November 1999
LINCOLN CAPITAL MANAGEMENT COMPANY
CODE OF ETHICS
Employees of Lincoln Capital should conduct themselves with integrity and
dignity and act in an ethical manner in dealings with clients, business
partners, fellow employees and the public.
PROHIBITION AGAINST ASSISTING LEGAL AND ETHICAL VIOLATIONS
An employee shall not knowingly participate in any act that violates any
applicable law, rule, or regulation of any Government, Government agency, or
regulatory organization governing professional, financial, or business activity,
nor any act which would violate any provision of this Code of Ethics.
PROHIBITION AGAINST USE OF MATERIAL NON-PUBLIC INFORMATION
It is a violation of United States Federal securities law and a serious breach
of Lincoln Capital's Code of Ethics for an employee to trade in, or recommend
trading in, the securities of a company, either for personal gain or on behalf
of the firm's clients, while in the possession of material, nonpublic
information ("inside information") obtained either in the course of performing
duties, or through personal contacts. Such violations could subject an employee
and Lincoln Capital to significant civil as well as criminal liability,
including the imposition of monetary penalties. It could also result in
irreparable harm to the reputation of Lincoln Capital. Tippees (i.e., persons
who receive material, nonpublic information) also may be held liable if they
pass along such information to others.
Inside information is generally understood as material information about an
issuer of publicly-traded securities that has not been made known to either the
professional investment community or to the public at large. Inside information
is MATERIAL if it would be likely to have a substantial effect on the price of
the issuer's securities or if a reasonable investor would be likely to consider
it important in making his/her investment decision. Such information usually
originates from the issuer itself and could include, among other things,
knowledge of a company's earnings or dividends, a significant change in the
value of assets, changes in key personnel or plans for a merger or acquisition.
For example, a Lincoln Capital portfolio manager, analyst or trader may receive
information about an issuer's earnings or a new product in a private
communication with the issuer. Such information is usually considered INSIDE
INFORMATION because it has not been effectively disseminated to the public at
large. As a general rule, any information received from an issuer that has not
been made public in a press release, a public filing or forum should be
considered inside information.
In addition, Rule 14e-3 under the Securities Exchange Act of 1934 (the "Exchange
Act") makes it unlawful to buy or sell securities while in possession of
material information relating to a tender offer, if the person buying or selling
the securities knows or has reason to know that the information is nonpublic and
has been acquired, directly or indirectly, from the person making or planning to
make the tender offer, from the target company, or from any officer, director,
partner or employee
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or other person acting on behalf of either the bidder or the target company.
This rule prohibits not only trading, but also the communication of material,
nonpublic information relating to a tender offer to another person in
circumstances under which it is reasonably foreseeable that the communication
could result in a trade by someone in possession of the material, nonpublic
information.
Insider trading violations do not result when a perceptive investor reaches a
conclusion about a corporate action or event through an analysis of public
information and nonmaterial, nonpublic information (such as major cost cutting
initiatives, new products, etc.). This is known as the mosaic theory. The data
used in creating the mosaic may be gathered from all of the sources at the
investor's disposal, including the company itself and sources outside of the
company, such as suppliers, customers, and competitors. The investor may use
conclusions reached under the mosaic theory as the basis for investment
recommendations without the need for the company to release the information
through broad, public means. Additionally, mere possession of material nonpublic
information is not a violation.
ACTIVITIES WITH RESPECT TO MATERIAL INSIDE INFORMATION
Engaging in communication of material inside information could result in
violation of the Federal securities laws. Individuals who commit such acts could
be subject to severe penalties under the securities laws and termination from
Lincoln Capital.
1) Whenever an employee believes that he/she may have come into possession
of material, nonpublic information about a public company, he/she
personally must notify the Compliance Director as well as one other
Managing Director and may not communicate such information to anyone
else. Additionally, Lincoln Capital is obliged to contact the company
and urge that the information be made public.
2) Whenever an employee has material, nonpublic information relating to
any security, an employee may not buy or sell that security, or any
derivative of that security, personally or for family members, any
client account under Lincoln Capital management or any other person. In
addition, an employee may not recommend to others that they should buy
or sell that security or any derivative thereof.
RESPONSIBILITIES OF SUPERVISORS
A person with supervisory responsibility shall exercise reasonable oversight of
their employees to prevent violation of applicable statutes, regulations and
provisions of this Code of Ethics. This Code has been adopted by Lincoln Capital
to comply with regulatory requirements. Any questions about the Code or the
applicability of the Code to a personal securities transaction should be
directed to the Compliance Director. If the Compliance Director is not
available, questions should be directed to another Managing Director. In so
doing the employee is entitled to rely upon reasonable procedures established by
Lincoln Capital.
PROHIBITION AGAINST MISREPRESENTATION OF SERVICES
An employee shall not make any statements, orally or in writing, which
misrepresent:
1) the services that the individual or Lincoln Capital performs for
clients;
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2) the qualifications of such person or Lincoln Capital;
3) the investment performance that the person or Lincoln Capital has
achieved or can reasonably be expected to achieve for the client; and or
4) the expected performance of any investment.
An employee shall not make, orally or in writing, explicitly or implicitly, any
assurances about or guarantees of any investment or its return except
communication of accurate information as to the terms of the investment
instrument and the issuer's obligations under the instrument.
FAIR DEALING WITH CLIENTS
An employee shall act in a manner consistent with the obligation to deal fairly
with all clients when:
1) disseminating investment recommendations;
2) disseminating material changes from prior investment advice; and
3) taking investment action.
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PRIORITY OF TRANSACTIONS
An employee shall give client transactions priority over personal transactions,
and ensure that any personal transactions do not adversely affect client
interests. If an employee decides to purchase or sell a security or other
investment, the employee must obtain prior approval from the Compliance Director
prior to executing the transaction.
DISCLOSURE OF CONFLICTS
An employee, when making an initial investment recommendation, shall disclose to
the Compliance Director and the Equity or Fixed Income Group, whichever is
appropriate, any potential conflict of interest relating to any beneficial
ownership of the securities or other investments involved that might reasonably
be expected to impair the employee's ability to render unbiased and objective
advice.
An employee shall disclose all matters that could reasonably be expected to
interfere with the employee's duty to Lincoln Capital and/or Lincoln Capital
clients, or with the ability to render unbiased and objective advice.
An employee shall also comply with all requirements as to disclosure of
conflicts of interest imposed by law and by rules and regulations of
organizations governing the employee's activities, and shall comply with any
prohibitions on the employee's activities if a conflict of interest exists.
If an employee is a director of a public company, Lincoln Capital will not trade
in any security of that company.
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Personal Trading
Below are rules governing personal purchases and sales of Common Stocks, Taxable
Fixed Income Securities, Options and Futures Contracts. These rules apply to
transactions in which an employee is deemed to have a beneficial interest in or
accounts over which the employee exercises discretion or control. Some examples
are:
1) securities an employee owns or has pledged to another;
2) securities an employee holds in a joint account with a spouse or
immediate family member;
3) securities held by any partnership other than Lincoln Partners in which
an employee is a general partner or by a trust of which an employee is a
beneficiary (except for a remainder interest that does not participate in
investment decisions regarding trust assets);
4) securities held by an employee as trustee of a trust of which the
employee is the settlor or an immediate family member has a beneficial
interest; and
5) securities held by a spouse, unless legally separated, or minor children
or a person living in the employee's household.
An employee will not be deemed to have a beneficial interest in securities if
they are held by a limited partnership in which the employee does not have or
share investment control over the partnership's portfolio.
These examples are not exclusive. There are other circumstances in which an
employee may or may not be deemed to have a beneficial interest. Any questions
should be directed to the Compliance Director.
PROHIBITION OF TRADING BENCHMARK ISSUES
Lincoln Capital employees may not buy or sell securities which are used or are
designated for possible use for Lincoln Capital client accounts. We call these
securities Benchmark issues. Each employee must submit a list of any Benchmark
issues owned at each year-end to the Compliance Director.
Effective 12/31/94, an employee of Lincoln Capital is prohibited from
buying Benchmark issues. The names of Lincoln Benchmark issues are attached and
include all present holdings of Lincoln Capital and other companies considered
to be candidates for Lincoln Capital accounts.
Any Benchmark issues already owned by Lincoln Capital employees prior
to the above date or acquired prior to employment by Lincoln Capital are
"grandfathered," and do not have to be sold. Nor is sale required for an issue
bought after 12/31/94 which subsequently is designated a Benchmark issue. A list
of benchmark issues at each calendar year-end must be submitted to the
Compliance Director. New employees must submit Benchmark issues to the
Compliance Director upon employment. Lincoln Capital employees may sell such
securities only in accordance with the transaction rules set forth below.
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REPORTING
Every Lincoln Capital employee must arrange for duplicate confirms of all
personal trades to be sent by their broker to Lincoln Capital's Compliance
Director. In addition, employees must report all personal trades in writing
quarterly. A copy of the Form is provided on page 9 of this document. Employees
must provide Lincoln Capital's Compliance Director with an annual statement of
all transactions and holdings from their broker. Annual statements are due in
January. Separate confidential files will be maintained for each employee. The
Compliance Director will review reports of all personal securities transactions
for adherence to the Code and compliance with applicable law and regulation.
PRIOR PERMISSION (PRE-CLEARANCE)
Prior to the purchase or sale of any non-Benchmark issue, an employee must
submit a request in writing to the Compliance Director using a trade
authorization form (example provided on page 10 of this document) which is
available from Equity trading. The employee cannot execute the trade until the
form is signed and returned. The Compliance Director will sign the form only
after ensuring (with the assistance of Equity trading) that the employee
transaction does not conflict with any current client transaction, pending order
or intention to buy or sell the issue for client accounts.
Once authorized, the employee has THREE days to execute the trade or else must
re-submit another request. The employee is also bound by the blackout period and
60-day rule described below. All trade execution information needs to be
supplied on the trade authorization form and returned to Equity trading.
In the absence of the Compliance Director, trades may be cleared by another
Managing Director. The Compliance Director's trades will be cleared by another
Managing Director. A log of all approvals and denials is kept by the Compliance
Director. The Code of Ethics is not intended to restrict personal investment
activities of employees beyond that necessary to accomplish its purposes.
Therefore, the pre-clearance procedure will not apply to:
1) purchases or sales of mutual funds (including any public or private
fund advised by Lincoln Capital);
2) bank certificates of deposit or commercial paper;
3) U.S. government securities and municipal securities;
4) purchases which are part of an automatic dividend reinvestment plan;
5) purchases or sales over which you have no direct influence or control;
and or
6) purchases or sales of stock index options, financial futures or index
participations (however, options on individual securities must receive
pre-clearance).
BLACKOUT PERIOD
Even after receiving written permission to make a specific trade, an employee is
still prohibited from buying or selling the security within three calendar days
before or after Lincoln Capital and/or Lincoln Partners trades in that security
(counting the trade date). To avoid even the
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appearance of "front running," if Lincoln Capital and/or Lincoln Partners
decides within the three day blackout period to trade in that particular stock
or sector of the fixed income market for fundamental reasons, the employee must
disgorge to a charitable organization any profits realized on the trade. If
Lincoln Capital trading within the 3 day period is done only for cash flow
reasons, that is, to adjust broadly client holdings because of unforeseen
capital contributions or withdrawals, the employee does not have to forego any
profit on the trade.
60 DAY RULE
Employees are prohibited from profiting in the purchase and sale, or sale and
purchase, of the same security within 60 calendar days.
PURCHASE OF PRIVATE SECURITY
Employees must receive approval from the Compliance Director prior to the
purchase of a private issue ("private placement"). In the case of a private
placement originated by a broker-dealer with whom Lincoln Capital may execute
trades for its clients, approval must be received from a second Lincoln Capital
Managing Director in addition to the Compliance Director. (If the Compliance
Director is the purchaser, approval is necessary from two other Managing
Directors.) These persons will consider potential conflicts of interest with
client accounts or opportunities in deciding whether to approve a purchase of a
private issue. If an issue which has been purchased by an employee in a private
placement (or another security of the same issuer) is ultimately considered by
Lincoln Capital as a viable prospect for purchase by clients, the Lincoln
Capital employee holding such an issue shall consult with the Compliance
Director who shall decide whether it is appropriate or desirable for the
employee to disqualify himself from any considerations with respect to the
purchase or sale of such issue or such issuer for client accounts.
Initial Public Offering
Because of the nature of the business relationship between Lincoln Capital and
its securities brokers, employees of Lincoln Capital are prohibited from
purchasing shares in an initial public offering.
DIRECTORSHIPS
Membership on the Board of Directors of a Benchmark issue will require prior
approval by Lincoln Capital Managing Directors. A person serving as a director
of any such company shall not participate in the decision to recommend or to
purchase or sell a security of such company for client accounts.
RESTRICTIONS ON RECEIVING GIFTS
Employee's shall not receive any gift in merchandise or service of more than
nominal value from any person or entity that does business with or on behalf of
Lincoln Capital.
COMPENSATION
1) Disclosure of Additional Compensation Arrangements
An employee shall inform Lincoln Capital of compensation or other
benefit arrangements
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in connection with any additional services.
2) Disclosure of Referral Fees
An employee shall make appropriate disclosure to Lincoln Capital of any
consideration paid or other benefit delivered to others for
recommending Lincoln's services to a prospective client. Where
applicable, any referral fee arrangements will be conducted in
accordance with Rule 206(4)-3 under the Investment Advisers Act.
3) Duty to Employer
An employee shall not undertake independent practice for compensation
or other benefit in competition with Lincoln Capital, unless written
consent is obtained from Lincoln Capital.
RELATIONSHIPS WITH OTHERS
1) Preservation of Confidentiality
An employee shall preserve the confidentiality of information
communicated by the client concerning matters within the scope of the
confidential relationship, unless the employee receives information
concerning illegal activities on the part of the client.
2) Fiduciary Duties
An employee, in relationships with clients, shall use particular care
in determining applicable fiduciary duty, and shall comply with such
duty as to those persons and interests to whom it is owed.
CONSEQUENCES FOR FAILURE TO COMPLY WITH THE CODE OF ETHICS
Compliance with this Code of Ethics is a condition of employment at Lincoln
Capital. Taking into consideration all relevant circumstances, the Compliance
Director, in consultation with other Managing Directors, will determine what
action is appropriate for any breach of the provisions of the Code.
PROFESSIONAL MISCONDUCT
An employee shall not:
1) commit a criminal act that upon conviction materially reflects
adversely on the employee's fitness as an employee of Lincoln Capital;
2) engage in conduct involving dishonesty, fraud, deceit or
misrepresentation;
3) use, sell, dispense, or possess any illegal drugs or narcotics; nor
5) report to work under the influence of alcohol.
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At the time of employment and subsequently at the beginning of each calendar
year, every Lincoln Capital employee must review and sign a copy of the Code of
Ethics and certify that the employee has reported all personal securities
transactions in accordance with this Code.
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QUARTERLY EMPLOYEE TRADE REPORTING FORM
LINCOLN CAPITAL MANAGEMENT COMPANY
Name:
For Quarter Ending:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Name of Buy or Date of Total
Security Sell No. of Shares Transaction Broker Price Cost
-------- ---- ------------- ----------- ------ ----- ----
</TABLE>
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TRADING REQUEST FORM
Date:______________________
I would like to purchase/sell the following securities:
Have you purchased or sold any of the above securities within the past 60 days?
Signed:________________________________
Compliance Director:___________________
Trader:________________________________
After approval, record the completed transaction below and return to Compliance
Director:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Name of Security Buy No. Date of Broker Price Total Cost
---------------- or Sell Shares Transaction ------- ----- ----------
------- ------ -----------
</TABLE>
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RESTRICTIONS ON RECEIVING GIFTS
Lincoln employees shall not accept a gift in merchandise or service of more than
nominal value from any person or entity that does business with or on behalf of
Lincoln Capital. All employees are required to exercise good judgement in their
interaction with brokers and suppliers, as even the appearance of a conflict of
interest could prove to be detrimental to Lincoln. Specifically: 1) solicitation
of any free goods or services from a supplier is prohibited; 2) provision for
travel and/or accommodations is prohibited.
If an employee has any questions about the appropriateness of a gift from a
supplier, he/she should first discuss it with the Compliance Director.
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