As filed with the Securities and Exchange Commission on October 26, 1995
Registration No. 2-51641
811-2506
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. 25 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 25 X
(Check appropriate box or boxes.)
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
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(Exact name of Registrant as specified in Charter)
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
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(Address of principal executive offices)
Registrant's Telephone Number: (201) 845-7300
Lisa Curcio, Secretary
Lexington Strategic Investments Fund, Inc.
Park 80 West Plaza Two, Saddle Brook, New Jersey 07663
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(Name and address of agent for service)
With a copy to:
Carl Frischling, Esq.
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
919 Third Avenue, New York, New York 10022
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It is proposed that this filing will become effective October 27, 1995
pursuant to Paragraph (b) of Rule 485.
------------------------------------------
The Registrant has registered an indefinite number of shares under the
Securities Act of 1933, pursuant to Section 24(f) of the Investment Company
Act of 1940. A Rule 24f-2 Notice for the Registrant's fiscal year ended
June 30, 1995 was filed on August 22, 1995.
<PAGE>
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET
PART A
Items in Part A Prospectus
of Form N-1A Prospectus Caption Page Number
- --------------- ------------------ -----------
1. Cover Page Cover Page
2. Synopsis *
3. Financial Highlights 2
4. General Description of Registrant 3
5. Management of the Fund 7
6. Capital Stock and Other Securities 16
7. Purchase of Securities Being Offered 8
8. Redemption or Repurchase 11
9. Legal Proceedings *
Note * Omitted since answer is negative or inapplicable
<PAGE>
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
STATEMENT OF ADDITIONAL STATEMENT OF ADDITIONAL
PART B INFORMATION CAPTION INFORMATION PAGE NUMBER
- ------ ----------------------- -----------------------
10. Cover Page Cover Page
11. Table of Contents Cover Page
12. General Information and History 16 (Part A)
13. Investment Objectives and Policies 3 (Part A)
14. Management of the Registrant 14
15. Control Persons and Principal Holders 4
of Securities
16. Investment Advisory and Other Services 4
17. Brokerage Allocation and Other Practices 5
18. Capital Stock and Other Securities 16 (Part A)
19. Purchase, Redemption and Pricing of 8, 11 (Part A)
Securities being offered
20. Tax Status 8
21. Underwriters 4
22. Calculation of Yield Quotations on Money *
Market Funds
PART C
- ------
Information required to be included in Part C is set
forth under the appropriate Item, so numbered, in
Part C to this Registration Statement.
* Not Applicable
<PAGE>
PROSPECTUS
October 27, 1995
Lexington Strategic Investments Fund, Inc.
P.O. Box 1515, Park 80 West, Plaza Two, Saddle Brook, New Jersey 07663
Toll Free: Sales-1-800-367-9160
1-201-845-7300
Service-1-800-526-0056
- --------------------------------------------------------------------------------
Lexington Strategic Investments Fund, Inc. (the "Fund") is an
open-end diversified management investment company. The Fund's principal
investment objective is capital appreciation. Current income is a
secondary objective. The investment concentration of the Fund's assets
is currently in the common stock of gold and other precious metals
mining companies. The Fund may also invest in bullion. As the highest
production of gold and other precious metals is currently taking place
in the Republic of South Africa, management anticipates that a major
portion of the Fund's Portfolio will continue to consist of securities
of issuers of that area. The Fund seeks the benefits of investing in
gold and other precious metals securities, but it is also subject to the
risks involved in such investments. See Investment Objective and
Policies on page 3.
Lexington Management Corporation ("LMC") is the Fund's investment
adviser. Lexington Funds Distributor, Inc. ("LFD") is the Fund's
distributor.
Shares of the Fund are being offered at a price equal to the net
asset value per share plus a sales charge of 5.75% of the offering price
(6.10% of the net amount invested) subject to reductions on purchases in
single transactions of $10,000 or more.
This Prospectus sets forth information about the Fund you should
know before investing. It should be read and retained for future
reference.
A Statement of Additional Information dated October 27, 1995 which
provides a further discussion of certain matters in this Prospectus and
other matters which may be of interest to some investors, has been filed
with the Securities and Exchange Commission and is incorporated herein
by reference. For a free copy, call the appropriate telephone number
above or write to the address listed above.
Mutual fund shares are not deposits or obligations of (or endorsed
or guaranteed by) any bank, nor are they federally insured or otherwise
protected by the Federal Deposit Insurance Corporation ("FDIC"), the
Federal Reserve Board or any other agency. Investing in mutual funds
involves investment risks, including the possible loss of principal, and
their value and return will fluctuate.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<PAGE>
FEE TABLE
Shareholder Transaction Expenses (as a percentage of the offering price)
Maximum sales charge imposed on purchases ................................ 5.75%
----
Annual Fund Operating Expenses (as a percentage of average net assets):
Management fees ...................................................... 0.82%
----
Other expenses ....................................................... 0.88%
----
Total Fund Operating Expenses .................................... 1.70%
====
Example: 1 year 3 years 5 years 10 years
------ ------- ------- --------
You would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual
return and (2) redemption at the end
of each period ............................. $73.79 $107.99 $144.49 $246.81
The purpose of the foregoing table is to assist an investor in understanding
the various costs and expenses that an investor in the Fund will bear
indirectly. Shareholder Servicing Agents acting as agents for their customers
may provide administrative and recordkeeping services on behalf of the Fund. For
these services, each Shareholder Servicing Agent receives fees, which may be
paid periodically, provided that such fees will not exceed, on an annual basis,
0.25% of the average daily net assets of the Fund represented by shares owned
during the period for which payment is made. Each Shareholder Servicing Agent
may, from time to time, voluntarily waive all or a portion of the fees payable
to it. (For more complete descriptions of the various costs and expenses, see
"Investment Adviser and Distributor" and "How to Purchase Shares" below.) The
Expenses and Example appearing in the table above are based on the Fund's
expenses for the period from July 1, 1994 to June 30, 1995. The Example shown in
the table above should not be considered a representation of past or future
expenses and actual expenses may be greater or less than those shown.
The Fund charges an annual fee of $25 per account for accounts of any size
without a current mailing address.
FINANCIAL HIGHLIGHTS
The Fund was originally organized as a Texas corporation on May 13, 1974
under the name Strategic Investments Fund, Inc. The Fund was re-organized as a
Maryland corporation under its present name on June 8, 1992. Lexington
Management Corporation became the Fund's investment adviser on December 13,
1991.
The table below includes certain financial highlights of the Fund's
investment results for periods prior to the Fund's re-organization during which
the Fund was managed by a different investment adviser.
The following Financial Highlights Table for the four years ended June 30,
1995 has been audited by KPMG Peat Marwick LLP, Independent Auditors, whose
report thereon appears in the Statement of Additional Information. The Financial
Highlights for the one year period ended June 30, 1991 has been audited by
Cheshier & Fuller, Inc., Independent Auditors. This information should be read
in conjunction with the financial statements and related notes thereto included
in the Statement of Additional Information. The Fund's annual report, which
contains additional performance information is available upon request and
without charge.
2
<PAGE>
Selected Per Share Data for a share outstanding throughout the period:
<TABLE>
<CAPTION>
Year ended June 30, 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period......................... $2.48 $2.30 $1.26 $2.54 $2.63 $3.08 $3.45 $6.01 $3.46 $5.95
Income (loss) from investment
operations:
Net investment income.......... .04 .04 .03 - .04 .12 .17 .24 .36 .30
Net realized and unrealized
gain (loss) on investments... .03 .18 1.01 (1.27) (.04) (.43) (.33) (2.50) 2.53 (2.48)
Total income (loss) from
investment operations.......... .07 .22 1.04 (1.27) - (.31) (.16) (2.26) 2.89 (2.18)
Less distributions:
Dividends from net investment
income....................... (.04) (.04) - (.01) (.09) (.14) (.21) (.30) (.34) (.31)
Net asset value, end of period... $2.51 $2.48 $2.30 $1.26 $2.54 $2.63 $3.08 $3.45 $6.01 $3.46
Total return*.................... 2.47% 9.26% 82.54% (50.14%) (0.17%) (11.28%) 4.56%) (39.70%) 89.24% (38.30%)
Ratios to average net assets:
Expenses, before reimbursement. 1.70% 1.76% 3.76% 2.82% 1.98% 1.71% 1.80% 1.52% 1.38% 1.46%
Expenses, net of reimbursement. 1.70% 1.76% 2.78% 2.50% 1.85% 1.59% 1.62% 1.52% 1.38% 1.46%
Net investment income (loss),
before reimbursement......... 1.54% 2.00% 2.05% (0.10%) 1.51% 3.13% 5.36% 4.48% 6.77% 6.90%
Net investment income............ 1.54% 2.00% 3.03% 0.22% 1.64% 3.25% 5.54% 4.48% 6.77% 6.90%
Portfolio turnover ..............115.91% 25.66% 4.80% 13.92% 12.48% 73.25% 0.32% 22.75% 18.96% 20.83%
Net assets at end of period
(000's omitted)................$94,059 $73,500 $43,816 $14,402 $32,070 $34,407 $46,075 $55,798 $108,125 $65,620
<FN>
*Sales load is not reflected in total return.
</FN>
</TABLE>
DESCRIPTION OF THE FUND
The Fund (formerly, Strategic Investments Fund, Inc.) a Maryland corporation
is an open-end diversified management investment company.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is capital appreciation. Current income is a
secondary objective.
As a fundamental policy the Fund intends to concentrate its investments in
securities of companies engaged in exploration, mining, processing, fabrication
and distribution of natural resources (hydrocarbons, minerals, metals of silver,
gold, uranium, platinum and copper). Accordingly, the Fund will have at least
25% of the value of its assets invested in such securities except during unusual
and adverse economic conditions that may exist in the natural resource industry.
The Fund's policy under normal conditions is to select investments so that a
minimum of 80% of its gross income will be derived from sources outside of the
United States, and so that at least 50% of the value of its assets will be
securities of foreign corporations. The investment concentration of the Fund's
assets is currently in the common stock of gold and other precious metals mining
companies. The Fund may also invest in bullion which includes gold, silver,
platinum and palladium. As the highest production of gold and other precious
metals is currently taking place in the Republic of South Africa, management
anticipates that a major portion of the Fund's portfolio will continue to
consist of the securities of issuers of that area. If the Fund's management,
after review by the Board of Directors, decided to de-emphasize investment in
gold and other precious metals mining shares, the Fund would sell precious
metals mining shares and buy shares of securities related to other natural
resources.
At any time management deems it advisable for temporary defensive or
liquidity purposes, the Fund may hold all its assets in cash or cash
equivalents, and invest in, or hold unlimited amounts of debt obligations of the
United States Government or its political subdivisions, and money market
instruments including repurchase agreements with maturities of seven days or
less and Certificates of Deposit.
3
<PAGE>
The Fund's investment portfolio may include repurchase agreements ("repos")
with banks and dealers in U.S. Government securities. A repurchase agreement
involves the purchase by the Fund of an investment contract from a bank or a
dealer in U.S. Government securities which contract is secured by debt
securities whose value is equal to or greater than the value of the repurchase
agreement including the agreed upon time and price. The total amount received on
repurchase would exceed this price paid by the Fund, reflecting an agreed upon
rate of interest for the period from the date of the repurchase agreement to the
settlement date, and would not be related to the interest rate of the underlying
securities. The difference between the total amount to be received upon the
repurchase of the securities and the price paid by the Fund upon their
acquisition is accrued daily as interest. If the institution defaults on the
repurchase agreement, the Fund will retain possession of the underlying
securities. In addition, if bankruptcy proceedings are commenced with respect to
the seller, realization on the collateral by the Fund may be delayed or limited
and the Fund may incur additional costs. In such case the Fund will be subject
to risks associated with changes in the market value of the collateral
securities. The Fund intends to limit repurchase agreements to transactions with
institutions believed by LMC to present minimal credit risk.
Although management will attempt to achieve the Fund's objective, there can
be no assurance that they will be achieved.
RISK CONSIDERATIONS
The Fund's performance and ability to meet its objective will generally be
largely dependent on the market value of gold and other precious metals. The
Fund's professional management seeks to maximize on advances and minimize on
declines by monitoring and anticipating shifts in the relative values of gold
and other precious metals and the securities of various related companies
throughout the world. A substantial portion of the Fund's investments should be
in the securities of foreign issuers. There can be no assurance that the Fund's
objective will be achieved. An investment in the Fund's shares should be
considered part of an overall investment program rather than a complete
investment program. Although there is some degree of risk in all investments,
there are special risks inherent in the Fund's policies of investing in the
securities of companies engaged in mining or processing gold and other precious
metals. These risks include:
1. FLUCTUATIONS IN THE PRICE OF GOLD. The price of gold has been subject to
dramatic downward and upward price movements over short periods of time
and may be affected by unpredictable international monetary and political
policies, such as currency devaluations or revaluations, economic
conditions within an individual country, trade imbalances, or trade or
currency restrictions between countries. The price of gold, in turn, is
likely to affect the market prices of securities of companies mining or
processing gold, and accordingly, the value of the Fund's investments in
such securities may also be affected.
2. POTENTIAL EFFECT OF CONCENTRATION OF SOURCE OF SUPPLY AND CONTROL OF
SALES. The two largest national producers of gold bullion are the
Republic of South Africa and the United States of America. Changes in
political and economic conditions affecting either country may have
direct impact on that country's sales of gold. Under South African law,
the one authorized sales agent for gold produced in South Africa is the
Reserve Bank of South Africa, which through its retention policies
controls the time and place of any sale of South African bullion. The
South African Ministry of Mines determines gold mining policy. South
Africa depends significantly on gold sales for the foreign exchange
necessary to finance its imports, and its sales policy is necessarily
subject to economic and political developments.
3. INVESTMENTS IN PRECIOUS METALS. Unlike certain more traditional
investment vehicles such as savings deposits and stocks and bonds, which
may produce interest or dividend income, bullion, earns no income return.
Appreciation in the market price of such metals is the sole manner in
which the Fund will be able to realize gains on its investment in
bullion. Furthermore, the Fund may encounter storage and transaction
costs in connection with its ownership of bullion which may be higher
than those attendant to the purchase, holding and disposition of more
traditional types of investments.
4
<PAGE>
4. INVESTMENTS IN FOREIGN SECURITIES. A substantial portion of the Fund's
investments will be in the securities of foreign issuers. Investments in
foreign securities may involve risks greater than those attendant to
investments in securities of U.S. issuers. Publicly available information
concerning issuers located outside the U.S. may not be comparable in
scope or depth of analysis to that generally available for publicly held
U.S. corporations. Accounting and auditing practices and financial
reporting requirements vary significantly from country to country and
generally are not comparable to those applicable to publicly held U.S.
corporations. Government supervision and regulation of foreign securities
exchanges and markets, securities listed on such exchanges or traded in
such markets and brokers, dealers, banks and other financial institutions
who trade the securities in which the Fund may invest is generally less
extensive than in the U.S., and trading customs and practices may differ
substantially from those prevailing in the U.S. The Fund may trade in
certain foreign securities markets which are less developed than
comparable U.S. markets, which may result in reduced liquidity of
securities traded in such markets. Investments in foreign securities are
also subject to currency fluctuations. For example, when the Fund's
assets are invested primarily in securities denominated in foreign
currencies, an investor can expect that the Fund's net asset value per
share will tend to increase when the value of U.S. dollars is decreasing
as against such currencies. Conversely, a tendency toward decline in net
asset value per share can be expected when the value of U.S. dollars is
increasing as against such currencies. Changes in net asset value per
share can be expected when the value of U.S. dollars is increasing as
against such currencies. Changes in net asset value per share as a result
of foreign exchange rate fluctuations will be determined by the
composition of the Fund's portfolio at any given time. Further, it is not
possible to avoid altogether the risks of expropriation, burdensome or
confiscatory taxation, moratoriums, exchange and investment controls or
political or diplomatic events which might adversely affect the Fund's
investments in foreign securities or restrict the Fund's ability to
dispose of such investments. However, to the extent that a substantial
portion of the Fund's portfolio is invested in American Depository
Receipts ("ADR's") or other securities which can be sold for United
States dollars and for which market quotations are readily available, the
Fund is able to minimize such risks.
5. TAX AND CURRENCY LAWS. The Fund's transactions in bullion may, under some
circumstances, preclude its qualifying for the special tax treatment
available to investment companies meeting the requirements of Subchapter
M of the Internal Revenue Code. However, the Fund may make investment
decisions without regard to the effect on its ability to qualify under
Subchapter M of the Internal Revenue Code, if deemed appropriate by LMC
(see "Tax Matters"). In addition, changes in the tax or currency laws of
the U.S. (including, for example, reinstatement of an interest
equalization tax as was previously in effect) and of foreign countries
may inhibit the Fund's ability to pursue or may increase the cost of
pursuing its investment program.
6. UNPREDICTABLE MONETARY POLICIES, ECONOMIC AND POLITICAL CONDITIONS. The
Fund's assets might be less liquid or the change in the value of its
assets might be more volatile (and less related to general price
movements in the U.S. securities markets) than would be the case with
investments in the securities of publicly traded U.S. companies,
particularly because the price of gold may be affected by unpredictable
international monetary policies, economic and political conditions,
governmental controls, conditions of scarcity and surplus, and
speculation. In addition, the use of gold or Special Drawing Rights
(which are also used by members of the International Monetary Fund for
international settlements) to settle net deficits and surpluses in trade
and capital movements between nations subjects the supply and demand, and
therefore the price of gold to a variety of economic factors which
normally would not affect other types of investments.
7. INTERNATIONAL AND DOMESTIC MONETARY SYSTEMS. Substantial amounts of gold
bullion serving as primary official reserve assets play a major role in
the international monetary system. Since December 31, 1974, when it again
became legal to invest in gold, several new markets have developed in the
United States. In connection with this legalization of gold ownership,
the U.S. Treasury and the International Monetary Fund
5
<PAGE>
("IMF") embarked upon programs to dispose of substantial amounts of gold
bullion. The last sale by the U.S. Treasury was carried out in November
1979 and May 1980 marked the completion of the IMF's program.
8. EXPERTISE OF THE INVESTMENT ADVISER. The successful management of the
Fund's portfolio may be more dependent upon the skills and expertise of
its investment adviser than is the case for most mutual funds because of
the need to evaluate the factors identified above.
Although the concentration of investments by the Fund in securities of
foreign issuers engaged in the mining of gold and precious metals may involve
special considerations and additional investment risks, management believes that
selective investment in such securities may offer a greater return than shares
of domestic industrial issuers.
In addition, the production and marketing of gold and other precious metals
may be affected by the actions of certain governments and changes in existing
governments of the largest gold producing countries. Economic and political
conditions and objectives prevailing in these countries may have direct effects
on the production and marketing of newly produced gold and sales of central bank
gold holdings. Unsettled political conditions prevailing in South Africa and
neighboring countries may pose certain risks to the Fund's investments in South
African issuers. The ability of the Fund to invest in South African companies
may also be affected by changes in American laws or regulations relating to
foreign investments.
INVESTMENT RESTRICTIONS
The Fund's investment program is subject to a number of investment
restrictions which reflect self imposed standards as well as federal and state
regulatory limitations. These restrictions are designed to minimize certain
risks associated with investing in certain types of securities or engaging in
certain transactions. The most significant of these restrictions provide that:
(1) The Fund will concentrate its investments in securities of companies
engaged in exploration, mining, processing, fabrication and distribution
of natural resources (hydrocarbons, minerals, metals of silver, gold,
uranium, platinum and copper). Accordingly, the Fund will have at least
25% of the value of its assets invested in such securities except during
unusual and adverse economic conditions that may exist in the natural
resource industry.
(2) The Fund will not hold more than 5% of the value of its total assets in
the securities of any one issuer or hold more than 10% of the
outstanding voting securities of any one issuer. This restriction
applies only to 75% of the value of the Fund's total assets. Securities
issued or guaranteed by the U.S. Government, its agencies and
instrumentalities are excluded from this restriction.
(3) The Fund will not borrow money, except that (a) the Fund may enter into
certain futures contracts and options related thereto; (b) the Fund may
enter into commitments to purchase securities in accordance with the
Fund's investment program, including delayed delivery and when-issued
securities and reverse repurchase agreements; (c) for temporary
emergency purposes, the Fund may borrow money in amounts not exceeding
5% of the value of its total assets at the time when the loan is made;
(d) the Fund may pledge its gold or its other precious metals or
portfolio securities or receivables or transfer or assign or otherwise
encumber them in an amount not exceeding one-third of the value of its
total assets; and (e) for purposes of leveraging, the Fund may borrow
money from banks (including its custodian bank), only if, immediately
after such borrowing, the value of the Fund's assets, including the
amount borrowed, less its liabilities, is equal to at least 300% of the
amount borrowed, plus all outstanding borrowings. If at any time, the
value of the Fund's assets fails to meet the 300% asset coverage
requirement relative only to leveraging, the Fund will, within three
days (not including Sundays and holidays), reduce its borrowings to the
extent necessary to meet the 300% test. The Fund will only invest in
reverse repurchase agreements up to 5% of the Fund's total assets.
6
<PAGE>
(4) The Fund will not make loans, except that, to the extent appropriate
under its investment program~ the Fund may (a) purchase bonds,
debentures or other debt securities, including short-term obligations,
(b) enter into repurchase debt securities, including short-term
obligations, (b) enter into repurchase transactions and (c) lend
portfolio securities provided that the value of such loaned securities
does not exceed one-third of the Fund's total assets.
(5) The Fund will not invest in commodity contracts, except that the Fund
may, to the extent appropriate under its investment program, purchase
securities of companies engaged in such activities, may enter into
transactions in financial and index futures contracts and related
options, may engage in transactions on a when-issued or forward
commitment basis, and may enter into forward currency contracts.
Investments in gold bullion or other precious metals shall not be deemed
an investment in a commodity subject to the Fund's investment
restrictions. Transactions in which bullion is taken in payment of
principal, interest or both or a debt instrument and where the Fund
disposes of bullion for cash will not be subject to this restriction.
The foregoing investment restrictions (as well as certain others set forth
in the Statement of Additional Information) are matters of fundamental policy
which may not be changed without the affirmative vote of the majority of the
shareholders of the Fund.
The investment policies described bellow are non-fundamental, therefore,
changes to such policies may be made in the future by the Board of Directors
without the approval of the shareholders of the Fund:
(1) The Fund will not invest more than 15% of its total assets in illiquid
securities. Illiquid securities are securities that are not readily
marketable or cannot be disposed of promptly within seven days and in
the usual course of business without taking a materially reduced price.
Such securities include, but are not limited to, time deposits and
repurchase agreements with maturities longer than seven days. Securities
that may be resold under Rule 144A or securities offered pursuant to
Section 4(2) of the Securities Act of 1933, as amended, shall not be
deemed illiquid solely by reason of being unregistered. The Investment
Adviser shall determine whether a particular security is deemed to be
liquid based on the trading markets for the specific security and other
factors.
(2) The Fund will not write, purchase or sell puts, calls or combinations
thereof. However, the Fund may invest up to 15% of the value of its
assets in warrants. This restriction on the purchase of warrants does
not apply to warrants attached to, or otherwise included in, a unit with
other securities.
(3) The Fund may purchase and sell futures contracts and related options
under the following conditions: (a) the then-current aggregate futures
market prices of financial instruments required to be delivered and
purchased under open futures contracts shall not exceed 30% of the
Fund's total assets, at market value; and (b) no more than 5% of the
assets, at market value at the time of entering into a contract, shall
be committed to margin deposits in relation to futures contracts.
The Statement of Additional Information contains a complete description of
the Fund's restrictions and additional information on policies relating to the
investment of its assets and its activities.
MANAGEMENT OF THE FUND
The business affairs of the Fund are managed under the direction of its
Board of Directors. There are currently ten directors (of whom seven are
non-affiliated persons) who meet four times each year. The Statement of
Additional Information contains additional information regarding the directors
and officers of the Fund.
Portfolio Manager
Robert W. Radsch, CFA, is Vice President and Portfolio Manager of the Fund.
He is also Vice President of Lexington Management Corporation. Prior to joining
Lexington in July 1994, he was Senior Vice President, Portfolio Manager and
7
<PAGE>
Chief Economist for the Bull & Bear Group. He has extensive experience managing
gold, silver and platinum on an international basis having managed precious
metals and international funds for more than 13 years. Mr. Radsch is a graduate
of Yale University with a B.A. degree and holds an M.B.A. in Finance from
Columbia University.
INVESTMENT ADVISER, DISTRIBUTOR AND ADMINISTRATOR
LMC, P.O. Box 1515/Park 80 West, Plaza Two, Saddle Brook, New Jersey 07663,
is the investment adviser to the Fund, and, as such, advises and makes
recommendations to the Fund with respect to its investment and investment
policies. Lexington Funds Distributor, Inc. ("LFD") is the distributor of shares
of the Fund.
LMC is paid an investment advisory fee at the annual rate of 1.00% of the
first $30 million on the daily net assets of the Fund at 0.75% on the daily net
assets of the Fund in excess of $30 million. In the fiscal year ended June 30,
1995, LMC earned $902,569 in management fees from the Fund. This fee is computed
on the basis of the Fund's average daily net assets and is payable on the last
business day of each month.
LMC also acts as administrator to the Fund and performs certain
administrative and internal accounting services, including but not limited to,
maintaining general ledger accounts, regulatory compliance, preparation of
financial information for semiannual and annual reports, preparing registration
statements, calculating net asset values, shareholder communications and
supervision of the custodian, transfer agent and provides facilities for such
services. The Fund shall reimburse LMC for its actual cost in providing such
services, facilities and expenses.
LMC, established in 1938, currently manages over $3.8 billion in assets. LMC
serves as investment adviser to other investment companies and private and
institutional investment accounts. Included among these clients are persons and
organizations which own significant amounts of capital stock of LMC's parent.
The clients pay fees which LMC considers comparable to the fees paid by
similarly served clients.
LMC and LFD are wholly-owned subsidiaries of Piedmont Management Company
Inc., a Delaware corporation with offices at 80 Maiden Lane, New York, New York
10038. Descendants of Lunsford Richardson, Sr., their spouses, trusts and other
related entities have a majority voting control of outstanding shares of
Piedmont Management Company Inc. common stock. See "Investment Adviser and
Distributor" in the Statement of Additional Information.
HOW TO PURCHASE SHARES
The minimum initial investment for a shareholder is $1,000 and minimum
subsequent investments are $50. The public offering price of shares of the Fund
is their net asset value per share next determined after receipt and acceptance
of the purchase order at the office of LMC, plus the applicable sales charge, if
any. Lower sales charges are applicable to larger transactions as shown in the
following table:
<TABLE>
Sales Charge As Sales Charge As Dealer Concessions
Percentage of the Percentage of Net as a Percentage of
Amount of Purchase Offering Amount Invested the Offering Price
- ------------------ ----------------- ----------------- -------------------
<S> <C> <C> <C>
Less than $10,000 .................. 5.75% 6.10% 5.00%
$10,000 but less than $25,000 ...... 5.50% 5.82% 5.00%
$25,000 but less than $100,000 .... 4.75% 4.99% 4.25%
$100,000 but less than $250,000 .... 3.75% 3.90% 3.25%
$250,000 but less than $500,000 .... 2.50% 2.60% 2.00%
$500,000 but less than $1,000,000 .. 2.00% 2.04% 1.50%
Over $1,000,000 .................... negotiable
</TABLE>
8
<PAGE>
Commissions are paid to securities dealers who have selling agreements with
LFD and are members of the National Association of Securities Dealers, Inc. From
time to time, LFD may reallow the entire sales commission to selected dealers
who sell or are expected to sell significant amounts of shares during specified
time periods. During periods when 90% or more of the sales commission is
reallowed, such dealers may be deemed to be underwriters as that term is defined
in the Securities Act of 1933.
The sales commission, as set forth in the table above, will be applicable to
purchases made at one time by an individual or an individual and spouse and
their children under the age of 21, or a trustee or fiduciary purchasing
securities for a single trust, estate or a single fiduciary account, even though
more than one beneficiary is involved. This, however, does not include a group
of individuals whose funds are combined, directly or indirectly, for the
purchase of shares of the Fund jointly or through a trustee, agent, custodian or
other representative of such group of individuals. The sales charges will also
be applicable to purchases made at one time by employees of tax exempt
organizations enumerated in Sections 501(c)(3) or (13) of the Internal Revenue
Code and the employee benefit plans qualified under Section 401 of the Internal
Revenue Code and also to employee benefit plans not qualified under Section 401,
provided employees' contributions are made by means of periodic payroll
deductions or otherwise in such manner that the total amount to be invested by
all individuals in the group at one time is remitted in one sum to the Fund
together with a tabulation indicating the amounts to be applied to the benefit
of each such individual.
Shares of the Fund may be purchased at any time at net asset value without a
sales charge by the following: (a) Officers, Directors and employees of the
Fund, the Investment Adviser, the Distributor, broker-dealers who have currently
effective sales agreements with the Distributor and affiliates of such companies
including their spouses and children; (b) any trust, pension or profit sharing
or other benefit plan for the persons described in item (a), above; (c) any
employee benefit plan subject to minimum requirements with respect to number of
employees or amount of contribution which may be established by LFD; (d)
accounts advised or managed by LMC and its affiliates; (e) trust companies and
bank trust departments for funds over which they exercise discretionary
investment authority and which are held in a fiduciary, agency, advisory,
custodial or similar capacity; (f) registered investment advisors; (g)
organizations that provide administrative services to (e) and (f) above; (h)
broker-dealers who maintain omnibus accounts with the Fund. Broker-dealers who
process such orders for their customers may charge a fee for these services; and
(i) persons who have redeemed their Fund shares within the previous 45 days. The
amount which may be so reinvested is limited to an amount up to, but not
exceeding, the redemption proceeds. In order to exercise this privilege, an
order for the purchase of shares must be received by the Fund or LFD within 45
days after redemption: (j) persons who have previously paid a sales charge and
exchanged their shares into another eligible Lexington Fund. The amount which
may be so reinvested is limited to an amount up to, but not exceeding, the
exchange proceeds. If the shareholder has realized a gain on the redemption or
exchange, the transaction is taxable as a sale of Fund shares and reinvestment
will not alter any Federal tax payable. Net asset value purchases under item
(a)-(g) above are made upon the written assurance that the purchase is made for
investment purposes and the shares purchased may not be resold except through
redemption by the Fund.
Net Asset Value: The net asset value of the shares of the Fund is computed as of
the close of trading on each day the New York Stock Exchange is open, by
dividing the value of the Fund's securities plus any cash and other assets
(including accrued dividends and interest) less all liabilities (including
accrued expenses) by the number of shares outstanding, the result being adjusted
to the nearest whole cent. A security listed or traded on a recognized stock
exchange is valued at its last sale price prior to the time when assets are
valued on the principal exchange on which the security is traded. If no sale is
reported at that time, the mean between the current bid and asked price will be
used. All other securities for which over-the-counter market quotations are
readily available are valued at the mean between the last current bid and asked
price. Short-term securities having maturity of 60 days' or less are valued at
cost. Securities for which market quotations are not readily available and other
assets are valued at fair value as determined by the management and approved in
good faith by the Board of Directors.
9
<PAGE>
Generally, trading in foreign securities, as well as United States
Government securities, money market instruments and repurchase agreements, is
substantially completed each day at various times prior to the close of the New
York Stock Exchange. The values of such securities used in computing the net
asset value of the shares of the Fund are determined as of such times. Foreign
currency exchange rates are also generally determined prior to the close of the
Exchange. Occasionally, events affecting the value of such securities and such
exchange rates may occur between the times at which they are determined and the
close of the Exchange, which will not be reflected in the computation of net
asset value. If during such periods, events occur which materially affect the
value of such securities, the securities will be valued at their fair market
value as determined in good faith by the Directors.
Precious metals held by the Fund are valued daily at fair market value,
based upon price quotations in common use, in such manner as the Board of
Directors from time to time (not less frequently than quarterly) determines in
good faith to reflect most accurately its fair market value. In accordance with
current Board of Directors' policy, management of the Fund employs the mean
between the closing bid and asked quotations for precious metals as supplied by
one or more Toronto or New York broker dealers or banks in its computation of
the net asset value of Fund shares; the Board retains the ultimate
responsibility in this matter. Securities for which (i) market quotations are
not readily available, or (ii) readily available quotations are deemed, by the
Board of Directors, in good faith, not to be representative of the value of
securities held by the Fund, as well as any other assets held in the Fund's
portfolio, are valued at fair value as determined in good faith by, or under the
supervision of, the Fund's officers in a manner specifically authorized by the
Board of Directors; the Board retains the ultimate responsibility in this
matter. Each foreign security held in the Fund's portfolio is valued as of the
close of the New York Stock Exchange in U.S. dollars. Repurchase agreements and
certificates of deposit of maturities of less than 60 days are stated at cost.
For purposes of determining the net asset value per share of the Fund all
assets and liabilities initially expressed in foreign currencies will be
converted into United States dollars at the mean between the bid and offer
prices of such currencies against United States dollars quoted by any major
bank.
Letter of Intent: Any person may sign a letter indicating his intention to
invest a certain amount in shares of the Fund within a period of 13 months. All
purchases made during this period are then at the reduced sales charge
applicable to the total amount of the intended investment. A price readjustment
will be made on shares previously purchased within 90 days of signing a Letter
of Intent if requested by the shareholder. If a shareholder (including spouse
and children under the age of 21) already owns shares of the Fund, the reduced
sales charge applicable to all purchases under the letter of intent is the
charge which would apply to a single purchase of such amount plus the net asset
value of shares of the Fund already owned.
Dividends and distributions of capital gains paid in shares of the Fund at
net asset value will not apply towards the completion of the Letter of Intent.
The signing of a Letter of Intent does not bind the investor to purchase the
full amount indicated, but the investor must complete the intended purchase to
obtain the reduced sales charge. The Letter of Intent provides that the transfer
agent will hold in escrow, shares valued at 5% of the amount of the intended
purchases to assure payment of additional sales charges if the intended purchase
amount is not made. The shareholder is required to remit to LFD the amount of
the additional sales charges applicable to shares already purchased because of
such reduced investment. If the shareholder does not pay such difference within
20 days after receipt of a written request therefor, the transfer agent will
redeem the number of escrowed shares necessary to realize such difference in
sales charges and the balance, if any, of the escrow shares will then be
released from escrow. A form of Letter of Intent is included in the purchase
application.
Shareholder Servicing Agents: The Fund may enter into Shareholder Servicing
Agreements with one or more Shareholder Servicing Agents. The Shareholder
Servicing Agent may, as agent for its customers, among other things: answer
customer inquiries regarding account history and purchase and redemption
procedures; assist shareholders in designating and changing dividend options,
account designations and addresses; provide necessary personnel and facilities
to establish and maintain shareholder accounts and records; assist in processing
purchase and redemption transactions; arrange for
10
<PAGE>
the wiring of funds; transmit and receive funds in connection with customer
orders to purchase or redeem shares; verify and guarantee shareholder signatures
in connection with redemption orders and transfers and changes in
shareholder-designated accounts; furnish monthly and year-end statements and
confirmations of purchases and redemptions; transmit, on behalf of the Fund,
proxy statements, annual reports, updated prospectuses and other communications
to shareholders of the Fund; receive, tabulate and transmit to the Fund proxies
executed by shareholders with respect to meetings of shareholders of the Fund;
and provide such other related services as the Fund or a shareholder may
request. For these services, each Shareholder Servicing Agent receives fees,
which may be paid periodically, provided that such fees will not exceed, on an
annual basis, 0.25% of the average daily net assets of the Fund represented by
shares owned during the period for which payment is made. Each Shareholder
Servicing Agent may, from time to time, voluntarily waive all or a portion of
the fees payable to it.
Accumulation Privilege: In determining the applicable sales charge, the amount
of a shareholder's investment will be considered as the amount of the purchase
plus the total net asset value of all shares of the Fund already owned by the
shareholder (including spouse and children under the age of 21). The reduced
sales charge applies to the total amount of money then being invested and not
just to the portion of such amount which exceeds the break point above which a
reduced sales charge applies. It is the responsibility of the shareholder to
notify the transfer agent or LFD in writing that a purchase qualifies for a
reduced sales charge.
The Open Account: By investing in the Fund, shareholders appoint State Street
Bank and Trust Company (the "Agent") as their representative, to establish an
Open Account to which all shares purchased will be credited, together with any
dividends and capital gain distributions which are paid in additional shares.
Stock certificates will be issued for full shares and only when requested in
writing. Unless payment for shares is made by Federal funds wire, certificates
will not be issued for 30 days. In order to facilitate redemptions and
transfers, most shareholders elect not to receive certificates.
Automatic Investing Plan with "Lex-O-Matic": A shareholder may arrange to make
additional purchases of shares automatically on a monthly or quarterly basis.
The investments of $50 or more are automatically deducted from a checking
account on or about the 15th day of each month. The institution must be an
Automated Clearing House (ACH) member. Should an order to purchase shares of a
fund be cancelled because your automated transfer does not clear, you will be
responsible for any resulting loss incurred by that fund. The shareholder
reserves the right to discontinue the Lex-O-Matic program provided written
notice is given ten days prior to the scheduled investment date. Further
information regarding this service can be obtained from Lexington by calling
1-800-526-0056.
Terms of Offering: The Fund reserves the right to reject any order, and to waive
or lower the investment minimums with respect to any person or class of persons,
including shareholders of the Fund's retirement plan programs. An order to
purchase shares is not binding on the Fund until it has been confirmed by the
Agent. If an order to purchase shares is cancelled because the investor's check
does not clear, the purchaser will be responsible for any loss incurred by the
Fund. To recover any such loss, the Fund reserves the right to redeem shares
owned by the purchaser, and may prohibit or restrict the purchaser in placing
future orders in the Fund.
Account Statements: The Agent will send shareholders who are either purchasing
or redeeming shares of the Fund a confirmation of the transaction indicating the
date the purchase or redemption was accepted, the number of shares purchased or
redeemed, the purchase or redemption price per share and the total amount
purchased or redemption proceeds. A statement is also sent to shareholders
whenever a distribution is paid, or when a change in the registration, address
or dividend option occurs. Shareholders are urged to retain their account
statement for tax purposes.
HOW TO REDEEM SHARES
By Mail: Send to the Agent (1) a written request for redemption, signed by each
registered owner exactly as the shares are registered including the name of the
Fund, account number and exact registration; (2) stock certificates for any
shares to be
11
<PAGE>
redeemed which are held by shareholders; (3) signature guarantees, when
required; and (4) the additional documents required for redemptions by
corporations, executors, administrators, trustees, and guardians. Redemptions by
mail will not become effective until all documents in proper form have been
received by the Agent. The Agent's address can be found on the back cover of
this prospectus. The redemption price will be the net asset value per share of
the Fund next determined after receipt by the Agent of a redemption request in
proper form. Shareholders who have questions regarding the requirements for
redeeming shares, may call the Fund at the toll-free number on the front cover
of this Prospectus prior to submitting a redemption request. The redemption
price may be more or less than the shareholder's cost depending on the market
value of the securities held by the Fund at the time of redemption.
Checks for redemption proceeds will be mailed within seven days of receipt
of all required documents in proper form but will not be mailed until checks in
payment for the shares to be redeemed have been cleared which may take up to 15
days. (See "Redemption of Shares" in the Statement of Additional Information).
By Telephone: The telephone redemption privilege is established by checking the
box on your account application. Shareholders who have previously established
accounts and wish to have the telephone redemption privilege may call our
Shareholder Services Department at 1-800-526-0056 between 9:00 A.M. and 5:00
P.M. Eastern Time and request a Telephone Authorization Form.
Shareholders redeeming at least $1,000 worth of shares (for which
certificates have not been issued) may effect a telephone redemption by calling
our Shareholder Services Department at 1-800-526-0056 Monday-Friday between 9
A.M. and 4 P.M. Eastern Time. A telephone redemption in good order will be
processed at the net asset value of the Fund next determined. There is a maximum
telephone redemption limit of $25,000.
The redemption proceeds will be made payable to the registered
shareholder(s) and forwarded to the address of record. The Transfer Agent will
restrict the mailing of telephone redemption proceeds to a shareholder's address
of record within 30 days of such address being changed, unless the shareholder
provides a signature guaranteed letter of instruction. (See Telephone
Exchange/Redemption Provisions).
Signature Guarantee: Signature guarantees are required in connection with (a)
redemptions by mail involving $25,000 or more; (b) all redemptions by mail,
regardless of the amount involved, when the proceeds are to be paid to someone
other than the registered owners; and (c) share transfer requests.
The Agent requires that the guarantor be either a commercial bank which is a
member of the Federal Deposit Insurance Corporation, a trust company, a savings
and loan association, a savings bank, a federally or state chartered credit
union, a member firm of a domestic stock exchange, or a foreign branch of any of
the foregoing. Notary publics are not acceptable guarantors.
With respect to redemption requests submitted by mail, the signature
guarantees must appear either: (a) on the written request for redemption; (b) on
a separate instrument of assignment ("stock power") which should be completed
and specify the total number of shares to be redeemed; or (c) on all stock
certificates tendered for redemption and, if shares held by the Agent are also
being redeemed, on the letter or stock power.
The right of redemption may be suspended (a) for any period during which the
New York Stock Exchange is closed or the Securities and Exchange Commission
("SEC") determines that trading on the Exchange is restricted, (b) when there is
an emergency as determined by the SEC as a result of which it is not reasonably
practicable for the Fund to dispose of securities owned by it or to determine
fairly the value of its net assets, or (c) for such other period as the SEC may
by order permit for the protection of shareholders of the Fund. Due to the
proportionately high cost of maintaining smaller accounts, the Fund reserves the
right to redeem all shares in an account with a value of less than $500 other
than as a result of a change in net asset value and mail the proceeds to the
shareholder. Shareholders will be notified before these redemptions are to be
made and will have thirty (30) days to make an additional investment to bring
their accounts up to the required minimum.
12
<PAGE>
The Fund charges an annual fee of $25 per account registration for accounts
of any size without current mailing addresses to defray the higher cost to the
Fund of maintaining these accounts, including the costs associated with ongoing
attempts to locate shareholders of such accounts. The fee will be charged to
each applicable account on or about December 15th.
SHAREHOLDER SERVICES
Exchange Privilege
Shares of the Fund may be exchanged for shares of Lexington Money Market
Trust on the basis of relative net asset value per share, without sales charge,
at the time of the exchange. Shares purchased at the public offering price
(including shares purchased at net asset value) that were exchanged into
Lexington Money Market Trust may be exchanged back into the Fund at net asset
value. In the event shares of Lexington Money Market Trust being exchanged by a
single investor have a value in excess of $500,000, the shares of the Fund will
not be purchased until the fifth business day following the redemption of the
shares being exchanged in order to enable the redeeming fund to utilize normal
securities settlement procedures in transferring the proceeds of the redemption
to the Fund.
Shareholders may exchange all or part of their shares, subject to the
conditions described herein. The Exchange Privilege enables a shareholder to
acquire shares in a fund with a different investment objective when the
shareholder believes that a shift between funds is an appropriate investment
decision. Shareholders contemplating an exchange should obtain and review the
prospectus of the fund to be acquired. If an exchange involves investing in a
Lexington Fund not already owned, and a new account has to be established, the
dollar amount exchanged must meet the minimum initial investment of the fund
being purchased. If, however, an account already exists in the fund being
bought, there is a $500 minimum exchange required. Shareholders must provide the
account number of the existing account. Any exchange between funds is, in
effect, a redemption of shares in one fund and a purchase in the other fund.
Shareholders should consider the possible tax effects of an exchange. The
transfer agent currently imposes a $10 charge for exchange transactions.
Telephone Exchange/Redemption Provisions-Exchange or redemption instructions may
be given in writing or by telephone. Telephone exchanges/redemptions may only be
made if a Telephone Authorization form has been previously executed and filed
with LFD. This privilege is not available on retirement accounts. Telephone
exchanges/redemptions are permitted only after a minimum of 7 days have elapsed
from the date of a previous telephone exchange/redemption. However, written
redemption requests are not subject to this restriction. (See "How to redeem by
mail").
Telephonic exchanges/redemptions can only involve shares held on deposit at
the Agent; shares held in certificate form by the shareholder cannot be
included. However, outstanding certificates can be returned to the Agent and
qualify for these services. Any new account established with the same
registration will also have the privilege of exchange/redemption by telephone in
the Lexington Funds. All accounts involved in a telephone exchange must have the
same registration and dividend option as the account from which the shares were
transferred, and will also have the privilege of exchange by telephone in the
Lexington Funds in which these services are available.
By accepting the telephone exchange and telephone redemption privilege as
signed for on the new account application you appoint LFD, distributor of the
Lexington Group of Mutual Funds, as the true and lawful attorney to surrender
for redemption or exchange any and all non-certificate shares held by the Agent
in account(s) designated, or in any other account with the Lexington Funds,
present or future which has the identical registration, authorize and direct LFD
to act upon any instructions from any person by telephone for exchange or
redemption of shares held in any of these accounts, to purchase shares of any
other Lexington Fund that is available, provided the registration and mailing
address of the shares to be purchased are identical to the registration of the
shares being redeemed, and agree that neither LFD, the Agent, or the Fund(s)
will be liable for any loss, expense or cost arising out of any requests
effected in accordance with this authorization
13
<PAGE>
which would include requests effected by impostors or persons otherwise
unauthorized to act on behalf of the account subject to the procedures outlined
below. LFD, the Agent and the Fund, will employ reasonable procedures to confirm
that instructions communicated by telephone are genuine and if they do not
employ reasonable procedures they may be liable for any losses due to
unauthorized or fraudulent instructions. The following identification procedures
may include, but are not limited to, the following: account number, registration
and address, taxpayer identification number and other information particular to
the account. In addition, all telephone exchange and redemption transactions
will take place on recorded telephone lines and each transaction will be
confirmed in writing by the Fund. (LFD reserves the right to cease to act as
Agent subject to the above appointment upon thirty (30) days written notice to
the address of record.) If the Shareholder is an entity other than an
individual, such entity may be required to certify that certain persons have
been duly elected and are now legally holding the titles given and that the said
corporation, trust, unincorporated association, etc. is duly organized and
existing and has the power to take action called for by this continuing
authorization.
Exchange Authorization forms, Telephone Authorization forms and prospectuses
of the other Funds may be obtained from LFD.
LFD has made arrangements with certain dealers to accept instructions by
telephone to exchange shares of the Fund or shares of one of the other Lexington
Funds at net asset value as described above. Under this procedure, the dealer
must agree to indemnify LFD and the Funds from any loss or liability that any of
them might incur as a result of the acceptance of such telephone exchange
orders. A properly signed Telephone Authorization form must be received by LFD
within 5 days of the exchange request. LFD reserves the right to reject any
telephone exchange request. Any telephone exchange or redemption orders so
rejected may be processed by mail.
This exchange offer is available only in states where shares of the Fund
being acquired may legally be sold and may be modified or terminated at any time
by the Fund. Broker-dealers who process exchange orders on behalf of their
customers may charge a fee for their services. Such fee may be avoided by making
requests for exchange directly to the Fund or Agent.
Transfer: Shares of the Fund may be transferred to another owner. A signature
guarantee is required on the letter of instruction or accompanying completed
stock power.
Systematic Withdrawal Plan: Shareholders may elect to withdraw cash in fixed
amounts from their accounts at regular intervals. The minimum investment to
establish a Systematic Withdrawal Plan is $10,000. If the proceeds are to be
mailed to someone other than the registered owner, a signature guarantee is
required.
TAX-SHELTERED RETIREMENT PLANS
The Fund offers a Prototype Pension and Profit Sharing Plan, including a
Keogh Plan, IRA's, SEP-IRA's and IRA Rollover Accounts, 401(k) Salary Reduction
Plans and 403(b)(7) Plans. Plan support services are available through the
Shareholder Services Department of LMC. For further information call
1-800-526-0056.
DIVIDEND, DISTRIBUTION AND REINVESTMENT POLICY
The Fund intends to pay dividends semi-annually from net investment income
and net capital gain income annually (December) if earned and as declared by its
Board of Directors.
Any dividends and distribution payments will be reinvested at net asset
value, without sales charge, in additional full and fractional shares of the
Fund unless and until the shareholder notifies the Agent in writing that he
wants to receive his payments in cash. This request must be received by the
Agent at least seven days before the dividend record date. Upon receipt by the
Agent of such written notice, all further payments will be made in cash until
written notice to the contrary is received. An account of such shares owned by
each shareholder will be maintained by the Agent. Shareholders whose accounts
are maintained by the Agent will have the same rights as other shareholders with
respect to shares so registered (see "How to Purchase Shares-The Open Account").
14
<PAGE>
TAX MATTERS
The Fund intends to qualify as a regulated investment company by satisfying
the requirements under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), including requirements with respect to diversification of
assets, distribution of income and sources of income. It is the Fund's policy to
distribute to shareholders all of its investment income (net of expenses) and
any capital gains (net of capital losses) so that, in addition to satisfying the
distribution requirement of Subchapter M, the Fund will not be subject to
federal income tax or the 4% excise tax.
Distributions by the Fund of its net investment income and the excess, if
any, of its net short-term capital gain over its net long-term capital loss are
taxable to shareholders as ordinary income. These distributions are treated as
dividends for federal income tax purposes, but in any year only a portion
thereof (which cannot exceed the aggregate amount of qualifying dividends from
domestic corporations received by the Fund during the year) may qualify for the
70% dividends-received deduction for corporate shareholders. Because the Fund's
investment income will include dividends from foreign corporations and the Fund
may have interest income and short-term capital gains, only a portion of the
ordinary income dividends paid by the Fund may qualify for the
dividends-received deduction. Distributions by the Fund of the excess, if any,
of its net long-term capital gain over its net short-term capital loss are
designated as capital gain dividends and are taxable to shareholders as
long-term capital gains, regardless of the length of time a shareholder has held
his shares.
Under certain circumstances, the Fund may elect to "pass-through" to its
shareholders the income tax or any other creditable taxes paid by the Fund to
foreign governments during the year. Each shareholder will be required to
include his pro rata portion of these foreign taxes in his gross income, but
will be able to deduct or (subject to various limitations) claim a foreign tax
credit for such amount.
Distributions to shareholders will be treated in the same manner for federal
income tax purposes whether received in cash or reinvested in additional shares
of the Fund. In general, distributions by the Fund are taken into account by the
shareholders in the year in which they are made. However, certain distributions
made during January will be treated as having been paid by the Fund and received
by the shareholders on December 31 of the preceding year. A statement setting
forth the federal income tax status of all distributions made or deemed made
during the year including any amount of creditable foreign taxes "passed
through" will be sent to shareholders promptly after the end of each year.
Under the back-up withholding rules of the Code, certain shareholders may be
subject to 31% withholding of federal income tax on ordinary income dividends,
capital gain dividends and redemption payments made by the Fund. In order to
avoid this back-up withholding, a shareholder must provide the Fund with a
correct taxpayer identification number (which for most individuals is their
Social Security number) or certify that it is a corporation or otherwise exempt
from or not subject to back-up withholding. The new account application included
with this Prospectus provides for shareholder compliance with these
certification requirements.
The foregoing discussion of federal income tax consequences is based on tax
laws and regulations in effect on the date of this Prospectus, and is subject to
change by legislative or administrative action. As the foregoing discussion is
for general information only, a prospective shareholder should also review the
more detailed discussion in the Statement of Additional Information of federal
income tax considerations relevant to an investment in the Fund. In addition,
each prospective shareholder should consult with his own tax adviser as to the
tax consequences of his investment in the Fund, including any state and local
taxes which may apply to him.
PERFORMANCE CALCULATION
The Fund will calculate performance on a total return basis for various
periods. The total return basis combines principal and dividend income changes
for the periods shown. Principal changes are based on the difference between the
beginning and closing net asset values for the period and assume reinvestment of
dividends paid by the Fund. Dividends are comprised of net realized capital
gains and net investment income.
15
<PAGE>
Performance will vary from time to time and past results are not necessarily
representative of future results. It should be remembered that performance is a
function of portfolio management in selecting the type and quality of portfolio
securities and is affected by operating expenses.
Comparative performance information may be used from time to time in
advertising or marketing of the Fund's shares, including data from Lipper
Analytical Services, Inc. or major market indices such as the Dow Jones
Industrial Average Index and Standard & Poor's 500 Composite Stock Price Index.
Such comparative performance information will be stated in the same terms in
which the comparative data and indices are stated. Further information about the
Fund's performance is contained in the annual report, which may be obtained
without charge.
CUSTODIANS, TRANSFER AGENT, AND DIVIDEND DISBURSING AGENT
Chase Manhattan Bank, N.A., 1211 Avenue of the Americas, New York, New York
10036, has been retained to act as the Custodian for the Fund's investments and
assets. In addition, Chase Manhattan Bank, N.A. may appoint foreign banks and
securities depositories to act as sub-custodians for the Fund's portfolio
securities subject to their qualification as eligible foreign custodians under
the rules adopted by the SEC.
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110 is the transfer agent and dividend disbursing agent for the
Fund.
Neither Chase Manhattan Bank, N.A. nor State Street Bank and Trust Company
have any part in determining the investment policies of the Fund or in
determining which portfolio securities are to be purchased or sold by the Fund
or in the declaration of dividends and distributions.
COUNSEL AND INDEPENDENT AUDITORS
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, 919 Third Avenue, New York
10022, will pass upon legal matters for the Fund in connection with the shares
offered by this Prospectus.
KPMG Peat Marwick LLP, 345 Park Avenue, New York, New York 10154, has been
selected as independent auditors for the Fund for the fiscal year ending June
30, 1996.
OTHER INFORMATION
The Fund is an open-end diversified management investment company. The Fund
was originally incorporated as a Texas corporation on May 13, 1974 with
200,000,000 no par value shares authorized. The Fund was re-organized as a
corporation under the laws of the State of Maryland on June 8, 1992. The Fund
has authorized capital of 1,000,000,000 shares of common stock $.001 par value.
Each share of common stock has one vote and shares equally in dividends and
distributions when and if declared by the Fund and in the Fund's net assets upon
liquidation. All shares, when issued, are fully paid and non-assessable. There
are no preemptive, conversion or exchange rights. Fund shares do not have
cumulative voting rights and, as such, holders of at least 50% of the shares
voting for Directors can elect all Directors and the remaining shareholders
would not be able to elect any Directors.
The Code of Ethics adopted by the Adviser and the Fund prohibits all
affiliated personnel from engaging in personal investment activities which
compete with or attempt to take advantage of the Fund's planned portfolio
transactions. The objective of each Code of Ethics is that the operations of the
Adviser and Fund be carried out for the exclusive benefit of the Fund's
shareholders. All organizations maintain careful monitoring of compliance with
the Code of Ethics.
The Fund will not normally hold annual shareholder meetings except as
required by Maryland General Corporation Law or the Investment Company Act of
1940. However, meetings of shareholders may be called at any time by the
Secretary upon the written request of shareholders holding in the aggregate not
less than 25% of the outstanding shares, such
16
<PAGE>
request specifying the purposes for which such meeting is to be called. In
addition, the Directors will promptly call a meeting of shareholders for the
purpose of voting upon the question of removal of any Director when requested to
do so in writing by the recordholders of not less than 10% of the Fund's
outstanding shares. The Fund will assist shareholders in any such communication
between shareholders and Directors.
A Registration Statement (the "Registration Statement"), of which this
Prospectus is a part, has been filed with the Securities and Exchange Commission
(the "Commission"), Washington, D.C. under the Securities Act of 1933, as
amended.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and in the Fund's
official sales literature in connection with the offer of the Fund's shares,
and, if given or made, such other information or representations must not be
relied upon as having been authorized by the Fund. This Prospectus does not
constitute an offer in any state in which, or to any person to whom, such
offering may not lawfully be made. "A Statement of Additional Information", to
which reference is made in this Prospectus, provides further discussion of
certain areas in the prospectus and other matters which may be of interest to
some investors and is available by request without cost as indicated herein. The
Prospectus and the Statement of Additional Information omit certain information
contained in the Registration Statement, to which reference is made, filed with
the Commission. Items which are thus omitted, including contracts and other
documents referred to or summarized herein and therein, may be obtained from the
Commission upon payment of the prescribed fees.
17
<PAGE>
(Right Column)
-----------------
L E X I N G T O N
-----------------
-----------------
LEXINGTON
STRATEGIC
INVESTMENTS
FUND, INC.
(filled box)
(filled box)Gold and Precious
Metals Securities
(filled box)Bullion
(filled box)No Redemption Charge
(filled box)
The Lexington Strategic Group
of
Investment Companies
-----------------
P R O S P E C T U S
OCTOBER 27, 1995
-----------------
(Left Column)
Investment Adviser
- -------------------------------------------------------
LEXINGTON MANAGEMENT CORPORATION
P.O. Box 1515/Park 80 West Plaza Two
Saddle Brook, N.J. 07663
Distributor
- -------------------------------------------------------
LEXINGTON FUNDS DISTRIBUTOR, INC.
P.O. Box 1515/Park 80 West Plaza Two
Saddle Brook, N.J. 07663
Transfer Agent
- -------------------------------------------------------
STATE STREET BANK AND TRUST COMPANY
c/o National Financial Data Services
P.O. Box 419648
Kansas City, Missouri 64141-6648
---------------------------------------------
All shareholder requests for services of any
kind should be sent to:
---------------------------------------------
Transfer Agent
STATE STREET BANK AND
TRUST COMPANY
c/o National Financial Data Services
1004 Baltimore
Kansas City, Missouri 84105
or call toll free:
Service and Sales: 1-800-526-0056
24 Hour Account Information:
1-800-526-0052
---------------------------------------------
Table of Contents Page
- -------------------------------------------------------
Fee Table ........................................... 2
Financial Highlights ................................ 2
Description of the Fund ............................. 3
Investment Objective and Policies ................... 3
Risk Considerations ................................. 4
Investment Restrictions ............................. 6
Management of the Fund .............................. 7
Portfolio Manager ................................. 7
Investment Adviser, Distributor and Administrator ... 8
How to Purchase Shares .............................. 8
How to Redeem Shares ................................11
Shareholder Services ................................13
Tax-Sheltered Retirement Plans ......................14
Dividend, Distribution and
Reinvestment Policy ...............................14
Tax Matters .........................................15
Performance Calculation .............................15
Custodians, Transfer Agent and
Dividend Disbursing Agent .........................16
Counsel and Independent Auditors ....................16
Other Information ...................................16
<PAGE>
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
OCTOBER 27, 1995
This Statement of Additional Information which is not a prospectus,
should be read in conjunction with the current prospectus of Lexington
Strategic Investments Fund, Inc. (the "Fund"), dated October 27, 1995, and as
it may be revised from time to time. To obtain a copy of the Fund's
prospectus at no charge, please write to the Fund at P.O. Box 1515/Park 80
West - Plaza Two, Saddle Brook, New Jersey 07663 or call the following toll-
free numbers:
Shareholder Services Information: 1-800-526-0056
Sales Information: 1-800-367-9160
24-Hour Account Information: 1-800-526-0052
Lexington Management Corporation ("LMC") is the Fund's investment adviser.
Lexington Funds Distributor, Inc. ("LFD") is the Fund's distributor.
TABLE OF CONTENTS
Investment Restrictions..........................................2
Investment Adviser, Distributor and Administrator ...............4
Portfolio Turnover and Brokerage Commissions.....................5
Redemption of Shares.............................................6
Tax Sheltered Retirement Plans...................................6
Dividends, Distribution and Reinvestment Policy..................7
Tax Matters......................................................8
Performance Calculation.........................................13
Custodians, Transfer Agent and Dividend Disbursing Agent........14
Management of the Fund..........................................14
-1-
<PAGE>
INVESTMENT RESTRICTIONS
The Fund's investment objective, as described under "investment policy"
and the following investment restrictions are matters or fundamental policy
which may not be changed without the affirmative vote of the lesser of (a) 67%
or more of the shares of the Fund present at a shareholders' meeting at which
more than 50% of the outstanding shares are present or represented by proxy
or (b) more than 50% of the outstanding shares. Under these investment
restrictions:
(1)The Fund will not issue any senior security (as defined in the 1940
Act), except that (a) the Fund may enter into commitments to purchase
securities in accordance with the Fund's investment program, including reverse
repurchase agreements, foreign exchange contracts, delayed delivery and when-
issued securities, which may be considered the issuance of senior securities;
(b) the Fund may engage in transactions that may result in the issuance of a
senior security to the extent permitted under applicable regulations,
interpretations of the 1940 Act or an exemptive order; (c) the Fund may engage
in short sales of securities to the extent permitted in its investment program
and other restrictions; (d) the purchase or sale of futures contracts and
related options shall not be considered to involve the issuance of senior
securities; and (e) subject to fundamental restrictions, the Fund may borrow
money as authorized by the 1940 Act.
(2) The Fund will concentrate its investments in securities of companies
engaged in exploration, mining, processing, fabrication and distribution of
natural resources (hydrocarbons, minerals, metals of sliver, gold, uranium,
platinum and copper). Accordingly, the Fund will have at least 25% of the
value of its assets invested in such securities except during unusual and
adverse economic conditions that may exist in the material resource industry.
(3)The Fund will not hold more than 5% of the value of its total assets
in the securities of any one issuer or hold more than 10% of the outstanding
voting securities of any one issuer. This restriction applies only to 75% of
the value of the Fund's total assets. Securities issued or guaranteed by the
U.S. Government, its agencies and instrumentalities are excluded from this
restriction.
(4)The Fund will not borrow money, except that (a) the Fund may enter
into certain futures contracts and options related thereto; (b) the Fund may
enter into commitments to purchase securities in accordance with the Fund's
investment program, including delayed delivery and when-issued securities and
reverse repurchase agreements; (c) for temporary emergency purposes, the Fund
may borrow money in amounts not exceeding 5% of the value of its total assets
at the time when the loan is made; (d) the Fund may pledge its gold or its
other precious metals or portfolio securities or receivables or transfer or
assign or otherwise encumber them in an amount not exceeding one-third of the
value of its total assets; and (e) for purposes of leveraging, the Fund may
borrow money from banks (including its custodian bank), only if, immediately
after such borrowing, the value of the Fund's assets, including the amount
borrowed, less its liabilities, is equal to at least 300% of the amount
borrowed, plus all outstanding borrowings. If at any time, the value of the
Fund's assets fails to meet the 300% asset coverage requirement relative only
to leveraging, the Fund will, within three days (not including Sundays and
holidays), reduce its borrowings to the extent necessary to meet the 300%
test. The Fund will only invest in reverse repurchase agreements up to 5% of
the Fund s total assets.
(5)The Fund will not act as an underwriter of securities except to the
extent that, in connection with the disposition of portfolio securities by the
Fund, the Fund may be deemed to be an underwriter under the provisions of the
1933 Act.
(6)The Fund will not purchase real estate, interests in real estate or
real estate limited partnership interests except that, to the extent
appropriate under its investment program, the Fund may invest in securities
secured by real estate or interests therein or issued by companies, including
real estate investment trusts, which deal in real estate or interests therein.
-2-
<PAGE>
(7)The Fund will not make loans, except that, to the extent appropriate
under its investment program, the Fund may (a) purchase bonds, debentures or
other debt securities, including short-term obligations, (b) enter into
repurchase transactions and (c) lend portfolio securities or bullion provided
that the value of such loaned securities does not exceed one-third of the
Fund's total assets.
(8)The Fund will not invest in commodity contracts, except that the Fund
may, to the extent appropriate under its investment program, purchase
securities of companies engaged in such activities, may enter into
transactions in financial and index futures contracts and related options, may
engage in transactions on a when-issued or forward commitment basis, and may
enter into forward currency contracts. Investments in gold bullion or other
precious metals shall not be deemed an investment in a commodity subject to
the Fund's investment restrictions. Transaction in which gold bullion is
taken in payment of principal, interest or both or a debt instrument and where
the Fund disposes of gold bullion for cash will not be subject to this
restriction.
In addition to the above fundamental restrictions, the Fund has
undertaken the following non fundamental restrictions, which may be changed
in the future by the Board of Directors, without a vote of the shareholders
of the Fund:
(1)The Fund will not purchase the securities of any other investment
company, except as permitted under the 1940 Act.
(2)The Fund will not, except for investments which, in the aggregate,
do not exceed 5% of the Fund's total assets taken at market value,
purchase securities unless the issuer thereof or any company on whose
credit the purchase was based has a record of at least three years
continuous operations prior to the purchase.
(3)The Fund will not invest more than 15% of its total assets in
illiquid securities. Illiquid securities are securities that are not
readily marketable or cannot be disposed of promptly within seven days
and in the usual course of business without taking a materially reduced
price. Such securities include, but are not limited to, time deposits
and repurchase agreements with maturities longer than seven days.
Securities that may be resold under Rule 144A or securities offered
pursuant to Section 4(2) of the Securities Act of 1933, as amended,
shall not be deemed illiquid solely by reason of being unregistered.
The Investment Adviser shall determine whether a particular security is
deemed to be liquid based on the trading markets for the specific
security and other factors.
(4)The Fund will not purchase securities of an issuer if to the Fund's
knowledge, one or more of the Directors or officers of the Fund or LMC
individually owns beneficially more than 0.5% and together own
beneficially more than 5% of the securities of such issuer nor will the
Fund hold the securities of such issuer.
(5)The Fund will not make short sales of securities, other than short
sales "against the box," or purchase securities on margin except for
short-term credits necessary for clearance of portfolio transactions,
provided that this restriction will not be applied to limit the use of
options, futures contracts and related options, in the manner otherwise
permitted by the investment restrictions, policies and investment
programs of the Fund.
(6)The Fund will not write, purchase or sell puts, calls or combinations
thereof. However, the Fund may invest up to 15% of the value of its
assets in warrants. This restriction on the purchase of warrants does
not apply to warrants attached to, or otherwise included in, a unit with
other securities.
(7)The Fund will not invest for the purpose of exercising control over
or management of any company.
-3-
<PAGE>
(8)The Fund will not invest in oil, gas or mineral leases or mineral
exploration programs.
(9)The Fund may purchase and sell futures contracts and related options
under the following conditions: (a) the then-current aggregate futures
market prices of financial instruments required to be delivered and
purchased under open futures contracts shall not exceed 30% of the
Fund's total assets, at market value; and (b) no more than 5% of the
assets, at market value at the time of entering into a contract, shall
be committed to margin deposits in relation to futures contracts.
The percentage restrictions referred to above are to be adhered to at the time
of investment and are not applicable to a later increase or decrease in
percentage beyond the specified limit resulting from change in values or net
assets.
INVESTMENT ADVISER, DISTRIBUTOR AND ADMINISTRATOR
LMC, P.O. Box 1515/Park 80 West, Plaza Two, Saddle Brook, New Jersey
07663, is the investment adviser to the Fund, and, as such, advises and makes
recommendations to the Fund with respect to its investments and investment
policies.
Under the terms of the investment advisory agreement, LMC also pays the
Fund's expenses for office rent, utilities, telephone, furniture and supplies
utilized for the Fund's principal office and the salaries and payroll expenses
of officers and directors of the Fund who are also employees of LMC or its
affiliates in carrying out its duties under the investment advisory agreement.
The Fund pays all its other expenses, including custodian and transfer agent
fees, legal and registration fees, audit fees, printing of prospectuses,
shareholder reports and communications required for regulatory purposes or for
distribution to existing shareholders, computation of net asset value, mailing
of shareholder reports and communications, portfolio brokerage, taxes and
independent directors' fees, and furnishes LFD at printers overrun cost, such
copies of its prospectus, annual, semi-annual and other reports and
shareholder communications as may be reasonably required for sales purposes.
LMC's investment advisory fee will be reduced for any fiscal year by any
amount necessary to prevent Fund expenses from exceeding the most restrictive
expense limitations imposed by the securities laws or regulations of those
states or jurisdictions in which the Fund's shares are registered or qualified
for sale. Brokerage fees and commissions, taxes, interest and extraordinary
expenses are not deemed to be expenses of the Fund for such reimbursement.
Currently, the most restrictive of such expense limitation would require LMC
to reduce its fee so that ordinary expenses (excluding interest, taxes,
brokerage commissions and extraordinary expenses) for any fiscal year do not
exceed 2.5% of the first $30 million of the Fund's average daily net assets,
plus 2.0% of the next $70 million, plus 1.5% of the Fund's average daily net
assets in excess of $100 million.
LMC's services are provided and its fee is paid pursuant to an
investment advisory agreement, dated December 13, 1991 which will
automatically terminate if assigned and which may be terminated by either
party upon 60 days notice. The terms of the agreement and any renewal thereof
must be approved annually by a majority of the Fund's Board of Directors,
including a majority of directors who are not parties to the agreement or
"interested persons" of such parties, as such term is defined under the
Investment Company Act of 1940, as amended ("1940 Act").
For the year ended June 30, 1995, LMC received $902,569 from the Fund
in investment advisory fees. For the year ended June 30,1994, LMC received
$564,429 from the Fund. For the year ended June 30, 1993, LMC received
$152,967 from the Fund and paid the Fund $152,967 in expense reimbursements.
LMC also acts as administrator to the Fund and performs certain
administrative and internal accounting services, including but not limited to,
maintaining general ledger accounts, regulatory compliance, preparation of
-4-
<PAGE>
financial information for semiannual and annual reports, preparing
registration statements, calculating net asset values, shareholder
communications and supervision of the custodian, transfer agent and provides
facilities for such services. The Fund shall reimburse LMC for its actual
cost in providing such services, facilities and expenses.
LFD serves as distributor for Fund shares under a distribution agreement
which is subject to annual approval by a majority of the Fund's Board of
Directors, including a majority of directors who are not "interested persons."
LMC is a wholly owned subsidiary of Piedmont Management Company Inc.,
a publicly traded corporation. Descendants of Lunsford Richardson, Sr., their
spouses, trusts and other related entities have a majority voting control of
outstanding shares of Piedmont Management Company Inc.
Of the directors, officers or employees ("affiliates persons") of the
Fund, Messrs. Corniotes, DeMichele, Faust, Hisey, Kantor, Lavery, Luehs,
Petruski and Radsch and Mmes. Carnicelli, Carr, Curcio, Gilfillan and Mosca
(see "Management of the Fund"), may also be deemed affiliates of LMC by virtue
of being officers, directors or employees thereof. As of September 29, 1995,
all officers and directors of the Fund as a group owned of record and
beneficially less than 1% of the outstanding shares of the Fund.
PORTFOLIO TURNOVER AND BROKERAGE COMMISSIONS
As a general matter, purchases and sales of portfolio securities by the
Fund are placed by LMC with brokers and dealers who in its opinion will
provide the Fund with the best combination of price (inclusive of brokerage
commissions) and execution for its orders. However, pursuant to the Fund's
investment advisory agreement, management consideration may be given in the
selection of broker-dealers to research provided and payment may be made of
a commission higher than that charged by another broker-dealer which does not
furnish research services or which furnishes research services deemed to be
of lesser value, so long as the criteria of Section 28(e) of the Securities
and Exchange Act of 1934 are met. Section 28(e) of the Securities and
Exchange Act of 1934 was adopted in 1975 and specifies that a person with
investment discretion shall not be "deemed to have acted unlawfully or to have
breached a fiduciary duty" solely because such person has caused the account
to pay a higher commission than the lowest available under certain
circumstances, provided that the person so exercising investment discretion
makes a good faith determination that the commissions paid are "reasonable in
relation to the value of the brokerage and research services provided
...viewed in terms of either that particular transaction or his overall
responsibilities with respect to the accounts as to which he exercises
investment discretion."
Currently, it is not possible to determine the extent to which
commissions that reflect an element of value for research services might
exceed commissions that would be payable for execution services alone. Nor
generally can the value of research services to the Fund be measured.
Research services furnished might be useful and of value to LMC and its
affiliates in serving other clients as well as the Fund. On the other hand,
any research services obtained by LMC or its affiliates from the placement of
portfolio brokerage of other clients might be useful and of value to LMC in
carrying out its obligations to the Fund.
As a general matter, it is the Fund's policy to execute in the U.S. all
transactions with respect to securities traded in the U.S. Over-the-counter
purchases and sales are normally made with principal market makers, except
where, in the opinion of management, the best executions are available
elsewhere.
In addition, the Fund may from time to time allocate brokerage
commissions to firms which furnish research and statistical information to LMC
or which render to the Fund services which LMC is not required to provide.
The supplementary research supplied by such firms is useful in varying degrees
and is of indeterminable value. No formula has been established for the
allocation of business to such brokers.
-5-
<PAGE>
The brokerage commissions paid and portfolio turnover rates are as
follows:
Total Brokerage Portfolio Turnover
Commissions Paid Rate
---------------- ------------------
1993 $ 270 4.80%
1994 4,706 25.66%
1995 381,584 115.91%
REDEMPTION OF SHARES
The Fund has elected, pursuant to Rule 18F-1 of the Investment Company
Act of 1940, to pay in cash all requests for redemption by any shareholder of
record, limited in amount, however, during any 90-day period to the lesser of
$250,000 or 1% of the value of the Fund's net assets at the beginning of such
period. Such commitment is irrevocable without the prior approval of the
Securities and Exchange Commission. In the case of request for redemptions
in excess of such amounts, the Board of Directors reserves the right to make
payments in whole or in part in securities or other assets of the Fund in case
of an emergency, or if the payments of such redemption in cash would be
detrimental to the existing shareholders of the Fund. In such circumstances
the securities distributed would be valued at the price used to compute the
Fund's net assets. Should the Fund do so, a shareholder may incur brokerage
fees in converting the securities to cash.
TAX SHELTERED RETIREMENT PLANS
The Fund makes available a variety of Prototype Pension and Profit
Sharing Plans including a 401(k) Salary Reduction Plan and a 403(b)(7) Plan.
Plan support services are available by contacting the Shareholder Services
Department of LMC at 1-800-526-0056.
INDIVIDUAL RETIREMENT ACCOUNT (IRA): Individuals who have earned income
may make tax deductible contributions to their own Individual Retirement
Accounts established under Section 408 of the Internal Revenue Code. Married
investors filing a joint return neither of whom is an active participant in
an employer sponsored retirement plan, or who have an adjusted gross income
of $40,000 or less ($25,000 or less for single taxpayers) may continue to make
a $2,000 ($2,250 for spousal IRAs) annual deductible IRA contribution. For
adjusted gross income above $40,000 ($25,000 for single taxpayers), the IRA
deduction limit is generally phased out ratably over the next $10,000 of
adjusted gross income, subject to a minimum $200 deductible contribution.
Investors who are not able to deduct a full $2,000 ($2,250 spousal) IRA
contribution because of the limitations may make a nondeductible contribution
to their IRA to the extent a deductible contribution is not allowed. Federal
income tax on accumulations earned on nondeductible contributions is deferred
until such time as these amounts are deemed distributed to an investor.
Rollovers are also permitted under the Plan. The disclosure statement
required by the Internal Revenue Service to be furnished to individuals who
are considering adopting an IRA may be obtained from the Fund.
SELF-EMPLOYED RETIREMENT PLAN (HR-10): Self-employed individuals may
make tax deductible contributions to a prototype defined contribution pension
plan or profit sharing plan. There are, however, a number of special rules
which apply when self-employed individuals participate in such plans.
Currently purchase payments under a self-employed plan are deductible only to
the extent of the lesser of (i) $30,000 or (ii) 25% of the individuals earned
annual income (as defined in the Code) and in applying these limitations not
more than $200,000 of "earned income" may be taken into account.
CORPORATE PENSION AND PROFIT SHARING PLANS: The Fund makes available
a Prototype Defined Contribution Pension Plan and a Prototype Profit Sharing
Plan.
-6-
<PAGE>
All purchases and redemptions of Fund shares pursuant to any one of the
Fund's tax sheltered plans must be carried out in accordance with the
provisions of the Plan. Accordingly, all plan documents should be reviewed
carefully before adopting or enrolling in the plan. Investors should
especially note that a penalty tax of 10% may be imposed by the IRS on early
withdrawals under corporate, Keogh or IRA plans. It is recommended by the IRS
that an investor consult a tax adviser before investing in the Fund through
any of these plans.
An investor participating in any of the Fund's special plans has no
obligation to continue to invest in the Fund and may terminate the plan with
the Fund at any time. Except for expenses of sales and promotion, executive
and administrative personnel, and certain services which are furnished by LMC,
the cost of the plans generally is borne by the Fund; however, each IRA Plan
account is subject to an annual maintenance fee of $12.00 charged by State
Street Bank and Trust Company (the "Agent").
DIVIDENDS, DISTRIBUTION AND REINVESTMENT POLICY
The Fund intends to pay dividends semi-annually from investment income
also if earned and as declared by its Board of Directors. The Fund intends
to declare or distribute a dividend from capital gain income if any, in
December in order to comply with distribution requirements of the 1986 Tax
Reform Act to avoid the imposition of a 4% excise tax.
Any dividends and distribution payments will be reinvested at net asset
value, without sales charge, in additional full and fractional shares of the
Fund unless and until the shareholder notifies the Agent in writing requesting
payments in cash. This request must be received by the Agent at least seven
days before the dividend record date. Upon receipt by the Agent of such
written notice, all further payments will be made in cash until written notice
to the contrary is received. A record of shares owned by each shareholder
will be maintained by the Agent. These accounts will have the rights of other
shareholders with respect to shares so registered (see "How to Purchase Shares
- - The Open Account" in the Prospectus).
-7-
<PAGE>
TAX MATTERS
The following is only a summary of certain additional tax considerations
generally affecting the Fund and its shareholders that are not described in
the Prospectus. No attempt is made to present a detailed explanation of the
tax treatment of the Fund or its shareholders, and the discussions here and
in the Prospectus are not intended as substitutes for careful tax planning.
Qualification as a Regulated Investment Company
The Fund has elected to be taxed as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
As a regulated investment company, the Fund is not subject to federal income
tax on the portion of its net investment income (i.e., taxable interest,
dividends and other taxable ordinary income, net of expenses) and capital gain
net income (i.e., the excess of capital gains over capital losses) that it
distributes to shareholders, provided that it distributes at least 90% of its
investment company taxable income (i.e., net investment income and the excess
of net short-term capital gain over net long-term capital loss) for the
taxable year (the "Distribution Requirement"), and satisfies certain other
requirements of the Code that are described below. Distributions by the Fund
made during the taxable year or, under specified circumstances, within twelve
months after the close of the taxable year, will be considered distributions
of income and gains of the taxable year and can therefore satisfy the
Distribution Requirement.
If the Fund has a net capital loss (i.e., the excess of capital losses
over capital gains) for any year, the amount thereof may be carried forward
up to eight years and treated as a short-term capital loss which can be used
to offset capital gains in such years. As of June 30, 1995, the Fund has
capital loss carryforwards of approximately $65,608,169, which expire through
2003. Under Code Sections 382 and 383, if the Fund has an "ownership change,"
then the Fund's use of its capital loss carryforwards in any year following
the ownership change will be limited to an amount equal to the net asset value
of the Fund immediately prior to the ownership change multiplied by the long-
term tax-exempt rate (which is published monthly by the Internal Revenue
Service (the "IRS")) in effect for the month in which the ownership change
occurs (the rate for September 1995 is 5.75 percent). The Fund will use its
best efforts to avoid having an ownership change. However, because of
circumstances which may be beyond the control or knowledge of the Fund, there
can be no assurance that the Fund will not have, or has not already had, an
ownership change. If the Fund has or has had an ownership change, then any
capital gain net income for any year following the ownership change in excess
of the annual limitation on the capital loss carryforwards will have to be
distributed by the Fund and will be taxable to shareholders as described under
"Fund Distributions" below.
In addition to satisfying the Distribution Requirement, a regulated
investment company must: (1) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign
currencies (to the extent such currency gains are directly related to the
regulated investment company's principal business of investing in stock or
securities) and other income (including but not limited to gains from options,
futures or forward contracts) derived with respect to its business of
investing in such stock, securities or currencies (the "Income Requirement");
and (2) derive less than 30% of its gross income (exclusive of certain gains
on designated hedging transactions that are netted against realized or
unrealized losses on offsetting positions) from the sale or other disposition
of stock, securities or foreign currencies (or options, futures or forward
contracts thereon) held for less than three months (the "Short-Short Gain
Test"). However, foreign currency gains, including those derived from
options, futures and forwards, are not in any event characterized as Short-
Short Gain if they are directly related to the regulated investment company's
investments in stock or securities (or options or futures thereon). Because
of the Short-Short Gain Test, the Fund may have to limit the sale of
-8-
<PAGE>
appreciated securities that it has held for less than three months. (However,
the Short-Short Gain Test will not prevent the Fund from disposing of
investments at a loss.) Interest (including original issue discount) received
by the Fund at maturity or upon the disposition of a security held for less
than three months will not be treated as gross income derived from the sale
or other disposition of such security within the meaning of the Short-Short
Gain Test. However, income that is attributable to realized market
appreciation will be treated as gross income from the sale or other
disposition of securities for this purpose.
In general, gain or loss recognized by the Fund on the disposition of
an asset will be a capital gain or loss. However, gain recognized on the
disposition of a debt obligation purchased by the Fund at a market discount
(generally, at a price less than its principal amount) will be treated as
ordinary income to the extent of the portion of the market discount which
accrued while the Fund held the debt obligation. In addition, under the rules
of Code Section 988, gain or loss recognized on the disposition of a debt
obligation denominated in a foreign currency or an option with respect thereto
(but only to the extent attributable to changes in foreign currency exchange
rates), and gain or loss recognized on the disposition of a foreign currency
forward contract, futures contract, option or similar financial instrument,
or of foreign currency itself, except for regulated futures contracts or non-
equity options subject to Code Section 1256, will generally be treated as
ordinary income or loss.
Certain transactions in which the Fund may engage (such as regulated
futures contracts, certain foreign currency contracts, and options on stock
indexes and futures contracts) will be subject to special tax treatment as
"Section 1256 contracts." Section 1256 contracts are marked-to-market and
treated as if they were sold for their fair market value on the last business
day of the taxable year, even if they have not been in fact terminated (by
delivery, exercise, entering into a closing transaction or otherwise) as of
such date. Any gain or loss recognized as a consequence of this year-end
marking-to-market is taken into account together with any other gain or loss
actually realized upon the termination of Section 1256 contracts during the
taxable year. Gain or loss with respect to Section 1256 contracts (including
gain or loss rising as a consequence of the year-end deemed sale of such
contracts) is generally treated as 60% long-term capital gain or loss and 40%
short-term capital gain or loss. The Fund, however, may elect not to have
this special tax treatment apply to Section 1256 contracts that are part of
a "mixed straddle" with other investments of the Fund that are not Section
1256 contracts. Gains arising from Section 1256 contracts are not taken into
account for purposes of the Short-Short Gain Test under the constructive sale
of Section 1256.
Treasury Regulations permit a regulated investment company, in
determining its investment company taxable income and net capital gain (i.e.,
the excess of net long-term capital gain over net short-term capital loss) for
any taxable year, to elect (unless it has made a taxable year election for
excise tax purposes as discussed below) to treat all or any part of any net
capital loss, any net long-term capital loss or any net foreign currency loss
incurred after October 31 as if it had been incurred in the succeeding year.
In addition to satisfying the requirements described above, the Fund
must satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of the
Fund's taxable year, at least 50% of the value of the Fund's assets must
consist of cash and cash items, U.S. Government securities, securities of
other regulated investment companies, and securities of other issuers (as to
which the Fund has not invested more than 5% of the value of its total assets
in securities of such issuer and as to which the Fund does not hold more than
10% of the outstanding voting securities of such issuer), and no more than 25%
of the value of its total assets may be invested in the securities of any one
issuer (other than U.S. Government securities and securities of other
regulated investment companies), or in two or more issuers which the Fund
controls and which are engaged in the same or similar trades or businesses.
If the Fund failed to qualify as a regulated investment company for any
taxable year, all of its taxable income (including its net capital gain) would
be subject to tax at regular corporate income tax rates without any deduction
for distributions to shareholders, and such distributions would be taxable to
the shareholders as ordinary dividends to the extent of the Fund's current and
accumulated earnings and profits. Such distributions would generally be
eligible for the dividends-received deduction in the case of corporate
shareholders.
-9-
<PAGE>
Excise Tax on Regulated Investment Companies
A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to 98%
of its ordinary taxable income for the calendar year and 98% of its capital
gain net income for the one-year period ended on October 31 of such year (or,
at the election of a regulated investment company having a taxable year ending
November 30 or December 31, for its taxable year (a "taxable year election")).
The balance of such income must be distributed during the next calendar year.
The Fund intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income prior
to the end of each calendar year to avoid liability for the excise tax. The
Fund may in certain circumstances have to liquidate portfolio investments to
make sufficient distributions to avoid excise tax liability.
Fund Distributions
The Fund intends to distribute substantially all of its investment
company taxable income for each taxable year. Such distributions will be
taxable to shareholders as ordinary income and treated as dividends for
federal income tax purposes, but will qualify for the 70% dividends-received
deduction for corporate shareholders only to the extent discussed below.
The Fund also intends to distribute to shareholders its net capital gain
for each taxable year. When distributed and designated as a capital gain
dividend, such gain will be taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder has held his shares or
whether such gain was recognized by the Fund before the shareholder acquired
his shares.
Ordinary income dividends paid by the Fund with respect to a taxable
year will qualify for the 70% dividends-received deduction generally available
to corporations (other than S corporations, which are not eligible for the
deduction, and other than for purposes of the accumulated earnings tax and the
personal holding company tax) to the extent of the amount of qualifying
dividends received by the Fund from domestic corporations. A dividend
received by the Fund will not be treated as a qualifying dividend (1) if it
was received with respect to stock that the Fund held for less than 46 days
(91 days in the case of certain preferred stock), excluding for this purpose
under the rules of Code Section 246(c) (3) and (4): (I) any day more than 45
days (or 90 days in the case of certain preferred stock) after the date on
which the stock becomes ex-dividend and (ii) any period during which the Fund
has an option to sell, is under a contractual obligation to sell, has made and
not closed a short sale of, is the grantor of a deep-in-the-money or otherwise
nonqualified option to buy, or has otherwise diminished its risk of loss by
holding other positions with respect to, such (or substantially identical)
stock; (2) to the extent that the Fund is under an obligation (pursuant to a
short sale or otherwise) to make related payments with respect to positions
in substantially similar or related property; or (3) to the extent the stock
on which the dividend is paid is treated as debt-financed under the rules of
Code Section 246A. Moreover, the dividends-received deduction for a corporate
shareholder may be disallowed or reduced (I) if the corporate shareholder
fails to satisfy the foregoing requirements with respect to its shares of the
Fund or (ii) by application of Code Section 246(b) which in general limits the
dividends-received deduction to 70% of the shareholder's taxable income
(determined without regard to the dividends-received deduction and certain
other items).
-10-
<PAGE>
Investment income that may be received by the Fund from sources within
foreign countries may be subject to foreign taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Fund to a reduced rate of, or exemption from, taxes on such
income. It is impossible to determine the effective rate of foreign tax in
advance since the amount of the Fund's assets to be invested in various
countries is not known. If more than 50% of the value of the Fund's total
assets at the close of its taxable year consist of the stock or securities of
foreign corporations, the Fund may elect to "pass through" to its shareholders
the amount of foreign taxes paid by the Fund. If the Fund so elects, each
shareholder would be required to include in gross income, even though not
actually received, his pro rata share of the foreign taxes paid by the Fund,
but would be treated as having paid his pro rate share of such foreign taxes
and would therefore be allowed either to deduct such amount in computing
taxable income or to use it (subject to certain limitations) as a foreign tax
credit against federal income tax (but not both). For purposes of the foreign
tax credit limitation rules of the Code, each shareholder would treat as
foreign source income his pro rata share of such foreign taxes plus the
portion of dividends received from the Fund representing income derived from
foreign sources. A deduction for foreign taxes may not be claimed by an
individual shareholder who does not itemize deductions. Each shareholder
should consult his own tax adviser regarding the potential application of
foreign tax credits in his particular circumstances.
Distributions by the Fund that do not constitute ordinary income
dividends or capital gain dividends will be treated as a return of capital to
the extent of (and in reduction of) the shareholder's tax basis in his shares;
any excess will be treated as gain from the sale of his shares, as discussed
below.
Distributions by the Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund (or of another fund). Shareholders receiving
a distribution in the form of additional shares will be treated as receiving
a distribution in an amount equal to the fair market value of the shares
received, determined as of the reinvestment date. In addition, if the net
asset value at the time a shareholder purchases shares of the Fund reflects
realized or unrealized undistributed income or gain, distributions of such
amounts will be taxable to the shareholder in the manner described above,
although economically they constitute a return of capital to him.
Ordinarily, shareholders are required to take distributions by the Fund
into account in the year in which they are made. However, dividends declared
in October, November or December of any calendar year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Fund) on December 31
of such year if such dividends are actually paid in January of the following
year. Shareholders will be advised annually as to the U.S. federal income tax
consequences of distributions made (or deemed made) during the year.
The Fund will be required in certain cases to withhold and remit to the
U.S. Treasury 31% of ordinary income dividends and capital gain dividends, and
the proceeds of redemption of shares, paid to any shareholder (1) who has
provided either an incorrect tax identification number or no number at all,
(2) who is subject to backup withholding by the IRS for failure to report the
receipt of interest or dividend income properly, or (3) who has failed to
certify to the Fund that it is not subject to backup withholding or that it
is a corporation or other "exempt recipient."
Sale or Redemption of Shares
A shareholder will recognize gain or loss on the sale or redemption of
shares of the Fund in an amount equal to the difference between the proceeds
of the sale or redemption and the shareholder's adjusted tax basis in the
shares. All or a portion of any loss so recognized may be disallowed if the
shareholder purchases other shares of the Fund within 30 days before or after
the sale or redemption. In general, any gain or loss arising from (or treated
as arising from) the sale or redemption of shares of the Fund will be
considered capital gain or loss and will be long-term capital gain or loss if
-11-
<PAGE>
the shares were held for longer than one year. However, any capital loss
arising from the sale or redemption of shares held for six months or less will
be treated as a long-term capital loss to the extent of the amount of capital
gain dividends received on such shares. For this purpose, the special holding
period rules of Code Section 246(c)(3) and (4) (discussed above in connection
with the dividends-received deduction for corporations) will generally apply
in determining the holding period of shares. Long-term capital gains of
noncorporate taxpayers are currently taxed at a maximum rate 11.6% lower than
the maximum rate applicable to ordinary income. Capital losses in any year
are deductible only to the extent of capital gains plus, in the case of a
noncorporate taxpayer, $3,000 of ordinary income.
If a shareholder (I) incurs a sales load in acquiring shares of the
Fund, (ii) disposes of such shares less than 91 days after they are acquired
and (iii) subsequently acquires shares of the Fund or another fund at a
reduced sales load on account of the shares disposed of, then the original
sales load (to the extent of the reduction in the sales load on the shares
subsequently acquired) shall not be taken into account in determining gain or
loss on the shares disposed of but shall be treated as incurred on the
acquisition of the shares subsequently acquired.
Foreign Shareholders
Taxation of a shareholder who, as to the United States, is a nonresident
alien individual, foreign trust or estate, foreign corporation, or foreign
partnership ("foreign shareholder"), depends on whether the income from the
Fund is "effectively connected" with a U.S. trade or business carried on by
such shareholder.
If the income from the Fund is not effectively connected with a U.S.
trade or business carried on by a foreign shareholder, ordinary income
dividends will be subject to U.S. withholding tax at the rate of 30% (or lower
treaty rate) upon the gross amount of the dividend. Furthermore, such a
foreign shareholder may be subject to U.S. withholding tax at the rate of 30%
(or lower treaty rate) on the gross income resulting from the Fund's election
to treat any foreign taxes paid by it as paid by its shareholders, but may not
be allowed a deduction against this gross income or a credit against this U.S.
withholding tax for the foreign shareholder's pro rata share of such foreign
taxes which it is treated as having paid. Such a foreign shareholder would
generally be exempt from U.S. federal income tax on gains realized on the sale
of shares of the Fund, capital gain dividends.
If the income from the Fund is effectively connected with a U.S. trade
or business carried on by a foreign shareholder, then ordinary income
dividends, capital gain dividends, and any gains realized upon the sale of
shares of the Fund will be subject to U.S. federal income tax at the rates
applicable to U.S. taxpayers.
In the case of a foreign noncorporate shareholder, the Fund may be
required to withhold U.S. federal income tax at a rate of 31% on distributions
that are otherwise exempt from withholding tax (or taxable at a reduced treaty
rate) unless the shareholder furnishes the Fund with proper notification of
its foreign status.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the
Fund, including the applicability of foreign taxes.
Effect of Future Legislation; Local Tax Considerations
The foregoing general discussion of U.S. federal income tax consequences
is based on the Code and the Treasury Regulations issued thereunder as in
effect on the date of this Statement of Additional Information. Future
legislative or administrative changes or court decisions may significantly
change the conclusions expressed herein, and any such changes or decisions may
have a retroactive effect with respect to the transactions contemplated
herein.
-12-
<PAGE>
Rules of state and local taxation of ordinary income dividends and
capital gain dividends from regulated investment companies often differ from
the rules for U.S. federal income taxation described above. Shareholders are
urged to consult their tax advisers as to the consequences of these and other
state and local tax rules affecting their investment in the Fund.
PERFORMANCE CALCULATION
For the purpose of quoting and comparing the performance of the Fund to
that of other mutual funds and to other relevant market indices in
advertisements or in reports to shareholders, performance may be stated in
terms of total return. Under the rules of the Securities and Exchange
Commission ("SEC rules"), funds advertising performance must include total
return quotes calculated according to the following formula:
n
P(1+T) = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years (1, 5 or 10)
ERV = ending redeemable value of a hypothetical $1,000 payment made
at the beginning of the 1, 5 or 10 year periods or at the end
of the 1, 5 or 10 year periods (or fractional portion thereof).
Under the foregoing formula, the time periods used in advertising will
be based on rolling calendar quarters, updated to the last day of the most
recent quarter prior to submission of the advertising for publication, and
will cover one, five and ten year periods or a shorter period dating from the
effectiveness of the Fund's Registration Statement. In calculating the ending
redeemable value, all dividends and distributions by the Fund are assumed to
have been reinvested at net asset value as described in the prospectus on the
reinvestment dates during the period. Total return, or "T" in the formula
above, is computed by finding the average annual compounded rates of return
over the 1, 5 or 10 year periods (or fractional portion thereof) that would
equate the initial amount invested to the ending redeemable value. Any
recurring account charges that might in the future be imposed by the Fund
would be included at that time.
The Fund may also from time to time include in such advertising a total
return figure that is not calculated according to the formula set forth above
in order to compare more accurately the performance of the Fund with other
measures of investment return. For example, in comparing the Fund's total
return with data published by Lipper Analytical Services, Inc., or with the
performance of the Standard and Poor's 500 Stock Index or the Dow Jones
Industrial Average, the Fund calculates its aggregate total return for the
specified periods of time by assuming the investment of $10,000 in Fund shares
and assuming the reinvestment of each dividend or other distribution at net
asset value on the reinvestment date. Percentage increases are determined by
subtracting the initial value of the investment from the ending value and by
dividing the remainder by the beginning value. Prior to January 1992, the
Fund was managed by a different investment adviser. The total return for the
one year and since commencement (1/2/92) period ended June 30, 1995 is as
follows:
Average Annual
Period Total Return
------ -------------
1 year ended June 30, 1995 -3.38%
42 month period ended June 30, 1995 6.88%
-13-
<PAGE>
CUSTODIANS, TRANSFER AGENT, AND DIVIDEND DISBURSING AGENT
Chase Manhattan Bank, N.A., 1211 Avenue of the Americas, New York, New
York 10036, has been retained to act as the Custodian for the Fund's
investments and assets. In addition, the Fund and Chase Manhattan Bank, N.A.
may appoint foreign banks and securities depositories to act as sub-custodians
for the Fund's portfolio securities subject to their qualification as eligible
foreign custodians under the rules adopted by the SEC.
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110 is the transfer agent and dividend disbursing agent for
the Fund.
Neither Chase Manhattan Bank, N.A. nor State Street Bank and Trust
Company has any part in determining the investment policies of the Fund or in
determining which portfolio securities are to be purchased or sold by the Fund
or in the declaration of dividends and distributions.
MANAGEMENT OF THE FUND
The Directors and executive officers of the Fund and their principal
occupations are set forth below:
*+ROBERT M. DEMICHELE, President and Chairman of the Board. P.O. Box 1515,
Saddle Brook, 07663. Chairman and Chief Executive Officer, Lexington
Management Corporation; Chairman and Chief Executive Officer, Lexington
Funds Distributor, Inc., President and Director, Piedmont Management
Company Inc.; Director, Reinsurance Corporation of New York; Director,
Unione Italiana Reinsurance; Vice Chairman of the Board of Trustees,
Union College; Director, Continental National Corporation; Director, The
Navigator's Insurance Group, Inc.; Chairman, Lexington Capital
Management, Inc.; Chairman, LCM Financial Services, Inc.; Director,
Vanguard Cellular Systems, Inc.; Chairman of the Board, Market Systems
Research, Inc. and Market Systems Research Advisors, Inc. (registered
investment advisers); Trustee, Smith Richardson Foundation.
+BEVERLEY C. DUER, Director, 340 East 72nd Street, New York, N.Y. 10021.
Private Investor. Formerly, Manager of Operations Research Department -
CPC International, Inc.
*+BARBARA R. EVANS, Director. 5 Fernwood Road, Summit, N.J. 07901. Private
Investor. Prior to May 1989, Assistant Vice President and Securities
Analyst, Lexington Management Corporation; prior to March 1987, Vice
President - Institutional Equity Sales, L.F. Rothchild, Unterberg,
Towbin.
*+LAWRENCE KANTOR, Vice President and Director. P.O. Box 1515, Saddle Brook,
N.J. 07663. Executive Vice President, Managing Director and Director,
Lexington Management Corporation; Executive Vice President, General
Manager and Director, Lexington Funds Distributor, Inc.
+DONALD B. MILLER, Director. 10275 Quail Covey Drive, Boynton Beach, Florida
33436. Chairman, Horizon Media, Inc.; Trustee, Galaxy Funds; Director,
Maguire Group of Connecticut; prior to January 1989, President, Director
and C.E.O., Media General Broadcast Services (advertising firm).
+FRANCIS OLMSTED, Director. 50 Van Hooten Court, San Anselmo, CA 94960.
Private Investor. Formerly, Manager - Commercial Development (West
Coast), Essex Chemical Corporation, Clifton, New Jersey (chemical
manufacturers).
+JOHN G. PRESTON, Director. 3 Woodfield Road, Wellesley, Massachusetts
02181. Associate Professor of Finance, Boston College, Boston,
Massachusetts.
+MARGARET RUSSELL. Director. 55 North Mountain Avenue, Montclair, N.J. 07042.
Private Investor. Formerly, Community Affairs Director, Union Camp
Corporation.
+PHILIP C. SMITH, Director. 87 Lord's Highway, Weston, Connecticut 06883.
Private Investor. Director, Southwest Investors Income Fund, Inc.,
Government Income Fund, Inc., U.S. Trend Fund, Inc., Investors Cash
Reserve and Plimony Fund, Inc. (registered investment companies).
-14-
<PAGE>
+FRANCIS A. SUNDERLAND, Director. 309 Quito Place, Castle Pines, Castle
Rock, CO 80104. Private Investor.
*+ROBERT W. RADSCH, C.F.A., Vice President and Portfolio Manager. P.O. Box
1515, Saddle Brook, N.J. 07663. Vice President, Lexington Management
Corporation. Prior to July 1994, Senior Vice President, Portfolio
Manager and Chief Economist, Bull & Bear Group.
*+LISA CURCIO, Vice President and Secretary. P.O. Box 1515, Saddle Brook,
N.J. 07663. Senior Vice President and Secretary, Lexington Management
Corporation; Vice President and Secretary, Lexington Funds Distributor,
Inc.
*+RICHARD M. HISEY, Vice President and Treasurer. P.O. Box 1515, Saddle
Brook, N.J. 07663. Managing Director, Director and Chief Financial
Officer, Lexington Management Corporation; Chief Financial Officer,
Vice President and Director, Lexington Funds Distributor, Inc.; Chief
Financial Officer, Market Systems Research Advisors, Inc.
*+RICHARD J. LAVERY, CLU ChFC, Vice President. P.O. Box 1515, Saddle Brook,
N.J. 07663. Senior Vice President, Lexington Management Corporation;
Vice President, Lexington Funds Distributor, Inc.
*+JANICE A. CARNICELLI, Vice President. P.O. Box 1515, Saddle Brook, N.J.
07663.
*+CHRISTIE CARR, Assistant Treasurer. P.O. Box 1515, Saddle Brook, N.J.
07663. Prior to October 1992, Senior Accountant, KPMG Peat Marwick LLP.
*+SIOBHAN GILFILLAN, Assistant Treasurer. P.O. Box 1515, Saddle Brook, N.J.
07663.
*+THOMAS LUEHS, Assistant Treasurer. P.O. Box 1515, Saddle Brook, N.J. 07663.
Prior to November, 1993, Supervisor Investment Accounting, Alliance
Capital Management, Inc.
*+SHERI MOSCA, Assistant Treasurer. P.O. Box 1515, Saddle Brook, N.J. 07663.
Prior to September 1990, Fund Accounting Manager, Lexington Group of
Investment Companies.
*+ANDREW PETRUSKI, Assistant Treasurer. P.O. Box 1515, Saddle Brook, N.J.
07663. Prior to May 1994, Supervising Senior Accountant, NY Life
Securities. Prior to December 1990, Senior Accountant, Dreyfus
Corporation.
*+PETER CORNIOTES, Assistant Secretary. P.O. Box 1515, Saddle Brook, N.J.
07663. Assistant Secretary, Lexington Management Corporation.
Assistant Secretary, Lexington Funds Distributor, Inc.
*+ENRIQUE J. FAUST, Assistant Secretary. P.O. Box 1515, Saddle Brook, N.J.
07663. Prior to March 1994, Blue Sky Compliance Coordinator, Lexington
Management Corporation.
* "Interested person" and/or "Affiliated person" of LMC as defined in the
1940 Act.
+ Messrs. Corniotes, DeMichele, Duer, Faust, Hisey, Kantor, Lavery, Luehs,
Miller, Olmsted, Petruski, Preston, Radsch, Smith and Sunderland and Mmes.
Carnicelli, Carr, Curcio, Evans, Gilfillan, Mosca and Russell hold similar
offices with some or all of the other investment companies advised and/or
distributed by LMC and LFD.
Directors not employed by the Fund or its affiliates receive an annual fee
of $800 and a fee of $160 for each meeting attended plus reimbursement of
expenses for attendance at regular meetings. During the fiscal year ended
June 30, 1995, the aggregate remuneration paid by the Fund to such directors
was $11,821.
-15-
<PAGE>
Name of Director Aggregate Total Compensation No. of
Compensation from From Fund and Directorships
Fund Fund Complex in Fund Complex
- -----------------------------------------------------------------------------
Robert M. DeMichele 0 $0 17
Beverley C. Duer $1350 $19,400 17
Barbara R. Evans 0 0 16
Lawrence Kantor 0 0 17
Donald B. Miller $1350 $18,050 16
Francis Olmsted $1350 $17,550 15
John G. Preston $1350 $18,050 16
Margaret Russell $1350 $17,550 15
Philip C. Smith $1350 $18,050 16
Francis A. Sunderland $1350 $17,550 15
-16-
<PAGE>
PART C. OTHER INFORMATION
- -----------------------------
Item 24. Financial Statements and Exhibits - List
----------------------------------------
(a) Financial statements: Filed electronically on
8/17/95 - Incorporated by
reference.
Report of Independent Auditors "
dated July 31, 1995
Statement of Net Assets (Including "
the Portfolio of Investments) as of
June 30, 1995 (1)
Statement of Assets and Liabilities "
as of June 30, 1995
Statement of Operations for the year "
ended June 30, 1995 (2)
Statements of Changes in Net Assets for "
the years ended June 30, 1995 and 1994
Notes to Financial Statements "
Schedules II-VII and other Financial Statements, for
which provisions are made in the applicable
accounting regulations of the Securities and Exchange
Commission, are omitted because they are not required
under the related instructions, they are
inapplicable, or the required information is
presented in the financial statements or notes
thereto.
(1) Includes the information required by Schedule I.
(2) Includes the information required by the Statement of
Realized Gain or Loss on Investments.
<PAGE>
ITEM 24. Financial Statements and Exhibits - List
(b) Exhibits:
1. Articles of Incorporation Filed electronically
2. By-Laws Filed electronically
3. Not Applicable
4. Stock Certificate Specimen Filed electronically
5. Investment Advisory Agreement between Filed electronically
Registrant and Lexington Management
Corporation
6. Distribution Agreement between Filed electronically
Registrant and Lexington Funds
Distributor, Inc.
7. Not Applicable
8. Custodian Agreement between Registrant Filed electronically
and Chase Manhattan Bank, N. A.
9a. Transfer Agency Agreement between Filed electronically
Registrant and State Street Bank and
Trust Company
9b. Form of Administrative Service Filed electronically
Agreement between Registrant and
Lexington Management Corporation
10. Opinion of Counsel as to Legality of Securities being
registered - Filed 4/8/92 - Incorporated by reference
11. Consents
(a) Consent of Counsel Filed electronically
(b) Consent of Independent Auditors Filed electronically
12. Not Applicable
13. Not Applicable
14. Model Retirement Plans Filed electronically
15. Not Applicable
16. Performance Calculation - Filed 4/8/92 - Incorporated
by reference
<PAGE>
Item 25. Persons Controlled by or under Common Control with Registrant
-------------------------------------------------------------
Furnish a list or diagram of all persons directly or
indirectly controlled by or under common control with the
Registrant and as to each such person indicate (1) if a company,
the state or other sovereign power under the laws of which it is
organized, (2) the percentage of voting securities owned or other
basis of control by the person, if any, immediately controlling
it.
None.
Item 26. Number of Holders of Securities
-------------------------------
State in substantially the tabular form indicated, as of a
specified date within 90 days prior to the date of filing, the
number of record holders of each class of securities of the
Registrant.
The following information is given as of September 14, 1995:
Title of Class Number of Record Holders
-------------- ------------------------
Capital Stock 15,242
($0.001 par value)
Item 27. Indemnification
---------------
State the general effect of any contract, arrangements or
statute under which any director, officer, underwriter or
affiliated person of the Registrant is insured or indemnified in
any manner against any liability which may be incurred in such
capacity, other than insurance provided by any director, officer,
affiliated person or underwriter for their own protection.
Under the terms of the Maryland General Corporation Law and
the Company's By-Laws, the Company may indemnify any person who
was or is a director, officer or employee of the Company to the
maximum extent permitted by the Maryland General Corporation Law;
provided, however, that Company only as authorized in the
specific case upon a determination that indemnification of such
persons is proper in the circumstances. Such determination shall
be made (i) by the Board of Directors, by a majority vote of a
quorum which consists of directors who are neither "interested
persons" of Company as defined in Section 2(a)(19) of the 1940
Act, nor parties to the proceeding, or (ii) if the required
quorum is not obtainable or if a quorum of such directors so
directs by independent legal counsel in a written opinion. No
indemnification will be provided by the Company to any director
or officer of the Company of any liability to the Company or
Shareholders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of duty.
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
----------------------------------------------------
Describe any other business, profession, vocation or
employment of a substantial nature in which the investment
adviser of the Registrant, and each director, officer or partner
of any such investment adviser, is or has been, at any time
during the past two fiscal years, engaged for his own account or
in the capacity of director, officer, employee, partner or
trustee.
See Prospectus Part A and Statement of Additional
Information Part B ("Management of the Fund").
Item 29. Principal Underwriters
----------------------
(a) Lexington Money Market Trust
Lexington Tax Free Money Fund, Inc.
Lexington Growth and Income Fund, Inc.
Lexington Worldwide Emerging Markets Fund, Inc.
Lexington Short-Intermediate Government Securities Fund, Inc.
Lexington GNMA Income Fund, Inc.
Lexington Ramirez Global Income Fund
Lexington Goldfund, Inc.
Lexington Global Fund, Inc.
Lexington Corporate Leaders Trust Fund
Lexington Natural Resources Trust
Lexington Strategic Investments Fund, Inc.
Lexington Strategic Silver Fund, Inc.
Lexington International Fund, Inc.
Lexington Convertible Securities Fund
Lexington Emerging Markets Fund, Inc.
<PAGE>
29 (b)
Position and Offices Position and
Name and Principal with Principal Offices with
Business Address Underwriter Registrant
- ---------------- ----------- ----------
Peter Corniotes* Assistant Secretary Asst. Secretary
Lisa A. Curcio* Vice President and Vice President
Secretary and Secretary
Robert M. DeMichele* Chief Executive Officer Chairman of the
and Chairman Board and President
Richard M. Hisey* Chief Financial Officer, Vice President and
Managing Director & Chied Financial Officer
Director
Lawrence Kantor* Executive Vice President, Director & Vice
Managing Director & President
Director
Richard Lavery* Vice President Vice President
Janice Violette* Assistant Treasurer None
(c)
Not Applicable.
*P.O. Box 1515
Saddle Brook, New Jersey 07663
<PAGE>
Item 30. Location of Accounts and Records
--------------------------------
With respect to each account, book or other document
required to be maintained by Section 31(a) of the 1940 Act and
the Rules (17 CFR 270, 31a-1 to 31a-3) promulgated thereunder,
furnish the name and address of each person maintaining physical
possession of each such account, book or other document.
The Registrant, Lexington Strategic Investments Fund,
Inc., Park 80 West - Plaza Two, Saddle Brook, New Jersey 07663
will maintain physical possession of such of each such account,
book or other document of the Company, except for those
maintained by the Registrant's Custodian, Chase Manhattan Bank,
N.A., 1211 Avenue of the Americas, New York, New York 10036, or
Transfer Agent, State Street Bank and Trust Company, c/o National
Financial Data Services, City Center Square, 1100 Main, Kansas
City, Missouri 64105.
Item 31. Management Services
-------------------
Furnish a summary of the substantive provisions of any
management-related service contract not discussed in Part A or B
of this Form (because the contract was not believed to be
material to a purchaser of securities of the Registrant) under
which services are provided to the Registrant, indicating the
parties to the contract, the total dollars paid and by whom for
the last three fiscal years.
None.
Item 32. Undertakings -
------------
The Registrant, Lexington Strategic Investments Fund,
Inc., undertakes to furnish a copy of the Fund's latest
annual report, upon request and without charge, to
every person to whom a prospectus is delivered.
<PAGE>
Registration No. 2-51641
Securities and Exchange Commission
Washington, D.C. 20549
Exhibits
Filed With
Form N-1A
<PAGE>
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
EXHIBIT INDEX
The following documents are being filed electronically as exhibits to
this filing:
Articles of Incorporation
Form of By-Laws
Form of Stock Certificate
Form of Investment Advisory Agreement between
Registrant and Lexington Management Corporation
Form of Distribution Agreement between registrant
Lexington Funds Distributor, Inc.
Form of Custodian Agreement
Form of Transfer Agency Agreement
Form of Administrative Services Agreement
Consent of Counsel
Consent of Auditors
Retirement Plans
Financial Data Schedule
Cover Page
<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
amendment to the Registration Statement pursuant to Rule 485(b)
under the Securities Act of 1933 and has duly caused this
amendment to be signed on its behalf by the Undersigned,
thereunto duly authorized, in the City of Saddle Brook and State
of New Jersey, on the 25th day of October, 1995.
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
Robert M. DeMichele
_____________________________________________
By: Robert M. DeMichele
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933,
this amendment to the Registration Statement has been signed
below by the following persons in the capacities and on the dates
indicated.
Signature Title Date
Rober M. DeMichele
__________________________ Chairman of the Board October 25, 1995
Robert M. DeMichele Principal Executive Officer
Richard M. Hisey
__________________________ Principal Financial October 25, 1995
Richard M. Hisey and Accounting Officer
Lisa Curcio
__________________________ Principal Compliance October 25, 1995
Lisa Curcio Officer
*Barbara R. Evans Director October 25, 1995
- --------------------------
Barbara R. Evans
<PAGE>
Signature Title Date
*Beverley C. Duer, P.E. Director October 25, 1995
- --------------------------
Beverley C. Duer, P.E.
*Lawrence Kantor Director October 25, 1995
- --------------------------
Lawrence Kantor
*Donald B. Miller Director October 25, 1995
- --------------------------
Donald B. Miller
*Francis Olmsted Director October 25, 1995
- --------------------------
Francis Olmsted
*John G. Preston Director October 25, 1995
- --------------------------
John G. Preston
*Margaret W. Russell Director October 25, 1995
- --------------------------
Margaret W. Russell
*Philip C. Smith Director October 25, 1995
- --------------------------
Philip C. Smith
*Francis A. Sunderland Director October 25, 1995
- --------------------------
Francis A. Sunderland
Lisa Curcio
*By: ______________________
Lisa Curcio
Attorney-in-Fact
ARTICLES OF INCORPORATION
OF
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
FIRST: THE UNDERSIGNED, ADAM J. SHAPIRO, whose address is
520 Madison Avenue, New York, New York 10022, being at least eighteen
years of age, is forming a corporation under the general laws of the
State of Maryland.
SECOND: The name of the corporation is LEXINGTON STRATEGIC
INVESTMENTS FUND, INC. (hereinafter called the "Corporation").
THIRD: The purpose for which the Corporation is formed, is
to act as an open-end investment company of the management type
registered as such with the Securities and Exchange Commission pursuant
to the Investment Company Act of 1940.
FOURTH: The address of the principal office of the
Corporation in the State of Maryland is Corporation Service Company, 100
Light Street, Baltimore, Maryland 21202.
FIFTH: The name and address of the resident agent of the
Corporation in this State is Joseph M. Roulhac, Esq., 100 Light Street,
Baltimore, Maryland 21202.
SIXTH: The total number of shares of stock of all classes
which the Corporation has authority to issue is 1,000,000,000 shares,
of which 500,000,000 shares are designated "Lexington Strategic
Investments Fund Series", and of which 500,000,000 are unclassified.
The par value of the shares of stock of each class is $.001 per share.
The aggregate par value of all the shares of all classes is $1,000,000.
SEVENTH: Subject to the power of the Board of Directors to
reclassify unissued shares, the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms or conditions of redemption of the stock of the
Corporation, shall be as follows:
(a) The net asset value of each class of the Corporation's
stock shall be determined separately in accordance with procedures
approved by the Board of Directors and in compliance with regulatory
requirements.
(b) The consideration received by the Corporation for the
issue and sale of shares of a class of stock may be invested in a
separate investment portfolio or together with the consideration
received for the issuance and sale of one or more other classes stock in
a common investment portfolio. If such consideration is invested in a
common investment portfolio, the income, gain or loss and the expenses
and liabilities of the common investment portfolio shall be allocated
among the classes in accordance with procedures approved by the Board of
Directors and in compliance with regulatory requirements.
(c) Shares of each class of stock shall be entitled to such
dividends or distributions, in stock or in cash or both, as may be
declared from time to time by the Board of Directors with respect to
such class. Dividends or distributions declared or paid on shares of a
class of stock shall be deducted in determining the net asset value of
shares of that class and may not exceed the net assets of that class.
(d) In the event of the liquidation or dissolution of the
Corporation, the stockholders of each class of the Corporation's stock
shall be entitled to receive, as a class, out of the assets of the
Corporation available for distribution to stockholders, an amount equal
to the net assets of that class. The assets so distributable to the
stockholders of a class shall be distributed among such stockholders in
proportion to the number of shares of that class held by them and
recorded on the books of the Corporation. In the event that there are
any assets available for distribution that are not attributable to any
particular class of stock, such assets shall be allocated to all classes
in proportion to the net asset value of the respective classes.
(e) On each matter submitted to a vote of the stockholders,
each holder of a share of stock shall be entitled to one vote for each
share standing in his name on the books of the Corporation. All holders
of shares of stock shall vote as a single class except with respect to
any matter which affects only one or more classes of stock, in which
case only the holders of shares of the class or classes affected shall
be entitled to vote.
(f) To the extent that the Corporation has funds or property
legally available therefor, each holder of shares of stock of the
Corporation, upon proper written request (including signature
guarantees, if required by the Corporation) to the Corporation
accompanied, when stock certificates representing such shares are
outstanding, by surrender of the appropriate stock certificate or
certificates in proper form for transfer, or any such form as the Board
of Directors may provide, shall be entitled to require the Corporation
to redeem all or any number of the shares outstanding in the name of
such holder on the books of the Corporation, at the net asset value of
such shares computed as hereinafter provided. Notwithstanding the
foregoing, the Corporation may suspend the right of the holders of the
shares of stock of the Corporation to require the Corporation to redeem
such shares when permitted or required to do so by the Investment
Company Act of 1940 or any rule or regulation of the Securities and
Exchange Commission promulgated thereunder.
The Corporation may redeem all of the shares of a class of
stock held by a stockholder if the net asset value of the shares of
stock is less than $500 or such other amount not exceeding $5,000 as the
Board of Directors may establish (the "Minimum Amount") with respect to
the shares of that class. The Board of Directors may establish
differing Minimum Amounts for each class of the Corporation s stock and
for categories of holders of stock based on such criteria as the Board
of Directors may deem appropriate. The Corporation shall give the
stockholder notice which shall be in writing personally delivered or
deposited in the mail, at least 30 days (or such other number of days as
may be specified from time to time by the Board of Directors) prior to
such redemption.
EIGHTH: The initial number of directors of the corporation
shall be three and the names of those who will serve as such until their
successors are elected and qualified are as follows:
Robert M. DeMichele
Lawrence Kantor
William S. Stack
The By-Laws of the Corporation may fix the number of
directors at a number greater or less than that named in these Articles
of Incorporation and may authorize the Board of Directors to increase or
decrease the number of directors.
NINTH: In furtherance and not in limitation of the powers
conferred by the laws of the State of Maryland, the following provisions
are hereby adopted for the purpose of defining and regulating the powers
of the Corporation and of the directors and stockholders:
(a) In addition to its other powers explicitly or
implicitly granted under these Articles of Incorporation, By-Laws or
otherwise the Board of Directors of the Corporation:
(i) is hereby empowered to authorize the
issuance from time to time of shares of its stock of any
class, whether now or hereafter authorized, and securities
convertible into shares of its stock of any class or
classes, whether now or hereafter authorized, in each case
upon such terms and conditions and for such consideration as
such Board of Directors shall from time to time determine.
(ii) is authorized to classify or to
reclassify, from time to time, any unissued shares of stock
of the Corporation, whether now or hereafter authorized, by
setting, changing or eliminating the preferences, conversion
or other rights, voting powers, restrictions, limitations as
to dividends, qualifications or terms and conditions of or
rights to require redemption of the stock. The provisions
of these Articles of Incorporation shall apply to each class
of stock unless otherwise provided by the Board of Directors
prior to issuance of any shares of that class.
(iii) is authorized to determine the net asset value
of a share of any class or series of stock of the
Corporation and is authorized to determine the methods to be
used to value the assets of a class or series, the amount
and allocation of expenses and liabilities of the
Corporation to each class or series and all other matters in
connection therewith.
(b) The Corporation is authorized to issue fractional
shares of stock of this Corporation, whether now or hereafter
authorized, and any fractional shares so issued shall entitle the
holders thereof to exercise voting rights, receive dividends and
participate in the distribution of assets of the Corporation in the
event of liquidation or dissolution to the extent of their proportionate
interest represented by such fractional shares, but excluding the right
to a certificate evidencing such shares.
(c) Except to the extent otherwise prohibited by
applicable law, the Corporation may enter into any management or
investment advisory contract or underwriting contract or any other type
of contract with, and may otherwise engage in any transaction or do
business with, any person, firm or corporation or any subsidiary or
other affiliate of any such person, firm or corporation and may
authorize such person, firm or corporation or such subsidiary or other
affiliate to enter into any other contracts or arrangements with any
other person, firm or corporation which relate to the Corporation or the
conduct of its business, notwithstanding that any directors or officers
of the Corporation are or may subsequently become partners, directors,
officers, stockholders or employees of such person, firm or corporation
or of such subsidiary or other affiliate or may have a material
financial interest in any such contract or transaction or business and
no such contract shall be invalidated or voidable or in any way affected
thereby nor shall any of such directors or officers of the Corporation
be liable to the Corporation or to any stockholder or creditor thereof
or to any other person for any loss incurred solely because of the
entering into and performance of such contract or the engaging in such
transaction or business or the existence of such material financial
interest therein; provided that nothing herein shall protect any
director or officer of the Corporation from liability to the Corporation
or its security holders to which he would be otherwise subject by reason
of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
(d) Any determination made in good faith, so far as
accounting matters are involved, in accordance with accepted accounting
practices by or pursuant to the direction of the Board of Directors of
the Corporation, as to the amount of assets, obligations, or liabilities
of any class of the Corporation, as to the amount of net income of any
class of the Corporation from dividends and interest for any period or
amounts at any time legally available for the payment of dividends, as
to the amount of any reserves or charges set up and the propriety
thereof, as to the time of or purpose for creating reserves or as to
the use, alteration or cancellation of any reserves or charges (whether
or not any obligation or liability for which such reserves or charges
shall have been created shall have been paid or discharged or shall be
then or thereafter required to be paid or discharged), as to the value
of any security owned by any class of the Corporation or as to any other
matters relating to the issuance, sale, redemption or other acquisition
or disposition of securities or shares of capital stock of any class of
the Corporation, and any reasonable determination made in good faith by
the Board of Directors of the Corporation as to whether any transaction
constitutes a purchase of securities on "margin," a sale of securities
"short," or an underwriting of the sale of, or a participation in any
underwriting of the sale of, or a participation in any underwriting or
selling group in connection with the public distribution of, any
securities, shall be final and conclusive, and shall be binding upon the
Corporation and all holders of its capital stock, past, present and
future, and shares of the capital stock of the Corporation are issued
and sold on the condition and understanding, evidenced by the purchase
of shares of capital stock or acceptance of share certificates, that any
and all such determinations shall be binding as aforesaid.
(e) The stockholders of the Corporation may remove any
director of the Corporation prior to the expiration of his term of
office by the affirmative vote of a majority of all votes entitled to be
cast for the election of directors.
(f) No holder of shares of stock of the Corporation shall,
as such holder, have any preemptive right to purchase or subscribe for
any shares of stock of the Corporation, other than such rights, if any,
as the Board of Directors of the Corporation, in its discretion, may
from time to time determine.
(g) All persons who shall acquire stock or securities of
the Corporation shall acquire the same subject to the provisions of
these Articles of Incorporation.
(h) Notwithstanding any provision of the Maryland General
Corporation Law requiring a greater proportion than a majority of the
votes of the Corporation s stock entitled to be cast in order to take or
authorize any action, any such action may be taken or authorized upon
the occurrence of a majority of the aggregate number of votes entitled
to be cast thereon.
(i) The presence in person or by proxy of the holders of
shares entitled to cast one-third of the votes entitled to be cast
(without regard to class) shall constitute a quorum at any meeting of
the Stockholders, except with respect to any matter which, under
applicable statutes or regulatory requirements or the Corporation s
charter, requires approval by a separate vote of one or more classes of
stock, in which case the presence in person or by proxy of the holders
of shares entitled to cast one-third of the votes entitled to be cast on
the matter by such holders shall constitute a quorum.
TENTH: The following provisions are hereby adopted for the
purpose of limiting the liability of and indemnifying the directors and
officers of the Corporation:
(a) To the fullest extent that limitations on the liability
of directors and officers are permitted by the Maryland General
Corporation Law, no director or officer of the Corporation shall have
any liability to the Corporation or its stockholders for damages. This
limitation on liability applies to events occurring at the time a person
serves as a director or officer of the Corporation whether or not such
person is a director or officer at the time of any proceeding in which
liability is asserted.
(b) The corporation shall indemnify and advance expenses to
its currently acting and its former directors to the fullest extent that
indemnification of directors is permitted by the Maryland General
Corporation Law. The corporation shall indemnify and advance expenses
to its officers to the same extent as its directors and to such further
extent as is consistent with law. The Board of Directors may by By-Law,
resolution or agreement make further provisions for indemnification of
directors, officers, employees and agents to the fullest extent
permitted by the Maryland General Corporation Law.
(c) No provision of this Article shall be effective (i) to
require a waiver of compliance with any provision of the Securities Act
of 1933, or of the Investment Company Act of 1940, or of any valid rule,
regulation or order of the Securities and Exchange Commission thereunder
or (ii) to protect or purport to protect any director or officer of the
Corporation against any liability to the Corporation or its security
holders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
(d) References to the Maryland General Corporation Law in
this Article are to the law as from time to time amended. No further
amendment to the Articles of Incorporation of the Corporation shall
affect any right of any person under this Article based on any event,
omission or proceeding prior to such amendment.
ELEVENTH: The Corporation reserves the right to amend,
alter, change or repeal any provision of its charter, including any
amendment which alters the contract rights, as expressly set forth in
the charter, of any outstanding stock, and all rights conferred upon
stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, the undersigned incorporator of
LEXINGTON STRATEGIC INVESTMENTS FUND, INC. who executed the foregoing
Articles of Incorporation hereby acknowledges the same to be his act.
Dated the 3rd day of January, 1992.
_____________________________
Adam J. Shapiro,
Sole Incorporator
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
(A Maryland Corporation)
BY-LAWS
______________________________
ARTICLE I
STOCKHOLDERS
Section 1. Place of Meeting. All meetings of the stockholders
shall be held at the principal office of the Corporation in the State of
Maryland or at such other place within or without the State of Maryland as
may from time to time be designated by the Board of Directors and stated in
the notice of meeting.
Section 2. Annual Meetings. The Corporation is not required
to hold an annual meeting of stockholders in any year in which the election
of directors is not required to be acted upon under the Investment Company
Act of 1940. If the Corporation is required under the Investment Company
Act of 1940 to hold a meeting of stockholders to elect directors, the
meeting shall be designated as the annual meeting for that year. The
meeting shall be held no later than 120 days after the occurrence of the
event requiring an election of directors.
Section 3. Special or Extraordinary Meetings. Special or
extraordinary meetings of the stockholders for any purpose or purposes may
be called by the Chairman of the Board of Directors, if any, or by the
President or by the Board of Directors. In addition, such special or
extraordinary meetings shall be called by the Secretary upon receipt of the
request in writing signed by stockholders entitled to cast at least 25% of
all the votes entitled to be cast at the meeting stating the purpose of the
meeting and the matters proposed to be acted on and upon payment by such
stockholders of the estimated costs of preparing and mailing a notice of the
meeting. Unless requested by stockholders entitled to cast a majority of
all of the votes entitled to be cast at the meeting, a special meeting need
not be called to consider any matter which is substantially the same as a
matter voted on at a special meeting of the stockholders held during the
preceding 12 months. The directors of the Corporation shall promptly call
a meeting of shareholders for the purpose of voting upon the question of
removal of any such director or directors when requested in writing so to
do by the record holders of not less than 10% of the outstanding shares.
Section 4. Notice of Meeting of Stockholders. Not less than
ten days and not more than ninety days written or printed notice of every
meeting of stockholders, stating the time and place thereof (and the purpose
of any special or extraordinary meeting), shall be given to each stockholder
entitled to vote thereat and each other stockholder entitled to notice, by
leaving the same with him or at his residence or usual place of business or
by mailing it, postage prepaid, and addressed to him at his address as it
appears upon the books of the Corporation.
Each person who is entitled to notice of any meeting waives
notice if he is present at the meeting, attends in person or by proxy or
either before or after the meeting signs a waiver of notice which is filed
with the records of stockholders meetings.
Section 5. Closing of Transfer Books, Record Dates. The Board
of Directors may direct that the stock transfer books of the Corporation be
closed for a stated period not exceeding twenty days for the purpose of
making any proper determination with respect to stockholders, including
which stockholders are entitled to notice of and to vote at the meeting,
receive a dividend or be allotted other rights. If such books are closed
for the purpose of determining stockholders entitled to notice of or to vote
at a meeting of stockholders, such books shall be closed for at least ten
days immediately preceding such meeting. In lieu of providing for the
closing of the stock transfer books, the Board of Directors may set a date,
not exceeding ninety days and not less than ten days preceding the date of
any meeting of stockholders, and not exceeding ninety days preceding any
dividend payment date or any date for the allotment of rights, as a record
date for the determination of the stockholders entitled to notice of and to
vote at such meeting, or entitled to receive such dividends or rights, as
the case may be; and only stockholders of record on such date shall be
entitled to notice of and to vote at such meeting or to receive such
dividends or rights, as the case may be.
Section 6. Quorum, Adjournment of Meetings. The presence in
person or by proxy of stockholders entitled to cast one-third of the votes
entitled to be cast at the meeting shall constitute a quorum at all meetings
of the stockholders; and a majority of all votes cast at a meeting at which
a quorum is present is sufficient to approve any matter which properly comes
before the meeting, except with respect to any matter which, under
applicable statues or regulatory requirements approval by a separate vote
of one or more classes of stock, in which case the presence in person or
proxy of the holders of shares entitled to cast one-third of the vote
entitled to be cast by each class entitled to vote on the matter shall
constitute a quorum. If at any meeting of the stockholders there shall be
less than a quorum present, the stockholders present at such meeting may,
without further notice, adjourn the same from time to time (but not more
than 120 days after the original record date for such meeting) until a
quorum shall attend, but no business shall be transacted by any such
adjourned meeting except such as might have been lawfully transacted had the
meeting not been adjourned.
Section 7. Voting and Inspectors. At all meetings of
stockholders every stockholder of record entitled to vote thereat shall be
entitled to vote at such meeting either in person or by written proxy
appointed by instrument in writing subscribed by such stockholder or his
duly authorized attorney in fact. Unless a proxy provides otherwise, such
proxy is not valid more than eleven months after its date.
At any election of Directors, the Board of Directors prior
thereto may, of, if they have not so acted, the Chairman of the meeting may
appoint two inspectors of election who shall first subscribe an oath or
affirmation to execute faithfully the duties of inspectors at such election
with strict impartiality and according to the best of their ability, and
shall after the election make a certificate of the result of the vote taken.
No candidate for the office of Director shall be appointed such inspector.
The Chairman of the meeting may cause a vote by ballot to be
taken upon any election of matter.
Section 8. Conduct of Stockholders Meetings. The meetings of
the stockholders shall be presided over by the Chairman of the Board, or if
he shall not be present or if there is not Chairman, by the President, or
if he shall not be present, by a Vice-President, or if neither the President
nor any Vice-President is present, by a chairman to be elected at the
meeting. The Secretary of the Corporation, if present, shall act as
Secretary of such meetings, or if he is not present, an Assistant Secretary
shall so act, and if neither the Secretary nor an assistant Secretary is
present, by a secretary to be elected at the meeting.
Section 9. Concerning Validity of Proxies, Ballots, Etc. At
every meeting of the stockholders, all proxies shall be received and taken
in charge of and all ballots shall be received and canvassed by the
secretary of the meeting, who shall decide all questions touching the
qualification of voters, the validity of the proxies, and the acceptance or
rejection of votes, unless inspectors of election shall have been appointed
as provided in Section 7, in which event such inspectors of election shall
decide all such questions.
ARTICLE II
BOARD OF DIRECTORS
Section 1. Number and Term of Office. The business and affairs
of the Corporation shall be managed under the direction of a Board of
Directors consisting of three Directors, which number may be increased and
decreased as provided in Section 2 of this Article. Each director shall
hold office until his successor is duly elected and qualifies. Directors
need not be stockholders.
Section 2. Increase or Decrease in Number of Directors. The
Board of Directors, by the vote of a majority of the entire Board , may
increase the number of Directors to a number not exceeding fifteen, and may
elect Directors to fill the vacancies created by any such increase in the
number of Directors until their successors are duly elected and qualify.
The Board of Directors, by the vote of a majority of the entire Board, may
decrease the number of Directors to a number not less than three or the same
number as the number of stockholders, which ever is less, but any such
decrease shall not affect the term of office of any Director. Vacancies
occurring other than by reason of any such increase shall be filled as
provided by the Maryland General Corporation Law.
Section 3. Place of Meeting. The Directors may hold their
meetings, have one or more offices, and keep the books of the Corporation
outside the State of Maryland, at any office or offices of the Corporation
or at any other place as they may from time to time determine, and in the
case of meetings, as they may from time to time determine or as shall be
specified in the respective notices of such meetings or waivers of notice
thereof.
Section 4. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such time and on such notice, if any, as the
Directors may from time to time determine.
Section 5. Special Meetings. Special meetings of the Board of
Directors shall be held from time to time upon call of the Chairman of the
Board of Directors, if any, the President or two or more of the Directors,
by oral or telegraphic or written notice duly served on each Director not
less than one business day before such meeting or if sent or mailed to each
Director not less than three business days before such meeting. Each
Director who is entitled to notice waives such notice if he either before
or after the meeting signs a waiver of the notice which is filed with the
minutes of the meeting or is present at the meeting. Such notice or waiver
of notice need not state the purpose or purposes of such meeting.
Section 6. Quorum. One third of the Directors then in office
(but in no event less than two Directors), shall constitute a quorum for the
transaction of business. If at any meeting of the Board there shall be less
than a quorum present, a majority of those present may adjourn the meeting
from time to time until a quorum shall have been obtained. The act of the
majority of the Directors present at any meeting at which there is a quorum
shall be the act of the Directors, except as may be otherwise specifically
provided by applicable law, by the Articles of Incorporation or by these By-
Laws.
Section 7. Telephone Meeting. The members of the Board of
Directors or any committee of the Board of Directors may participate in a
meeting by means of a conference telephone or similar communications
equipment if all persons participating in such meeting can hear each other
at the same time, and participation in a meeting by these means constitutes
presence in person at such meeting.
Section 8. Executive Committee. The Board of Directors may
elect from the Directors an Executive Committee to consist of such number
of Directors (but not less than two) as the Board may from time to time
determine. The Board of Directors by such affirmative vote shall have power
at any time to change the members of such Committee and may fill vacancies
in the Committee by election from the Directors. When the Board of
Directors is not in session, the Executive Committee shall have and may
exercise any or all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation (including the
power to authorize the seal of the Corporation to be affixed to all papers
which may require it) except as provided by law and except the power to
increase or decrease the size of, or fill vacancies on the Board. The
Executive Committee may fix its own rules of procedure, and may meet, when
and as provided by such rules or by resolution of the Board of Directors,
but in every case the presence of a majority shall be necessary to
constitute a quorum. In the absence of any member of the Executive
Committee the members thereof present at any meeting, whether or not they
constitute a quorum, may appoint a member of the Board of Directors to act
in place of such absent member.
Section 9. Other Committees. The Board of Directors may
appoint other committees which shall in each case consist of such number of
members (not less than two) and shall have any may exercise such powers as
the Board may determine in the resolution appointing them. A majority of
all members of any such committee may determine its action, and fix the time
and place of its meeting, unless the Board of Directors shall otherwise
provide. The Board of Directors shall have power at any time to change the
members and powers of any such committee, to fill vacancies, and to
discharge any such committee. In the absence of any member of any
committee, the members thereof present at any meeting, whether or not they
constitute a quorum, may appoint a member of the Board of Directors to act
in the place of such absent member.
Section 10. Informal Action by Directors. Except to the extent
otherwise specifically provided by applicable law, any action required or
permitted to be taken at any meeting of the Board of Directors or any
committee thereof may be taken without a meeting, if a written consent to
such action is signed by all members of the Board or committee and is filed
with the minutes of proceedings of the Board or committee.
Section 11. Compensation of Directors. Directors shall be
entitled to receive such compensation from the Corporation for their
services as Directors as may from time to time be voted by the Board of
Directors.
ARTICLE III
OFFICERS
Section 1. Executive Officers. The executive officers of the
Corporation shall be chose by the Board of Directors. These may include a
Chairman of the Board, and shall include a President, one or more Vice
Presidents (the number thereof to be determined by the Board of Directors),
a Secretary and a Treasurer. The Chairman of the Board, if any, shall be
selected from among the Directors. The Board of Directors may also in its
discretion appoint Assistant Secretaries, Assistant Treasurers, and other
officers, agents and employees, who shall have such authority and perform
such duties as the Board may determine. The Board of Directors may fill any
vacancy which may occur in any office. Any two offices, except those of
President and Vice President, may be held by the same person, but no officer
shall execute, acknowledge or verify any instrument in more than one
capacity, if such instrument is required by law or these By-Laws to be
executed, acknowledged or verified by two or more officers.
Section 2. Term of Office. Unless otherwise specifically
determined by the Board of Directors, all officers of the Corporation shall
hold office until their respective successors are elected and qualify,
provided, however, that said term of office shall not create any contract
rights in the officer. If the Board of Directors in its judgment finds that
the best interests of the Corporation will be served, the Board of Directors
may remove any officer of the Corporation at any time with or without cause.
Section 3. President. The President shall be the chief
executive officer of the Corporation and, subject to the Board of Directors,
shall have the general control and management of the business and affairs
of the Corporation. If no Chairman of the Board be appointed, or, if
appointed, said Chairman is absent, the President shall, if present, preside
at all meetings of the stockholders and the Board of Directors.
Section 4. Chairman of the Board. The Chairman of the Board
shall preside at all meetings of the stockholders and the Board of Directors
at which he shall be present. Subject to the provisions of Section 2, he
shall have such other powers and duties as shall be prescribed by the Board
of Directors, and shall undertake such other assignments as may be requested
by the President.
Section 5. Chairman or one or more Vice Presidents. The
Chairman or one or more Vice Presidents shall have an exercise such powers
and duties of the President in the absence or inability of the President as
may be assigned to them, respectively, by resolution of the Board of
Directors or, to the extent not so assigned, as the President may assign to
them, respectively. In the absence or inability of the President to act,
the powers and duties of the President not assigned by the Board of
Directors or the President shall evolve upon the Chairman or in his absence
the Vice Chairman or in his absence the senior Vice President.
Section 6. Secretary. The Secretary shall have custody of the
seal of the Corporation. He shall keep the minutes of the meetings of the
stockholders, Board of Directors and any committees thereof, and he shall
attend to the giving and serving of all notices of the Corporation. He
shall have charge of the stock certificate book and such other books and
papers as the Board may direct; and he shall perform such other duties as
may be incidental to his office or as may be assigned to him by the Board
of Directors. He shall also keep or cause to be kept a stock book,
containing the names, alphabetically arranged, of all persons who are
stockholders of the Corporation showing their places of residence, the
number an class or series of any class of shares of stock held by them
respectively, and the dates when they respectively became the owners of
record thereof.
Section 7. The Treasurer shall have the care and custody of the
funds and securities of the Corporation and shall deposit the same in the
name of the Corporation in such bank or banks or other depositories and
subject to withdrawal in such manner as these by-laws or the Board of
Directors may determine; he shall, if required by the Board of Directors,
give such bond for the faithful discharge of his duties in such form as the
Board of Directors may require.
ARTICLE IV
CAPITAL STOCK
Section 1. Certificates of Shares. Each stockholder of the
Corporation shall be entitled to a certificate or certificates for the
number of whole shares of each class of stock of the Corporation owned by
him in such form as the Board of Directors may from time to time prescribe.
Section 2. Transfer of Shares. Shares of the Corporation shall
be transferable on the books of the Corporation by the holder thereof in
person or by his duly authorized attorney or legal representative, upon
surrender and cancellation of certificates, if any, for the same number of
shares, duly endorsed or accompanied by proper instruments of assignment and
transfer, with such proof of the authenticity of the signature as the
Corporation or its agents may reasonably require. In the case of shares not
represented by certificates, the same or similar requirements may be imposed
by the Board of Directors.
Section 3. Stock Ledgers. The stock ledgers of the
Corporation, containing the names and addresses of the stockholders and the
number of shares held by them respectively, shall be kept at the principal
offices of the Corporation, or if the Corporation employs a transfer agent,
at the offices of the transfer agent of the Corporation.
Section 4. Lost, Stolen or Destroyed Certificates. The Board
of Directors may determine the conditions upon which a new certificate of
stock of the Corporation of any class may be issued in place of a
certificate which is alleged to have been lost, stolen or destroyed; and
may, in their discretion, require the owner of such certificate or his legal
representative to give bond, with sufficient surety to the Corporation and
the transfer agent, if any, to indemnify it and such transfer agent against
any and all loss or claims which may arise by reason of the issue of a new
certificate in the place of the one so lost, stolen or destroyed.
ARTICLE V
CORPORATE SEAL
The Board of Directors may provide a suitable corporate seal,
in such form and bearing such inscriptions as it may determine. In lieu of
fixing the Corporation s seal to a document, it is sufficient to meet the
requirements of any law, rule or regulation relating to a corporation seal
to place the word (seal) adjacent to the signature of the person
authorized to sign the document on behalf of the Corporation.
ARTICLE VI
FISCAL YEAR
The fiscal year of the corporation shall be fixed by the Board
of Directors.
ARTICLE VII
INDEMNIFICATION
Section 1. Indemnification of Directors and Officers. The
Corporation shall indemnify its directors to the fullest extent that
indemnification of directors is permitted by the Maryland General
Corporation Law. The Corporation shall indemnify its officers to the same
extent as its directors and to such further extent consistent with law. The
Corporation shall indemnify its directors and officers who while serving as
directors or officers also serve at the request of the Corporation as a
director, officer, partner, trustee, employee, agent or fiduciary of another
corporation, partnership, joint venture, trust, other enterprise or employee
benefit plan to the fullest extent consistent with law. The indemnification
and other rights provided by this Article shall continue as to a person who
has ceased to be a director or officer and shall inure to the benefit of the
heirs, executors and administrators of such a person. This Article shall
not protect any such person against any liability to the Corporation or any
stockholder thereof to which such person 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 ("disabling
conduct").
Section 2. Advances. Any current or former director or officer
of the Corporation seeking indemnification within the scope of this Article
shall be entitled to advances from the Corporation for payment of the
reasonable expenses incurred by him in connection with the matter as to
which he is seeking indemnification in the manner and to the fullest extent
permissible under the Maryland General Corporation Law, and except as
provided below, without a preliminary determination of ultimate entitlement
to indemnification. The person seeking indemnification shall provide to the
Corporation a written affirmation of his good faith belief that the standard
of conduct necessary for indemnification by the Corporation has been met and
a written undertaking to repay any such advances if it should ultimately be
determined that the standard of conduct has not been met. In addition, at
least one of the following additional conditions shall be met: (a) the
person seeking indemnification shall provide a security in form and amount
acceptable to the Corporation for his undertaking; (b) the Corporation is
insured against losses arising by reason of the advance; or (c) a majority
of a quorum of directors of the corporation who are neither "interested
persons" as defined in Section 2(a)(19) of the Investment Company Act of
1940, as amended, nor parties to the proceeding ("disinterested non-party
directors"), or independent legal counsel, in a written opinion, shall have
determined, based on a review of facts readily available to the Corporation
at the time the advance is proposed to be made, that there is reason to
believe that the person seeking indemnification will ultimately be found to
be entitled to indemnification.
Section 3. Procedure. At the request of any person claiming
indemnification under this Article, the Board of Directors shall determine,
or cause to be determined, in a manner consistent with the Maryland General
Corporation Law, whether the standards required by this Article have been
met. Indemnification shall be made only following: (a) a final decision on
the merits by a court or other body before whom the proceeding was brought
that the person to be indemnified was not liable by reason of disabling
conduct or (b) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that the person to be
indemnified was not liable by reason of disabling conduct by (i) the vote
of a majority of a quorum of disinterested non-party directors or (ii) an
independent legal counsel in a written opinion.
Section 4. Indemnification of Employees and Agents. Employees
and agents who are not officers or directors of the Corporation may be
indemnified, and reasonable expenses may be advanced to such employees or
agents, as may be provided by action of the Board of Directors or by
contract, subject to any limitations imposed by the Investment Company Act
of 1940, as from time to time amended.
Section 5. Other Rights. The Board of Directors may make
further provision consistent with law for indemnification and advance of
expenses to directors, officers, employees and agents by resolution,
agreement or otherwise. The indemnification provided by this Article shall
not be deemed exclusive of any other right, with respect to indemnification
or otherwise, to which those seeking indemnification may be entitled under
any insurance or other agreement or resolution of stockholders or
disinterested non-party directors or otherwise.
Section 6. Amendments. References in this Article are to the
Maryland General Corporation Law and to the Investment Company Act of 1940
as from time to time amended. No amendment of the By-laws shall affect any
right of any person under this Article based on any event, omission or
proceeding prior to the amendment.
ARTICLE VIII
AMENDMENT OF BY-LAWS
The Board of Directors shall have the exclusive power to make,
alter and repeal the By-laws of the Corporation.
- ------------------------------------------------------------------------
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
THIS CERTIFIES that is the owner of
*SEE REVERSE FOR CERTAIN DEFINITIONS
___________________________________
| CUSIP 52962R 10 7 |
|___________________________________|
fully paid and non-assesable shares of COMMON STOCK of the par value of
$.001 each of LEXINGTON STRATEGIC INVESTMENTS FUND, INC., transferable
only on the books of the Corporation by the holder hereof in person or
by duly authorized Attorney upon surrender of this Certificate properly
endorsed.
This Certificate is not valid unless countersigned by the Transfer Agent
of the Corporation.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
COUNTERSIGNED: NATIONAL FINANCIAL DATA SERVICES
SERVICING AGENT FOR STATE STREET BANK AND TRUST COMPANY
P.O. BOX 419648 KANSAS CITY, MO 84141-6648
BY_____________________________________________________
AUTHORIZED OFFICER
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
CORPORATE
SEAL
LISA CURCIO 1992 ROBERT M. DEMICHELE
SECRETARY MARYLAND PRESIDENT
- ------------------------------------------------------------------------------
PLEASE DETACH AND DISCARD UNLESS CHANGES ARE DISCOVERED
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
NUMBER SHARES
KCK
ACCOUNT NO. ALPHA CODE DEALER NO. CONFIRM NO.
TRADE DATE CONFIRM DATE BATCH I.D. NO.
CHANGE NOTICE: IF THE ABOVE INFORMATION IS INCORRECT OR MISSING,
PLEASE PRINT THE CORRECT INFORMATION BELOW, AND RETURN TO:
National Financial Data Services
Servicing Agent for State Street Bank and Trust Company
P.O. Box 419648
Kansas City, MO 64141-6648
________________________________________________________
________________________________________________________
________________________________________________________
IDENT. OR SOC. SEC. NO._________________________________
<PAGE>
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT - ______ Custodian______
(Cust) (Minor)
under Uniform Gifts to Minors
Act _________________________
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, I/We hereby sell, assign and transfer unto
PLEASE INSERT TAXPAYER IDENTIFICATION
NUMBER OF ASSIGNEE
_____________________________________
| |
|_____________________________________|
_________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________(________________) shares
of Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
___________________________________________________________________attorney,
to transfer the said stock on the books of the within named Corporation
with full power of substitution in the premises.
Dated_______________________ Signature(s)_______________________________
SIGNATURE GUARANTEED
BY
_______________________________
(THE SIGNATURE(S) TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THIS
CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT,
OR ANY CHANGE WHATSOEVER.)
This certificate is transferable
or redeemable at the offices of the
Transfer Agent.
The Signature Guarantee must be by a Trust Company or a Commercial Bank
that is a member firm of the F.D.I.C. or by a member firm of the New York,
Boston, Midwest or Pacific Stock Exchanges. NOTARIZATION BY A NOTARY PUBLIC
IS NOT ACCEPTABLE.
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 8th day of June, 1992 by and between LEXINGTON
STRATEGIC INVESTMENTS FUND, INC., a Maryland corporation (the "Fund"), and
LEXINGTON MANAGEMENT CORPORATION, a Delaware corporation (the "Manager"),
with respect to the following recital of fact:
RECITALS
WHEREAS, the Fund is registered as an open-end, diversified
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and the rules and regulations promulgated
thereunder; and
WHEREAS, the Manager is registered as an investment advisor under the
Investment Advisers Act of 1940, as amended, and engages in the business
of acting as an investment advisor; and
WHEREAS, the Fund and the Manager desire to enter an agreement to
provide for management services for the Fund on the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1. Management. The Manager shall act as investment advisor for
the Fund and shall, in such capacity, supervise the investment and
reinvestment of the cash, securities or other properties comprising the
Fund's assets subject at all times to the policies and control of the
Fund's Board of Directors. The Manager shall give the Fund the benefit of
its best judgment, efforts and facilities in rendering its services as
investment advisor.
2. Investment Analysis and Implementation. In carrying out its
obligation under paragraph 1 hereof, the Manager shall:
(a) determine which issuers and securities shall be
represented in the Fund and regularly report thereof to the Fund's
Board of Directors;
(b) formulate and implement continuing programs for the
purchases and sales of the securities of such issuers and regularly
report thereon to the Fund's Board of Directors;
(c) continuously review the portfolio security holdings, the
investment programs and the investment policies of the Fund; and
(d) take, on behalf of the Fund, all actions which appear to
the Fund necessary to carry into effect such purchase and sale
programs and supervisory functions aforesaid, including the placing
of orders for the purchase and sale of portfolio securities.
3. Broker-Dealer Relationships. The Manager's primary policy is
to execute all purchases and sales of portfolio instruments at the most
favorable prices consistent with best execution, considering all of the
costs of the transaction including brokerage commissions. This policy
governs the selection of brokers and dealers and the market in which a
transaction is executed. Consistent with this policy, the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., and such
other policies as the Directors may determine, the Manager may consider
sales of shares of the Fund and of the other funds advised by the Manager
as a factor in the selection of broker-dealers to execute the Fund's
portfolio transactions. However, in selecting a broker-dealer to execute
each transaction, the Manager may consider research provided and payment
may be made of the commission higher than that charged by another broker-
dealer which does not furnish research services or which furnishes research
services deemed to be of lesser value, in accordance with Section 28(e) of
the Securities Exchange Act of 1934. Section 28(e) of the Securities
Exchange Act of 1934 specifies that a person with investment discretion
shall not be "deemed to have acted unlawfully or to have breached a
fiduciary duty" solely because such person has caused the account to pay
a higher commission than the lowest available under certain circumstances,
provided that the person so exercising investment discretion makes a good
faith determination that the commissions paid are "reasonable in relation
to the value of the brokerage and research services provided...viewed in
terms of either that particular transaction or his overall responsibilities
with respect to the accounts as to which he exercises investment
discretion."
The Manager cannot determine the extent to which commissions that
reflect an element of value for research services might exceed commissions
that would be payable for executing services alone. Research services
furnished may be useful and of value to the Manager and its affiliates, in
serving other clients as well as the Fund. Similarly, any research
services obtained by the Manager or its affiliates, from the placement of
portfolio brokerage of other clients might be useful and of value to the
Manager in carrying out its obligations to the Fund.
Brokerage transactions involving securities of companies domiciled
in countries other than the United States will be normally conducted on the
principal stock exchanges of those countries.
4. Control by Board of Directors. Any investment program undertaken
by the Manager pursuant to this Agreement, as well as any other activities
undertaken by the Manager on behalf of the Fund pursuant thereto, shall at
all times be subject to any directives of the Board of Directors of the
Fund.
5. Compliance with applicable Requirements. In carrying out its
obligations under this Agreement, the Manager shall at all times conform
to:
(a) all applicable provisions of the Investment Company Act
of 1940 and any rules and regulations adopted thereunder as amended;
and
(b) the provisions of the Registration Statement of the Fund
under the Securities act of 1933 and the investment Company Act of
1940, as amended; and
(c) the provisions of the Articles of Incorporation of the
Fund; and
(d) the provisions of the By-Laws of the Fund; and
(e) any other applicable provisions of state and federal law.
6. Expenses. The expenses connected with the Fund shall be
allocable between the Fund and the Manager as follows:
(a) The Manager shall maintain, at its expense and without
cost to the Fund, a trading function in order to carry out its
obligations under subparagraph (d) of paragraph 2 hereof to place
orders for the purchase and sale of portfolio securities for the
Fund.
(b) The Manager shall pay the Fund's expenses for office
rent, utilities, telephone, furniture and supplies utilized at the
Fund's principal office.
(c) The Manager shall pay the salaries and payroll expenses
of persons serving as officers or Directors of the Fund who are also
employees of the Manager of any of its affiliates.
(d) Nothing in subparagraph (a) through (e) hereof shall be
construed to require the Manager to bear other expenses.
(e) Any of the other expenses incurred in the operation of
the Fund shall be borne by the Fund, including, among other things,
fees of its custodian transfer and shareholder servicing agent; cost
of pricing and calculating its daily net asset value and of
maintaining its books and accounts required by the Investment Company
Act of 1940; expenditures in connection with meetings of the Fund's
directors and shareholders, except those called to accommodate the
Manager; fees and expenses of Directors who are not affiliated with
or interested persons of the Manager, in maintaining registration of
its shares under state securities laws or in providing shareholder
and dealer services; insurance premiums on property or personnel of
the Fund which inure to its benefit; costs of preparing and printing
reports, proxy statements and prospectuses of the Fund for
distribution to its shareholders; legal, auditing and accounting
fees; fees and expenses of registering and maintaining registration
of its shares for sale under Federal and applicable state securities
laws; and all other expenses in connection with issuance,
registration and transfer of its shares.
7. Delegation of Responsibilities. Upon the request of the Fund's
Board of Directors, the Manager may perform services on behalf of the Fund
which are not required by this Agreement. Such services will be performed
on behalf of the Fund and the Manager's cost in rendering such services may
be billed monthly to the Fund, subject to examination by the Fund's
independent accountants. Payment or assumption by the Manager of any Fund
expense that the Manager is not required to pay or assume under this
Agreement shall not relieve the Manager of any of its obligations to the
Fund nor obligate the Manager to pay or assume any similar Fund expense on
any subsequent occasions.
8. Compensation. The Fund shall pay the Manager in full
compensation for services rendered hereunder an annual investment advisory
fee, payable monthly equal to 1% of the first $30 million of the daily net
assets of the Fund and 0.75% on all of the daily net assets of the Fund in
excess of the first $30 million. The average daily net asset value of the
Fund shall be determined in the manner set forth in the Articles of
Incorporation and Prospectus of the Fund.
9. Expense Limitation. If, for any fiscal year, the total of all
ordinary business expenses of the Fund, including all investment advisory
fees but excluding brokerage commissions and fees, taxes, interest and
extraordinary expenses such as litigation, would exceed the most
restrictive expense limits imposed by any statute or regulatory authority
of any jurisdiction in which shares of the Fund are offered for sale, the
investment advisory fee shall be reduced by the amount of such excess. The
amount of any such reduction to be borne by the Manager shall be deducted
from the monthly investment advisory fee otherwise payable to the Manager
during such fiscal year; and if such amount should exceed such monthly fee,
the Manager agrees to pay to the Fund such expenses no later than the last
day of the first month of the next succeeding fiscal year. For purposes
of this paragraph, the term "fiscal year" shall exclude the portion of the
current fiscal year which shall have elapsed prior to the date hereof and
shall include the portion of the then current fiscal year which shall have
elapsed at the date of termination of this Agreement.
10. Non-Exclusivity. The services of the Manager of the Fund are
not to be deemed to be exclusive, and the Manager shall be free to render
investment advisory and corporate administrative or other services to
others (including other investment companies) and to engage in other
activities. It is understood and agreed that officers and Directors of the
Manager may serve as officers or Directors of the Fund, and that officers
and Directors of the Fund may serve as officers or Directors of the Manager
to the extent permitted by law; and that the officers and directors of the
Manager are not prohibited from engaging in any other business activity or
from rendering services or any other person, or from serving as partners,
officers, trustees or directors of any other firm or corporation, including
other investment companies.
11. Term and Approval. This Agreement shall become effective at
the close of business on the date hereof and shall thereunder continue in
force and effect from year to year, provided that such continuance is
specifically approved at least annually:
(a) (i) by the Fund's Board of Directors; or (ii) by the vote
of a majority of the Fund's outstanding voting securities (as defined
in Section 2(a)(42) of the 1940 Act), and
(b) by the affirmative vote of a majority of the Directors
who are not parties to this Agreement or interested persons of a
party to this Agreement (other than as a Director of the Fund), by
votes cast in person at a meeting specifically called for such
purpose.
12. Termination. This Agreement may be terminated at any time,
without the payment of penalty, by vote of the Fund's Board of Directors
or by vote of a majority of the Fund's outstanding voting securities or by
the Manager, on sixty (60) day's written notice to the other party. This
Agreement shall automatically terminate in the event of its assignment, the
term "assignment" for the purposes having this meaning defined in Section
2(a)(4) of the Investment Company Act of 1940, as amended.
13. Liability of Manager and Indemnification. In the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Manager or any of its
officers, directors or employees, it shall not be subject to liability to
the Fund or to any shareholder of the Fund for any commission 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.
14. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice.
Until further notice of the other party, it is agreed that the address of
the Manager shall be Park 80 West Plaza Two, Saddle Brook, New Jersey
07662, and that the Fund for this purpose shall be Park 80 West Plaza Two,
Saddle Brook, New Jersey 07662.
15. Questions of Interpretation. Any question of interpretation
of any term of provision of this Agreement having a counterpart in or
otherwise derived from a term or provision of the Investment Company act
of 1940, as amended, shall be resolved by reference to such term or
provision of the Act and to interpretations thereof, if any, by the United
States Courts or in the absence of any controlling decision of any such
court, by rules, regulations or orders of the Securities and Exchange
Commission issued pursuant to said Act. In addition, where the effect of
a requirement of the Investment Company Act of 1940, as amended, reflected
in any provision of this Agreement is revised by rules, regulations or
order of the Securities and Exchange Commission, such provisions shall be
deemed to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed in duplicate by their respective officers on the day and
year first above written.
Attest: LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
_______________________ By_________________________________________
President
Attest: LEXINGTON MANAGEMENT CORPORATION
_______________________ By_______________________________________
Executive Vice President
DISTRIBUTION AGREEMENT
between
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
and
LEXINGTON FUNDS DISTRIBUTOR, INC.
THIS AGREEMENT made this 16th day of March, 1992 by and between
LEXINGTON STRATEGIC INVESTMENTS FUND, INC., a Maryland Corporation
(hereinafter referred to as the "Fund"), and LEXINGTON FUNDS DISTRIBUTOR,
INC., a Delaware Corporation (hereinafter referred to as the
"Distributor").
W I T N E S S E T H:
In consideration of the mutual covenants herein contained and other
good and valuable consideration, the receipt whereof is hereby
acknowledged, the parties hereto agree as follows:
FIRST: The Fund hereby appoints the Distributor as its exclusive
underwriter to promote the sale and to arrange for the sale of shares of
common stock of the Fund in jurisdictions wherein shares may legally be
offered for sale.
The Fund agrees to sell and deliver its unissued shares, as from time
to time shall be effectively registered under the Securities Act of 1933,
upon the terms hereinafter set forth.
SECOND: The Fund hereby authorizes the Distributor, subject to law
and the Declaration of Trust of the Fund, to accept, for the account of the
Fund, orders for the purchase of its shares, satisfactory to the
Distributor, as of the time of receipt of such orders or as otherwise
described in the then current prospectus of the Fund.
THIRD: The public offering price of such shares shall be based on
the net asset value per share (as determined by the Fund) of the
outstanding shares of the Fund. The net asset value shall be regularly
determined on every business day as of the time of closing of the New York
Stock Exchange. It is expected that the New York Stock Exchange will be
closed on Saturdays and Sundays and on New Year's Day, President's Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas. The public offering price shall become effective as set
forth from time to time in the Fund's current prospectus; such net asset
value shall also be regularly determined, and the public offering price
based thereon shall become effective, as of such other times for the
regular determination of net asset value as may be required or permitted
by rules of the National Association of Securities Dealers, Inc. or of the
Securities and Exchange Commission. The Fund shall furnish the
Distributor, with all possible promptness, a statement of each computation
of net asset value, and of the details entering into such computation.
The Distributor may, and when requested by the Fund shall, suspend
its efforts to effectuate sales of the shares of common stock at any time
when in the opinion of the Distributor or of the Fund no sales should be
made because of market or other economic considerations or abnormal
circumstances of any kind.
The Fund may withdraw the offering of its common stock (i) at any
time with the consent of the Distributor, or (ii) without such consent when
so required by the provisions of any statute or of any order, rule or
regulation of any governmental body or securities exchange having
jurisdiction. It is mutually understood and agreed that the Distributor
does not undertake to sell all or any specific portion of the shares of
common stock of the Fund.
FOURTH: The Distributor agrees that it will use its best efforts
with reasonable promptness to promote and sell shares of the Fund; but so
long as it does so, nothing herein contained shall prevent the Distributor
from entering into similar arrangements with other funds and to engage in
other activities. The Fund reserves the right to issue shares in
connection with any merger or consolidation of the Fund with any other
investment company or any personal holding company or in connection with
offers of exchange exempted from Section 11(a) of the Investment Company
Act of 1940.
FIFTH: Upon a receipt by the Fund at its principal place of business
or other place designated by the Fund of an order from the Distributor,
together with delivery instructions, the Fund shall, as promptly as
practicable, cause the shareholder's account or certificates for the shares
called for in such order to be credited or delivered in such amount and in
such names as shall be specified by the Distributor, against payment
therefor in such manner as may be acceptable to the Fund.
SIXTH: All sales literature and advertisements used by the
Distributor in connection with sales of the shares of the Fund shall be
subject to the approval of the Fund. The Fund authorizes the Distributor
in connection with the sale or arranging for the sales of its shares to
give only such information and to make only such statements or
representations as are contained in the current prospectus and statement
of additional information or in sales literature or advertisements approved
by the Fund or in such financial statements and reports as are furnished
to the Distributor pursuant to this Agreement. The Fund shall not be
responsible in any way for any information, statements or representatives
given or made by the Distributor or its representatives or agents other
than such information, statements or representations contained in the then
current prospectus and statement of additional information or other
financial statements of the Fund.
SEVENTH: The Distributor as agent of the Fund is authorized, subject
to the direction of the Fund, to accept shares for redemption at their net
asset value, determined as prescribed in the then current prospectus of the
Fund. The Fund shall reimburse the Distributor monthly for its out-of-
pocket expenses reasonably incurred for carrying out the foregoing
authorization, but the Distributor shall not be entitled to any commissions
or other compensation in respect to such redemptions.
EIGHTH: The Fund shall bear:
(A) the expenses of qualification of the shares for sale in
connection with such public offerings in such states as shall be selected
by the Distributor and of continuing the qualification continued; and
(B) all legal expenses in connection with the foregoing.
NINTH: The Distributor shall bear:
(A) the expenses of printing and distributing prospectuses and
statements of additional information (other than those prospectuses and
statements of additional information required by applicable laws and
regulations to be distributed to the Fund's shareholders by the Fund) and
any other promotional or sales literature which are used by the Distributor
or furnished by the Distributor to purchasers or dealers in connection with
the Distributor's activities pursuant to this Agreement;
(B) expenses of any advertising used by the Distributor in connection
with such public offering; and
(C) all legal expenses in connection with the foregoing.
TENTH: The Distributor will accept orders for shares of the Fund
only to the extent of purchase orders actually received and not in excess
of such orders, and it will not avail itself of any opportunity of making
a profit by expediting or withholding orders.
ELEVENTH: The Fund shall keep the Distributor fully informed with
regard to its affairs, shall furnish the Distributor with a certified copy
of all financial statements, and a signed copy of each report, prepared by
independent public accountants, and with such reasonable number of printed
copies of each semi-annual and annual report of the Fund as the Distributor
may request, and shall cooperate fully in the efforts of the Distributor
to sell and arrange for the sale of its shares and in the performance by
the Distributor of all its duties under the Agreement.
TWELFTH: The Fund agrees to register, from time to time as
necessary, additional shares with the Securities and Exchange Commission,
state and other regulatory bodies and to pay the related filing fees
therefor and to file such amendments, reports and other documents as may
be necessary in order that there may be no untrue statement of a material
fact in the Registration Statement or prospectus or necessary in order that
there may be no omission to state a material fact therein necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading. As used in this Agreement, the term
"Registration Statement" shall mean from time to time the Registration
Statement most recently filed by the Fund with the Securities and Exchange
Commission and effective under the Securities Act of 1933, as amended, as
such Registration Statement is amended at such time, and the terms
"Prospectus" shall mean for the purposes of this Agreement from time to
time the form of prospectus and statement of additional information
authorized by the Fund for use by Distributor and by dealers.
THIRTEENTH:
(A) The Fund and Distributor shall each comply with all applicable
provisions of the Investment Company Act of 1940, the Securities Act of
1933, and the rules and regulations of the National Association of
Securities Dealers, Inc. and of all other Federal and State laws, rules and
regulations governing the issuance and sale of shares of the Fund.
(B) In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties hereunder on the
part of the Distributor, the Fund agrees to indemnify the Distributor and
any controlling person of the Distributor against any and all claims,
demands, liabilities and expenses including reasonable costs of any alleged
litigation which the Distributor may incur under the Securities Act of
1933, or common law on otherwise, arising out of or based upon any alleged
untrue statement of a material fact contained in any registration
statement, statement of additional information or prospectus of the Fund,
or any omission to state a material fact therein, the omission of which
makes any statement contained therein misleading, unless such statement or
omission was made in reliance upon, and in conformity with written
information furnished to the Fund in connection with written information
furnished to the Fund in connection therewith by or on behalf of the
Distributor. The Distributor agrees to indemnify the Fund against any and
all claims, demands, liabilities and expenses which the Fund may incur
arising out of or based upon any act or deed of sales representatives of
the Distributor which is outside the scope of their authority under this
Agreement.
(C) The Distributor agrees to indemnify the Fund against any and all
claims, demands, liabilities and expenses which the Fund may incur under
the Securities Act of 1933, or common law or otherwise, arising out of or
based upon any alleged untrue statement of material fact contained in any
registration statement, statement of additional information or prospectus
of the Fund, relating to the Fund, or any omission to state a material fact
therein if such statement or omission was made in reliance upon, and in
conformity with, written information furnished to the Fund in connection
therewith by or on behalf of the Distributor.
FOURTEENTH: Nothing herein contained shall require the Fund to take
any action contrary to any provision of its Declaration of Trust or to any
applicable statute or regulation.
FIFTEENTH: This Agreement has been approved by the Directors of the
Fund and shall become effective at the close of business on the date
hereof. This Agreement shall continue in force and effect for successive
annual periods, provided that such continuance is specifically approved at
least annually (a) (i) by the Board of Directors of the Fund, or (ii) by
vote of a majority of the Fund's outstanding voting securities (as defined
in Section 2 (a) (42) of the Investment Company Act of 1940), and (b) by
vote of majority of the Fund's Directors who are not interested persons (as
defined in Section 2 (a) (19) of the Investment Company Act of 1940) of the
Distributor by votes cast in person at a meeting called for such purposes.
SIXTEENTH: The Distributor, as the owner of the registered service
mark "Lexington" (registration number 836-088), hereby sublicenses and
authorizes the Fund to include the word "Lexington" as part of its
corporate name, subject, however, to revocation by the Distributor in the
event that the Fund ceases to engage the Distributor or affiliates of the
Distributor as investment advisor or distributor. The Fund agrees upon
demand of the Distributor to change its corporate name to delete the word
"Lexington" therefrom.
SEVENTEENTH:
(A) This Agreement may be terminated at any time, without the
payment of any penalty, by vote of the Board of Directors of the Fund or
by vote of a majority of the outstanding voting securities of the Fund, or
by the Distributor, on sixty (60) days written notice of the other
party.
(B) This Agreement shall automatically terminate in the event of its
assignment, the term "assignment" for this purpose having the meaning
defined in Section 2(a)(4) of the Investment Company Act of 1940.
EIGHTEENTH: Any notice under this Agreement shall be in writing,
addressed and delivered, or mailed, postage paid, to the other party at
such address as such other party may designate for the receipt of such
notices. Until further notice to the other party, it is agreed that the
address of the Fund shall be Park 80 West, Plaza Two, Saddle Brook, New
Jersey and Distributor shall be Park 80 West, Plaza Two, Saddle Brook, New
Jersey.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in duplicate on the day and year first above written.
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
Attest: By
____________________________________
Vice President
______________________________
LEXINGTON FUNDS DISTRIBUTOR, INC.
Attest: By
_____________________________________
Executive Vice President
_______________________________
GLOBAL CUSTODY AGREEMENT
This AGREEMENT is effective October 18, 1993, and is between THE CHASE
MANHATTAN BANK, N.A. (the "Bank") and LEXINGTON STRATEGIC INVESTMENTS
FUND,INC. (the "Customer").
1. Customer Accounts.
The Bank agrees to establish and maintain the following accounts
("Accounts"):
(a) A custody account in the name of the Customer ("Custody
Account") for any and all stocks, shares, bonds, debentures, notes,
mortgages or other obligations for the payment of money, bullion, coin 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 and other similar
property whether certificated or uncertificated as may be received by the
Bank or its Subcustodian (as defined in Section 3) for the account of the
Customer ("Securities"); and
(b) A deposit account in the name of the Customer ("Deposit
Account") for any and all cash in any currency received by the Bank or its
Subcustodian for the account of the Customer, which cash shall not be
subject to withdrawal by draft or check.
The Customer warrants its authority to: 1) deposit the cash and
Securities ("Assets") received in the Accounts and 2) give Instructions (as
defined in Section 11) concerning the Accounts. The Bank may deliver
securities of the same class in place of those deposited in the Custody
Account.
Upon written agreement between the Bank and the Customer, additional
Accounts may be established and separately accounted for as additional
Accounts under the terms of this Agreement.
2. Maintenance of Securities and Cash at Bank and Subcustodian Locations.
Unless Instructions specifically require another location acceptable
to the Bank:
(a) Securities will be held in the country or other jurisdiction in
which the principal trading market for such Securities is located, where
such Securities are to be presented for payment or where such Securities are
acquired; and
(b) Cash will be credited to an account in a country or other
jurisdiction in which such cash may be legally deposited or is the legal
currency for the payment of public or private debts.
Cash may be held pursuant to Instructions in either interest or
non-interest bearing accounts as may be available for the particular
currency. To the extent Instructions are issued and the Bank can comply
with such Instructions, the Bank is authorized to maintain cash balances on
deposit for the Customer with itself or one of its affiliates at such
reasonable rates of interest as may from time to time be paid on such
accounts, or in non-interest bearing accounts as the Customer may direct, if
acceptable to the Bank.
If the Customer wishes to have any of its Assets held in the custody
of an institution other than the established Subcustodians as defined in
Section 3 (or their securities depositories), such arrangement must be
authorized by a written agreement, signed by the Bank and the Customer.
3. Subcustodians and Securities Depositories.
The Bank may act under this Agreement through the subcustodians listed
in Schedule A of this Agreement with which the Bank has entered into
subcustodial agreements ("Subcustodians"). The Customer authorizes the Bank
to hold Assets in the Accounts in accounts which the Bank has established
with one or more of its branches or Subcustodians. The Bank and Subcustodians
are authorized to hold any of the Securities in their account with any
securities depository in which they participate.
The Bank reserves the right to add new, replace or remove
Subcustodians. The Customer will be given reasonable notice by the Bank of
any amendment to Schedule A. Upon request by the Customer, the Bank will
identify the name, address and principal place of business of any
Subcustodian of the Customer's Assets and the name and address of the
governmental agency or other regulatory authority that supervises or
regulates such Subcustodian.
4. Use of Subcustodian.
(a) The Bank will identify such Assets on its books as belonging to
the Customer.
(b) A Subcustodian will hold such Assets together with assets
belonging to other customers of the Bank in accounts identified on such
Subcustodian's books as special custody accounts for the exclusive benefit
of customers of the Bank.
(c) Any Assets in the Accounts held by a Subcustodian will be
subject only to the instructions of the Bank or its agent. Any Securities
held in a securities depository for the account of a Subcustodian will be
subject only to the instructions of such Subcustodian.
(d) Any agreement the Bank enters into with a Subcustodian for
holding its customer's assets shall provide that such assets will not be
subject to any right, charge, security interest, lien or claim of any kind
in favor of such Subcustodian except for safe custody or administration, and
that the beneficial ownership of such assets will be freely transferable
without the payment of money or value other than for safe custody or
administration. The foregoing shall not apply to the extent of any special
agreement or arrangement made by the Customer with any particular
Subcustodian.
5. Deposit Account Transactions.
(a) The Bank or its Subcustodians will make payments from the
Deposit Account upon receipt of Instructions which include all information
required by the Bank.
(b) In the event that any payment to be made under this Section 5
exceeds the funds available in the Deposit Account, the Bank, in its
discretion, may advance the Customer such excess amount which shall be
deemed a loan payable on demand, bearing interest at the rate customarily
charged by the Bank on similar loans.
(c) If the Bank credits the Deposit Account on a payable date, or at
any time prior to actual collection and reconciliation to the Deposit
Account, with interest, dividends, redemptions or any other amount due, the
Customer will promptly return any such amount upon oral or written
notification: (i) that such amount has not been received in the ordinary
course of business or (ii) that such amount was incorrectly credited. If
the Customer does not promptly return any amount upon such notification, the
Bank shall be entitled, upon oral or written notification to the Customer,
to reverse such credit by debiting the Deposit Account for the amount
previously credited. The Bank or its Subcustodian shall have no duty or
obligation to institute legal proceedings, file a claim or a proof of claim
in any insolvency proceeding or take any other action with respect to the
collection of such amount, but may act for the Customer upon Instructions
after consultation with the Customer.
6. Custody Account Transactions.
(a) Securities will be transferred, exchanged or delivered by the
Bank or its Subcustodian upon receipt by the Bank of Instructions which
include all information required by the Bank. Settlement and payment for
Securities received for, and delivery of Securities out of, the Custody
Account may be made in accordance with the customary or established
securities trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivery of Securities to a purchaser, dealer or their agents
against a receipt with the expectation of receiving later payment and free
delivery. Delivery of Securities out of the Custody Account may also be
made in any manner specifically required by Instructions acceptable to the
Bank.
(b) The Bank, in its discretion, may credit or debit the Accounts on
a contractual settlement date with cash or Securities with respect to any
sale, exchange or purchase of Securities. Otherwise, such transactions will
be credited or debited to the Accounts on the date cash or Securities are
actually received by the Bank and reconciled to the Account.
(i) The Bank may reverse credits or debits made to the
Accounts in its discretion if the related transaction fails to
settle within a reasonable period, determined by the Bank in its
discretion, after the contractual settlement date for the
related transaction.
(ii) If any Securities delivered pursuant to this Section 6 are
returned by the recipient thereof, the Bank may reverse the
credits and debits of the particular transaction at any time.
7. Actions of the Bank.
The Bank shall follow Instructions received regarding assets held in
the Accounts. However, until it receives Instructions to the contrary, the
Bank will:
(a) Present for payment any Securities which are called, redeemed or
retired or otherwise become payable and all coupons and other income items
which call for payment upon presentation, to the extent that the Bank or
Subcustodian is actually aware of such opportunities.
(b) Execute in the name of the Customer such ownership and other
certificates as may be required to obtain payments in respect of Securities.
(c) Exchange interim receipts or temporary Securities for definitive
Securities.
(d) Appoint brokers and agents for any transaction involving the
Securities, including, without limitation, affiliates of the Bank or any
Subcustodian.
(e) Issue statements to the Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.
The Bank will send the Customer an advice or notification of any
transfers of Assets to or from the Accounts. Such statements, advices or
notifications shall indicate the identity of the entity having custody of
the Assets. Unless the Customer sends the Bank a written exception or
objection to any Bank statement within sixty (60) days of receipt, the
Customer shall be deemed to have approved such statement. In such event, or
where the Customer has otherwise approved any such statement, the Bank
shall, to the extent permitted by law, be released, relieved and discharged
with respect to all matters set forth in such statement or reasonably
implied therefrom as though it had been settled by the decree of a court of
competent jurisdiction in an action where the Customer and all persons
having or claiming an interest in the Customer or the Customer's Accounts
were parties.
All collections of funds or other property paid or distributed in
respect of Securities in the Custody Account shall be made at the risk of
the Customer. The Bank shall have no liability for any loss occasioned by
delay in the actual receipt of notice by the Bank or by its Subcustodians of
any payment, redemption or other transaction regarding Securities in the
Custody Account in respect of which the Bank has agreed to take any action
under this Agreement.
8. Corporate Actions; Proxies.
Whenever the Bank receives information concerning the Securities which
requires discretionary action by the beneficial owner of the Securities
(other than a proxy), such as subscription rights, bonus issues, stock
repurchase plans and rights offerings, or legal notices or other material
intended to be transmitted to securities holders ("Corporate Actions"), the
Bank will give the Customer notice of such Corporate Actions to the extent
that the Bank's central corporate actions department has actual knowledge of
a Corporate Action in time to notify its customers.
When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action is
received which bears an expiration date, the Bank will endeavor to obtain
Instructions from the Customer or its Authorized Person, but if Instructions
are not received in time for the Bank to take timely action, or actual
notice of such Corporate Action was received too late to seek Instructions,
the Bank is authorized to sell such rights entitlement or fractional
interest and to credit the Deposit Account with the proceeds or take any
other action it deems, in good faith, to be appropriate in which case it
shall be held harmless for any such action.
The Bank will deliver proxies to the Customer or its designated agent
pursuant to special arrangements which may have been agreed to in writing.
Such proxies shall be executed in the appropriate nominee name relating to
Securities in the Custody Account registered in the name of such nominee but
without indicating the manner in which such proxies are to be voted; and
where bearer Securities are involved, proxies will be delivered in
accordance with Instructions.
9. Nominees.
Securities which are ordinarily held in registered form may be
registered in a nominee name of the Bank, Subcustodian or securities
depository, as the case may be. The Bank may without notice to the Customer
cause any such Securities to cease to be registered in the name of any such
nominee and to be registered in the name of the Customer. In the event that
any Securities registered in a nominee name are called for partial
redemption by the issuer, the Bank may allot the called portion to the
respective beneficial holders of such class of security in any manner the
Bank deems to be fair and equitable. The Customer agrees to hold the Bank,
Subcustodians, and their respective nominees harmless from any liability
arising directly or indirectly from their status as a mere record holder of
Securities in the Custody Account.
10. Authorized Persons.
As used in this Agreement, the term "Authorized Person" means
employees or agents including investment managers as have been designated by
written notice from the Customer or its designated agent to act on behalf of
the Customer under this Agreement. Such persons shall continue to be
Authorized Persons until such time as the Bank receives Instructions from
the Customer or its designated agent that any such employee or agent is no
longer an Authorized Person.
11. Instructions.
The term "Instructions" means instructions of any Authorized Person
received by the Bank, via telephone, telex, TWX, facsimile transmission,
bank wire or other teleprocess or electronic instruction or trade
information system acceptable to the Bank which the Bank believes in good
faith to have been given by Authorized Persons or which are transmitted with
proper testing or authentication pursuant to terms and conditions which the
Bank may specify. Unless otherwise expressly provided, all Instructions
shall continue in full force and effect until canceled or superseded.
Any Instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which
confirmation may bear the facsimile signature of such Person), but the
Customer will hold the Bank harmless for the failure of an Authorized Person
to send such confirmation in writing, the failure of such confirmation to
conform to the telephone instructions received or the Bank's failure to
produce such confirmation at any subsequent time. The Bank may
electronically record any Instructions given by telephone, and any other
telephone discussions with respect to the Custody Account. The Customer
shall be responsible for safeguarding any testkeys, identification codes or
other security devices which the Bank shall make available to the Customer
or its Authorized Persons.
12. Standard of Care; Liabilities.
(a) The Bank shall be responsible for the performance of only such
duties as are set forth in this Agreement or expressly contained in
Instructions which are consistent with the provisions of this Agreement as
follows:
(i) The Bank will use reasonable care with respect to its
obligations under this Agreement and the safekeeping of Assets.
The Bank shall be liable to the Customer for any loss which
shall occur as the result of the failure of a Subcustodian to
exercise reasonable care with respect to the safekeeping of such
Assets to the same extent that the Bank would be liable to the
Customer if the Bank were holding such Assets in New York. In
the event of any loss to the Customer by reason of the failure
of the Bank or its Subcustodian to utilize reasonable care, the
Bank shall be liable to the Customer only to the extent of the
Customer's direct damages, to be determined based on the market
value of the property which is the subject of the loss at the
date of discovery of such loss and without reference to any
special conditions or circumstances.
(ii) The Bank will not be responsible for any act, omission,
default or for the solvency of any broker or agent which it or
a Subcustodian appoints unless such appointment was made
negligently or in bad faith.
(iii) The Bank shall be indemnified by, and without liability
to the Customer for any action taken or omitted by the Bank
whether pursuant to Instructions or otherwise within the scope
of this Agreement if such act or omission was in good faith,
without negligence. In performing its obligations under this
Agreement, the Bank may rely on the genuineness of any document
which it believes in good faith to have been validly executed.
(iv) The Customer agrees to pay for and hold the Bank harmless
from any liability or loss resulting from the imposition or
assessment of any taxes or other governmental charges, and any
related expenses with respect to income from or Assets in the
Accounts.
(v) The Bank shall be entitled to rely, and may act, upon the
advice of counsel (who may be counsel for the Customer) on all
matters and shall be without liability for any action reasonably
taken or omitted pursuant to such advice.
(vi) The Bank need not maintain any insurance for the benefit
of the Customer.
(vii) Without limiting the foregoing, the Bank shall not be
liable for any loss which results from: 1) the general risk of
investing, or 2) investing or holding Assets in a particular
country including, but not limited to, losses resulting from
nationalization, expropriation or other governmental actions;
regulation of the banking or securities industry; currency
restrictions, devaluations or fluctuations; and market
conditions which prevent the orderly execution of securities
transactions or affect the value of Assets.
(viii) Neither party shall be liable to the other for any
loss due to forces beyond their control including, but not
limited to strikes or work stoppages, acts of war or terrorism,
insurrection, revolution, nuclear fusion, fission or radiation,
or acts of God.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall have no duty
or responsibility to:
(i) question Instructions or make any suggestions to the
Customer or an Authorized Person regarding such Instructions;
(ii) supervise or make recommendations with respect to
investments or the retention of Securities;
(iii) advise the Customer or an Authorized Person regarding any
default in the payment of principal or income of any security other
than as provided in Section 5(c) of this Agreement;
(iv) evaluate or report to the Customer or an Authorized Person
regarding the financial condition of any broker, agent or other
party to which Securities are delivered or payments are made
pursuant to this Agreement;
(v) review or reconcile trade confirmations received from
brokers. The Customer or its Authorized Persons (as defined in
Section 10) issuing Instructions shall bear any responsibility
to review such confirmations against Instructions issued to and
statements issued by the Bank.
(c) The Customer authorizes the Bank to act under this Agreement
notwithstanding that the Bank or any of its divisions or affiliates may have
a material interest in a transaction, or circumstances are such that the
Bank may have a potential conflict of duty or interest including the fact
that the Bank or any of its affiliates may provide brokerage services to
other customers, act as financial advisor to the issuer of Securities, act
as a lender to the issuer of Securities, act in the same transaction as
agent for more than one customer, have a material interest in the issue of
Securities, or earn profits from any of the activities listed herein.
13. Fees and Expenses.
The Customer agrees to pay the Bank for its services under this
Agreement such amount as may be agreed upon in writing, together with the
Bank's reasonable out-of-pocket or incidental expenses, including, but not
limited to, legal fees. The Bank shall have a lien on and is authorized to
charge any Accounts of the Customer for any amount owing to the Bank under
any provision of this Agreement.
14. Miscellaneous.
(a) Foreign Exchange Transactions. To facilitate the administration
of the Customer's trading and investment activity, the Bank is authorized to
enter into spot or forward foreign exchange contracts with the Customer or
an Authorized Person for the Customer and may also provide foreign exchange
through its subsidiaries, affiliates or Subcustodians. Instructions,
including standing instructions, may be issued with respect to such
contracts but the Bank may establish rules or limitations concerning any
foreign exchange facility made available. In all cases where the Bank, its
subsidiaries, affiliates or Subcustodians enter into a foreign exchange
contract related to Accounts, the terms and conditions of the then current
foreign exchange contract of the Bank, its subsidiary, affiliate or
Subcustodian and, to the extent not inconsistent, this Agreement shall apply
to such transaction.
(b) Certification of Residency, etc. The Customer certifies that it
is a resident of the United States and agrees to notify the Bank of any
changes in residency. The Bank may rely upon this certification or the
certification of such other facts as may be required to administer the
Bank's obligations under this Agreement. The Customer will indemnify the
Bank against all losses, liability, claims or demands arising directly or
indirectly from any such certifications.
(c) Access to Records. The Bank shall allow the Customer's
independent public accountant reasonable access to the records of the Bank
relating to the Assets as is required in connection with their examination
of books and records pertaining to the Customer's affairs. Subject to
restrictions under applicable law, the Bank shall also obtain an undertaking
to permit the Customer's independent public accountants reasonable access to
the records of any Subcustodian which has physical possession of any Assets
as may be required in connection with the examination of the Customer's
books and records.
(d) Governing Law; Successors and Assigns. This Agreement shall be
governed by the laws of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Customer and
the Bank.
(e) Entire Agreement; Applicable Riders. Customer represents that
the Assets deposited in the Accounts are (Check one):
Employee Benefit Plan or other assets subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA");
X Mutual Fund assets subject to certain Securities and Exchange
Commission ("SEC") rules and regulations;
Neither of the above.
This Agreement consists exclusively of this document together with
Schedule A, Exhibits I - _______ and the following Rider(s) [Check
applicable rider(s)]:
ERISA
X MUTUAL FUND
X SPECIAL TERMS AND CONDITIONS
There are no other provisions of this Agreement and this Agreement
supersedes any other agreements, whether written or oral, between the
parties. Any amendment to this Agreement must be in writing, executed by
both parties.
(f) Severability. In the event that one or more provisions of this
Agreement are held invalid, illegal or enforceable in any respect on the
basis of any particular circumstances or in any jurisdiction, the validity,
legality and enforceability of such provision or provisions under other
circumstances or in other jurisdictions and of the remaining provisions will
not in any way be affected or impaired.
(g) Waiver. Except as otherwise provided in this Agreement, no
failure or delay on the part of either party in exercising any power or
right under this Agreement operates as a waiver, nor does any single or
partial exercise of any power or right preclude any other or further
exercise, or the exercise of any other power or right. No waiver by a party
of any provision of this Agreement, or waiver of any breach or default, is
effective unless in writing and signed by the party against whom the waiver
is to be enforced.
(h) Notices. All notices under this Agreement shall be effective
when actually received. Any notices or other communications which may be
required under this Agreement are to be sent to the parties at the following
addresses or such other addresses as may subsequently be given to the other
party in writing:
Bank: The Chase Manhattan Bank, N.A.
Chase MetroTech Center
Brooklyn, NY 11245
Attention: Global Custody Division
or telex:
Customer: Richard Hisey
Lexington Management Corp.
Park 80 West, Plaza Two
Saddlebrook, NJ 07663
or telex:
(i) Termination. This Agreement may be terminated by the Customer
or the Bank by giving sixty (60) days written notice to the other, provided
that such notice to the Bank shall specify the names of the persons to whom
the Bank shall deliver the Assets in the Accounts. If notice of termination
is given by the Bank, the Customer shall, within sixty (60) days following
receipt of the notice, deliver to the Bank Instructions specifying the names
of the persons to whom the Bank shall deliver the Assets. In either case
the Bank will deliver the Assets to the persons so specified, after
deducting any amounts which the Bank determines in good faith to be owed to
it under Section 13. If within sixty (60) days following receipt of a
notice of termination by the Bank, the Bank does not receive Instructions
from the Customer specifying the names of the persons to whom the Bank shall
deliver the Assets, the Bank, at its election, may deliver the Assets to a
bank or trust company doing business in the State of New York to be held and
disposed of pursuant to the provisions of this Agreement, or to Authorized
Persons, or may continue to hold the Assets until Instructions are provided
to the Bank.
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
By:____________________________________________
Title
THE CHASE MANHATTAN BANK, N.A.
By:____________________________________________
Title
STATE OF )
: ss.
COUNTY OF )
On this day of , 19 , before me personally
came , to me known, who being by me duly
sworn, did depose and say that he/she resides in at
;
that he/she is of
, the entity described in and which executed the
foregoing instrument; that he/she knows the seal of said entity, that the
seal affixed to said instrument is such seal, that it was so affixed by
order of said entity, and that he/she signed his/her name thereto by like
order.
Sworn to before me this
day of , 19 .
Notary
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
On this day of ,19 ,
before me personally came , to me known, who being by
me duly sworn, did depose and say that he/she resides in
at
; that he/she is a Vice
President of THE CHASE MANHATTAN BANK, (National Association), the
corporation described in and which executed the foregoing instrument; that
he/she knows the seal of said corporation, that the seal affixed to said
instrument is such corporate seal, that it was so affixed by order of the
Board of Directors of said corporation, and that he/she signed his/her name
thereto by like order.
Sworn to before me this
day of , 19 .
Notary
Mutual Fund Rider to Global Custody Agreement
Between The Chase Manhattan Bank, N.A. and
Lexington Strategic Investments Fund, Inc.
effective October 18, 1993
Customer represents that the Assets being placed in the Bank's custody
are subject to the Investment Company Act of 1940 (the Act), as the same may
be amended from time to time.
Except to the extent that the Bank has specifically agreed to comply
with a condition of a rule, regulation, interpretation promulgated by or
under the authority of the SEC or the Exemptive Order applicable to accounts
of this nature issued to the Bank (Investment Company Act of 1940, Release
No. 12053, November 20, 1981), as amended, or unless the Bank has otherwise
specifically agreed, the Customer shall be solely responsible to assure that
the maintenance of Assets under this Agreement complies with such rules,
regulations, interpretations or exemptive order promulgated by or under the
authority of the Securities Exchange Commission.
The following modifications are made to the Agreement:
Section 3. Subcustodians and Securities Depositories.
Add the following language to the end of Section 3:
The terms Subcustodian and securities depositories as used in this
Agreement shall mean a branch of a qualified U.S. bank, an eligible
foreign custodian or an eligible foreign securities depository, which
are further defined as follows:
(a) "qualified U.S. Bank" shall mean a qualified U.S. bank as defined
in Rule 17f-5 under the Investment Company Act of 1940;
(b) "eligible foreign custodian" shall mean (i) a banking institution
or trust company incorporated or organized under the laws of a country
other than the United States that is regulated as such by that
country's government or an agency thereof and that has shareholders'
equity in excess of $200 million in U.S. currency (or a foreign
currency equivalent thereof), (ii) a majority owned direct or indirect
subsidiary of a qualified U.S. bank or bank holding company that is
incorporated or organized under the laws of a country other than the
United States and that has shareholders' equity in excess of $100
million in U.S. currency (or a foreign currency equivalent thereof)
(iii) a banking institution or trust company incorporated or organized
under the laws of a country other than the United States or a majority
owned direct or indirect subsidiary of a qualified U.S. bank or bank
holding company that is incorporated or organized under the laws of a
country other than the United States which has such other
qualifications as shall be specified in Instructions and approved by
the Bank; or (iv) any other entity that shall have been so qualified
by exemptive order, rule or other appropriate action of the SEC; and
(c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under the
laws of a country other than the United States, which operates (i) the
central system for handling securities or equivalent book-entries in
that country, or (ii) a transnational system for the central handling
of securities or equivalent book-entries.
The Customer represents that its Board of Directors has approved each
of the Subcustodians listed in Schedule A to this Agreement and the terms of
the subcustody agreements between the Bank and each Subcustodian, which are
attached as Exhibits I through of Schedule A, and further represents
that its Board has determined that the use of each Subcustodian and the
terms of each subcustody agreement are consistent with the best interests of
the Fund(s) and its (their) shareholders. The Bank will supply the Customer
with any amendment to Schedule A for approval. The Customer has supplied or
will supply the Bank with certified copies of its Board of Directors
resolution(s) with respect to the foregoing prior to placing Assets with any
Subcustodian so approved.
Section 11. Instructions.
Add the following language to the end of Section 11:
Deposit Account Payments and Custody Account Transactions made
pursuant to Section 5 and 6 of this Agreement may be made only for the
purposes listed below. Instructions must specify the purpose for
which any transaction is to be made and Customer shall be solely
responsible to assure that Instructions are in accord with any
limitations or restrictions applicable to the Customer by law or as
may be set forth in its prospectus.
(a) In connection with the purchase or sale of Securities at prices
as confirmed by Instructions;
(b) When Securities are called, redeemed or retired, or otherwise
become payable;
(c) In exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan or merger,
consolidation, reorganization, recapitalization or readjustment;
(d) Upon conversion of Securities pursuant to their terms into other
securities;
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities;
(f) For the payment of interest, taxes, management or supervisory
fees, distributions or operating expenses;
(g) In connection with any borrowings by the Customer requiring a
pledge of Securities, but only against receipt of amounts borrowed;
(h) In connection with any loans, but only against receipt of
adequate collateral as specified in Instructions which shall reflect
any restrictions applicable to the Customer;
(i) For the purpose of redeeming shares of the capital stock of the
Customer and the delivery to, or the crediting to the account of, the
Bank, its Subcustodian or the Customer's transfer agent, such shares
to be purchased or redeemed;
(j) For the purpose of redeeming in kind shares of the Customer
against delivery to the Bank, its Subcustodian or the Customer's
transfer agent of such shares to be so redeemed;
(k) For delivery in accordance with the provisions of any agreement
among the Customer, the Bank and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and a member of
The National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange, or of
any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Customer;
(l) For release of Securities to designated brokers under covered
call options, provided, however, that such Securities shall be
released only upon payment to the Bank of monies for the premium due
and a receipt for the Securities which are to be held in escrow. Upon
exercise of the option, or at expiration, the Bank will receive from
brokers the Securities previously deposited. The Bank will act
strictly in accordance with Instructions in the delivery of Securities
to be held in escrow and will have no responsibility or liability for
any such Securities which are not returned promptly when due other
than to make proper request for such return;
(m) For spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related
transactions;
(n) For other proper purposes as may be specified in Instructions
issued by an officer of the Customer which shall include a statement
of the purpose for which the delivery or payment is to be made, the
amount of the payment or specific Securities to be delivered, the name
of the person or persons to whom delivery or payment is to be made,
and a certification that the purpose is a proper purpose under the
instruments governing the Customer; and
(o) Upon the termination of this Agreement as set forth in Section
14(i).
Section 12. Standard of Care; Liabilities.
Add the following subsection (c) to Section 12:
(c) The Bank hereby warrants to the Customer that in its opinion,
after due inquiry, the established procedures to be followed by each
of its branches, each branch of a qualified U.S. bank, each eligible
foreign custodian and each eligible foreign securities depository
holding the Customer's Securities pursuant to this Agreement afford
protection for such Securities at least equal to that afforded by the
Bank's established procedures with respect to similar securities held
by the Bank and its securities depositories in New York.
Section 14. Access to Records.
Add the following language to the end of Section 14(c):
Upon reasonable request from the Customer, the Bank shall furnish the
Customer such reports (or portions thereof) of the Bank's system of
internal accounting controls applicable to the Bank's duties under
this Agreement. The Bank shall endeavor to obtain and furnish the
Customer with such similar reports as it may reasonably request with
respect to each Subcustodian and securities depository holding the
Customer's assets.
GLOBAL CUSTODY AGREEMENT
WITH: LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
DATE: October 18, 1993
SPECIAL TERMS AND CONDITIONS RIDER
The parties have agreed to the following modifications to the Agreement:
Section 7
The last paragraph of Section 7 shall be reworded as follows:
"The collectibility of funds or other property paid or
distributed in respect of Securities, in the Custody
Account shall be made at the risk of the customer.
Subject to the Bank's of exercise of reasonable care the
Bank shall have no liability for any loss occasioned by
delay in the acutal receipt of notice by the Bank or by
its Subcustodians of any payment, redemption or other
transaction regarding Securities in in the Custody Account
in respect of which the Bank has agreed to take any action
under this Agreement."
Section 12(b)(iii)
Following the words: "as provided in Section 5(c)" insert the words:
"and 7(e)".
Section 13
Reword the last sentence as follows:
"Following invoice by the Bank, if any such amount is not
paid by the Customer (and rights with respect to such
amount remains disputed following good faith efforts to
resolve such dispute), the Bank shall have a lien on, and
is authorized to charge any accounts of the Customer for
any amount owing to the Bank under any provision of this
Agreement.
TRANSFER AGENCY AND SERVICE AGREEMENT
between
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
Article 1 Terms of Appointment; Duties of the Bank
Article 2 Fees and Expenses
Article 3 Representations and Warranties of the Bank
Article 4 Representations and Warranties of the Fund
Article 5 Data Access and Proprietary Information
Article 6 Indemnification
Article 7 Standard of Care
Article 8 Covenants of the Fund and the Bank
Article 9 Termination of Agreement
Article 10 Assignment
Article 11 Amendment
Article 12 Massachusetts Law to Apply
Article 13 Force Majeure
Article 14 Consequential Damages
Article 15 Merger of Agreement
Article 16 Counterparts
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 8th day of June, 1992, by and between
Lexington Strategic Investments Fund, Inc., a corporation, having its
principal office and place of business at Park 80 West Plaza Two, Saddle
Brook, New Jersey 07663, (the "Fund"), and STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company having its principal office and place
of business at 225 Franklin Street, Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Fund desires to appoint the Bank as its transfer agent,
dividend disbursing agent, custodian of certain retirement plans and agent in
connection with certain other activities, and the Bank desires to accept such
appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
Article l Terms of Appointment; Duties of the Bank
1.01 Subject to the terms and conditions set forth in
this Agreement, the Fund hereby employs and appoints the Bank to act as, and
the Bank agrees to act as its transfer agent for the Fund's authorized and
issued shares of its common stock, $____ par value, ("Shares"), dividend
disbursing agent, custodian of certain retirement plans and agent in
connection with any accumulation, open-account or similar plans provided to
the shareholders of the Fund ("Shareholders") and set out in the currently
effective prospectus and statement of additional information ("prospectus")
of the Fund, including without limitation any periodic investment plan or
periodic withdrawal program.
1.02 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Fund and the Bank, the Bank shall:
(i) Receive for acceptance, orders for the purchase of Shares,
and promptly deliver payment and appropriate documentation
thereof to the Custodian of the Fund authorized pursuant to
the Articles of Incorporation of the Fund (the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder
account;
(iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof
to the Custodian;
(iv) In respect to the transactions in items (i), (ii) and (iii)
above, the Bank shall execute transactions directly with
broker-dealers authorized by the Fund who shall thereby be
deemed to be acting on behalf of the Fund;
(v) At the appropriate time as and when it receives monies
paid to it by the Custodian with respect to any redemption, pay
over or cause to be paid over in the appropriate manner such
monies as instructed by the redeeming Shareholders;
(vi) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(vii) Prepare and transmit payments for dividends and distributions
declared by the Fund;
(viii)Issue replacement certificates for those certificates
alleged to have been lost, stolen or destroyed upon receipt
by the Bank of indemnification satisfactory to the Bank and
protecting the Bank and the Fund, and the Bank at its option,
may issue replacement certificates in place of mutilated
stock certificates upon presentation thereof and without such
indemnity;
(ix) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(x) Record the issuance of shares of the Fund and maintain
pursuant to SEC Rule 17Ad-10(e) a record of the total number
of shares of the Fund which are authorized, based upon data
provided to it by the Fund, and issued and outstanding. The
Bank shall also provide the Fund on a regular basis with the
total number of shares which are authorized and issued and
outstanding and shall have no obligation, when recording the
issuance of shares, to monitor the issuance of such shares or
to take cognizance of any laws relating to the issue or sale
of such shares, which functions shall be the sole
responsibility of the Fund.
(b) In addition to and neither in lieu nor in contravention of
the services set forth in the above paragraph (a), the Bank shall:
(i) perform the customary services of a transfer agent, dividend disbursing
agent, custodian of certain retirement plans 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: maintaining all Shareholder
accounts, preparing Shareholder meeting lists, mailing proxies, mailing
Shareholder reports and prospectuses to current Shareholders, withholding
taxes on U.S. resident and non-resident alien accounts, preparing and filing
U.S. Treasury Department Forms 1099 and other appropriate forms required with
respect to dividends and distributions by federal authorities for all
Shareholders, preparing and mailing confirmation forms and statements of
account to Shareholders for all purchases and redemptions of Shares and other
confirmable transactions in Shareholder accounts, preparing and mailing
activity statements for Shareholders, and providing Shareholder account
information and (ii) provide a system which will enable the Fund to monitor
the total number of Shares sold in each State.
(c) In addition, the Fund shall (i) identify to the Bank in
writing those transactions and assets to be treated as exempt from blue sky
reporting for each State and (ii) verify the establishment of transactions
for each State on the system prior to activation and thereafter monitor the
daily activity for each State. The responsibility of the Bank for the Fund's
blue sky State registration status is solely limited to the initial
establishment of transactions subject to blue sky compliance by the Fund and
the reporting of such transactions to the Fund as provided above.
(d) Procedures as to who shall provide certain of these services
in Article 1 may be established from time to time by agreement between the
Fund and the Bank per the attached service responsibility schedule. The Bank
may at times perform only a portion of these services and the Fund or its
agent may perform these services on the Fund's behalf.
(e) The Bank shall provide additional services on behalf of the
Fund (i.e., escheatment services) which may be agreed upon in writing between
the Fund and the Bank.
Article 2 Fees and Expenses
2.01 For the performance by the Bank pursuant to this
Agreement, the Fund agrees to pay the Bank an annual maintenance fee for each
Shareholder account as set out in the initial fee schedule attached hereto.
Such fees and out-of-pocket expenses and advances identified under Section
2.02 below may be changed from time to time subject to mutual written
agreement between the Fund and the Bank.
2.02 In addition to the fee paid under Section 2.01 above, the
Fund agrees to reimburse the Bank for out-of-pocket expenses, including but
not limited to confirmation production, postage, forms, telephone, microfilm,
microfiche, tabulating proxies, records storage, or advances incurred by the
Bank for the items set out in the fee schedule attached hereto. In addition,
any other expenses incurred by the Bank at the request or with the consent of
the Fund, will be reimbursed by the Fund.
2.03 The Fund agrees to pay all fees and reimbursable expenses
within five days following the receipt of the respective billing notice.
Postage for mailing of dividends, proxies, Fund reports and other mailings to
all shareholder accounts shall be advanced to the Bank by the Fund at least
seven (7) days prior to the mailing date of such materials.
Article 3 Representations and Warranties of the Bank
The Bank represents and warrants to the Fund that:
3.01 It is a trust company duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in the
Commonwealth of Massachusetts.
3.03 It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations
under this Agreement.
Article 4 Representations and Warranties of the Fund
The Fund represents and warrants to the Bank that:
4.01 It is a corporation duly organized and existing and in good
standing under the laws of.
4.02 It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement.
4.03 All corporate proceedings required by said Articles of
Incorporation and By-Laws have been taken to authorize it to enter into and
perform this Agreement.
4.04 It is an open-end and diversified management investment
company registered under the Investment Company Act of 1940, as amended.
4.05 A registration statement under the Securities Act of 1933, as
amended 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.
Article 5 Data Access and Proprietary Information
5.01 The Fund acknowledges that the data bases,
computer programs, screen formats, report formats, interactive design
techniques, and documentation manuals furnished to the Fund by the Bank as
part of the Fund's ability to access certain Fund-related data ("Customer
Data") maintained by the Bank on data bases under the control and ownership
of the Bank or other third party ("Data Access Services") constitute
copyrighted, trade secret, or other proprietary information (collectively,
"Proprietary Information") of substantial value to the Bank or other third
party. In no event shall Proprietary Information be deemed Customer Data.
The Fund agrees to treat all Proprietary Information as proprietary to the
Bank and further agrees that it shall not divulge any Proprietary Information
to any person or organization except as may be provided hereunder. Without
limiting the foregoing, the Fund agrees for itself and its employees and
agents:
(a) to access Customer Data solely from locations as may be
designated in writing by the Bank and solely in accordance
with the Bank's applicable user documentation;
(b) to refrain from copying or duplicating in any way the
Proprietary Information;
(c) to refrain from obtaining unauthorized access to any portion
of the Proprietary Information, and if such access is
inadvertently obtained, to inform in a timely manner of such
fact and dispose of such information in accordance with the
Bank's instructions;
(d) to refrain from causing or allowing third-party data acquired
hereunder from being retransmitted to any other computer
facility or other location, except with the prior written
consent of the Bank;
(e) that the Fund shall have access only to those authorized
transactions agreed upon by the parties;
(f) to honor all reasonable written requests made by the Bank to
protect at the Bank's expense the
rights of the Bank in Proprietary Information at common law,
under federal copyright law and under other federal or state
law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Article 5. The obligations of this Article
shall survive any earlier termination of this Agreement.
5.02 If the Fund notifies the Bank that any of the Data Access
Services do not operate in material compliance with the most recently issued
user documentation for such services, the Bank shall endeavor in a timely
manner to correct such failure. Organizations from which the Bank may obtain
certain data included in the Data Access Services are solely responsible for
the contents of such data and the Fund agrees to make no claim against the
Bank arising out of the contents of such third-party data, including, but not
limited to, the accuracy thereof. DATA ACCESS SERVICES AND ALL COMPUTER
PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH ARE
PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS ALL
WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED
TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
5.03 If the transactions available to the Fund include
the ability to originate electronic instructions to the Bank in order to (i)
effect the transfer or movement of cash or Shares or (ii) transmit Shareholder
information or other information (such transactions constituting a "COEFI"),
then in such event the Bank shall be entitled to rely on the validity and
authenticity of such instruction without undertaking any further inquiry as
long as such instruction is undertaken in conformity with security procedures
established by the Bank from time to time.
Article 6 Indemnification
6.01 The Bank shall not be responsible for, and the
Fund shall indemnify and hold the Bank harmless from and against, any and all
losses, damages, costs, charges, counsel fees, payments, expenses and
liability arising out of or attributable to:
(a) All actions of the Bank or its agent or subcontractors
required to be taken pursuant to this Agreement, provided that such actions
are taken in good faith and without negligence or willful misconduct.
(b) The Fund's lack of good faith, negligence or willful
misconduct which arise out of the breach of any representation or warranty of
the Fund hereunder.
(c) The reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or services which (i) are
received by the Bank or its agents or subcontractors, and (ii) have been
prepared, maintained or performed by the Fund or any other person or firm on
behalf of the Fund including but not limited to any previous transfer agent
or registrar.
(d) The reliance on, or the carrying out by the Bank or its agents
or subcontractors of any instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state or in
violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state.
6.02 At any time the Bank may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by the Bank under this
Agreement, and the Bank and its agents or subcontractors shall not be liable
and shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. The
Bank, its agents and subcontractors shall be protected and indemnified in
acting upon any paper or document furnished by or on behalf of the Fund,
reasonably believed to be genuine and to have been signed by the proper
person or persons, or upon any instruction, information, data, records or
documents provided the Bank or its agents or subcontractors by machine
readable input, telex, CRT data entry or other similar means authorized by
the Fund, and shall not be held to have notice of any change of authority of
any person, until receipt of written notice thereof from the Fund. The Bank,
its agents and subcontractors shall also be protected and indemnified in
recognizing stock certificates which are reasonably believed to bear the
proper manual or facsimile signatures of the officers of the Fund, and the
proper countersignature of any former transfer agent or former registrar, or
of a co-transfer agent or co-registrar.
6.03 In order that the indemnification provisions
contained in this Article 6 shall apply, upon the assertion of a claim for
which the Fund may be required to indemnify the Bank, the Bank shall promptly
notify the Fund of such assertion, and shall keep the Fund advised with
respect to all developments concerning such claim. The Fund shall have the
option to participate with the Bank in the defense of such claim or to defend
against said claim in its own name or in the name of the Bank. The Bank
shall in no case confess any claim or make any compromise in any case in
which the Fund may be required to indemnify the Bank except with the Fund's
prior written consent.
Article 7 Standard of Care
7.01 The Bank shall at all times act in good faith and
agrees to use its best efforts within reasonable limits to insure the
accuracy of all services performed under this Agreement, but assumes no
responsibility and shall not be liable for loss or damage due to errors
unless said errors are caused by its negligence, bad faith, or willful
misconduct of that of its employees.
Article 8 Covenants of the Fund and the Bank
8.01 The Fund shall promptly furnish to the Bank the following:
(a) A certified copy of the resolution of the Board of Directors
of the Fund authorizing the appointment of the Bank and the execution and
delivery of this Agreement.
(b) A copy of the Articles of Incorporation and By-Laws of the
Fund and all amendments thereto.
8.02 The Bank hereby agrees to establish and maintain facilities
and procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of such certificates,
forms and devices.
8.03 The Bank 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 Bank agrees that all such records
prepared or maintained by the Bank relating to the services to be performed
by the Bank 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 promptly to the Fund on and in accordance with its
request.
8.04 The Bank and the Fund agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed
to any other person, except as may be required by law.
8.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Bank will endeavor to notify the Fund
and to secure instructions from an authorized officer of the Fund as to such
inspection. The Bank reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be
held liable for the failure to exhibit the Shareholder records to such person.
Article 9 Termination of Agreement
9.01 This Agreement may be terminated by either party
upon one hundred twenty (120) days written notice to the other.
9.02 Should the Fund exercise its right to terminate,
all out-of-pocket expenses associated with the movement of records and
material will be borne by the Fund. Additionally, the Bank reserves the
right to charge for any other reasonable expenses associated with such
termination and/or a charge equivalent to the average of three (3) months'
fees.
Article 10 Assignment
10.01 Except as provided in Section 10.03 below, neither
this Agreement nor any rights or obligations hereunder may be assigned by
either party without the written consent of the other party.
10.02 This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.
10.03 The Bank may, without further consent on the part of the
Fund, subcontract for the performance hereof with (i) Boston Financial Data
Services, Inc., a Massachusetts corporation ("BFDS") which is duly registered
as a transfer agent pursuant to Section 17A(c)(1) of the Securities Exchange
Act of 1934, as amended ("Section 17A(c)(1)"), (ii) a BFDS subsidiary duly
registered as a transfer agent pursuant to Section 17A(c)(1) or (iii) a BFDS
affiliate; provided, however, that the Bank shall be as fully responsible to
the Fund for the acts and omissions of any subcontractor as it is for its own
acts and omissions.
Article 11 Amendment
11.01 This Agreement may be amended or modified by a
written agreement executed by both parties and authorized or approved by a
resolution of the Board of Directors of the Fund.
Article 12 Massachusetts Law to Apply
12.01 This Agreement shall be construed and the
provisions thereof interpreted under and in accordance with the laws of the
Commonwealth of Massachusetts.
Article 13 Force Majeure
13.01 In the event either party is unable to perform its
obligations under the terms of this Agreement because of acts of God,
strikes, equipment or transmission failure or damage reasonably beyond its
control, or other causes reasonably beyond its control, such party shall not
be liable for damages to the other for any damages resulting from such
failure to perform or otherwise from such causes.
Article 14 Consequential Damages
14.01 Neither party to this Agreement shall be liable to
the other party for consequential damages under any provision of this
Agreement or for any consequential damages arising out of any act or failure
to act hereunder.
Article 15 Merger of Agreement
15.01 This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with respect to
the subject matter hereof whether oral or written.
Article 16 Counterparts
16.01 This Agreement may be executed by the parties
hereto on any number of counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
BY:
___________________________________
Vice President
ATTEST:
_________________________________
STATE STREET BANK AND TRUST COMPANY
BY:
____________________________________
Senior Vice President
ATTEST:
___________________________________
STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES*
Service Performed Responsibility
----------------- --------------
Bank Fund
---- ----
1. Receives orders for the purchase
of Shares.
2. Issue Shares and hold Shares in
Shareholders accounts.
3. Receive redemption requests.
4. Effect transactions 1-3 above
directly with broker-dealers.
5. Pay over monies to redeeming
Shareholders.
6. Effect transfers of Shares.
7. Prepare and transmit dividends
and distributions.
8. Issue Replacement Certificates.
9. Reporting of abandoned property.
10. Maintain records of account.
11. Maintain and keep a current and
accurate control book for each
issue of securities.
12. Mail proxies.
13. Mail Shareholder reports.
14. Mail prospectuses to current
Shareholders.
15. Withhold taxes on U.S. resident
and non-resident alien accounts.
Service Performed Responsibility
----------------- --------------
Bank Fund
---- ----
16. Prepare and file U.S. Treasury
Department forms.
17. Prepare and mail account and
confirmation statements for
Shareholders.
18. Provide Shareholder account
information.
19. Blue sky reporting.
* Such services are more fully described in Article 1.02 (a), (b) and (c)
of the Agreement.
LEXINGTON STRATEIC INVESTMENTS FUND, INC.
BY:
__________________________________
Vice President
ATTEST:
________________________________
STATE STREET BANK AND TRUST COMPANY
BY:
___________________________________
Vice President
ATTEST:
__________________________________
FORM OF
ADMINISTRATIVE SERVICES AGREEMENT
THIS AGREEMENT is made by and between LEXINGTON STRATEGIC INVESTMENTS
FUND, INC., a Maryland corporation (the "Fund"), and LEXINGTON MANAGEMENT
CORPORATION, a Delaware corporation (the Administrator ), with respect to
the following recital of facts:
RECITAL
WHEREAS, the Fund is registered as an open-end diversified management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), and the rules and regulations promulgated thereunder;
WHEREAS, the Administrator is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended (the " Advisers Act"),
and engages in the business of acting as an investment adviser and an
administrator of investment companies;
WHEREAS, the Fund, and the Administrator desire to enter into an
agreement to provide for administrative services for the Fund on the terms
and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable considerations, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
I. APPOINTMENT AND OBLIGATIONS OF THE ADMINISTRATOR
The Administrator is hereby appointed to serve as the Administrator
to the Fund, to provide the administrative services described herein and
assume the obligations set forth in Section II, subject to the terms of this
Agreement and the control of the Fund's Board of [Directors/Trustees] (the
"Board"). The administrator shall, for all purposes herein, be deemed an
independent contractor and shall have, unless otherwise expressly provided
or authorized, no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
II. DUTIES OF THE ADMINISTRATOR
In carrying out the terms of this Agreement, the Administrator shall:
A. provide office space, equipment and facilities (which may be
the Administrator's or its affiliates) for maintaining the
Fund s organization, for meetings of the Board and the
shareholders, and for performing administrative services
hereunder;
B. supervise and manage all aspects of the Fund's operations
(other than investment advisory activities), and supervise
relations with, and monitor the performance of, custodians,
depositories, transfer and pricing agents, accountants,
attorneys, underwriters, brokers and dealers, insurers and
other persons in any capacity deemed to be necessary and
desirable by the Board;
C. determine and arrange for the publication of the net asset
value of the Fund;
D. provide non-investment related statistical and research data
and such other reports, evaluations and information as the Fund
may request from time to time;
E. provide internal clerical, accounting and legal services, and
stationery and office supplies;
F. prepare, to the extent requested by the Fund, the Fund's
prospectus, statement of additional information, proxy
statements and annual and semi-annual reports to shareholders;
G. arrange for the printing and mailing (at the Fund's expense) of
proxy statements and other reports or other materials provided
to the Fund's shareholders;
H. prepare for execution and file all the Fund's federal and state
tax returns and required tax filings other than those required
to be made by the Fund's custodian and transfer agent;
I. prepare periodic reports to and filings with the Securities and
Exchange Commission (the "SEC") and state Blue Sky authorities
with the advice of the Fund's counsel;
J. maintain the Fund s existence, and during such times as the
shares of the Fund are publicly offered, maintain the
registration and qualification of the Fund's shares under the
federal and state law;
K. keep and maintain the financial accounts and records of the
Fund;
L. develop and implement, if appropriate, management and
shareholder services designed to enhance the value or
convenience of the Fund as an investment vehicle;
M. provide the Board on a regular basis with reports and analyses
of the Fund's operations and the operations of comparable
investment companies;
N. respond to inquiries from shareholders or participants of
employee benefit plans (for which the administrator or any
affiliate provides recordkeeping) relating to the Fund,
concerning, among other things, exchanges among Funds, or refer
any such inquiries to the Fund's officers or the Fund's
transfer agent;
O. provide participant recordkeeping services for participants in
employee benefit plans for which the Administrator or any
affiliate provides recordkeeping services; and
P. provide such information as may be reasonably requested by a
shareholder representative of or a participant in an employee
benefit plan to comply with applicable federal or state laws.
III. REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF THE ADMINISTRATOR
The Administrator hereby represents and warrants to the Fund as
follows:
1. Due Incorporation and Organization. The Administrator is
duly organized and is in good standing under the laws of the
State of Delaware and is fully authorized to enter into this
Agreement and carry out its duties and obligations hereunder.
2. Best Efforts. The Administrator at all times shall provide
its best judgment and effort to the Fund in carrying out its
obligations hereunder.
B. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund hereby represents and warrants to the Administrator as
follows:
1. Organization. The Fund has been duly organized as a
corporation under the laws of the State of Maryland and it is
authorized to enter into this Agreement and carry out its
terms.
2. Registration. The Fund is registered as an investment
company with the SEC under the 1940 Act and shares of the Fund
are registered or qualified for offer and sale to the public
under the Securities Act of 1933, as amended (the 1933 Act ),
and all applicable state securities laws. Such registrations
or qualifications will be kept in effect during the term of
this Agreement.
IV. CONTROL BY THE BOARD
Any activities undertaken by the administrator pursuant to this
Agreement on behalf of the Fund shall at all times be subject to any
directives of the Board.
V. COMPLIANCE WITH APPLICABLE REQUIREMENTS
In carrying out its obligations under this Agreement, the
Administrator shall at all times conform to:
A. all applicable provisions of the 1940 Act;
B. the provisions of the registration statement of the Fund under
the 1933 Act and the 1940 Act;
C. the provisions of the Fund s chartering documents, as amended;
D. the provisions of the By-Laws of the Fund, as amended; and
E. any other applicable provisions of state and federal law.
VI. DELEGATION OF RESPONSIBILITIES
All services to be provided by the Administrator under this Agreement
may be furnished by any directors, officers or employees of the
Administrator or by any affiliates of the Administrator under the
Administrator's supervision.
VII. COMPENSATION
For the services to be rendered, the facilities furnished and the
expenses assumed by the administrator, the Fund shall pay to the
Administrator an annual fee, payable monthly, equal to the pro-rata portion
of the Administrator's actual cost in providing such services, facilities
and expenses.
VIII. NON-EXCLUSIVITY
The services of the Administrator to the Fund are not to be deemed to
be exclusive, and the Administrator shall be free to render administrative
or other services to others (including other investment companies) and to
engage in other activities, so long as its services under this agreement are
not impaired thereby. It is understood and agreed that officers and
directors of the Administrator may serve as officers or [directors/trustees]
of the Fund, and that officers of [directors/trustees] of the Fund may serve
as officers or directors of the Administrator to the extent permitted by
law; and that the officers and directors of the Administrator are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers,
directors or trustees of any other firm or trust, including other investment
companies.
IX. TERM
This Agreement shall become effective at the close of business on the
date hereof and shall continue automatically for successive annual periods,
provided such continuance is specifically approved at least annually by the
Fund s [directors/trustees] who are not parties to this Agreement or
interested persons (as defined in the 1940 Act) of any such party, or by
the vote of the holders of a majority (as so defined) of the outstanding
voting securities of the Fund and by such vote of the [directors/trustees].
X. TERMINATION
This Agreement may be terminated at any time, without the payment of
any penalty, by vote of the Fund s [directors/trustees] or by vote of a
majority of the Fund s outstanding voting securities (as defined in Section
2(a)(42) of the 1940 Act), or by the Administrator, on sixty (60) days
written notice to the other party.
XI. LIABILITY OF ADMINISTRATOR AND INDEMNIFICATION
A. LIABILITY
In the absence of willful misfeasance, bad faith or gross
negligence on the part of the Administrator or its officers, directors
or employees, or reckless disregard by the Administrator of its duties
under this Agreement, the Administrator shall not be liable 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
looses that may be sustained in the purchase, holding or sale of any
security.
B. INDEMNIFICATION
In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties hereunder
on the part of the Administrator or any officer, director or employee
of the Administrator, to the extent permitted by applicable law, the
Fund hereby agrees to indemnify and hold the Administrator harmless
from and against all claims, actions, suits and proceedings at law or
in equity, whether brought or asserted by a private party or a
governmental agency, instrumentality or entity of any kind, relating
to the sale, purchase, pledge of, advertisement of, or solicitation
of sales or purchases of any security (whether of the Fund or
otherwise) by the Fund, its officers, directors, employees or agents
in alleged violation of applicable federal, state or foreign laws,
rules or regulations.
XII. MATERIALS FOR DISTRIBUTION TO SHAREHOLDERS
During the term of this Agreement, the Fund shall furnish to the
Administrator at its principal office copies of all prospectuses, proxy
statements, reports to shareholders, sales literature and other material
referring to the Administrator that were prepared for distribution to
shareholders of the Fund and to participants in employee benefit plans
owning interests in the Fund (prior to the public distribution of such
materials). The Fund shall not use any such materials that refer to the
Administrator if the Administrator reasonably objects in writing within five
business days (or such other time as the parties may agree) after receipt
thereof, unless prior to such use the material is modified in a manner that
is satisfactory to the Administrator. Subsequent to the termination of this
Agreement, the Fund will continue to furnish to the Administrator copies of
such materials. The Fund shall also furnish or otherwise make available to
the Administrator other information relating to the business affairs of the
Fund as the Administrator reasonably requests from time to time.
XIII. NOTICES
Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further
notice to the other party, it is agreed that the address of the
Administrator and that of the Fund for this purpose shall be Park 80 West,
Plaza Two, Saddle Brook, New Jersey, 07663.
XIV. QUESTIONS OF INTERPRETATIONS
This Agreement shall be governed by the laws of the State of New
Jersey. Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretations thereof, if any, by the
United States Courts or in the absence of any controlling decision of any
such court, by rules, regulations or orders of the SEC issued pursuant to
said Act. In addition, where the effect of a requirement of the 1940 Act
reflected in the provisions of this Agreement is revised by rule, regulation
or order of the SEC, such provisions shall be deemed to incorporate the
effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in duplicate by their respective officers on the 28th day of
February, 1995.
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
Attest: By: _______________________________
Name Title
________________________
LEXINGTON MANAGEMENT CORPORATION
Attest: By: ______________________________
Name Title
________________________
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
9 1 9 T H I R D A V E N U E
NEW YORK, N.Y. 10022 - 3852
(212) 715 - 9100
FAX
(212) 715-8000
_____
WRITER'S
DIRECT NUMBER
(212) 715-9100
October 22, 1995
Lexington Strategic Investments Fund, Inc.
Park 80 West
Plaza Two
Saddle Brook, NJ 07663
Re: Lexington Strategic Investments Fund,
Inc. - Registration Statement on Form
N-1A
Gentlemen:
We hereby consent to the reference of our firm as counsel in this
Registration Statement on Form N-1A.
The Registrant has certified and we concur that this Registration
Statement meets all the requirements for immediate effectiveness pursuant to
Rule 485(b).
Very truly yours,
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
Independent Auditors' Consent
The Board of Directors
Lexington Strategic Investments Fund, Inc.:
We consent to the use of our report dated July 31, 1995, included in
the Registration Statement on form N-1A and to the reference to our
firm under the heading "Financial Highlights" in the Prospectus.
KPMG PEAT MARWICK LLP
New York, New York
October 23 , 1995
LEXINGTON MANAGEMENT CORPORATION
PROTOTYPE
MONEY PURCHASE PENSION AND
PROFIT SHARING PLAN
BASIC DOCUMENT #01
PROTOTYPE
MONEY PURCHASE PENSION AND
PROFIT SHARING PLAN
TABLE OF CONTENTS
Section Page
ARTICLE 1
GENERAL
1.1 Purpose......................................... 1
1.2 Trust........................................... 1
ARTICLE 2
DEFINITIONS
2.1 Account......................................... 1
2.2 Adoption Agreement.............................. 1
2.3 Affiliated Employers............................ 1
2.4 Beneficiary..................................... 2
2.5 Break in Service................................ 2
2.6 Code............................................ 2
2.7 Compensation.................................... 2
2.8 Custodian....................................... 3
2.9 Determination Date.............................. 3
2.10 Early Retirement Date........................... 3
2.11 Earned Income................................... 3
2.12 Effective Date.................................. 3
2.13 Eligibility Computation Period.................. 3
2.14 Employee........................................ 4
2.15 Employer........................................ 4
2.16 Employer Contributions.......................... 4
2.17 Entry Dates..................................... 4
2.18 ERISA........................................... 4
2.19 Hour of Service................................. 4
2.20 Integration Level............................... 7
2.21 Key Employee.................................... 7
2.22 Leased Employee................................. 7
2.23 Maximum Disparity Rate.......................... 8
2.24 Maximum Profit Sharing Disparity Rate........... 9
2.25 Non-Key Employee................................ 9
2.26 Normal Retirement Age........................... 9
2.27 Owner-Employee.................................. 9
2.28 Participant..................................... 10
2.29 Plan............................................ 10
2.30 Plan Administrator.............................. 10
2.31 Plan Year....................................... 10
2.32 Self-Employed Individuals....................... 10
2.33 Shares.......................................... 10
2.34 Sponsor......................................... 10
2.35 Taxable Wage Base............................... 10
2.36 Total and Permanent Disability.................. 10
2.37 Trust........................................... 11
2.38 Trust Agreement................................. 11
2.39 Trustee......................................... 11
2.40 Valuation Date.................................. 11
2.41 Vesting Computation Period...................... 11
2.42 Year of Service................................. 11
ARTICLE 3
ELIGIBILITY AND YEARS OF SERVICE
3.1 Eligibility Requirements........................ 11
3.2 Participation and Service Upon Reemployment..... 12
3.3 Predecessor Employers........................... 12
ARTICLE 4
CONTRIBUTIONS
4.1 Employer Contributions.......................... 13
4.2 Payment......................................... 13
4.3 Nondeductible Voluntary Contributions by
Participants.................................... 14
4.4 Rollovers....................................... 14
4.5 Direct Transfers................................ 14
ARTICLE 5
ALLOCATIONS
5.1 Individual Accounts............................. 15
5.2 Minimum Allocation.............................. 16
5.3 Allocation of Employer Contributions and
Forfeitures..................................... 17
5.4 Coordination of Social Security Integration..... 19
5.5 Withdrawals and Distributions................... 19
5.6 Determination of Value of Trust Fund and of Net
Earnings or Losses.............................. 19
5.7 Allocation of Net Earnings or Losses............ 20
5.8 Responsibilities of the Plan Administrator...... 21
ARTICLE 6
LIMITATIONS ON ALLOCATIONS
6.1 Employers Who Do Not Maintain Other Qualified
Plans........................................... 21
6.2 Employers Who Maintain Other Qualified Master
or Prototype Defined Contribution Plans......... 22
6.3 Employers Who, In Addition to This Plan,
Maintain Other Qualified Plans Which are
Defined Contribution Plans Other Than Master or
Prototype Plans................................. 24
6.4 Employers, Who In Addition To This Plan,
Maintain A Qualified Defined Benefit Plan....... 24
6.5 Definitions..................................... 24
ARTICLE 7
TRUST FUND
7.1 Receipt of Contributions by Trustee............. 29
7.2 Investment Responsibility....................... 29
7.3 Investment Limitations.......................... 30
ARTICLE 8
VESTING
8.1 Nondeductible Voluntary Contributions and
Earnings........................................ 30
8.2 Rollovers, Transfers and Earnings............... 31
8.3 Employer Contributions and Earnings............. 31
8.4 Amendments to Vesting Schedule.................. 31
8.5 Determination of Years of Service............... 32
8.6 Forfeiture of Nonvested Amounts................. 33
8.7 Reinstatement of Benefit........................ 33
ARTICLE 9
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
9.1 General......................................... 34
9.2 Qualified Joint and Survivor Annuity............ 34
9.3 Qualified Preretirement Survivor Annuity........ 34
9.4 Definitions..................................... 34
9.5 Notice Requirements............................. 36
9.6 Safe Harbor Rules............................... 38
9.7 Transitional Rules.............................. 39
ARTICLE 10
DISTRIBUTION PROVISIONS
10.1 Vesting on Distribution Before Break in Service. 41
10.2 Restrictions on Immediate Distributions......... 42
10.3 Commencement of Benefits........................ 44
10.4 Early Retirement With Age and Service Require-
ment............................................ 44
10.5 Nontransferability of Annuities................. 44
10.6 Conflicts With Annuity Contracts................ 44
ARTICLE 11
TIMING AND MODES OF DISTRIBUTION
11.1 General Rules................................... 45
11.2 Required Beginning Date......................... 45
11.3 Limits on Distribution Periods.................. 45
11.4 Determination of Amount to be Distributed Each
Year............................................ 45
11.5 Death Distribution Provisions................... 46
11.6 Designation of Beneficiary...................... 48
11.7 Definitions..................................... 48
11.8 Transitional Rules.............................. 51
11.9 Optional Forms of Benefit....................... 52
ARTICLE 12
WITHDRAWALS
12.1 Withdrawal of Nondeductible Voluntary Contribu-
tions........................................... 54
12.2 Hardship Withdrawals............................ 54
12.3 Manner of Making Withdrawals.................... 55
12.4 Limitations on Withdrawals...................... 55
ARTICLE 13
LOANS
13.1 General Provisions.............................. 55
13.2 Administration of Loan Program.................. 57
13.3 Amount of Loan.................................. 57
13.4 Manner of Making Loans.......................... 57
13.5 Terms of Loan................................... 58
13.6 Security for Loan............................... 58
13.7 Segregated Investment........................... 59
13.8 Repayment of Loan............................... 59
13.9 Default on Loan................................. 59
13.10Unpaid Amounts.................................. 59
ARTICLE 14
INSURANCE
14.1 Insurance....................................... 60
14.2 Policies........................................ 60
14.3 Beneficiary..................................... 60
14.4 Payment of Premiums............................. 60
14.5 Limitation on Insurance Premiums................ 61
14.6 Insurance Company............................... 62
14.7 Distribution of Policies........................ 62
14.8 Policy Features................................. 64
14.9 Changed Conditions.............................. 64
14.10Conflicts....................................... 64
ARTICLE 15
ADMINISTRATION
15.1 Duties and Responsibilities of Fiduciaries;
Allocation of Fiduciary Responsibility.......... 64
15.2 Powers and Responsibilities of the Plan
Administrator................................... 65
15.3 Allocation of Duties and Responsibilities....... 67
15.4 Appointment of the Plan Administrator........... 67
15.5 Expenses........................................ 67
15.6 Liabilities..................................... 67
15.7 Claims Procedure................................ 68
ARTICLE 16
AMENDMENT, TERMINATION AND MERGER
16.1 Sponsor's Power to Amend........................ 69
16.2 Amendment by Adopting Employer.................. 69
16.3 Vesting Upon Plan Termination................... 70
16.4 Vesting Upon Complete Discontinuance of
Contributions................................... 70
16.5 Maintenance of Benefits Upon Merger............. 70
16.6 Special Amendments.............................. 70
ARTICLE 17
MISCELLANEOUS
17.1 Exclusive Benefit of Participants and
Beneficiaries................................... 70
17.2 Nonguarantee of Employment...................... 71
17.3 Rights to Trust Assets.......................... 71
17.4 Nonalienation of Benefits....................... 71
17.5 Aggregation Rules............................... 72
17.6 Failure of Qualification........................ 73
17.7 Applicable Law.................................. 73
<PAGE>
ARTICLE 1
GENERAL
1.1 Purpose. The Employer hereby establishes this Plan to provide
retirement, death and disability benefits for eligible employees and their
Beneficiaries. This Plan is a standardized prototype paired defined
contribution plan and is designed to permit adoption of profit sharing
provisions, money purchase pension provisions, or both. The provisions
herein and the selections made by the Employer by execution of the money
purchase pension or profit sharing Adoption Agreement or Agreements, shall
constitute the Plan. It is intended that the Plan and Trust qualify under
sections 401 and 501 of the Internal Revenue Code of 1986, as amended and
that it comply with the provisions of the Employee Retirement Income
Security Act of 1974, as amended.
1.2 Trust. The Employer has simultaneously adopted a Trust to
receive, invest, and distribute funds in accordance with the Plan.
ARTICLE 2
DEFINITIONS
2.1 Account. The aggregate of the individual bookkeeping
subaccounts established for each Participant, as provided in section 5.1.
2.2 Adoption_Agreement. The written agreement or agreements of
the Employer and the Trustee by which the Employer establishes this Plan
and adopts the Trust Agreement forming a part hereof, as the same may be
amended from time to time. The Adoption Agreement contains all the
options that may be selected by the Employer. The information set forth
in the Adoption Agreement executed by the Employer shall be deemed to be
a part of this Plan as if set forth in full herein.
2.3 Affiliated_Employers. The Employer and any corporation which
is a member of a controlled group of corporations (as defined in section
-1-
<PAGE>
414(b) of the Code) which includes the Employer, any trade or business
(whether or not incorporated) which is under common control (as defined
in section 414(c) of the Code) with the Employer, or any service
organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in sections 414(m) and (o) of the
Code) which includes the Employer.
2.4 Beneficiary. The person or persons (natural or otherwise)
designated by a Participant in accordance with section 11.6 to receive any
undistributed amounts credited to the Participant's Account under the Plan
at the time of the Participant's death.
2.5 Break_in_Service. An Eligibility Computation Period or
Vesting Computation Period in which an Employee fails to complete more
than five hundred (500) Hours of Service.
2.6 Code. The Internal Revenue Code of 1986, as amended from time
to time, or any successor statute.
2.7 Compensation.
(a) Compensation will mean all of each Participant's W-2
earnings.
(b) For any self-employed individual covered under the Plan,
Compensation will mean Earned Income.
(c) Compensation shall include only that Compensation that
is actually paid to the Participant during the Plan Year.
(d) Notwithstanding the above, if elected by the Employer
in the Adoption Agreement, Compensation shall include any amount which is
contributed by the Employer pursuant to a salary reduction agreement and
which is not includable in the gross income of the Employee under sections
125, 402(a)(8), 402(h) or 403(b) of the Code. The effective date of this
subsection shall be elected by the Employer in the Adoption Agreement.
(e) The annual Compensation of each Participant taken into
-2-
<PAGE>
account under the Plan for any year shall not exceed two hundred thousand
dollars ($200,000), as adjusted by the Secretary at the same time and in
the same manner as under section 415(d) of the Code. In determining the
Compensation of a Participant for purposes of this limitation, the rules
of section 414(q)(6) of the Code shall apply, except in applying such
rules, the term "family" shall include only the Spouse of the Participant
and any lineal descendants of the Participant who have not attained age
nineteen (19) before the close of the year. If, as a result of the
application of such rules, the adjusted two hundred thousand dollar
($200,000) limitation is exceeded, then (except for purposes of
determining the portion of Compensation up to the Integration Level to the
extent this Plan provides for permitted disparity), the limitation shall
be prorated among the affected individuals in proportion to each such
individual's Compensation as determined under this section prior to the
application of this limitation.
(f) The effective date of this subsection shall be the
first Plan Year beginning on or after January 1, 1989.
2.8 Custodian. The custodian, if any, designated in the Adoption
Agreement.
2.9 Determination_Date. With respect to any Plan Year subsequent
to the first Plan Year, the last day of the preceding Plan Year. For the
first Plan Year of the Plan, the last day of that Plan Year.
2.10 Early_Retirement_Date. The first day of the month coincident
with or next following the date upon which the Participant satisfies the
early retirement age and service requirements in the Adoption Agreement;
provided, however, such requirements may not be less than age fifty- five
(55), nor more than fifteen (15) Years of Service.
2.11 Earned_Income. The net earnings from self- employment in the
trade or business with respect to which the Plan is established, for which
personal services of the individual are a material income-producing
factor. Net earnings will be determined without regard to items not
included in gross income and the deductions allocable to such items. Net
earnings are reduced by contributions to a qualified plan to the extent
deductible under section 404 of the Code. Net earnings shall be
determined with regard to the deduction allowed to the Employer by section
164(f) of the Code for taxable years beginning after December 31, 1989.
2.12 Effective_Date. The first day of the first Plan Year for
which the Plan is effective as specified in the Adoption Agreement.
2.13 Eligibility_Computation_Period. For purposes of determining
Years of Service and Breaks in Service for eligibility to participate, the
initial Eligibility Computation Period shall be the twelve (12)
consecutive month period beginning with the day the Employee first
performs an Hour of Service for the Employer (employment commencement
date). The succeeding twelve (12) consecutive month periods commence with
the first anniversary of the Employee's employment commencement date.
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2.14 Employee. Any person, including a Self-Employed Individual,
who is employed by the Employer maintaining the Plan or any other employer
required to be aggregated with such Employer under sections 414(b), (c),
(m) or (o) of the Code. The term "Employee" shall also include any Leased
Employee deemed to be an Employee of any Employer described above as
provided in sections 414(n) or (o) of the Code.
2.15 Employer. The corporation, proprietorship, partnership or
other organization that adopts the Plan by execution of an Adoption
Agreement.
2.16 Employer_Contributions. The contribution of the Employer to
the Plan and Trust as set forth in section 4.1 and the Adoption Agreement.
2.17 Entry_Dates. The Effective Date shall be the first Entry
Date. Thereafter, the Entry Dates shall be the first day of each Plan
Year and the first day of the seventh month of each Plan Year.
2.18 ERISA. The Employee Retirement Income Security Act of 1974,
as amended.
2.19 Hour_of_Service.
(a) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer. These hours
shall be credited to the Employee only for the computation period or
periods in which the duties are performed; 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 to an Employee on account of any single, continuous period
during which the Employee performs no duties (whether or not such period
occurs in a single computation period). Hours under this paragraph will
be calculated and credited pursuant to section 2530.200b-2 of the
Department of Labor regulations which are incorporated herein by this
reference.
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(c) Each hour for which back pay, irrespective of mitigation
of damages, is either awarded or agreed to by the Employer. The same
Hours of Service shall not be credited both under paragraph (a) or
paragraph (b), as the case may be, and under this paragraph (c). These
hours shall be credited to the Employee for the computation period or
periods to which the award or agreement pertains rather than the
computation period in which the award, agreement, or payment is made.
(d) Solely for purposes of determining whether an Employee
has a Break in Service, Hours of Service shall also include an
uncompensated authorized leave of absence not in excess of two (2) years,
or military leave while the Employee's reemployment rights are protected
by law or such additional or other periods as granted by the Employer as
military leave (credited on the basis of forty (40) Hours of Service per
each week or eight (8) Hours of Service per working day), provided the
Employee returns to employment at the end of his leave of absence or
within ninety (90) days of the end of his military leave, whichever is
applicable.
(e) Hours of Service will be credited for employment with
other members of an affiliated service group (under section 414(m)), a
controlled group of corporations (under section 414(b)), or a group of
trades or businesses under common control (under section 414(c)) of which
the adopting Employer is a member, and any other entity required to be
aggregated with the Employer pursuant to section 414(o) and the
regulations thereunder. Hours of Service will also be credited for any
individual considered an Employee for purposes of this Plan under section
414(n) or section 414(o) and the regulations thereunder.
(f) Solely for purposes of determining whether an Employee
has a Break in Service, Hours of Service shall also include absence from
work for maternity or paternity reasons, if the absence begins on or after
the first day of the first Plan Year beginning after 1984. During this
absence, the Employee shall be credited with the Hours of Service which
would have been credited but for the absence, or, if such hours cannot be
determined with eight (8) hours per day. An absence from work for
maternity or paternity reasons means an absence:
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(i) by reason of the pregnancy of an Employee;
(ii) by reason of the birth of a child of the
Employee;
(iii) by reason of the placement of a child with the
Employee in connection with adoption; or
(iv) for purposes of caring for such a child for a
period immediately following such birth or placement.
These Hours of Service shall be credited in the computation period
following the computation period in which the absence begins, except as
necessary to prevent a Break in Service in the computation period in which
the absence begins. However, no more than five hundred one (501) Hours
of Service will be credited for purposes of any such maternity or
paternity absence from work.
(g) The Employer may elect to compute Hours of Service by
the use of one of the service equivalencies in the Adoption Agreement.
Only one method may be selected. If selected, the service equivalency
must be applied to all Employees covered under the Plan.
(h) If the Employer amends the method of crediting service
from the elapsed time method described in section 1.410(a)-7 of the
Treasury regulations to the Hours of Service computation method by the
adoption of this Plan, or an Employee transfers from a plan under which
service is determined on the basis of elapsed time, the following rules
shall apply for purposes of determining the Employee's service under this
Plan up to the time of amendment or transfer:
(i) the Employee shall receive credit, as of the date
of amendment or transfer, for a number of Years of Service equal to the
number of one (1) year periods of service credited to the Employee as of
the date of the amendment or transfer; and
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(ii) the Employee shall receive credit in the
applicable computation period which includes the date of amendment or
transfer, for a number of Hours of Service determined by applying the
weekly service equivalency specified in paragraph (g) to any fractional
part of a year credited to the Employee under this paragraph (h) as of the
date of amendment or transfer. The use of the weekly service equivalency
shall apply to all Employees who formerly were credited with service under
the elapsed time method.
2.20 Integration_Level. The Taxable Wage Base or such lesser
amount elected by the Employer in the Adoption Agreement.
2.21 Key_Employee.
(a) 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
fifty percent (50%) of the dollar limitation under section 415(b)(1)(A)
of the Code; an owner (or considered an owner under section 318 of the
Code) of one of the ten (10) largest interests in the Employer if such
individual's Compensation exceeds one hundred percent (100%) of the dollar
limitation under section 415(c)(1)(A) of the Code; a Five Percent (5%)
Owner of the Employer; or a one percent (1%) owner of the Employer who has
annual Compensation of more than one hundred fifty thousand dollars
($150,000).
(b) For purposes of this section, annual Compensation means
compensation as defined in section 415(c)(3) of the Code, but including
amounts contributed by the Employer pursuant to a salary reduction
agreement which are excludable from the Employee's gross income under
sections 125, 402(a)(8), 402(h) or 403(b) of the Code.
(c) For purposes of this section, determination period is
the Plan Year containing the Determination Date and the four (4) preceding
Plan Years.
2.22 Leased_Employee.
(a) Any person (other than an Employee of any of the
Affiliated Employers) who, pursuant to an agreement between any of the
Affiliated Employers and any other person ("leasing organization"), has
performed service for any of the Affiliated Employers (or for any of the
Affiliated Employers and related persons determined in accordance with
section 414(n)(6) of the Code) on a substantially full-time basis for a
period of at least one (1) year and such services are of a type
historically performed by employees in the Affiliated Employer's business
field. Contributions or benefits provided a Leased Employee by the
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leasing organization which are attributable to services performed for the
Affiliated Employer shall be treated as provided by the Affiliated
Employer.
(b) A Leased Employee shall not be considered an Employee
of an Affiliated Employer if:
(i) such employee is covered by a money purchase
pension plan providing:
(1) a nonintegrated employer contribution rate
of at least ten percent (10%) of compensation (as defined in section
415(c)(3) of the Code), but including amounts contributed pursuant to a
salary reduction agreement which are excludable from the employee's gross
income under sections 125, 402(a)(8), 402(h) or 403(b) of the Code;
(2) immediate participation; and
(3) full and immediate vesting.
and
(ii) Leased Employees do not constitute more than
twenty percent (20%) of the Affiliated Employer's non-Highly-Compensated
workforce.
(c) The determination of whether a person is a Leased
Employee will be made pursuant to section 414(n) of the Code.
2.23 Maximum_Disparity_Rate. The lesser of:
(a) five and seven-tenths percent (5.7%);
(b) the applicable percentage determined in accordance with
the table below:
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If the Integration Level is
The Applicable
More_Than But_Not_More_Than Percentage_Is:
$0 X */ 5.7%
X of TWB 80% of TWB 4.3%
80% of TWB Y **/ 5.4%
*/ X = the greater of $10,000 or 20% of the Taxable Wage Base.
**/ Y = any amount more than 80% of the Taxable Wage Base but less than
100% of the Taxable Wage Base.
"TWB" means the Taxable Wage Base.
If the Integration Level used is equal to the Taxable Wage Base, the
applicable percentage is five and seven-tenths percent (5.7%).
2.24 Maximum_Profit_Sharing_Disparity_Rate. The lesser of:
(a) two and seven-tenths percent (2.7%);
(b) the applicable percentage determined in accordance with
the table below:
If the Integration Level is
The Applicable
More_Than But_Not_More_Than Percentage_Is:
$0 X */ 2.7%
X of TWB 80% of TWB 1.3%
80% of TWB Y **/ 2.4%
*/ X = the greater of $10,000 or 20% of the Taxable Wage Base.
**/ Y = any amount more than 80% of the Taxable Wage Base but less than
100% of the Taxable Wage Base.
"TWB" means the Taxable Wage Base.
If the Integration Level used is equal to the Taxable Wage Base, the
applicable percentage is two and seven-tenths percent (2.7%).
2.25 Non-Key_Employee. Any Employee or former Employee who is not
a Key Employee. In addition, any Beneficiary of a Non-Key Employee shall
be treated as a Non- Key Employee.
2.26 Normal_Retirement_Age. The age selected in the Adoption
Agreement, but not less than age fifty-five (55). If the Employer
enforces a mandatory retirement age, the Normal Retirement Age is the
lesser of that mandatory age or the age specified in the Adoption
Agreement.
2.27 Owner-Employee. An individual who is a sole proprietor, or
who is a partner owning more than ten percent (10%) of either the capital
or profits interest of a partnership.
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2.28 Participant. A person who has met the eligibility
requirements of section 3.1 and whose Account hereunder has been neither
completely forfeited nor completely distributed.
2.29 Plan. The prototype paired defined contribution profit
sharing and money purchase pension plan provided under this basic plan
document. References to the Plan shall refer to the profit sharing
provisions, the money purchase pension provisions, or both, as the context
may require.
2.30 Plan_Administrator. The person, persons or entity appointed
by the Employer pursuant to ARTICLE 15 to manage and administer the Plan.
2.31 Plan_Year. The twelve (12) consecutive month period
designated by the Employer in the Adoption Agreement.
2.32 Self-Employed_Individual. An individual who has Earned Income
for the taxable year from the trade or business for which the Plan is
established, or an individual who would have had Earned Income for the
taxable year but for the fact that the trade or business had no net
profits for the taxable year.
2.33 Shares. Shares of stock in any regulated investment company
registered under the Investment Company Act of 1940 that are made
available for investment purposes as an investment option under this Plan.
2.34 Sponsor. The sponsor designated in the Adoption Agreement
which has made this Plan available to the Employer.
2.35 Taxable_Wage_Base. The maximum amount of earnings which may
be considered wages for a year under section 3121(a)(1) of the Code in
effect as of the beginning of the Plan Year.
2.36 Total_and_Permanent_Disability. The inability of the
Participant to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment, which condition, in
the opinion of a physician chosen by the Plan Administrator, can be
expected to result in death or which has lasted or can be expected to last
for a continuous period of not less than twelve (12) months.
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2.37 Trust. The fund maintained by the Trustee for the investment
of Plan assets in accordance with the terms and conditions of the Trust
Agreement.
2.38 Trust_Agreement. The agreement between the Employer and the
Trustee under which the assets of the Plan are held, administered, and
managed. The provisions of the Trust Agreement shall be considered an
integral part of this Plan as if set forth fully herein.
2.39 Trustee. The individual or corporate Trustee or Trustees
under the Trust Agreement as they may be constituted from time to time.
2.40 Valuation_Date. The last day of each Plan Year and such other
dates as may be determined by the Plan Administrator, as provided in
section 5.6 for valuing the Trust assets.
2.41 Vesting_Computation_Period. The Plan Year.
2.42 Year_of_Service. An Eligibility Computation Period, Vesting
Computation Period, or Plan Year, whichever is applicable, during which
an Employee has completed at least one thousand (1,000) Hours of Service
(whether or not continuous). The Employer may, in the Adoption Agreement,
specify a fewer number of hours.
ARTICLE 3
ELIGIBILITY AND YEARS OF SERVICE
3.1 Eligibility_Requirements.
(a) Each Employee of the Affiliated Employers shall become
a Participant in the Plan as of the first Entry Date after the date on
which the Employee has satisfied the minimum age and service requirements
specified in the Adoption Agreement.
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(b) The Employer may elect in the Adoption Agreement to
exclude from participation:
(i) Employees included in a unit of employees covered
by a collective bargaining agreement between the Employer and Employee
representatives, if retirement benefits were the subject of good faith
bargaining. For this purpose, the term "Employee representatives" does
not include any organization more than half of whose members are Employees
who are owners, officers, or executives of the Employer; and
(ii) nonresident aliens who receive no earned income
from the Employer which constitutes income from sources within the United
States.
3.2 Participation_and_Service_Upon_Reemployment. Upon the
reemployment of any Employee, the following rules shall determine his
eligibility to participate in the Plan and his credit for prior service.
(a) Participation. If the reemployed Employee was a
Participant in the Plan during his prior period of employment, he shall
be eligible upon reemployment to resume participation in the Plan. If the
reemployed Employee was not a Participant in the Plan, he shall be
considered a new Employee and required to meet the requirements of section
3.1 in order to be eligible to participate in the Plan, subject to the
reinstatement of credit for prior service under paragraph (b) below.
(b) Credit_for_Prior_Service. In the case of any Employee
who is reemployed before or after incurring a Break in Service, any Hour
of Service and Year of Service credited to the Employee at the end of his
prior period of employment shall be reinstated as of the date of his
reemployment.
3.3 Predecessor_Employers. If specified in the Adoption
Agreement, Years of Service with a predecessor employer will be treated
as service for the Employer for eligibility purposes; provided, however,
if the Employer maintains the plan of a predecessor employer, Years of
Service with such employer will be treated as service with the Employer
without regard to any election.
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ARTICLE 4
CONTRIBUTIONS
4.1 Employer_Contributions.
(a) Money_Purchase_Pension_Contributions. For each Plan
Year, the Employer shall contribute to the Trust an amount equal to such
uniform percentage of Compensation of each eligible Participant as may be
determined by the Employer in accordance with the money purchase pension
contribution formula specified in the Adoption Agreement. Subject to the
limitations of section 5.4, the money purchase pension contribution
formula may be integrated with Social Security, as set forth in the
Adoption Agreement.
(b) Profit_Sharing_Contribution. For each Plan Year, the
Employer shall contribute to the Trust an amount as may be determined by
the Employer in accordance with the profit sharing formula set forth in
the Adoption Agreement.
(c) Eligible_Participants. Subject to the Minimum
Allocation rules of section 5.2 and the exclusions specified in this
section, each Participant shall be eligible to share in the Employer
Contribution. An Employer may elect in the Adoption Agreement that
Participants who terminate employment during the Plan Year with not more
than five hundred (500) Hours of Service and who are not Employees as of
the last day of the Plan Year (other than Participants who die, retire or
become totally and Permanently Disabled during the Plan Year) shall not
be eligible to share in the Employer Contribution. An Employer may
further elect in the Adoption Agreement to allocate a contribution on
behalf of a Participant who completes fewer than five hundred (500) Hours
of Service and is otherwise ineligible to share in the Employer
Contribution. If the Employer fails to specify in the Adoption Agreement
the number of Hours of Service required to share in the Employer
Contribution, the number shall be five hundred (500) Hours of Service.
(d) Contribution_Limitation. In no event shall any Employer
Contribution exceed the maximum amount deductible from the Employer's
income under section 404 of the Code, or the maximum limitations under
section 415 of the Code provided in ARTICLE 6.
4.2 Payment. All Employer Contributions to the Trust for any Plan
Year shall be made either in one lump-sum or in installments in U.S.
currency, by check, or in Shares within the time prescribed by law,
including extensions granted by the Internal Revenue Service, for filing
the Employer's federal income tax return for the taxable year with or
within which such Plan Year ends. All Employer Contributions to the Trust
for a money purchase pension plan for any Plan Year shall be made within
the time prescribed by regulations under section 412(c)(10) of the Code.
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4.3 Nondeductible_Voluntary_Contributions_by_Partici pants.
(a) This Plan will not accept nondeductible Employee
contributions for Plan Years beginning after the Plan Year in which this
Plan is adopted by the Employer. Employee contributions made with respect
to Plan years beginning after December 31, 1986 will be limited so as to
meet the nondiscrimination test of section 401(m).
(b) A separate account shall be maintained by the Trustee
for the nondeductible Employee contributions of each Participant.
(c) Employee contributions and earnings thereon shall be
fully vested and nonforfeitable at all times.
(d) The provisions of this section shall apply to Employee
contributions made prior to the first Plan Year after the Plan Year in
which the Employer adopts this Plan.
4.4 Rollovers.
(a) Subject to the approval of the Plan Administrator, a
participant who has participated in any other qualified plan described in
section 401(a) of the Code or in a qualified annuity plan described in
section 403(a) of the Code shall be permitted to make a rollover
contribution in the form of cash to the Trustee of an amount received by
the Participant that is attributable to participation in such other plan
(reduced by any nondeductible voluntary contributions he made to the
plan), provided that the rollover contribution complies with all
requirements of sections 402(a)(5) or 403(a)(4) of the Code, whichever is
applicable.
(b) Before approving such a Participant rollover, the Plan
Administrator may request from the Participant or the Employer any
documents which the Plan Administrator, in its discretion, deems necessary
for such rollover.
(c) Any rollover contribution to the Trust shall be credited
to the Participant's rollover subaccount established under section 5.1 and
separately accounted for.
4.5 Direct_Transfers.
(a) The Plan shall accept a transfer of assets directly from
another plan qualified under sections 401(a) or 403(a) of the Code only
if the Plan Administrator, in its sole discretion, agrees to accept such
a transfer. In determining whether to accept such a transfer the Plan
Administrator shall consider the administrative inconvenience engendered
by such a transfer and any risks to the continued qualification of the
Plan under section 401(a) of the Code. Acceptance of any such transfer
shall not preclude the Plan Administrator from refusing any subsequent
such transfers.
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(b) Any transfer of assets accepted under this section shall
be credited to the Participant's direct transfer subaccount and shall be
separately accounted for at all times and shall remain subject to the
provisions of the transferor plan (as it existed at the time of such
transfer) to the extent required by section 411(d)(6) of the Code
(including, but not limited to, any rights to Qualified Joint and Survivor
Annuities and qualified preretirement survivor annuities) as if such
provisions were part of the Plan. In all other respects, however, such
transferred assets will be subject to the provisions of the Plan.
(c) Assets accepted under this section shall be fully vested
and nonforfeitable.
(d) Before approving such a direct transfer, the Plan
Administrator may request from the Participant or the Employer (or the
prior employer) any documents the Plan Administrator, in its discretion,
deems necessary for such direct transfer.
ARTICLE 5
ALLOCATIONS
5.1 Individual_Accounts. The Plan Administrator shall establish
and maintain an Account in the name of each Participant. The Account
shall contain the following subaccounts:
(a) A money purchase pension contribution subaccount to
which shall be credited each such Participant's share of (i) Employer
Contributions under section 4.1(a); (ii) the net earnings or net losses
on the investment of the assets of the Trust; (iii) distributions; and
(iv) dividends, capital gain distributions and other earnings received on
any Shares credited to the Participant's subaccount;
(b) A profit sharing contribution subaccount to which shall
be credited each such Participant's share of (i) Employer Contributions
under section 4.1(b); (ii) forfeitures; (iii) the net earnings or net
losses on the investment of the assets of the trust; (iv) distributions;
and (v) dividends, capital gain distributions and other earnings received
on any Shares credited to the Participant's subaccount;
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(c) A nondeductible voluntary contribution subaccount to
which shall be credited (i) nondeductible voluntary contributions by the
Participant under section 4.3; (ii) the net earnings or net losses on the
investment of the assets of the Trust; (iii) distributions; and
(iv) dividends, capital gain distributions and other earnings received on
any Shares credited to the Participant's subaccount;
(d) A direct transfer subaccount to which shall be credited
(i) contributions to the Trust accepted under section 4.5(a); (ii) the net
earnings or net losses on the investment of the assets of the Trust;
(iii) distributions; and (iv) dividends, capital gain distributions and
other earnings received on any Shares credited to the Participant's
subaccount;
(e) A rollover subaccount to which shall be credited
(i) contributions to the Trust accepted under section 4.4(a); (ii) the net
earnings or net losses on the investment of the assets of the Trust;
(iii) distributions; and (iv) dividends, capital gain distributions and
other earnings received on any Shares credited to the Participant's
subaccount.
5.2 Minimum_Allocation.
(a) Except as otherwise provided in this section, the
Employer Contributions and forfeitures allocated on behalf of any
Participant who is not a Key Employee shall not be less than the lesser
of three percent (3%) of such Participant's Compensation or in the case
where the Employer has no defined benefit plan which designates this Plan
to satisfy section 401 of the Code, the largest percentage of Employer
Contributions and forfeitures, as a percentage of the first two hundred
thousand dollars ($200,000) of the Key Employee's Compensation, allocated
on behalf of any Key Employee for that year. The minimum allocation is
determined without regard to any Social Security contribution. This
minimum allocation shall be made even though, under other Plan provisions,
the Participant would not otherwise be entitled to receive an allocation,
or would have received a lesser allocation for the year because of (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. For purposes of this
subsection, all defined contribution plans required to be included in an
aggregation group under section 416(g)(2)(A)(i) shall be treated as a
single plan.
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(b) For purposes of computing the minimum allocation,
Compensation shall mean Compensation as defined in section 6.5(b) of the
Plan.
(c) The provision in subsection (a) above shall not apply
to any Participant who was not employed by the Employer on the last day
of the Plan Year.
(d) The provision in subsection (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.
(e) The minimum allocation required (to the extent required
to be nonforfeitable under section 416(b)) may not be forfeited under
section 411(a)(3)(B) or 411(a)(3)(D).
5.3 Allocation_of_Employer_Contributions_and_Forfeitures.
(a) All money purchase pension contributions for a given
Plan Year shall be allocated to the Account of the Participant for whom
such contribution was made. Any forfeiture from a Participant's money
purchase pension contribution subaccount arising under the Plan for a
given Plan Year shall be applied as specified in the Adoption Agreement,
either: (i) to reduce the Employer Contribution in that year, or if in
excess of the Employer Contribution for such Plan Year, the excess amounts
shall be used to reduce the Employer Contribution in the next succeeding
Plan Year or Years or (ii) to be added to the Employer Contributions and
allocated accordingly.
(b) All profit sharing contributions and forfeitures from
a Participant's profit sharing contribution subaccount will be allocated
to the Account of each Participant in the ratio that such Participant's
Compensation bears to the Compensation of all Participants. However, if
the profit sharing contribution formula selected in the Adoption
Agreement is integrated with Social Security, profit sharing contributions
for the Plan Year plus any forfeitures will be allocated to Participants'
Accounts as follows:
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(i) Step_One. Contributions and forfeitures will be
allocated to each Participant's Account in the ratio that each
Participant's total Compensation bears to all Participants' total
Compensation, but not in excess of three percent (3%) of each
Participant's Compensation. (Step One is not applicable if the Employer
enters into the money purchase pension Adoption Agreement).
(ii) Step_Two. Any contributions and forfeitures
remaining after the allocation in Step One (if any) will be allocated to
each Participant's Account in the ratio that each Participant's
Compensation for the Plan Year in excess of the Integration Level bears
to the excess Compensation of all Participants, but not in excess of three
percent (3%). (Step Two is not applicable if the Employer enters into the
money purchase pension Adoption Agreement).
(iii) Step_Three. Any contributions and forfeitures
remaining after the allocation in Step Two (if any) will be allocated to
each Participant's Account in the ratio that the sum of each Participant's
total Compensation and Compensation in excess of the Integration Level
bears to the sum of all Participants' total Compensation and Compensation
in excess of the Integration Level, but not in excess of whichever of the
following is applicable:
(i) if the Employer has not adopted the money
purchase pension Adoption Agreement, then the Maximum Profit Sharing
Disparity Rate; or
(ii) If the Employer has adopted the money purchase
pension Adoption Agreement, then the lesser of:
(1) the percentage of each Participant's
Compensation for the Plan Year up to the Integration Level determined by
dividing the allocation by such Compensation (the base contribution
percentage); or
(2) the Maximum Disparity Rate.
(iv) Step_Four. Any remaining contributions or
forfeitures will be allocated to each Participant's Account in the ratio
that each Participant's total Compensation for the Plan Year bears to all
Participants' total Compensation for that year.
(c) Notwithstanding anything in (a) or (b) above to the
contrary, forfeitures arising under a Participant's money purchase pension
contribution subaccount will only be used to reduce the contributions of
the Participant's Employer who adopted this Plan, and forfeitures arising
under a Participant's profit sharing contribution subaccount will be
reallocated only for the benefit of Employees of the Participant's
Employer who adopted this Plan.
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5.4 Coordination_of_Social_Security_Integration. If the Employer
maintains plans involving integration with Social Security other than this
Plan, and if any Participant is eligible to participate in more than one
of such plans, all such plans will be considered to be integrated if the
extent of the integration of all such plans does not exceed one hundred
percent (100%). For purposes of the preceding sentence, the extent of
integration of a plan is the ratio (expressed as a percentage) which the
actual benefits, benefit rate, offset rate, or Employer Contribution rate
under the plan bears to the integration limitation applicable to such
plan. If the Employer enters into both the money purchase pension
Adoption Agreement and the profit sharing Adoption Agreement under this
Plan, integration with Social Security may only be selected in one Adop-
tion Agreement.
5.5 Withdrawals_and_Distributions. Any distribution to a
Participant or his Beneficiary, any amount transferred from a
Participant's Account directly to the Trustee of any other qualified plan
described in section 401(a) of the Code or to a qualified annuity plan
described in section 403(a) of the Code, or any withdrawal by a
Participant shall be charged to the appropriate subaccount(s) of the
Participant as of the date of the distribution or the withdrawal.
5.6 Determination_of_Value_of_Trust_Fund_and_of_Net
Earnings_or_Losses. As of each Valuation Date the Trustee shall determine
for the period then ended the sum of the net earnings or losses of the
Trust (excluding with respect to Shares and other assets specifically
allocated to a specific Participant's subaccount, (i) dividends and
capital gain distributions from Shares, (ii) receipts or income
attributable to insurance policies, (iii) income gains and/or losses
attributable to a Participant's loans made pursuant to ARTICLE 13 or to
any other assets) which shall reflect accrued but unpaid interest,
dividends, gains, or losses realized from the sale, exchange or collection
of assets, other income received, appreciation in the fair market value
of assets, depreciation in the fair market value of assets, administration
expenses, and taxes and other expenses paid. Gains or losses realized and
adjustments for appreciation or depreciation in fair market value shall
be computed with respect to the difference between such value as of the
preceding Valuation Date or date of purchase, whichever is applicable, and
the value as of the date of disposition or the current Valuation Date,
whichever is applicable.
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5.7 Allocation_of_Net_Earnings_or_Losses.
(a) As of each Valuation Date the net earnings or losses of
the Trust (excluding with respect to Shares and other assets specifically
allocated to a specific Participant's subaccount, (i) dividends and
capital gain distributions from Shares, (ii) dividends or credits
attributable to insurance policies, (iii) income gains and/or losses
attributable to a Participant's loans made pursuant to ARTICLE 13 or to
any other assets, all of which shall be allocated to such Participant's
subaccount) for the valuation period then ending shall be allocated to the
Accounts of all Participants (or Beneficiaries) having credits in the fund
both on such date and at the beginning of such valuation period. Such
allocation shall be made by the application of a fraction, the numerator
of which is the value of the Account of a specific Participant (or
Beneficiary) as of the immediately preceding Valuation Date, reduced by
any distributions therefrom since such preceding Valuation Date, and the
denominator of which is the total value of all such Accounts as of the
preceding Valuation Date, reduced by any distributions therefrom since
such preceding Valuation Date.
(b) To the extent that Shares and other assets are
specifically allocated to a specific Participant's subaccount:
(i) dividends and capital gain distributions from Shares; (ii) dividends
or credits attributable to insurance policies; and (iii) income gains
and/or losses attributable to a Participant's loans made pursuant to
ARTICLE 13 or to any other assets, all shall be allocated to such Partici-
pant's subaccount.
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5.8 Responsibilities_of_the_Plan_Administrator. The Plan
Administrator shall maintain accurate records with respect to the
contributions made by or on behalf of Participants under the Plan, and
shall furnish the Trustee with written instructions directing the Trustee
to allocate all Plan contributions to the Trust among the separate
Accounts of Participants in accordance with section 5.1 above. In making
any such allocation, the Trustee shall be fully entitled to rely on the
instructions furnished by the Plan Administrator, and shall be under no
duty to make any inquiry or investigation with respect thereto.
ARTICLE 6
LIMITATIONS ON ALLOCATIONS
6.1 Employers_Who_Do_Not_Maintain_Other_Qualified Plans.
(a) If the Participant does not participate in, and has
never participated in another qualified plan or a welfare benefit fund,
as defined in section 419(e) of the Code, maintained by the Employer, or
an individual medical account, as defined in section 415(l)(2) of the
Code, maintained by the Employer, which provides an Annual Addition as
defined in section 6.5(a), the amount of Annual Additions that may be
credited to the Participant's Account for any Limitation Year will not
exceed the lesser of the Maximum Permissible Amount or any other
limitation contained in this Plan. If the Employer Contribution that
would otherwise be contributed or allocated to the Participant's Account
would cause the Annual Additions for the Limitation Year to exceed the
Maximum Permissible Amount, the amount contributed or allocated will be
reduced so that the Annual Additions for the Limitation Year will equal
the Maximum Permissible Amount.
(b) Prior to determining the Participant's actual
Compensation for the Limitation Year, the Employer may determine the
Maximum Permissible Amount for a Participant on the basis of a reasonable
estimation of the Participant's Compensation for the Limitation Year,
uniformly determined for all Participants similarly situated.
(c) As soon as is administratively feasible after the end
of the Limitation Year, the Maximum Permissible Amount for the Limitation
Year will be determined on the basis of the Participant's actual
Compensation for the Limitation Year.
(d) If, pursuant to subsection (c) or as a result of the
allocation of forfeitures, there is an Excess Amount the excess will be
disposed of as follows:
(i) Any nondeductible voluntary Employee
contributions, to the extent they would reduce the Excess Amount, will be
returned to the Participant;
(ii) If after the application of paragraph (i) an
Excess Amount still exists, and the Participant is covered by the Plan at
the end of the Limitation Year, the Excess Amount in the Participant's
Account will be used to reduce Employer Contributions (including any
allocation of forfeitures) for such Participant in the next Limitation
Year, and each succeeding Limitation Year if necessary;
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(iii) If after the application of paragraph (i) an
Excess Amount still exists, and the Participant is not covered by the Plan
at the end of the Limitation Year, the Excess Amount will be held
unallocated in a suspense account. The suspense account will be applied
to reduce future Employer Contributions (including allocation of any
forfeitures) for all remaining Participants in the next Limitation Year,
and each succeeding Limitation Year if necessary;
(iv) If a suspense account is in existence at any time
during the Limitation Year pursuant to this section, it will not
participate in the allocation of the Trust's investment gains and losses.
If a suspense account is in existence at any time during a particular
Limitation Year, all amounts in the suspense account must be allocated and
reallocated to Participants' Accounts before any Employer or any Employee
contributions may be made to the Plan for that Limitation Year. Excess
amounts may not be distributed to Participants or former Participants.
6.2 Employers_Who_Maintain_Other_Qualified_Master_or
Prototype_Defined_Contribution_Plans.
(a) This section applies if, in addition to this Plan, the
Participant is covered under another qualified master or prototype defined
contribution plan maintained by the Employer, a welfare benefit fund, as
defined in section 419(e) of the Code maintained by the Employer or an
individual medical account, as defined in section 415(l)(2) of the Code,
maintained by the Employer which provides an Annual Addition as defined
in section 6.5(a), during any Limitation Year. The Annual Additions that
may be credited to a Participant's Account under this Plan for any such
Limitation Year will not exceed the Maximum Permissible Amount reduced by
the Annual Additions credited to a Participant's Account under the other
plans and welfare benefit funds for the same Limitation Year. If the
Annual Additions with respect to the Participant under other defined
contribution plans and welfare benefit funds maintained by the Employer
are less than the Maximum Permissible Amount and the Employer Contribution
that would otherwise be contributed or allocated to the Participant's
Account under this Plan would cause the Annual Additions for the
Limitation Year to exceed this limitation, the amount contributed or
allocated will be reduced so that the Annual Additions under all such
plans and funds for the Limitation Year will equal the Maximum Permissible
Amount. If the Annual Additions with respect to the Participant under
such other defined contribution plans and welfare benefit funds in the
aggregate are equal to or greater than the Maximum Permissible Amount, no
amount will be contributed or allocated to the Participant's Account under
this Plan for the Limitation Year.
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(b) Prior to determining the Participant's actual
Compensation for the Limitation Year, the Employer may determine the
Maximum Permissible Amount for a Participant in the manner described in
section 6.1(b).
(c) As soon as is administratively feasible after the end
of the Limitation Year, the Maximum Permissible Amount for the Limitation
Year will be determined on the basis of the Participant's actual
Compensation for the Limitation Year.
(d) If, pursuant to section 6.2(c), or as a result of the
allocation of forfeitures, a Participant's Annual Additions under this
Plan and such other plans would result in an Excess Amount for a
Limitation Year, the Excess Amount will be deemed to consist of the Annual
Additions last allocated, except that Annual Additions attributable to a
welfare benefit fund or individual medical account will be deemed to have
been allocated first regardless of the actual allocation date.
(e) If an Excess Amount was allocated to a Participant on
an allocation date of this Plan which coincides with an allocation date
of another plan, the Excess Amount attributed to this Plan will be the
product of:
(i) the total Excess Amount allocated as of such
date, times
(ii) the ratio of (1) the Annual Additions allocated
to the Participant for the Limitation Year as of such date under this Plan
to (2) the total Annual Additions allocated to the Participant for the
Limitation Year as of such date under this and all the other qualified
master or prototype defined contribution plans.
(f) Any Excess Amount attributed to this Plan will be
disposed of in the manner described in section 6.1(d).
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6.3 Employers_Who,_In_Addition_to_this_Plan,_Maintain
Other_Qualified_Plans_Which_Are_Defined_Contribution_Plans
Other_than_Master_or_Prototype_Plans. If the Participant is covered under
another qualified defined contribution plan maintained by the Employer
which is not a Master or Prototype Plan, Annual Additions which may be
credited to the Participant's Account under this Plan for any Limitation
Year will be limited in accordance with section 6.2 as though the other
plan were a Master or Prototype Plan unless the Employer provides other
limitations in the Adoption Agreement.
6.4 Employers_Who,_In_Addition_to_This_Plan,_Maintain
A_Qualified_Defined_Benefit_Plan. If the Employer maintains, or at any
time maintained, a qualified defined benefit plan covering any Participant
in this Plan, the sum of the Participant's Defined Benefit Fraction and
Defined Contribution Fraction will not exceed 1.0 in any Limitation Year.
The Annual Additions which may be credited to the Participant's Account
under this Plan for any Limitation Year will be limited in accordance with
the Adoption Agreement.
6.5 Definitions. Unless otherwise expressly provided herein, for
purposes of this ARTICLE only, the following definitions and rules of
interpretation shall apply:
(a) Annual_Additions. The sum of the following amounts
credited to a Participant's Account for the Limitation Year:
(i) Employer Contributions;
(ii) Employee contributions;
(iii) forfeitures; and
(iv) amounts allocated after March 31, 1984 to an
individual medical account, as defined in section 415(l)(2) of the Code,
which is part of a pension or annuity plan maintained by the Employer, are
treated as Annual Additions to a defined contribution plan. Also, amounts
derived from contributions paid or accrued after December 31, 1985, in
taxable years ending after such date, which are attributable to post-
retirement medical benefits allocated to the separate account of a key
employee, as defined in section 419A(d)(3) of the Code, under a welfare
benefit fund, as defined in section 419(e) of the Code, maintained by the
Employer, are treated as Annual Additions to a defined contribution plan.
For this purpose, any Excess Amount applied under sections 6.1(d) or
6.2(f) in the Limitation Year to reduce Employer Contributions will be
considered Annual Additions for such Limitation Year.
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(b) Compensation. A Participant's earned income, wages,
salaries, and fees for professional services and other amounts received
for personal services actually rendered in the course of employment with
the Employer maintaining the Plan (including, but not limited to,
commissions paid salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips and
bonuses), and excluding the following:
(i) Employer contributions to a plan of deferred
compensation which are not includable in the Employee's gross income for
the taxable year in which contributed, or Employer Contributions under a
simplified employee pension plan to the extent such contributions are
excluded from the Employee's gross income, or any distributions from a
plan of deferred compensation;
(ii) Amounts realized from the exercise of a
nonqualified stock option, or when restricted stock (or property) held by
the Employee either becomes freely transferable or is no longer subject
to a substantial risk of forfeiture;
(iii) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; and
(iv) Other amounts which received special tax
benefits, or contributions made by the Employer (whether or not under a
salary reduction agreement) towards the purchase of an annuity described
in section 403(b) of the Code (whether or not the amounts are actually
excludable from the gross income of the Employee).
For purposes of applying the limitations of this
ARTICLE, Compensation for a Limitation Year is the Compensation actually
paid or includable in gross income during such year.
Notwithstanding the preceding sentence, Compensation for
a Participant in a defined contribution plan who is Totally and
Permanently Disabled (as defined in section 22(e)(3) of the Code) is the
Compensation such Participant would have received for the Limitation Year
if the Participant had been paid at the rate of Compensation paid
immediately before becoming permanently and totally disabled; such imputed
Compensation for the disabled Participant may be taken into account only
if the Participant is not a Highly-Compensated Employee (as defined in
section 414(q) of the Code), and contributions made on behalf of such
Participant are nonforfeitable when made.
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(c) Defined_Benefit_Fraction. A fraction, the numerator of
which is the sum of the Participant's Projected Annual Benefits under all
the defined benefit plans (whether or not terminated) maintained by the
Employer, and the denominator of which is the lesser of one hundred
percent (100%) of the dollar limitation determined for the Limitation Year
under sections 415(b) and (d) of the Code or one hundred forty percent
(140%) of highest average compensation, including any adjustments under
section 415(b) of the Code.
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first Limitation Year beginning
after December 31, 1986, 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 one hundred twenty-five percent
(125%) of the sum of the annual benefits under such plans which the
Participant had accrued as of the close of the last Limitation Year
beginning before January 1, 1987, disregarding any changes in the terms
and conditions of the Plan after May 5, 1986. The preceding sentence
applies only if the defined benefit plans individually and in the
aggregate satisfied the requirements of section 415 of the Code for all
Limitation Years beginning before January 1, 1987.
(d) Defined_Contribution_Dollar_Limitation. Thirty thousand
dollars ($30,000) or, if greater, one- fourth (1/4) of the defined benefit
dollar limitation set forth in section 415(b)(1) of the Code as in effect
for the Limitation Year.
(e) Defined_Contribution_Fraction. A fraction, the
numerator of which is the sum of the Annual Additions to the Participant's
Account under all the defined contribution plans (whether or not
terminated) maintained by the Employer for the current and all prior
Limitation Years (including the Annual Additions attributable to the
Participant's nondeductible voluntary contributions to all defined benefit
plans, whether or not terminated, maintained by the Employer, and the
Annual Additions attributable to all welfare benefit funds, as defined in
section 419(e) of the Code and individual medical accounts, as defined in
section 415(l)(2) of the Code, maintained by the Employer), and the
denominator of which is the sum of the maximum aggregate amounts for the
current and all prior Limitation Years of service with the Employer
(regardless of whether a defined contribution plan was maintained by the
Employer). The maximum aggregate amount in any Limitation Year is the
lesser of one hundred percent (100%) of the dollar limitation in effect
under section 415(c)(1)(A) of the Code or thirty-five percent (35%) of the
Participant's Compensation for such year.
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If the Participant was a Participant as of the end of the
first day of the first Limitation Year beginning after December 31, 1986,
in one or more defined contribution plans maintained by the Employer which
were in existence on May 6, 1986, the numerator of this fraction will be
adjusted if the sum of this fraction and the Defined Benefit Fraction
would otherwise exceed 1.0 under the terms of this Plan. Under the
adjustment, an amount equal to the product of (1) the excess of the sum
of the fractions over 1.0 times (2) the denominator of this fraction, will
be permanently subtracted from the numerator of this fraction. The
adjustment is calculated using the fractions as they would be computed as
of the end of the last Limitation Year beginning before January 1, 1987,
and disregarding any changes in the terms and conditions of the Plan made
after May 5, 1986, but using the section 415 limitation applicable to the
first Limitation Year beginning on or after January 1, 1987. The Annual
Addition for any Limitation Year beginning before January 1, 1987, shall
not be recomputed to treat all Employee contributions as Annual Additions.
(f) Employer. For purposes of this ARTICLE, Employer shall
mean the employer that adopts this Plan, and all members of a controlled
group of corporations (as defined in section 414(b) of the Code as
modified by section 415(h) of the Code), all commonly controlled trades
or businesses (as defined in section 414(c) of the Code as modified by
section 415(h) of the Code), or affiliated service groups (as defined in
section 414(m) of the Code) of which the adopting Employer is a part and
any other entity required to be aggregated with the Employer pursuant to
regulations under section 414(o) of the Code.
(g) Excess_Amount. The excess of the Participant's Annual
Addition for the Limitation Year over the Maximum Permissible Amount.
(h) Highest_Average_Compensation. The average compensation
for the three consecutive Plan Years that produce the highest average.
(i) Limitation_Year. A Plan Year, or the twelve (12)
consecutive month period elected by the Employer in the Adoption
Agreement. All qualified plans maintained by the Employer must use the
same Limitation Year. If the Limitation Year is amended to a different
twelve (12) consecutive month period, the new Limitation Year must begin
on a date within the Limitation Year in which the amendment is made.
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(j) Master_or_Prototype_Plan. A plan the form of which is
the subject of a favorable opinion letter from the Internal Revenue
Service.
(k) Maximum_Permissible_Amount. The maximum Annual Addition
that may be contributed or allocated to a Participant's Account under the
Plan for any Limitation Year shall not exceed the lesser of:
(a) the Defined Contribution Dollar Limitation;
or
(b) twenty-five percent (25%) of the Participant's
Compensation for the Limitation Year.
The Compensation limitation referred to in subsection (b)
shall not apply to any contribution for medical benefits (within the
meaning of section 401(h) or section 419A(f)(2) of the Code) which is
otherwise treated as an Annual Addition under section 415(l)(1) or section
419A(d)(2) of the Code.
If a short Limitation Year is created because of an amendment
changing the Limitation Year to a different twelve (12) consecutive month
period, the Maximum Permissible Amount will not exceed the Defined
Contribution Dollar Limitation multiplied by the following fraction:
Number of Months in the Short Limitation Year
---------------------------------------------
12
(l) Projected_Annual_Benefit. The annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if such
benefit is expressed in a form other than a straight life annuity or
Qualified Joint and Survivor Annuity) to which the Participant would be
entitled under the terms of the Plan assuming:
(i) the Participant will continue employment until
Normal Retirement Age under the Plan (or current age, if later), and
(ii) the Participant's Compensation for the current
Limitation Year and all other relevant factors used to determine benefits
under the Plan will remain constant for all future Limitation Years.
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ARTICLE 7
TRUST FUND
7.1 Receipt_of_Contributions_by_Trustee. All contributions to the
Trust that are received by the Trustee, together with any earnings
thereon, shall be held, managed and administered by the Trustee named in
the Adoption Agreement in accordance with the terms and conditions of the
Trust Agreement and the Plan. The Trustee may use a Custodian designated
by the Sponsor to perform recordkeeping and custodial functions. The
Trustee shall be subject to the proper directions of the Employer or the
Plan Administrator made in accordance with the terms of the Plan and
ERISA.
7.2 Investment_Responsibility.
(a) If the Employer elects in the Adoption Agreement to
exercise investment authority and responsibility, the selection of the
investments in which assets of the Trust are invested shall be the
responsibility of the Plan Administrator and each Participant will have
a ratable interest in all assets of the Trust.
(b) If the Adoption Agreement so provides and the Employer
elects to permit each Participant or Beneficiary to select the investments
in his Account, no person, including the Trustee and the Plan
Administrator, shall be liable for any loss or for any breach of fiduciary
duty which results from such Participant's or Beneficiary's exercise of
control.
(c) If the Adoption Agreement so provides and the Employer
elects to permit each Participant or Beneficiary to select the investments
in his Account, the Employer or the Plan Administrator must complete a
schedule of Participant designations.
(d) If Participants and Beneficiaries are permitted to
select the investment in their Accounts, all investment related expenses,
including administrative fees charged by brokerage houses, will be charged
against the Accounts of the Participants.
(e) The Plan Administrator may at any time change the
selection of investments in which the assets of the Trust are invested,
or subject to such reasonable restrictions as may be imposed by the
Sponsor for administrative convenience, may submit an amended schedule of
Participant designations. Such amended documents may provide for a
variance in the percentages of contributions to any particular investment
or a request that Shares in the Trust be reinvested in whole or in part
in other Shares.
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7.3 Investment_Limitations. The Sponsor may impose reasonable
investment limitations on the Employer and the Plan Administrator relating
to the type of permissible investments in the Trust or the minimum
percentage of Trust assets to be invested in Shares.
ARTICLE 8
VESTING
8.1 Nondeductible_Voluntary_Contributions_and Earnings. The
Participant's nondeductible voluntary contribution subaccount shall be
fully vested and nonforfeitable at all times and no forfeitures will occur
as a result of an Employee's withdrawal of nondeductible voluntary
contributions.
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8.2 Rollovers,_Transfers_and_Earnings. The Participant's rollover
subaccount and direct transfer subaccount shall be fully vested and
nonforfeitable at all times.
8.3 Employer_Contributions_and_Earnings. Notwithstanding the
vesting schedule elected by the Employer in the Adoption Agreement, the
Participant's money purchase pension contribution subaccount and profit
sharing contribution subaccount shall be fully vested and nonforfeitable
upon the Participant's death, disability, attainment of Normal Retirement
Age, or, if the Adoption Agreement provides for an Early Retirement Date,
attainment of the required age and completion of the required service.
In the absence of any of the preceding events, the Participant's money
purchase contribution subaccount and his profit sharing contribution
subaccount shall vest in accordance with a minimum vesting schedule
specified in the Adoption Agreement. The schedule must be at least as
favorable to Participants as either schedule (a) or (b) below.
(a) Graduated vesting according to the following schedule:
Years_of_Service Vested_Percentage
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
(b) Full one hundred percent (100%) vesting after three (3)
Years of Service.
8.4 Amendments_to_Vesting_Schedule.
(a) If the Plan's vesting schedule is amended, or the Plan
is amended in any way that directly or indirectly affects the computation
of the Participant's nonforfeitable percentage or if the Plan is deemed
amended by an automatic change to or from a top-heavy vesting schedule,
each Participant with at least three (3) Years of Service with the
Employer may elect, within a reasonable period after the adoption of the
amendment or change, to have the nonforfeitable percentage computed under
the Plan without regard to such amendment or change. For any Participants
who do not have at least one (1) Hour of Service in any Plan Year
beginning after December 31, 1988, the preceding sentence shall be applied
by substituting "five (5) Years of Service" for "three (3) Years of
Service" where such language appears.
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(b) The period during which the election may be made shall
commence with the date the amendment is adopted or deemed to be made and
shall end on the latest of:
(i) sixty (60) days after the amendment is adopted;
(ii) sixty (60) days after the amendment becomes
effective; or
(iii) sixty (60) days after the Participant is issued
written notice of the amendment by the Employer or Plan Administrator.
(c) No amendment to the Plan shall be effective to the
extent that it has the effect of decreasing a Participant's accrued
benefit. Notwithstanding the preceding sentence, a Participant's Account
balance may be reduced to the extent permitted under section 412(c)(8) of
the Code. For purposes of this paragraph, a Plan amendment which has the
effect of decreasing a Participant's Account balance or eliminating an
optional form of 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.
8.5 Determination_of_Years_of_Service. For purposes of
determining the vested and nonforfeitable percentage of the Participant's
Employer Contribution subaccounts, all of the Participant's Years of
Service with the Employer or an Affiliated Employer shall be taken into
account. If specified in the Adoption Agreement, Years of Service with
a predecessor employer will be treated as service for the Employer;
provided, however, if the Employer maintains the plan of a predecessor
employer, Years of Service with such predecessor employer will be treated
as service with the Employer without regard to any election.
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8.6 Forfeiture_of_Nonvested_Amounts.
(a) For Plan Years beginning before 1985, any portion of a
Participant's Account that is not vested shall be forfeited by him as of
the last day of the Plan Year in which a Break in Service occurs. For
Plan Years beginning after 1984, any portion of a Participant's Account
that is not vested shall be forfeited by him as of the last day of the
Plan Year in which his fifth consecutive Break in Service occurs. Any
amounts thus forfeited shall be reallocated as provided in ARTICLE 5 and
shall not be considered part of a Participant's Account in computing his
vested interest. The remaining portion of the Participant's Account will
be nonforfeitable.
(b) If a distribution is made at a time when a Participant
has a vested right to less than one hundred percent (100%) of the value
of the Participant's Account attributable to Employer Contributions and
forfeitures, as determined in accordance with the provisions of section
8.3, and the nonvested portion of the Participant's Account has not yet
been forfeited in accordance with paragraph (a) above:
(i) a separate remainder subaccount shall be
established for the Participant's interest in the Plan as of the time of
the distribution, and
(ii) at any relevant time the Participant's vested
portion of the separate remainder subaccount shall be equal to an amount
("X") determined by the following formula:
X = P(AB + (R x D)) - (R x D)
For purposes of applying the formula: P is the vested
percentage at the relevant time; AB is the Account balance at the relevant
time; D is the amount of the distribution; and R is the ratio of the
Account balance at the relevant time to the Account balance after
distribution.
8.7 Reinstatement_of_Benefit. 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.
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ARTICLE 9
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
9.1 General. The provisions of this ARTICLE shall apply to any
Participant who is credited with at least one (1) Hour of Service with the
Employer on or after August 23, 1984, and such other Participants as
provided in section 9.7.
9.2 Qualified_Joint_and_Survivor_Annuity. Unless an optional form
of benefit is selected pursuant to a Qualified Election within the ninety
(90) day period ending on the Annuity Starting Date, a married
Participant's Vested Account Balance will be paid in the form of a
Qualified Joint and Survivor Annuity and an unmarried Participant's Vested
Account Balance will be paid in the form of a life annuity. The
Participant may elect to have such annuity distributed upon attainment of
the Earliest Retirement Age under the Plan.
9.3 Qualified_Preretirement_Survivor_Annuity. Unless an optional
form of benefit has been selected within the Election Period pursuant to
a Qualified Election, if a Participant dies before the Annuity Starting
Date, then the Participant's Vested Account Balance shall be applied
toward the purchase of an annuity for the life of the Surviving Spouse.
The Surviving Spouse may elect to have such annuity distributed within a
reasonable period after the Participant's death.
9.4 Definitions.
(a) Election_Period.
(i) The period which begins on the first day of the
Plan Year in which the Participant attains age thirty-five (35) and ends
on the date of the Participant's death. If a Participant separates from
service prior to the first day of the Plan Year in which age thirty-five
(35) is attained, with respect to the Account balance as of the date of
separation, the Election Period shall begin on the date of separation.
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(ii) A Participant who has not yet attained age
thirty-five (35) as of the end of any current Plan Year may make a special
Qualified Election to waive the qualified preretirement survivor annuity
for the period beginning on the date of such election and ending on the
first day of the Plan Year in which the Participant will attain age
thirty-five (35). Such election shall not be valid unless the Participant
receives a written explanation of the qualified preretirement survivor
annuity in such terms as are comparable to the explanation required under
section 9.5. Qualified preretirement survivor annuity coverage will be
automatically reinstated as of the first day of the Plan Year in which the
Participant attains age thirty-five (35). Any new waiver on or after such
date shall be subject to the full requirements of this ARTICLE.
(b) Earliest_Retirement_Age. The earliest date on which,
under the Plan, the Participant could elect to receive retirement
benefits.
(c) Qualified_Election.
(i) A waiver of a Qualified Joint and Survivor
Annuity or a qualified preretirement survivor annuity. Any waiver of a
Qualified Joint and Survivor Annuity or a qualified preretirement survivor
annuity shall not be effective unless:
(1) the Participant's Spouse consents in
writing to the election;
(2) the election designates a specific
Beneficiary, including any class of Beneficiaries or any contingent
Beneficiaries, which may not be changed without spousal consent (or the
Spouse expressly permits designations by the Participant without any
further spousal consent);
(3) the Spouse's consent acknowledges the
effect of the election; and
(4) the Spouse's consent is witnessed by a Plan
representative or notary public. Additionally, a Participant's waiver of
the Qualified Joint and Survivor Annuity shall not be effective unless the
election designates a form of benefit payment which may not be changed
without spousal consent (or the Spouse expressly permits designations by
the participant without any further spousal consent). If it is
established to the satisfaction of a Plan representative that there is no
Spouse or that the Spouse cannot be located, a waiver will be deemed a
Qualified Election.
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(ii) Any consent by a Spouse obtained under this
provision (or establishment that the consent of Spouse may not be
obtained) shall be effective only with respect to such Spouse. A consent
that permits designations by the Participant without any requirement of
further consent by such Spouse must acknowledge that the Spouse has the
right to limit consent to a specific Beneficiary, and a specific form of
benefit where applicable, and that the Spouse voluntarily elects to
relinquish either or both of such rights. A revocation of a prior waiver
may be made by a Participant without the consent of the Spouse at any time
before the commencement of benefits. The number of revocations shall not
be limited. No consent obtained under this provision shall be valid
unless the Participant has received notice as provided in section 9.5.
(d) Qualified_Joint_and_Survivor_Annuity. An immediate
annuity for the life of the Participant with a survivor annuity for the
life of the Spouse which equals fifty percent (50%) of the amount of the
annuity which is payable during the joint lives of the Participant and the
Spouse and which is the amount of benefit which can be purchased with the
Participant's Vested Account Balance.
(e) Spouse_(Surviving_Spouse). The Spouse or Surviving
Spouse of the Participant, provided that a former spouse will be treated
as the Spouse or Surviving Spouse and a current Spouse will not be treated
as the Spouse or Surviving Spouse to the extent provided under a qualified
domestic relations order as described in section 414(p) of the Code.
(f) Annuity_Starting_Date. The first day of the first
period for which an amount is paid as an annuity or any other form.
(g) Vested_Account_Balance. The aggregate value of the
Participant's Vested Account Balances derived from Employer and Employee
contributions (including rollovers and direct transfers), whether vested
before or upon death, including the proceeds of insurance contracts if
any, on the Participant's life. The provisions of this ARTICLE shall
apply to a Participant who is vested in amounts attributable to Employer
Contributions, Employee contributions (or both) at the time of death or
distribution.
9.5 Notice_Requirements.
(a) In the case of a Qualified Joint and Survivor Annuity,
the Plan Administrator shall no less than thirty (30) days and no more
than ninety (90) days prior to the Annuity Starting Date, provide each
Participant a written explanation of:
(i) the terms and conditions of a Qualified Joint and
Survivor Annuity;
(ii) the Participant's right to make and the effect
of an election to waive the Qualified Joint and Survivor Annuity form of
benefit;
(iii) the rights of a Participant's Spouse; and
(iv) the right to make, and the effect of, a
revocation of a previous election to waive the Qualified Joint and
Survivor Annuity.
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(b) In the case of a qualified preretirement survivor
annuity as described in section 9.3, the Plan Administrator shall provide
each Participant within the applicable period for such Participant a
written explanation of the qualified preretirement survivor annuity in
such terms and in such manner as would be comparable to the explanation
provided for meeting the requirements of subsection (a) applicable to a
Qualified Joint and Survivor Annuity.
(c) The applicable period for a Participant is whichever of
the following periods ends last:
(i) the period beginning with the first day of the
Plan Year in which the Participant attains age thirty-two (32) and ending
with the close of the Plan Year preceding the Plan Year in which the
Participant attains age thirty-five (35);
(ii) a reasonable period ending after the individual
becomes a Participant;
(iii) a reasonable period ending after subsection (e)
ceases to apply to the Participant;
(iv) a reasonable period ending after this ARTICLE
first applies to the Participant. Notwithstanding the foregoing, notice
must be provided within a reasonable period ending after separation from
service in the case of a Participant who separates from service before
attaining age thirty-five (35).
(d) For purposes of applying subsection (c), a reasonable
period ending after the enumerated events described above in subsections
(ii), (iii) and (iv) is the end of the two-year period beginning one (1)
year prior to the date the applicable event occurs, and ending one (1)
year after that date. In the case of a Participant who separates from
service before the Plan Year in which age thirty-five (35) is attained,
notice shall be provided within the two (2) year period beginning one (1)
year prior to separation and ending one (1) year after separation. If
such a participant thereafter returns to employment with the Employer, the
applicable period for such Participant shall be redetermined.
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(e) Notwithstanding the other requirements of this section,
the respective notices prescribed by this section need not be given to a
Participant if:
(i) the Plan "fully subsidizes" the cost of a
Qualified Joint and Survivor Annuity or qualified preretirement survivor
annuity; and
(ii) the Plan does not allow the Participant to waive
the Qualified Joint and Survivor Annuity or qualified preretirement
survivor annuity and does not allow a married Participant to designate a
nonspouse Beneficiary.
For purposes of this subsection, a plan fully subsidizes the
costs of a benefit if no increase in cost, or decrease in benefits to the
Participant may result from the Participant's failure to elect another
benefit.
9.6 Safe_Harbor_Rules.
(a) This section shall apply to a Participant in a profit
sharing plan, and to any distribution, made on or after the first day of
the first Plan year beginning after December 31, 1988, from or under a
separate account attributable solely to accumulated deductible Employee
contributions, as defined in section 72(o)(5)(B) of the Code, and
maintained on behalf of a Participant in a money purchase pension plan
(including a target benefit plan) if the following conditions are
satisfied:
(i) the Participant does not or cannot elect payments
in the form of a life annuity; and
(ii) on the death of a Participant, the Participant's
Vested Account Balance will be paid to the Participant's Surviving Spouse,
but if there is no Surviving Spouse, or if the Surviving Spouse has
consented in a manner conforming to a Qualified Election, then to the
Participant's Designated Beneficiary.
(b) The Surviving Spouse may elect to have distribution of
the Vested Account Balance commence within the ninety (90) day period
following the date of the Participant's death. The Account balance shall
be adjusted for gains or losses occurring after the Participant's death
in accordance with the provisions of the Plan governing the adjustment of
Account balances for other types of distributions.
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(c) This section shall not be operative with respect to a
Participant in a profit sharing plan if the plan is a direct or indirect
transferee of a defined benefit plan, money purchase plan, a target
benefit plan, stock bonus, or profit sharing plan which is subject to the
survivor annuity requirements of sections 401(a)(11) and 417 of the Code.
If this section is operative, then the provisions of this ARTICLE, other
than section 9.7, shall be inoperative.
(d) The Participant may waive the spousal death benefit
described in this section at any time provided that no such waiver shall
be effective unless it satisfies the conditions of section 9.4(c) (other
than the notification requirement referred to therein) that would apply
to the Participant's waiver of the qualified preretirement survivor
annuity.
(e) For purposes of this section, Vested Account Balance
shall mean, in the case of a money purchase pension plan or a target
benefit plan, the Participant's separate Account balance attributable
solely to accumulated deductible Employee contributions within the meaning
of section 72(o)(5)(B) of the Code. In the case of a profit sharing plan,
Vested Account Balance shall have the same meaning as provided in section
9.4(g).
9.7 Transitional_Rules.
(a) Any living Participant not receiving benefits on
August 23, 1984, who would otherwise not receive the benefits prescribed
by the previous sections of this ARTICLE must be given the opportunity to
elect to have the prior sections of this ARTICLE apply if such Participant
is credited with at least one (1) Hour of Service under this Plan or a
predecessor plan in a Plan Year beginning on or after January 1, 1976, and
such Participant had at least ten (10) years of vesting service when he
or she separated from service.
(b) Any living Participant not receiving benefits on
August 23, 1984, who was credited with at least one (1) Hour of Service
under this Plan or a predecessor plan on or after September 2, 1974, and
who is not otherwise credited with any service in a Plan Year beginning
on or after January 1, 1976, must be given the opportunity to have his or
her benefits paid in accordance with subsection (d).
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(c) The respective opportunities to elect (as described in
subsections (a) and (b) above) must be afforded to the appropriate
Participants during the period commencing on August 23, 1984, and ending
on the date benefits would otherwise commence to said Participants.
(d) Any Participant who has elected pursuant to subsection
(b) and any Participant who does not elect under subsection (a) or who
meets the requirements of subsection (a) except that such Participant does
not have at least ten (10) years of vesting service when he or she
separates from service, shall have his or her benefits distributed in
accordance with all of the following requirements if benefits would have
been payable in the form of a life annuity:
(i) Automatic_Joint_and_Survivor_Annuity. If
benefits in the form of a life annuity become payable to a married
Participant who:
(1) begins to receive payments under the Plan
on or after Normal Retirement Age; or
(2) dies on or after Normal Retirement Age
while still working for the Employer; or
(3) begins to receive payments on or after the
qualified early retirement age; or
(4) separates from service on or after
attaining Normal Retirement Age (or the qualified early retirement age)
and after satisfying the eligibility requirements for the payment of
benefits under the Plan and thereafter dies before beginning to receive
such benefits;
then such benefits will be received under this Plan in the form of a
Qualified Joint and Survivor Annuity, unless the Participant has elected
otherwise during the Election Period. The Election Period must begin at
least six (6) months before the Participant attains qualified early
retirement age and end not more than ninety (90) days before the
commencement of benefits. Any election hereunder will be in writing and
may be changed by the Participant at any time.
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(ii) Election_of_Early_Survivor_Annuity. A
Participant who is employed after attaining the qualified early retirement
age will be given the opportunity to elect, during the Election Period,
to have a survivor annuity payable on death. If the Participant elects
the survivor annuity, payments under such annuity must not be less than
the payments which would have been made to the Spouse under the Qualified
Joint and Survivor Annuity if the Participant had retired on the day
before his or her death. Any election under this provision will be in
writing and may be changed by the Participant at any time. The Election
Period begins on the later of (1) the 90th day before the Participant
attains the qualified early retirement age; or (2) the date on which
participation begins, and ends on the date the Participant terminates
employment.
(e) The following terms shall have the meanings specified
herein:
(i) Qualified_Early_Retirement_Age. The latest of:
(1) the earliest date, under the Plan, on which
the Participant may elect to receive retirement benefits;
(2) the first day of the 120th month beginning
before the Participant reaches Normal Retirement Age; or
(3) the date the Participant begins
participation.
(ii) Qualified_Joint_and_Survivor_Annuity. An annuity
for the life of the Participant with a survivor annuity for the life of
the Spouse as described in section 9.4(d).
ARTICLE 10
DISTRIBUTION PROVISIONS
10.1 Vesting_on_Distribution_Before_Break_in_Service.
(a) If an Employee terminates service, and the value of the
Employee's Vested Account Balance derived from Employer and Employee
contributions is not greater than three thousand five hundred dollars
($3,500), the Employee will receive a distribution of the value of the
entire vested portion of such Account balance and the nonvested portion
will be treated as a forfeiture. 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 section
72(o)(5)(B) of the Code for Plan Years beginning prior to January 1, 1989.
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(b) If an Employee terminates service and elects, in
accordance with this ARTICLE, to receive the value of his Vested Account
Balance, the nonvested portion will be treated as a forfeiture. If the
Employee elects to have distributed less than the entire vested portion
of the 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.
(c) If an Employee receives a distribution pursuant to this
section and the Employee resumes employment covered under this Plan, the
Employee's Employer- derived Account balance will be restored to the
amount on the date of distribution if the Employee repays to the Plan the
full amount of the distribution attributable to Employer Contributions
before the earlier of five (5) years after the first date on which the
Participant is subsequently reemployed by the Employer, or the date the
Participant incurs five (5) consecutive one (1) year Breaks in Service
following the date of the distribution. If an Employee is deemed to
receive a distribution pursuant to this section, and the Employee resumes
employment covered under this Plan before the date the Participant incurs
five (5) consecutive one (1) year Breaks in Service, upon the reemployment
of such Employee, the Employer-derived Account balance of the Employee
will be restored to the amount on the date of such deemed distribution.
10.2 Restrictions_on_Immediate_Distributions.
(a) If the value of a Participant's Vested Account Balance
derived from Employer and Employee contributions exceeds (or at the time
of any prior distribution exceeded) three thousand five hundred dollars
($3,500) and the Account balance is immediately distributable, the
Participant and the Participant's Spouse (or where either the Participant
or the Spouse has died, the survivor) must consent to any distribution of
such Account balance. The consent of the Participant and the
Participant's Spouse shall be obtained in writing within the ninety (90)
day period ending on the Annuity Starting Date. The Annuity Starting Date
is the first day of the first period for which an amount is paid as an
annuity or any other form. The Plan Administrator shall notify the
Participant and the Participant's Spouse of the right to defer any
distribution until the Participant's Account balance is no longer
immediately distributable. Such notification shall include a general
description of the material features, and an explanation of the relative
values of, the optional forms of benefit available under the Plan in a
manner that would satisfy the notice requirements of section 417(a)(3),
and shall be provided no less than thirty (30) days and no more than
ninety (90) days prior to the Annuity Starting Date.
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(b) Notwithstanding the provisions of subsection (a), only
the Participant need consent to the commencement of a distribution in the
form of a Qualified Joint and Survivor Annuity while the Account balance
is immediately distributable. (Furthermore, if payment in the form of a
Qualified Joint and Survivor Annuity is not required with respect to the
Participant pursuant to section 9.6 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 Partici-
pant's Spouse shall be required to the extent that a distribution is
required to satisfy section 401(a)(9) or section 415 of the Code. In
addition, upon termination of this Plan if the Plan does not offer an
annuity option (purchased from a commercial provider), 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 section 4975(e)(7) of
the Code) within the same controlled group.
(c) An Account balance is immediately distributable if any
part of the Account balance could be distributed to the Participant (or
Surviving Spouse) before the Participant attains (or would have attained
if not deceased) the later of Normal Retirement Age or age sixty- two
(62).
(d) For purposes of determining the applicability of the
foregoing consent requirements to distributions made before the first day
of the first Plan Year beginning after December 31, 1988, the
Participant's Vested Account Balance shall not include amounts
attributable to accumulated deductible Employee contributions within the
meaning of section 72(o)(5)(B) of the Code.
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10.3 Commencement_of_Benefits.
(a) Unless the Participant elects otherwise, distribution
of benefits will begin no later than the 60th day after the latest of the
close of the Plan Year in which:
(i) the Participant attains age sixty-five (65) (or
Normal Retirement Age, if earlier);
(ii) the 10th anniversary of the year in which the
Participant commenced participation in the Plan occurs; or
(iii) the Participant terminates service with the
Employer.
(b) Notwithstanding the foregoing, the failure of a
Participant and Spouse to consent to a distribution while a benefit is
immediately distributable, within the meaning of section 10.2 of the Plan,
shall be deemed to be an election to defer commencement of payment of any
benefit sufficient to satisfy this section.
10.4 Early_Retirement_With_Age_and_Service_Require ment. If a
Participant separates from service before satisfying the age requirement
for early retirement, but has satisfied the service requirement, the
Participant will be entitled to elect an early retirement benefit upon
satisfaction of such age requirement.
10.5 Nontransferability_of_Annuities. Any annuity contract
distributed herefrom must be nontransferable.
10.6 Conflicts_With_Annuity_Contracts. The terms of any annuity
contract purchased and distributed by the Plan to a Participant or Spouse
shall comply with the requirements of this Plan.
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ARTICLE 11
TIMING AND MODES OF DISTRIBUTION
11.1 General_Rules.
(a) Subject to ARTICLE 9, the requirements of this ARTICLE
shall apply to any distribution of a Participant's interest and will take
precedence over any inconsistent provisions of this Plan. Unless
otherwise specified, the provisions of this ARTICLE apply to calendar
years beginning after December 31, 1984.
(b) All distributions required under this ARTICLE shall be
determined and made in accordance with the income tax regulations under
section 401(a)(9) of the Code, including the minimum distribution
incidental benefit requirement of section 1.401(a)(9)-2 of the proposed
regulations.
11.2 Required_Beginning_Date. The entire interest of a Participant
must be distributed or begin to be distributed no later than the
Participant's Required Beginning Date.
11.3 Limits_on_Distribution_Periods. As of the first Distribution
Calendar Year, distributions, if not made in a single-sum, may only be
made over one of the following periods (or a combination thereof):
(a) the life of the Participant;
(b) the life of the Participant and a Designated
Beneficiary;
(c) a period certain not extending beyond the Life
Expectancy of the Participant; or
(d) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a Designated Beneficiary.
11.4 Determination_of_Amount_to_be_Distributed_Each Year.
(a) Individual_Account.
(i) If a Participant's Benefit is to be distributed
over (1) a period not extending beyond the Life Expectancy of the
Participant or the joint life and last survivor expectancy of the
Participant and the Participant's Designated Beneficiary or (2) a period
not extending beyond the Life Expectancy of the Designated Beneficiary,
the amount required to be distributed for each calendar year, beginning
with distributions for the first Distribution Calendar Year, must at least
equal the quotient obtained by dividing the Participant's Benefit by the
Applicable Life Expectancy.
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(ii) For calendar years beginning before January 1,
1989, if the Participant's Spouse is not the Designated Beneficiary, the
method of distribution selected must assure that at least fifty percent
(50%) of the present value of the amount available for distribution is
paid within the Life Expectancy of the Participant.
(iii) For calendar years beginning after December 31,
1988, the amount to be distributed each year, beginning with distributions
for the first Distribution Calendar Year shall not be less than the
quotient obtained by dividing the Participant's Benefit by the lesser of
(1) the Applicable Life Expectancy or (2) if the Participant's Spouse is
not the Designated Beneficiary, the applicable divisor determined from the
table set forth in Q&A-4 of section 1.401(a)(9)-2 of the proposed
regulations. Distributions after the death of the Participant shall be
distributed using the Applicable Life Expectancy in subsection (a)(i)
above as the relevant divisor without regard to proposed regulations
section 1.401(a)(9)-2.
(iv) The minimum distribution required for the
Participant's first Distribution Calendar Year must be made on or before
the Participant's Required Beginning Date. The minimum distribution for
other calendar years, including the minimum distribution for the
Distribution Calendar Year in which the Employee's Required Beginning Date
occurs, must be made on or before December 31 of that Distribution
Calendar Year.
(b) Other_Forms. If the Participant's Benefit is
distributed in the form of an annuity purchased from an insurance company,
distributions thereunder shall be made in accordance with the requirements
of section 401(a)(9) of the Code and the proposed regulations thereunder.
11.5 Death_Distribution_Provisions.
(a) Distribution_Beginning_Before_Death. If the Participant
dies after distribution of his or her interest has begun, the remaining
portion of such interest will continue to be distributed at least as
rapidly as under the method of distribution being used prior to the
Participant's death.
(b) Distribution_Beginning_After_Death. If the Participant
dies before distribution of his or her interest begins, distribution of
the Participant's entire interest shall be completed by December 31 of the
calendar year containing the fifth anniversary of the Participant's death
except to the extent that an election is made to receive distributions in
accordance with (i) or (ii) below:
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(i) if any portion of the Participant's interest is
payable to a Designated Beneficiary, distributions may be made over the
life or over a period certain not greater than the Life Expectancy of the
Designated Beneficiary commencing on or before December 31 of the calendar
year immediately following the calendar year in which the Participant
died;
(ii) if the Designated Beneficiary is the
Participant's Surviving Spouse, the date distributions are required to
begin in accordance with (i) above shall not be earlier than the later of
(1) December 31 of the calendar year immediately following the calendar
year in which the Participant died and (2) December 31 of the calendar
year in which the Participant would have attained age seventy and one-half
(70 1/2).
(c) If the Participant has not made an election pursuant to
this section by the time of his or her death, the Participant's Designated
Beneficiary must elect the method of distribution no later than the
earlier of (1) December 31 of the calendar year in which distributions
would be required to begin under this section; or (2) December 31 of the
calendar year which contains the fifth anniversary of the date of death
of the Participant. If the Participant has no Designated Beneficiary, or
if the Designated Beneficiary does not elect a method of distribution,
distribution of the Participant's entire interest must be completed by
December 31 of the calendar year containing the fifth anniversary of the
Participant's death.
(d) For purposes of subsection (b) above, if the Surviving
Spouse dies after the Participant, but before payments to such Spouse
begin, the provisions of subsection (b), with the exception of paragraph
(ii) therein, shall be applied as if the Surviving Spouse were the
Participant.
(e) For purposes of this section, any amount paid to a child
of the Participant will be treated as if it had been paid to the Surviving
Spouse if the amount becomes payable to the Surviving Spouse when the
child reaches the age of majority.
(f) For the purposes of this section, distribution of a
Participant's interest is considered to begin on the Participant's
Required Beginning Date (or, if subsection (d) above is applicable, the
date distribution is required to begin to the Surviving Spouse pursuant
to subsection (b) above). If distribution in the form of an annuity
described in section 11.4(b) above irrevocably commences to the
Participant before the Required Beginning Date, the date distribution is
considered to begin is the date distribution actually commences.
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11.6 Designation_of_Beneficiary. Subject to the rules of
ARTICLE 9, a Participant (or former Participant) may designate from time
to time any person or persons (who may be designated contingently or
successively and may be an entity other than a natural person) as his
Beneficiary who will be entitled to receive any undistributed amounts
credited to the Participant's separate Account under the Plan at the time
of the Participant's death. Any such Beneficiary designation by a
Participant shall be made in writing in the manner prescribed by the Plan
Administrator, and shall be effective only when filed with the Plan
Administrator during the Participant's lifetime. A Participant may change
or revoke his Beneficiary designation at any time in the manner prescribed
by the Plan Administrator. If any portion of the Participant's Account
is invested in insurance pursuant to ARTICLE 14, the Beneficiary of the
benefits under the insurance policy shall be the person or persons
designated under the policy. If the Designated Beneficiary (or each of
the Designated Beneficiaries) predeceases the Participant, the Partici-
pant's Beneficiary designation shall be ineffective. If no Beneficiary
designation is in effect at the time of the Participant's death, his
Beneficiary shall be his estate.
11.7 Definitions.
(a) Applicable_Life_Expectancy. The Life Expectancy (or
joint and last survivor expectancy) calculated using the attained age of
the Participant (or Designated Beneficiary) as of the Participant's (or
Designated Beneficiary's) birthday in the applicable calendar year reduced
by one (1) for each calendar year which has elapsed since the date Life
Expectancy was first calculated. If Life Expectancy is being
recalculated, the Applicable Life Expectancy shall be the Life Expectancy
as so recalculated. The applicable calendar year shall be the first
Distribution Calendar Year, and if Life Expectancy is being recalculated
such succeeding calendar year. If annuity payments commence in accordance
with section 11.4(b) before the Required Beginning Date, the applicable
calendar year is the year such payments commence. If distribution is in
the form of an immediate annuity purchased after the Participant's death
with the Participant's remaining interest, the applicable calendar year
is the year of purchase.
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(b) Designated_Beneficiary. The individual who is
designated as the Beneficiary under the Plan in accordance with section
401(a)(9) and the proposed regulations thereunder.
(c) Distribution_Calendar_Year. A calendar year for which
a minimum distribution is required. For distributions beginning before
the Participant's death, the first Distribution Calendar Year is the
calendar year immediately preceding the calendar year which contains the
Participant's Required Beginning Date. For distributions beginning after
the Participant's death, the first Distribution Calendar Year is the
calendar year in which distributions are required to begin pursuant to
section 11.5 above.
(d) Life_Expectancy.
(i) Life Expectancy and joint and last survivor
expectancy are computed by use of the expected return multiples in
Tables V and VI of section 1.72-9 of the income tax regulations.
(ii) Unless otherwise elected by the Participant (or
Spouse, in the case of distributions described in section 11.5(b)(ii)
above) by the time distributions are required to begin, life expectancies
shall be recalculated annually. Such election shall be irrevocable as to
the Participant (or Spouse) and shall apply to all subsequent years. The
Life Expectancy of a non-Spouse Beneficiary may not be recalculated.
(e) Participant's_Benefit.
(i) The Account balance as of the last valuation date
in the calendar year immediately preceding the Distribution Calendar Year
(valuation calendar year) increased by the amount of any contributions or
forfeitures allocated to the Account balance as of dates in the valuation
calendar year after the valuation date and decreased by distributions made
in the valuation calendar year after the valuation date.
(ii) For purposes of subsection (i) above, if any
portion of the minimum distribution for the first Distribution Calendar
Year is made in the second Distribution Calendar Year on or before the
Required Beginning Date, the amount of the minimum distribution made in
the second Distribution Calendar Year shall be treated as if it had been
made in the immediately preceding Distribution Calendar Year.
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(f) Required_Beginning_Date.
(i) General_Rule. The Required Beginning Date of a
Participant is the first day of April of the calendar year following the
calendar year in which the Participant attains age seventy and one-half
(70 1/2).
(ii) Transitional_Rules. The Required Beginning Date
of a Participant who attains age seventy and one-half (70 1/2) before
January 1, 1988, shall be determined in accordance with (1) or (2) below:
(1) Non-Five-Percent_Owners. The Required
Beginning Date of a Participant who is not a Five Percent (5%) Owner is
the first day of April of the calendar year following the calendar year
in which the later of retirement or attainment of age seventy and one-
half (70 1/2) occurs.
(2) Five_Percent_Owners. The Required
Beginning Date of a Participant who is a Five Percent (5%) Owner during
any year beginning after December 31, 1979, is the first day of April
following the later of:
(A) the calendar year in which the
Participant attains age seventy and one-half (70 1/2); or
(B) the earlier of the calendar year with
or within which ends the Plan Year in which the Participant becomes a Five
Percent (5%) Owner, or the calendar year in which the Participant retires.
The Required Beginning Date of a Participant who is not a Five Percent
(5%) Owner who attains age seventy and one- half (70 1/2) during 1988 and
who has not retired as of January 1, 1989, is April 1, 1990.
(iii) Five_Percent_Owner. A Participant is treated as
a Five Percent (5%) Owner for purposes of this section if such Participant
is a Five Percent (5%) Owner as defined in section 416(i) of the Code
(determined in accordance with section 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 year.
(iv) Once distributions have begun to a Five Percent
(5%) Owner under this section, they must continue to be distributed, even
if the Participant ceases to be a Five Percent (5%) Owner in a subsequent
year.
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11.8 Transitional_Rule.
(a) Notwithstanding the other requirements of this ARTICLE
and subject to the requirements of ARTICLE 9, distribution on behalf of
any Employee, including a Five Percent (5%) Owner, may be made in
accordance with all of the following requirements (regardless of when such
distribution commences):
(i) The distribution by the Trust is one which would
not have disqualified such trust under section 401(a)(9) of the Internal
Revenue Code as in effect prior to amendment by the Deficit Reduction Act
of 1984.
(ii) The distribution is in accordance with a method
of distribution designated by the Employee whose interest in the Trust is
being distributed or, if the Employee is deceased, by a Beneficiary of
such Employee.
(iii) Such designation was in writing, was signed by
the Employee or the Beneficiary, and was made before January 1, 1984.
(iv) The Employee had accrued a benefit under the Plan
as of December 31, 1983.
(v) The method of distribution designated by the
Employee or the Beneficiary specifies the time at which distributions will
be made, and in the case of any distribution upon the Employee's death,
the Beneficiaries of the Employee listed in order of priority.
(b) A distribution upon death will not be covered by this
transitional rule unless the information in the designation contains the
required information described above with respect to the distributions to
be made upon the death of the Employee.
(c) For any distribution which commences before January 1,
1984, but continues after December 31, 1983, the Employee, or the
Beneficiary, to whom such distribution is being made, will be presumed to
have designated the method of distribution under which the distribution
is being made if the method of distribution was specified in writing and
the distribution satisfies the requirements in subsections (a)(i) and
(a)(v).
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(d) If a designation is revoked, any subsequent distribution
must satisfy the requirements of section 401(a)(9) of the Code and the
proposed regulations thereunder. If a designation is revoked subsequent
to the date distributions are required to begin, the Trust must distribute
by the end of the calendar year following the calendar year in which the
revocation occurs the total amount not yet distributed which would have
been required to have been distributed to satisfy section 401(a)(9) of the
Code and the regulations thereunder but for the section 242(b)(2)
election. For calendar years beginning after December 31, 1988, such
distributions must meet the minimum distribution incidental benefit
requirements in section 1.401(a)(9)-2 of the proposed regulations. Any
changes in the designation will be considered to be a revocation of the
designation. However, the mere substitution or addition of another
beneficiary (one not named in the designation) under the designation will
not be considered to be a revocation of the designation, so long as such
substitution or addition does not alter the period over which
distributions are to be made under the designation, directly or indirectly
(for example, by altering the relevant measuring life). In the case in
which an amount is transferred or rolled over from one plan to another
plan, the rules in Q&A J-2 and Q&A J-3 shall apply.
11.9 Optional_Forms_of_Benefit.
(a) Except to the extent benefits are required to be paid
in the form of an automatic joint and survivor annuity under ARTICLE 9,
any amount which a Participant shall be entitled to receive under the Plan
shall be distributed in one or a combination of the following ways:
(i) in a lump-sum payment of cash, the amount of
which shall be determined by redeeming all Shares credited to the
Participant's Account under the Plan as of the date of distribution;
(ii) in a lump-sum payment including a distribution
in kind of all Shares credited to the Participant's Account under the Plan
as of the date of distribution;
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(iii) in substantially equal monthly, quarterly, or
annual installment payments of cash, or the distribution of Shares in
kind, over a period certain not to exceed the Life Expectancy of the
Participant or the joint and last survivor Life Expectancy of the
Participant and his Beneficiary, determined in each case as of the earlier
of: (1) the end of the Plan Year in which occurs the event entitling the
Participant to a distribution of benefits, or (2) the date such
installments commence;
(iv) if permitted by the Sponsor, in monthly,
quarterly, or annual installment payments of cash, or the distribution of
Shares in kind, so that the amount distributed in each Plan Year equals
the quotient obtained by dividing the Participant's Account at the
beginning of that Plan Year by the joint and last survivor Life Expectancy
of the Participant and the Beneficiary for that Plan Year. The Life
Expectancy will be computed using the recomputation method described in
section 11.7(d). Unless the Spouse of the retired Participant is the
Beneficiary, the actuarial present value of all expected payments to the
retired Participant must be more than fifty percent (50%) of the actuarial
present value of payments to the retired Participant and the Beneficiary;
or
(v) by application of the Participant's vested
Account to the purchase of a nontransferable immediate or deferred annuity
contract, on an individual or group basis. Unless the Spouse of the
retired Participant is the Beneficiary, the actuarial present value of all
expected payments to the retired Participant must be more than fifty
percent (50%) of the actuarial present value of payments to the retired
Participant and the Beneficiary.
(b) If the Participant fails to select a method of
distribution, except as may be required by ARTICLE 9, all amounts which
he is entitled to receive under the Plan shall be distributed to him in
a lump-sum payment.
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ARTICLE 12
WITHDRAWALS
12.1 Withdrawal_of_Nondeductible_Voluntary_Contribu tions. Subject
to the Qualified Election requirements of ARTICLE 9 and section 12.3, any
Participant who has made nondeductible voluntary contributions may, upon
thirty (30) days notice in writing filed with the Plan Administrator, have
paid to him all or any portion of the fair market value of his
nondeductible voluntary contribution subaccount.
12.2 Hardship_Withdrawals. If the Adoption Agreement so provides
and the Employer elects, this section applies only to the profit sharing
contribution subaccount and only if the profit sharing allocation formula
selected in the Adoption Agreement is not integrated with Social Security.
(a) Demonstration_of_Need. Subject to the Qualified
Election requirements of ARTICLE 9 and section 12.3, if a Participant
establishes an immediate and heavy financial need for funds because of a
hardship resulting from the purchase or renovation of a primary residence,
the education of the Participant or a member of his immediate family
(including special education), the medical or personal expenses of the
Participant or a member of his immediate family, or other demonstrable
emergency as determined by the Plan Administrator on a uniform and
nondiscriminatory basis, the Participant shall be permitted, subject to
the limitations of subsection (b) below, to make a hardship withdrawal of
an amount credited to his profit sharing contribution subaccount under the
Plan.
(b) Amount_of_Hardship_Withdrawal. The amount of any
hardship withdrawal by a Participant under subsection (a) above shall not
exceed the amount required to meet the immediate financial need created
by the hardship and not reasonably available from other resources of the
Participant.
(c) Prior_Withdrawal_of_Nondeductible_Voluntary
Participant_Contributions. A Participant shall not be permitted to make
a hardship withdrawal under subsection (a) above unless he has already
withdrawn, in accordance with section 12.1, any amount credited to his
nondeductible voluntary contributions subaccount.
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12.3 Manner_of_Making_Withdrawals. Any withdrawal by a Participant
under the Plan shall be made only after the Participant files a written
request with the Plan Administrator specifying the nature of the
withdrawal (and the reasons therefor, if a hardship withdrawal), and the
amount of funds requested to be withdrawn. Upon approving any withdrawal,
the Plan Administrator shall furnish the Trustee with written instructions
directing the Trustee to make the withdrawal in a lump-sum payment of cash
to the Participant. In making any withdrawal payment, the Trustee shall
be fully entitled to rely on the instructions furnished by the Plan
Administrator, and shall be under no duty to make any inquiry or
investigation with respect thereto. Unless section 9.6 is applicable, if
the Participant is married, his Spouse must consent to the withdrawal
pursuant to a Qualified Election (as defined in section 9.4(c)) within the
ninety (90) day period ending on the date of the withdrawal.
12.4 Limitations_on_Withdrawals. The Plan Administrator may
prescribe uniform and nondiscriminatory rules and procedures limiting the
number of times a Participant may make a withdrawal under the Plan during
any Plan Year, and the minimum amount a Participant may withdraw on any
single occasion.
ARTICLE 13
LOANS
13.1 General_Provisions.
(a) If the Adoption Agreement so provides and the Employer
so elects, loans shall be made available to any Participant or Beneficiary
who is a party-in-interest (as defined in section 3(14) of ERISA) on a
reasonably equivalent basis. A Participant or Beneficiary who is not a
party-in-interest (as defined in section 3(14) of ERISA) shall not be
eligible to receive a loan under this ARTICLE.
(b) Loans shall not be made available to Highly- Compensated
Employees (as defined in section 414(q) of the Code) in an amount greater
than the amount made available to other Employees.
(c) Loans must be adequately secured and bear a reasonable
interest rate.
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(d) No Participant loan shall exceed the present value of
the Participant's Vested Account Balance.
(e) Unless section 9.6 is applicable, a Participant must
obtain the consent of his or her Spouse, if any, to use of the Account
balance as security for the loan. Spousal consent shall be obtained no
earlier than the beginning of the ninety (90) day period that ends on the
date on which the loan is to be so secured. The consent must be in
writing, must acknowledge the effect of the loan, and must be witnessed
by a Plan representative or notary public. Such consent shall thereafter
be binding with respect to the consenting Spouse or any subsequent Spouse
with respect to that loan. A new consent shall be required if the Account
balance is used for renegotiation, extension, renewal or other revision
of the loan.
(f) In the event of default, foreclosure on the note and
attachment of security will not occur until a distributable event occurs
under the Plan.
(g) Loans will not be made to any shareholder- employee or
Owner-Employee. For purposes of this requirement, a shareholder-employee
means an Employee or officer of an electing small business (subchapter S)
corporation who owns (or is considered as owning within the meaning of
section 318(a)(1) of the Code), on any day during the taxable year of such
corporation, more than five percent (5%) of the outstanding stock of the
corporation.
(h) If a valid spousal consent has been obtained in
accordance with subsection (e), then, notwithstanding any other provision
of this Plan, the portion of the Participant's Vested Account Balance used
as a security interest held by the Plan by reason of a loan outstanding
to the Participant shall be taken into account for purposes of determining
the amount of the Account balance payable at the time of death or
distribution, but only if the reduction is used as repayment of the loan.
If less than one hundred percent (100%) of the Participant's Vested
Account Balance (determined without regard to the preceding sentence) is
payable to the Surviving Spouse, then the Account balance shall be
adjusted by first reducing the Vested Account Balance by the amount of the
security used as repayment of the loan, and then determining the benefit
payable to the Surviving Spouse.
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13.2 Administration_of_Loan_Program.
(a) The Plan's loan program will be administered by the Plan
Administrator.
(b) Loan requests shall be made on a form prescribed by the
Plan Administrator and shall comply with section 13.4.
(c) Loan requests that comply with all the requirements of
this ARTICLE shall be approved by the Plan Administrator.
(d) The rate of interest to be charged on loans shall be
determined under section 13.5.
(e) The only collateral that may be used as security for a
loan, and the limitations and requirements applicable, are determined
under section 13.6.
(f) The rules regarding defaults are set forth in section
13.9.
13.3 Amount_of_Loan. Loans to any Participant or Beneficiary will
not be made to the extent that such loan, when added to the outstanding
balance of all other loans to the Participant or Beneficiary, would exceed
the lesser of:
(a) fifty thousand dollars ($50,000) reduced by the excess
(if any) of the highest outstanding balance of loans during the one (1)
year period ending on the day before the loan is made, over the
outstanding balance of loans from the Plan on the date the loan is made;
or
(b) one-half (1/2) the present value of the nonforfeitable
accrued benefit of the Participant.
(c) For the purpose of the above limitation, all loans from
all plans of the Employer and other members of a group of employers
described in sections 414(b), 414(c) and 414(m) of the Code are
aggregated.
13.4 Manner_of_Making_Loans. A request by a Participant for a loan
shall be made in writing to the Plan Administrator and shall specify the
amount of the loan, and the subaccount(s) or Shares of the Participant
from which the loan should be made. The terms and conditions on which the
Plan Administrator shall approve loans under the Plan shall be applied on
a uniform and nondiscriminatory basis with respect to all Participants.
If a Participant's request for a loan is approved by the Plan
Administrator, the Plan Administrator shall furnish the Trustee with
written instructions directing the Trustee to make the loan in a lump-sum
payment of cash to the Participant. In making any loan payment under this
ARTICLE, the Trustee shall be fully entitled to rely on the instructions
furnished by the Plan Administrator and shall be under no duty to make any
inquiry or investigation with respect thereto.
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13.5 Terms_of_Loan. Loans shall be made on such terms and subject
to such limitations as the Plan Administrator may prescribe.
Furthermore, any loan shall, by its terms, require that repayment
(principal and interest) be amortized in level payments, not less
frequently than quarterly, over a period not extending beyond five (5)
years from the date of the loan, unless such loan is used to acquire a
dwelling unit which, within a reasonable time (determined at the time the
loan is made) will be used as the principal residence of the Participant.
The rate of interest to be charged shall be determined by the Plan
Administrator in accordance with the rates quoted by representative
financial institutions in the local area for similar loans.
13.6 Security_for_Loan. Any loan to a Participant under the Plan
shall be secured by the pledge of all the Participant's right, title, and
interest in the Trust. Such pledge shall be evidenced by the execution
of a promissory note by the Participant which shall provide that, in the
event of any default by the Participant on a loan repayment, the Plan
Administrator shall be authorized (to the extent permitted by law) to
deduct the amount of the loan outstanding and any unpaid interest due
thereon from the Participant's wages or salary to be thereafter paid by
the Employer, and to take any and all other actions necessary and
appropriate to enforce collection of the unpaid loan. An assignment or
pledge of any portion of the Participant's interest in the Plan and a
loan, pledge, or assignment with respect to any insurance contract
purchased under the Plan, will be treated as a loan under this section.
In the event the value of the Participant's vested Account at any time is
less than one hundred twenty- five percent (125%) of the outstanding loan
balance, the Plan Administrator shall request additional collateral of
sufficient value to adequately secure the repayment of the loan. Failure
to provide such additional collateral upon a request of the Plan
Administrator shall constitute an event of default.
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13.7 Segregated_Investment. Loans shall be considered a
Participant directed investment and, for the limited purposes of
allocating earnings and losses pursuant to ARTICLE 5, shall not be
considered a part of the common fund under the Trust.
13.8 Repayment_of_Loan. The Plan Administrator shall have the sole
responsibility for ensuring that a Participant timely makes all loan
repayments, and for notifying the Trustee in the event of any default by
the Participant on the loan. Each loan repayment shall be paid to the
Trustee and shall be accompanied by written instructions from the Plan
Administrator that identify the Participant on whose behalf the loan
repayment is being made.
13.9 Default_on_Loan.
(a) In the event of a termination of the Participant's
employment with the Affiliated Employers or a default by a Participant on
a loan repayment, all remaining payments on the loan shall be immediately
due and payable. The Employer shall, upon the direction of the Plan
Administrator, to the extent permitted by law, deduct the total amount of
the loan outstanding and any unpaid interest due thereon from the wages
or salaries payable to the Participant by the Employer in accordance with
the Participant's promissory note. In addition, the Plan Administrator
shall take any and all other actions necessary and appropriate to enforce
collection of the unpaid loan. However, attachment of the Participant's
Account pledged as security will not occur until a distributable event
occurs under the Plan.
(b) For purposes of this section, the term "default" shall
mean failure, by a period of at least ten (10) days, to make any loan
payment (whether principal or interest or both) that is due and payable.
Neither the Plan Administrator nor any other fiduciary is required to give
any written or oral notice of default.
13.10 Unpaid_Amounts. Upon the occurrence of a Participant's
retirement or death, or upon a Participant's fifth consecutive Break in
Service or earlier distribution, the unpaid balance of any loan, including
any unpaid interest, shall be deducted from any payment or distribution
from the Trust to which such Participant or his Beneficiary may be
entitled. If after charging the Participant's Account with the unpaid
balance of the loan, including any unpaid interest, there still remains
an unpaid balance of any such loan and interest, then the remaining unpaid
balance of such loan and interest shall be charged against any property
pledged as security with respect to such loan.
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ARTICLE 14
INSURANCE
14.1 Insurance. If the Adoption Agreement so provides and the
Employer elects to allocate or permit Participants to allocate a portion
of their Accounts to purchase life insurance, the ensuing subsections of
this ARTICLE shall apply.
14.2 Policies. The Plan Administrator shall instruct the Trustee
to procure one or more life insurance policies on the Participant's life,
the terms of which shall conform to the requirements of the Plan and the
Code. The policies and the companies which write them shall be subject
to the approval of the Plan Administrator and the Trustee. The Trustee
shall procure and hold such policies in its name or the name of the
nominee. The Trustee shall be the sole owner of all contracts purchased
hereunder, and it shall be so designated in each policy and application
therefor.
14.3 Beneficiary. The Participant shall have the right to name the
Beneficiary and to choose the benefit option under the policy for the
Beneficiary. The Trustee shall designate the Beneficiary of all such
policies in accordance with the written directions of the Plan Adminis-
trator and the policy terms. Such designations may be outlined in the
original application as forwarded to the issuing company. However, the
Plan Administrator shall have available and shall furnish the Participant
with the necessary forms for any Beneficiary designation or change of
Beneficiary and it will keep a copy of all executed designations as part
of its records. Upon a Participant's death, the Plan Administrator will
promptly furnish the Trustee a copy of the last designation and shall
authorize the Trustee to complete such forms as the insurance company may
require in order to effect the benefit option.
14.4 Payment_of_Premiums. Subject to the provisions of sections
7.3 and 14.5, premium payments to the insurer may be made only by the
Trustee with respect to any insurance policy purchased on behalf of a
Participant and shall constitute first an investment of a portion of the
funds of the Participant's Employer Contribution subaccounts up to the
maximum amount of such subaccounts permitted to be applied toward such
premium payments, as provided in section 14.5. If a Participant's
subaccounts lack sufficient assets to pay premiums on a life insurance
policy due on his behalf, the Trustee, at the direction of the Plan
Administrator, acting upon the request of the Participant, shall borrow
under the policy loan provisions, if any, the amount necessary to pay such
premiums, using the cash value of the insurance as security, or the
Trustee may liquidate assets held in the Participant's Account, in the
same order, of sufficient value to pay such premiums. Any loans shall be
repaid by the application of earnings, contributions, or forfeitures to
the Account of the Participant insured by such policy. In the absence of
the Plan Administrator's direction to borrow or to liquidate assets to pay
premiums, the life insurance policy shall be put on a paid-up basis or,
if it has no cash value, cancelled.
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14.5 Limitation_on_Insurance_Premiums. The Trustee shall not pay,
nor shall anyone on behalf of the Trustee pay, any life insurance premium
for any Participant out of the Participant's Employer Contribution
subaccounts unless the amount of such payment, plus all premiums
previously so paid on behalf of the Participant, is less than fifty
percent (50%) of the Employer Contributions and forfeitures allocated to
the Participant's Employer Contribution subaccounts as determined on the
date such premium is paid with respect to reserve life insurance policies
and shall be less than twenty-five percent (25%) thereof with respect to
nonreserve (term) policies, or, if both reserve life and term insurance
are purchased on the life of any Participant, the sum of the term
insurance premium plus one-half (1/2) of the reserve life premiums may not
exceed twenty- five percent (25%) of the Employer Contributions made on
behalf of such Participant. For purposes of these incidental insurance
provisions, reserve life insurance contracts are contracts with both
nondecreasing death benefits and nonincreasing premiums. Dividends
received on life insurance policies shall be considered a reduction of
premiums paid in such computations.
If payment of premiums on a Participant's life insurance
policy is prohibited because of the limitation, the Trustee, as directed
by the Plan Administrator, shall permit the Participant to maintain that
part of the coverage made available by the prohibited premiums, either by
payment of the amount of the prohibited premium by the Participant from
sources other than the Trust or by distributing the policy to the extent
of the Participant's vested interest to the Participant and eliminating
it from the Trust.
Nothing contained in the foregoing provisions of section 14.4
and this section shall be deemed to authorize the payment of any premium
or premiums for any Participant which would result in a failure to
maintain any mandatory investment in Shares required by the Sponsor in the
Account or subaccounts of any such Participant.
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14.6 Insurance_Company. No insurance company which may issue any
policies for the purposes of this Plan shall be required to take or permit
any action contrary to the provisions of said policies, nor shall such
insurance company be deemed to be a party to, or responsible for the
validity of, this Plan for any purpose. No such insurance company shall
be required to look into the terms of this Plan or question any action of
the Trustee hereunder, nor be responsible to see that any action of the
Trustee is authorized by the terms of this Plan. Any such issuing
insurance company shall be fully discharged from any and all liability for
any amount paid to the Trustee or paid in accordance with the direction
of the Trustee, as the case may be, or for any change made or action taken
by such insurance company upon such direction and no such insurance
company shall be obliged to see to the distribution or further application
of any monies paid by it. The certificate of the Trustee signed by one
of its trust officers, assistant secretary, or other authorized
representative thereof, may be received by any insurance company as
conclusive evidence of any of the matters mentioned in this Plan and any
insurance company shall be fully protected in taking or permitting any
action on the faith thereof and shall incur no liability or responsibility
for so doing.
14.7 Distribution_of_Policies. Upon a Participant's death, the
Trustee, upon direction of the Plan Administrator, shall procure the
payment of the proceeds of any policy held by the Participant in
accordance with its terms and this Plan. The Trustee shall be required
to pay over all the proceeds of any policy to the Participant's Designated
Beneficiary in accordance with the distribution provisions of this Plan.
A Participant's Spouse will be the Designated Beneficiary unless a
Qualified Election has been made in accordance with section 9.4(c) of the
Plan. Under no circumstances shall the Trust retain any part of the
proceeds. Subject to the joint and survivor annuity requirements of
ARTICLE 9, the policies shall be converted or distributed upon
commencement of benefits in accordance with the provisions of this
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section. Upon a Participant's retirement at or after his Normal
Retirement Age, unless there is a single sum distribution in which case
any policy shall be distributed, any such policy shall be converted to a
paid-up contract and delivered to the Participant but the Plan
Administrator may, with the Participant's consent, direct that a portion
or all of such cash value of the policy be converted to provide retirement
income as permitted within the terms of the policy and this Plan. Upon
a Participant's retirement due to Total and Permanent Disability, any such
policy shall be held for his account and assigned or delivered to the
Participant in addition to any other benefits provided by this Plan. Upon
a Participant's termination of employment for reasons other than death,
Total and Permanent Disability, or retirement as stated above, to the
extent of life insurance purchased by Employer Contributions, he shall be
entitled to a vested interest in any policy held for his account as his
interest is vested in the remainder of his Employer Contribution
subaccounts (exclusive of any such policy). Whenever the Participant is
entitled to one hundred percent (100%) vesting, then such policy shall be
assigned and delivered to the Participant in accordance with its terms and
the terms of the Plan. Whenever the Participant is entitled to vesting
of less than one hundred percent (100%), then the Participant shall be
entitled to a vested interest of the cash surrender value of any such
policy equal to his percent of vested interest in his Employer
Contribution subaccounts, exclusive of the policy, and one of the
following distribution procedures shall apply:
(a) If the nonvested portion of the cash surrender value of
all policies held for the Participant's Account is less than the amount
of his vested termination benefit exclusive of the policies, then, such
policy shall be assigned to the Participant and the remainder of the
Participant's vested interest in the Participant's Employer Contribution
subaccounts shall be reduced by the cash surrender value of the nonvested
portion of all policies, after which it shall be paid or distributed to
the Participant in accordance with the terms of the Plan; or
(b) If the nonvested portion of the cash surrender value of
all policies held for the Participant's Account exceeds the Participant's
vested interest in the Employer Contribution subaccount exclusive of such
policies, the Participant shall be given the opportunity to purchase such
policies by paying to the Trustee the amount of such excess within thirty
(30) days after notice to him of the amount to be paid. Upon receipt of
such payment said policy shall be assigned and delivered to the Partici-
pant to the full satisfaction of all termination benefits under this Plan.
Any such policy not so purchased shall be surrendered by the Trustee for
its cash value and the proceeds thereof deposited in the Trust for
reallocation pursuant to ARTICLE 5.
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It is the intention hereof that the total termination benefit
of a Participant whose interest is not fully vested shall be equal to the
sum of the vested percentage of his Employer Contribution subaccounts
exclusive of all such policies and the same percentage of the cash value
of all such policies held for his Account. To the extent possible under
the foregoing provisions, such total termination benefits shall be
satisfied by the transfer and delivery to the Participant of one or more
such policies with the balance, if any, to be paid in cash or in kind.
14.8 Policy_Features. The Trustee shall arrange, where possible,
that all policies purchased for the benefit of a Participant shall have
the same dividend option which shall be on the premium reduction plan, and
as nearly as may be possible all policies issued under the Plan shall have
the same anniversary date. To the extent any dividends or credits earned
on insurance policies are not applied toward the next premiums due, they
shall be allocated to the Participant's Employer Contribution subaccount
in the same manner as a Participant's directed investment.
14.9 Changed_Conditions. From time to time because of changed
conditions, the Trustee, acting at the direction of the Plan Administrator
upon the election of the Participant concerned, shall obtain an additional
contract or policy or make such change in the contracts or policies
maintained by the Trustee on the life of the Participant as may be
required by such changed conditions, within the limits permitted by the
insurance company which issued or is requested to issue a contract and the
limits established by this Plan.
14.10 Conflicts. In the event of any conflict between the terms
of the Plan and the provisions of any contract issued hereunder, the terms
of the Plan shall control.
ARTICLE 15
ADMINISTRATION
15.1 Duties_and_Responsibilities_of_Fiduciaries;
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Allocation_of_Fiduciary_Responsibility. A fiduciary of the Plan shall
have only those specific powers, duties, responsibilities, and obligations
as are explicitly given him under the Plan and Trust Agreement. In
general, the Employer shall have the sole responsibility for making
contributions to the Plan required under ARTICLE 4; appointing the Trustee
and the Plan Administrator; and determining the funds available for
investment under the Plan. The Plan Administrator shall have the sole
responsibility for the administration of the Plan, as more fully described
in section 15.2. It is intended that each fiduciary shall be responsible
only for the proper exercise of his own powers, duties, responsibilities,
and obligations under the Plan and Trust Agreement, and shall not be
responsible for any act or failure to act of another fiduciary. A
fiduciary may serve in more than one fiduciary capacity with respect to
the Plan.
15.2 Powers_and_Responsibilities_of_the_Plan_Adminis trator.
(a) Administration_of_the_Plan. The Plan Administrator
shall have all powers necessary to administer the Plan, including the
power to construe and interpret the Plan documents; to decide all
questions relating to an individual's eligibility to participate in the
Plan; to determine the amount, manner, and timing of any distribution of
benefits or withdrawal under the Plan; to approve and ensure the repayment
of any loan to a Participant under the Plan; to resolve any claim for
benefits in accordance with section 15.7; and to appoint or employ
advisors, including legal counsel; to render advice with respect to any
of the Plan Administrator's responsibilities under the Plan. Any
construction, interpretation, or application of the Plan by the Plan
Administrator shall be final, conclusive, and binding. All actions by the
Plan Administrator shall be taken pursuant to uniform standards applied
to all persons similarly situated. The Plan Administrator shall have no
power to add to, subtract from, or modify any of the terms of the Plan,
or to change or add to any benefits provided by the Plan, or to waive or
fail to apply any requirements of eligibility for a benefit under the
Plan.
(b) Records_and_Reports. The Plan Administrator shall be
responsible for maintaining sufficient records to reflect the Eligibility
Computation Periods in which an Employee is credited with one or more
Years of Service for purposes of determining his eligibility to
participate in the Plan, and the Compensation of each Participant for
purposes of determining the amount of contributions that may be made by
or on behalf of the Participant under the Plan. The Plan Administrator
shall be responsible for submitting all required reports and notifications
relating to the Plan to Participants or their Beneficiaries, the Internal
Revenue Service and the Department of Labor.
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(c) Furnishing_Trustee_with_Instructions. The Plan
Administrator shall be responsible for furnishing the Trustee with written
instructions regarding all contributions to the Trust, all distributions
to Participants in accordance with ARTICLE 10, all withdrawals by
Participants in accordance with ARTICLE 12, all loans to Participants in
accordance with ARTICLE 13 and all purchases of life insurance in
accordance with ARTICLE 14. In addition, the Plan Administrator shall be
responsible for furnishing the Trustee with any further information
respecting the Plan which the Trustee may request for the performance of
its duties or for the purpose of making any returns to the Internal
Revenue Service or Department of Labor as may be required of the Trustee.
(d) Rules_and_Decisions. The Plan Administrator may adopt
such rules as it deems necessary, desirable, or appropriate in the
administration of the Plan. All rules and decisions of the Plan
Administrator shall be applied uniformly and consistently to all
Participants in similar circumstances. When making a determination or
calculation, the Plan Administrator shall be entitled to rely upon
information furnished by a Participant or Beneficiary, the Employer, the
legal counsel of the Employer, or the Trustee.
(e) Application_and_Forms_for_Benefits. The Plan
Administrator may require a Participant or Beneficiary to complete and
file with it an application for a benefit, and to furnish all pertinent
information requested by it. The Plan Administrator may rely upon all
such information so furnished to it, including the Participant's or
Beneficiary's current mailing address.
(f) Facility_of_Payment. Whenever, in the Plan
Administrator's opinion, a person entitled to receive a payment of a
benefit or installment thereof is under a legal disability or is
incapacitated in any way so as to be unable to manage his financial
affairs, as determined by a court of competent jurisdiction, it may direct
the Trustee to make payments to such person or to the legal representative
or to a relative or friend of such person for that person's benefit, or
it may direct the Trustee to apply the payment for the benefit of such
person in such manner as it considers advisable.
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15.3 Allocation_of_Duties_and_Responsibilities. The Plan
Administrator may, by written instrument, allocate among its members or
employees any of its duties and responsibilities not already allocated
under the Plan or may designate persons other than members or employees
to carry out any of the Plan Administrator's duties and responsibilities
under the Plan. Any such duties or responsibilities thus allocated must
be described in the written instrument. If a person other than an
Employee of the Employer is so designated, such person must acknowledge
in writing his acceptance of the duties and responsibilities allocated to
him.
15.4 Appointment_of_the_Plan_Administrator. The Employer shall
designate in the Adoption Agreement the Plan Administrator who shall
administer the Employer's Plan. Such Plan Administrator may consist of
an individual, a committee of two or more individuals, whether or not, in
either such case, the individual or any of such individuals are Employees
of the Employer, a consulting firm or other independent agent, the Trustee
(with its consent), or the Employer itself. The Plan Administrator shall
be charged with the full power and the responsibility for administering
the Plan in all its details. If no Plan Administrator has been appointed
by the Employer, or if the person designated as Plan Administrator by the
Employer is not serving as such for any reason, the Employer shall be
deemed to be the Plan Administrator of the Plan. The Plan Administrator
may be removed by the Employer, or may resign by giving notice in writing
to the Employer, and in the event of the removal, resignation, or death,
or other termination of service by the Plan Administrator, the Employer
shall, as soon as practicable, appoint a successor Plan Administrator,
such successor thereafter to have all of the rights, privileges, duties,
and obligations of the predecessor Plan Administrator.
15.5 Expenses. The Employer shall pay all expenses authorized and
incurred by the Plan Administrator in the administration of the Plan
except to the extent such expenses are paid from the Trust.
15.6 Liabilities. The Plan Administrator and each person to whom
duties and responsibilities have been allocated pursuant to section 15.3
may be indemnified and held harmless by the Employer with respect to any
alleged breach of responsibilities performed or to be performed hereunder.
The Employer and each Affiliated Employer shall indemnify and hold
harmless the Sponsor against all claims, liabilities, fines, and
penalties, and all expenses reasonably incurred by or imposed upon him
(including, but not limited to, reasonable attorney's fees) which arise
as a result of actions or failure to act in connection with the operation
and administration of the Plan.
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15.7 Claims_Procedure.
(a) Filing_a_Claim. Any Participant or Beneficiary under
the Plan may file a written claim for a Plan benefit with the Plan
Administrator or with a person named by the Plan Administrator to receive
claims under the Plan.
(b) Notice_of_Denial_of_Claim. In the event of a denial or
limitation of any benefit or payment due to or requested by any
Participant or Beneficiary under the Plan ("claimant"), claimant shall be
given a written notification containing specific reasons for the denial
or limitation of his benefit. The written notification shall contain
specific reference to the pertinent Plan provisions on which the denial
or limitation of his benefit is based. In addition, it shall contain a
description of any other material or information necessary for the
claimant to perfect a claim, and an explanation of why such material or
information is necessary. The notification shall further provide
appropriate information as to the steps to be taken if the claimant wishes
to submit his claim for review. This written notification shall be given
to a claimant within ninety (90) days after receipt of his claim by the
Plan Administrator unless special circumstances require an extension of
time for processing the claim. If such an extension of time for
processing is required, written notice of the extension shall be furnished
to the claimant prior to the termination of said ninety (90) day period,
and such notice shall indicate the special circumstances which make the
postponement appropriate.
(c) Right_of_Review. In the event of a denial or limitation
of his benefit, the claimant or his duly authorized representative shall
be permitted to review pertinent documents and to submit to the Plan
Administrator issues and comments in writing. In addition, the claimant
or his duly authorized representative may make a written request for a
full and fair review of his claim and its denial by the Plan
Administrator; provided, however, that such written request must be
received by the Plan Administrator (or its delegate to receive such
requests) within sixty (60) days after receipt by the claimant of written
notification of the denial or limitation of the claim. The sixty (60) day
requirement may be waived by the Plan Administrator in appropriate cases.
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(d) Decision_on_Review. A decision shall be rendered by the
Plan Administrator within sixty (60) days after the receipt of the request
for review, provided that where special circumstances require an extension
of time for processing the decision, it may be postponed on written notice
to the claimant (prior to the expiration of the initial sixty (60) day
period) for an additional sixty (60) days, but in no event shall the
decision be rendered more than one hundred twenty (120) days after the
receipt of such request for review. Any decision by the Plan Adminis-
trator shall be furnished to the claimant in writing and shall set forth
the specific reasons for the decision and the specific Plan provisions on
which the decision is based.
(e) Court_Action. No Participant or Beneficiary shall have
the right to seek judicial review of a denial of benefits, or to bring any
action in any court to enforce a claim for benefits prior to filing a
claim for benefits or exhausting his rights to review under this section.
ARTICLE 16
AMENDMENT, TERMINATION AND MERGER
16.1 Sponsor's_Power_to_Amend. The Sponsor may amend any part of
the Plan. For purposes of Sponsor's amendments, the mass submitter shall
be recognized as the agent of the Sponsor. If the Sponsor 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.
16.2 Amendment_by_Adopting_Employer.
(a) The Employer may:
(i) change the choice of options in the Adoption
Agreement;
(ii) add overriding language in the Adoption Agreement
when such language is necessary to satisfy section 415 or section 416 of
the Code because of the required aggregation of multiple plans; and
(iii) add certain model amendments published by the
Internal Revenue Service which specifically provide that their adoption
will not cause the Plan to be treated as individually designed.
(b) An Employer that amends the Plan for any other reason,
including a waiver of the minimum funding requirement under section 412(d)
of the Code, will no longer participate in this prototype plan and will
be considered to have an individually designed plan.
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16.3 Vesting_Upon_Plan_Termination. In the event of the
termination or partial termination of the Plan, the Account balance of
each affected Participant will be nonforfeitable.
16.4 Vesting_Upon_Complete_Discontinuance_of_Contribu tions. In
the event of a complete discontinuance of contributions under the Plan,
the Account balance of each affected Participant will be nonforfeitable.
16.5 Maintenance_of_Benefits_Upon_Merger. In the event of a merger
or consolidation with, or transfer of assets to any other plan, each
Participant will receive a benefit immediately after such merger,
consolidation or transfer (if the Plan then terminated) which is at least
equal to the benefit the Participant was entitled to immediately before
such merger, consolidation or transfer (if the Plan had been terminated).
16.6 Special_Amendments. The Employer may from time to time make
any amendment to the Plan that may be necessary to satisfy section 415 or
416 of the Code. Any such amendment will be adopted by the Employer by
completing overriding Plan language in the Adoption Agreement. In the
event of such an amendment, the Employer must obtain a separate
determination letter from the Internal Revenue Service to continue
reliance on the Plan's qualified status.
ARTICLE 17
MISCELLANEOUS
17.1 Exclusive_Benefit_of_Participants_and_Beneficia ries.
(a) All assets of the Trust shall be retained for the
exclusive benefit of Participants and their Beneficiaries, and shall be
used only to pay benefits to such persons or to pay the fees and expenses
of the Trust. The assets of the Trust shall not revert to the benefit of
the Employer, except as otherwise specifically provided in section
17.1(b).
(b) To the extent permitted or required by ERISA and the
Code, contributions to the Trust under this Plan are subject to the
following conditions:
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(i) If a contribution or any part thereof is made to
the Trust by the Employer under a mistake of fact, such contribution or
part thereof shall be returned to the Employer within one (1) year after
the date the contribution is made.
(ii) In the event the Plan is determined not to meet
the initial qualification requirements of section 401 of the Code,
contributions made in respect of any period for which such requirements
are not met shall be returned to the Employer within one (1) year after
the Plan is determined not to meet such requirements, but only if the
application for the 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.
(iii) Contributions to the Trust are specifically
conditioned on their deductibility under the Code and, to the extent a
deduction is disallowed for any such contribution, such amount shall be
returned to the Employer within one (1) year after the date of the
disallowance of the deduction.
17.2 Nonguarantee_of_Employment. Nothing contained in this Plan
shall be construed as a contract of employment between the Employer and
any Employee, or as a right of any Employee to be continued in the
employment of the Employer, or as a limitation of the right of the
Employer to discharge any of its Employees, with or without cause.
17.3 Rights_to_Trust_Assets. No Employee, Participant, or
Beneficiary shall have any right to, or interest in, any assets of the
Trust upon termination of employment or otherwise, except as provided
under the Plan. All payments of benefits under the Plan shall be made
solely out of the assets of the Trust.
17.4 Nonalienation_of_Benefits. No benefit or interest available
hereunder will be subject to assignment or alienation, either voluntarily
or involuntarily. The preceding sentence shall also apply to the
creation, assignment, or recognition of a right to any benefit payable
with respect to a Participant pursuant to a domestic relations order,
unless such order is determined to be a qualified domestic relations
order, as defined in section 414(p) of the Code, or any domestic relations
order entered before January 1, 1985.
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17.5 Aggregation_Rules.
(a) Except as provided in ARTICLE 6, all Employees of the
Employer or any Affiliated Employer will be treated as employed by a
single employer.
(b) If this Plan provides contributions or benefits for one
or more Owner-Employees who control both the business for which this Plan
is established and one or more other trades or businesses, this Plan and
the plan established for other trades or businesses must, when looked at
as a single plan, satisfy sections 401(a) and (d) of the Code for the
Employees of this and all other trades or businesses.
(c) If the Plan provides contributions or benefits for one
or more Owner-Employees who control one or more other trades or
businesses, the employees of the other trades or businesses must be
included in a plan which satisfies sections 401(a) and (d) of the Code and
which provides contributions and benefits not less favorable than provided
for Owner-Employees under this Plan.
(d) If an individual is covered as an Owner- Employee under
the plans of two or more trades or businesses which are not controlled and
the individual controls a trade or business, then the contributions or
benefits of the employees under the plan of the trades or businesses which
are controlled must be as favorable as those provided for him under the
most favorable plan of the trade or business which is not controlled.
(e) For purposes of paragraphs (b), (c) and (d), an Owner-
Employee, or two or more Owner-Employees, will be considered to control
a trade or business if the Owner- Employee, or two or more Owner-Employees
together:
(i) own the entire interest in an unincorporated
trade or business; or
(ii) in the case of a partnership, own more than fifty
percent (50%) of either the capital interest or the profits interest in
the partnership.
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For purposes of the preceding sentence, an Owner- Employee,
or two or more Owner-Employees shall be treated as owning an interest in
a partnership which is owned, directly or indirectly, by a partnership
which such Owner- Employee, or such two or more Owner-Employees, are
considered to control within the meaning of the preceding sentence.
17.6 Failure_of_Qualification. If the Employer's plan fails to
attain or retain qualification, such plan will no longer participate in
this master/prototype plan and will be considered an individually designed
plan.
17.7 Applicable_Law. Except to the extent otherwise required by
ERISA, as amended, this Plan shall be construed and enforced in accordance
with the laws of the state in which the Employer's principal place of
business is located, as specified in the Adoption Agreement.
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<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
The Schedule contains summary financial information extracted from year-end
audited financial statements dated June 30, 1995 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 100,521,205
<INVESTMENTS-AT-VALUE> 94,718,341
<RECEIVABLES> 429,419
<ASSETS-OTHER> 966,804
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 96,114,564
<PAYABLE-FOR-SECURITIES> 690,262
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,365,588
<TOTAL-LIABILITIES> 2,055,850
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 166,667,002
<SHARES-COMMON-STOCK> 37,400,881
<SHARES-COMMON-PRIOR> 29,664,946
<ACCUMULATED-NII-CURRENT> 772,732
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (67,578,568)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (5,802,452)
<NET-ASSETS> 94,058,714
<DIVIDEND-INCOME> 4,086,252
<INTEREST-INCOME> 309,061
<OTHER-INCOME> (817,031)
<EXPENSES-NET> 1,879,145
<NET-INVESTMENT-INCOME> 1,699,137
<REALIZED-GAINS-CURRENT> (4,939,047)
<APPREC-INCREASE-CURRENT> (1,647,487)
<NET-CHANGE-FROM-OPS> (4,887,397)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,662,361)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 106,249,102
<NUMBER-OF-SHARES-REDEEMED> (98,974,867)
<SHARES-REINVESTED> 461,700
<NET-CHANGE-IN-ASSETS> 27,108,968
<ACCUMULATED-NII-PRIOR> 702,433
<ACCUMULATED-GAINS-PRIOR> (90,697,557)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 902,569
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,879,145
<AVERAGE-NET-ASSETS> 110,361,782
<PER-SHARE-NAV-BEGIN> 2.48
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> .03
<PER-SHARE-DIVIDEND> (.04)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 2.51
<EXPENSE-RATIO> 1.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
