (i) an amendment of the Certificate and Agreement is
proposed or an action is proposed to be taken or omitted by or with respect to
the Partnership which requires, under the terms of the Certificate and
Agreement, the approval of a specified percentage in interest (but less than
all) of the Partners, (ii) Partners holding the percentage of Partnership
interests in the Partnership specified in the Partnership Certificate and
Agreement as being required for such amendment or action have approved such
amendment or action in the manner contemplated by the Certificate and Agreement,
and (iii) a Limited Partner has failed or refused to approve such amendment or
action (hereinafter referred to as a non-consenting Limited Partner), each
non-consenting Limited Partner agrees that each special attorney specified
above, with full power of substitution, is hereby authorized and powered to
execute, acknowledge, make, swear to, verify, deliver, record, file and/or
publish for and in behalf of such non-consenting Limited Partner, and in his
name, place and stead, any and all instruments and documents which may be
necessary or appropriate to permit such amendment to be lawfully made or action
lawfully taken or omitted. Each consenting and non-consenting Limited Partner is
fully aware that he and each other Limited Partner have executed this special
power of attorney, and that each Limited Partner will rely on the effectiveness
of such powers with a view to the orderly administration of the Partnership's
affairs.
The foregoing grant of authority (i) is a Special Power of Attorney coupled
with an interest and as such shall be irrevocable and shall survive the death or
insanity (or, in the case of a Limited Partner that is a corporation,
association, partnership, joint venture or trust, shall survive the merger
dissolution or other termination of the existence) of the Limited Partner, (ii)
may be exercised for the Limited Partner by a facsimile signature of any
Managing General Partner of the Partnership or by listing all of the Limited
Partners, including such Limited Partner, and executing any instrument with a
single signature of any Managing General Partner acting as attorney-in-fact for
all of them, (iii) shall survive the assignment by the Limited Partner of the
whole or any portion of his interest for any purpose until the substitution is
effective, except that where the assignee of the whole thereof has furnished a
Power of Attorney and has been approved by the Managing General Partners for
admission to the Partnership as a Substituted Limited Partner, this Power of
Attorney shall survive such assignment for the sole purpose of enabling a
Managing General Partner to execute, acknowledge and file any instrument
necessary to effect such substitution and shall thereafter terminate; and (iv)
shall survive the redemption by the Limited Partner of the whole or any portion
of his interest as provided in Section 10.1 hereof provided that where all of
such Limited Partner's interest is so redeemed, the power of attorney shall
survive such redemption for the sole purpose of enabling a Managing General
Partner to execute, acknowledge and file any instrument necessary to effect the
deletion of such person as a Limited Partner.
12.4 Power of Attorney by Substituted or Additional Limited Partners. Under
Section 9.5 hereof, an assignee of a Limited Partner shall be required to
execute a similar power of attorney as that set forth in Section 12.3 hereof as
a condition of his admission as a Substituted Limited Partner, and the Managing
General Partners shall require an additional Limited Partner to execute a
similar power of attorney as a condition of his admission.
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12.5 Amendments Requiring Signature by Less than All Limited Partners. Any
amendment to this Certificate and Agreement substituting a Limited Partner or
adding a General Partner may be signed by any Managing General Partner and by
the person to be substituted as a Limited Partner or added as a General Partner,
and shall also be signed by the assigning Limited Partner, in the case of a
substitution. Any amendment reflecting the determination of the remaining
Managing General Partners to continue the business of the Partnership upon the
retirement, death or insanity of a Managing General Partner need be signed by
only one Managing General Partner. The execution of any such amendment on
behalf of a Limited Partner or any proposed substituted Limited Partner may be
effected by this attorney-in-fact.
ARTICLE 13
MISCELLANEOUS MATTERS
13.1 Independent Activities. Each Partner reserves the right to conduct
activities similar to those conducted by the Partnership, including buying or
selling securities for his own account or for others.
13.2 Interested Partners. Subject to the provisions of Section 10 of the
1940 Act, the fact that a General Partner or one or more of the Limited
Partners is directly or indirectly interested in or connected with any company
or person with which or with whom the Partnership may have dealings, including
but not limited to the payment of brokerage commissions and other expenses,
shall not preclude such dealings or make them void or voidable, and the
Partnership or any of the Partners shall not have any rights in or to such
dealings or any profits derived therefrom.
13.3 Tax Election.
(a) No election shall be made by any Partner to be excluded from the
application of the provisions of Subchapter K of the Code, or from any
similar provisions of state tax laws, and no such election shall be made by
the Partnership.
(b) In the event of the transfer of a Partners interest, or the death
of a Partner, or the distribution by redemption or otherwise of any
Partnership property to any Partner, the Managing General Partners, on
behalf of the Partnership, may, at their option, file an election, in
accordance with applicable Treasury Regulations, to cause the basis of the
Partnership's property to be adjusted for Federal income tax purposes as
provided in Sections 734, 743 and 754 of the Code, as than in effect.
13.4 Reimbursement and Indemnification. Managing General Partners will be
reimbursed by the Partnership for all reasonable out-of-pocket expenses incurred
in organizing the Partnership and in
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performing their duties hereunder. The Partnership shall indemnify each General
Partner (including officers and/or directors of a corporate General Partner and
including former General Partners who have not ceased to be liable as General
Partners under the Partnership Act) against judgments, fines, amounts paid in
settlement, and expenses (including attorneys' fees) reasonably incurred by him
in any civil, criminal or investigative proceeding in which be is involved or
threatened to be involved by reason of his being a General Partner of the
Partnership, provided that he acted in good faith, within what he reasonably
believed to be the scope of his authority, and for a purpose which he reasonably
believed to be within the scope of his authority, and for a purpose which he
reasonably believed to be in the best interests of the Partnership or the
Limited Partners. To the extent that a General Partner has been successful on
the merits or otherwise in defense of any such proceeding or in defense of any
claim or matter therein, he shall be deemed to have acted in good faith and in a
manner he believed to be in the best interests of the Partnership or the Limited
Partners. The determination under any other circumstances as to whether a
General Partner acted in good faith, within what he reasonably believed to be
the scope of his authority, and for a purpose which he reasonably believed to be
in the best interests of the Partnership or the Limited Partners, shall be made
by action of the General Partners who were not parties to such proceedings, or
by independent legal counsel selected by the General Partners (who may be the
regular counsel for the Partnership) in a written opinion. No General Partner
shall be indemnified under this provision against any liability to the
Partnership or its Partners 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. The indemnification provided
hereunder shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any applicable statute, agreement, vote of the
General Partners or Limited Partners, or otherwise.
13.5 Insurance. The General Partners shall procure and maintain insurance
on the Partnership assets and concerning the Partnership's activities
(including actions taken by the General Partners) in an amount and covering
such risks as may be appropriate in the judgment of the Managing, General
Partners, including without limitation insurance against any loss which the
Partnership may have incurred as a result of an unauthorized act of a General
Partner which was not ratified by the Limited Partners pursuant to the
Partnership Act.
13.6 Custodian. All assets of the Partnership shall be held by a Custodian
meeting the requirements of the 1940 Act, and may be registered in the name of
the Partnership or such Custodian or its qualified nominee. The terms of such
Custodian Agreement shall be determined by the Managing General Partners, which
terms shall be in accordance with the provisions of the 1940 Act. Upon the
resignation or inability of the Custodian to serve, the Managing General
Partners shall: (a) use their best efforts to obtain a qualified successor, and
(b) require the cash and securities of the Partnership held by such Custodian to
be delivered directly to the successor. In the event that no qualified
successor can be found, the Managing General Partners shall, before permitting
delivery of such cash and securities to anyone other than a qualified successor,
call a special meeting of the Partnership for the purpose of determining an
acceptable custodian arrangement. Upon such resignation of inability to serve,
such Custodian shall deliver any assets of the Partnership held by it to a
qualified bank or trust company selected by it, such assets to be held subject
to the terms of the agreement which governed such retiring Custodian, pending
action by the Partnership as set forth in this Section. Nothing herein
contained, however, shall prevent the termination of any agreement between the
Partnership and any such Custodian by the Partnership at the discretion of the
Managing General Partners.
A-23
<PAGE> 28
13.7 Notices. All notices required or permitted to be given under this
Certificate and Agreement shall be in writing and shall be given to the parties
at the addresses set forth in Schedule "A" to this Certificate and Agreement
and to the Partnership at its principal office, or at such other address as any
of the parties may hereafter specify in writing to the Partnership.
13.8 Captions. Paragraph titles or captions contained in this Certificate
and Agreement are inserted only as a matter of convenience and for reference and
in no way define, limit, extend or describe the scope of this Certificate and
Agreement or the intent of any provision hereof.
13.9 Variations in Pronouns. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine, singular or plural, as the
identity of the person or persons may require.
13.10 Certificate and Agreement in Counterparts. This Certificate and
Agreement may be executed in several counterparts, and as so executed, shall
constitute one Certificate and Agreement, binding on all of the parties hereto,
notwithstanding that all of the parties are not signatory to the original or the
same counterpart.
13.11 Benefit. Except as herein otherwise provided to the contrary, this
Certificate and Agreement shall be binding upon and inure to the benefit of the
parties signatory hereto, and their respective heirs executors, guardians,
representatives, successors and assigns.
13.12 Nonrecourse Creditors. No creditor who makes a nonrecourse loan to
the Partnership will have or acquire at any time, as a result of making the
loan, any direct or indirect interest in the Partnership other than as a
secured creditor.
13.13 Agent for Service of Process. The Managing General Partners shall
take whatever action is necessary to designate an agent at the Partnership's
office in California or such other persons in other jurisdictions as required by
law upon whom service of process upon the Partnership may lawfully be made.
13.14 Principles of Construction; Severability. This Certificate and
Agreement shall be construed to the maximum extent possible to comply with all
of the terms and conditions of the 1940 Act and the Partnership Act. Unless the
Context otherwise requires, the terms utilized herein shall have the respective
meanings attributable thereto under such Acts. If, nevertheless, it shall be
determined by a court of competent jurisdiction that any provision or wording of
this Certificate and Agreement shall be invalid or unenforceable under the 1940
Act, the Partnership Act or other applicable law, such invalidity, or
unenforceability shall not invalidate the entire Certificate and Agreement. In
that case, the Certificate and Agreement shall be construed so as to limit any
term or provision so as to make it enforceable or valid within the requirements
of such law, and in the event such term or provision cannot be so limited, this
Certificate and Agreement shall be construed to omit such invalid or
unenforceable provision.
13.15 California Law. It is the intention of the parties that the internal
laws of the State of California shall govern the validity of this Certificate
and Agreement, the construction of its terms and the interpretation of the
rights and duties of the parties.
13.16 Integrated Agreement. This Certificate and Agreement constitutes the
entire understanding and agreement among the parties hereto with respect to the
subject matter hereof, and there are no agreements, understandings,
restrictions, representations or warranties among the parties other than those
set forth herein.
A-24
<PAGE> 1
EXHIBIT (a)(4)
[CALIFORNIA SEAL] STATE OF CALIFORNIA
SECRETARY OF STATE
BILL JONES
<TABLE>
<S><C>
FILED
In the office of the Secretary of State
AMENDMENT TO CERTIFICATE OF LIMITED PARTNERSHIP of the State of California
A $30.00 FILING FEE MUST ACCOMPANY THIS FORM. FEB 17, 1999
IMPORTANT - READ INSTRUCTIONS BEFORE COMPLETING THIS FORM.
/s/ Bill Jones
BILL JONES, SECRETARY OF STATE
This Space For Filing Use Only
- --------------------------------------------------------------------------------------------------------------------------
1. SECRETARY OF STATE FILE NUMBER 2. NAME OF LIMITED PARTNERSHIP
9502500015 VAN KAMPEN AMERICAN CAPITAL EXCHANGE FUND, A CALIFORNIA LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------------------------------------------------
3. COMPLETE ONLY THE BOXES WHERE INFORMATION IS BEING CHANGED, ADDITIONAL PAGES MAY BE ATTACHED, IF NECESSARY.
- ---------------------------------------------------------------------------------------------------------------------------
A. LIMITED PARTNERSHIP NAME (END THE NAME WITH THE WORDS "LIMITED PARTNERSHIP" OR THE ABBREVIATION "LP"
VAN KAMPEN EXCHANGE FUND, A CALIFORNIA LIMITED PARTNERSHIP. (EFFECTIVE AS OF DECEMBER 9, 1998)
- ---------------------------------------------------------------------------------------------------------------------------
B. THE STREET ADDRESS OF THE PRINCIPAL OFFICE
ADDRESS
CITY STATE ZIP CODE
- ---------------------------------------------------------------------------------------------------------------------------
C. THE STREET ADDRESS IN CALIFORNIA WHERE RECORDS ARE KEPT
STREET ADDRESS
CITY STATE CA ZIP CODE
- ---------------------------------------------------------------------------------------------------------------------------
D. THE ADDRESS OF GENERAL PARTNER(S)
NAME
ADDRESS
CITY STATE ZIP CODE
- ---------------------------------------------------------------------------------------------------------------------------
E. NAME CHANGE OF A GENERAL PARTNER FROM: TO:
- ---------------------------------------------------------------------------------------------------------------------------
F. GENERAL PARTNER(S) CESSATION Don G. Powell (effective as of January 2, 1998)
- ---------------------------------------------------------------------------------------------------------------------------
G. GENERAL PARTNERSHIP ADDED
NAME Don G. Powell
ADDRESS 3 Wexford Court
CITY Houston STATE Texas ZIP CODE 77024
- ---------------------------------------------------------------------------------------------------------------------------
H. THE PERSON(S) AUTHORIZED TO WIND UP AFFAIRS OF THE LIMITED PARTNERSHIP
NAME
ADDRESS
CITY STATE ZIP CODE
- ---------------------------------------------------------------------------------------------------------------------------
I. THE NAME OF THE AGENT FOR SERVICE OF PROCESS
- ---------------------------------------------------------------------------------------------------------------------------
J. IF AN INDIVIDUAL CALIFORNIA ADDRESS OF THE AGENT FOR SERVICE OF PROCESS
ADDRESS
CITY STATE CA ZIP CODE
- ---------------------------------------------------------------------------------------------------------------------------
K. NUMBER OF GENERAL PARTNERS' SIGNATURES REQUIRED FOR FILING CERTIFICATES OF AMENDMENT, RESTATEMENT, MERGER,
DISSOLUTION, CONTINUATION AND CANCELLATION. | 9 |
- ---------------------------------------------------------------------------------------------------------------------------
L. OTHER MATTERS (ATTACH ADDITIONAL PAGES, IF NECESSARY).
- ---------------------------------------------------------------------------------------------------------------------------
4. TOTAL NUMBER OF PAGES ATTACHED (IF ANY) 7
- ---------------------------------------------------------------------------------------------------------------------------
5. I CERTIFY THAT THE STATEMENTS CONTAINED IN THIS DOCUMENT ARE TRUE AND CORRECT TO MY OWN KNOWLEDGE. I DECLARE THAT I AM
THE PERSON WHO IS EXECUTING THIS INSTRUMENT, WHICH EXECUTION IS MY ACT AND DEED.
/s/ Don G. Powell Managing General Partner /s/ Don G. Powell 12/21/98
--------------------------------------------------- --------------------------------------------------------
SIGNATURE POSITION OR TITLE PRINT NAME DATE
/s/ Dennis J. McDonnell Managing General Partner /s/ Dennis J. McDonnell 12/21/98
--------------------------------------------------- --------------------------------------------------------
SIGNATURE POSITION OR TITLE PRINT NAME DATE
- ---------------------------------------------------------------------------------------------------------------------------
SECSTATE (REV. 10/98) FORM
Approved by Secretary of State
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
AMENDMENT TO CERTIFICATE OF LIMITED PARTNERSHIP
VAN KAMPEN AMERICAN CAPITAL EXCHANGE FUND,
A CALIFORNIA LIMITED PARTNERSHIP
--------------------------------
ITEM 5 (CONTINUED):
<TABLE>
<S> <C> <C> <C>
/s/ Dr. Steven Muller Managing General Partner Dr. Steven Muller 12/21/98
- --------------------------------------------------- -----------------------------
SIGNATURE POSITION OR TITLE PRINT NAME DATE
/s/ Howard J Kerr Managing General Partner Howard J Kerr
- --------------------------------------------------- -----------------------------
SIGNATURE POSITION OR TITLE PRINT NAME DATE
/s/ David C. Arch Managing General Partner David C. Arch
- --------------------------------------------------- -----------------------------
SIGNATURE POSITION OR TITLE PRINT NAME DATE
/s/ Wayne W. Whalen Managing General Partner Wayne W. Whalen
- --------------------------------------------------- -----------------------------
SIGNATURE POSITION OR TITLE PRINT NAME DATE
/s/ Rod Dammeyer Managing General Partner Rod Dammeyer
- --------------------------------------------------- -----------------------------
SIGNATURE POSITION OR TITLE PRINT NAME DATE
/s/ Theodore A. Myers Managing General Partner Theodore A. Myers
- --------------------------------------------------- -----------------------------
SIGNATURE POSITION OR TITLE PRINT NAME DATE
/s/ Hugo Sonnenschein Managing General Partner Hugo Sonnenschein
- --------------------------------------------------- -----------------------------
SIGNATURE POSITION OR TITLE PRINT NAME DATE
</TABLE>
<PAGE> 3
[STATE OF CALIFORNIA SEAL]
SECRETARY OF STATE
[OFFICE OF THE SECRETARY OF STATE SEAL]
I, BILL JONES, Secretary of State of the State of California, hereby
certify:
That the attached transcript of 8 page(s) was prepared by and in this
office from the record on file, of which it purports to be a copy, and that it
is full, true and correct.
IN WITNESS WHEREOF, I execute this
certificate and affix the Great Seal
of the State of California this day of
MAR-5 1999
----------------------------------------
Bill Jones
[THE GREAT SEAL OF THE STATE OF Secretary of State
CALIFORNIA SEAL]
<PAGE> 1
EXHIBIT (b)
BY-LAWS
OF
AMERICAN GENERAL EXCHANGE FUND
a California Limited Partnership
ARTICLE I
MANAGING GENERAL PARTNERS
Section 1. Election and Tenure of Office.
Managing General Partners shall be elected, by ballot, at the
Annual Meeting of the Partnership, to serve for one year or until their
successors are elected and have qualified. Their term of office shall begin
immediately after election. If the Annual Meeting is not held, or the Managing
General Partners are not elected at any Annual Meeting, they may be elected at
any Special Meeting of the Partnership held for that purpose.
Section 2. Regular Meetings.
Regular Meetings of the Managing General Partners shall be held at
least quarterly, at such time and on such notice, if any, as the Managing
General Partners may from time to time determine. At such meetings, the Managing
General Partners shall exercise their powers with respect to the management,
conduct and operation of the Partnership's business; provided, however, that all
such actions shall require the majority vote of the Managing General Partners
then in office. Without limiting the foregoing, the Managing General Partners
shall, at the regular meetings: (a) ratify the actions taken by the transfer
agent employed by the Partnership pursuant to the power of attorney given it in
the Certificate and Agreement of Limited Partnership and all amendments thereto,
or take such remedial action as may be appropriate for any action of the
Partnership's transfer agent which is not ratified; and (b) take such action as
may be required for the admission of additional limited partners, if any.
<PAGE> 2
Section 3. Special Meetings.
Special Meetings of the Managing General Partners for any purpose
or purposes may be called at any time by the Managing General Partner appointed
to be Chairman by the other Managing General Partners, or by any two Managing
General Partners. The Chairman shall preside at all Meetings of Partners.
Notice of the time and place of Special Meetings may be oral,
telegraphic, or written, and shall be duly served on or sent or mailed to each
Managing General Partner not less than one day before such Meeting. No notice
need be given to any Managing General Partner who attends in person, or to any
Managing General Partner who, in writing, executed and filed with the records of
the Meeting either before or after the holding thereof, waives such notice. Such
notice or waiver of notice need not state the purpose or purposes of such
Meeting.
All actions taken at a Special Meeting of the Managing General
Partners shall require the majority vote of the Managing General Partners then
in office.
Section 4. Acting Without a Meeting by Unanimous Consent.
Any action required or permitted to be taken by the Managing
General Partners may be taken without a Meeting, and with the same force and
effect as if taken by the unanimous vote of the Managing General Partners, if
authorized by a writing signed by all of the Managing General Partners.
Section 5. Quorum.
A majority of the Managing General Partners then in office shall
constitute a quorum for the transaction of business. If at any Meeting of the
Managing General Partners there shall be less than a quorum present, a majority
of those present may adjourn the Meeting from time to time until a quorum shall
have been obtained. At any meeting of the Managing General Partners at which
there is a quorum, no act shall constitute the act of the Managing General
Partners unless such act has been approved by the majority vote of the Managing
General Partners then in office.
-2-
<PAGE> 3
Section 6. Compensation of Managing General Partners
No Managing General Partner shall receive any stated salary or
fees from the Partnership for his services as such Managing General Partner if
such Partner is, otherwise then by reason of being such Partner, affiliated (as
such term is defined in the Investment Company Act of 1940) with the Partnership
or with any investment advisor of the Partnership. Except as provided in the
preceding sentence, Managing General Partners shall be entitled to receive such
compensation from the Partnership for their services as may from time to time be
voted by the Managing General Partners.
ARTICLE II
CERTIFICATES FOR SHARES OF
PARTNERSHIP INTEREST
Section 1. Certificates for Shares.
Each Partner of the Partnership shall be entitled to a Certificate
or Certificates representing the units of Partnership interest of the
Partnership owned by them in such form as the Managing General Partners may from
time to time prescribe.
Every Certificate for Shares shall bear the actual or facsimile signatures
of the Principal Executive Officer and the Secretary of the Partnership or an
assistant thereto. Before it becomes effective, every Certificate for Shares
authenticated by a facsimile signature must be countersigned by the transfer
agent or a transfer clerk employed by the Partnership.
Section 2. Transfer on the Books.
Upon surrender to the Partnership's transfer agent of proper
evidence of succession, assignment or authority to transfer units of Partnership
interest on such forms as shall be required pursuant to the Certificate and
Agreement of Limited Partnership, accompanied by any outstanding Certificate for
Shares affected thereby, duly endorsed and with such proof of authenticity of
signature as the Partnership or its agents may reasonably require, following
recordation of an appropriate amendment to the Certificate and Agreement of
Limited Partnership in California, the Partnership or its agents shall cancel
the old Certificate, record the transaction upon the Partnership's books
and, if requested by the person entitled thereto, issue a new Certificate for
Shares to such person.
-3-
<PAGE> 4
Section 3. Lost or Destroyed Certificates.
The Managing General Partners may determine the conditions upon
which a new Certificate representing an interest in the Partnership may be
issued in place of a Certificate which is alleged to have been lost, stolen, or
destroyed; and may, in their discretion, require the owner of such Certificate,
or his legal representative, to give a bond with sufficient surety to the
Partnership and its transfer agent, to indemnify it and such transfer agent
against any and all loss or claims which may arise by reason of the issue of a
new Certificate in the place of the one so lost, stolen or destroyed.
ARTICLE III
AUTHORIZED SIGNATORIES
Section 1. Designation of Persons to sign and deliver checks, instructions,
contracts and other documents on behalf of the Limited Partnership
Unless otherwise specified, agreements specifically approved by
the Managing General Partners shall be duly and validly executed when signed on
its behalf by the Principal Executive Officer, the Principal Financial and
Accounting Officer or any Vice President of the Limited Partnership, and
attested to by the Secretary, any Assistant Secretary or other Assistant Officer
of the Limited Partnership. Checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness, and instructions relating to
the deposit or withdrawal from the Custodian, or the purchase or acquisition or
sale or disposition of securities of the Limited Partnership shall be signed by
any two of the following (who shall not be the same person): the Principal
Executive Officer, the Principal Financial and Accounting Officer, the
Secretary, any Vice President or any other persons duly authorized by resolution
of the Managing General Partners. The Managing General Partners may, by
resolution, authorize additional signatories to act on behalf of the Limited
Partnership in particular or general situations.
-4-
<PAGE> 5
ARTICLE IV
PROHIBITED ACTIVITIES
Section 1. Self-Dealing.
No general partner of the Partnership (including officers and/or
directors of a corporate general partner), or officers or directors of the
Partnership's investment advisor, or any trustee of the Partnership, shall deal
for or on behalf of the Partnership with themselves, as principal or agent, or
with any corporation or partnership in which they have a financial interest;
provided, however, that:
(a) Such prohibition shall not prevent a general partner of the
Partnership (including officers and/or directors of a corporate general
partner) from having a financial interest in the Partnership or in a
sponsor or manager of the Partnership;
(b) Such prohibition shall not prevent the purchase of securities
for the portfolio of the Partnership or sale of securities owned by the
Partnership through a security dealer, one or more of whose partners,
officers or directors is a general partner of the Partnership
(including officers and/or directors of a corporate general partner),
provided such transactions are handled in the capacity of broker only,
and provided commissions charged do not exceed customary brokerage
charges for such service; and
(c) Such prohibition shall not prevent the employment of legal
counsel, registrar, transfer agent, dividend disbursing agent, or
custodian or trustee having a partner, officer or director who is a
general partner of the Partnership (including officers and/or directors
of a corporate general partner), provided only customary fees are
charged for services rendered to or for the benefit of the Partnership.
-5-
<PAGE> 6
Section 2. Securities Issued by the Partnership.
The general partners of the Partnership (including officers and/or
directors of a corporate general partner), the sponsor or manager of the
Partnership, if any, and the officers and directors of any such sponsor or
manager, shall not take long or short positions in the securities issued by the
Partnership; provided however, that:
(a) Such prohibition shall not prevent any sponsor from
purchasing from the Partnership units of Partnership interest issued by
the Partnership, provided that orders to purchase from the Partnership
are entered with the Partnership by the sponsor upon receipt by the
sponsor of purchase orders for the units of Partnership interest, and
provided such purchases are not in excess of purchase orders received
by the sponsor;
(b) Such prohibition shall not prevent the sponsor from
maintaining a market for the securities issued by the Partnership in
the capacity of agent for the Partnership;
(c) Such prohibition shall not prevent the purchase from the
Partnership of securities issued by the Partnership by the general
partners of the Partnership (including officers and/or directors of a
corporate general partner), or by the officers or directors of the
sponsor or manager of the Partnership, or by the trustees of the
Partnership, at the price available to the public at the moment of such
purchase, provided there is on file with the applicable regulatory
agency an undertaking by the Partnership that purchases will be
permitted for investment purposes only, and that any sale of securities
issued by the Partnership made by such persons less than two (2) months
after the date of purchase of any securities issued by the Partnership
will be immediately reported to the appropriate governmental agency;
and
(d) Such prohibition shall not prevent the purchase or retention
by the Partnership of securities of a company if such securities are
also owned by a General Partner of the Partnership or an officer or
director of the Partnership's investment advisor so long as such
purchase or retention does not violate Section 2.3(b) of the
Certificate and Agreement of Limited Partnership.
-6-
<PAGE> 7
Section 3. Management Contract.
The Partnership shall not operate under any management contract
which does not provide that such management contract cannot be amended,
transferred, assigned, sold or in any manner hypothecated or pledged without the
affirmative vote or written consent of the holders of a majority of the units of
Partnership interest. Furthermore, in the event of a cancellation or expiration
by its own terms of any management contract, no new management contract shall
become effective without the affirmative vote or written consent of the holders
of a majority of the units of Partnership interest.
ARTICLE V
OFFICERS
Section 1. Numbers, Titles and Term of Office. The officers of the
Partnership shall include a Chairman, a Principal Executive Officer, Principal
Financial and Accounting Officer and Secretary and such other and assistant
officers as the Managing General Partners may from time to time elect or
appoint. The Chairman and the Principal Executive Officer shall be chosen from
among the Managing General Partners. Each officer shall hold office until the
first meeting of Managing General Partners following the Annual Meeting of
Partners and until his successor is duly elected and shall qualify, unless he
sooner resigns, dies or is removed in the manner hereinafter provided.
Section 2. Removal. Any officer or agent elected or appointed by the
Managing General Partners may be removed at any time by the vote of a majority
of the Managing General Partners whenever in their judgment the best interests
of the Partnership will be served thereby.
Section 3. Meetings. The Chairman, or in his absence, the President or
another designated by the Meeting, shall preside at Meetings of Partners and of
Managing General Partners.
Section 4. Principal Executive Officer. In addition to the duties specified
elsewhere in these By-Laws and in resolutions from time to time adopted by the
Managing General Partners, the Principal Executive Officer shall, subject to the
Managing General Partners, have general executive charge, management and control
of the affairs and properties of the Partnership in the ordinary course of its
business with all such powers with respect to such affairs and properties as may
be reasonably incident to such responsibilities. Specifically, but without
limitation of the foregoing, he may agree upon and execute all division and
transfer orders, bonds, contracts and other obligations in the name of the
Partnership and shall have the powers and duties that generally pertain to the
president of a corporation.
-7-
<PAGE> 8
Section 5. Assistant Executive Officers. Assistant Executive Officers, in
the absence or inability to act of the Principal Executive Officer, are
authorized to perform all the powers of and are subject to all the restrictions
upon the Principal Executive Officer. Assistant Executive Officers shall
perform such other duties and have such other powers as may from time to time be
prescribed by the Managing General Partners.
Section 6. Principal Financial and Accounting Officer. The Principal
Financial and Accounting Officer shall have custody of the financial books and
records of the Partnership and shall be charged with maintaining the same as
required by law. When necessary or proper, he may endorse, on behalf of the
Partnership, for collection checks, notes and other obligations and shall
deposit the same to the credit of the Partnership in the bank or banks or
depositories having custody of the funds of the Partnership; he may sign all
receipts and vouchers for payments made to the Partnership, either alone or with
such other officer as is designated by the Managing General Partners. Whenever
required by the Managing General Partners, he shall render a statement of his
cash account; he shall enter or cause to be entered regularly in the books of
the Partnership to be kept by him for that purpose full and accurate accounts of
all monies, securities and other property received and disbursed on account of
the Partnership; he shall cause to be prepared each business day a statement of
the Partnership's assets and liabilities and of its net asset value per Share in
accordance with the methods set forth in the Partnership's Prospectus and
subject to such specific or general directives as the Managing General Partners
may, from time to time, adopt; and, without limitation of the foregoing, he
shall have the powers and duties that generally pertain to the office of
treasurer.
Section 7. Secretary. The Secretary shall keep the minutes of all Meetings
of Partners and Managing General Partners, in books provided for that purpose;
he shall attend to the giving and serving of all notices; he may sign with the
President in the name of the Partnership all contracts on its behalf and
certificates for units of limited partnership interest; he shall have charge of
the corporate legal records and such other books and papers as the Managing
General Partners may direct; and, without limitation of the foregoing, shall
have the powers and duties that generally pertain to such office.
Section 8. Assistant Officers. Assistant officers shall be empowered to act
in the absence or inability to act of the officers they assist, and shall
possess the powers and duties usually pertaining to their offices, as well as
such other powers and duties as may from time to time be specified by the
Managing General Partners.
Section 9. Vacancies. Upon a vacancy in office, it may be filled by vote of
a majority of Managing General Partners present at a Meeting at which a quorum
present or by unanimous consent of the Managing General Partners.
Section 10. Duality of Offices. Any two offices except those of Principal
Executive Officer and Secretary, and of an officer and assistant officer, may be
held by the some person.
-8-
<PAGE> 1
EXHIBIT (c)
NUMBER SHARES
- ---------- ----------
AMERICAN CAPITAL EXCHANGE FUND
A CALIFORNIA LIMITED PARTNERSHIP
FORMED UNDER THE LAWS OF THE STATE OF CALIFORNIA
THIS CERTIFIES that is the Record Holder of
*SEE REVERSE SIDE FOR CERTAIN DEFINITIONS
-----------------
CUSIP 024907 10 7
-----------------
Units of Limited Partnership Interest ("Shares") of
AMERICAN CAPITAL EXCHANGE FUND:
This Certificate is intended only as a receipt to evidence the payment of
full consideration for the Shares specified by the original Record Holder
thereof, and does not confer any rights or impose any obligations on said
Record Holder or any subsequent Record Holder of said Shares. The rights and
obligations of said Record Holder are governed exclusively by the laws to which
the Partnership is subject and by the Certificate and Agreement of Limited
Partnership, as restated and recorded on August 30, 1976, in Book M5449 Page
301 of Official Records, County of Los Angeles, State of California, as the
same may be further amended and restated from time to time.
Dated
Janet S. Middlebrook George F. Reed
Secretary Managing General Partner
<PAGE> 2
ASSIGNMENT
Effective upon acceptance by the Partnership and the Recordation of an
Amendment to the Certificate and Agreement of Limited Partnership, the
undersigned, for value received, hereby sell(s), assign(s), and transfer(s), to
,
Shares
of Partnership interest indicated on the reverse side of this Certificate; and
do(es) hereby irrevocably constitute and appoint Shareholders Investor Service
Corporation, or its successor, its attorney to transfer the said Shares on the
books of the within-named Limited Partnership, with full power of substitution.
Dated:_______________________________________________________, 19
________________________________________
________________________________________
Signatures Guaranteed
________________________________________
________________________________________
ACCEPTANCE OF ASSIGNMENT
[For Execution by Assignee(s)]
Subject to acceptance by the within-named Limited Partnership, the
undersigned hereby agrees to become a Limited Partner of the Partnership and
agrees to be bound by and accepts and adopts each and every provision of the
Restated Certificate and Agreement of Limited Partnership ("Partnership
Agreement") as fully as if an original Limited Partner thereunder. Without
limiting the foregoing, the undersigned hereby makes, constitutes and appoints
the Managing General Partners of the Partnership, and each person who shall
hereafter become a Managing General Partner, and additionally appoints the
transfer agent employed by the Partnership. Shareholders Investor Service
Corporation, and any successor transfer agent employed by the Partnership, the
Attorney-in-Fact of the undersigned, with respect to all matters and to the same
extent as set forth in Section 12.3 of the Partnership Agreement, the provisions
of which are incorporated herein as if fully set forth.
Dated:_______________________________________________________, 19
________________________________________
________________________________________
Signatures Guaranteed
________________________________________
________________________________________
INSTRUCTIONS FOR TRANSFER
I. ASSIGNORS(S).
A. Complete the above Assignment form by inserting: (1) the name of the
assignee and the number of Shares to transferred; and (2) the date of execution.
B. Sign the Assignment form where indicated and have the genuineness of
your signature(s) guaranteed by a commercial bank or trust company, or by a
member firm of a domestic securities exchange.
THE SIGNATURE(S) ON THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) ON THE FACE
OF THIS CERTIFICATE IN EVERY PARTICULAR AND WITHOUT ANY CHANGE.
II. ASSIGNEE(S).
Date and sign the above Acceptance of Assignment form and have your
signature(s) guaranteed by a commercial bank or trust company or by a member
firm of a domestic securities exchange.
III. MAIL TO TRANSFER AGENT.
After the above Assignment and Acceptance of Assignment forms have been
properly completed and executed, and all signatures have been guaranteed, the
Certificate should be sent by certified mail, return receipt requested to:
SHAREHOLDERS INVESTOR SERVICE CORPORATION
Post Office Box 24226
Los Angeles, California 90024
<PAGE> 1
EXHIBIT (j)
CONSENT OF INDEPENDENT AUDITORS
The Managing General Partners
Van Kampen Exchange Fund (A California Limited Partnership)
We consent to the use of our report included in the Statement of Additional
Information which is incorporated by reference into the Prospectus and to the
reference to our Firm under the heading "Investment Advisory and Other Services"
in the Statement of Additional Information.
/s/ KPMG LLP
Chicago, Illinois
April 19, 1999
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 11,384,138
<INVESTMENTS-AT-VALUE> 87,931,596
<RECEIVABLES> 81,145
<ASSETS-OTHER> 97,133
<OTHER-ITEMS-ASSETS> 6,155
<TOTAL-ASSETS> 88,116,029
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 199,297
<TOTAL-LIABILITIES> 199,297
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> (41,764,557)
<SHARES-COMMON-STOCK> 280,359
<SHARES-COMMON-PRIOR> 288,555
<ACCUMULATED-NII-CURRENT> 2,825,384
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 50,308,448
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 76,547,458
<NET-ASSETS> 87,916,732
<DIVIDEND-INCOME> 964,747
<INTEREST-INCOME> 194,093
<OTHER-INCOME> 0
<EXPENSES-NET> (585,283)
<NET-INVESTMENT-INCOME> 573,557
<REALIZED-GAINS-CURRENT> 2,475,843
<APPREC-INCREASE-CURRENT> 17,188,549
<NET-CHANGE-FROM-OPS> 20,237,949
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (366,286)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> (8,376)
<SHARES-REINVESTED> 180
<NET-CHANGE-IN-ASSETS> 17,642,739
<ACCUMULATED-NII-PRIOR> 2,618,113
<ACCUMULATED-GAINS-PRIOR> 47,832,605
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 392,398
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 585,283
<AVERAGE-NET-ASSETS> 78,591,689
<PER-SHARE-NAV-BEGIN> 243,538
<PER-SHARE-NII> 2,010
<PER-SHARE-GAIN-APPREC> 69,318
<PER-SHARE-DIVIDEND> (1,280)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 313,586
<EXPENSE-RATIO> 0.74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
