Registration No. 33-33799
File No. 811-6001
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
PRE-EFFECTIVE AMENDMENT NO. ___ / /
POST-EFFECTIVE AMENDMENT NO. 7 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 9 / X /
OPPENHEIMER GLOBAL GROWTH & INCOME FUND
- -----------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Two World Trade Center, New York, New York 10048-0203
- -----------------------------------------------------------------------
(Address of Principal Executive Offices)
212-323-0200
- -----------------------------------------------------------------------
(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
Oppenheimer Management Corporation
Two World Trade Center, New York, New York 10048-0203
- -----------------------------------------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box):
/ / Immediately upon filing pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / On _ _ _ _ _ _ _ _ pursuant to paragraph (b)
/ / On _ _ _ _ _ pursuant to paragraph (a)(1)
/ X / On February 1, 1994, pursuant to paragraph (a)(2)
of Rule 485.
- -----------------------------------------------------------------------
The Registrant has registered an indefinite number of its shares under the
Securities Act of 1933 pursuant to Rule 24f-2 promulgated under the
Investment Company Act of 1940. A Rule 24f-2 Notice for the Registrant's
fiscal year ended September 30, 1994 was filed on November 29, 1994.
<PAGE>
FORM N-1A
OPPENHEIMER GLOBAL GROWTH & INCOME FUND
Cross Reference Sheet
Part A of
Form N-1A
Item No. Prospectus Heading
1 Front Cover Page
2 Expenses; Overview of the Fund
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; How the Fund is Managed--Organization and
History; Investment Objective and Policies
5 How the Fund is Managed; Expenses; Back Cover
5A Performance of the Fund
6 How the Fund is Managed--Organization and History-- The
Transfer Agent; Dividends, Capital Gains and Taxes;
Investment Objective and Policies--Portfolio Turnover
7 Shareholder Account Rules and Policies; How Buy Shares; How
to Exchange Shares; Special Investor Services; Service Plan
for Class A Shares; Distribution and Service Plan for Class
B Shares; How to Sell Shares
8 How to Sell Shares; Special Investor Services
9 *
Part B of
Form N-1A
Item No. Heading In Statement of Additional Information
10 Cover Page
11 Cover Page
12 *
13
Investment Objective and Policies; Other Investment
Techniques and Strategies; Additional Investment
Restrictions
14 How the Fund is Managed - Trustees and Officers of the Fund
15 How the Fund is Managed - Major Shareholders
16 How the Fund is Managed; Distribution and Service Plans
17 Brokerage Policies of the Fund
18 Additional Information About the Fund
19 Your Investment Account - How to Buy Shares; How to Sell
Shares; How to Exchange Shares
20 Dividends, Capital Gains and Taxes
21 How the Fund is Managed; Brokerage Policies of the Fund
22 Performance of the Fund</R
23
*
- ----------------
* Not applicable or negative answer.
<PAGE>
OPPENHEIMER GLOBAL GROWTH &
INCOME FUND
Prospectus dated February 1, 1995
Oppenheimer Global Growth & Income Fund (the "Fund") is a
mutual fund with the investment objective of seeking capital
appreciation consistent with preservation of principal while providing
current income. The Fund emphasizes a combination of investments in
common stocks, convertible securities and fixed income securities and
will normally invest in at least four countries (including the United
States). The Fund may also write covered calls and use certain hedging
instruments. The Fund is not intended for investors whose principal
objective is assured income and conservation of capital. Some
investment techniques the Fund uses may be considered to be speculative
investment methods that may increase the risks of investing in the Fund
and may also increase the Fund's operating costs. You should carefully
review the risks associated with an investment in the Fund. The
securities the Fund invests in, its investment methods and certain of
the risks of those investments and investment methods are described
more completely in "Investment Objective and Policies" in the
Prospectus.
The Fund offers two classes of shares: (1) Class A shares,
which are sold at a public offering price that includes a front-end
sales charge, and (2) Class C shares, which are sold without a front-
end sales charge, although you may pay a sales charge when you redeem
your shares, depending on how long you hold them. A contingent
deferred sales charge is imposed on most Class C shares redeemed within
12 months of purchase. Class C shares are also subject to an annual
"asset-based sales charge." Each class of shares bears different
expenses. In deciding which class of shares to buy, you should
consider how much you plan to purchase, how long you plan to keep your
shares, and other factors discussed in "How to Buy Shares" starting on
page __.
This Prospectus explains concisely what you should know
before investing in the Fund. Please read this Prospectus carefully
and keep it for future reference. You can find more detailed
information about the Fund in the February 1, 1995 Statement of
Additional Information. For a free copy, call Oppenheimer Shareholder
Services, the Fund's Transfer Agent, at 1-800-525-7048, or write to the
Transfer Agent at the address on the back cover. The Statement of
Additional Information has been filed with the Securities and Exchange
Commission and is incorporated into this Prospectus by reference (which
means that it is legally part of this Prospectus).
Because of the Fund's investment policies and practices, the
Fund's shares may be considered to be speculative.
Shares of the Fund are not deposits or obligations of any bank, are
not guaranteed by any bank, and are not insured by the F.D.I.C. or any
other agency, and involve investment risks, including the possible loss
of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
About the Fund
Expenses
Overview of the Fund
Financial Highlights
Objective and Policies
How the Fund is Managed
Performance of the Fund
About Your Account
How to Buy Shares
Class A Shares
Class C Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
<PAGE>
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management of its
assets, administration, distribution of its shares and other services,
and those expenses are subtracted from the Fund's assets to calculate
the Fund's net asset value per share. All shareholders therefore pay
those expenses indirectly. Shareholders pay other expenses directly,
such as sales charges and account transaction charges. The following
tables are provided to help you understand your direct expenses of
investing in the Fund and your share of the Fund's business operating
expenses that you will bear indirectly. The numbers below are based on
the Fund's expenses during its last fiscal year ended September 30,
1994.
Shareholder Transaction Expenses are charges you pay when you
buy or sell shares of the Fund. Please refer to "About Your Account,"
from pages ____ through ____, for an explanation of how and when these
charges apply.
Class A Shares Class C
Shares
Maximum Sales Charge on Purchases
(as a % of offering price) 5.75% None
Sales Charge on Reinvested Dividends None None
Deferred Sales Charge
(as a % of the lower of the original
purchase price or redemption proceeds)None(1) 1.0%(2)
Exchange Fee $5.00(3) $5.00(3)
(1) If you invest more than $1 million in Class A shares, you may
have to pay a sales charge of up to 1.0% if you sell your shares
within 18 calendar months from the end of the calendar month
during which you purchased those shares. See "How to Buy Shares
- Class A Shares," below.
(2) If you redeem Class C shares within 12 months of buying them, you
may have to pay a 1.0% contingent deferred sales charge. See
"How to Buy Shares - Class C Shares," below.
(3) The fee is waived for automated exchanges, as described in "How
to Exchange Shares," below.
Annual Fund Operating Expenses are paid out of the Fund's
assets and represent the Fund's expenses in operating its business.
For example, the Fund pays management fees to its investment adviser,
Oppenheimer Management Corporation (which is referred to in this
Prospectus as the "Manager"). The rates of the Manager's fees are set
forth in "How the Fund is Managed," below. The Fund has other regular
expenses for services, such as transfer agent fees, custodial fees paid
to the bank that holds its portfolio securities, audit fees and legal
expenses. Those expenses are detailed in the Fund's Financial
Statements in the Statement of Additional Information.
The numbers in the chart below are projections of the Fund's
business expenses based on the Fund's expenses in its last fiscal year.
These amounts are shown as a percentage of the average net assets of
each class of the Fund's shares for that year. The management fees in
the chart below reflect an increase in the management fee rates payable
by the Fund to the Manager, which increase was approved by the Fund's
shareholders at a shareholder meeting held on June 20, 1994 and became
effective as of such date. For further information, see "How the Fund
is Managed - The Manager and Its Affiliates - Fees and Expenses." The
"12b-1 Distribution Plan Fees" for Class A shares are Service Plan Fees
(which are a maximum of 0.25% of average annual net assets of that
class), and for Class C shares are the Distribution and Service Plan
Fees (maximum of 0.25% of average annual net assets of that class for
the service fee) and the asset-based sales charge of 0.75%. These
plans are described in greater detail in "How to Buy Shares."
The actual expenses for each class of shares in future years may
be more or less than the numbers in the chart, depending on a number of
factors, including the actual value of the Fund's assets represented by
each class of shares. Class C shares were not publicly sold before
December 1, 1993. Therefore, the Annual Fund Operating Expenses shown
for Class C shares are based only on expenses for the period from
December 1, 1993 through September 30, 1994.
Class A Shares Class C Shares
Management Fees .__% .__%
2b-1 Distribution Plan Fees .__% .__%
Other Expenses .__% .__%
Total Fund Operating Expenses .__% .__%
Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown
below. Assume that you make a $1,000 investment in each class of
shares of the Fund, and the Fund's annual return is 5%, and that its
operating expenses for each class are the ones shown in the Annual Fund
Operating Expenses chart above. If you were to redeem your shares at
the end of each period shown below, your investment would incur the
following expenses by the end of 1, 3, 5 and 10 years:
1 year 3 years 5 years 10 years*
Class A Shares $__ $__ $___ $___
Class C Shares $__ $__ $___ $___
If you did not redeem your investment, it would incur the
following expenses:
Class A Shares $__ $__ $___ $___
Class C Shares $__ $__ $__ $___
*Because of the asset-based sales charge imposed on Class C shares
of the Fund, long-term shareholders of Class C shares could bear
expenses that would be the economic equivalent of an amount greater
than the maximum front-end sales charges permitted under applicable
regulatory requirements. Please refer to "How to Buy Shares - Class C
Shares" for more information.
These examples show the effect of expenses on an investment, but
are not meant to state or predict actual or expected costs or
investment returns of the Fund, all of which will vary.
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below,
with references to the section of this Prospectus where more complete
information can be found. You should carefully read the entire
Prospectus before making a decision about investing. Keep the
Prospectus for reference after you invest, particularly for information
about your account, such as how to sell or exchange shares.
What Is The Fund's Investment Objective? The Fund's
investment objective is to seek capital appreciation consistent with
preservation of principal while providing current income.
What Does the Fund Invest In? Depending on market conditions,
the Fund may emphasize investments in a combination of common stocks,
convertible securities and securities acquired primarily to produce
income, such as fixed-income securities and income-producing common
stocks. The Fund will normally maintain investments in at least four
countries (including the United States). The Fund may also write
covered calls and use derivative investments to enhance income, and may
use hedging instruments, including some derivative investments, to try
to manage investment risks. These investments and investment methods
are more fully explained in "Investment Objective and Policies,"
starting on page ___.
Who Manages the Fund? The Fund's investment adviser is
Oppenheimer Management Corporation, which (including a subsidiary)
advises investment company portfolios having over $28 billion in
assets. The Fund's portfolio manager, who is primarily responsible for
the selection of the Fund's securities, is William L. Wilby. The
Manager is paid an advisory fee by the Fund, based on its assets. The
Fund's Board of Trustees, elected by shareholders, oversees the
investment adviser and the portfolio manager. Please refer to "How the
Fund is Managed" starting on page ___ for more information about the
Manager and its fees, and the Fund's portfolio managers.
How Risky is the Fund? All investments carry risks to some
degree. The Fund's investments in stocks and bonds are subject to
changes in their value from a number of factors such as changes in
general bond and stock market movements, the change in value of
particular stocks or bonds because of an event affecting the issuer, or
changes in interest rates that can affect bond prices. These changes
affect the value of the Fund's investments and its price per share.
The Fund's investment in foreign securities involves additional
considerations and risks not associated with investment in domestic
securities, including risks associated with changes in currency rates
and issuers in non-industrialized countries. Certain of the Fund's
investment techniques and strategies, such as purchasing securities
with borrowed funds, hedging and investing in derivative investments
may subject an investment in the Fund to relatively greater risks and
costs that may not be present in a mutual fund that does not utilize
these practices. In the OppenheimerFunds spectrum, the Fund is
generally more conservative than aggressive growth funds, but more
aggressive than money market or investment grade bond funds. While the
Manager tries to reduce risks by diversifying investments, by carefully
researching securities before they are purchased for the portfolio, and
in some cases by using hedging techniques, there is no guarantee of
success in achieving the Fund's objective and your shares may be worth
more or less than their original cost when you redeem them. Please
refer to "Investment Objective and Policies" starting on page ___ for a
more complete discussion.
How Can I Buy Shares? You can buy shares through your dealer
or financial institution, or you can purchase shares directly through
the Distributor by completing an Application or by using an Automatic
Investment Plan under AccountLink. Please refer to "How to Buy Shares"
on page ___ for more details.
Will I Pay a Sales Charge to Buy Shares? The Fund has two
classes of shares. Class A shares are offered with a front-end sales
charge, starting at 5.75%, and reduced for larger purchases. Class C
shares are offered without a front-end sales charge, but may be subject
to a contingent deferred sales charge of 1.0% if redeemed within 12
months of purchase. There is also an annual asset-based sales charge
on Class C shares. Please review "How to Buy Shares" starting on page
___ for more details, including a discussion about which class may be
appropriate for you.
How Can I Sell My Shares? Shares can be redeemed by mail or
by telephone call to the Transfer Agent on any business day, or through
your dealer. Please refer to "How to Sell Shares" on page ___.
How Has the Fund Performed? The Fund measures its performance
by quoting its average annual total return and cumulative total return,
which measure historical performance. Those returns can be compared to
the returns (over similar periods) of other funds. Of course, other
funds may have different objectives, investments, and levels of risk.
The Fund's performance can also be compared to broad market indices,
which we have done on page ___. Please remember that past performance
does not guarantee future results.
<PAGE>
Financial Highlights
The table on this page presents selected financial information
about the Fund, including per share data and expense ratios and other
data based on the Fund's average net assets. This information has been
audited by KPMG Peat Marwick LLP, the Fund's independent auditors,
whose report on the Fund's financial statements for the fiscal year
ended September 30, 1994 is included in the Statement of Additional
Information. Class C shares were publicly offered only during a
portion of that period, commencing December 1, 1993.
<PAGE>
Investment Objective and Policies
Objective. As its investment objective, the Fund seeks capital
appreciation consistent with preservation of principal while providing
current income.
Investment Policies and Strategies. In seeking its investment
objective, depending on the assessment of market conditions by the
Manager, the Fund may emphasize investments in common stocks and
securities convertible into common stocks, or securities acquired
primarily to produce income, or in a combination of both types of
investments. Securities acquired primarily to produce income are
bonds, notes, debentures and income-producing common stocks. When the
investment climate is viewed as favorable, common stocks may be more
heavily emphasized. The Fund will invest in foreign as well as
domestic securities and normally will maintain investments in at least
four countries (including the United States). While the Fund may
invest in securities having appreciation possibilities, such securities
will not be selected which, in the view of the Manager, would involve
undue risk.
When market or economic conditions are unstable, the Fund may
invest all or a portion of its assets in government securities, money
market instruments, commercial paper and short-term debt securities.
See "Temporary Defensive Investments," below. The Fund may try to
hedge against losses in the value of its portfolio of securities by
using hedging strategies and derivative investments described below.
The Fund's portfolio manager may employ special investment techniques
in selecting securities for the Fund. These are also described below.
Additional information may be found about them under the same headings
in the Statement of Additional Information. The Fund is not intended
for investors whose principal objective is assured income and
conservation of capital. Since market risks are inherent in all
investments to varying degrees, there can be no assurance that the Fund
will meet its investment objective.
Can the Fund's Investment Objective and Policies Change? The
Fund has an investment objective, described above, as well as
investment policies it follows to try to achieve its objective.
Additionally, the Fund uses certain investment techniques and
strategies in carrying out those investment policies. The Fund's
investment policies and techniques are not "fundamental" unless this
Prospectus or the Statement of Additional Information says that a
particular policy is "fundamental." The Fund's investment objective is
a fundamental policy.
The Fund's Board of Trustees may change non-fundamental policies
without shareholder approval, although significant changes will be
described in amendments to this Prospectus. Fundamental policies are
those that cannot be changed without the approval of a "majority" of
the Fund's outstanding voting shares. The term "majority" is defined
in the Investment Company Act to be a particular percentage of
outstanding voting shares (and this term is explained in the Statement
of Additional Information).
Stock Investment Risks. Because the Fund invests a
substantial portion of its assets in stocks, the value of the Fund's
portfolio will be affected by changes in the stock markets. At times,
the stock markets can be volatile and stock prices can change
substantially. This market risk will affect the Fund's net asset value
per share, which will fluctuate as the values of the Fund's portfolio
securities change. Not all stock prices change uniformly or at the
same time, and other factors can affect a particular stock's prices
(for example, poor earnings reports by an issuer, loss of major
customers, major litigation against an issuer, changes in government
regulations affecting an industry). Not all of these factors can be
predicted.
The Fund attempts to limit market risks by diversifying its
investments, that is, by not holding a substantial amount of the stock
of any one company and by not investing too great a percentage of the
Fund's assets in any one company. Also, the Fund does not concentrate
its investments in any one industry or group of industries. Because
changes in overall market prices can occur at any time, and because the
income earned on securities is subject to change, there is no assurance
that the Fund will achieve its investment objective, and when you
redeem your shares, they may be worth more or less than what you paid
for them.
Interest Rate Risks. In addition to credit risks, described
below, fixed-income securities are subject to changes in their value
due to changes in prevailing interest rates. When prevailing interest
rates fall, the value of already-issued fixed-income securities
generally rise. When interest rates rise, the values of already-issued
fixed-income securities generally decline. The magnitude of these
fluctuations will often be greater for longer-term fixed-income
securities than shorter-term fixed-income securities. Changes in the
value of securities held by the Fund mean that the Fund's share prices
can go up or down when interest rates change because of the effect of
the change on the value of the Fund's portfolio of debt securities.
Special Risks of Lower-Rated Securities. Investments in bonds
and debentures will be based on the Fund's investment objective and
will not be limited to issues having specific ratings. The Fund may
invest in bonds and debentures rated as low as "C" or "D" by Moody's
Investors Service, Inc. ("Moody's") or Standard & Poor's Corporation
("Standard & Poor's"). Such lower ratings indicate that the
obligations are speculative in a high degree and may be in default. As
a non-fundamental policy, the Fund will invest no more than 25% of its
total assets in "lower-grade" or non-investment grade securities, which
are those securities rated below "BBB" by Standard & Poor's or below
"Baa" by Moody's, although the Fund currently intends to invest no more
than 15% of its total assets in securities rated below BBB/Baa. The
Fund is not obligated to dispose of securities that have been
downgraded below investment grade. The Appendix of the Statement of
Additional Information describes these rating categories. The Manager
does not rely solely on the ratings of rated securities in making
investment decisions but evaluates other economic and business factors
affecting the issuer as well.
The primary advantage of high yield, lower-rated securities is
their attractive investment return. However, high yield, lower-grade
securities, whether rated or unrated, often have speculative
characteristics. Lower-grade securities have special risks that make
them riskier investments than investment grade securities. They may be
subject to greater market fluctuations and risk of loss of income and
principal than lower yielding, investment grade securities. There may
be less of a market for them and therefore they may be harder to sell
at an acceptable price. There is a relatively greater possibility that
the issuer's earnings may be insufficient to make the payments of
interest due on the bonds. The issuer's low creditworthiness may
increase the potential for its insolvency.
These risks mean that the Fund may not achieve the expected
income from lower-grade securities, and that the Fund's net asset value
per share may be affected by declines in value of these securities.
However, the Fund's limitations on investments in these types of
securities may reduce some of the risk, as will the Fund's policy of
diversifying its investments. Also, convertible securities may be less
subject to some of these risks than other debt securities, to the
extent they can be converted into stock, which may be more liquid and
less affected by these other risk factors.
Special Risks - Borrowing for Leverage. The Fund may borrow up
to 10% of the value of its assets from banks on an unsecured basis to
buy securities. This is a speculative investment method known as
"leverage." Leveraging may subject an investment in the Fund to greater
risks and costs than funds that do not borrow. These risks may include
the possible reduction of income and increased fluctuation in the
Fund's net asset value per share, since the Fund pays interest on
borrowings. Borrowing is subject to regulatory limits, described in
more detail in the Statement of Additional Information.
International Securities. The Fund may invest without limit
in equity and debt securities issued or guaranteed by foreign companies
or foreign governments, including foreign government agencies. Under
normal circumstances, as a matter of fundamental policy, the Fund will
maintain investments in the United States and at least three foreign
countries. The Fund may invest in any country, developed or
undeveloped, where the Manager believes there is a potential to achieve
the Fund's investment objective. Investments in securities of issuers
in non-industrialized countries generally involve more risk and may be
considered highly speculative.
Investments in foreign securities may include (a) U.S. dollar-
denominated debt obligations known as "Brady Bonds", which are issued
for the exchange of existing commercial bank loans to foreign entities
for new obligations that are generally collateralized by zero coupon
Treasury securities having the same maturity, (b) debt obligations such
as bonds (including sinking fund and callable bonds), (c) debentures
and notes (including variable and floating rate instruments), and (d)
preferred stocks and zero coupon securities. Foreign securities that
the Fund may purchase may be denominated in U.S. dollars or in non-U.S.
currencies. If the Fund's securities are held abroad, the countries in
which they are held and the sub-custodians holding them must be
approved by the Fund's Board of Trustees. The Fund will hold foreign
currency only in connection with the purchase or sale of foreign
securities.
Foreign securities have special risks. For example, foreign
issuers are not subject to the same accounting and disclosure
requirements that U.S. companies are subject to. The value of foreign
investments may be affected by changes in foreign currency rates,
exchange control regulations, expropriation or nationalization of a
company's assets, foreign taxes, delays in settlement of transactions,
changes in governmental economic or monetary policy in the U.S. or
abroad, or other political and economic factors. More information about
the risks and potential rewards of investing in foreign securities is
contained in the Statement of Additional Information.
As of September 30, 1994, the Fund had approximately __% of its
total assets invested in foreign securities. When more than 50% of its
total assets are invested in foreign securities at the end of any
fiscal year, the Fund may elect the application of Section 853 of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue
Code"), to permit shareholders to take a credit (or a deduction) for
foreign income taxes paid by the Fund. Such foreign tax credit or
deduction is subject to certain limitations under the Internal Revenue
Code. See the Statement of Additional Information for further
discussion.
Other Domestic Securities
Mortgage-Backed Securities and CMOs. The Fund's investments may
include securities which represent participation interests in pools of
residential mortgage loans, including collateralized mortgage-backed
obligations (CMOs), which may be issued or guaranteed by (i) agencies
or instrumentalities of the U.S. Government (e.g., Ginnie Maes, Freddie
Macs and Fannie Maes), or (ii) private issuers (i.e., commercial banks,
savings and loan institutions, private mortgage insurance companies,
mortgage bankers and other secondary market issuers). Certain
mortgage-backed securities "pass-through" to investors the interest and
principal payments generated by a pool of mortgages assembled for sale
by government agencies and private issuers. Pass-through mortgage-
backed securities entail the risk that principal may be repaid at any
time because of prepayments on the underlying mortgages. That may
result in greater price and yield volatility than traditional fixed-
income securities that have a fixed maturity and interest rate.
Mortgage-backed securities created by private issuers may be supported
by various forms of insurance or guarantees, although there can be no
assurance that private issuers will be able to meet their obligations.
The Fund may also invest in CMOs, which generally are obligations
fully collateralized by a portfolio of mortgages or mortgage-related
securities. Payment of the interest and principal generated by the
pool of mortgages is passed through to the holders as the payments are
received. CMOs are issued with a variety of classes or series which
have different maturities. Certain CMOs may be more volatile and less
liquid than other types of mortgage-related securities, because of the
possibility of the prepayment of principal due to prepayments on the
underlying mortgage loans.
The Fund may also enter into "forward roll" transactions with
banks with respect to the mortgage-related securities in which it can
invest. These require the Fund to secure its obligation in the
transaction by segregating assets with its custodian bank equal in
amount to its obligation under the roll. As new types of mortgage-
related securities are developed and offered to investors, the Manager
will, subject to the direction of the Fund's Board of Trustees and
consistent with the Fund's investment objective and policies, consider
making investment in such new types of mortgage-related securities.
Asset-Backed Securities. Asset-backed securities are fractional
interests in pools of consumer loans and other trade receivables,
similar to mortgage-backed securities described below. They are issued
by trusts and special purpose corporations. They are backed by a pool
of assets, such as credit card or auto loan receivables, which are the
obligations of a number of different parties. The income from the
underlying pool is passed through to holders, such as the Fund. These
securities are frequently supported by a credit enhancement, such as a
letter of credit, a guarantee or a preference right. However, the
extent of the credit enhancement may be different for different
securities and generally applies to only a fraction of the security's
value. These securities present special risks. For example, in the
case of credit card receivables, the issuer of the security may have no
security interest in the related collateral.
Warrants and Rights. Warrants basically are options to
purchase stock at set prices that are valid for a limited period of
time. Rights are options to purchase securities, normally granted to
current holders by the issuer. The Fund may invest up to 10% of its
total assets in warrants or rights. That 10% does not apply to
warrants and rights the Fund acquired as part of units with other
securities or that were attached to other securities. However, the
Fund has undertaken that its investments in warrants and rights shall
not exceed 5% of its net assets. In addition, the Fund has undertaken
that no more than 2% of the Fund's assets may be invested in warrants
that are not listed on the New York or American Stock Exchanges. For
further details about these investments, please refer to "Warrants and
Rights" in the Statement of Additional Information.
Temporary Defensive Investments. Under normal circumstances,
the Fund may hold a portion of its assets in cash equivalents
(commercial paper, Treasury bills and U.S. Government securities
maturing in one year or less) for day-to-day operating purposes. When
stock market prices are falling or in other unusual economic or
business circumstances, the Fund may invest all or a portion of its
assets in defensive securities. Securities selected for defensive
purposes usually will include (i) obligations issued or guaranteed by
the U.S. Government, its instrumentalities or agencies, (ii)
certificates of deposit, bankers' acceptances, time deposits, and
letters of credit if they are payable in the United States or London,
England and are issued or guaranteed by a domestic or foreign bank
having total assets in excess of $1 billion, (iii) commercial paper
rated in the three highest categories by Standard & Poor's or Moody's
and/or (iv) short-term debt securities (i.e., those maturing in one
year or less from the date of purchase), including rated or unrated
bonds, debentures and preferred stocks.
Other Investment Techniques and Strategies. The Fund may also use
the investment techniques and strategies described below. These
techniques involve certain risks. The Statement of Additional
Information contains more information about these practices, including
limitations on their use that are designed to reduce some of the
risks.
Loans of Portfolio Securities. To attempt to increase its
income and for liquidity purposes, the Fund may lend its portfolio
securities to brokers, dealers and other financial institutions. These
loans are limited to not more than 25% of the Fund's net assets and are
subject to other conditions described in the Statement of Additional
Information. The Fund presently does not intend to lend its portfolio
securities, but if it does, the value of securities loaned is not
expected to exceed 5% of the value of its total assets.
Repurchase Agreements. The Fund may enter into repurchase
agreements. In a repurchase transaction, the Fund buys a security and
simultaneously sells it to the vendor for delivery at a future date.
There is no limit on the amount of the Fund's net assets that may be
subject to repurchase agreements of seven days or less. Repurchase
agreements must be fully collateralized. However, if the vendor fails
to pay the resale price on the delivery date, the Fund may incur costs
in disposing of the collateral and may experience losses if there is
any delay in its ability to do so. The Fund will not enter into a
repurchase agreement that causes more than 10% of its net assets to be
subject to repurchase agreements having a maturity beyond seven days.
Illiquid and Restricted Securities. Under the policies and
procedures established by the Fund's Board of Trustees, the Manager
determines the liquidity of certain of the Fund's investments.
Investments may be illiquid because of the absence of an active trading
market, making it difficult to value them or dispose of them promptly
at an acceptable price. A restricted security is one that has a
contractual restriction on its resale or which cannot be sold publicly
until it is registered under the Securities Act of 1933. The Fund will
not invest more than 10% of its net assets in illiquid or restricted
securities (that limit may increase to 15% if certain state laws are
changed or the Fund's shares are no longer sold in those states). The
Fund's percentage limitation on these investments does not apply to
certain restricted securities that are eligible for resale to qualified
institutional purchasers.
"When-Issued" and Delayed Delivery Transactions. The Fund may
purchase securities on a "when-issued" basis and may purchase or sell
securities on a "delayed delivery" basis. These terms refer to
securities that have been created and for which a market exists, but
which are not available for immediate delivery. There may be a risk of
loss to the Fund if the value of the security declines prior to the
settlement date.
Participation Interests. The Fund may acquire
participation interests in loans that are made primarily to U.S.
companies (the "borrower"). They may be interests in, or assignments
of, the loan and are acquired from banks that have made the loan or are
members of the lending syndicate. The value of loan participation
interests depends primarily upon the creditworthiness of the borrower,
and its ability to pay interest and principal. Borrowers may have
difficulty making payments. If a borrower fails to make scheduled
interest or principal payments, the Fund could experience a reduction
in its income and might experience a decline in the net asset value of
its shares. The Fund's Board of Trustees has established quality
standards for participation interests. The Fund currently intends to
invest less than 5% of its net assets in participation interests.
Writing Covered Calls. The Fund may write (that is, sell)
covered call options (calls) on securities and Futures (discussed
below) that are traded on U.S. and foreign securities exchanges and
over-the-counter markets. The Fund may write calls to raise cash for
income to distribute to shareholders, or for liquidity purposes (for
example, to meet redemption requirements) or for defensive reasons.
The Fund receives cash (called a premium) when it writes a call. The
call gives the buyer the ability to buy the security from the Fund at
the call price during the period the call may be exercised. If the
value of the security does not rise above the call price, it is likely
that the call will lapse without being exercised, while the Fund keeps
the cash premium (and the security). Up to 100% of the Fund's total
assets may be subject to calls. All calls written by the Fund must be
"covered" while the call is outstanding; that means the Fund must own
the securities on which the call is written or it must own other
securities that are acceptable for the escrow arrangements required for
calls. Calls on Futures must be covered by deliverable securities or
by liquid assets segregated to satisfy the Futures contract.
If a covered call written by the Fund is exercised on a security
that has increased in value, the Fund will be required to sell the
security at the call price and will not be able to realize any profit
if the security has increased in value above the call price.
Hedging With Options, Futures and Forward Contracts. The Fund
may buy and sell option, futures and forward contracts to try to manage
its exposure to declining prices on its portfolio securities, to
establish a position in the equity securities market as a temporary
substitute for purchasing individual securities, or to reduce the risk
of adverse currency fluctuations. Some of these strategies, such as
selling futures, buying puts and writing covered calls, hedge the
Fund's portfolio against price fluctuations. Other hedging strategies,
such as buying futures and buying call options, tend to increase the
Fund's exposure to the market as a temporary substitute for purchasing
securities. Forward contracts are used to try to manage foreign
currency risks on the Fund's foreign investments. At present, the Fund
does not intend to purchase or sell futures, forward contracts and
options on futures if, after any such purchase, the sum of initial
margin deposits on futures and premiums paid for related options
exceeds 5% of the value of the Fund's total assets.
The Fund may purchase and sell certain kinds of futures
contracts, put and call options, forward contracts, and options on
securities, futures, broadly-based indices and foreign currencies, and
engage in interest-rate swap transactions. These are all referred to
as "hedging instruments." The Fund does not use hedging instruments
for speculative purposes. The hedging instruments the Fund may use are
described below and in greater detail in "Other Investment Techniques
and Strategies" in the Statement of Additional Information.
Futures. The Fund may buy and sell futures contracts that relate
to (1) broadly-based stock indices (these are referred to as Stock
Index Futures), (2) debt securities (Interest Rate Futures), and (3)
bond indices (Bond Index Futures). All of these Futures are described
in the Statement of Additional Information.
Puts and Calls. The Fund may purchase put options (puts) that
relate to securities (whether or not it holds such securities in its
portfolio) or Futures. The Fund may sell puts on securities or Futures
in an amount up to 50% of its total assets only if such puts are
covered by segregated liquid assets. The Fund may purchase calls only
on securities or on Futures that are traded on U.S. and foreign
securities exchanges or over-the counter markets. The Fund may buy or
sell foreign currency puts and calls only if they are traded on a
securities or commodities exchange or are quoted by major recognized
dealers in those options. Foreign currency options are used to try to
protect against declines in the dollar value of foreign securities the
Fund owns, or to protect against increases in the dollar cost of buying
foreign securities. A call or put may be purchased only if, after such
purchase, the value of all call and put options held by the Fund would
not exceed 5% of the Fund's total assets.
Forward Contracts. Forward contracts are foreign currency
exchange contracts. They are used to buy or sell foreign currency for
future delivery at a fixed price. The Fund uses them to try to "lock
in" the U.S. dollar price of a security denominated in a foreign
currency that the Fund has bought or sold, or to protect against
possible losses from changes in the relative values of the U.S. dollar
and a foreign currency. The Fund may also use "cross-hedging," where
the Fund hedges against changes in currencies other than the currency
in which a security it holds is denominated.
Interest Rate Swaps. In an interest rate swap, the Fund and
another party exchange their right to receive, or their obligation to
pay, interest on a security. For example, they may swap a right to
receive floating rate payments for fixed rate payments. The Fund
enters into swaps only on securities it owns. The Fund may not enter
into swaps with respect to more than 25% of its total assets. Also,
the Fund will segregate liquid assets (such as cash or U.S. Government
securities) to cover any amounts it could owe under swaps that exceed
the amounts it is entitled to receive, and it will adjust that amount
daily, as needed.
Hedging instruments can be volatile instruments and may involve
special risks. The use of hedging instruments requires special skills
and knowledge of investment techniques that are different than what is
required for normal portfolio management. If the Manager uses a
hedging instrument at the wrong time or judges market conditions
incorrectly, hedging strategies may reduce the Fund's return. The Fund
could also experience losses if the prices of its futures and options
positions were not correlated with its other investments or if it could
not close out a position because of an illiquid market for the future
or option.
Options trading involves the payment of premiums and has special
tax effects on the Fund. There are also special risks in particular
hedging strategies. For example, the use of forward contracts may
reduce the gain that would otherwise result from a change in the
relationship between the U.S. dollar and a foreign currency. To limit
its exposure in foreign currency exchange contracts, the Fund limits
its exposure to the amount of its assets denominated in the foreign
currency. Interest rate swaps are subject to credit risks (if the
other party fails to meet its obligation) and also to interest rate
risks. The Fund could be obligated to pay more under its swap
agreements that it receives under them, as a result of interest rate
changes. These risks are described in greater detail in the Statement
of Additional Information.
Derivative Investments. The Fund can invest in a number of
different kinds of "derivative investments." In general, a "derivative
investment" is a specially designed investment whose performance is
linked to the performance of another investment or security, such as an
option, future, index or currency. In the broadest sense, derivative
investments include exchange-traded options and futures contracts (see
"Writing Covered Calls" and "Hedging With Options, Futures and Forward
Contracts"). The risks of investing in derivative investments include
not only the ability of the company issuing the instrument to pay the
amount due on the maturity of the instrument, but also the risk that
the underlying investment or security might not perform the way the
Manager expected it to perform. The performance of derivative
investments may also be influenced by interest rate changes in the U.S.
and abroad. All of this can mean that the Fund will realize less
principal and/or income than expected. Certain derivative investments
held by the Fund may trade in the over-the-counter market and may be
illiquid. See "Restricted and Illiquid Securities."
Examples of derivative investments the Fund may invest in
include, among others, "index-linked" notes. These are debt securities
of companies that call for payment on the maturity of the note in
different terms than the typical note where the borrower agrees to pay
a fixed sum on the maturity of the note. The payment on maturity of an
index-linked note depends on the performance of one or more market
indices, such as the S & P 500 Index. Further examples of derivative
investments the Fund may invest in include "debt exchangeable for
common stock" of an issuer or "equity-linked debt securities" of an
issuer. At maturity, the principal amount of the debt security is
exchanged for common stock of the issuer or is payable in an amount
based on the issuer's common stock price at the time of maturity. In
either case there is a risk that the amount payable at maturity will be
less than the principal amount of the debt.
Other examples of derivative investments the Fund may invest in
are currency-indexed securities. These are typically short-term or
intermediate-term debt securities whose maturity values or interest
rates are determined by reference to one or more specified foreign
currencies. Certain currency-indexed securities purchased by the Fund
may have a payout factor tied to a multiple of the movement of the U.S.
dollar (or the foreign currency in which the security is denominated)
against the movement in the U.S. dollar, the foreign currency, another
currency, or an index. Such securities may be subject to increased
principal risk and increased volatility than comparable securities
without a payout factor in excess of one, but the Manager believes the
increased yield justifies the increased risk.
Special Situations. The Fund may invest in securities of
companies that are in "special situations" that the Manager believes
present opportunities for capital growth. A "special situation" may be
an event such as a proposed merger, reorganization, or other unusual
development that is expected to occur and which may result in an
increase in the value of a company's securities regardless of general
business conditions or the movement of prices in the securities market
as a whole. There is a risk that the price of the security may decline
if the anticipated development fails to occur.
Short Sales Against-the-Box. The Fund may not sell securities
short except in collateralized transactions referred to as "short
sales-against-the-box." No more than 15% of the Fund's net assets will
be held as collateral for such short sales at any one time.
Investing in Small, Unseasoned Companies. The Fund may
invest in securities of small, unseasoned companies. These are
companies that have been in operation for less than three years,
counting the operations of any predecessors. Securities of these
companies may have limited liquidity (which means that the Fund may
have difficulty selling them at an acceptable price when it wants to)
and the prices of these securities may be volatile. The Fund may not
invest more than 5% of its net assets in securities of small,
unseasoned issuers.
Portfolio Turnover. A change in the securities held by the
Fund is known as "portfolio turnover." The Fund ordinarily does not
engage in short-term trading to try to achieve its objectives. As a
result, the Fund's portfolio turnover is not expected to be more than
100% each year. The "Financial Highlights," above, show the Fund's
portfolio turnover rate during past fiscal years. Portfolio turnover
affects brokerage costs as well as a fund's ability to qualify as a
"regulated investment company" under the Internal Revenue Code for tax
deductions for dividends and capital gains distributions the Fund pays
to shareholders. The Fund qualified in its last fiscal year and
intends to do so in the coming year, although it reserves the right not
to qualify.
Other Investment Restrictions. The Fund has other investment
restrictions which are fundamental policies. Under these fundamental
policies, the Fund cannot do any of the following: (i) with respect to
75% of its assets, invest in securities of any one issuer (other than
securities issued by the U.S. Government or any of its agencies or
instrumentalities) if immediately thereafter (a) more than 5% of the
Fund's total assets would be invested in securities of that issuer, or
(b) the Fund would then own more than 10% of that issuer's voting
securities; (ii) concentrate investments to the extent that more than
25% of the value of its total assets is invested in securities of
issuers in the same industry (other than securities of the U.S.
Government, its agencies or instrumentalities).
All of the percentage restrictions described above and elsewhere
in this Prospectus apply only at the time the Fund purchases a
security, and the Fund need not dispose of a security merely because
the size of the Fund's assets has changed or the security has increased
in value relative to the size of the Fund. There are other fundamental
policies discussed in the Statement of Additional Information.
How the Fund is Managed
Organization and History. The Fund organized in 1990 as a
Massachusetts business trust. The Fund is an open-end, diversified
management investment company, with an unlimited number of authorized
shares of beneficial interest.
The Fund is governed by a Board of Trustees, which is responsible
for protecting the interests of shareholders under Massachusetts law.
The Trustees meet periodically throughout the year to oversee the
Fund's activities, review its performance, and review the actions of
the Manager. "Trustees and Officers of the Fund" in the Statement of
Additional Information names the Trustees and provides more information
about them and the officers of the Fund. Although the Fund is not
required by law to hold annual meetings, it may hold shareholder
meetings from time to time on important matters, and shareholders have
the right to call a meeting to remove a Trustee or to take other action
described in the Fund's Declaration of Trust.
The Board of Trustees has the power, without shareholder
approval, to divide unissued shares of the Fund into two or more
classes. The Board has done so, and the Fund currently has two classes
of shares, Class A and Class C. Each class has its own dividends and
distributions and pays certain expenses which may be different for the
different classes. Each class may have a different net asset value.
Each share has one vote at shareholder meetings, with fractional shares
voting proportionally. Only shares of a particular class vote together
on matters that affect that class alone. Shares are freely
transferrable.
The Manager and Its Affiliates. The Fund is managed by the Manager,
Oppenheimer Management Corporation, which is responsible for selecting
the Fund's investments and handles its day-to-day business. The
Manager carries out its duties, subject to the policies established by
the Board of Trustees, under an Investment Advisory Agreement which
states the Manager's responsibilities. The Agreement sets forth the
fees paid by the Fund to the Manager and describes the expenses that
the Fund is responsible to pay to conduct its business.
The Manager has operated as an investment adviser since 1959.
The Manager and its affiliates currently manage investment companies,
including other OppenheimerFunds, with assets of more than $28 billion
as of September 30, 1994, and with more than 1.8 million shareholder
accounts. The Manager is owned by Oppenheimer Acquisition Corp., a
holding company that is owned in part by senior officers of the Manager
and controlled by Massachusetts Mutual Life Insurance Company, a mutual
life insurance company.
Portfolio Manager. The Portfolio Manager of the Fund is
William L. Wilby. He is a Vice President of the Manager. He has been
the person principally responsible for the day-to-day management of the
Fund's portfolio since September, 1991. During the past five years,
prior to joining the Manager, Mr. Wilby served as an international
investment strategist at Brown Brothers Harriman & Co. and prior to
that Mr. Wilby served as Managing Director and Portfolio Manager at AIG
Global Investors.
Fees and Expenses. Under a new Investment Advisory Agreement,
which was approved by the Fund's shareholders at a meeting held on June
27, 1994 and which became effective as of such date, the Fund pays the
Manager the following annual fees, which decline on additional assets
as the Fund grows: 0.80% of the first $250 million of net assets;
0.77% of the next $250 million; 0.75% of the next $500 million; 0.69%
of the next $1 billion; and 0.67% of net assets in excess of $2
billion. Prior to June 27, 1994, the following fee rates were in
effect: 0.75% of the first $200 million of aggregate net assets, 0.72%
of the next $200 million, 0.69% of the next $200 million, 0.66% of the
next $200 million, and 0.60% of net assets in excess of $800 million.
The Fund's management fee for its last fiscal year was ___% of average
annual net assets for both its Class A and Class C shares, which may be
higher than the rate paid by some other mutual funds. Had the new fee
rates not been in effect for a portion of the Fund's last fiscal year,
the management fees would have been ____% of average annual net assets
for both its Class A and Class C shares.
The Fund pays expenses related to its daily operations, such as
custodian fees, Trustees' fees, transfer agency fees, legal and
auditing costs. Those expenses are paid out of the Fund's assets and
are not paid directly by shareholders. However, those expenses reduce
the net asset value of shares, and therefore are indirectly borne by
shareholders through their investment. More information about the
investment advisory agreement and the other expenses paid by the Fund
is contained in the Statement of Additional Information.
There is also information about the Fund's brokerage policies and
practices in "Brokerage Policies of the Fund" in the Statement of
Additional Information. That section discusses how brokers and dealers
are selected for the Fund's portfolio transactions. When deciding
which brokers to use, the Manager is permitted by the investment
advisory agreement to consider whether brokers have sold shares of the
Fund or any other funds for which the Manager serves as investment
adviser.
The Distributor. The Fund's shares are sold through dealers
and brokers that have a sales agreement with Oppenheimer Funds
Distributor, Inc., a subsidiary of the Manager that acts as the Fund's
Distributor. The Distributor also distributes the shares of other
mutual funds managed by the Manager (the "OppenheimerFunds") and is
sub-distributor for funds managed by a subsidiary of the Manager.
The Transfer Agent. The Fund's transfer agent is Oppenheimer
Shareholder Services, a division of the Manager, which acts as the
shareholder servicing agent for the Fund and the other OppenheimerFunds
on an "at-cost" basis. Shareholders should direct inquiries about their
accounts to the Transfer Agent at the address and toll-free numbers
shown below in this Prospectus and on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms
"total return" and "average annual total return" to illustrate its
performance. The performance of each class of shares is shown
separately, because the performance of each class will usually be
different as a result of the different kinds of expenses each class
bears. This performance information may be useful to help you see how
well your investment has done and to compare it to other funds or
market indices, as we have done below.
It is important to understand that the Fund's total returns
represent past performance and should not be considered to be
predictions of future returns or performance. This performance data is
described below, but more detailed information about how total returns
are calculated is contained in the Statement of Additional Information,
which also contains information about other ways to measure and compare
the Fund's performance. The Fund's investment performance will vary
over time, depending on market conditions, the composition of the
portfolio, expenses and which class of shares you purchase.
Total Returns. There are different types of total returns used
to measure the Fund's performance. Total return is the change in value
of a hypothetical investment in the Fund over a given period, assuming
that all dividends and capital gains distributions are reinvested in
additional shares. The cumulative total return measures the change in
value over the entire period (for example, ten years). An average
annual total return shows the average rate of return for each year in a
period that would produce the cumulative total return over the entire
period. However, average annual total returns do not show the Fund's
actual year-by-year performance.
When total returns are quoted for Class A shares, they reflect
the payment of the current maximum initial sales charge. When total
returns are shown for Class C shares, they reflect the effect of the
contingent deferred sales charge that applies to the period for which
total return is shown. Total returns may also be quoted "at net asset
value," without considering the effect of the sales charge, and those
returns would be reduced if sales charges were deducted.
How Has the Fund Performed? Below is a discussion by the Manager of
the Fund's performance during its last fiscal year ended September 30,
1994, followed by a graphical comparison of the Fund's performance to
an appropriate broad-based market index.
Management's Discussion of Performance. During the Fund's
fiscal year ended September 30, 1994, the Manager sought to increase
the Fund's yield while reducing the impact of foreign currency swings
by maintaining the Fund's investment in certain high-yield U.S.
corporate bonds, reducing the amount of fixed-income investments in
Latin America and Europe and building positions in Canadian, Australian
and New Zealand bonds. During this period the Fund reduced its
positions in the Pacific Rim and Latin America, countries in which the
Manager believed values had peaked, and in financial services and
consumer stocks worldwide, and invested the profits in companies with
perceived strong earnings potential.
Comparing the Fund's Performance to the Market. The chart
below shows the performance of a hypothetical $10,000 investment in
each Class of shares of the Fund held until September 30, 1994. In the
case of Class A shares, performance is measured from October 22, 1990
and in the case of Class C shares, from the inception of the Class on
December 1, 1994. In both cases, all dividends and capital gains
distributions were reinvested in additional shares. The graph reflects
the deduction of the 5.75% current maximum initial sales charge on
Class A shares and the maximum 1.0% contingent deferred sales charge on
Class C shares.
The Fund's performance is compared to the performance of the
Morgan Stanley Capital International World Index, an unmanaged index of
issuers listed on the stock exchanges of 20 foreign countries and the
U.S. that is widely recognized as a measure of global stock market
performance. The Fund's performance is also compared to the
performance of the Lehman Aggregate Bond Index, an unmanaged index of
U.S. Government Treasury and agency issues and investment grade
corporate bond issues and fixed-rate mortgage-backed securities backed
by mortgage pools issued by certain U.S. Government agencies. That
index is widely regarded as a measure of the performance of the general
bond market. Index performance reflects the reinvestment of dividends
but does not consider the effect of capital gains or transaction costs,
and none of the data in the graph shows the effect of taxes. Moreover,
index performance data does not reflect any assessment of the risk of
the investments included in the index. The Fund's performance reflects
the effect of Fund business and operating expenses.
<PAGE>
Oppenheimer Global Growth & Income Fund
Comparison of Change in Value
of a $10,000 Hypothetical Investment to the
Morgan Stanley Capital International World Index and the Lehman
Aggregate Bond Index
[Graph]
Past performance is not predictive of future performance.
Oppenheimer Global Growth & Income Fund
Average Annual Total Returns Cumulative Total Return
of the Fund at 9/30/94 of the Fund at 9/30/94
A Shares 1-Year Life* C Shares Life:**
_____________________
* The Fund began operations on 10/22/90.
**Class B shares of the Fund were first publicly offered on 12/1/93.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors two different classes
of shares. The different classes of shares represent investments in the
same portfolio of securities but are subject to different expenses and
will likely have different share prices.
Class A Shares. If you buy Class A shares, you pay an initial
sales charge (on investments up to $1 million). If you purchase Class A
shares as part of an investment of at least $1 million in shares of one
or more OppenheimerFunds, you will not pay an initial sales charge but
if you sell any of those shares within 18 months after your purchase,
you may pay a contingent deferred sales charge, which will vary
depending on the amount you invested. Sales charges are described
below.
Class C Shares. If you buy Class C shares, you pay no sales
charge at the time of purchase, but if you sell your shares within 12
months of buying them, you will normally pay a contingent deferred
sales charge of 1%. It is described below.
Which Class of Shares Should You Choose? Once you decide that the
Fund is an appropriate investment for you, the decision as to which
class of shares is better suited to your needs depends on a number of
factors which you should discuss with your financial advisor. The
Fund's operating costs that apply to a class of shares and the effect
of the different types of sales charges on your investment will vary
your investment results over time. The most important factors are how
much you plan to invest, how long you plan to hold your investment, and
whether you anticipate exchanging your shares for shares of other
OppenheimerFunds (not all of which currently offer Class C shares). If
your goals and objectives change over time and you plan to purchase
additional shares, you should re-evaluate those factors to see if you
should consider another class of shares.
In the following discussion, to help provide you and your
financial advisor with a framework in which to choose a class, we have
made some assumptions using a hypothetical investment in the Fund. We
used the sales charge rates that apply to Class A and C, considering
the effect of the annual asset-based sales charge on Class C expenses
(which, like all expenses, will affect your investment return). For
the sake of comparison, we have assumed that there is a 10% rate of
appreciation in the investment each year. Of course, the actual
performance of your investment cannot be predicted and will vary, based
on the Fund's actual investment returns and the operating expenses
borne by each class of shares, and which class you invest in. The
factors discussed below are not intended to be investment advice or
recommendations, because each investor's financial considerations are
different.
How Long Do You Expect to Hold Your Investment? The Fund is
designed for long-term investment. While future financial needs cannot
be predicted with certainty, knowing how long you expect to hold your
investment will assist you in selecting the appropriate class of
shares. The effect of the sales charge over time, using our
assumptions, will generally depend on the amount invested. Because of
the effect of class-based expenses, your choice will also depend on how
much you invest.
How Much Do You Plan to Invest? If you plan to invest a
substantial amount over the long term, the reduced sales charges
available for larger purchases of Class A shares may offset the effect
of paying an initial sales charge on your investment (which reduces the
amount of your investment dollars used to buy shares for your account),
compared to the effect over time of higher expenses on Class C, for
which no initial sales charge is paid. Additionally, dividends payable
to Class C shareholders will be reduced by the additional expenses
borne solely by Class C, such as the asset-based sales charge described
below.
In general, if you plan to invest less than $100,000, Class C
shares may be more advantageous than Class A shares, using the
assumptions in our hypothetical example. However, if you plan to
invest more than $100,000 (not only in the Fund, but possibly in other
OppenheimerFunds as well), then Class A shares generally will be more
advantageous than Class C, because of the effect of the reduction of
initial sales charges on larger purchases of Class A shares (described
in "Reduced Sales Charges for Class A Share Purchases," below). That
is also the case because the annual asset-based sales charge on Class C
shares will have a greater impact on larger investments than the
initial sales charge on Class A shares because of the reductions of
initial sales charge available for larger purchases.
And for investors who invest $1 million or more, in most cases
Class A shares will be the most advantageous choice, no matter how long
you intend to hold your shares. For that reason, the Distributor
normally will not accept purchase orders of $1 million or more of Class
C shares from a single investor.
Of course, these examples are based on approximations of the
effect of current sales charges and expenses on a hypothetical
investment over time, using the assumptions stated above. Therefore,
these examples should not be relied on as rigid guidelines.
Are There Differences in Account Features That Matter to You?
Because some account features may not be available to Class C
shareholders, or other features (such as Automatic Withdrawal Plans)
might not be advisable (because of the effect of contingent deferred
sales charge) in non-retirement accounts for Class C shareholders, you
should carefully review how you plan to use your investment account
before deciding which class of shares to buy. Also, because not all
OppenheimerFunds currently offer Class C shares, and because exchanges
are permitted only to the same class of shares in other
OppenheimerFunds, you should consider how important the exchange
privilege is likely to be for you.
How Does It Affect Payments to My Broker? A salesperson, such
as a broker, or any other person who is entitled to receive
compensation for selling Fund shares may receive different compensation
for selling one class than another class. It is important that
investors understand that the purpose of the Class C contingent
deferred sales charge and asset-based sales charge is the same as the
purpose of the front-end sales charge on sales of Class A shares: to
compensate the Distributor for commissions it pays to dealers and
financial institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a
minimum initial investment of $1,000 and make additional investments at
any time with as little as $25. There are reduced minimum investments
under special investment plans:
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7)
custodial plans and military allotment plans, you can make initial and
subsequent investments of as little as $25; and subsequent purchases of
at least $25 can be made by telephone through AccountLink.
Under pension and profit-sharing plans and Individual
Retirement Accounts (IRAs), you can make an initial investment of as
little as $250 (if your IRA is established under an Asset Builder Plan,
the $25 minimum applies), and subsequent investments may be as little
as $25.
There is no minimum investment requirement if you are buying
shares by reinvesting dividends from the Fund or other OppenheimerFunds
(a list of them appears in the Statement of Additional Information, or
you can ask your dealer or call the Transfer Agent), or by reinvesting
distributions from unit investment trusts that have made arrangements
with the Distributor.
How Are Shares Purchased? You can buy shares several ways --
through any dealer, broker or financial institution that has a sales
agreement with the Distributor, or directly through the Distributor, or
automatically from your bank account through an Asset Builder Plan
under the OppenheimerFunds AccountLink service. When you buy shares, be
sure to specify Class A or Class C shares. If you do not choose, your
investment will be made in Class A shares.
Buying Shares Through Your Dealer. Your dealer will place your
order with the Distributor on your behalf.
Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "Oppenheimer Funds Distributor, Inc." Mail it to P.O. Box
5270, Denver, Colorado 80217. If you don't list a dealer on the
application, the Distributor will act as your agent in buying the
shares. However, we recommend that you discuss your investment first
with a financial advisor, to be sure it is appropriate for you.
Buying Shares Through OppenheimerFunds AccountLink. You can
use AccountLink to link your Fund account with an account at a U.S.
bank or other financial institution that is an Automated Clearing House
(ACH) member. You can then transmit funds electronically to purchase
shares, to send redemption proceeds, and to transmit dividends and
distributions.
Shares are purchased for your account on AccountLink on the
regular business day the Distributor is instructed by you to initiate
the ACH transfer to buy shares. You can provide those instructions
automatically, under an Asset Builder Plan, described below, or by
telephone instructions using OppenheimerFunds PhoneLink, also described
below. You should request AccountLink privileges on the application or
dealer settlement instructions used to establish your account. Please
refer to "AccountLink" below for more details.
Asset Builder Plans. You may purchase shares of the Fund (and
up to Four other OppenheimerFunds) automatically each month from your
account at a bank or other financial institution under an Asset Builder
Plan with AccountLink. Details are on the Application and in the
Statement of Additional Information.
At What Price Are Shares Sold? Shares are sold at the public
offering price based on the net asset value (and any initial sales
charge that applies) that is next determined after the Distributor
receives the purchase order in Denver. In most cases, to enable you to
receive that day's offering price, the Distributor must receive your
order by 4:00 P.M., New York time (all references to time in this
Prospectus mean "New York time"). The net asset value of each class of
shares is determined as of that time on each day The New York Stock
Exchange is open (which is a "regular business day").
If you buy shares through a dealer, the dealer must receive your
order by 4:00 P.M., on a regular business day and transmit it to the
Distributor so that it is received before the Distributor's close of
business that day, which is normally 5:00 P.M. The Distributor may
reject any purchase order for the Fund's shares, in its sole
discretion.
Class A Shares. Class A shares are sold at their offering price,
which is normally net asset value plus an initial sales charge.
However, in some cases, described below, purchases are not subject to
an initial sales charge, and the offering price will be the net asset
value. In some cases, reduced sales charges may be available, as
described below. Out of the amount you invest, the Fund receives the
net asset value to invest for your account. The sales charge varies
depending on the amount of your purchase. A portion of the sales
charge may be retained by the Distributor and allocated to your dealer
as commission. The current sales charge rates and commissions paid to
dealers and brokers are as follows:
_______________________________________________________________________
Front-End Sales Charge Commission as
As a Percentage of: Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
_______________________________________________________________________
____ _
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
_______________________________________________________________________
The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter"
under Federal securities laws.
Class A Contingent Deferred Sales Charge. There is no initial
sales charge on purchases of Class A shares of any one or more
OppenheimerFunds aggregating $1 million or more. However, the
Distributor pays dealers of record commissions on such purchases in an
amount equal to the sum of 1.0% of the first $2.5 million, plus 0.50%
of the next $2.5 million, plus 0.25% of share purchases over $5
million. That commission will be paid only on the amount of those
purchases in excess of $1 million that were not previously subject to a
front-end sales charge and dealer commission.
If you redeem any of those shares within 18 months of the end of
the calendar month of their purchase, a contingent deferred sales
charge (called the "Class A contingent deferred sales charge") will be
deducted from the redemption proceeds. That sales charge will be equal
to 1.0% of the aggregate net asset value of either (1) the redeemed
shares (not including shares purchased by reinvestment of dividends or
capital gain distributions) or (2) the original cost of the shares,
whichever is less. However, the Class A contingent deferred sales
charge will not exceed the aggregate amount of the commissions the
Distributor paid to your dealer on all Class A shares of all
OppenheimerFunds you purchased subject to the Class A contingent
deferred sales charge.
In determining whether a contingent deferred sales charge is
payable, the Fund will first redeem shares that are not subject to the
sales charge, including shares purchased by reinvestment of dividends
and capital gains, and then will redeem other shares in the order that
you purchased them. The Class A contingent deferred sales charge is
waived in certain cases described in "Waivers of Class A Sales Charges"
below.
No Class A contingent deferred sales charge is charged on
exchanges of shares under the Fund's Exchange Privilege (described
below). However, if the shares acquired by exchange are redeemed
within 18 months of the end of the calendar month of the purchase of
the exchanged shares, the sales charge will apply.
Special Arrangements With Dealers. The Distributor may
advance up to 13 months' commissions to dealers that have established
special arrangements with the Distributor for Asset Builder Plans for
their clients. Dealers whose sales of Class A shares of
OppenheimerFunds (other than money market funds) under
OppenheimerFunds-sponsored 403(b)(7) custodial plans exceed $5 million
per year (calculated per quarter), will receive monthly one-half of the
Distributor's retained commissions on those sales, and if those sales
exceed $10 million per year, those dealers will receive the
Distributor's entire retained commission on those sales.
Reduced Sales Charges for Class A Share Purchases. You may be
eligible to buy Class A shares at reduced sales charge rates in one or
more of the following ways:
Right of Accumulation. To qualify for the lower sales charge
rates that apply to larger purchases of Class A shares, you and your
spouse can add together Class A shares you purchase for your individual
accounts, or jointly, or on behalf of your children who are minors,
under trust or custodial accounts. A fiduciary can count all shares
purchased for a trust, estate or other fiduciary account (including one
or more employee benefit plans of the same employer) that has multiple
accounts.
Additionally, you can add together current purchases of Class A
shares of the Fund and other OppenheimerFunds. You can also include
Class A shares of OppenheimerFunds you previously purchased subject to
a sales charge, provided that you still hold your investment in one of
the OppenheimerFunds. The value of those shares will be based on the
greater of the amount you paid for the shares or their current value
(at offering price). The OppenheimerFunds are listed in "Reduced Sales
Charges" in the Statement of Additional Information, or a list can be
obtained from the Transfer Agent. The reduced sales charge will apply
only to current purchases and must be requested when you buy your
shares.
Letter of Intent. Under a Letter of Intent, you may purchase
Class A shares of the Fund and other OppenheimerFunds during a 13-month
period at the reduced sales charge rate that applies to the total
amount of the intended purchases. This can include purchases made up
to 90 days before the date of the Letter. More information is
contained in the Application and in "Reduced Sales Charges" in the
Statement of Additional Information.
Waivers of Class A Sales Charges. No sales charge is imposed
on sales of Class A shares to the following investors: (1) the Manager
or its affiliates; (2) present or former officers, directors, trustees
and employees (and their "immediate families" as defined in "Reduced
Sales Charges" in the Statement of Additional Information) of the Fund,
the Manager and its affiliates, and retirement plans established by
them for their employees; (3) registered management investment
companies, or separate accounts of insurance companies having an
agreement with the Manager or the Distributor for that purpose; (4)
dealers or brokers that have a sales agreement with the Distributor, if
they purchase shares for their own accounts or for retirement plans for
their employees; (5) employees and registered representatives (and
their spouses) of dealers or brokers described above or financial
institutions that have entered into sales arrangements with such
dealers or brokers (and are identified to the Distributor) or with the
Distributor; the purchaser must certify to the Distributor at the time
of purchase that the purchase is for the purchaser's own account (or
for the benefit of such employee's spouse or minor children); (6)
dealers, brokers or registered investment advisers that have entered
into an agreement with the Distributor providing specifically for the
use of shares of the Fund in particular investment products made
available to their clients; and (7) dealers, brokers or registered
investment advisers that have entered into an agreement with the
Distributor to sell shares of defined contribution employee retirement
plans for which the dealer, broker or investment adviser provides
administration services. In addition, no initial or deferred sales
charge will be imposed on Class A shares of the Fund paid for with the
redemption proceeds of shares of a mutual fund other than a money
market fund or a fund managed by the Manager or its affiliates. This
sales charge waiver must be requested when you buy your shares, and the
Distributor may require evidence of qualification for this waiver.
Additionally, no sales charge is imposed on shares that are (a)
issued in plans of reorganization, such as mergers, asset acquisitions
and exchange offers, to which the Fund is a party, or (b) purchased by
the reinvestment of loan repayments by a participant in a retirement
plan for which the Manager or its affiliates acts as sponsor, or (c)
purchased by the reinvestment of dividends or other distributions
reinvested from the Fund or other OppenheimerFunds (other than
Oppenheimer Cash Reserves) or unit investment trusts for which
reinvestment arrangements have been made with the Distributor. There
is a further discussion of this policy in "Reduced Sales Charges" in
the Statement of Additional Information.
The contingent deferred sales charge does not apply to purchases
of Class A shares at net asset value described above and is also waived
if shares are redeemed in the following cases: (1) retirement
distributions or loans to participants or beneficiaries from qualified
retirement plans, deferred compensation plans or other employee benefit
plans ("Retirement Plans"), (2) returns of excess contributions made to
Retirement Plans, (3) Automatic Withdrawal Plan payments that are
limited to no more than 12% of the original account value annually, (4)
involuntary redemptions of shares by operation of law or under the
procedures set forth in the Fund's Declaration of Trust or adopted by
the Board of Trustees, and (5) if, at the time an order is placed for
Class A shares that would otherwise be subject to the Class A
contingent deferred sales charge, the dealer agrees to accept the
dealer's portion of the commission payable on the sale in installments
of 1/18th of the commission per month (with no further commission
payable if the shares are redeemed within 18 months of purchase).
Service Plan for Class A Shares. The Fund has adopted a
Service Plan for Class A shares to reimburse the Distributor for a
portion of its costs incurred in connection with the personal service
and maintenance of accounts that hold Class A shares. Reimbursement is
made quarterly at an annual rate that may not exceed 0.25% of the
average annual net assets of Class A shares of the Fund. The
Distributor uses all of those fees to compensate dealers, brokers,
banks and other financial institutions quarterly for providing personal
service and maintenance of accounts of their customers that hold Class
A shares and to reimburse itself (if the Fund's Board of Trustees
authorizes such reimbursements, which it has not yet done) for its
other expenditures under the Plan.
Services to be provided include, among others, answering customer
inquiries about the Fund, assisting in establishing and maintaining
accounts in the Fund, making the Fund's investment plans available and
providing other services at the request of the Fund or the Distributor.
Payments are made by the Distributor quarterly at an annual rate not to
exceed 0.25% of the average annual net assets of Class A shares held in
accounts of the dealer or its customers. For more details, please
refer to "Distribution and Service Plans" in the Statement of
Additional Information.
Class C Shares. Class C shares are sold at net asset value per share
without an initial sales charge. However, if Class C shares are
redeemed within 12 months of their purchase, a contingent deferred
sales charge of 1.0% will be deducted from the redemption proceeds.
That sales charge will not apply to shares purchased by the
reinvestment of dividends or capital gains distributions. The charge
will be assessed on the lesser of the net asset value of the shares at
the time of redemption or the original purchase price. The contingent
deferred sales charge is not imposed on the amount of your account
value represented by the increase in net asset value over the initial
purchase price (including increases due to the reinvestment of
dividends and capital gains distributions). The Class C contingent
deferred sales charge is paid to the Distributor to reimburse its
expenses of providing distribution-related services to the Fund in
connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge applies
to a redemption, the Fund redeems shares in the following order: (1)
shares acquired by reinvestment of dividends and capital gains
distributions, (2) shares held for over 12 months, and (3) shares held
the longest during the 12-month period.
Waivers of Class C Sales Charge. The Class C contingent
deferred sales charge will be waived if the shareholder requests it for
any of the following redemptions: (1) distributions to participants or
beneficiaries from Retirement Plans, if the distributions are made (a)
under an Automatic Withdrawal Plan after the participant reaches age
59-1/2, as long as the payments are no more than 10% of the account
value annually (measured from the date the Transfer Agent receives the
request), or (b) following the death or disability (as defined in the
Internal Revenue Code) of the participant or beneficiary; (2)
redemptions from accounts other than Retirement Plans following the
death or disability of the shareholder (the disability must have
occurred after the account was established and you must provide
evidence of a determination of disability by the Social Security
Administration), (3) returns of excess contributions to Retirement
Plans, and (4) distributions from IRAs (including SEP-IRAs and SAR/SEP
accounts) before the participant is age 59-1/2, and distributions from
403(b)(7) custodial plans or pension or profit sharing plans before the
participant is age 59-1/2 but only after the participant has separated
from service, if the distributions are made in substantially equal
periodic payments over the life (or life expectancy) of the participant
or the joint lives (or joint life and last survivor expectancy) of the
participant and the participant's designated beneficiary (and the
distributions must comply with other requirements for such
distributions under the Internal Revenue Code and may not exceed 10% of
the account value annually, measured from the date the Transfer Agent
receives the request).
The contingent deferred sales charge is also waived on Class C
shares in the following cases: (i) shares sold to the Manager or its
affiliates; (ii) shares sold to registered management investment
companies or separate accounts of insurance companies having an
agreement with the Manager or the Distributor for that purpose; (iii)
shares issued in plans of reorganization to which the Fund is a party;
and (iv) shares redeemed in involuntary redemptions as described below.
Further details about this policy are contained in "Reduced Sales
Charges" in the Statement of Additional Information.
Distribution and Service Plan for Class C Shares. The Fund
has adopted a Distribution and Service Plan for Class C shares to
compensate the Distributor for its services and costs in distributing
Class C shares and servicing accounts. Under the Plan, the Fund pays
the Distributor an annual "asset-based sales charge" of 0.75% per year
on Class C shares. The Distributor also receives a service fee of
0.25% per year. Both fees are computed on the average annual net
assets of Class C shares, determined as of the close of each regular
business day. The asset-based sales charge allows investors to buy
Class C shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell Class C shares.
The Distributor uses the service fee to compensate dealers for
providing personal services for accounts that hold Class C shares.
Those services are similar to those provided under the Class A Service
Plan, described above. The asset-based sales charge and service fees
increase Class C expenses by up to 1.00% of average net assets per
year.
The Distributor pays the 0.25% service fee to dealers in advance
for the first year after Class C shares have been sold by the dealer.
After the shares have been held for a year, the Distributor pays the
fee on a quarterly basis. The Distributor pays sales commissions of
0.75% of the purchase price to dealers from its own resources at the
time of sale. The Distributor retains the asset-based sales charge
during the first year shares are outstanding to recoup the sales
commissions it pays, the advances of service fee payments it makes, and
its financing costs. The Distributor plans to pay the asset-based
sales charge as an ongoing commission to the dealer on Class C Shares
that have been outstanding for a year or more.
Because the Distributor's actual expenses in selling Class C
shares may be more than the payments it receives from contingent
deferred sales charges collected on redeemed shares and from the Fund
under the Distribution and Service Plan for Class C shares, those
expenses may be carried over and paid in future years. If the Plan is
terminated by the Fund, the Board of Trustees may allow the Fund to
continue payments of the asset-based sales charge to the Distributor
for certain expenses it incurred before the plan was terminated.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account
to your account at your bank or other financial institution to enable
you to send money electronically between those accounts to perform a
number of types of account transactions. These include purchases of
shares by telephone (either through a service representative or by
PhoneLink, described below), automatic investments under Asset Builder
Plans, and sending dividends and distributions or Automatic Withdrawal
Plan payments directly to your bank account. Please refer to the
Application for details or call the Transfer Agent for more
information.
AccountLink privileges must be requested on the Application you
use to buy shares, or on your dealer's settlement instructions if you
buy your shares through your dealer. After your account is established,
you can request AccountLink privileges on signature-guaranteed
instructions to the Transfer Agent. AccountLink privileges will apply
to each shareholder listed in the registration on your account as well
as to your dealer representative of record unless and until the
Transfer Agent receives written instructions terminating or changing
those privileges. After you establish AccountLink for your account, any
change of bank account information must be made by signature-guaranteed
instructions to the Transfer Agent signed by all shareholders who own
the account.
Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase
shares in amounts up to $250,000 through a telephone representative,
call the Distributor at 1-800-852-8457. The purchase payment will be
debited from your bank account.
PhoneLink. PhoneLink is the OppenheimerFunds automated
telephone system that enables shareholders to perform a number of
account transactions automatically using a touch-tone phone. PhoneLink
may be used on already-established Fund accounts after you obtain a
Personal Identification Number (PIN), by calling the special PhoneLink
number: 1-800-533-3310.
Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have
established AccountLink privileges to link your bank account with the
Fund, to pay for these purchases.
Exchanging Shares. With the OppenheimerFunds Exchange
Privilege, described below, you can exchange shares automatically by
phone from your Fund account to another OppenheimerFunds account you
have already established by calling the special PhoneLink number.
Please refer to "How to Exchange Shares," below, for details.
Selling Shares. You can redeem shares by telephone
automatically by calling the PhoneLink number and the Fund will send
the proceeds directly to your AccountLink bank account. Please refer
to "How to Sell Shares," below, for details.
Automatic Withdrawal and Exchange Plans. The Fund has several plans
that enable you to sell shares automatically or exchange them to
another OppenheimerFunds account on a regular basis:
Automatic Withdrawal Plans. If your Fund account is worth
$5,000 or more, you can establish an Automatic Withdrawal Plan to
receive payments of at least $50 on a monthly, quarterly, semi-annual
or annual basis. The checks may be sent to you or sent automatically to
your bank account on AccountLink. You may even set up certain types of
withdrawals of up to $1,500 per month by telephone. You should consult
the Application and Statement of Additional Information for more
details.
Automatic Exchange Plans. You can authorize the Transfer Agent
automatically to exchange an amount you establish in advance for shares
of up to five other OppenheimerFunds on a monthly, quarterly, semi-
annual or annual basis under an Automatic Exchange Plan. The minimum
purchase for each OppenheimerFunds account is $25. These exchanges are
subject to the terms of the Exchange Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Fund
shares, you have up to 6 months to reinvest all or part of the
redemption proceeds in Class A shares of the Fund or other
OppenheimerFunds without paying a sales charge. This privilege applies
to Fund shares that you purchased with an initial sales charge. It
also applies to shares on which you paid a contingent deferred sales
charge when you redeemed them. You must be sure to ask the Distributor
for this privilege when you send your payment. Please consult the
Statement of Additional Information for more details.
Retirement Plans. Fund shares are available as an investment for
your retirement plans. If you participate in a plan sponsored by your
employer, the plan trustee or administrator must make the purchase of
shares for your retirement plan account. The Distributor offers a
number of different retirement plans that can be used by individuals
and employers:
Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
403(b)(7) Custodial Plans for employees of eligible tax-
exempt organizations, such as schools, hospitals and charitable
organizations
SEP-IRAs (Simplified Employee Pension Plans) for small
business owners or people with income from self-employment, including
SARSEP-IRAs
Pension and Profit-Sharing Plans for self-employed persons
and other employers
Please call the Distributor for the OppenheimerFunds plan
documents, which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account on any regular
business day by selling (redeeming) some or all of your shares. Your
shares will be sold at the next net asset value calculated after your
order is received and accepted by the Transfer Agent. The Fund offers
you a number of ways to sell your shares: in writing or by telephone.
You can also set up Automatic Withdrawal Plans to redeem shares on a
regular basis, as described above. If you have questions about any of
these procedures, and especially if you are redeeming shares in a
special situation, such as due to the death of the owner, or from a
retirement plan, please call the Transfer Agent first at 1-800-525-
7048, for assistance.
Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must
submit a withholding form with your request to avoid delay. If your
retirement plan account is held for you by your employer, you must
arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the Statement
of Additional Information.
Certain Requests Require a Signature Guarantee. To protect
you and the Fund from fraud, certain redemption requests must be in
writing and must include a signature guarantee in the following
situations (there may be other situations also requiring a signature
guarantee):
You wish to redeem more than $50,000 worth of shares and
receive a check
A redemption check is not payable to all shareholders
listed on the account statement
A redemption check is not sent to the address of record on
your statement
Shares are being transferred to a Fund account with a
different owner or name
Shares are redeemed by someone other than the owners (such
as an Executor)
Where Can I Have My Signature Guaranteed? The Transfer Agent
will accept a guarantee of your signature by a number of financial
institutions, including: a U.S. bank, trust company, credit union or
savings association, or by a foreign bank that has a U.S. correspondent
bank, or by a U.S. registered dealer or broker in securities, municipal
securities or government securities, or by a U.S. national securities
exchange, a registered securities association or a clearing agency. If
you are signing on behalf of a corporation, partnership or other
business, or as a fiduciary, you must also include your title in the
signature.
Selling Shares by Mail. Write a "letter of instructions" that
includes:
Your name
The Fund's name
Your Fund account number (from your statement)
The dollar amount or number of shares to be redeemed
Any special payment instructions
Any share certificates for the shares you are selling, and
Any special requirements or documents requested by the
Transfer Agent to assure proper authorization of the person asking to
sell shares.
Use the following address for requests by mail: Send courier or
Express Mail requests to:
Oppenheimer Shareholder Services Oppenheimer Shareholder Services
P.O. Box 5270, 10200 E. Girard Avenue,Building D
Denver, Colorado 80217 Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of
record may also sell your shares by telephone. To receive the
redemption price on a regular business day, your call must be received
by the Transfer Agent by 4:00 P.M. You may not redeem shares held in an
OppenheimerFunds retirement plan or under a share certificate by
telephone.
To redeem shares through a service representative, call 1-800-
852-8457
To redeem shares automatically on PhoneLink, call 1-800-533-
3310
Whichever method you use, you may have a check sent to the
address on the account statement, or, if you have linked your Fund
account to your bank account on AccountLink, you may have the proceeds
wired to that bank account.
Telephone Redemptions Paid by Check. Up to $50,000 may be
redeemed by telephone, in any 7-day period. The check must be payable
to all owners of record of the shares and must be sent to the address
on the account statement. This service is not available within 30 days
of changing the address on an account.
Telephone Redemptions Through AccountLink. There are no
dollar limits on telephone redemption proceeds sent to a bank account
designated when you establish AccountLink. Normally the ACH wire to
your bank is initiated on the business day after the redemption. You
do not receive dividends on the proceeds of the shares you redeemed
while they are waiting to be wired.
Selling Shares Through Your Dealer. The Distributor has made
arrangements to repurchase Fund shares from dealers and brokers on
behalf of their customers. Brokers or dealers may charge for that
service. Please refer to "Special Arrangements for Repurchase of
Shares from Dealers and Brokers" in the Statement of Additional
Information for more details.
<PAGE>
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain
OppenheimerFunds at net asset value per share at the time of exchange,
without sales charge. A $5 service fee will be deducted from the fund
account you are exchanging into to help defray administrative costs.
That charge is waived for automated exchanges made by brokers on
Fund/SERV and for automated exchanges between already established
accounts on PhoneLink described below. To exchange shares, you must
meet several conditions:
Shares of the fund selected for exchange must be available for
sale in your state of residence
The prospectuses of this Fund and the fund whose shares you
want to buy must offer the exchange privilege
You must hold the shares you buy when you establish your
account for at least 7 days before you can exchange them; after the
account is open 7 days, you can exchange shares every regular business
day
You must meet the minimum purchase requirements for the fund
you purchase by exchange
Before exchanging into a fund, you should obtain and read its
prospectus
Shares of a particular class may be exchanged only for shares of
the same class in the other OppenheimerFunds. For example, you can
exchange Class A shares of this Fund only for Class A shares of another
fund. At present, not all of the OppenheimerFunds offer the same
classes of shares. If a fund has only one class of shares that does not
have a class designation, they are "Class A" shares for exchange
purposes. Certain OppenheimerFunds offer Class A shares and Class B or
Class C shares, and a list can be obtained by calling the Distributor
at 1-800-525-7048. In some cases, sales charges may be imposed on
exchange transactions. Please refer to "How to Exchange Shares" in the
Statement of Additional Information for more details.
Exchanges may be requested in writing or by telephone:
Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the
Transfer Agent at the addresses listed in "How to Sell Shares."
Telephone Exchange Requests. Telephone exchange requests may
be made either by calling a service representative at 1-800-852-8457 or
by using PhoneLink for automated exchanges, by calling 1-800-533-3310.
Telephone exchanges may be made only between accounts that are
registered with the same name(s) and address. Shares held under
certificates may not be exchanged by telephone.
You can find a list of OppenheimerFunds currently available for
exchanges in the Statement of Additional Information or by calling a
service representative at 1-800-525-7048. Exchanges of shares involve a
redemption of the shares of the fund you own and a purchase of shares
of the other fund.
There are certain exchange policies you should be aware of:
Shares are normally redeemed from one fund and purchased from
the other fund in the exchange transaction on the same regular business
day on which the Transfer Agent receives an exchange request by 4:00
P.M. that is in proper form. However, either fund may delay the
purchase of shares of the fund you are exchanging into if it determines
it would be disadvantaged by a same-day transfer of the proceeds to buy
shares. For example, the receipt of multiple exchange requests from a
dealer in a "market-timing" strategy might require the disposition of
portfolio securities at a time or price disadvantageous to the
Fund.
Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange
request that will disadvantage it, or to refuse multiple exchange
requests submitted by a shareholder or dealer.
The Fund may amend, suspend or terminate the exchange
privilege at any time. Although the Fund will attempt to provide you
notice whenever it is reasonably able to do so, it may impose these
changes at any time.
If the Transfer Agent cannot exchange all the shares you
request because of a restriction cited above, only the shares eligible
for exchange will be exchanged.
Shareholder Account Rules and Policies
Net Asset Value Per Share is determined for each class of
shares as of 4:00 P.M. each day The New York Stock Exchange is open by
dividing the value of the Fund's net assets attributable to a class by
the number of shares of that class that are outstanding. The Fund's
Board of Trustees has established procedures to value the Fund's
securities to determine net asset value. In general, securities values
are based on market value. There are special procedures for valuing
illiquid and restricted securities, obligations for which market values
cannot be readily obtained, and call options and hedging instruments.
These procedures are described more completely in the Statement of
Additional Information.
The offering of shares may be suspended during any period in
which the determination of net asset value is suspended, and the
offering may be suspended by the Board of Trustees at any time the
Board believes it is in the Fund's best interest to do so.
Telephone Transaction Privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any
time. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone
privileges apply to each owner of the account and the dealer
representative of record for the account unless and until the Transfer
Agent receives cancellation instructions from an owner of the
account.
The Transfer Agent will record any telephone calls to verify
data concerning transactions and has adopted other procedures to
confirm that telephone instructions are genuine, by requiring callers
to provide tax identification numbers and other account data or by
using PINs, and by confirming such transactions in writing. If the
Transfer Agent does not use reasonable procedures it may be liable for
losses due to unauthorized transactions, but otherwise it will not be
liable for losses or expenses arising out of telephone instructions
reasonably believed to be genuine. If you are unable to reach the
Transfer Agent during periods of unusual market activity, you may not
be able to complete a telephone transaction and should consider placing
your order by mail.
Redemption or transfer requests will not be honored until the
Transfer Agent receives all required documents in proper form. From
time to time, the Transfer Agent in its discretion may waive certain of
the requirements for redemptions stated in this Prospectus.
Dealers that can perform account transactions for their
clients by participating in NETWORKING through the National Securities
Clearing Corporation are responsible for obtaining their clients'
permission to perform those transactions and are responsible to their
clients who are shareholders of the Fund if the dealer performs any
transaction erroneously or improperly.
The redemption price for shares will vary from day to day
because the value of the securities in the Fund's portfolio fluctuates,
and the redemption price, which is the net asset value per share, will
normally be different for Class A and Class C shares. Therefore, the
redemption value of your shares may be more or less than their original
cost.
Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within 7
days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. The Transfer Agent may delay forwarding a check or
processing a payment via AccountLink for recently purchased shares, but
only until the purchase payment has cleared. That delay may be as much
as 15 days from the date the shares were purchased. That delay may be
avoided if you purchase shares by certified check or arrange with your
bank to provide telephone or written assurance to the Transfer Agent
that your purchase payment has cleared.
Involuntary redemptions of small accounts may be made by the
Fund if the account value has fallen below $200 for reasons other than
the fact that the market value of shares has dropped, and in some cases
involuntary redemptions may be made to repay the Distributor for losses
from the cancellation of share purchase orders.
Under unusual circumstances, shares of the Fund may be
redeemed "in kind," which means that the redemption proceeds will be
paid with securities from the Fund's portfolio. Please refer to "How
to Sell Shares" in the Statement of Additional Information for more
details.
"Backup Withholding" of Federal income tax may be applied at
the rate of 31% from dividends, distributions and redemption proceeds
(including exchanges) if you fail to furnish the Fund a certified
Social Security or Employer Identification Number when you sign your
application, or if you violate Internal Revenue Service regulations on
tax reporting of dividends.
The Fund does not charge a redemption fee, but if your dealer
or broker handles your redemption, they may charge a fee. That fee can
be avoided by redeeming your Fund shares directly through the Transfer
Agent. Under the circumstances described in "How To Buy Shares," you
may be subject to a contingent deferred sales charges when redeeming
certain Class A and Class C shares.
To avoid sending duplicate copies of materials to households,
the Fund will mail only one copy of each annual and semi-annual report
to shareholders having the same surname and address on the Fund's
records. However, each shareholder may call the Transfer Agent at 1-
800-525-7048 to ask that copies of those materials be sent personally
to that shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A and
Class C shares from net investment income and pays such dividends to
shareholders quarterly in March, June, September and December, but the
Board of Trustees can change that date. It is expected that
distributions paid with respect to Class A shares will generally be
higher than for Class C shares because expenses allocable to Class C
shares will generally be higher. There is no fixed dividend rate and
there can be no assurance as to the payment of any dividends of the
realization of any capital gains.
Capital Gains. The Fund may make distributions annually in December
out of any net short-term or long-term capital gains, and the Fund may
make supplemental distributions of dividends and capital gains
following the end of its fiscal year. Long-term capital gains will be
separately identified in the tax information the Fund sends you after
the end of the year. Short-term capital gains are treated as dividends
for tax purposes. There can be no assurance that the Fund will pay any
capital gains distributions in a particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are reinvested.
For other accounts, you have four options:
Reinvest All Distributions in the Fund. You can elect to
reinvest all dividends and long-term capital gains distributions in
additional shares of the Fund.
Reinvest Long-Term Capital Gains Only. You can elect to
reinvest long-term capital gains in the Fund while receiving dividends
by check or sent to your bank account on AccountLink.
Receive All Distributions in Cash. You can elect to receive a
check for all dividends and long-term capital gains distributions or
have them sent to your bank on AccountLink.
Reinvest Your Distributions in Another OppenheimerFunds
Account. You can reinvest all distributions in another OppenheimerFunds
account you have established.
Taxes. If your account is not a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the
Fund. Long-term capital gains are taxable as long-term capital gains
when distributed to shareholders. It does not matter how long you have
held your shares. Dividends paid from short-term capital gains and net
investment income are taxable as ordinary income. Distributions are
subject to federal income tax and may be subject to state or local
taxes. Your distributions are taxable when paid, whether you reinvest
them in additional shares or take them in cash. Every year the Fund
will send you and the IRS a statement showing the amount of each
taxable distribution you received in the previous year.
"Buying a Dividend": When a fund goes ex-dividend, its share
price is reduced by the amount of the distribution. If you buy shares
on or just before the ex-dividend date, or just before the Fund
declares a capital gains distribution, you will pay the full price for
the shares and then receive a portion of the price back as a taxable
dividend or capital gain.
Taxes on Transactions: Share redemptions, including
redemptions for exchanges, are subject to capital gains tax. A capital
gain or loss is the difference between the price you paid for the
shares and the price you received when you sold them.
Returns of Capital: In certain cases distributions made by the
Fund may be considered a non-taxable return of capital to shareholders.
If that occurs, it will be identified in notices to shareholders.
This information is only a summary of certain federal tax
information about your investment. More information is contained in
the Statement of Additional Information, and in addition you should
consult with your tax adviser about the effect of an investment in the
Fund on your particular tax situation.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER GLOBAL GROWTH & INCOME FUND
Graphic material included in Prospectus of Oppenheimer Global
Growth & Income Fund: "Comparison of Total Return of Oppenheimer Global
Growth & Income Fund to the Morgan Stanley Capital International World
Index and the Lehman Aggregate Bond Index - Change in Value of a
$10,000 Hypothetical Investment"
A linear graph will be included in the Prospectus of Oppenheimer
Global Growth & Income Fund (the "Fund") depicting the initial account
value and subsequent account value of a hypothetical $10,000 investment
in the Fund. In the case of the Fund's Class A shares, that graph will
cover the life of the Fund from 10/22/90 through 9/30/94 and in the
case of the Fund's Class C shares will cover the period from the
inception of the class (December 1, 1993) through 9/30/94. The graph
will compare such values with hypothetical $10,000 investments over the
same time periods to the Morgan Stanley Capital International World
Index and the Lehman Aggregate Bond Index. Set forth below are the
relevant data points that will appear on the linear graph. Additional
information with respect to the foregoing, including a description of
the Morgan Stanley Capital International World Index and the Lehman
Aggregate Bond Index, is set forth in the Prospectus under "Performance
of the Fund - Comparing the Fund's Performance to the Market."
Fiscal Year Oppenheimer Global Morgan Stanley Lehman Aggregate
(Period) Ended Growth & Income Fund A World Index Bond Index
10/22/90 (1) $
10/31/90 $
09/30/91 $
09/30/92 $
09/30/93 $
09/30/94 $
Fiscal Oppenheimer Global Morgan Stanley Lehman Aggregate
Period Ended Growth & Income Fund C World Index Bond Index
12/01/93(2)
09/30/94
- ----------------------
(1) The Fund commenced operations on October 22, 1990.
(2) Class C shares of the Fund were first publicly offered on December
1, 1993.
<PAGE>
Oppenheimer Global Growth & Income Fund
Two World Trade Center
New York, New York 10048-0023
1-800-525-7048
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent O P P E N H E I M E R
Oppenheimer Shareholder Services Global
P.O. Box 5270 Growth &
Denver, Colorado 80217 Income
1-800-525-7048 Fund
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street Prospectus
Denver, Colorado 80202 Effective February 1, 1995
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, salesperson or any other person has been authorized to give
any information or to make any representations other than those
contained in this Prospectus or the Additional Statement, and if given
or made, such information and representations must not be relied upon
as having been authorized by the Fund, Oppenheimer Management
Corporation, Oppenheimer Funds Distributor, Inc. or any affiliate
thereof. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby in
any state to any person to whom it is unlawful to make such an offer in
such state.
OppenheimerFunds
PR216.0194.R Printed on recycled paper
Oppenheimer Global Growth & Income Fund
Two World Trade Center
New York, New York 10048-0023
1-800-525-7048
<PAGE>
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent O P P E N H E I M E R
Oppenheimer Shareholder Services Global
P.O. Box 5270 Growth &
Denver, Colorado 80217 Income
1-800-525-7048 Fund
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street Prospectus and
Denver, Colorado 80202 New Account Application
Effective February 15, 1994
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, salesperson or any other person has been authorized to give
any information or to make any representations other than those
contained in this Prospectus or the Additional Statement, and if given
or made, such information and representations must not be relied upon
as having been authorized by the Fund, Oppenheimer Management
Corporation, Oppenheimer Funds Distributor, Inc. or any affiliate
thereof. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby in
any state to any person to whom it is unlawful to make such an offer in
such state.
OppenheimerFunds
PR215.0194 Printed on recycled paper
<PAGE>
Oppenheimer Global Growth & Income Fund
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated February 1, 1995
This Statement of Additional Information is not a Prospectus.
This document contains additional information about the Fund and
supplements information in the Prospectus dated February 1, 1995. It
should be read together with the Prospectus, which may be obtained by
writing to the Fund's Transfer Agent, Oppenheimer Shareholder Services,
at P.O. Box 5270, Denver, Colorado 80217 or by calling the Transfer
Agent at the toll-free number shown above.
TABLE OF CONTENTS
Page
About the Fund
Investment Objective and Policies
Investment Policies and Strategies
Other Investment Techniques and Strategies
Other Investment Restrictions
How the Fund is Managed
Organization and History
Trustees and Officers of the Fund
The Manager and Its Affiliates
Brokerage Policies of the Fund
Performance of the Fund
Distribution and Service Plans
About Your Account
How To Buy Shares
How To Sell Shares
How To Exchange Shares
Dividends, Capital Gains and Taxes
Additional Information About the Fund
Financial Information About the Fund
Independent Auditors' Report
Financial Statements
Appendix: Ratings of Investments A-1
<PAGE>
ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and
policies of the Fund are described in the Prospectus. Set forth below
is supplemental information about those policies and the types of
securities in which the Fund invests, as well as strategies the Fund
may use to try to achieve its objective. Capitalized terms used in
this Statement of Additional Information have the same meaning as those
terms have in the Prospectus.
In selecting securities for the Fund's portfolio, the Fund's
investment adviser, Oppenheimer Management Corporation (the "Manager"),
evaluates the merits of particular equity and fixed-income securities
primarily through the exercise of its own investment analysis. This may
include, among other things, evaluation of the history of the issuer's
operations, prospects for the industry of which the issuer is part, the
issuer's financial condition, the issuer's pending product developments
and developments by competitors, the effect of general market and
economic conditions on the issuer's business, and legislative proposals
or new laws that might affect the issuer. Depending on the assessment
of market conditions by the Manager, the Fund may emphasize investments
in common stocks, and securities convertible into common stocks, or
securities acquired primarily to produce income, or in a combination of
both types of investments. While the Fund may invest in securities
having appreciation possibilities, such securities will not be selected
which, in the view of the Manager, would involve undue risk.
Securities of Growth-Type Companies. The Fund may emphasize
securities of "growth-type" companies. Such issuers typically are
those whose goods or services have relatively favorable long-term
prospects for increasing demand, or ones that develop new products,
services or markets and normally retain a relatively large part of
their earnings for research, development and investment in capital
assets. They may include companies in the natural resources fields or
those developing industrial applications for new scientific knowledge
having potential for technological innovation, such as nuclear energy,
oceanography, business services and new customer products.
Investing in Small, Unseasoned Companies. The securities of
small, unseasoned companies may have a limited trading market, which
may adversely affect the Fund's ability to dispose of them and can
reduce the price the Fund might be able to obtain for them. If other
investment companies and investors trade the same securities when the
Fund attempts to dispose of its holdings, the Fund may receive lower
prices than might otherwise be obtained, because of the thinner market
for such securities.
Fixed-Income Securities. All fixed-income securities are
subject to two types of risks: credit risk and interest rate risk.
Credit risk relates to the ability of the issuer to meet interest or
principal payments or both as they become due. Generally, higher
yielding bonds are subject to credit risk to a greater extent that
lower yielding, higher quality bonds. Interest rate risk refers to the
fluctuations in value of fixed-income securities resulting solely from
the inverse relationship between price and yield of fixed-income
securities. An increase in interest rates will tend to reduce the
market value of fixed-income investments, and a decline in interest
rates will tend to increase their value. In addition, debt securities
with longer maturities, which tend to produce higher yields, are
subject to potentially greater capital appreciation and depreciation
than obligations with shorter maturities. Fluctuations in the market
value of fixed-income securities after the Fund buys them will not
affect the interest payable on those securities, and thus the cash
income from such securities. However, those price fluctuations will be
reflected in the valuations of these securities and therefore the
Fund's net asset values.
As stated in the Prospectus, the Fund may not invest more than 25%
of its assets in bonds and debentures in the lower rating categories of
Moody's and Standard & Poor's, the principal rating services. High
yield securities, whether rated or unrated, may be subject to greater
market fluctuations and risks of loss of income and principal than
lower-yielding, higher-rated, fixed-income securities. Risks of high
yield securities may include (i) limited liquidity and secondary market
support, (ii) substantial market price volatility resulting from
changes in prevailing interest rates, (iii) subordination of the
obligations to the prior claims of banks and other senior lenders, (iv)
the operation of mandatory sinking fund or call/redemption provisions
during periods of declining interest rates that could cause the Fund to
be able to reinvest premature redemption proceeds only in lower-
yielding portfolio securities, (v) the possibility that earnings of the
issuer may be insufficient to meet its debt service, and (vi) the
issuer's low creditworthiness and potential for insolvency during
periods of rising interest rates and economic downturn. As a result of
the limited liquidity of high yield securities, at times their prices
have experienced significant and rapid declines when a substantial
number of holders decided to sell simultaneously. A decline is also
likely in the high yield bond market during a general economic
downturn. An economic downturn or an increase in interest rates could
severely disrupt the market for high yield bonds and adversely affect
the value of outstanding bonds and the ability of the issuers to repay
principal and interest. In addition, there have been several
Congressional attempts to limit the use of tax and other advantages of
high yield bonds which, if enacted, could adversely affect the value of
these securities and the Fund's net asset value. For example,
federally-insured savings and loan associations have been required to
divest their investments in high yield bonds.
Convertible Securities. While convertible securities are a
form of debt security in many cases, their conversion feature (allowing
conversion into equity securities) causes them to be regarded more as
"equity equivalents." As a result, the rating assigned to the security
has less impact on the Manager's investment decision with respect to
convertible securities than in the case of non-convertible fixed-income
securities. To determine whether convertible securities should be
regarded as "equity equivalents," the Manager examines the following
factors: (1) whether, at the option of the investor, the convertible
security can be exchanged for a fixed number of shares of common stock
of the issuer, (2) whether the issuer of the convertible securities has
restated its earnings per share of common stock on a fully diluted
basis (considering the effect of converting the convertible
securities), and (3) the extent to which the convertible security may
be a defensive "equity substitute," providing the ability to
participate in any appreciation in the price of the issuer's common
stock.
Foreign Securities. "Foreign securities" are equity and debt
securities issued by companies organized under the laws of countries
other than the U.S. and debt securities issued by foreign governments,
which securities are traded on foreign securities exchanges or in
foreign over-the-counter markets. Securities of foreign issuers: (i)
represented by American Depositary Receipts, (ii) traded in the U.S.
over-the-counter markets or (iii) listed on a U.S. securities exchange
are not considered "foreign securities" because they are not subject to
many of the special considerations and risks (discussed below) that
apply to investments in foreign securities traded and held abroad.
A number of current significant political and economic
developments may affect investments in foreign securities and in
securities of companies with operations overseas. Such developments
include dramatic political changes in government and economic policies
in several Eastern European countries, Germany and the Commonwealth of
Independent States (the former Soviet Union), as well as unification of
the European Economic Community. The course of any of one or more of
these events and the effect on trade barriers, competition and markets
for consumer goods and services is uncertain.
Because the Fund may purchase securities denominated in foreign
currencies, a change in the value of any such currency against the U.S.
dollar will result in a change in the U.S. dollar value of the Fund's
assets and the Fund's income available for distribution. In buying
foreign securities, the Fund may convert U.S. dollars into foreign
currency, but only to effect securities transactions on foreign
securities exchanges and not to hold such currency as an investment.
In addition, although a portion of the Fund's investment income, if
any, may be received or realized in foreign currencies, the Fund will
be required to compute and distribute its income in U.S. dollars, and
absorb the cost of currency fluctuations. The Fund may engage in
foreign currency exchange transactions for hedging purposes to protect
against changes in future exchange rates. See "Other Investment
Techniques and Strategies--Covered Calls, Puts and Hedging--Forward
Contracts" below.
The values of foreign investments and the investment income
derived from them may also be affected unfavorably by changes in
currency exchange control regulations. Although the Fund will invest
only in securities denominated in foreign currencies that at the time
of investment do not have significant government-imposed restrictions
on conversion into U.S. dollars, there can be no assurance against
subsequent imposition of currency controls. In addition, the values of
foreign securities will fluctuate in response to changes in U.S. and
foreign interest rates.
Investing in foreign securities offers potential benefits not
available from investing solely in securities of domestic issuers by
offering the opportunity to invest in foreign issuers that appear to
offer growth potential, or in foreign countries with economic policies
or business cycles different from those of the U.S., or to reduce
fluctuations in portfolio value by taking advantage of in foreign stock
markets that do not move in a manner parallel to U.S. markets. From
time to time, U.S. government policies have discouraged certain
investments abroad by U.S. investors, through taxation or other
restrictions, and it is possible that such restrictions could be
reimposed.
The Fund intends to invest less than 5% of its total assets in
securities of issuers of Eastern European countries. The social,
political and economic reforms in most Eastern European countries are
still in their early stages, and there can be no assurance that these
reforms will continue, or, if they continue, will prove beneficial to
the Fund. Eastern European countries in many cases have no existing
capital market structure for the sale and trading of securities.
Participation in the growth of such countries may be available
initially or solely through investment in joint ventures, state
enterprises, private placements, unlisted securities or other similar
illiquid investment vehicles.
In addition, even though opportunities for investment may exist in
Eastern European countries, any change in the leadership or policies of
the governments of those countries, or changes in the leadership or
policies of any other government that exercises a significant influence
over those countries, may halt the expansion of or reverse the
liberalization of foreign investment policies now occurring and thereby
eliminate any investment opportunities which may currently exist.
Prospective investors should note that upon the accession to power
of authoritarian regimes, the governments of a number of the Eastern
European countries previously expropriated large quantities of real and
personal property, similar to the property which will be represented by
the securities purchased by the Fund. The claims of property owners
against those governments were never finally settled. There can be no
assurance that any property represented by securities purchased by the
Fund will not also be expropriated, nationalized, or otherwise
confiscated. If such confiscation were to occur, the Fund could lose a
substantial portion of its investments in such countries. The Fund's
investments would similarly be adversely affected by exchange control
regulations in any of those countries.
The obligations of foreign governmental entities may or may not be
supported by the full faith and credit of a foreign government.
Obligations of supranational entities include those of international
organizations designated or supported by governmental entities to
promote economic reconstruction or development and of international
banking institutions and related government agencies. Examples include
the International Bank for Reconstruction and Development (the World
Bank), the European Coal and Steel Community, the Asian Development
Bank and the Inter-American Development Bank. The governmental
members, or "stockholders," usually make initial capital contributions
to the supranational entity and in many cases are committed to make
additional capital contributions if the supranational entity is unable
to repay its borrowings. Each supranational entity's lending
activities are limited to a percentage of its total capital (including
"callable capital" contributed by members at the entity's call),
reserves and net income. There is no assurance that foreign
governments will be able or willing to honor their commitments.
The Fund may invest in U.S. dollar-denominated, collateralized
"Brady Bonds", as described in the Prospectus. These foreign debt
obligations may be fixed-rate par bonds or floating-rate discount bonds
and are generally collateralized in full as to principal due at
maturity by U.S Treasury zero coupon obligations that have the same
maturity as the Brady Bonds. Brady Bonds are often viewed as having
three or four valuation components: (i) the collateralized repayment of
principal at final maturity; (ii) the collateralized interest payments;
(iii) the uncollateralized interest payments; and (iv) any
uncollateralized repayment of principal at maturity (these
uncollateralized amounts constitute the "residual risk"). In the event
of a default with respect to collateralized Brady Bonds as a result of
which the payment obligations of the issuer are accelerated, the zero
coupon U.S. Treasury securities held as collateral for the payment of
principal will not be distributed to investors, nor will such
obligations be sold and the proceeds distributed. The collateral will
be held by the collateral agent to the scheduled maturity of the
defaulted Brady Bonds, which will continue to be outstanding, at which
time the face amount of the collateral will equal the principal
payments which would have then been due on the Brady Bonds in the
normal course. In addition, in light of the residual risk of Brady
Bonds and, among other factors, the history of defaults with respect to
commercial bank loans by public and private entities of countries
issuing Brady Bonds, investment in Brady Bonds are to be viewed as
speculative.
Asset-Backed Securities. These securities, issued by trusts and
special purpose corporations, are backed by pools of assets, primarily
automobile and credit-card receivables and home equity loans, which
pass through the payments on the underlying obligations to the security
holders (less servicing fees paid to the originator or fees for any
credit enhancement). The value of an asset-backed security is affected
by changes in the market's perception of the asset backing the
security, the creditworthiness of the servicing agent for the loan
pool, the originator of the loans, or the financial institution
providing any credit enhancement, and is also affected if any credit
enhancement has been exhausted. Payments of principal and interest
passed through to holders of asset-backed securities are typically
supported by some form of credit enhancement, such as a letter of
credit, surety bond, limited guarantee by another entity or having a
priority to certain of the borrower's other securities. The degree of
credit enhancement varies, and generally applies to only a fraction of
the asset-backed security's par value until exhausted. If the credit
enhancement of an asset-backed security held by the Fund has been
exhausted, and if any required payments of principal and interest are
not made with respect to the underlying loans, the Fund may experience
losses or delays in receiving payment. The risks of investing in
asset-backed securities are ultimately dependent upon payment of the
consumer loans by the individual borrowers. As a purchaser of an
asset-backed security, the Fund would generally have no recourse to the
entity that originated the loans in the event of default by a borrower.
The underlying loans are subject to prepayments that shorten the
weighted average life of asset-backed securities and may lower their
return in the same manner as described in the Prospectus and in
"Mortgage-Backed Securities" below for prepayments of a pool of
mortgage loans underlying mortgage-backed securities.
U.S. Government Securities. U.S. Government Securities are debt
obligations issued or guaranteed by the U.S. Government or one of its
agencies or instrumentalities, and include "zero coupon" Treasury
securities, mortgage-backed securities, collateralized mortgage-backed
obligations and money market instruments. See "Temporary Investments"
for further discussion.
Mortgage-Backed Securities. These securities represent
participation interests in pools of residential mortgage loans that may
or may not be guaranteed by agencies or instrumentalities of the U.S.
Government. Such securities differ from conventional debt securities
which generally provide for periodic payment of interest in fixed or
determinable amounts (usually semi-annually) with principal payments at
maturity or specified call dates. Some of the mortgage-backed
securities in which the Fund may invest may be backed by the full faith
and credit of the U.S. Treasury (e.g., direct pass-through certificates
of the Government National Mortgage Association (the "GNMA")); some are
supported by the right of the issuer to borrow from the U.S. Government
(e.g., obligations of Federal Home Loan Banks); and some are backed by
only the credit of the issuer itself. Any such guarantees do not
extend to the value of or yield of the mortgage-backed securities
themselves or to the net asset value of the Fund's shares. Any of
these government agencies may issue collateralized mortgage-backed
obligations ("CMO's"), discussed below.
The yield on mortgage-backed securities is based on the average
expected life of the underlying pool of mortgage loans. The actual
life of any particular pool will be shortened by any unscheduled or
early payments of principal and interest. Principal prepayments
generally result from the sale of the underlying property or the
refinancing or foreclosure of underlying mortgages. The occurrence of
prepayments is affected by a wide range of economic, demographic and
social factors and, accordingly, it is not possible to predict
accurately the average life of a particular pool. Yield on such pools
is usually computed by using the historical record of prepayments for
that pool or, in the case of newly-issued mortgages, the prepayment
history of similar pools. The actual prepayment experience of a pool
of mortgage loans may cause the yield realized by the Fund to differ
from the yield calculated on the basis of the expected average life of
the pool.
Prepayments tend to increase during periods of falling interest
rates, while during periods of rising interest rates prepayments will
most likely decline. When prevailing interest rates rise, the value of
a pass-through security may decrease as do other debt securities, but,
when prevailing interest rates decline, the value of a pass-through
security is not likely to rise on a comparable basis with other debt
securities because of the prepayment feature of pass-through
securities. The Fund's reinvestment of scheduled principal payments
and unscheduled prepayments it receives may occur at higher or lower
rates than the original investment, thus affecting the yield of the
Fund. Monthly interest payments received by the Fund have a
compounding effect that may increase the yield to the Fund more than
debt obligations that pay interest semi-annually. Due to those
factors, mortgage-backed securities may be less effective than Treasury
bonds of similar maturity at maintaining yields during periods of
declining interest rates. Accelerated prepayments adversely affect
yields for pass-through securities purchased at a premium (i.e., at a
price in excess of principal amount) and may involve additional risk of
loss of principal because the premium may not have been fully
amortized at the time the obligation is repaid. The opposite is true
for pass-through securities purchased at a discount. The Fund may
purchase mortgage-backed securities at par, at a premium or at a
discount.
GNMA Certificates. Certificates of the Government National
Mortgage Association ("GNMA Certificates") are mortgage-backed
securities that evidence an undivided interest in a pool or pools of
mortgages. The GNMA Certificates that the Fund may purchase are of the
"modified pass-through" type, which entitle the holder to receive
timely payment of all interest and principal payments due on the
mortgage pool, net of fees paid to the "issuer" and the GNMA,
regardless of whether the mortgagor actually makes the payments.
The National Housing Act authorized the GNMA to guarantee the
timely payment of principal and interest on securities backed by a pool
of mortgages insured by the Federal Housing Administration (the "FHA")
or guaranteed by the Veterans Administration (the "VA"). The GNMA
guarantee is backed by the full faith and credit of the U.S.
Government. The GNMA is also empowered to borrow without limitation
from the U.S. Treasury if necessary to make any payments under its
guarantee.
The average life of a GNMA Certificate is likely to be
substantially shorter than the original maturity of the mortgages
underlying the securities. Prepayments of principal by mortgagors and
mortgage foreclosures will usually result in the return of the greater
part of principal investment long before the maturity of the mortgages
in the pool. Foreclosures impose no risk to principal investment
because of the GNMA guarantee, except to the extent that the Fund has
purchased the certificates at a premium in the secondary market.
FNMA Securities. The Federal National Mortgage Association (the
"FNMA") was established to create a secondary market in mortgages
insured by the FHA. FNMA issues guaranteed mortgage pass-through
certificates ("FNMA Certificates"). The FNMA Certificates resemble
GNMA Certificates in that each FNMA Certificate represents a pro rata
share of all interest and principal payments made and owed on the
underlying pool. The FNMA guarantees timely payment of interest and
principal on FNMA Certificates. The FNMA guarantee is not backed by
the full faith and credit of the U.S. Government.
FHLMC Securities. The Federal Home Loan Mortgage Corporation
(the "FHLMC") was created to promote development of a nationwide
secondary market for conventional residential mortgages. The FHLMC
issues mortgage pass-through certificates ("PCs"). PCs resemble GNMA
Certificates in that each PC represents a pro rata share of all
interest and principal payments made and owed on the underlying pool.
The FHLMC guarantees timely monthly payment of interest on PCs and the
ultimate payment of principal. The FHLMC guarantee is not backed by
the full faith and credit of the U.S. Government.
Collateralized Mortgage-Backed Obligations ("CMOs"). CMOs are
fully-collateralized bonds that are the general obligations of the
issuer thereof, either the U.S. Government, a U.S. Government
instrumentality, or a private issuer. Such bonds generally are secured
by an assignment to a trustee (under the indenture pursuant to which
the bonds are issued) of collateral consisting of a pool of mortgages.
Payments with respect to the underlying mortgages generally are made to
the trustee under the indenture. Payments of principal and interest on
the underlying mortgages are not passed through to the holders of the
CMOs as such (i.e., the character of payments of principal and interest
is not passed through, and therefore payments to holders of CMOs
attributable to interest paid and principal repaid on the underlying
mortgages do not necessarily constitute income and return of capital,
respectively, to such holders), but such payments are dedicated to
payment of interest on and repayment of principal of the CMOs. CMOs
often are issued in two or more classes with different characteristics
such as varying maturities and stated rates of interest. Because
interest and principal payments on the underlying mortgages are not
passed through to holders of CMOs, CMOs of varying maturities may be
secured by the same pool of mortgages, the payments on which are used
to pay interest on each class and to retire successive maturities in
sequence. Unlike other mortgage-backed securities (discussed above),
CMOs are designed to be retired as the underlying mortgages are repaid.
In the event of prepayment on such mortgages, the class of CMO first to
mature generally will be paid down. Therefore, although in most cases
the issuer of CMOs will not supply additional collateral in the event
of such prepayment, there will be sufficient collateral to secure CMOs
that remain outstanding.
Mortgage-Backed Security Rolls. The Fund may enter into
"forward roll" transactions with respect to mortgage-backed securities
issued by the GNMA, FNMA or FHLMC. In a forward roll transaction,
which is considered to be a borrowing by the Fund, the Fund will sell a
mortgage-backed security to a bank or other permitted entity and
simultaneously agree to repurchase a similar security from the
institution at a later date at an agreed upon price. The mortgage-
backed securities that are repurchased will bear the same interest rate
as those sold, but generally will be collateralized by different pools
of mortgages with different prepayment histories than those sold.
Risks of mortgage-backed security rolls include (i) the risk of
prepayment prior to maturity, (ii) the possibility that the Fund may
not be entitled to receive interest and principal payments on the
securities sold and that the proceeds of the sale may have to be
invested in money market instruments (typically repurchase agreements)
maturing not later than the expiration of the roll, and (iii) the risk
that the market value of the securities sold by the Fund may decline
below the price at which the Fund is obligated to purchase the
securities. Upon entering into a mortgage-backed security roll, the
Fund will be required to place cash, U.S. Government securities or
other high-grade debt securities in a segregated account with its
Custodian in an amount equal to its obligation under the roll.
Temporary Defensive Investments. As stated in the Prospectus,
the Fund may hold a portion of its assets in cash equivalents
(commercial paper, Treasury bills and U.S. Government securities
maturing in one year or less) for day to day operating purposes. Under
unusual market or economic conditions (including drastic market
fluctuations), the Fund may invest up to 100% of its assets in those
instruments identified in the Prospectus under "Temporary Defensive
Investments."
U.S. Government Securities. U.S. Government securities are debt
obligations issued or guaranteed by the U.S. Government or one of its
agencies or instrumentalities. Certain of these obligations, including
U.S. Treasury notes and bonds, and GNMA debentures ("Ginnie Mae's"),
are supported by the full faith and credit of the U.S. Certain other
U.S. Government securities, issued or guaranteed by Federal agencies or
government sponsored enterprises, are not supported by the full faith
and credit of the U.S. These latter securities may include obligations
supported by the right of the issuer to borrow from the U.S. Treasury,
such as obligations of the Federal Home Loan Mortgage Corporation
("Freddie Macs's") and obligations supported by the credit of the
instrumentality, such as FNMA bonds (Fannie Mae's"). U.S. Government
securities in which the Fund may invest include zero coupon U.S.
Treasury securities, mortgage-backed securities and CMOs (see
discussion above) and money market instruments.
Zero Coupon Securities. The Fund may invest in zero coupon
securities issued by the U.S. Treasury. Zero coupon U.S. Treasury
securities are U.S. Treasury notes and bonds that have been stripped of
their unmatured interest coupons and receipts or bills issued without
interest coupons, U.S. Treasury certificates representing interest in
such stripped debt obligations or coupons. The Fund may also invest in
zero coupon securities issued by other issuers, including foreign
governments.
These securities usually trade at a deep discount from their face
or par value and will be subject to greater fluctuations in market
value in response to changing interest rates than debt obligations of
comparable maturities that make current payments of interest. However,
the lack of periodic interest payments means that the interest rate is
"locked in" and there is no risk of having to reinvest periodic
interest payments in securities having lower rates. Because the Fund
accrues taxable income from zero coupon securities issued by either the
U.S. Treasury or other issuers without receiving cash, the Fund may be
required to sell portfolio securities in order to pay a dividend
depending, among other things, upon the proportion of shareholders who
elect to receive dividends in cash rather than reinvesting dividends in
additional shares of the Fund. The Fund might also sell portfolio
securities to maintain portfolio liquidity. In either case, cash
distributed or held by the Fund and not reinvested in Fund shares will
hinder the Fund in seeking a high level of current income.
Commercial Paper.
The Fund's commercial paper investments include:
Variable Amount Master Demand Notes. Master demand notes are
corporate obligations that permit the investment of fluctuating amounts
by the Fund at varying rates of interest pursuant to direct
arrangements between the Fund, as lender, and the borrower. These
notes may or may not be backed by bank letters of credit. Because
these notes are direct lending arrangements between the lender and
borrower, it is not generally contemplated that they will be traded.
There is no secondary market for these notes, although they are
redeemable (and thus immediately repayable by the borrower) at
principal amount, plus accrued interest, at any time. Accordingly, the
Fund's right to redeem is dependent upon the ability of the borrower to
pay principal and interest on demand. The Manager will consider the
earning power, cash flow and other liquidity ratios of the issuer, and
its ability to pay principal and interest on demand, including a
situation in which all holders of such notes made demand
simultaneously. Investments in bank time deposits and master demand
notes are subject to the 10% of total assets limitation on securities
that are not readily marketable.
Floating Rate/Variable Rate Notes. Some of the notes the Fund
may purchase may have variable or floating interest rates. Variable
rates are adjustable at stated periodic intervals. Floating rates are
automatically adjusted according to a specified market rate for such
investments, such as the percentage of the prime rate of a bank, or the
91-day U.S. Treasury Bill rate. Such obligations may be secured by
bank letters of credit or other credit support arrangements.
Warrants and Rights. Warrants basically are options to purchase
equity securities at set prices valid for a specified period of time.
The prices of warrants do not necessarily move in a manner parallel to
the prices of the underlying securities. The price the Fund pays for a
warrant will be lost unless the warrant is exercised prior to its
expiration. Rights are similar to warrants, but normally have a short
duration and are distributed directly by the issuer to its
shareholders. Warrants and rights have no voting rights, receive no
dividends and have no rights with respect to the assets of the
issuer.
Other Investment Techniques and Strategies
Borrowing for Leverage. From time to time, the Fund may increase
its ownership of securities by borrowing from banks on an unsecured
basis and investing the borrowed funds subject to the restrictions
stated in the Prospectus. Any such borrowing will be made only from
banks, and, pursuant to the requirements of the Investment Company Act
of 1940 (the "Investment Company Act"), will only be made to the extent
that the value of the Fund's assets, less its liabilities other than
borrowings, is equal to at least 300% of all borrowings including the
proposed borrowing. If the value of the Fund's assets, when computed in
that manner, should fail to meet the 300% asset coverage requirement,
the Fund is required within three days to reduce its bank debt to the
extent necessary to meet such requirement. To do so, the Fund may have
to sell a portion of its investments at a time when independent
investment judgment would not dictate such sale. Interest on money
borrowed is an expense the Fund would not otherwise incur, so that
during period of substantial borrowing, its expenses may increase more
than funds that do not borrow.
Loans of Portfolio Securities. The Fund may lend its
portfolio securities subject to the restrictions stated in the
Prospectus. Under applicable regulatory requirements (which are
subject to change), the loan collateral on each business day must at
least equal the value of the loaned securities and must consist of
cash, bank letters of credit or securities of the U.S. Government (or
its agencies or instrumentalities). To be acceptable as collateral,
letters of credit must obligate a bank to pay amounts demanded by the
Fund if the demand meets the terms of the letter. Such terms and the
issuing bank must be satisfactory to the Fund. When it lends
securities, the Fund receives amounts equal to the dividends or
interest on loaned securities and also receives one or more of (a)
negotiated loan fees, (b) interest on securities used as collateral,
and (c) interest on short-term debt securities purchased with such loan
collateral. Either type of interest may be shared with the borrower.
The Fund may also pay reasonable finder's, custodian and administrative
fees. The terms of the Fund's loans must meet applicable tests under
the Internal Revenue Code and must permit the Fund to reacquire loaned
securities on five days' notice or in time to vote on any important
matter.
Repurchase Agreements. The Fund may acquire securities subject
to repurchase agreements for liquidity purposes to meet anticipated
redemptions, or pending the investment of the proceeds from sales of
Fund shares, or pending the settlement of purchases of portfolio
securities. In a repurchase transaction, the Fund acquires a security
from, and simultaneously resells it to, an approved vendor. An
"approved vendor" is a U.S. commercial bank or the U.S. branch of a
foreign bank or a broker-dealer that has been designated a primary
dealer in government securities, that must meet credit requirements set
by the Fund's Board of Trustees from time to time. The resale price
exceeds the purchase price by an amount that reflects an agreed-upon
interest rate effective for the period during which the repurchase
agreement is in effect. The majority of these transactions run from
day to day, and delivery pursuant to the resale typically will occur
within one to five days of the purchase. Repurchase agreements are
considered "loans" under the Investment Company Act, collateralized by
the underlying security. The Fund's repurchase agreements require that
at all times while the repurchase agreement is in effect, the value of
the collateral must equal or exceed the repurchase price to fully
collateralize the repayment obligation. Additionally, the Manager will
impose creditworthiness requirements to confirm that the vendor is
financially sound and will continuously monitor the collateral's
value.
Restricted and Illiquid Securities
Restricted and Illiquid Securities. As stated in the
Prospectus, restricted securities, unregistered under the Securities
Act of 1933, which are offered and sold to institutional investors
under Rule 144A, may be readily marketable and thus not illiquid if the
Fund's Board of Trustees, or the Manager under Board-approved
guidelines, so determines. Such guidelines take into account, among
other factors, trading activity for such securities and the
availability of reliable pricing information. If there is a lack of
trading interest in particular Rule 144A securities, the Fund's
holdings of those securities may be illiquid. There may be undesirable
delays in selling such securities at a price representing their fair
value. The expenses of registration of restricted securities that are
illiquid may be negotiated by the Fund at the time such securities are
purchased by the Fund. When registration is required before such
securities may be sold, a considerable period may elapse between a
decision to sell the securities and the time when the Fund would be
permitted to sell them. Thus, the Fund would bear the risks of any
downward price fluctuation during that period. The Fund also may
acquire, through private placements, securities having contractual
restrictions on their resale, which might lower the amount realizable
upon the sale of such securities. The Fund will also treat as illiquid
any OTC option held by it, as well as repurchase transactions having a
maturity beyond seven days.
Participation Interests. The Fund may acquire participation
interests in senior, fully-secured floating rate loans that are made
primarily to U.S. companies (the "borrower"). Such participation
interests, which may take the form of interests in, or assignment of,
the loan, are acquired from banks who have made loans or are members of
a lending syndicate. The Fund may purchase only those participation
interests that mature in 60 days or less, or, if maturing in more than
60 days, that have a floating rate that is automatically adjusted at
least once every 60 days according to a specified rate for such
investments, such as the percentage of a bank's prime rate. The Fund
will use the amortized cost method in valuing its investments in
participation interests maturing in 60 days or less when amortized cost
represents fair value as determined in good faith by the Fund's Board
of Trustees. Participation interests are primarily dependent upon the
creditworthiness of the borrower for payment of interest and principal,
and such borrowers may have difficulty making payments. In the event
the borrower fails to pay scheduled interest or principal payments, the
Fund could experience a reduction in its income and might experience a
decline in the net asset value of its shares. The Fund's Board of
Trustees has established quality standards for participation interests
(the borrower shall have senior securities rated at least "BBB" by
Standard & Poor's or "Baa" by Moody's or, if unrated, which offer
comparable yields and risks, in the Manager's opinion, to such rated
securities). The Fund currently intends to invest less than 5% of its
net assets in participation interests. The Board will review
procedures to verify that (i) participation interests purchased by the
Fund meet such prescribed quality standards and (ii) provide for
monitoring the creditworthiness of the borrowing institution.
"When-Issued" and Delayed Delivery Transactions. The Fund may
purchase securities on a "when-issued" basis, and may purchase or sell
such securities on a "delayed delivery" basis. Although the Fund will
enter into such transactions for the purpose of acquiring securities
for its portfolio or for delivery pursuant to options contracts it has
entered into, the Fund may dispose of a commitment prior to settlement.
"When-issued" or "delayed delivery" refers to securities whose terms
and indenture are available and for which a market exists, but which
are not available for immediate delivery. When such transactions are
negotiated, the price (which is generally expressed in yield terms) is
fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. The Fund does not intend to
make such purchases for speculative purposes. The commitment to
purchase a security for which payment will be made on a future date may
be deemed a separate security and involve a risk of loss if the value
of the security declines prior to the settlement date. During the
period between commitment by the Fund and settlement (generally within
two months but not to exceed 120 days), no payment is made for the
securities purchased by the purchaser, and no interest accrues to the
purchaser from the transaction. Such securities are subject to market
fluctuation; the value at delivery may be less than the purchase price.
The Fund will maintain a segregated account with its Custodian,
consisting of cash, U.S. Government securities or other high grade debt
obligations at least equal to the value of purchase commitments until
payment is made.
The Fund will engage in when-issued transactions in order to
secure what is considered to be an advantageous price and yield at the
time of entering into the obligation. When the Fund engages in when-
issued or delayed delivery transactions, it relies on the buyer or
seller, as the case may be, to consummate the transaction. Failure of
the buyer or seller to do so may result in the Fund losing the
opportunity to obtain a price and yield considered to be advantageous.
At the time the Fund makes a commitment to purchase or sell a security
on a when-issued or forward commitment basis, it records the
transaction and reflects the value of the security purchased, or if a
sale, the proceeds to be received, in determining its net asset value.
If the Fund chooses to (i) dispose of the right to acquire a when-
issued security prior to its acquisition or (ii) dispose of its right
to deliver or receive against a forward commitment, it may incur a gain
or loss.
To the extent the Fund engages in when-issued and delayed delivery
transactions, it will do so for the purpose of acquiring or selling
securities consistent with its investment objective and policies and
not for the purposes of investment leverage. The Fund enters into such
transactions only with the intention of actually receiving or
delivering the securities, although (as noted above), when-issued
securities and forward commitments may be sold prior to settlement
date. In addition, changes in interest rates before settlement in a
direction other than that expected by the Manager will affect the value
of such securities and may cause a loss to the Fund.
When-issued transactions and forward commitments allow the Fund a
technique to use against anticipated changes in interest rates and
prices. For instance, in periods of rising interest rates and falling
prices, the Fund might sell securities in its portfolio on a forward
commitment basis to attempt to limit its exposure to anticipated
falling prices. In periods of falling interest rates and rising
prices, the Fund might sell portfolio securities and purchase the same
or similar securities on a when-issued or forward commitment basis,
thereby obtaining the benefit of currently higher cash yields
Short Sales Against-the-Box. In this type of short sale, while
the short position is open, the Fund must own an equal amount of such
securities sold short, or by virtue of ownership of securities have the
right, without payment of further consideration, to obtain an equal
amount of the securities sold short. Short sales against-the-box may
be made to defer, for Federal income tax purposes, recognition of gain
or loss on the sale of securities "in the box" until the short position
is closed out.
Covered Calls, Puts and Hedging. As described in the Prospectus,
the Fund may write covered calls or employ one or more types of Hedging
Instruments, including the futures identified in the Prospectus
("Futures"). The Fund's strategy of hedging with Futures and options
on Futures will be incidental to the Fund's activities in the
underlying cash market. When hedging to attempt to protect against
declines in the market value of the Fund's portfolio, to permit the
Fund to retain unrealized gains in the value of portfolio securities
which have appreciated, or to facilitate selling securities for
investment reasons, the Fund may (i) sell Futures, (ii) buy puts on
such Futures or securities, or (iii) write covered calls on securities
or on Futures. When hedging to permit the Fund to establish a position
in the equities market as a temporary substitute for purchasing
individual equity securities (which the Fund will normally purchase,
and then terminate that hedging position), or to attempt to protect
against the possibility that portfolio debt securities are not fully
included in a rise in value of the debt securities market, the Fund
may: (i) buy Futures, or (ii) buy calls on such Futures or on
securities. Covered calls and puts may also be written on debt
securities to attempt to increase the Fund's income. When hedging to
attempt to protect against declines in the dollar value of a foreign
currency-denominated security or in a payment on such security, the
Fund may: (a) buy puts on that foreign currency or on foreign currency
Futures, (b) write calls on that currency or on such Futures, or (c)
enter into Forward Contracts at a different rate than the spot ("cash")
rate. Additional information about the Hedging Instruments the Fund
may use is provided below. At present, the Fund does not intend to
purchase or sell Futures, Forward Contracts or options on Futures if,
after any such purchase, the sum of initial margin deposits on Futures
and premiums paid for related options exceeds 5% of the value of the
Fund's total assets. Certain options on foreign currencies are
considered related options for this purpose. The Fund may in the
future employ hedging instruments and strategies that are not presently
contemplated to the extent such investment methods are consistent with
the Fund's investment objective, are legally permissible and are
adequately disclosed.
The Fund's Custodian, or a securities depository acting for the
Custodian, will act as the Fund's escrow agent, through the facilities
of the Options Clearing Corporation ("OCC"), as to the investments on
which the Fund has written options that are traded on exchanges, or as
to other acceptable escrow securities, so that no margin will be
required from the Fund for such option transactions. OCC will release
the securities covering a call on the expiration of the call or when
the Fund enters into a closing purchase transaction. Call writing
affects the Fund's turnover rate and the brokerage commissions it pays.
Commissions, normally higher than on general securities transactions,
are payable on writing or purchasing a call.
Writing Covered Call Options. When the Fund writes a call on an
investment, it receives a premium and agrees to sell the callable
investment to a purchaser of a corresponding call during the call
period (usually not more than 9 months) at a fixed exercise price
(which may differ from the market price of the underlying investment),
regardless of market price changes during the call period. To
terminate its obligation on a call it has written, the Fund may
purchase a corresponding call in a "closing purchase transaction." A
profit or loss will be realized, depending upon whether the net of the
amount of the option transaction costs and the premium received on the
call written was more or less than the price of the call subsequently
purchased. A profit may also be realized if the call expires
unexercised, because the Fund retains the underlying investment and the
premium received. Any such profits are considered short-term capital
gains for Federal income tax purposes, and when distributed by the Fund
are taxable as ordinary income. If the Fund could not effect a closing
purchase transaction due to lack of a market, it would have to hold the
callable investment until the call expired or was exercised.
The Fund may write calls on foreign currencies. A call written on
a foreign currency by the Fund is "covered" if the Fund owns the
underlying foreign currency covered by the call or has an absolute and
immediate right to acquire that foreign currency without additional
cash consideration (or for additional cash consideration held in a
segregated account by its custodian) upon conversion or exchange of
other foreign currency held in its portfolio. A call written by the
Fund on a foreign currency is for cross-hedging purposes if it is not
covered, but is designed to provide a hedge against a decline (due to
an adverse change in the exchange rate) in the U.S. dollar value of a
security which the Fund owns or has the right to acquire and which is
denominated in the currency underlying the option. In such
circumstances, the Fund collateralizes the option by maintaining in a
segregated account with the Fund's custodian, cash or Government
securities in an amount not less than the value of the underlying
foreign currency in U.S. dollars marked-to-market daily.
The Fund may also write calls on Futures without owning a futures
contract, provided that at the time the call is written, the Fund
covers the call by segregating in escrow an equivalent dollar amount of
liquid assets. The Fund will segregate additional liquid assets if the
value of the escrowed assets drops below 100% of the current value of
the Future. In no circumstances would an exercise notice require the
Fund to deliver a futures contract; it would simply put the Fund in a
short futures position, which is permitted by the Fund's hedging
policies.
Writing Put Options. A put option on securities gives the
purchaser the right to sell, and the writer the obligation to buy, the
underlying investment at the exercise price during the option period.
Writing a put covered by segregated liquid assets equal to the exercise
price of the put has the same economic effect to the Fund as writing a
covered call. The premium the Fund receives from writing a put option
represents a profit, as long as the price of the underlying investment
remains above the exercise price. However, the Fund has also assumed
the obligation during the option period to buy the underlying
investment from the buyer of the put at the exercise price, even though
the value of the investment may fall below the exercise price. If the
put expires unexercised, the Fund (as the writer of the put) realizes a
gain in the amount of the premium less transaction costs. If the put
is exercised, the Fund must fulfill its obligation to purchase the
underlying investment at the exercise price, which will usually exceed
the market value of the investment at that time. In that case, the
Fund may incur a loss, equal to the sum of the sale price of the
underlying investment and the premium received minus the sum of the
exercise price and any transaction costs incurred.
When writing put options on securities or on foreign currencies,
to secure its obligation to pay for the underlying security, the Fund
will deposit in escrow liquid assets with a value equal to or greater
than the exercise price of the underlying securities. The Fund
therefore foregoes the opportunity of investing the segregated assets
or writing calls against those assets. As long as the obligation of
the Fund as the put writer continues, it may be assigned an exercise
notice by the exchange or broker-dealer through whom such option was
sold, requiring the Fund to exchange currency at the specified rate of
exchange or to take delivery of the underlying security against payment
of the exercise price. The Fund may have no control over when it may
be required to purchase the underlying security, since it may be
assigned an exercise notice at any time prior to the termination of its
obligation as the writer of the put. This obligation terminates upon
expiration of the put, or such earlier time at which the Fund effects a
closing purchase transaction by purchasing a put of the same series as
that previously sold. Once the Fund has been assigned an exercise
notice, it is thereafter not allowed to effect a closing purchase
transaction.
The Fund may effect a closing purchase transaction to realize a
profit on an outstanding put option it has written or to prevent an
underlying security from being put. Furthermore, effecting such a
closing purchase transaction will permit the Fund to write another put
option to the extent that the exercise price thereof is secured by the
deposited assets, or to utilize the proceeds from the sale of such
assets for other investments by the Fund. The Fund will realize a
profit or loss from a closing purchase transaction if the cost of the
transaction is less or more than the premium received from writing the
option. As above for writing covered calls, any and all such profits
described herein from writing puts are considered short-term capital
gains for Federal tax purposes, and when distributed by the Fund, are
taxable as ordinary income.
Purchasing Calls and Puts. When the Fund purchases a call
(other than in a closing purchase transaction), it pays a premium and
has the right to buy the underlying investment from a seller of a
corresponding call on the same investment during the call period at a
fixed exercise price. The Fund benefits only if the call is sold at a
profit or if, during the call period, the market price of the
underlying investment is above the sum of the call price plus the
transaction costs and the premium paid for the call and the call is
exercised. If the call is not exercised or sold (whether or not at a
profit), it will become worthless at its expiration date and the Fund
will lose its premium payment and the right to purchase the underlying
investment.
When the Fund purchases a put, it pays a premium and has the right
to sell the underlying investment to a seller of a put on a
corresponding investment during the put period at a fixed exercise
price. Buying a put on securities or Futures the Fund owns enables the
Fund to attempt to protect itself during the put period against a
decline in the value of the underlying investment below the exercise
price by selling the underlying investment at the exercise price to a
seller of a corresponding put. If the market price of the underlying
investment is equal to or above the exercise price and, as a result,
the put is not exercised or resold, the put will become worthless at
its expiration date and the Fund will lose its premium payment and the
right to sell the underlying investment; the put may, however, be sold
prior to expiration (whether or not at a profit).
Purchasing a put on either Futures or on securities it does not
own permits the Fund either to resell the put or, if applicable, to buy
the underlying investment and sell it at the exercise price. The
resale price of the put will vary inversely with the price of the
underlying investment. If the market price of the underlying
investment is above the exercise price, and, as a result, the put is
not exercised, the put will become worthless on its expiration date.
In the event of a decline in price of the underlying investment, the
Fund could exercise or sell the put at a profit to attempt to offset
some or all of its loss on its portfolio securities. When the Fund
purchases a put on a Future or security not held by it, the put
protects the Fund to the extent that the prices of the underlying
Future or securities move in a similar pattern to the prices of the
securities in the Fund's portfolio.
Futures. No payment is paid or received by the Fund on the
purchase or sale of a Future. Upon entering into a Futures
transaction, the Fund will be required to deposit an initial margin
payment with the futures commission merchant (the "futures broker").
Initial margin payments will be deposited with the Fund's Custodian in
an account registered in the futures broker's name; however, the
futures broker can gain access to that account only under specified
conditions. As the Future is marked to market to reflect changes in
its market value, subsequent margin payments, called variation margin,
will be paid to or by the futures broker on a daily basis. At any time
prior to expiration of the Future, the Fund may elect to close out its
position by taking an opposite position, at which time a final
determination of variation margin is made and additional cash is
required to be paid by or released to the Fund. Any loss or gain is
realized. All futures transactions are effected through a
clearinghouse associated with the exchange on which the contracts are
traded.
Forward Contracts. The Fund may enter into foreign currency
exchange contracts ("Forward Contracts"), which obligate the seller to
deliver and the purchaser to take a specific amount of foreign currency
at a specific future date for a fixed price. A Forward Contract
involves bilateral obligations of one party to purchase, and another
party to sell, a specific currency at a future date (which may be any
fixed number of days from the date of the contract agreed upon by the
parties), at a price set at the time the contract is entered into.
These contracts are traded in the interbank market conducted directly
between currency traders (usually large commercial banks) and their
customers. The Fund may enter into a Forward Contract in order to
"lock in" the U.S. dollar price of a security denominated in a foreign
currency which it has purchased or sold but which has not yet settled,
or to protect against a possible loss resulting from an adverse change
in the relationship between the U.S. dollar and a foreign currency.
There is a risk that use of Forward Contracts may reduce the gain
that would otherwise result from a change in the relationship between
the U.S. dollar and a foreign currency. Forward Contracts include
standardized foreign currency futures contracts which are traded on
exchanges and are subject to procedures and regulations applicable to
other Futures. The Fund may also enter into a Forward Contract to sell
a foreign currency denominated in a currency other than that in which
the underlying security is denominated. This is done in the
expectation that there is a greater correlation between the foreign
currency of the Forward Contract and the foreign currency of the
underlying investment than between the U.S. dollar and the foreign
currency of the underlying investment. This technique is referred to
as "cross hedging." The success of cross hedging is dependent on many
factors, including the ability of the Manager to correctly identify and
monitor the correlation between foreign currencies and the U.S. dollar.
To the extent that the correlation is not identical, the Fund may
experience losses or gains on both the underlying security and the
cross currency hedge.
The Fund may use Forward Contracts to protect against uncertainty
in the level of future exchange rates. The use of Forward Contracts
does not eliminate fluctuations in the prices of the underlying
securities the Fund owns or intends to acquire, but it does fix a rate
of exchange in advance. In addition, although Forward Contracts limit
the risk of loss due to a decline in the value of the hedged
currencies, at the same time they limit any potential gain that might
result should the value of the currencies increase.
The Fund will not speculate with foreign currency exchange
contracts. There is no limitation as to the percentage of the Fund's
assets that may be committed to foreign currency exchange contracts.
The Fund does not enter into such forward contracts or maintain a net
exposure in such contracts to the extent that the Fund would be
obligated to deliver an amount of foreign currency in excess of the
value of the Fund's assets denominated in that currency, or enter into
a "cross hedge," unless it is denominated in a currency or currencies
that the Manager believes will have price movements that tend to
correlate closely with the currency in which the investment being
hedged is denominated. See "Tax Aspects of Covered Calls and Hedging
Instruments" below for a discussion of the tax treatment of foreign
currency exchange contracts.
The Fund may enter into Forward Contracts with respect to specific
transactions. For example, when the Fund enters into a contract for
the purchase or sale of a security denominated in a foreign currency,
or when the Fund anticipates receipt of dividend payments in a foreign
currency, the Fund may desire to "lock-in" the U.S. dollar price of the
security or the U.S. dollar equivalent of such payment by entering into
a Forward Contract, for a fixed amount of U.S. dollars per unit of
foreign currency, for the purchase or sale of the amount of foreign
currency involved in the underlying transaction ("transaction hedge").
The Fund will thereby be able to protect itself against a possible loss
resulting from an adverse change in the relationship between the
currency exchange rates during the period between the date on which the
security is purchased or sold, or on which the payment is declared, and
the date on which such payments are made or received.
The Fund may also use Forward Contracts to lock in the U.S. dollar
value of portfolio positions ("position hedge"). In a position hedge,
for example, when the Fund believes that foreign currency may suffer a
substantial decline against the U.S. dollar, it may enter into a
forward sale contract to sell an amount of that foreign currency
approximating the value of some or all of the Fund's portfolio
securities denominated in such foreign currency, or when the Fund
believes that the U.S. dollar may suffer a substantial decline against
a foreign currency, it may enter into a forward purchase contract to
buy that foreign currency for a fixed dollar amount. In this situation
the Fund may, in the alternative, enter into a forward contract to sell
a different foreign currency for a fixed U.S. dollar amount where the
Fund believes that the U.S. dollar value of the currency to be sold
pursuant to the forward contract will fall whenever there is a decline
in the U.S. dollar value of the currency in which portfolio securities
of the Fund are denominated ("cross hedge").
The Fund's Custodian will place cash or U.S. Government securities
or other liquid high-quality debt securities in a separate account of
the Fund having a value equal to the aggregate amount of the Fund's
commitments under forward contracts to cover its short positions. If
the value of the securities placed in the separate account declines,
additional cash or securities will be placed in the account on a daily
basis so that the value of the account will equal the amount of the
Fund's commitments with respect to such contracts. As an alternative
to maintaining all or part of the separate account, the Fund may
purchase a call option permitting the Fund to purchase the amount of
foreign currency being hedged by a forward sale contract at a price no
higher than the forward contract price, or the Fund may purchase a put
option permitting the Fund to sell the amount of foreign currency
subject to a forward purchase contract at a price as high or higher
than the forward contract price. Unanticipated changes in currency
prices may result in poorer overall performance for the Fund than if it
had not entered into such contracts.
The precise matching of the Forward Contract amounts and the value
of the securities involved will not generally be possible because the
future value of such securities in foreign currencies will change as a
consequence of market movements in the value of these securities
between the date the Forward Contract is entered into and the date it
is sold. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot (i.e., cash) market (and bear
the expense of such purchase), if the market value of the security is
less than the amount of foreign currency the Fund is obligated to
deliver and if a decision is made to sell the security and make
delivery of the foreign currency. Conversely, it may be necessary to
sell on the spot market some of the foreign currency received upon the
sale of the portfolio security if its market value exceeds the amount
of foreign currency the Fund is obligated to deliver. The projection
of short-term currency market movements is extremely difficult, and the
successful execution of a short-term hedging strategy is highly
uncertain. Forward Contracts involve the risk that anticipated
currency movements will not be accurately predicted, causing the Fund
to sustain losses on these contracts and transactions costs.
At or before the maturity of a Forward Contract requiring the Fund
to sell a currency, the Fund may either sell a portfolio security and
use the sale proceeds to make delivery of the currency or retain the
security and offset its contractual obligation to deliver the currency
by purchasing a second contract pursuant to which the Fund will obtain,
on the same maturity date, the same amount of the currency that it is
obligated to deliver. Similarly, the Fund may close out a Forward
Contract requiring it to purchase a specified currency by entering into
a second contract entitling it to sell the same amount of the same
currency on the maturity date of the first contract. The Fund would
realize a gain or loss as a result of entering into such an offsetting
Forward Contract under either circumstance to the extent the exchange
rate or rates between the currencies involved moved between the
execution dates of the first contract and offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of the contract
period and the market conditions then prevailing. Because Forward
Contracts are usually entered into on a principal basis, no fees or
commissions are involved. Because such contracts are not traded on an
exchange, the Fund must evaluate the credit and performance risk of
each particular counterparty under a Forward Contract.
Although the Fund values its assets daily in terms of U.S.
dollars, it does not intend to convert its holdings of foreign
currencies into U.S. dollars on a daily basis. The Fund may convert
foreign currency from time to time, and investors should be aware of
the costs of currency conversion. Foreign exchange dealers do not
charge a fee for conversion, but they do seek to realize a profit based
on the difference between the prices at which they buy and sell various
currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the
Fund desire to resell that currency to the dealer.
Interest Rate Swap Transactions. Swap agreements entail both
interest rate risk and credit risk. There is a risk that, based on
movements of interest rates in the future, the payments made by the
Fund under a swap agreement will have been greater than those received
by it. Credit risk arises from the possibility that the counterparty
will default. If the counterparty to an interest rate swap defaults,
the Fund's loss will consist of the net amount of contractual interest
payments that the Fund has not yet received. The Manager will monitor
the creditworthiness of counterparties to the Fund's interest rate swap
transactions on an ongoing basis. The Fund will enter into swap
transactions with appropriate counterparties pursuant to master netting
agreements.
A master netting agreement provides that all swaps done between
the Fund and that counterparty under the master agreement shall be
regarded as parts of an integral agreement. If on any date amounts are
payable in the same currency in respect of one or more swap
transactions, the net amount payable on that date in that currency
shall be paid. In addition, the master netting agreement may provide
that if one party defaults generally or on one swap, the counterparty
may terminate the swaps with that party. Under such agreements, if
there is a default resulting in a loss to one part, the measure of that
part's damages is calculated by reference to the average cost of a
replacement swap with respect to each swap (i.e., the mark-to-market
value at the time of the termination of each swap). The gains and
losses on all swaps are then netted, and the result is the
counterparty's gain or loss on termination. The termination of all
swaps and the netting of gains and losses on termination is generally
referred to as "aggregation." The Fund will not invest more than 25%
of its assets in interest rate swap transactions.
Regulatory Aspects of Hedging Instruments. The Fund is required
to operate within certain guidelines and restrictions with respect to
its use of Futures and options on Futures established by the Commodity
Futures Trading Commission ("CFTC"). In particular the Fund is
exempted from registration with the CFTC as a "commodity pool operator"
if the Fund complies with the requirements of Rule 4.5 adopted by the
CFTC. Under this Rule the Fund will not, as to any positions, whether
long, short or a combination thereof, enter into Futures transactions
and options thereon for which the aggregate initial margins and
premiums exceed 5% of the fair market value of the Fund's assets, with
certain exclusions as defined in the Rule. Under the Rule, the Fund
also must use short Futures and Futures options positions solely for
"bona fide hedging purposes" within the meaning and intent of the
applicable provisions of the Commodity Exchange Act.
Transactions in options by the Fund are subject to limitations
established by option exchanges governing the maximum number of options
that may be written or held by a single investor or group of investors
acting in concert, regardless of whether the options were written or
purchased on the same or different exchanges or are held in one or more
accounts or through one or more different exchanges or through one or
more brokers. Thus the number of options which the Fund may write or
hold may be affected by options written or held by other entities,
including other investment companies having the same adviser as the
Fund (or an adviser that is an affiliate of the Fund's adviser). The
exchanges also impose position limits on Futures transactions. An
exchange may order the liquidation of positions found to be in
violation of those limits and may impose certain other sanctions.
Due to requirements under the Investment Company Act, when the
Fund purchases a Future, the Fund will maintain, in a segregated
account or accounts with its Custodian, cash or readily-marketable,
short-term (maturing in one year or less) debt instruments in an amount
equal to the market value of the securities underlying such Future,
less the margin deposit applicable to it.
Tax Aspects of Covered Calls and Hedging Instruments. The Fund
intends to qualify as a "regulated investment company" under the
Internal Revenue Code (although it reserves the right not to qualify).
That qualification enables the Fund to "pass through" its income and
realized capital gains to shareholders without having to pay tax on
them. This avoids a "double tax" on that income and capital gains,
since shareholders normally will be taxed on the dividends and capital
gains they receive from the Fund (unless the Fund's shares are held in
a retirement account or the shareholder is otherwise exempt from tax).
One of the tests for the Fund's qualification as a regulated investment
company is that less than 30% of its gross income must be derived from
gains realized on the sale of securities held for less than three
months. To comply with this 30% cap, the Fund will limit the extent to
which it engages in the following activities, but will not be precluded
from them: (i) selling investments, including Futures, held for less
than three months, whether or not they were purchased on the exercise
of a call held by the Fund; (ii) purchasing options which expire in
less than three months; (iii) effecting closing transactions with
respect to calls or puts written or purchased less than three months
previously; (iv) exercising puts or calls held by the Fund for less
than three months; or (v) writing calls on investments held less than
three months.
Certain foreign currency exchange contracts (Forward Contracts) in
which the Fund may invest are treated as "section 1256 contracts."
Gains or losses relating to section 1256 contracts generally are
characterized under the Internal Revenue Code as 60% long-term and 40%
short-term capital gains or losses. However, foreign currency gains or
losses arising from certain section 1256 contracts (including Forward
Contracts) generally are treated as ordinary income or loss. In
addition, section 1256 contracts held by the Fund at the end of each
taxable year are "marked-to-market" with the result that unrealized
gains or losses are treated as though they were realized. These
contracts also may be marked-to-market for purposes of the excise tax
applicable to investment company distributions and for other purposes
under rules prescribed pursuant to the Internal Revenue Code. An
election can be made by the Fund to exempt these transactions from this
marked-to-market treatment.
Certain Forward Contracts entered into by the Fund may result in
"straddles" for Federal income tax purposes. The straddle rules may
affect the character of gains (or losses) realized by the Fund on
straddle positions. Generally, a loss sustained on the disposition of
a position(s) making up a straddle is allowed only to the extent such
loss exceeds any unrecognized gain in the offsetting positions making
up the straddle. Disallowed loss is generally allowed at the point
where there is no unrecognized gain in the offsetting positions making
up the straddle, or the offsetting position is disposed of.
Under the Internal Revenue Code, gains or losses attributable to
fluctuations in exchange rates which occur between the time the Fund
accrues interest or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the Fund
actually collects such receivables or pays such liabilities generally
are treated as ordinary income or ordinary loss. Similarly, on
disposition of debt securities denominated in a foreign currency and on
disposition of foreign currency forward contracts, gains or losses
attributable to fluctuations in the value of a foreign currency between
the date of acquisition of the security or contract and the date of
disposition also are treated as an ordinary gain or loss. Currency
gains and losses are offset against market gains and losses before
determining a net "section 988" gain or loss under the Internal Revenue
Code, which may increase or decrease the amount of the Fund's
investment company income available for distribution to its
shareholders.
Risks of Hedging With Options and Futures. An option position may
be closed out only on a market that provides secondary trading for
options of the same series, and there is no assurance that a liquid
secondary market will exist for any particular option. In addition to
the risks associated with hedging that are discussed in the Prospectus
and above, there is a risk in using short hedging by (i) selling
Futures or (ii) purchasing puts on broadly-based indices or Futures to
attempt to protect against declines in the value of the Fund's equity
securities. The risk is that the prices of Futures will correlate
imperfectly with the behavior of the cash (i.e., market value) prices
of the Fund's equity securities. The ordinary spreads between prices
in the cash and futures markets are subject to distortions, due to
differences in the natures of those markets. First, all participants
in the futures markets are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit
requirements, investors may close out futures contracts through
offsetting transactions which could distort the normal relationship
between the cash and futures markets. Second, the liquidity of the
futures markets depends on participants entering into offsetting
transactions rather than making or taking delivery. To the extent
participants decide to make or take delivery, liquidity in the futures
markets could be reduced, thus producing distortion. Third, from the
point of view of speculators, the deposit requirements in the futures
markets are less onerous than margin requirements in the securities
markets. Therefore, increased participation by speculators in the
futures markets may cause temporary price distortions.
The risk of imperfect correlation increases as the composition of
the Fund's portfolio diverges from the securities included in the
applicable index. To compensate for the imperfect correlation of
movements in the price of the portfolio securities being hedged and
movements in the price of the hedging instruments, the Fund may use
hedging instruments in a greater dollar amount than the dollar amount
of portfolio securities being hedged if the historical volatility of
the prices of such portfolio securities being hedged is more than the
historical volatility of the applicable index. It is also possible
that if the Fund has used hedging instruments in a short hedge, the
market may advance and the value of the securities held in the Fund's
portfolio may decline. If that occurred, the Fund would lose money on
the hedging instruments and also experience a decline in value in its
portfolio securities. However, while this could occur for a very brief
period or to a very small degree, over time the value of a diversified
portfolio of securities will tend to move in the same direction as the
indices upon which the hedging instruments are based.
If the Fund uses hedging instruments to establish a position in
the securities markets as a temporary substitute for the purchase of
particular securities (long hedging) by buying Futures and/or calls on
such Futures, on securities, or on broadly-based indices, it is
possible that the market may decline. If the Fund then concludes not
to invest in such securities at that time because of concerns as to a
possible further market decline or for other reasons, the Fund will
realize a loss on the hedging instruments that is not offset by a
reduction in the price of the securities purchased.
Other Investment Restrictions
The Fund's most significant investment restrictions are set forth
in the Prospectus. There are additional investment restrictions that
the Fund must follow that are also fundamental policies. Fundamental
policies and the Fund's investment objective cannot be changed without
the vote of a "majority" of the Fund's outstanding voting securities.
Under the Investment Company Act, such a "majority" vote is defined as
the vote of the holders of the lesser of (1) 67% or more of the shares
present or represented by proxy at a shareholder meeting, if the
holders of more than 50% of the outstanding shares are present, or (2)
more than 50% of the outstanding shares.
Under these additional restrictions, the Fund cannot: (1) buy the
securities of any company for the purpose of exercising management
control; (2) invest in commodities or in commodities contracts, other
than the Hedging Instruments permitted by any of its other fundamental
policies, whether or not any such Hedging Instrument is considered to
be a commodity or a commodity contract; (3) buy or sell real estate;
however, the Fund may invest in debt securities secured by real estate
or interests therein or issued by companies, including real estate
investment trusts, which invest in real estate or interests therein;
(4) buy securities on margin, except that the Fund may make margin
deposits in connection with any of the Hedging Instruments which it may
use; (5) lend money, but the Fund may enter into repurchase agreements
or invest in all or a portion of an issue of bonds, debentures,
commercial paper, or other similar corporate obligations of the types
that are usually purchased by institutions, whether or not publicly
distributed; (6) mortgage or pledge any of its assets; however this
does not prohibit the Fund from pledging its assets for collateral
arrangements contemplated in connection with the use of Hedging
Instruments; (7) underwrite securities of other companies except to the
extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter for purposes of the
Securities Act; (8) buy and retain securities of any issuer if those
officers, directors or trustees of the Fund or the Manager who
beneficially own more than .5% of the securities of such issuer
together own more than 5% of the securities of such issuer; (9) invest
more than 5% of total assets through open-market purchases in other
investment companies, except in connection with a merger,
consolidation, reorganization or acquisition of assets; or (10) invest
in oil, gas or other mineral exploration or development programs.
In connection with the qualification of its shares in certain
states, the Fund has undertaken that in addition to the above, it will
not (i) invest more than 5% of its net assets in warrants, and that
warrants not listed on the New York and American Stock Exchanges shall
not exceed 2% of its net assets, (ii) invest more than 5% of its total
assets in securities of issuers, including their predecessors, that
have been in continuous operation for less than three continuous years;
(iii) invest in real estate limited partnerships, or (iv) invest in
oil, gas or other mineral leases. In the event that the Fund's shares
cease to be qualified under such laws or if such undertaking otherwise
ceases to be operative, the Fund would not be subject to such
restriction. The percentage restrictions described above and in the
Prospectus apply only at the time of investment and require no action
by the Fund as a result of subsequent changes in relative values.
How the Fund Is Managed
Organization and History. As a Massachusetts business trust, the
Fund is not required to hold, and does not plan to hold, regular annual
meetings of shareholders. The Fund will hold meetings when required to
do so by the Investment Company Act or other applicable law, or when a
shareholder meeting is called by the Trustees or upon proper request of
the shareholders. Shareholders have the right, upon the declaration in
writing or vote of two-thirds of the outstanding shares of the Fund, to
remove a Trustee. The Trustees will call a meeting of shareholders to
vote on the removal of a Trustee upon the written request of the record
holders of 10% of its outstanding shares. In addition, if the Trustees
receive a request from at least 10 shareholders (who have been
shareholders for at least six months) holding shares of the Fund valued
at $25,000 or more or holding at least 1% of the Fund's outstanding
shares, whichever is less, stating that they wish to communicate with
other shareholders to request a meeting to remove a Trustee, the
Trustees will then either make the Fund's shareholder list available to
the applicants or mail their communication to all other shareholders at
the applicants' expense, or the Trustees may take such other action as
set forth under Section 16(c) of the Investment Company Act.
The Fund's Declaration of Trust contains an express disclaimer of
shareholder or Trustee liability for the Fund's obligations, and
provides for indemnification and reimbursement of expenses out of its
property for any shareholder held personally liable for its
obligations. The Declaration of Trust also provides that the Fund
shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Fund and satisfy any
judgment thereon. Thus, while Massachusetts law permits a shareholder
of a business trust (such as the Fund) to be held personally liable as
a "partner" under certain circumstances, the risk of a Fund shareholder
incurring financial loss on account of shareholder liability is
limited to the relatively remote circumstances in which the Fund would
be unable to meet its obligations described above. Any person doing
business with the Trust, and any shareholder of the Trust, agrees under
the Trust's Declaration of Trust to look solely to the assets of the
Trust for satisfaction of any claim or demand which may arise out of
any dealings with the Trust, and the Trustees shall have no personal
liability to any such person, to the extent permitted by law.
Trustees And Officers of the Fund. The Fund's Trustees and officers
and their principal occupations and business affiliations during the
past five years are listed below. The address of each Trustee and
officer is Two World Trade Center, New York, New York 10048-0203,
unless another address is listed below. All of the Trustees are also
trustees of Oppenheimer Fund, Oppenheimer Global Fund, Oppenheimer Time
Fund, Oppenheimer Growth Fund, Oppenheimer Target Fund, Oppenheimer
Discovery Fund, Oppenheimer Global Growth & Income Fund, Oppenheimer
Global Emerging Growth Fund, Oppenheimer Tax-Free Bond Fund,
Oppenheimer New York Tax-Exempt Fund, Oppenheimer California Tax-Exempt
Fund, Oppenheimer Multi-State Tax-Exempt Trust, Oppenheimer Asset
Allocation Fund, Oppenheimer Mortgage Income Fund, Oppenheimer U.S.
Government Trust, Oppenheimer Multi-Sector Income Trust and Oppenheimer
Multi-Government Trust (the "New York-based OppenheimerFunds"). Messrs.
Spiro, Bishop, Bowen, Donohue, Farrar and Zack respectively hold the
same offices with the other New York-based OppenheimerFunds as with the
Fund. As of January _, 1994, the Trustees and officers of the Fund as a
group owned less than 1% of the outstanding shares of the Fund.
Leon Levy, Chairman of the Board of Trustees
General Partner of Odyssey Partners, L.P. (investment partnership)
and Chairman of Avatar Holdings, Inc. (real estate
development).
Leo Cherne, Trustee
122 East 42nd Street, New York, New York 10168
Chairman Emeritus of the International Rescue Committee
(philanthropic organization); formerly Executive Director of The
Research Institute of America.
Robert G. Galli, Trustee*
Vice Chairman of the Manager and Vice President and Counsel of
Oppenheimer Acquisition Corp., the Manager's parent holding
company; formerly he held the following positions: a director of
the Manager and Oppenheimer Funds Distributor, Inc. (the
"Distributor"), Vice President and a director of HarbourView Asset
Management Corporation ("HarbourView") and Centennial Asset
Management Corporation ("Centennial"), investment advisory
subsidiaries of the Manager, a director of Shareholder Financial
Services, Inc. ("SFSI") and Shareholder Services, Inc. ("SSI"),
transfer agent subsidiaries of the Manager, an officer of other
OppenheimerFunds and Executive Vice President and General Counsel
of the Manager and the Distributor.
Benjamin Lipstein, Trustee
591 Breezy Hill Road, Hillsdale, New York 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University.
Elizabeth B. Moynihan, Trustee
801 Pennsylvania Avenue, N.W., Washington, DC 20004
Author and architectural historian; a trustee of the American
Schools of Oriental Research and of the Freer Gallery of Art,
Smithsonian Institution; a member of the Indo-U.S. Sub-Commission
on Education and Culture; a trustee of the Institute of Fine Arts,
New York University; and a trustee of the Preservation League of
New York State.
Kenneth A. Randall, Trustee
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Northeast Bancorp, Inc. (bank holding company),
Dominion Resources, Inc. (electric utility holding company) and
Kemper Corporation (insurance and financial services company);
formerly Chairman of the Board of ICL, Inc. (information
systems).
Edward V. Regan, Trustee
40 Park Avenue, New York, New York 10016
President of Jerome Levy Economics Institute; a member of the U.S.
Competitiveness Policy Council; a director or GranCare, Inc.
(healthcare provider); formerly New York State Comptroller and a
trustee, New York State and Local Retirement Fund.
Russell S. Reynolds, Jr., Trustee
200 Park Avenue, New York, New York 10166
Founder Chairman of Russell Reynolds Associates, Inc. (executive
recruiting); Chairman of Directors Publication, Inc. (consulting
and publishing); a trustee of Mystic Seaport Museum, International
House, Greenwich Hospital and the Greenwich Historical Society.
Sidney M. Robbins, Trustee
50 Overlook Road, Ossining, New York 10562
Chase Manhattan Professor Emeritus of Financial Institutions,
Graduate School of Business, Columbia University; Visiting
Professor of Finance, University of Hawaii; a director of The
Korea Fund, Inc. and The Malaysia Fund, Inc. (closed-end
investment companies); a member of the Board of Advisors, Olympus
Private Placement Fund, L.P.; Professor Emeritus of Finance,
Adelphi University.
Donald W. Spiro, President and Trustee*
Chairman Emeritus and a director of the Manager; formerly Chairman
of the Manager and the Distributor.
Pauline Trigere, Trustee
257 West 39th Street, New York, New York 10081
Chairman and Chief Executive Officer of Trigere, Inc. (design and
sale of women's fashions).
Clayton K. Yeutter, Trustee
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel to Hogan & Hartson (a law firm); a director of B.A.T.
Industries, Ltd. (tobacco and financial services), Caterpillar,
Inc. (machinery), ConAgra, Inc. (food and agricultural products),
FMC Corp. (chemicals and machinery), Lindsay Manufacturing Co.
(irrigation equipment), Texas Instruments, Inc. (electronics) and
The Vigoro Corporation (fertilizer manufacturer); formerly (in
descending chronological order) Counsellor to the President (Bush)
for Domestic Policy, Chairman of the Republican National
Committee, Secretary of the U.S. Department of Agriculture, and
U.S. Trade Representative.
William L. Wilby, Vice President and Portfolio Manager
Vice President of the Manager and HarbourView; an officer of other
OppenheimerFunds; formerly international investment strategist at
Brown Brothers, Harriman & Co., prior to which he was a Managing
Director and Portfolio Manager at AIG Global Investors.
Andrew J. Donohue, Secretary
Executive Vice President and General Counsel of the Manager and
the Distributor; an officer of other OppenheimerFunds; formerly
Senior Vice President and Associate General Counsel of the Manager
and the Distributor, prior to which he was a partner in Kraft &
McManimon (a law firm), an officer of First Investors Corporation
(a broker-dealer) and First Investors Management Company, Inc.
(broker-dealer and investment adviser), and a director and an
officer of First Investors Family of Funds and First Investors
Life Insurance Company.
George C. Bowen, Treasurer
3410 South Galena Street, Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President
and Treasurer of the Distributor and HarbourView; Senior Vice
President, Treasurer, Assistant Secretary and a director of
Centennial; Vice President, Treasurer and Secretary of SSI and
SFSI; an officer of other OppenheimerFunds.
Robert G. Zack, Assistant Secretary
Senior Vice President and Associate General Counsel of the
Manager; Assistant Secretary of SSI and SFSI; an officer of other
OppenheimerFunds.
Robert Bishop, Assistant Treasurer
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other OppenheimerFunds; previously a Fund Controller
for the Manager, prior to which he was an Accountant for
Resolution Trust Corporation and previously an Accountant and
Commissions Supervisor for Stuart James Company Inc., a broker-
dealer.
Scott Farrar, Assistant Treasurer
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other OppenheimerFunds; previously a Fund Controller
for the Manager, prior to which he was an International Mutual
Fund Supervisor for Brown Brothers Harriman & Co., a bank, and
previously a Senior Fund Accountant for State Street Bank & Trust
Company, before which he was a sales representative for Central
Colorado Planning.
_____________________________________
[FN]
* A Trustee who is an "interested person" of the Fund as defined
in the Investment Company Act.
Remuneration of Trustees. The officers of the Fund are
affiliated with the Manager. They and the Trustees of the Fund who are
affiliated with the Manager (Mr. Spiro, who is both an officer and
Trustee, and Mr. Galli) receive no salary or fee from the Fund. During
the Fund's fiscal year ended September 30, 1994, the remuneration
(including expense reimbursements) paid to all Trustees of the Fund
(excluding Mr. Galli and Mr. Spiro) as a group for services as trustees
and as members of one or more committees of the Board, totalled
$_______. The Fund has adopted a retirement plan that provides for
payment to a retired Trustee of up to 80% of the average compensation
paid during that Trustee's five years of service in which the highest
compensation was received. A Trustee must serve in that capacity for
any of the New York-based OppenheimerFunds for at least 15 years to be
eligible for the maximum payment. No Trustee has retired since the
adoption of the plan and no payments have been made by the Fund under
the plan. The accumulated liability for the Fund's projected benefit
obligations under the plan was $______ of September 30, 1994.
Major Shareholders. As of January __, 1995, no person owned of
record or was known by the Fund to own beneficially 5% or more of the
shares of (i) the Fund in the aggregate or (ii) either class of the
Fund.
The Manager and Its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled by
Massachusetts Mutual Life Insurance Company. OAC is also owned in part
by certain of the Manager's directors and officers, some of whom also
serve as officers of the Fund, and two of whom (Mr. Galli and Mr.
Spiro) serve as Trustees of the Fund.
The Investment Advisory Agreement. The investment advisory
agreement between the Manager and the Fund requires the Manager, at its
expense, to provide the Fund with adequate office space, facilities and
equipment, and to provide and supervise the activities of all
administrative and clerical personnel required to provide effective
corporate administration for the Fund, including the compilation and
maintenance of records with respect to its operations, the preparation
and filing of specified reports, and composition of proxy materials and
registration statements for continuous public sale of shares of the
Fund.
Expenses not expressly assumed by the Manager under the advisory
agreement or by the Distributor under the General Distributor's
Agreement are paid by the Fund. The advisory agreement lists examples
of expenses paid by the Fund, the major categories of which relate to
interest, taxes, brokerage commissions, fees to certain Trustees, legal
and audit expenses, custodian and transfer agent expenses, share
issuance costs, certain printing and registration costs and non-
recurring expenses, including litigation costs. For the Fund's fiscal
years ended September 30, 1992, 1993, and 1994, the management fees
paid by the Fund to the Manager were $__________ $_________, and
$_________, respectively.
The advisory agreement contains no provision limiting the Fund's
expenses. However, independently of the advisory agreement, the Manager
has undertaken that the total expenses of the Fund in any fiscal year
(including the management fee but excluding taxes, interest, brokerage
commissions, distribution assistance payments and extraordinary
expenses such as litigation costs) shall not exceed the most stringent
expense limitation imposed under state law applicable to the Fund.
Pursuant to the undertaking, the Manager's fee will be reduced at the
end of a month so that there will not be any accrued but unpaid
liability under this undertaking. Currently, the most stringent state
expense limitation is imposed by California, and limits the Fund's
expenses (with specified exclusions) to 2.5% of the first $30 million
of average annual net assets, 2% of the next $70 million of average
annual net assets, and 1.5% of average annual net assets in excess of
$100 million. The Manager reserves the right to terminate or amend the
undertaking at any time. Any assumption of the Fund's expenses under
this limitation would lower the Fund's overall expense ratio and
increase its total return during any period in which expenses are
limited.
The advisory agreement provides that in the absence of willful
misfeasance, bad faith or gross negligence in the performance of its
duties, or reckless disregard for its obligations and duties under the
advisory agreement, the Manager is not liable for any loss resulting
from a good faith error or omission on its part with respect to any of
its duties thereunder. The advisory agreement permits the Manager to
act as investment adviser for any other person, firm or corporation and
to use the name "Oppenheimer" in connection with other investment
companies for which it may act as investment adviser or general
distributor. If the Manager shall no longer act as investment adviser
to the Fund, the right of the Fund to use the name "Oppenheimer" as
part of its name may be withdrawn.
The Distributor. Under its General Distributor's Agreement
with the Fund, the Distributor acts as the Fund's principal underwriter
in the continuous public offering of the Fund's Class A and Class C
shares but is not obligated to sell a specific number of shares.
Expenses normally attributable to sales (excluding payments under the
Distribution and Service Plans but including advertising and the cost
of printing and mailing prospectuses, other than those furnished to
existing shareholders), are borne by the Distributor. During the
Fund's fiscal years ended September 30, 1992, 1993, and 1994, the
aggregate sales charges on sales of the Fund's Class A shares were
$__________, $_________, and $_________, respectively, of which the
Distributor and an affiliated broker-dealer retained in the aggregate
$_________, $_________, and $_________ in those respective years.
During the Fund's fiscal year ended September 30, 1994, contingent
deferred sales charges collected on the Fund's Class C shares totalled
$________, all of which the Distributor retained. For additional
information about distribution of the Fund's shares and the expenses
connected with such activities, please refer to "Distribution and
Service Plans," below.
The Transfer Agent. Oppenheimer Shareholder Services, the
Fund's Transfer Agent, is responsible for maintaining the Fund's
shareholder registry and shareholder accounting records, and for
shareholder servicing and administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of
the duties of the Manager under the advisory agreement is to arrange
the portfolio transactions for the Fund. The advisory agreement
contains provisions relating to the employment of broker-dealers
("brokers") to effect the Fund's portfolio transactions. In doing so,
the Manager is authorized by the advisory agreement to employ broker-
dealers, including "affiliated" brokers, as that term is defined in the
Investment Company Act, as may, in its best judgment based on all
relevant factors, implement the policy of the Fund to obtain, at
reasonable expense, the "best execution" (prompt and reliable execution
at the most favorable price obtainable) of such transactions. The
Manager need not seek competitive commission bidding but is expected to
minimize the commissions paid to the extent consistent with the
interest and policies of the Fund as established by its Board of
Trustees. Purchases of securities from underwriters include a
commission or concession paid by the issuer to the underwriter, and
purchases from dealers include a spread between the bid and asked
price.
Under the advisory agreement, the Manager is authorized to select
brokers that provide brokerage and/or research services for the Fund
and/or the other accounts over which the Manager or its affiliates have
investment discretion. The commissions paid to such brokers may be
higher than another qualified broker would have charged if a good faith
determination is made by the Manager that the commission is fair and
reasonable in relation to the services provided. Subject to the
foregoing considerations, the Manager may also consider sales of shares
of the Fund and other investment companies managed by the Manager or
its affiliates as a factor in the selection of brokers for the Fund's
portfolio transactions.
Description of Brokerage Practices Followed by the Manager. Subject
to the provisions of the advisory agreement, and the procedures and
rules described above, allocations of brokerage are made by portfolio
managers of the Manager under the supervision of the Manager's
executive officers. Transactions in securities other than those for
which an exchange is the primary market are generally done with
principals or market makers. Brokerage commissions are paid primarily
for effecting transactions in listed securities and are otherwise paid
only if it appears likely that a better price or execution can be
obtained. When the Fund engages in an option transaction, ordinarily
the same broker will be used for the purchase or sale of the option and
any transaction in the securities to which the option relates. When
possible, concurrent orders to purchase or sell the same security by
more than one of the accounts managed by the Manager or its affiliates
are combined. The transactions effected pursuant to such combined
orders are averaged as to price and allocated in accordance with the
purchase or sale orders actually placed for each account.
The research services provided by a particular broker may be
useful only to one or more of the advisory accounts of the Manager and
its affiliates, and investment research received for the commissions of
those other accounts may be useful both to the Fund and one or more of
such other accounts. Such research, which may be supplied by a third
party at the instance of a broker, includes information and analyses on
particular companies and industries as well as market or economic
trends and portfolio strategy, receipt of market quotations for
portfolio evaluations, information systems, computer hardware and
similar products and services. If a research service also assists the
Manager in a non-research capacity (such as bookkeeping or other
administrative functions), then only the percentage or component that
provides assistance to the Manager in the investment decision-making
process may be paid in commission dollars.
The research services provided by brokers broaden the scope and
supplement the research activities of the Manager, by making available
additional views for consideration and comparisons, and by enabling the
Manager to obtain market information for the valuation of securities
held in the Fund's portfolio or being considered for purchase. The
Board of Trustees, including the "independent" Trustees of the Fund
(those Trustees of the Fund who are not "interested persons" as defined
in the Investment Company Act, and who have no direct or indirect
financial interest in the operation of the advisory agreement or the
Distribution Plans described below) annually reviews information
furnished by the Manager as to the commissions paid to brokers
furnishing such services so that the Board may ascertain whether the
amount of such commissions was reasonably related to the value or
benefit of such services.
During the Fund's fiscal years ended September 30, 1992, 1993, and
1994, total brokerage commissions paid by the Fund (not including
spreads or concessions on principal transactions on a net trade basis)
were $_________, $_________, and $_________, respectively. During the
fiscal year ended September 30, 1994, $_______ was paid to brokers as
commissions in return for research services; the aggregate dollar
amount of those transactions was $___________. The transactions giving
rise to those commissions were allocated in accordance with the
Manager's internal allocation procedures.
Performance of the Fund
Total Return Information. As described in the Prospectus, from time
to time the "average annual total return," "cumulative total return,"
"average annual total return at net asset value" and "total return at
net asset value" of an investment in a class of shares of the Fund may
be advertised. An explanation of how these total returns are
calculated for each class and the components of those calculations is
set forth below.
The Fund's advertisements of its performance data must, under
applicable rules of the Securities and Exchange Commission, include the
average annual total returns for each class of shares of the Fund for
the 1, 5, and 10-year periods (or the life of the class, if less)
ending as of the most recently-ended calendar quarter prior to the
publication of the advertisement. This enables an investor to compare
the Fund's performance to the performance of other funds for the same
periods. However, a number of factors should be considered before using
such information as a basis for comparison with other investments. An
investment in the Fund is not insured; its returns and share prices are
not guaranteed and normally will fluctuate on a daily basis. When
redeemed, an investor's shares may be worth more or less than their
original cost. Returns for any given past period are not a prediction
or representation by the Fund of future returns. The returns of Class A
and Class C shares of the Fund are affected by portfolio quality, the
type of investments the Fund holds and its operating expenses allocated
to the particular class.
Average Annual Total Returns. The "average annual total return"
of each class is an average annual compounded rate of return for each
year in a specified number of years. It is the rate of return based on
the change in value of a hypothetical initial investment of $1,000 ("P"
in the formula below) held for a number of years ("n") to achieve an
Ending Redeemable Value ("ERV") of that investment, according to the
following formula:
( ERV ) 1/n
(-----) -1 = Average Annual Total Return
( P )
Cumulative Total Returns. The cumulative "total return"
calculation measures the change in value of a hypothetical investment
of $1,000 over an entire period of years. Its calculation uses some of
the same factors as average annual total return, but it does not
average the rate of return on an annual basis. Cumulative total return
is determined as follows:
ERV - P
------- = Total Return
P
In calculating total returns for Class A shares, the current
maximum sales charge of 5.75% (as a percentage of the offering price)
is deducted from the initial investment ("P") (unless the return is
shown at net asset value, as described below). For Class C shares, a
1.0% contingent deferred sales charge is applied to the investment
result for the one-year period (or less). Total returns also assume
that all dividends and capital gains distributions during the period
are reinvested to buy additional shares at net asset value per share,
and that the investment is redeemed at the end of the period. The
"average annual total returns" on an investment in Class A shares of
the Fund for the fiscal year ended September 30, 1994 and for the
period October 22, 1990 (commencement of operations) to September 30,
1994 were _____% and ______%, respectively. The cumulative "total
return" on Class A shares for the period October 22, 1990 (commencement
of operations) to September 30, 1994 was ____%. The cumulative total
return on Class C shares for the period from December 1, 1993 (the
commencement of the offering of the shares) through September 30, 1994
was _____%.
Total Returns at Net Asset Value. From time to time the Fund may
also quote an average annual total return at net asset value or a
cumulative total return at net asset value for Class A or Class C
shares. Each is based on the difference in net asset value per share
at the beginning and the end of the period for a hypothetical
investment in that class of shares (without considering front-end or
contingent deferred sales charges) and takes into consideration the
reinvestment of dividends and capital gains distributions. The
cumulative total return at net asset value of the Fund's Class A shares
for the period from October 22, 1990 (commencement of operations) to
September 30, 1994 was ______%. The average annual total returns at net
asset value for the fiscal year ended September 30, 1994 and for the
period October 22, 1990 (commencement of operations) through September
30, 1994, for Class A shares were _____% and ______%, respectively.
The cumulative total return at net asset value on the Fund's Class C
shares for the fiscal period from December 1, 1993 through September
30, 1994 was ______%.
Other Performance Comparisons. From time to time the Fund may
publish the ranking of its Class A or Class C shares by Lipper
Analytical Services, Inc. ("Lipper"), a widely-recognized independent
mutual fund monitoring service. Lipper monitors the performance of
regulated investment companies, including the Fund, and ranks their
performance for various periods based on categories relating to
investment objectives. The performance of the Fund is ranked against
(i) all other funds, (ii) all other "balanced" funds and (iii) all
other "balanced" funds in a specific size category. The Lipper
performance rankings are based on total returns that include the
reinvestment of capital gain distributions and income dividends but do
not take sales charges or taxes into consideration.
From time to time the Fund may publish the ranking of the
performance of its Class A or Class C shares by Morningstar, Inc., an
independent mutual fund monitoring service that ranks mutual funds,
including the Fund, monthly in broad investment categories (equity,
taxable bond, municipal bond and hybrid) based on risk-adjusted
investment return. Investment return measures a fund's three, five and
ten-year average annual total returns (when available) in excess of 90-
day U.S. Treasury bill returns after considering sales charges and
expenses. Risk measures fund performance below 90-day U.S. Treasury
bill monthly returns. Risk and return are combined to produce star
rankings reflecting performance relative to the average fund in a
fund's category. Five stars is the "highest" ranking (top 10%), four
stars is "above average" (next 22.5%), three stars is "average" (next
35%), two stars is "below average" (next 22.5%) and one star is
"lowest" (bottom 10%). Morningstar ranks the Fund in relation to other
rated growth and income funds. Rankings are subject to change.
The total return on an investment in the Fund's Class A or Class C
shares may be compared with performance for the same period of either
the Morgan Stanley Capital International World Index or the Lehman
Aggregate Bond Index, as described in the Prospectus. The performance
of both indices includes a factor for the reinvestment of income
dividends. Neither index reflects reinvestment of capital gains or
takes transaction charges or taxes into consideration as these items
are not applicable to indices.
Investors may also wish to compare the Fund's Class A or Class C
return to the returns on fixed income investments available from banks
and thrift institutions, such as certificates of deposit, ordinary
interest-paying checking and savings accounts, and other forms of fixed
or variable time deposits, and various other instruments such as
Treasury bills. However, the Fund's returns and share price are not
guaranteed by the FDIC or any other agency and will fluctuate daily,
while bank depository obligations may be insured by the FDIC and may
provide fixed rates of return, and Treasury bills are guaranteed as to
principal and interest by the U.S. government.
From time to time, the Fund's Manager may publish rankings or
ratings of the Manager (or Transfer Agent) or the investor services
provided by them to shareholders of the OppenheimerFunds, other than
performance rankings of the OppenheimerFunds themselves. Those ratings
or rankings of shareholder/investor services by third parties may
compare the OppenheimerFunds' services to those of other mutual fund
families selected by the rating or ranking services and may be based
upon the opinions of the rating or ranking service itself, based on its
research or judgment, or based upon surveys of investors, brokers,
shareholders or others.
Distribution and Service Plans
The Fund has adopted a Service Plan for Class A shares and a
Distribution and Service Plan for Class C shares under Rule 12b-1 of
the Investment Company Act pursuant to which the Fund will reimburse
the Distributor quarterly for all or a portion of its costs incurred in
connection with the distribution and/or servicing of the shares of that
class, as described in the Prospectus. Each Plan has been approved by
a vote of (i) the Board of Trustees of the Fund, including a majority
of the Independent Trustees, cast in person at a meeting called for the
purpose of voting on that Plan, and (ii) the holders of a "majority"
(as defined in the Investment Company Act) of the shares of each class.
For the Distribution and Service Plan for Class C shares, that vote was
cast by the Manager as the sole initial holder of Class C shares of the
Fund.
In addition, under the Plans the Manager and the Distributor, in
their sole discretion, from time to time may use their own resources
(which, in the case of the Manager, may include profits from the
advisory fee it receives from the Fund) to make payments to brokers,
dealers or other financial institutions (each is referred to as a
"Recipient" under the Plans) for distribution and administrative
services they perform. The Distributor and the Manager may, in their
sole discretion, increase or decrease the amount of payments they make
from their own resources to Recipients.
Unless terminated as described below, each Plan continues in
effect from year to year but only as long as its continuance is
specifically approved at least annually by the Fund's Board of Trustees
and its Independent Trustees by a vote cast in person at a meeting
called for the purpose of voting on such continuance. Either Plan may
be terminated at any time by the vote of a majority of the Independent
Trustees or by the vote of the holders of a "majority" (as defined in
the Investment Company Act) of the outstanding shares of that class.
Neither Plan may be amended to increase materially the amount of
payments to be made unless such amendment is approved by shareholders
of the class affected by the amendment. All material amendments must
be approved by the Independent Trustees.
While the Plans are in effect, the Treasurer of the Fund shall
provide separate written reports to the Fund's Board of Trustees at
least quarterly on the amount of all payments made pursuant to each
Plan, the purpose for which each payment was made and the identity of
each Recipient that received any payment. The report for the Class C
Plan shall also include the distribution costs for that quarter, and
such costs for previous fiscal periods that have been carried forward,
as explained in the Prospectus and below. Those reports, including the
allocations on which they are based, will be subject to the review and
approval of the Independent Trustees in the exercise of their fiduciary
duty. Each Plan further provides that while it is in effect, the
selection and nomination of those Trustees of the Fund who are not
"interested persons" of the Fund is committed to the discretion of the
Independent Trustees. This does not prevent the involvement of others
in such selection and nomination if the final decision on selection or
nomination is approved by a majority of the Independent Trustees.
Under the Plans, no payment will be made to any Recipient in any
quarter if the aggregate net asset value of all Fund shares held by the
Recipient for itself and its customers, did not exceed a minimum
amount, if any, that may be determined from time to time by a majority
of the Fund's Independent Trustees. Currently, the Board of Trustees
has set no requirement for a minimum amount of assets.
For the fiscal year ended September 30, 1994, payments under the
Class A Plan totalled $_______, all of which was paid by the
Distributor to Recipients, including $_______ paid to MML Investor
Services, Inc., an affiliate of the Distributor. Any unreimbursed
expenses incurred by the Distributor with respect to Class A shares for
any fiscal year may not be recovered in subsequent years. Payments
received by the Distributor under the Plan for Class A shares will not
be used to pay any interest expense, carrying charge, or other
financial costs, or allocation of overhead by the Distributor.
The Class C Plan allows the service fee payment to be paid by the
Distributor to Recipients in advance for the first year Class C shares
are outstanding, and thereafter on a quarterly basis, as described in
the Prospectus. The advance service fee payment is based on the net
asset value of the Class C shares sold. An exchange of shares does
not entitle the Recipient to an advance service fee payment. In the
event Class C shares are redeemed during the first year that the shares
are outstanding, the Recipient will be obligated to repay a pro rata
portion of the advance payment for those shares to the Distributor.
Payments made under the Class C Plan during the fiscal period ended
September 30, 1994 totalled $_______, all paid by the Distributor to
Recipients, including $____ paid to a dealer affiliated with the
Distributor.
Although the Class C Plan permits the Distributor to retain both
the asset-based sales charges and the service fee on Class C shares, or
to pay Recipients the service fee on a quarterly basis, without payment
in advance, the Distributor intends to pay the service fee to
Recipients in the manner described above. A minimum holding period may
be established from time to time under the Class C Plan by the Board.
Initially, the Board has set no minimum holding period. All payments
under the Class C Plan are subject to the limitations imposed by the
Rules of Fair Practice of the National Association of Securities
Dealers, Inc. on payments of asset-based sales charges and service
fees.
The Class C Plan allows for the carry-forward of distribution
expenses, to be recovered from asset-based sales charges in subsequent
fiscal periods, as described in the Prospectus. The asset-based sales
charge paid to the Distributor by the Fund under the Class C Plan is
intended to allow the Distributor to recoup the cost of sales
commissions paid to authorized brokers and dealers at the time of sale,
plus financing costs, as described in the Prospectus. Such payments
may also be used to pay for the following expenses in connection with
the distribution of Class C shares: (i) financing the advance of the
service fee payment to Recipients under the Class C Plan, (ii)
compensation and expenses of personnel employed by the Distributor to
support distribution of Class C shares, and (iii) costs of sales
literature, advertising and prospectuses (other than those furnished to
current shareholders) and state "blue sky" registration fees.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A and Class C Shares. The
availability of two classes of shares permits an investor to choose the
method of purchasing shares that is more beneficial to the investor
depending on the amount of the purchase, the length of time the
investor expects to hold shares and other relevant circumstances.
Investors should understand that the purpose and function of the
deferred sales charge and asset-based sales charge with respect to
Class C shares are the same as those of the initial sales charge with
respect to Class A shares. Any salesperson or other person entitled to
receive compensation for selling Fund shares may receive different
compensation with respect to one class of shares than the other. The
Distributor will not accept any order for $1 million or more of Class C
shares on behalf of a single investor (not including dealer "street
name" or omnibus accounts) because generally it will be more
advantageous for that investor to purchase Class A shares of the Fund
instead.
The two classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different
shareholder privileges and features. The net income attributable to
Class C shares and the dividends payable on Class C shares will be
reduced by incremental expenses borne solely by that class, including
the asset-based sales charge to which Class C shares are subject.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's Class A and Class C shares recognizes two
types of expenses. General expenses that do not pertain specifically
to either class are allocated pro rata to the shares of each class,
based on the percentage of the net assets of such class to the Fund's
total assets, and then equally to each outstanding share within a given
class. Such general expenses include (i) management fees, (ii) legal,
bookkeeping and audit fees, (iii) printing and mailing costs of
shareholder reports, Prospectuses, Statements of Additional Information
and other materials for current shareholders, (iv) fees to Independent
Trustees, (v) custodian expenses, (vi) share issuance costs, (vii)
organization and start-up costs, (viii) interest, taxes and brokerage
commissions, and (ix) non-recurring expenses, such as litigation costs.
Other expenses that are directly attributable to a class are allocated
equally to each outstanding share within that class. Such expenses
include (a) Distribution Plan fees, (b) incremental transfer and
shareholder servicing agent fees and expenses, (c) registration fees
and (d) shareholder meeting expenses, to the extent that such expenses
pertain to a specific class rather than to the Fund as a whole.
Determination of Net Asset Values Per Share. The net asset values
per share of Class A and Class C shares of the Fund are determined each
day The New York Stock Exchange (the "NYSE") is open, as of 4:00 P.M.,
New York time, that day, by dividing the value of the Fund's net assets
attributable to that class by the number of shares of that class
outstanding. The NYSE's most recent annual announcement (which is
subject to change) states that it will close on New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. It may also close on other
days. The Fund may invest a substantial portion of its assets in
foreign securities primarily listed on foreign exchanges which may
trade on Saturdays or customary U.S. business holidays on which the
NYSE is closed. Because the Fund's net asset value will not be
calculated on those days, the Fund's net asset values per share may be
significantly affected on such days when shareholders may not purchase
or redeem shares.
The Fund's Board of Trustees has established procedures for the
valuation of the Fund's securities, generally as follows: (i) equity
securities traded on a securities exchange or on NASDAQ for which last
sale information is regularly reported are valued at the last reported
sale price on their primary exchange or NASDAQ that day (or, in the
absence of sales that day, at values based on the last sales prices of
the preceding trading day, or closing bid and asked prices); (ii)
securities traded on NASDAQ and other unlisted equity securities for
which last sale prices are not regularly reported but for which over-
the-counter market quotations are readily available are valued at the
highest closing bid price at the time of valuation, or, if no closing
bid price is reported, on the basis of a closing bid price obtained
from a dealer who maintains an active market in that security; (iii)
debt securities having a maturity in excess of 60 days are valued at
the mean between the bid and asked prices determined by a portfolio
pricing service approved by the Board or obtained from active market
makers on the basis of reasonable inquiry; (iv) short-term debt
securities having a remaining maturity of 60 days or less are valued at
cost, adjusted for amortization of premiums and accretion of discounts;
(v) securities (including restricted securities) not having readily-
available market quotations are valued at fair value under the Board's
procedures; and (vi) securities traded on foreign exchanges are valued
at the closing or last sales prices reported on a principal exchange,
or, if none, at the mean between closing bid and asked prices and
reflect prevailing rates of exchange taken from the closing price on
the London foreign exchange market that day.
Trading in securities on European and Asian exchanges and over-
the-counter markets is normally completed before the close of the NYSE.
Events affecting the values of foreign securities traded in stock
markets that occur between the time their prices are determined and the
close of the NYSE will not be reflected in the Fund's calculation of
net asset value unless the Board of Trustees or the Manager, under
procedures established by the Board of Trustees, determines that the
particular event would materially affect the Fund's net asset value, in
which case an adjustment would be made. Foreign currency will be
valued as close to the time fixed for the valuation date as is
reasonably practicable. The values of securities denominated in
foreign currency will be converted to U.S. dollars at the prevailing
rates of exchange at the time of valuation.
Puts, calls and Futures held by the Fund are valued at the last
sales price on the principal exchange on which they are traded, or on
NASDAQ, as applicable, or, if there are no sales that day, in
accordance with (i), above. Forward currency contracts are valued at
the closing price on the London foreign exchange market. When the Fund
writes an option, an amount equal to the premium received by the Fund
is included in the Fund's Statement of Assets and Liabilities as an
asset, and an equivalent deferred credit is included in the liability
section. The deferred credit is "marked-to-market" to reflect the
current market value of the option. In determining the Fund's gain on
investments, if a call written by the Fund is exercised, the proceeds
are increased by the premium received. If a call or put written by the
Fund expires, the Fund has a gain in the amount of the premium; if the
Fund enters into a closing purchase transaction, it will have a gain or
loss depending on whether the premium was more or less than the cost
of the closing transaction. If the Fund exercises a put it holds, the
amount the Fund receives on its sale of the underlying investment is
reduced by the amount of premium paid by the Fund.
AccountLink. When shares are purchased through AccountLink, each
purchase must be at least $25.00. Shares will be purchased on the
regular business day the Distributor is instructed to initiate the
Automated Clearing House transfer to buy the shares. Dividends will
begin to accrue on such shares on the day the Fund receives Federal
Funds for such purchase through the ACH system before 4:00 P.M., which
is normally 3 days after the ACH transfer is initiated. The
Distributor and the Fund are not responsible for any delays. If the
Federal Funds are received after 4:00 P.M., dividends will begin to
accrue on the next regular business day after such Federal Funds are
received.
Reduced Sales Charges. As discussed in the Prospectus, a reduced
sales charge rate may be obtained for Class A shares under Right of
Accumulation and Letters of Intent because of the economies of sales
efforts and reduction in expenses realized by the Distributor, dealers
and brokers making such sales. No sales charge is imposed in certain
other circumstances described in the Prospectus because the Distributor
incurs little or no selling expenses. The term "immediate family"
refers to one's spouse, children, grandchildren, grandparents, parents,
parents-in-law, brothers and sisters, sons- and daughters-in-law, a
sibling's spouse and a spouse's siblings.
The OppenheimerFunds. The OppenheimerFunds are those mutual
funds for which the Distributor acts as the distributor or the sub-
distributor and include the following:
Oppenheimer Tax-Free Bond Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Bond Fund
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt FundOppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Time Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion High Yield Fund
Oppenheimer Investment Grade Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Diversified Income Fund
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
There is an initial sales charge on the purchase of Class A shares
of each of the OppenheimerFunds except Money Market Funds (under
certain circumstances described herein, redemption proceeds of Money
Market Fund shares may be subject to a contingent deferred sales
charge).
Letters of Intent. A Letter of Intent ("Letter") is the
investor's statement of intention to purchase Class A shares of the
Fund (and other eligible OppenheimerFunds) sold with a front-end sales
charge during the 13-month period from the investor's first purchase
pursuant to the Letter (the "Letter of Intent period"), which may, at
the investor's request, include purchases made up to 90 days prior to
the date of the Letter. The Letter states the investor's intention to
make the aggregate amount of purchases (excluding any purchases made by
reinvestments of dividends or distributions or purchases made at net
asset value without sales charge), which together with the investor's
holdings of such funds (calculated at their respective public offering
prices calculated on the date of the Letter) will equal or exceed the
amount specified in the Letter. This enables the investor to obtain
the reduced sales charge rate (as set forth in the Prospectus)
applicable to purchases of shares in that amount (the "intended
purchase amount"). Each purchase under the Letter will be made at the
public offering price applicable to a single lump-sum purchase of
shares in the intended purchase amount, as described in the
Prospectus.
In submitting a Letter, the investor makes no commitment to
purchase shares, but if the investor's purchases of shares within the
Letter of Intent period, when added to the value (at offering price) of
the investor's holdings of shares on the last day of that period, do
not equal or exceed the intended purchase amount, the investor agrees
to pay the additional amount of sales charge applicable to such
purchases, as set forth in "Terms of Escrow," below (as those terms may
be amended from time to time). The investor agrees that shares equal
in value to 5% of the intended purchase amount will be held in escrow
by the Transfer Agent subject to the Terms of Escrow. Also, the
investor agrees to be bound by the terms of the Prospectus, this
Statement of Additional Information and the Application used for such
Letter of Intent, and if such terms are amended, as they may be from
time to time by the Fund, that those amendments will apply
automatically to existing Letters of Intent.
If the total eligible purchases made during the Letter of Intent
period do not equal or exceed the intended purchase amount, the
commissions previously paid to the dealer of record for the account and
the amount of sales charge retained by the Distributor will be adjusted
to the rates applicable to actual purchases. If total eligible
purchases during the Letter of Intent period exceed the intended
purchase amount and exceed the amount needed to qualify for the next
sales charge rate reduction set forth in the applicable prospectus, the
sales charges paid will be adjusted to the lower rate, but only if and
when the dealer returns to the Distributor the excess of the amount of
commissions allowed or paid to the dealer over the amount of
commissions that apply to the actual amount of purchases. The excess
commissions returned to the Distributor will be used to purchase
additional shares for the investor's account at the net asset value per
share in effect on the date of such purchase, promptly after the
Distributor's receipt thereof.
In determining the total amount of purchases made under a Letter,
shares redeemed by the investor prior to the termination of the Letter
of Intent period will be deducted. It is the responsibility of the
dealer of record and/or the investor to advise the Distributor about
the Letter in placing any purchase orders for the investor during the
Letter of Intent period. All of such purchases must be made through
the Distributor.
Terms of Escrow That Apply to Letters of Intent.
1.Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in value
to 5% of the intended purchase amount specified in the Letter shall be
held in escrow by the Transfer Agent. For example, if the intended
purchase amount is $50,000, the escrow shall be shares valued in the
amount of $2,500 (computed at the public offering price adjusted for a
$50,000 purchase). Any dividends and capital gains distributions on
the escrowed shares will be credited to the investor's account.
2.If the intended purchase amount specified under the Letter is
completed within the thirteen-month Letter of Intent period, the
escrowed shares will be promptly released to the investor.
3.If, at the end of the thirteen-month Letter of Intent period the
total purchases pursuant to the Letter are less than the intended
purchase amount specified in the Letter, the investor must remit to the
Distributor an amount equal to the difference between the dollar amount
of sales charges actually paid and the amount of sales charges which
would have been paid if the total amount purchased had been made at a
single time. Such sales charge adjustment will apply to any shares
redeemed prior to the completion of the Letter. If such difference in
sales charges is not paid within twenty days after a request from the
Distributor or the dealer, the Distributor will, within sixty days of
the expiration of the Letter, redeem the number of escrowed shares
necessary to realize such difference in sales charges. Full and
fractional shares remaining after such redemption will be released from
escrow. If a request is received to redeem escrowed shares prior to
the payment of such additional sales charge, the sales charge will be
withheld from the redemption proceeds.
4.By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for
redemption any or all escrowed shares.
5.The shares eligible for purchase under the Letter (or the
holding of which may be counted toward completion of the Letter) do not
include any shares sold without a front-end sales charge or without
being subject to a Class A contingent deferred sales charge unless (for
the purpose of determining completion of the obligation to purchase
shares under the Letter) the shares were acquired in exchange for
shares of one of the OppenheimerFunds whose shares were acquired by
payment of a sales charge.
6.Shares held in escrow hereunder will automatically be exchanged
for shares of another fund to which an exchange is requested, as
described in the section of the Prospectus entitled "Exchange
Privilege," and the escrow will be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a bank
account, a check (minimum $25) for the initial purchase must accompany
the application. Shares purchased by Asset Builder Plan payments from
bank accounts are subject to the redemption restrictions for recent
purchases described in "How To Sell Shares," in the Prospectus. Asset
Builder Plans also enable shareholders of Oppenheimer Cash Reserves to
use those accounts for monthly automatic purchases of shares of up to
four other OppenheimerFunds.
There is a front-end sales charge on the purchase of certain
OppenheimerFunds, or a contingent deferred sales charge may apply to
shares purchased by Asset Builder payments. An application should be
obtained from the Distributor, completed and returned, and a prospectus
of the selected fund(s) should be obtained from the Distributor or your
financial advisor before initiating Asset Builder payments. The amount
of the Asset Builder investment may be changed or the automatic
investments may be terminated at any time by writing to the Transfer
Agent. A reasonable period (approximately 15 days) is required after
the Transfer Agent's receipt of such instructions to implement them.
The Fund reserves the right to amend, suspend, or discontinue offering
such plans at any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders
for the Fund's shares (for example, when a purchase check is returned
to the Fund unpaid) causes a loss to be incurred when the net asset
value of the Fund's shares on the cancellation date is less than on the
purchase date. That loss is equal to the amount of the decline in the
net asset value per share multiplied by the number of shares in the
purchase order. The investor is responsible for that loss. If the
investor fails to compensate the Fund for the loss, the Distributor
will do so. The Fund may reimburse the Distributor for that amount by
redeeming shares from any account registered in that investor's name,
or the Fund or the Distributor may seek other redress.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and conditions
for redemptions set forth in the Prospectus.
Involuntary Redemptions. The Fund's Board of Trustees has the
right to cause the involuntary redemption of the shares held in any
account if the aggregate net asset value of those shares is less than
$200 or such lesser amount as the Board may fix. The Board of Trustees
will not cause the involuntary redemption of shares in an account if
the aggregate net asset value of the shares has fallen below the stated
minimum solely as a result of market fluctuations. Should the Board
elect to exercise this right, it may also fix, in accordance with the
Investment Company Act, the requirements for any notice to be given to
the shareholders in question (not less than 30 days), or the Board may
set requirements for granting permission to the Shareholder to increase
the investment, and set other terms and conditions so that the shares
would not be involuntarily redeemed.
Payments "In Kind". The Prospectus states that payment for
shares tendered for redemption is ordinarily made in cash. However,
the Board of Trustees of the Fund may determine that it would be
detrimental to the best interests of the remaining shareholders of the
Fund to make payment of a redemption order wholly or partly in cash.
In that case the Fund may pay the redemption proceeds in whole or in
part by a distribution "in kind" of securities from the portfolio of
the Fund, in lieu of cash, in conformity with applicable rules of the
Securities and Exchange Commission. The Fund has elected to be
governed by Rule 18f-1 under the Investment Company Act, pursuant to
which the Fund is obligated to redeem shares solely in cash up to the
lesser of $250,000 or 1% of the net assets of the Fund during any 90-
day period for any one shareholder. If shares are redeemed in kind,
the redeeming shareholder might incur brokerage or other costs in
selling the securities for cash. The method of valuing securities used
to make redemptions in kind will be the same as the method the Fund
uses to value its portfolio securities described above under the
"Determination of Net Asset Values Per Share" and that valuation will
be made as of the time the redemption price is determined.
Reinvestment Privilege. Within six months of a redemption, a
shareholder may reinvest all or part of the redemption proceeds of (i)
Class A shares, or (ii) Class C shares that were subject to the Class C
contingent deferred sales charge when redeemed. The reinvestment may
be made without sales charge only in Class A shares of the Fund or any
of the other OppenheimerFunds into which shares of the Fund are
exchangeable as described below, at the net asset value next computed
after the Transfer Agent receives the reinvestment order. The
shareholder must ask the Distributor for that privilege at the time of
reinvestment. Any capital gain that was realized when the shares were
redeemed is taxable, and reinvestment will not alter any capital gains
tax payable on that gain. If there has been a capital loss on the
redemption, some or all of the loss may not be tax deductible,
depending on the timing and amount of the reinvestment. Under the
Internal Revenue Code, if the redemption proceeds of Fund shares on
which a sales charge was paid are reinvested in shares of the Fund or
another of the OppenheimerFunds within 90 days of payment of the sales
charge, the shareholder's basis in the shares of the Fund that were
redeemed may not include the amount of the sales charge paid. That
would reduce the loss or increase the gain recognized from the
redemption. However, in that case the sales charge would be added to
the basis of the shares acquired by the reinvestment of the redemption
proceeds. The Fund may amend, suspend or cease offering this
reinvestment privilege at any time as to shares redeemed after the date
of such amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of either class at the time of
transfer to the name of another person or entity (whether the transfer
occurs by absolute assignment, gift or bequest, not involving, directly
or indirectly, a public sale). The transferred shares will remain
subject to the contingent deferred sales charge, calculated as if the
transferee shareholder had acquired the transferred shares in the same
manner and at the same time as the transferring shareholder. If less
than all shares held in an account are transferred, and some but not
all shares in the account would be subject to a contingent deferred
sales charge if redeemed at the time of transfer, the priorities
described in the Prospectus under "How to Buy Shares" for the
imposition of the Class C contingent deferred sales charge will be
followed in determining the order in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions
from OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, or
pension or profit-sharing plans should be addressed to "Trustee,
OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its
address listed in "How To Sell Shares" in the Prospectus or on the back
cover of this Statement of Additional Information. The request must:
(i) state the reason for the distribution; (ii) state the owner's
awareness of tax penalties if the distribution is premature; and (iii)
conform to the requirements of the plan and the Fund's other redemption
requirements. Participants (other than self-employed persons) in
OppenheimerFunds-sponsored pension or profit-sharing plans may not
directly request redemption of their accounts. The employer or plan
administrator must sign the request. Distributions from pension and
profit sharing plans are subject to special requirements under the
Internal Revenue Code and certain documents (available from the
Transfer Agent) must be completed before the distribution may be made.
Distributions from retirement plans are subject to withholding
requirements under the Internal Revenue Code, and IRS Form W-4P
(available from the Transfer Agent) must be submitted to the Transfer
Agent with the distribution request, or the distribution may be
delayed. Unless the shareholder has provided the Transfer Agent with a
certified tax identification number, the Internal Revenue Code requires
that tax be withheld from any distribution even if the shareholder
elects not to have tax withheld. The Fund, the Manager, the
Distributor, the Trustee and the Transfer Agent assume no
responsibility to determine whether a distribution satisfies the
conditions of applicable tax laws and will not be responsible for any
tax penalties assessed in connection with a distribution.
Special Arrangements for Repurchase of Shares from Dealers and
Brokers. The Distributor is the Fund's agent to repurchase its shares
from authorized dealers or brokers. The repurchase price will be the
net asset value next computed after the receipt of an order placed by
such dealer or broker, except that orders received from dealers or
brokers after 4:00 P.M. on a regular business day will be processed at
that day's net asset value if such orders were received by the dealer
or broker from its customers prior to 4:00 P.M., and were transmitted
to and received by the Distributor prior to its close of business that
day (normally 5:00 P.M.). Payment ordinarily will be made within seven
days after the Distributor's receipt of the required redemption
documents, with signature(s) guaranteed as described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of
the Fund valued at $5,000 or more can authorize the Transfer Agent to
redeem shares (minimum $50) automatically on a monthly, quarterly,
semi-annual or annual basis under an Automatic Withdrawal Plan. Shares
will be redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are to be
made by check payable to all shareholders of record and sent to the
address of record for the account (and if the address has not been
changed within the prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on this
basis. Payments are normally made by check, but shareholders having
AccountLink privileges (see "How To Buy Shares") may arrange to have
Automatic Withdrawal Plan payments transferred to the bank account
designated on the OppenheimerFunds New Account Application or
signature-guaranteed instructions. The Fund cannot guarantee receipt
of a payment on the date requested and reserves the right to amend,
suspend or discontinue offering such plans at any time without prior
notice. Because of the sales charge assessed on Class A share
purchases, shareholders should not make regular additional Class A
share purchases while participating in an Automatic Withdrawal Plan.
Class C shareholders should not establish withdrawal plans that would
require the redemption of shares held less than 12 months, because of
the imposition of the Class C on such withdrawals (except where the
Class C contingent deferred sales charge is waived as described in the
Prospectus under "Class C Contingent Deferred Sales Charge").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such plans,
as stated below and in the provisions of the OppenheimerFunds Application
relating to such Plans, as well as the Prospectus. These provisions may
be amended from time to time by the Fund and/or the Distributor. When
adopted, such amendments will automatically apply to existing Plans.
Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent (on the OppenheimerFunds Application or signature-guaranteed
instructions) to exchange a pre-determined amount of shares of the Fund
for shares (of the same class) of other OppenheimerFunds automatically on
a monthly, quarterly, semi-annual or annual basis under an Automatic
Exchange Plan. The minimum amount that may be exchanged to each other
fund account is $25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to Exchange
Shares" in the Prospectus and below in this Statement of Additional
Information.
Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a sales
charge will be redeemed first and shares acquired with reinvested
dividends and capital gains distributions will be redeemed next, followed
by shares acquired with a sales charge, to the extent necessary to make
withdrawal payments. Depending upon the amount withdrawn, the investor's
principal may be depleted. Payments made under withdrawal plans should
not be considered as a yield or income on your investment.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the "Planholder")
who executed the Plan authorization and application submitted to the
Transfer Agent. The Transfer Agent shall incur no liability to the
Planholder for any action taken or omitted by the Transfer Agent in good
faith to administer the Plan. Certificates will not be issued for shares
of the Fund purchased for and held under the Plan, but the Transfer Agent
will credit all such shares to the account of the Planholder on the
records of the Fund. Any share certificates held by a Planholder may be
surrendered unendorsed to the Transfer Agent with the Plan application so
that the shares represented by the certificate may be held under the
Plan.
For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of the Fund, which will be done
at net asset value without a sales charge. Dividends on shares held in
the account may be paid in cash or reinvested.
Redemptions of shares needed to make withdrawal payments will be made
at the net asset value per share determined on the redemption date.
Checks or AccountLink payments of the proceeds of Plan withdrawals will
normally be transmitted three business days prior to the date selected for
receipt of the payment (receipt of payment on the date selected cannot be
guaranteed), according to the choice specified in writing by the
Planholder.
The amount and the interval of disbursement payments and the address
to which checks are to be mailed or AccountLink payments are to be sent
may be changed at any time by the Planholder by writing to the Transfer
Agent. The Planholder should allow at least two weeks' time in mailing
such notification for the requested change to be put in effect. The
Planholder may, at any time, instruct the Transfer Agent by written notice
(in proper form in accordance with the requirements of the then-current
Prospectus of the Fund) to redeem all, or any part of, the shares held
under the Plan. In that case, the Transfer Agent will redeem the number
of shares requested at the net asset value per share in effect in
accordance with the Fund's usual redemption procedures and will mail a
check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by writing
to the Transfer Agent. A Plan may also be terminated at any time by the
Transfer Agent upon receiving directions to that effect from the Fund.
The Transfer Agent will also terminate a Plan upon receipt of evidence
satisfactory to it of the death or legal incapacity of the Planholder.
Upon termination of a Plan by the Transfer Agent or the Fund, shares that
have not been redeemed from the account will be held in uncertificated
form in the name of the Planholder, and the account will continue as a
dividend-reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her executor or
guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt, the
Planholder may request issuance of a portion of the shares in certificated
form. Upon written request from the Planholder, the Transfer Agent will
determine the number of shares for which a certificate may be issued
without causing the withdrawal checks to stop because of exhaustion of
uncertificated shares needed to continue payments. However, should such
uncertificated shares become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the Fund,
the Planholder will be deemed to have appointed any successor transfer
agent to act as agent in administering the Plan.
How To Exchange Shares
As stated in the Prospectus, shares of a particular class of
OppenheimerFunds having more than one class of shares may be exchanged
only for shares of the same class of other OppenheimerFunds. Shares of
the OppenheimerFunds that have a single class without a class designation
are deemed "Class A" shares for this purpose. All OppenheimerFunds offer
Class A shares (except for Oppenheimer Strategic Diversified Income Fund),
but only the following other OppenheimerFunds currently offer Class C
shares:
Oppenheimer Intermediate Tax-Exempt Bond Fund
Oppenheimer Champion High Yield Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Main Street Income & Growth Fund
Oppenheimer Cash Reserves (Class C shares are only available by
exchange)
Oppenheimer Target Fund
Oppenheimer Strategic Diversified Income Fund
Oppenheimer Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Class A shares of OppenheimerFunds may be exchanged at net asset
value for shares of any Money Market Fund. Shares of any Money Market
Fund purchased without a sales charge may be exchanged for shares of
OppenheimerFunds offered with a sales charge upon payment of the sales
charge (or, if applicable, may be used to purchase shares of
OppenheimerFunds subject to a contingent deferred sales charge). Shares
of this Fund acquired by reinvestment of dividends or distributions from
any other of the OppenheimerFunds or from any unit investment trust for
which reinvestment arrangements have been made with the Distributor may
be exchanged at net asset value for shares of any of the OppenheimerFunds.
No contingent deferred sales charge is imposed on exchanges of shares of
either class purchased subject to a contingent deferred sales charge.
However, when Class A shares acquired by exchange of Class A shares of
other OppenheimerFunds purchased subject to a Class A contingent deferred
sales charge are redeemed within 18 months of the end of the calendar
month of the initial purchase of the exchanged Class A shares, the Class
A contingent deferred sales charge is imposed on the redeemed shares (see
"Class A Contingent Deferred Sales Charge" in the Prospectus). The Class
C contingent deferred sales charge is imposed on Class C shares acquired
by exchange if they are redeemed within 12 months of the initial purchase
of the exchanged Class C shares.
When Class C shares are redeemed to effect an exchange, the
priorities described in "How To Buy Shares" in the Prospectus for the
imposition of the Class C contingent deferred sales charge will be
followed in determining the order in which the shares are exchanged.
Shareholders should take into account the effect of any exchange on the
applicability and rate of any contingent deferred sales charge that might
be imposed in the subsequent redemption of remaining shares. Shareholders
owning shares of both classes must specify whether they intend to exchange
Class A or Class C shares.
The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of 10 or more accounts. The
Fund may accept requests for exchanges of up to 50 accounts per day from
representatives of authorized dealers that qualify for this privilege. In
connection with any exchange request, the number of shares exchanged may
be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or
this Statement of Additional Information or would include shares covered
by a share certificate that is not tendered with the request. In those
cases, only the shares available for exchange without restriction will be
exchanged.
When exchanging shares by telephone, a shareholder must either have
an existing account in, or obtain and acknowledge receipt of a prospectus
of, the fund to which the exchange is to be made. For full or partial
exchanges of an account made by telephone, any special account features
such as Asset Builder Plans, Automatic Withdrawal Plans and retirement
plan contributions will be switched to the new account unless the Transfer
Agent is instructed otherwise. If all telephone lines are busy (which
might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by
telephone and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired are
purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The
Fund reserves the right, in its discretion, to refuse any exchange request
that may disadvantage it (for example, if the receipt of multiple exchange
requests from a dealer might require the disposition of portfolio
securities at a time or at a price that might be disadvantageous to the
Fund).
The different OppenheimerFunds available for exchange have different
investment objectives, policies and risks, and a shareholder should assure
that the Fund selected is appropriate for his or her investment and should
be aware of the tax consequences of an exchange. For federal income tax
purposes, an exchange transaction is treated as a redemption of shares of
one fund and a purchase of shares of another. "Reinvestment Privilege,"
above, discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and the
Transfer Agent are unable to provide investment, tax or legal advice to
a shareholder in connection with an exchange request or any other
investment transaction.
Dividends, Capital Gains and Taxes
Tax Status of the Fund's Dividends and Distributions. The Federal tax
treatment of the Fund's dividends and capital gains distributions is
explained in the Prospectus under the caption "Dividends, Capital Gains
and Taxes." Special provisions of the Internal Revenue Code govern the
eligibility of the Fund's dividends for the dividends-received deduction
for corporate shareholders. Long-term capital gains distributions are not
eligible for the deduction. In addition, the amount of dividends paid by
the Fund which may qualify for the deduction is limited to the aggregate
amount of qualifying dividends that the Fund derives from its portfolio
investments that the Fund has held for a minimum period, usually 46 days.
A corporate shareholder will not be eligible for the deduction on
dividends paid on Fund shares held for 45 days or less. To the extent the
Fund's dividends are derived from gross income from option premiums,
interest income or short-term gains from the sale of securities or
dividends from foreign corporations, those dividends will not qualify for
the deduction.
Under the Internal Revenue Code, by December 31 each year, the Fund
must distribute 98% of its taxable investment income earned from January
1 through December 31 of that year and 98% of its capital gains realized
in the period from November 1 of the prior year through October 31 of the
current year, or else the Fund must pay an excise tax on the amounts not
distributed. While it is presently anticipated that the Fund will meet
those requirements, the Fund's Board of Trustees and the Manager might
determine in a particular year that it would be in the best interest of
shareholders for the Fund not to make such distributions at the required
levels and to pay the excise tax on the undistributed amounts. That would
reduce the amount of income or capital gains available for distribution
to shareholders.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may
elect to reinvest all dividends and/or capital gains distributions in
shares of the same class of any of the other OppenheimerFunds listed in
"Reduced Sales Charges," above, at net asset value without sales charge.
Class C shareholders should be aware that as of the date of this Statement
of Additional Information, not all of the OppenheimerFunds offer Class C
shares. To elect this option, a shareholder must notify the Transfer
Agent in writing and either have an existing account in the fund selected
for reinvestment or must obtain a prospectus for that fund and an
application from the Distributor to establish an account. The investment
will be made at the net asset value per share in effect at the close of
business on the payable date of the dividend or distribution. Dividends
and/or distributions from shares of other OppenheimerFunds may be invested
in shares of this Fund on the same basis.
Additional Information About the Fund
The Custodian. The Bank of New York is the Custodian of the Fund's
assets. The Custodian's responsibilities include safeguarding and
controlling the Fund's portfolio securities, collecting income on the
portfolio securities and handling the delivery of such securities to and
from the Fund. The Manager has represented to the Fund that the banking
relationships between the Manager and the Custodian have been and will
continue to be unrelated to and unaffected by the relationship between the
Fund and the Custodian. It will be the practice of the Fund to deal with
the Custodian in a manner uninfluenced by any banking relationship the
Custodian may have with the Manager and its affiliates.
Independent Auditors. The independent auditors of the Fund audit the
Fund's financial statements and perform other related audit services.
They also act as auditors for the Manager and certain other funds advised
by the Manager and its affiliates.
<PAGE>
Appendix: Ratings of Investments
Description of Moody's Investors Service, Inc. Bond Ratings
Aaa: Bonds which are rated "Aaa" are judged to be the best quality
and to carry the smallest degree of investment risk. Interest payments
are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, the changes that can be expected are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds which are rated "Aa" are judged to be of high quality by
all standards. Together with the "Aaa" group, they comprise what are
generally known as "high-grade" bonds. They are rated lower than the best
bonds because margins of protection may not be as large as with "Aaa"
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risks appear somewhat larger than those of "Aaa" securities.
A: Bonds which are rated "A" possess many favorable investment
attributes and are to be considered as upper-medium grade obligations.
Factors giving security to principal and interest are considered adequate
but elements may be present which suggest a susceptibility to impairment
sometime in the future.
Baa: Bonds which are rated "Baa" are considered medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and have speculative
characteristics as well.
Ba: Bonds which are rated "Ba" are judged to have speculative
elements; their future cannot be considered well-assured. Often the
protection of interest and principal payments may be very moderate and not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B: Bonds which are rated "B" generally lack characteristics of
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Caa: Bonds which are rated "Caa" are of poor standing and may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca: Bonds which are rated "Ca" represent obligations which are
speculative in a high degree and are often in default or have other marked
shortcomings.
C: Bonds which are rated "C" can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
Description of Standard & Poor's Bond Ratings
AAA: "AAA" is the highest rating assigned to a debt obligation and
indicates an extremely strong capacity to pay principal and interest.
AA: Bonds rated "AA" also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority
of instances they differ from "AAA" issues only in small degree.
A: Bonds rated "A" have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to adverse effects
of change in circumstances and economic conditions.
BBB: The bond investments in which the Fund will principally invest
will be in the lower-rated categories, described below. Bonds rated "BBB"
are regarded as having an adequate capacity to pay principal and interest.
Whereas they normally exhibit protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity to pay principal and interest for bonds in this category than for
bonds in the "A" category.
BB, B, CCC, CC: Bonds rated "BB," "B," "CCC" and "CC" are regarded,
on balance, as predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with the terms
of the obligation. "BB" indicates the lowest degree of speculation and
"CC" the highest degree. While such bonds will likely have some quality
and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
C, D: Bonds on which no interest is being paid are rated "C." Bonds
rated "D" are in default and payment of interest and/or repayment of
principal is in arrears.
<PAGE>
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
OPPENHEIMER GLOBAL GROWTH & INCOME FUND
FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
1. Financial Highlights (See Part A, Prospectus):*
2. Independent Auditors' Report (See Part B, Statement of
Additional Information):*
3. Statement of Investments (See Part B, Statement of
Additional Information):*
4. Statement of Assets and Liabilities (See Part B, Statement
of Additional Information):*
5. Statement of Operations (See Part B, Statement of
Additional Information):*
6. Statement of Changes in Net Assets (See Part B, Statement
of Additional Information):*
7. Notes to Financial Statements (See Part B, Statement of
Additional Information):*
(b) Exhibits:
1. Registrant's Amended and Restated Declaration of Trust
dated 11/29/93: Filed herewith.
2. By-Laws adopted 8/21/90: Previously filed with Pre-
Effective Amendment No. 1 to Registrant's Registration
Statement, 6/29/90, and refiled herewith pursuant to Item
102 of Regulation S-T.
3. Not applicable.
4. (i) Specimen Share Certificate for Class A Shares:
Previously filed with Post-Effective Amendment No.
6, to Registrant's Registration Statement,
1/19/94, and incorporated herein by reference.
(ii) Specimen Share Certificate for Class C Shares:
Previously filed with Post-Effective Amendment No.
6, to Registrant's Registration Statement,
1/19/94, and incorporated herein by reference.
_ _ _ _ _ _ _ _ _ _
* To be filed by amendment.
5. Investment Advisory Agreement dated 6/27/94: Filed
herewith.
6. (i) General Distributor's Agreement dated 12/10/92:
Previously filed with Post-Effective Amendment No.
4 to Registrant's Registration Statement, 1/29/93,
and refiled herewith pursuant to Item 102 of
Regulation S-T.
(ii) Form of Oppenheimer Funds Distributor, Inc. Dealer
Agreement: Previously filed with Post-Effective
Amendment No. 14 to the Registration Statement of
Oppenheimer Main Street Funds, Inc. (Reg. No. 33-
17850), 9/30/94, and incorporated herein by
reference.
(iii) Form of Oppenheimer Funds Distributor, Inc. Broker
Agreement: Previously filed with Post-Effective
Amendment No. 14 to the Registration Statement of
Oppenheimer Main Street Funds, Inc. (Reg. No. 33-
17850), 9/30/94, and incorporated herein by
reference.
(iv) Form of Oppenheimer Funds Distributor, Inc. Agency
Agreement: Previously filed with Post-Effective
Amendment No. 14 to the Registration Statement of
Oppenheimer Main Street Funds, Inc. (Reg. No. 33-
17850), 9/30/94, and incorporated herein by
reference.
(v) Broker Agreement between Oppenheimer Fund
Management, Inc. and Newbridge Securities, Inc.
dated 10/1/86: Previously filed with Post-
Effective Amendment No. 25 of Oppenheimer Special
Fund (Reg. No. 2-45272), 11/1/86, refiled with
Post-Effective Amendment No. 47 of Oppenheimer
Growth Fund (Reg. No. 2-14586) 10/21/94, pursuant
to Item 102 of Regulation S-T, and incorporated
herein by reference.
7. Retirement Plan for Non-Interested Trustees or Directors
(adopted by Registrant 6/7/90): Previously filed with
Post-Effective Amendment No. 97 of Oppenheimer Fund (Reg.
No. 2-14586), 8/30/90, refiled with Post-Effective
Amendment No. 45 of Oppenheimer Special Fund (reg. No. 2-
14586), 10/21/94, pursuant to Item 102 of Regulation S-T
and incorporated herein by reference.
8. Custody Agreement dated 11/12/92: Previously filed with
Post-Effective Amendment No. 4 to Registrant's
Registration Statement, 1/29/93, and refiled herewith
pursuant to Item 102 of Regulation S-T.
9. Not Applicable.
10. Opinion and Consent of Counsel dated 9/7/90: Previously
filed with Pre-Effective Amendment No. 2, 9/11/90, and
refiled herewith pursuant to Item 102 of Regulation S-
T.
11. Independent Auditors' Consent: To be filed by
amendment.
12. Not applicable.
13. Investment Letter dated 8/14/90 from Oppenheimer
Management Corporation to Registrant: Previously filed
with Pre-Effective Amendment No. 2, 9/11/90, to
Registrant's Registration Statement, and incorporated
herein by reference.
14. (i) Form of Individual Retirement Account Plan (IRA):
Previously filed with Post-Effective Amendment No.
21 of Oppenheimer U.S. Government Trust (Reg. No.
2-76645), 8/25/93, and incorporated herein by
reference.
(ii) Form of prototype Standardized and Non-
Standardized Profit Sharing and Money Purchase
Pension Plan for self-employed persons and
corporations: Previously filed with Post-Effective
Amendment No. 3 to Registrant's Registration
Statement, 2/1/92, and refiled herewith pursuant
to Item 102 of Regulation S-T.
(iii) Form of Tax-Sheltered Retirement Plan and Custody
Agreement for employees of public schools and tax-
exempt organizations: Previously filed with Post-
Effective Amendment No. 47 of Oppenheimer
Directors Fund (File No. 2-14586), 10/21/94, and
incorporated herein by reference.
(iv) Form of Simplified Employee Pension IRA:
Previously filed with Post-Effective Amendment No.
42 of Oppenheimer Equity Income Fund (Reg. No. 2-
33043), 10/28/94, and incorporated herein by
reference.
15. (i) Service Plan and Agreement for Class A Shares
dated 6/10/93 under Rule 12b-1 of the Investment
Company Act of 1940: Previously filed with Post-
Effective Amendment No. 6 to Registrant's
Registration Statement, 1/19/94, and incorporated
herein by reference.
(ii) Distribution and Service Plan and Agreement for
Class C Shares dated 6/10/93 under Rule 12b-1 of
the Investment Company Act of 1940: Previously
filed with Post-Effective Amendment No. 6 to
Registrant's Registration Statement, 1/19/94, and
incorporated herein by reference.
16. Performance Data Computation Schedule: To be filed by
Amendment.
17. (a) Financial Data Schedule For Class A shares: To be
filed by amendment.
(b) Financial Data Schedule for Class C shares: To be
filed by amendment.
Powers of Attorney signed by Registrant's Trustees: Previously
filed with Registrant's Post-Effective Amendment No. 5,
11/22/93, and incorporated herein by reference.
Item 25. Persons Controlled by or Under Common Control with Registrant
None
Item 26. Number of Holders of Securities
Number of
Record Holders as
Title of Class of January __, 1994
Class A Shares of Beneficial Interest _ _ _ _ _
Class C Shares of Beneficial Interest _ _ _ _ _
Item 27. Indemnification
Reference is made to the provisions of Article SEVENTH of
Registrant's Declaration of Trust.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of Registrant pursuant to the foregoing provisions or
otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by Registrant of expenses incurred or
paid by a trustee, officer or controlling person of Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person, 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 Securities Act of 1933 and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
(a) Oppenheimer Management Corporation is the investment adviser of
the Registrant; it and its affiliates act in the same capacity
for other registered investment companies as described in Parts
A and B.
(b) For information as to the business, profession, vocation or
employment of a substantial nature of each of the directors and
principal officers of Oppenheimer Management Corporation,
reference is made to Part B of this Registration Statement and
to Form ADV filed by Oppenheimer Management Corporation under
the Investment Advisers Act of 1940, which is incorporated
herein by reference.
Item 29. Principal Underwriter
(a) Oppenheimer Funds Distributor, Inc. is the General Distributor
of the Registrant's shares and is also general distributor of
the other registered open-end investment companies for which
Oppenheimer Management Corporation is the investment adviser.
(b) The information contained in the registration on Form BD of
Oppenheimer Funds Distributor, Inc., filed under the Securities
Exchange Act of 1934, is incorporated herein by reference.
(c) Not applicable.
Item 30. Location of Accounts and Records
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act 1940
and rules promulgated thereunder are in the possession of Oppenheimer
Management Corporation at its offices at 3410 South Galena Street, Denver,
Colorado 80231.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) Registrant undertakes to call a meeting of shareholders for the
purpose of voting upon the question of the removal of a Trustee
or Trustees when requested in writing to do so by the holders
of at least 10% of the Registrant's outstanding shares and in
connection with such meeting to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940 relating to
shareholder communications.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York
on the 30th day of November, 1994.
OPPENHEIMER GLOBAL GROWTH & INCOME FUND
By: /s/ Donald W. Spiro*
----------------------------------------
Donald W. Spiro, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities on the dates indicated:
Signatures Title Date
- ---------- ----- ----
/s/ Leon Levy* Chairman of the
- -------------- Board of Trustees November 30, 1994
Leon Levy
/s/ Donald W. Spiro* President, Principal
- -------------------- Executive Officer
Donald W. Spiro and Trustee November 30, 1994
/s/ George Bowen* Treasurer and
- ----------------- Principal Financial
George Bowen and Accounting
Officer November 30, 1994
/s/ Leo Cherne* Trustee November 30, 1994
- ---------------
Leo Cherne
/s/ Robert G. Galli* Trustee November 30, 1994
- -------------------
Robert G. Galli
/s/ Benjamin Lipstein* Trustee November 30, 1994
- ----------------------
Benjamin Lipstein
/s/ Elizabeth B. Moynihan* Trustee November 30, 1994
- --------------------------
Elizabeth B. Moynihan
/s/ Kenneth A. Randall* Trustee November 30, 1994
- -----------------------
Kenneth A. Randall
/s/ Edward V. Regan* Trustee November 30, 1994
- --------------------
Edward V. Regan
/s/ Russell S. Reynolds, Jr.* Trustee November 30, 1994
- -----------------------------
Russell S. Reynolds, Jr.
/s/ Sidney M. Robbins* Trustee November 30, 1994
- ----------------------
Sidney M. Robbins
/s/ Pauline Trigere* Trustee November 30, 1994
- --------------------
Pauline Trigere
/s/ Clayton K. Yeutter* Trustee November 30, 1994
- -----------------------
Clayton K. Yeutter
*By: /s/ Robert G. Zack
- --------------------------------
Robert G. Zack, Attorney-in-Fact
<PAGE>
OPPENHEIMER GLOBAL GROWTH & INCOME FUND
Registration No. 33-33799
Post-Effective Amendment No. 7
Index to Exhibits
Exhibit No. Description
24(b)1 Amended and Restated Declaration of Trust
dated 11/29/93
24(b)2 By-Laws adopted 8/21/90
24(b)5 Investment Advisory Agreement
dated 6/27/94
25(b)6(i) General Distributor's Agreement
dated 12/10/92
24(b)8 Custody Agreement dated 11/12/92
24(b)10 Opinion & Consent of Counsel
dated 9/7/90
24(b)14(ii) Form of Standardized and Non-Standardized Profit
Sharing and Money Purchase Pension Plan
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
OPPENHEIMER GLOBAL GROWTH & INCOME FUND
AMENDED AND RESTATED DECLARATION OF TRUST, made November 29, 1993
by and among the individuals executing this Amended and Restated
Declaration of Trust as the Trustees.
WHEREAS, the Trustees established Oppenheimer Global Equity
Income Fund, a trust fund under the laws of the Commonwealth of
Massachusetts, for the investment and reinvestment of funds contributed
thereto, under a Declaration of Trust dated June 15, 1990, as amended by
an Amended Declaration of Trust dated August 10, 1990, whereby the Fund's
name was changed to Oppenheimer Global Growth & Income Fund;
WHEREAS, the Trustees desire to make permitted changes to said
Declaration of Trust; and
WHEREAS, such changes have been approved by the Trust's
shareholders at a meeting held April 23, 1993;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the Trust Fund hereunder shall be held and managed under
this Amended Declaration of Trust IN TRUST as herein set forth below.
FIRST: This Trust shall be known as OPPENHEIMER GLOBAL GROWTH
& INCOME FUND. The principal office of the Trust shall be located at Two
World Trade Center, New York, New York 10048. The Trust's resident agent
in the Commonwealth of Massachusetts is hereby appointed as Massachussetts
Mutual Life Insurance Company, Attention: Legal Department, 1295 State
Street, Springfield, Massachussetts, 01111.
SECOND: Whenever used herein, unless otherwise required by the
context or specifically provided:
1. All terms used in this Declaration of Trust which are
defined in the 1940 Act (defined below) shall have the
meanings given to them in the 1940 Act.
2. "Board" or "Board of Trustees" or the "Trustees" means the
Board of Trustees of the Trust.
3. "By-Laws" means the By-Laws of the Trust as amended from
time to time.
4. "Class" means a Class of a series of Shares of the
trust established and designated under or in accordance
with the provisions of Article FOURTH.
5. "Commission" means the Securities and Exchange Commission.
6. "Declaration of Trust" shall mean this Declaration of Trust
as amended or restated from time to time.
7. The "1940 Act" refers to the Investment Company Act of 1940
and the Rules and Regulations of the Commission thereunder,
all as amended from time to time.
8. "Series" refers to Series of Shares established and
designated under or in accordance with the provisions of
Article FOURTH.
9. "Shareholder" means a record owner of Shares of the
Trust.
10. "Shares" refers to the transferable units of interest into
which the beneficial interest in the Trust or any Series of
the Trust (as the context may require) shall be divided
from time to time and includes fractions of Shares as well
as whole Shares.
11. The "Trust" refers to the Massachusetts business trust
created by this Declaration of Trust, as amended or
restated from time to time.
12. "Trustees" refers to the individual trustees in their
capacity as trustees hereunder of the Trust and their
successor or successors for the time being in office as
such trustees.
THIRD: The purpose or purposes for which the Trust is formed and
the business or objects to be transacted, carried on and promoted by it
are as follows:
1. To hold, invest or reinvest its funds, and in connection
therewith to hold part or all of its funds in cash, and to
purchase or otherwise acquire, hold for investment or
otherwise, sell, sell short, assign, negotiate, transfer,
exchange or otherwise dispose of or turn to account or
realize upon, securities (which term "securities" shall for
the purposes of this Declaration of Trust, without
limitation of the generality thereof, be deemed to include
any stocks, shares, bonds, financial futures contracts,
indexes, debentures, notes, mortgages or other obligations,
and any certificates, receipts, warrants or other
instruments representing rights to receive, purchase or
subscribe for the same, or evidencing or representing any
other rights or interests therein, or in any property or
assets) created or issued by any issuer (which term
"issuer" shall for the purposes of this Declaration of
Trust, without limitation of the generality thereof be
deemed to include any persons, firms, associations,
corporations, syndicates, combinations, organizations,
governments, or subdivisions thereof) and in financial
instruments (whether they are considered as securities or
commodities); and to exercise, as owner or holder of any
securities or financial instruments, all rights, powers and
privileges in respect thereof; and to do any and all acts
and things for the preservation, protection, improvement
and enhancement in value of any or all such securities or
financial instruments.
2. To borrow money and pledge assets in connection with any of
the objects or purposes of the Trust, and to issue notes or
other obligations evidencing such borrowings, to the extent
permitted by the 1940 Act and by the Trust's fundamental
investment policies under the 1940 Act.
3. To issue and sell its Shares in such Series and Classes and
amounts and on such terms and conditions, for such purposes
and for such amount or kind of consideration (including
without limitation thereto, securities) now or hereafter
permitted by the laws of the Commonwealth of Massachusetts
and by this Declaration of Trust, as the Trustees may
determine.
4. To purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue or cancel its Shares, or to classify or
reclassify any unissued Shares or any Shares previously
issued and reacquired of any Series or Class into one or
more Series or Classes that may have been established and
designated from time to time, all without the vote or
consent of the Shareholders of the Trust, in any manner and
to the extent now or hereafter permitted by this
Declaration of Trust.
5. To conduct its business in all its branches at one or more
offices in New York, Colorado and elsewhere in any part of
the world, without restriction or limit as to extent.
6. To carry out all or any of the foregoing objects and
purposes as principal or agent, and alone or with
associates or to the extent now or hereafter permitted by
the laws of Massachusetts, as a member of, or as the owner
or holder of any stock of, or share of interest in, any
issuer, and in connection therewith or make or enter into
such deeds or contracts with any issuers and to do such
acts and things and to exercise such powers, as a natural
person could lawfully make, enter into, do or exercise.
7. To do any and all such further acts and things and to
exercise any and all such further powers as may be
necessary, incidental, relative, conducive, appropriate or
desirable for the accomplishment, carrying out or
attainment of all or any of the foregoing purposes or
objects.
The foregoing objects and purposes shall, except as otherwise
expressly provided, 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 this Declaration of Trust, and shall each be regarded as
independent and construed as powers as well as objects and purposes, and
the enumeration of specific purposes, objects and powers shall not be
construed to limit or restrict in any manner the meaning of general terms
or the general powers of the Trust now or hereafter conferred by the laws
of the Commonwealth of Massachusetts nor shall the expression of one
thing be deemed to exclude another, though it be of a similar or
dissimilar nature, not expressed; provided, however, that the Trust shall
not carry on any business, or exercise any powers, in any state,
territory, district or country except to the extent that the same may
lawfully be carried on or exercised under the laws thereof.
FOURTH: (1) The beneficial interest in the Trust shall be
divided into Shares, all without par value, but the Trustees shall have
the authority from time to time to create one or more Series of Shares in
addition to the Series specifically established and designated in part (3)
of this Article FOURTH, and to divide the shares of any Series into two
or more Classes pursuant to part (2) of this Article FOURTH, all as they
deem necessary or desirable, to establish and designate such Series and
Classes, and to fix and determine the relative rights and preferences as
between the different Series of Shares or Classes as to right of
redemption and the price, terms and manner of redemption, liabilities and
expenses to be borne by any Series or Class, special and relative rights
as to dividends and other distributions and on liquidation, sinking or
purchase fund provisions, conversion on liquidation, conversion rights,
and conditions under which the several Series or Classes shall have
individual voting rights or no voting rights. Except as aforesaid, all
Shares of the different Series shall be identical.
(a) The number of authorized Shares and the number of
Shares of each Series and each Class of a Series that
may be issued is unlimited, and the Trustees may issue
Shares of any Series or Class of any Series for such
consideration and on such terms as they may determine
(or for no consideration if pursuant to a Share
dividend or split-up), all without action or approval
of the Shareholders. All Shares when so issued on the
terms determined by the Trustees shall be fully paid
and non-assessable. The Trustees may classify or
reclassify any unissued Shares or any Shares
previously issued and reacquired of any Series into
one or more Series or Classes of Series that may be
established and designated from time to time. The
Trustees may hold as Treasury Shares (of the same or
some other Series), reissue for such consideration and
on such terms as they may determine, or cancel, at
their discretion from time to time, any Shares of any
Series reacquired by the Trust.
(b) The establishment and designation of any Series or any
Class of any Series in addition to that established
and designated in part (3) of this Article FOURTH
shall be effective upon the execution by a majority of
the Trustees of an instrument setting forth such
establishment and designation and the relative rights
and preferences of such Series or such Class of such
Series, or as otherwise provided in such instrument.
At any time that there are no Shares outstanding of
any particular Series previously established and
designated, the Trustees may by an instrument executed
by a majority of their number abolish that Series and
the establishment and designation thereof. Each
instrument referred to in this paragraph shall be an
amendment to this Declaration of Trust, and the
Trustees may make any such amendment without
shareholder approval.
(c) Any Trustee, officer or other agent of the Trust, and
any organization in which any such person is
interested may acquire, own, hold and dispose of
Shares of any Series or Class of any Series of the
Trust to the same extent as if such person were not a
Trustee, officer or other agent of the Trust; and the
Trust may issue and sell or cause to be issued and
sold and may purchase Shares of any Series or Class of
any Series from any such person or any such
organization subject only to the general limitations,
restrictions or other provisions applicable to the
sale or purchase of Shares of such Series or Class
generally.
(2) The Trustees shall have the authority from time to time,
without obtaining shareholder approval, to divide the Shares of any Series
into two or more Classes as they deem necessary or desirable, and to
establish and designate such Classes. In such event, each Class of a
Series shall represent interests in the designated Series of the Trust and
have such voting, dividend, liquidation and other rights as may be
established and designated by the Trustees. Expenses and liabilities
related directly or indirectly to the Shares of a Class of a Series may
be borne solely by such Class (as shall be determined by the Trustees)
and, as provided in Article FIFTH, a Class of a Series may have exclusive
voting rights with respect to matters relating solely to such Class. The
bearing of expenses and liabilities solely by a Class of Shares of a
Series shall be appropriately reflected (in the manner determined by the
Trustees) in the net asset value, dividend and liquidation rights of the
Shares of such Class of a Series. The division of the Shares of a Series
into Classes and the terms and conditions pursuant to which the Shares of
the Classes of a Series will be issued must be made in compliance with the
1940 Act. No division of Shares of a Series into Classes shall result in
the creation of a Class of Shares having a preference as to dividends or
distributions or a preference in the event of any liquidation, termination
or winding up of the Trust, to the extent such a preference is prohibited
by Section 18 of the 1940 Act as to the Trust.
The relative rights and preferences of shares of different
classes shall be the same in all respects except that, and unless and
until the Board of Trustees shall determine otherwise: (i) when a vote of
Shareholders is required under this Declaration of Trust or when a meeting
of Shareholders is called by the Board of Trustees, the Shares of a Class
shall vote exclusively on matters that affect that Class only; (ii) the
liabilities and expenses related to a Class shall be borne solely by such
Class (as determined and allocated to such Class by the Trustees from time
to time in a manner consistent with parts 2 and 3 of Article FOURTH); and
(iii) pursuant to paragraph 10 of Article NINTH, the Shares of each Class
shall have such other rights and preferences as are set forth from time
to time in the then effective prospectus and/or statement of additional
information relating to the Shares. Dividends and distributions on one
class may differ from the dividends and distributions on another class,
and the net asset value of the shares of one class may differ from the net
asset value of shares of another class.
(3) Without limiting the authority of the Trustees set forth in
part (1) of this Article FOURTH to establish and designate any further
Series, the Trustees hereby establish one Series of Shares having the same
name as the Trust and said Shares shall be divided int two Classes, which
shall be designated Class A and Class C, as follows. The Shares of the
Class outstanding since the inception of the Trust are hereby designated
Class A Shares, and the Shares of the Class initially issued upon the
division of the Shares of that Series into two Classes are hereby
designated Class C Shares. The Shares of that Series and any Shares of
any further Series or Classes that may from time to time be established
and designated by the Trustees shall (unless the Trustees otherwise
determine with respect to some further Series or Classes at the time of
establishing and designating the same) have the following relative rights
and preferences:
(a) Assets Belonging to Series. All consideration
received by the Trust for the issue or sale of Shares
of a particular Series, together with all assets in
which such consideration is invested or reinvested,
all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange
or liquidation of such assets, and any funds or
payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall
irrevocably belong to that Series for all purposes,
subject only to the rights of creditors, and shall be
so recorded upon the books of account of the Trust.
Such consideration, assets, income, earnings, profits,
and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets,
and any funds or payments derived from any
reinvestment of such proceeds, in whatever form the
same may be, together with any General Items allocated
to that Series as provided in the following sentence,
are herein referred to as "assets belonging to" that
Series. In the event that there are any assets,
income, earnings, profits, and proceeds thereof,
funds, or payments which are not readily identifiable
as belonging to any particular Series (collectively,
"General Items"), the Trustees shall allocate such
General Items to and among any one or more of the
Series established and designated from time to time in
such manner and on such basis as they, in their sole
discretion, deem fair and equitable; and any General
Items so allocated to a particular Series shall belong
to that Series. Each such allocation by the Trustees
shall be conclusive and binding upon the shareholders
of all Series for all purposes.
(b) (1) Liabilities Belonging to Series. The assets
belonging to each particular Series shall be charged
with the liabilities of the Trust in respect of that
Series and all expenses, costs, charges and reserves
attributable to that Series, and any general
liabilities, expenses, costs, charges or reserves of
the Trust which are not readily identifiable as
belonging to any particular Series shall be allocated
and charged by the Trustees to and among any one or
more of the Series established and designated from
time to time in such manner and on such basis as the
Trustees in their sole discretion deem fair and
equitable. The liabilities, expenses, costs, charges
and reserves allocated and so charged to a Series are
herein referred to as "liabilities belonging to" that
Series. Each allocation of liabilities, expenses,
costs, charges and reserves by the Trustees shall be
conclusive and binding upon the holders of all Series
for all purposes.
(2) Liabilities Belonging to a Class. If a Series is
divided into more than one Class, the liabilities, expenses, costs,
charges and reserves attributable to a Class shall be charged and
allocated to the Class to which such liabilities, expenses, costs, charges
or reserves are attributable. Any general liabilities, expenses, costs,
charges or reserves belonging to the Series which are not identifiable as
belonging to any particular Class shall be allocated and charged by the
Trustees to and among any one or more of the Classes established and
designated from time to time in such manner and on such basis as the
Trustees in their sole discretion deem fair and equitable. The
allocations in the two preceding sentences shall be subject to the 1940
Act or any release, rule, regulation, interpretation or order thereunder
relating to such allocations. The liabilities, expenses, costs, charges
and reserves allocated and so chargded to each Class are herein referred
to as "liabilities belonging to" that Class. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees shall
be conclusive and binding upon the holders of all Classes for all
purposes.
(c) Dividends. Dividends and distributions on Shares of
a particular Series or Class may be paid to the
holders of Shares of that Series or Class, with such
frequency as the Trustees may determine, which may be
daily or otherwise pursuant to a standing resolution
or resolutions adopted only once or with such
frequency as the Trustees may determine, from such of
the income, and surplus capital gains accrued or
realized, from the assets belonging to that Series, as
the Trustees may determine, after providing for actual
and accrued liabilities belonging to that Series or
Class. All dividends and distributions on Shares of
a particular Series or Class shall be distributed pro
rata to the Shareholders of such Series or Class in
proportion to the number of Shares such Series or
Class held by such Shareholders at the date and time
of record established for the payment of such
dividends or distributions, except that in connection
with any dividend or distribution program or procedure
the Trustees may determine that no dividend or
distribution shall be payable on Shares as to which
the Shareholder's purchase order and/or payment have
not been received by the time or times established by
the Trustees under such program or procedure. Such
dividends and distributions may be made in cash or
Shares or a combination thereof as determined by the
Trustees or pursuant to any program that the Trustees
may have in effect at the time for the election by
each Shareholder of the mode of the making of such
dividend or distribution to that Shareholder. Any
such dividend or distribution paid in Shares will be
paid at the net asset value thereof as determined in
accordance with paragraph 13 of Article SEVENTH.
(d) Liquidation. In the event of the liquidation or
dissolution of the Trust, the Shareholders of each
Series and all Classes of each Series that has been
established and designated shall be entitled to
receive, as a Series or Class, when and as declared by
the Trustees, the excess of the assets belonging to
that Series over the liabilities belonging to that
Series or Class. The assets so distributable to the
Shareholders of any particular Series shall be
distributed among such Shareholders in proportion to
the number of Shares of such Class of that Series held
by them and recorded on the books of the Trust.
(e) Transfer. All Shares of each particular Series or
Class shall be transferable, but transfers of Shares
of a particular Class and Series will be recorded on
the Share transfer records of the Trust applicable to
such Series or Class of that Series only at such times
as Shareholders shall have the right to require the
Trust to redeem Shares of such Series or Class of that
Series and at such other times as may be permitted by
the Trustees.
(f) Equality. All Shares of each particular Series shall
represent an equal proportionate interest in the
assets belonging to that Series (subject to the
liabilities belonging to such Series or any Class of
that Series), and each Share of any particular Series
shall be equal to each other Share of that Series and
Shares of each Class of a Series shall be equal to
each other Share of such Class; but the provisions of
this sentence shall not restrict any distinctions
permissible under subsection (c) of part (2) of this
Article FOURTH that may exist with respect to Shares
of the different Classes of a Series. The Trustees
may from time to time divide or combine the Shares of
any particular Class or Series into a greater or
lesser number of Shares of that Class or Series
without thereby changing the proportionate beneficial
interest in the assets belonging to that Class or
Series or in any way affecting the rights of Shares of
any other Class or Series and shares of each Class of
a Series shall be equal to each other Share of such
Class.
(g) Fractions. Any fractional Share of any Class and
Series, if any such fractional Share is outstanding,
shall carry proportionately all the rights and
obligations of a whole Share of that Class and Series,
including those rights and obligations with respect to
voting, receipt of dividends and distributions,
redemption of Shares, and liquidation of the Trust.
(h) Conversion Rights. Subject to compliance with the
requirements of the 1940 Act, the Trustees shall have
the authority to provide whether (i) holders of Shares
of any Series shall have the right to exchange said
Shares into Shares of one or more other Series of
Shares, (ii) holders of Shares of any Class shall have
the right to exchange said Shares into Shares of one
or more other Classes of the same or a different
Series, and/or (iii) the Trust shall have the right to
carry out exchanges of the aforesaid kind, in each
case in accordance with such requirements and
procedures as may be established by the Trustees.
(i) Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or
similar agent for the Trust, which books shall be
maintained separately for the Shares of each Class and
Series that has been established and designated. No
certification certifying the ownership of Shares need
be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make
such rules as they consider appropriate for the
issuance of Shares certificates, the use of facsimile
signatures, the transfer of Shares and similar
matters. The record books of the Trust as kept by the
Trust or any transfer or similar agent, as the case
may be, shall be conclusive as to who are the
Shareholders and as to the number of Shares of each
Class and Series held from time to time by each such
Shareholder.
(j) Investments in the Trust. The Trustees may accept
investments in the Trust from such persons and on such
terms and for such consideration, not inconsistent
with the provisions of the 1940 Act, as they from
time to time authorize. The Trustees may authorize
any distributor, principal underwriter, custodian,
transfer agent or other person to accept orders for
the purchase or sale of Shares that conform to such
authorized terms and to reject any purchase or sale
orders for Shares whether or not conforming to such
authorized terms.
FIFTH: The following provisions are hereby adopted with respect
to voting Shares of the Trust and certain other rights:
1. The Shareholders shall have the power to vote: (i) for the
election of Trustees when that issue is submitted to them,
(ii) with respect to the amendment of this Declaration of
Trust except where the Trustees are given authority to
amend the Declaration of Trust without shareholder
approval, (iii) to the same extent as the shareholders of
a Massachusetts business corporation, as to whether or not
a court action, proceeding or claim should be brought or
maintained derivatively or as a class action on behalf of
the Trust or the Shareholders, and (iv) with respect to
those matters relating to the Trust as may be required by
the 1940 Act or required by law, by this Declaration of
Trust, or the By-Laws of the Trust or any registration
statement of the Trust filed with the Commission or any
State, or as the Trustees may consider desirable.
2. The Trust will not hold shareholder meetings unless
required by the 1940 Act, the provisions of this
Declaration of Trust, or any other applicable law, or
unless the Trustees determine to call a meeting of
shareholders.
3. At all meetings of Shareholders, each Shareholder shall be
entitled to one vote on each matter submitted to a vote of
the Shareholders of the affected Series for each Share
standing in his name on the books of the Trust on the date,
fixed in accordance with the By-Laws, for determination of
Shareholders of the affected Series entitled to vote at
such meeting (except, if the Board so determines, for
Shares redeemed prior to the meeting), and each such Series
shall vote separately ("Individual Series Voting"); a
Series shall be deemed to be affected when a vote of the
holders of that Series on a matter is required by the 1940
Act; provided, however, that as to any matter with respect
to which a vote of Shareholders is required by the 1940 Act
or by any applicable law that must be complied with, such
requirements as to a vote by Shareholders shall apply in
lieu of Individual Series Voting as described above. If
the shares of a Series shall be divided into Classes as
provided in Article FOURTH, the shares of each Class shall
have identical voting rights except that the Trustees, in
their discretion, may provide a Class of a Series with
exclusive voting rights with respect to matters which
relate solely to such Class. If the Shares of any Series
shall be divided into Classes with a Class having exclusive
voting rights with respect to certain matters, the quorum
and voting requirements described below with respect to
action to be taken by the Shareholders of the Class of such
Series on such matters shall be applicable only to the
Shares of such Class. Any fractional Share shall carry
proportionately all the rights of a whole Share, including
the right to vote and the right to receive dividends. The
presence in person or by proxy of the holders of one-third
of the Shares, or of the Shares of any Series or Class of
any Series, outstanding and entitled to vote thereat shall
constitute a quorum at any meeting of the Shareholders or
of that Series or Class, respectively; provided however,
that if any action to be taken by the Shareholders or by a
Series or Class at a meeting requires an affirmative vote
of a majority, or more than a majority, of the shares
outstanding and entitled to vote, then in such event the
presence in person or by proxy of the holders of a majority
of the shares outstanding and entitled to vote at such a
meeting shall constitute a quorum for all purposes. At a
meeting at which is a quorum is present, a vote of a
majority of the quorum shall be sufficient to transact all
business at the meeting. If at any meeting of the
Shareholders there shall be less than a quorum present, the
Shareholders or the Trustees present at such meeting may,
without further notice, adjourn the same from time to time
until a quorum shall attend, but no business shall be
transacted at any such adjourned meeting except such as
might have been lawfully transacted had the meeting not
been adjourned.
4. Each Shareholder, upon request to the Trust in proper form
determined by the Trust, shall be entitled to require the
Trust to redeem from the net assets of that Series all or
part of the Shares of such Series and Class standing in the
name of such Shareholder. The method of computing such net
asset value, the time at which such net asset value shall
be computed and the time within which the Trust shall make
payment therefor, shall be determined as hereinafter
provided in Article SEVENTH of this Declaration of Trust.
Notwithstanding the foregoing, the Trustees, when permitted
or required to do so by the 1940 Act, may suspend the right
of the Shareholders to require the Trust to redeem Shares.
5. No Shareholder shall, as such holder, have any right to
purchase or subscribe for any security of the Trust which
it may issue or sell, other than such right, if any, as the
Trustees, in their discretion, may determine.
6. All persons who shall acquire Shares shall acquire the same
subject to the provisions of the Declaration of Trust.
7. Cumulative voting for the election of Trustees shall not be
allowed.
SIXTH: (1) The persons who shall act as initial Trustees until
the first meeting or until their successors are duly chosen and qualify
are the initial trustees executing this Declaration of Trust or any
counterpart thereof. However, the By-Laws of the Trust may fix the number
of Trustees at a number greater or lesser than the number of initial
Trustees and may authorize the Trustees to increase or decrease the number
of Trustees, to fill any vacancies on the Board which may occur for any
reason including any vacancies created by any such increase in the number
of Trustees, to set and alter the terms of office of the Trustees and to
lengthen or lessen their own terms of office or make their terms of office
of indefinite duration, all subject to the 1940 Act. Unless otherwise
provided by the By-Laws of the Trust, the Trustees need not be
Shareholders.
(2) A Trustee at any time may be removed either with or without
cause by resolution duly adopted by the affirmative vote of the holders
of two-thirds of the outstanding Shares, present in person or by proxy at
any meeting of Shareholders called for such purpose; such a meeting shall
be called by the Trustees when requested in writing to do so by the record
holders of not less than ten per centum of the outstanding Shares. A
Trustee may also be removed by the Board of Trustees as provided in the
By-Laws of the Trust.
(3) The Trustees shall make available a list of names and
addresses of all Shareholders as recorded on the books of the Trust, upon
receipt of the request in writing signed by not less than ten Shareholders
(who have been shareholders for at least six months) holding in the
aggregate shares of the Trust valued at not less than $25,000 at current
offering price (as defined in the Trust's Prospectus and/or Statement of
Additional Information) or holding not less than 1% in amount of the
entire amount of Shares issued and outstanding; such request must state
that such Shareholders wish to communicate with other shareholders with
a view to obtaining signatures to a request for a meeting to take action
pursuant to part (2) of this Article SIXTH and accompanied by a form of
communication to the Shareholders. The Trustees may, in their discretion,
satisfy their obligation under this part (3) by either making available
the Shareholder list to such Shareholders at the principal offices of the
Trust, or at the offices of the Trust's transfer agent, during regular
business hours, or by mailing a copy of such communication and form of
request, at the expense of such requesting Shareholders, to all other
Shareholders, and the Trustees may also take such other action as may be
permitted under Section 16(c) of the 1940 Act.
(4) The Trust may at any time or from time to time apply to the
Commission for one or more exemptions from all or part of said Section
16(c) and, if an exemptive order or orders are issued by the Commission,
such order or orders shall be deemed part of Section 16(c) for the
purposes of parts (2) and (3) of this Article SIXTH.
SEVENTH: The following provisions are hereby adopted for the
purpose of defining, limiting and regulating the powers of the Trust, the
Trustees and the Shareholders:
1. As soon as any Trustee is duly elected by the Shareholders
or the Trustees and shall have accepted this trust, the
Trust estate shall vest in the new Trustee or Trustees,
together with the continuing Trustees, without any further
act or conveyance, and he shall be deemed a Trustee
hereunder.
2. The death, declination, resignation, retirement, removal,
or incapacity of the Trustees, or any one of them shall not
operate to annul or terminate the Trust but the Trust shall
continue in full force and effect pursuant to the terms of
this Declaration of Trust.
3. The assets of the Trust shall be held separate and apart
from any assets now or hereafter held in any capacity other
than as Trustee hereunder by the Trustees or any successor
Trustees. All of the assets of the Trust shall at all
times be considered as vested in the Trustees. No
Shareholder shall have, as such holder of beneficial
interest in the Trust, any authority, power or right
whatsoever to transact business for or on behalf of the
Trust, or on behalf of the Trustees, in connection with the
property or assets of the Trust, or in any part thereof.
4. The Trustees in all instances shall act as principals, and
are and shall be free from the control of the Shareholders.
The Trustees shall have full power and authority to do any
and all acts and to make and execute, and to authorize the
officers and agents of the Trust to make and execute, any
and all contracts and instruments that they may consider
necessary or appropriate in connection with the management
of the Trust. The Trustees shall not in any way be bound
or limited by present or future laws or customs in regard
to Trust investments, but shall have full authority and
power to make any and all investments which they, in their
uncontrolled discretion, shall deem proper to accomplish
the purpose of this Trust. Subject to any applicable
limitation in this Declaration of Trust or by the By-Laws
of the Trust, the Trustees shall have power and authority:
(a) to adopt By-Laws not inconsistent with this
Declaration of Trust providing for the conduct of the
business of the Trust and to amend and repeal them to
the extent that they do not reserve that right to the
Shareholders;
(b) to elect and remove such officers and appoint and
terminate such officers as they consider appropriate
with or without cause, and to appoint and designate
from among the Trustees such committees as the
Trustees may determine, and to terminate any such
committee and remove any member of such committee;
(c) to employ a bank or trust company as custodian of any
assets of the Trust subject to any conditions set
forth in this Declaration of Trust or in the By-Laws;
(d) To retain a transfer agent and shareholder servicing
agent, or both;
(e) To provide for the distribution of Shares either
through a principal underwriter or the Trust itself or
both;
(f) To set record dates in the manner provided for in the
By-Laws of the Trust;
(g) to delegate such authority as they consider desirable
to any officers of the Trust and to any agent,
custodian or underwriter;
(h) to vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities
or property held in Trust hereunder; and to execute
and deliver powers of attorney to such person or
persons as the Trustees shall deem proper, granting to
such person or persons such power and discretion with
relation to securities or property as the Trustees
shall deem proper;
(i) to exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership
of securities held in trust hereunder;
(j) to hold any security or property in a form not
indicating any trust, whether in bearer, unregistered
or other negotiable form, or either in its own name or
in the name of a custodian or a nominee or nominees,
subject in either case to proper safeguards according
to the usual practice of Massachusetts business trusts
or investment companies;
(k) to consent to or participate in any plan for the
reorganization, consolidation or merger of any
corporation or concern, any security of which is held
in the Trust; to consent to any contract, lease,
mortgage, purchase, or sale of property by such
corporation or concern, and to pay calls or
subscriptions with respect to any security held in the
Trust;
(l) to compromise, arbitrate, or otherwise adjust claims
in favor of or against the Trust or any matter in
controversy including, but not limited to, claims for
taxes;
(m) to make, in the manner provided in the By-Laws,
distributions of income and of capital gains to
Shareholders;
(n) to borrow money to the extent and in the manner
permitted by the 1940 Act and the Trust's fundamental
policy thereunder as to borrowing;
(o) to enter into investment advisory or management
contracts, subject to the 1940 Act, with any one or
more corporations, partnerships, trusts, associations
or other persons;
(p) to change the name of the Trust or any Class or series
of the Trust as they consider appropriate without
prior shareholder approval;
(q) to establish officers' and Trustees' fees or
compensation and fees or compensation for committees
of the Trustees to be paid by the Trust or each Series
thereof in such manner and amount as the Trustees may
determine.
5. No one dealing with the Trustees shall be under any
obligation to make any inquiry concerning the authority of
the Trustees, or to see to the application of any payments
made or property transferred to the Trustees or upon their
order.
6. (a) The Trustees shall have no power to bind any
Shareholder personally or to call upon any Shareholder
for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at
any time personally agree to pay by way of
subscription to any Shares or otherwise. This
paragraph shall not limit the right of the Trustees to
assert claims against any shareholder based upon the
acts or omissions of such shareholder or for any other
reason. There is hereby expressly disclaimed
shareholder and Trustee liability for the acts and
obligations of the Trust. Every note, bond, contract
or other undertaking issued by or on behalf of the
Trust or the Trustees relating to the Trust shall
include a notice and provision limiting the obligation
represented thereby to the Trust and its assets (but
the omission of such notice and provision shall not
operate to impose any liability or obligation on any
Shareholder or Trustee).
(b) Whenever this Declaration of Trust calls for or
permits any action to be taken by the Trustees
hereunder, such action shall mean that taken by the
Board of Trustees by vote of the majority of a quorum
of Trustees as set forth from time to time in the By-
Laws of the Trust or as required by the 1940 Act.
(c) The Trustees shall possess and exercise any and all
such additional powers as are reasonably implied from
the powers herein contained such as may be necessary
or convenient in the conduct of any business or
enterprise of the Trust, to do and perform anything
necessary, suitable, or proper for the accomplishment
of any of the purposes, or the attainment of any one
or more of the objects, herein enumerated, or which
shall at any time appear conducive to or expedient for
the protection or benefit of the Trust, and to do and
perform all other acts and things necessary or
incidental to the purposes herein before set forth, or
that may be deemed necessary by the Trustees.
(d) The Trustees shall have the power, to the extent not
inconsistent with the 1940 Act, to determine
conclusively whether any moneys, securities, or other
properties of the Trust are, for the purposes of this
Trust, to be considered as capital or income and in
what manner any expenses or disbursements are to be
borne as between capital and income whether or not in
the absence of this provision such moneys, securities,
or other properties would be regarded as capital or
income and whether or not in the absence of this
provision such expenses or disbursements ordinarily be
charged to capital or to income.
7. The By-Laws of the Trust may divide the Trustees into
classes and prescribe the tenure of office of the several
classes, but no class of Trustee shall be elected for a
period shorter than that from the time of the election
following the division into classes until the next meeting
and thereafter for a period shorter than the interval
between meetings or for a period longer than five years,
and the term of office of at least one class shall expire
each year.
8. The Shareholders shall have the right to inspect the
records, documents, accounts and books of the Trust,
subject to reasonable regulations of the Trustees, not
contrary to Massachusetts law, as to whether and to what
extent, and at what times and places, and under what
conditions and regulations, such right shall be exercised.
9. Any officer elected or appointed by the Trustees or by the
Shareholders or otherwise, may be removed at any time, with
or without cause, in such lawful manner as may be provided
in the By-Laws of the Trust.
10. The Trustees shall have power to hold their meetings, to
have an office or offices and, subject to the provisions of
the laws of Massachusetts, to keep the books of the Trust
outside of said Commonwealth at such places as may from
time to time be designated by them. Action may be taken by
the Trustees without a meeting by unanimous written consent
or by telephone or similar method of communication.
11. Securities held by the Trust shall be voted in person or by
proxy by the President or a Vice-President, or such officer
or officers of the Trust as the Trustees shall designate
for the purpose, or by a proxy or proxies thereunto duly
authorized by the Trustees, except as otherwise ordered by
vote of the holders of a majority of the Shares outstanding
and entitled to vote in respect thereto.
12. (a) Subject to the provisions of the 1940 Act, any
Trustee, officer or employee, individually, or any
partnership of which any Trustee, officer or employee
may be a member, or any corporation or association of
which any Trustee, officer or employee may be an
officer, partner, director, trustee, employee or
stockholder, or otherwise may have an interest, may be
a party to, or may be pecuniarily or otherwise
interested in, any contract or transaction of the
Trust, and in the absence of fraud no contract or
other transaction shall be thereby affected or
invalidated; provided that in such case a Trustee,
officer or employee or a partnership, corporation or
association of which a Trustee, officer or employee
is a member, officer, director, trustee, employee or
stockholder is so interested, such fact shall be
disclosed or shall have been known to the Trustees
including those Trustees who are not so interested and
who are neither "interested" nor "affiliated" persons
as those terms are defined in the 1940 Act, or a
majority thereof; and any Trustee who is so
interested, or who is also a director, officer,
partner, trustee, employee or stockholder of such
other corporation or a member of such partnership or
association which is so interested, may be counted in
determining the existence of a quorum at any meeting
of the Trustees which shall authorize any such
contract or transaction, and may vote thereat to
authorize any such contract or transaction, with like
force and effect as if he were not so interested.
(b) Specifically, but without limitation of the foregoing,
the Trust may enter into a management or investment
advisory contract or underwriting contract and other
contracts with, and may otherwise do business with any
manager or investment adviser for the Trust and/or
principal underwriter of the Shares of the Trust or
any subsidiary or affiliate of any such manager or
investment adviser and/or principal underwriter and
may permit any such firm or corporation to enter into
any contracts or other arrangements with any other
firm or corporation relating to the Trust
notwithstanding that the Trustees of the Trust may be
composed in part of partners, directors, officers or
employees of any such firm or corporation, and
officers of the Trust may have been or may be or
become partners, directors, officers or employees of
any such firm or corporation, and in the absence of
fraud the Trust and any such firm or corporation may
deal freely with each other, and no such contract or
transaction between the Trust and any such firm or
corporation shall be invalidated or in any way
affected thereby, nor shall any Trustee or officer of
the Trust be liable to the Trust or to any Shareholder
or creditor thereof or to any other person for any
loss incurred by it or him solely because of the
existence of any such contract or transaction;
provided that nothing herein shall protect any
director or officer of the Trust against any liability
to the trust or to its security holders to which he
would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his
office.
(c) (1) As used in this paragraph the following terms
shall have the meanings set forth below:
(i) the term "indemnitee" shall mean any
present or former Trustee, officer or
employee of the Trust, any present or
former Trustee, partner, Director or
officer of another trust, partnership,
corporation or association whose
securities are or were owned by the Trust
or of which the Trust is or was a creditor
and who served or serves in such capacity
at the request of the Trust, and the
heirs, executors, administrators,
successors and assigns of any of the
foregoing; however, whenever conduct by an
indemnitee is referred to, the conduct
shall be that of the original indemnitee
rather than that of the heir, executor,
administrator, successor or assignee;
(ii) the term "covered proceeding" shall mean
any threatened, pending or completed
action, suit or proceeding, whether civil,
criminal, administrative or investigative,
to which an indemnitee is or was a party
or is threatened to be made a party by
reason of the fact or facts under which he
or it is an indemnitee as defined above;
(iii) the term "disabling conduct" shall mean
willful misfeasance, bad faith, gross
negligence or reckless disregard of the
duties involved in the conduct of the
office in question;
(iv) the term "covered expenses" shall mean
expenses (including attorney's fees),
judgments, fines and amounts paid in
settlement actually and reasonably
incurred by an indemnitee in connection
with a covered proceeding; and
(v) the term "adjudication of liability" shall
mean, as to any covered proceeding and as
to any indemnitee, an adverse
determination as to the indemnitee whether
by judgment, order, settlement, conviction
or upon a plea of nolo contendere or its
equivalent.
(d) The Trust shall not indemnify any indemnitee for any
covered expenses in any covered proceeding if there
has been an adjudication of liability against such
indemnitee expressly based on a finding of disabling
conduct.
(e) Except as set forth in paragraph (d) above, the Trust
shall indemnify any indemnitee for covered expenses in
any covered proceeding, whether or not there is an
adjudiciation of liability as to such indemnitee, such
indemnification by the Trust to be to the fullest
extent now or hereafter permitted by any applicable
law unless the bylaws limit or restrict the
indemnification to which any indemnitee may be
entitled. The Board of Trustees may adopt bylaw
provisions to implement sub-paragraphs (c), (d) and
(e) hereof.
(f) Nothing herein shall be deemed to affect the right of
the Trust and/or any indemnitee to acquire and pay for
any insurance covering any or all indemnitees to the
extent permitted by applicable law or to affect any
other indemnification rights to which any indemnitee
may be entitled to the extent permitted by applicable
law. Such rights to indemnification shall not, except
as otherwise provided by law, be deemed exclusive of
any other rights to which such indemnitee may be
entitled under any statute, By-Law, contract or
otherwise.
13. The Trustees are empowered, in their absolute discretion,
to establish bases or times, or both, for determining the
net asset value per Share of any Class and Series in
accordance with the 1940 Act and to authorize the voluntary
purchase by any Class and Series, either directly or
through an agent, of Shares of any Class and Series upon
such terms and conditions and for such consideration as the
Trustees shall deem advisable in accordance with the 1940
Act.
14. Payment of the net asset value per Share of any Class and
Series properly surrendered to it for redemption shall be
made by the Trust within seven days, or as specified in any
applicable law or regulation, after tender of such stock or
request for redemption to the Trust for such purpose plus
any period of time during which the right of the holders of
the shares of such Class of that Series to require the
Trust to redeem such shares has been suspended. Any such
payment may be made in portfolio securities of such Class
of that Series and/or in cash, as the Trustees shall deem
advisable, and no Shareholder shall have a right, other
than as determined by the Trustees, to have his Shares
redeemed in kind.
15. The Trust shall have the right, at any time and without
prior notice to the Shareholder, to redeem Shares of the
Class and Series held by such Shareholder held in any
account registered in the name of such Shareholder for its
current net asset value, if and to the extent that such
redemption is necessary to reimburse either that Series or
Class of the Trust or the distributor (i.e., principal
underwriter) of the Shares for any loss either has
sustained by reason of the failure of such Shareholder to
make timely and good payment for Shares purchased or
subscribed for by such Shareholder, regardless of whether
such Shareholder was a Shareholder at the time of such
purchase or subscription; subject to and upon such terms
and conditions as the Trustees may from time to time
prescribe.
EIGHTH: The name "Oppenheimer" included in the name of the Trust
and of any Series shall be used pursuant to a royalty-free, non-exclusive
license from Oppenheimer Management Corporation, incidental to and as part
of an advisory, management or supervisory contract which may be entered
into by the Trust with Oppenheimer Management Corporation. To the extent
necessary to protect Oppenheimer Management Corporation's rights to the
name "Oppenheimer" under applicable law, such license shall allow
Oppenheimer Management Corporation to inspect and, subject to control by
the Trust's Board of Trustees, control the nature and quality of services
offered by the Trust under such name. The license may be terminated by
Oppenheimer Management Corporation upon termination of such advisory,
management or supervisory contract or without cause upon 60 days' written
notice, in which case neither the Trust nor any Series or Class shall have
any further right to use the name "Oppenheimer" in its name or otherwise
and the Trust, the Shareholders and its officers and Trustees shall
promptly take whatever action may be necessary to change its name and the
names of any Series or Classes accordingly.
NINTH:
1. In case any Shareholder or former Shareholder shall be held
to be personally liable solely by reason of his being or
having been a Shareholder and not because of his acts or
omissions or for some other reason, the Shareholder or
former Shareholder (or the Shareholders, heirs, executors,
administrators or other legal representatives or in the
case of a corporation or other entity, its corporate or
other general successor) shall be entitled out of the Trust
estate to be held harmless from and indemnified against all
loss and expense arising from such liability. The Trust
shall, upon request by the Shareholder, assume the defense
of any such claim made against any Shareholder for any act
or obligation of the Trust and satisfy any judgment
thereon.
2. It is hereby expressly declared that a trust and not a
partnership is created hereby. No individual Trustee
hereunder shall have any power to bind the Trust, the
Trust's officers or any Shareholder. All persons extending
credit to, doing business with, contracting with or having
or asserting any claim against the Trust or the Trustees
shall look only to the assets of the Trust for payment
under any such credit, transaction, contract or claim; and
neither the Shareholders nor the Trustees, nor any of their
agents, whether past, present or future, shall be
personally liable therefor; notice of such disclaimer
shall be given in each agreement, obligation or instrument
entered into or executed by the Trust or the Trustees.
Nothing in this Declaration of Trust shall protect a
Trustee against any liability to which such Trustee would
otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee hereunder.
3. The exercise by the Trustees of their powers and discretion
hereunder in good faith and with reasonable care under the
circumstances then prevailing, shall be binding upon
everyone interested. Subject to the provisions of
paragraph 2 of this Article NINTH, the Trustees shall not
be liable for errors of judgment or mistakes of fact or
law. The Trustees may take advice of counsel or other
experts with respect to the meaning and operations of this
Declaration of Trust, applicable laws, contracts,
obligations, transactions or any other business the Trust
may enter into, and subject to the provisions of paragraph
2 of this Article NINTH, shall be under no liability for
any act or omission in accordance with such advice or for
failing to follow such advice. The Trustees shall not be
required to give any bond as such, nor any surety if a bond
is required.
4. This Trust shall continue without limitation of time but
subject to the provisions of sub-sections (a), (b), (c) and
(d) of this paragraph 4.
(a) The Trustees, with the favorable vote of the holders
of a majority of the outstanding voting securities, as
defined in the 1940 Act, of any one or more Series
entitled to vote, may sell and convey the assets of
that Series (which sale may be subject to the
retention of assets for the payment of liabilities and
expenses) to another issuer for a consideration which
may be or include securities of such issuer. Upon
making provision for the payment of liabilities, by
assumption by such issuer or otherwise, the Trustees
shall distribute the remaining proceeds ratably among
the holders of the outstanding Shares of the Series
the assets of which have been so transferred.
(b) The Trustees, with the favorable vote of the holders
of a majority of the outstanding voting securities, as
defined in the 1940 Act, of any one or more Series
entitled to vote, may at any time sell and convert
into money all the assets of that Series. Upon making
provisions for the payment of all outstanding
obligations, taxes and other liabilities, accrued or
contingent, of that Series, the Trustees shall
distribute the remaining assets of that Series ratably
among the holders of the outstanding Shares of that
Series.
(c) The Trustees, with the favorable vote of the holders
of a majority of the outstanding voting securities, as
defined in the 1940 Act, of any one or more Series
entitled to vote, may otherwise alter, convert or
transfer the assets of that Series or those Series.
(d) Upon completion of the distribution of the remaining
proceeds or the remaining assets as provided in sub-
sections (a) and (b), and in subsection (c) where
applicable, the Series the assets of which have been
so transferred shall terminate, and if all the assets
of the Trust have been so transferred, the Trust shall
terminate and the Trustees shall be discharged of any
and all further liabilities and duties hereunder and
the right, title and interest of all parties shall be
cancelled and discharged.
5. The original or a copy of this instrument and of each
restated declaration of trust or instrument supplemental
hereto shall be kept at the office of the Trust where it
may be inspected by any Shareholder. A copy of this
instrument and of each supplemental or restated declaration
of trust shall be filed with the Secretary of the
Commonwealth of Massachusetts, as well as any other
governmental office where such filing may from time to time
be required. Anyone dealing with the Trust may rely on a
certificate by an officer of the Trust as to whether or not
any such supplemental or restated declarations of trust
have been made and as to any matters in connection with the
Trust hereunder, and, with the same effect as if it were
the original, may rely on a copy certified by an officer of
the Trust to be a copy of this instrument or of any such
supplemental or restated declaration of trust. In this
instrument or in any such supplemental or restated
declaration of trust, references to this instrument, and
all expressions like "herein," "hereof" and "hereunder"
shall be deemed to refer to this instrument as amended or
affected by any such supplemental or restated declaration
of trust. This instrument may be executed in any number of
counterparts, each of which shall be deemed as original.
6. The Trust set forth in this instrument is created under and
is to be governed by and construed and administered
according to the laws of the Commonwealth of Massachusetts.
The Trust shall be of the type commonly called a
Massachusetts business trust, and without limiting the
provisions hereof, the Trust may exercise all powers which
are ordinarily exercised by such a trust.
7. The Board of Trustees is empowered to cause the redemption
of the Shares held in any account if the aggregate net
asset value of such Shares (taken at cost or value, as
determined by the Board) has been reduced to $200 or less
upon such notice to the shareholder in question, with such
permission to increase the investment in question and upon
such other terms and conditions as may be fixed by the
Board of Trustees in accordance with the 1940 Act.
8. In the event that any person advances the organizational
expenses of the Trust, such advances shall become an
obligation of the Trust subject to such terms and
conditions as may be fixed by, and on a date fixed by, or
determined with criteria fixed by the Board of Trustees, to
be amortized over a period or periods to be fixed by the
Board.
9. Whenever any action is taken under this Declaration of
Trust including action which is required or permitted by
the 1940 Act or any other applicable law, such action shall
be deemed to have been properly taken if such action is in
accordance with the construction of the 1940 Act or such
other applicable law then in effect as expressed in "no
action" letters of the staff of the Commission or any
release, rule, regulation or order under the 1940 Act or
any decision of a court of competent jurisdiction,
notwithstanding that any of the foregoing shall later be
found to be invalid or otherwise reversed or modified by
any of the foregoing.
10. Any action which may be taken by the Board of Trustees
under this Declaration of Trust or its By-Laws may be taken
by the description thereof in the then effective prospectus
and/or statement of additional information relating to the
Shares under the Securities Act of 1933 or in any proxy
statement of the Trust rather than by formal resolution of
the Board.
11. Whenever under this Declaration of Trust, the Board of
Trustees is permitted or required to place a value on
assets of the Trust, such action may be delegated by the
Board, and/or determined in accordance with a formula
determined by the Board, to the extent permitted by the
1940 Act.
12. If authorized by vote of the Trustees and the favorable
vote of the holders of a majority of the outstanding voting
securities, as defined in the 1940 Act, entitled to vote,
or by any larger vote which may be required by applicable
law in any particular case, the Trustees shall amend or
otherwise supplement this instrument, by making a Restated
Declaration of Trust or a Declaration of Trust
supplemental hereto, which thereafter shall form a part
hereof; any such Supplemental or Restated Declaration of
Trust may be executed by and on behalf of the Trust and the
Trustees by an officer or officers of the Trust.
IN WITNESS WHEREOF, the undersigned have executed this instrument
as of this 29th day of November, 1993.
/s/ Leo Cherne /s/ Benjamin Lipstein
Leo Cherne Benjamin Lipstein
50 East 79th Street 333 East 57th Street
New York, NY 10021 New York, NY 10022
/s/ Edmund T. Delaney /s/ Donald W. Spiro
Edmund T. Delaney Donald W. Spiro
5 Gorham Road 399 Ski Trail
Chester, CT Kinnelon, NJ 07405
-------------------- /s/ Pauline Trigere
Leon S. Levy Pauline Trigere
One Sutton Place South 525 Park Avenue
New York, NY 10022 New York, NY 10021
/s/ Sidney M. Robbins /s/ Kenneth A. Randall
Sidney M. Robbins Kenneth A. Randall
50 Overlook Road 6 Wittaker's Mill
Ossining, NY 10562 Williamsburg, VA 23185
/s/ Russell S. Reynolds /s/ Elizabeth B. Moynihan
Russell S. Reynolds Elizabeth B. Moynihan
39 Clapboard Ridge Road 801 Pennsylvania Avenue
Greenwich, CT 06830 Washington, DC 20004
/s/ Clayton K. Yeutter /s/ Edward V. Regan
Clayton K. Yeutter Edward V. Regan
1325 Merrie Ridge Road 40 Park Avenue
McLean, VA 22101 New York, NY 10016
/s/ Robert G. Galli
Robert G. Galli
11-54 Shearwater Court
Jersey City, NJ 07305
215.2
OPPENHEIMER GLOBAL GROWTH & INCOME FUND
(the "Fund")
BY-LAWS
(Adopted August 21, 1990)
ARTICLE I
SHAREHOLDERS
Section 1. Place of Meeting. All meetings of the Shareholders
(which terms as used herein shall, together with all other terms defined
in the Declaration of Trust, have the same meaning as in the Declaration
of Trust) shall be held at the principal office of the Fund or at such
other place as may from time to time be designated by the Board of
Trustees and stated in the notice of meeting.
Section 2. Shareholder Meetings. Meetings of the Shareholders
for any purpose or purposes may be called by the Chairman of the Board of
Trustees, if any, or by the President or by the Board of Trustees and
shall be called by the Secretary upon receipt of the request in writing
signed by Shareholders holding not less than one third of the entire
number of Shares issued and outstanding and entitled to vote thereat.
Such request shall state the purpose or purposes of the proposed meeting.
In addition, meetings of the Shareholders shall be called by the Board of
Trustees upon receipt of the request in writing signed by Shareholders
that hold not less than ten percent of the entire number of Shares issued
and outstanding and entitled to vote thereat, stating that the purpose of
the proposed meeting is the removal of a Trustee.
Section 3. Notice of Meetings of Shareholders. Not less than
ten days' and not more than 120 days' written notice of every meeting of
Shareholders, stating the time and place thereof (and the general nature
of the business proposed to be transacted at any special or extraordinary
meeting), shall be given to each Shareholder entitled to vote thereat by
leaving the same with him or at his residence or usual place of business
or by mailing it, postage prepaid and addressed to him at his address as
it appears upon the books of the Fund.
No notice of the time, place or purpose of any meeting of
Shareholders need be given to any Shareholder who attends in person or by
proxy or to any Shareholder who, in writing executed and filed with the
records of the meeting, either before or after the holding thereof, waives
such notice.
Section 4. Record Dates. The Board of Trustees may fix, in
advance, a record date not exceeding 120 days and not less than 10 days
preceding the date of any meeting of Shareholders, any dividend payment
date or any date for the allotment of rights, as a record date for the
determination of shareholders entitled to vote or receive such dividends
or rights as the case may be; and only Shareholders of record on such date
and entitled to receive such dividends or rights shall be entitled to
notice of and to vote at such meeting or to receive such dividends or
rights, as the case may be.
Section 5. Access to Shareholder List. The Board of Trustees
shall make available a list of the names and addresses of all shareholders
as recorded on the books of the Fund, upon receipt of the request in
writing signed by not less than ten Shareholders (who have been
Shareholders for at least 6 months prior to submitting such request)
holding Shares of the Fund valued at $25,000 or more at current net asset
value (as defined in the Fund's Prospectus) or holding not less than one
percent in amount of the entire number of shares of the Fund issued and
outstanding; such request must state that such Shareholders wish to
communicate with other Shareholders with a view to obtaining signatures
to a request for a meeting to remove one or more trustees pursuant to
Section 2 of Article II of these By-Laws and must be accompanied by the
form of communication requested to be sent to the Shareholders. The Board
of Trustees may, in its discretion, satisfy its obligation under this
Section 5 by either making available the Shareholder List to such
Shareholders at the principal offices of the Fund, or at the offices of
the Fund's transfer agent, during regular business hours, or by mailing
a copy of such Shareholders' proposed communication and form of request,
at such Shareholders' expense, to all other Shareholders.
Section 6. Quorum, Adjournment of Meetings. The presence in
person or by proxy of the holders of record of more than 50% of the Shares
of the Fund issued and outstanding and entitled to vote thereat shall
constitute a quorum at all meetings of the Shareholders. If at any
meeting of the Shareholders there shall be less than a quorum present, the
Shareholders or Trustees present at such meeting may, without further
notice, adjourn the same from time to time until a quorum shall attend,
but no business shall be transacted at any such adjourned meeting except
as might have been lawfully transacted had the meeting not been adjourned.
Section 7. Voting and Inspectors. At all meetings of
Shareholders, every Shareholder of record entitled to vote thereat shall
be entitled to vote at such meeting either in person or by proxy appointed
by instrument in writing subscribed by such Shareholder or his duly
authorized attorney-in-fact.
All elections of Trustees shall be had by a plurality of the
votes cast and all questions shall be decided by a majority of the votes
cast, in each case at a duly constituted meeting, except as otherwise
provided in the Declaration of Trust or in these By-Laws or by specific
statutory provision superseding the restrictions and limitations contained
in the Declaration of Trust or in these By-Laws.
At any election of Trustees, the Board of Trustees prior thereto
may, or, if they have not so acted, the Chairman of the meeting may, and
upon the request of the holders of ten percent (10%) of the Shares
entitled to vote at such election shall, appoint two inspectors of
election who shall first subscribe an oath or affirmation to execute
faithfully the duties of inspectors at such election with strict
impartiality and according to the best of their ability, and shall after
the election make a certificate of the result of the vote taken. No
candidate for the office of Trustee shall be appointed such Inspector.
The Chairman of the meeting may cause a vote by ballot to be
taken upon any election or matter, and such vote shall be taken upon the
request of the holders of ten percent (10%) of the Shares entitled to vote
on such election or matter.
Section 8. Conduct of Shareholders' Meetings. The meetings of
the Shareholders shall be presided over by the Chairman of the Board of
Trustees, if any, or if he shall not be present, by the President, or if
he shall not be present, by a Vice-President, or if none of the Chairman
of the Board of Trustees, the President or any Vice-President is present,
by a chairman to be elected at the meeting. The Secretary of the Fund,
if present, shall act as Secretary of such meetings, or if the Secretary
is not present, an Assistant Secretary shall so act; if neither the
Secretary nor an Assistant Secretary is present, than the meeting shall
elect its secretary.
Section 9. Concerning Validity of Proxies, Ballots, Etc. At
every meeting of the Shareholders, all proxies shall be received and taken
in charge of and all ballots shall be received and canvassed by the
secretary of the meeting, who shall decide all questions touching the
qualification of voters, the validity of the proxies, and the acceptance
or rejection of votes, unless inspectors of election shall have been
appointed as provided in Section 7, in which event such inspectors of
election shall decide all such questions.
ARTICLE II
BOARD OF TRUSTEES
Section 1. Number and Tenure of Office. The business and
affairs of the Fund shall be conducted and managed by a Board of Trustees
consisting of the number of initial Trustees, which number may be
increased or decreased as provided in Section 2 of this Article. Each
Trustee shall, except as otherwise provided herein, hold office until the
next meeting of Shareholders of the Fund following his election called for
the purpose of electing Trustees or until his successor is duly elected
and qualifies. Trustees need not be Shareholders.
Section 2. Increase or Decrease in Number of Trustees; Removal.
The Board of Trustees, by the vote of a majority of the entire Board, may
increase the number of Trustees to a number not exceeding fifteen, and may
elect Trustees to fill the vacancies created by any such increase in the
number of Trustees until the next meeting called for the purpose of
electing Trustees or until their successors are duly elected and qualify;
the Board of Trustees, by the vote of a majority of the entire Board, may
likewise decrease the number of Trustees to a number not less than three
but the tenure of office of any Trustee shall not be affected by any such
decrease. Vacancies occurring other than by reason of any such increase
shall be filled as provided for a Massachusetts business trust. In the
event that after the proxy material has been printed for a meeting of
Shareholders at which Trustees are to be elected and any one or more
nominees named in such proxy material dies or becomes incapacitated, the
authorized number of Trustees shall be automatically reduced by the number
of such nominees, unless the Board of Trustees prior to the meeting shall
otherwise determine.
A Trustee at any time may be removed either with or without cause
by resolution duly adopted by the affirmative votes of the holders of not
less than two-thirds of the outstanding Shares of the Fund, present in
person or by proxy at any meeting of Shareholders at which such vote may
be taken, provided that a quorum is present. Any Trustee at any time may
be removed for cause by resolution duly adopted at any meeting of the
Board of Trustees provided that notice thereof is contained in the notice
of such meeting and that such resolution is adopted by the vote of at
least two thirds of the Trustees whose removal is not proposed. As used
herein, "for cause" shall mean any cause which under Massachusetts law
would permit the removal of a Trustee of a business trust.
Section 3. Place of Meeting. The Trustees may hold their
meetings, have one or more offices, and keep the books of the Fund outside
Massachusetts, at any office or offices of the Fund or at any other place
as they may from time to time by resolution determine, or, in the case of
meetings, as they may from time to time by resolution determine or as
shall be specified or fixed in the respective notices or waivers of notice
thereof.
Section 4. Regular Meetings. Regular meetings of the Board of
Trustees shall be held at such time and on such notice, if any, as the
Trustees may from time to time determine.
Section 5. Special Meetings. Special meetings of the Board of
Trustees may be held from time to time upon call of the Chairman of the
Board of Trustees, if any, the President or two or more of the Trustees,
by oral, telegraphic or written notice duly served on or sent or mailed
to each Trustee not less than one day before such meeting. No notice need
be given to any Trustee who attends in person or to any Trustee who in
writing executed and filed with the records of the meeting either before
or after the holding thereof, waives such notice. Such notice or waiver
of notice need not state the purpose or purposes of such meeting.
Section 6. Quorum. One-third of the Trustees then in office
shall constitute a quorum for the transaction of business, provided that
a quorum shall in no case be less than two Trustees. If at any meeting
of the Board there shall be less than a quorum present (in person or by
open telephone line, to the extent permitted by the Investment Company Act
of 1940 (the "1940 Act")), a majority of those present may adjourn the
meeting from time to time until a quorum shall have been obtained. The
act of the majority of the Trustees present at any meeting at which there
is a quorum shall be the act of the Board, except as may be otherwise
specifically provided by statute, by the Declaration of Trust or by these
By-Laws.
Section 7. Executive Committee. The Board of Trustees may, by
the affirmative vote of a majority of the entire Board, elect from the
Trustees an Executive Committee to consist of such number of Trustees (but
not less than two) as the Board may from time to time determine. The Board
of Trustees by such affirmative vote shall have power at any time to
change the members of such Committee and may fill vacancies in the
Committee by election from the Trustees. When the Board of Trustees is
not in session, the Executive Committee shall have and may exercise any
or all of the powers of the Board of Trustees in the management of the
business and affairs of the Fund (including the power to authorize the
seal of the Fund to be affixed to all papers which may require it) except
as provided by law and except the power to increase or decrease the size
of, or fill vacancies on, the Board. The Executive Committee may fix its
own rules of procedure, and may meet, when and as provided by such rules
or by resolution of the Board of Trustees, but in every case the presence
of a majority shall be necessary to constitute a quorum. In the absence
of any member of the Executive Committee, the members thereof present at
any meeting, whether or not they constitute a quorum, may appoint a member
of the Board of Trustees to act in the place of such absent member.
Section 8. Other Committees. The Board of Trustees, by the
affirmative vote of a majority of the entire Board, may appoint other
committees which shall in each case consist of such number of members of
the Board (not less than two) and shall have and may exercise such powers
as the Board may determine in the resolution appointing them. A majority
of all members of any such committee may determine its action, and fix the
time and place of its meetings, unless the Board of Trustees shall
otherwise provide. The Board of Trustees shall have power at any time to
change the members and powers of any such committee, to fill vacancies,
and to discharge any such committee.
Section 9. Informal Action by and Telephone Meetings of,
Trustees and Committees. Any action required or permitted to be taken
at any meeting of the Board of Trustees or 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.
Trustees or members of a committee of the Board of Trustees may
participate in a meeting by means of a conference telephone or similar
communications equipment; such participation shall, except as otherwise
required by the 1940 Act, have the same effect as presence in person.
Section 10. Compensation of Trustees. Trustees shall be
entitled to receive such compensation from the Fund for their services as
may from time to time be voted by the Board of Trustees.
Section 11. Dividends. Dividends or distributions payable on
the Shares of any Series of the Fund may, but need not be, declared by
specific resolution of the Board as to each dividend or distribution; in
lieu of such specific resolutions, the Board may, by general resolution,
determine the method of computation thereof, the method of determining the
Shareholders of the Series to which they are payable and the methods of
determining whether and to which Shareholders they are to be paid in cash
or in additional Shares.
ARTICLE III
OFFICERS
Section 1. Executive Officers. The executive officers of the
Fund may include a Chairman of the Board of Trustees, and shall include
a President, one or more Vice-Presidents (the number thereof to be
determined by the Board of Trustees), a Secretary and a Treasurer. The
Chairman of the Board of Trustees, if any, and the President shall be
selected from among the Trustees. The Board of Trustees may also in its
discretion appoint Assistant Secretaries, Assistant Treasurers, and other
officers, agents and employees, who shall have such authority and perform
such duties as the Board or the Executive Committee may determine. The
Board of Trustees may fill any vacancy which may occur in any office. Any
two offices, except those of President and Secretary, may be held by the
same person, but no officer shall execute, acknowledge or verify any
instrument in more than one capacity, if such instrument is required by
law or these By-Laws to be executed, acknowledged or verified by two or
more officers.
Section 2. Term of Office. The term of office of all officers
shall be until their respective successors are chosen and qualify;
however, any officer may be removed from office at any time with or
without cause by the vote of a majority of the entire Board of Trustees.
Section 3. Powers and Duties. The officers of the Fund shall
have such powers and duties as generally pertain to their respective
offices, as well as such powers and duties as may from time to time be
conferred by the Board of Trustees or the Executive Committee.
ARTICLE IV
SHARES
Section 1. Share Certificates. Each Shareholder of any Series
of the Fund may be issued a certificate or certificates for his Shares of
that Series, in such form as the Board of Trustees may from time to time
prescribe, but only if and to the extent and on the conditions described
by the Board.
Section 2. Transfer of Shares. Shares of any Series shall be
transferable on the books of the Fund by the holder thereof in person or
by his duly authorized attorney or legal representative, upon surrender
and cancellation of certificates, if any, for the same number of Shares
of that Series, duly endorsed or accompanied by proper instruments of
assignment and transfer, with such proof of the authenticity of the
signature as the Fund or its agent may reasonably require; in the case of
shares not represented by certificates, the same or similar requirements
may be imposed by the Board of Trustees.
Section 3. Share Ledgers. The share ledgers of the Fund,
containing the name and address of the Shareholders of each Series of the
Fund and the number of shares of that Series, held by them respectively,
shall be kept at the principal offices of the Fund or, if the Fund employs
a transfer agent, at the offices of the transfer agent of the Fund.
Section 4. Lost, Stolen or Destroyed Certificates. The Board of
Trustees may determine the conditions upon which a new certificate may be
issued in place of a certificate which is alleged to have been lost,
stolen or destroyed; and may, in their discretion, require the owner of
such certificate or his legal representative to give bond, with sufficient
surety to the Fund and the transfer agent, if any, to indemnify it and
such transfer agent against any and all loss or claims which may arise by
reason of the issue of a new certificate in the place of the one so lost,
stolen or destroyed.
ARTICLE V
SEAL
The Board of Trustees shall provide a suitable seal of the Fund,
in such form and bearing such inscriptions as it may determine.
ARTICLE VI
FISCAL YEAR
The fiscal year of the Fund shall be fixed by the Board of
Trustees.
ARTICLE VII
INDEMNIFICATION
Pursuant to the provisions of subparagraph (e) of paragraph 12
of Article SEVENTH of the Declaration of Trust, the Trustees are
authorized to adopt bylaws to implement the provisions with respect to
indemnification of persons described in the Declaration of Trust. The
following bylaw is adopted to implement an indemnitee's right of
indemnification as follows:
Before an indemnitee shall be indemnified by the Fund, there
shall be a reasonable determination upon review of the facts that the
person to be indemnified was not liable by reason of disabling conduct as
defined in the Declaration of Trust. Such determination may be made
either by vote of a majority of a quorum of the Board who are neither
"interested persons" of the Fund or the investment adviser nor parties to
the proceeding or by independent legal counsel in a written opinion.
The Fund may advance attorneys' fees and expenses of litigation
to an indemnitee if the indemnitee undertakes to repay the advance unless
it is determined that he is entitled to indemnification under the
Declaration of Trust, and at least one of the following is satisfied: (1)
the indemnitee provides security for his undertaking, or (2) the Fund is
insured against losses arising by reason of lawful advances, or (3) a
majority of the disinterested non-party Trustees or independent legal
counsel in a written opinion shall determine, based upon review of all of
the facts, that there is reason to believe that the indemnitee will
ultimately be found entitled to indemnification.
ARTICLE VIII
AMENDMENT OF BY-LAWS
The By-Laws of the Fund may be altered, amended, added to or
repealed by the Shareholders or by majority vote of the entire Board of
Trustees, but any such alteration, amendment, addition or repeal of the
By-Laws by action of the Board of Trustees may be altered or repealed by
the Shareholders.
215.1
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 27th day of June, 1994, by and between
OPPENHEIMER GLOBAL GROWTH & INCOME FUND (the "Fund"), and OPPENHEIMER
MANAGEMENT CORPORATION ("OMC").
WHEREAS, the Fund is an open-end, diversified management investment
company registered as such with the Securities and Exchange Commission
(the "Commission") pursuant to the Investment Company Act of 1940 (the
"Investment Company Act"), and OMC is an investment adviser registered as
such with the Commission under the Investment Advisors Act of 1940;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, it is agreed by and between the parties, as
follows:
1. General Provision.
The Fund hereby employs OMC and OMC hereby undertakes to act as the
investment adviser of the Fund and to perform for the Fund such other
duties and functions as are hereinafter set forth. OMC shall, in all
matters, give to the Fund and its Board of Trustees the benefit of its
best judgment, effort, advice and recommendations and shall, at all times
conform to, and use its best efforts to enable the Fund to conform to (i)
the provisions of the Investment Company Act and any rules or regulations
thereunder; (ii) any other applicable provisions of state or Federal law;
(iii) the provisions of the Declaration of Trust and By-Laws of the Fund
as amended from time to time; (iv) policies and determinations of the
Board of Trustees of the Fund; (v) the fundamental policies and investment
restrictions of the Fund as reflected in its registration statement under
the Investment Company Act or as such policies may, from time to time, be
amended by the Fund's shareholders; and (vi) the Prospectus and Statement
of Additional Information of the Fund in effect from time to time. The
appropriate officers and employees of OMC shall be available upon
reasonable notice for consultation with any of the Trustees and officers
of the Fund with respect to any matters dealing with the business and
affairs of the Fund including the valuation of portfolio securities of the
Fund which are either not registered for public sale or not traded on any
securities market.
2. Investment Management.
(a) OMC shall, subject to the direction and control by the Fund's
Board of Trustees, (i) regularly provide investment advice and
recommendations to the Fund with respect to its investments, investment
policies and the purchase and sale of securities; (ii) supervise
continuously the investment program of the Fund and the composition of its
portfolio and determine what securities shall be purchased or sold by the
Fund; and (iii) arrange, subject to the provisions of paragraph 7 hereof,
for the purchase of securities and other investments for the Fund and the
sale of securities and other investments held in the Fund's portfolio.
(b) Provided that the Fund shall not be required to pay any
compensation other than as provided by the terms of this Agreement and
subject to the provisions of paragraph 7 hereof, OMC may obtain investment
information, research or assistance from any other person, firm or
corporation to supplement, update or otherwise improve its investment
management services.
(c) Provided that nothing herein shall be deemed to protect OMC from
willful misfeasance, bad faith or gross negligence in the performance of
its duties, or reckless disregard of its obligations and duties under this
Agreement, OMC shall not be liable for any loss sustained by reason of
good faith errors or omissions in connection with any matters to which
this Agreement relates.
(d) Nothing in this Agreement shall prevent OMC or any officer
thereof from acting as investment adviser for any other person, firm or
corporation or in any way limit or restrict OMC or any of its directors,
officers, stockholders or employees from buying, selling or trading any
securities for its or their own account or for the account of others for
whom it or they may be acting, provided that such activities will not
adversely affect or otherwise impair the performance by OMC of its duties
and obligations under this Agreement.
3. Other Duties of OMC.
OMC shall, at its own expense, provide and supervise the activities
of all administrative and clerical personnel as shall be required to
provide effective corporate administration for the Fund, including the
compilation and maintenance of such records with respect to its operations
as may reasonably be required; the preparation and filing of such reports
with respect thereto as shall be required by the Commission; composition
of periodic reports with respect to operations of the Fund for its
shareholders; composition of proxy materials for meetings of the Fund's
shareholders; and the composition of such registration statements as may
be required by Federal and state securities laws for continuous public
sale of shares of the Fund. OMC shall, at its own cost and expense, also
provide the Fund with adequate office space, facilities and equipment.
OMC shall, at its own expense, provide officers for the Fund.
4. Allocation of Expenses.
All other costs and expenses of the Fund not expressly assumed by OMC
under this Agreement, or to be paid by the Distributor of the shares of
the Fund, shall be paid by the Fund, including, but not limited to: (i)
interest and taxes; (ii) brokerage commissions; (iii) insurance premiums
for fidelity and other coverage requisite to its operations; (iv)
compensation and expenses of its trustees other than those associated or
affiliated with OMC; (v) legal and audit expenses; (vi) custodian and
transfer agent fees and expenses; (vii) expenses incident to the
redemption of its shares; (viii) expenses incident to the issuance of its
shares against payment therefor by or on behalf of the subscribers
thereto; (ix) fees and expenses, other than as hereinabove provided,
incident to the registration under Federal and state securities laws of
shares of the Fund for public sale; (x) expenses of printing and mailing
reports, notices and proxy materials to shareholders of the Fund; (xi)
except as noted above, all other expenses incidental to holding meetings
of the Fund's shareholders; and (xii) such extraordinary non-recurring
expenses as may arise, including litigation, affecting the Fund and any
legal obligation which the Fund may have (on behalf of the Fund) to
indemnify its officers and trustees with respect thereto. Any officers
or employees of OMC or any entity controlling, controlled by or under
common control with OMC who also serve as officers, trustees or employees
of the Fund shall not receive any compensation from the Fund for their
services.
5. Compensation of OMC.
The Fund agrees to pay OMC and OMC agrees to accept as full
compensation for the performance of all functions and duties on its part
to be performed pursuant to the provisions hereof, a fee computed on the
aggregate net asset value of the Fund as of the close of each business day
and payable monthly at the following annual rate:
0.80% of the first $250 million of net assets;
0.77% of the next $250 million;
0.75% of the next $500 million;
0.69% of the next $1 billion; and
0.67% of net assets in excess of $2 billion.
6. Use of Name "Oppenheimer."
OMC hereby grants to the Fund a royalty-free, non-exclusive license
to use the name "Oppenheimer" in the name of the Fund for the duration of
this Agreement and any extensions or renewals thereof. To the extent
necessary to protect OMC's rights to the name "Oppenheimer" under
applicable law, such license shall allow OMC to inspect and, subject to
control by the Fund's Board, control the nature and quality of services
offered by the Fund under such name and may, upon termination of this
Agreement, be terminated by OMC, in which event the Fund shall promptly
take whatever action may be necessary to change its name and discontinue
any further use of the name "Oppenheimer" in the name of the Fund or
otherwise. The name "Oppenheimer" may be used or licensed by OMC in
connection with any of its activities, or licensed by OMC to any other
party.
7. Portfolio Transactions and Brokerage.
(a) OMC is authorized, in arranging the purchase and sale of the
Fund's portfolio securities, to employ or deal with such members of
securities or commodities exchanges, brokers or dealers (hereinafter
"broker-dealers"), including "affiliated" broker-dealers (as that term is
defined in the Investment Company Act), as may, in its best judgment,
implement the policy of the Fund to obtain, at reasonable expense, the
"best execution" (prompt and reliable execution at the most favorable
security price obtainable) of the Fund's portfolio transactions as well
as to obtain, consistent with the provisions of subparagraph (c) of this
paragraph 7, the benefit of such investment information or research as
will be of significant assistance to the performance by OMC of its
investment management functions.
(b) OMC shall select broker-dealers to effect the Fund's portfolio
transactions on the basis of its estimate of their ability to obtain best
execution of particular and related portfolio transactions. The abilities
of a broker-dealer to obtain best execution of particular portfolio
transaction(s) will be judged by OMC on the basis of all relevant factors
and considerations including, insofar as feasible, the execution
capabilities required by the transaction or transactions; the ability and
willingness of the broker-dealer to facilitate the Fund's portfolio
transactions by participating therein for its own account; the importance
to the Fund of speed, efficiency or confidentiality; the broker-dealer's
apparent familiarity with sources from or to whom particular securities
might be purchased or sold; as well as any other matters relevant to the
selection of a broker-dealer for particular and related transactions of
the Fund.
(c) OMC shall have discretion, in the interests of the Fund, to
allocate brokerage on the Fund's portfolio transactions to broker-dealers,
other than an affiliated broker-dealer, qualified to obtain best execution
of such transactions who provide brokerage and/or research services (as
such services are defined in Section 28(e)(3) of the Securities Exchange
Act of 1934) for the Fund and/or other accounts for which OMC or its
affiliates exercise "investment discretion" (as that term is defined in
Section 3(a)(35) of the Securities Exchange Act of 1934) and to cause the
Fund to pay such broker-dealers a commission for effecting a portfolio
transaction for the Fund that is in excess of the amount of commission
another broker-dealer adequately qualified to effect such transaction
would have charged for effecting that transaction, if OMC determines, in
good faith, that such commission is reasonable in relation to the value
of the brokerage and/or research services provided by such broker-dealer,
viewed in terms of either that particular transaction or the overall
responsibilities of OMC or its affiliates with respect to the accounts as
to which they exercise investment discretion. In reaching such
determination, OMC will not be required to place or attempt to place a
specific dollar value on the brokerage and/or research services provided
or being provided by such broker-dealer. In demonstrating that such
determinations were made in good faith, OMC shall be prepared to show that
all commissions were allocated for purposes contemplated by this Agreement
and that the total commissions paid by the Fund over a representative
period selected by the Fund's trustees were reasonable in relation to the
benefits to the Fund.
(d) OMC shall have no duty or obligation to seek advance competitive
bidding for the most favorable commission rate applicable to any
particular portfolio transactions or to select any broker-dealer on the
basis of its purported or "posted" commission rate but will, to the best
of its ability, endeavor to be aware of the current level of the charges
of eligible broker-dealers and to minimize the expense incurred by the
Fund for effecting its portfolio transactions to the extent consistent
with the interests and policies of the Fund as established by the
determinations of the Board of Trustees of the Fund and the provisions of
this paragraph 7.
(e) The Fund recognizes that an affiliated broker-dealer: (i) may
act as one of the Fund's regular brokers for the Fund so long as it is
lawful for it so to act; (ii) may be a major recipient of brokerage
commissions paid by the Fund; and (iii) may effect portfolio transactions
for the Fund only if the commissions, fees or other remuneration received
or to be received by it are determined in accordance with procedures
contemplated by any rule, regulation or order adopted under the Investment
Company Act for determining the permissible level of such commissions.
(f) Subject to the foregoing provisions of this paragraph 7, OMC may
also consider sales of shares of the Fund and the other funds advised by
OMC and its affiliates as a factor in the selection of broker-dealers for
its portfolio transactions.
8. Duration.
This Agreement will take effect on the date first set forth above and
replaces the Fund's Investment Advisory Agreement dated October 22, 1990.
Unless earlier terminated pursuant to paragraph 10 hereof, this Agreement
shall remain in effect until December 31, 1994, and thereafter will
continue in effect from year to year, so long as such continuance shall
be approved at least annually by the Fund's Board of Trustees, including
the vote of the majority of the trustees of the Fund who are not parties
to this Agreement or "interested persons" (as defined in the Investment
Company Act) of any such party, cast in person at a meeting called for the
purpose of voting on such approval, or by the holders of a "majority" (as
defined in the Investment Company Act) of the outstanding voting
securities of the Fund and by such a vote of the Fund's Board of Trustees.
9. Disclaimer of Shareholder or Trustee Liability.
OMC understands and agrees that the obligations of the Fund under
this Agreement are not binding upon any shareholder or Trustee of the Fund
personally, but bind only the Fund and the Fund's property; OMC represents
that it has notice of the provisions of the Declaration of Trust of the
Fund disclaiming shareholder or Trustee liability for acts or obligations
of the Fund.
10. Termination.
This Agreement may be terminated (i) by OMC at any time without
penalty upon sixty days' written notice to the Fund (which notice may be
waived by the Fund); or (ii) by the Fund at any time without penalty upon
sixty days' written notice to OMC (which notice may be waived by OMC)
provided that such termination by the Fund shall be directed or approved
by the vote of a majority of all of the trustees of the Fund then in
office or by the vote of the holders of a "majority" of the outstanding
voting securities of the Fund (as defined in the Investment Company Act).
11. Assignment or Amendment.
This Agreement may not be amended or the rights of OMC hereunder
sold, transferred, pledged or otherwise in any manner encumbered without
the affirmative vote or written consent of the holders of the "majority"
of the outstanding voting securities of the Fund. This Agreement shall
automatically and immediately terminate in the event of its "assignment,"
as defined in the Investment Company Act.
12. Definitions.
The terms and provisions of the Agreement shall be interpreted and
defined in a manner consistent with the provisions and definitions
contained in the Investment Company Act.
OPPENHEIMER GLOBAL GROWTH & INCOME FUND
By: /s/ Andrew J. Donohue
Andrew J. Donohue,
Secretary
OPPENHEIMER MANAGEMENT
CORPORATION
By: /s/ Mitchell J. Lindauer
Mitchell J. Lindauer
Vice President
215.3
GENERAL DISTRIBUTOR'S AGREEMENT
BETWEEN
OPPENHEIMER GLOBAL GROWTH & INCOME FUND
AND
OPPENHEIMER FUND MANAGEMENT, INC.
Date: December 10, 1992
OPPENHEIMER FUND MANAGEMENT, INC.
Two World Trade Center, Suite 3400
New York, NY 10048
Dear Sirs:
OPPENHEIMER GLOBAL GROWTH & INCOME FUND, a Massachusetts business
trust (the "Fund"), is registered as an investment company under the
Investment Company Act of 1940 (the "1940 Act"), and an indefinite number
of one or more classes of its shares of beneficial interest ("Shares")
have been registered under the Securities Act of 1933 (the "1933 Act") to
be offered for sale to the public in a continuous public offering in
accordance with the terms and conditions set forth in the Prospectus and
Statement of Additional Information ("SAI") included in the Fund's
Registration Statement as it may be amended from time to time (the
"current Prospectus and/or SAI").
In this connection, the Fund desires that your firm (the "General
Distributor") act in a principal capacity as General Distributor for the
sale and distribution of Shares which have been registered as described
above and of any additional Shares which may become registered during the
term of this Agreement. You have advised the Fund that you are willing
to act as such General Distributor, and it is accordingly agreed by and
between us as follows:
1. Appointment of the Distributor. The Fund hereby appoints you as
the sole General Distributor, pursuant to the aforesaid continuous public
offering of its Shares, and the Fund further agrees from and after the
date of this Agreement, that it will not, without your consent, sell or
agree to sell any Shares otherwise than through you, except (a) the Fund
may itself sell shares without sales charge as an investment to the
officers, trustees or directors and bona fide present and former full-time
employees of the Fund, the Fund's Investment Adviser and affiliates
thereof, and to other investors who are identified in the current
Prospectus and/or SAI as having the privilege to buy Shares at net asset
value; (b) the Fund may issue shares in connection with a merger,
consolidation or acquisition of assets on such basis as may be authorized
or permitted under the 1940 Act; (c) the Fund may issue shares for the
reinvestment of dividends and other distributions of the Fund or of any
other Fund if permitted by the current Prospectus and/or SAI; and (d) the
Fund may issue shares as underlying securities of a unit investment trust
if such unit investment trust has elected to use Shares as an underlying
investment; provided that in no event as to any of the foregoing
exceptions shall Shares be issued and sold at less than the then-existing
net asset value.
2. Sale of Shares. You hereby accept such appointment and agree to
use your best efforts to sell Shares, provided, however, that when
requested by the Fund at any time because of market or other economic
considerations or abnormal circumstances of any kind, or when agreed to
by mutual consent of the Fund and the General Distributor, you will
suspend such efforts. The Fund may also withdraw the offering of Shares
at any time when required by the provisions of any statute, order, rule
or regulation of any governmental body having jurisdiction. It is
understood that you do not undertake to sell all or any specific number
of Shares.
3. Sales Charge. Shares shall be sold by you at net asset value
plus a front-end sales charge not in excess of 8.5% of the offering price,
but which front-end sales charge shall be proportionately reduced or
eliminated for larger sales and under other circumstances, in each case
on the basis set forth in the current Prospectus and/or SAI. The
redemption proceeds of shares offered and sold at net asset value with or
without a front-end sales charge may be subject to a contingent deferred
sales charge ("CDSC") under the circumstances described in the current
Prospectus and\or SAI. You may reallow such portion of the front-end
sales charge to dealers or cause payment (which may exceed the front-end
sales charge, if any) of commissions to brokers through which sales are
made, as you may determine, and you may pay such amounts to dealers and
brokers on sales of shares from your own resources (such dealers and
brokers shall collectively include all domestic or foreign institutions
eligible to offer and sell the Shares), and in the event the Fund has more
than one class of Shares outstanding, then you may impose a front-end
sales charge and/or a CDSC on Shares of one class that is different from
the charges imposed on Shares of the Fund's other class(es), in each case
as set forth in the current Prospectus and/or SAI, provided the front-end
sales charge and CDSC to the ultimate purchaser do not exceed the
respective levels set forth for such category of purchaser in the current
Prospectus and/or SAI.
4. Purchase of Shares.
(a) As General Distributor, you shall have the right to accept or
reject orders for the purchase of Shares at your discretion.
Any consideration which you may receive in connection with a
rejected purchase order will be returned promptly.
(b) You agree promptly to issue or to cause the duly appointed
transfer or shareholder servicing agent of the Fund to issue as
your agent confirmations of all accepted purchase orders and to
transmit a copy of such confirmations to the Fund. The net
asset value of all Shares which are the subject of such
confirmations, computed in accordance with the applicable rules
under the 1940 Act, shall be a liability of the General
Distributor to the Fund to be paid promptly after receipt of
payment from the originating dealer or broker (or investor, in
the case of direct purchases) and not later than eleven business
days after such confirmation even if you have not actually
received payment from the originating dealer or broker, or
investor. In no event shall the General Distributor make
payment to the Fund later than permitted by applicable rules of
the National Association of Securities Dealers, Inc.
(c) If the originating dealer or broker shall fail to make timely
settlement of its purchase order in accordance with applicable
rules of the National Association of Securities Dealers, Inc.,
or if a direct purchaser shall fail to make good payment for
shares in a timely manner, you shall have the right to cancel
such purchase order and, at your account and risk, to hold
responsible the originating dealer or broker, or investor. You
agree promptly to reimburse the Fund for losses suffered by it
that are attributable to any such cancellation, or to errors on
your part in relation to the effective date of accepted purchase
orders, limited to the amount that such losses exceed
contemporaneous gains realized by the Fund for either of such
reasons with respect to other purchase orders.
(d) In the case of a canceled purchase for the account of a directly
purchasing shareholder, the Fund agrees that if such investor
fails to make you whole for any loss you pay to the Fund on such
canceled purchase order, the Fund will reimburse you for such
loss to the extent of the aggregate redemption proceeds of any
other shares of the Fund owned by such investor, on your demand
that the Fund exercise its right to claim such redemption
proceeds. The Fund shall register or cause to be registered all
Shares sold to you pursuant to the provisions hereof in such
names and amounts as you may request from time to time and the
Fund shall issue or cause to be issued certificates evidencing
such Shares for delivery to you or pursuant to your direction if
and to the extent that the shareholder account in question
contemplates the issuance of such certificates. All Shares,
when so issued and paid for, shall be fully paid and non-
assessable by the Fund (which shall not prevent the imposition
of any CDSC that may apply) to the extent set forth in the
current Prospectus and/or SAI.
5. Repurchase of Shares.
(a) In connection with the repurchase of Shares, you are appointed
and shall act as Agent of the Fund. You are authorized, for so
long as you act as General Distributor of the Fund, to
repurchase, from authorized dealers, certificated or
uncertificated shares of the Fund ("Shares") on the basis of
orders received from each dealer ("authorized dealer") with
which you have a dealer agreement for the sale of Shares and
permitting resales of Shares to you, provided that such
authorized dealer, at the time of placing such resale order,
shall represent (i) if such Shares are represented by
certificate(s), that certificate(s) for the Shares to be
repurchased have been delivered to it by the registered owner
with a request for the redemption of such Shares executed in the
manner and with the signature guarantee required by the then-
currently effective prospectus of the Fund, or (ii) if such
Shares are uncertificated, that the registered owner(s) has
delivered to the dealer a request for the redemption of such
Shares executed in the manner and with the signature guarantee
required by the then-currently effective prospectus of the Fund.
(b) You shall (a) have the right in your discretion to accept or
reject orders for the repurchase of Shares; (b) promptly
transmit confirmations of all accepted repurchase orders; and
(c) transmit a copy of such confirmation to the Fund, or, if so
directed, to any duly appointed transfer or shareholder
servicing agent of the Fund. In your discretion, you may accept
repurchase requests made by a financially responsible dealer
which provides you with indemnification in form satisfactory to
you in consideration of your acceptance of such dealer's request
in lieu of the written redemption request of the owner of the
account; you agree that the Fund shall be a third party
beneficiary of such indemnification.
(c) Upon receipt by the Fund or its duly appointed transfer or
shareholder servicing agent of any certificate(s) (if any has
been issued) for repurchased Shares and a written redemption
request of the registered owner(s) of such Shares executed in
the manner and bearing the signature guarantee required by the
then-currently effective Prospectus or SAI of the Fund, the Fund
will pay or cause its duly appointed transfer or shareholder
servicing agent promptly to pay to the originating authorized
dealer the redemption price of the repurchased Shares (other
than repurchased Shares subject to the provisions of part (d) of
Section 5 of this Agreement) next determined after your receipt
of the dealer's repurchase order.
(d) Notwithstanding the provisions of part (c) of Section 5 of this
Agreement, repurchase orders received from an authorized dealer
after the determination of the Fund's redemption price on a
regular business day will receive that day's redemption price if
the request to the dealer by its customer to arrange such
repurchase prior to the determination of the Fund's redemption
price that day complies with the requirements governing such
requests as stated in the current Prospectus and/or SAI.
(e) You will make every reasonable effort and take all reasonably
available measures to assure the accurate performance of all
services to be performed by you hereunder within the
requirements of any statute, rule or regulation pertaining to
the redemption of shares of a regulated investment company and
any requirements set forth in the then-current Prospectus and/or
SAI of the Fund. You shall correct any error or omission made
by you in the performance of your duties hereunder of which you
shall have received notice in writing and any necessary
substantiating data; and you shall hold the Fund harmless from
the effect of any errors or omissions which might cause an over-
or under-redemption of the Fund's Shares and/or an excess or
non-payment of dividends, capital gains distributions, or other
distributions.
(f) In the event an authorized dealer initiating a repurchase order
shall fail to make delivery or otherwise settle such order in
accordance with the rules of the National Association of
Securities Dealers, Inc., you shall have the right to cancel
such repurchase order and, at your account and risk, to hold
responsible the originating dealer. In the event that any
cancellation of a Share repurchase order or any error in the
timing of the acceptance of a Share repurchase order shall
result in a gain or loss to the Fund, you agree promptly to
reimburse the Fund for any amount by which any losses shall
exceed then-existing gains so arising.
6. 1933 Act Registration. The Fund has delivered to you a copy of
its current Prospectus and SAI. The Fund agrees that it will use its best
efforts to continue the effectiveness of the Registration Statement under
the 1933 Act. The Fund further agrees to prepare and file any amendments
to its Registration Statement as may be necessary and any supplemental
data in order to comply with the 1933 Act. The Fund will furnish you at
your expense with a reasonable number of copies of the Prospectus and SAI
and any amendments thereto for use in connection with the sale of Shares.
7. 1940 Act Registration. The Fund has already registered under
the 1940 Act as an investment company, and it will use its best efforts
to maintain such registration and to comply with the requirements of the
1940 Act.
8. State Blue Sky Qualification. At your request, the Fund will
take such steps as may be necessary and feasible to qualify Shares for
sale in states, territories or dependencies of the United States, the
District of Columbia, the Commonwealth of Puerto Rico and in foreign
countries, in accordance with the laws thereof, and to renew or extend any
such qualification; provided, however, that the Fund shall not be required
to qualify shares or to maintain the qualification of shares in any
jurisdiction where it shall deem such qualification disadvantageous to the
Fund.
9. Duties of Distributor. You agree that:
(a) Neither you nor any of your officers will take any long or short
position in the Shares, but this provision shall not prevent you
or your officers from acquiring Shares for investment purposes
only;
(b) You shall furnish to the Fund any pertinent information required
to be inserted with respect to you as General Distributor within
the purview of the Securities Act of 1933 in any reports or
registration required to be filed with any governmental
authority; and
(c) You will not make any representations inconsistent with the
information contained in the current Prospectus and/or SAI.
(d) You shall maintain such records as may be reasonably required
for the Fund or its transfer or shareholder servicing agent to
respond to shareholder requests or complaints, and to permit the
Fund to maintain proper accounting records, and you shall make
such records available to the Fund and its transfer agent or
shareholder servicing agent upon request.
(e) In performing under this Agreement, you shall comply with all
requirements of the Fund's current Prospectus and/or SAI and all
applicable laws, rules and regulations with respect to the
purchase, sale and distribution of Shares.
10. Allocation of Costs. The Fund shall pay the cost of composition
and printing of sufficient copies of its Prospectus and SAI as shall be
required for periodic distribution to its shareholders and the expense of
registering Shares for sale under federal securities laws. You shall pay
the expenses normally attributable to the sale of Shares, other than as
paid under the Fund's Distribution Plan under Rule 12b-1 of the 1940 Act,
including the cost of printing and mailing of the Prospectus (other than
those furnished to existing shareholders) and any sales literature used
by you in the public sale of the Shares and for registering such shares
under state blue sky laws pursuant to paragraph 8.
11. Duration. This Agreement shall take effect on the date first
written above, and shall supersede any and all prior General Distributor's
Agreements by and among the Fund and you. Unless earlier terminated
pursuant to paragraph 11 hereof, this Agreement shall remain in effect
until September 30, 1994. This Agreement shall continue in effect from
year to year thereafter, provided that such continuance shall be
specifically approved at least annually: (a) by the Fund's Board of
Trustees or by vote of a majority of the voting securities of the Fund;
and (b) by the vote of a majority of the Trustees, who are not parties to
this Agreement or "interested persons" (as defined in the 1940 Act) of any
such person, cast in person at a meeting called for the purpose of voting
on such approval.
12. Termination. This Agreement may be terminated (a) by the
General Distributor at any time without penalty by giving sixty days'
written notice (which notice may be waived by the Fund); (b) by the Fund
at any time without penalty upon sixty days' written notice to the General
Distributor (which notice may be waived by the General Distributor); or
(c) by mutual consent of the Fund and the General Distributor, provided
that such termination by the Fund shall be directed or approved by the
Board of Trustees of the Fund or by the vote of the holders of a majority
of the outstanding voting securities of the Fund. In the event this
Agreement is terminated by the Fund, the General Distributor shall be
entitled to be paid the CDSC under paragraph 3 hereof on the redemption
proceeds of Shares sold prior to the effective date of such termination.
13. Assignment. This Agreement may not be amended or changed except
in writing and shall be binding upon and shall enure to the benefit of the
parties hereto and their respective successors; however, this Agreement
shall not be assigned by either party and shall automatically terminate
upon assignment.
14. Disclaimer of Shareholder Liability. The General Distributor
understands and agrees that the obligations of the Fund under this
Agreement are not binding upon any Trustee or shareholder of the Fund
personally, but bind only the Fund and the Fund's property; the General
Distributor represents that it has notice of the provisions of the
Declaration of Trust of the Fund disclaiming shareholder liability for
acts or obligations of the Fund.
15. Section Headings. The headings of each section is for
descriptive purposes only, and such headings are not to be construed or
interpreted as part of this Agreement.
If the foregoing is in accordance with your understanding, so
indicate by signing in the space provided below.
OPPENHEIMER GLOBAL GROWTH & INCOME FUND
By: /s/ Robert G. Galli_______________
Robert G. Galli, Secretary
Accepted:
OPPENHEIMER FUND MANAGEMENT, INC.
By: /s/ Andrew J. Donohue_________________
Andrew J. Donohue, Senior Vice President
2151A
OPPENHEIMER GLOBAL GROWTH & INCOME FUND
CUSTODY AGREEMENT
Agreement made as of this 12th day of November, 1992, between
OPPENHEIMER GLOBAL GROWTH & INCOME FUND, a business trust organized and
existing under the laws of the Commonwealth of Massachusetts, having its
principal office and place of business at 2 World Trade Center, New York,
New York 10048 (hereinafter called the "Fund"), and THE BANK OF NEW YORK,
a New York corporation authorized to do a banking business, having its
principal office and place of business at 48 Wall Street, New York, New
York 10286 (hereinafter called the "Custodian").
W I T N E S S E T H
that for and in consideration of the mutual promises hereinafter set
forth, the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
shall have the following meanings:
1. "Agreement" shall mean this Custody Agreement and all Appendices
and Certifications described in the Exhibits delivered in connection
herewith.
2. "Authorized Person" shall mean any person, whether or not such
person is an Officer or employee of the Fund, duly authorized by the Board
of Trustees of the Fund to give Oral Instructions and Written Instructions
on behalf of the Fund and listed in the Certificate annexed hereto as
Appendix A or such other Certificate as may be received by the Custodian
from time to time, provided that each person who is designated in any such
Certificate as an "Officer of OSS" shall be an Authorized Person only for
purposes of Articles XII and XIII hereof.
3. "Book-Entry System" shall mean the Federal Reserve/Treasury book-
entry system for United States and federal agency securities, its
successor or successors and its nominee or nominees.
4. "Call Option" shall mean an exchange traded Option with respect
to Securities other than Index, Futures Contracts, and Futures Contract
Options entitling the holder, upon timely exercise and payment of the
exercise price, as specified therein, to purchase from the writer thereof
the specified underlying instruments, currency, or Securities.
5. "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement to be
given to the Custodian which is actually received (irrespective of
constructive receipt) by the Custodian and signed on behalf of the Fund
by any two Officers. The term Certificate shall also include instructions
by the Fund to the Custodian communicated by a Terminal Link.
6. "Clearing Member" shall mean a registered broker-dealer which
is a clearing member under the rules of O.C.C. and a member of a national
securities exchange qualified to act as a custodian for an investment
company, or any broker-dealer reasonably believed by the Custodian to be
such a clearing member.
7. "Collateral Account" shall mean a segregated account so de-
nominated which is specifically allocated to a Series and pledged to the
Custodian as security for, and in consideration of, the Custodian's
issuance of any Put Option guarantee letter or similar document described
in paragraph 8 of Article V herein.
8. "Covered Call Option" shall mean an exchange traded Option
entitling the holder, upon timely exercise and payment of the exercise
price, as specified therein, to purchase from the writer thereof the
specified underlying instruments, currency, or Securities (excluding
Futures Contracts) which are owned by the writer thereof.
9. "Depository" shall mean The Depository Trust Company ("DTC"),
a clearing agency registered with the Securities and Exchange Commission,
its successor or successors and its nominee or nominees. The term
"Depository" shall further mean and include any other person authorized
to act as a depository under the Investment Company Act of 1940, its
successor or successors and its nominee or nominees, specifically
identified in a certified copy of a resolution of the Fund's Board of
Trustees specifically approving deposits therein by the Custodian,
including, without limitation, a Foreign Depository.
10. "Financial Futures Contract" shall mean the firm commitment to
buy or sell financial instruments on a U.S. commodities exchange or board
of trade at a specified future time at an agreed upon price.
11. "Foreign Subcustodian" shall mean an "Eligible Foreign
Custodian" as defined in Rule 17-5 which is appointed by the Custodian to
perform or coordinate the receipt, custody and delivery of Foreign
Property of the Fund outside the United States in a manner consistent with
the provisions of this Agreement and whose written contract is approved
by the Board of Trustees of the Fund in accordance with Rule 17f-5.
References to the Custodian herein shall, when appropriate, include
reference to its Foreign Subcustodians.
12. "Foreign Depository" shall mean an entity organized under the
laws of a foreign country which operates a system outside the United
States in general use by foreign banks and securities brokers for the
central or transnational handling of securities or equivalent book-entries
which is regulated by a foreign government or agency thereof and which is
an "Eligible Foreign Custodian" as defined in Rule 17f-5.
13. "Foreign Securities" shall mean securities and/or short term
paper as defined in Rule 17f-5 under the Act, whether issued in registered
or bearer form.
14. "Foreign Property" shall mean Foreign Securities and money of
any currency which is held outside of the United States.
15. "Futures Contract" shall mean a Financial Futures Contract
and/or Index Futures Contracts.
16. "Futures Contract Option" shall mean an Option with respect to
a Futures Contract.
17. "Investment Company Act of 1940" shall mean the Investment
Company Act of 1940, as amended, and the rules and regulations thereunder.
18. "Index Futures Contract" shall mean a bilateral agreement
pursuant to which the parties agree to take or make delivery of an amount
of cash equal to a specified dollar amount times the difference between
the value of a particular index at the close of the last business day of
the contract and the price at which the futures contract is originally
struck.
19. "Index Option" shall mean an exchange traded Option entitling
the holder, upon timely exercise, to receive an amount of cash determined
by reference to the difference between the exercise price and the value
of the index on the date of exercise.
20. "Margin Account" shall mean a segregated account in the name of
a broker, dealer, futures commission merchant, or a Clearing Member, or
in the name of the Fund for the benefit of a broker, dealer, futures
commission merchant, or Clearing Member, or otherwise, in accordance with
an agreement between the Fund, the Custodian and a broker, dealer, futures
commission merchant or a Clearing Member (a "Margin Account Agreement"),
separate and distinct from the custody account, in which certain
Securities and/or money of the Fund shall be deposited and withdrawn from
time to time in connection with such transactions as the Fund may from
time to time determine. Securities held in the Book-Entry System or a
Depository shall be deemed to have been deposited in, or withdrawn from,
a Margin Account upon the Custodian's effecting an appropriate entry in
its books and records.
21. "Money Market Security" shall mean all instruments and ob-
ligations commonly known as a money market instruments, where the purchase
and sale of such securities normally requires settlement in federal funds
on the same day as such purchase or sale, including, without limitation,
certain Reverse Repurchase Agreements, debt obligations issued or
guaranteed as to interest and/or principal by the government of the United
States or agencies or instrumentalities thereof, any tax, bond or revenue
anticipation note issued by any state or municipal government or public
authority, commercial paper, certificates of deposit and bankers'
acceptances, repurchase agreements with respect to Securities and bank
time deposits.
22. "Nominee" shall mean, in addition to the name of the registered
nominee of the Custodian, (i) a partnership or other entity of a Foreign
Subcustodian which is used solely for the assets of its customers other
than the Custodian and the Foreign Subcustodian, if any, by which it was
appointed; or (ii) the nominee of a Foreign Depository which is used for
the securities and other assets of its customers, members or participants.
23. "O.C.C." shall mean the Options Clearing Corporation, a clearing
agency registered under Section 17A of the Securities Exchange Act of
1934, its successor or successors, and its nominee or nominees.
24. "Officers" shall mean the President, any Vice President, the
Secretary, the Treasurer, the Controller, any Assistant Secretary, any
Assistant Treasurer, and any other person or persons, whether or not any
such other person is an officer or employee of the Fund, but in each case
only if duly authorized by the Board of Trustees of the Fund to execute
any Certificate, instruction, notice or other instrument on behalf of the
Fund and listed in the Certificate annexed hereto as Appendix B or such
other Certificate as may be received by the Custodian from time to time;
provided that each person who is designated in any such Certificate as
holding the position of "Officer of OSS" shall be an Officer only for
purposes of Articles XII and XIII hereof.
25. "Option" shall mean a Call Option, Covered Call Option, Index
Option and/or a Put Option.
26. "Oral Instructions" shall mean verbal instructions actually
received (irrespective of constructive receipt) by the Custodian from an
Authorized Person or from a person reasonably believed by the Custodian
to be an Authorized Person.
27. "Put Option" shall mean an exchange traded Option with respect
to instruments, currency, or Securities other than Index Options, Futures
Contracts, and Futures Contract Options entitling the holder, upon timely
exercise and tender of the specified underlying instruments, currency, or
Securities, to sell such instruments, currency, or Securities to the
writer thereof for the exercise price.
28. "Repurchase Agreement" shall mean an agreement pursuant to which
the Fund buys Securities and agrees to resell such Securities at a
described or specified date and price.
29. "Reverse Repurchase Agreement" shall mean an agreement pursuant
to which the Fund sells Securities and agrees to repurchase such
Securities at a described or specified date and price.
30. "Rule 17f-5" shall mean Rule 17f-5 (Reg. Sec. 270.17f-5) promulgated
by the Securities and Exchange Commission under the Investment Company Act
of 1940, as amended.
31. "Security" shall be deemed to include, without limitation, Money
Market Securities, Call Options, Put Options, Index Options, Index Futures
Contracts, Index Futures Contract Options, Financial Futures Contracts,
Financial Futures Contract Options, Reverse Repurchase Agreements, over
the counter Options on Securities, common stocks and other securities
having characteristics similar to common stocks, preferred stocks, debt
obligations issued by state or municipal governments and by public
authorities, (including, without limitation, general obligation bonds,
revenue bonds, industrial bonds and industrial development bonds), bonds,
debentures, notes, mortgages or other obligations, and any certificates,
receipts, warrants or other instruments representing rights to receive,
purchase, sell or subscribe for the same, or evidencing or representing
any other rights or interest therein, or rights to any property or assets.
32. "Senior Security Account" shall mean an account maintained and
specifically allocated to a Series under the terms of this Agreement as
a segregated account, by recordation or otherwise, within the custody
account in which certain Securities and/or other assets of the Fund
specifically allocated to such Series shall be deposited and withdrawn
from time to time in accordance with Certificates received by the
Custodian in connection with such transactions as the Fund may from time
to time determine.
33. "Series" shall mean the various portfolios, if any, of the Fund
as described from time to time in the current and effective prospectus for
the Fund, except that if the Fund does not have more than one portfolio,
"Series" shall mean the Fund or be ignored where a requirement would be
imposed on the Fund or the Custodian which is unnecessary if there is only
one portfolio.
34. "Shares" shall mean the shares of beneficial interest of the
Fund and its Series.
35. "Terminal Link" shall mean an electronic data transmission link
between the Fund and the Custodian requiring in connection with each use
of the Terminal Link the use of an authorization code provided by the
Custodian and at least two access codes established by the Fund, provided,
that the Fund shall have delivered to the Custodian a Certificate
substantially in the form of Appendix C.
36. "Transfer Agent" shall mean Oppenheimer Shareholder Services,
a division of Oppenheimer Management Corporation, its successors and as-
signs.
37. "Transfer Agent Account" shall mean any account in the name of
the Fund, or the Transfer Agent, as agent for the Fund, maintained with
United Missouri Bank or such other Bank designated by the Fund in a
Certificate.
38. "Written Instructions" shall mean written communications
actually received (irrespective of constructive receipt) by the Custodian
from an Authorized Person or from a person reasonably believed by the
Custodian to be an Authorized Person by telex or any other such system
whereby the receiver of such communications is able to verify by codes or
otherwise with a reasonable degree of certainty the identity of the sender
of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as
custodian of the Securities and moneys at any time owned or held by the
Fund during the period of this Agreement.
2. The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except for monies received and maintained in the Transfer Agent
Account, or as otherwise provided in paragraph 7 of this Article or in
Article VIII or XV, the Fund will deliver or cause to be delivered to the
Custodian all Securities and all moneys owned by it, at any time during
the period of this Agreement, and shall specify with respect to such
Securities and money the Series to which the same are specifically
allocated, and the Custodian shall not be responsible for any Securities
or money not so delivered. Except for assets held at DTC, the Custodian
shall physically segregate, keep and maintain the Securities of the Series
separate and apart from each other Series and from other assets held by
the Custodian. Except as otherwise expressly provided in this Agreement,
the Custodian will not be responsible for any Securities and moneys not
actually received by it, unless the Custodian has been negligent or has
engaged in willful misconduct with respect thereto. The Custodian will
be entitled to reverse any credit of money made on the Fund's behalf where
such credits have been previously made and moneys are not finally col-
lected, unless the Custodian has been negligent or has engaged in willful
misconduct with respect thereto; provided that if such reversal is thirty
(30) days or more after the credit was issued, the Custodian will give
five (5) days' prior notice of such reversal. The Fund shall deliver to
the Custodian a certified resolution of the Board of Trustees of the Fund,
substantially in the form of Exhibit A hereto, approving, authorizing and
instructing the Custodian on a continuous and on-going basis to deposit
in the Book-Entry System all Securities eligible for deposit therein,
regardless of the Series to which the same are specifically allocated and
to utilize the Book-Entry System to the extent possible in connection with
its performance hereunder, including, without limitation, in connection
with settlements of purchases and sales of Securities, loans of Securities
and deliveries and returns of Securities collateral. Prior to a deposit
of Securities specifically allocated to a Series in any Depository, the
Fund shall deliver to the Custodian a certified resolution of the Board
of Trustees of the Fund, substantially in the form of Exhibit B hereto,
approving, authorizing and instructing the Custodian on a continuous and
ongoing basis until instructed to the contrary by a Certificate to deposit
in such Depository all Securities specifically allocated to such Series
eligible for deposit therein, and to utilize such Depository to the extent
possible with respect to such Securities in connection with its per-
formance hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral. Securities and moneys
deposited in either the Book-Entry System or a Depository will be
represented in accounts which include only assets held by the Custodian
for customers, including, but not limited to, accounts in which the Custo-
dian acts in a fiduciary or representative capacity and will be
specifically allocated on the Custodian's books to the separate account
for the applicable Series. Prior to the Custodian's accepting, utilizing
and acting with respect to Clearing Member confirmations for Options and
transactions in Options for a Series as provided in this Agreement, the
Custodian shall have received a certified resolution of the Fund's Board
of Trustees, substantially in the form of Exhibit C hereto, approving,
authorizing and instructing the Custodian on a continuous and on-going
basis, until instructed to the contrary by a Certificate to accept,
utilize and act in accordance with such confirmations as provided in this
Agreement with respect to such Series. All Securities are to be held or
disposed of by the Custodian for, and subject at all times to the
instructions of, the Fund pursuant to the terms of this Agreement. The
Custodian shall have no power or authority to assign, hypothecate, pledge
or otherwise dispose of any Securities except as provided by the terms of
this Agreement, and shall have the sole power to release and deliver
Securities held pursuant to this Agreement.
2. The Custodian shall establish and maintain separate accounts,
in the name of each Series, and shall credit to the separate account for
each Series all moneys received by it for the account of the Fund with
respect to such Series. Money credited to a separate account for a Series
shall be subject only to drafts, orders, or charges of the Custodian
pursuant to this Agreement and shall be disbursed by the Custodian only:
(a) As hereinafter provided;
(b) Pursuant to Certificates or Resolutions of the Fund's
Board of Trustees certified by an Officer and by the Secretary or
Assistant Secretary of the Fund setting forth the name and address of the
person to whom the payment is to be made, the Series account from which
payment is to be made, the purpose for which payment is to be made, and
declaring such purpose to be a proper corporate purpose; provided,
however, that amounts representing dividends, distributions, or
redemptions proceeds with respect to Shares shall be paid only to the
Transfer Agent Account;
(c) In payment of the fees and in reimbursement of the
expenses and liabilities of the Custodian attributable to such Series and
authorized by this Agreement; or
(d) Pursuant to Certificates to pay interest, taxes,
management fees or operating expenses (including, without limitation
thereto, Board of Trustees' fees and expenses, and fees for legal
accounting and auditing services), which Certificates set forth the name
and address of the person to whom payment is to be made, state the purpose
of such payment and designate the Series for whose account the payment is
to be made.
3. Promptly after the close of business on each day, the Custodian
shall furnish the Fund with confirmations and a summary, on a per Series
basis, of all transfers to or from the account of the Fund for a Series,
either hereunder or with any co-custodian or subcustodian appointed in
accordance with this Agreement during said day. Where Securities are
transferred to the account of the Fund for a Series but held in a
Depository, the Custodian shall upon such transfer also by book-entry or
otherwise identify such Securities as belonging to such Series in a
fungible bulk of Securities registered in the name of the Custodian (or
its nominee) or shown on the Custodian's account on the books of the Book-
Entry System or the Depository. At least monthly and from time to time,
the Custodian shall furnish the Fund with a detailed statement, on a per
Series basis, of the Securities and moneys held under this Agreement for
the Fund.
4. Except as otherwise provided in paragraph 7 of this Article and
in Article VIII, all Securities held by the Custodian hereunder, which are
issued or issuable only in bearer form, except such Securities as are held
in the Book-Entry System, shall be held by the Custodian in that form; all
other Securities held hereunder may be registered in the name of the Fund,
in the name of any duly appointed registered nominee of the Custodian as
the Custodian may from time to time determine, or in the name of the Book-
Entry System or a Depository or their successor or successors, or their
nominee or nominees. The Fund agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold or deliver in
proper form for transfer, or to register in the name of its registered
nominee or in the name of the Book-Entry System or a Depository any
Securities which it may hold hereunder and which may from time to time be
registered in the name of the Fund. The Custodian shall hold all such
Securities specifically allocated to a Series which are not held in the
Book-Entry System or in a Depository in a separate account in the name of
such Series physically segregated at all times from those of any other
person or persons.
5. Except as otherwise provided in this Agreement and unless
otherwise instructed to the contrary by a Certificate, the Custodian by
itself, or through the use of the Book-Entry System or a Depository with
respect to Securities held hereunder and therein deposited, shall with
respect to all Securities held for the Fund hereunder in accordance with
preceding paragraph 4:
(a) Promptly collect all income, dividends and dis-
tributions due or payable;
(b) Promptly give notice to the Fund and promptly present
for payment and collect the amount of money or other consideration payable
upon such Securities which are called, but only if either (i) the
Custodian receives a written notice of such call, or (ii) notice of such
call appears in one or more of the publications listed in Appendix D
annexed hereto, which may be amended at any time by the Custodian without
the prior consent of the Fund, provided the Custodian gives prior notice
of such amendment to the Fund;
(c) Promptly present for payment and collect for the
Fund's account the amount payable upon all Securities which mature;
(d) Promptly surrender Securities in temporary form in
exchange for definitive Securities;
(e) Promptly execute, as custodian, any necessary de-
clarations or certificates of ownership under the Federal Income Tax Laws
or the laws or regulations of any other taxing authority now or hereafter
in effect;
(f) Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for the account
of a Series, all rights and similar securities issued with respect to any
Securities held by the Custodian for such Series hereunder; and
(g) Promptly deliver to the Fund all notices, proxies,
proxy soliciting materials, consents and other written information
(including, without limitation, notices of tender offers and exchange
offers, pendency of calls, maturities of Securities and expiration of
rights) relating to Securities held pursuant to this Agreement which are
actually received by the Custodian, such proxies and other similar
materials to be executed by the registered holder (if Securities are
registered otherwise than in the name of the Fund), but without indicating
the manner in which proxies or consents are to be voted.
6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository,
shall:
(a) Promptly execute and deliver to such persons as may
be designated in such Certificate proxies, consents, authorizations, and
any other instruments whereby the authority of the Fund as owner of any
Securities held hereunder for the Series specified in such Certificate may
be exercised;
(b) Promptly deliver any Securities held hereunder for the
Series specified in such Certificate in exchange for other Securities or
cash issued or paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation or recapitalization of any corporation,
or the exercise of any right, warrant or conversion privilege and receive
and hold hereunder specifically allocated to such Series any cash or other
Securities received in exchange;
(c) Promptly deliver any Securities held hereunder for the
Series specified in such Certificate to any protective committee,
reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or
sale of assets of any corporation, and receive and hold hereunder
specifically allocated to such Series in exchange therefor such
certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery or such
Securities as may be issued upon such delivery; and
(d) Promptly present for payment and collect the amount
payable upon Securities which may be called as specified in the
Certificate.
7. Notwithstanding any provision elsewhere contained herein, the
Custodian shall not be required to obtain possession of any instrument or
certificate representing any Futures Contract, any Option, or any Futures
Contract Option until after it shall have determined, or shall have
received a Certificate from the Fund stating, that any such instruments
or certificates are available. The Fund shall deliver to the Custodian
such a Certificate no later than the business day preceding the
availability of any such instrument or certificate. Prior to such
availability, the Custodian shall comply with Section 17(f) of the
Investment Company Act of 1940 in connection with the purchase, sale,
settlement, closing out or writing of Futures Contracts, Options, or
Futures Contract Options by making payments or deliveries specified in
Certificates in connection with any such purchase, sale, writing,
settlement or closing out upon its receipt from a broker, dealer, or
futures commission merchant of a statement or confirmation reasonably
believed by the Custodian to be in the form customarily used by brokers,
dealers, or future commission merchants with respect to such Futures
Contracts, Options, or Futures Contract Options, as the case may be,
confirming that such Security is held by such broker, dealer or futures
commission merchant, in book-entry form or otherwise in the name the
Custodian (or any nominee of the Custodian) as custodian for the Fund;
provided, however, that notwithstanding the foregoing, payments to or
deliveries from the Margin Account and payments with respect to Securities
to which a Margin Account relates, shall be made in accordance with the
terms and conditions of the Margin Account Agreement. Whenever any such
instruments or certificates are available, the Custodian shall,
notwithstanding any provision in this Agreement to the contrary, make
payment for any Futures Contract, Option, or Futures Contract Option for
which such instruments or such certificates are available only against the
delivery to the Custodian of such instrument or such certificate, and
deliver any Futures Contract, Option or Futures Contract Option for which
such instruments or such certificates are available only against receipt
by the Custodian of payment therefor. Any such instrument or certificate
delivered to the Custodian shall be held by the Custodian hereunder in
accordance with, and subject to, the provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS,
FUTURES CONTRACT OPTIONS, REPURCHASE AGREEMENTS,
REVERSE REPURCHASE AGREEMENTS AND SHORT SALES
1. Promptly after each execution of a purchase of Securities by the
Fund, other than a purchase of an Option, a Futures Contract, a Futures
Contract Option, a Repurchase Agreement, a Reverse Repurchase Agreement
or a Short Sale, the Fund shall deliver to the Custodian (i) with respect
to each purchase of Securities which are not Money Market Securities, a
Certificate, and (ii) with respect to each purchase of Money Market
Securities, a Certificate, oral Instructions or Written Instructions,
specifying with respect to each such purchase: (a) the Series to which
such Securities are to be specifically allocated; (b) the name of the
issuer and the title of the Securities; (c) the number of shares or the
principal amount purchased and accrued interest, if any; (d) the date of
purchase and settlement; (e) the purchase price per unit; (f) the total
amount payable upon such purchase; (g) the name of the person from whom
or the broker through whom the purchase was made, and the name of the
clearing broker, if any; and (h) the name of the broker or other party to
whom payment is to be made. Custodian shall, upon receipt of such
Securities purchased by or for the Fund, pay to the broker specified in
the Certificate out of the moneys held for the account of such Series the
total amount payable upon such purchase, provided that the same conforms
to the total amount payable as set forth in such Certificate, oral
Instructions or Written Instructions.
2. Promptly after each execution of a sale of Securities by the
Fund, other than a sale of any Option, Futures Contract, Futures Contract
Option, Repurchase Agreement, Reverse Repurchase Agreement or Short Sale,
the Fund shall deliver such to the Custodian (i) with respect to each sale
of Securities which are not Money Market Securities, a Certificate, and
(ii) with respect to each sale of Money Market Securities, a Certificate,
Oral Instructions or Written Instructions, specifying with respect to each
such sale: (a) the Series to which such Securities were specifically
allocated; (b) the name of the issuer and the title of the Security; (c)
the number of shares or principal amount sold, and accrued interest, if
any; (d) the date of sale and settlement; (e) the sale price per unit; (f)
the total amount payable to the Fund upon such sale; (g) the name of the
broker through whom or the person to whom the sale was made, and the name
of the clearing broker, if any; and (h) the name of the broker to whom the
Securities are to be delivered. On the settlement date, the Custodian
shall deliver the Securities specifically allocated to such Series to the
broker in accordance with generally accepted street practices and as
specified in the Certificate upon receipt of the total amount payable to
the Fund upon such sale, provided that the same conforms to the total
amount payable as set forth in such Certificate, oral Instructions or
Written Instructions.
ARTICLE V
OPTIONS
1. Promptly after each execution of a purchase of any Option by the
Fund other than a closing purchase transaction, the Fund shall deliver to
the Custodian a Certificate specifying with respect to each Option
purchased: (a) the Series to which such Option is specifically allocated;
(b) the type of Option (put or call); (c) the instrument, currency, or
Security underlying such Option and the number of Options, or the name of
the in the case of an Index Option, the index to which such Option relates
and the number of Index Options purchased; (d) the expiration date; (e)
the exercise price; (f) the dates of purchase and settlement; (g) the
total amount payable by the Fund in connection with such purchase; and (h)
the name of the Clearing Member through whom such Option was purchased.
The Custodian shall pay, upon receipt of a Clearing Member's written
statement confirming the purchase of such Option held by such Clearing
Member for the account of the Custodian (or any duly appointed and
registered nominee of the Custodian) as Custodian for the Fund, out of
moneys held for the account of the Series to which such Option is to be
specifically allocated, the total amount payable upon such purchase to the
Clearing Member through whom the purchase was made, provided that the same
conforms to the amount payable as set forth in such Certificate.
2. Promptly after the execution of a sale of any Option purchased
by the Fund, other than a closing sale transaction, pursuant to paragraph
1 hereof, the Fund shall deliver to the Custodian a Certificate specifying
with respect to each such sale: (a) the Series to which such Option was
specifically allocated; (b) the type of Option (put or call); (c) the
instrument, currency, or Security underlying such Option and the number
of Options, or the name of the issuer and the title and number of shares
subject to such Option or, in the case of a Index Option, the index to
which such Option relates and the number of Index Options sold; (d) the
date of sale; (e) the sale price; (f) the date of settlement; (g) the
total amount payable to the Fund upon such sale; and (h) the name of the
Clearing Member through whom the sale was made. The Custodian shall
consent to the delivery of the Option sold by the Clearing Member which
previously supplied the confirmation described in preceding paragraph of
this Article with respect to such Option upon receipt by the Custodian of
the total amount payable to the Fund, provided that the same conforms to
the total amount payable as set forth in such Certificate.
3. Promptly after the exercise by the Fund of any Call Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall
deliver to the Custodian a Certificate specifying with respect to such
Call Option: (a) the Series to which such Call Option was specifically
allocated; (b) the name of the issuer and the title and number of shares
subject to the Call Option; (c) the expiration date; (d) the date of
exercise and settlement; (e) the exercise price per share; (f) the total
amount to be paid by the Fund upon such exercise; and (g) the name of the
Clearing Member through whom such Call Option was exercised. The Custo-
dian shall, upon receipt of the Securities underlying the Call Option
which was exercised, pay out of the moneys held for the account of the
Series to which such Call Option was specifically allocated the total
amount payable to the Clearing Member through whom the Call Option was ex-
ercised, provided that the same conforms to the total amount payable as
set forth in such Certificate.
4. Promptly after the exercise by the Fund of any Put Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall
deliver to the Custodian a Certificate specifying with respect to such Put
Option: (a) the Series to which such Put Option was specifically
allocated; (b) the name of the issuer and the title and number of shares
subject to the Put Option; (c) the expiration date; (d) the date of
exercise and settlement; (e) the exercise price per share; (f) the total
amount to be paid to the Fund upon such exercise; and (g) the name of the
Clearing Member through whom such Put Option was exercised. The Custodian
shall, upon receipt of the amount payable upon the exercise of the Put
Option, deliver or direct a Depository to deliver the Securities
specifically allocated to such Series, provided the same conforms to the
amount payable to the Fund as set forth in such Certificate.
5. Promptly after the exercise by the Fund of any Index Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall
deliver to the Custodian a Certificate specifying with respect to such
Index Option: (a) the Series to which such Index Option was specifically
allocated; (b) the type of Index Option (put or call) (c) the number of
Options being exercised; (d) the index to which such Option relates; (e)
the expiration date; (f) the exercise price; (g) the total amount to be
received by the Fund in connection with such exercise; and (h) the
Clearing Member from whom such payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect
to such Covered Call Option: (a) the Series for which such Covered Call
Option was written; (b) the name of the issuer and the title and number
of shares for which the Covered Call Option was written and which underlie
the same; (c) the expiration date; (d) the exercise price; (e) the premium
to be received by the Fund; (f) the date such Covered Call Option was
written; and (g) the name of the Clearing Member through whom the premium
is to be received. The Custodian shall deliver or cause to be delivered,
upon receipt of the premium specified in the Certificate with respect to
such Covered Call Option, such receipts as are required in accordance with
the customs prevailing among Clearing Members dealing in Covered Call
Options and shall impose, or direct a Depository to impose, upon the
underlying Securities specified in the Certificate specifically allocated
to such Series such restrictions as may be required by such receipts.
Notwithstanding the foregoing, the Custodian has the right, upon prior
written notification to the Fund, at any time to refuse to issue any
receipts for Securities in the possession of the Custodian and not
deposited with a Depository underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund and described
in the preceding paragraph of this Article is exercised, the Fund shall
promptly deliver to the Custodian a Certificate instructing the Custodian
to deliver, or to direct the Depository to deliver, the Securities subject
to such Covered Call Option and specifying: (a) the Series for which such
Covered Call Option was written; (b) the name of the issuer and the title
and number of shares subject to the Covered Call Option; (c) the Clearing
Member to whom the underlying Securities are to be delivered; and (d) the
total amount payable to the Fund upon such delivery. Upon the return
and/or cancellation of any receipts delivered pursuant to paragraph 6 of
this Article, the Custodian shall deliver, or direct a Depository to
deliver, the underlying Securities as specified in the Certificate upon
payment of the amount to be received as set forth in such Certificate.
8. Whenever the Fund writes a Put Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to such Put
Option: (a) the Series for which such Put Option was written; (b) the
name of the issuer and the title and number of shares for which the Put
Option is written and which underlie the same; (c) the expiration date;
(d) the exercise price; (e) the premium to be received by the Fund; (f)
the date such Put Option is written; (g) the name of the Clearing Member
through whom the premium is to be received and to whom a Put Option
guarantee letter is to be delivered; (h) the amount of cash, and/or the
amount and kind of Securities, if any, specifically allocated to such
Series to be deposited in the Senior Security Account for such Series; and
(i) the amount of cash and/or the amount and kind of Securities
specifically allocated to such Series to be deposited into the Collateral
Account for such Series. The Custodian shall, after making the deposits
into the Collateral Account specified in the Certificate, issue a Put
Option guarantee letter substantially in the form utilized by the
Custodian on the date hereof, and deliver the same to the Clearing Member
specified in the Certificate upon receipt of the premium specified in said
Certificate. Notwithstanding the foregoing, the Custodian shall be under
no obligation to issue any Put Option guarantee letter or similar document
if it is unable to make any of the representations contained therein.
9. Whenever a Put Option written by the Fund and described in the
preceding paragraph is exercised, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Put
Option was written; (b) the name of the issuer and title and number of
shares subject to the Put Option; (c) the Clearing Member from whom the
underlying Securities are to be received; (d) the total amount payable by
the Fund upon such delivery; (e) the amount of cash and/or the amount and
kind of Securities specifically allocated to such Series to be withdrawn
from the Collateral Account for such Series and (f) the amount of cash
and/or the amount and kind of Securities, specifically allocated to such
series, if any, to be withdrawn from the Senior Security Account. Upon
the return and/or cancellation of any Put Option guarantee letter or
similar document issued by the Custodian in connection with such Put
Option, the Custodian shall pay out of the moneys held for the account of
the series to which such Put Option was specifically allocated the total
amount payable to the Clearing Member specified in the Certificate as set
forth in such Certificate, upon delivery of such Securities, and shall
make the withdrawals specified in such Certificate.
10. Whenever the Fund writes an Index Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect
to such Index Option: (a) the Series for which such Index Option was
written; (b) whether such Index Option is a put or a call; (c) the number
of Options written; (d) the index to which such Option relates; (e) the
expiration date; (f) the exercise price; (g) the Clearing Member through
whom such Option was written; (h) the premium to be received by the Fund;
(i) the amount of cash and/or the amount and kind of Securities, if any,
specifically allocated to such Series to be deposited in the Senior
Security Account for such Series; (j) the amount of cash and/or the amount
and kind of Securities, if any, specifically allocated to such Series to
be deposited in the Collateral Account for such Series; and (k) the amount
of cash and/or the amount and kind of Securities, if any, specifically
allocated to such Series to be deposited in a Margin Account, and the name
in which such account is to be or has been established. The Custodian
shall, upon receipt of the premium specified in the Certificate, make the
deposits, if any, into the Senior Security Account specified in the
Certificate, and either (1) deliver such receipts, if any, which the
Custodian has specifically agreed to issue, which are in accordance with
the customs prevailing among Clearing Members in Index Options and make
the deposits into the Collateral Account specified in the Certificate, or
(2) make the deposits into the Margin Account specified in the Certi-
ficate.
11. Whenever an Index Option written by the Fund and described in
the preceding paragraph of this Article is exercised, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect
to such Index Option: (a) the Series for which such Index Option was
written; (b) such information as may be necessary to identify the Index
Option being exercised; (c) the Clearing Member through whom such Index
Option is being exercised; (d) the total amount payable upon such
exercise, and whether such amount is to be paid by or to the Fund; (e) the
amount of cash and/or amount and kind of Securities, if any, to be with-
drawn from the Margin Account; and (f) the amount of cash and/or amount
and kind of Securities, if any, to be withdrawn from the Senior Security
Account for such Series; and the amount of cash and/or the amount and kind
of Securities, if any, to be withdrawn from the Collateral Account for
such Series. Upon the return and/or cancellation of the receipt, if any,
delivered pursuant to the preceding paragraph of this Article, the
Custodian shall pay out of the moneys held for the account of the Series
to which such Stock Index Option was specifically allocated to the Clear-
ing Member specified in the Certificate the total amount payable, if any,
as specified therein.
12. Promptly after the execution of a purchase or sale by the Fund
of any Option identical to a previously written Option described in
paragraphs, 6, 8 or 10 of this Article in a transaction expressly
designated as a "Closing Purchase Transaction" or a "Closing Sale
Transaction", the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to the Option being purchased: (a)
that the transaction is a Closing Purchase Transaction or a Closing Sale
Transaction; (b) the Series for which the Option was written; (c) the
instrument, currency, or Security subject to the Option, or, in the case
of an Index Option, the index to which such Option relates and the number
of Options held; (d) the exercise price; (e) the premium to be paid by or
the amount to be paid to the Fund; (f) the expiration date; (g) the type
of Option (put or call); (h) the date of such purchase or sale; (i) the
name of the Clearing Member to whom the premium is to be paid or from whom
the amount is to be received; and (j) the amount of cash and/or the amount
and kind of Securities, if any, to be withdrawn from the Collateral
Account, a specified Margin Account, or the Senior Security Account for
such Series. Upon the Custodian's payment of the premium or receipt of
the amount, as the case may be, specified in the Certificate and the
return and/or cancellation of any receipt issued pursuant to paragraphs
6, 8 or 10 of this Article with respect to the Option being liquidated
through the Closing Purchase Transaction or the Closing Sale Transaction,
the Custodian shall remove, or direct a Depository to remove, the pre-
viously imposed restrictions on the Securities underlying the Call Option.
13. Upon the expiration, exercise or consummation of a Closing
Purchase Transaction with respect to any Option purchased or written by
the Fund and described in this Article, the Custodian shall delete such
Option from the statements delivered to the Fund pursuant to paragraph 3
Article III herein, and upon the return and/or cancellation of any
receipts issued by the Custodian, shall make such withdrawals from the
Collateral Account, and the Margin Account and/or the Senior Security
Account as may be specified in a Certificate received in connection with
such expiration, exercise, or consummation.
14. Securities acquired by the Fund through the exercise of an
Option described in this Article shall be subject to Article IV hereof.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures Contract, the Fund
shall deliver to the Custodian a Certificate specifying with respect to
such Futures Contract, (or with respect to any number of identical Futures
Contract (s)): (a) the Series for which the Futures Contract is being
entered; (b) the category of Futures Contract (the name of the underlying
index or financial instrument); (c) the number of identical Futures
Contracts entered into; (d) the delivery or settlement date of the Futures
Contract(s); (e) the date the Futures Contract(s) was (were) entered into
and the maturity date; (f) whether the Fund is buying (going long) or
selling (going short) such Futures Contract(s); (g) the amount of cash
and/or the amount and kind of Securities, if any, to be deposited in the
Senior Security Account for such Series; (h) the name of the broker,
dealer, or futures commission merchant through whom the Futures Contract
was entered into; and (i) the amount of fee or commission, if any, to be
paid and the name of the broker, dealer, or futures commission merchant
to whom such amount is to be paid. The Custodian shall make the deposits,
if any, to the Margin Account in accordance with the terms and conditions
of the Margin Account Agreement. The Custodian shall make payment out of
the moneys specifically allocated to such Series of the fee or commission,
if any, specified in the Certificate and deposit in the Senior Security
Account for such Series the amount of cash and/or the amount and kind of
Securities specified in said Certificate.
2. (a) Any variation margin payment or similar payment
required to be made by the Fund to a broker, dealer, or futures commission
merchant with respect to an outstanding Futures Contract shall be made by
the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
(b) Any variation margin payment or similar payment from
a broker, dealer, or futures commission merchant to the Fund with respect
to an outstanding Futures Contract shall be received and dealt with by the
Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
3. Whenever a Futures Contract held by the Custodian hereunder is
retained by the Fund until delivery or settlement is made on such Futures
Contract, the Fund shall deliver to the Custodian prior to the delivery
or settlement date a Certificate specifying: (a) the Futures Contract and
the Series to which the same relates; (b) with respect to an Index Futures
Contract, the total cash settlement amount to be paid or received, and
with respect to a Financial Futures Contract, the Securities and/or amount
of cash to be delivered or received; (c) the broker, dealer, or futures
commission merchant to or from whom payment or delivery is to be made or
received; and (d) the amount of cash and/or Securities to be withdrawn
from the Senior Security Account for such Series. The Custodian shall
make the payment or delivery specified in the Certificate, and delete such
Futures Contract from the statements delivered to the Fund pursuant to
paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a Futures Contract to offset
a Futures Contract held by the Custodian hereunder, the Fund shall deliver
to the Custodian a Certificate specifying: (a) the items of information
required in a Certificate described in paragraph 1 of this Article, and
(b) the Futures Contract being offset. The Custodian shall make payment
out of the money specifically allocated to such Series of the fee or
commission, if any, specified in the Certificate and delete the Futures
Contract being offset from the statements delivered to the Fund pursuant
to paragraph 3 of Article III herein, and make such withdrawals from the
Senior Security Account for such Series as may be specified in the Cer-
tificate. The withdrawals, if any, to be made from the Margin Account
shall be made by the Custodian in accordance with the terms and conditions
of the Margin Account Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the execution of a purchase of any Futures
Contract Option by the Fund, the Fund shall deliver to the Custodian a
Certificate specifying with respect to such Futures Contract Option: (a)
the Series to which such Option is specifically allocated; (b) the type
of Futures Contract Option (put or call); (c) the type of Futures Contract
and such other information as may be necessary to identify the Futures
Contract underlying the Futures Contract Option purchased; (d) the
expiration date; (e) the exercise price; (f) the dates of purchase and
settlement; (g) the amount of premium to be paid by the Fund upon such
purchase; (h) the name of the broker or futures commission merchant
through whom such Option was purchased; and (i) the name of the broker,
or futures commission merchant, to whom payment is to be made. The Cus-
todian shall pay out of the moneys specifically allocated to such Series
the total amount to be paid upon such purchase to the broker or futures
commissions merchant through whom the purchase was made, provided that the
same conforms to the amount set forth in such Certificate.
Option purchased by the Fund pursuant to paragraph 1 hereof, the Fund
shall deliver to the Custodian a Certificate specifying with respect to
each such sale: (a) Series to which such Futures Contract Option was
specifically allocated; (b) the type of Future Contract Option (put or
call); (c) the type of Futures Contract and such other information as may
be necessary to identify the Futures Contract underlying the Futures
Contract Option; (d) the date of sale; (e) the sale price; (f) the date
of settlement; (g) the total amount payable to the Fund upon such sale;
and (h) the name of the broker of futures commission merchant through whom
the sale was made. The Custodian shall consent to the cancellation of the
Futures Contract Option being closed against payment to the Custodian of
the total amount payable to the Fund, provided the same conforms to the
total amount payable as set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the Fund
pursuant to paragraph 1 is exercised by the Fund, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the Series to
which such Futures Contract Option was specifically allocated; (b) the
particular Futures Contract Option (put or call) being exercised; (c) the
type of Futures Contract underlying the Futures Contract Option; (d) the
date of exercise; (e) the name of the broker or futures commission
merchant through whom the Futures Contract Option is exercised; (f) the
net total amount, if any, payable by the Fund; (g) the amount, if any, to
be received by the Fund; and (h) the amount of cash and/or the amount and
kind of Securities to be deposited in the Senior Security Account for such
Series. The Custodian shall make, out of the moneys and Securities
specifically allocated to such Series, the payments of money, if any, and
the deposits of Securities, if any, into the Senior Security Account as
specified in the Certificate. The deposits, if any, to be made to the
Margin Account shall be made by the Custodian in accordance with the terms
and conditions of the Margin Account Agreement.
4. Whenever the Fund writes a Futures Contract Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying with
respect to such Futures Contract Option: (a) the Series for which such
Futures Contract Option was written; (b) the type of Futures Contract
Option (put or call); (c) the type of Futures Contract and such other
information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option; (d) the expiration date; (e) the
exercise price; (f) the premium to be received by the Fund; (g) the name
of the broker or futures commission merchant through whom the premium is
to be received; and (h) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in the Senior Security Account for
such Series. The Custodian shall, upon receipt of the premium specified
in the Certificate, make out of the moneys and Securities specifically
allocated to such Series the deposits into the Senior Security Account,
if any, as specified in the Certificate. The deposits, if any, to be made
to the Margin Account shall be made by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
5. Whenever a Futures Contract Option written by the Fund which is
a call is exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying: (a) the Series to which such Futures Contract
Option was specifically allocated; (b) the particular Futures Contract
Option exercised; (c) the type of Futures Contract underlying the Futures
Contract Option; (d) the name of the broker or futures commission merchant
through whom such Futures Contract Option was exercised; (e) the net total
amount, if any, payable to the Fund upon such exercise; (f) the net total
amount, if any, payable by the Fund upon such exercise; and (g) the amount
of cash and/or the amount and kind of Securities to be deposited in the
Senior Security Account for such Series. The Custodian shall, upon its
receipt of the net total amount payable to the Fund, if any, specified in
such Certificate make the payments, if any, and the deposits, if any, into
the Senior Security Account as specified in the Certificate. The de-
posits, if any, to be made to the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
6. Whenever a Futures Contract Option which is written by the Fund
and which is a put is exercised, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Option
was specifically allocated; (b) the particular Futures Contract Option
exercised; (c) the type of Futures Contract underlying such Futures
Contract Option; (d) the name of the broker or futures commission merchant
through whom such Futures Contract Option is exercised; (e) the net total
amount, if any, payable to the Fund upon such exercise; (f) the net total
amount, if any, payable by the Fund upon such exercise; and (g) the amount
and kind of Securities and/or cash to be withdrawn from or deposited in,
the Senior Security Account for such Series, if any. The Custodian shall,
upon its receipt of the net total amount payable to the Fund, if any,
specified in the Certificate, make out of the moneys and Securities
specifically allocated to such Series, the payments, if any, and the
deposits, if any, into the Senior Security Account as specified in the
Certificate. The deposits to and/or withdrawals from the Margin Account,
if any, shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
7. Promptly after the execution by the Fund of a purchase of any
Futures Contract Option identical to a previously written Futures Contract
Option described in this Article in order to liquidate its position as a
writer of such Futures Contract Option, the Fund shall deliver to the
Custodian a Certificate specifying with respect to the Futures Contract
Option being purchased: (a) the Series to which such Option is
specifically allocated; (b) that the transaction is a closing transaction;
(c) the type of Future Contract and such other information as may be
necessary to identify the Futures Contract underlying the Futures Option
Contract; (d) the exercise price; (e) the premium to be paid by the Fund;
(f) the expiration date; (g) the name of the broker or futures commission
merchant to whom the premium is to be paid; and (h) the amount of cash
and/or the amount and kind of Securities, if any, to be withdrawn from the
Senior Security Account for such Series. The Custodian shall effect the
withdrawals from the Senior Security Account specified in the Certificate.
The withdrawals, if any, to be made from the Margin Account shall be made
by the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
8. Upon the expiration, exercise, or consummation of a closing
transaction with respect to, any Futures Contract Option written or
purchased by the Fund and described in this Article, the Custodian shall
(a) delete such Futures Contract Option from the statements delivered to
the Fund pursuant to paragraph 3 of Article III herein and (b) make such
withdrawals from and/or in the case of an exercise such deposits into the
Senior Security Account as may be specified in a Certificate. The
deposits to and/or withdrawals from the Margin Account, if any, shall be
made by the Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
9. Futures Contracts acquired by the Fund through the exercise of
a Futures Contract Option described in this Article shall be subject to
Article VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after the execution of any short sales of Securities
by any Series of the Fund, the Fund shall deliver to the Custodian a
Certificate specifying: (a) the Series for which such short sale was
made; (b) the name of the issuer-and the title of the Security; (c) the
number of shares or principal amount sold, and accrued interest or
dividends, if any; (d) the dates of the sale and settlement; (e) the sale
price per unit; (f) the total amount credited to the Fund upon such sale,
if any, (g) the amount of cash and/or the amount and kind of Securities,
if any, which are to be deposited in a Margin Account and the name in
which such Margin Account has been or is to be established; (h) the amount
of cash and/or the amount and kind of Securities, if any, to be deposited
in a Senior Security Account, and (i) the name of the broker through whom
such short sale was made. The Custodian shall upon its receipt of a
statement from such broker confirming such sale and that the total amount
credited to the Fund upon such sale, if any, as specified in the
Certificate is held by such broker for the account of the Custodian (or
any nominee of the Custodian) as custodian of the Fund, issue a receipt
or make the deposits into the Margin Account and the Senior Security
Account specified in the Certificate.
2. Promptly after the execution of a purchase to close-out any
short sale of Securities, the Fund shall promptly deliver to the Custodian
a Certificate specifying with respect to each such closing out: (a) the
Series for which such transaction is being made; (b) the name of the
issuer and the title of the Security; (c) the number of shares or the
principal amount, and accrued interest or dividends, if any, required to
effect such closing-out to be delivered to the broker; (d) the dates of
closing-out and settlement; (e) the purchase price per unit; (f) the net
total amount payable to the Fund upon such closing-out; (g) the net total
amount payable to the broker upon such closing-out; (h) the amount of cash
and the amount and kind of Securities to be withdrawn, if any, from the
Margin Account; (i) the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Senior Security Account; and
(j) the name of the broker through whom the Fund is effecting such
closing-out. The Custodian shall, upon receipt of the net total amount
payable to the Fund upon such closing-out, and the return and/or
cancellation of the receipts, if any, issued by the Custodian with respect
to the short sale being closed-out, pay out of the moneys held for the
account of the Fund to the broker the net total amount payable to the
broker, and make the withdrawals from the Margin Account and the Senior
Security Account, as the same are specified in the Certificate.
ARTICLE IX
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters a Repurchase Agreement or a
Reverse Repurchase Agreement with respect to Securities and money held by
the Custodian hereunder, the Fund shall deliver to the Custodian a Certi-
ficate, or in the event such Repurchase Agreement or Reverse Repurchase
Agreement is a Money Market Security, a Certificate, Oral Instructions,
or Written Instructions specifying: (a) the Series for which the
Repurchase Agreement or Reverse Repurchase Agreement is entered; (b) the
total amount payable to or by the Fund in connection with such Repurchase
Agreement or Reverse Repurchase Agreement and specifically allocated to
such Series; (c) the broker, dealer, or financial institution with whom
the Repurchase Agreement or Reverse Repurchase Agreement is entered; (d)
the amount and kind of Securities to be delivered or received by the Fund
to or from such broker, dealer, or financial institution; (e) the date of
such Repurchase Agreement or Reverse Repurchase Agreement; and (f) the
amount of cash and/or the amount and kind of Securities, if any, specifi-
cally allocated to such Series to be deposited in a Senior Security Ac-
count for such Series in connection with such Reverse Repurchase
Agreement. The Custodian shall, upon receipt of the total amount payable
to or by the Fund specified in the Certificate, Oral Instructions, or
Written Instructions make or accept the delivery to or from the broker,
dealer, or financial institution and the deposits, if any, to the Senior
Security Account, specified in such Certificate, Oral Instructions, or
Written Instructions.
2. Upon the termination of a Repurchase Agreement or a Reverse
Repurchase Agreement described in preceding paragraph 1 of this Article,
the Fund shall promptly deliver a Certificate or, in the event such
Repurchase Agreement or Reverse Repurchase Agreement is a Money Market
Security, a Certificate, Oral Instructions, or Written Instructions to the
Custodian specifying: (a) the Repurchase Agreement or Reverse Repurchase
Agreement being terminated and the Series for which same was entered; (b)
the total amount payable to or by the Fund in connection with such
termination; (c) the amount and kind of Securities to be received or
delivered by the Fund and specifically allocated to such Series in
connection with such termination; (d) the date of termination; (e) the
name of the broker, dealer, or financial institution with whom the Repur-
chase Agreement or Reverse Repurchase Agreement is to be terminated; and
(f) the amount of cash and/or the amount and kind of Securities, if any,
to be withdrawn from the Senior Securities Account for such Series. The
Custodian shall, upon receipt or delivery of the amount and kind of
Securities or cash to be received or delivered by the Fund specified in
the Certificate, Oral Instructions, or Written Instructions, make or
receive the payment to or from the broker, dealer, or financial
institution and make the withdrawals, if any, from the Senior Security
Account, specified in such Certificate, Oral Instructions, or Written
Instructions.
3. The Certificates, Oral Instructions, or Written Instructions
described in paragraphs 1 and 2 of this Article may with respect to any
particular Repurchase Agreement or Reverse Repurchase Agreement be
combined and delivered to the Custodian at the time of entering into such
Repurchase Agreement or Reverse Repurchase Agreement.
ARTICLE X
LOANS OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities specifically
allocated to a Series held by the Custodian hereunder, the Fund shall
deliver or cause to be delivered to the Custodian a Certificate specifying
with respect to each such loan: (a) the Series to which the loaned
Securities are specifically allocated; (b) the name of the issuer and the
title of the Securities, (c) the number of shares or the principal amount
loaned, (d) the date of loan and delivery, (e) the total amount to be
delivered to the Custodian against the loan of the Securities, including
the amount of cash collateral and the premium, if any, separately iden-
tified, and (f) the name of the broker, dealer, or financial institution
to which the loan was made. The Custodian shall deliver the Securities
thus designated to the broker, dealer or financial institution to which
the loan was made upon receipt of the total amount designated in the
Certificate as to be delivered against the loan of Securities. The
Custodian may accept payment in connection with a delivery otherwise than
through the Book-Entry System or a Depository only in the form of a
certified or bank cashier's check payable to the order of the Fund or the
Custodian drawn on New York Clearing House funds.
2. In connection with each termination of a loan of Securities by
the Fund, the Fund shall deliver or cause to be delivered to the Custodian
a Certificate specifying with respect to each such loan termination and
return of Securities: (a) the Series to which the loaned Securities are
specifically allocated; (b) the name of the issuer and the title of the
Securities to be returned, (c) the number of shares or the principal
amount to be returned, (d) the date of termination, (e) the total amount
to be delivered by the Custodian (including the cash collateral for such
Securities minus any offsetting credits as described in said Certificate),
and (f) the name of the broker, dealer, or financial institution from
which the Securities will be returned. The Custodian shall receive all
Securities returned from the broker, dealer, or financial institution to
which such Securities were loaned and upon receipt thereof shall pay, out
of the moneys held for the account of the Fund, the total amount payable
upon such return of Securities as set forth in the Certificate.
ARTICLE XI
CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY
ACCOUNTS, AND COLLATERAL ACCOUNTS
1. The Custodian shall establish a Senior Security Account and from
time to time make such deposits thereto, or withdrawals therefrom, as
specified in a Certificate. Such Certificate shall specify the Series for
which such deposit or withdrawal is to be made and the amount of cash
and/or the amount and kind of Securities specifically allocated to such
Series to be deposited in, or withdrawn from, such Senior Security Account
for such Series. In the event that the Fund fails to specify in a
Certificate the Series, the name of the issuer, the title and the number
of shares or the principal amount of any particular Securities to be
deposited by the Custodian into, or withdrawn from, a Senior Securities
Account, the Custodian shall be under no obligation to make any such
deposit or withdrawal and shall promptly notify the Fund that no such
deposit has been made.
2. The Custodian shall make deliveries or payments from a Margin
Account to the broker, dealer, futures commission merchant or Clearing
Member in whose name, or for whose benefit, the account was established
as specified in the Margin Account Agreement.
3. Amounts received by the Custodian as payments or distributions
with respect to Securities deposited in any Margin Account shall be dealt
with in accordance with the terms and conditions of the Margin Account
Agreement.
4. The Custodian shall to the extent permitted by the Fund's
Declaration of Trust, investment restrictions and the Investment Company
Act of 1940 have a continuing lien and security interest in and to any
property at any time held by the Custodian in any Collateral Account
described herein. In accordance with applicable law the Custodian may
enforce its lien and realize on any such property whenever the Custodian
has made payment or delivery pursuant to any Put Option guarantee letter
or similar document or any receipt issued hereunder by the Custodian;
provided, however, that the Custodian shall not be required to issue any
Put Option guarantee letter unless it shall have received an opinion of
counsel to the Fund or its investment adviser that the issuance of such
letters is authorized by the Fund and that the Custodian's continuing lien
and security interest is valid, enforceable and not limited by the
Declaration of Trust, any investment restrictions or the Investment
Company Act of 1940. In the event the Custodian should realize on any
such property net proceeds which are less than the Custodian's obligations
under any Put Option guarantee letter or similar document or any receipt,
such deficiency shall be a debt owed the Custodian by the Fund within the
scope of Article XIV herein.
5. On each business day the Custodian shall furnish the Fund with
a statement with respect to each Margin Account in which money or
Securities are held specifying as of the close of business on the previous
business day: (a) the name of the Margin Account; (b) the amount and kind
of Securities held therein; and (c) the amount of money held therein. The
Custodian shall make available upon request to any broker, dealer, or
futures commission merchant specified in the name of a Margin Account a
copy of the statement furnished the Fund with respect to such Margin
Account.
6. The Custodian shall establish a Collateral Account and from time
to time shall make such deposits thereto as may be specified in a
Certificate. Promptly after the close of business on each business day
in which cash and/or Securities are maintained in a Collateral Account for
any Series, the Custodian shall furnish the Fund with a statement with
respect to such Collateral Account specifying the amount of cash and/or
the amount and kind of Securities held therein. No later than the close
of business next succeeding the delivery to the Fund of such statement,
the Fund shall furnish to the Custodian a Certificate or Written
Instructions specifying the then market value of the Securities described
in such statement. In the event such then market value is indicated to
be less than the Custodian's obligation with respect to any outstanding
Put Option guarantee letter or similar document, the Fund shall promptly
specify in a Certificate the additional cash and/or Securities to be
deposited in such Collateral Account to eliminate such deficiency.
ARTICLE
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of the resolution
of the Board of Trustees of the Fund, certified by the Secretary or any
Assistant Secretary, either (i) setting forth with respect to the Series
specified therein the date of the declaration of a dividend or distribu-
tion, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount payable
per Share of such Series to the shareholders of record as of that date and
the total amount payable to the Transfer Agent Account and any sub-
dividend agent or co-dividend agent of the Fund on the payment date, or
(ii) authorizing with respect to the Series specified therein and the
declaration of dividends and distributions thereon the Custodian to rely
on Oral Instructions, Written Instructions, or a Certificate setting forth
the date of the declaration of such dividend or distribution, the date of
payment thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per Share of such Series
to the shareholders of record as of that date and the total amount payable
to the Transfer Agent Account on the payment date.
2. Upon the payment date specified in such resolution, Oral
Instructions, Written Instructions, or Certificate, as the case may be,
the Custodian shall pay to the Transfer Agent Account out of the moneys
held for the account of the Series specified therein the total amount
payable to the Transfer Agent Account and with respect to such Series.
ARTICLE XIII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall deliver or
cause to be delivered, to the Custodian a Certificate duly specifying:
(a) The series, the number of shares sold, trade date, and
price; and
(b) The amount of money to be received by the Custodian
for the sale of such Shares and specifically allocated to the separate
account in the name of such Series.
2. Upon receipt of such money from the Fund's General Distributor,
the Custodian shall credit such money to the separate account in the name
of the Series for which such money was received.
3. Upon issuance of any Shares of any Series the Custodian shall
pay, out of the money held for the account of such Series, all original
issue or other taxes required to be paid by the Fund in connection with
such issuance upon the receipt of a Certificate specifying the amount to
be paid.
4. Except as provided hereinafter, whenever the Fund desires the
Custodian to make payment out of the money held by the Custodian hereunder
in connection with a redemption of any Shares, it shall furnish, or cause
to be furnished, to the Custodian a Certificate specifying:
(a) The number and Series of Shares redeemed; and
(b) The amount to be paid for such Shares.
5. Upon receipt of an advice from an Authorized Person setting
forth the Series and number of Shares received by the Transfer Agent for
redemption and that such Shares are in good form for redemption, the
Custodian shall make payment to the Transfer Agent Account out of the
moneys held in the separate account in the name of the Series the total
amount specified in the Certificate issued pursuant to the foregoing
paragraph 4 of this Article.
ARTICLE XIV
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance funds on
behalf of any Series which results in an overdraft because the moneys held
by the Custodian in the separate account for such Series shall be insuffi-
cient to pay the total amount payable upon a purchase of Securities
specifically allocated to such Series, as set forth in a Certificate, Oral
Instructions, or Written Instructions or which results in an overdraft in
the separate account of such Series for some other reason, or if the Fund
is for any other reason indebted to the Custodian with respect to a Ser-
ies, (except a borrowing for investment or for temporary or emergency
purposes using Securities as collateral pursuant to a separate agreement
and subject to the provisions of paragraph 2 of this Article), such
overdraft or indebtedness shall be deemed to be a loan made by the
Custodian to the Fund for such Series payable on demand and shall bear
interest from the date incurred at a rate per annum (based on a 360-day
year for the actual number of days involved) equal to the Federal Funds
Rate plus 1/2%, such rate to be adjusted on the effective date of any change
in such Federal Funds Rate but in no event to be less than 6% per annum.
In addition, unless the Fund has given a Certificate that the Custodian
shall not impose a lien and security interest to secure such overdrafts
(in which event it shall not do so), the Custodian shall have a continuing
lien and security interest in the aggregate amount of such overdrafts and
indebtedness as may from time to time exist in and to any property
specifically allocated to such Series at any time held by it for the
benefit of such Series or in which the Fund may have an interest which is
then in the Custodian's possession or control or in possession or control
of any third party acting in the Custodian's behalf. The Fund authorizes
the Custodian, in its sole discretion, at any time to charge any such
overdraft or indebtedness together with interest due thereon against any
money balance in an account standing in the name of such Series' credit
on the Custodian's books. In addition, the Fund hereby covenants that on
each Business Day on which either it intends to enter a Reverse Repurchase
Agreement and/or otherwise borrow from a third party, or which next
succeeds a Business Day on which at the close of business the Fund had
outstanding a Reverse Repurchase Agreement or such a borrowing, it shall
prior to 9 a.m., New York City time, advise the Custodian, in writing, of
each such borrowing, shall specify the Series to which the same relates,
and shall not incur any indebtedness, including pursuant to any Reverse
Repurchase Agreement, not so specified other than from the Custodian.
2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the
Custodian) from which it borrows money for investment or for temporary or
emergency purposes using Securities held by the Custodian hereunder as
collateral for such borrowings, a notice or undertaking in the form
currently employed by any such bank setting forth the amount which such
bank will loan to the Fund against delivery of a stated amount of
collateral. The Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such borrowing: (a) the
Series to which such borrowing relates; (b) the name of the bank, (c) the
amount and terms of the borrowing, which may be set forth by incorporating
by reference an attached promissory note, duly endorsed by the Fund, or
other loan agreement, (d) the time and date, if known, on which the loan
is to be entered into, (e) the date on which the loan becomes due and
payable, (f) the total amount payable to the Fund on the borrowing date,
(g) the market value of Securities to be delivered as collateral for such
loan, including the name of the issuer, the title and the number of shares
or the principal amount of any particular Securities, and (h) a statement
specifying whether such loan is for investment purposes or for temporary
or emergency purposes and that such loan is in conformance with the
Investment Company Act of 1940 and the Fund's prospectus and Statement of
Additional Information. The Custodian shall deliver on the borrowing date
specified in a Certificate the specified collateral and the executed
promissory note, if any, against delivery by the lending bank of the total
amount of the loan payable, provided that the same conforms to the total
amount payable as set forth in the Certificate. The Custodian may, at the
option of the lending bank, keep such collateral in its possession, but
such collateral shall be subject to all rights therein given the lending
bank by virtue of any promissory note or loan agreement. The Custodian
shall deliver such Securities as additional collateral as may be specified
in a Certificate to collateralize further any transaction described in
this paragraph. The Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian, and the
Custodian shall receive from time to time such return of collateral as may
be tendered to it. In the event that the Fund fails to specify in a
Certificate the Series, the name of the issuer, the title and number of
shares or the principal amount of any particular Securities to be
delivered as collateral by the Custodian, to any such bank, the Custodian
shall not be under any obligation to deliver any Securities.
ARTICLE XV
CUSTODY OF ASSETS OUTSIDE THE U.S.
1. The Custodian is authorized and instructed to employ, as its
agent, as subcustodians for the securities and other assets of the Fund
maintained outside of the United States the Foreign Subcustodians and For-
eign Depositories designated on Schedule A hereto. Except as provided in
Schedule A, the Custodian shall employ no other Foreign Custodian or
Foreign Depository. The Custodian and the Fund may amend Schedule A
hereto from time to time to agree to designate any additional Foreign
Subcustodian or Foreign Depository with which the Custodian has an
agreement for such entity to act as the Custodian's agent, as subcus-
todian, and which the Custodian in its absolute discretion proposes to
utilize to hold any of the Fund's Foreign Property. Upon receipt of a
Certificate or Written Instructions from the Fund, the Custodian shall
cease the employment of any one or more of such subcustodians for
maintaining custody of the Fund's assets and such custodian shall be
deemed deleted from Schedule A.
2. The Custodian shall limit the securities and other assets
maintained in the custody of the Foreign Subcustodians to: (a) "foreign
securities," as defined in paragraph (c)(1) of Rule 17f-5 under the
Investment Company Act of 1940, and (b) cash and cash equivalents in such
amounts as the Fund may determine to be reasonably necessary to effect the
foreign securities transactions of the Fund.
3. The Custodian shall identify on its books as belonging to the
Fund, the Foreign Securities held by each Foreign Subcustodian.
4. Each agreement pursuant to which the Custodian employs a Foreign
Subcustodian shall be substantially in the form reviewed and approved by
the Fund and will not be amended in a way that materially affects the Fund
without the Fund's prior written consent and shall:
(a) require that such institution establish custody account(s)
for the Custodian on behalf of the Fund and physically segregate in each
such account securities and other assets of the fund, and, in the event
that such institution deposits the securities of the Fund in a Foreign
Depository, that it shall identify on its books as belonging to the Fund
or the Custodian, as agent for the Fund, the securities so deposited;
(b) provide that:
(1) the assets of the Fund will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of
the Foreign Subcustodian or its creditors, except a claim of payment for
their safe custody or administration;
(2) beneficial ownership for the assets of the Fund will
be freely transferable without the payment of money or value other than
for custody or administration;
(3) adequate records will be maintained identifying the
assets as belonging to the Fund;
(4) the independent public accountants for the Fund will
be given access to the books and records of the Foreign Subcustodian
relating to its actions under its agreement with the Custodian or
confirmation of the contents of those records;
(5) the Fund will receive periodic reports with respect
to the safekeeping of the Fund's assets, including, but not necessarily
limited to, notification of any transfer to or from the custody
account(s); and
(6) assets of the Fund held by the Foreign Subcustodian
will be subject only to the instructions of the Custodian or its agents.
(c) Require the institution to exercise reasonable care in the
performance of its duties and to indemnify, and hold harmless, the
Custodian from and against any loss, damage, cost, expense, liability or
claim arising out of or in connection with the institution's performance
of such obligations, with the exception of any such losses, damages,
costs, expenses, liabilities or claims arising as a result of an act of
God. At the election of the Fund, it shall be entitled to be subrogated
to the rights of the Custodian with respect to any claims against a
Foreign Subcustodian as a consequence of any such loss, damage, cost,
expense, liability or claim of or to the Fund, if and to the extent that
the Fund has not been made whole for any such loss, damage, cost, expense,
liability or claim.
5. Upon receipt of a Certificate or Written Instructions, which may
be continuing instructions when deemed appropriate by the parties, the
Custodian shall on behalf of the Fund make or cause its Foreign
Subcustodian to transfer, exchange or deliver securities owned by the
Fund, except to the extent explicitly prohibited therein. Upon receipt
of a Certificate or Written Instructions, which may be continuing
instructions when deemed appropriate by the parties, the Custodian shall
on behalf of the fund pay out or cause its Foreign Subcustodians to pay
out monies of the Fund. The Custodian shall use all means reasonably
available to it, including, if specifically authorized by the Fund in a
Certificate, any necessary litigation at the cost and expense of the Fund
(except as to matters for which the Custodian is responsible hereunder)
to require or compel each Foreign Subcustodian or Foreign Depository to
perform the services required of it by the agreement between it and the
Custodian authorized pursuant to this Agreement.
6. The Custodian shall maintain all books and records as shall be
necessary to enable the Custodian readily to perform the services required
of it hereunder with respect to the Fund's Foreign Properties. The
Custodians shall supply to the Fund from time to time, as mutually agreed
upon, statements in respect of the Foreign Securities and other Foreign
Properties of the Fund held by Foreign Subcustodians, directly or through
Foreign Depositories, including but not limited to an identification of
entities having possession of the Fund's Foreign Securities and other
assets, an advice or other notification of any transfers of securities to
or from each custodial account maintained for the Fund or the Custodian
on behalf of the Fund indicating, as to securities acquired for the Fund,
the identity of the entity having physical possession of such securities.
The Custodian shall promptly and faithfully transmit all reports and
information received pertaining to the Foreign Property of the Fund,
including, without limitation, notices or reports of corporate action,
proxies and proxy soliciting materials.
7. Upon request of the Fund, the Custodian shall use reasonable
efforts to arrange for the independent accountants of the Fund to be
afforded access to the books and records of any Foreign Subcustodian, or
confirmation of the contents thereof, insofar as such books and records
relate to the Foreign Property of the Fund or the performance of such
Foreign Subcustodian under its agreement with the Custodian; provided that
any litigation to afford such access shall be at the sole cost and expense
of the Fund.
8. The Custodian recognizes that employment of a Foreign Sub-
custodian or Foreign Depository for the Fund's Foreign Securities and
Foreign Property is permitted by Section 17(f) of the Investment Company
Act of 1940 only upon compliance with Section (a) of Rule 17f-5
promulgated thereunder. With respect to the Foreign Subcustodians and
Foreign Depositories identified on Schedule A, the Custodian represents
that it has furnished the Fund with certain materials prepared by the
Custodian and with such other information in the possession of the Cus-
todian as the Fund advised the Custodian was reasonably necessary to
assist the Board of Trustees of the Fund in making the determinations
required of the Board of Trustees by Rule 17f-5, including, without
limitation, consideration of the matters set forth in the Notes to Rule
17f-5. If the Custodian recommends any additional Foreign Subcustodian
or Foreign Depository, the Custodian shall supply information similar in
kind and scope to that furnished pursuant to the preceding sentence. Fur-
ther, the Custodian shall furnish annually to the Fund, at such time as
the Fund and Custodian shall mutually agree, information concerning each
Foreign Subcustodian and Foreign Depository then identified on Schedule
A similar in kind and scope to that furnished pursuant to the preceding
two sentences.
9. The Custodian's employment of any Foreign Subcustodian or
Foreign Depository shall constitute a representation that the Custodian
believes in good faith that such Foreign Subcustodian or Foreign
Depository provides a level of safeguards for maintaining the Fund's
assets not materially different from that provided by the Custodian in
maintaining the Fund's securities in the United States. In addition, the
Custodian shall monitor the financial condition and general operational
performance of the Foreign Subcustodians and Foreign Depositories and
shall promptly inform the Fund in the event that the Custodian has actual
knowledge of a material adverse change in the financial condition thereof
or that there appears to be a substantial likelihood that the share-
holders' equity of any Foreign Subcustodian will decline below $200
million (U.S. dollars or the equivalent thereof) or that its shareholders'
equity has declined below $200 million , or that the Foreign Subcustodian
or Foreign Depository has breached the agreement between it and the
Custodian in a way that the Custodian believes adversely affects the Fund.
Further, the Custodian shall advise the Fund if it believes that there is
a material adverse change in the operating environment of any Foreign
Subcustodian or Foreign Depository.
ARTICLE XVI
CONCERNING THE CUSTODIAN
1. The Custodian shall use reasonable care in the performance of
its duties hereunder, and, except as hereinafter provided, neither the
Custodian nor its nominee shall be liable for any loss or damage,
including counsel fees, resulting from its action or omission to act or
otherwise, either hereunder or under any Margin Account Agreement, except
for any such loss or damage arising out of its own negligence, bad faith,
or willful misconduct or that of the subcustodians or co-custodians
appointed by the Custodian or of the officers, employees, or agents of any
of them. The Custodian may, with respect to questions of law arising
hereunder or under any Margin Account Agreement, apply for and obtain the
advice and opinion of counsel to the Fund, at the expense of the Fund, or
of its own counsel, at its own expense, and shall be fully protected with
respect to anything done or omitted by it in good faith in conformity with
such advice or opinion. The Custodian shall be liable to the Fund for any
loss or damage resulting from the use of the Book-Entry System or any
Depository arising by reason of any negligence, bad faith or willful mis-
conduct on the part of the Custodian or any of its employees or agents.
2. Notwithstanding the foregoing, the Custodian shall be under no
obligation to inquire into, and shall not be liable for:
(a) The validity (but not the authenticity) of the issue of any
Securities purchased, sold, or written by or for the Fund, the legality
of the purchase, sale or writing thereof, or the propriety of the amount
paid or received therefor, as specified in a Certificate, Oral
Instructions, or Written Instructions;
(b) The legality of the sale or redemption of any Shares, or
the propriety of the amount to be received or paid therefor, as specified
in a Certificate;
(c) The legality of the declaration or payment of any dividend
by the Fund, as specified in a resolution, Certificate, Oral Instructions,
or Written Instructions;
(d) The legality of any borrowing by the Fund using Securities
as collateral;
(e) The legality of any loan of portfolio Securities, nor shall
the Custodian be under any duty or obligation to see to it that the cash
collateral delivered to it by a broker, dealer, or financial institution
or held by it at any time as a result of such loan of portfolio Securities
of the Fund is adequate collateral for the Fund against any loss it might
sustain as a result of such loan, except that this subparagraph shall not
excuse any liability the Custodian may have for failing to act in accor-
dance with Article X hereof or any Certificate, Oral Instructions or
Written Instructions given in accordance with this Agreement. The Custo-
dian specifically, but not by way of limitation, shall not be under any
duty or obligation periodically to check or notify the Fund that the
amount of such cash collateral held by it for the Fund is sufficient
collateral for the Fund, but such duty or obligation shall be the sole
responsibility of the Fund. In addition, the Custodian shall be under no
duty or obligation to see that any broker, dealer or financial institution
to which portfolio Securities of the Fund are lent pursuant to Article X
of this Agreement makes payment to it of any dividends or interest which
are payable to or for the account of the Fund during the period of such
loan or at the termination of such loan, provided, however, that the
Custodian shall promptly notify the Fund in the event that such dividends
or interest are not paid and received when due; or
(f) The sufficiency or value of any amounts of money and/or
Securities held in any Margin Account, Senior Security Account or
Collateral Account in connection with transactions by the Fund, except
that this subparagraph shall not excuse any liability the Custodian may
have for failing to establish, maintain, make deposits to or withdrawals
from such accounts in accordance with this Agreement. In addition, the
Custodian shall be under no duty or obligation to see that any broker,
dealer, futures commission merchant or Clearing Member makes payment to
the Fund of any variation margin payment or similar payment which the Fund
may be entitled to receive from such broker, dealer, futures commission
merchant or Clearing Member, to see that any payment received by the
Custodian from any broker, dealer, futures commission merchant or Clearing
Member is the amount the Fund is entitled to receive, or to notify the
Fund of the Custodian's receipt or non-receipt of any such payment.
3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft,
or other instrument for the payment of money, received by it on behalf of
the Fund until the Custodian actually receives such money directly or by
the final crediting of the account representing the Fund's interest at the
Book-Entry System or the Depository.
4. With respect to Securities held in a Depository, except as
otherwise provided in paragraph 5(b) of Article III hereof, the Custodian
shall have no responsibility and shall not be liable for ascertaining or
acting upon any calls, conversions, exchange offers, tenders, interest
rate changes or similar matters relating to such Securities, unless the
Custodian shall have actually received timely notice from the Depository
in which such Securities are held. In no event shall the Custodian have
any responsibility or liability for the failure of a Depository to
collect, or for the late collection or late crediting by a Depository of
any amount payable upon Securities deposited in a Depository which may
mature or be redeemed, retired, called or otherwise become payable. How-
ever, upon receipt of a Certificate from the Fund of an overdue amount on
Securities held in a Depository the Custodian shall make a claim against
the Depository on behalf of the Fund, except that the Custodian shall not
be under any obligation to appear in, prosecute or defend any action suit
or proceeding in respect to any Securities held by a Depository which in
its opinion may involve it in expense or liability, unless indemnity
satisfactory to it against all expense and liability be furnished as often
as may be required, or alternatively, the Fund shall be subrogated to the
rights of the Custodian with respect to such claim against the Depository
should it so request in a Certificate. This paragraph shall not, however,
excuse any failure by the Custodian to act in accordance with a
Certificate, Oral Instructions, or Written Instructions given in
accordance with this Agreement.
5. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due the Fund from the Transfer
Agent of the Fund nor to take any action to effect payment or distribution
by the Transfer Agent of the Fund of any amount paid by the Custodian to
the Transfer Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount if the Securities upon which
such amount is payable are in default, or if payment is refused after the
Custodian has timely and properly, in accordance with this Agreement, made
due demand or presentation, unless and until (i) it shall be directed to
take such action by a Certificate and (ii) it shall be assured to its
satisfaction of reimbursement of its costs and expenses in connection with
any such action, but the Custodian shall have such a duty if the Secu-
rities were not in default on the payable date and the Custodian failed
to timely and properly make such demand for payment and such failure is
the reason for the non-receipt of payment.
7. The Custodian may, with the prior approval of the Board of
Trustees of the Fund, appoint one or more banking institutions as
subcustodian or subcustodians, or as co-Custodian or co-Custodians, of
Securities and moneys at any time owned by the Fund, upon such terms and
conditions as may be approved in a Certificate or contained in an
agreement executed by the Custodian, the Fund and the appointed
institution; provided, however, that appointment of any foreign banking
institution or depository shall be subject to the provisions of Article
XV hereof.
8. The Custodian agrees to indemnify the Fund against and save the
Fund harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever arising or incurred because of the
negligence, bad faith or willful misconduct of any subcustodian of the
Securities and moneys owned by the Fund.
9. The Custodian shall not be under any duty or obligation (a) to
ascertain whether any Securities at any time delivered to, or held by it,
for the account of the Fund and specifically allocated to a Series are
such as properly may be held by the Fund or such Series under the
provisions of its then current prospectus, or (b) to ascertain whether any
transactions by the Fund, whether or not involving the Custodian, are such
transactions as may properly be engaged in by the Fund.
10. The Custodian shall be entitled to receive and the Fund agrees
to pay to the Custodian all reasonable out-of-pocket expenses and such
compensation as may be agreed upon in writing from time to time between
the Custodian and the Fund. The Custodian may charge such compensation,
and any such expenses with respect to a Series incurred by the Custodian
in the performance of its duties under this Agreement against any money
specifically allocated to such Series. The Custodian shall also be
entitled to charge against any money held by it for the account of a
Series the amount of any loss, damage, liability or expense, including
counsel fees, for which it shall be entitled to reimbursement under the
provisions of this Agreement attributable to, or arising out of, its
serving as Custodian for such Series. The expenses for which the
Custodian shall be entitled to reimbursement hereunder shall include, but
are not limited to, the expenses of subcustodians and foreign branches of
the Custodian incurred in settling outside of New York City transactions
involving the purchase and sale of Securities of the Fund. Notwithstanding
the foregoing or anything else contained in this Agreement to the
contrary, the Custodian shall, prior to effecting any charge for
compensation, expenses, or any overdraft or indebtedness or interest
thereon, submit an invoice therefor to the Fund.
11. The Custodian shall be entitled to rely upon any Certificate,
notice or other instrument in writing, Oral Instructions, or Written
Instructions received by the Custodian and reasonably believed by the
Custodian to be genuine. The Fund agrees to forward to the Custodian a
Certificate or facsimile thereof confirming Oral Instructions or Written
Instructions in such manner so that such Certificate or facsimile thereof
is received by the Custodian, whether by hand delivery, telecopier or
other similar device, or otherwise, by the close of business of the same
day that such Oral Instructions or Written Instructions are given to the
Custodian. The Fund agrees that the fact that such confirming
instructions are not received by the Custodian shall in no way affect the
validity of the transactions or enforceability of the transactions thereby
authorized by the Fund. The Fund agrees that the Custodian shall incur
no liability to the Fund in acting upon Oral Instructions or Written
Instructions given to the Custodian hereunder concerning such transactions
provided such instructions reasonably appear to have been received from
an Authorized Person.
12. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed
by the Custodian to be given in accordance with the terms and conditions
of any Margin Account Agreement. Without limiting the generality of the
foregoing, the Custodian shall be under no duty to inquire into, and shall
not be liable for, the accuracy of any statements or representations
contained in any such instrument or other notice including, without limi-
tation, any specification of any amount to be paid to a broker, dealer,
futures commission merchant or Clearing Member. This paragraph shall not
excuse any failure by the Custodian to have acted in accordance with any
Margin Agreement it has executed or any Certificate, Oral Instructions,
or Written Instructions given in accordance with this Agreement.
13. The books and records pertaining to the Fund, as described in
Appendix E hereto, which are in the possession of the Custodian shall be
the property of the Fund. Such books and records shall be prepared and
maintained by the Custodian as required by the Investment Company Act of
1940, as amended, and other applicable Securities laws and rules and
regulations. The Fund, or the Fund's authorized representatives, shall
have access to such books and records during the Custodian's normal
business hours. Upon the reasonable request of the Fund, copies of any
such books and records shall be provided by the Custodian to the Fund or
the Fund's authorized representative, and the Fund shall reimburse the
Custodian its expenses of providing such copies. Upon reasonable request
of the Fund, the Custodian shall provide in hard copy or on micro-film,
whichever the Custodian elects, any records included in any such delivery
which are maintained by the Custodian on a computer disc, or are similarly
maintained, and the Fund shall reimburse the Custodian for its expenses
of providing such hard copy or micro-film.
14. The Custodian shall provide the Fund with any report obtained
by the Custodian on the system of internal accounting control of the Book-
Entry system, each Depository or O.C.C., and with such reports on its own
systems of internal accounting control as the Fund may reasonably request
from time to time.
15. The Custodian shall furnish upon request annually to the Fund
a letter prepared by the Custodian's accountants with respect to the
Custodian's internal systems and controls in the form generally provided
by the Custodian to other investment companies for which the Custodian
acts as custodian.
16. The Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands
whatsoever, including attorney's fees, howsoever arising out of, or
related to, the Custodian's performance of its obligations under this
Agreement, except for any such liability, claim, loss and demand arising
out of the negligence, bad faith, or willful misconduct of the Custodian,
any co-Custodian or subcustodian appointed by the Custodian, or that of
the officers, employees, or agents of any of them.
17. Subject to the foregoing provisions of this Agreement, the
Custodian shall deliver and receive Securities, and receipts with respect
to such Securities, and shall make and receive payments only in accordance
with the customs prevailing from time to time among brokers or dealers in
such Securities and, except as may otherwise be provided by this Agreement
or as may be in accordance with such customs, shall make payment for
Securities only against delivery thereof and deliveries of Securities only
against payment therefor.
18. The Custodian will comply with the procedures, guidelines or
restrictions ("Procedures") adopted by the Fund from time to time for par-
ticular types of investments or transactions, e.g., Repurchase Agreements
and Reverse Repurchase Agreements, provided that the Custodian has
received from the Fund a copy of such Procedures. If within ten days
after receipt of any such Procedures, the Custodian determines in good
faith that it is unreasonable for it to comply with any new procedures,
guidelines or restrictions set forth therein, it may within such ten day
period send notice to the Fund that it does not intend to comply with
those new procedures, guidelines or restrictions which it identifies with
particularity in such notice, in which event the Custodian shall not be
required to comply with such identified procedures, guidelines or
restrictions; provided, however, that, anything to the contrary set forth
herein or in any other agreement with the Fund, if the Custodian identi-
fies procedures, guidelines or restrictions with which it does not intend
to comply, the Fund shall be entitled to terminate this Agreement without
cost or penalty to the Fund upon thirty days' written notice.
19. Whenever the Custodian has the authority to deduct monies from
the account for a series without a Certificate, it shall notify the Fund
within one business day of such deduction and the reason for it. Whenever
the Custodian has the authority to sell Securities or any other property
of the Fund on behalf of any Series without a Certificate, the Custodian
will notify the Fund of its intention to do so and afford the Fund the
reasonable opportunity to select which Securities or other property it
wishes to sell on behalf of such Series. If the Fund does not promptly
sell sufficient Securities or Deposited Property on behalf of the Series,
then, after notice, the Custodian may proceed with the intended sale.
20. The Custodian shall have no duties or responsibilities
whatsoever except such duties and responsibilities as are specifically set
forth or referred to in this Agreement, and no covenant or obligation
shall be implied in this Agreement against the Custodian.
ARTICLE XVII
TERMINATION
1. Except as provided in paragraph 3 of this Article, this
Agreement shall continue until terminated by either the Custodian giving
to the Fund, or the Fund giving to the Custodian, a notice in writing
specifying the date of such termination, which date shall be not less than
60 days after the date of the giving of such notice. In the event such
notice or a notice pursuant to paragraph 3 of this Article is given by the
Fund, it shall be accompanied by a copy of a resolution of the Board of
Trustees of the Fund, certified by an Officer and the Secretary or an
Assistant Secretary of the Fund, electing to terminate this Agreement and
designating a successor custodian or custodians, each of which shall be
eligible to serve as a custodian for the Securities of a management
investment company under the Investment Company Act of 1940. In the event
such notice is given by the Custodian, the Fund shall, on or before the
termination date, deliver to the Custodian a copy of a resolution of the
Board of Trustees of the Fund, certified by the Secretary or any Assistant
Secretary, designating a successor custodian or custodians. In the ab-
sence of such designation by the Fund, the Custodian may designate a
successor custodian which shall be a bank or trust company eligible to
serve as a custodian for Securities of a management investment company
under the Investment Company Act of 1940 and which is acceptable to the
Fund. Upon the date set forth in such notice this Agreement shall
terminate, and the Custodian shall upon receipt of a notice of acceptance
by the successor custodian on that date deliver directly to the successor
custodian all Securities and moneys then owned by the Fund and held by it
as Custodian, after deducting all fees, expenses and other amounts for the
payment or reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or the
Custodian in accordance with the preceding paragraph, the Fund shall upon
the date specified in the notice of termination of this Agreement and upon
the delivery by the Custodian of all Securities (other than Securities
held in the Book-Entry System which cannot be delivered to the Fund) and
moneys then owned by the Fund be deemed to be its own custodian and the
Custodian shall thereby be relieved of all duties and responsibilities
pursuant to this Agreement arising thereafter, other than the duty with
respect to Securities held in the Book Entry System which cannot be deliv-
ered to the Fund to hold such Securities hereunder in accordance with this
Agreement.
3. Notwithstanding the foregoing, the Fund may terminate this
Agreement upon the date specified in a written notice in the event of the
"Bankruptcy" of The Bank of New York. As used in this sub-paragraph, the
term "Bankruptcy" shall mean The Bank of New York's making a general
assignment, arrangement or composition with or for the benefit of its
creditors, or instituting or having instituted against it a proceeding
seeking a judgment of insolvency or bankruptcy or the entry of a order for
relief under any applicable bankruptcy law or any other relief under any
bankruptcy or insolvency law or other similar law affecting creditors
rights, or if a petition is presented for the winding up or liquidation
of the party or a resolution is passed for its winding up or liquidation,
or it seeks, or becomes subject to, the appointment of an administrator,
receiver, trustee, custodian or other similar official for it or for all
or substantially all of its assets or its taking any action in furtherance
of, or indicating its consent to approval of, or acquiescence in, any of
the foregoing.
ARTICLE XVIII
TERMINAL LINK
1. At no time and under no circumstances shall the Fund be
obligated to have or utilize the Terminal Link, and the provisions of this
Article shall apply if, but only if, the Fund in its sole and absolute
discretion elects to utilize the Terminal Link to transmit Certificates
to the Custodian.
2. The Terminal Link shall be utilized only for the purpose of the
Fund providing Certificates to the Custodian and the Custodian providing
notices to the Fund and only after the Fund shall have established access
codes and internal safekeeping procedures to safeguard and protect the
confidentiality and availability of such access codes. Each use of the
Terminal Link by the Fund shall constitute a representation and warranty
that at least two officers have each utilized an access code that such
internal safekeeping procedures have been established by the Fund, and
that such use does not contravene the Investment Company Act of 1940 and
the rules and regulations thereunder.
3. Each party shall obtain and maintain at its own cost and expense
all equipment and services, including, but not limited to communications
services, necessary for it to utilize the Terminal Link, and the other
party shall not be responsible for the reliability or availability of any
such equipment or services, except that the Custodian shall not pay any
communications costs of any line leased by the Fund, even if such line is
also used by the Custodian.
4. The Fund acknowledges that any data bases made available as part
of, or through the Terminal Link and any proprietary data, software,
processes, information and documentation (other than any such which are
or become part of the public domain or are legally required to be made
available to the public) (collectively, the "Information"), are the
exclusive and confidential property of the Custodian. The Fund shall, and
shall cause others to which it discloses the Information, to keep the
Information confidential by using the same care and discretion it uses
with respect to its own confidential property and trade secrets, and shall
neither make nor permit any disclosure without the express prior written
consent of the Custodian.
5. Upon termination of this Agreement for any reason, each Fund
shall return to the Custodian any and all copies of the Information which
are in the Fund's possession or under its control, or which the Fund
distributed to third parties. The provisions of this Article shall not
affect the copyright status of any of the Information which may be
copyrighted and shall apply to all Information whether or not copyrighted.
6. The Custodian reserves the right to modify the Terminal Link from
time to time without notice to the Fund, except that the Custodian shall
give the Fund notice not less than 75 days in advance of any modification
which would materially adversely affect the Fund's operation, and the Fund
agrees not to modify or attempt to modify the Terminal Link without the
Custodian's prior written consent. The Fund acknowledges that any
software provided by the Custodian as part of the Terminal Link is the
property of the Custodian and, accordingly, the Fund agrees that any
modifications to the same, whether by the Fund or the Custodian and
whether with or without the Custodian's consent, shall become the property
of the Custodian.
7. Neither the Custodian nor any manufacturers and suppliers it
utilizes or the Fund utilizes in connection with the Terminal Link makes
any warranties or representations, express or implied, in fact or in law,
including but not limited to warranties of merchantability and fitness for
a particular purpose.
8. Each party will cause its officers and employees to treat the
authorization codes and the access codes applicable to Terminal Link with
extreme care, and irrevocably authorizes the other to act in accordance
with and rely on Certificates and notices received by it through the
Terminal Link. Each party acknowledges that it is its responsibility to
assure that only its authorized persons use the Terminal Link on its
behalf, and that a party shall not be responsible nor liable for use of
the Terminal Link on behalf of the other party by unauthorized persons of
such other party.
9. Notwithstanding anything else in this Agreement to the contrary,
neither party shall have any liability to the other for any losses,
damages, injuries, claims, costs or expenses arising as a result of a
delay, omission or error in the transmission of a Certificate or notice
by use of the Terminal Link except for money damages for those suffered
as the result of the negligence, bad faith or willful misconduct of such
party or its officers, employees or agents in an amount not exceeding for
any incident $100,000; provided, however, that a party shall have no
liability under this Section 9 if the other party fails to comply with the
provisions of Section 11.
10. Without limiting the generality of the foregoing, in no event
shall either party or any manufacturer or supplier of its computer
equipment, software or services relating to the Terminal Link be
responsible for any special, indirect, incidental or consequential damages
which the other party may incur or experience by reason of its use of the
Terminal Link even if such party, manufacturer or supplier has been
advised of the possibility of such damages, nor with respect to the use
of the Terminal Link shall either party or any such manufacturer or
supplier be liable for acts of God, or with respect to the following to
the extent beyond such person's reasonable control: machine or computer
breakdown or malfunction, interruption or malfunction of communication
facilities, labor difficulties or any other similar or dissimilar cause.
11. The Fund shall notify the Custodian of any errors, omissions or
interruptions in, or delay or unavailability of, the Terminal Link as
promptly as practicable, and in any event within 24 hours after the
earliest of (i) discovery thereof, and (ii) in the case of any error, the
date of actual receipt of the earliest notice which reflects such error,
it being agreed that discovery and receipt of notice may only occur on a
business day. The Custodian shall promptly advise the Fund whenever the
Custodian learns of any errors, omissions or interruption in, or delay or
unavailability of, the Terminal Link.
12. Each party shall, as soon as practicable after its receipt of
a Certificate or a notice transmitted by the Terminal Link, verify to the
other party by use of the Terminal Link its receipt of such Certificate
or notice, and in the absence of such verification the party to which the
Certificate or notice is sent shall not be liable for any failure to act
in accordance with such Certificate or notice and the sending party may
not claim that such Certificate or notice was received by the other party.
ARTICLE XIX
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by two of
the present Officers of the Fund under its seal, setting forth the names
and the signatures of the present Authorized Persons. The Fund agrees to
furnish to the Custodian a new Certificate in similar form in the event
that any such present Authorized Person ceases to be an Authorized Person
or in the event that other or additional Authorized Persons are elected
or appointed. Until such new Certificate shall be received, the Custodian
shall be entitled to rely and to act upon Oral Instructions, Written
Instructions, or signatures of the present Authorized Persons as set forth
in the last delivered Certificate to the extent provided by this
Agreement.
2. Annexed hereto as Appendix B is a Certificate signed by two of
the present Officers of the Fund under its seal, setting forth the names
and the signatures of the present Officers of the Fund. The Fund agrees
to furnish to the Custodian a new Certificate in similar form in the event
any such present officer ceases to be an officer of the Fund, or in the
event that other or additional officers are elected or appointed. Until
such new Certificate shall be received, the Custodian shall be entitled
to rely and to act upon the signatures of the officers as set forth in the
last delivered Certificate to the extent provided by this Agreement.
3. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Custodian, other than any
Certificate or Written Instructions, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices
at 90 Washington Street, New York, New York 10286, or at such other place
as the Custodian may from time to time designate in writing.
4. Any notice or other instrument in writing, authorized or rehired
by this Agreement to be given to the Fund shall be sufficiently given if
addressed to the Fund and mailed or delivered to it at its office at the
address for the Fund first above written, or at such other place as the
Fund may from time to time designate in writing.
5. This Agreement constitutes the entire agreement between the
parties, replaces all prior agreements and may not be amended or modified
in any manner except by a written agreement executed by both parties with
the same formality as this Agreement and approved by a resolution of the
Board of Trustees of the Fund, except that Appendices A and B may be
amended unilaterally by the Fund without such an approving resolution.
6. This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Fund without
the written consent of the Custodian, or by the Custodian or The Bank of
New York without the written consent of the Fund, authorized or approved
by a resolution of the Fund's Board of Trustees. For purposes of this
paragraph, no merger, consolidation, or amalgamation of the Custodian, The
Bank of New York, or the Fund shall be deemed to constitute an assignment
of this Agreement.
7. This Agreement shall be construed in accordance with the laws
of the State of New York without giving effect to conflict of laws
principles thereof. Each party hereby consents to the jurisdiction of a
state or federal court situated in New York City, New York in connection
with any dispute arising hereunder and hereby waives its right to trial
by jury.
8. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts
shall, together, constitute only one instrument.
9. A copy of the Declaration of Trust of the Fund is on file with
the Secretary of The Commonwealth of Massachusetts, and notice is hereby
given that this instrument is executed on behalf of the Board of Trustees
of the Fund as Trustees and not individually and that the obligations of
the instrument are not binding upon any of the Trustees or shareholders
individually but are binding upon the assets and property of the Fund;
provided, however, that the Declaration of Trust of the Fund provides that
the assets of a particular series of the Fund shall under no circumstances
be charges with liabilities attributable to any other series of the Fund
and that all persons extending credit to, or contracting with or having
any claim against a particular series of the Fund shall look only to the
assets of that particular series for payment of such credit, contract or
claim.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective Officers, thereunto duly authorized and
their respective seals to be hereunto affixed, as of the day and year
first above written.
OPPENHEIMER GLOBAL GROWTH & INCOME FUND
By: /s/ Robert G. Galli
Robert G. Galli, Secretary
[SEAL]
Attest:
/s/ Robert G. Zack
Robert G. Zack, Assistant Secretary
THE BANK OF NEW YORK
[SEAL] By: /s/ Jeorge Ramos
Jeorge Ramos
Attest:
/s/ Michael A. Cecero
Michael A. Cecero
<PAGE>
APPENDIX A
I, President and I,
, of Oppenheimer Fund,
a Massachusetts business trust (the "Fund") do hereby certify that:
The following individuals have been duly authorized by the Board of
Trustees of the Fund in conformity with the Fund's Declaration of Trust
and By-Laws to give Oral Instructions and Written Instructions on behalf
of the Fund, except that those persons designated as being an "Officer of
OSS" shall be an Authorized Person only for purposes of Articles XII and
XIII. The signatures set forth opposite their respective names are their
true and correct signatures:
Name Position Signature
__________________ _______________________ __________________
APPENDIX B
I, President and I,
, of Oppenheimer Fund, a
Massachusetts business trust (the "Fund"), do hereby certify that:
The following individuals for whom a position other than "Officer of
OSS" is specified serve in the following positions with the Fund and each
has been duly elected or appointed by the Board of Trustees of the Fund
to each such position and qualified therefor in conformity with the Fund's
Declaration of Trust and By-Laws. With respect to the following
individuals for whom a position of "Officer of OSS" is specified, each
such individual has been designated by a resolution of the Board of
Trustees of the Fund to be an Officer for purposes of the Fund's Custody
Agreement with The Bank of New York, but only for purposes of Articles XII
and XIII thereof and a certified copy of such resolution is attached
hereto. The signatures of each individual below set forth opposite their
respective names are their true and correct signatures:
Name Position Signature
__________________ _______________________ __________________
APPENDIX C
The undersigned, hereby
certifies that he or she is the duly elected and acting
of Oppenheimer Fund (the "Fund"),
further certifies that the following resolutions were adopted by the Board
of Trustees of the Fund at a meeting duly held on __________________, 199
, at which a quorum at all times present and that such resolutions have
not been modified or rescinded and are in full force an effect as of the
date hereof.
RESOLVED, that The Bank New York, as Custodian pursuant to
a Custody Agreement between The Bank of New York and the
Fund dated as of 199 (the "Custody Agreement") is
authorized and instructed on a continuous and ongoing basis
to act in accordance with, and to rely on instructions by
the Fund to the Custodian communicated by a Terminal Link as
defined in the Custody Agreement.
RESOLVED, that the Fund shall establish access codes and
grant use of such access codes only to officers of the Fund
as defined in the Custody Agreement, and shall establish
internal safekeeping procedures to safeguard and protect the
confidentiality and availability of such access codes.
RESOLVED, that Officers of the Fund as defined in the
Custody Agreement shall, following the establishment of such
access codes and such internal safekeeping procedures,
advise the Custodian that the same have been established by
delivering a Certificate, as defined in the Custody
Agreement, and the Custodian shall be entitled to rely upon
such advice.
IN WITNESS WHEREOF, I hereunto set my hand in the seal of
, as of the day of , 199 .
APPENDIX D
I, Richard P. Lando, an Assistant Vice President with THE BANK OF NEW
YORK do hereby designate the following publications:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
JJ Kenney Municipal Bond Service
London Financial Times
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
APPENDIX E
The following books and records pertaining to Fund shall be prepared
and maintained by the Custodian and shall be the property of the Fund:
EXHIBIT A
CERTIFICATION
The undersigned, , hereby
certifies that he or she is the duly elected and acting
of Oppenheimer Fund, a Massachusetts business trust
(the "Fund"), and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a meeting duly held on 199
, at which a quorum was at all times present and that such resolution has
not been modified or rescinded and is in full force and effect as of the
date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant
to a Custody Agreement between The Bank of New York and the
Fund dated as of , 199 (the "Custody Agreement")
is authorized and instructed on a continuous and ongoing
basis to deposit in the Book-Entry System, as defined in the
Custody Agreement, all Securities eligible for deposit
therein, regardless of the Series to which the same are
specifically allocated, and to utilize the Book-Entry System
to the extent possible in connection with its performance
thereunder, including, without limitation, In connection
with settlements of purchases and sales of Securities, loans
of Securities, and deliveries and returns of Securities col-
lateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal
of , as of the day of
, 199 .
__________________________
[SEAL]
EXHIBIT B
CERTIFICATION
The undersigned , hereby certifies
that he or she is the duly elected and acting
of Oppenheimer Fund, a Massachusetts business trust (the
"Fund"), and further certifies that the following resolution was adopted
by the Board of Trustees of the Fund at a meeting duly held on
, 199 , at which a quorum was at all times present and
that such resolution has not been modified or rescinded and is in full
force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant
to a Custody Agreement between The Bank of New York and the
Fund dated as of , 199 (the "Custody Agreement")
is authorized and instructed on a continuous and ongoing
basis until such time as it receives a Certificate, as
defined in the Custody Agreement, to the contrary to deposit
in The Depository Trust Company ("DTC") as a "Depository" as
defined in the Custody Agreement, all Securities eligible
for deposit therein, regardless of the Series to which the
same are specifically allocated, and to utilize DTC to the
extent possible in connection with its performance there-
under, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of
Securities, and deliveries and returns of Securities
collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of
as of the day of , 199 .
___________________________
[SEAL]
EXHIBIT B-1
CERTIFICATION
The undersigned, hereby certifies that he or she
is the duly elected and acting
of Oppenheimer Fund, a Massachusetts business trust (the
"Fund"), and further certifies that the following resolution was adopted
by the Board of Trustees of the Fund at a meeting duly held on
, 199 , at which a quorum was at all times present and that such
resolution has not been modified or rescinded and is in full force and
effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant
to a Custody Agreement between The Bank of New York and the
Fund dated as of 199 , (the "Custody Agreement") is
authorized and instructed on a continuous and ongoing basis
until such time as it receives a Certificate, as defined in
the Custody Agreement, to the contrary to deposit in the
Participants Trust Company as a Depository, as defined in
the Custody Agreement, all Securities eligible for deposit
therein, regardless of the Series to which the same are
specifically allocated, and to utilize the Participants
Trust Company to the extent possible in connection with its
performance thereunder, including, without limitation, in
connection with settlements of purchases and sales of
Securities, loans of Securities, and deliveries and returns
of Securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of
, as of the day of , 199 .
_______________________
[SEAL]
EXHIBIT C
CERTIFICATION
The undersigned, , hereby certifies that
he or she is the duly elected and acting
of Oppenheimer Fund, a Massachusetts business trust (the
"Fund"), and further certifies that the following resolution was adopted
by the Board of Trustees of the Fund at a meeting duly held on
, 199 , at which a quorum was at all times present and that
such resolution has not been modified or rescinded and is in full force
and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant
to a Custody Agreement between The Bank of New York and the
Fund dated as of , 199 (the "Custody Agreement")
is authorized and instructed on a continuous and ongoing
basis until such time as it receives a Certificate, as
defined in the Custody Agreement, to the contrary, to ac-
cept, utilize and act with respect to Clearing Member
confirmations for Options and transaction in Options,
regardless of the Series to which the same are specifically
allocated, as such terms are defined in the Custody
Agreement, as provided in the Custody Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand and the
seal of , as of the day of , 199 .
____________________________
[SEAL]
EXHIBIT D
[FORM OF FOREIGN SUBCUSTODIAN AGREEMENT]
Appendix A
Article XIX.1 49
Appendix B
Article XIX.2 50
Exhibit A
Article III. 17
Exhibit B
Article III.1 8
Exhibit C
Article III.1 8
Exhibit D 34
Article XV.4 34
Schedule A
Article XV.1 33
215CA
September 7, 1990
Oppenheimer Global Growth & Income Fund
Two World Trade Center
New York, New York 10048-0669
Dear Sirs:
In connection with the proposed public offering of shares of
beneficial interest in Oppenheimer Global Growth & Income Fund (the
"Fund"), we have examined such records and documents and have made such
further investigations and examinations as we have deemed necessary for
the purposes of this opinion. In rendering this opinion, as to the
matters of Massachusetts law we have relied on the opinion of Lane &
Altman, Massachusetts counsel to the Fund.
It is our opinion that the Fund is a business trust duly organized
and validly existing under the laws of the Commonwealth of Massachusetts
and that an indefinite number of shares of the Fund covered by the Fund's
Registration Statement on Form N-1A (SEC Reg. No. 33-33799) (the
"Registration Statement"), when issued and paid for in accordance with the
terms of the offering, as set forth in the Prospectus and Statement of
Additional Information forming a part of the Registration Statement, will
be legally issued, fully paid and non-assessable by the Fund to the extent
set forth in the Registration Statement.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to us in the Prospectus and
Statement of Additional Information forming a part thereof. We also
consent to the filing of this opinion with the authorities administering
the "Blue Sky" or securities law of any jurisdiction in connection with
the registration or qualification under such law of the Fund's shares.
Very truly yours,
/s/ Gordon Hurwitz Butowsky Weitzen
Shavlov & Wein
---------------------------------
Gordon Hurwitz Butowsky Weitzen
Shalov & Wein
215.op
APPLICATION AND ADOPTION AGREEMENT DOCUMENT 1
OPPENHEIMERFUNDS STANDARDIZED MONEY PURCHASE PENSION PLAN
This application offers a number of choices regarding the features
of your Money Purchase Pension Plan. Notes are included in the
left-hand margin to help you complete the application.
/ / Check this box if this an amendment to an existing plan.
Note: Failure to properly fill out this Adoption Agreement may
result in disqualification of the Plan. The Employer should,
therefore, consult a tax advisor concerning execution of this
Adoption Agreement. This Adoption Agreement must be used only in
conjunction with the OppenheimerFunds Retirement Plan Basic Plan
Document (No. 01).
[at left-hand margin]
Mail this form to:
Oppenheimer Shareholder Services
Retirement Plans Administration
P.O. Box 173694
Denver, CO 80217-3694
If you do not have an Employer Federal Tax I.D. Number, obtain one
by filing a Form SS-4 at your local IRS district office.
[end]
1. EMPLOYER INFORMATION.
A. Employer's Name:
B. Employer's Business Address:
If mail pertaining to Participants' Accounts will be sent
to a different address, then also provide such address:
C. Employer's Federal Tax I.D.:
Type of Business:
D. / / Sole Proprietor
/ / Partnership
/ / Corporation
E. Employer's Taxable Year (Plan Year) for Federal Income
Tax purposes:
/ / Calendar Year, or
/ / Other year beginning with the first day of (month)
each year
[at left-hand margin]
If you are selecting more than one fund or have more than one
participant, use the Retirement Plan Contribution Form on Page 15.
Use the first day of your fiscal year unless you are transferring
or amending your current plan.
[end]
2. PLAN INFORMATION.
A. (For non-insured portion of the Plan.) Dollar Amount of
Initial Employer Contributions:
(For insured portion of the Plan: Send the insurance
premium, if any, for the insured portion of the Plan to
the insurance company [see Item 8].)
B. Initial Mutual Fund Investment (insert name of fund):
C. Plan Number (e.g., 001, 002):
(Paired plans should each have a separate number, such
as 001 for the profit sharing plan and 002 for the money
purchase pension plan.)
D. Effective Date:
(For a plan in existence, the Effective Date is the date
the plan was adopted by the Employer. For a new plan, the
Effective Date is the first day of the Plan Year in which
the plan is adopted.)
[at left-hand margin]
You can specify any period of up to two years including full and
fractional years, which employees must complete before they can
participate in the plan. You can also specify no service
requirement.
[end]
3. PARTICIPATION.
A. Number of years of service necessary for participation
(not greater than 2 years):
Any individual who works 1,000 or more hours in a
consecutive twelve-month period, computed with reference
to the date the individual's employment commenced, shall
be credited with a Year of Service.
If the Years of Services selected is or includes a
fractional year, an Employee will not be required to
complete any specified number of hours of employment to
receive credit for such fractional year.
B. The Plan / / shall / / shall not exclude Employees
covered by a collective bargaining agreement.
4. COMPENSATION.
For any Participant, Compensation means Compensation as
defined in the Plan. Also, effective for Plan Years beginning
on or after January 1, 1990, choose A or B below:
A. / / Compensation shall include; or B. / / Compensation
shall not include any amount which is contributed by the
Employer pursuant to a salary reduction agreement and which is
not includable in the gross income of the Employee pursuant to
Sections 125, 402(a)(8), 402(h) or 403(b) of the Code.
[at left-hand margin]
An integrated formula allows you to coordinate the retirement
benefits provided by the Social Security Administration. If you
want a relatively simple plan, choose item A. If you wish to
integrate your plan with Social Security, choose item B and consult
your tax advisor.
[end]
5. CONTRIBUTIONS (see Note on next page for self-employed
contribution calculation).
A. / / Plan shall not be integrated with Social Security.
The Employer will contribution [%] of Compensation (not in
excess of $200,000) for each Participant for the Plan Year
(not to exceed 25%).
B. / / Plan shall be integrated with Social Security
(complete (1) and (2)):
The Employer shall contribute for each Plan Year:
(1) [%] (the "Base Contribution Percentage," which shall not
be less than 3%) of the Compensation of each Participant for
the then-current Plan Year, and
(2) [%] of the Compensation of each Participant in excess of
the Social Security Taxable Wage Base for the then-current
Plan Year. However, the percentage chosen under this
paragraph (2) shall not exceed the lesser of the Base
Contribution Percentage above, or 5.7%.
Employer contributions on behalf of each Participant shall not
exceed the lesser of $30,000 or 25% of the Participant's
Compensation for the Plan Year. For purposes of the foregoing
allocation formulas, not more than $200,000 of each
Participant's Compensation shall be taken into account.
Subject to Item 7 of this Adoption Agreement, for Plan Years
beginning before January 1, 1989, the Employer's contribution
will be allocated under an integrated or non-integrated
formula to the Account of each Participant who has completed
at least 1,000 Hours of Service during the Plan Year and is an
Employee on the last day of such Plan Year. For Plan years
beginning on or after January 1, 1989, a Participant shall
receive an allocation of such Employer Contribution for the
Plan Year if the Participant either (i) has completed more
than 500 Hours of Service for the Employer during a Plan Year,
regardless of whether the Participant is employed on the last
day of the Plan Year, or (ii) is employed on the last day of
the Plan Year.
Note: In calculating amounts which may be contributed for
Self-Employed Individuals, you must deduct contributions made
to this Plan and all other qualified self-employed retirement
plans. The total of all such contributions cannot exceed 25%
of Earned Income as defined in the Plan, or 20% of Net Profits
for a Self-Employed Individual before making such
contributions.
[at left hand-margin]
Most employers choose age 65 as their retirement age. If you wish,
you may choose another age subject to the restrictions outlined
here.
[end]
6. NORMAL RETIREMENT AGE.
Normal Retirement Age is age / / (not to exceed age 65) or
the / / (not to exceed 5th) anniversary of the participation
commencement date, which date is the first day of the month in
which the Participant commenced participation. The Normal
Retirement Age chosen above may not be higher than the age
that has previously been effect under the Plan for a current
Participant. For example, if the Normal Retirement Age has
been Age 62 or the 3rd anniversary of participation, the
Normal Retirement Age must be no higher than either of those
dates for current Participants. However, in no event may the
Normal Retirement Age chosen above be higher than 65 or exceed
the 5th anniversary of the participation.
[at left-hand margin]
If your plan is deemed to be Top-Heavy under IRS rules, you will be
required to make certain minimum contributions for your "non-key"
employees. (See the Plan Document for the definition of "key
employee".) Complete item B if you want to make these contributions
to another non-Oppenheimer sponsored plan.
[end]
7. MINIMUM TOP-HEAVY CONTRIBUTIONS (for Non-integrated Plans).
A. Notwithstanding the contribution formula selected in Item
5 above, for purposes of the minimum top-heavy
contributions required to be made under the Plan, the
Employer contributions shall be allocated under this
paragraph A unless the Employer checks and completes
paragraph B below. The Employer contribution allocated
under this paragraph A shall be allocated on behalf of
each Participant who is not a Key Employee in an amount
that shall not be less than the lesser of (1) or (2):
(1) 3% of such Participant's Compensation for such Plan
Year (or 5% of such Participant's Compensation for such
Plan Year if the Employer maintains a defined benefit
plan), or
(2) In the case where the Employer has no defined benefit
plan which uses this Plan to satisfy the requirements of
Section 401 of the Code, the highest percentage of
Employer contributions allocated on behalf of any Key
Employee (expressed as a percentage of the first $200,000
of such Key Employee's Compensation for such Plan Year).
B. / / For each Plan Year in which the Employer maintains
another plan in addition to this Plan, the minimum
allocation required for any non-Key Employee shall be
made by the Employer in accordance with Section 415 of
the Code under the following plan or plans:
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
(enter plan name)
If this paragraph B is completed the Employer may not
rely on the opinion letter issued by the Internal Revenue
Service to the Sponsor to evidence that this Plan is
qualified under Section 401 of the Internal Revenue Code.
If the Employer has completed this section and wants to
determine that his plan(s) is qualified, an application
should be made to the appropriate Key District Director
of Internal Revenue.
Important Note: Choosing this paragraph B may cause this
Plan to fail to satisfy the design-based safe harbor of
the proposed regulations under Code Section 401(a)(4) as
of the first day of the first Plan Year beginning after
1991, even though all other requirements of the safe
harbor are met.
[at left-hand margin]
You and your plan participants may use a portion of the plan's
assets to buy life insurance contracts, subject to the restrictions
outlined here.
[end]
8. INSURANCE.
If Insurance coverage is utilized:
A. The amount to be invested in ordinary life insurance
contracts for any Participant shall be less than 50% of
the aggregate Employer contributions allocated to his
account. If term insurance is selected, the premium
shall be less than 25% of the aggregate Employer
contributions allocated to his Account.
B. If both ordinary life and term insurance are purchased on
the life of a Participant, the sum of the term insurance
premium plus one-half of the ordinary life premiums may
not exceed 25% of the Employer contributions made on
behalf of such Participant.
C. Employer contributions in excess of the insurance premium
shall be invested in shares of any fund managed by
Oppenheimer Management Corporation, or any parent,
subsidiary or affiliate thereof, or in Systematic Capital
Accumulation Plans or Variable Annuities for the
accumulation of shares of one of these funds.
D. It is understood that the portion of the insurance
premium that is allocated to the current cost of the
insurance protection (term cost) is not tax deductible to
the Self-Employed Individual and is taxable income to
Participant's who are Employees. The insurance company
may supply each insured Participant with a statement of
the dollar amount of the non-deductible or taxable
portion of the premium.
[at left-hand margin]
Complete this section only if you maintain any other qualified
plans besides an OppenheimerFunds Profit Sharing Plan. If you do
maintain other plans, their qualification may be adversely affected
if you do not complete this section.
[end]
9. ALLOCATION LIMITS.
If the Employer maintains or has ever maintained another
qualified plan (other than the OppenheimerFunds Profit Sharing
Plan (Standardized Plan) which is a paired plan with this
Plan) in which any Participant is (or was) a participant or
could possibly become a participant, the Employer must
complete this Item 9. The Employer must also complete this
Item 9 if it maintains a welfare benefit fund, as defined in
Section 419(e) of the Code, or an individual medical account,
as defined in Section 415(1)(2) of the Code, under which
amounts are treated as Annual Additions under the Plan with
respect to any Participant in this Plan.
A. If the Participant is covered under another qualified
defined contribution plan maintained by the Employer,
other than a Master or Prototype Plan:
/ / The provisions of Sections 11.2(a) through 11.2(f)
of Article XI will apply, as if the other plan was a
Master or Prototype Plan.
/ / Employer should provide the method under which the
plans involved will limit total Annual Additions to the
Maximum Permissible Amount, and will properly reduce any
Excess Amounts, in a manner that precludes Employer
discretion -- attach separate sheet if necessary.
B. If the Participant is or has ever been a Participant in
a defined benefit plan maintained by the Employer, the
Employer should attach an explanation of the method under
which the plans involved will satisfy the 1.0 combined
limitation of Section 11.4 of the Plan, which method
shall preclude Employer discretion.
10. MISCELLANEOUS.
A. A copy of the current prospectus of the fund(s), and the
variable annuity prospectus (if chosen) has been received
by each Participant named. Each new Participant will
receive a copy of the then current prospectus.
B. The Sponsor shall inform the Employer of any amendments
made to the Plan or of the discontinuance or abandonment
of the Plan.
C. Information concerning the Sponsor:
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, NY 10048-0203
1-212-323-0200
[at left-hand margin]
Please sign in the appropriate space only after having read all the
materials and completing this Application.
[end]
11. SIGNATURES.
Under penalties of perjury, the undersigned Employer, or duly
authorized officer or employee thereof, hereby certifies (i)
that the taxpayer identification number set forth on the front
of this Application and Adoption Agreement is the Employer's
correct taxpayer identification number and (ii) currently the
Employer is not under IRS notification as being subject to
backup withholding (line out (ii) if under notification). If
no such number is shown, the undersigned further certifies,
under penalties of perjury, that no such number has been
issued, and a number has been or soon will be applied for; if
a number is not provided to you within sixty days, the
undersigned understands that all payments (including
redemptions) are subject to 20% withholding under Federal tax
law, until a number is provided.
---------------------------- ----------------------------
Please Print Business Name (Date)
By: -------------------------
Sole Proprietor, Partner
or Corporate Officer
(signature)
Note: An Employer who has ever maintained or who later adopts
any plan (including a welfare benefit fund, as defined in
section 419(e) of the Code, which provides post-retirement
medical benefits allocated to separate accounts for Key
Employees, as defined in Section 419A(d)(3) of the Code, or an
individual medical account, as defined in Section 415(1)(2) of
the Code) in addition to this Plan (other than the
OppenheimerFunds Profit Sharing Plan (Standardized Plan) that
is a paired plan with this Plan) may not rely on the opinion
letter issued by the National Office of the Internal Revenue
Service as evidence that this Plan is qualified under Section
401 of the Code. If the Employer who adopts or maintains
multiple plans wishes to obtain reliance that the plans are
qualified, application for a determination letter should be
made to the appropriate Key District Director of Internal
Revenue.
12. DEALER INFORMATION.
--------------------------------------------------------------
Dealer Name
--------------------------------------------------------------
Dealer Head Office Address: No. and Street
--------------------------------------------------------------
City State Zip Code
--------------------------------------------------------------
Oppenheimer Dealer Number
--------------------------------------------------------------
Representative's Last Name First Name MI
--------------------------------------------------------------
Representative's Branch Office Address: No. and Street
--------------------------------------------------------------
City State Zip Code
--------------------------------------------------------------
Rep's Office Telephone Number Rep's A.E. Number
<PAGE>
APPLICATION AND ADOPTION AGREEMENT DOCUMENT 2
OPPENHEIMERFUNDS STANDARDIZED PROFIT SHARING PLAN
This application offers a number of choices regarding the features
of your Profit Sharing Plan. Notes are included in the left-hand
margin to help you complete the application.
/ / Check this box if this is an amendment to an existing plan.
Note: Failure to properly fill out this Adoption Agreement may
result in disqualification of the Plan. The Employer should,
therefore, consult a tax advisor concerning execution of this
Adoption Agreement. This Adoption Agreement must be used only in
conjunction with the OppenheimerFunds Retirement Plan Basic Plan
Document (No. 01).
[at left-hand margin]
Mail this form to:
Oppenheimer Shareholder Services
Retirement Plans Administration
P.O. Box 173694
Denver, CO 80217-3694
If you do not have an Employer Federal Tax I.D. Number, obtain one
by filing a Form SS-4 at your local IRS district office.
[end]
1. EMPLOYER INFORMATION.
A. Employer's Name:
B. Employer's Business Address:
If mail pertaining to Participants' Accounts will be sent
to a different address, then also provide such address:
C. Employer's Federal Tax I.D.:
Type of Business:
D. / / Sole Proprietor
/ / Partnership
/ / Corporation
E. Employer's Taxable Year (Plan Year) for Federal Income
Tax purposes:
/ / Calendar Year, or
/ / Other year beginning with the first day of (month)
each year
[at left-hand margin]
If you are selecting more than one fund or have more than one
participant, use the Retirement Plan Contribution Form on Page 15.
Use the first day of your fiscal year unless you are transferring
or amending your current plan.
[end]
2. PLAN INFORMATION.
A. (For non-insured portion of the Plan.) Dollar Amount of
Initial Employer Contributions:
(For insured portion of the Plan: Send the insurance
premium, if any, for the insured portion of the Plan to
the insurance company [see Item 8].)
B. Initial Mutual Fund Investment (insert name of fund):
C. Plan Number (e.g., 001, 002):
(Paired plans should each have a separate number, such
as 001 for the profit sharing plan and 002 for the money
purchase pension plan.)
D. Effective Date:
(For a plan in existence, the Effective Date is the date
the plan was adopted by the Employer. For a new plan, the
Effective Date is the first day of the Plan Year in which
the plan is adopted.)
[at left-hand margin]
You can specify any period of up to two years including full and
fractional years, which employees must complete before they can
participate in the plan. You can also specify no service
requirement.
[end]
3. PARTICIPATION.
A. Number of years of service necessary for participation
(not greater than 2 years):
Any individual who works 1,000 or more hours in a
consecutive twelve-month period, computed with reference
to the date the individual's employment commenced, shall
be credited with a Year of Service.
If the Years of Services selected is or includes a
fractional year, an Employee will not be required to
complete any specified number of hours of employment to
receive credit for such fractional year.
B. The Plan / / shall / / shall not exclude Employees
covered by a collective bargaining agreement.
4. COMPENSATION.
For any Participant, Compensation means Compensation as
defined in the Plan. Also, effective for Plan Years beginning
on or after January 1, 1990, choose A or B below:
A. / / Compensation shall include; or B. / / Compensation
shall not include any amount which is contributed by the
Employer pursuant to a salary reduction agreement and which is
not includable in the gross income of the Employee pursuant to
Sections 125, 402(a)(8), 402(h) or 403(b) of the Code.
[at left-hand margin]
You may make a profit-sharing contribution which exceeds your
earnings or profits, if any, for the year. Check this option if
you wish to do so.
An integrated formula allows you to coordinate the retirement
benefits provided by the Social Security Administration. If you
want a relatively simple plan, choose item B. If you wish to
integrate your plan with Social Security, choose item C and consult
your tax advisor.
[end]
5. CONTRIBUTIONS (see Note on next page for self-employed
contribution calculation).
A. Under the profit-sharing plan contribution formula the
amount of Employer contributions for each year is not
fixed and may vary from year to year. Contributions may
be made only from the Net Income of the Employer for the
Plan Year unless the Employer elects to disregard Net
Income below.
Check this option if you wish it to apply to your Plan:
/ / Effective for Plan Years beginning on or after
(date) (fill in the first day of the Plan Year in which
this Adoption Agreement is executed for a subsequent
anniversary of such date), notwithstanding any other
provision of the Plan, the Employer contributions shall
be made to the Plan without regard to current or
accumulated earnings and profits for the taxable year or
years ending with or within such Plan Year.
The Employer must also check B or C below:
B. / / Plan shall be not integrated with Social Security.
The Employer shall contribute an amount to be determined
by the Employer each Plan Year. Such contributions shall
be allocated as a uniform percentage of each
Participant's Compensation (not in excess of $200,000) up
to 15% of Compensation.
C. / / Plan shall be integrated with Social Security.
Effective for the Plan Years beginning on or after
January 1, 1989, the Employer shall contribute an amount
to be determined by the Employer each Plan Year, which
amount shall be allocated to the Accounts of Participants
as follows:
(1) First, contributions made by the Employer shall be
allocated to each Participant's Account in the ratio that
each Participant's total Compensation bears to all
Participants' total compensation, but not in excess of 3%
of each Participant's Compensation;
(2) next, any contributions remaining after the
allocation in subparagraph (1) shall be allocated to each
Participant's Account in the ratio that each
Participant's Excess Compensation (see Section 1.1 of the
Plan) for the Plan Year bears to the Excess Compensation
of all Participants, but not in excess of 3%;
(3) Any contributions remaining after the allocation in
subparagraph (2) shall be allocated to each Participant's
Account in the ratio that the sum of each Participant's
total Compensation plus Excess Compensation bears to the
sum of all Participant's total Compensation plus Excess
Compensation, but not in excess of 2.7%; and
(4) Next, any remaining Employer contributions shall be
allocated to all Participants in the ratio that each
Participant's Compensation for the Plan Year bears to all
the Participants' Compensation for that year. Employer
contributions on behalf of each Participant shall not
exceed the lesser of $30,000 or 15% of the Participant's
Compensation for the Plan Year. For purposes of the
foregoing allocation formulas, not more than $200,000 of
each Participant's Compensation shall be taken into
account. Subject to Item 7 of this Adoption Agreement,
for Plan Years beginning before January 1, 1989, the
Employer's contribution will be allocated under an
integrated or non-integrated formula to the Account of
each Participant who has completed at least 1,000 Hours
of Service during the Plan Year and is an Employee on the
last day of such Plan Year. For Plan Years beginning on
or after January 1, 1989, a Participant shall receive an
allocation of such Employer Contributions for the Plan
Year if the Participant either (i) has completed more
than 500 Hours of Service for the Employer during a Plan
Year, regardless of whether the Participant is employed
on the last day of the Plan Year, or (ii) is employed on
the last day of the Plan Year.
Note: In calculating amounts which may be contributed for
Self-Employed Individuals, you must deduct contributions
made to this Plan and all other qualified self-employed
retirement plans. The maximum profit sharing plan
deductible contribution for a Self-Employed Individual
is, therefore, 13.04348% of Net Profits before making
such contribution.
[at left hand-margin]
Most employers choose age 65 as their retirement age. If you wish,
you may choose another age subject to the restrictions outlined
here.
[end]
6. NORMAL RETIREMENT AGE.
Normal Retirement Age is age / / (not to exceed age 65) or
the / / (not to exceed 5th) anniversary of the participation
commencement date, which date is the first day of the month in
which the Participant commenced participation. The Normal
Retirement Age chosen above may not be higher than the age
that has previously been effect under the Plan for a current
Participant. For example, if the Normal Retirement Age has
been Age 62 or the 3rd anniversary of participation, the
Normal Retirement Age must be no higher than either of those
dates for current Participants. However, in no event may the
Normal Retirement Age chosen above be higher than 65 or exceed
the 5th anniversary of the participation.
[at left-hand margin]
If your plan is deemed to be Top-Heavy under IRS rules, you will be
required to make certain minimum contributions for your "non-key"
employees. (See the Plan Document for the definition of "key
employee".) Choose item B if you want to make these contributions
from your OppenheimerFunds Money Purchase Pension Plan. Complete
item C if you want to make them from another, non-Oppenheimer
sponsored plan. In either case, consult your tax advisor.
[end]
7. MINIMUM TOP-HEAVY CONTRIBUTIONS (for Non-integrated Plans).
A. Notwithstanding the contribution formula selected in Item
5 above, for purposes of the minimum top-heavy
contributions required to be made under the Plan, the
Employer contributions shall be allocated under this
paragraph A unless the Employer checks and completes
paragraph B or C below. The Employer contribution
allocated under this paragraph A shall be allocated on
behalf of each Participant who is not a Key Employee in
an amount that shall not be less than the lesser of (1)
or (2):
(1) 3% of such Participant's Compensation for such Plan
Year (or 5% of such Participant's Compensation for such
Plan Year if the Employer maintains a defined benefit
plan), or
(2) In the case where the Employer has no defined benefit
plan which uses this Plan to satisfy the requirements of
Section 401 of the Code, the highest percentage of
Employer contributions allocated on behalf of any Key
Employee (expressed as a percentage of the first $200,000
of such Key Employee's Compensation for such Plan Year).
B. / / If the Employer also maintains the Oppenheimer Money
Purchase Pension Plan (Standardized Plan) (the "Money
Purchase Plan") that is a paired plan with this Plan, the
minimum contribution for Participants who are eligible to
receive an allocation thereof shall be made under the
Money Purchase Plan. This paragraph B shall apply only if
the eligibility and coverage requirements of the Money
Purchase Plan are to be identical to the corresponding
provisions of this Plan.
C. / / For each Plan Year in which the Employer maintains
another plan in addition to this Plan, the minimum
allocation required for any non-Key Employee shall be
made by the Employer in accordance with Section 415 of
the Code under the following plan or plans:
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
(enter plan name)
If this paragraph C is completed the Employer may not
rely on the opinion letter issued by the Internal Revenue
Service to the Sponsor to evidence that this Plan is
qualified under Section 401 of the Internal Revenue Code.
If the Employer has completed this section and wants to
determine that his plan(s) is qualified, an application
should be made to the appropriate Key District Director
of Internal Revenue.
Important Note: Choosing this paragraph C may cause this
Plan to fail to satisfy the design-based safe harbor of
the proposed regulations under Code Section 401(a)(4) as
of the first day of the first Plan Year beginning after
1991, even though all other requirements of the safe
harbor are met.
[at left-hand margin]
You and your plan participants may use a portion of the plan's
assets to buy life insurance contracts, subject to the restrictions
outlined here.
[end]
8. INSURANCE.
If Insurance coverage is utilized:
A. The amount to be invested in ordinary life insurance
contracts for any Participant shall be less than 50% of
the aggregate Employer contributions allocated to his
account. If term insurance is selected, the premium
shall be less than 25% of the aggregate Employer
contributions allocated to his Account.
B. If both ordinary life and term insurance are purchased on
the life of a Participant, the sum of the term insurance
premium plus one-half of the ordinary life premiums may
not exceed 25% of the Employer contributions made on
behalf of such Participant.
C. Employer contributions in excess of the insurance premium
shall be invested in shares of any fund managed by
Oppenheimer Management Corporation, or any parent,
subsidiary or affiliate thereof, or in Systematic Capital
Accumulation Plans or Variable Annuities for the
accumulation of shares of one of these funds.
D. It is understood that the portion of the insurance
premium that is allocated to the current cost of the
insurance protection (term cost) is not tax deductible to
the Self-Employed Individual and is taxable income to
Participant's who are Employees. The insurance company
may supply each insured Participant with a statement of
the dollar amount of the non-deductible or taxable
portion of the premium.
[at left-hand margin]
Complete this section only if you maintain any other qualified
plans besides an OppenheimerFunds Money Purchase Pension Plan. If
you do maintain other plans, their qualification may be adversely
affected if you do not complete this section.
[end]
9. ALLOCATION LIMITS.
If the Employer maintains or has ever maintained another
qualified plan (other than the OppenheimerFunds Money Purchase
Pension Plan (Standardized Plan) which is a paired plan with
this Plan) in which any Participant is (or was) a participant
or could possibly become a participant, the Employer must
complete this Item 9. The Employer must also complete this
Item 9 if it maintains a welfare benefit fund, as defined in
Section 419(e) of the Code, or an individual medical account,
as defined in Section 415(1)(2) of the Code, under which
amounts are treated as Annual Additions under the Plan with
respect to any Participant in this Plan.
A. If the Participant is covered under another qualified
defined contribution plan maintained by the Employer,
other than a Master or Prototype Plan:
/ / The provisions of Sections 11.2(a) through 11.2(f)
of Article XI will apply, as if the other plan was a
Master or Prototype Plan.
/ / Employer should provide the method under which the
plans involved will limit total Annual Additions to the
Maximum Permissible Amount, and will properly reduce any
Excess Amounts, in a manner that precludes Employer
discretion -- attach separate sheet if necessary.
B. If the Participant is or has ever been a Participant in
a defined benefit plan maintained by the Employer, the
Employer should attached an explanation of the method
under which the plans involved will satisfy the 1.0
combined limitation of Section 11.4 of the Plan, which
method shall preclude Employer discretion.
10. MISCELLANEOUS.
A. A copy of the current prospectus of the fund(s), and the
variable annuity prospectus (if chosen) has been received
by each Participant named. Each new Participant will
receive a copy of the then current prospectus.
B. The Sponsor shall inform the Employer of any amendments
made to the Plan of the discontinuance or abandonment of
the Plan.
C. Information concerning the Sponsor:
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, NY 10048-0203
1-212-323-0200
[at left-hand margin]
Please sign in the appropriate space only after having read all the
materials and completing this Application.
[end]
11. SIGNATURES.
Under penalties of perjury, the undersigned Employer, or duly
authorized officer or employee thereof, hereby certifies (i)
that the taxpayer identification number set forth on the front
of this Application and Adoption Agreement is the Employer's
correct taxpayer identification number and (ii) currently the
Employer is not under IRS notification as being subject to
backup withholding (line out (ii) if under notification). If
no such number is shown, the undersigned further certifies,
under penalties of perjury, that no such number has been
issued, and a number has been or soon will be applied for; if
a number is not provided to you within sixty days, the
undersigned understands that all payments (including
redemptions) are subject to 20% withholding under Federal tax
law, until a number is provided.
---------------------------- ----------------------------
Please Print Business Name (Date)
By: -------------------------
Sole Proprietor, Partner
or Corporate Officer
(signature)
Note: An Employer who has ever maintained or who later adopts
any plan (including a welfare benefit fund, as defined in
section 419(e) of the Code, which provides post-retirement
medical benefits allocated to separate accounts for Key
Employees, as defined in Section 419A(d)(3) of the Code, or an
individual medical account, as defined in Section 415(1)(2) of
the Code) in addition to this Plan (other than the
OppenheimerFunds Money Purchase Pension Plan (Standardized
Plan) that is a paired plan with this Plan) may not rely on
the opinion letter issued by the National Office of the
Internal Revenue Service as evidence that this Plan is
qualified under Section 401 of the Code. If the Employer who
adopts or maintains multiple plans wishes to obtain reliance
that the plans are qualified, application for a determination
letter should be made to the appropriate Key District Director
of Internal Revenue.
12. DEALER INFORMATION.
--------------------------------------------------------------
Dealer Name
--------------------------------------------------------------
Dealer Head Office Address: No. and Street
--------------------------------------------------------------
City State Zip Code
--------------------------------------------------------------
Oppenheimer Dealer Number
--------------------------------------------------------------
Representative's Last Name First Name MI
--------------------------------------------------------------
Representative's Branch Office Address: No. and Street
--------------------------------------------------------------
City State Zip Code
--------------------------------------------------------------
Rep's Office Telephone Number Rep's A.E. Number
<PAGE>
OppenheimerFunds
Retirement Plan Contribution Form
Name of Employer/Business:
Name of Plan Administrator:
Address of Employer/Business:
Phone #:
Employer Tax I.D. No.:
Enclosed with this form are contributions to the following
OppenheimerFunds Retirement Plan adopted by the Employer (use a
separate form for each type of plan if employer has adopted both
plans):
/ / Profit Sharing Plan / / Money Purchase Pension Plan
1. Choose your desired account setup:
Choose one of the following:
/ / Establish separate accounts for each participant.
/ / Establish a pooled account for all participants (plan
administrator is responsible for allocating on its books
the appropriate amount to each participant).
Choose one of the Following:
/ / Establish all accounts using the Employer's address set
forth in the Application/Adoption Agreement.
/ / Establish all accounts using the participants' home
addresses. (Cannot be used if you choose a pooled
account. The Address Column on the reverse side must be
completed.)
2. List participant information on the reverse side for each
account to be established. List Employer and Employee
contributions separately. Indicate Employer contributions in
the column labeled "Account Type" as "ER", and Employee
contributions in that column as "EE". If additional space is
needed, photocopy the form and staple all pages together.
3. Attach all contributions. Checks should be made payable to
the Trustee for the OppenheimerFunds Retirement Plans ($250
minimum initial purchase, $25 minimum subsequent purchases).
Mail to: Oppenheimer Shareholder Services
Retirement Plans Administration
P.O. Box 173694
Denver, CO 80217-3694
Note: All contributions are subject to the terms and conditions of
the governing plan documents for the OppenheimerFunds Retirement
Plan. Failure to follow the terms of the Plan can adversely affect
the tax qualification of your OppenheimerFunds Retirement Plan.
Is this a
Participant new or
Name, Date of Participant's Name of existing
Birth, SSN Address Contribution Fund Participant?
- ------------- ------------- ------------ ------- ------------
- -------------------------------------------------------------------
- -------------------------------------------------------------------
- -------------------------------------------------------------------
- -------------------------------------------------------------------
- -------------------------------------------------------------------
- -------------------------------------------------------------------
- -------------------------------------------------------------------
- -------------------------------------------------------------------
$------------
Total
Contributions
<PAGE>
BASIC PLAN DOCUMENT (NO. 01)* OPPENHEIMERFUNDS RETIREMENT PLAN
ARTICLE I - DEFINITIONS
ACCOUNT means the aggregate of the individual bookkeeping accounts
established for each Participant in accordance with Section 4.3.
ADOPTION AGREEMENT means the written agreement by which the
Employer establishes this Plan. The information set forth in the
Adoption Agreement executed by the Employer shall be deemed to be
a part of this Plan as if set forth in full herein.
AFFILIATED EMPLOYERS means the Employer and any corporation which
is a member of a controlled group of corporations (as defined in
Section 414(b) of the Code) which includes the Employer, any trade
or business (whether or not incorporated) which is under common
control (as defined in Section 414(c) of the Code) with the
Employer, any service organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in
Section 414(m) of the Code) which includes the Employer, or any
other entity required to be aggregated with the Employer pursuant
to Section 414(o) of the Code.
BENEFICIARY means the beneficiary or beneficiaries so designated by
a Participant pursuant to Section 6.7, in accordance with Section
401(a)(9) of the Code and applicable regulations thereunder.
BUSINESS means the business or profession engaged in by the
Employer.
CODE means the Internal Revenue Code of 1986, as amended.
COMPENSATION means Compensation as that term is defined in Section
11.5(b) of the Plan. For any Self-Employed Individual covered
under the Plan, Compensation means Earned Income.
(1) Notwithstanding the above, if elected by the Employer in the
Adoption Agreement, Compensation shall include any amount
which is contributed by the Employer pursuant to a salary
reduction agreement and which is not includable in the gross
income of the Employee under Sections 125, 402(a)(8), 402(h)
or 403(b) of the Code. This paragraph is effective for Plan
Years beginning on or after January 1, 1990.
___________________
*Provisions are common to both money purchase pension plan and
profit sharing plan unless otherwise stated.
(2) For years beginning after December 31, 1988, the annual
compensation of each Participant taken into account under the
Plan for any year shall not exceed $200,000, as adjusted by
the Secretary of the Treasury at the same time and in the same
manner as under Section 415(d) of the Code except that the
dollar increase in effect on January 1 of any calendar year is
effective for years beginning in such calendar year and the
first adjustment to the $200,000 limitation is effected on
January 1, 1990. If a Plan determines compensation on a
period of time that contains fewer than 12 calendar months,
then the annual compensation limit is an amount equal to the
annual compensation limit for the calendar year in which the
compensation period begins multiplied by the ratio obtained by
dividing the number of full months in the period by 12.
In determining the Compensation of a Participant for purposes
of this limitation, the rules of Section 414(q)(6) of the Code
shall apply, except in applying such rules, the term "family"
shall include only the Spouse of the Participant and any
lineal descendants of the Participant who have not attained
age 19 before the close of the year. If, as a result of the
application of such rules, the adjusted $200,000 limitation is
exceeded, then (except for purposes of determining the portion
of compensation up to the Taxable Wage Base if this Plan
provides for permitted disparity), the limitation shall be
prorated among the affected individuals in proportion to each
such individual's Compensation as determined under this
definition prior to the application of this limitation. For
purposes of this limit:
(i) all plans maintained by the same Employer shall
be treated as a single plan;
(ii) all plans maintained with respect to one or
more trades or businesses which are under common
control, within the meaning of Sections 401(d)(9)
and (10) or 414(c) of the Code, shall be treated as
a single plan; and
(iii) all plans in which any person participates as
a Self-Employed Individual shall be treated as a
single plan with respect to such Self-Employed
Individual.
DISABILITY means inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be
expected to be of long-continued and indefinite duration. This
definition shall be interpreted to be identical with that contained
in Section 72(m)(7) of the Code.
EARNED INCOME means, except as otherwise required by Section 401(c)
of the Code and the regulations thereunder, net earnings from self-
employment to the extent such net earnings are derived from the
Business during the Plan Year while such person is a Participant,
but only if personal services of such Participant are a material
income-producing factor in the Business. In computing such net
earnings, a deduction will be made for contributions under the Plan
made on behalf of Participants in the Plan to the extent deductible
under Section 404 of the Code. Net earnings shall be determined
with regard to the deduction allowed the Employer by Section 164(f)
of the Code for taxable years beginning after December 31, 1989.
EFFECTIVE DATE means the first day of the Plan year during which
the Plan is adopted.
EMPLOYEE means any person, including a Self-Employed Individual,
who is employed by any Affiliated Employer and shall include any
Leased Employee considered an Employee of the Employer under
Section 414(n) or (o) of the Code.
EMPLOYER means the sole proprietor, partnership, corporation or
entity taxable as a corporation which adopts the Plan by execution
of an Adoption Agreement, and shall also include a predecessor or
successor entity which engages in or has engaged in the Business
with respect to which the Plan is established.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
EXCESS COMPENSATION means, with respect to any Plan Year, the
amount of a Participant's Compensation which exceeds the Taxable
Wage Base in effect on the first day of the Plan Year.
5-PERCENT OWNER means, if the Employer is a corporation, any person
who owns or is considered as owning (within the meaning of Section
318 of the Code) more than 5 percent of the outstanding stock of
the corporation or stock possessing more than 5 percent of the
total combined voting power of all stock of the corporation, or, if
the Employer is not a corporation, any person who owns more than 5
percent of the capital or profits interest in the Employer.
HIGHLY COMPENSATED EMPLOYEE means an Employee within the meaning of
Section 414(q) of the Code.
HOUR OF SERVICE shall mean:
(1) Each hour for which an individual is paid, or entitled to
payment, for the performance of duties for the Employer.
These hours shall be credited to the individual for the
computation period in which the duties are performed; and
(2) Each hour for which an individual is paid, or entitled to
payment, by the Employer on account of a period of time during
which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation,
holiday, illness, incapacity (including disability), layoff,
jury duty, military duty or leave of absence. No more than
501 hours of service shall be credited under this paragraph
for any single continuous period (whether or not such period
occurs in a single computation period). Hours under this
paragraph shall be calculated and credited pursuant to Section
2530.200b-2 of the Department of Labor Regulations which are
incorporated herein by reference; and
(3) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The
same Hours of Service shall not be credited both under
paragraph (1) or paragraph (2), as the case may be, and under
this paragraph (3). These hours shall be credited to the
individual for the computation period or periods to which the
award or agreement pertains rather than the computation period
in which the award, agreement or payment is made.
INSURER means any insurance company which shall issue non-
transferable annuity or life insurance policies under Section 4.2
of this Plan.
KEY EMPLOYEE means any Employee or former Employee (and the
beneficiaries of such Employee) who at any time during the
determination period was (1) an officer of the Employer if such
individual's annual compensation exceeds 50 percent of the dollar
limitation under Section 415(b)(1)(A) of the Code, (2) an owner (or
considered an owner under Section 318 of the Code) of one of the
ten largest interests in the Employer if such individual's
compensation exceeds 100 percent of the dollar limitation under
Section 415(c)(1)(A) of the Code, (3) a 5-percent owner of the
Employer, or (4) a 1-percent owner of the Employer who has an
annual compensation of more than $150,000. For purposes of this
definition, annual compensation means compensation as defined in
Section 415(c)(3) of the Code, but including amounts contributed by
the Employer pursuant to a salary reduction agreement which are
excludable from an Employee's gross income under Sections 125,
402(a)(8), 402(h) or 403(b) of the Code. The determination period
is the Plan Year containing the determination date and the four
preceding Plan Years. The determination of who is a Key Employee
will be made in accordance with Section 416(i)(1) of the Code and
the regulations thereunder.
LEASED EMPLOYEE means any person (other than an Employee of the
recipient) who, pursuant to an agreement between any of the
recipient Affiliated Employers and any other person ("leasing
organization"), has performed service for any of the recipient
Affiliated Employers (or for any of the recipient Affiliated
Employers and related persons determined in accordance with Section
414(n)(6) of the Code) on a substantially full-time basis for a
period of at least one year and such services are of a type
historically performed by employees in the recipient Employer's
business field. The determination of whether a person is a Leased
Employee will be made pursuant to Section 414(n) of the Code. A
Leased Employee shall not be considered an Employee of the
recipient Employer if (1) such employee is covered by a money
purchase pension plan providing: (i) a non-integrated employer
contribution rate of at least 10% of Compensation, as defined in
Section 11.5(b) of the Plan, but including amounts contributed
pursuant to a salary reduction agreement which are excludable from
the employee's gross income under Sections 125, 402(a)(8), 402(h)
or 403(b) of the Code, (ii) immediate participation, and (iii) full
vesting; and (2) Leased Employees do not constitute more than 20
percent of the recipient Employer's non-highly compensated
workforce.
NET PROFITS means the net income of the Employer before deduction
for income taxes and contributions made hereunder.
NORMAL RETIREMENT AGE means the age selected by the Employer in the
Adoption Agreement.
OWNER-EMPLOYEE means the sole proprietor or a partner, in a
partnership, who owns more than l0% of either the capital interest
or the profits interest in such partnership.
PARTICIPANT means any person who participates in the Plan as
provided in ARTICLE II hereof.
PLAN means this Retirement Plan, including the accompanying Trust
Agreement and the Adoption Agreement.
PLAN ADMINISTRATOR means the Employer.
PLAN YEAR means the Employer's taxable year for federal income tax
purposes.
SELF-EMPLOYED INDIVIDUAL means an individual who has Earned Income
for the taxable year from the trade or business with respect to
which the Plan was established or who would have had Earned Income
but for the fact that the trade or business had no net profits for
the taxable year.
SPONSOR means OppenheimerFunds Distributor,Inc.
TAXABLE WAGE BASE means the contribution and benefit base in effect
under Section 230 of the Social Security Act at the beginning of
the Plan Year.
TOP-HEAVY PLAN means this Plan and any other plan maintained by the
Employer which is deemed to be a top-heavy plan pursuant to the
Code.
TRUSTEE means the Trustee under the accompanying Trust Agreement.
TRUST AGREEMENT means the accompanying Declaration of Trust, which
is a part of this Plan.
TRUST ACCOUNT means an account maintained by the Trustee under the
Trust Agreement for all contributions except the portion, if any,
allocated pursuant to Section 4.2.
VALUATION DATE for the Plan means the latest day of the taxable
year of the Employer. Valuation Date for an Account in the Plan
means, in addition, any date a distribution is made from that
Account. Assets of an Account, or if applicable the Plan, must be
valued at fair market value on each Valuation Date.
ARTICLE II - PARTICIPATION
Section 2.1 - Participation
(a) Every Employee who shall have completed two (2) Years of
Service (as hereinafter defined), whether or not consecutive,
with the Employer, or such shorter period of service with the
Employer specified in the Adoption Agreement, shall become a
Participant under the Plan. If such service shall have been
completed on the Effective Date of the Plan, participation
shall begin as of that date; if such service shall be
completed subsequently, participation shall begin on the first
day of the month coincident or preceding completion of such
service.
(b) The participation of a Participant in the Plan will continue
until he terminates his service with the Employer for any
reason, including retirement, disability or death. If a
Participant who has terminated his service with the Employer
is re-employed by the Employer, he will become a Participant
on the date of his re-employment. If an Employee's service
with the Employer is terminated prior to his becoming a
Participant hereunder and he again becomes an Employee, his
prior period of service shall be restored upon his again
becoming an Employee.
Section 2.2 - Controlled Business
(a) Except as provided in Article XI, all Employees of the
Employer or any Affiliated Employer will be treated as
employed by a single employer.
(b) If the Plan provides contributions or benefits for one or more
Owner-Employees who control both the business for which this
Plan is established and one or more other trades or
businesses, this Plan and the plan established for such other
trades or businesses must, when looked at as a single plan,
satisfy Sections 401(a) and (d) of the Code for the Employees
of this and all such other trades or businesses.
(c) If the Plan provides contributions or benefits for one or more
Owner-Employees who control one or more other trades or
businesses, the employees of such other trades or businesses
must be included in a plan which satisfies Sections 401(a) and
(d) of the Code and which provides contributions and benefits
not less favorable than provided for Owner-Employees under
this Plan.
(d) If an individual is covered as an Owner-Employee under the
plans of two or more trades or businesses which are not
controlled and the individual controls a trade or business,
then the contributions or benefits of the employees under the
plan of the trades or businesses which are controlled must be
as favorable as those provided for him under the most
favorable plan of the trade or business which is not
controlled.
(e) For purposes of paragraphs (b), (c) and (d), an Owner-
Employee, or two or more Owner-Employees, will be considered
to control a trade or business if the Owner-Employee, or two
or more Owner-Employees together:
(1) own the entire interest in an unincorporated trade or
business, or
(2) in the case of a partnership, own more than 50 percent of
either the capital interest or the profits interest in the
partnership.
For purposes of the preceding sentence, an Owner-Employee, or
two or more Owner-Employees shall be treated as owning an
interest in a partnership which is owned, directly or
indirectly, by a partnership which such Owner-Employee, or
such two or more Owner-Employees, are considered to control
within the meaning of the preceding sentence.
Section 2.3 - Year of Service
For purposes of this ARTICLE II, a "Year of Service" shall mean a
twelve consecutive-month period during which the Employee completes
at least 1,000 Hours of Service, computed with reference to the
date the Employee first performs an Hour of Service for the
Employer and each anniversary thereof. In any case in which the
Employer maintains the plan of a predecessor Employer, service for
such predecessor shall be treated as service with the Employer.
Section 2.4 - Bargaining Unit Employees
For purposes of Section 2.1, the term "Employee" does not include,
if so elected by the Employer in the Adoption Agreement, any
Employee who is included in a unit of Employees covered by a
collective-bargaining agreement between the Employer and Employee
representatives where (i) retirement benefits were subject to good-
faith bargaining, and (ii) if 2% or less of the Employees of the
Employer who are covered by that agreement are professionals as
defined in Proposed Treasury Regulation Section 1.410(b)-9(g) or
any successor provision. Solely for these purposes, the term
"Employee representatives" does not include any organization more
than half of whose members are Employees who are owners, officers,
or executives of the Employer.
ARTICLE III - CONTRIBUTIONS
Section 3.1 - Employer Contributions
For Money Purchase Pension Plans only:
(a) Each Plan Year the Employer may contribute on behalf of each
Participant such amount as the Employer shall determine in the
Adoption Agreement, but in no event to exceed the lesser of
$30,000 (or such larger amount as may be permitted under the
Code) or 25% of such Participant's Compensation, as defined in
ARTICLE I of this Plan.
For Profit Sharing Plans only:
(a) Each Plan Year the Employer may contribute on behalf of each
Participant such amount as the Employer shall determine in the
Adoption Agreement, but in no event to exceed the lesser of
$30,000 (or such larger amount as may be permitted under the
Code) or 15% of such Participant's Compensation.
The remainder of Article III applies to both Money Purchase
Pension Plan and Profit Sharing Plan versions.
The above limitations for a money purchase pension plan or a
profit sharing plan, as the case may be, apply in the
aggregate where any Owner-Employee is covered as a Self-
Employed Individual under more than one self-employed
retirement plan established with respect to other trades or
businesses. In the event the above limitations would
otherwise be exceeded, the amount which may be contributed
with respect to each trade or business shall be limited to
that amount which bears the same ratio to the aggregate amount
deductible with respect to all trades or businesses as the
Earned Income derived from each such trade or business bears
to the Earned Income derived from all the trades or businesses
with respect to which plans are established.
(b) A Participant must share in the Employer's contributions if
the Participant either (i) has completed more than 500 Hours
of Service for the Employer during a Plan Year, regardless of
whether the Participant is employed on the last day of the
Plan Year, or (ii) is employed on the last day of the Plan
Year.
Section 3.2 - Non-deductible Employee Contributions
This Plan will not accept non-deductible Employee contributions for
Plan Years beginning after the Plan Year in which this Plan is
adopted by the Employer. Employee contributions for Plan Years
beginning after December 31, 1986 will be limited so as to meet the
non-discrimination test of Section 401(m) of the Code. A Separate
Account shall be established under the Plan for each Participant's
voluntary contributions and earnings.
Section 3.3 - Deductible Employee Contributions
(a) The Plan Administrator will not accept deductible Employee
contributions which are made for a taxable year beginning
after December 31, 1986. Deductible employee contributions
prior to that time will be maintained in a separate Account
which will be nonforfeitable at all times. The Account will
share in the gains and losses of the trust in the same manner
as Accounts maintained for other contributions to the Plan.
No part of the deductible employee contribution Account will
be used to purchase life insurance.
(b) The Plan will accept accumulated deductible employee
contributions (as defined in section 72(o)(5) of the Code)
that were distributed from a qualified retirement plan and
rolled over pursuant to Section 402(a)(5), 402(a)(7),
403(a)(4) or 408(d)(3) of the Code. The rolled over amount
will be added to the deductible employee contributions Account
but will not be taken into account in applying the limitations
on deductible contributions to this Plan. The Plan will not
accept rollovers of accumulated deductible employee
contributions from a simplified employee pension plan nor from
a plan under which the Employee was covered as a self-employed
individual as described in Section 401(c)(1) of the Code.
(c) The Participant may withdraw any part of the deductible
employee contributions Account by making a written application
to the Plan Administrator. However, if at the time the
distribution is received the Participant has not attained age
59 1/2 and is not disabled, the Participant will be subject to
a federal income tax penalty, unless the distribution is
rolled over to a qualified plan or individual retirement plan
within 60 days of the date of distribution.
Section 3.4 - Minimum Contribution
For Non-integrated Plans only:
(a) If the Employer or any Affiliated Employer does not maintain
any qualified defined benefit plan, except as provided in (b),
(c) and (d) below, Employer contributions on behalf of any
Participant who is not a Key Employee shall not be less than
the lesser of three percent (3%) of such Participant's
Compensation or the largest percentage of Employer
contributions, as a percentage of the Key Employee's
Compensation up to $200,000, allocated on behalf of any Key
Employee for the Plan Year. This minimum contribution shall
be made even though, under other Plan provisions, the
Participant would not otherwise be entitled to receive a
contribution, or would have received a lesser contribution for
the year, because of the Participant's failure to complete
1,000 Hours of Service.
(b) In the event the Employer or any Affiliated Employer maintains
any qualified defined benefit plan in addition to this Plan,
the Employer will provide a minimum allocation equal to five
percent (5%) of Compensation to each non-Key Employee entitled
under (a) above to receive a minimum contribution.
(c) The provisions of (a) and (b) above shall not apply to any
Participant who was not employed by the Employer or an
Affiliated Employer on the last day of the Plan Year.
(d) The provision in (a) above shall not apply to any Participant
to the extent the Participant is covered under any other plan
or plans of the Employer and the Employer has provided in the
Money Purchase Pension Plan or the Profit Sharing Plan
Adoption Agreement that the minimum contribution requirement
applicable to top-heavy plans will be met in another plan or
other plans.
Section 3.5 - Vesting
All contributions made by or on behalf of each Participant and all
investments made with such contributions and the earnings thereon
shall immediately become and at all times remain fully vested and
non-forfeitable. Within one hundred and eighty (180) days after
the close of each Plan Year, the Employer shall furnish each
Participant a statement of the amounts credited to his Account
during such Plan Year.
Section 3.6 - Remittance to Trustee
All contributions except the portion, if any, allocated to premiums
on non-transferable policies pursuant to Section 4.2 shall be
transmitted to the Trustee by the Employer and shall be accompanied
by written instructions from the Employer specifying the
Participants to whose Accounts they are to be credited, which are
amounts contributed by the Employer and which are amounts of
voluntary employee contributions or deductible employee
contributions contributed by each Participant and any other
relevant information required by the Trustee. Contributions of the
Employer and the Participants shall be remitted to the Trustee by
the Employer at such times as the Employer may determine.
Section 3.7 - Return of Contributions
Any contribution made by the Employer because of a mistake of fact
may be returned to the Employer within one year of such
contribution. Any contribution made by the Employer which is
conditional upon the Plan's initial qualification under the Code
may be returned to the Employer within one year after the date such
initial qualification is denied, but only if the application for
qualification is made by the time prescribed by law for filing the
Employer's return for the taxable year in which the Plan is
adopted, or such later date as the Secretary of the Treasury may
prescribe. Any contribution made by the Employer which is
conditioned on the deductibility of such amount under Section 404
of the Code may be returned to the Employer, to the extent of the
amount disallowed, within one year after the disallowance of the
deduction.
ARTICLE IV - INVESTMENT AND ALLOCATIONS
Section 4.1 - Investments
All contributions made hereunder except the portion, if any,
allocated to premiums on non-transferable policies pursuant to
Section 4.2 shall be invested as directed in a uniform, consistent
and non-discriminatory manner by the Employer, in one or more
investment companies registered under the Investment Company Act of
1940 as provided under the accompanying Trust Agreement.
Section 4.2 - Insurance
All or any portion of the contributions made by the Employer for a
Participant pursuant to Section 3.1, may, if elected by the
Employer, in a uniform and non-discriminatory manner, be used to
pay premiums on annuities (including variable annuities where the
underlying investments are made in one or more of the mutual funds
managed by Oppenheimer Management Corporation or any parent,
subsidiary, or affiliate thereof) or ordinary or term life
insurance, provided that the maximum aggregate amount which may be
used to pay the premiums for term insurance shall be less than 25%
of the aggregate contributions allocated to any Participant's
Account and the maximum aggregate premiums paid for his Account for
ordinary or whole life insurance shall be less than 50% of the
aggregate contributions allocated to his Account. If both ordinary
life and term insurance are purchased on the life of any
Participant, the sum of the term insurance premium plus one-half of
the ordinary life premiums may not exceed 25% of the Employer
contributions allocated to such Participant. The insurance may be
issued by any insurance company in the name of the Participant and
shall be owned by the Plan Administrator or may be issued in
connection with a systematic capital accumulation program. A
restriction to the following effect shall be made a part of the
policy: "This policy is not transferable and may not be sold,
assigned, discounted or pledged as collateral for a loan or as
security or for any other purpose to any person other than the
Insurance Company. This policy is issued in conjunction with a
plan established under Section 401 of the Internal Revenue Code and
constitutes part of the non-trusteed annuity portion of the plan."
Dividends on any such policy shall be applied to reduce future
premiums or purchase additional insurance. The Employer shall
substitute a bank as trustee or custodian of the insurance
contracts if the Employer is notified by the Internal Revenue
Service that such substitution is required because the holder of
the contracts is not keeping such records, or making such returns,
or rendering such statements as are required by law.
Section 4.3 - Separate Accounts
All contributions made by or on behalf of each Participant, and all
investments made with such contributions and the earnings thereon,
shall be credited to a separate Account or separate Accounts
maintained for him under the Plan, the assets of which shall be
valued on the Valuation Date. On such Valuation Date, the earnings
and losses of the Trust Account shall be allocated to each
Participant's Account in the ratio that such Account balance bears
to Account balances.
Section 4.4 - Allocation of Contributions
(a) All money purchase pension contributions made by the Employer
for a given Plan Year shall be allocated as provided in the
Adoption Agreement to the Account of the Participant for whom
such contribution was made.
(b) All profit-sharing contributions shall be allocated to the
Account of each Participant in the ratio that such
Participant's Compensation bears to the Compensation of all
Participants. However, if the profit-sharing formula selected
in the Adoption Agreement is integrated with Social Security,
profit-sharing contributions for the Plan Year will be
allocated, effective for Plan Years beginning on or after
January 1, 1989, and subject to Section 3.4, to Participants'
Accounts as follows:
(1) First, the profit sharing contributions made by the
Employer shall be allocated in the ratio that the
sum of (i) each Participant's Compensation for the
Plan Year plus (ii) Excess Compensation bears to
the sum of all Participants' total Compensation and
Participants' Excess Compensation, but not in
excess of 5.7% of the sum of such Compensation plus
such Excess Compensation taken into account under
this paragraph; and
(2) Next, any remaining profit-sharing contributions
made by the Employer shall be allocated to all
Participants in the ratio that each Participant's
Compensation for the Plan Year bears to all the
Participants' Compensation for that year.
Section 4.5 - Coordination of Social Security Integration
If the Employer maintains plans involving integration with Social
Security other than this Plan, and if any Participant is eligible
to participate in more than one of such plans, all such plans will
be considered to be integrated if the extent of the integration of
all such plans does not exceed 100 percent. For purposes of the
preceding sentence, the extent of integration of a plan is the
ratio (expressed as a percentage) which the actual benefits,
benefit-rate, offset rate, or Employer contribution rate under the
plan bears to the integration limitation applicable to such plan.
If the Employer enters into both the money purchase pension
Adoption Agreement and the profit-sharing Adoption Agreement under
this Plan, integration with Social Security may only be selected in
one Adoption Agreement.
Section 4.6 - Trustee Authority; Recordkeeping
The Trustee is authorized to hold and invest amounts transferred to
the Plan from any other plans, and the restrictions contained in
this Plan shall apply as of the date originally contributed to the
predecessor plan. The Employer shall keep all necessary records to
determine the character of such amounts.
Section 4.7 - Borrowing Not Permitted
No Participant under this Plan may borrow against the cash
surrender value of any policies purchased on his behalf.
Section 4.8 - Distribution of Policies
Subject to the joint and survivor annuity rules of ARTICLE VI, at
or before retirement any contract on the life of a Participant
shall be either distributed to the Participant or converted to cash
to provide retirement income for the Participant. Benefits
resulting from such distribution or conversion shall be paid in
accordance with the Plan. Only insurance contracts that conform to
the terms of the Plan will be issued.
ARTICLE V - PAYMENT OF BENEFITS UNDER THE PLAN
Section 5.1 - General
All distributions made under this Article shall be subject to the
requirements of Code Section 401(a)(9) and Treasury Regulations
thereunder, including the minimum distribution incidental benefit
requirements of Section 1.401(a)(9)-2 of the Proposed Regulations.
The distribution rules contained in this ARTICLE are subject to the
requirements of ARTICLE VI.
Section 5.2 - Commencement of Benefits
(a) If the value of the Participant's Account balance derived from
Employer and Employee contributions exceeds (or at the time of
any prior distribution exceeded) $3,500, and the Account
balance is distributable prior to the later of the
Participant's Normal Retirement Age or his attainment of age
62, the Participant and the Participant's Spouse (or the
survivor) must consent to any distribution of such Account
balance. The consent of the Participant and the Participant's
Spouse shall be obtained in writing within the 90-day period
prior to the date benefits commence. The Employer shall
notify the Participant and the Participant's Spouse of the
right to defer any distribution until the later of the
Participant's Normal Retirement Age or his attainment of age
62. Such notification shall include a general description of
the material features, and an explanation of the relative
values, of the optional forms of benefit available under the
Plan in a manner that would satisfy the notice requirements of
Section 417(a)(3) of the Code, and shall be provided no less
than 30 days and no more than 90 days prior to the date
benefits commence.
Notwithstanding the foregoing, only the Participant need
consent to the commencement of a distribution in the form of
a Qualified Joint and Survivor Annuity (as hereinafter
defined) which can be distributed prior to the later of the
Participant's Normal Retirement Age or his attainment of age
62. (Furthermore, if payment in the form of a Qualified Joint
and Survivor Annuity is not required with respect to the
Participant pursuant to Section 6.5 of the Plan, only the
Participant need consent to the distribution of an Account
balance which can be distributed prior to the later of the
Participant's Normal Retirement Age or his attainment of age
62). The consent of neither the Participant nor the
Participant's Spouse shall be required to the extent that a
distribution is required to satisfy Section 401(a)(9) or
Section 415 of the Code. In addition, upon termination of
this Plan, if the Plan does not offer an annuity option
(purchased from a commercial provider), and if the Employer or
any entity within the same controlled group as the Employer
does not maintain another defined contribution plan (other
than an employee stock ownership plan as defined in Section
4975(e)(7) of the Code), the Participant's account balance
may, without the Participant's consent, be distributed to the
Participant. However, if any entity within the same controlled
group as the Employer maintains another defined contribution
plan (other than any employee stock ownership plan as defined
in Section 4975(e)(7) of the Code) then the Participant's
account balance will be transferred, without the Participant's
consent, to the other plan if the Participant does not consent
to an immediate distribution.
(b) Unless the Participant elects otherwise, distribution of
benefits will begin no later than the 60th day after the
latest of the close of the Plan Year in which occurs:
(1) The Participant attains age 65 (or Normal Retirement Age,
if earlier);
(2) The 10th anniversary of the year in which the Participant
commenced participation in the Plan; or
(3) The Participant's termination of service with the
Employer.
The failure of a Participant and Spouse to consent to a
distribution while a benefit is distributable, prior to the later
of the Participant's Normal Retirement Age or age 62 in accordance
with Section 5.2(a) hereof, shall be deemed to be an election to
defer commencement of payment of any benefit until the time
provided in this Section 5.2(b).
Section 5.3 - Required Minimum Distribution; Transitional Rule
(a) Notwithstanding any other provision of the Plan to the
contrary (other than the transitional rules of this Section
5.3), the Account balance of a Participant must be
distributed, or must begin to be distributed no later than the
April 1 of the calendar year following the calendar year in
which the Participant attains age 70 1/2 (the "Required
Beginning Date").
(b) The Required Beginning Date of a Participant who attains age
70 1/2 before January 1, 1988, shall be determined in
accordance with (1) or (2) below:
(1) Non-5-percent owners. The Required Beginning Date of a
Participant who is not a 5-percent owner is the first day
of April of the calendar year following the calendar year
in which the later of retirement or attainment of age 70
1/2 occurs.
(2) 5-percent owners. The Required Beginning Date of a
Participant who is a 5-percent owner during any year
beginning after December 31, 1979, is the first day of
April following the later of:
(i) the calendar year in which the Participant attains
age 70 1/2, or
(ii) the earlier of the calendar year with or within
which ends the Plan year in which the Participant becomes
a 5-percent owner, or the calendar year in which the
Participant retires.
The Required Beginning Date of a Participant who is not
a 5-percent owner who attains age 70 1/2 during 1988 and
who has not retired as of January 1, 1989, is April 1,
1990.
(c) 5-percent owner. A Participant is treated as a 5-percent
owner for purposes of Section 5.3(b) if such Participant is a
5-percent owner as defined in Section 416(i) of the Code
(determined in accordance with Section 416 but without regard
to whether the Plan is top-heavy) at any time during the Plan
Year ending with or within the calendar year in which such
owner attains age 66 1/2 or any subsequent Plan Year.
(d) Once distributions have begun to a 5-percent owner under this
section, they must continue to be distributed, even if the
Participant ceases to be a 5-percent owner in a subsequent
year.
Section 5.4 - Form of Distribution
Except as otherwise provided in ARTICLE VI, distribution of a
Participant's benefits may be made in cash or kind in any one or
more of the following methods:
(1) In a lump sum.
(2) In substantially equal periodic installments payable at least
annually over a period certain not in excess of the life
expectancy of the Participant or the joint life and last
survivor expectancy of the Participant and his Beneficiary, as
applicable.
(3) By the conversion of any policy purchased pursuant to Section
4.2 of this Plan into an annuity for the life of the
Participant and his Beneficiary (including any period certain
not extending beyond the life expectancy of the Participant or
the joint life and last survivor expectancy of the Participant
and his Beneficiary.
Section 5.5 - Amount to be Distributed
If a Participant's Account balance is to be distributed in other
than a lump sum, then the following minimum distribution rules
shall apply on or after the Required Distribution Date:
(a) If a Participant's benefit is to be distributed over (1) a
period not extending beyond the Life Expectancy of the
Participant or the joint life and last survivor expectancy of
the Participant and the Participant's Beneficiary or (2) a
period not extending beyond the Life Expectancy of the
Beneficiary, the amount required to be distributed for each
calendar year, beginning with distributions for the first
Distribution Calendar Year (as hereinafter defined), must at
least equal the quotient obtained by dividing the
Participant's benefit (as determined under subsection (e)
below) by the Applicable Life Expectancy (as hereinafter
defined).
(b) For calendar years beginning before January 1, 1989, if the
Participant's Spouse is not the designated Beneficiary, the
method of distribution selected must assure that at least 50%
of the present value of the amount available for distribution
is paid within the life expectancy of the Participant.
(c) For calendar years beginning after December 31, 1988, the
amount to be distributed each year, beginning with
distributions for the first Distribution Calendar Year shall
not be less than the quotient obtained by dividing the
Participant's benefit by the lesser of (1) the Applicable Life
Expectancy (as hereinafter defined) or (2) if the
Participant's Spouse is not the designated Beneficiary, the
applicable divisor determined from the table set forth in Q&A-
4 of Section 1.401(a)(9)-2 of the Proposed Regulations.
Distributions after the death of the Participant shall be
distributed using the Applicable Life Expectancy (as
hereinafter defined) in subsection 5.5(a) above as the
relevant divisor without regard to Proposed Regulations
Section 1.401(a)(9)-2.
(d) The minimum distribution required for the Participant's first
Distribution Calendar Year must be made on or before the
Participant's Required Beginning Date. The minimum
distribution for other calendar years, including the minimum
distribution for the Distribution Calendar Year in which the
Employee's Required Distribution Date occurs, must be made on
or before December 31 of that Distribution Calendar Year.
(e) For purposes of this Section 5.5, the "Participant's benefit"
means the Account balance as of the last valuation date in the
calendar year immediately preceding the Distribution Calendar
Year (valuation calendar year) increased by the amount of any
contributions allocated to the Account balance as of dates in
the valuation calendar year after the valuation date and
decreased by distributions made in the valuation calendar year
after the valuation date. If any portion of the minimum
distribution for the first Distribution Calendar Year is made
in the second Distribution Calendar Year on or before the
Required Distribution Date, the amount of the minimum
distribution made in the second Distribution Calendar Year
shall be treated as if it had been made in the immediately
preceding Distribution Calendar Year.
Section 5.6 - Immediate Distributions
Notwithstanding the provisions of this ARTICLE V, if the Account
balance derived from Employer and Employee contributions of a
Participant on the date of his termination of service, the date he
becomes permanently and totally disabled, or the date of his death
does not exceed $3,500, such amount shall be paid to him, his
Spouse or his Beneficiary (whichever is applicable under ARTICLE
VI) in a lump sum as soon as practicable after such date. For
purposes of this Section 5.6, if the value of a Participant's
Account is zero, the Participant shall be deemed to have received
a distribution of such entire Account balance.
Section 5.7 - Death Benefits
(a) If the Participant dies after distribution of his or her
interest has begun, the remaining portion of such interest
will continue to be distributed at least as rapidly as under
the method of distribution being used prior to the
Participant's death.
(b) If the Participant dies before distribution of his or her
interest begins, distribution of the Participant's entire
interest shall be completed by December 31 of the calendar
year containing the fifth anniversary of the Participant's
death except to the extent that an election is made to receive
distributions in accordance with (1) or (2) below:
(1) if any portion of the Participant's interest is payable
to a designated Beneficiary, distributions may be made
over the life or over a period certain not greater than
the life expectancy of the designated Beneficiary
commencing on or before December 31 of the calendar year
immediately following the calendar year in which the
Participant died;
(2) if the designated Beneficiary is the Participant's
surviving Spouse, the date distributions are required to
begin in accordance with (i) above shall not be earlier
than the later of (1) December 31 of the calendar year
immediately following the calendar year in which the
Participant died and (2) December 31 of the calendar year
in which the Participant would have attained age 70 1/2.
If the Participant has not made an election pursuant to
this Section 5.7 by the time of his or her death, the
Participant's Beneficiary must elect the method of
distribution no later than the earlier of (1) December 31
of the calendar year in which distributions would be
required to begin under this Section, or (2) December 31
of the calendar year which contains the fifth anniversary
of the date of death of the Participant. If the
Participant has no Beneficiary, or if the designated
beneficiary does not elect a method of distribution,
distribution of the Participant's entire interest must be
completed by December 31 of the calendar year containing
the fifth anniversary of the Participant's death.
(c) For purposes of subsection (b) of this Section 5.7, if the
Surviving Spouse dies after the Participant, but before
payments to such Spouse begin, the provisions of such
subsection (b), with the exception of paragraph (ii) therein,
shall be applied as if the Surviving Spouse were the
Participant.
(d) For purposes of this Section 5.7, any amount paid to a child
of the Participant will be treated as if it has been paid to
the Surviving Spouse if the amount becomes payable to the
Surviving Spouse when the child reaches the age of majority.
(e) For purposes of this Section 5.7, distribution of a
Participant's interest is considered to begin on the
Participant's Required Beginning Date (or, if subsection (c)
of this Section 5.7 is applicable, the date distribution is
required to begin to the Surviving Spouse pursuant to
subsection (b) of this Section 5.7). If distribution in the
form of an annuity irrevocably commences to the Participant
before the Required Beginning Date, the date distribution is
considered to begin is the date distribution actually
commences.
Section 5.8 - ARTICLE V Definitions
For purposes of Sections 5.1 to 5.7 of this Plan, the following
definitions shall apply in determining the date for distributions,
the form of distributions and the amount of distributions under the
Plan:
(a) "Applicable Life Expectancy": The life expectancy (or joint
and last survivor expectancy) calculated using the attained
age of the Participant (or Beneficiary) as of the
Participant's (or Beneficiary's) birthday in the applicable
calendar year reduced by one for each calendar year which has
elapsed since the date life expectancy was first calculated.
If life expectancy is being recalculated, the Applicable Life
Expectancy shall be the life expectancy as so recalculated.
The applicable calendar year shall be the first Distribution
Calendar Year, and if life expectancy is being recalculated,
such succeeding calendar year.
(b) "Life expectancy": Life expectancy and joint and last
survivor expectancy as computed by use of the expected return
multiples in Tables V and VI of section 1.72-9 of the income
tax regulations. Unless otherwise elected by the Participant
(or Spouse, in the case of distributions described in Section
5.07(b)(2)) by the time distributions are required to begin,
Life Expectancies shall be recalculated annually. Such
election shall be irrevocable as to the Participant (or
Spouse) and shall apply to all subsequent years. The Life
Expectancy of a nonspouse beneficiary may not be recalculated.
(c) "Distribution Calendar Year": A calendar year for which a
minimum distribution is required. For distributions beginning
before the Participant's death, the first Distribution
Calendar Year is the calendar year immediately preceding the
calendar year which contains the Participant's Required
Beginning Date. For distributions beginning after the
Participant's death, the first Distribution Calendar Year is
the calendar year in which distributions are required to begin
pursuant to Section 5.7 above.
Section 5.9 - Transitional Rule
(a) Notwithstanding the other requirements of this ARTICLE V, a
distribution on behalf of any Employee, including a 5-Percent
Owner, may be made in accordance with all of the following
requirements (regardless of when such distribution commences):
(1) The distribution by the trust is one which would not have
disqualified such trust under Section 401(a)(9) of the
Code as in effect prior to amendment by the Deficit
Reduction Act of 1984.
(2) The distribution is in accordance with a method of
distribution designated by the Employee whose interest in
the trust is being distributed or, if the Employee is
deceased, by a Beneficiary of such Employee.
(3) Such designation was in writing, was signed by the
Employee or the Beneficiary, and was made before January
1, 1984.
(4) The Employee had accrued a benefit under the Plan as of
December 31, 1983.
(5) The method of distribution designated by the Employee or
the Beneficiary specifies the time at which distribution
will commence, the period over which distributions will
be made, and in the case of any distribution upon the
Employee's death, the Beneficiaries of the Employee
listed in order of priority.
(b) A distribution upon death will not be covered by this
transitional rule unless the information in the designation
contains the required information described above with
respect to the distributions to be made upon the death of the
Employee.
(c) For any distribution which commences before January 1, 1984,
but continues after December 31, 1983, the Employee, or the
Beneficiary, to whom such distribution is being made, will be
presumed to have designated the method of distribution under
which the distribution is being made if the method of
distribution was specified in writing and the distribution
satisfies the requirements in Section 5.9(a)(1) and (5)
hereof.
(d) If a designation is revoked, any subsequent distribution must
satisfy the requirements of Section 401(a)(9) of the Code and
proposed regulations thereunder. If a designation is revoked
subsequent to the date distributions are required to begin,
the trust must distribute by the end of the calendar year
following the calendar year in which the revocation occurs the
total amount not yet distributed which would have been
required to be distributed to satisfy Section 401(a)(9) of the
Code and regulations thereunder, but for the Section 242(b)
election. For calendar years beginning after December 31,
1988, such distributions must meet the minimum distribution
incidental benefit requirements in Proposed Regulations
Section 1.401(a)(9)-2. Any changes in the designation will be
considered to be a revocation of the designation. However,
the mere substitution or addition of another Beneficiary (one
not named in the designation) under the designation will not
be considered to be a revocation of the designation, so long
as such substitution or addition does not alter the period
over which distributions are to be made under the designation,
directly or indirectly (for example, by altering the relevant
measuring life). In the case in which an amount is
transferred or rolled over from one plan to another plan, the
rules in Q&A J-2 and J-3 shall apply.
ARTICLE VI - JOINT AND SURVIVOR ANNUITY AND PRE-RETIREMENT
SURVIVOR ANNUITY
Section 6.1 - General
Except as provided with respect to certain profit sharing plans in
Section 6.5, the provisions of this ARTICLE VI shall apply to any
Participant who is credited with at least one hour of service with
the Employer on or after August 23, 1984, and such other
Participants as provided in Section 6.6 hereof.
Section 6.2 - Joint and Survivor and Pre-retirement Survivor
Annuity
(a) Unless an optional form of benefit is selected pursuant to a
Qualified Election within the 90-day period ending on the date
benefit payments would commence, a married Participant's
vested Account balance will be paid in the form of a Qualified
Joint and Survivor Annuity and an unmarried Participant's
vested account balance will be paid in the form of a life
annuity.
(b) Unless an optional form of benefit has been selected within
the election period pursuant to a Qualified Election (as
hereinafter defined), if a Participant dies before benefits
have commenced then the Participant's vested Account balance
shall be applied toward the purchase of an annuity for the
life of the surviving Spouse (a "Qualified Pre-retirement
Survivor Annuity"). The surviving Spouse may elect to have
such annuity distributed immediately or may elect another
manner of distribution.
Section 6.3 - ARTICLE VI Definitions
For purposes of this ARTICLE VI, the following definitions shall
apply:
(a) "Election period": The period which begins on the first day
of the Plan Year in which the Participant attains age 35 and
ends on the date of the Participant's death. If a Participant
separates from service prior to the first day of the Plan Year
in which age 35 is attained, with respect to the Account
balance as of the date of separation, the election period
shall begin on the date of separation.
(b) "Pre-Age 35 Waiver": A Participant who will not yet attain
age 35 as of the end of any current Plan Year may make a
special Qualified Election to waive the Qualified Pre-
retirement Survivor Annuity for the period beginning on the
date of such election and ending on the first day of the Plan
Year in which the Participant will attain age 35. Such
election shall not be valid unless the Participant receives a
written explanation of the Qualified Pre-retirement Survivor
Annuity in such terms as are comparable to the explanation
required under Section 6.4. Qualified Pre-retirement Survivor
Annuity coverage will be automatically reinstated as of the
first day of the Plan Year in which the Participant attains
age 35. Any new waiver on or after such date shall be subject
to the full requirements of this ARTICLE VI.
(c) "Qualified Election": A waiver of a Qualified Joint and
Survivor Annuity or a Qualified Pre-retirement Survivor
Annuity and the election of an optional form of benefit
described in Section 5.4. The waiver shall not be effective
unless: (a) it is in writing and it is consented to by the
Participant's Spouse; (b) the Spouse's consent is witnessed by
a notary public; (c) the election is limited to a specific
alternate Beneficiary, including any class of Beneficiaries or
any contingent Beneficiaries (or the Spouse expressly permits
designations by the Participant without any further spousal
consent); (d) the election designates a form of benefit
payment which may not be changed without the Spouse's consent
(or the Spouse expressly permits designations by the
Participant without any further consent of the Spouse); and
(e) the Spouse's consent acknowledges the effect of the
election. Notwithstanding this consent requirement, if the
Participant establishes to the satisfaction of the Employer
that such written consent may not be obtained because there is
no Spouse or the Spouse cannot be located, a waiver will be
deemed a Qualified Election.
Any consent necessary under this provision (or the
establishment that the consent of the Spouse may not be
obtained) will not be valid with respect to any other Spouse.
A consent that permits designations by the Participant without
any requirement of further consent by such Spouse must
acknowledge that the Spouse has the right to limit consent to
a specific Beneficiary, and a specific form of benefit where
applicable, and that the Spouse voluntarily elects to
relinquish either or both of such rights. Additionally, a
revocation of a prior waiver may be made by a Participant
without the consent of the Spouse at any time before the
commencement of benefits. The number of revocations shall not
be limited. Any new waiver or change of Beneficiary will
require a new spousal consent. No consent pursuant to the
provisions herein shall be valid unless the Participant has
received notice pursuant to Section 6.4.
(d) "Earliest Retirement Age": The earliest date on which, under
the Plan, the Participant could elect to receive retirement
benefits.
(e) "Qualified Joint and Survivor Annuity": An immediate annuity
for the life of the Participant with a survivor annuity for
the life of the Spouse which is one-half of the amount of the
annuity which is payable during the joint lives of the
Participant and the Spouse and which is the amount of benefit
which can be purchased with the Participant's vested account
balance.
(f) "Spouse (Surviving Spouse)": The spouse or surviving spouse
of the Participant, provided that a former spouse will be
treated as the spouse or surviving spouse to the extent
provided under a qualified domestic relations order as
described in Section 414(p) of the Code.
Section 6.4 - Notice Requirements
(a) In the case of a Qualified Joint and Survivor Annuity as
described in Section 6.3 hereof, the Plan Administrator shall,
no less than 30 days and no more than 90 days prior to the
annuity starting date, provide each Participant with a written
explanation of (i) the terms and conditions of a Qualified
Joint and Survivor Annuity; (ii) the Participant's right to
make and the effect of an election to waive the Qualified
Joint and Survivor Annuity form of benefit; (iii) the rights
of a Participant's Spouse; and (iv) the right to make, and the
effect of, a revocation of a previous election to waive the
Qualified Joint and Survivor Annuity.
(b) In the case of a Qualified Pre-retirement Survivor Annuity as
described in Section 6.3 hereof, the Employer shall provide
each Participant within the Applicable Period for such
Participant a written explanation of the Qualified Pre-
retirement Survivor Annuity in such manner as would be
comparable to the explanation provided for meeting the
requirements of Section 6.3 applicable to a Qualified Joint
and Survivor Annuity. The Applicable Period for a Participant
is whichever of the following periods in (1), (2)(a), (2)(b)
or (2)(c) below ends last:
(1) the period beginning with the first day of the Plan Year
in which the Participant attains age 32 and ending with
the close of the Plan Year preceding the Plan Year in
which the Participant attains age 35;
(2) the period beginning 1 year before and ending 1 year
after (a) the individual becomes a Participant; (b) the
Qualified Pre-retirement Survivor Annuity is no longer
fully subsidized within the meaning of the Code and
regulations thereunder; or (c) this ARTICLE VI first
applies to such Participant.
Notwithstanding the foregoing, in the case of a Participant who
separates from service before attaining age 35, notice must be
provided within the period beginning 1 year before and ending 1
year after such separation. If such Participant thereafter returns
to employment with the Employer, the Applicable Period shall be
redetermined.
Section 6.5 - Special Rule for Profit Sharing Plans
This Article VI applies to (1) a profit sharing plan, and (2) to
any distribution, made on or after the first day of the first Plan
Year beginning after December 31, 1988, from or under a separate
account attributable solely to accumulated deductible employee
contributions (as defined in Code Section 72(o)(5)(B)), and
maintained on behalf of a Participant in a money purchase pension
plan, if, in the case of (1) or (2), the following two conditions
are met: (i) the Participant cannot or does not elect payments in
the form of a life annuity, and (ii) on the death of the
Participant, the Participant's vested Account balance will be paid
to the Participant's Surviving Spouse, but if there is no Surviving
Spouse, or, if the Surviving Spouse has already consented in a
manner conforming to a Qualified Election, then to the
Participant's designated Beneficiary. However, this Section 6.5
shall not be operative with respect to a Participant in a profit
sharing plan if it is determined that such plan is a direct or
indirect transferee of a defined benefit plan, money purchase
pension plan (including a target benefit plan), stock bonus, or
profit sharing plan which is subject to the survivor annuity
requirements of Section 401(a)(11) and Section 417 of the Code. In
addition, this Section shall not apply unless the Participant's
Spouse is the beneficiary of any insurance on the Participant's
life purchased by Employer contributions or forfeitures allocated
to the Participant's Account. If this Section is operative, then
except to the extent otherwise provided in Section 6.6 hereof, the
other provisions of this ARTICLE VI shall be inoperative.
Section 6.6 - Transitional Rules
(a) Any living Participant not receiving benefits on August 23,
1984, who would otherwise not receive the benefits prescribed
by this ARTICLE VI must be given the opportunity to elect to
have this ARTICLE VI apply if such Participant is credited
with at least one hour of service under this Plan or a
predecessor plan in a Plan Year beginning on or after January
1, 1976, and such Participant had at least 10 years of vesting
service when he or she separated from service.
(b) Any living Participant not receiving benefits on August 23,
1984, who was credited with at least one hour of service under
this Plan or a predecessor plan on or after September 2, 1974,
and who is not otherwise credited with any service in a Plan
Year beginning on or after January 1, 1976, must be given the
opportunity to have his or her benefits paid in accordance
with Section 6.6(d).
(c) The respective opportunities to elect (as described in Section
6.6(a) and (b) above) must be afforded to the appropriate
Participants during the period commencing on August 23, 1984,
and ending on the date benefits would otherwise commence to
said Participants.
(d) Any Participant who has elected pursuant to Section 6.6(b)
hereof and any Participant who does not elect under Section
6.6(a) hereof or who meets the requirements of Section 6.6(a)
hereof except that such Participant does not have at least 10
years of vesting service when he or she separates from
service, shall have his or her benefits distributed in
accordance with all of the following requirements if benefits
would have been payable in the form of a life annuity:
(1) Automatic joint and survivor annuity. If benefits in the
form of a life annuity become payable to a married
Participant who:
(i) begins to receive payments under the Plan on or after
Normal Retirement Age; or
(ii) dies on or after Normal Retirement Age while still
working for the Employer; or
(iii) begins to receive payments on or after the
Qualified Early Retirement Age; or
(iv) separates from service on or after attaining Normal
Retirement Age (or the Qualified Early Retirement Age)
and after satisfying the eligibility requirements for the
payment of benefits under the Plan and thereafter dies
before beginning to receive such benefits; then such
benefits will be received under this Plan in the form of
a Qualified Joint and Survivor Annuity, unless the
Participant has elected otherwise during the election
period. The election period must begin at least 6 months
before the Participant attains Qualified Early Retirement
Age and not more than 90 days before the commencement of
benefits. Any election hereunder will be in writing and
may be changed by the Participant at any time.
(2) Election of early survivor annuity. A Participant who is
employed after attaining the Qualified Early Retirement
Age will be given the opportunity to elect, during the
election period, to have a survivor annuity payable on
death. If the Participant elects the survivor annuity,
payments under such annuity must not be less than the
payments which would have been made to the Spouse under
the Qualified Joint and Survivor Annuity if the
Participant had retired on the day before his or her
death. Any election under this provision will be in
writing and may be changed by the Participant at any
time. The election period begins on the last of (i) the
90th day before the Participant attains the Qualified
Early Retirement Age, or (ii) the date on which
participation begins, and ends on the date the
Participant terminates employment.
(3) For purposes of this Section 6.6(d), Qualified Early
Retirement Age is the latest of:
(i) the earliest date, under the Plan, on which the
Participant may elect to receive retirement benefits,
(ii) the first day of the 120th month beginning before
the Participant reaches Normal Retirement Age, or
(iii) the date the Participant begins participation.
Section 6.7 - Beneficiary
Subject to the Surviving Spouses's rights under this ARTICLE VI,
each Participant shall have the right, by written notice to the
Employer, to designate one or more Beneficiaries to receive any
benefit to which such Participant may be entitled in the event of
his death prior to the complete distribution of such benefit. Any
such selection may be revoked by a Participant at any time prior to
his death by written notification to the Employer of such
revocation. If no such election is in effect on a Participant's
death, his Beneficiary shall be deemed to be his Surviving Spouse
or, if none, the Participant's estate.
Section 6.8 - Withdrawals
Any Participant may, upon thirty days written notice filed with the
Employer, have paid to him an amount equal to the then present
value of all or any portion of any nondeductible voluntary
contributions that were made by such Participant on behalf of
himself pursuant to the Plan, less prior withdrawals, but not
including any earnings thereon. Such withdrawal is subject to
spousal consent if the rules described in this ARTICLE VI apply.
Section 6.9 - Annuity Contracts
Annuity contracts must be non-transferable when distributed from
the Trust.
ARTICLE VII - TRUST ACCOUNT
Section 7.1 - Trust Agreement
All contributions except the portion, if any, allocated to premiums
on non-transferable policies pursuant to Section 4.2 under the Plan
shall be paid over to a Trust to be maintained by the Employer with
the Trustee to be held in accordance with the accompanying Trust
Agreement, which is part of this Plan.
ARTICLE VIII - AMENDMENT AND TERMINATION
Section 8.1 - Amendment by Employer and Sponsor
The Employer reserves the right to amend the Plan in whole or in
part (including retroactive amendments), and the Employer delegates
to the Sponsor the right to amend the terms and conditions of the
Plan, and the Employer will be deemed to have consented to such
amendment. The Sponsor shall, upon making any such amendment, mail
a copy of such amendment to each participating Employer.
Section 8.2 - Amendment by Employer
The Employer will not cease participation in this prototype plan if
the Employer amends the Plan (1) to change the choice of options in
the Adoption Agreement, (2) to add amending language in the
Adoption Agreement when such language is necessary to satisfy
section 415 or 416 of the Code because of the required aggregation
of multiple plans, and (3) to add certain model amendments
published by the Internal Revenue Service which specifically
provide that their adoption will not cause the Plan to be treated
as individually designed. An Employer that amends the Plan for any
other reason, including a waiver of the minimum funding
requirements under Section 412(d) of the Code, will no longer
participate in this prototype plan and will be considered to have
an individually designed plan.
No amendment to the Plan shall be effective to the extent that it
has the effect of decreasing a Participant's Account balance. For
purposes of this Section 8.2, a Plan amendment which has the effect
of decreasing a Participant's Account balance or eliminating an
optional form of benefit, with respect to benefits attributable to
service before the amendment will be treated as reducing an accrued
benefit. Furthermore, if the vesting schedule of the Plan is
amended, in the case of an Employee who is a Participant as of the
later of the date such amendment is adopted or the date it becomes
effective, the nonforfeitable percentage (determined as of such
date) of such Employee's right to his employer-derived accrued
benefit will not be less than his percentage computed under the
Plan without regard to such amendment. If the Plan's vesting
schedule is amended, or the Plan is amended in any way that
directly or indirectly affects the computation of a Participant's
nonforfeitable percentage, each Participant with at least 3 Years
of Service (5 Years of Service for Participants without 1 Hour of
Service in any Plan Year beginning after December 31, 1988) with
the Employer may elect, within a reasonable period after the
adoption of the amendment or change, to have the nonforfeitable
percentage computed under the Plan without regard to such amendment
or change. The period during which the election may be made shall
commence with the date the amendment is adopted or deemed to be
made and shall end on the latest of:
(1) 60 days after the amendment is adopted;
(2) 60 days after the amendment becomes effective; or
(3) 60 days after the Participant is issued written notice of the
amendment by the Employer.
Section 8.3 - Termination
(a) An Employer may terminate his Plan at any time by delivering
to the Trustee and insurer, if any, a written notice of such
termination.
(b) The Plan shall terminate (1) upon the death of the Employer,
if he is a sole proprietor, or otherwise upon the dissolution,
merger, consolidation or reorganization of the Employer,
unless provision is made by a successor to the Business for
the continuation of the Plan, and such continuation is
approved by the Trustee, or (2) if the Employer is judicially
declared insolvent.
Section 8.4 - Action Upon Termination
Upon termination of the Plan by the Employer pursuant to Section
8.3 hereof, no further contributions shall be made and the Trustee
shall continue to administer the Trust and distribute benefits in
accordance with the instructions of the Employer and the provisions
of the Plan.
Section 8.5 - Transfer of Assets
The Employer is authorized to direct the Trustee, upon 60 days
written notice, to transfer the assets to a successor trustee or
custodian under the Plan or any other plan which is qualified under
Section 401(a) and Section 401(d) of the Code and which provides
substantially equivalent benefits. Such a transfer may constitute
an amendment of this Plan or the adoption of a new Plan and the
termination of this Plan, as the case may be, but in either case,
upon making such transfer the Trustee shall be discharged from any
and all liability hereunder, except with respect to acts committed,
or acts not taken, as the case may be, prior to such transfer. The
Trustee in making such transfer may withhold sufficient assets to
pay any of its accrued but unpaid fees.
Section 8.6 - Benefits Upon Merger, Consolidation or Transfer of
Plan Assets
In the event of any merger or consolidation with, or transfer of
assets to, any other plan, it shall be a condition of such merger,
consolidation with, or transfer of assets that each Participant
hereunder would (if the Plan were to terminate then) receive a
benefit immediately after such merger, consolidation, or transfer
which is equal to or greater than the benefit he would have been
entitled to receive immediately before the merger, consolidation,
or transfer (if the Plan were to have terminated then).
ARTICLE IX - NAMED FIDUCIARY AND ADMINISTRATOR
Section 9.1 - Administration
The Employer shall be responsible for the administration and
operation of the Plan in accordance with its terms and applicable
laws and shall have the sole authority to enforce the provisions of
the Plan, except as otherwise provided by Federal law. The
Employer shall determine all matters concerning the Plan, including
but not limited to questions arising out of the administration,
interpretation and application of the Plan, which determination
shall be conclusive and binding on all persons.
Section 9.2 - Trustee Liability
The Employer shall indemnify and hold harmless the Trustee against
all and any liabilities which may be imposed on the Trustee, and
the Employer shall be responsible for the defense of any actions
brought against the Trustee except for acts of willful dishonesty
or gross negligence, and except as otherwise required by law.
Section 9.3 - Rights Against Trust Assets; Employment
Neither the establishment of the Plan and the Trust nor any
modification thereof, nor the creation of any fund or account, nor
the payment of any benefits, shall be construed as giving to any
Participant or other person any legal or equitable right against
the assets of the Trust, the Trustee, or the Employer, except as
herein provided and as provided by Federal law; and in no event
shall the terms of employment of any Employee or Participant be
modified or in any way be affected hereby.
Section 9.4 - Named Fiduciary; Plan Administrator
(a) The Employer shall be the "Named Fiduciary" with respect to
administration, interpretation and application of the Plan.
The Employer shall also be the "Plan Administrator" with
respect to the Plan. The Plan Administrator shall be
responsible for complying with all reporting and disclosure
requirements under the Code and ERISA.
(b) The Employer shall be the Named Fiduciary with respect to both
administration and investment of the Plan assets, and the
Trustee shall be subject to direction of the Employer as
provided herein, and is directed to follow the instructions of
the Employer.
ARTICLE X - MISCELLANEOUS
Section 10.1 - Qualified Status
The Plan is established with the intent that it will be a qualified
plan under Section 401(a) of the Code. The Employer will notify
the Trustee in writing of any determination made with respect to
the qualified status or change in the qualified status of the Plan.
Section 10.2 - Alienation of Benefits
No benefit or interest available hereunder will be subject to
assignment or alienation, either voluntarily or involuntarily. The
preceding sentence shall also apply to the creation, assignment, or
recognition of a right to any benefit payable with respect to a
Participant pursuant to a domestic relations order, unless such
order is determined to be a qualified domestic relations order, as
defined in Section 414(p) of the Code, or any domestic relations
order entered before January 1, 1985.
Section 10.3 - Governing Law
This Plan shall be construed, administered and enforced according
to the laws of the State where the Employer maintains its principal
place of business, except where Federal law is pre-emptive.
Section 10.4 - Trustee Actions
The Trustee shall have the right to design forms to be used for
direction of investments, designation of Beneficiary, selection of
retirement benefits, and other notices to the Trustee. If such
form has been designed and made available to the Employer, the
Trustee shall be under no duty to act with instructions of the
Employer unless provided on the form prescribed.
Section 10.5 - Loss of Qualification
If a Plan of a participating Employer either fails to attain
initial qualified status or fails to retain its qualified status,
such Plan shall not participate in this prototype plan and shall be
considered an individually designed plan.
Section 10.6 - Contributions; Exclusive Benefit
Contributions are made conditioned upon the initial and continuing
qualification of the Plan under Section 401(a) of the Code and the
deductibility of such contributions under Section 404(a) of the
Code. The assets of the Plan will not be used for or diverted to
any purpose whatsoever other than the payment of the expenses of
administering the Plan and the exclusive benefit of the
Participants and their Beneficiaries.
ARTICLE XI - LIMITATIONS ON ALLOCATIONS
Section 11.1 - Employers Who Do Not Maintain Other Qualified Plans
(a) If the Participant does not participate in, and has never
participated in, another qualified plan, a welfare benefit
fund (as defined in Section 419(e) of the Code) maintained by
the Employer, or an individual medical account (as defined in
Section 415(l)(2) of the Code), maintained by the Employer,
which provides an Annual Addition as defined in Section 11.5
hereof, the amount of Annual Additions (as defined below)
which may be credited to the Participant's account for any
Limitation Year (as defined below) will not exceed the lesser
of the Maximum Permissible Amount (as defined below) or any
other limitation contained in this Plan. If the Employer
contribution that would otherwise be contributed or allocated
to the Participant's account would cause the Annual Additions
for the Limitation Year to exceed the Maximum Permissible
Amount, the amount contributed or allocated will be reduced so
that the Annual Additions for the Limitation Year will equal
the Maximum Permissible Amount.
(b) Prior to determining the Participant's actual Compensation (as
defined below) for the Limitation Year, the Employer may
determine the Maximum Permissible Amount for a Participant on
the basis of a reasonable estimation of the Participant's
Compensation for the Limitation Year uniformly determined for
all Participants similarly situated.
(c) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the
Limitation Year will be determined on the basis of the
Participant's actual Compensation for the Limitation Year.
(d) If pursuant to Section 11.1(c) hereof or the allocation of
forfeitures there is an Excess Amount (as defined below), the
excess will be disposed of as follows:
(i) Any nondeductible voluntary employee contributions, to the
extent they would reduce the Excess Amount, will be returned
to the Participant.
(ii) If after the application of paragraph (i) an Excess
Amount still exists, and the Participant is covered by the
Plan at the end of the Limitation Year, the Excess Amount in
the Participant's account will be used to reduce Employer
contributions for such Participant in the next Limitation Year
and each succeeding Limitation Year if necessary.
(iii) If after the application of paragraphs (i) or (ii) an
Excess Amount still exists, and the Participant is not covered
by the Plan at the end of the Limitation Year, the Excess
Amount will be held unallocated in a suspense account. The
suspense account will be applied to reduce future Employer
contributions for all remaining Participants in the next
Limitation Year, and each succeeding Limitation Year if
necessary.
(iv) If a suspense account is in existence at any time during
a Limitation Year pursuant to this Section, it will not
participate in the allocation of the Trust Account's
investment gains and losses. If a suspense account is in
existence at any time during a particular Limitation Year, all
amounts in the suspense account must be allocated and
reallocated to Participants' accounts before any Employer or
any Employee contributions may be made to the Plan for that
Limitation Year. Excess Amounts may not be distributed to
Participants or former Participant.
Section 11.2 - Employers Who Maintain Other Qualified Master or
Prototype Defined Contribution Plans
(a) This Section applies if, in addition to this Plan, the
Participant is covered under another qualified Master or
Prototype defined contribution plan maintained by the
Employer, a welfare benefit fund (as defined in Section 419(e)
of the Code) maintained by the Employer, or an individual
medical account (as defined in Section 415(l)(2) of the Code),
maintained by the Employer, which provides an Annual Addition
as defined in Section 11.5 hereof, during any Limitation Year.
The Annual Additions which may be credited to a Participant's
account under this Plan for any such Limitation Year will not
exceed the Maximum Permissible Amount reduced by the Annual
Additions credited to a Participant's account under the other
plans and welfare benefit funds for the same Limitation Year.
If the Annual Additions with respect to the Participant under
other defined contribution Plans and welfare benefit funds
maintained by the Employer are less than the Maximum
Permissible Amount and the Employer contribution that would
otherwise be contributed or allocated to the Participant's
account under this Plan would cause the Annual Additions for
the Limitation Year to exceed this limitation, the amount
contributed or allocated will be reduced so that the Annual
Additions under all such plans and funds for the Limitation
Year will equal the Maximum Permissible Amount. If the Annual
Additions with respect to the Participant under such other
defined contribution plans and welfare benefit funds in the
aggregate are equal to or greater than the Maximum Permissible
Amount, no amount will be contributed or allocated to the
Participant's account under this Plan for the Limitation Year.
(b) Prior to determining the Participant's actual Compensation for
the Limitation Year, the Employer may determine the Maximum
Permissible Amount for a Participant in the manner described
in subsection 11.1(b) hereof.
(c) As soon as is administratively feasible after the end of the
Limitation Year the Maximum Permissible Amount for the
Limitation Year will be determined on the basis of the
Participant's actual Compensation for the Limitation Year.
(d) If, pursuant to subsection 11.2(c) or as a result of the
allocation of forfeitures, a Participant's Annual Additions
under this Plan and such other plans would result in an Excess
Amount for a Limitation Year, the Excess Amount will be deemed
to consist of the Annual Additions last allocated except that
annual additions attributable to a welfare benefit fund or
individual medical account will be deemed to have been
allocated first regardless of the actual allocation date.
(e) If an Excess Amount was allocated to a Participant on an
allocation date of this Plan which coincides with an
allocation date of another plan, the Excess Amount attributed
to this Plan will be the product of,
(i) the total Excess Amount allocated as of such date, times
(ii) the ratio of (a) the Annual Additions allocated to the
Participant for the Limitation Year as of such date under this
Plan to (b) the total Annual Additions allocated to the
Participant for the Limitation Year as of such date under this
and all other qualified Master or Prototype defined
contribution plans.
(f) Any Excess Amount attributed to this Plan will be disposed in
the manner described in subsection 11.1(d) hereof.
Section 11.3 - Employers Who Maintain Other Defined Contribution
Plans Which Are Not Master or Prototype Plans
If the Participant is covered under another qualified defined
contribution plan maintained by the Employer which is not a Master
or Prototype plan, Annual Additions which may be credited to the
Participant's account under this Plan for any Limitation Year will
be limited in accordance with subsections 11.2(a) through 11.2(f)
as though the other plan was a Master or Prototype plan unless the
Employer provides other limitations in the Profit Sharing Plan
Adoption Agreement and/or the Money Purchase Pension Plan Adoption
Agreement.
Section 11.4 - Employers Who Maintain a Defined Benefit Plan
If the Employer maintains, or at any time maintained, a qualified
defined benefit plan covering any Participant in this Plan, the sum
of the Participant's Defined Benefit Plan Fraction and Defined
Contribution Plan Fraction will not exceed 1.0 in any Limitation
Year. The Annual Additions which may be credited to the
Participant's account under this Plan for any Limitation Year will
be limited in accordance with the Profit Sharing Plan Adoption
Agreement and/or the Money Purchase Pension Plan Adoption
Agreement.
Section 11.5 Definitions
(a) Annual Additions: The sum of the following amounts credited
to a Participant's account for the Limitation Year:
(1) Employer contributions;
(2) Employee Contributions; and
(3) forfeitures.
For this purpose, any Excess Amount applied under subsections
11.1(d) or 11.2(f) in the Limitation Year to reduce Employer
contributions will be considered Annual Additions for such
Limitation Year. Amounts allocated, after March 31, 1984, to
an individual medical account, as defined in section 415(l)
(2) of the Code, which is part of a pension or annuity plan
maintained by the Employer, are treated as Annual Additions to
a defined contribution plan. Also, amounts derived from
contributions paid or accrued after December 31, 1985, in
taxable years ending after such date, which are attributable
to post-retirement medical benefits allocated to the separate
account of a Key Employee, as defined in Section 419A(d)(3) of
the Code, under a welfare benefit fund, as defined in Section
419(e) of the Code, maintained by the Employer, are treated as
Annual Additions to a defined contribution plan.
(b) Compensation: A Participant's earned income, wages, salaries,
and fees for professional services and other amounts received
(without regard to whether or not an amount is paid in cash)
for personal services actually rendered in the course of
employment with the Employer maintaining the Plan to the
extent that the amounts are includable in gross income
(including, but not limited to, commissions paid to salesmen,
compensation for services on the basis of a percentage of
profits, commissions on insurance premiums, tips, bonuses,
fringe benefits, reimbursements and expense allowances), and
excluding the following:
(1) Employer contributions to a plan of deferred compensation
which are not includable in the Employee's gross income
for the taxable year in which contributed, or Employer
contributions under a simplified employee pension plan to
the extent such contributions are deductible by the
Employee, or any distributions from a plan of deferred
compensation;
(2) Amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property) held
by the Employee either becomes freely transferable or is
no longer subject to a substantial risk of forfeiture;
(3) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock
option; and
(4) Other amounts which received special tax benefits, or
contributions made by the Employer (whether or not under
a salary reduction agreement) towards the purchase of an
annuity described in Section 403(b) of the Code (whether
or not the amounts are actually excludable from the gross
income of the Employee).
For purposes of applying the limitations of this Article,
Compensation for a Limitation Year is the Compensation
actually paid or includable in gross income during such
year.
Notwithstanding the preceding sentence, compensation for
a Participant in a defined contribution plan who is
permanently and totally disabled (as defined in section
105(d)(4) of the Code) is the Compensation such
Participant would have received for the Limitation Year
if the Participant was paid at the rate of Compensation
paid immediately before becoming permanently and totally
disabled; such imputed compensation for the disabled
Participant may be taken into account only if the
Participant is not a highly compensated employee (as
defined in Section 414(q) of the Code), and contributions
made on behalf of such Participant are nonforfeitable
when made.
(c) Defined Benefit Fraction: A fraction, the numerator of
which is the sum of the Participant's Projected Annual
Benefits under all the defined benefit plans (whether or
not terminated) maintained by the Employer, and the
denominator of which is the lesser of 125 percent of the
dollar limitation determined for the Limitation Year
under Sections 415(b) and (d) of the Code or 140 percent
of the Highest Average Compensation, including any
adjustments under Section 415(b) of the Code.
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first Limitation
Year beginning after December 31, 1986, was a Participant
in one or more defined benefit plans maintained by the
Employer which were in existence on May 6, 1986, the
denominator of this fraction will not be less than 125
percent of the sum of the annual benefits under such
plans which the Participant had accrued as of the close
of the last Limitation Year beginning before January 1,
1987, disregarding any changes in the terms and
conditions of the Plan after May 5, 1986. The preceding
sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the
requirements of section 415 for all Limitation Years
beginning before January 1, 1987.
(d) Defined Contribution Dollar Limitation: $30,000 or if
greater, one-fourth of the defined benefit dollar
limitation set forth in Section 415(b)(1) of the Code, as
in effect for the Limitation Year.
(e) Defined Contribution Fraction: A fraction, the numerator
of which is the sum of the Annual Additions to the
Participant's account under all the defined contribution
plans (whether or not terminated) maintained by the
Employer for the current and all prior Limitation Years
(including the Annual Additions attributable to the
Participant's nondeductible Employee contributions to
this and all other defined benefit plans, whether or not
terminated, maintained by the Employer and the annual
additions attributable to all welfare benefit funds, as
defined in Section 419(e) of the Code, and individual
medical accounts, as defined in Section 415(l)(2) of the
Code, maintained by the Employer, and the denominator of
which is the sum of the Maximum Aggregate Amounts for the
current and all prior Limitation Years of service with
the Employer (regardless of whether a defined
contribution plan was maintained by the Employer). The
Maximum Aggregate Amount in any Limitation Year is the
lesser of 125 percent of the dollar limitation determined
under Section 415(b) and (d) of the Code in effect under
Section 415(c)(1)(A) of the Code or 35 percent of the
Participant's Compensation for such year.
If the Employee was a Participant as of the end of the
first day of the first Limitation Year beginning after
December 31, 1986, in one or more defined contribution
plans maintained by the Employer which were in existence
on May 6, 1986, the numerator of this fraction will be
adjusted if the sum of this fraction and the Defined
Benefit Fraction would otherwise exceed 1.0 under the
terms of this Plan. Under the adjustment, an amount
equal to the product of (1) the excess of the sum of the
fractions over 1.0 times (2) the denominator of this
fraction, will be permanently subtracted from the
numerator of this fraction.
The adjustment is calculated using the fractions as they
would be computed as of the end of the last Limitation
Year beginning before January 1, 1987, and disregarding
any changes in the terms and conditions of the Plan made
after May 5, 1986, but using the Section 415 limitation
applicable to the first Limitation Year beginning on or
after January 1, 1987. The Annual Addition for any
Limitation Year beginning before January 1, 1987, shall
not be recomputed to treat all Employee contributions as
Annual Additions.
(f) Employer: For purposes of this ARTICLE, the Employer
that adopts this Plan, and all members of a controlled
group of corporations (as defined in Section 414(b) of
the Code as modified by Section 415(h)), all commonly
controlled trades or businesses (as defined in Section
414(c) as modified by Section 415(h)) or affiliated
service groups (as defined in Section 414(m)) of which
the adopting Employer is a part, and any other entity
required to be aggregated with the Employer pursuant to
regulations under Section 414(o) of the Code.
(g) Excess Amount: The excess of the Participant's Annual
Additions for the Limitation Year over the Maximum
Permissible Amount.
(h) Limitation Year: A calendar year, or the 12-consecutive
month period elected by the Employer in a resolution
attached to the Adoption Agreement. All qualified plans
maintained by the Employer must use the same Limitation
Year. If the Limitation Year is amended to a different
12-consecutive-month period, the new Limitation Year must
begin on a date within the Limitation Year in which the
amendment is made.
(i) Master or Prototype Plan: A Plan the form of which is
the subject of a favorable opinion letter from the
Internal Revenue Service.
(j) Maximum Permissible Amount: The maximum Annual Addition
that may be contributed or allocated to a Participant's
Account under the Plan for any Limitation Year, which
shall not exceed the lesser of (a) the defined
contribution dollar limitation, or (b) 25 percent of the
Participant's Compensation for the Limitation Year. The
Compensation Limitation referred to in (b) shall not
apply to any contribution for medical benefits (within
the meaning of Sections 401(h) or 419A(f)(2) of the Code)
which is otherwise treated as an Annual Addition under
Sections 415(l)(1) or 419A(d)(2) of the Code.
If a short Limitation Year is created because of an
amendment changing the Limitation Year to a different 12-
consecutive-month period, the Maximum Permissible Amount
will not exceed the Defined Contribution Dollar
Limitation multiplied by the following fraction:
number of months in the short Limitation Year
---------------------------------------------
12
(j) Projected Annual Benefit: The annual retirement benefit
(adjusted to an actuarially equivalent straight life
annuity if such benefit is expressed in a form other than
a straight life annuity or Qualified Joint and Survivor
Annuity) to which the Participant would be entitled under
the terms of the Plan assuming:
(1) the Participant will continue employment until
Normal Retirement Age under the Plan (or current
age, if later), and
(2) the Participant's Compensation for the current
Limitation Year and all other relevant factors used
to determine benefits under the Plan will remain
constant for all future Limitation Years.
- ------------------------------------------------------------
(Employer's Signature) (Date)
<PAGE>
DECLARATION OF TRUST
OppenheimerFunds Retirement Plan
Profit Sharing Plan - I.R.S. Serial No. D259770A
Pension Plan - I.R.S. Serial No. D259771A
The Employer has established a Retirement Plan (the "Plan") for the
benefit of the participants therein (the "Participants"). As part
of the Plan the Employer has requested The Bank of Boston (the
"Trustee"), to establish a Trust Account for the investment of
contributions under the Plan in shares or plans for the
accumulation of shares of certain Funds, upon the terms and
conditions set forth in this Declaration of Trust.
Section 1. Establishment of Trust and Participant's Accounts
The Trustee shall open and maintain a Trust Account and, as part
thereof, Participant's accounts for such individuals as the
Employer shall from time to time certify to it as Participants in
the Plan. The Participants as of the date of this Declaration of
Trust are set forth in the Retirement Plan Contribution Form.
Section 2. Receipt of Contributions
The Trustee shall accept and hold in the Trust Account such
contributions of money on behalf of the Employer and Participants
as it may receive from time to time from the Employer. All such
contributions shall be accompanied by written instructions from the
Employer specifying the Participant's Accounts to which they are to
be credited. Any reasonable number of accounts may be established
for a Participant provided that each such account meets the
appropriate investment minimums currently required under the
prospectus of the mutual fund in which the account is invested. If
a contribution for a participant is, by virtue of the contributions
limits set forth in the Plan, insufficient to meet a minimum amount
of investment required by a mutual fund prospectus, the
contribution may nevertheless be invested, at the direction of the
Employer, in one of the mutual funds described in Section 3 hereof.
The selection of the number of accounts and of the investment shall
be made by the Employer, in one of the mutual funds described in
Section 3 hereof. The selection of the number of accounts and of
the investment shall be made by the Employer, but in the event that
all contributions are not to be invested in the same manner the
Employer shall act on instructions from the Participants.
Section 3. Investment of Account Assets
The amount of each contribution credited to a Participant's
account, except the portion, if any, allocated pursuant to Section
4.2 of the Plan Document shall be applied to purchase full and
fractional shares of any Fund managed by Oppenheimer Management
Corporation, or any affiliate in any of the manners in which such
shares are being publicly offered. More than one account may be
opened for a Participant.
All dividends and capital gains distributions received on the
shares of any Fund held in each Participant's Account shall (unless
received in additional shares of the Fund) be reinvested in such
shares which shall be credited to such account. If any
distribution of the Fund may be received at the election of the
shareholder in additional shares or in cash or other property, the
Trustee shall elect to receive it in additional shares.
Sales charges attributable to the acquisition of shares shall be
charged to the Account for which such shares are acquired.
The functions of the Trustee under this Trust are custodial only,
and the Trustee does not have investment discretion. Amounts
received without Employer direction as to the investment shall be
held in cash until the Employer sends written directions to the
Trustee with respect to such amounts.
Section 4. Distributions from the Trust Account
On receipt of a written request from the Employer certifying that a
Participant's benefit is payable to the Plan, the Trustee shall
distribute the shares in his account (together with any cash
credited to him) to the Participant or his designated beneficiary,
provided, however, that if any request for payment of a benefit so
directs, the Trustee shall pay the same by redeeming all shares
credited to such Participant's accounts (or such lesser number as
the Employer may so request), and distribute the redemption
proceeds (together with any cash credited to his account) to such
Participant or his designated beneficiary under the plan.
Section 5. Voting and Other Action
The Fund shall deliver, or cause to be delivered, to the Employer
all notices, prospectuses, financial statements, proxies and proxy
soliciting materials relating to such shares. The Trustee shall
not vote any of the shares of the Fund held hereunder except in
accordance with the written instructions of the Employer.
Section 6. Report of the Trustee and Employer
The Employer shall keep accurate and detailed records of all
receipts, investments, disbursements and other transactions. After
receipt of an investment the Trustee will transmit the amount of
the investment to the underwriter with a copy of the confirmation
statement of the Fund in order to enable the Employer to keep all
proper accounts.
The Employer shall furnish to the Trustee, and the Trustee shall
furnish to the Employer such information relating to the Plan and
Trust Account as may be required under the Employee Retirement
Income Security Act of 1974 or the Internal Revenue Code and
regulations thereunder.
Section 7. Trustee's Fee and Expenses of the Account
Any income or other taxes of any kind whatsoever (other than
penalty taxes for excess contributions or premature distributions)
that may be levied or assessed upon or in respect to the Trust
Account, any transfer taxes, charges or fees incurred in connection
with the investment and reinvestment of the assets of the Trust
Account, administrative expenses incurred by the Trustee in the
performance of its duties including fees for legal services
rendered to the Trustee, and the compensation to the Trustee that
may be agreed upon in writing from time to time between the Trustee
and the Employer, shall be paid from the assets of the Accounts and
shall, unless allocable to the accounts of specific Participants,
be charged proportionately to their respective accounts.
Penalty taxes imposed by the Code for excess contributions or
premature distributions shall not be paid by the Trust, but by the
person making the excess contribution or receiving the premature
distribution. To the extent any such tax is nevertheless levied
upon the Trust Account, it shall be allocated to the account of the
Participant who has made the excess contribution or received the
premature distribution.
Section 8. Concerning the Trustee
The Trustee shall not be responsible in any way for the collection
of contributions provided for under the Plan, the purpose or
propriety of any distribution made pursuant to Section 4 hereof, or
for any other action taken at the Employer's request. The Trustee
shall not be responsible for the administration of the Plan, its
validity or effect or for the qualification of the Plan or this
Trust Agreement under the provisions of the Internal Revenue Code.
The Employer shall at all times fully indemnify and save harmless
the Trustee, its successors and assigns, from any liability arising
from distributions so made or actions so taken and from any and all
other liability whatsoever which may arise in connection with this
Agreement. The Trustee shall be under no duty to take any action
other than as herein specified with respect to the Trust Account
unless the Employer shall furnish the Trustee with instructions in
proper form to which instruction the Trustee shall have
specifically agreed in writing; or to defend or engage in any suit
with respect to the Trust Account unless the Trustee shall have
first agreed in writing to do so and shall have been fully
indemnified to its satisfaction The Trustee shall be protected in
acting upon any written order from the Employer or any other
notice, request, consent, certificate or other instrument or paper
believed by it to be genuine and to have been properly executed, so
long as it acts in good faith, in taking or omitting to take any
action.
Section 9. Resignation or Removal of Trustee
The Trustee may resign at any time upon forty-five (45) days notice
in writing to the Employer, and may be removed by the Employer at
any time upon forty-five (45) days notice in writing to the
Trustee. Upon such resignation or removal, the Sponsor or the
Employer shall appoint a successor Trustee. Upon receipt by the
Trustee of written acceptance of such appointment by the successor
Trustee, the Trustee shall transfer and pay over to such successor
the assets of the Trust Account and all records pertaining thereto.
The Trustee is authorized, however, to reserve such sum of money as
it may deem advisable for payment of all its fees, compensation,
costs and expenses, or for payment of any other liability
constituting a charge in or against the assets of the Trust or on
or against the Trustee, with any balance of such reserve remaining
after the payment of all such items to be paid over to the
successor Trustee. The successor Trustee shall hold the assets
paid over to it under terms similar to those of this Declaration of
Trust that qualify under Section 401 of the Internal Revenue Code.
If within thirty (30) days after its resignation or removal
pursuant to Section 9 hereof the Employer has not appointed a
successor Trustee which has accepted such appointment, the Trustee
shall, unless it elects to terminate the Trust Agreement pursuant
to Section 10 hereof, appoint such successor itself.
Section 10. Termination and Amendment of Account
The Trustee may elect to terminate the Trust Account if within
thirty (30) days after its resignation or removal pursuant to
Section 9 hereof the Employer has not appointed a successor Trustee
which has accepted such appointment. The Trustee may terminate the
Account upon receiving notice of the Employer's death, if the
Employer of a sole proprietor, or upon receiving notice of the
termination of the partnership if the Employer is a partnership
unless in either case provision is made by a successor to the
business of the Employer for the continuation of the Plan and this
Agreement upon terms satisfactory to the Trustee. Termination of
the Trust Account shall be effected by distributing all assets
thereof to the Participants and their designated beneficiaries
pursuant to the terms of the Plan as if the Plan were terminated.
Upon the completion of such distribution, the Trustee shall be
relieved from all further liability with respect to all amounts so
paid.
Amendments prepared by the sponsor shall be effective as to
Employers adopting the Plan after the date of the amendment upon
consent by the Trustee to the amendment, and shall become effective
as to existing Employers upon their consent, expressed or implied.
Amendments prepared by the sponsor which merely change the Trust to
conform to legal requirements shall be effective immediately with
respect to all adopting Employers, upon consent by the Trustee.
Section 11. Miscellaneous
At no time shall it be possible for any part of the assets of the
Trust Account to be used for or diverted to purposes other than for
the exclusive benefit of Participants and their beneficiaries.
Any notice from the Trustee to the Employer provided for in this
Agreement shall be effective if sent by first class mail to him at
his last address of record.
This Agreement shall be construed in accordance with the laws of
the State wherein the Trustee maintains its principal place of
business.
This Agreement shall bind and inure to the benefit of the personal
representatives, successors and assigns of the Employer and the
Trustee.
Trustee:
The Bank of Boston
<PAGE>
Document No. 1
PROFIT-SHARING PLAN ADOPTION AGREEMENT
FOR A PROTOTYPE NON-STANDARDIZED DEFINED CONTRIBUTION PLAN
SPONSORED BY OPPENHEIMER FUNDS DISTRIBUTOR, INC.
Adoption Agreement #001
This is the Adoption Agreement for defined contribution plan #001
of basic plan document #02, which is a combined prototype
sharing/money purchase pension plan. This Adoption Agreement may
be adopted either singly or in combination with defined
contribution plan #002, a prototype money purchase pension plan.
NOTE: Failure to properly fill out this Adoption Agreement may
result in disqualification of the Plan. Before executing this
Adoption Agreement, the Employer should consult with a tax advisor
or attorney.
- -------------------------------------------------------------------
The Employer hereby establishes a Profit-Sharing Plan and a trust
upon the respective terms and conditions contained in the prototype
defined contribution plan (the "Plan") and the Trust Agreement
annexed hereto and appoints as Trustee of such trust the person(s)
who have executed this Adoption Agreement evidencing their
acceptance of such appointment. The Plan, the Trust Agreement, and
the Custody Agreement, if applicable, shall be supplemented and
modified by the terms and conditions contained in this Adoption
Agreement and shall be effective on the Effective Date.
The Sponsor will inform the Employer of any amendments to the Plan
or the discontinuance or abandonment of the Plan.
- -------------------------------------------------------------------
1. EMPLOYER DATA
A. ---------------------------------------------
Name of Employer
B. ---------------------------------------------
Address
( )
C. ---------------------------------------------
Telephone Number
D. ---------------------------------------------
Employer's Taxable Year End
E. ---------------------------------------------
Plan Year End
F. The Employer is:
( ) a corporate entity
( ) a non-corporate entity
( ) a corporation electing to be taxed under Subchapter
S
G. ---------------------------------------------
Effective Date (Should be the first day of a Plan Year)
H. If this is an Amendment of an existing plan, complete the
following:
---------------------------------------------
Effective Date of Amendment (Should be the first day of a
Plan Year)
---------------------------------------------
Name of Prior Plan
---------------------------------------------
Effective Date of Prior Plan
---------------------------------------------
I. Limitation Year, if different from E. above.
II. ELIGIBILITY
A. Employees shall be eligible to participate in the Plan
upon completion of the eligibility requirements (Complete
1 and 2) (Plan Section 3.1.):
1. Years of Service. The Employer must complete (check
one box)
( ) One Year of Service.
( ) [ ] Years of Service. (You can require less
than or more than one Year of Service, but not
more than two (2). If you select more than one
Year of Service, the Employee must be 100
percent vested once he become eligible, and you
must select vesting schedule Number 2 in
Section IX of this Adoption Agreement. If the
Year of Service is or includes a fractional
year, an Employee will not be required to
complete any specified number of Hours of
Service (Section III, A of this Adoption
Agreement) to receive credit for such
fractional year.
2. Age. The Employer has attained age [ ] (not greater
than age 21).
B. All Employees will be eligible to participate in the Plan
with the exception of the following (Plan Section 3.1):
( ) Union Employees. Employees included in a unit covered by
a collective bargaining agreement between the Employee
and Employer representatives (as defined in Section
3.1(b)(i) of the Plan), if retirement benefits were the
subject of good faith bargaining and the requirements of
Section 3.1(b)(i) of the Plan are satisfied.
( ) Non-resident Aliens. Employees who are nonresident aliens
and who receive no earned income from the Employer which
constitutes income from sources within the United States.
For purposes of this Section II, the term "Employee"
includes all employees of this Employer or any employer
aggregated with this Employer under Sections
414(b),(c),(m), or (o) or the Code and individuals who
are Leased Employees required to be considered Employees
of such employer under Section 414(n) or (o) of the Code.
III. CREDITED SERVICE
A. The plan provides that a Year of Service requires at
least 1,000 hours during any Plan Year. If a lower
number of hours is desired, state the number here:
_ _ _ _ (Plan Section 2.49)
B. The Plan permits Hours of Service to be determined by the
use of service equivalencies under one of the methods
selected below (choose one method) (Plan Section 2.21):
1. ( ) On the basis of actual hours for which an
Employee is paid or entitled to payment.
2. ( ) On the basis of days worked. An Employee will be
credited with ten (10) Hours of Service if under Section
2.21 of the Plan such Employee would be credited with at
least one (1) Hour of Service during the day.
3. ( ) On the basis of weeks worked. An Employee will
be credited with forty-five (45) Hours of Service if under
Section 2.21 of the Plan such Employee would be credited with
at least one (1) Hour of Service during the week.
4. ( ) On the basis of semi-monthly payroll periods. An
Employee will be credited with ninety-five (95) Hours of
Service if under Section 2.21 of the Plan such Employee
would be credited with a least one (1) Hour of Service
during the semi-monthly payroll period.
-or-
5. ( ) On the basis of months worked. An Employee will
be credited with one hundred ninety (190) Hours of Service if
under Section 2.21 of the Plan such Employee would be credited
with at least one (1) Hours of Service during the month.
C. Service with predecessor employer (choose 1 or 2) (Plan
Sections 3.3 and 8.5):
1. ( ) No credit will be given for service with
predecessor employer.
2. ( ) Credit will be given for service with the
following predecessor employer(s):
---------------------------------------------
---------------------------------------------
Note: The Plan provides that if this is a continuation of
a predecessor plan, service under the predecessor plan
must be counted.
IV. COMPENSATION
A. For purposes of the Plan, Compensation means of all of
each Participant's (check one):
( ) Section 3401(a) Wages: Wages as defined in Code
Section 3401(a) for purposes of income tax
withholding at the source, but determined without
regard to any rules that limit the remuneration
included in wages that are based on the nature and
location of the employment or the services
performed.
( ) Section 415 Safe-Harbor Compensation: Wages,
salaries and fees for professional services and
other amounts received (without regard to whether or
not an amount is paid in cash) for personal services
actually rendered in the course of employment with
the Employer maintaining the Plan to the extent that
the amounts are includable in gross income
(including, but not limited to, commissions paid
salesmen, compensation for services on the basis of
a percentage of profits, commissions on insurance
premiums, tips, bonuses, fringe benefits,
reimbursements, and expense allowances), and
excluding the following:
(1) Employer contributions to a Plan deferred
compensation which are not includable in the
Employee's gross income for the taxable year in
which contributed, or Employer contributions under a
simplified employee pension plan to the extent such
contributions are deductible by the Employee, or any
distributions from a Plan of deferred compensation;
(2) Amounts realized from the exercise of a non-
qualified stock option, or when restricted stock (or
property) held by the Employee either becomes freely
transferable or is no longer subject to a
substantial risk of forfeiture;
(3) Amounts realized from the sale, exchange or
other disposition of stock acquired under a
qualified stock option; and
(4) Other amounts which received special tax
benefits, or contributions made by the Employer
(whether or not under a salary reduction agreement)
towards the purchase of an annuity described in
Section 403(b) of the Code (whether or not the
amounts are actually excludable from the gross
income of the Employee).
For any self-employed individual Compensation will mean
earned income.
B. Effective [ ], Compensation:
( ) shall include
( ) shall not include
Employer Contributions made pursuant to a salary
reduction agreement which are not includable in the gross
income of the Employee under Sections 125, 402(a)(8),
402(h) or 403(b) of the Code. (The effective date of the
election in this paragraph shall not be earlier than the
first day of the first Plan Year beginning after 1986.)
V. CONTRIBUTIONS
A. Profit Sharing Plan Formulas (Choose 1 or 2) (Plan
Section 4.1(b))
1. ( ) Discretionary pursuant to Employer resolution.
If not resolution is adopted, then [ ]% of Participants'
Compensation.
-or-
2. ( ) [ ]% of Participants' Compensation, plus
discretionary amount, if any, by Employer resolution, not
to exceed current and accumulated Net Profits.
Note: Each of these formulas is subject to maximum
limitations on contributions as provided in the Plan and
the Internal Revenue Code. In no event may the Employer
contribution exceed 15% of the aggregate compensation of
all Participants for the year, plus up to 10% credit
carryover in certain circumstances. Additional
limitations are included in the Plan where the Employer
also has another qualified retirement plan. An
Individual Participant's limit on contributions and
forfeitures, per year is generally the lesser of 15% of
compensation of $30,000.
B. Contribution Eligibility (Choose 1 or 2) Plan Section
4.1(c).
1. ( ) The Plan provides that a Participant will share
in Employer Contributions for the Plan Year only if he
(i) retires, dies, or becomes totally and permanently
disabled, or (ii) completes 501 Hours of Service and is
employed on the last day in such year. If a lesser
number of hours is desired, state the number here: [ ].
2. ( ) A Participant will share in Employer
Contributions for the Plan Year in which he terminates
employment prior to the end of such year if he completes
501 Hours of Service in such year. If a lesser number of
hours is desired, state the number here: [ ].
C. Contributions may only be made from the Net Income of the
Employer for the Plan Year unless the Employer elects to
disregard Net Income below.
(Check the option below if you wish it to apply to your
plan.)
( ) Effective for Plan Years beginning on or after [ ]
(fill in the first day of the Plan Year in which
this Adoption Agreement is executed or a subsequent
anniversary of such date), not withstanding any
other provision of the Plan, the Employer
Contributions shall be made to the Plan without
regard to current or accumulated earnings and
profits for the taxable year or years ending with or
within such Plan Year.
VI. ALLOCATION OF EMPLOYER CONTRIBUTIONS
A. Formula -- Choose 1 or 2
NOTE: If you provide for hardship withdrawals you must
use Formula 1.
1. ( ) Non-Integrated Plan -- Employer contributions
shall be allocated to the accounts of all eligible
Participants prorated upon compensation.
2. ( ) Integrated Plan -- Employer contributions and
forfeitures shall be integrated with Social Security and
allocated in accordance with the provisions of Plan
Section 5.3(b)(i),(ii),(iii) and (iv).
(a) The Integration Level is:
( ) Taxable Wage Base
( ) [$ ] (a dollar amount less than Taxable Wage
Base)
( ) [ % ] of the Taxable Wage Base (not to exceed
100%)
Note: If you maintain any other plan in addition to this
Plan, only one plan may be integrated with Social
Security.
VII. DISTRIBUTIONS
A. Normal Retirement Age is (Choose 1 and/or 2) (Plan
Section 2.27):
1. ( ) The date a Participant reach age [ ] (not more
than 65 or less than 55). If no age is indicated, normal
retirement age shall be 65.
-or-
2. ( ) The late of age [ ] (not more than 65) or the [
] (not more than 5th) anniversary of the day the
Participant commenced participation in the Plan. The
participation commencement date is the first day of the
first Plan Year in which the Participant commenced
participation in the Plan.
NOTE: If, for Plan Years beginning before January 1,
1988, Normal Retirement Age was determined with reference
to the anniversary date (more than 5 but not to exceed 10
years), the anniversary date for Participants who first
commenced participation under the Plan before the first
Plan Year beginning on or after January 1, 1988, shall be
the earlier of (A) the 10th anniversary of the date the
Participant commenced participation in the Plan (or such
anniversary as had been elected by the Employer, if less
than 10), or (B) the 5th anniversary of the first day of
the first Plan Year beginning on or after January 1,
1988.
B. Early Retirement (Choose 1 or 2) (Plan Section 9.1, 10.4)
1. ( ) Early Retirement Date is the first day of the
month coincident with or next following the date upon
which a Participant reaches age [ ] (not less than 55)
and completes [ ] years of service not more than 15).
-or-
2. ( ) Early Retirement will not be permitted under the
plan.
VIII. OPTIONAL FEATURES
A. Hardship Withdrawal (Choose 1 or 2)(Plan Section
12.2):
1. ( ) The Plan permits a hardship withdrawal
-or-
2. ( ) The Plan does not permit a hardship
withdrawal.
Note: The Plan may not provide hardship withdrawals
if integration with Social Security is elected in
Section VI.
B. Loans (Choose 1 or 2)(Plan Article 13).
1. ( ) The Plan permits Loans to Participants.
-or-
2. ( ) The Plan does not permit loans to
Participants.
Note: The Plan may not permit loans to Owner-
Employees of non-corporate entities or to
Shareholder-Employees of Subchapter S corporations.
If Plan loans are permitted, the Trustee designated
in Section XV of this Adoption Agreement may not be
the Sponsor's designated Trustee.
C. Insurance (Choose 1 or 2)(Plan Article 14).
1. ( ) The Plan permits Participants to designate a
portion of their Account to purchase life insurance
contracts. (MUST NOT be selected if Sponsor's
designated Trustee is appointed as Trustee).
The percentage of the Employer Contributions which
may be applied to purchase life insurance contracts
shall be equal to [ ]%.
-or-
2. ( ) The Plan does not permit Participants to
designate a portion of their Account to purchase
life insurance contracts.
Note: Section 14.5 of the Plan provides certain
limits on the amount of Employer Contributions that
can be applied to purchase life insurance contracts.
IX. VESTING
A. Employer contributions will become vested if the
Participant terminates employment for any reasons other
than retirement, death, or disability pursuant to the
following schedule (Choose 1, 2, 3, or 4). (Plan Section
8.3):
1. ( )
Years of
Service Vested Percentage
1 year 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
-or-
2. ( ) 100 percent vesting immediately after
satisfaction of the eligibility requirements.
Note: If a service requirement greater than 1 year is
chosen for eligibility in Section II.A.1 of this Adoption
Agreement, vesting schedule Number 2 must be chosen.
3. ( ) 100 percent vesting after [ ] (not to
exceed 3 Years of Service).
4. ( )
Years of Vested
Service Percentage
1 year [ ]%
2 years [ ]% (not less than 20)
3 years [ ]% (not less than 40)
4 years [ ]% (not less than 60)
5 years [ ]% (not less than 80)
6 years [ ]% (not less than 100)
X. INVESTMENT CHOICES
A. ( ) Investment of Trust assets may be selected only
from Shares or other investment offered by the
Sponsor.
B. ( ) [ ]% (not less than 25%) of the Trust assets must
be invested in Shares or other investment offered
by the Sponsor with the remainder in such other
investments as may be acceptable within the
discretion of the Trustee.
C. ( ) 50% of the Trust assets must be invested in Shares
or investments offered by the Sponsor with the
remainder of such other investments as may be
acceptable within the discretion of the Trustee.
D. ( ) 25% of the Trust assets must be invested in Shares
or investments offered by the Sponsor with the
remainder of such other investments as may be
acceptable within the discretion of the Trustee.
The Sponsor may impose additional limitations
relating to the type of permissible investments in
the Trust (Plan Section 7.3).
XI. INVESTMENT AUTHORITY
Contributions to the Plan shall be invested by the Trustee
in accordance with instructions of the Employer or Plan
Administrator except that (Choose A, B, or C)(Plan Section
7.2):
A. ( ) No Exceptions; the Employer or Plan Administrator
shall make all investment selections.
-or-
B. ( ) The Employer delegates all investment
responsibility to the Trustee. (MUST NOT be
selected is Sponsor's designated Trustee is
appointed as Trustee).
-or-
C. ( ) Each Participant ( ) may, ( ) shall direct that
( ) (1) amounts voluntarily contributed by such
Participant pursuant to Section 4.3 of
the Plan, and rollover contributions and
trustee transfers pursuant to Section
4.4 of the Plan, if any,
-and/or-
( ) (2) Employer Contributions on the
Participant's behalf, shall be invested
in specified investments offered by the
Sponsor. Participants may make or
change such directions by giving written
notice to the Plan Administrator.
Reasonable restrictions may be imposed
on this privilege by the Plan
Administrator or the Sponsor for
purposes of administrative convenience.
XII. TOP-HEAVY PROVISIONS
A. Participant who are eligible to receive the minimum
allocation provided by Section 5.2 of the Plan shall
receive a minimum allocation of contributions and
forfeitures under this Plan equal to 3% of
compensation, or if lesser, the largest percentage of
compensation allocated on behalf of any Key Employee
for the Plan Year.
Note: If the Participant also participates in the
defined contribution plan sponsored by Oppenheimer
which is a money purchase pension plan, the required
minimum contribution must be made under that money
purchase pension plan.
B. For purposes of establishing Present Value (Plan
Section 2.35) to compute the Top-Heavy Ratio (Plan
Section 2.42), any benefit under a defined benefit plan
shall be discounted only for mortality and interest
based on the following (does not need to be completed
if Employer does not now and has never maintained a
defined benefit plan in addition to this Plan):
Interest rate [ ]%
Mortality Table [ ]
XIII.ALLOCATION LIMITATIONS
COMPLETE THIS SECTION ONLY IF YOU MAINTAIN OR EVER
MAINTAINED ANOTHER QUALIFIED PLAN IN WHICH ANY
PARTICIPANT IN THIS PLAN IS (OR WAS) A PARTICIPANT OR
COULD BECOME A PARTICIPANT. THIS SECTION MUST ALSO BE
COMPLETED IF THE EMPLOYER MAINTAINS A WELFARE BENEFIT
FUND, AS DEFINED IN SECTION 419(e) OF THE CODE, OR AN
INDIVIDUAL MEDICAL ACCOUNT, AS DEFINED IN SECTION
415(1)(2) OF THE CODE, UNDER WHICH AMOUNTS ARE TREATED
AS ANNUAL ADDITIONS WITH RESPECT TO ANY PARTICIPANT IN
THIS PLAN. IF YOU MAINTAIN OTHER PLANS, FAILURE TO
COMPLETE THIS SECTION MAY ADVERSELY AFFECT THE
QUALIFICATION OF THE PLANS YOU MAINTAIN.
A. If the Participant is covered under another qualified
defined contribution plan maintained by the Employer,
other than a master or prototype plan (choose either 1
or 2) (Plan Section 6.3).
1. ( ) The provisions of Section 6.2 will apply as if
the other plan were a master or prototype plan.
-or-
2. ( ) (In the space below or on an attachment, provide
the method under which the plans will limit total
annual additions to the maximum permissible amount, and
will properly reduce any excess months, in a manner
that precludes Employer discretion.)
B. If the Participant is or has ever been a participant in
a defined benefit plan maintained by the Employer state
below or attach an explanation of the method under
which the plan involved will satisfy the 1.0 limitation
in a manner that precludes Employer discretion.
XIV. ADMINISTRATION
A. The Plan Administrator of the Plan will be (choose
1,2,3, or 4)(Plan Sections 2.33 and 15.4):
1. ( ) The Trustee
-or-
2. ( ) The Employer
NOTE: If the Trustee designated in Section XV of the
Adoption Agreement is the Sponsor's designated Trustee,
it may not be appointed as Plan Administrator.
-or-
3. ( ) An individual Plan Administrator designated by
the Employer:
Name
---------------------------------------------
Address
---------------------------------------------
4. ( ) A committee of two or more Employees designated
by the Employer:
Name
---------------------------------------------
Title
---------------------------------------------
Signature
---------------------------------------------
Name
---------------------------------------------
Title
---------------------------------------------
Signature
---------------------------------------------
Name
---------------------------------------------
Title
---------------------------------------------
Signature
---------------------------------------------
Note: If no Plan Administrator has been designated or
is serving at any time, the Employer will be deemed the
Plan Administrator. (Plan Section 15.4).
B. The Plan Administrator (including all members of a
committee, if a committee is named) is a Named
Fiduciary for the Plan. If other persons are also to
be Named Fiduciaries, their names and addresses are:
Name Address
---------------------------------------------
---------------------------------------------
---------------------------------------------
C. The Named Fiduciaries have all of the powers set forth
in the Plan. If any powers or duties are to be
allocated among them, or delegated to third parties,
indicate below what the powers or duties are and to
whom they are to be delegated (Plan Section 15.3):
--------------------------------------
--------------------------------------
--------------------------------------
XV. THE TRUSTEE
The Employer hereby appoints the following to serve as
Trustee(s) (Plan Section 2.46):
-------------------------
Name
------------------------- -------------------------
Date Address
------------------------- -------------------------
Witness Signature
-------------------------
Name
------------------------- -------------------------
Date Address
------------------------- -------------------------
Witness Signature
-------------------------
Name
------------------------- -------------------------
Date Address
------------------------- -------------------------
Witness Signature
XVI. SPONSOR DATA
A. Oppenheimer Funds Distributor, Inc.
-----------------------------------
Name of Sponsor
B. 2 World Trade Center, 34th Floor
New York, New York 10048-0023
-----------------------------------
Address
C. 212-323-0200
-----------------------------------
Telphone Number
XVII. EMPLOYER SIGNATURE
The Employer acknowledges receipt of the current
prospectus of the investment companies designated by
the Employer for its initial investments under the Plan
and represents that it has delivered a copy thereof to
each Participant in the Plan, and that it will deliver
to each Participant making contributions and each new
Participant, a copy of the then current prospectuses of
such investment companies. The Employer further
represents that the information in this Adoption
Agreement shall become effective only when approved and
countersigned by the Trustee. The right to reject this
Adoption Agreement for any reason is reserved. This
Adoption Agreement must be used only in conjunction
with basic plan document #02. The undersigned
Employer, or duly authorized officer or employee,
hereby certifies that the taxpayer identification
number set forth below is the Employer's correct
taxpayer identification number.
Note: If the Employer who adopts this Plan wishes to
obtain reliance that the Plan is qualified under
Section 401 of the Internal Revenue Code, application
for a determination letter should be made to the
appropriate Key District Director of Internal Revenue.
---------------------------------------------
Date Employer
---------------------------------------------
(Corporate Seal) Employer Tax I.D. No.
---------------------------------------------
By: Name Title
---------------------------------------------
Signature
---------------------------------------------
Attest Signature
<PAGE>
INVESTMENT DEALER INFORMATION
(to be completed by dealer.)
- -------------------- ------------------------------------------
Dealers Name Rep.'s Last Name First Name Middle
Initial
- -------------------- ------------------------------------------
Dealer Head Office Rep.s' Brand Office Address: No. and
Street
Address: No. and Street
- --------------------- ------------------------------------------
City State Zip Code City State Zip Code
- -------------------- ------------------------------------------
Oppenheimer Dealer No. Reps. Office Telephone # Rep's A.E. No.
<PAGE>
Document No. 2
MONEY PURCHASE PENSION PLAN
ADOPTION AGREEMENT
FOR A PROTOTYPE NON-STANDARDIZED DEFINED CONTRIBUTION PLAN
SPONSORED BY OPPENHEIMER FUNDS DISTRIBUTOR, INC.
Adoption Agreement #002
This is the Adoption Agreement for defined contribution plan #002
of basic plan document #02, which is a combined prototype profit
sharing/money purchase pension plan. This Adoption Agreement may
be adopted either singly or in combination with defined
contribution plan #001, prototype profit sharing plan.
NOTE: Failure to properly fill out this Adoption Agreement
may result in disqualification of the Plan. Before
executing this Adoption Agreement, the Employer should
consult with a tax advisor or attorney.
- ------------------------------------------------------------
The Employer hereby establishes a Money Purchase Pension Plan and
a trust upon the respective terms and conditions contained in the
prototype defined contribution plan (the "Plan") and the Trust
Agreement annexed hereto and appoints as Trustee of such trust
the person(s) who have executed this Adoption Agreement
evidencing their acceptance of such appoint. The Plan, the Trust
Agreement, and the Custody Agreement if applicable, shall be
supplemented and modified by the terms and conditions contained
in this Adoption Agreement and shall be effective on the
Effective Date.
The Sponsor will inform the Employer of any amendments to the
Plan or the discontinuance or abandonment of the Plan.
I. EMPLOYER DATA
A. ---------------------------------------------
Name of Employer
B. ---------------------------------------------
Address
C. ---------------------------------------------
Telephone Number
D. ---------------------------------------------
Employer's Taxable Year End
E. ---------------------------------------------
Plan Year End
F. The Employer is:
( ) a corporate entity
( ) a non-corporate entity
( ) a corporation electing to be taxed under
Subchapter S
G. -------------------------------------------------------
Effective Date (Should be the first day of a Plan Year)
H. If this is an Amendment of an existing plan, complete
the following:
-------------------------------------------------------
Effective Date of Amendment
(Should be first day of Plan Year)
-------------------------------------------------------
Name of Prior Plan
-------------------------------------------------------
Effective Date of Prior Plan
I. -------------------------------------------------------
Limitation Year, if different from E. above.
II. ELIGIBILITY
A. Employees shall be eligible to participate in the Plan
upon completion of the eligibility requirements
(Complete 1 and 2)(Plan Section 3.1):
Years of Service. The Employer must complete (check
one box)
( ) One Year of Service.
( ) [ ] Years of Service. (You can require less than
or more than one Year of Service, but not more
than two (2). If you select more than one Year of
Service, the Employee must be 100 percent vested
once he becomes eligible, and you must select
vesting schedule Number 2 in Section VIII of this
Adoption Agreement. If the Year of Service is or
includes a fractional year, an Employee will not
be required to complete any specified number of
Hours of Service (Section III, A of this Adoption
Agreement) to received credit for such fractional
year.
B. Age. The Employee has attained age [ ] (not greater
than age 21). All Employees will be eligible to
participate in the Plan with the exception of the
following (Plan Section 3.1):
( ) Union Employees. Employees included in a unit
covered by a collective bargaining agreement
between the Employer and Employee representatives
(as defined in Section 3.1(b)(i) of the Plan), if
retirement benefits were the subject of good faith
bargaining and the requirements of Section
3.1(b)(i) of the Plan are satisfied.
( ) Non-resident Aliens. Employees who are non-
resident aliens and who receive no earned income
from the Employer which constitutes income from
sources within the United States.
For purposes of this Section II, the term "Employee"
includes all employees of this Employer or any employer
aggregated with this Employer under Sections 414(b),
(c), (m), or (o) of the Code and individuals who are
Leased Employees required to be considered Employees of
any such employer under Section 414(n) or (o) of the
Code.
III. CREDITED SERVICE
A. The Plan provides that a Year of Service requires at
least 1,000 hours during any Plan Year. If a lower
number of hours is desired, state the number here:
[ ] (Plan Section 2.49)
B. The Plan permits Hours of Service to be determined by
the use of service equivalencies under one of the
methods selected below (choose one method) (Plan
Section 2.21):
1. ( ) On the basis of actual hours for which an
Employee is paid or entitled to payment.
2. ( ) On the basis of days worked. An Employee
will be credited with ten (10) Hours of
Service if under Section 2.21 of the Plan
such Employee would be credited with at least
one (1) Hour of Service during the day.
3. ( ) On the basis of weeks worked. An Employee
will be credited with forty-five (45) Hours
of Service if under Section 2.21 of the Plan
such Employee would be credited with a least
one (1) Hour of Service during the week.
4. ( ) On the basis of semi-monthly payroll periods.
An Employee will be credited with ninety-five
(95) Hours of Service if under Section 2.21
of the Plan such Employee would be credited
with a least one (1) Hour of Service during
the semi-monthly payroll period.
- or-
5. ( ) On the basis of months worked. An Employee
will be credited with one hundred ninety
(190) Hours of Service if under Section 2.21
of the Plan such Employee would be credited
with at least one (1) Hour of Service during
the month.
C. Service with predecessor employer (choose 1 or 2) (Plan
Sections 3.3 and 8.5):
1. ( ) No credit will be given for service with
predecessor employer.
2. ( ) Credit will be given for service with the
following predecessor employer(s):
------------------------------
------------------------------
Note: The Plan provides that if this is a
continuation of a predecessor plan, service
under the predecessor plan must be counted.
IV. COMPENSATION
A. For purposes of the Plan, Compensation means all of
each Participant's (check one):
( ) Section 3401(a) Wages: Wages as defined in Code
Section 3401(a) for purposes of income tax
withholding at the source, but determined without
regard to any rules that limit the remuneration
included in wages that are based on the nature and
location of the employment or the services
performed.
( ) Section 415 Safe-harbor Compensation: Wages,
salaries and fees for professional services and
other amounts received (without regard to whether
or not an amount is paid in cash) for personal
services actually rendered in the course of
employment with the Employer maintaining the Plan
to the extent that the amounts are includable in
gross income (including, but not limited to,
commissions paid salesmen, compensation for
services on the basis of a percentage of profits,
commissions on insurance premiums, tips, bonuses,
fringe benefits, reimbursements, and expense
allowances), and excluding the following:
(1) Employer contributions to a Plan of deferred
compensation which are not includable in the
Employee's gross income for the taxable year in
which contributed, or Employer contributions under
a simplified employee pension plan to the extent
such contributions are deductible by the Employer,
or any distributions from a Plan of deferred
compensation;
(2) Amounts realized from the exercise of a non-
qualified stock option, or when restricted stock
(or property) held by the Employee either becomes
freely transferable or is no longer subject to a
substantial risk of forfeiture;
(3) Amounts realized from the sale, exchange or
other disposition of stock acquired under a
qualified stock option; and
(4) Other amounts which received special tax
benefits, or contributions made by the Employer
(whether or not under a salary reduction
agreement) towards the purchase of an annuity
described in Section 403(b) of the Code (whether
or not the amounts are actually excludable form
the gross income of the Employee).
For any self-employed individual, compensation will
mean earned income.
B. Effective [ ], Compensation:
( ) shall include
( ) shall not include
Employer Contributions made pursuant to a salary
reduction agreement which are not includable in the
gross income of the Employee under Sections 125,
402(a)(8), 402(h) or 403(b) of the Code. (The
effective date of the election in this paragraph shall
not be earlier than the first day of the first Plan
Year beginning after 1986.)
V. CONTRIBUTIONS
A. Formulas (Choose 1 or 2)(Plan Section 4.1(a))
1. ( ) Plan not integrated with Social Security.
The Employer will contribute [ ]% of compensation
for each Participant (not to exceed 25%).
2. ( ) Plan integrated with Social Security (complete
(a) and (b))
(a) The Employer shall contribute [ ]% (the "Base
Contribution Percentage") of the Compensation of
each Participant up to the Integration Level, but
not less than 3%, and
(b) [ ]%, which shall be not less than 3% and shall
not exceed the Base Contribution Percentage by
more than the lesser of (1) the Base Contribution
Percentage, or money purchase maximum disparity
rate, of such Participant's Compensation in excess
of the integration Level, provided, that the
contribution on behalf of each Participant shall
not exceed the lesser of $30,000 or 25% of the
Participant's Compensation for the Plan Year.
B. The Integration Level is equal to:
( ) Taxable Wage base
( ) $[ ] (a dollar amount less than the Taxable
Wage Base)
( ) [ ]% of Taxable Wage Base (not to exceed
100%).
C. The money purchase maximum disparity rate is equal to
the lesser of:
1. 5.7%
2. The applicable percentage determined in accordance
with the following table:
If the integration level:
the applicable
is more than but not more than percentage is:
$0 X* 5.7%
X* 0f TWB 80% of TWB 4.3%
80% of TWB Y** 5.4%
*X = the greater of $10,000 or 20 percent of TWB
**Y = any amount more than 80% of the TWB but less
than 100% of the TWB
TWB = Taxable Wage Base
If the integration level used is equal to the Taxable
Wage Base, the applicable percentage is 5.7%.
If you maintain any other plan in addition to this
Plan, only one plan may be integrated with Social
Security.
C. Contribution Eligibility (Choose 1 or 2)(Plan Section
4.1(c)).
1. ( ) The plan provides that a Participant will
share in Employer Contributions for the Plan
Year only is he (i) retires, dies, or becomes
totally and permanently disabled, or (ii)
completes 501 Hours of Service and is
employed on the last day in such year. If a
lesser number of hours is desired, state the
number here:[ ]
-or-
2. ( ) A Participant will share in Employer
Contributions for the Plan Year in which he
terminates employment prior to the end of
such year if he completes 501 Hours of
Service in such year. If a lesser number of
hours is desired, state the number here:
[ ].
VI. DISTRIBUTIONS
A. Normal Retirement Age is (choose 1 and/or 2)(Plan
Section 2.27):
1. ( ) The date a Participant reaches age [ ] (Not
more than 65 or less than 55). If no age is
indicated, normal retirement age shall be 65.
-or-
2. ( ) The later of age [ ] (not more than 65) or
the [ ](not more than 5th) anniversary of
the day the Participant commenced
participation in the Plan. The participation
commencement date is the first day of the
first plan year in which the Participant
commenced participation in the Plan.
NOTE: If, for Plan Years beginning before
January 1, 1988, Normal Retirement Age was
determined with reference to the anniversary
date (more than 5 but not to exceed 10
years), the anniversary date for Participants
who first commenced participation under the
Plan before the first Plan Year beginning on
or after January 1, 1988, shall be the
earlier of (A) the 10th anniversary of the
date the Participant commenced participation
in the Plan (or such anniversary as had been
elected by the Employer, if less than 10), or
(B) the 5th anniversary of the first day of
the first Plan Year beginning on or after
January 1, 1988.
B. Early Retirement (choose 1 or 2)(Plan Section 9.1,
10.4)
1. ( ) Early Retirement Date is the first day of the
month coincident with or next following the
date upon which a Participant reaches age [
] (not less than 55) and completes [ ] years
of service (not more than 15).
-or-
2. ( ) Early Retirement will not be permitted under
the plan.
VII. OPTIONAL FEATURES
A. Loans (Choose 1 or 2)(Plan Article 13).
1. ( ) The Plan permits loans to Participants.
-or-
2. ( ) The Plan does not permit loans to
Participants.
Note: The Plan may not permit loans to Owner-
Employees of non-corporate entities or to
Shareholder-Employees of Subchapter S
corporations. If Plan loans are permitted,
the Trustee designated in Section XIV of this
Adoption Agreement may not be the Sponsor's
designated Trustee.
B. Insurance (Choose 1 or 2)(Plan Article 14).
1. ( ) The Plan permits Participants to designate a
portion of their Account to purchase life
insurance contracts. (MUST NOT be selected
if Sponsor's designated Trustee is appointed
as Trustee).
The percentage of the Employer Contributions which may
be applied to purchase life insurance contracts shall
be equal to [ %].
2. ( ) The Plan does not permit Participants to
designate a portion of their Account to
purchase life insurance contracts.
Note: Section 14.5 of the Plan provides certain
limits on the amount of Employer
Contributions that can be applied to purchase
life insurance contracts.
C. Annuities (Plan Section 11.9(a)(iv), Article 9).
The Plan permits benefits to be distributed in the form
of a non-transferable annuity contract. In addition,
if a Participant is married, the Plan must provide a
qualified joint and survivor annuity and a pre-
retirement survivor annuity. Under any of these
options, the survivor annuity will be [ ]% (not less
than 50 nor greater than 100) of the amount of the
annuity payable during the joint lives of the
Participant and the spouse. If no amount is
designated, the survivor annuity will be 50%.
VII. VESTING
A. Employer contributions will become vested if the
Participant terminates employment for any reasons other
than retirement, death, or disability pursuant to the
following schedule (Choose 1, 2, 3 or 4)(Plan Section
8.3):
1. ( )
Years of Vested
Service Percentage
1 year 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
-or-
2. ( ) 100 percent vesting immediately after
satisfaction of the eligibility requirements.
Note: If a service requirement greater than 1 year
is chosen for eligibility in Section II.A.1
of this Adoption Agreement, vesting schedule
Number 2 must be chosen.
3. ( ) 100 percent vesting after [ ] (not to exceed
3) Years of Service.
4. ( )
Years of Vested
Service Percentage
1 year [ ]%
2 years [ ]% (not less than 20)
3 years [ ]% (not less than 40)
4 years [ ]% (not less than 60)
5 years [ ]% (not less than 80)
6 years [ ]% (not less than 100)
Note: If vesting schedule Number 3 is chosen,
the vesting percentages inserted must be
at least as rapid as one of the above
vesting schedule at all points in time.
IX. INVESTMENT CHOICES
A. ( ) Investment of Trust assets may be selected only
from Shares or other investment offered by the
Sponsor.
B. ( ) [ ]% (not less than 25%) of the Trust assets
must be invested in Shares or other investments
offered by the Sponsor with the remainder in such
other investments as may be acceptable within the
discretion of the Trustee.
C. ( ) 50% of the Trust assets must be invested in Shares
or investments offered by the Sponsor with the
remainder in such other investments as may be
acceptable within the discretion of the Trustee.
D. ( ) 25% of the Trust assets must be invested in Shares
or investments offered by the Sponsor with the
remainder of such other investments as may be
acceptable within the discretion of the Trustee.
The Sponsor may impose additional limitations
relating to the type of permissible investments in
the Trust (Plan section 7.3).
X. INVESTMENT AUTHORITY
Contributions to the Plan shall be invested by the Trustee
in accordance with instructions of the Employer or Plan
Administrator except that (Choose A, B, or C)(Plan Section
7.2):
A. ( ) No exceptions; the Employer or Plan Administrator
shall make all investment selections.
-or-
B. ( ) The Employer delegates all investment
responsibility to the Trustee. (MUST NOT be
selected if Sponsor's designated trustee is
appointed as Trustee).
C. ( ) Each Participant ( ) may, ( ) shall direct that
( ) (1) amounts voluntarily contributed by such
Participant pursuant to Section 4.3 of the Plan, and
rollover contributions and trustee transfers pursuant
to Section 4.4 of the Plan, if any,
-and/or-
( ) (2) Employer Contributions on the Participant's
behalf, shall be invested in specified investments
offered by the Sponsor. Participants may make or
change such directions by giving written notice to the
Plan Administrator. Reasonable restrictions may be
imposed on this privilege by the plan Administrator of
the Sponsor for purposes of administrative convenience.
XI. TOP-HEAVY PROVISIONS
A. Participants who are eligible to receive the minimum
allocation provided by Section 5.2 of the Plan shall
receive a minimum allocation of contributions and
forfeitures under this Plan equal to 3% of
compensation, or if lesser, the largest percentage of
compensation allocated on behalf of any Key Employee
for the Plan Year.
Note: If the Participant also participates in the
defined contribution plan sponsored by Oppenheimer
which is a profit sharing plan, the required
minimum contribution must be made under this Plan.
B. For purposes of establishing Present Value (Plan
Section 2.35) to compute the Top-Heavy Ratio (Plan
Section 2.42), any benefit under a defined benefit plan
shall be discounted only for mortality and interest
based on the following (does not need to be completed
if Employer does not now and has never maintained a
defined benefit plan in addition to this Plan):
Interest rate [ ]%
Mortality Table [ ]
XII. ALLOCATION LIMITATIONS
COMPLETE THIS SECTION ONLY IF YOU MAINTAIN OR EVER
MAINTAINED ANOTHER QUALIFIED PLAN IN WHICH ANY
PARTICIPANT IN THIS PLAN IS (OR WAS) A PARTICIPANT OR
COULD BECOME A PARTICIPANT. THIS SECTION MUST ALSO BE
COMPLETED IF THE EMPLOYER MAINTAINS A WELFARE BENEFIT
FUND, AS DEFINED IN SECTION 419(e) OF THE CODE, OR AN
INDIVIDUAL MEDICAL ACCOUNT, AS DEFINED IN SECTION
415(l)(2) OF THE CODE, UNDER WHICH AMOUNTS ARE TREATED
AS ANNUAL ADDITIONS WITH RESPECT TO ANY PARTICIPANT IN
THIS PLAN. IF YOU MAINTAIN OTHER PLANS, FAILURE TO
COMPLETE THIS SECTION MAY ADVERSELY AFFECT THE
QUALIFICATION OF THE PLANS YOU MAINTAIN.
A. If the Participant is covered under another qualified
defined contribution plan maintained by the Employer,
other than a master or prototype plan (choose either 1
or 2)(Plan Section 6.3):
1. ( ) The provisions of Section 6.2 will apply as
if the other plan were a master or prototype
plan.
-or-
2. ( ) (In the space below or on an attachment,
provide the method under which the plans will
limit total annual additions to the maximum
permissible amount, and will properly reduce
an excess amounts in a manner that precludes
Employer discretion.)
B. If the participant is or has ever been a participant in
a defined benefit plan maintained by the Employer,
state below or attach an explanation of the method
under which the plan involved will satisfy the 1.0
limitation in a manner that precludes Employer
discretion.
C. For allocation purposes, a Limitation Year shall be the
12 calendar month period ending on [ ]; if no year
is chosen the Limitation Year shall be the Plan Year.
XIII.ADMINISTRATION
A. The Plan Administrator of the Plan will be (choose 1,
2, 3 or 4)(Plan Sections 2.33 and 15.4):
1. ( ) The Trustee
-or-
2. ( ) The Employer
NOTE: If the Trustee designated in Section XIV of the
Adoption Agreement is the Sponsor's designated Trustee, it
may not be appointed as Plan Administrator.
-or-
3. ( ) An individual Plan Administrator designated by the
Employer:
Name---------------------------------------------
--------------------------------------------------
Address-------------------------------------------
--------------------------------------------------
-or-
4. ( ) A committee or two or more Employees designated by
the Employer:
Name
--------------------------------------------------
Title
--------------------------------------------------
Signature
--------------------------------------------------
Name
--------------------------------------------------
Title
--------------------------------------------------
Signature
--------------------------------------------------
Name
--------------------------------------------------
Title
--------------------------------------------------
Signature
--------------------------------------------------
Note: If no Plan Administrator has been designated or is
serving at any time, the Employer will be deemed
the Plan Administrator. (Plan Section 15.4).
B. The Plan Administrator (including all members of a
committee, if a committee is named) is a Named
Fiduciary for the Plan. If other persons are also to
be Named Fiduciaries, their names and addresses are:
Name
----------------------------------------
Address
----------------------------------------
Name
----------------------------------------
Address
----------------------------------------
Name
----------------------------------------
Address
----------------------------------------
C. The named Fiduciaries have all of the powers set forth
in the Plan. If any powers or duties are to be
allocated among them, or delegated to third parties,
indicate below what the powers or duties are and to
whom they are to be delegated (Plan Section 15.3):
----------------------------------------
----------------------------------------
XIV. THE TRUSTEE
A. The Employer hereby appoints the following to serve as
Trustee(s)(Plan Section 2.46):
-----------------------------
Name
- ----------------------------- -----------------------------
Date Address
- ----------------------------- -----------------------------
Witness Signature
-----------------------------
Name
- ----------------------------- -----------------------------
Date Address
- ----------------------------- -----------------------------
Witness Signature
XV. SPONSOR DATA
A. Oppenheimer Funds Distributor, Inc.
-----------------------------------
Name of Sponsor
B. 2 World Trade Center, 34th Floor
New York, New York 10048-0023
-----------------------------------
Address
C. 212-323-0200
-----------------------------------
Telephone Number
XVI. EMPLOYER SIGNATURE
The Employer acknowledges receipt of the current prospectus
of the investment companies designated by the Employer for
its initial investments under the Plan and represents that
it has delivered a copy thereof to each Participant in the
plan, and that it will deliver to each Participant making
contributions and each new Participant, a copy of the then
current prospectuses of such investment companies. The
Employer further represents that the information in this
Adoption Agreement shall become effective only when approved
and countersigned by the Trustee. The right to reject this
Adoption Agreement for any reason is reserved. This
Adoption Agreement must be used only in conjunction with
basic plan document #02. The undersigned Employer, or duly
authorized officer or employee, hereby certifies that the
taxpayer identification number set forth below is the
Employer's correct taxpayer identification number.
Note: If the Employer who adopts this Plan wishes to obtain
reliance that the plan is qualified under Section 401 of the
internal Revenue Code, application for a determination
letter should be made to the appropriate Key District
Director of Internal Revenue.
---------------------------------------------
Date Employer
---------------------------------------------
(Corporate Seal) Employer Tax I.D. No.
---------------------------------------------
By: Name Title
---------------------------------------------
Signature
---------------------------------------------
Attest Signature
INVESTMENT DEALER INFORMATION
(to be completed by Dealer.)
- ------------------------------ ------------------------------
Dealers Name Rep's Last Name First Name
M.I.
- ------------------------------ ------------------------------
Dealer Head Office Add.No&Street Rep's Branch Off.Add.No
&Street
- ------------------------------ ------------------------------
City State Zip Code City State Zip
Code
- ------------------------------ ------------------------------
Oppenheimer Dealer No. Rep's Off.Tel.No. Rep's AE No.
<PAGE>
BASIC PLAN DOCUMENT (No. 02)
(Non-Standardized)
ARTICLE 1
GENERAL
1.1 Purpose. The Employer hereby establishes this Plan to
provide retirement, death and disability benefits for eligible
employees and their beneficiaries. This Plan is a nonstandardized
prototype defined contribution plan and is designed to permit
adoption of profit-sharing provisions, money purchase pension
provisions, or both. The provisions herein and the selections made
by the Employer by execution of the money purchase pension or
profit-sharing Adoption Agreement or Agreements, shall constitute
the Plan. It is intended that the Plan and Trust qualify under,
and meet the applicable requirements of, Sections 401 and 501 of
the Internal Revenue Code of 1986, as amended, as well as the
provisions of the Employee Retirement Income Security Act of 1974,
as amended.
1.2 Trust. The Employer has simultaneously adopted a Trust
to receive, invest, and distribute funds in accordance with the
Plan.
ARTICLE 2
DEFINITIONS
2.1 Account. The aggregate of the individual bookkeeping
subaccounts established for each Participant, as provided in
Section 5.1.
2.2 Adoption Agreement. The written agreement or agreements
of the Employer and the Trustee by which the Employer establishes
this Plan and adopts the Trust Agreement forming a part hereof, as
the same may be amended from time to time. The Adoption Agreement
contains all the options that may be selected by the Employer. The
information set forth in the Adoption Agreement executed by the
Employer shall be deemed to be a part of this Plan as if set forth
in full herein.
2.3 Affiliated Employers. The Employer and any corporation
which is a member of a controlled group of corporations (as defined
in Section 414(b) of the Code) which includes the Employer, any
trade or business (whether or not incorporated) which is under
common control (as defined in Section 414(c) of the Code) with the
Employer, any service organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in
Section 414(m) of the Code) which includes the Employer or any
other employer required to be aggregated with such Employer under
Section 414(m) or 414(o) of the Code.
2.4 Beneficiary. The person or persons (natural or
otherwise) designated by a Participant in accordance with Section
11.6 to receive any undistributed amounts credited to the
Participant's Account under the Plan at the time of the
Participant's death.
2.5 Break in Service. An Eligibility Computation Period or
Vesting Computation Period in which an Employee fails to complete
more than 500 Hours of Service with the Affiliated Employers.
2.6 Code. The Internal Revenue Code of 1986, as amended from
time to time, or any successor statute.
2.7 Compensation. Compensation shall be as elected by the
Employer in the Adoption Agreement. In the case of a Self-Employed
Individual, Compensation includes the Individual's Earned Income
from Affiliated Employers. For Plan Years beginning after December
31, 1988, annual Compensation taken into account under the Plan for
any Plan Year shall not exceed $200,000. This limitation shall be
adjusted at the same time and in the same manner as under Section
415(d) of the Code, except that the dollar increase in effect on
January 1 of any calendar year is effective for Plan Years
beginning in such calendar year and the first adjustment to the
$200,000 limitation takes effect on January 1, 1990. If a Plan
determines Compensation on a period of time that contains fewer
than 12 calendar months, then the annual Compensation limit is an
amount equal to the annual Compensation limit for the calendar year
in which the Compensation period begins multiplied by the ratio
obtained by dividing the number of full months in the period by 12.
In determining the Compensation of a Participant for
purposes of this limitation, the rules of Section 414(q)(6) of the
Code shall apply, except in applying such rules, the term "family"
shall include only the spouse of the Participant and any lineal
descendants of the Participant who have not attained age 19 before
the close of the year. If, as a result of the application of such
rules, the adjusted $200,000 limitation is exceeded, then (except
for purposes of determining the portion of Compensation up to the
Integration Level if the Plan provides for permitted disparity) the
limitation shall be prorated among the affected individuals in
proportion to each such individual's Compensation as determined
under this Section prior to the application of this limitation.
Notwithstanding the above, if elected by the Employer in
the Adoption Agreement, Compensation shall include any amount which
is contributed by the Employer pursuant to a salary reduction
agreement and which is not includible in the gross income of the
Employee under Sections 125, 402(a)(8), 402(h) or 403 (b) of the
Code.
2.8 Custodian. The custodian, if any, designated in the
Adoption Agreement.
2.9 Determination Date. With respect to any Plan Year
subsequent to the first Plan Year, the last day of the preceding
Plan Year. For the first Plan Year of the Plan, the last day of
that Plan Year.
2.10 Early Retirement Date. The first day of the month
coincident with or next following the date upon which the
Participant satisfies the early retirement age and service
requirements in the Adoption Agreement; provided, however, such
requirements may not be less than age 55, nor more than 15 Years of
Service.
2.11 Earned Income. The net earnings from self-employment in
the trade or business with respect to which the Plan is
established, for which personal services of the individual are a
material income-producing factor. Net earnings will be determined
without regard to items not included in gross income and the
deductions allocable to such items. Net earnings are reduced by
contributions to a qualified plan to the extent deductible under
Section 404 of the Code. Net earnings shall be determined with
regard to the deduction allowed to the Employer by Section 164(f)
of the Code for taxable years beginning after December 31, 1989.
2.12 Effective Date. The first day of the first Plan Year
for which the Plan is effective as specified in the Adoption
Agreement.
2.13 Eligibility Computation Period. For purposes of
determining Years of Service and Breaks in Service for eligibility
to participate, the initial Eligibility Computation Period shall be
the twelve (12) consecutive month period beginning with the day the
Employee first performs an Hour of Service. The succeeding
Eligibility Computation Periods commence with the first Plan Year
which commences after the first day of the Employee's initial
Eligibility Computation Period regardless of whether the employee
is entitled to be credited with a Year of Service during the
initial Eligibility Computation Period. An Employee who is
credited with a Year of Service in both the initial Eligibility
Computation Period and the first Plan Year which commences after
the first day of the Employee's initial eligibility computation
period will be credited with two Years of Service for purposes of
eligibility to participate.
2.14 Employee. Any person, including a Self-Employed
Individual, who is employed by any Affiliated Employers. Any
Leased Employee shall be treated as an Employee. However,
contributions or benefits provided by the leasing organization
which are attributable to services performed for the Employer shall
be treated as provided by the Employer. Notwithstanding the above,
a Leased Employee will not be considered an Employee if: (i) such
Leased Employee is covered by a money purchase pension plan
providing: (1) a non-integrated Employer contribution rate of at
least ten percent (10%) of Compensation, as defined in Section 2.7
of the Plan,
but including amounts contributed pursuant to a salary reduction
agreement which are excludable from the Employee's gross income
under Section 125, Section 402(a)(8), Section 402(h) or Section
403(b) of the Code, (2) immediate participation, and (3) full and
immediate vesting and (ii) leased Employees do not constitute more
than twenty percent (20%) of the recipient's non-highly compensated
workforce.
2.15 Employer. The corporation, proprietorship, partnership
or other organization which adopts the Plan by execution of an
Adoption Agreement.
2.16 Employer Contributions. The contribution of the
Employer to the Plan and Trust as set forth in Article IV and the
Adoption Agreement.
2.17 Entry Dates. The Effective Date shall be the first
Entry Date. Thereafter the Entry Dates shall be the first day of
each Plan Year and the first day of the seventh month of each Plan
Year.
2.18 ERISA. The Employee Retirement Income Security Act of
1974, as amended.
2.19 Excess Compensation. With respect to any Plan Year, the
amount of the Participant's Compensation which exceeds the
Integration Level.
2.20 Highly Compensated Employee. An Employee described in
Section 414(q) of the Code.
2.21 Hour of Service.
(a) Each hour for which an Employee is paid, or entitled
to payment for the performance of duties for the Employer. These
hours shall be credited to the Employee only for the computation
period or periods in which the duties are performed.
(b) Each hour for which an Employee is paid, or entitled
to payment, by the Employer on account of a period of time during
which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), layoff, jury duty,
military duty, or leave of absence. No more than 501 Hours of
Service shall be credited under this paragraph to an Employee on
account of any single, continuous period during which the Employee
performs no duties (whether or not such period occurs in a single
computation period) and no credit shall be given for hours for
which no duties are performed but for which payment by the Employer
is made or due under a plan maintained solely for the purpose of
complying with applicable workmen's compensation, unemployment
compensation, or disability insurance laws or where payment solely
reimburses an Employee for medical or medically related expenses
incurred by the Employee. Hours under this paragraph will be
calculated and credited pursuant to Section 2530.200b-2 of the
Department of Labor Regulations which are incorporated herein by
this reference.
(c) Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the
Employer. The same Hours of Service shall not be credited both
under paragraph (a) or paragraph (b), as the case may be, and under
this paragraph (c). These hours shall be credited to the Employee
for the computation period or periods to which the award or
agreement pertains rather than the computation period in which the
award, agreement, or payment is made.
(d) Solely for purposes of determining whether an
employee has a Break in Service, Hour of Service shall also include
an uncompensated authorized leave of absence not in excess of two
(2) years, or military leave while the Employee's reemployment
rights are protected by law or such additional or other periods as
granted by the Employer as military leave (credited on the basis of
forty (40) Hours of Service per each week or either (8) Hours of
Service per working day), provided the Employee returns to
employment at the end of his leave of absence or within ninety (90)
days of the end of his military leave, whichever is applicable.
(e) Hours of Service will be credited for employment
with any of the Affiliated Employers. Hours of Service will also
be credited for services rendered to the Affiliated Employers by
any individual considered an Employee for purposes of this Plan
under Section 414(n) or (o) of the Code.
(f) Solely for purposes of determining whether an
Employee has a Break in Service, Hours of Service shall also
include absence from work for maternity or paternity reasons if the
absence begins on or after the first day of the first Plan Year
beginning after 1984. During this absence, the Employee shall be
credited with the Hours of Service which would have been credited
but for the absence, or, if such hours cannot be determined, with
eight hours per day. An absence from work for maternity or
paternity reasons means an absence:
(i) by reason of the pregnancy of an Employee,
(ii) by reason of the birth of a child of the Employee,
(iii) by reason of the placement of a child with the
Employee in connection with adoption or
(iv) for purposes of caring for such a child for a
period immediately following such birth or placement.
These Hours of Service shall be credited in the computation period
following the computation period in which the absence begins,
except as necessary to prevent a Break in Service in the
computation period in which the absence begins. However, no more
than 501 Hours of Service will be credited for purposes of any such
maternity or paternity absence from work.
(g) The Employer may elect to compute Hours of Service
by the use of one of the service equivalencies in the Adoption
Agreement. Only one method may be selected. If selected, the
service equivalency must be applied to all Employees covered under
the Plan.
(h) If the Employer amends the method of crediting
service from the elapsed time method described in 1.410(a)-7 of the
Treasury Regulations to the Hours of Service computation method by
the adoption of this Plan, or an Employee transfers from a plan
under which service is determined on the basis of elapsed time, the
following rules shall apply for purposes of determining the
Employee's service under this Plan up to the time of amendment or
transfer:
(i) the Employee shall receive credit, as of the
date of amendment or transfer, for a number of Years of Service
equal to the number of one-year periods of service credited to the
Employee as of the date of the amendment or transfer, and
(ii) the Employee shall receive credit in the
applicable computation period which includes the date of amendment
or transfer, for a number of Hours of Service determined by
applying the weekly service equivalency specified in paragraph (g)
to any fractional part of a year credited to the Employee under
this paragraph (h) as of the date of amendment or transfer. The
use of the weekly service equivalency shall apply to all Employees
who formerly were credited with service under the elapsed time
method.
2.22 Integration Level. The Taxable Wage Base or such lesser
amount elected by the Employer in the Adoption Agreement, which
level shall be the amount of Compensation at which Employer
Contributions begin to be integrated with Social Security.
2.23 Key Employee. Any Employee, former Employee, or
Beneficiary who, at any time during the determination period, is or
was:
(a) An Officer of any of the Affiliated Employers if
such Officer has total annual compensation from the affiliated
Employers in excess of fifty percent (50%) of the dollar limitation
under Section 415(b)(1)(A) of the Code; or
(b) An Employee or Beneficiary owning (or considered as
owning within the meaning of Section 318 of the Code) one of the
ten largest interests in any of the Affiliated Employers if such
individual's Compensation exceeds one hundred percent (100%) of the
dollar limitation under Section 415(c)(1)(A) of the Code; or
(c) A five percent (5%) shareholder or owner of the
Affiliated Employers; or
(d) A one percent (1%) shareholder or owner of any of
the Affiliated Employers, if such Employee has total annual
compensation from the Affiliated Employers of more than $150,000.
The determination of who is a Key Employee shall be made
in accordance with the rules and regulations under Section
416(i)(1) of the Code. The determination period for purposes of
this Section 2.23 is the Plan Year containing the determination
date and the four preceding Plan Years.
Annual compensation for purposes of this Section shall
mean compensation as defined in Section 415(c)(3) of the Code, but
including amounts contributed by the Employer pursuant to a salary
reduction agreement which are excludable from the Employee's gross
income under Section 125, Section 402(a)(8), Section 402(h) or
Section 403(b) of the Code.
2.24 Leased Employee. Any person (other than an Employee of
any of the Affiliated Employers) who, pursuant to an agreement
between any of the Affiliated Employers and any other person
("leasing organization"), has performed service for any of the
Affiliated Employers (or for any of the Affiliated Employers and
related persons determined in accordance with Section 414(n)(6) of
the Code) on a substantially full-time basis for a period of at
least one year and such services are of a type historically
performed by employees in the Employer's business field. The
determination of whether a person is a Leased Employee will be made
pursuant to Section 414(n) of the Code.
2.25 Net Profits. Current and accumulated earnings of the
Employer, before federal and state taxes and contributions to this
Plan and any other qualified plan, as computed by the Employer's
accountants, in accordance with generally accepted accounting
principles.
2.26 Non-Key Employee. Any Employee or former Employee who
is not a Key Employee. In addition, any Beneficiary of a Non-Key
Employee shall be treated as a Non-Key Employee.
2.27 Normal Retirement Age. The age selected in the Adoption
Agreement, but not less than age 55. If the Employer enforces a
mandatory retirement age, the Normal Retirement Age is the lesser
of that mandatory age or the age specified in the Adoption
Agreement.
2.28 Normal Retirement Date. The first day of the month
coincident with or next following the date upon which a Participant
attains Normal Retirement Age.
2.29 Owner-Employee. An individual who is a sole proprietor,
or who is a partner owning more than ten percent (10%) of either
the capital or profits interest of a partnership.
2.30 Participant. A person who has met the eligibility
requirements of Section 3.1 and whose Account hereunder has been
neither completely forfeited nor completely distributed.
2.31 Permissive Aggregation Group. The Required Aggregation
Group of plans plus any other plan or plans of the Affiliated
Employers which, when considered as a group with the Required
Aggregation Group, would continue to satisfy the requirements of
Sections 401(a)(4) and 410 of the Code.
2.32 Plan. The prototype defined contribution profit sharing
and money purchase pension plan provided under this basic plan
document. References to the Plan shall refer to the profit sharing
provisions, the money purchase pension provisions, or both, as the
context may require.
2.33 Plan Administrator. The person, persons, or entity
appointed by the Employer pursuant to Article 15 to manage and
administer the Plan.
2.34 Plan Year. The twelve (12) consecutive month period
designated by the Employer in the Adoption Agreement.
2.35 Present Value. The discounted value of the accrued
benefit under a defined benefit plan used to determine Top-Heavy
Plan status. Present Value shall be based only on the interest and
mortality rates specified in the Adoption Agreement.
2.36 Required Aggregation Group.
(a) Each qualified plan of the Employer in which at
least one Key Employee participates or participated at any time
during the determination period (regardless of whether the Plan has
terminated), and
(b) any other qualified plan of the Employer which
enables a plan described in (a) to meet the requirements of
Sections 401(a)(4) or 410 of the Code.
2.37 Self-Employed Individual. An individual who has earned
income for the taxable year from the trade or business for which
the Plan is established, or an individual who would have had earned
income for the taxable year but for the fact that the trade or
business had no Net Profits for the taxable year.
2.38 Shares. Shares of stock in any regulated investment
company registered under the Investment Company Act of 1940 which
is made available for investment purposes as an investment option
under this Plan.
2.39 Sponsor. Oppenheimer Funds Distributor, Inc. (formerly
known as Oppenheimer Fund Management, Inc.)
2.40 Taxable Wage Base. The maximum amount of earnings which
may be considered wages for such year under Section 3121(a)(1) of
the Code in effect as of the beginning of the Plan Year.
2.41 Top-Heavy Plan. For any Plan Year beginning after
December 31, 1983, this Plan is Top-Heavy if any of the following
conditions exist:
(a) If the Top-Heavy Ratio for this Plan exceeds 60
percent and this Plan is not part of any Required Aggregation Group
or Permissive Aggregation Group of plans.
(b) If this Plan is part of a Required Aggregation Group
of plans but not part of a
Permissive Aggregation Group and the Top-Heavy Ratio for the group
of plans exceeds 60 percent (60%).
(c) If this Plan is a part of a Required Aggregation
Group and part of a Permissive Aggregation Group of plans and the
Top-Heavy Ratio for the Permissive Aggregation Group exceeds 60
percent (60%).
2.42 Top-Heavy Ratio.
(a) If the Affiliated Employers maintain one or more
defined contribution plans (including any Simplified Employee
Pension Plan) and have never maintained any defined benefit plan
which during the five (5) year period ending on the Determination
Date has or had account benefits, the Top-Heavy Ratio for this Plan
alone or for the Required or Permissive Aggregation Group as
appropriate is a fraction, the numerator of which is the sum of the
Account balances of all Key Employees as of the Determination Date
(including any part of any Account balance distributed in the five
(5) year period ending on the Determination Date), and the
denominator of which is the sum of all Account balances (including
any part of any Account balance distributed in the five (5) year
period ending on the Determination Date) of all Participants as of
the Determination Date both computed in accordance with Section 416
of the Code and the regulations thereunder. Both the numerator and
denominator of the Top-Heavy Ratio are increased to reflect any
contribution not actually made as of the Determination Date, but
which is required to be taken into account on that date under
Section 416 of the Code and regulations thereunder. Both the
numerator and the denominator shall be computed in accordance with
Section 416 of the Code and the regulations thereunder.
(b) If the Affiliated Employers maintain one or more
defined contribution plans (including any Simplified Employee
Pension Plan) and maintain or have maintained one or more defined
benefit plans which during the five (5) year period ending on the
Determination Date has or has had any accrued benefits, the Top-
Heavy Ratio for any Required or Permissive Aggregation Group is a
fraction, the numerator of which is the sum of Account balances
under the defined contribution plans for all Key Employees
determined in accordance with paragraph (a) above, and the Present
Value of accrued benefits under the defined benefit plans for all
Key Employees as of the Determination Date, and the denominator of
which is the sum of the account balances under the aggregated
defined contribution plans for all Participants as of the
Determination Date and the Present Value of accrued benefits under
the defined benefit plans for all Participants as of the
Determination Date, all determined in accordance with Section 416
of the Code and the regulations thereunder. The accrued benefit
in a defined benefit plan with respect to both the numerator and
the denominator of the Top-Heavy Ratio are increased for any
distribution of an Account balance or an accrued benefit made in
the five (5) year period ending on the Determination Date, and
shall be adjusted for any contribution due but unpaid as of the
Determination Date.
(c) For the purposes of (a) and (b) above, the value of
Account balances and the Present Value of accrued benefits will be
determined as of the most recent Valuation Date that falls within
or ends with the twelve (12) month period ending on the
Determination Date, except as provided in Section 416 of the Code
and the regulations thereunder for the first and second plan years
of a defined benefit plan. The Account balances and accrued
benefits of a Participant who is not a Key Employee but who was a
Key Employee in a prior year will be disregarded. The calculation
of the Top-Heavy Ratio, and the extent to which distributions,
rollovers, and transfers are taken into account will be made in
accordance with Section 416 of the Code and the regulations
thereunder. Deductible employee contributions will not be taken
into account for purposes of computing the Top-Heavy Ratio. When
aggregating plans the value of Account balances and accrued
benefits will be calculated with reference to the Determination
Dates that fall within the same calendar year. For Plan Years
beginning after 1984, both the numerator and denominator of the
Top-Heavy Ratio shall be adjusted to exclude the account balance or
accrued benefit of any individual who has not been credited with at
least one Hour of Service with any Affiliated Employer in the 5-
year period ending on the Determination Date.
The accrued benefit of a Participant other than a Key
Employee shall be determined under (i) the method, if any, that
uniformly applies for accrual purposes under all defined benefit
plans maintained by the Employer, or (ii) if there is no such
method, as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under the fractional rule of Section
411(b)(1)(C) of the Code.
2.43 Total and Permanent Disability. The inability of the
Participant to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment, which
condition, in the opinion of a physician chosen by the Plan
Administrator, can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not
less than twelve (12) months.
2.44 Trust. The fund maintained by the Trustee for the
investment of Plan assets in accordance with the terms and
conditions of the Trust Agreement.
2.45 Trust Agreement. The agreement between the Employer and
the Trustee under which the assets of the Plan are held,
administered, and managed. The provisions of the Trust Agreement
shall be considered an integral part of this Plan as if set forth
fully herein.
2.46 Trustee. The individual or corporate Trustee or
Trustees under the Trust Agreement as they may be constituted from
time to time.
2.47 Valuation Date. The last day of each Plan Year and such
other dates, as provided in Section 5.6, for valuing the Trust
assets.
2.48 Vesting Computation Period. The Plan Year.
2.49 Year of Service. An Eligibility Computation Period,
Vesting Computation Period, or Plan Year, whichever is applicable,
during which an Employee of the Affiliated Employers has completed
at least one thousand (1,000) Hours of Service (whether or not
continuous) with the Affiliated Employers. The Employer may, in
the Adoption Agreement, specify a lesser number of hours.
ARTICLE 3
ELIGIBILITY AND YEARS OF SERVICE
3.1 Eligibility Requirements.
(a) Each Employee of the Affiliated Employers shall
become a Participant in the plan as of the first Entry Date after
the date on which the Employee has satisfied the minimum age and
service requirements specified in the Adoption Agreement.
(b) The Employer may elect in the Adoption Agreement to
exclude from participation:
(i) Employees included in a unit of employees
covered by a collective bargaining agreement, between the Employer
and Employee representatives if retirement benefits were the
subject of good faith bargaining and if less than 2% of the
Employees of the Employer who are covered pursuant to that
agreement are professionals as defined in Section 1.410(b)-9(g) of
the proposed Treasury regulations or comparable final Treasury
regulations. For this purpose, the term "Employee representatives"
does not include any organization more than half of whose members
are Employees who are owners, officers, or executives of the
Employer, and
(ii) non-resident aliens who receive no earned
income from the Employer which constitutes income from sources
within the United States.
3.2 Participation and Service Upon Reemployment. Upon the
reemployment of any Employee, the following rules shall determine
his eligibility to participate in the Plan and his credit for prior
service.
(a) Participation. If the reemployed Employee was a
Participant in the Plan during his prior period of employment with
the Employer, he shall be eligible upon reemployment to resume
participation in the Plan. If the reemployed Employee was not a
Participant in the Plan, he shall be considered a new Employee and
required to meet the requirements of Section 3.1 in order to be
eligible to participate in the Plan, subject to the possible
reinstatement of credit for prior service under paragraph (b)
below.
(b) Credit for Prior Service. In the case of any
Employee who is reemployed before or after incurring a Break in
Service, any Hour of Service and Year of Service credited to the
Employee at the end of his prior period of employment shall be
reinstated as of the date of his reemployment.
3.3 Predecessor Employers. If specified in the Adoption
Agreement, Years of Service with a predecessor employer will be
treated as service for the Employer for eligibility purposes;
provided, however, if the Employer maintains the plan of a
predecessor employer, Years of Service with such employer will be
treated as Service with the Employer without regard to any
election.
ARTICLE 4
CONTRIBUTIONS
4.1 Employer Contributions.
(a) Money Purchase Pension Contributions. For each Plan
Year, the Employer shall contribute to the Trust an amount equal to
such uniform percentage of Compensation of each eligible
Participant as may be determined by the Employer in accordance with
the money purchase pension contribution formula specified in the
Adoption Agreement. Subject to the limitations of Section 5.4, the
money purchase pension contribution formula may be integrated with
Social Security by providing for additional Employer Contributions
for each Participant not to exceed the amount permitted to be
allocated on account of the Participant's Excess Compensation.
(b) Profit-Sharing Contribution. For each Plan Year,
the Employer shall contribute to the Trust an amount as may be
determined by the Employer in accordance with the profit-sharing
formula set forth in the Adoption Agreement.
(c) Eligible Participants. Subject to the Minimum
Allocation rules of Section 5.2, Participants who (i) died,
retired, or became Totally and Permanently Disabled during the Plan
Year, or (ii) are employed on the last day of the Plan Year and who
completed the number of Hours of Service specified by the Employer
in the Adoption Agreement in such Plan Year shall be eligible to
share in the Employer Contribution. An Employer may elect in the
Adoption Agreement to allocate a contribution on behalf of a
Participant who completes the number of Hours of Service specified
by the Employer in the Adoption Agreement but terminates employment
before the end of the Plan Year. If the Employer fails to specify
in the Adoption Agreement the number of Hours of Service required
to share in the Employer Contribution, the number shall be 501
Hours of Service.
(d) Contribution Limitation. In no event shall any
Employer contribution exceed the maximum amount deductible from the
Employer's income under Section 404 of the Code, or the maximum
limitations under Section 415 of the Code provided in Article 6.
4.2 Payment. All Employer Contributions to the Trust for any
Plan Year shall be made either in one lump sum or in installments
in U.S. currency or by check within the time prescribed by law,
including extensions granted by the Internal Revenue Service, for
filing the Employer's federal income tax return for the taxable
year with or within which such Plan Year ends. All Employer
Contributions to the Trust for a money purchase pension plan for
any Plan Year shall be made within the time prescribed by
regulations under Section 412(c)(10) of the Code.
4.3 Nondeductible Voluntary Contributions by Participants.
(a) This Plan will not accept nondeductible Employee
contributions and matching contributions for Plan Years beginning
after the Plan Year in which this Plan is adopted by the Employer.
Employee contributions for Plan Years beginning after December 31,
1986 will be limited so as to meet the nondiscrimination test of
Section 401(m).
(b) A separate account shall be maintained by the
Trustee for the nondeductible Employee contributions of each
Participant.
(c) Employee contributions and earnings thereon will be
nonforfeitable at all times.
4.4 Rollovers and Other Transfers.
(a) Subject to the approval of the Plan Administrator,
the Trustee may, in its discretion, accept a direct transfer of
assets from the trustee of any other qualified plan described in
Section 401(a) of the Code or from a qualified annuity plan
described in Section 403(a) of the Code to be held for the benefit
of any Participant to the full extent permitted by the Code.
(b) Subject to the approval of the Plan Administrator,
a Participant who has participated in any other qualified plan
described in Section 401(a) of the Code or in a qualified annuity
plan described in Section 403(a) of the Code shall be permitted to
make a rollover contribution to the Trust of an amount received by
the Participant that is attributable to participation in such other
plan (reduced by any nondeductible voluntary contributions he made
to the Plan), provided that no part of the rollover contribution is
attributable to participation in a plan under which the Participant
was covered as a Key Employee in a Top-Heavy Plan at the time
contributions were made on his behalf, and provided further that
the rollover contribution complies with all requirements of Section
402(a)(5), Section 403(a)(4), Section 408(d)(3)(A)(ii) or Section
409(b)(3)(C) of the Code, whichever is applicable.
(c) Before approving such a trustee transfer or
Participant rollover, the Plan Administrator may request from the
Participant or the Employer any documents which the Plan
Administrator, in its discretion, deems necessary for such trustee
transfer or rollover.
(d) Any trustee transfer or Participant rollover
contribution to the Trust shall be credited to the Participant's
trustee transfer or rollover subaccount established under Section
5.1 and separately accounted for.
ARTICLE 5
ALLOCATIONS
5.1 Individual Accounts. The Plan Administrator shall
establish and maintain an Account in the name of each Participant.
The Account shall contain the following subaccounts:
(a) A money purchase pension contribution subaccount to
which shall be credited each such Participant's share of (i)
Employer Contributions under Section 4.1(a), (ii) the net earnings
or net losses on the investment of the assets of the Trust, (iii)
distributions, and (iv) dividends, capital gain distributions and
other earnings received on any Shares credited to the Participant's
subaccount;
(b) A profit-sharing contribution subaccount to which
shall be credited each such Participant's share of (i) Employer
Contributions under Section 4.1(b), (ii) forfeitures, (iii) the net
earnings or net losses on the investment of the assets of the
trust, (iv) distributions, and (v) dividends, capital gain
distributions and other earnings received on any Shares credited to
the Participant's subaccount;
(c) A nondeductible voluntary contribution subaccount to
which shall be credited nondeductible voluntary contributions by
the Participant under Section 4.3 to the extent such nondeductible
voluntary contributions were permitted and made under the Plan, and
the earnings, losses and expenses attributable thereto, including
any dividends, capital gain distributions and other earnings
received on any Shares credited to the Participant's subaccount;
(d) A trustee transfer subaccount to which shall be
credited contributions to the Trust accepted under Section 4.4(a)
and the earnings, losses and expenses attributable thereto,
including any dividends, capital gain distributions and other
earnings received on any Shares credited to the Participant's
subaccount;
(e) A rollover subaccount to which shall be credited
contributions to the Trust accepted under Section 4.4(b) and the
earnings, losses and expenses attributable thereto, including any
dividends, capital gain distributions and other earnings received
on any Shares credited to the Participant's subaccount.
5.2 Minimum Allocation.
(a) Except as provided in (b) and (c) below, the
Employer Contributions and forfeitures allocated on behalf of any
Participant who is a Non-Key Employee shall not be less than the
lesser of three percent (3%) of such Participant's compensation (as
defined in Section 6.5) or in the case where the Employer has no
defined benefit plan which designates this Plan to satisfy Section
401 of the Code, the largest percentage of Employer Contributions
and forfeitures, as a percentage of the Key Employee's compensation
(as defined in Section 6.5), excluding amounts in excess of
$200,000, allocated on behalf of any Key Employee for that year.
The minimum allocation is determined without regard to any Social
Security contribution. This minimum allocation shall be made even
though, under other Plan provisions, the Participant would not
otherwise be entitled to receive an allocation, or would have
received a lesser allocation for the year because of the
Participant's failure to complete 1,000 Hours of Service (or such
lesser amount as may be specified in the Adoption Agreement for a
Year of Service) or because of compensation less than a stated
amount. The minimum allocation required (to the extent required to
be nonforfeitable under Section 416(b) of the Code) may not be
forfeited under Section 411(a)(3)(B) or 411(a)(3)(D) of the Code.
(b) The provisions in (a) above shall not apply to any
Participant who was not employed by the Affiliated Employers on the
last day of the Plan Year.
(c) If the Employer enters into both the money purchase
pension Adoption Agreement and the profit-sharing Adoption
Agreement under this Plan, to avoid a duplication of the minimum
allocation under this Section 5.2, the money purchase pension
Adoption Agreement shall provide for contributions that are
sufficient to satisfy the minimum allocation requirements of this
Section 5.2.
5.3 Allocation of Employer Contributions and Forfeitures.
(a) All money purchase pension contributions for a given
Plan Year shall be allocated to the Account of the Participant for
whom such contribution was made in accordance with the contribution
formula specified by the Employer in the Adoption Agreement. Any
forfeiture from a Participant's money purchase pension contribution
subaccount arising under the Plan for a given Plan Year shall be
applied to reduce the Employer Contribution in that Plan Year, or
if in excess of the Employer Contribution for such Plan Year, the
amounts shall be used to reduce the Employer Contribution in the
next succeeding Plan Year or Years.
(b) All profit-sharing contributions to and forfeitures
from a Participant's profit-sharing contribution subaccount will be
allocated to the Account of each Participant in the ratio that such
Participant's Compensation bears to the Compensation of all
Participants. However, if the profit-sharing contribution formula
selected in the Adoption Agreement is integrated with Social
Security, profit-sharing contributions for the Plan Year plus any
forfeitures will be allocated to Participants' Accounts as follows:
(i) First, contributions and forfeitures shall be
allocated to each Participant's Account in the ratio that each
Participant's total Compensation bears to all Participant's total
Compensation, but not in excess of 3% of each Participant's
Compensation;
(ii) Next, any contributions and forfeitures
remaining after the allocation in (i) shall be allocated to each
Participant's Account in the ratio that each Participant's Excess
Compensation bears to the Excess Compensation of all Participants,
but not in excess of 3%.
(iii) Next, any contributions and forfeiture
remaining after the allocation in (ii) shall be allocated to each
Participant's Account in the ratio that the sum of each
Participant's total Compensation and Excess Compensation bears to
the sum of all Participants' total Compensation and Excess
Compensation, but not in excess of the profit-sharing maximum
disparity rate;
(iv) Next, any remaining Employer Contributions or
forfeitures shall be allocated to each Participant's Account in the
ratio that each Participant's total Compensation for the Plan Year
bears to all Participant's total Compensation for that year.
The profit-sharing maximum disparity rate is equal to the lesser of
(A) 2.7% or (B) the applicable percentage determined in accordance
with the table below:
If the Integration Level
the applicable
is more than but not more than percentage is:
$0 X* 2.7%
X* of TWB 80% of TWB 1.3%
80% of TWB Y** 2.4%
*X = the greater of $10,000 or 20 percent of the TWB
**Y = any amount more than 80% of the TWB but less than 100% of
the TWB.
TWB = Taxable Wage Base
If the Integration Level used is equal to the Taxable Wage Base,
the applicable percentage is 2.7%.
(c) Notwithstanding anything in (a) or (b) above to the
contrary, forfeitures arising under a Participant's money purchase
pension contribution subaccount will only be used to reduce the
contributions of the Participant's Employer who adopted this Plan,
and forfeitures arising under a Participant's profit-sharing
subaccount will be reallocated only for the benefit of Employees of
the
Participant's Employer who adopted this Plan.
5.4 Coordination of Social Security Integration. If the
Employer maintains plans involving integration with Social Security
other than this Plan, and if any Participant is eligible to
participate in more than one of such plans, all such plans will be
considered to be integrated if the extent of the integration of all
such plans does not exceed 100 percent. For purposes of the
preceding sentence, the extent of integration of a plan is the
ratio (expressed as a percentage) which the actual benefits,
benefit rate, offset rate, or Employer Contribution rate under the
plan bears to the integration limitation applicable to such plan.
If the Employer enters into both the money purchase pension
Adoption Agreement and the profit-sharing Adoption Agreement under
this Plan, integration with Social Security may only be selected in
one Adoption Agreement.
5.5 Withdrawals and Distributions. Any distribution to a
Participant or his Beneficiary, any amount transferred from a
Participant's Account directly to the Trustee of any other
qualified plan described in Section 401(a) of the Code or from a
qualified annuity plan described in Section 403(a) of the Code, or
any withdrawal by a Participant shall be charged to the appropriate
subaccount(s) of the Participant as of the date of the distribution
or the withdrawal. Distributions are subject to spousal consent if
the joint and survivor rules of Article 9 apply.
5.6 Determination of Value of Trust Fund and of Net Earnings
or Losses. As of each Valuation Date the Trustee shall determine
for the period then ended the sum of the net earnings or losses of
the Trust (excluding with respect to Shares and other assets
specifically allocated to a specific Participant's subaccount, (i)
dividends and capital gain distributions from Shares, (ii) receipts
or income attributable to insurance policies, (iii) income gains
and/or losses attributable to a Participant's loans made pursuant
to Article 13 or to any other assets) which shall reflect accrued
but unpaid interest, dividends, gains, or losses realized from the
sale, exchange or collection of assets, other income received,
appreciation in the fair market value of assets, depreciation in
the fair market value of assets, administration expenses, and taxes
and other expenses paid. Gains or losses realized and adjustments
for appreciation or depreciation in fair market value shall be
computed with respect to the difference between such value as of
the preceding Valuation Date or date of purchase, whichever is
applicable, and the value as of the date of disposition of the
current Valuation Date, whichever is applicable.
5.7 Allocation of Net Earnings or Losses.
(a) As of each Valuation Date the net earnings or losses
of the Trust (excluding with respect to Shares and other assets
specifically allocated to a specific Participant's subaccount, (i)
dividends and capital gain distributions from Shares, (ii)
dividends or credits attributable to insurance policies, (iii)
income gains and/or losses attributable to a Participant's loans
made pursuant to Article 11 or to any other assets, all of which
shall be allocated to such Participant's subaccount) for the
Valuation Period then ending shall be allocated to the Accounts of
all Participants (or Beneficiaries) having credits in the Fund both
on such date and at the beginning of such Valuation Period. Such
allocation shall be made by the application of a fraction, the
numerator of which is the value of the Account of a specific
Participant (or Beneficiary) as of the immediately preceding
Valuation Date, reduced by any distributions therefrom since such
preceding Valuation Date, and the denominator of which is the total
value of all such Accounts as of that preceding Valuation Date,
reduced by any distributions therefrom since such preceding
Valuation Date.
(b) To the extent that Shares and other assets are
specifically allocated to a specific Participant's subaccount:
(i) dividends and capital gain distributions from
Shares,
(ii) dividends or credits attributable to
insurance policies,
(iii) income gains and/or losses attributable to a
Participant's loans made pursuant to Article 13 or
to any other assets, all shall be allocated to such
Participant's subaccount.
5.8 Responsibilities of the Plan Administrator. The Plan
Administrator shall maintain accurate records with respect to the
contributions made by or on behalf of Participants under the Plan,
and shall furnish the Trustee with written instructions directing
the Trustee to allocate all Plan contributions to the Trust among
the separate Accounts of Participants in accordance with Section
5.1 above. In making any such allocation, the Trustee shall be
fully entitled to rely on the instructions furnished by the Plan
Administrator, and shall be under no duty to make any inquiry or
investigation with respect thereto.
ARTICLE 6
LIMITATIONS ON ALLOCATIONS
6.1 Employers Who Do Not Maintain Other Qualified Plans.
(a) If the Participant does not participate in, and has
never participated in another qualified plan or a welfare benefit
fund, as defined in Section 419(e) of the Code maintained by the
employer (as defined in Section 6.5), or an individual medical
account, as defined in Section 415(l)(2) of the Code, maintained by
the employer, which provides an annual addition as defined in
Section 6.5(a), the amount of annual additions which may be
credited to the Participant's Account for any limitation year will
not exceed the lesser of the maximum permissible amount or any
other limitation contained in this Plan. If the Employer
Contribution that would otherwise be contributed or allocated to
the Participant's Account would cause the annual additions for the
limitation year to exceed the maximum permissible amount, the
amount contributed or allocated will be reduced so that the annual
additions for the limitation year will equal the maximum
permissible amount.
(b) Prior to determining the Participant's actual
compensation for the limitation year, the employer may determine
the maximum permissible amount for a Participant on the basis of a
reasonable estimation of the Participant's compensation for the
limitation year, uniformly determined for all Participants
similarly situated.
(c) As soon as is administratively feasible after the
end of the limitation year, the maximum permissible amount for the
limitation year will be determined on the basis of the
Participant's actual compensation for the limitation year.
(d) If, pursuant to Section 6.1(c) or as a result of
forfeitures, there is an excess amount the excess will be disposed
of as follows:
(i) any nondeductible voluntary contributions, to
the extent they would reduce the excess amount, will be returned to
the Participant;
(ii) if after the application of paragraph (i) an
excess amount still exists, and the Participant is covered by the
Plan at the end of the limitation year, the excess amount in the
Participant's Account will be used to reduce Employer Contributions
(including any allocation of forfeitures) for such Participant in
the next limitation year, and each succeeding limitation year if
necessary;
(iii) if after the application of paragraph (i) an
excess amount still exists, and the Participant is not covered by
the Plan at the end of the limitation year, the excess amount will
be held unallocated in a suspense account. The suspense account
will be applied to reduce future Employer Contributions (including
allocation of any forfeitures) for all remaining Participants in
the next limitation year, and each succeeding limitation year if
necessary; and
(iv) if a suspense account is in existence at any
time during the limitation year pursuant to this Section, it will
not participate in the allocation of the Trust's investment gains
and losses. If a suspense account is in existence at any time
during a particular limitation year, all amounts in the suspense
account must be allocated and reallocated to Participants' accounts
before any Employer or Employee contributions may be made to the
Plan for that limitation year. Excess amounts may not be
distributed to Participants or former Participants.
6.2 Employers Who Maintain Other Qualified Master or
Prototype Defined Contribution Plans.
(a) This Section applies if, in addition to this Plan,
the Participant is covered under another qualified master or
prototype defined contribution plan maintained by the employer or
a welfare benefit fund, as defined in Section 419(e) of the Code,
maintained by the Employer, or an individual medical account, as
defined in Section 415(l)(2) of the Code, maintained by the
employer, which provides an annual addition as defined in Section
6.5(a), during any limitation year. The annual additions which may
be credited to a Participant's Account under this Plan for any such
limitation year will not exceed the maximum permissible amount
reduced by the annual additions credited to a Participant's Account
under the other plans and welfare benefit funds for the same
limitation year. If the annual additions with respect to the
Participant under other defined contribution plans and welfare
benefit funds maintained by the employer are less than the maximum
permissible amount and the Employer Contribution that would
otherwise be contributed or allocated to the Participant's Account
under this Plan would cause the annual additions for the limitation
year to exceed this limitation, the amount contributed or allocated
will be reduced so that the annual additions under all such plans
and funds for the limitation year will equal the maximum
permissible amount. If the annual additions with respect to the
Participant under such other defined contribution plans and welfare
benefit funds in the aggregate are equal to or greater than the
maximum permissible amount, no amount will be contributed or
allocated to the Participant's Account under this Plan for the
limitation year.
(b) Prior to determining the Participant's actual
compensation for the limitation year, the Employer may determine
the maximum permissible amount for a Participant in the manner
described in Section 6.1(b).
(c) As soon as is administratively feasible after the
end of the limitation year, the maximum permissible amount for the
limitation year will be determined on the basis of the
Participant's actual compensation for the limitation year.
(d) If, pursuant to Section 6.2(c) or as a result of the
allocation of forfeitures, a Participant's annual additions under
this Plan and such other plans would result in an excess amount for
a limitation year, the excess amount will be deemed to consist of
the annual additions last allocated, except that annual additions
attributable to a welfare benefit fund or individual medical
account will be deemed to have been allocated first regardless of
the actual allocation date.
(e) If an excess amount was allocated to a Participant
on an allocation date of this Plan which coincides with an
allocation date of another plan, the excess amount attributed to
this Plan will be the product of,
(i) the total excess amount allocated as of such
date, times
(ii) the ratio of (1) the annual additions
allocated to the Participant for the limitation
year as of such date under this Plan to (2) the
total annual additions allocated to the Participant
for the limitation year as of such date under this
and all the other qualified master or prototype
defined contribution plans.
(f) Any excess amount attributed to this Plan will be
disposed in the manner described in Section 6.1(d).
6.3 Employers Who, In Addition to this Plan, Maintain Other
Qualified Plans Which Are Defined Contribution Plans Other than
Master or Prototype Plans. If the Participant is covered under
another qualified defined contribution plan maintained by the
employer which is not a master or prototype plan, annual additions
which may be credited to the Participant's Account under this Plan
for any limitation year will be limited in accordance with Section
6.2 as though the other plan were a master or prototype plan unless
the employer provides other limitations in the Adoption Agreement.
6.4 Employers Who, In Addition to this Plan, Maintain a
Qualified Defined Benefit Plan. If the employer maintains, or at
any time maintained, a qualified defined benefit plan covering any
Participant in this Plan, the sum of the Participant's defined
benefit plan fraction and defined contribution plan fraction will
not exceed 1.0 in any limitation year. The annual additions which
may be credited to the Participant's Account under this Plan for
any limitation year will be limited in accordance with the Adoption
Agreement.
6.5 Definitions. For purposes of this Article 6 the
following definitions and rules of interpretation shall apply:
(a) "annual additions" -- The sum of the following
amounts credited to a Participant's Account for the limitation
year:
(i) Employer contributions;
(ii) Employee contributions; and
(iii) Forfeitures.
For this purpose, any excess amount applied under Section
6.1(d) or 6.2(f) in the limitation year to reduce employer
contributions will be considered annual additions for such
limitation year. Amounts allocated after March 31, 1984 to an
individual medical account, as defined in Section 415(l)(2) of the
Code, which is part of a pension or annuity plan maintained by the
Employer, are treated as annual additions to a defined contribution
plan. Also, amounts derived from contributions paid or accrued
after December 31, 1985, in taxable years ending after such date,
which are attributable to post-retirement medical benefits
allocated to the separate account of a Key Employee, as defined in
Section 419A(d)(3) of the Code, under a welfare benefit fund, as
defined in Section 419(e) of the Code, maintained by the employer,
are treated as annual additions to a defined contribution plan.
(b) "compensation" -- A Participant's earned income,
wages, salaries, and fees for professional services and other
amounts received (without regard to whether or not paid in cash)
for personal services actually rendered in the course of employment
with the employer maintaining the Plan to the extent that amounts
are includable in gross income (including, but not limited to,
commissions paid salesmen, compensation for services on the basis
of a percentage of profits, commissions on insurance premiums,
tips, bonuses, fringe benefits, reimbursements and expense
allowances), and excluding the following:
(i) Employer contributions to a plan of deferred
compensation which are not includible in the Employee's gross
income for the taxable year in which contributed, or employer
contributions under a simplified employee pension to the extent
such contributions are deductible by the Employee, or any
distributions from a plan of deferred compensation;
(ii) amounts realized from the exercise of a non-
qualified stock option, or when restricted stock (or property) held
by the Employee either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
(iii) amounts realized from the sale, exchange or
other disposition of stock acquired under a qualified stock option;
and
(iv) other amounts which received special tax
benefits, or contributions made by the employer (whether or not
under a salary reduction agreement) towards the purchase of an
annuity described in Section 403(b) of the Code (whether or not the
amounts are actually excludable from the gross income of the
Employee).
For purposes of applying the limitations of this Article,
compensation for a limitation year is the compensation actually
paid or includible in gross income during such year.
Notwithstanding the preceding sentence, compensation for
a Participant in a defined contribution plan who is permanently and
totally disabled (as defined in Section 22(e)(3) of the Code) is
the compensation such Participant would have received for the
limitation year if the Participant had been paid at the rate of
compensation paid immediately before becoming permanently and
totally disabled; such imputed compensation for the disabled
participant may be taken into account only if the Participant is
not a highly compensated employee, and contributions made on behalf
of such Participant are nonforfeitable when made.
(c) "defined benefit fraction" -- A fraction, the
numerator of which is the sum of the Participant's projected annual
benefits under all the defined benefit plans (whether or not
terminated) maintained by the employer, and the denominator of
which is the lesser of 100 percent of the dollar limitation
determined for the limitation year under Section 415(b) and (d) of
the Code or 140 percent of highest average compensation, including
any adjustment under Section 415(b) of the Code.
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first limitation year
beginning after December 31, 1986, in one or more defined benefit
plans maintained by the employer which were in existence on May 6,
1986, the denominator of this fraction will not be less than 100
percent of the sum of the annual benefits under such plans which
the Participant had accrued as of the close of the last limitation
year beginning before January 1, 1987, disregarding any changes in
the terms and conditions of the Plan after May 5, 1986. The
preceding sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of
Section 415 of the Code for all limitation years beginning before
January 1, 1987.
(d) "defined contribution dollar limitation" -- $30,000
or, if greater, one-fourth of the defined benefit dollar limitation
set forth in Section 415(b)(1) of the Code as in effect for the
limitation year.
(e) "defined contribution fraction" -- A fraction, the
numerator of which is the sum of the annual additions to the
Participant's account under all the defined contribution plans
(whether or not terminated) maintained by the employer for the
current and all prior limitation years (including the annual
additions attributable to the Participant's nondeductible voluntary
contributions to all defined benefit plans, whether or not
terminated, maintained by the employer and the annual additions
attributable to all welfare benefit funds, as defined, in Section
419(e) of the Code, and individual medical accounts, as defined in
Section 415(l)(2) of the Code, maintained by the employer), and the
denominator of which is the sum of the maximum aggregate amounts
for the current and all prior limitation years of service with the
employer (regardless of whether a defined contribution plan was
maintained by the employer). The maximum aggregate amount in any
limitation year is the lesser of 125 percent of the dollar
limitation determined under Sections 415(b) and (d) of the Code in
effect under Section 415(c)(1)(A) of the Code or 35 percent of the
Participant's compensation for such year.
If the Participant was a Participant as of the end of the
first day of the first limitation year beginning after December 31,
1986, in one or more defined contribution plans maintained by the
employer which were in existence on May 6, 1986, the numerator of
this fraction will be adjusted if the sum of this fraction and the
defined benefit fraction would otherwise exceed 1.0 under the terms
of this Plan. Under the adjustment, an amount equal to the product
of (1) the excess of the sum of the fractions over 1.0 times (2)
the denominator of this fraction, will be permanently subtracted
from the numerator of this fraction. The adjustment is calculated
using the fractions as they would be computed as of the end of the
last limitation year beginning before January 1, 1987, and
disregarding any changes in the terms and conditions of the Plan
made after May 5, 1986, but using the Section 415 limitation
applicable to the first limitation year beginning on or after
January 1, 1987. The annual addition for any limitation year
beginning before January 1, 1987, shall not be recomputed to treat
all employee contributions as annual additions.
(f) "employer" -- For purposes of this Article, the
Employer that adopts this plan, and all members of a controlled
group of corporations (as defined in Section 414(b) of the Code as
modified by Section 415(h) of the Code), all commonly controlled
trades or businesses (as defined in Section 414(c) of the Code as
modified by Section 415(h) of the Code), or affiliated service
groups (as defined in Section 414(m) of the Code) of which the
adopting Employer is a part, and any other entity required to be
aggregated with the Employer under Section 414(o) of the Code.
(g) "excess amount" -- The excess of the Participant's
annual addition for the limitation year over the maximum
permissible amount.
(h) "highest average compensation" -- The average
compensation for the three consecutive years of service with the
employer that produces the highest average.
(i) "limitation year" -- A Plan Year, or the 12-
consecutive month period elected by the employer in a resolution.
All qualified plans maintained by the employer must use the same
limitation year. If the limitation year is amended to a different
12-consecutive month period, the new limitation year must begin on
a date within the limitation year in which the amendment is made.
(j) "master or prototype plan" -- A plan the form of
which is the subject of a favorable opinion letter from the
Internal Revenue Service.
(k) "maximum permissible amount" -- The maximum annual
addition that may be contributed to a Participant's account under
the Plan for any limitation year shall not exceed the lesser of:
(i) the defined contribution dollar limitation, or
(ii) 25 percent of the Participant's compensation
for the limitation year.
The compensation limitation referred to in (ii) shall not
apply to any contribution for medical benefits (within the meaning
of Section 401(h) or Section 419A(f)(2) of the Code) which is
otherwise treated as an annual addition under Section 415(l)(1) or
Section 419A(d)(2) of the Code.
If a short limitation year is created because of an
amendment changing the limitation year to a different 12-
consecutive month period, the maximum permissible amount will not
exceed the defined contribution dollar limitation multiplied by the
following fraction:
Number of months in the short limitation year
12
(l) "projected annual benefit" -- The annual retirement
benefit (adjusted to an actuarially equivalent straight life
annuity if such benefit is expressed in a form other than a
straight life annuity or qualified joint and survivor annuity) to
which the Participant would be entitled under the terms of the plan
assuming:
(i) the Participant will continue employment until
normal retirement age under the plan (or current age, if later),
and
(ii) the Participant's compensation for the current
limitation year and all other relevant factors used to determine
benefits under the plan will remain constant for all future
limitation years.
ARTICLE 7
TRUST FUND
7.1 Receipt of Contributions by Trustee. All contributions
to the Trust that are received by the Trustee, together with any
earnings thereon, shall be held, managed and administered by the
Trustee named in the Adoption Agreement in accordance with the
terms and conditions of the Trust Agreement and the Plan. The
Trustee may use a Custodian designated by the Sponsor to perform
recordkeeping and custodial functions. The Trustee shall be
subject to the proper directions of the Employer or the Plan
Administrator made in accordance with the terms of the Plan and
ERISA.
7.2 Investment Responsibility.
(a) If the Employer elects in the Adoption Agreement to
exercise investment authority and responsibility, the selection of
the investments in which assets of the Trust are invested shall be
the responsibility of the Plan Administrator and each Participant
will have a ratable interest in all assets of the Trust.
(b) If the Adoption Agreement so provides and the
Employer elects to permit each Participant or Beneficiary to select
the investments in his Account, no person, including the Trustee
and the Plan Administrator, shall be liable for any loss or for any
breach of fiduciary duty which results from such Participant's or
Beneficiary's exercise of control.
(c) If the Adoption Agreement so provides and the
Employer elects to permit each Participant or Beneficiary to select
the investments in his Account, the Employer or the Plan
Administrator must complete a schedule of Participant designations.
(d) The Plan Administrator may at any time change the
selection of investments in which the assets of the Trust are
invested, or subject to such reasonable restrictions as may be
imposed by the Sponsor for administrative convenience, may submit
an amended schedule of Participant designations. Such amended
documents may provide for a variance in the percentages of
contributions to any particular investment or a request that Shares
in the Trust be reinvested in whole or in part in other Shares.
7.3 Investment Limitations. The Sponsor may impose
reasonable investment limitations on the Employer and the Plan
Administrator relating to the type of permissible investments in
the Trust or the minimum percentage of Trust assets to be invested
in Shares.
ARTICLE 8
VESTING
8.1 Nondeductible Voluntary Contributions and Earnings. The
Participant's nondeductible voluntary contribution subaccount shall
be fully vested and nonforfeitable at all times and no forfeitures
will occur as a result of an Employee's withdrawal of nondeductible
voluntary contributions.
8.2 Rollovers, Transfers and Earnings. The Participant's
rollover subaccount shall be fully vested and nonforfeitable at all
times.
8.3 Employer Contributions and Earnings. The Participant's
money purchase pension contribution subaccount and profit-sharing
contribution subaccount shall be fully vested and nonforfeitable
upon the Participant's death, disability, attainment of Normal
Retirement Age, or, if the Adoption Agreement provides for an Early
Retirement Date, attainment of the required age and completion of
the required service. In the absence of any of the preceding
events, the Participant's money purchase contribution subaccount
and his profit-sharing contribution subaccount shall vest in
accordance with a minimum vesting schedule specified in the
Adoption Agreement. The schedule must be at least as favorable to
Participants as either schedule (a) or (b) below.
(a) Graduated vesting according to the following
schedule:
Years of Service Percent Vested
Less than 2 0
2 20
3 40
4 60
5 80
6 or more 100
(b) Full (100 percent) vesting after three (3) Years of
Service.
8.4 Amendments to Vesting Schedule.
(a) No amendment to the Plan shall be effective to the
extent that it has the effect of decreasing a Participant's accrued
benefit. Notwithstanding the preceding sentence, a Participant's
account balance may be reduced to the extent permitted under
Section 412(c)(8) of the Code. For purposes of this paragraph, a
Plan amendment which has the effect of decreasing a Participant's
account balance or eliminating an optional form of a benefit, with
respect to benefits attributable to service before the amendment
shall be treated as reducing an accrued benefit. Furthermore, if
the vesting schedule of the Plan is amended, in the case of an
Employee who is a Participant as of the later of the date such
amendment is adopted or the date it becomes effective, the
nonforfeitable percentage (determined as of such date) of such
Employee's right to his Employer-derived accrued benefit will not
be less than his percentage computed under the Plan without regard
to such amendment.
(b) If the Plan's vesting schedule is amended, or the
Plan is amended in any way that directly or indirectly affects the
computation of a Participant's nonforfeitable percentage, or if the
Plan is deemed amended by an automatic change to or from a top-
heavy vesting schedule, each Participant with at least three (3)
Years of Service with the Employer may elect, within a reasonable
period after the adoption of the amendment, to have the
nonforfeitable percentage computed under the Plan without regard to
such amendment. For Participants who do not have at least one (1)
Hour of Service in any Plan Year beginning after December 31, 1988,
the preceding sentence shall be applied by substituting "five (5)
Years of Service" for "three (3) Years of Service" where such
language appears. The Participant's election may be made at any
time during the period ending on the latest of:
(i) 60 days after the amendment is adopted;
(ii) 60 days after the amendment becomes effective; or
(iii) 60 days after the Participant is issued
written notice of the amendment by the
Employer or the Plan Administrator.
8.5 Determination of Years of Service. For purposes of
determining the vested and nonforfeitable percentage of the
Participant's Employer Contribution subaccounts, all of the
Participant's Years of Service with the Employer or an Affiliated
Employer shall be taken into account. If specified in the Adoption
Agreement, Years of Service with a predecessor employer will be
treated as service for the Employer; provided, however, if the
Employer maintains the plan of a predecessor employer, Years of
Service with such employer will be treated as service with the
Employer without regard to any election.
8.6 Forfeiture of Non-Vested Amounts.
(a) For Plan Years beginning before 1985, any portion of
a Participant's Account that is not vested shall be forfeited by
him as of the last day of the Plan Year in which a Break in Service
occurs. For Plan Years beginning after 1984, any portion of a
Participant's Account that is not vested shall be forfeited by him
as of the last day of the Plan Year in which his fifth consecutive
Break in Service occurs. Any amounts thus forfeited shall be
reallocated as provided in Article 5.
(b) If a distribution is made at a time when a
Participant has a vested right to less than 100 percent of the
value of the Participant's Account attributable to Employer
Contributions and forfeitures, as determined in accordance with the
provisions of Section 8.3 above, and the nonvested portion of the
Participant's Account has not yet been forfeited in accordance with
paragraph (a) above:
(i) a separate remainder subaccount shall be
established for the Participant's interest in the Plan as of the
time of the distribution, and
(ii) at any relevant time the Participant's vested
portion of the separate remainder subaccount shall be equal to an
amount ("X") determined by the formula:
X = P(AB + (R x D)) - (R x D).
For purposes of applying the formula: P is the vested
percentage at the relevant time; AB is the Account balance at the
relevant time; D is the amount of the distribution; and R is the
ratio of the Account balance at the relevant time to the Account
balance after distribution.
ARTICLE 9
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
9.1 General. The provisions of this Article shall apply to
any Participant who is credited with at least one (1) Hour of
Service with the Employer on or after August 23, 1984, and such
other Participants as provided in Section 9.6.
9.2 Qualified Joint and Survivor Annuity. Unless an optional
form of benefit is selected pursuant to a Qualified Election within
the ninety (90) day period ending on the Annuity Starting Date, a
married Participant's Vested Account Balance will be paid in the
form of a Qualified Joint and Survivor Annuity and an unmarried
Participant's Vested Account Balance will be paid in the form of a
life annuity. The Participant may elect to have such annuity
distributed upon attainment of the Earliest Retirement Age under
the Plan.
9.3 Qualified Preretirement Survivor Annuity. Unless an
optional form of benefit has been selected within the Election
Period pursuant to a Qualified Election, if a Participant dies
before the Annuity Starting Date, then the Participant's Vested
Account Balance shall be applied toward the purchase of an annuity
for the life of the Surviving Spouse. The Surviving Spouse may
elect to have such annuity distributed within a reasonable period
after the Participant's death.
9.4 Definitions.
(a) (i) Election Period. The period which begins on the
first day of the Plan Year in which the Participant attains age
thirty-five (35) and ends on the date of the Participant's death.
If a Participant separates from service prior to the first day of
the Plan Year in which age thirty-five (35) is attained, with
respect to the Account balance as of the date of separation, the
Election Period shall begin on the date of separation.
(ii) A Participant who has not yet attained age
thirty-five (35) as of the end of any current Plan Year may make a
special Qualified Election to waive the qualified preretirement
survivor annuity for the period beginning on the date of such
election and ending on the first day of the Plan Year in which the
Participant will attain age thirty-five (35). Such election shall
not be valid unless the Participant receives a written explanation
of the qualified preretirement survivor annuity in such terms as
are comparable to the explanation required under Section 9.5.
Qualified preretirement survivor annuity coverage will be
automatically reinstated as of the first day of the Plan Year in
which the Participant attains age thirty-five (35). Any new waiver
on or after such date shall be subject to the full requirements of
this Article.
(b) Earliest Retirement Age. The earliest date on which,
under the Plan, the Participant could elect to receive retirement
benefits.
(c) Qualified Election.
(i) A waiver of a Qualified Joint and Survivor
Annuity or a qualified preretirement survivor annuity. Any waiver
of a Qualified Joint and Survivor Annuity or a qualified
preretirement survivor annuity shall not be effective unless: (1)
the Participant's Spouse consents in writing to the election; (2)
the election designates a specific Beneficiary, including any class
of Beneficiaries or any contingent Beneficiaries, which may not be
changed without spousal consent (or the Spouse expressly permits
designations by the Participant without any further spousal
consent); (3) the Spouse's consent acknowledges the effect of the
election; and (4) the Spouse's consent is witnessed by a Plan
representative or notary public. Additionally, a Participant's
waiver of the Qualified Joint and Survivor Annuity shall not be
effective unless the election designates a form of benefit payment
which may not be changed without spousal consent (or the Spouse
expressly permits designations by the Participant without any
further spousal consent). If it is established to the satisfaction
of a Plan representative that there is no Spouse or that the Spouse
cannot be located, a waiver will be deemed a Qualified Election.
(ii) Any consent by a Spouse obtained under this
provision (or establishment that the consent of a Spouse may not be
obtained) shall be effective only with respect to such Spouse. A
consent that permits designations by the Participant without any
requirement of further consent by such Spouse must acknowledge that
the Spouse has the right to limit consent to a specific
Beneficiary, and a specific form of benefit where applicable, and
that the Spouse voluntarily elects to relinquish either or both of
such rights. A revocation of a prior waiver may be made by a
Participant without the consent of the Spouse at any time before
the commencement of benefits. The number of revocations shall not
be limited. No consent obtained under this provision shall be
valid unless the Participant has received notice as provided in
Section 9.5.
(d) Qualified Joint and Survivor Annuity. An immediate
annuity for the life of the Participant with a survivor annuity for
the life of the Spouse which equals fifty percent (50%) of the
amount of the annuity which is payable during the joint lives of
the Participant and the Spouse and which is the amount of benefit
which can be purchased with the Participant's Vested Account
Balance.
(e) Spouse (Surviving Spouse). The Spouse or Surviving
Spouse of the Participant, provided that a former spouse will be
treated as the Spouse or Surviving Spouse and a current Spouse will
not be treated as the Spouse or Surviving Spouse to the extent
provided under a qualified domestic relations order as described in
Section 414(p) of the Code.
(f) Annuity Starting Date. The first day of the first
period for which an amount is paid as an annuity or any other form.
(g) Vested Account Balance. The aggregate value of the
Participant's vested Account balances derived from Employer and
Employee contributions (including rollovers), whether vested before
or upon death, including the proceeds of insurance contracts, if
any, on the Participant's life. The provisions of this Article
shall apply to a Participant who is vested in amounts attributable
to Employer Contributions, Employee contributions (or both) at the
time of death or distribution.
9.5 Notice Requirements
(a) In the case of a Qualified Joint and Survivor
Annuity, the Plan Administrator shall no less than thirty (30) days
and no more than ninety (90) days prior to the Annuity Starting
Date, provide each Participant with a written explanation of: (i)
the terms and conditions of a Qualified Joint and Survivor Annuity;
(ii) the Participant's right to make and the effect of an election
to waive the Qualified Joint and Survivor Annuity form of benefit;
(iii) the rights of a Participant's Spouse; and (iv) the right to
make, and the effect of, a revocation of a previous election to
waive the Qualified Joint and Survivor Annuity.
(b) (i) In the case of a qualified preretirement
survivor annuity as described in Section 9.3, the Plan
Administrator shall provide each Participant within the applicable
period for such Participant a written explanation of the qualified
preretirement survivor annuity in such terms and in such manner as
would be comparable to the explanation provided for meeting the
requirements of subsection (a) applicable to a Qualified Joint and
Survivor Annuity.
(ii) The applicable period for a Participant is
whichever of the following periods ends last: (i) the period
beginning with the first day of the Plan Year in which the
Participant attains age 32 and ending with the close of the Plan
Year preceding the Plan Year in which the Participant attains age
35; (ii) a reasonable period ending after the individual becomes a
Participant; (iii) a reasonable period ending after Section 9.5(c)
ceases to apply to the Participant; (iv) a reasonable period ending
after this Article first applies to the Participant.
Notwithstanding the foregoing, notice must be provided within a
reasonable period ending after separation from service in the case
of a Participant who separates from service before attaining age
35.
For purposes of applying the preceding paragraph, a
reasonable period ending after the enumerated events described in
(ii), (iii) and (iv) is the end of the two-year period beginning
one year prior to the date the applicable event occurs, and ending
one year after that date. In the case of a Participant who
separates from service before the Plan Year in which age 35 is
attained, notice shall be provided within the two-year period
beginning one year prior to separation and ending one year after
separation. If such a Participant thereafter returns to employment
with the Employer, the applicable period for such Participant shall
be redetermined.
(c) Notwithstanding the other requirements of this
Section 9.5, the respective notices prescribed by this Section need
not be given to a Participant if (1) the plan "fully subsidizes"
the costs of a Qualified Joint and Survivor Annuity or qualified
preretirement survivor annuity, and (2) the plan does not allow the
Participant to waive the Qualified Joint and Survivor Annuity or
qualified preretirement survivor annuity and does not allow a
married Participant to designate a nonspouse beneficiary. For
purposes of this subsection, a plan fully subsidizes the costs of
a benefit if no increase in cost, or decrease in benefits to the
Participant may result from the Participant's failure to elect
another benefit.
9.6 Safe Harbor Rules.
(a) This section shall apply to a Participant in a profit
sharing plan, and to any distribution, made on or after the first
day of the first Plan year beginning after December 31, 1988, from
or under a separate account attributable solely to accumulated
deductible Employee contributions, as defined in Section
72(o)(5)(B) of the Code, and maintained on behalf of a Participant
in a money purchase pension plan (including a target benefit plan)
if the following conditions are satisfied: (i) the Participant
does not or cannot elect payments in the form of a life annuity;
and (ii) on the death of a Participant, the Participant's Vested
Account Balance will be paid to the Participant's Surviving Spouse,
but if there is no Surviving Spouse, or if the Surviving Spouse has
consented in a manner conforming to a Qualified Election, then to
the Participant's designated Beneficiary. The Surviving Spouse may
elect to have distribution of the Vested Account Balance commence
within the ninety (90) day period following the date of the
Participant's death. The Account balance shall be adjusted for
gains or losses occurring after the Participant's death in
accordance with the provisions of the Plan governing the adjustment
of Account balances for other types of distributions. This Section
shall not be operative with respect to a Participant in a profit
sharing plan if the plan is a direct or indirect transferee of a
defined benefit plan, money purchase plan, a target benefit plan,
stock bonus, or profit sharing plan which is subject to the
survivor annuity requirements of Sections 401(a)(11) and 417 of the
Code. If this Section is operative, then the provisions of this
Article 9, other than Section 9.7, shall be inoperative.
(b) The Participant may waive the spousal death benefit
described in this Section at any time provided that no such waiver
shall be effective unless it satisfies the conditions of Section
9.4(c) (other than the notification requirement referred to
therein) that would apply to the Participant's waiver of the
qualified preretirement survivor annuity.
(c) For purposes of this section, Vested Account Balance
shall mean, in the case of a money purchase pension plan or a
target benefit plan, the Participant's separate Account balance
attributable solely to accumulated deductible Employee
contributions within the meaning of Section 72(o)(5)(B) of the
Code. In the case of a profit sharing plan, Vested Account Balance
shall have the same meaning as provided in Section 9.4(g).
9.7 Transitional Rules.
(a) Any living Participant not receiving benefits on
August 23, 1984, who would otherwise not receive the benefits
prescribed by the previous sections of this Article must be given
the opportunity to elect to have the prior sections of this Article
apply if such Participant is credited with at least one (1) Hour of
Service under this Plan or a predecessor plan in a Plan Year
beginning on or after January 1, 1976, and such Participant had at
least ten (10) years of vesting service when he or she separated
from service.
(b) Any living Participant not receiving benefits on
August 23, 1984, who was credited with at least one (1) Hour of
Service under this Plan or a predecessor plan on or after September
2, 1974, and who is not otherwise credited with any service in a
Plan Year beginning on or after January 1, 1976, must be given the
opportunity to have his or her benefits paid in accordance with
Section 9.6(d) of this Article.
(c) The respective opportunities to elect (as described
in subsections (a) and (b) above) must be afforded to the
appropriate Participants during the period commencing on August 23,
1984, and ending on the date benefits would otherwise commence to
said Participants.
(d) Any Participant who has elected pursuant to
subsection (b) and any Participant who does not elect under
subsection (a) or who meets the requirements of subsection (a) of
this Section 9.7 except that such Participant does not have at
least ten (10) years of vesting service when he or she separates
from service, shall have his or her benefits distributed in
accordance with all of the following requirements if benefits would
have been payable in the form of a life annuity:
(i) Automatic Joint and Survivor Annuity. If
benefits in the form of a life annuity become payable to a married
Participant who:
(1) begins to receive payments under the Plan on
or after Normal Retirement Age; or
(2) dies on or after Normal Retirement Age while
still working for the Employer; or
(3) begins to receive payments on or after the
qualified early retirement age; or
(4) separates from service on or after attaining
Normal Retirement Age (or the qualified early
retirement age) and after satisfying the
eligibility requirements for the payment of
benefits under the Plan and thereafter dies
before beginning to receive such benefits;
then such benefits will be received under this
Plan in the form of a Qualified Joint and
Survivor Annuity, unless the Participant has
elected otherwise during the Election Period.
The Election Period must begin at least six
(6) months before the Participant attains
qualified early retirement age and end not
more than ninety (90) days before the
commencement of benefits. Any election
hereunder will be in writing and may be
changed by the Participant at any time.
(ii) Election of Early Survivor Annuity. A
Participant who is employed after attaining the qualified early
retirement age will be given the opportunity to elect, during the
Election Period, to have a survivor annuity payable on death. If
the Participant elects the survivor annuity, payments under such
annuity must not be less than the payments which would have been
made to the Spouse under the Qualified Joint and Survivor Annuity
if the Participant had retired on the day before his or her death.
Any election under this provision will be in writing and may be
changed by the Participant at any time. The Election Period begins
on the later of (1) the 90th day before the Participant attains the
qualified early retirement age; or (2) the date on which
participation begins, and ends on the date the Participant
terminates employment.
(e) The following terms shall have the meanings specified
herein:
(i) Qualified Early Retirement Age. The latest of:
(1) the earliest date, under the Plan, on
which the Participant may elect to
receive retirement benefits;
(2) the first day of the 120th month
beginning before the Participant reaches
Normal Retirement Age; or
(3) the date the Participant begins
participation.
(ii) Qualified Joint and Survivor Annuity. An
annuity for the life of the Participant with a
survivor annuity for the life of the Spouse as
described in Section 9.4(d).
ARTICLE 10
DISTRIBUTION PROVISIONS
10.1 Distribution Upon Retirement, Disability or Termination.
Subject to Articles 9, 10 and 11, a Participant shall be entitled
to receive the entire amount credited to his Account under the Plan
upon his retirement at or after Normal Retirement Age, at his Early
Retirement Date if the Adoption Agreement provides for an Early
Retirement Date or in the event of the Participant's Total and
Permanent Disability. Subject to Articles 9, 10 and 11, a
Participant shall be entitled to receive the vested portion of his
Account upon termination of employment with the Employer for any
reason.
10.2 Restrictions on Immediate Distributions.
(a) If the value of a Participant's Vested Account
Balance derived from Employer and the Employee contributions
exceeds (or at the time of any prior distribution exceeded) three
thousand five hundred dollars ($3,500) and the Account balance is
immediately distributable, the Participant and the Participant's
Spouse (or where either the Participant or the Spouse has died, the
survivor) must consent to any distribution of such Account balance.
The consent of the Participant and the Participant's Spouse shall
be obtained in writing within the ninety (90) day period ending on
the Annuity Starting Date. The Annuity Starting Date is the first
day of the first period for which an amount is paid as an annuity
or any other form. The Plan Administrator shall notify the
Participant and the Participant's Spouse of the right to defer any
distribution until the Participant's Account balance is no longer
immediately distributable. Such notification shall include a
general description of the material features, and an explanation of
the relative values of, the optional forms of benefit available
under the Plan in a manner that would satisfy the notice
requirements of Section 417(a)(3) of the Code, and shall be
provided no less than thirty (30) days and no more than ninety (90)
days prior to the Annuity Starting Date.
(b) Notwithstanding the provisions of subsection (a),
only the Participant need consent to the commencement of a
distribution in the form of a Qualified Joint and Survivor Annuity
while the Account balance is immediately distributable.
(Furthermore, if payment in the form of a Qualified Joint and
Survivor Annuity is not required with respect to the Participant
pursuant to Section 9.5 of the Plan, only the Participant need
consent to the distribution of an Account balance that is
immediately distributable). Neither the consent of the Participant
nor the Participant's Spouse shall be required to the extent that
a distribution is required to satisfy Section 401(a)(9) or Section
415 of the Code. In addition, upon termination of this Plan, if
the Plan does not offer an annuity option (purchased from a
commercial provider) and if the Employer or any entity within the
same controlled group as the Employer does not maintain another
defined contribution plan (other than an employee stock ownership
plan as defined in Section 4975(e)(7) of the Code), the
Participant's Account balance may, without the Participant's
consent, be distributed to the Participant. However, if any entity
within the same controlled group as the Employer maintains another
defined contribution plan (other than an employee stock ownership
plan as defined in Section 4975(e)(7) of the Code), then the
Participant's Account balance shall be transferred, without the
Participant's consent, to the other plan if the Participant does
not consent to an immediate distribution.
(c) An Account balance is immediately distributable if
any part of the Account balance could be distributed to the
Participant (or Surviving Spouse) before the Participant attains
(or would have attained if not deceased) the later of Normal
Retirement Age or age sixty-two (62).
(d) For purposes of determining the applicability of the
foregoing consent requirements to distributions made before the
first day of the first Plan Year beginning after December 31, 1988,
the Participant's Vested Account Balance shall not include amounts
attributable to accumulated deductible Employee contributions
within the meaning of Section 72(o)(5)(B) of the Code.
10.3 Commencement of Benefits.
(a) Unless the Participant elects otherwise, distribution
of benefits will begin no later than the 60th day after the latest
of the close of the Plan Year in which:
(i) the Participant attains age sixty-five (65)
(or Normal Retirement Age, if earlier);
(ii) the 10th anniversary of the year in which the
Participant commenced participation in the
Plan occurs; or
(iii) the Participant terminates service with
the Employer.
(b) Notwithstanding the foregoing, the failure of a
Participant and Spouse to consent to a distribution while a benefit
is immediately distributable, within the meaning of Section 10.2 of
the Plan, shall be deemed to be an election to defer commencement
of payment of any benefit sufficient to satisfy this Section.
10.4 Early Retirement With Age and Service Requirement. If
a Participant separates from service before satisfying the age
requirement for early retirement, but has satisfied the service
requirement, the Participant will be entitled to elect an early
retirement benefit upon satisfaction of such age requirement.
10.5 Nontransferability of Annuities. Any annuity contract
distributed herefrom must be nontransferable.
l0.6 Conflicts With Annuity Contracts. The terms of any
annuity contract purchased and distributed by the Plan to a
Participant or Spouse shall comply with the requirements of this
Plan.
ARTICLE 11
TIMING AND MODES OF DISTRIBUTION
11.1 General Rules.
(a) Except as otherwise provided in Article 9, the
requirements of this Article shall apply to any distribution of a
Participant's interest and will take precedence over any
inconsistent provisions of this Plan. Unless otherwise specified,
the provisions of this Article apply to calendar years beginning
after December 31, 1984.
(b) All distributions required under this Article shall
be determined and made in accordance with the income tax
regulations under Section 401(a)(9), including the minimum
distribution incidental benefit requirement of Section 1.401(a)(9)-
2 of the regulations.
11.2 Required Beginning Date. The entire interest of a
Participant must be distributed or begin to be distributed no later
than the Participant's required beginning date.
11.3 Limits on Distribution Periods. As of the first
distribution calendar year, distributions, if not made in a single-
sum, may only be made over one of the following periods (or a
combination thereof):
(a) the life of the Participant;
(b) the life of the Participant and a designated
Beneficiary;
(c) a period certain not extending beyond the life
expectancy of the Participant; or
(d) a period certain not extending beyond the joint and
last survivor expectancy of the Participant and a designated
Beneficiary.
11.4 Determination of Amounts to be Distributed Each Year.
(a) Individual Account.
(i) If a Participant's benefit is to be distributed
over (1) a period not extending beyond the life expectancy of the
Participant or the joint life and last survivor expectancy of the
Participant and the Participant's designated Beneficiary or (2) a
period not extending beyond the life expectancy of the designated
Beneficiary, the amount required to be distributed for each
calendar year, beginning with distributions for the first
distribution calendar year, must at least equal the quotient
obtained by dividing the Participant's benefit by the applicable
life expectancy.
(ii) For calendar years beginning before January 1,
1989, if the Participant's Spouse is not the designated
Beneficiary, the method of distribution selected must assure that
at least fifty percent (50%) of the present value of the amount
available for distribution is paid within the life expectancy of
the Participant.
(iii) For calendar years beginning after December
31, 1988, the amount to be distributed each year, beginning with
distributions for the first distribution calendar year shall not be
less than the quotient obtained by dividing the Participant's
benefit by the lesser of (1) the applicable life expectancy or (2)
if the Participant's Spouse is not the designated Beneficiary, the
applicable divisor determined from the table set forth in Q&A-4 of
Section 1.401(a)(9)-2 of the Proposed Regulations. Distributions
after the death of the Participant shall be distributed using the
applicable life expectancy in subsection (a)(i) above as the
relevant divisor without regard to Proposed Regulations Section
1.401(a)(9)-2.
(iv) The minimum distribution required for the
Participant's first distribution calendar year must be made on or
before the Participant's required beginning date. The minimum
distribution for other calendar years, including the minimum
distribution for the distribution calendar year in which the
Employee's required beginning date occurs, must be made on or
before December 31 of that distribution calendar year.
(b) Other Forms. If the Participant's benefit is
distributed in the form of an annuity purchased from an insurance
company, distributions thereunder shall be made in accordance with
the requirements of Section 401(a)(9) of the Code and the
regulations thereunder.
11.5 Death Distribution Provisions.
(a) Distribution Beginning Before Death. If the
Participant dies after distribution of his or her interest has
begun, the remaining portion of such interest will continue to be
distributed at least as rapidly as under the method of distribution
being used prior to the Participant's death.
(b) Distribution Beginning After Death. If the
Participant dies before distribution of his or her interest
begins, distribution of the Participant's entire interest shall be
completed by December 31 of the calendar year containing the fifth
anniversary of the Participant's death except to the extent that an
election is made to receive distributions in accordance with (i) or
(ii) below:
(i) if any portion of the Participant's interest is
payable to a designated Beneficiary, distributions may be made over
the life or over a period certain not greater than the life
expectancy of the designated Beneficiary commencing on or before
December 31 of the calendar year immediately following the calendar
year in which the Participant died;
(ii) if the designated Beneficiary is the
Participant's surviving Spouse, the date distributions are
required to begin in accordance with (i) above shall not be earlier
than the later of (1) December 31 of the calendar year immediately
following the calendar year in which the Participant died and (2)
December 31 of the calendar year in which the Participant would
have attained age seventy and one-half (70-l/2).
(c) If the Participant has not made an election pursuant
to this Section by the time of his or her death, the Participant's
designated Beneficiary must elect the method of distribution no
later than the earlier of (1) December 31 of the calendar year in
which distributions would be required to begin under this Section;
or (2) December 31 of the calendar year which contains the fifth
anniversary of the date of death of the Participant. If the
Participant has no designated Beneficiary, or if the designated
Beneficiary does not elect a method of distribution, distribution
of the Participant's entire interest must be completed by December
31 of the calendar year containing the fifth anniversary of the
Participant's death.
(d) For purposes of subsection (b) above, if the
surviving Spouse dies after the Participant, but before payments to
such Spouse begin, the provisions of subsection (b), with the
exception of paragraph (ii) therein, shall be applied as if the
surviving Spouse were the Participant.
(e) For purposes of this Section, any amount paid to a
child of the Participant will be treated as if it had been paid to
the surviving Spouse if the amount becomes payable to the surviving
Spouse when the child reaches the age of majority.
(f) For the purposes of this Section, distribution of a
Participant's interest is considered to begin on the Participant's
required beginning date (or, if subsection (d) above is applicable,
the date distribution is required to begin to the surviving Spouse
pursuant to subsection (b) above). If distribution in the form of
an annuity described in Section 11.4(b) above irrevocably commences
to the Participant before the required beginning date, the date
distribution is considered to begin is the date distribution
actually commences.
11.6 Designation of Beneficiary. Subject to the rules of
Article 9, a Participant (or former Participant) may designate from
time to time any person or persons (who may be designated
contingently or successively and may be an entity other than a
natural person) as his Beneficiary who will be entitled to receive
any undistributed amounts credited to the Participant's separate
Account under the Plan at the time of the Participant's death. Any
such Beneficiary designation by a Participant shall be made in
writing in the manner prescribed by the Plan Administrator, and
shall be effective only when filed with the Plan Administrator
during the Participant's lifetime. A Participant may change or
revoke his Beneficiary designation at any time in the manner
prescribed by the Plan Administrator. If any portion of the
Participant's Account is invested in insurance pursuant to Article
14, the Beneficiary of the benefits under the insurance policy
shall be the person or persons designated under the policy. If the
designated Beneficiary (or each of the designated Beneficiaries)
predeceases the Participant, the Participant's Beneficiary
designation shall be ineffective. If no Beneficiary designation is
in effect at the time of the Participant's death, his Beneficiary
shall be his estate.
11.7 Definitions.
(a) Applicable Life Expectancy. The life expectancy (or
joint and last survivor expectancy) calculated using the attained
age of the Participant (or designated Beneficiary) as of the
Participant's (or designated Beneficiary's) birthday in the
applicable calendar year reduced by one (1) for each calendar year
which has elapsed since the date life expectancy was first
calculated. If life expectancy is being recalculated, the
applicable life expectancy shall be the life expectancy as so
recalculated. The applicable calendar year shall be the first
distribution calendar year, and if life expectancy is being
recalculated such succeeding calendar year. If annuity payments
commence in accordance with Section 11.4(b) before the required
beginning date, the applicable calendar year is the year such
payments commence. If distribution is in the form of an immediate
annuity purchased after the Participant's death with the
Participant's remaining interest, the applicable calendar year is
the year of purchase.
(b) Designated Beneficiary. The individual who is
designated as the Beneficiary under the Plan in accordance with
Section 401(a)(9) and the regulations thereunder.
(c) Distribution Calendar Year. A calendar year for
which a minimum distribution is required. For distributions
beginning before the Participant's death, the first distribution
calendar year is the calendar year immediately preceding the
calendar year which contains the Participant's required beginning
date. For distributions beginning after the Participant's death,
the first distribution calendar year is the calendar year in which
distributions are required to begin pursuant to Section 11.5 above.
(d) Life Expectancy.
(i) Life expectancy and joint and last survivor
expectancy are computed by use of the expected return multiples in
Tables V and VI of Section 1.72-9 of the income tax regulations.
(ii) Unless otherwise elected by the Participant (or
Spouse, in the case of distributions described in Section
11.5(b)(ii) above) by the time distributions are required to begin,
life expectancies shall be recalculated annually. Such election
shall be irrevocable as to the Participant (or Spouse) and shall
apply to all subsequent years. The life expectancy of a non-Spouse
Beneficiary may not be recalculated.
(e) Participant's Benefit.
(i) The Account balance as of the last valuation
date in the calendar year immediately preceding the distribution
calendar year (valuation calendar year) increased by the amount of
any contributions or forfeitures allocated to the Account balance
as of dates in the valuation calendar year after the valuation date
and decreased by distributions made in the valuation calendar year
after the valuation date.
(ii) For purposes of subsection (i) above, if any
portion of the minimum distribution for the first distribution
calendar year is made in the second distribution calendar year on
or before the required beginning date, the amount of the minimum
distribution made in the second distribution calendar year shall
be treated as if it had been made in the immediately preceding
distribution calendar year.
(f) Required Beginning Date.
(i) General Rule. The required beginning date of a
Participant is the first day of April of the calendar year
following the calendar year in which the Participant attains age
seventy and one-half (70-1/2).
(ii) Transitional Rules. The required beginning
date of a Participant who attains age seventy and one-half (70-1/2)
before January 1, 1988, shall be determined in accordance with (1)
or (2) below:
(1) Non-Five Percent Owners. The required
beginning date of a Participant who is not a five percent (5%)
owner is the first day of April of the calendar year following the
calendar year in which the later of retirement or attainment of age
seventy and one-half (70 l/2) occurs.
(2) Five Percent Owners. The required
beginning date of a Participant who is a five percent (5%) owner
during any year beginning after December 31, 1979, is the first day
of April following the later of:
(A) the calendar year in which the Participant
attains age seventy and one-half (70 l/2); or
(B) the earlier of the calendar year with or
within which ends the Plan Year in which the Participant becomes a
five percent (5%) owner, or the calendar year in which the
Participant retires.
The required beginning date of a Participant who is not a five
percent (5%) owner who attains age seventy and one-half (70 l/2)
during l988 and who has not retired as of January l, 1989, is April
l, 1990.
(iii) Five Percent Owner. A Participant is treated
as a five percent (5%) owner for purposes of this Section if such
Participant is a five percent (5%) owner as defined in Section
416(i) of the Code (determined in accordance with Section 4l6 but
without regard to whether the Plan is top-heavy) at any time during
the Plan Year ending with or within the calendar year in which such
owner attains age sixty-six and one-half (66 l/2) or any subsequent
year.
(iv) Once distributions have begun to a five percent
(5%) owner under this Section, they must continue to be
distributed, even if the Participant ceases to be a five percent
(5%) owner in a subsequent year.
11.8 Transitional Rule.
(a) Notwithstanding the other requirements of this
Article and subject to the requirements of Article 9, distribution
on behalf of any Employee, including a five percent (5%) owner, may
be made in accordance with all of the following requirements
(regardless of when such distribution commences):
(i) The distribution by the Trust is one which would
not have disqualified such trust under Section 401(a)(9) of the
Internal Revenue Code as in effect prior to amendment by the
Deficit Reduction Act of 1984.
(ii) The distribution is in accordance with a method
of distribution designated by the Employee whose interest in the
Trust is being distributed or, if the Employee is deceased, by a
Beneficiary of such Employee.
(iii) Such designation was in writing, was signed by
the Employee or the Beneficiary, and was made before January l,
1984.
(iv) The Employee had accrued a benefit under the
Plan as of December 31, 1983.
(v) The method of distribution designated by the
Employee or the Beneficiary specifies the time at which
distributions will be made and in the case of any distribution upon
the Employee's death, the Beneficiaries of the Employee listed in
order of priority.
(b) A distribution upon death will not be covered by this
transitional rule unless the information in the designation
contains the required information described above with respect to
the distributions to be made upon the death of the Employee.
(c) For any distribution which commences before January
1, 1984, but continues after December 31, 1983, the Employee, or
the Beneficiary, to whom such distribution is being made, will be
presumed to have designated the method of distribution under which
the distribution is being made if the method of distribution was
specified in writing and the distribution satisfies the
requirements in subsections (a)(i) and (a)(v).
(d) If a designation is revoked, any subsequent
distribution must satisfy the requirements of Section 401(a)(9) of
the Code and the regulations thereunder. If a designation is
revoked subsequent to the date distributions are required to begin,
the Trust must distribute by the end of the calendar year following
the calendar year in which the revocation occurs the total amount
not yet distributed which would have been required to have been
distributed to satisfy Section 40l(a)(9) of the Code and the
regulations thereunder but for the Section 242(b)(2) election. For
calendar years beginning after December 31, 1988, such
distributions must meet the minimum distribution incidental benefit
requirements in Section l.401(a)(9)-2 of the income tax
regulations. Any changes in the designation will be considered to
be a revocation of the designation. However, the mere substitution
or addition of another beneficiary (one not named in the
designation) under the designation will not be considered to be a
revocation of the designation, so long as such substitution or
addition does not alter the period over which distributions are to
be made under the designation, directly or indirectly (for example,
by altering the relevant measuring life). In the case in which an
amount is transferred or rolled over from one plan to another plan,
the rules in Q&A J-2 and Q&A J-3 shall apply.
11.9 Optional Forms of Benefit.
(a) Except to the extent benefits are required to be paid
in the form of an automatic joint and survivor annuity under
Article 9, any amount which a Participant shall be entitled to
receive under the Plan shall be distributed in one or a combination
of the following ways:
(i) in a lump-sum payment of cash, the amount of
which shall be determined by redeeming all Shares credited to the
Participant's Account under the Plan as of the date of
distribution;
(ii) in a lump-sum payment including a distribution
in kind of all Shares credited to the Participant's Account under
the Plan as of the date of distribution;
(iii) in substantially equal monthly, quarterly, or
annual installment payments of cash, or the distribution of Shares
in kind, over a period certain not to exceed the life expectancy of
the Participant or the joint and last survivor life expectancy of
the Participant and his Beneficiary, determined in each case as of
the earlier of: (l) the end of the Plan Year in which occurs the
event entitling the Participant to a distribution of benefits, or
(2) the date such installments commence;
(iv) if permitted by the Sponsor, in monthly,
quarterly, or annual installment payments of cash, or the
distribution of Shares in kind, so that the amount distributed in
each Plan Year equals the quotient obtained by dividing the
Participant's Account at the beginning of that Plan Year by the
joint and last survivor life expectancy of the Participant and the
Beneficiary for that Plan year. The life expectancy will be
computed using the recomputation method described in Section
II.7(d). Unless the Spouse of the retired Participant is the
Beneficiary, the actuarial present value of all expected payments
to the retired Participant must be more than fifty percent (50%) of
the actuarial present value of payments to the retired Participant
and the Beneficiary;
(v) by application of the Participant's vested
Account to the purchase of a nontransferable immediate or deferred
annuity contract, on an individual or group basis. Unless the
Spouse of the retired Participant is the Beneficiary, the actuarial
present value of all expected payments to the retired Participant
must be more than fifty percent (50%) of the actuarial present
value of payments to the retired Participant and the Beneficiary.
(b) Notwithstanding any other provision of this Plan to
the contrary, if the Participant's Vested Account Balance exceeds
three thousand five hundred dollars ($3,500) the Plan Administrator
may make an immediate distribution of the Participant's Account
during Plan Years beginning after 1984 only if the Participant (or
if married, the Participant and Spouse, or where the Participant
has died, the surviving Spouse) consents in writing to
distribution.
(c) If the Participant fails to select a method of
distribution, except as may be required by Article 9, all amounts
which he is entitled to receive under the Plan shall be distributed
to him in a lump-sum payment.
ARTICLE 12
WITHDRAWALS
12.1 Withdrawal of Nondeductible Voluntary Contributions.
Subject to the qualified election requirements of the survivor
annuity rules of Article 9 and also subject to Section 12.3, any
Participant who has made nondeductible voluntary contributions may,
upon thirty (30) days notice in writing filed with the plan
Administrator, have paid to him all or any portion of the fair
market value of his nondeductible voluntary contribution
subaccount.
12.2 Hardship Withdrawals. If the Adoption Agreement so
provides and the Employer elects, this Section applies only to the
profit sharing contribution subaccount and only if the profit
sharing allocation formula selected in the Adoption Agreement is
not integrated with Social Security.
(a) Demonstration of Need. Subject to the qualified
election requirements of the survivor annuity rules of Article 9
and also subject to Section 12.3, if a Participant establishes an
immediate and heavy financial need for funds because of a hardship
resulting from the purchase or renovation of a primary residence,
the education of the Participant or a member of his immediate
family (including special education), the medical or personal
expenses of the Participant or a member of his immediate family, or
other demonstrable emergency as determined by the Plan
Administrator on a uniform and nondiscriminatory basis, the
Participant shall be permitted, subject to the limitations of
subsection (b) below, to make a hardship withdrawal of an amount
credited to his profit-sharing contribution subaccount under the
Plan.
(b) Amount of Hardship Withdrawal. The amount of any
hardship withdrawal by a Participant under subsection (a) above
shall not exceed the amount required to meet the immediate
financial need created by the hardship and not reasonably available
from other resources of the Participant.
(c) Prior Withdrawal of Nondeductible Voluntary
Participant Contributions. A Participant shall not be permitted to
make a hardship withdrawal under subsection (a) above unless he has
already withdrawn, in accordance with Section 12.l, any amount
credited to his nondeductible voluntary contributions subaccount.
l2.3 Manner of Making Withdrawals. Any withdrawal by a
Participant under the Plan shall be made only after the Participant
files a written request with the Plan Administrator specifying the
nature of the withdrawal (and the reasons therefor, if a hardship
withdrawal), and the amount of funds requested to be withdrawn.
Upon approving any withdrawal, the Plan Administrator shall furnish
the Trustee with written instructions directing the Trustee to make
the withdrawal in a lump sum payment of cash to the Participant.
In making any withdrawal payment, the Trustee shall be fully
entitled to rely on the instructions furnished by the Plan
Administrator, and shall be under no duty to make any inquiry or
investigation with respect thereto. If the Participant is married,
his spouse must consent to the withdrawal pursuant to a qualified
election (as defined in Section 9.4(c)) within the 90-day period
ending on the date of withdrawal.
12.4 Limitations on Withdrawals. The Plan Administrator may
prescribe uniform and nondiscriminatory rules and procedures
limiting the number of times a Participant may make a withdrawal
under the Plan during any Plan Year, and the minimum amount a
Participant may withdraw on any single occasion.
ARTICLE 13
LOANS
13.1 Amount of Loan.
(a) If the Adoption Agreement so provides and the
Employer elects to allocate or permits Participants to allocate a
portion of their Accounts to Participant loans, such loans shall be
made available to all Participants and Beneficiaries on a
reasonably equivalent basis. Loans shall be made only upon receipt
of a written request from the Participant in accordance with the
provisions of this Article 13. Unless the provisions of Section
9.6 apply, such request must be accompanied by a written consent of
the Participant's spouse, if any. Spousal consent shall be
obtained no earlier than the beginning of the 90-day period that
ends on the date on which the Participant's Account is pledged as
security for the loan. The consent must be in writing, must
acknowledge the effect of the loan, and must be witnessed by a Plan
representative or notary public. Such consent shall thereafter be
binding with respect to the consenting spouse or any subsequent
spouse with respect to that loan. A new consent shall be required
if the Participant's Account balance is used for renegotiation,
extension, renewal, or other revision of the loan. If a valid
spousal consent has been obtained, then, notwithstanding any other
provision of this Plan, the portion of the Participant's vested
Account balance used as a security interest held by the Plan by
reason of a loan outstanding to the Participant shall be taken into
Account for purposes of determining the amount of the Account
balance payable at the time of death or distribution, but only if
the reduction is used as repayment of the loan. If less than 100%
of the Participant's vested Account balance (determined without
regard to the preceding sentence) is payable to the Surviving
Spouse, then the Account balance shall be adjusted by first
reducing the vested Account balance by the amount of the security
used as repayment of the loan, and then determining the benefit
payable to the Surviving Spouse. Notwithstanding any other
provision of this Article 13, no loan will be made to any Owner-
Employee or to any shareholder-employee. For purposes of this
requirement, a shareholder- employee means an employee or officer
of an electing small business (Subchapter S) corporation who owns
(or is considered as owning within the meaning of Section 318(a)(i)
of the Code, on any day during the taxable year of such
corporation), more than five percent of the outstanding stock of
the corporation. Loans shall not be made to Highly Compensated
Employees in an amount greater than the amount made available to
other Employees.
(b) No loan to any Participant or Beneficiary can be made
to the extent that such loan when added to the outstanding balance
of all other loans to the Participant or Beneficiary would exceed
the lesser of (a) $50,000 reduced by the excess (if any) of the
highest outstanding balance of loans during the one year period
ending on the day before the loan is made, over the outstanding
balance of loans from the Plan on the date the loan is made, or (b)
one-half the present value of the nonforfeitable Accrued benefit of
the Participant. An assignment or pledge of any portion of the
Participant's interest in the Plan and a loan, pledge or assignment
with respect to any insurance
contract purchased under the Plan, will be treated as a loan under
this paragraph. For purposes of the above limitation, all loans
from plans of the Affiliated Employers shall be aggregated.
13.2 Manner of Making Loans. A request by a Participant for
a loan shall be made in writing to the Plan Administrator and shall
specify the amount of the loan, and the subaccount(s) or Shares of
the Participant from which the loan should be made. The terms and
conditions on which the Plan Administrator shall approve loans
under the Plan shall be applied on a uniform and nondiscriminatory
basis with respect to all Participants. If a Participant's request
for a loan is approved by the Plan Administrator, the Plan
Administrator shall furnish the Trustee with written instructions
directing the Trustee to make the loan in a lump sum payment of
cash to the Participant. In making any loan payment under this
Article 13, the Trustee shall be fully entitled to rely on the
instructions furnished by the Plan Administrator, and shall be
under no duty to make any inquiry or investigation with respect
thereto.
13.3 Terms of Loan. Loans shall be made on such terms and
subject to such limitations as the Plan Administrator may prescribe
provided that any such loan shall be evidenced by a written note,
shall bear a reasonable rate of interest on the unpaid principal
thereof, shall be adequately secured, and shall be repaid (both
principal and interest), not less frequently than quarterly, by the
Participant over a period not to exceed five (5) years, unless such
loan is solely for the purpose of acquiring a dwelling unit which,
within a reasonable time (determined when the loan is made) will be
used as the principal residence of the Participant. The rate of
interest to be charged shall not violate any applicable usury law,
and shall be a rate determined by the Employer in accordance with
the rates quoted by representative financial institutions in the
local area for similar loans.
13.4 Security for Loan. Any loan to a Participant under the
Plan shall be secured by the pledge of all the Participant's right,
title, and interest in the Trust. Such pledge shall be evidenced
by the execution of a promissory note by the Participant which
shall provide that, in the event of any default by the Participant
on a loan repayment, the Plan Administrator shall be authorized (to
the extent permitted by law) to deduct the amount of the loan
outstanding and any unpaid interest due thereon from the
Participant's wages or salary to be thereafter paid by the
Employer, and to take any and all other actions necessary and
appropriate to enforce collection of the unpaid loan. In the event
the value of the Participant's vested Account at any time is less
than 125 percent of the outstanding loan balance, the Plan
Administrator may request additional collateral of sufficient value
to adequately secure the repayment of the loan. Failure to provide
such additional collateral upon a request of the Plan Administrator
shall constitute an event of default.
13.5 Segregated Investment. Loans shall be considered a
Participant directed investment and for the limited purposes of
allocating earnings and losses pursuant to Article 5 shall not be
considered a part of the common fund under the Trust.
13.6 Repayment of Loan. The Plan Administrator shall have
the sole responsibility for ensuring that a Participant timely
makes all loan repayments, and for notifying the Trustee in the
event of any default by the Participant on the loan. Each loan
repayment shall be paid to the Trustee, and shall be accompanied by
written instructions from the Plan Administrator that identify the
Participant on whose behalf the loan repayment is being made.
13.7 Default on Loan. In the event of a termination of the
Participant's employment with the Affiliated Employers or a default
by a Participant on a loan repayment, all remaining payments on the
loan shall be immediately due and payable. The Employer shall,
upon the direction of the Plan Administrator, to the extent
permitted by law, deduct the total amount of the loan outstanding
and any unpaid interest due thereon from the wages or salaries
payable to the Participant by the Employer in accordance with the
Participant's promissory note. In addition, the Plan Administrator
shall take any and all other actions necessary and appropriate to
enforce collection of the unpaid loan. However, attachment of the
Participant's Account pledged as security will not occur until a
distributable event occurs under the Plan.
13.8 Unpaid Amounts. Upon the occurrence of a Participant's
retirement or death, or upon a Participant's fifth Break in Service
or earlier distribution, the unpaid balance of any loan, including
any unpaid interest, shall be deducted from any payment or
distribution from the Trust to which such Participant or his
Beneficiary may be entitled and his vested interest in his Account
shall be reduced. If after charging the Participant's Account with
the unpaid balance of the loan, including any unpaid interest,
there still remains an unpaid balance of any such loan and
interest, then the remaining unpaid balance of such loan and
interest shall be charged against any property pledged as security
with respect to such loan.
ARTICLE 14
INSURANCE
14.1 Insurance. If the Adoption Agreement so provides and
the Employer elects to allocate or permit Participants to allocate
a portion of their Accounts to purchase life insurance, the ensuing
subsections of this Article shall apply.
14.2 Policies. The Plan Administrator shall instruct the
Trustee to procure one or more life insurance policies on the
Participant's life, the terms of which shall conform to the
requirements of the Plan and the Code. The policies and the
companies which write them shall be subject to the approval of the
Plan Administrator and the Trustee. The Trustee shall procure and
hold such policies in its name or the name of a nominee who shall
act solely as agent for the Trustee and pursuant to the directions
of the Trustee. The Trustee shall be the sole owner of all
contracts purchased hereunder, and it shall be so designated in
each policy and application therefor.
14.3 Beneficiary. The Participant shall have the right to
name the Beneficiary and to choose the benefit option under the
policy for the Beneficiary. Notwithstanding the foregoing, a
Participant's spouse shall be the designated beneficiary of the
proceeds in all circumstances unless a Qualified Election has been
made in accordance with Section 9.4(c), if applicable. The
Trustee shall designate the Beneficiary of all such policies in
accordance with the written directions of the Plan Administrator
and the policy terms. Such designation may be outlined in the
original application as forwarded to the issuing company. However,
the Plan Administrator shall have available and shall furnish the
Participant with the necessary forms for any Beneficiary
designation or change of Beneficiary and it will keep a copy of all
executed designations as a part of its records.
Upon a Participant's death, the Plan Administrator will promptly
furnish the Trustee a copy of the last designation and shall
authorize the Trustee to complete such forms as the insurance
company may require in order to effect the benefit option. Under no
circumstances shall the Trust retain any part of the insurance
proceeds.
14.4 Payment of Premiums. Subject to the provisions of
Sections 7.3 and 14.5, premium payments to the insurer may be made
only by the Trustee with respect to any insurance policy purchased
on behalf of a Participant and shall constitute first an investment
of a portion of the funds of the Participant's Employer
Contribution subaccounts up to the maximum amount of such
subaccounts permitted to be applied toward such premium payments,
as provided in Section 14.5 hereof. If a Participant's subaccounts
lack sufficient assets to pay premiums on a life insurance policy
due on his behalf, the Trustee, at the direction of the Plan
Administrator, acting upon the request of the Participant, shall
borrow under the policy loan provisions, if any, the amount
necessary to pay such premiums, using the cash value of the
insurance as security, or the Trustee may liquidate assets held in
the Participant's Account, in the same order, of sufficient value
to pay such premiums. Any loans shall be repaid by the application
of earnings, contributions, or forfeitures to the Account of the
Participant insured by such policy. In the absence of the Plan
Administrator's direction to borrow or to liquidate assets to pay
premiums, the life insurance policy shall be put on a paid-up basis
or, if it has no cash value, cancelled.
14.5 Limitation on Insurance Premiums. The Trustee shall not
pay, nor shall anyone on behalf of the Trustee pay, any life
insurance premium for any Participant out of the Participant's
Employer Contribution subaccounts unless the amount of such
payment, plus all premiums previously so paid on behalf of the
Participant, is less than fifty percent (50%) of the Employer
Contributions and forfeitures allocated to the Participant's
Employer Contribution subaccounts as determined on the date such
premium is paid with respect to reserve life insurance policies and
shall be less than twenty-five percent (25%) thereof with respect
to non-reserve (term) policies, universal life insurance contracts,
and all other life insurance contracts which are not reserve life
insurance contracts or, if both reserve life and non-reserve
insurance are purchased on the life of any Participant, the sum of
the term insurance premium plus one-half of the reserve life
premiums may not exceed twenty-five percent (25%) of the Employer
Contributions made on behalf of such Participant. For purposes of
these incidental insurance provisions, reserve life insurance
contracts are contracts with both nondecreasing death benefits and
nonincreasing premiums. Dividends received on life insurance
policies shall be considered a reduction of premiums paid in such
computations.
If payment of premiums on a Participant's life insurance
policy is prohibited because of the limitation, the Trustee, as
directed by the Plan Administrator, shall permit the Participant to
maintain that part of the coverage made available by the prohibited
premiums, either by payment of the amount of the prohibited
premium by the Participant from sources other than the Trust or by
distributing the policy to the extent of the Participant's vested
interest to the Participant and eliminating it from the Trust.
Nothing contained in the foregoing provisions of Section
14.4 and this Section 14.5 shall be deemed to authorize the payment
of any premium or premiums for any Participant which would result
in a failure to maintain any mandatory investment in Shares
required by the Sponsor in the Account or subaccounts of any such
Participant.
14.6 Insurance Company. No insurance company which may issue
any policies for the purposes of this Plan shall be required to
take or permit any action contrary to the provisions of said
policies, nor shall such insurance company be deemed to be a party
to, or responsible for the validity of, this Plan for any purpose.
No such insurance company shall be required to look into the terms
of this Plan or question any action of the Trustee hereunder, nor
be responsible to see that any action of the Trustee is authorized
by the terms of this Plan. Any such issuing insurance company
shall be fully discharged from any and all liability for any amount
paid to the Trustee or paid in accordance with the direction of the
Trustee, as the case may be, or for any change made or action taken
by such insurance company upon such direction; and no such
insurance company shall be obliged to see the distribution or
further application of any monies paid by it. The certificate of
the Trustee signed by one of its trust officers, assistant
secretary, or other authorized representative thereof may be
received by any insurance company as conclusive evidence of any of
the matters mentioned in this Plan, and any insurance company shall
be fully protected in taking or permitting any action on the faith
thereof and shall incur no liability or responsibility for so
doing.
14.7 Distribution of Policies. Upon a Participant's death,
the Trustee, upon direction of the Administrator, shall procure the
payment of the proceeds of any policy held by the Participant in
accordance with its terms and this Plan. The Trustee shall be
required to pay over all the proceeds of any policy to the
Participant's designated Beneficiary in accordance with the
distribution provisions of this Plan. A Participant's spouse will
be the designated beneficiary unless a qualified election has been
made in accordance with Section 9.4(c) of the Plan. Under no
circumstances shall the Trust retain any part of the proceeds.
Subject to the joint and survivor annuity requirements of Article
9, the policies shall be converted or distributed upon commencement
of benefits in accordance with the provisions of this Section 14.7.
Upon a Participant's retirement at or after his Normal Retirement
Date, unless there is a single sum distribution in which case any
policy shall be distributed, any such policy shall be converted to
a paid-up contract and delivered to the Participant but the
Administrator may, with the Participant's consent, direct that a
portion or all of such cash value of the policy be converted to
provide retirement income as permitted within the terms of the
policy and this Plan. Upon a Participant's retirement due to Total
and Permanent Disability, any such policy shall be held for his
account and assigned or delivered to the Participant in addition to
any other benefits provided by this Plan. Upon a Participant's
termination of employment for reasons other than death, Total and
Permanent Disability, or retirement as stated above, to the extent
of life insurance purchased by Employer contributions, he shall be
entitled to a vested interest in any policy held for his account as
his interest is vested in the remainder of his Employer
Contribution subaccounts (exclusive of any such policy). Whenever
the Participant is entitled to one-hundred percent (100%) vesting,
then such policy shall be assigned and delivered to the Participant
in accordance with its terms and the terms of the Plan. Whenever
the Participant is entitled to a vesting of less than one-hundred
percent (100%), then the Participant shall be entitled to a vested
interest of the cash surrender value of any such policy equal to
his percentage vested interest in his Employer Contribution
subaccounts, exclusive of the policy, and one of the following
distribution procedures shall apply:
(a) If the nonvested portion of the cash surrender value
of all policies held for the Participant's Account is less than the
amount of his vested termination benefit exclusive of the policies,
then, such policy shall be assigned to the Participant and the
remainder of the Participant's vested interest in the
Participant's Employer Contribution subaccounts shall be reduced by
the cash surrender value of the nonvested portion of all policies,
after which it shall be paid or distributed to the Participant in
accordance with the terms of the Plan; or
(b) If the nonvested portion of the cash surrender value
of all policies held for the Participant's Account exceeds the
Participant's vested interest in the Employer Contribution
subaccount exclusive of such policies, the Participant shall be
given the opportunity to purchase such policies by paying to the
Trustee the amount of such excess within thirty (30) days after
notice to him of the amount to be paid. Upon receipt of such
payment said policy shall be assigned and delivered to the
Participant to the full satisfaction of all termination benefits
under this Plan. Any such policy not so purchased shall be
surrendered by the Trustee for its cash value and the proceeds
thereof deposited in the Trust for reallocation pursuant to Article
5.
It is the intention hereof that the total termination
benefit of a Participant whose interest is not fully vested shall
be equal to the sum of the vested percentage of his Employer
Contribution subaccounts exclusive of all such policies and the
same percentage of the cash value of all such policies held for his
Account. To the extent possible under the foregoing provisions
such total termination benefits shall be satisfied by the transfer
and delivery to the Participant of one or more such policies with
the balance, if any, to be paid in cash or in kind.
14.8 Policy Features. The Trustee shall arrange, where
possible, that all policies purchased for the benefit of a
Participant shall have the same dividend option which shall be on
the premium reduction plan, and as nearly as may be possible all
policies issued under the Plan shall have the same anniversary
date. To the extent any dividends or credits earned on insurance
policies are not applied toward the next premiums due, they shall
be allocated to the Participant's Employer Contribution subaccount
in the same manner as a Participant directed investment.
14.9 Changed Conditions. From time to time because of
changed conditions, the Trustee, acting at the direction of the
Plan Administrator upon the election of the Participant concerned,
shall obtain an additional contract or policy or make such change
in the contracts or policies maintained by the Trustee on the life
of the Participant as may be required by such changed conditions,
within the limits permitted by the insurance company which issued
or is requested to issue a contract and the limits established by
this Plan.
14.10 Conflicts. In the event of any conflict between the
terms of the Plan and the provisions of any contract issued
hereunder, the terms of the Plan shall control.
ARTICLE 15
ADMINISTRATION
15.1 Duties and Responsibilities of Fiduciaries; Allocation
of Fiduciary Responsibility. A fiduciary to the Plan shall have
only those specific powers, duties, responsibilities, and
obligations as are explicitly given him under the Plan and Trust
Agreement. In general, the Employer shall have the sole
responsibility for making contributions to the Plan required under
Article 4; appointing the Trustee and the Plan Administrator; and
determining the funds available for investment under the Plan. The
Plan Administrator shall have the sole responsibility for the
administration of the Plan, as more fully described in Section
15.2. It is intended that each fiduciary shall be responsible only
for the proper exercise of his own powers, duties,
responsibilities, and obligations under the Plan and Trust
Agreement, and shall not be responsible for any act or failure to
act of another fiduciary. A fiduciary may serve in more than one
fiduciary capacity with respect to the Plan.
15.2 Powers and Responsibilities of the Plan Administrator.
(a) Administration of the Plan. The Plan Administrator
shall have all powers necessary to administer the Plan, including
the power to construe and interpret the Plan documents; to decide
all questions relating to an individual's eligibility to
participate in the Plan; to approve and insure the repayment of any
loan to a Participant under the Plan; to resolve any claim for
benefits in accordance with Section 15.6; and to appoint or employ
advisors, including legal counsel, to render advice with respect to
any of the Plan Administrator's responsibilities under the Plan.
Any construction, interpretation, or application of the Plan by the
Plan Administrator shall be final, conclusive, and binding. All
actions by the Plan Administrator shall be taken pursuant to
uniform standards applied to all persons similarly situated. The
Plan Administrator shall have no power to add to, subtract from, or
modify any of the terms of the Plan, or to change or add to any
benefits provided by the Plan, or to waive or fail to apply any
requirements of eligibility for a benefit under the Plan.
(b) Records and Reports. The Plan Administrator shall
be responsible for maintaining sufficient records to reflect the
eligibility computation periods in which an Employee is credited
with one or more Years of Service for purposes of determining his
eligibility to participate in the Plan, and the Compensation of
each Participant for purposes of determining the amount of
contributions that may be made by or on behalf of the Participant
under the Plan. The Plan Administrator shall be responsible for
submitting all required reports and notifications relating to the
Plan to Participants or their Beneficiaries, the Internal Revenue
Service and the Department of Labor.
(c) Furnishing Trustee with Instructions. The Plan
Administrator shall be responsible for furnishing the Trustee with
written instructions regarding all contributions to the Trust, all
distributions to Participants in accordance with Article 10, all
withdrawals by Participants in accordance with Article 12, all
loans to Participants in accordance with Article 13, and all
purchases of life insurance in accordance with Article 14. In
addition, the Plan Administrator shall be responsible for
furnishing the Trustee with any further information respecting the
Plan which the Trustee may request for the performance of its
duties or for the purpose of making any returns to the Internal
Revenue Service or Department of Labor as may be required of the
Trustee.
(d) Rules and Decisions. The Plan Administrator may
adopt such rules as it deems necessary, desirable, or appropriate
in the administration of the Plan. All rules and decisions of the
Plan Administrator shall be applied uniformly and consistently to
all Participants in similar circumstances. When making a
determination or calculation, the Plan Administrator shall be
entitled to rely upon information furnished by a Participant or
Beneficiary, the Employer, the legal counsel of the Employer, or
the Trustee.
(e) Application and Forms for Benefits. The Plan
Administrator may require a Participant or Beneficiary to complete
and file with it an application for a benefit, and to furnish all
pertinent information requested by it. The Plan Administrator may
rely upon all such information so furnished to it, including the
Participant's or Beneficiary's current mailing address.
(f) Facility of Payment. Whenever, in the Plan
Administrator's opinion, a person entitled to receive a payment of
a benefit or installment thereof is under a legal disability or is
incapacitated in any way so as to be unable to manage his financial
affairs, it may direct the Trustee to make payments to the legal
representative or court appointed guardian of such person.
15.3 Allocation of Duties and Responsibilities. The Plan
Administrator may by written instrument allocate among its members
or employees any of its duties and responsibilities not already
allocated under the Plan or may designate persons other than
members or employees to carry out any of the Plan Administrator's
duties and responsibilities under the Plan. Any such duties or
responsibilities thus allocated must be described in the written
instrument. If a person other than an Employee of the Employer is
so designated, such person must acknowledge in writing his
acceptance of the duties and responsibilities allocated to him.
15.4 Appointment of the Plan Administrator. The Employer
shall designate in the Adoption Agreement the Plan Administrator
who shall administer the Employer's Plan. Such Plan Administrator
may consist of an individual, a committee of two or more
individuals, whether or not, in either such case, the individual or
any of such individuals are Employees of the Employer, a consulting
firm or other independent agent, the Trustee (with its consent), or
the Employer itself. The Plan Administrator shall be charged with
the full power and the responsibility for administering the Plan in
all its details. If no Plan Administrator has been appointed by the
Employer, or if the person designated as Plan Administrator by the
Employer is not serving as such for any reason, the Employer shall
be deemed to be the Plan Administrator of the Plan. The Plan
Administrator may be removed by the Employer, or may resign by
giving notice in writing to the Employer, and in the event of the
removal, resignation, or death, or other termination of service by
the Plan Administrator, the Employer shall, as soon as practicable,
appoint a successor Plan Administrator, such successor thereafter
to have all of the rights, privileges, duties, and obligations of
the predecessor Plan Administrator.
15.5 Expenses. The Employer shall pay all expenses
authorized and incurred by the Plan Administrator in the
administration of the Plan except to the extent such expenses are
paid from the Trust.
15.6 Liabilities. The Plan Administrator and each person to
whom duties and responsibilities have been allocated pursuant to
Section 15.3 may be indemnified and held harmless by the Employer
with respect to any alleged breach of responsibilities performed or
to be performed hereunder. The Employer and each Affiliated
Employer shall indemnify and hold harmless the Sponsor against all
claims, liabilities, fines, and penalties, and all expenses
reasonably incurred by or imposed upon him (including, but not
limited to, reasonable attorney's fees) which arise as a result of
actions or failure to act in connection with the operation and
administration of the Plan.
15.7 Claims Procedure.
(a) Filing a Claim. Any Participant or Beneficiary
under the Plan may file a written claim for a Plan benefit with the
Plan Administrator or with a person named by the Plan Administrator
to receive claims under the Plan.
(b) Notice of Denial of Claim. In the event of a denial
or limitation of any benefit or payment due to or requested by any
Participant or Beneficiary under the Plan ("claimant"), claimant
shall be given a written notification containing specific reasons
for the denial or limitation of his benefit. The written
notification shall contain specific reference to the pertinent Plan
provisions on which the denial or limitation of his benefit is
based. In addition, it shall contain a description of any other
material or information necessary for the claimant to perfect a
claim, and an explanation of why such material or information is
necessary. The notification shall further provide appropriate
information as to the steps to be taken if the claimant wishes to
submit his claim for review. This written notification shall be
given to a claimant within 90 days after receipt of his claim by
the Plan Administrator unless special circumstances require an
extension of time for processing the claim. If such an extension
of time for processing is required, written notice of the extension
shall be furnished to the claimant prior to the termination of said
90-day period, and such notice shall indicate the special
circumstances which make the postponement appropriate.
(c) Right of Review. In the event of a denial or
limitation of his benefit, the claimant or his duly authorized
representative shall be permitted to review pertinent documents and
to submit to the Plan Administrator issues and comments in writing.
In addition, the claimant or his duly authorized representative may
make a written request for a full and fair review of his claim and
its denial by the Plan Administrator; provided, however, that such
written request must be received by the Plan Administrator (or its
delegate to receive such requests) within 60 days
after receipt by the claimant of written notification of the denial
or limitation of the claim. The 60-day requirement may be waived by
the Plan Administrator in appropriate cases.
(d) Decision on Review. A decision shall be rendered by
the Plan Administrator within 60 days after the receipt of the
request for review, provided that where special circumstances
require an extension of time for processing the decision, it may be
postponed on written notice to the claimant (prior to the
expiration of the initial 60-day period) for an additional 60 days,
but in no event shall the decision be rendered more than 120 days
after the receipt of such request for review. Any decision by the
Plan Administrator shall be furnished to the claimant in writing
and shall set forth the specific reasons for the decision and the
specific plan provisions on which the decision is based.
(e) Court Action. No Participant or Beneficiary shall
have the right to seek judicial review of a denial of benefits, or
to bring any action in any court to enforce a claim for benefits
prior to filing a claim for benefits or exhausting his rights to
review under this Section 13.7.
ARTICLE 16
AMENDMENT, TERMINATION, AND MERGER
16.1 Amendments.
(a) The Employer hereby irrevocably delegates (except as
provided in (b) below), to the Sponsor the right and power to amend
the Plan and the Trust Agreement at any time and from time to time,
and the Employer by adopting the Plan and entering into the Trust
Agreement, shall be deemed to have consented to any such amendment.
The Sponsor shall notify the Employer of any amendment to the Plan
and the Trust Agreement.
(b) The Employer reserves the right at any time to amend
or discontinue the Plan or the Trust Agreement or give notice of
termination by delivering to the Trustee a written copy of such
change signed by the Employer; provided that, if any such amendment
by the Employer is not an amendment permitted under the Adoption
Agreement or under paragraph (c) below, the Plan shall no longer be
deemed part of this prototype Plan. In the event of such an
amendment not described in paragraph (c), the Employer must obtain
a separate determination letter from the Internal Revenue Service
to continue reliance on the Plan's qualified status. No such
amendment may:
(i) violate the exclusive benefit limitations of
Section 15.1;
(ii) violate the anti-cutback rules of Section 8.4;
(iii) vest in the Employer any interest or control
over any assets of the Trust;
or
(iv) change any of the rights, duties and powers of
the Trustee without the Trustee's written consent.
(c) The Employer may from time to time make any
amendment to the Plan (1) to change the choice of options in the
Adoption Agreement, (2) to add overriding language in the Adoption
Agreement when such language is necessary to satisfy Section 415 or
Section 416 of the Code because of the required aggregation of
multiple plans, and (3) to add certain model amendments published
by the Internal Revenue Service which specifically provide that
their adoption will not cause the Plan to be treated as
individually designed.
(d) An Employer that amends the Plan for any reason
other than as specified in paragraph (c) above, including an
amendment with respect to a waiver of the minimum funding
requirement under Section 412(d) of the Code, shall no longer
participate in this prototype plan and shall be considered to have
an individually designed plan.
16.2 Plan Termination; Discontinuance of Employer
Contributions.
(a) The Employer may terminate the Plan at any time in
whole or in part. In the event of the dissolution, merger,
consolidation, or reorganization of the Employer, the Plan shall
automatically terminate and the Trust shall be liquidated unless
the Plan is continued by a successor employer in accordance with
Section 16.3.
(b) Upon the complete or partial termination of the Plan
or the complete discontinuance of Employer Contributions under the
Plan, the separate Account of all Participants affected thereby
shall become fully vested and nonforfeitable, and the Plan
Administrator shall direct the Trustee to distribute assets
remaining in the Trust, after payment of any expenses properly
chargeable thereto, to Participants or their Beneficiaries unless
directed by the Employer to continue the Trust and distribute
Participant's accounts at such other time and in such other
nondiscriminatory manner as the Employer shall designate, provided
that such distribution shall be in accordance with the provisions
of Articles 9 and 10. Upon the completion of such distribution,
the Trustee shall be relieved of all further liability with respect
to the assets so distributed.
16.3 Successor Employer. In the event of the dissolution,
merger, consolidation, or reorganization of the Employer, provision
may be made by which the Plan and Trust shall be continued by the
successor employer, in which case such successor employer shall be
substituted for the Employer under the Plan. The substitution of
the successor employer shall constitute an assumption of Plan
liabilities by the successor employer, and the successor employer
shall have all powers, duties, and responsibilities of the Employer
under the Plan.
16.4 Merger, Consolidation, or Transfer. There shall be no
merger or consolidation of the Plan with, or transfer of assets or
liabilities of the Plan to, any other plan of deferred compensation
maintained or to be established for the benefit of all or some of
the Participants of the Plan, unless each Participant would (if
either this Plan or such other plan then terminated) receive a
benefit immediately after the merger, consolidation or transfer
which is equal to or greater than the benefit the Participant would
have been entitled to receive immediately before the merger,
consolidation, or transfer (if this Plan had then terminated).
ARTICLE 17
MISCELLANEOUS
17.1 Exclusive Benefit of Participants and Beneficiaries.
(a) All assets of the Trust shall be retained for the
exclusive benefit of Participants and their Beneficiaries, and
shall be used only to pay benefits to such persons or to pay the
fees and expenses of the Trust. The assets of the Trust shall not
revert to the benefit of the Employer, except as otherwise
specifically provided in Section 17.1(b).
(b) To the extent permitted or required by ERISA and the
Code, contributions to the Trust under this Plan are subject to the
following conditions:
(i) If a contribution or any part thereof is made
to the Trust by the Employer under a mistake of fact, such
contribution or part thereof shall be returned to the Employer
within one year after the date the contribution is made;
(ii) Contributions to the Trust are specifically
conditioned on the initial qualification of the Plan under Section
401 of the Code, and in the event the Plan is determined not to
meet the initial qualification requirements of Section 401 of the
Code, contributions made in respect of any period for which such
requirements are not met shall be returned to the Employer within
one year after the Plan is determined not to meet such
requirements, but only if application for qualification is made by
the time prescribed by law for filing the Employer's return for the
taxable year for which the Plan is adopted, or such later date as
the Secretary of the Treasury may prescribe; and
(iii) Contributions to the Trust are specifically
conditioned on their deductibility under the Code and, to the
extent a deduction is disallowed for any such contribution, such
amount shall be returned to the Employer within one year after the
date of the disallowance of the deduction.
17.2 Nonguarantee of Employment. Nothing contained in this
Plan shall be construed as a contract of employment between the
Employer and any Employee, or as a right of any Employee to be
continued in the employment of the Employer, or as a limitation of
the right of the Employer to discharge any of its Employees, with
or without cause.
17.3 Rights to Trust Assets. No Employee, Participant, or
Beneficiary shall have any right to, or interest in, any assets of
the Trust upon termination of employment or otherwise, except as
provided under the Plan. All payments of benefits under the Plan
shall be made solely out of the assets of the Trust.
17.4 Nonalienation of Benefits. Except as provided under
Article 13 with respect to Plan loans, benefits payable under the
Plan shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance,
charge, garnishment, execution, or levy of any kind, voluntary or
involuntary; provided, however, that the Trustee shall not be
hereby precluded from complying with a qualified domestic relations
order described in Section 414(p) of the Code, or any domestic
relations order entered before January 1, 1985, requiring deduction
from distributions to a recipient in pay status for alimony or
support payments. Any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, charge, or otherwise dispose of
any right to benefits payable hereunder shall be void. The Trust
shall not in any manner be liable for, or subject to, the debts,
contracts, liabilities, engagements, or torts of any person
entitled to benefit hereunder.
17.5 Aggregation Rules.
(a) Except as provided in Article 6, all employees of
the Employer or any Affiliated Employer will be treated as employed
by a single employer.
(b) If this Plan provides contributions or benefits for
one or more Owner-Employees who control both the business for which
this Plan is established and one or more other trades or
businesses, this Plan and the plan established for other trades or
businesses must, when looked at as a single plan, satisfy Sections
401(a) and (d) for the Employees of this and all other trades or
businesses.
(c) If the Plan provides contributions or benefits for
one or more Owner-Employees who control one or more other trades or
businesses, the employees of the other trades or businesses must be
included in a plan which satisfies Sections 401(a) and (d) and
which provides contributions and benefits not less favorable than
provided for Owner-Employees under this Plan.
(d) If an individual is covered as an Owner-Employee
under the plans of two or more trades or businesses which are not
controlled and the individual controls a trade or business, than
the contributions or benefits of the employees under the plan of
the trades or businesses which are controlled must be as favorable
as those provided for him under the most favorable plan of the
trade or business which is not controlled.
(e) For purposes of paragraphs (b), (c) and (d), an
Owner-Employee, or two or more Owner-Employees, will be considered
to control a trade or business if the Owner-Employee, or two or
more Owner-Employees together:
(i) own the entire interest in an unincorporated
trade or business, or
(ii) in the case of a partnership, own more than 50
percent of either the capital interest or the profits interest in
the partnership.
For purposes of the preceding sentence, an Owner-
Employee, or two or more Owner-Employees shall be treated as owning
an interest in a partnership which is owned, directly or
indirectly, by a partnership which such Owner-Employee, or such two
or more Owner-Employees, are considered to control within the
meaning of the preceding sentence.
17.6 Failure of Qualification. If this Plan or any part of
it fails to attain or retain qualification, such plan will no
longer participate in this prototype paired defined contribution
plan and will be considered an individually designed plan.
17.7 Applicable Law. Except to the extent otherwise required
by ERISA, as amended, this Plan shall be construed and enforced in
accordance with the laws of the state in which the Employer's
principal place of business is located, as specified in the
Adoption Agreement.
-------------------------------
(Name of Employer)
By: -------------------------------
(Name and Title)
-------------------------------
(Date)
<PAGE>
TRUST AGREEMENT
The Employer has established a Plan for the benefit of
Participants therein pursuant to Section 401 of the Internal
Revenue Code of 1954. As part of the Plan the Employer has
requested such person or persons (individual, corporate, or other
entity), as may be designated in the Adoption Agreement, to serve
as Trustee pursuant to the Trust established for the investment of
contributions under the Plan upon the terms and conditions set
forth in this Agreement.
Unless the context of this Trust Agreement clearly indicates
otherwise, the terms defined in Article 2 of the Plan entered into
by the Employer, of which this Trust Agreement forms a part, shall,
when used herein, have the same meaning as in the Plan.
ARTICLE I - ACCOUNTS
1.1 Establishing Accounts. The Trustee shall open and
maintain a Trust account for the Plan and, as part thereof,
Participants' Accounts for such individuals as the Plan
Administrator shall, from time to time, give written notice to the
Trustee as being Participants in the Plan. The Trustee shall also
open and maintain such other subaccounts as may be appropriate or
desirable to aid in the administration of the Plan. Separate
subaccounts shall be maintained for each Participant and shall be
credited with the contributions made by the Employer and with
forfeitures allocated to each such Participant pursuant to the Plan
(and all earnings thereon). If nondeductible voluntary
contributions by Participants are permitted by the Plan, the
Trustee shall open and maintain as a part of the Trust a separate
subaccount for each Participant who makes such nondeductible
voluntary contributions, each such subaccount to be credited with
the Participant's voluntary contributions (and all earnings
attributable to such contributions). If trustee transfers or
rollover contributions from another qualified plan are received,
the Trustee shall open and maintain a separate rollover subaccount
for each Participant, each such subaccount to be credited with the
Participant's trustee transfers or rollover contributions (and all
earnings attributable to such contributions).
1.2 Charges Against Accounts. Upon receipt of written
instructions from the Administrator, the Trustee shall charge the
appropriate subaccount of the Participant for any withdrawals or
distributions made under the Plan and any forfeiture, which may be
required under the Plan, of unvested interests attributable to
Employer Contributions. The Plan Administrator will give written
instructions to the Trustee specifying the manner in which Employer
Contributions and any forfeiture of the nonvested portion of
Accounts, as allocated by the Plan Administrator in accordance with
the provisions of the Plan, are to be credited to the various
Accounts maintained for Participants.
1.3 Prospectus to be Provided. The Plan Administrator shall
ensure that a Participant who makes a nondeductible voluntary
contribution has previously received or receives a copy of the then
current prospectus relating to the Shares. Delivery of such a
nondeductible voluntary contribution, pursuant to the provisions of
the Plan by the Plan Administrator to the Trustee shall entitle the
Trustee to assume that the Participant has received such a
prospectus.
ARTICLE II - RECEIPT OF CONTRIBUTIONS
The Trustee shall accept and hold in the Trust contributions
made by the Employer and Participants under the Plan. The
Administrator shall give written instructions to the Trustee
specifying the Participants' Accounts to which contributions are to
be credited, the amount of each such credit which is attributable
to Employer Contributions, and the amount, if any, which is
attributable to the Participant's nondeductible voluntary
contributions. If written instructions are not received by the
Trustee, or if such instructions are received but are deemed by the
Trustee to be unclear, upon notice to the Employer, the Trustee may
elect to hold all or part of any such contribution in cash, without
liability for rising security prices or distributions made, pending
receipt by it from the Plan Administrator of written instructions
or other clarification, or the Trustee may return the contribution
to the Employer. If any contributions or earnings are less than
any minimum which the then current prospectus for the Shares
requires, the Trustee may hold the specified portion of
contributions or earnings in cash, without interest, until such
time as the proper amount has been contributed or earned so that
the investment in the Shares required under the Plan may be made.
ARTICLE III - INVESTMENT POWERS OF THE TRUSTEE
3.1 Investment of Account Assets. The Trustee shall invest
the amount of each contribution made hereunder and all earnings on
the Trust in full and fractional Shares in accordance with the
current prospectus for such Shares, in such amounts and proportions
as shall from time to time be designated by the Plan Administrator
on forms provided by the Sponsor, and shall credit such Shares to
the Accounts of each Participant on whose behalf or by whom the
contributions are made and any forfeitures are allocated. All
dividends and capital gain distributions received on the Shares
held by the Trustee in each Account, shall, if received in cash, be
reinvested in such Shares in accordance with the current prospectus
for such Shares and shall in any event be credited to such account.
If any distribution on Shares may be received at the election of
the shareholder in additional Shares, the Trustee shall so elect.
The Trustee shall deliver, or cause to be executed and delivered,
to the Plan Administrator all notices, prospectuses, financial
statements, proxies, and proxy soliciting materials relating to
Shares held hereunder. The Trustee shall not vote any of the
Shares held hereunder, except in accordance with the written
instructions of the Plan Administrator. If no such written
instructions are received, such Shares shall not be voted. The
obligations of the Trustee hereunder may be delegated by it as
provided in Sections 9.1 and 9.2.
The Trustee shall sell Shares and purchase Shares to
accomplish any change in investments desired by the Employer as
indicated on any amended Adoption Agreement or other instruction in
accordance with the terms of the Plan.
Notwithstanding the above, if periodic payments are being made
to a Participant pursuant to Article IV hereof, any dividends
received on Shares held in such Participant's Account, which
dividends are invested at an offering price which includes a sales
charge, need not be invested in additional Shares but may be held
for distribution to the Participant in periodic payments. In such
instances, the Trustee may make any election necessary to receive
any such dividends in cash.
3.2 Directed Investments. When so instructed by the Plan
Administrator, the Trustee shall invest all or any portion of the
individual Account of any Participant in accordance with the
direction of the Employer or such Participant in lieu of
participation in the general assets of the Trust. Such directed
investments shall be accounted for separately for each Participant.
Except as otherwise provided herein, the Trustee shall not have any
discretion, with respect to such directed investments. Each
Participant who directs the investment of his Account shall be
solely and absolutely responsible for the investment or
reinvestment of all directed investment assets held on his behalf
in Trust, and, except as otherwise provided herein, the Trustee
shall not question any such direction, review any securities or
other such assets, or make suggestions with respect to the
investment, retention or disposition of any such assets; provided
that
(a) If any contributions are transmitted to or otherwise
received or held as a directed investment asset without
investment directions from the Participant, the Trustee
may retain such amounts in a noninterest-bearing savings
account in a federally insured institution for the
benefit of the Participant;
(b) The Trustee may establish such reasonable rules and
regulations, applied on a uniform basis to all
Participants, with respect to the requirements for, and
the form and manner of, effectuating any transaction with
respect to directed investment assets including, without
limitation, minimum amounts, rules applicable to
conversion of directed investments into general assets of
the Trust, and appropriate adjustments (based on fair
market values) to Accounts in order to reflect any such
conversion, as the Trustee shall determine to be
consistent with the purposes of the Plan. Any such rules
and regulations shall be binding upon all persons
interested in the Trust;
(c) The Trustee may establish a procedure for the
periodic review of directed investment assets to
determine, in light of the facts and circumstances
reasonably known to the Trustee, whether any actual or
proposed investment of such assets constitutes or would
constitute a prohibited transaction as that term is
defined in sections 406-408 of ERISA and the
corresponding provisions of the Code. If the Trustee
determines that any investment constitutes or would
constitute a prohibited transaction, the Trustee shall
promptly communicate this determination to the Plan
Administrator, and shall recommend that the investment be
prevented or disposed of, as the case may be, and may
recommend any other action authorized or required by law,
to prevent or remedy the transaction;
(d) In accordance with and pursuant to uniform and
nondiscriminatory rules established under and in
accordance with the Plan, the Trustee may deny the Plan
Administrator's application to allow a directed
investment proposed by a Participant; and
(e) Notwithstanding anything herein to the contrary, in
no event shall the Trustee engage in any transaction that
would be prohibited under ERISA.
3.3 General Investment Powers. Subject to any investment
limitations or minimum requirements for investment instructions
given by the Employer, the Trustee shall be authorized and
empowered to invest and reinvest all or any part of the Trust in
any property, real or personal or mixed, including, but not being
limited to, capital or common stock (whether voting or nonvoting
and whether or not currently paying a dividend), preferred or
preference stock (whether voting or nonvoting or whether or not
currently paying a dividend), shares of regulated investment
companies, convertible securities, corporate and governmental
obligations, leaseholds, ground rents, mortgages, and other
interests in realty, trust, and participation certificates, oil,
mineral, or gas properties, royalty interests or rights, including
equipment pertaining thereto, notes, and other evidences of
indebtedness or ownership, secured or unsecured, contracts, choses
in action, and warrants, and other instruments entitling the owner
thereof to subscribe to or purchase any of the aforesaid. Subject
to any investment limitations or requirements imposed by the
Sponsor relating to the type of permissible investments in the
Trust or the minimum percentage of Trust assets to be invested in
Shares, and subject to the provisions of Article VIII hereof, in
making and retaining such investments and reinvestments pursuant
hereto, the Trustee shall not be bound as to the character of any
investments by any statute, rule of court, or custom governing the
investment of Trust funds.
3.4 Investment in Combined Funds. If the Trustee is a
banking institution, subject to any investment limitations or
minimum requirements for investment in Shares imposed by the
Sponsor, and subject to investment instructions given by the
Employer, it may, subject to the election of the Sponsor or the
Employer, cause funds of this Trust to be invested in its
commingled funds for qualified employee benefit plan trusts and
such commingled funds are hereby adopted and made a part of the
Plan of which this Trust is a part, and any funds of this Trust
invested in any such commingled funds shall be subject to all the
provisions thereof, as the same may be amended from time to time.
3.5 Other Powers of the Trustee. The Trustee is authorized
and empowered with respect to the Trust:
(a) Subject to any investment limitations or minimum
requirements for investment in Shares imposed by the
Sponsor, and subject to investment instructions given by
the Employer, to sell, exchange, convey, transfer, or
otherwise dispose of, either at public or private sale,
any property, real or personal or mixed, at any time held
by it, for such consideration and on such terms and
conditions as to credit or otherwise as the Trustee may
deem best;
(b) Subject to the provisions of Section 3.1, to vote in
person or by proxy any stocks, bonds, or other securities
held by it; to exercise any options appurtenant to any
stocks, bonds, or other securities, or to exercise any
rights to subscribe for additional stocks, bonds, or
other securities, and to make any and all necessary
payments therefor; to join in, or to dissent from, and to
oppose, the reorganization, consolidation, liquidation,
sale, or merger of corporations, or properties in which
it may be interested as Trustee, upon such terms and
conditions as it may deem wise;
(c) To make, execute, acknowledge, and deliver any and
all documents of transfer and conveyance and any and all
other instruments that may be necessary or appropriate to
carry out the powers herein granted;
(d) To register any investment held in the Trust in the
name of the Trust or in the name of a nominee, and to
hold any investment in bearer form, but the books and
records of the Trustee shall at all times show that all
such investments are part of the Trust;
(e) To employ suitable agents and counsel (who may also
be agents and/or counsel for the Employer or the Sponsor)
and to pay their reasonable expenses and compensation;
(f) To borrow or raise monies for the purpose of the
Trust from any source and, for any sum so borrowed to
issue its promissory note as Trustee and to secure the
repayment thereof by pledging all or any part of the
Trust Fund, but nothing herein contained shall obligate
the Trustee to render itself liable individually for the
amount of any such borrowing; and no person loaning money
to the Trustee shall be bound to see to the application
of money loaned or to inquire into the validity or
propriety of any such borrowing.
Each and all of the foregoing powers may be exercised without
a court order or approval. No one dealing with the Trustee need
inquire concerning the validity or propriety of anything that is
done or need see to the application of any money paid or property
transferred to or upon the order of the Trustee.
3.6 General Powers. The Trustee shall have all of the powers
necessary or desirable to do all acts, take all such proceedings,
and exercise all such rights and privileges, whether or not
expressly authorized herein, which it may deem necessary or proper
for the administration and protection of the property of the Trust
and to accomplish any action provided for in the Plan.
ARTICLE IV - DISTRIBUTIONS FROM A PARTICIPANT'S ACCOUNT
Distributions from the Trust shall be made by the Trustee in
accordance with proper written directions of the Plan Administrator
in accordance with the provisions of Section 15.2 of the Plan, and
the Plan Administrator shall have the sole responsibility for
determining that the directions given conform to provisions of the
Plan and applicable law, including (without limitation)
responsibility for calculating the amounts payable to a Participant
pursuant to Article 10 of the Plan, and for determining the proper
person to whom benefits are payable under the Plan.
ARTICLE V - REPORTS OF THE TRUSTEE AND THE PLAN ADMINISTRATOR
The Trustee shall keep accurate and detailed records of all
receipts, investments, disbursements, and other transactions
required to be performed hereunder with respect to the Trust. The
Trustee shall file with the Plan Administrator a written report or
reports reflecting the receipts, disbursements, and other
transactions effected by it with respect to the Trust during such
Plan Year and the assets and liabilities of the Trust at the close
of the Plan Year. Such report or reports shall be open to
inspection by any Participant for a period of one-hundred eighty
(180) days immediately following the date on which it is filed with
the Plan Administrator. Except as otherwise prescribed by ERISA,
upon the expiration of such one-hundred eighty (180) day period,
the Trustee shall be forever released and discharged from all
liability and accountability to anyone with respect to its acts,
transactions, duties, obligations, or responsibilities as shown in
or reflected by such report, except with respect to any such acts
or transactions as to which the Plan Administrator shall have filed
written objections with the Trustee within one-hundred eighty (180)
day period, and except for willful misconduct or lack of good faith
on the part of the Trustee.
ARTICLE VI - TRUSTEE'S FEES AND EXPENSES OF THE TRUST
The Trustee's fees for performing its duties hereunder shall
be such reasonable amounts as shall be respectively established by
them from time to time. The Trustee shall furnish the Employer
with its current schedule of fees and shall give written notice to
the Employer whenever its fees are changed or revised. Such fees,
any taxes of any kind whatsoever which may be levied or assessed
upon or in respect of the Trust, to the extent incurred by the
Trustee, and any and all expenses incurred by the Trustee in the
performance of its duties, including fees for legal services
rendered to the Trustee, shall, unless paid by the Employer, be
paid from the Trust in the manner provided in the Plan.
Unless paid by the Employer, all fees of the Trustee and taxes
and other expenses charged to a Participant's Account may be
collected by the Trustee from the amount of any contribution to be
credited or distribution to be charged to such Account or may be
paid by redeeming or selling assets credited to such Account.
ARTICLE VII - DUTIES OF THE EMPLOYER AND THE PLAN ADMINISTRATOR
7.1 Information and Data to be Furnished the Trustee. In
addition to making the contributions called for in Article II
hereof, the Employer, through the Plan Administrator, agrees to
furnish the Trustee with such information and data relative to the
Plan as is necessary for the proper administration of the Trust
established hereunder.
7.2 Limitation of Duties. Neither the Employer nor any of
its officers, directors, or partners, nor the Plan Administrator
shall have any duties or obligations with respect to this Trust
Agreement, except those expressly set forth herein and in the Plan.
ARTICLE VIII - LIABILITY OF THE TRUST
8.1 Trustee's Liability.
(a) The Employer shall indemnify and save the Trustee
(including its affiliates, representatives and agents)
harmless from and against any liability, cost or other
expense, including, but not limited to, the payment of
attorneys' fees that the Trustee may incur in connection
with this Agreement or the Plan unless such liability,
cost or other expense (whether direct or indirect) arises
from the Trustee's own willful misconduct or gross
negligence. The Employer recognizes that a burden of
litigation may be imposed upon the Trustee as a result of
some act or transaction for which it has no
responsibility or over which it has no control under this
Agreement. Therefore, the Employer agrees to indemnify
and hold harmless and, if requested, defend the Trustee
(including its affiliates, representatives and agents)
from any expenses (including counsel fees, liabilities,
claims, damages, actions, suits or other charges)
incurred by the Trustee in prosecuting or defending
against any such litigation.
(b) The Trustee shall not be liable for, and the
Employer will indemnify and hold harmless the Trustee
(including its affiliates, representatives and agents)
from and against all liability or expense (including
counsel fees) because of (i) any investment action taken
or omitted by the Trustee in accordance with any
direction of the Employer or a Participant, or investment
inaction in the absence of directions from the Employer
or a Participant or (ii) any investment action taken by
the Trustee pursuant to an order to purchase or sell
securities placed by the Employer or a Participant
directly with a broker, dealer or issuer. It is
understood that although, when the Trustee is subject to
the direction of the Employer or a Participant the
Trustee will perform certain ministerial duties with
respect to the portion of the Fund subject to such
direction (the "Directed Fund"), such duties do not
involve the exercise of any discretionary authority or
other authority to manage and control assets of the
Directed Fund and will be performed in the normal course
of business by officers and employees of the Trustee or
its affiliates, representatives or agents who may be
unfamiliar with investment management. It is agreed that
the Trustee is not undertaking any duty or obligation,
express or implied, to review, and will not be deemed to
have any knowledge of or responsibility with respect to,
any transaction involving the investment of the Directed
Fund as a result of the performance of its ministerial
duties. Therefore, in the event that "knowledge" of the
Trustee shall be a prerequisite to imposing a duty upon
or determining liability of the Trustee under the Plan or
this Trust or any law or regulation regulating the
conduct of the Trustee, with respect to the Directed
Fund, as a result of any act or omission of the Employer
or any Participant, or as a result of any transaction
engaged in by any of them, then the receipt and
processing of investment orders and other documents
relating to Plan assets by an officer or other employee
of the Trustee or its affiliates, representatives or
agents engaged in the performance of purely ministerial
functions shall not constitute "knowledge" of the
Trustee.
(c) Notwithstanding the foregoing provisions of this
Trust Agreement, the Trustee shall discharge its duties
hereunder with the care, skill, prudence, and diligence
under the circumstances then prevailing that a prudent
man acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a
like character and with like aims. Any investments
selected by the Trustee without specific direction from
the Employer shall be selected to diversify the
investments of the Trust Fund so as to minimize the risk
of large losses, unless in the circumstances it is
clearly prudent not to do so. The Trustee shall perform
its duties in accordance with this Trust Agreement
insofar as this Trust Agreement is consistent with the
provisions of ERISA. To the extent not prohibited by
ERISA, the Trustee shall not be responsible in any way
for any action or omission of the Employer or the Plan
Administrator with respect to the performance of their
duties and obligations set forth in the Plan. To the
extent not prohibited by ERISA, the Trustee shall not be
responsible for any action or omission of any of its
agents, or with respect to reliance upon advice of its
counsel (whether or not such counsel is also counsel to
the Employer or to the Plan Administrator), provided that
such agents or counsel were prudently chosen by the
Trustee and that the Trustee relied in good faith upon
the action of such agent or the advice of such counsel.
The Trustee shall be indemnified and held harmless by the
Employer against liability or losses occurring by reason
of any act or omission of the Trustee under this Trust
Agreement, unless such act or omission is due to its own
willful nonfeasance, malfeasance, or misfeasance or other
breach of duty under ERISA, to the extent that such
indemnification does not violate ERISA or any other
Federal or state laws.
ARTICLE IX - DELEGATION OF POWERS
9.1 Delegation by the Trustee. With respect to Shares held
by the Plan, the Trustee hereby delegates to the Custodian
designated by the Sponsor the functions designated in (a) through
(d) hereunder, other than the investment, management, or control of
the Trust assets. With respect to assets other than Shares, the
Trustee may delegate in writing pursuant to a procedure permitted
and established by the Sponsor, to a person (individual, corporate,
or other entity) designated by the Sponsor as an agent or
custodian, any of the powers or functions of the Trustee hereunder
other than the investment, management or control of the Trust
assets, including (without limitation):
(a) Custodianship of all or any part of the assets of
the Trust;
(b) Maintaining and accounting for the Trust and for
Participants and other Accounts as a part thereof;
(c) Distribution of benefits as directed by the Plan
Administrator; and
(d) Preparation of the annual report on the status of
the Trust.
The agent or custodian so appointed may act as agent for the
Trustee, without investment responsibility, for fees to be mutually
agreed upon by the Employer and the agent or custodian and paid in
the same manner as Trustee's fees. The Trustee shall not be
responsible for any act or omission of the agent or custodian
arising from any such delegation, except to the extent provided in
Section 8.1.
9.2 Delegation with Employer Approval. The Trustee (whether
or not a bank or trust company) and the Employer may, by mutual
agreement, arrange for the delegation by the Trustee to the Plan
Administrator or any agent of the Employer of any powers or
functions of the Trustee hereunder other than the investment and
custody of the Trust assets. The Trustee shall not be responsible
for any act or omission of such person or persons arising from any
such delegation, except to the extent provided in Article VIII.
ARTICLE X - AMENDMENT
As provided in Section 16.1 of the Plan, and subject to the
limitations set forth therein, the prototype Adoption Agreement,
Plan, and Trust Agreement may be amended at any time, in whole or
in part, by the Sponsor. The Trustee hereby delegates authority to
the Sponsor, and to any successor Sponsor, to so amend the
prototype Adoption Agreement, Plan, and Trust Agreement and the
Trustee hereby agrees that it shall be deemed to have consented to
any amendment so made which does not increase the duties of the
Trustee without its consent.
ARTICLE XI - RESIGNATION OR REMOVAL OF TRUSTEE
The Trustee may resign at any time upon thirty (30) days
notice in writing to the Employer, and may be removed by the
Employer at any time upon thirty (30) days notice in writing to the
Trustee. Upon such resignation or removal, the Employer shall
appoint a successor Trustee or Trustees. Upon receipt by the
Trustee of written acceptance of such appointment by the successor
Trustee, the Trustee shall transfer and pay over to such successor
the assets of the Trust and all records pertaining thereto,
provided that any successor Trustee shall agree not to dispose of
any such records without the Trustee's consent. The successor
Trustee shall be entitled to rely on all accounts, records, and
other documents received by it from the Trustee, and shall not
incur any liability whatsoever for such reliance. The Trustee is
authorized, however, to reserve such sum of money or property as it
may deem advisable for payment of all its fees, compensation,
costs, and expenses, or for payment of any other liabilities
constituting a charge on or against the assets of the Trust or on
or against the Trustee, with any balance of such reserve remaining
after the payment of all such items to be paid over to the
successor Trustee. Upon the assignment, transfer, and payment over
of the assets of the Trust, and obtaining a receipt thereof from
the successor Trustee, the Trustee shall be released and discharged
for any and all claims, demands, duties, and obligations arising
out of the Trust and its management thereof, excepting only claims
based upon the Trustee's willful misconduct or lack of good faith.
The successor Trustee shall hold the assets paid over to it under
terms similar to those of this Agreement that it qualify under
Section 401 of the Code. If within (30) days after the Trustee's
resignation or removal, the Employer has not appointed a successor
Trustee which has accepted such appointment, the Trustee shall,
unless it elects to terminate the Trust pursuant to Article XII,
appoint such successor itself.
ARTICLE XII - TERMINATION OF THE TRUST
12.1 Term of the Trust. This Trust shall continue as to the
Employer so long as the Plan is in full force and effect. If the
Plan ceases to be in full force and effect, this Trust shall
thereupon terminate unless expressly extended by the Employer.
12.2 Termination by the Trustee. The Trustee may elect to
terminate the Trust if within thirty (30) days after its
resignation or removal pursuant to Article XI the Employer has not
appointed a successor Trustee which has accepted such appointment.
Termination of the Trust shall be effected by distributing all
assets thereof to the Participants or other persons entitled
thereto pursuant to the direction of the Plan Administrator (or in
the absence of such direction, as determined by the Trustee) as
provided in Section 16.2 of the Plan, subject to the Trustee's
right to reserve funds as provided in Article XI hereof. Upon the
completion of such distribution, the Trustee shall be relieved from
all further liability with respect to all amounts so paid, other
than any liability arising out of the Trustee's willful misconduct
or lack of good faith.
ARTICLE XIII - MISCELLANEOUS
13.1 No Diversion of Assets. At no time shall it be possible
for any part of the assets of the Trust to be used for or diverted
to purposes other than for the exclusive benefit of Participants
and their beneficiaries or revert to the Employer, except as
specifically provided in the Plan or this Agreement.
13.2 Notices. Any notice from the Trustee to the Employer or
from the Employer to the Trustee provided for in the Plan and Trust
shall be effective if sent by first class mail at their respective
last address of record.
13.3 Multiple Trustees. In the event that there shall be two
(2) or more Trustees serving hereunder, the trustees shall act by
majority vote, but any action taken or decision made by any one of
such Trustees may be relied upon as if taken or made by a majority
of them with the same effect as if all had joined therein, if there
be more than two (2), or unanimously if there be two (2).
13.4 Conflict with Plan. In the event of any conflict
between the provisions of the Plan and those of this Agreement, the
former shall prevail.
13.5 Applicable Law. Except to the extent otherwise required
by ERISA, as amended, this Agreement shall be construed in
accordance with the laws of the state where the Trustee has its
principal place of business, as specified in the Adoption
Agreement.
PENSPLAN\PROTOTYP.EDG
