Registration No. 33-52154
__________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
__________________________
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. _____ [_]
Post-Effective Amendment No. 6 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 7 [X]
(Check appropriate box or boxes.)
_________________________________
THE HENLOPEN FUND
(Exact name of Registrant as Specified in Charter)
Longwood Corporate Center, Suite 213
415 McFarlan Road
Kennett Square, Pennsylvania 19348
(Address of Principal Executive Offices) (Zip Code)
(610) 925-0400
(Registrant's Telephone Number, including Area Code)
Copy to:
Michael L. Hershey
Longwood Corporate Center Richard L. Teigen
Suite 213 Foley & Lardner
415 McFarlan Road 777 East Wisconsin Avenue
Kennett Square, Pennsylvania 19348 Milwaukee, Wisconsin 53202
(Name and Address of Agent for Service)
Registrant has registered an indefinite number or amount of shares of
beneficial interest, no par value, under the Securities Act of 1933
pursuant to Rule 24f-2 of the Investment Company Act of 1940, and filed
its required Rule 24f-2 Notice for Registrant's fiscal year ended June 30,
1997 on August 28, 1997.
Approximate Date of Proposed Public Offering: As soon as practicable
after the Registration Statement becomes effective.
It is proposed that this filing become effective (check appropriate box):
[_] immediately upon filing pursuant to paragraph (b)
[X] on October 31, 1997 pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph (a)(1)
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] on (date) pursuant to paragraph (a)(2) of Rule 485
__________________________________________________________________________
The Exhibit Index is located at page __ of the sequential numbering
system.
Page 1 of __ Pages
<PAGE>
THE HENLOPEN FUND
CROSS REFERENCE SHEET
(Pursuant to Rule 481 showing the location in the Prospectus and
the Statement of Additional Information of the responses to the Items of
Parts A and B of Form N-1A.)
Caption or Subheading in Prospectus
Item No. on Form N-1A or Statement of Additional Information
Part A - INFORMATION REQUIRED IN PROSPECTUS
1. Cover Page Cover Page
2. Synopsis Expense Information
3. Condensed Financial Financial Highlights; Performance
Information Information
4. General Description Introduction; Investment Objective, Policies
of Registrant and Risk
5. Management of the Management of the Fund; Brokerage
Fund Transactions; Capital Structure
5A. Management's Discussion Management's Discussion of Fund Performance
of Fund Performance
6. Capital Stock and Dividends, Distributions and Taxes;
Other Securities Capital Structure; Shareholder
Reports
7. Purchase of Securities Determination of Net Asset Value;
Being Offered Purchase of Shares; Automatic Investment
Plan; Dividend Reinvestment; Retirement
Plans
8. Redemption or Repurchase Redemption of Shares
9. Legal Proceedings *
PART B - INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and *
History
13. Investment Objectives Investment Restrictions
and Policies
14. Management of the Trustees and Officers of the Fund
Registrant
15. Control Persons and Included in Prospectus under "Capital
Principal Holders Structure"; Ownership of Management
of Securities and Principal Shareholders
16. Investment Advisory Investment Adviser and Administrator;
and Other Services Custodian; Independent Accountants
17. Brokerage Allocation Allocation of Portfolio Brokerage
18. Capital Stock and Included in Prospectus under
Other Securities "Capital Structure"
19. Purchase, Redemption Included in Prospectus under
and Pricing of "Determination of Net Asset Value";
Securities Being "Automatic Investment Plan"; Dividend
Offered Reinvestment"; "Retirement Plans"; and
Determination of Net Asset Value; Systematic
Withdrawal Plan
20. Tax Status Taxes
21. Underwriters *
22. Calculation of Per- Performance Information
formance Data
23. Financial Statements Financial Statements
____________________________
*Answer negative or inapplicable
<PAGE>
P R O S P E C T U S
THE HENLOPEN FUND
(THE HENLOPEN LOGO)
A NO-LOAD MUTUAL FUND
SEEKING LONG-TERM
CAPITAL APPRECIATION
BOARD OF TRUSTEES
ROBERT J. FAHEY, JR.
Director of Real Estate Investment Banking
Cushman & Wakefield of Pennsylvania, Inc.
Philadelphia, Pennsylvania
MICHAEL L. HERSHEY
Chairman, Landis Associates, Inc.
Wilmington, Delaware
STEPHEN L. HERSHEY, M.D.
President, First State
Orthopaedic Consultants, P.A.
Newark, Delaware
P. COLEMAN TOWNSEND, JR.
President/CEO, Townsends, Inc.
Wilmington, Delaware
INVESTMENT ADVISER
LANDIS ASSOCIATES, INC.
Longwood Corporate Center
Suite 213
415 McFarlan Road
Kennett Square, Pennsylvania 19348
P R O S P E C T U S October 31, 1997
THE HENLOPEN FUND
(THE HENLOPEN LOGO)
The Henlopen Fund (the "Fund") is an open-end, diversified management investment
company -- a mutual fund. Its primary investment objective is to produce long-
term capital appreciation principally through investing in common stocks.
Current income is a secondary investment objective.
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.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. Investors are advised to
read this Prospectus and retain it for future reference. This Prospectus does
not set forth all of the information included in the Registration Statement and
Exhibits thereto which the Fund has filed with the Securities and Exchange
Commission. A Statement of Additional Information, dated October 31, 1997,
which is a part of such Registration Statement is incorporated by reference in
this Prospectus. Copies of the Statement of Additional Information will be
provided promptly without charge to each person to whom a Prospectus is
delivered upon written or telephone request. Written requests should be made by
writing to: The Henlopen Fund, Longwood Corporate Center, Suite 213, 415
McFarlan Road, Kennett Square, Pennsylvania 19348, Attn: Corporate Secretary,
and telephone requests should be made by calling (610) 925-0400.
THE HENLOPEN FUND
Longwood Corporate Center
Suite 213
415 McFarlan Road
Kennett Square, Pennsylvania 19348
(610) 925-0400
THE HENLOPEN FUND
TABLE OF CONTENTS
PAGE NO.
--------
Expense Information 1
Financial Highlights 2
Introduction 3
Investment Objective, Policies and Risk 3
Management of the Fund 5
Determination of Net Asset Value 6
Purchase of Shares 6
Automatic Investment Plan 7
Redemption of Shares 8
Retirement Plans 9
Dividend Reinvestment 12
Dividends, Distributions and Taxes 12
Brokerage Transactions 12
Capital Structure 12
Shareholder Reports 13
Performance Information 13
Management's Discussion of Fund
Performance 14
Share Purchase Application 16
EXPENSE INFORMATION
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases or Reinvested Dividends None
Deferred Sales Load None
Redemption Fee None*<F1>
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Management Fees 1.00%
12b-1 Fees None
Other Expenses 0.57%
------
Total Fund Operating Expenses 1.57%
======
*<F1>A fee of $12.00 is charged for each wire redemption.
Example: 1 Year 3 Years 5 Years 10 Years
- ------- ------ ------- ------- --------
An investor would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return
and (2) redemption at the end of each
time period: $16 $50 $86 $187
The purpose of the preceding table is to assist investors in understanding the
various costs that an investor in the Fund will bear, directly or indirectly.
THEY SHOULD NOT BE CONSIDERED TO BE A REPRESENTATION OF PAST OR FUTURE EXPENSES.
ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN. See "MANAGEMENT OF
THE FUND" for a more complete discussion of applicable management fees. The
Annual Fund Operating Expenses are based on actual expenses incurred for the
year ended June 30, 1997. The example assumes a 5% annual rate of return
pursuant to requirements of the Securities and Exchange Commission. This
hypothetical rate of return is not intended to be representative of past or
future performance of the Fund.
FINANCIAL HIGHLIGHTS
(Selected data for each share of the Fund
outstanding throughout each period)
The Financial Highlights of the Fund should be read in conjunction with the
Fund's financial statements and notes thereto included in the Fund's Annual
Report to Shareholders. Further information about the performance of the Fund
is also contained in the Fund's Annual Report to Shareholders, copies of which
may be obtained without charge upon request.
<TABLE>
<CAPTION>
For the Period
For the Years Ended From 12/2/92*<F2>
-----------------------------------------------
6/30/97 6/30/96 6/30/95 6/30/94 to 6/30/93
--------- -------- -------- -------- ---------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of period $17.47 $14.68 $11.67 $11.55 $10.00
Income from investment operations:
Net investment loss(a) <F4> (0.08) (0.05) (0.11) (0.07) (0.02)
Net realized and unrealized
gains on investments 0.58 5.10 3.31 0.64 1.58
-------- -------- -------- -------- --------
Total from investment operations 0.50 5.05 3.20 0.57 1.56
Less distributions:
Dividends from net investment income - 0 - - 0 - - 0 - - 0 - (0.01)
Distributions from net realized gains (2.14) (2.26) (0.19) (0.45) - 0 -
-------- -------- -------- -------- --------
Total from distributions (2.14) (2.26) (0.19) (0.45) (0.01)
-------- -------- -------- -------- --------
Net asset value, end of period $15.83 $17.47 $14.68 $11.67 $11.55
======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN 5.0% 38.4% 27.8% 4.9% 28.5%**<F3>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $28,979 $26,972 $11,685 $6,798 $1,062
Ratio of expenses (after reimbursement)
to average net assets(b)<F5> 1.6% 1.8% 2.0% 2.0% 2.0%**<F3>
Ratio of net investment loss
to average net assets(c)<F6> (0.7)% (1.3)% (1.2)% (1.3)% (0.7)%**<F3>
Portfolio turnover rate 140.6% 177.5% 147.8% 63.0% 54.0%
Average commission rate paid(d)<F7> $0.0578
*<F2>Commencement of Operations.
**<F3>Annualized.
(a)<F4>Net investment loss per share is calculated using balances prior to
consideration of adjustments for permanent book and tax differences.
(b)<F5>Computed after giving effect to the adviser's expense limitation
undertaking. If the Fund had paid all of its expenses, the ratio would have been
3.0% for the year ended June 30, 1994 and 11.5%**<F3> for the period ended June
30, 1993.
(c)<F6>The ratio of net investment loss prior to the adviser's expense
limitation undertaking to average net assets would have been (2.2%) for the year
ended June 30, 1994 and (10.2%)**<F3> for the period ended June 30, 1993.
(d)<F7>Disclosure required for fiscal years beginning after September 1, 1995.
</TABLE>
INTRODUCTION
The Fund was organized as a business trust under the laws of Delaware on
September 17, 1992. The Fund is an open-end, diversified management investment
company registered under the Investment Company Act of 1940. As an open-end
investment company, it obtains its assets by continuously selling shares of
beneficial interest, having no par value ("Shares"), to the public. Proceeds
from such sales are invested by the Fund in securities of other companies. The
resources of many investors are thus combined and each individual investor has
an interest in every one of the securities owned thereby providing
diversification in a variety of industries. The Fund's investment adviser
furnishes experienced management to select and watch over its investments. As
an open-end investment company, the Fund will redeem any of its outstanding
Shares on demand of the owner at the next determined net asset value.
INVESTMENT OBJECTIVE, POLICIES AND RISK
The primary investment objective of the Fund is to produce long-term capital
appreciation principally through investing in common stocks. Current income is
a secondary investment objective. Landis Associates, Inc., the Fund's
investment Adviser (the "Adviser"), anticipates that most of the time the major
portion of the Fund's portfolio will be invested in common stocks. The Adviser
purchases common stocks which it believes will appreciate significantly over a
one to two-year period. It may purchase stocks of companies having market
capitalizations ranging from less than $100 million to in excess of $5 billion.
The Adviser will endeavor to find companies that, regardless of market
capitalization size, enjoy a strong and growing position in their market niches
and might be expected to continue to benefit from ongoing industry consolidation
trends. It may purchase stocks with a strong earnings momentum if it believes
that such stocks will appreciate significantly over a one to two-year period.
However, it may also take a contrarian position and purchase out-of-favor common
stocks if it believes they will appreciate significantly over a one to two-year
period. At appropriate times in the business cycle the Adviser may purchase
cyclical stocks. However, not more than 10% of the Fund's net assets may be
invested in securities of unseasoned companies defined as companies having a
record of less than three years of continuous operation, including the operation
of any predecessor business of a company which came into existence as a result
of a merger, consolidation, reorganization or purchase of substantially all of
the assets of such predecessor business.
In selecting investments the Adviser will consider various financial
characteristics of the issuer, including historical sales and net income,
debt/equity and price/earnings ratios and book value. In addition to the
Adviser's internal fundamental research, the Adviser may also use external
information sources such as research reports of broker/dealers, trade
publications, customer and competitive reference checks, and meetings with
management. Greater weight will be given to company specific factors, such as
product or service development, than to general economic factors, such as
interest rate changes, commodity price fluctuations, general stock market trends
and foreign currency exchange values. Since the Fund's primary investment
objective is to produce long-term capital appreciation, and current income is a
secondary consideration in the selection of investments, a particular issuer's
dividend history is not a primary consideration.
Investors should be aware that since the major portion of the Fund's
portfolio will normally be invested in common stocks, the Fund's net asset value
may be subject to greater fluctuation than a portfolio containing a substantial
amount of fixed-income securities. There can be no assurance that the primary
objective of the Fund will be realized or that any income will be earned. Nor
can there be any assurance that the Fund's portfolio will not decline in value.
Except for temporary defensive purposes, the Fund intends to have at all
times at least 70% of its total assets in common stocks which the Adviser
believes offer opportunity for growth of capital. When the Adviser believes
that securities other than common stocks offer opportunity for long-term capital
appreciation, the Fund may invest up to 30% of its total assets in publicly
distributed debt securities, preferred stocks, particularly those which are
convertible into or carry rights to acquire common stocks, and warrants.
Investments in publicly distributed debt securities and nonconvertible preferred
stocks offer an opportunity for growth of capital during periods of declining
interest rates, when the market value of such securities in general increases.
The Fund will limit its investments in publicly distributed debt securities to
those which have been assigned one of the three highest ratings of either
Standard & Poor's Corporation (AAA, AA and A) or Moody's Investors Service, Inc.
(Aaa, Aa and A). In the event a publicly distributed debt security is
downgraded after investment, the Fund may retain such security unless it is
rated less than investment grade (i.e., less than BBB by Standard & Poor's
Corporation or Baa by Moody's Investors Service, Inc.). If it is downgraded
below investment grade, the Fund will promptly dispose of such publicly
distributed debt security. A description of the foregoing ratings is set forth
in the Statement of Additional Information.
Except for temporary defensive purposes, cash and money market instruments
will be retained by the Fund only in amounts deemed adequate for current needs
and to permit the Fund to take advantage of investment opportunities. The money
market instruments in which the Fund may invest include conservative fixed-
income securities, such as United States Treasury Bills, certificates of deposit
of U.S. banks (provided that the bank has capital, surplus and undivided
profits, as of the date of its most recently published annual financial
statements, with a value in excess of $100,000,000 at the date of investment),
commercial paper rated A-1 or better by Standard & Poor's Corporation,
commercial paper master notes and repurchase agreements. Commercial paper
master notes are unsecured promissory notes issued by corporations to finance
short-term credit needs. They permit a series of short-term borrowings under a
single note. Borrowings under commercial paper master notes are payable in
whole or in part at any time, may be prepaid in whole or in part at any time,
and bear interest at rates which are fixed to known lending rates and
automatically adjusted when such known lending rates change. There is no
secondary market for commercial paper master notes. The Adviser will monitor
the creditworthiness of the issuer of the commercial paper master notes while
any borrowings are outstanding.
Repurchase agreements are agreements under which the seller of a security
agrees at the time of sale to repurchase the security at an agreed time and
price. The Fund will not enter into repurchase agreements with entities other
than banks or invest over 5% of its net assets in repurchase agreements with
maturities of more than seven days. If a seller of a repurchase agreement
defaults and does not repurchase the security subject to the agreement, the Fund
will look to the collateral security underlying the seller's repurchase
agreement, including the securities subject to the repurchase agreement, for
satisfaction of the seller's obligation to the Fund. In such event, the Fund
might incur disposition costs in liquidating the collateral and might suffer a
loss if the value of the collateral declines. In addition, if bankruptcy
proceedings are instituted against a seller of a repurchase agreement,
realization upon the collateral may be delayed or limited.
The Fund does not intend to place emphasis on short-term trading profits.
The Fund's annual portfolio turnover rate generally will not exceed 150%. The
annual portfolio turnover rate indicates changes in the Fund's portfolio and is
calculated by dividing the lesser of purchases or sales of portfolio securities
(excluding securities having maturities at acquisition of one year or less) for
the fiscal year, by the monthly average of the value of the portfolio securities
(excluding securities having maturities at acquisition of one year or less)
owned by the Fund during the fiscal year. The annual portfolio turnover rate
may vary widely from year to year depending upon market conditions and
prospects. High turnover (100% or more) in any year will result in the payment
by the Fund from capital of above average amounts of brokerage commissions and
could result in the payment by shareholders of above-average amounts of taxes on
realized gains. Distributions to shareholders of such investment gains, to the
extent they consist of net short-term capital gains, will be considered ordinary
income for federal income tax purposes.
The Fund will limit to 10% of its assets investments in securities of foreign
issuers or in American Depository Receipts of such issuers. Such investments
may involve risks which are in addition to the usual risks inherent in domestic
investments. The value of the Fund's foreign investments may be significantly
affected by changes in currency exchange rates and the Fund may incur costs in
converting securities denominated in foreign currencies to U.S. dollars. In
many countries, there is less publicly available information about issuers than
is available in the reports and ratings published about companies in the United
States. Additionally, foreign companies are not subject to uniform accounting,
auditing and financial reporting standards. Dividends and interest on foreign
securities may be subject to foreign withholding taxes, which would reduce the
Fund's income without providing a tax credit for the Fund's stockholders.
Although the Fund intends to invest in securities of foreign issuers domiciled
in nations which the Fund's investment adviser considers as having stable and
friendly governments, there is the possibility of expropriation, confiscatory
taxation, currency blockage or political or social instability which could
affect investments in those nations.
Under certain circumstances the Fund may (a) invest in warrants, (b)
temporarily borrow money from banks for emergency or extraordinary borrowings,
(c) pledge its assets to secure borrowings, and (d) purchase securities of other
investment companies. A more complete discussion of the circumstances in which
the Fund may engage in these activities is included in the Fund's Statement of
Additional Information. Except for the investment policies listed in this
paragraph, the investment objective and the other policies described under this
caption are not fundamental policies and may be changed without shareholder
approval. Such changes may result in the Fund having investment objectives
different from the objectives which the shareholder considered appropriate at
the time of investment in the Fund.
MANAGEMENT OF THE FUND
As a Delaware business trust, the business and affairs of the Fund are
managed under the direction of its Trustees. Under an investment advisory
agreement (the "Agreement") with the Fund, Landis Associates, Inc. (the
"Adviser"), Longwood Corporate Center, Suite 213, 415 McFarlan Road, Kennett
Square, Pennsylvania 19348, furnishes continuous investment advisory services
and management to the Fund. In addition to the Fund, the Adviser is the
investment adviser to individual and institutional clients with substantial
investment portfolios. As of September 30, 1997, the Adviser managed
approximately $115 million in assets. The Adviser was organized in 1986 and is
controlled by Michael L. Hershey, who is a director and the Chairman and
President of the Adviser.
The Adviser supervises and manages the investment portfolio of the Fund and,
subject to such policies as the Trustees of the Fund may determine, directs the
purchase or sale of investment securities in the day-to-day management of the
Fund. Under the Agreement, the Adviser, at its own expense and without
reimbursement from the Fund, will furnish office space and all necessary office
facilities, equipment and executive personnel for making the investment
decisions necessary for managing the Fund and maintaining its organization, and
will pay the salaries and fees of all officers and directors of the Fund (except
the fees paid to disinterested directors) and the printing and distribution cost
of prospectuses mailed to persons other than existing shareholders. For the
foregoing, the Adviser will receive a monthly fee of 1/12 of 1% (1.0% per annum)
of the daily net assets of the Fund. The advisory fees paid in the fiscal year
ended June 30, 1997 were equal to 1.0% of the Fund's average net assets.
Michael L. Hershey, President and Chairman of the Board of the Adviser since
he founded the firm in 1986, is primarily responsible for the day-to-day
management of the Fund's portfolio. He has held this responsibility since the
Fund commenced operations on December 2, 1992. Mr. Hershey also has served as
Chairman, President, Treasurer and a Trustee of the Fund since it was organized
in September, 1992.
The Fund also has entered into an administration agreement (the
"Administration Agreement") with Fiduciary Management, Inc. (the
"Administrator"), 225 East Mason Street, Milwaukee, Wisconsin 53202. Under the
Administration Agreement, the Administrator prepares and maintains the books,
accounts and other documents required by the Act, calculates the Fund's net
asset value, responds to shareholder inquiries, prepares the Fund's financial
statements and tax returns, prepares certain reports and filings with the
Securities and Exchange Commission and with state Blue Sky authorities,
furnishes statistical and research data, clerical, accounting and bookkeeping
services and stationery and office supplies, keeps and maintains the Fund's
financial and accounting records and generally assists in all aspects of the
Fund's operations. The Administrator, at its own expense and without
reimbursement from the Fund, furnishes office space and all necessary office
facilities, equipment and executive personnel for performing the services
required to be performed by it under the Administration Agreement. For the
foregoing, the Administrator receives from the Fund a monthly fee of 1/12 of
0.2% (0.2% per annum) of the first $30,000,000 of the Fund's average daily net
assets, 1/12 of 0.1% (0.1% per annum) of the next $30,000,000 of the Fund's
average daily net assets and 1/12 of 0.05% (0.05% per annum) of the average
daily net assets of the Fund in excess of $30,000,000, subject to a fiscal year
minimum of $20,000.
DETERMINATION OF NET ASSET VALUE
The per Share net asset value of the Fund is determined by dividing the total
value of its net assets (meaning its assets less its liabilities) by the total
number of its Shares outstanding at that time. The net asset value is
determined as of the close of regular trading (currently 4:00 p.m. Eastern time)
on the New York Stock Exchange on each day the New York Stock Exchange is open
for trading. This determination is applicable to all transactions in Shares of
the Fund prior to that time and after the previous time as of which net asset
value was determined. Accordingly, purchase orders accepted or Shares tendered
for redemption prior to the close of regular trading on a day the New York Stock
Exchange is open for trading will be valued as of the close of trading, and
purchase orders accepted or Shares tendered for redemption after that time will
be valued as of the close of the next trading day.
Securities traded on any national stock exchange or quoted on the Nasdaq
National Market System will be valued on the basis of the last sale price on the
date of valuation or, in the absence of any sale on that date, the most recent
bid price. Other securities will be valued at the most recent bid price, if
market quotations are readily available. Any securities for which there are no
readily available market quotations and other assets will be valued at their
fair value as determined in good faith by the Trustees. Odd lot differentials
and brokerage commissions will be excluded in calculating values.
PURCHASE OF SHARES
Shares may be purchased directly from the Fund. A Share purchase application
form is included at the back of this Prospectus. The price per Share is the
next determined per Share net asset value after receipt of an application.
Additional purchase applications may be obtained from the Fund. Purchase
applications should be mailed directly to: The Henlopen Fund, c/o Firstar Trust
Company, P.O. Box 701, Milwaukee, Wisconsin 53201-0701. The U.S. Postal Service
and other independent delivery services are not agents of the Fund. Therefore,
deposit of purchase applications in the mail or with such services does not
constitute receipt by Firstar Trust Company or the Fund. PLEASE DO NOT mail
letters by overnight courier to the Post Office Box address. To purchase Shares
by overnight or express mail, please use the following street address: The
Henlopen Fund, c/o Firstar Trust Company, Mutual Fund Services, Third Floor, 615
East Michigan Street, Milwaukee, Wisconsin 53202. All applications must be
accompanied by payment in the form of a check drawn on a U.S. bank payable to
The Henlopen Fund, or by direct wire transfer. Neither cash nor third-party
checks will be accepted. Firstar Trust Company will charge a $20 fee against a
shareholder's account for any payment check returned to the custodian. THE
SHAREHOLDER WILL ALSO BE RESPONSIBLE FOR ANY LOSSES SUFFERED BY THE FUND AS A
RESULT.
Funds should be
wired to: Firstar Bank of Milwaukee, N.A.
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
ABA #075000022
credit: Firstar Trust Company
Account #112952137
further credit: The Henlopen Fund
"name of shareholder and account number (if known)"
The establishment of a new account or any additional purchases for an
existing account by wire transfer should be preceded by a phone call to Firstar
Trust Company at (800) 922-0224 to provide information for the account. A
properly signed Share purchase application marked "Follow-up" must be sent for
all new accounts opened by wire transfer. Applications are subject to
acceptance by the Fund, and are not binding until so accepted. The Fund does
not accept telephone orders for purchase of Shares and reserves the right to
reject applications in whole or part. You may also invest in the Fund by
purchasing Shares through a registered broker-dealer who may charge you a fee
either at time of purchase or redemption. The fee, if charged, is retained by
the broker-dealer and not remitted to the Fund or Adviser.
The Trustees of the Fund have established $10,000 as the minimum initial
purchase (except for Individual Retirement Account ("IRA") investments, where
the minimum is $2,000 ($500 for Education IRAs) and 401(k) plans which have no
minimums) and $1,000 as the minimum for any subsequent purchase (except through
dividend reinvestment and 401(k) plans which have no minimums and for IRA
investments, where the minimum is $500), which minimum amounts are subject to
change at any time. Shareholders will receive written notification at least
thirty days in advance of any changes in such minimum amounts.
Investors may purchase Shares of the Fund through programs of services
offered or administered by broker-dealers, financial institutions or other
service providers ("Processing Intermediaries") that have entered into
agreements with the Fund. Such Processing Intermediaries may become shareholders
of record and may use procedures and impose restrictions in addition to or
different from those applicable to shareholders who invest directly in the Fund.
Certain services of the Fund may not be available or may be modified in
connection with the programs provided by Processing Intermediaries. The Fund may
only accept requests to purchase additional shares into an account in which the
Processing Intermediary is the shareholder of record from the Processing
Intermediary.
The Fund may authorize one or more Processing Intermediaries (and other
Processing Intermediaries properly designated thereby) to accept purchase orders
on the Fund's behalf. In such event, the Fund will be deemed to have received a
purchase order when the Processing Intermediary accepts the customer order, and
the order will be priced at the Fund's net asset value next computed after it is
accepted by the Processing Intermediary.
Processing Intermediaries may charge fees or assess other charges for the
services they provide to their customers. Any such fee or charge paid directly
by shareholders is retained by the Processing Intermediary and is not remitted
to the Fund or the Adviser. Additionally, the Adviser and/or the Fund may pay
fees to Processing Intermediaries to compensate them for the services they
provide. Program materials provided by the Processing Intermediary should be
read in conjunction with the Prospectus before investing in this manner. Shares
of the Fund may be purchased through Processing Intermediaries without regard to
the Fund's minimum purchase requirement.
Certain Processing Intermediaries that have entered into agreements with the
Fund may enter purchase orders by telephone, with payment to follow the next
business day as specified in the agreement. The Fund may effect such purchase
orders at the net asset value next determined after receipt of the telephone
purchase order. It is the responsibility of the Processing Intermediary to place
the order with the Fund on a timely basis. If payment is not received within the
time period specified in the agreement, the Processing Intermediary could be
held liable for any resulting fees or losses.
AUTOMATIC INVESTMENT PLAN
The Fund offers an Automatic Investment Plan whereby a shareholder may
automatically make purchases of Shares on a regular, convenient basis ($100
minimum per transaction). Under the Automatic Investment Plan, a shareholder's
designated bank or other financial institution debits a preauthorized amount on
the shareholder's account either monthly or quarterly and applies the amount to
the purchase of Shares. A shareholder may make automatic withdrawals on any day
he or she chooses. If such day is a weekend or holiday, the automatic
withdrawal will be made on the next business day. The Automatic Investment Plan
must be implemented with a financial institution that is a member of the
Automated Clearing House ("ACH"). No service fee is currently charged by the
Fund for participating in the Automatic Investment Plan. A $20 fee will be
imposed by the transfer agent if sufficient funds are not available in the
shareholder's account at the time of the automatic transaction. An application
to establish the Automatic Investment Plan is included as part of the Share
purchase application.
REDEMPTION OF SHARES
A shareholder may require the Fund to redeem his or her Shares in whole or in
part at any time during normal business hours. Redemption requests must be made
in writing and directed to: The Henlopen Fund, c/o Firstar Trust Company, P.O.
Box 701, Milwaukee, Wisconsin 53201-0701. The U.S. Postal Service and other
independent delivery services are not agents of the Fund. Therefore, deposit of
redemption requests in the mail or with such services does not constitute
receipt by Firstar Trust Company or the Fund. Please do not mail letters by
overnight courier to the Post Office Box address. Redemption requests sent by
overnight or express mail should be directed to: The Henlopen Fund, c/o Firstar
Trust Company, Mutual Fund Services, 3rd Floor, 615 East Michigan Street,
Milwaukee, Wisconsin 53202. If a redemption request is inadvertently sent to
the Fund, it will be forwarded to Firstar Trust Company, but the effective date
of redemption will be delayed until the request is received by Firstar Trust
Company. Requests for redemption by telegram and requests which are subject to
any special conditions or which specify an effective date other than as provided
herein cannot be honored.
A request for redemption must be signed by the shareholder or shareholders
exactly as the Shares are registered, including the signature of each joint
owner, and must specify either the number of Shares or the dollar amount of
Shares that are to be redeemed. If the proceeds of redemption are requested to
be sent to an address or a person other than as the Shares to be redeemed are
registered, each signature on the redemption request must be guaranteed by a
commercial bank or trust company in the United States, a member firm of the New
York Stock Exchange or any other eligible guarantor institution. Additional
documentation may be required for redemptions by corporations, executors,
administrators, trustees, guardians, or others who hold shares in a fiduciary or
representative capacity or who are not natural persons. In case of any
questions concerning the nature of such documentation, the Fund's transfer
agent, Firstar Trust Company, should be contacted in advance at (800) 922-0224.
Redemptions will not be effective or complete until all of the foregoing
conditions, including receipt of all required documentation by Firstar Trust
Company in its capacity as transfer agent, have been satisfied.
Shareholders who have an IRA must indicate on their redemption requests
whether or not to withhold federal income tax. Unless otherwise indicated,
these redemptions, as well as redemptions of other retirement plans not
involving a direct rollover to an eligible plan, will be subject to federal
income tax withholding.
The redemption price is the net asset value next determined after receipt by
Firstar Trust Company in its capacity as transfer agent of the written request
in proper form with all required documentation. The amount received may be more
or less than the cost of the Shares redeemed. Proceeds for Shares redeemed will
be mailed, wired or forwarded via Electronic Funds Transfer ("EFT") to the
holder no later than the seventh day after receipt of the redemption request in
proper form with all required documentation, except that when a purchase has
been made by check, the Fund can hold payment on redemption until it is
reasonably satisfied the check has cleared. (This may normally take up to 3
days from the purchase date for local personal or corporate checks and up to 7
days for other personal or corporate checks.) Firstar Trust Company currently
charges a $12.00 fee for each payment made by wire of redemption proceeds, which
will be deducted from the shareholder's account. Transfers made via EFT
generally will take up to 3 business days to reach the shareholder's bank
account.
Shares of the Fund purchased through programs of services offered or
administered by Processing Intermediaries that have entered into agreements with
the Fund may be required to be redeemed through such programs. Such Processing
Intermediaries may become shareholders of record and may use procedures and
impose restrictions in addition to or different from those applicable to
shareholders who redeem shares directly through the Fund. The Fund may only
accept redemption requests for an account in which the Processing Intermediary
is the shareholder of record from the Processing Intermediary. The Fund may
authorize one or more Processing Intermediaries (and other Processing
Intermediaries properly designated thereby) to accept redemption requests on the
Fund's behalf. In such event, the Fund will be deemed to have received a
redemption request when the Processing Intermediary accepts the customer
request, and the redemption price will be the Fund's net asset value next
computed after the customer redemption request is accepted by the Processing
Intermediary.
If a shareholder instructs Firstar Trust Company in writing, redemption
requests may be made by telephone by CALLING ONLY FIRSTAR TRUST COMPANY, NOT THE
FUND OR ITS ADVISER, at (800) 922-0224 or (414) 765-4124, provided the
redemption proceeds are to be mailed, wired or forwarded via EFT to the
shareholder's address or bank of record as shown on the records of the transfer
agent. Proceeds redeemed by telephone will be mailed, wired or forwarded via EFT
to an address or account other than that shown on the records of the transfer
agent only if such has been prearranged by a written request sent via mail or
facsimile copy to Firstar Trust Company. Such a request must be signed by the
shareholder with signatures guaranteed as described above. Additional
documentation may be requested from those who hold shares in a fiduciary or
representative capacity or who are not natural persons. A shareholder may change
his address by calling Firstar Trust Company at (800) 922-0224 or (414) 765-
4124. Any written redemption requests received within 30 days after an address
change, whether such address change is made in writing or by telephone, must be
accompanied by a signature guarantee. In addition, no telephone redemptions will
be allowed within 30 days of an address change. The Fund reserves the right to
refuse a telephone redemption request if it is believed advisable to do so.
Redemption by telephone is not available for IRA accounts. PROCEDURES FOR
TELEPHONE REDEMPTIONS MAY BE MODIFIED OR TERMINATED AT ANY TIME BY THE FUND OR
FIRSTAR TRUST COMPANY. Neither the Fund nor Firstar Trust Company will be liable
for following instructions for telephone redemption transactions that they
reasonably believe to be genuine, provided reasonable procedures are used to
confirm the genuineness of the telephone instructions, but may be liable for
unauthorized transactions if they fail to follow such procedures. These
procedures include requiring some form of personal identification prior to
acting upon the telephone instructions and recording all telephone calls. During
periods of substantial economic or market change, telephone redemptions may be
difficult to implement. In the event a shareholder cannot contact Firstar Trust
Company by telephone, he or she should make a redemption request in writing in
the manner set forth above.
To accommodate the current cash needs of investors, the Fund offers a
SYSTEMATIC WITHDRAWAL PLAN pursuant to which a shareholder who owns Shares worth
at least $50,000 at current net asset value may provide that a fixed sum ($500
minimum) will be distributed to him at regular intervals. A shareholder may
make systematic withdrawal payments on any day he or she chooses. If such day
is a weekend or holiday, the automatic withdrawal will be made on the next
business day. Investors may elect to have such payments automatically deposited
in their checking or savings accounts via wire or EFT. Firstar Trust Company
currently charges a $12.00 fee for each payment made by wire of redemption
proceeds, which will be deducted from the shareholder's account. See the Share
purchase application form included at the back of this Prospectus for further
information. In electing to participate in the Systematic Withdrawal Plan,
investors should realize that within any given period the appreciation of their
investment in the Fund may not be as great as the amount withdrawn. A more
complete discussion of the Systematic Withdrawal Plan is included in the Fund's
Statement of Additional Information.
The right to redeem Shares of the Fund will be suspended for any period
during which the New York Stock Exchange is closed because of financial
conditions or any other extraordinary reason and may be suspended for any period
during which (a) trading on the New York Stock Exchange is restricted pursuant
to rules and regulations of the Securities and Exchange Commission, (b) the
Securities and Exchange Commission has by order permitted such suspension or (c)
an emergency, as defined by rules and regulations of the Securities and Exchange
Commission, exists as a result of which it is not reasonably practicable for the
Fund to dispose of its securities or fairly to determine the value of its net
assets.
RETIREMENT PLANS
The Fund offers the following retirement plans that may be funded with
purchases of Shares and may allow investors to shelter some of their income from
taxes:
INDIVIDUAL RETIREMENT ACCOUNTS
Individual shareholders may establish their own tax-sheltered Individual
Retirement Acccount ("IRA"). The Fund currently offers a Traditional IRA and,
effective January 1, 1998, the Fund will offer three types of IRAs, including
the Traditional IRA, that can be adopted by executing the appropriate Internal
Revenue Service ("IRS") Form.
Traditional IRA. In a Traditional IRA, amounts contributed to the IRA may be
tax deductible at the time of contribution depending on whether the shareholder
is an "active participant" in an employer-sponsored retirement plan and the
shareholder's income. Distributions from a Traditional IRA will be taxed at
distribution except to the extent that the distribution represents a return of
the shareholder's own contributions for which the shareholder did not claim (or
was not eligible to claim) a deduction. Distributions prior to age 59-1/2 may be
subject to an additional 10% tax applicable to certain premature distributions.
Distributions must commence by April 1 following the calendar year in which the
shareholder attains age 70-1/2. Failure to begin distributions by this date (or
distributions that do not equal certain minimum thresholds) may result in
adverse tax consequences.
Roth IRA. In a Roth IRA (sometimes known as American Dream IRA), amounts
contributed to the IRA are taxed at the time of contribution, but distributions
from the IRA are not subject to tax if the shareholder has held the IRA for
certain minimum periods of time (generally, until age 59-1/2). Shareholders
whose incomes exceed certain limits are ineligible to contribute to a Roth IRA.
Distributions that do not satisfy the requirements for tax-free withdrawal are
subject to income taxes (and possibly penalty taxes) to the extent that the
distribution exceeds the shareholder's contributions to the IRA. The minimum
distribution rules applicable to Traditional IRAs do not apply during the
lifetime of the shareholder. Following the death of the shareholder, certain
minimum distribution rules apply.
For Traditional and Roth IRAs, the maximum annual contribution generally is
equal to the lesser of $2,000 or 100% of the shareholder's compensation (earned
income). An individual may also contribute to a Traditional IRA or Roth IRA on
behalf of his or her spouse provided that the individual has sufficient
compensation (earned income). Contributions to a Traditional IRA reduce the
allowable contribution under a Roth IRA, and contributions to a Roth IRA reduce
the allowable contribution to a Traditional IRA.
Education IRA. In an Education IRA, contributions are made to an IRA
maintained on behalf of a beneficiary under age 18. The maximum annual
contribution is $500 per beneficiary. The contributions are not tax deductible
when made. However, if amounts are used for certain educational purposes,
neither the contributor nor the beneficiary of the IRA are taxed upon
distribution. The beneficiary is subject to income (and possibly penalty taxes)
on amounts withdrawn from an Education IRA that are not used for qualified
educational purposes. Shareholders whose income exceeds certain limits are
ineligible to contribute to an Education IRA.
Under current IRS regulations, an IRA applicant must be furnished a disclosure
statement containing information specified by the IRS. The applicant generally
has the right to revoke his account within seven days after receiving the
disclosure statement and obtain a full refund of his contributions. The
custodian may, in its discretion, hold the initial contribution uninvested
until the expiration of the seven-day revocation period. The custodian does not
anticipate that it will exercise its discretion but reserves the right to do
so.
SIMPLIFIED EMPLOYEE PENSION PLAN
A Traditional IRA may also be used in conjunction with a Simplified Employee
Pension Plan ("SEP-IRA"). A SEP-IRA is established through execution of Form
5305-SEP together with a Traditional IRA established for each eligible employee.
Generally, a SEP-IRA allows an employer (including a self-employed individual)
to purchase Shares with tax deductible contributions not exceeding annually for
any one participant 15% of compensation (disregarding for this purpose
compensation in excess of $160,000 per year). The $160,000 compensation limit
applies for 1998 and is adjusted periodically for cost of living increases. A
number of special rules apply to SEP Plans, including a requirement that
contributions generally be made on behalf of all employees of the employer
(including for this purpose a sole proprietorship or partnership) who satisfy
certain minimum participation requirements.
SIMPLE IRA
An IRA may also be used in connection with a SIMPLE Plan established by the
shareholder's employer (or by a self-employed individual). When this is done,
the IRA is known as a SIMPLE IRA, although it is similar to a Traditional IRA
with the exceptions described below. Under a SIMPLE Plan, the shareholder may
elect to have his or her employer make salary reduction contributions of up to
$6,000 per year to the SIMPLE IRA. The $6,000 limit applies for 1997 and is
adjusted periodically for cost of living increases. In addition, the employer
will contribute certain amounts to the shareholder's SIMPLE IRA, either as a
matching contribution to those participants who make salary reduction
contributions or as a non-elective contribution to all eligible participants
whether or not making salary reduction contributions. A number of special rules
apply to SIMPLE Plans, including (1) a SIMPLE Plan generally is available only
to employers with fewer than 100 employees; (2) contributions must be made on
behalf of all employees of the employer (other than bargaining unit employees)
who satisfy certain minimum participation requirements; (3) contributions are
made to a special SIMPLE IRA that is separate and apart from the other IRAs of
employees; (4) the early distribution excise tax (if otherwise applicable) is
increased to 25% on withdrawals during the first two years of participation in a
SIMPLEIRA; and (5) amounts withdrawn during the first two years of participation
in a SIMPLE IRA may be rolled over tax-free only into another SIMPLE IRA (and
not to a Traditional IRA or to a Roth IRA). A SIMPLE IRA is established by
executing Form 5304-SIMPLE together with an IRA established for each eligible
employee.
403(b)(7) CUSTODIAL ACCOUNT
A 403(b)(7) Custodial Account is available for use in conjunction with the
403(b)(7) program established by certain educational organizations and other
organizations that are exempt from tax under 501(c)(3) of the Internal Revenue
Code, as amended ("Code"). Amounts contributed to the custodial account in
accordance with the employer's 403(b)(7) program will be invested on a tax-
deductible basis in Shares of the Fund. Various contribution limits apply with
respect to 403(b)(7) arrangements.
DEFINED CONTRIBUTION RETIREMENT PLAN (401(k))
A prototype defined contribution plan is available for employers who wish to
purchase Shares of the Fund with tax deductible contributions. The plan consists
of both profit sharing and money purchase pension components. The profit sharing
component includes a Section 401(k) cash or deferred arrangement for employers
who wish to allow eligible employees to elect to reduce their compensation and
have such amounts contributed to the plan. The limit on employee salary
reduction contributions is $9,500 annually (as adjusted for cost-of-living
increases) although lower limits may apply as a result of non-discrimination
requirements incorporated into the plan. The Fund has received an opinion letter
from the IRS holding that the form of the prototype defined contribution
retirement plan is acceptable under Section 401 of the Code. The
maximum annual contribution that may be allocated to the account of any
participant is generally the lesser of $30,000 or 25% of compensation (earned
income). Compensation in excess of $160,000 (as periodically indexed for cost-
of-living increases) is disregarded for this purpose. The maximum amount that is
deductible by the employer depends upon whether the employer adopts both the
profit sharing and money purchase components of the plan, or only one component.
RETIREMENT PLAN FEES
Firstar Trust Company, Milwaukee, Wisconsin, serves as trustee or custodian
of the retirement plans. Firstar invests all cash contributions, dividends and
capital gains distributions in shares of the Fund. For such services, the
following fees are charged against the accounts of participants; $12.50 annual
maintenance fee per participant account; $15 for transferring to a successor
trustee or custodian; $15 for distribution(s) to a participant; and $15 for
refunding any contribution in excess of the deductible limit. Firstar's fee
schedule may be changed upon written notice.
Requests for information and forms concerning the retirement plans should be
directed to the Fund. Because a retirement program may involve commitments
covering future years, it is important that the investment objective of the Fund
be consistent with the participant's retirement objectives. Premature withdrawal
from a retirement plan will result in adverse tax consequences. Consultation
with a competent financial and tax advisor regarding the retirement plans is
recommended.
DIVIDEND REINVESTMENT
Shareholders may elect to have all income dividends and capital gains
distributions reinvested or paid in cash, or to have dividends reinvested and
capital gains distributions paid in cash or capital gains distributions
reinvested and income dividends paid in cash. Shareholders having dividends
and/or capital gains distributions paid in cash may choose to have such amounts
automatically deposited to their checking or savings accounts via EFT.
Transfers via EFT generally will take up to 3 business days to reach the
shareholder's bank account. See the Share purchase application form included at
the back of this Prospectus for further information. If a shareholder does not
specify an election, all income dividends and capital gains distributions will
automatically be reinvested in full and fractional Shares calculated to the
nearest 1,000th of a Share. Shares are purchased at the net asset value in
effect on the business day after the dividend record date and are credited to
the shareholder's account on the dividend payment date. Shareholders will be
advised of the number of Shares purchased and the price following each
reinvestment. An election to reinvest or receive dividends and distributions in
cash will apply to all Shares registered in the same name, including those
previously purchased. See "DIVIDENDS, DISTRIBUTIONS AND TAXES" for tax
consequences.
A shareholder may change an election at any time by notifying the Fund in
writing. If such a notice is received between a dividend declaration date and
payment date, it will become effective on the day following the payment date.
The Fund may modify or terminate its dividend reinvestment program at any time
on thirty days' written notice to participants.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund will endeavor to qualify as a "regulated investment company" under
Subchapter M of the Code. Pursuant to the qualification requirements of
Subchapter M, the Fund intends to distribute substantially all of its net
investment income to its shareholders annually. The Fund also intends to
distribute substantially all of its net capital gains less available capital
loss carryovers annually and other income to reduce or avoid federal income and
excise taxes. For federal income tax purposes, distributions by the Fund,
whether invested in additional Shares or received in cash, will be taxable to
the Fund's shareholders unless the shareholder is exempt from federal taxation.
Shareholders will be notified annually as to the federal tax status of dividends
and distributions.
Distributions and redemptions may also be taxed under state and local tax
laws. Investors are advised to consult their tax adviser concerning the
application of state and local taxes.
BROKERAGE TRANSACTIONS
The Agreement authorizes the Adviser to select the brokers or dealers that
will execute the purchases and sales of the Fund's portfolio securities. In
placing purchase and sale orders for the Fund, it is the policy of the Adviser
to seek the best execution of orders at the most favorable price in light of the
overall quality of brokerage and research services provided.
The Agreement permits the Adviser to pay a broker which provides brokerage
and research services to the Adviser a commission for effecting securities
transactions in excess of the amount another broker would have charged for
executing the transaction, provided the Adviser believes this to be in the best
interests of the Fund. The Fund may place portfolio orders with broker-dealers
who recommend the purchase of Shares to clients, if the Adviser believes the
commissions and transaction quality are comparable to that available from other
brokers, and may allocate portfolio brokerage on that basis.
CAPITAL STRUCTURE
The Fund's authorized capital consists of an unlimited number of Shares.
Shareholders are entitled: (i) to one vote per full Share; (ii) to such
distributions as may be declared by the Fund's Trustees out of funds legally
available; and (iii) upon liquidation, to participate ratably in the assets
available for distribution. There are no conversion or sinking fund provisions
applicable to the Shares, and the holders have no preemptive rights and may not
cumulate their votes in the election of Trustees. Consequently, the holders of
more than 50% of the Shares voting for the election of Trustees can elect all
the Trustees, and in such event, the holders of the remaining Shares voting for
the election of Trustees will not be able to elect any persons as Trustees. The
Fund does not anticipate holding an annual meeting in any year in which the
election of Trustees is not required to be acted on by shareholders under the
Investment Company Act of 1940. The Fund's Trust Instrument contains provisions
for the removal of Trustees by the shareholders.
The Shares are redeemable and are transferable. All Shares issued and sold
by the Fund will be fully paid and nonassessable. Fractional Shares entitle the
holder of the same rights as whole Shares. Firstar Trust Company, 615 East
Michigan Street, Milwaukee, Wisconsin 53202 acts as the Fund's transfer agent
and dividend disbursing agent.
The Fund will not issue certificates evidencing Shares purchased. Each
shareholder's account will be credited with the number of Shares purchased,
relieving shareholders of responsibility for safekeeping of certificates and the
need to deliver them upon redemption. Written confirmations are issued for all
purchases of Shares.
Pursuant to the Trust Instrument, the Trustees may establish and designate
one or more separate and distinct series of Shares, each of which shall be
authorized to issue an unlimited number of Shares. In addition, the Trustees
may, without obtaining any prior authorization or vote of shareholders,
redesignate or reclassify any issued Shares of any series. In the event that
more than one series is established, each Share outstanding, regardless of
series, would still entitle its holder to one (1) vote. As a general matter,
Shares would be voted in the aggregate and not by series, except where class
voting would be required by the Investment Company Act of 1940 (e.g., change in
investment policy or approval of an investment advisory agreement). All
consideration received from the sale of Shares of any series, together with all
income, earnings, profits and proceeds thereof, would belong to that series and
would be charged with the liabilities in respect of that series and of that
series' share of the general liabilities of the Fund in the proportion that the
total net assets of the series bear to the total net assets of all series. The
net asset value of a Share of any series would be based on the assets belonging
to that series less the liabilities charged to that series, and dividends could
be paid on Shares of any series only out of lawfully available assets belonging
to that series. In the event of liquidation or dissolution of the Fund, the
shareholders of each series would be entitled, out of the assets of the Fund
available for distribution, to the assets belonging to that series.
The Fund's Trust Instrument contains an express disclaimer of shareholder
liability for its acts or obligations and requires that notice of such
disclaimer be given in each agreement, obligation or instrument entered into or
executed by the Fund or its Trustees. The Trust Instrument provides for
indemnification and reimbursement of expenses out of the Fund's property for any
shareholder held personally liable for its obligations. The Trust Instrument
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.
The Trust Instrument further provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law, but nothing in the Trust
Instrument protects a Trustee against any liability 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.
SHAREHOLDER REPORTS
Shareholders will be provided at least semi-annually with a report showing
the Fund's portfolio and other information and annually after the close of the
Fund's fiscal year, which ends June 30, with an annual report containing audited
financial statements. Shareholders who have questions about the Fund should
write to: The Henlopen Fund, Longwood Corporate Center, Suite 213, 415 McFarlan
Road, Kennett Square, Pennsylvania 19348, Attention: Corporate Secretary, or
call (610) 925-0400. Questions about individual accounts may be directed toll
free to Firstar Trust Company at (800) 922-0224.
PERFORMANCE INFORMATION
The Fund may provide from time to time in advertisements, reports to
shareholders and other communications with shareholders its average annual
compounded rate of return as well as its total return and cumulative total
return. An average annual compounded rate of return refers to the rate of
return which, if applied to an initial investment at the beginning of a stated
period and compounded over the period, would result in the redeemable value of
the investment at the end of the stated period assuming reinvestment of all
dividends and distributions and reflecting the effect of all recurring fees.
Total return and cumulative total return similarly reflect net investment income
generated by, and the effect of any realized and unrealized appreciation or
depreciation of, the underlying investments of the Fund for the stated period,
assuming the reinvestment of all dividends and distributions and reflecting the
effect of all recurring fees. Total return figures are not annualized or
compounded and represent the aggregate percentage of dollar value change over
the period in question. Cumulative total return reflects the Fund's total
return since inception. An investor's principal in the Fund and the Fund's
return are not guaranteed and will fluctuate according to market conditions.
The Fund may compare its performance to other mutual funds with similar
investment objectives and to the industry as a whole, as reported by Lipper
Analytical Services, Inc., Morningstar, Inc., Money, Forbes, Business Week and
Barron's magazines and The Wall Street Journal. (Lipper Analytical Services,
Inc. and Morningstar, Inc. are independent fund ranking services that rank
mutual funds based upon total return performance.) The Fund may also compare
its performance to the Dow Jones Industrial Average, NASDAQ Composite Index,
NASDAQ Industrials Index, Value Line Composite Index, the Standard & Poor's 500
Stock Index ("S&P 500 Index") and the Consumer Price Index. Such comparisons
may be made in advertisements, shareholder reports or other communications to
shareholders.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
Fiscal 1997 saw a continuation of the extremely favorable economic and
financial environment that has formed the investment backdrop for the last
several years. Economically, GDP growth exceeded 3% during the period, while
expanding world trade, a strong dollar and a stable global political environment
all contributed to the investor's feeling of well being. Financially, corporate
profits remained robust while long term interest rates generally declined. These
factors provided a strong stimulus for the continuation of the positive trend in
stock prices.
Throughout the year, money flows into equity mutual funds exceeded $15
billion/month and were a primary driver of increasing equity prices. From July
1996 to March 1997, much of this money flowed into index funds, which purchase
mostly large capitalization companies. These money flows resulted in a market
where large companies generally outperformed smaller ones of the type in which
the Fund invests. Since April 1997, however, smaller companies have appreciated
considerably and the valuation discrepancy between larger and smaller companies
has diminished. During this period the Fund's investment performance improved as
well.
The Fund appreciated 5.0% for the fiscal year ended June 30, 1997. Throughout
this period we maintained our strategy and our investment discipline. We
continue to believe that superior long-term results will be generated by our
approach. For the three years ending June 1997, the Fund has appreciated at an
annual compounded rate of +22.9%. We look to invest in companies that have
attained leadership positions within their market niches and are generating
strong revenue and earnings growth. We will maintain a balanced, diversified
portfolio and will exercise our established valuation and selection disciplines.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE HENLOPEN FUND, S&P 500 INDEX AND LIPPER GROWTH FUND INDEX
The Henlopen Fund S&P 500 Index Lipper Growth Fund Index
12/2/92*<F10> $10,000 $10,000 $10,000
12/31/92 $10,010 $10,162 $10,204
3/31/93 $10,821 $10,600 $10,507
6/30/93 $11,562 $10,643 $10,661
9/30/93 $12,450 $10,928 $11,173
12/31/93 $12,999 $11,183 $11,426
3/31/94 $12,760 $10,754 $11,084
6/30/94 $12,126 $10,792 $10,841
9/30/94 $12,853 $11,330 $11,373
12/31/94 $12,644 $11,325 $11,246
3/31/95 $13,583 $12,432 $12,059
6/30/95 $15,493 $13,600 $13,350
9/30/95 $17,819 $14,693 $14,562
12/31/95 $17,453 $15,576 $14,855
3/31/96 $19,233 $16,413 $15,590
6/30/96 $21,442 $17,140 $16,109
9/30/96 $21,024 $17,670 $16,568
12/31/96 $21,182 $19,143 $17,259
3/31/97 $20,072 $19,656 $17,199
6/30/97 $22,519 $23,088 $19,916
*<F10>December 2, 1992 inception date
AVERAGE ANNUAL TOTAL RETURN
1-YEAR 5.0%
since inception 12/2/92 19.4%
Past performance is not predictive of future performance.
THE HENLOPEN FUND
SHARE PURCHASE APPLICATION
Minimum Initial Investment $10,000
Minimum Subsequent Investment $1,000
- ----- This is a follow-up application
(Investment by wire transfer. See page 6 of the Prospectus.)
Mail Completed Application to:
The Henlopen Fund
c/o Firstar Trust Company
Mutual Fund Services
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
Overnight Express Mail to:
The Henlopen Fund
c/o Firstar Trust Company
Mutual Fund Services, 3rd Floor
615 E. Michigan Street
Milwaukee, Wisconsin 53202
Use this form for individual, custodial, trust, profit-sharing or pension plan
accounts, including self-directed IRA and 401(k) plans. DO NOT USE THIS FORM
FOR THE HENLOPEN FUND-SPONSORED 401(K), 403(B)(7), IRA, SEP-IRA, SIMPLE IRA OR
DEFINED CONTRIBUTION PLANS (KEOGH OR CORPORATE PROFIT-SHARING AND MONEY-
PURCHASE) WHICH REQUIRE FORMS AVAILABLE FROM THE FUND. For information please
call 1-800-922-0224 or 1-414-765-4124.
A. INVESTMENT Please indicate the amount you wish to invest $ ----------------
($10,000 minimum)
- ------ By check enclosed payable to The Henlopen Fund Amount $ --------------
- ------ By wire (call first): 1-800-922-0224 or 1-414-765-4124 to set up
account.
Indicate total amount and date of wire $ ---------------- Date --------------
B. REGISTRATION
- --- Individual
- ------------------ ----- ---------------------------------------------------
FIRST NAME M.I. LAST NAME SOCIAL SECURITY # BIRTHDATE
(Mo/Dy/Yr)
- --- Joint Owner*<F1>
- ------------------ ----- ---------------------------------------------------
FIRST NAME M.I. LAST NAME SOCIAL SECURITY # BIRTHDATE
(Mo/Dy/Yr)
*<F1>Registration will be Joint Tenancy with Rights of Survivorship (JTWROS)
unless otherwise specified.
- --- Gift to Minors
- -------------------------------------------- ------ -----------------------
CUSTODIAN'S FIRST NAME (ONLY ONE PERMITTED) M.I. LAST NAME
- -------------------------------------------- ------ -----------------------
MINOR'S FIRST NAME (ONLY ONE PERMITTED) M.I. LAST NAME
- ------------------------- ---------------------------- --------------------
MINOR'S SOCIAL SECURITY # MINOR'S BIRTHDATE (Mo/Dy/Yr) STATE OF RESIDENCE
- --- Corporation**<F2>
(including Corporate
Pension Plans),**<F2>
Trust, Estate or
Guardianship
- -------------------------------------------------------------------------------
NAME OF TRUSTEE(S) (IF TO BE INCLUDED IN REGISTRATION)***<F3>
- --- Partnership***<F3>
- -------------------------------------------------------------------------------
NAME OF TRUST/CORPORATION**/PARTNERSHIP
- --- Other Entity***<F3>
- --------------------------------- -----------------------------------------
SOCIAL SECURITY #/TAX ID # DATE OF AGREEMENT (Mo/Dy/Yr)
**<F2>Corporate Resolution is required. ***<F3>Additional documentation and
certification may be requested.
C.MAILING ADDRESS
- ------------------------------------------------------- --------------------
STREET APT/SUITE
- ------------------------------------------- -------------------- ------------
CITY STATE ZIP
- ------------------------------------------- --------------------------------
DAYTIME PHONE # EVENING PHONE #
- --- Duplicate Confirmation to:
- --------------------------------------------- -------- --------------------
FIRST NAME MI LAST NAME
- ------------------------------------------------------- --------------------
STREET APT/SUITE
- ------------------------------------------- -------------------- ------------
CITY STATE ZIP
D. DISTRIBUTION OPTIONS
Capital gains & dividends will be reinvested if no option is selected.
Capital Gains & Dividends Capital Gains & Dividends
Reinvested ----- in Cash M
Capital Gains in Cash & Capital Gains Reinvested &
Dividends Reinvested ---- Dividends in Cash -----
If the distribution is to be paid in cash, specify payment method below:
- ---- Send check to mailing address in Section C.
- ---- Automatic deposit to my bank account via Electronic Funds Transfer
("EFT"). May take up to 3 business days to reach your bank account (complete
bank information following).
Your signed Application must be received at least 15 business days prior to
initial transaction.
An unsigned voided check (for checking accounts) or a savings account deposit
slip is required with your Application.
- ------------------------------------------------------------------------------
NAME(S) ON BANK ACCOUNT
- --------------------------------------- ----------------------------------
BANK NAME ACCOUNT NUMBER
- ------------------------------------------------------------------------------
BANK ADDRESS
To ensure proper crediting of your bank account, please attach a voided check or
a deposit slip.
E. AUTOMATIC INVESTMENT PLAN
Your signed application must be received at least 15 business days prior to
initial transaction. Attach an unsigned, voided check (for checking accounts)
or a savings account deposit slip and complete this form. I would like to
establish an Automatic Investment Plan for The Henlopen Fund as described in the
Prospectus. Based on these instructions, Firstar Trust Company as Transfer
Agent for The Henlopen Fund, will automatically transfer money directly from my
checking, NOW or savings account to purchase shares in The Henlopen Fund. I
understand if the automatic purchase cannot be made due to insufficient funds,
stop payment or any other reason, a $20 fee will be assessed.
Please indicate the day of debit from bank account ---------------- (if not
indicated then the 25th of the month will be selected)
Start Date (month & year) ------------------- --- Monthly --- Quarterly
Indicate amount to be withdrawn from my bank account $------------------------
(minimum $100)
- ------------------------------------------------------------------------------
NAME(S) ON BANK ACCOUNT
- ----------------------------------------- ---------------------------------
BANK NAME ACCOUNT NUMBER
- ------------------------------------------------------------------------------
BANK ADDRESS
- ------------------------------------------------------------------------------
SIGNATURE OF BANK ACCOUNT OWNER SIGNATURE OF JOINT OWNER (if any)
An unsigned voided check (for checking accounts) or a savings account deposit
slip is required with your application.
E. TELEPHONE REDEMPTION OPTIONS
(800) 922-0224 or
(414) 765-4124
Your signed Application must be received at least 15 business days prior to
initial transaction.
An unsigned voided check (for chicking accounts) or a savings account deposit
slip is required with your Application.
I (we) authorize The Henlopen Fund, to act upon my (our) telephone instructions
to redeem shares from this account. Please check all that may apply.
- --- The proceeds will be mailed to the address in Section C.
- --- By wire. The proceeds of any redemption may be wired to your bank (complete
bank information below). A wire fee of $12.00 will be charged.
- --- By EFT. Proceeds generally take up to 3 business days to reach your bank
(complete bank information below).
- ------------------------------------------------------------------------------
NAME(S) ON BANK ACCOUNT
- ------------------------------------------------------------------------------
BANK NAME ACCOUNT NUMBER
- ------------------------------------------------------------------------------
BANK ADDRESS
To ensure proper crediting of your bank account, please attach a voided check or
a deposit slip.
G. SYSTEMATIC WITHDRAWALS
A balance of at least $50,000 is required for this option.
I would like to withdraw from The Henlopen Fund $ --------------- ($500 minimum)
as follows:
- --- I would like to have payments made to me on or about the ---------- day of
each month, or
- --- I would like to have payments made to me on or about the day of
the months that I have circled below:
Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.
- --- I would like to have payments automatically deposited to my bank account.
Complete bank account information below. (A check will be mailed to the address
in Section C if this box is not checked.)
- ------------------------------------------------------------------------------
NAME(S) ON BANK ACCOUNT
- ------------------------------------------------------------------------------
BANK NAME ACCOUNT NUMBER
- ------------------------------------------------------------------------------
BANK ADDRESS
To ensure proper crediting of your bank account, please attach a voided check or
a deposit slip.
H. SIGNATURE AND CERTIFICATION REQUIRED BY THE INTERNAL REVENUE SERVICE
Neither the Fund nor its transfer agent will be responsible for the authenticity
of transaction instructions received by telephone, provided that reasonable
security procedures have been followed.
By selecting the options in Section (E, F or G), I hereby authorize the Fund to
initiate debits/credits to my account at the bank indicated and for the bank to
debit/credit the same to such account through the Automated Clearing House
("ACH") system.
UNDER THE PENALTY OF PERJURY, I CERTIFY THAT (1) THE SOCIAL SECURITY NUMBER OR
TAXPAYER IDENTIFICATION NUMBER SHOWN ON THIS FORM IS MY CORRECT TAXPAYER
IDENTIFICATION NUMBER, AND (2) I AM NOT SUBJECT TO BACKUP WITHHOLDING EITHER AS
A RESULT OF A FAILURE TO REPORT ALL INTEREST OR DIVIDENDS, OR THE IRS HAS
NOTIFIED ME THAT I AM NO LONGER SUBJECT TO BACKUP WITHHOLDING. THE IRS DOES NOT
REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE
CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
- --------------------------------------- ------------------------------------
DATE (Mo/Dy/Yr) SIGNATURE OF OWNER*<F4>
- --------------------------------------- ------------------------------------
DATE (Mo/Dy/Yr) SIGNATURE OF CO-OWNER, if any
*<F4>If shares are to be registered in (1) joint names, both persons should
sign, (2) a custodian for a minor, the custodian should sign, (3) a trust, the
trustee(s) should sign, or (4) a corporation or other entity, an officer should
sign and print name and title on space provided below.
- ------------------------------------------------------------------------------
PRINT NAME AND TITLE OF OFFICER SIGNING FOR A CORPORATION OR OTHER ENTITY
CUSTODIAN, TRANSFER AGENT
AND DIVIDEND DISBURSING AGENT
FIRSTAR TRUST COMPANY
615 East Michigan Street
Milwaukee, Wisconsin 53202
INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP
3100 Multifoods Tower
33 South Sixth Street
Minneapolis, Minnesota 55402
LEGAL COUNSEL
FOLEY & LARDNER
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
THE HENLOPEN FUND
Longwood Corporate Center
Suite 213
415 McFarlan Road
Kennett Square, Pennsylvania 19348
(610) 925-0400
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION October 31, 1997
THE HENLOPEN FUND
Longwood Corporate Center
Suite 213
415 McFarlan Road
Kennett Square, Pennsylvania 19348
This Statement of Additional Information is not a Prospectus and
should be read in conjunction with the Prospectus of The Henlopen Fund
dated October 31, 1997. Requests for copies of the Prospectus should be
made in writing to The Henlopen Fund, Longwood Corporate Center, Suite
213, 415 McFarlan Road, Kennett Square, Pennsylvania 19348, Attention:
Corporate Secretary or by calling (610) 925-0400.
THE HENLOPEN FUND
Table of Contents
Page No.
Investment Restrictions ........................ 1
Trustees and Officers of the Fund .............. 3
Ownership of Management and Principal
Shareholders.................................. 6
Investment Adviser and Administrator............ 7
Determination of Net Asset Value ............... 9
Systematic Withdrawal Plan ..................... 9
Allocation of Portfolio Brokerage .............. 10
Performance Information......................... 11
Custodian ...................................... 13
Taxes .......................................... 13
Shareholder Meetings ........................... 14
Independent Accountants ........................ 15
Financial Statements ........................... 15
Description of Securities Ratings............... 15
No person has been authorized to give any information or to make any
representations other than those contained in this Statement of Additional
Information and the Prospectus dated October 31, 1997, and, if given or
made, such information or representations may not be relied upon as having
been authorized by The Henlopen Fund.
This Statement of Additional Information does not constitute an
offer to sell securities.
INVESTMENT RESTRICTIONS
As set forth in the prospectus dated October 31, 1997, of The
Henlopen Fund (the "Fund") under the caption "Investment Objective and
Policies", the primary investment objective of the Fund is to produce
long-term capital appreciation principally through investing in common
stocks. Current income is a secondary investment objective. Consistent
with its investment objectives, the Fund has adopted the following
investment restrictions which are matters of fundamental policy and cannot
be changed without approval of the holders of the lesser of: (i) 67% of
the Fund's shares present or represented at a shareholder's meeting at
which the holders of more than 50% of such shares are present or
represented; or (ii) more than 50% of the outstanding shares of the
Fund.
1. The Fund will not purchase securities on margin,
participate in a joint-trading account, sell securities short, or write or
invest in put or call options. The Fund's investments in warrants, valued
at the lower of cost or market, will not exceed 5% of the value of the
Fund's net assets.
2. The Fund will not borrow money or issue senior securities,
except for temporary bank borrowings or for emergency or extraordinary
purposes (but not for the purpose of purchase of investments) and then
only in an amount not in excess of 5% of the value of its total assets and
will not pledge any of its assets except to secure borrowings and then
only to an extent not greater than 10% of the value of the Fund's net
assets. The Fund will not purchase securities while it has any
outstanding borrowings.
3. The Fund will not lend money, except by purchasing publicly
distributed debt securities or entering into repurchase agreements;
provided, however, that repurchase agreements maturing in more than seven
days plus all other illiquid securities will not exceed 10% of the Fund's
total assets. The Fund will not lend its portfolio securities.
4. The Fund will not purchase securities of other investment
companies except (a) as part of a plan of merger, consolidation or
reorganization approved by the shareholders of the Fund or (b) securities
of registered closed-end investment companies on the open market where no
commission or profit results, other than the usual and customary broker's
commission and where as a result of such purchase the Fund would hold less
than 3% of any class of securities, including voting securities, of any
registered closed-end investment company and less than 5% of the Fund's
assets, taken at current value, would be invested in securities of
registered closed-end investment companies.
5. The Fund will not make investments for the purpose of
exercising control or management of any company.
6. The Fund will limit its purchases of securities of any
issuer (other than the United States or an instrumentality of the United
States) in such a manner that it will satisfy at all times the
requirements of Section 5(b)(1) of the Investment Company Act of 1940
(i.e., that at least 75% of the value of its total assets is represented
by cash and cash items (including receivables), U.S. Government
Securities, securities of other investment companies, and other securities
for the purpose of the foregoing limited in respect of any one issuer to
an amount not greater than 5% of the value of the total assets of the Fund
and to not more than 10% of the outstanding voting securities of such
issuer.)
7. The Fund will not concentrate 25% or more of the value of
its total assets, determined at the time an investment is made, exclusive
of U.S. Government securities, in securities issued by companies engaged
in the same industry.
8. The Fund will not acquire or retain any security issued by
a company, an officer or director of which is an officer or director of
the Fund or an officer, director or other affiliated person of its
investment adviser.
9. The Fund will not acquire or retain any security issued by
a company if any of the directors or officers of the Fund, or directors,
officers or other affiliated persons of its investment adviser
beneficially own more than 1/2% of such company's securities and all of
the above persons owning more than 1/2% own together more than 5% of its
securities.
10. The Fund will not act as an underwriter or distributor of
securities other than shares of the Fund and will not purchase any
securities which are restricted from sale to the public without
registration under the Securities Act of 1933, as amended.
11. The Fund will not purchase any interest in any oil, gas or
any other mineral exploration or development program.
12. The Fund will not purchase or sell real estate or real
estate mortgage loans.
13. The Fund will not purchase or sell commodities or
commodities contracts, including futures contracts.
TRUSTEES AND OFFICERS OF THE FUND
The name, age, address, principal occupations during the past
five years and other information with respect to each of the trustees and
officers of the Fund are as follows:
MICHAEL L. HERSHEY*
Longwood Corporate Center
Suite 213
415 McFarlan Road
Kennett Square, Pennsylvania 19348
(CHAIRMAN, PRESIDENT
AND A TRUSTEE OF THE FUND)
Mr. Hershey, age 58, is President and Chairman of the Board of
Landis Associates, Inc., an investment advisory firm which he founded in
1986. Prior to that time, he served as President of Kalmar Investments,
Inc., an investment advisory firm, from 1982 to 1986. Mr. Hershey
attended Princeton University from 1956 to 1961. He has served as a
director of Nematron Corporation, a manufacturer of industrial computers,
since March, 1995.
ROBERT J. FAHEY, JR.
2 Logan Square
20th Floor
Philadelphia, Pennsylvania
(TRUSTEE)
Mr. Fahey, age 39, joined Cushman & Wakefield, a commercial real
estate services firm and a Rockefeller Group Company, in 1985. He
presently serves as a Director and Manager of Real Estate Investment
Banking of Cushman & Wakefield's Financial Services Group in its
Philadelphia, Pennsylvania office. Prior to joining Cushman & Wakefield,
Mr. Fahey was associated for three years with Strouse, Greenberg & Co.,
Inc. as an Associate in the Mortgage Banking Group. Mr. Fahey graduated
from Temple University in 1981 and is a candidate in the Masters of
Business Administration program at Temple University. He is currently a
part-time instructor of real estate finance in the graduate program at
Temple. He is a member of the Urban Land Institute, the Mortgage Bankers
Association, the National Association of Realtors and The World Affairs
Council.
__________________
* Mr. Michael L. Hershey and Dr. Stephen L. Hershey are trustees who
are "interested persons" of the Fund as that term is defined in the
Investment Company Act of 1940.
STEPHEN L. HERSHEY, M.D.*
4745 Stanton-Ogletown Road
Suite 225
Newark, Delaware
(TRUSTEE)
Dr. Hershey, age 56, has been associated with First State
Orthopaedic Consultants, P.A. (formerly Wilmington Orthopaedic
Consultants, P.A.) since 1978. He graduated from Kenyon College in 1963
and received his M.D. from Jefferson Medical College in 1968. He is a
member of the American Medical Association, the American Academy of
Orthopaedic Surgeons, the American College of Surgeons, the Southern
Medical Association, the Jefferson Orthopaedic Society, the Delaware
Society of Orthopaedic Surgeons (charter member), the New Castle County
Medical Society and the Medical Society of Delaware.
PAUL J. LARSON, C.F.A.
Longwood Corporate Center
Suite 213
415 McFarlan Road
Kennett Square, Pennsylvania 19348
(VICE PRESIDENT AND TREASURER)
Mr. Larson, age 52, has been Vice President and Treasurer of the
Fund since August, 1997. He joined Landis Associates, Inc., the Fund's
investment adviser, as an investment manager in July, 1997. Prior to such
time, he was an investment advisor with Kalmar Investments, Inc. from
April, 1995 to October, 1996. From June, 1993 to April, 1995 he was
employed by Ashford Capital Management as an investment advisor. From
December, 1984 to August, 1993, Mr. Larson was employed by YMCA Retirement
Fund, most recently as a Retirement Fund Manager. Mr. Larson received
his B.S. degree from Rensselaer Polytechnic Institute in 1967 and his M.S.
degree in 1968 also from Rensselaer Polytechnic Institute. He received
his Chartered Financial Analyst designation in 1976.
__________________
* Mr. Michael L. Hershey and Dr. Stephen L. Hershey are trustees who
are "interested persons" of the Fund as that term is defined in the
Investment Company Act of 1940.
P. COLEMAN TOWNSEND, JR.
919 N. Market Street
Mellon Bank Center, Suite 420
Wilmington, Delaware 19801
(TRUSTEE)
Mr. Townsend, age 51, has been the President and Chief Executive
Officer of Townsends, Inc., an agricultural business, since 1984. He
graduated from the University of Delaware in 1969. Mr. Townsend is
presently a member of the Board of Directors of the Baltimore Trust
Company and the National Broiler Council. He is also a member of the
Board of Visitors of Delaware State University and a member of the
Foundation Board of Beebe Medical Center.
LORENZO A. VILLALON
Longwood Corporate Center
Suite 213
415 McFarlan Road
Kennett Square, Pennsylvania 19348
(VICE PRESIDENT AND SECRETARY)
Mr. Villalon, age 46, has been Vice President and Secretary of
the Fund since August, 1997. He was Vice President and Treasurer of the
Fund from July, 1996 to August, 1997. He also has served as a research
analyst with Landis Associates, Inc., the Fund's investment adviser, since
November, 1995. Prior to such time, he was a research analyst with Friess
Associates, Inc. from June, 1992 to November, 1995. From May, 1979 to
May, 1992, he was employed by J.P. Morgan & Co., most recently as Vice
President. Mr. Villalon received his B.A. degree from Haverford College
and his M.B.A. degree from Wharton Graduate School.
CAMILLE F. WILDES
225 East Mason Street
Milwaukee, Wisconsin 53202
(VICE PRESIDENT/COMPLIANCE OFFICER)
Ms. Wildes, age 45, is a Vice President of Fiduciary Management,
Inc., the Fund's Administrator, and has been employed by such firm in
various capacities since December, 1982.
The Fund's standard method of compensating trustees is to pay
each trustee who is not an officer of the Fund a fee of $250 for each
meeting of the trustees attended. The Fund also may reimburse its
trustees for travel expenses incurred in order to attend meetings of the
trustees. During the fiscal year ended June 30, 1997, the Fund paid a
total of $750 in fees to trustees who were not officers of the Fund. Mr.
Michael L. Hershey and Dr. Stephen L. Hershey are brothers. The table
below sets forth the compensation paid by the Fund to each of the current
trustees of the Fund during the fiscal year ended June 30, 1997:
<TABLE>
COMPENSATION TABLE
<CAPTION>
Name of Estimated Annual Total
Person Aggregate Pension or Retirement Benefits Upon Compensation
Compensation Benefits Accrued As Retirement from Fund Paid
from Fund Part of Fund Expenses to Trustees
<S> <C> <C> <C> <C>
Michael L. Hershey $0 $0 $0 $0
Robert J. Fahey, Jr. $250 $0 $0 $250
Stephen L. Hershey, M.D. $250 $0 $0 $250
P. Coleman Townsend, Jr. $250 $0 $0 $250
</TABLE>
OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
Set forth below are the names and addresses of all holders of
the Fund's shares who as of September 30, 1997 beneficially owned more
than 5% of the Fund's then outstanding shares, as well as the number of
shares of the Fund beneficially owned by all officers and directors of the
Fund as a group.
Name and Address
of Beneficial Owner Number of Shares Percent of Class
Wilmington Trust Co., Custodian 490,944(1)(2) 25.52%
FBO J. Eric May Trust
c/o Mutual Funds
1100 North Market Street
Wilmington, DE 19890-0001
Patterson & Co. 272,739(2) 14.18%
c/o Corestates Bank
P. O. Box 7829
Philadelphia, PA 19101-7829
Wilmington Trust Co., Trustee 111,278(2) 5.79%
Richards Layton & Finger Money
Purchase Pension Plan Dated 4/27/79
FBO R. Franklin Balotti #31896
1100 N. Market Street
Wilmington, DE 19890-0001
Officers and Trustees as
a Group (7 persons) 56,405 (3) 2.93%
___________________
(1) Excludes 81,255 shares held by Wilmington Trust Company, Trustee, FBO
J. Eric May Charitable Remainder Trust dated May 30, 1995.
(2) Consists solely of shares in one or more accounts managed by the
Adviser and over which the Adviser has investment authority.
(3) Excludes 1,015,454 shares in accounts managed by the Adviser and over
which the Adviser has investment authority.
By virtue of its share ownership, Wilmington Trust Company, as
custodian FBO J. Eric May Trust, is deemed to control the Fund. In
combination with the holders of more than 24.48% of the Fund's outstanding
shares, it owns sufficient shares to approve or disapprove all matters
brought before the Fund's shareholders.
INVESTMENT ADVISER AND ADMINISTRATOR
As set forth in the Prospectus under the caption "Management of
the Fund" the investment adviser to the Fund is Landis Associates, Inc.
(the "Adviser"). Pursuant to an investment advisory agreement between the
Fund and the Adviser (the "Advisory
Agreement") the Adviser furnishes continuous investment advisory services
and management to the Fund. The Adviser is controlled by Michael L.
Hershey, who owns 80% of its outstanding capital stock. Mr. Hershey is
also Chairman, President, Treasurer and a trustee of the Fund. Dr.
Stephen L. Hershey is a director of the Adviser.
The Fund will pay all of its expenses not assumed by the Adviser
including, but not limited to, the costs of preparing and printing its
registration statements required under the Securities Act of 1933 and the
Investment Company Act of 1940 and any amendments thereto, the expenses of
registering its shares with the Securities and Exchange Commission and in
the various states, the printing and distribution cost of prospectuses
mailed to existing shareholders, the cost of trustee and officer liability
insurance, reports to shareholders, reports to government authorities and
proxy statements, interest charges, brokerage commissions, and expenses
incurred in connection with portfolio transactions. The Fund will also
pay the fees of trustees who are not officers of the Fund, salaries of
administrative and clerical personnel, association membership dues,
auditing and accounting services, fees and expenses of any custodian or
trustees having custody of Fund assets, expenses of calculating the net
asset value and repurchasing and redeeming shares, and charges and
expenses of dividend disbursing agents, registrars, and share transfer
agents, including the cost of keeping all necessary shareholder records
and accounts and handling any problems relating thereto.
The Adviser has undertaken to reimburse the Fund to the extent
that the aggregate annual operating expenses, including the investment
advisory fee but excluding interest, taxes, brokerage commissions and
extraordinary items, exceed that percentage of the average net assets of
the Fund for such year, as determined by valuations made as of the close
of each business day of the year, which is the most restrictive percentage
provided by the state laws of the various states in which the Common Stock
is qualified for sale. As of the date of this Statement of Additional
Information the shares of the Fund are not qualified for sale in any state
that imposes an expense limitation. The Fund monitors its expense ratio
at least on a monthly basis. If the accrued amount of the expenses of the
Fund exceeds the expense limitation, the Fund creates an account
receivable from the Adviser for the amount of such excess. In such a
situation the monthly payment of the Adviser's fee will be reduced by the
amount of such excess, subject to adjustment month by month during the
balance of the Fund's fiscal year if accrued expenses thereafter fall
below this limit.
In addition to any reimbursement required under the most
restrictive applicable expense limitation of state securities commissions
described above, the Adviser has voluntarily undertaken to reimburse the
Fund for expenses in excess of 2.0% of average net assets. Such voluntary
reimbursements to the Fund may be modified or discontinued at any time by
the Adviser.
For services provided by the Adviser under the Advisory
Agreement for the fiscal years ended June 30, 1997, 1996 and 1995, the
Fund paid the Adviser $286,734, $181,554 and $91,873, respectively. No
reimbursement was made during the fiscal years ended June 30, 1997, 1996
and 1995.
The Advisory Agreement will remain in effect for as long as its
continuance is specifically approved at least annually, by (i) the
trustees of the Fund, or by the vote of a majority (as defined in the
Investment Company Act of 1940) of the outstanding shares of the Fund, and
(ii) by the vote of a majority of the trustees of the Fund who are not
parties to the Advisory Agreement or interested persons of the Adviser,
cast in person at a meeting called for the purpose of voting on such
approval. The Advisory Agreement provides that it may be terminated at
any time without the payment of any penalty, by the trustees of the Fund
or by vote of a majority of the Fund's shareholders, on sixty days written
notice to the Adviser, and by the Adviser on the same notice to the Fund
and that it shall be automatically terminated if it is assigned.
As set forth in the Prospectus under the caption "Management of
the Fund," the administrator to the Fund is Fiduciary Management, Inc.
(the "Administrator"). The administration agreement entered into between
the Fund and the Administrator (the "Administration Agreement") will
remain in effect until terminated by either party. The Administration
Agreement may be terminated at any time, without the payment of any
penalty, by the trustees of the Fund upon the giving of ninety (90) days'
written notice to the Administrator, or by the Administrator upon the
giving of ninety (90) days' written notice to the Fund. For the fiscal
years ended June 30, 1997, 1996 and 1995, the Fund paid the Administrator
$56,926, $36,311 and $18,374, respectively, pursuant to the Administration
Agreement.
The Advisory Agreement and the Administration Agreement provide
that the Adviser and Administrator, as the case may be, shall not be
liable to the Fund or its shareholders for anything other than willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations or duties. The Advisory Agreement and the Administration
Agreement also provide that the Adviser and Administrator, as the case may
be, and their officers, directors and employees may engage in other
businesses, devote time and attention to any other business whether of a
similar or dissimilar nature, and render investment advisory services to
others.
DETERMINATION OF NET ASSET VALUE
As set forth in the Prospectus under the caption "Determination
of Net Asset Value," the net asset value of the Fund will be determined as
of the close of regular trading (currently 4:00 p.m. Eastern time) on each
day the New York Stock Exchange is open for trading. The New York Stock
Exchange is open for trading Monday through Friday except New Year's Day,
Martin Luther King, Jr. Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Additionally, if any of the aforementioned holidays falls on a Saturday,
the New York Stock Exchange will not be open for trading on the preceding
Friday and when any such holiday falls on a Sunday, the New York Stock
Exchange will not be open for trading on the succeeding Monday, unless
unusual business conditions exist, such as the ending of a monthly or the
yearly accounting period.
SYSTEMATIC WITHDRAWAL PLAN
A shareholder who owns Fund shares worth at least $50,000 at the
current net asset value may, by completing either the appropriate portion
of the share purchase application included in the Prospectus or an
application which may be obtained from Firstar Trust Company, create a
Systematic Withdrawal Plan from which a fixed sum will be paid to the
shareholder at regular intervals. To establish the Systematic Withdrawal
Plan, the shareholder deposits Fund shares with the Fund and appoints it
as agent to effect redemptions of Fund shares held in the account for the
purpose of making monthly or quarterly withdrawal payments of a fixed
amount to the shareholder out of the account.
The minimum amount of a withdrawal payment is $500. These
payments will be made from the proceeds of periodic redemption of shares
in the account at net asset value. Redemptions will be made monthly or
quarterly on any day a shareholder chooses. If that day is a weekend or
holiday, such redemption will be made on the next business day. The
shareholder may elect to have payments automatically deposited to his or
her checking or savings account. Establishment of a Systematic Withdrawal
Plan constitutes an election by the shareholder to reinvest in additional
Fund shares, at net asset value, all income dividends and capital gains
distributions payable by the Fund on shares held in such account, and
shares so acquired will be added to such account. The shareholder may
deposit additional Fund shares in his account at any time.
Withdrawal payments cannot be considered as yield or income on
the shareholder's investment, since portions of each payment will normally
consist of a return of capital. Depending on the size or the frequency of
the disbursements requested, and the fluctuation in the value of the
Fund's portfolio, redemptions for the purpose of making such disbursements
may reduce or even exhaust the shareholder's account.
The shareholder may vary the amount or frequency of withdrawal
payments, temporarily discontinue them, or change the designated payee or
payee's address, by notifying Firstar Trust Company in writing prior to
the fifteenth day of the month preceding the next payment.
ALLOCATION OF PORTFOLIO BROKERAGE
Decisions to buy and sell securities for the Fund are made by
the Adviser subject to review by the Fund's trustees. In placing purchase
and sale orders for portfolio securities for the Fund, it is the policy of
the Adviser to seek the best execution of orders at the most favorable
price in light of the overall quality of brokerage and research services
provided, as described in this and the following paragraph. In selecting
brokers to effect portfolio transactions, the determination of what is
expected to result in best execution at the most favorable price involves
a number of largely judgmental considerations. Among these are the
Adviser's evaluation of the broker's efficiency in executing and clearing
transactions, block trading capability (including the broker's willingness
to position securities) and the broker's financial strength and stability.
The most favorable price to the Fund means the best net price without
regard to the mix between purchase or sale price and commission, if any.
Over-the-counter securities are generally purchased and sold directly with
principal market makers who retain the difference in their cost in the
security and its selling price. In some instances, the Adviser feels that
better prices are available from non-principal market makers who are paid
commissions directly. The Fund does not intend to market its shares
through intermediary broker-dealers. However, the Fund may place
portfolio orders with broker-dealers who recommend the purchase of shares
to clients (if the Adviser believes the commissions and transaction
quality are comparable to that available from other brokers) and may
allocate portfolio brokerage on that basis.
In allocating brokerage business for the Fund, the Adviser also
takes into consideration the research, analytical, statistical and other
information and services provided by the broker, such as general economic
reports and information, reports or analyses of particular companies or
industry groups, market timing and technical information, and the
availability of the brokerage firm's analysts for consultation. While the
Adviser believes these services have substantial value, they are
considered supplemental to the Adviser's own efforts in the performance of
its duties under the Advisory Agreement. Other clients of the Adviser may
indirectly benefit from the availability of these services to the Adviser,
and the Fund may indirectly benefit from services available to the Adviser
as a result of transactions for other clients. The Advisory Agreement
provides that the Adviser may cause the Fund to pay a broker which
provides brokerage and research services to the Adviser a commission for
effecting a securities transaction in excess of the amount another broker
would have charged for effecting the transaction, if the Adviser
determines in good faith that such amount of commission is reasonable in
relation to the value of brokerage and research services provided by the
executing broker viewed in terms of either the particular transaction or
the Adviser's overall responsibilities with respect to the Fund and the
other accounts as to which he exercises investment discretion. Brokerage
commissions paid by the Fund during the fiscal years ended June 30, 1997,
1996 and 1995, respectively, totaled $83,895 on total transactions of
$28,175,647, $55,895 on total transactions of $19,027,798, and $31,531 on
total transactions of $6,291,313. During the fiscal year ended June 30,
1997, the Adviser did not allocate brokerage for the Fund based on
research provided by brokers.
PERFORMANCE INFORMATION
Any total rate of return quotation for the Fund will be for a
period of three or more months and will assume the reinvestment of all
dividends and capital gains distributions which were made by the Fund
during such period. Any period total rate of return quotation of the Fund
will be calculated by dividing the net change in value of a hypothetical
shareholder account established by an initial payment of $1,000 at the
beginning of the period by 1,000. The net change in the value of a
shareholder account is determined by subtracting $1,000 from the product
obtained by multiplying the net asset value per share at the end of the
period by the sum obtained by adding (A) the number of shares purchased at
the beginning of the period plus (B) the number of shares purchased during
the period with reinvested dividends and distributions. Any average
annual compounded total rate of return quotation of the Fund will be
calculated by dividing the redeemable value at the end of the period
(i.e., the product referred to in the preceding sentence) by $1,000. A
root equal to the period, measured in years, in question is then
determined and 1 is subtracted from such root to determine the average
annual compounded total rate of return.
The foregoing computation may also be expressed by the following
formula:
P(1+T)n = ERV
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the stated periods at
the end of the stated periods.
An average annual compounded rate of return refers to the rate of return
which, if applied to an initial investment at the beginning of a stated
period and compounded over the period, would result in the redeemable
value of the investment at the end of the stated period. The calculation
assumes reinvestment of all dividends and distributions and reflects the
effect of all recurring fees. The Fund's average annual compounded rate
of return for the one year ended June 30, 1997 was 5.02% and for the
period from December 2, 1992 (commencement of operations) through June 30,
1997 was 19.41%.
The results below show the value of an assumed initial investment
in the Fund of $10,000 made on December 2, 1992 through June 30, 1997,
assuming reinvestment of all dividends and distributions.
Value of
$10,000 Cumulative
June 30, Investment % Change
1993 $ 11,562 15.62%
1994 $ 12,126 21.26%
1995 $ 15,494 54.94%
1996 $ 21,442 114.42%
1997 $ 22,519 125.19%
The foregoing performance results are based on historical earnings
and should not be considered as representative of the performance of the
Fund in the future. Such performance results also reflect reimbursements
made by the Adviser during the period from December 2, 1992 to June 30,
1994 to keep the Fund's total fund operating expenses at or below 2.0%.
An investment in the Fund will fluctuate in value and at redemption its
value may be more or less than the initial investment.
CUSTODIAN
Firstar Trust Company, 615 East Michigan Street, Milwaukee,
Wisconsin 53202, acts as custodian for the Fund. As such, Firstar Trust
Company holds all securities and cash of the Fund, delivers and receives
payment for securities sold, receives and pays for securities purchased,
collects income from investments and performs other duties, all as
directed by officers of the Fund. Firstar Trust Company does not exercise
any supervisory function over the management of the Fund, the purchase and
sale of securities or the payment of distributions to shareholders.
Firstar Trust Company also acts as the Fund's transfer agent and dividend
disbursing agent.
TAXES
As set forth in the Prospectus under the caption "Dividends,
Distributions and Taxes, the Fund will endeavor to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code, as
amended.
Dividends from the Fund's net investment income and distributions
from the Fund's net realized short-term capital gains are taxable to
shareholders as ordinary income, whether received in cash or in additional
Fund shares. The 70% dividends-received deduction for corporations will
apply to dividends from the Fund's net investment income, subject to
proportionate reductions if the aggregate dividends received by the Fund
from domestic corporations in any year are less than 100% of the Fund's
gross income.
Any dividend or capital gains distribution paid shortly after a
purchase of Fund shares will have the effect of reducing the per share net
asset value of such shares by the amount of the dividend or distribution.
Furthermore, if the net asset value of the Fund shares immediately after a
dividend or distribution is less than the cost of such shares to the
shareholder, the dividend or distribution will be taxable to the
shareholder even though it results in a return of capital to him.
The Fund may be required to withhold Federal income tax at a rate
of 31% ("backup withholding") from dividend payments and redemption
proceeds if a shareholder fails to furnish the Fund with his social
security or other tax identification number and certify under penalty of
perjury that such number is correct and that he is not subject to backup
withholding due to the underreporting of income. The certification form
is included as part of the share purchase application and should be
completed when the account is opened.
This section is not intended to be a full discussion of present or
proposed federal income tax laws and the effects of such laws on an
investor. Investors are urged to consult their own tax advisers for a
complete review of the tax ramifications of an investment in the Fund.
SHAREHOLDER MEETINGS
It is contemplated that the Fund will not hold an annual meeting of
shareholders in any year in which the election of trustees is not required
to be acted on by shareholders under the Investment Company Act of 1940.
The Fund's Trust Instrument and Bylaws also contain procedures for the
removal of trustees by the Fund's shareholders. At any meeting of
shareholders, duly called and at which a quorum is present, the
shareholders may, by the affirmative vote of the holders of at least
two-thirds (2/3) of the outstanding shares, remove any trustee or
trustees.
Upon the written request of the holders of shares entitled to not
less than ten percent (10%) of all the votes entitled to be cast at such
meeting, the Secretary of the Fund shall promptly call a special meeting
of shareholders for the purpose of voting upon the question of removal of
any trustee. Whenever ten or more shareholders of record who have been
such for at least six months preceding the date of application, and who
hold in the aggregate either shares having a net asset value of at least
$25,000 or at least one percent (1%) of the total outstanding shares,
whichever is less, shall apply to the Fund's Secretary in writing, stating
that they wish to communicate with other shareholders with a view to
obtaining signatures to a request for a meeting as described above and
accompanied by a form of communication and request which they wish to
transmit, the Secretary shall within five business days after such
application either: (1) afford to such applicants access to a list of the
names and addresses of all shareholders as recorded on the books of the
Fund; or (2) inform such applicants as to the approximate number of
shareholders of record and the approximate cost of mailing to them the
proposed communication and form of request.
If the Secretary elects to follow the course specified in clause
(2) of the last sentence of the preceding paragraph, the Secretary, upon
the written request of such applicants, accompanied by a tender of the
material to be mailed and of the reasonable expenses of mailing, shall,
with reasonable promptness, mail such material to all shareholders of
record at their addresses as recorded on the books unless within five
business days after such tender the Secretary shall mail to such
applicants and file with the Securities and Exchange Commission, together
with a copy of the material to be mailed, a written statement signed by at
least a majority of the trustees to the effect that in their opinion
either such material contains untrue statements of fact or omits to state
facts necessary to make the statements contained therein not misleading,
or would be in violation of applicable law, and specifying the basis of
such opinion.
After opportunity for hearing upon the objections specified in the
written statement so filed, the Securities and Exchange Commission may,
and if demanded by the trustees or by such applicants shall, enter an
order either sustaining one or more of such objections or refusing to
sustain any of them. If the Securities and Exchange Commission shall
enter an order refusing to sustain any of such objections, or if, after
the entry of an order sustaining one or more of such objections, the
Securities and Exchange Commission shall find, after notice and
opportunity for hearing, that all objections so sustained have been met,
and shall enter an order so declaring, the Secretary shall mail copies of
such material to all shareholders with reasonable promptness after the
entry of such order and the renewal of such tender.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 3100 Multifoods Tower, 33 South Sixth Street,
Minneapolis, Minnesota 55402, currently serves as the independent
accountants for the Fund.
FINANCIAL STATEMENTS
The following financial statements are incorporated by reference to
the Annual Report, dated June 30, 1997, of The Henlopen Fund (File No.
811-7168), as filed with the Securities and Exchange Commission on August
6, 1997:
Statement of Net Assets
Statement of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Report of Independent Accounts
DESCRIPTION OF SECURITIES RATINGS
As set forth in the Prospectus under the caption "Investment
Objective and Policies," the Fund may invest up to 30% of its total assets
in publicly distributed debt securities assigned one of the three highest
ratings of either Standard & Poor's Corporation ("Standard & Poor's") or
Moody's Investors Service, Inc. ("Moody's"). A brief description of the
ratings symbols and their meanings follows.
Standard & Poor's Debt Ratings. A Standard & Poor's corporate debt
rating is a current assessment of the creditworthiness of an obligor with
respect to a specific obligation. This assessment may take into
consideration obligors such as guarantors, insurers or lessees.
The debt rating is not a recommendation to purchase, sell or hold a
security, inasmuch as it does not comment as to market price or
suitability for a particular investor.
The ratings are based on current information furnished by the
issuer or obtained by Standard & Poor's from other sources it considers
reliable. Standard & Poor's does not perform any audit in connection with
any rating and may, on occasion, rely on unaudited financial information.
The ratings may be changed, suspended or withdrawn as a result of changes
in, or unavailability of, such information, or for other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
I. Likelihood of default - capacity and willingness of the
obligor as to the timely payment of interest and
repayment of principal in accordance with the terms of
the obligation;
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position of the
obligation in the event of bankruptcy, reorganization or
other arrangement under the laws of bankruptcy and other
laws affecting creditors' rights;
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher rated issues only in small
degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in the
higher rated categories.
Moody's Bond Ratings.
Aaa - Bonds which are rated Aaa are judged to be the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." 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, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa - Bonds which are 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 in 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 in 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.
Moody's applies numerical modifiers 1, 2 and 3 in each of the
foregoing generic rating classifications. The modifier 1 indicates that
the company ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates
that the company ranks in the lower end of its generic rating category.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a.) Financial Statements (Financial Highlights included in Part A and
all incorporated by reference to the Annual Report, dated June 30,
1997 (File No. 811-7168), of The Henlopen Fund (as filed with the
Securities and Exchange Commission on August 6, 1997))
(b.) Exhibits
(1.1) Registrant's Certificate of Trust
(1.2) Registrant's Trust Instrument
(2) Registrant's Bylaws, as amended
(3) None
(4) None
(5) Investment Advisory Agreement
(6) None
(7) None
(8) Custodian Agreement with Firstar Trust Company
(9.1) Administration Agreement with Fiduciary Management, Inc.
(9.2) Transfer Agent Agreement with Firstar Trust Company
(10) Opinion of Foley & Lardner, counsel for Registrant
(11) Consent of Independent Accountants
(12) None
(13) Subscription Agreement
(14.1) Individual Retirement Custodial Account
(14.2) Simplified Employee Pension Plan
(14.3) Defined Contribution Retirement Plan
(15) None
(16) Computation of Performance Quotations (Exhibit 16 to
Post-Effective Amendment No. 5. to Registrant's
Registration Statement on Form N-1A is incorporated by
reference pursuant to Rule 411 under the Securities Act
of 1933).
(17) Financial Data Schedule
(18) None
Item 25. Persons Controlled by or under Common Control with
Registrant
Registrant is controlled by Wilmington Trust Company, as
custodian FBO J. Eric May Trust, which owned or controlled 25.52% of the
Fund's voting securities as of September 30, 1997. Registrant does not
control any person.
Item 26. Number of Holders of Securities
Number of Record Holders
Title of Class as of September 30, 1997
Shares of Beneficial Interest,
no par value 312
Item 27. Indemnification
Pursuant to Chapter 38 of Title 12 of the Delaware Code,
the Registrant's Trust Instrument, dated September 16, 1992, contains the
following article, which is in full force and effect and has not been
modified or canceled:
ARTICLE X
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 10.1. Limitation of Liability. A Trustee, when acting in
such capacity, shall not be personally liable to any person other than the
Trust or a beneficial owner for any act, omission or obligation of the
Trust or any Trustee. A Trustee shall not be liable for any act or
omission or any conduct whatsoever in his capacity as Trustee, provided
that nothing contained herein or in the Delaware Act shall protect any
Trustee against any liability to the Trust or to Shareholders 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 the office of Trustee hereunder.
Section 10.2. Indemnification.
(a) Subject to the exceptions and limitations contained
in Section 10.2(b) below:
(i) every Person who is, or has been, a Trustee or
officer of the Trust (hereinafter referred to as a
"Covered Person") shall be indemnified by the Trust to
the fullest extent permitted by law against liability and
against all expenses reasonably incurred or paid by him
in connection with any claim, action, suit or proceeding
in which he becomes involved as a party or otherwise by
virtue of his being or having been a Trustee or officer
and against amounts paid or incurred by him in the
settlement thereof;
(ii) the words "claim," "action," "suit," or
"proceeding" shall apply to all claims, actions, suits or
proceedings (civil, criminal or other, including
appeals), actual or threatened while in office or
thereafter, and the words "liability" and "expenses"
shall include, without limitation, attorneys' fees,
costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a
Covered Person:
(i) who shall have been adjudicated by a court or
body before which the proceeding was brought (A) to be
liable to the Trust or its Shareholders by reason of
willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct
of his office or (B) not to have acted in good faith in
the reasonable belief that his action was in the best
interest of the Trust; or
(ii) in the event of a settlement, unless there has
been a determination that such Trustee or officer did not
engage in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved
in the conduct of his office,
(A) by the court or other body approving the
settlement;
(B) by at least a majority of those Trustees who
are neither Interested Persons of the Trust nor are
parties to the matter based upon a review of readily
available facts (as opposed to a full trial-type
inquiry); or
(C) by written opinion of independent legal counsel
based upon a review of readily available facts (as
opposed to a full trial-type inquiry);
provided, however, that any Shareholder may, by
appropriate legal proceedings, challenge any such
determination by the Trustees or by independent counsel.
(c) The rights of indemnification herein provided may be
insured against by policies maintained by the Trust, shall be
severable, shall not be exclusive of or affect any other rights to
which any Covered Person may now or hereafter be entitled, shall
continue as to a person who has ceased to be a Covered Person and
shall inure to the benefit of the heirs, executors and
administrators of such a person. Nothing contained herein shall
affect any rights to indemnification to which Trust personnel,
other than Covered Persons, and other persons may be entitled by
contract or otherwise under law.
(d) Expenses in connection with the preparation and
presentation of a defense to any claim, action, suit or proceeding
of the character described in paragraph (a) of this Section 10.2
may be paid by the Trust or Series from time to time prior to final
disposition thereof upon receipt of an undertaking by or on behalf
of such Covered Person that such amount will be paid over by him to
the Trust or Series if it is ultimately determined that he is not
entitled to indemnification under this Section 10.2; provided,
however, that either (a) such Covered Person shall have provided
appropriate security for such undertaking, (b) the Trust is insured
against losses arising out of any such advance payments or (c)
either a majority of the Trustees who are neither Interested
Persons of the Trust nor parties to the matter, or independent
legal counsel in a written opinion, shall have determined, based
upon a review of readily available facts (as opposed to a trial-
type inquiry or full investigation), that there is reason to
believe that such Covered Person will be found entitled to
indemnification under this Section 10.2.
Section 10.3. Shareholders. In case any Shareholder or former
Shareholder of any Series shall be held to be personally liable solely by
reason of his being or having been a Shareholder of such Series and not
because of his acts or omissions or for some other reason, the Shareholder
or former Shareholder (or his 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
assets belonging to the applicable Series to be held harmless from and
indemnified against all loss and expense arising from such liability. The
Trust, on behalf of the affected Series, shall, upon request by the
Shareholder, assume the defense of any claim made against the Shareholder
for any act or obligation of the Series and satisfy any judgment thereon
from the assets of the Series.
Insofar as indemnification for and with respect to
liabilities arising under the Securities Act of 1933 may be permitted to
directors, 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 Act 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 director, officer or controlling person or Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, 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 of whether such indemnification is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
Incorporated by reference to pages 3 through 5 of the
Statement of Additional Information pursuant to Rule 411 under the
Securities Act of 1933.
Item 29. Principal Underwriters
Registrant has no principal underwriters.
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 of 1940 and the rules promulgated thereunder are in the
physical possession of Registrant, Registrant's Custodian and Registrant's
Administrator as follows: the documents required to be maintained by
paragraphs (5) and (11) of Rule 31a-1(b) will be maintained by the
Registrant; the documents required to be maintained by paragraphs (3) and
(7) of Rule 31a-1(b) will be maintained by Registrant's Custodian; and all
other records will be maintained by Registrant's Administrator.
Item 31. Management Services
All management-related service contracts entered into by
Registrant are discussed in Parts A and B of this Registration Statement.
Item 32. Undertakings
Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940, the Registrant certifies that
it meets all of the requirements for effectiveness of this Amended
Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Amended Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City
of Wilmington and State of Delaware on the 20th day of October, 1997.
THE HENLOPEN FUND
(Registrant)
By:/s/ Michael L. Hershey
Michael L. Hershey,
President and Treasurer
Pursuant to the requirements of the Securities Act of
1933, this Amended Registration Statement has been signed below by the
following persons in the capacities and on the date indicated.
Name Title Date
/s/ Michael L. Hershey Principal Executive, October 20, 1997
Michael L. Hershey Financial and Accounting
officer and Trustee
/s/ Robert J. Fahey, Jr. Trustee October 20, 1997
Robert J. Fahey, Jr.
/s/ Stephen L. Hershey, M.D. Trustee October 20, 1997
Stephen L. Hershey, M.D.
/s/ P. Coleman Townsend, Jr. Trustee October 20, 1997
P. Coleman Townsend, Jr.
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Page No.
(1.1) Registrant's Certificate of Trust
(1.2) Registrant's Trust Instrument
(2) Registrant's Bylaws, as amended
(3) None
(4) None
(5) Investment Advisory Agreement
(6) None
(7) None
(8) Custodian Agreement with Firstar
Trust Company
(9.1) Administration Agreement with
Fiduciary Management, Inc.
(9.2) Transfer Agent Agreement with
Firstar Trust Company
(10) Opinion of Foley & Lardner,
counsel for Registrant
(11) Consent of Independent
Accountants
(12) None
(13) Subscription Agreement
(14.1) Individual Retirement Custodial
Account
(14.2) Simplified Employee Pension
Plan
(14.3) Defined Contribution Retirement
Plan
(15) None
(16) Computation of Performance Quotations*
(17) Financial Data Schedule
(18) None
_________________
* Incorporated by reference.
EXHIBIT 1.1
CERTIFICATE OF TRUST
OF
THE HENLOPEN FUND
THIS CERTIFICATE OF TRUST is being duly executed and filed on
behalf of the business trust formed hereby by the undersigned, all of the
trustees of the Trust, to form a business trust pursuant to the Delaware
Business Trust Act (12 Del. C. Section 3801 et seq.).
ARTICLE I
The name of the business trust formed hereby is "The Henlopen
Fund" (the "Trust").
ARTICLE II
The Trust is, or will become prior to the issuance of beneficial
interests, a registered investment company under the Investment Company
Act of 1940, as amended (15 U.S.C. Section Section 80a-1 et seq.).
ARTICLE III
The address of the registered office of the Trust in the State
of Delaware is Suite 100, 400 West Ninth Street in the City of Wilmington,
County of New Castle. The name of its registered agent at such address is
Michael L. Hershey.
ARTICLE IV
The Trust Instrument relating to the Trust provides for the
issuance of one or more series of shares of beneficial interest in the
Trust. Separate and distinct records shall be maintained by the Trust for
each series and the assets associated solely with any such series shall be
held and accounted for separately from the assets of the Trust associated
solely with any other series. As provided in the Trust Instrument, the
debts, liabilities, obligations and expenses incurred, contracted for or
otherwise existing with respect to a particular series shall be
enforceable against the assets of such series only, and not against the
assets of the Trust generally.
ARTICLE V
This Certificate of Trust shall become effective upon filing in
the office of the Secretary of State of Delaware
IN WITNESS WHEREOF, the undersigned have executed this
Certificate of Trust as of this 16th day of September, 1992.
THE HENLOPEN FUND
(the "Trust")
/s/ Michael L. Hershey
Michael L. Hershey, as Trustee
/s/ Robert J. Fahey, Jr.
Robert J. Fahey, Jr., as Trustee
/s/ Stephen L. Hershey
Stephen L. Hershey, M.D., as Trustee
/s/ P. Coleman Townsend, Jr.
P. Coleman Townsend, Jr., as Trustee
EXHIBIT 1.2
THE HENLOPEN FUND
TRUST INSTRUMENT
DATED SEPTEMBER 16, 1992
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I -- NAME, DEFINITIONS AND CERTIFICATE OF TRUST 1
Section 1.1. Name 1
Section 1.2. Definitions 1
Section 1.3. Certificate of Trust 3
ARTICLE II -- BENEFICIAL INTEREST 3
Section 2.1. Shares of Beneficial Interest 3
Section 2.2. Issuance of Shares 4
Section 2.3. Register of Shares and Share Certificates 4
Section 2.4. Transfer of Shares 5
Section 2.5. Treasury Shares 5
Section 2.6. Establishment of Series 5
Section 2.7. Investment in the Trust 7
Section 2.8. Assets and Liabilities of Series 7
Section 2.9. No Preemptive Rights 9
Section 2.10. Personal Liability of Shareholders 9
Section 2.11. Assent to Trust Instrument 9
ARTICLE III -- THE TRUSTEES 9
Section 3.1. Management of the Trust 9
Section 3.2. Initial Trustees 10
Section 3.3. Term of Office of Trustees 11
Section 3.4. Vacancies and Appointment of Trustees 11
Section 3.5. Temporary Absence of Trustee 12
Section 3.6. Number of Trustees 12
Section 3.7. Effect of Death, Resignation, etc. of a Trustee 12
Section 3.8. Ownership of Assets of the Trust 12
ARTICLE IV -- POWERS OF THE TRUSTEES 13
Section 4.1. Powers 13
Section 4.2. Issuance and Repurchase of Shares 17
Section 4.3. Trustees and Officers as Shareholders 17
Section 4.4. Action by the Trustees 18
Section 4.5. Chairman of the Trustees 19
Section 4.6. Principal Transactions 19
ARTICLE V -- EXPENSES OF THE TRUST 19
Section 5.1. Trustee Reimbursement 19
ARTICLE VI -- INVESTMENT ADVISER, PRINCIPAL UNDERWRITER AND
TRANSFER AGENT 20
Section 6.1. Investment Adviser 20
Section 6.2. Principal Underwriter 21
Section 6.3. Transfer Agent 21
Section 6.4. Parties to Contract 22
Section 6.5. Provisions and Amendments 22
ARTICLE VII -- SHAREHOLDERS' VOTING POWERS AND MEETINGS 23
Section 7.1. Voting Powers 23
Section 7.2. Meetings 24
Section 7.3. Quorum and Required Vote 24
ARTICLE VIII -- CUSTODIAN 25
Section 8.1. Appointment and Duties 25
Section 8.2. Central Certificate System 26
ARTICLE IX -- DISTRIBUTIONS AND REDEMPTIONS 27
Section 9.1. Distributions 27
Section 9.2. Redemptions 28
Section 9.3. Determination of Net Asset Value and Valuation of
Portfolio Assets 28
Section 9.4. Suspension of the Right of Redemption 30
Section 9.5. Redemption of Shares in Order to Qualify as
Regulated Investment Company 30
Section 9.6. Redemption of De Minimis Accounts 31
ARTICLE X -- LIMITATION OF LIABILITY AND INDEMNIFICATION 31
Section 10.1. Limitation of Liability 31
Section 10.2. Indemnification 31
Section 10.3. Shareholders 34
ARTICLE XI -- MISCELLANEOUS 34
Section 11.1. Trust Not a Partnership 34
Section 11.2. Trustee's Good Faith Action, Expert Advice,
No Bond or Surety 35
Section 11.3. Establishment of Record Dates 35
Section 11.4. Termination of Trust 36
Section 11.5. Reorganization 37
Section 11.6. Filing of Copies, References, Headings 38
Section 11.7. Applicable Law 38
Section 11.8. Amendments 40
Section 11.9. Fiscal Year 40
Section 11.10. Use of the Word "Henlopen" 40
Section 11.11. Provisions in Conflict with Law 41
<PAGE>
THE HENLOPEN FUND
DATED SEPTEMBER 16, 1992
TRUST INSTRUMENT, dated as of September 16, 1992, by and among
Michael L. Hershey, Robert J. Fahey, Jr., Stephen L. Hershey, M.D., and P.
Coleman Townsend, Jr., as trustees, and each person who becomes a
Shareholder (as hereinafter defined) in accordance with the terms hereof.
WHEREAS, the parties hereto desire to create a business trust
pursuant to the Delaware Act (as hereinafter defined) for the investment
and reinvestment of funds contributed thereto.
NOW, THEREFORE, the parties hereto declare that all money and
property contributed to the trust hereunder shall be held and managed in
trust under this Trust Instrument for the benefit of the Shareholders as
herein set forth below.
ARTICLE I
NAME, DEFINITIONS AND CERTIFICATE OF TRUST
Section 1.1. Name. The name of the business trust created hereby is
"The Henlopen Fund".
Section 1.2. Definitions. Wherever used herein, unless otherwise
required by the context or specifically provided:
(a) "Bylaws" means the Bylaws referred to in Article IV, Section
4.1(e) hereof, as from time to time amended.
(b) The term "Commission" has the meaning given it in the 1940 Act.
The terms "Affiliated Person", "Assignment", "Interested Person" and
"Principal Underwriter" shall have the meanings given them in the 1940
Act, as modified by or interpreted by any applicable order or orders of
the Commission or any rules or regulations adopted or interpretive
releases of the Commission thereunder. "Majority Shareholder Vote" shall
have the same meaning as the term "vote of a majority of the outstanding
voting securities" is given in the 1940 Act, as modified by or interpreted
by any applicable order or orders of the Commission or any rules or
regulations adopted or interpretive releases of the Commission thereunder.
(c) The "Delaware Act" refers to the Delaware Business Trust Act, 12
Del. C. Section 3801 et seq., as such Act may be amended from time to
time.
(d) "Net Asset Value" means the net asset value of each Series of
the Trust determined in the manner provided in Article IX, Section 9.3
hereof.
(e) "Outstanding Shares" means those Shares shown from time to time
in the books of the Trust or its Transfer Agent as then issued and
outstanding, but shall not include Shares which have been redeemed or
repurchased by the Trust and which are at the time held in the treasury of
the Trust.
(f) "Person" means a natural person, partnership, limited
partnership, trust, estate, association, corporation, custodian, nominee
or any other individual or entity in its own or any representative
capacity.
(g) "Series" means a series of Shares of the Trust established in
accordance with the provisions of Article II, Section 2.6 hereof.
(h) "Shareholder" means a record owner of Outstanding Shares of the
Trust.
(i) "Shares" means the equal proportionate transferable units of
beneficial interest into which the beneficial interest of each Series of
the Trust or class thereof shall be divided and may include fractions of
Shares as well as whole Shares.
(j) The "Trust" refers to The Henlopen Fund business trust created
hereby, and reference to the Trust, when applicable to one or more Series
of the Trust, shall refer to any such Series.
(k) The "Trustees" means the Persons who have signed this Trust
Instrument as trustees, so long as they shall continue to serve as
trustees of the Trust in accordance with the terms hereof, and all other
Persons who may from time to time be duly appointed as Trustees in
accordance with the provisions of Section 3.4 hereof, and reference herein
to a Trustee or to the Trustees shall refer to such Persons in their
capacity as Trustees hereunder.
(l) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of
one or more of the Trust or any Series, or the Trustees on behalf of the
Trust or any Series.
(m) The "1940 Act" refers to the Investment Company Act of 1940, as
amended from time to time.
Section 1.3. Certificate of Trust. Immediately upon the execution
of this Trust Instrument, the Trustees shall file a Certificate of Trust
with respect to the Trust in the office of the Secretary of State of the
State of Delaware pursuant to the Delaware Act.
ARTICLE II
BENEFICIAL INTEREST
Section 2.1. Shares of Beneficial Interest. The beneficial interest
in the Trust shall be divided into such transferable Shares of one or more
separate and distinct Series or classes of a Series as the Trustees shall
from time to time create and establish. The number of Shares of each
Series, and class thereof, authorized hereunder is unlimited. Each Share
shall have no par value. All Shares issued hereunder, including without
limitation, Shares issued in connection with a dividend in Shares or a
split or reverse split of Shares, shall be fully paid and nonassessable.
Section 2.2. Issuance of Shares. The Trustees in their discretion
may, from time to time, without vote of the Shareholders, issue Shares, in
addition to the then issued and outstanding Shares and Shares held in the
treasury, to such party or parties and for such amount and type of
consideration, subject to applicable law, including cash or securities, at
such time or times and on such terms as the Trustees may deem appropriate,
and may in such manner acquire other assets (including the acquisition of
assets subject to, and in connection with, the assumption of liabilities)
and businesses. In connection with any issuance of Shares, the Trustees
may issue fractional Shares and Shares held in the treasury. The Trustees
may from time to time divide or combine the Shares into a greater or
lesser number without thereby changing the proportionate beneficial
interests in the Trust. Contributions to the Trust may be accepted for,
and Shares shall be redeemed as, whole Shares and/or 1/1,000th of a Share
or integral multiples thereof.
Section 2.3. Register of Shares and Share Certificates. A register
shall be kept at the principal office of the Trust or an office of the
Trust's transfer agent which shall contain the names and addresses of the
Shareholders of each Series, the number of Shares of that Series (or any
class or classes thereof) held by them respectively and a record of all
transfers thereof. As to Shares for which no certificate has been issued,
such register shall be conclusive as to who are the holders of the Shares
and who shall be entitled to receive dividends or other distributions or
otherwise to exercise or enjoy the rights of Shareholders. No Shareholder
shall be entitled to receive payment of any dividend or other
distribution, nor to have notice given to him as herein or in the Bylaws
provided, until he has given his address to the transfer agent or such
other officer or agent of the Trustees as shall keep the said register for
entry thereon. The Trustees, in their discretion, may authorize the
issuance of share certificates and promulgate appropriate rules and
regulations as to their use. Such certificates may be issuable for any
purpose limited in the Trustees discretion. In the event that one or more
certificates are issued, whether in the name of a shareholder or a
nominee, such certificate or certificates shall constitute evidence of
ownership of Shares for all purposes, including transfer, assignment or
sale of such Shares, subject to such limitations as the Trustees may, in
their discretion, prescribe.
Section 2.4. Transfer of Shares. Except as otherwise provided by
the Trustees, Shares shall be transferable on the records of the Trust
only by the recent holder thereof or by his agent thereunto duly
authorized in writing, upon delivery to the Trustees or the Trust's
transfer agent of a duly executed instrument of transfer, together with a
Share certificate, if one is outstanding, and such evidence of the
genuineness of each such execution and authorization and of such other
matters as may be required by the Trustees. Upon such delivery the
transfer shall be recorded on the register of the Trust. Until such
record is made, the Shareholder of record shall be deemed to be the holder
of such Shares for all purposes hereunder and neither the Trustees nor the
Trust, nor any transfer agent or registrar nor any officer, employee or
agent of the Trust shall be affected by any notice of the proposed
transfer.
Section 2.5. Treasury Shares. Shares held in the treasury shall,
until reissued pursuant to Section 2.2 hereof, not confer any voting
rights on the Trustees, nor shall such Shares be entitled to any dividends
or other distributions declared with respect to the Shares.
Section 2.6. Establishment of Series. The Shares issued hereunder
shall consist of one or more Series and separate and distinct records
shall be maintained by the Trust for each Series and the assets associated
solely with any such Series shall be held and accounted for separately
from the assets of the Trust associated solely with any other Series. The
Trustees shall have full power and authority, in their sole discretion,
and without obtaining any prior authorization or vote of the Shareholders
of any Series of the Trust, to establish and designate and to change in
any manner any such Series of Shares or any classes of initial or
additional Series and to fix such preferences, voting powers, rights and
privileges of such Series or classes thereof as the Trustees may from time
to time determine, to divide or combine the Shares or any Series or
classes thereof into a greater or lesser number, to classify or reclassify
any issued Shares or any Series or classes thereof into one or more Series
or classes of Shares, and to take such other action with respect to the
Shares as the Trustees may deem desirable. The establishment and
designation of any Series shall be effective upon the adoption of a
resolution by a majority of the Trustees setting forth such establishment
and designation and the relative rights and preferences of the Shares of
such Series. A Series may issue any number of Shares but need not issue
any shares. At any time that there are no Shares outstanding of any
particular Series previously established and designated, the Trustees may
by a majority vote abolish that Series and the establishment and
designation thereof.
All references to Shares in this Trust Instrument shall be deemed to
be Shares of any or all Series, or classes thereof, as the context may
require. All provisions herein relating to the Trust shall apply equally
to each Series of the Trust, and each class thereof, except as the context
otherwise requires.
Each Share of a Series of the Trust shall represent an equal
beneficial interest in the net assets of such Series. Each holder of
outstanding Shares of a Series shall be entitled to receive his pro rata
share of distributions of income and capital gains, if any, made with
respect to such Series. Upon redemption of his Shares, such Shareholder
shall be paid solely out of the funds and property of such Series of the
Trust.
Section 2.7. Investment in the Trust. The Trustees shall accept
investments in any Series of the Trust from such Persons and on such terms
as they may from time to time authorize. At the Trustees' discretion,
such investments, subject to applicable law, may be in the form of cash or
securities in which the affected Series is authorized to invest, valued as
provided in Article IX, Section 9.3 hereof. Investments in a Series shall
be credited to each Shareholder's account in the form of full Shares at
the Net Asset Value per Share next determined after the investment is
received; provided, however, that the Trustees may, in their sole
discretion, (a) fix the Net Asset Value per Share of the initial capital
contribution, (b) impose a sales charge upon investments in the Trust in
such manner and at such time determined by the Trustees or (c) issue
fractional Shares.
Section 2.8. Assets and Liabilities of 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 be held and
accounted for separately from the other assets of the Trust and of every
other Series and may be referred to herein as "assets belonging to" that
Series. The assets belonging to a particular Series shall belong to that
Series for all purposes, and to no other Series, subject only to the
rights of creditors of that Series. In addition, any assets, income,
earnings, profits or funds, or payments and proceeds with respect thereto,
which are not readily identifiable as belonging to any particular Series
shall be allocated by the Trustees between and among one or more of the
Series in such manner as the Trustees, in their sole discretion, deem fair
and equitable. Each such allocation shall be conclusive and binding upon
the Shareholders of all Series for all purposes, and such assets, income,
earnings, profits or funds, or payments and proceeds with respect thereto
shall be assets belonging to that Series. The assets belonging to a
particular Series shall be so recorded upon the books of the Trust, and
shall be held by the Trustees in trust for the benefit of the holders of
Shares of that Series. The assets belonging to each particular Series
shall be charged with the liabilities of that Series and all expenses,
costs, charges and reserves attributable to that Series. 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 between or among any one or more of
the Series in such manner as the Trustees in their sole discretion deem
fair and equitable. Each such allocation shall be conclusive and binding
upon the Shareholders of all Series for all purposes. Without limitation
of the foregoing provisions of this Section 2.8, but subject to the right
of the Trustees in their discretion to allocate general liabilities,
expenses, costs, charges or reserves as herein provided, the debts,
liabilities, obligations and expenses incurred, contracted for or
otherwise existing with respect to a particular Series shall be
enforceable against the assets of such Series only, and not against the
assets of the Trust generally. Notice of this contractual limitation on
inter-Series liabilities may, in the Trustee's sole discretion, be set
forth in the Certificate of Trust of the Trust (whether originally or by
amendment) as filed or to be filed in the Office of the Secretary of State
of the State of Delaware pursuant to the Delaware Act, and upon the giving
of such notice in the Certificate of Trust, the statutory provisions of
Section 3804 of the Delaware Act relating to limitations on inter-Series
liabilities (and the statutory effect under Section 3804 of setting forth
such notice in the Certificate of Trust) shall become applicable to the
Trust and each Series. Any Person extending credit to, contracting with
or having any claim against any Series may look only to the assets of that
Series to satisfy or enforce any debt, liability, obligation or expense
incurred, contracted for or otherwise existing with respect to that
Series. No Shareholder or former Shareholder of any Series shall have a
claim on or any right to any assets allocated or belonging to any other
Series.
Section 2.9. No Preemptive Rights. Shareholders shall have no
preemptive or other right to subscribe to any additional Shares or other
securities issues by the Trust or the Trustees, whether of the same or
other Series.
Section 2.10. Personal Liability of Shareholders. Each Shareholder
of the Trust shall not be personally liable for the debts, liabilities,
obligations and expenses incurred by, contracted for, or otherwise
existing with respect to, the Trust or any Series thereof. The Trustees
shall have no power to bind any Shareholder personally or, except as
provided by applicable law, 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
for any Shares or otherwise. Every note, bond, contract or other
undertaking issued by or on behalf of the Trust or the Trustees relating
to the Trust or to any Series thereof shall include a recitation limiting
the obligation represented thereby to the Trust or to one or more Series
thereof and its or their assets (but the omission of such a recitation
shall not operate to bind any Shareholder or Trustee of the Trust).
Section 2.11. Assent to Trust Instrument. Every Shareholder, by
virtue of having purchased a Share, shall be held to have expressly
assented to, and agreed to be bound by, the terms hereof.
ARTICLE III
THE TRUSTEES
Section 3.1. Management of the Trust. The Trustees shall have
exclusive and absolute control over the Trust Property and over the
business of the Trust to the same extent as if the Trustees were the sole
owners of the Trust Property and business in their own right, but with
such powers of delegation as may be permitted by this Trust Instrument.
The Trustees shall have power to conduct the business of the Trust and
carry on its operations in any and all of its branches and maintain
offices both within and without the State of Delaware, in any and all
states of the United States of America, in the District of Columbia, in
any and all commonwealths, territories, dependencies, colonies, or
possessions of the United States of America, and in any foreign
jurisdiction and to do all such other things and execute all such
instruments as they deem necessary, proper or desirable in order to
promote the interests of the Trust although such things are not herein
specifically mentioned. Any determination as to what is in the interests
of the Trust made by the Trustees in good faith shall be conclusive. In
construing the provisions of this Trust Instrument, the presumption shall
be in favor of a grant of power to the Trustees.
The enumeration of any specific power in this Trust Instrument shall
not be construed as limiting the aforesaid power. The powers of the
Trustees may be exercised without order of or resort to any court.
Except for the Trustees named herein or appointed to fill vacancies
pursuant to Section 3.4 of this Article III, the Trustees shall be elected
by the Shareholders owning of record a plurality of the Shares voting at a
meeting of Shareholders. Such a meeting shall be held on a date fixed by
the Trustees. In the event that less than a majority of the Trustees
holding office have been elected by Shareholders, the Trustees then in
office will call a Shareholders' meeting for the election of Trustees.
Section 3.2. Initial Trustees. The initial Trustees shall be the
persons named herein. On a date fixed by the Trustees, the Shareholders
shall elect at least three (3) but not more than twelve (12) Trustees, as
specified by the Trustees pursuant to Section 3.6 of this Article III.
Section 3.3. Term of Office of Trustees. The Trustees shall hold
office during the lifetime of this Trust, and until its termination as
herein provided; except (a) that any Trustee may resign his trust by
written instrument signed by him and delivered to the other Trustees,
which shall take effect upon such delivery or upon such later date as is
specified therein; (b) that any Trustee may be removed at any time by
written instrument, signed by at least two-thirds of the number of
Trustees prior to such removal, specifying the date when such removal
shall become effective; (c) that any Trustee who requests in writing to be
retired or who has died, become physically or mentally incapacitated by
reason of disease or otherwise, or is otherwise unable to serve, may be
retired by written instrument signed by a majority of the other Trustees,
specifying the date of his retirement; and (d) that a Trustee may be
removed at any meeting of the Shareholders of the Trust by a vote of
Shareholders owning at least two-thirds of the outstanding Shares.
Section 3.4. Vacancies and Appointment of Trustees. In case of the
declination to serve, death, resignation, retirement, removal, physical or
mental incapacity by reason of disease or otherwise, or a Trustee is
otherwise unable to serve, or an increase in the number of Trustees, a
vacancy shall occur. Whenever a vacancy in the Board of Trustees shall
occur, until such vacancy is filled, the other Trustees shall have all the
powers hereunder and the certificate of the other Trustees of such vacancy
shall be conclusive. In the case of an existing vacancy, the remaining
Trustees shall fill such vacancy by appointing such other person as they
in their discretion shall see fit consistent with the limitations under
the 1940 Act. Such appointment shall be evidenced by a written instrument
signed by a majority of the Trustees in office or by resolution of the
Trustees, duly adopted, which shall be recorded in the minutes of a
meeting of the Trustees, whereupon the appointment shall take effect.
An appointment of a Trustee may be made by the Trustees then in
office in anticipation of a vacancy to occur by reason of retirement,
resignation or increase in number of Trustees effective at a later date,
provided that said appointment shall become effective only at or after the
effective date of said retirement, resignation or increase in number of
Trustees. As soon as any Trustee appointed pursuant to this Section 3.4
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.
The power to appoint a Trustee pursuant to this Section 3.4 is subject to
the provisions of Section 16(a) of the 1940 Act.
Section 3.5. Temporary Absence of Trustee. Any Trustee may, by
power of attorney, delegate his power for a period not exceeding six
months at any one time to any other Trustee or Trustees, provided that in
no case shall less than two Trustees personally exercise the other powers
hereunder except as herein otherwise expressly provided.
Section 3.6. Number of Trustees. The number of Trustees shall
initially be four (4), and thereafter shall be such number as shall be
fixed from time to time by a majority of the Trustees; provided, however,
that the number of Trustees shall in no event be less than three (3) nor
more than twelve (12).
Section 3.7. Effect of Death, Resignation, etc. of a Trustee. The
declination to serve, death, resignation, retirement, removal, incapacity,
or inability of the Trustees, or any one of them, shall not operate to
terminate the Trust or to revoke any existing agency created pursuant to
the terms of this Trust Instrument.
Section 3.8. Ownership of Assets of the Trust. The assets of the
Trust and of each Series thereof 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. Legal title in all
of the assets of the Trust and the right to conduct any business shall at
all times be considered as vested in the Trustees on behalf of the Trust,
except that the Trustees may cause legal title to any Trust Property to be
held by, or in the name of the Trust, or in the name of any person as
nominee. No Shareholder shall be deemed to have a severable ownership in
any individual asset of the Trust or of any Series or any right of
partition or possession thereof, but each Shareholder shall have, except
as otherwise provided for herein, a proportionate undivided beneficial
interest in the Trust or Series. The Shares shall be personal property
giving only the rights specifically set forth in this Trust Instrument or
the Delaware Act.
ARTICLE IV
POWERS OF THE TRUSTEES
Section 4.1. Powers. 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 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 sole discretion, shall deem proper to
accomplish the purpose of this Trust without recourse to any court or
other authority. Subject to any applicable limitation in this Trust
Instrument or the Bylaws of the Trust, the Trustees shall have power and
authority:
(a) To invest and reinvest cash and other property, and to hold cash
or other property uninvested, without in any event being bound or limited
by any present or future law or custom in regard to investments by
trustees, and to sell, exchange, lend, pledge, mortgage, hypothecate,
write options on and lease any or all of the assets of the Trust;
(b) To operate as and carry on the business of an investment
company, and exercise all the powers necessary and appropriate to the
conduct of such operations;
(c) To borrow money and in this connection issue notes or other
evidence of indebtedness; to secure borrowings by mortgaging, pledging or
otherwise subjecting as security the Trust Property; to endorse,
guarantee, or undertake the performance of an obligation or engagement of
any other Person and to lend Trust Property;
(d) To provide for the distribution of interests of the Trust either
through a principal underwriter in the manner hereinafter provided for or
by the Trust itself, or both, or otherwise pursuant to a plan of
distribution of any kind;
(e) To adopt Bylaws not inconsistent with this Trust Instrument
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; such Bylaws shall be deemed incorporated and included in
this Trust Instrument;
(f) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate;
(g) To employ one or more banks, trust companies or companies that
are members of a national securities exchange or such other entities as
the Commission may permit as custodians of any assets of the Trust subject
to any conditions set forth in this Trust Instrument or in the Bylaws;
(h) To retain one or more transfer agents and shareholder servicing
agents, or both;
(i) To set record dates in the manner provided herein or in the
Bylaws;
(j) To delegate such authority as they consider desirable to any
officers of the Trust and to any investment adviser, manager, custodian,
underwriter or other agent or independent contractor;
(k) To sell or exchange any or all of the assets of the Trust,
subject to the provisions of Article XI, Section 11.4(b) hereof;
(l) To vote or give assent, or exercise any rights of ownership,
with respect to stock or other securities or property; 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;
(m) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities;
(n) To hold any security or property in a form not indicating any
trust, whether in bearer, book entry, unregistered or other negotiable
form; or either in the name of the Trust 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 Delaware business trusts or investment
companies;
(o) To establish separate and distinct Series with separately
defined investment objectives and policies and distinct investment
purposes in accordance with the provisions of Article II hereof and to
establish classes of such Series having relative rights, powers and duties
as they may provide consistent with applicable law;
(p) Subject to the provisions of Section 3804 of the Delaware Act,
to allocate assets, liabilities and expenses of the Trust to a particular
Series or to apportion the same between or among two or more Series,
provided that any liabilities or expenses incurred by a particular Series
shall be payable solely out of the assets belonging to that Series as
provided for in Article II hereof;
(q) 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;
(r) 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;
(s) To make distributions of income and of capital gains to
Shareholders in the manner hereinafter provided;
(t) To establish, from time to time, a minimum investment for
Shareholders in the Trust or in one or more Series or class, and to
require the redemption of the Shares of any Shareholders whose investment
is less than such minimum upon giving notice to such Shareholder;
(u) To establish one or more committees, to delegate any of the
powers of the Trustees to said committees and to adopt a committee charter
providing for such responsibilities, membership (including Trustees,
officers or other agents of the Trust therein) and any other
characteristics of said committees as the Trustees may deem proper.
Notwithstanding the provisions of this Article IV, and in addition to such
provisions or any other provision of this Trust Instrument or of the
Bylaws, the Trustees may by resolution appoint a committee consisting of
less than the whole number of Trustees then in office, which committee may
be empowered to act for and bind the Trustees and the Trust, as if the
acts of such committee were the acts of all the Trustees then in office,
with respect to the institution, prosecution, dismissal, settlement,
review or investigation of any action, suit or proceeding which shall be
pending or threatened to be brought before any court, administrative
agency or other adjudicatory body;
(v) To interpret the investment policies, practices or limitations
of any Series;
(w) To establish a registered office and have a registered agent in
the state of Delaware; and
(x) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary,
suitable or proper for the accomplishment of any purpose or the attainment
of any object or the furtherance of any power hereinbefore set forth,
either alone or in association with others, and to do every other act or
thing incidental or appurtenant to or growing out of or connected with the
aforesaid business or purposes, objects or powers.
The foregoing clauses shall be construed both as objects and powers,
and the foregoing enumeration of specific powers shall not be held to
limit or restrict in any manner the general powers of the Trustees. Any
action by one or more the Trustees in their capacity as such hereunder
shall be deemed an action on behalf of the Trust or the applicable Series,
and not an action in an individual capacity.
The Trustees shall not be limited to investing in obligations
maturing before the possible termination of the Trust.
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.
Section 4.2. Issuance and Repurchase of Shares. The Trustees shall
have the power to issue, sell, repurchase, redeem, retire, cancel,
acquire, hold, resell, reissue, dispose of, and otherwise deal in Shares
and, subject to the provisions set forth in Articles II and IX, to apply
to any such repurchase, redemption, retirement, cancellation or
acquisition of Shares any funds or property of the Trust, or the
particular Series of the Trust, with respect to which such Shares are
issued.
Section 4.3. Trustees and Officers as Shareholders. Any Trustee,
officer or other agent of the Trust may acquire, own and dispose of Shares
to the same extent as if he were not a Trustee, officer or agent; and the
Trustees may issue and sell or cause to be issued and sold Shares to and
buy such Shares from any such person or any firm or company in which he is
interested, subject only to the general limitations herein contained as to
the sale and purchase of such Shares; and all subject to any restrictions
which may be contained in the Bylaws.
Section 4.4. Action by the Trustees. The Trustees shall act by
majority vote at a meeting only called or by unanimous written consent
without a meeting or by telephone meeting provided a quorum of Trustees
participate in any such telephone meeting, unless the 1940 Act requires
that a particular action be taken only at a meeting at which the Trustees
are present in person. At any meeting of the Trustees, a majority of the
Trustees shall constitute a quorum. Meetings of the Trustees may be
called orally or in writing by the Chairman of the Board of Trustees or by
any two other Trustees. Notice of the time, date and place of all
meetings of the Trustees shall be given by the party calling the meeting
to each Trustee by telephone, telefax, or telegram sent to his home or
business address at least twenty-four hours in advance of the meeting or
by written notice mailed to his home or business address at least seventy-
two hours in advance of the meeting. Notice need not be given to any
Trustee who attends the meeting without objecting to the lack of notice or
who executes a written waiver of notice with respect to the meeting. Any
meeting conducted by telephone shall be deemed to take place at the
principal office of the Trust, as determined by the Bylaws or the
Trustees. Subject to the requirements of the 1940 Act, the Trustees by
majority vote may delegate to any one or more of their number their
authority to approve particular matters or take particular actions on
behalf of the Trust. Written consents or waivers of the Trustees may be
executed in one or more counterparts. Execution of a written consent or
waiver and delivery thereof to the Trust may be accomplished by telefax.
Section 4.5. Chairman of the Trustees. The Trustees shall appoint
one of their number to be Chairman of the Board of Trustees. The Chairman
shall preside at all meetings of the Trustees, shall be responsible for
the execution of policies established by the Trustees and the
administration of the Trust, and may be (but is not required to be) the
chief executive, financial and/or accounting officer of the Trust.
Section 4.6. Principal Transactions. Except to the extent
prohibited by applicable law, the Trustees may, on behalf of the Trust,
buy any securities from or sell any securities to, or lend any assets of
the Trust to, any Trustee or officer of the Trust or any firm of which any
such Trustee or officer is a member acting as principal, or have any such
dealings with any investment adviser, distributor or transfer agent for
the Trust or with any Interested Person of such person; and the Trust may
employ any such person, or firm or company in which such person is an
Interested Person, as broker, legal counsel, registrar, investment
adviser, distributor, transfer agent, dividend disbursing agent, custodian
or in any other capacity upon customary terms.
ARTICLE V
EXPENSES OF THE TRUST
Section 5.1. Trustee Reimbursement. Subject to the provisions of
Article II, Section 2.8 hereof, the Trustees shall be reimbursed from the
Trust estate or the assets belonging to the appropriate Series for their
expenses and disbursements, including, without limitation, fees and
expenses of Trustees who are not Interested Persons of the Trust, interest
expense, taxes, fees and commissions of every kind, expenses of pricing
Trust portfolio securities, expenses of issue, repurchase and redemption
of shares, including expenses attributable to a program of periodic
repurchases or redemptions, expenses of registering and qualifying the
Trust and its Shares under Federal and State laws and regulations or under
the laws of any foreign jurisdiction, charges of third parties, including
investment advisers, managers, custodians, transfer agents, portfolio
accounting and/or pricing agents, and registrars, expenses of preparing
and setting up in type prospectuses and statements of additional
information and other related Trust documents, expenses of printing and
distributing prospectuses sent to existing Shareholders, auditing and
legal expenses, reports to Shareholders, expenses of meetings of
Shareholders and proxy solicitations therefor, insurance expenses,
association membership dues and for such non-recurring items as may arise,
including litigation to which the Trust (or a Trustee acting as such) is a
party, and for all losses and liabilities by them incurred in
administering the Trust, and for the payment of such expenses,
disbursements, losses and liabilities the Trustees shall have a lien on
the assets belonging to the appropriate Series, or in the case of an
expense allocable to more than one Series, on the assets of each such
Series, prior to any rights or interests of the Shareholders thereto.
This section shall not preclude the Trust from directly paying any of the
aforementioned fees and expenses.
ARTICLE VI
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER AND TRANSFER AGENT
Section 6.1. Investment Adviser. The Trustees may in their
discretion, from time to time, enter into an investment advisory or
management contract or contracts with respect to the Trust or any Series
whereby the other party or parties to such contract or contracts shall
undertake to furnish the Trustees with such management, investment
advisory, statistical and research facilities and services and such other
facilities and services, if any, and all upon such terms and conditions,
as the Trustees may in their discretion determine; provided, however, that
the initial approval and entering into of such contract or contracts shall
be subject to a Majority Shareholder Vote. Notwithstanding any other
provision of this Trust Instrument, the Trustees may authorize any
investment adviser (subject to such general or specific instructions as
the Trustees may from time to time adopt) to effect purchases, sales or
exchanges of portfolio securities, other investment instruments of the
Trust, or other Trust Property on behalf of the Trustees, or may authorize
any officer, agent, or Trustee to effect such purchases, sales or
exchanges pursuant to recommendations of the investment advisor (and all
without further action by the Trustees). Any such purchases, sales and
exchanges shall be deemed to have been authorized by all of the Trustees.
The Trustees may authorize, subject to applicable requirements of the
1940 Act, including those relating to Shareholder approval, the investment
advisor to employ, from time to time, one or more sub-advisors to perform
such of the acts and services of the investment advisor, and upon such
terms and conditions, as may be agreed upon between the investment advisor
and sub-advisor. Any reference in this Trust Instrument to the investment
advisor shall be deemed to include such sub-advisors, unless the context
otherwise requires.
Section 6.2. Principal Underwriter. The Trustees may in their
discretion from time to time enter into an exclusive or non-exclusive
underwriting contract or contracts providing for the sale of Shares,
whereby the Trust may either agree to sell Shares to the other party to
the contract or appoint such other party its sales agent for such Shares.
In either case, the contract shall be on such terms and conditions, if
any, as may be prescribed in the Bylaws, and such further terms and
conditions as the Trustees may in their discretion determine not
inconsistent with the provisions of this Article VI, or of the Bylaws; and
such contract may also provide for the repurchase or sale of Shares by
such other party as principal or as agent of the Trust.
Section 6.3. Transfer Agent. The Trustees may in their discretion
from time to time enter into one or more transfer agency and Shareholder
service contracts whereby the other party or parties shall undertake to
furnish the Trustees with transfer agency and Shareholder services. The
contract or contracts shall be on such terms and conditions as the
Trustees may in their discretion determine not inconsistent with the
provisions of this Trust Instrument or of the Bylaws.
Section 6.4. Parties to Contract. Any contract of the character
described in Sections 6.1, 6.2, and 6.3 of this Article VI or any contract
of the character described in Article VIII hereof may be entered into with
any corporation, firm, partnership, trust or association, although one or
more of the Trustees or officers of the Trust may be an officer, director,
trustee, shareholder, or member of such other party to the contract, and
no such contract shall be invalidated or rendered void or voidable by
reason of the existence of any relationship, nor shall any person holding
such relationship be disqualified from voting on or executing the same in
his capacity as Shareholder and/or Trustee, nor shall any person holding
such relationship be liable merely by reason of such relationship for any
loss or expense to the Trust under or by reason of said contract or
accountable for any profit realized directly or indirectly therefrom,
provided that the contract when entered into was not inconsistent with the
provisions of this Article VI or Article VIII hereof or of the Bylaws.
The same person (including a firm, corporation, partnership, trust, or
association) may be the other party to contracts entered into pursuant to
Sections 6.1, 6.2, and 6.3 of this Article VI or pursuant to Article VIII
hereof, and any individual may be financially interested or otherwise
affiliated with persons who are parties to any or all of the contracts
mentioned in this Section 6.4.
Section 6.5. Provisions and Amendments. Any contract entered into
pursuant to Sections 6.1 or 6.2 of this Article VI shall be consistent
with and subject to the requirements of Section 15 of the 1940 Act or
other applicable Act of Congress hereafter enacted with respect to its
continuance in effect, its termination, and the method of authorization
and approval of such contract or renewal thereof, and no amendment to any
contract, entered into pursuant to Section 6.1 of this Article VI shall be
effective unless assented to in a manner consistent with the requirements
of said Section 15, as modified by an applicable rule, regulation or order
of the Commission.
ARTICLE VII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 7.1. Voting Powers. The Shareholders shall have power to
vote only (i) for the election of Trustees as provided in Article III,
Sections 3.1 and 3.2 hereof, (ii) for the removal of Trustees as provided
in Article III, Section 3.3(d) hereof, (iii) with respect to any
investment advisory or management contract as provided in Article VI,
Sections 6.1 and 6.5 hereof, and (iv) with respect to such additional
matters relating to the Trust as may be required by law, by this Trust
Instrument, or the Bylaws or any registration of the Trust with the
Commission or any State, or as the Trustees may consider desirable.
On any matter submitted to a vote of the Shareholders, all Shares
shall be voted separately by individual Series, except (i) when required
by the 1940 Act, Shares shall be voted in the aggregate and not by
individual Series, and (ii) when the Trustees have determined that the
matter affects the interests of more than one Series, then the
Shareholders of all such Series shall be entitled to vote thereon. The
Trustees may also determine that a matter affects only the interests of
one or more classes of a Series, in which case any such matter shall be
voted on by such class or classes. Each whole Share shall be entitled to
one vote as to any matter on which it is entitled to vote, and each
fractional Share shall be entitled to a proportionate fractional vote.
There shall be no cumulative voting in the election of Trustees. Shares
may be voted in person or by proxy or in any manner provided for in the
Bylaws. A proxy may be given in writing. The Bylaws may provide that
proxies may also, or may instead, be given by any electronic or
telecommunications device or in any other manner. Notwithstanding
anything else herein or in the Bylaws, in the event a proposal by anyone
other than the officers or Trustees of the Trust is submitted to a vote of
the Shareholders of one or more Series or of the Trust, or in the event of
any proxy contest or proxy solicitation or proposal in opposition to any
proposal by the officers or Trustees of the Trust, Shares may be voted
only in person or by written proxy. Until Shares are issued, the Trustees
may exercise all rights of Shareholders and may take any action required
or permitted by law, this Trust Instrument or any of the Bylaws of the
Trust to be taken by Shareholders.
Section 7.2. Meetings. The first Shareholders' meeting shall be
held in order to elect Trustees as specified in Section 3.2 of Article III
hereof at the principal office of the Trust or such other place as the
Trustees may designate. Meetings may be held within or without the State
of Delaware. Special meetings of the Shareholders of any Series may be
called by the Trustees and shall be called by the Trustees upon the
written request of Shareholders owning at least one-tenth of the
Outstanding Shares entitled to vote. Whenever ten or more Shareholders
meeting the qualifications set forth in Section 16(c) of the 1940 Act, as
the same may be amended from time to time, seek the opportunity of
furnishing materials to the other Shareholders with a view to obtaining
signatures on such a request for a meeting, the Trustees shall comply with
the provisions of said Section 16(c) with respect to providing such
Shareholders access to the list of the Shareholders of record of the Trust
or the mailing of such materials to such Shareholders of record, subject
to any rights provided to the Trust or any Trustees provided by said
Section 16(c). Notice shall be sent, by First Class Mail or such other
means determined by the Trustees, at least 15 days prior to any such
meeting.
Section 7.3. Quorum and Required Vote. One-third of Shares entitled
to vote in person or by proxy shall be a quorum for the transaction of
business at a Shareholders' meeting, except that where any provision of
law or of this Trust Instrument permits or requires that holders of any
Series shall vote as a Series (or that holders of a class shall vote as a
class), then one-third of the aggregate number of Shares of that Series
(or that class) entitled to vote shall be necessary to constitute a quorum
for the transaction of business by that Series (or that class). Any
lesser number shall be sufficient for adjournments. Any adjourned session
or sessions may be held, within a reasonable time after the date set for
the original meeting, without the necessity of further notice. Except
when a larger vote is required by law or by any provision of this Trust
Instrument or the Bylaws, a majority of the Shares voted in person or by
proxy shall decide any questions and a plurality shall elect a Trustee,
provided that where any provision of law or of this Trust Instrument
permits or requires that the holders of any Series shall vote as a Series
(or that the holders of any class shall vote as a class), then a majority
of the Shares present in person or by proxy of that Series or, if required
by law, a Majority Shareholder Vote of that Series (or class), voted on
the matter in person or by proxy shall decide that matter insofar as that
Series (or class) is concerned. Shareholders may act by unanimous written
consent. Actions taken by Series (or class) may be consented to
unanimously in writing by Shareholders of that Series.
ARTICLE VIII
CUSTODIAN
Section 8.1. Appointment and Duties. The Trustees shall at all
times employ a bank, a company that is a member of a national securities
exchange, or a trust company, each having capital, surplus and undivided
profits of at least two million dollars ($2,000,000) as custodian with
authority as its agent, but subject to such restrictions, limitations and
other requirements, if any, as may be contained in the Bylaws of the
Trust:
(1) to hold the securities owned by the Trust and deliver the
same upon written order or oral order confirmed in writing;
(2) to receive and receipt for any moneys due to the Trust and
deposit the same in its own banking department or elsewhere as the
Trustees may direct; and
(3) to disburse such funds upon orders or vouchers;
and the trust may also employ such custodian as its agent;
(4) to keep the books and accounts of the Trust or of any
Series or class and furnish clerical and accounting services; and
(5) to compute, if authorized to do so by the Trustees, the Net
Asset Value of any Series, or class thereof, in accordance with the
provisions hereof; all upon such basis of compensation as may be
agreed upon between the Trustees and the custodian.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services
of the custodian, and upon such terms and conditions, as may be agreed
upon between the custodian and such sub-custodian and approved by the
Trustees, provided that in every case such sub-custodian shall be a bank,
a company that is a member of a national securities exchange, or a trust
company organized under the laws of the United States or one of the states
thereof and having capital, surplus and undivided profits of at least two
million dollars ($2,000,000) or such other person as may be permitted by
the Commission, or otherwise in accordance with the 1940 Act.
Section 8.2. Central Certificate System. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may
direct the custodian to deposit all or any part of the securities owned by
the Trust in a system for the central handling of securities established
by a national securities exchange or a national securities association
registered with the Commission under the Securities Exchange Act of 1934,
as amended, or such other person as may be permitted by the Commission, or
otherwise in accordance with the 1940 Act, pursuant to which system all
securities of any particular class or series of any issuer deposited
within the system are treated as fungible and may be transferred or
pledged by bookkeeping entry without physical delivery of such securities,
provided that all such deposits shall be subject to withdrawal only upon
the order of the Trust or its custodians, subcustodians or other agents.
ARTICLE IX
DISTRIBUTIONS AND REDEMPTIONS
Section 9.1. Distributions.
(a) The Trustees may from time to time declare and pay
dividends or other distributions with respect to any Series. The
amount of such dividends or distributions and the payment of them and
whether they are in cash or any other Trust Property shall be wholly
in the discretion of the Trustees.
(b) Dividends and other distributions may be paid or made to
the Shareholders of record at the time of declaring a dividend or
other distribution or among the Shareholders of record at such other
date or time or dates or times as the Trustees shall determine, which
dividends or distributions, at the election of the Trustees, may be
paid pursuant to a standing resolution or resolutions adopted only
once or with such frequency as the Trustees may determine. The
Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans or related plans as
the Trustees shall deem appropriate.
(c) Anything in this Trust Instrument to the contrary
notwithstanding, the Trustees may at any time declare and distribute
a stock dividend pro rata among the Shareholders of a particular
Series, or class thereof, as of the record date of that Series fixed
as provided in Section 9.1(b) hereof.
Section 9.2. Redemptions. In case any holder of record of Shares of
a particular Series desires to dispose of his Shares or any portion
thereof, he may deposit at the office of the transfer agent or other
authorized agent of that Series a written request or such other form of
request as the Trustees may from time to time authorize, requesting that
the Series purchase the Shares in accordance with this Section 9.2; and
the Shareholder so requesting shall be entitled to require the Series to
purchase, and the Series or the principal underwriter of the Series shall
purchase his said Shares, but only at the Net Asset Value thereof (as
described in Section 9.3 of this Article IX). The Series shall make
payment for any such Shares to be redeemed, as aforesaid, in cash or
property from the assets of that Series and payment for such Shares shall
be made by the Series or the principal underwriter of the Series to the
Shareholder of record within seven (7) days after the date upon which the
request is effective. Upon redemption, shares shall become Treasury
shares and may be re-issued from time to time.
Section 9.3. Determination of Net Asset Value and Valuation of
Portfolio Assets. The term "Net Asset Value" of any Series shall mean
that amount by which the assets of that Series exceed its liabilities, all
as determined by or under the direction of the Trustees. Such value shall
be determined separately for each Series and shall be determined on such
days and at such times as the Trustees may determine. Such determination
shall be made with respect to securities for which market quotations are
readily available, at the market value of such securities; and with
respect to other securities and assets, at the fair value as determined in
good faith by the Trustees; provided, however, that the Trustees, without
Shareholder approval, may alter the method of valuing portfolio securities
insofar as permitted under the 1940 Act and the rules, regulations and
interpretations thereof promulgated or issued by the Commission or insofar
as permitted by any Order of the Commission applicable to the Series. The
Trustees may delegate any of their powers and duties under this Section
9.3 with respect to valuation of assets and liabilities. The resulting
amount, which shall represent the total Net Asset Value of the particular
Series, shall be divided by the total number of shares of that Series
outstanding at the time and the quotient so obtained shall be the Net
Asset Value per Share of that Series. At any time the Trustees may cause
the Net Asset Value per Share last determined to be determined again in
similar manner and may fix the time when such redetermined value shall
become effective. If, for any reason, the net income of any Series,
determined at any time, is a negative amount, the Trustees shall have the
power with respect to that Series (i) to offset each Shareholder's pro
rata share of such negative amount from the accrued dividend account of
such Shareholder, or (ii) to reduce the number of Outstanding Shares of
such Series by reducing the number of Shares in the account of each
Shareholder by a pro rata portion of that number of full and fractional
Shares which represents the amount of such excess negative net income, or
(iii) to cause to be recorded on the books of such Series an asset account
in the amount of such negative net income (provided that the same shall
thereupon become the property of such Series with respect to such Series
and shall not be paid to any Shareholder), which account may be reduced by
the amount, of dividends declared thereafter upon the Outstanding Shares
of such Series on the day such negative net income is experienced, until
such asset account is reduced to zero; (iv) to combine the methods
described in clauses (i) and (ii) and (iii) of this sentence; or (v) to
take any other action they deem appropriate, in order to cause (or in
order to assist in causing) the Net Asset Value per Share of such Series
to remain at a constant amount per Outstanding Share immediately after
each such determination and declaration. The Trustees shall also have the
power not to declare a dividend out of net income for the purpose of
causing the Net Asset Value per Share to be increased. The Trustees shall
not be required to adopt, but may at any time adopt, discontinue or amend
the practice of maintaining the Net Asset Value per Share of the Series at
a constant amount.
Section 9.4. Suspension of the Right of Redemption. The Trustees
may declare a suspension of the right of redemption or postpone the date
of payment as permitted under the 1940 Act. Such suspension shall take
effect at such time as the Trustees shall specify but not later than the
close of business on the business day next following the declaration of
suspension, and thereafter there shall be no right of redemption or
payment until the Trustees shall declare the suspension at an end. In the
case of a suspension of the right of redemption, a Shareholder may either
withdraw his request for redemption or receive payment based on the Net
Asset Value per Share next determined after the termination of the
suspension. In the event that any Series is divided into classes, the
provisions of this Section 9.3, to the extent applicable as determined in
the discretion of the Trustees and consistent with applicable law, may be
equally applied to each such class.
Section 9.5. Redemption of Shares in Order to Qualify as Regulated
Investment Company. If the Trustees shall, at any time and in good faith,
be of the opinion that direct or indirect ownership of Shares of any
Series has or may become concentrated in any Person to an extent which
would disqualify any Series as a regulated investment company under the
Internal Revenue Code, then the Trustees shall have the power (but not the
obligation) by lot or other means deemed equitable by them (i) to call for
redemption by any such person of a number, or principal amount, of Shares
sufficient to maintain or bring the direct or indirect ownership of Shares
into conformity with the requirements for such qualification and (ii) to
refuse to transfer or issue Shares to any person whose acquisition of the
Shares in question would result in such disqualification. The redemption
shall be effected at the redemption price and in the manner provided in
this Article IX.
The holders of Shares shall upon demand disclose to the Trustees in
writing such information with respect to direct and indirect ownership of
Shares as the Trustees deem necessary to comply with the provisions of the
Internal Revenue Code, or to comply with the requirements of any other
taxing authority.
Section 9.6. Redemption of De Minimis Accounts. If, at any time
when a request for transfer or redemption of Shares of any Series is
received by the Trust or its agent, the value (computed as set forth in
Section 9.3 hereof) of the Shares of such Series in a Shareholder's
account is less than Dollars ($ ), after
giving effect to such transfer or redemption, the Trust may cause the
remaining Shares of such Series in such Shareholder's account to be
redeemed in accordance with such procedures as the Trustees shall adopt.
ARTICLE X
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 10.1. Limitation of Liability. A Trustee, when acting in
such capacity, shall not be personally liable to any person other than the
Trust or a beneficial owner for any act, omission or obligation of the
Trust or any Trustee. A Trustee shall not be liable for any act or
omission or any conduct whatsoever in his capacity as Trustee, provided
that nothing contained herein or in the Delaware Act shall protect any
Trustee against any liability to the Trust or to Shareholders 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 the office of Trustee hereunder.
Section 10.2. Indemnification.
(a) Subject to the exceptions and limitations contained in
Section 10.2(b) below:
(i) every Person who is, or has been, a Trustee or officer
of the Trust (hereinafter referred to as a "Covered Person")
shall be indemnified by the Trust to the fullest extent
permitted by law against liability and against all expenses
reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a
party or otherwise by virtue of his being or having been a
Trustee or officer and against amounts paid or incurred by him
in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened
while in office or thereafter, and the words "liability" and
"expenses" shall include, without limitation, attorneys' fees,
costs, judgments, amounts paid in settlement, fines, penalties
and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered
Person:
(i) who shall have been adjudicated by a court or body
before which the proceeding was brought (A) to be liable to the
Trust or its Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office or (B) not to have acted
in good faith in the reasonable belief that his action was in
the best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office,
(A) by the court or other body approving the settlement;
(B) by at least a majority of those Trustees who are
neither Interested Persons of the Trust nor are parties to
the matter based upon a review of readily available facts
(as opposed to a full trial-type inquiry); or
(C) by written opinion of independent legal counsel based
upon a review of readily available facts (as opposed to a
full trial-type inquiry);
provided, however, that any Shareholder may, by appropriate
legal proceedings, challenge any such determination by the
Trustees or by independent counsel.
(c) The rights of indemnification herein provided may be
insured against by policies maintained by the Trust, shall be
severable, shall not be exclusive of or affect any other rights to
which any Covered Person may now or hereafter be entitled, shall
continue as to a person who has ceased to be a Covered Person and
shall inure to the benefit of the heirs, executors and administrators
of such a person. Nothing contained herein shall affect any rights
to indemnification to which Trust personnel, other than Covered
Persons, and other persons may be entitled by contract or otherwise
under law.
(d) Expenses in connection with the preparation and
presentation of a defense to any claim, action, suit or proceeding of
the character described in paragraph (a) of this Section 10.2 may be
paid by the Trust or Series from time to time prior to final
disposition thereof upon receipt of an undertaking by or on behalf of
such Covered Person that such amount will be paid over by him to the
Trust or Series if it is ultimately determined that he is not
entitled to indemnification under this Section 10.2; provided,
however, that either (a) such Covered Person shall have provided
appropriate security for such undertaking, (b) the Trust is insured
against losses arising out of any such advance payments or (c) either
a majority of the Trustees who are neither Interested Persons of the
Trust nor parties to the matter, or independent legal counsel in a
written opinion, shall have determined, based upon a review of
readily available facts (as opposed to a trial-type inquiry or full
investigation), that there is reason to believe that such Covered
Person will be found entitled to indemnification under this Section
10.2.
Section 10.3. Shareholders. In case any Shareholder or former
Shareholder of any Series shall be held to be personally liable solely by
reason of his being or having been a Shareholder of such Series and not
because of his acts or omissions or for some other reason, the Shareholder
or former Shareholder (or his 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
assets belonging to the applicable Series to be held harmless from and
indemnified against all loss and expense arising from such liability. The
Trust, on behalf of the affected Series, shall, upon request by the
Shareholder, assume the defense of any claim made against the Shareholder
for any act or obligation of the Series and satisfy any judgment thereon
from the assets of the Series.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Trust Not a Partnership. It is hereby expressly
declared that a trust and not a partnership is created hereby. No Trustee
hereunder shall have any power to bind personally either the Trust's
officers or any Shareholder. All persons extending credit to, contracting
with or having any claim against the Trust or the Trustees shall look only
to the assets of the appropriate Series or (if the Trustees shall have yet
to have established any separate Series) of the Trust for payment under
such credit, 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. Nothing in this Trust Instrument shall
protect a Trustee against any liability to which the 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.
Section 11.2. Trustee's Good Faith Action, Expert Advice, No Bond or
Surety. The exercise by the Trustees of their powers and discretions
hereunder in good faith and with reasonable care under the circumstances
then prevailing shall be binding upon everyone interested. Subject to the
provisions of Article X hereof and to Section 11.1 of this Article XI, 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 operation of this Trust Instrument, and subject
to the provisions of Article X hereof and Section 11.1 of this Article XI,
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
obtained.
Section 11.3. Establishment of Record Dates. The Trustees may close
the Share transfer books of the Trust for a period not exceeding sixty
(60) days preceding the date of any meeting of Shareholders, or the date
for the payment of any dividends or other distributions, or the date for
the allotment of rights, or the date when any change or conversion or
exchange of Shares shall go into effect; or in lieu of closing the stock
transfer books as aforesaid, the Trustees may fix in advance a date, not
exceeding sixty (60) days preceding the date of any meeting of
Shareholders, or the date for payment of any dividend or other
distribution, or the date for the allotment of rights, or the date when
any change or conversion or exchange of Shares shall go into effect, as a
record date for the determination of the Shareholders entitled to notice
of, and to vote at, any such meeting, or entitled to receive payment of
any such dividend or other distribution, or to any such allotment of
rights, or to exercise the rights in respect of any such change,
conversion or exchange of Shares, and in such case such Shareholders and
only such Shareholders as shall be Shareholders of record on the date so
fixed shall be entitled to such notice of, and to vote at, such meeting,
or to receive payment of such dividend or other distribution, or to
receive such allotment or rights, or to exercise such rights, as the case
may be, notwithstanding any transfer of any Shares on the books of the
Trust after any such record date fixed as aforesaid.
Section 11.4. Termination of Trust.
(a) This Trust shall continue without limitation of time but subject
to the provisions of sub-section (b) of this Section 11.4.
(b) The Trustees may, subject to a Majority Shareholder Vote of each
Series affected by the matter or, if applicable, to a Majority Shareholder
Vote of the Trust, and subject to a vote of a majority of the Trustees:
(i) sell and convey all or substantially all of the assets of
any affected Series to another Series of the Trust for adequate
consideration, which may include the assumption of all outstanding
obligations, taxes and other liabilities, accrued or contingent, of
the affected Series, and which may include Shares of the acquiring
Series;
(ii) sell and convey all or substantially all of the assets of
the Trust or any affected Series to another trust, partnership,
association or corporation, or to a separate series of shares
thereof, organized under the laws of any state which trust,
partnership, association or corporation is an open-end management
company as defined in the 1940 Act, or is a series thereof, for
adequate consideration which may include the assumption of all
outstanding obligations, taxes and other liabilities, accrued or
contingent, of the Trust or any affected Series, and which may
include shares of beneficial interest, stock or other ownership
interests of such trust, partnership, association or corporation or
of a series thereof; or
(iii) at any time sell and convert into money all of the
assets of the Trust or any affected Series.
Upon making reasonable provision, in the determination of the
Trustees, for the payment of all such liabilities in (i), (ii) or (iii),
by such assumption or otherwise, the Trustees shall distribute the
remaining proceeds or assets (as the case may be) of each Series (or
class) ratably among the holders of Shares of that Series then
outstanding.
(c) Upon completion of the distribution of the remaining proceeds or
the remaining assets as provided in sub-section (b), the Trust or any
affected Series shall terminate and the Trustees and the Trust shall be
discharged of any and all further liabilities and duties hereunder and the
right, title and interest of all parties with respect to the Trust or
Series shall be cancelled and discharged.
Upon termination of the Trust, following completion of winding up of
its business, the Trustees shall cause a certificate of cancellation of
the Trust's certificate of trust to be filed in accordance with the
Delaware Act, which certificate of cancellation may be signed by any one
Trustee.
Section 11.5. Reorganization. Notwithstanding anything else herein,
the Trustees, in order to change the form of organization of the Trust,
may, without prior Shareholder approval, (i) cause the Trust to merge or
consolidate with or into one or more trusts, partnerships, associations or
corporations so long as the surviving or resulting entity is an open-end
management investment company under the 1940 Act, or is a series thereof,
that will succeed to or assume the Trust's registration under that Act and
which is formed, organized or existing under the laws of a state,
commonwealth possession or colony of the Unites States or (ii) cause the
Trust to incorporate under the laws of Delaware. Any agreement of merger
or consolidation or certificate of merge may be signed by a majority of
Trustees and facsimile signatures conveyed by electronic or
telecommunication means shall be valid.
Pursuant to and in accordance with the provisions of Section 3815(f)
of the Delaware Act, and notwithstanding anything to the contrary
contained in this Trust Instrument, an agreement of merger or
consolidation approved by the Trustees in accordance with this Section
11.5 may effect any amendment to the Trust Instrument or effect the
adoption of a new trust instrument of the Trust if it is the surviving or
resulting trust in the merger or consolidation.
Section 11.6. Filing of Copies, References, Headings. The original
or a copy of this Trust Instrument and of each amendment hereof or Trust
Instrument supplemental hereto shall be kept at the office of the Trust
where it may be inspected by any Shareholder. Anyone dealing with the
Trust may rely on a certificate by an officer or Trustee of the Trust as
to whether or not any such amendments or supplements 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 or Trustee of the Trust to be a copy of this Trust Instrument or
of any such amendment or supplemental Trust Instrument. In this Trust
Instrument or in any such amendment or supplemental Trust Instrument,
references to this Trust Instrument, and all expressions like "herein,"
"hereof" and "hereunder," shall be deemed to refer to this Trust
Instrument as amended or affected by any such supplemental Trust
Instrument. All expressions like "his", "he", and "him", shall be deemed
to include the feminine and neuter, as well as masculine, genders.
Headings are placed herein for convenience of reference only and in case
of any conflict, the text of this Trust Instrument, rather than the
headings, shall control. This Trust Instrument may be executed in any
number of counterparts each of which shall be deemed an original.
Section 11.7. Applicable Law. This Trust Instrument has been
executed and delivered in, and the Trust created hereby will be
administered from, the State of Delaware, and the Trust and this Trust
Instrument, and the rights, obligations and remedies of the Trustees and
Shareholders hereunder, are to be governed by and construed and
administered according to the Delaware Act and the other laws of said
State; provided, however, that there shall not be applicable to the Trust,
the Trustees, the Shareholders or this Trust Instrument (a) the provisions
of Section 3540 of Title 12 of the Delaware Code or (b) any provisions of
the laws (statutory or common) of the State of Delaware (other than the
Delaware Act) pertaining to trusts which relate to or regulate (i) the
filing with any court or governmental body or agency of trustee accounts
or schedules of trustee fees and charges, (ii) affirmative requirements to
post bonds for trustees, officers, agents or employees of a trust, (iii)
the necessity for obtaining court or other governmental approval
concerning the acquisition, holding or disposition of real or personal
property, (iv) fees or other sums payable to trustees, officers, agents or
employees of a trust, (v) the allocation of receipts and expenditures to
income or principal, (vi) restrictions or limitations on the permissible
nature, amount or concentration of trust investments or requirements
relating to the titling, storage or other manner of holding of trust
assets, or (vii) the establishment of fiduciary or other standards or
responsibilities or limitations on the indemnification, acts or powers of
trustees or other Persons, which are inconsistent with the limitations or
liabilities or authorities and powers of the Trustees or officers of the
Trust set forth or referenced in this Trust Instrument. The Trust shall
be of the type commonly called a "business trust," and without limiting
the provisions hereof, the Trust may exercise all powers which are
ordinarily exercised by such a trust under Delaware law. The Trust
specifically reserves the right to exercise any of the powers or
privileges afforded to trusts or actions that may be engaged in by trusts
under the Delaware Act, and the absence of a specific reference herein to
any such power, privilege or action shall not imply that the Trust may not
exercise such power or privilege or take such actions.
Section 11.8. Amendments. Except as specifically provided herein,
the Trustees may, without shareholder vote, amend or otherwise supplement
this Trust Instrument by making an amendment, a Trust Instrument
supplemental hereto or an amended and restated trust instrument.
Shareholders shall have the right to vote (i) on any amendment which would
affect their right to vote granted in Section 7.1 of Article VII hereof,
(ii) on any amendment to this Section 11.8, (iii) on any amendment as may
be required by law or by the Trust's registration statement filed with the
Commission and (iv) on any amendment submitted to them by the Trustees.
Any amendment required or permitted to be submitted to Shareholders which,
as the trustees determine, shall affect the Shareholders of one or more
Series shall be authorized by vote of the Shareholders of each Series
affected and no vote of shareholders of a Series not affected shall be
required. Notwithstanding anything else herein, any amendment to Article
10 hereof shall not limit the rights to indemnification or insurance
provided therein with respect to action or omission of Covered Persons
prior to such amendment.
Section 11.9. Fiscal Year. The fiscal year of the Trust shall end
on a specified date as set forth in the Bylaws, provided, however, that
the Trustees may, without Shareholder approval, change the fiscal year of
the Trust.
Section 11.10. Use of the Word "Henlopen". Landis Associates, Inc.
("Landis") has consented to, and granted a non-exclusive license for, the
use by any Series or by the Trust of the identifying word "Henlopen" in
the name of the Trust or any Series thereof. Such consent is subject to
revocation by Landis in its discretion, if Landis or any subsidiary or
affiliate thereof is not employed as the investment advisor of each Series
of the Trust. As between the Trust and Landis, Landis controls the use of
the name of the Trust insofar as such name contains the identifying word
"Henlopen". Landis may, from time to time, use the identifying word
"Henlopen" in other connections and for other purposes, including, without
limitation, in the names of other investment companies, corporations or
businesses which it may manage, advise, sponsor or own or in which it may
have a financial interest, whether or not any such business or entity
shall have any interest adverse to the Trust or any Series thereof.
Landis may require the Trust or any Series thereof to cease using the
identifying word "Henlopen" in the name of the Trust or any Series thereof
if the Trust or any Series thereof ceases to employ Landis or a subsidiary
or affiliate thereof as investment adviser.
Section 11.11. Provisions in Conflict with Law. The provisions of
this Trust Instrument are severable, and if the Trustees shall determine,
with the advice of counsel, that any of such provisions is in conflict
with the 1940 Act, the regulated investment company provisions of the
Internal Revenue Code or with other applicable laws and regulations, the
conflicting provision shall be deemed never to have constituted a part of
this Trust Instrument; provided, however, that such determination shall
not affect any of the remaining provisions of this Trust Instrument or
render invalid or improper any action taken or omitted prior to such
determination. If any provision of this Trust Instrument shall be held
invalid or enforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction
and shall not in any manner affect such provisions in any other
jurisdiction or any other provision of this Trust Instrument in any
jurisdiction.
IN WITNESS WHEREOF, the undersigned, being all of the initial
Trustees of the Trust, have executed this instrument this 16th day of
September, 1992.
/s/ Michael L. Hershey
Michael L. Hershey,
as Trustee
/s/ Robert J. Fahey, Jr.
Robert J. Fahey, Jr,
as Trustee
/s/ Stephen L. Hershey, M.D.
Stephen L. Hershey, M.D.,
as Trustee
/s/ P. Coleman Townsend, Jr.
P. Coleman Townsend, Jr.,
as Trustee
Exhibit 2
BYLAWS
of
THE HENLOPEN FUND
These Bylaws of The Henlopen Fund, a Delaware business trust
(the "Trust"), are subject to the Trust Instrument of the Trust, dated
September 16, 1992, as from time to time amended, supplemented or restated
(the "Trust Instrument"). Capitalized terms used herein which are defined
in the Trust Instrument are used as therein defined.
ARTICLE I
PRINCIPAL OFFICE
The principal office of the Trust shall be located in
Wilmington, Delaware, or such other location as the Trustees may, from
time to time, determine. The Trust may establish and maintain such other
offices and places of business as the Trustees may, from time to time,
determine.
ARTICLE II
OFFICERS AND THEIR ELECTION
Section 1. Officers. The officers of the Trust shall be a
President, a Treasurer, a Secretary, and such other officers as the
Trustees may from time to time elect. The Trustees may delegate to any
officer or committee the power to appoint any subordinate officers or
agents. It shall not be necessary for any Trustee or other officer to be
a holder of Shares in the Trust.
Section 2. Election of Officers. The Treasurer and Secretary
shall be chosen by the Trustees. The President shall be chosen by the
Trustees from among their number. Two or more offices may be held by a
single person, except the offices of President and Secretary. Subject to
the provisions of Article III, Section 13 hereof, the President, the
Treasurer and the Secretary shall each hold office until their successors
are chosen and qualified and all other officers shall hold office at the
pleasure of the Trustees.
Section 3. Resignations. Any officer of the Trust may resign,
notwithstanding Section 2 hereof, by filing a written resignation with the
President, the Trustees or the Secretary, which resignation shall take
effect upon being so filed or at such time as may be therein specified.
ARTICLE III
POWERS AND DUTIES OF OFFICERS AND TRUSTEES
Section 1. Management of The Trust; General. The business and
affairs of the Trust shall be managed by, or under the direction of, the
Trustees, and they shall have all powers necessary and desirable to carry
out their responsibilities, so far as such powers are not inconsistent
with the laws of the State of Delaware, the Trust Instrument or with these
Bylaws.
Section 2. Executive And Other Committees. The Trustees may
elect from their own number an executive committee, which shall have any
or all the powers of the Trustees while the Trustees are not in session.
The Trustees may also elect from their own number other committees from
time to time. The number composing such committees and the powers
conferred upon the same are to be determined by vote of a majority of the
Trustees. All members of such committees shall hold such offices at the
pleasure of the Trustees. The Trustees may abolish any such committee at
any time. Any committee to which the Trustees delegate any of their
powers or duties shall keep records of its meetings and shall report its
actions to the Trustees. The Trustees shall have power to rescind any
action of any committee, but no such rescission shall have retroactive
effect.
Section 3. Compensation. Each Trustee and each committee
member may receive such compensation for his services and reimbursement
for his expenses as may be fixed from time to time by resolution of the
Trustees.
Section 4. Chairman Of the Trustees. The Trustees shall
appoint from among their number a Chairman, who shall serve as such at the
pleasure of the Trustees. When present, he shall preside at all meetings
of the Shareholders and the Trustees, and he may, subject to the approval
of the Trustees, appoint another Trustee to preside at such meetings in
his absence. He shall perform such other duties as the Trustees may from
time to time designate.
Section 5. President. The President shall be the chief
executive officer of the Trust and, subject to the direction of the
Trustees, shall have general administration of the business and policies
of the Trust. Except as the Trustees may otherwise order, the President
shall have the power to grant, issue, execute or sign such powers of
attorney, proxies, agreements or other documents as may be deemed
advisable or necessary in the furtherance of the interests of the Trust or
any Series thereof. He shall also have the power to employ attorneys,
accountants and other advisers and agents and counsel for the Trust. The
President shall perform such duties additional to all of the foregoing as
the Trustees may from time to time designate.
Section 6. Treasurer. The Treasurer shall be the principal
financial and accounting officer of the Trust. He shall deliver all funds
and securities of the Trust which may come into his hands to such company
as the Trustees shall employ as Custodian in accordance with the Trust
Instrument and applicable provisions of law. He shall make annual reports
regarding the business and condition of the Trust, which reports shall be
preserved in Trust records, and he shall furnish such other reports
regarding the business and condition of the Trust as the Trustees may
from time to time require. The Treasurer shall perform such additional
duties as the Trustees may from time to time designate.
Section 7. Secretary. The Secretary shall record in books kept
for the purpose all votes and proceedings of the Trustees and the
Shareholders at their respective meetings. He shall have the custody of
the seal of the Trust. The Secretary shall perform such additional duties
as the Trustees may from time to time designate.
Section 8. Vice President. Any Vice President of the Trust
shall perform such duties as the Trustees or the President may from time
to time designate. At the request or in the absence or disability of the
President, the Vice President (or, if there are two or more Vice
Presidents, then the senior of the Vice Presidents present and able to
act) may perform all the duties of the President and, when so acting,
shall have all the powers of and be subject to all the restrictions upon
the President.
Section 9. Assistant Treasurer. Any Assistant Treasurer of the
Trust shall perform such duties as the Trustees or the Treasurer may from
time to time designate, and, in the absence of the Treasurer, the senior
Assistant Treasurer, present and able to act, may perform all the duties
of the Treasurer.
Section 10. Assistant Secretary. Any Assistant Secretary of
the Trust shall perform such duties as the Trustees or the Secretary may
from time to time designate, and, in the absence of the Secretary, the
senior Assistant Secretary, present and able to act, may perform all the
duties of the Secretary.
Section 11. Subordinate Officers. The Trustees from time to
time may appoint such other officers or agents as they may deem advisable
each of whom shall have such title, hold office for such period, have such
authority and perform such duties as the Trustees may determine. The
Trustees from time to time may delegate to one or more officers or
committees of Trustees the power to appoint any such subordinate officers
or agents and to prescribe their respective terms of office, authorities
and duties.
Section 12. Surety Bonds. The Trustees may require any officer
or agent of the Trust to execute a bond (including, without limitation,
any bond required by the Investment Company Act of 1940, as amended ("the
1940 Act"), and the rules and regulations of the Securities and Exchange
Commission ("Commission")) to the Trust in such sum and with such surety
or sureties as the Trustees may determine, conditioned upon the faithful
performance of his duties to the Trust including responsibility for
negligence and for the accounting of any of the Trust's property, funds or
securities that may come into his hands.
Section 13. Removal. Any officer may be removed from office
whenever in the judgment of the Trustees the best interest of the Trust
will be served thereby, by the vote of a majority of the Trustees given at
any regular meeting or any special meeting of the Trustees. In addition,
any officer or agent appointed in accordance with the provisions of
Section 10 hereof may be removed, either with or without cause, by any
officer upon whom such power of removal shall have been conferred by the
Trustees.
Section 14. Remuneration. The salaries or other compensation,
if any, of the officers of the Trust shall be fixed from time to time by
resolution of the Trustees.
ARTICLE IV
SHAREHOLDERS' MEETINGS
Section 1. Special Meetings. A special meeting of the
shareholders shall be called by the Secretary whenever (i) ordered by the
Trustees or (ii) requested in writing by the holder or holders of at least
ten percent (10%) of the Outstanding Shares entitled to vote (provided
that such holder or holders prepay the costs to the Trust of preparing and
mailing the notice of the meeting). If the Secretary, when so ordered or
requested, refuses or neglects for more than thirty (30) days to call such
special meeting, the Trustees or the Shareholders so requesting, may, in
the name of the Secretary, call the meeting by giving notice thereof in
the manner required when notice is given by the Secretary. If the meeting
is a meeting of the Shareholders of one or more Series or classes of
Shares, but not a meeting of all Shareholders of the Trust, then only
special meetings of the Shareholders of such one or more Series or Classes
shall be called and only the shareholders of such one or more Series or
Classes shall be entitled to notice of and to vote at such meeting.
Section 2. Notices. Except as above provided, notices of any
meeting of the Shareholders shall be given by the Secretary by delivering
or mailing, postage prepaid, to each Shareholder entitled to vote at said
meeting, written or printed notification of such meeting at least fifteen
(15) days before the meeting, to such address as may be registered with
the Trust by the Shareholder. Notice of any Shareholder meeting need not
be given to any Shareholder if a written waiver of notice, executed before
or after such meeting, is filed with the record of such meeting, or to any
Shareholder who shall attend such meeting in person or by proxy. Notice
of adjournment of a Shareholders' meeting to another time or place need
not be given, if such time and place are announced at the meeting or
reasonable notice is given to persons present at the meeting and the
adjourned meeting is held within a reasonable time after the date set for
the original meeting.
Section 3. Voting; Proxies. Subject to the provisions of the
Trust Instrument, Shareholders entitled to vote may vote either in person
or by proxy, provided that either (i) an instrument authorizing such proxy
to act is executed by the Shareholder in writing and dated not more than
eleven (11) months before the meeting, unless the instrument specifically
provides for a longer period, or (ii) the Trustees adopt by resolution an
electronic, telephonic, computerized or other alternative to execution of
a written instrument authorizing the proxy to act, which authorization is
received not more than eleven (11) months before the meeting. Proxies
shall be delivered to the Secretary of the Trust or other person
responsible for recording the proceedings before being voted. A proxy
with respect to Shares held in the name of two or more persons shall be
valid if executed by one of them, unless at or prior to exercise of such
proxy the Trust receives a specific written notice to the contrary from
any one of them. Unless otherwise specifically limited by their terms,
proxies shall entitle the holder thereof to vote at any adjournment of a
meeting. A proxy purporting to be exercised by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its
exercise and the burden or proving invalidity shall rest on the
challenger. At all meetings of the Shareholders, unless the voting is
conducted by inspectors, all questions relating to the qualifications of
voters, the validity of proxies, and the acceptance or rejection of votes
shall be decided by the Chairman of the meeting. Except as otherwise
provided herein or in the Trust Instrument, as these Bylaws or such Trust
Instrument may be amended or supplemented from time to time, all matters
relating to the giving, voting or validity of proxies shall be governed by
the General Corporation Law of the State of Delaware relating to proxies,
and judicial interpretations thereunder, as if the Trust were a Delaware
corporation and the Shareholders were shareholders of a Delaware
corporation.
Section 4. Place Of Meeting. All special meetings of the
Shareholders shall be held at the principal place of business of the Trust
or at such other place in the United States as the Trustees may designate.
Section 5. Action Without a Meeting. Any action to be taken by
Shareholders may be taken without a meeting if all Shareholders entitled
to vote on the matter consent to the action in writing and the written
consents are filed with the records of meetings of Shareholders of the
Trust. Such consent shall be treated for all purposes as a vote at a
meeting of the Trustees held at the principal place of business of the
Trust.
ARTICLE V
TRUSTEES' MEETINGS
Section 1. Special Meetings. Special meetings of the Trustees
may be called orally or in writing by the Chairman of the Trustees or any
two other Trustees.
Section 2. Regular Meetings. Regular meetings of the Trustees
may be held at such places and at such times as the Trustees may from time
to time determine; each Trustee present at such determination shall be
deemed a party calling the meeting and no call or notice will be required
to such Trustee, provided that any Trustee who is absent when such
determination is made shall be given notice of the determination by the
Chairman or any two other Trustees, as provided for in Section 4.04 of the
Trust Instrument.
Section 3. Quorum. A majority of the Trustees shall constitute
a quorum for the transaction of business and an action of a majority of
the quorum shall constitute action of the Trustees.
Section 4. Notice. Except as otherwise provided, notice of any
special meeting of the Trustees shall be given by the party calling the
meeting to each Trustee, as provided for in Section 4.04 of the Trust
Instrument. A written notice may be mailed, postage prepaid, addressed to
him at his address as registered on the books of the Trust or, if not so
registered, at his last known address.
Section 5. Place Of Meeting. All special meetings of the
Trustees shall be held at the principal place of business of the Trust or
such other place as the Trustees may designate. Any meeting may adjourn
to any place.
Section 6. Special Action. When all the Trustees shall be
present at any meeting, however called or wherever held, or shall assent
to the holding of the meeting without notice, or shall sign a written
assent thereto filed with the record of such meeting, the acts of such
meeting shall be valid as if such meeting had been regularly held.
Section 7. Action By Consent. Except as set forth below, any
action by the Trustees may be taken without a meeting if a written consent
thereto is signed by all the Trustees and filed with the records of the
Trustees' meeting. Such consent shall be treated, for all purposes, as a
vote at a meeting of the Trustees held at the principal place of business
of the Trustees. Notwithstanding the preceding two sentences, no action
may be taken by the Trustees pursuant to a written consent with respect to
the approval of the Trust's investment advisory agreement or any action
required by the Investment Company Act of 1940 or other applicable law to
be taken at a meeting of the Trustees to be held in person.
Section 8. Participation in Meetings By Conference Telephone.
Except as set forth below, the Trustees may participate in a meeting of
Trustees by conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each
other, and such participation shall constitute presence in person at such
meeting. Any meeting conducted by telephone shall be deemed to take place
at and from the principal office of the Trust. Notwithstanding the
preceding two sentences, no action may be taken by the Trustees pursuant
to a telephonic conference call with respect to the approval of the
Trust's investment advisory agreement or any action required by the
Investment Company Act of 1940 or other applicable law to be taken at a
meeting of the Trustees to be held in person.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
Section 1. Beneficial Interest. The beneficial interest in the
Trust shall at all times be divided into such transferable Shares of one
or more separate and distinct Series, or classes thereof, as the Trustees
shall from time to time create and establish. The number of Shares is
unlimited, and each Share of each Series or class thereof shall be without
par value and shall represent an equal proportionate interest with each
other Share in the Series, none having priority or preference over
another, except to the extent that such priorities or preferences are
established with respect to one or more classes of shares consistent with
applicable law and any rule or order of the Commission.
Section 2. Transfer of Shares. The Shares of the Trust shall
be transferable, so as to affect the rights of the Trust, only by transfer
recorded on the books of the Trust, in person or by attorney.
Section 3. Equitable Interest Not Recognized. The Trust shall
be entitled to treat the holder of record of any Share or Shares of
beneficial interest as the holder in fact thereof, and shall not be bound
to recognize any equitable or other claim or interest in such Share or
Shares on the part of any other person except as may be otherwise
expressly provided by law.
Section 4. Share Certificate. No certificates certifying the
ownership of Shares shall be issued except as the Trustees may otherwise
authorize. The Trustees may issue certificates to a Shareholder of any
Series or class thereof for any purpose and the issuance of a certificate
to one or more Shareholders shall not require the issuance of certificates
generally. In the event that the Trustees authorize the issuance of Share
certificates, such certificate shall be in the form proscribed from time
to time by the Trustees and shall be signed by the President or a Vice
President and by the Treasurer, Assistant Treasurer, Secretary or
Assistant Secretary. Such signatures may be facsimiles if the certificate
is signed by a transfer or shareholder services agent or by a registrar,
other than a Trustee, officer or employee of the Trust. In case any
officer who has signed or whose facsimile signature has been placed on
such certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Trust with the same effect
as if he or she were such officer at the time of its issue.
In lieu of issuing certificates for Shares, the Trustees or the
transfer or shareholder services agent may either issue receipts therefor
or may keep accounts upon the books of the Trust for the record holders of
such Shares, who shall in either case be deemed, for all purposes
hereunder, to be the holders of certificates for such Shares as if they
had accepted such certificates and shall be held to have expressly
assented and agreed to the terms hereof.
Section 5. Loss of Certificate. In the case of the alleged
loss or destruction or the mutilation of a Share certificate, a duplicate
certificate may be issued in place thereof, upon such terms as the
Trustees may prescribe.
Section 6. Discontinuance of Issuance Of Certificates. The
Trustees may at any time discontinue the issuance of Share certificates
and may, by written notice to each Shareholder, require the surrender of
Share certificates to the Trust for cancellation. Such surrender and
cancellation shall not affect the ownership of Shares in the Trust.
ARTICLE VII
OWNERSHIP OF ASSETS OF THE TRUST
The Trustees, acting for and on behalf of the Trust, shall be
deemed to hold legal and beneficial ownership of any income earned on
securities held by the Trust issued by any business entity formed,
organized or existing under the laws of any jurisdiction other than a
state, commonwealth, possession or colony of the United States or the laws
of the United States.
ARTICLE VIII
INSPECTION OF BOOKS
The Trustees shall from time to time determine whether and to
what extent, and at what times and places, and under what conditions and
regulations the accounts and books of the Trust or any of them shall be
open to the inspection of the Shareholders; and no Shareholder shall have
any right to inspect any account or book or document of the Trust except
as conferred by law or otherwise by the Trustees or by resolution of the
Shareholders.
ARTICLE IX
INSURANCE OF OFFICERS, TRUSTEES, AND EMPLOYEES
The Trust may purchase and maintain insurance on behalf of any
Covered Person or employee of the Trust, including any Covered Person or
employee of the Trust who is or was serving at the request of the Trust as
a Trustee, officer or employee of a corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity or arising out of his status
as such, whether or not the Trustees would have the power to indemnify him
against such liability.
The Trust may not acquire or obtain a contract for insurance
that protects or purports to protect any Trustee or officer of the Trust
against any liability to the Trust or its Shareholders to which he would
otherwise be subject by reason or willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of
his office.
ARTICLE X
SEAL
The seal of the Trust shall be circular in form bearing the
inscription:
"THE HENLOPEN FUND -- 1992
THE STATE OF DELAWARE"
The form of the seal shall be subject to alteration by the
Trustees and the seal may be used by causing it or a facsimile to be
impressed or affixed or printed or otherwise reproduced.
Any officer or Trustee of the Trust shall have authority to
affix the seal of the Trust to any document, instrument or other paper
executed and delivered by or on behalf of the Trust; however, unless
otherwise required by the Trustees, the seal shall not be
necessary to be placed on and its absence shall not impair the validity of
any document, instrument, or other paper executed by or on behalf of the
Trust.
ARTICLE XI
FISCAL YEAR
The fiscal year of the Trust shall end on such date as the
Trustees shall from time to time determine.
ARTICLE XII
AMENDMENTS
These Bylaws may be amended at any meeting of the Trustees of
the Trust by a majority vote.
ARTICLE XIII
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the
Shareholders a written financial report of the Trust including financial
statements which shall be certified at least annually by independent
public accountants.
XIV
HEADINGS
Headings are placed in these Bylaws for convenience of reference
only and in case of any conflict, the text of these Bylaws rather than the
headings shall control.
INVESTMENT ADVISORY AGREEMENT
Agreement made this ____ day of_____________, 1992 between
The Henlopen Fund, a Delaware business trust (the "Trust"), and Landis
Associates, Inc., a Delaware corporation (the "Adviser").
W I T N E S S E T H:
WHEREAS, the Trust is in the process of registering with the
Securities and Exchange Commission as an open-end management investment
company under the Investment Company Act of 1940 (the "Act");
WHEREAS, upon so registering with the Securities and Exchange
Commission, the Trust will be a registered investment company satisfying
the conditions of Section 10(d) of the Act; and
WHEREAS, the Trust desires to retain the Adviser, which is an
investment adviser registered under the Investment Advisers Act of 1940
and which is engaged principally in the business of rendering investment
supervisory services within the meaning of Section 202(a)(13) of the
Investment Advisers Act of 1940, as its investment adviser.
NOW, THEREFORE, the Trust and the Adviser do mutually promise
and agree as follows:
1. Employment. The Trust hereby employs the Adviser to manage
the investment and reinvestment of the assets of the Trust for the period
and on the terms set forth in this Agreement. The Adviser hereby accepts
such employment for the compensation herein provided and agrees during
such period to render the services and to assume the obligations herein
set forth.
2. Authority of the Adviser. The Adviser shall supervise and
manage the investment portfolio of the Trust, and, subject to such
policies as the trustees of the Trust may determine, direct the purchase
and sale of investment securities in the day to day management of the
Trust. The Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Trust in any way
or otherwise be deemed an agent of the Trust. However, one or more
shareholders, officers, directors or employees of the Adviser may serve as
directors and/or officers of the Trust, but without compensation or
reimbursement of expenses for such services from the Trust. Nothing
herein contained shall be deemed to require the Trust to take any action
contrary to its Certificate of Trust or Trust Instrument, dated September
16, 1992, or any applicable statute or regulation, or to relieve or
deprive the trustees of the Trust of their responsibility for, and control
of, the affairs of the Trust.
3. Expenses. The Adviser, at its own expense and without
reimbursement from the Trust, shall furnish office space, and all
necessary office facilities, equipment and executive personnel for
managing the investments of the Trust. The Adviser shall pay the salaries
and fees of all officers and trustees of the Trust (except the fees paid
to those trustees who are not interested persons of the Adviser, as
defined in the Act, and who are not officers or employees of the Trust).
The Adviser shall also bear all sales and promotional expenses of the
Trust, except for expenses incurred in complying with laws regulating the
issue or sale of securities. Fees paid for attendance at meetings of the
Trust's trustees to trustees of the Trust who are not interested persons
of the Adviser, as defined in the Act, as amended, shall be borne by the
Trust. The Trust shall bear all other expenses initially incurred by it,
provided that the total expenses borne by the Trust, including the
Adviser's fee but excluding all federal, state and local taxes, interest,
brokerage commissions and extraordinary items, shall not in any year
exceed that percentage of the average net asset value of the Trust for
such year, as determined by valuations made as of the close of each
business day, which is the most restrictive percentage provided by the
state laws of the various states in which the Trust's shares are qualified
for sale. The expenses of the Trust's operations borne by the Trust
include by way of illustration and not limitation, the costs of preparing
and printing its registration statements required under the Securities Act
of 1933 and the Act (and amendments thereto), the expense of registering
its shares with the Securities and Exchange Commission and in the various
states, the printing and distribution cost of prospectuses mailed to
existing shareholders, the cost of share certificates trustee and officer
liability insurance, reports to shareholders, reports to government
authorities and proxy statements, interest charges, taxes, legal expenses,
salaries of administrative and clerical personnel, association membership
dues, auditing and accounting services, insurance premiums, brokerage and
other expenses connected with the execution of portfolio securities
transactions, fees and expenses of the custodian of the Trust's assets,
expenses of calculating the net asset value and repurchasing and redeeming
shares, charges and expenses of dividend disbursing agents, registrars and
stock transfer agents and the cost of keeping all necessary shareholder
records and accounts.
The Trust shall monitor its expense ratio on a monthly basis.
If the accrued amount of the expenses of the Trust exceeds the expense
limitation established herein, the Trust shall create an account
receivable from the Adviser for the amount of such excess. In such a
situation the monthly payment of the Adviser's fee will be reduced by the
amount of such excess, subject to adjustment month by month during the
balance of the Trust's fiscal year if accrued expenses thereafter fall
below the expense limitation.
4. Compensation of the Adviser. For the services and
facilities to be rendered and the charges and expenses to be assumed by
the Adviser hereunder, the Trust shall pay to the Adviser an advisory fee,
paid monthly, based on the average net asset value of the Trust, as
determined by valuations made as of the close of each business day of the
month. The advisory fee shall be 1/12 of 1% (1% per annum) of such net
asset value. For any month in which this Agreement is not in effect for
the entire month, such fee shall be reduced proportionately on the basis
of the number of calendar days during which it is in effect and the fee
computed upon the average net asset value of the business days during
which it is so in effect.
5. Ownership of Shares of the Trust. Except in connection
with the initial capitalization of the Trust, the Adviser shall not take,
and shall not permit any of its shareholders, officers, directors or
employees to take, a long or short position in the shares of the Trust,
except for the purchase of shares of the Trust for investment purposes at
the same price as that available to the public at the time of purchase.
6. Exclusivity. The services of the Adviser to the Trust
hereunder are not to be deemed exclusive and the Adviser shall be free to
furnish similar services to others as long as the services hereunder are
not impaired thereby. Although the Adviser has permitted and is
permitting the Trust to use the name "Henlopen", it is understood and
agreed that the Adviser reserves the right to use and to permit other
persons, firms or corporations, including investment companies, to use
such name, and that the Trust will not use such name if the Adviser ceases
to be the Trust's sole investment adviser. During the period that this
Agreement is in effect, the Adviser shall be the Trust's sole investment
adviser.
7. Liability. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Trust or to any shareholder of the Trust for any act or
omission in the course of, or connected with, rendering services
hereunder, or for any losses that may be sustained in the purchase,
holding or sale of any security.
8. Brokerage Commissions. The Adviser may cause the Trust to
pay a broker-dealer which provides brokerage and research services, as
such services are defined in Section 28(e) of the Securities Exchange Act
of 1934 (the "Exchange Act"), to the Adviser a commission for effecting a
securities transaction in excess of the amount another broker-dealer would
have charged for effecting such transaction, if the Adviser determines in
good faith that such amount of commission is reasonable in relation to the
value of brokerage and research services provided by the executing
broker-dealer viewed in terms of either that particular transaction or his
overall responsibilities with respect to the accounts as to which he
exercises investment discretion (as defined in Section 3(a)(35) of the
Exchange Act).
9. Amendments. This Agreement may be amended by the mutual
consent of the parties; provided, however, that in no event may it be
amended without the approval of the trustees of the Trust in the manner
required by the Act, and by the vote of the majority of the outstanding
voting securities of the Trust, as defined in the Act.
10. Termination. This Agreement may be terminated at any time,
without the payment of any penalty, by the trustees of the Trust or by a
vote of the majority of the outstanding voting securities of the Trust, as
defined in the Act, upon giving sixty (60) days' written notice to the
Adviser. This Agreement may be terminated by the Adviser at any time upon
the giving of sixty (60) days' written notice to the Trust. This
Agreement shall terminate automatically in the event of its assignment (as
defined in Section 2(a)(4) of the Act). Subject to prior termination as
hereinbefore provided, this Agreement shall continue in effect for two (2)
years from the date hereof and indefinitely thereafter, but only so long
as the continuance after such two (2) year period is specifically approved
annually by (i) the trustees of the Trust or by the vote of the majority
of the outstanding voting securities of the Trust, as defined in the Act,
and (ii) the trustees of the Trust in the manner required by the Act,
provided that any such approval may be made effective not more than sixty
(60) days thereafter.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day first above written.
LANDIS ASSOCIATES, INC.
(the "Adviser")
By: _______________________ By: ________________________
Abigail Rickert Hershey Michael L. Hershey
Secretary President
THE HENLOPEN FUND
(the "Trust")
By: _______________________ By: ________________________________
Jane M. Teasley Michael L. Hershey
Secretary President
EXHIBIT 8
CUSTODIAN AGREEMENT
THIS AGREEMENT made on October 27, 1992, between THE HENLOPEN
FUND, a Delaware Business Trust (hereinafter called the "Fund"), and FIRST
WISCONSIN TRUST COMPANY, a corporation organized under the laws of the
State of Wisconsin (hereinafter called "Custodian").
W I T N E S S E T H :
WHEREAS, the Fund desires that its securities and cash shall be
hereafter held and administered by Custodian pursuant to the terms of this
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein
made, the Fund and Custodian agree as follows:
1. Definitions
The word "securities" as used herein includes stocks, shares,
bonds, debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments representing rights
to receive, purchase or subscribe for the same, or evidencing or
representing any other rights or interests therein, or in any property or
assets.
The words "officers' certificate" shall mean a request or
direction or certification in writing signed in the name of the Fund by
any two of the President, a Vice President, the Secretary and the
Treasurer of the Fund, or any other persons duly authorized to sign by the
Board of Trustees.
The word "Board" shall mean Board of Trustees of The Henlopen
Fund.
2. Names, Titles and Signatures of the Fund's Officers
An officer of the Fund will certify to Custodian the names and
signatures of those persons authorized to sign the officers' certificates
described in Section 1 hereof, and the names of the members of the Board
of Trustees, together with any changes which may occur from time to time.
3. Receipt and Disbursement of Money
A. Custodian shall open and maintain a separate account or
accounts in the name of the Fund, subject only to draft or order by
Custodian acting pursuant to the terms of this Agreement. Custodian shall
hold in such account or accounts, subject to the provisions hereof, all
cash received by it from or for the account of the Fund. Custodian shall
make payments of cash to, or for the account of, the Fund from such cash
only:
(a) for the purchase of securities for the portfolio of
the Fund upon the delivery of such securities to Custodian,
registered in the name of the Fund or of the nominee of
Custodian referred to in Section 7 or in proper form for
transfer;
(b) for the purchase or redemption of shares of the common
stock of the Fund upon delivery thereof to Custodian, or upon
proper instructions from The Henlopen Fund;
(c) for the payment of interest, dividends, taxes,
investment adviser's fees or operating expenses (including,
without limitation thereto, fees for legal, accounting, auditing
and custodian services and expenses for printing and postage);
(d) for payments in connection with the conversion,
exchange or surrender of securities owned or subscribed to by
the Fund held by or to be delivered to Custodian; or
(e) for other proper corporate purposes certified by
resolution of the Board of Trustees of the Fund.
Before making any such payment, Custodian shall receive (and may
rely upon) an officers' certificate requesting such payment and stating
that it is for a purpose permitted under the terms of items (a), (b), (c)
or (d) of this Subsection A, and also, in respect of item (e), upon
receipt of an officers' certificate specifying the amount of such payment,
setting forth the purpose for which such payment is to be made, declaring
such purpose to be a proper corporate purpose, and naming the person or
persons to whom such payment is to be made, provided, however, that an
officers' certificate need not precede the disbursement of cash for the
purpose of purchasing a money market instrument, or any other security
with same or next-day settlement, if the President, a Vice President, the
Secretary or the Treasurer of the Fund issues appropriate oral or
facsimile instructions to Custodian and an appropriate officers'
certificate is received by Custodian within two business days thereafter.
B. Custodian is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money received by
Custodian for the account of the Fund.
C. Custodian shall, upon receipt of proper instructions, make
federal funds available to the Fund as of specified times agreed upon from
time to time by the Fund and the Custodian in the amount of checks
received in payment for shares of the Fund which are deposited into the
Fund's account.
4. Segregated Accounts
Upon receipt of proper instructions, the Custodian shall
establish and maintain a segregated account(s) for and on behalf of the
portfolio, into which account(s) may be transferred cash and/or
securities.
5. Transfer, Exchange, Redelivery, etc. of Securities
Custodian shall have sole power to release or deliver any
securities of the Fund held by it pursuant to this Agreement. Custodian
agrees to transfer, exchange or deliver securities held by it hereunder
only:
(a) for sales of such securities for the account of the
Fund upon receipt by Custodian of payment therefore;
(b) when such securities are called, redeemed or retired
or otherwise become payable;
(c) for examination by any broker selling any such
securities in accordance with "street delivery" custom;
(d) in exchange for, or upon conversion into, other
securities alone or other securities and cash whether pursuant
to any plan of merger, consolidation, reorganization,
recapitalization or readjustment, or otherwise;
(e) upon conversion of such securities pursuant to their
terms into other securities;
(f) upon exercise of subscription, purchase or other
similar rights represented by such securities;
(g) for the purpose of exchanging interim receipts or
temporary securities for definitive securities;
(h) for the purpose of redeeming in kind shares of common
stock of the Fund upon delivery thereof to Custodian; or
(i) for other proper corporate purposes.
As to any deliveries made by Custodian pursuant to items (a),
(b), (d), (e), (f) and (g), securities or cash receivable in exchange
therefore shall be deliverable to Custodian.
Before making any such transfer, exchange or delivery, Custodian
shall receive (and may rely upon) an officers' certificate requesting such
transfer, exchange or delivery, and stating that it is for a purpose
permitted under the terms of items (a), (b), (c), (d), (e), (f), (g) or
(h) of this Section 5 and also, in respect of item (i), upon receipt of an
officers' certificate specifying the securities to be delivered, setting
forth the purpose for which such delivery is to be made, declaring such
purpose to be a proper corporate purpose, and naming the person or persons
to whom delivery of such securities shall be made, provided, however, that
an officers' certificate need not precede any such transfer, exchange or
delivery of a money market instrument, or any other security with same or
next-day settlement, if the President, a Vice President, the Secretary or
the Treasurer of the Fund issues appropriate oral or facsimile
instructions to Custodian and an appropriate officers' certificate is
received by Custodian within two business days thereafter.
6. Custodian's Acts Without Instructions
Unless and until Custodian receives an officers' certificate to
the contrary, Custodian shall: (a) present for payment all coupons and
other income items held by it for the account of the Fund, which call for
payment upon presentation and hold the cash received by it upon such
payment for the account of the Fund; (b) collect interest and cash
dividends received, with notice to the Fund, for the account of the Fund;
(c) hold for the account of the Fund hereunder all stock dividends, rights
and similar securities issued with respect to any securities held by it
hereunder; and (d) execute, as agent on behalf of the Fund, all necessary
ownership certificates required by the Internal Revenue Code or the Income
Tax Regulations of the United States Treasury Department or under the laws
of any state now or hereafter in effect, inserting the Fund's name on such
certificates as the owner of the securities covered thereby, to the extent
it may lawfully do so.
7. Registration of Securities
Except as otherwise directed by an officers' certificate,
Custodian shall register all securities, except such as are in bearer
form, in the name of a registered nominee of Custodian as defined in the
Internal Revenue Code and any Regulations of the Treasury Department
issued hereunder or in any provision of any subsequent federal tax law
exempting such transaction from liability for stock transfer taxes, and
shall execute and deliver all such certificates in connection therewith as
may be required by such laws or regulations or under the laws of any
state. Custodian shall use its best efforts to the end that the specific
securities held by it hereunder shall be at all times identifiable in its
records.
The Fund shall from time to time furnish to Custodian
appropriate instruments to enable Custodian to hold or deliver in proper
form for transfer, or to register in the name of its registered nominee,
any securities which it may hold for the account of the Fund and which may
from time to time be registered in the name of the Fund.
8. Voting and Other Action
Neither Custodian nor any nominee of Custodian shall vote any of
the securities held hereunder by or for the account of the Fund, except in
accordance with the instructions contained in an officers' certificate.
Custodian shall deliver, or cause to be executed and delivered, to the
Corporation all notices, proxies and proxy soliciting materials with
relation to such securities, such proxies to be executed by the registered
holder of such securities (if registered otherwise than in the name of the
Fund), but without indicating the manner in which such proxies are to be
voted.
9. Transfer Tax and Other Disbursements
The Fund shall pay or reimburse Custodian from time to time for
any transfer taxes payable upon transfers of securities made hereunder,
and for all other necessary and proper disbursements and expenses made or
incurred by Custodian in the performance of this Agreement.
Custodian shall execute and deliver such certificates in
connection with securities delivered to it or by it under this Agreement
as may be required under the provisions of the Internal Revenue Code and
any Regulations of the Treasury Department issued thereunder, or under the
laws of any state, to exempt form taxation any exemptable transfers and/or
deliveries of any such securities.
10. Concerning Custodian
Custodian shall be paid as compensation for its services
pursuant to this Agreement such compensation as may from time to time be
agreed upon in writing between the two parties. Until modified in
writing, such compensation shall be as set forth in Exhibit A attached
hereto.
Custodian shall not be liable for any action taken in good faith
upon any certificate herein described or certified copy of any resolution
of the Board, and may rely on the genuineness of any such document which
it may in good faith believe to have been validly executed.
The Fund agrees to indemnify and hold harmless Custodian and its
nominee from all taxes, charges, expenses, assessments, claims and
liabilities (including counsel fees) incurred or assessed against it or by
its nominee in connection with the performance of this Agreement, except
such as may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct. Custodian is authorized
to charge any account of the Fund for such items. In the event of any
advance of cash for any purpose made by Custodian resulting from orders or
instructions of the Fund, or in the event that Custodian or its nominee
shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this
Agreement, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any
property at any time held for the account of the Fund shall be security
therefore.
11. Subcustodians
Custodian is hereby authorized to engage another bank or trust
company as a Subcustodian for all or any part of the Fund's assets, so
long as any such bank or trust company is a bank or trust company
organized under the laws of any state of the United States, having an
aggregate capital, surplus and undivided profit, as shown by its last
published report, of not less than Two Million Dollars ($2,000,000) and
provided further that, if the Custodian utilizes the services of a
Subcustodian, the Custodian shall remain fully liable and responsible for
any losses caused to the Fund by the Subcustodian as fully as if the
Custodian was directly responsible for any such losses under the terms of
the Custodian Agreement.
Notwithstanding anything contained herein, if the Fund requires
the Custodian to engage specific Subcustodians for the safekeeping and/or
clearing of assets, the Fund agrees to indemnify and hold harmless
Custodian from all claims, expenses and liabilities incurred or assessed
against it in connection with the use of such Subcustodian in regard to
the Fund's assets, except as may arise from its own negligent action,
negligent failure to act or willful misconduct.
12. Reports by Custodian
Custodian shall furnish the Fund periodically as agreed upon
with a statement summarizing all transactions and entries for the account
of Fund. Custodian shall furnish to the Fund, at the end of every month,
a list of the portfolio securities showing the aggregate cost of each
issue. The books and records of Custodian pertaining to its actions under
this Agreement shall be open to inspection and audit at reasonable times
by officers of, and of auditors employed by, the Fund.
13. Termination or Assignment
This Agreement may be terminated by the Fund, or by Custodian,
on ninety (90) days notice, given in writing and sent by registered mail
to Custodian at P.O. Box 2054, Milwaukee, Wisconsin 53201, or to the Fund
at 400 West Ninth Street, Suite 100, Wilmington, Delaware 19801, as the
case may be. Upon termination of this Agreement, pending appointment of a
successor to Custodian or a vote of the shareholders of the Fund to
dissolve or to function without a custodian of its cash, securities and
other property, Custodian shall not deliver cash, securities or other
property of the Fund to the Fund, but may deliver them to a bank or trust
company of its own selection, having an aggregate capital, surplus and
undivided profits, as shown by its last published report of not less than
Two Million Dollars ($2,000,000) as a Custodian for the Fund to be held
under terms similar to those of this Agreement, provided, however, that
Custodian shall not be required to make any such delivery or payment until
full payment shall have been made by the Fund of all liabilities
constituting a charge on or against the properties then held by Custodian
or on or against Custodian, and until full payment shall have been made to
Custodian of all its fees, compensation, costs and expenses, subject to
the provisions of Section 10 of this Agreement.
This Agreement may not be assigned by Custodian without the
consent of the Fund, authorized or approved by a resolution of its Board
of Trustees.
14. Deposits of Securities in Securities Depositories
No provision of this Agreement shall be deemed to prevent the
use by Custodian of a central securities clearing agency or securities
depository, provided, however, that Custodian and the central securities
clearing agency or securities depository meet all applicable federal and
state laws and regulations, and the Board of Trustees of the Fund approves
by resolution the use of such central securities clearing agency or
securities depository.
15. Records
To the extent that Custodian in any capacity prepares or
maintains any records required to be maintained and preserved by the Fund
pursuant to the provisions of the Investment Company Act of 1940, as
amended, or the rules and regulations promulgated thereunder, Custodian
agrees to make any such records available to the Fund upon request and to
preserve such records for the periods prescribed in Rule 31a-2 under the
Investment Company Act of 1940, as amended.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and their respective corporate seals to be
affixed hereto as of the date first above-written by their respective
officers thereunto duly authorized.
Executed in several counterparts, each of which is an original.
Attest: FIRST WISCONSIN TRUST COMPANY
_____________________ By ____________________________
ASSISTANT SECRETARY VICE PRESIDENT
Attest: THE HENLOPEN FUND
_________________________ By ____________________________
EXHIBIT 9.1
ADMINISTRATIVE AGREEMENT
AGREEMENT made this 29th day of October, 1992, between THE
HENLOPEN FUND (the "Fund"), and FIDUCIARY MANAGEMENT, INC., a Wisconsin
corporation (the "Administrator").
W I T N E S S E T H :
WHEREAS, the Fund is in the process of registering with the
Securities and Exchange Commission as an open-end management investment
company under the Investment Company Act of 1940 (the "Act");
WHEREAS, upon so registering with the Securities and Exchange
Commission, the Fund will be a registered investment company; and
WHEREAS, the Fund desires to retain the Administrator to perform
the following management-related services for the Fund and the
Administrator desires to perform such services for the Fund.
NOW, THEREFORE, the Fund and the Administrator do mutually
promise and agree as follows:
1. Employment. The Fund hereby employs the Administrator to
be its Administrator for the period and on the terms set forth in this
Agreement. The Administrator hereby accepts such employment for the
compensation herein provided and agrees during such period to render the
services and to assume the obligations herein set forth.
2. Authority and Duties of the Administrator. The
Administrator shall perform the following management-related services for
the Fund:
(a) Prepare and maintain the books, accounts and other
documents specified in Rule 31a-1, under the Act in accordance
with the requirements of Rule 31a-1 and Rule 31a-2 under the
Act;
(b) Determine the Fund's net asset value in accordance
with the provisions of the Fund's Articles of Incorporation and
its Registration Statement;
(c) Respond to stockholder inquiries forwarded to it by
the Fund;
(d) Prepare the financial statements contained in reports
to stockholders of the Fund;
(e) Prepare reports to and filings with the Securities and
Exchange Commission (other than the Fund's Registration
Statement on Form N-1A);
(f) Furnish statistical and research data, clerical,
accounting and bookkeeping services and stationery and office
supplies; and
(g) Keep and maintain the Fund's financial accounts and
records, and generally assist in all aspects of the Fund's
operations to the extent agreed to by the Administrator and the
Fund.
The Administrator shall not act, and shall not be required to
act, as an investment adviser to the Fund and shall not have any authority
to supervise the investment or reinvestment of the cash, securities or
other property comprising the Fund's assets or to determine what
securities or other property may be purchased or sold by the Fund. The
Administrator shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized,
have no authority to act for or represent the Fund in any way or otherwise
be deemed an agent of the Fund.
3. Expenses. The Administrator, at its own expense and
without reimbursement from the Fund, shall furnish office space, and all
necessary office facilities, equipment and executive personnel for
performing the services required to be performed by it under the
Agreement. The Administrator shall not be required to pay any expenses of
the Fund. The expenses of the Fund's operations borne by the Fund include
by way of illustration and not limitation, directors fees paid to those
directors who are not interested persons of the Fund, as defined in the
Act, the professional costs of preparing and cost of printing its
registration statements required under the Securities Act of 1933 and the
Act (and amendments thereto), the expense of registering its shares with
the Securities and Exchange Commission and in the various states, the
printing and distribution cost of prospectuses mailed to existing
shareholders, the cost of stock certificates, director and officer
liability insurance, the printing and distribution costs of reports to
stockholders, reports to government authorities and proxy statements,
interest charges, taxes, legal expenses, association membership dues,
auditing services, insurance premiums, brokerage and other expenses
connected with the execution of portfolio securities transactions, fees
and expenses of the custodian of the Fund's assets, printing and mailing
expenses and charges and expenses of dividend disbursing agents,
registrars and stock transfer agents.
4. Compensation of the Administrator. For the services to be
rendered by the Administrator hereunder, the Fund shall pay to the
Administrator an administration fee, paid monthly, based on the average
net assets of the Fund, as determined by valuations made as of the close
of each business day of the month. The administration fee shall be 1/12
of 0.2% of such net assets up to and including $30,000,000 and 1/12 of .1%
of the next $30,000,000 of daily net assets and 1/12 of 0.05% of the daily
net assets in excess of $60,000,000, provided, however, that the minimum
fee payable by the Fund shall be $20,000 annually. For any month in which
this Agreement is not in effect for the entire month, such fee shall be
reduced proportionately on the basis of the number of calendar days during
which it is in effect and the fee computed upon the net assets of the
business days during which it is so in effect.
5. Exclusivity. The services of the Administrator to the Fund
hereunder are not to be deemed exclusive and the Administrator shall be
free to furnish similar services to others as long as the services
hereunder are not impaired thereby. During the period that this Agreement
is in effect, the Administrator shall be the Fund's sole administrator.
6. Liability. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Administrator, the Administrator shall not be
subject to liability to the Fund or to any shareholder of the Fund for any
act or omission in the course of, or connected with, rendering services
hereunder, or for any losses that may be sustained in the purchase,
holding or sale of any security.
7. Amendments and Termination. This Agreement may be amended
by the mutual consent of the parties. This Agreement may be terminated at
any time, without the payment of any penalty, by the board of directors of
the Fund upon the giving of ninety (90) days' written notice to the
Administrator. This Agreement may be terminated by the Administrator at
any time upon the giving of ninety (90) days' written notice to the Fund.
Upon termination of the Agreement the Administrator shall deliver to the
Fund all books, accounts and other documents then maintained by it
pursuant to Section 2 hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day first above written.
FIDUCIARY MANAGEMENT, INC.
(the "Administrator")
By: /s/ Maria Blanco By: /s/ Donald S. Wilson
Secretary President
THE HENLOPEN FUND
(the "Fund")
By: /s/ Jane M. Teasley By: /s/ Michael L. Hershey
Secretary President
Exhibit 9.2
TRANSFER AGENT AGREEMENT
THIS AGREEMENT is made and entered into on this 27th day of October,
1992, by and between THE HENLOPEN FUND (hereinafter referred to as the
"Fund") and FIRST WISCONSIN TRUST COMPANY, a corporation organized under
the laws of the State of Wisconsin (hereinafter referred to as the
"Agent").
W I T N E S S E T H :
WHEREAS, the Fund is an open-ended management investment company
which is registered under the Investment Company Act of 1940; and
WHEREAS, the Agent is a trust company and, among other things, is in
the business of administering transfer and dividend disbursing agent
functions for the benefit of its customers;
NOW, THEREFORE, the Fund and the Agent do mutually promise and agree
as follows:
1. Terms of Appointment; Duties of the Agent
Subject to the terms and conditions set forth in this Agreement, the
Fund hereby employs and appoints the Agent to act as transfer agent and
dividend disbursing agent.
The Agent shall perform all of the customary services of a transfer
agent and dividend disbursing agent, and as relevant, agent in connection
with accumulation, open account or similar plans (including without
limitation any periodic investment plan or periodic withdrawal program),
including but not limited to:
A. Receive orders for the purchase of shares;
B. Process purchase orders and issue the appropriate number of
certificated or uncertificated shares with such uncertificated
shares being held in the appropriate shareholder account;
C. Process redemption requests received in good order;
D. Pay monies in accordance with the instructions of redeeming
shareholders;
E. Process transfers of shares in accordance with the shareowner's
instructions;
F. Process exchanges between funds within the same family of funds;
G. Issue and/or cancel certificates as instructed; replace lost,
stolen or destroyed certificates upon receipt of satisfactory
indemnification or surety bond;
H. Prepare and transmit payments for dividends and distributions
declared by the Fund;
I. Make changes to shareholder records, including, but not limited
to, address changes in plans (i.e., systematic withdrawal,
automatic investment, dividend reinvestment, etc.);
J. Record the issuance of shares of the Fund and maintain, pursuant
to Section Rule 17ad-10(e), a record of the total number of
shares of the Fund which are authorized, issued and outstanding;
K. Prepare shareholder meeting lists and, if applicable, mail,
receive and tabulate proxies;
L. Mail shareholder reports and prospectuses to current
shareholders;
M. Prepare and file U.S. Treasury Department forms 1099 and other
appropriate information returns required with respect to
dividends and distributions for all shareholders;
N. Provide shareholder account information upon request and prepare
and mail confirmations and statements of account to shareholders
for all purchases, redemptions and other confirmable
transactions as agreed upon with the Fund; and
O. Provide a Blue Sky System which will enable the Fund to monitor
the total number of shares sold in each state. In addition, the
Fund shall identify to the Agent in writing those transactions
and assets to be treated as exempt from the Blue Sky reporting
to the Fund for each state. The responsibility of the Agent for
the Fund's Blue Sky state registration status is solely limited
to the initial compliance by the Fund and the reporting of such
transactions to the Fund.
2. Compensation
The Fund agrees to pay the Agent for performance of the duties listed
in this Agreement; the fees and out-of-pocket expenses include, but are
not limited to the following: printing, postage, forms, stationery, record
retention, mailing, insertion, programming, labels, shareholder lists and
proxy expenses.
These fees and reimbursable expenses may be changed from time to time
subject to mutual written agreement between the Fund and the Agent.
The Fund agrees to pay all fees and reimbursable expenses within ten
(10) business days following the mailing of the billing notice.
3. Representations of Agent
The Agent represents and warrants to the Fund that:
A. It is a trust company duly organized, existing and in good
standing under the laws of Wisconsin;
B. It is duly qualified to carry on its business in the state of
Wisconsin;
C. It is empowered under applicable laws and by its charter and
bylaws to enter into and perform this Agreement;
D. All requisite corporate proceedings have been taken to authorize
it to enter and perform this Agreement; and
E. It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
4. Representations of the Fund
The Fund represents and warrants to the Agent that:
A. The Fund is an open-ended diversified investment company under
the Investment Company Act of 1940;
B. The Fund is a business trust organized, existing, and in good
standing under the laws of Delaware;
C. The Fund is empowered under applicable laws and by its
Declaration of Trust and bylaws to enter into and perform this
Agreement;
D. All necessary proceedings required by the Declaration of Trust
have been taken to authorize it to enter into and perform this
Agreement;
E. The Fund will comply with all applicable requirements of the
Securities and Exchange Acts of 1933 and 1934, as amended, the
Investment Company Act of 1940, as amended, and any laws, rules
and regulations of governmental authorities having jurisdiction;
and
F. A registration statement under the Securities Act of 1933 is
currently effective and will remain effective, and appropriate
state securities law filings have been made and will continue to
be made, with respect to all shares of the Fund being offered
for sale.
5. Covenants of Fund and Agent
The Fund shall furnish the Agent a certified copy of the resolution
of the Board of Trustees of the Fund authorizing the appointment of the
Agent and the execution of this Agreement. The Fund shall provide to the
Agent a copy of the Declaration of Trust, bylaws of the Fund, and all
amendments.
The Agent shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended,
and the rules thereunder, the Agent agrees that all such records prepared
or maintained by the Agent relating to the services to be performed by the
Agent hereunder are the property of the Fund and will be preserved,
maintained and made available in accordance with such section and rules
and will be surrendered to the Fund on and in accordance with its request.
6. Indemnification; Remedies Upon Breach
The Agent agrees to use reasonable care and act in good faith in
performing its duties hereunder.
Notwithstanding the foregoing, the Agent shall not be liable or
responsible for delays or errors occurring by reason of circumstances
beyond its control, including acts of civil or military authority,
national or state emergencies, fire, mechanical or equipment failure,
flood or catastrophe, acts of God, insurrection or war. In the event of a
mechanical breakdown beyond its control, the Agent shall take all
reasonable steps to minimize service interruptions for any period that
such interruption continues beyond the Agent's control. The Agent will
make every reasonable effort to restore any lost or damaged data, and the
correcting of any errors resulting from such a breakdown will be at the
Agent's expense. The Agent agrees that it shall, at all times, have
reasonable contingency plans with appropriate parties, making reasonable
provision for emergency use of electrical data processing equipment to the
extent appropriate equipment is available. Representatives of The
Henlopen Fund shall be entitled to inspect the Agent's premises and
operating capabilities at any time during regular business hours of the
Agent, upon reasonable notice to the Agent.
The Fund will indemnify and hold the Agent harmless against any and
all losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from any claim, demand, action or
suit not resulting from the Agent's bad faith or negligence, and arising
out of or in connection with the Agent's duties on behalf of the Fund
hereunder.
Further, the Fund will indemnify and hold the Agent harmless against
any and all losses, claims, damages, liabilities or expenses (including
reasonable counsel fees and expenses) resulting from any claim, demand,
action or suit as a result of the negligence of the Fund or the principal
underwriter (unless contributed to by the Agent's own negligence or bad
faith); or as a result of the Agent acting upon telephone instructions
relating to the exchange or redemption of shares received by the Agent and
reasonably believed by the Agent to have originated from the record owner
of the subject shares; or as a result of the Agent acting upon any
instructions executed or orally communicated by a duly authorized officer
or employee of the Fund, according to such lists of authorized officers
and employees furnished to the Agent and as amended from time to time in
writing by a resolution of the Board of Trustees of the Fund; or as a
result of acting in reliance upon any genuine instrument or stock
certificate signed, countersigned or executed by any person or persons
authorized to sign, countersign or execute the same.
In order for this section to apply, it is understood that if in any
case the Fund may be asked to indemnify or hold harmless the Agent, the
Fund shall be advised of all pertinent facts concerning the situation in
question, and it is further understood that the Agent will use reasonable
care to notify the Fund promptly concerning any situation which presents
or appears likely to present a claim for indemnification against the Fund.
The Fund shall have the option to defend the Agent against any claim which
may be the subject of this indemnification and, in the event that the Fund
so elects, the Agent will so notify the Fund, and thereupon the Fund shall
take over complete defense of the claim and the Agent shall sustain no
further legal or other expenses in such situation for which the Agent
shall seek indemnification under this section. The Agent will in no case
confess any claim or make any compromise in any case in which the Fund
will be asked to indemnify the Agent, except with the Fund's prior written
consent.
7. Confidentiality
The Agent agrees on behalf of itself and its employees to treat
confidentially all records and other information relative to the Fund and
its shareholders and shall not be disclosed to any other party, except
after prior notification to and approval in writing by the Fund, which
approval shall not be unreasonably withheld and may not be withheld where
the Agent may be exposed to civil or criminal contempt proceedings for
failure to comply after being requested to divulge such information by
duly constituted authorities.
8. Wisconsin Law to Apply
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the state of
Wisconsin.
9. Amendment, Assignment, Termination and Notice
A. This Agreement may be amended by the mutual written consent of
the parties.
B. After the first full year, this Agreement may be terminated upon
ninety (90) day's written notice given by one party to the
other.
C. This Agreement and any right or obligation hereunder may not be
assigned by either party without the signed, written consent of
the other party.
D. Any notice required to be given by the parties to each other
under the terms of this Agreement shall be in writing, addressed
and delivered, or mailed to the principal place of business of
the other party.
E. In the event that the Fund gives to the Agent its written
intention to terminate and appoint a successor transfer agent,
the Agent agrees to cooperate in the transfer of its duties and
responsibilities to the successor, including any and all
relevant books, records and other data established or maintained
by the Agent under this Agreement.
F. Should the Fund exercise its right to terminatie, all out-of-
pocket expenses associated with the movement of records and
material will be paid by the Fund.
THE HENLOPEN FUND FIRST WISCONSIN TRUST COMPANY
By: __________________________ By: _________________________________
Attest: ________________________ Attest: ____________________________
EXHIBIT 10
November 5, 1992
The Henlopen Fund
400 West Ninth Street
Wilmington, Delaware 19801
Gentlemen:
We have acted as counsel for you in connection with the
preparation of a Registration Statement on Form N-1A relating to the sale
by you of an indefinite amount of shares of beneficial interest, no par
value, of The Henlopen Fund (such shares of beneficial interest being
hereinafter referred to as the "Shares") in the manner set forth in the
Registration Statement to which reference is made. In this connection we
have examined: (a) the Registration Statement on Form N-1A; (b) your
Certificate of Trust, Trust Instrument and Bylaws; (c) proceedings
relative to the authorization for issuance of the Shares; and (d) such
other proceedings, documents and records as we have deemed necessary to
enable us to render this opinion.
Based upon the foregoing, we are of the opinion that the Shares
when sold as contemplated in the Registration Statement will be legally
issued, fully paid and nonassessable.
We hereby consent to the use of this opinion as an exhibit to
the Form N-1A Registration Statement. In giving this consent, we do not
admit that we are experts within the meaning of Section 11 of the
Securities Act of 1933, as amended, or within the category of persons
whose consent is required by Section 7 of said Act.
Very truly yours,
FOLEY & LARDNER
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 6 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
July 24, 1997, relating to the financial statements and financial highlights
of The Henlopen Fund, which appears in such Statement of Additional
Information, and to the incorporation by reference of our report into the
Prospectus which constitutes part of this Registration Statement. We also
consent to the reference to us under the heading "Independent Accountants" in
such Statement of Additional Information.
PRICE WATERHOUSE LLP
Minneapolis, Minnesota
October 31, 1997
Exhibit 13
SUBSCRIPTION AGREEMENT
The Henlopen Fund
400 West Ninth Street
Wilmington, Delaware 19801
Gentlemen:
The undersigned hereby subscribes to 10,000 shares of beneficial
interest, no par value, of The Henlopen Fund, in consideration for which
the undersigned agrees to transfer to you upon demand cash in the amount
of $100,000.
It is understood that upon receipt by you of payment therefor,
said shares shall be issued and shall be deemed to be fully paid and
nonassessable.
The undersigned agrees that the shares are being purchased for
investment with no present intention of reselling or redeeming said
shares.
Dated and effective as of this ____ day of November, 1992.
By: _________________________________
Michael L. Hershey
ACCEPTANCE
The foregoing subscription is hereby accepted. Dated and
effective as of this ____ day of November, 1992.
THE HENLOPEN FUND
By: _________________________________
President
Attest: ___________________________
Secretary
THE HENLOPEN FUND
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
The following constitutes an agreement establishing an
Individual Retirement Account (under Section 408(a) of the Internal
Revenue Code) between the Depositor and the Custodian.
ARTICLE I
The Custodian may accept additional cash contributions on behalf
of the Depositor for a tax year of the Depositor. The total cash
contributions are limited to $2,000 for the tax year unless the
contribution is a rollover contribution described in Section 402(c) (but
only after December 31, 1992), 403(a)(4), 403(b)(8), 408(d)(3), or an
employer contribution to a simplified employee pension plan as described
in Section 408(k). Rollover contributions before January 1, 1993, include
rollovers described in Section 402(a)(5), 402(a)(6), 402(a)(7), 403(a)(4),
403(b)(8), 408(d)(3), or an employer contribution to a simplified employee
pension plan as described in Section 408(k).
ARTICLE II
The Depositor's interest in the balance in the custodial account
is nonforfeitable.
ARTICLE III
1. No part of the custodial funds may be invested in life
insurance contracts, nor may the assets of the custodial account be
commingled with other property except in a common trust fund or common
investment fund (within the meaning of Section 408(a)(5)).
2. No part of the custodial funds may be invested in
collectibles (within the meaning of Section 408(m)) except as otherwise
permitted by Section 408(m)(3) which provides an exception for certain
gold and silver coins and coins issued under the laws of any state.
ARTICLE IV
1. Notwithstanding any provision of this agreement to the
contrary, the distribution of the Depositor's interest in the custodial
account shall be made in accordance with the following requirements and
shall otherwise comply with Section 408(a)(6) and Proposed Regulations
Section 1.408-8, including the incidental death benefit provisions of
Proposed Regulations Section 1.401(a)(9)-2, the provisions of which are
herein incorporated by reference.
2. Unless otherwise elected by the time distributions are
required to begin to the Depositor under Paragraph 3, or to the surviving
spouse under Paragraph 4, other than in the case of a life annuity, life
expectancies shall be recalculated annually. Such election shall be
irrevocable as to the Depositor and the surviving spouse and shall apply
to all subsequent years. The life expectancy of a nonspouse beneficiary
may not be recalculated.
3. The Depositor's entire interest in the custodial account
must be, or begin to be, distributed by the Depositor's required beginning
date, April 1 following the calendar year end in which the Depositor
reaches age 70 1/2. By that date, the Depositor may elect, in a manner
acceptable to the Custodian, to have the balance in the custodial account
distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or substantially
equal monthly, quarterly, or annual payments over the life of the
Depositor.
(c) An annuity contract that provides equal or substantially
equal monthly, quarterly, or annual payments over the joint and last
survivor lives of the Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a
specified period that may not be longer than the Depositor's life
expectancy.
(e) Equal or substantially equal annual payments over a
specified period that may not be longer than the joint life and last
survivor expectancy of the Depositor and his or her designated
beneficiary.
4. If the Depositor dies before his or her entire interest is
distributed to him or her, the entire remaining interest will be
distributed as follows:
(a) If the Depositor dies on or after distribution of his or
her interest has begun, distribution must continue to be made in
accordance with Paragraph 3.
(b) If the Depositor dies before distribution of his or her
interest has begun, the entire remaining interest will, at the election of
the Depositor or, if the Depositor has not so elected, at the election of
the beneficiary or beneficiaries, either
(i) Be distributed by the December 31 of the year
containing the fifth anniversary of the Depositor's
death, or
(ii) Be distributed in equal or substantially equal
payments over the life or life expectancy of the
designated beneficiary or beneficiaries starting by
December 31 of the year following the year of the
Depositor's death. If, however, the beneficiary is
the Depositor's surviving spouse, then this
distribution is not required to begin before December
31 of the year in which the Depositor would have
turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting
the requirements of Section 408(b)(3) and its related regulations has
irrevocably commenced, distributions are treated as having begun on the
Depositor's required beginning date, even though payments may actually
have been made before that date.
(d) If the Depositor dies before his or her entire interest has
been distributed and if the beneficiary is other than the surviving
spouse, no additional cash contributions or rollover contributions may be
accepted in the account.
5. In the case of a distribution over life expectancy in equal
or substantially equal annual payments, to determine the minimum annual
payment for each year, divide the Depositor's entire interest in the
custodial account as of the close of business on December 31 of the
preceding year by the life expectancy of the Depositor (or the joint life
and last survivor expectancy of the Depositor and the Depositor's
designated beneficiary, or the life expectancy of the designated
beneficiary, whichever applies). In the case of distributions under
Paragraph 3, determine the initial life expectancy (or joint life and last
survivor expectancy) using the attained ages of the Depositor and designed
beneficiary as of their birthdays in the year the Depositor reaches age 70
1/2. In the case of a distribution in accordance with Paragraph 4(b)(ii),
determine life expectancy using the attained age of the designated
beneficiary as of the beneficiary's birthday in the year distributions are
required to commence.
6. The owner of two or more individual retirement accounts may
use the "alternative method" described in Notice 88-38, 1988-1 C.B. 524,
to satisfy the minimum distribution requirements described above. This
method permits an individual to satisfy these requirements by taking from
one individual retirement account the amount required to satisfy the
requirement for another.
ARTICLE V
1. The Depositor agrees to provide the Custodian with
information necessary for the Custodian to prepare any reports required
under Section 408(i) and Regulations Section 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal
Revenue Service and the Depositor prescribed by the Internal Revenue
Service.
ARTICLE VI
Notwithstanding any other articles which may be added or
incorporated, the provisions of Articles I through III and this sentence
will be controlling. Any additional articles that are not consistent with
Section 408(a) and related regulations will be invalid.
ARTICLE VII
This agreement will be amended from time to time to comply with
the provisions of the Code and related regulations. Other amendments may
be made with the consent of the persons whose signatures appear below.
ARTICLE VIII
1. Investment of Account Assets. (a) All contributions to the
custodial account shall be invested in shares of The Henlopen Fund or, if
available, any other regulated investment company or companies for which
Landis Associates, Inc. serves as investment advisor or designates as
being eligible for investment ("Investment Company"). Shares of stock of
an Investment Company shall be referred to as "Investment Company Shares."
To the extent that two or more funds are available for investment,
contributions shall be invested in accordance with the Depositor's
investment election.
(b) Each contribution to the custodial account shall identify
the Depositor's account number and be accompanied by a signed statement
directing the investment of that contribution. The Custodian may return
to the Depositor, without liability for interest thereon, any contribution
which is not accompanied by adequate account identification or an
appropriate signed statement directing investment of that contribution.
(c) Contributions shall be invested in whole and fractional
Investment Company Shares at the price and in the manner such shares are
offered to the public. All distributions received on Investment Company
Shares, including both dividends and capital gains distributions, held in
the custodial account shall be reinvested in like shares. If any
distribution of Investment Company Shares may be received in additional
like shares or in cash or other property, the Custodian shall elect to
receive such distribution in additional like Investment Company Shares.
(d) All Investment Company Shares acquired by the Custodian
shall be registered in the name of the Custodian or its nominee. The
Depositor shall be the beneficial owner of all Investment Company Shares
held in the custodial account and the Custodian shall not vote any such
shares, except upon written direction of the Depositor, timely received,
in a form acceptable to the Custodian. The Custodian agrees to forward to
the Depositor each prospectus, report, notice, proxy and related proxy
soliciting materials applicable to Investment Company Shares held in the
custodial account received by the Custodian.
(e) The Depositor may, at any time, by written notice to the
Custodian, in a form acceptable to the Custodian, redeem any number of
shares held in the custodial account and reinvest the proceeds in the
shares of any other Investment Company upon the terms and within the
limitations imposed by the then current prospectus of such other
Investment Company in which the Depositor elects to invest. By giving
such instructions, the Depositor will be deemed to have acknowledged
receipt of such prospectus. Such redemptions and reinvestments shall be
done at the price and in the manner such shares are then being redeemed or
offered by the respective Investment Company.
2. Amendment and Termination. (a) Landis Associates, Inc.
may amend the Custodial Account (including retroactive amendments) by
delivering to the Custodian and to the Depositor written notice of such
amendment setting forth the substance and effective date of the amendment.
The Custodian and the Depositor shall be deemed to have consented to any
such amendment not objected to in writing by the Custodian or Depositor,
as applicable, within thirty (30) days of receipt of the notice, provided
that no amendment shall cause or permit any part of the assets of the
custodial account to be diverted to purposes other than for the exclusive
benefit of the Depositor or his or her beneficiaries.
(b) The Depositor may terminate the custodial account at any
time by delivering to the Custodian a written notice of such termination.
(c) The custodial account shall automatically terminate upon
distribution to the Depositor or his or her beneficiaries of its entire
balance.
3. Taxes and Custodial Fees. Any income taxes or other taxes
levied or assessed upon or in respect of the assets or income of the
custodial account and any transfer taxes incurred shall be paid from the
custodial account. All administrative expenses incurred by the Custodian
in the performance of its duties, including fees for legal services
rendered to the Custodian in connection with the custodial account, and
the Custodian's compensation shall be paid from the custodial account,
unless otherwise paid by the Depositor or his or her beneficiaries.
Sufficient shares shall be liquidated from the custodial account to pay
such fees and expenses.
The Custodian's fees are set forth in a schedule provided to the
Depositor. Extraordinary charges resulting from unusual administrative
responsibilities not contemplated by the schedule will be subject to such
additional charges as will reasonably compensate the Custodian. Fees for
refund of excess contributions, transferring to a successor trustee or
custodian, or redemption/reinvestment of Investment Company Shares will be
deducted from the refund or redemption proceeds and the remaining balance
will be remitted to the Depositor, or reinvested or transferred in
accordance with the Depositor's instructions.
4. Reports and Notices. (a) The Custodian shall keep
adequate records of transactions it is required to perform hereunder.
After the close of each calendar year, the Custodian shall provide to the
Depositor or his or her legal representative a written report or reports
reflecting the transactions effected by it during such year and the assets
and liabilities of the Custodial Account at the close of the year.
(b) All communications or notices shall be deemed to be given
upon receipt by the Custodian at Post Office Box 701, Milwaukee, Wisconsin
53201-0701 or the Depositor at his most recent address shown in the
Custodian's records. The Depositor agrees to advise the Custodian
promptly, in writing, of any change of address.
5. Designation of Beneficiary. The Depositor may designate a
beneficiary or beneficiaries to receive benefits from the custodial
account in the event of the Depositor's death. In the event the Depositor
has not designated a beneficiary, or if all beneficiaries shall predecease
the Depositor, the following persons shall take in the order named:
(a) The spouse of the Depositor;
(b) If the spouse shall predecease the Depositor or if the
Depositor does not have a spouse, then to the Depositor's estate.
The Depositor may also change or revoke any previously made
designation of beneficiary. Any designation or change or revocation of a
designation shall be made by written notice in a form acceptable to and
filed with the Custodian, prior to the complete distribution of the
balance in the custodial account. The last such designation on file at
the time of the Depositor's death shall govern. If a beneficiary dies
after the Depositor, but prior to receiving his or her entire interest in
the custodial account, the remaining interest in the custodial account
shall be paid to the beneficiary's estate.
6. Multiple Individual Retirement Accounts. In the event the
Depositor maintains more than one individual retirement account (as
defined in Section 408(a)) and elects to satisfy his or her minimum
distribution requirements described in Article IV above by making a
distribution for another individual retirement account in accordance with
Paragraph 6 thereof, the Depositor shall be deemed to have elected to
calculate the amount of his or her minimum distribution under this
custodial account in the same manner as under the individual retirement
account from which the distribution is made.
7. Inalienability of Benefits. Neither the benefits provided
under this custodial account nor the assets held therein shall be subject
to alienation, assignment, garnishment, attachment, execution or levy of
any kind and any attempt to cause such benefits or assets to be so
subjected shall not be recognized except to the extent as may be required
by law.
8. Rollover Contributions and Transfers. The Custodian shall
have the right to receive rollover contributions and to receive direct
transfers from other custodians or trustees. All contributions must be
made in cash or check.
9. Conflict in Provisions. To the extent that any provisions
of this Article VIII shall conflict with the provisions of Articles IV, V
and/or VII, the provisions of this Article VIII shall govern.
10. Applicable State Law. This custodial account shall be
construed, administered and enforced according to the laws of the State of
Wisconsin.
11. Resignation or Removal of Custodian. The Custodian may
resign at any time upon thirty (30) days notice in writing to the
Investment Company. Upon such resignation, the Investment Company shall
notify the Depositor, and shall appoint a successor custodian under this
Agreement. The Depositor or the Investment Company at any time may remove
the Custodian upon 30 days written notice to that effect in a form
acceptable to and filed with the Custodian. Such notice must include
designation of a successor custodian. The successor custodian shall
satisfy the requirements of section 408(h) of the Code. Upon receipt by
the Custodian of written acceptance of such appointment by the successor
custodian, the Custodian shall transfer and pay over to such successor the
assets of and records relating to the Custodial Account. The Custodian 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 on or against the
assets of the Custodial Account or on or against the Custodian, and where
necessary may liquidate shares in the Custodial Account for such payments.
Any balance of such reserve remaining after the payment of all such items
shall be paid over to the successor Custodian. The Custodian shall not be
liable for the acts or omissions of any predecessor or successor custodian
or trustee.
12. Limitation on Custodian Responsibility. The Custodian will
not under any circumstances be responsible for the timing, purpose or
propriety of any contribution or of any distribution made hereunder, nor
shall the Custodian incur any liability or responsibility for any tax
imposed on account of any such contribution or distribution. Further, the
Custodian shall not incur any liability or responsibility in taking or
omitting to take any action based on any notice, election, or instruction
or any written instrument believed by the Custodian to be genuine and to
have been properly executed. The Custodian shall be under no duty of
inquiry with respect to any such notice, election, instruction, or written
instrument, but in its discretion may request any tax waivers, proof of
signatures or other evidence which it reasonably deems necessary for its
protection. The Depositor and the successors of the Depositor including
any executor or administrator of the Depositor shall, to the extent
permitted by law, indemnify the Custodian and its successors and assigns
against any and all claims, actions or liabilities of the Custodian to the
Depositor or the successors or beneficiaries of the Depositor whatsoever
(including without limitation all reasonable expenses incurred in
defending against or settlement of such claims, actions or liabilities)
which may arise in connection with this Agreement or the Custodial
Account, except those due to the Custodian's own bad faith, gross
negligence or willful misconduct. The Custodial shall not be under any
duty to take any action not specified in this Agreement, unless the
Depositor shall furnish it with instructions in proper form and such
instructions shall have been specifically agreed to by the Custodian, or
to defend or engage in any suit with respect hereto unless it shall have
first agreed in writing to do so and shall have been fully indemnified to
its satisfaction.
THE HENLOPEN FUND SIMPLIFIED EMPLOYEE PENSION
Instructions
Section references are to the Internal Revenue Code unless otherwise
noted.
Purpose of Form
Form 5305-SEP (Model SEP) is used by an employer to make an agreement to
provide benefits to all eligible employees under a SEP described in
section 408(k). Do not file this form with the IRS. See Pub. 560,
Retirement Plans for the Self-Employed, and Pub. 590, Individual
Retirement Arrangements (IRAs).
Instructions to the Employer
Simplified Employee Pension.-A SEP is a written arrangement (a plan) that
provides you with a simplified way to make contributions toward your
employees' retirement income. Under a SEP, you can contribute to an
employee's individual retirement account or annuity (IRA). You make
contributions directly to an IRA set up by or for each employee with a
bank, insurance company, or other qualified financial institution. When
using Form 5305-SEP to establish a SEP, the IRA must be a Model IRA
established on an IRS form or a master or prototype IRA for which the IRS
has issued a favorable opinion letter. Making the agreement on Form 5305-
SEP does not establish an employer IRA described in section 408(c).
When Not To Use Form 5305-SEP.-Do not use this form if you:
1. Currently maintain any other qualified retirement plan. This
does not prevent you from maintaining another SEP.
2. Previously maintained a defined benefit plan that is now
terminated.
3. Have any eligible employees for whom IRAs have not been
established.
4. Use the services of leased employees (described in section
414(n)).
5. Are a member of an affiliated service group (described in
section 414(m)), a controlled group of corporations (described in section
414(b)), or trades or businesses under common control (described in
sections 414(c) and 414(o)), unless all eligible employees of all the
members of such groups,trades, or businesses, participate in the SEP.
6. Will not pay the cost of the SEP contributions. Do not use Form
5305-SEP for a SEP that provides for elective employee contributions even
if the contributions are made under a salary reduction agreement.
Use Form 5305A-SEP, or a nonmodel SEP if you permit elective
deferrals to a SEP.
Note: SEPs permitting elective deferrals cannot be established after
1996.
Eligible Employees.-All eligible employees must be allowed to participate
in the SEP. An eligible employee is any employee who: (1) is at least 21
years old, and (2) has performed "service" for you in at least 3 of the
immediately preceding 5 years.
Note: You can establish less restrictive eligibility requirements, but
not more restrictive ones.
Service is any work performed for you for any period of time, however
short. If you are a member of an affiliated service group, a controlled
group of corporations,or trades or businesses under common control,
service includes any work performed for any period of time for any other
member of such group,trades, or businesses.
Excludable Employees.-The following employees do not have to be covered by
the SEP: (1) employees covered by a collective bargaining agreement whose
retirement benefits were bargained for in good faith by you and their
union, (2) nonresident alien employees who did not earn U.S.source income
from you, and (3) employees who received less than $400* in compensation
during the year.
____________________
* This amount reflects the cost-of-living increase effective January 1,
1997. The amount is adjusted annually. The IRS announces the increase,
if any, in a news release and in the Internal Revenue Bulletin.
Contribution Limits.-The SEP rules permit you to make an annual
contribution of up to 15% of the employee's compensation or $300,000*,
whichever is less. Compensation, for this purpose, does not include
employer contributions to the SEP or the employee's compensation in excess
of $160,000*. If you also maintain a Model Elective SEP or any other SEP
that permits employees to make elective deferrals, contributions to the
two SEPs together may not exceed the smaller of $300,000* or 15% of
compensation for any employee.
Contributions cannot discriminate in favor of highly compensated
employees. You are not required to make contributions every year. But
you must contribute to the SEP-IRAs of all of the eligible employees who
actually performed services during the year of the contribution. This
includes eligible employees who die or quit working before the
contribution is made.
You may also not integrate your SEP contributions with, or offset
them by, contributions made under the Federal Insurance Contributions Act
(FICA).
If this SEP is intended to meet the top-heavy minimum contribution
rules of section 416, but it does not cover all your employees who
participate in your elective SEP, then you must make minimum contributions
to IRAs established on behalf of those employees.
Deducting Contributions.--You may deduct contributions to a SEP subject to
the limits of section 404(h). This SEP is maintained on a calendar year
basis and contributions to the SEP are deductible for your tax year with
or within which the calendar year ends. Contributions made for a
particular tax year must be made by the due date of your income tax return
(including extensions) for that tax year.
Completing the Agreement.--This agreement is considered adopted when:
- IRAs have been established for all your eligible employees;
- You have completed all blanks on the agreement form without
modification; and
- You have given all your eligible employees the following information:
1. A copy of Form 5305-SEP.
2. A statement that IRAs other than the IRAs into which employer
SEP contributions will be made may provide different rates of return and
different terms concerning, among other things, transfers and withdrawals
of funds from the IRAs.
3. A statement that, in addition to the information provided to an
employee at the time the employee becomes eligible to participate, the
administrator of the SEP must furnish each participant within 30 days of
the effective date of any amendment to the SEP, a copy of the amendment
and a written explanation of its effects.
4. A statement that the administrator will give written
notification to each participant of any employer contributions made under
the SEP to that participant's IRA by the later of January 31 of the year
following the year for which a contribution is made or 30 days after the
contribution is made.
Employers who have established a SEP using Form 5305-SEP and have
furnished each eligible employee with a copy of the completed Form 5305-
SEP and provided the other documents and disclosures described in
Instructions to the Employer and Information for the Employee, are not
required to file the annual information returns, Forms 5500, 5500-C/R, or
5500-EZ for the SEP. However, under Title I of ERISA, this relief from
the annual reporting requirements may not be available to an employer who
selects, recommends, or influences its employees to choose IRAs into which
contributions will be made under the SEP, if those IRAs are subject to
provisions that impose any limits on a participant's ability to withdraw
funds (other than restrictions imposed by the Code that apply to all
IRAs). For additional information on Title I requirements, see the
Department of Labor regulation at 29 CFR 2520.104-48.
Information for the Employee
The information below explains what a SEP is, how contributions are made,
and how to treat your employer's contributions for tax purposes. For more
information, see Pub. 590.
Simplified Employee Pension.--A SEP is a written arrangement (a plan) that
allows an employer to make contributions toward your retirement.
Contributions are made to an individual retirement account/annuity (IRA).
Contributions must be made to either a Model IRA executed on an IRS form
or a master or prototype IRA for which the IRS has issued a favorable
opinion letter.
An employer is not required to make SEP contributions. If a
contribution is made, it must be allocated to all the eligible employees
according to the SEP agreement. The Model SEP (Form 5305-SEP) specifies
that the contribution for each eligible employee will be the same
percentage of compensation (excluding compensation higher than $160,000*)
for all employees.
Your employer will provide you with a copy of the agreement
containing participation rules and a description of how employer
contributions may be made to your IRA. Your employer must also provide
you with a copy of the completed Form 5305-SEP and a yearly statement
showing any contributions to your IRA.
All amounts contributed to your IRA by your employer belong to you
even after you stop working for that employer.
Contribution Limits.--Your employer will determine the amount to be
contributed to your IRA each year. However, the amount for any year is
limited to the smaller of $30,000* or 15% of your compensation (currently
limited to $160,000) for that year. Compensation does not include any
amount that is contributed by your employer to your IRA under the SEP.
Your employer is not required to make contributions every year or to
maintain a particular level of contributions.
Tax Treatment of Contributions.--Employer contributions to your SEP-IRA
are excluded from your income unless there are contributions in excess of
the applicable limit. Employer contributions within these limits will not
be included on your Form W-2.
Employee Contributions.--You may contribute the smaller of $2,000 or 100%
of your compensation to an IRA. However, the amount you can deduct may be
reduced or eliminated because, as a participant in a SEP, you are covered
by an employer retirement plan.
SEP Participation.--If your employer does not require you to participate
in a SEP as a condition of employment, and you elect not to participate,
all other employees of your employer may be prohibited from participating.
If one or more eligible employees do not participate and the employer
tries to establish a SEP for the remaining employees, it could cause
adverse tax consequences for the participating employees.
An employer may not adopt this IRS Model SEP if the employer
maintains another qualified retirement plan or has ever maintained a
qualified defined benefit plan. This does not prevent your employer from
adopting this IRS Model SEP and also maintaining an IRS Model Elective SEP
or other SEP. However, if you work for several employers, you may be
covered by a SEP of one employer and a different SEP or pension or profit-
sharing plan of another employer.
SEP-IRA Amounts--Rollover or Transfer to Another IRA.--You can withdraw or
receive funds from your SEP-IRA if within 60 days of receipt, you place
those funds in another IRA or SEP-IRA. This is called a "rollover" and
can be done without penalty only once in any 1-year period. However,
there are no restrictions on the number of times you may make "transfers"
if you arrange to have these funds transferred between the trustees or the
custodians so that you never have possession of the funds.
Withdrawals.--You may withdraw your employer's contribution at any time,
but any amount withdrawn is includible in your income unless rolled over.
Also, if withdrawals occur before you reach age 59-1/2, you may be subject to
a tax on early withdrawal.
Excess SEP Contributions.--Contributions exceeding the yearly limitations
may be withdrawn without penalty by the due date (plus extensions) for
filing your tax return (normally April 15), but is includible in your
gross income. Excess contributions left in your SEP-IRA account after
that time may have adverse tax consequences. Withdrawals of those
contributions may be taxed as premature withdrawals.
Financial Institution Requirements.--The financial institution where your
IRA is maintained must provide you with a disclosure statement that
contains the following information in plain, nontechnical language:
1. The law that relates to your IRA.
2. The tax consequences of various options concerning your IRA.
3. Participation eligibility rules, and rules on the deductibility
of retirement savings.
4. Situations and procedures for revoking your IRA, including the
name, address, and telephone number of the person designated to receive
notice of revocation. (This information must be clearly displayed at the
beginning of the disclosure statement.)
5. A discussion of the penalties that may be assessed because of
prohibited activities concerning your IRA.
6. Financial disclosure that provides the following information:
a. Projects value growth rates of your IRA under various
contribution and retirement schedules, or describes the method of
determining annual earnings and charges that may be assessed.
b. Describes whether, and for when, the growth projections are
guaranteed, or a statement of the earnings rate and the terms on which the
projections are based.
c. States the sales commission for each year expressed as a
percentage of $1,000.
In addition, the financial institution must provide you with a
financial statement each year. You may want to keep these statements to
evaluate your IRA's investment performance.
<PAGE>
THE HENLOPEN FUND
SIMPLIFIED EMPLOYEE PENSION-INDIVIDUAL
RETIREMENT ACCOUNTS CONTRIBUTION AGREEMENT
(Under Section 408(k) of the Internal Revenue Code)
____________________________ makes the following agreement under
(Name of employer)
Section 408(k) of the Internal Revenue Code and the instructions to this
form.
Article I--Eligibility Requirements (Check appropriate boxes--see
Instructions.)
The employer agrees to provide for discretionary contributions in each
calendar year to the individual retirement account or individual
retirement annuity (IRA) of all employees who are at least ______ years
old (not to exceed 21 years old) and have performed services for the
employer in at least ______ years (not to exceed 3 years) of the
immediately preceding 5 years. This simplified employee pension (SEP) [_]
includes [_] does not include employees covered under a collective
bargaining agreement, [_] includes [_] does not include certain
nonresident aliens, and [_] includes [_] does not include employees whose
total compensation during the year is less than $400*.
_____________________
* This amount reflects the cost-of-living increase effective January 1,
1997. The amount is adjusted annually. The IRS announces the increase,
if any, in a news release and in the Internal Revenue Bulletin.
Article II--SEP Requirements (See Instructions.)
The employer agrees that contributions made on behalf of each eligible
employee will be:
A. Based only on the first $160,000* of compensation.
B. Made in an amount that is the same percentage of compensation for
every employee.
C. Limited annually to the smaller of $30,000* or 15% of
compensation.
D. Paid to the employee's IRA trustee, custodian, or insurance company
(for an annuity contract).
____________________________ __________________________
Employer's Signature and date Name and title
THE HENLOPEN FUND
PROTOTYPE DEFINED CONTRIBUTION
RETIREMENT PLAN
Profit Sharing Plan AA - Plan No. 01-001
Pension Plan AA - Plan No. 01-002
<PAGE>
THE HENLOPEN FUND
PROTOTYPE DEFINED CONTRIBUTION
RETIREMENT PLAN
Profit Sharing Plan AA - Plan No. 01-001
Pension Plan AA - Plan No. 01-002
<PAGE>
THE HENLOPEN FUND
PROTOTYPE DEFINED CONTRIBUTION
RETIREMENT PLAN
Table of Contents
ARTICLE I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III. PARTICIPATION . . . . . . . . . . . . . . . . . . . . 10
Section 3.1. Participation at Effective Date . . . . . . . . . . . 10
Section 3.2. Participation after Effective Date . . . . . . . . . . 10
Section 3.3. Reentry . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.4. Participation by an Owner-Employee of More Than One
Trade or Business . . . . . . . . . . . . . . . . . . 10
ARTICLE IV. CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . 12
Section 4.1. Employer Profit Sharing Contributions . . . . . . . . 12
Section 4.2. Employer Pension Contributions . . . . . . . . . . . . 14
Section 4.3. Participant Voluntary Contributions . . . . . . . . . 14
Section 4.4. Time for Making Contributions . . . . . . . . . . . . 15
Section 4.5. Leased Employees . . . . . . . . . . . . . . . . . . . 15
Section 4.6. Rollovers and Transfers . . . . . . . . . . . . . . . 15
ARTICLE V. CASH OR DEFERRED ARRANGEMENT
(CODE SECTION 401(k)) . . . . . . . . . . . . . . . . 16
Section 5.1. Cash or Deferred Arrangement (Code Section 401(k)) . . 16
Section 5.2. Elective Deferrals . . . . . . . . . . . . . . . . . . 16
Section 5.3. Matching Contributions . . . . . . . . . . . . . . . . 21
Section 5.4. Qualified Matching Contributions and Qualified
Non-Elective Contributions . . . . . . . . . . . . . . 24
Section 5.5. Special Distribution Rules . . . . . . . . . . . . . . 25
Section 5.6. Definitions . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VI. SECTION 415 LIMITATIONS . . . . . . . . . . . . . . . 31
Section 6.1. Employers Maintaining Only this Plan . . . . . . . . . 31
Section 6.2. Employers Maintaining Other Master or Prototype
Defined Contribution Plans . . . . . . . . . . . . . . 32
Section 6.3. Employers Maintaining Other Defined Contribution
Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 6.4. Employers Maintaining Defined Benefit Plans . . . . . 33
Section 6.5. Definitions . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VII. PARTICIPANTS' ACCOUNTS . . . . . . . . . . . . . . . . 37
Section 7.1. Separate Accounts . . . . . . . . . . . . . . . . . . 37
Section 7.2. Vesting . . . . . . . . . . . . . . . . . . . . . . . 37
Section 7.3. Computation of Vesting Service . . . . . . . . . . . . 37
Section 7.4. Allocation of Forfeitures . . . . . . . . . . . . . . 38
ARTICLE VIII. PAYMENT OF BENEFITS . . . . . . . . . . . . . . . . . 39
Section 8.1. Benefits Payable Under the Plan . . . . . . . . . . . 39
Section 8.2. Manner of Distributions . . . . . . . . . . . . . . . 40
Section 8.3. Commencement of Payments . . . . . . . . . . . . . . . 44
Section 8.4. Payment of Small Amounts . . . . . . . . . . . . . . . 48
Section 8.5. Persons Under Legal or Other Disability . . . . . . . 49
Section 8.6. Withdrawals from Profit Sharing Plan . . . . . . . . . 49
Section 8.7. Transfer of Benefits to Eligible Retirement Plan . . . 50
ARTICLE IX. ESTABLISHMENT OF CUSTODIAL ACCOUNT; INVESTMENTS . . . 51
Section 9.1. Custodial Account . . . . . . . . . . . . . . . . . . 51
Section 9.2. Receipt of Contributions . . . . . . . . . . . . . . . 51
Section 9.3. Investment of Account Assets . . . . . . . . . . . . . 51
Section 9.4. Exclusive Benefit . . . . . . . . . . . . . . . . . . 52
Section 9.5. Expenses . . . . . . . . . . . . . . . . . . . . . . . 52
Section 9.6. Voting . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 9.7. Reports of the Custodian and Administrator . . . . . . 52
Section 9.8. Limitation of Custodian's Duties and Liability . . . . 53
ARTICLE X. AMENDMENT AND TERMINATION . . . . . . . . . . . . . . 55
Section 10.1. Amendment . . . . . . . . . . . . . . . . . . . . . . 55
Section 10.2. Termination . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE XI. FIDUCIARY RESPONSIBILITIES . . . . . . . . . . . . . . 57
Section 11.1. Administrator . . . . . . . . . . . . . . . . . . . . 57
Section 11.2. Powers of Administrator . . . . . . . . . . . . . . . 57
Section 11.3. Records and Reports . . . . . . . . . . . . . . . . . 57
Section 11.4. Other Administrative Provisions . . . . . . . . . . . 57
Section 11.5. Claims Procedure . . . . . . . . . . . . . . . . . . . 58
Section 11.6. Claims Review Procedure . . . . . . . . . . . . . 58
ARTICLE XII. AMENDMENT AND CONTINUATION OF ORIGINAL PLAN . . . . . 59
ARTICLE XIII. TOP-HEAVY PROVISIONS . . . . . . . . . . . . . . . . . 61
Section 13.1. Effect of Top-Heavy Status . . . . . . . . . . . . . . 61
Section 13.2. Additional Definitions . . . . . . . . . . . . . . . . 61
Section 13.3. Minimum Allocations . . . . . . . . . . . . . . . . . 63
Section 13.4. Benefit Limit Change . . . . . . . . . . . . . . . . . 64
ARTICLE XIV. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . 65
Section 14.1. Rights of Employees and Participants . . . . . . . . . 65
Section 14.2. Merger With Other Plans . . . . . . . . . . . . . . . 65
Section 14.3. Non-Alienation of Benefits . . . . . . . . . . . . . . 65
Section 14.4. Failure to Qualify . . . . . . . . . . . . . . . . . . 65
Section 14.5. Mistake of Fact; Disallowance of Deduction . . . . . . 66
Section 14.6. Participation under Prototype Plan . . . . . . . . . . 66
Section 14.7. Gender . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 14.8. Headings . . . . . . . . . . . . . . . . . . . . . . . 66
Section 14.9. Governing Law . . . . . . . . . . . . . . . . . . . . 66
THE HENLOPEN FUND
PROTOTYPE DEFINED CONTRIBUTION
RETIREMENT PLAN
ARTICLE I.
INTRODUCTION
This Plan, which is made available by Landis Associates, Inc.,
has been adopted by the Employer named in the Adoption Agreement(s) as a
qualified money purchase pension and/or profit sharing plan for its
eligible employees which is intended to qualify under Code Section 401(a).
The Employer's Plan shall consist of the following provisions, together
with the Adoption Agreement(s).
ARTICLE II.
DEFINITIONS
Section 2.1. "Account" means the account or accounts
maintained by the Custodian for a Participant, as described in Article
VII.
Section 2.2. "Administrator" means the plan administrator and
fiduciary of the Plan with authority and responsibility to control and
manage the operation and administration of the Plan in accordance with its
terms and to comply with the reporting, disclosure and other requirements
of ERISA. Unless a different Administrator is appointed by the Employer,
the Administrator shall be the Employer.
Section 2.3. "Beneficiary" means the person or persons
designated by a Participant or otherwise entitled to receive benefits in
the event of the Participant's death as provided herein. Such designation
shall be made in writing and in such form as may be required by the
Administrator, and shall be filed with the Administrator. Any designation
may include contingent or successive Beneficiaries. Where such
designation has been properly made, distribution of benefits shall be made
directly to such Beneficiary or Beneficiaries. The Beneficiary or
Beneficiaries designated by a Participant may be changed or withdrawn at
any time from time to time, by the Participant, but only by filing with
the Administrator a new designation, and revoking all prior designations.
The most recent valid designation on file with the Administrator at the
time of the Participant's death shall be the Beneficiary. Notwithstanding
the foregoing, in the event the Participant is married at the time of his
death, the Beneficiary shall be the Participant's surviving spouse unless
such spouse consented in writing to the designation of an alternative
Beneficiary after notice of the spouse's rights and such consent was
witnessed by a Plan representative appointed by the Administrator or a
notary public as provided in Section 8.2(a) hereof. In the event no valid
designation of Beneficiary is on file with the Administrator at the date
of death or no designated Beneficiary survives him, the Participant's
spouse shall be deemed the Beneficiary; in the further event the
Participant is unmarried or his spouse does not survive him, the
Participant's estate shall be deemed to be his Beneficiary.
Section 2.4. "Break in Service" means a Plan Year in which a
Participant fails to complete at least five hundred one (501) Hours of
Service. Breaks in Service and Years of Service will be measured on the
same vesting computation period.
Section 2.5. "Code" means the Internal Revenue Code of 1986,
as interpreted by applicable regulations and rulings issued pursuant
thereto, all as amended and in effect from time to time. Reference to a
Code Section shall include that Section, and any comparable section or
sections of any future legislation that amends, supplements or supersedes
that Section.
Section 2.6. "Compensation" is defined as wages within the
meaning of Section 3401(a) of the Code and all other payments of
compensation to the Employee by the Employer (in the course of the
Employer's trade or business) for which the Employer is required to
furnish the Employee a written statement under Sections 6041(d),
6051(a)(3) and 6052 of the Code, determined without regard to any rules
under Section 3401(a) that limit the remuneration included in wages based
on the nature or locations of the employment or the services performed.
For any Self-Employed Individual covered under the Plan, Compensation
shall mean such individual's Earned Income.
For Plan Years beginning after December 31, 1988, the maximum
amount of Compensation taken into account under the Plan for a Participant
in any Plan Year shall not exceed two hundred thousand dollars ($200,000)
or such greater amount as permitted by the Secretary of the Treasury,
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 effective on January 1, 1990. If
the 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.
For purposes of this limitation, the family aggregation rules of
Code Section 414(q)(6) shall apply, except that the term "family" shall
include only the spouse of the Participant and any lineal descendants of
the Participant who have not attained age nineteen (19) before the close
of such year. If, as a result of the application of such rules the
adjusted two hundred thousand dollars ($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. If Compensation for any prior
Plan Year is taken into account in determining an Employee's contributions
or benefits for the current year, the Compensation for such prior year is
subject to the applicable annual compensation limit in effect for that
prior year. For this purpose, for years beginning before January 1, 1990,
the applicable annual compensation limit is $200,000.
In addition to other applicable limitations set forth in the
plan, and notwithstanding any other provision of the plan to the contrary,
for plan years beginning on or after January 1, 1994, the annual
Compensation of each employee taken into account under the plan shall not
exceed the OBRA '93 annual compensation limit. The OBRA '93 annual
compensation limit is $150,000, as adjusted by the Commissioner for
increases in the cost of living in accordance with section 401(a)(17)(B)
of the Internal Revenue Code. The cost-of-living adjustment in effect for
a calendar year applies to any period, not exceeding 12 months, over which
compensation is determined (determination period) beginning in such
calendar year. If a determination period consists of fewer than 12
months, the OBRA '93 annual compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
For plan years beginning on or after January 1, 1994, any
reference in this plan to the limitation under section 401(a)(17) of the
Code shall mean the OBRA '93 annual compensation limit set forth in this
provision.
If Compensation for any prior determination period is taken into
account in determining an employee's benefits accruing in the current plan
year, the compensation for that prior determination period is subject to
OBRA '93 annual compensation limit in effect for that prior determination
period. For this purpose, for determination periods beginning before the
first day of the first plan year beginning on or after January 1, 1994,
the OBRA '93 annual compensation limit is $150,000
Section 2.7. "Custodial Account" means the account established
by the Custodian, in accordance with Article IX, in the name of the
Employer or for each Participant as elected in the Adoption Agreement.
Section 2.8. "Custodian" means Firstar Trust Company, or any
successor thereto.
Section 2.9. "Disability" means a mental or physical condition
of injury or sickness, as determined by the Administrator based upon the
report of a medical examiner satisfactory to the Employer, which prevents
a Participant from carrying out the duties of his position and which is
likely to be permanent. Any such determination by the Administrator shall
be made in a uniform and nondiscriminatory manner.
Section 2.10. "Earned Income" means net earnings from
self-employment in the trade or business with respect to which the Plan is
established for which the personal services of the individual are a
material income-producing factor. Net earnings shall be determined
without regard to items not included in gross income and the deductions
allocable to such items. Net earnings shall be reduced by contributions
by the Employer to a qualified plan to the extent deductible under Code
Section 404. Net earnings shall be determined with regard to the
deduction allowed to the Employer under Code Section 164(f) for taxable
years beginning after December 31, 1989.
Section 2.11. "Effective Date" means the date as of which this
Plan is initially effective as indicated in item 3 of the Adoption
Agreement.
Section 2.12. "Elective Deferrals" means any Employer
contributions made to the Plan at the election of a participating
Employee, in lieu of payment of an equal amount to the participating
Employee in cash as Compensation pursuant to Section 5.2 hereof, and shall
include contributions made pursuant to a salary reduction agreement or
other deferral method. With respect to any taxable year, a participating
Employee's Elective Deferrals are the sum of all employer contributions
made on behalf of such Employee pursuant to an election to defer under any
qualified CODA as described in Code Section 401(k), any simplified
employee pension cash or deferred arrangement as described in Code Section
402(h)(1)(B), any eligible deferred compensation plan under Code Section
457, any plan as described under Code Section 501(c)(18), and any employer
contributions made on the behalf of a participating Employee for the
purchase of an annuity contract under Code Section 403(b) pursuant to a
salary reduction agreement.
Section 2.13. "Employee" means an individual employed by the
Employer (including any eligible Self-Employed Individual) or any Related
Employer adopting this Plan except as excluded pursuant to item 4 of the
Adoption Agreement. The term Employee shall also include any individual
who is a Leased Employee, unless excluded pursuant to item 4 of the
Adoption Agreement.
Section 2.14. "Employer" means any entity adopting the Plan.
Section 2.15. "Employer Pension Contributions" means the
contributions made by the Employer pursuant to Section 4.2 hereof if
elected in item 6 of the Adoption Agreement (Pension Plan).
Section 2.16. "Employer Profit Sharing Contributions" means the
contributions made by the Employer pursuant to Section 4.1 hereof if
elected in item 6 of the Adoption Agreement (Profit Sharing Plan).
Section 2.17. "ERISA" means the Employee Retirement Income
Security Act of 1974, as interpreted and applied under regulations and
rulings issued pursuant thereto, all as amended and in effect from time to
time.
Section 2.18. "Hour of Service" means:
(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 for the computation period in which the duties
are performed; and
(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 five hundred one (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 of Service 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 this reference; and
(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 subsection (a) or subsection
(b), as the case may be, and under this subsection (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 a Break in
Service, as defined in Section 2.4, for participation and vesting purposes
has occurred in a computation period, an individual who is absent from
work for maternity or paternity reasons shall receive credit for the Hours
of Service which would otherwise have been credited to such individual but
for such absence, or in any case in which such hours cannot be determined,
eight (8) hours of service per normal workday of such absence. For
purposes of this paragraph, an absence from work for maternity or
paternity reasons means an absence:
(i) by reason of the pregnancy of the
individual;
(ii) by reason of a birth of a child of the
individual;
(iii) by reason of the placement of a child with
the individual in connection with the
adoption of such child by such individual;
or
(iv) for purposes of caring for such child for a
period beginning immediately following such
birth or placement.
The Hours of Service credited under this Section 2.18 shall be credited
(i) in the computation period in which the absence begins if the crediting
is necessary to prevent a Break in Service in that period, or (ii) in all
other cases the following computation period.
(e) Hours of Service shall be determined on the basis of actual
hours for which an Employee is paid or entitled to payment unless a
different method of determining Hours of Service is selected in item 4(A)
of the Adoption Agreement.
(f) In the event the Employer maintains the plan of a
predecessor employer, service for such predecessor employer shall be
treated as service for the Employer. Hours of Service will be credited
for employment with members of an affiliated service group under Code
Section 414(m), a controlled group of corporations under Code Section
414(b), or a group of trades or businesses under common control under Code
Section 414(c) of which the Employer is a member and any other entity
required to be aggregated with the Employer pursuant to Code Section
414(o) and the Regulations thereunder. Hours of Service will also be
credited for any Leased Employee for purposes of this Plan under Code
Sections 414(n) or (o) and the Regulations thereunder, unless excluded
under item 4 of the Adoption Agreement.
Section 2.19. "Investment Advisor" means Landis Associates,
Inc..
Section 2.20. "Investment Company" means The Henlopen Fund,
Inc. and any other regulated investment company(ies) designated by the
Investment Advisor.
Section 2.21. "Investment Company Shares" means the shares of
each Investment Company.
Section 2.22. "Leased Employee" means any individual who is
considered a leased employee within the meaning of Code Sections 414(n) or
(o). For purposes of this Section, a Leased Employee means any person
who, pursuant to an agreement between the Employer and any other person
(which may include the Leased Employee), has performed services for the
Employer (or for the Employer and any Related Employer) in a capacity
other than as a common law employee 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 business field of the Employer.
Notwithstanding the foregoing, no individual shall be considered to be a
Leased Employee if (a) such individual is covered by a money purchase
pension plan providing: (i) a non-integrated employer contribution rate
of at least ten percent (10%) of compensation, as defined in Code Section
415(c)(3), but including amounts contributed pursuant to a salary
reduction agreement which are excludable from the individual's gross
income under Code Sections 125, 402(a)(8), 402(h) or 403(b), (ii)
immediate participation, and (iii) full and immediate vesting and (b)
Leased Employees do not constitute more than twenty percent (20%) of the
Employer's nonhighly compensated work force. Contributions or benefits
provided to a Leased Employee by the leasing organization which are
attributable to services performed for the Employer shall be treated as
provided by the Employer.
Section 2.23. "Matching Contribution" means an Employer
contribution made to the Plan or any other defined contribution plan on
behalf of a participating Employee on account of a participating
Employee's Elective Deferrals pursuant to Section 5.3 hereof or on account
of any employee contributions or elective deferrals made to any other
plan.
Section 2.24. "Net Profits" means the current or accumulated
earnings of the Employer before federal and state taxes and contributions
to this or any other qualified plan.
Section 2.25. "Normal Retirement Age" means age 65 or such
other age as selected in item 11 of the Adoption Agreement (Profit Sharing
Plan) and item 9 of the Adoption Agreement (Pension Plan). If the
Employer enforces a mandatory retirement age, the Normal Retirement Age
shall be the lesser of such mandatory retirement age or the age specified
in the Adoption Agreement.
Section 2.26. "Original Plan" means any defined contribution
plan which meets the requirements of Code Section 401 and referred to in
Article XII of the Plan.
Section 2.27. "Owner-Employee" means 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 the partnership.
Section 2.28. "Participant" means each Employee (including any
eligible Self-Employed Individual) who has completed the requirements for
eligibility specified in Section 3.1 hereof. Each such Employee shall
become a Participant as of the earlier of: (i) the first day of the Plan
Year or (ii) the first day of the seventh month of the Plan Year beginning
after he completes such requirements.
Section 2.29. "Participant Voluntary Contributions" means
contributions by a Participant under the Plan pursuant to Section 4.3, if
elected in item 9 of the Adoption Agreement (Profit Sharing Plan) and item
8 of the Adoption Agreement (Pension Plan).
Section 2.30. "Pension Plan" means the feature of the Plan
pursuant to which the Employer makes Employer Pension Contributions. Such
feature applies only to the extent elected in item 6 of the Adoption
Agreement (Pension Plan).
Section 2.31. "Plan" means this prototype profit sharing plan
and/or money purchase pension plan, together with the appropriate Adoption
Agreement(s), as set forth herein and as may be amended from time to time.
As used herein, the term Plan shall mean either or both the money purchase
pension plan and the profit-sharing plan depending on whether the Employer
has adopted one or both plans.
Section 2.32. "Plan Year" means the twelve (12) consecutive
month period designated in item 2 of the Adoption Agreement. The first
Plan Year shall commence on the Effective Date.
Section 2.33. "Profit Sharing Plan" means the features of the
Plan pursuant to which all contributions, other than Employer Pension
Contributions, are made to the Plan, including any contributions pursuant
to the cash or deferred arrangement (Section 401(k)) described in Article
V hereof. Such features apply only to the extent elected in items 6
and/or 8 of the Adoption Agreement (Profit Sharing Plan).
Section 2.34. "Related Employer" means an organization which,
together with the Employer, constitutes (i) a controlled group of
corporations as defined in Code Section 414(b); (ii) trades or businesses
under common control as defined in Code Section 414(c); (iii) an
affiliated service group as defined in Code Section 414(m); or (iv) a
group of employers required to be aggregated under Code Section 414(o).
Section 2.35. "Self-Employed Individual" means an individual
who has Earned Income for the taxable year from the trade or business for
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.
Section 2.36. "Valuation Date" means the last day of each Plan
Year and such other times as shall be determined by the Administrator.
Section 2.37. "Year of Employment" means the twelve (12)
consecutive month period, beginning on the date the Employee first
performs an Hour of Service or any anniversary thereof, in which the
Employee completes at least one thousand (1,000) Hours of Service or such
lesser number of Hours of Service as selected in item 4 of the Adoption
Agreement.
Section 2.38. "Year of Service" means a Plan Year in which the
Employee completes at least one thousand (1,000) Hours of Service or such
lesser number of Hours of Service as selected in item 7 of the Adoption
Agreement.
ARTICLE III.
PARTICIPATION
Section 3.1. Participation at Effective Date. Each Employee
shall become a Participant on the Effective Date, if on the Effective Date
such Employee has completed the number of Years of Employment and has
attained age 21 or such lesser age as elected in item 4 of the Adoption
Agreement.
Section 3.2. Participation after Effective Date. Each Employee
who did not become a Participant as of the Effective Date, including
future Employees, shall be entitled to become a Participant in accordance
with Section 2.28 after such Employee has completed the number of Years of
Employment and has attained age 21 or such lesser age as elected in item 4
of the Adoption Agreement.
Section 3.3. Reentry. A former Participant shall become a
Participant immediately upon his return to employment with the Employer or
his return to an eligible class of Employees, whichever is applicable. In
the event an Employee who is not a member of the eligible class of
Employees becomes a member of the eligible class, such Employee will
become a Participant in accordance with Section 3.2 above; provided that
if the Employee has previously satisfied the eligibility requirements of
Section 3.2, the Employee shall become a Participant immediately upon
becoming a member of the eligible class of Employees.
Section 3.4. Participation by an Owner-Employee of More Than
One Trade or Business.
(a) If this Plan provides contributions or benefits for one or
more Owner-Employees who control both the business with respect to which
this Plan is established, and one or more other trades or businesses, this
Plan and the plan established with respect to such other trades or
businesses must, when looked at as a single plan, satisfy Code Sections
401(a) and (d) with respect to the employees of this and all such other
trades or businesses.
(b) If this Plan provides contributions or benefits for one or
more Owner-Employees who control one or more other trades or businesses,
the employees of each such other trade or business must be included in a
plan which satisfies Code Section 401(a) and (d) and which provides
contributions and benefits not less favorable than provided for such
Owner-Employees under this Plan.
(c) If an individual is covered as an Owner-Employee under the
plans of two or more trades or businesses which he does not control, and
such individual controls a trade or business, then the contributions or
benefits of the employees under the plan of the trade or business which he
or she does control must be as favorable as those provided for him or her
under the most favorable plan of the trade or business which he or she
does not control.
(d) For purposes of the preceding subparagraphs, an
Owner-Employee, or two or more Owner-Employees, shall be considered to
control a trade or business if such Owner-Employee, or such two or more
Owner-Employees together, own the entire interest in an unincorporated
trade or business, or, in the case of a partnership, own more than fifty
percent (50%) of either the capital interest or the profits interest in
such partnership. For purposes of the preceding sentence, an
Owner-Employee, or two or more Owner-Employees, shall be treated as owning
any 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.
(e) Employees and Owner-Employees of trades or businesses which
are under common control (within the meaning of Code Section 414(c)) and
Employees and Owner-Employees of the members of an affiliated service
group (within the meaning of Code Section 414(m)) or of a group of
aggregated employers (under Code Section 414(o)) will be treated as
employed by a single Employer for purposes of employee benefit
requirements of Code Section 414(m)(4).
ARTICLE IV.
CONTRIBUTIONS
Section 4.1. Employer Profit Sharing Contributions.
(a) If elected in item 6 of the Adoption Agreement (Profit
Sharing Plan), the Employer shall make an Employer Profit Sharing
Contribution for each Plan Year ending on or after the Effective Date in
the amount determined under such Adoption Agreement.
(b) The total amount of such Employer Profit Sharing
Contribution for a Plan Year shall be allocated to the Account of each
eligible Participant as follows:
(i) Unless otherwise elected in item 6(C) of the Adoption
Agreement, the total amount of such Employer Profit Sharing Contribution
shall be allocated based on the ratio that such eligible Participant's
Compensation and/or Earned Income for the Plan Year bears to the total
Compensation and Earned Income of all eligible Participants for the Plan
Year.
(ii) If the Integration Formula is selected in item 6(C) of the
Adoption Agreement, the total amount of such Employer Profit Sharing
Contribution shall be allocated based on the ratio that such eligible
Participant's Compensation and/or Earned Income for the Plan Year in
excess of the integration level for the Plan Year bears to the total
Compensation and Earned Income for all eligible Participants in excess of
the integration level for the Plan Year; provided, however, that
contributions allocated to a Participant with respect to Compensation
and/or Earned Income in excess of the integration level shall not
represent a greater percentage of such excess Compensation and/or Earned
Income than the lesser of
(A) 200% of the base contribution
percentage, or
(B) the base contribution percentage
plus the greater of
(I) 5.7%, or
(II) the rate of tax under Code Section
3111(a) which is attributable to
old-age insurance in effect at the
beginning of the Plan Year.
Any Employer Profit Sharing Contribution remaining after the allocation in
this subsection (ii) shall be allocated in accordance with subsection (i)
above. The "integration level" shall be the taxable wage base or such
lesser level of Compensation and/or Earned Income selected in item 6(C) of
the Adoption Agreement. The "base contribution percentage" shall mean the
percentage of Compensation and/or Earned Income which is contributed under
the Plan with respect to each Participant's Compensation and/or Earned
Income not in excess of the integration level.
If the integration level exceeds the greater of ten thousand
dollars ($10,000) or one-fifth (1/5) of the taxable wage base but is not
more than eighty percent (80%) of the taxable wage base, the percentage
referred to in (I) above shall be reduced to 4.3% and a proportionate
reduction shall be made to the rate described in (II) above. If the
integration level is more than eighty percent (80%) but less than one
hundred percent (100%) of the taxable wage base, the percentage referred
to in (I) above shall be reduced to 5.4% and a proportionate reduction
shall be made to the rate described in (II) above. The "taxable wage
base" shall be the maximum amount of earnings which may be considered
wages for a year under Code Section 3121(a)(1) in effect as of the
beginning of the applicable Plan Year.
Notwithstanding the above, for any Plan Year in which the Plan
is top-heavy (as defined in Section 13.1 hereof) the Employer Profit
Sharing Contribution shall be allocated
(A) first, to each eligible Participant
based on the ratio that such
Participant's Compensation and/or
Earned Income for the Plan Year bears
to the total Compensation and Earned
Income of all eligible Participants for
the Plan Year, but not more than three
percent (3%) of such Participant's
Compensation and/or Earned Income,
(B) second, to each eligible Participant
based on the ratio that such
Participant's Compensation and/or
Earned Income in excess of the
integration level for the Plan Year
bears to the total Compensation and
Earned Income of all eligible
Participants in excess of the
integration level for the Plan Year,
but not more than three percent (3%) of
such Participant's excess Compensation
and/or Earned Income, and
(C) any remaining Employer Profit Sharing
Contribution shall be allocated
pursuant to the provisions of this
subsection (ii) above.
(c) A Participant will be considered eligible for an allocation
of the Employer Profit Sharing Contribution if the Participant (i) is
employed by the Employer on the last day of the Plan Year or (ii) has
completed at least Five Hundred one (501) Hours of Service during the Plan
Year.
(d) If elected in item 6(B) of the Adoption Agreement, Employer
Profit Sharing Contributions for a Plan Year shall not exceed the Net
Profits of the Employer for such Plan Year.
Section 4.2. Employer Pension Contributions.
(a) If elected in item 6 of the Adoption Agreement (Pension
Plan), the Employer shall make an Employer Pension Contribution for each
eligible Participant for each Plan Year ending on or after the Effective
Date in an amount determined under such Adoption Agreement.
(b) The total amount of such Employer Pension Contribution for
a Plan Year shall be allocated to the Account of each eligible Participant
as follows:
(i) Unless otherwise elected in item 6(B) of the Adoption
Agreement, each eligible Participant shall be allocated an amount equal to
the percentage of such eligible Participant's Compensation and/or Earned
Income as specified in the Adoption Agreement.
(ii) If the Integration Formula is selected in item 6(B) of the
Adoption Agreement, the total amount of such Employer Pension Contribution
shall be allocated in accordance with the method described in Section
4.1(b)(ii) above. Notwithstanding the foregoing, if the Integration
Formula is selected under the Profit Sharing Plan, the Employer Pension
Contribution shall be allocated in accordance with subsection (b)(i)
above.
(c) A Participant will be considered eligible for an Employer
Pension Contribution if the Participant (i) is employed by the Employer on
the last day of the Plan Year or (ii) has completed at least Five Hundred
one (501) Hours of Service during the Plan Year.
Section 4.3. Participant Voluntary Contributions.
(a) If elected in item 9 of the Adoption Agreement (Profit
Sharing Plan) or item 8 of the Adoption Agreement (Pension Plan), a
Participant may voluntarily contribute to the Plan an amount up to ten
percent (10%) of his aggregate Compensation for all years since becoming a
Participant under this Plan and all other qualified plans of the Employer.
Any Participant Voluntary Contributions shall be limited in accordance
with the provisions of Section 5.3, even if the Employer does not elect
the Cash or Deferred Arrangement (Section 401(k)) under item 8 of the
Adoption Agreement (Profit Sharing Plan). If the Profit Sharing Plan is
elected, all Participant Voluntary Contributions shall be deemed made to
such plan. Participant Voluntary Contributions shall be limited to
Participants who are not highly compensated employees (within the meaning
of Code Section 414(q)) if elected in the Adoption Agreement.
(b) A Participant shall be entitled to withdraw from his
appropriate Account at any time upon thirty (30) days' notice from the
Administrator to the Custodian (which notice shall specify the amount of
the withdrawal), a sum not in excess of the capital amount contributed by
him as Participant Voluntary Contributions under the provisions of this
Section 4.3, or the value of such Account, whichever is less, provided
that no ordinary income or capital gains attributable to such
contributions shall be subject to withdrawal. Notwithstanding anything to
the contrary herein, (i) all withdrawals are subject to the provisions of
Article VIII, and (ii) no forfeiture shall occur solely as a result of a
Participant's withdrawal of all or any portion of his Participant
Voluntary Contributions.
(c) No deductible voluntary employee contributions may be made
for taxable years beginning after December 31, 1986. Such contributions
made prior to that date will be maintained in a separate Account which
will be nonforfeitable at all times. The Account will share in the gains
or losses in the same manner as described in Section 9.3 of the Plan.
Subject to Section 8.2, a Participant may withdraw any part of the
deductible voluntary contribution Account by making a written application
to the Administrator.
Section 4.4. Time for Making Contributions. Employer Pension
Contributions and Employer Profit Sharing Contributions must be made no
later than the due date, including extensions thereof, for filing the
Employer's Federal income tax return for the year coincident with or
within which the Plan Year ends (or such later time as authorized by
Treasury Regulations). Participant Voluntary Contributions for any Plan
Year shall be made no later than thirty (30) days after the end of such
Plan Year. The Employer may establish a payroll deduction system or other
procedure to assist the making of Participant Voluntary Contributions and
shall transfer such contributions to the Custodian as soon as practicable
after collected.
Section 4.5. Leased Employees. Contributions or benefits
provided to a Leased Employee by the leasing organization (within the
meaning of Code Section 414(n)) which are attributable to services
performed for the Employer shall be treated as provided by the Employer
for purposes of this Plan.
Section 4.6. Rollovers and Transfers. In the discretion of
the Administrator according to such uniform and nondiscriminatory rules
established by the Administrator, and in accordance with Sections 402 and
408 of the Code, a Participant may make a rollover to the Plan or the Plan
may accept a direct transfer (including voluntary after-tax contributions)
from another plan qualified under Section 401(a) of the Code or from an
individual retirement account. If the Employer has adopted the Profit
Sharing Plan, any rollover or transfer shall be made to such Plan.
ARTICLE V. CASH OR DEFERRED ARRANGEMENT
(CODE SECTION 401(k))
Section 5.1. Cash or Deferred Arrangement (Code Section
401(k)). The provisions of this Article shall be effective as of the
first day of the Plan Year in which this cash or deferred arrangement is
elected in item 8 of the Adoption Agreement (Profit Sharing Plan). Under
no circumstances shall the provisions of this Article apply prior to the
time specified in the preceding sentence.
Section 5.2. Elective Deferrals. (a) Election. (i) An
Employee who has satisfied the minimum age and service requirements set
forth in item 8(A) of the Adoption Agreement (Profit Sharing Plan) may
elect to have Elective Deferrals made to the Plan pursuant to a salary
reduction agreement to the extent permitted in item 8(A) of the Adoption
Agreement (Profit Sharing Plan). Such an election shall be effective as
of the time specified in item 8(A) of the Adoption Agreement (Profit
Sharing Plan) and may not be made effective retroactively.
(ii) An eligible Employee may also base Elective Deferrals, to
the extent provided in item 8(A) of the Adoption Agreement (Profit Sharing
Plan), on cash bonuses that, at the Employee's election, may be
contributed to the Plan or received by the Employee. Such an election
shall be effective as of the time specified in item 8(A) of the Adoption
Agreement (Profit Sharing Plan) and may not be made effective
retroactively.
(b) Change in Rate. The rate at which Elective Deferrals are
made shall remain in effect until modified in accordance with item 8(A) of
the Adoption Agreement (Profit Sharing Plan). Notwithstanding the
foregoing, Elective Deferrals may be suspended entirely by an Employee at
any time by written notice to the Administrator. Any such suspension
shall be effective as soon as administratively practicable following the
Administrator's receipt of such notice.
(c) Vesting. A Participant shall at all times have a fully
vested and nonforfeitable interest in his Elective Deferrals.
(d) Excess Elective Deferrals. (i) No Participating Employee
shall be permitted to have Elective Deferrals made under this Plan or any
other qualified plan maintained by the Employer during any taxable year
pursuant to Code Sections 401(k), 408(k) or 403(b) in excess of the dollar
limitation contained in Code Section 402(g) in effect at the beginning of
such taxable year.
(ii) A Participating Employee may assign to the Plan any Excess
Elective Deferrals made during a taxable year of such Employee by
notifying the Administrator on or before the date specified below of the
Excess Elective Deferrals to be assigned to the Plan. Notwithstanding any
other provision of the Plan, Excess Elective Deferrals, plus any income
and minus any loss allocable thereto, may be distributed no later than
April 15 to any Participating Employee to whose Accounts Excess Elective
Deferrals were assigned for the preceding year and who claims Excess
Elective Deferrals for such taxable year. A Participating Employee's
claim for Excess Elective Deferrals shall be made in writing and shall be
submitted to the Administrator not later than the March 1 immediately
preceding the relevant April 15. Such claim shall specify the amount of
the Participating Employee's Excess Elective Deferrals for the preceding
taxable year and shall be accompanied by the Participating Employee's
written statement that if such amounts are not distributed, such Excess
Elective Deferrals, when added to amounts deferred under other plans or
arrangements described in Code Sections 401(k), 408(k) or 403(b), exceed
the limit imposed on the Participating Employee by Code Section 402(g) for
the year of the deferral.
(iii) Excess Elective Deferrals shall be adjusted for any
income or loss up to the date of distribution. The income or loss
allocable to Excess Elective Deferrals is the sum of:
(A) income or loss allocable to the
participating Employee's Elective Deferrals
Account for the taxable year for which the
Excess Elective Deferrals occurred
multiplied by a fraction, the numerator of
which is such Participating Employee's
Excess Elective Deferrals for such taxable
year and the denominator of which is such
Participating Employee's Elective Deferrals
Account balance as of the end of the taxable
year without regard to any income or loss
occurring during such taxable year; and
(B) income or loss allocable to the
Participating Employee's Elective Deferrals
Account for the period between the end of
such taxable year and the date of
distribution under (A) above; or, at the
option of the Employer, ten percent (10%) of
the amount determined under (A) above
multiplied by the number of whole calendar
months between the end of such taxable year
and the date of distribution, counting the
month of distribution if distribution occurs
after the fifteenth (15th) of such month.
The amount of Excess Elective Deferrals that may be distributed with
respect to a Participating Employee shall be reduced by any Excess
Contributions previously distributed or recharacterized with respect to
such Participating Employee for the Plan Year beginning with or within
such taxable year. In no event may the amount distributed exceed the
Participating Employee's total Elective Deferrals for such taxable year.
(e) Actual Deferral Percentage. (i) The Actual Deferral
Percentage for Participating Employees who are Highly Compensated
Employees for each Plan Year and the Actual Deferral Percentage for
Participating Employees who are not Highly Compensated Employees for the
same Plan Year must satisfy one of the following tests:
(A) The Actual Deferral Percentage for
Participating Employees who are Highly
Compensated Employees for the Plan Year
shall not exceed the Actual Deferral
Percentage for Participating Employees who
are not Highly Compensated Employees for the
same Plan Year multiplied by 1.25; or
(B) The Actual Deferral Percentage for
Participating Employees who are Highly
Compensated Employees for the Plan Year
shall not exceed the Actual Deferral
Percentage for Participating Employees who
are not Highly Compensated Employees for the
same Plan Year multiplied by 2.0, provided
that the Actual Deferral Percentage for
Participating Employees who are Highly
Compensated Employees does not exceed the
Actual Deferral Percentage for Participating
Employees who are not Highly Compensated
Employees by more than two (2) percentage
points.
(ii) The Actual Deferral Percentage for any Participating
Employee who is a Highly Compensated Employee for the Plan Year and who is
eligible to have Elective Deferrals (and Qualified Non-Elective
Contributions or Qualified Matching Contributions, or both) allocated to
his Accounts under two or more arrangements described in Code Section
401(k), that are maintained by the Employer, shall be determined as if
such Elective Deferrals (and, if applicable, such Qualified Non-Elective
Contributions or Qualified Matching Contributions, or both) were made
under a single arrangement. If a Highly Compensated Employee participates
in two or more cash or deferred arrangements that have different Plan
Years, contributions for such employee shall be aggregated for purposes of
this subsection (e). Contributions which are required to be aggregated
are any contributions made under all cash or deferred arrangements ending
with or within the same calendar year.
(iii) In the event that the Plan satisfies the requirements
of Code Sections 401(k), 401(a)(4) or 410(b) only if aggregated with one
or more other plans, or if one or more other plans satisfy the
requirements of such Code Sections only if aggregated with this Plan, then
this subsection shall be applied by determining the Actual Deferral
Percentage of Participating Employees as if all such plans were a single
plan. For Plan Years beginning after December 31, 1989, plans may be
aggregated in order to satisfy Code Section 401(k) only if they have the
same Plan Year.
(iv) For purposes of determining the Actual Deferral Percentage
of a Participating Employee who is a five (5) percent owner or one of the
ten (10) most highly-paid Highly Compensated Employees, the Elective
Deferrals (and Qualified Non-Elective Contributions and Qualified Matching
Contributions, or both) and Compensation of such Participating Employee
shall include the Elective Deferrals (and, if applicable, Qualified
Non-Elective Contributions and Qualified Matching Contributions, or both)
and Compensation for the Plan Year of Family Members. Family Members,
with respect to such Highly Compensated Employees, shall be disregarded as
separate employees in determining the Actual Deferral Percentage both for
Participating Employees who are not Highly Compensated Employees and for
Participating Employees who are Highly Compensated Employees.
(v) For purposes of determining the Actual Deferral Percentage
test, Elective Deferrals, Qualified Non-Elective Contributions and
Qualified Matching Contributions must be made before the last day of the
twelve-month period immediately following the Plan Year to which such
contributions relate.
(vi) The Employer shall maintain records sufficient to
demonstrate satisfaction of the Actual Deferral Percentage test and the
amount of Qualified Non-Elective Contributions or Qualified Matching
Contributions, or both, used in such test.
(vii) The determination and treatment of the Actual Deferral
Percentage amounts of any Participating Employee shall satisfy such other
requirements as may be prescribed by the Secretary of the Treasury.
(f) Distribution of Excess Contributions. (i) Notwithstanding
any other provision of this Plan, Excess Contributions, plus any income
and minus any loss allocable thereto, shall be distributed no later than
the last day of each Plan Year to Participating Employees to whose
Accounts such Excess Contributions were allocated for the preceding Plan
Year. If such excess amounts are distributed more than two and one-half
(2-1/2) months after the last day of the Plan Year in which such excess
amounts arose, a ten percent (10%) excise tax will be imposed on the
Employer with respect to such amounts. Such distributions shall be made
to Highly Compensated Employees on the basis of the respective portions of
the Excess Contributions attributable to each of such Employees. Excess
Contributions shall be allocated to Participating Employees who are
subject to the family member aggregation rules of Code Section 414(q)(6)
in the manner prescribed by the regulations. Excess Contributions
(including any amounts recharacterized) shall be treated as Annual
Additions for purposes of Article VI of the Plan.
(ii) Excess Contributions shall be adjusted for any income or
loss up to the date of distribution. The income or loss allocable to
Excess Contributions is the sum of:
(A) income or loss allocable to the
Participating Employee's Elective Deferrals
Account (and, if applicable, the Qualified
Non-Elective Contributions Account or the
Qualified Matching Contributions Account, or
both) for the Plan Year for which the Excess
Contributions occurred multiplied by a
fraction, the numerator of which is such
Participating Employee's Excess
Contributions for such Plan Year and the
denominator of which is such Participating
Employee's Account balance(s) attributable
to Elective Deferrals (and Qualified
Non-Elective Contributions or Qualified
Matching Contributions, or both) as of the
end of the Plan Year without regard to any
income or loss occurring during such Plan
Year; and
(B) income or loss allocable to the
Participant's Elective Deferrals Account
(and, if applicable, the Qualified
Non-Elective Contribution Account or the
Qualified Matching Contribution Account, or
both) for the period between the end of such
Plan Year and the date of distribution
multiplied by the fraction determined under
(A) above; or, at the option of the
Employer, ten percent (10%) of the amount
determined under (A) above multiplied by the
number of whole calendar months between the
end of such Plan Year and the date of
distribution, counting the month of
distribution if distribution occurs after
the fifteenth (15th) of such month.
(iii) Excess Contributions shall be distributed from the
Participating Employee's Elective Deferrals Account and Qualified Matching
Contributions Account (if applicable) in proportion to the Participating
Employee's Elective Deferrals and Qualified Matching Contributions (to the
extent used in the Actual Deferral Percentage test) for the Plan Year.
Excess Contributions shall be distributed from the Participating
Employee's Qualified Non-Elective Contributions Account only to the extent
that such Excess Contributions exceed the balance in the Participating
Employee's Elective Deferrals Account and Matching Contributions Account.
(g) Recharacterization. (i) A Participating Employee may
treat his Excess Contributions as an amount distributed to the
Participating Employee and then contributed by the Participating Employee
to the Plan. Recharacterized amounts will remain nonforfeitable and
subject to the same distribution requirements as Elective Deferrals.
Amounts may not be recharacterized by a Highly Compensated Employee to the
extent that such amount in combination with other Participant Voluntary
Contributions would exceed any stated limit under the Plan on Participant
Voluntary Contributions. Recharacterizing Excess Contributions shall be
limited to Participants who are not Highly Compensated Employees if
elected in the Adoption Agreement.
(ii) Recharacterization must occur no later than two and
one-half (2-1/2) months after the end of the Plan Year in which such Excess
Contributions arose and is deemed to occur no earlier than the date the
last Highly Compensated Employee is informed in writing of the amount
recharacterized and the consequences thereof. Recharacterized amounts
will be taxable to the Participating Employee for such Participating
Employee's taxable year in which the Participating Employee would have
received them in cash.
Section 5.3. Matching Contributions. (a) The Employer shall
make Employer Matching Contributions to the Plan to the extent elected in
item 8(B) of the Adoption Agreement (Profit Sharing Plan).
(b) A Participant shall have a vested interest in his Matching
Contributions Account as determined under the vesting schedule elected in
item 8(B) of the Adoption Agreement (Profit Sharing Plan). Forfeitures
derived from Matching Contributions which become available because of the
vesting provisions above, shall be applied to reduce the Employer Matching
Contributions that would otherwise be due for the Plan Year, or subsequent
Plan Years.
(c) Actual Contribution Percentage. (i) The Actual
Contribution Percentage for Participating Employees who are Highly
Compensated Employees for each Plan Year and the Actual Contribution
Percentage for Participating Employees who are not Highly Compensated
Employees for the same Plan Year must satisfy one of the following tests:
(A) The Actual Contribution Percentage for
Participating Employees who are Highly
Compensated Employees for the Plan Year
shall not exceed the Actual Contribution
Percentage for Participating Employees who
are not Highly Compensated Employees for the
same Plan Year multiplied by 1.25; or
(B) The Actual Contribution Percentage for
Participating Employees who are Highly
Compensated Employees for the Plan Year
shall not exceed the Actual Contribution
Percentage for Participating Employees who
are not Highly Compensated Employees for the
same Plan Year multiplied by two (2),
provided that the Actual Contribution
Percentage for Participating Employees who
are Highly Compensated Employees does not
exceed the Actual Contribution Percentage
for Participating Employees who are not
Highly Compensated Employees by more than
two (2) percentage points.
(ii) If one or more Highly Compensated Employees participate in
both a cash or deferred arrangement and a plan subject to the Actual
Contribution Percentage test maintained by the Employer and the sum of the
Actual Deferral Percentage and the Actual Contribution Percentage of those
Highly Compensated Employees subject to either or both tests exceeds the
Aggregate Limit, then the Actual Contribution Percentage of those Highly
Compensated Employees who also participate in a cash or deferred
arrangement will be reduced (beginning with such Highly Compensated
Employee whose Actual Contribution Percentage is the highest) so that the
limit is not exceeded. The amount by which each Highly Compensated
Employee's Contribution Percentage Amount is reduced shall be treated as
an Excess Aggregate Contribution. The Actual Deferral Percentage and the
Actual Contribution Percentage of the Highly Compensated Employees are
determined after any corrections required to meet the Actual Deferral
Percentage and the Actual Contribution Percentage tests. Multiple use
does not occur if both the Actual Deferral Percentage and the Actual
Contribution Percentage of the Highly Compensated Employees does not
exceed 1.25 multiplied by the Actual Deferral Percentage and the Actual
Contribution Percentage of the Participating Employees who are not Highly
Compensated Employees.
(iii) For purposes of this subsection, the Contribution
Percentage for any Participating Employee who is a Highly Compensated
Employee and who is eligible to have Contribution Percentage Amounts
allocated to his account under two or more plans described in Code Section
401(a), or arrangements described in Code Section 401(k) that are
maintained by the Employer, shall be determined as if the total of such
Contribution Percentage Amounts was made under each plan. If a Highly
Compensated Employee participates in two or more cash or deferred
arrangements that have different plan years, all cash or deferred
arrangements ending with or within the same calendar year shall be treated
as a single arrangement.
(iv) In the event that this Plan satisfies the requirements of
Code Sections 401(m), 401(a)(4) or 410(b) only if aggregated with one or
more other plans, or if one or more other plans satisfy the requirements
of such Code Sections only if aggregated with this Plan, then this
subsection shall be applied by determining the Contribution Percentage of
employees as if all such plans were a single plan. For plan years
beginning after December 31, 1989, plans may be aggregated in order to
satisfy Code Section 401(m) only if they have the same plan year.
(v) For purposes of determining the Contribution Percentage of
a Participating Employee who is a five percent owner or one of the ten
(10) most highly-paid Highly Compensated Employees, the Contribution
Percentage Amounts and Compensation of such Participating Employee shall
include the Contribution Percentage Amounts and Compensation for the Plan
Year of Family Members. Family Members, with respect to Highly
Compensated Employees, shall be disregarded as separate employees in
determining the Contribution Percentage both for Participating Employees
who are not Highly Compensated Employees and for Participating Employees
who are Highly Compensated Employees.
(vi) For purposes of determining the Contribution Percentage
test, Employee Contributions are considered to have been made in the Plan
Year in which contributed to the trust. Matching Contributions and
Qualified Non-Elective Contributions shall be considered made for a Plan
Year if made no later than the end of the twelve-month period beginning on
the day after the close of the Plan Year.
(vii) The Employer shall maintain records sufficient to
demonstrate satisfaction of the Actual Contribution Percentage test and
the amount of Qualified Non-Elective Contributions or Qualified Matching
Contributions, or both, used in such test.
(viii) The determination and treatment of the Contribution
Percentage of any Participating Employee shall satisfy such other
requirements as may be prescribed by the Secretary of the Treasury.
(d) Distribution of Excess Aggregate Contributions. (i)
Notwithstanding any other provision of this Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocable thereto, shall
be forfeited, if forfeitable, or if not forfeitable, distributed no later
than the last day of each Plan Year to Participating Employees to whose
Accounts such Excess Aggregate Contributions were allocated for the
preceding Plan Year. Excess Aggregate Contributions shall be allocated to
Participating Employees who are subject to the family member aggregation
rules of Code Section 414(q)(6) in the manner prescribed by the
regulations. If such Excess Aggregate Contributions are distributed more
than two and one-half (2-1/2) months after the last day of the Plan Year in
which such excess amounts arose, a ten percent (10%) excise tax will be
imposed on the Employer with respect to those amounts. Excess Aggregate
Contributions shall be treated as Annual Additions for purposes of Article
VI of the Plan.
(ii) Excess Aggregate Contributions shall be adjusted for any
income or loss up to the date of distribution. The income or loss
allocable to Excess Aggregate Contributions is the sum of:
(A) income or loss allocable to the
Participating Employee's Participant
Voluntary Contributions Account, Matching
Contributions Account, Qualified Matching
Contribution Account (if any, and if all
amounts therein are not used in the Actual
Deferral Percentage test) and, if
applicable, Qualified Non-Elective
Contributions Account and Elective Deferrals
Account for the Plan Year for which the
Excess Aggregate Contributions occurred
multiplied by a fraction, the numerator of
which is such Participating Employee's
Excess Aggregate Contributions for such Plan
Year and the denominator of which is the
Participating Employee's Account balance(s)
attributable to Contribution Percentage
Amounts as of the end of the Plan Year
without regard to any income or loss
occurring during such Plan Year; and
(B) income or loss allocable to the
Participating Employee's Participant
Voluntary Contribution Account, Matching
Contributions Account, Qualified Matching
Contribution Account (if any, and if all
amounts therein are not used in the Actual
Deferral Percentage test) and, if
applicable, Qualified Non-Elective
Contributions Account and Elective Deferrals
Account for the period between the end of
such Plan Year and the date of distribution
multiplied by the fraction determined under
(A) above; or, at the election of the
Employer, ten percent (10%) of the amount
determined under (A) above multiplied by the
number of whole calendar months between the
end of such Plan Year and the date of
distribution, counting the month of
distribution if distribution occurs after
the fifteenth (15th) of such month.
(iii) Forfeitures of Excess Aggregate Contributions shall be
applied to reduce Employer contributions for subsequent Plan Years.
(iv) Excess Aggregate Contributions shall be forfeited, if
forfeitable, or distributed on a pro rata basis from the Participating
Employee's Participant Voluntary Contributions Account, Matching
Contributions Account and Qualified Matching Contribution Account (and, if
applicable, the Participating Employee's Qualified Non-Elective
Contributions Account or Elective Deferrals Account, or both).
Section 5.4. Qualified Matching Contributions and Qualified
Non-Elective Contributions.
(a) Qualified Matching Contributions. The Employer may elect
to make Qualified Matching Contributions under the Plan in item 8(C) of
the Adoption Agreement. Qualified Matching Contributions may be made in
lieu of distributing Excess Contributions as provided in Section 5.2(f)
hereof. Qualified Matching Contributions may be either (i) additional
amounts contributed to the Plan by the Employer and allocated to the
Accounts of Participating Employees who are not Highly Compensated
Employees based on such Employees' Elective Deferrals or (ii) Matching
Contributions otherwise made to the Plan pursuant to Section 5.3(a) hereof
which the Employer designates as Qualified Matching Contributions. The
amount of Qualified Matching Contributions (if any) shall be determined by
the Employer for each year. All Qualifying Matching Contributions shall
be used to satisfy the Actual Deferral Percentage test pursuant to
regulations under the Code.
(b) The Employer may elect to make Qualified NonElective
Contributions under the Plan in item 8(C) of the Adoption Agreement.
Qualified Non-Elective Contributions may be made in lieu of distributing
Excess Contributions as provided in Section 5.2(f) or Excess Aggregate
Contributions as provided in Section 5.3(d) hereof. Qualified
Non-Elective Contributions may be either (i) additional amounts
contributed to the Plan by the Employer and allocated to the Accounts of
Participating Employees who are not Highly Compensated Employees based on
such Employees' Compensation or (ii) Profit Sharing Contributions
otherwise made to the Plan pursuant to Section 4.1(a) hereof which the
Employer designates as Qualified Non-Elective Contributions. The amount
of Qualified Non-Elective Contributions (if any) shall be determined by
the Employer for each year. All Qualified Non-Elective Contributions
shall be used to satisfy either the Actual Deferral Percentage test or the
Average Contribution Percentage test, or both, pursuant to regulations
under the Code.
(c) Separate accounts for Qualified Non-Elective Contributions
and Qualified Matching Contributions will be maintained for each
Participant consistent with Section 7.1 hereof. Each account will be
credited with the applicable contributions and earnings thereon.
(d) For purposes of the special distribution rules in Section
5.5, Qualified Matching Contributions and Qualified Non-Elective
Contributions shall be treated as Elective Deferrals.
(e) Qualified Matching Contributions and Qualified Non-Elective
Contributions shall be appropriately designated when contributed.
Section 5.5. Special Distribution Rules. Except as provided
below, Elective Deferrals, Qualified Non-Elective Contributions and
Qualified Matching Contributions, and income allocable to each, are not
distributable to a Participant or a Beneficiary, in accordance with such
Participant's or Beneficiary's election, earlier than upon separation from
service, death, or disability.
(a) Financial Hardship. (i) If elected by the Employer in item
8(D) of the Adoption Agreement (Profit Sharing Plan), a Participant may
elect to withdraw all or any portion of his Elective Deferrals (excluding
net earnings credited thereto after December 31, 1988) on account of
financial hardship. For purposes of this Section 5.5, a financial
hardship shall mean an immediate and heavy financial need of the
Participant which cannot be satisfied from other resources reasonably
available to such Participant. Hardship withdrawals are subject to the
spousal consent requirements of Code Sections 401(a)(11) and 417.
(ii) A withdrawal is made on account of an immediate and heavy
financial need of a Participant only if it is made on account of: (A)
unreimbursed medical expenses described in Code Section 213(d) of the
Participant or the Participant's spouse or dependents (as defined in Code
Section 152); (B) the purchase (excluding mortgage payments) of a
principal residence for the Participant; (C) payment of tuition for the
next term of post-secondary education for the Participant or the
Participant's spouse, children or dependents; or (D) the need to prevent
the Participant's eviction from, or foreclosure on the mortgage of, the
Participant's principal residence or such other events as may be approved
by the Commissioner of Internal Revenue in rulings, notices or other
published documents.
(iii) A distribution will be considered as necessary to
satisfy an immediate and heavy financial need of the Participant only if:
(A) the Participant has obtained all distributions, other than hardship
distributions, and all nontaxable loans under all plans maintained by the
Employer; (B) all plans maintained by the Employer provide that the
Participant's Elective Deferrals and any other elective contributions or
employee contributions under this Plan and any other plan maintained by
the Employer (both qualified and nonqualified) will be automatically
suspended for twelve (12) months after the receipt of the hardship
distribution; (C) the distribution is not in excess of the amount of an
immediate and heavy financial need; and (D) all plans maintained by the
Employer provide that the Participant may not make Elective Deferrals for
the Participant's taxable year immediately following the taxable year of
the hardship distribution in excess of the applicable limit under Code
Section 402(g) for such taxable year less the amount of such Participant's
Elective Deferrals for the taxable year of the hardship distribution.
(iv) A request for a hardship distribution shall be made in
writing and in such form as may be prescribed by the Administrator.
Processing of applications and distributions of amounts under this
Section, on account of a bona fide financial hardship, shall be made as
soon as administratively feasible.
(b) Elective Deferrals at Age 59-1/2. Upon attaining age
fifty-nine and one-half (59-1/2), a Participant may elect to withdraw all or
any portion of his Elective Deferrals Account and/or Employer Matching
Contributions Account, as of the last day of any month, even if he is
still employed.
Section 5.6. Definitions. For purposes of this Article, the
following words and phrases shall have the following meanings:
(a) "Actual Deferral Percentage" means, for a specified group
of Participating Employees for a Plan Year, the average of the ratios
(calculated separately for each Participating Employee in such group) of
(i) the amount of Employer contributions actually paid over to the trust
on behalf of such Participating Employee for the Plan Year to (ii) the
Participating Employee's Compensation for such Plan Year (whether or not
the Employee was a Participating Employee for the entire Plan Year).
Employer contributions on behalf of any Participating Employee shall
include: (i) any Elective Deferrals made pursuant to the Participating
Employee's deferral election, including Excess Elective Deferrals of
Highly Compensated Employees, but excluding Elective Deferrals that are
taken into account in the Contribution Percentage test (provided the
Actual Deferral Percentage test is satisfied both with and without
exclusion of these Elective Deferrals); and (ii) at the election of the
Employer, Qualified Non-Elective Contributions and Qualified Matching
Contributions. For purposes of computing Actual Deferral Percentages, an
Employee who would be a Participating Employee but for the failure to make
Elective Deferrals shall be treated as a Participating Employee on whose
behalf no Elective Deferrals are made.
(b) "Aggregate Limit" means the sum of (i) one hundred
twenty-five percent (125%) of the greater of the Actual Deferral
Percentage of the Participating Employees who are not Highly Compensated
Employees for the Plan Year or the Actual Contribution Percentage of
Participating Employees who are not Highly Compensated Employees under the
Plan subject to Code Section 401(m) for the Plan Year beginning with or
within the Plan Year of the cash or deferred arrangement and (ii) the
lesser of two hundred percent (200%) or two (2) plus the lesser of such
Actual Deferral Percentage or Actual Contribution Percentage. "Lesser" is
substituted for "greater" in (i) above and "greater" is substituted for
"lesser" after "two plus the" in (ii) above if it would result in a larger
Aggregate Limit.
(c) "Average Contribution Percentage" means the average of the
Contribution Percentages of the Employees in a group who are eligible to
make Participant Voluntary Contributions, or Elective Deferrals (if the
Employer takes such contributions into account in the calculation of the
Contribution Percentage), or to receive Matching Contributions (including
forfeitures) or Qualified Matching Contributions.
(d) "Contribution Percentage" means the ratio (expressed as a
percentage) of the Participating Employee's Contribution Percentage
Amounts to the Participating Employee's Compensation for the Plan Year
(whether or not the Employee was a Participating Employee for the entire
Plan Year).
(e) "Contribution Percentage Amounts" means the sum of the
Participant Voluntary Contributions, Matching Contributions, and Qualified
Matching Contributions (to the extent not taken into account for purposes
of the Actual Deferral Percentage test) made under the Plan on behalf of
the Participating Employee for the Plan Year. Such Contribution
Percentage Amounts shall include forfeitures of Excess Aggregate
Contributions or Matching Contributions allocated to the Participating
Employee's Accounts which shall be taken into account in the year in which
such forfeiture is allocated. The Employer may elect to include Qualified
Non-Elective Contributions in the Contribution Percentage Amounts. The
Employer also may elect to use all or part of the Elective Deferrals for
the Plan Year in the Contribution Percentage Amounts so long as the Actual
Deferral Percentage test is satisfied both including and excluding the
Elective Deferrals that are included in the Contribution Percentage
Amounts.
(f) "Excess Aggregate Contributions" means, with respect to any
Plan Year, the excess of:
(i) the aggregate Contribution Percentage Amounts taken into
account in computing the numerator of the Contribution Percentage actually
made on behalf of Highly Compensated Employees for such Plan Year, over
(ii) the maximum Contribution Percentage Amounts permitted by
the Actual Contribution Percentage test (determined by reducing
contributions made on behalf of Highly Compensated Employees in order of
their Contribution Percentages beginning with the highest of such
percentages).
Such determination shall be made after first determining Excess Elective
Deferrals pursuant to Section 5.2(d) hereof and then determining Excess
Contributions pursuant to Section 5.2(f) hereof.
(g) "Excess Contributions" means, with respect to any Plan
Year, the excess of:
(i) the aggregate amount of Employer contributions actually
taken into account in computing the Actual Deferral Percentage of Highly
Compensated Employees for such Plan Year, over
(ii) the maximum amount of such contributions permitted by the
Actual Deferral Percentage test (determined by reducing contributions made
on behalf of Highly Compensated Employees in order of the Actual Deferral
Percentages, beginning with the highest of such percentages).
(h) "Excess Elective Deferrals" means those Elective Deferrals
that are includible in a Participating Employee's gross income for a
taxable year under Code Section 402(g) because they exceed the limitation
specified in Section 5.2(d)(i) hereof. Excess Elective Deferrals shall be
treated as Annual Additions under the Plan.
(i) "Family Member" means the spouse, lineal ascendants and
descendants of the employee or former employee and the spouses of such
lineal ascendants and descendants, all within the meaning of Code Section
414(q)(6).
(j) "Highly Compensated Employee" means both highly compensated
active employees and highly compensated former employees.
(i) A highly compensated active employee includes any Employee
who performs service for the Employer during the determination year and
who, during the look-back year: (i) received compensation from the
Employer in excess of $75,000 (as adjusted pursuant to Code Section
415(d)); (ii) received compensation from the Employer in excess of $50,000
(as adjusted pursuant to Code Section 415(d)) and was a member of the
top-paid group for such year; or (iii) was an officer of the Employer and
received compensation during such year that is greater than 50 percent of
the dollar limitation in effect under Code Section 415(b)(1)(A). The term
Highly Compensated Employee also includes: (i) employees who are both
described in the preceding sentence if the term "determination year" is
substituted for the term "look-back year" and the employee is one of the
100 employees who received the most compensation from the Employer during
the determination year; and (ii) employees who are 5 percent owners at any
time during the look-back year or determination year. If no officer has
satisfied the compensation requirement of (iii) above during either a
determination year or look-back year, the highest paid officer for such
year shall be treated as a Highly Compensated Employee. For this purpose,
the determination year shall be the Plan Year. The look-back year shall
be the twelve-month period immediately preceding the determination year.
(ii) A highly compensated former employee includes any Employee
who separated from service (or was deemed to have separated) prior to the
determination year, performs no service for the Employer during the
determination year, and was a highly compensated active employee for
either the separation year or any determination year ending on or after
the employee's fifty-fifth (55th) birthday.
(iii) If an employee is, during a determination year or
look-back year, a Family Member of either a five percent owner who is an
active or former employee or a Highly Compensated Employee who is one of
the ten (10) most highly compensated employees ranked on the basis of
Compensation paid by the Employer during such year, then the Family Member
and the five percent owner or top-ten Highly Compensated Employee shall be
aggregated. In such case, the Family Member and five percent owner or
top-ten Highly Compensated Employee shall be treated as a single employee
receiving Compensation and Plan contributions or benefits equal to the sum
of such Compensation and contributions or benefits of the Family Member
and five percent owner or top-ten Highly Compensated Employee.
(iv) The determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of employees in
the top-paid group, the top 100 employees, the number of employees treated
as officers and the Compensation that is considered, will be made in
accordance with Code Section 414(q).
(k) "Participating Employee" means an Employee who is eligible
to make Elective Deferrals or Participant Voluntary Contributions (if the
Employer takes such contributions into account in the calculation of the
Contribution Percentage), or to receive Matching Contributions (including
forfeitures) or Qualified Matching Contributions. If an Employee
contribution is required as a condition of participation in the Plan, any
Employee who would be a Participant in the Plan if such Employee made such
a contribution shall be treated as a Participating Employee on behalf of
whom no Employee contributions are made.
(l) "Qualified Matching Contributions" means Matching
Contributions which are one hundred percent (100%) vested and
nonforfeitable at all times and which are distributable only in accordance
with the distribution provisions applicable to Elective Deferrals.
(m) "Qualified Non-Elective Contributions" means contributions
(other than Matching Contributions or Qualified Matching Contributions)
made by the Employer and allocated to Participating Employees' Accounts
that the Participating Employees may not elect to receive in cash until
distributed from the Plan, are one hundred percent (100%) vested and
nonforfeitable when made, and are distributable only in accordance with
the distribution provisions applicable to Elective Deferrals.
ARTICLE VI.
SECTION 415 LIMITATIONS
Section 6.1. Employers Maintaining Only this Plan.
(a) If the Participant does not participate in, and has never
participated in another qualified plan, a welfare benefit fund (as defined
in Code Section 419(e)) or an individual medical account (as defined in
Code Section 415(1)(2)) maintained by the Employer, the amount of Annual
Additions which may be credited to a Participant's Account under this Plan
for a Limitation Year shall not exceed the lesser of the Maximum
Permissible Amount or any other limitation contained in this Plan. If the
Employer's 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 the determination of the Participant's actual
compensation for a Limitation Year, the Maximum Permissible Amount may be
determined on the basis of the Participant's estimated annual compensation
for such Limitation Year. Such estimated annual compensation shall be
determined on a reasonable basis and shall be uniformly determined for all
Participants similarly situated. Any Employer contributions based on
estimated annual compensation shall be reduced by any Excess Amounts
carried over from prior years.
(c) As soon as it is administratively feasible after the end of
the Limitation Year, the Maximum Permissible Amount for such Limitation
Year shall be determined on the basis of the Participant's actual
Compensation for such Limitation Year.
(d) If, pursuant to Section 6.1(c) and notwithstanding the
provisions of Section 6.1(a) hereof which require a reduction of
contributions so as not to exceed the limitations of this Article VI,
there is an Excess Amount with respect to a Participant for a Limitation
Year, such Excess Amount shall be disposed of as follows:
(i) Any Participant Voluntary Contributions, to the extent that
the return would reduce the Excess Amount, shall be returned to the
Participant.
(ii) In the event that the Participant is covered by this Plan
at the end of the Limitation Year, remaining Excess Amounts after the
application of clause (i) shall be applied to reduce future Employer
contributions (including any allocation of forfeitures) for such
Participant under this Plan in the next Limitation Year (and each
succeeding year, as necessary).
(iii) In the event that the Participant is not covered by
this Plan at the end of the Limitation Year, remaining Excess Amounts
after the application of clause (i) shall not be distributed to the
Participant, but shall be held unallocated in a suspense account and shall
be applied to reduce future Employer contributions (including any
allocation of forfeitures) for all remaining Participants in the next
Limitation Year (and each succeeding year, as necessary).
(iv) If a suspense account is in existence at any time during
the Limitation Year pursuant to this Section, it will not participate in
the allocation of any investment gains and losses, and 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 such Limitation Year. Excess amounts may not be distributed to
Participants or former Participants.
Section 6.2. Employers Maintaining Other Master or Prototype
Defined Contribution Plans.
(a) If, in addition to this Plan, the Participant is covered
under another qualified defined contribution plan which qualifies as a
Master or Prototype Plan or a welfare benefit fund (as defined in Code
Section 419(e)) or an individual medical account (as defined in Code
Section 415(1)(2)) maintained by the Employer during any Limitation Year,
the amount of Annual Additions which may be allocated under this Plan on
the Participant's behalf for such Limitation Year, shall not exceed the
Maximum Permissible Amount reduced by the Annual Additions credited to a
Participant's account under such other plans, welfare benefit funds or
individual medical accounts 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 the determination of the Participant's actual
Compensation for the Limitation Year, the amounts referred to in
subsection (a) above may be determined on the Participant's estimated
annual compensation for such Limitation Year. Such estimated annual
compensation shall be determined on a reasonable basis and shall be
uniformly determined for all Participants similarly situated. Any
Employer contribution based on estimated annual compensation shall be
reduced by any Excess Amounts carried over from prior years.
(c) As soon as it is administratively feasible after the end of
the Limitation Year, the amounts referred to in subsection (a) above shall
be determined on the basis of the Participant's actual Compensation for
such Limitation Year.
(d) If a Participant's Annual Additions under this Plan and all
such other plans result in an Excess Amount for a Limitation Year, such
Excess Amount shall 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
(including any amount which would have been allocated but for the
limitations of Code Section 415), times
(ii) the ratio of (A) the amount allocated to the Participant as
of such date under this Plan, divided by (B) the total amount allocated as
of such date under all qualified master or prototype defined contribution
plans (determined without regard to the limitations of Code Section 415).
(f) Any Excess Amounts attributed to this Plan shall be
disposed of as provided in Section 6.1(d).
Section 6.3. Employers Maintaining Other Defined Contribution
Plans. If the Participant is covered under another plan which is a
qualified defined contribution plan which is not a Master or Prototype
Plan maintained by the Employer, Annual Additions allocated under this
Plan on behalf of any Participant shall be limited in accordance with the
provisions of Section 6.2, as though the other plan were a Master or
Prototype Plan, unless the Employer provides other limitations in the
Adoption Agreement.
Section 6.4. Employers Maintaining Defined Benefit Plans. If
the Participant is covered or was covered at any time under a qualified
defined benefit plan maintained by the Employer, the projected annual
benefit thereunder and the Annual Additions credited to any such
Participant's Account under this Plan and any other qualified defined
contribution plan in any Limitation Year will be limited so that the sum
of the Defined Contribution Fraction and the Defined Benefit Fraction with
respect to such Participant 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.
Section 6.5. Definitions. For purposes of this Article VI,
the following terms shall be defined as follows:
(a) Annual Additions -- The sum of the following amounts
allocated to a Participant's Account for a Limitation Year: (i) all
Employer contributions; (ii) all Participant contributions (other than a
qualified rollover contribution as described in Code Section 402(a)(5));
(iii) all forfeitures; (iv) all amounts allocated, after March 31, 1984,
to an individual medical account (as defined in Code Section 415(1)(2))
which is part of a defined benefit or annuity plan maintained by the
Employer are treated as Annual Additions to a defined contribution plan;
and (v) 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 Code Section 419A(d)(3)) under a welfare
benefit fund (as defined in Code Section 419(e)) maintained by the
Employer, are treated as Annual Additions to a defined contribution plan.
For the purposes of this Article VI, amounts reapplied under Sections
6.1(d) and 6.2(f) of the Plan to reduce Employer contributions shall also
be included as Annual Additions.
(b) Compensation -- A Participant's wages as defined in Code
Section 3121(a), for purposes of calculating social security taxes, but
determined without regard to the wage base limitation in Code Section
3121(a)(1), the limitations on the exclusions from wages in Code Section
3121(a)(5)(C) and (D) for elective contributions and payments by reason of
salary reduction agreements, the special rules in Code Section 3121(v),
any rules that limit covered employment based on the type or location of
an employee's employer, and any rules that limit the remuneration included
in wages based on familial relationship or based on the nature or location
of the employment or the services performed (such as the exceptions to the
definition of employment in Code Section 3121(b)(1) through (20)). For
any Self-Employed Individual Compensation means Earned Income.
For Limitation Years beginning after December 31, 1991, 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 Limitation Year. Notwithstanding the preceding
sentence, Compensation for a participant in a defined contribution plan
who is permanently and totally disabled (as defined in Code Section
22(e)(3)) 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 a disabled participant may be
taken into account only if the participant is not a highly compensated
employee (as defined in Code Section 414(q)) 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 a Participant's Projected Annual Benefits under all
the qualified defined benefit plans whether or not terminated) maintained
by the Employer determined at the end of the Limitation Year, and the
denominator of which is the lesser of (i) one hundred and twenty-five
percent (125%) of the dollar limitation for such Limitation Year under
Code Sections 415(b) and (d) (or such higher amount determined by the
Commissioner of Internal Revenue applicable to the calendar year with
which or within which the Limitation Year ends) or (ii) one hundred and
forty percent (140%) of the Participant's average Compensation (or Earned
Income) for the three highest consecutive calendar years of service during
which the Participant was in the Plan including any adjustments under Code
Section 415(b). Notwithstanding the above, if the Participant was a
Participant as 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 the product of 1.25 times the sum of the annual benefits
under such plans which the Participant had accrued as of the close of the
last Limitation Year beginning after 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 Code Section 415 for
all Limitation Years beginning before January 1, 1987.
(d) Employer -- The Employer that adopts this Plan and in the
case of a group of employers which constitutes (i) a controlled group of
corporations (as defined in Code Section 414(b) as modified by Code
Section 415(h)); (ii) trades or businesses (whether or not incorporated)
which are under common control (as defined in Section 414(c) as modified
by Code Section 415(h)); (iii) an affiliated service group (as defined in
Code Section 414(m)); or (iv) a group of entities required to be
aggregated (pursuant to Code Section 414(o)) all such employers shall be
considered a single employer for purposes of applying the limitations of
this Article VI.
(e) Excess Amount -- The excess of the Participant's Annual
Additions for the Limitation Year over the Maximum Permissible Amount.
(f) Limitation Year -- A calendar year or any other twelve (12)
consecutive month period adopted by the Employer in item 12 of the
Adoption Agreement (Profit Sharing Plan) or item 10 of the Adoption
Agreement (Pension Plan). All qualified plans maintained by the Employer
shall use the same Limitation Year. If the Limitation Year is amended to
a different twelve (12) consecutive month period, the new Limitation Year
shall begin on the date within the Limitation Year in which the amendment
is made.
(g) Master or Prototype Plan -- A plan the form of which is the
subject of a favorable opinion letter from the Internal Revenue Service.
(h) Maximum Permissible Amount -- For a Limitation Year, the
Maximum Permissible Amount with respect to any Participant shall be the
lesser of (i) the Defined Contribution Dollar Limitation or (ii)
twenty-five percent (25%) of the Participant's Compensation for the
Limitation Year. The Compensation limitation described in (ii) shall not
apply to any contribution for medical benefits (within the meaning of Code
Sections 401(h) or 419A(f)(2)) which is otherwise treated as an Annual
Addition under Code Sections 415(1)(1) or 419A(d)(2). If a short
Limitation Year is created because of an amendment changing the Limitation
Year to a different twelve (12) consecutive month period, the Maximum
Permissible Amount shall not exceed the defined contribution dollar
limitation in Code Section 415(c)(1)(A) multiplied by a fraction, the
numerator of which is the number of months in the short Limitation Year
and the denominator of which is twelve (12).
(i) Projected Annual Benefit -- A Participant's annual
retirement benefit (adjusted to the actuarial equivalent of a straight
life annuity if expressed in a form other than a straight life or
qualified joint and survivor annuity) under the Plan, assuming that the
Participant will continue employment until the later of current age or
Normal Retirement Age, and that the Participant's Compensation for the
Limitation Year and all other relevant factors used to determine benefits
under the Plan will remain constant for all future Limitation Years.
(j) Defined Contribution Fraction -- A fraction, the numerator
of which is the sum of the Annual Additions credited to the Participant's
account under this and all other qualified 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 non-deductible employee contributions to all qualified
defined benefit plans (whether or not terminated) maintained by the
Employer for the current and all prior Limitation Years and the Annual
Additions attributable to all welfare benefit funds (as defined in Code
Section 419(e)) and individual medical accounts (as defined in Code
Section 415(1)(2) 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 (i) one hundred
and twenty-five percent (125%) of the dollar limitation determined under
Code Sections 415(b) and (d) in effect under Code Section 415(c)(1)(A) or
(ii) thirty-five percent (35%) of the Participant's Compensation for such
Limitation 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 5, 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: (i) the excess of the sum of the
fractions over 1.0 times (ii) 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 Code 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 computed to treat all Employee contributions as Annual
Additions.
(k) Defined Contribution Dollar Limitation -- For a Limitation
Year, thirty thousand dollars ($30,000) or, if greater, one-fourth of the
defined benefit dollar limitation set forth in Code Section 415(b)(1) as
in effect for such Limitation Year.
(l) Highest Average Compensation -- The average Compensation
for the three consecutive Years of Service with the Employer which
produces the highest average.
ARTICLE VII.
PARTICIPANTS' ACCOUNTS
Section 7.1. Separate Accounts. Separate Accounts will be
maintained for each Participant for each of the following types of
contributions, and the income, expenses, gains and losses attributable
thereto:
(a) Employer Profit Sharing Contributions pursuant to Section
4.1 hereof;
(b) Employer Pension Contributions pursuant to Section 4.2
hereof;
(c) Participant Voluntary Contributions pursuant to Section 4.3
hereof;
(d) Elective Deferrals pursuant to Section 5.2 hereof;
(e) Matching Contributions pursuant to Section 5.3 hereof;
(f) Rollover Contributions pursuant to Section 4.6 hereof.
The Custodian shall establish such other separate Accounts as may be
necessary under the Plan. These Accounts shall be for accounting purposes
only and the Custodian shall not be required to establish separate
Custodial Accounts for these contributions.
Section 7.2. Vesting. (a) A Participant shall at all times
have a fully vested and nonforfeitable interest in all his Accounts except
his Employer Profit Sharing Contributions Account and/or his Employer
Pension Contributions Account.
(b) A Participant shall have a vested interest in his Employer
Profit Sharing Contributions Account and/or his Employer Pension
Contributions Account as determined under the vesting schedule elected in
item 7 of the Adoption Agreement.
Section 7.3. Computation of Vesting Service. All of a
Participant's Years of Service with the Employer shall be counted to
determine the nonforfeitable percentage of his Employer Profit Sharing
Contributions Account and/or his Employer Pension Contributions Account
except those Years of Service excluded under item 7 of the Adoption
Agreement. A former Participant who had a nonforfeitable right to all or
a portion of his Account balance derived from Employer contributions at
the time of his termination shall receive credit for Years of Service
prior to his Break in Service upon completing a Year of Service after his
return to the employ of the Employer. A former Participant who did not
have a nonforfeitable right to any portion of his Account balance derived
from Employer contributions at the time of termination from service will
be considered a new employee for vesting purposes, if the number of
consecutive one year Breaks in Service equals or exceeds the greater of
(i) five (5) years or (ii) the aggregate number of Years of Service before
such Breaks in Service. If such a former Participant's Years of Service
before termination from service may not be disregarded pursuant to the
preceding sentence, such former Participant's prior Years of Service shall
not be cancelled hereunder.
Section 7.4. Allocation of Forfeitures.
(a) As of the end of the Plan Year, forfeitures derived from
Employer Profit Sharing Contributions Accounts which become available for
reallocation during such Plan Year because of the operation of the vesting
provisions of Section 7.2(b), shall be allocated to the Employer Profit
Sharing Contribution Accounts of the Participants who are eligible to
share in an Employer Profit Sharing Contributions for the Plan Year. Such
amounts shall be allocated according to the ratio that each such
Participant's Compensation or Earned Income for the Plan Year bears to the
total Compensation and Earned Income of all such Participants for the Plan
Year. Forfeitures under this subsection (a) will be allocated only for
the benefit of Participants of the Employer adopting this Plan.
(b) Forfeitures derived from Employer Pension Contributions
which become available for reallocation during a Plan Year shall be
applied to reduce the Employer Pension Contributions that would otherwise
be due for such Plan Year under Section 4.2. Forfeitures under this
subsection (b) will only be used to reduce the Employer Pension
Contributions of the Employer adopting this Plan.
(c) If a benefit is forfeited because a Participant or
Beneficiary cannot be found, such benefit will be reinstated if a claim is
made by the Participant or Beneficiary.
(d) No forfeiture will occur solely as a result of a
Participant's withdrawal of any Employee contributions.
ARTICLE VIII.
PAYMENT OF BENEFITS
Section 8.1. Benefits Payable Under the Plan.
(a) Normal Retirement. A Participant's interest in all
Employer contributions allocated to his Accounts shall be fully vested and
nonforfeitable on and after his Normal Retirement Age. Such Participant
may retire at any time on or after that date and shall be entitled to
receive, in accordance with the provisions of Sections 8.2 and 8.3 hereof,
the total amount credited to his Accounts. Any Participant who is
employed beyond his Normal Retirement Age shall continue to share in
Employer contributions until his actual retirement.
(b) Death Benefits. Upon the death of a Participant while
employed by the Employer, the total amount credited to such Participant's
Accounts (plus such Participant's share of the Employer contributions for
the year of his death), shall be payable to such Participant's Beneficiary
in accordance with Sections 8.2 and 8.3 hereof. Upon the death of a
Participant following his termination of employment with the Employer, the
vested portion of his Accounts which has not been distributed shall be
payable to such Participant's Beneficiary in accordance with Sections 8.2
and 8.3 hereof.
(c) Other Termination of Employment. A Participant who
terminates employment with the Employer on account of Disability shall be
entitled to receive, in accordance with Sections 8.2 and 8.3 hereof, the
total amount credited to his Account. A Participant whose employment with
the Employer is terminated prior to his Normal Retirement Date for any
reason other than death or Disability shall be entitled to receive, in
accordance with the provisions of Sections 8.2 and 8.3 hereof, the
portions of his Accounts that have vested pursuant to Section 7.2 hereof.
(d) Forfeitures. Any amounts in a Participant's Accounts which
are not payable under subsection (c) above when his employment with the
Employer is terminated shall remain in such Accounts and shall continue to
share in profits or losses on investments under Section 9.3 hereof until
such former Participant incurs five (5) consecutive Breaks in Service,
whereupon they shall be forfeited and administered in accordance with
Section 7.4 hereof. In the event a former Participant is reemployed by
the Employer before incurring five (5) consecutive Breaks in Service his
Accounts shall continue to vest in accordance with the vesting schedule
specified in the applicable Adoption Agreement. Notwithstanding the
foregoing, if a terminated Participant receives a distribution on account
of termination of his participation in the Plan of his entire vested
interest in the Pension Plan or the Profit Sharing Plan, such
Participant's nonvested interest in the relevant plan shall be treated as
a forfeiture and administered in accordance with Section 7.4 hereof. If
the Participant elects to have distributed less than the entire vested
portion of his Account balance derived from Employer contributions, the
part of the nonvested portion that will be treated as a forfeiture is the
total nonvested portion multiplied by a fraction, the numerator of which
is the amount of the distribution attributable to Employer contributions
and the denominator of which is the total value of the vested Employer
derived Account balance. For purposes of this Section, if the value of an
employee's vested account balance is zero, the Employee shall be deemed to
have received a distribution of such vested account balance. A
Participant's vested account balance shall not include accumulated
deductible employee contributions within the meaning of Code Section
72(o)(5)(B) for plan years beginning prior to January 1, 1989. If a
Participant receives or is deemed to receive a distribution pursuant to
this subsection (d) and such Participant subsequently resumes employment
covered under the Plan, the forfeited amounts shall be restored from
current forfeitures, or if those are insufficient by a special Employer
contribution, provided that the Participant repays to the Plan the full
amount of the distribution attributable to Employer contributions prior to
the earlier of (i) five (5) years after the Participant is reemployed, or
(ii) the time the Participant incurs five (5) consecutive Breaks in
Service. In the event a former Participant is reemployed after incurring
five (5) consecutive Breaks in Service, separate Accounts will be
maintained for Employer contributions allocated before and after the Break
in Service, and Years of Service earned after his return to employment
shall be disregarded in determining the Participant's vested percentage in
his prebreak Employer contributions.
Section 8.2. Manner of Distributions.
(a) Distributions From Pension Plan. Distributions from the
Pension Plan shall be made as follows:
(i) A Participant's vested interest in the Plan shall be paid
by purchasing an annuity contract from a licensed insurance company,
unless the Participant elects to receive his interest in one of the
alternate forms of benefit described in subsection (c) below. If a
Participant is not married at his annuity starting date, the annuity
contract shall provide a monthly benefit for his life. If a Participant
is married at his annuity starting date, the annuity shall be in the form
of a qualified joint and survivor annuity. A "qualified joint and survivor
annuity" is an immediate annuity for the life of the Participant with a
survivor annuity for the life of the spouse which is equal to 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. The Participant may elect to have such annuity distributed upon
attainment of the earliest retirement age under the Plan. Any annuity
contract purchased hereunder and distributed in accordance with this
Section 8.2 shall be nontransferable and shall comply with the terms of
this Plan. For purposes of this Section, the earliest retirement age
shall be the Participant's age on the earliest date on which the
Participant could elect to receive retirement benefits.
(ii) Unless an optional form of benefit is selected in
accordance with subsection (c) below, if a Participant has a spouse and
dies prior to his annuity starting date (the date annuity payments
commence), the Participant's vested Account balance in the Plan shall be
applied toward the purchase of a life only annuity contract from a
licensed insurance company providing a benefit 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.
(iii) For any distribution subject to the annuity
requirements in subsection (i) above, a Participant or Beneficiary may
elect in writing, within the ninety (90) day period ending on the annuity
starting date (the date annuity or any other form of benefit payments
commence), to receive his vested interest in the Plan in one of the
alternate forms of benefit set forth in subsection (c) below in lieu of
the form of benefit otherwise payable hereunder. Any waiver of the joint
and survivor annuity by a married Participant shall not be effective
unless: (A) the Participant's spouse consents in writing to the election;
(B) 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); (C) the spouse's
consent acknowledges the effect of the election; and (D) the spouse's
consent is witnessed by a Plan representative or notary public.
Additionally, a Participant's waiver of the 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. 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 election 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 and the spouse have
received notice as provided in subsection (v) below.
(iv) A Participant may elect in writing to waive the surviving
spouse benefit otherwise payable under subsection (ii) above. The benefit
may be waived at any time during 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. A Participant and the spouse may waive
the pre-retirement survivor death benefit prior to age 35, provided that
such early waiver becomes invalid in the Plan Year the Participant attains
age 35 and a new waiver must be made pursuant to this subsection (iv). If
the Participant separates from service prior to the first day of the Plan
Year in which he attains age 35, the surviving spouse benefit may be
waived, with respect to the Participant's account balance as of the date
of separation, at any time during the period which begins on the date of
such separation and ends on the date of the Participant's death.
Notwithstanding the foregoing, any election by a Participant to waive the
surviving spouse benefit payable under subsection (ii) above shall not be
effective unless: (A) the Participant's spouse consents in writing to the
election; (B) the spouse's consent acknowledges the effect of the
election; and (C) the spouse's consent is witnessed by a Plan
representative or notary public. 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. 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 revocation of a prior election 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 and the spouse have received notice as provided in subsection
(v) below.
(v) The Administrator shall provide the Participant and the
Spouse, as applicable, with a written explanation of: (A) the terms and
conditions of the annuity described in subsections (i) or (ii), as
applicable; (B) the Participant's or Spouse's, as applicable, right to
waive the payment of benefits in the form of an annuity; (C) the rights of
the Participant's spouse; and (D) the right to make, and the effect of,
the revocation of a previous election to waive the payment of benefits in
the form of an annuity described in subsections (i) or (ii) hereof. In
the case of the annuity described in subsection (i), such explanation
shall be provided no less than thirty (30) days and no more than ninety
(90) days prior to the annuity starting date. In the case of the annuity
described in subsection (ii), such explanation shall be provided within
the applicable period for such Participant. The applicable period for a
Participant is whichever of the following periods ends last: (A) 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; (B) a
reasonable period ending after the individual becomes a Participant; (C) 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 (B) and (C) 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. A written explanation comparable to the notices described
above shall be provided to a Participant who is waiving the surviving
spouse benefit prior to attaining age 35.
(vi) The Administrator shall be responsible for the purchase of
any annuity contracts required to be purchased in accordance with the
terms of this Plan.
(b) Distributions from Profit Sharing Plan. Distributions from
the Profit Sharing Plan shall be made in the form elected by the
Participant (or Beneficiary) as described in subsection (c) below.
Notwithstanding the foregoing, if the Profit Sharing Plan is a direct or
indirect transferee of a defined benefit plan, a money purchase pension
plan (including a target benefit plan), or a stock bonus or profit sharing
plan or is an amendment of an original Plan which is (or was) subject to
the survivor annuity requirements of Code Sections 401(a)(11) or 417 then
distributions shall be made in accordance with the provisions of
subsection (a) above.
This amendment is effective on the first day of the first plan
year beginning on or after December 12, 1994, or, if later, 90 days after
December 12, 1994. Notwithstanding any provision of this plan to the
contrary, to the extent that any optional form of benefit under this plan
permits a distribution prior to the employee's retirement, death,
disability, or severance from employment, and prior to plan termination,
the optional form of benefit is not available with respect to benefits
attributable to assets (including the post-transfer earnings thereon) and
liabilities that are transferred, within the meaning of section 414(l) of
the Internal Revenue Code, to this plan from a money purchase pension plan
qualified under section 401(a) of the Internal Revenue Code (other than
any portion of those assets and liabilities attributable to voluntary
employee contributions).
(c) Optional Forms of Distribution. All distributions required
under this subsection shall be determined and made in accordance with the
Income Tax Regulations under Code Section 401(a)(9), including the minimum
distribution incidental benefit requirement of Section 1.401(a)(9)-2 of
such Regulations.
(i) Amounts payable to a Participant shall be distributed in
one of the following forms as elected by the Participant, with spousal
consent, as applicable:
(A) a lump sum; or
(B) installments over a period certain not to
exceed the life expectancy of the
Participant or the joint life expectancy of
the Participant and his Beneficiary.
Such election shall be made in writing and in such form as shall be
acceptable to the Administrator. If the Participant fails to elect any of
the methods of distribution described above within the time specified for
such election, the Administrator shall distribute the Participant's
Account in the form of a single sum cash payment by the April 1 following
the calendar year in which the Participant attains age seventy and
one-half (70-1/2).
(ii) If a Participant's benefit is to be distributed in
installment payments under (B) above, the amount 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. The life
expectancy (or joint and last survivor expectancy) is 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.
Unless otherwise elected by the Participant (or the
Participant's spouse) 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. Life expectancy and joint life 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.
Notwithstanding anything herein to the contrary, 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. For calendar years beginning after December 31, 1988,
the amount to be distributed each year shall not be less than the quotient
obtained by dividing the Participant's benefit by the lesser of (A) the
applicable life expectancy or (B) 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 Income Tax Regulations.
Distributions after the death of the Participant shall be distributed
using the applicable return multiple specified in Section 1.72-9 of the
Income Tax Regulations as the relevant divisor without regard to Section
1.401(a)(9)-2 of the Income Tax Regulations.
(iii) The minimum distribution required for the
Participant's first distribution calendar year must be made on or before
the Participant's required beginning date as described in Section 8.3(c)
hereof. The minimum distribution for other calendar years, including the
minimum distribution for the distribution calendar year in which such
required beginning date occurs, must be made on or before December 31 of
that distribution calendar year.
(d) In any case where the Participant or Beneficiary has
determined payment to be on an installment basis, such Participant or
Beneficiary may by written request directed to the Administrator, at any
time following commencement of such installment payments, accelerate all
or any portion of the unpaid balance.
(e) For purposes of this Section a "spouse" shall include the
spouse or surviving spouse of a Participant, provided that a former spouse
shall be treated as the spouse or surviving spouse and a current spouse
will not be treated as a spouse or surviving spouse to the extent provided
under a qualified domestic relations order as described in Code Section
414(p).
(f) The payment of benefits in either a lump sum or in
installments under this Section 8.2 may be made in cash or in Investment
Company Shares.
Section 8.3. Commencement of Payments. (a) Subject to the
provisions of this Section 8.3, payment of benefits, under whichever
method is selected, shall be made or commence as soon as administratively
practicable after the Valuation Date immediately following the
Participant's retirement, death or other termination of employment.
(b) If the Participant's vested Account balance in the Pension
Plan or the Profit Sharing Plan exceeds (or at the time of any prior
distribution exceeded) three thousand five hundred dollars ($3,500), no
distribution of that interest shall be made prior to the time the
Participant's Account becomes immediately distributable without the
written consent of the Participant and, in the case of the Pension Plan,
the Participant's spouse (or where either the Participant or the spouse
has died, the survivor). 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 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 Code Section 417(a)(3), and shall be provided no
less than thirty (30) days and no more than ninety (90) days prior to the
annuity starting date; provided that if a distribution is one to which
Sections 401(a)(11) and 417 of the Internal Revenue Code do not apply,
such distribution may commence less than 30 days after the notice required
under Section 1.411(a)-11(c) of the Income Tax Regulations is given,
provided that:
(1) the Administrator clearly informs the Participant that
the Participant has a right to a period of at least 30 days
after receiving the notice to consider the decision of whether
or not to elect a distribution (and, if applicable, a particular
distribution option), and
(2) the Participant, after receiving the notice,
affirmatively elects a distribution.
Notwithstanding the foregoing, 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 8.2(b) 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 Code
Sections 401(a)(9) or 415. In addition, upon termination of this Plan if
the Plan does not offer an annuity option (purchased from a commercial
insurance company), the Participant's Account balance may, without the
Participant's consent, be distributed to the Participant or transferred to
another defined contribution plan (other than an employee stock ownership
plan as defined in Code Section 4975(e)(7)) within the same controlled
group.
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 his Normal Retirement Age or age sixty-two (62).
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, a Participant's vested
Account balance shall not include amounts attributable to accumulated
deductible employee contributions within the meaning of Code Section
72(o)(5)(B).
(c) Unless the Participant (or the Participant's Beneficiary,
if the Participant is dead) elects to defer commencement under (b) above,
distribution of benefits shall begin no later than the sixtieth (60th) day
after the close of the Plan Year in which occurs the latest of (i) the
Participant's attainment of age 65 (or normal retirement age, if earlier);
(ii) the tenth (10th) anniversary of the year in which the Participant
commenced participation in the Plan; or (iii) the date the Participant
terminates service with the Employer. Notwithstanding the foregoing, the
failure of a Participant and the spouse to consent to a distribution while
a benefit is immediately distributable, within the meaning of Section 8.1
of the Plan, shall be deemed to be an election to defer commencement of
payment of any benefit sufficient to satisfy this Section.
(d) Notwithstanding anything herein to the contrary, payment of
benefits to a Participant shall commence by the Participant's required
beginning date, even if the Participant is still employed. A
Participant's required beginning date is the April 1 of the calendar year
following the calendar year in which the Participant attains age seventy
and one-half (70-1/2); provided that the required beginning date of a
Participant who attains age 70-1/2 before January 1, 1988, shall be
determined in accordance with (i) or (ii) below:
(i) 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
seventy and one-half (70-1/2) occurs.
(ii) 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 the calendar year in which the
Participant attains age seventy and one-half (70-1/2), or 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 seventy and one-half (70-1/2) during 1988 and who has not
retired as of January 1, 1989, is April 1, 1990.
A Participant is treated as a 5-percent owner for purposes of
this subsection (d) if such Participant is a 5-percent owner as defined in
Code Section 416(i) (determined in accordance with Code Section 416, but
without regard to whether the Plan is top-heavy) at any time during the
Plan Year ending with or within the calendar year in which such owner
attains age sixty-six and one-half (66-1/2) or any subsequent Plan Year.
Once distributions have begun to a 5-percent owner under this
subsection (d), they must continue to be distributed, even if the
Participant ceases to be a 5-percent owner in a subsequent year.
Distributions may be delayed pursuant to an election made prior
to January 1, 1984, under Section 242 of the Tax Equity and Fiscal
Responsibility Act of 1982; provided that the method of distribution
selected must be in accordance with the requirements of Code Section
401(a)(9) as in effect prior to amendment by the Deficit Reduction Act of
1984. If such an election is revoked, any subsequent distribution must
satisfy the requirements of Code Section 401(a)(9). If a designation is
revoked subsequent to the date distributions are required to begin, the
Plan 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 Code Section 401(a)(9), but for such Section 242(b)(2) election.
For calendar years beginning after December 31, 1988, such distributions
must meet the minimum distribution incidental benefit requirements in
Section 1.401(a)(9)-2 of the 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).
(e)(i) If a Participant dies after benefit payments have
begun, the Participant's remaining interest in the Plan shall be
distributed to his designated Beneficiary at least as rapidly as under the
method of distribution being used prior to the Participant's death.
(ii) If the Participant dies before benefit payments have
commenced, distribution of the Participant's entire interest in the Plan
shall be completed by the December 31 of the calendar year containing the
fifth (5th) anniversary of the Participant's death, except to the extent
that an election is made to receive distributions in accordance with the
following: (A) 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; (B)
if the designated Beneficiary is the Participant's surviving spouse, the
date distributions are required to begin in accordance with (A) above
shall not be earlier than the later of December 31 of the calendar year
immediately following the calendar year in which the Participant died and
December 31 of the calendar year in which the Participant would have
attained age seventy and one-half (70-1/2).
If the Participant has not made an election pursuant to this
subsection (ii) by the time of his death, the designated Beneficiary must
elect the method of distribution no later than the earlier of December 31
of the calendar year in which distributions would be required to begin
under this subsection (e) or 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 in the Plan must be completed by December 31
of the calendar year containing the fifth anniversary of the Participant's
death.
For purposes of this subsection (ii), if the surviving spouse
dies after the Participant, but before payments to such spouse begin, the
provisions of this subsection (ii), with the exception of paragraph (B)
above, shall be applied as if the surviving spouse were the Participant.
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.
For the purposes of this subsection (e), distribution of a
Participant's interest is considered to begin on the Participant's
required beginning date (or the date distribution is required to begin to
the surviving spouse). If a distribution in the form of an annuity
irrevocably commences to the Participant before the required beginning
date, the date the distribution is considered to begin is the date
distribution actually commences.
(iii) A Participant's interest in the Plan is his Account
balance as of the last valuation date in the calendar year immediately
preceding the distribution calendar year (the 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. 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.
The distribution calendar year is 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
subsection (ii) above.
For purposes of this subsection (e), the designated Beneficiary
is the individual who is designated as the Beneficiary under the Plan in
accordance with Code Section 401(a)(9) and the proposed regulations
thereunder.
Section 8.4. Payment of Small Amounts. Notwithstanding
anything herein to the contrary, if the present value of the Participant's
vested interest in the Pension Plan does not exceed (nor at the time of
any prior distribution exceeded) three thousand five hundred dollars
($3,500) as of the date the Participant's employment with the Employer
terminates, the Administrator shall distribute the present value of such
interest to the Participant in a lump sum as soon as administratively
practicable after the end of the Plan Year in which termination occurs.
Likewise, if the total present value of the Participant's vested interest
in the Profit Sharing Plan and Cash or Deferred Arrangement does not
exceed (nor at any time of any prior distribution exceeded) three thousand
five hundred dollars ($3,500) as of the date the Participant's employment
with the Employer terminates, the Administrator shall distribute the
present value of this interest to the Participant in a lump sum as soon as
administratively practicable after the end of the Plan Year in which
termination occurs. A Participant whose entire vested interest in the
Pension Plan and/or the Profit Sharing Plan has been distributed or who
has no vested interest in the Pension Plan and/or the Profit Sharing Plan
shall be deemed cashed out from the Pension Plan and/or the Profit Sharing
Plan, as applicable.
Section 8.5. Persons Under Legal or Other Disability. In the
event a Participant or Beneficiary is declared incompetent and a guardian
or other person legally charged with the care of his person or of his
property is appointed, any benefits to which such Participant or
Beneficiary is entitled shall be paid to such guardian or other person
legally charged with the care of his person or of his property.
Section 8.6. Withdrawals from Profit Sharing Plan. (a) If
elected in item 10 of the Adoption Agreement (Profit Sharing Plan), a
Participant shall be permitted to withdraw the specified percentage of his
vested Employer Profit Sharing Account while he is still employed after
attainment of age fifty-nine and one-half (59-1/2) or prior to attainment of
such age on account of a financial hardship; provided, that such
Participant has been an active Participant in the Plan for at least five
(5) years. A Participant may not make another withdrawal on account of
financial hardship under this Section 8.6 until he has been an active
Participant for at least an additional five (5) years from the date of his
last hardship withdrawal. For purposes of this Section 8.6, a financial
hardship shall mean a financial need or emergency which requires the
distribution of a Participant's Plan account in order to meet such need or
emergency. The determination of the existence of a financial hardship and
the amount required to be distributed to meet the hardship shall be made
by the Administrator in accordance with such uniform and nondiscriminatory
rules as may be established by the Administrator. A request for a
withdrawal shall be made in writing in a form prescribed by the
Administrator and shall be made in accordance with procedures and
limitations established by the Administrator. Notwithstanding the above,
no withdrawal under this Section 8.6 shall be permitted if the Integration
Formula is selected in item 6 of the Adoption Agreement (Profit Sharing
Plan).
(b) If a distribution is made pursuant to this Section 8.6 at a
time when the Participant has a nonforfeitable right to less than one
hundred percent (100%) of his Account balance derived from Employer
contributions and the Participant may increase the nonforfeitable
percentage in the Account:
(i) A separate Account will 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 nonforfeitable
portion of the separate Account will 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 above: P is the nonforfeitable
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.
Section 8.7. Transfer of Benefits to Eligible Retirement Plan.
(a) This Section applies to distributions made on or after January 1,
1993. Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributee's election under this Article VIII, a
distributee may elect, at the time and in the manner prescribed by the
Administrator, to have any portion of an eligible rollover distribution
paid directly to an eligible retirement plan specified by the distributee
in a direct rollover.
(b) An eligible rollover distribution is any distribution of
all or any portion of the balance to the credit of the distributee, except
that an eligible rollover distribution does not include (i) any
distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or life
expectancy) of the distributee or the joint lives (or joint life
expectancies) of the distributee and the distributee's designated
beneficiary, or for a specified period of ten years or more; (ii) any
distribution to the extent such distribution is required under Section
401(a)(9) of the Code; and (iii) the portion of any distribution that is
not includible in gross income (determined without regard to the exclusion
for net unrealized appreciation with respect to employer securities).
(c) An eligible retirement plan is an individual retirement
account described in Section 408(a) of the Code, an individual retirement
annuity described in Section 408(b) of the Code, an annuity plan described
in Section 403(a) of the Code, or a qualified trust described in Section
401(a) of the Code, that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover distribution
to the surviving spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
(d) A distributee includes an employee or former employee. In
addition, the employee's or former employee's surviving spouse and the
employee's or former employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined in
Section 414(p) of the Code, are distributees with regard to the interest
of the spouse or former spouse.
(e) A direct rollover is a payment by the plan to the eligible
retirement plan specified by the distributee.
ARTICLE IX.
ESTABLISHMENT OF
CUSTODIAL ACCOUNT; INVESTMENTS
Section 9.1. Custodial Account. (a) Unless the Employer
elects otherwise in the Adoption Agreement, the Custodian shall open and
maintain separate Custodial Accounts for each individual that the Employer
shall from time to time certify to the Custodian as a Participant in the
Plan. Such Custodial Accounts shall reflect the various Participant
Accounts described at Section 7.1 hereof.
(b) If the Employer so elects in the Adoption Agreement the
Custodian shall open and maintain a single Custodial Account in the name
of the Employer. If only a single Custodial Account is established, the
Employer shall be responsible for maintaining the records for the
individual Participant accounts.
(c) In the event that separate balances are not maintained for
the portion of a Participant's Account balance derived from Employer
contributions and Participant Voluntary Contributions, the Account balance
derived from Participant Voluntary Contributions shall be the
Participant's total account balance multiplied by a fraction, the
numerator of which is the total amount of Participant Voluntary
Contributions (less any withdrawals) and the denominator of which is the
sum of the numerator and the total Employer contributions (including
Elective Deferrals) made on behalf of such Participant.
Section 9.2. Receipt of Contributions. The Custodian shall
accept such contributions of money on behalf of Participants as it may
receive from time to time from the Employer. The Custodian may, in its
sole discretion, also accept money or Investment Company Shares held under
a preceding plan of the Employer qualified under Code Section 401(a) or
which qualify as rollover contributions or transfers under Section 4.6 of
the Plan. All such contributions shall be accompanied by written
instructions, in a form acceptable to the Custodian, from the Employer
specifying the Participant Accounts to which they are to be credited.
Section 9.3. Investment of Account Assets. (a) Upon written
instructions given by the Employer on a uniform and nondiscriminatory
basis as between Participants, the Custodian shall invest and reinvest
contributions credited to a Participant Account(s) in Investment Company
Shares. All Participant Accounts shall share in the profits or losses of
the investments on a pro rata basis (i.e., in the ratio that the
Participant's Account balance bears to all Account balances, other than
Accounts which are self-directed under subsection (b) below), subject to
adjustment by the Administrator on a fair and equitable basis for
contributions, distributions and/or withdrawals during the year. The
amount of each contribution credited to a Participant Account to be
applied to the purchase of Investment Company Shares shall be invested by
the Custodian at the applicable offering price. These purchases shall be
credited to such Account with notation as to cost. The Custodian shall
have no discretionary investment responsibility and in no event be liable
to any person for following investment instructions given by the Employer
or the Participant in the manner provided herein.
(b) Each Participant, through his separate Participant
Account(s), shall be the beneficial owner of all investments held in such
Account(s). The Employer however shall direct the Custodian (in a
nondiscriminatory manner) regarding the selection of specific Investment
Company Shares to be purchased for the Accounts of the Participants. The
Employer may permit (in a nondiscriminatory manner) the individual
Participants to select and direct the purchase of specific Investment
Company Shares for their own Account(s). In such a situation, the
Employer shall transmit all such directions to the Custodian.
Notwithstanding the foregoing, unless otherwise elected in the Adoption
Agreement the individual Participant may direct the investment of his
Account(s) and select the specific Investment Company Shares for purchase
for his individual Account(s) by directly communicating with the
Custodian.
(c) All income, dividends and capital gain distributions
received on the Investment Company Shares held in each Participant Account
shall be reinvested in such shares which shall be credited to such
Account. If any distribution on Investment Company Shares may be received
at the election of the Participant in additional shares or in cash or
other property, the Custodian shall elect to receive it in additional
shares. All investments acquired by the Custodian shall be registered in
the name of the Custodian or its registered nominee.
Section 9.4. Exclusive Benefit. The Custodial Account or
Accounts established hereby shall not be used or diverted to purposes
other than the exclusive benefit of Participants or their Beneficiaries.
Section 9.5. Expenses. All expenses and charges in respect of
the Plan and the Custodial Account, including, without limitation, the
Custodian's fees and commissions and taxes of any kind upon or with
respect to the Plan, shall be paid by the Employer; provided, however,
that the Custodian shall be authorized to pay such charges and expenses
from the Plan if the Employer shall fail to make payment within thirty
(30) days after it has been billed therefor by the Custodian or such
charges have otherwise become due.
Section 9.6. Voting. The Custodian shall deliver, or cause to
be executed and delivered, to the Employer all notices, prospectuses,
financial statements, proxies and proxy soliciting materials received by
the Custodian relating to investments held in Participants' Accounts. The
Custodian shall vote all proxies only in accordance with instructions
received from the Employer.
Section 9.7. Reports of the Custodian and Administrator. (a)
The Custodian shall keep accurate and detailed records of all receipts,
investments, disbursements and other transactions required to be performed
hereunder. Not later than sixty (60) days after the close of each
calendar year (or after the Custodian's resignation or removal), the
Custodian shall file with the Employer a written report reflecting the
receipts, disbursements and other transactions effected by it during such
year (or period ending with such resignation or removal) and the assets of
this Plan at its close. Such report shall be open to inspection by any
Participant for a period of thirty (30) days immediately following the
date on which it is filed with the Employer. Upon the expiration of such
thirty (30) day period, the Custodian 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 Employer shall have filed written objections
with the Custodian within such thirty (30) day period.
(b) Annual reports provided to the Employer by the Custodian
shall be, in the Custodian's discretion, on a calendar year basis unless
otherwise required by law. The Employer shall compute the valuation of
all Plan assets at least annually at the fair market value as of the last
day of each calendar year.
(c) The Custodian shall keep such records, make such
identifications and file such returns and other information concerning the
Plan as may be required of the Custodian under the Code or forms adopted
thereunder.
(d) The Administrator shall be solely responsible for the
filing of any reports or information required under the Code or forms
adopted thereunder.
Section 9.8. Limitation of Custodian's Duties and Liability.
(a) The Custodian's duties are limited to those set forth in this Plan,
and the Custodian shall have no other responsibility in the administration
of the Plan or for compliance by the Employer with any provision thereof.
The Custodian shall not be responsible for the collection of contributions
provided for under the Plan; the purpose or propriety of any distribution;
or any action or nonaction taken by the Employer or pursuant to the
Employer's request. The Custodian shall have no responsibility to
determine if instructions received by it from the Employer, or the
Employer's designated agent, comply with the provisions of the Plan. The
Custodian shall not have any obligation either to give advice to any
Participant on the taxability of any contributions or payments made in
connection with the Plan or to determine the amount of excess contribution
and net income attributable thereto. The Custodian may employ suitable
agents and counsel and pay their reasonable expenses and compensation, and
such agents or counsel may or may not be agent or counsel for the
Employer, and may be the Investment Advisor or an Investment Company.
(b) The Employer shall at all times fully indemnify and hold
harmless the Custodian, its agents, counsel, successors and assigns, from
any liability arising from distributions made or actions taken, and from
any and all other liability whatsoever which may arise in connection with
this Plan, except liability arising from the negligence or willful
misconduct of the Custodian. The Custodian shall be under no duty to take
any action other than as herein specified with respect to this Plan unless
the Employer shall furnish the Custodian with instructions in a form
acceptable to the Custodian; or to defend or engage in any suit with
respect to this Plan unless the Custodian shall have first agreed in
writing to do so and shall have been fully indemnified to the satisfaction
of the Custodian. The Custodian (and its agents) may conclusively rely
upon and 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, and, so long as it acts in good faith, in taking or omitting to
take any other action. No amendment to the Plan shall place any greater
burden on the Custodian without its written consent. The Custodian shall
not be liable for interest on any cash balances maintained in the Plan.
(c) The Employer shall have the sole authority to enforce the
terms of the Plan on behalf of any and all persons having or claiming any
interest therein by virtue of the Plan.
(d) The Custodian, its agents, counsel, successors and assigns,
shall not be liable to the Employer, or to any Participants or Beneficiary
for any depreciation or loss of assets, or for the failure of this Plan to
produce any or larger net earnings. The Custodian further shall not be
liable for any act or failure to act of itself, its agents, employees, or
attorneys, so long as it exercises good faith, is not guilty of negligence
or willful misconduct, and has selected such agents, employees, and
attorneys with reasonable diligence. The Custodian shall have no
responsibility for the determination or verification of the offering or
redemption prices or net asset values of Investment Company Shares, and
shall be entitled to rely for such prices and net asset values upon
statements issued by or on behalf of the Investment Company issuing the
Investment Company Shares. The Custodian shall have no duty to inquire
into the investment practices of such Investment Company; such Investment
Company shall have the exclusive right to control the investment of its
funds in accordance with its stated policies, and the investments shall
not be restricted to securities of the character now or hereafter
authorized for trustees by law or rules of court. The Custodian shall not
be liable or responsible for any omissions, mistakes, acts or failures to
act of such Investment Company, or its successors, assigns or agents.
Notwithstanding the foregoing, nothing in this Plan shall relieve the
Custodian of any responsibility or liability under ERISA.
ARTICLE X.
AMENDMENT AND TERMINATION
Section 10.1. Amendment. (a) The Employer reserves the right
at any time and from time to time to amend or terminate the Plan. No part
of the Plan shall by reason of any amendment or termination be used for or
diverted to purposes other than the exclusive benefit of Participants and
their Beneficiaries, and further that no amendment or termination may
retroactively change or deprive any Participant or Beneficiary of rights
already accrued under the Plan except insofar as such amendment is
necessary to preserve the qualification and tax exemption of the Plan
pursuant to Code Section 401. No amendment shall increase the duties of
the Custodian or otherwise adversely affect the Custodian unless the
Custodian expressly agrees thereto. However, if the Employer amends any
provision of this Plan (including a waiver of the minimum funding
requirements under Code Section 412(d)) other than by changing any
election made in the Adoption Agreement, adopting an amendment stated in
the Adoption Agreement which allows the Plan to satisfy Code Section 415,
to avoid duplication of minimum benefits under Code Section 416 or 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 an individually designed plan, such Employer shall no longer
participate under this prototype plan and the Employer's Plan shall be
deemed to be an individually designed plan. The Employer hereby
irrevocably delegates (retaining, however, the right and power to change
any election made in the Adoption Agreement) to the Investment Advisor the
right and power to amend the Plan at any time, and from time to time, and
the Employer by adopting the Plan shall be deemed to have consented
thereto. The Investment Advisor shall notify the Employer of any
amendment to the Plan. For purposes of any Investment Advisor amendments,
the mass submitter shall be recognized as the agent of the Investment
Advisor. If the Investment Advisor does not adopt the amendments made by
the mass submitter, it will no longer be identical to or a minor modifier
of the mass submitter plan.
(b) No amendment to the Plan shall be effective to the extent
that it has the effect of decreasing a Participant's accrued benefit
except to the extent permitted by Code Sections 412(c)(8) and 411(d)(6).
For purposes of this subsection, 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 shall be treated as reducing an accrued benefit. Furthermore,
if the vesting schedule of a Plan is amended, in the case of an Employee
who is a Participant as of the later of the date such amendment is adopted
or the date it becomes effective, the 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.
(c) Notwithstanding subsection (a) above, an Employer may amend
the Plan by adding overriding plan language to the Adoption Agreement
where such language is necessary to satisfy Code Sections 415 or 416
because of the required aggregation of multiple plans under such Code
Sections.
Section 10.2. Termination. Upon complete discontinuance of the
Employer's Profit Sharing Contributions (if the Employer has adopted a
Profit Sharing Plan by completing the appropriate Adoption Agreement) or
termination or partial termination of the Plan, each affected
Participant's Account shall become nonforfeitable. Upon termination or
partial termination of the Plan, the Employer shall instruct the Custodian
whether currently to distribute to each Participant the entire amount of
the Participant's Account, in such one or more of the methods described in
Article VIII, or whether to continue the Plan and to make distributions
therefrom as if the Plan had continued; provided that, in the event the
Plan is continued, the Plan must continue to satisfy the requirements of
Code Section 401(a). The Employer shall in all events exercise such
discretion in a nondiscriminatory manner. The Plan shall continue in
effect until the Custodian shall have completed the distribution of all of
the Plan asset and the accounts of the Custodian have been settled.
ARTICLE XI.
FIDUCIARY RESPONSIBILITIES
Section 11.1. Administrator. The Administrator shall have the
power to allocate fiduciary responsibilities and to designate other
persons to carry out such fiduciary responsibilities; provided such
allocation is in writing and filed with the Plan records. The
Administrator may employ one or more persons to render advice to the
Administrator with regard to its responsibilities under the Plan, and
consult with counsel, who may be counsel to the Employer.
Section 11.2. Powers of Administrator. The Administrator shall
administer the Plan in accordance with its terms and shall have all powers
necessary to carry out its terms. The Administrator shall have
discretionary authority to determine eligibility for benefits and to
interpret and construe the terms of the Plan, and any such determination,
interpretation or construction shall be final and binding on all parties
unless arbitrary and capricious. Any such discretionary authority shall be
carried out in a uniform and nondiscriminatory manner.
Section 11.3. Records and Reports. The Administrator, or those
to whom it has delegated fiduciary duties, shall keep a record of all
proceedings and actions, and shall maintain all such books of account,
records and other data as shall be necessary for the proper administration
of the Plan. The Administrator, or those to whom it has delegated
fiduciary duties, shall have responsibility for compliance with the
provisions of ERISA relating to such office, including filing with the
Secretary of Labor and Internal Revenue Service of all reports required by
the Code and/or ERISA and furnishing Participants and Beneficiaries with
descriptions of the Plan and reports required by ERISA.
Section 11.4. Other Administrative Provisions.
(a) No bond or other security shall be required of the
Administrator, and/or any officer or Employee of the Employer to whom
fiduciary responsibilities are allocated, except as may be required by
ERISA.
(b) The Administrator or the Employer may shorten, extend or
waive the time (but not beyond sixty days) required by the Plan for filing
any notice or other form with the Administrator or the Employer, or taking
any other action under the Plan, except a response to an appeal under
Section 11.6, from a decision of the Administrator.
(c) The Administrator or the Employer may direct that such
reasonable expenses as may be incurred in the administration of the Plan
shall be paid out of the funds of the Plan, unless the Employer shall pay
them.
(d) The Administrator, the Custodian, and any other persons
performing fiduciary duties under the Plan shall act 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 like character and with like aims,
and no such person shall be liable, to the maximum extent permitted by
ERISA, for any act of commission or omission in accordance with the
foregoing standard.
Section 11.5. Claims Procedure. Any claim relating to benefits
under the Plan shall be filed with the Administrator on a form prescribed
by the Administrator. If a claim is denied in whole or in part, the
Administrator shall give the claimant written notice of such denial within
ninety (90) days after the filing of such claim, which notice shall
specifically set forth:
(a) The reasons for the denial;
(b) The pertinent Plan provisions on which the denial was
based;
(c) Any additional material or information necessary for the
claimant to perfect the claim and an explanation of why such material or
information is needed; and
(d) An explanation of the Plan's procedure for review of the
denial of the claim.
In the event that the claim is not granted and notice of denial of a claim
is not furnished by the ninetieth (90th) day after such claim was filed,
the claim shall be deemed to have been denied on that day for the purpose
of permitting the claimant to request review of the claim.
Section 11.6. Claims Review Procedure.
(a) Any person whose claim filed pursuant to Section 11.5 has
been denied in whole or in part by the Administrator may request review of
the claim by the Employer, by filing a written request with the
Administrator. The claimant shall file such request (including a
statement of his position) with the Employer no later than sixty (60) days
after the mailing or delivery of the written notice of denial provided for
in Section 11.5, or, if such notice is not provided, within sixty (60)
days after such be in writing and shall specifically set forth:
(i) The reasons for the decision; and
(ii) The pertinent Plan provisions on
which the decision is based.
Any such decision of the Employer shall bind the claimant and the
Employer, and the Administrator shall take appropriate action to carry out
such decision.
(b) Any person whose claim has been denied in whole or in part
must exhaust the administrative review procedures provided in subsection
(a) above prior to initiating any claim for judicial review.
ARTICLE XII.
AMENDMENT AND CONTINUATION OF ORIGINAL PLAN
Notwithstanding any of the foregoing provisions of the Plan to
the contrary, an employer that has previously established an Original Plan
may, in accordance with the provisions of the Original Plan, amend and
continue the Original Plan in the form of this Plan and become an Employer
hereunder, subject to the following:
(a) subject to the conditions and limitations of the Plan, each
person who is a Participant under the Original Plan immediately prior to
the effective date of the amendment and continuation thereof in the form
of this Plan will continue as a Participant in this Plan;
(b) no election may be made in the Adoption Agreement if such
election would reduce the benefits of a Participant under the Original
Plan to less than the benefits to which he would have been entitled if he
had resigned from the employ of the Employer on the date of the Amendment
and continuation of the Original Plan in the form of this Plan;
(c) the amounts, if any, of a Participant's or former
Participant's Accounts immediately prior to the effective date of the
amendment and continuation of the Original Plan in the form of this Plan
shall be reduced to cash, deposited with the Custodian and constitute the
opening balances in such Participant's Account under this Plan;
(d) amounts being paid to individuals in accordance with the
provisions of the Original Plan shall continue to be paid under this Plan,
but in the form that they were being paid under the Original Plan;
(e) any Beneficiary designation in effect under the Original
Plan immediately before its amendment and continuation in the form of this
Plan which effectively meets the requirements contained in Section 2.3
hereof shall be deemed to be a valid Beneficiary designation pursuant to
Section 2.3 of this Plan, unless and until the Participant or former
Participant revokes such Beneficiary designation or makes a new
Beneficiary designation under this Plan. If the Beneficiary designation
form does not meet the requirements of Section 2.3 hereunder, the
Participant's spouse shall be deemed to be his Beneficiary. If the
Participant is unmarried, or his spouse does not survive him, his estate
shall be deemed his Beneficiary.
(f) if the Original Plan's vesting schedule (or this Plan's
vesting schedule) or the Plan is amended or changed in any way that
directly or indirectly affects the computation of a Participant's
nonforfeitable interest in his Account derived from Employer
contributions, each such Participant with at least three (3) Years of
Service with the Employer may elect, within a reasonable period after the
adoption of the amendment or change, to have his nonforfeitable percentage
computed under the Plan without regard for the amendment or change. For
any Participant who does 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 therein. Any such election
must be made during the period commencing on the date of the amendment or
change and ending on the latest of: (i) sixty (60) days after that date;
(ii) sixty (60) days after the effective date of the amendment or change;
or (iii) sixty (60) days after such Participant is issued written notice
of the amendment or change by the Plan Administrator or Employer.
ARTICLE XIII.
TOP-HEAVY PROVISIONS
Section 13.1. Effect of Top-Heavy Status. The Plan shall be a
"Top-Heavy Plan" for any Plan Year commencing after December 31, 1983, if
any of the following conditions exist:
(a) If the Top-Heavy Ratio for this Plan exceeds sixty percent
(60%) and this Plan is not part of any Required Aggregation Group or
Permissive Aggregation Group.
(b) If this Plan is a part of a Required Aggregation Group but
not part of a Permissive Aggregation Group and the Top-Heavy Ratio for the
group of plans exceeds sixty percent (60%).
(c) If this Plan is a part of a Required Aggregation Group and
part of a Permissive Aggregation Group and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds sixty percent (60%).
If the Plan is a Top-Heavy Plan in any Plan Year beginning after December
31, 1983, the provisions of Sections 13.3 through 13.6 shall supersede any
conflicting provisions of the Plan or the Adoption Agreement.
Section 13.2. Additional Definitions. Solely for purposes of
this Article, the following terms shall have the meanings set forth below:
(a) "Key Employee" means any Employee or former Employee (and
the Beneficiaries of such Employee) who at any time during the
Determination Period was an officer of the Employer if such individual's
annual compensation exceeds 50 percent of the dollar limitation under Code
Section 415(b)(1) (A), an owner (or considered an owner under Code Section
318) of one of the ten largest interests in the Employer if such
individual's compensation exceeds 100 percent (100%) of the dollar
limitation under Code Section 415(c)(1)(A), a five percent (5%) owner of
the Employer, or one percent (1%) owner of the Employer who has an annual
compensation of more than $150,000. Annual compensation means
compensation as defined in Code Section 415(c)(3), of the Code, but
including amounts contributed by the Employer pursuant to a salary
reduction agreement which are excludible from the Employee's gross income
under Code Sections 125, 402(a)(8), 402(h) or 403(b). The determination
period is the plan year containing the Determination Date and the four (4)
preceding Plan Years.
The determination of who is a Key Employee will be made in accordance with
Code Section 416(i)(1) and the Regulations thereunder.
(b) "Determination Date" means the last day of the preceding
Plan Year. For the first Plan Year of the Plan Determination Date shall
mean the last day of that year.
(c) "Top-Heavy Ratio" means:
(i) If the Employer maintains one or more defined contribution
plans (including any simplified employee pension plan) and the Employer
has not maintained any defined benefit plan which during the five (5) year
period ending on the Determination Date(s) has or has had accrued
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(s) (including any part of any account balance
distributed in the five (5) year period ending on the Determination
Date(s)), 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(s)), both computed in
accordance with Code Section 416 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 Code Section 416
and the Regulations thereunder.
(ii) If the Employer maintains one or more defined contribution
plans (including any simplified employee pension plan) and the Employer
maintains or has maintained one or more defined benefit plans which during
the five (5) year period ending on the Determination Date(s) has or has
had any accrued benefits, the Top-Heavy Ratio for any Required or
Permissive Aggregation Group as appropriate is a fraction, the numerator
of which is the sum of account balances under the aggregated defined
contribution plan or plans for all Key Employees, determined in accordance
with (i) above, and the present value of accrued benefits under the
aggregated defined benefit plan or plans for all Key Employees as of the
Determination Date(s), and the denominator of which is the sum of the
account balances under the aggregated defined contribution plan or plans
for all participants, determined in accordance with (i) above, and the
present value of accrued benefits under the defined benefit plan or plans
for all participants as of the Determination Date(s), all determined in
accordance with Code Section 416 and the Regulations thereunder. The
accrued benefits under a defined benefit plan in both the numerator and
denominator of the Top-Heavy Ratio are increased for any distribution of
an accrued benefit made in the five (5) year period ending on the
Determination Date.
(iii) For purposes of (i) and (ii) above the value of
account balances and the present value of accrued Valuation Date that
falls within or ends with the twelve (12) month period ending on the
Determination Date, except as provided in Code Section 416 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
(A) who is not a Key Employee but who was a Key Employee in a prior year,
or (B) who has not been credited with at least one (1) hour of service
with any employer maintaining the plan at any time during the five (5)
year period ending on the Determination Date 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 Code Section 416 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.
(iv) 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 Code Section 411(b)(1)(C).
(d) "Permissive Aggregation Group" means the Required
Aggregation Group of plans plus any other plan or plans of the Employer
which, when considered as a group with the Required Aggregation Group,
would continue to satisfy the requirements of Code Sections 401(a)(4) and
410.
(e) "Required Aggregation Group" means (i) each qualified plan
of the Employer in which at least one Key Employee participates or
participated at any time during the five (5) year period ending on the
Determination Date (regardless of whether the plan has terminated), and
(ii) any other qualified plan of the Employer which enables a plan
described in (i) to meet the requirements of Code Sections 401(a)(4) or
410.
(f) "Valuation Date" means (i) in the case of a defined
contribution plan, the Determination Date, and (ii) in the case of a
defined benefit plan, the date as of which funding calculations are
generally made within the twelve (12) month period ending on the
Determination Date.
(g) "Employer" means the employer or employers whose employees
are covered by this Plan and any other employer which must be aggregated
with any such employer under Code Sections 414(b), (c), (m) and (o).
(h) "Present Value" means the value based on an interest rate
of five percent (5%) and mortality assumptions based on the 1971 GAM
Mortality Table or such other interest rate or mortality assumptions as
may be specified in the Adoption Agreement.
Section 13.3. Minimum Allocations. (a) For any year in which
the Plan is a Top-Heavy Plan, each Participant who is not a Key Employee
and who is not separated from service at the end of the Plan Year shall
receive allocations of Employer contributions and forfeitures under this
Plan at least equal to three percent (3%) of Compensation (as defined in
Section 2.6) for such year or, if less, the largest percentage of the
first two hundred thousand dollars ($200,000) of compensation allocated on
behalf of the Key Employee for the Plan Year where the Employer has no
defined benefit plan which designates this Plan to satisfy Code Section
401. This minimum allocation shall be determined without regard for any
Social Security contribution and shall be provided even though under other
provisions the Participant would not otherwise be entitled to receive an
allocation or would have received a lesser allocation because of (i) the
Participant's failure to complete One Thousand (1,000) Hours of Service
(or any equivalent provided in the Plan), or (ii) the Participant's
failure to make mandatory Employee contributions to the Plan, or (iii)
Compensation less than a stated amount.
(b) 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 Adoption
Agreement that the minimum allocation or benefit requirement applicable to
top-heavy plans will be met in the other plan or plans.
(c) The minimum allocation required (to the extent required to
be nonforfeitable under Section 416(b)) may not be forfeited under Code
Sections 411(a)(3)(B) or 411(a)(3)(D).
(d) For purposes of subsection (a) above, neither Elective
Deferrals nor Employer Matching Contributions shall be taken into account
for the purposes of satisfying the minimum top-heavy benefits requirement.
Section 13.4. Benefit Limit Change. If the Employer maintains
both the Plan and a defined benefit plan which cover one or more of the
same Key Employees and the plans are Top-Heavy in a Plan Year, then
Section 6.5(c) and (j) hereof shall be amended to substitute "one hundred
percent (100%)" for the number "one hundred and twenty-five percent
(125%)" where the latter appears therein.
ARTICLE XIV.
MISCELLANEOUS
Section 14.1. Rights of Employees and Participants. No Employee
or Participant shall have any right or claim to any benefit under the Plan
except in accordance with the provisions of the Plan, and then only to the
extent that there are funds available therefor in the hands of the
Custodian. The establishment of the Plan shall not be construed as
creating any contract of employment between the Employer and any Employee
or otherwise conferring upon any Employee or other person any legal right
to continuation of employment, nor as limiting or qualifying the right of
the Employer to discharge any Employee without regard to the effect that
such discharge might have upon his rights under the Plan.
Section 14.2. Merger With Other Plans. The Plan shall not be
merged or consolidated with, nor transfer its assets or liabilities to,
any other plan unless each Participant, Beneficiary and other person
entitled to benefits, would (if the Plan then terminated) receive a
benefit immediately after the merger, consolidation or transfer which is
equal to or greater than the benefit he would have been entitled to
receive if the Plan had terminated immediately prior to the merger,
consolidation or transfer.
Section 14.3. Non-Alienation of Benefits. The right to receive
a benefit under the Plan shall not be subject in any manner to
anticipation, alienation, or assignment, nor shall such right be liable
for or subject to debts, contracts, liabilities or torts, either
voluntarily or involuntarily. Any attempt by the Participant, Beneficiary
or other person to anticipate, alienate or assign his interest in or right
to a benefit or any claim against him seeking to subject such interest or
right to legal or equitable process shall be null and void for all
purposes hereunder to the extent permitted by ERISA and the Code.
Notwithstanding the foregoing or any other provision of the Plan, the
Administrator shall recognize and give effect to a qualified domestic
relations order with respect to child support, alimony payments or marital
property rights if such order is determined by the Administrator to meet
the applicable requirements of Code Section 414(p). If any such order so
directs, distribution of benefits to the alternate payee may be made at
any time, even if the Participant is not then entitled to a distribution.
The Administrator shall establish reasonable procedures relating to notice
to the Participant and determinations respecting the qualified status of
any domestic relations order.
Section 14.4. Failure to Qualify. Notwithstanding anything in
this Plan to the contrary, all contributions under the Plan made prior to
the receipt by the Employer of a determination by the Internal Revenue
Service to the effect that the Plan is qualified under Code Section 401
shall be made on the express condition that such a determination will be
received, and in the event that the Internal Revenue Service determines
upon initial application for a determination that the Plan is not so
qualified or tax exempt, all contributions made by the Employer or
Participants prior to the date of determination must be returned within
one (1) year from the date of such determination, 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.
Section 14.5. Mistake of Fact; Disallowance of Deduction.
Notwithstanding anything in this Plan to the contrary, any contributions
made by the Employer which are conditioned on the deductibility of such
amount under Code Section 404, to the extent of the amount disallowed, or
which are made because of a mistake of fact must be returned to the
Employer within one year after such disallowance or such mistaken
contribution.
Section 14.6. Participation under Prototype Plan. If the Plan
as adopted by the Employer either fails to attain or maintain
qualification under the Code, such Plan will no longer participate in this
prototype plan and will be considered an individually designed plan.
Section 14.7. Gender. Where the context admits, words used in
the singular include the plural, words used in the plural include the
singular, and the masculine gender shall include the feminine and neuter
genders.
Section 14.8. Headings. The headings of Sections are included
solely for convenience of reference, and if there is any conflict between
such headings and the text of the Plan, the text shall control.
Section 14.9. Governing Law. Except to the extent governed by
ERISA and any other applicable federal law, the Plan shall be construed,
administered and enforced according to the laws of the state in which the
Employer has its principal place of business.
<PAGE>
THE HENLOPEN FUND
PROTOTYPE DEFINED CONTRIBUTION RETIREMENT PLAN
ADOPTION AGREEMENT
[STANDARDIZED]
(PENSION PLAN)
The undersigned Employer hereby adopts and establishes The
Henlopen Fund Prototype Defined Contribution Retirement Plan. This Plan
is subject to the terms set forth below in this Adoption Agreement.
1. EMPLOYER INFORMATION
Name:
Address:
Telephone Number: (___)
Employer Identification Number:
Type of Entity: [_] Corporation
[_] Partnership
[_] Sole Proprietorship
[_] Other (please describe)
Employer's Taxable Year is [_] calendar year or [_] fiscal year
beginning ______________________.
2. PLAN INFORMATION
Plan Administrator (if other than the Employer):
Name:
Address:
Telephone
Number: (___)
Plan Year is the [_] calendar year, [_] Employer's fiscal year, or
[_] year beginning ___________________.
3. EFFECTIVE DATE
Execution of this Adoption Agreement (check one):
[_] Establishes a new plan.
[_] Is an amendment to an Original Plan.
This amendment is effective _____________, 19__.
[_] Is an amendment to an Original Plan under which no
further contributions will be made or participation
permitted (a "frozen plan"). This amendment is
effective __________, 19__. (You need not complete
items 4, 5 or 6 and check item 7(A)(1)).
The Effective Date of the Plan is ____________, 19__. (If this is an
amended plan enter the date the Original Plan first started.)
4. ELIGIBILITY REQUIREMENTS
(A) Please check one:
[_] An Employee need not complete any waiting period.
[_] In order to become a Participant, an employee must
satisfy the following Age and Service
Requirements:
(1) An Employee must complete ____ (enter 1 or 2 years)
Year(s) of Employment. If more than 1 year is
selected, you must also check item 7(A)(1).
A Year of Employment shall mean the 12 consecutive
month period beginning on the date an Employee first
performs an Hour of Service or an anniversary thereof
during which the Employee has completed ________
(insert 1,000 or less) Hours of Service.
Hours of Service shall be determined on the basis of
the method elected below. Only one method may be
elected. The method elected shall be applied to all
Employees covered under the Plan.
[_] On the basis of actual hours for which
an Employee is paid or entitled to
payment.
[_] On the basis of days worked:
An Employee shall be credited with 10
Hours of Service if the Employee would
be credited with at least 1 Hour of
Service during the day.
[_] On the basis of weeks worked:
An Employee shall be credited with 45
Hours of Service if the Employee would
be credited with at least 1 Hour of
Service during the week.
[_] On the basis of months worked:
An Employee shall be credited with 190
Hours of Service if the Employee would
be credited with at least 1 Hour of
Service during the month.
(2) An Employee must attain age ____ (not greater than age
21).
(B) Union Employees shall be:
[_] Included as eligible employees.
[_] Excluded from participation in the Plan.
Note: Union Employees must be covered by a
collective bargaining agreement between the
Employer and employee representatives under which
retirement benefits were the subject of good faith
bargaining. The term "employee representatives"
does not include any organization more than
one-half of whose members are officers, executives
or owners of the Employer.
5. COMPENSATION
(A) A Participant's "Compensation" shall include (check one):
[_] All taxable earnings for the Plan Year.
[_] Only amounts earned after completion of the
eligibility requirements selected in 4 above.
(B) For any self-employed individual, Compensation means Earned
Income.
6. EMPLOYER PENSION CONTRIBUTIONS
(A) The Employer Pension Contribution for each Plan Year shall be
____% (not more than 25%) of the aggregate Compensation and
Earned Income of eligible Participants. This contribution will
be reduced by the amount of any forfeitures allocated to the
accounts of Participants for such Plan Year.
(B) Allocation Formulas
The Employer Pension Contributions shall be allocated pursuant
to the following formula (check one):
(1) [_] Compensation Formula
Employer Pension Contributions shall be
allocated based on each eligible
Participant's total Compensation for the Plan
Year.
Note: If the Integration Formula is elected under the Profit
Sharing Plan, the Compensation Formula must be elected under
this Plan.
(2) [_] Integration Formula
Employer Pension Contributions (and
forfeitures) shall be allocated based on each
eligible Participant's Compensation in excess
of the Integration Level and total
Compensation for the Plan Year, subject to
the limitations set forth in Section 4.2(b)
of the Plan.
[_] The Integration Level shall be the
taxable wage base for FICA tax
purposes.
[_] The Integration Level shall be
$_________ (not to exceed the FICA
taxable wage base).
Note: If the Plan is top-heavy all eligible Participants must
first be allocated 3% of their total Compensation and any
remaining contribution may be allocated pursuant to the
Integration Formula.
7. VESTING
(A) A Participant shall have a nonforfeitable and fully vested
interest in his Employer Pension Contribution Account under the
following vesting schedule (check one):
(1) [_] A Participant shall at all times have a
nonforfeitable and fully vested interest.
(2) [_] A Participant shall be fully vested after _____
(not more than 3) Years of Service.
(3) [_] A Participant shall become vested in accordance
with the following schedule:
Vested
Years of Service Percentage
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
(B) A "Year of Service" shall mean any Plan year in which an
Employee completes at least ____ (insert 1,000 or less) Hours of
Service. Years of Service shall include all Years of Service
with the Employer except as noted below (check one, both or
none):
(1) [_] All Years of Service prior to the effective
date of this Plan (or a predecessor plan) shall
be excluded.
(2) [_] All Years of Service before the Plan Year in
which the Participant attained age 18 shall be
excluded.
8. PARTICIPANT AFTER-TAX CONTRIBUTIONS
Participant Voluntary Contributions (check one):
[_] Participant Voluntary Contributions are permitted.
[_] Participant Voluntary Contributions are permitted only
for non-highly compensated employees.
[_] Participant Voluntary Contributions are not permitted.
9. NORMAL RETIREMENT AGE
The Normal Retirement Age Shall be age ___ [insert an age not to
exceed 65].
10. LIMITATION ON ALLOCATIONS
"Limitation Year", if other than a calendar year, shall mean the 12
consecutive month period ending on the last day of
________________________.
Follow these instructions only if the Employer maintains (or has ever
maintained) another qualified plan (other than the Profit Sharing
Plan) which is either (i) a qualified defined contribution plan other
than a Master or Prototype Plan or (ii) a qualified defined benefit
plan in which any Participant in this Plan is (or was) a participant
or could become a participant, or if the Employer maintains a welfare
benefit fund or an individual medical account.
To comply with Internal Revenue Code requirements, please attach
appropriate provisions that limit the amount of Annual Additions
allocated to any Participant's Account.
If you do not attach the appropriate provisions, Sections 6.3. and
6.4 of the Plan will automatically apply.
11. TOP-HEAVY PROVISIONS
The interest rate and mortality assumptions for determining Top-Heavy
status shall be the assumptions designated under Section 13.2(h) of
the Plan, unless different assumptions are selected below.
The interest rate and mortality assumptions for determining present
values to compute the Top-Heavy ratio shall be:
Interest Rate: _____%
Mortality Table: _____________________________
12. ESTABLISHMENT OF ACCOUNTS
(A) Unless elected below, the Custodian shall establish individual
Custodial Accounts for each Participant.
[_] The Custodian shall establish a single Custodial
Account in the name of the Employer and the
Employer shall keep all records for the individual
Participants.
(B) Unless elected below, a Participant shall be permitted to direct
the investment of his Account balance.
[_] Participant self-direction of the investment of his
Account balance is not permitted.
13. CUSTODIAN
The undersigned as Employer hereby appoints Firstar Trust Company as
Custodian.
14. FEES
The Custodian shall receive fees for its services in respect to each
Participant's Account in accordance with the attached fee schedule.
The fee schedule may be changed by the Custodian with advance notice
from time to time. If not separately included, any acceptance fee
listed in the attached schedule will be deducted from the initial
contribution received from the Employer. Any acceptance or other
Custodian fees included will be deducted equally from each
Owner-Employee's contribution or Account. Annual maintenance fees
for each Participant's Account and any fees directly related to
activity in that Participant's Account shall be deducted annually and
activity fees will be deducted at the time incurred. Sufficient
Investment Company Shares will be redeemed to cover this fee.
Extraordinary services resulting from unusual administrative
responsibilities not contemplated by this schedule will be subject to
such additional charges as will reasonably compensate the Custodian
for the services performed.
15. FUNDING WAIVER
In the event the Employer obtains a funding waiver under Code Section
412 from the Internal Revenue Service, the Employer shall amend the
Plan by adding language which will override the affected provisions
of the Plan and this Adoption Agreement (attach appropriate
overriding language to this Adoption Agreement to comply with the
Code).
Note: An Employer that amends the Plan because of a waiver of the
minimum funding requirements under Code Section 412 will no longer
participate in this prototype Plan and will be considered to have
adopted an individually designed plan.
16. REPRESENTATION OF EMPLOYER
The Employer represents that it has consulted its legal and tax
advisors with respect to the Plan. The Employer acknowledges that it
may not continue participation under the Plan if it fails to attain
or maintain tax qualification of the Plan or if it amends the Plan
other than by a change in the Adoption Agreement. The Employer
agrees that whenever a Participant contribution is made, the Employer
will determine that the Participant has received the appropriate
current Investment Company prospectus. The Employer represents that
the Participant has received such prospectus by depositing
contributions with the Custodian.
The Employer acknowledges that if it has ever maintained or later
adopts any plan (including after December 31, 1985, a welfare benefit
fund, as defined in Code Section 419(e), which provides
post-retirement medical benefits allocated to separate accounts for
key employees, as defined in Code Section 419A(d)(3) or an individual
medical account, as defined in Code Section 415(l)(2)) in addition to
this Plan (or the Profit Sharing Plan), it may not rely on an opinion
letter issued by the National Office of the Internal Revenue Service
as evidence that this Plan is qualified under Code Section 401. If
the Employer adopts or maintains multiple plans and wishes reliance
that the Plan is qualified, application for an individual
determination letter should be made to the appropriate District
Office of the Internal Revenue Service.
17. ADDITIONAL INFORMATION
This Plan is sponsored by:
Landis Associates, Inc.
Suite 100
400 W. Ninth Street
Wilmington, DE 19801
(302) 654-3131
Further information regarding this Plan may be obtained by contacting
the Plan Sponsor at the address or telephone number listed above.
The Plan Sponsor will inform the undersigned Employer of any
amendments made to this Plan or of the discontinuance or abandonment
of this Plan.
Failure to properly fill out this Adoption Agreement may result in
disqualification of this Plan.
This Adoption Agreement can only be used with Plan document No. 01.
Signature of Employer:
Name of person signing above (please print):
Date:
CUSTODIAN ACCEPTANCE
The undersigned hereby accepts appointment as Custodian under
the Plan.
FIRSTAR TRUST COMPANY
By: _________________________
Date: _______________________
<PAGE>
THE HENLOPEN FUND
PROTOTYPE DEFINED CONTRIBUTION RETIREMENT PLAN
ADOPTION AGREEMENT
[STANDARDIZED]
(PROFIT-SHARING PLAN)
The undersigned Employer hereby adopts and establishes The
Henlopen Fund Prototype Defined Contribution Retirement Plan. This Plan
is subject to the terms set forth below in this Adoption Agreement.
1. EMPLOYER INFORMATION
Name:
Address:
Telephone Number: (___)
Employer Identification Number:
Type of Entity: [_] Corporation
[_] Partnership
[_] Sole Proprietorship
[_] Other (please describe)
Employer's Taxable Year is [_] calendar year or [_] fiscal year
beginning _____________________.
2. PLAN INFORMATION
Plan Administrator (if other than the Employer):
Name:
Address:
Telephone Number: (___)
Plan Year is the [_] calendar year, [_] Employer's fiscal year, or
[_] year beginning __________________.
3. EFFECTIVE DATE
Execution of this Adoption Agreement (elect one):
[_] Establishes a new plan.
[_] Is an amendment to an Original Plan.
This amendment is effective ____________, 19__.
[_] Is an amendment to an Original Plan under which no
further contributions will be made or participation
permitted (a "frozen plan"). This amendment is
effective ______________, 19__. (You need not complete
items 4, 5 or 6 and check item 7(A)(l).)
The Effective Date of the Plan is ____________, 19__. (If this is an
amended plan enter the date the Original Plan first started.)
4. ELIGIBILITY REQUIREMENTS
(A) Please check one:
[_] An Employee need not complete any waiting period.
[_] In order to become a Participant, an Employee must
satisfy the following Age and Service Requirements
(please fill in the blanks):
(1) An Employee must complete ____ (enter 1 or 2
years) Year(s) of Employment. If more than 1
year is selected, you must also check item
7(A)(1).
A Year of Employment shall mean the 12
consecutive month period beginning on the date
an Employee first performs an Hour of Service
or an anniversary thereof during which the
Employee has completed _________ (insert 1,000
or less) Hours of Service.
Hours of Service shall be determined on the
basis of the method elected below. Only one
method may be elected. The method elected
shall be applied to all Employees covered
under the Plan.
[_] On the basis of actual hours for which an
Employee is paid or entitled to payment.
[_] On the basis of days worked:
An Employee shall be credited with 10
Hours of Service if the Employee would be
credited with at least 1 Hour of Service
during the day.
[_] On the basis of weeks worked:
An Employee shall be credited with 45
Hours of Service if the Employee would be
credited with at least 1 Hour of Service
during the week.
[_] On the basis of months worked:
Employee shall be credited with 190 Hours
of Service if the Employee would be
credited with at least 1 Hour of Service
during the month.
(2) An Employee must attain age _____ (not greater
than age 21).
(B) Union Employees shall be:
[_] Included as eligible employees.
[_] Excluded from participation in the Plan.
Note: Union Employees must be covered by a collective
bargaining agreement between the Employer and employee
representatives under which retirement benefits were the
subject of good faith bargaining. The term "employee
representatives" does not include any organization more
than one-half of whose members are officers, executives or
owners of the Employer.
5. COMPENSATION
(A) A Participant's "Compensation" shall include (check one):
[_] All taxable earnings for the Plan Year.
[_] Only amounts earned after completion of the
eligibility requirements selected in item 4 above.
(B) For any self-employed individual, Compensation means Earned
Income.
6. EMPLOYER PROFIT SHARING CONTRIBUTIONS
(A) The Employer Profit Sharing Contributions for each Plan Year
shall be
(check one):
[_] A discretionary amount determined by the Employer,
but not more than 15% of the aggregate
Compensation and Earned Income of Participants
eligible to share in such contribution for the
Plan Year.
[_] An amount equal to ____% (not more than 15%) of
the aggregate Compensation and Earned Income of
Participants eligible to share in such
contribution for the Plan Year.
(B) Employer Profit Sharing Contributions:
[_] Shall be made out of Net Profits.
[_] May be made without regard to Net Profits.
(C) Allocation Formulas
The Employer Profit Sharing Contributions (and) forfeitures)
shall be allocated to the accounts of eligible Participants
pursuant to the following formula
(elect one):
(1) [_] Compensation Formula
Employer Profit Sharing Contributions (and
forfeitures) shall be allocated based on each
eligible Participant's total Compensation for
the Plan Year.
NOTE: If the Integration Formula is selected under the Pension
Plan, the Compensation Formula must be selected under this Plan.
(2) [_] Integration Formula
Employer Profit Sharing Contributions (and
forfeitures) shall be allocated based on each
eligible Participant's Compensation in excess
of the Intregration Level and total
Compensation for the Plan Year, subject to the
limitation set forth in Section 4.1(b) of the
Plan.
[_] The Integration Level shall be the taxable
wage base for FICA tax purposes.
[_] The Integration Level shall be $_________
(not to exceed the FICA taxable wage base).
NOTE: If the Plan is top-heavy all eligible Participants must
first be al1ocated 3% of their total Compensation and any
remaining contributions may be allocated pursuant to the
Intregration Formula.
7. VESTING
(A) A Participant shall have a nonforfeitable and fully vested
interest in his Employer Profit Sharing Contribution Account
under the following vesting schedule
(check one):
(1) [_] A Participant shall at all times have a
nonforfeitable and fully vested interest.
(2) [_] A Participant shall be fully vested after
_____ (not more than 3) Years of Service.
(3) [_] A Participant shall become vested in
accordance with the following schedule:
Vested
Years of Service Percentage
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
(B) A "Year of Service" shall mean any Plan Year in which an
Employee completes at least ____ (insert 1,000 or less) Hours of
Service. Years of Service shall include all Years of Service
with the Employer except as noted below (check one, both or
none).
(1) [_] All Years of Service prior to the effective
date of this Plan (or a predecessor plan)
shall be excluded.
(2) [_] All Years of Service before the Plan Year in
which the Participant attained age 18 shall be
excluded.
8. CASH OR DEFERRED ARRANGEMENT (Section 401(k))
Please check one:
[_] This Plan will include a cash or deferred arrangement
(complete the remainder of this Section). The
Effective Date of this Cash or Deferred Arrangement
(Section 401(k)) is ________________, l9__.
[_] This Plan will not include a cash or deferred
arrangement (do not complete the remainder of this
Section).
(A) Elective Deferrals.
(1) An Employee shall be eligible to make Elective
Deferrals under Article V of the Plan upon satisfying
the following eligibility requirements:
[_] An Employee must complete _____ (not
greater than 1 year) Years of Employment.
[_] An Employee must attain age ____ (not
greater than 21).
[_] Union Employees are excluded from making
Elective Deferrals.
[_] All Employees are eligible to make
Elective Deferrals.
(2) An Employee may elect to make Elective Deferrals to
the Plan equal to a percentage of regular salary or
wages for a pay period as specified in a salary
reduction agreement. The maximum percentage of
Elective Deferrals shall be _____%.
[_] Elective Deferrals may be based on cash
bonuses paid to the Employee. The
maximum percentage of such Elective
Deferrals shall be _____%.
(3) An Employee may change the rate of his Elective
Deferrals:
[_] On the first day of each Plan Year.
[_] And on the following additional dates:
______________________
(4) [_] Recharacterization of excess contributions
will be available only for non-highly
compensated employees.
(B) Matching Contributions
(1) [_] The percentage of Elective Deferrral
contributions which are matched is:
[_] ____%.
[_] of the first _____% of Elective Deferrals.
[_] A percentage determined by the Employer, but
will not be more than 100%.
(2) Matching Contributions are made:
[_] Each pay period in which Elective Deferrals
are made.
[_] At the end of the Plan Year for Employees
meeting the requirements for annual
contributions.
(3) Matching Contributions will vest under the following
schedule (elect one):
[_] Employee shall at all times have a
nonforfeitable and fully vested interest in
any Matching Contributions.
[_] An Employee shall be fully vested in any
Matching Contributions after ____ (not more
than 3) Years of Service.
[_] An Employee shall become vested in any
Matching Contributions in accordance with the
following schedule:
Nonforfeitable
Years of Service Percentage
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
(C) Special Contributions
[_] The Employer may make Qualified Matching
Contributions subject to Section 5.4 of the Plan.
[_] The Employer may make Qualified Non-Elective
Contributions, subject to Section 5.4 of the Plan.
Note: These special contributions are used to
satisfy the nondiscrimination tests which apply to
elective deferral and matching contributions.
(D) Hardship Withdrawals
[_] Withdrawals on account of financial hardship are
allowed in accordance with Section 5.5(a) of the
Plan.
[_] Withdrawals on account of financial hardship are
not allowed.
9. PARTICIPANT AFTER-TAX CONTRIBUTIONS
Participant Voluntary Contributions (check one):
[_] Participant Voluntary Contributions are permitted.
[_] Participant Voluntary Contributions are permitted only
for non-highly compensated employees.
[_] Participant Voluntary Contributions are not permitted.
10. WITHDRAWAL OF EMPLOYER PROFIT SHARING CONTRIBUTIONS
[_] A Participant who has participated in the Plan for at
least 5 years may withdraw up to _____% of his vested
Employer Profit Sharing Contribution Account after
attaining age 59-1/2 or on account of a financial hardship
in accordance with Section 8.6 of the Plan.
Note: Withdrawals are not permitted if the Integration
Formula is selected in item 6(C)(2).
[_] Withdrawals are not permitted.
11. NORMAL RETIREMENT AGE
The Normal Retirement Age shall be age ___ [insert an age not to
exceed 65].
12. LIMITATION ON ALLOCATIONS
"Limitation Year", if other than a calendar year, shall mean the 12
consecutive month period ending on the last day of
_______________________.
Follow these instructions only if the Employer maintains (or has ever
maintained) another qualified plan (other than the Pension Plan)
which is either (i) a qualified defined contribution plan other than
a Master or Prototype Plan or (ii) a qualified defined benefit plan
in which any Participant in this Plan is (or was) a participant or
could become a participant, or if the Employer maintains a welfare
benefit fund or an individual medical account.
To comply with Internal Revenue Code requirements, please attach
appropriate provisions that limit the amount of Annual Additions
allocated to any Participant's Account.
If you do not attach the appropriate provisions, Sections 6.3. and
6.4 of the Plan will automatically apply.
13. TOP-HEAVY PROVISIONS
The interest rate and mortality assumptions for determining Top-Heavy
status shall be the assumptions designated under Section 13.2(h) of
the Plan, unless different assumptions are selected below.
The interest rate and mortality assumptions for determining present
values to compute the Top-Heavy ratio shall be:
Interest Rate: _____%
Mortality Table: _____________________________
14. ESTABLISHMENT OF ACCOUNTS
(A) Unless elected below, the Custodian shall establish individual
Custodial Accounts for each Participant.
[_] The Custodian shall establish a single Custodial
Account in the name of the Employer and the
Employer shall keep all records for the individual
Participants.
(B) Unless elected below, a Participant shall be permitted to direct
the investment of his Account balance.
[_] Participant self-direction of the investment of his
Account balance is not permitted.
15. CUSTODIAN
The undersigned as Employer hereby appoints Firstar Trust Company as
Custodian.
16. FEES
The Custodian shall receive fees for its services in respect to each
Participant's Account in accordance with the attached fee schedule.
The fee schedule may be changed by the Custodian with advance notice.
If not separately included, any acceptance fee listed in the attached
schedule will be deducted from the initial contribution received from
the Employer. Any acceptance or other Custodian fees included will
be deducted equally from each Owner-Employee's contribution or
Account. Annual maintenance fees for each Participant's Account and
any fees directly related to activity in that Participant's Account
shall be deducted annually and activity fees will be deducted at the
time incurred. Sufficient Investment Company Shares will be redeemed
to cover this fee.
Extraordinary services resulting from unusual administrative
responsibilities not contemplated by this schedule will be subject to
such additional charges as will reasonably compensate the Custodian
for the services performed.
17. REPRESENTATION OF EMPLOYER
The Employer represents that it has consulted its legal and tax
advisors with respect to the Plan. The Employer acknowledges that it
may not continue participation under the Plan if it fails to attain
or maintain tax qualification of the Plan or if it amends the Plan
other than by a change in the Adoption Agreement. The Employer
agrees that whenever a Participant Contribution is made, the Employer
will determine that the Participant has received the appropriate
current Investment Company prospectus. The Employer represents that
the Participant has received suchprospectus by depositing
contributions with the Custodian.
The Employer acknowledges that if it has ever maintained or later
adopts any plan (including after December 3l, l985, a welfare benefit
fund, as defined in Code Section 4l9(e), which provides
post-retirement medical benefits allocated to separate accounts for
key employees, as defined in Code Section 4l9A(d)(3) or an individual
medical account, as defined in Code Section 4l5(l)(2)) in addition to
this Plan (or the Pension Plan), it may not rely on an opinion letter
issued by the National Office of the Internal Revenue Service as
evidence that this Plan is qualified under Code Section 40l. If the
Employer adopts or maintains multiple plans and wishes reliance that
the Plan is qualified, application for an individual determination
letter should be made to the appropriate District Office of the
Internal Revenue Service.
18. ADDITIONAL INFORMATION
This Plan is sponsored by:
Landis Associates, Inc.
Suite 100
400 W. Ninth Street
Wilmington, DE 19801
(302) 654-3131
Further information regarding this Plan may be obtained by contacting
the Plan Sponsor at the address or telephone number listed above.
The Plan Sponsor will inform the undersigned Employer of any
amendments made to this Plan or of the discontinuance or abandonment
of this Plan.
Failure to properly fill out this Adoption Agreement may result in
disqualification of this Plan.
This Adoption Agreement can only be used with Plan document No. 01.
Signature of Employer:
Name of person signing above (please print):
Date:
CUSTODIAN ACCEPTANCE
The undersigned hereby accepts appointment as Custodian under
the Plan.
FIRSTAR TRUST COMPANY
By:
Date:
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