<PAGE>
FILE NO. 2-63910
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
------------------
POST-EFFECTIVE AMENDMENT
NUMBER 21
To
FORM S-1
Registration Statement
Under
The Securities Act of 1933
-----------------
ASSOCIATION FOR INVESTMENT
IN UNITED STATES GUARANTEED ASSETS, INC.
(Exact name of Registrant as specified in charter)
9 Old Kings Highway South, Darien, Connecticut 06820
(Address of principal executive office)
-----------------
WILLIAM C. GOW WILLIAM C. GOW
Association For Investment in United Gow Holdings, Inc.
States Guaranteed Assets, Inc. P.O Box 1601
P.O. Box 1601 Darien, CT 06820
Darien, CT 06820
(Names and Addresses of agents for service)
FILING: POST-EFFECTIVE AMENDMENT
-----------------
CALCULATION OF ADDITIONAL REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each Class Additional Amount Proposed Maximum Amount of
of Securities Being Being Registered Aggregate Offering Additional
Registration Price Fee
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Series 28 Face Amount
Certificates $5,805,845 $32,043,600 $1,614.02
================================================================================
</TABLE>
<PAGE>
REQUEST FOR ACCELERATION
The undersigned issuer hereby requests that the effect date of this
post-effective amendment to the registration statement be accelerated so that it
may be made effective July 15, 1999.
UNDERTAKINGS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in this section.
The registrant and each person whose signature appears below hereby authorizes
any agent for service named in the registration statement to file one or more
amendments (including post-effective amendments) to the registration statement
which amendments may make such changes in the registration statement as such
agent for service deem appropriate and the registrant and each such person
hereby appoints any such agent for service as attorney-in-fact to execute in the
name and on behalf of the registrant and each such person, individually and in
each capacity stated below, any such amendments to the registration statement.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this post-effective amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Darien in the State of Connecticut, on this 1st day of July 1999.
Association for Investment in
United States Guaranteed Assets, Inc.
By: WILLIAM G. GOW---CHAIRMAN
Pursuant to the requirements of the Securities Act of 1933, this
post-effective amendment has been signed below by the following persons in the
capacities and on the date indicated.
- --------------------------------------------------------------------------------
SIGNATURE TITLE DATE
- -------------------- ---------------------------- ---------
William C. Gow Chairman--Board of Directors 7/01/99
Marcie Gow Pajolek Vice President/Director 7/01/99
Lucia Leone Secretary 7/01/99
Edward J. Martin Director 7/01/99
2
<PAGE>
ASSOCIATION FOR INVESTMENT IN
UNITED STATES GUARANTEED ASSETS, INC.
PROSPECTUS/JULY 15, 1999
This prospectus describes the secondary offering of Series 28 face amount
certificates issued by the Association for Investment in United States
Guaranteed Assets (the Company). The certificates offered for sale are owned by
Gow Holdings, Inc. The aggregate face amount of the offering is $32,043,600
payable in single payments for an aggregate purchase price of $22,058,155 plus
accrued interest. The certificates mature in 2004 with an option at maturity to
extend the investment for an additional period of up to twenty (20) years. The
value at maturity will be equal to the purchase price (less the mark-up), plus
interest and additional earnings applied to the certificate. (See page 7 for
more details.)
The name Association for Investment in United States Guaranteed Assets, is not
intended to, and should not imply that the face amount certificates are
guaranteed by the United States Government or any other agency or
instrumentality thereof. However, the Company will invest in, or make loans
secured by, assets which are either guaranteed or insured by, or the direct
obligation of, the United States Government, its agencies, or instrumentalities.
(See page 8.)
You may purchase the certificate with a single investment of any amount from
$5,000 (face amount: $12,500) plus accrued interest and additional credits. The
total mark up is 8.5% of the purchase price net of accrued interest and
additional credits. (See page 2.)
TAX ADVICE
Counsel have advised that purchasers of these certificates should benefit from a
deferral of income taxes but cautions that the Internal Revenue Service has not
interpreted its regulations with respect to these certificates. Prospective
purchasers should consult their own tax advisers. (See page 4.)
BREAKEVEN POINT
Investors in these certificates who surrender their certificates at any time
before the end of the SECOND year after purchase may suffer a maximum loss of 5%
of the total certificate cost.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE'S SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE'S SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This prospectus gives you facts about the certificate and describes its terms
and conditions. You should read it to decide if this certificate is the right
investment for you, and keep it for future reference.
- --------------------------------------------------------------------------------
FIRST SENTINEL SECURITIES LTD.
3
<PAGE>
TABLE OF CONTENTS PAGE NO.
- --------------------------------------------------------------------------------
CERTIFICATES OFFERED FOR SALE BY THE PROSPECTUS 1
ABOUT THE CERTIFICATE 1
Description of the Series 28 Certificate 1
Purchase Amounts 2
Buying Certificates 2
Certificate Earnings 3
o guaranteed minimum 3
o additional earnings 3
Tax Treatment of the Certificate 4
USING THE CERTIFICATE 5
Borrowing 5
Receiving Cash Before Maturity 6
At Maturity 7
HOW YOUR INVESTMENT IS PROTECTED 7
Issuer of the Certificate 7
Government Regulation 7
Investments on Deposit 8
Investment Policies 8
ADDITIONAL INFORMATION ABOUT THE COMPANY 10
Directors, Management Staff and Affiliates 10
The Company's Auditors 11
The Company's Offices 11
FINANCIAL INFORMATION 12
Summary of Selected Financial Information 12
Management's Discussion of Operations 12
4
<PAGE>
CERTIFICATES OFFERED FOR SALE BY THIS PROSPECTUS
Association for Investment in United States Guaranteed Assets, Inc. (the
Company) was incorporated under the laws of the State of Maryland on March 11,
1975. At that time, the Company was a wholly owned subsidiary of 44 Holding
Corporation, New York, New York and it began business as an issuer of face
amount certificates on June 3, 1975.
On March 29, 1979 USGI Holdings, Inc. purchased the Company from and
certificates owned by 44 Holding Corporation, formerly known as Huntoon, Paige
Holding Corporation. On June 30, 1995 Huntoon Hastings Capital Corp. (HCC)
purchased the certificates owned by USGI Holdings, Inc. On January 1, 1997,
Huntoon Hastings Capital Corp. purchased the stock of the Company from USGI
Holdings, Inc. Effective January 1, 1998 the stock of the company and
certificates were transferred from HHCC to USGI Holdings, Inc. Effective July
23, 1998 the stock of the company and certificates were transferred to Gow
Holdings, Inc.
Some of the certificates purchased by Gow Holdings, Inc. are among those being
offered by this prospectus. Also offered by this prospectus are certificates
that were purchased by Gow Holdings, Inc. from investors who tendered them for
cash surrender. The fact that Gow Holdings, Inc. has in the past purchased
certificates tendered for cash is no assurance that it will continue such
purchases in the future, although it is its present intention to do so. These
purchases will be made at the cash surrender value as determined by the Company.
In the event that Gow Holdings, Inc. does not continue to effect such purchases,
the Company will redeem the certificates. (See page 6.)
ABOUT THE CERTIFICATE
DESCRIPTION OF THE SERIES 28 FACE AMOUNT CERTIFICATE
The Series 28 face amount certificate is a contractual obligation of the issuer,
the Company. The Company agrees to pay the investor at a fixed future maturity
date, a definite sum of money that is referred to as the "face amount". The face
amount is determined by deducting the commission from the initial purchase price
that is net of accumulations and compounding the balance at the guaranteed
annual rate of 3-1/2% from date of issue to maturity.
Certificates may receive additional earnings that will be calculated at the end
of each calendar year. (See page 4.)
The Series 28 certificates were issued on December 12, 1975 and mature on
February 16, 2004. Certificates purchased under this offering while issued and
outstanding in 1975, are purchased plus accrued interest from December 12, 1975
and have, in 1998, approximately five (5) years to maturity in 2004. At maturity
they may be extended for an additional period of up to twenty (20) years.
5
<PAGE>
PURCHASE AMOUNTS
Certificates are purchased with a single investment in any amount from $5,000 to
$1 million.
An investment of approximately $40,000 would appear as follows:
Initial Purchase Price: $ 21,320
(includes markup of 8.5%
in the amount of $1,670)
Accrued Interest from
December 12, 1975 to January 1,1998: $ 18,674
Total Certificate Value at Purchase: $ 38,324
Total Certificate cost is: $ 39,994
Guaranteed Face Amount at Maturity: $ 47,321
BUYING CERTIFICATES
Applications for investment in these certificates are available through selected
broker-dealers who are members of the National Association of Security Dealers.
This selling group of firms will be managed by First Sentinel Securities, Ltd.
who will act as the Dealer-Manager in this offering. All applications and
investor funds will be delivered by the selected firms to Fleet Bank, Rochester,
New York who acts as agent for Gow Holdings, Inc. Once received and accepted by
Gow Holdings, Inc. applications are not subject to cancellation by the investor.
The initial purchase price includes a markup of 8.5% that is the commission paid
by the investor. Total certificate cost, however, includes initial purchase
price plus accrued interest and additional credits. The 8.5% markup is not
applied to the accrued interest and additional credit amounts. When the markup
of 8.5% is applied as a percentage of the total monies invested (i.e., initial
purchase price plus accrued interest and additional credits), the markup
translates to between 4.4% and 5.0% of total monies invested.
For example, using the illustration from the previous section "Purchase Amounts"
the markup on the Initial Purchase Price of $21,320 amounts to $1,670. When
applied as a percentage of the Total Certificate Value, $38,324, this translates
to 4.4% of total monies invested.
6
<PAGE>
The total markup provided in this offering is payable to First Sentinel
Securities, Ltd. from which 80% to 100% will be paid to the selected dealers
dependent upon their volume.
There will be no markup on purchases for their own accounts by employees,
officers and directors of Gow Holdings, Inc. and its affiliates or members of
their families.
CERTIFICATE EARNINGS
You are always guaranteed a minimum of 3-1/2% on your investment. To accumulate
the amount of the payment promised, the Company invests the purchase price, net
of the markup, and promises that the income from such investments will be a
minimum of 3-1/2% per year. This 3-1/2% is accumulated annually and reinvested
at the same 3-1/2% minimum rate. Amounts that you borrow from your certificate
reserves will continue to earn the 3-1/2% minimum rate.
In addition to the guaranteed rate, you may receive additional earnings that are
distributed to certificate holders of record on December 31st. These additional
earnings will only be applied to the unborrowed amounts on your certificate. The
Company will maintain a reserve to assure payment of any additional earnings
granted plus accumulations at the guaranteed minimum rate of 3-1/2% compounded
annually. The amount of such reserves shall be paid upon surrender or at
maturity unless a different settlement option has been elected. It should be
noted that the additional earnings are not based upon the total amount paid in
on a certificate, but upon the reserve value of the certificate during the year
for which the additional earnings are granted.
When added to the guaranteed minimum rate of 3-1/2%, additional earnings have
resulted in gross annual yields on the unborrowed portion of the certificate as
follows:
1989 - 8.08% 1994 - 3.96%
1990 - 7.89% 1995 - 6.12%
1991 - 6.27% 1996 - 4.50%
1992 - 4.56% 1997 - 4.61%
1993 - 4.24% 1998 - 4.21%
Past yields are no guarantee of future performance.
7
<PAGE>
The total annual income earned on the investment portfolio will determine the
amount of additional earnings in the following manner:
o After the guaranteed 3-1/2% earnings are applied to the reserves for
each certificate, the next 1% of the portfolio's earnings are allocated
to the Company to cover operating expenses.
o The next 4% of investment portfolio earnings, over the aforesaid 4-1/2%
earnings, will be applied as additional earnings to the reserves for
each certificate.
o On income earned over the first 8-1/2% of portfolio earnings, one half
is credited to the reserves for each certificate as additional earnings
and one half is credited to the Company.
Additional earnings for any certificate will be reduced proportionately for any
period of the fiscal year during which the reserves behind such certificate were
unfunded or ineligible for any reason.
TAX TREATMENT OF THE CERTIFICATE
Under Federal income tax laws and regulations in effect prior to January 1,
1976, the yield on certificates was treated as ordinary income upon maturity or
surrender. The increase in value, including additional credits, is accumulated
over the years on a tax-deferred basis until surrender or maturity. Thus, under
the tax treatment in effect for certificates issued prior to January 1, 1976 you
could arrange to take your certificate proceeds at a time most favorable to you
from a tax standpoint. Often this is at retirement or semi-retirement when
income is reduced and the individual's tax bracket is lower.
Regulations adopted by the U.S. Treasury Department changed this treatment for
certificates issued after December 31, 1975. Under the new regulations, holders
of certificates issued AFTER December 31, 1975 would include as ordinary income,
under the definition of original issue discount, in each year during the life of
the certificate a ratable portion of the difference between the face amount and
the purchase price and also an amount to be computed as assumed additional
earnings. However, certificates issued PRIOR to December 31, 1975 would not be
affected by the new regulations.
8
<PAGE>
Counsel to the Company have advised that the certificates offered by this
Prospectus should be considered to be certificates issued prior to January 1,
1976 and that there should be no income tax payable on such certificates until
maturity or surrender. Such counsel have further advised that the purchase of
such certificates from Gow Holdings, Inc. by a third party would be a purchase
of certificates issued prior to January 1, 1976 and that no income tax should be
payable by such purchasers until the maturity or surrender of such certificates.
However, such counsel has also further advised that no revenue ruling has been
sought to ascertain the position of the Internal Revenue Service on the matter.
Prospective purchasers should consult with an independent tax adviser with
respect to the tax consequences of this investment.
USING THE CERTIFICATE
BORROWING
At any time after the date of purchase of your certificate, the Company will
loan to you up to 98% of the value of your certificate.
Loans bear interest, payable in advance, at a maximum rate of 5% per year on the
unpaid balance.
While the loan is for one year, it will be renewed each additional year if the
value of your certificate is sufficient to pay the required interest, or if you
pay the interest due on the loan. If interest is not paid when due, it will be
added to the existing balance of your loan.
Whenever the loan balance equals or exceeds the maximum allowable, the Company
may apply the surrender value in payment of the loan and forward the remaining
certificate balance, if any, to you. At this point your certificate shall become
void.
Upon a final settlement with you as the result of surrender or maturity, the
amount of the loan shall be deducted from the amount otherwise due you.
As security for the loans, a loan agreement is to be executed specifying the
assignment of your certificate to the Company.
During any period when there is a loan outstanding, all the certificate reserves
attributable to your certificate will continue to earn the guaranteed minimum
rate of 3-1/2%. However, only the unborrowed reserves will be entitled to the
additional earnings.
9
<PAGE>
RECEIVING CASH BEFORE MATURITY
If you find that you need your money prior to maturity, you may surrender all or
part of your certificate by giving us instructions in writing. Certificates will
be redeemed by the Company upon demand for their cash surrender values.
There are no penalties or charges for redemptions. All certificates issued by
the Company provide guaranteed minimum cash surrender values before maturity.
The following examples illustrate various surrender values. (These numbers are
approximate, actual calculations would be determined on a per diem basis so
values may be slightly lower or higher.)
Certificate's Features:
Purchase Date: January 1, 1998
Total Certificate Cost
(including markup of $1,670) is: $ 39,994
You surrendered the certificate
on January 1st in the following
year(s) after purchase as follows:
SURRENDER VALUE
CASE A CASE B
With annual earnings With annual earnings
limited to 3-1/2% of 5.68% which includes
guaranteed rate the 3-1/2% guaranteed rate.
Year 1 $ 39,665 $40,500
Year 4 $ 43,976 $47,800
Maturity $ 47,321 $53,384
(February 16, 2004)
In cases A and B Total Certificate Cost (less the markup) plus earnings are
compounded annually up to, and including, the day of surrender.
In cases A and B it is assumed there are no outstanding loans on the
certificate.
In case B, while the 5.68% annual earnings used for illustrative purposes is
slightly above the Company's average annual portfolio yield for the past
ten-year period (5.44%), this is no guarantee of future performance.
10
<PAGE>
AT MATURITY
You may surrender your certificate at maturity and receive its full cash
surrender value.
At maturity you may also elect to receive the total value of your certificate
under various settlement options which include:
1. Withdrawing the total value in not less than quarterly installments of
at least $500.00 per installment.
2. Leaving all, or any part of, the total value with the Company to accrue
interest for an additional period of up to 20 years as may be
designated by you.
Certificates left with the Company under the above options will earn interest at
the guaranteed annual rate of 3-1/2%. These certificates may also receive
additional earnings that will be calculated upon the reserves for each
certificate at December 31st.
You may elect at any time after the effective date of a settlement option to
terminate your settlement option and receive the entire reserve then maintained
under the above option 1 and 2.
HOW YOUR INVESTMENT IS PROTECTED
ISSUER OF THE CERTIFICATE
The Association for Investment in United States Guaranteed Assets, Inc. is a
wholly owned subsidiary of Gow Holdings, Inc.
Gross income of the Company is derived from interest on investments and
certificate loans. The Company's net income is determined by deducting the
following expenses from gross income:
o provision for certificate reserves (interest accrued on certificate
holder accounts) and
o other expenses, including taxes
For a more detailed financial accounting see the audited financial statements
(See page 16.)
GOVERNMENT REGULATIONS
The face amount certificate is a security regulated under the Investment Company
Act of 1940. Its offer and sale are subject to regulations under federal and
state securities laws. It is not a bank product, an equity investment, a form of
life insurance or an investment trust.
11
<PAGE>
INVESTMENTS ON DEPOSIT
The Federal Investment Company Act of 1940 requires the Company to keep cash or
qualified investments on deposit in a segregated account to protect the value of
all of our outstanding certificates. These investments back the entire value of
your certificate reserves.
Certificate reserve requirements on December 31, 1998 were $35,707,304. The
value of our investments on deposit determined in accordance with generally
accepted accounting principles were $35,746,958.
Our investments are on deposit with Fleet Bank, Rochester, New York.
For comments regarding the valuation of investments see note one to the
financial statements.
INVESTMENT POLICIES
The Company is restricted by its Articles of Incorporation to the following
investments:
o U.S. Government securities which include Treasury Bonds, Notes and
Bills and securities issued by instrumentalities of the United States
Government.
o The insured portion of loans guaranteed by the Small Business
Administration and The Farmers Home Administration.
o Mortgage loans guaranteed by the Veterans Administration or insured by
the Federal Housing Administration (FHA and VA Mortgages).
o Certificates guaranteed as to the payment of principal and interest by
the Government National Mortgage Association (GNMA certificates).
o Short-term loans under the Order of Exemption from certain provisions
of the Investment Company Act of 1940 which was granted to the Company
by the Securities and Exchange Commission. These loans may be made to
affiliated and nonaffiliated mortgage bankers, are callable on demand,
and bear interest to the Company at the prime rate or more. Security
for these loans shall be FHA/VA mortgages, GNMA certificates or other
U.S. Government guaranteed securities.
Portfolio Turnover - There are no restrictions on rates of portfolio turnover.
Purchasing Securities on Margin - We will not purchase any securities on margin
or participate on a joint basis or a joint and several basis in any trading
account in securities.
12
<PAGE>
Short Sales - We will not effect the short sale of any security.
Borrowing Money - The Company has not borrowed money and has no present
intention of doing so. It may borrow in the future only when necessary for the
clearance or delivery of purchases and sales of investments.
Underwriting - We do not intend to engage in the public distribution of
securities issued by others.
ADDITIONAL INFORMATION ABOUT THE COMPANY
OUR DIRECTORS, MANAGEMENT STAFF AND AFFILIATES
<TABLE>
<CAPTION>
NAME OFFICE PRINCIPAL OCCUPATION &AFFILIATE
- ---- ------ -------------------------------
<S> <C> <C>
William C. Gow Chairman of the Chairman of the Board of Directors of Gow
Board of Directors Holdings, Inc. since July 1998. Chairman of the
Board of Directors of USGI Holdings, Inc. from July
1980 to July 1998. Chairman of the Board of
Directors of Merrill Lynch Huntoon, Paige Inc. from
December 1978 to June 1980. Chairman of the
Board of Directors of Huntoon, Paige & Co., Inc.;
1967 to December 1978.
Marcie Gow Vice-President Vice President of The Association for Investment in
Pajolek United States Guaranteed Assets, Inc. since 1990.
Elected to the Board of Directors December 1998.
Lucia Leone Secretary Secretary of the Company since December 1998.
Edward J. Martin Director Practicing Attorney with the law firm of Stroock
& Stroock & Lavan LLP since June, 1997. Formerly
of counsel to Reid & Priest from June 1994 to June,
1997; Partner of Shea & Gould for more than sixteen
years prior to June 1994; partner of Bartel,
Engelman & Fishman and for more than two years prior
to 1978; associate of Dewey, Ballantine, Bushby,
Palmer & Wood for more than five years prior to 1975.
</TABLE>
13
<PAGE>
THE COMPANY'S AUDITORS
A firm of independent accountants audits the Company's financial statements at
the close of each fiscal year (December 31st). Copies of our annual financial
statements are available to any certificate holder upon request. Dworken,
Hillman, La Morte & Sterzcala, P.C. has audited the financial statements for the
years ended December 31, 1998, 1997 and 1996. These statements are included in
this prospectus.
THE COMPANY'S OFFICES
Our offices are located at: Our Mailing Address is:
9 Old Kings Highway South P.O. Box 1601
Darien, CT 06820 Darien, CT 06820
Our Phone: (203) 662-7683
FINANCIAL INFORMATION
SUMMARY OF SELECTED FINANCIAL INFORMATION
The following selected financial information has been derived from the audited
financial statements and should be read in conjunction with those statements and
the related notes to those financial statements. Also see Management's
Discussion of Operations.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Investment Income $ 1,731,335 $ 1,695,277 $ 1,638,569 $ 1,681,622 $ 1,483,314
Investment Expense 106,376 109,449 169,922 158,877 157,415
Provisions for
Certificate Reserves 1,249,730 1,231,261 1,189,455 1,251,309 1,070,114
Net Income 221,854 208,858 164,458 158,994 149,404
Total Assets $36,241,845 $35,037,649 $33,798,197 $32,412,633 $31,336,938
</TABLE>
14
<PAGE>
MANAGEMENT'S DISCUSSION OF OPERATIONS
The Company's investment income is derived from interest income on investments
and loans to certificate holders. The Company's primary portfolio policy was one
of investing in U.S. Government or Government guaranteed securities.
Rates and yields on these securities during 1998 were approximately the same as
those prevailing in 1997. The income from this source resulted in a yield on
unborrowed reserves for 1998 or 4.21% versus 4.61% in 1997. Reflecting the
stability in rates of return, the provision for certificate reserves in 1998 was
approximately the same as in 1997.
The Company's investment objectives are to assure the maximum safety and
liquidity of the investment portfolio. To that end investments have been limited
to U.S. Government or Government guaranteed securities and short-term loans
under the Order of Exemption which are secured by Government guaranteed
securities. The average maturity of the investments in U.S. Government
securities is three months. Loans under the Order of Exemption are of less than
thirty days duration.
There is no expected change in the asset mix of the portfolio in the foreseeable
future.
INDEPENDENT AUDITORS' REPORT
Board of Directors and Security Holders
Association for Investment in United States
Guaranteed Assets, Inc.
We have audited the accompanying balance sheets of Association for Investment in
United States Guaranteed Assets, Inc. as of December 31, 1998 and 1997 and the
related statements of income, retained earnings and cash flows for each of the
years in the three year period ended December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements 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 are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
15
<PAGE>
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 referred to above present fairly, in
all material respects, the financial position of Association for Investment in
United States Guaranteed Assets, Inc. as of December 31, 1998 and 1997 and the
results of its operations and its cash flows for each of the years in the three
year period ended December 31, 1998, in conformity with generally accepted
accounting principles.
Bridgeport, Connecticut Dworken, Hillman, LaMorte & Sterczala, P.C.
March 1, 1999
16
<PAGE>
ASSOCIATION FOR INVESTMENT
IN UNITED STATES GUARANTEED ASSETS, INC.
BALANCE SHEETS
December 31, 1998 and 1997
ASSETS
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
QUALIFIED ASSETS (Note 2):
Cash $ 27,828 $ 18,184
Investments in U.S. Treasury Bills, at cost which approximates market 6,603,886 6,944,367
Certificates loans, secured by applicable certificate reserves (Note 3) 29,115,244 27,639,163
Loans to affiliates under Order of Exemption (Note 5) 14,173
Receivable for accrued interest (Note 5) 468,206 421,762
----------- -----------
36,215,164 35,037,649
OTHER ASSETS 26,681
----------- -----------
$36,241,845 $35,037,649
=========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
CERTIFICATE RESERVES (Note 3):
Reserves to mature:
Series 28, fully paid certificates (Note 5) $31,328,352 $30,122,784
Series 28I, installment certificates 7,763 7,579
Reserve for additional credits 4,371,189 4,327,211
----------- -----------
35,707,304 34,457,574
CURRENT LIABILITIES, EXCLUSIVE OF CERTIFICATE RESERVE LIABILITIES:
Unearned interest on certificate holders' loans 78,691 76,685
Accrued expenses, taxes and other 79,487 73,881
----------- -----------
35,865,482 34,608,140
----------- -----------
SHAREHOLDER'S EQUITY:
Common stock, par value $1 per share, authorized, issued and
outstanding 250,000 shares 250,000 250,000
Capital in excess of par value 1,000 1,000
Retained earnings 125,363 178,509
----------- -----------
376,363 429,509
----------- -----------
$36,241,845 $35,037,649
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
ASSOCIATION FOR INVESTMENT
IN UNITED STATES GUARANTEED ASSETS, INC.
STATEMENTS OF INCOME
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income: (Note 5)
Investments $ 331,493 $ 367,483 $ 370,457
Certificate loans 1,399,842 1,327,794 1,268,112
----------- ----------- -----------
1,731,335 1,695,277 1,638,569
----------- ----------- -----------
INVESTMENT EXPENSES:
Officer's salary 45,480 49,269 69,333
Consulting 31,500
Professional fees 17,886 17,694 26,977
Custodial fees 17,966 19,058 16,000
Printing, promotion and telephone 7,630 8,156 8,286
Directors' fees 6,000 8,000 8,000
Payroll taxes 4,022 4,065 3,778
Other 7,392 3,207 6,048
----------- ----------- -----------
106,376 109,449 169,922
----------- ----------- -----------
NET INVESTMENT INCOME 1,624,959 1,585,828 1,468,647
----------- ----------- -----------
PROVISION FOR CERTIFICATE RESERVES
(Notes 3 and 5) 1,249,730 1,231,261 1,189,455
----------- ----------- -----------
INCOME BEFORE INCOME TAXES 375,229 354,567 279,192
----------- ----------- -----------
INCOME TAXES (Note 4) 153,375 145,709 114,734
----------- ----------- -----------
NET INCOME $ 221,854 $ 208,858 $ 164,458
=========== =========== ===========
</TABLE>
STATEMENTS OF RETAINED EARNINGS
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
BALANCE, BEGINNING $ 178,509 $ 159,651 $ 15,193
ADD NET INCOME 221,854 208,828 164,458
DEDUCT CASH DIVIDENDS ON COMMON STOCK (275,000) (190,000) (20,000)
----------- ----------- -----------
BALANCE, ENDING $ 125,363 $ 178,509 $ 159,651
=========== =========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
ASSOCIATION FOR INVESTMENT
IN UNITED STATES GUARANTEED ASSETS, INC.
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 221,854 $ 208,858 $ 164,458
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for certificate reserves 1,249,730 1,231,261 1,189,455
Change in assets and liabilities:
(Increase) in accrued interest (46,444) (66,741) (245,328)
Increase in unearned interest 2,006 9,126 8,593
Increase (decrease) in accrued expenses 5,606 (19,793) 43,058
------------ ------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,432,752 1,362,711 1,160,236
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of other assets (26,681)
Proceeds from sale and maturity of investments 11,566,856 13,193,368 14,327,107
Purchase of investments (11,226,375) (13,069,019) (16,260,497)
(Increase) decrease in loans to affiliates 14,173 (12,372) 2,019,396
Disbursements for certificate loans (1,476,081) (1,279,699) (1,255,768)
------------ ------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (1,148,108) (1,167,722) (1,169,762)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid (275,000) (190,000) (20,000)
------------ ------------ ------------
NET CASH USED IN FINANCING ACTIVITIES (275,000) (190,000) (20,000)
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH 9,644 4,989 (29,526)
------------ ------------ ------------
CASH, BEGINNING 18,184 13,195 42,721
------------ ------------ ------------
CASH, ENDING $ 27,828 $ 18,184 $ 13,195
============ ============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
INFORMATION:
Cash payment for income taxes $ 112,000 $ 98,266 $ 80,000
============ ============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
ASSOCIATION FOR INVESTMENT
IN UNITED STATES GUARANTEED ASSETS, INC.
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1998, 1997 and 1996
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES:
NATURE OF BUSINESS:
The Company is an issuer of Series 28 Face amount certificates. The
Company is a wholly-owned subsidiary of Gow Holdings, Inc. ("Parent").
Effective January 1, 1998, the stock of the Company was transferred
from Huntoon Hastings Capital Corp. to USGI Holdings, Inc. Effective
July 28, 1998, the stock of the Company was transferred to Gow
Holdings, Inc.
The Company's financial statements are prepared in accordance with
generally accepted accounting principles and comply with Section 28 of
the Investment Company Act of 1940.
USE OF ESTIMATES:
Management uses estimates and assumptions in preparing these financial
statements in accordance with generally accepted accounting principles.
Those estimates and assumptions affect the reported amount of assets
and liabilities, the disclosure of contingent assets and liabilities,
and reported revenue and expenses. Actual results could vary from the
estimates that were used.
VALUATION OF QUALIFIED ASSETS:
Qualified assets are stated at cost, except for United States Treasury
Bills which are stated at amortized cost which approximates market
value. An allowance for loss will be provided if evidence indicates a
permanent decline in the underlying value and earning power of
individual securities.
INCOME RECOGNITION:
Security transactions are recorded on the trade date. Interest income is
recorded when earned. Discounts on United States Treasury Bills are
amortized over the terms of the securities to which they apply.
Unearned interest on certificate loans is amortized on a straight-line
basis over the life of the loan.
PROVISION FOR CERTIFICATE RESERVES:
Certificate reserves accrue at the rate of 3 1/2% compounded annually. In
addition, at the end of each fiscal year of the Company, each
certificate upon which all payments including all installments, have
been made will receive "additional credits" calculated on the earnings
attributable to the invested reserves. Borrowed reserves are not
eligible for additional credits.
20
<PAGE>
ASSOCIATION FOR INVESTMENT
IN UNITED STATES GUARANTEED ASSETS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1998, 1997 and 1996
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued):
CASH:
For the purposes of the Statement of Cash Flows, the Company considers
investments with original maturities of three months or less to be a
cash equivalent.
The Company maintains its cash in bank deposit accounts which, at times,
may exceed federally insured limits. The Company believes it is not
exposed to any significant credit risk on cash and cash equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS:
The carrying amount of cash, investments in U.S. Treasury Bills,
accounts, loans and other receivables, loans payable and trade payables
approximates fair value because of the short maturity of those
instruments.
The carrying amount of Certificate Loans approximates fair value because
these loans are secured by related Certificate Reserves. The carrying
amount of Certificate Reserves approximates fair value because under
the terms of the Certificates, a holder can sell their certificates at
any time for its carrying amount.
2. QUALIFIED ASSETS:
Under the provisions of its certificates and the Investment Company Act
of 1940, at December 31, 1998, the Company was required to have
qualified assets (as that term is defined in Section 28 (b) of the
Act), of $35,957,304. As shown in the accompanying balance sheet, the
Company had qualified assets of $36,215,614.
Pursuant to the requirements of the Investment Company Act of 1940,
"Qualified Assets" are to be maintained on deposit with Fleet Bank
under a "Depository Agreement" to meet certificate reserve requirements
of $35,707,304, at December 31, 1998. Assets on deposit as of December
31, 1998 are as follows:
<TABLE>
<S> <C>
Cash $ 27,828
United States Treasury Bills 6,603,886
Certificate loans, secured by certificate reserves 29,115,244
-----------
$35,746,958
===========
</TABLE>
21
<PAGE>
ASSOCIATION FOR INVESTMENT
IN UNITED STATES GUARANTEED ASSETS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1998, 1997 and 1996
3. CERTIFICATE RESERVES:
Reserves maintained on outstanding certificates have been computed in
accordance with the provisions of the certificates and Section 28 of
the Investment Company Act of 1940. The total gross rate of
accumulation on Series 28 and 28I certificates for 1998 was 4.21%.
Gross rates of accumulation on certificate reserves were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------------------------- -------------------------- --------------------------
ANNUAL GROSS ANNUAL GROSS ANNUAL GROSS
TOTAL RATES OF TOTAL RATES OF TOTAL RATES OF
RESERVES ACCUMULATION RESERVES ACCUMULATION RESERVES ACCUMULATION
-------- ------------ -------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Reserves to mature:
Series 28 $31,328,352 3.50% $30,122,784 3.50% $28,960,222 3.50%
Series 28I 7,763 3.50% 7,579 3.50% 7,241 3.50%
Additional credits
on Series 28 and
28I certificates 4,371,189 .71% 4,327,211 1.11% 4,258,850 1.00%
$35,707,304 $34,457,574 $33,226,313
=========== =========== ===========
</TABLE>
4. INCOME TAXES:
The Company files a consolidated federal income tax return with its
parent and affiliates. The tax liability is allocated to the Company on
a separate-return basis.
The provision for income taxes is composed of the following for the years
ended December 31, 1998, 1997 and 1996:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Federal $114,626 $107,593 $ 84,721
State 38,749 38,116 30,013
-------- -------- --------
$153,375 $145,709 $114,734
======== ======== ========
</TABLE>
22
<PAGE>
ASSOCIATION FOR INVESTMENT
IN UNITED STATES GUARANTEED ASSETS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1998, 1997 and 1996
4. INCOME TAXES (continued):
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Computed "expected" federal tax expense $127,578 $120,553 $ 94,925
Increase in taxes resulting from state income
taxes, net of federal benefit 25,797 25,156 19,809
-------- -------- --------
ACTUAL TAX EXPENSE $153,375 $145,709 $114,734
======== ======== ========
</TABLE>
5. RELATED PARTY TRANSACTIONS:
At December 31, 1998, the Parent owned certificates with an aggregate
cost of $27,864,000 ($26,109,000 in 1997) and had a related loan
balance of $27,301,000 ($25,574,000 for 1997) with accrued interest of
$420,000 ($398,800 for 1997).
During 1998, the Company made certificate reserve provisions of
approximately $937,000 ($879,000 and $827,500 for 1997 and 1996,
respectively) and recorded earned interest of $1,094,400 ($1,226,200
and $1,158,500 for 1997 and 1996, respectively), both, pertaining to
the affiliate's certificates and loans.
Under the Order of Exemption granted by the Securities and Exchange
Commission, during 1998, 1997 and 1996 the Association made short-term
loans to affiliates of the Company, secured by FHA mortgages. Interest
earned on these loans, charged at a rate equal to the prime rate,
amounted to $0, during 1998 and 1997 and $4,400 during 1996.
The affiliate has borne all operational expenses of the Company, other
than those set forth in the statements of income.
YEAR 2000 COMPLIANCE:
The Company is completing upgrades to its computer systems for compliance
with issues related to the year 2000. Management anticipates that the
Company's systems will be fully compliant by mid 1999. In management's
opinon, the costs associated with this and other aspects of year 2000
compliance are not expected to have a material impact on the Company's
financial position or results of operations.
23
<PAGE>
INFORMATION NOT REQUIRED IN PROSPECTUS
MARKETING ARRANGEMENTS.
See "Buying Certificates: p.2 of the Prospectus.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses payable in connection with the distribution of
securities being registered by the Registration statement are as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee....... $ 1,614
Accounting fees...........................................
Printing and engraving.................................... 220
Legal fees................................................ 500
Blue Sky fees and expenses................................
Miscellaneous.............................................
Total..................................................... $2,324
</TABLE>
------------
All of the foregoing expenses will be borne by Gow Holdings, Inc., parent of
the Registrant.
RELATIONSHIP WITH REGISTRANT OF EXPERTS NAMED IN REGISTRATION STATEMENT.
None.
SALES TO SPECIAL PARTIES.
None.
RECENT SALES OF UNREGISTERED SECURITIES.
None.
SUBSIDIARIES OF REGISTRANT.
None.
FRANCHISES AND CONCESSIONS.
None.
24
<PAGE>
INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 5 of Article 23 of the Annotated Code of Maryland provides in part:
"(a) Any corporation of this State may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (other than an action by or in the right of
the corporation) by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other enterprise.
The indemnification may be against expenses (Including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with the action, suit, or proceeding if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and , with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit, or proceeding, by
judgment, order, settlement, conviction, or upon a plea of nolo contendere
or its equivalent, shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interest of the corporation,
and, with respect to any criminal action or proceeding, had reasonable cause
to believe that his conduct was unlawful.
"(b) Any corporation of this State may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust or other enterprise.
The indemnification may be against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of the action or suit if he acted in good faith and in a manner
he reasonably believed to be or not opposed to the best interests of the
corporation; except that no indemnification shall be made in respect of any
claim, issue, or matter as to which the person has been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation, unless and only to the extent that the court in which the
action or suit was brought, or a court of equity in the county in which the
corporation has its principal office, determines upon application that,
despite the adjudication of liability but in view of all circumstances of
the case, the person is fairly and reasonably entitled to indemnify for the
expenses which the court shall deem proper."
The Board of Directors of Registrant has resolved to indemnify all
directors, officers and employees in accordance with the terms of the above
Section. The Board of Directors of Registrant intends to obtain liability
insurance covering officers, directors and key staff personnel. The insurance
terms provide, with certain exceptions and exclusions, for protection of the
insured personnel against unindemnified losses from claims and expenses
resulting from any negligent act, any error, any omission or any breach of duty
while acting in their respective capacities.
25
<PAGE>
Insofar as indemnification or liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
TREATMENT OF PROCEEDS FROM STOCK BEING REGISTERED.
Not applicable.
FINANCIAL STATEMENTS AND EXHIBITS.
(A) 1. INCLUDED IN THE PROSPECTUS:
Independent Auditor's Report
Balance Sheets, December 31, 1998 and 1997
Statements of Income, Years Ended December 31, 1998, 1997 and 1996
Statements of Retained Earnings, Years Ended December 31, 1998, 1997 and
1996
Statements of Cash Flows, Years Ended December 31, 1998, 1997 and 1996
Notes to Financial Statements.
(2) INCLUDED ELSEWHERE IN THE REGISTRATION STATEMENT:
Schedule I as of December 31, 1976 and Schedule VI as of December 31, 1976
thru 1998 are incorporated by reference to the Company's Annual Reports
(Form 10-K) filed with the Securities and Exchange Commission in March 1976
through 1998. All other schedules have been omitted because they are not
applicable, not required or the information is included in the financial
statements or notes thereto.
26
<PAGE>
(3) REPORTS AND CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS.:
(B) EXHIBITS:
1 Form of Dealer Agreement, filed as exhibit 1 to Registration Statement
No. 2-55358, filed under prospectus dated February 12, 1976.
3.1 Articles of Incorporation, filed as exhibit 1 to Registration Statement
No. 811-2563 and incorporated herein by reference and made a part hereof
filed under prospectus dated May 1, 1977.
3.2 Amendment to Articles of Incorporation, filed as exhibit 3.2 to
Registration Statement No. 2-53024 and incorporated herein by reference
and made a part hereof, filed under prospectus dated November 1, 1976.
3.2a Articles of Amendment--consent dated April 8, 1977
3.2b Articles of Amendment--Dated April 15, 1977
3.3 By-Laws, filed as exhibit 2 to Registration Statement No. 81102563 and
incorporated herein by reference and made a part hereof , filed under
prospectus dated May 1, 1977.
4.1 Form of Series 28 Face Amount Certificate, filed as exhibit 4 to
Registration Statement No. 811-2563 and incorporated herein by reference
and made a part hereof, filed under prospectus May 1, 1977.
7 Opinion and consent of Messrs. Emmet, Marvin & Martin, filed as exhibit
7 to Registration Statement No. 2-63910 Number 20 dated July 1, 1998.
27
<PAGE>
REPORT AND CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
THE BOARD OF DIRECTORS AND SECURITY HOLDERS
Association for Investment in United States
Guaranteed Assets, Inc.
We consent to the use in Post-Effective Amendment No. 21 to Registration
Statement of Association For Investment In United States Guaranteed Assets, Inc.
of our report dated March 1,1999 appearing in the prospectus, which is part of
the Registration Statement, and to the reference to us under the heading
"Selected Financial Data" and "Experts" in such prospectus.
Bridgeport, Connecticut
June 23, 1999
DWORKEN, HILLMAN, LAMORTE & STERCZALA, P.C.
28
<PAGE>
ASSOCIATION FOR INVESTMENT IN UNITED STATES
GUARANTEED ASSETS, INC.
SCHEDULE VI - CERTIFICATE RESERVES
December 31, 1998
<TABLE>
<CAPTION>
Description Balance December 31, 1998
----------- -------------------------
Yield to Maturity
an Annual Payment Amount of
Basis Reserves
----------------- ---------
<S> <C> <C>
SERIES
Paid-up certificates -
Series 28....................... 3.50% $31,328,352
Installment basis -
Series 28I....................... 3.50% 7,763
Additional credits:
Series 28........................ 0.71% 4,371,189
------------
$35,707,304
</TABLE>
29
<PAGE>
APPLICATION FORM
I am of legal age in the State of my residence and I hereby purchase Series 28
face amount certificates in the face amounts indicated below which are as
described in the Prospectus dated July 15, 1999 of Association for Investment in
United States Guaranteed Assets, Inc. and acknowledge receipt of a copy of such
Prospectus, I understand that this purchase is irrevocable.
NO APPLICATION FORM WILL BE PROCESSED
UNLESS ACCOMPANIED BY PAYMENT IN FULL
(EXCEPT THAT ACCRUED INTEREST WILL BE BILLED ON TRANSFER)
FACE AMOUNT PAYMENT ENCLOSED
- ---------------------- ----------------------
($12,500 minimum) ($5,000 minimum)
REGISTRATION the Certificates should be Registered as follows:
MR. MRS. MISS. MS.
- --- --- --- --- --- ---- --- --- --- --- ---- --- --- --- --- ---- --- --- ---
- --- --- --- --- --- ---- --- --- --- --- ---- --- --- --- --- ---- --- --- ---
Print Applicant's Name. For clarity, please skip a space where appropriate.
MR. MRS. MISS. MS.
- --- --- --- --- --- ---- --- --- --- --- ---- --- --- --- --- ---- --- --- ---
- --- --- --- --- --- ---- --- --- --- --- ---- --- --- --- --- ---- --- --- ---
Print Joint Registrant's Name, if any. In case of joint registration, a joint
tenancy with right of survivorship will be presumed, unless a tenancy in common
is indicated. For clarity, please skip a space where appropriate.
- --------------------------------------------------------------------------------
Print Street Address City State Zip Code
- --------------------------------------------------------------------------------
Signature of Applicant Date Signature of Joint Registrant Date
- --------------------------------------------------------------------------------
Taxpayer's Account Number -or- Name of Taxpayer whose
Social Security Number Account Number appears at left.
Accrued interest will be billed to above address.
PLEASE MAKE CHECKS PAYABLE TO
"FLEET BANK C/O USGA ACCOUNT"
Please mail this signed Application Form and your check for the total
price shown above to:
USGA, P.O. Box 1601, Darien, CT 06820-1601
- --------------------------------------------------------------------------------
TO BE COMPLETED BY YOUR INVESTMENT DEALER
- --------------------------------------------------------------------------------
Dealer Code # Investment Firm Name Authorized Signature Date
- --------------------------------------------------------------------------------
Print Street Address City State Zip Code
- --------------------------------------------------------------------------------
Branch Code # Salesperson's Code # Salesperson's Last Name
<PAGE>
EXHIBIT 3.1-ARTICLES OF INCORPORATION
ARTICLES OF INCORPORATION
OF
SECURED CERTIFICATE ASSOCIATION FOR INVESTMENT
IN U.S. GUARANTEED ASSETS, INC.
* * * * *
FIRST: WE, THE UNDERSIGNED, JOHN H. PELLETIER whose
post-office address is 277 Park Avenue, New York, N.Y. 10017, THOMAS C. TOTARO
whose post-office address is 277 Park Avenue, New York, N.Y. 10017 and FRANK
SIMMONS whose post-office address is 277 Park Avenue, New York, N.Y. 10017, each
being at least eighteen years of age, do, under and by virtue of the General
Laws of the State of Maryland authorizing the formation of corporations,
Associate ourselves as incorporators with the intention of forming a
corporation.
SECOND: The name of the corporation is
SECURED CERTIFICATE ASSOCIATION FOR INVESTMENT
IN U.S. GUARANTEED ASSETS, INC.
THIRD: The purposes for which the corporation is formed are:
To purchase or otherwise acquire, hold for investment or
otherwise, sell, trade in, deal in, assign,
negotiate, transfer, exchange, and dispose of, or issue securities and
investments of every type and description, including without limitation, stocks,
shares, bonds, debentures, notes, mortgages or other obligations, face-amount
certificates and any other certificates, receipts, warrants, or other
instruments, representing rights to receive, purchase, or subscribe, for
securities or other investments, created or issued by any person, firm,
partnership, association, trust, investment company, corporation, syndicate,
organization, governments or political subdivision, agencies, or entities
thereof; to exercise, as owner or holder of any such securities or investments,
all rights, powers, and privileges, with respect thereto; and to do any and all
acts and things necessary or desirable for the preservation protection,
improvement, and enhancement in value, of any and all such securities and
investments.
<PAGE>
To conduct researches, investigations, and examinations of
businesses and enterprises of every kind and description with the purpose of
securing information and particulars for the investment and employment of
capital, and to undertake and transact all kinds of business relating to the
gathering and distribution of financial and investment information and
statistics.
To import, export, manufacture, produce, buy, sell and
otherwise deal in and with, goods, wares and merchandise of every class and
description.
To engage in and carry on any other business which may
conveniently be conducted in conjunction with any of the business of the
corporation.
To acquire all or any part of the good will, rights, property
and business of any person, firm, association or corporation heretofore or
hereafter engaged in any business similar to any business which the corporation
has the power to conduct, and to hold, utilize, enjoy and in any manner dispose
of the whole or any part of the rights, property and business so acquired, and
to assume in connection therewith any liabilities of any such person, firm,
association or corporation.
To apply for, obtain, purchase or otherwise acquire, any
patents, copyrights, licenses, trade-marks, trade names, rights, processes,
formulas, and the like, which may seem capable of being used for any of the
purposes of the corporation; and to use, exercise, develop, grant licenses in
respect of, sell and otherwise turn to account, the same.
To acquire by purchase, subscription or in any other manner,
take, receive, hold, use, employ, sell, assign, transfer, exchange, pledge,
mortgage, lease, dispose of and otherwise deal in and with, any shares of stock,
shares, bonds, debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments evidencing rights or
options to receive, purchase or subscribe for the same or representing any other
rights or interests therein or in any property or assets, issued or created by
any persons, firms, associations, corporations, syndicates, or by any
governments or subdivisions thereof; and to possess and exercise in respect
thereof any and all rights, powers and privileges of individual holders.
To aid in any manner any person, firm, association,
corporation or syndicate, of which any shares, bonds, debentures, notes,
mortgages or other obligations, or any certificates, receipts, warrants or other
instruments evi-
<PAGE>
dencing rights or options to receive, purchase or subscribe for the same, or
representing any other rights or interests therein, are held by or for this
corporation, or in the welfare of which this corporation shall have any
interest, and to do any acts or things designed to protect, preserve, improve
and enhance the value of any such property or interest, or any other property of
this corporation.
To guarantee the payment of dividends upon any shares of stock
or shares in, or the performance of any con- tract by, any other corporation or
association in which this corporation has an interest, and to endorse or
otherwise guarantee the payment of the principal and interest, or either, of any
bonds, debentures, notes or other evidences of indebtedness created or issued by
any such other corporation or association.
To carry out all or any part of the foregoing objects as
principal, factor, agent, contractor, or otherwise, either alone or through or
in conjunction with any person, firm, association or corporation, and, in
carrying on its business and for the purpose of attaining or furthering any of
its objects and purposes, to make and perform any contracts and to do any acts
and things, and to exercise any powers suitable, convenient or proper for the
accomplishment of any of the objects and purposes herein enumerated or
incidental to the powers herein specified, or which at any time may appear
conducive to or expedient for the accomplishment of any of such objects and
purposes.
To carry out all or any part of the aforesaid objects and
purposes, and to conduct its business in all or any of its branches, in any or
all states, territories, districts and possessions of the United States of
America and in foreign countries; and to maintain offices and agencies in any or
all states, territories, districts and possessions of the United States of
America and in foreign countries.
The foregoing objects and purposes shall, except when
otherwise expressed, be in no way limited or restricted by reference to or
inference from the terms of any other clause of this or any other article of
these articles of incorporation or of any amendment thereto, and shall each be
regarded as independent, and construed as powers as well as objects and
purposes.
The corporation shall be authorized to exercise and enjoy all
of the powers, rights and privileges granted to, or conferred upon, corporations
of a similar character by the General Laws of the State of Maryland now or
hereafter in force, and the enumeration of the foregoing powers shall not
<PAGE>
be deemed to exclude any powers, rights or privileges so granted or conferred.
FOURTH: The post-office address of the principal Office of the
corporation in this State is c/o The Corporation Trust Incorporated, First
Maryland Building, 25 South Charles Street, Baltimore, Maryland 21201. The name
of the resident agent of the corporation in this State is The Corporation Trust
Incorporated, a corporation of this State, and the post-office address of the
resident agent is First Maryland Building, 25 South Charles Street, Baltimore,
Maryland 21201.
FIFTH: The total number of shares of stock which the
corporation shall have authority to issue is two hundred fifty thousand
(250,000) shares with a par value of One Dollar ($1.00) each.
SIXTH: The number of directors of the corporation shall be
three (3), which number may be increased or decreased pursuant to the by-laws of
the corporation and shall never be less than three (3). The names of the
directors who shall act until the first annual meeting or until their successors
are duly chosen and qualify are: WILLIAM C. GOW, WILLIAM BUSH and JOSEPH B.
BREEN.
SEVENTH: The following provisions are hereby adopted for the
purpose of defining, limiting and regulating the powers of the corporation and
of the directors and stockholders:
The board of directors of the corporation is hereby empowered
to authorize the issuance from time to time of shares of its stock of any class,
whether now or hereafter authorized, or securities convertible into shares of
its stock of any class or classes, whether now or hereafter authorized.
The directors may alter or amend the by-laws.
The corporation shall be prohibited from engaging in any of
the following investment practices: (1) investing in commodities, commodity
contracts, foreign currencies, bullion or chattels, except such chattels as are
required in the day-to-day operation of the Trust or in connection with its
mortgage loans; (2) investing in the ownership of, or interests in, real
property, except as may be the result of foreclosure; (3) investing in contracts
for the sale of real estate (unless acquired as additional security or upon
foreclosure of its mortgages); (4) investing in any mortgage loan other than
FHA's or VA's; (5) investing in junior mort-
<PAGE>
gage loans; (6) investing in any equity interests in real property; (7) engaging
in underwriting or the agency distribution of securities issued by others, (8)
investing in any equity securities of another company.
The corporation shall be prohibited from making any
investments or engaging in any transactions which, in the opinion of counsel,
would violate the provisions of the Investment Company Act of 1940, as
applicable to face-amount certificate companies, and from investing in
securities not permitted for investment by insurance companies under the Code of
the District of Columbia.
The corporation shall be prohibited from making loans to
affiliated persons of the corporation. The corporation may make loans to persons
other than affiliated persons, if the Trustees in their sole discretion
determine that such loans are investments which are qualified under the
provisions of 28(b) of the Investment Company Act.
The corporation shall be prohibited from declaring or paying
any dividends on shares which shall exceed one-third (1/3) of the net earnings
of the next proceeding calendar year or which shall exceed 10% of the aggregate
net earnings for the next proceeding calendar year or which shall exceed 10% of
the aggregate net earnings for the next proceeding five calendar years,
whichever is the lesser amount, or any dividend which shall have been forbidden
by the Securities and Exchange Commission, if the corporation does not maintain
the minimum certificate reserve on all its outstanding face-amount certificates
as provided in Section 28 of the Investment Company Act of 1940.
The corporation shall be permitted to purchase mortgage loans
from United First Mortgage Corporation ("UFMC"). UFMC shall service loans owned
by registrant and receive a fee for such servicing.
The corporation shall be permitted to purchase securities
including GNMA Certificates from UFM; Huntoon, Paige & Co., Inc., and Huntoon,
Paige Securities Corporation and to sell and purchase mortgages through Huntoon,
Paige & Co., Inc.
The corporation shall be permitted to borrow money and to
pledge assets of the Trust now reserved, as that term is used in Section 28 of
the Investment Company Act of 1940 on account of the face-amount certificates.
The corporation shall be permitted to buy and sell the
investments in its portfolio security as the corporation determines.
<PAGE>
The corporation shall deposit with an authorized bank such or
any part of the investments maintained by the corporation as certificate reserve
requirements.
The corporation is required to give thirty days notice before
the declaration of any dividend payable to shareholders.
The corporation shall invest its assets only in FHA and VA
mortgages, GNMA's, United States Government obligations or Bank Certificates of
Deposit.
Each share of the corporation will entitle the holder thereof
to one vote on any matters which may be voted upon by shareholders of the
corporation. Face amount certificate holders as such do not have any voting
right. Holders of shares are entitled to their pro rata share of the
registrant's assets distributed in liquidation after payments of all liabilities
payable to face amount certificate holders and to any other creditors of the
corporation. Face amount certificate holders do not have any right to convert
their face amount certificates into shares. Holders of shares are not entitled
to demand that the corporation redeem their shares except in accordance with the
provisions of Maryland law which allow holders of shares to appraisal rights.
Holders of shares that have been fully paid are not required to make any further
payments on their shares. Shares are freely transferable by holders thereof on
presentment of the proper documents, as required by the transfer agent for the
corporation.
No holder of shares of stock of any class shall be entitled as
a matter of right to subscribe for or purchase or receive any part of any new or
additional issue of shares of stock of any class or of securities convertible
into shares of stock of any class, whether now or hereafter authorized or
whether issued for money, for a consideration other than money or by way of
dividend.
Notwithstanding any provision of law requiring a greater
proportion than a majority of the votes of all classes or of any class of stock
entitled to be cast, to take or authorize any action, the corporation may take
or authorize such action upon the concurrence of a majority of the aggregate
number of the votes entitled to be cast thereon.
The corporation reserves the right from time to time to make
any amendment of its charter, now or hereafter authorized by law, including any
amendment which alters the contract rights, as expressly set forth in its
charter, of any outstanding stock.
<PAGE>
EIGHTH: The duration of the corporation shall be perpetual.
IN WITNESS WHEREOF, the undersigned incorporators of SECURED
CERTIFICATE ASSOCIATION FOR INVESTMENT IN U.S. GUARANTEED ASSETS, INC. who
executed the foregoing articles of incorporation hereby acknowledge the same to
be their act and further acknowledge that, to the best of their knowledge the
matters and facts set forth therein are true in all material respects under the
penalties of perjury.
Dated the 7th day of March, 1975.
JOHN H. PELLETIER
------------------------------------
John H. Pelletier
THOMAS C. TOTARO
------------------------------------
Thomas C. Totaro
FRANK SIMMONS
------------------------------------
Frank Simmons
<PAGE>
EXHIBIT 3.2
ARTICLES OF AMENDMENT
OF
SECURED CERTIFICATE ASSOCIATION FOR INVESTMENT
IN U.S. GUARANTEED ASSETS, INC.
********
SECURED CERTIFICATE ASSOCIATION FOR INVESTMENT IN U.S. GUARANTEED
ASSETS, INC., a Maryland corporation having its principal office in Baltimore,
Maryland (hereinafter called the Corporation), hereby certifies to the State
Department of Assessments and Taxation of Maryland, that:
FIRST: The charter of the Corporation is hereby amended by striking out
Article "SECOND" of the Articles of Incorporation and inserting in lieu thereof
a new Article "SECOND" and by adding to Article "SEVENTH" a new paragraph as the
first paragraph of said Article "SEVENTH" without deleting or changing any of
the existing paragraphs now in Article "SEVENTH", so that Article "SECOND" will
now read as follows:
"SECOND: The name of the corporation is
ASSOCIATION FOR INVESTMENT IN UNITED STATES
GUARANTEED ASSETS, INC."
and the new additional paragraph to Article Seventh will read as follows:
"The board of directors of the Corporation is hereby empowered to
authorize the issuance from time to time of any series, in any aggregate face
amount, of face amount certificates, whether now or hereafter authorized."
SECOND: The board of directors of the Corporation, by unanimous written
consent pursuant to Section 58 of Article 23 of the Annotated Code of Maryland,
duly adopted a resolution in which was set forth the foregoing amendment to the
charter, declaring that the said amendment of the charter as proposed was
advisable and directing that it be submitted for action thereon by the
stockholders of the Corporation.
THIRD: That the said amendment has been consented to and authorized by
the holders of all the issued and outstanding stock, entitled to vote, by a
written consent given in accordance with the provisions of Section 47 of Article
23 of the Annotated Code of Maryland, and filed with the Corporation.
FOURTH: The amendment of the charter of the Corporation as hereinabove
set forth has been duly advised by the board of directors and approved by the
stockholders of the Corporation.
IN WITNESS WHEREOF, SECURED CERTIFICATE ASSOCIATION FOR INVESTMENT IN
U.S. GUARANTEED ASSETS, INC. has caused these presents to be signed in its name
and on its behalf by its President and witnessed (or attested) by its Secretary
on May 29, 1975.
SECURED CERTIFICATE ASSOCIATION
FOR INVESTMENT IN U.S. GUARANTEED
ASSETS, INC.
By _______________________________
William C. Gow, President
WITNESS: (ATTEST)
- ---------------------------
Joseph B. Breen, Secretary
<PAGE>
THE UNDERSIGNED, President of SECURED CERTIFICATE ASSOCIATION FOR
INVESTMENT IN U.S. GUARANTEED ASSETS, INC. who executed on behalf of said
corporation the foregoing Articles of Amendment, of which this certificate is
made a part, hereby acknowledges, in the name and on behalf of said corporation,
the foregoing Articles of Amendment to be the corporate act of said corporation
and further certifies that, to the best of his knowledge, information and
belief, the matters and facts set forth therein with respect to the approval
thereof are true in all material respects, under the penalties of perjury.
----------------------------------
William C. Gow, President
<PAGE>
EXHIBIT 3.2A--CONSENT AMENDMENT
CONSENT IN WRITING TO AMENDMENT
OF ARTICLES OF INCORPORATION
OF
ASSOCIATION FOR INVESTMENT IN
UNITED STATES GUARANTEED ASSETS, INC.
* * * * * * * * * * * * * *
The UNDERSIGNED, being the sole stockholder entitled to vote
on amendments to the articles of incorporation of Association for Investment in
United States Guaranteed Assets, Inc., a corporation organized and existing
under the laws of the State of Maryland, DOES HEREBY GIVE ITS CONSENT in writing
pursuant to Section 2-205 of the Maryland Corporation Law and does adopt the
following resolution:
RESOLVED: That the articles of incorporation of this
corporation be and they hereby are amended by deleting Article SEVENTH thereof
and substituting the following new Article SEVENTH:
"SEVENTH: The following provisions are hereby adopted for the
purpose of defining, limiting and regulating the powers of the corporation and
of the directors and stockholders:
The board of directors of the corporation is hereby empowered
to authorize the issuance from time to time of any series, in any aggregate face
amount of the face amount certificates, whether now or hereafter authorized.
The board of directors of the corporation is hereby empowered
to authorize the issuance from time to time of shares of its stock of any class,
whether now or hereafter authorized, or securities convertible into shares of
its stock of any class or classes, whether now or hereafter authorized.
The directors may alter or amend the by-laws.
The corporation shall be prohibited from engaging in any of
the following investment practices: (1) investing in commodities, commodity
contracts, foreign currencies, bullion or chattels, except such chattels as are
required in the day-to-day operation of the corporation or in connection with
its mortgage loans; (2) investing in the ownership of, or interests in,real
property, except as may be the result of foreclosure; (3) investing in contracts
for the sale of real estate (unless acquired as additional security or upon
foreclosure of its mortgages); (4) investing in any mortgage loan other than
FHA's or VA's; (5) investing in junior mortgage loans; (6) investing in any
equity interests in real property; (7) engaging in underwriting or the agency
distribution of securities issued by others; and (8) investing in any equity
securities of another company.
<PAGE>
The corporation shall be prohibited from making any investment
or engaging in any transactions which, in the opinion of counsel, would violate
the provisions of the Investment Company Act of 1940, as applicable to
face-amount certificate companies, and from investing in securities not
permitted for investment by insurance companies under the Code of the District
of Columbia or by the Securities and Exchange Commission pursuant to Section
28(b) of the Investment Company Act.
The corporation may make loans to affiliated persons of the
corporation to the extent permitted by the Securities and Exchange Commission
pursuant to Section 28(b) of the Investment Company Act. The corporation may
make loans to persons other than affiliated persons, if the Trustees in their
sole discretion determine that such loans are investments which are qualified
under the provisions of 28(b) of the Investment Company Act.
The corporation shall be prohibited from declaring or paying
any dividends on shares which shall exceed one-third (1/3) of the net earnings
of the next proceeding calendar year or which shall exceed 10% of the aggregate
net earnings for the next proceeding calendar year or which shall exceed 10% of
the aggregate net earnings for the next proceeding five calendar years,
whichever is the lesser amount, or any dividend which shall have been forbidden
by the Securities and Exchange Commission, if the corporation does not maintain
the minimum certificate reserve on all its outstanding face-amount certificates
as provided in Section 28 of the Investment Company Act of 1940.
The corporation shall be permitted to purchase mortgage loans
from United First Mortgage Corporation ("UFMC"). UFMC shall service loans owned
by registrant and receive a fee for such servicing.
The corporation shall be permitted to purchase securities
including GNMA Certificates from UFMC; Huntoon, Paige & Co., Inc., and Huntoon,
Paige Securities Corporation and to sell and purchase mortgages through Huntoon,
Paige & Co., Inc.
The corporation shall be permitted to borrow money and to
pledge assets of the corporation not reserved, as that term is used in Section
28 of the Investment Company Act of 1940 on account of the face-amount
certificates.
The corporation shall be permitted to buy and sell the
investments in its portfolio security as the corporation determines.
The corporation shall deposit with an authorized bank such or
any part of the investments maintained by the corporation as certificate reserve
requirements.
The corporation is required to give thirty days notice before
the declaration of any dividend payable to shareholders.
The corporation shall invest its assets only in FHA and VA
mortgages, GNMA' s, United States Government obligations or Bank Certificates of
Deposit and such other investments as permitted by the Securities and Exchange
Commission pursuant to Section 28(b) of the Investment Company Act.
Each share of the corporation will entitle the holder thereof
to one vote on any matters which may be voted upon by shareholders of the
corporation. Face amount certificate holders as such do not have any voting
right. Holders of shares are entitled to their pro rata share of the
registrant's assets distributed in liquidation after payment of all liabilities
payable to face-amount certificate holders and to any other creditors of the
corporation. Face amount certificate holders do not have any right to convert
their face amount certificates into shares. Holders of shares are not entitled
to demand that
2
<PAGE>
the corporation redeem their shares except in accordance with the provisions of
Maryland law which allow holders of shares to appraisal rights. Holders of
shares that have been fully paid are not required to make any further payments
on their shares. Shares are freely transferable by holders thereof on
presentment of the proper documents, as required by the transfer agent for the
corporation.
No holder of shares of stock of any class shall be entitled as
a matter of right to subscribe for or purchase or receive any part of any new or
additional issue of shares of stock of any class or of securities convertible
into shares of stock of any class, whether now or hereafter authorized or
whether issued for money, for a consideration other than money or by way of
dividend.
Notwithstanding, any provision of law requiring a greater
proportion than a majority of the votes of all classes or of any class of stock
entitled to be cast, to take or authorize any action, the corporation may take
or authorize such action upon the concurrence of a majority of the aggregate
number of the votes entitled to be cast thereon.
The corporation reserves the right from time to time to make
any amendment of its charter, now or hereafter authorized by law, including any
amendment which alters the contract rights, as expressly set forth in its
charter, of any outstanding stock. "
FURTHER RESOLVED: that the board of directors and the proposed
officers of the corporation be and they hereby are authorized to do and perform
any and all acts and things necessary or advisable to perfect such amendment.
Dated: April 8, 1977 HUNTOON, PAIGE HOLDING CORPORATION
By _____________________________
Joseph B. Breen, President
Attest:_______________________________
Cecil W. Akre, Secretary
3
<PAGE>
EXHIBIT 3.2B--AMENDMENT
ARTICLES OF AMENDMENT
OF
ASSOCIATION FOR INVESTMENT IN UNITED STATES
GUARANTEED ASSETS, INC.
****************
ASSOCIATION FOR INVESTMENT IN UNITED STATES GUARANTEED ASSETS,
INC., a Maryland corporation having its principal office in Baltimore, Maryland
(hereinafter called the "Corporation"), hereby certifies to the State Department
of Assessments and Taxation of Maryland,that:
FIRST: The charter of the Corporation is hereby amended by
striking out Article "SEVENTH" of the Articles of Incorporation and inserting in
lieu thereof a new Article "SEVENTH", so that Article "SEVENTH" will now read as
follows:
"SEVENTH: The following provisions are hereby adopted for the
purpose of defining, limiting and regulating the powers of the corporation and
of the directors and stockholders:
The board of directors of the corporation is hereby empowered
to authorize the issuance from time to time of any series, in any aggregate face
amount of the face amount certificates, whether now or hereafter authorized.
The board of directors of the corporation is hereby empowered
to authorize the issuance from time to time of shares of its stock of any class,
whether now or hereafter authorized, or securities convertible into shares of
its stock of any class or classes, whether now or hereafter authorized.
The directors may alter or amend the by-laws.
The corporation shall be prohibited from engaging in any of
the following investment practices: (1) investing in commodities, commodity
contracts, foreign currencies, bullion or chattels, except such chattels as are
required in the day-to-day operation of the corporation or in connection with
its mortgage loans; (2) investing in the ownership of, or interests in, real
property, except as may be the result of foreclosure; (3) investing in contracts
for the sale of real estate (unless acquired as additional security or upon
foreclosure of its mortgages); (4) investing in any mortgage loan other than
FHA's or VA's; (5) investing in junior mortgage loans; (6) investing in any
equity interests in real
1
<PAGE>
property; (7) engaging in underwriting or the agency distribution of securities
issued by others; and (8) investing in any equity securities of another company.
The corporation shall be prohibited from making any investment
or engaging in any transactions which, in the opinion of counsel, would violate
the provisions of the Investment Company Act of 1940, as applicable to
face-amount certificate companies, and from investing in securities not
permitted for investment by insurance companies under the Code of the District
of Columbia or by the Securities and Exchange Commission pursuant to Section
28(b) of the Investment Company Act.
The corporation may make loans to affiliated persons of the
corporation to the extent permitted by the Securities and Exchange Commission
pursuant to Section 28(b) of the Investment Company Act. The corporation may
make loans to persons other than affiliated persons, if the directors in their
sole discretion determine that such loans are investments which are qualified
under the provisions of 28(b) of the Investment Company Act.
The corporation shall be prohibited from declaring or paying
any dividends on shares which shall exceed one-third (1/3) of the net earnings
of the next proceeding calendar year or which shall exceed 10% of the aggregate
net earnings for the next proceeding calendar year or which shall exceed 10% of
the aggregate net earnings for the next proceeding five calendar years,
whichever is the lesser amount, or any dividend which shall have been forbidden
by the Securities and Exchange Commission, if the corporation does not maintain
the minimum certificate reserve on all its outstanding face-amount certificates
as provided in Section 28 of the Investment Company Act of 1940.
The corporation shall be permitted to purchase mortgage loans
from United First Mortgage Corporation ("UFMC"). UFMC shall service loans owned
by registrant and receive a fee for such servicing.
The corporation shall be permitted to purchase securities
including GNMA Certificates from UFMC; Huntoon, Paige & Co., Inc., and Huntoon,
Paige Securities Corporation and to sell and purchase mortgages through Huntoon,
Paige & Co., Inc.
The corporation shall be permitted to borrow money and to
pledge assets of the corporation not reserved, as that
2
<PAGE>
term is used in Section 28 of the Investment Company Act of 1940 on account of
the face-amount certificates.
The corporation shall be permitted to buy and sell the
investments in its portfolio security as the corporation determines.
The corporation shall deposit with an authorized bank such or
any part of the investments maintained by the corporation as certificate reserve
requirements.
The corporation is required to give thirty days notice before
the declaration of any dividend payable to shareholders.
The corporation shall invest its assets only in FHA and VA
mortgages, GNMA's, United States Government obligations or Bank Certificates of
Deposit and such other investments as permitted by the Securities and Exchange
Commission pursuant to Section 28(b) of the Investment Company Act.
Each share of the corporation will entitle the holder thereof
to one vote on any matters which may be voted upon by shareholders of the
corporation. Face amount certificate holders as such do not have any voting
right. Holders of shares are entitled to their pro rata share of the
registrant's assets distributed in liquidation after payments of all liabilities
payable to face-amount certificate holders and to any other creditors of the
corporation. Face amount certificate holders do not have any right to convert
their face amount certificates into shares. Holders of shares are not entitled
to demand that the corporation redeem their shares except in accordance with the
provisions of Maryland law which allow holders of shares to appraisal rights.
Holders of shares that have been fully paid are not required to make any further
payments on their shares. Shares are freely transferable by holders thereof on
presentment of the proper documents, as required by the transfer agent for the
corporation.
No holder of shares of stock of any class shall be entitled as
a matter of right to subscribe for or purchase or receive any part of any new or
additional issue of shares of stock of any class or of securities convertible
into shares of stock of any class, whether now or hereafter authorized or
whether issued for money, for a consideration other than money or by way of
dividend.
Notwithstanding any provision of law requiring a greater
proportion than a majority of the votes of all classes or of any class of stock
entitled to be cast, to take or
3
<PAGE>
authorize any action, the corporation may take or authorize such action upon the
concurrence of a majority of the aggregate number of the votes entitled to be
cast thereon.
The corporation reserves the right from time to time to make
any amendment of its charter, now or hereafter authorized by law, including any
amendment which alters the contract rights, as expressly set forth in its
charter, of any outstanding stock."
SECOND: The board of directors of the corporation, duly
adopted a resolution in which was set forth the foregoing amendment to the
charter, declaring that the said amendment of the charter as proposed was
advisable and directing that it be submitted for action thereon by the
stockholders of the corporation.
THIRD: That the said amendment has been consented to and
authorized by the holders of all the issued and outstanding stock, entitled to
vote, by a written consent given in accordance with the provisions of Section
2-505 of the Annotated Code of Maryland, and filed with the records of
stockholders meetings.
FOURTH: The amendment of the charter of the corporation as
hereinabove set forth has been duly advised by the board of directors and
approved by the stockholders of the corporation.
IN WITNESS WHEREOF, ASSOCIATION FOR INVESTMENT IN UNITED
STATES GUARANTEED ASSETS, INC. has caused these presents to be signed in its
name and on its behalf by its President and witnessed (or attested) by its
Secretary on April 15, 1977.
ASSOCIATION FOR INVESTMENT IN
UNITED STATES GUARANTEED ASSETS, INC.
By___________________________________
William C. Bush, President
WITNESS: (ATTEST)
- ---------------------------------
Joseph B. Breen, Secretary
4
<PAGE>
THE UNDERSIGNED, President of ASSOCIATION FOR INVESTMENT IN
UNITED STATES GUARANTEED ASSETS, INC. who executed on behalf of said corporation
the foregoing Articles of Amendment, of which this certificate is made a part,
hereby acknowledges, in the name and on behalf of said corporation the foregoing
Articles of Amendment to be the corporate act of said corporation and further
certifies that, to the best of his knowledge, information and belief, the
matters and facts set forth therein with respect to the approval thereof are
true in all material respects, under the penalties of perjury.
------------------------------
William C. Bush, President
5
<PAGE>
EXHIBIT 3.3--BY LAWS
SECURED CERTIFICATE ASSOCIATION FOR INVESTMENT
IN U.S. GUARANTEED ASSETS, INC.
* * * * *
B Y - L A W S
* * * * *
ARTICLE I
OFFICES
Section 1. The principal office shall be in the City of New
York, State of New York.
Section 2. The corporation may also have offices at such other
places both within and without the State of Maryland as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of stockholders shall be held at the
office of the corporation in the City of New York, State of New York. Meetings
may be held at the principal office in this State or at such other place within
the United States as designated in the by-laws or fixed by the board of
directors pursuant to the by-laws.
Section 2. Annual meetings of stockholders, commencing with
the year 1976, shall be held on the 1st day of March if not a legal holiday, and
if a legal holiday then on the next secular day following, at 10:00 A. M., or at
such other date and time as shall be fixed by the Board of Directors between the
1st day of March and the 31st day of March and stated in the notice of the
meeting, at which they shall elect a board of directors and may transact any
business within the powers of the corporation. Any business of the corporation
may be transacted at the annual meeting without being specially designated in
the notice, except such business as is specifically required by statute to be
stated in the notice.
Section 3. At any time in the interval between annual meetings
special meetings of the stockholders may be called by the board of directors, or
by the president, a vice-president, the secretary, or an assistant secretary.
<PAGE>
Section 4. Special meetings of stockholders shall be called by
the secretary upon the written request of the holders of shares entitled to not
less than twenty-five percent of all the votes entitled to be cast at such
meetings. Such request shall state the purpose or purposes of such meeting and
the matters proposed to be acted on thereat. The secretary shall inform such
stockholders of the reasonably estimated cost of preparing and mailing such
notice of the meeting, and upon payment to the corporation of such costs the
secretary shall give notice stating the purpose or purposes of the meeting to
all stockholders entitled to vote at such meeting. No special meeting need to be
called upon the request of the holders of shares entitled to be case at such
meeting, to consider any matter which is substantially the same as a matter
voted upon at any special meeting of the stockholders held during the preceding
twelve months.
Section 5. Not less than ten nor more than ninety days before
the date of every stockholders' meeting, the secretary shall give to each
stockholder entitled to vote at such meeting, and to each stockholder not
entitled to vote who is entitled by statute to notice, written or printed notice
stating the time and place of the meeting and, in the case of a special meeting,
the purpose or purposes for which the meeting is called, either by mail or by
presenting it to him personally or by leaving it at his residence or usual place
of business. If mailed, such notice shall be deemed to be given when deposited
in the United States mail addressed to the stockholder at his post-office
address as it appears on the records of the corporation, with postage thereon
prepaid.
Section 6. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 7. At any meeting of stockholders the presence in
person or by proxy of stockholders entitled to cast a majority of the votes
thereat shall constitute a quorum; but this section shall not affect any
requirement under the statute or under the charter for the vote necessary for
the adoption of any measure. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified.
<PAGE>
Section 8. A majority of the votes cast at a meeting of
stockholders, duly called and at which a quorum is present, shall be sufficient
to take or authorize action upon any matter which may properly come before the
meeting, unless more than a majority of the votes cast is required by the
statute or by the charter.
Section 9. Each outstanding share of stock having voting power
shall be entitled to one vote on each matter submitted to a vote at a meeting of
stockholders; but no share shall be entitled to vote if any installment payable
thereon is overdue and unpaid. A stockholder may vote the shares owned of record
by him either in person or by proxy executed in writing by the stockholder or by
his duly authorized attorney-in-fact. No proxy shall be valid after eleven
months from its date, unless otherwise provided in the proxy. At all meetings of
stockholders, unless the voting is conducted by inspectors, all questions
relating to the qualification of voters and the validity of proxies and the
acceptance or rejection of votes shall be decided by the chairman of the
meeting. At all elections of directors of the corporation each stockholder
having voting power shall be entitled to exercise the right of cumulative voting
as provided in the articles of incorporation.
Section 10. Any action required or permitted to be taken at
any meeting of stockholders may be taken without a meeting, if a consent in
writing, setting forth such action, is signed by all the stockholders entitled
to vote on the subject matter thereof and any other stockholders entitled to
notice of a meeting of stockholders (but not to vote thereat) have waived in
writing any rights which they may have to dissent from such action, and such
consent and waiver are filed with the records of the corporation.
ARTICLE III
DIRECTORS
Section 1. The maximum number of directors of the corporation
shall be nine. Until the first annual meeting of stockholders or until
successors are duly elected and qualify, the board shall consist of the persons
named as such in the charter. At the first annual meeting of stockholders and at
each annual meeting thereafter, the stockholders shall elect directors to hold
office until the next annual meeting or until their successors are elected and
qualify. Directors need not be stockholders in the corporation.
Section 2. Any vacancy occurring in the board of directors for
any cause other than by reason of an increase in the number of directors may be
filled by a majority of the remaining members of the board of directors,
although such majority is less than a quorum. Any vacancy occurring by reason
<PAGE>
of an increase in the number of directors may be filled by action of a majority
of the entire board of directors. A director elected by the board of directors
to fill a vacancy shall be elected to hold office until the next annual meeting
of stockholders or until his successor is elected and qualifies.
Section 3. The business and affairs of the corporation shall
be managed by its board of directors, which may exercise all of the powers of
the corporation, except such as are by law or by the charter or by these by-laws
conferred upon or reserved to the stockholders.
Section 4. At any meeting of stockholders, duly called and at
which a quorum is present, the stockholders may, by the affirmative vote of the
holders of a majority of the votes entitled to be cast thereon, remove any
director or directors from office and may elect a successor or successors to
fill any resulting vacancies for the unexpired terms of removed directors.
MEETINGS OF THE BOARD OF DIRECTORS
Section 5. Meetings of the board of directors, regular or
special, may be held at any place in or out of the State of Maryland as the
board may from time to time determine.
Section 6. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the stockholders at the annual meeting, and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 7. Regular meetings of the board of directors may be
held without notice at such time and place as shall from time to time be
determined by the board of directors.
Section 8. Special meetings of the board of directors may be
called at any time by the board of directors or the executive committee, if one
be constituted, by vote at a meeting or by the president or by a majority of the
directors or a majority of the members of the executive committee in writing
with or without a meeting. Special meetings may be held at such place or places
within or without Maryland as may be designated from time to time by the board
of directors; in the absence of
<PAGE>
such designation such meetings shall be held at such places as may be designated
in the call.
Section 9. Notice of the place and time of every special
meeting of the board of directors shall be served on each director or sent to
him by telegraph or by mail, or by leaving the same at his residence or usual
place of business at least one day before the date of the meeting. If mailed,
such notice shall be deemed to be given when deposited in the United States mail
addressed to the director at his post-office address as it appears on the
records of the corporation, with postage thereon prepaid.
Section 10. At all meetings of the board, three of the entire
board of directors shall constitute a quorum for the transaction of business and
the action of a majority of the directors present at any meetings at which a
quorum is present shall be the action of the board of directors unless the
concurrence of a greater proportion is required for such action by statute, the
articles of incorporation of these by-laws. If a quorum shall not be present at
any meeting of directors, the directors present thereat may by a majority vote
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 11. Any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if a written consent to such action is signed by all members
of the board or of such committee, as the case may be, and such written consent
is filed with the minutes of proceedings of the board or committee.
COMMITTEES OF DIRECTORS
Section 12. The board of directors may appoint from among its
members an executive committee and other committees composed of two or more
directors, and may delegate to such committees, in the intervals between
meetings of the board of directors, any or all of the powers of the board of
directors in the management of the business and affairs of the corporation,
except the power to declare dividends, to issue stock or to recommend to
stockholders any action requiring stockholders' approval. In the absence of any
member of any such committee, the members thereof present at any meeting,
whether or not they constitute a quorum, may appoint a member of the board of
directors to act in the place of such absent members.
Section 13. The committees shall keep minutes of their
proceedings and shall report the same to the board of directors at the meeting
next succeeding, and any action by the
<PAGE>
committees shall be subject to revision and alteration by the board of
directors, provided that no rights of third persons shall be affected by any
such revision or alteration.
COMPENSATION OF DIRECTORS
Section 14. Directors, as such, shall not receive any stated
salary for their services but, by resolution of the board, a fixed sum, and
expenses of attendance if any, may be allowed to directors for attendance at
each regular or special meeting of the board of directors, or of any committee
thereof, but nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
ARTICLE IV
NOTICES
Section 1. Notices to directors and stockholders
shall be in writing and delivered personally or mailed to directors or
stockholders at their addresses appearing on the books of the corporation.
Notice by mail shall be deemed to be given at the time when the same shall be
mailed. In the case of stockholders' meetings the notice may be left at the
stockholders residence or usual place of business. Notice to directors may also
be given by telegram.
Section 2. Whenever any notice of the time, place or purpose
of any meeting of stockholders, directors or committee is required to be given
under the provisions of the statute or under the provisions of the charter or
these by-laws, a waiver thereof in writing, signed by the person or persons
entitled to such notice and filed with the records of the meeting, whether
before or after the holding thereof, or actual attendance at the meeting of
stockholders in person or by proxy, or at the meeting of directors or committee
in person, shall be deemed equivalent to the giving of such notice to such
persons.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by
the board of directors and shall be a president, a vice-president, a secretary
and a treasurer. The president shall be selected from among the directors. The
board of directors may also choose additional vice-presidents, and one or more
assistant secretaries and assistant treasurers. Two or more offices, except
those of president and vice-president, may be held by the same person but no
officer shall execute,
<PAGE>
acknowledge or verify any instrument in more than one capacity, if such
instrument is required by law, the charter or these by-laws to be executed,
acknowledged or verified by two or more officers.
Section 2. The board of directors at its first meeting after
each annual meeting of stockholders shall choose a president from among the
directors, and shall choose one or more vice-presidents, a secretary and a
treasurer, none of whom need be a member of the board.
Section 3. The board of directors may appoint such other
officers and agents as it shall deem necessary, who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall serve for one
year and until their successors are chosen and qualify. Any officer or agent may
be removed by the board of directors whenever, in its judgment, the best
interests of the corporation will be served thereby, but such removal shall be
without prejudice to the contractual rights, if any, of the person so removed.
If the office of any officer becomes vacant for any reason, the vacancy shall be
filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer
of the corporation; he shall preside at all meetings of the stockholders and
directors, shall have general and active management of the business of the
corporation, and shall see that all orders and resolutions of the board are
carried into effect.
Section 7. He shall execute in the corporate name all
authorized deeds, mortgages, bonds, contracts or other instruments requiring a
seal, under the seal of the corporation, except in cases in which the signing or
execution thereof shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.
VICE-PRESIDENTS
Section 8. The vice-president, or if there shall be more than
one, the vice-presidents in the order determined by the board of directors,
shall, in the absence or disability of the president, perform the duties and
exercise the powers of the president, and shall perform such other duties and
have such
<PAGE>
other powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the
board of directors and all meetings of the stockholders and record all the
proceedings of the meetings of the corporation and of the board of directors in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He shall give, or cause to be given, notice
of all meetings of the stockholders and special meetings of the board of
directors, and shall perform such other duties as may be prescribed by the board
of directors or president, under whose supervision he shall be. He shall keep in
safe custody the seal of the corporation and, when authorized by the board of
directors, affix the same to any instrument requiring it and, when so affixed,
it shall be attested by his signature or by the signature of an assistant
secretary.
Section 10. The assistant secretary, or if there be more than
one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors.
Section 12. He shall disburse the funds of the corporation as
may be ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall
give the corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the board for the faithful performance of the duties of
his office and for the restoration to the corporation, in case of his death,
resignation, retirement or removal from office, of all books,
<PAGE>
papers, vouchers, money and other property of whatever kind in his possession or
under his control belonging to the corporation.
Section 14. The assistant treasurer, or if there shall be more
than one, the assistant treasurers in the order determined by the board of
directors, shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Each stockholder shall be entitled to a certificate
or certificates which shall represent and certify the number and kind and class
of shares owned by him in the corporation. Each certificate shall be signed by
the president or a vice-president and countersigned by the secretary or an
assistant secretary or the treasurer or an assistant treasurer and may be sealed
with the corporate seal.
Section 2. The signatures may be either manual or facsimile
signatures and the seal may be either facsimile or any other form of seal. In
case any officer who has signed any certificate ceases to be an officer of the
corporation before the certificate is issued, the certificate may nevertheless
be issued by the corporation with the same effect as if the officer had not
ceased to be such officer as of the date of its issue. Every certificate
representing stock issued by a corporation which is authorized to issue stock of
more than one class shall set forth upon the face or back of the certificate, a
full statement or summary of the designations, preferences, limitations, and
relative rights of the shares of each class authorized to be issued and, if the
corporation is authorized to issue any preferred or special class in series, the
variations in the relative rights and preferences between the shares of each
such series so far as the same have been fixed and determined and the authority
of the board of directors to fix and determine the relative rights and
preferences of subsequent series. A summary of such information included in a
registration statement permitted to become effective under the Federal
Securities Act of 1933, as now or hereafter amended, shall be an acceptable
summary for the purposes of this section. In lieu of such full statement or
summary, there may be set forth upon the face or back of the certificate a
statement that the corporation will furnish to any stockholder upon request and
without charge, a full statement of such information. Every certificate
representing shares which are restricted or limited
<PAGE>
as to transferability by the corporation issuing such shares shall either (i)
set forth upon the face or back of the certificate a full statement of such
restriction or limitation or (ii) state that the corporation will furnish such a
statement upon request and without charge to any holder of such shares. No
certificate shall be issued for any share of stock until such share is full
paid.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate
or certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been stolen, lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be stolen, lost or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such stolen, lost or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and to give the corporation a bond, with sufficient surety, to the corporation
to indemnify it against any loss or claim which may arise by reason of the
issuance of a new certificate.
TRANSFERS OF STOCK
Section 4. Upon surrender to the corporation or the transfer
agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
CLOSING OF TRANSFER BOOKS
Section 5. The board of directors may fix, in advance, a date
as the record date for the purpose of determining stockholders entitled to
notice of, or to vote at, any meeting of stockholders, or stockholders entitled
to receive payment of any dividend or the allotment of any rights, or in order
to make a determination of stockholders for any other proper purpose. Such date,
in any case, shall be not more than sixty days, and in case of a meeting of
stockholders not less than ten days, prior to the date on which the particular
action requiring such determination of stockholders is to be taken. In lieu of
fixing a record date, the board of directors may provide that the stock transfer
books shall be closed for a stated
<PAGE>
period but not to exceed, in any case, twenty days. If the stock transfer books
are closed for the purpose of determining stockholders entitled to notice of or
to vote at a meeting of stockholders, such books shall be closed for at least
ten days immediately preceding such meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
bot be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Maryland.
ARTICLE VII
GENERAL PROVISIONS
DIVIDEND
Section 1. Dividends upon the capital stock of the
corporation, subject to the provisions of the articles of incorporation, if any,
may be declared by the board of directors at any regular or special meeting,
pursuant to law. Dividends may be paid in cash, in property, or in its own
shares, subject to the provisions of the statute and of the articles of
incorporation.
Section 2. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve fund to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interests of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
Section 3. The president or a vice-president or the treasurer
shall prepare or cause to be prepared annually a full and correct statement of
the affairs of the corporation, including a balance sheet and a financial
statement of operations for the preceding fiscal year, which shall be submitted
at the annual meeting and shall be filed within twenty days thereafter at the
principal office of the corporation in the State of Maryland.
<PAGE>
CHECKS
Section 4. All checks, drafts, and orders for the payment of
money, notes and other evidences of indebtedness, issued in the name of the
corporation shall be signed by such officer or officers as the board of
directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the
name of the corporation, the year of its organization and the words "Corporate
Seal, Maryland." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
STOCK LEDGER
Section 7. The corporation shall maintain at its office in the
City of New York, State of New York, an original stock ledger containing the
names and addresses of all stockholders and the number of shares of each class
held by each stockholder. Such stock ledger may be in written form or any other
form capable of being converted into written form within a reasonable time for
visual inspection.
ARTICLE VIII
AMENDMENTS
Section 1. The board of directors shall have the power, at any
regular meeting or at any special meeting if notice thereof be included in the
notice of such special meeting, to alter or repeal any by-laws of the
corporation and to make new by-laws, except that the board of directors shall
not alter or repeal any by-laws made by the stockholders.
Section 2. The stockholders shall have the power, at any
annual meeting or at any special meeting if notice thereof be included in the
notice of such special meeting, to alter or repeal any by-laws of the
corporation and to make new by-laws.
<PAGE>
EXHIBIT 4.1-SAMPLE CERTIFICATE
Certificate No.______________
ASSOCIATION FOR INVESTMENT IN
UNITED STATES GUARANTEED ASSETS, INC.
SINGLE PAYMENT FACE AMOUNT
CERTIFICATE SERIES 28
THIS IS TO CERTIFY that in consideration of the payment of
heretofore made to it ASSOCIATION FOR INVESTMENT IN UNITED STATES GUARANTEED
ASSETS, INC. ( the Company ) agrees, subject to all of the conditions and
provisions of this certificate, to pay to
("the Owner") at the maturity of this certificate the face amount hereof in the
sum of
or in such installments as may be elected hereunder.
The foregoing provisions, together with all the conditions and
provisions in Articles l through l0 hereinafter set forth and hereby made a part
of this certificate as if fully set forth herein, constitute the entire
agreement of the Company with the Owner.
IN WITNESS WHEREOF the Company has caused this certificate to be duly
executed at New York, New York.
ASSOCIATION FOR INVESTMENT IN UNITED STATES
GUARANTEED ASSETS, INC
Dated: December 12, 1975 By
Authenticated as of:.................................
By________________________________________
AUTHORIZED SIGNATURE
<PAGE>
ARTICLE 1. MAINTENANCE OF RESERVES
(a) The Company will maintain at all times the minimum certificate
reserves on all its outstanding face-amount certificates in an aggregate amount
calculated and adjusted as required by Section 28(a) (2) (E) of the Investment
Company Act of 1940 as it exists on the date this certificate is issued. The
amount of the reserve shall at any time be at least equal to (1) such amount as
and when accumulated at a rate not to exceed 3 1/2 per centum per annum
compounded annually, will provide the amount or amounts payable when due and (2)
such amount as shall have been credited to the account of each such certificate
holder in the form of any credit, or any dividend, or any interest in addition
to the minimum maturity amount specified in the certificate, plus any
accumulations on any amount or amounts so credited, at a rate not exceeding 3
1/2 per centum per annum compounded annually;
(b) Prior to maturity and to the effective date of an election under
Article 5 to receive term installment payments, the Company will maintain
reserves for each $400 paid for this certificate as follows (rounded to the
nearest dollar):
<TABLE>
<CAPTION>
Minimum Total
Year-End Reserves Payments
-------- -------- --------
<S> <C> <C>
Purchase........................................................ $ 380 $ 400
1............................................................ 393 400
2............................................................ 407 400
3............................................................ 421 400
4............................................................ 436 400
5............................................................ 451 400
6............................................................ 467 400
7............................................................ 484 400
8............................................................ 500 400
9............................................................ 518 400
10........................................................... 536 400
11........................................................... 555 400
12........................................................... 574 400
13........................................................... 594 400
14........................................................... 615 400
15........................................................... 637 400
16........................................................... 659 400
17........................................................... 682 400
18........................................................... 706 400
19........................................................... 731 400
20........................................................... 756 400
21........................................................... 783 400
22........................................................... 810 400
23........................................................... 838 400
24........................................................... 868 400
25........................................................... 898 400
26........................................................... 930 400
27........................................................... 962 400
28........................................................... 996 400
28.13 (maturity)............................................. 1,000 400
</TABLE>
The reserves will accumulate interest at the rate of 3 1/2% per annum compounded
annually. During the same period, the Company will also maintain the reserve
required by Article 8(a) with respect to any additional credits granted pursuant
to the provisions thereof.
2
<PAGE>
(c) From the effective date of an election of any Settlement Option
under Article 5, the Company will maintain a reserve in respect of this
certificate which shall consist of such amount as will when accumulated at the
rate of 3 1/2%, per annum, compounded annually, provide the amount or amounts
payable when due and also the reserve required by Article 8(b) with respect to
any additional credits granted pursuant to the provisions thereof.
ARTICLE 2. QUALIFIED INVESTMENTS
The Company will maintain cash or investments having a total value at
least equal to the aggregate amount of the reserves required under the
provisions of this certificate. The Company is restricted by its Articles of
Incorporation to investments in mortgage loans guaranteed by the Veterans
Administration or insured by FHA (FHA and VA mortgages) GNMA Certificates and
other U. S. Government Securities which include United States Treasury Bonds,
Notes and Bills, Treasury Certificates of Indebtedness and securities issued by
instrumentalities of the United States Government, such as Federal Land Bank
Bonds, Federal Home Loan Bank Bonds and Notes, Federal National Mortgage
Association Debentures and Notes and Federal Intermediate Credit Bank
Debentures. Investments shall be valued, for all purposes under this
certificate, in accordance with any applicable provisions of the Code of the
District of Columbia. Any investments to which such provisions are not
applicable shall be valued in such manner as the Securities and Exchange
Commission shall prescribe.
ARTICLE 3. DEPOSIT OF ASSETS
The Company will deposit and maintain cash and qualified investments
with one or more independent depositaries as provided by agreements with such
depositary or depositaries, or otherwise, in such manner and amount as shall be
in conformity with or allowed by the provisions of Section 28(c) of the
Investment Company Act of 1940 and the rules, regulations and orders of the
Securities and Exchange Commission made from time to time pursuant thereto. Any
assets so deposited and any assets deposited in conformity with any statute or
any rule, regulation, or order or requirement of any state or of any official or
agency thereof, made from time to time, shall be deemed to be maintained by the
Company under the requirements of Article 2.
ARTICLE 4. MATURITY OF CERTIFICATE
This certificate shall mature 28.13 years from the date of its
execution unless prior to that date it has been surrendered pursuant to Article
6 or an election to receive a settlement option under Article 5 has become
effective. The maturity value of this certificate will be $1,000 for each $400
of the amount paid for this certificate. The maturity value will be increased by
the amount of additional credits, together with accumulations thereon, granted
pursuant to Article 8(a).
ARTICLE 5. SETTLEMENT OPTIONS
Each of the settlement options provided in this article is subject to
the general provisions governing settlement options subsequently set forth in
this article.
OPTION A. TERM INSTALLMENT PAYMENTS
By an election made at least 30 days before but effective at maturity
Owner may elect to receive the total value of this certificate, together with
interest thereon, in installment payments of not less than $500 per quarter not
more often than quarterly on the following payment dates: January 15, April 15,
July 15, October 15. Each payment, including the first shall be made on the
payment date next after maturity and shall be continued until the total value of
this certificate and any additional interest or additional credits have been
disbursed in the installments elected. The balance remaining in the hands of the
Company will accrue interest compounded annually at 3 1/2% and additional
credits which may be granted pursuant to Article 8(b).
3
<PAGE>
OPTION B. DEFERRED INTEREST
By an election made at least 30 days before but effective at maturity,
Owner may elect to leave with the Company all or any part of the total value of
this certificate as of such date to earn interest for an additional period of up
to 20 years as designated by Owner. The amount so left will earn interest at the
rate of 3 1/2% per annum compounded annually as set forth in the following
table.
TABLE OF VALUES UNDER DEFERRED INTEREST
OPTION (PER $1,000)
<TABLE>
<CAPTION>
Year-End Amount Year-End Amount
-------- ------ -------- ------
<S> <C> <C> <C>
1st................. $1,035.00 11th................ $1,459.97
2nd................. 1,071.23 12th................ 1,511.07
3rd................. 1,108.72 13th................ 1,563.96
4th................. 1,147.52 14th................ 1,618.69
5th................. 1,187.69 15th................ 1,675.35
6th................. 1,229.26 16th................ 1,733.99
7th................. 1,272.28 17th................ 1,794.68
8th................. 1,316.81 18th................ 1,857.49
9th................. 1,362.90 19th................ 1,922.50
10th................. 1,410.60 20th................ 1,989.79
</TABLE>
The values shown above may be further increased by additional credits
and interest thereon, if any such credits have been granted pursuant to Article
8(b). The entire amount left under this Option, together with all interest
earned thereon and the amount of any reserve under Article 8(b), shall be
payable to Owner in a single sum at the end of the period elected by Owner.
GENERAL PROVISIONS GOVERNING SETTLEMENT OPTIONS.
Every election under any of the foregoing settlement options must be
made not less than 30 days prior to maturity by written notice in a form
acceptable to the Company and unless previously withdrawn shall become effective
upon maturity. If neither Option A nor Option B is elected Owner will receive
payment in a single sum the total value of this certificate. No election or
combination of elections may be made which would require the Company to make any
payment later than twenty years after the date upon which the first election of
an option under this article became effective or to make any term installment
payment of less than $500 (except for the last installment). At any time after
the effective date of an election of any settlement option, Owner may elect to
receive payment in a single sum of the amount of the reserve maintained under
such option and of any reserve under Article 8(b).
ARTICLE 6. CASH SURRENDER VALUE
At any time prior to maturity and prior to the effective date of an
election to receive a settlement option under Article 5, Owner may surrender
this certificate and receive the cash surrender value in a single sum. The
initial surrender value shall be $380 for each $400 of the amount paid for a
single Series 28 certificate. Thereafter at the end of each year
4
<PAGE>
subsequent to its issuance the cash surrender value for each $400 of the amount
paid for a single Series 28 certificate shall be the amount shown in the
following table (rounded to nearest dollar):
TABLE OF CASH SURRENDER VALUES
<TABLE>
<CAPTION>
Year- Year- Year-
end Amount end Amount end Amount
--- ------ --- ------ --- ------
<S> <C> <C> <C> <C> <C>
1st.............. $ 393 11th.............. $ 555 21st................ $ 783
2nd.............. 407 12th.............. 574 22nd................ 810
3rd.............. 421 13th.............. 594 23rd................ 838
4th.............. 436 14th.............. 615 24th................ 868
5th.............. 451 15th.............. 637 25th................ 898
6th.............. 467 16th.............. 659 26th................ 930
7th.............. 484 17th.............. 682 27th................ 962
8th.............. 500 18th.............. 706 28th................ 996
9th.............. 518 19th.............. 731 28.13 (maturity).... 1,000
10th............. 536 20th.............. 756
</TABLE>
The cash surrender value increases proportionately during each
certificate year.
In addition to the cash surrender value shown above, the Owner will be
paid the amount of any reserve maintained under Article 8(a).
At any time and from time to time when the cash surrender value is in
excess of $500.00, in lieu of surrender the Owner may present this certificate
and request in writing payment of any portion of the cash surrender value
provided that such portion is $500.00 or more. The Company will write upon this
certificate the portion paid and return the certificate to the Owner with the
payment of the amount requested.
On each surrender prior to maturity, whether partial or complete there
will be a transaction charge of $2.50 to cover clerical and administrative
expenses.
ARTICLE 7. CERTIFICATE LOAN PRIVILEGE
At any time subsequent to the date of issue of the certificate, the
Company will loan to Owner solely upon the security of this certificate a
minimum amount of $1,000 but not greater than 98% of the cash surrender value of
the certificate. The loan will bear interest payable annually in advance at a
rate fixed by the Company at the time of making the loan or a renewal thereof.
Such rate may be changed on any renewal date by giving at least 15 days' notice
thereof to the Owner, but shall not be in excess of 5% per annum. The loan will
be for one year but subject to the provisions of this article will be renewed
for one or more additional periods of one year if certificate values are
sufficient to pay or Owner pays the interest for such an additional period. If
interest is not paid when due, it will be added to the indebtedness and bear
interest at the same rate as such indebtedness.
Whenever the indebtedness of the Owner to the Company equals or exceeds
98% of the total value of this certificate, the Company may apply such total in
payment to the indebtedness and the certificate shall become void.
Owner may pay all or part of the total indebtedness at any time while
this certificate is in force.
Upon a final settlement with Owner, the amount of any loan indebtedness
shall be deducted from the amount otherwise payable to Owner.
As evidence of and as security for the loan, Owner shall execute and
deliver a note or loan agreement and an assignment of the certificate which may
contain such other terms and conditions consistent with this article as the
Company may prescribe.
Borrowed reserves will be ineligible for additional credits.
5
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ARTICLE 8. ADDITIONAL CREDIT
(a) Prior to maturity or election of Settlement Option.
Unless an election to receive an optional settlement under Article 5
has become effective, there shall be credited to this certificate at the end of
each fiscal year of the Company as an additional credit an additional amount
computed as follows:
(i) to the extent that the income attributable to the reserves
maintained for this certificate exceeds 4 1/2% of such reserves, so
much of said excess income as equals 4% of such reserves, plus
(ii) one-half of the balance of such excess income
attributable to such reserves, if there is any balance remaining, after
deducting and crediting out of the income attributable to such
reserves:
(a) the aforesaid 4% additional credit;
(b) 3 1/2% interest due such reserves, and
(c) 1% of such reserves to the Company which after
expenses of operations and taxes, if any, will be applied to
retained earnings of the Company.
The Company will maintain a reserve which shall consist of any amounts
credited pursuant to this article plus accumulations thereon. Accumulation will
be at the rate of 3 1/2% per annum compounded annually. The amount of any
reserve under this article shall be paid to the Owner upon surrender or at
maturity unless Owner has elected to leave such amount after maturity under a
settlement option under Article 5. The grant of any additional credits under
this paragraph shall be wholly independent of the grant of any additional
credits under paragraph (b) of this article and shall be reduced proportionately
for any period of the fiscal year during which the reserves behind the
certificates were unfunded or ineligible for any reason. For example, if a
certificate were purchased after the start of the fiscal year of the Company the
reserves would be entitled to additional credits only for such proportionate
part of such year as the reserves were funded.
(b) AFTER ELECTION OF SETTLEMENT OPTION.
After the effective date of an election of a settlement option under
Article 5, there shall be credited to this certificate an additional amount
computed at the end of each fiscal year of the Company as follows: One-half of
the excess if any, of the income attributable to the reserves maintained for
this certificate over 4 1/2% of such reserves. The Company will maintain a
reserve under this article which shall consist of the amount of any such credits
not previously paid Owner under Article 5 plus accumulations thereon.
Accumulation will be at the rate of 3 1/2% per annum compounded annually. The
amount of any reserve under this article shall be paid to Owner as provided in
Article 5. The grant of any additional credits determined under this paragraph
shall be wholly independent of the grant of any additional credits under
paragraph (a) of this article and shall be reduced proportionately for any
period of the fiscal year during which the reserves behind the certificates were
unfunded or ineligible for any reason.
ARTICLE 9. TRANSFER OF CERTIFICATE
This certificate may be transferred on the records of the Company in
its home office pursuant to a written assignment or transfer in form acceptable
to the Company. This certificate is not a negotiable instrument. No transfer
assignment, pledge, delivery or other disposition of the certificate or of
Owner's rights under it will in any way bind or affect the Company until written
notice thereof has been received in its home office and receipt of such notice
duly acknowledged.
ARTICLE 10. MISCELLANEOUS
Wherever used in this certificate, the words "total value" shall mean
the aggregate amount the Owner would be entitled to receive in cash upon
surrender or at maturity of this certificate as provided in Article 5 or 6 and
Article 8 at the time such value is being determined. Whenever used in this
certificate, the term "year" shall mean any period of twelve consecutive months,
which may commence on any day of any calendar month.
6
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At its option the Company may defer for not more than thirty days any
payment to which Owner may become entitled prior to maturity under Article 6 or
7. The Company shall pay interest on the amount deferred at the rate of 3 1/2%
per annum for any such period of deferment. Any payment by the Company shall
also be subject to such other deferment as may be provided by rules, regulations
or orders made by the Securities and Exchange Commission.
An Owner may surrender his certificate for payment by sending to the
Company or its agent Bank a written request accompanied by the certificate
which, in the case of complete surrender or choice of a settlement option, shall
be duly endorsed. All certificates and all written requests for or elections
with respect to payment must be endorsed by the Owner with signatures guaranteed
by a commercial bank or by a member of a stock exchange. The Company or its
agent may request further documentation from corporations, executors,
administrators, trustees or guardians. Any payment made by the Company prior to
the acknowledgment by the Company of the written notice required by Article 9
hereof shall to the extent thereof discharge the obligation of the Company under
this certificate. All amounts payable to or by the Company in connection with
this certificate shall be payable at the home office of the Company unless
otherwise elected by the Company. No person has authority to change the terms of
this certificate or to bind the Company by any statement not set forth in it.
Nothing contained in this certificate shall prevent the issuance by the Company
of other securities or certificates with such terms and conditions as it shall
determine.
7
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Date made on this Signature
Certificate
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8
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EXHIBIT 7--CONSENT
Emmet, Marvin & Martin, LLP
Counselors at Law
9 Old Kings Highway South
P. O. Box 1106
Darien, Connecticut 06820
(203) 662-0812
Fax: (203) 655-2882
Association for Investment in
United States Guaranteed Assets, Inc.
P. O. Box 4183
Stamford, CT 06907
Dear Sirs:
Referring to the Post Effective Amendment to Form S-1 in (file
#2-63910) filed by Association for Investment in United States Guaranteed
Assets, Inc., (hereinafter called "USGA"), with the Securities and Exchange
Commission, relating to $30,018.162 face amount of USGA, Series 28 single
payment certificates, it is our opinion that:
1. USGA is duly organized and existing under the laws Of the
State of Maryland.
2. USGA's issuance of the Series 28 Certificates on the terms set
forth in such registration statement has been duly authorized
by its Board of Directors and these Certificates are valid,
legal and binding obligations of the company according to
their terms.
We hereby consent to the use of this opinion in the above-mentioned
Post Effective Amendment to Form S-1.
Very truly yours,
Joseph B. Breen
JBB:bw
