-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SvUXhy8hwutCV+UipwLIb+lpfQf0A1Scn1IpHo9IUDvlg1tiyCILl4X6QMK9IFXZ cbuJtnEwJyU+N06C7gKPJA== 0000893220-98-000782.txt : 19980424 0000893220-98-000782.hdr.sgml : 19980424 ACCESSION NUMBER: 0000893220-98-000782 CONFORMED SUBMISSION TYPE: POS AMI PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19980422 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHESTNUT STREET EXCHANGE FUND CENTRAL INDEX KEY: 0000019780 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 510199471 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AMI SEC ACT: SEC FILE NUMBER: 811-02631 FILM NUMBER: 98598960 BUSINESS ADDRESS: STREET 1: 103 BELLEVUE PKWY CITY: WILMINGTON STATE: DE ZIP: 19809 BUSINESS PHONE: 3027922555 MAIL ADDRESS: STREET 1: 103 BELLEVUE PKWY CITY: WILMINGTON STATE: DE ZIP: 19809 POS AMI 1 PEA #21 TO FORM N-1A, CHESTNUT STREET EXCHANGE 1 As filed with the Securities and Exchange Commission on April 22, 1998. File No. 811-2631 -------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT /X/ OF 1940 AMENDMENT No. 21 CHESTNUT STREET EXCHANGE FUND ----------------------------- (Exact Name of Registrant as Specified in Charter) 400 Bellevue Parkway Wilmington, Delaware 19809 -------------------------- (Address of Principal Executive Offices) Registrant's Telephone Number: (302) 792-2555 Edward J. Roach 400 Bellevue Parkway Wilmington, Delaware 19809 -------------------------- (Name and Address of Agent for Service) Copy to: Vernon Stanton, Jr., Esq. Drinker Biddle & Reath LLP Philadelphia National Bank Building 1345 Chestnut Street Philadelphia, Pennsylvania 19107-3496 2 CONTENTS OF FORM N-1A
Page No. ------- PART A. INFORMATION REQUIRED IN A PROSPECTUS 1 Item 1. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Item 2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Item 3. Condensed Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Item 4. General Description of Registrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Item 5. Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Item 5A. Management's Discussion of Fund Performance . . . . . . . . . . . . . . . . . . . . . . . . . 8 Item 6. Capital Stock and Other Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Item 7. Purchase of Securities Being Offered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Item 8. Redemption or Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Item 9. Pending Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 PART B. STATEMENT OF ADDITIONAL INFORMATION 14 Item 10. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Item 11. Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Item 12. General Information and History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Item 13. Investment Objective and Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Item 14. Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Item 15. Control Persons and Principal Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Item 16. Investment Advisory and Other Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Item 17. Brokerage Allocation and Other Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Item 18. Capital Stock and Other Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Item 19. Purchase, Redemption, and Pricing of Securities Being Offered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Item 20. Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Item 21. Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Item 22. Calculation of Performance Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Item 23. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 PART C. OTHER INFORMATION C-1 Item 24. Financial Statements and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1 Item 25. Persons Controlled by or under Common Control with Registrant . . . . . . . . . . . . . . . . C-3 Item 26. Number of Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-3 Item 27. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-3 Item 28. Business and Other Connections of Investment Adviser . . . . . . . . . . . . . . . . . . . . . C-3 Item 29. Principal Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-9 Item 30. Location of Accounts and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-9 Item 31. Management Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-9
3 PART A. INFORMATION REQUIRED IN A PROSPECTUS Item 1. Cover Page Inapplicable. Item 2. Synopsis Inapplicable. Item 3. Condensed Financial Information Inapplicable. Item 4. General Description of Registrant (i) Registrant is a limited partnership organized as of March 23, 1976 under The Uniform Limited Partnership Act of California. Registrant is an open-end diversified management investment company. (ii) Registrant's investment objectives are to seek long-term growth of capital and, secondarily, current income. Registrant will invest in a portfolio of common stocks and securities convertible into common stocks of issuers included in the "List of Representative Companies" on pages 10 to 12 of Post- Effective Amendment No. 1 to Registrant's Registration Statement on Form S-5 filed under the Securities Act of 1933 on October 28, 1976, which is incorporated herein by reference, and of other issuers of comparable quality. Registrant may also invest in other types of securities for temporary or defensive purposes, including preferred stocks, investment grade bonds and money market obligations such as U.S. Government securities, certificates of deposit and commercial paper. Up to 10% of the value of Registrant's total assets may be invested in securities which are subject to legal or contractual restrictions on resale and which Registrant reasonably believes will be saleable after a two year holding period pursuant to Rule 144 under the Securities Act of 1933. The Registrant may write exchange-traded covered call options on portfolio securities up to 25% of the value of its assets and may loan portfolio 4 securities as permitted under subpart (8) of this Item 4(ii). The Registrant will not sell securities covered by outstanding options and will endeavor to liquidate its position as an option writer in a closing purchase transaction rather than deliver portfolio securities upon exercise of the option. The extent to which the Registrant may be able to write such options will depend in part on state securities regulations as amended from time to time. The investment objectives stated above may be changed by the Board of Managing General Partners without the approval of a majority of Registrant's outstanding voting securities. Registrant's fundamental policies which may not be changed without the approval of a majority of Registrant's outstanding voting securities are as follows: (1) Registrant will not issue any senior securities (as defined in the Investment Company Act of 1940). (2) Registrant will not purchase securities on margin or sell any securities short. Registrant will not purchase or write puts, calls, straddles or spreads with respect to any security except that (i) Registrant may write call options on securities constituting not more than 25% of the value of its assets if the option is listed on a national securities exchange and, at all times while the option is outstanding, Registrant owns the securities against which the option is written or owns securities convertible into such securities, and (ii) Registrant may purchase call options in closing purchase transactions to liquidate its position as an option writer. (3) Registrant will not borrow money except from banks in amounts which in the aggregate do not exceed 10% of the value of its assets at the time of borrowing. This borrowing provision is not for purposes of leverage but is intended to facilitate the orderly sale of portfolio securities to accommodate abnormally heavy redemption requests, and to pay subscription fees due with respect to -2- 5 the exchange without having to sell portfolio securities. Securities may be purchased for Registrant's portfolio while borrowings are outstanding. (4) Registrant will not act as an underwriter (except as it may be deemed such in a sale of restricted securities owned by it). (5) It is not the policy of Registrant to concentrate its investments in any particular industry, but if it is deemed advisable in light of Registrant's investment objectives, up to 25% of the value of its assets may be invested in any one industry. Registrant will not be required to reduce holdings in a particular industry if, solely as a result of price changes, the value of such holdings exceeds 25% of the value of Registrant's total assets. (6) Registrant will not purchase or sell real estate or real estate mortgage loans. (7) Registrant will not purchase or sell commodities or commodity contracts. (8) Registrant will not make loans except by (i) the purchase of debt securities in accordance with its investment objectives and (ii) the loaning of securities against collateral consisting of cash or securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities, which is equal at all times to at least 100% of the value of the securities loaned. Registrant will lend portfolio securities only when its investment adviser believes that the net return to Registrant in consideration of the loan is reasonable, that any fee paid for placing the loan is reasonable and based solely upon services rendered, that the loan is consistent with Registrant's investment objectives, and that no affiliate of Registrant or of its investment adviser is involved in the lending transaction or is receiving any fees in connection therewith. Registrant will not have the right to vote securities loaned, but will have the right to terminate such a loan at any time and receive back equivalent securities and to -3- 6 receive amounts equivalent to all dividends and interest paid on the securities loaned. (9) Registrant will not: (A) Mortgage, pledge or hypothecate its assets except to secure borrowings described in Item 4(ii)(3) and in amounts not exceeding 10% of the value of its assets. (B) Invest more than 5% of its assets at the time of purchase in the securities of any one issuer (exclusive of securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities). (C) Purchase securities if such purchase would result in its owning more than 10% of the outstanding voting securities of any one issuer at the time of purchase. (D) Invest in securities of companies which have a record, together with their predecessors, of less than five years of continuous operation. (E) Purchase or hold securities of any company if, to its knowledge, those General Partners of Registrant and those directors and officers above the level of Senior Vice President of its investment adviser beneficially owning more than 1/2 of 1% of the securities of that company, together own beneficially more than 5% of the securities of such company taken at market value. (F) Purchase the securities of other investment companies except that Registrant has accepted for exchange shares of common stock of Coca-Cola International Corporation in accordance with the limitations imposed by the Investment Company Act of 1940. (G) Purchase oil, gas or other mineral leases or partnership interests in oil, -4- 7 gas or other mineral exploration programs. (H) Knowingly purchase or otherwise acquire any equity or debt securities which are subject to legal or contractual restrictions on resale if, as a result thereof, more than 10% of the value of its assets would be invested in such securities. (I) Invest in companies for the purpose of exercising control or management. Any investment policy or restriction in these Items (1)-(9) which involves a maximum percentage of securities or assets shall not be considered to be violated unless an excess over the percentage occurs immediately after an acquisition of securities or utilization of assets and results therefrom. Registrant's investment policies which are not deemed fundamental and may be changed without shareholder approval are as follows: Registrant does not intend to engage in any significant degree in short-term trading. Portfolio turnover is not expected to exceed 15%, although Registrant reserves the right to exceed this turnover rate. The tax consequences of a sale of portfolio securities will be considered prior to a sale, but sales will be effected when the investment adviser believes a sale would be in the best interests of Registrant's shareholders even though capital gains will be realized. Registrant will not sell securities covered by outstanding options and will endeavor to liquidate its position as an option writer in a closing purchase transaction rather than by delivering portfolio securities upon exercise of the option. * * * Limited Partners generally are not personally liable for liabilities of the Fund. However, if the Fund were unable to pay its liabilities, -5- 8 recipients of distributions from the Fund could be liable to creditors of the Fund to the extent of such distributions, plus interest. See Item 6. A Limited Partner has no right to take any part in the control of the Partnership business, and the exercise of such control would subject a Limited Partner to the personal liability of a General Partner for obligations of the Fund. Although no absolute assurance can be given due to the lack of specific statutory authority and the fact that there are no authoritative judicial decisions on the matter, the Fund received an opinion from California Counsel that the existence and exercise by the Limited Partners of the voting rights provided for in the Partnership Agreement do not subject the Limited Partners to liability as general partners under the California Act. It is possible, however, that the existence or exercise of such rights, might subject the Limited Partners to such liability under the laws of another state. In the event that a Limited Partner should be found to be liable as a general partner, then, to the extent the assets and insurance of the Fund and of the General Partners were insufficient to reimburse a Limited Partner, he would be required to personally satisfy claims of creditors against the Fund. The net asset value of the Shares on redemption or repurchase may be more or less than the initial offering price of the Shares depending upon the market value of the Fund's portfolio securities at the time of redemption or repurchase. Item 5. Management of the Fund (a) The business and affairs of the Fund are managed by its five Managing General Partners. Their addresses and principal occupations for the past five years are stated at Item 14. (b)(i) Registrant's investment advisers are PNC Bank, National Association ("PNC Bank") which has banking offices at 1600 Market Street, Philadelphia, Pennsylvania 19101 and BlackRock Institutional Management Corporation ("BIMC"), formerly PNC Institutional Management Corporation, located at Bellevue Park Corporate Center, 400 Bellevue Parkway, Wilmington, Delaware 19809. PNC Bank and its predecessors -6- 9 have been in the business of managing the investments of fiduciary and other accounts in the Philadelphia area since 1847. Investment advisory services are provided to the Registrant by PNC Bank through its Trust Division. BIMC was organized by PNC Bank in June 1977 to perform investment advisory services for Registrant and certain other regulated investment companies advised by PNC Bank. All of the capital stock of BIMC is owned by PNC Bank. All of the capital stock of PNC Bank is owned by PNC Bancorp, Inc. with principal offices in Wilmington, Delaware. All of the capital stock of PNC Bancorp, Inc. is owned by PNC Bank Corp., a publicly held bank holding corporation with principal offices in Pittsburgh, Pennsylvania. (ii) The investment advisers, subject to the authority of the Managing General Partners, are responsible for the overall management of the Fund's business affairs. (iii) For the services provided by PNC Bank and BIMC and the expenses assumed by them under the Advisory Agreement dated January 1, 1998, Registrant has agreed to pay BIMC a fee, computed daily and payable monthly, at the annual rate of 4/10ths of 1% of the first $100,000,000 of the Registrant's net assets, plus 3/10ths of 1% of the net assets exceeding $100,000,000. For the fiscal year ended December 31, 1997, the Fund paid $1,463,053, or approximately .43% of its average net assets to BIMC pursuant to its former Investment Advisory Agreement. (c) Since January 1996, Mary Elizabeth C. Pfeil has been primarily responsible for the day-to-day management of the Fund's portfolio. Prior to joining PNC Equity Advisors Company in 1993, Ms. Pfeil was a member of the Equity Research Group of PNC Asset Management Group (then named PNC Investment Management and Research) where she covered the energy and housing-related industries. From 1990 to 1992, she was employed by Wellington Management Company as a generalist equity researcher. Prior to 1990, Ms. Pfeil worked first as a commercial lender and later as an equity analyst for PNC Bank. She is a member of the Financial Analysts of Philadelphia and is a Chartered Financial Analyst. (d) Inapplicable. (e) The Fund's transfer agent and dividend disbursing agent is PFPC Inc. ("PFPC"). Its principal business address is 400 Bellevue Parkway, Wilmington, DE 19809. -7- 10 (f) For fiscal year ended December 31, 1997, the Fund's expenses totalled $1,697,789, or approximately .50% of its average net assets. (g) Inapplicable. Item 5A. Management's Discussion of Fund Performance Inapplicable. Item 6. Capital Stock and Other Securities (a) Registrant has one class of partnership interest, no par value ("Shares"). All Shares are entitled to participate equally in distributions declared by the Board of Managing General Partners. Each full Share entitles the record holder thereof to one full vote, and each fractional Share to a fractional vote, on all matters submitted to the shareholders. Shareholders are not entitled to cumulative voting in elections for General Partners. Each Share has equal liquidation rights. There are no pre-emptive rights or conversion rights. Registrant is a limited partnership formed under The Uniform Limited Partnership Act of California. Limited Partners generally are not personally liable for liabilities of Registrant. However, if Registrant were unable to pay its liabilities, recipients of distributions from Registrant could be liable to certain creditors of Registrant to the extent of such distributions, plus interest. Registrant believes that, because of the nature of Registrant's business, the assets and insurance of Registrant and of the General Partners, and Registrant's ability to contract with third parties to prevent recourse by the party against a Limited Partner, it is unlikely that Limited Partners will receive distributions which have to be returned or that they will be subject to liability as General Partners. In the event that a Limited -8- 11 Partner should be found to be liable as a General Partner, then, to the extent the assets and insurance of Registrant and of the General Partners were insufficient to reimburse a Limited Partner, he would be required to personally satisfy claims of creditors against Registrant. (b) Inapplicable. (c) The rights of the holders of Shares may not be modified otherwise than by the vote of a majority of outstanding shares. (d) Inapplicable. (e) Shareholder inquiries should be made to the Fund, 400 Bellevue Parkway, Wilmington, Delaware 19809, telephone (302) 792-2555. (f) Registrant's Dividend/Distribution Policy Beginning on January 1, 1998: Effective January 1, 1998, the Registrant is deemed a corporation, rather than a partnership, for federal tax purposes. In connection with this change in its federal tax status, the Registrant will elect to be taxed as a regulated investment company ("RIC"). To qualify as a RIC under the Internal Revenue Code (the "Code"), the Registrant is required to meet certain income, diversification and distribution requirements. For example, to qualify as a RIC, the Registrant must pay as dividends each year at least 90% of its investment company income which includes, but is not limited to, taxable interest, dividends and short-term capital gains less expenses. The Registrant intends to continue its historic policy of regular and quarterly dividends and to pay an additional dividend at year end so that total distributions for each year equal 100% of its net investment income. The Registrant intends to retain all of its net long-term capital gains. Under the new policy, each Limited Partner will be deemed to have received his or her pro rata share of net long-term capital gain and will receive a tax credit equal to the pro rata share of the capital gains tax paid by the Fund. Formerly the Registrant, when it was taxed as a partnership, distributed approximately 30% of its net long-term capital gains to provide its Limited Partners, who were deemed to have been distributed all of such gains, with funds with which to pay the capital gains tax. See Item 6(g) for more information on the tax consequences to Partners of an investment in the Registrant. Investors who elect to participate in the Registrant's Systematic Withdrawal Plan will receive quarterly in cash as a partial redemption of their Shares up to 3/4 of 1% of the net asset value of their Shares determined as of the last trading day of each calendar quarter. -9- 12 (g) Tax Consequences to Partners Invested in the Registrant Beginning on January 1, 1998: Under the publicly traded partnership Rules of the Code, the Registrant is treated as a corporation for federal income tax purposes as of January 1, 1998. However, the Registrant intends to qualify as a RIC under the Code. The Code's RIC provisions provide pass-through treatment of taxable income similar to that provided under the Code's partnership rules. Therefore, to the extent that the Registrant's earnings are distributed to its partners as required by the RIC provisions of the Code, the Registrant itself will not be required to pay federal income tax. Distributions of net investment income by the Registrant as a RIC will be treated as ordinary income in determining a partner's gross income for tax purposes, whether the partner receives these dividends in cash or Shares. The Registrant intends to retain all of its net realized long-term capital gains as a RIC and pay the tax on the gain at the required corporate rate. Each partner will be required to report his allocable portion of the Registrant's gain, but each partner will also receive a tax credit for his allocable portion of the tax paid by the Registrant. As a result, each partner should receive a federal income tax benefit equal to the difference between the corporate tax rate and the individual tax rate on long-term capital gains. In addition, any retained capital gains, net of tax, would generally increase a partner's investment (and tax basis) in the Registrant. Registrant will inform each Partner as to the amount and nature of such income or gains. Each partner should consult with his tax adviser with specific references to his own tax situation. See Item 20 for additional background information on the Registrant's federal income tax status. -10- 13 Item 7. Purchase of Securities Being Offered (a) Inapplicable. (b) Inapplicable. (c) Investors may, by notice in writing to the transfer agent, elect to participate in the Systematic Withdrawal Plan (the "Plan"). Participants in the Plan may elect to receive quarterly in cash as a partial redemption of their Shares up to 3/4 of 1% of the net asset value of their Shares as of the close of trading on the New York Stock Exchange on the last trading day of each calendar quarter. Registrant does not intend to impose a charge upon investors for participating in the Plan. Participants may withdraw from the Plan at any time by written notice to the transfer agent. (d) Inapplicable. (e) Inapplicable. (f) Inapplicable. (g) Inapplicable. Item 8. Redemption or Repurchase (a) Shares may be redeemed at the option of the investor at any time without charge at their net asset value next computed after receipt by PFPC of a written request for redemption setting forth the name of the Registrant and the investor's account number. The request must be accompanied by certificates (if issued) or if certificates have not been issued, by stock powers. The certificate or stock powers must be endorsed by the record owner(s) exactly as the Shares are registered and the signature(s) must be guaranteed by an "eligible guarantor institution" as defined in Rule 17Ad-15 under the Securities Exchange Act of 1934. The Registrant reserves the right to require that additional documents be furnished in the case of redemptions by other than the registered owner of the Shares. Except to the extent Shares are redeemed for cash pursuant to the Systematic Withdrawal Plan, Registrant intends to distribute upon redemption -11- 14 securities in kind valued at the same value used for purposes of next determining Registrant's net asset value after the receipt of the request for redemption in proper form. Registrant may in its discretion pay part or all of redemption proceeds in cash. The proceeds of redemption will be paid as soon as possible but not later than seven days after the request for redemption is received with the required documentation. The Registrant may suspend the right of redemption or delay payment during any period when the New York Stock Exchange is closed (other than customary weekend and holiday closings); when trading on that exchange is restricted or an emergency exists which makes disposal or valuation of portfolio securities impracticable; or during such other period as the Securities and Exchange Commission may by order permit. The net asset value of the Shares on redemption or repurchase may be more or less than the initial offering price of the Shares depending upon the market value of the Fund's portfolio securities at the time of redemption or repurchase. (b) Inapplicable. -12- 15 (c) Inapplicable. (d) Inapplicable. Item 9. Pending Legal Proceedings Inapplicable. -13- 16 PART B. STATEMENT OF ADDITIONAL INFORMATION Item 10. Cover Page Inapplicable.
Item 11. Table of Contents Page No. ----------------- ------- General Information and History . . . . . . . . . . . . . . . . . . . . . . . . . 14 Investment Objectives and Policies . . . . . . . . . . . . . . . . . . . . . . . . 14 Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Control Persons and Principal Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Investment Advisory and Other Services . . . . . . . . . . . . . . . . . . . . . . 18 Brokerage Allocation and Other Practices . . . . . . . . . . . . . . . . . . . . . 20 Capital Stock and Other Securities . . . . . . . . . . . . . . . . . . . . . . . . 21 Purchase, Redemption and Pricing of Securities Being Offered . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Calculation of Performance Data . . . . . . . . . . . . . . . . . . . . . . . . . 24 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Item 12. General Information and History Inapplicable. Item 13. Investment Objective and Policies (a) See Item 4(ii). (b) See Item 4(ii). (c) See Item 4(ii). (d) For the fiscal years ended December 31, 1997 and 1996, Registrant's portfolio turnover rates were 1.26% and 3.92%, respectively. Item 14. Management of the Fund (a) Managing General Partners and officers of the Fund: -14- 17
Principal Occupations Position with During Past 5 Years and Name and Address Age with Registrant and Current Affiliations - ---------------- ---- --------------- ------------------------ Richard C. Caldwell 53 Managing Executive Vice President, PNC Bank; Director of various 400 Bellevue Parkway General affiliates and subsidiaries of PNC Bank, including BIMC; Wilmington, DE 19809 Partner Director or Trustee of no other investment companies advised by BIMC. Robert R. Fortune 81 President and Financial Consultant; Former Chairman, 2920 Ritter Lane Chairman of the President and Chief Executive Allentown, PA 18104 Managing General Officer, Associated Electric & Partners Gas Insurance Services Limited from 1984 to 1993; Member of the Financial Executives Institute and American Institute of Certified Pubic Accountants; Director, Trustee or Managing General Partner of 4 other investment companies advised by BIMC. G. Willing Pepper 89 Managing Retired; Chairman of the Board, 128 Springton Lake Rd. General Specialty Composites Corporation Media, PA 19063 Partner until May 1984; Chairman of the Board, The Institute for Cancer Research until 1979; Director, Philadelphia National Bank until 1978; President, Scott Paper Company, 1971-1973; Director, Trustee or Managing General Partner of 5 other investment companies advised by BIMC. Langhorne B. Smith 61 Managing President and Director, the Sandridge Corporation Suite 400 General (private investment company); Executive Vice President Plymouth Meeting Partner and Director, Clancil Enterprises, Inc. (private Executive Campus investment company); Director or Trustee of 1 other 630 Germantown Pike investment company advised by BIMC. Plymouth Meeting, P.A. 19462 David R. Wilmerding, Jr. 62 Managing President, Gee Wilmerding Gee Wilmerding & Associates General & Associates (investment advisers) since February 1989; Aldwyn Center Partner Director, Beaver Management Corporation; Until September Villanova, PA 19085 1988, President, Treasurer and Trustee, The Mutual Assurance Company; Until September 1988, Chairman, President, Treasurer and Director, The Green Tree Insurance Company (a wholly-owned subsidiary of The Mutual Assurance Company); Until September 1988, Director, Keystone State Life Insurance Company; Director or Trustee
-15- 18
Principal Occupations Position with During Past 5 Years and Name and Address Age with Registrant and Current Affiliations - ---------------- ---- --------------- ------------------------ of 2 other investment companies advised by BIMC. Edward J. Roach 73 Treasurer Certified Public Accountant; Partner 400 Bellevue Parkway of the accounting firm of Main Wilmington, DE 19809 Hurdman until 1981; Vice Chairman of the Board, Fox Chase Cancer Center; Trustee Emeritus, Pennsylvania School for the Deaf; Trustee Emeritus, Immaculata College; Former Director, Biotrol USA, Inc.; President, Vice-President and/or Treasurer of 2 other investment companies advised by BIMC; Director, The Bradford Funds, Inc. Morgan R. Jones 58 Secretary Partner of the law firm of PNB Building Drinker Biddle & Reath LLP, 1345 Chestnut Street Philadelphia, Pennsylvania. Philadelphia, PA 19107-3496
(b) See item (a) above. -16- 19 (c) The Registrant pays Managing General Partners at the rate of $6,000 annually ($10,000 beginning June 1998), and pays the Chairman an additional $4,000 annually ($8,000 beginning June 1998). The following table provides information concerning the compensation of each of the Registrant's Managing General Partners for services rendered during the Company's last fiscal year ended December 31, 1997:
Aggregate Pension or Retirement Estimated Annual Total Compensation Name of Person/ Compensation Benefits Accrued as Benefits Upon from Registrant and Position From Registrant Part of Fund Expenses Retirement Fund Complex (1) - --------------- --------------- --------------------- ---------------- -------------------- Richard C. Caldwell(2) $0 None None $0 Managing General Partner Robert R. Fortune $10,000 None None (5)(3) $64,000 President and Chairman of the Managing General Partners G. Willing Pepper $ 6,000 None None (6)(3) $94,000 Managing General Partner Longhorne B. Smith(2) $0 None None (2)(3) $0 Managing General Partner David R. Wilmerding, Jr. $ 6,000 None None (3)(3) $66,100 Managing General Partner
- ----------------------- (1) A Fund Complex means two or more investment companies that hold themselves out to investors as related companies for purposes of investment and investor services, or have a common investment adviser or have an investment adviser that is an affiliated person of the investment adviser of any of the other investment companies. (2) Messrs. Caldwell and Smith were elected Managing General Partners of the Registrant on December 18, 1997. (3) Total number of investment companies within the Fund Complex of which the Managing General Partner serves as director, trustee or managing general partner. -17- 20 Item 15. Control Persons and Principal Holders of Securities (a) Inapplicable. (b) Inapplicable. (c) As of April 2, 1998, all officers and Managing General Partners of Registrant as a group beneficially owned less than 1% of the Registrant's outstanding equity securities. Item 16. Investment Advisory and Other Services (a) All of the capital stock of BIMC is owned by PNC Bank. All of the capital stock of PNC Bank is owned by PNC Bancorp, Inc., with principal offices in Wilmington, Delaware. All of the capital stock of PNC Bancorp, Inc. is owned by PNC Bank Corp., a publicly held bank holding corporation with principal offices in Pittsburgh, Pennsylvania. The Registrant paid $1,021,188, $1,194,793 and $1,463,053 for investment advisory services for the years ended December 31, 1995, 1996 and 1997, respectively. The method of computing the advisory fee payable by the Registrant is determined as in Item 5(b)(iii) above. (b) Subject to the supervision of Registrant's Managing General Partners, BIMC manages the Registrant's portfolio and is responsible for, makes decisions with respect to, and places orders for, all purchases and sales of the Registrant's portfolio securities. BIMC is also required to compute the Registrant's net asset value and net income. The Advisory Agreement also provides that, subject to the supervision of the Registrant's Managing General Partners and without additional charge to Registrant, PNC Bank will, through its Trust Division and on behalf of Registrant: (i) provide BIMC investment research and credit analysis concerning prospective and existing investments of the Registrant, (ii) make recommendations to BIMC with respect to the Registrant's continuous investment program, (iii) make recommendations to BIMC regarding the amount of the Registrant's assets to be invested or held uninvested in cash or cash equivalents, (iv) -18- 21 supply BIMC with computer facilities and operating personnel, (v) provide BIMC with such statistical services as BIMC may reasonably request, and (vi) maintain or cause BIMC to maintain Registrant's financial accounts and records. PNC Bank and BIMC have agreed to bear all expenses incurred by them in connection with their activities other than the cost of securities (including brokerage commissions, if any) purchased for Registrant. (c) Inapplicable. (d) Inapplicable. -19- 22 (e) Inapplicable. (f) Inapplicable. (g) Inapplicable. (h) The custodian of Registrant's portfolio securities is the Wilmington Trust Company, located at Wilmington Trust Center, Rodney Square North, Wilmington, Delaware 19890. The custodian has agreed to provide certain services as depository and custodian for the Registrant. Registrant's independent accountants are Coopers & Lybrand L.L.P., located at 2400 Eleven Penn Center, Philadelphia, Pennsylvania 19103. The following is a general description of the services performed by Coopers & Lybrand L.L.P.: auditing and reporting upon financial statements; reviewing semi-annual report; and reporting on internal control structure for inclusion in Form N-SAR. (i) Inapplicable. Item 17. Brokerage Allocation and Other Practices (a) Registrant effects transactions in portfolio securities through brokers and dealers. Registrant paid aggregate brokerage commissions of $0, $19,505 and $5,850 for the years ended December 31, 1995, 1996 and 1997, respectively. (b) Inapplicable. (c) In placing orders with brokers and dealers for purchases and sales of securities, BIMC attempts to obtain the best net price and the most favorable execution of its orders. In seeking best execution, BIMC uses its best judgment to evaluate the terms of a transaction, giving consideration to all relevant factors including the nature of the transaction and of the markets for the security, the financial condition and execution and settlement capabilities of the broker-dealer, and the reasonableness of any brokerage commission. Where the terms of a transaction are comparable, BIMC may give consideration to firms which supply investment research, statis- -20- 23 tical and other services to Registrant or to PNC Bank, although there are no agreements to that effect with any such firm. Research and statistical material furnished by brokers without cost to PNC Bank and BIMC may tend to benefit the Fund or other clients of PNC Bank and BIMC by improving the quality of advice given. (d) Inapplicable. (e) Inapplicable. Item 18. Capital Stock and Other Securities (a) Inapplicable. (b) Inapplicable. Item 19. Purchase, Redemption, and Pricing of Securities Being Offered (a) Inapplicable. (b) Net asset value per share is determined by BIMC as of the close of business on each day. The net asset value per share is computed by taking the total value of all assets of Registrant less its liabilities and dividing by the number of Shares outstanding. Securities for which market quotations are readily available are valued at their current market value in the principal market in which such securities are normally traded. These values are normally determined by (i) the last sales price, if the principal market is on the New York Stock Exchange or other securities exchange (or the closing bid price, if there has been no sales on such exchange on that day), or (ii) the most recent -21- 24 bid price, if the principal market is other than an exchange. Securities and other assets for which market quotations are not readily available (including restricted securities) are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Managing General Partners. With respect to call options written on portfolio securities, the amount of the premium received is treated as an asset and amortized over the life of the option, and the price of an option to purchase identical securities upon the same terms and conditions is treated as a liability marked to the market daily. The price of options are normally determined by the last sales price on the principal exchange on which such options are normally traded (or the closing asked price if there has been no sales on such exchange on that day). (c) Inapplicable. Item 20. Tax Status -22- 25 The Revenue Act of 1987 added section 7704 to the Code. Section 7704, which is also known as the publicly traded partnership rules, provides that a publicly traded partnership is to be treated as a corporation for federal tax purposes. A publicly traded partnership is defined to include any partnership whose interests are (1) traded on an established securities market, or (2) readily tradeable on a secondary market (or the substantial equivalent thereof). A transitional rule postponed the application of section 7704 to a partnership which was a publicly traded partnership on -23- 26 December 17, 1987 until its first taxable year beginning after December 31, 1997 provided that the partnership does not add a substantial new line of business. The Registrant was within the definition of a publicly traded partnership and was eligible for the transitional rule. In connection with its deemed incorporation for federal income tax purposes on January 1, 1998, the Registrant will elect to be taxed federally as a RIC. This election permits the Registrant to receive pass through tax treatment similar to that of a regular partnership. In order to qualify as a RIC, the Registrant will have to comply with certain income, diversification and distribution requirements set forth in Subchapter M of the Code. If the Registrant elected not to be a RIC or failed to meet the RIC requirements of Subchapter M of the Code, it would be taxed as a regular corporation and any distributions to its partners would be taxed as ordinary dividend income to the extent of the Registrant's earnings and profits. See Item 6 for information about the taxation of Registrant's income and capital gains after January 1, 1998. Although the Registrant is deemed a corporation for federal income tax purposes as of January 1, 1998 and intends to qualify as a RIC thereafter, the Registrant expects that it will continue to be organized for all other purposes as a California Limited Partnership. Item 21. Underwriters (a) Inapplicable. (b) Inapplicable. (c) Inapplicable. Item 22. Calculation of Performance Data (a) Inapplicable. (b) Inapplicable. Item 23. Financial Statements The audited financial statements and related report of Coopers & Lybrand, L.L.P., independent accountants, contained in the annual report to partners for the fiscal year ended December 31, 1997 (the "1997 Annual Report") as filed with the Securities and Exchange Commission on March 2, 1998 are incorporated herein by reference. No other parts of the 1997 Annual Report are incorporated herein by reference. The financial statements included in the 1997 Annual Report have been incorporated herein in reliance upon the report of Coopers & Lybrand, L.L.P. given on the authority of said firm as expert in accounting and auditing. A copy of the 1997 Annual Report may be obtained by writing to the Registrant or by calling (302) 792-2555. -24- 27 PART C. OTHER INFORMATION Item 24. Financial Statements and Exhibits (a) Financial Statements: 1. Part A: None. 2. Part B: The Registrant's December 31, 1997 Annual Report has been filed with the Securities and Exchange Commission and the financial statements included therein are incorporated herein by reference. See Exhibit 24 below. (b) Exhibits: 1. Amended and Restated Certificate and Agreement of Limited Partnership dated January 1, 1998. 2. (a) Code of Regulations of Registrant filed as Exhibit 2(a) to PEA No. 19 is incorporated herein by reference. (b) Amendment No. 1 to Registrant's Code of Regulations adopted December 16, 1982 filed as Exhibit 2(b) is incorporated herein by reference. 3. Inapplicable. C-1 28 4. Specimen certificate for units of partnership interest in Registrant is incorporated herein by reference to Exhibit No. (4)(a)(1) of Amendment No. 2 to Registrant's Registration Statement on Form S-5, filed on September 16, 1976. 5. Advisory Agreement dated January 1, 1998. 6. Inapplicable. 7. Amended and Restated Fund Office Retirement Profit-Sharing Plan and Trust Agreement dated January 1, 1998. 8. Amended and Restated Custodian Agreement dated October 15, 1983 filed as Exhibit 8 to PEA No. 19 is incorporated herein by reference. 9. Inapplicable. 10. Inapplicable. 11. Consent of Independent Accountants. 12. Inapplicable. 13. (a) Agreement dated September 15, 1976 relating to Initial Capitalization filed as Exhibit 13(a) to PEA No. 19 is incorporated herein by reference. (b) Amendment No. 1 to Agreement dated September 15, 1976 relating to Initial Capitalization filed as Exhibit 13(b) to PEA No. 19 is incorporated herein by reference. 14. Inapplicable. 15. Inapplicable. 16. Inapplicable. 17. Financial Data Schedule of the Registrant as Exhibit 27. 18. Inapplicable. 24. Annual Report for Registrant (No. 811-2631) dated December 31, 1997 is incorporated herein by reference to the Registrant's filing including such Annual Report and filed on March 2, 1998 (Accession No. 893220-98-458). C-2 29 Item 25. Persons Controlled by or under Common Control with Registrant Inapplicable. Item 26. Number of Holders of Securities
(1) (2) Title of Number of Record Holders Class as of March 31, 1998 Shares of partnership interest (no par value) 322
Item 27. Indemnification The answer to Item 19 of Amendment No. 2 to Registrant's Registration Statement on Form N-8B-1 filed on September 16, 1976 is incorporated herein by reference. Item 28. Business and Other Connections of Investment Adviser (a) The information required by this Item 28 with respect to each director, officer and partner of BIMC is incorporated by reference to Schedules A and D of Form ADV filed by BIMC with the Securities and Exchange Commission pursuant to the Investment Advisers Act of 1940 (the "1940 Act") (SEC File No. 801-13304). (b) To Registrant's knowledge, none of the directors or principal officers of PNC Bank, N.A., except those set forth below, is, or has been at any time during Registrant's past two fiscal years, engaged in any other business, profession, vocation or employment of a substantial nature. Set forth below are the names and principal businesses of the directors and principal officers of PNC Bank, N.A. who are engaged in any other business, profession, vocation or employment of a substantial nature. (c) Set forth below are the names and principal businesses of the directors and certain executives of PNC Bank who are engaged in any other business, profession, vocation or employment of a substantial nature. C-3 30 PNC BANK, NATIONAL ASSOCIATION DIRECTORS
POSITION WITH TYPE PNC BANK NAME OTHER BUSINESS CONNECTIONS OF BUSINESS - -------- ---- -------------------------- ----------- Director B.R. Brown Chairman, President and C.E.O. of Coal Consol, Inc. Consol Plaza Pittsburgh, PA 15241 Director Constance E. Clayton Alleghany University of the Medical Health Sciences Ballet Building 1505 Race St. - Mail Stop 660 Philadelphia, PA 19102 Director Eberhard Faber IV Chairman and C.E.O. Manufacturing E.F.L., Inc. 450 Hedge Road P.O. Box 49 Bearcreek, PA 18602 Director Dr. Stuart Heydt President and C.E.O. Medical Penn State Geisinger Health System Commerce Court, Suite 300 2601 Market Place Harrisburg, PA 17110-9603 Director Edward P. Junker, III Retired Vice Chairman Banking PNC Bank, N.A. 901 State Street Erie, PA 16553 Director Thomas A. McConomy President, C.E.O. and Manufacturing Chairman, Calgon Carbon Corporation 413 Woodland Road Sewickley, PA 15143 Director Thomas H. O'Brien Chairman and CEO Banking PNC Bank Corp. One PNC Plaza 249 Fifth Avenue Pittsburgh, PA 15265
C-4 31
POSITION WITH TYPE PNC BANK NAME OTHER BUSINESS CONNECTIONS OF BUSINESS - -------- ---- -------------------------- ----------- Director Rocco A. Ortenzio Chairman and C.E.O. Medical Select Medical Corporation 4718 Old Gettsburg Road P.O. Box 2034 Mechanicsburg, PA 17055 Director Robert C. Robb, Jr. President, Lewis, Eckert, Robb Financial & Company Management 425 One Plymouth Meeting Consultants Plymouth Meeting, PA 19462 Director James E. Rohr President and C.E.O. Banking PNC Bank, National Association One PNC Plaza, 30th Floor Pittsburgh, PA 15265 Director Daniel M. Rooney President, Pittsburgh Steelers Football Football Club of the National Football League 300 Stadium Circle Pittsburgh, PA 15212 Director Seth E. Schofield Chairman Security Basa International Consulting 1479 Pointers Run Road Pittsburgh, PA 15241
C-5 32 PNC BANK, NATIONAL ASSOCIATION OFFICERS Name Position with PNC Bank - ---- ---------------------- James C. Altman Senior Vice President Edward V. Arbaugh, III Senior Vice President Robert Jones Arnold Senior Vice President James N. Atteberry Senior Vice President Lila M. Bachelier Senior Vice President James C. Baker Senior Vice President James R. Bartholomew Senior Vice President Peter R. Begg Senior Vice President Constance A. Bentzen Senior Vice President Donald G. Berdine Senior Vice President Ben Berzin, Jr. Senior Vice President James H. Best Senior Vice President Paul A. Best Senior Vice President Michael J. Beyer Senior Vice President R. Bruce Bickel Senior Vice President Karen E. Blair Senior Vice President Robald R. Blankenbuehler Senior Vice President Eva T. Blum Senior Vice President Ronald L. Bovill Senior Vice President Dennis P. Brenckle Regional President, Central PA Market George Brikis Executive Vice President Michael Brundage Senior Vice President Donna L. Burge Senior Vice President Jane Wilson Burke Senior Vice President Douglas H. Burr Senior Vice President David D. Burrow Senior Vice President Anthony J. Cacciatore Senior Vice President Richard C. Caldwell Executive Vice President Craig T. Campbell Senior Vice President J. Richard Carnall Executive Vice President Donald R. Carroll Senior Vice President Edward V. Caruso Executive Vice President Kevin J. Cecil Senior Vice President Rhonda S. Chatzkel Senior Vice President Chaomei Chen Senior Vice President Sandra Chickletti Assistant Secretary Thomas P. Ciak Assistant Secretary Peter K. Classen Regional President, Northeast PA Market Andra D. Cochran Senior Vice President William Harvey Coggin Senior Vice President Sharon Coghlan Coordinating Market Chief Counsel, Philadelphia John F. Colligan Senior Vice President James P. Conley Senior Vice President C. David Cook Senior Vice President Robert F. Crouse Senior Vice President Peter M. Crowley Senior Vice President Keith P. Crytzer Senior Vice President Terry D'Amore Senior Vice President John J. Daggett Senior Vice President Peter J. Danchak Senior Vice President Richard Devore Senior Vice President James N. Devries Senior Vice President Anuj Dhanda Senior Vice President Victor M. DiBattista Chief Regional Counsel Frank H. Dilenschneider Senior Vice President Thomas C. Dilworth Senior Vice President Alfred J. DiMatteis Senior Vice President Robert D. Edwards Senior Vice President Tawana L. Edwards Senior Vice President C-6 33 PNC BANK, NATIONAL ASSOCIATION OFFICERS David J. Egan Senior Vice President Richard M. Ellis Senior Vice President Lynn Fox Evans Senior Vice President & Controller William E. Fallon Senior Vice President James M. Ferguson, III Senior Vice President Charles J. Ferrero Senior Vice President John Fox Executive Vice President Frederick C. Frank, III Executive Vice President William J. Friel Executive Vice President Brian K. Garlock Senior Vice President Leigh Gerstenberger Senior Vice President George D. Gonczar Senior Vice President Richard C. Grace Senior Vice President James S. Graham Executive Vice President Craig Davidson Grant Senior Vice President Barbara J. Griec Senior Vice President Donald W. Griffin, Jr. Senior Vice President Thomas M. Groneman Senior Vice President Thomas Grundman Senior Vice President John C. Haller Regional President, Ohio Market Michael J. Hannon Senior Vice President Michael J. Harrington Senior Vice President Michael N. Harrold Regional President, Kentucky Market Maurice H. Hartigan, II Executive Vice President G. Thomas Hewes Senior Vice President Gregory A. Hoeck Executive Vice President Susan G. Holt Senior Vice President Sylvan M. Holzer Regional Vice President, Pittsburgh Market William D. Hummel Senior Vice President John M. Infield Senior Vice President S. Terry Irvin Executive Vice President Philip C. Jackson Senior Vice President Robert Greg Jenkins Senior Vice President William J. Johns Controller Craig M. Johnson Senior Vice President and Comptroller William R. Johnson Audit Director Robert D. Kane Senior Vice President Jack Kelly Senior Vice President Michael D. Kelsey Chief Compliance Counsel Geoffrey R. Kimmel Senior Vice President Randall C. King Senior Vice President Christopher M. Knoll Senior Vice President William Koch Executive Vice President Richard C. Krauss Senior Vice President Frank R. Krepp Senior Vice President & Chief Credit Policy Officer Kenneth P. Leckey Senior Vice President & Cashier Marilyn R. Levins Senior Vice President Carl J. Lisman Executive Vice President Richard J. Lovett Senior Vice President Stephen F. Lugarich Senior Vice President C-7 34 PNC BANK, NATIONAL ASSOCIATION OFFICERS Brian S. MacConnell Senior Vice President Jane E. Madio Senior Vice President Nicholas M. Marsini, Jr. Senior Vice President John A. Martin Senior Vice President David O. Matthews Senior Vice President Dennis McChesney Executive Vice President Walter B. McClellan Senior Vice President James F. McGowan Senior Vice President Timothy McInerney Senior Vice President Charlotte B. McLaughlin Senior Vice President Kim D. McNeil Senior Vice President Charles R. McNutt Senior Vice President James W. Meighen Senior Vice President James C. Mendelson Senior Vice President Theodore Lang Merhoff Senior Vice President Darryl Metsger Senior Vice President Scott C. Meves Senior Vice President Ralph S. Michael, III Executive Vice President James P. Mikula Senior Vice President Robert J. Miller, Jr. Senior Vice President Melanie Millican Senior Vice President J. William Mills Senior Vice President Robert G. Mills Assistant Secretary Francine Miltenberger Senior Vice President Chester A. Misbach Senior Vice President Barbara A. Misner Senior Vice President D. Bryant Mitchell, II Executive Vice President Michael D. Moll Senior Vice President Thomas R. Moore Vice President and Secretary Marlene D. Mosco Senior Vice President Peter F. Moylan Senior Vice President Ronald J. Murphy Executive Vice President Saiyid T. Naqvi Executive Vice President Michael B. Nelson Executive Vice President Thomas J. Nist Senior Vice President John L. Nocicke Senior Vice President Thomas H. O'Brien Chairman Cynthia G. Osofsky Senior Vice President Thomas E. Paisley, III Senior Vice President Daniel J. Pavlick Senior Vice President David M. Payne Senior Vice President John Pendergrass Senior Vice President W. David Pendl Senior Vice President Stephen D. Penn Senior Vice President Frank Pomor Senior Vice President Helen P. Pudlin Senior Vice President Wayne Pulliam Senior Vice President Arthur F. Radman, III Senior Vice President Gordon L. Ragan Senior Vice President Edward E. Randall Senior Vice President Jesse S. Reinhardt Senior Vice President Ronald J. Retzler Senior Vice President Richard C. Rhoades Senior Vice President Rodger L. Rickenbrode Senior Vice President Bryan W. Ridley Senior Vice President W. Alton Roberts Senior Vice President James E. Rohr President and Chief Executive Officer James C. Rooks Senior Vice President Peter M. Ross Senior Vice President Gerhard Royer Senior Vice President Robert T. Saltarelli Senior Vice President Robert V. Sammartino Senior Vice President William Sayre, Jr. Senior Vice President Stephen C. Schatteman Senior Vice President Richard A. Seymour Senior Vice President Timothy G. Shack Senior Vice President Douglas E. Shaffer Senior Vice President Bruce Shipley Senior Vice President Alfred A. Silva Executive Vice President George R. Simon Senior Vice President J. Max Smith Senior Vice President Richard L. Smoot President and CEO of PNC Bank, Philadelphia C-8 35 PNC BANK, NATIONAL ASSOCIATION OFFICERS Timothy N. Smyth Senior Vice President Darcel H. Steber Senior Vice President Donald N. Stolper Executive Vice President Stephen L. Swanson Executive Vice President Melvin A. Steele Senior Vice President Richard Stegemaier Senior Vice President Ted K. Stirgwolt Senior Vice President Connie Bond Stuart Senior Vice President Lon E. Susak Senior Vice President Ronald L. Tassone Senior Vice President Frank A. Taucher Senior Vice President John T. Taylor Senior Vice President Peter W. Thompson Senior Vice President Jane B. Tompkins Senior Vice President Alex T. Topping Senior Vice President Kevin M. Tucker Senior Vice President William H. Turner Regional President, Northern New Jersey Market William Thomps Tyrrell Senior Vice President Alan P. Vail Senior Vice President Michael B. Vairin Senior Vice President Ellen G. Van der Horst Executive Vice President Ronald H. Vicari Senior Vice President Patrick M. Wallace Senior Vice President Bruce E. Walton Executive Vice President Annette M. Ward-Kredel Senior Vice President Robert S. Warth Senior Vice President Leonard A. Watkins Senior Vice President Mark F. Wheeler Senior Vice President Frances A. Wilkinson Assistant Secretary Gary G. Wilson Senior Vice President Nancy B. Wolcott Executive Vice President Arlene M. Yocum Senior Vice President Carole Yon Senior Vice President George L. Ziminski, Jr. Senior Vice President Item 29. PRINCIPAL UNDERWRITERS Inapplicable. Item 30. LOCATION OF ACCOUNTS AND RECORDS Books or other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules (17 CFR 270.31a-1 to 31a-3) promulgated thereunder, are maintained by BIMC at 400 Bellevue Parkway, Wilmington, Delaware 19809 except for the Certificate and Agreement of Limited Partnership and Code of Regulations which are maintained by the Secretary of the Registrant at Philadelphia National Bank Building, 1345 Chestnut Street, Philadelphia, Pennsylvania 19107-3496. Item 31. MANAGEMENT SERVICES None. C-9 36 SIGNATURE Pursuant to the requirements of the Investment Company Act of 1940, the Registrant has duly caused this Amendment No. 21 to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Wilmington, and State of Delaware, on the 22nd day of April, 1998. CHESTNUT STREET EXCHANGE FUND By /s/ Edward J. Roach -------------------------- Edward J. Roach Treasurer C-10 37 EXHIBIT INDEX
Exhibit Number Description - ------- ------ ----------- (1) Amended and Restated Certificate of Limited Partnership dated December 31, 1997. (5) Advisory Agreement dated January 1, 1998. (7) Amended and Restated Fund Office Retirement Profit-Sharing Plan and Trust Agreement dated January 1, 1998. (11) Consent of Independent Accountants. (27) Financial Data Schedule of the Registrant.
EX-1 2 AMENDED & RESTATED CERTIFICATE OF LIMITED PART. 1 EXHIBIT 1 TABLE OF CONTENTS TO RESTATED CERTIFICATE AND AGREEMENT OF LIMITED PARTNERSHIP OF CHESTNUT STREET EXCHANGE FUND (A CALIFORNIA LIMITED PARTNERSHIP) ARTICLE I - NAME AND STATUTORY OFFICE......................................................................... A-1 1.1 Name........................................................................................... A-1 1.2 Principal Place of Business.................................................................... A-1 ARTICLE II - CHARACTER OF THE BUSINESS OF THE FUND............................................................ A-2 2.1 Purpose........................................................................................ A-2 2.2 Investment Objectives.......................................................................... A-2 2.3 Operating Powers............................................................................... A-2 ARTICLE III - GENERAL PARTNERS................................................................................ A-3 3.1 Identity of Managing General Partners.......................................................... A-3 3.2 Designation and Election of Successor or Additional General Partners........................... A-3 3.3 Management and Control......................................................................... A-4 3.4 Limitations on the Authority of the General Partners........................................... A-6 3.5 Action by the General Partners................................................................. A-6 3.6 Reimbursement and Indemnification.............................................................. A-7 3.7 Limitation of Liability to Shareholders........................................................ A-8 3.8 Termination of Status and Interest of General Partners......................................... A-8 3.9 Right of General Partners to Become Limited Partners........................................... A-9 3.10 No Agency...................................................................................... A-9 3.11 Voting of Shares Owned by General Partners..................................................... A-9 ARTICLE IV - LIMITED PARTNERS................................................................................. A-9 4.1 Sales of Additional Shares; Admission of Additional Limited Partners........................... A-9 4.2 Right to Assign Shares; Substituted and Additional Limited Partners............................ A-9 4.3 No Power to Control Business................................................................... A-10 4.4 Limited Liability.............................................................................. A-10 4.5 Limited Partners Not Personally Liable......................................................... A-11 4.6 Death of a Limited Partner..................................................................... A-11 ARTICLE V - CAPITAL CONTRIBUTIONS: SALES OF SHARES; ALLOCATIONS TO SHARES..................................... A-11 5.1 Shares of Partnership Interest................................................................. A-11 5.2 Contributions by General Partners.............................................................. A-12 5.3 Contributions by the Limited Partners.......................................................... A-12 5.4 Allocation of Fund Income, Gains, Losses, Deductions and Credits Among the Shares.............. A-12 ARTICLE VI - DISTRIBUTIONS AND RETURNS OF CONTRIBUTIONS....................................................... A-12 6.1 In General..................................................................................... A-12 6.2 Distributions with Respect to Income and Net Realized Capital Gains............................ A-12 6.3 Distributions in Connection With Redemption of Shares.......................................... A-13 6.4 Distributions upon Winding Up of the Fund...................................................... A-14 6.5 Returns of Contributions....................................................................... A-15 ARTICLE VII - PARTNERS' RIGHTS TO VOTE UPON MATTERS AFFECTING THE BASIC STRUCTURE OF THE FUND: EXERCISE OF VOTING RIGHTS.......................................................... A-16 7.1 Voting Rights of Partners...................................................................... A-16 7.2 Meetings of the Partners....................................................................... A-17 7.3 Quorum and Required Vote at Meetings of the Partners........................................... A-17 7.4 Action by Written Consent...................................................................... A-18 ARTICLE VIII - TERM AND DISSOLUTION OF THE FUND............................................................... A-18 8.1 Term........................................................................................... A-18 8.2 Events Causing Earlier Dissolution of the Fund................................................. A-18 8.3 Right of General Partners to Continue the Business of the Fund in Certain Events............... A-18 8.4 Right of the Partners to Provide for Continuation of the Business of the Fund in Certain Events................................................................................. A-19 ARTICLE IX - FUND DOCUMENTATION; AMENDMENT OF THE CERTIFICATE AND AGREEMENT; POWER OF ATTORNEY................ A-19 9.1 Certificate and Agreement and Other Documentation.............................................. A-19 9.2 Events Requiring Amendment of Certificate and Agreement........................................ A-19 9.3 Partnership Authorization...................................................................... A-20 9.4 Power of Attorney by Substituted or Additional Limited Partners................................ A-22 9.5 Amendments Requiring Signature by Less than All Limited Partners............................... A-22 9.6 Amendments Requiring Signature by All Partners................................................. A-22 ARTICLE X - BOOKS AND RECORDS: STATEMENTS AND INCOME TAX INFORMATION.......................................... A-22 10.1 Fiscal Year.................................................................................... A-22 10.2 Records and Accounting......................................................................... A-23 10.3 Periodic Financial Statements.................................................................. A-23 10.4 Record Dates................................................................................... A-23 10.5 Income Tax Information......................................................................... A-24
2 10.6 Statement Upon Winding Up of the Fund.......................................................... A-24 ARTICLE XI - GENERAL PROVISIONS............................................................................... A-24 11.1 Definitions.................................................................................... A-24 11.2 Independent Activities......................................................................... A-26 11.3 Custodian...................................................................................... A-26 11.4 Benefit........................................................................................ A-26 11.5 Nonrecourse Creditors.......................................................................... A-26 11.6 Notices........................................................................................ A-26 11.7 Captions....................................................................................... A-26 11.8 Certificate and Agreement in Counterparts...................................................... A-26 11.9 Agent for Service of Process................................................................... A-27 11.10 Principles of Construction; Severability....................................................... A-27 11.11 California Law................................................................................. A-27 11.12 Integrated Agreement........................................................................... A-27
SCHEDULE "A": Names, Places of Residence and Number of Shares of Partnership Interest of the General Partners. 3 CHESTNUT STREET EXCHANGE FUND (A CALIFORNIA LIMITED PARTNERSHIP) RESTATED CERTIFICATE AND AGREEMENT OF LIMITED PARTNERSHIP This RESTATED CERTIFICATE AND AGREEMENT OF LIMITED PARTNERSHIP (the "Certificate and Agreement") has been executed and delivered among the General Partners and Limited Partners herein named, for the purpose of amending and restating in full the Restated Certificate and Agreement of Limited Partnership dated as of September 16, 1976, recorded on September 16, 1976, as Document Number 8504, in the official records of the office of the County Recorder of Los Angeles County, California, of Chestnut Street Exchange Fund (a California Limited Partnership), a limited partnership formed pursuant to the Uniform Limited Partnership Act as enacted by the State of California. WHEREAS, the General Partners and Limited Partners herein named have formed a Limited Partnership under the laws of the State of California which will qualify as a diversified, open-end, management investment company under the Investment Company Act of 1940 (the "1940 Act"); WHEREAS, the General and Limited Partners desire to amend and restate the Restated Certificate and Agreement of Limited Partnership previously recorded as described above; NOW, THEREFORE, THE GENERAL PARTNERS AND THE LIMITED PARTNERS HEREIN NAMED HEREBY AMEND AND RESTATE THE RESTATED CERTIFICATE AND AGREEMENT OF LIMITED PARTNERSHIP OF CHESTNUT STREET EXCHANGE FUND (A CALIFORNIA LIMITED PARTNERSHIP) IN FULL AS FOLLOWS: ARTICLE I NAME AND STATUTORY OFFICE 1.1 NAME. This Partnership shall be known as and shall operate under the firm name of "CHESTNUT STREET EXCHANGE FUND" (A California Limited Partnership). 1.2 PRINCIPAL PLACE OF BUSINESS. The principal place of business of the Partnership for purposes of Section 15614 of the Limited Partnership Act shall be c/o Corporation Service Company, 2730 Gateway Oaks Drive, Suite 100, Sacramento, California 95833. The Managing General Partners may from time to time establish additional places of business of the Partnership in such other locations, within and without California, as they deem necessary or desirable for the conduct of the Partnership's business. A-1 4 ARTICLE II CHARACTER OF THE BUSINESS OF THE FUND 2.1 PURPOSE. The purpose of the Fund is to create and operate an open-end, diversified management investment company which will qualify under the 1940 Act. 2.2 INVESTMENT OBJECTIVES. The Fund's investment objectives are to seek long-term growth of capital and, secondarily, current income. The Fund will invest in a portfolio of common stocks and securities convertible into common stocks, and may also invest in other types of securities for temporary or defensive purposes including preferred stocks, investment grade bonds, obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities, certificates of deposit, commercial paper and other "money-market" obligations. Up to 10% of the value of the Fund's total assets may be invested in securities which are subject to legal or contractual restrictions on resale (for example restrictions on resale without registration under the Securities Act of 1933 (the "1933 Act")). The Fund may write exchange-traded call options on portfolio securities and may loan portfolio securities. 2.3 OPERATING POWERS. Subject to the Fund's Investment Objectives in Section 2.2, the Fund shall have the power to: (a) to invest and trade in capital stock, subscriptions, bonds, notes, debentures, trust receipts and other securities of any corporation or entity; (b) to engage personnel and do such other acts and incur such other expenses on behalf of the Fund as may be necessary or advisable; (c) to engage attorneys, accountants or such other persons as may be deemed necessary or advisable; (d) to receive, acquire, buy, sell, exchange, trade, loan, borrow and otherwise deal in and with property; (e) to open, conduct and close accounts with brokers and to pay the customary fees and charges applicable to transactions in all such accounts; (f) to open, maintain, and close bank accounts and to draw checks and other orders for the payment of money; (g) to enter into, make and perform such contracts, agreements and other undertakings, and to do such other acts, as may be deemed necessary or advisable, including, without in any manner limiting the generality of the foregoing, contracts, agreements, undertakings and transactions with any Partner or with any other person, firm or corporation having any business, financial or other relationship with any Partner; (h) to institute and prosecute litigation arising out of the regular course of its affairs or in the enforcement of its obligations due it, including all rights of appeal; (i) to compromise and settle any claims against the Fund and to provide for indemnification by the Fund in the Fund's contracts and agreements; (j) to defend any litigation, including all rights of appeal, whether or not arising in the regular course of its affairs; (k) to appear before any governmental A-2 5 board or agency or to otherwise participate in any administrative review or appeal; (l) to employ one or more investment advisors for the Fund to supervise the Fund's investments and to administer the affairs of the Fund subject to the provisions of this Certificate and Agreement; (m) to file and publish all such certificates, notices, statements or other instruments required by law for the formation and operation of a limited partnership in any jurisdictions where the Fund may elect to do business; (n) to exercise any and all other powers which may be necessary to implement the purposes, policies and powers of the Fund and not inconsistent therewith, including those granted to limited partnerships under the California Revised Limited Partnership Act; and (o) to exercise such other powers as the Managing General Partners reasonably believe to be necessary to comply with the provisions of the 1940 Act. ARTICLE III GENERAL PARTNERS 3.1 IDENTITY OF MANAGING GENERAL PARTNERS. The General Partners of the Fund shall consist of the Managing General Partners (hereinafter referred to as the "General Partners" or the "Managing General Partners"). Only individuals may act as Managing General Partners, and all individual General Partners shall act as Managing General Partners. The names of the currently acting Managing General Partners, their places of residence and the number of Shares owned by each of them are set forth in Schedule "A" to this Certificate and Agreement and are incorporated herein by this reference. 3.2 DESIGNATION AND ELECTION OF SUCCESSOR OR ADDITIONAL GENERAL PARTNERS. The Managing General Partners shall determine from time to time the number of persons who will be proposed for election as General Partners. At the annual meeting of Partners, if held in a given year, or at any special meeting called for the purpose of electing General Partners, the Partners shall elect the General Partners. Each of the Managing General Partners shall serve until the next annual or special meeting at which General Partners are elected and until the election and qualification of the person's successor, or until the person's status as such is sooner terminated as provided in Section 3.8 below. If at any time the number of Managing Partners is reduced to less than three, the remaining Managing General Partners shall, within 120 days, call a meeting of Partners for the purpose of electing an additional Managing General Partners or Managing General Partners so as to restore the number of Managing General Partners to at least three. A-3 6 If at any time a vacancy occurs among the Managing General Partners, the vacancy may be filled by the Managing General Partners subject to the limitations set forth in Sections 16(a) and (b) of the 1940 Act. Each General Partner, by becoming a General Partner, consents to the admission as an added or substituted General Partner of any person elected by the Partners in accordance with this Certificate and Agreement. Each Partner, by becoming a Partner of the Fund, consents to and ratifies the actions of the General Partners in determining the persons who will be proposed for election and admission as additional or substituted General Partners, and the actions of the Partners in electing an additional or substituted General Partner pursuant to the procedure in Article VII of this Certificate and Agreement. Any General Partner who is elected at a meeting of the Partners and who is not then serving as a General Partner shall be admitted to the Partnership as a General Partner effective as of the date of such election. 3.3 MANAGEMENT AND CONTROL. Subject to the provisions of this Certificate and Agreement, the business of the Fund shall be managed solely by the Managing General Partners, and they shall have complete and exclusive control over the management, conduct and operation of the Fund's business. Except as otherwise specifically provided in this Certificate and Agreement, the Managing General Partners, acting pursuant to Section 3.5 hereof, shall have the right, power and authority, on behalf of the Fund and in its name to exercise all of the rights, powers and authority of a partner in a partnership without limited partners under the California Uniform General Partnership Act. Without limiting the foregoing, but subject to the right of the Partners to vote on certain matters affecting the basic structure of the Fund in Article VII below, the Managing General Partners, acting pursuant to Section 3.5 below, shall have the power and authority to: (a) adopt, amend and repeal a Code of Regulations not inconsistent with this Certificate and Agreement providing for the operation of the Fund; (b) appoint one of their number to be President, who shall preside at all meetings of Partners, shall be responsible for the execution of policies established by the Managing General Partners and may be the chief executive, financial and accounting officer; (c) appoint from their own number, and terminate, any one or more committees consisting of two or more managing General Partners, including executive committee which may, when the Managing General Partners are not in session, exercise one or all of the power and authority of the Managing General Partners as the Managing General Partners may determine; (d) elect and appoint, delegate authority to, remove and terminate such officers and agents (who need not be Partners) as they consider appropriate; (e) subject always to the continuing supervision of the Managing General Partners, contract A-4 7 with one or more banks, trust companies, investment advisers or other persons for the performance of such functions as they may determine, including, but not by way of limitation, the investment and reinvestment of all or part of the Fund's assets and effecting portfolio transactions, and any or all administrative functions of the Fund; (f) at any time and from time to time, contract with any corporation, trust, association or other person to act as exclusive or nonexclusive distributor or Principal Underwriter for the Shares; (g) purchase and pay for entirely out of Fund property insurance policies insuring the Shareholders, General Partners, Limited Partners, officers, employees, agents, investment advisers, principal underwriters, or independent contractors of the Fund individually against all claims and liabilities of every nature arising by reason of holding, being or having held any such office or position, or by reason of any action alleged to have been taken or omitted by any such person as Partner, officer, employee, agent, investment adviser, principal underwriter, or independent contractor, including any action taken or omitted that may be determined to constitute negligence, whether or not the Fund would have the power to indemnify such person against such liability; and (h) pay or cause to be paid out of the principal or income of the Fund, or partly out of principal and partly out of income, all expenses, fees, charges, taxes and liabilities incurred or arising in connection with the Fund, or in connection with the management thereof, including but not limited to, the General Partners' compensation and such expenses and charges for the services of the Fund's officers, employees, investment adviser or Manager, Principal Underwriter, auditor, counsel, custodian, transfer agent, Shareholder servicing agent, and such other agents or independent contractors and such other expenses and charges as the Managing General Partners may deem necessary or advisable to incur. The Managing General Partners shall devote themselves to the Fund's business to the extent they may determine necessary for the efficient conduct thereof, which need not, however, occupy their full time. General Partners may also engage in other businesses, whether or not similar in nature to the business of the Fund, subject to the limitations of the 1940 Act. Further, subject to the limitations of the 1940 Act and the Partnership Act, the fact that: (i) any of the Partners or officers of the Fund is a shareholder, director, officer, partner, trustee, employee, manager, adviser, Principal Underwriter or distributor or agent of or for any corporation, trust, association, or other person, or of or for any parent or affiliate of any person which handles brokerage transactions for the Fund or with which the Fund has or may hereafter enter into an advisory or management contract, or Principal Underwriter's or distributor's contract, or transfer, Shareholder A-5 8 servicing or other contract, or that any such organization, or any parent or affiliate thereof, is a Shareholder or has an interest in the Fund, or that (ii) any corporation, trust, association or other person which handles brokerage transactions for the Fund or with which the Fund has or may hereafter enter into an advisory or management contract or Principal Underwriter's or distributor's contract, or transfer, Shareholder servicing or other contract, also has an advisory or management contract, or Principal Underwriter's or distributor's contract, or transfer, Shareholder servicing or other contract with one or more other corporations, trusts, associations, or other persons, in which any of the Partners or officers of the Fund may have an interest, shall not preclude such contracts or dealings, or affect the validity of any such contract or dealings or disqualify any Partner or officer of the Fund from voting upon or executing the same or create any liability or accountability to the Fund or its Shareholders with respect to such contract or dealings. 3.4 LIMITATIONS ON THE AUTHORITY OF THE GENERAL PARTNERS. The General Partners shall have no authority without the vote or written consent of all of the Limited Partners to: (a) do any act in contravention of this Certificate and Agreement, as it may be amended, or which would make it impossible to carry on the ordinary business of the Fund; (b) confess a judgment against the Fund; (c) possess Fund property, or assign the Fund's rights in specific Fund property, for other than a Fund purpose. In addition, certain actions of the Managing General Partners shall be subject to a Majority Shareholder Vote as provided in paragraph 7.3 below. 3.5 ACTION BY THE GENERAL PARTNERS. Except as may otherwise be provided herein or from time to time in the Code of Regulations, any action to be taken by the Managing General Partners shall be taken: (a) by a majority of the Managing General Partners present at a meeting of the Managing General Partners at which at least 50% of the Managing General Partners are present, within or without California, including any meeting held by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other at the same time, and participation by such means shall constitute presence at a meeting; or (b) by unanimous written consent of the Managing General Partners acting without a meeting, unless the 1940 Act or the Partnership Act requires that a particular action be taken by a greater vote or only at a meeting in person of the Managing General Partners. Each Managing General Partner shall have one vote. No single Managing General Partner shall have authority to act on behalf of A-6 9 the Partnership or to bind the Partnership except as specifically authorized in a particular case by the Managing General Partners. 3.6 REIMBURSEMENT AND INDEMNIFICATION. The General Partners shall be reimbursed for all reasonable out-of-pocket expenses incurred in performing their duties hereunder. Each General Partner and officer of the Fund, each corporate Non-Managing General Partner and officer and director thereof, and each former General Partner who has not ceased to be liable as a General Partner under the Partnership Act (herein collectively referred to as "Agent"), shall be indemnified by the Fund, to the extent permitted by applicable law, against judgments, fines, amounts paid in settlement, and expenses (including counsel fees) reasonably incurred by such Agent by virtue of being threatened to be made, being or having been a party to any civil, criminal, administrative or investigative proceeding in which such Agent is involved or threatened to be involved by reason of such person being an Agent, provided that the Agent acted in good faith and in a manner the Agent reasonably believed to be within the scope of such person's authority and for a purpose which such person reasonably believed to be in the best interests of the Fund or the Limited Partners. To the extent that an Agent has been successful on the merits or otherwise in defense of any such proceeding or in defense of any claim or matter therein, such person shall be deemed to have acted in good faith and in a manner such person reasonably believed to be in the best interests of the Fund or the Limited Partners. The determination under any other circumstances as to whether an Agent acted in good faith and in a manner such person reasonably believed to be within the scope of the person's authority and for a purpose which the person reasonably believed to be in the best interests of the Fund or the Limited Partners shall be made, (i) by action of the Managing General Partners who were not parties to such proceedings, or (ii) the court in which such proceeding is or was pending upon application made by the Fund or the Agent (whether or not such application is opposed by the Fund), or (iii) by independent legal counsel (who may not be the regular counsel for the Fund) in a written opinion. No Agent shall be indemnified against any liability to the Fund or its Partners to which he would otherwise be subjected by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. The foregoing indemnification provisions shall not preclude any other rights to which those persons indemnified hereunder may be entitled under any applicable statute, agreement, vote of the General Partners or Limited Partners or otherwise, nor shall the foregoing preclude the Fund from purchasing and maintaining insurance on behalf of any Agent against liability which may be asserted against or incurred by the Agent in such capacity, whether or not the Fund would have the power to indemnify the A-7 10 Agent against such liability under the provisions of this Section 3.6. Expenses incurred in defending any proceeding may be advanced by the Fund prior to final disposition of such proceeding upon receipt of an undertaking by or on behalf of the Agent to repay such amount unless it shall be determined ultimately that the Agent is entitled to be indemnified as authorized in this Section 3.6. 3.7 LIMITATION OF LIABILITY TO SHAREHOLDERS. No General Partner shall have any personal liability to any Shareholder for the repayment of the contributions with respect to Shares held by him, or for the payment of the amount standing in the individual accounts of the Limited Partners or any portion thereof; any such amounts shall be paid solely from assets of the Fund, if any, sufficient therefor, according to the terms of this Certificate and Agreement. Nor, to the extent permitted by the Partnership Act and the 1940 Act, shall the General Partners be liable to any Shareholder for any neglect or wrongdoing of any officer, agent, employee, investment adviser or principal underwriter of the Fund, or by reason of any change in the general or state income tax laws, or in interpretations thereof, as they apply to the Partnership and the Shareholders, whether such change occurs through legislative, judicial or administrative action, provided, that nothing herein shall protect a General Partner against any liability to which he would otherwise be subject by reason of misfeasance, bad faith, negligence, or reckless disregard of the duties involved in the conduct of his office. 3.8 TERMINATION OF STATUS AND INTEREST OF GENERAL PARTNERS. (a) The status and interest of a person as a Managing General Partner shall terminate and such person shall have no further right or power to act as General Partner (except to execute any amendment to this Certificate and Agreement to evidence his termination) effective when and if he: (1) dies; (2) becomes insane; (3) is adjudicated a bankrupt; (4) voluntarily retires effective upon not less than 180 days' written notice to the other General Partners or election of his successor, whichever first occurs; (5) fails to be re-elected by the Partners, as provided in Section 3.2 above; or (6) is removed by the Partners, as provided in Section 7.1 below. (b) Termination of a person's status as a General Partner shall not affect his status, if any, as a Limited Partner. A General Partner shall not be entitled to any special payment from the Partnership as a result of termination of his status as General Partner. Upon termination of his status and in interest as a General Partner, a General Partner may redeem his Shares in accordance with Section 6.3 or retain such Shares as a Limited Partner. A-8 11 3.9 RIGHT OF GENERAL PARTNERS TO BECOME LIMITED PARTNERS. A General Partner may also become a Limited Partner and thereby become entitled to all of the rights of a Limited Partner to the extent of the Limited Partnership interest so acquired, and the consent of the Limited Partners thereto need not be obtained. Such event shall not, however, affect such General Partner's liability hereunder. 3.10 NO AGENCY. Nothing in this Certificate and Agreement shall be construed as establishing any General Partner as an agent of any Limited Partner, except to the extent provided in Sections 9.3 and 9.4 below. 3.11 VOTING OF SHARES OWNED BY GENERAL PARTNERS. In accordance with Section 7.1, the Managing General Partners shall have the right to vote any Shares which they own, whether as a General or as a Limited Partner. Each General Partner shall own at least one Share. ARTICLE IV LIMITED PARTNERS 4.1 SALES OF ADDITIONAL SHARES; ADMISSION OF ADDITIONAL LIMITED PARTNERS. The Fund sold Shares through an initial public offering and admitted such purchasers as additional Limited Partners in the Fund. In addition, without the consent or approval of the Limited Partners, the Fund may issue additional Shares from time to time in payment of the distributions to the Partners contemplated by Article VI below or in connection with the admission of General Partners pursuant to Section 3.2 above. The Fund shall not otherwise issue additional Shares. Each purchaser of a Share from the Fund shall be bound by all the terms and conditions of this Certificate and Agreement. 4.2 RIGHT TO ASSIGN SHARES; SUBSTITUTED AND ADDITIONAL LIMITED PARTNERS. A Shareholder may assign the whole or any portion of his Shares by a written instrument of assignment in form satisfactory to the Managing General Partners. Each assignee of a Share shall be bound by all the terms and conditions of this Certificate and Agreement including, without limitation, the allocation of income, gains, losses, deductions and credits as provided in Section 5.4. Any Shareholder who assigns Shares, and any assignee of such Shares who subsequently assigns such Shares, by virtue of an assignment made in accordance with the provisions hereof confers upon his assignee the right to be substituted as a Limited Partner, and the assignee shall become a Limited Partner upon being entered into the records of the Fund as a Limited Partner, by which act the assignee shall be deemed to accept and adopt all of the terms and A-9 12 provisions of the Certificate and Agreement, as the same may be amended. 4.3 NO POWER TO CONTROL BUSINESS. A Limited Partner shall have no right to and shall take no part in the control of the Fund's business and shall have no right or authority to act for or bind the Fund, but may exercise the rights and powers of a Limited Partner under this Certificate and Agreement, including without limitation, the voting rights and the giving of consents and approvals provided for hereunder. The exercise of such rights and powers are deemed to be matters affecting the basic structure of the Fund and not the control of its business. 4.4 LIMITED LIABILITY. No Limited Partner shall be liable for any debts, obligations or losses of the Fund, provided, however, that the contributions of a Limited Partner shall be subject to the risks of the business of the Fund and subject to the claims of the Fund's creditors and provided further, that after any Limited Partner has received the return of any part of his contribution, he will be liable to the Fund, only to the extent required by the Partnership Act, for: (a) his proportionate share, not in excess of the amount of such returned contributions plus interest thereon, of any sum necessary to discharge any liabilities of the Fund to creditors who extended credit or whose claims arose before such returns were made; (b) for his proportionate share, not in excess of any amount of such sum wrongfully distributed to him and necessary to discharge any liabilities of the Fund to any creditors. In the event a Limited Partner or former Limited Partner who received the return of any part of his contribution is required pursuant to the foregoing paragraph to discharge more than his proportionate share of a Fund liability ("Discharged Liability"), the Fund shall indemnify such person, to the extent of its net assets, against the Discharged Liability. In the event the Fund's net assets are insufficient to satisfy such person's right of reimbursement for the Discharged Liability, the Fund shall use its best efforts to obtain for such person an amount equal to the insufficiency arising in its net assets to reimburse ("Insufficiency Reimbursement") such person for the Discharged Liability from each of the other Limited Partners or former Limited Partners of the Fund who received a return of contribution after the time the creditor whose claim was discharged extended credit to the Fund. The Insufficiency Reimbursement to be sought against each other Limited Partner or former Limited Partner shall be limited to that amount obtained by multiplying the amount of the Insufficiency Reimbursement by that percentage of the aggregate contributions so returned to all Limited Partners which was received by the particular Limited Partner or former Limited Partner from whom the Insufficiency Reimbursement is sought. Each Limited Partner, to the extent of his proportionate share of such a returned contribution as above A-10 13 determined, hereby agrees to indemnify each other Limited Partner against such Insufficiency Reimbursement. In addition, the General Partners and the Fund (to the extent of its net assets) hereby further indemnify any Limited Partner against any liability of the Fund discharged by him pursuant to the final decision of any court of competent jurisdiction that such Limited Partner was liable for such liability solely by virtue of the grant or exercise of the voting rights as set forth in Article VII (and not by virtue of any action or representation by such Limited Partner). Any such right of indemnification pursuant to either of the preceding two paragraphs shall be conditioned upon the party so seeking indemnification giving to the Fund prompt notice of, and the opportunity to defend, any claim instituted or threatened against such person by a creditor of the Fund. Each Limited Partner further agrees that any sum or property wrongfully distributed to him shall be held by him as trustee for the Fund to be delivered to the Fund upon its demand in order to satisfy the Insufficiency Reimbursement. 4.5 LIMITED PARTNERS NOT PERSONALLY LIABLE. All persons extending credit to, contracting with or having any claim against the Fund shall look only to the assets of the Fund and of the General Partners for payment under such credit, contract or claim, or only to the assets of the Fund if any such person has so agreed, and except to the extent provided in Section 4.4 hereof, neither the Limited Partners, nor any of the Fund's officers, employees or agents, whether past, present or future, shall be personally liable therefor. 4.6 DEATH OF A LIMITED PARTNER. The death of a Limited Partner shall not dissolve or terminate the Partnership. Upon the death of a Limited Partner the personal representative of such deceased Limited Partner shall have all the rights of a Limited Partner, to the extent of the deceased's interest in the Fund, for the sole purpose of settling his estate, including the right to assign his Shares and to designate his assignee a substituted Limited Partner, upon compliance with the provisions of Section 4.2 above. The estate of a deceased Limited Partner shall be liable for all such deceased Limited Partner's liabilities as a Limited Partner. ARTICLE V CAPITAL CONTRIBUTIONS: SALES OF SHARES; ALLOCATIONS TO SHARES 5.1 SHARES OF PARTNERSHIP INTEREST. The entire beneficial interest of the Partners in the Fund and its assets shall be divided into equal proportionate units of partnership interest, referred to herein as "Shares." The Managing General Partners A-11 14 may from time to time divide or combine such units into a greater or less number of Shares, provided that no such action shall in and of itself alter the proportionate beneficial interest of the several Holders of Shares in the Fund at the time. The Managing General Partners shall, by appointment of an agent for the purpose or otherwise, at all times maintain a record of the outstanding Shares and the Holders thereof from time to time. 5.2 CONTRIBUTIONS BY GENERAL PARTNERS. Each of the General Partners has purchased the number of Shares set forth in Schedule "A" to this Certificate and Agreement. Each Share purchased by a General Partner will be held in such person's capacity as a General Partner and not as a Limited Partner. Except as provided in this Section, no General Partner has agreed to make any contributions in addition to that required as a condition to admission as a General Partner, or to lend additional funds to the Partnership. 5.3 CONTRIBUTIONS BY THE LIMITED PARTNERS. (a) Except to the extent a Limited Partner hereafter elects to participate in an income and/or capital gains reinvestment program which may be offered by the Fund, no Limited Partner has agreed to make any additional contributions to or to lend additional funds to the Fund, and no Limited Partner shall be liable for any additional assessment therefor. 5.4 ALLOCATION OF FUND INCOME, GAINS, LOSSES, DEDUCTIONS AND CREDITS AMONG THE SHARES. All items of Fund income, gain, loss, deduction and credit during each taxable year of the Fund shall be computed for the Fund in accordance with generally accepted accounting principles applicable to regulated investment companies. ARTICLE VI DISTRIBUTIONS AND RETURNS OF CONTRIBUTIONS 6.1 IN GENERAL. Distributions of cash or other property may be made by the Managing General Partners in accordance with this Article: (a) with respect to net income and net realized capital gains of the Fund; (b) in connection with redemption of Shares; and (c) upon dissolution of the Fund. However, all such distributions shall be in proportion to the number of Shares held and without regard to the dollar amount of contributions received with respect thereto. 6.2 DISTRIBUTIONS WITH RESPECT TO INCOME AND NET REALIZED CAPITAL GAINS. The Managing General Partners shall determine the amounts with respect to net investment income and net realized capital gains, if any, to be distributed to the Shareholders and A-12 15 the times when such distributions shall be made. Except as otherwise provided in this Certificate and Agreement, such amounts shall be distributed equally among the Shares outstanding. For purposes of such distributions, a person will be deemed to be a Shareholder if such person's interest is recorded on the books of the Fund maintained for that purpose on the record date determined for such distribution. 6.3 DISTRIBUTIONS IN CONNECTION WITH REDEMPTION OF SHARES. (a) Subject to the requirement stated in Section 3.11 that each General Partner own at least one Share, and to the limitations of Sections 6.3(b) and (d) below, a Shareholder may elect to redeem any or all of the Shares held by him of record at the Net Asset Value Per Share next computed after receipt by the Fund (or by a person designated by the Fund for such purpose) of a written request for redemption. The request must be accompanied by either the certificates representing the Shares to be redeemed, if certificates have been issued, or a stock power, duly endorsed by the record Holder(s) with signature(s) guaranteed by an "eligible guarantor institution" as defined in Rule 17Ad-15 under the Securities Exchange Act of 1934. Except as otherwise provided in this Section 6.3(a) and except to the extent Shares are redeemed for cash pursuant to a Systematic Withdrawal Plan described in Section 6.3(e) below, payments upon redemption may be made in cash, in any portfolio securities or in any combination thereof, in the sole discretion of the Managing General Partners. Securities which are subject to a legal or contractual restriction on their resale by the Fund ("restricted securities") will not be distributed in redemption of Shares. (b) The Managing General Partners may suspend redemptions and defer payment of the redemption price during any period that the determination of Net Asset Value Per Share is suspended pursuant to Section 11.1(g). (c) No Holder shall be entitled to receive the return of any part of the contribution with respect to his Shares unless all liabilities of the Partnership, except liabilities to General Partners and to Limited Partners on account of their contributions, have been paid or there remains property of the Fund sufficient to pay them. (d) Each Shareholder, by becoming a Shareholder: (i) agrees that payment of the redemption price as determined hereunder with respect to a Share owned by him as reflected in this Certificate and Agreement constitutes full and complete discharge of any obligation of the Fund and the General Partners with respect to his interest in the Fund represented by such Share, including, without limitation, any right to the return of contribution represented by such Share, and that, upon such redemption, he shall have no further rights with respect to such A-13 16 share; (ii) agrees that the date upon which Net Asset Value is computed for purposes of redeeming a Share shall constitute the date specified in this Certificate and Agreement for the return of the contribution with respect to such Shares for purposes of the Partnership Act; and (iii) consents to the redemption of any Share in accordance with the provisions of this Certificate and Agreement. (e) The Managing General Partners may in their discretion adopt a Systematic Withdrawal Plan (the "Plan") pursuant to which a Shareholder electing to participate in the Plan will receive in cash as a partial redemption of his Shares a stipulated percentage of the net asset value of such Shares as of the close of trading on the New York Stock Exchange on such day or days as the Managing General Partners may determine. The Managing General Partners may in their sole discretion determine from time to time the percentage to be paid to Plan participants, the amount of any fees or other service charges which may be imposed upon participants, and such other matters as are necessary or advisable in connection with the implementation and administration of the Plan. 6.4 DISTRIBUTIONS UPON WINDING UP OF THE FUND. Upon the dissolution of the Fund pursuant to Section VIII, the Managing General Partners, or trustee, if one is appointed, shall proceed to wind up the affairs for the Fund and to liquidate its assets as promptly as is consistent with obtaining fair value. The proceeds from such liquidation of the Fund assets shall be applied and distributed in the following order of priority: (a) to the payment of debts and liabilities of the Fund (other than any loans or advances which may have been made by any of the Partners to the Fund) and the expenses of liquidation; (b) to create any reserve which the Managing General Partners or trustee may deem reasonably necessary for any contingent or unforeseen liabilities or obligations of the Fund. Such reserve shall be paid over by the Managing General Partners or trustee to a bank or trust company to act as escrow agent selected by the Managing General Partners or trustee. Any such escrow agent shall hold such reserves for payment of any of the aforementioned contingencies, and, at the expiration of such period as the Managing General Partners or trustee designate, shall distribute the balance thereafter remaining in the manner hereinafter provided; (c) to the repayment of any loans or advances that may have been made by any of the Partners to the Fund, but if the amount available for such repayment shall be insufficient, then pro rata on account thereof; and A-14 17 (d) the balance, if any, pro rata among the Shareholders in proportion to the number of Shares held by them at the record date for any such distribution. When the Managing General Partners have complied with the foregoing distribution plan (including payment over to the escrow agent), the Partners shall execute, acknowledge, and cause to be filed a cancellation of this Certificate and Agreement. 6.5 RETURNS OF CONTRIBUTION. (a) Except upon dissolution of the Fund or the earlier effective date of any redemption of the Shares of a Holder pursuant to Section 6.3 above (which shall be the date specified in this Certificate and Agreement for return of contributions pursuant to the Partnership Act), no Partner has the right to demand return of any part of his contribution. The Managing General Partners may, however, from time to time, elect to make returns of contributions to Shareholders, provided that: (i) all liabilities of the Fund to persons other than shareholders have been paid or, in the good faith determination of the Managing General Partners, there remains property of the Fund sufficient to pay them; (ii) the consent, expressed or implied, of all of the Partners is obtained; and (iii) the Managing General Partners cause this Certificate and Agreement to be amended to reflect a reduction in contributions. For purposes of the foregoing provisions, the condition of subpart (ii) shall have been satisfied if such return of contribution is effected by a distribution made pro rata to all of the Shareholders based upon the number of Shares held by each of them, or upon the redemption of Shares pursuant to the authority of Section 6.3 above. Each Partner, by becoming such, consents to any such distribution theretofore or thereafter duly authorized and made in accordance with the foregoing provisions. (b) In the event subparts (i) and (ii) of part (a) above are satisfied, the Managing General Partners agree to cause an appropriate amendment to this Certificate and Agreement to be promptly filed. (c) In return for his contribution, subject to the provisions of Section 6.3 above, a Shareholder may receive cash or other property at the sole discretion of the Managing General Partners, but a Shareholder has no right to demand return of his contribution other than in cash. A-15 18 ARTICLE VII PARTNERS' RIGHTS TO VOTE UPON MATTERS AFFECTING THE BASIC STRUCTURE OF THE FUND: EXERCISE OF VOTING RIGHTS 7.1 VOTING RIGHTS OF PARTNERS. Subject to the provisions of Section 4.3 and 4.4 above, the Managing General and Limited Partners shall have in proportion to the numbers of Shares held of record by them, voting, approval, consent or similar rights with respect to the following matters affecting the basic structure of the Partnership, which include the voting, approval, consent or similar rights required under the 1940 Act for voting security holders: (a) the right to remove General Partners and to elect General Partners; (b) the right to approve or disapprove of proposed changes in the investment limitations and policies; (c) the right to approve or disapprove of a proposed change in the nature of the Fund's business so as to cease to be an investment company; (d) the right to approve or disapprove of any investment advisory contract or the termination of such a contract entered into by the Managing General Partners pursuant to Section 3.3(e) above; (e) the right to ratify or reject the appointment of and to terminate employment of the independent public accountants of the Fund to the extent required by the 1940 Act or other applicable law; (f) the right to approve or disapprove the sale of all or substantially all of the assets of the Fund; (g) the right to amend this Certificate and Agreement in any other respect; provided, however, that no such amendment shall conflict with the 1940 Act, so long as the Fund is registered thereunder, or affect the liability of the General Partners without their consent nor the limited liability of the Limited Partners as provided under Section 4.4 above and provided further that the foregoing shall not preclude amendments to this Certificate and Agreement without the vote of the Partners to the extent permitted in Article IX below; and (h) The right to elect to wind up and dissolve the Fund. A-16 19 Limited Partners shall not have the right to vote on any other matters. 7.2 MEETINGS OF THE PARTNERS. An annual meeting of the Partners for the election of General Partners, the ratification or rejection of the appointment of the independent public accountants of the Fund or other business is not required to be held unless required by applicable law or otherwise determined by the Managing General Partners. Any such meetings shall be held at the statutory office of the Fund in California, or at such other place as may be designated in the call thereof, which call shall be made by the Managing General Partners. Special meetings may also be called by the Managing General Partners from time to time for the purpose of taking action upon any matter requiring the vote or authority of the Partners as herein provided. 7.3 QUORUM AND REQUIRED VOTE AT MEETINGS OF THE PARTNERS. Partners holding a majority of the Shares entitled to vote present or represented by proxy shall be a quorum for the transaction of business at a Partners' meeting, but any lesser number shall be sufficient for adjournments. Each Partner shall have one vote for each Share standing of record in such Partner's name as of the record date set forth in the notice of meeting. A majority of the Shares voted at a meeting at which a quorum is present shall constitute action on the Partners, except: (a) that in the election of General Partners, those candidates receiving the highest number of votes cast at a meeting of Partners at which a quorum is present, up to the number of General Partners to be elected, shall be elected as General Partners of the Fund; there shall be no cumulative voting in election of General Partners; (b) that approval of matters referred to in (b), (c) and (d) and the termination of the employment of independent public accountants referred to in (e) of paragraph 7.1 above shall require a Majority Shareholder Vote; and (c) where a larger vote, if any, is otherwise required by provision of this Certificate and Agreement. Shares may be voted at a meeting of Partners in person or by proxy duly executed by the Partner(s) holding the Shares of record on the record date for such meeting fixed by the Managing General Partners as provided in Section 10.4. All such proxies shall be filed with the Fund before or at the meeting. No such proxy shall be valid after eleven months from the date of its execution. The law of California pertaining to corporate proxies will govern all Partnership proxies. Notwithstanding that a valid proxy is outstanding, powers of the proxy holder will be A-17 20 suspended if the person executing the proxy is present at the meeting and elects to vote in person. 7.4 ACTION BY WRITTEN CONSENT. Any action taken by Partners may be taken without a meeting if all of the Partners entitled to vote on the matter consent to the action in writing and such written consents are filed with the records of the meetings of Partners. Such consent shall be treated for all purposes as a vote taken at a meeting of Partners. ARTICLE VIII TERM AND DISSOLUTION OF THE FUND 8.1 TERM. The Term of this Partnership shall commence as of March 25, 1976, the date of the initial filing of this Certificate and Agreement with the County Recorder in the County of Los Angeles, of the State of California, as required by the Partnership Act, and shall continue in existence until December 31, 2071, on which date it shall commence dissolution, unless it is sooner dissolved as hereinafter provided. 8.2 EVENTS CAUSING EARLIER DISSOLUTION OF THE FUND. The Fund shall commence dissolution, and the affairs of the Fund shall be wound up, prior to the date specified above, upon the happening of any of the following events: (a) the Fund disposes of all of its assets; or (b) if a Managing General Partner has not filed an amendment to this Certificate and Agreement evidencing his determination to continue the business of the Partnership within One Hundred and Eighty (180) days after the death, retirement or insanity of a General Partner; or (c) partners holding a majority of the Shares vote to dissolve the Fund. The Limited Partners shall have no right or power to cause the termination or dissolution of the Partnership except as set forth in this Certificate and Agreement. No Limited Partner shall have the right to bring an action for partition against the Partnership. 8.3 RIGHT OF GENERAL PARTNERS TO CONTINUE THE BUSINESS OF THE FUND IN CERTAIN EVENTS. The death, retirement or insanity of a General Partner shall not dissolve the Partnership. In any such event the business of the Partnership shall continue pending the election to continue the business of the Fund contemplated in this Section or the exercise of the rights of the Partners provided in Section 8.4 below. A-18 21 After the death, retirement or insanity of a General Partner, any remaining Managing General Partner shall have the right to elect to continue the business of the Fund. If a remaining Managing General Partner so elects to continue the Fund, within thirty (30) days after such event he shall execute and cause to be filed an appropriate amendment to this Certificate and Agreement to evidence such election. If no remaining Managing General Partner is willing to continue the business of the Partnership, then prior to the expiration of such thirty-day period, the remaining Managing General Partners shall (or, if there is no Managing General Partner then acting, any Partner or Partners owning 10% or more of the Shares then outstanding) shall, within one hundred and twenty (120) days of such event, call a meeting of the Partners for the purpose of exercising the rights provided in Section 8.4 below. 8.4 RIGHT OF THE PARTNERS TO PROVIDE FOR CONTINUATION OF THE BUSINESS OF THE FUND IN CERTAIN EVENTS. In the event that: (a) at any time the status and interest of all Managing General Partners has terminated by virtue of any of the events or circumstances specified in Section 3.8 of this Certificate and Agreement; or (b) the Managing General Partner(s) remaining after the death, retirement or insanity of a General Partner do not elect to continue the Fund (which failure to elect to continue the Fund shall constitute an election to retire pursuant to Section 3.8(a)(4) above), then, to the extent permitted by the Partnership Act, the Partners shall have the right to elect a successor Managing General Partner or Partners who shall have the authority to elect to continue the business of the Fund under its present name. Any such successor Managing General Partner shall have all of the rights and powers, and be subject to all of the duties and obligations of a Managing General Partner provided in this Certificate and Agreement. ARTICLE IX FUND DOCUMENTATION; AMENDMENT OF THE CERTIFICATE AND AGREEMENT; POWER OF ATTORNEY 9.1 CERTIFICATE AND AGREEMENT AND OTHER DOCUMENTATION. This Certificate and Agreement shall constitute a Certificate of Limited Partnership within the meaning of the Partnership Act, and the Managing General Partners shall promptly cause it to be filed and recorded in accordance with the Partnership Act in the County of the location of the Fund's statutory office, and to the extent required by local law, in the appropriate place in each state in which the Fund may hereafter establish a place of business. 9.2 EVENTS REQUIRING AMENDMENT OF CERTIFICATE AND AGREEMENT. This Certificate and Agreement shall be promptly A-19 22 amended, as hereafter provided, upon the occurrence of any of the following events: (a) there is a change in the name of the Fund; (b) there is a change in the street address of the principal executive office; (c) there is a change in the address of a General Partner or a change in the address of the agent for service of process, unless a corporate agent is designated, or appointment of a new agent for service of process; (d) a person is admitted as a General Partner; (e) a General Partner retires, dies or becomes insane, and the business is continued as permitted by Article VIII; (f) there is a false or erroneous statement in this Certificate and Agreement; (g) the Partners desire to make a change in any other statement in this Certificate and Agreement in order that it shall accurately represent the agreement among them; or (h) there is a change in the right to vote upon any of the matters described in Article VII. 9.3 PARTNERSHIP AUTHORIZATION. Each of the Limited Partners hereby makes, constitutes and appoints the Managing General Partners of the Partnership or any of them and each person who shall hereafter become a Managing General Partner, with full power of substitution, the true and lawful attorney of, and in the name, place and stead of such Limited Partner, with the power from time to time to execute, acknowledge, make, swear to, verify, deliver, record, filed and/or publish: (a) this Certificate and Agreement of Limited Partnership under the laws of the State of California or any other jurisdiction, any amendment to any such Certificate and Agreement of Limited Partnership (including, but not limited to, amendments reflecting the withdrawal of any General Partner or the return, in whole or in part, of the contribution of any Partner) or any other document required from time to time to admit such Limited Partner, to effect his substitution as a Limited Partner or to effect the substitution of the Limited Partner's assignee as a Limited Partner as to any or all shares of limited partnership interest assigned to such assignee; (b) any amendments to this Certificate and Agreement or any other document required to reflect any action of the Partners provided for in this Certificate and Agreement whether or not such Limited Partner voted in favor of or otherwise consented to such action; and (c) any other instrument, certificate or document as may be required by any regulatory agency, the laws of the United States, any state or any other jurisdiction in which the Fund is doing or intends to do business or which the Managing General Partners deem advisable to file or record, provided such instrument, certificate or document is in accordance with the terms of this Certificate and Agreement as then in effect. Each of the General Partners hereby makes, continues and appoints the Managing General Partners and any one of them and each person who shall hereafter become a Managing General Partner, and additionally appoints the transfer agent and any A-20 23 successor transfer agent employed by the Fund, with full power of substitution, the true and lawful attorney of, and in the name, place and stead of such General Partner, with the powers from time to time to execute, acknowledge, make, swear to, verify, deliver, record, file and/or publish the documents specified or contemplated by subparts (a), (b) and (c) of the preceding paragraph. Each of the Limited Partners is aware that the terms of the Certificate and Agreement permit certain amendments of the Certificate and Agreement to be effected and certain other actions to be taken or omitted by or with respect to the Partnership, in each case with the approval of less than all the Limited Partners, provided that a specified percentage of Partners shall have voted in favor of or otherwise consented to such action. Such actions include, without limitation, admission of new General Partners duly elected at meetings of the Partners. If, as and when (i) an amendment of the Certificate and Agreement is proposed or an action is proposed to be taken or omitted by or with respect to the Partnership which requires, under the terms of the Certificate and Agreement, the approval of a specified percentage in interest (but less than all) of the Partners, (ii) Partners holding the percentage of Partnership interests in the Partnership specified in the Certificate and Agreement as being required for such amendment or action have approved such amendment or action in the manner contemplated by the Certificate and Agreement; and (iii) a Limited Partner has failed or refused to approve such amendment or action (hereinafter referred to as a non-consenting Limited Partner), each nonconsenting Limited Partner agrees that each special attorney specified above, with full power of substitution, is hereby authorized and empowered to execute, acknowledge, make, swear to, verify, delivery, record, file and/or publish, for and on behalf of such non-consenting Limited Partner, and in his name, place and stead, any and all instruments and documents which may be necessary or appropriate to permit such amendment to be lawfully made or action lawfully taken or omitted. Each consenting and non-consenting Limited Partner is fully aware that he and each other Limited Partner have executed this special power of attorney, and that each Limited Partner will rely on the effectiveness of such powers with a view to the orderly administration of the Partnership's affairs. The foregoing grant of authority (i) is a special power-of-attorney coupled with an interest in favor of the Managing General Partners now and hereafter acting and as such shall be irrevocable and shall survive the death or insanity (or, in the case of a Limited Partner that is a corporation, association, partnership, joint venture or trust, the merger, dissolution or other termination of the existence) of such Limited Partner, (ii) may be exercised for each Limited Partner by a facsimile signature of any Managing General Partner or by listing all of A-21 24 the Limited Partners executing any instrument with a single signature of any Managing General Partner acting as attorney-in-fact for all of them, (iii) shall survive the assignment by such Limited Partner of the whole or any portion of his interest, and (iv) shall survive the redemption by the Limited Partner of the whole or any portion of his interest as provided in section 6.3 hereof, provided that where all of such Limited Partner's interest is so redeemed, the power of attorney shall survive such redemption for the sole purpose of enabling a Managing General Partner to execute, acknowledge and file any instrument necessary to effect the deletion of such person as a Limited Partner. 9.4 POWER OF ATTORNEY BY SUBSTITUTED OR ADDITIONAL LIMITED PARTNERS. As a condition to effectiveness of any assignment of Shares and to becoming a Limited Partner, each original purchaser or assignee of Shares shall execute and deliver to the Managing General Partners one or more Partnership Authorizations, including a power-of-attorney in form acceptable to the Managing General Partners and in content substantially in accordance with the foregoing provisions of Section 9.3, which shall similarly be irrevocable during the period specified above. 9.5 AMENDMENTS REQUIRING SIGNATURE BY LESS THAN ALL LIMITED PARTNERS. Anything herein to the contrary notwithstanding, any amendment to this Certificate and Agreement substituting or adding a Partner may be signed by any Managing General Partner and by the person to be substituted or added as a Partner. The execution of any such amendment on behalf of a Limited Partner or any proposed substituted or added Limited Partner may be effected by his attorney-in-fact. An amendment reflecting the death, retirement or insanity of a General Partner and the election of a Managing General Partner to continue the business of the Fund pursuant to Article VIII above, need only be signed by any General Partner. 9.6 AMENDMENTS REQUIRING SIGNATURE BY ALL PARTNERS. Any amendment to this Certificate and Agreement other than amendments described in Section 9.5 shall be signed by or on behalf of all Partners. The execution of any such amendment on behalf of a General or Limited Partner may be effected by his attorney-in-fact pursuant to Section 9.3 and 9.4. ARTICLE X BOOK AND RECORDS, STATEMENTS AND INCOME TAX INFORMATION 10.1 FISCAL YEAR. The fiscal year of the Fund shall be the calendar year for financial reporting and for federal income tax purposes. A-22 25 10.2 RECORDS AND ACCOUNTING. At all times during the continuance of the Fund, books of account and records, which shall be adequate and appropriate for the Fund business, shall be kept on a basis consistent with the accounting methods followed by the Fund for federal income tax purposes and, where deemed appropriate, in accordance with generally accepted accounting principles and procedures applied in a consistent manner. Such books and records shall include such separate and additional accounts for each Partner and such records of each other Shareholder as shall be necessary to reflect accurately the rights and interest of its respective Shareholders and shall specifically reflect the name and address of each Shareholder and number of Shares held by him for the purpose of determining recipients of distributions and notices. Such books of account, a copy of this Certificate and Agreement and all amendments hereto, the Code of Regulations, all documents relating to the ownership and condition of title of Fund properties, and copies of all Fund tax returns shall be maintained by the Fund at all times during its operations, and each Partner shall have access to them and the right, at such Partner's expense, to inspect and copy them at all reasonable times upon reasonable notice to the Fund. In addition, each Partner shall have the right to receive by mail, upon written request to the Partnership, a copy of a list of the names and addresses of the Limited Partners and the number of Shares held by each of them, against reimbursement of the cost of duplicating and mailing the same. 10.3 PERIODIC FINANCIAL STATEMENTS. The Fund shall cause certified annual and uncertified semiannual financial statements of the operations of the Fund to be prepared and forwarded to the Partners. The annual statements shall include a statement of assets and liabilities, statements of operations and changes in net assets, and such supporting statements or schedules as required by law or by the Managing General Partners. 10.4 RECORD DATES. For the purpose of determining the Partners who are entitled to notice of, and to vote or act at any Meeting of Partners or any adjournment thereof, or the Shareholders who are entitled to receive payment of any dividend or of any other distribution, the Managing General Partners may from time to time, in advance, fix a time, which shall be not more than 50 days nor less than 10 days before the date of any Meeting of Partners or the date for the payment of any dividend or of any other distribution, as the record date for determining the Partners having the right to notice of and to vote at such meeting and any adjournment thereof or Shareholders having the right to receive such dividend or distribution, and in such case only Partners or Shareholders of record, as appropriate, on such record date shall have such right, notwithstanding any transfer of shares on the books of the Fund after the record date; or without fixing such record date, the Managing General Partners A-23 26 may, for any of such purposes, close the register or transfer books for all or any part of such period. 10.5 INCOME TAX INFORMATION. The Fund shall provide to each Shareholder on a timely basis annually information with respect to federal taxable income and gain. 10.6 STATEMENT UPON WINDING UP OF THE FUND. As soon as possible after completion of the winding up of the Fund pursuant to Section 6.4 above, each Shareholder shall be furnished with a statement prepared by the Fund's accountants which shall set forth the assets and liabilities of the Fund as at the date of complete winding up. ARTICLE XI GENERAL PROVISIONS 11.1 DEFINITIONS. Whenever used herein, unless otherwise required by the context or specifically provided: (a) The terms "Affiliated Person," "Assignment," "Commission," "Interested Person," "Principal Underwriter" shall have the respective meanings given such terms in Sections 2(a)(3), 2(a)(4), 2(a)(7), 2(a)(19), and 2(a)(29) respectively of the 1940 Act; "Majority Shareholder Vote" shall mean "vote of a majority of outstanding voting securities" as defined in Section 2(a)(42) of the 1940 Act; (b) "Certificate and Agreement" shall mean this Certificate and Agreement of Limited Partnership, as amended or restated from time to time; (c) "Code of Regulations" shall mean the "Code of Regulations" of the Fund as amended from time to time; (d) "General Partners" refers to the Managing General Partners named herein and any person who shall hereafter become a General Partner. "Managing General Partner" refers to the individuals designated as such in Section 3.1 and identified, from time to time, in Schedule "A" to this Certificate and Agreement; (e) The pronouns "he," "his," "him," "it" or "who," with "Limited Partner" or "General Partner" as the antecedent shall be deemed to refer also to a Limited Partner or General Partner who is a woman, a partnership, a joint venture, an association, a corporation or a trust; (f) "Limited Partners" shall mean the original Limited Partner and all other persons who shall hereafter be A-24 27 admitted to the Fund as additional Limited Partners or substituted Limited Partners, except those persons who (i) have redeemed all Shares of the Fund owned by them, or (ii) have been replaced by a substituted Limited Partner to the extent of their entire Limited Partnership Interest; (g) "Net Asset Value Per Share." The Net Asset Value Per Share of the Fund shall be determined as of the close of trading on the New York Stock Exchange on each day on which the Exchange is open for trading (and at such other times as the Fund may determine). The Net Asset Value Per Share shall be computed by taking the total value of all assets of the Fund, less its liabilities and dividing by the number of Shares outstanding. Securities for which market quotations are readily available shall be valued at their current market values in the principal markets in which such securities are normally traded. Securities and other assets for which market quotations are not readily available (including restricted securities) shall be valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Managing General Partners. The Partnership may suspend the determination of the Net Asset Value Per Share in the event the New York Stock Exchange is closed for other than customary weekends or holidays, or during periods when trading on the Exchange is restricted or an emergency exists which makes disposition or valuation of portfolio securities impractical, or during any other period permitted by order of the Commission. (h) The "1940 Act" refers to the Investment Company Act of 1940, as amended, and the Rules and Regulations thereunder, all as amended from time to time; the "1933 Act" refers to the Securities Act of 1933, as amended, and the Rules and Regulations thereunder, all as amended from time to time; (i) "Partners" shall mean collectively the General Partners and the Limited Partners. Reference to a "Partner" shall mean any one of the Partners. (j) "Partnership" or the "Fund" refers to this Limited Partnership formed under the law of the State of California and established by this Certificate and Agreement, as amended from time to time. (k) The "Partnership Act" refers to The California Revised Limited Partnership Act as enacted by the State of California and hereafter amended, set forth presently at Sections 15611 and following, of the Corporations Code of the State of California; A-25 28 (l) "Person" means an individual, partnership, joint venture, association, corporation or trust; (m) "Shareholder" or "Holder" means a holder of Shares, whether a General Partner, Limited Partner or assignee of any of them, but only to the extent such person's interest is recorded on the books of the Fund maintained for such purpose either by the Fund or by its appointed transfer or similar agent. (n) "Shares" shall mean the equal proportionate units into which the Partnership Interests of the Fund shall be divided from time to time as provided in Section 5.1 of this Certificate and Agreement. 11.2 INDEPENDENT ACTIVITIES. Each Partner reserves the right to conduct activities similar to those conducted by the Fund, including buying or selling securities for his own account or for others. 11.3 CUSTODIAN. All assets of the Partnership shall be held by a Custodian as required by the 1940 Act, and may be registered in the name of the Partnership or such custodian or a nominee thereof. 11.4 BENEFIT. Except as herein otherwise provided to the contrary, this Certificate and Agreement shall be binding upon and inure to the benefit of the parties signatory hereto, and their respective heirs, executors, guardians, representatives, successors and assigns. 11.5 NONRECOURSE CREDITORS. No creditor making a nonrecourse loan to the Partnership shall, by reason thereof, acquire any direct or indirect interest in the profits, capital or property of the Partnership other than as a secured creditor. 11.6 NOTICES. All notices required or permitted to be given under this Certificate and Agreement shall be in writing and shall be given to the parties at the addresses set forth in Schedule "A" to this Certificate and Agreement and to the Fund at its statutory office in California, or at such other address as any of the parties may hereafter specify in writing to the Fund. 11.7 CAPTIONS. Paragraph titles or captions contained in this Certificate and Agreement are inserted only as a matter of convenience and for reference and in on way define, limit, extend or describe the scope of this Certificate and Agreement or the intent of any provision hereof. 11.8 CERTIFICATE AND AGREEMENT IN COUNTERPARTS. This Certificate and Agreement may be executed in several counterparts, and as so executed, shall constitute one A-26 29 Certificate and Agreement, binding on all of the parties hereto, notwithstanding that all of the parties are not signatory to the original or the same counterpart. 11.9 AGENT FOR SERVICE OF PROCESS. The Managing General Partners shall take whatever action is necessary to designate an agent at the Fund's office in California upon whom service of process upon the Fund may lawfully be made. 11.10 PRINCIPLES OF CONSTRUCTION; SEVERABILITY. This Certificate and Agreement shall be construed to the maximum extent possible to comply with all of the terms and conditions of the 1940 Act and the Partnership Act. If, nevertheless, it shall be determined by a court of competent jurisdiction that any provision or wording of this Certificate and Agreement shall be invalid or unenforceable under the 1940 Act, the Partnership Act or other applicable law, such invalidity or unenforceability shall not invalidate the Certificate and Agreement. In that case, the Certificate and Agreement shall be construed so as to limit any term or provision so as to make it enforceable or valid within the requirements of such law, and in the event such term or provision cannot be so limited, this Certificate and Agreement shall be construed to omit such invalid or unenforceable provision. 11.11 CALIFORNIA LAW. This Certificate and Agreement is made in the State of California, and it is created under and is to be governed by and construed and administered according to the laws of said state. 11.12 INTEGRATED AGREEMENT. This Certificate and Agreement constitutes the entire understanding and agreement among the parties hereto with respect to the subject matter hereof, and there are no agreements, understandings, restrictions, representations or warranties among the parties other than those set forth herein. A-27 30 IN WITNESS WHEREOF, the Managing General Partners and Limited Partners have executed this Certificate and Agreement as of this 31st day of December, 1997. MANAGING GENERAL PARTNERS /s/ Robert R. Fortune ----------------------------- By: Robert R. Fortune, Attorney-in-fact for the Managing General Partners set forth in Schedule A pursuant to Section 9.3 of the Certificate and Agreement THE LIMITED PARTNERS /s/ Robert R. Fortune ----------------------------- By: Robert R. Fortune, Attorney-in-fact for the Limited Partners pursuant to Sections 9.3 and 9.4 of the Certificate and Agreement A-28 31 SCHEDULE "A" NAMES, PLACES OF RESIDENCE AND NUMBER OF SHARES OF PARTNERSHIP INTEREST OF THE GENERAL PARTNERS MANAGING GENERAL PARTNERS
Shares of NAMES AND ADDRESS Partnership Interest ----------------- -------------------- G. Willing Pepper 128 Springton Lake Road Media, Pennsylvania Robert R. Fortune 2920 Ritter Lane Allentown, Pennsylvania 18104 David R. Wilmerding, Jr. Gee, Wilmerding & Associates, Inc. Villanova, PA 19085-1445 Richard C. Caldwell PNC Bank, N.A. 1600 Market Street 29th Floor Philadelphia, PA 19103 Langhorne B. Smith Claniel Enterprises, Inc. Suite 400 630 West Germantown Pike Plymouth Meeting, PA 19462
A-29 EX-5 3 ADVISORY AGREEMENT DATED JANUARY 1, 1998 1 EXHIBIT 5 ADVISORY AGREEMENT AGREEMENT, dated January 1, 1998 between CHESTNUT STREET EXCHANGE FUND, a California Limited Partnership ("Fund"), and PNC BANK, N.A., a national banking association ("PNC"), and PROVIDENT INSTITUTIONAL MANAGEMENT CORPORATION ("PIMC"), a Delaware corporation registered as an investment adviser under the Investment Advisers Act of 1940 and wholly-owned by PNC. WHEREAS, the Fund is registered as an open-end, diversified, management investment company under the Investment Company Act of 1940; and WHEREAS, the Fund desires to retain PNC and PIMC to render investment advisory and administrative services to the Fund, and PNC and PIMC are willing to render such services; NOW THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows: 1. DELIVERY OF DOCUMENTS. The Fund has previously furnished PNC with copies properly certified or authenticated of each of the following: (a) The Fund's Restated Certificate and Agreement of Limited Partnership dated August 16, 1976 and recorded in California on August 16, 1976 and all subsequent restatements and amendments thereto. Such Restated Certificates and Agreement of Limited Partnership, as presently in effect and as it may hereinafter from time to time be restated or further amended, is hereinafter referred to as the "Certificate of Limited Partnership"; (b) The Fund's Code of Regulations, as amended, (such Code, as presently in effect and as it may hereinafter from time to time be amended, is hereinafter referred to as the "Code"); (c) Resolutions of the Managing General Partners of the Fund authorizing the appointment of the Advisers and approving this Agreement; and (d) An Order of the Securities and Exchange Commission, dated November 9, 1976, exempting the Fund from certain provisions of Sections 2(a)(3), 2(a)(19), 18(f) and 22(e) of the Investment Company Act of 1940, and exempting the Non-Managing General Partner of the Fund from certain provisions of Section 17(a) of the Act. 2 The Fund agrees to furnish PIMC from time to time with copies, properly certified or authenticated, of any amendments or supplements to the foregoing. 2. APPOINTMENT. The Fund hereby appoints PNC and PIMC to act an investment advisers to the Fund for the period and on the terms set forth in this Agreement. The PNC and PIMC are sometimes hereinafter referred to collectively as "the Advisers." The Advisers accept such appointment and agree that the services herein set forth shall be rendered for the compensation herein provided. 3. SERVICES RENDERED BY PNC. Subject to the supervision of the Managing General Partners of the Fund, PNC, through its Trust Division and on behalf of the Fund, will provide PIMC investment research and credit analysis concerning prospective and existing Fund investments, make recommendations to PIMC with respect to the Fund's continuous investment program, recommend to PIMC the portion of the Fund's assets to be invested or held uninvested in cash or cash equivalents, supply PIMC computer facilities and operating personnel, and provide certain statistical services as PIMC may from time to time reasonably request. PNC will provide the services rendered by it hereunder in accordance with the Fund's investment objectives, policies and restrictions as stated in the Prospectus and as they may hereafter be amended. PNC further agrees that it: (a) will use the same skill and care in providing such services as it uses in providing services to fiduciary accounts for which it has investment responsibilities; (b) will conform with all applicable Rules and Regulations of the Securities and Exchange Commission (hereinafter called the "Rules"), and will in addition conduct its activities under this Agreement in accordance with the regulations of the Board of Governors of the Federal Reserve System pertaining to the investment advisory activities of bank holding companies to the same extent as if such regulations were by their terms applicable to its activities hereunder; (c) will not invest its assets or assets of any fiduciary account managed by it in Shares of the Fund, make loans for purposes of purchasing or carrying such Shares or make loans to the Fund; (d) will maintain or cause PIMC to maintain all books and records with respect to the Fund's securities transactions and shall keep or shall cause PIMC to keep the Fund's books of account; -2- 3 (e) will render to the Fund's Managing General Partners such periodic and special reports as the Board may request; (f) will maintain its policy and practice of conducting its Trust Division independently of its Commercial Division. In making investment recommendations for the Fund, Trust Division personnel will not inquire or take into consideration whether the issuer of securities proposed for purchase or sale for the Fund's account are customers of the Commercial Division. In dealing with commercial customers, the Commercial Division will not inquire or take into consideration whether securities of those customers are held by the Fund; and 4. SERVICES PROVIDED BY PIMC. Subject to the supervision of the Managing General Partners of the Fund, PIMC will provide a continuous investment program for the Fund's portfolio, including investment research and management with respect to all securities and investments and cash and cash equivalents in the portfolio. PIMC will determine from time to time what securities and other investments will be purchased, retained or sold by the Fund, and what portion of its assets will be invested or held uninvested in cash or cash equivalents. PIMC will provide the services rendered by it hereunder in accordance with the Fund's investment objectives, policies and restrictions as stated in the Prospectus and as they may hereafter be amended. PIMC further agrees that it: (a) will place orders pursuant to its investment determinations for the Fund either directly with the issuer or with any broker or dealer. In placing orders with brokers and dealers, PIMC will attempt to obtain the best net price and the most favorable execution of its orders. Consistent with this obligation, when the execution and price offered by two or more brokers or dealers are comparable, PIMC may, in its discretion, purchase and sell portfolio securities to and from brokers and dealers who provide the Fund with research advice and other services. In no instance will portfolio securities be purchased from or sold to PNC, PIMC or any affiliated person thereof; (b) will conform with all applicable Rules, and will in addition conduct its activities under this Agreement in accordance with the regulations of the Board of Governors of the Federal Reserve System pertaining to the investment advisory activities of bank holding companies to the same extent as if such regulations were by their terms applicable to the activities of PIMC; (c) will not invest its assets or the assets of any accounts advised by it in Shares of the Fund, make loans -3- 4 for the purpose of purchasing or carrying Shares, or make loans to the Fund; and (d) will compute the net asset value and the net income of the Fund on each business day as described in the Prospectus or as more frequently requested by the Fund. 5. SERVICES NOT EXCLUSIVE. The investment advisory services rendered by PNC and PIMC hereunder are not to be deemed exclusive, and PNC and PIMC shall be free to render similar services to others so long as their services under this Agreement are not impaired thereby. 6. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3 of the Rules, the Advisers hereby agree that all records which they maintain for the Fund are property of the Fund and further agree to surrender promptly to the Fund any of such records upon the Fund's request. The Advisers further agree to preserve for the periods prescribed by Rule 31a-2 the records required to be maintained by Rule 31a-1 of the Rules. 7. EXPENSES. During the term of this Agreement, the Advisers will pay all expenses incurred by them in connection with their activities under this Agreement other than the cost of (including brokerage commissions, if any) securities purchased for the Fund. In addition, if the expenses borne by the Fund in any fiscal year exceed the applicable expense limitations imposed by the securities regulations of any state in which the Shares are registered or qualified for sale to the public, the Advisers shall reimburse the Fund for any excess up to the amount of the fees payable to PIMC during such fiscal year pursuant to paragraph 8 hereof. 8. COMPENSATION. For the services provided hereunder by PNC and PIMC and the expenses assumed pursuant to this Agreement, the Fund will pay PIMC, and PNC and PIMC will accept as full compensation therefor, a fee computed daily and paid monthly at the annual rate of 4/10 of 1% of the first $100,000,000 of the Fund's net assets, plus 3/10 of 1% of net assets exceeding $100,000,000. 9. LIMITATION OF LIABILITY OF THE ADVISORS. The Advisers shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the matters to which this Agreement relates, except a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services or a loss resulting from willful misfeasance, bad faith or gross negligence by either of them in the performance of their duties or from reckless -4- 5 disregard by either of them of their obligations and duties under this Agreement. 10. DURATION AND TERMINATION. This Agreement shall become effective on January 1, 1998 or the date upon which it is approved by a majority of the outstanding voting securities of the Fund at a meeting of Partners, whichever is later. Unless sooner terminated as provided herein, this Agreement shall continue until March 31, 1999. Thereafter, if not terminated, this Agreement shall continue for successive annual periods ending on March 31, provided, such continuance for successive annual periods is specifically approved at least annually (a) by the vote of a majority of those members of the Board of Managing General Partners of the Fund who are not parties to this Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval, and (b) by the Board of Managing General Partners of the Fund or by vote of a majority of the outstanding voting securities of the Fund, provided however, that this Agreement may be terminated by the Fund at any time, without the payment of any penalty, by the Managing General Partners of the Fund or by vote of a majority of the outstanding voting securities of the Fund, on 60 days' written notice to the Advisers, or the Advisers at any time, without payment of any penalty, on 90 days' written notice to the Fund. This Agreement will terminate automatically in the event of its assignment. (As used in this Agreement, the terms "majority of the outstanding voting securities," "interested person" and "assignment" shall have the same meaning as such terms have in the Investment Company Act of 1940.) 11. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, and no amendment of this Agreement shall be effective until approved by vote of the holders of a majority of the Fund's outstanding voting securities. 12. MISCELLANEOUS. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and shall be governed by Delaware law. 13. NO PERSONAL LIABILITY. The persons executing this Agreement on behalf of the Fund have executed the Agreement as Managing General Partners or officers of the Fund and not individually. The obligations of the Fund hereunder and any -5- 6 liabilities or claims in connection therewith are not binding upon any of the Limited Partners of the Fund individually, but are binding only upon the assets and property of the Fund. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of the day and year first above written. Attest: PNC BANK, N.A. /s/ Gary M. Gardner By:/s/ Joseph Gramlich - ------------------------- --------------------- [corporate seal] PROVIDENT INSTITUTIONAL Attest: MANAGEMENT CORPORATION /s/ Gary M. Gardner By:/s/ Lisa M. Buono - ------------------------- --------------------- [corporate seal] Attest: CHESTNUT STREET EXCHANGE FUND /s/ Terrance James Reilly By:/s/ Robert R. Fortune - ------------------------- --------------------- -6- EX-7 4 AMENDED & RESTATED FUND OFFICE RETIREMENT 1 EXHIBIT 7 PART II [ CHESTNUT STREET EXCHANGE FUND ] NAME OF ADOPTING EMPLOYER DEFINED CONTRIBUTION PLAN (PROFIT-SHARING OR PROFIT-SHARING 401(K)) REGIONAL PROTOTYPE PLAN NUMBER 001 ADOPTION AGREEMENT DRINKER BIDDLE & REATH LLP REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN AND TRUST AGREEMENT [ FUND OFFICE RETIREMENT PROFIT-SHARING PLAN ] NAME OF PLAN 2 INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY DISTRICT DIRECTOR 31 HOPKINS PLAZA BALTIMORE, MD 21201-0000 Employer Identification Number: Date: JAN 04, 1993 23-1423089 File Folder Number: DRINKER BIDDLE & REATH 521006125 PHILADELPHIA NATIONAL BANK BLDG Person to Contact: C/O HOMER L ELLIOTT ESQUIRE G.N. Wallace DRINKER BIDDLE & REATH Contact Telephone Number: 1345 CHESTNUT STREET PH NAT BK BLDG (410) 962-2973 PHILADELPHIA, PA 19107-3496 Plan Name: REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN Plan Number: 001 Letter Serial Number: D8520005 Dear Applicant: The amendment to the form of the plan identified above is acceptable under section 401(a) or 403(a) of the Internal Revenue Code. This letter relates only to the amendment to the form of the plan. It is not a determination of any other amendment or of the form of the plan as a whole, or on the effect of other federal or local statutes. You must furnish a copy of this letter and the enclosed publication to each employer who adopts this plan. You must also send a copy of this letter, a copy of the approved form of the plan, and any approved amendments and related documents to each key District Director of the Internal Revenue Service in whose jurisdiction there are adopting employers. The acceptability of the form of the plan is not a ruling or determination as to whether an employer's plan qualifies under Code section 401(a). To adopt the form of the plan, the employer should apply for a determination letter by filing an application with the key District Director of the Internal Revenue Service on Form 5307, Application for Determination for Adopters of Master or Prototype, Regional Prototype or Volume Submitter Plans. For purposes of sections 15.02 and 15.03 of Rev. Proc. 89-13, 1989-1 C .B. 801, your application was received before March 31, 1991. Please advise those adopting the plan to contact you if they have any questions about the operation of the plan. We have sent a copy of this letter to your representative as indicated in your Power of Attorney. If you have any questions on our processing of this case, please call the above telephone number. If you write, please provide your telephone number and the most convenient time for us to call in case we need more information. Whether you call or write, please refer to the Letter Serial Number and File Folder Number shown in the heading of this letter. You should keep this letter as a permanent record. Sincerely yours, /s/ H.J. Hightower District Director Enclosure(s) Publication 1488 Letter 2026/DO/CG) A-2 3 Department of the Treasury Internal Revenue Service PUBLICATION 1488 (Rev. February 1991) FAVORABLE NOTIFICATION LETTER INTRODUCTION This publication is issued in conjunction with a favorable notification letter. It explains the significance of your letter, points out some features that may affect the qualified status of the plan, and provides information on the reporting requirements for the plan. An employee retirement plan qualified under Internal Revenue Code section 401(a) or 403(a) (qualified plan) is entitled to favorable tax treatment. For example, contributions made in accordance with the plan document are generally currently deductible. Participants will not include these contributions into income until the time they receive a distribution from the plan, at which time special income averaging rates for lump sum distributions may serve to reduce the tax liability. In some cases, taxation may be further deferred by rollover to another qualified plan or individual retirement arrangement. See Publication 575, Pension and Annuity Income (Including Simplified General Rule), for further details. Finally, plan earnings may accumulate free of tax. Employee retirement plans that fail to satisfy the requirements under section 401(a) or 403(a) are not entitled to this favorable tax treatment. Therefore, many employers desire advance assurance that the terms of their plans satisfy the qualification requirements. The Service provides such advance assurance for regional prototype plans by issuing favorable notification letters. However, in some cases, a determination letter is also required for reliance. SIGNIFICANCE OF A FAVORABLE NOTIFICATION LETTER Notification letters are issued by the Service to sponsors of regional prototype plans. Plan sponsors then make the plan available to employers who may adopt the plans for the benefit of their employees. The significance of a favorable notification letter differs for standardized plans and nonstandardized plans. A standardized plan can be identified by the number 2, 5, or 7 appearing in the second position of the letter serial number (the number following the alpha character which appears in the upper right portion of the letter). A nonstandardized plan may be identified by the number 3, 6, or 8 appearing in the second position. STANDARDIZED PLANS. A standardized plan is designed to be automatically acceptable under any fact pattern, except as indicated below. Therefore, there is no need to request a determination letter for such plans, provided the employer does not amend the plan and chooses only those options in the adoption agreement that were approved by the Service. Although a determination letter is not requested, the employer must still inform interested parties of the establishment or amendment of the plan. However, a determination letter is required for advance assurance that the provisions of the plan satisfy the qualification requirements if the employer maintains or has maintained another qualified plan. The Employer is not considered to have maintained another plan merely because the plan was previously not a standardized plan. Under certain circumstances, employers who have adopted standardized defined benefit plans may wish to request a determination letter that their plans prior benefit structure satisfies the requirements of Internal Revenue Code section 401(a)(26). Paired plans are standardized plans that are designed to work together. A paired plan may be recognized by the phrase "other than a specified paired plan" appearing in the fifth or sixth paragraph of the notification letter. If the employer maintains and has maintained only paired plans, a determination letter is not needed. NONSTANDARDIZED PLANS. It is possible that the unique fact patterns applicable to a specific employer may cause a nonstandardized plan to fail qualification. Therefore, to obtain advance assurance that the plan is qualified, the plan must be submitted for a determination letter. A determination letter is similar to an insurance policy that will, in many cases, protect the employer and plan beneficiaries from adverse tax consequences if the plan is later found to be nonqualified in the absence of a change in law, provided the plan is being operated in good faith in accordance with plan provisions. This advance assurance is a service provided by the Internal Revenue Service, and is not required for qualification. Form 5307, Application for Determination for Adopters of Master or Prototype Regional Prototype or Volume Submitter Plans, is used to request a determination letter, along with Form 5302, Employee Census, Form 8717 (explained later), a copy of the adoption agreement, a copy of the notification letter, a certification from the plan sponsor that the plan has not been withdrawn and is still in effect, and a copy of any separate trust or custodial account document. USER FEE. There is a charge for requesting a determination letter, but the charge is significantly reduced for regional prototype plans. Please complete and attach Form 8717, User Fee for Employee Plan Determination Letter Request, to Form 5307 when requesting a determination letter. LAW CHANGES AFFECTING THE PLAN. Plans must be amended to retain their qualified status if any plan provision fails qualification requirements because of changes in the law becoming effective subsequent to the issuance of the notification letter. If the plan is not amended, the plan will become nonqualified without specific notice from the Service. This will occur even if the employer has received a favorable determination letter in addition to the notification letter. The employer and plan participants may be subject to adverse tax consequences if the plan is nonqualified. A-3 4 The first character of the serial number assigned to the plan indicates the latest law change for which the plan had been amended. For example, the letter "D" indicates the plan was amended for the Tax Reform Act of 1986, which generally became effective for plan years after the 1988 plan year. A notification letter will not be applicable after a change in qualification requirements unless the plan sponsor requests a new notification letter within 12 months after the change. The plan sponsor must provide those employers for whom the employer is continuing to sponsor the plan with a copy of the amendments and the new notification letter within 60 days of the receipt of the new letter. If a change requires modification of the adoption agreement, employers must execute the new agreement by the later of 6 months after issuance of the new notification letter, or the end of the period specified in Internal Revenue Code section 401(b). If the application for a notification letter was submitted to the Service within certain time frames, the plan generally need not be amended again unless required to do so by legislation. The application was submitted to the Service within these time frames, if the following paragraph appears in the notification letter: "For purposes of sections 15.02 and 15.03 of Rev. Proc. 89-13, 1989-1 C.B. 801, your application was received timely." REQUIRED NOTIFICATIONS TO ADOPTING EMPLOYERS. The plan sponsor must provide adopting employers with annual notifications indicating whether the sponsor intends to continue to sponsor the plan, and whether amendments have been made to the plan. The plan sponsor must also notify employers within 60 days if the plan sponsor discontinues its sponsoring of the plan. REQUIRED NOTIFICATIONS TO THE INTERNAL REVENUE SERVICE. On each anniversary of the date of issuance of the notification letter, the plan sponsor must advise the Service whether the sponsor has made any changes to the plan, and whether the plan is still being made available for adoption by employers. The plan sponsor must also provide a listing of adopting employers, and a statement that the plan sponsor has provided employers with the notification described in the above paragraph. REPORTING REQUIREMENTS. Most plan administrators or employers who maintain an employee benefit plan must file an annual return/report with the Internal Revenue Service. The following forms should be used for this purpose: FORM 5500EZ - generally for a "One-Participant Plan," which is a plan that covers only: (1) an individual, or an individual or his or her spouse who wholly owns a business, whether incorporated or not, or (2) partner(s) in a partnership or the partner(s) and their spouse(s). If Form 5500EZ cannot be used, the one-participant plan should use 5500-C or 5500-R, whichever applies. NOTE: Keogh (H.R. 10) plans are required to file an annual return even if the only participants are owner-employees. The term "owner-employee" includes a partner who owns more than 10% interest in either the capital or the profits of the partnership. This applies to both defined contribution and defined benefit plans. FILING EXCEPTION FOR PLANS THAT HAVE NO MORE THAN $100,000 IN ASSETS. An annual return is not required to be filed for one participant plans having less than $100,000 in assets that otherwise qualify for filing Form 5500EZ. FORM 5500 - for a pension benefit plan with 100 or more participants at the beginning of the plan year. FORM 5500-C - for a pension benefit plan with more than one but fewer than 100 participants at the beginning of the plan year. FORM 5500-R - for a pension benefit plan with more than one but fewer than 100 participants at the start of the plan year for which 5500-C is not filed. NOTE: For 1989 and subsequent years Form 5500-R is part of the Form 5500C/R package. Filing only the first two pages of the Form 5500C/R package constitutes the filing of a Form 5500-R. WHEN TO FILE. Forms 5500 and 5500EZ must be filed annually. Form 5500-C must be filed for (i) the initial plan year, (ii) the year a final return/report would be filed, and (iii) at three-year intervals. Form 5500-R must be filed in the years when Form 5500-C is not filed (See Note above). However, 5500-C will be accepted in place of 5500-R. DISCLOSURE. The Internal Revenue Service will process the returns and provide the Department of Labor and the Pension Benefit Guarantee Corporation with the necessary information and copies of the returns on microfilm for disclosure purposes. A-4 5 PART II [CHESTNUT STREET EXCHANGE FUND] DEFINED CONTRIBUTION PLAN (PROFIT-SHARING OR PROFIT-SHARING 401(K)) REGIONAL PROTOTYPE PLAN NUMBER 001 ADOPTION AGREEMENT DRINKER BIDDLE & REATH LLP REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN AND TRUST AGREEMENT NOTES TO ADOPTING EMPLOYERS AND TO ADOPTING AFFILIATED EMPLOYERS: THIS ADOPTION AGREEMENT MAY ONLY BE USED WITH THE DRINKER BIDDLE & REATH LLP REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN. FAILURE TO PROPERLY FILL OUT THIS ADOPTION AGREEMENT MAY RESULT IN THE DISQUALIFICATION OF THE PLAN AS ADOPTED BY THE EMPLOYER. A CASH OR DEFERRED ARRANGEMENT MAY NOT BE ADOPTED BY A TAX EXEMPT OR GOVERNMENTAL ORGANIZATION WITH THE EXCEPTION OF CERTAIN PRE-EXISTING PLANS. DRINKER BIDDLE & REATH LLP, THE SPONSORING ORGANIZATION OF THIS PLAN, WILL INFORM THE ADOPTING EMPLOYER AND/OR ADOPTING AFFILIATED EMPLOYER OF ANY AMENDMENTS MADE TO THE PLAN OR OF THE DISCONTINUANCE OR ABANDONMENT OF THE PLAN. DRINKER BIDDLE & REATH LLP IS THE SPONSORING ORGANIZATION OF THIS PLAN. ITS ADDRESS IS PHILADELPHIA NATIONAL BANK BUILDING, 1345 CHESTNUT STREET, PHILADELPHIA, PA 19107-3496 AND ITS TELEPHONE NUMBER IS (215) 988-2855. (FILL IN BLANKS AND INDICATE SELECTION WHERE REQUIRED) The undersigned Employer hereby (check applicable box) [ ] adopts [ X ] adopts, as an amendment to a predecessor plan and trust agreement of the Employer, the DRINKER BIDDLE & REATH LLP REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN AND TRUST AGREEMENT, consisting of Part I, the Plan and Trust Agreement, and Part II, this Adoption Agreement. The Plan and Trust Agreement, as so adopted, shall be known as the [FUND OFFICE RETIREMENT PROFIT-SHARING PLAN AND TRUST AGREEMENT] (the "Plan"), a DEFINED CONTRIBUTION PLAN (PROFIT-SHARING OR PROFIT-SHARING 401(K)) AND TRUST AGREEMENT. The Employer and Trustee, by signing this Adoption Agreement, mutually agree and consent to the terms of the Plan and Trust, consisting of Part I, the Plan and Trust Agreement, and Part II, this Adoption Agreement. (C) DRINKER BIDDLE & REATH LLP 1997 A-5 6 NAME OF ADOPTING EMPLOYER: [CHESTNUT STREET EXCHANGE FUND] ADDRESS OF ADOPTING EMPLOYER:[BELLEVUE PARK CORPORATE CENTER 400 BELLEVUE PARKWAY, SUITE 100 WILMINGTON, DE 19809 ] ADOPTING EMPLOYER'S EMPLOYER IDENTIFICATION NUMBER: [ 51-0199471 ] ADOPTING EMPLOYER'S BUSINESS CODE NUMBER: [ 6742 ] TYPE OF ENTITY (check one): [ ] Corporation [ ] S Corporation [ ] Sole Proprietor [ X ] Partnership [ ] Church [ ] Tax Exempt Organization [ ] Governmental Organization [ ] Professional Corporation [ ] Other (Specify): [ ] PLACE OF INCORPORATION OR OTHER ORGANIZATION (SPECIFY): [ CALIFORNIA ] DATE OF INCORPORATION OR DATE BUSINESS BEGAN: [ MARCH 25, 1976 ] ADMINISTRATIVE COMMITTEE EMPLOYER IDENTIFICATION NUMBER: [23-2118138] PLAN NAME: [ FUND OFFICE RETIREMENT PROFIT-SHARING PLAN ] PLAN IDENTIFICATION NUMBER: [ 001 (333 FOR FORM 5500C/R) ] TRUST NAME: [ FUND OFFICE RETIREMENT PROFIT-SHARING PLAN TRUST ] TRUST EMPLOYER IDENTIFICATION NUMBER (IF ANY): [ 23-2487197 ] REGIONAL PROTOTYPE (PROFIT-SHARING (401(K)) PLAN NOTIFICATION LETTER NUMBER: D8520005 (PN:001 JANUARY 4, 1993) FROZEN PLAN: If the Employer has discontinued all further contributions to the Plan, check here [ ]. The Employer and the Trustee shall, however, continue to maintain the Plan and Trust in accordance with the requirements of the Internal Revenue Code and the Treasury regulations thereunder. TYPE PLAN: The Plan, as adopted under this Adoption Agreement, is a (check one): [ X ] (A) Profit-Sharing Plan. [ ] (B) Profit-Sharing 401(k) Plan. A.1.1 ACCRUAL COMPUTATION PERIOD. The Accrual Computation Period is the (check one): [ X ] (A) Plan Year [ ] (B)(A consecutive 12-month period ending with or within the Plan Year.) Enter the day and the month this period begins: [ ](day) [ ](month). For Employees whose date of hire is less than 12 months before the end of the 12-month period designated, Compensation will be determined over the Plan Year. A.1.4 ADMINISTRATIVE COMMITTEE. The name(s) and address(es) of the member(s) of the Administrative Committee are: A-6 7 [(A) EDWARD J. ROACH BELLEVUE PARK CORPORATE CENTER 400 BELLEVUE PARKWAY, SUITE 100 WILMINGTON, DE 19809 (B) (C) ] A.1.10 COMPENSATION. Compensation shall be determined over the Accrual Computation Period elected in Section A.1.1. (A) Compensation shall (check one): [ X ] (1) Include [ ] (2) Not include Employer contributions made pursuant to a salary reduction agreement which are not includible in the gross income of the Employee under sections 125, 402(e)(3), 402(h)(1)(B) or 403(b) of the Code. (B) Compensation shall exclude (specify): [ N/A .] (Note that this exclusion applies only to the manner of determining contributions to the Plan and for no other purpose; if not applicable, insert letters N/A in blanks). A.1.12 CONTROLLED GROUP. (A) Is the adopting Employer a member of a Controlled Group (check one)? [ ] (1) Yes [ X ] (2) No (B) If Section A.1.12(A)(1) is checked, is the adopting Employer a member of an affiliated service group (check one)? [ ] (1) Yes [ ] (2) No [ X ] (3) N/A If Section A.1.12(A)(1) is checked, list the name and address of each member in the following blanks (and if Section A.1.12(B)(1) is also checked, indicate whether the member is an affiliated service group member): [ N/A ] (If Section A.1.12(A)(2) is checked, the letters N/A should be inserted in these blanks) A.1.17 CONTRIBUTIONS ON BEHALF OF DISABLED PARTICIPANTS. The Employer (check one): [ ] (A) Will [ X ] (B) Will not make contributions on behalf of disabled Participants on the basis of the compensation each such Participant would have received for the Limitation Year if the Participant had been paid at the rate of compensation paid immediately before becoming permanently and totally disabled. Such imputed compensation for the disabled Participant may be taken into account only if the Participant is not a Highly Compensated Employee, and contributions made on behalf of such Participant shall be nonforfeitable when made. A-7 8 A.1.18 EARLY RETIREMENT DATE. (A) Shall the Plan provide for an Early Retirement Date (check one)? [ ] (1) Yes [ X ] (2) No If Section A.1.18(A)(1) is checked, complete the following: (B) Early Retirement Date shall mean the (check one): [ ] (1) Last day of the Plan Year [ ] (2) Last day of the month (must coincide with a Valuation Date) [ ] (3) [ ] (fill in date) (must coincide with a Valuation Date) in which the Participant attains age [ ] (not later than age 64) and completes [ ] Years of Service for Benefit Accrual with the Employer. A.1.19 EARNED INCOME. This Section shall apply only if the Plan, as adopted by the adopting Employer, covers Self-Employed Persons. A.1.20 EFFECTIVE DATE. If the adoption of this Plan and Trust Agreement constitutes the adoption of a new plan and trust agreement, check (A) and fill in blank. If the adoption of this Plan and Trust Agreement constitutes the restatement of an existing plan and trust agreement (including a prior version of this Plan and Trust Agreement), check (B) and fill in blanks. [ ] (A) NEW PLAN. The Effective Date of the Plan and Trust Agreement is [ ]. [ X ] (B) RESTATED PLAN. The original effective date of the predecessor plan and trust agreement was [SEPTEMBER 18, 1981]. Except as otherwise specifically provided herein, the Effective Date of the Plan and Trust Agreement, as restated herein, is [DECEMBER 1, 1997, EXCEPT AS OTHERWISE INDICATED]. A.1.24 ELIGIBILITY COMPUTATION PERIOD. If Section A.1.33(A)(4) is checked or if the elapsed time method is checked under Section A.2.2(B)(2), check here [ ] and do NOT complete the remainder of this Section A.1.24. Otherwise, the Eligibility Computation Period shall be calculated as follows: (A) COMPUTATION PERIOD. The Eligibility Computation Period shall be calculated pursuant to (check (1) or (2)): [ X ] (1) NORMAL RULE. The Eligibility Computation Period(s) shall be determined under Section 1.24(A) of the Plan. [ ] (2) ALTERNATE RULE. The Eligibility Computation Period(s) shall be determined under Section 1.24(B) of the Plan. (B) HOURS OF SERVICE REQUIRED. The number of Hours of Service which must be completed in order to meet the Eligibility Computation Period requirements of the Plan is [ 1 ] (fill in blank but not to exceed 1,000 Hours of Service). A.1.27 EMPLOYEE PENSION BENEFIT PLAN. Does the Employer or any member of its Controlled Group maintain or has the Employer or any member of its Controlled Group maintained any other Employee Pension Benefit Plan (check one)? [ X ] (A) Yes [ ] (B) No A-8 9 If Section A.1.27(A) is checked, list such Employee Pension Benefit Plan(s) in the following lines: [CHESTNUT STREET EXCHANGE FUND RETIREMENT PROFIT- SHARING PLAN; INDEPENDENCE SQUARE INCOME SECURITIES, INC. RETIREMENT PROFIT- SHARING PLAN; TEMPORARY INVESTMENT FUND, INC. RETIREMENT PROFIT-SHARING PLAN; AND TRUST FOR SHORT TERM FEDERAL SECURITIES RETIREMENT PROFIT-SHARING PLAN. ALL OF THE FOREGOING PLANS WERE MERGED INTO THIS PLAN EFFECTIVE DECEMBER 1, 1987.] (If Section A.1.27(B) is checked, the letters N/A should be inserted in these blanks). A.1.33 ENTRY DATE. Entry Date shall mean (check (A) or (B)): [ X ] (A) REGULAR METHOD. [ ] (1) The first day of the Plan Year (this option cannot be used unless the maximum age and service requirements are reduced by 1/2 year (i.e., age 20 1/2 or less must be selected in Section A.2.2(B)(1)(a)(ii) and the service requirement in Section A.2.2(B)(1)(a) (i) must be reduced by 1/2 year), coincident with, or, if the first day of the Plan Year does not so coincide, the first day of the Plan Year next following, the date on which an Employee meets the eligibility requirements of Article II of the Plan. [ ] (2) The first day of the Plan Year or the date six months after the first day of the Plan Year (whichever date is earlier), coincident with, or if such dates do not so coincide, the first day of the Plan Year or the date six months after the first day of the Plan Year (whichever date is earlier) next following, the date on which an Employee meets the eligibility requirements of Article II of the Plan. [ ] (3) The first day of the month coincident with, or if the first day of the month does not so coincide, the first day of the month next following, the date on which an Employee meets the eligibility requirements of Article II of the Plan. [ ] (4) The Employee's date of hire. [ X ] (5) The date on which the eligibility requirements of Article II of the Plan are met. [ ] (6) The first day of the quarter (in the Plan Year) coincident with, or if the first day of the quarter does not so coincide, the first day of the quarter (in the Plan Year) next following, the date on which an Employee meets the eligibility requirements of Article II of the Plan. [ ] (7) The first day of the Plan Year in which an Employee meets the eligibility requirements of Article II of the Plan. [ ] (B) ELAPSED TIME METHOD. The Employee's first day of employment or reemployment in accordance with the rules of Section 1.55(B) of the Plan. A.1.35 EXCESS COMPENSATION. Excess Compensation shall mean Compensation in excess of (check applicable block): [ ] (A) Taxable Wage Base. [ ] (B) [$ ] (if (B) is checked, insert dollar amount not to exceed the Taxable Wage Base). A-9 10 [ X ] (C) N/A (The Plan is not integrated with Social Security). A.1.38 HIGHLY COMPENSATED EMPLOYEE. (A) CALENDAR YEAR ELECTION. Does the Employer desire to make the calendar year election provided in Section 1.38 of the Plan for purposes of determining the look-back year calculation (check one)? [ ] (1) Yes [ X ] (2) No IF THIS ELECTION IS MADE, SUCH ELECTION MUST APPLY TO ALL PLANS, ENTITIES AND ARRANGEMENTS OF THE EMPLOYER. (B) SIMPLIFIED DEFINITION. If the Employer maintains significant business activities (and employs Employees) in at least two significantly separate geographic areas, the Employer may elect the simplified definition of Highly Compensated Employee in Section 1.38 of the Plan. Does the Employer desire to make this election (check one): [ ] (1) Yes [ X ] (2) No [ ] (3) N/A A.1.44 INVESTMENT MANAGER. The name and address of the Investment Manager are: [ N/A ] (If no Investment Manager has been appointed by the Employer, the letters N/A should be inserted in these blanks). A.1.46 LEASED EMPLOYEES. Does the Employer have any Leased Employees (check one)? [ ] (A) Yes [ X ] (B) No If Section A.1.46(A) is checked, complete Section A.2.3(H) below. A.1.47 LIMITATION COMPENSATION. Limitation Compensation shall mean all of each Participant's (check one): [ X ] (A) Wages, Tips and Other Compensation as Reported on Form W-2. [ ] (B) Code Section 3401(a) Wages. [ ] (C) Code Section 415 Safe-Harbor Compensation. A.1.48 LIMITATION YEAR. The Limitation Year is the (check applicable block): [ ] (A) Calendar year. [ X ] (B) Twelve-consecutive month period ending (insert month and day) [ NOVEMBER 30 ]. A.1.53 NORMAL RETIREMENT AGE. Normal Retirement Age shall mean (check one): [ X ] (A) Age [ 65 ] (fill in blank but not earlier than age 62 and not later than age 65). [ ] (B) The later of age [ ] fill in blank but not earlier than age 62 and not later than age 65) or the [ ] (fill in blank but not to exceed 5th) anniversary of the first day of the first Plan Year in which the Participant commenced participation in the Plan. A.1.55 ONE-YEAR BREAK IN SERVICE. A One-Year Break In Service shall be determined by the following method (check one): A-10 11 [ X ] (A) REGULAR METHOD. If this method is selected, a One-Year Break In Service shall occur in any Computation Period in which the Employee completes not more than [ 100] (fill in blank, but not to exceed 500) Hours of Service. [ ] (B) ELAPSED TIME METHOD. A.1.56 OWNER-EMPLOYEES OR SHAREHOLDER-EMPLOYEES. (A) Does the Plan cover any Owner-Employees, as defined in Section 1.56 of the Plan (check one)? [ ] (1) Yes [ ] (2) No [ X ] (3) N/A (This Plan does not cover any Self-Employed Persons) If Section A.1.56(A)(1) is checked, see Section 2.4 of the Plan. (B) Does the Plan cover any shareholder-employees, as defined in Section 7.11(A)(7) of the Plan (check one)? [ ] (1) Yes [ ] (2) No [ X ] (3) N/A (The Employer is not an electing S corporation) If Section A.1.56(B)(1) is checked, see Section 7.11(A)(7) of the Plan. A.1.63 PLAN SPONSOR. The name(s) and address(es) of the Plan Sponsor(s) are: [ CHESTNUT STREET EXCHANGE FUND BELLEVUE PARK CORPORATE CENTER 400 BELLEVUE PARKWAY, SUITE 100 WILMINGTON, DE 19809 ] A.1.64 PLAN YEAR. The Plan Year shall be the Computation Period ending (insert month and day) [ NOVEMBER 30 ]. A.1.72 QUALIFYING EMPLOYER SECURITIES. If this Adoption Agreement provides for investments in Qualifying Employer Securities, the Employer may restrict the types of Employer Securities so qualifying by indicating the restrictions in the following blanks: [ NO RESTRICTIONS ] (If investment in Qualifying Employer Securities is not restricted to type, insert in the blanks the words "No Restrictions"; if investment in Qualifying Employer Securities is not permitted, insert the letters N/A in the blanks). A.1.78 SELF-EMPLOYED PERSONS. Does the Plan cover Self-Employed Persons (check one)? [ ] (A) Yes [ X ] (B) No A.1.79 SERVICE. (A) If not otherwise required by the Plan, shall service with predecessor employer(s) (to the extent specified in Section A.1.79 (B) and (C)) be treated as Service with the Employer (check one)? [ ] (1) Yes [ ] (2) No [ X ] (3) N/A (No predecessor employer) (B) If Section A.1.79(A)(1) is checked, service with the predecessor employer(s) specified in Section A.1.79 (C) shall be treated as Service with the Employer for purposes of (check applicable blank(s)): A-11 12 [ ] (1) Eligibility for Participation [ ] (2) Vesting [ X ] (3) N/A (C) If Section A.1.79(A)(1) is checked, indicate the name of the predecessor employer(s) in the following blanks: [ N/A ] (If Section A.1.79(A)(2) or (3) is checked, insert the letters N/A in the blanks). (D) If Section A.18.17(A) is checked, and the Prior Plan credited service under the elapsed time method, indicate the equivalency (if any) which is to be used to credit service in the Computation Period in which the amendment is effective, if the effective date of the amendment is other than the first day of the Computation Period (check one): [ ] Daily [ ] Monthly [ ] Weekly [ X ] N/A [ ] Semi-Monthly A.1.83 TAXABLE YEAR. The Employer's Taxable Year is the year ending (insert month and day) [ DECEMBER 31 ]. A.1.85 TOP-HEAVY RATIO. For purposes of establishing present value to compute the Top-Heavy Ratios of Section 1.85 of the Plan, any benefit shall be discounted only for mortality and interest based on the following: (A) INTEREST RATE (check one): [ X ] (1) APPLICABLE INTEREST RATE (For purposes of this Section A.1.85, "Applicable Interest Rate" shall mean the interest rate or rates which would be used, as of the date distribution commences under a Defined Benefit Plan, by the Pension Benefit Guaranty Corporation for purposes of determining the present value of a participant's benefits under such Defined Benefit Plan if such Defined Benefit Plan had terminated on the date distribution commences with insufficient assets to provide benefits guaranteed by the Pension Benefit Guaranty Corporation on that date. For purposes of this provision, the "date distribution commences" shall mean the Top-Heavy Valuation Date). [ ] (2) OTHER (specify) [ ]% (B) MORTALITY TABLE: [ 1984 UNISEX MORTALITY TABLE] A.1.86 TOP-HEAVY VALUATION DATE. The Top-Heavy Valuation Date, for purposes of calculating the Top-Heavy Ratios shall be (fill in blank) [ THE LAST DAY ] of each Plan Year. A.1.91 TRUSTEE(S). The name(s) and address(es) of the Trustee(s) are: [(A) ROBERT R. FORTUNE BELLEVUE PARK CORPORATE CENTER 400 BELLEVUE PARKWAY, SUITE 100 WILMINGTON, DE 19809 (B) EDWARD J. ROACH BELLEVUE PARK CORPORATE CENTER 400 BELLEVUE PARKWAY, SUITE 100 WILMINGTON, DE 19809 A-12 13 (C) ] A.1.93 VALUATION DATE. Valuation Date shall mean: (A) For purposes of determining a Participant's Accrued Benefit which is distributable in accordance with Article VII of the Plan (check one): [ ] (1) Last day of Plan Year. [ X ] (2) Last day of Plan Year and [ THE LAST DAY OF EVERY OTHER CALENDAR MONTH DURING THE PLAN YEAR ] (insert date(s)). (B) For purposes of determining the fair market value of assets in the Trust Fund and allocating the increase or decrease in the assets in accordance with Sections 5.3 and 5.4 of the Plan (check one): [ X ] (1) The date(s) specified in Section A .1.93(A). [ ] (2) Last day of Plan Year and [ ] (insert date(s)). A.1.97 YEAR OF SERVICE FOR BENEFIT ACCRUAL. (A) GENERAL. A Year of Service for Benefit Accrual shall be determined by the following method (check one): [ X ] (1) REGULAR METHOD. (This method must be selected if Section A.1.55(A) is checked). In order for a Participant to have a Year of Service for Benefit Accrual for any Plan Year, the Participant must complete the number of Hours of Service indicated (check either (a) and fill in blank or (b)): [ X ] (a) The number of Hours of Service which must be completed with the Employer in order for a Participant to have a Year of Service for Benefit Accrual is [ 200 ] (fill in blank but not to exceed 1,000 Hours of Service). [ ] (b) The number of Hours of Service which must be completed with the Employer in order for a Participant to have a Year of Service for Benefit Accrual for a Plan Year is 501 if the Participant is not an active Employee on the last day of the Plan Year; if the Participant is an active Employee on the last day of the Plan Year, only one Hour of Service with the Employer must be completed in order for the Participant to have a Year of Service for Benefit Accrual for such Plan Year. NOTE: UNDER PROPOSED TREAS. REG. SECTION 1.410(b) AND 1.401(a)(26), IT MAY BE NECESSARY TO PROVIDE THAT NO MORE THAN 501 HOURS OF SERVICE ARE REQUIRED FOR A YEAR OF SERVICE FOR BENEFIT ACCRUAL FOR ANY PARTICIPANT WHO HAS TERMINATED EMPLOYMENT AND IS NOT AN ACTIVE EMPLOYEE ON THE LAST DAY OF THE PLAN YEAR AND THAT NO MORE THAN ONE HOUR OF SERVICE IS REQUIRED FOR A YEAR OF SERVICE FOR BENEFIT ACCRUAL FOR ANY PARTICIPANT WHO IS AN ACTIVE EMPLOYEE ON THE LAST DAY OF THE PLAN YEAR. (PROPOSED TREAS. REG. SECTION 1.410(b)-3(c) AND 1.401(a)(26)-3(b)(8)). [ ] (2) ELAPSED TIME METHOD. (This method must be selected if Section A.1.55(B) is checked). A-13 14 (B) ELECTIVE DEFERRAL CONTRIBUTIONS. If Elective Deferral Contributions are provided for under Section A.3.4 of the Adoption Agreement, the number of Hours of Service which a Participant must complete in a Year of Service for Benefit Accrual is [ N/A ] (fill in blank but not to exceed 1,000 Hours of Service unless Section A.1.97(A)(2) is checked, in which case insert letters "ET" and the elapsed time rules apply; if there are no Elective Deferral Contributions, insert letters "N/A") in order for the Participant to have Elective Deferral Contributions made on his behalf under the Plan. (C) MATCHING CONTRIBUTIONS. If Matching Contributions by the Employer are provided for under Section A.3.5 of the Adoption Agreement, the number of Hours of Service which a Participant must complete in a Year of Service for Benefit Accrual is [ N/A ] (fill in blank (if there are no Matching Contributions, insert letters "N/A") but not to exceed 1,000 Hours of Service unless Section A.1.97(A)(2) is checked, in which case insert letters "ET" and the elapsed time rules apply) in order for the Employer to match Participant Contributions or Elective Deferral Contributions of such Participant under Section A.3.5 of the Adoption Agreement. Except as provided in Sections A.1.97(B) and A.1.97(C), a Year of Service for Benefit Accrual shall be determined under Section A.1.97(A). A.1.98 YEAR OF SERVICE FOR ELIGIBILITY. The number of Hours of Service which must be completed in order for an Employee to have a Year of Service for Eligibility is [ 1 ] (fill in blank, but not to exceed 1,000 Hours of Service; insert letters N/A if Section A.1.33(A)(4) is checked or if the elapsed time method is selected under Section A.2.2.(B)(2). A.1.99 YEAR OF SERVICE FOR VESTING. A Year of Service for Vesting shall be determined by the following method (check one): [ X ] (A) REGULAR METHOD. (This method must be selected if Section A.1.55(A) is checked). The number of Hours of Service which must be completed in order for a Participant to have a Year of Service for Vesting is [ 200 ] (fill in blank but not to exceed 1,000 Hours of Service). [ ] (B) ELAPSED TIME METHOD. (This method must be selected if Section A.1.55(B) is checked). [ ] (C) N/A (Plan provides 100% immediate vesting). A.2.2 ELIGIBILITY REQUIREMENTS. (A) ELIGIBLE CLASSES OF EMPLOYEES: (1) Except as provided in (2) below, the following Employees are or shall be eligible to participate in the Plan (check one): [ X ] (a) All Employees [ ] (b) Salaried Employees only (as defined in Section 1.77 of the Plan) [ ] (c) Hourly Employees only (as defined in Section 1.40 of the Plan) [ ] (d) All Employees except (specify class or classes of Employees to be excluded): [ ] (2) The following Employees shall not be eligible to participate in the Plan (check block(s) if such Employees are to be excluded): A-14 15 [ X ] (a) Union Employees (as defined in Section 1.92 of the Plan) [ X ] (b) Non-Resident Aliens (as defined in Section 1.52 of the Plan) (B) LENGTH OF SERVICE; MINIMUM AGE: Participation in the Plan shall be determined under either the regular method or the elapsed time method (check (1) or (2)): [ X ] (1) REGULAR METHOD. If the regular method is selected, check (a) or (b): [ ] (a) SERVICE AND AGE REQUIREMENT. In order to participate in the Plan, an Employee shall meet the following requirements (complete blanks): (i) SERVICE. (AA) ELECTIVE DEFERRAL CONTRIBUTIONS. An Employee shall have completed [ ] Year of Service for Eligibility (not more than one Year of Service for Eligibility) to be eligible to make Elective Deferral Contributions. (BB) MATCHING CONTRIBUTIONS. An Employee shall have completed [ ] Year(s) of Service for Eligibility (not more than two Years of Service for Eligibility) to be eligible for Matching Contributions. (CC) EMPLOYER CONTRIBUTIONS AND ALL OTHER PURPOSES. An Employee shall have completed [ ] Year(s) of Service for Eligibility (not more than two Years of Service for Eligibility) for Employer Contributions and for all other purposes of the Plan. Note that in Section A.2.2(B)(1)(a)(i)(BB) and (CC) not more than one Year of Service for Eligibility may be selected, if the option under Section A.7.6(B)(1)(a) is not elected nor more than two Years of Service for Eligibility if the option under Section A.7.6(B)(1)(a) is elected. For purposes of this Section A.2.2(B)(1)(a)(i), Service includes service with a predecessor employer if the Employer adopting the Plan is maintaining the plan of a predecessor employer. Such Service also includes predecessor service to the extent required by the Secretary of the Treasury or his delegate. Service for purposes of eligibility also includes service with a predecessor employer if such service is not otherwise required to be included under Sections 1.79 and 2.2 of the Plan to the extent provided in Section A.1.79. (ii) AGE. An Employee shall have attained [ ] years of age (not more than age 21). [ X ] (b) NO SERVICE OR AGE REQUIREMENT. The Plan shall cover Employees in eligible classes A-15 16 effective on the first Entry Date coinciding with, or next following, their date of hire. [ ] (2) ELAPSED TIME METHOD. The Employee shall be eligible to participate in the Plan on his first day of employment or reemployment in accordance with the rules of Section 1.55(B) of the Plan. A.2.3 ADDITIONAL RULES. (A)-(F) RESERVED. (G) ALLOCATIONS TO PARTICIPANTS. Except as otherwise provided below, a Participant shall share in Employer contributions in any Plan Year if the Participant completes a Year of Service for Benefit Accrual during such Plan Year. Notwithstanding any other provision of the Plan or this Adoption Agreement, any Participant making Elective Deferral or Participant Contributions to the Plan for any Plan Year shall be entitled to such Elective Deferral or Participant Contributions. (1) EMPLOYER CONTRIBUTIONS. This provision shall only apply if Section A.1.97(A)(1) is checked and then only to the extent permitted by Section 3.11 of the Plan. (a) SEPARATION FROM SERVICE FOR REASONS OTHER THAN DISABILITY, DEATH OR RETIREMENT. (i) Shall Participants who separate from the service of the Employer (for reasons other than Disability, death or retirement) before the end of the Plan Year even if they have completed a Year of Service for Benefit Accrual share in Employer contributions for such Plan Year (check one)? [ X ] (AA) Yes[ ] (BB) No [ ] (CC) N/A (Section A.1 .97(A)(2) checked) NOTE THAT SECTION A.2.3(G)(1)(a)(I)(AA) MUST BE CHECKED IF SECTION A.1.97(A)(1)(B) IS CHECKED. (ii) If Section A.2.3(G)(1)(a)(i)(AA) is checked, shall such Participant share in Employer contributions for such Plan Year if such Participant has not completed a Year of Service for Benefit Accrual (check one)? [ X ] (AA) Yes [ ] (BB) No [ ] (CC) N/A (Section A.2.3 (G)(1) (a)(i) (AA) not checked) (b) DISABILITY, DEATH OR RETIREMENT. (i) Shall Participants who separate from the service of the Employer because of Disability, death or retirement before the end of the Plan Year even if they have completed a Year of Service for Benefit Accrual share in Employer contributions for such Plan Year (check one)? [ X ] (AA) Yes [ ] (BB) No [ ] (CC) N/A (Section A.1 .97(A)(2) checked) A-16 17 NOTE THAT SECTION A.2.3(G)(1)(b)(I)(AA) MUST BE CHECKED IF SECTION A.1.97(A)(1)(b) IS CHECKED.0 (ii) If Section A.2.3(G)(1)(b)(i)(AA) is checked, shall such Participant share in Employer contributions for such Plan Year if such Participant has not completed a Year of Service for Benefit Accrual (check one)? [ X ] (AA) Yes [ ] (BB) No [ ] (CC) N/A (Section A.2 .3(G)(1)(b) (i)(AA) not checked) (2) MATCHING CONTRIBUTIONS. This provision shall only apply if Section A .1.97(A)(1) is checked. (a) SEPARATION FROM SERVICE FOR REASONS OTHER THAN DISABILITY, DEATH OR RETIREMENT. (i) Shall Participants who separate from the service of the Employer (for reasons other than Disability, death or retirement) before the end of the (check one) [ ] (aa) month [ ] (bb) quarter [ ] (cc) Plan Year for which the Matching Contribution is being made even if they have completed a Year of Service for Benefit Accrual share in Matching Contributions for such period (check one)? [ ] (AA) Yes [ ] (BB) No [X] (CC) N/A (No Matching Contributions or Section A.1.97(A) (2) checked) NOTE THAT SECTION A.2.3(G)(2)(a)(I)(AA) MUST BE CHECKED IF SECTION A.1.97 (A)(1)(b) IS CHECKED. (ii) If Section A.2.3(G)(2)(a)(i) (AA) is checked, shall such Participant share in Matching Contributions for such (check one) [ ] (aa) month [ ] (bb) quarter [ ] (cc) Plan Year if such Participant has not completed a Year of Service for Benefit Accrual (check one)? [ ] (AA) Yes [ ] (BB) No [ X ] (CC) N/A (Section A.2.3(G)(2)(a) (i) (AA) not checked) (b) DISABILITY, DEATH OR RETIREMENT. (i) Shall Participants who separate from the service of the Employer because of Disability, death or retirement before the end of the (check one) [ ] (aa) month [ ] (bb) quarter [ ] (cc) Plan Year for which the Matching Contribution is being made even if they have completed a Year of Service for Benefit Accrual share in Matching Contributions for such period (check one)? [ ] (AA) Yes [ ] (BB) No A-17 18 [X] (CC) N/A (no Matching Contributions or Section A.1.97 (A)(2) checked) NOTE THAT SECTION A.2.3(G)(2)(b)(i)(AA) MUST BE CHECKED IF SECTION A.1.97(A)(1)(b) IS CHECKED. (ii) If Section A.2.3(G)(2)(b) (i)(AA) is checked, shall such Participant share in Matching Contributions for such (check one) [ ] (aa) month [ ] (bb) quarter [ ] (cc) Plan Year if such Participant has not completed a Year of Service for Benefit Accrual (check one): [ ] (AA) Yes [ ] (BB) No [ X ] (CC) N/A (Section A.2.3(G)(2)(b)(i) (AA) not checked. (H) LEASED EMPLOYEES. Shall Leased Employees be eligible to participate in the Plan (check applicable block)? [ ] (1) Yes [ ] (2) No [ X ] (3) N/A If Section A.2.3(H)(1) is checked, describe Leased Employees to be covered by the Plan and conditions and other limitations on such coverage in the following lines: [ N/A ] (If not applicable, insert letters N/A in these blanks) A.2.4 PLANS COVERING OWNER-EMPLOYEES. Section 2.4 of the Plan does not apply unless Section A.1.56(A) is checked. A.3.1 EMPLOYER CONTRIBUTIONS. (A) EMPLOYER CONTRIBUTIONS. (1) GENERAL. Shall the Employer, in its sole discretion, be permitted to make Employer Contributions to the Plan (check one)? [ X ] (a) Yes [ ] (b) No If Section A.3.1(A)(1)(a) is checked, such Employer Contributions shall be allocated under Section A.5.1(A). (2) PROFIT REQUIREMENTS. Shall Profits be required for Employer Contributions to the Plan (check one)? [ ] (a) Yes [ X ] (b) No (B) QUALIFIED NONELECTIVE CONTRIBUTIONS. (1) ELECTION. May the Employer be permitted to make, in its sole discretion, Qualified Nonelective Contributions to the Plan (check one)? [ ] (a) Yes [ ] (b) No [ X ] (c) N/A (No Elective Deferral or Participant Contributions) (2) AMOUNT. If the Employer does make such contributions to the Plan, then the amount of such contributions for each Plan Year shall be (check one): A-18 19 [ ] (a) [ ] percent (not to exceed 15 percent) of the Compensation of all Participants eligible to share in the allocation. [ ] (b) [ ] percent of the Profits, but in no event more than [$ ] for any Plan Year. [ ] (c) An amount determined by the Employer. [X] (d) N/A (Qualified Nonelective contributions not permitted). (3) PARTICIPANTS ELIGIBLE FOR ALLOCATION. Allocation of Qualified Nonelective Contributions shall be made to the accounts of (check one): [ ] (a) All Participants [ ] (b) Only Participants who are Non-Highly Compensated Employees [ ] (c) Only Participants who are Non-Highly Compensated Employees and who are (specify group to which allocations are to be made) [ ] [X] (d) N/A (Qualified Nonelective Contributions not permitted) (4) MANNER OF ALLOCATION. Allocation of Qualified Nonelective Contributions shall be made (check one): [ ] (a) In the ratio which each affected Participant's Compensation for the Plan Year bears to the total Compensation of all affected Participants for such Plan Year. [ ] (b) In the ratio which each affected Participant's Compensation not in excess of [$ ] for the Plan Year bears to the total Compensation of all affected Participants not in excess of [$ ] for such Plan Year. [X] (c) N/A (Qualified Nonelective Contributions not permitted). (C) QUALIFIED MATCHING CONTRIBUTIONS. (1) ELECTION. May the Employer be permitted to make Qualified Matching Contributions to the Plan? [ ] (a) Yes [ ] (b) No [X] (c) N/A (No Elective Deferrals or Participant Contributions) (2) ALLOCATION. The Employer shall, in its sole discretion, make Qualified Matching Contributions to the Plan on behalf of (check one): [ ] (a) All Participants [ ] (b) All Participants who are Non-Highly Compensated Employees A-19 20 [ ] (c) All Participants who are Non-Highly Compensated Employees and who are (specify group to which allocations are to be made) [ ] [X] (d) N/A (No Qualified Matching Contributions) If Section A.3.1(C)(2)(a), (b) or (c) is checked, the allocation shall be made to applicable Participants who make (check (i) and/or (ii) or (iii)): [ ] (i) Elective Deferral Contributions [ ] (ii) Participant Contributions [X] (iii) N/A (No Qualified Matching Contributions) (3) AMOUNT. The Employer shall contribute and allocate to each Participant's Qualified Matching Contribution account an amount determined as follows (check applicable block(s)): [ ] (a) ELECTIVE DEFERRAL CONTRIBUTIONS. The Employer shall contribute an amount equal to (check one): [ ] (i) [ ] percent of the Participant's Elective Deferral Contributions; or [ ] (ii) that percent of the Participant's Elective Deferral Contributions, as determined by the Employer, in its sole discretion, for the Plan Year. [ ] (b) PARTICIPANT CONTRIBUTIONS. The Employer shall contribute an amount equal to (check one): [ ] (i) [ ] percent of the Participant's Participant Contributions; or [ ] (ii) that percent of the Participant's Participant Contributions, as determined by the Employer, in its sole discretion, for the Plan Year. [X] (c) N/A (No Qualified Matching Contributions). The Employer shall not match amounts provided above in excess of [$ N/A ], or in excess of [N/A] percent of the Participant's Compensation (if there are no limitations or if this provision is not otherwise applicable, insert letters N/A in blank(s)). A-20 21 A.3.2 PARTICIPANT CONTRIBUTIONS. (A) PERMISSIBILITY. Participant Contributions shall (check (1), (2) or (3)): [X] (1) Not be permitted under the Plan (NOTE: THIS BLOCK MUST BE CHECKED UNLESS THE PLAN HAS A CODA AS INDICATED BY CHECKING SECTION A.3.4(A)(2)). [ ] (2) Be permitted (but not required) in the amounts provided by Section 3.2 of the Plan but subject to the limitations of Section 3.8 of the Plan. [ ] (3) Be required in order for an Employee to participate in the Plan. Such Participant Contributions shall be made by payroll deduction and shall equal no less than [ ] percent but shall not exceed [ ] percent (not to exceed 6 percent) of the Participant's Compensation for the Plan Year. The Employee shall enter into an agreement with the Employer providing for Participant Contributions in any amount from [ ] percent to [ ] percent (not to exceed 6 percent) of the Participant's Compensation for the Plan Year. In addition, the Employee may, but is not required to, make voluntary Participant Contributions in the amounts provided for in Section 3.2 of the Plan subject to the limitations of Section 3.8 of the Plan. (B) PAYROLL DEDUCTION. Participant Contributions by payroll deduction (check (1), (2) or (3)): [ ] (1) Shall not be permitted. [ ] (2) Shall be permitted. [X] (3) Are N/A (No Participant Contributions). A.3.4 ELECTIVE DEFERRAL CONTRIBUTIONS. (A) ELECTION. Elective Deferral Contributions shall (check (1) or (2)): [X] (1) Not be permitted under the Plan. [ ] (2) Be permitted in accordance with the provisions of Section 3.4 of the Plan. If Section A.3.4(A)(2) is checked, a salary reduction agreement must be completed and filed by the Participant with the Administrative Committee prior to the date the Elective Deferral Contributions are made. (B) ELECTION CHANGES. If Section A.3.4(A)(2) is checked, the Participant shall be permitted to enter into a new salary reduction agreement (check one): [ ] (1) Monthly [ ] (2) Quarterly [ ] (3) Semi-Annually [ ] (4) Annually [ ] (5) Other (Specify): [ ] [ X ] (6) N/A A salary reduction agreement shall remain in effect until revoked or changed. (C) REVOCATION OF ELECTION. A Participant shall be permitted to revoke his salary reduction agreement (check one): A-21 22 [ ] (1) Only as permitted under Section A.3.4(B). [ ] (2) Upon 15 days' written notice to the Administrative Committee on the Appropriate Form. [X] (3) N/A. (D) INCLUSION OF QUALIFIED MATCHING AND QUALIFIED NONELECTIVE CONTRIBUTIONS. Qualified Matching Contributions and Qualified Nonelective Contributions may be taken into account as Elective Deferral Contributions for purposes of calculating the "Actual Deferral Percentages." In determining Elective Deferral Contributions for the purpose of the ADP test, the Employer shall include, under the Plan or any other plan of the Employer as provided by Treasury regulations under the Code, (check one): [ ] (1) Qualified Matching Contributions. [ ] (2) Qualified Nonelective Contributions. [X] (3) N/A (Elective Deferral Contributions are not permitted or Employer does not desire to make this election or no Qualified Matching or Qualified Nonelective Contributions are permitted). (E) QUALIFIED MATCHING CONTRIBUTIONS - AMOUNT. The amount of Qualified Matching Contributions made under Sections 3.1 of the Plan and A.3.1 of this Adoption Agreement and taken into account as Elective Deferral Contributions for purposes of calculating the "Actual Deferral Percentages," subject to such other requirements as may be prescribed by the Secretary of the Treasury, shall be (check one): [ ] (1) All such Qualified Matching Contributions. [ ] (2) Such Qualified Matching Contributions that are needed to meet the "Actual Deferral Percentage" test stated in Section 3.4(B)(2) of the Plan. [X] (3) N/A (Elective Deferral Contributions not permitted and/or Qualified Matching Contributions not permitted). (F) QUALIFIED NONELECTIVE CONTRIBUTIONS - AMOUNT. The amount of Qualified Nonelective Contributions made under Sections 3.1 of the Plan and A.3.1 of this Adoption Agreement and taken into account as Elective Deferral Contributions for purposes of calculating the "Actual Deferral Percentages," subject to such other requirements as may be prescribed by the Secretary of the Treasury, shall be (check one): [ ] (1) All such Qualified Nonelective Contributions. [ ] (2) Such Qualified Nonelective Contributions that are needed to meet the Actual Deferral Percentage test stated in Section 3.4(B)(2) of the Plan. [X] (3) N/A (Elective Deferral Contributions and/or Qualified Nonelective Contributions not permitted). A.3.5 MATCHING CONTRIBUTIONS. (A) ELECTION. Matching Contributions by the Employer (check (1), (2) or (3)): [ ] (1) Shall not be permitted under the Plan. [ ] (2) Shall be permitted in accordance with the provisions of Section 3.5 of the Plan and Section A.3.5(B) of the Adoption Agreement. A-22 23 [X] (3) Are N/A (No Elective Deferral or Participant Contributions). If Section A.3.5(A)(2) is checked, the Employer may, in its sole discretion, match, in accordance with Section A.3.5(B), the Elective Deferral Contributions of a Participant made pursuant to Section A.3.4 or Participant Contributions made pursuant to Section A.3.2. (B) ALLOCATION OF MATCHING CONTRIBUTIONS. (1) AMOUNT. If Section A.3.5(A)(2) is checked, Matching Contributions for the Plan Year shall be allocated to the Matching Account of each Participant, on whose behalf Elective Deferral Contributions for the Plan Year are being made, in an amount equal to (check one): [ ] (a) [ ] (insert percentage) percent of the (check applicable block): (i) [ ] Elective Deferral Contribution; (ii)[ ] Participant Contribution made on behalf of each Participant for such Plan Year; or [ ] (b) that percent of the (check applicable block): (i) [ ] Elective Deferral Contribution ; (ii) [ ] Participant Contribution made on behalf of each Participant for such Plan Year as determined by the Employer, in its sole discretion, for such Plan Year. [X] (c) N/A (No Matching Contributions). In no event shall such Matching Contribution exceed the lesser of (aaa) (insert percentage) [ ] percent of such Participant's Compensation for such Plan Year or (bbb) (insert amount, if any, of dollar limitation) [$ ]. (2) ALLOCATION DATE. Shall Matching Contributions be allocated effective as of a date or dates other than the last day of the Plan Year (check one)? [ ] (a) Yes [ ] (b) No [X](c) N/A (aaa) If Section A.3.5(B)(2)(a) is checked, list the date(s) (month and day) in each Plan Year as of which Matching Contributions shall be allocated: [ ]. (bbb) If Section A.3.5(B)(2)(a) is checked, a Participant who is employed as of a date specified for the allocation of Matching Contributions and on whose behalf Elective Deferral Contributions or Participant Contributions are being made shall receive an allocation of Matching Contributions as of such date regardless of the number of Hours of Service credited to the Participant for purposes of a Year of Service for Benefit Accrual as of such date, notwithstanding anything in the Plan to the contrary. (C) VESTING. Matching Contributions shall be vested in accordance with the following schedule (check one): A-23 24 [ ] (1) Nonforfeitable when made. [ ] (2) The Plan's general vesting schedule, other than that for Elective Deferral Contributions. [ ] (3) [The sponsor may add elections for one or more of the vesting schedules that comply with section 411(a)(2) of the Code: [ ]. [X] (4) N/A (No Matching Contributions). (D) "AVERAGE CONTRIBUTION PERCENTAGE" COMPUTATIONS. (1) In computing the "Average Contribution Percentage" with respect to Participant Contributions and Matching Contributions, the Employer shall take into account, under this Plan or any other plan of the Employer, as provided by Treasury regulations, and include as "Contribution Percentage Amounts" (check applicable block or blocks): [ ] (a) Elective Deferral Contributions. [ ] (b) Qualified Nonelective Contributions. [X] (c) N/A (There are no Participant or Matching Contributions, or Employer does not desire to make this election). (2) The amount of Qualified Nonelective Contributions that are made under Section 3.1 of the Plan and Section A.3.1 and taken into account as "Contribution Percentage Amounts" for purposes of calculating the "Average Contribution Percentage," subject to such other requirements as may be prescribed by the Secretary of the Treasury, shall be (check one): [ ] (a) All such Qualified Nonelective Contributions. [ ] (b) Such Qualified Nonelective Contributions that are needed to meet the "Average Contribution Percentage" test stated in Section 3 .2 of the Plan. [X] (c) N/A (No Participant or Matching Contributions or Employer does not desire to make this election). (3) The amount of Elective Deferral Contributions made under Section 3.4 of the Plan and Section A.3.4 and taken into account as "Contribution Percentage Amounts" for purposes of calculating the "Average Contribution Percentage", subject to such other requirements as may be prescribed by the Secretary of the Treasury, shall be: [ ] (a) All such Elective Deferral Contributions. [ ] (b) Such Elective Deferral Contributions that are needed to meet the "Average Contribution Percentage" test stated in Section 3.2 of the Plan. A-24 25 [X] (c) N/A (There are no Elective Deferral Contributions under the Plan or Employer did not make election under Section A.3.5(D)(1)). (4) To the extent forfeitable, forfeitures of "Excess Aggregate Contributions" shall be: [ ] (a) Applied to reduce Employer contributions. [ ] (b) Allocated, after all other forfeitures --- under the Plan, to each Participant's Matching Account in the ratio which each Participant's Compensation for the Plan Year bears to the total Compensation of all Participants for such Plan Year. Such forfeitures shall not be allocated to the account of any Highly Compensated Employee. [X] (c) N/A (No Matching Contributions). A.3.8 LIMITATIONS ON ALLOCATIONS. (A) GENERAL RULES. If the Employer maintains or ever maintained another qualified plan (other than a paired defined contribution regional prototype plan) in which any Participant in this Plan is (or was) a participant or could become a participant, the Employer must complete this Section A.3.8. The Employer must also complete this Section A.3.8 if it maintains a Welfare Benefit Fund or an individual medical benefit account, as defined in section 415(l)(2) of the Code, under which amounts are treated as "Annual Additions" with respect to any Participant in this Plan. Does the Employer maintain or has the Employer maintained any such plan(s) (check one): [ ] (1) Yes [ X ] (2) No If Section A.3.8(A)(1) is checked, complete Section A.3.8(B) and/or (C). (B) MAINTENANCE OF OTHER DEFINED CONTRIBUTION PLAN. If the Participant is covered under another qualified Defined Contribution Plan maintained by the Employer, other than a regional prototype plan (check applicable provisions as necessary): [ ] (1) The provisions of Section 3.8(B) of the Plan shall apply as if the other plan were a regional prototype plan. [ ] (2) Provide the method under which the plans will limit the total "Annual Additions" to the "Maximum Permissible Amount", and will properly reduce any "Excess Amounts", in a manner that precludes Employer discretion: [ ]. [X] (3) N/A (No other qualified Defined Contribution Plan (other than a regional prototype plan), Defined Benefit Plan, Welfare Benefit Fund or individual medical benefit account maintained). (C) MAINTENANCE OF A DEFINED BENEFIT PLAN. If a Participant is or has ever been a participant in a Defined Benefit Plan maintained by the Employer, check either (1) or (2) and complete as necessary: [ ] (1) The limitations set forth in Section 3.8(C)(2) through (4) of the Plan shall apply. A-25 26 [ ] (2) Provide the method under which the Plan will satisfy the 1.0 limitation of section 415 (e) of the Code (such language must preclude employer discretion; see Treas. Reg. Section 1.415-1 for guidance) in the following blanks: [ ]. IF ADDITIONAL SPACE IS REQUIRED THE EMPLOYER IS TO INSERT APPLICABLE LIMITATIONS IN AN ATTACHMENT TO THIS ADOPTION AGREEMENT. SUCH ATTACHMENT SHALL BE ADDED TO, AND MADE A PART OF, THIS ADOPTION AGREEMENT. A.3.9 ROLLOVERS. (A) PARTICIPANT ROLLOVERS. May Participants be permitted to make Rollover Contributions to the Plan (check one)? [ X ] (1) Yes [ ] (2) No (B) NON-PARTICIPANT ROLLOVERS. May Employees other than Participants be permitted to make Rollover Contributions to the Plan (check one)? [ ] (1) Yes [ X ] (2) No A.3.10 TRANSFERS. (A) PARTICIPANT DIRECT TRANSFERS. May Participants be permitted to have direct transfers made on their behalf to the Plan (check one)? [ X ] (1) Yes [ ] (2) No (B) NON-PARTICIPANT DIRECT TRANSFERS. May Employees other than Participants be permitted to have direct transfers made on their behalf to the Plan (check one)? [ ] (1) Yes [ X ] (2) No (C) TRANSFERS OF ACCOUNTS. Are assets being transferred to this Plan from a qualified plan covering Key Employees in a Top-Heavy Plan or five-percent owners (within the meaning of section 416(i)(1) of the Code) (check one)? [ ] (1) Yes [ X ] (2) No If such assets are transferred, the restrictions of Section 3.10(B) of the Plan apply. A.3.11 TOP-HEAVY PROVISIONS. (A) APPLICATION OF PROVISIONS AND ADJUSTMENTS. (1) APPLICATION. Is the Plan a Top-Heavy Plan on the Effective Date (check one): [ ] (a) Yes [ ] (b) No [ X ] (c) Uncertain (Note that if this box is checked and the Plan is a Top-Heavy Plan, the Top-Heavy Plan provisions as set forth herein shall apply) (2) ADJUSTMENTS. If the Employer maintains more than one plan in a Permissive or Required Aggregation Group, set forth here any adjustments to be made for Employer contributions or benefits attributable to Employer contributions under such A-26 27 other plan(s) in determining the amount of contributions to be made under the Top-Heavy provisions of this Plan (if not applicable, insert letters N/A)): [ N/A ] (B) VESTING. The nonforfeitable interest of each Employee in his account balance attributable to Employer contributions shall be determined on the basis of the following (check either (1) or (2) and fill in blank(s): [ ] (1)100% vesting after [ ] (not to exceed 3) Years of Service for Vesting; [X] (2)[ 10 ]% (no minimum) vesting after 1 Year of Service for Vesting; [25]% (not less than 20) vesting after 2 Years of Service for Vesting; [50]% (not less than 40) vesting after 3 Years of Service for Vesting; [75]% (not less than 60) vesting after 4 Years of Service for Vesting; [100]% (not less than 80) vesting after 5 Years of Service for Vesting; 100% vesting after 6 Years of Service for Vesting. If the vesting schedule under the Plan shifts in or out of the above schedule for any Plan Year because of the Plan's top-heavy status, such shift is an amendment to the vesting schedule and the election in Section 15.2(G) of the Plan applies. A.5.1 ALLOCATIONS. If Section A.3.1(A)(1)(a) is checked, complete the following: (A) ALLOCATION OF EMPLOYER CONTRIBUTIONS. (1) METHOD. Shall Employer Contributions (if any) to the Employer Accounts of Participants be integrated with Social Security contributions, subject to the overall permitted disparity limits set forth below (check (a) if integrated, (b) if not integrated)? [ ] (a) Yes The annual Employer Contribution shall not exceed the limitations set forth in Section A.5.1(A)(2). In any Plan Year in which there are Employer Contributions, such Employer Contributions shall, subject to the Top-Heavy Plan provisions, be allocated to each Participant's Employer Account as follows: (i) ALLOCATION OF EMPLOYER CONTRIBUTIONS FOR PLAN YEARS IN WHICH PLAN IS A TOP-HEAVY PLAN. If the Plan is a Top-Heavy Plan for the Plan Year, the Employer Contribution for such Plan Year shall be allocated to each Participant's Employer Account as follows: A-27 28 (aa) "BASE CONTRIBUTION PERCENTAGE". First, (check either (aaa) or (bbb))(percent in either (aaa) or (bbb) must not be less than the "Minimum Top- Heavy Rate"): [ ] (aaa) [ ] (insert percent), or [ ] (bbb) that percent determined by the Employer for the Plan Year of the Participant's "Base Compensation" for such Plan Year shall be allocated to the Employer Account of such Participant; (bb) "EXCESS CONTRIBUTION PERCENTAGE". Second, (check either (aaa) or (bbb))(percent in either (aaa) or (bbb) must not be less than the "Minimum Top-Heavy Rate" and must not exceed the "Maximum Excess Allowance"): [ ] (aaa)[ ] (insert percent) percent, or [ ] (bbb) that percent determined by the Employer for the Plan Year of the Participant's Excess Compensation for such Plan Year shall be allocated to the Employer Account of such Participant (for purposes of this allocation, forfeitures allocated to a Participant in the Plan Year shall be treated as Employer Contributions); however, in the case of any Participant who has exceeded the cumulative permitted disparity limit described below, the Employer shall contribute for such Participant an amount equal to the "Excess Contribution Percentage" multiplied by the Participant's total Compensation for the Plan Year; and (cc) "ADDITIONAL CONTRIBUTION PERCENTAGE". Lastly, any excess over (aa) and (bb) shall be allocated to each Participant's Employer Account in the same ratio as his Compensation for such Plan Year bears to the Compensation of all Participants for such Plan Year. (ii) ALLOCATION OF EMPLOYER CONTRIBUTIONS FOR PLAN YEARS IN WHICH PLAN IS NOT A TOP-HEAVY PLAN. The Employer Contribution for the Plan Year, if the Plan is not a Top-Heavy Plan for the Plan Year, shall be allocated as follows: (aa) "BASE CONTRIBUTION PERCENTAGE". First, (check either (aaa) or (bbb)): [ ] (aaa)[ ] (insert percent) percent, or [ ] (bbb) that percent determined by the Employer for the Plan Year A-28 29 of the Participant's "Base Compensation" for such Plan Year shall be allocated to the Employer Account of such Participant; (bb) "EXCESS CONTRIBUTION PERCENTAGE". Second, (check either (aaa) or (bbb))(percent in either (aaa) or (bbb) must not exceed the "Maximum Excess Allowance"): [ ] (aaa)[ ] (insert percent) percent, or [ ] (bbb) that percent determined by the Employer for the Plan Year of the Participant's Excess Compensation for such Plan Year shall be allocated to the Employer Account of such Participant (for purposes of this allocation, forfeitures allocated to a Participant in the Plan Year shall be treated as Employer Contributions); however, in the case of any Participant who has exceeded the cumulative permitted disparity limit described below, the Employer shall contribute for such Participant an amount equal to the "Excess Contribution Percentage" multiplied by the Participant's total Compensation for the Plan Year; and (cc) "ADDITIONAL CONTRIBUTION PERCENTAGE". Lastly, any excess over (aa) and (bb) shall be allocated to each Participant's Employer Account in the same ratio as his Compensation for such Plan Year bears to the Compensation of all Participants for such Plan Year. With respect to any Employee who is a Participant in the Plan for only a portion of the Plan Year for which the Employer Contribution is made, the allocation to such Employee of the Employer Contribution (other than the Top-Heavy portion, if the Plan is a Top-Heavy Plan), shall be (check one): [ ] (AA) Based only upon the amount of "Base Compensation", Excess Compensation and/or Compensation earned by such Employee and all other Employees during the portion of the Plan Year in which they are or were Plan Participants. [ ] (BB) Based upon the amount of "Base Compensation," Excess Compensation and/or Compensation earned by such Employee and all other Employees during the entire Plan Year. NOTE THAT THIS PLAN MAY NOT PROVIDE FOR PERMITTED DISPARITY IF THE EMPLOYER MAINTAINS ANY OTHER PLAN THAT PROVIDES FOR PERMITTED DISPARITY AND BENEFITS ANY OF THE SAME PARTICIPANTS. [ X ] (b) No The annual Employer Contributions (if any) shall be determined by the Employer for each Plan Year but shall not exceed the limitations of Section A.5.1(A)(2). In any Plan Year in which A-29 30 there are Employer Contributions, such Employer Contributions shall, subject to the Top-Heavy Plan provisions, be allocated to such Participant's Employer Account as follows: (i) ALLOCATION OF EMPLOYER CONTRIBUTIONS FOR PLAN YEARS IN WHICH PLAN IS A TOP-HEAVY PLAN. If the Plan is a Top-Heavy Plan for the Plan Year, the Employer Contribution for such Plan Year shall be first allocated to each Participant's Employer Account in the same ratio as his Compensation for such Plan Year bears to the Compensation of all Participants for such Plan Year, in an amount which is not less than the "Minimum Top-Heavy Rate". The balance of the Employer Contribution for such Plan Year shall be allocated to each Participant's Employer Account as follows (check one): [ ] (aa) In the same ratio as his Compensation for such Plan Year bears to the Compensation of all Participants for such Plan Year. [X] (bb) In the same ratio as his Compensation for the portion of the Plan Year in which he was a Participant bears to the Compensation of all Participants for the portion of the Plan Year in which they were Participants. (ii) ALLOCATION OF EMPLOYER CONTRIBUTIONS FOR PLAN YEARS IN WHICH PLAN IS NOT A TOP-HEAVY PLAN. The Employer Contribution for the Plan Year, if the Plan is not a Top-Heavy Plan for the Plan Year, shall be allocated to each Participant's Employer Account as follows (check one): [ ] (aa) In the same ratio as his Compensation for such Plan Year bears to the Compensation of all Participants for such Plan Year. [X] (bb) In the same ratio as his Compensation for the portion of the Plan Year in which he was a Participant bears to the Compensation of all Participants for the portion of the Plan Year in which they were Participants. [ ] (c) N/A (Section A.3.1(A)(1)(b) checked) (2) LIMITATIONS ON EMPLOYER CONTRIBUTIONS. The following limitations on Employer Contributions apply: (a) DEDUCTION LIMITATIONS. The annual Employer, Matching, and Elective Deferral Contributions and any other Employer contribution shall, in the aggregate, not exceed the greater of: (i) the Employer's "Primary Limitation" (as defined below) for the Taxable Year which ends with or within the Plan Year for which the Employer, Matching, and/or A-30 31 Elective Deferral Contribution and/or other Employer contribution is being made: or (ii) the Employer's "Secondary Limitation" (as defined below) for the Taxable Year which ends with or within the Plan Year for which the Employer, Matching, and/or Elective Deferral Contribution and/or other Employer contribution is being made. (b) CODE SECTION 415 LIMITATION. The allocation of the Employer contributions for the Plan Year shall be further limited by Section 3.8 of the Plan (Limitations on Allocations). (c) OVERALL PERMITTED DISPARITY LIMITS. (i) ANNUAL OVERALL PERMITTED DISPARITY LIMIT. Notwithstanding the preceding paragraphs, for any Plan Year this Plan "Benefits" any Participant who "Benefits" under another qualified plan or simplified employee pension, as defined in section 408(k) of the Code, maintained by the Employer that provides for permitted disparity (or imputes disparity), Employer contributions and forfeitures shall be allocated to the account of every Participant otherwise eligible to receive an allocation in the ratio that such Participant's total Compensation bears to the total Compensation of all Participants. (ii) CUMULATIVE PERMITTED DISPARITY LIMIT. Effective for Plan Years beginning on or after January 1, 1995, the cumulative permitted disparity limit for a Participant is 35 total cumulative permitted disparity years. Total cumulative permitted years means the number of years credited to the Participant for allocation or accrual purposes under this Plan, any other qualified plan or simplified employee pension plan (whether or not terminated) ever maintained by the Employer. For purposes of determining the Participant's cumulative permitted disparity limit, all years ending in the same calendar year are treated as the same year. If the Participant has not "Benefitted" under a defined benefit or target benefit plan for any year beginning on or after January 1, 1994, the Participant has no cumulative disparity limit. (3) DEFINITIONS. For purposes of this Section A.5.1(A), the following definitions apply: (a) "BASE CONTRIBUTION PERCENTAGE" means, for any Plan Year, the percentage of Compensation contributed under the Plan with respect to that portion of each Participant's Compensation up to the "Integration Level" (i.e., with respect to such Participant's "Base Compensation") specified in the Plan for such Plan Year. A-31 32 (b) "BASE COMPENSATION" means, for any Plan Year, Compensation up to the "Integration Level" for such Plan Year. (c) "BENEFIT" OR" BENEFITING" means, with respect to a Participant, that such Participant is treated as benefiting under the Plan for any Plan Year during which the Participant received or is deemed to receive an allocation in accordance with Treas. Reg. ss. 1.410(b)-3(a). (d) "EXCESS CONTRIBUTION PERCENTAGE" means, for any Plan Year, the percentage of Compensation which is contributed under the Plan with respect to that portion of each Participant's Compensation in excess of the "Integration Level" (i.e., with respect to such Participant's Excess Compensation) specified in the Plan for such Plan Year. (e) "INTEGRATION LEVEL" means the amount of Compensation specified in the Plan at or below which the rate of contributions (expressed as a percentage of such Compensation) provided under the Plan is less than the rate of contributions (expressed as a percentage of Compensation) provided under the Plan with respect to Compensation above such level. The "Integration Level" for any Plan Year may in no event exceed the Taxable Wage Base as in effect on the first day of such Plan Year. (f) "MAXIMUM EXCESS ALLOWANCE" means, for any Plan Year beginning before January 1, 1989, the "Base Contribution Percentage" plus 5.7% and for any Plan Year beginning after December 31, 1988, the percentage determined under either (i) or (ii): (i) If the "Integration Level" for such Plan Year is equal to the Taxable Wage Base, in effect on the first day of such Plan Year, or if the "Integration Level" is a uniform dollar amount for all Participants which is no greater than the greater of $10,000 or 1/5 of the Taxable Wage Base in effect on the first day of such Plan Year, then the "Maximum Excess Allowance" for such Plan Year is the lesser of: (aa) The "Base Contribution Percentage," or (bb) The greater of (AA) 5.7% or (BB) the percentage equal to the rate of tax under section 3111(a) of the Code (in effect on the first day of the Plan Year) which is attributable to the old age insurance portion of the Old Age, Survivors and Disability Insurance provisions of the Social Security Act. (ii) If the "Integration Level" for such Plan Year is greater than the greater of $10,000 or 1/5 of the Taxable Wage Base in effect on the first day of such Plan Year but less than the Taxable Wage Base in A-32 33 effect on the first day of such Plan Year then the "Maximum Excess Allowance" shall be determined as follows:
----------------------------------------------------------- IF THE "INTEGRATION LEVEL" ---------------------------------- THE "MAXIMUM EXCESS IS MORE THAN BUT NOT MORE THAN ALLOWANCE" IS ------------------------------------ ---------------------- (1) X* 80% OF TAXABLE WAGE BASE 4.3% (2) 80% OF Y** TAXABLE WAGE BASE 5.4% -------------------------------------------------------------
* x=The greater of $10,000 or 1/5 of Taxable Wage Base **y=Any amount more than 80% of Taxable Wage Base but less than 100% of Taxable Wage Base. (g) "MINIMUM TOP-HEAVY RATE" means a rate of at least three percent (unless the total Employer contribution to the Plan is less than three percent), or, in certain cases where a Defined Benefit Plan is maintained, five percent or seven and one-half percent (whichever is applicable) of each Participant's Compensation for such Plan Year; if the Plan is integrated with Social Security, the "Base Contribution Percentage" plus the "Excess Contribution Percentage" plus the "Additional Contribution Percentage" (if any) must be no less than the "Minimum Top-Heavy Rate" as set forth in the preceding clause. (h) "PRIMARY LIMITATION" means 15 percent of the Compensation otherwise paid or accrued by the Employer during such Taxable Year to, or for, the Participants in the Plan. (i) "SECONDARY LIMITATION" means the lesser of: (i) 25 percent of the Participants' Compensation for the Taxable Year which ends with or within the Plan Year for which the Employer, Matching, and/or Elective Deferral Contribution or other Employer contribution is being made, or (ii) Any excess of (aa) the aggregate of the "Primary Limitations" for all Taxable Years beginning before January 1, 1987, over (bb) the aggregate of the deductions allowed or allowable (for Employer, Matching, and Elective Deferral Contributions or other Employer contributions paid or deemed paid to the Plan) under section 404(a)(3)(A) of the Code for all Taxable Years beginning before January 1, 1987, which excess is available as a carryforward to the current Taxable Year from such prior Taxable Year(s) under said section 404(a)(3)(A). A-33 34 (B) OTHER ALLOCATIONS. Other contributions shall be allocated in accordance with the Plan document. A.5.4 ALLOCATION OF INCREASES AND DECREASES. Allocation of increases or decreases in the fair market value of assets described in Section 5.4 of the Plan shall be made on the basis of the amounts in the Accounts under the Plan (as adjusted under Section 5.4 of the Plan) as determined on (check either (A) or (B)): [ X ](A) First day of the period in which the Valuation Date occurs (except that the last day of the period shall be used for the initial allocation). [ ](B) Last day of the period in which the Valuation Date occurs. A.5.5 ALLOCATION OF FORFEITURES. (A) Shall forfeitures be allocated in accordance with Section 5.5 of the Plan (check one)? [ X ] (1) Yes [ ] (2) No [ ] (3) N/A (No forfeitures) If Section A.5.5(A)(1) is checked, such allocation shall be effected as of the last day of the (check one): [ ] (a) month [ ] (b) quarter [ X ] (c) Plan Year in which the forfeiture occurs under Section 7.6(c) of the Plan, in proportion to the Employer and/or Matching Contributions (as applicable) allocated to the remaining Participants for the period for which the allocation is effected. (B) If Section A.5.5(A)(2) is checked, forfeitures shall be allocated as follows (check applicable block): [ ] (1) Matching Account forfeitures shall be used to reduce Matching Contributions for the Plan Year in which such forfeitures occur but otherwise the provisions of Section 5.5 of the Plan shall apply. [ ] (2) All Matching and Employer Account forfeitures shall be used to reduce Matching and Employer Contributions for the Plan Year in which such forfeitures occur. [ X ] (3) N/A (Forfeitures shall be allocated under Section 5.5 of Plan or no forfeitures). A.6.1 INVESTMENT OF ACCOUNTS. (A) INVESTMENT POWER. Investment of Trust assets shall be directed as follows (check (1), (2) or (3)): [ X ] (1) Subject to the terms of the Plan, the Trustee shall, subject to any limitations indicated below, have the sole power and authority to direct investment of Trust assets. [ ] (2) Subject to the terms of the Plan, the Investment Manager shall, subject to any limitations indicated below, have the sole power and authority to direct investment of Trust assets held in (check applicable block(s)): [ ] Employer Accounts [ ] Matching Accounts [ ] Participant Accounts [ ] Elective Deferral Accounts A-34 35 [ ] QVEC Accounts [ ] Rollover Accounts [ ] Transfer Accounts [ ] Other Accounts Subject to the terms of the Plan, the Trustee shall have the sole power and authority to direct investment of Trust assets not committed to the direction of the Investment Manager. [ ] (3) Subject to the terms of the Plan, each Plan Participant or Beneficiary shall, subject to any limitations indicated below, have the sole power and authority to direct investment of the Trust assets held in (check applicable block(s)): [ ] Employer Accounts [ ] Matching Accounts [ ] Participant Accounts [ ] Elective Deferral Accounts [ ] QVEC Accounts [ ] Rollover Accounts [ ] Transfer Accounts [ ] Other Accounts The investments which the Participant or Beneficiary may select are any one or more of the following (specify investment selections available): [__________________________________________ __________________________________________________________________ _________________________________________________________________] Investment instructions shall be given by the Participant or Beneficiary on the Appropriate Form to the Administrative Committee not later than (fill in blank) [ ] days before the Valuation Date preceding the effective date of the investment direction. The Administrative Committee shall deliver such instructions to the Trustee. Such investment instructions shall be effected by the Trustee not later than (fill in blank) [ ] days following the Valuation Date coincident with or next following the date on which the investment instructions are delivered to the Administrative Committee. Subject to the terms of the Plan, the Trustee shall have the sole power and authority to direct investment of Trust assets not committed to the direction of the Participant or Beneficiary. (B) LIMITATIONS. List any limitations on types of investments and transitional investment rules (if none, write "none"): [____ NONE ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ___________________________________________________________________________] (C) QUALIFYING EMPLOYER SECURITIES. May Plan assets be invested in Qualifying Employer Securities (check one)? [ X ] (1) Yes [ ] (2) No In no event may Employer, Participant, Elective Deferral, Matching, Rollover or Qualified Voluntary Employee Contributions or other Employer contributions or direct transfers or Employer, Participant, Elective Deferral, Matching, Rollover, Transfer or QVEC Accounts or other accounts be invested in Qualifying Employer Securities unless such investment is in compliance with applicable Federal and state securities laws (including any necessary filings under such Federal and state securities laws) and the requirements of the Plan. If such investment is in compliance with such laws (including any required filings) and Plan requirements, the prohibition on investment of Plan assets in Qualifying Employer Securities does not apply and up to [ 100 ] (insert percentage; if not applicable, insert letters N/A in blank) percent of Plan assets may be so invested. A-35 36 If any such required filings have not been made, only Employer Contributions and Employer Accounts not subject to Participant or Beneficiary directed investment may be invested in Qualifying Employer Securities. In such case, indicate the percentage of Employer Contributions and Employer Accounts which may be invested in Qualifying Employer Securities in the following blank: [ 100 ] percent (insert percentage; if not applicable, insert letters N/A in blank). A.7.6 SEPARATION FROM SERVICE. (A) DISTRIBUTION OF ACCRUED BENEFITS UPON SEPARATION FROM SERVICE. (1) NORMAL RULES. Upon separation of a Participant from the service of his Employer under Section 7.6(A) of the Plan, distribution of such Participant's Vested Accrued Benefit shall be made (check only one block (i.e., (a), (b) or (c)): [ ](a) Upon the request of the Participant in writing on the Appropriate Form, within 60 days following the last day of the Plan Year in which such Participant incurs five consecutive One-Year Breaks In Service but if distribution is not so requested by the Participant, distribution shall be made on the date the Participant would have attained his Normal Retirement Age had he remained in the employ of the Employer; [ X ](b) Upon the request of the Participant in writing on the Appropriate Form, at any time following the first Valuation Date coincident with or next following the date such Participant separates from the service of the Employer; however, if distribution is not so requested by the Participant earlier, distribution shall be made no later than 60 days following the date the Participant would have attained his Normal Retirement Age had he remained in the employ of the Employer; or [ ](c) Within 60 days following the date the Participant would have attained his Normal Retirement Age had he remained in the employ of the Employer. Notwithstanding any other provision in the Plan or Adoption Agreement, if the Plan provides for distribution on an Early Retirement Date and if a separated Participant met the service but not the age requirement for such Early Retirement Date on the date of his separation from the service of his Employer, upon meeting such age requirement after separation, such Participant, if he so requests in writing on the Appropriate Form, shall commence receiving his deferred Vested Accrued Benefit no later than the date which would have been his Early Retirement Date had he continued in the service of the Employer. If no such request is made, distribution shall be made in accordance with Section A.7.6(A)(1)(a), (b) or (c), as elected by the Employer in this Adoption Agreement. All requests for payment under this Section A.7.6(A) shall be made within the 90-day period preceding the date payment is to commence. (2) EXCEPTION. If a Participant separates from the service of the Employer and the value of the Participant's Vested Accrued Benefit does not exceed and at the time of any prior distribution did not exceed $3,500, the Participant shall automatically, whether or not he requests distribution, receive, in one lump sum, a distribution of his entire Vested Accrued Benefit (and if the Vested Accrued Benefit A-36 37 is $-0-, he shall be deemed to have received such Vested Accrued Benefit) within 60 days following the first Valuation Date coincident with or next following the date such Participant separates from the service of the Employer. This provision shall only apply if this block is checked [ X ]. If the above block is not checked or if the value of the Participant's Vested Accrued Benefit exceeds or at the time of a prior distribution exceeded $3,500, the election made under Section A.7.6(A)(1) shall apply to the distribution of the Participant's Vested Accrued Benefit under the Plan. (B) VESTING UPON SEPARATION FROM SERVICE. (1) Except as otherwise provided in the Plan and in Sections A.3.5 and A.3.11, the interest of each Participant in his Employer Account and Matching Account shall vest as follows (check one and complete applicable blanks): [ ](a) 100 percent vesting immediately. (This alternative must be chosen if a period of more than one year has been designated in Section A.2.2(B)(1)(a)(i)). [ ](b) [ ] percent for each Year of Service for Vesting (not less than 20 percent for each Year of Service for Vesting, but not more than 100 percent). [ ](c) Nothing for the first five Years of Service for Vesting and 100 percent thereafter. [ ](d) Nothing for the first [ ] Years of Service for Vesting, then [ ] percent for each Year of Service for Vesting thereafter, but not more than 100 percent. (Full vesting must occur after five Years of Service for Vesting). [ ](e) In accordance with the following table:
IF YEARS OF SERVICE FOR VESTING THEN THE VESTED EQUAL OR EXCEED - PERCENTAGE IS 3.................................. 20 4.................................. 40 5.................................. 60 6.................................. 80 7 or more.......................... 100
[ X ](f) [Other. (This alternative, if chosen, must provide a percentage of vesting which is not less than the percentage that would be provided under options (c) or (e) used consistently) - Specify:
[IF YEARS OF SERVICE FOR VESTING THEN THE VESTED EQUAL OR EXCEED - PERCENTAGE IS --------------- - ------------- 1.................................. 10 2.................................. 25 3.................................. 50 4.................................. 75 5 OR MORE......................... 100
A-37 38 (2) For purposes of Section A.7.6(B)(1) above and for purposes of Section A.3.5 and Section 3.11(B) of the Plan, Years of Service for Vesting attributable to the following shall be disregarded (check applicable blocks): [ ](a) Service prior to the attainment of age 18, exclusive of the year within which the Employee attained age 18. [ ](b) Service during any period for which the Employer did not maintain this Plan or a predecessor trust or plan. [ ](c) Service before January 1, 1971, unless the Employee has had at least three years of credited service after December 31, 1970, determined without application of paragraphs (a), (b), (d) and (e) hereof if selected by the Employer. [ X ](d) If an Employee is reemployed by the Employer following a One-Year Break In Service, service before such One-Year Break In Service, if the Employee has not completed a Year of Service for Vesting after such One-Year Break In Service, for the purpose of determining the vested percentage in his Employer-derived Accrued Benefit which accrues after such One-Year Break In Service. [ X ](e) If an Employee is reemployed by the Employer following five consecutive One-Year Breaks In Service (check only (i) or (ii) whichever is to apply): [ ](i) Service after such five consecutive One-Year Breaks In Service, for the purpose of determining the vested percentage in his Employer-derived Accrued Benefit which accrued before such five consecutive One-Year Breaks In Service but both pre-Break and post- Break service will count for purposes of determining the vested percentage in his Employer-derived Accrued Benefit which accrued after such Break. [ X ](ii) Service after such five consecutive One-Year Breaks In Service, for the purpose of determining the vested percentage in his Employer-derived Accrued Benefit which accrued before such five consecutive One-Year Breaks In Service and, if the Employee had no vested interest in his Employer-derived Accrued Benefit prior to such Break(s) and the number of consecutive One-Year Breaks In Service equals or exceeds the aggregate Years of Service for Vesting, service before such five consecutive One-Year Breaks In Service for the purpose of determining the vested percentage in his Employer-derived Accrued Benefit which accrues after such five A-38 39 consecutive One-Year Breaks In Service. To the extent required by the Plan, separate accounts shall be maintained for the Participant's pre-Break and post-Break Employer-derived account balances. (3) Except as otherwise provided in Section 7.6(C) of the Plan relating to benefits accruing before a separation from service, if a Participant separates from service and thereafter returns to employment with the Employer without incurring five consecutive One-Year Breaks In Service, he shall continue to vest in his Accrued Benefit. (4) In the event that an Employee who is not a member of the eligible class of Employees becomes a member of the eligible class, such Employee shall, subject to any applicable limitation set forth in this Section A.7.6, receive credit, for vesting purposes, for Service with the Employer while such Employee was not a member of the eligible class. (5) Service, for purposes of Section A.7.6(B)(1), includes service with a predecessor employer if the Employer adopting the Plan is maintaining the Plan as a plan of a predecessor employer. Service, for purposes of Section A.7.6(B)(1), also includes service with a predecessor employer whose plan is not being continued by the Employer to the extent provided in Section A.1.79. (C) FORFEITURES. If the provisions of Section 7.6(C)(1)(b) of the Plan are to apply, check this block [ X ]; otherwise the provisions of Section 7.6(C)(1)(a) of the Plan shall apply. A.7.9 COMMENCEMENT OF PAYMENTS; DEFERRAL OF PAYMENTS; MINIMUM DISTRIBUTION REQUIREMENTS. (A) DATE PAYMENTS TO COMMENCE. This provision is contained in the Plan. (B) DEFERRAL OF PAYMENTS. Shall a Participant, to the extent permitted by the Plan, be permitted to defer payment of benefits under Sections 7.3, 7.4, 7.5 and 7.7 of the Plan (check one)? [ X ] (1) Yes [ ] (2) No (C) MINIMUM DISTRIBUTION REQUIREMENTS. This provision is contained in the Plan. A.7.10 WITHDRAWALS DURING EMPLOYMENT. (A) WITHDRAWALS FROM PARTICIPANT ACCOUNTS. Shall withdrawals of Participant Accounts (other than the portion of such Participant Accounts attributable to required Participant Contributions and to Participant Contributions which are matched by the Employer) be permitted (check one)? [ ] (1) Yes [ ] (2) No [ X ] (3) N/A (B) WITHDRAWALS FROM QVEC ACCOUNTS. Shall withdrawals of QVEC Accounts be permitted (check one)? [ ] (1) Yes [ ] (2) No [ X ] (3) N/A (C) WITHDRAWALS FROM ROLLOVER ACCOUNTS. Shall withdrawals of Rollover Accounts be permitted (check one)? [ ] (1) Yes [ X ] (2) No [ ] (3) N/A A-39 40 (D) HARDSHIP AND POST - 59 1/2 WITHDRAWALS FROM ELECTIVE DEFERRAL ACCOUNTS. Shall withdrawals of Elective Deferral Accounts be permitted (if such withdrawals are to be permitted, check either (1) or (2) or both) [ ] (1) on account of hardship [ ] (2) after reaching age 59- 1/2 (check one)? [ ] (a) Yes [ ] (b) No [ X ] (c) N/A (E) HARDSHIP AND POST - 59 1/2 WITHDRAWALS FROM EMPLOYER, PARTICIPANT, ROLLOVER AND TRANSFER ACCOUNTS. Shall withdrawals of Employer, Participant, Rollover and Transfer Accounts be permitted (if such withdrawals are to be permitted, check either (1) or (2) or both) [ ] (1) on account of hardship [ ] (2) after reaching age 59-1/2 (check one)? [ ] (a) Yes [ X ] (b) No (F) HARDSHIP AND POST - 59 1/2 WITHDRAWALS FROM MATCHING ACCOUNTS. Shall hardship and post - age 59 1/2 withdrawals of Matching Accounts be permitted (if such withdrawals are to be permitted, check either (1) or (2) or both) [ ] (1) on account of hardship [ ] (2) after reaching age 59-1/2 (check one)? [ ] (a) Yes [ ] (b) No [ X ] (c) N/A (G) OTHER PRE-59-1/2 IN-SERVICE WITHDRAWALS. Shall withdrawals of a Participant's Vested Accrued Benefit attributable to Participant Contributions, Employer Contributions, and Matching Contributions after such Participant completes five Years of Service for Benefit Accrual but before he attains age 59 1/2 be permitted (check one)? [ ] (1) Yes [ X ] (2) No WITHDRAWALS SHALL ONLY BE MADE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 7.10 OF THE PLAN. A.7.11 LOANS. (A) Shall loans to Participants and Beneficiaries if such Beneficiaries are parties-in-interest (as defined in the Plan) be permitted (check one)? [ X ] (1) Yes [ ] (2) No NOTE: NO LOANS MAY BE MADE TO OWNER-EMPLOYEES OR TO SHAREHOLDER EMPLOYEES (AS DEFINED IN SECTION 7.11(A)(7) OF THE PLAN). (B) The interest rate shall be determined as follows: The interest rate shall equal one percentage point above the prime interest rate as published in The Wall Street Journal on the first business day of the week in which the loan is made. (C) Shall the exception to the 50% of Vested Accrued Benefit limitation on loans not in excess of $10,000 apply? [ ] (1) Yes [ X ] (2) No [ ] (3) N/A (No loans permitted) If the exception is to apply, note that only 50% of the Vested Accrued Benefit may be used as security for the loan. Additional security must be provided by the Participant or Beneficiary. Specify the type of additional collateral which will be used to secure the remainder of the loan: [ N/A ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------] (D) Specify the types of collateral to be used to secure loans under the Plan: [ One half of the present value of the Participant's or Beneficiary's Vested Accrued Benefit under the Plan. ] A-40 41 (E) If Section A.7.11(A)(1) is checked, indicate any additional limitations to be placed on loans (if none, so state; if not applicable, insert letters N/A):[ Loans from the Plan will be permitted only in the event of a personal emergency or financial hardship in accordance with the guidelines set forth in Section 7.10(C)(3) of the Plan. ] (F) Shall loans to a Participant be treated as an investment by such Participant for his Accounts only (check one)? [ X ] (1) Yes [ ] (2) No [ ] (3) N/A (No loans permitted) A.7.14 JOINT AND SURVIVOR ANNUITY. The provisions of Section 7.14 of the Plan shall not apply to the Plan, as adopted under this Adoption Agreement. A.8.2 SPECIAL PROVISION WITH RESPECT TO QUALIFIED DOMESTIC RELATIONS ORDERS. Shall the special provision of Section 8.2 of the Plan with respect to Qualified Domestic Relations Orders apply to the Plan as adopted by the Employer (check one)? [ X ] (A) Yes [ ] (B) No A.15.1 AMENDMENT. THE CHANGES MADE BY THIS AMENDMENT AND RESTATEMENT SHALL BE DEEMED ADOPTED BY EACH ADOPTING EMPLOYER ON THE DATE THE NOTIFICATION LETTER IS ISSUED BY THE DISTRICT OFFICE OF THE INTERNAL REVENUE SERVICE WITHOUT FURTHER ACTION ON THE PART OF THE ADOPTING EMPLOYER EXCEPT THAT SUCH ADOPTING EMPLOYER MUST SEND A NOTICE TO INTERESTED PARTIES INFORMING SUCH INTERESTED PARTIES THAT THE PLAN HAS BEEN AMENDED. SUCH NOTICE MUST BE GIVEN IN ACCORDANCE WITH THE RULES OF SECTION 15.1(C) OF THE PLAN. SEE SECTION 15.1(C) OF THE PLAN FOR FURTHER INFORMATION. A.18.4 AGENT FOR SERVICE OF LEGAL PROCESS. The name(s) and address(es) of the agent(s) for service of legal process under the Plan are: ADMINISTRATIVE COMMITTEE, FUND OFFICE RETIREMENT PROFIT-SHARING PLAN c/o Chestnut Street Exchange Fund Bellevue Park Corporate Center 400 Bellevue Parkway, Suite 100 Wilmington, DE 19809 A.18.17 RESTATEMENT. (A) RESTATEMENT OF EXISTING PLAN. The Employer may adopt the Plan as an amendment and restatement of any Prior Plan (including a prior version of this Plan and Trust Agreement). Adoption shall not require termination of the Prior Plan, except that amendment and restatement of an existing Defined Benefit Plan into the Plan shall be deemed to be a termination of such Prior Plan for the purposes of Title IV of ERISA. Upon adoption of this Plan, the assets of the Prior Plan shall be invested in accordance with the provisions of this Plan. Check if applicable: [ X ] This is an amendment and restatement of the FUND OFFICE RETIREMENT PROFIT-SHARING PLAN, an existing qualified profit-sharing plan, which was adopted effective as of September 18, 1981. (B) LIMITATIONS APPLICABLE TO PLAN PROVISIONS. Except as otherwise provided in Section 3.11 of the Plan, the participation and/or vesting provisions of the Plan, as adopted by the Employer, shall apply as follows (check applicable block or blocks; to the extent not checked, the Plan shall apply in accordance with the terms set forth herein): [ ] (1) The participation provisions of this Plan, as adopted by the Employer, shall apply only to Employees hired on or after the date the Plan is adopted by the Employer. The participation provisions of the Prior Plan shall otherwise apply. A-41 42 [ ] (2) The vesting provisions of this Plan, as adopted by the Employer, shall apply only to Employees hired on or after the date the Plan is adopted by the Employer. The vesting provisions of the Prior Plan shall otherwise apply. [ X ] (3) N/A. (C) INCORPORATION OF APPLICABLE PRIOR PLAN PROVISIONS AND TRANSITIONAL RULES. If the Employer checked A.18.17(A), such Employer shall insert here any Prior Plan provisions and any transitional rules which such Employer desires or is required to make applicable to this Plan (if none, write the word "none"): [(1) MERGER OF PLANS. Effective December 1, 1987, the Chestnut Street Exchange Fund Retirement Profit-Sharing Plan, the Independence Square Income Securities, Inc. Retirement Profit-Sharing Plan, the Temporary Investment Fund, Inc. Retirement Profit-Sharing Plan, and the Trust for Short-Term Federal Securities Retirement Profit-Sharing Plan were merged into, and their assets transferred into, the Plan. (2) CHANGE IN ACCRUAL COMPUTATION PERIODS, LIMITATION YEARS, PLAN YEARS AND VESTING COMPUTATION PERIODS. As a result of the merger and transfer of assets, the Accrual Computation Periods, Limitation Years, Plan Years and Vesting Computation Periods for the Chestnut Street Exchange Fund, Independence Square Income Securities, Inc., Temporary Investment Fund, Inc., and Trust for Federal Securities Retirement Profit-Sharing Plans were changed as follows:
PLAN OLD (UNDER OLD PLAN) NEW (UNDER THIS PLAN) - -------------------------------------------------------------------------------- CHESTNUT STREET EX- CHANGE FUND 1/1 TO 12/31 12/1 TO 11/30 INDEPENDENCE SQUARE INCOME SECURITIES, INC. 1/1 TO 12/31 12/1 TO 11/30 TEMPORARY INVESTMENT FUND, INC. 10/1 TO 9/30 12/1 TO 11/30 TRUST FOR FEDERAL SECURITIES 11/1 TO 10/31 12/1 TO 11/30
This resulted in the following short Accrual Computation Periods, Limitation Years, Plan Years and Vesting Computation Periods:
PLAN SHORT PERIOD/YEAR - -------------------------------------------------------------------------------- CHESTNUT STREET 1/1/87 TO 11/30/87 INDEPENDENCE SQUARE INCOME SECURITIES, INC. 1/1/87 TO 11/30/87 TEMPORARY INVESTMENT FUND, INC. 10/1/87 TO 11/30/87 TRUST FOR FEDERAL SECURITIES 11/1/87 TO 11/30/87
(a) CHANGE IN VESTING COMPUTATION PERIODS. Each Participant in the above listed Plans received vesting credit for two Years of Service for Vesting provided such Participant completed 200 or more Hours of Service in both the Old Vesting Computation Period and the New Vesting Computation Period as set forth above. (b) CHANGE IN ACCRUAL COMPUTATION PERIODS. Any Participant in the above listed Plans who completed 200 Hours of Service multiplied by the number of months in the short Accrual Computation Period divided by twelve received his proportionate share of Employer Contributions during the short Accrual Computation Period set forth above. (c) CHANGE IN LIMITATION YEARS. For the short Limitation Years, the dollar limitations under section 415(c)(1)(A) of the Code were adjusted as provided under Treas. Reg. Section 1.415-2(b)(4). The above changes were made pursuant to the automatic approval provisions of Rev. Proc. 87-27, 1987-25 I.R.B. 41.] A-42 43 A.18.18 INDIVIDUAL PROVISIONS. Any provisions applicable to the adopting Employer only should be inserted here (if none, write the word "none"): (A) EMPLOYER AMENDMENT OF PLAN AND/OR TRUST. Any Employer amendment of the Plan and/or Trust permitted by Section 15.1 of the Plan and Trust Agreement shall be effected by resolution of the Employer's Board of Directors adopted at a duly held meeting of said Board or by unanimous written consent of said Board, if the Employer is incorporated and otherwise by appropriate written action of Employer's owner or other governing entity under State law. A certified copy of such resolutions or other written action shall be delivered to the Administrative Committee and the Trustee. (B) TERMINATION OR PARTIAL TERMINATION OF PLAN AND/OR TRUST. Termination or partial termination of the Plan and/or Trust under Article XVI of the Plan and Trust Agreement shall be effected by resolution of the Employer's Board of Directors adopted at a duly held meeting of said Board or by unanimous written consent of said Board, if such Employer is incorporated and otherwise by appropriate written action of the Employer's owner or other governing entity under State law. A certified copy of such resolutions or other written action shall be delivered to the Administrative Committee and the Trustee. (C) SMALL BUSINESS JOB PROTECTION ACT OF 1996 AND TAXPAYER RELIEF ACT OF 1997 CHANGES. (1) DEFINITION OF HIGHLY COMPENSATED EMPLOYEE. Notwithstanding Section 1.38 of the Plan, effective for Plan Years beginning on and after January 1, 1997, "Highly Compensated Employee" shall mean any Employee of the Employer who: (a) Was a five percent owner (within the meaning of Section 414(q)(2) of the Code) of the Employer at any time during the determination year or the look back year; or (b) For the preceding Plan Year: (i) Had compensation from the Employer in excess of $80,000 (as adjusted in accordance with Section 414(q)(1) of the Code); (ii) If the Employer elects the application of this Section 18.18(C)(2)(b) for such look back year, was a member of the top-paid group for such look back year. Any calendar year election shall be made in accordance with Notice 97- 45. (2) RESTRICTIONS ON MANDATORY DISTRIBUTIONS. Sections 7.1, 7.3, 7.4, 7.5, 7.6 and 7.7 of the Plan are amended by striking $3,500 each place it appears in said Sections and inserting $5,000. (D) UNPAID FAMILY AND MEDICAL LEAVE ACT OF 1993. Notwithstanding any provision in the Plan to the contrary, and effective with respect to an Employee whose absence after April 5, 1993 is governed by the Family and Medical Leave Act of 1993 ("FMLA"), any period of unpaid FMLA leave shall not be treated as, or counted toward, a One-Year Break in Service for purposes of vesting or eligibility to participate. However, unpaid FMLA leave periods shall not be treated as credited service for purposes of benefit accrual, vesting and eligibility to participate. The Plan shall be administered in accordance with the requirements of the FMLA and the Department of Labor regulations thereunder. (E) USERRA AMENDMENT. Effective December 12, 1994, notwithstanding any provision of this Plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with section 414(u) of the Internal Revenue Code. Loan repayments will be suspended under this Plan as permitted under section 414(u)(4) of the Internal Revenue Code. (F) ADOPTION OF PLAN BY OTHER EMPLOYERS. (1) EFFECTIVE DATE. This Section A.18.18(F) shall be effective as of December 1, 1989. A-43 44 (2) ADOPTION OF PLAN AND TRUST. Any other employer may adopt the terms of this Plan as adopted by the adopting Employer, and thereby become a "Participating Employer," provided: (a) The Board of Directors or other governing entity of the adopting Employer consents to such adoption; (b) The Board of Directors or other governing entity of the adopting Participating Employer adopts this Plan by appropriate action; (c) The adopting Participating Employer executes the Adoption Agreement; and (d) The adopting Participating Employer executes such other documents as may be required to make such adopting Participating Employer a party to the Plan and Trust as a Participating Employer (except as provided below). A Participating Employer which adopts the Plan and Trust Agreement is thereafter an Employer with respect to its employees for purposes of the Plan, the Trust Agreement and this Adoption Agreement except that such Participating Employer delegates to the adopting Employer the power to amend the Adoption Agreement on its behalf and on behalf of the adopting Employer and each other Participating Employer, provided such amendment does not materially affect the substance of the Plan with respect to the adopting Employer or any Participating Employer or materially affect the costs of the adopting Employer or any Participating Employer. A Participating Employer reserves the power to withdraw from the Plan, as provided in Section A.18.18(F)(3), and to terminate the Plan and Trust Agreement with respect to such Participating Employer, as provided in Section A.18.18(F)(5). (3) WITHDRAWAL FROM PLAN. Subject to the requirements of Article XVII, any Participating Employer may, at any time, withdraw from the Plan upon giving the Board of Directors or other governing entity of the adopting Employer, the Administrative Committee and the Trustee at least 30 days notice in writing of its intention to withdraw. Upon the withdrawal of a Participating Employer pursuant to this Section A.18.18(F)(3), the Trustee shall segregate a portion of the assets in the Trust as set forth below, the value of which shall equal the total amount credited to the accounts of Participants employed by the withdrawing Participating Employer. Subject to the requirements of Article XVII, the determination of which assets are to be so segregated shall be made by the Trustee in its sole discretion as set forth below. The Administrative Committee may, at any time, direct the Trustee to segregate from the Trust such part thereof as the Administrative Committee shall determine to be held for the benefit of the employees of a Participating Employer, and shall give a copy of such directions to the adopting Employer and each Participating Employer. Such directions shall specify the assets of the Trust to be segregated. Unless the adopting Employer or any Participating Employer files with the Trustee a written protest within 30 days after delivery of such directions to the Trustee, such directions shall conclusively establish that the assets specified therein represent the part of the Trust held for the benefit of the Employees of the adopting Employer and of each Participating Employer. After the expiration of such 30 day period, and after settlement of any such protest, the Trustee shall follow the Administrative Committee's directions, including any modification thereof adopted in settlement of any protest. Any part of the Trust segregated pursuant to such directions shall thereafter be held in a separate trust identical in terms to the Trust hereby established or maintained, except that, with respect to such separate trust, this Plan and Trust Agreement shall be construed as if such Participating Employer were the adopting Employer and all powers and authority conferred upon the adopting Employer or its Board or other governing entity and the Administrative Committee shall devolve upon such Participating Employer or its Board of Directors or other governing entity. At any time thereafter, such Participating Employer and the Trustee may (but they shall not be required to) enter into a separate agreement stating the terms of such separate plan and trust agreement which may be the DRINKER BIDDLE & REATH LLP REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN AND TRUST AGREEMENT. If the A-44 45 DRINKER BIDDLE & REATH LLP REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN AND TRUST AGREEMENT is not so adopted, the plan and trust agreement with respect to the withdrawing Participating Employer shall be considered an individually designed plan. (4) EXCLUSIVE PURPOSE OF TRUST. Neither the segregation and transfer of the Trust assets upon the withdrawal of a Participating Employer nor the execution of a new plan and trust agreement by such withdrawing Participating Employer shall operate to permit any part of the Trust to be used for, or diverted to, purposes other than for the exclusive benefit of the Participants or their Beneficiaries. (5) APPLICATION OF WITHDRAWAL PROVISIONS. The withdrawal provisions contained in Section A.18.18(G)(3) and (4) shall be applicable only if the withdrawing Participating Employer continues to cover its Participants and eligible Employees in another plan and trust qualified under sections 401 and 501 of the Code. Otherwise, the termination provisions of the Plan and Trust Agreement shall apply with respect to the withdrawing Participating Employer. (6) SINGLE PLAN. Notwithstanding any other provision set forth herein, the Plan, as adopted pursuant to this Section A.18.18(F) by the adopting Employer and each Participating Employer, shall constitute a single plan, as such term is defined in Treas. Reg. Sections. 1.414(1)-1(b)(1), as to the adopting Employer and each Participating Employer. (7) QUALIFYING EMPLOYER SECURITIES. For purposes of Sections A.1.72 and A.6.1(B), and for all other purposes of the Plan and Trust Agreement, the stock of any adopting Employer and any Participating Employer shall be treated as Qualifying Employer Securities. (8) ADOPTING EMPLOYER APPOINTED AGENT OF PARTICIPATING EMPLOYERS. Each Participating Employer appoints the Board of Directors or other governing entity of the adopting Employer as its agent to exercise on its behalf all of the administrative power and authority conferred upon the adopting Employer by this Plan and Trust Agreement, including the power to amend the Adoption Agreement on its behalf and on behalf of the adopting Employer and each other Participating Employer as set forth in Article XV, provided such amendment does not materially affect the substance of the Plan with respect to the adopting Employer or any Participating Employer or materially affect the cost of the adopting Employer or any Participating Employer. The authority of the Board of Directors or other governing entity of the adopting Employer to act as agent of any Participating Employer, in accordance with Sections A.18.18(F)(2) and A.18.18(F)(8), shall terminate only if the part of the Plan's assets held for the benefit of the employees of such Participating Employer shall be segregated in a separate trust as provided in Section A.18.18(F)(3) and such Participating Employer thereupon withdraws from the Plan in accordance with Section A.18.18(F)(3). Any material amendment (i.e., any amendment materially affecting the substance of the Plan with respect to the adopting Employer or any Participating Employer or materially affecting the costs of the adopting Employer or any Participating Employer) can only be adopted by the adopting Employer and all Participating Employers. Each Participating Employer exclusively reserves the power to terminate this Plan and/or the Trust Agreement as set forth in Article XVI with respect to such Participating Employer. The complete termination of the Plan can only be effected by action of the adopting Employer and all Participating Employers. (9) NAME OF ADOPTING EMPLOYER. The CHESTNUT STREET EXCHANGE FUND is the adopting Employer. (10) PARTICIPATING EMPLOYERS. The names and pertinent data for the Participating Employers are as follows: (a) THE RBB FUND, INC.: ADDRESS: Bellevue Park Corporate Center 400 Bellevue Parkway, Suite 100 Wilmington, DE 19809 EMPLOYER IDENTIFICATION NUMBER:51-0312196 A-45 46 TAXABLE YEAR: September 1 - August 31 BUSINESS CODE NUMBER: 6742 TYPE OF ENTITY: Corporation PLACE OF ORGANIZATION: Maryland (b) INDEPENDENCE SQUARE INCOME SECURITIES, INC.: ADDRESS: One Aldwyn Center Villanova, PA 19085 EMPLOYER IDENTIFICATION NUMBER:23-1861553 TAXABLE YEAR: January 1 - December 31 BUSINESS CODE NUMBER: 6742 TYPE OF ENTITY: Corporation PLACE OF ORGANIZATION: Maryland (c) TEMPORARY INVESTMENT FUND, INC.: (CEASED PARTICIPATION IN THE PLAN EFFECTIVE DECEMBER 31, 1997) ADDRESS: Bellevue Park Corporate Center 400 Bellevue Parkway, Suite 100 Wilmington, DE 19809 EMPLOYER IDENTIFICATION NUMBER:52-0983343 TAXABLE YEAR: October 1 - September 30 BUSINESS CODE NUMBER: 6742 TYPE OF ENTITY: Corporation PLACE OF ORGANIZATION: Maryland (d) TRUST FOR FEDERAL SECURITIES (CEASED PARTICIPATION IN THE PLAN EFFECTIVE DECEMBER 31, 1997): ADDRESS: Bellevue Park Corporate Center 400 Bellevue Parkway, Suite 100 Wilmington, DE 19809 EMPLOYER IDENTIFICATION NUMBER:52-1036683 TAXABLE YEAR: November 1 - October 31 BUSINESS CODE NUMBER: 6742 TYPE OF ENTITY: Business Trust PLACE OF ORGANIZATION: Pennsylvania (e) MUNICIPAL FUND FOR CALIFORNIA INVESTORS, INC. (CEASED PARTICIPATION IN THE PLAN EFFECTIVE DECEMBER 31, 1997): ADDRESS: Bellevue Park Corporate Center 400 Bellevue Parkway, Suite 100 Wilmington, DE 19809 EMPLOYER IDENTIFICATION NUMBER:51-0266273 TAXABLE YEAR: February 1 - January 31 BUSINESS CODE NUMBER: 6742 A-46 47 TYPE OF ENTITY: Corporation PLACE OF ORGANIZATION: Maryland (f) MUNICIPAL FUND FOR NEW YORK INVESTORS, INC. (CEASED PARTICIPATION THE PLAN EFFECTIVE DECEMBER 31, 1997): ADDRESS: Bellevue Park Corporate Center 400 Bellevue Parkway, Suite 100 Wilmington, DE 19809 EMPLOYER IDENTIFICATION NUMBER:51-0270312 TAXABLE YEAR: August 1 - July 31 BUSINESS CODE NUMBER: 6742 TYPE OF ENTITY: Corporation PLACE OF ORGANIZATION: Maryland (g) MUNICIPAL FUND FOR TEMPORARY INVESTMENT (CEASED PARTICIPATION IN THE PLAN EFFECTIVE DECEMBER 31, 1997: ADDRESS: Bellevue Park Corporate Center 400 Bellevue Parkway, Suite 100 Wilmington, DE 19809 EMPLOYER IDENTIFICATION NUMBER: 51-0241021 TAXABLE YEAR: December 1 - November 30 BUSINESS CODE NUMBER: 6742 TYPE OF ENTITY: Business Trust PLACE OF ORGANIZATION: Pennsylvania (h) PORTFOLIOS FOR DIVERSIFIED INVESTMENT (CEASED PARTICIPATION IN THE PLAN EFFECTIVE NOVEMBER 14, 1995): ADDRESS: Bellevue Park Corporate Center 400 Bellevue Parkway, Suite 100 Wilmington, DE 19809 EMPLOYER IDENTIFICATION NUMBER:51-0300345 TAXABLE YEAR: July 1 - June 30 BUSINESS CODE NUMBER: 6742 TYPE OF ENTITY: Business Trust PLACE OF ORGANIZATION: Maryland (i) THE PNC(R) FUND (CEASED PARTICIPATION IN THE PLAN EFFECTIVE MARCH 31, 1996): ADDRESS: Bellevue Park Corporate Center 400 Bellevue Parkway, Suite 100 Wilmington, DE 19809 EMPLOYER IDENTIFICATION NUMBER:51-0318674 TAXABLE YEAR: October 1 - September 30 BUSINESS CODE NUMBER: 6742 TYPE OF ENTITY: Business Trust A-47 48 PLACE OF ORGANIZATION: Massachusetts (j) PROVIDENT INSTITUTIONAL FUNDS, INC. (BECAME A PARTICIPATING EMPLOYER IN THE PLAN EFFECTIVE FEBRUARY 16, 1995 AND CEASED PARTICIPATION IN THE PLAN EFFECTIVE JUNE 24, 1996): ADDRESS: Bellevue Park Corporate Center 400 Bellevue Parkway, Suite 100 Wilmington, DE 19809 EMPLOYER IDENTIFICATION NUMBER:41-1769812 TAXABLE YEAR: January 1 - December 31 BUSINESS CODE NUMBER: 6742 TYPE OF ENTITY: Corporation PLACE OF ORGANIZATION: Maryland (k) THE INTERNATIONAL FUND FOR INSTITUTIONS (CEASED PARTICIPATION IN THE PLAN EFFECTIVE DECEMBER 1992): ADDRESS: Bellevue Park Corporate Center 103 Bellevue Parkway, Suite 152 Wilmington, DE 19809 EMPLOYER IDENTIFICATION NUMBER:51-0273019 TAXABLE YEAR: February 1 - January 31 BUSINESS CODE NUMBER: 6742 TYPE OF ENTITY: Business Trust PLACE OF ORGANIZATION: Maryland (l) CHESTNUT STREET CASH FUND, INC. (CEASED PARTICIPATION IN THE PLAN EFFECTIVE AUGUST 1991): ADDRESS: 3 Radnor Corporate Center 100 Matsonford Road Radnor, PA 19087 EMPLOYER IDENTIFICATION NUMBER: 51-0263360 TAXABLE YEAR: June 1 - May 31 BUSINESS CODE NUMBER: 6742 TYPE OF ENTITY: Corporation PLACE OF ORGANIZATION: Maryland A.19.1 ADOPTION OF PLAN AND TRUST BY AFFILIATED EMPLOYERS. Shall Article XIX of the Plan apply (check one)? [ ] (A) Yes [ ] (B) No [ X ] (C) N/A (No Affiliated Employers adopting Plan) If Section A.19.1(A) is checked, fill in the following blanks: Name of Adopting Employer: [ ] -------------------------------------------- Name(s), Address(es), Type of Entity and Tax Identification Number(s) of Adopting Affiliated Employer(s):[ --------------------------- ] - ---------------------------------------------------------------------------- A-48 49 The adopting Employer and each adopting Affiliated Employer must adopt the Plan and execute the Adoption Agreement upon the initial adoption by an adopting Affiliated Employer of the Plan. Thereafter the adopting Affiliated Employer, pursuant to Article XIX of the Plan, authorizes the adopting Employer to take all further action including, but not limited to, the amendment and/or termination of the Plan, on behalf of the adopting Affiliated Employer under the Plan (unless such adopting Affiliated Employer withdraws from the Plan pursuant to Article XIX of the Plan) and such adopting Affiliated Employer need not be a party to this Adoption Agreement with respect to any such subsequent action relating to the Plan and Trust Agreement and/or Adoption Agreement. THE ADOPTING EMPLOYER OR ADOPTING AFFILIATED EMPLOYER MAY NOT RELY ON THE NOTIFICATION LETTER ISSUED BY THE NATIONAL OR DISTRICT DIRECTOR OF THE INTERNAL REVENUE SERVICE AS EVIDENCE THAT THE PLAN IS QUALIFIED UNDER SECTION 401 OF THE INTERNAL REVENUE CODE. IN ORDER TO OBTAIN RELIANCE WITH RESPECT TO PLAN QUALIFICATION, THE ADOPTING EMPLOYER AND/OR ADOPTING AFFILIATED EMPLOYER MUST APPLY TO THE APPROPRIATE KEY DISTRICT OFFICE FOR A DETERMINATION LETTER. Executed at [WILMINGTON ], [ DELAWARE ], on this the [31st] day of [December], 19[97]. ADOPTING EMPLOYER: ATTEST: CHESTNUT STREET EXCHANGE FUND [SEAL] ------------------------------------- [SEAL] NAME OF ADOPTING EMPLOYER /s/ Morgan R. Jones By: /s/ Robert R. Fortune - ---------------------------- ---------------------------------- Morgan R. Jones, Secretary Robert R. Fortune, President PARTICIPATING EMPLOYERS: ATTEST: THE RBB FUND [SEAL] ------------------------------------- Name of Participating Employer /s/ Morgan R. Jones By: /s/ Edward J. Roach - ---------------------------- ---------------------------------- Morgan R. Jones, Secretary Edward J. Roach, President ATTEST: INDEPENDENCE SQUARE INCOME [SEAL] SECURITIES, INC. ------------------------------------- Name of Participating Employer /s/ Gary M. Gardner By: /s/ Robert R. Fortune - ---------------------------- ---------------------------------- Gary M. Gardner, Secretary Robert R. Fortune, President The undersigned hereby agree(s) to serve as the Trustee(s) under the Plan and Trust Agreement. EDWARD J. ROACH ROBERT R. FORTUNE - ---------------------------- ------------------------------------- Name of Trustee Name of Trustee /s/ Morgan R. Jones Edward J. Roach - ---------------------------- ---------------------------------- Witness Signature /s/ Morgan R. Jones /s/ Robert R. Fortune - ---------------------------- ---------------------------------- Witness Signature A-49 EX-11 5 CONSENT OF INDEPENDENT ACCOUNTANTS 1 EXHIBIT 11 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in this Post-Effective Amendment No. 21 to the Registration Statement on Form N-1A (File No. 811-2631) of our report dated January 30, 1998 on our audit of the financial statements and financial highlights of Chestnut Street Exchange Fund, which report is included in the Annual Report to Shareholders for the year ended December 31, 1997 which is incorporated by reference in the Post-Effective Amendment to the Registration Statement. We also consent to the reference to our Firm under the headings "Investment Advisory and Other Services," and "Financial Statements" in the Statement of Additional Information. /s/ Coopers & Lybrand L.L.P. - ---------------------------- COOPERS & LYBRAND L.L.P. 2400 Eleven Penn Center Philadelphia, Pennsylvania April 22, 1998 EX-27 6 FINANCIAL DATA SCHEDULE
6 0000019780 CHESTNUT STREET EXCHANGE FUND 12-MOS DEC-31-1997 DEC-31-1997 58307134 352877245 589608 125179 0 353592032 0 0 2009620 2009620 0 78253059 1199810 1248165 18311 0 443823 0 294570110 351582412 5427262 269456 0 1697789 3998930 635807 50408603 66399890 0 3987287 191984 0 9036 3349904 863872 48387073 6668 6592387 0 0 1463053 0 1697789 340762117 242.91 3.29 50.27 3.28 .16 0 293.03 .005 0 0
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