with the Securities and Exchange Commission on March 31, 2003
-------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
(Mark One)
X Annual Report Pursuant to Section 13 or 15(d) of the
-------
Securities Exchange Act of 1934 [Fee Required]
For the fiscal year ended December 31, 2002
or
------- Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [No Fee Required]
For the Transition Period From ___________ to ___________
Commission File Number 0-9667
WINMILL & CO. INCORPORATED,
(Exact name of registrant as specified in its charter)
Delaware 13-1897916
(State of incorporation) (I.R.S. Employer Identification No.)
11 Hanover Square, New York, New York 10005
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 785-0900
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, Par Value $.01 Per Share
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part IV of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
No voting stock was held by non-affiliates of the registrant as of March 15,
2003.
The number of shares outstanding of each of the registrant's classes of common
stock, as of March 15, 2003:
Class A Non-Voting Common Stock, par value $.01 per share - 1,588,820 shares
Class B Voting Common Stock, par value $.01 per share - 20,000
PART I
Item Page
1. Business 1
2. Properties 4
3. Legal Proceedings 4
PART II
4. Market for Company's Common Equity and Related Stockholder Matters 5
PART III
5. Management's Discussion and Analysis of Financial Condition
and Results of Operations 5
6. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 7
7. Financial Statements and Supplementary Data 8
PART IV
8. Directors and Executive Officers 23
9. Executive Compensation 25
10. Security Ownership of Certain Beneficial Owners and Management 31
11. Certain Relationships and Related Transactions 32
PART V
12. Exhibits, Consolidated Financial Statements and Schedules,
and Reports on Form 8-K 33
13. Controls and Procedures 36
-5-
PART I
Item 1. Business
Winmill & Co. Incorporated, a Delaware corporation (the "Company"), is a
holding company with three principal subsidiaries: CEF Advisers, Inc., ("CEF"),
Investor Service Center, Inc. ("ISC") and Midas Management Corporation ("MMC").
MMC and CEF act as investment managers to open-end and closed-end management
investment companies (the "Funds") registered under the Investment Company Act
of 1940 (the "Act"). The open-end Funds are Dollar Reserves, Inc., Midas Fund,
Inc., and Midas Special Equities Fund, Inc. The closed-end funds are Global
Income Fund, Inc. and Internet Growth Fund, Inc. CEF acted as investment manager
of Bexil Corporation ("Bexil") and Tuxis Corporation ("Tuxis") until July 31,
2001 and November 30, 2001, respectively, when the investment management
agreements with CEF were terminated. Commencing August 1, 2001, Bexil's officers
(who are substantially identical to those of CEF) assumed the internal
management of Bexil's affairs, including portfolio management, subject to the
oversight and final direction of the Board of Directors of Bexil. Commencing
December 1, 2001, the officers of Tuxis (who are substantially identical to
those of CEF) assumed the internal management of Tuxis' affairs, including
portfolio management, subject to the oversight and final direction of the Board
of Directors of Tuxis. Compensation of Bexil and Tuxis personnel, initially set
in the aggregate amount of $200,000 each per year, may be changed from time to
time at the discretion of the Board of Directors of each of Bexil and Tuxis.
This amount was increased to $365,000 per year for Bexil effective January 1,
2003 and to $300,000 per year for Tuxis effective October 2, 2002. Bexil and
Tuxis are paying compensation directly to certain officers whose compensation
from the Company was partly reduced, reflecting the increased time such officers
spend on the business of Bexil and Tuxis. As of December 31, 2002, the Company
owned approximately 25% and 19% of the outstanding shares of Bexil and Tuxis,
respectively.
Bexil and Tuxis have received shareholder approval to change from registered
investment companies to operating companies. Bexil filed in 2002 an application
with the SEC to terminate its registration as an investment company and is
awaiting the decision from the SEC. Tuxis anticipates filing in 2003 an
application with the SEC to terminate its registration as an investment company.
In January 2002, Bexil began operating a business through a 50% interest in a
third party claims administrator.
ISC was organized in 1985 and is registered with the SEC as a broker/dealer and
is a member of the NASD. ISC acts as the principal distributor for the open-end
Funds and engages in proprietary securities trading.
The Company has granted certain of the Funds, Tuxis, Bexil and its subsidiaries
a non-exclusive license to use certain service marks owned by the Company, under
certain terms and conditions on a royalty free basis. Such license may be
withdrawn from a Fund in the event the investment manager of the Fund is not a
subsidiary of the Company or in other cases, at the discretion of the Company.
Investment Management and Distribution Business
The Company is engaged, through its subsidiaries, in the business of managing
investment companies registered under the Act. The Funds and their respective
net assets as of December 31, 2002 were approximately as follows:
Dollar Reserves, Inc. $ 20,969,600
Global Income Fund, Inc. 27,588,500
Internet Growth Fund, Inc. 6,731,300
Midas Fund, Inc. 54,788,700
Midas Special Equities Fund, Inc. 18,884,100
---------------
Total Net Assets $ 128,962,200
===============
The fund management industry along with the entire financial services sector of
the economy has been rapidly changing to meet the increasing needs of investors.
Competition for management of financial resources has increased as banks,
insurance companies and broker/dealers have introduced products and services
traditionally offered by independent fund management companies. There are also
many fund management groups with substantially more resources than the Company.
While the Company's business is not seasonal, it is affected by the financial
markets, which in turn, are dependent upon current and future economic
conditions.
Drastic material declines in the securities markets can have a significant
effect on the Company's business. Volatile stock markets may affect management
and distribution fees earned by the Company's subsidiaries. If the market value
of securities owned by the Funds declines, assets under management will decline
and shareholder redemptions may occur, either by transfer out of the equity
Funds and into the money market Fund, Dollar Reserves, which has lower
management and distribution fee rates than the equity Funds, or by redemptions
out of the Funds entirely. Lower asset levels in the Funds may also cause or
increase reimbursements to the Funds pursuant to the expense limitations
described below.
In general, investment management services are rendered to the Funds pursuant to
written contractual agreements. Such agreements relate to the general management
of the affairs of each Fund, in addition to supervising the acquisition and sale
of each Fund's portfolio investments. As provided in the agreements, CEF and MMC
may receive management fees ranging from 1.0% to 0.5% (and generally declining
thereafter on higher net asset levels) per annum of the Funds' average daily or
average weekly net assets payable monthly. The Act requires that such
contractual agreements be initially approved by the Funds' Board of Directors,
including a majority of all of the directors who are not "interested persons"
(as defined in the Act), and by the vote of a majority of the outstanding shares
of the Fund (as defined in the Act). Agreements, if approved, may be for a term
of up to two years, and thereafter their continuance must be approved at least
annually by a majority of the directors of the Fund, including a majority of
those directors of the Fund who are not "interested persons", or by such a vote
of "disinterested" directors and the vote of a majority of the outstanding
shares of the Fund. In addition, all such agreements are subject to termination
on 60 days' notice by majority vote of the Board of Directors or the
shareholders and are subject to automatic termination in the event of
assignment. Effective July 31, 2001, Bexil's officers assumed the internal
management of Bexil's affairs, including portfolio management. Effective
November 30, 2001, Tuxis' officers assumed the internal management of Tuxis'
affairs, including portfolio management. Depending on the assets of the Fund
involved and other factors, the termination of any agreements for investment
management services between any of the Funds, CEF, and MMC or the termination of
the relationship of the Company with the management of Bexil and Tuxis may have
a serious adverse impact upon the Company.
Under the investment management contracts, CEF and MMC are required to reimburse
the Funds for certain expenses to the extent that such expenses exceed
limitations prescribed by any state in which shares of the Funds are qualified
for sale, although currently the Funds are not subject to any such limits. In
addition, from time to time CEF and MMC may waive or reimburse management fees
to increase a Fund's performance.
Each of the open-end Funds has adopted a plan of distribution pursuant to Rule
12b-1 under the Act (the "Plan"). Pursuant to the Plans, ISC may receive as
compensation amounts ranging from one-quarter of one percent to one percent per
annum of the Funds' average daily net assets for distribution and service
activities. The service fee portion is intended to cover services provided to
shareholders in the Funds and the maintenance of shareholder accounts. The
distribution fee portion is to cover all other activities and expenses primarily
intended to result in the sale of the Funds' shares.
The Act requires that a plan of distribution be initially approved by the Fund's
Board of Directors, including a majority of the directors who are not
"interested persons" and who have no financial interest in the Plan, and by the
vote of a majority of the outstanding shares of the Fund. If approved, a plan of
distribution may be for a term of one year, and thereafter it must be approved
at least annually by the entire Board of Directors and by a majority of the
"disinterested" directors. In addition, all plans of distribution are subject to
termination at any time by majority vote of the disinterested directors or
shareholders.
CEF and MMC are registered with the SEC as investment advisers under the
Investment Advisers Act of 1940. ISC is registered with the SEC as a
broker/dealer under the Securities Exchange Act of 1934 and is a member of the
NASD. The Funds, Tuxis and Bexil are registered with the SEC under the Act. The
activities of CEF and MMC and of the Funds are subject to regulation under
Federal and state securities laws. The provisions of these laws, including those
relating to the contractual arrangements between the Funds and their investment
managers, are primarily designed to protect the shareholders of the Funds, Tuxis
and Bexil, and not the shareholders of the Company.
Forward-Looking Information
Information or statements provided by or on behalf of the Company from time to
time, including those within this Form 10-KSB Annual Report, may contain certain
"forward-looking information", including information relating to anticipated
growth in revenues or earnings per share, anticipated changes in the amount and
composition of assets under management, anticipated expense levels, and
expectations regarding financial market conditions. The Company cautions readers
that any forward-looking information provided by or on behalf of the Company is
not a guarantee of future performance and that actual results may differ
materially from those in forward-looking information as a result of various
factors, including but not limited to those discussed below. Further, such
forward-looking statements speak only as of the date on which such statements
are made, and the Company undertakes no obligation to update any forward-looking
statement to reflect events or circumstances after the date on which such
statement is made or to reflect the occurrence of unanticipated events.
The Company's future revenues may fluctuate due to factors such as: the total
value and composition of assets under management and related cash inflows or
outflows in mutual funds; fluctuations in the financial markets resulting in
appreciation or depreciation of assets under management; the relative investment
performance of the Company's sponsored investment products as compared to
competing products and market indices; the expense ratios and fees of the
Company's sponsored products and services; investor sentiment and investor
confidence in mutual funds; the ability of the Company to maintain investment
management fees at current levels; competitive conditions in the mutual funds
industry; the introduction of new mutual funds and investment products; the
ability of the Company to contract with the Funds for payment for services
offered to the Funds and Fund shareholders; the continuation of trends in the
retirement plan marketplace favoring defined contribution plans and
participant-directed investments; and the amount and timing of income from the
Company's proprietary securities trading portfolio.
The Company's future operating results are also dependent upon the level of
operating expenses, which are subject to fluctuation for the following or other
reasons: changes in the level of advertising expenses in response to market
conditions or other factors; the level of expenses assumed by the Company for
the Funds as a result of expense reimbursement plan or waiver of expenses to
increase a Fund's performance; variations in the level of compensation expense
incurred by the Company, including performance-based compensation based on the
Company's financial results, as well as changes in response to the size of the
total employee population, competitive factors, or other reasons; expenses and
capital costs, including depreciation, amortization and other non-cash charges,
incurred by the Company to maintain its administrative and service
infrastructure; and unanticipated costs that may be incurred by the Company from
time to time to protect investor accounts and client goodwill.
The Company's operating results will also depend on the results of its holdings
in Bexil and Tuxis.
The Company's revenues are substantially dependent on revenues from the Funds,
which could be adversely affected if the independent directors of one or more of
the Funds determined to terminate or renegotiate the terms of one or more
investment management agreements.
The Company's business is also subject to substantial governmental regulation,
and changes in legal, regulatory, accounting, tax, and compliance requirements
may have a substantial effect on the Company's business and results of
operations, including but not limited to effects on the level of costs incurred
by the Company and effects on investor interest in mutual funds in general or in
particular classes of mutual funds.
Item 2. Properties
The principal office of the Company is located at 11 Hanover Square, New York,
New York 10005. For the office of 3,800 rentable square feet, the rent is
approximately $96,000 per annum plus $12,800 per annum for electricity. The
lease expires on December 31, 2003.
Item 3. Legal Proceedings
From time to time, the Company and/or its subsidiaries are threatened or named
as defendants in litigation arising in the normal course of business. As of
December 31, 2002, neither the Company nor any of its subsidiaries was involved
in any other litigation that, in the opinion of management, would have a
material adverse impact on the consolidated financial statements.
-11-
Park II
Item 4. Market for the Company's Common Equity and Related Stockholder Matters
The Company's Class A Common Stock (non-voting) trades on the Nasdaq SmallCap
Market tier of the Nasdaq Stock Market under the symbol WNMLA. The Company's
Class B Common Stock (voting) has no public trading market. There are
approximately 219 holders of record of Class A Common Stock and 1 holder of
Class B Common Stock as of December 31, 2002. In addition, there are an
indeterminate number of beneficial owners of Class A Common Stock that are held
in "street name." No dividends have been paid on either class of Common Stock in
the past five years and the Company does not expect to pay any such dividends in
the foreseeable future. The high and low sales prices of the Class A Common
Stock during each quarterly period over the last two years were as follows:
2002 2001
-------------------- -------------------
High Low High Low
First Quarter $1.6700 $1.4800 $1.6250 $1.1563
Second Quarter $1.8500 $1.4200 $1.8900 $1.3000
Third Quarter $1.7000 $1.4600 $1.9400 $1.5500
Fourth Quarter $1.7500 $1.4200 $1.7000 $1.3500
Equity Compensation Plan Information
Number of
Number of Class A Weighted- Class A shares
shares to be issued average price remaining available
upon exercise of of outstanding for future issuance
outstanding options options, warrants under equity
warrants and rights and rights compensation plans
Equity Compensation Plans
approved by security holders 281,500 $ 1.59 33,500
Equity Compensation Plans not
approved by security holders - - -
--------- ------ --------
Total 281,500 $ 1.59 33,500
========= ====== ========
Item 5. Management's Discussion and Analysis of Financial Condition and Results
of Operations
2002 Compared to 2001
Declines in the securities markets can have a significant effect on the
Company's business. Volatile stock markets may affect management and
distribution fees earned by the Company's subsidiaries. If the market value of
securities owned by the Funds declines, shareholder redemptions may occur,
either by transfer out of the equity Funds and into the money market fund, which
has lower management and distribution fees rates than the equity Funds, or by
transfer out of the Funds entirely. Lower net asset levels in the Funds may also
cause or increase reimbursements to the Funds pursuant to expense limitations as
described in Note 9 of the financial statements.
Total revenues decreased $99,638 or 5% which was primarily due to the decrease
in management, distribution and other fees, consulting fee and dividends and
interest income offset by an increase in realized and unrealized gains on
investments. Management, distribution and other fees decreased $289,531 or 16%
due to lower net assets in the Funds and the termination of the investment
management agreement with Bexil and Tuxis effective July 31, 2001 and November
30, 2001 respectively. Average net assets under management were less in the
twelve months ended December 31, 2002 verses December 31, 2001. Total net assets
under management were approximately $116 million at December 31, 2001, $125
million at March 31, 2002, $123 million at June 30, 2002, $129 million at
September 30, 2002 and $129 million at December 31, 2002. Net realized and
unrealized gains on proprietary securities trading were $161,794. Consulting
fees decreased $246,923 which was due to the termination of the Company's
consulting agreement with Bull & Bear Securities, Inc. ("BBSI") during the
second quarter of 2001.
Total expenses decreased $600,182 or 27% over this period of last year. General
and administrative expenses decreased $143,924 or 16% due to lower employee
costs. Marketing expense decreased $225,579 or 31% due to lower fulfillment and
printing costs. Expense reimbursement to the Funds decreased $104,659 or 37%.
Professional fees decreased $89,289 or 49%. Net income for the period was
$137,326 or $.08 per share on a diluted basis as compared to net loss of
$199,065 or $(.12) per share on a diluted basis for last year.
2001 Compared to 2000
Declines in the securities markets can have a significant effect on the
Company's business. Volatile stock markets may affect management and
distribution fees earned by the Company's subsidiaries. If the market value of
securities owned by the Funds declines, shareholder redemptions may occur,
either by transfer out of the equity Funds and into the money market fund, which
has lower management and distribution fees rates than the equity Funds, or by
transfer out of the Funds entirely. Lower net asset levels in the Funds may also
cause or increase reimbursements to the Funds pursuant to expense limitations as
described in Note 9 of the financial statements.
Total revenues decreased $2,253,399 or 54% which was primarily due to the
decrease in management, distribution and other fees, net realized and unrealized
gains on proprietary securities trading and real estate, rental income and
dividends and interest income. Management, distribution and other fees decreased
$526,278 or 23% due to lower net assets in the Funds and the termination of the
investment management agreement with Bexil and Tuxis effective July 31, 2001 and
November 30, 2001 respectively. Net assets under management were approximately
$181 million at December 31, 2000, $172 million at March 31, 2001 $140 million
at June 30, 2001, $128 million at September 30, 2001 and $116 million at
December 31, 2001. Net realized and unrealized losses on proprietary securities
trading were $360,418. Consulting fees increased $46,923 which was primarily due
to the termination and settlement of the Company's consulting agreement with
BBSI during the second quarter of 2001. Rental income declined to $0 as compared
to $250,941 due to the sale of the real estate held for investment in December
2000 for a pre-tax profit of $901,046.
Total expenses decreased $977,041 or 31% over this period of last year, as a
result of decreases in general and administrative expense of $373,560 or 29%,
marketing expenses of $230,925 or 24%, and amortization and depreciation expense
of $32,865 or 26%. General and administrative expenses decreased due to lower
employee costs, in part due to the assumption by Bexil, effective August 1,
2001, of compensation expense of certain Company personnel at the annual rate of
$200,000. Marketing expense decreased due to lower fulfillment and printing
costs. Expense reimbursement to the Funds decreased $3,180 or 1%. Professional
fees decreased $11,511 or 6%. Net loss for the period was $199,065 or $(.12) per
share on a diluted basis as compared to net income of $508,314 or $.31 per share
on a diluted basis for last year.
Liquidity and Capital Resources
The following table reflects the Company's consolidated working capital, total
assets, long-term debt and shareholders' equity as of the dates indicated.
December 31,
2002 2001
---- ----
Working Capital $6,768,292 $7,063,441
Total Assets $8,106,436 $8,036,785
Long-Term Debt $ - $ -
Shareholders' Equity $7,889,020 $7,748,846
For the year ended 2002, working capital decreased $295,149 primarily due to a
reduction in cash from the purchase of additional investments. Total assets and
shareholders' equity increased by $69,651 and $140,174. Total assets and
shareholders' equity increased primarily due to net income recorded for the
year.
For the year ended 2001, working capital, total assets and shareholders' equity
decreased $69,445, $340,437 and $212,900, respectively. Working capital, total
assets and shareholders' equity decreased primarily due to the realized and
unrealized losses from proprietary securities trading.
Management knows of no contingencies that are reasonably likely to result in a
material decrease in the Company's liquidity or that are likely to adversely
affect the Company's capital resources. This includes the restrictions placed on
the transfer of funds to ISC as a result of its regulatory net capital
requirements. At December 31, 2002, the amount subject to these restrictions was
$100,000 or 1.2% of total assets.
Effects of Inflation and Changing Prices
Since the Company derives revenue primarily from investment management and
distribution services from the Funds and proprietary securities trading, it is
not possible for it to discuss or predict with accuracy the impact of inflation
and changing prices on its revenues from continuing operations.
Item 6. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
There were no changes in or disagreements with the Company's accountants on
accounting and financial disclosure matters during the two years ended December
31, 2002.
Item 7. Financial Statements and Supplementary Data
Financial Statements required by Regulation S-X and Supplementary Financial
Information required by Regulation S-B are presented herein.
FINANCIAL STATEMENTS AND SUPPORTING SCHEDULES
TABLE OF CONTENTS
Page
Report of Independent Certified Public Accountants 9
Consolidated Balance Sheet,
December 31, 2002 10
Consolidated Statements of Income,
Years ended December 31, 2002 and 2001 11
Consolidated Statements of Changes in Shareholders' Equity,
Years ended December 31, 2002 and 2001 12
Consolidated Statements of Cash Flows,
Years ended December 31, 2002 and 2001 13
Notes to Consolidated Financial Statements 15
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Shareholders of
Winmill & Co. Incorporated
We have audited the accompanying consolidated balance sheet of Winmill & Co.
Incorporated and subsidiaries as of December 31, 2002, and the related
consolidated statements of income, changes in shareholders' equity, and cash
flows for each of the two years in the period ended December 31, 2002. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Winmill & Co.
Incorporated and subsidiaries at December 31, 2002, and the consolidated results
of their operations and their consolidated cash flows for each of the two years
in the period ended December 31, 2002, in conformity with accounting principles
generally accepted in the United States of America.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 7, 2003
WINMILL & CO. INCORPORATED
CONSOLIDATED BALANCE SHEET
December 31, 2002
ASSETS
Current Assets:
Cash and cash equivalents $ 1,254,528
Marketable securities (Note 2) 5,287,080
Management, distribution and other fees receivable 114,216
Dividends, interest and other receivables 56,475
Prepaid expenses and other current assets 100,115
Refundable income taxes 173,294
------------
Total Current Assets 6,985,708
------------
Equipment, furniture and fixtures, net 58,502
Intangible assets, net 635,795
Deferred income taxes (Note 8) 22,000
Other assets (Note 10) 404,431
------------
1,120,728
Total Assets $ 8,106,436
============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 12,585
Accrued professional fees 99,024
Accrued payroll and other related costs 25,000
Accrued other expenses 24,504
Other current liabilities 56,303
------------
Total Current Liabilities 217,416
------------
Shareholders' Equity (Notes 2, 4, 5, and 6) Common Stock, $.01 par value Class
A, 10,000,000 shares authorized;
1,628,320 shares issued 16,283
Class B, 20,000 shares authorized;
20,000 shares issued and outstanding 200
Additional paid-in capital 6,807,985
Retained earnings 1,649,878
Notes receivable for common stock issued (527,041)
Accumulated other comprehensive loss (177)
------------
7,947,128
Less treasury stock (58,108)
------------
Total Shareholders' Equity 7,889,020
------------
Total Liabilities and Shareholders' Equity $ 8,106,436
============
See accompanying notes to consolidated financial statements.
WINMILL & CO. INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31,
2002 2001
---- ----
Revenues:
Management, distribution and other fees $ 1,469,731 $ 1,759,262
Consulting fee - 246,923
Realized and unrealized gains (losses) from investments 161,794 (360,418)
Dividends, interest and other 179,243 264,639
------------ ------------
1,810,768 1,910,406
------------ ------------
Expenses:
General and administrative 772,827 916,751
Marketing 493,405 718,984
Expense reimbursements to the Funds (Note 11) 179,716 284,375
Professional fees 92,035 181,324
Depreciation and amortization 57,159 93,890
------------ ------------
1,595,142 2,195,324
------------ ------------
Income (loss) before income taxes 215,626 (284,918)
Income taxes (benefit) (Note 8) 78,300 (85,853)
------------ ------------
Net Income (Loss) $ 137,326 $ (199,065)
============ ============
Per Share Data:
Basic
Net income (loss) $ .08 $(.12)
====== =====
Diluted
Net income (loss) $ .08 $(.12)
====== =====
Average Shares Outstanding:
Basic 1,638,403 1,653,343
========= =========
Diluted 1,649,129 1,653,343
========= =========
See accompanying notes to consolidated financial statements.
See accompanying notes to consolidated financial statements.
WINMILL & CO. INCORPORATED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Years Ended December 31, 2002 and 2001
Number of Shares Amount
---------------- -------------------------------------------------------------------------------------
Notes
Receivable
For Accumulated
Additional Common Retained Treasury Other
Class A Class B Class A Class B Paid-In Stock Earnings Stock Comprehensive
Common Common Common Common Capital Issued (Deficit) Class A Income
--------- ------- ------- ------- ---------- ---------- ---------- --------- -------------
Balance, December 31, 2000 1,635,017 20,000 $16,351 $200 $6,872,454 $(603,675) $1,711,617 $ - $(35,201)
Net loss - - - - - - (199,065) - -
Other comprehensive income
Unrealized gains on
marketable securities - - - - - - - - 44,763
-------- ------- ------- ---- ----------- --------- ---------- -------- --------
Comprehensive income
Redemption of stock (6,697) - (68) - (64,469) - - - -
Repayment of notes receivable - - - - - 5,939 - - -
-------- ------ ------- ---- ----------- --------- ---------- -------- --------
Balance, December 31, 2001 1,628,320 20,000 16,283 200 6,807,985 (597,736) 1,512,552 - 9,562
Net income - - - - - - 137,326 - -
Other comprehensive income
Unrealized losses on
investments - - - - - - - - (9,739)
------- ------ ------ ---- ---------- -------- ---------- -------- --------
Comprehensive income
Repayment of notes receivable - - - - - 70,695 - - -
Purchase of treasury stock (39,500) - - - - - - (58,108) -
-------- ------ ------ ---- ---------- -------- ---------- -------- --------
Balance, December 31, 2002 1,588,820 20,000 $16,283 $200 $6,807,985 $(527,041) $1,649,878 $(58,108) $(177)
========= ====== ======= ==== ========== ========= ========== ======== ========
Total
Shareholders'
Equity
-------------
Balance, December 31, 2000 $ 7,961,746
Net loss (199,065)
Other comprehensive income
Unrealized gains on
marketable securities 44,763
--------
Comprehensive income (154,302)
---------
Redemption of stock (64,537)
Repayment of notes receivable 5,939
--------
Balance, December 31, 2001 7,748,846
Net income 137,326
Other comprehensive income
Unrealized losses on
investments (9,739)
--------
Comprehensive income 127,587
--------
Repayment of notes receivable 70,695
Purchase of treasury stock (58,108)
--------
Balance, December 31, 2002 $ 7,889,020
==========
-13-
WINMILL & CO. INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
2002 2001
---- ----
Cash Flows from Operating Activities:
Net income (loss) $ 137,326 $ (199,065)
------------- -------------
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization 57,159 93,890
Decrease (increase) deferred income taxes 69,000 47,000
Decrease (increase) in cash value of life insurance (32,160) 21,463
Unrealized (gain) on proprietary securities trading (163,105) (54,591)
(Increase) decrease in:
Management, distribution and other fees receivable (8,499) 56,057
Dividends, interest and other receivables (32,229) 159,570
Prepaid expenses and other current assets (27,699) 118,094
Refundable income taxes 86,126 (259,420)
Other assets (26,538) (13,275)
Increase (decrease) in:
Accounts payable (15,286) (10,778)
Accrued expenses (54,322) 57,557
Accrued income taxes 9,300 (231,000)
Other current liabilities (10,215) 56,682
------------- -------------
Total adjustments (148,468) 41,249
------------- -------------
Net cash provided by (used for) operating activities (11,142) (157,816)
------------- -------------
WINMILL & CO. INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
Years Ended December 31,
2002 2001
---- ----
Cash Flows from Investing Activities:
Capital expenditures $ (18,874) $ (5,623)
Proprietary securities trading sales 27,173 1,253,790
Proprietary securites trading purchases (722,438) (1,674,147)
Acquisition of intangible asset (476,471) -
------------- -------------
Net cash used in investing activities (1,190,610) (425,980)
------------- -------------
Cash Flows from Financing Activities:
Repayments of notes receivable 70,695 5,939
Redemption of Class A Common Stock - (64,537)
Purchase of treasury stock (58,108) -
------------- -------------
Net cash provided by (used in) financing activities 12,587 (58,598)
------------- -------------
Net decrease in cash and cash equivalents (1,189,165) (642,394)
Cash and cash equivalents:
Beginning of year 2,443,693 3,086,087
------------- -------------
End of year $ 1,254,528 $ 2,443,693
============= =============
SUPPLEMENTAL DISCLOSURE:
The Company paid $0 and $0 in Federal income taxes in 2002 and 2001,
respectively.
See accompanying notes to consolidated financial statements.
WINMILL & CO. INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2002 and 2001
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Winmill & Co. Incorporated ("Company") is a holding company. Its
subsidiaries' business consists of providing investment management and
distribution services for the Midas Funds (three open-end funds), two
closed-end funds, and proprietary securities trading.
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the
Company and all of its subsidiaries. Substantially all intercompany
accounts and transactions have been eliminated.
ACCOUNTING ESTIMATES
In preparing financial statements in conformity with accounting
principles generally accepted in the United States of America,
management makes estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements, as well as the reported amounts of revenues and expenses
during the reported period. Actual results could differ from those
estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, accounts receivable,
accounts payable, and accrued expenses and other liabilities
approximate fair value because of the short maturity of these items.
Marketable securities are recorded at market value which represents the
fair value of the securities.
CASH AND CASH EQUIVALENTS
Investments in money market funds are considered to be cash
equivalents. At December 31, 2002, the Company and subsidiaries had
invested approximately $983,100 in an affiliated money market fund.
MARKETABLE SECURITIES
The Company and its non-broker/dealer subsidiaries' marketable
securities are considered to be "available-for-sale" and recorded at
market value, with the unrealized gain or loss included in
stockholders' equity as "accumulated other comprehensive income."
Marketable securities of the broker/dealer subsidiary are valued at
market with unrealized gains and losses included in earnings.
WINMILL & CO. INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
December 31, 2002 and 2001
INCOME TAXES
The Company's method of accounting for income taxes conforms to
Statement of Financial Accounting Standards No. 109 "Accounting for
Income Taxes." This method requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of
temporary differences between the financial reporting basis and the tax
basis of assets and liabilities. The Company and its wholly-owned
subsidiaries file consolidated income tax returns.
EQUIPMENT
Equipment, furniture and fixtures are recorded at cost and are
depreciated on the straight-line basis over their estimated useful
lives, 3 to 10 years. At December 31, 2002, accumulated depreciation on
equipment, furniture and fixtures amounted to approximately $823,700.
INTANGIBLE ASSETS
The Company adopted Statements of Financial Accounting Standards No.
142, "Goodwill and Other Intangible Assets ("SFAS 142") in 2002. In
accordance with SFAS 142, intangible assets with a finite useful life
are amortized over the useful life. In addition, intangible assets are
reviewed for impairment and the remaining useful life evaluated at
least annually to determine whether events and circumstances warrant a
revision to the remaining period of amortization. As such, the Company
has amortized its intangible assets over fifteen years using the
straight-line method. At December 31, 2002, accumulated amortization on
intangible assets amounted to approximately $174,900.
COMPREHENSIVE INCOME
The Company discloses comprehensive income in the financial statements.
Comprehensive income includes net income and unrealized gains and
losses on non-broker/dealer marketable securities, which is reported as
other comprehensive income in stockholders' equity.
SEGMENT INFORMATION
The Company's operating segment is organized around services provided
and classified into one group - investment management.
EARNINGS PER SHARE
Basic earnings per share is computed using the weighted average number
of shares outstanding. Diluted earnings per share is computed using the
weighted average number of shares outstanding adjusted for the
incremental shares attributed to outstanding options to purchase common
stock.
WINMILL & CO. INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
December 31, 2002 and 2001
The following table sets forth the computation of basic and diluted
earnings per share:
2002 2001
---- ----
Numerator for basic and diluted earnings per share:
Net income (loss) $ 137,326 $ (199,065)
=========== ===========
Denominator:
Denominator for basic earnings per share:
weighted - average shares 1,638,403 1,653,343
Effect of dilutive securities:
employee stock options 10,726 -
----------- -----------
Denominator for diluted earnings per share:
adjusted weighted - average shares and
assumed conversions 1,649,129 1,653,343
=========== ===========
2. MARKETABLE SECURITIES
At December 31, 2002 marketable securities consisted of:
Broker/dealer securities - at market
Affiliated investment companies $ 4,389,555
Equity securities 895,020
------------
Total broker/dealer securities (cost - $5,272,185) 5,284,575
------------
Other companies
Unaffiliated investment companies 2,505
------------
Total available-for-sale securities (cost - $2,682) 2,505
------------
$ 5,287,080
At December 31, 2002, the Company had $(177), net of deferred income
taxes, of unrealized losses on "available-for-sale securities" which is
reported as a separate component of consolidated shareholders' equity.
Included in the investments in affiliated investment companies are
investments of $2,302,945 (representing approximately 25% of the
outstanding shares) in Bexil and $1,817,329 (representing approximately
19% of the outstanding shares) in Tuxis, both of which have received
shareholder approval to change from registered investment companies to
operating companies.
WINMILL & CO. INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
December 31, 2002 and 2001
3. LEASE COMMITMENTS
The Company leases office space under a lease which expires December 31,
2003. The rent is approximately $109,000 per annum including electricity.
4. SHAREHOLDERS' EQUITY
The Class A and Class B Common Stock are identical in all respects except
for voting rights, which are vested solely in the Class B Common Stock.
The Company also has 1,000,000 shares of Preferred Stock, $.01 par value,
authorized. As of December 31, 2002 and 2001, none of the Preferred Stock
was issued.
5. NET CAPITAL REQUIREMENTS
The Company's broker/dealer subsidiary is a member firm of the National
Association of Securities Dealers, Inc. ("NASD") and is registered with
the Securities and Exchange Commission as a broker/dealer. Under its
membership agreement with the NASD, the broker/dealer must maintain
minimum net capital, as defined, of not less than $100,000, or 6-2/3% of
aggregate indebtedness, whichever is greater; and a ratio of aggregate
indebtedness to net capital, as defined, of not more than 15 to 1. At
December 31, 2002, the subsidiary had net capital of approximately
$4,623,900; net capital requirements of $100,000; excess net capital of
approximately $4,523,900; and the ratio of aggregate indebtedness to net
capital was approximately .05 to 1.
6. STOCK OPTIONS
On December 6, 1995, the Company adopted a Long-Term Incentive Plan which,
as amended, provides for the granting of a maximum of 600,000 options to
purchase Class A Common Stock to directors, officers and key employees of
the Company or its subsidiaries. With respect to non-employee directors,
only grants of non-qualified stock options and awards of restricted shares
are available. The three non-employee directors were granted 2,500 options
each on December 10, 2002. The option price per share may not be less than
the fair value of such shares on the date the option is granted, and the
maximum term of an option may not exceed ten years except as to
non-employee directors for which the maximum term is five years.
WINMILL & CO. INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
December 31, 2002 and 2001
The Company applies APB Opinion 25 and related interpretations in
accounting for its stock option plans. Accordingly, no compensation cost
has been recognized for its stock option plans. Pro forma compensation
cost for the Company's plans is required by Financial Accounting Standards
No. 123 "Accounting for Stock-Based Compensation (SFAS 123)" and has been
determined based on the fair value at the grant dates for awards under
these plans consistent with the method of SFAS 123. For purposes of pro
forma disclosure, the estimated fair value of the options is amortized to
expense over the options' vesting period. The Company's pro forma
information follows:
Years Ended December 31,
2002 2001
---- ----
Net income (loss) As reported $137,326 $(199,065)
Pro forma $102,381 $(213,005)
Earnings per share
Basic As reported $.08 $(.12)
Pro forma $.06 $(.13)
Diluted As reported $.08 $(.12)
Pro forma $.06 $(.13)
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted
average assumptions used for grants in 2002 and 2001: expected volatility
of 41.18% and 46.98%, risk-free interest rate of 1.17% and 3.95% and
expected life of three years for each year.
A summary of the status of the Company's stock option plans as of December
31, 2002 and 2001, and changes during the years ending on those dates is
presented below:
Weighted
Number Average
Of Exercise
Stock Options Shares Price
Outstanding at December 31, 2000 226,000 $1.61
Granted 15,000 $1.80
Canceled (20,000) $1.94
--------
Outstanding at December 31, 2001 221,000 $1.60
Granted 77,500 $1.61
Canceled (17,000) $1.76
--------
Outstanding at December 31, 2002 281,500 $1.59
========
There were 266,500 and 174,000 options exercisable at December 31, 2002
and 2001 with a weighted-average exercise price of $1.59 and $1.59,
respectively. The weighted-average fair value of options granted using the
Black Scholes option-pricing model was $.40 and $.64 for the years ended
December 31, 2002 and 2001, respectively.
WINMILL & CO. INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
December 31, 2002 and 2001
The following table summarizes information about stock options outstanding
at December 31, 2002:
Weighted-Average
Range of Number Remaining Weighted-Average
Exercise Prices Outstanding Contractual Life Exercise Price
$1.50 - $1.60 121,500 3.4 years $1.50
$1.60 - $1.66 160,000 3.6 years $1.65
In connection with the exercise of the options, the Company has received
from certain officers notes with interest rates ranging from 2.45% to
2.48% per annum payable December 31, 2004. The balance of the notes at
December 31, 2002 was $527,041, which was classified as "notes receivable
for common stock issued."
7. PENSION PLAN
The Company has a 401(k) retirement plan for substantially all of its
qualified employees. Contributions are based upon a percentage of earnings
of eligible employees and are accrued and funded on a current basis. Total
pension expense for the years ended December 31, 2002 and 2001 was
approximately $49,500 and $33,700, respectively.
8. INCOME TAXES
The provision for income tax expense (benefit) was as follows:
2002 2001
---- ----
Current
Federal $ (4,500) $ (114,000)
State and local 13,800 (18,853)
--------- -----------
9,300 (132,853)
Deferred 69,000 47,000
--------- -----------
$ 78,300 $ (85,853)
========= ===========
Deferred tax assets (liabilities) are comprised of the following at
December 31, 2002 and 2001:
2002 2001
---- ----
Unrealized (appreciation) depreciation on investments $ (5,000) $ 53,000
Accrued expenses 2,000 19,000
Net capital loss carryforwards 25,000 19,000
--------- ---------
Net deferred tax assets $ 22,000 $ 91,000
========= =========
WINMILL & CO. INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
December 31, 2002 and 2001
A reconciliation of the federal statutory income tax rate to the Company's
effective tax rate is as follows:
2002 2001
---- ----
Statutory rate 34.0% 34.0%
Increase in effective tax rate resulting from:
State income taxes, net of federal benefit 4.2 4.4
Write-down of non-deductible intangible assets - (6.2)
Non-deductible income and expenses - net (1.9) (2.1)
----- -----
36.3 30.1%
===== =====
9. RELATED PARTIES
All investment management and distribution fees are a result of services
provided to the Funds. All such services are provided pursuant to
agreements that set forth the fees to be charged for these services. These
agreements are subject to annual review and approval by each Fund's Board
of Directors and a majority of the Fund's non-interested directors. In
addition, during the years ended December 31, 2002 and 2001, the Funds
paid approximately $44,000 and $69,000, respectively, for recordkeeping
services to ISC, which paid such amounts to certain brokers for performing
such services. These reimbursements for recordkeeping services were
recorded in management, distribution and other fees.
The Company's investment manager and distributor subsidiaries waived
management and distribution fees from the Funds in the amount of
approximately $179,700 and $284,400 for the years ended December 31, 2002
and 2001, respectively.
On March 31, 1999, the Company sold its discount brokerage business, Bull
& Bear Securities, ("BBSI") to a subsidiary of Royal Bank of Canada. In
connection with the sale, Royal Bank agreed that it would cause for the
three-year period following the sale, BBSI to offer exclusively Dollar
Reserves to its customers as the sole money market fund into which cash
balances held by BBSI's customers would be swept on a daily basis. In
addition, the Company agreed to provide to BBSI for a period of three
years following the sale certain services with respect to the operation of
a securities brokerage business for a monthly consulting fee of
$16,666.67, subject to certain conditions. The agreement was terminated in
June 2001 by Royal Bank which provided a final settlement payment of
approximately $164,000.
Certain officers of the Company also serve as officers and/or directors of
the Funds.
Commencing August 1992, the Company has a key man life insurance policy on
the life of the Company's Chairman which provides for the payment of
$1,000,000 to the Company upon his death. As of December 31, 2002, the
policy had a cash surrender value of approximately $274,200 and is
included in other assets in the balance sheet.
WINMILL & CO. INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
December 31, 2002 and 2001
10. CONTINGENCIES
From time to time, the Company and/or its subsidiaries are threatened or
named as defendants in litigation arising in the normal course of
business. As of December 31, 2002, neither the Company nor any of its
subsidiaries was involved in any other litigation that, in the opinion of
management, would have a material adverse impact on the consolidated
financial statements.
In April 2002, the Company entered into a Death Benefit Agreement
("Agreement") with the Company's Chairman. Following his death, the
Agreement provides for annual payments, equal to 80% of his average annual
salary received from the Company, its affiliates, subsidiaries and other
related entities for the three year period prior to his death subject to
certain adjustments to his wife until her death. The Company's obligations
under the Agreement are not secured and will terminate if he leaves the
Company's employ under certain conditions.
PART III
Item 8. Directors and Executive Officers
The following list contains the names, ages, positions and lengths of service of
all directors and executive officers of the Company.
Name Position Years of Service Age
Director Officer
Bassett S. Winmill Chairman of the Board 26 26 72
Robert D. Anderson Vice Chairman of the Board 26 26 73
Thomas B. Winmill, Esq. President, 14 15 43
General Counsel, Director
Edward G. Webb, Jr. Director 17* 14** 63
Charles A. Carroll Director 11 - 72
Mark C. Winmill Director 13*** 15**** 45
Marion E. Morris Senior Vice President - 2 57
William G. Vohrer Treasurer, - 2 52
Chief Accounting Officer
Monica Pelaez, Esquire Vice President,
Secretary, Associate General Counsel - 3 31
* 1985 to 1990 and 1992 to present.
** 1979 to 1990
*** 1989 to 1999 and 2000 to present.
**** 1987 to 1999
Set forth below is a description of the business experience of the directors and
executive officers of the Company during the past five years.
BASSETT S. WINMILL - Chairman of the Board of Directors. He is also Chairman of
certain investment companies managed by Company subsidiaries and Tuxis
Corporation and Bexil Corporation. He is a member of the New York Society of
Security Analysts, the Association for Investment Management and Research, and
the International Society of Financial Analysts. He is the father of Thomas B.
Winmill and Mark C. Winmill.
ROBERT D. ANDERSON - Vice Chairman of the Board of Directors. He is also Vice
Chairman of certain investment companies managed by Company subsidiaries and
certain subsidiaries of the Company.
THOMAS B. WINMILL, ESQ. - President, General Counsel, Chief Executive Officer
and Director. He is also President of the investment companies managed by
Company subsidiaries and of certain subsidiaries of the Company. He is also a
director and President of Bexil Corporation and a director and general counsel
of Tuxis Corporation. He is a member of the New York State Bar. He is a son of
Bassett S. Winmill and brother of Mark C. Winmill.
EDWARD G. WEBB, JR. - Director. He is Equity Portfolio Manager of Advanced Asset
Management Advisers, Inc. He was President of Webb Associates, Ltd. since 1996.
Prior to that, he served as a Senior Vice President and Director of the Company.
CHARLES A. CARROLL - Director. From 1989 to the present, he has been affiliated
with Kalin Associates, Inc., a member firm of the New York Stock Exchange.
MARK C. WINMILL - Director. He is currently President of Tuxis Corporation. He
was Co-President and Director of the Company from June 1990 to March 1999 and an
Officer and Director of its various Funds and subsidiaries from June 1987 to
March 1999. He was President and Director of Bull & Bear Securities, Inc.
("BBSI"), a nationwide discount broker, from June 1987 until March 1999 when the
Company sold BBSI to The Royal Bank of Canada. He was also Chief Operating
Officer of BBSI from April 1999 to February 2000. He is a son of Bassett S.
Winmill and a brother of Thomas B. Winmill.
WILLIAM G. VOHRER - Chief Financial Officer, Treasurer and Chief Accounting
Officer. He joined the Company in February 2001. He is also Chief Financial
Officer and Treasurer of certain investment companies managed by Company
subsidiaries and certain subsidiaries of the Company, Bexil Corporation and
Tuxis Corporation. From 1999 to 2001, he consulted on accounting matters. From
1994 to 1999 he was Chief Financial Officer and Financial Operations Principal
for Nafinsa Securities, Inc., a Mexican Securities broker/dealer. From 1978 to
1994, he held Chief Financial Officer/Controller positions with various
international banks.
MARION E. MORRIS - Senior Vice President. Since 2000, she has served as Senior
Vice President of the Company, certain investment companies managed by Company
subsidiaries and certain subsidiaries of the Company. She is Director of Fixed
Income and a member of the Investment Policy Committee. From 1997 to 2000, she
acted as general manager of Michael Trapp. Previously, she had served as Vice
President of Salomon Brothers, The First Boston Corporation and Cantor
Fitzgerald.
MONICA PELAEZ, ESQ. - Vice President, Secretary and Chief Compliance Officer.
She is also Vice President, Secretary and Chief Compliance Officer of certain
investment companies managed by Company subsidiaries and certain subsidiaries of
the Company, Bexil Corporation and Tuxis Corporation. Previously, she was
Special Assistant Corporation Counsel to New York City Administration for
Children's Services from 1998 to 2000 and an attorney with Debevoise & Plimpton
from 1997 to 1998. She earned her Juris Doctor from St. John's University School
of Law in 1997. She is a member of the New York State Bar.
Each director is elected by the vote or written consent of the holder of a
majority of the Class B Common Stock and holds office until the next meeting of
the Class B common stockholder and until his successor is elected and qualified,
or until his earlier death, resignation or removal.
Based solely on the information from Forms 3, 4, and 5 furnished to it, the
Company believes that the directors, officers, and owners of more than 10
percent of the Class A Common Stock of the Company have filed on a timely basis
reports required by Section 16(a) of the Securities Exchange Act of 1934 during
the most recent fiscal year, except for Forms 5 filed on behalf of Robert D.
Anderson, Charles A. Carroll, William G. Vohrer, Edward G. Webb, Jr., Bassett S.
Winmill, Mark C. Winmill, and Thomas B. Winmill, on February 28, 2003, 14 days
following the February 14, 2003 filing deadline.
Item 9. Executive Compensation
The following information and tables set forth the information required under
the Securities and Exchange Commission's executive compensation rules.
Summary Compensation Table
The following table sets forth, for the three years ended December 31, 2002, the
compensation paid to the chief executive and the other officers whose total
annual salary and bonus exceeded $100,000 in 2002.
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation
Compensation ------------
------------------- Securities All Other
Name And Salary Bonus Other Annual Underlying Compensation
Principal Position Year ($) ($) Compensation* Options -----------------
------------------ ---- (a) (b)
Bassett S. Winmill 2002 $ 131,733(c) $ - - 80,000 $ 1,174 $ 6,888
Chairman 2001 $ 315,000 $ 13,125 - 55,000 $ 3,584 $ 6,300
2000 $ 315,000 $ 7,450 - 55,000 $ 3,504 $ 5,883
Thomas B. Winmill 2002 $ 110,970(d) $ - - 80,000 $ 120 $ 6,600
President and 2001 $ 187,500(d) $ 10,416 - 55,000 $ 300 $ 6,300
Chief Executive Officer 2000 $ 250,000 $ 10,416 - 55,000 $ 300 $ 6,000
* Information omitted as perquisites do not exceed the lesser of $50,000 or
10% of the total annual salary and bonus for the year for the named
executive officers.
(a) Represents term life insurance
(b) Represents Company's matching contributions to 401(k) Plan.
(c) Bassett Winmill also received $200,000 in bonus from Bexil Corporation and
$175,000 in compensation from Tuxis Corporation for his services as
Executive Chairman.
(d) Thomas Winmill also received $350,000 and $62,500 in 2002 and 2001,
respectively, in compensation and bonus from Bexil Corporation for his
services as President.
Option Grants Table
The following table sets forth, for the year ended December 31, 2002,
information regarding the options granted for each of the executive officers
named in the Summary Compensation Table.
Potential Realizable
Value At Assumed
Annual Rates Of
Stock Price
Appreciation For
Individual Grants Option Term
Number Of % Of Total
Securities Options
Underlying Granted To
Options Employees In Exercise Expiration
Name Granted Fiscal Year Price Date 5% 10%
---- ------------ --------------- ---------- -------------- -- ---
Bassett S. Winmill 25,000 32 1.66 12/9/07 $11,480 $25,368
Thomas B. Winmill 25,000 32 1.66 12/9/07 $11,480 $25,368
All of the above options are exercisable as of December 31, 2002.
Aggregated Option Exercises and Fiscal Year-End Option Value Table
The following table sets forth, for the year ended December 31, 2002,
information regarding the outstanding options for each of the executive officers
named in the Summary Compensation Table.
Number of
Shares of
Class A Stock Value of
Number of Underlying Unexercised
Shares of Unexercised In-The-Money
Class A Options at Options at
Stock Dollar 12-31-02 (#) 12-31-02 (*)
Aquired on Value Exercisalbe/ Exercisable/
Exercise Realized Unexercisable Unexercisable
------------ ---------- --------------- ---------------
Bassett S. Winmill 0 $0 80,000 / 0 $6,898 / $0
Thomas B. Winmill 0 $0 80,000 / 0 $6,898 / $0
Long-Term Incentive Plan Awards Table
There were no long-term incentive plan awards other than options made during the
year ended December 31, 2002 to the executive officers named in the Summary
Compensation Table.
Compensation of Directors
Edward G. Webb, Jr., Charles A. Carroll and Mark C. Winmill were the only
individuals who received compensation for their service as directors of the
Company in 2002. They were each paid $500 per quarter as a retainer and $2,000
per quarterly meeting attended plus expenses. For the year ended December 31,
2002, Mr. Webb, Mr. Carroll and Mr. Mark C. Winmill were each paid $10,000 for
attending four regular meetings and annual retainer and each received an option
to purchase 2,500 shares of Class A Common Stock at an exercise price of $1.511
per share in December 2002.
Employment Contracts
The Company has no employment or termination contracts with any of its employees
except to the extent of the agreement described in Note 10 to the financial
statements.
1995 Long-Term Incentive Plan
On December 6, 1995, the Board of Directors of the Company ("Board") and the
Class B voting common stockholder adopted the Winmill & Co. Incorporated 1995
Long-Term Incentive Plan ("Plan"), as amended, under which a maximum of 600,000
options and stock-based awards (collectively, "Awards") may be made to
directors, officers and employees of the Company or its subsidiaries. The
amended Plan is described below.
The purpose of the Plan is to assist the Company and its subsidiaries in
attracting and retaining highly competent officers and directors and otherwise
on behalf of the Company. The Plan also acts as an incentive in motivating
selected officers and key employees to achieve long-term objectives of the
Company, which will inure to the benefit of all stockholders of the Company. Any
proceeds raised by the Company under the Plan will be used for working capital
purposes.
General Provisions
Duration of the Plan; Share Authorization. The Plan will terminate on December
6, 2005, unless terminated earlier by the Board.
Six hundred thousand (600,000) shares of the Company's Class A Common Stock
("Shares") have been available for Awards under the Plan. The Shares to be
offered under the Plan are authorized and unissued Shares, or issued Shares that
have been reacquired by the Company and held in its treasury. Holders of Shares
do not have voting rights except as specifically provided by the Delaware
General Corporation Law.
Shares covered by any unexercised portions of terminated options, Shares
forfeited by Participants, and Shares subject to any Awards that are otherwise
surrendered by a Participant without receiving any payment or other benefit with
respect thereto may again be subject to new Awards under the Plan. In the event
the purchase price of an option or tax withholding relating to an Award is paid
in whole or in part through the delivery of Shares, the number of Shares
issuable in connection with the exercise of the option may not again be
available for the grant of Awards under the Plan.
Plan Administration. The Plan is administered by the Board or Compensation
Committee ("Committee") of the Board. The Committee is composed of at least two
directors of the Company, each of whom is a "Non-Employee Director" as defined
in Rule 16b-3 promulgated by the SEC ("Rule 16b-3") under Section 16 of the
Securities Exchange Act of 1934, as amended ("Exchange Act"). When the Committee
is administering the Plan, the Committee will determine the officers and other
key employees who will be eligible for and granted Awards, determine the amount
and type of Awards, establish and modify administrative rules relating to the
Plan, impose such conditions and restrictions on Awards as it determines
appropriate and take such other action as may be necessary or advisable for the
proper administration of the Plan. The Board or Committee may, with respect to
Participants who are not subject to Section 16 of the Exchange Act, delegate
such of its powers and authority under the Plan as it deems appropriate to
certain officers or employees of the Company.
Plan Participants. Any employee of the Company or its subsidiaries, whether or
not a director of the Company, may be selected by the Board or Committee to
receive an Award under the Plan. Non-Employee Directors shall receive such
Awards (other than Incentive Stock Options) as the Board in its discretion may
designate.
Awards Available Under the Plan
Awards to employees under the Plan may take the form of stock options or
Restricted Share Awards. Awards under the Plan may be granted alone or in
combination with other Awards. The consideration for issuance of Awards under
the Plan is the continued services of the employees and non-employee directors
to the Company and its subsidiaries.
Stock Options Granted to Employees. Stock options ("Incentive Stock Options")
meeting the requirements of Section 422 of the Internal Revenue Code of 1986, as
amended from time to time, or any successor thereto ("Code"), and stock options
that do not meet such requirements ("Non-Qualified Stock Options") are both
available for grant to employees under the Plan.
The term of each option will be determined by the Board or Committee, but no
option will be exercisable more than ten years after the date of grant. If,
however, an Incentive Stock Option is granted to a Participant who, at the time
of grant of the option, owns (or is deemed to own under Section 424(d) of the
Code) more than 10% (a "Ten Percent Shareholder") of the Company's Class B
common stock, par value $0.01 per share ("Company Voting Securities"), the
option is not exercisable more than five years after the date of grant. Options
may also be subject to restrictions on exercise, such as exercise in periodic
installments, performance targets and waiting periods, as determined by the
Board or Committee.
The exercise price of each option is determined by the Board or Committee;
however, the per share exercise price of an option must be at least equal to
100% of the Fair Market Value (as defined below) of a Share on the date of grant
of such option. If, however, an Incentive Stock Option is granted to a Ten
Percent Shareholder, the per share exercise price of the option must be at least
equal to 110% of the Fair Market Value of a Share on the date of grant of such
option. Fair Market Value of a Share means, as of any given date, the most
recently reported sale price of a Share on such date as of the time when Fair
Market Value is being determined on the principal national securities exchange
on which the Shares are then traded or, if the Shares are not then traded on a
national securities exchange, the most recently reported sale price of the
Shares on such date as of the time when Fair Market Value is being determined on
Nasdaq; provided, however, that, if there were no sales reported as of such
date, Fair Market Value is the last sale price previously reported. In the event
the Shares are not admitted to trade on a securities exchange or quoted on
Nasdaq, the Fair Market Value of a Share as of any given date is as determined
in good faith by the Board or Committee. Notwithstanding the foregoing, the Fair
Market Value of a Share will never be less than par value per share.
Subject to whatever installment exercise and waiting period provisions the Board
or Committee may impose, options may be exercised in whole or in part at any
time prior to expiration of the option by giving written notice of exercise to
the Company specifying the number of Shares to be purchased. Such notice must be
accompanied by payment in full of the purchase price in such form as the Board
or Committee may accept (including payment in accordance with a cashless
exercise program under which, if so instructed by the Participant, Shares may be
issued directly to the Participant's broker or dealer upon receipt of the
purchase price in cash from the broker or dealer). If and to the extent
determined by the Board or Committee in its discretion at or after grant,
payment in full or in part may also be made in the form of Shares duly owned by
the Participant (and for which the Participant has good title, free and clear of
any liens and encumbrances) or by reduction in the number of Shares issuable
upon such exercise based, in each case, on the Fair Market Value of the Shares
on the date the option is exercised. In the case of an Incentive Stock Option,
however, the right to make payment of the purchase price in the form of Shares
may be authorized only at the time of grant.
Stock options granted under the Plan are not transferable except by will or the
laws of descent and distribution and may be exercised, during the Participant's
lifetime, only by the Participant.
Unless the Board or Committee provides for a shorter period of time, upon a
Participant's termination of employment other than by reason of death or
disability, the Participant may, within three months from the date of such
termination of employment, exercise all or any part of his or her options as
were exercisable at the date of termination of employment but only if (x) the
Participant resigns or retires and the Board or Committee consents to such
resignation or retirement and (y) such termination of employment is not for
cause. In no event, however, may any option be exercised after the time when it
would otherwise expire. If such termination of employment is for cause or the
Board or Committee does not so consent, the right of such Participant to
exercise such options will terminate at the date of termination of employment.
Further, unless the Board or Committee provides for a shorter period of time,
upon a Participant's becoming disabled (such date being the "Disability Date"),
the Participant may, within one year after the Disability Date, exercise all or
a part of his or her options that were exercisable upon such Disability Date. In
no event, however, may any option be exercised after the time when it would
otherwise expire.
Further, unless the Board or Committee provides for a shorter period of time, in
the event of the death of a Participant while employed by the Company or prior
to the expiration of the option as provided for in the event of disability, to
the extent all or any part of the option was exercisable as of the date of death
of the Participant, the right of the Participant's beneficiary to exercise the
option will expire upon the expiration of one year from the date of the
Participant's death (but in no event more than one year from the Participant's
Disability Date) or on the stated termination date of the option, whichever is
earlier. In the event of the Participant's death, the Board or Committee may, in
its sole discretion, accelerate the right to exercise all or any part of an
Option that would not otherwise be exercisable.
To the extent all or any part of an option was not exercisable as of the date of
a Participant's termination of employment, such right will expire at the date of
such termination of employment. Notwithstanding the foregoing, the Board or
Committee, in its sole discretion and under such terms as it deems appropriate,
may permit a Participant who will continue to render significant services to the
Company after his or her termination of employment to continue to accrue service
with respect to the right to exercise his or her options during the period in
which the individual continues to render such services.
Restricted Shares. The Board or Committee may award restricted Shares
("Restricted Shares") to a Participant. Such a grant gives a Participant the
right to receive Shares subject to a risk of forfeiture based upon certain
conditions. The forfeiture restrictions on the Restricted Shares may be based
upon performance standards, length of service or other criteria as the Board or
Committee may determine. Until all restrictions are satisfied, lapsed or waived,
the Company will maintain control over the Restricted Shares but the Participant
will be entitled to receive dividends on the Restricted Shares; provided,
however, that any Shares distributed as a dividend or otherwise with respect to
any Restricted Shares as to which the restrictions have not yet lapsed will be
subject to the same restrictions as such Restricted Shares. When all
restrictions have been satisfied and/or waived or have lapsed, the Company will
deliver to the Participant or, in the case of the Participant's death, his or
her beneficiary, stock certificates for the appropriate number of Shares, free
of all restrictions (except those imposed by law). None of the Restricted Shares
may be assigned or transferred (other than by will or the laws of descent and
distribution), pledged or sold prior to lapse or release of the applicable
restrictions.
All of a Participant's Restricted Shares and rights thereto are forfeited to the
Company unless the Participant continues in the service of the Company or any
parent or subsidiary of the Company as an employee until the expiration of the
forfeiture period, and all other applicable restrictions of the Restricted
Shares. Notwithstanding the foregoing, the Board or Committee may, in its sole
discretion, waive the forfeiture period and any other applicable restrictions on
a Participant's Restricted Share Award, provided that the Participant must at
that time have completed at least one year of employment after the date of
grant.
Awards Granted to Non-Employee Directors. Non-Employee Directors are eligible
only to receive Non-Qualified Stock Options and Awards of Restricted Shares. All
such grants may be made only by the Board. The terms and conditions applicable
to grants of such Awards to Non-Employee Directors (except where specifically
stated herein to the contrary) are the same as those applicable to grants of
Non-Qualified Options and Restricted Shares to employees, except that references
to (a) the Committee shall be deemed to refer to the Board (b) employees shall
be deemed to refer to Non-Employee Directors and (c) termination of employment
shall be deemed to refer to termination of service.
Termination and Amendment
The Board may amend or terminate the Plan at any time it is deemed necessary or
appropriate; provided, however, that no amendment may be made, without the
affirmative approval of the holder of Company Voting Securities, that would
require stockholder approval under Rule 16b-3, the Code or other applicable law
unless the Board determines that compliance with Rule 16b-3 and/or the Code is
no longer desired.
Except as provided by the Board or Committee, in its sole discretion, at the
time of an Award or pursuant to certain antidilution provisions (as discussed
below), no Award granted under the Plan to a Participant may be modified (unless
such modification does not materially decrease the value of the Award) after the
date of grant except by express written agreement between the Company and the
Participant, provided that any such change (a) may not be inconsistent with the
terms of the Plan, and (b) must be approved by the Board or Committee.
The Board has the right and the power to terminate the Plan at any time. No
Award may be granted under the Plan after the termination of the Plan, but the
termination of the Plan will not have any other effect and any Award outstanding
at the time of the termination of the Plan may be exercised after termination of
the Plan at any time prior to the expiration date of such Award to the same
extent such Award would have been exercisable had the Plan not terminated.
Antidilution Provisions
Recapitalization. The number and kind of shares subject to outstanding Awards,
the purchase price or exercise price of such Awards, and the number and kind of
shares available for Awards subsequently granted under the Plan will be
appropriately adjusted to reflect any stock dividend, stock split, combination
or exchange of shares, merger, consolidation or other change in capitalization
with a similar substantive effect upon the Plan or the Awards granted under the
Plan. The Board or Committee has the power and sole discretion to determine the
nature and amount of the adjustment to be made in each case. However, in no
event will any adjustment be made in accordance with the Plan's antidilution
provisions to any previous grant of Restricted Shares if an adjustment has been
or will be made to the Shares awarded to a Participant in such person's capacity
as a stockholder.
Sale or Reorganization. After any reorganization, merger or consolidation in
which the Company is the surviving entity, each Participant will, at no
additional cost, be entitled upon the exercise of an Award outstanding prior to
such event, and in connection with the payout after such event of any Award
outstanding at the time of such event, to receive (subject to any required
action by stockholders), in lieu of the number of Shares receivable or
exercisable pursuant to such option, the number and class of shares of stock or
other securities to which such Participant would have been entitled pursuant to
the terms of the reorganization, merger or consolidation if, at the time of such
reorganization, merger or consolidation, such Participant had been the holder of
record of a number of Shares equal to the number of Shares receivable or
exercisable pursuant to such Award. Comparable rights will accrue to each
Participant in the event of successive reorganizations, mergers or
consolidations of the character described above.
Options to Purchase Stock of Acquired Companies. After any reorganization,
merger or consolidation in which the Company is a surviving entity, the Board or
Committee may grant substituted options under the provisions of the Plan,
pursuant to Section 424 of the Code, replacing old options granted under a plan
of another party to the reorganization, merger or consolidation whose stock
subject to the old options may no longer be issued following such merger or
consolidation. The foregoing adjustments and manner of application of the
foregoing provisions will be determined by the Board or Committee in its sole
discretion. Any such adjustments may provide for the elimination of any
fractional Shares that might otherwise become subject to any options.
Item 10. Security Ownership of Certain Beneficial Owners and Management.
(a) Bassett S. Winmill, Chairman of the Board of Directors, owns all of the
issued and outstanding shares of the Company's Class B Common Stock, which
represents 100% of the Company's voting securities.
(b) The following table sets forth, as of December 31, 2002, information
relating to beneficial ownership by individual directors of the Company,
executive officers named in the Summary Compensation Table and by
directors and executive officers of the Company as a group, of the
currently issued and outstanding Class A Common Stock of the Company.
Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership (5) of Class
------------------------ ------------------------ --------
Bassett S. Winmill 356,104 (1) 21.3%
Thomas B. Winmill 202,520 (2) 12.1%
Robert D. Anderson 99,414 (3) 6.1%
Edward G. Webb, Jr. 21,164 (4) 1.3%
Charles A. Carroll 40,600 (4) 2.5%
Mark C. Winmill 109,300 (4) 6.8%
All directors and executive officers as a group (6 persons) 829,102 45.3%
(1) Includes options exercisable to purchase 80,000 shares at December 31,
2002.
(2) Includes 10,000 shares held by Thomas B. Winmill's sons, of which he
disclaims beneficial ownership and options exercisable to purchase
80,000 shares.
(3) Includes options exercisable to purchase 30,000 shares.
(4) Includes options exercisable to purchase 17,500 shares.
(5) The nature of the beneficial ownership for all the Class A Common Stock is
investment power.
Item 11. Certain Relationships and Related Transactions
The following sets forth the reportable items regarding indebtedness of
management in excess of $60,000.
Largest Amount
Amount Of Outstanding At
Name and Relationship Indebtedness December 31, 2002
Bassett S. Winmill, Chairman * $265,816 $223,958
Thomas B. Winmill, President * $197,398 $179,835
Mark C. Winmill, Director * $225,158 $225,158
* In connection with the exercise of stock options and related tax expense,
the Company received notes with interest rates ranging from 2.45% to 2.48%
per annum payable on December 31, 2004.
PART IV
Item 12. Exhibits, Consolidated Financial Statements and Schedules, and Reports
on Form 8-K
(a) (1) Financial Statements
See Item 7 for a list of the financial statements filed as
part of this report.
(2) Financial Statement Schedules by Regulation S-X are not
required under the related instructions or are inapplicable,
and therefore have been omitted.
(3) Exhibits
(2) Not applicable
(3) Certificate of Incorporation as amended October
24, 1989 as filed as an exhibit to Form 10-K for
the year ended December 31, 1992 and incorporated
herein by reference; Certificate of Incorporation
as amended April 1, 1999 as filed as an exhibit to
Form 10-K/A for the year ended December 31, 1998
and incorporated herein by reference; By-Laws
amended as of October 1, 1993 as filed as an
exhibit to Form 10-K for the year ended December
31, 1993 and incorporated herein by reference, and
By-Laws amended as of April 1, 1999 as filed as an
exhibit to Form 10-K/A for the year ended December
31, 1998 and incorporated herein by reference.
(4) Instruments defining the rights of security
holders, including indentures (see Article Four of
Certificate of Incorporation).
(9) Not applicable.
(10) Material Contracts
(a) Investment Management Agreements,
Distribution Agreements and Plans of
Distribution ("12b-1 Plans") between
subsidiaries of the Company and the Funds
and Non-Exclusive License Agreements between
the Company and the Funds:
Non-Exclusive
Management Distribution 12b-1 License
Fund Agreement Agreement Plan Agreement
(i) Dollar Reserves, Inc. (1) (1) (1) (3)
(ii) Global Income Fund, Inc. (4) - - -
(iii) Midas Special Equities Fund, Inc. (1) (1) (1) (3)
(iv) Midas Fund, Inc. (2) (2) (2) (3)
(v) Internet Growth Fund, Inc. (5) - - (5)
(1) Filed as exhibits to Form 10-K for the
year ended December 31, 1993 and
incorporated herein by reference.
(2) Filed as exhibits to Form 10-K for the
year ended December 31, 1995 and
incorporated herein by reference.
(3) Filed as exhibits to Form 10-K for the
year ended December 31, 1997 and
incorporated herein by reference.
(4) Filed as exhibits to Form 10-K for the
year ended December 31, 1999 and
incorporated herein by reference.
(5) Filed as exhibits to Form 10-KSB for the
year ended December 31, 2002 and filed
herein.
(b) Winmill & Co. Incorporated 1995 Long-Term
Incentive Plan, as adopted December 6, 1995
and amended February 6, 1996, filed as
exhibit to Form 10-K for the year ended
December 31, 1995 and incorporated herein by
reference.
(c) Section 422A Incentive Stock Option Plan, as
adopted December 5, 1990, filed as exhibit
to Form 10-K for the year ended December 31,
1990 and incorporated herein by reference.
(d) Investment Management Transfer Agreements
between the investment management
subsidiaries of the Company and filed as
exhibit to Form 10-K for the year ended
December 31, 1992 and incorporated herein by
reference.
(e) Winmill & Co. Incorporated Investment Plan,
filed as an exhibit to Form 10-K for the
year ended December 31, 1993 and
incorporated herein by reference.
(f) Death Benefit Agreement dated July 22, 1994
and filed as exhibit to Form 10-K for the
year ended December 31, 1994 and
incorporated herein by reference.
(g) Winmill & Co. Incorporated Incentive Stock
Option Agreement for Employees - Bassett S.
Winmill filed as an exhibit to Form 10-K for
the year ended December 31, 1995 and
incorporated herein by reference.
(h) Winmill & Co. Incorporated Incentive Stock
Option Agreement for Employees - Robert D.
Anderson filed as an exhibit to Form 10-K
for the year ended December 31, 1995 and
incorporated herein by reference.
(i) Winmill & Co. Incorporated Incentive Stock
Option Agreement for Employees - Mark C.
Winmill filed as an exhibit to Form 10-K for
the year ended December 31, 1995 and
incorporated herein by reference.
(j) Winmill & Co. Incorporated Incentive Stock
Option Agreement for Employees - Thomas B.
Winmill filed as an exhibit to Form 10-K for
the year ended December 31, 1995 and
incorporated herein by reference.
(k) Winmill & Co. Incorporated Stock Option
Agreement - Edward G. Webb, Jr. filed as an
exhibit to Form 10-K for the year ended
December 31, 1995 and incorporated herein by
reference.
(l) Winmill & Co. Incorporated Stock Option
Agreement - Charles A. Carroll filed as an
exhibit to Form 10-K for the year ended
December 31, 1995 and incorporated herein by
reference.
(m) Winmill & Co. Incorporated 1995 Long-Term
Incentive Plan, (as Amended and Restated as
of October 29, 1997), filed as exhibit to
Form 10-K for the year ended December 31,
1997 and incorporated herein by reference.
(n) Option Certificate for Bassett S. Winmill
filed as an exhibit to Form 10-K for the
year ended December 31, 1997 and
incorporated herein by reference.
(o) Option Certificate for Edward G. Webb, Jr.
filed as an exhibit to Form 10-K for the
year ended December 31, 1997 and
incorporated herein by reference.
(p) Option Certificate for Charles A. Carroll
filed as an exhibit to Form 10-K for the
year ended December 31, 1997 and
incorporated herein by reference.
(q) Option Certificate for Thomas B. Winmill
filed as an exhibit to Form 10-K for the
year ended December 31, 1997 and
incorporated herein by reference.
(r) Option Certificate for Robert D. Anderson
filed as an exhibit to Form 10-K for the
year ended December 31, 1997 and
incorporated herein by reference.
(s) Purchase Agreement, dated as of December 17,
1998, by and among Winmill & Co.
Incorporated (formerly Bull & Bear Group,
Inc.), Bull & Bear Securities, Inc. and RBC
Holdings (USA) Inc., with all exhibits
thereto filed as an exhibit to Form 8-K on
December 18, 1998 and incorporated herein by
reference.
(t) Death Benefit Agreement as amended April
2002 filed as exhibit to Form 10-KSB for the
year ended December 31, 2002 and filed
herein.
(11) Statement Regarding Computation of Per Share Earnings
(12) Not applicable. (13) Not applicable.
(16) Not applicable.
(18) Not applicable.
(21) Wholly-Owned Subsidiaries of the Company
(23) Not applicable.
(24) Not applicable.
(27) Not applicable.
(28) Not applicable.
(99) Not applicable.
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the last
quarter of the period covered by this report.
-36-
Item 13. Controls and Procedures
(a) Evaluation of disclosure controls and procedures. The Company's chief
executive officer and chief financial officer, after evaluating the
effectiveness of the Company's "disclosure controls and procedures"
(as defined in the Securities Exchange Act of 1934 Rules 13a-14(c))
as of a date (the "Evaluation Date") within 90 days before the filing
date of this annual report, have concluded that, as of the Evaluation
Date, the Company's disclosure controls and procedures were
effective.
(b) Changes in internal controls. There were no significant changes in
the Company's internal controls or to the Company's knowledge, in
other factors that could significantly affect the Company's
disclosure controls and procedures subsequent to the Evaluation Date.
-37-
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WINMILL & CO. INCORPORATED
March 31, 2003 By: /s/ William G. Vohrer
-------------------------------------------------------
William G. Vohrer
Chief Financial Officer, Treasurer, Chief Accounting
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Company and in the
capacities and on the dates indicated.
March 31, 2003 By: /s/ Bassett S. Winmill
-------------------------------------------------------
Bassett S. Winmill,
Chairman of the Board, Director
March 31, 2003 By: /s/ Robert D. Anderson
-------------------------------------------------------
Robert D. Anderson,
Vice Chairman, Director
March 31, 2003 By: /s/ Thomas B. Winmill
-------------------------------------------------------
Thomas B. Winmill, Esq., President
Chief Executive Officer, General Counsel, Director
March 31, 2003 By: /s/ Edward G. Webb, Jr.
-------------------------------------------------------
Edward G. Webb, Jr.
Director
March 31, 2003 By: /s/ Charles A. Carroll
-------------------------------------------------------
Charles A. Carroll,
Director
March 31, 2003 By: /s/ Mark C. Winmill
-------------------------------------------------------
Mark C. Winmill,
Director
-38-
Certification Under Section 906
Of The Sarbanes-Oxley Act of 2002
Certification of Periodic Financial Report
Pursuant to 18 U.S. C. Section 1350
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Winmill &
Co. Incorporated (the "Company") certifies that the Annual Report on Form 10-KSB
of the Company of the fiscal year ended December 31, 2002 fully complies with
the requirements of Section 13(a) or 15 (d), as applicable, of the Securities
Exchange Act of 1934 and information contained in that Form 10-KSB fairly
presents, in all material respects, the financial condition and results of
operations of the Company.
Dated: March 31, 2003 /s/ Thomas B. Winmill
-------------------------------------------------------
Thomas B. Winmill
Chief Executive Officer and President
Dated: March 31, 2003 /s/ William G. Vohrer
-------------------------------------------------------
Chief Financial Officer, Treasurer, Chief Accounting
Officer
-47-
Certification- Exchange act rules 13a-14 and 15d-14
I, Thomas B. Winmill, certify that:
1. I have reviewed this annual report on Form 10-KSB of Winmill & Co.
Incorporated;
2. Based on my knowledge, this Annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: March 31, 2003
/s/ Thomas B. Winmill
------------------------
Chief Executive Officer
Certification- Exchange act rules 13a-14 and 15d-14
I, William G. Vohrer, certify that:
1. I have reviewed this annual report on Form 10-KSB of Winmill & Co.
Incorporated;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: March 31, 2003
/s/ William G. Vohrer
------------------------
Chief Financial Officer, Treasurer and Chief Accounting Officier
INDEX TO EXHIBITS
(3) Exhibits
(10) Material Contracts
(a) Management Agreement between Internet Growth Fund, Inc. and
CEF Advisers, Inc.
(b) Non-Exclusive License Agreement between Internet Growth Fund,
Inc. and CEF Advisers, Inc.
(c) Amended Death Benefit Agreement
(11) Statement Regarding Computation of Per Share Earnings
(21) Wholly-Owned Subsidiaries of the Company
Exhibit 11 - Statement Regarding Computation of Per Share Earnings
2002 2001
-------------------------------- --------------------
Basic Diluted Basic Diluted
Weighted average common shares outstanding 1,638,403 1,638,403 1,653,343 1,653,343
Weighted average common shares issuable
upon exercise of stock options under the
treasury stock method - 10,726 - -
Weighted average common shares issuable
upon exercise of warrants under the
treasury stock method - - - -
Weighted average common shares and
common share equivalents utilized for
earnings per share computation 1,638,403 1,649,129 1,653,343 1,653,343
Exhibit 21 - Wholly-Owned Subsidiaries of the Company
CEF Advisers, Inc.,
a Delaware corporation
Investor Service Center, Inc.,
a Delaware corporation
Midas Management Corporation,
a Delaware corporation
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made on July 12, 2002, by and between Internet Growth Fund, Inc.,
a Maryland corporation (the "Fund") and CEF Advisers, Inc., a Delaware
corporation (the "Investment Manager").
WHEREAS the Fund is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as a closed-end management investment company; and
WHEREAS, the Fund desires to retain the Investment Manager to furnish
certain investment advisory and portfolio management services to the Fund, and
the Investment Manager desires to furnish such services;
NOW THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, it is hereby agreed between the parties hereto as
follows:
1. The Fund hereby employs the Investment Manager to manage the investment and
reinvestment of its assets, including the regular furnishing of advice with
respect to the Fund's portfolio transactions subject at all times to the
control and oversight of the Fund's Board of Directors, for the period and
on the terms set forth in this Agreement. The Investment Manager hereby
accepts such employment and agrees during such period to render the
services and to assume the obligations herein set forth, for the
compensation herein provided. The Investment Manager shall for all purposes
herein be deemed to be an independent contractor and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Fund in any way, or otherwise be deemed an agent of the Fund.
The Investment Manager may enter into a contract ("Subadvisory Agreement")
with an investment adviser in which the Investment Manager delegates to
such investment adviser any or all of its duties specified in this
Paragraph 1, provided that such Subadvisory Agreement meets all
requirements of the 1940 Act and rules thereunder.
2. The Fund assumes and shall pay all the expenses required for the conduct of
its business including, but not limited to, salaries of administrative and
clerical personnel, brokerage commissions, taxes, insurance, fees of the
transfer agent, custodian, legal counsel and auditors, association fees,
costs of filing, printing and mailing proxies, reports and notices to
shareholders, preparing, filing and printing the prospectus and statement
of additional information, payment of dividends, costs of stock
certificates, costs of shareholders meetings, fees of the independent
directors, necessary office space rental, all expenses relating to the
registration or qualification of shares of the Fund under applicable Blue
Sky laws and reasonable fees and expenses of counsel in connection with
such registration and qualification and such non-recurring expenses as may
arise, including, without limitation, actions, suits or proceedings
affecting the Fund and the legal obligation which the Fund may have to
indemnify its officers and directors with respect thereto.
3. If requested by the Fund's Board of Directors, the Investment Manager may
provide other services to the Fund such as, without limitation, the
functions of billing, accounting, certain shareholder communications and
services, administering state and Federal registrations, filings and
controls and other administrative services. Any services so requested and
performed will be for the account of the Fund and the costs of the
Investment Manager in rendering such services shall be reimbursed by the
Fund, subject to examination by those directors of the Fund who are not
interested persons of the Investment Manager or any affiliate thereof.
4. The services of the Investment Manager are not to be deemed exclusive, and
the Investment Manager shall be free to render similar services to others
in addition to the Fund so long as its services hereunder are not impaired
thereby.
5. The Investment Manager shall create and maintain all necessary books and
records in accordance with all applicable laws, rules and regulations,
including but not limited to records required by Section 31(a) of the 1940
Act and the rules thereunder, as the same may be amended from time to time,
pertaining to the investment management services performed by it hereunder
and not otherwise created and maintained by another party pursuant to a
written contract with the Fund. Where applicable, such records shall be
maintained by the Investment Manager for the periods and in the places
required by Rule 31a-2 under the 1940 Act. The books and records pertaining
to the Fund which are in the possession of the Investment Manager shall be
the property of the Fund. The Fund, or the Fund's authorized
representatives, shall have access to such books and records at all times
during the Investment Manager's normal business hours. Upon the reasonable
request of the Fund, copies of any such books and records shall be provided
by the Investment Manager to the Fund or the Fund's authorized
representatives.
6. The Fund will pay the Investment Manager a fee for its services (the
"Advisory Fee") at the annual rate of 1.00% of the Fund's average daily net
assets. The Advisory Fee shall be accrued each calendar day during the term
of this Agreement and the sum of the daily fee accruals shall be paid
monthly as soon as practicable following the last day of each month. The
daily fee accruals will be computed by multiplying 1/365 by the annual rate
and multiplying the product by the net asset value of the Fund as
determined in accordance with the Fund's registration statement as of the
close of business on the previous day on which the American Stock Exchange
(or such other exchange on which the Fund's shares are principally traded)
was open for business, or in such other manner as the parties agree. The
Investment Manager may from time to time and for such periods as it deems
appropriate reduce its compensation and/or assume expenses of the Fund. If
this Agreement becomes effective or terminates before the end of any month,
the fee for the period from the effective date to the end of the month or
from the beginning of such month to the date of termination, as the case
may be, shall be pro-rated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
7. The Investment Manager shall direct portfolio transactions to
broker/dealers for execution on terms and at rates which it believes, in
good faith, to be reasonable in view of the overall nature and quality of
services provided by a particular broker/dealer, including brokerage and
research services and sales of shares of the Fund and shares of other
investment companies or series thereof for which the Investment Manager or
an affiliate thereof serves as investment adviser. The Investment Manager
may also allocate portfolio transactions to broker/dealers that remit a
portion of their commissions as a credit against Fund expenses. With
respect to brokerage and research services, the Investment Manager may
consider in the selection of broker/dealers brokerage or research provided
and payment may be made of a fee higher than that charged by another
broker/dealer which does not furnish brokerage or research services or
which furnishes brokerage or research services deemed to be of lesser
value, so long as the criteria of Section 28(e) of the Securities Exchange
Act of 1934, as amended, or other applicable laws are met. Although the
Investment Manager may direct portfolio transactions without necessarily
obtaining the lowest price at which such broker/dealer, or another, may be
willing to do business, the Investment Manager shall seek the best value
for the Fund on each trade that circumstances in the market place permit,
including the value inherent in on-going relationships with quality
brokers. To the extent any such brokerage or research services may be
deemed to be additional compensation to the Investment Manager from the
Fund, it is authorized by this Agreement. The Investment Manager may place
brokerage for the Fund through an affiliate of the Investment Manager,
provided that: the Fund not deal with such affiliate in any transaction in
which such affiliate acts as principal; the commissions, fees or other
remuneration received by such affiliate be reasonable and fair compared to
the commissions, fees or other remuneration paid to other brokers in
connection with comparable transactions involving similar securities being
purchased or sold on a securities exchange during a comparable period of
time; and such brokerage be undertaken in compliance with applicable law.
The Investment Manager's fees under this Agreement shall not be reduced by
reason of any commissions, fees or other remuneration received by such
affiliate from the Fund.
8. A. This Agreement shall become effective upon the date hereinabove written
provided that this Agreement shall not take effect unless it has first been
approved (i) by a vote of a majority of the Directors of the Fund who are
not parties to this Agreement, or interested persons of any such party and
(ii) by vote of a majority of the Fund's outstanding voting securities.
B. Unless sooner terminated as provided herein, this Agreement shall
continue in effect for two years from the above written date.
Thereafter, if not terminated, this Agreement shall continue
automatically for successive periods of twelve months each, provided
that such continuance is specifically approved at least annually (i)
by a vote of a majority of the Directors of the Fund who are not
parties to this Agreement, or interested persons of any such party and
(ii) by the Board of Directors of the Fund or by vote of a majority of
the outstanding voting securities of the Fund.
C. This Agreement may be terminated without penalty at any time either by
vote of the Board of Directors of the Fund or by vote of a majority of
the Fund's outstanding voting securities on 60 days' written notice to
the Investment Manager, or by the Investment Manager on 60 days'
written notice to the Fund. This Agreement shall immediately terminate
in the event of its assignment.
9. The Investment Manager shall not be liable to the Fund or any shareholder
of the Fund for any error of judgment or mistake of law or for any loss
suffered by the Fund or the Fund's shareholders in connection with the
matters to which this Agreement relates, but nothing herein contained shall
be construed to protect the Investment Manager against any liability to the
Fund or the Fund's shareholders by reason of willful misfeasance, bad
faith, or gross negligence in the performance of its duties or by reason of
its reckless disregard of obligations and duties under this Agreement.
10. As used in this Agreement, the terms "interested person," "assignment," and
"majority of the outstanding voting securities" shall have the meanings
provided therefore in the 1940 Act, and the rules and regulations
thereunder.
11. This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement, with respect to the subject hereof
whether oral or written. If any provision of this Agreement shall be held
or made invalid by a court or regulatory agency, decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby.
12. This Agreement shall be construed in accordance with and governed by the
laws of the State of New York, provided, however, that nothing herein shall
be construed in a manner inconsistent with the 1940 Act or any rule or
regulation promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
ATTEST: INTERNET GROWTH FUND, INC.
/s/ Monica Pelaez By: /s/ Thomas B. Winmill
--------------------------------- -----------------------------
ATTEST: CEF ADVISERS, INC.
/s/ Irene K. Kawczynski By: /s/ William G. Vohrer
--------------------------------- -----------------------------
NON-EXCLUSIVE LICENSE AGREEMENT
AGREEMENT dated as of December 11, 2002 between WINMILL & CO.
INCORPORATED, a Delaware corporation (the "Licensor") and INTERNET GROWTH FUND,
INC., a Maryland corporation (the "Licensee").
-49-
W I T N E S S E T H
WHEREAS, the Licensor is the owner of all right, title and interest in
and to the service mark listed on Schedule A hereto, as such Schedule may be
amended from time to time, (hereinafter collectively referred to as the
"Licensed Mark"), and
WHEREAS, the Licensee has requested a non-exclusive license to use the
Licensed Mark in connection with its corporate activities,
NOW, THEREFORE, the parties hereto agree as follows:
1. The Licensor grants to the Licensee the non-exclusive right to use the
Licensed Mark in connection with its activities as an investment company.
2. The grant of the license provided for in paragraph 1 herein is personal,
indivisible, non-exclusive and not subject to succession or transfer.
3. The Licensee agrees to follow all rules reasonably imposed by the
Licensor to protect the Licensor's rights in the Licensed Mark.
4. The Licensee agrees that the nature and quality of all services rendered
by the Licensee in connection with the Licensed Mark shall conform to
standards set by the Licensor and be under control of the Licensor.
5. The license may be withdrawn by the Licensor at any time, in its sole
discretion and without prior notice, in which case the Licensee shall
have no further right whatsoever to use the Licensed Mark and the
Licensee's shareholders, officers and directors shall promptly take
whatever action may be necessary to eliminate all use of and reference to
the Licensed Mark in the Licensor's name and otherwise.
6. In the event of termination as provided for in paragraph 5 herein, the
Licensee agrees to promptly do all such acts and things as may be
necessary to terminate its use of the Licensed Mark and will, after such
termination, make no further reference to the Licensed Mark or any
confusingly similar term in its business.
7. The Licensor and the Licensee agree to do all such further acts and
things to effect the purposes of this Agreement.
8. The representations and warranties contained herein shall continue after
and survive the termination of this Agreement. No provision of this
Agreement may be amended or modified in any manner except by a written
agreement properly authorized and executed by each party hereto. This
agreement may not be assigned by the Licensee without the prior written
consent of the Licensor, although the Licensor may assign this Agreement
at any time without notice or penalty. Subject to the Licensee's Articles
of Incorporation, with such amendments, if any, as may be in effect as of
the date hereof, this Agreement supersedes any prior agreement between
the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
WINMILL & CO. INCORPORATED
By:
-----------------------------
INTERNET GROWTH FUND, INC.
By:
-----------------------------
AMENDED
DEATH BENEFIT AGREEMENT
THIS AGREEMENT, made and entered into this 16th day of April, 2002, by
and between WINMILL & CO. INCORPORATED, a corporation organized and existing
under the laws of the State of Delaware (hereinafter referred to as the
"Employer") and BASSETT S. WINMILL (hereinafter referred to as the "Employee").
WHEREAS,
It is the consensus of the Board of Directors of the Employer that the
Employee's service to the Employer in the past has been of exceptional merit and
has constituted an invaluable contribution to the general welfare of the
Employer and to achieving its present status of operating efficiency and
position in its field of activity; and
The ability and experience of the Employee are such that assurance of his
continued services is essential to the growth and performance of the Employer
and it is in the best interests of the Employer to arrange terms of continued
employment for the Employee so as to reasonably assure his remaining in the
Employer's employment until his death; and
It is the desire of the Employer that the Employee's services be retained
as herein provided; and
The Employee is willing to continue in the employ of the Employer
provided the Employer agrees to pay certain benefits in accordance with the
terms and conditions hereinafter set forth;
NOW THEREFORE,
In consideration of services performed in the past and to be performed in
the future by the Employee, as well as of the mutual promises and covenants
herein contained, it is hereby agreed as follows:
Article FIRST: Definitions
For the purposes of this Agreement, the following terms shall have
meanings indicated below:
(1) The term "Employee's Spouse" shall mean Sarah J. Winmill.
(2) The term "CPI - U" shall mean the "Consumer Price Index for All
Urban Consumers: U.S. City Average for All Items" published
monthly by the Bureau of Labor Statistics of the United States
Department of Labor. If the CPI - U is discontinued, the Employer
shall use in lieu thereof a comparable consumer index pertaining
to the purchasing power of the U.S. dollar published by the United
States government, such comparable index to be chosen by the
Employer in its sole discretion.
(3) The term "Employee's Average Salary" shall mean 80% of the average
annual salary of the Employee, including bonuses, calculated for
the three (3) year period ending December 31 prior to the date of
death of the Employee, as paid by Employer, its affiliates and
subsidiaries, and any entities of which Employer owns at least
10%.
(4) The term "Index Factor" shall mean a factor equal to the
percentage increase or decrease in the CPI - U as measured from
and after the preceding calendar year.
(5) The term Annual Death Benefit Sum shall mean (i) an amount equal
to the Employee's Average Salary increased or decreased on the
first day of each year next following the date of the Employee's
death by an amount which shall be equal to the product of the
Employee's Average Salary multiplied by the Index Factor and (ii)
such amount as shall be required from time to time to pay premiums
for health insurance for the Employee's Spouse during her lifetime
that shall be comparable to the health insurance provided by the
Employer to its employees.
Article SECOND: Death Benefit
The Employer agrees to pay as a death benefit the Annual Death Benefit
Sum in semi-monthly installments to the Employee's Spouse each year during her
lifetime. The first installment shall be due the first day of the month next
following the Employee's death. In no event shall the Employee or his estate
have any right to receive the, death benefit or any installments described
herein or in any way to alter the receipt of such semi-monthly installments.
Article THIRD: Forfeitable Benefits - Voluntary or Other
Termination of Services, or Discharge
In the event that prior to the Employee's death, the Employee shall
terminate his employment with the Employer or shall be discharged for action
inimical to the corporate interests of the Employer, which shall be in the sole
determination of the Board of Directors of the Employer, this Agreement shall
terminate upon the date of such termination of employment or discharge and no
benefits or payments of any kind shall be made hereunder.
Article FOURTH: Non-Alienability
Neither the Employee nor the Employee's Spouse under this Agreement shall
have the power or right to transfer, assign, anticipate, mortgage, commute, or
otherwise encumber in advance any installment payable hereunder, nor shall any
said monthly installment be subject to seizure for the payment of any debts or
judgments or be transferable by operation of law in the event of bankruptcy,
insolvency or otherwise. In the event the foregoing restriction is violated, all
installments shall cease and terminate.
Article FIFTH: Participation in Other Plans
Nothing contained in this Agreement shall be construed to alter, abridge
or in any manner affect the rights and privileges of the Employee to participate
in any pension or profit-sharing plan that the Employer may now or hereafter
provide.
Article SIXTH: Benefits and Burdens
This Agreement shall be binding upon and inure to the benefit of the
Employee and the Employee's Spouse and it shall be binding, on the Employer and
any successor organization which shall succeed to substantially all of the
Employer s assets.
Article SEVENTH: Governing Law, Etc.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York. This Agreement sets forth the entire Agreement
between the parties concerning the subject matter thereof, and any amendment or
discharge to this Agreement shall be in writing and signed by the parties
hereto. This Amended Agreement is intended to replace the Death Benefit
Agreement dated July 22, 1994 between the Employer and Employee, which shall be
of no further force or effect.
Article EIGHTH: Not an Employment Contract
This Agreement shall not be deemed to constitute a contract of employment
between the parties hereto, nor shall any provision herein restrict the right of
the Employer to discharge the Employee or restrict the right of the Employee to
terminate his employment.
IN WITNESS WHEREOF, the Employer has caused its name to be here under
executed by its duly authorized officer, duly attested by its Secretary, and the
Employee has hereunto set his hand seal the day and year first above written.
WINMILL & CO. INCORPORATED
Attest: /s/ By: /s/
---------------- ------------------
/s/ (L.S.)
------------------------
Bassett S. Winmill