<PAGE>
Registration Nos. 333-5863/ 811-7671
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. 1 [X]
Post-Effective Amendment No._ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [X]
Amendment No. 1 [X]
(Check appropriate box or boxes.)
COLUMBIA SMALL CAP FUND, INC.
(Exact Name of Registrant as Specified in Charter)
1301 SW Fifth Avenue, PO Box 1350, Portland, Oregon 97207
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (503) 222-3600
John A. Kemp
1301 SW Fifth Avenue, PO Box 1350, Portland, Oregon 97207
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
It is proposed that this filing will become effective (Check appropriate box)
immediately upon filing pursuant to paragraph (b)
---
on _______________ pursuant to paragraph (b)
---
60 days after filing pursuant to paragraph (a)(i)
---
on _______________ pursuant to paragraph (a)(i)
---
75 days after filing pursuant to paragraph (a)(ii)
---
on _________________ pursuant to paragraph (a)(ii) of Rule 485
---
If appropriate, check the following box:
this post-effective amendment designates a new effective date for
--- a previously filed post-effective amendment.
Please forward copies of communications to:
Robert J. Moorman
Stoel Rives L.L.P.
900 SW Fifth Avenue, Suite 2300
Portland, Oregon 97204
------------------------------
An indefinite number of shares of Common Stock is being registered under the
Securities Act of 1933 by the Registrant. The Rule 24f-2 Notice for the year
ending December 31, 1996 will be filed on or before February 28, 1997
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
COLUMBIA SMALL CAP FUND, INC.
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
Location in
Part A - INFORMATION REQUIRED IN A PROSPECTUS Prospectus
-----------
<S> <C>
Item 1. Cover Page . . . . . . . . . . . Cover
Item 2. Synopsis . . . . . . . . . . . . "Fund Expenses"
Item 3. Condensed Financial
Information. . . . . . . . . . . Not applicable
Item 4. General Description of
Registrant . . . . . . . . . . . "Fund Description" and
"Additional Information"
Item 5. Management of the Fund . . . . . "Fund Management"
Item 5A. Management's Discussion of
Fund Performance . . . . . . . . Not applicable
Item 6. Capital Stock and Other
Securities . . . . . . . . . . . "Fund Management";
"Distributions and Taxes";
"Investor Services"; "Fund
Description"; and Cover
Item 7. Purchase of Securities Being
Offered. . . . . . . . . . . . . "Investor Services"; "Fund
Description" and "Fund
Management"
Item 8. Redemption or Repurchase . . . . "Investor Services"
Item 9. Pending Legal Proceedings. . . . Not applicable
Part B - INFORMATION REQUIRED IN A STATEMENT Statement of Additional
OF ADDITIONAL INFORMATION . . . . . . Information
-----------------------
Item 10. Cover Page . . . . . . . . . . . Cover
Item 11. Table of Contents. . . . . . . . "Table of Contents"
Item 12. General Information and
History. . . . . . . . . . . . Not applicable
Item 13. Investment Objectives and
Policies . . . . . . . . . . . "Investment Restrictions"; and
"Additional Information Regarding
Certain Investments by the Fund."
Additional information is in Prospectus
under "Fund Description" and "Additional
Information."
Item 14. Management of the Fund . . . . . "Management"
2
<PAGE>
Item 15. Control Persons and Principal
Holders of Securities. . . . . . "Management"
Item 16. Investment Advisory and
Other Services . . . . . . . . . "Investment Advisory and other
Fees Paid to Affiliates" and
"Custodians." Additional
information is in Prospectus
under "Fund Management."
Item 17. Brokerage Allocation and Other
Practices. . . . . . . . . . . . "Portfolio Transactions"
Item 18. Capital Stock and Other
Securities . . . . . . . . . . . All required information is
in Prospectus under "Fund
Management."
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered. . . . . . . . . . "Redemptions." Additional
information is in Prospectus
under "Investor Services."
Item 20. Tax Status . . . . . . . . . . . "Taxes." Additional
information is in Prospectus
under "Distributions and
Taxes."
Item 21. Underwriters . . . . . . . . . . "Management"
Item 22. Calculation of Performance
Data . . . . . . . . . . . . . . "Performance"
Item 23. Financial Statements . . . . . . To be provided in Pre-
Effective Amendment
</TABLE>
3
<PAGE>
PROSPECTUS
--------------------------
[LOGO]
COLUMBIA FUNDS
October 1, 1996
-------------------------------------
COLUMBIA
SMALL CAP
FUND
----------
COLUMBIA FINANCIAL CENTER INCORPORATED
1301 S.W. Fifth Avenue
P.O. Box 1350
Portland, Oregon 97207-1350
1-800-547-1707
<PAGE>
COLUMBIA SMALL CAP
FUND, INC.
------------------------------------
PROSPECTUS -- OCTOBER 1, 1996
----------------------------------------------
This Prospectus contains information relating to Columbia Small Cap Fund, Inc.
(the "Fund"), a mutual fund managed by Columbia Funds Management Company (the
"Advisor"). The Fund seeks significant capital appreciation by investing
primarily in common stocks of smaller companies ("small cap"). A company is
considered small cap if it has a market capitalization of less than $1 billion.
Investing in small cap companies may offer greater potential for capital growth,
but is generally riskier than an investment in larger, more established
companies. See "Fund Description -- Risk Factors."
This Prospectus contains information you should know about the Fund before
investing. Please keep it for future reference. A Statement of Additional
Information about the Fund dated October 1, 1996 has been filed with the
Securities and Exchange Commission and is available without charge upon written
request to the Fund or by calling 1-800-547-1707. The Statement of Additional
Information is legally a part of (incorporated by reference into) this
Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE FUND CHARGES NO SALES LOAD. SHARES OF THE FUND ARE SOLD AND REDEEMED AT
THEIR NET ASSET VALUE.
THIS PROSPECTUS CONSTITUTES AN OFFER TO SELL SECURITIES OF THE FUND ONLY IN
THOSE STATES WHERE THE FUND'S SHARES HAVE BEEN REGISTERED FOR SALE. THE FUND
WILL NOT ACCEPT APPLICATIONS FROM PERSONS RESIDING IN STATES WHERE THE FUND'S
SHARES ARE NOT REGISTERED.
TABLE OF CONTENTS
-------------------------
FUND EXPENSES................................................................ 1
FUND DESCRIPTION...............................................................2
PERFORMANCE....................................................................5
FUND MANAGEMENT................................................................6
BOARD OF DIRECTORS...........................................................6
INVESTMENT ADVISOR...........................................................6
A TEAM APPROACH TO INVESTING.................................................7
PERSONAL TRADING.............................................................7
OTHER SERVICE PROVIDERS......................................................7
OTHER INFORMATION............................................................8
MUTUAL FUND FEATURES...........................................................9
INVESTOR SERVICES.............................................................10
HOW TO OPEN A NEW ACCOUNT...................................................10
HOW TO PURCHASE SHARES......................................................10
MINIMUM INVESTMENTS.........................................................10
PAYING FOR YOUR SHARES......................................................11
HOW TO REDEEM (SELL) SHARES.................................................11
SIGNATURE POLICY............................................................12
PAYMENT OF REDEMPTION PROCEEDS..............................................12
HOW TO EXCHANGE SHARES......................................................13
PROCESSING YOUR ORDER.......................................................13
DETERMINING YOUR SHARE PRICE................................................13
INVESTOR INQUIRIES..........................................................14
ACCOUNT PRIVILEGES..........................................................14
IRAS, SEP IRAS, AND RETIREMENT PLANS........................................15
PRIVATE MANAGEMENT ACCOUNTS.................................................15
DISTRIBUTIONS AND TAXES.......................................................16
ADDITIONAL INFORMATION........................................................17
FOR FURTHER INFORMATION OR ASSISTANCE
IN OPENING AN ACCOUNT, PLEASE CALL:
222-3606 IN PORTLAND
OR 1-800-547-1707 NATIONWIDE
<PAGE>
FUND EXPENSES
-----------------------------------------------------------------
The following information is provided to assist you in understanding the various
costs and estimated expenses that an investor in the Fund will bear directly or
indirectly. The Fund is new, so the Annual Fund Operating Expenses are based on
estimates for the current fiscal year of the Fund. In the future, the amount of
expenses will depend on the annual average net assets of the Fund and a number
of other factors. Estimated expenses paid by the Fund include management fees as
well as audit, transfer agent, custodian and legal fees, and other business
operating expenses but exclude extraordinary expenses. For more information,
please see "Fund Description -- No Sales Load or 12b-1 Fees," "Fund Management,"
and "Investor Services -- How to Redeem (Sell) Shares."
-- SHAREHOLDER TRANSACTION EXPENSES --
<TABLE>
<S> <C>
SALES LOAD IMPOSED ON PURCHASES....... NONE
SALES LOAD IMPOSED ON REINVESTED
DIVIDENDS........................... NONE
REDEMPTION FEES*...................... NONE
EXCHANGE FEES......................... NONE
*WIRE REDEMPTIONS MAY BE SUBJECT TO A FEE OF UP
TO $5, IN ADDITION TO ANY CHARGES BY YOUR BANK.
</TABLE>
-- ANNUAL FUND OPERATING EXPENSES --
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<S> <C>
MANAGEMENT FEES....................... 1.00%
12B-1 FEES............................ NONE
OTHER OPERATING EXPENSES.............. .37%
TOTAL FUND OPERATING EXPENSES....... 1.37%
</TABLE>
<TABLE>
<S> <C> <C> <C>
Assume that you have $1,000 to invest, the
Fund has a hypothetical return of 5%
annually, and the above expense ratio
remains the same. This table shows the
total expenses that you would pay
indirectly if you closed your account
after each time period shown:
</TABLE>
<TABLE>
<S> <C>
1 YEAR 3 YEARS
- --------- ---------
$14 $43
</TABLE>
<TABLE>
<S> <C> <C> <C>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES
OR PERFORMANCE; ACTUAL EXPENSES AND
PERFORMANCE MAY BE GREATER OR LESS THAN
THOSE SHOWN.
</TABLE>
1
<PAGE>
FUND DESCRIPTION
-----------------------------------------------------------------
The Fund is an open-end, diversified management investment company (that is, a
"mutual fund"). The Fund is managed by Columbia Funds Management Company (the
"Advisor").
-- NO SALES LOAD OR 12B-1 FEES --
MANY MUTUAL FUNDS CHARGE FEES TO COMPENSATE SALES REPRESENTATIVES FOR
PROMOTING AND SELLING THEIR FUNDS. THERE ARE FUNDS, HOWEVER, THAT CHARGE NO
SALES FEES WHEN YOU BUY SHARES. WITH THESE FUNDS, ALL OF YOUR MONEY, INSTEAD
OF JUST A PORTION, IS INVESTED. IN ADDITION, SOME "NO-LOAD" MUTUAL FUNDS
CHARGE AN ANNUAL 12B-1 FEE AGAINST FUND ASSETS TO HELP PAY FOR THE SALE OF
FUND SHARES. THE FUND IS SOLD WITHOUT SALES LOADS OR 12B-1 FEES; ALL THE MONEY
YOU PAY TO BUY SHARES IS INVESTED IN THE FUND.
-- COLUMBIA'S INVESTMENT APPROACH --
The Fund is managed by the Advisor using a team approach (please see "Fund
Management"). The investment team generally selects portfolio securities using
what is sometimes referred to as a "top down, sector rotating" emphasis. This
approach begins with an overall evaluation of the domestic and international
investment environment before focusing on individual security selection.
The investment environment is analyzed in terms of economic policy, trends in
monetary and fiscal policy, investor sentiment, the supply and demand for
credit, and market momentum.
"SECTOR ROTATING" REFERS TO THE DYNAMIC PROCESS OF OVER- OR UNDERWEIGHTING
INDUSTRY GROUPS OR ASSET CLASSES BASED ON THEIR RELATIVE ATTRACTIVENESS. [LOGO]
Once the "top down" analysis is completed, specific stocks are selected based on
a fundamental analysis of the company, such as:
- - financial condition
- - quality of management
- - dynamics of the relevant industry
- - earnings growth and profit margins
- - sales trends
- - potential for new product development
- - dividend payment history and potential
- - financial ratios -- including price/earnings and
price/book ratios
- - investment for the future in research and facilities
The team continuously adapts its investment strategies to changing market
conditions. Although the Fund will generally emphasize investments for long-term
capital appreciation, it may invest for short-term capital appreciation when
management believes such action is consistent with sound investment practices
and the Fund's overall objective. These determinations will be made without a
vote of the shareholders of the Fund. There is no assurance that the Fund will
achieve its investment objective.
2
<PAGE>
FUND DESCRIPTION, CONTINUED
---------------------------------------------------------------------------
--_COLUMBIA SMALL CAP FUND_--
The Fund was incorporated on May 31, 1996 under Oregon law and began offering
shares to the public on October 1, 1996.
-- INVESTMENT OBJECTIVE --
The investment objective of the Fund is to achieve capital appreciation by
investing, in normal circumstances, at least 65 percent of the value of the
Fund's total assets in common stocks, or securities convertible into common
stocks, of "small cap" companies. As of the date of this Prospectus, a company
is considered small cap if it has an aggregate market capitalization of less
than $1 billion. Upon notice to shareholders, the definition of small cap may
change in the future if the Advisor determines, based on changes in market
levels and accepted industry definitions, that a different market capitalization
is more appropriate. There is no minimum aggregate market capitalization for a
company to be considered an appropriate investment for the Fund. The Fund may,
however, invest from time to time up to 35 percent of the value of its total
assets in the securities of larger, more established companies when the Advisor
believes they offer capital appreciation potential that is generally comparable
to small cap securities. The Fund's investment objective may not be changed
without shareholder approval.
Investments in small cap companies may involve greater risks than investments in
larger companies, with a corresponding effect on the Fund's net asset value. For
this reason, the Fund is not intended to be used as the sole investment in your
portfolio. The Fund is designed for that portion of a portfolio that can
appropriately be invested in securities with greater risk but also greater
potential for appreciation.
The Fund may also invest in debt securities or preferred stock that is
convertible into or exchangeable for small cap stocks. Convertible debt
securities, typically unsecured, are interest bearing and represent a claim to
the corporation's earnings and assets before common and preferred stock owners,
generally on par with unsecured creditors. Convertible preferred stocks are
securities that represent a claim to the corporation's earnings and assets
before common stock owners but after bond owners. Investments by the Fund in
convertible debt or preferred stock could be a substitute for an investment in
the underlying common stock in circumstances where only the convertible security
is available in quantities necessary to satisfy the Fund's investment needs (for
example, in the case of a new issuance of convertible securities). In addition,
such securities may be purchased if the conversion price of the convertible
security is comparable to the price of the underlying common stock. In this
case, a preferred position with respect to the corporation's earnings and assets
may be preferable to holding common stock.
The Fund may invest up to 25% of its total assets in foreign securities or
American Depository Receipts ("ADRs") for foreign securities. Subject to that
limitation, the Fund may invest in companies located anywhere in the world but
expects to invest principally in the following foreign countries: Argentina,
Australia, Brazil, Canada, Chile, China, Hong Kong, Indonesia, Japan, Malaysia,
Mexico, New Zealand, Singapore, and any country in Western Europe. For a
discussion of the special risks involved with investing in foreign securities,
see "Risk Factors -- Foreign Securities."
Because the Fund focuses on the performance of the portfolio as a whole,
individual security positions may be sold without regard to the length of time
they have been held. This may result in a relatively high rate of portfolio
turnover. High portfolio turnover increases the Fund's transaction costs,
including brokerage commissions. Under normal market conditions, the Adviser
expects that the Fund's portfolio turnover rate will not exceed 125%. To the
extent short-term trades result in gains on securities held one year or less,
shareholders will be subject to taxes at ordinary income rates. See
"Distributions and Taxes."
-- INVESTMENT RESTRICTIONS --
For information on the investment by the Fund in repurchase agreements, illiquid
securities, when-issued securities, options, and temporary investments, please
see "Additional Information." A description of other
3
<PAGE>
FUND DESCRIPTION, CONTINUED
---------------------------------------------------------------------------
investment restrictions and certain investment practices of the Fund is included
in the Statement of Additional Information.
-- RISK FACTORS --
An investment in any mutual fund, including the Fund, involves certain risks.
General market risk and other specific risks associated with different types of
securities used by the Fund, including foreign securities and stocks of small
companies, are discussed below and under "Additional Information."
STOCK MARKET RISK. The principal risk associated with a stock mutual fund is
that the stocks held by the fund will decline in value. Stock values may
fluctuate in response to the activities and financial prospects of an individual
company or in response to general market and economic conditions. Investments in
smaller or unseasoned companies may be both more volatile and more speculative.
See "Investments in Small and Unseasoned Companies."
ALTHOUGH COMMON STOCKS HAVE HISTORICALLY PROVIDED LONG-TERM RETURNS THAT ARE
GREATER THAN OTHER TYPES OF INVESTMENTS, STOCK RETURNS HAVE ALSO BEEN MORE
VOLATILE OVER SHORTER PERIODS OF TIME. [LOGO]
FOREIGN SECURITIES. Foreign securities, which are generally denominated in
foreign currencies, involve risks not typically associated with investing in
domestic securities. The value of the Fund's portfolio will be affected by
changes in currency exchange rates and in currency exchange regulations to the
extent the Fund holds foreign securities. Foreign securities may be subject to
foreign taxes that would reduce their effective yield. Certain foreign
governments levy withholding taxes against dividend and interest income.
Although in some countries a portion of these taxes is recoverable, the
unrecovered portion of any foreign withholding taxes would reduce the income the
Fund receives from its foreign investments.
Foreign investments involve certain other risks, including possible political or
economic instability of the country of the issuer, the difficulty of predicting
international trade patterns, and the possibility of currency exchange controls.
Foreign securities may also be subject to greater price fluctuations than
domestic securities. There may be less publicly available information about a
foreign company than about a domestic company. Foreign companies generally are
not subject to uniform accounting, auditing, and financial reporting standards
comparable to those of domestic companies. There is generally less government
regulation of stock exchanges, brokers, and listed companies abroad than in the
United States. In addition, with respect to certain foreign countries, there is
a possibility of the adoption of a policy to withhold dividends at the source,
or of expropriation, nationalization, confiscatory taxation, or diplomatic
developments that could affect investments in those countries. Finally, in the
event of default on a foreign debt obligation, it may be more difficult for the
Fund to obtain or enforce a judgment against the issuers of the obligation. The
Fund will normally execute its portfolio securities transactions on the
principal stock exchange on which the security is traded.
Additional costs may be incurred in connection with the Fund's foreign
investments. Foreign brokerage commissions are generally higher than those in
the United States. Expenses may also be incurred on currency conversions when
the Fund moves investments from one country to another. Increased custodian
costs as well as administrative difficulties may be experienced in connection
with maintaining assets in foreign jurisdictions.
INVESTMENTS IN SMALL AND UNSEASONED COMPANIES. Investments by the Fund in small
or unseasoned companies may be regarded as speculative. These companies may have
limited or unprofitable operating histories, limited financial resources, and
inexperienced management. In addition, they often face competition from larger
or more established firms that have greater resources. Securities of small and
young companies are frequently traded in the over-the-counter market or on
regional exchanges where low trading volumes may result in erratic or abrupt
price movements. To dispose of these securities, the Fund may have to sell them
over an extended period of time or below the original purchase price. Because of
these factors, an investment in the Fund may be subject to greater price
fluctuations than an investment in a fund that invests primarily in larger, more
established companies.
4
<PAGE>
PERFORMANCE
-----------------------------------------------------------------
This section is designed to help you understand terms used to describe Fund
performance, such as "total return" and "average annual total return."
-- UNDERSTANDING "RETURN" --
TOTAL RETURN REFERS TO THE CHANGE IN VALUE OF AN INVESTMENT IN THE FUND OVER A
STATED PERIOD, ASSUMING THE REINVESTMENT OF ANY DIVIDENDS AND CAPITAL GAINS.
"AVERAGE ANNUAL TOTAL RETURN" IS A HYPOTHETICAL RATE OF RETURN THAT, IF
ACHIEVED ANNUALLY, WOULD HAVE PRODUCED THE SAME TOTAL RETURN IF PERFORMANCE
HAD BEEN CONSTANT OVER THE ENTIRE PERIOD. AVERAGE ANNUAL TOTAL RETURNS SMOOTH
OUT THE VARIATIONS IN PERFORMANCE BUT ARE NOT THE SAME AS ACTUAL ANNUAL
RESULTS.
For more information on total return calculations for the Fund, please see the
Statement of Additional Information.
-- PERFORMANCE COMPARISONS --
The Fund may compare its performance to other mutual funds and to the mutual
fund industry as a whole, as quoted by ranking services such as Lipper
Analytical Services, Inc., or Morningstar, Inc., or as reported in financial
publications such as BARRON'S, BUSINESS WEEK, FORBES, MONEY MAGAZINE, and THE
WALL STREET JOURNAL. The Fund may also compare its performance to that of a
recognized stock or bond index, such as the S&P 500 Stock Index, the Russell
2000 Stock Index, the Lehman Aggregate Bond Index, and other relevant indices.
Unmanaged indices may assume the reinvestment of dividends, but generally do not
reflect deductions for administrative and management costs and expenses.
PERFORMANCE INFORMATION ON THE FUND IS HISTORICAL DATA AND IS NOT INTENDED TO
INDICATE FUTURE PERFORMANCE. INVESTMENT RETURNS AND NET ASSET VALUES WILL
FLUCTUATE SO THAT YOUR SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. [LOGO]
5
<PAGE>
FUND MANAGEMENT
-----------------------------------------------------------------
-- BOARD OF DIRECTORS --
The Fund is managed under the supervision of its Board of Directors, which has
responsibility for overseeing decisions relating to the investment policies and
objectives of the Fund. The Board meets quarterly to review the Fund's
investment policies, performance, expenses, and other business matters.
-- INVESTMENT ADVISOR --
The Fund has contracted with Columbia Funds Management Company (the "Advisor")
to provide investment advisory services. The Advisor has acted as an investment
advisor since 1982, and also provides investment management services to each of
the following Columbia Funds: Columbia Common Stock Fund, Columbia International
Stock Fund, Columbia Special Fund, Columbia Growth Fund, Columbia Real Estate
Equity Fund, Columbia Balanced Fund, Columbia Daily Income Company, Columbia
U.S. Government Securities Fund, Columbia Fixed Income Securities Fund, Columbia
Municipal Bond Fund, and Columbia High Yield Fund. Until December 1985, the
Advisor was a wholly-owned subsidiary of Columbia Management Co. ("CMC"), which
was organized in 1969 and acts as investment manager for approximately $12
billion of assets of other institutions. In December 1985, CMC and its
subsidiaries were reorganized, and the Advisor is now owned principally by its
employees, including J. Jerry Inskeep, Jr. and James F. Rippey, who are also
principal shareholders of CMC. The address of the Advisor is 1300 S.W. Sixth
Avenue, P.O. Box 1350, Portland, Oregon 97207-1350.
Under the investment advisory contract with the Fund, the Advisor provides
research, advice, and supervision with respect to investment matters and
determines what securities to purchase or sell and what portion of the Fund's
assets to invest. The Advisor provides office space and pays all executive
salaries and expenses and ordinary office expenses of the Fund (other than the
expenses of clerical services relating to the administration of the Fund).
Certain employees of the Advisor are also officers of the Fund and, subject to
the authority of the Fund's Board of Directors, are responsible for the overall
management of the Fund's business affairs.
The investment advisory fee of the Fund is accrued daily and paid monthly. The
investment advisory fee of the Fund equals the annual rate of 1% of daily net
assets. While comparable to the advisory fees paid by other mutual funds with a
similar investment objective, the advisory fee paid by the Fund is higher than
the advisory fees paid by most mutual funds.
The Advisor has entered into an agreement with CMC under which CMC provides the
Advisor with statistical and other factual information, advice regarding
economic factors and trends, and advice as to occasional transactions in
specific securities. CMC, upon receipt of specific instructions from the
Advisor, also contacts brokerage firms to conduct securities transactions for
the Fund. The Advisor pays CMC a fee for these services. The Fund's expenses are
not increased by this arrangement, and no amounts are paid by the Fund to CMC
under this agreement.
The Fund assumes the following costs and expenses: costs relating to corporate
matters; cost of services to shareholders; transfer and dividend paying agent
fees; custodian fees; legal, auditing, and accounting expenses; disinterested
directors' fees; taxes and governmental fees; interest; brokers' commissions;
transaction expenses; cost of stock certificates and any other expenses
(including clerical expenses) of issue, sale, repurchase, or redemption of its
shares; expenses of registering or qualifying its shares for sale; transfer
taxes; all expenses of preparing its registration statements, prospectuses, and
reports; and the cost of printing and delivering to shareholders its
prospectuses and reports. Third-party administrators of tax-qualified retirement
plans and other entities may establish omnibus accounts with the Fund and
provide sub-transfer agency, recordkeeping, or other services to participants in
the
6
<PAGE>
FUND MANAGEMENT, CONTINUED
---------------------------------------------------------------------------
omnibus accounts. In recognition that these arrangements reduce or eliminate the
need for the Fund's transfer agent to provide such services, the Fund may pay
the administrator or entity a sub-transfer agent or recordkeeping fee.
-- A TEAM APPROACH TO INVESTING --
The Advisor uses a team approach to analyze investment themes and strategies for
the Fund. Alan J. Folkman, a Senior Vice President and director of the Advisor,
is the Chief Investment Officer of the Investment Team. With over 29 years of
investment management experience, Mr. Folkman supervises the Investment Team in
establishing broad investment strategies and determining portfolio guidelines
for the Fund.
Members of the Investment Team are responsible for the analysis of particular
industries or types of fixed income securities and for recommendations on
individual securities within those industries or asset categories. Investment
decisions for the Fund are then made by the Investment Team and Richard J.
Johnson, the portfolio manager who has principal management responsibility for
investment decisions on behalf of the Fund. Mr. Johnson, a Vice President of the
Advisor and a Chartered Financial Analyst, joined the Columbia organization in
1994. Mr. Johnson is also the portfolio manager for CMC Small Cap Fund, a mutual
fund managed by CMC, and CTC Small Stock Fund, an investment fund managed by
Columbia Trust Company. Prior to joining the Investment Team, Mr. Johnson was a
Portfolio Manager and Analyst with Provident Investment Counsel (1990-1994). He
received a Masters of Business Administration from the Anderson Graduate School
of Management at UCLA in 1990.
-- PERSONAL TRADING --
Members of the Investment Team and other personnel of the Fund or the Advisor
are permitted to trade securities for their own or family accounts, subject to
the rules of the Code of Ethics adopted by the Fund and the Advisor. The rules
that govern personal trading by investment personnel are based on the principal
that employees owe a fiduciary duty to conduct their trades in a manner that is
not detrimental to the Fund or its shareholders. The Fund has adopted the
recommendations of the Investment Company Institute, an organization composed of
members of the mutual fund industry, relating to restrictions on personal
trading. For more information on the Code of Ethics and specific trading
restrictions, please refer to the Statement of Additional Information.
-- OTHER SERVICE PROVIDERS --
TRANSFER AGENT. Columbia Trust Company acts as transfer agent and dividend
paying agent for the Fund. Its address is 1301 S.W. Fifth Avenue, P.O. Box 1350,
Portland, Oregon 97207-1350. The Advisor is the principal shareholder, and
certain officers of the Fund are minority shareholders, of Columbia Trust
Company.
COLUMBIA FINANCIAL CENTER INCORPORATED. Columbia Financial Center Incorporated
("Columbia Financial"), a registered securities broker and a member of the
National Association of Securities Dealers, Inc., acts as a distributor of
shares of the Fund. Its address is 1301 S.W. Fifth Avenue, P.O. Box 1350,
Portland, Oregon 97207-1350. You may invest or redeem your investment in the
Fund through Columbia Financial, which will not charge a commission for handling
your order. J. Jerry Inskeep, Jr., director and chairman of the Fund, and James
F. Rippey, director of the Fund, are the principal shareholders of Columbia
Financial.
CUSTODIANS. United States National Bank of Oregon, 321 S.W. Sixth Avenue,
Portland, Oregon 97208, serves as general custodian for the Fund. Morgan Stanley
Trust Company, One Pierrepont Plaza, Brooklyn, New York, NY 11201, provides
custody services to the Fund to the extent it holds foreign securities.
7
<PAGE>
FUND MANAGEMENT, CONTINUED
---------------------------------------------------------------------------
-- OTHER INFORMATION --
VOTING RIGHTS. The Fund is a separate corporation. All shares of the Fund have
equal voting, redemption, dividend, and liquidation rights. All issued and
outstanding shares of the Fund are fully paid and nonassessable. Shares have no
preemptive or conversion rights. Fractional shares have the same rights
proportionately as full shares. The shares of the Fund do not have cumulative
voting rights, which means that holders of more than 50 percent of the shares of
the Fund voting for the election of directors can elect all of the directors.
SHAREHOLDER MEETINGS. The Fund is not required to hold annual shareholder
meetings. Special meetings may be called, however, as required or deemed
desirable for purposes such as electing directors, changing fundamental
investment policies, or approving an investment management agreement. The
holders of not less than 10% of the shares of the Fund may request in writing
that a special meeting be called for a specified purpose. If such a special
meeting is called to vote on the removal of one or more directors of the Fund,
shareholders will be assisted in communications with other shareholders of the
Fund.
8
<PAGE>
MUTUAL FUND FEATURES
-----------------------------------------------------------------
ALTHOUGH THERE ARE RISKS THAT CANNOT BE ELIMINATED IN OWNING SECURITIES, A
MUTUAL FUND OFFERS MANY ADVANTAGES THAT ITS SHAREHOLDERS WOULD FIND HARD TO
OBTAIN AS INDIVIDUAL INVESTORS. THE CHIEF ADVANTAGES INCLUDE:
-- CONTINUOUS PROFESSIONAL --
MANAGEMENT
By sharing the cost of hiring experienced money managers, individual investors
receive professional financial management of their investments.
-- DIVERSIFICATION --
The investment portfolio of the Fund is "diversified" under the Investment
Company Act, which tends to reduce investment risks. However, diversification
does not ensure a gain or eliminate the risk of loss.
-- CONVENIENCE --
Compared to owning many individual issues, the problems of recordkeeping, tax
calculation, liquidity, and dividends may be greatly simplified by investing in
a mutual fund.
Suppose, for example, you have $1,000 to invest but don't have the time or
training necessary to monitor securities markets, select securities, maintain
investment records, or keep track of tax information. One possible solution
would be to find a professional money manager to make these decisions for you
and provide full-time supervision of your investment. You could say, "Look, I
have $1,000 I want you to supervise for me, following trends in the economy and
the securities markets, making necessary investment decisions, and trying to
make this money worth more to me or earn income for me. I want you to give my
money the same continuous supervision and care you might give to someone who
invests $100,000 or even $1,000,000. But for that management service, I cannot
afford to pay you more than $15 each year."
As you might expect, it is not likely that the investment manager could accept
your proposal, for its costs would be many times your fee. But it might suggest
that if you could find another thousand investors like yourself, willing to
combine their funds with yours and willing to pay the same amount for continuous
supervision and control, then it might agree to work for you.
This is much like the agreement upon which mutual funds operate. By combining
the capital of many investors into one large account, it is possible to offer
all the shareholders who make up a mutual fund the kind of professional
investment supervision they desire, at a cost each can afford.
Despite the advantages of mutual funds, investing in them involves certain
risks. Some of these risks are described under "Fund Description" and
"Additional Information." As a prospective investor, you are encouraged to read
the entire Prospectus before investing in the Fund.
BY COMBINING THE CAPITAL OF MANY INVESTORS INTO ONE LARGE ACCOUNT, IT IS
POSSIBLE TO OFFER ALL THE SHAREHOLDERS WHO MAKE UP A MUTUAL FUND THE KIND OF
PROFESSIONAL INVESTMENT SUPERVISION THEY DESIRE, AT A COST EACH CAN
AFFORD. [LOGO]
9
<PAGE>
INVESTOR SERVICES
-----------------------------------------------------------------
This section is designed to provide you with information on opening an account
and conducting transactions with the Fund. In addition, information is provided
on the different types of accounts and services offered by the Fund and the
policies relating to those services.
-- HOW TO OPEN A NEW ACCOUNT --
Please complete and sign a Fund application and make your check payable to the
Fund for the minimum required investment. See "Minimum Investments." Please be
sure to include a tax identification number on your application or it may be
rejected and returned to you. The completed application and a check should be
mailed to:
Columbia Financial Center
1301 S.W. Fifth Avenue
P.O. Box 1350
Portland, Oregon 97207-1350
Attn.: New Accounts
-- HOW TO PURCHASE SHARES --
Shares of the Fund are offered at the share price, or net asset value ("NAV"),
next determined after an order is accepted. See "Processing Your Order" and
"Determining Your Share Price." Shares can be purchased in the following ways:
IN PERSON: Investments can be made in person by visiting the Fund at 1301 S.W.
Fifth Avenue, Portland, Oregon between 7:30 a.m. and 5:00 p.m. on any business
day.
BY MAIL: Send a check, with either a completed Investment Slip from the bottom
of a confirmation statement, or a letter indicating the account number and
registration, to:
Columbia Financial Center
1301 S.W. Fifth Avenue
P.O. Box 1350
Portland, Oregon 97207-1350
Attn.: Investments
BY WIRE: You may have your bank wire federal funds. Be sure to call the Fund
for instructions and notification that money is being wired:
Portland area 222-3606
Nationwide (toll-free)
1-800-547-1707
BY TELEPHONE: You may make additional investments in the Fund by telephone from
a predesignated bank account ("Televest"). The minimum investment that can be
made by Televest is $100. Shareholders must complete the appropriate sections of
the application or call the Fund to have the Televest application sent to you.
An investment using Televest is processed on the day the Fund receives your
investment from your bank, usually the business day following the day of your
telephone call.
-- MINIMUM INVESTMENTS --
THE FUND HAS A MINIMUM INVESTMENT REQUIREMENT OF $2,000. THIS REQUIREMENT IS
WAIVED, HOWEVER, FOR ACCOUNTS USING THE AUTOMATIC INVESTMENT PLAN, WHERE THE
MINIMUM INVESTMENT IS $50 MONTH. SUBSEQUENT INVESTMENTS (OTHER THAN THROUGH AN
AUTOMATIC INVESTMENT PLAN) MUST BE AT LEAST $100 AND SHOULD ALWAYS IDENTIFY
YOUR NAME, THE FUND'S NAME, AND YOUR ACCOUNT NUMBER. MANAGEMENT OF THE FUND
MAY, AT ITS SOLE DISCRETION, WAIVE THE MINIMUM PURCHASE AND ACCOUNT SIZE
REQUIREMENTS FOR CERTAIN GROUP PLANS OR ACCOUNTS OPENED BY AGENTS OR
FIDUCIARIES (SUCH AS A BANK TRUST DEPARTMENT, INVESTMENT ADVISOR, OR
SECURITIES BROKER) OR IN OTHER CIRCUMSTANCES.
BY AUTOMATIC INVESTMENT: Investments in the Fund may be made automatically from
your bank under Columbia's Automatic Investment Plan ("AIP"). Shareholders whose
bank is a member of the National Automated Clearing House Association may choose
to
10
<PAGE>
INVESTOR SERVICES, CONTINUED
---------------------------------------------------------------------------
have amounts of $50 or more automatically transferred from a bank checking
account to the Fund on or about the 5th or 20th, or both, of each month.
Shareholders must complete the AIP section of the application to participate in
the AIP. If you stop investing in the Fund using an AIP, your account may be
closed if you fail to reach or maintain a minimum account balance. See "Account
Privileges -- Involuntary Redemptions."
BY EXCHANGE: You may purchase shares of the Fund with the proceeds from a
redemption of shares of any other Columbia Fund with the same account number.
See "How to Exchange" below.
THROUGH YOUR BROKER-DEALER OR BANK: You may purchase or redeem shares of the
Fund through your broker, bank, or other financial institution, which may charge
a commission or fee for handling your order and which may be required to be
registered as a broker or dealer under federal or state securities laws.
CLOSING THE FUND TO NEW INVESTORS: The Advisor to the Fund reserves the right
at its discretion to close the Fund to new investors. A number of factors may be
considered in making such a decision, including the total assets and flow of new
investments into the Fund. If the Fund is closed, shareholders who maintain open
accounts with the Fund may make additional investments in the Fund. Once a
shareholder's account in the Fund is closed, additional investments may not be
possible.
-- PAYING FOR YOUR SHARES --
Payment for Fund shares is subject to the following policies:
- - Checks should be drawn on U.S. banks and made payable to the Fund.
- - Never send cash or cash equivalents; the Fund will not accept responsibility
for their receipt.
- - The Fund reserves the right to reject any order.
- - If your order is canceled because your check did not clear the bank or the
Fund was unable to debit your predesignated bank account, you will be
responsible for any losses or fees imposed by your bank or attributable to a
loss in value of the shares purchased.
- - The Fund may reject any third party checks used to make an investment or open
a new account.
-- HOW TO REDEEM (SELL) SHARES --
You may redeem all or a portion of your investment in the Fund on any business
day. All redemptions of shares of the Fund will be at the share price (NAV)
computed after receipt of a valid redemption request, in whatever form, on days
when the NYSE is open for business. In every case, sufficient full and
fractional shares will be redeemed to cover the amount of the redemption
request.
If certificates for Fund shares have been issued to you, they must be returned
to the Fund, properly endorsed, before any redemption request may be processed.
Redemptions from a Columbia-sponsored IRA or retirement plan require the
completion of certain additional forms to ensure compliance with IRS
regulations. If a redemption request cannot be processed for any of these
reasons, the redemption request will be returned to you and no redemption will
be made until a valid request is submitted. Shares can be redeemed in the
following ways:
IN WRITING: You may redeem shares of the Fund by providing a written
instruction to the Fund either in person or by mail to:
1301 S.W. Fifth Avenue
P.O. Box 1350
Portland, Oregon 97207-1350
Attn.: Redemptions
11
<PAGE>
INVESTOR SERVICES, CONTINUED
---------------------------------------------------------------------------
-- SIGNATURE POLICY --
SIGNATURES ON THE REQUEST MUST CORRESPOND EXACTLY WITH THOSE ON THE ACCOUNT.
ACCOUNTS IN THE NAMES OF CORPORATIONS, FIDUCIARIES, AND INSTITUTIONS MAY REQUIRE
ADDITIONAL DOCUMENTS. PLEASE CONTACT THE FUND IF YOUR ACCOUNT FALLS INTO ONE OF
THESE CATEGORIES.
A WRITTEN REDEMPTION REQUEST, WHETHER IN PERSON OR BY MAIL, IS NOT VALID UNLESS
THE SIGNATURE OR SIGNATURES ON THE REQUEST CORRESPOND EXACTLY WITH THOSE ON YOUR
ACCOUNT. THE FUND NORMALLY REQUIRES THAT SIGNATURES ON WRITTEN REDEMPTION,
TRANSFER, AND EXCHANGE REQUESTS BE GUARANTEED BY AN ELIGIBLE GUARANTOR
INSTITUTION, SUCH AS A
BANK, BROKER-DEALER, CREDIT UNION, NATIONAL SECURITIES EXCHANGE, REGISTERED
SECURITIES EXCHANGE, CLEARING AGENCY, OR SAVINGS ASSOCIATION.
BY TELEPHONE: You may redeem shares by telephone unless you decline this
service by checking the appropriate box on the application. Proceeds from
telephone redemptions may be mailed only to the registered name and address on
your account or transferred to the bank designated on the application or to
another Columbia Fund. A maximum of $50,000 may be redeemed by telephone and
mailed to your registered address. There is no such limitation on telephone
redemptions transferred to your bank. Telephone redemptions may be made by
calling the Fund between 7:30 a.m. and 5:00 p.m., Pacific Time, at:
Portland area 222-3606
Nationwide (toll-free)
1-800-547-1707
You may experience some difficulty in implementing a telephone redemption during
periods of drastic economic or financial market changes. Telephone redemption
privileges may be modified or terminated at any time without notice to
shareholders. Please see "Account Privileges -- Telephone Redemptions."
BY AUTOMATIC WITHDRAWAL: If your account value in the Fund is $5,000 or more,
you may elect to receive automatic cash withdrawals of $50 or more from the Fund
in accordance with either of the following withdrawal options:
1. Income earned. You may elect to receive any dividends or capital gains
distributions on your shares, provided such dividends and distributions
exceed $25.
2. Fixed amount. You may elect to receive a monthly or quarterly fixed amount
of $50 or more.
Automatic withdrawals will be made within seven days after the end of the month
or quarter to which they relate.
To the extent redemptions for automatic withdrawals exceed dividends declared on
shares in your account, the number of shares in your account will be reduced. If
the value of your account falls below the Fund minimum, your account is subject
to being closed on 60 days written notice. The minimum withdrawal amount has
been established for administrative convenience and should not be considered as
recommended for all investors. For tax reporting, a capital gain or loss may be
realized on each fixed-amount withdrawal.
An automatic withdrawal plan may be modified or terminated at any time upon
prior notice by the Fund or the shareholder.
-- PAYMENT OF REDEMPTION PROCEEDS --
Redemption proceeds are normally transmitted in the manner specified in the
redemption request on the business day following the effective date of the
redemption. Except as provided by rules of the Securities and
12
<PAGE>
INVESTOR SERVICES, CONTINUED
---------------------------------------------------------------------------
Exchange Commission, redemption proceeds must be transmitted to you within seven
days of the redemption date.
REDEMPTION OF RECENTLY PURCHASED SHARES. Although you may redeem shares of the
Fund that you have recently purchased by check, the Fund may hold the redemption
proceeds until payment for the purchase of such shares has cleared, which may
take up to 15 days from the date of purchase. No interest is paid on the
redemption proceeds after the redemption date and before the proceeds are sent
to you. This holding period does not apply to the redemption of shares purchased
by bank wire or with a cashiers or certified check.
There is no charge for redemption payments that are mailed. Amounts transferred
by wire must be at least $1,000, and the bank wire cost for each redemption will
be charged against your account. Your bank may also impose an incoming wire
charge.
-- HOW TO EXCHANGE SHARES --
You may use proceeds from the redemption of shares of the Fund to purchase
shares of any other Columbia Fund offering shares for sale in your state of
residence. There is no charge for this exchange privilege. Before making an
exchange, you should read the Prospectus relating to the Columbia Fund into
which the shares are to be exchanged. The shares of the Columbia Fund to be
acquired will be purchased at the NAV next determined after acceptance of the
purchase order by that fund in accordance with its policy for accepting
investments. The exchange of shares of the Fund for shares of another Columbia
Fund is treated, for federal income tax purposes, as a sale on which you may
realize taxable gain or loss. Certain restrictions may apply to exchange
transactions. See "Account Privileges -- Exchange Privilege."
-- PROCESSING YOUR ORDER --
Orders received by the Fund will be processed the day they are received. Orders
received before the close of regular trading on the NYSE (normally 4 p.m. New
York time) will be entered at the Fund's share price computed that day. Orders
received after the close of regular trading on the NYSE will be entered at the
Fund's share price next determined. All investments will be credited to your
account in full and fractional shares computed to the third decimal place. The
Fund reserves the right to reject any order.
Shares purchased will be credited to your account on the record books of the
Fund. The Fund will not issue share certificates except on request. Certificates
for fractional shares will not be issued.
-- DETERMINING YOUR SHARE PRICE --
The share price, or NAV, of the Fund is determined by the Advisor, under
procedures approved by the Fund's Board of Directors, as of the close of regular
trading (normally 4 p.m. New York time) on each day the NYSE is open for
business and at other times determined by the Board of Directors. The NAV is
computed by dividing the value of all assets of the Fund, less its liabilities,
by the number of shares outstanding.
Portfolio securities will be valued according to the market value obtained from
the broadest and most representative markets. These market quotations, depending
on local convention or regulation, may be the last sale price, last bid or asked
price, or the mean between the last bid and asked price as of, in each case, the
close of the applicable exchange or other designated time. Securities for which
market quotations are not readily available and other assets will be valued at
fair value as determined in good faith under procedures established by and under
the general supervision of the Board of Directors of the Fund. These procedures
may include valuing portfolio securities by reference to other securities with
comparable ratings, interest rates, and maturities and by using pricing
services. Fair value for debt
13
<PAGE>
INVESTOR SERVICES, CONTINUED
---------------------------------------------------------------------------
securities for which market quotations are not readily available and with
remaining maturities of less than 60 days is based on cost adjusted for
amortization of discount or premium and accrued interest (unless the Board of
Directors believes unusual circumstances indicate another method of determining
fair value should be used).
Trading in securities on many foreign securities exchanges and over-the-counter
markets is completed at various times before the close of the NYSE. In addition,
trading of these foreign securities may not take place on all NYSE business
days. Trading may take place in various foreign markets on Saturday or on other
days the NYSE is not open for business and on which the Fund's NAV is therefore
not calculated. The calculation of the Fund's NAV may not take place
contemporaneously with the determination of the prices of the Fund's portfolio
foreign securities. Events affecting the values of portfolio foreign securities
that occur between the time the prices are determined and the close of the NYSE
will not be reflected in the Fund's calculation of NAV unless the Board of
Directors determines that the event would materially affect the NAV. Assets of
foreign securities are translated from the local currency into U.S. dollars at
the prevailing exchange rates.
-- INVESTOR INQUIRIES --
If you have any questions about this Prospectus, the Fund or your account,
please call the Fund at:
Portland area 222-3606
Nationwide (toll-free) 1-800-547-1707
or write or visit the Fund at:
Columbia Financial Center
1301 S.W. Fifth Avenue
P.O. Box 1350
Portland, Oregon 97207-1350
-- ACCOUNT PRIVILEGES --
EXCHANGE PRIVILEGE. Telephone exchange privileges are available to you
automatically unless you decline this service by checking the appropriate box on
the application. Telephone exchanges may be made from the Fund into another
Columbia Fund only within the same account number. To prevent the abuse of the
exchange privilege to the disadvantage of other shareholders, the Fund reserves
the right to terminate the exchange privilege of any shareholder who makes more
than four exchanges out of the Fund during the calendar year. The exchange
privilege may be modified or terminated at any time, and the Fund may
discontinue offering its shares generally or in any particular state without
notice to shareholders.
TELEPHONE REDEMPTIONS. The Fund does not accept responsibility for the
authenticity of telephone instructions, and, accordingly, shareholders who have
approved telephone redemptions assume the risk of any losses due to fraudulent
telephone instructions that the Fund reasonably believes to be genuine. The Fund
employs certain procedures to determine whether telephone instructions are
genuine, including requesting personal shareholder information prior to acting
on telephone instructions, providing written confirmations of each telephone
transaction, and recording all telephone instructions. The Fund may be liable
for losses due to fraudulent telephone instructions if it fails to follow these
procedures. For your protection, the ability to redeem by telephone and have the
proceeds mailed to your registered address may be suspended for up to 30 days
following an account address change. This suspension period will not apply to
redemptions by mail, which can be made at any time. See "How to Redeem (Sell)
Shares."
INVOLUNTARY REDEMPTIONS. Upon 60 days prior written notice, the Fund may redeem
all of your shares without your consent if:
1. Your account balance falls below the minimum account requirement. However,
if you wish to maintain the account, you may during the 60-day
14
<PAGE>
INVESTOR SERVICES, CONTINUED
---------------------------------------------------------------------------
notice period either (i) add to your account to bring it to the $2,000
minimum, or (ii) establish an Automatic Investment Plan with a minimum
monthly investment of $50.
2. You are a U.S. shareholder and fail to provide the Fund with a certified
taxpayer identification number.
3. You are a foreign shareholder and fail to provide the Fund with a current
Form W-8, "Certificate of Foreign Status."
If the Fund redeems shares, payment will be made promptly at the current net
asset value. A redemption may result in a realized capital gain or loss.
TAXPAYER IDENTIFICATION NUMBER. Federal law requires the Fund to withhold 31%
of dividends and redemption proceeds paid to certain shareholders who have not
complied with certain tax regulations. The Fund will generally not accept an
investment to establish a new account that does not comply with these
regulations. You will be asked to certify on your account application that the
social security number or tax identification number provided is correct and that
you are not subject to 31% backup withholding for previous underreporting of
income to the Internal Revenue Service.
SHAREHOLDER STATEMENTS AND REPORTS. The Fund will send a separate confirmation
of each nonroutine transaction that affects your account balance or
registration. Routine, pre-authorized transactions are confirmed in the monthly
or quarterly account statements provided to shareholders. The types of
pre-authorized transactions that will be confirmed on your account statement
include:
- - Periodic share purchases through an Automatic Investment Plan
- - Reinvestment of dividends and capital gains distributions
- - Automatic withdrawals or exchanges between the Fund and another Columbia Fund
The Fund will mail to its shareholders on or before January 31 of each year a
summary of the federal income tax status of the Fund's distributions for the
preceding year.
Financial reports on the Fund, which include a listing of the Fund's portfolio
securities, are mailed semiannually to shareholders. To reduce Fund expenses,
only one such report and the annually updated prospectus will be mailed to
accounts with the same Tax Identification Number. In addition, shareholders or
multiple accounts at the same mailing address can elect to eliminate duplicate
mailings to that address by filing a SAVMAIL form with the Fund. For a SAVMAIL
form or to receive additional copies of any shareholder report or prospectus,
please call an Investor Services Representative at 1-800-547-1707.
-- IRAS, SEP IRAS, AND --
RETIREMENT PLANS
Investors may invest in the Fund through the Columbia IRA and the Columbia
Prototype Money Purchase Pension and Profit Sharing Plan. Please contact the
Fund for further information and application forms. Investments may also be made
in the Fund in connection with established retirement plans.
-- PRIVATE MANAGEMENT ACCOUNTS --
Columbia Trust Company offers Private Management Accounts that provide
investment management tailored to the specific investment objectives of
individuals, institutions, trusts, and estates, using the Fund and other
Columbia Funds as investment vehicles. The annual fee for this service is .75 of
1% of net assets ($1,000 minimum fee) and is in addition to investment advisory
fees paid by the Fund and other Columbia Funds to the Advisor. For additional
information, call Columbia Trust Company at 503-222-3600.
15
<PAGE>
DISTRIBUTIONS AND TAXES
-----------------------------------------------------------------
-- DISTRIBUTIONS --
The Fund is required to distribute to shareholders each year all of its net
investment income and any net realized capital gains. Net investment income
(income from dividends, interest and any net realized short-term capital gains)
is distributed by the Fund as a dividend. Any net long-term capital gains
realized on the sale of portfolio securities by the Fund are distributed as
capital gains distributions. Dividends and capital gains distributions are
declared and paid in December.
-- DISTRIBUTION OPTIONS --
Unless you select a different option, all dividends and capital gains
distributions are reinvested on the record date in additional shares at a
reinvestment price equal to the NAV at the close of business on that day minus
the amount of the distribution. You may elect on your account application, or at
any other time by notifying the Fund, to receive your distributions in cash or
to reinvest them in the Fund.
-- TAXATION OF DISTRIBUTIONS --
The tax character of distributions from the Fund is the same whether they are
paid in cash or reinvested in additional shares. Dividends declared in October,
November, or December to shareholders of record as of a date in one of those
months and paid the following January will be reportable as if received by the
shareholders on December 31. This section is only a brief summary of the major
tax considerations affecting the Fund and its shareholders and is not a complete
or detailed explanation of tax matters. Investors should consult their tax
advisors concerning the tax consequences of investing in the Fund.
FEDERAL INCOME TAXES. Distributions from the Fund of net investment income or
net realized short-term capital gains are generally taxable to shareholders as
ordinary income. Distributions designated as the excess of net long-term capital
gain over net short-term capital loss are taxable to shareholders as long-term
capital gain, regardless of the length of time the shareholder held the Fund's
shares. A portion of any dividends received from the Fund may be eligible for
the dividends received deduction available to corporate shareholders.
Information on the tax status of distributions by the Fund is mailed to
shareholders each year on or before January 31.
STATE INCOME TAXES. In addition to federal taxes, shareholders of the Fund may
be subject to state and local taxes on distributions from the Fund. Shareholders
should consult with their tax advisors concerning state and local tax
consequences of investing in the Fund.
"BUYING A DIVIDEND." If you buy shares of the Fund before it pays a
distribution, you will pay the full price of the shares and receive a portion of
the purchase price back in the form of a taxable distribution. The Fund's NAV
and your cost basis in the purchased shares is reduced by the amount of the
distribution. The impact of this tax result is most significant when shares are
purchased shortly before an annual distribution of capital gains or other
earnings.
-- TAXATION OF THE FUND --
The Fund intends to qualify as a regulated investment company under the Internal
Revenue Code. By qualifying and meeting certain other requirements, the Fund
generally will not be subject to federal income taxes to the extent it
distributes to its shareholders its net investment income and realized capital
gains. The Fund intends to make sufficient distributions to relieve itself from
liability for federal income taxes.
16
<PAGE>
ADDITIONAL INFORMATION
-----------------------------------------------------------------
-- REPURCHASE AGREEMENTS --
The Fund may enter into repurchase agreements, which are agreements where the
Fund purchases a security and simultaneously commits to resell that security to
the seller (a commercial bank or recognized securities dealer) at a stated price
within a number of days (usually not more than seven) from the date of purchase.
The resale price reflects the purchase price plus a rate of interest which is
unrelated to the coupon rate or maturity of the purchased security. Repurchase
agreements may be considered loans by the Fund collateralized by the underlying
security. The obligation of the seller to pay the stated price is in effect
secured by the underlying security. The seller will be required to maintain the
value of the collateral underlying any repurchase agreement at a level at least
equal to the repurchase agreement. In the case of default by the seller, the
Fund could incur a loss. In the event of a bankruptcy proceeding against the
seller, the Fund may incur costs and delays in realizing upon the collateral.
The Fund will enter into repurchase agreements only with those banks or
securities dealers who are deemed creditworthy based on criteria adopted by its
Board of Directors. There is no limit on the portion of the Fund's assets that
may be invested in repurchase agreements with maturities of seven days or less.
-- ILLIQUID SECURITIES --
No illiquid securities will be acquired if upon the purchase more than 10% of
the value of the Fund's net assets would consist of these securities. "Illiquid
securities" are securities that may not be sold or disposed of in the ordinary
course of business within seven days at approximately the price used to
determine the Fund's net asset value.
Under current interpretations of the Staff of the Securities and Exchange
Commission, the following securities in which the Fund may invest will be
considered illiquid:
- - repurchase agreements maturing in more than seven days;
- - restricted securities (securities whose public resale is subject to legal
restrictions);
- - options, with respect to specific securities, not traded on a national
securities exchange that are not readily marketable; and
- - any other securities in which the Fund may invest that are not readily
marketable.
The Fund may purchase without limit, however, certain restricted securities that
can be resold to qualifying institutions pursuant to a regulatory exemption
under SEC Rule 144A ("Rule 144A securities"). If a dealer or institutional
trading market exists for Rule 144A securities, such securities may be deemed to
be liquid and thus treated as exempt from the Fund's restrictions on illiquid
securities. Under the supervision of the Board of Directors of the Fund, the
Advisor determines the liquidity of Rule 144A securities and, through reports
from the Advisor, the Board of Directors monitors trading activity in these
securities. In reaching liquidity decisions, the Advisor will consider, among
other things, the following factors:
- - the frequency of trades and price quotes for the security;
- - the number of dealers willing to purchase or sell the security and the number
of other potential purchasers;
- - dealer undertakings to make a market in the security; and
- - the nature of the security and the marketplace trades (e.g., the time needed
to dispose of the security, the method of soliciting offers, and the
procedures for the transfer).
17
<PAGE>
ADDITIONAL INFORMATION, CONTINUED
---------------------------------------------------------------------------
Because institutional trading in Rule 144A securities is relatively new, it is
difficult to predict accurately how these markets will develop. If institutional
trading in Rule 144A securities declines, the Fund's liquidity could be
adversely affected to the extent it is invested in such securities.
-- OPTIONS AND FINANCIAL --
FUTURES TRANSACTIONS
The Fund may invest up to 5% of its net assets in premiums on put and call
exchange-traded options. A call option gives the holder (buyer) the right to
purchase a security at a specified price (the exercise price) at any time until
a certain date (the expiration date). A put option gives the buyer the right to
sell a security at the exercise price at any time until the expiration date. The
Fund may also purchase options on securities indices and foreign currencies.
Options on securities indices are similar to options on a security except that,
rather than the right to take or make delivery of a security at a specified
price, an option on a securities index gives the holder the right to receive, on
exercise of the option, an amount of cash if the closing level of the securities
index on which the option is based is greater than, in the case of a call, or
less than, in the case of a put, the exercise price of the option. The Fund may
enter into closing transactions, exercise its options, or permit the options to
expire. The Fund may only write call options that are covered. A call option is
covered if written on a security that the Fund already owns. The Fund may write
such options on up to 25% of its assets.
The Fund may also engage in financial futures transactions, including foreign
currency financial futures transactions. Financial futures contracts are
commodity contracts that obligate the long or short holder to take or make
delivery of a specified quantity of a financial instrument, such as a security,
or the cash value of a securities index, during a specified future period at a
specified price. The Fund's investment restrictions do not limit the percentage
of the Fund's assets that may be invested in financial futures transactions. The
Fund, however, does not intend to enter into financial futures transactions for
which the aggregate initial margin exceeds 5% of the net assets of the Fund
after taking into account unrealized profits and unrealized losses on any such
transactions it has entered into. The Fund may engage in futures transactions
only on commodities exchanges or boards of trade.
The Fund will not engage in transactions in index options, financial futures
contracts, or related options for speculation, but only as an attempt to hedge
against market conditions affecting the values of securities that the Fund owns
or intends to purchase. When the Fund purchases a put on a stock index or on a
stock index future not held by the Fund, the put protects the Fund against a
decline in the value of all securities held by it to the extent that the stock
index moves in a similar pattern to the prices of the securities held. The
correlation, however, between stock indices and price movements of the stocks in
which the Fund will generally invest may be imperfect. The Fund expects,
nonetheless, that the use of put options that relate to such indices will, in
certain circumstances, protect against declines in values of specific portfolio
securities or the Fund's portfolio generally. Although the purchase of a put
option may partially protect the Fund from a decline in the value of a
particular security or its portfolio generally, the cost of a put will reduce
the potential return on the security or the portfolio if either increases in
value.
Upon entering into a futures contract, the Fund would be required to deposit
with its custodian in a segregated account cash or certain U.S. Government
securities in an amount known as the "initial margin." This amount, which is
subject to change, is in the nature of a performance bond or a good faith
deposit on the contract and would be returned to the Fund upon termination of
the futures contract, assuming all contractual obligations have been satisfied.
18
<PAGE>
ADDITIONAL INFORMATION, CONTINUED
---------------------------------------------------------------------------
The principal risks of options and futures transactions are:
- - imperfect correlation between movements in the prices of options, currencies,
or futures contracts and movements in the prices of the securities or
currencies hedged or used for cover;
- - lack of assurance that a liquid secondary market will exist for any particular
option, futures, or foreign currency contract at any particular time;
- - the need for additional skills and techniques beyond those required for normal
portfolio management;
- - losses on futures contracts resulting from market movements not anticipated by
the investment adviser; and
- - possible need to defer closing out certain options or futures contracts in
order to continue to qualify for beneficial tax treatment afforded "regulated
investment companies" under the Internal Revenue Code of 1986, as amended.
-- TEMPORARY INVESTMENTS --
When, as a result of market conditions, the Fund determines that a temporary
defensive position is warranted to help preserve capital, the Fund may without
limit temporarily retain cash or invest in prime commercial paper, high-grade
debt securities, securities of the U.S. Government and its agencies and
instrumentalities, and high-quality money market instruments, including
repurchase agreements. When the Fund assumes a temporary defensive position, it
is not invested in securities designed to achieve its stated investment
objective.
-- WHEN-ISSUED SECURITIES --
Delayed-delivery or when-issued transactions arise when securities are purchased
or sold by the Fund, with payment and delivery taking place in the future, to
secure what is considered to be an advantageous price and yield to the Fund at
the time of the transaction. When-issued securities are subject to market
fluctuations, and no interest accrues to the Fund until delivery. The value of
the securities may be less at the time of delivery than it was when the
commitment was made. When the Fund engages in when-issued and delayed-delivery
transactions, the Fund relies on the buyer or seller, as the case may be, to
complete the sale. Failure to do so may result in the Fund missing the
opportunity to obtain a price or yield considered to be advantageous.
When-issued and delayed-delivery transactions typically occur approximately 30
days or more before delivery is due. However, no payment or delivery is made by
the Fund until it receives payment or delivery from the other party to the
transaction. A separate account of liquid assets consisting of cash, U.S.
Government securities, or other high-grade debt obligations and equal to the
value of such purchase commitments will be maintained by the Fund's custodian
until payment is made. To the extent the Fund engages in when-issued and
delayed-delivery transactions, it will do so to acquire portfolio securities
consistent with its investment objectives and policies and not for investment
leverage.
19
<PAGE>
Part B
Reg. Nos. 333-5863/811-7671
------------------------------------------------------------------------------
COLUMBIA SMALL CAP FUND, INC.
------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
Columbia Financial Center
1301 S.W. Fifth Avenue
P.O. Box 1350
Portland, Oregon 97207
1-800-547-1707
This Statement of Additional Information contains information relating to
Columbia Small Cap Fund, Inc. (the "Fund"), an open-end, diversified investment
company of the management type. The Fund is an Oregon corporation and has a
specific investment objective.
This Statement of Additional Information is not a Prospectus. It relates
to a Prospectus dated October 1, 1996 (the "Prospectus") and should be read
in conjunction with the Prospectus. Copies of the Prospectus are available
without charge upon written request to the Fund or by calling 1-800-547-1707.
------------------------------------------------------------------------------
TABLE OF CONTENTS
------------------------------------------------------------------------------
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Investment Advisory and Other Fees Paid to Affiliates. . . . . . . . 3
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . 4
Redemptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Custodians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Accounting Services . . . . . . . . . . . . . . . . . . . . . . . . 6
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Investment Restrictions. . . . . . . . . . . . . . . . . . . . . . . 10
Additional Information Regarding Certain
Investments by the Fund. . . . . . . . . . . . . . . . . . . . . . 12
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 13
October 1, 1996
1
<PAGE>
------------------------------------------------------------------------------
MANAGEMENT
------------------------------------------------------------------------------
The directors and officers of the Fund are listed below, together with
their principal business occupations. All principal business occupations
have been held for more than five years, except that positions with Columbia
International Stock Fund, Inc., Columbia High Yield Fund, Inc., and Columbia
Real Estate Equity Fund, Inc. have been held since July 1992, July 1993, and
January 1994, respectively, and except as otherwise indicated. The term
"Columbia Funds" refers to Columbia Common Stock Fund, Inc., Columbia Growth
Fund, Inc., Columbia Real Estate Equity Fund, Inc., Columbia International
Stock Fund, Inc., Columbia Special Fund, Inc., Columbia High Yield Fund,
Inc., Columbia Balanced Fund, Inc., Columbia Daily Income Company, Columbia
Municipal Bond Fund, Inc., Columbia U.S. Government Securities Fund, Inc.,
and Columbia Fixed Income Securities Fund, Inc.
J. JERRY INSKEEP, JR.,*+ Chairman and Director of the Fund and each of the
Columbia Funds; Chairman, Director, and a principal shareholder of Columbia
Funds Management Company (the "Advisor") and Columbia Management Co.; Chairman
and Director of Columbia Trust Company (the "Trust Company"); Director of
Columbia Financial Center Incorporated ("Columbia Financial"); Chairman and
Trustee of CMC Fund Trust ("CMC Trust").
JAMES F. RIPPEY,*+ Director of the Fund and each of the Columbia Funds;
President, Director, and a principal shareholder of the Advisor and Columbia
Management Co.; President and Director of the Trust Company; President and
Trustee of CMC Trust.
JAMES C. GEORGE, Director of the Fund and each of the Columbia Funds (since June
1994). Mr. George, the former Investment Manager of the Oregon State Treasury
(1962-1992), is an investment consultant; 1001 S.W. Fifth Avenue, Portland,
Oregon 97204.
JOHN A. KEMP,* Director (since June 1994) and President of the Fund and each of
the Columbia Funds; Senior Vice President and Director of the Advisor, Columbia
Management Co., and the Trust Company; Senior Vice President, Treasurer, and
Director of Columbia Financial; Vice President and Trustee of CMC Trust.
THOMAS R. MACKENZIE, Director of the Fund and each of the Columbia Funds.
Mr. Mackenzie is Chairman of the Board of Directors of Mackenzie Engineering
Incorporated, consulting engineers, 0690 S.W. Bancroft Street, Portland, Oregon
97201.
RICHARD L. WOOLWORTH,+ Director of the Fund and each of the Columbia Funds
(since January 1992). Mr. Woolworth is Chairman, President, and Chief Executive
Officer of The Benchmark Group, health insurers, 100 S.W. Market Street,
Portland, Oregon 97201.
GEORGE L. HANSETH,* Senior Vice President and Treasurer of the Fund and each of
the Columbia Funds; Vice President and Director of the Advisor, Columbia
Management Co., and the Trust Company; President and Director of Columbia
Financial; Vice President and Trustee of CMC Trust.
ALBERT D. CORRADO,* Vice President of the Fund and each of the Columbia Funds;
Vice President of the Advisor and the Trust Company.
LAWRENCE S. VIEHL,* Vice President of the Fund, each of the Columbia Funds, the
Advisor, Columbia Management Co., the Trust Company, and CMC Trust.
JEFF B. CURTIS,* Secretary of the Fund, each of the Columbia Funds, and CMC
Trust (since April 1994); General Counsel, Vice President and Secretary of the
Advisor, Columbia Management Co., the Trust Company, and Columbia Financial
(since March 1993). Attorney with Stoel Rives (1986-1993), a law firm in
Portland, Oregon.
2
<PAGE>
*These officers and directors are "interested persons" as defined by the
Investment Company Act of 1940 and receive no directors fees or salaries from
the Fund. Their business address is 1300 S.W. Sixth Avenue, P.O. Box 1350,
Portland, Oregon 97207.
+Members of the Executive Committee. The Executive Committee has all
powers of the Board of Directors when the Board is not in session, except as
limited by law.
Columbia Financial, a registered securities broker and a member of the
National Association of Securities Dealers, Inc., is authorized under a
distribution agreement with the Fund to sell shares of the Fund. Columbia
Financial does not charge any fees or commissions to investors or the Fund for
the sale of shares of the Fund.
At ___________ ____, 1996, officers and directors of the Fund, in the
aggregate, owned of record or beneficially __________ shares of the Fund (____%
of the total outstanding shares).
------------------------------------------------------------------
INVESTMENT ADVISORY AND OTHER FEES
PAID TO AFFILIATES
------------------------------------------------------------------
Information regarding services performed by the Advisor for the Fund and
the formula for calculating the fees are set forth in the Prospectus under "Fund
Management."
The Advisor has entered into an agreement with Columbia Management Co.
pursuant to which Columbia Management Co. provides the Advisor with statistical
and other factual information, advice regarding economic factors and trends, and
advice as to occasional transactions in specific securities. Columbia
Management Co., upon receipt of specific instructions from the Advisor, contacts
brokerage firms to effect securities transactions for the Fund. The Advisor
pays Columbia Management Co. a fee for this service. No amounts are paid by the
Fund to Columbia Management Co. pursuant to the agreement, and Fund expenses are
not increased as a result of this agreement.
The Trust Company, of which the Advisor is a principal shareholder and
certain officers of the Fund are minority shareholders, acts as custodian of
certain Individual Retirement Accounts (IRAs) and sponsor of Prototype Money
Purchase Pension and Profit Sharing Plans that invest in the Fund. The Trust
Company charges account holders an annual fee of $25 per IRA account (fee is
waived for accounts over $25,000) and a retirement plan setup fee of $100 and an
annual fee of $50.
The Trust Company also acts as transfer agent and dividend crediting
agent for the Fund. Its address is 1301 S.W. Fifth Avenue, P.O. Box 1350,
Portland, Oregon 97207. It issues certificates for shares of the Fund upon
request and records and disburses dividends. The Fund pays the Trust Company a
per-account fee of $1.00 per month for each shareholder account existing at any
time during the month. In addition, the Fund pays the Trust Company for extra
administrative services performed at cost in accordance with a schedule set
forth in the agreement and reimburses the Trust Company for certain
out-of-pocket expenses incurred in carrying out its duties under the agreement.
3
<PAGE>
------------------------------------------------------------------------------
PORTFOLIO TRANSACTIONS
------------------------------------------------------------------------------
The Fund will not generally invest in securities for short-term capital
appreciation but, when business and economic conditions, market prices, or the
Fund's investment policy warrant, individual security positions may be sold
without regard to the length of time they have been held. The Fund is new and
without historical portfolio turnover information but expects that its portfolio
turnover rate will generally not exceed 125%.
Securities owned by the Fund may be purchased with brokerage commissions
or on a principal basis without brokerage commissions. The Fund may also
purchase securities from underwriters, the price of which will include a
commission or concession paid by the issuer to the underwriter. The purchase
price of securities purchased from dealers serving as market makers will include
the spread between the bid and asked prices. Brokerage transactions involving
securities of companies domiciled in countries other than the United States will
normally be conducted on the principal stock exchanges of those countries. In
most international markets, commission rates are not negotiable and may be
higher than negotiated commission rates available in the United States. There
is generally less government supervision and regulation of foreign stock
exchanges and broker-dealers than in the United States.
Prompt execution of orders at the most favorable price will be the
primary consideration of the Fund in transactions where brokerage fees are
involved. Research, statistical, and other services also may be taken into
consideration in selecting broker-dealers. These services may include: advice
concerning the value of securities, the advisability of investing in,
purchasing, or selling securities, and the availability of securities or the
purchasers or sellers of securities; and furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategies, and performance of accounts. While the Fund has no
arrangements or formulas as to either the allocation of brokerage transactions
or commission rates paid thereon, a commission in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction may be paid by the Fund if management of the Fund determines in good
faith that the commission is reasonable in relation to the value of the
brokerage and research services provided, viewed in terms of either that
particular transaction or management's overall responsibilities with respect to
the Fund.
Allocation of transactions to obtain research services for the Advisor
enables the Advisor to supplement its own research and analysis with the
statistics, information, and views of others. While it is not possible to place
a dollar value on these services, it is the opinion of the Advisor that the
receipt of such services will not reduce the overall expenses for its research
or those of its affiliated companies. The fees paid to the Advisor by the Fund
would not be reduced as a result of the receipt of such information and services
by the Fund. The receipt of research services from brokers or dealers might be
useful to the Advisor and its affiliates in rendering investment management
services to the Fund or other clients; and, conversely, information provided by
brokers or dealers who have executed orders on behalf of other clients might be
useful to the Advisor in carrying out its obligations to the Fund.
The Board of Directors of the Fund will from time to time review whether
the recapture for the benefit of the Fund of some portion of the brokerage
commissions or similar fees paid by the Fund on portfolio transactions is
legally permissible and, if so, determine, in the exercise of its business
judgment, whether it would be advisable for the Fund to seek such recapture.
Although the officers and directors of the Fund and each of the Columbia
Funds are the same, investment decisions for the Fund are made independently
from those of the other Columbia Funds or accounts managed by Columbia
Management Co. The same security is sometimes held in the portfolio of more
than one fund or account. Simultaneous transactions are inevitable when
several funds or accounts are managed by the same investment advisor,
particularly when the same security is suitable for the investment objective of
more than one fund or account. In the event of simultaneous transactions,
allocations among the Fund, the Columbia Funds, or accounts will be made on an
equitable basis.
4
<PAGE>
Since 1967, the Advisor and the Funds have had a Code of Ethics (the
"Code") that sets forth general and specific standards relating to the
securities trading activities of all employees of the Advisor and the Funds.
The purpose of the Code is to ensure that all employees conduct their personal
transactions in a manner that does not interfere with the portfolio transactions
of the Funds or take unfair advantage of their relationship with the Advisor or
the Funds. The specific standards included in the Code (as amended) include,
among others, a requirement that all employee trades be pre-cleared; a
prohibition on investing in initial public offerings; required pre-approval on
private placements; a prohibition on portfolio managers trading in a security
seven days before or after a trade in the same security by a Fund over which the
manager exercises investment discretion; and a prohibition on realizing any
profit on the trading of a security held less than 60 days. Certain securities
and transactions, such as mutual fund shares or U. S. Treasuries and purchases
of options on securities indexes or securities under an automatic dividend
reinvestment plan, are exempt from the restrictions in the Code because they
present little or no potential for abuse. Certain transactions involving the
stocks of large capitalization companies are exempt from the seven day black-out
period and short-term trading prohibitions because such transactions are highly
unlikely to affect the price of these stocks. In addition to the trading
restrictions, the Code contains reporting obligations that are designed to
ensure compliance and allow the Advisor's Ethics Committee to monitor that
compliance.
The Advisor and the Funds have also adopted a Policy and Procedures
Designed to Detect and Prevent Insider Trading (the "Insider Trading Policy").
The Insider Trading Policy prohibits any employee of the Advisor or the Funds
from trading, either personally or on behalf of others (including the Funds), on
material nonpublic information. All employees are required to certify each year
that they have read and complied with the provisions of the Code and the Insider
Trading Policy.
------------------------------------------------------------------------------
REDEMPTIONS
------------------------------------------------------------------------------
Information regarding redemptions is set forth in the Prospectus under
"Investor Services -- How to Redeem (Sell) Shares." As discussed under "Investor
Services -- Account Privileges -- Telephone Redemptions" in the Prospectus, the
Fund does not accept responsibility for the authenticity of telephone
instructions relating to redemptions and, accordingly, shareholders who have
approved telephone redemption assume the risk of any losses due to fraudulent
telephone instructions that the Fund reasonably believes to be genuine. The
Fund employs certain procedures to determine if telephone instructions are
genuine, including requesting personal shareholder information prior to acting
on telephone instructions, providing written confirmations of each telephone
transaction, and recording all telephone instructions. The Fund may be liable
for losses due to fraudulent telephone instructions if it fails to follow these
procedures.
The Fund may suspend the determination of net asset value and the right
of redemption for any period (1) when the New York Stock Exchange is closed,
other than customary weekend and holiday closings, (2) when trading on the New
York Stock Exchange is restricted, (3) when an emergency exists as a result of
which disposal of securities owned by the Fund is not reasonably practicable or
it is not reasonably practicable for the Fund to determine the value of its net
assets, or (4) as the Securities and Exchange Commission may by order permit for
the protection of security holders, provided that applicable rules and
regulations of the Securities and Exchange Commission which govern as to whether
the conditions prescribed in (2) or (3) exist are complied with. The New York
Stock Exchange observes the following holidays: New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving, and
Christmas. In the case of suspension of the right to redeem, shareholders may
withdraw their redemption request or receive payment based upon the net asset
value computed upon the termination of the suspension.
5
<PAGE>
------------------------------------------------------------------------------
CUSTODIANS
------------------------------------------------------------------------------
United States National Bank of Oregon, 321 S.W. Sixth Avenue, Portland,
Oregon 97208, acts as Custodian for the Fund. Morgan Stanley Trust Company
("Morgan Stanley" or "Custodian"), One Pierrepont Plaza, Brooklyn, New York
11201 has entered into a custodian agreement with the Fund with respect to the
purchase of foreign securities by the Fund. The Custodians hold all securities
and cash of the Fund, receive and pay for securities purchased, deliver against
payment securities sold, receive and collect income from investments, make all
payments covering expenses of the Fund, and perform other administrative duties,
all as directed by authorized officers of the Fund. The Custodians do not
exercise any supervisory function in the purchase and sale of portfolio
securities or payment of dividends.
Portfolio securities purchased in the United States are maintained in the
custody of the Fund's Custodian. Portfolio securities purchased outside the
United States are maintained in the custody of foreign banks, trust companies,
or depositories that have sub-custodian arrangements with Morgan Stanley (the
"foreign sub-custodians"). Each of the domestic and foreign custodial
institutions holding portfolio securities of the Fund has been approved by the
Board of Directors of the Fund in accordance with regulations under the
Investment Company Act of 1940.
The Board of Directors reviews, at least annually, whether it is in the
best interest of the Fund and its shareholders to maintain Fund assets, in each
of the countries (if any) in which the Fund invests, with particular foreign
sub-custodians in those countries, pursuant to contracts between the foreign
sub-custodians and Morgan Stanley. The review includes an assessment of the
risk of holding Fund assets in that country (including risks of expropriation or
imposition of exchange controls), the operational capability and reliability of
the foreign sub-custodian, and the impact of local laws on the custody
arrangement. The Board of Directors of the Fund is aided in its review by
Morgan Stanley, which has assembled the network of foreign sub-custodians used
by the Fund, as well as by the Advisor and counsel. With respect to foreign
sub-custodians, however, there can be no assurance that the Fund, and the value
of their shares, will not be adversely affected by acts of foreign governments,
financial or operational difficulties of the foreign sub-custodians,
difficulties and costs of obtaining jurisdiction over, or enforcing judgments
against, the foreign sub-custodians, or the application of foreign law to the
Fund's foreign sub-custodial arrangement. Accordingly, an investor should
recognize that the administrative risks involved in holding assets abroad are
greater than those associated with investing in the United States.
------------------------------------------------------------------------------
ACCOUNTING SERVICES
------------------------------------------------------------------------------
The statement of assets and liabilities of the Fund at ____________ ___,
1996, has been included in this Statement of Additional Information in reliance
on the report of the Fund's independent accountants, Coopers & Lybrand L.L.P.,
2700 First Interstate Tower, Portland, Oregon 97201. Coopers & Lybrand L.L.P.,
in addition to examining the financial statements of the Fund, assists in the
preparation of the tax returns of the Fund and in certain other matters.
6
<PAGE>
------------------------------------------------------------------------------
TAXES
------------------------------------------------------------------------------
FEDERAL INCOME TAXES
The Fund intends and expects to meet continuously the tests for
qualification as a regulated investment company under Part I of Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"). The Fund believes
it satisfies the tests to qualify as a regulated investment company.
To qualify as a regulated investment company for any taxable year, the
Fund must, among other things:
(a) derive at least 90 percent of its gross income from dividends,
interest, payments with respect to securities loans, gains from the sale or
other disposition of stock, securities, or foreign currencies, or other income
(including but not limited to gains from options, futures, or forward contracts)
derived with respect to its business of investing in such stock, securities, or
currencies (the "90 Percent Test");
(b) derive less than 30 percent of its gross income from the sale or
other disposition of any of the following, if held for less than three months:
stock, securities, foreign currencies (or options, futures, or forward contracts
on foreign currencies) that are not directly related to the Fund's principal
business of investing in stocks or securities (or options and futures with
respect to stocks or securities), or certain other assets (the "30 Percent
Test"); and
(c) diversify its holdings so that, at the end of each quarter, (i) 50
percent or more of the value of the assets of the Fund is represented by cash,
government securities, and other securities limited, in respect of any one
issuer of such other securities, to an amount not greater than 5 percent of the
value of the assets of the Fund and 10 percent of the outstanding voting
securities of such issuer, and (ii) not more than 25 percent of the value of the
assets of the Fund is invested in the securities (other than government
securities) of any one issuer or of two or more issuers that the Fund "controls"
within the meaning of Section 851 of the Code and that meet certain requirements
(the "Diversification Test"). In addition, the Fund must file, or have filed, a
proper election with the Internal Revenue Service.
Part I of Subchapter M of the Code will apply to the Fund during a
taxable year only if it meets certain additional requirements. Among other
things, the Fund must: (a) have a deduction for dividends paid (without regard
to capital gain dividends) at least equal to the sum of 90 percent of its
investment company taxable income (computed without any deduction for dividends
paid) and 90 percent of its tax-exempt interest in excess of certain disallowed
deductions (unless the Internal Revenue Service waives this requirement), and
(b) either (i) have been subject to Part I of Subchapter M for all taxable years
ending after November 8, 1983 or (ii) as of the close of the taxable year have
no earnings and profits accumulated in any taxable year to which Part I of
Subchapter M did not apply.
A regulated investment company that meets the requirements described
above is taxed only on its "investment company taxable income," which generally
equals the undistributed portion of its ordinary net income and any excess of
net short-term capital gain over net long-term capital loss. In addition, any
excess of net long-term capital gain over net short-term capital loss that is
not distributed is taxed to the Fund at corporate capital gain tax rates. The
policy of the Fund is to apply capital loss carry-forwards as a deduction
against future capital gains before making a capital gain distribution to
shareholders. Under rules that are beyond the scope of this discussion, certain
capital losses and certain net foreign currency losses resulting from
transactions occurring in November and December of a taxable year may be taken
into account either in that taxable year or in the following taxable year.
If any net long-term capital gains in excess of net short-term capital
losses are retained by the Fund, requiring federal income taxes to be paid
thereon by the Fund, the Fund may elect to
7
<PAGE>
treat such capital gains as having been distributed to shareholders. In the
case of such an election, shareholders will be taxed on such amounts as
long-term capital gains, will be able to claim their proportional share of the
federal income taxes paid by the Fund on such gains as credits against their own
federal income tax liabilities, and generally will be entitled to increase the
adjusted tax basis of their shares in the Fund by the differences between their
pro rata shares of such gains and their tax credits.
Shareholders of the Fund are taxed on distributions of net investment
income, or of any excess of net short-term capital gain over net long-term
capital loss, as ordinary income. Income distributions to corporate
shareholders from the Fund may qualify, in whole or part, for the federal income
tax dividends-received deduction, depending on the amount of qualifying
dividends received by the Fund. Qualifying dividends may include those paid to
the Fund by domestic corporations but do not include those paid by foreign
corporations. The dividends-received deduction equals 70 percent of eligible
dividends received from the Fund by a shareholder. Distributions of any excess
of net long-term capital gain over net short-term capital loss from the Fund are
ineligible for the dividends-received deduction.
Distributions properly designated by the Fund as representing the excess
of net long-term capital gain over net short-term capital loss are taxable to
shareholders as long-term capital gain, regardless of the length of time the
shares of the Fund have been held by shareholders. For noncorporate taxpayers,
the highest rate that applies to long-term capital gains is lower than the
highest rate that applies to ordinary income. Any loss that is realized and
allowed on redemption of shares of the Fund less than 6 months from the date of
purchase of the shares and following the receipt of a capital gain dividend will
be treated as a long-term capital loss to the extent of the capital gain
dividend. For this purpose, Section 852(b)(4) of the Code contains special
rules on the computation of a shareholder's holding period.
Distributions of taxable net investment income and net realized capital
gains will be taxable as described above, whether paid in shares or in cash.
Each distribution is accompanied by a brief explanation of the form and
character of the distribution. Within 60 days after the close of each calendar
year, the Fund issues to each shareholder a statement of the federal income tax
status of all distributions, including a statement of the prior calendar year's
distributions which the Fund has designated to be treated as long-term capital
gain.
A distribution may be taxable to a shareholder even if the distribution
reduces the net asset value of the shares held below their cost (and is in an
economic sense a return of the shareholder's capital). This tax result is most
likely when shares are purchased shortly before an annual distribution of
capital gains or other earnings.
The Fund is generally required to obtain from its shareholders a
certification of the shareholder's taxpayer identification number and certain
other information. The Fund generally will not accept an investment to
establish a new account that does not comply with this requirement. If a
shareholder fails to certify such number and other information, or upon receipt
of certain notices from the Internal Revenue Service, the Fund may be required
to withhold 31 percent of any reportable interest or dividends, or redemption
proceeds, payable to the shareholder, and to remit such sum to the Internal
Revenue Service, for credit toward the shareholder's federal income taxes. A
shareholder's failure to provide a social security number or other tax
identification number may subject the shareholder to a penalty of $50 imposed by
the Internal Revenue Service. In addition, that failure may subject the Fund to
a separate penalty of $50. This penalty will be charged against the
shareholder's account, which will be closed. Closure of the account may result
in a capital gain or loss.
If the Fund declares a dividend in October, November, or December payable
to shareholders of record on a certain date in such a month and pays the
dividend during January of the following year, the shareholders will be taxed as
if they had received the dividend on December 31 of the year in which the
dividend was declared. Thus, a shareholder may be taxed on the dividend in a
taxable year prior to the year of actual receipt.
A special tax may apply to the Fund if it fails to make enough
distributions during the calendar year. The required distributions for each
calendar year generally equal the sum of
8
<PAGE>
(a) 98 percent of the ordinary income for the calendar year plus (b) 98
percent of the capital gain net income for the one-year period that ends on
October 31 during the calendar year (or for the calendar year itself if the Fund
so elects), plus (c) an adjustment relating to any shortfall for the prior
taxable year. If the actual distributions are less than the required
distributions, a tax of 4 percent applies to the shortfall.
The Code allows the deduction by certain individuals, trusts, and estates
of "miscellaneous itemized deductions" only to the extent that such deductions
exceed 2 percent of adjusted gross income. The limit on miscellaneous itemized
deductions will NOT apply, however, with respect to the expenses incurred by any
"publicly offered regulated investment company." The Fund believes that it is a
publicly offered regulated investment company because its shares are
continuously offered pursuant to a public offering (within the meaning of
Section 4 of the Securities Act of 1933, as amended). Therefore, the limit on
miscellaneous itemized deductions should not apply to expenses incurred by the
Fund.
STATE INCOME TAXES
The state tax consequences of investments in the Fund are beyond the
scope of the tax discussions in the Prospectus and this Statement of Additional
Information.
ADDITIONAL INFORMATION
The foregoing summary and the summary included in the Prospectus under
"Taxes" of tax consequences of investment in the Fund are necessarily general
and abbreviated. No attempt has been made to present a complete or detailed
explanation of tax matters. Furthermore, the provisions of the statutes and
regulations on which they are based are subject to change by legislative or
administrative action. Local taxes are beyond the scope of this discussion.
Prospective investors in the Fund are urged to consult their own tax advisors
regarding specific questions as to federal, state, or local taxes.
This discussion applies only to general U.S. shareholders. Foreign
investors and U.S. shareholders with particular tax issues or statuses should
consult their own tax advisors regarding the special rules that may apply to
them.
------------------------------------------------------------------------------
PERFORMANCE
------------------------------------------------------------------------------
The Fund will from time to time advertise or quote its total return
performance. These figures represent historical data and are calculated
according to Securities and Exchange Commission ("SEC") rules standardizing such
computations. The investment return and principal value will fluctuate so that
shares when redeemed may be worth more or less than their original cost.
The Fund may publish average annual total return quotations for recent 1,
5, and 10-year periods (or a fractional portion thereof) computed by finding the
average annual compounded rates of return over the 1, 5, and 10-year periods
that would equate the initial amount invested to the ending redeemable value,
according to the following formula:
P(1+T)to the nth power = ERV
Where: P = a hypothetical initial payment of $1000
T = average annual total return
n = number of years
9
<PAGE>
ERV = ending redeemable value of a hypothetical $1000 payment made at
the beginning of the 1, 5, and 10-year periods (or fractional
portion thereof)
Total return figures may also be published for recent 1, 5, and 10-year
periods where the total return figures represent the percentage return for the
1, 5, and 10-year periods that would equate the initial amount invested to the
ending redeemable value.
If the Fund's registration statement under the Investment Company Act of
1940 has been in effect less than 1, 5, or 10 years, the time period during
which the registration statement has been in effect will be substituted for the
periods stated.
The Fund may compare its performance to other mutual funds with similar
investment objectives and to the mutual fund industry as a whole, as quoted by
ranking services and publications of general interest. For example, these
services or publications may include Lipper Analytical Services, Inc.,
Schabacker's Total Investment Service, Barron's, Business Week, Changing Times,
The Financial Times, Financial World, Forbes, Investor's Daily, Money,
Morningstar, Inc., Personal Investor, The Economist, The Wall Street Journal,
and USA Today. These ranking services and publications rank the performance of
the Fund against all other funds over specified periods and against funds in
specified categories.
The Fund may also compare its performance to that of a recognized stock
or bond index including the Standard & Poor's 500, Dow Jones, Russell, and
Nasdaq stock indices, the NAREIT Equity Index, and the Shearson Lehman and
Salomon bond indices. The comparative material found in advertisements, sales
literature, or in reports to shareholders may contain past or present
performance ratings. This is not to be considered representative or indicative
of future results or future performance. Unmanaged indices may assume the
reinvestment of dividends, but generally do not reflect deductions for
administrative and management costs and expenses.
------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
------------------------------------------------------------------------------
The Prospectus sets forth the investment objectives and certain
restrictions applicable to the Fund. The following is a list of investment
restrictions applicable to the Fund. If a percentage limitation is adhered to
at the time of an investment by the Fund, a later increase or decrease in
percentage resulting from any change in value or net assets will not result in a
violation of the restriction. The Fund may not change these restrictions
without the approval of a majority of its shareholders, which means the vote at
any meeting of shareholders of the Fund of (i) 67 percent or more of the shares
present or represented by proxy at the meeting (if the holders of more than 50
percent of the outstanding shares are present or represented by proxy) or
(ii) more than 50 percent of the outstanding shares, whichever is less.
The Fund may not:
1. Buy or sell commodities. However, the Fund may invest in futures
contracts relating to broadly based stock indices, subject to the restrictions
in paragraph 15.
2. Concentrate investments in any industry. However, the Fund may
(a) invest up to 25 percent of the value of the total assets in any one industry
and (b) invest for temporary defensive purposes up to 100 percent of the value
of the total assets in securities issued or guaranteed by the U.S. Government or
its agencies or instrumentalities.
3. Buy or sell real estate. However, the Fund may purchase or hold
readily marketable securities issued by companies such as real estate investment
trusts, which operate in real estate or interests therein.
4. Make loans to other persons (except by purchase of short-term
commercial paper, bonds, debentures, or other debt securities constituting part
of an issue).
10
<PAGE>
5. The Fund may not purchase a repurchase agreement with a maturity
greater than seven days or a security that is subject to legal or contractual
restrictions on resale or for which there are no readily available market
quotations if, as a result of such purchase, more than 10 percent of the assets
of the Fund (taken at current value) is invested in such securities.
6. Purchase the securities of any issuer if the purchase, at the time
thereof, would cause more than 10 percent of the outstanding voting securities
of that issuer to be held in the Fund.
7. Purchase the securities of any issuer if the purchase, at the time
thereof, would cause more than 5 percent of the value of the total assets of the
Fund at market value to be invested in the securities of that issuer (other than
obligations of the U.S. Government and its agencies and instrumentalities), with
reference to 75 percent of the assets of the Fund.
8. Purchase securities of other open-end investment companies.
9. Issue senior securities, bonds, or debentures.
10. Underwrite securities of other issuers, except that the Fund may
acquire portfolio securities under circumstances where, if the securities are
later publicly offered or sold by the Fund, it might be deemed to be an
underwriter for purposes of the Securities Act of 1933.
11. Borrow money in excess of 5 percent of its net asset value. Any
borrowing must only be temporarily from banks and for extraordinary or emergency
purposes.
12. Invest its funds in the securities of any company if the purchase,
at the time thereof, would cause more than 10 percent of the value of the Fund's
total assets to be invested in companies which, including predecessors and
parents, have a record of less than three years' continuous operation.
13. Invest in companies for the purpose of exercising control or
management.
14. Engage in short sales of securities except to the extent that it
owns an equal amount of the securities sold short or other securities
convertible into an equivalent amount of such securities ("short sales against
the box"). Such transactions may only be made to protect a profit in or to
attempt to minimize a loss with respect to securities held by the Fund. In any
event, no more than 10 percent of the value of the Fund's net assets taken at
market may, at any time, be held as collateral for such sales.
15. Buy and sell puts and calls as securities, stock index futures or
options on stock index futures, or financial futures or options on financial
futures, unless such options or futures are offered through the facilities of a
national securities association or are listed on a national securities or
commodities exchange. The Fund may write call options that are covered in
accordance with rules established by the Securities and Exchange Commission.
16. Invest directly in oil, gas, or other mineral development or
exploration programs or leases; although, the Fund may own securities of
companies engaged in those businesses.
Some of the policies described above prohibit particular practices.
Other policies (paragraphs 5, 11, 12, and 14) permit specified practices but
limit the portion of the Fund's assets that may be so invested. Subject to the
investment restriction, the Fund expects to engage in the practices described in
paragraph 12. The Fund has no current intention of engaging in the other
permitted practices in the foreseeable future.
OTHER RESTRICTIONS
To permit the sale of shares of the Fund in certain states, the Fund may
make commitments more restrictive than the fundamental restrictions described
above. If the Board of Directors of the Fund determines that a commitment is no
longer in the best interests of the Fund and its shareholders, it will revoke
the commitment, terminate sales of its shares in the state(s) involved, and
notify the affected shareholders.
11
<PAGE>
------------------------------------------------------------------
ADDITIONAL INFORMATION REGARDING CERTAIN
INVESTMENTS BY THE FUND
------------------------------------------------------------------
WARRANTS
Warrants are in effect longer-term call options. They give the holder
the right to purchase a given number of shares of a particular company at
specified prices within certain periods of time. The purchaser of a warrant
expects that the market price of the security will exceed the purchase price of
the warrant plus the exercise price of the warrant, thus giving him a profit.
Since the market price may never exceed the exercise price before the expiration
date of the warrant, the purchaser of the warrant risks the loss of the purchase
price of the warrant. Warrants generally trade in the open market and may be
sold rather than exercised. Warrants are sometimes sold in unit form with other
securities of an issuer. Units of warrants and common stock may be employed in
financing young, unseasoned companies. The purchase price of a warrant varies
with the exercise price of the warrant, the current market value of the
underlying security, the life of the warrant, and various other investment
factors. The Fund's investment restrictions do not limit the percentage of the
Fund's assets that may be invested in warrants, but the Fund does not intend to
invest more than 5 percent of its assets in warrants or more than 2 percent of
its assets in warrants that are not listed on the New York Stock Exchange or
American Stock Exchange.
12
<PAGE>
FINANCIAL STATEMENTS
(to be provided in the pre-effective amendment)
13
<PAGE>
COLUMBIA SMALL CAP FUND, INC.
PART C
OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
The Statement of Assets and Liabilities and Report of Independent
Accountants will be included in a pre-effective amendment to the
Registration Statement.
(b) Exhibits:
(1) Registrant's Articles of Incorporation.*
(2) Registrant's Bylaws.*
(4A) Specimen Stock Certificate.
(4B) Application.**
(5) Investment Advisory Contract.
(6) Distribution Agreement.
(8A) Custodian Contract between the Registrant and United States
National Bank of Oregon.
(8B) Custodian Contract between the Registrant and Morgan Stanley Trust
Company.
(9) Transfer Agent Agreement.
(10) Opinion of Counsel.**
(11) Consent of Accountants.**
(12) See paragraph (a) of Item 24.
(14) IRA and Money Purchase Pension and Profit Sharing Plan booklets.
(17) Powers of Attorney.
(27) Financial Data Schedule.**
* Previously filed.
** To be filed by Amendment.
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
The Registrant, Columbia Balanced Fund, Inc., Columbia Common Stock Fund,
Inc., Columbia Fixed Income Securities Fund, Inc., Columbia Growth Fund, Inc.,
Columbia International Stock Fund, Inc., Columbia Daily Income Company, Columbia
Special Fund, Inc., Columbia Municipal Bond Fund, Inc., Columbia U.S. Government
Securities Fund, Inc., Columbia Real Estate Equity Fund, Inc., and Columbia High
Yield Fund, Inc., each an Oregon corporation (the "Columbia Funds"), have
investment advisory contracts with Columbia Funds Management Company (the
"Advisor"), an Oregon corporation. Columbia Trust Company, an Oregon
corporation, is 79% owned by the Advisor. J. Jerry Inskeep, Jr. and James F.
Rippey own 14.9% and 27.2%, respectively, of
C-1
<PAGE>
the voting securities of the Advisor; 32.3% each of the voting securities of
Columbia Financial Center Incorporated, an Oregon corporation; 41.1% each of the
voting securities of Columbia Management Co., an Oregon corporation; and 3.7%
and 1.2%, respectively, of the voting securities of Columbia Trust Company. CMC
Fund Trust, an Oregon business trust, has an investment advisory contract with
Columbia Management Co. See "Management" in Part B. The Registrant does not
have any subsidiaries.
Item 26. NUMBER OF HOLDERS OF SECURITIES
At the commencement of the offering of the Registrant's shares of Common
Stock to the public, all outstanding shares will be held by certain officers of
the Advisor or Columbia Management Co.
Item 27. INDEMNIFICATION
The articles of incorporation and bylaws of the Registrant provide that any
director or officer of the Registrant shall be indemnified by the Registrant
against all expenses incurred by him in connection with any claim, action, suit,
or proceeding, civil or criminal, by reason of his being an officer, director,
employee, or agent of the Registrant to the fullest extent not prohibited by the
Oregon Business Corporation Act and the Investment Company Act of 1940 and
related regulations and interpretations of the Securities and Exchange
Commission.
Insofar as reimbursement or indemnification for expenses incurred by a
director or officer in legal proceedings arising under the Securities Act of
1933 may be permitted by the above provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
reimbursement or indemnification is against public policy as expressed in the
Act and therefore unenforceable. In the event that any claim for
indemnification under the above provisions is asserted by an officer or director
in connection with the securities being registered, the Registrant, unless in
the opinion of its counsel the matter has already been settled by controlling
precedent, will (except insofar as such claim seeks reimbursement of expenses
paid or incurred by an officer or director in the successful defense of any such
action, suit or proceeding or claim, issue, or matter therein) submit to a court
of appropriate jurisdiction the question whether indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The Registrant's directors and officers are also named insureds under an
insurance policy issued by ICI Mutual Insurance Company.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR
Information regarding the businesses of the Advisor and its officers and
directors is set forth under "Fund Management" in the Prospectus and under
"Management" and "Investment Advisory and Other Fees Paid to Affiliates" in the
Statement of Additional Information and is incorporated herein by reference.
Columbia Trust Company also acts as trustee and/or agent for the investment of
the assets of pension and profit sharing plans in pooled accounts.
C-2
<PAGE>
Item 29. PRINCIPAL UNDERWRITERS
Pursuant to a distribution agreement with each of the Columbia Funds,
including the Registrant, Columbia Financial is authorized to sell shares of
each fund to the public. No commission or other compensation is received by
Columbia Financial in connection with the sale of shares of the Columbia Funds.
Certain information on each director and officer of Columbia Financial is set
forth below:
Name and Principal Positions with
Business Address Columbia Financial Positions with Registrant
- ------------------ ------------------ -------------------------
J. Jerry Inskeep, Jr. Director Chairman and Director
1301 SW Fifth Ave
Portland, OR 97207
George L. Hanseth President and Director Senior Vice President
1301 SW Fifth Ave and Treasurer
Portland, OR 97207
John A. Kemp Senior Vice President, President and Director
1301 SW Fifth Ave Treasurer and Director
Portland, OR 97207
Jeff B. Curtis General Counsel, Vice Secretary
1301 SW Fifth Avenue President and Secretary
Portland, OR 97201
Item 30. LOCATION OF ACCOUNTS AND RECORDS
The records required to be maintained under Section 31(a) of the Investment
Company Act of 1940 and Rules 31a-1 to 31a-3 thereunder are maintained by the
Registrant, Columbia Funds Management Company, and Columbia Trust Company at
1301 SW Fifth Avenue, Portland, Oregon 97201. Records relating to the
Registrant's portfolio securities are also maintained by United States National
Bank of Oregon and Morgan Stanley Trust Company.
Item 31. MANAGEMENT SERVICES
Not applicable.
Item 32. UNDERTAKINGS
(a) The Registrant hereby undertakes to file a post-effective amendment, using
reasonably current unaudited financial statements, within four to six months
from the effective date of this Registration Statement, subject to the
instructions set forth in Item 32 of Form N-1A.
(b) The Registrant hereby undertakes to promptly call a meeting of the
shareholders of the Registrant for the purpose of voting on the removal of any
director of the Registrant when requested in writing by shareholders of at least
10 percent of the outstanding shares of Common Stock of the Registrant. The
Registrant undertakes to assist its shareholders in communicating with other
shareholders of the Registrant to the extent required by Section 16 of the
Investment Company Act of 1940 or any regulations promulgated thereunder.
(c) The Registrant hereby undertakes, upon request and without charge, to
furnish a copy of the Registrant's annual report to shareholders to each person
to whom a prospectus is delivered.
C-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in this City of Portland and State of Oregon on the 27th day of
August, 1996.
COLUMBIA SMALL CAP FUND, INC.
By JOHN A KEMP
--------------------------------
John A. Kemp, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on the 27th day of August, 1996
by the following persons in the capacities indicated.
(i) Principal executive officer:
JOHN A. KEMP President and Director
- -----------------------------------
John A. Kemp
(ii) Principal accounting and
financial officer:
* GEORGE L. HANSETH Senior Vice President
- -----------------------------------
George L. Hanseth
(iii) Directors:
* J. JERRY INSKEEP, JR. Chairman of the Board and Director
- -----------------------------------
J. Jerry Inskeep, Jr.
* JAMES C. GEORGE Director
- -----------------------------------
James C. George
* THOMAS R. MACKENZIE Director
- -----------------------------------
Thomas R. Mackenzie
* JAMES F. RIPPEY Director
- -----------------------------------
James F. Rippey
* RICHARD L. WOOLWORTH Director
- -----------------------------------
Richard L. Woolworth
* JOHN A. KEMP
- -----------------------------------
John A. Kemp
as Attorney-in-fact
C-4
<PAGE>
COLUMBIA SMALL CAP FUND, INC.
EXHIBIT INDEX
Exhibit No. Sequential Page No.
- ----------- -------------------
(1) Registrant's Articles of Incorporation.*
(2) Registrant's Bylaws.*
(4A) Specimen Stock Certificate.
(4B) Application.**
(5) Investment Advisory Contract.
(6) Distribution Agreement.
(8A) Custodian Contract between the Registrant and United
States National Bank of Oregon.
(8B) Custodian Contract between the Registrant and Morgan
Stanley Trust Company.
(9) Transfer Agent Agreement.
(10) Opinion of Counsel.**
(11) Consent of Accountants.**
(12) See paragraph (a) of Item 24.
(14) IRA and Money Purchase Pension and Profit Sharing Plan booklets.
(17) Powers of Attorney.
(27) Financial Data Schedule.**
* Previously filed
** To be filed by amendment.
C-5
<PAGE>
[LOGO]
COLUMBIA SMALL CAP
FUND, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF OREGON
This Certifies that
*SEE REVERSE FOR
CERTAIN DEFINITIONS
is the owner of
fully paid and non-assessable Shares of the Columbia Small Cap Fund,
Inc., transferable on the books of the Corporation by the holder
thereof in person or by duly authorized attorney upon surrender of
this certificate properly endorsed. This certificate is not valid
unless countersigned by the transfer agent. Witness the facsimile
seal of the Corporation and the facsimile signatures of its duly
authorized officers.
COLUMBIA Dated:
SMALL CAP
FUND, INC.
Jeff B. Curtis J. Jerry Inskeep, Jr.
SECRETARY CORPORATE CHAIRMAN
SEAL
OREGON
COUNTERSIGNED:
BY TRANSFER AGENT
___________________________________________________________________
Authorized Officer
<PAGE>
REQUIREMENTS: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER.
THE SIGNATURE(S) MUST BE GUARANTEED BY A COMMERCIAL BANK OR BY A SECURITIES
FIRM HAVING MEMBERSHIP ON A RECOGNIZED NATIONAL SECURITIES EXCHANGE, WHOSE
SIGNATURE(S) IS KNOWN TO THE TRANSFER AGENT OF THE CORPORATION.
For value received, hereby sell, assign and transfer unto
------------------
- --------------------------------------------------------------------------------
(Please print or typewrite name and address of assignee)
- --------------------------------------------------------------------------------
Shares
- --------------------------------------------------------------------------
of the Common Stock represented by the within Certificate and do hereby
irrevocably Constitute and appoint Attorney
--------------------------------------
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.
Dated, 19
--------------------- ----
----------------------------------------------------------------------
Owner
----------------------------------------------------------------------
Signature of Co-Owner, if any
IMPORTANT: BEFORE SIGNING, READ AND COMPLY CAREFULLY
WITH REQUIREMENTS PRINTED ABOVE.
SIGNATURE(S) GUARANTEED BY:
-----------------------------------------------------
*The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT- Custodian-
----- ----
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors
JT TEN - as joint tenants with right of survivorship
and not as tenants in common Act
--------------------
(State)
Additional abbreviations may also be used though not in the above list.
<PAGE>
- ------------------------------------------------------------------------
THIS SPACE MUST NOT BE COVERED IN ANY WAY
<PAGE>
COLUMBIA SMALL CAP FUND, INC.
INVESTMENT ADVISORY CONTRACT
This Agreement is made the 20th day of August, 1996 between
COLUMBIA SMALL CAP FUND, INC., an Oregon corporation, (the "Fund") and COLUMBIA
FUNDS MANAGEMENT COMPANY, an Oregon corporation having its principal place of
business in Portland, Oregon (the "Adviser"). The Fund is registered as an
open-end investment company pursuant to the Investment Company Act of 1940 (the
"Act"). The Adviser is registered as an investment adviser pursuant to the
Investment Advisers Act of 1940. This Agreement relates to services to be
performed by the Adviser with respect to the Fund.
The parties agree as follows:
1. DUTIES OF ADVISER. The Adviser shall regularly provide the Fund with
research, advice, and supervision with respect to investment matters and shall
furnish continuously an investment program, recommend what securities shall be
purchased or sold and what portion of the Fund's assets shall be held invested
or uninvested, subject always to the provisions of the Act and the Fund's
Articles of Incorporation and Bylaws, and amendments thereto, which amendments
shall be furnished to the Adviser by the Fund. The Adviser shall take any steps
necessary or appropriate to carry out its decisions in regard to the foregoing
matters and the general conduct of the business of the Fund. The Adviser may
take into consideration receipt of research and statistical information and
other services rendered to the Fund in the allocation of commissions from
portfolio brokerage business.
2. ALLOCATION OF CHARGES AND EXPENSES.
(a) The Adviser shall pay or reimburse the Fund for payments
made by the Fund for all executive salaries and executive expenses, office rent
of the Fund, ordinary office expenses (other than the expense of clerical
services relating to the administration of the Fund), and for any other expenses
that, if otherwise borne by the Fund, would cause the Fund to "be deemed to be
acting as a distributor of securities of which it is the issuer, other than
through an underwriter," pursuant to Rule 12b-1 under the Act. The Adviser
shall provide investment advisory, statistical, and research facilities and all
clerical services relating to research, statistical, and investment work with
respect to the Fund.
(b) The Adviser shall not be required to pay any expenses of
the Fund other than those enumerated in this Agreement. The Fund will assume
all other costs, including the cost of its custodian, legal, auditing, and
accounting expenses, disinterested directors' fees, taxes, and governmental
fees, interest, brokers' commissions, transaction expenses, cost of stock
certificates, and any other expenses (including clerical expenses) of issue,
sale, repurchase, or redemption of shares, expenses of registering or qualifying
shares for sale, transfer taxes, and all expenses of preparing the Fund's
registration statement and prospectus, and the cost of printing and delivering
to shareholders prospectuses and reports.
1
<PAGE>
3. COMPENSATION OF THE ADVISER. For the services to be rendered, the
facilities to be furnished, and the payments to be made by the Adviser, as
provided in Sections 1 and 2 hereof, for each calendar month the Fund shall pay
to the Adviser a fee computed at the annual rate of 1 percent of daily net
assets. If the asset value is not required to be determined on any particular
business day, then for the purposes of this Section 3, the asset value of a
share as last determined shall be deemed to be the asset value of a share as of
the close of business on that day. If there is no business day in any calendar
month, the fee shall be computed on the basis of the asset value of a share as
last determined, multiplied by the average number of shares outstanding on the
last day of the month.
4. COVENANTS OF THE ADVISER. In connection with purchases or sales of
portfolio securities for the account of the Fund, neither the Adviser nor any
officer, director, or employee of the Adviser shall act as a principal. The
Adviser covenants that it and its employees will comply with investment
restrictions of the Fund's Bylaws applicable to them. If the Adviser or any of
its affiliates give any advice to clients concerning the shares of the Fund, it
will act solely as investment counsel for the clients and not on behalf of the
Fund.
5. LIMITATION ON LIABILITY OF ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
in connection with the matters to which this agreement relates, except a loss
resulting from willful malfeasance, bad faith, or gross negligence on the part
of the Adviser in the performance of its duties or from reckless disregard by
the Adviser of its obligations and duties under this Agreement.
6. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) This Agreement shall remain in force for two years from the
date hereof, and it may be continued from year to year thereafter if approved
annually by a vote of a majority of the Fund's shareholders or by its Board of
Directors and in either case a vote of a majority of the Board of Directors who
are not parties to this Agreement or interested persons of any such party cast
in person at a meeting called for the purpose of voting on such approval.
(b) This Agreement may be terminated at any time without the
payment of any penalty by vote of the Board of Directors of the Fund, by vote of
a majority of the outstanding shares of the Fund, or by the Adviser, on 60 days
written notice to the other party.
(c) This Agreement shall automatically terminate if it is
assigned. The Adviser shall notify the Fund of any change in the officers or
directors of the Adviser within a reasonable time after the change. The terms
"assignment," "vote of a majority of the outstanding voting securities", and
"interested persons" shall have the meanings specified in the Act.
2
<PAGE>
IN WITNESS WHEREOF the parties have caused this Agreement to be
executed as of the day and year first written above.
COLUMBIA SMALL CAP FUND, INC.
By /s/ John A. Kemp
------------------------------------
Title: President
COLUMBIA FUNDS MANAGEMENT COMPANY
By /s/ George L. Hanseth
------------------------------------
Title: Vice President
3
<PAGE>
DISTRIBUTION AGREEMENT
DATED: August 20, 1996
BETWEEN: COLUMBIA SMALL CAP FUND, INC.
an Oregon corporation
1301 SW Fifth Avenue, Portland, Oregon 97207 the Fund
AND: COLUMBIA FINANCIAL CENTER
INCORPORATED, an Oregon corporation
1301 SW Fifth Avenue, Portland, Oregon 97207 the Distributor
The Fund is an open-end management investment company registered
under the Investment Company Act of 1940, as amended, (Investment Company Act).
The Distributor is engaged principally in the business of distributing shares of
the investment companies sponsored and managed by Columbia Funds Management
Company (the Adviser), is registered as a broker-dealer under the Securities
Exchange Act of 1934, as amended, (the Exchange Act), and is a member of the
National Association of Securities Dealers, Inc. (NASD). The Fund desires the
Distributor to act as a distributor in the public offering of its shares.
The parties agree as follows:
1. DELIVERY OF FUND DOCUMENTS. The Fund shall make available
promptly to the Distributor copies of any registration statements filed by it
with the Securities and Exchange Commission (SEC) under the Securities Act of
1933, as amended, (Securities Act) or the Investment Company Act, together with
any financial statements and exhibits included therein, and all amendments or
supplements thereto.
2. SALE OF SHARES. Subject to the provisions of Sections 3, 4, and 6
and to any minimum purchase requirements from time to time described in the
Fund's prospectus, the Distributor is authorized to sell, as agent on behalf of
the Fund, shares of the Fund's capital stock (Shares) authorized for issuance
and registered under the Securities Act. The Distributor may also sell Shares
under offers of exchange between and among the investment companies for which
the Adviser acts as investment adviser (Columbia Funds). Sales will be made by
the Distributor on behalf of the Fund by accepting unconditional orders to
purchase Shares placed with the Distributor by investors, and purchases will be
made by the Distributor only after acceptance by the Distributor of orders. The
sales price to the public of Shares shall be the public offering price as
defined in Section 5.
3. SALE OF SHARES BY THE FUND. The Fund reserves the right to sell
Shares to investors pursuant to applications received and accepted by the Fund
or its transfer agent or any other lawful method. The Fund also reserves the
right to issue
1
<PAGE>
Shares in connection with the merger or consolidation of any other investment
company, trust, or personal holding company with the Fund or the Fund's
acquisition by purchase or otherwise of all or substantially all of the assets
of an investment company, trust, or personal holding company. Any right granted
to the Distributor to accept orders for Shares, to make sales on behalf of the
Fund, or to purchase Shares for resale will not apply to Shares issued in
connection with the merger or consolidation of any other investment company with
the Fund or its acquisition by purchase or otherwise of all or substantially all
of the assets of any investment company, trust, or personal holding company, or
substantially all of the outstanding shares or interests of any such entity, and
this right shall not apply to shares that may be offered by the Fund to
shareholders by virtue of their being shareholders of the Fund.
4. SHARES COVERED BY THIS AGREEMENT. This Agreement relates to the
issuance and sale of Shares that are duly authorized, registered, and available
for sale by the Fund, including redeemed or repurchased Shares if and to the
extent they may be legally sold and if, but only if, the Fund authorizes the
Distributor to sell them.
5. PUBLIC OFFERING PRICE. All Shares sold by the Distributor
pursuant to this Agreement shall be sold at the public offering price. The
public offering price for all accepted subscriptions will be the net asset value
per share, as determined in the manner provided in the Fund's articles of
incorporation or bylaws, as now in effect or as later amended (and as reflected
in the Fund's then current prospectus), next after the order is accepted by the
Distributor. The Distributor will process orders submitted by brokers for the
sale of Shares at the public offering price exclusive of any commission charged
by such broker to the customer.
6. SUSPENSION OF SALES. If and whenever the determination of net
asset value is suspended and until the suspension is terminated, no further
orders for Shares shall be accepted by the Distributor except unconditional
orders placed with the Distributor before it had knowledge of the suspension. In
addition, the Fund reserves the right to suspend sales and the Distributor's
authority to accept orders for Shares on behalf of the Fund if, in the judgment
of the board of directors of the Fund, it is in the best interests of the Fund
to do so. The suspension will continue for the period determined by the Board
of Directors of the Fund. In that event, no orders to purchase Shares shall be
processed or accepted by the Distributor on behalf of the Fund while the
suspension remains in effect, except for Shares necessary to cover unconditional
orders accepted by the Distributor before it had knowledge of the suspension,
unless otherwise directed by the board of directors of the Fund.
7. SOLICITATION OF ORDERS. In consideration of the rights granted to
the Distributor under this Agreement, the Distributor will use its best efforts
(but only in jurisdictions in which the Distributor may lawfully do so) to
obtain from investors unconditional orders for Shares authorized for issuance by
the Fund and registered under the Securities Act, provided that the Distributor
may in its discretion reject any order to purchase Shares. This does not
obligate the Distributor to register or maintain its registration as a broker or
dealer under the securities laws of any jurisdiction if, in the discretion of
the Distributor, registration is not practical or feasible. The Fund shall make
available to the Distributor at the expense of the
2
<PAGE>
Distributor the number of copies of the Fund's then effective prospectus as the
Distributor reasonably requests. The Fund shall furnish to the Distributor
copies of all information, financial statements, statements of additional
information, and other papers the Distributor reasonably requests for use in
connection with the distribution of Shares.
8. AUTHORIZED REPRESENTATIONS.
(a) The Fund is not authorized by the Distributor to give on
behalf of the Distributor any information or to make any representations other
than the information and representations contained in a registration statement
or prospectus filed with the SEC under the Securities Act or the Investment
Company Act covering Shares, as the registration statement and prospectus is
amended or supplemented from time to time.
(b) The Distributor is not authorized by the Fund to give on
behalf of the Fund any information or to make any representations in connection
with the sale of Shares other than the information and representations contained
in a registration statement or prospectus filed with the SEC under the
Securities Act or the Investment Company Act covering Shares, as the
registration statement and prospectus is amended or supplemented from time to
time,or contained in shareholder reports or other material that may be prepared
by or on behalf of the Fund for the Distributor's use. This paragraph shall not
be construed to prevent the Distributor from preparing and distributing
tombstone and sales literature or other materials it deems appropriate. No
person other than the Distributor is authorized to act as principal underwriter
(as defined in the Investment Company Act) for the Fund.
9. REGISTRATION AND SALE OF ADDITIONAL SHARES. The Fund agrees to
register with the SEC an indefinite number of Shares pursuant to Rule 24f-2
under the Investment Company Act. The Fund will, in cooperation with the
Distributor, take action necessary from time to time to qualify the Shares
(registered or otherwise qualified for sale under the Securities Act) in any
jurisdiction agreeable to the Distributor and Fund and to maintain such
qualification.
10. EXPENSES.
(a) The Distributor shall pay (or will enter into arrangements
providing that persons other than the Distributor shall pay) all fees and
expenses:
(i) incurred in connection with its registration as a
broker or dealer or the registration or qualification of its officers,
directors, or representatives under the laws of various jurisdictions; and
(ii) that, if otherwise borne by the Fund, would cause the
Fund to "be deemed to be acting as a distributor of securities of which it is
the issuer, other than through an underwriter," pursuant to Rule 12b-1 under the
Investment Company Act.
3
<PAGE>
(b) The Fund shall pay all other fees and expenses incurred by
the Fund and not allocated to the Distributor pursuant to 10(a) above.
11. CONFORMITY WITH LAW. The Distributor agrees that in selling
Shares it shall conform in all respects with the laws of the United States and
any jurisdiction in which the Shares are offered for sale by the Distributor
pursuant to this Agreement and the rules and regulations of the NASD.
12. INDEPENDENT CONTRACTOR. The Distributor shall be an independent
contractor, and neither the Distributor nor any of its officers, directors,
employees, or representatives is or shall be an employee of the Fund in the
performance of the Distributor's duties hereunder. The Distributor shall be
responsible for its own conduct and the employment, control, and conduct of its
agents and employees and for injury to its agents or employees or to others
through its agents or employees. The Distributor assumes full responsibility
for its agents and employees, as such, under applicable statutes and agrees to
pay all employee taxes thereunder.
13. INDEMNIFICATION.
(a) The Distributor agrees to indemnify and hold harmless the
Fund and each of its directors, officers, employees, and representatives and
each person, if any, who controls the Fund within the meaning of Section 15 of
the Securities Act against any and all losses, liabilities, damages, claims, or
expenses (including the reasonable costs of investigating or defending any
alleged loss, liability, damage, claim, or expense and reasonable legal counsel
fees incurred in connection therewith) to which the Fund or such directors,
officers, employees, representatives, or controlling person may become subject
under the Securities Act, under any other statute, at common law, or otherwise,
arising out of the acquisition of any Shares by any person which (i) may be
based upon any wrongful act by the Distributor or any of Distributor's
directors, officers, employees, or representatives or (ii) may be based upon any
untrue statement or alleged untrue statement of a material fact contained in a
registration statement, prospectus, shareholder report, or other information
covering Shares filed or made public by the Fund or any amendment thereof or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made in reliance upon
information furnished to the Fund by the Distributor. In no case (x) is the
Distributor's indemnity in favor of the Fund or any person indemnified to be
deemed to protect the Fund or such indemnified person against any liability to
which the Fund or such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of duties or by
reason of reckless disregard of obligations and duties under this Agreement or
(y) is the Distributor to be liable under its indemnity agreement contained in
this paragraph with respect to any claim made against the Fund or any person
indemnified unless the Fund or such person, as the case may be, shall have
notified the Distributor in writing of the claim within a reasonable time after
the summons or other first written notification giving information of the nature
of the claim shall have been served upon the Fund or upon such person (or after
the Fund or such person shall have received notice of such service on any
designated agent). Failure to notify the Distributor of any such claim,
however, shall not relieve the
4
<PAGE>
Distributor from any liability the Distributor may have to the Fund or any
person against whom such action is brought otherwise than on account of the
Distributor's indemnity agreement contained in this paragraph.
(b) The Distributor shall be entitled to participate, at its
own expense, in the defense, or, if the Distributor elects, to assume the
defense, of any suit brought to enforce any such claim, but, if the Distributor
elects to assume the defense, such defense shall be conducted by legal counsel
chosen by the Distributor and satisfactory to the Fund, to its directors,
officers, employees, or representatives, or to any controlling person or
persons, defendant or defendants, in the suit. If the Distributor elects to
assume the defense of any such suit and retain such legal counsel, the Fund, its
directors, officers, employees, representatives, or controlling person or
persons, defendant or defendants in the suit, shall bear the fees and expenses
of any additional legal counsel retained by them. If the Distributor does not
elect to assume the defense of any such suit, Distributor will reimburse the
Fund, such directors, officers, employees, representatives, or controlling
person or persons, defendant or defendants in such suit for the reasonable fees
and expenses of any legal counsel retained by them. The Distributor agrees to
notify promptly the Fund of the commencement of any litigation or proceedings
against it or any of its directors, officers, employees, or representatives in
connection with the issue or sale of any Shares.
(c) The Fund agrees to indemnify and hold harmless the
Distributor and each of its directors, officers, employees, and representatives
and each person, if any, who controls the Distributor within the meaning of
Section 15 of the Securities Act against any and all losses, liabilities,
damages, claims, or expenses (including the reasonable costs of investigating or
defending any alleged loss, liability, damage, claim, or expense and reasonable
legal counsel fees incurred in connection therewith) to which the Distributor or
such directors, officers, employees, representatives, or controlling person may
become subject under the Securities Act, under any other statute, at common law,
or otherwise, arising out of the acquisition of any Shares by any person which
(i) may be based upon any wrongful act by the Fund or any of Fund's directors,
officers, employees, or representatives or (ii) may be based upon any untrue
statement or alleged untrue statement of a material fact contained in a
registration statement, prospectus, shareholder report, or other information
covering Shares filed or made public by the Fund or any amendment thereof or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made in reliance upon
information furnished to Distributor by the Fund. In no case (x) is the Fund's
indemnity in favor of the Distributor or any person indemnified to be deemed to
protect the Distributor or such indemnified person against any liability to
which the Distributor or such person would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of duties
or by reason of reckless disregard of obligations and duties under this
Agreement or (y) is the Fund to be liable under its indemnity agreement
contained in this paragraph with respect to any claim made against the
Distributor or person indemnified unless the Distributor or such person, as the
case may be, shall have notified the Fund in writing of the claim within a
reasonable time after the summons or other first written notification giving
5
<PAGE>
information of the nature of the claim shall have been served upon the
Distributor or upon such person (or after the Distributor or such person shall
have received notice of such service on any designated agent). Failure to
notify the Fund of any such claim, however, shall not relieve the Fund from any
liability which the Fund may have to the Distributor or any person against whom
such action is brought otherwise than on account of the Fund's indemnity
agreement contained in this paragraph.
(d) The Fund shall be entitled to participate, at its own
expense, in the defense, or, if the Fund elects, to assume the defense, of any
suit brought to enforce any such claim, but, if the Fund elects to assume the
defense, such defense shall be conducted by legal counsel chosen by the Fund and
satisfactory to the Distributor, to its directors, officers, employees, or
representatives, or to any controlling person or persons, defendant or
defendants, in the suit. If the Fund elects to assume the defense of any such
suit and retain such legal counsel, the Distributor, its directors, officers,
employees, representatives, or controlling person or persons, defendant or
defendants in the suit, shall bear the fees and expenses of any additional legal
counsel retained by them. If the Fund does not elect to assume the defense of
any such suit, the Fund will reimburse the Distributor, such directors,
officers, employees, representatives, or controlling person or persons,
defendant or defendants in such suit for the reasonable fees and expenses of any
legal counsel retained by them. The Fund agrees to notify promptly the
Distributor of the commencement of any litigation or proceedings against it or
any of its directors, officers, employees, or representatives in connection with
the issue or sale of any Shares.
14. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall
become effective upon its execution (effective date) and, unless terminated as
provided, shall remain in effect for two years from the date first set forth
above (the date of its execution) and from year to year thereafter, but only so
long as such continuance is specifically approved at least annually by the vote
of a majority of the directors of the Fund who are not interested persons of the
Distributor or of the Fund, cast in person at a meeting called for the purpose
of voting on such approval, and by vote of the directors of the Fund or of a
majority of the outstanding voting securities of the Fund. This Agreement may,
on 60 days written notice, be terminated at any time, without the payment of any
penalty, by the vote of a majority of the directors of the Fund who are not
interested persons of the Distributor or the Fund, by a vote of a majority of
the outstanding voting securities of the Fund, or by the Distributor. This
Agreement will automatically terminate in the event of its assignment. In
interpreting the provisions of this Section 14, the definitions contained in
Section 2(a) of the Investment Company Act (including the definitions of
"interested person," "assignment," and "majority of the outstanding securities")
shall be applied.
15. AMENDMENT OF THIS AGREEMENT. This Agreement may be amended,
waived, discharged, or terminated only by a written instrument signed by the
party against which enforcement of the amendment, waiver, discharge, or
termination is sought. If the Fund at any time deems it necessary or advisable
in the best interests of the Fund that any amendment of this Agreement be made
to comply with the recommendations or requirements of the SEC or other
governmental authority or to
6
<PAGE>
obtain any advantage under state or federal tax laws and notifies the
Distributor of the form of the amendment and the reasons therefor, and if the
Distributor declines to assent to the amendment, the Fund may terminate this
Agreement immediately without regard to the 60-day period referred to in
Section 14. If the Distributor at any time requests that a change be made in
the Fund's articles of incorporation or bylaws or in its methods of doing
business to comply with any requirements of federal law or regulations of the
SEC or of a national securities association of which the Distributor is or may
be a member relating to the sale of Shares, and the Fund does not make such
necessary change within a reasonable time, the Distributor may terminate this
Agreement immediately without regard to the 60-day period referred to in
Section 14.
16. MISCELLANEOUS. It is understood and expressly stipulated that
neither the shareholders of the Fund nor the directors of the Fund shall be
personally liable hereunder. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
17. NOTICE. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other party
at the address set forth on the first page of this Agreement.
COLUMBIA SMALL CAP FUND, INC.
By /s/ John A. Kemp
-----------------------------------------
Title: President
COLUMBIA FINANCIAL CENTER
INCORPORATED
By /s/ George L. Hanseth
-----------------------------------------
Title: President
7
<PAGE>
CUSTODIAN CONTRACT
COLUMBIA SMALL CAP FUND, INC.
This Custodian Contract, made this 21st day of August, 1996, between
Columbia Small Cap Fund, Inc., an Oregon Corporation (hereinafter called the
"Company"), and UNITED STATES NATIONAL BANK OF OREGON, a national banking
association organized under the laws of the United States of America and having
its place of business in the City of Portland, Oregon (hereinafter called the
"Custodian"), is to become effective, except as otherwise provided herein, on
the effective date of the Registration Statement of the company under the
Securities Act of 1933.
SECTION 1. The Company agrees to deliver to the Custodian all securities
and cash owned by it, and all dividend checks or other income, payments of
principal or capital distributions received by the Company with respect to all
securities owned by the Company from time to time and the cash consideration due
to the Company for such new stock of the Company as may be issued from time to
time.
SECTION 2. The Custodian is hereby authorized by the company to receive,
hold and deal with, subject to the terms hereof, all securities, cash, whether
representing principal deposits or income, and property of any other nature
which will be, from time to time hereafter, delivered to it by or for the
account of the Company, or purchased with cash on deposit hereunder, exercising
the same care in the safekeeping thereof as it exercises with respect to other
accounts of similar character.
SECTION 3 The Custodian shall keep books and records of all cash deposited
hereunder, subdivided into principal and income accounts, and all other property
and securities deposited hereunder.
SECTION 4. The Custodian shall hold for the account of the Company either
in the name of the Company, the name of a nominee of the Company, the name of
the Custodian, the name of a nominee of the Custodian, in bearer form, in a
securities depository, or the Federal Reserve Book Entry System, all securities
or other property delivered to or received by it for the account of the
Company. All securities received by the Custodian may be in "street" or other
good delivery form.
SECTION 5. The Custodian shall receive and receipt for moneys due to the
Company. Funds held by the Custodian may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other banks or
trust companies and in such amounts as it may in its discretion deem necessary
or desirable; provided, however, that every other bank or trust company and the
funds to be deposited with each shall be approved by vote of the Board of
Directors of the Company. Such funds shall be so deposited by the Custodian in
its capacity as Custodian and shall be withdrawable by the Custodian only in
such capacity.
SECTION 6. The Custodian is hereby appointed attorney-in-fact of the
Company to endorse for credit to the account of the Company when collected, all
checks, drafts or other orders for the payment of money drawn to, or to the
order of, the Company, or to the order of the Custodian for the account of the
Company. All cash, whether principal or Company or its officers and/or trustees
for any of the following purposes:
- 1 -
<PAGE>
a. For the purchase of securities or other property to be retained in the
custody of the Custodian, or of other property in which assets of the
Company are to be invested, provided that, in every case where payment
is made by the Custodian in advance of receipt of the securities
purchased, except as provided in Section 8 hereof or except where
authorized by resolution of the Company, the Custodian shall be
absolutely liable to the Company for such securities to the same
extent as if the securities had been received by the Custodian.
b. For the redemption of shares of capital stock of the Company;
c. For the payment of dividends or other cash distributions to
shareholders;
d. For payment of taxes, expenses, fees and other liabilities incurred in
connection with the operation of the Company including registration
and qualification costs and other expenses of issuing stock or
changing its capital structure, whether or not such expenses shall be
in whole or in part capitalized or treated as deferred expenses;
e. For the making of any disbursements authorized by the Board of
Directors pursuant to the By-Laws, copies of which shall be certified
to the Custodian by an officer of the Company, provided, however, the
Custodian shall have no duty or responsibility to determine whether
such disbursements are made in accordance with said By-Laws;
f. For the payment of any expense or liability incurred by the Company;
g. For any other purpose as herein specifically provided. All written
orders calling for the disbursement of cash shall specify the person,
firm, corporation or entity to whom payment is to be made and the
purpose for which such payment is made. The Custodian may in its
discretion without express authority from the Company make payments to
itself or others for minor expenses (defined as out of pocket
expenses for postage, insurance and similar expenses) of handling
securities or other similar items relating to its duties under this
Contract, all such payments to be accounted for to the Company.
SECTION 7. The Custodian shall collect all income and other payments with
respect to securities held hereunder as of the record date for such income or
other payments. The Custodian shall also execute ownership and other
certificates and affidavits for all Federal and state tax purposes in connection
therewith and in connection with transfers of securities. The Custodian shall
hold all such income collected by it hereunder. Without limiting the generality
of the foregoing, the Custodian shall detach and present for payment all coupons
and other income items requiring presentation as and when they become due and
shall collect dividends and interest when due on securities held hereunder.
SECTION 8. Upon receipt of an order (to be confirmed in writing) of the
Company, or its officers and/or trustees, stating that the Company has purchased
securities or other property in which assets of the Company are permitted to be
invested, specifying the securities or other transaction being consummated and
other information required by Section 6 hereof, and directing payment for such
securities or other property, the Custodian shall, insofar as it has available
funds, pay for and hold for the account of the Company any such securities or
other property described in the written order. The Custodian may not make
payments for securities
- 2 -
<PAGE>
or other property until receipt of such securities or property by the Custodian
except that such payments may be made in advance of receipt of such securities
or other property in connection with subscriptions to underwritten offerings
with respect which an initial deposit is required in order to participate in
such offering, or where, as the result of an adjudicatory proceeding advance
payment is required to obtain the release of such securities or other property.
Whenever possible, confirmation of the broker, dealer or other seller shall be
furnished the Custodian.
SECTION 9. The Custodian shall release and deliver securities or other
property owned by the Company in the following cases only:
a. Upon sale of such securities for the account of the Company and
receipt of payment therefor, such delivery to be preceded by receipt
of a written order of the Company or its officers and/or trustees,
stating that the Company has sold securities or other property in
which assets of the Company are invested, specifying the securities or
property sold, the prices received therefore the broker or dealer
through whom the transaction is being consummated and other
information required by Section 6 thereof, and directing delivery of
the securities or other property on deposit with the Custodian;
b. To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash is to be delivered to the Custodian;
c. To the issuer thereof or its agent for transfer in the name of the
Company or the Custodian or a nominee of either, or for exchange for a
different number of bonds or certificates representing the same
aggregate face amount or number of units; provided that, in any such
case, the new securities are to be delivered to the Custodian;
d. To the broker selling the same, for examination, in accordance with
the "street delivery" custom;
e. To a securities depository to be held for the account of the Custodian
or to a Federal Reserve Bank to be held for the Custodian in the
Federal Reserve Book Entry System;
f. Subject to receipt of a written order of the Company or its officers
and/or trustees, for exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such securities, or
pursuant to provisions for conversion contained in such securities, or
pursuant to any deposit agreement; provided that, in any such case,
the new securities and cash, if any, are to be delivered to the
Custodian;
g. Subject to receipt of a written order of the Company or its officers
and/or trustees, in the case of warrants, rights, or similar
securities, the surrender thereof in the exercise of such warrants,
rights or similar securities.
Whenever possible, confirmation of the broker or dealer shall be furnished
to the Custodian.
- 3 -
<PAGE>
SECTION 10. Unless and until otherwise directed by a written order of the
Company or its officers and/or trustees, the Custodian shall:
a. Surrender securities in temporary form or interim receipts for
definitive securities;
b. Credit to the proper account of the Company all distributions received
with respect to the securities;
c. Make, execute, acknowledge and deliver any and all documents of
transfer and conveyance and any and all other instruments that may be
necessary or appropriate to carry out the powers herein granted;
d. Employ suitable agents or custodians;
e. Notify the Company of matured and uncollected principal and interest.
Upon receipt of information with respect to investments held
hereunder, notify the Company: Of securities called for redemption, of
sinking funds available for the redemption of securities, of the
expiration of conversion privileges, or the organization of protective
committees, of subscription or conversion rights, and of mergers,
consolidations, reorganizations, recapitalizations, or similar
proceedings; and
f. Do all acts, whether or not expressly authorized, which it may deem
necessary or proper for the protection of the property held hereunder.
SECTION 11. The Custodian may at any time or times in its discretion
appoint (and may at any time remove) any other bank or trust company as its
agent to carry out such of the provisions of section 6, 8, 9, and 10 of this
Contract as the Custodian may from time to time direct; provided, however, that
the appointment of such agent shall not relieve the Custodian of any of its
responsibilities hereunder.
SECTION 12. The Company shall make such arrangements with the Transfer
Agent of the Company as will enable the Custodian to receive the cash
consideration due to the Company for such new or previously issued stock as may
be issued or sold from time to time by the Company.
SECTION 13. The Company agrees to furnish the Custodian all instruments
necessary to enable the Custodian to carry out the foregoing instructions with
respect to collection of income on securities registered in the name of the
Company, or its nominee.
SECTION 14. The Custodian agrees to prepare and deliver to the Company all
such statements and reports with respect to income and principal of the account
as shall be reasonably required, but shall not be required to prepare income or
other tax returns with respect to the securities of the Company, or the income
received thereon, and agrees to use its best efforts to carry out the written
orders of the Company or its officers and/or trustees, but it shall have no duty
to take any action in any way relating to the account except as herein provided
or to determine the proper application of any disbursement of cash made on
receipt of a written order or resolution.
- 4 -
<PAGE>
SECTION 15. When instructed by the Company or its officers and/or
trustees, the Custodian shall deliver to the Transfer Agent or the Company,
checks or funds in the amount of the redemption price which will be based on the
net asset value of the shares redeemed.
SECTION 16. Upon receipt of a written order of the Company specifying:
a. The amount of cash or securities, or both, payable or distributable as
dividends or other distributions to the shareholders, and
b. That all necessary action authorizing such payment or distribution has
been taken in accordance with the By-Laws of the Company;
accompanied by a certified copy of resolution of the company or the officers
and/or trustees authorizing such payment or distribution and establishing record
and payment dates, the Custodian shall pay and deliver to the Company, or the
dividend disbursing agent of the Company checks or funds for amounts so
certified to be payable and distributable as dividends or other distributions.
SECTION 17. As soon as possible after and as of the close of business each
day on which transactions in the custodian account occur, the Custodian shall
transmit to the Company advices which shall show:
a. All cash received and disbursed;
b. All securities received and the prices paid therefor;
c. All securities sold and delivered and the prices received therefor;
d. All other transactions and the cash, securities and other property,
paid or delivered, received or credited, in connection therewith.
Additionally, the Custodian shall furnish a monthly statement reflecting all
transactions in the account to the Company.
SECTION 18. The Custodian shall have no duty or responsibility whatsoever
relating to moneys, securities or other property received by the Company and not
deposited with the Custodian.
The Custodian shall not be liable to anyone, except such liability as may
be expressly assumed under this Contract, for any act or omission of the
Company, or of any agent of the Company designated by two or more of its officrs
and/or trustees, or for any decision or act or omission to act or anything
whatsoever in connection with this Contract, except its own willful default or
gross negligence.
The Custodian may at the expense of the Company consult with the legal
counsel representing the Company and shall not be liable for any action taken or
suffered in good faith in accordance with the opinion of such counsel.
- 5 -
<PAGE>
Any of this Custodian Contract notwithstanding, the Custodian shall not be
required to take any action, even when so directed by the Company, or to do
anything which, in the opinion of the Custodian, shall be likely to involve it
in any liability, loss or expense, unless the custodian shall first receive
security or indemnity in form and amount satisfactory to it against any and all
such liability, loss or expense.
The custodian shall not incur any personal liability of any nature in connection
with any act done or omitted to be done in good faith in the administration of
this account or in carrying out any directions of the Company or its officers
and/or trustees issued in accordance with this Contract, and the Custodian shall
be indemnified and saved harmless by the Company from and against any and all
such personal liability to which the Custodian may be subjected by reason of any
such act or conduct in its official capacity, including all expenses reasonably
incurred in its defense in case the Company fail to provide such defense, unless
such act or conduct is the result of the Custodian's own negligence, willful
misconduct or lack of good faith.
SECTION 19. The custodian shall be entitled to compensation for its
services as agreed upon by the Company and the Custodian from time to time as
set forth in EXHIBIT A attached hereto.
SECTION 20. Upon receipt of notice from the Company or a shareholder that
a check issued by the Custodian pursuant to this Contract has not been received
by the payee thereof, or has been lost or misplaced by said payee, the Custodian
shall issue a new check on receipt of such indemnity as it may reasonably
require.
SECTION 21. From time to time a special situations, not contemplated under
the terms of this Contract, may arise. An officer of the Company and the
Custodian will then negotiate as to the acts to be performed and the
compensation to be paid in such situations.
SECTION 22. This contract shall be effective as of its execution, and
shall continue in full force and effect until terminated as hereinafter
provided, may be amended at any time by mutual agreement of the parties hereto
and may be terminated by either party by an instrument in writing delivered or
mailed, postage prepaid, to the other party, such termination to take effect not
sooner than sixty (60) days after date of such delivery or mailing; provided,
however, that the Company shall not amend or terminate this Contract in
contravention of any applicable Federal or State regulations, or any provision
of the By-Laws of the company as the same may from time to time be amended and
further provided that the Company may at any time by action of its Board of
Directors substitute another bank or trust company for the Custodian by giving
notice as above to the Custodian.
In connection with the operations of this Contract, the Custodian and the
Company may agree from time to time on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract, any such interpretive or
additional provisions to be signed by both parties and annexed hereto,
provided that the company shall not agree to any such interpretive or
additional provisions which shall contravene any applicable Federal or State
regulations, or any provision of the By-Laws as the same may from time to
time be amended.
SECTION 23. Upon termination hereof the Company shall pay to the Custodian
such compensation as may be due as of the date of such termination and shall
likewise reimburse the Custodian for its costs, expenses and disbursements.
- 6 -
<PAGE>
If a successor custodian is appointed by the Board of Directors, the
Custodian shall, upon termination, deliver to such successor Custodian at the
office of the Custodian, duly endorsed and in form for transfer, all securities
then held hereunder and all funds or other properties of the Company deposited
with or held by it hereunder.
If no such successor custodian is appointed, the Custodian shall, in like
manner, at its office, upon receipt of a certified copy of a vote of the Board
Of Trustees, deliver such securities, funds and other properties in accordance
with such vote.
In the event that no written order designating a successor Custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or
trust company of its own selection, having an aggregate capital, surplus, and
undivided profits, as shown by its last published report of not less than
$2,000,000, all securities, funds and other properties held by the Custodian and
all instruments held by it relative thereto and all other property held by it
under this contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof, owing to
failure of the Board of Trustees to procure the certified copy above referred
to, or to appoint a successor Custodian, the custodian shall be entitled to fair
compensation for its services during such period and the provisions of this
Contract relating to the duties and obligations of the Custodian shall remain in
full force and effect.
SECTION 24. Any written order to be given to the Custodian by the Company
shall be signed by any two of its officers and/or trustees. The Company will
certify to the Custodian the names of the officers and trustees and any change
therein, and the Custodian shall not be charged with knowledge thereof until it
receives such certification. No written order of the Company small direct
payment of any money or delivery of any securities to the company, or shall
direct payment of money or delivery of securities for purposes not specifically
set forth in this Contract, unless accompanied by a copy of a resolution of the
Board of Directors specifying the amount of such payment or the securities to be
delivered, the purpose for which the payment or delivery is made declaring such
purpose to be a proper company purpose and naming the person or persons to whom
such payment or delivery is to be made.
Custodian shall not be liable for any action taken by it when directed in
writing as herein provided and may rely on continuance in office of any person
until otherwise notified in writing.
SECTION 25. Evidence required of anyone under this Contract may be by
certificate, affidavit, endorsement or any other written Instrument which the
person acting thereon believes to be pertinent, reliable and genuine, and to
have been signed, mace or presented by the proper and duly authorized party or
parties.
Whenever the custodian shall deem it necessary that a matter be proved
prior to taking, suffering or omitting any action, such matter shall be deemed
to be conclusively proved by the certificate of any two officers or trustees
delivered to the Custodian, but the Custodian, in its discretion, may in lieu of
such certification accept, or may require such other or further evidence as it
may deem necessary or sufficient.
- 7 -
<PAGE>
SECTION 26. This Contract shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the state of Oregon.
SECTION 27. Nothing contained in the By-Laws of the Company except as
specifically set forth in this Contract shall be deemed to impose any powers,
duties or responsibilities on the Custodian other than those set forth in this
Contract. The Company, by any one of its officers, will certify to the
Custodian any changes in the By-Laws of the Company and the Custodian shall not
be charged with knowledge thereof until it receives such certification. The
Company warrants that no directions, orders, instructions, notices or
certificate shall be issued to the Custodian by an officer or trustee other than
in accordance with me terms and provisions of the By-Laws of the Company, and
the Custodian shall have no duty to question the authority for or the propriety
of any such directions, orders, instructions, notices or certificates.
Nothing herein contained, however, shall be construed to relieve the
Custodian from faithfully performing its duties under this Contract, and the
Custodian shall be responsible for any action taken by it not in accordance with
this Contract.
SECTION 28. All directions, orders, instructions, notices, accountings,
reports and other written communications required to be given under this
Contract shall be addressed to the parties at their respective addresses shown
below or such other addresses as each may hereafter designate in writing
delivered to the other:
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be
signed by their duly authorized officers;
COLUMBIA SMALL CAP FUND, INC.
By: /s/ George L. Hanseth
- ------------------------------
Senior Vice President
1300 S.W. Sixth Avenue
Portland, Oregon 97201
UNITED STATES NATIONAL BANK OF OREGON
By: /s/ Ruth Taylor
- ------------------------------
Vice President
555 S.W. Oak
Portland, Oregon 97204
#82728
- 8 -
<PAGE>
TRUST GROUP
111 S.W. Fifth Avenue
Post Office Box 3168
Portland, OR 97208-3168
Exhibit A
COLUMBIA SMALL CAP FUND, INC.
2483300
Annual Minimum Fee: $2,500.00
Market Value: .00004
Security Transactions: $12.50
Miscellaneous Charges:
All out-of-pocket expenses including telephone, postage, express mail, Federal
Express, transfer fees, messenger services, global settlement fees, global
holding charges by other banks, charges made by other banks or Federal Reserve
Bank.
Fees will be calculated monthly and charged against account assets. A summary
of fee's taken will also be provided to the Client for review.
The above fee schedule is guaranteed until December 1, 1997 when all other
existing relationships will be reviewed.
Effective August 1, 1996
#82610
<PAGE>
CUSTODY AGREEMENT
This Custody Agreement is dated August 20, 1996 between MORGAN
STANLEY TRUST COMPANY. a New York State chartered trust company (the
"Custodian"), and COLUMBIA SMALL CAP FUND, INC., an Oregon corporation
(the "Client").
1. APPOINTMENT AND ACCEPTANCE: ACCOUNTS. (a) The Client
hereby appoints the Custodian as a custodian of Property (as defined below)
owned or under the control of the Client that are delivered to the Custodian, or
any Subcustodian as appointed below, from time to time to be held in custody for
the benefit of the Client.
(b) Prior to the delivery of any Property by the Client to the
Custodian, the Client shall deliver to the Custodian each document and other
item listed in Appendix 1. In addition, the Client shall deliver to the
Custodian any additional documents or items as the Custodian may deem necessary
for the performance of its duties under this Agreement.
(c) The Client instructs the Custodian to establish on the
books and records of the Custodian the accounts listed in Appendix 2 (the
"Accounts") in the name of the Client. Upon receipt of Authorized Instructions
(as defined below) and appropriate documentation, the Custodian shall open
additional Accounts for the Client. Upon the Custodian's confirmation to the
Client of the opening of such additional Accounts, or of the closing of
Accounts, Appendix 2 shall be deemed automatically amended or supplemented
accordingly. The Custodian shall record in the Accounts and shall have general
responsibility for the safekeeping of all securities ("Securities"), cash, cash
equivalents and other property (all such Securities, cash, cash equivalents and
other property being collectively the "Property") of the Client that are
delivered to the Custodian for custody.
(d) The procedures the Custodian and the Client will use in
performing activities in connection with this Agreement are set forth in a
client services guide provided to the Client by the Custodian, as such guide
may be amended from time to time by the Custodian by written notice to the
Client (the "Client Services Guide").
2. SUBCUSTODIANS. The Property may be held in custody and
deposit accounts that have been established by the Custodian with one or more
domestic or foreign banks or other institutions as lived on Exhibit A (the
"Subcustodians"), as such Exhibit may be amended from time to time by the
Custodian by written notice to the Client, or through the facilities of one or
more securities depositories of clearing agencies. The Custodian shall hold
Property through a Subcustodian, securities depository or clearing agency only
if (a) such Subcustodian and any securities depository or clearing agency in
which such Subcustodian or the Custodian holds Property, or any of their
creditors, may not assert any right, charge, security interest, lien,
1
<PAGE>
encumbrance or other claim of any kind to such Property except a claim of
payment for its safe custody or administration and (b) beneficial ownership of
such Property may be freely transferred without the payment of money or value
other than for safe custody or administration. Any Subcustodian may hold
Property in a securities depository and may utilize a clearing agency.
3. RECORDS. With respect to Property held by a Subcustodian:
(a) The Custodian may hold Property for all of its customers
with a Subcustodian in a single account identified as belonging to the
Custodian for the benefit of its customers:
(b) The Custodian shall identify on its books as belonging to
the Client any Property held by a Subcustodian for the Custodian's
account:
(c) The Custodian shall require that Property held by the
Subcustodian for the Custodian's account be identified on the
Subcustodian's books as separate from any other property held by the
Subcustodian other than property of the Custodian's customers held solely
for the benefit of customers of the Custodian; and
(d) In the event the Subcustodian holds Property in a
securities depository or clearing agency, such Subcustodian shall be
required by its agreement with the Custodian to identify on its books
such Property as being held for the account of the Custodian as custodian
for its customers or in such other manner as is required by local law or
market practice.
4. ACCESS TO RECORDS. The Custodian shall allow the Client's
accountants reasonable access to the Custodian's records relating to the
Property held by the Custodian as such accountants may reasonably require in
connection with their examination of the Client's affairs. The Custodian shall
also obtain from any Subcustodian (and shall require each Subcustodian to use
reasonable efforts to obtain from any securities depositary or clearing agency
in which it deposits Property) an undertaking, to the extent consistent with
local practice and the laws of the jurisdiction or jurisdictions to which such
Subcustodian, securities depositors, or clearing agency is subject, to permit
independent public accountants such reasonable access to the records of such
Subcustodian, securities depository or clearing agency as may be reasonably
required in connection with the examination of the Client's affairs or to take
such other action as the Custodian in its judgment may deem sufficient to ensure
such reasonable access.
5. REPORTS. The Custodian shall provide such reports and
other information to the Client and to such persons as the Client directs as the
Custodian and the Client may agree from time to time.
6. PAYMENT OF MONIES. The Custodian shall make, or cause any
Subcustodian to make, payment from monies being held in the Accounts only in
accordance with Authorized Instructions or as provided in Sections 9, 13 and 17.
2
<PAGE>
exchange transactions at such rates as are agreed from time to time between the
Client and the Custodian.
7. TRANSFER OF SECURITIES. The Custodian shall make, or cause
any Subcustodian to make, transfers, exchanges or deliveries of Securities only
in accordance with Authorized Instructions or as provided in Sections 9, 13 and
17.
8. CORPORATE ACTION. (a) The Custodian shall notify the Client
of details of all corporate actions affecting the Client's Securities promptly
upon its receipt of such information.
(b) The Custodian shall take, or cause any Subcustodian to
take, such corporate action only in accordance with Authorized Instructions or
as provided in this Section 8 or Section 9.
(c) In the event the Client does not provide timely Authorized
Instructions to the Custodian, the Custodian shall act in accordance with the
default option provided by local market practice and/or the issuer of the
Securities.
(d) Fractional shares resulting from corporate action activity
shall be treated in accordance with local market practices.
9. GENERAL AUTHORITY. In the absence of Authorized
Instructions to the contrary, the Custodian may, and may authorize any
Subcustodian to:
(a) make payments to itself or others for expenses of handling
Property or other similar items relating to its duties under this
Agreement, provided that all such payments shall be accounted for to the
Client;
(b) receive and collect all income and principal with respect
to Securities and to credit cash receipts to the Accounts;
(c) exchange Securities when the exchange is purely ministerial
(including, without limitation, the exchange of interim receipts or
temporary securities for securities in definitive form and the exchange
of warrants, or other documents of entitlement to securities, for the
securities themselves);
(d) surrender Securities at maturity or when called for
redemption upon receiving payment therefor;
(e) execute in the Client's name such ownership and other
certificates as may be required to obtain the payment of income from
Securities;
3
<PAGE>
(f) pay or cause to be paid, from the Accounts, any and all
taxes and levies in the nature of taxes imposed on Property by any
governmental authority in connection with custody of and transactions in
such Property;
(g) endorse for collection, in the name of the Client, checks,
drafts and other negotiable instruments;
(h) take non-discretionary action on mandatory corporate
actions; and
(i) in general, attend to all nondiscretionary details in
connection with the custody, sale, purchase, transfer and other dealings
with the Property.
10. AUTHORIZED INSTRUCTIONS; AUTHORIZED PERSONS: (a) Except
as otherwise provided in Sections 6 through 9, 13 and 17, all payments of
monies, all transfers, exchanges or deliveries of Property and all responses to
corporate actions shall be made or taken only upon receipt by the Custodian of
Authorized Instructions; PROVIDED that such Authorized Instructions are timely
received by the Custodian. "AUTHORIZED INSTRUCTIONS" of the Client means
instructions from an Authorized Person received by telecopy, tested telex,
electronic link or other electronic means or by such other means as may be
agreed in writing between the Client and the Custodian.
(b) "AUTHORIZED PERSON" means each of the persons or entities
identified on Appendix 3 as amended form time to time by written notice from
the Client to the Custodian. The Client represents and warrants to the
Custodian that each Authorized Person listed in Appendix 3, as amended from
time to time, is authorized to issue Authorized Instructions on behalf of the
Client. Prior to the delivery of the Property to the Custodian, the
Custodian shall provide a list of designated system user ID numbers and
passwords that the Client shall be responsible for assigning to Authorized
Persons. The Custodian shall assume that an electronic transmission received
and identified by a system user ID number and password was sent by an
Authorized Person. The Custodian agrees to provide additional designated
system user ID numbers and passwords as needed by the Client. The Client
authorizes the Custodian to issue new system user ID numbers upon the request
of a previously existing Authorized Person. Upon the issuance of additional
system user ID numbers by the Custodian to the Client, Appendix 3 shall be
deemed automatically amended accordingly. The Client authorizes the
Custodian to receive, act and rely upon any Authorized Instructions received
by the Custodian which have been issued, or purport to have been issued, by
an Authorized Person.
(c) Any Authorized Person may cancel/correct or otherwise amend
any Authorized Instruction received by the Custodian, but the Client agrees to
indemnify the Custodian for any liability, loss or expense incurred by the
Custodian and its Subcustodians as a result of their having relied upon or acted
on any prior Authorized Instruction. An amendment or cancellation of an
Authorized Instruction to deliver or receive any security or funds in connection
with a trade will not be processed once the trade has settled.
11. REGISTRATION OF SECURITIES. (a) In the absence of
Authorized Instructions to the contrary, Securities which must be held in
registered form shall be registered in the name of
4
<PAGE>
the Custodian or the custodian's nominee or, in the case of Securities in the
custody of an entity other than the Custodian, in the name of the Custodian, its
Subcustodian or any such entity's nominee. The Custodian may, without notice to
the Client, cause any Securities to be registered or re-registered in the name
of the Client.
(b) Where the Custodian has been instructed by the Client to hold any
Securities in the name of any person or entity other than the Custodian, its
Subcustodian or any such entity's nominee, the Custodian shall not be
responsible for any failure to collect such dividends or other income or
participate in any such corporate action with respect to such Securities.
12. DEPOSIT ACCOUNTS. All cash received by the Custodian for the
Accounts shall be held by the Custodian as a short-term credit balance in favor
of the Client and, if the Custodian and the Client have agreed in writing in
advance that such credit balances shall bear interest, the Client shall earn
interest at the rates and times as agreed between the Custodian and the Client.
The Client acknowledges that any such credit balances shall not be accompanied
by the benefit of any governmental insurance.
13. SHORT-TERM CREDIT EXTENSIONS. (a) From time to time, the
Custodian may extend or arrange short-term credit for the Client which is (i)
necessary in connection with payment and clearance of securities and foreign
exchange transactions or (ii) pursuant to an agreed schedule, as and if set
forth in the Client Services Guide, of credits for dividends and interest
payments on Securities. All such extensions of credit shall be repayable by
the Client on demand.
(b) The Custodian shall be entitled to charge the Client interest for
any such credit extension at rates to be agreed upon from time to time or, if
such credit is arranged by the Custodian with a third party on behalf of the
Client, the Client shall reimburse the Custodian for any interest charge. In
addition to any other remedies available, the Custodian shall be entitled to a
right of set-off against the Property to satisfy the repayment of such credit
extensions and the payment of, or reimbursement for, accrued interest thereon.
14. REPRESENTATIONS AND WARRANTIES. (a) The Client represents and
warrants that (i) the execution, delivery and performance of this Agreement
(including, without limitation, the ability to obtain the short-term extensions
of credit in accordance with Section 13) are within the Client's power and
authority and have been duly authorized by all requisite action (corporate or
otherwise) of the Client and of the beneficial owner of the Property, if other
than the Client. and (ii) this Agreement (including, without each extension of
short-term credit extended to or arranged for the benefit of the Client in
accordance with Section 13) shall at all times constitute a legal, valid and
binding obligation of the Client enforceable against the Client in accordance
with its terms, except as may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights in general and
subject to the effect of general principles of equity (regardless of whether
considered in a proceeding in equity or at law).
(b) The Custodian represents and warrants that (i) the execution,
delivery and performance of this Agreement are within the Custodian's power and
authority and have been
5
<PAGE>
duly authorized by all requisite action (corporate or otherwise) of the
Custodian and (ii) this Agreement constitutes the legal, valid and binding
obligation of the Custodian enforceable against the Custodian in accordance with
its terms, except as may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights in general and subject to
the effect of general principles of equity (regardless of whether considered in
a proceeding in equity or at law).
15. STANDARD OF CARE; INDEMNIFICATION. (a) The Custodian shall be
responsible for the performance of only such duties as are set forth in this
Agreement or contained in Authorized Instructions given to the Custodian which
are not contrary to the provisions of any relevant law or regulation. The
Custodian shall be liable to the Client for any loss, liability or expense
incurred by the Client in connection with this Agreement to the extent that any
such loss, liability or expense results from the negligence or willful
misconduct of the Custodian or any Subcustodian; PROVIDED, HOWEVER that neither
the Custodian nor any Subcustodian shall be liable to the Client for any
indirect, special or consequential damages.
(b) The Client acknowledges that the Property may be physically held
outside the United States. The Custodian shall not be liable for any loss,
liability or expense resulting from events beyond the reasonable control of the
Custodian, including, but not limited to, FORCE MAJEURE.
(c) In addition, the Client shall indemnify the Custodian and
Subcustodians and any nominee for, and hold each of them harmless from, any
liability, loss or expense (including attorneys' fees and disbursements)
incurred in connection with this Agreement, including without limitation, (i) as
a result of the Custodian having acted or relied upon any Authorized
Instructions or (ii) arising out of any such person acting as a nominee or
holder of record of Securities.
16. FEES; LIENS. The Client shall pay to the Custodian from time to
time such compensation for its services pursuant to this Agreement as may be
mutually agreed upon as well as the Custodian's out-of-pocket and incidental
expenses. The Client shall hold the Custodian harmless from any liability or
loss resulting from any taxes or other governmental charges, and any expenses
related thereto, which may be imposed or assessed with respect to the Accounts
or any Property held therein. The Custodian is, and any Subcustodians are,
authorized to charge the Accounts for such items and the Custodian shall have a
lien, charge and security interest on any and all Property for any amount owing
to the Custodian from time to time under this Agreement.
17. TERMINATION. This Agreement may be terminated by the Client or
the Custodian by 60 days written notice to the other, sent by registered mail.
If notice of termination is given, the Client shall, within 30 days following
the giving of such notice, deliver to the Custodian a statement in writing
specifying the successor custodian or other person to whom the Custodian shall
transfer the Property. In either event, the Custodian, subject to the
satisfaction of any lien it may have, shall transfer the Property to the person
so specified. If the Custodian does not receive such statement the Custodian,
at its election, may transfer the Property to a bank or trust company
established under the laws of the United States or any state thereof to be held
and
6
<PAGE>
disposed of pursuant to the provisions of this Agreement or may continue to
hold the Property until such a statement is delivered to the Custodian. In
such event the Custodian shall be entitled to fair compensation for its
services during such period as the Custodian remains in possession of any
Property and the provisions of this Agreement relating to the duties and
obligations of the Custodian shall remain in full force and effect; provided,
however, that the Custodian shall have no obligation to settle any
transactions in Securities for the Accounts. The provisions of Sections 15
and 16 shall survive termination of this Agreement.
18. INVESTMENT ADVICE. The Custodian shall not supervise, recommend
or advise the Client relative to the investment, purchase, sale, retention or
other disposition of any Property held under this Agreement.
19. CONFIDENTIALITY. (a) The Custodian, its agents and employees
shall maintain the confidentiality of information concerning the Property
held in the Client's account, including in dealings with affiliates of the
Custodian. In the event the Custodian or any Subcustodian is requested or
required to disclose any confidential information concerning the Property,
the Custodian shall, to the extent practicable and legally permissible,
promptly notify the Client of such request or requirement so that the Client
may seek a protective order or waive any objection to the Custodian's or such
Subcustodian's compliance with this Section 19. In the absence of such a
waiver, if the Custodian or such Subcustodian is compelled, in the opinion of
its counsel, to disclose any confidential information, the Custodian or such
Subcustodian may disclose such information to such persons as, in the opinion
of counsel, is so required.
(b) The Client shall maintain the confidentiality of, and not
provide to any third parties absent the written permission of the Custodian, any
computer software, hardware or communications facilities made available to the
Client or its agents by the Custodian.
20. NOTICES. Any notice or other communication from the Client to
the Custodian, unless otherwise provided by this Agreement or the Client
Services Guide, shall be sent by certified or registered mail to Morgan Stanley
Trust Company, One Pierrepont Plaza, Brooklyn, New York, 11201, Attention:
President, and any notice from the Custodian to the Client is to be mailed
postage prepaid, addressed to the Client at the address appearing below, or as
it may hereafter be changed on the Custodian's records in accordance with
written notice from the Client.
21. ASSIGNMENT. This contract may not be assigned by either party
without the prior written approval of the other.
22. MISCELLANEOUS. (a) This Agreement shall bind the successors and
assigns of the Client and the Custodian.
(b) This Agreement shall be governed by and construed in accordance
with the Internal Laws of the State of New York without regard to its conflicts
of law rules and to the extent not preempted by federal law. The Custodian and
the Client hereby irrevocably submit to the exclusive jurisdiction of any New
York State court or any United States District Court
7
<PAGE>
located in the State of New York in any action or proceeding arising out of this
Agreement and hereby irrevocably waive any objection to the venue of any such
action or proceeding brought in any such court or any defense of an inconvenient
forum.
In witness whereof, the parties hereto have set their hands as of the
date first above written.
COLUMBIA SMALL CAP FUND, INC.
By /s/ George L. Hanseth
---------------------------------
Name: George L. Hanseth
Title: Senior Vice President
Address for record: 1301 S.W. Fifth Avenue
Portland, Oregon 97207
Accepted:
MORGAN STANLEY TRUST COMPANY
By
-----------------------
Authorized Signature
8
<PAGE>
APPENDIX 1
Account Documentation
REQUIRED DOCUMENTATION FOR CORE CUSTODIAL SERVICES (INCLUDING TAX RECLAIMS):
CUSTODY AGREEMENT
CLIENT SERVICES GUIDE (INCLUDING APPENDICES)
FEE SCHEDULE / BILLING GUIDE
GENERAL ACCOUNT INFORMATION
US TAX AUTHORITY DOCUMENTATION
LOCAL TAX OFFICE LETTER / APPLICATION LETTER
(NON-UNITED STATES-RESIDENT BENEFICIAL OWNERS, ONLY)
FORM 6166 / REQUEST FOR FOREIGN CERTIFICATION FORM
(UNITED STATES-RESIDENT BENEFICIAL OWNERS, ONLY)
CERTIFICATION OF BENEFICIAL OWNERSHIP, LEGAL NAME, LEGAL
RESIDENCY, TAX STATUS AND TAX IDS
TAX RECLAIM POWER OF ATTORNEY
PREVIOUS TAX RECLAIM FILING INFORMATION
(PREVIOUS FILERS, ONLY)
UK TAX AUTHORITY DOCUMENTATION
SOPHISTICATED INVESTOR (ACCREDITED INVESTOR) LETTER
(UNITED STATES-RESIDENT BENEFICIAL OWNERS, ONLY)
9
<PAGE>
DOCUMENTATION THAT IS REQUIRED FROM AN ENTITY CLASSIFIED AS TAX-EXEMPT BY ITS
LOCAL TAX AUTHORITY:
UK FORM 4338
(EXEMPT NON-UNITED KINGDOM-RESIDENT BENEFICIAL OWNERS, ONLY)
UK FORM 309A
(EXEMPT UNITED STATES-RESIDENT BENEFICIAL OWNERS, ONLY)
FOREIGN EXEMPTION LETTERS / APPLICATION FOR AUSTRALIAN EXEMPTION LETTER
(EXEMPT BENEFICIAL OWNERS, ONLY)
DOCUMENTATION THAT IS REQUIRED ONLY IF YOU WILL USE THE PROXY VOTING SERVICE:
VOTING POWER OF ATTORNEY
DOCUMENTATION THAT IS REQUIRED ONLY IF YOU WILL DEAL IN CERTAIN SECURITIES:
JGB INDEMNIFICATION LETTER
KOREAN SECURITIES POWER OF ATTORNEY
NEW ZEALAND 'APPROVED ISSUER LEVY' LETTER
SPANISH POWER OF ATTORNEY WITH APOSTILE
10
<PAGE>
APPENDIX 2
Client Accounts
Account Name Account Number Account Mnemonic
- ------------ -------------- ----------------
1. Columbia Small Cap 42578 COSC
2.
3.
4.
5.
6.
7.
8.
9.
10.
11
<PAGE>
APPENDIX 3
Part I - Authorized Signatures
The Custodian is directed to accept and act upon Authorized Instructions
received from any of the following persons or entities:
Telephone/ Authorized
Name Organization Title Fax Signature
- ------ ------------ ----- --------- ---------
Authorized by:
--------------------------
12
<PAGE>
Part II - System User ID numbers
The Custodian is directed to accept and act upon Authorized Instructions
transmitted electronically and identified with the following mnemonics and
system user ID numbers for the following activities:
Work Station Account Workstation Sessions
User ID. Mnemonic Number TE TCC SL FE CM MA TD
- -------- -------- ------ -- --- -- -- -- -- --
COLT COSC 42578
WORKSTATION SESSION CODES
TE Trade Entry
TCC Trade Cancel/Correct
SL Securities Lending
FE Foreign Exchange
CM Cash Movement
MA Mass Authorization
TD Time Deposit
13
<PAGE>
EXHIBIT A
Subcustodians
14
<PAGE>
COLUMBIA SMALL CAP FUND, INC.
TRANSFER AGENT AGREEMENT
August 20, 1996
This Agreement is made between COLUMBIA SMALL CAP FUND, INC. ("Fund"),
an Oregon corporation, and COLUMBIA TRUST COMPANY ("Agent"), an Oregon
corporation, as of August 20, 1996.
Fund is an investment company registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), whose shares are registered for sale
under the Securities Act of 1933, as amended (the "1933 Act"); and
Fund desires to have Agent serve as transfer agent and dividend
disbursing agent for Fund, and Agent is willing to serve as transfer agent and
dividend disbursing agent for Fund.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, Fund and Agent agree as follows:
1. APPOINTMENT. Fund hereby appoints Agent as transfer agent for the
shares of the Fund, as described in the Articles of Incorporation of the Fund,
(the "Stock") and dividend disbursing agent for Fund, and Agent agrees to serve
as transfer agent and dividend disbursing agent under the terms and conditions
hereinafter set forth.
2. DOCUMENTS. Fund has furnished Agent copies of Fund's Articles of
Incorporation, investment advisory contract, custodian contract, all account
application forms, and other documents relating to shareholders' accounts and a
certified copy of the resolutions of Fund's Board of Directors adopting Fund's
form of stock certificate and approving the appointment of Agent hereunder.
Fund shall furnish promptly to Agent a copy of any amendment or supplement to
the above-mentioned documents and any additional documents necessary for Agent
to perform its functions hereunder.
3. AUTHORIZED SHARES. Fund certifies to Agent that, as of the date
hereof, Fund is authorized to issue 100,000,000 shares.
4. SERVICES TO BE PERFORMED. Agent shall be responsible for performing
the duties of transfer agent and dividend disbursing agent for Fund, which
duties are more fully set forth in Schedule A to this Agreement. All computer
programs and procedures developed by Agent to perform services required under
this Agreement shall remain the exclusive property of Agent.
5. MAINTENANCE OF RECORDS; CONFIDENTIALITY. All records maintained by
Agent as required on Schedule A shall remain the exclusive property of Fund and
shall be preserved and retained by Agent while this Agreement remains in effect.
Agent shall make available during regular business hours all records and
1
<PAGE>
other data created and maintained pursuant to this Agreement for reasonable
audit and inspection by the Fund or any person retained by Fund. Agent shall
treat all records and other information with respect to Fund with confidence.
6. COMPENSATION. As compensation for the performance of the services
described in parts I and II of Schedule A, Agent shall receive from Fund a per
account fee in the amount set forth in Schedule B. These fees will be charged
for any account in existence during any part of a month, and the fees will be
charged for any part of a month preceding termination of this Agreement. As
compensation for the performance of extra charge services described in part III
of Schedule A, Agent shall be paid by Fund at the rates listed on Schedule B.
Upon request of the Agent, the hourly rates listed on Schedule B may be
adjusted, subject to approval by the Fund's Board of Directors in accordance
with paragraph 17.
7. EXPENSES. Fund agrees to pay directly or reimburse Agent for postage
and the procurement or printing of share certificates, statements, envelopes,
checks, reports, tax forms, proxies, or other forms of printed material required
in the performance of its services to Fund under this Agreement, and Agent
agrees that Fund may purchase these materials directly for use by Agent, subject
to prior approval by Agent as to the compatibility of any materials with Agent's
data processing equipment. Fund agrees to pay directly or reimburse Agent for
all freight and other delivery charges and insurance or bonding charges incurred
by Agent in delivering certificates to shareholders and any and all other out-
of-pocket expenses and charges incurred by Agent in performing services under
this Agreement.
8. MONTHLY STATEMENT. At the end of each month during the term of this
Agreement and upon termination of this Agreement, Agent will render an itemized
statement to Fund for its fees and expenses under this Agreement. Payment by
Fund is due 10 days from the date the statement is received.
9. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
9.1 Agent represents that it is registered with the Securities and
Exchange Commission as a transfer agent under Section 17A of the Securities
Exchange Act of 1934, as amended, and will notify the Fund promptly if its
registration is revoked or if any proceeding is commenced before the Securities
and Exchange Commission which may lead to revocation. Agent shall be
responsible for compliance with all laws, rules, and regulations of governmental
authorities having jurisdiction over transfer agents and their activities.
9.2 Except for the accuracy of information furnished to Fund by
Agent, Fund assumes full responsibility for the preparation, contents, and
distribution of its prospectuses and for compliance with all applicable
requirements of the 1933 Act, the 1940 Act, and any other laws, rules, or
regulations of governmental authorities with jurisdiction over Fund.
2
<PAGE>
10. REFERENCES TO AGENT. Fund shall not circulate any printed matter
that contains any reference to Agent without the prior written approval of
Agent, except printed matter that identifies Agent as transfer agent and
dividend disbursing agent for Fund.
11. ACTS OF GOD, NATIONAL EMERGENCY, ETC. Agent shall not be liable for
loss of data, delays, or errors occurring by reason of circumstances beyond its
control, including but not limited to acts of civil or military authority,
national emergencies, fire, flood, catastrophe, acts of God, insurrection, war,
riot, failure of transportation, communication, or power supply, or machine
breakdown. Agent shall use its best efforts to minimize the likelihood of
damage, loss of data, delays, or errors resulting from such uncontrollable
events, and if damage, loss of data, delays, or errors occur, Agent shall use
its best efforts to mitigate the effects of the occurrence.
12. STANDARD OF CARE. Agent shall at all times act in good faith and use
its best efforts within reasonable limits to insure the accuracy of all services
performed under this Agreement and to absorb all costs for time, materials, or
other expenses necessary to correct any errors made by Agent. Agent shall not
be liable for any loss or damage due to its errors unless the errors are caused
by its gross negligence, bad faith, or willful misconduct or that of its
employees or agents. Fund agrees to pay Agent, at the rates set forth in
Schedule B, for any excess work required by Agent due to the errors of Fund's
employees or representatives or due to incorrect data furnished to Agent by
Fund, Fund's investment adviser, or Fund's custodian.
13. INSTRUCTIONS AND OPINION OF COUNSEL. At any time Agent may apply to
an officer of Fund for instructions and consult counsel for Fund or its own
counsel on any matter arising in connection with this Agreement. Agent shall
not be liable for any action taken or omitted by it in good faith in accordance
with such instructions or with the advice or opinion of such counsel.
14. INDEMNIFICATION. Fund shall indemnify and hold Agent harmless from
all loss, cost, damage, and expense, including reasonable expenses for counsel,
incurred by Agent resulting from any claim, demand, action, or suit in
connection with the performance of its duties hereunder or as the result of
acting upon any instruction, advice, or opinion obtained pursuant to
paragraph 13 hereof, upon any other instruction reasonably believed by Agent to
have been properly executed by a duly authorized officer of Fund, or upon any
information, data, records, or documents provided to Agent by Fund, Fund's
investment adviser, or Fund's custodian. This indemnification shall not apply
to actions or omissions constituting gross negligence, bad faith, or willful
misconduct of Agent, its employees, or agents. Prior to confessing any claim
against it which may be subject to this indemnification, Agent shall give Fund
reasonable opportunity to defend against that claim in its own name or in the
name of Agent.
15. FIDELITY BOND. Agent will maintain in force throughout the duration
of this Agreement a fidelity bond that complies with applicable regulatory
requirements, written by a reputable bonding company, covering theft,
3
<PAGE>
embezzlement, forgery, and other acts of malfeasance by Agent, its employees, or
agents in connection with services performed for Fund.
16. DURATION AND TERMINATION.
16.1 This Agreement shall remain in force until two years from the
date hereof and may be continued from year to year thereafter if approved
annually by a vote of a majority of the Fund's shareholders (as determined in
accordance with the requirements of the 1940 Act) or by its Board of Directors
and in either case a vote of a majority of the directors who are not parties to
this Agreement or interested persons of any such party cast in person at a
meeting called for the purpose of voting on approval.
16.2 This Agreement may be terminated at any time without the payment
of any penalty by vote of the Trustees of Fund or by vote of a majority of the
outstanding shares of Fund on 60 days written notice to the other party. This
Agreement may be terminated by Agent upon 180 days written notice thereof to
Fund. Any termination in accordance with this Agreement shall not affect the
rights and obligations of the parties under paragraphs 11, 12, 13, and 14
hereof. Immediately upon termination of this Agreement, all records and other
data in the possession of Agent which are the property of Fund shall be
furnished to Fund in computer written data forms as requested by Fund.
16.3 This Agreement shall automatically terminate if it is assigned,
the term "assignment" for this purpose having the meaning defined in Section
2(a)(4) of the 1940 Act. Agent shall notify Fund of any change in the officers
or directors of Agent within a reasonable time after the change.
17. AMENDMENTS. This Agreement may be amended with the written consent
of Agent and Fund if the amendment has been approved by the Board of Directors
of Fund, including a majority of the disinterested directors.
18. NOTICES. Any notice shall be officially given when sent by
registered or certified mail by either party to the following addresses,
provided that either party may notify the other of any changed address to which
such notices should be mailed hereunder:
If to Fund: Columbia Small Cap Fund, Inc.
1301 SW Fifth Avenue
PO Box 1350
Portland, Oregon 97207
Attention: President
If to Agent: Columbia Trust Company
1301 SW Fifth Avenue
PO Box 1350
Portland, Oregon 97207
Attention: President
4
<PAGE>
19. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Oregon.
20. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties, supersedes any agreements previously entered into by them,
and may be amended only by written amendment, duly executed on behalf of the
respective parties in accordance with paragraph 17.
IN WITNESS WHEREOF, the parties hereto cause this agreement to be duly
executed and to become effective as of the date first written above.
COLUMBIA SMALL CAP FUND, INC.
By /s/ John A. Kemp
----------------------------------
Title: President
COLUMBIA TRUST COMPANY
By /s/ George L. Hanseth
----------------------------------
Title: Vice President
5
<PAGE>
SCHEDULE A
I. Shareholder Services
A. Maintain all shareholder records on electronic data processing
equipment, including:
1. Share balances
2. Account transaction history
3. Names and addresses
4. Certificate records
5. Distribution records
6. Transfer records
7. Over-all control records
B. New Accounts
1. Deposit all moneys received into transfer account maintained for
the Custodian
2. Set up account according to shareholders' instructions as to:
a. Amount of shares purchased
b. Whether to deliver stock certificates to shareholders
C. Additional Purchases
1. Deposit moneys received into a transfer account maintained for
the Custodian
2. Issue shareholder confirmations
D. Redemptions - Full and Partial
1. Redeem shares upon shareholder request
2. Issue checks for the amount of redemption
3. Issue and mail shareholder confirmations
E. Transfer shares as requested, which includes obtaining necessary
papers and documents to satisfy transfer requirements. On irregular
transfers requiring special legal opinions, such special legal fees,
if any, are to be paid for by the Fund.
F. Prepare and mail certificates as requested by shareholders
6
<PAGE>
G. Process changes, corrections of addresses and registrations
H. Compute distributions, dividends and capital gains
1. Reinvest in additional shares as requested by shareholders
2. Issue checks as requested by shareholders
3. Advise each shareholder of amount of dividends received and tax
status annually
I. Handle replacement of lost certificates
J. Produce transcripts of shareholder account history as required
K. Maintain the controls associated with the computer programs and manual
systems to arrive at the Company's total shares outstanding
L. Receive mail and perform other administrative functions relating to
transfer agent work
II. Reports and Schedules
A. Daily
1. Name and address changes
2. Name and address additions and deletions
3. Transaction Register
a. Purchases
b. Redemptions
c. Transfer and adjustments
4. Cash reconciliation - Cash received for day
5. Check reconciliation - checks issued for day
6. Transaction reconciliation
a. Amount received
b. Total shares purchased
c. Number of purchase transactions
7
<PAGE>
d. Dollar amount redeemed
e. Shares redeemed
f. Number of accounts redeeming
g. Checks issued for redemptions
B. Monthly/Daily
1. Balance list of shareholders in account number sequence
a. Number of shares outstanding for which stock certificates
were issued
b. Number of shares outstanding for which stock certificates
were not issued
c. Total shares outstanding (a + b)
2. a. Purchases, sales and adjustments
b. Certificates issued
c. Certificates, redemptions and transfers
d. Certificates reconciliations by certificate number
C. Monthly
1. Sales by states for month
D. Periodically
1. Alphabetical account listing
III. Extra Charge Services
A. Mailing labels or other mailing services to shareholders
B. Services in connection with any stock splits
C. The computer system is designed to produce almost any display of
statistical management or accounting data in almost any format desired
by the management, auditors or directors. The parameters of reporting
are only limited to the data contained on disc. With sufficient
notice this information is available to management in accordance with
charges as itemized in Schedule B.
8
<PAGE>
COLUMBIA SMALL CAP FUND, INC.
SCHEDULE B
BASIC FEE
$1.00 per account per month
TIME AND MATERIAL FOR EXTRA SERVICES
Computer. . . . . . . . . . . . . . . . . .At Cost
Key punch . . . . . . . . . . . . . . . . .At Cost
Clerical. . . . . . . . . . . . . . . . . .At Cost
Programming and Direct
Technical Management. . . . . . . . . . . .At Cost
Travel and per diem expenses
(Chargeable only when authorized
in advance by Fund) . . . . . . . . . . . .At Cost
Mailing Services. . . . . . . . . . . . . . .At Cost
Permanent file supplies, forms,
microfilm, microfiche . . . . . . . . . . .At Cost
Any of the above services when performed outside regular working hours of Agent
may be billed at 150 percent of the above.
9
<PAGE>
[logo] Columbia Trust Company
Employer's Booklet
Notices to Employees
The Columbia Retirement Plan
<PAGE>
The Columbia Retirement Plan
Employer's Booklet
Notice to Employees
Table of Contents
This Employer's Booklet contains specific information for retirement plans
covering employees. Although some information is duplicated here, this booklet
should be used in conjunction with the Columbia Retirement Plan packet.
PROCEDURES AND
GENERAL ADMINISTRATIVE RESPONSIBILITIES
Including: REPORTING REQUIREMENTS
DISTRIBUTIONS
SPECIAL TAX NOTICE REGARDING PLAN PAYMENTS
SUMMARY PLAN DESCRIPTIONS
INSTRUCTIONS FOR PREPARING MODEL SUMMARY PLAN DESCRIPTION FOR PROFIT SHARING
PLAN
MODEL SUMMARY PLAN DESCRIPTION FOR PROFIT SHARING PLAN
INSTRUCTIONS FOR PREPARING MODEL SUMMARY PLAN DESCRIPTION FOR MONEY PURCHASE
PENSION PLAN
MODEL SUMMARY PLAN DESCRIPTION FOR MONEY PURCHASE PENSION PLAN
ADMINISTRATIVE FORMS
NOTICE TO INTERESTED PARTIES
PARTICIPANT LOANS
BENEFICIARY DESIGNATIONS
JOINT SURVIVOR ANNUITY
DOMESTIC RELATIONS ORDERS
<PAGE>
[LOGO] The Columbia Retirement Plan
PROCEDURES & ADMINISTRATION
PROCEDURES & ADMINISTRATION
PROCEDURES & ADMINISTRATION
PROCEDURES & ADMINISTRATION
- ----------------------------------------------------------------
Questions? Call 1-800-547-1707; in Portland 222-3606
<PAGE>
PROCEDURES
Employers have special responsibilities when employees are covered under a
retirement plan. Once the Adoption Agreements have been completed and the
Trustees and Plan Administrator appointed, these additional procedures should be
followed.
Communicate the Plan to Employees.
After the employer has adopted the plan(s), the employer should communicate the
adoption and principal provisions of the plan(s) to employees. The adoption can
be communicated by posting or delivering a Notice to Interested Parties to
current employees, former employees who are eligible for benefits, and
beneficiaries of deceased employees. If the plan is a new plan, only current
employees need be notified. The employer or the plan administrator must post the
notice between 9 and 23 days after the employer has adopted the plan and between
6 and 20 days after adoption if the notice is mailed to employees. Model notices
and instructions for completing them are in the Administrative Forms section of
this booklet.
The principal plan provisions can be communicated to employees by providing
participants with a copy of the summary plan description. See the Summary Plan
Description Procedure.
Bonding and Insurance.
If a plan covers common law employees, the plan administrator, any individual
trustees, and any person who handles funds or property belonging to the plan
must be covered by a surety bond equal to 10 percent of the plan assets as of
the beginning of the plan year (but not less than $1,000 nor more than
$500,000). For example, an employee who signs checks transferring assets to the
trustee should be bonded. This bond normally may be obtained from an insurance
company at a minimal cost. A bond is not required if the plan only covers the
individual and/or spouse who are the sole owners of the proprietorship or
corporation. The employer may also wish to obtain fiduciary liability insurance
covering the plan administrator and any individual trustees. Fiduciary
liability insurance must be paid for by the employer unless it permits recovery
against individual fiduciaries. It may not be paid from plan assets. Fiduciary
liability insurance is not required by law, however.
Prepare the Summary Plan Descriptions(s).
The employer must inform each participant under the plan(s) of his rights under
the plan(s) in a manner that is understandable to the participants. To do this,
the employer should complete the Model Summary Plan Description in the Summary
Plan Description Section according to the instructions provided. The plan
administrator should provide a copy of the completed description within 90 days
after participation begins, to each new participant under the plan. In
addition, a copy of the summary plan description must be filed with the
Department of Labor by the plan administrator within 120 days after adoption of
the plan.
Consult a Professional.
<PAGE>
Once again, because of the many statutory and regulatory requirements imposed on
tax-qualified plans, all actions taken with respect to establishing such a plan
should be reviewed by a tax advisor or legal counsel.
<PAGE>
Notice of General
Administrative Responsibilities
The plan administrator is responsible for the administration and recordkeeping
under the plan. The plan administrator may be the trustee, the employer
(including a corporate employer), an individual, or a committee of two or more
individuals. Among its duties, the plan administrator must comply with many
reporting and disclosure requirements. If you have employees, these duties are
significantly increased. See the Employer's Booklet-Notices to Employees for an
expanded list of administrative responsibilities. The following list, which is
not exhaustive, identifies the primary areas of administrative responsibility.
Record Keeping
Maintain Columbia's confirmations of account activity and Quarterly statements.
Keep beneficiary designations current. Monitor the Joint and Survivor Annuity
election.
Accounting
Account for yearly contributions allocated to the accounts, as well as
investment gains or losses. The plan administrator must also account for
amounts rolled over or transferred from other tax-qualified plans.
Investment Selection
Designate the Columbia fund or funds and the amount for each contribution. See
the Contribution Schedule in the Adoption Agreement section.
Form 5500
Reporting Requirements
As the administrator of a defined contribution plan, you are required to file an
annual return/report of your plan. The report must be filed with the IRS within
seven months of your plan's year end. If you terminate your plan during the
year, your filing deadline is seven months from the date of termination. There
are penalties for failure to file.
The appropriate 5500 Form depends upon your plan size. Form 5500-EZ is the
newer annual return for use by most one-participant plans. As of 1989 filing,
5500-EZ filers with less than $100,000 in aggregate plan balances are exempted
from filing.
Plans with 2-99 participants must file Form 5500-C/R regardless of the plan
balance. In the plan's first year of existence, and every third year
thereafter, fill out the complete form. For the other years, complete only the
registration portion of the form. The entire form must be completed for the
year in which your plan terminates, regardless of where you are in the 3-year
cycle.
All forms are available through the IRS or through your accountant. If you have
any questions regarding which form to use for your plan, please consult the IRS
or your tax advisor.
Distributions
Distributions must be authorized in writing by the Plan's trustee(s) only. A
Prototype Retirement Plan Trustee Distribution Form can be used for that
authorization. Distributions are subject to the requirements of the Retirement
Equity Act of 1984 (REA) and spousal
<PAGE>
consent should be obtained for any form of distribution other than a qualified
joint and survivor annuity. Use the Participant Distribution Election Form,
which accompanies the Retirement Plan Trustee Distribution Form.
As of January 1, 1993, distributions from retirement plans are subject to
mandatory withholding at a rate of 20% as a pre-payment of federal income tax
(currently, Oregon residents may elect whether or not to have 8% state tax
withholding). Columbia Trust Company can do this withholding. Different
withholding rates may apply to lump-sum distributions and to periodic
distributions. You can elect to have additional amounts withheld. The IRS
Form W-4P may need to be completed if any portion of the distribution is not an
eligible rollover amount. Call Columbia for the Distribution Form and Form W-
4P. Taxable distributions from qualified plans are eligible rollover
distributions to an individual retirement account or annuity (IRA), another
qualified plan or a section 403(b) annuity. Eligible rollover distributions
that are directly rolled over avoid the mandatory 20% withholding. Eligible
rollover distributions exclude:
Required Minimum Distributions (age 70 1/2)
Distributions from an annuity
Equal payments spanning 10 years or more
After-tax contributions
If you are under 59 1/2 years of age, the distribution is subject to a 10%
penalty. Exceptions to the penalty are distributions which are:
Made to a beneficiary after the death of a participant
Due to a total and permanent disability
A series of substantially equal periodic payments which begin after
separation from service
Made to participants over age 55 and separating from service
Medical expenses
Made to alternate payees specified in a Qualified Domestic Relations Order
i.e. divorce
Distributions that are directly rolled over are also exempted from the 10%
penalty. If you choose to have your distribution paid to you, you will receive
only 80% of the distribution since 20% must be withheld for federal income
taxes. If you want to roll over the distribution to an IRA or another
employer's plan, you must do so within 60 days of receiving the distribution.
You can roll over up to 100% of the distribution, however, you will need to find
other money to replace the 20% that was withheld. If you roll over only 80%,
you will be taxed on the 20% withheld and not rolled over.
Federal law requires participants reaching age 70 1/2 to begin receiving a
minimum distribution from the plan each year. Distributions must begin by April
1 following the year the participant reaches 70 1/2. The minimum amount is
calculated by dividing the previous year-end balance by the applicable life
expectancy. Your life expectancy will depend on who your listed beneficiary is,
and locating the expectancy on the IRS Life Expectancy tables. Required Minimum
Distributions cannot be Rolled Over to an IRA. Failure to make a minimum
distribution subjects you to a 50% IRS penalty tax.
Distributions from your retirement plan (excludes plan-to-plan transfer of
assets) are reportable to the IRS. You will receive a Form 1099R in the January
following the distribution.
<PAGE>
Because of tax consequences and options available to you, we urge you to consult
your tax advisor for your best option. We also suggest these IRS Publications
for more information:
Publ. 560 Self-Employed Retirement Plans
Publ. 575 Pension and Annuity Income
Publ. 505 Tax Withholding and Estimated Tax
Death of a Trustee or Plan Administrator
Depending on the organization of your company, you may have appointed one
individual (yourself) as the plan administrator and trustee of the plan. In
this situation, your death may complicate the distribution of your plan assets
to an intended beneficiary.
Under the terms of the plan, the plan administrator is responsible for the
management and administration of the plan. The plan administrator is also
responsible for instructing the trustee regarding distributions from the plan.
Further, Columbia is authorized to accept distribution instructions signed only
by the trustee under the plan. The employer (that is, your company) is the only
entity that can appoint the plan administrator and trustee. Please note that
Columbia does not fulfill either of these duties.
If you decide to fill all three capacities (employer, plan administrator and
trustee), then upon your death no one is automatically available to give
Columbia instructions on distributions. Your company will need to appoint a
successor trustee in order to distribute plan assets to your beneficiaries.
That appointment may be more difficult to accomplish if your company is a sole
proprietorship.
To address this issue, you may consider appointing a co-trustee who could
continue to give distribution instructions to Columbia in the event of your
death. The co-trustee's signature must be on the Adoption Agreement. Note that
Columbia will not accept appointment as co-trustee.
If you elect not to appoint a co-trustee, then your representatives will need to
provide Columbia with any of the following to effect a distribution:
1. Appointment of Trustee - If your company is a corporation or a partnership,
a successor trustee may be appointed with the appropriate corporate action (e.g.
by the board of directors). Acceptable evidence of that appointment must be
provided to Columbia.
2. Letters of Testamentary - If you are a sole proprietorship, the personal
representative of your estate, acting as a successor-in-interest to your
company, will need to appoint a successor plan administrator and trustee of your
plan. This procedure involves the probate of your estate and requires that you
provide Columbia with letters of testamentary.
3. A Fidelity/Indemnity Bond - In lieu of the appointment of a new trustee by
the corporation or a personal representative, you could provide Columbia with a
surety bond that indemnifies Columbia against claims by any other parties where
Columbia makes a distribution to a beneficiary without a trustee's authorizing
signature. This type of bond can be obtained from a surety company for a fee.
Specific options should be discussed with your legal and/or tax advisor before
taking any action with regard to this plan.
<PAGE>
(Notice 92-48)
- -------------------------------------------------
This notice contains a "Safe Harbor Explanation" that plan administrators
may provide to recipients of certain distributions from qualified plans in
order to satisfy sections 402(f) of the Internal Revenue Code.
- -------------------------------------------------
Background
The Unemployment Compensation Amendments of 1992, P.L. 102-318 (UCA) amended
section 402(f) of the Code with respect to distributions made after December 31,
1992. Prior to UCA, section 402(f) required a plan administrator to provide the
recipient of an eligible rollover distribution with a written explanation of the
rollover rules and the special tax treatment available to lump sum
distributions. As amended by UCA, section 402(f) now requires that, in addition
to the previously required information, the written explanation also cover the
direct rollover option and the mandatory income tax withholding on distributions
not directly rolled over. Section 402(f) now provides that this explanation must
be given within a reasonable period of time before the plan makes an eligible
rollover distribution.
Section 521(d) of UCA directs the Secretary of the Treasury to develop a model
explanation that can be used to satisfy the requirements of 402(f), as amended.
This notice is being released in conjunction with temporary and proposed
regulations under sections 402(a)(31), 402(c) and (f), 403(b) and 3405(c). Those
regulations provide additional guidance with respect to the treatment of
eligible rollover distributions.
Safe Harbor and Alternative Explanations
In accordance with the requirements of UCA section 521(d), this notice contains
a model written explanation ("Safe Harbor Explanation") that meets the
requirements of section 402(f) of the Code if it is provided to the recipient of
an eligible rollover distribution within a reasonable period of time before the
distribution is made. The reasonable period of time for providing an explanation
is defined in the temporary and proposed regulations issued in conjunction with
this notice. See section 1.402(c)-1T of the temporary regulations.
In using the Safe Harbor Explanation, a plan administrator may "customize" the
Safe Harbor Explanation by omitting any portions that could not apply
<PAGE>
to the plan. For example, if the plan does not hold after-tax employee
contributions, the paragraph headed "Non-taxable Payments" could be eliminated.
Similarly, if the plan does not provide for distributions of employer stock or
other employer securities, the paragraph headed "Employer Stock or Securities"
could be eliminated. Other paragraphs that may not be relevant to a particular
plan include, for example, "Payments Spread Over Long Periods," "Direct Rollover
of a Series of Payments," and "Special Tax Treatment". A plan administrator also
may provide additional information with the Safe Harbor Explanation, if the
information is not inconsistent with the Safe Harbor Explanation.
Alternatively, a plan administrator can satisfy section 402(f) by providing
distributees with an explanation that is different from the Safe Harbor
Explanation. Any explanation must contain the information required by section
402(f) and must be written in a manner designed to be easily understood.
If the law governing the tax treatment of distributions or the other provisions
covered by the Safe Harbor Explanation is amended after publication of this
notice, the Safe Harbor Explanation will not satisfy section 402(f) to the
extent that the Safe Harbor Explanation no longer accurately describes the
relevant law.
Effect on Other Guidance
The guidance in section 1.402(f)-1 of the regulations and Notice 87-2, 1987-1
C.B. 396, with respect to section 402(f) (as in effect before its amendment by
UCA) is superseded for distributions made after December 31, 1992.
<PAGE>
Special Tax Notice Regarding Plan Payments
This notice contains important information you will need before you decide how
to receive your benefits from [Name of Plan] (the "Plan").
Summary
A payment from the Plan that is eligible for "rollover" can be taken in two
ways. You can have all or any portion of your payment either 1) PAID IN A
"DIRECT ROLLOVER" or 2) PAID TO YOU. A rollover is a payment of your Plan
benefits to your individual retirement arrangement (IRA) or to another employer
plan. This choice will affect the tax you owe.
If You Choose a Direct Rollover
1. Your payment will not be taxed in the current year and no income tax will
be withheld.
2. Your payment will be made directly to your IRA or, if you choose, to
another employer plan that accepts your rollover.
3. Your payment will be taxed later when you take it out of the IRA or the
employer plan.
If You Choose to Have Your Plan Benefits Paid To You
1. You will receive only 80% of the payment, because the Plan administrator is
required to withhold 20% of the payment and send it to the IRS as income tax
withholding to be credited against your taxes.
2. Your payment will be taxed in the current year unless you roll it over.
You may be able to use special tax rules that could reduce the tax you owe.
However, if you receive the payment before age 59-1/2, you also may have to pay
an additional 10% tax.
3. You can roll over the payment by paying it to your IRA or to another
employer plan that accepts your rollover within 60 days of receiving the
payment. The amount rolled over will not be taxed until you take it out of the
IRA or employer plan.
4. If you want to roll over 100% of the payment to an IRA or an employer plan,
you must find other money to replace the 20% that was withheld. If you roll
over only the 80% that you received, you will be taxed on the 20% that was
withheld and that is not rolled over.
Special Notice
The Plan administrator must provide this Special Tax Notice to you within a
reasonable time before an "eligible rollover distribution," as described herein,
is made. Under IRS regulations, this Special Tax Notice must generally be given
no more than 90 days and no less than 30 days before the distribution or
transfer. However, the 30-day requirement no longer applies once you
affirmatively elect to make or not make a direct rollover. You have the right
to wait the full 30 days before making a decision, if you wish to do so.
More Information Page
I. Payments That Can and Cannot be
Rolled Over [ ]
II. Direct Rollover [ ]
III. Payment to You [ ]
IV. Surviving Spouses, Alternate Payees,
<PAGE>
and Other Beneficiaries [ ]
I. Payments That Can and Cannot Be Rolled Over
Payments from the Plan may be "eligible rollover distributions." This means
that they can be rolled over to an IRA or to another employer plan that accepts
rollovers. Your Plan administrator should be able to tell you what portion of
your payment is an eligible rollover distribution. The following types of
payments cannot be rolled over:
Non-taxable Payments. In general, only the "taxable portion" of your payment is
an eligible rollover distribution. If you have made "after-tax" employee
contributions to the Plan, these contributions will be non-taxable when they are
paid to you, and they cannot be rolled over. (After-tax employee contributions
generally are contributions you made from your own pay that were already taxed.)
Payments Spread Over Long Periods. You cannot roll over a payment if it is part
of a series of equal (or almost equal) payments that are made at least once a
year and that will last for
1. your lifetime (or your life expectancy), or
2. your lifetime and your beneficiary's lifetime (or life expectancies), or
3. a period of ten years or more.
Required Minimum Payments. Beginning in the year you reach age 70-1/2, a
certain portion of your payment cannot be rolled over because it is a "required
minimum payment" that must be paid to you.
II. Direct Rollover
You can choose a direct rollover of all or any portion of your payment that is
an "eligible rollover distribution," as described above. In a direct rollover,
the eligible rollover distribution is paid directly from the Plan to an IRA or
another employer plan that accepts rollovers. If you choose a direct rollover,
you are not taxed on a payment until you later take it out of the IRA or the
employer plan.
Direct Rollover to an IRA. You can open an IRA to receive the direct rollover.
(The term "IRA", as used in this notice, includes individual retirement accounts
and individual retirement annuities.) If you choose to have your payment made
directly into an IRA, contact an IRA sponsor (usually a financial institution)
to find out how to have your payment made in a direct rollover to an IRA at that
institution. If you are unsure of how to invest your money, you can temporarily
establish an IRA to receive the payment. However, in choosing an IRA, you may
wish to consider whether the IRA you choose will allow you to move all or part
of your payment to another IRA at a later date, without penalties or other
limitations. See IRS Publication 590, Individual Retirement Arrangements, for
more information on IRAs (including limits on how often you can roll over
between IRAs).
Direct Rollover to a Plan. If you are employed by a new employer that has a
plan, and you want a direct rollover to that plan, ask the administrator of that
plan whether it will accept a rollover. If your new employer's plan does not
accept a rollover, you can choose a direct rollover to an IRA.
Direct Rollover of a Series of Payments. If you receive eligible rollover
distributions that are paid in a series for less than ten years, your choice to
make or not make a direct rollover for a payment will apply to all later
payments in the series until you change your election. You are free to change
your election for any later payment in the series.
<PAGE>
III Payment Paid to You
If you have the payment made to you, it is subject to 20% income tax
withholding. The payment is taxed in the year you receive it unless, within 60
days, you roll it over to an IRA or another plan that accepts rollovers. If you
do not roll it over, special tax rules may apply.
Income Tax Withholding:
Mandatory Withholding. If any portion of the payment to you is an eligible
rollover distribution, the Plan is required by law to withhold 20% of that
amount. This amount is sent to the IRS as income tax withholding. For example,
if your eligible rollover distribution is $10,000, only $8,000 will be paid to
you because the Plan must withhold $2,000 as income tax. However, when you
prepare your income tax return for the year, you will report the full $10,000 as
a payment from the Plan. You will report the $2,000 as tax withheld, and it
will be credited against any income tax you owe for the year.
Voluntary Withholding. If any portion of your payment is not an eligible
rollover distribution but is taxable, the mandatory withholding rules described
above do not apply. In this case, you may elect not to have withholding apply
to that portion. To elect out of withholding, ask the Plan administrator for
the election form and related information.
Sixty-Day Rollover Option. If you have an eligible rollover distribution paid
to you, you can still decide to roll over all or part of it to an IRA or another
employer plan that accepts rollovers. If you decide to roll over, you must make
the rollover within 60 days after you receive the payment. The portion of your
payment that is rolled over will not be taxed until you take it out of the IRA
or the employer plan.
You can roll over up to 100% of the eligible rollover distribution, including an
amount equal to the 20% that was withheld. If you choose to roll over 100%, you
must find other money within the 60-day period to contribute to the IRA or the
employer plan to replace the 20% that was withheld. On the other hand, if you
roll over only the 80% that you received, you will be taxed on the 20% that was
withheld.
Example: Your eligible rollover distribution is $10,000, and you choose to have
it paid to you. You will receive $8,000, and $2,000 will be sent to the IRS as
income tax withholding. Within 60 days after receiving the $8,000, you may roll
over the entire $10,000 to an IRA or employer plan. To do this, you roll over
the $8,000 you received from the Plan, and you will have to find $2,000 from
other sources (your savings, a loan, etc.). In this case, the entire $10,000 is
not taxed until you take it out of the IRA or employer plan. If you roll over
the entire $10,000, when you file your income tax return you may get a refund of
the $2,000 withheld...
If, on the other hand, you roll over only $8,000, the $2,000 you did not roll
over is taxed in the year it was withheld. When you file your income tax return
you may get a refund of part of the $2,000 withheld. (However, any refund is
likely to be larger if you roll over the entire $10,000.)
Additional 10% Tax If You Are Under Age 59-1/2. If you receive a payment before
you reach age 59-1/2 and you do not roll it over, then, in addition to the
regular income tax, you may have to pay an extra tax equal to 10% of the taxable
portion of the payment. The additional 10% tax does not apply to your payment
if it is (1) paid to you because you separate from service with your employer
during or after the year you reach age 55, (2) paid because you retire due to
disability, (3) paid to you as equal (or almost equal) payments over your life
or
<PAGE>
life expectancy (or your and your beneficiary's lives or life expectancies), or
(4) used to pay certain medial expenses. See IRS Form 5329 for more information
on the additional 10% tax.
Special Tax Treatment. If your eligible rollover distribution is not rolled
over, it will be taxed in the year you receive it. However, if it qualifies as
a "lump sum distribution," it may be eligible for special tax treatment. A lump
sum distribution is a payment, within one year, of your entire balance under the
Plan (and certain other similar plans of the employer) that is payable to you
because you have reached age 59-1/2 or have separated from service with your
employer (or, in the case of a self-employed individual, because you have
reached age 59-1/2 or have become disabled). For a payment to qualify as a lump
sum distribution, you must have been a participant in the Plan for at least 5
years. The special tax treatment for lump sum distributions is described below.
Five-Year Averaging. If you receive a lump sum distribution after you are age
59-1/2, you may be able to make a one-time election to figure the tax on the
payment by using "5-year averaging." Five-year averaging often reduces the tax
you owe because it treats the payment much as if it were paid over 5 years.
Ten-Year Averaging If You Were Born Before January 1, 1936. If you receive a
lump sum distribution and you were born before January 1, 1936, you can make a
one-time election to figure the tax on the payment by using "10-year averaging"
(using 1986 tax rates) instead of 5-year averaging (using current tax rates).
Like the 5-year averaging rules, 10-year averaging often reduces the tax you
owe.
Capital Gain Treatment If You Were Born Before January 1, 1936. In addition, if
you receive a lump sum distribution and you were born before January 1, 1936,
you may elect to have the part of your payment that is attributable to your pre-
1974 participation in the Plan (if any) taxed as long-term capital gain at a
rate of 20%.
There are other limits on the special tax treatment for lump sum distributions.
For example, you can generally elect this special tax treatment only once in
your lifetime, and the election applies to all lump sum distributions that you
receive in that same year. If you have previously rolled over a payment from
the Plan (or certain other similar plans of the employer), you cannot use this
special tax treatment for later payments from the Plan. If you roll over your
payment to an IRA, you will not be able to use this special tax treatment for
later payments from the IRA. Also, if you roll over only a portion of your
payment to an IRA, this special tax treatment is not available for the rest of
the payment. Additional restrictions are described in IRS Form 4972, which has
more information on lump sum distributions and how you elect the special tax
treatment.
Employer Stock or Securities. There is a special rule for a payment from the
Plan that includes employer stock (or other employer securities). To use this
special rule, (1) the payment must qualify as a lump sum distribution, as
described above (or would qualify except that you do not yet have 5 years of
participation in the Plan), or (2) the employer stock included in the payment
must be attributable to "after-tax" employee contributions, if any. Under this
special rule, you may have the option of not paying tax on the "net unrealized
appreciation" of the stock until you sell the stock. Net unrealized
appreciation generally is the increase in the value of the employer stock while
it was held by the Plan. For example, if employer stock was contributed to your
plan account when the stock was worth $1,000 but the stock was worth $1,200 when
you received it, you would not have to pay tax on the $200 increase in value
until you later sold the stock.
<PAGE>
You may instead elect not to have the special rule apply to the net unrealized
appreciation. In this case, your net unrealized appreciation will be taxed in
the year you receive the stock, unless you roll over the stock. The stock
(including any net unrealized appreciation) can be rolled over to an IRA or
another employer plan either in a direct rollover or a rollover that you make
yourself.
If you receive employer stock in a payment that qualifies as a lump sum
distribution, the special tax treatment for lump sum distributions described
above (such as 5-year averaging) also may apply. See IRS Form 4972 for
additional information on these rules.
IV. Surviving Spouses, Alternate Payees, and Other Beneficiaries
In general, the rules summarized above that apply to payments to employees also
apply to payments to surviving spouses of employees and to spouses or former
spouses who are "alternate payees." You are an alternate payee if your interest
in the Plan results from a "qualified domestic relations order," which is an
order issued by a court, usually in connection with a divorce or legal
separation. Some of the rules summarized above also apply to a deceased
employee's beneficiary who is not a spouse. However, there are some exceptions
for payments to surviving spouses, alternate payees, and other beneficiaries
that should be mentioned.
If you are a surviving spouse, you may choose to have an eligible rollover
distribution paid in a direct rollover to an IRA or paid to you. If you have
the payment paid to you, you can keep it or roll it over yourself to an IRA, but
you cannot roll it over to an employer plan. If you are an alternate payee,
you have the same choices as the employee. Thus, you can have the payment paid
as a direct rollover or paid to you. If you have it paid to you, you can keep
it or roll it over yourself to an IRA or to another employer plan that accepts
rollovers. If you are a beneficiary other than the surviving spouse, you cannot
choose a direct rollover, and you cannot roll over the payment yourself.
If you are a surviving spouse, an alternate payee, or another beneficiary, your
payment is not subject to the additional 10% tax described in section III above,
even if you are younger than age 59-1/2.
If you are a surviving spouse, an alternate payee, or another beneficiary, you
may be able to use the special tax treatment for lump sum distributions and the
special rule for payments that include employer stock, as described in section
III above. If you receive a payment because of the employee's death, you may be
able to treat the payment as a lump sum distribution if the employee met the
appropriate age requirements, whether or not the employee had 5 years of
participation in the Plan.
<PAGE>
[LOGO] The Columbia Retirement Plan
SUMMARY PLAN DESCRIPTIONS
SUMMARY PLAN DESCRIPTIONS
SUMMARY PLAN DESCRIPTIONS
SUMMARY PLAN DESCRIPTIONS
________________________________________________________________
Questions? Call 1-800-547-1707; in Portland 222-3606
<PAGE>
MODEL SUMMARY PLAN DESCRIPTION OF THE [INSERT NAME OF EMPLOYER] PROFIT SHARING
PLAN
Instructions for Preparing the Model Summary Plan Description of the Prototype
Profit Sharing Plan
Each Employer who adopts the Prototype Profit Sharing Plan is required by
Department of Labor regulations to provide employees with a summary plan
description. A summary plan description is intended to provide employees with
the information they need to properly understand their rights under such a
retirement plan.
The Summary Plan Description you distribute to your employees must accurately
reflect the provisions of your particular Plan, in accordance with the choices
you have made in your Adoption Agreement. This Model Summary Plan Description
was designed to assist you in producing such a document.
You will notice that the Model Summary Plan Description contains several
sections where you must choose which language is appropriate, or whether
language should be included in your Summary Plan Description at all. You should
make these decisions by looking at your Adoption Agreement and determining which
language, if any, is appropriate. We have included instructions wherever
possible to help you make these decisions. Once you have made your choices, you
need simply to check off the appropriate language in the space provided. You
may then wish to have your Summary Plan Description retyped to delete those
provisions which do not apply to your Plan.
Remember, the Summary Plan Description must be provided to each participant
within 90 days of commencing participation and to the Department of Labor within
120 days of the adoption of the Plan.
The address is:
Administrator of Pension and Welfare Benefit Programs
U.S. Department of Labor
200 Constitution Avenue N.W.
Washington, D.C. 20216
I. Introduction
[INSERT NAME OF EMPLOYER] (the Employer) is pleased to be able to provide you
with the [INSERT NAME OF EMPLOYER] Profit Sharing Plan (the Plan or the Profit
Sharing Plan). The Plan is effective as of [INSERT EFFECTIVE DATE].
The Plan is a defined contribution plan, to which the Employer makes
contributions to an account held in your name. With this type of plan, the
retirement benefit you receive will depend on the investment performance of the
amounts that are in your account. The Plan is designed to provide retirement
income to employees who remain with the Employer until
<PAGE>
retirement and to those who have a vested interest in their account when they
terminate their employment with the Employer.
Only the main features of the Plan are explained in this Summary Plan
Description. Any questions which are not answered here should be referred to
[INSERT NAME OF DEPARTMENT OR PERSONNEL RESPONSIBLE FOR PARTICIPANT
INFORMATION]. If there is any inconsistency between the Plan as described in
this Summary Plan Description and the Plan document itself, the terms of the
Plan document will govern. Copies of the Plan document and the Trust Agreement
are available for your inspection during regular working hours.
II. Description of
Plan Benefits and
Requirements
A. Terms With Special Meanings
Certain words and terms used in this Summary have special meanings. Many
of these terms are defined in this section, while others are explained in the
text of the Summary. To assist you in identifying these terms within the text,
they are capitalized.
1. Beneficiary. Your designated Beneficiary is the person you name to
receive your benefit distribution in the event of your death. If you are
married, you will need written consent from your spouse to name someone other
than your spouse as your Beneficiary.
2. Break in Service. A Break in Service occurs if you complete less than 501
Hours of Service with the Employer during a Plan Year.
3. Compensation. Compensation is the total compensation paid to you by the
Employer during any portion of a Plan Year during which you were a Plan
Participant. If you are self-employed, your Compensation is your earned income
less your deductible contributions to any qualified retirement plans.
4. Hours of Service. Each hour for which you are paid or entitled to be paid
by the Employer. In addition, uncompensated authorized leaves of absence that
do not exceed two years, military leave while your reemployment rights are
protected by law, and absences from work for maternity or paternity reasons may
be credited as Hours of Service for the purpose of determining whether you had a
Break in Service.
5. Participant. A Participant is an employee who has met the requirements for
participating in this Plan, and whose account has been neither completely
forfeited nor distributed.
6. Plan Year. The Plan Year is the 12-month period ending on the date shown
in section V of this Summary.
7. Sponsor. The Sponsor is the organization which has made this Plan
available to the Employer.
8. Trust. The Trust is a fund maintained by the Trustee for the investment of
Plan assets, including the amount in your account.
9. Year of Service. A Year of Service is the applicable 12-month period
during which you complete [INSERT NUMBER OF HOURS] or more Hours of Service.
For eligibility purposes, the applicable 12-month period is your first year of
employment or any Plan Year. For vesting purposes, the applicable 12-month
period is the Plan Year.
B. Participation
<PAGE>
You will be eligible to participate in the Plan after you have met the
following eligibility requirements (Check all that apply):
[ ] You have reached age [INSERT AGE].
[ ] You have completed [INSERT NUMBER OF YEARS] Year(s) of Service.
[ ] You are not a member of a collective bargaining unit.
[ ] You are not a nonresident alien.
The first entry date, or date in which you can first participate in the
Plan if you meet these requirements, is [INSERT EFFECTIVE DATE]. Thereafter,
the entry date(s) will be [INSERT DATES OF THE FIRST DAY OF THE PLAN YEAR AND
THE FIRST DAY OF THE SEVENTH MONTH OF THE PLAN YEAR] of each year.
Once you become a Participant, you will remain a Participant as long as you
do not incur a Break in Service. If you do incur a Break in Service, and are
later reemployed by the Employer, you will be reinstated as a Participant and
any previous Hours of Service will be reinstated as of the date of your
reemployment.
C. Individual Accounts
A separate account will be maintained for you within the Plan. This
account will be further divided into subaccounts, which will be credited with
the different types of contributions that are described in the next section.
The subaccounts that will be maintained for you are as follows:
1. Profit Sharing Contribution Subaccount. This subaccount will be credited
with your share of Employer Profit Sharing Contributions, forfeitures (if any),
distributions from this subaccount, and the earnings and losses attributable to
this subaccount.
2. Trustee Transfer and Rollover Subaccounts. These subaccounts will be
credited with any rollover contributions or transfer contributions you may make
to the Plan, any distributions from this subaccount, and the earnings and losses
attributable to this subaccount.
3. Nondeductible Voluntary Contribution Subaccount. This subaccount will be
credited with your Voluntary Employee Contributions, any distributions from this
subaccount, and the earnings and losses attributable to this subaccount.
D. Contributions
[ ] Employer Profit Sharing Contributions. The Employer will make Profit
Sharing Contributions to the Plan each Plan Year in accordance with the
following contribution formula (Check one box)
[ ] Contributions will be made in an amount to be determined each year by the
Employer.
[ ] Contributions will be made in an amount equal to [INSERT CONTRIBUTION
PERCENTAGE] of each Participant's Compensation, plus any discretionary amount
the Employer may choose to contribute.
[ ] Rollover Contributions and Direct Transfers. If you have participated in
other pension or profit sharing plans, you will be permitted to make a rollover
contribution to the Plan of certain amounts you may receive from those other
plans. You will also be permitted, with the approval of the Plan Administrator,
to authorize a direct transfer to the Plan of amounts that are attributable to
your participation in other pension or profit sharing plans.
CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS:
<PAGE>
[ ] Voluntary Employee Contributions. To increase your retirement benefits
from this Plan, you may choose to make voluntary contributions to the Plan of up
to [INSERT MAXIMUM VOLUNTARY EMPLOYEE CONTRIBUTION PERCENTAGE] of your
compensation. Such contributions will not be permitted, however, for Plan Years
beginning after [THE PLAN YEAR IN WHICH THE PLAN IS ADOPTED]. The minimum
contribution you must make if you choose to make a voluntary contribution is as
follows (Check one box):
[ ] The minimum voluntary contribution is [INSERT MINIMUM VOLUNTARY
CONTRIBUTION PERCENTAGE] of your Compensation.
[ ] There is no minimum voluntary contribution.
E. Allocations.
Eligibility for Allocations. Each Plan Year the Employer will make a
Profit Sharing Contribution to the Plan in accordance with the formula described
in the previous section. Your account will be allocated a share of that
contribution.
[ ] Unless you terminate your employment during the Plan year with not more
than [INSERT HOURS OF SERVICE REQUIREMENT] Hours of Service and you are not an
employee as of the last day of the Plan Year. (You will receive an allocation,
however, if you die, retire or become disabled during the Plan Year).
Under some circumstances, special minimum allocation rules may result in
your receiving an allocation even if you do not meet any of the requirements set
forth above.
Amount of Allocation. If you are eligible, your account will be credited
with a portion of the Profit Sharing Contribution (and any forfeitures) as
follows (check one box):
[ ] Your account will be credited with a portion of the Profit Sharing
Contribution that is equal to the ratio of your Compensation to the Compensation
of all Participants for such year.
For example, if your Compensation for a Plan Year was $10,000 and the total
Compensation of all Participants was $100,000, your account would be credited
with $10,000/$100,000=1/10 of the total contribution made by the Employer for
that Plan Year.
[CHOOSE IF YOUR PLAN IS INTEGRATED WITH SOCIAL SECURITY AND YOU HAVE NOT
ADOPTED THE MONEY PURCHASE PENSION PLAN]
[ ] Profit Sharing Contributions will be allocated to eligible Participants in
four steps as follows:
Step One: Your account will be credited with a portion of the Profit
Sharing Contribution that is equal to the ratio of your Compensation to the
Compensation of all Participants for such year (just as if the Plan were not
integrated with Social Security), but only up to a maximum of three percent of
each Participant's Compensation.
Step Two: Your account will be credited with a portion of the balance of
the Profit Sharing Contribution (after the allocation in Step One) that is equal
to the ratio of your Compensation in excess of the Plan's Integration Level to
the Compensation in excess of the Plan's Integration Level of all Participants
for such year, but only up to a maximum of three percent of any Participant's
Compensation in excess of the Plan's Integration Level.
For example, if the Plan's Integration Level were $51,300 and your
Compensation were $61,300, your Compensation in excess of the Integration Level
would be $10,000. If the total Compensation in excess of the Integration Level
of all Participants were $70,000, your account would be credited with
$10,000/$70,000=1/7 of the total allocation made under Step
<PAGE>
Two (but only up to a maximum of three percent of your Compensation in excess of
the plan's Integration Level, or $300).
Step Three: Your account will be credited with a portion of the balance of
the Profit Sharing Contribution (after the allocations in Step One and Step Two)
that is equal to the ratio that the sum of your Compensation plus your
Compensation in excess of the Plan's Integration Level bears to the sum of all
Participant's Compensation plus their Compensation in excess of the Plan's
Integration Level for such year, up to a maximum of the Maximum Profit Sharing
Disparity Rate.
The Maximum Profit Sharing Disparity Rate is 2.7 percent if the Integration
Level equals the annual earnings subject to Social Security (FICA) tax (the
taxable wage base). If the Integration Level is lower (see below), then the
Maximum Profit Sharing Disparity Rate is determined by the following formula:
If the Integration is:
The Applicable
More Than But Not More Than Percentage Is:
$0 X * 2.7%
X of TWB 80% of TWB 1.3%
80% of TWB Y ** 2.4%
* XE=The greater of $10,000 or 20% of the Taxable Wage Base.
** YE=Any amount more than 80% of the Taxable Wage Base but less than 100% of
the Taxable Wage Base.
TWB means the Taxable Wage Base.
For example, if the Maximum Profit Sharing Disparity Rate is 2.7 percent,
your Compensation is $61,300, the Plan's Integration Level is $51,300, the total
Compensation of all Participants is $700,000 and the Compensation of all
Participants that is in excess of the Plan's Integration Level is $70,000, then
the ratio applied under Step Three would be:
(61,300 + 10,000)/(700,000 + 70,000) = 9.25%
However, this exceeds the Maximum Profit Sharing Disparity Rate, so 2.7
percent is applicable instead.
Step Four: Your account will be credited with a portion of the balance of
the Profit Sharing Contribution (after the allocations in Step One, Step Two and
Step Three) that is equal to the ratio of your Compensation to the Compensation
of all Participants for such year.
[CHOOSE IF YOUR PLAN IS INTEGRATED WITH SOCIAL SECURITY AND YOU HAVE
ADOPTED THE MONEY PURCHASE PENSION PLAN]:
[ ] Profit Sharing Contributions will be allocated to eligible Participants in
two steps as follows:
Step One: Your account will be credited with a portion of the Profit
Sharing Contribution that is equal to the ratio that the sum of your
Compensation plus your Compensation in excess of the Plan's Integration Level
bears to the sum of all Participant's Compensation plus their Compensation in
excess of the Plan's Integration level for such year,
<PAGE>
up to a maximum that does not exceed the lesser of two amounts. The first is
the percentage determined by dividing the allocation by your Compensation up to
the Plan's Integration Level. The second is the Maximum Disparity Rate.
The Maximum Disparity Rate is 5.7 percent if the Integration Level equals
the annual earnings subject to Social Security (FICA) tax (the taxable wage
base). If the Integration Level is lower (see below), then the Maximum
Disparity Rate is determined by the following formula:
If the Integration is:
The Applicable
More Than But Not More Than Percentage Is:
$0 X * 5.7%
X of TWB 80% of TWB 4.3%
80% of TWB Y ** 5.4%
* XE=The greater of $10,000 or 20% of the Taxable Wage Base.
** YE=Any amount more than 80% of the Taxable Wage Base but less than 100% of
the Taxable Wage Base.
TWB means the Taxable Wage Base.
For example, if the Maximum Disparity Rate is 5.7 percent, your
Compensation is $61,300, the Plan's Integration Level is $51,300, the total
Compensation of all Participants is $700,000 and the Compensation of all
Participants that is in excess of the Plan's Integration Level is $70,000, then
the ratio applied under Step One would be:
(61,300 + 10,000)/(700,000 + 70,000) = 9.25%
However, this exceeds the Maximum Disparity Rate, so 5.7 percent is
applicable instead. (This assumes the allocation as a percentage of your
Compensation up to the Plan's Integration Level would exceed 5.7 percent).
Step TWO: Your account will be credited with a portion of the balance of
the Profit Sharing Contribution (after the allocation in Step One) that is equal
to the ratio of your Compensation to the Compensation of all Participants for
such year.
The Plan's Integration Level is equal to (check one box):
[ ] The taxable wage base, which is the annual earnings subject to Social
Security (FICA) tax.
[ ] A dollar amount equal to [INSERT DOLLAR AMOUNT].
[ ] A percentage of the taxable wage base equal to _______% of the annual
earnings subject to Social Security (FICA) tax.
Under some circumstances, special minimum allocation rules may result in
your receiving a larger allocation than you normally would. The amount that can
be allocated to your Account in any Plan Year, including forfeitures (if any),
is limited by rules applying to all qualified plans.
F. Vesting.
Vesting refers to the nonforfeitable interest you have in each of your
subaccounts. In other words, your vested interest in your account is the amount
you will receive when your account is distributed to you.
<PAGE>
You will always have a 100 percent vested and nonforfeitable interest in
the amounts you have in your:
[ ] Trustee Transfer and Rollover Subaccounts.
[CHECK THE FOLLOWING ITEM ONLY IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
[ ] Nondeductible Voluntary Contribution Subaccount.
You will earn a vested interest in your Profit Sharing Contribution
Subaccount in accordance with the following (check one box):
[ ] You will always have a 100 percent vested and nonforfeitable interest in
your Profit Sharing Contribution Subaccount.
[ ] You will have a 100 percent vested and nonforfeitable interest in your
Profit Sharing Contribution Subaccount in the event of any of the following:
You reach your retirement date.
You die or become disabled.
Otherwise, you will earn a vested interest in your Profit Sharing
Contribution Subaccount in accordance with the following schedule (check one
box):
[ ] Years of Service Vested Percentage
1 year 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
For example, if you are employed for six years, you will be entitled to the
entire amount in your Profit Sharing Contribution Subaccount. However, if you
terminate employment with the Employer after only four years, even though you
return to employment with the Employer six years later, you will be entitled to
receive only 60 percent of that amount.
[ ] You will be 100 percent vested after three years of service. If you
terminate employment prior to three years you will not have any vested interest
in your Profit Sharing Contribution Subaccount.
G. Forfeitures. (Check one box)
[ ] You have a 100 percent vested and nonforfeitable interest in the amounts in
your account at all times. Your account therefore will not be subject to
forfeitures.
[ ] Forfeitures occur when you terminate employment before becoming fully
vested in your account, as explained in the section on Vesting. Effective for
the first Plan Year beginning after 1984, any portion of your Account that is
not vested will be forfeited as of the last day of the Plan Year in which your
fifth consecutive Break in Service occurs. Forfeited amounts will not be
reinstated, even if you return to service with the Employer. Such forfeitures
will be allocated among the Accounts of other Participants in the same manner as
Profit Sharing Contributions.
H. Distribution of Benefits.
1. Eligibility for Distribution. You will be entitled to receive a
distribution of the vested amounts in your account upon occurrence of any of the
following:
Your termination of employment with the Employer for any reason.
<PAGE>
Your total and permanent disability.
Your death.
Termination of the Plan.
Your attainment of normal retirement age, which is (check one box):
[ ] Age [INSERT NORMAL RETIREMENT AGE]
[ ] Age [INSERT NORMAL RETIREMENT AGE] or the [INSERT ANNIVERSARY DATE] of the
day you commenced participation in the plan.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS EARLY RETIREMENT]:
[ ] If you elect Early Retirement, attainment of your Early Retirement Date,
which is the first day of the month coincident with or next following the date
you reach age [INSERT EARLY RETIREMENT AGE] and complete [INSERT NUMBER OF
YEARS] Years of Service.
2. Timing of Distributions. You will begin receiving benefit distributions in
accordance with the following:
Generally, benefit distributions will commence not later than 60 days after
the end of the Plan Year in which you become eligible to receive benefits.
In the event of your death, your spouse, if you are married, will generally
be entitled to receive your benefit distribution. If you are unmarried, or if
your spouse has given written consent, your designated Beneficiary will receive
your benefit distribution. If you have no spouse or designated Beneficiary,
your benefit distribution will go to your estate.
If you so elect, you may defer commencement of the distribution of your
benefit beyond the date you first become eligible to receive that distribution,
to a date which you may specify. The date you specify must not be later than
the April 1 following the close of your taxable year in which you attain age 70
1/2.
If you attained age 70 1/2 before January 1, 1988, special rules apply to
your distributions.
If you wish to receive benefit distributions before attaining age 59 1/2,
you may be subject to a penalty tax, and you must notify the Plan Administrator
in writing that you are aware of the consequences of this tax.
3. Form of Distribution. If you are married, your benefit will automatically
be distributed in the form of a joint and survivor annuity, unless you elect
otherwise and your spouse consents in writing to one of the forms below. If you
are unmarried, your benefit will automatically be distributed in the form of a
life annuity, unless you elect any of the other distribution options listed
below.
In a lump sum payment of cash, or a lump sum payment that includes an in-
kind distribution of all mutual fund shares credited to your account.
In substantially equal monthly, quarterly, or annual installment payments
of cash or distributions in kind of the mutual fund shares credited to your
account, over a period of years not to exceed your life expectancy or the joint
and survivor life expectancies of you and your Beneficiary.
In the form of an annuity, which is a level payment that you receive at a
fixed interval over a specified period of time. If you are married, the annuity
will automatically take the form of a joint and survivor annuity, unless you
elect otherwise, and your spouse consents in writing, as described above. A
joint and survivor annuity is an annuity paid over the lives of
<PAGE>
both you and your spouse. If your spouse survives you, the annuity payment your
spouse will receive will be at least 50 percent of the annuity payment you
received or would have received.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PROVIDES FOR THIS FORM OF
DISTRIBUTION]:
[ ] In monthly, quarterly, or annual installment payments of cash, or the
distribution of shares in kind, so that the amount you receive each Plan Year is
equal to the amount in your account at the beginning of that Plan Year divided
by the joint and survivor life expectancy of you and your Beneficiary for that
Plan Year. Your joint and survivor life expectancy will be recalculated each
Plan Year so that benefit payments will continue through your life and that of
your Beneficiary.
4. Direct Rollovers
All benefits paid under the Plan (whether to a participant or a
beneficiary) will be subject to income tax withholding. A payment from the Plan
that is eligible for "rollover" can be taken in two ways. The payment can be
either (1) paid in a "direct rollover;" or (2) paid directly to you. A rollover
is a payment of Plan benefits to an individual retirement arrangement (IRA) or
to another employer plan. This choice will affect the tax you owe.
If you choose a direct rollover:
the payment will not be taxed in the current year and no income tax
will be withheld;
the payment will be made directly to the IRA or to another employer
plan that accepts rollovers;
the payment will be taxed later when it is withdrawn from the IRA or
the employer plan.
If you choose to receive Plan benefits directly:
You will receive only 80% of the payment because the Plan
administrator is required to withhold 20% of the payment and send it to the
Internal Revenue Service as income tax withholding to be credited against your
taxes;
The payment will be taxed in the current year unless it is rolled
over. You might be able to use special tax rules that could reduce the tax that
is owed. However, if you receive the payment before age 59 1/2, an additional
10% tax may have to be paid.
Within 60 days of receiving the payment it can be rolled over by
paying it to an IRA or to another employer plan that accepts rollovers. The
amount rolled over will be taxed until it is withdrawn from the IRA or employer
plan.
If you want to roll over 100% of the payment to an IRA or an employer
plan, other money must be found to replace the 20% that was withheld. If only
the 80% that is received is rolled over, you will be taxed on the 20% that was
withheld and that is not rolled over.
I. Investment of Plan Assets
All contributions made to the Plan are kept in the Trust. A separate
account, including all of the subaccounts described in the section on
Participant Accounts, is maintained for you within that Trust. The assets of
the Trust are invested as follows:
[ ] You [INSERT MAY OR MUST] direct the Plan Administrator to invest the
amounts in the following subaccount in specified investments offered by the
Sponsor (check all boxes that apply):
<PAGE>
[ ] The amounts in your Nondeductible Voluntary Contribution Subaccount.
[ ] The amounts in your Profit Sharing Contribution Subaccount.
[ ] The amounts in your Trustee Transfer and Rollover Subaccounts.
[ ] [CHECK THIS BOX IF YOUR PLAN PERMITS WITHDRAWALS]:
J. Withdrawals
You may make the following types of withdrawals from your account (Check
all boxes that apply):
[ ] If you have made Voluntary Employee Contributions to the Plan, you will be
permitted to withdraw the amounts in your Nondeductible Voluntary Contribution
Subaccount. If you are married, your spouse must consent to the withdrawal.
[ ] In the event of an imminent and heavy financial need due to the purchase or
renovation of a primary residence, the educational, medical or personal expenses
of you or a member of your immediate family, or other hardship, you will be
permitted to make a hardship withdrawal of amounts credited to your Profit
Sharing Contribution Subaccount.
All hardship withdrawals are subject to approval by the Plan Administrator.
Such withdrawals can only be made after prior withdrawal of all amounts in your
Nondeductible Voluntary Contribution Subaccount, and after exhausting all other
reasonable sources of funds. If you are married, your spouse must consent to
any withdrawals.
[ ] [CHECK THIS BOX IF PLAN LOANS ARE
PERMITTED]:
K. Loans.
This Plan contains provisions that permit you to borrow (with the consent
of your spouse) from the Plan part of your vested interest in your account.
Such a loan will not be made, however, if the total of all outstanding loans to
you from all pension and profit sharing plans of the Employer exceed the lesser
of $50,000 (taking into account the highest principal balance of any loan
outstanding at any time during the preceding 12 months) or one-half of the value
of your vested interest in your account.
The Plan Administrator will set the terms of all loans. The maximum
payment term for any loan will generally be five years. The interest rate will
be determined by the Plan Administrator. Your account will be security for the
loan.
III. Claims Procedure
You or your Beneficiary may file a written claim for benefits under this Plan
with the Plan Administrator at any time. If your claim is denied to any extent
by the Plan Administrator, a written notification must be sent to you within 90
days. If you choose to appeal the decision, a request for review must be made
in writing to the Plan Administrator within 60 days of receipt of written
notification of the denial. Within 60 days after the appeal is filed, or within
120 days, if there are special circumstances involved, the Plan Administrator
will issue a written decision.
IV. Changes to the Plan
A. Amendment of the Plan
<PAGE>
The Employer, together with the Sponsor, reserves the right to amend the
Plan at any time. You will be kept informed of any material amendments to the
Plan by updates to this Summary Plan Description.
B. Termination of the Plan
The Employer intends to continue this Plan indefinitely. However, the
Employer reserves the right to terminate the Plan at any time. If a termination
takes place, or if the Employer discontinues making contributions to the Plan,
you will have a 100 percent vested and nonforfeitable interest in all of the
amounts in your account. These amounts may be distributed to you at that time,
or may be distributed in accordance with the benefit distribution rules.
C. Merger, Consolidation or Transfer of the Plan
In the event of the merger, consolidation or transfer of assets or
liabilities of the Plan to any other plan, your benefits will not be decreased
from what they would have been prior to such an event.
V. General Information
Name of Plan: [INSERT NAME OF EMPLOYER] Profit Sharing Plan
Employer: [INSERT NAME, ADDRESS AND TELEPHONE NUMBER OF EMPLOYER]
Type of Plan: Profit Sharing Plan
Type of
Administration: Trusteed
Employers
Fiscal Year: [INSERT EMPLOYERS FISCAL YEAR]
Plan Year End: [INSERT PLAN YEAR END]
Plan Administrator: [INSERT NAME, ADDRESS AND TELEPHONE NUMBER OF PLAN
ADMINISTRATOR]
Trustees: [INSERT NAME, TITLE, ADDRESS AND PHONE NUMBER OF PRINCIPAL PLACE
OF BUSINESS OF EACH TRUSTEE]
Agent for Service
of Legal Process: [INSERT NAME AND ADDRESS OF PERSON DESIGNATED AS AGENT FOR
SERVICE OF LEGAL PROCESS]
Employer
Identification Number: [INSERT IN]
Plan Number: [INSERT PLAN NUMBER]
Also, a complete list of the employers and employee organizations sponsoring the
Plan may be obtained by participants and beneficiaries upon written request to
the Plan administrator, and is available for examination by participants and
beneficiaries, as required by Labor Reg. 1.2520.104-b1 and 2520.104b-30.
VI. Non-Application of PBGC Guarantees
Because this Plan is a defined contribution plan, the benefits you will receive
are exempt from and not insured by the Pension Benefit Guaranty Corporation.
VII. Special Rights Under ERISA
<PAGE>
As a participant in the [INSERT NAME OF EMPLOYER] Profit Sharing Plan, you are
entitled to certain rights and protections under the Employee Retirement Income
Security Act of 1974 (ERISA). ERISA provides that all Plan Participants shall
be entitled to:
Examine, without charge, at the Plan Administrator's office and at other
specified locations, all Plan documents, including insurance contracts,
affecting the individual making the request, and copies of all documents filed
by the Plan with the U.S. Department of Labor, such as detailed annual reports
and Plan descriptions.
Obtain copies of all Plan documents and other Plan information upon written
request to the Plan Administrator. The Plan Administrator may make a reasonable
charge for the copies.
Receive a summary of the Plan's annual financial report. The Plan
Administrator is required by law to furnish each Participant with a copy of this
summary annual report.
Obtain a statement of the total value of your account under the Plan and
your vested (nonforfeitable) portion of this account. This statement must be
requested in writing and is not required to be given more than once a year. The
Plan will provide the statement free of charge.
In addition to creating rights for Plan Participants, ERISA imposes duties upon
the people who are responsible for the operation of the Plan. These people who
operate your plan, called fiduciaries of the Plan, have a duty to do so
prudently and in the interest of you and other Plan Participants and
Beneficiaries. No one, including your Employer, or any other person, may fire
you or otherwise discriminate against you in any way to prevent you from
obtaining a benefit under this Plan or exercising your rights under ERISA. If
your claim for a benefit is denied in whole or in part you must receive a
written explanation of the reason for the denial. You have the right to have
the Plan review and reconsider your claim.
Under ERISA, there are steps you can take to enforce the above rights. For
instance, if you request materials from the Plan and do not receive them within
30 days, you may file suit in a federal court. In such a case, the court may
require the Plan Administrator to provide the materials and pay you up to $100 a
day until you receive the materials unless the materials were not sent because
of reasons beyond the control of the Plan Administrator. If you have a claim
for benefits which is denied or ignored, in whole or in part, you may file suit
in a state or federal court. If it should happen that Plan fiduciaries misuse
the plan's money, or if you are discriminated against for asserting your rights,
you may seek assistance from the U.S. Department of Labor, or you may file suit
in a federal court. The court will decide who should pay court costs and legal
fees. If you lose, the court may order you to pay these costs and fees, for
example, if it finds your claim is frivolous. If you have any questions about
your Plan, you should contact the Plan Administrator. If you have any questions
about this statement or about your rights under ERISA, you should contact the
nearest Area Office of the U.S. Labor-Management Services Administration,
Department of Labor.
<PAGE>
MODEL SUMMARY PLAN DESCRIPTION OF THE [INSERT NAME OF EMPLOYER] MONEY PURCHASE
PENSION PLAN
Instructions for Preparing the Model Summary Plan Description of the Prototype
Money Purchase Pension Plan
Each employer who adopts the Prototype Money Purchase Pension Plan is required
by Department of Labor regulations to provide employees with a summary plan
description. A summary plan description is intended to provide employees with
the information they need to properly understand their rights under such a
retirement plan.
The summary plan description distributed to employees must accurately reflect
the provisions of the Plan, in accordance with the choices made in the Adoption
Agreement. The model summary plan description was designed to assist in
producing such a document.
The model summary plan description contains several sections where the employer
must choose which language is appropriate, or whether language should be
included in the summary plan description at all. These decisions should be made
by looking at the Adoption Agreement and determining which language in the
spaces provided. Employers may then wish to have the summary plan description
retyped to delete those provisions which do not apply to the Plan.
Remember, the Summary Plan Description must be provided to each participant
within 90 days of commencing participation and to the Department of Labor within
120 days of the adoption of the Plan.
The address is:
Administrator of Pension and Welfare Benefit Programs
U.S. Department of Labor
200 Constitution Avenue N.W.
Washington, D.C. 20216
I. Introduction
[INSERT NAME OF EMPLOYER] (the Employer) is pleased to be able to provide you
with the [INSERT NAME OF EMPLOYER] Money Purchase Pension Plan (the Plan or the
Pension Plan). The Plan is effective as of [INSERT EFFECTIVE DATE].
The Plan is a defined contribution plan, to which the Employer makes
contributions to an account held in your name. With this type of plan, the
retirement benefit you receive will depend on the investment performance of the
amounts that are in your account. The Plan is designed to provide retirement
income to employees who remain with the Employer until retirement and to those
who have a vested interest in their account when they terminate their employment
with the Employer.
<PAGE>
Only the main features of the Plan are explained in this Summary Plan
Description. Any questions which are not answered here should be referred to
[INSERT NAME OF DEPARTMENT OR PERSONNEL RESPONSIBLE FOR PARTICIPANT
INFORMATION]. If there is any inconsistency between the Plan as described in
this Summary Plan Description and the Plan document itself, the terms of the
Plan document will govern. Copies of the Plan document and the Trust Agreement
are available for your inspection during regular working hours.
II. Description of
Plan Benefits and Requirements
A. Terms With Special Meanings
Certain words and terms used in this Summary have special meanings. Many
of these terms are defined in this section, while others are explained in the
text of the Summary. To assist you in identifying these terms within the text,
they are capitalized.
1. Beneficiary. Your designated Beneficiary is the person you name to receive
your benefit distribution in the event of your death. If you are married, you
will need written consent from your spouse to name someone other than your
spouse as your Beneficiary.
2. Break in Service. A Break in Service occurs if you complete less than 501
Hours of Service with the Employer during a Plan Year.
3. Compensation. Compensation is the total compensation paid to you by the
Employer during any portion of a Plan Year during which you were a Plan
Participant. If you are self-employed, your Compensation is your earned income
less your deductible contributions to any qualified retirement plans.
4. Hours of Service. Each hour for which you are paid or entitled to be paid
by the Employer. In addition, uncompensated authorized leaves of absence that
do not exceed two years, military leave while your reemployment rights are
protected by law, and absences from work for maternity or paternity reasons may
be credited as Hours of Service for the purpose of determining whether you had a
Break in Service.
5. Participant. A Participant is an employee who has met the requirements for
participating in this Plan, and whose account has been neither completely
forfeited nor distributed.
6. Plan Year. The Plan Year is the 12-month period ending on the date shown
in section V of this Summary.
7. Sponsor. The Sponsor is the organization which has made this Plan
available to the Employer.
8. Trust. The Trust is a fund maintained by the Trustee for the investment of
Plan assets, including the amount in your account.
9. Year of Service. A Year of Service is the applicable 12-month period
during which you complete [INSERT NUMBER OF HOURS] or more Hours of Service.
For eligibility purposes, the applicable 12-month period is your first year of
employment or any Plan Year. For vesting purposes, the applicable 12-month
period is the Plan Year.
B. Participation
You will be eligible to participate in the Plan after you have met the
following eligibility requirements (check all boxes that apply):
[ ] You have reached age [INSERT AGE].
<PAGE>
[ ] You have completed [INSERT NUMBER OF YEARS] Year(s) of Service.
[ ] You are not a member of a collective bargaining unit.
[ ] You are not a nonresident alien.
The first entry date, or date in which you can first participate in the
Plan if you meet these requirements, is [INSERT EFFECTIVE DATE]. Thereafter,
the entry date(s) will be [INSERT DATES OF THE FIRST DAY OF THE PLAN YEAR AND
THE FIRST DAY OF THE SEVENTH MONTH OF THE PLAN YEAR] of each Plan Year.
Once you become a Participant, you will remain a Participant as long as you
do not incur a Break in Service. If you do incur a Break in Service, and are
later reemployed by the Employer, you will be reinstated as a Participant and
any previous Hours of Service will be reinstated as of the date of your
reemployment.
C. Individual Accounts
A separate account will be maintained for you within the Plan. This
account will be further divided into subaccounts, which will be credited with
the different types of contributions that are described in the next section.
The subaccounts that will be maintained for you are as follows:
1. Money Purchase Pension Contribution Subaccount. This subaccount will be
credited with your share of Employer Money Purchase Pension Contributions,
distributions from this subaccount, and the earnings and losses attributable to
this subaccount.
2. Trustee Transfer and Rollover Subaccounts. These subaccounts will be
credited with any rollover contributions or transfer contributions you may make
to the Plan, any distributions from the subaccount, and the earnings and losses
attributable to the subaccount.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
[ ] 3. Nondeductible Voluntary Contribution Subaccount. This subaccount will
be credited with your Voluntary Employee Contributions, any distributions from
this subaccount, and the earnings and losses attributable to this subaccount.
D. Contributions
The Employer will make, or you will be permitted to make, the following
types of contributions. These contributions will be allocated to the
appropriate subaccounts within your account.
1. Employer Money Purchase Pension Contributions. The Employer will make
Money Purchase Pension Contributions to the Plan each Plan Year in accordance
with a formula based on your Compensation. This formula is given in the section
on Allocations.
2. Rollover Contributions and Direct Transfers. If you have participated in
other pension or profit sharing plans, you will be permitted to make a rollover
contribution to the Plan of certain amounts you may receive from those other
plans.
You will also be permitted, with the approval of the Plan Administrator, to
authorize a direct transfer to the Plan of amounts that are attributable to your
participation in other pension or profit sharing plans.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
[ ] 3. Voluntary Employee Contributions. To increase your retirement benefits
from this Plan, you may choose to make voluntary contributions to the Plan of up
to [INSERT MAXIMUM VOLUNTARY EMPLOYEE CONTRIBUTION PERCENTAGE] of your
<PAGE>
Compensation. Such contributions will not be permitted, however, for Plan Years
beginning after [THE PLAN YEAR IN WHICH THE PLAN IS ADOPTED]. The minimum
contribution you must make if you choose to make a voluntary contribution is as
follows (check one box):
[ ] The minimum voluntary contribution is [INSERT MINIMUM VOLUNTARY
CONTRIBUTION PERCENTAGE] of your Compensation.
[ ] There is no minimum voluntary contribution.
E. Allocations
1. Eligibility for Allocations. Each Plan Year the Employer will make a Money
Purchase Pension Contribution to the Plan in accordance with the formula based
on your Compensation. Your account will be allocated a contribution
[ ] Unless you terminate your employment during the Plan Year with not more
than [INSERT HOURS OF SERVICE REQUIREMENT] Hours of Service and you are not an
employee as of the last day of the Plan Year. (You will receive an allocation,
however, if you die, retire or become disabled during the Plan Year).
Under some circumstances, special minimum allocation rules may result in
your receiving an allocation, even if you do not meet any of the requirements
set forth above.
2. Amount of Allocation. If you are eligible, your account will be credited
with a Money Purchase Pension Contribution as follows:
The Employer will make a contribution on your behalf equal to [INSERT
CONTRIBUTION PERCENTAGE] of your Compensation.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN IS INTEGRATED WITH SOCIAL SECURITY]:
[ ] The Employer will make a contribution equal to _______% of your
Compensation up to the Plan's Integration Level, plus _______% of your
Compensation in excess of the Plan's Integration Level.
The Plan's Integration Level is equal to (check one box):
[ ] The taxable wage base, which is the annual earnings subject to Social
Security (FICA) tax.
[ ] A dollar amount equal to [INSERT DOLLAR AMOUNT].
[ ] A percentage of the taxable wage base equal to ______% of the annual
earnings subject to Social Security (FICA) tax.
For example, suppose that the Plan's taxable wage base is equal to $51,300,
and that your Compensation during a Plan Year totaled $61,300. You would
receive an allocation of [INSERT CONTRIBUTION PERCENTAGE] of your first $51,300
in Compensation, and [INSERT EXCESS CONTRIBUTION PERCENTAGE] on the remainder of
$10,000.
Under some circumstances, special minimum allocation rules may cause you to
receive a larger allocation than you normally would. The amount that can be
allocated to your account in any Plan Year is limited by rules applying to all
qualified plans.
F. Vesting
Vesting refers to the nonforfeitable interest you have in each of your
subaccounts. In other words, your vested interest in your account is the amount
you will receive when your account is distributed to you.
You will always have a 100 percent vested and nonforfeitable interest in
the amounts you have in your:
<PAGE>
[ ] Trustee transfer and rollover subaccounts.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
[ ] Nondeductible Voluntary Contribution Subaccount.
You will earn a vested interest in your Money Purchase Pension Contribution
Subaccount in accordance with the following (check one box):
[ ] You will always have a 100 percent vested and nonforfeitable interest in
your Money Purchase Pension Contribution Subaccount.
[ ] You will have a 100 percent vested and nonforfeitable interest in your
Money Purchase Pension Contribution Subaccount in the event of any of the
following:
You reach your retirement date.
You die or become disabled.
Otherwise, you will earn a vested interest in your Money Purchase Pension
Contribution Subaccount in accordance with the following schedule (check one
box):
[ ] Years of Service Vested Percentage
1 year 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
For example, if you are employed for six years, you will be entitled to the
entire amount in your Money Purchase Pension Contribution Subaccount. However,
if you terminate employment with the Employer after only four years, even though
you return to employment with the Employer six years later, you will be entitled
to receive only 60 percent of that amount.
[ ] You will be 100 percent vested after three years of service. If you
terminate employment prior to three years you will not have any vested amount in
your Money Purchase Pension Contribution Subaccount.
Any portion of your Money Purchase Pension Contribution Subaccount in which
you do not have a vested interest will be forfeited by you as of the last day of
the Plan Year in which your fifth consecutive Break in Service occurs.
G. Forfeitures (check one box)
[ ] You have a 100 percent vested and nonforfeitable interest in the amounts in
your account at all times. You will therefore not be subject to forfeitures.
[ ] Forfeitures occur when you terminate employment before becoming fully
vested in your account, as explained in the section on Vesting. Effective for
the first Plan Year beginning after 1984, any portion of your account that is
not vested will be forfeited as of the last day of the Plan Year in which your
fifth consecutive Break in Service occurs. Forfeited amounts will not be
reinstated, even if you return to service with the Employer. Such forfeitures
either will be (check one box):
[ ] Used by the Employer as a credit against its future contributions to the
Plan; or
[ ] Reallocated among the accounts of remaining Participants in proportion to
their pay.
H. Distribution of Benefits.
<PAGE>
1. Eligibility for Distribution. You will be entitled to receive a
distribution of the vested amounts in your account upon occurrence of any of the
following:
Your termination of employment with the Employer for any reason.
Your total and permanent disability.
Your death.
Termination of the Plan.
Your attainment of normal retirement age, which is (check one box):
[ ] Age [INSERT NORMAL RETIREMENT AGE].
[ ] Age [INSERT NORMAL RETIREMENT AGE] or the [INSERT ANNIVERSARY DATE] of the
day you commenced participation in the Plan.
[CHECK THE FOLLOWING IF YOUR PLAN PERMITS EARLY RETIREMENT]:
[ ] If you elect early retirement, attainment of your early retirement date,
which is the first day of the month coincident with or next following the date
you reach age [INSERT EARLY RETIREMENT AGE] and complete [INSERT NUMBER OF
YEARS] Years of Service.
2. Timing of Distributions. You will begin receiving benefit distributions in
accordance with the following:
Generally, benefit distributions will commence not later than 60 days after
the end of the Plan Year in which you become eligible to receive benefits.
In the event of your death, your spouse, if you are married, will generally
be entitled to receive your benefit distribution. If you are unmarried, or if
your spouse has given written consent, your designated Beneficiary will receive
your benefit distribution. If you have no spouse or designated Beneficiary,
your benefit distribution will go to your estate.
If you so elect, you may defer commencement of the distribution of your
benefit beyond the date you first become eligible to receive that distribution,
to a date which you may specify. The date you specify must not be later than
the April 1 following the close of your taxable year in which you attain age 70
1/2.
If you attained age 70 1/2 before January 1, 1988, special rules apply to
your distributions.
If you wish to receive benefit distributions before attaining age 59 1/2,
you may be subject to a penalty tax, and you must notify the Plan Administrator
in writing that you are aware of the consequences of this tax.
3. Form of Distribution. If you are married, your benefit will automatically
be distributed in the form of a joint and survivor annuity, unless you elect
otherwise and your spouse consents in writing to one of the forms below. If you
are unmarried, your benefit will automatically be distributed in the form of a
life annuity, unless you elect any of the other distribution options listed
below.
In a lump sum payment of cash, or a lump sum payment that includes an in-
kind distribution of all mutual fund shares credited to your account.
In substantially equal monthly, quarterly, or annual installment payments
of cash or distributions in kind of the mutual fund shares credited to your
account, over a period of years not to exceed your life expectancy or the joint
and survivor life expectancies of you and your Beneficiary.
<PAGE>
In the form of an annuity, which is a level payment that you receive at a
fixed interval over a specified period of time. If you are married, the annuity
will automatically take the form of a joint and survivor annuity, unless you
elect otherwise, and your spouse consents in writing, as described above. A
joint and survivor annuity is an annuity paid over the lives of both you and
your spouse. If your spouse survives you, the annuity payment your spouse will
receive will be at least 50 percent of the annuity payment you received or would
have received.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PROVIDES THIS FORM OF DISTRIBUTION]:
[ ] In monthly, quarterly, or annual installment payments of cash, or the
distribution of shares in kind, so that the amount you receive each Plan Year is
equal to the amount in your account at the beginning of that Plan Year divided
by the joint and survivor life expectancy of you and your Beneficiary for that
Plan Year. Your joint and survivor life expectancy will be recalculated each
Plan Year so that benefit payments will continue through your life and that of
your Beneficiary.
4. Direct Rollovers
All benefits paid under the Plan (whether to a participant or a
beneficiary) will be subject to income tax withholding. A payment from the Plan
that is eligible for "rollover" can be taken in two ways. The payment can be
either (1) paid in a "direct rollover;" or (2) paid directly to you. A rollover
is a payment of Plan benefits to an individual retirement arrangement (IRA) or
to another employer plan. This choice will affect the tax you owe.
If you choose a direct rollover:
the payment will not be taxed in the current year and no income tax
will be withheld;
the payment will be made directly to the IRA or to another employer
plan that accepts rollovers;
the payment will be taxed later when it is withdrawn from the IRA or
the employer plan.
If you choose to receive Plan benefits directly:
You will receive only 80% of the payment because the Plan
administrator is required to withhold 20% of the payment and send it to the
Internal Revenue Service as income tax withholding to be credited against your
taxes;
The payment will be taxed in the current year unless it is rolled
over. You might be able to use special tax rules that could reduce the tax that
is owed. However, if you receive the payment before age 59 1/2, an additional
10% tax may have to be paid.
Within 60 days of receiving the payment it can be rolled over by
paying it to an IRA or to another employer plan that accepts rollovers. The
amount rolled over will be taxed until it is withdrawn from the IRA or employer
plan.
If you want to roll over 100% of the payment to an IRA or an employer
plan, other money must be found to replace the 20% that was withheld. If only
the 80% that is received is rolled over, you will be taxed on the 20% that was
withheld and that is not rolled over.
I. Investment of Plan Assets
<PAGE>
All contributions made to the Plan are kept in the Trust. A separate
account, including all of the subaccounts described in the section on
Participant accounts, is maintained for you within that Trust. The assets of
the Trust are invested as follows:
[ ] You [INSERT may or must] direct the Plan Administrator to invest the
amounts in the following subaccount in specified investments offered by the
Sponsor (check all that apply):
[ ] The amounts in your Nondeductible Voluntary Contribution Subaccount.
[ ] The amounts in your Money Purchase Pension Contribution Subaccount.
[ ] The amounts in your trustee transfer and rollover subaccounts.
[ ] [CHECK THIS BOX IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE CONTRIBUTIONS]:
J. Withdrawals
If you have made Voluntary Employee Contributions to the Plan, you will be
permitted to withdraw the amounts in your Nondeductible Voluntary Contribution
Subaccount. If you are married, your spouse must consent to the withdrawal.
[ ] [CHECK THIS BOX IF PLAN LOANS ARE
PERMITTED]
K. Loans
The Plan contains provisions that permit you to borrow from the Plan part
of your vested interest in your account. Such a loan will not be made, however,
if the total of all outstanding loans to you from all pension and profit sharing
plans of the Employer exceed the lesser of $50,000 (taking into account the
highest principal balance of any loan outstanding at any time during the
preceding 12 months) or one-half of the value of your vested interest in your
account.
The Plan Administrator will set the terms of all loans. The maximum
payment term for any loan will generally be five years.
III. Claims Procedure
You or your Beneficiary may file a written claim for benefits under this Plan
with the Plan Administrator at any time. If your claim is denied to any extent
by the Plan Administrator, a written notification must be sent to you within 90
days. If you choose to appeal the decision, a request for review must be made
in writing to the Plan Administrator within 60 days of receipt of written
notification of the denial. Within 60 days after the appeal is filed, or within
120 days, if there are special circumstances involved, the Plan Administrator
will issue a written decision.
IV. Changes to the Plan
A. Amendment of the Plan
The Employer, together with the Sponsor, reserves the right to amend the
Plan at any time. You will be kept informed of any material amendments to the
Plan by updates to this Summary Plan Description.
B. Termination of the Plan
<PAGE>
The Employer intends to continue this Plan indefinitely. However, the
Employer reserves the right to terminate the Plan at any time. If a termination
takes place, or if the Employer discontinues making contributions to the Plan,
you will have a 100 percent vested and nonforfeitable interest in all of the
amounts in your account. These amounts may be distributed to you at that time,
or may be distributed in accordance with the benefit distribution rules.
C. Merger, Consolidation or Transfer of the Plan
In the event of the merger, consolidation or transfer of assets or
liabilities of the Plan to any other plan, your benefits will not be decreased
from what they would have been prior to such an event.
V. General Information
Name of Plan: [INSERT NAME OF EMPLOYER] Money Purchase Pension Plan
Employer: [INSERT NAME, ADDRESS AND TELEPHONE NUMBER OF EMPLOYER]
Type of Plan: Money Purchase Pension Plan
Type of
Administration: Trusteed
Employer's Fiscal
Year: [INSERT EMPLOYERS FISCAL YEAR]
Plan Year End: [INSERT PLAN YEAR END]
Plan Administrator: [INSERT NAME, ADDRESS AND TELEPHONE NUMBER OF PLAN
ADMINISTRATOR]
Trustees: [INSERT NAME, TITLE, ADDRESS AND PHONE NUMBER OF PRINCIPAL PLACE
OF BUSINESS OF EACH TRUSTEE]
Agent for Service of
Legal Process: [INSERT NAME AND ADDRESS OF PERSON DESIGNATED AS AGENT FOR
SERVICE OF LEGAL PROCESS]
Employer
Identification
Number: [INSERT IN]
Plan Number: [INSERT PLAN NUMBER]
Also, a complete list of the employers and employee organizations sponsoring the
Plan may be obtained by participants and beneficiaries upon written request to
the Plan administrator, and is available for examination by participants and
beneficiaries, as required by Labor Reg. 2520.104b-1 and 2520.104b-30.
VI. Non-Application of PBGC Guarantees
Because this Plan is a defined contribution plan, the benefits you will receive
are exempt from and not insured by the Pension Benefit Guaranty Corporation.
VII. Special Rights Under ERISA
As a participant in the [INSERT NAME OF EMPLOYER] Money Purchase Pension Plan,
you are entitled to certain rights and protections under the Employee Retirement
Income Security Act of 1974 (ERISA). ERISA provides that all Plan Participants
shall be entitled to:
<PAGE>
Examine, without charge, at the Plan Administrator's office and at other
specified locations, all Plan documents, including insurance contracts,
affecting the individual making the request, and copies of all documents filed
by the Plan with the U.S. Department of Labor, such as detailed annual reports
and Plan descriptions.
Obtain copies of all Plan documents and other Plan information upon written
request to the Plan Administrator. The Plan Administrator may make a reasonable
charge for the copies.
Receive a summary of the Plan's annual financial report. The Plan
Administrator is required by law to furnish each Participant with a copy of this
summary annual report.
Obtain a statement of the total value of your account under the Plan and
your vested (nonforfeitable) portion of this account. This statement must be
requested in writing and is not required to be given more than once a year. The
Plan will provide the statement free of charge.
In addition to creating rights for Plan Participants, ERISA imposes duties upon
the people who are responsible for the operation of the Plan. These people who
operate your plan, called fiduciaries of the Plan, have a duty to do so
prudently and in the interest of you and other Plan Participants and
Beneficiaries. No one, including your Employer, or any other person, may fire
you or otherwise discriminate against you in any way to prevent you from
obtaining a benefit under this Plan or exercising your rights under ERISA. If
your claim for a benefit is denied in whole or in part you must receive a
written explanation of the reason for the denial. You have the right to have
the Plan review and reconsider your claim.
Under ERISA, there are steps you can take to enforce the above rights. For
instance, if you request materials from the Plan and do not receive them within
30 days, you may file suit in a federal court. In such a case, the court may
require the Plan Administrator to provide the materials and pay you up to $100 a
day until you receive the materials unless the materials were not sent because
of reasons beyond the control of the Plan Administrator. If you have a claim
for benefits which is denied or ignored, in whole or in part, you may file suit
in a state or federal court. If it should happen that Plan fiduciaries misuse
the plan's money, or if you are discriminated against for asserting your rights,
you may seek assistance from the U.S. Department of Labor, or you may file suit
in a federal court. The court will decide who should pay court costs and legal
fees. If you lose, the court may order you to pay these costs and fees, for
example, if it finds your claim is frivolous. If you have any questions about
your Plan, you should contact the Plan Administrator. If you have any questions
about this statement or about your rights under ERISA, you should contact the
nearest Area Office of the U.S. Labor-Management Services Administration,
Department of Labor.
<PAGE>
[LOGO] The Columbia Retirement Plan
ADMINISTRATIVE FORMS
ADMINISTRATIVE FORMS
ADMINISTRATIVE FORMS
ADMINISTRATIVE FORMS
- ----------------------------------------------------------------
Questions? Call 1-800-547-1707; in Portland 222-3606
<PAGE>
NOTICE TO INTERESTED PARTIES
Instructions
Retype this form on your letterhead, filling in all blanks. Post it on the
bulletin boards customarily used to display notices concerning labor-management
relations, or hand distribute or mail it to employees after adopting the Plan.
A list of IRS Key District Offices is attached to the end of this notice. The
list should be kept available to employees at the location indicated in the
notice.
Notice to Interested Parties
Current employees of [NAME OF EMPLOYER] are hereby notified that [NAME OF
ADOPTING EMPLOYER] has adopted the [NAME OF PLAN OR PLANS] as its employee
retirement benefit plan.
The employees eligible to participate under this Plan are [INSERT ELIGIBLE CLASS
OF EMPLOYEES].
It is not expected that this Plan will be submitted to the Internal Revenue
Service for an advance determination as to whether or not the Plan meets the
qualification requirements of section 401(a) of the Internal Revenue Code.
However, this Plan is a prototype plan and the Internal Revenue Service has
previously issued a favorable opinion letter to the sponsor with regard to this
Plan.
As an interested party, you have the right to submit to the Key District
Director of the Internal Revenue Service, either individually or jointly with
other interested parties, your comments as to whether this Plan meets the
qualification requirements of the Internal Revenue Code.
You may also, either individually or jointly with other interested parties,
request that the Department of Labor submit, on your behalf, comments to the Key
District Director regarding qualification of this Plan.
If the Department of Labor declines to comment on all or some of the matters you
raise, you may, individually or jointly if your request was made to the
Department jointly, submit your comments on these matters directly to the Key
District Director at the following address:
[INSERT NAME AND ADDRESS OF KEY DISTRICT DIRECTOR]
The Department of Labor may not comment on behalf of interested parties unless
requested to do so by the lesser of 10 employees or 10 percent of the employees
who qualify as interested parties. The number of persons needed for the
Department of Labor to comment with respect to this Plan is [INSERT NUMBER]. A
request to the Department of Labor should be sent to the following address:
Administrator of Pension and
Welfare Benefit Programs
U.S. Department of Labor
200 Constitution Avenue, N.W.
Washington, D.C. 20216
Attention: 3001 Comment Request
Any comment you submit to the Key District Director, or any request to the
Department of Labor must include the name of the Plan, the Plan number, the
opinion letter number, the
<PAGE>
adopting employer's identification number, the name and address of the sponsor,
and the name and address of the Plan administrator. Any request to the
Department of Labor must also include the address of the Key District Director.
This information can be found at the end of this Notice.
A comment to the Key District Director must be received by [INSERT DATE 75 DAYS
AFTER PLAN IS ADOPTED]. A request for comment submitted to the Department of
Labor must be received by [INSERT DATE 45 DAYS AFTER PLAN IS ADOPTED], if you
wish to preserve your right to comment to the Key District Director, or by
[INSERT DATE 55 DAYS AFTER PLAN IS ADOPTED] if you wish to waive that right.
If there are matters upon which you request the Department of Labor to comment
upon on your behalf, and the Department declines to do so, you may submit
comments on these matters directly to the Key District Director. These comments
must be received by the Key District Director within 15 days from the time the
Department of Labor notifies you that it will not comment on a particular
matter, or by [INSERT THE DATE 75 DAYS AFTER THE PLAN IS ADOPTED], whichever is
later.
Detailed instructions regarding the requirements for submitting comments may be
found in sections 6, 7 and 8 of Revenue Procedure 80-30.
Additional information concerning this Plan (including, where applicable, a
description of the circumstances which may result in ineligibility or loss of
benefits, a description of the source of financing of the plan, and copies of
section 6 of Revenue Procedure 80-30) is available at [INSERT LOCATION] during
the hours of [INSERT HOURS] for inspection or copying. There may be a nominal
charge for copying and/or mailing.
The following information will be needed for correspondence with the Department
of Labor or the Key District Director: (Fill in specific information)
Name of Employer:
----------------------------
Name of Plan
or Plans
Profit Sharing or
Money
Purchase Pension:
----------------------------
Plan Identification
Number(s)
Profit Sharing
Plan 001:
----------------------------
Money Purchase
Pension
Plan 002:
----------------------------
IRS Determination
Letter Number(s)
Profit Sharing
Plan D244626a:
----------------------------
<PAGE>
Money Purchase
Pension
Plan D244627a:
----------------------------
Plan Sponsor: Columbia Trust Company
Address of Sponsor: 1301 S.W. 5th
P.O. Box 1350
Portland, OR 97207-1350
Employer's Employer
Identification Number:
----------------------------
Name of Plan
Administrator:
----------------------------
Address of Key
District Director:
----------------------------
Key District Offices
Key District IRS Districts Covered
Central Region
Cincinnati: Cincinnati, Louisville,
Indianapolis, Cleveland,
Parkersburg, Detroit
Mid-Atlantic Region
Baltimore: Baltimore (which includes the District of Columbia and
Office of International Operations), Pittsburgh, Richmond, Philadelphia,
Wilmington, Newark
Midwest Region
Chicago: Chicago, St. Paul, Fargo, Aberdeen, Milwaukee, St. Louis,
Springfield, Des Moines, Omaha, Helena
North-Atlantic Region
Brooklyn: Boston, Augusta, Burlington, Providence, Hartford,
Portsmouth, Manhattan, Brooklyn, Albany, Buffalo
Southeast Region
Atlanta: Atlanta, Greensboro, Columbia, Nashville, Jacksonville,
Jackson, Birmingham, Fort Lauderdale, Little Rock, New Orleans
Southwest Region
Dallas: Austin, Albuquerque, Denver, Cheyenne, Dallas, Oklahoma
City, Little Rock, Wichita, Houston, Phoenix, Salt Lake City
<PAGE>
[Insert name of Plan] Plan
Participant Loan Agreement
THIS AGREEMENT, made this ____ day of __________________________, 19______, by
and between the ______________________________________ Plan (the Plan) and
__________________________________, a participant (the Participant) in the Plan.
W I T N E S S E T H:
WHEREAS, the Administrator is authorized, under ARTICLE 13 of the Plan to
provide loans to participants; and
WHEREAS, in accordance with section 72(p) of the Internal Revenue Code (the
Code), the Plan may make a loan to the Participant of up to the lesser of fifty
thousand dollars ($50,000) or one-half (1/2) of the Participant's accrued
benefit (subject to certain limits and restrictions specified in the Plan); and
WHEREAS, the Participant has made a written request for a loan from the Plan in
the amount of _____________________ dollars ($_______________) in accordance
with the provisions of the Plan and section 72(p) of the Code for the purpose of
___________________________________________________________
__________________________________________________________;
NOW, THEREFORE, the parties hereby agree as follows:
FIRST
The amount of _______________________________ dollars ($________________) shall
be loaned to the Participant from the Plan on ________________________. Such
loan shall be governed by the requirements of the Plan, section 72(p) of the
Code, this Participant Loan Agreement (the Agreement) and such rules as the
Administrator shall from time to time establish.
SECOND
The rate of interest charged on the unpaid principal balance from the date of
this Agreement until fully paid shall be ___________________ percent (______%)
simple interest per annum, payable to the Plan.
THIRD
Unless otherwise specified herein, the Participant's vested accrued benefits
under the Plan shall be the security for this Agreement; provided, however, that
if security for this Agreement is provided by a Participant's vested accrued
benefits such security first shall be deemed provided by that portion of the
Participant's vested accrued benefits which is attributable to nonelective
deferrals.
FOURTH
The term of the loan shall be for ____________________ (__________) and shall be
repaid through payroll reductions. Unless prepaid in accordance with ARTICLE
FIFTH below, commencing on _____________________________, 19_____, the
Participant shall repay the
<PAGE>
principal amount of _______________ dollars ($_________) and interest in equal
_______________ payments in the amount of _____________________________________
($__________), representing principal and interest.
FIFTH
Nothing contained herein shall prevent the Participant from prepaying the
principal amount outstanding in whole or in part without notice and without
penalty. Any partial prepayment shall be applied against the principal amount
outstanding and shall not postpone the due date of any subsequent quarterly
installments or change the amount of such installments, unless the Administrator
shall otherwise agree in writing.
SIXTH
If any ____________ installment under this Agreement is not paid when due, the
entire principal amount outstanding and accrued interest thereon shall at once
become due and payalbe at the option of the Administrator. In the event of
default, simple interest at the rate of __________ percent (_______%) per annum
compounded monthly shall continue to accrue until such time as the amount of the
default is fully satisfied. In the event of any failure to timely repay this
loan, the Administrator shall apply, at such time as the Participant is entitled
to a distribution under the terms of the Plan, so much of the Participant's
vested accrued benefit as is required to repay the entire principal amount
outstanding as of the date of default and interest thereon accruing to the date
the Administrator so applies such accrued benefit. Further, at the sole
discretion of the employer, any failure to pay an installment when due under
this Agreement shall be cause for the discharge of the Participant from his
employment with ______________________________.
SEVENTH
In the event that the Participant dies, becomes disabled or terminates service
(as these terms are defined in the Plan) with _______________________________,
the entire principal amount outstanding and accrued interest thereon shall
become immediately due and payable.
EIGHTH
Interest paid on the loan and repayments of principal shall be credited to the
account of the Participant.
NINTH
The Participant hereby waives all demand, notice and protest.
IN WITNESS WHEREOF, the Administrator and the Participant have caused this
Agreement to be executed as of the date first above written.
[NAME OF PLAN]
____________________________
Plan Administrator
<PAGE>
PARTICIPANT
____________________________
[Signature of Participant]
The Participant hereby acknowledges receipt of _________________________ dollars
($_____________) and agrees to be bound by the terms and conditions of this
Agreement.
___________________________ __________________________
Witness Participant
CONSENT OF SPOUSE
I, ___________________________________________________, spouse of
_____________________________________________, hereby consent to the foregoing
loan to my spouse and acknowledge that this consent may diminish my right to
receive an annuity for the remainder of my life in the event such loan is not
fully repaid.
___________________________ ___________________________
[Print Name of Spouse] Spouse's Signature
Dated:___________________
The foregoing consent was executed in my presence.
_____________________________
Plan Administrator
[If not so witnessed by the Plan Administrator, the following notarization must
be executed]
)
) ss
)
I, _________________________________, a notary public in and for the
jurisdiction above-named, do hereby certify that ____________________________
and __________________________________ did personally appear before me and did
acknowledge that they executed the foregoing Participant Loan Agreement as their
free act and deed.
Subscribed and sworn to before me this _____ day of _______________________,
19____.
_____________________________
<PAGE>
Notary Public
My Commission Expires:___________________
<PAGE>
[Insert Name of Plan]
Beneficiary Designation
Retain this designation in your own files.
DO NOT send to Columbia Trust Co.
_________________________________________________
_____________________________
Employee's Name (last, first, middle) Social Security Number
Birth Date: ______________________
Marital Status: ___ Married ___ Single ___ Divorced ___ Widowed
Beneficiary Designation
I. PRIMARY
% (Paid
Equally
Unless
Otherwise
Last Name, First Name, Middle Relationship Noted)
___________________________________________ ___________________
_________
___________________________________________ ___________________
_________
___________________________________________ ___________________
_________
___________________________________________ ___________________
_________
II. CONTINGENT
If all of the above beneficiaries are not living, then pay:
% (Paid
Equally
Unless
Otherwise
Last Name, First Name, Middle Relationship Noted)
___________________________________________ ___________________
_________
<PAGE>
___________________________________________ ___________________
_________
___________________________________________ ___________________
_________
___________________________________________ ___________________
_________
Note: If more than one primary beneficiary is named and a primary beneficiary
dies before payment is made, the amounts designated for the deceased primary
beneficiary will be reallocated to the other primary beneficiaries (in
accordance with the indicated proportions). Similar rules apply for contingent
beneficiaries.
The foregoing designation is effective upon receipt by the Plan Administrator
and revokes any and all previous designations made by the employee. The Plan
Administrator is authorized to act under this Beneficiary Designation unless it
is revoked or changed by the employee in writing.
_____________________________________
______________________________________
Witness Employee
[In the event the employee designates someone other than his or her spouse, the
following Consent of Spouse must be completed by the employee's spouse.]
Consent of Spouse
I, __________________________________________, spouse of
_______________________________________, in accordance with section 417 of the
Internal Revenue Code, do hereby consent to this Beneficiary Designation.
The effect of the foregoing consent is to pay my spouse's vested benefits under
the Plan, which may be substantial, to persons other than myself.
_____________________________________
[Signature of] Spouse
The foregoing Beneficiary Designation and Consent of Spouse were signed in my
presence.
_____________________________________
<PAGE>
Plan Administrator
Dated: _____________________
[If not so witnessed, the following notarization must be executed]
)
) ss
)
I, _____________________________________, a notary public in and for the
jurisdiction above named, do hereby certify that
_____________________________________ did personally appear before me and did
acknowledge that he/she executed the foregoing Consent of Spouse as his/her free
act and deed.
Subscribed and sworn to before me this __________ day of
__________________________, 19______.
_____________________________________
Notary Public
My Commission
Expires: ________________________
Receipt of this Beneficiary Designation is hereby acknowledged.
_____________________________________
Plan Administrator
Dated: _________________________
Notice of Pre-Retirement Survivor Annuity
As a married participant in the [NAME OF PLAN], if you die before commencing
distributions from your account, your entire account will be used to purchase a
qualified survivor annuity for your spouse, which will be distributed in monthly
installments over his or her lifetime.
You may elect to waive the requirement that your spouse receive a survivor
annuity during any Plan year in which you are at least age 35. However, your
spouse must consent in writing to this waiver before a Plan representative or
notary public.
You may also elect to waive the requirement that your spouse be your primary
beneficiary during any Plan year in which you are at least age 35. Again, your
spouse must consent to this waiver in writing before a Plan representative or
notary public. If you do elect to waive
<PAGE>
both the survivor annuity and the designation of your spouse as beneficiary, and
your spouse has consented in writing, you may designate any beneficiary as the
recipient of your account balance.
You may revoke your waiver at any time before your death and make a new
election. Should you choose to make an election change, or should you have a
change in marital status, notify the Plan Administrator promptly.
<PAGE>
EXPLANATION OF JOINT AND SURVIVOR ANNUITY
As a married participant in this Plan, your benefit will be paid to you in the
form of a joint and survivor annuity. A joint and survivor annuity provides a
benefit to you over your lifetime, and a benefit to your surviving spouse over
that spouse's lifetime to [INSERT JOINT AND SURVIVOR PERCENTAGE (WILL BE 50
PERCENT IF LEFT BLANK)] of the benefit you received or would have received. The
total of the annuity payments to both you and your surviving spouse will be the
actuarial equivalent of the amount in your account at the time you first receive
your distribution this means that the monthly payments you and your spouse
receive will be less than the monthly payments you would receive if payments
were made only during your lifetime.
You may opt out of this form of distribution by electing one of the other forms
of distribution permitted by this Plan during the 90-day period ending on the
date your distribution begins. If you want to opt out of the joint and survivor
annuity, or wish to have the benefit after your death paid to someone other than
your spouse, you must receive the consent of your spouse in writing in order for
the change to be effective.
If you elect out of the joint and survivor annuity, you and your spouse will no
longer receive a guaranteed level of benefits over your joint lifetimes.
Depending on the form of distribution you do select, your spouse may receive no
benefit at all in the event of your death.
Any election that you make may be revoked at any time before you begin to
receive payments. If you want to change your election, please notify the Plan
Administrator promptly.
You can request from the Plan Administrator a written explanation of the
financial effect upon the monthly benefits payable to you of any election you
and your spouse wish to make. The explanation will show the dollar effect of
different elections you and your spouse might wish to make. Your request must
be submitted to the Plan Administrator in writing. No more than one request may
be made in any calendar year.
<PAGE>
SPECIFIC INFORMATION ABOUT
JOINT AND SURVIVOR ANNUITY
As a married participant in the [INSERT NAME OF PLAN] you are entitled to
receive a retirement benefit equal to the amount contained in your account.
Unless you elect otherwise, and your spouse consents in writing, this benefit
will be distributed in the form of a joint and survivor annuity.
A joint and survivor annuity will provide you with a periodic benefit over your
lifetime, and a periodic benefit over your spouse's lifetime equal to [INSERT
JOINT AND SURVIVOR PERCENTAGE] of the benefit you received or would have
received. The total of the annuity payments to both you and your surviving
spouse is calculated so as to equal the amount you would receive were the
benefit paid over your lifetime only. This results in periodic joint and
survivor benefit payments that are smaller than you would receive were payments
made over your lifetime only.
You currently have a vested account balance of [INSERT PARTICIPANT'S VESTED
ACCOUNT BALANCE]. If this vested account balance were distributed to you today
in the form of a joint and survivor annuity, you would receive [INSERT FREQUENCY
OF PAYMENT] payments of [INSERT AMOUNT OF PARTICIPANT'S ANNUITY] over your
lifetime. In the event of your death, your spouse would receive [INSERT
FREQUENCY OF PAYMENT] payments of [INSERT AMOUNT OF SURVIVOR'S ANNUITY] over
that spouse's lifetime.
If you were to elect to receive a single life annuity, and your spouse consented
to that election in writing, you would receive [INSERT FREQUENCY OF PAYMENT]
payments of [INSERT AMOUNT OF PARTICIPANT'S ANNUITY] over you lifetime, but your
spouse would receive no further benefits in the event of your death.
The actual payments you would receive from an annuity would depend on your
vested account balance in the time you begin distributions, and the current
rates begin charged for annuity contracts.
If you wish to elect a form of distribution other than a joint and survivor
annuity, you should use the form "Distribution Election Form for Married
Participants."
<PAGE>
Waiver of Pre-Retirement Survivor Annuity
I, _______________, a participant in the [fill in name of plan] (the
"Plan"), am married. With the consent of my spouse, _______________, I
hereby elect to waive the right of my spouse to receive a preretirement
survivor annuity in the event I die before my annuity starting date. This
annuity would have entitled my surviving spouse to an annuity for the
remainder of his/her life, the actuarial equivalent of which is not less
than fifty percent (50%) of my account on the date of my death.
The foregoing election is effective upon receipt by the Plan administrator
and revokes any and all previous elections made by me concerning the
preretirement survivor annuity. The Plan administrator is authorized to act
under this election unless it is revoked by me in writing at any time prior
to my death. Such revocation of consent must be in writing on a form
obtained from and submitted to the Plan administrator.
- ----------------
- ----------------
Witness
Participant
Dated:
---------------
CONSENT OF SPOUSE
I, _______________, spouse of _______________, in accordance with section
417 of the Internal Revenue Code, hereby consent to the Waiver of
Preretirement Survivor Annuity by my spouse and acknowledge that with this
consent I forfeit my right to receive an annuity for the remainder of my
life in the event my spouse dies before his/her retirement benefits
commence. Such annuity would have been equal to my spouse's benefit
(actuarially adjusted) on the date of his/her death. I understand that my
consent to this Waiver of Preretirement Survivor Annuity may be revoked by
me at any time before my spouse's death. The effect of such revocation will
be to restore my right to receive a preretirement survivor annuity in the
event my spouse dies before his/her annuity starting date.
Dated:
-------------------------------
- --------------------------
Spouse of Participant
The foregoing Waiver of Preretirement Survivor Annuity and Consent of Spouse
were signed in my presence.
<PAGE>
Dated:
------------------
- -----------------------------
Plan Administrator
If not so witnessed, the following notarization must be executed.
)
) ss
)
I, _________________________________________, a notary public in and for the
jurisdiction above named, do hereby certify that ______________________________
did personally appear before me and did acknowledge that he/she executed the
foregoing Consent of Spouse as her/her free act and deed.
Subscribed and sworn to before me this _____________ day of ______________,
19________.
---------------------------------
Notary Public
My Commission Expires:
--------------------
Receipt of this Waiver of Preretirement Survivor Annuity is hereby acknowledged.
Dated:
------------------
- -----------------------------
Plan Administrator
<PAGE>
Domestic Relations Orders
A domestic relations order recognizes or assigns to an alternate payee the right
to receive all or a portion of the benefits payable to you under the Plan. An
alternate payee can be any spouse, former spouse, child, or other dependent. If
a domestic relations order is received by the Plan, the following procedure
shall be in effect:
1. The Plan Administrator shall promptly notify you and any other alternate
payee that a domestic relations order has been received, and shall explain how
the Plan determines the status of the order.
2. As soon as possible, the Plan Administrator shall determine whether the
order is a qualified domestic relations order, as defined in ERISA.
3. If it is determined that the domestic relations order is a qualified
domestic relations order, the Plan Administrator shall promptly inform you and
any alternate payee of that fact. The Plan Administrator shall then ascertain
the amount payable to each alternate payee, and disburse it accordingly.
4. If, for any reason, there is a delay in making payment to the alternate
payee(s), the Plan Administrator shall direct that the dollar amount in question
be segregated in a separate account in the Plan or in an escrow account where it
will continue to accumulate interest. If it is later determined that the
domestic relations order is not a qualified domestic relations order, the
segregated account and its accrued interest shall be restored to you.
Attached are various sample forms for use by Plan administrators who receive
domestic relations orders.
<PAGE>
[Insert Name of Plan] Plan
Notice to Plan Participant of Receipt of Domestic Relations Order
You are hereby notified that the __________________________________________ Plan
(the "Plan"), in which you are a participant, has recently received a domestic
relations order that purports to confer upon your former spouse,
_______________________________, certain of your rights to benefits under the
Plan. A copy of this communication is attached. If the Plan administrator
determines that this communication constitutes a qualified domestic relations
order as defined by section 414(p) of the Internal Revenue Code of 1986, it will
comply with the request or instructions that the communication contains.
The Plan administrator will make its determination as to whether the attached
communication constitutes a qualified domestic relations not more than sixty
(60) days after the date of this notice, which is set forth below. If you wish
to comment on this matter, please write the Plan administrator at the address
set forth below. In making its determination, the Plan administrator will
consider any written comments mailed within thirty (30) days from the date of
this notice.
Upon making its determination, the Plan administrator will notify you thereof
and, if it determines that the communication is not a qualified domestic
relations order, will furnish the reason or reasons for that determination. It
will also notify you of any action it intends to take pursuant to its
determination.
Date:
----------------- ----------------------------------
Plan Administrator
Address for Comment:
- ------------------------------
- ------------------------------
- ------------------------------
- ------------------------------
<PAGE>
[Insert Name of Plan] Plan
Notice to Alternate Payee of Receipt of Domestic Relations Order
You are hereby notified that the ___________________________________________
Plan (the "Plan"), in which __________________________ is a participant (the
"Participant"), has recently received a domestic relations order that purports
to confer upon ________________________________, the Participant's former
spouse, certain of the rights of the Participant to benefits under the Plan. A
copy of this communication is attached. If the Plan administrator determines
that this communication constitutes a qualified domestic relations order as
defined by section 414(p) of the Internal Revenue Code of 1986, it will comply
with the request or instructions that the communication contains.
The Plan administrator will make its determination as to whether the attached
communication constitutes a qualified domestic relations not more than sixty
(60) days after the date of this notice, which is set forth below. If you wish
to comment on this matter, please write the Plan administrator at the address
set forth below. In making its determination, the Plan administrator will
consider any written comments mailed within thirty (30) days from the date of
this notice.
Upon making its determination, the Plan administrator will notify you thereof
and, if it determines that the communication is not a qualified domestic
relations order, will furnish the reason or reasons for that determination. It
will also notify you of any action it intends to take pursuant to its
determination.
Date:
----------------- ----------------------------------
Plan Administrator
Address for Comment:
- ------------------------------
- ------------------------------
- ------------------------------
- ------------------------------
<PAGE>
[Insert Name of Plan] Plan
Notice to Participant of Plan Administrator's Determination Regarding Domestic
Relations Order
You were previously notified that the _______________________________________
Plan (the "Plan"), in which you are a participant, received a domestic relations
order that purported to confer upon your former spouse, _______________________,
certain of your rights to benefits under the Plan. In that prior notification,
dated ____________________, you were informed that the Plan administrator would
determine whether the domestic relations order received constituted a qualified
domestic relations order under section 414(p) of the Internal Revenue Code of
1986 (the "Code).
Conclusion
After careful consideration, the Plan administrator has determined that the
domestic relations order received by it does not constitute a qualified domestic
relations order. Based on this determination, the Plan will not honor the
domestic relations order unless the domestic relations order is modified, within
the time period established by section 414(p) of the Code, to bring it into
compliance with the provisions of Code section 414(p).
Reasons for Conclusion
The Plan administrator's determination that the domestic relations order does
not constitute a qualified domestic relations order is based on its
determination that the domestic relations order fails to satisfy certain
requirements set forth in section 414(p)(2) of the Code. Each of those
requirements is set froth below, as well as the indication of the reason by the
domestic relations order does not comply with these requirements:
[To be Completed by Plan Administrator]
In all other respects the domestic relations order received by the Plan appears
to satisfy the requirements for a qualified domestic relations order as
established by the Internal Revenue Code. For this purpose, it is assumed that
payments to the alternate payee will be made in accordance with the time and
manner in which payments will be made to the participant since the domestic
relations order received by the Plan does not otherwise specify.
Since the Plan administrator has determined that the domestic relations order in
question is not presently a qualified domestic relations order, it will not make
any payments pursuant to the domestic relations order received by it at the
present time. If the domestic relations order is modified to become a qualified
domestic relations order, within the time period prescribed in section 414(p) of
the Code, the Plan will make payments in accordance with the directions of such
domestic relations order. In the interim, the Plan administrator will
separately account for the amounts which would have been payable to the
alternate payee during the period as if the domestic relations order received by
it had been determined to have been a
<PAGE>
qualified domestic relations order. If, however, under the terms of the Plan,
payments are required to be made to the Participant and the domestic relations
order received by the Plan has not been modified to become a qualified domestic
relations order, the Plan will pay the entire amount to the Participant in
accordance with the Plan provisions.
Date:
----------------- ----------------------------------
Plan Administrator
Address for Comment:
- ------------------------------
- ------------------------------
- ------------------------------
- ------------------------------
<PAGE>
[Insert Name of Plan] Plan
Notice to Alternate Payee of Plan Administrator's
Determination Regarding Domestic Relations Order
You were previously notified that the _______________________________________
Plan (the "Plan"), in which ___________________________________ is a participant
(the "Participant"), received a domestic relations order that purported to
confer upon you certain of the Participant's rights to benefits under the Plan.
In that prior notification, dated ____________________, you were informed that
the Plan administrator would determine whether the domestic relations order
received constituted a qualified domestic relations order under section 414(p)
of the Internal Revenue Code of 1986 (the "Code).
Conclusion
After careful consideration, the Plan administrator has determined that the
domestic relations order received by it does not constitute a qualified domestic
relations order. Based on this determination, the Plan will not honor the
domestic relations order unless the domestic relations order is modified, within
the time period established by section 414(p) of the Code, to bring it into
compliance with the provisions of Code section 414(p).
Reasons for Conclusion
The Plan administrator's determination that the domestic relations order does
not constitute a qualified domestic relations order is based on its
determination that the domestic relations order fails to satisfy certain
requirements set forth in section 414(p)(2) of the Code. Each of those
requirements is set froth below, as well as the indication of the reason by the
domestic relations order does not comply with these requirements:
[To be Completed by Plan Administrator]
In all other respects the domestic relations order received by the Plan appears
to satisfy the requirements for a qualified domestic relations order as
established by the Internal Revenue Code. For this purpose, it is assumed that
payments to the alternate payee will be made in accordance with the time and
manner in which payments will be made to the participant since the domestic
relations order received by the Plan does not otherwise specify.
Since the Plan administrator has determined that the domestic relations order in
question is not presently a qualified domestic relations order, it will not make
any payments pursuant to the domestic relations order received by it at the
present time. If the domestic relations order
<PAGE>
is modified to become a qualified domestic relations order, within the time
period prescribed in section 414(p) of the Code, the Plan will make payments in
accordance with the directions of such domestic relations order. In the
interim, the Plan administrator will separately account for the amounts which
would have been payable to the alternate payee during the period as if the
domestic relations order received by it had been determined to have been a
qualified domestic relations order. If, however, under the terms of the Plan,
payments are required to be made to the Participant and the domestic relations
order received by the Plan has not been modified to become a qualified domestic
relations order, the Plan will pay the entire amount to the Participant in
accordance with the Plan provisions.
Date:
----------------- ----------------------------------
Plan Administrator
Address for Comment:
- ------------------------------
- ------------------------------
- ------------------------------
- ------------------------------
<PAGE>
[Insert Name of Plan] Plan
Notice to Alternate Payee of Plan Administrator's
Determination Regarding Domestic Relations Order
You were previously notified that the _____________________________________ Plan
(the "Plan"), in which you are a participant, received a domestic relations
order that purported to confer upon your former spouse, _____________________,
certain of your rights to benefits under the Plan . In that prior notification,
dated ______________________, you were informed that the Plan administrator
would determine whether the domestic relations order received constituted a
qualified domestic relations order under section 414(p) of the Internal Revenue
Code of 1986.
After careful consideration, the Plan administrator has determined that the
domestic relations order received by it constitutes a qualified domestic
relations order. Based on this determination, the Plan will honor the qualified
domestic relations order.
The Plan administrator has further determined that the qualified domestic
relations order requires that the amount of payment shall equal
_____________________________. Accordingly, the Plan will promptly issue a
check in the amount of ____________________________________________
($_________________) plus earnings, payable to your former spouse, which
amount represents payment in full of all amounts due [him/her] under the
terms of the qualified domestic relations order.
Date:
----------------- ----------------------------------
Plan Administrator
Address for Comment:
- ------------------------------
- ------------------------------
- ------------------------------
- ------------------------------
<PAGE>
[Insert Name of Plan] Plan
Notice to Participant of Plan Administrator's
Determination Regarding Domestic Relations Order
You were previously notified that the _____________________________________ Plan
(the "Plan"), in which your former spouse, _______________________, is a
participant, received a domestic relations order that purported to confer
upon you certain of your former spouse's rights to benefits under the Plan. In
that prior notification, dated ____________________, you were informed that the
Plan administrator would determine whether the domestic relations order received
constituted a qualified domestic relations order under section 414(p) of the
Internal Revenue Code of 1986.
After careful consideration, the Plan administrator has determined that the
domestic relations order received by it constitutes a qualified domestic
relations order. Based on this determination, the Plan will honor the qualified
domestic relations order.
The Plan administrator has further determined that the qualified domestic
relations order requires that the amount of payment shall equal
_____________________________________________________________________________
_______________. Accordingly, the Plan will promptly issue a check in the
amount of ______________________________________________ ($_____________), plus
earnings, payable to your former spouse, which amount represents payment in full
of all amounts due [him/her] under the terms of the qualified domestic relations
order.
Date:
----------------- ----------------------------------
Plan Administrator
Address for Comment:
- ------------------------------
- ------------------------------
- ------------------------------
- ------------------------------
<PAGE>
COLUMBIA TRUST COMPANY
1301 S.W. Fifth Avenue
P.O. BOX 1350
Portland, Oregon 97207-1350
Nationwide 1-800-547-1707
In Portland 222-3606
<PAGE>
Columbia Trust Company
Retirement Plan Packet
The Columbia Retirement Plan
<PAGE>
The Columbia Retirement Plan
Prototype Paired Defined Contribution Plans
Table of Contents
INTRODUCTION
GENERAL CONSIDERATIONS
TAX-QUALIFIED STATUS OF PROTOTYPE PLANS
PROCEDURES
PROCEDURES FOR ESTABLISHING OR AMENDING A PROTOTYPE PLAN
PROCEDURES FOR TRANSFERRING ASSETS BETWEEN TRUSTS
PLAN-TO-PLAN TRANSFER FORM
PROCEDURES FOR MAKING PLAN CONTRIBUTIONS
CONTRIBUTION SCHEDULE
ADMINISTRATION
NOTICE OF GENERAL ADMINISTRATIVE RESPONSIBILITIES
Including: FORM 5500 REPORTING
DISTRIBUTIONS
DEATH OF A TRUSTEE AND PLAN ADMINISTRATOR
BENEFICIARY DESIGNATION
JOINT AND SURVIVOR ANNUITY
ADOPTION AGREEMENTS
COMPLETING THE ADOPTION AGREEMENTS
PROVISION-BY-PROVISION EXPLANATION AND INSTRUCTIONS
PROFIT SHARING ADOPTION AGREEMENT
MONEY PURCHASE PENSION ADOPTION AGREEMENT
COLUMBIA ACCOUNT AGREEMENT
TELEPHONE EXCHANGE AUTHORIZATION
PLAN AND TRUST
BASIC PLAN DOCUMENT
PLAN AMENDMENT
TRUST AGREEMENT
- ----------------------------------------------------------
Complete and mail to Columbia Trust Company
Prototype Plan
P.O. Box 1350
Portland, Oregon 97207-1350
<PAGE>
[LOGO] The Columbia Retirement Plan
INTRODUCTION
INTRODUCTION
INTRODUCTION
INTRODUCTION
- ----------------------------------------------------------------
Questions? Call 1-800-547-1707; in Portland 222-3606
<PAGE>
INTRODUCTION
General Considerations
Under defined contribution plans, contributions are made on behalf of each
participant. The plan administrator is required to maintain a separate
bookkeeping account for each participant. This may be accomplished most
conveniently by setting up a separate mutual fund account for each participant.
However, a separate mutual fund account is not required by law. The sum of the
contributions to the participant's account, as adjusted by investment gains or
losses, comprises the participant's retirement income. The employer's
obligation to contribute is determined by the terms of the plan. The amounts
the employer contributes will not increase or decrease on the basis of
investment performance.
Profit Sharing Plan
Under a profit sharing plan, which is one type of defined contribution plan, the
amount and allocation of contributions each year may be based on a specified
formula, or made in amounts determined by the employer in its sole discretion.
Money Purchase Pension Plan
Under a money purchase pension plan, which is also a type of defined
contribution plan, an amount equal to a specified percentage of each
participant's annual compensation is contributed to the participant's account.
These contributions are required; they are not subject to the discretion of the
employer. Failure to make the required contribution without approval of the IRS
(by obtaining a waiver of the minimum funding requirements) may result in the
imposition of excise taxes.
Overall Limitations
The maximum annual amount that can be allocated to any employees' account under
all defined contribution plans of an employer is limited to the lesser of 25
percent of compensation or $30,000 (the $30,000 limit may be increased to
reflect changes in the cost of living after 1994).
Special Rules for Self-Employed Contributions
The limits are calculated differently for a self-employed person. Contributions
are based on a percentage of a self-employed individual's earned income after
making the contribution on his own behalf (earned income is reduced by the
amount of the deductible contribution) and after one-half of his social security
taxes (earned income is reduced by the deduction allowed for one-half of
self-employment social security taxes.) Because of these adjustments,
calculating the contributions for self-employed individuals can be difficult.
The following example illustrates one method of determining that limit. Assume
the self-employed individual wishes to contribute 15% of compensation for
himself and his other employees for 1994. Assume further that his net profit
from self-employment in that business is $150,000 for that year. First, the
employer would calculate his gross compensation ($150,000) less one-half of his
self-employment taxes ($5,932), which is $144,068. (Self-employment taxes equal
12.40% of his social security wages ($60,600) plus 2.90% of his Medicare wages
($150,000)). Second, he would multiply this adjusted compensation of
<PAGE>
$144,068 by 13.0435% to determine his contribution, which is $18,791. Third,
this contribution is then also deducted from gross compensation ($150,000 -
($5,932 + $18,791)) to produce his actual compensation of $125,277.
It is this compensation amount that is used to determine whether the overall
limit is satisfied. That is, the contribution cannot exceed the lesser of 25%
of compensation (as calculated above) or $30,000. If compensation is less than
$120,000 then the 25% limit applies but if compensation equals or exceeds
$120,000, then the $30,000 limit applies.
Compensation Limitations
The amount of compensation that is counted is also limited. For 1994 the limit
is $150,000. The limit may increase in future years due to cost-of-living
increases. Increases will only be made in increments of $10,000.
This compensation limit applies whenever any calculation involving compensation
is made. For example, in calculating contributions and deduction limits, only
compensation up to this limit may be used.
Deduction Limitations
Separate limits are imposed on deductions for plan contributions. Deductions
for contributions to all of an employers defined contribution plans are limited
to 25 percent of the total compensation paid to all participants during that
year. Of this, 15 percent of the total compensation paid to all plan
participants during a year can generally be deducted as a contribution to a
profit sharing plan.
The rules concerning deductions for contributions on behalf of self-employed
individuals are generally the same as those that apply to common law employees.
However, if contributions to a profit sharing plan on behalf of a self-employed
individual would exceed 13.0435 percent of earned income (before plan
contributions but after one-half of self-employment taxes), or if contributions
to all defined contribution plans on behalf of a self-employed individual would
exceed 20 percent of earned income (before plan contributions), a tax advisor
should be consulted to ensure that contributions will be deductible and that the
plan(s) will retain tax-qualified status.
Combination of Plans
Adopting both the profit sharing and money purchase pension plans permits an
employer to maximize the amount of its contributions while retaining flexibility
as to the amount and timing of each years contribution. Thus, a profit sharing
plan provides flexibility due to the discretionary contribution formula. The 15
percent deduction limit, however, will not permit an employer to maximize
deductible contributions. Conversely, the money purchase plan by itself permits
the employer to make the maximum deductible contribution (25 percent of
compensation) on behalf of employees. However, to obtain this deduction under a
money purchase pension plan alone, the employer must commit itself to that
contribution rate in every year, regardless of the employers profit situation.
Combining the two types of plans permits the employer to maximize contributions
without committing itself to that level on an ongoing basis. This is often
achieved by contributing 10
<PAGE>
percent of compensation to the money purchase pension plan and 15 percent of
compensation to a discretionary profit sharing plan.
Tax Qualified Status of Prototype Plans
Columbia Trust Company has received opinion letters from the Internal Revenue
Service that its prototype paired plans qualify for special tax treatment.
(Money Purchase Pension Plan Letter Serial No.: D244627a; Profit Sharing Plan
Letter Serial No.: D244626a). Because these plans contain provisions regarding
coverage, eligibility, vesting schedules, and contribution limits which are
designed to meet tax qualification requirements, the employer meeting the
conditions described below can rely on the sponsors opinion letter as to the
tax-qualified status of its plans and need not obtain an individual
determination letter.
To rely on the sponsors favorable opinion letter, the employer must provide that
the plan(s) will:
(1) cover all employees, including employees of Affiliated Employers, except:
(a) those who have not met the minimum age and service requirements for
participation;
(b) certain union employees; and
(c) certain nonresident aliens;
(2) not favor Key Employees as to eligibility to participate;
(3) vest employees' accounts at least as rapidly as one of the Top-Heavy
vesting schedules; and
(4) require the employer to contribute a uniform percentage of compensation (in
making this determination, the plan may consider benefits provided under the
Social Security Act).
If the employer has maintained, now maintains, or later adopts a qualified plan
in addition to these prototype plans (other than plans being amended by adoption
of one or both of these plans), it will not be able to rely on the sponsors
opinion letter and will be required to apply for a separate determination
letter.
<PAGE>
Internal Revenue Service
Plan Description: Prototype Standardized Profit Sharing Plan
FFN: 50214485001-001 Case: 8902690 EIN: 36-3077680
BPD: 01 Plan: 001 Letter Serial No.: D244626a
Columbia Trust Co.
1301 SW Fifth Avenue
PO Box 1350
Portland, OR 97201
Department of the Treasury
Washington DC 20224
Person to Contact: Ms. Arrington
Telephone Number: (202) 566-4576
Refer Reply to: E:EP:Q:ICU
Date: 03/05/90
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the
benefit of their employees. This opinion relates only to the acceptability
of the form of the plan under the Internal Revenue Code. It is not an
opinion of the effect of other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this
plan. You are also required to send a copy of the approved form of the
plan, any approved amendments and related documents to each Key District
Director of Internal Revenue Service in whose jurisdiction there are
adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). An employer who adopts this plan will be considered to have a plan
qualified under Code section 401(a) provided all of the terms of the plan
are followed, and the eligibility requirements and contribution or benefit
provisions are not more favorable for officers, owners, or highly
compensated employees than for other employees. Except as stated below, the
Key District Director will not issue a determination letter with regard to
this plan.
Our opinion does not apply to the form of the plan for purposes of Code
section 401(a)(16) if: (1) an employer ever maintained another qualified
<PAGE>
plan for one or more employees who are covered by this plan, other than a
specified paired plan within the meaning of section 7 of Rev. Proc. 89-9,
1989-6 I.R.B 14; or (2) after December 31, 1985, the employer maintains a
welfare benefit fund defined in Code section 419(e), which provides
postretirement medical benefits allocated to separate accounts for key
employees as defined in Code section 419A(d)(3). In such situations, the
employer should request a determination as to whether the plan, considered
with all related qualified plans and, if appropriate, welfare benefit
funds, satisfies the requirements of Code section 401(a)(16) as to
limitations on benefits and contributions in Code section 415.
If you, the plan sponsor, have any questions concerning the IRS processing
of this case, please call the above telephone number. This number is only
for use of the plan sponsor. Individual participants and/or adopting
employers with questions concerning the plan should contact the plan
sponsor. The plan's adoption agreement must include the sponsor's address
and telephone number for inquiries by adopting employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial
Number and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
Chief, Employee Plans Qualifications Branch
<PAGE>
Internal Revenue Service
Plan Description: Prototype Standardized Money Purchase Pension
Plan
FFN: 50214485001-002 Case: 8902691 EIN: 36-3077680
BPD: 01 Plan: 002 Letter Serial No.: D244627a
Columbia Trust Co.
1301 SW Fifth Avenue
PO Box 1350
Portland, OR 97201
Department of the Treasury
Washington DC 20224
Person to Contact: Ms. Arrington
Telephone Number: (202) 566-4576
Refer Reply to: E:EP:Q:ICU
Date: 03/05/90
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the
benefit of their employees. This opinion relates only to the acceptability
of the form of the plan under the Internal Revenue Code. It is not an
opinion of the effect of other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this
plan. You are also required to send a copy of the approved form of the
plan, any approved amendments and related documents to each Key District
Director of Internal Revenue Service in whose jurisdiction there are
adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). An employer who adopts this plan will be considered to have a plan
qualified under Code section 401(a) provided all of the terms of the plan are
followed, and the eligibility requirements and contribution or benefit
provisions are not more favorable for officers, owners, or highly compensated
employees than for other employees. Except as stated below, the Key District
Director will not issue a determination letter with regard to this plan.
Our opinion does not apply to the form of the plan for purposes of Code
<PAGE>
section 401(a)(16) if: (1) an employer ever maintained another qualified
plan for one or more employees who are covered by this plan, other than a
specified paired plan within the meaning of section 7 of Rev. Proc. 89-9,
1989-6 I.R.B 14; or (2) after December 31, 1985, the employer maintains a
welfare benefit fund defined in Code section 419(e), which provides
postretirement medical benefits allocated to separate accounts for key
employees as defined in Code section 419A(d)(3). In such situations, the
employer should request a determination as to whether the plan, considered
with all related qualified plans and, if appropriate, welfare benefit
funds, satisfies the requirements of Code section 401(a)(16) as to
limitations on benefits and contributions in Code section 415.
If you, the plan sponsor, have any questions concerning the IRS processing
of this case, please call the above telephone number. This number is only
for use of the plan sponsor. Individual participants and/or adopting
employers with questions concerning the plan should contact the plan
sponsor. The plan's adoption agreement must include the sponsor's address
and telephone number for inquiries by adopting employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial
Number and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
Chief, Employee Plans Qualifications Branch
<PAGE>
[LOGO] The Columbia Retirement Plan
PROCEDURES
PROCEDURES
PROCEDURES
PROCEDURES
- ---------------------------------------------------------------------------
Questions? Call 1-800-547-1707; in Portland 222-3606
<PAGE>
PROCEDURES
Procedures for
Establishing or Amending
a Prototype Plan
There are a number of steps that an employer must take to establish or amend a
prototype plan. For an employer establishing a new plan, the adoption agreement
must be completed and executed prior to the end of the employer's taxable year.
These steps are set out below:
Plan Documents. The employer should study the provisions of the prototype
plan document, the trust agreement, and the applicable adoption agreements
carefully. Consult with a tax advisor or legal counsel before completing the
adoption agreement.
Complete the Adoption Agreement(s). The employer must complete an adoption
agreement. To select alternative or optional plan features and complete the
adoption agreement(s), see the Provision-by-Provision Instructions for
Completing Adoption Agreement. The completed adoption agreement must be dated
and signed by the employer and sent to the plan sponsor, Columbia Trust Company,
at P.O. Box 1350, Portland, OR 97207-1350.
Adopt the Plan(s). A corporate employer should adopt a resolution authorizing
the adoption and implementation of the plan(s). A sole proprietor should
execute the plan documents and a partnership should adopt the plan using the
procedures set forth in its partnership agreement (or in state law) for
executing legal documents.
Appoint the Plan Trustee. The employer must name one or more trustees to
oversee the investment of plan assets. The trustees may be individuals or
institutions with trust powers. A corporate employer is not permitted to serve
as trustee. The trustees should acknowledge their acceptance of their duties
and obligations by signing the Adoption Agreement at ARTICLE XVI of the Profit
Sharing Adoption Agreement and/or ARTICLE XV of the Money Purchase Pension
Adoption Agreement or in a separate written document. If the employer is a sole
proprietorship, more than one individual should be appointed. See the next
section for Death of a Trustee or Plan Administrator.
Appoint the Plan Administrator. The employer, or the trustees appointed by the
employer, must name an administrator to manage the recordkeeping and reporting
activities regarding the plan(s). The plan administrator may be the employer,
an officer or committee of officers of the employer, or an external
administrative agent. A corporate employer can be the plan administrator. See
the next section for Notice of General Administrative Responsibilities.
Establish the Trust. The trustees appointed by the employer should open a trust
account with the sponsor. Columbia Trust Company will establish individual
accounts for each plan participant and provide them with periodic reports. If
assets from an existing plan are to be transferred into the trust, see the
following page, Procedures for Transferring Assets Between Trusts.
Communicate the Plan to Employees. After you have adopted the plan(s), you will
need to communicate the adoption and principal provisions of the plan(s) to your
employees. Models of Notice to Interested parties and a Summary Plan
Description are in a separate employer's Booklet. Call Columbia if you have
employees and you did not receive this booklet with your Retirement Plan packet.
<PAGE>
Consult a Professional. Retirement Plans are complex! Study the agreements and
provisions carefully. Consult with your tax advisor or legal counsel before you
take any action to establish your Plan.
PROCEDURES FOR TRANSFERRING ASSETS BETWEEN TRUSTS
If you currently maintain another prototype plan, the adoption of the Columbia
prototype plan(s) constitutes an amendment of the existing plan. The newly
amended prototype plan provisions must not decrease the rights of participants
under the existing plan. For example, if the participants accounts are 100
percent vested under the existing plan, these accounts must be 100 percent
vested under the new plan.
In addition, the assets of the existing plan must be transferred to the Columbia
prototype plan. The following steps should be taken:
Notify Trustee. Inform the trustee or custodian of the prior plan that the plan
assets are to be transferred to the newly amended prototype plan. You can use
the Notice of Appointment of Successor trustee following these Procedures. Send
the notice directly to the existing Trustee/custodian of your plan.
Transfer Prior Plan Assets. Request a final accounting of the prior plan. The
prior Trustee/custodian should prepare an accounting of the account names and
balances, liquidate the assets of the plan, and transfer them directly to your
Columbia Retirement Plan.
Instruct Columbia. Instruct Columbia how to invest the assets upon receipt.
Use the Contribution Schedule included in the Adoption Agreement section of this
packet.
Note that the successor trustee is yourself. Columbia Trust Company is only the
prototype sponsor of the plan.
PROCEDURES FOR MAKING PLAN CONTRIBUTIONS
Section XI in the Adoption Agreements for the plan(s) allow you to designate who
will have investment authority under the plan(s) and the extent of such
authority.
Select Investment Authority. The employer must determine whether plan
contributions are to be invested at the instruction of:
a. the employer via the plan administrator
b. the trustee; or
c. each participant.
Determine Extent of Authority. The employer may wish to limit the authority
designated above. If the employer delegates investment decisions to the
trustee, the trustee must be informed as to whether decisions may be made among
unlimited options or whether decisions must be made among certain designated
investment options. If the employer elects to permit participants to make
investment decisions, then the employer must designate whether the participant
may direct the investment of employer contributions or employee contributions or
both.
Schedule of Participant Designations. If participants are permitted to direct
investments of contributions to their individual accounts, then the plan
administrator must prepare a schedule indicating the investment selections
available to the participants. A Columbia Contribution Schedule is included in
this packet. Investment instructions must accompany each contribution, listing
participant name, account number (if known), dollar amount to be invested in
each Columbia Fund and the source of the contribution. New accounts can be
<PAGE>
established at the time of investment, however, information such as participant
social security number and birth-date must be included.
<PAGE>
[LOGO] COLUMBIA TRUST COMPANY
NOTICE OF APPOINTMENT OF SUCCESSOR TRUSTEE
To:
------------------------------------
Name of Custodian/Trustee
------------------------------------
Address
------------------------------------
City/State Zip
Your institution is presently serving as Trustee/Custodian for the plan
maintained by the undersigned employer. The employer has adopted the prototype
retirement plan sponsored by Columbia Trust Company as an amendment and
restatement of the Plan, appointing a successor trustee whose name (s) is listed
on the back of this notice.
Your institution is hereby asked to relinquish its position as the
Trustee/Custodian of the plan. The employer hereby directs you to liquidate the
assets of the Plan and to remit the proceeds in cash payable to the fund
indicated by the Employer
__ Columbia Growth Fund __ Columbia Common Stock Fund
__ Columbia Special Fund __ Columbia Balanced Fund
__ Columbia Daily Income Company __ Columbia International Stock Fund
__ Columbia Fixed Income Securities Fund __ Columbia High Yield Fund
__ Columbia U.S. Government Securities Fund __ Columbia Real Estate Equity Fund
and mail to : Columbia Trust Company
Attn: Prototype Retirement Plan
P.O. Box 1350
Portland, OR 97207
for deposit to the account established by the successor trustee(s).
With the transfer, please furnish the account balance of each participant.
- ------------------------------------ ----------------------------------
Date Print Name of Employer
<PAGE>
- ------------------------------------ ----------------------------------
Phone Signature of Employer
*** OVER ***
1301 SW 5TH AVENUE PORTLAND, OR 97201 (503) 222-3606 1-800-547-1707
MAILING ADDRESS PO BOX 1350 PORTLAND, OR 97207
<PAGE>
ACCEPTANCE BY SUCCESSOR TRUSTEE(S)
The employer has designated the individual(s) listed below to serve as successor
trustee(s) of the Plan. The undersigned (Name of Employer) hereby
acknowledges acceptance of appointment as successor trustee(s) and agrees
to accept the transfer of the Plan's assets and to hold such assets in
accordance with the terms and provisions of the Plan Trust.
Trustee's Signature Date
Trustee's Signature Date
Trustee's Signature Date
Columbia Trust Company is only the Prototype Sponsor for this plan and does not
serve as a trustee. The IRS determination letter number is D244626a for the
Profit Sharing Plan and D244627a for the Money Purchase Plan.
If there are any questions the Trustee(s) cannot answer concerning this
transfer, you may direct your questions to Columbia Trust Company, Prototype
Plan at (503) 222-3600 within Oregon or 1-800-547-1037 nationwide.
<PAGE>
[LOGO] The Columbia Retirement Plan
ADMINISTRATION
ADMINISTRATION
ADMINISTRATION
ADMINISTRATION
- ---------------------------------------------------------------------------
Questions? Call 1-800-547-1707; in Portland 222-3606
<PAGE>
Notice of General
Administrative Responsibilities
The plan administrator is responsible for the administration and recordkeeping
under the plan. The plan administrator may be the trustee, the employer
(including a corporate employer), an individual, or a committee of two or more
individuals. Among its duties, the plan administrator must comply with many
reporting and disclosure requirements. If you have employees, these duties are
significantly increased. See the Employer's Booklet-Notices to Employees for an
expanded list of administrative responsibilities. The following list, which is
not exhaustive, identifies the primary areas of administrative responsibility.
Record Keeping
Maintain Columbia's confirmations of account activity and Quarterly statements.
Keep beneficiary designations current. Monitor the Joint and Survivor Annuity
election.
Accounting
Account for yearly contributions allocated to the accounts, as well as
investment gains or losses. The plan administrator must also account for
amounts rolled over or transferred from other tax-qualified plans.
Investment Selection
Designate the Columbia fund or funds and the amount for each contribution. See
the Contribution Schedule in the Adoption Agreement section.
Form 5500
Reporting Requirements
As the administrator of a defined contribution plan, you are required to file an
annual return/report of your plan. The report must be filed with the IRS within
seven months of your plan's year end. If you terminate your plan during the
year, your filing deadline is seven months from the date of termination. There
are penalties for failure to file.
The appropriate 5500 Form depends upon your plan size. Form 5500-EZ is the
newer annual return for use by most one-participant plans. As of 1989 filing,
5500-EZ filers with less than $100,000 in aggregate plan balances are exempted
from filing.
Plans with 2-99 participants must file Form 5500-C/R regardless of the plan
balance. In the plan's first year of existence, and every third year
thereafter, fill out the complete form. For the other years, complete only the
registration portion of the form. The entire form must be completed for the
year in which your plan terminates, regardless of where you are in the 3-year
cycle.
All forms are available through the IRS or through your accountant. If you have
any questions regarding which form to use for your plan, please consult the IRS
or your tax advisor.
Distributions
Distributions must be authorized in writing by the Plan's trustee(s) only. A
Prototype Retirement Plan Trustee Distribution Form can be used for that
authorization. Distributions are subject to the requirements of the Retirement
Equity Act of 1984 (REA) and spousal
<PAGE>
consent should be obtained for any form of distribution other than a qualified
joint and survivor annuity. Use the Participant Distribution Election Form,
which accompanies the Retirement Plan Trustee Distribution Form.
As of January 1, 1993, distributions from retirement plans are subject to
mandatory withholding at a rate of 20% as a pre-payment of federal income tax
(currently, Oregon residents may elect whether or not to have 8% state tax
withholding). Columbia Trust Company can do this withholding. Different
withholding rates may apply to lump-sum distributions and to periodic
distributions. You can elect to have additional amounts withheld. The IRS
Form W-4P may need to be completed if any portion of the distribution is not an
eligible rollover amount. Call Columbia for the Distribution Form and Form
W-4P. Taxable distributions from qualified plans are eligible rollover
distributions to an individual retirement account or annuity (IRA), another
qualified plan or a section 403(b) annuity. Eligible rollover distributions
that are directly rolled over avoid the mandatory 20% withholding. Eligible
rollover distributions exclude:
Required Minimum Distributions (age 70 1/2)
Distributions from an annuity
Equal payments spanning 10 years or more
After-tax contributions
If you are under 59 1/2 years of age, the distribution is subject to a 10%
penalty. Exceptions to the penalty are distributions which are:
Made to a beneficiary after the death of a participant
Due to a total and permanent disability
A series of substantially equal periodic payments which begin after
separation from service
Made to participants over age 55 and separating from service
Medical expenses
Made to alternate payees specified in a Qualified Domestic Relations Order
i.e. divorce
Distributions that are directly rolled over are also exempted from the 10%
penalty.
If you choose to have your distribution paid to you, you will receive only 80%
of the distribution since 20% must be withheld for federal income taxes. If you
want to roll over the distribution to an IRA or another employer's plan, you
must do so within 60 days of receiving the distribution. You can roll over up
to 100% of the distribution, however, you will need to find other money to
replace the 20% that was withheld. If you roll over only 80%, you will be taxed
on the 20% withheld and not rolled over.
Federal law requires participants reaching age 70 1/2 to begin receiving a
minimum distribution from the plan each year. Distributions must begin by April
1 following the year the participant reaches 70 1/2. The minimum amount is
calculated by dividing the previous year-end balance by the applicable life
expectancy. Your life expectancy will depend on who your listed beneficiary is,
and locating the expectancy on the IRS Life Expectancy tables. Required Minimum
Distributions cannot be Rolled Over to an IRA. Failure to make a minimum
distribution subjects you to a 50% IRS penalty tax.
Distributions from your retirement plan (excludes plan-to-plan transfer of
assets) are reportable to the IRS. You will receive a Form 1099R in the January
following the distribution.
<PAGE>
Because of tax consequences and options available to you, we urge you to consult
your tax advisor for your best option. We also suggest these IRS Publications
for more information:
Publ. 560 Self-Employed Retirement Plans
Publ. 575 Pension and Annuity Income
Publ. 505 Tax Withholding and Estimated Tax
Death of a Trustee or Plan Administrator
Depending on the organization of your company, you may have appointed one
individual (yourself) as the plan administrator and trustee of the plan. In
this situation, your death may complicate the distribution of your plan assets
to an intended beneficiary.
Under the terms of the plan, the plan administrator is responsible for the
management and administration of the plan. The plan administrator is also
responsible for instructing the trustee regarding distributions from the plan.
Further, Columbia is authorized to accept distribution instructions signed only
by the trustee under the plan. The employer (that is, your company) is the only
entity that can appoint the plan administrator and trustee. Please note that
Columbia does not fulfill either of these duties.
If you decide to fill all three capacities (employer, plan administrator and
trustee), then upon your death no one is automatically available to give
Columbia instructions on distributions. Your company will need to appoint a
successor trustee in order to distribute plan assets to your beneficiaries.
That appointment may be more difficult to accomplish if your company is a sole
proprietorship.
To address this issue, you may consider appointing a co-trustee who could
continue to give distribution instructions to Columbia in the event of your
death. The co-trustee's signature must be on the Adoption Agreement. Note that
Columbia will not accept appointment as co-trustee.
If you elect not to appoint a co-trustee, then your representatives will need to
provide Columbia with any of the following to effect a distribution:
1. Appointment of Trustee - If your company is a corporation or a partnership,
a successor trustee may be appointed with the appropriate corporate action (e.g.
by the board of directors). Acceptable evidence of that appointment must be
provided to Columbia.
2. Letters of Testamentary - If you are a sole proprietorship, the personal
representative of your estate, acting as a successor-in-interest to your
company, will need to appoint a successor plan administrator and trustee of your
plan. This procedure involves the probate of your estate and requires that you
provide Columbia with letters of testamentary.
3. A Fidelity/Indemnity Bond - In lieu of the appointment of a new trustee by
the corporation or a personal representative, you could provide Columbia with a
surety bond that indemnifies Columbia against claims by any other parties where
Columbia makes a distribution to a beneficiary without a trustee's authorizing
signature. This type of bond can be obtained from a surety company for a fee.
Specific options should be discussed with your legal and/or tax advisor before
taking any action with regard to this plan.
<PAGE>
[LOGO] COLUMBIA TRUST COMPANY
COLUMBIA RETIREMENT PLAN DISTRIBUTION FORM
NOTE - The Plan Administrator should have a completed Participant Beneficiary
Designation and Distribution Election Form and also a completed W-4P form.
Both are needed to complete this form. Send this form and a copy of the W-4P to
Columbia, and keep the order forms in the Plan Administrator's permanent file.
Plan Name:
----------------------------------------------------------------
Master Account Number:
----------------------------------------------------
Participant's Account Number:
-------------------------------------------------
Name:
---------------------------------------------------------------------
Social Security #: - - Age:
----------- ------------ ---------- -----------------
Married? ___ Yes * ___ No * If yes, Spousal consent is required on
Participant Beneficiary Designation and Distribution Election Form.
To: Columbia Trust Company,
Liquidate _____ ALL or _____ PART $_______________ or ____________ shares from
the;
The participant is __________% vested. If not 100% vested, include instructions
for non-vested portion of the distribution on the back of this form.
(Check all appropriate boxes)
__ Columbia Daily Income Company __ Columbia Common Stock Fund, Inc.
__ Columbia Growth Fund, Inc. __ Columbia Balanced Fund, Inc.
__ Columbia Fixed Income Securities __ Columbia International Stock
Fund, Inc. Fund, Inc.
__ Columbia Special Fund, Inc.
__ Columbia U.S. Government Securities Fund
portion of the Participant's:
___ Profit-Sharing Account ___ Money Purchase Account
<PAGE>
___ Other (specify):
- ----------------------------------------------------------------------
for the following reason (death, termination, hardship, etc.):
----------------
- ---------------------------------------------------------------------------
Is this distribution:
___ a Required Minimum Distribution (Age 70 1/2+)
___ One in a series of Equal Payments spanning 10 years or more
Attach a copy of the W-4P form: New rules regarding distributions from
qualified plans have been in effect since January 1, 1993. Answer the following
questions carefully.
Is this a Direct Rollover?
___ YES ___ NO
___ to an IRA Eligible Rollover
Distributions paid directly
to the participant are
subject to an automatic 20%
withholding as a prepayment
of federal income taxes.
___ to a qualified plan
INSTRUCTIONS FOR DISTRIBUTION:
Make check payable to:
------------------------------------------------------
And mail to this address:
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
- - and/or
Special Instructions:
-----------------------------------------------------
(include instructions for
non-vested portion)
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
<PAGE>
MAINTENANCE FEE - Check One (unless you have paid this year's fee or this is not
a liquidating distribution)
___ I have enclosed a $50 ___ I authorize Columbia to withhold
check for this year's - OR - $50 from this distribution for
maintenance fee. this year's maintenance fee.
- -------------------------------- ------------------- -------------------------
Trustee's Signature Date Daytime Phone Number
- -------------------------------- ------------------- -------------------------
Trustee's Signature Date Daytime Phone Number
- -------------------------------- ------------------- -------------------------
Trustee's Signature Date Daytime Phone Number
NOTE - all trustees of the plan must sign this form, use additional space as
required.
<PAGE>
1993 Form W-4P Department of the Treasury Internal Revenue Service
- ----------------------------------------------------
What is Form W-4P? This form is for recipients of income from annuity,
pension, and certain other deferred compensation plans to tell payers
whether income tax is to be withheld and on what basis. The options
available to the recipient depend on whether the payment is periodic or
nonperiodic (including an eligible rollover distribution) as explained on
page 3.
Recipients can use this form to choose to have no income tax withheld from
the payment (except for eligible rollover distributions or payments to U.S.
citizens delivered outside the United States or its possessions) or to have
an additional amount of tax withheld.
What Do I Need To Do? Recipients who want no tax to be withheld can skip
the worksheet below and go directly to the form at the bottom of this page.
All others should complete lines A through F of the worksheet. Many
recipients can stop at line F.
Other Income? If you have a large amount of income from other sources not
subject to withholding (such as interest, dividends, or taxable social
security), you should consider making estimated tax payments using Form
1040-ES, Estimated Tax for Individuals. Call 1-800-829-3676 for copies of
Form 1040-ES, and Pub. 505, Tax Withholding and Estimated Tax.
When Should I file? File as soon as possible to avoid underwithholding
problems.
Multiple Pensions? More Than One Income? To figure the number of allowances
you may claim, combine allowances and income subject to withholding from
all sources on one worksheet. You can file a Form W-4P with each pension
payer, but do not claim the same allowances more than once. Your
withholding will usually be more accurate if you claim all allowances on
the largest source of income subject to withholding.
- ----------------------------------------------------
Personal Allowances Worksheet For 1993, the value of your personal exemption(s)
is reduced if your income is over $108,450
($162,700 if married filing jointly, $135,600 if
head of household, or $81,350 if married filing
separately). Get Pub. 919, Is My Withholding
Correct for 1993? for details. Call
1-800-829-3676 to order this publication.
- ----------------------------------------------------
A Enter "1" for yourself if no one else can claim you as a dependent .... A ___
<PAGE>
B Enter "1" if: -- You are single and have only one pension; or
-- You are married, have only one pension, and your
spouse has no income subject to withholding; or .... B ___
-- Your income from a second pension or a job,
or your spouse's pension or wages (or the total
of all) is $1,000 or less.
C Enter "1" for your spouse. You may choose to enter -0- if you are
married and have either a spouse who has income subject to withholding
or you have more than one source of income subject to withholding.
(This may help you avoid having too little tax withheld.) ............. C ___
D Enter number of dependents (other than your spouse or yourself)
you will claim on your return.......................................... D ___
E Enter "1" if you will file as a head of household on your tax return... E ___
F Add lines A through E and enter total here............................. F ___
For accuracy, do all worksheets that apply.
- -- If you plan to itemize or claim other deductions and want to reduce your
withholding, use the Deductions and Adjustments Worksheet on page 2.
- -- If you have more than one source of income subject to withholding or a
spouse with income subject to withholding AND your combined earnings
from all sources exceed $30,000, $50,000 if you are married filing a joint
return, see the Multiple Pensions/More Than One Income Worksheet on page 2
if you want to avoid having too little tax withheld.
- -- If neither of the above situations applies to you, stop here and enter the
number from line F above on line 2 of Form W-4P below.
- ----------------------------------------------------
........ Cut here and give the certificate to the payer of your pension ........
or annuity. Keep the top portion for your records.
Form W-4P OMB No. 1545-0415
Department of the Treasury
Internal Revenue Service 1993
Withholding Certificate for Pension or Annuity Payments
- ----------------------------------------------------
Type or print your full name Your social security number
<PAGE>
- ----------------------------------------------------
Home address (number and street or rural route) Claim or identification
number (if any) of your
- ------------------------------------------------------- pension or annuity
City or town, state, and ZIP code contract
- ----------------------------------------------------
Complete the following applicable lines:
1 I elect not to have income tax withheld from my pension or
annuity. (Do not complete lines 2 or 3.)...................... / /
2 I want my withholding from each periodic pension or annuity
payment to be figured using the number of allowances and
marital status shown. (You may also designate an amount
on line 3.)..................................................._______________
Enter number of
allowances.)
Marital status: / / Single / / Married / / Married, but
withhold at higher
Single rate
3 I want the following additional amount withheld from each
pension or annuity payment. Note: For periodic payments,
you cannot enter an amount here without entering the number
(including zero) of allowances on line 2).....................$______________
- ----------------------------------------------------
Your signature Date
- ----------------------------------------------------
Cat No. 10225T
<PAGE>
Form W-4P (1996) Page 2
- ----------------------------------------------------
Deductions and Adjustments Worksheet
- ----------------------------------------------------
NOTE: Use this Worksheet only if you plan to itemize deductions or claim
adjustments to income on your 1993 tax return.
1. Enter an estimate of your 1993 itemized deductions. These
include: qualifying home mortgage interest, charitable
contributions, state and local taxes (but not sales taxes),
medical expenses in excess of 7.5% of your income, and
miscellaneous deductions in excess of 2% of your income. (For
1993, you may have to reduce your itemized deductions if your
<PAGE>
income is over $108,450 ($54,225 if married filing
separately). Get Pub. 919 for details)....................... 1 $___________
2. Enter: $6,200 if married filing jointly or qualifying widow(er)
$5,450 if head of household
$3,700 if single
$3,100 if married filing separately.................. 2 $___________
3. Subtract line 2 from line 1. If line 2 is greater than
line 1, enter -0-............................................ 3 $___________
4. Enter estimate of your 1993 adjustments to income. These
include alimony paid and deductible IRA contributions........ 4 $___________
5. Add lines 3 and 4 and enter the total........................ 5 $___________
6. Enter an estimate of your 1993 income not subject to
withholding (such as dividends or interest income)........... 6 $___________
7. Subtract line 6 from line 5. Enter the result,
but not less than zero....................................... 7 $___________
8. Divide the amount on line 7 by $2,500 and enter the result
here. Drop any fraction..................................... 8 ____________
9. Enter the number from Personal Allowances Worksheet,
line F, on page 1............................................ 9 ____________
10. Add lines 8 and 9 and enter the total here. If you plan to use the
Multiple Pensions/More Than One Income Worksheet, also enter this total on
line 1 below. Otherwise stop here and enter this total on Form W-4P, line
2, on page 1.........10 ____________
- ----------------------------------------------------
Multiple Pensions/More Than One Income Worksheet
- ----------------------------------------------------
NOTE: Use this Worksheet only if the instructions under line F on page 1
direct you here. This applies if you (and your spouse if married filing a
joint return) have more than one source of income subject to withholding
(such as more than one pension, or a pension and a job, or you have a
pension and your spouse works).
1. Enter the number from line F on page 1 (or from line 10
above if you used the Deductions and Adjustments Worksheet).. 1 ____________
2. Find the number in Table 1 below that applies to the
<PAGE>
LOWEST paying pension or job and enter it here............... 2 ____________
3. If line 1 is GREATER THAN OR EQUAL TO line 2, subtract line 2
from line 1. Enter the result here (if zero, enter -0-) and on
Form W-4P, line 2, page 1. Do not use the result of this
worksheet.................................................... 3 ____________
4. If line 1 is LESS THAN line 2, enter -0- on Form W-4P,
line 2, page 1, and enter the number from line 2 of this
worksheet here............................................... 4 ____________
5. Enter the number from line 1 of this worksheet............... 5 ____________
6. Subtract line 5 from line 4 and enter the result here........ 6 ____________
7. Find the amount in Table 2 below that applies to the HIGHEST
paying pension or job and enter it here...................... 7 $___________
8. Multiply line 7 by line 6 and enter the result here.......... 8 $___________
9. Divide line 8 by the number of pay periods in each year. (For
example, divide by 12 if you are paid every month.) Enter the
result here and on Form W-4P, line 3, page 1. This is the
additional amount to be withheld from each payment........... 9 $___________
- --------------------------------------------------------------------------------
------------------------------------------------------------------
Table 1: Multiple Pensions/More Than One Income Worksheet
--------------------------------------------------------------------
Married Filing Jointly All Others
--------------------------------------------------------------------
If amounts from Enter on If amounts from Enter on
LOWEST paying line 2 above LOWEST paying line 2 above
pension or job pension or job
is -- is --
--------------------------------------------------------------------
0 - $3,000......... 0 0 - $6,000.........0
3,001 - 8,000......... 1 6,001 - 11,000.........1
8,001 - 13,000......... 2 11,001 - 15,000.........2
13,001 - 18,000......... 3 15,001 - 19,000.........3
18,001 - 22,000......... 4 19,001 - 24,000.........4
22,001 - 27,000......... 5 24,001 - 50,000.........5
27,001 - 31,000......... 6 50,001 and over.........6
31,001 - 35,000......... 7
35,001 - 40,000......... 8
40,001 - 60,000......... 9
<PAGE>
60,001 - 85,000.........10
85,001 and over.........11
---------------------------------------------------------------------
Table 2: Multiple Pensions/More Than One Income Worksheet
---------------------------------------------------------------------
Married Filing Jointly All Others
---------------------------------------------------------------------
If amounts from Enter on If amounts from Enter on
HIGHEST paying line 7 above HIGHEST paying line 7 above
pension or job pension or job
is -- is --
---------------------------------------------------------------------
0 - $50,000....$ 350 0 - $30,000.....$ 350
50,001 - 100,000.... 660 30,001 - 60,000..... 650
100,001 and over..... 730 60,001 and over...... 730
---------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Form W-4P (1993) Page 3
- --------------------------------------------------------------------------------
Paperwork Reduction Act Notice.--We ask for the information on this form to
carry out the Internal Revenue laws of the United States. The Internal Revenue
Code requires this information under sections 3405 and 6109 and their
regulations. Failure to provide this information may result in inaccurate
withholding on your payment(s).
The time needed to complete this form will vary depending on individual
circumstances. The estimated average time is:
Recordkeeping. . . . . . . . . . . . . . . . . . . . 40 min.
Learning about the law or the form . . . . . . . . . 20 min.
Preparing the form . . . . . . . . . . . . . . . . . 49 min.
If you have comments concerning the accuracy of these time estimates or
suggestions for making this form more simple, we would be happy to hear
from you. You can write to both the Internal Revenue Service, Washington,
DC 20224, Attention: IRS Reports Clearance Officer, T:FP, and the Office of
Management and Budget, Paperwork Reduction Project (1545-0415), Washington,
DC 20503. DO NOT send the tax form to either of these offices. Instead,
give it to your payer.
- --------------------------------------------------------------------------------
Changes for 1993
<PAGE>
Beginning on January 1, 1993, you will no longer have the option of
claiming exemption from withholding for eligible rollover distributions
from qualified pension or annuity plans (e.g., 401(k) pension plans) or tax
sheltered annuity plans. See Pub. 505 for more details. Plan payers will be
required to withhold 20% from all such distributions from qualified pension
or tax sheltered annuity plans.
Exception: The only way to avoid this 20% withholding is to have the plan
administrator transfer your distribution amount to an IRA or qualified
pension or annuity plan in a direct rollover. See Pub. 505 for more
information on how to make a direct rollover.
If you receive an eligible rollover distribution and roll over the entire
amount within 60 days, it will not be taxable. However, because the plan
payer must withhold 20% of the distribution, you would have to add this 20%
from your own funds to the amount you received to roll over the entire
amount of the distribution. For example, if you had a $100,000 eligible
rollover distribution, the plan administrator would withhold $20,000 and
you would receive $80,000. To roll over the entire $100,000 distribution,
you would have to reinvest the $80,000 you received plus $20,000 from your
own funds in an IRA or qualified pension plan within 60 days. You would
recover the withheld $20,000 when you file your next tax return.
If you rolled over only the amount received from the distribution, the
remaining 20% ($20,000 in the above example) would be taxable. In addition,
you would be liable for an additional 10% excise tax on the taxable amount
if you are under age 59 1/2.
Withholding From Pensions and Annuities
Generally, withholding applies to payments made from pension, profit-sharing,
stock bonus, annuity, and certain deferred compensation plans; from individual
retirement arrangements (IRAs); and from commercial annuities. The method and
rate of withholding depends upon the kind of payment you receive.
Periodic payments from all of the items above are treated as wages for the
purpose of withholding. A periodic payment is one that is includable in
your income for tax purposes and that you receive in installments at
regular intervals over a period of more than 1 full year from the starting
date of the pension or annuity. The intervals can be annual, quarterly,
monthly, etc.
You can use Form W-4P to change the amount of tax to be withheld by using
lines 2 and 3 of the form or to exempt the payments from withholding by
using line 1 of the form. This exemption from withholding does not apply
<PAGE>
to certain recipients who have payments delivered outside the United States
or its possessions. See Exemption From Income Tax Withholding later.
Caution: Remember that there are penalties for not paying enough tax during
the year, either through withholding or estimated tax payments. New
retirees, especially, should see Pub. 505. It explains the estimated tax
requirements and penalties in detail. You may be able to avoid quarterly
estimated tax payments by having enough tax withheld from your pension or
annuity using Form W-4P.
Unless you tell your payer otherwise, tax must be withheld on periodic
payments if your pension or annuity is more than $1,104 a month (or $13,250
a year).
There are some kinds of periodic payments for which you cannot use Form
W-4P since they are already defined as wages subject to income tax
withholding. Retirement pay for service in the Armed Forces of the United
States generally falls into this category. Certain nonqualified deferred
compensation plans and state and local deferred compensation plans
described in section 457 also fall into this category. Your payer should be
able to tell you whether Form W-4P will apply. Social security payments are
not subject to withholding but may be includable in income.
For periodic payments, your certificate stays in effect until you change or
revoke it. Your payer must notify you each year of your right to elect to
have no tax withheld or to revoke your election.
Nonperiodic payments will have income tax withheld at a flat 10% rate
unless the payment is an eligible rollover distribution. Tax will be withheld
from an eligible rollover distribution at a flat 20% rate, unless the entire
distribution is transferred by the plan administrator in a direct rollover
to an IRA or qualified pension plan. (See the Changes for 1993 section above
for more details.)
Distributions from an IRA that are payable on demand are treated as
nonperiodic payments. You can elect to have no income tax withheld from a
nonperiodic payment, except for an eligible rollover distribution as
discussed above, by filing Form W-4P with the payer and checking the box on
line 1. Generally, your election to have not tax withheld will apply to any
later payment from the same plan. You cannot use line 2 to change the way
tax is withheld. But you may use line 3 to specify that an additional
amount be withheld.
Exemption From Income Tax Withholding
<PAGE>
The election to be exempt from income tax withholding does not apply to any
periodic payment or nonperiodic distribution that is delivered outside the
United States or its possessions to a U.S. citizen or resident alien.
Other recipients who have these payments delivered outside the United
States or its possessions can elect exemption only if an individual
certifies to the payer that the individual is not: (1) a U.S. citizen or
resident alien or (2) an individual to whom section 877 of the Internal
Revenue Code applies (concerning expatriation to avoid tax). The
certification must be made in a statement to the payer under the penalties
of perjury. A nonresident alien who elects exemption from withholding under
section 3405 is subject to withholding under section 1441.
Revoking the Exemption From Withholding
If you want to revoke your previously filed exemption from withholding for
periodic payments, file another Form W-4P with the payer. If you want tax
withheld at the rate set by law, write "Revoked" by the checkbox on line 1
of the form. If you want tax withheld at any different rate, complete line
2 on the form.
If you want to revoke your previously filed exemption for nonperiodic
payments, write "Revoked" by the checkbox on line 1 and file Form W-4P with
the payer.
Statement of Income Tax Withheld From Your Pension or Annuity
By January 31 of next year, you will receive a statement from your payer
showing the total amount of your pension or annuity payments and the total
income tax withheld during the year.
<PAGE>
[Insert Name of Plan]
Beneficiary Designation
Retain this designation in your own files.
DO NOT send to Columbia Trust Co.
- -------------------------------------------------
- -----------------------------------
employees Name (last, first, middle) Social Security Number
Birth Date:
----------------------
Marital Status: Married Single Divorced Widowed
--- --- --- ---
Beneficiary Designation
I. PRIMARY
% (Paid
Equally
Unless
Otherwise
Last Name, First Name, Middle Relationship Noted)
------------------------------------- ----------------------
----------
------------------------------------- ----------------------
----------
------------------------------------- ----------------------
----------
------------------------------------- ----------------------
----------
II. CONTINGENT
If all of the above beneficiaries are not living, then pay:
% (Paid
Equally
Unless
Otherwise
<PAGE>
Last Name, First Name, Middle Relationship Noted)
------------------------------------- ----------------------
----------
------------------------------------- ----------------------
----------
------------------------------------- ----------------------
----------
------------------------------------- ----------------------
----------
Note: If more than one primary beneficiary is named and a primary beneficiary
dies before payment is made, the amounts designated for the deceased primary
beneficiary will be reallocated to the other primary beneficiaries (in
accordance with the indicated proportions). Similar rules apply for contingent
beneficiaries.
The foregoing designation is effective upon receipt by the Plan Administrator
and revokes any and all previous designations made by the employee. The Plan
Administrator is authorized to act under this Beneficiary Designation unless it
is revoked or changed by the employee in writing.
-------------------------------------
--------------------------------------
Witness Employee
[In the event the employee designates someone other than his or her spouse, the
following Consent of Spouse must be completed by the employees spouse.]
Consent of Spouse
I, __________________________________________, spouse of
_______________________________________, in accordance with section 417 of the
Internal Revenue Code, do hereby consent to this Beneficiary Designation.
The effect of the foregoing consent is to pay my spouse's vested benefits under
the Plan, which may be substantial, to persons other than myself.
<PAGE>
-------------------------------------
[Signature of] Spouse
The foregoing Beneficiary Designation and Consent of Spouse were signed in my
presence.
-------------------------------------
Plan Administrator
Dated:
---------------------
[If not so witnessed, the following notarization must be executed]
)
) ss
)
I, _____________________________________, a notary public in and for the
jurisdiction above named, do hereby certify that
_____________________________________ did personally appear before me and did
acknowledge that he/she executed the foregoing Consent of Spouse as his/her free
act and deed.
Subscribed and sworn to before me this __________ day of
__________________________, 19______.
-------------------------------------
Notary Public
My Commission
Expires:
------------------------
Receipt of this Beneficiary Designation is hereby acknowledged.
<PAGE>
-------------------------------------
Plan Administrator
Dated:
-------------------------
Notice of Pre-Retirement Survivor Annuity
As a married participant in the [NAME OF PLAN], if you die before commencing
distributions from your account, your entire account will be used to purchase a
qualified survivor annuity for your spouse, which will be distributed in monthly
installments over his or her lifetime.
You may elect to waive the requirement that your spouse receive a survivor
annuity during any Plan year in which you are at least age 35. However, your
spouse must consent in writing to this waiver before a Plan representative or
notary public.
You may also elect to waive the requirement that your spouse be your primary
beneficiary during any Plan year in which you are at least age 35. Again, your
spouse must consent to this waiver in writing before a Plan representative or
notary public. If you do elect to waive both the survivor annuity and the
designation of your spouse as beneficiary, and your spouse has consented in
writing, you may designate any beneficiary as the recipient of your account
balance.
You may revoke your waiver at any time before your death and make a new
election. Should you choose to make an election change, or should you have a
change in marital status, notify the Plan Administrator promptly.
Explanation of Joint and Survivor Annuity
As a married participant in this Plan, your benefit will be paid to you in the
form of a joint and survivor annuity. A joint and survivor annuity provides a
benefit to you over your lifetime, and a benefit to your surviving spouse over
that spouse's lifetime equal to [INSERT JOINT AND SURVIVOR PERCENTAGE (WILL BE
50 PERCENT IF LEFT BLANK)] of the benefit you received or would have received.
The total of the annuity payments to both you and your surviving spouse will be
the actuarial equivalent of the amount in your account at the time you first
receive your distribution. This means that the monthly payments you and your
spouse receive will be less than the monthly payments you would receive if
payments were made only during your lifetime.
You may opt out of this form of distribution by electing one of the other forms
of distribution permitted by this Plan during the 90-day period ending on the
date your distribution begins. If you want to opt out of the joint and survivor
annuity, or wish to have
<PAGE>
the benefit after your death paid to someone other than your spouse, you must
receive the consent of your spouse in writing in order for the change to be
effective.
If you elect out of the joint and survivor annuity, you and your spouse will no
longer receive a guaranteed level of benefits over your joint lifetimes.
Depending on the form of distribution you do select, your spouse may receive no
benefit at all in the event of your death.
Any election that you make may be revoked at any time before you begin to
receive payments. If you want to change your election, please notify the Plan
Administrator promptly.
You can request from the Plan Administrator a written explanation of the
financial effect upon the monthly benefits payable to you of any election you
and your spouse wish to make. The explanation will show the dollar effect of
different elections you and your spouse might wish to make. Your request must
be submitted to the Plan Administrator in writing. No more than one request may
be made in any calendar year.
Specific Information About
Joint and Survivor Annuity
As a married participant in the [INSERT NAME OF PLAN], you are entitled to
receive a retirement benefit equal to the amount contained in your account.
Unless you elect otherwise, and your spouse consents in writing, this benefit
will be distributed in the form of a joint and survivor annuity.
A joint and survivor annuity will provide you with a periodic benefit over your
lifetime, and a periodic benefit over your spouse's lifetime equal to [INSERT
JOINT AND SURVIVOR PERCENTAGE] of the benefit you received or would have
received. The total of the annuity payments to both you and your surviving
spouse is calculated so as to equal the amount you would receive were the
benefit paid over your lifetime only. This results in periodic joint and
survivor benefit payments that are smaller than you would receive were payments
made over your lifetime only.
You currently have a vested account balance of [INSERT PARTICIPANTS VESTED
ACCOUNT BALANCE]. If this vested account balance were distributed to you today
in the form of a joint and survivor annuity, you would receive [INSERT FREQUENCY
OF PAYMENT] payments of [INSERT AMOUNT OF PARTICIPANTS ANNUITY] over your
lifetime. In the event of your death, your spouse would receive [INSERT
FREQUENCY OF PAYMENT] payments of [INSERT AMOUNT OF SURVIVORS ANNUITY] over that
SPOUSE'S lifetime.
If you were to elect to receive a single life annuity, and your spouse consented
to that election in writing, you would receive [INSERT FREQUENCY OF PAYMENT]
payments of [INSERT AMOUNT OF PARTICIPANTS ANNUITY] over your lifetime, but your
spouse would receive no further benefits in the event of your death.
The actual payments you would receive from an annuity would depend on your
vested account balance at the time you begin distributions, and the current
rates being charged for annuity contracts.
<PAGE>
If you wish to elect a form of distribution other than a joint and survivor
annuity, you should use the form Distribution Election Form for Married
participants
Waiver of Pre-Retirement Survivor Annuity
I, _________________________________________, a participant in the [fill in name
of plan] (the "Plan"), am married. With the consent of my spouse,
_________________________________________, I hereby elect to waive the right of
my spouse to receive a preretirement survivor annuity in the event I die before
my annuity starting date. This annuity would have entitled my surviving spouse
to an annuity for the remainder of his/her life, the actuarial equivalent of
which is not less than fifty percent (50%) of my account on the date of my
death.
The foregoing election is effective upon receipt by the Plan administrator and
revokes any and all previous elections made by me concerning the preretirement
survivor annuity. The Plan administrator is authorized to act under this
election unless it is revoked by me in writing at any time prior to my death.
Such revocation of consent must be in writing on a form obtained from and
submitted to the Plan administrator.
- -------------------------------- ---------------------------------
Witness Participant
Dated:
----------------------
CONSENT OF SPOUSE
I, __________________________________________________, spouse of
_________________________________________, in accordance with section 417 of the
Internal Revenue Code, hereby consent to the Waiver of Preretirement Survivor
Annuity by my spouse and acknowledge that with this consent I forfeit my right
to receive an annuity for the remainder of my life in the event my spouse dies
before his/her retirement benefits commence. Such annuity would have been equal
to my spouse's benefit (actuarially adjusted) on the date of his/her death. I
understand that my consent to this Waiver of Preretirement Survivor Annuity may
be revoked by me at any time before my spouse's death. The effect of such
revocation will be to restore my right to receive a preretirement survivor
annuity in the event my spouse dies before his/her annuity starting date.
Dated:
------------------- ---------------------------------
Spouse of Participant
The foregoing Waiver of Preretirement Survivor Annuity and Consent of Spouse
were signed in my presence.
Dated:
-------------------- ---------------------------------
<PAGE>
Plan Administrator
If not so witnessed, the following notarization must be executed.
)
) ss
)
I, _________________________________________, a notary public in and for the
jurisdiction above named, do hereby certify that
_________________________________________ did personally appear before me and
did acknowledge that he/she executed the foregoing Consent of Spouse as her/her
free act and deed.
Subscribed and sworn to before me this _____________ day of ______________,
19________.
---------------------------------
Notary Public
My Commission Expires:
--------------------
Receipt of this Waiver of Preretirement Survivor Annuity is hereby acknowledged.
Dated:
-------------------- ---------------------------------
Plan Administrator
<PAGE>
[LOGO] The Columbia Retirement Plan
ADOPTION AGREEMENTS
ADOPTION AGREEMENTS
ADOPTION AGREEMENTS
ADOPTION AGREEMENTS
- ----------------------------------------------------------------
Questions? Call 1-800-547-1707; in Portland 222-3606
<PAGE>
PROVISION - BY - PROVISION
Explanation and Instructions for Completing the Adoption Agreement
The Employer should consult with a tax advisor or attorney before completing an
Adoption Agreement. The consultation is advised because adopting a retirement
plan has substantial financial and legal consequences. Establishing a plan
imposes contribution obligations on the Employer and subjects the Employer to
additional tax laws. In addition, the Employer assumes new administrative
responsibilities and fiduciary obligations. These consequences should be known
and carefully assessed with professional tax or legal assistance before deciding
to adopt any retirement plan.
Completing the Adoption Agreements
Each Adoption Agreement (the Money Purchase Pension Plan and the Profit Sharing
Plan) must be fully completed, even if you have no employees. Consider yourself
the employee when completing the agreements.
If you are transferring assets from another plan, your Columbia plan is an
amendment to your existing plan. List that information in the Employer Data
section of the agreements. See also Procedures for Transferring Assets Between
Trusts in this packet.
A set-up fee of $100.00 must accompany your agreements. Columbia also charges
an annual maintenance fee of $50.00. Your first year's maintenance fee should
accompany any contributions or transfer of assets from another plan.
Detailed instructions for completing the Adoption Agreements are contained in
the Provision-by-Provision Explanation and Instructions and in the Money
Purchase Pension and Profit Sharing Plan Basic Document.
Employer Data
(Section II of Adoption Agreements)
Name of Employer. The name and employer identification number (EIN) of the
Employer should include the names and EINs of all Affiliated Employers. If
there are a number of Affiliated Employers, their names and EINs can be listed
on an attachment to the Adoption Agreement and all the Affiliated Employers
should execute the Adoption Agreement. Failure to list all Affiliated Employers
can jeopardize the tax-qualified status of the plan. Examples of an Affiliated
Employer are:
1. A corporation or unincorporated business that owns 80 percent or more of
the Employer.
2. A corporation or unincorporated business that is 80 percent or more owned
by the Employer.
3. Certain businesses that perform services for or with the Employer and that
are owned in part by the Employer.
4. Certain businesses that are owned in part by the Employer and for which the
Employer provides services.
Amendment to Existing Plan. The sponsor may impose reasonable investment
limitations on the Employer regarding the type of investments selected for the
trust or the minimum percentage of trust assets that must be invested in mutual
funds. If the adoption of a
<PAGE>
prototype plan constitutes an amendment to an existing plan, it may be necessary
to change the existing investments to conform to these limitations.
Eligibility
(Section III of Adoption Agreements)
The eligibility provisions of a plan govern which employees participate in a
plan and the date on which an employee begins to participate in the plan. An
employee can be required to complete both age and service requirements before
participation begins.
The eligibility provisions interact with the vesting provisions. If the
Employer chooses to require only one Year of Service for eligibility, then
participants may gradually vest over a period of years, according to one of the
vesting schedules in Section VIII of the Adoption Agreement. If, however, the
Employer chooses to require more than one Year of Service for eligibility, the
participants must be fully and immediately vested when participation in the
plan(s) commences.
Years of Service. The Employer may require an employee to complete one or more,
up to two, Years of Service with the Employer (including Affiliated Employers).
Alternatively, the Employer may permit immediate participation without any
service requirement. A Year of Service is a 12-month period of employment
during which an employee must complete at least 1,000 Hours of Service, unless
the Employer chooses a lesser number of hours. If the Employer does not
maintain records that make it possible to determine an employee's Hours of
Service, the Employer must use an Equivalency Method that will credit an
employee with a specified number of Hours of Service based upon designated
periods of service. See CREDITED SERVICE herein.
Age. The Employer may require an employee to reach a specified age, up to 21
years of age, to be eligible to participate in the plan. However, the Employer
may permit immediate participation upon employment or upon completion of stated
service requirements without any age requirement.
Coverage. All employees of the Employer and of Affiliated Employers must be
eligible to participate. The only employees that may be excluded are union
employees who have bargained in good faith with the Employer for retirement
benefits, and nonDresident alien employees.
Credited Service
(Section IV of Adoption Agreements)
Hours of Service. Under the plan(s), a Year of Service requires 1,000 Hours of
Service, unless the Employer designates otherwise. The Employer is permitted to
reduce the number of required hours. The Employer is not permitted, however, to
change the method of counting Hours of Service. Under the plan(s), one Hour of
Service is counted for each hour for which an employee is paid or entitled to be
paid for work, vacation, holiday, illness, incapacity, maternity or paternity
leave, layoff, jury duty, military duty, or leave of absence. However, no more
than 501 Hours of Service will be credited on account of any period during which
no duties are performed by the employee.
Equivalency Methods. The Employer must designate how Hours of Service will be
determined. If the Employer has records of actual hours for which an employee
is paid or entitled to payment, the Employer can use actual hours to determine
Hours of Service. If the
<PAGE>
Employer does not wish to use this method, or does not have the necessary
records, the Employer should choose an alternate method based on days, weeks,
semi-monthly payroll periods, or months worked. If no Equivalency Method is
indicated, the Employer will be deemed to use actual hours and must keep
appropriate records.
Note: If the plans are an amendment to a prior plan that used the elapsed time
method of calculating service, the plans provide special rules for converting
elapsed time service to Years of Service and Hours of Service. These rules
count Hours of Service for partial periods on the basis of the weekly method,
under which employees are credited with 45 Hours of Service for each week in
which they perform one Hour of Service.
Service with Predecessor Employer. Generally, the Employer has the discretion
as to whether to count hours worked for a predecessor employer. For example, if
a business is sold, the new employer may count hours worked by employees for the
old business under the prototype plan. If, however, the adoption of a prototype
plan is a continuation of a Predecessor Plan or a successor plan to a
Predecessor Plan, then hours counted under the Predecessor Plan must be counted
under the prototype plan. For example, if a partnership maintained a Keogh plan
before it incorporated, and adopts a prototype plan after it incorporates, the
hours counted under the Keogh plan must be counted under the corporate plan.
Compensation
(Section V of Adoption Agreements)
Definition of Compensation. Generally, Compensation under the plan means all of
the employee's W-2 earnings. The Employer may elect, however, in the Adoption
Agreements, to expand the definition to include amounts contributed pursuant to
a salary reduction agreement, such as contributions to a cafeteria plan under
section 125 of the Code or a tax-deferred annuity under section 403(b) of the
Code.
Contributions
and Allocations
(Section VI and VII of Profit Sharing
Adoption Agreement; Section VI of Money Purchase Pension Adoption Agreement)
The contribution formulas to be chosen by the Employer are different in the
Adoption Agreement for the profit sharing plan from those in the Adoption
Agreement for the money purchase pension plan. The difference is due in part to
the fact that contributions are required to be a fixed percentage under the
money purchase pension plan whereas contributions may be discretionary under the
profit sharing plan. The difference is also attributable to the effect of
Social Security Integration on the contribution formulas. If only one of the
prototype plans is adopted, the Employer can choose whether or not to use Social
Security Integration. If both of the prototype plans are adopted, however, the
Employer can use Social Security Integration with only one plan. The Employer
may choose to use Social Security Integration with either plan.
When Social Security Integration is used, the employer's contributions are
adjusted to take into account the Employer's Social Security contribution for
old age and disability benefits for an employee. Employers considering
integration of their plans should consult with a tax advisor.
<PAGE>
Profit Sharing Plan Formulas: Employer Contributions. Employer contributions
can be completely or partially discretionary. That is, the amount can be
determined on an ad hoc basis by the Employer each year. If the Employer wants
a completely discretionary contribution formula, the Employer should check
itemEA.1. under Section VI or designate zero percent. If the Employer wants to
make a regular contribution, the Employer should specify the percentage of
compensation to be contributed (up to 15 percent) on itemEA.2. under Section VI
or insert the percentage of compensation in itemEA.1. under Section VI. The
Employer can then make additional contributions (up to 15 percent total) at its
discretion. If the profit sharing plan is to be integrated with Social
Security, the integration formula will be designated in Section VII,
Allocations.
Profit Sharing Allocation Formula. If the plan does not use Social Security
Integration, check itemEA.1. under Section VII. Check itemEA.2. if the plan
uses Social Security Integration. The plan's integration level may be set at
the Social Security taxable wage base, at a dollar amount below the Social
Security taxable wage base or at a specified percentage of the Social Security
taxable wage base. If the Employer allows the integration level to vary with
changes in the Social Security Act, the level of compensation required in order
to receive plan contributions will generally increase.
Money Purchase Plan Formulas: Employer Contributions. If the money purchase
contribution formula is not integrated with Social Security, check itemEA.1.
under Section VI and specify a contribution percentage between one percent and
25 percent.
If the money purchase contribution formula uses Social Security Integration,
itemEA.2. should be checked. The plan's integration level may be set at the
Social Security taxable wage base, at a dollar amount below the Social Security
taxable wage base, or at a specified percentage of the Social Security taxable
wage base.
If the Employer allows the integration level to vary with changes in the Social
Security Act, the level of compensation required in order to receive plan
contributions will generally increase.
Calculating the Self-Employed contribution
Self-Employed Individuals. The manner in which contributions are determined is
somewhat different if the plan covers self-employed individuals. Under the law,
deductible contributions to the plan on behalf of a self-employed individual
will reduce that self-employed individual's earned income. The deduction is
figured on the self-employed individual's net earnings after taking into
account: (1) the deduction allowed for one-half of the self-employment tax and
(2) the deduction for contributions on behalf of the self-employed person to the
plan.
The adjustment to net earnings in (2) is done indirectly by reducing the
contribution rate to the plan. The Self-Employed Person's Rate Table below can
be used for the reduction:
Self-Employed Person's Rate Table
Column A Column B
If the Plan The Self-Employed
Contribution Person's
Rate is: Rate is:
(shown as a %) (shown as a decimal)
1 ................... .009901
2 ................... .019608
3 ................... .029126
<PAGE>
4 ................... .038462
5 ................... .047619
6 ................... .056604
7 ................... .065421
8 ................... .074074
9 ................... .082569
10 ................... .090909
11 ................... .099099
12 ................... .107143
13 ................... .115044
14 ................... .122807
15 ................... .130435
16 ................... .137931
17 ................... .145299
18 ................... .152542
19 ................... .159664
20 ................... .166667
21 ................... .173554
22 ................... .180328
23 ................... .186992
24 ................... .193548
25 ................... .200000
For example, if the plan contribution rate is 10% and net earnings (after the
adjustment for one-half of the self-employment tax) are $60,000, the deduction
for the self-employed person is $5,454.54 (60,000 X .090909 from Column B
above).
For purposes of calculating the deductible contribution for the combination of a
money purchase pension plan and a profit sharing plan, treat both plans as a
single plan. For example, a maximum plan contribution rate of 25% would be
reduced to 20% (.200000 from Column B above) and applied to the (adjusted) net
earnings of the self-employed individual.
Contribution Eligibility. This provision concerns the contribution for the year
in which an employee terminates employment with the Employer with not more than
500 Hours of Service and is not an employee on the last day of the plan year.
Although the Employer has the discretion as to whether an employee is allocated
a contribution in such a year, not permitting the employee to receive an
allocation may result in discrimination in the operation of the plan in favor of
Key Employees. Such discrimination could cause the plan to lose its qualified
status notwithstanding the plan's favorable opinion letter.
Distributions
(Section VIII of Profit Sharing Adoption Agreement, Section VII of Money
Purchase Pension Adoption Agreement)
Normal Retirement Age. Generally, normal retirement age is 65 years of age.
However, the Employer may choose a different age (item A.1.), or may choose a
combination of age and Years of Service (item A.2.), provided the age does not
exceed 65 and is not less than 55, and no more than 5 Years of Service is
required.
<PAGE>
Early Retirement Date. The Employer has the discretion to allow benefits to be
paid upon a designated early retirement date. The early retirement age must be
at least 55, and no more than 15 years of service can be required.
Optional Features
(Section IX of Profit Sharing Adoption Agreement, Section VIII of Money Purchase
Pension Adoption Agreement)
The optional features permitted under the profit sharing plan differ from those
under the money purchase pension plan. Both plans allow withdrawals of
voluntary employee contributions and loans. However, hardship withdrawals are
only permitted under the profit sharing plan. If the participant is married,
spousal consent is required for all distributions, including hardship
withdrawals and withdrawals of nondeductible voluntary employee contributions.
Hardship Withdrawals. The Employer may allow hardship withdrawals of amounts
contributed by the Employer under the profit sharing plan if the plan is not
integrated with Social Security benefits. This feature is not available if
Section V.II.A.2. is selected.
Loans. The Employer may choose to allow loans to participants to be made from
plan assets, provided the loans meet the requirements specified in the plan(s),
including a reasonable interest rate, adequate security, and a fixed repayment
term. If the loans do not meet these requirements, they may result in plan
disqualification. If loans are permitted, the plan administrator assumes the
additional administrative responsibility of seeing that the loans are repaid in
a timely fashion.
A participant loan will be treated as a distribution to the extent that the sum
of all a participant's loans under all the Employer's qualified plans (taking
into account the highest principal balance of any loan outstanding at any time
during the preceding 12 months) exceeds the lesser of $50,000 or 50 percent of
the participant's vested account balance, unless it is less than $10,000. It
will also be treated as a distribution if it is not repaid within five years.
The plan does not permit loans to Owner-Employees or to Shareholder-Employees in
subchapter S corporations.
Vesting
(Section X of Profit Sharing Adoption Agreement, Section IX of Money Purchase
Pension Adoption Agreement)
Vesting is the rate at which an employee earns a nonforfeitable right to the
Employer contributions allocated to his account. As indicated above with
respect to Year of Service requirements, vesting requirements interact with the
Year of Service options. If an eligibility service requirement in excess of one
Year of Service is selected, you must choose itemEB. If itemED. is chosen and
the vesting schedule exceeds three Years of Service, applicable percentages must
be at least as rapid at all points as the schedule in itemEA.
Investment Choices
(Section XII of Profit Sharing Adoption Agreement, Section X of Money Purchase
Pension Adoption Agreement)
Investment of Trust Assets may be selected only from shares or other investments
offered by the sponsor, Columbia Trust Company.
<PAGE>
Investment Authority
(Section XII of Profit Sharing Adoption Agreement, Section XI of Money Purchase
Pension Adoption Agreement)
The Employer may choose whether plan assets are to be invested according to the
instructions of the Employer, the plan administrator, the participants or some
combination of the above. If participants are to be permitted to direct the
investment of voluntary employee contributions or Employer contributions, items
B.1. or B.2. should be checked.
Allocation Limitations
(Section XIV of Profit Sharing Adoption Agreement, Section XIII of Money
Purchase Pension Adoption Agreement)
This section is applicable only if the Employer maintains or ever maintained
other qualified plans in addition to this prototype plan. If not, section 6.1
of the plan will automatically apply.
Administration
(Section XV of Profit Sharing Adoption Agreement, Section XIV of Money Purchase
Pension Adoption Agreement)
Plan Administrator. The Employer must designate the plan administrator, unless
the Employer is going to be the plan administrator. The plan administrator is
generally responsible for implementing and interpreting the plan; deciding all
questions concerning eligibility, distribution of benefits and loan provisions;
employing investment, legal, or accounting professionals; keeping all records
and filing all administrative reports; furnishing instructions to the plan
trustees; adopting rules and procedures for employee elections and benefit
claims; and collecting all forms and applications from employees.
Named Fiduciaries. The plan administrator is the named fiduciary under the
plan. Additional named fiduciaries also may be designated in the Adoption
Agreement. If any powers or duties under the plan are allocated between the
named fiduciaries or to third parties, they should be specified in itemEC.
The Trustee
(Section XVI of Profit Sharing Adoption Agreement, Section XV of Money Purchase
Pension Adoption Agreement)
Unless the sponsor has designated a trustee, the Employer must designate
individuals or institutions with trust powers to serve as trustees of the plan.
If the Employer wishes to have individuals as trustees, more than one individual
should be chosen. The designated parties must be informed of their fiduciary
obligations regarding the plan and must expressly accept those obligations in
writing.
Employer Signature
(Section XVII of Profit Sharing Adoption Agreement, Section XVI of Money
Purchase Pension Adoption Agreement)
The Employer must execute the Adoption Agreement on the last page. If the
Employer is a corporation, the individual executing the agreement must be a
corporate officer who is duly
<PAGE>
authorized, pursuant to a corporate resolution, to act on behalf of the
corporation. Any Affiliated Employers also should execute the Adoption
Agreement.
<PAGE>
PROFIT SHARING ADOPTION
Agreement for Prototype Paired Defined Contribution #001 Sponsored by Columbia
Trust Company
Introduction
This is the Adoption Agreement for paired defined contribution plan #001 of
basic plan document #01, which is a combined prototype profit sharing/money
purchase pension plan. This Adoption Agreement may be adopted either singly or
in combination with paired defined contribution plan #002, a prototype money
purchase pension plan.
NOTE: Before executing this Adoption Agreement, the Employer should consult
with a tax advisor or attorney. Failure to properly complete this Adoption
Agreement may result in Plan disqualification.
The Employer hereby establishes a profit sharing plan and a trust upon the
respective terms and conditions contained in the prototype paired defined
contribution plan (the Plan) and the Trust Agreement annexed hereto and appoints
as Trustee of such trust the person(s) who have executed this Adoption Agreement
evidencing their acceptance of such appointment. The Plan, the Trust Agreement,
and the Custody Agreement, if applicable, shall be supplemented and modified by
the terms and conditions contained in this Adoption Agreement and shall be
effective on the Effective Date.
The Sponsor will inform the Employer of any amendments made to the Plan or the
discontinuance or abandonment of the Plan.
I. Sponsor Data
Columbia Trust Company
1301 SW 5th P.O. Box 1350
Portland, Oregon 97207
1-800-547-1707; (503) 222-3600
II. Employer Data
A. ___________________________________________
Name of Employer
_____________________________________________
Employer Identification Number
B. ___________________________________________
_____________________________________________
Address
C. ___________________________________________
Telephone Number
<PAGE>
D. ___________________________________________
Employer's Taxable Year End
E. ___________________________________________
Plan Year End
F. The Employer is:
[ ] A corporate entity
[ ] A noncorporate entity
[ ] A corporation electing to be taxed under SubchapterES
G. ___________________________________________
Effective Date (should be first day of a Plan Year)
H. If this is an amendment of an existing plan, complete the following:
_____________________________________________
Effective Date of Amendment (should be first day of a Plan Year)
_____________________________________________
Name of Prior Plan
_____________________________________________
Effective Date of Prior Plan
I. _____________________________________________
Limitation Year, if different from E., above
III. Eligibility
A. Employees shall be eligible to participate in the Plan upon completion of
the eligibility requirements (complete E1 and E2) (Plan section 3.1):
1. Years of Service. The Employee must complete (check one box):
[ ] One Year of Service.
[ ] _______ Years of Service. (You can require less than or more than one
Year of Service, but not more than two (2). If you select more than one Year of
Service, the Employee must be 100% vested once he becomes eligible, and you must
select vesting schedule EB in section X of this Adoption Agreement. If the Year
of Service is or includes a fractional year, an Employee will not be required to
complete any specified number of Hours of Service (section IV, A of this
Adoption Agreement) to receive credit for such fractional year.
2. Age. The Employee must attain age ______ (not greater than age 21).
B. The following Employees will not be eligible to participate in the Plan
(Plan section 3.1):
[ ] Union Employees. Employees included in a unit of employees covered by a
collective bargaining agreement between the Employer and Employee
representatives (as defined in section 3.1(b)(i) of the Plan), if retirement
benefits were the subject of good faith bargaining.
[ ] Nonresident Aliens. Employees who are nonresident aliens and who receive
no earned income from the Employer which constitutes income from sources within
the United States.
For purposes of this section III, the term Employee includes all employees
of this Employer or any employer aggregated with this Employer under sections
414(b), (c) or (m) or
<PAGE>
(o) of the Code and individuals who are Leased Employees required to be
considered Employees of any such employer under section 414(n) or (o) of the
Code.
IV. Credited Service
A. The Plan provides that a Year of Service requires at least 1,000 hours
during any Plan Year. If a lower number of hours is desired, state the number
here: ________ (Plan section 2.42).
B. The Plan permits Hours of Service to be determined by the use of service
equivalencies under one of the methods selected below (choose one method) (Plan
section 2.19):
[ ] On the basis of actual hours for which an Employee is paid or entitled to
payment.
[ ] On the basis of days worked. An Employee will be credited with ten (10)
Hours of Service if under section 2.19 of the Plan such Employee would be
credited with at least one (1) Hour of Service during the day.
[ ] On the basis of weeks worked. An Employee will be credited with forty-
five (45) Hours of Service if under section 2.19 of the Plan such Employee would
be credited with at least one (1) Hour of Service during the week.
[ ] On the basis of semimonthly payroll periods. An Employee will be credited
with ninety-five (95) Hours of Service if under section 2.19 of the Plan such
Employee would be credited with at least one (1) Hour of Service during the
semimonthly payroll period.
- - or -
[ ] On the basis of months worked. An Employee will be credited with one
hundred ninety (190) Hours of Service if under section 2.19 of the Plan such
Employee would be credited with at least one (1) Hour of Service during the
month.
C. Service with a predecessor employer (check one box) (Plan sections 3.3 and
8.5):
[ ] No credit will be given for service with a predecessor employer.
- - or -
[ ] Credit will be given for service with the following predecessor
employer(s):
__________________________________________
__________________________________________
NOTE: The Plan provides that if this is a continuation of a predecessor
plan, service under the predecessor plan must be counted.
V. Compensation
A. Compensation (check one box) (Plan section 2.7):
[ ] shall include
- - or -
[ ] shall not include
Employer Contributions made pursuant to a salary reduction agreement which
are not includable in the gross income of the Employee under sections 125,
402(a)(8), 402(h) or 403(b) of the Code.
B. The effective date of the election in A. above shall be
____________________ (but not earlier than the first day of the first Plan Year
beginning after 1986).
VI. Contributions
A. Profit sharing plan formulas (check one box) (Plan section 4.1(b)):
<PAGE>
[ ] Discretionary pursuant to Employer resolution. If no resolution is
adopted, then _______% of Participant's compensation.
- - or -
[ ] ________% of Participant's Compensation, plus discretionary amount, if
any, by Employer resolution.
NOTE: Each of these formulas is subject to maximum limitations on
contributions as provided in the Plan and the Internal Revenue Code. In no
event may the Employer Contribution exceed 15% of the aggregate compensation of
all Participants for the year, plus up to 10% credit carryover in certain
circumstances. Additional limitations are included in the Plan where the
Employer also has another qualified retirement plan. An individual
Participant's limit on contributions and forfeitures, per year is generally the
lesser of 25% of compensation or $30,000.
VII. Allocation of
Employer Contributions
A. Formula Check one box(Plan section 5.3(b)). NOTE: If you provide for
hardship withdrawals you must use the Nonintegrated Plan.
[ ] Nonintegrated Plan Employer contributions shall be allocated to the
accounts of all eligible Participants prorated upon compensation.
- - or -
[ ] Integrated Plan Employer contributions and forfeitures shall be integrated
with Social Security and allocated in accordance with the provisions of Plan
section 5.3(b). The Plan's Integration Level shall be (check one box):
[ ] Taxable Wage Base. (The maximum amount considered as wages for such year
under section 3121(a)(1) of the Internal Revenue Code (the Social Security
taxable wage base) as of the beginning of the Plan Year).
[ ] $__________ (a dollar amount not to exceed the Taxable Wage Base).
- - or -
[ ] _______% of the Taxable Wage Base (not to exceed 100%).
NOTE: If you maintain any other plan in addition to this Plan, only one
plan may be integrated with Social Security.
B. Contribution Eligibility (Plan section 4.1(c)):
The Plan provides that all Participants will share in Employer
Contributions for the Plan Year, except the following (if elected):
[ ] Participants who terminate employment during the Plan Year with not more
than 500 Hours of Service and who are not Employees as of the last day of the
Plan Year (other than Participants who die, retire or become Totally and
Permanently Disabled).
If a fewer number of hours than 500 is desired, state the number here:
________.
VIII. Distributions
A. Normal Retirement Age is (check one box) (Plan section 2.26):
[ ] The date a Participant reaches age _______ (not more than 65 or less than
55). If no age is indicated, normal retirement age shall be 65.
- - or -
<PAGE>
[ ] The later of age ______ (not more than 65) or the ________ (not more than
5th) anniversary of the day the Participant commenced participation in the Plan.
The participation commencement date is the first day of the first Plan Year in
which the Participant commenced participation in the Plan.
B. Early Retirement (check one box) (Plan section 2.10):
[ ] Early Retirement Date is the first day of the month coincident with or
next following the date upon which a Participant reaches age _______ (not less
than 55) and completes _______ years of service (not more than 15).
- - or -
[ ] Early Retirement will not be permitted under the Plan.
IX. Optional Features
A. Hardship withdrawals (chooseE1 orE2) (Plan section 12.2):
[ ] The Plan permits hardship withdrawals.
- - or -
[ ] The Plan does not permit hardship withdrawals.
NOTE: The Plan may not provide hardship withdrawals if integration with
Social Security is elected in section VII.A.2.
B. Loans (chooseE1 orE2) (Plan ARTICLE 13):
[ ] The Plan permits loans to Participants.
- - or -
[ ] The Plan does not permit loans to Participants.
NOTE: The Plan may not permit loans to Owner-Employees of noncorporate
entities or to Shareholder-Employees of subchapter ES corporations. If Plan
loans are permitted, the Trustee designated in section XVI of this Adoption
Agreement may not be the sponsors designated Trustee.]
X. Vesting
Employer Contributions will become vested if the Participant terminates
employment for any reasons other than retirement, death, or disability pursuant
to the following schedule (check one box) (Plan section 8.3):
[ ] Years of
Service Vested Percentage
1 year 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
[ ] 100% vesting immediately after satisfaction of the eligibility
requirements.
NOTE: If a service requirement greater than one year is chosen for
eligibility in section III.A.1. of this Adoption Agreement, vesting schedule EB
must be chosen.
[ ] 100% vesting after _____ years of service (not to exceed three).
- - or -
[ ] Years of
<PAGE>
Service Vested Percentage
1 year ___%
2 years ___% (not less than 20)
3 years ___% (not less than 40)
4 years ___% (not less than 60)
5 years ___% (not less than 80)
6 years ___% (not less than 100)
XI. Investment Choices
Investment of Trust assets may be selected only from Shares or other investments
offered by the Sponsor.
The Sponsor may impose additional limitations relating to the type of
permissible investments in the Trust (Plan section 7.3).
XII. Investment Authority
Contributions to the Plan shall be invested by the Trustee in accordance with
instructions of the Employer or Plan Administrator except that (check one
box)(Plan section 7.2)
A.[ ] No exceptions; the Employer or Plan Administrator shall make all
investment selections.
B.[ ] Each participant [ ] may, [ ]shall direct that:
1.[ ] Amounts voluntarily contributed by such Participant pursuant to
section 4.3 of the Plan, rollover contributions pursuant to section 4.4 or the
Plan and direct transfers pursuant to section 4.5 of the Plan, if any,
-and/or-
2.[ ] Employer Contributions on the Participant's behalf shall be invested
in specified investments offered by the Sponsor. Participants may make or
change such directions by giving written notice to the Plan Administrator.
Reasonable restrictions may be imposed on this privilege by the Plan
Administrator or the Sponsor for purposes of administrative convenience.
XIII. Top-Heavy Provisions
Participants who are eligible to receive the minimum allocation provided by
section 5.2 of the Plan shall receive a minimum allocation of contributions and
forfeitures under this Plan equal to 3% of Compensation, or if lesser, the
largest percentage of Compensation allocated on behalf of any Key Employee for
the Plan Year.
NOTE: If the Participant also participates in paired defined contribution plan
#002 (the money purchase pension plan), the required minimum allocation must be
made under paired defined contribution plan #002 (the money purchase pension
plan).
XIV. Allocation Limitations
Complete this section only if you maintain another qualified (other than Paired
Plan #002) in which any Participant in this Plan is (or was) a Participant or
could become a Participant. This section must also be completed if the Employer
maintains a welfare benefit fund, as defined in section 419(e) of the Code, or
an individual medical account, as defined in section
<PAGE>
415(I)(2) of the Code, under which amounts are treated as annual additions with
respect to any Participant in this Plan.
A. If the Participant is covered under another qualified defined contribution
plan maintained by the Employer, other than a master or prototype plan (check
one box) (Plan section 6.3):
[ ] The provisions of section 6.2 will apply as if the other plan were a
master or prototype plan.
- - or -
[ ] (On an attachment, provide the method under which the plans will limit
total annual additions to the maximum permissible amount, and will properly
reduce any excess amounts, in a manner that precludes Employer discretion).
B. If the Participant is or has ever been a participant in a defined benefit
plan maintained by the Employer attach an explanation of the method under which
the plan involved will satisfy the 1.0 limitation in a manner that precludes
Employer discretion.
XV. Administration
A. The Plan Administrator of the Plan will be (check one box) (Plan sections
2.30 and 15.4):
[ ] The Trustee
NOTE: If the Trustee designated in section XVI of this Adoption Agreement
is the sponsors designated Trustee, it may not be appointed as Plan
Administrator.
[ ] The Employer
- -or-
[ ] An individual Plan Administrator designated by the Employer:
______________________________________________
Name
______________________________________________
Address
______________________________________________
- - or -
[ ] A committee of two or more Employees designated by the Employer:
______________________________________________
Name & Title
______________________________________________
Signature
______________________________________________
Name & Title
______________________________________________
Signature
______________________________________________
Name & Title
______________________________________________
Signature
<PAGE>
NOTE: If no Plan Administrator has been designated or serving at any
time, the Employer will be deemed the Plan Administrator (Plan section 15.4).
B. The Plan Administrator (including all members of a committee, if a
committee is named) is a Named Fiduciary for the Plan. If other persons are
also to be Named Fiduciaries, their names and addresses are:
Name:_________________________________________
Address:_______________________________________
___________________________________________________
Name:__________________________________________
Address: ______________________________________
__________________________________________________
Name: ________________________________________
Address: ______________________________________
__________________________________________________
C. The Named Fiduciaries have all of the powers set forth in the Plan. If
any powers or duties are to be allocated among them, or delegated to third
parties, indicate below what the powers or duties are and to whom they are to be
delegated (Plan section 15.3):
__________________________________________________
__________________________________________________
__________________________________________________
__________________________________________________
XVI. The Trustee
A. The Employer hereby appoints the following to serve as Trustee (Plan
section 2.39):
Name: ____________________________________________
Address: __________________________________________
___________________________________________________
<PAGE>
____________________________________
(Signature of) Trustee
Dated: ___________________
Name: ________________________________________
Address: ______________________________________
___________________________________________________
____________________________________
(Signature of) Trustee
Dated: ___________________
Name: ________________________________________
Address: ______________________________________
__________________________________________________
____________________________________
(Signature of) Trustee
Dated: ___________________
XVII. Employer Signature
The Employer acknowledges receipt of the current prospectus of the investment
companies designated by the Employer for its initial investments under the Plan
and represents that it has delivered a copy thereof to each Participant in the
Plan, and that it will deliver to each Participant making contributions and each
new Participant, a copy of the then current prospectus of such investment
companies. The Employer further represents that the information in this
Adoption Agreement shall become effective only when approved and countersigned
by the Trustee. The right to reject this Adoption Agreement for any reason is
reserved.
This Adoption Agreement must be used only in conjunction with basic plan
document #01.
NOTE: An Employer who has ever maintained or who later adopts any plan
(including, after December E31, 1985, a welfare benefit fund, as defined in
section 419(e) of the Code, which provides postretirement medical benefits
allocated to separate accounts for Key Employees, as defined in section
419A(d)(3) of the Code, or an individual medical account, as defined in section
415(l)(2) of the Code), in addition to this Plan (other than paired defined
contribution plan #002), may not rely on the opinion letter issued by the
National Office of the Internal
<PAGE>
Revenue Service as evidence that this Plan is qualified under section 401 of the
Internal Revenue Code. If the Employer who adopts or maintains multiple plans
wishes to obtain reliance that the plans are qualified, application for a
determination letter should be made to the appropriate Key District Director of
Internal Revenue.
IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be
executed by its duly authorized officers this _____ day of ______________.
__________________________________
(Name of Employer)
By:__________________________________
(Name & Title)
Date:_________________
<PAGE>
MONEY PURCHASE PENSION
Adoption Agreement for Prototype Paired Defined Contribution Plan #002 Sponsored
by Columbia Trust Company
Introduction
This is the Adoption Agreement for paired defined contribution plan #002 of
basic plan document #01, which is a combined prototype profit sharing/money
purchase pension defined contribution plan. This adoption agreement may be
adopted either singly or in combination with paired defined contribution plan
#001, a prototype profit sharing plan.
NOTE: Before executing this Adoption Agreement, the Employer should consult
with a tax advisor or attorney. Failure to properly complete this Adoption
Agreement may result in Plan disqualification.
The Employer hereby establishes a money purchase pension plan and a trust upon
the respective terms and conditions contained in the prototype paired defined
contribution plan (the Plan) and the Trust Agreement annexed hereto and appoints
as Trustee of such trust the person(s) who have executed this Adoption Agreement
evidencing their acceptance of such appointment. The Plan, the Trust Agreement,
and the Custody Agreement, if applicable, shall be supplemented and modified by
the terms and conditions contained in this Adoption Agreement and shall be
effective on the Effective Date.
The Sponsor will inform the Employer of any amendments made to the Plan or the
discontinuance or abandonment of the Plan.
I. Sponsor Data
Columbia Trust Company
1301 SW 5th P.O. Box 1350
Portland, Oregon 97207
1-800-547-1707; (503) 222-3600
II. Employer Data
A. ___________________________________________
Name of Employer
_____________________________________________
Employer Identification Number
B. ___________________________________________
_____________________________________________
Address
C. ___________________________________________
Telephone Number
D. ___________________________________________
Employer's Taxable Year End
<PAGE>
E. ___________________________________________
Plan Year End
F. The Employer is:
[ ] A corporate entity
[ ] A noncorporate entity
[ ] A corporation electing to be taxed under Subchapter ES
G. ___________________________________________
Effective Date (should be first day of a Plan Year)
H. If this is an amendment of an existing plan, complete the following:
___________________________________________
Effective Date of Amendment (should be first day of a Plan Year)
_____________________________________________
Name of Prior Plan
___________________________________________
Effective Date of Prior Plan
I. ___________________________________________
Limitation Year, if different from E
III. Eligibility
A. Employees shall be eligible to participate in the Plan upon completion of
the eligibility requirements (completeE1 andE2) (Plan section 3.1):
1. Years of Service. The Employee must complete (check one box):
[ ] One Year of Service.
[ ] _______ Years of Service. (You can require less than or more than one Year
of Service, but not more than two (2). If you select more than one Year of
Service, the Employee must be 100% vested once he becomes eligible, and you must
select vesting schedule EB in section IX of this Adoption Agreement. If the
Year of Service is or includes a fractional year, an Employee will not be
required to complete any specified number of Hours of Service (section IV, A of
this Adoption Agreement) to receive credit for such fractional year.
2. Age. The Employee must attain age ______ (not greater than age 21).
B. The following Employees will not be eligible to participate in the Plan
(Check all boxes that apply) (Plan section 3.1):
[ ] Union Employees. Employees included in a unit of employees covered by a
collective bargaining agreement between the Employer and Employee
representatives (as defined in section 3.1(b)(i) of the Plan), if retirement
benefits were the subject of good faith bargaining.
[ ] Nonresident Aliens. Employees who are nonresident aliens and who receive
no earned income from the Employer which constitutes income from sources within
the United States.
For purposes of this section III, the term Employee includes all employees of
this Employer or any employer aggregated with this Employer under sections
414(b), (c), (m) or (o) of the
<PAGE>
Code and individuals who are Leased Employees required to be considered
Employees of any such employer under section 414(n) or (o) of the Code.
IV. Credited Service
A. The Plan provides that a Year of Service requires at least 1,000 hours
during any Plan Year. If a lower number of hours is desired, state the number
here: ______ (Plan section 2.42).
B. The Plan permits Hours of Service to be determined by the use of service
equivalencies under one of the methods selected below (choose one method) (Plan
section 2.19):
[ ] On the basis of actual hours for which an Employee is paid or entitled to
payment.
[ ] On the basis of days worked. An Employee will be credited with ten (10)
Hours of Service if under section 2.19 of the Plan such Employee would be
credited with at least one (1) Hour of Service during the day.
[ ] On the basis of weeks worked. An Employee will be credited with forty-five
(45) Hours of Service if under section 2.19 of the Plan such Employee would be
credited with at least one (1) Hour of Service during the week.
[ ] On the basis of semimonthly payroll periods. An Employee will be credited
with ninety-five (95) Hours of Service if under section 2.19 of the Plan such
Employee would be credited with at least one (1) Hour of Service during the
semimonthly payroll period.
- - or -
[ ] On the basis of months worked. An Employee will be credited with one
hundred ninety (190) Hours of Service if under section 2.19 of the Plan such
Employee would be credited with at least one (1) Hour of Service during the
month.
C. Service with a predecessor employer (check one box) (Plan sections 3.3 and
8.5):
[ ] No credit will be given for service with a predecessor employer.
- - or -
[ ] Credit will be given for service with the following predecessor
employer(s):
______________________________________
______________________________________
NOTE: The Plan provides that if this is a continuation of a predecessor
plan, service under the predecessor plan must be counted.
V. Compensation
A. Compensation (check one box) (Plan section 2.7):
[ ] shall include
- - or -
[ ] shall not include
Employer Contributions made pursuant to a salary reduction agreement which
are not includable in the gross income of the Employee under sections 125,
402(a)(8), 402(h) or 403(b) of the Code.
B. The effective date of the election in A. above shall be
_____________________ (but not earlier than the first day of the first Plan Year
beginning after 1986).
<PAGE>
VI. Contributions
A. Formulas (check one box) (Plan section 4.1(a)):
[ ] Plan not integrated with Social Security
The Employer will contribute _______% of compensation for each Participant
(not less than 3% if the profit sharing Adoption Agreement is also adopted and,
in any event, not more than 25%).
[ ] Integrated Plan The Employer will contribute an amount equal to _______%
(base contribution percentage, not less than E3) of each Participant's
Compensation (as defined in section 2.7 of the Plan) for the Plan Year, up to
the Integration Level plus _______% (not less than 3% and not to exceed the base
contribution percentage by more than the lesser of: (1)The base contribution
percentage, or (2)The Maximum Disparity Rate of such Participant's Compensation
in excess of the Integration Level. (Check one box)
[ ] Taxable Wage Base. (The maximum amount considered as wages for such year
under section 3121(a)(1) of the Internal Revenue Code (the Social Security
taxable wage base) as of the beginning of the Plan Year).
[ ] $_______________ (a dollar amount not to exceed the Taxable Wage Base).
- - or -
[ ] ________% of the Taxable Wage Base (not to exceed 100%).
NOTE: If you maintain any other plan in addition to this Plan, only one plan
may be integrated with Social Security.
B. Forfeitures for a given Plan Year (check one box) (Plan section 5.3(a)):
[ ] Shall be applied to reduce the Employer Contribution in that year, or if in
excess of the Employer Contribution for such Plan Year, the excess amounts shall
be used to reduce the Employer Contribution in the next succeeding Plan Year or
Years.
- - or -
[ ] Shall be added to the Employer Contribution and allocated accordingly.
C. Contribution Eligibility (Plan section 4.1(c)):
The Plan provides that all Participants will share in Employer
Contributions for the Plan Year, except the following (if elected):
[ ] Participants who terminate employment during the Plan Year with not more
than 500 Hours of Service and who are not Employees as of the last day of the
Plan Year (other than Participants who die, retire or become Totally and
Permanently Disabled).
If a fewer number of hours than 500 is desired, state the number here: ________.
VII. Distributions
A. Normal Retirement Age is (check one box) (Plan section 2.26):
[ ] The date a Participant reaches age ______ (not more than 65 or less than
55). If no age is indicated, normal retirement age shall be 65.
- - or -
[ ] The later of age ______ (not more than 65) or the ______ (not more than
5th) anniversary of the day the Participant commenced participation in the Plan.
The participation commencement date is the first day of the first Plan Year in
which the Participant commenced participation in the Plan.
B. Early Retirement (check one box) (Plan section 2.10):
<PAGE>
[ ] Early Retirement Date is the first day of the month coincident with or next
following the date upon which a Participant reaches age ______ (not less than
55) and completes ______ years of service (not more than 15).
- - or -
[ ] Early Retirement will not be permitted under the Plan.
VIII. Optional Features
A. Loans (check one box) (Plan ARTICLE 13):
[ ] The Plan permits loans to Participants.
- - or -
[ ] The Plan does not permit loans to Participants.
NOTE: The Plan may not permit loans to Owner-Employees of noncorporate
entities or to Shareholder-Employees of subchapter ES corporations. If Plan
loans are permitted, the Trustee designated in section XV of this Adoption
Agreement may not be the Sponsor's designated Trustee.
IX. Vesting
Employer Contributions will become vested if the Participant terminates
employment for any reasons other than retirement, death, or disability pursuant
to the following schedule (check one box) Plan section 8.3):
[ ] Years of
Service Vested Percentage
1 year 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
[ ] 100% vesting immediately after satisfaction of the eligibility
requirements.
NOTE: If a service requirement greater than one year is chosen for
eligibility in section III.A.1. of this Adoption Agreement, vesting schedule EB
must be chosen).
[ ] 100% vesting after _______ years of service (not to exceed three).
- - or -
[ ] Years of
Service Vested Percentage
1 year _______%
2 years _______% (not less than 20)
3 years _______% (not less than 40)
4 years _______% (not less than 60)
5 years _______% (not less than 80)
6 years _______% (not less than 100)
X. Investment Choices
Investment of Trust assets may be selected only from Shares or other investments
offered by the Sponsor.
<PAGE>
XI. Investment Authority
Contributions to the Plan shall be invested by the Trustee in accordance with
instructions of the Employer or Plan Administrator except that (check one
box)(Plan section 7.2)
A.[ ] No exceptions; the Employer or Plan Administrator shall make all
investment selections.
B.[ ] Each participant [ ] may, [ ]shall direct that:
1.[ ] Amounts voluntarily contributed by such Participant pursuant to
section 4.3 of the Plan, rollover contributions pursuant to section 4.4 or the
Plan and direct transfers pursuant to section 4.5 of the Plan, if any,
-and/or-
2.[ ] Employer Contributions on the Participant's behalf shall be invested
in specified investments offered by the Sponsor. Participants may make or
change such directions by giving written notice to the Plan Administrator.
Reasonable restrictions may be imposed on this privilege by the Plan
Administrator or the Sponsor for purposes of administrative convenience.
XII. Top-Heavy Provisions
Participants who are eligible to receive the minimum allocation provided by
section 5.2 of the Plan shall receive a minimum contribution under this Plan
equal to 3% of Compensation, or if lesser, the largest percentage of
Compensation allocated on behalf of any Key Employee for the Plan Year under
this Plan and paired defined contribution plan #001.
NOTE: If the Participant also participates in paired defined contribution plan
#001 (the profit sharing plan), the required minimum contribution must be made
under this Plan, even if the integrated plan combination formula is selected.
XIII. Allocation Limitations
Complete this section only if you maintain or ever maintained another qualified
plan (other than Paired Plan #001) in which any Participant in this Plan is (or
was) a Participant or could become a Participant. This section must also be
completed if the Employer maintains a welfare benefit fund, as defined in
section 45(I)(2) of the Code, under which amounts are treated as annual
additions with respect to any Participant in this Plan.
A. If the Participant is covered under another qualified defined contribution
plan maintained by the Employer, other than a master or prototype plan (check
one box) (Plan section 6.3):
[ ] The provisions of section 6.2 will apply as if the other plan were a master
or prototype plan.
- - or -
[ ] (On an attachment, provide the method under which the plans will limit
total annual additions to the maximum permissible amount, and will properly
reduce any excess amounts, in a manner that precludes Employer discretion).
B. If the Participant is or has ever been a participant in a defined benefit
plan maintained by the Employer attach an explanation of the method under which
the plan involved will satisfy the 1.0 limitation in a manner that precludes
Employer discretion.
<PAGE>
XIV. Administration
A. The Plan Administrator of the Plan will be (Check one box) (Plan sections
2.30 and 15.4):
[ ] The Trustee
NOTE: If the Trustee designated in section XV of this Adoption Agreement
is the Sponsor's designated Trustee, it may not be appointed as Plan
Administrator.
[ ] The Employer
[ ] An individual Plan Administrator designated by the Employer
______________________________________
Name
______________________________________
Address
_____________________________________
- - or -
[ ] A committee of two or more Employees designated by the Employer:
_________________________________________
Name & Title
_________________________________________
Signature
_________________________________________
Name & Title
_________________________________________
Signature
_________________________________________
Name & Title
_________________________________________
Signature
NOTE: If no Plan Administrator has been designated or serving at any time,
the Employer will be deemed the Plan Administrator (Plan section 15.4).
B. The Plan Administrator (including all members of a committee, if a
committee is named) is a Named Fiduciary for the Plan. If other persons are
also to be Named Fiduciaries, their names and addresses are:
_____________________________________________
Name
_____________________________________________
Address
_____________________________________________
_____________________________________________
Name
<PAGE>
_____________________________________________
Address
_____________________________________________
_____________________________________________
Name
_____________________________________________
Address
_____________________________________________
C. The Named Fiduciaries have all of the powers set forth in the Plan. If any
powers or duties are to be allocated among them, or delegated to third parties,
indicate below what the powers or duties are and to whom they are to be
delegated (Plan section 15.3):
______________________________________________
______________________________________________
______________________________________________
______________________________________________
XV. The Trustee
The Employer hereby appoints the following to serve as Trustee (Plan section
2.39):
____________________________________________
Name
_____________________________________________
Address
_____________________________________________
____________________________________
(Signature of) Trustee
Dated: ___________________
_____________________________________________
Name
_____________________________________________
Address
_____________________________________________
____________________________________
(Signature of) Trustee
Dated: ___________________
____________________________________________
Name
_____________________________________________
Address
<PAGE>
_____________________________________________
____________________________________
(Signature of) Trustee
Dated: ___________________
XVI. Employer Signature
The Employer acknowledges receipt of the current prospectus of the investment
companies designated by the Employer for its initial investments under the Plan
and represents that it has delivered a copy thereof to each Participant in the
Plan, and that it will deliver to each Participant making contributions and each
new Participant, a copy of the then current prospectus of such investment
companies. The Employer further represents that the information in this
Adoption Agreement shall become effective only when approved and countersigned
by the Trustee. The right to reject this Adoption Agreement for any reason is
reserved.
This Adoption Agreement must be used only in conjunction with basic plan
document #01.
NOTE: An Employer who has ever maintained or who later adopts any plan
(including a welfare benefit fund, as defined in section 419(e) of the Code,
which provides post-retirement medical benefits allocated to separate accounts
for Key Employees, as defined in section 419A(d)(3) of the Code, or an
individual medical account as defined in section 415(l)(2) of the Code), in
addition to this Plan (other than paired plan #001), may not rely on the opinion
letter issued by the National Office of the Internal Revenue Service as evidence
that this Plan is qualified under section 401 of the Internal Revenue Code. If
the Employer who adopts or maintains multiple plans wishes to obtain reliance
that the plans are qualified, application for a determination letter should be
made to the appropriate Key District Director of Internal Revenue.
.
IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be
executed by its duly authorized officers this ______ day of ______________.
__________________________________
(Name of Employer)
By: __________________________________
(Name & Title)
Date: ______________________
<PAGE>
THE COLUMBIA RETIREMENT PLAN
ACCOUNT AGREEMENT
Between:
Employer, and
Columbia Trust Company
an Oregon banking corporation
1301 SW Fifth Avenue
PO Box 1350
Portland, OR 97207 Columbia
Columbia sponsors a Prototype Paired Defined Contribution Plan #001 with
profit-sharing provisions and a Prototype Paired Defined Contribution Plan #002
with money purchase pension provisions. They consist of a common basic plan
document and two adoption agreements, all of which are known collectively as the
Columbia Retirement Plan (the Prototype Plan).
Columbia Sponsors the Prototype Plan as a document under which adopting
employers may establish retirement plans that purchase investments Columbia
designates. Employer wishes to adopt the Prototype Plan to establish such a
retirement plan for its employees. Therefore, the parties agree as follows.
1. Account. Columbia shall open an Account in the name of Employer's
retirement plan. The Account shall be invested in shares of mutual funds
managed by an affiliate of Columbia and in such other investments as are
designated from time to time by Columbia. The Account shall be owned by the
trustee named by Employer in the adoption agreements establishing its plan and
shall be invested in accordance with directions from that trustee or another
fiduciary for Employer's plan. Columbia shall maintain records on the assets
held in the Account and shall provide periodic statements of such assets to
Employer or to the trustee of Employer's plan.
2. Prototype Documents. Columbia shall furnish Employer with the
Prototype Plan documents, including, if Employer is current in paying its fees
owed under section 3 below, any amendments and other updated documents as they
are approved by the Internal Revenue Service. If Employer is delinquent in
paying such fees or if assets are held for Employer's retirement plan outside of
the Account, Employer shall discontinue use of the Prototype Plan.
3. Fees. For the Use of the Prototype Plan and maintenance of the
Account, Columbia shall receive fees as follows. An initial fee of $100 shall
be paid for the opening of the account. In addition, an annual fee of $50 shall
be paid for each whole or partial 12-month period that the Account is open.
Each annual fee shall be due at the commencement of the 12-month period to which
it applies. Employer may pay Columbia's fees. If not so paid by the due date,
Columbia is authorized to remove the amount due from the assets in the Account.
<PAGE>
Columbia may change its fees at any time except that no fee increase shall be
effective before 30 days after written notice of the increase is given to the
Employer by mailing to its regular business office.
4. Limitations on Columbia's Responsibility. Columbia's responsibility
under this Agreement shall be limited to providing reports on the investments of
the Account and providing Employer with documents of the Prototype Plan in the
form approved by the Internal Revenue Service. Columbia shall not be a
fiduciary with respect to Employer's retirement plan. Columbia shall have no
responsibility for the tax treatment of Employer's retirement plan nor for its
compliance with the requirements of the Employee Retirement Income Security Act
of 1974, as amended, including without limitation reporting to governmental
agencies, disclosure to employees and fiduciary responsibility.
5. Termination. Employer or Columbia may terminate this Agreement at
any time on 30-day's advance written notice mailed to the other at its regular
business office. Upon such termination, Columbia shall close the Account and
transfer the assets to, or as directed by, the trustee of Employer's plan.
Employer
By
Date Signed:
Columbia COLUMBIA TRUST COMPANY
By
Date Signed:
<PAGE>
COLUMBIA FUNDS
TELEPHONE EXCHANGE AUTHORIZATION
Completion of this form will allow you to invest in and to make exchanges
between identically registered accounts in Columbia Growth Fund, Inc., Columbia
Daily Income Company, Columbia Fixed Income Securities Fund, Inc., Columbia
Special Fund, Inc., Columbia U.S. Government Securities Fund, Inc., Columbia
Common Stock Fund, Inc., Columbia Balanced Fund, Inc., Columbia International
Stock Fund, Inc., and with any other future eligible fund(s), (The Columbia
Funds).
Account Number(s)
Account Name
TERMS AND CONDITIONS:
Telephone exchange instructions must be received by the Funds before 1:00 PM
Pacific Time for same day redemption. Shares normally will be purchased at the
net asset value next determined after acceptance of the purchase order. Please
call 1-800-547-1707 nationwide, and 222-3606 in the Portland area.
Exchanges must equal or exceed the recipient funds minimum initial or subsequent
investment requirements.
The Columbia Funds may modify or terminate the exchange privilege at any time.
This privilege extends only to those funds currently registered for sale in the
shareholder's state of residence. Not all funds in the Columbia Group are
registered for sale in all states.
The Columbia Funds or transfer agent generally records telephone instructions
and the shareholder(s) expressly authorize such recording.
Columbia Funds and its transfer agent will act upon any telephone instructions
for exchange without checking or verifying in any manner the identity or
authority of the person giving the instructions, but only on condition that all
proceeds are exchanged into another Columbia Fund account or identical
registration.
EXCHANGE AUTHORIZATION AGREEMENT: Must be signed by all currently registered
shareholders.
I (we) have read and agree to the Terms and Conditions outlined above.
I (we) authorize the Columbia Funds and Columbia Trust Company to act upon
instructions by telephone/telegram to exchange shares from any Columbia Funds(s)
with identical registration with any other eligible fund(s) present and future
registered with identical registration, upon instructions by any person(s) by
telephone or telegram.
I (we) agree to be governed by the Terms and Conditions for telephone exchange
as set forth above and in the current Columbia Fund(s) prospectus and that
neither the Trust Company nor the Columbia Funds will be liable for any loss,
expense, or cost arising out of any request, including any fraudulent or
unauthorized request, when acting upon such instructions believed to be genuine.
I (we) have received and read the current prospectus or each Fund in which I
(we) intend to participate through this agreement.
Signature Date Type or print name
Signature Date Type or print name
<PAGE>
[LOGO]
<TABLE>
<CAPTION>
CONTRIBUTION SCHEDULE
Send to: Columbia Trust Company, PO Box 1350, Portland, OR 97207
EMPLOYER CONTRIBUTIONS TRANSFER
Profit Sharing Subaccount Money Purchase Subaccount Transfer subaccount
Account # Amount Funds Account # Amount Funds Amount Funds
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Check here if Participant
is an Owner-Employee
1.
-------------------------- --
Participant's Name
/ /
--------------------- -- -- --
Social Security # BirthDate
2.
-------------------------- --
Participant's Name
/ /
--------------------- -- -- --
Social Security # BirthDate
3.
-------------------------- --
Participant's Name
/ /
--------------------- -- -- --
Social Security # BirthDate
4.
-------------------------- --
Participant's Name
/ /
--------------------- -- -- --
Social Security # BirthDate
5.
-------------------------- --
Participant's Name
/ /
--------------------- -- -- --
Social Security # BirthDate
6.
-------------------------- --
Participant's Name
/ /
--------------------- -- -- --
Social Security # BirthDate
</TABLE>
<PAGE>
Make a separate check payable to each Fund of your choice for investment:
<TABLE>
<S> <C> <C>
Columbia Daily Income Company (CDIC) Columbia Balanced Fund (CBF) Columbia Common Stock Fund (CCSF)
Columbia U.S. Government Securities Fund (CUSG) Columbia Real Estate Fund (CREF) Columbia Growth Fund (CGF)
Columbia Fixed Income Securities Fund (CFIS) Columbia International Stock Fund (CISF)
Columbia High Yield Fund (CHYF) Columbia Special Fund (CSF)
</TABLE>
Make check for Maintenance Charges payable to Columbia Trust Company
Maintenance charges are as follows:
a) $100.00 initial charge for opening the Employer's master account.
(Paid one time only)
b) $50.00 annual fee for maintaining Employer's master account.
Initial charge and first annual fee must accompany Adoption Agreement(s)
<PAGE>
[LOGO] The Columbia Retirement Plan
PLAN & TRUST
PLAN & TRUST
PLAN & TRUST
PLAN & TRUST
- ----------------------------------------------------------------
Questions? Call 1-800-547-1707; in Portland 222-3606
<PAGE>
PROTOTYPE MONEY PURCHASE PENSION AND PROFIT SHARING PLAN BASIC DOCUMENT
ARTICLE 1
General
1.1 Purpose. The Employer hereby establishes this Plan to provide retirement,
death and disability benefits for eligible employees and their Beneficiaries.
This Plan is a standardized prototype paired defined contribution plan and is
designed to permit adoption of profit sharing provisions, money purchase pension
provisions, or both. The provisions herein and the selections made by the
Employer by execution of the money purchase pension or profit sharing Adoption
Agreement or Agreements, shall constitute the Plan. It is intended that the
Plan and Trust qualify under sections 401 and 501 of the Internal Revenue Code
of 1986, as amended and that it comply with the provisions of the Employee
Retirement Income Security Act of 1974, as amended.
1.2 Trust. The Employer has simultaneously adopted a Trust to receive, invest,
and distribute funds in accordance with the Plan.
ARTICLE 2
Definitions
2.1 Account. The aggregate of the individual bookkeeping subaccounts
established for each Participant, as provided in section 5.1.
2.2 Adoption Agreement. The written agreement or agreements of the Employer
and the Trustee by which the Employer establishes this Plan and adopts the Trust
Agreement forming a part hereof, as the same may be amended from time to time.
The Adoption Agreement contains all the options that may be selected by the
Employer. The information set forth in the Adoption Agreement executed by the
Employer shall be deemed to be a part of this Plan as if set forth in full
herein.
2.3 Affiliated Employers. The Employer and any corporation which is a member
of a controlled group of corporations (as defined in section 414(b) of the Code)
which includes the Employer, any trade or business (whether or not incorporated)
which is under common control (as defined in section 414(c) of the Code) with
the Employer, or any service organization (whether or not incorporated) which is
a member of an affiliated service group (as defined in sections 414(m) and (o)
of the Code) which includes the Employer.
2.4 Beneficiary. The person or persons (natural or otherwise) designated by a
Participant in accordance with section 11.6 to receive any undistributed amounts
credited to the Participant's Account under the Plan at the time of the
Participant's death.
2.5 Break in Service. An Eligibility Computation Period or Vesting Computation
Period in which an Employee fails to complete more than five hundred (500) Hours
of Service.
2.6 Code. The Internal Revenue Code of 1986, as amended from time to time, or
any successor statute.
2.7 Compensation.
(a) Compensation will mean all of each Participant's W-2 earnings.
(b) For any self-employed individual covered under the Plan, Compensation will
mean Earned Income.
<PAGE>
(c) Compensation shall include only that Compensation that is actually paid to
the Participant during the Plan Year.
(d) Notwithstanding the above, if elected by the Employer in the Adoption
Agreement, Compensation shall include any amount which is contributed by the
Employer pursuant to a salary reduction agreement and which is not includable in
the gross income of the Employee under sections 125, 402(a)(8), 402(h) or 403(b)
of the Code. The effective date of this subsection shall be elected by the
Employer in the Adoption Agreement.
(e) The annual Compensation of each Participant taken into account under the
Plan for any year shall not exceed two hundred thousand dollars ($200,000), as
adjusted by the Secretary at the same time and in the same manner as under
section 415(d) of the Code. In determining the Compensation of a Participant
for purposes of this limitation, the rules of section 414(q)(6) of the Code
shall apply, except in applying such rules, the term family shall include only
the Spouse of the Participant and any lineal descendants of the Participant who
have not attained age nineteen (19) before the close of the year. If, as a
result of the application of such rules, the adjusted two hundred thousand
dollar ($200,000) limitation is exceeded, then (except for purposes of
determining the portion of Compensation up to the Integration Level to the
extent this Plan provides for permitted disparity), the limitation shall be
prorated among the affected individuals in proportion to each such individual's
Compensation as determined under this section prior to the application of this
limitation.
(f) The effective date of this subsection shall be the first Plan Year
beginning on or after January 1, 1989.
2.8 Custodian. The custodian, if any, designated in the Adoption Agreement.
2.9 Determination Date. With respect to any Plan Year subsequent to the first
Plan Year, the last day of the preceding Plan Year. For the first Plan Year of
the Plan, the last day of that Plan Year.
2.10 Early Retirement Date. The first day of the month coincident with or next
following the date upon which the Participant satisfies the early retirement age
and service requirements in the Adoption Agreement; provided, however, such
requirements may not be less than age fifty-five (55), nor more than fifteen
(15) Years of Service.
2.11 Earned Income. The net earnings from self-employment in the trade or
business with respect to which the Plan is established, for which personal
services of the individual are a material income-producing factor. Net earnings
will be determined without regard to items not included in gross income and the
deductions allocable to such items. Net earnings are reduced by contributions
to a qualified plan to the extent deductible under section 404 of the Code. Net
earnings shall be determined with regard to the deduction allowed to the
Employer by section 164(f) of the Code for taxable years beginning after
December 31, 1989.
2.12 Effective Date. The first day of the first Plan Year for which the Plan
is effective as specified in the Adoption Agreement.
2.13 Eligibility Computation Period. For purposes of determining Years of
Service and Breaks in Service for eligibility to participate, the initial
Eligibility Computation Period shall be the twelve (12) consecutive month period
beginning with the day the Employee first performs an hour of service for the
Employer (employment commencement date). The succeeding twelve (12) consecutive
month periods commence with the first anniversary of the Employee's employment
commencement date.
<PAGE>
2.14 Employee. Any person, including a Self-Employed Individual, who is
employed by the Employer maintaining the Plan or any other employer required to
be aggregated with such Employer under sections 414(b), (c), (m) or (o) of the
Code. The term Employee shall also include any Leased Employee deemed to be an
Employee of any Employer described above as provided in sections 414(n) or (o)
of the Code.
2.15 Employer. The corporation, proprietorship, partnership or other
organization that adopts the Plan by execution of an Adoption Agreement.
2.16 Employer Contributions. The contribution of the Employer to the Plan and
Trust as set forth in section 4.1 and the Adoption Agreement.
2.17 Entry Dates. The Effective Date shall be the first Entry Date.
Thereafter, the Entry Dates shall be the first day of each Plan Year and the
first day of the seventh month of each Plan Year.
2.18 ERISA. The Employee Retirement Income Security Act of 1974, as amended.
2.19 Hour of Service.
(a) Each hour for which an Employee is paid, or entitled to payment, for the
performance of duties for the Employer. These hours shall be credited to the
Employee only for the computation period or periods in which the duties are
performed; and
(b) Each hour for which an Employee is paid, or entitled to payment, by the
Employer on account of a period of time during which no duties are performed
(irrespective of whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability), layoff, jury
duty, military duty, or leave of absence. No more than five hundred one (501)
Hours of Service shall be credited under this paragraph to an Employee on
account of any single, continuous period during which the Employee performs no
duties (whether or not such period occurs in a single computation period).
Hours under this paragraph will be calculated and credited pursuant to section
2503.200b-2 of the Department of Labor regulations which are incorporated herein
by this reference.
(c) Each hour for which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by the Employer. The same Hours of Service shall
not be credited both under paragraph (a) or paragraph (b), as the case may be,
and under this paragraph (c). These hours shall be credited to the Employee for
the computation period or periods to which the award or agreement pertains
rather than the computation period in which the award, agreement, or payment is
made.
(d) Solely for purposes of determining whether an Employee has a Break in
Service, Hours of Service shall also include an uncompensated authorized leave
of absence not in excess of two (2) years, or military leave while the
Employee's reemployment rights are protected by law or such additional or other
periods as granted by the Employer as military leave (credited on the basis of
forty (40) Hours of Service per each week or eight (8) Hours of Service per
working day), provided the Employee returns to employment at the end of his
leave of absence or within ninety (90) days of the end of his military leave,
whichever is applicable.
(e) Hours of Service will be credited for employment with other members of an
affiliated service group (under section 414(m)), a controlled group of
corporations (under section 414(b)), or a group of trades or businesses under
common control (under section 414(c)) of which the adopting Employer is a
member, and any other entity required to be aggregated with the Employer
pursuant to section 414(o) and the regulations thereunder. Hours of
<PAGE>
Service will also be credited for any individual considered an Employee for
purposes of this Plan under section 414(n) or section 414(o) and the regulations
thereunder.
(f) Solely for purposes of determining whether an Employee has a Break in
Service, Hours of Service shall also include absence from work for maternity or
paternity reasons, if the absence begins on or after the first day of the first
Plan Year beginning after 1984. During this absence, the Employee shall be
credited with the Hours of Service which would have been credited but for the
absence, if such hours cannot be determined with eight (8) hours per day. An
absence from work for maternity or paternity reasons means an absence:
(i) by reason or the pregnancy of an Employee;
(ii) by reason of the birth of a child of the Employee;
(iii) by reason of the placement of a child with the Employee in connection
with adoption; or
(iv) for purposes of caring for such a child for a period immediately
following such birth or placement.
These Hours of Service shall be credited in the computation period
following the computation period in which the absence begins, except as
necessary to prevent a Break in Service in the computation period in which the
absence begins. However, no more than five hundred one (501) Hours of Service
will be credited for purposes of any such maternity or paternity absence from
work.
(g) The Employer may elect to compute Hours of Service by the use of one of the
service equivalencies in the Adoption Agreement. Only one method may be
selected. If selected, the service equivalency must be applied to all Employees
covered under the Plan.
(h) If the Employer amends the method of crediting service from the elapsed
time method described in section 1.410(a)-7 of the Treasury regulations to the
Hours of Service computation method by the adoption of this Plan, or an Employee
transfers from a plan under which service is determined on the basis of elapsed
time, the following rules shall apply for purposes of determining the Employee's
service under this Plan up to the time of amendment or transfer:
(i) the Employee shall receive credit, as of the date of amendment or transfer,
for a number of Years of Service equal to the number of one (1) year periods of
service credited to the Employee as of the date of the amendment or transfer;
and
(ii) the Employee shall receive credit in the applicable computation period
which includes the date of amendment or transfer, for a number of Hours of
Service determined by applying the weekly service equivalency specified in
paragraph (g) to any fractional part of a year credited to the Employee under
this paragraph (h) as of the date of amendment or transfer. The use of the
weekly service equivalency shall apply to all Employees who formerly were
credited with service under the elapsed time method.
2.20 Integration Level. The Taxable Wage Base or such lesser amount elected by
the Employer in the Adoption Agreement.
2.21 Key Employee.
(a) Any Employee or former Employee (and the Beneficiaries of such Employee)
who at any time during the determination period was an officer of the Employer
if such Individual's annual Compensation exceeds fifty percent (50%) of the
dollar limitation under section 415(b)(1)(A) of the Code; an owner (or
considered an owner under section 318 of the Code) of one of the ten (10)
largest interests in the Employer if such Individual's Compensation exceeds
<PAGE>
one hundred percent (100%) of the dollar limitation under section 415(c)(1)(A)
of the Code; a Five Percent (5%) Owner of the Employer; or a one percent (1%)
owner of the Employer who has annual Compensation of more than one hundred fifty
thousand dollars ($150,000).
(b) For purposes of this section, annual Compensation means compensation as
defined in section 415(c)(3) of the Code, but including amounts contributed by
the Employer pursuant to a salary reduction agreement which are excludable from
the Employee's gross income under sections 125, 402(a)(8), 402(h) or 403(b) of
the Code.
(c) For purposes of this section, determination period is the Plan Year
containing the Determination Date and the four (4) preceding Plan Years.
2.22 Leased Employee.
(a) Any person (other than an Employee of any of the Affiliated Employers) who,
pursuant to an agreement between any of the Affiliated Employers and any other
person (Leasing organization), has performed service for any of the Affiliated
Employers (or for any of the Affiliated Employers and related persons determined
in accordance with section 414(n)(6) of the Code) on a substantially full-time
basis for a period of at least one (1) year and such services are of a type
historically performed by employees in the Affiliated Employer's business field.
Contributions or benefits provided a Leased Employee by the leasing organization
which are attributable to services performed for the Affiliated Employer shall
be treated as provided by the Affiliated Employer.
(b) A Leased Employee shall not be considered an Employee of an Affiliated
Employer if:
(i) such employee is covered by a money purchase pension plan providing:
(1) a nonintegrated employer contribution rate of at least ten percent (10%) of
compensation (as defined in section 415(c)(3) of the Code), but including
amounts contributed pursuant to a salary reduction agreement which are
excludable from the employee's gross income under sections 125, 402(a)(8),
402(h) or 403(b) of the Code;
(2) immediate participation; and
(3) full and immediate vesting.
and
(ii) Leased Employees do not constitute more than twenty percent (20%) of
the Affiliated Employer's non-Highly-Compensated workforce.
(c) The determination of whether a person is a Leased Employee will be made
pursuant to section 414(n) of the Code.
2.23 Maximum Disparity Rate. The lesser of:
(a) five and seven-tenths percent (5.7%);
(b) the applicable percentage determined in accordance with the table below:
If the Integration Level is
* XE=The greater of $10,000 or 20% of the Taxable Wage Base.
YE=Any amount more than 80% of the Taxable Wage Base but less than 100% of
the Taxable Wage Base.
TWB means the Taxable Wage Base.
If the Integration Level used is equal to the Taxable Wage Base, the
applicable percentage is five and seven-tenths percent (5.7%).
2.24 Maximum Profit Sharing Disparity Rate. The lesser of:
<PAGE>
(a) two and seven-tenths percent (2.7%);
(b) the applicable percentage determined in accordance with the table that
follows (top of next column):
If the Integration Level is
* XE=The greater of $10,000 or 20% of the Taxable Wage Base.
YE=Any amount more than 80% of the Taxable Wage Base but less than 100% of
the Taxable Wage Base.
TWB means the Taxable Wage Base.
If the Integration Level used is equal to the Taxable Wage Base, the
applicable percentage is two and seven-tenths percent (2.7%).
2.25 Non-Key Employee. Any Employee or former Employee who is not a Key
Employee. In addition, any Beneficiary of a Non-Key Employee shall be treated
as a Non-Key Employee.
2.26 Normal Retirement Age. The age selected in the Adoption Agreement, but
not less than age fifty-five (55). If the Employer enforces a mandatory
retirement age, the Normal Retirement Age is the lesser of that mandatory age or
the age specified in the Adoption Agreement.
2.27 Owner-Employee. An individual who is a sole proprietor, or who is a
partner owning more than ten percent (10%) of either the capital or profits
interest of a partnership.
2.28 Participant. A person who has met the eligibility requirements of section
3.1 and whose Account hereunder has been neither completely forfeited nor
completely distributed.
2.29 Plan. The prototype paired defined contribution profit sharing and money
purchase pension plan provided under this basic plan document. References to
the Plan shall refer to the profit sharing provisions, the money purchase
pension provisions, or both, as the context may require.
2.30 Plan Administrator. The person, persons or entity appointed by the
Employer pursuant to ARTICLE 15 to manage and administer the Plan.
2.31 Plan Year. The twelve (12) consecutive month period designated by the
Employer in the Adoption Agreement.
2.32 Self-Employed Individual. An individual who has Earned Income for the
taxable year from the trade or business for which the Plan is established, or an
individual who would have had Earned Income for the taxable year but for the
fact that the trade or business had no net profits for the taxable year.
2.33 Shares. Shares of stock in any regulated investment company registered
under the Investment Company Act of 1940 that are made available for investment
purposes as an investment option under this Plan.
2.34 Sponsor. The sponsor designated in the Adoption Agreement which has made
this Plan available to the Employer.
2.35 Taxable Wage Base. The maximum amount of earnings which may be considered
wages for a year under section 3121(a)(1) of the Code in effect as of the
beginning of the Plan Year.
2.36 Total and Permanent Disability. The inability of the Participant to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment, which condition, in the opinion of a
physician chosen by the Plan
<PAGE>
Administrator, can be expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than twelve (12) months.
2.37 Trust. The fund maintained by the Trustee for the investment of Plan
assets in accordance with the terms and conditions of the Trust Agreement.
2.38 Trust Agreement. The agreement between the Employer and the Trustee under
which the assets of the Plan are held, administered, and managed. The
provisions of the Trust Agreement shall be considered an integral part of this
Plan as if set forth fully herein.
2.39 Trustee. The individual or corporate Trustee or Trustees under the Trust
Agreement as they may be constituted from time to time.
2.40 Valuation Date. The last day of each Plan Year and such other dates as
may be determined by the Plan Administrator, as provided in section 5.6 for
valuing the Trust assets.
2.41 Vesting Computation Period. The Plan Year.
2.42 Year of Service. An Eligibility Computation Period, Vesting Computation
Period, or Plan Year, whichever is applicable, during which an Employee has
completed at least one thousand (1,000) Hours of Service (whether or not
continuous). The Employer may, in the Adoption Agreement, specify a fewer
number of hours.
ARTICLE 3
Eligibility and
Years of Service
3.1 Eligibility Requirements.
(a) Each Employee of the Affiliated Employers shall become a Participant in the
Plan as of the first Entry Date after the date on which the Employee has
satisfied the minimum age and service requirements specified in the Adoption
Agreement.
(b) The Employer may elect in the Adoption Agreement to exclude from
participation:
(i) Employees included in a unit of employees covered by a collective
bargaining agreement between the Employer and Employee representatives, if
retirement benefits were the subject of good faith bargaining. For this
purpose, the term Employee representatives does not include any organization
more than half of whose members are Employees who are owners, officers, or
executives of the Employer; and
(ii) nonresident aliens who receive no earned income from the Employer which
constitutes income from sources within the United States.
3.2 Participation and Service. Upon Reemployment. Upon the reemployment of
any Employee, the following rules shall determine his eligibility to participate
in the Plan and his credit for prior service.
(a) Participation. If the reemployed Employee was a Participant in the Plan
during his prior period of employment, he shall be eligible upon reemployment to
resume participation in the Plan. If the reemployed Employee was not a
Participant in the Plan, he shall be considered a new Employee and required to
meet the requirements of section 3.1 in order to be eligible to participate in
the Plan, subject to the reinstatement of credit for prior service under
paragraph (b) below.
(b) Credit for Prior Service. In the case of any Employee who is reemployed
before or after incurring a Break in Service, any Hour of Service and Year of
Service credited to the
<PAGE>
Employee at the end of his prior period of employment shall be reinstated as of
the date of his reemployment.
3.3 Predecessor Employers. If specified in the Adoption Agreement, Years of
Service with a predecessor employer will be treated as service for the Employer
for eligibility purposes; provided, however, if the Employer maintains the plan
of a predecessor employer, Years of Service with such employer will be treated
as service with the Employer without regard to any election.
ARTICLE 4
Contributions
4.1 Employer Contributions.
(a) Money Purchase Pension Contributions. For each Plan Year, the Employer
shall contribute to the Trust an amount equal to such uniform percentage of
Compensation of each eligible Participant as may be determined by the Employer
in accordance with the money purchase pension contribution formula specified in
the Adoption Agreement. Subject to the limitations of section 5.4, the money
purchase pension contribution formula may be integrated with Social Security, as
set forth in the Adoption Agreement.
(b) Profit Sharing Contribution. For each Plan Year, the Employer shall
contribute to the Trust an amount as may be determined by the Employer in
accordance with the profit sharing formula set forth in the Adoption Agreement.
(c) Eligible Participants. Subject to the Minimum Allocation rules of section
5.2 and the exclusions specified in this section, each Participant shall be
eligible to share in the Employer Contribution. An Employer may elect in the
Adoption Agreement that Participants who terminate employment during the Plan
Year with not more than five hundred (500) Hours of Service and who are not
Employees as of the last day of the Plan Year (other than Participants who die,
retire or become totally and Permanently Disabled during the Plan Year) shall
not be eligible to share in the Employer Contribution. An Employer may further
elect in the Adoption Agreement to allocate a contribution on behalf of a
Participant who completes fewer than five hundred (500) Hours of Service and is
otherwise ineligible to share in the Employer Contribution. If the Employer
fails to specify in the Adoption Agreement the number of Hours of Service
required to share in the Employer Contribution, the number shall be five hundred
(500) Hours of Service.
(d) Contribution Limitation. In no event shall any Employer Contribution
exceed the maximum amount deductible from the Employer's income under section
404 of the Code, or the maximum limitations under section 415 of the Code
provided in ARTICLE 6.
4.2 Payment. All Employer Contributions to the Trust for any Plan Year shall
be made either in one lump-sum or in installments in U.S. currency, by check, or
in Shares within the time prescribed by law, including extensions granted by the
Internal Revenue Service, for filing the Employer's federal income tax return
for the taxable year with or within which such Plan Year ends. All employer
Contributions to the Trust for a money purchase pension plan for any Plan Year
shall be made within the time prescribed by regulations under section 412(c)
(10) of the Code.
4.3 Nondeductible Voluntary Contributions by Participants.
<PAGE>
(a) This Plan will not accept nondeductible Employee contributions for Plan
Years beginning after the Plan Year in which this Plan is adopted by the
Employer. Employee contributions made with respect to Plan years beginning
after December 31, 1986 will be limited so as to meet the nondiscrimination test
of section 401(m).
(b) A separate account shall be maintained by the Trustee for the nondeductible
Employee contributions of each Participant.
(c) Employee contributions and earnings thereon shall be fully vested and
nonforfeitable at all times.
(d) The provisions of this section shall apply to Employee contributions made
prior to the first Plan Year after the Plan Year in which the Employer adopts
this Plan.
4.4 Rollovers.
(a) Subject to the approval of the Plan Administrator, a participant who has
participated in any other qualified plan described in section 401(a) of the Code
or in a qualified annuity plan described in section 403(a) of the Code shall be
permitted to make a rollover contribution in the form of cash to the Trustee of
an amount received by the Participant that is attributable to participation in
such other plan (reduced by any nondeductible voluntary contributions he made to
the plan), provided that the rollover contribution complies with all
requirements of sections 402(a)(5) or 403(a)(4) of the Code, whichever is
applicable.
(b) Before approving such a Participant rollover, the Plan Administrator may
request from the Participant or the Employer any documents which the Plan
Administrator, in its discretion, deems necessary for such rollover.
(c) Any rollover contribution to the Trust shall be credited to the
Participant's rollover subaccount established under section 5.1 and separately
accounted for.
4.5 Direct Transfers.
(a) The Plan shall accept a transfer of assets directly from another plan
qualified under sections 401(a) or 403(a) of the Code only if the Plan
Administrator, in its sole discretion, agrees to accept such a transfer. In
determining whether to accept such a transfer the Plan Administrator shall
consider the administrative inconvenience engendered by such a transfer and any
risks to the continued qualification of the Plan under section 401(a) of the
Code. Acceptance of any such transfer shall not preclude the Plan Administrator
from refusing any subsequent such transfers.
(b) Any transfer of assets accepted under this section shall be credited to the
Participant's direct transfer subaccount and shall be separately accounted for
at all times and shall remain subject to the provisions of the transferor plan
(as it existed at the time of such transfer) to the extent required by section
411(d)(6) of the Code (including, but not limited to, any rights to Qualified
Joint and Survivor Annuities and qualified preretirement survivor annuities) as
if such provisions were part of the Plan. In all other respects, however, such
transferred assets will be subject to the provisions of the Plan.
(c) Assets accepted under this section shall be fully vested and
nonforfeitable.
(d) Before approving such a direct transfer, the Plan Administrator may request
from the Participant or the Employer (or the prior employer) any documents the
Plan Administrator, in its discretion, deems necessary for such direct transfer.
ARTICLE 5
<PAGE>
Allocations
5.1 Individual Accounts. The Plan Administrator shall establish and maintain
an Account in the name of each Participant. The Account shall contain the
following subaccounts:
(a) A money purchase pension contribution subaccount to which shall be credited
each such Participant's share of (i) Employer Contributions under section
4.1(a); (ii) the net earnings or net losses on the investment of the assets of
the Trust; (iii) distributions; and (iv) dividends, capital gain distributions
and other earnings received on any Shares credited to the Participant's
subaccount;
(b) A profit sharing contribution subaccount to which shall be credited each
such Participant's share of (i) Employer Contributions under section 4.1(b);
(ii) forfeitures; (iii) the net earnings or net losses on the investment of the
assets of the trust; (iv) distributions; and (v) dividends, capital gain
distributions and other earnings received on any Shares credited to the
Participant's subaccount;
(c) A nondeductible voluntary contribution subaccount to which shall be
credited (i)Nondeductible voluntary contributions by the Participant under
section 4.3; (ii)The net earnings or net losses on the investment of the assets
of the Trust; (iii)Distributions; and (iv)Dividends, capital gain distributions
and other earnings received on any Shares credited to the Participant's
subaccount;
(d) A direct transfer subaccount to which shall be credited (i)Contributions to
the Trust accepted under section 4.5(a); (ii)The net earnings or net losses on
the investment of the assets of the Trust; (iii)Distributions; and
(iv)Dividends, capital gain distributions and other earnings received on any
Shares credited to the Participant's subaccount;
(e) A rollover subaccount to which shall be credited (i)Contributions to the
Trust accepted under section 4.4(a); (ii)The net earnings or net losses on the
investment of the assets of the Trust; (iii)Distributions; and (iv)Dividends,
capital gain distributions and other earnings received on any Shares credited to
the Participant's subaccount.
5.2 Minimum Allocation.
(a) Except as otherwise provided in this section, the Employer Contributions
and forfeitures allocated on behalf of any Participant who is not a Key Employee
shall not be less than the lesser of three percent (3%) of such Participant's
Compensation or in the case where the Employer has no defined benefit plan which
designates this Plan to satisfy section 401 of the Code, the largest percentage
of Employer Contributions and forfeitures, as a percentage of the first two
hundred thousand dollars ($200,000) of the Key Employee's Compensation,
allocated on behalf of any Key Employee for that year. The minimum allocation
is determined without regard to any Social Security contribution. This minimum
allocation shall be made even though, under other Plan provisions, the
Participant would not otherwise be entitled to receive an allocation, or would
have received a lesser allocation for the year because of (i)The Participant's
failure to complete one thousand (1,000) Hours of Service (or any equivalent
provided in the Plan); or (ii)The Participant's failure to make mandatory
Employee contributions to the Plan; or (iii)Compensation less than a stated
amount. For purposes of this subsection, all defined contribution plans
required to be included in an aggregation group under section 416(g)(2)(A)(i)
shall be treated as a single plan.
(b) For purposes of computing the minimum allocation, Compensation shall mean
Compensation as defined in section 6.5(b) of the Plan.
<PAGE>
(c) The provision in subsection (a) above shall not apply to any Participant
who was not employed by the Employer on the last day of the Plan Year.
(d) The provision in subsection (a) above shall not apply to any Participant to
the extent the Participant is covered under any other plan or plans of the
Employer and the Employer has provided in the Adoption Agreement that the
minimum allocation or benefit requirement applicable to top-heavy plans will be
met in the other plan or plans.
(e) The minimum allocation required (to the extent required to be
nonforfeitable under section 416(b)) may not be forfeited under section
411(a)(3)(B) or 411(a)(3)(D).
5.3 Allocation of Employer Contributions and Forfeitures.
(a) All money purchase pension contributions for a given Plan Year shall be
allocated to the Account of the Participant for whom such contribution was made.
Any forfeiture from a Participant's money purchase pension contribution
subaccount arising under the Plan for a given Plan Year shall be applied as
specified in the Adoption Agreement, either: (i) to reduce the Employer
Contribution in that year, or if in excess of the Employer Contribution for such
Plan Year, the excess amounts shall be used to reduce the Employer Contribution
in the next succeeding Plan Year or Years or (ii) to be added to the Employer
Contributions and allocated accordingly.
(b) All profit sharing contributions and forfeitures from a Participant's
profit sharing contribution subaccount will be allocated to the Account of each
Participant in the ratio that such Participant's Compensation bears to the
Compensation of all Participants. However, if the profit sharing contribution
formula selected in the Adoption Agreement is integrated with Social Security,
profit sharing contributions for the Plan Year plus any forfeitures will be
allocated to Participant's Accounts as follows:
(i) Step One. Contributions and forfeitures will be allocated to each
participant's Account in the ratio that each participant's total Compensation
bears to all Participant's total Compensation, but not in excess of three
percent (3%) of each Participant's Compensation. (Step One is not applicable if
the Employer enters into the money purchase pension Adoption Agreement).
(ii) Step Two. Any contributions and forfeitures remaining after the
allocation in Step One (if any) will be allocated to each Participant's
Account in the ratio that each Participant's Compensation for the Plan Year
in excess of the Integration Level bears to the excess Compensation of all
Participants, but not in excess of three percent (3%). (Step Two is not
applicable if the Employer enters into the money purchase pension Adoption
Agreement). (iii) Step Three. Any contributions and forfeitures remaining
after the allocation in Step Two (if any) will be allocated to each
Participant's Account in the ratio that the sum of each Participant's total
Compensation and Compensation in excess of the Integration Level bears to the
sum of all Participants total Compensation and Compensation in excess of the
Integration Level, but not in excess of whichever of the following is
applicable:
(1) if the Employer has not adopted the money purchase pension Adoption
Agreement, then the Maximum Profit Sharing Disparity Rate; or
(2) if the Employer has adopted the money purchase pension Adoption Agreement,
then the lesser of:
(2.a) the percentage of each Participant's Compensation for the Plan Year up
to the Integration Level determined by dividing the allocation by such
Compensation (the base contribution percentage); or
<PAGE>
(2.b) the Maximum Disparity Rate.
(iv) Step Four. Any remaining contributions or forfeitures will be allocated
to each Participant's Account in the ratio that each Participant's total
Compensation for the Plan Year bears to all Participants total Compensation for
that year.
(c) Notwithstanding anything in (a) or (b) above to the contrary, forfeitures
arising under a Participant's money purchase pension contribution subaccount
will only be used to reduce the contributions of the Participant's Employer who
adopted this Plan, and forfeitures arising under a Participant's profit sharing
contribution subaccount will be reallocated only for the benefit of Employees of
the Participant's Employer who adopted this Plan.
5.4 Coordination of Social Security Integration. If the Employer maintains
plans involving integration with Social Security other than this Plan, and if
any Participant is eligible to participate in more than one of such plans, all
such plans will be considered to be integrated if the extent of the integration
of all such plans does not exceed one hundred percent (100%). For purposes of
the preceding sentence, the extent of integration of a plan is the ratio
(expressed as a percentage) which the actual benefits, benefit rate, offset
rate, or Employer Contribution rate under the plan bears to the integration
limitation applicable to such plan. If the Employer enters into both the money
purchase pension Adoption Agreement and the profit sharing Adoption Agreement
under this Plan, integration with Social Security may only be selected in one
Adoption Agreement.
5.5 Withdrawals and Distributions. Any distribution to a Participant or his
Beneficiary, any amount transferred from a Participant's Account directly to the
Trustee of any other qualified plan described in section 401(a) of the Code or
to a qualified annuity plan described in section 403(a) of the Code, or any
withdrawal by a Participant shall be charged to the appropriate subaccount(s) of
the Participant as of the date of the distribution or the withdrawal.
5.6 Determination of Value of Trust Fund and of Net Earnings or Losses. As of
each Valuation Date the Trustee shall determine for the period then ended the
sum of the net earnings or losses of the Trust (excluding with respect to Shares
and other assets specifically allocated to a specific Participant's subaccount,
(i) dividends and capital gain distributions from Shares, (ii) receipts or
income attributable to insurance policies, (iii) income gains and/or losses
attributable to a Participant's loans made pursuant to ARTICLE 13 or to any
other assets) which shall reflect accrued but unpaid interest, dividends, gains,
or losses realized from the sale, exchange or collection of assets, other income
received, appreciation in the fair market value of assets, depreciation in the
fair market value of assets, administration expenses, and taxes and other
expenses paid. Gains or losses realized and adjustments for appreciation or
depreciation in fair market value shall be computed with respect to the
difference between such value as of the preceding Valuation Date or date of
purchase, whichever is applicable, and the value as of the date of disposition
or the current Valuation Date, whichever is applicable.
5.7 Allocation of Net Earnings or Losses.
(a) As of each Valuation Date the net earnings or losses of the Trust
(excluding with respect to Shares and other assets specifically allocated to a
specific Participant's subaccount, (i) dividends and capital gain distributions
from Shares, (ii) dividends or credits attributable to insurance policies, (iii)
income gains and/or losses attributable to a Participant's loans made pursuant
to ARTICLE 13 or to any other assets, all of which shall be allocated to such
Participant's subaccount) for the valuation period then ending shall be
allocated to the Accounts of all Participants (or Beneficiaries) having credits
in the fund both on such date and
<PAGE>
at the beginning of such valuation period. Such allocation shall be made by the
application of a fraction, the numerator of which is the value of the Account of
a specific Participant (or Beneficiary) as of the immediately preceding
Valuation Date, reduced by any distributions therefrom since such preceding
Valuation Date, and the denominator of which is the total value of all such
Accounts as of the preceding Valuation Date, reduced by any distributions
therefrom since such preceding Valuation Date.
(b) To the extent that Shares and other assets are specifically allocated to a
specific Participant's subaccount: (i) dividends and capital gain distributions
from Shares; (ii) dividends or credits attributable to insurance policies; and
(iii) income gains and/or losses attributable to a Participant's loans made
pursuant to ARTICLE 13 or to any other assets, all shall be allocated to such
Participant's subaccount.
5.8 Responsibilities of the Plan Administrator. The Plan Administrator shall
maintain accurate records with respect to the contributions made by or on behalf
of Participants under the Plan, and shall furnish the Trustee with written
instructions directing the Trustee to allocate all Plan contributions to the
Trust among the separate Accounts of Participants in accordance with section 5.1
above. In making any such allocation, the Trustee shall be fully entitled to
rely on the instructions furnished by the Plan Administrator, and shall be under
no duty to make any inquiry or investigation with respect thereto.
ARTICLE 6
Limitations on Allocations
6.1 Employers Who Do Not Maintain Other Qualified Plans.
(a) If the Participant does not participate in, and has never participated in
another qualified plan or a welfare benefit fund, as defined in section 419(e)
of the Code, maintained by the Employer, or an individual medical account, as
defined in section 415(l)(2) of the Code, maintained by the Employer, which
provides an Annual Addition as defined in section 6.5(a), the amount of Annual
Additions that may be credited to the Participant's Account for any Limitation
Year will not exceed the lesser of the Maximum Permissible Amount or any other
limitation contained in this Plan. If the Employer Contribution that would
otherwise be contributed or allocated to the Participant's Account would cause
the Annual Additions for the Limitation Year to exceed the Maximum Permissible
Amount, the amount contributed or allocated will be reduced so that the Annual
Additions for the Limitation Year will equal the Maximum Permissible Amount.
(b) Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible Amount for a
Participant on the basis of a reasonable estimation of the Participant's
Compensation for the Limitation Year, uniformly determined for all Participants
similarly situated.
(c) As soon as is administratively feasible after the end of the Limitation
Year, the Maximum Permissible Amount for the Limitation Year will be determined
on the basis of the Participant's actual Compensation for the Limitation Year.
(d) If, pursuant to subsection (c) or as a result of the allocation of
forfeitures, there is an Excess Amount the excess will be disposed of as
follows:
(i) Any nondeductible voluntary Employee contributions, to the extent they
would reduce the Excess Amount, will be returned to the Participant;
<PAGE>
(ii) If after the application of paragraph(i) an Excess Amount still exists,
and the Participant is covered by the Plan at the end of the Limitation Year,
the Excess Amount in the Participant's Account will be used to reduce Employer
Contributions (including any allocation of forfeitures) for such Participant in
the next Limitation Year, and each succeeding Limitation Year if necessary;
(iii) If after the application of paragraph(i) an Excess Amount still
exists, and the Participant is not covered by the Plan at the end of the
Limitation Year, the Excess Amount will be held unallocated in a suspense
account. The suspense account will be applied to reduce future Employer
Contributions (including allocation of any forfeitures) for all remaining
Participants in the next Limitation Year, and each succeeding Limitation Year if
necessary;
(iv) If a suspense account is in existence at any time during the Limitation
Year pursuant to this section, it will not participate in the allocation of the
Trust's investment gains and losses. If a suspense account is in existence at
any time during a particular Limitation Year, all amounts in the suspense
account must be allocated and reallocated to participant's Accounts before any
Employer or any Employee contributions may be made to the Plan for that
Limitation Year. Excess amounts may not be distributed to Participants or
former Participants.
6.2 Employers Who Maintain Other Qualified Master or Prototype Defined
Contribution Plans.
(a) This section applies if, in addition to this Plan, the Participant is
covered under another qualified master of prototype defined contribution plan
maintained by the Employer, a welfare benefit fund, as defined in section 419(e)
of the Code maintained by the Employer or an individual medical account, as
defined in section 415(1)(2) of the Code, maintained by the Employer which
provides an Annual Addition as defined in Section 6.5(a), during any Limitation
Year. The Annual Additions that may be credited to a Participant's Account
under this Plan for any such Limitation Year will not exceed the Maximum
Permissible Amount reduced by the Annual Additions credited to a Participant's
Account under the other plans and welfare benefit funds for the same Limitation
Year. If the Annual Additions with respect to the Participant under other
defined contribution plans and welfare benefit funds maintained by the Employer
are less than the Maximum Permissible Amount and the Employer Contribution that
would otherwise be contributed or allocated to the Participant's Account under
this Plan would cause the Annual Additions for the Limitation Year to exceed
this limitation, the amount contributed or allocated will be reduced so that the
Annual Additions under all such plans and funds for the Limitation Year will
equal the Maximum Permissible Amount. If the Annual Additions with respect to
the Participant under such other defined contribution plans and welfare benefit
funds in the aggregate are equal to or greater than the Maximum Permissible
Amount, no amount will be contributed or allocated to the Participant's Account
under this Plan for the Limitation Year.
(b) Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible Amount for a
Participant in the manner described in section 6.1(b).
(c) As soon as is administratively feasible after the end of the Limitation
Year, the Maximum Permissible Amount for the Limitation Year will be determined
on the basis of the Participant's actual Compensation for the Limitation Year.
<PAGE>
(d) If, pursuant to section 6.2(c), or as a result of the allocation of
forfeitures, a Participant's Annual Additions under this Plan and such other
plans would result in an Excess Amount for a Limitation Year, the Excess Amount
will be deemed to consist of the Annual Additions last allocated, except that
Annual Additions attributable to a welfare benefit fund or individual medical
account will be deemed to have been allocated first regardless of the actual
allocation date.
(e) If an Excess Amount was allocated to a Participant on an allocation date of
this Plan which coincides with an allocation date of another plan, the Excess
Amount attributed to this Plan will be the product of:
(i) the total Excess Amount allocated as of such date, times
(ii) the ratio of (1) the Annual Additions allocated to the Participant for the
Limitation Year as of such date under this Plan to (2)The total Annual Additions
allocated to the Participant for the Limitation Year as of such date under this
and all the other qualified master or prototype defined contribution plans.
(f) Any Excess Amount attributed to this Plan will be disposed of in the manner
described in Section 6.1(d).
6.3 Employers Who, In Addition to this Plan, Maintain Other Qualified Plans
Which Are Defined Contribution Plans Other than Master or Prototype Plans. If
the Participant is covered under another qualified defined contribution plan
maintained by the Employer which is not a Master or Prototype Plan, Annual
Additions which may be credited to the Participant's Account under this Plan for
any Limitation Year will be limited in accordance with Section 6.2 as though the
other plan were a Master or Prototype Plan unless the Employer provides other
limitations in the Adoption Agreement.
6.4 Employers Who, In Addition to This Plan, Maintain A Qualified Defined
Benefit Plan. If the Employer maintains, or at any time maintained, a qualified
defined benefit plan covering any Participant in this Plan, the sum of the
Participant's Defined Benefit Fraction and Defined Contribution Fraction will
not exceed 1.0 in any Limitation Year. The Annual Additions which may be
credited to the Participant's Account under this Plan for any Limitation Year
will be limited in accordance with the Adoption Agreement.
6.5 Definitions. Unless otherwise expressly provided herein, for purposes of
this ARTICLE only, the following definitions and rules of interpretation shall
apply:
(a) Annual Additions. The sum of the following amounts credited to a
Participant's Account for the Limitation Year:
(i) Employer Contributions;
(ii) Employee Contributions;
(iii) forfeitures; and
(iv) amounts allocated after March 31, 1984 to an individual medical account,
as defined in section 415(l)(2) of the Code, which is part of a pension or a
nnuityplan maintained by the Employer, are treated as Annual Additions to a
defined contribution plan. Also, amounts derived from contributions paid or
accrued after December 31,1985, in taxable years ending after such date,
which are attributable to post-retirement medical benefits allocated to the
separate account of a key employee, as defined in section 419A(d)(3) of the
Code, under a welfare benefit fund, as defined in section 419(e) of the Code,
maintained by the Employer, are treated as Annual Additions to a defined
contribution plan.
<PAGE>
For this purpose, any Excess Amount applied under sections 6.1(d) or 6.2(f)
in the Limitation Year to reduce Employer Contributions will be considered
Annual Additions for such Limitation Year.
(b) Compensation. A Participant's earned income, wages, salaries, and fees for
professional services and other amounts received for personal services actually
rendered in the course of employment with the Employer maintaining the Plan
(including, but not limited to, commissions paid salesmen, compensation for
services on the basis of a percentage of profits, commissions on insurance
premiums, tips and bonuses), and excluding the following:
(i) Employer contributions to a plan of deferred compensation which are not
includable in the Employee's gross income for the taxable year in which
contributed, or Employer Contributions under a simplified employee pension plan
to the extent such contributions are excluded from the Employer's gross income,
or any distributions from a plan of deferred compensation;
(ii) Amounts realized from the exercise of a nonqualified stock option, or when
restricted stock (or property) held by the Employee either becomes freely
transferable or is no longer subject to a substantial risk of forfeiture;
(iii) Amounts realized from the sale, exchange or other disposition of stock
acquired under a qualified stock option; and
(iv) Other amounts which received special tax benefits, or contributions made
by the Employer (whether or not under a salary reduction agreement) towards the
purchase of an annuity described in section 403(b) or the Code (whether or not
the amounts are actually excludable from the gross income of the Employee).
For purposes of applying the limitations of this ARTICLE, Compensation for
a Limitation Year is the Compensation actually paid or includable in gross
income during such year.
Notwithstanding the preceding sentence, Compensation for a Participant in a
defined contribution plan who is Totally and Permanently Disabled (as defined in
section 22(e)(3) of the Code) is the Compensation such Participant would have
received for the Limitation Year if the Participant had been paid at the rate of
Compensation paid immediately before becoming permanently and totally disabled;
such imputed Compensation for the disabled Participant may be taken into account
only if the Participant is not a Highly-Compensated Employee (as defined in
section 414(q) of the Code), and contributions made on behalf of such
Participant are nonforfeitable when made.
(c) Defined Benefit Fraction. A fraction, the numerator of which is the sum of
the Participant's Projected Annual Benefits under all the defined benefit plans
(whether or not terminated) maintained by the Employer, and the denominator of
which is the lesser of one hundred percent (100%) of the dollar limitation
determined for the Limitation Year under sections 415(b) and (d) of the Code or
one hundred forty percent (140%) of highest average compensation, including any
adjustments under section 415(b) of the Code.
Notwithstanding the above, if the Participant was a Participant as of the
first day of the first Limitation Year beginning after December 31, 1986, in one
or more defined benefit plans maintained by the Employer which were in existence
on May 6, 1986, the denominator of this fraction will not be less than one
hundred twenty-five percent (125%) of the sum of the annual benefits under such
plans which the Participant had accrued as of the close of the last Limitation
Year beginning before January 1, 1987, disregarding any changes in the terms and
<PAGE>
conditions of the Plan after May 5, 1986. The preceding sentence applies only
if the defined benefit plans individually and in the aggregate satisfied the
requirements of section 415 of the Code for all Limitation Years beginning
before January 1, 1987.
(d) Defined Contribution Dollar Limitation. Thirty thousand dollars ($30,000)
or, if greater, one-fourth (1/4) of the defined benefit dollar limitation set
forth in section 415(b)(1) of the Code as in effect for the Limitation Year.
(e) Defined Contribution Fraction. A fraction, the numerator of which is the
sum of the Annual Additions to the Participant's Account under all the defined
contribution plans (whether or not terminated) maintained by the Employer for
the current and all prior Limitation Years (including the Annual Additions
attributable to the Participant's nondeductible voluntary contributions to all
defined benefit plans, whether or not terminated, maintained by the Employer,
and the Annual Additions attributable to all welfare benefit funds, as defined
in Section 419(e) of the Code and individual medical accounts, as defined in
section 415(l)(2) of the Code, maintained by the Employer), and the denominator
of which is the sum of the maximum aggregate amounts for the current and all
prior Limitation Years of service with the Employer (regardless of whether a
defined contribution plan was maintained by the Employer). The maximum
aggregate amount in any Limitation Year is the lesser of one hundred percent
(100%) of the dollar limitation in effect under Section 415(c)(1)(A) of the Code
or thirty-five percent (35%) of the Participant's Compensation for such year.
If the Participant was a Participant as of the end of the first day of the
first Limitation Year beginning after December 31, 1986, in one or more defined
contribution plans maintained by the Employer which were in existence on May 6,
1986, the numerator of this fraction will be adjusted if the sum of this
fraction and the Defined Benefit Fraction would otherwise exceed 1.0 under the
terms of this Plan. Under the adjustment, an amount equal to the product of
(1)The excess of the sum of the fractions over 1.0 times (2) the denominator of
this fraction, will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as they would be
computed as of the end of the last Limitation Year beginning before January 1,
1987, and disregarding any changes in the terms and conditions of the Plan made
after May 5, 1986, but using the section 415 limitation applicable to the first
Limitation Year beginning on or after January 1, 1987. The Annual Addition for
any Limitation Year beginning before January 1, 1987, shall not be recomputed to
treat all Employee contributions as Annual Additions.
(f) Employer. For purposes of this ARTICLE, Employer shall mean the employer
that adopts this Plan, and all members of a controlled group of corporations (as
defined in section 414(b) of the Code as modified by section 415(h) of the
Code), all commonly controlled trades or businesses (as defined in section
414(c) of the Code as modified by section 415(h) of the Code), or affiliated
service groups (as defined in section 414(m) of the Code) of which the adopting
Employer is a part and any other entity required to be aggregated with the
Employer pursuant to regulations under section 414(o) of the Code.
(g) Excess Amount. The excess of the Participant's Annual Addition for the
Limitation Year over the Maximum Permissible Amount.
(h) Highest Average Compensation. The average compensation for the three
consecutive Plan Years that produce the highest average.
(i) Limitation Year. A Plan Year, or the twelve (12) consecutive month period
elected by the Employer in the Adoption Agreement. All qualified plans
maintained by the Employer
<PAGE>
must use the same Limitation Year. If the Limitation Year is amended to a
different twelve (12) consecutive month period, the new Limitation Year must
begin on a date within the Limitation Year in which the amendment is made.
(j) Master or Prototype Plan. A plan the form of which is the subject of a
favorable opinion letter from the Internal Revenue Service.
(k) Maximum Permissible Amount. The maximum Annual Addition that may be
contributed or allocated to a Participant's Account under the Plan for any
Limitation Year shall not exceed the lesser of:
(i) the Defined Contribution Dollar Limitation;
or
(ii) twenty-five percent (25%) of the Participant's Compensation for the
Limitation Year.
The Compensation limitation referred to in subsection (b) shall not apply
to any contribution for medical benefits (within the meaning of section 401(h)
or section 419A(f)(2) of the Code) which is otherwise treated as an Annual
Addition under section 415(l)(1) or section 419A(d)(2) of the Code.
If a short Limitation Year is created because of an amendment changing the
Limitation Year to a different twelve (12) consecutive month period, the Maximum
Permissible Amount will not exceed the Defined Contribution Dollar Limitation
multiplied by the following fraction:
Number of Months in
the Short Limitation Year
(l) Projected Annual Benefit. The annual retirement benefit (adjusted to an
actuarially equivalent straight life annuity if such benefit is expressed in a
form other than a straight life annuity or Qualified Joint and Survivor Annuity)
to which the Participant would be entitled under the terms of the Plan assuming:
(i) the Participant will continue employment until Normal Retirement Age under
the Plan (or current age, if later), and
(ii) the Participant's Compensation for the current Limitation Year and all
other relevant factors used to determine benefits under the Plan will remain
constant for all future Limitation Years.
ARTICLE 7
Trust Fund
7.1 Receipt of Contributions by Trustee. All contributions to the Trust that
are received by the Trustee, together with any earnings thereon, shall be held,
managed and administered by the Trustee named in the Adoption Agreement in
accordance with the terms and conditions of the Trust Agreement and the Plan.
The Trustee may use a Custodian designated by the Sponsor to perform
recordkeeping and custodial functions. The Trustee shall be subject to the
proper directions of the Employer or the Plan Administrator made in accordance
with the terms of the Plan and ERISA.
7.2 Investment Responsibility.
(a) If the Employer elects in the Adoption Agreement to exercise investment
authority and responsibility, the selection of the investments in which assets
of the Trust are invested
<PAGE>
shall be the responsibility of the Plan Administrator and each Participant will
have a ratable interest in all assets of the Trust.
(b) If the Adoption Agreement so provides and the Employer elects to permit
each Participant or Beneficiary to select the investments in his Account, no
person, including the Trustee and the Plan Administrator, shall be liable for
any loss or for any breach of fiduciary duty which results from such
Participant's or Beneficiary's exercise of control.
(c) If the Adoption Agreement so provides and the Employer elects to permit
each Participant or Beneficiary to select the investments in his Account, the
Employer or the Plan Administrator must complete a schedule of Participant
designations.
(d) If Participants and Beneficiaries are permitted to select the investment in
their Accounts, all investment related expenses, including administrative fees
charged by brokerage houses, will be charged against the Accounts of the
Participants.
(e) The Plan Administrator may at any time change the selection of investments
in which the assets of the Trust are invested, or subject to such reasonable
restrictions as may be imposed by the Sponsor for administrative convenience,
may submit an amended schedule of Participant designations. Such amended
documents may provide for a variance in the percentages of contributions to any
particular investment or a request that Shares in the Trust be reinvested in
whole or in part in other Shares.
7.3 Investment Limitations. The Sponsor may impose reasonable investment
limitations on the Employer and the Plan Administrator relating to the type of
permissible investments in the Trust or the minimum percentage of Trust assets
to be invested in Shares.
ARTICLE 8
Vesting
8.1 Nondeductible Voluntary Contributions and Earnings. The Participant's
nondeductible voluntary contribution subaccount shall be fully vested and
nonforfeitable at all times and no forfeitures will occur as a result of an
Employee's withdrawal of nondeductible voluntary contributions.
8.2 Rollovers, Transfers and Earnings. The Participant's rollover subaccount
and direct transfer subaccount shall be fully vested and nonforfeitable at all
times.
8.3 Employer Contributions and Earnings. Notwithstanding the vesting schedule
elected by the Employer in the Adoption Agreement, the Participant's money
purchase pension contribution subaccount and profit sharing contribution
subaccount shall be fully vested and nonforfeitable upon the Participant's
death, disability, attainment of Normal Retirement Age, or, if the Adoption
Agreement provides for an Early Retirement Date, attainment of the required age
and completion of the required service. In the absence of any of the preceding
events, the Participant's money purchase contribution subaccount and his profit
sharing contribution subaccount shall vest in accordance with a minimum vesting
schedule specified in the Adoption Agreement. The schedule must be at least as
favorable to Participants as either schedule(a) or (b) below.
(a) Graduated vesting according to the following schedule:
Years Vested
of Service Percentage
<PAGE>
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
(b) Full one hundred percent (100%) vesting after three (3) Years of Service.
8.4 Amendments to Vesting Schedule.
(a) If the Plan's vesting schedule is amended, or the Plan is amended in any
way that directly or indirectly affects the computation of the Participant's
nonforfeitable percentage or if the Plan is deemed amended by an automatic
change to or from a top-heavy vesting schedule, each Participant with at least
three (3) Years of Service with the Employer may elect, within a reasonable
period after the adoption of the amendment or change, to have the nonforfeitable
percentage computed under the Plan without regard to such amendment or change.
For any Participants who do not have at least one (1) Hour of Service in any
Plan Year beginning after December 31, 1988, the preceding sentence shall be
applied by substituting five (5) Years of Service for three (3) Years of Service
where such language appears.
(b) The period during which the election may be made shall commence with the
date the amendment is adopted or deemed to be made and shall end on the latest
of:
(i) sixty (60) days after the amendment is adopted
(ii) sixty (60) days after the amendment becomes effective; or
(iii) sixty (60) days after the Participant is issued written notice of the
amendment by the Employer or Plan Administrator.
(c) No amendment to the Plan shall be effective to the extent that it has the
effect of decreasing a Participant's accrued benefit. Notwithstanding the
preceding sentence, a Participant's Account balance may be reduced to the extent
permitted under section 412(c)(8) of the Code. For purposes of this paragraph,
a Plan amendment which has the effect of decreasing a Participant's Account
balance or eliminating an optional form of benefit, with respect to benefits
attributable to service before the amendment shall be treated as reducing an
accrued benefit. Furthermore, if the vesting schedule of a Plan is amended, in
the case of an Employee who is a Participant as of the later of the date such
amendment is adopted or the date it becomes effective, the nonforfeitable
percentage (determined as of such date) of such Employee's right to his
Employer-derived accrued benefit will not be less than his percentage computed
under the Plan without regard to such amendment.
8.5 Determination of Years of Service. For purposes of determining the vested
and nonforfeitable percentage of the Participant's Employer Contribution
subaccounts, all of the Participant's Years of Service with the Employer or an
Affiliated Employer shall be taken into account. If specified in the Adoption
Agreement, Years of Service with a predecessor employer will be treated as
service for the Employer; provided, however, if the Employer maintains the plan
of a predecessor employer, Years of Service with such predecessor employer will
be treated as service with the Employer without regard to any election.
8.6 Forfeiture of Nonvested Amounts.
<PAGE>
(a) For Plan Years beginning before 1985, any portion of a Participant's
Account that is not vested shall be forfeited by him as of the last day of the
Plan Year in which a Break in Service occurs. For Plan Years beginning after
1984, any portion of a Participant's Account that is not vested shall be
forfeited by him as of the last day of the Plan Year in which his fifth
consecutive Break in Service occurs. Any amounts thus forfeited shall be
reallocated as provided in ARTICLE 5 and shall not be considered part of a
Participant's Account in computing his vested interest. The remaining portion
of the Participant's Account will be nonforfeitable.
(b) If a distribution is made at a time when a Participant has a vested right
to less than one hundred percent (100%) of the value of the Participant's
Account attributable to Employer Contributions and forfeitures, as determined in
accordance with the provisions of section 8.3, and the nonvested portion of the
Participant's Account has not yet been forfeited in accordance with paragraph
(a) above:
(i) a separate remainder subaccount shall be established for the Participant's
interest in the Plan as of the time of the distribution, and
(ii) at any relevant time the Participant's vested portion of the separate
remainder subaccount shall be equal to an amount (X) determined by the following
formula:
X = P(AB + (R x D)) - (R x D)
For purposes of applying the formula: P is the vested percentage at the
relevant time; AB is the Account balance at the relevant time; D is the amount
of the distribution; and R is the ratio of the Account balance at the relevant
time to the Account balance after distribution.
8.7 Reinstatement of Benefit. If a benefit is forfeited because a Participant
or Beneficiary cannot be found, such benefit will be reinstated if a claim is
made by the Participant or Beneficiary.
ARTICLE 9
Joint and Survivor
Annuity Requirements
9.1 General. The provisions of this ARTICLE shall apply to any Participant who
is credited with at least one (1) Hour of Service with the Employer on or after
August 23, 1984, and such other Participants as provided in section 9.7.
9.2 Qualified Joint and Survivor Annuity. Unless an optional form of benefit
is selected pursuant to a Qualified Election within the ninety (90) day period
ending on the Annuity Starting Date, a married Participant's Vested Account
Balance will be paid in the form of a Qualified Joint and Survivor Annuity and
an unmarried Participant's Vested Account Balance will be paid in the form of a
life annuity. The Participant may elect to have such annuity distributed upon
attainment of the Earliest Retirement Age under the Plan.
9.3 Qualified Preretirement Survivor Annuity. Unless an optional form of
benefit has been selected within the Election Period pursuant to a Qualified
Election, if a Participant dies before the Annuity Starting Date, then the
Participant's Vested Account Balance shall be applied toward the purchase of an
annuity for the life of the Surviving Spouse. The Surviving Spouse may elect to
have such annuity distributed within a reasonable period after the Participant's
death.
9.4 Definitions.
<PAGE>
(a) Election Period.
(i) The period which begins on the first day of the Plan Year in which the
Participant attains age thirty-five (35) and ends on the date of the
Participant's death. If a Participant separates from service prior to the first
day of the Plan Year in which age thirty-five (35) is attained, with respect to
the Account balance as of the date of separation, the Election Period shall
begin on the date of separation.
(ii) A Participant who has not yet attained age thirty-five (35) as of the end
of any current Plan Year may make a special Qualified Election to waive the
qualified preretirement survivor annuity for the period beginning on the date of
such election and ending on the first day of the Plan Year in which the
Participant will attain age thirty-five (35). Such election shall not be valid
unless the Participant receives a written explanation of the qualified
preretirement survivor annuity in such terms as are comparable to the
explanation required under section 9.5. Qualified preretirement survivor
annuity coverage will be automatically reinstated as of the first day of the
Plan Year in which the Participant attains age thirty-five (35). Any new waiver
on or after such date shall be subject to the full requirements of this ARTICLE.
(b) Earliest Retirement Age. The earliest date on which, under the Plan, the
Participant could elect to receive retirement benefits.
(c) Qualified Election.
(i) A waiver of a Qualified Joint and Survivor Annuity or a qualified
preretirement survivor annuity. Any waiver of a Qualified Joint and Survivor
Annuity or a qualified preretirement survivor annuity shall not be effective
unless:
(1) the Participant's Spouse consents in writing to the election;
(2) the election designates a specific Beneficiary, including any class of
Beneficiaries or any contingent Beneficiaries, which may not be changed without
spousal consent (or the Spouse expressly permits designations by the Participant
without any further spousal consent);
(3) the Spouse's consent acknowledges the effect of the election; and
(4) the Spouse's consent is witnessed by a Plan representative or notary
public. Additionally, a Participant's waiver of the Qualified Joint and
Survivor Annuity shall not be effective unless the election designates a form of
benefit payment which may not be changed without spousal consent (or the Spouse
expressly permits designations by the participant without any further spousal
consent). If it is established to the satisfaction of a Plan representative
that there is no Spouse or that the Spouse cannot be located, a waiver will be
deemed a Qualified Election.
(ii) Any consent by a Spouse obtained under this provision (or establishment
that the consent of Spouse may not be obtained) shall be effective only with
respect to such Spouse. A consent that permits designations by the Participant
without any requirement of further consent by such Spouse must acknowledge that
the Spouse has the right to limit consent to a specific Beneficiary, and a
specific form of benefit where applicable, and that the Spouse voluntarily
elects to relinquish either or both of such rights. A revocation of a prior
waiver may be made by a Participant without the consent of the Spouse at any
time before the commencement of benefits. The number of revocations shall not
be limited. No consent obtained under this provision shall be valid unless the
Participant has received notice as provided in section 9.5.
(d) Qualified Joint and Survivor Annuity. An immediate annuity for the life of
the Participant with a survivor annuity for the life of the Spouse which equals
fifty percent (50%)
<PAGE>
of the amount of the annuity which is payable during the joint lives of the
Participant and the Spouse and which is the amount of benefit which can be
purchased with the Participant's Vested Account Balance.
(e) Spouse (Surviving Spouse). The Spouse or Surviving Spouse of the
Participant, provided that a former spouse will be treated as the Spouse or
Surviving Spouse and a current Spouse will not be treated as the Spouse or
Surviving Spouse to the extent provided under a qualified domestic relations
order as described in section 414(p) of the Code.
(f) Annuity Starting Date. The first day of the first period for which an
amount is paid as an annuity or any other form.
(g) Vested Account Balance. The aggregate value of the Participant's Vested
Account Balances derived from Employer and Employee contributions (including
rollovers and direct transfers), whether vested before or upon death, including
the proceeds of insurance contracts if any, on the Participant's life. The
provisions of this ARTICLE shall apply to a Participant who is vested in amounts
attributable to Employer Contributions, Employee contributions (or both) at the
time of death or distribution.
9.5 Notice Requirements
(a) In the case of a Qualified Joint and Survivor Annuity, the Plan
Administrator shall no less than thirty (30) days and no more than ninety (90)
days prior to the Annuity Starting Date, provide each Participant a written
explanation of:
(i) the terms and conditions of a Qualified Joint and Survivor Annuity;
(ii) the Participant's right to make and the effect of an election to waive the
Qualified Joint and Survivor Annuity form of benefit;
(iii) the rights of a Participant's Spouse; and
(iv) the right to make, and the effect of, a revocation of a previous election
to waive the Qualified Joint and Survivor Annuity.
(b) In the case of a qualified preretirement survivor annuity as described in
section 9.3, the Plan Administrator shall provide each Participant within the
applicable period for such Participant a written explanation of the qualified
preretirement survivor annuity in such terms and in such manner as would be
comparable to the explanation provided for meeting the requirements of
subsection (a) applicable to a Qualified Joint and Survivor Annuity.
(c) The applicable period for a Participant is whichever of the following
periods ends last:
(i) the period beginning with the first day of the Plan Year in which the
Participant attains age thirty-two (32) and ending with the close of the Plan
Year preceding the Plan Year in which the Participant attains age thirty-five
(35);
(ii) a reasonable period ending after the individual becomes a Participant;
(iii) a reasonable period ending after subsection (e) ceases to apply to the
Participant;
(iv) a reasonable period ending after this ARTICLE first applies to the
Participant. Notwithstanding the foregoing, notice must be provided within a
reasonable period ending after separation from service in the case of a
Participant who separates from service before attaining age thirty-five (35).
(d) For purposes of applying subsection (c), a reasonable period ending after
the enumerated events described above in subsections (ii), (iii) and (iv) is the
end of the two-year period beginning one (1) year prior to the date the
applicable event occurs, and ending one (1) year after that date. In the case
of a Participant who separates from service before the Plan Year in which age
thirty-five (35) is attained, notice shall be provided within the two (2) year
<PAGE>
period beginning one (1) year prior to separation and ending one (1) year after
separation. If such a participant thereafter returns to employment with the
Employer, the applicable period for such Participant shall be redetermined.
(e) Notwithstanding the other requirements of this section, the respective
notices prescribed by this section need not be given to a Participant if:
(i) the Plan fully subsidizes the cost of a Qualified Joint and Survivor
Annuity or qualified preretirement survivor annuity; and
(ii) the Plan does not allow the Participant to waive the Qualified Joint and
Survivor Annuity or qualified preretirement survivor annuity and does not allow
a married Participant to designate a nonspouse Beneficiary.
For purposes of this subsection, a plan fully subsidizes the costs of a
benefit if no increase in cost, or decrease in benefits to the Participant may
result from the participant's failure to elect another benefit.
9.6 Safe Harbor Rules.
(a) This section shall apply to a Participant in a profit sharing plan, and to
any distribution, made on or after the first day of the first Plan year
beginning after December 31, 1988, from or under a separate account attributable
solely to accumulated deductible Employee contributions, as defined in section
72(o)(5)(B) of the Code, and maintained on behalf of a Participant in a money
purchase pension plan (including a target benefit plan) if the following
conditions are satisfied:
(i) the Participant does not or cannot elect payments in the form of a life
annuity; and
(ii) on the death of a Participant, the Participant's Vested Account Balance
will be paid to the Participant's Surviving Spouse, but if there is no Surviving
Spouse, or if the Surviving Spouse has consented in a manner conforming to a
Qualified Election, then to the Participant's Designated Beneficiary.
(b) The Surviving Spouse may elect to have distribution of the Vested Account
Balance commence within the ninety (90) day period following the date of the
Participant's death. The Account balance shall be adjusted for gains or losses
occurring after the Participant's death in accordance with the provisions of the
Plan governing the adjustment of Account balances for other types of
distributions.
(c) This section shall not be operative with respect to a Participant in a
profit sharing plan if the plan is a direct or indirect transferee of a defined
benefit plan, money purchase plan, a target benefit plan, stock bonus, or profit
sharing plan which is subject to the survivor annuity requirements of sections
401(a)(11) and 417 of the Code. If this section is operative, then the
provisions of this ARTICLE, other than section 9.7, shall be inoperative.
(d) The Participant may waive the spousal death benefit described in this
section at any time provided that no such waiver shall be effective unless it
satisfies the conditions of section 9.4(c) (other than the notification
requirement referred to therein) that would apply to the Participant's waiver of
the qualified preretirement survivor annuity.
(e) For purposes of this section, Vested Account Balance shall mean, in the
case of a money purchase pension plan or a target benefit plan, the
Participant's separate Account balance attributable solely to accumulated
deductible Employee contributions within the meaning of section 72(o)(5)(B) of
the Code. In the case of a profit sharing plan, Vested Account Balance shall
have the same meaning as provided in section 9.4(g).
9.7 Transitional Rules.
<PAGE>
(a) Any living Participant not receiving benefits on August 23, 1984, who would
otherwise not receive the benefits prescribed by the previous sections of this
ARTICLE must be given the opportunity to elect to have the prior sections of
this ARTICLE apply if such Participant is credited with at least one (1) Hour of
Service under this Plan or a predecessor plan in a Plan Year beginning on or
after January 1, 1976, and such Participant had at least ten (10) years of
vesting service when he or she separated from service.
(b) Any living Participant not receiving benefits on August 23, 1984, who was
credited with at least one (1) Hour of Service under this Plan or a predecessor
plan on or after September 2, 1974, and who is not otherwise credited with any
service in a Plan Year beginning on or after January 1, 1976, must be given the
opportunity to have his or her benefits paid in accordance with subsection (d).
(c) The respective opportunities to elect (as described in subsections (a) and
(b) above) must be afforded to the appropriate Participants during the period
commencing on August 23, 1984, and ending on the date benefits would otherwise
commence to said Participants.
(d) Any Participant who has elected pursuant to subsection (b) and any
Participant who does not elect under subsection (a) or who meets the
requirements of subsection (a) except that such Participant does not have at
least ten (10) years of vesting service when he or she separates from service,
shall have his or her benefits distributed in accordance with all of the
following requirements if benefits would have been payable in the form of a life
annuity:
(i) Automatic Joint and Survivor Annuity. If benefits in the form of a life
annuity become payable to a married Participant who:
(1) begins to receive payments under the Plan on or after Normal Retirement
Age; or
(2) dies on or after Normal Retirement Age while still working for the
Employer; or
(3) begins to receive payments on or after the qualified early retirement age;
or
(4) separates from service on or after attaining Normal Retirement Age (or the
qualified early retirement age) and after satisfying the eligibility
requirements for the payment of benefits under the Plan and thereafter dies
before beginning to receive such benefits;
then such benefits will be received under this Plan in the form of a
Qualified Joint and Survivor Annuity, unless the Participant has elected
otherwise during the Election Period. The Election Period must begin at least
six (6) months before the Participant attains qualified early retirement age and
end not more than ninety (90) days before the commencement of benefits. Any
election hereunder will be in writing and may be changed by the Participant at
any time.
(ii) Election of Early Survivor Annuity. A Participant who is employed after
attaining the qualified early retirement age will be given the opportunity to
elect, during the Election Period, to have a survivor annuity payable on death.
If the Participant elects the survivor annuity, payments under such annuity must
not be less than the payments which would have been made to the Spouse under the
Qualified Joint and Survivor Annuity if the Participant had retired on the day
before his or her death. Any election under this provision will be in writing
and may be changed by the Participant at any time. The Election Period begins
on the later of (1)The 90th day before the Participant attains the qualified
early retirement age; or (2)The date on which participation begins, and ends on
the date the Participant terminates employment.
(e) The following terms shall have the meanings specified herein:
(i) Qualified Early Retirement Age. The latest of:
<PAGE>
(1) the earliest date, under the Plan, on which the Participant may elect to
receive retirement benefits;
(2) the first day of the 120th month beginning before the Participant reaches
Normal Retirement Age; or
(3) the date the Participant begins participation.
(ii) Qualified Joint and Survivor Annuity. An annuity for the life of the
Participant with a survivor annuity for the life of the Spouse as described in
section 9.4(d).
ARTICLE 10
Distribution Provisions
10.1 Vesting on Distribution Before Break in Service.
(a) If an Employee terminates service, and the value of the Employee's Vested
Account Balance derived from Employer and Employee contributions is not greater
than three thousand five hundred dollars ($3,500), the Employee will receive a
distribution of the value of the entire vested portion of such Account balance
and the nonvested portion will be treated as a forfeiture. For purposes of this
section, if the value of an Employee's Vested Account Balance is zero, the
Employee shall be deemed to have received a distribution of such Vested Account
Balance. A Participant's Vested Account Balance shall not include accumulated
deductible Employee contributions within the meaning of section 72(o)(5)(B) of
the Code for Plan Years beginning prior to January 1, 1989.
(b) If an Employee terminates service and elects, in accordance with this
ARTICLE, to receive the value of his Vested Account Balance, the nonvested
portion will be treated as a forfeiture. If the Employee elects to have
distributed less than the entire vested portion of the Account balance derived
from Employer Contributions, the part of the nonvested portion that will be
treated as a forfeiture is the total nonvested portion multiplied by a fraction,
the numerator of which is the amount of the distribution attributable to
Employer Contributions and the denominator of which is the total value of the
vested Employer derived Account balance.
(c) If an Employee receives a distribution pursuant to this section and the
Employee resumes employment covered under this Plan, the Employee's Employer-
derived Account balance will be restored to the amount on the date of
distribution if the Employee repays to the Plan the full amount of the
distribution attributable to Employer Contributions before the earlier of five
(5) years after the first date on which the Participant is subsequently
reemployed by the Employer, or the date the Participant incurs five (5)
consecutive one (1) year Breaks in Service following the date of the
distribution. If an Employee is deemed to receive a distribution pursuant to
this section, and the Employee resumes employment covered under this Plan before
the date the Participant incurs five (5) consecutive one (1) year Breaks in
Service, upon the reemployment of such Employee, the Employer-derived Account
balance of the Employee will be restored to the amount on the date of such
deemed distribution.
10.2 Restrictions on Immediate Distributions.
(a) If the value of a Participant's Vested Account Balance derived from
Employer and Employees contributions exceeds (or at the time of any prior
distribution exceeded) three thousand five hundred dollars ($3,500) and the
Account balance is immediately distributable,
<PAGE>
the Participant and the Participant's Spouse (or where either the Participant or
the Spouse has died, the survivor) must consent to any distribution of such
Account balance. The consent of the Participant and the Participant's Spouse
shall be obtained in writing within the ninety (90) day period ending on the
Annuity Starting Date. The Annuity Starting Date is the first day of the first
period for which an amount is paid as an annuity or any other form. The Plan
Administrator shall notify the Participant and the Participant's Spouse of the
right to defer any distribution until the Participant's Account balance is no
longer immediately distributable. Such notification shall include a general
description of the material features, and an explanation of the relative values
of, the optional forms of benefit available under the Plan in a manner that
would satisfy the notice requirements of section 417(a)(3), and shall be
provided no less than thirty (30) days and no more than ninety (90) days prior
to the Annuity Starting Date.
(b) Notwithstanding the provisions of subsection (a), only the Participant need
consent to the commencement of a distribution in the form of a Qualified Joint
and Survivor Annuity while the Account balance is immediately distributable.
(Furthermore, if payment in the form of a Qualified Joint and Survivor Annuity
is not required with respect to the Participant pursuant to section 9.6 of the
Plan, only the Participant need consent to the distribution of an Account
balance that is immediately distributable). Neither the consent of the
Participant nor the Participant's Spouse shall be required to the extent that a
distribution is required to satisfy section 401(a)(9) or section 415 of the
Code. In addition, upon termination of this Plan if the Plan does not offer an
annuity option (purchased from a commercial provider), the Participant's Account
balance may, without the Participant's consent, be distributed to the
Participant or transferred to another defined contribution plan (other than an
employee stock ownership plan as defined in section 4975(e) (7) of the Code)
within the same controlled group.
(c) An Account balance is immediately distributable if any part of the Account
balance could be distributed to the Participant (or Surviving Spouse) before the
Participant attains (or would have attained if not deceased) the later of Normal
Retirement Age or age sixty-two (62).
(d) For purposes of determining the applicability of the foregoing consent
requirements to distributions made before the first day of the first Plan Year
beginning after December 31, 1988, the Participant's Vested Account Balance
shall not include amounts attributable to accumulated deductible Employee
contributions within the meaning of section 72(o)(5)(B) of the Code.
10.3 Commencement of Benefits.
(a) Unless the Participant elects otherwise, distribution of benefits will
begin no later than the 60th day after the latest of the close of the Plan Year
in which:
(i) the Participant attains age sixty-five (65) (or Normal Retirement Age, if
earlier);
(ii) the 10th anniversary of the year in which the Participant commenced
participation in the Plan occurs; or
(iii) the Participant terminates service with the Employer.
(b) Notwithstanding the foregoing, the failure of a Participant and Spouse to
consent to a distribution while a benefit is immediately distributable, within
the meaning of section 10.2 of the Plan, shall be deemed to be an election to
defer commencement of payment of any benefit sufficient to satisfy this section.
<PAGE>
10.4 Early Retirement With Age and Service Requirement. If a Participant
separates from service before satisfying the age requirement for early
retirement, but has satisfied the service requirement, the Participant will be
entitled to elect an early retirement benefit upon satisfaction of such age
requirement.
10.5 Nontransferability of Annuities. Any annuity contract distributed
herefrom must be nontransferable.
10.6 Conflicts With Annuity Contracts. The terms of any annuity contract
purchased and distributed by the Plan to a Participant or Spouse shall comply
with the requirements of this Plan.
ARTICLE 11
Timing and
Modes of Distribution
11.1 General Rules.
(a) Subject to ARTICLE 9, the requirements of this ARTICLE shall apply to any
distribution of a Participant's interest and will take precedence over any
inconsistent provisions of this Plan. Unless otherwise specified, the
provisions of this ARTICLE apply to calendar years beginning after December 31,
1984.
(b) All distributions required under this ARTICLE shall be determined and made
in accordance with the income tax regulations under section 401(a)(9) of the
Code, including the minimum distribution incidental benefit requirement of
section 1.401(a)(9)-2 of the proposed regulations.
11.2 Required Beginning Date. The entire interest of a Participant must be
distributed or begin to be distributed no later than the Participant's Required
Beginning Date.
11.3 Limits on Distribution Periods. As of the first Distribution Calendar
Year, distributions, if not made in a single-sum, may only be made over one of
the following periods (or a combination thereof):
(a) the life of the Participant;
(b) the life of the Participant and a Designated Beneficiary;
(c) a period certain not extending beyond the Life Expectancy of the
Participant; or
(d) a period certain not extending beyond the joint and last survivor
expectancy of the Participant and a Designated Beneficiary
11.4 Determination of Amount to be Distributed Each Year.
(a) Individual Account.
(i) If a Participant's Benefit is to be distributed over (1)Ea. period not
extending beyond the Life Expectancy of the Participant or the joint life and
last survivor expectancy of the Participant and the Participant's Designated
Beneficiary or (2)Ea. period not extending beyond the Life Expectancy of the
Designated Beneficiary, the amount required to be distributed for each calendar
year, beginning with distributions for the first Distribution Calendar Year,
must at least equal the quotient obtained by dividing the Participant's Benefit
by the Applicable Life Expectancy.
(ii) For calendar years beginning before January 1, 1989, if the Participant's
Spouse is not the Designated Beneficiary, the method of distribution selected
must assure that at least fifty
<PAGE>
percent (50%) of the present value of the amount available for distribution is
paid within the Life Expectancy of the Participant.
(iii) For calendar years beginning after December 31, 1988, the amount to be
distributed each year, beginning with distributions for the first Distribution
Calendar Year shall not be less than the quotient obtained by dividing the
Participant's Benefit by the lesser of (1)The Applicable Life Expectancy or
(2)If the Participant's Spouse is not the Designated Beneficiary, the applicable
divisor determined from the table set forth in Q&A-4 of section 1.401(a)(9)-2 of
the proposed regulations. Distributions after the death of the Participant
shall be distributed using the Applicable Life Expectancy in subsection (a)(i)
above as the relevant divisor without regard to proposed regulations section
1.401(a)(9)-2.
(iv) The minimum distribution required for the Participant's first Distribution
Calendar Year must be made on or before the Participant's Required Beginning
Date. The minimum distribution for other calendar years, including the minimum
distribution for the Distribution Calendar Year in which the Employee's Required
Beginning Date occurs, must be made on or before December 31 of that
Distribution Calendar Year.
(b) Other Forms. If the Participant's Benefit is distributed in the form of an
annuity purchased from an insurance company, distributions thereunder shall be
made in accordance with the requirements of section 401(a)(9) of the Code and
the proposed regulations thereunder.
11.5 Death Distribution Provisions.
(a) Distribution Beginning Before Death. If the Participant dies after
distribution of his or her interest has begun, the remaining portion of such
interest will continue to be distributed at least as rapidly as under the method
of distribution being used prior to the Participant's death.
(b) Distribution Beginning After Death. If the Participant dies before
distribution of his or her interest begins, distribution of the Participant's
entire interest shall be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death except to the extent
that an election is made to receive distributions in accordance with (i) or (ii)
below:
(i) if any portion of the Participant's interest is payable to a Designated
Beneficiary, distributions may be made over the life or over a period certain
not greater than the Life Expectancy of the Designated Beneficiary commencing on
or before December 31 of the calendar year immediately following the calendar
year in which the Participant died;
(ii) if the Designated Beneficiary is the Participant's Surviving Spouse, the
date distributions are required to begin in accordance with (i) above shall not
be earlier than the later of (1)December 31 of the calendar year immediately
following the calendar year in which the Participant died and (2)December 31 of
the calendar year in which the Participant would have attained age seventy and
one-half (70E1/2).
(c) If the Participant has not made an election pursuant to this section by the
time of his or her death, the Participant's Designated Beneficiary must elect
the method of distribution no later than the earlier of (1)December 31 of the
calendar year in which distributions would be required to begin under this
section; or (2)December 31 of the calendar year which contains the fifth
anniversary of the date of death of the Participant. If the Participant has no
Designated Beneficiary, or if the Designated Beneficiary does not elect a method
of
<PAGE>
distribution, distribution of the Participant's entire interest must be
completed by December 31 of the calendar year containing the fifth anniversary
of the Participant's death.
(d) For purposes of subsection (b) above, if the Surviving Spouse dies after
the Participant, but before payments to such Spouse begin, the provisions of
subsection (b), with the exception of paragraph (ii) therein, shall be applied
as if the Surviving Spouse were the Participant.
(e) For purposes of this section, any amount paid to a child of the Participant
will be treated as if it had been paid to the Surviving Spouse if the amount
becomes payable to the Surviving Spouse when the child reaches the age of
majority.
(f) For the purposes of this section, distribution of a Participant's interest
is considered to begin on the Participant's Required Beginning Date (or, if
subsection (d) above is applicable, the date distribution is required to begin
to the Surviving Spouse pursuant to subsection (b) above). If distribution in
the form of an annuity described in section 11.4(b) above irrevocably commences
to the Participant before the Required Beginning Date, the date distribution is
considered to begin is the date distribution actually commences.
11.6 Designation of Beneficiary. Subject to the rules of ARTICLE 9, a
Participant (or former Participant) may designate from time to time any person
or persons (who may be designated continentally or successively and may be an
entity other than a natural person) as his Beneficiary who will be entitled to
receive any undistributed amounts credited to the participant's separate Account
under the Plan at the time of the participant's death. Any such Beneficiary
designation by a Participant shall be made in writing in the manner prescribed
by the Plan Administrator, and shall be effective only when filed with the Plan
Administrator during the participant's lifetime. A Participant may change or
revoke his Beneficiary designation at any time in the manner prescribed by the
Plan Administrator. If any portion of the participant's Account is invested in
insurance pursuant to ARTICLE 14, the Beneficiary of the benefits under the
insurance policy shall be the person or persons designated under the policy. If
the Designated Beneficiary (or each of the Designated Beneficiaries) predeceases
the Participant, the participant's Beneficiary designation shall be ineffective.
If no Beneficiary designation is in effect at the time of the Participant's
death, his Beneficiary shall be his estate.
11.7 Definitions.
(a) Applicable Life Expectancy. The Life expectancy (or joint and last
survivor expectancy) calculated using the attained age of the Participant (or
Designated Beneficiary) as of the Participant's (or Designated Beneficiary)
birthday in the applicable calendar year reduced by one (1) for each calendar
year which has elapsed since the date Life Expectancy was first calculated. If
Life Expectancy is being recalculated, the Applicable Life Expectancy shall be
the Life Expectancy as so recalculated. The applicable calendar year shall be
the first Distribution Calendar Year, and if Life Expectancy is being
recalculated such succeeding calendar year. If annuity payments commence in
accordance with section 11.4(b) before the Required Beginning Date, the
applicable calendar year is the year such payments commence. If distribution is
in the form of an immediate annuity purchased after the participant's death with
the participant's remaining interest, the applicable calendar year is the year
of purchase.
(b) Designated Beneficiary. The individual who is designated as the
Beneficiary under the Plan in accordance with section 401(a)(9) and the proposed
regulations thereunder.
(c) Distribution Calendar Year. A calendar year for which a minimum
distribution is required. For distributions beginning before the participant's
death, the first Distribution Calendar Year is the calendar year immediately
preceding the calendar year which contains
<PAGE>
the participant's Required Beginning Date. For distributions beginning after
the participant's death, the first Distribution Calendar Year is the calendar
year in which distributions are required to begin pursuant to section 11.5
above.
(d) Life Expectancy.
(i) Life Expectancy and joint and last survivor expectancy are computed by use
of the expected return multiples in Tables V and VI of section 1.72-9 of the
income tax regulations.
(ii) Unless otherwise elected by the Participant (or Spouse, in the case of
distributions described in section 11.5(b)(ii) above) by the time distributions
are required to begin, life expectancies shall be recalculated annually. Such
election shall be irrevocable as to the Participant (or Spouse) and shall apply
to all subsequent years. The Life Expectancy of a non-Spouse Beneficiary may
not be recalculated.
(e) Participant's Benefit.
(i) The Account balance as of the last valuation date in the calendar year
immediately preceding the Distribution Calendar Year (valuation calendar year)
increased by the amount of any contributions or forfeitures allocated to the
Account balance as of dates in the valuation calendar year after the valuation
date and decreased by distributions made in the valuation calendar year after
the valuation date.
(ii) For purposes of subsection (i) above, if any portion of the minimum
distribution for the first Distribution Calendar Year is made in the second
Distribution Calendar Year on or before the Required Beginning Date, the amount
of the minimum distribution made in the second Distribution Calendar Year shall
be treated as if it had been made in the immediately preceding Distribution
Calendar Year.
(f) Required Beginning Date.
(i) General Rule. The Required Beginning Date of a Participant is the first
day of April of the calendar year following the calendar year in which the
Participant attains age seventy and one-half (70E1/2).
(ii) Transitional Rules. The Required Beginning Date of a Participant who
attains age seventy and one-half (70E1/2) before January 1, 1988, shall be
determined in accordance with (1) or (2) below:
(1) Non-Five-Percent Owners. The Required Beginning Date of a Participant who
is not a Five Percent (5%) Owner is the first day of April of the calendar year
following the calendar year in which the later of retirement or attainment of
age seventy and one-half (70E1/2) occurs.
(2) Five Percent Owners. The Required Beginning Date of a Participant who is a
Five Percent (5%) Owner during any year beginning after December 31, 1979, is
the first day of April following the later of:
(2.a) the calendar year in which the Participant attains age seventy and
one-half (70E1/2); or
(2.b) the earlier of the calendar year with or within which ends the Plan
Year in which the Participant becomes a Five Percent (5%) Owner, or the calendar
year in which the Participant retires. The Required Beginning Date of a
Participant who is not a Five Percent (5%) Owner who attains age seventy and
one-half (70E1/2) during 1988 and who has not retired as of January 1, 1989, is
April 1, 1990.
(iii) Five Percent Owner. A Participant is treated as a Five Percent (5%)
Owner for purposes of this section if such Participant is a Five Percent (5%)
Owner as defined in section 416(i) of the Code (determined in accordance with
section 416 but without regard to whether
<PAGE>
the Plan is top-heavy) at any time during the Plan Year ending with or within
the calendar year in which such owner attains age sixty-six and one-half
(66E1/2) or any subsequent year.
(iv) Once distributions have begun to a Five Percent (5%) Owner under this
section, they must continue to be distributed, even if the Participant ceases to
be a Five Percent (5%) Owner in a subsequent year.
11.8 Transitional Rule.
(a) Notwithstanding the other requirements of this ARTICLE and subject to the
requirements of ARTICLE 9, distribution on behalf of any Employee, including a
Five Percent (5%) Owner, may be made in accordance with all of the following
requirements (regardless of when such distribution commences):
(i) The distribution by the Trust is one which would not have disqualified such
trust under section 401(a)(9) of the Internal Revenue Code as in effect prior to
amendment by the Deficit Reduction Act of 1984.
(ii) The distribution is in accordance with a method of distribution designated
by the Employee whose interest in the Trust is being distributed or, if the
Employee is deceased, by a Beneficiary of such Employee.
(iii) Such designation was in writing, was signed by the Employee or the
Beneficiary, and was made before January 1, 1984.
(iv) The Employee had accrued a benefit under the Plan as of December 31, 1983.
(v) The method of distribution designated by the Employee or the Beneficiary
specifies the time at which distributions will be made, and in the case of any
distribution upon the Employee's death, the Beneficiaries of the Employee listed
in order of priority.
(b) A distribution upon death will not be covered by this transitional rule
unless the information in the designation contains the required information
described above with respect to the distributions to be made upon the death of
the Employee.
(c) For any distribution which commences before January 1, 1984, but continues
after December 31, 1983, the Employee, or the Beneficiary, to whom such
distribution is being made, will be presumed to have designated the method of
distribution under which the distribution is being made if the method of
distribution was specified in writing and the distribution satisfies the
requirements in subsections (a)(i) and (a)(v).
(d) If a designation is revoked, any subsequent distribution must satisfy the
requirements of section 401(a)(9) of the Code and the proposed regulations
thereunder. If a designation is revoked subsequent to the date distributions
are required to begin, the Trust must distribute by the end of the calendar year
following the calendar year in which the revocation occurs the total amount not
yet distributed which would have been required to have been distributed to
satisfy section 401(a)(9) of the Code and the regulations thereunder but for the
section 242(b)(2) election. For calendar years beginning after December 31,
1988, such distributions must meet the minimum distribution incidental benefit
requirements in section 1.401(a)(9)-2 of the proposed regulations. Any changes
in the designation will be considered to be a revocation of the designation.
However, the mere substitution or addition of another beneficiary (one not named
in the designation) under the designation will not be considered to be a
revocation of the designation, so long as such substitution or addition does not
alter the period over which distributions are to be made under the designation,
directly or indirectly (for example, by altering the relevant measuring life).
In the case in which an amount is
<PAGE>
transferred or rolled over from one plan to another plan, the rules in Q&A J-2
and Q&A J-3 shall apply.
11.9 Optional Forms of Benefit.
(a) Except to the extent benefits are required to be paid in the form of an
automatic joint and survivor annuity under Article 9, any amount which a
Participant shall be entitled to receive under the Plan shall be distributed in
one or a combination of the following ways:
(i) in a lump-sum payment of cash, the amount of which shall be determined by
redeeming all Shares credited to the Participant's Account under the Plan as of
the date of distribution;
(ii) in a lump-sum payment including a distribution in kind of all Shares
credited to the Participant's Account under the Plan as of the date of
distribution;
(iii) in substantially equal monthly, quarterly, or annual installment
payments of cash, or the distribution of Shares in kind, over a period certain
not to exceed the Life Expectancy of the Participant or the joint and last
survivor Life Expectancy of the Participant and his Beneficiary, determined in
each case as of the earlier of: (1) the end of the Plan Year in which occurs
the event entitling the Participant to a distribution of benefits, or (2) the
date such installments commence;
(iv) if permitted by the Sponsor, in monthly, quarterly, or annual installment
payments of cash, or the distribution of Shares in kind, so that the amount
distributed in each Plan Year equals the quotient obtained by dividing the
Participant's Account at the beginning of that Plan Year by the joint and last
survivor Life Expectancy of the Participant and the Beneficiary for that Plan
Year. The Life Expectancy will be computed using the recomputation method
described in section 11.7(d). Unless the Spouse of the retired Participant is
the Beneficiary, the actuarial present value of all expected payments to the
retired Participant must be more than fifty percent (50%) of the actuarial
present value of payments to the retired Participant and the Beneficiary; or
(v) by application of the Participant's vested Account to the purchase of a
nontransferable immediate or deferred annuity contract, on an individual or
group basis. Unless the Spouse of the retired Participant is the Beneficiary,
the actuarial present value of all expected payments to the retired Participant
must be more than fifty percent (50%) of the actuarial present value of payments
to the retired Participant and the Beneficiary.
(b) If the Participant fails to select a method of distribution, except as may
be required by ARTICLE 9, all amounts which he is entitled to receive under the
Plan shall be distributed to him in a lump-sum payment.
ARTICLE 12
Withdrawals
12.1 Withdrawal of Nondeductible Voluntary Contributions. Subject to the
Qualified Election requirements of ARTICLE 9 and section 12.3, any Participant
who has made nondeductible voluntary contributions may, upon thirty (30) days
notice in writing filed with the Plan Administrator, have paid to him all or any
portion of the fair market value of his nondeductible voluntary contribution
subaccount.
12.2 Hardship Withdrawals. If the Adoption Agreement so provides and the
Employer elects, this section applies only to the profit sharing contribution
subaccount and only if the
<PAGE>
profit sharing allocation formula selected in the Adoption Agreement is not
integrated with Social Security.
(a) Demonstration of Need. Subject to the Qualified Election requirements of
ARTICLE 9 and section 12.3, if a Participant establishes an immediate and heavy
financial need for funds because of a hardship resulting from the purchase or
renovation of a primary residence, the education of the Participant or a member
of his immediate family (including special education), the medical or personal
expenses of the Participant or a member of his immediate family, or other
demonstrable emergency as determined by the Plan Administrator on a uniform and
nondiscriminatory basis, the Participant shall be permitted, subject to the
limitations of subsection (b) below, to make a hardship withdrawal of an amount
credited to his profit sharing contribution subaccount under the Plan.
(b) Amount of Hardship Withdrawal. The amount of any hardship withdrawal by a
Participant under subsection (a) above shall not exceed the amount required to
meet the immediate financial need created by the hardship and not reasonably
available from other resources of the Participant.
(c) Prior Withdrawal of Nondeductible Voluntary Participant Contributions. A
Participant shall not be permitted to make a hardship withdrawal under
subsection (a) above unless he has already withdrawn, in accordance with section
12.1, any amount credited to his nondeductible voluntary contributions
subaccount.
12.3 Manner of Making Withdrawals. Any withdrawal by a Participant under the
Plan shall be made only after the Participant files a written request with the
Plan Administrator specifying the nature of the withdrawal (and the reasons
therefor, if a hardship withdrawal), and the amount of funds requested to be
withdrawn. Upon approving any withdrawal, the Plan Administrator shall furnish
the Trustee with written instructions directing the Trustee to make the
withdrawal in a lump-sum payment of cash to the Participant. In making any
withdrawal payment, the Trustee shall be fully entitled to rely on the
instructions furnished by the Plan Administrator, and shall be under no duty to
make any inquiry or investigation with respect thereto. Unless section 9.6 is
applicable, if the Participant is married, his Spouse must consent to the
withdrawal pursuant to a Qualified Election (as defined in section 9.4(c))
within the ninety (90) day period ending on the date of the withdrawal.
12.4 Limitations on Withdrawals. The Plan Administrator may prescribe uniform
and nondiscriminatory rules and procedures limiting the number of times a
Participant may make a withdrawal under the Plan during any Plan Year, and the
minimum amount a Participant may withdraw on any single occasion.
ARTICLE 13
Loans
13.1 General Provisions.
(a) If the Adoption Agreement so provides and the Employer so elects, loans
shall be made available to any Participant or Beneficiary who is a
party-in-interest (as defined in section 3(14) of ERISA) on a reasonably
equivalent basis. A Participant or Beneficiary who is not a party-in-interest
(as defined in section 3(14) of ERISA) shall not be eligible to receive a loan
under this ARTICLE.
<PAGE>
(b) Loans shall not be made available to Highly Compensated Employees (as
defined in section 414(q) of the Code) in an amount greater than the amount made
available to other Employees.
(c) Loans must be adequately secured and bear a reasonable interest rate.
(d) No Participant loan shall exceed the present value of the participant's
Vested Account Balance.
(e) Unless section 9.6 is applicable, a Participant must obtain the consent of
his or her Spouse, if any, to use of the Account balance as security for the
loan. Spousal consent shall be obtained no earlier than the beginning of the
ninety (90) day period that ends on the date on which the loan is to be so
secured. The consent must be in writing, must acknowledge the effect of the
loan, and must be witnessed by a Plan representative or notary public. Such
consent shall thereafter be binding with respect to the consenting Spouse or any
subsequent Spouse with respect to that loan. A new consent shall be required if
the Account balance is used for renegotiation, extension, renewal or other
revision of the loan.
(f) In the event of default, foreclosure on the note and attachment of security
will not occur until a distributable event occurs under the Plan.
(g) Loans will not be made to any shareholder-employee or Owner-Employee. For
purposes of this requirement, a shareholder-employee means an Employee or
officer of an electing small business (subchapter S) corporation who owns (or is
considered as owning within the meaning of section 318(a)(1) of the Code), on
any day during the taxable year of such corporation, more than five percent (5%)
of the outstanding stock of the corporation.
(h) If a valid spousal consent has been obtained in accordance with subsection
(e), then, notwithstanding any other provision of this Plan, the portion of the
participant's Vested Account Balance used as a security interest held by the
Plan by reason of a loan outstanding to the Participant shall be taken into
account for purposes of determining the amount of the Account balance payable at
the time of death or distribution, but only if the reduction is used as
repayment of the loan. If less than one hundred percent (100%) of the
Participant's Vested Account Balance (determined without regard to the preceding
sentence) is payable to the Surviving Spouse, then the Account balance shall be
adjusted by first reducing the Vested Account Balance by the amount of the
security used as repayment of the loan, and then determining the benefit payable
to the Surviving Spouse.
13.2 Administration of Loan Program.
(a) The Plan's loan program will be administered by the Plan Administrator.
(b) Loan requests shall be made on a form prescribed by the Plan Administrator
and shall comply with section 13.4.
(c) Loan requests that comply with all the requirements of this ARTICLE shall
be approved by the Plan Administrator.
(d) The rate of interest to be charged on loans shall be determined under
section 13.5.
(e) The only collateral that may be used as security for a loan, and the
limitations and requirements applicable, are determined under section 13.6.
(f) The rules regarding defaults are set forth in section 13.9.
13.3 Amount of Loan. Loans to any Participant or Beneficiary will not be made
to the extent that such loan, when added to the outstanding balance of all other
loans to the Participant or Beneficiary, would exceed the lesser of:
<PAGE>
(a) fifty thousand dollars ($50,000) reduced by the excess (if any) of the
highest outstanding balance of loans during the one (1) year period ending on
the day before the loan is made, over the outstanding balance of loans from the
Plan on the date the loan is made; or
(b) one-half (1/2) the present value of the nonforfeitable accrued benefit of
the Participant.
(c) For the purpose of the above limitation, all loans from all plans of the
Employer and other members of a group of employers described in sections 414(b),
414(c) and 414(m) of the Code are aggregated.
13.4 Manner of Making Loans. A request by a Participant for a loan shall be
made in writing to the Plan Administrator and shall specify the amount of the
loan, and the subaccount(s) or Shares of the Participant from which the loan
should be made. The terms and conditions on which the Plan Administrator shall
approve loans under the Plan shall be applied on a uniform and nondiscriminatory
basis with respect to all Participants. If a Participant's request for a loan
is approved by the Plan Administrator, the Plan Administrator shall furnish the
Trustee with written instructions directing the Trustee to make the loan in a
lump-sum payment of cash to the Participant. In making any loan payment under
this ARTICLE, the Trustee shall be fully entitled to rely on the instructions
furnished by the Plan Administrator and shall be under no duty to make any
inquiry or investigation with respect thereto.
13.5 Terms of Loan. Loans shall be made on such terms and subject to such
limitations as the Plan Administrator may prescribe. Furthermore, any loan
shall, by its terms, require that repayment (principal and interest) be
amortized in level payments, not less frequently than quarterly, over a period
not extending beyond five (5) years from the date of the loan, unless such loan
is used to acquire a dwelling unit which, within a reasonable time (determined
at the time the loan is made) will be used as the principal residence of the
Participant. The rate of interest to be charged shall be determined by the
Plan Administrator in accordance with the rates quoted by representative
financial institutions in the local area for similar loans.
13.6 Security for Loan. Any loan to a Participant under the Plan shall be
secured by the pledge of all the Participant's right, title, and interest in the
Trust. Such pledge shall be evidenced by the execution of a promissory note by
the Participant which shall provide that, in the event of any default by the
Participant on a loan repayment, the Plan Administrator shall be authorized (to
the extent permitted by law) to deduct the amount of the loan outstanding and
any unpaid interest due thereon from the Participant's wages or salary to be
thereafter paid by the Employer, and to take any and all other actions necessary
and appropriate to enforce collection of the unpaid loan. An assignment or
pledge of any portion of the Participant's interest in the Plan and a loan,
pledge, or assignment with respect to any insurance contract purchased under the
Plan, will be treated as a loan under this section. In the event the value of
the Participant's vested Account at any time is less than one hundred
twenty-five percent (125%) of the outstanding loan balance, the Plan
Administrator shall request additional collateral of sufficient value to
adequately secure the repayment of the loan. Failure to provide such
additional collateral upon a request of the Plan Administrator shall
constitute an event of default.
13.7 Segregated Investment. Loans shall be considered a Participant directed
investment and, for the limited purposes of allocating earnings and losses
pursuant to ARTICLE 5, shall not be considered a part of the common fund under
the Trust.
13.8 Repayment of Loan. The Plan Administrator shall have the sole
responsibility for ensuring that a Participant timely makes all loan repayments,
and for notifying the Trustee in
<PAGE>
the event of any default by the Participant on the loan. Each loan repayment
shall be paid to the Trustee and shall be accompanied by written instructions
from the Plan Administrator that identify the Participant on whose behalf the
loan repayment is being made.
13.9 Default on Loan.
(a) In the event of a termination of the Participant's employment with the
Affiliated Employers or a default by a Participant on a loan repayment, all
remaining payments on the loan shall be immediately due and payable. The
Employer shall, upon the direction of the Plan Administrator, to the extent
permitted by law, deduct the total amount of the loan outstanding and any unpaid
interest due thereon from the wages or salaries payable to the Participant by
the Employer in accordance with the Participant's promissory note. In addition,
the Plan Administrator shall take any and all other actions necessary and
appropriate to enforce collection of the unpaid loan. However, attachment of
the Participant's Account pledged as security will not occur until a
distributable event occurs under the Plan.
(b) For purposes of this section, the term default shall mean failure, by a
period of at least ten (10) days, to make any loan payment (whether principal or
interest or both) that is due and payable. Neither the Plan Administrator nor
any other fiduciary is required to give any written or oral notice of default.
13.10 Unpaid Amounts. Upon the occurrence of a Participant's retirement or
death, or upon a Participant's fifth consecutive Break in Service or earlier
distribution, the unpaid balance of any loan, including any unpaid interest,
shall be deducted from any payment or distribution from the Trust to which such
Participant or his beneficiary may be entitled. If after charging the
Participant's Account with the unpaid balance of the loan, including any unpaid
interest, there still remains an unpaid balance of any such loan and interest,
then the remaining unpaid balance of such loan and interest shall be charged
against any property pledged as security with respect to such loan.
ARTICLE 14
Insurance
(Not available in the Columbia Retirement Plan)
14.1 Insurance. If the Adoption Agreement so provides and the Employer elects
to allocate or permit Participants to allocate a portion of their Accounts to
purchase life insurance, the ensuing subsections of this ARTICLE shall apply.
14.2 Policies. The Plan Administrator shall instruct the Trustee to procure
one or more life insurance policies on the participant's life, the terms of
which shall conform to the requirements of the Plan and the Code. The policies
and the companies which write them shall be subject to the approval of the Plan
Administrator and the Trustee. The Trustee shall procure and hold such policies
in its name or the name of the nominee. The Trustee shall be the sole owner of
all contracts purchased hereunder, and it shall be so designated in each policy
and application therefor.
14.3 Beneficiary. The Participant shall have the right to name the Beneficiary
and to choose the benefit option under the policy for the Beneficiary. The
Trustee shall designate the Beneficiary of all such policies in accordance with
the written directions of the Plan Administrator and the policy terms. Such
designations may be outlined in the original application as forwarded to the
issuing company. However, the Plan Administrator shall
<PAGE>
have available and shall furnish the Participant with the necessary forms for
any Beneficiary designation or change of Beneficiary and it will keep a copy of
all executed designations as part of its records. Upon a participant's death,
the Plan Administrator will promptly furnish the Trustee a copy of the last
designation and shall authorize the Trustee to complete such forms as the
insurance company may require in order to effect the benefit option.
14.4 Payment of Premiums. Subject to the provisions of sections 7.3 and 14.5,
premium payments to the insurer may be made only by the Trustee with respect to
any insurance policy purchased on behalf of a Participant and shall constitute
first an investment of a portion of the funds of the Participant's Employer
Contribution subaccounts up to the maximum amount of such subaccounts permitted
to be applied toward such premium payments, as in section 14.5. If a
participant's subaccounts lack sufficient assets to pay premiums on a life
insurance policy due on his behalf, the Trustee, at the direction of the Plan
Administrator, acting upon the request of the Participant, shall borrow under
the policy loan provisions, if any, the amount necessary to pay such premiums,
using the cash value of the insurance as security, or the Trustee may liquidate
assets held in the participant's Account, in the same order, of sufficient value
to pay such premiums. Any loans shall be repaid by the application of earnings,
contributions, or forfeitures to the Account of the Participant insured by such
policy. In the absence of the Plan Administrator's direction to borrow or to
liquidate assets to pay premiums, the life insurance policy shall be put on a
paid-up basis or, if it has no cash value, canceled.
14.5 Limitation on Insurance Premiums. The Trustee shall not pay, nor shall
anyone on behalf of the Trustee pay, any life insurance premium for any
Participant out of the participant's Employer Contribution subaccounts unless
the amount of such payment, plus all premiums previously so paid on behalf of
the Participant, is less than fifty percent (50%) of the Employer Contributions
and forfeitures allocated to the participant's Employer Contribution subaccounts
as determined on the date such premium is paid with respect to reserve life
insurance policies and shall be less than twenty-five percent (25%) thereof with
respect to nonreserve (term) policies, or, if both reserve life and term
insurance are purchased on the life of any Participant, the sum of the term
insurance premium plus one-half (1/2) of the reserve life premiums may not
exceed twenty-five percent (25%) of the Employer Contributions made on behalf of
such Participant. For purposes of these incidental insurance provisions,
reserve life insurance contracts are contracts with both nondecreasing death
benefits and nonincreasing premiums. Dividends received on life insurance
policies shall be considered a reduction of premiums paid in such computations.
If payment of premiums on a Participant's life insurance policy is prohibited
because of the limitation, the Trustee, as directed by the Plan Administrator,
shall permit the participant to maintain that part of the coverage made
available by the prohibited premiums, either by payment of the amount of the
prohibited premium by the Participant from sources other than the Trust or by
distributing the policy to the extent of the Participant's vested interest to
the Participant and eliminating it from the Trust.
Nothing contained in the foregoing provisions of section 14.4 and this section
shall be deemed to authorize the payment of any premium or premiums for any
Participant which would result in a failure to maintain any mandatory investment
in Shares required by the Sponsor in the Account or subaccounts of any such
Participant.
<PAGE>
14.6 Insurance Company. No insurance company which may issue any policies for
the purposes of this Plan shall be required to take or permit any action
contrary to the provisions of said policies, nor shall such insurance company be
deemed to be a party to, or responsible for the validity of, this Plan for any
purpose. No such insurance company shall be required to look into the terms of
this Plan or question any action of the Trustee hereunder, nor be responsible to
see that any action of the Trustee is authorized by the terms of this Plan. Any
such issuing insurance company shall be fully discharged from any and all
liability for any amount paid to the Trustee or paid in accordance with the
direction of the Trustee, as the case may be, or for any change made or action
taken by such insurance company upon such direction and no such insurance
company shall be obliged to see to the distribution or further application of
any monies paid by it. The certificate of the Trustee signed by one of its
trust officers, assistant secretary, or other authorized representative thereof,
may be received by any insurance company as conclusive evidence of any of the
matters mentioned in this Plan and any insurance company shall be fully
protected in taking or permitting any action on the faith thereof and shall
incur no liability or responsibility for so doing.
14.7 Distribution of Policies. Upon a participant's death, the Trustee, upon
direction of the Plan Administrator, shall procure the payment of the proceeds
of any policy held by the Participant in accordance with its term and this Plan.
The Trustee shall be required to pay over all the proceeds of any policy to the
Participant's Designated Beneficiary in accordance with the distribution
provisions of this Plan. A Participant's Spouse will be the Designated
Beneficiary unless a Qualified Election has been made in accordance with section
9.4(c) of the Plan. Under no circumstances shall the Trust retain any part of
the proceeds. Subject to the joint and survivor annuity requirements of ARTICLE
9, the policies shall be converted or distributed upon commencement of benefits
in accordance with the provisions of this section. Upon a Participant's
retirement at or after his Normal Retirement Age, unless there is a single sum
distribution in which case any policy shall be distributed, any such policy
shall be converted to a paid-up contract and delivered to the Participant but
the Plan Administrator may, with the participant's consent, direct that a
portion or all of such cash value of the policy be converted to provide
retirement income as permitted within the terms of the policy and this Plan.
Upon a participant's retirement due to Total and Permanent Disability, any such
policy shall be held for his account and assigned or delivered to the
Participant in addition to any other benefits provided by this Plan. Upon a
participant's termination of employment for reasons other than death, Total and
Permanent Disability, or retirement as stated above, to the extent of life
insurance purchased by Employer Contributions, he shall be entitled to a vested
interest in any policy held for his account as his interest is vested in the
remainder of his Employer Contribution subaccounts (exclusive of any such
policy). Whenever the Participant is entitled to one hundred percent (100%)
vesting, then such policy shall be assigned and delivered to the Participant in
accordance with its terms and the terms of the Plan. Whenever the Participant
is entitled to vesting of less than one hundred percent (100%), then the
Participant shall be entitled to a vested interest of the cash surrender value
of any such policy equal to his percent of vested interest in his Employer
Contribution subaccounts, exclusive of the policy, and one of the following
distribution procedures shall apply:
(a) If the nonvested portion of the cash surrender value of all policies held
for the participant's Account is less than the amount of his vested termination
benefit exclusive of the policies, then, such policy shall be assigned to the
Participant and the remainder of the
<PAGE>
participant's vested interest in the participant's Employer Contribution
subaccounts shall be reduced by the cash surrender value of the nonvested
portion of all policies, after which it shall be paid or distributed to the
Participant in accordance with the terms of the Plan; or
(b) If the nonvested portion of the cash surrender value of all policies held
for the Participant's Account exceeds the Participant's vested interest in the
Employer Contribution subaccount exclusive of such policies, the Participant
shall be given the opportunity to purchase such policies by paying to the
Trustee the amount of such excess within thirty (30) days after notice to him of
the amount to be paid. Upon receipt of such payment said policy shall be
assigned and delivered to the Participant to the full satisfaction of all
termination benefits under this Plan. Any such policy not so purchased shall be
surrendered by the Trustee for its cash value and the proceeds thereof deposited
in the Trust for reallocation pursuant to ARTICLE 5.
It is the intention hereof that the total termination benefit of a
Participant whose interest is not fully vested shall be equal to the sum of the
vested percentage of his Employer Contribution subaccounts exclusive of all such
policies and the same percentage of the cash value of all such policies held for
his Account. To the extent possible under the foregoing provisions, such total
termination benefits shall be satisfied by the transfer and delivery to the
Participant of one or more such policies with the balance, if any, to be paid in
cash or in kind.
14.8 Policy Features. The Trustee shall arrange, where possible, that all
policies purchased for the benefit of a Participant shall have the same dividend
option which shall be on the premium reduction plan, and as nearly as may be
possible all policies issued under the Plan shall have the same anniversary
date. To the extent any dividends or credits earned on insurance policies are
not applied toward the next premiums due, they shall be allocated to the
participant's Employer Contribution subaccount in the same manner as a
participant's directed investment.
14.9 Changed Conditions. From time to time because of changed conditions, the
Trustee, acting at the direction of the Plan Administrator upon the election of
the Participant concerned, shall obtain an additional contract or policy or make
such change in the contracts or policies maintained by the Trustee on the life
of the Participant as may be required by such changed conditions, within the
limits permitted by the insurance company which issued or is requested to issue
a contract and the limits established by this Plan.
14.10 Conflicts. In the event of any conflict between the terms of the Plan
and the provisions of any contract issued hereunder, the terms of the Plan shall
control.
ARTICLE 15
Administration
15.1 Duties and Responsibilities of Fiduciaries; Allocation of Fiduciary
Responsibility. A fiduciary of the Plan shall have only those specific powers,
duties, responsibilities, and obligations as are explicitly given him under the
Plan and Trust Agreement. In general, the Employer shall have the sole
responsibility for making contributions to the Plan required under ARTICLE 4;
appointing the Trustee and the Plan Administrator; and determining the funds
available for investment under the Plan. The Plan Administrator shall have the
sole responsibility for the administration of the Plan, as more fully described
in section 15.2. It is intended that each fiduciary shall be responsible only
for the proper exercise of his own
<PAGE>
powers, duties, responsibilities, and obligations under the Plan and Trust
Agreement, and shall not be responsible for any act or failure to act of another
fiduciary. A fiduciary may serve in more than one fiduciary capacity with
respect to the Plan.
15.2 Powers and Responsibilities of the Plan Administrator.
(a) Administration of the Plan. The Plan Administrator shall have all powers
necessary to administer the Plan, including the power to construe and interpret
the Plan documents; to decide all questions relating to an individual's
eligibility to participate in the Plan; to determine the amount, manner, and
timing of any distribution of benefits or withdrawal under the Plan; to approve
and ensure the repayment of any loan to a Participant under the Plan; to resolve
any claim for benefits in accordance with section 15.7; and to appoint or employ
advisors, including legal counsel; to render advice with respect to any of the
Plan administrator's responsibilities under the Plan. Any construction,
interpretation, or application of the Plan by the Plan Administrator shall be
final, conclusive, and binding. All actions by the Plan Administrator shall be
taken pursuant to uniform standards applied to all persons similarly situated.
The Plan Administrator shall have no power to add to, subtract from, or modify
any of the terms of the Plan, or to change or add to any benefits provided by
the Plan, or to waive or fail to apply any requirements of eligibility for a
benefit under the Plan.
(b) Records and Reports. The Plan Administrator shall be responsible for
maintaining sufficient records to reflect the Eligibility Computation Periods in
which an Employee is credited with one or more Years of Service for purposes of
determining his eligibility to participate in the Plan, and the Compensation of
each Participant for purposes of determining the amount of contributions that
may be made by or on behalf of the Participant under the Plan. The Plan
Administrator shall be responsible for submitting all required reports and
notifications relating to the Plan to Participants or their Beneficiaries, the
Internal Revenue Service and the Department of Labor.
(c) Furnishing Trustee with Instructions. The Plan Administrator shall be
responsible for furnishing the Trustee with written instructions regarding all
contributions to the Trust, all distributions to Participants in accordance with
ARTICLE 10, all withdrawals by Participants in accordance with ARTICLE 12, all
loans to Participants in accordance with ARTICLE 13 and all purchases of life
insurance in accordance with ARTICLE 14. In addition, the Plan Administrator
shall be responsible for furnishing the Trustee with any further information
respecting the Plan which the Trustee may request for the performance of its
duties or for the purpose of making any returns to the Internal Revenue Service
or Department of Labor as may be required of the Trustee.
(d) Rules and Decisions. The Plan Administrator may adopt such rules as it
deems necessary, desirable, or appropriate in the administration of the Plan.
All rules and decisions of the Plan Administrator shall be applied uniformly and
consistently to all Participants in similar circumstances. When making a
determination or calculation, the Plan Administrator shall be entitled to rely
upon information furnished by a Participant or Beneficiary, the Employer, the
legal counsel of the Employer, or the Trustee.
(e) Application and Forms for Benefits. The Plan Administrator may require a
Participant or Beneficiary to complete and file with it an application for a
benefit, and to furnish all pertinent information requested by it. The Plan
Administrator may rely upon all
<PAGE>
such information so furnished to it, including the participant's or
Beneficiary's current mailing address.
(f) Facility of Payment. Whenever, in the Plan Administrator's opinion, a
person entitled to receive a payment of a benefit or installment thereof is
under a legal disability or is incapacitated in any way so as to be unable to
manage his financial affairs, as determined by a court of competent
jurisdiction, it may direct the Trustee to make payments to such person or to
the legal representative or to a relative or friend of such person for that
person's benefit, or it may direct the Trustee to apply the payment for the
benefit of such person in such manner as it considers advisable.
15.3 Allocation of Duties and Responsibilities. The Plan Administrator may, by
written instrument, allocate among its members or employees any of its duties
and responsibilities not already allocated under the Plan or may designate
persons other than members or employees to carry out any of the Plan
Administrator's duties and responsibilities under the Plan. Any such duties or
responsibilities thus allocated must be described in the written instrument. If
a person other than an Employee of the Employer is so designated, such person
must acknowledge in writing his acceptance of the duties and responsibilities
allocated to him.
15.4 Appointment of the Plan Administrator. The Employer shall designate in
the Adoption Agreement the Plan Administrator who shall administer the
Employer's Plan. Such Plan Administrator may consist of an individual, a
committee of two or more individuals, whether or not, in either such case, the
individual or any of such individuals are Employees of the Employer, a
consulting firm or other independent agent, the Trustee (with its consent), or
the Employer itself. The Plan Administrator shall be charged with the full
power and the responsibility for administering the Plan in all its details. If
no Plan Administrator has been appointed by the Employer, or if the person
designated as Plan Administrator by the Employer is not serving as such for any
reason, the Employer shall be deemed to be the Plan Administrator of the Plan.
The Plan Administrator may be removed by the Employer, or may resign by giving
notice in writing to the Employer, and in the event of the removal, resignation,
or death, or other termination of service by the Plan Administrator, the
Employer shall, as soon as practicable, appoint a successor Plan Administrator,
such successor thereafter to have all of the rights, privileges, duties, and
obligations of the predecessor Plan Administrator.
15.5 Expenses. The Employer shall pay all expenses authorized and incurred by
the Plan Administrator in the administration of the Plan except to the extent
such expenses are paid from the Trust.
15.6 Liabilities. The Plan Administrator and each person to whom duties and
responsibilities have been allocated pursuant to section 15.3 may be indemnified
and held harmless by the Employer with respect to any alleged breach of
responsibilities performed or to be performed hereunder. The Employer and each
Affiliated Employer shall indemnify and hold harmless the Sponsor against all
claims, liabilities, fines, and penalties, and all expenses reasonably incurred
by or imposed upon him (including, but not limited to, reasonable attorney's
fees) which arise as a result of actions or failure to act in connection with
the operation and administration of the Plan.
15.7 Claims Procedure.
<PAGE>
(a) Filing a Claim. Any Participant or Beneficiary under the Plan may file a
written claim for a Plan benefit with the Plan Administrator or with a person
named by the Plan Administrator to receive claims under the Plan.
(b) Notice of Denial of Claim. In the event of a denial or limitation of any
benefit or payment due to or requested by any Participant or Beneficiary under
the Plan (claimant), claimant shall be given a written notification containing
specific reasons for the denial or limitation of his benefit. The written
notification shall contain specific reference to the pertinent Plan provisions
on which the denial or limitation of his benefit is based. In addition, it
shall contain a description of any other material or information necessary for
the claimant to perfect a claim, and an explanation of why such material or
information is necessary. The notification shall further provide appropriate
information as to the steps to be taken if the claimant wishes to submit his
claim for review. This written notification shall be given to a claimant within
ninety (90) days after receipt of his claim by the Plan Administrator unless
special circumstances require an extension of time for processing the claim. If
such an extension of time for processing is required, written notice of the
extension shall be furnished to the claimant prior to the termination of said
ninety (90) day period, and such notice shall indicate the special circumstances
which make the postponement appropriate.
(c) Right of Review. In the event of a denial or limitation of his benefit,
the claimant or his duly authorized representative shall be permitted to review
pertinent documents and to submit to the Plan Administrator issues and comments
in writing. In addition, the claimant or his duly authorized representative may
make a written request for a full and fair review of his claim and its denial by
the Plan Administrator; provided, however, that such written request must be
received by the Plan Administrator (or its delegate to receive such requests)
within sixty (60) days after receipt by the claimant of written notification of
the denial or limitation of the claim. The sixty (60) day requirement may be
waived by the Plan Administrator in appropriate cases.
(d) Decision on Review. A decision shall be rendered by the Plan Administrator
within sixty (60) days after the receipt of the request for review, provided
that where special circumstances require an extension of time for processing the
decision, it may be postponed on written notice to the claimant (prior to the
expiration of the initial sixty (60) day period) for an additional sixty (60)
days, but in no event shall the decision be rendered more than one hundred
twenty (120) days after the receipt of such request for review. Any decision by
the Plan Administrator shall be furnished to the claimant in writing and shall
set forth the specific reasons for the decision and the specific Plan provisions
on which the decision is based.
(e) Court Action. No Participant or Beneficiary shall have the right to seek
judicial review of a denial of benefits, or to bring any action in any court to
enforce a claim for benefits prior to filing a claim for benefits or exhausting
his rights to review under this section.
ARTICLE 16
Amendment, Termination and Merger
16.1 Sponsor's Power to Amend. The Sponsor may amend any part of the Plan.
For purposes of Sponsor's amendments, the mass submitter shall be recognized as
the agent of the
<PAGE>
Sponsor. If the Sponsor does not adopt the amendments made by the mass
submitter, it will no longer be identical to or a minor modifier of the mass
submitter plan.
16.2 Amendment by Adopting Employer.
(a) The Employer may:
(i) change the choice of options in the Adoption Agreement;
(ii) add overriding language in the Adoption Agreement when such language is
necessary to satisfy section 415 or section 416 of the Code because of the
required aggregation of multiple plans; and
(iii) add certain model amendments published by the Internal Revenue Service
which specifically provide that their adoption will not cause the Plan to be
treated as individually designed.
(b) An Employer that amends the Plan for any other reason, including a waiver
of the minimum funding requirement under section 412(d) of the Code, will no
longer participate in this prototype plan and will be considered to have an
individually designed plan.
16.3 Vesting Upon Plan Termination. In the event of the termination or partial
termination of the Plan, the Account balance of each affected Participant will
be nonforfeitable.
16.4 Vesting Upon Complete Discontinuance of Contributions. In the event of a
complete discontinuance of contributions under the Plan, the Account balance of
each affected Participant will be nonforfeitable.
16.5 Maintenance of Benefits Upon Merger. In the event of a merger or
consolidation with, or transfer of assets to any other plan, each Participant
will receive a benefit immediately after such merger, consolidation or transfer
(if the Plan then terminated) which is at least equal to the benefit the
Participant was entitled to immediately before such merger, consolidation or
transfer (if the Plan had been terminated).
16.6 Special Amendments. The Employer may from time to time make any amendment
to the Plan that may be necessary to satisfy section 415 or 416 of the Code.
Any such amendment will be adopted by the Employer by completing overriding Plan
language in the Adoption Agreement. In the event of such an amendment, the
Employer must obtain a separate determination letter from the Internal Revenue
Service to continue reliance on the Plan's qualified status.
<PAGE>
Prototype Defined
Contribution Trust
The Employer has established a Plan for the benefit of Participants therein
pursuant to section 401 of the Internal Revenue Code of 1986. As part of the
Plan, the Employer has requested such person or persons (individual, corporate,
or other entity), as may be designated in the Adoption Agreement, to serve as
Trustee pursuant to the Trust established for the investment of contributions
under the Plan upon the terms and conditions set forth in this Trust Agreement.
Unless the context of this Trust Agreement clearly indicates otherwise, the
terms defined in ARTICLE 2 of the Plan entered into by the Employer, of which
this Trust Agreement forms a part, shall, when used herein, have the same
meaning as in the Plan.
ARTICLE I
Accounts
1.1 Establishing Accounts. The Trustee shall open and maintain a Trust account
for the Plan and, as part thereof, Participant's Accounts for such individuals
as the Plan Administrator shall, from time to time, give written notice to the
Trustee as being Participants in the Plan. The Trustee shall also open and
maintain such other subaccounts as may be appropriate or desirable to aid in the
administration of the Plan. Separate subaccounts shall be maintained for each
Participant and shall be credited with the contributions made by the Employer
and with forfeitures allocated to each such Participant pursuant to the Plan
(and all earnings thereon). If nondeductible voluntary contributions by
Participants are permitted by the Plan, the Trustee shall open and maintain as a
part of the Trust a separate subaccount for each Participant who makes such
nondeductible voluntary contributions, each such subaccount to be credited with
the Participant's voluntary contributions (and all earnings attributable to such
contributions). If trustee transfers or rollover contributions from another
qualified plan are received, the Trustee shall open and maintain a separate
rollover subaccount for each Participant, each such subaccount to be credited
with the Participant's trustee transfers or rollover contributions (and all
earnings attributable to such contributions).
1.2 Charges Against Accounts. Upon receipt of written instructions from the
Administrator, the Trustee shall charge the appropriate subaccount of the
Participant for any withdrawals or distributions made under the Plan and any
forfeiture, which may be required under the Plan, of unvested interests
attributable to Employer Contributions. The Plan Administrator will give
written instructions to the Trustee specifying the manner in which Employer
Contributions and any forfeiture of the nonvested portion of Accounts, as
allocated by the Plan Administrator in accordance with the provisions of the
Plan, are to be credited to the various Accounts maintained for Participants.
1.3 Prospectus to be Provided. The Plan Administrator shall ensure that a
Participant who makes a nondeductible voluntary contribution has previously
received or receives a copy of the then current prospectus relating to the
Shares. Delivery of such a nondeductible voluntary contribution, pursuant to
the provisions of the Plan by the Plan Administrator to the Trustee shall
entitle the Trustee to assume that the Participant has received such a
prospectus.
<PAGE>
ARTICLE II
Receipt of Contributions
The Trustee shall accept and hold in the Trust contributions made by the
Employer and Participants under the Plan. The Administrator shall give written
instructions to the Trustee specifying the Participant's Accounts to which
contributions are to be credited, the amount of each such credit which is
attributable to Employer Contributions, and the amount, if any, which is
attributable to the Participant's nondeductible voluntary contributions. If
written instructions are not received by the Trustee, or if such instructions
are received but are deemed by the Trustee to be unclear, upon notice to the
Employer, the Trustee may elect to hold all or part of any such contribution in
cash, without liability for rising security prices or distributions made,
pending receipt by it from the Plan Administrator of written instructions or
other clarification, or the Trustee may return the contribution to the Employer.
If any contributions or earnings are less than any minimum which the then
current prospectus for the Shares requires, the Trustee may hold the specified
portion of contributions or earnings in cash, without interest, until such time
as the proper amount has been contributed or earned so that the investment in
the Shares required under the Plan may be made. All payments to the Trust shall
be remitted in U.S. currency or other property to the Trustee at the address
specified by it. Any payments not in U.S. currency may, in the sole discretion
of the Trustee, be refused.
ARTICLE III
Investment Powers
of the Trustee
3.1 Investment of Account Assets. The Trustee shall invest the amount of each
contribution made hereunder and all earnings on the Trust in full and fractional
Shares in accordance with the current prospectus for such Shares, in such
amounts and proportions as shall from time to time be designated by the Plan
Administrator on forms provided by the Sponsor, and shall credit such Shares to
the Accounts of each Participant on whose behalf or by whom the contributions
are made and any forfeitures are allocated. All dividends and capital gain
distributions received on the Shares held by the Trustee in each Account, shall,
if received in cash, be reinvested in such Shares in accordance with the current
prospectus for such Shares and shall in any event be credited to such Account.
If any distribution on Shares may be received at the election of the shareholder
in additional Shares, the Trustee shall so elect. The Trustee shall deliver, or
cause to be executed and delivered, to the Plan Administrator, all notices,
prospectuses, financial statements, proxies, and proxy soliciting materials
relating to Shares held hereunder. The Trustee shall not vote any of the Shares
held hereunder, except in accordance with the written instructions of the Plan
Administrator. If no such written instructions are received, such Shares shall
not be voted. The obligations of the Trustee hereunder may be delegated by it
as provided in sections 9.1 and 9.2.
The Trustee shall sell Shares and purchase Shares to accomplish any change in
investments desired by the Employer as indicated on any amended Adoption
Agreement or other instructions in accordance with the terms of the Plan.
<PAGE>
Notwithstanding the above, if periodic payments are being made to a Participant
pursuant to ARTICLE IV hereof, any dividends received on Shares held in such
Participant's Account, which dividends are invested at an offering price which
includes a sales charge, need not be invested in additional Shares but may be
held for distribution to the Participant in periodic payments. In such
instances, the Trustee may make any election necessary to receive any such
dividends in cash.
3.2 Directed Investments. When so instructed by the Plan Administrator, the
Trustee shall invest all or any portion of the individual Account of any
Participant in accordance with the direction of the Employer or such Participant
in lieu of participation in the general assets of the Trust. Such directed
investments shall be accounted for separately for each Participant. Except as
otherwise provided herein, the Trustee shall not have any discretion, and is
specifically prohibited from exercising any control or discretion, with respect
to such directed investments. Each Participant who directs the investment of
his Account shall be solely and absolutely responsible for the investment or
reinvestment of all directed investment assets held on his behalf in Trust, and,
except as otherwise provided herein, the Trustee shall not question any such
direction, review any securities or other such assets, or make suggestions with
respect to the investment, retention or disposition of any such assets; provided
that:
(a) If any contributions are transmitted to or otherwise received or held as
directed investment assets without investment directions from the Participant,
the Trustee may retain such amounts in a noninterest-bearing savings account in
a federally insured institution for the benefit of the Participant.
(b) The Trustee may establish such reasonable rules and regulations, applied on
a uniform basis to all Participants, with respect to the requirements for, and
the form and manner of, effectuating any transaction with respect to directed
investment assets including, without limitation, minimum amounts, rules
applicable to conversion of directed investments into general assets of the
Trust, and appropriate adjustments (based on fair market values) to Accounts to
reflect any such conversion, as the Trustee shall determine to be consistent
with the purposes of the Plan. Any such rules and regulations shall be binding
upon all persons interested in the Trust.
(c) The Trustee may establish a procedure for the periodic review of directed
investment assets to determine, in light of the facts and circumstances
reasonably known to it, whether any actual or proposed investment of such assets
constitutes or would constitute a prohibited transaction as that term is defined
in sections 406-408 of ERISA and the corresponding provisions of the Code. If
the Trustee determines that any investment constitutes or would constitute a
prohibited transaction, the Trustee shall promptly communicate this
determination to the Plan Administrator, and shall recommend that the investment
be prevented or disposed of, as the case may be, and may recommend any other
action authorized or required by law, to prevent or remedy the transaction.
(d) In accordance with and pursuant to uniform and nondiscriminatory rules
established under and in accordance with the Plan, the Trustee may deny the Plan
Administrator's application to allow a directed investment proposed by a
Participant.
(e) Notwithstanding anything herein to the contrary, in no event shall the
Trustee engage in any transaction that would be prohibited under ERISA.
3.3 General Investment Powers. Subject to any investment limitations or
minimum requirements for investments in Shares imposed by the Sponsor, and
subject to investment
<PAGE>
instructions given by the Employer, the Trustee shall be authorized and
empowered to invest and reinvest all or any part of the Trust in any property,
real or personal or mixed, including, but not being limited to, capital or
common stock (whether voting or nonvoting or whether or not currently paying a
dividend), preferred or preference stock (whether voting or nonvoting or whether
or not currently paying a dividend), Shares of regulated investment companies,
convertible securities, corporate and governmental obligations, leaseholds,
ground rents, mortgages, and other interests in realty, trust, and participation
certificates, oil, mineral or gas properties, royalty interests or rights,
including equipment pertaining thereto, notes and other evidences of
indebtedness or ownership, secured or unsecured, contracts, chooses in action,
and warrants, and other instruments entitling the owner thereof to subscribe to
or purchase any of the aforesaid. Subject to any investment limitations or
requirements imposed by the Sponsor relating to the type of permissible
investments in the Trust or the minimum percentage of Trust assets to be
invested in Shares, and subject to the provisions of ARTICLE VIII hereof, in
making and retaining such investments and reinvestments pursuant hereto, the
Trustee shall not be bound as to the character of any investments by any
statute, rule of court, or custom governing the investment of Trust funds.
3.4 Investment in Combined Funds. If the Trustee is a banking institution,
subject to any investment limitations or minimum requirements for investment in
Shares imposed by the
Sponsor, and subject to investment instructions given by the Employer, it may,
subject to the election of the Sponsor or the Employer, cause funds of this
Trust to be invested in its commingled funds for qualified employee benefit plan
trusts and such commingled funds are hereby adopted and made a part of the Plan
of which this Trust is a part, and any funds of this Trust invested in any such
commingled funds shall be subject to all the provisions thereof, as the same may
be amended from time to time.
3.5 Other Powers of the Trustee. The Trustee is authorized and empowered with
respect to the Trust:
(a) Subject to any investment limitations or minimum requirements for
investment in Shares imposed by the Sponsor, and subject to investment
instructions given by the Employer, to sell, exchange, convey, transfer, or
otherwise dispose of, either at public or private sale, any property, real or
personal or mixed, at any time held by it, for such consideration and on such
terms and conditions as to credit or otherwise as the Trustee may deem best.
(b) Subject to the provisions of section 3.1, to vote in person or by proxy any
stocks, bonds, or other securities held by it; to exercise any options
appurtenant to any stocks, bonds, or other securities, or to exercise any rights
to subscribe for additional stocks, bonds, or other securities, and to make any
and all necessary payments therefor, to join in, or to dissent from, and to
oppose, the reorganizations, consolidation, liquidation, sale, or merger of
corporations, or properties in which it may be interested as Trustee, upon such
terms and conditions as it may deem wise.
(c) To make, execute, acknowledge, and deliver any and all documents of
transfer and conveyance and any and all other instruments that may be necessary
or appropriate to carry out the powers herein granted.
(d) To register any investment held in the Trust in the name of the Trust or in
the name of a nominee, and to hold any investment in bearer form, but the books
and records of the Trustee shall at all times show that all such investments are
part of the Trust.
<PAGE>
(e) To employ suitable agents and counsel (who may also be agents and/or
counsel for the Employer or the Sponsor) and to pay their reasonable expenses
and compensation.
(f) To borrow or raise monies for the purpose of the Trust from any source and,
for any sum so borrowed to issue its promissory note as Trustee and to secure
the repayment thereof by pledging all or any part of the Trust fund, but nothing
herein contained shall obligate the Trustee to render itself liable individually
for the amount of any such borrowing; and no person loaning money to the Trustee
shall be bound to see to the application of money loaned or to inquire into the
validity or propriety of any such borrowing. Each and all of the foregoing
powers may be exercised without a court order or approval. No one dealing with
the Trustee need inquire concerning the validity or propriety of anything that
is done or need see to the application of any money paid or property transferred
to or upon the order of the Trustee.
3.6 General Powers. The Trustee shall have all of the powers necessary or
desirable to do all acts, take all such proceedings, and exercise all such
rights and privileges, whether or not expressly authorized herein, which it may
deem necessary or proper for the administration and protection of the property
of the Trust and to accomplish any action provided for in the Plan.
3.7 Valuation of Trust. The Trustee, as of the Valuation Date, and at such
other time or times as it determines, shall determine the net worth of the
assets of the Trust. In determining such net worth, the assets of the Trust
shall be evaluated at their fair market value and all expenses shall be
deducted. The Trustee may adopt such methods of valuation as it deems
advisable.
3.8 Bonding. Except to the extent otherwise required by law, the Trustee shall
not be required to obtain any bonds in connection with its duties hereunder.
The cost of any bond obtained may be charged as an expense of the Trust, but if
not so charged, shall be paid by the Employer.
3.9 Duties not Assigned. The duties of the Trustee with respect to the Plan
are limited to those assumed by the Trustee by the terms of this Trust. The
Trustee shall not be deemed, by virtue hereof, to be the administrator or
sponsor of the Plan, and shall not be responsible for filing reports, returns or
disclosures with any government agency except as may otherwise be required by
its duties as Trustee under applicable law.
ARTICLE IV
Distributions From a
participant's Account
Distributions from the Trust shall be made by the Trustee in accordance with
proper written directions of the Plan Administrator in accordance with the
provisions of section 15.2 of the Plan, and the Plan Administrator shall have
the sole responsibility for determining that the directions given conform to
provisions of the Plan and applicable law, including (without limitation)
responsibility for calculating the vested interests of the Participant, for
calculating the amounts payable to a Participant pursuant to ARTICLE 11 of the
Plan, and for determining the proper person to whom benefits are payable under
the Plan. Except to the extent otherwise provided in the Plan, the interest of
Participants and Beneficiaries in the Trust and in the net earnings and profits
thereof may not be assigned or used by a Participant
<PAGE>
or Beneficiary as collateral for a loan and shall not be subject to garnishment,
attachment, levy or execution of any kind for the debts or defaults of the
Trustee or of any person, natural or legal, having interest in the Trust.
ARTICLE V
Reports of the Trustee
and the Plan Administrator
The Trustee shall keep accurate and detailed records of all receipts,
investments, disbursements, and other transactions required to be performed
hereunder with respect to the Trust. The Trustee shall file with the Plan
Administrator a written report or reports reflecting the receipts,
disbursements, and other transactions effected by it with respect to the Trust
during such Plan Year and the assets and liabilities of the Trust at the close
of the Plan Year. Such report or reports shall be open to inspection by any
Participant for a period of one hundred eighty (180) days immediately following
the date on which it is filed with the Plan Administrator. Except as otherwise
prescribed by ERISA, upon the expiration of such one hundred eighty (180) day
period, the Trustee shall be forever released and discharged from all liability
and accountability to anyone with respect to its acts, transactions, duties,
obligations, or responsibilities as shown in or reflected by such report, except
with respect to any such acts or transactions as to which the Plan Administrator
shall have filed written objections with the Trustee within such one hundred
eighty (180) day period, and except for willful misconduct or lack of good faith
on the part of the Trustee.
ARTICLE VI
Trustee's Fees and
Expenses of the Trust
The Trustee's fees for performing its duties hereunder shall be such reasonable
amounts as shall be respectively established by it from time to time. The
Trustee shall furnish the Employer with its current schedule of fees and shall
give written notice to the Employer whenever its fees are changed or revised.
Such fees, any taxes of any kind whatsoever which may be levied or assessed upon
or in respect of the Trust, to the extent incurred by the Trustee and any and
all expenses incurred by the Trustee in the performance of its duties, including
fees for legal services rendered to the Trustee, shall, unless paid by the
Employer, be paid from the Trust in the manner provided in the Plan.
Unless paid by the Employer, all fees of the Trustee and taxes and other
expenses charged to a Participant's Account may be collected by the Trustee from
the amount of any contribution to be credited or distribution to be charged to
such Account or may be paid by redeeming or selling assets credited to such
Account.
ARTICLE VII
Duties of the Employer
and the Plan Administrator
<PAGE>
7.1 Information and Data to be Furnished the Trustee. In addition to making
the contributions called for in ARTICLE II hereof, the Employer, through the
Plan Administrator, agrees to furnish the Trustee with such information and data
relative to the Plan as is necessary for the proper administration of the Trust
established hereunder.
7.2 Limitation of Duties. Neither the Employer nor any of its officers,
directors, or partners, nor the Plan Administrator shall have any duties or
obligations with respect to this Trust Agreement, except those expressly set
forth herein and in the Plan.
ARTICLE VIII
Liability of the Trust
8.1 Trustee's Liability.
(a) The Employer shall indemnify and save the Trustee (including its
affiliates, representatives and agents) harmless from and against any liability,
cost or other expense, including, but not limited to, the payment of attorney's
fees that the Trustee may incur in connection with this Trust Agreement or the
Plan unless such liability, cost or other expense (whether direct or indirect)
arises from the trustee's own willful misconduct or gross negligence. The
Employer recognizes that a burden of litigation may be imposed upon the Trustee
as a result of some act or transaction for which it has no responsibility or
over which it has no control under this Trust Agreement. Therefore, the
Employer agrees to indemnify and hold harmless and, if requested, defend the
Trustee (including its affiliates, representatives and agents) from any expenses
(including counsel fees, liabilities, claims, damages, actions, suits or other
charges) incurred by the Trustee in prosecuting or defending against any such
litigation.
(b) The Trustee shall not be liable for, and the Employer will indemnify and
hold harmless the Trustee (including its affiliates, representatives and agents)
from and against all liability or expense (including counsel fees) because of
(i)Any investment action taken or omitted by the Trustee in accordance with any
direction of the Employer or a Participant, or investment inaction in the
absence of directions from the Employer or a Participant or (ii)Any investment
action taken by the Trustee pursuant to an order to purchase or sell securities
placed by the Employer or a Participant directly with a broker, dealer or
issuer. It is understood that although, when the Trustee is subject to the
direction of the Employer or a Participant the Trustee will perform certain
ministerial duties with respect to the portion of the Fund subject to such
direction (the Directed Fund), such duties do not involve the exercise of any
discretionary authority or other authority to manage and control assets of the
Directed Fund and will be performed in the normal course of business by officers
and employees of the Trustee or its affiliates, representatives or agents who
may be unfamiliar with investment management. It is agreed that the Trustee is
not undertaking any duty or obligation, express or implied, to review, and will
not be deemed to have any knowledge of or responsibility with respect to, any
transaction involving the investment of the Directed Fund as a result of the
performance of its ministerial duties. Therefore, in the event that knowledge
of the Trustee shall be a prerequisite to imposing a duty upon or determining
liability of the Trustee under the Plan or this Trust or any law or regulation
regulating the conduct of the Trustee with respect to the Directed Fund, as a
result of any act or omission of the Employer or any Participant, or as a result
of any transaction engaged in by any of them, then the receipt and
<PAGE>
processing of investment orders and other documents relating to Plan assets by
an officer or other employee of the Trustee or its affiliates, representatives
or agents engaged in the performance of purely ministerial functions shall not
constitute knowledge of the Trustee.
(c) Notwithstanding the foregoing provisions of this Trust Agreement, the
Trustee shall discharge its duties hereunder with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent man acting in a
like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims. Any investments selected by
the Trustee without specific direction from the Employer shall be selected to
diversify the investments of the Trust fund so as to minimize the risk of large
losses, unless in the circumstances it is clearly prudent not to do so. The
Trustee shall perform its duties in accordance with this Trust Agreement insofar
as this Trust Agreement is consistent with the provisions of ERISA. To the
extent not prohibited by ERISA, the Trustee shall not be responsible in any way
for any action or omission of the Employer or the Plan Administrator with
respect to the performance of their duties and obligations set forth in the
Plan. To the extent not prohibited by ERISA, the Trustee shall not be
responsible for any action or omission of any of its agents, or with respect to
reliance upon advice of its counsel (whether or not such counsel is also counsel
to the Employer or to the Plan Administrator), provided that such agents or
counsel were prudently chosen by the Trustee and that the Trustee relied in good
faith upon the action of such agent or the advice of such counsel. The Trustee
shall be indemnified and held harmless by the Employer against liability or
losses occurring by reason of any act or omission of the Trustee under this
Trust Agreement, unless such act or omission is due to its own willful
nonfeasance, malfeasance, or misfeasance or other breach of duty under ERISA, to
the extent that such indemnification does not violate ERISA or any other federal
or state laws.
ARTICLE IX
Delegation of Powers
9.1 Delegation by the Trustee. With respect to Shares held by the Plan, the
Trustee hereby delegates to the custodian or other agent designated by the
Sponsor the functions designated in (a) through (d) hereunder, other than the
investment, management or control of the Trust assets. With respect to assets
other than Shares, the Trustee may delegate in writing pursuant to a procedure
permitted and established by the Sponsor, to a person (individual, corporate, or
other entity) designated by the Sponsor as an agent or custodian, any of the
powers or functions of the Trustee hereunder other than the investment,
management or control of the Trust assets, including (without limitation):
(a) custodianship of all or any part of the assets of the Trust;
(b) maintaining and accounting for the Trust and for Participants and other
Accounts as a part thereof;
(c) distribution of benefits as directed by the Plan Administrator; and
(d) Preparation of the annual report on the status of the Trust.
The agent or custodian so appointed may act as agent for the Trustee, without
investment responsibility, for fees to be mutually agreed upon by the Employer
and the agent or custodian and paid in the same manner as trustee's fees. The
Trustee shall not be responsible
<PAGE>
for any act or omission of the agent or custodian arising from any such
delegation, except to the extent provided in section 8.1.
9.2 Delegation with Employer Approval. The Trustee (whether or not a bank or
trust company) and the Employer may, by mutual agreement, arrange for the
delegation by the Trustee to the Plan Administrator or any agent of the Employer
of any powers or functions of the Trustee hereunder other than the investment
and custody of the Trust assets. The Trustee shall not be responsible for any
act or omission of such person or persons arising from any such delegation,
except to the extent provided in ARTICLE VIII.
ARTICLE X
Amendment
As provided in section 16.1 of the Plan, and subject to the limitations set
forth therein, the prototype Adoption Agreement, Plan and Trust Agreement may be
amended at any time, in whole or in part, by the Sponsor. The Trustee hereby
delegates authority to the Sponsor, and to any successor Sponsor, to so amend
the prototype Adoption Agreement, Plan and Trust Agreement and the Trustee
hereby agrees that it shall be deemed to have consented to any amendment so made
which does not increase the duties of the Trustee without its consent.
ARTICLE XI
Resignation or
Removal of Trustee
The Trustee may resign at any time upon thirty (30) days notice in writing to
the Employer, and may be removed by the Sponsor or Employer at any time upon
thirty (30) days notice in writing to the Trustee. Upon such resignation or
removal, the Sponsor or Employer shall appoint a successor Trustee or Trustees.
Upon receipt by the Trustee of written acceptance of such appointment by the
successor Trustee, the Trustee shall transfer and pay over to such successor the
assets of the Trust and all records pertaining thereto, provided that any
successor Trustee shall agree not to dispose of any such records without the
trustee's consent. The successor Trustee shall be entitled to rely on all
accounts, records, and other documents received by it from the Trustee, and
shall not incur any liability whatsoever for such reliance. The Trustee is
authorized, however, to reserve such sum of money or property as it may deem
advisable for payment of all its fees, compensation, costs, and expenses, or for
payment of any other liabilities constituting a charge on or against the assets
of the Trust or on or against the Trustee, with any balance of such reserve
remaining after the payment of all such items to be paid over to the successor
Trustee. Upon the assignment, transfer, and payment over of the assets of the
Trust, and obtaining a receipt thereof from the successor Trustee, the Trustee
shall be released and discharged from any and all claims, demands, duties, and
obligations arising out of the Trust and its management thereof, excepting only
claims based upon the trustee's willful misconduct or lack of good faith. The
successor Trustee shall hold the assets paid over to it under terms similar to
those of this Trust Agreement under a trust that will qualify under section 401
of the Code. If within thirty (30) days after the trustee's resignation or
removal, the Employer or Sponsor has not appointed a successor Trustee which
<PAGE>
has accepted such appointment, the Trustee shall, unless it elects to terminate
the Trust pursuant to ARTICLE XII, appoint such successor itself.
ARTICLE XII
Termination of the Trust
12.1 Term of the Trust. This Trust shall continue as to the Employer so long
as the Plan is in full force and effect. If the Plan ceases to be in full force
and effect, this Trust shall thereupon terminate unless expressly extended by
the Employer.
12.2 Termination by the Trustee. The Trustee may elect to terminate the Trust
if within thirty (30) days after its resignation or removal pursuant to ARTICLE
XI the Employer or Sponsor has not appointed a successor Trustee which has
accepted such appointment. Termination of the Trust shall be effected by
distributing all assets thereof to the Participants or other persons entitled
thereto pursuant to the directions of the Plan Administrator (or, in the absence
of such direction, as determined by the Trustee) as provided in section 16.3 of
the Plan, subject to the trustee's right to reserve funds as provided in ARTICLE
XI hereof. Upon the completion of such distribution, the Trustee shall be
relieved from all further liability with respect to all amounts so paid, other
than any liability arising out of the trustee's willful misconduct.
ARTICLE XIII
Miscellaneous
13.1 No Diversion of Assets. At no time shall it be possible for any part of
the assets of the Trust to be used for or diverted to purposes other than for
the exclusive benefit of Participants and their Beneficiaries or revert to the
Employer, except as specifically provided in the Plan or this Trust Agreement.
13.2 Notices. Any notice from the Trustee to the Employer or from the Employer
to the Trustee provided for in the Plan and Trust shall be effective if sent by
first class mail to their respective last address of record.
13.3 Multiple Trustees. In the event that there shall be two (2) or more
Trustees serving hereunder, any action taken or decision made by any such
Trustee may be taken or made by a majority of them with the same effect as if
all had joined therein, if there be more than two (2), or unanimously if there
be two (2).
13.4 Conflict With Plan. In the event of any conflict between the provisions
of the Plan and those of this Trust Agreement, the Plan shall prevail.
13.5 Applicable Law. Except to the extent otherwise required by ERISA, as
amended, this Trust Agreement shall be construed in accordance with the laws of
the state where the Trustee has its principal place of business.
13.6 Returned Contributions.
(a) A contribution made by the Employer by a mistake of fact shall, if the
Administrator so directs, be returned to the Employer within one (1) year after
its payment. The Administrator shall, in its sole discretion, determine whether
the contribution was made by mistake of fact based upon such evidence as it
deems appropriate.
<PAGE>
(b) A contribution made by the Employer that is conditioned on deductibility
under section 404 of the Code shall, to the extent such deduction is disallowed,
be returned to the Employer within one (1) year after the disallowance, if the
Administrator so directs.
13.7 General Undertaking. All parties to this Trust and all persons claiming
any interest whatsoever hereunder agree to perform any and all acts and execute
any and all documents and papers which may be necessary or desirable for the
carrying out of the Trust or any of its provisions.
13.8 Invalidity of Certain Provisions. If any provision of this Trust shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof and the Trust shall be construed and enforced
as if such provisions had not been included.
13.9 Counterpart Originals. This Trust may be executed in one or more
counterpart originals.
IN WITNESS WHEREOF, the Employer and the Trustee(s) have signed this Trust
effective as of the date specified in the Adoption Agreement.
[NAME OF EMPLOYER]
By:
Secretary President
TRUSTEE(S)
)
) ss
)
I, ______________________________________, a notary public in and for the
jurisdiction above named, do hereby certify that
did personally appear before me and do acknowledge that they executed the
foregoing Trust as their free act and deed.
Subscribed and sworn to before me this ______________________ day
of______________________, 19_____.
_______________________________
Notary Public
My Commission
Expires: ___________________
<PAGE>
[logo]
COLUMBIA TRUST COMPANY
1301 S.W. Fifth Avenue
P.O. BOX 1350
Portland, Oregon 97207-1350
Nationwide 1-800-547-1707
In Portland 222-3606
<PAGE>
RETIREMENT PLAN PARTICIPANT
DISTRIBUTION ELECTION FORM
(the Plan)
Participant's Name:
Mailing Address:
Social Sec. No.: Marital Status: married unmarried
I request that my interest under the Plan be paid to me in the following form at
the time indicated below. I understand that if my accounts exceed $3,500, my
benefit may remain in the Plan until I request payment in one of the forms
listed below or until I reach normal retirement age under the Plan. I also
understand that the benefit will be paid in the form of an annuity after I reach
normal retirement age if no earlier distribution election form has been
received.
(NOTE: Please refer to the Special Tax Notice Regarding Plan Payments and
consider the tax consequences of your selection.)
1) A Direct Rollover to: an IRA OR to a new employer's Plan.
name of IRA or new employer Plan
address
2) Paid directly to me as follows:
a) Lump sum distribution* of
cash only. OR
in-kind, with the mutual fund shares credited to my account.
* (Mandatory Federal tax withholding of 20% applies to eligible rollover amounts
that you elect to have paid directly to you instead. Refer to Special Tax
Notice.)
b) Installments
in cash OR
in kind, with the mutual fund shares credited to my account,
Paid
monthly OR
quarterly OR
annually
as follows:
(Section 2b Installments continued)
Over a period of years (not to exceed applicable life expectancy of recipient
and beneficiary.)
Over life expectancy of me and, if applicable, my beneficiary. Under this
option, life expectancy will be recalculated annually, and the amount you
receive each year will be the total account balance at the start of the year,
divided by the life expectancy of you and, if applicable, your beneficiary.
3) In the form of an annuity contract as follows:
Straight life annuity. (If you are married, attach Spouse's Consent.)
<PAGE>
Life Annuity with a 50 percent survivor annuity for my spouse should I
predecease my spouse.
Other annuity (describe):
Participant's Signature Date
FOR MARRIED PARTICIPANTS: If you are married and choose a form of benefit other
than a life annuity starting at your normal retirement age with at least a 50
percent continuation annuity for your spouse, you must have your spouse's
consent as provided on the attached Spouse's Consent Form.
RECEIPT OF SPECIAL TAX NOTICE: By signing the above, you acknowledge receipt of
the "Special Tax Notice Regarding Plan Payments" provided by the Plan
Administrator.
(Note to Plan Administrator: This distribution election form should be
accompanied by an election regarding withholding of income tax and/or IRS Form
W-4P for any distribution that is not an eligible rollover distribution.)
<PAGE>
SPOUSE'S CONSENT TO ELECTION OF A
FORM OF BENEFIT WITHOUT A SPOUSE'S ANNUITY
I declare that I am the participant's spouse. I consent to the election of
the form and time of benefit payment set out on the attached distribution
election form. I acknowledge that this election will have the effect of causing
the participant's benefit under the Plan to be paid with no guarantee of a
continued benefit to me after the participant's death.
Spouse's Signature Date
The spouse's consent must be witnessed by a notary public (Alternative 1)
or by a plan representative (Alternative 2).
Alternative 1
STATE OF )
) ss.
County of )
This instrument was signed before me on .
199 by .
Notary Public for
My commission expires
Alternative 2
I declare that I am a plan representative and this instrument was signed
before me on
, 199 by .
Signature of Plan Representative Date
<PAGE>
Amendment to the
Investment Company Institute
Prototype Money Purchase Pension and
Profit Sharing Plan
Basic Document #01
FIRST
The Plan is hereby amended by the word-for-word adoption of the model language
contained in Revenue Procedure 93-12, for distributions made on or after January
1, 1993, as follows:
Notwithstanding any provision of the Plan to the contrary that would otherwise
limit a Distributee's election under this provision, a Distributee may elect, at
the time and in the manner prescribed by the Plan Administrator, to have any
portion of an Eligible Rollover Distribution paid directly to an Eligible
Retirement Plan specified by the Distributee in a Direct Rollover.
Definitions
(a) Eligible Rollover Distribution. An Eligible Rollover Distribution is any
distribution of all or any portion of the balance to the credit of the
Distributee, except that an Eligible Rollover Distribution does not include:
any distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or life
expectancy) of the Distributee or the joint lives (or joint life expectancies)
of the Distributee and the Distributee's designated Beneficiary, or for a
specified period of ten (10) years or more; any distribution to the extent such
distribution is required under section 401(a)(9) of the Code; and the portion of
any distribution that is not includable in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to employer
securities).
(b) Eligible Retirement Plan. An Eligible Retirement Plan is an individual
retirement account described in section 408(a) of the Code, an individual
retirement annuity described in section 408(b) of the Code, an annuity plan
described in section 403(a) of the Code, or a qualified trust described in
section 401(a) of the Code, that accepts the Distributee's Eligible Rollover
Distribution. However, in the case of an Eligible Rollover Distribution to the
surviving spouse, an Eligible Retirement Plan is an individual retirement
account or individual retirement annuity.
(c) Distributee. A Distributee includes an Employee or former Employee. In
addition, the Employee's or former Employee's surviving spouse and the
Employee's or former Employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in section 414(p)
of the Code, are Distributees with regard to the interest of the spouse or
former spouse.
(d) Direct Rollover. A Direct Rollover is a payment by the Plan to the
Eligible Retirement Plan specified by the Distributee.
SECOND
The Plan is hereby amended by the word-for-word adoption of the model language
contained in Revenue Procedure 94-13 as follows:
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1,
<PAGE>
1994, the annual Compensation of each Employee taken into account under the Plan
shall not exceed the OBRA O93 Annual Compensation Limit. The OBRA O93 Annual
Compensation Limit is $150,000 as adjusted by the Commissioner for increases in
the cost-of-living in accordance with section 401(a)(17)(B) of the Internal
Revenue Code. The cost-of-living adjustment in effect for a calendar year
applies to any period, not exceeding 12 months, over which Compensation is
determined (Determination Period) beginning in such calendar year. If a
Determination Period consists of fewer than 12 months, the OBRA O93 Annual
Compensation Limit will be multiplied by a fraction, the numerator of which is
the number of months in the Determination Period, and the denominator of which
is 12.
For Plan Years beginning on or after January, 1994, any reference in this Plan
to the limitation under section 401(a)(17) of the Code shall mean the OBRA O93
Annual Compensation Limit set forth in this provision.
If Compensation for any prior Determination Period is taken into account in
determining an Employee's benefits accruing in the current Plan year, the
Compensation for that prior Determination Period is subject to the OBRA O93
Annual Compensation Limit in effect for that prior Determination Period. For
this purpose, for Determination Period beginning before the first day of the
first Plan Year beginning on or after January 1, 1994, the OBRA O93 Annual
Compensation Limit is $150,000.
<PAGE>
TRUSTEE'S AUTHORIZATION
[LOGO] COLUMBIA TRUST COMPANY
PROTOTYPE RETIREMENT PLAN TRUSTEE DISTRIBUTION FORM
NOTE - The Plan Administrator should have a completed Participant Beneficiary
Designation and distribution Election Form. A Form W-4P might be necessary if
any part of the distribution is not an eligible rollover amount. Send this
form (and a copy of the W-4P if applicable) to Columbia, and keep all other
forms in the Plan Administrator's permanent file.
Plan Name:
-----------------------------------------------------------------------
Master Account Number:
----------------------------------------------------------
Participant's Account Number:
---------------------------------------------------
Name:
--------------------------------------------------------------------------
Social Security #: - - Age:
----------- ------------ ---------- -----------------
(for plan administrator) Married? Yes * No
--- ---
* If yes, Spousal consent is required on Participant Beneficiary Designation and
Distribution Election Form if the participant's vested account balance is
greater than $3,500.
To: Columbia Trust Company,
Liquidate ALL or PART $ or shares from
the; ----- ----- ------------ ------------
The participant is % vested. If not 100% vested, include instructions
---------
for non-vested portion of the distribution on the back of this form.
(Check all appropriate boxes)
Columbia Daily Income Company Columbia Common Stock Fund, Inc.
- -- --
Columbia Growth Fund, Inc. Columbia Balanced Fund, Inc.
- -- --
Columbia Fixed Income Securities Fund, Inc. Columbia International Stock
- -- -- Fund, Inc.
<PAGE>
Columbia Special Fund, Inc. Columbia High Yeild Fund, Inc.
- -- --
Columbia U.S. Government Securities Fund Columbia Real Estate Equity
- -- -- Fund, Inc.
portion of the Participant's:
Profit-Sharing Account Money Purchase Account
- --- ---
Other (specify):
- ---
- ----------------------------------------------------------------------
for the following reason (death, termination, hardship, etc.):
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Is this distribution: (complete a Form W-4P for withholding elections)
a Required Minimum Distribution (Age 70 1/2+)
- ---
One in a series of Equal Payments spanning 10 years or more
- ---
(Over)
Note: Rules regarding distributions from qualified plans have been in effect
since January 1, 1993. Answer the following questions carefully.
Is this a Direct Rollover?
YES NO
- --- ---
to an IRA Eligible Rollover distributions paid directly
- --- to the participant are subject to an
automatic 20% with-holding as a prepayment of
federal income taxes.
- --- to qualified plan
Federal Withholding is Mandatory
INSTRUCTIONS FOR DISTRIBUTION:
Make check payable to:
------------------------------------------------------
And mail to this address:
------------------------------------------------------
<PAGE>
------------------------------------------------------
------------------------------------------------------
- - and/or
Special Instructions: ------------------------------------------------------
(include instructions for
non-vested portion) ------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
MAINTENANCE FEE - Check One (unless you have paid this year's fee or this is not
a liquidating distribution)
I have enclosed a $50 I authorize Columbia to withhold
- ---check for this year's ---$50 from this distribution for
maintenance fee. this year's maintenance fee.
- ------------------------------------------------------------------------------
Trustee's Signature Date Daytime Phone Number
- ------------------------------------------------------------------------------
Trustee's Signature Date Daytime Phone Number
- ------------------------------------------------------------------------------
Trustee's Signature Date Daytime Phone Number
NOTE - all trustees of the plan must sign this form, use additional space as
required.
<PAGE>
1996 Form W-4P Department of the Treasury
Internal Revenue Service
- --------------------------------------------------------------------------------
What is Form W-4P? This form is for recipients of income from annuity,
pension, and certain other deferred compensation plans to tell payers
whether income tax is to be withheld and on what basis. Your options depend
on whether the payment is periodic, nonperiodic, or an eligible rollover
distribution as explained on page 3.
You also can use this form to choose (a) to have no income tax withheld
from the payment (except for eligible rollover distributions or payments to
U.S. citizens delivered outside the United States or its possessions) or
(b) to have an additional amount of tax withheld.
What Do I Need To Do? Complete lines A through F of the worksheet. If you
want no tax to be withheld, you can skip the worksheet below and go
directly to the form at the bottom of this page.
Sign This Form.--Form W-4P is not considered valid unless you sign it.
Other Income? If you have a large amount of income from other sources not
subject to withholding (such as interest, dividends, or taxable social
security), you should consider making estimated tax payments using Form
1040-ES, Estimated Tax for Individuals. Call 1-800-829-3676 for copies of
Form 1040-ES, and Pub. 505, Tax Withholding and Estimated Tax.
When Should I file? File as soon as possible to avoid underwithholding
problems.
Multiple Pensions? More Than One Income? To figure the number of allowances
you may claim, combine allowances and income subject to withholding from
all sources on one worksheet. You can file a Form W-4P with each pension
payer, but do not claim the same allowances more than once. Your
withholding will usually be more accurate if you claim all allowances on
the Form W-4P for the largest source of income subject to withholding.
Caution: At the time this form was printed, Congress was
considering legislation that would allow you to claim additional
withholding allowances. See Pub. 553, Highlights of 1995 Tax Law
Changes.
- --------------------------------------------------------------------------------
Personal Allowances Worksheet
- --------------------------------------------------------------------------------
A Enter "1" for yourself if no one else can claim you as a dependent .... A
---
<PAGE>
B Enter "1" if: -- You are single and have only one pension; or
-- You are married, have only one pension, and your
spouse has no income subject to withholding; or .... B
-- Your income from a second pension or a job, ---
or your spouse's pension or wages (or the total
of all) is $1,000 or less.
C Enter "1" for your spouse. You may choose to enter -0- if you are
married and have either a spouse who has income subject to withholding
or you have more than one source of income subject to withholding.
(This may help you avoid having too little tax withheld.) ............. C
---
D Enter number of dependents (other than your spouse or yourself)
you will claim on your return.......................................... D
---
E Enter "1" if you will file as a head of household on your tax return... E
---
F Add lines A through E and enter total here............................. F
---
For accuracy, do all worksheets that apply.
- -- If you plan to itemize or claim other deductions and want to reduce your
withholding, use the Deductions and Adjustments Worksheet on page 2.
Caution: At the time this form was printed, Congress was considering
legislation that would allow you to claim additional withholding
allowances. See Pub. 553, Highlights of 1995 Tax Law Changes.
- -- If you have more than one source of income subject to withholding or a
spouse with income subject to withholding AND your combined earnings
from all sources exceed $30,000 ($50,000 if married filing jointly), use
the Multiple Pensions/More Than One Income Worksheet on page 2 if you
want to avoid having too little tax withheld.
- -- If neither situation applies, stop here and enter the number from line F
above on line 2 of Form W-4P below.
- --------------------------------------------------------------------------------
........ Cut here and give the certificate to the payer of your pension ........
or annuity. Keep the top portion for your records.
Form W-4P OMB No. 1545-0415
Department of the Treasury
Internal Revenue Service 1996
Withholding Certificate for Pension or Annuity Payments
<PAGE>
- --------------------------------------------------------------------------------
Type or print your full name Your social security number
- --------------------------------------------------------------------------------
Home address (number and street or rural route) Claim or identification
number (if any) of your
- ------------------------------------------------------- pension or annuity
City or town, state, and ZIP code contract
- --------------------------------------------------------------------------------
Complete the following applicable lines:
1 I elect not to have income tax withheld from my pension or
annuity. (Do not complete lines 2 or 3.)...................... / /
2 I want my withholding from each periodic pension or annuity
payment to be figured using the number of allowances and
marital status shown. (You may designate a dollar amount
on line 3.)...................................................
---------------
Enter number of
allowances.)
Marital status: / / Single / / Married / / Married, but
withhold at higher
Single rate
3 I want the following additional amount withheld from each
pension or annuity payment. Note: For periodic payments,
you cannot enter an amount here without entering the number
(including zero) of allowances on line 2).....................$
--------------
- --------------------------------------------------------------------------------
Your signature Date
- --------------------------------------------------------------------------------
Cat No. 10225T
Form W-4P (1996) Page 2
- --------------------------------------------------------------------------------
Deductions and Adjustments Worksheet
- --------------------------------------------------------------------------------
NOTE: Complete only if you plan to itemize deductions or claim adjustments to
income on your 1996 return.
1. Enter an estimate of your 1996 itemized deductions. These
include qualifying home mortgage interest, charitable
contributions, state and local taxes (but not sales taxes),
<PAGE>
medical expenses in excess of 7.5% of your income, and
miscellaneous deductions in excess of 2% of your income. (For
1996, you may have to reduce your itemized deductions if your
income is over $117,950 ($58,975 if married filing
separately). Get Pub. 919 for details)....................... 1 $
-----------
2. Enter: $6,700 if married filing jointly or qualifying widow(er)
$5,900 if head of household
$4,000 if single
$3,350 if married filing separately.................. 2 $
-----------
3. Subtract line 2 from line 1. If line 2 is greater than
line 1, enter -0-............................................ 3 $
-----------
4. Enter estimate of your 1996 adjustments to income. These
include alimony paid and deductible IRA contributions........ 4 $
-----------
5. Add lines 3 and 4 and enter the total........................ 5 $
-----------
6. Enter an estimate of your 1996 income not subject to
withholding (such as dividends or interest income)........... 6 $
-----------
7. Subtract line 6 from line 5. Enter the result,
but not less than zero....................................... 7 $
-----------
8. Divide the amount on line 7 by $2,500 and enter the result
here. Drop any fraction..................................... 8
------------
9. Enter the number from Personal Allowances Worksheet,
line F, on page 1............................................ 9
------------
10. Add lines 8 and 9 and enter the total here. If you plan
to use the Multiple Pensions/More Than One Income Worksheet,
also enter this total on line 1 below. Otherwise stop here
and enter this total on Form W-4P, line 2, on page 1.........10
------------
- --------------------------------------------------------------------------------
Multiple Pensions/More Than One Income Worksheet
- --------------------------------------------------------------------------------
NOTE: Complete only if you plan to itemize deductions or claim adjustments to
income on your 1996 return.
1. Enter the number from line F on page 1 (or from line 10
above if you used the Deductions and Adjustments Worksheet).. 1
------------
2. Find the number in Table 1 below that applies to the
<PAGE>
LOWEST paying pension or job and enter it here............... 2
------------
3. If line 1 is GREATER THAN OR EQUAL TO line 2, subtract line 2
from line 1. Enter the result here (if zero, enter -0-) and on
Form W-4P, line 2, page 1. Do not use the result of this
worksheet.................................................... 3
------------
4. If line 1 is LESS THAN line 2, enter -0- on Form W-4P,
line 2, page 1, and enter the number from line 2 of this
worksheet here............................................... 4
------------
5. Enter the number from line 1 of this worksheet............... 5
------------
6. Subtract line 5 from line 4 and enter the result here........ 6
------------
7. Find the amount in Table 2 below that applies to the HIGHEST
paying pension or job and enter it here...................... 7 $
-----------
8. Multiply line 7 by line 6 and enter the result here.......... 8 $
-----------
9. Divide line 8 by the number of pay periods in each year. (For
example, divide by 12 if you are paid every month.) Enter the
result here and on Form W-4P, line 3, page 1. This is the
additional amount to be withheld from each payment........... 9 $
<TABLE> -----------
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Table 1: Multiple Pensions/More Than One Income Worksheet
- ---------------------------------------------------------------------------------------------------------
Married Filing Jointly All Others
- ---------------------------------------------------------------------------------------------------------
If amounts from Enter on If amounts from Enter on If amounts from Enter on
LOWEST paying line 2 above LOWEST paying line 2 above LOWEST paying line 2 above
pension or job pension or job pension or job
is -- is -- is--
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
0 - $3,000.........0 39,001 - 50,000......... 9 0 - $4,000.........0
3,001 - 6,000.........1 50,001 - 55,000.........10 4,001 - 10,000.........1
6,001 - 11,000.........2 55,001 - 60,000.........11 10,001 - 20,000.........2
11,001 - 16,000.........3 60,001 - 70,000.........12 14,001 - 30,000.........3
16,001 - 21,000.........4 70,001 - 80,000.........13 19,001 - 40,000.........4
<PAGE>
21,001 - 27,000.........5 80,001 - 90,000.........14 23,001 - 50,000.........5
27,001 - 31,000.........6 90,001 and over.........15 45,001 - 60,000.........6
31,001 - 34,000.........7 60,001 - 70,000.........7
34,001 - 39,000.........8 70,001 and over.........8
- ---------------------------------------------------------------------------------------------------------
Table 2: Multiple Pensions/More Than One Income Worksheet
- ---------------------------------------------------------------------------------------------------------
Married Filing Jointly All Others
- ---------------------------------------------------------------------------------------------------------
If amounts from Enter on If amounts from Enter on
HIGHEST paying line 7 above HIGHEST paying line 7 above
pension or job pension or job
is -- is--
- ---------------------------------------------------------------------------------------------------------
0 - $50,000.......$ 380 0 - $30,000........$ 380
50,001 - 100,000....... 710 30,001 - 60,000........ 710
100,001 - 130,000....... 790 60,001 - 120,000........ 790
130,001 - 240,000....... 920 110,001 - 240,000........ 920
240,001 and over........ 1,010 240,001 and over......... 1,010
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Form W-4P (1996) Page 3
- --------------------------------------------------------------------------------
Paperwork Reduction Act Notice.--We ask for the information on this form to
carry out the Internal Revenue laws of the United States. The Internal Revenue
Code requires this information under sections 3405 and 6109 and their
regulations. Failure to provide this information may result in inaccurate
withholding on your payment(s).
The time needed to complete this form will vary depending on individual
circumstances. The estimated average time is:
Recordkeeping. . . . . . . . . . . . . . . . . . . . 40 min.
Learning about the law or the form . . . . . . . . . 20 min.
Preparing the form . . . . . . . . . . . . . . . . . 49 min.
If you have comments concerning the accuracy of these time estimates or
suggestions for making this form simpler, we would be happy to hear from you.
You can write to the Tax Forms Committee, Western Area Distribution Center,
<PAGE>
Rancho Cordova, CA 95743-0001. DO NOT send the tax form to this address.
Instead, give it to your payer.
- --------------------------------------------------------------------------------
Withholding From Pensions and Annuities
Generally, withholding applies to payments made from pension, profit-sharing,
stock bonus, annuity, and certain deferred compensation plans; from individual
retirement arrangements (IRAs); and from commercial annuities. The method and
rate of withholding depends on the kind of payment you receive. Also, because
your tax situation may change from year to year, you may want to refigure your
withholding each year.
You can change the amount of tax to be withheld by using lines 2 and 3 of
Form W-4P. You can also exempt the payments from withholding by using line
1 of Form W-4P. This exemption from withholding does not apply to eligible
rollover distributions (discussed later). Also, the exemption does not
apply to certain recipients who have payments delivered outside the United
States or its possessions. See Exemption From Withholding--Payments Outside
the United States later.
Caution: There are penalties for not paying enough tax during the year,
either through withholding or estimated tax payments. New retirees,
especially, should see Pub. 505. It explains the estimated tax requirements
and penalties in detail. You may be able to avoid quarterly estimated tax
payments by having enough tax withheld from your pension or annuity using
Form W-4P.
Periodic payments from any plan noted earlier are treated as wages for the
purpose of withholding. A periodic payment is one that is includable in
your income for tax purposes. You must receive the payment in installments
at regular intervals over a period of more than 1 full year from the
starting date of the pension or annuity. The intervals can be annual,
quarterly, monthly, etc.
Unless you tell your payer otherwise, tax must be withheld on periodic
payments as if you are married and claiming three withholding allowances.
This means that tax will be withheld if your pension or annuity is more
than $1,173 a month (or $14,075 a year).
There are some kinds of periodic payments for which you cannot use Form
W-4P since they are already defined a wages subject to income tax
withholding. Retirement pay for service in the U.S. Armed Forces generally
falls into this category. Certain nonqualified deferred compensation plans
and state and local deferred compensation plans described in section 457
also fall into this category. Your payer should be able to tell you whether
<PAGE>
Form W-4P will apply. Social security payments are not subject to
withholding but may be includable in income.
For periodic payments, your certificate stays in effect until you change or
revoke it. Your payer must notify you each year of your right to elect to
have no tax withheld or to revoke your election.
Nonperiodic payments will have income tax withheld at a flat 10% rate (but
see Eligible rollover distribution below).
Distributions from an IRA that are payable on demand are treated as
nonperiodic payments. You can elect to have no income tax withheld from a
nonperiodic payment by filing Form W-4P with the payer and checking the box
on line 1. Generally, your election to have not tax withheld will apply to
any later payment from the same plan. You cannot use line 2 for nonperiodic
payments. But you may use line 3 to specify that an additional amount be
withheld.
Eligible rollover distribution. You do not have the option of claiming
exemption from withholding for eligible rollover distributions from
qualified pension or annuity plans (e.g., 401(k) pension plans) or
tax-sheltered annuity plans. See Pub. 505 for more details. Tax will be
withheld from an eligible rollover distribution at a flat 20% rate, unless
you elect to have more withheld by filing a Form W-4P with the plan
administrator. However, no tax will be withheld if the entire distribution
is transferred by the plan administrator in a direct rollover to an IRA or
qualified pension or tax-sheltered annuity plan. Since you are no longer
entitled to claim exemption from withholding on eligible rollover
distributions from such plans, do not file Form W-4P with your plan
administrator unless you choose to have more than 20% withheld.
Exemption From Withholding--Payment Outside the United States
The election to be exempt from income tax withholding does not apply to any
periodic payment or nonperiodic distribution made to a U.S. citizen or
resident alien that is delivered outside the United States or its possessions.
Other recipients who have these payments delivered outside the United
States or its possessions can elect exemption only if an individual
certifies to the payer that the individual is not (1) a U.S. citizen or
resident alien or (2) an individual to whom section 877 of the Internal
Revenue Code applies (concerning expatriation to avoid tax). The
certification must be made in a statement to the payer under the penalties
of perjury. A nonresident alien who elects exemption from withholding under
section 3405 is subject to withholding under section 1441.
<PAGE>
Revoking the Exemption From Withholding
If you want to revoke your previously filed exemption from withholding for
periodic payments, file another Form W-4P with the payer. If you want tax
withheld at the rate set by law (married with three allowances), write
"Revoked" by the checkbox on line 1 of the form. If you want tax withheld
at any different rate, complete line 2 on the form.
If you want to revoke your previously filed exemption for nonperiodic
payments, write "Revoked" by the checkbox on line 1 and file Form W-4P with
the payer.
Statement of Income Tax Withheld From Your Pension or Annuity
By January 31 of next year, you will receive a statement from your payer
showing the total amount of your pension or annuity payments and the total
income tax withheld during the year.
<PAGE>
[LOGO]
Attached are the replacement pages and forms corresponding to amended or revised
sections of the Employers Booklet - Notice to Employees. The updated sections
are underlined in the Table of Contents.
Columbia Trust Company
<PAGE>
The Columbia Retirement Plan
Employer's Booklet
Notice to Employees
Table of Contents
This Employer's Booklet contains specific information for retirement
plans covering employees. Although some information is duplicated here, this
booklet should be used in conjunction with the Columbia Retirement Plan packet.
PROCEDURES AND
GENERAL ADMINISTRATIVE RESPONSIBILITIES
Including: REPORTING REQUIREMENTS
DISTRIBUTIONS
SPECIAL TAX NOTICE REGARDING PLAN PAYMENTS
SUMMARY PLAN DESCRIPTIONS
INSTRUCTIONS FOR PREPARING MODEL SUMMARY PLAN DESCRIPTION FOR PROFIT SHARING
PLAN
MODEL SUMMARY PLAN DESCRIPTION FOR PROFIT SHARING PLAN
INSTRUCTIONS FOR PREPARING MODEL SUMMARY PLAN DESCRIPTION FOR MONEY PURCHASE
PENSION PLAN
MODEL SUMMARY PLAN DESCRIPTION FOR MONEY PURCHASE PENSION PLAN
ADMINISTRATIVE FORMS
NOTICE TO INTERESTED PARTIES
PARTICIPANT LOANS
BENEFICIARY DESIGNATIONS
JOINT SURVIVOR ANNUITY
DOMESTIC RELATIONS ORDERS
PARTICIPANT DISTRIBUTION ELECTION FORM
<PAGE>
[LOGO] The Columbia Retirement Plan
PROCEDURES & ADMINISTRATION
PROCEDURES & ADMINISTRATION
PROCEDURES & ADMINISTRATION
PROCEDURES & ADMINISTRATION
________________________________________________________________
Questions? Call 1-800-547-1707; in Portland 222-3606
<PAGE>
PROCEDURES
Employers have special responsibilities when employees are covered under a
retirement plan. Once the Adoption Agreements have been completed and the
Trustees and Plan Administrator appointed, these additional procedures should be
followed.
Communicate the Plan to Employees.
After the employer has adopted the plan(s), the employer should communicate the
adoption and principal provisions of the plan(s) to employees.
The adoption can be communicated by posting or delivering a Notice to Interested
Parties to current employees, former employees who are eligible for benefits,
and beneficiaries of deceased employees. If the plan is a new plan, only
current employees need be notified. The employer or the plan administrator must
post the notice between 9 and 23 days after the employer has adopted the plan
and between 6 and 20 days after adoption if the notice is mailed to employees.
Model notices and instructions for completing them are in the Administrative
Forms section of this booklet.
The principal plan provisions can be communicated to employees by providing
participants with a copy of the summary plan description. See the Summary Plan
Description Procedure.
Bonding and Insurance.
If a plan covers common law employees, the plan administrator, any individual
trustees, and any person who handles funds or property belonging to the plan
must be covered by a surety bond equal to 10 percent of the plan assets as of
the beginning of the plan year (but not less than $1,000 nor more than
$500,000). For example, an employee who signs checks transferring assets to the
trustee should be bonded. This bond normally may be obtained from an insurance
company at a minimal cost. A bond is not required if the plan only covers the
individual and/or spouse who are the sole owners of the proprietorship or
corporation.
The employer may also wish to obtain fiduciary liability insurance covering the
plan administrator and any individual trustees. Fiduciary liability insurance
must be paid for by the employer unless it permits recovery against individual
fiduciaries. It may not be paid from plan assets. Fiduciary liability
insurance is not required by law, however.
Prepare the Summary Plan Descriptions(s).
The employer must inform each participant under the plan(s) of his rights under
the plan(s) in a manner that is understandable to the participants. To do this,
the employer should complete the Model Summary Plan Description in the Summary
Plan Description Section according to the instructions provided. The plan
administrator should provide a copy of the completed description within 90 days
after participation begins, to each new participant under the plan. In
addition, a copy of the summary plan description must be filed with the
Department of Labor by the plan administrator within 120 days after adoption of
the plan.
Consult a Professional.
<PAGE>
Once again, because of the many statutory and regulatory requirements imposed on
tax-qualified plans, all actions taken with respect to establishing such a plan
should be reviewed by a tax advisor or legal counsel.
<PAGE>
General Administrative Responsibilities
The plan administrator is responsible for the administration and recordkeeping
under the plan. The plan administrator may be the trustee, the employer
(including a corporate employer), an individual, or a committee of two or more
individuals. Among its duties, the plan administrator must comply with many
reporting and disclosure requirements. These requirements apply to
communications to government agencies and to plan participants. The following
list, which is not exhaustive, identifies the primary areas of administrative
responsibility.
Record Keeping
The plan administrator must compile the employee data necessary to credit
employees with service for eligibility and vesting purposes. The plan
administrator should also have each participant designate a beneficiary. If the
participant is married, the participant cannot designate a beneficiary other
than his or her spouse without the spouse's consent. If the participant marries
or remarries after designating a beneficiary, the new spouse must consent to any
beneficiary (other than that spouse) who has been named by the participant. See
the Beneficiary Designation Form in the Administrative Forms section of this
booklet.
Accounting
The plan administrator must collect all contributions from the employer and from
employees. Also, the plan administrator must establish an individual account
for each participant and account separately for the employer contributions
allocated to the accounts, as well as for investment gains or losses. The plan
administrator must also account for amounts rolled over or transferred from
other tax-qualified plans.
Investment Selection
The plan administrator must record the participant's instructions directing the
investment of contributions.
Notices
The Plan administrator must provide participants with a number of notices. For
example, the plan administrator must notify participants of any benefits that
will be forfeited in the event of the participant's death. The plan
administrator must also notify participants of the receipt of any court order
requiring the plan to pay out any part of the participant's account to or on
behalf of the participant's former spouse or as child support. See Notice of
Domestic Relations Order in the Administrative Forms section of this booklet.
The plan administrator must also provide participants with a general notice of
the participant's ability to elect not to receive annuity benefits in the form
of a Joint and Survivor Annuity and to elect not to have a Preretirement
Survivor Annuity paid to the participant's surviving spouse. This notice can be
permanently posted in the locations customarily used to inform employees of
labor-management relations matters. Specific information on the effect of a
Joint and Survivor Annuity or Preretirement Survivor Annuity must also be
provided to participants who request it. See the Administrative Forms section
of this booklet for Explanation of Joint and Survivor Annuity and Specific
Information About Joint and Survivor Annuity.
Reporting
The plan administrator is responsible for submitting a number of reports or
statements to government agencies or to plan participants. The plan
administrator must provide a summary plan description to each participant within
90 days of commencing participation and to the Department of Labor within 120
days of adoption of the Plan. A summary plan description and instructions for
completing it are located in the next sections. If there are significant
changes in the plan, the plan administrator must provide participants and the
Department of Labor with a statement of material modifications. Columbia Trust
Company will inform the plan administrator of significant changes in the plan
and will provide model statements of material modifications if required.
<PAGE>
An annual report must be filed with the Internal Revenue Service. Form 5500 is
used for plans with 100 or more employees and Form 5500-C/R for plans with less
than 100 employees. A summary annual report and a benefit statement must be
provided to participants each year.
Distributions
The plan administrator must determine which employees are entitled to receive
distributions of benefits under the plan. With respect to such distributions,
the plan administrator must distribute and collect any participant elections
concerning the time or manner of distribution. A Participant Distribution
Election Form is provided in the Administrative Forms section of the Employer's
Booklet, including elections and waivers as required by the Retirement Equity
Act of 1984 and the Unemployment Compensation Act of 1992.
Distributions must be authorized in writing by the plan's trustee(s) only. A
Prototype Retirement Plan Trustee Distribution Form can be used for that
authorization.
As of January 1, 1993, distributions from retirement plans are subject to
mandatory withholding at a rate of 20% as a pre-payment of federal income tax
(currently, Oregon residents may elect whether or not to have 8% state tax
withholding). Columbia Trust Company can do this withholding. Different
withholding rates may apply to lump-sum distributions and to periodic
distributions. You can elect to have additional amounts withheld. The IRS
Form W-4P may need to be completed if any portion of the distribution is not an
eligible rollover amount. Call Columbia for the Distribution Form and Form
W-4P.
Taxable distributions from qualified plans are eligible rollover distributions
to an individual retirement account or annuity (IRA), another qualified plan or
a section 403(b) annuity. Eligible rollover distributions that are directly
rolled over avoid the mandatory 20% withholding. Eligible rollover
distributions exclude:
* Required Minimum Distributions (age 70 1/2)
* Distributions from an annuity
* Equal payments spanning 10 years or more
* After-tax contributions
Distributions from this retirement plan are reportable to the IRS. The employer
will receive participant Form 1099Rs from Columbia Trust Company in the January
following the distribution unless Columbia notifies the employer of a
circumstance in which it is not able to do so.
Generally, distributions will be made to a participant due to separation from
service or retirement (and possibly, termination of the plan.) If the
participant is under 59 1/2 years of age, the distribution is subject to a 10%
penalty. Exceptions to the penalty are distributions which are:
Made to a beneficiary after the death of a participant
Due to total and permanent disability
A series of substantially equal periodic payments_which begin after
separation from service
Made to participants over age 55 and separating from service
Medical expenses
Made to alternate payees specified in a Qualified Domestic Relations order
i.e. divorce
Distributions that are directly rolled over are also exempted from the 10%
penalty. The plan administrator must inform participants of their options by
providing a written explanation of the direct rollover options and related tax
rules. Give the Special Tax Notice Regarding Plan Payments on the following
page to the participant. The notice must be provided within "a reasonable
period of time" before making a distribution to the participant. Generally,
that period is no less than 30 days and no more than 90 days prior to the
distribution. However, if the participant makes an affirmative election to make
or not make a direct rollover, the 30-day requirement is waived.
Refer to the Special Tax Notice for a discussion on rollover options for
distributions that are paid directly to the participant.
<PAGE>
Please Note
The attached form is a model explanation, prepared by the IRS, of some of the
consequences of plan rollover rules, the direct rollover option, the mandatory
and voluntary income tax withholding rules, the special tax treatment of lump
sum distributions, the special tax treatment of distributions of employer stock
and other matters.
The IRS permits this model explanation to be "customized" by omitting any
portions of it that are not applicable to a plan. For example, the explanation
of the special tax treatment of employer stock might be omitted by plans that do
not invest in or distribute employer stock. In addition, alternative
explanations may be substituted for all or any portion of the model explanation.
Any alterations must, however, comply with the requirements of section 402(f) of
the Internal Revenue Code.
<PAGE>
Special Tax Notice Regarding Plan Payments
This notice contains important information you will need before you decide how
to receive your benefits from [Name of Plan] (the "Plan").
Summary
A payment from the Plan that is eligible for "rollover" can be taken in two
ways. You can have all or any portion of your payment either 1) PAID IN A
"DIRECT ROLLOVER" or 2) PAID TO YOU. A rollover is a payment of your Plan
benefits to your individual retirement arrangement (IRA) or to another employer
plan. This choice will affect the tax you owe.
If You Choose a Direct Rollover
1. Your payment will not be taxed in the current year and no income tax will
be withheld.
2. Your payment will be made directly to your IRA or, if you choose, to
another employer plan that accepts your rollover.
3. Your payment will be taxed later when you take it out of the IRA or the
employer plan.
If You Choose to Have Your Plan Benefits Paid To You
1. You will receive only 80% of the payment, because the Plan administrator is
required to withhold 20% of the payment and send it to the IRS as income tax
withholding to be credited against your taxes.
2. Your payment will be taxed in the current year unless you roll it over.
You may be able to use special tax rules that could reduce the tax you owe.
However, if you receive the payment before age 59-1/2, you also may have to pay
an additional 10% tax.
3. You can roll over the payment by paying it to your IRA or to another
employer plan that accepts your rollover within 60 days of receiving the
payment. The amount rolled over will not be taxed until you take it out of the
IRA or employer plan.
4. If you want to roll over 100% of the payment to an IRA or an employer plan,
you must find other money to replace the 20% that was withheld. If you roll
over only the 80% that you received, you will be taxed on the 20% that was
withheld and that is not rolled over.
Special Notice
The Plan administrator must provide this Special Tax Notice to you within a
reasonable time before an "eligible rollover distribution," as described herein,
is made. Under IRS regulations, this Special Tax Notice must generally be given
no more than 90 days and no less than 30 days before the distribution or
transfer. However, the 30-day requirement no longer applies once you
affirmatively elect to make or not make a direct rollover. You have the right
to wait the full 30 days before making a decision, if you wish to do so.
More Information Page
I. Payments That Can and Cannot be
Rolled Over [ ]
II. Direct Rollover [ ]
III. Payment to You [ ]
IV. Surviving Spouses, Alternate Payees,
<PAGE>
and Other Beneficiaries [ ]
I. Payments That Can and Cannot Be Rolled Over
Payments from the Plan may be "eligible rollover distributions." This means
that they can be rolled over to an IRA or to another employer plan that accepts
rollovers. Your Plan administrator should be able to tell you what portion of
your payment is an eligible rollover distribution. The following types of
payments cannot be rolled over:
Non-taxable Payments. In general, only the "taxable portion" of your payment is
an eligible rollover distribution. If you have made "after-tax" employee
contributions to the Plan, these contributions will be non-taxable when they are
paid to you, and they cannot be rolled over. (After-tax employee contributions
generally are contributions you made from your own pay that were already taxed.)
Payments Spread Over Long Periods. You cannot roll over a payment if it is part
of a series of equal (or almost equal) payments that are made at least once a
year and that will last for
1. your lifetime (or your life expectancy), or
2. your lifetime and your beneficiary's lifetime (or life expectancies), or
3. a period of ten years or more.
Required Minimum Payments. Beginning in the year you reach age 70-1/2, a
certain portion of your payment cannot be rolled over because it is a "required
minimum payment" that must be paid to you.
II. Direct Rollover
You can choose a direct rollover of all or any portion of your payment that is
an "eligible rollover distribution," as described above. In a direct rollover,
the eligible rollover distribution is paid directly from the Plan to an IRA or
another employer plan that accepts rollovers. If you choose a direct rollover,
you are not taxed on a payment until you later take it out of the IRA or the
employer plan.
Direct Rollover to an IRA. You can open an IRA to receive the direct rollover.
(The term "IRA", as used in this notice, includes individual retirement accounts
and individual retirement annuities.) If you choose to have your payment made
directly into an IRA, contact an IRA sponsor (usually a financial institution)
to find out how to have your payment made in a direct rollover to an IRA at that
institution. If you are unsure of how to invest your money, you can temporarily
establish an IRA to receive the payment. However, in choosing an IRA, you may
wish to consider whether the IRA you choose will allow you to move all or part
of your payment to another IRA at a later date, without penalties or other
limitations. See IRS Publication 590, Individual Retirement Arrangements, for
more information on IRAs (including limits on how often you can roll over
between IRAs).
Direct Rollover to a Plan. If you are employed by a new employer that has a
plan, and you want a direct rollover to that plan, ask the administrator of that
plan whether it will accept a rollover. If your new employer's plan does not
accept a rollover, you can choose a direct rollover to an IRA.
Direct Rollover of a Series of Payments. If you receive eligible rollover
distributions that are paid in a series for less than ten years, your choice to
make or not make a direct rollover for a payment will apply to all later
payments in the series until you change your election. You are free to change
your election for any later payment in the series.
<PAGE>
III Payment Paid to You
If you have the payment made to you, it is subject to 20% income tax
withholding. The payment is taxed in the year you receive it unless, within 60
days, you roll it over to an IRA or another plan that accepts rollovers. If you
do not roll it over, special tax rules may apply.
Income Tax Withholding:
Mandatory Withholding. If any portion of the payment to you is an eligible
rollover distribution, the Plan is required by law to withhold 20% of that
amount. This amount is sent to the IRS as income tax withholding. For example,
if your eligible rollover distribution is $10,000, only $8,000 will be paid to
you because the Plan must withhold $2,000 as income tax. However, when you
prepare your income tax return for the year, you will report the full $10,000 as
a payment from the Plan. You will report the $2,000 as tax withheld, and it
will be credited against any income tax you owe for the year.
Voluntary Withholding. If any portion of your payment is not an eligible
rollover distribution but is taxable, the mandatory withholding rules described
above do not apply. In this case, you may elect not to have withholding apply
to that portion. To elect out of withholding, ask the Plan administrator for
the election form and related information.
Sixty-Day Rollover Option. If you have an eligible rollover distribution paid
to you, you can still decide to roll over all or part of it to an IRA or another
employer plan that accepts rollovers. If you decide to roll over, you must make
the rollover within 60 days after you receive the payment. The portion of your
payment that is rolled over will not be taxed until you take it out of the IRA
or the employer plan.
You can roll over up to 100% of the eligible rollover distribution, including an
amount equal to the 20% that was withheld. If you choose to roll over 100%, you
must find other money within the 60-day period to contribute to the IRA or the
employer plan to replace the 20% that was withheld. On the other hand, if you
roll over only the 80% that you received, you will be taxed on the 20% that was
withheld.
Example: Your eligible rollover distribution is $10,000, and you choose to have
it paid to you. You will receive $8,000, and $2,000 will be sent to the IRS as
income tax withholding. Within 60 days after receiving the $8,000, you may roll
over the entire $10,000 to an IRA or employer plan. To do this, you roll over
the $8,000 you received from the Plan, and you will have to find $2,000 from
other sources (your savings, a loan, etc.). In this case, the entire $10,000 is
not taxed until you take it out of the IRA or employer plan. If you roll over
the entire $10,000, when you file your income tax return you may get a refund of
the $2,000 withheld...
If, on the other hand, you roll over only $8,000, the $2,000 you did not roll
over is taxed in the year it was withheld. When you file your income tax return
you may get a refund of part of the $2,000 withheld. (However, any refund is
likely to be larger if you roll over the entire $10,000.)
Additional 10% Tax If You Are Under Age 59-1/2. If you receive a payment before
you reach age 59-1/2 and you do not roll it over, then, in addition to the
regular income tax, you may have to pay an extra tax equal to 10% of the taxable
portion of the payment. The additional 10% tax does not apply to your payment
if it is (1) paid to you because you separate from service with your employer
during or after the year you reach age 55, (2) paid because you retire due to
disability, (3) paid to you as equal (or almost equal) payments over your life
or
<PAGE>
life expectancy (or your and your beneficiary's lives or life expectancies), or
(4) used to pay certain medial expenses. See IRS Form 5329 for more information
on the additional 10% tax.
Special Tax Treatment. If your eligible rollover distribution is not rolled
over, it will be taxed in the year you receive it. However, if it qualifies as
a "lump sum distribution," it may be eligible for special tax treatment. A lump
sum distribution is a payment, within one year, of your entire balance under the
Plan (and certain other similar plans of the employer) that is payable to you
because you have reached age 59-1/2 or have separated from service with your
employer (or, in the case of a self-employed individual, because you have
reached age 59-1/2 or have become disabled). For a payment to qualify as a lump
sum distribution, you must have been a participant in the Plan for at least 5
years. The special tax treatment for lump sum distributions is described below.
Five-Year Averaging. If you receive a lump sum distribution after you are age
59-1/2, you may be able to make a one-time election to figure the tax on the
payment by using "5-year averaging." Five-year averaging often reduces the tax
you owe because it treats the payment much as if it were paid over 5 years.
Ten-Year Averaging If You Were Born Before January 1, 1936. If you receive a
lump sum distribution and you were born before January 1, 1936, you can make a
one-time election to figure the tax on the payment by using "10-year averaging"
(using 1986 tax rates) instead of 5-year averaging (using current tax rates).
Like the 5-year averaging rules, 10-year averaging often reduces the tax you
owe.
Capital Gain Treatment If You Were Born Before January 1, 1936. In addition, if
you receive a lump sum distribution and you were born before January 1, 1936,
you may elect to have the part of your payment that is attributable to your
pre-1974 participation in the Plan (if any) taxed as long-term capital gain at a
rate of 20%.
There are other limits on the special tax treatment for lump sum distributions.
For example, you can generally elect this special tax treatment only once in
your lifetime, and the election applies to all lump sum distributions that you
receive in that same year. If you have previously rolled over a payment from
the Plan (or certain other similar plans of the employer), you cannot use this
special tax treatment for later payments from the Plan. If you roll over your
payment to an IRA, you will not be able to use this special tax treatment for
later payments from the IRA. Also, if you roll over only a portion of your
payment to an IRA, this special tax treatment is not available for the rest of
the payment. Additional restrictions are described in IRS Form 4972, which has
more information on lump sum distributions and how you elect the special tax
treatment.
Employer Stock or Securities. There is a special rule for a payment from the
Plan that includes employer stock (or other employer securities). To use this
special rule, (1) the payment must qualify as a lump sum distribution, as
described above (or would qualify except that you do not yet have 5 years of
participation in the Plan), or (2) the employer stock included in the payment
must be attributable to "after-tax" employee contributions, if any. Under this
special rule, you may have the option of not paying tax on the "net unrealized
appreciation" of the stock until you sell the stock. Net unrealized
appreciation generally is the increase in the value of the employer stock while
it was held by the Plan. For example, if employer stock was contributed to your
plan account when the stock was worth $1,000 but the stock was worth $1,200 when
you received it, you would not have to pay tax on the $200 increase in value
until you later sold the stock.
<PAGE>
You may instead elect not to have the special rule apply to the net unrealized
appreciation. In this case, your net unrealized appreciation will be taxed in
the year you receive the stock, unless you roll over the stock. The stock
(including any net unrealized appreciation) can be rolled over to an IRA or
another employer plan either in a direct rollover or a rollover that you make
yourself.
If you receive employer stock in a payment that qualifies as a lump sum
distribution, the special tax treatment for lump sum distributions described
above (such as 5-year averaging) also may apply. See IRS Form 4972 for
additional information on these rules.
IV. Surviving Spouses, Alternate Payees, and Other Beneficiaries
In general, the rules summarized above that apply to payments to employees also
apply to payments to surviving spouses of employees and to spouses or former
spouses who are "alternate payees." You are an alternate payee if your interest
in the Plan results from a "qualified domestic relations order," which is an
order issued by a court, usually in connection with a divorce or legal
separation. Some of the rules summarized above also apply to a deceased
employee's beneficiary who is not a spouse. However, there are some exceptions
for payments to surviving spouses, alternate payees, and other beneficiaries
that should be mentioned.
If you are a surviving spouse, you may choose to have an eligible rollover
distribution paid in a direct rollover to an IRA or paid to you. If you have
the payment paid to you, you can keep it or roll it over yourself to an IRA, but
you cannot roll it over to an employer plan. If you are an alternate payee,
you have the same choices as the employee. Thus, you can have the payment paid
as a direct rollover or paid to you. If you have it paid to you, you can keep
it or roll it over yourself to an IRA or to another employer plan that accepts
rollovers. If you are a beneficiary other than the surviving spouse, you cannot
choose a direct rollover, and you cannot roll over the payment yourself.
If you are a surviving spouse, an alternate payee, or another beneficiary, your
payment is not subject to the additional 10% tax described in section III above,
even if you are younger than age 59-1/2.
If you are a surviving spouse, an alternate payee, or another beneficiary, you
may be able to use the special tax treatment for lump sum distributions and the
special rule for payments that include employer stock, as described in section
III above. If you receive a payment because of the employee's death, you may be
able to treat the payment as a lump sum distribution if the employee met the
appropriate age requirements, whether or not the employee had 5 years of
participation in the Plan.
<PAGE>
MODEL SUMMARY PLAN DESCRIPTION OF THE [INSERT NAME OF EMPLOYER] PROFIT SHARING
PLAN
Instructions for Preparing the Model Summary Plan Description of the Prototype
Profit Sharing Plan
Each Employer who adopts the Prototype Profit Sharing Plan is required by
Department of Labor regulations to provide employees with a summary plan
description. A summary plan description is intended to provide employees with
the information they need to properly understand their rights under such a
retirement plan.
The Summary Plan Description you distribute to your employees must accurately
reflect the provisions of your particular Plan, in accordance with the choices
you have made in your Adoption Agreement. This Model Summary Plan Description
was designed to assist you in producing such a document.
You will notice that the Model Summary Plan Description contains several
sections where you must choose which language is appropriate, or whether
language should be included in your Summary Plan Description at all. You should
make these decisions by looking at your Adoption Agreement and determining which
language, if any, is appropriate. We have included instructions wherever
possible to help you make these decisions. Once you have made your choices, you
need simply to check off the appropriate language in the space provided. You
may then wish to have your Summary Plan Description retyped to delete those
provisions which do not apply to your Plan.
Remember, the Summary Plan Description must be provided to each participant
within 90 days of commencing participation and to the Department of Labor within
120 days of the adoption of the Plan.
The address is:
Administrator of Pension and Welfare Benefit Programs
U.S. Department of Labor
200 Constitution Avenue N.W.
Washington, D.C. 20216
I. Introduction
[INSERT NAME OF EMPLOYER] (the Employer) is pleased to be able to provide you
with the [INSERT NAME OF EMPLOYER] Profit Sharing Plan (the Plan or the Profit
Sharing Plan). The Plan is effective as of [INSERT EFFECTIVE DATE].
The Plan is a defined contribution plan, to which the Employer makes
contributions to an account held in your name. With this type of plan, the
retirement benefit you receive will depend on the investment performance of the
amounts that are in your account. The Plan is designed to provide retirement
income to employees who remain with the Employer until
<PAGE>
retirement and to those who have a vested interest in their account when they
terminate their employment with the Employer.
Only the main features of the Plan are explained in this Summary Plan
Description. Any questions which are not answered here should be referred to
[INSERT NAME OF DEPARTMENT OR PERSONNEL RESPONSIBLE FOR PARTICIPANT
INFORMATION]. If there is any inconsistency between the Plan as described in
this Summary Plan Description and the Plan document itself, the terms of the
Plan document will govern. Copies of the Plan document and the Trust Agreement
are available for your inspection during regular working hours.
II. Description of
Plan Benefits and
Requirements
A. Terms With Special Meanings
Certain words and terms used in this Summary have special meanings. Many
of these terms are defined in this section, while others are explained in the
text of the Summary. To assist you in identifying these terms within the text,
they are capitalized.
1. Beneficiary. Your designated Beneficiary is the person you name to
receive your benefit distribution in the event of your death. If you are
married, you will need written consent from your spouse to name someone other
than your spouse as your Beneficiary.
2. Break in Service. A Break in Service occurs if you complete less than 501
Hours of Service with the Employer during a Plan Year.
3. Compensation. Compensation is the total compensation paid to you by the
Employer during any portion of a Plan Year during which you were a Plan
Participant. If you are self-employed, your Compensation is your earned income
less your deductible contributions to any qualified retirement plans.
4. Hours of Service. Each hour for which you are paid or entitled to be paid
by the Employer. In addition, uncompensated authorized leaves of absence that
do not exceed two years, military leave while your reemployment rights are
protected by law, and absences from work for maternity or paternity reasons may
be credited as Hours of Service for the purpose of determining whether you had a
Break in Service.
5. Participant. A Participant is an employee who has met the requirements for
participating in this Plan, and whose account has been neither completely
forfeited nor distributed.
6. Plan Year. The Plan Year is the 12-month period ending on the date shown
in section V of this Summary.
7. Sponsor. The Sponsor is the organization which has made this Plan
available to the Employer.
8. Trust. The Trust is a fund maintained by the Trustee for the investment of
Plan assets, including the amount in your account.
9. Year of Service. A Year of Service is the applicable 12-month period
during which you complete [INSERT NUMBER OF HOURS] or more Hours of Service.
For eligibility purposes, the applicable 12-month period is your first year of
employment or any Plan Year. For vesting purposes, the applicable 12-month
period is the Plan Year.
B. Participation
<PAGE>
You will be eligible to participate in the Plan after you have met the
following eligibility requirements (Check all that apply):
[ ] You have reached age [INSERT AGE].
[ ] You have completed [INSERT NUMBER OF YEARS] Year(s) of Service.
[ ] You are not a member of a collective bargaining unit.
[ ] You are not a nonresident alien.
The first entry date, or date in which you can first participate in the
Plan if you meet these requirements, is [INSERT EFFECTIVE DATE]. Thereafter,
the entry date(s) will be [INSERT DATES OF THE FIRST DAY OF THE PLAN YEAR AND
THE FIRST DAY OF THE SEVENTH MONTH OF THE PLAN YEAR] of each year.
Once you become a Participant, you will remain a Participant as long as you
do not incur a Break in Service. If you do incur a Break in Service, and are
later reemployed by the Employer, you will be reinstated as a Participant and
any previous Hours of Service will be reinstated as of the date of your
reemployment.
C. Individual Accounts
A separate account will be maintained for you within the Plan. This
account will be further divided into subaccounts, which will be credited with
the different types of contributions that are described in the next section.
The subaccounts that will be maintained for you are as follows:
1. Profit Sharing Contribution Subaccount. This subaccount will be credited
with your share of Employer Profit Sharing Contributions, forfeitures (if any),
distributions from this subaccount, and the earnings and losses attributable to
this subaccount.
2. Trustee Transfer and Rollover Subaccounts. These subaccounts will be
credited with any rollover contributions or transfer contributions you may make
to the Plan, any distributions from this subaccount, and the earnings and losses
attributable to this subaccount.
3. Nondeductible Voluntary Contribution Subaccount. This subaccount will be
credited with your Voluntary Employee Contributions, any distributions from this
subaccount, and the earnings and losses attributable to this subaccount.
D. Contributions
[ ] Employer Profit Sharing Contributions. The Employer will make Profit
Sharing Contributions to the Plan each Plan Year in accordance with the
following contribution formula (Check one box)
[ ] Contributions will be made in an amount to be determined each year by
the Employer.
[ ] Contributions will be made in an amount equal to [INSERT CONTRIBUTION
PERCENTAGE] of each Participant's Compensation, plus any discretionary amount
the Employer may choose to contribute.
[ ] Rollover Contributions and Direct Transfers. If you have participated
in other pension or profit sharing plans, you will be permitted to make a
rollover contribution to the Plan of certain amounts you may receive from those
other plans. You will also be permitted, with the approval of the Plan
Administrator, to authorize a direct transfer to the Plan of amounts that are
attributable to your participation in other pension or profit sharing plans.
CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS:
<PAGE>
[ ] Voluntary Employee Contributions. To increase your retirement
benefits from this Plan, you may choose to make voluntary contributions to the
Plan of up to [INSERT MAXIMUM VOLUNTARY EMPLOYEE CONTRIBUTION PERCENTAGE] of
your compensation. Such contributions will not be permitted, however, for Plan
Years beginning after [THE PLAN YEAR IN WHICH THE PLAN IS ADOPTED]. The minimum
contribution you must make if you choose to make a voluntary contribution is as
follows (Check one box):
[ ] The minimum voluntary contribution is [INSERT MINIMUM VOLUNTARY
CONTRIBUTION PERCENTAGE] of your Compensation.
[ ] There is no minimum voluntary contribution.
E. Allocations.
Eligibility for Allocations. Each Plan Year the Employer will make a
Profit Sharing Contribution to the Plan in accordance with the formula described
in the previous section. Your account will be allocated a share of that
contribution.
[ ] Unless you terminate your employment during the Plan year with not
more than [INSERT HOURS OF SERVICE REQUIREMENT] Hours of Service and you are not
an employee as of the last day of the Plan Year. (You will receive an
allocation, however, if you die, retire or become disabled during the Plan
Year).
Under some circumstances, special minimum allocation rules may result in
your receiving an allocation even if you do not meet any of the requirements set
forth above.
Amount of Allocation. If you are eligible, your account will be credited
with a portion of the Profit Sharing Contribution (and any forfeitures) as
follows (check one box):
[ ] Your account will be credited with a portion of the Profit Sharing
Contribution that is equal to the ratio of your Compensation to the Compensation
of all Participants for such year.
For example, if your Compensation for a Plan Year was $10,000 and the total
Compensation of all Participants was $100,000, your account would be credited
with $10,000/$100,000=1/10 of the total contribution made by the Employer for
that Plan Year.
[CHOOSE IF YOUR PLAN IS INTEGRATED WITH SOCIAL SECURITY AND YOU HAVE NOT
ADOPTED THE MONEY PURCHASE PENSION PLAN]
[ ] Profit Sharing Contributions will be allocated to eligible
Participants in four steps as follows:
Step One: Your account will be credited with a portion of the Profit
Sharing Contribution that is equal to the ratio of your Compensation to the
Compensation of all Participants for such year (just as if the Plan were not
integrated with Social Security), but only up to a maximum of three percent of
each Participant's Compensation.
Step Two: Your account will be credited with a portion of the balance of
the Profit Sharing Contribution (after the allocation in Step One) that is equal
to the ratio of your Compensation in excess of the Plan's Integration Level to
the Compensation in excess of the Plan's Integration Level of all Participants
for such year, but only up to a maximum of three percent of any Participant's
Compensation in excess of the Plan's Integration Level.
For example, if the Plan's Integration Level were $51,300 and your
Compensation were $61,300, your Compensation in excess of the Integration Level
would be $10,000. If the total Compensation in excess of the Integration Level
of all Participants were $70,000, your account would be credited with
$10,000/$70,000=1/7 of the total allocation made under Step
<PAGE>
Two (but only up to a maximum of three percent of your Compensation in excess of
the plan's Integration Level, or $300).
Step Three: Your account will be credited with a portion of the balance of
the Profit Sharing Contribution (after the allocations in Step One and Step Two)
that is equal to the ratio that the sum of your Compensation plus your
Compensation in excess of the Plan's Integration Level bears to the sum of all
Participant's Compensation plus their Compensation in excess of the Plan's
Integration Level for such year, up to a maximum of the Maximum Profit Sharing
Disparity Rate.
The Maximum Profit Sharing Disparity Rate is 2.7 percent if the Integration
Level equals the annual earnings subject to Social Security (FICA) tax (the
taxable wage base). If the Integration Level is lower (see below), then the
Maximum Profit Sharing Disparity Rate is determined by the following formula:
If the Integration is:
The Applicable
More Than But Not More Than Percentage Is:
$0 X * 2.7%
X of TWB 80% of TWB 1.3%
80% of TWB Y ** 2.4%
* X=The greater of $10,000 or 20% of the Taxable Wage Base.
** Y=Any amount more than 80% of the Taxable Wage Base but less than 100% of
the Taxable Wage Base.
TWB means the Taxable Wage Base.
For example, if the Maximum Profit Sharing Disparity Rate is 2.7 percent,
your Compensation is $61,300, the Plan's Integration Level is $51,300, the total
Compensation of all Participants is $700,000 and the Compensation of all
Participants that is in excess of the Plan's Integration Level is $70,000, then
the ratio applied under Step Three would be:
(61,300 + 10,000)/(700,000 + 70,000) = 9.25%
However, this exceeds the Maximum Profit Sharing Disparity Rate, so 2.7
percent is applicable instead.
Step Four: Your account will be credited with a portion of the balance of
the Profit Sharing Contribution (after the allocations in Step One, Step Two and
Step Three) that is equal to the ratio of your Compensation to the Compensation
of all Participants for such year.
[CHOOSE IF YOUR PLAN IS INTEGRATED WITH SOCIAL SECURITY AND YOU HAVE
ADOPTED THE MONEY PURCHASE PENSION PLAN]:
[ ] Profit Sharing Contributions will be allocated to eligible
Participants in two steps as follows:
Step One: Your account will be credited with a portion of the Profit
Sharing Contribution that is equal to the ratio that the sum of your
Compensation plus your Compensation in excess of the Plan's Integration Level
bears to the sum of all Participant's Compensation plus their Compensation in
excess of the Plan's Integration level for such year,
<PAGE>
up to a maximum that does not exceed the lesser of two amounts. The first is
the percentage determined by dividing the allocation by your Compensation up to
the Plan's Integration Level. The second is the Maximum Disparity Rate.
The Maximum Disparity Rate is 5.7 percent if the Integration Level equals
the annual earnings subject to Social Security (FICA) tax (the taxable wage
base). If the Integration Level is lower (see below), then the Maximum
Disparity Rate is determined by the following formula:
If the Integration is:
The Applicable
More Than But Not More Than Percentage Is:
$0 X * 5.7%
X of TWB 80% of TWB 4.3%
80% of TWB Y ** 5.4%
* X=The greater of $10,000 or 20% of the Taxable Wage Base.
** Y=Any amount more than 80% of the Taxable Wage Base but less than 100%
of the Taxable Wage Base. TWB means the Taxable Wage Base.
For example, if the Maximum Disparity Rate is 5.7 percent, your
Compensation is $61,300, the Plan's Integration Level is $51,300, the total
Compensation of all Participants is $700,000 and the Compensation of all
Participants that is in excess of the Plan's Integration Level is $70,000, then
the ratio applied under Step One would be:
(61,300 + 10,000)/(700,000 + 70,000) = 9.25%
However, this exceeds the Maximum Disparity Rate, so 5.7 percent is
applicable instead. (This assumes the allocation as a percentage of your
Compensation up to the Plan's Integration Level would exceed 5.7 percent).
Step Two: Your account will be credited with a portion of the balance of
the Profit Sharing Contribution (after the allocation in Step One) that is equal
to the ratio of your Compensation to the Compensation of all Participants for
such year.
The Plan's Integration Level is equal to (check one box):
[ ] The taxable wage base, which is the annual earnings subject to Social
Security (FICA) tax.
[ ] A dollar amount equal to [INSERT DOLLAR AMOUNT].
[ ] A percentage of the taxable wage base equal to _______% of the annual
earnings subject to Social Security (FICA) tax.
Under some circumstances, special minimum allocation rules may result in
your receiving a larger allocation than you normally would. The amount that can
be allocated to your Account in any Plan Year, including forfeitures (if any),
is limited by rules applying to all qualified plans.
F. Vesting.
Vesting refers to the nonforfeitable interest you have in each of your
subaccounts. In other words, your vested interest in your account is the amount
you will receive when your account is distributed to you.
<PAGE>
You will always have a 100 percent vested and nonforfeitable interest in
the amounts you have in your:
[ ] Trustee Transfer and Rollover Subaccounts.
[CHECK THE FOLLOWING ITEM ONLY IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
[ ] Nondeductible Voluntary Contribution Subaccount.
You will earn a vested interest in your Profit Sharing Contribution
Subaccount in accordance with the following (check one box):
[ ] You will always have a 100 percent vested and nonforfeitable interest
in your Profit Sharing Contribution Subaccount.
[ ] You will have a 100 percent vested and nonforfeitable interest in your
Profit Sharing Contribution Subaccount in the event of any of the following:
You reach your retirement date.
You die or become disabled.
Otherwise, you will earn a vested interest in your Profit Sharing
Contribution Subaccount in accordance with the following schedule (check one
box):
[ ] Years of Service Vested Percentage
1 year 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
For example, if you are employed for six years, you will be entitled to the
entire amount in your Profit Sharing Contribution Subaccount. However, if you
terminate employment with the Employer after only four years, even though you
return to employment with the Employer six years later, you will be entitled to
receive only 60 percent of that amount.
[ ] You will be 100 percent vested after three years of service. If you
terminate employment prior to three years you will not have any vested interest
in your Profit Sharing Contribution Subaccount.
G. Forfeitures. (Check one box)
[ ] You have a 100 percent vested and nonforfeitable interest in the
amounts in your account at all times. Your account therefore will not be
subject to forfeitures.
[ ] Forfeitures occur when you terminate employment before becoming fully
vested in your account, as explained in the section on Vesting. Effective for
the first Plan Year beginning after 1984, any portion of your Account that is
not vested will be forfeited as of the last day of the Plan Year in which your
fifth consecutive Break in Service occurs. Forfeited amounts will not be
reinstated, even if you return to service with the Employer. Such forfeitures
will be allocated among the Accounts of other Participants in the same manner as
Profit Sharing Contributions.
H. Distribution of Benefits.
1. Eligibility for Distribution. You will be entitled to receive a
distribution of the vested amounts in your account upon occurrence of any of the
following:
Your termination of employment with the Employer for any reason.
<PAGE>
Your total and permanent disability.
Your death.
Termination of the Plan.
Your attainment of normal retirement age, which is (check one box):
[ ] Age [INSERT NORMAL RETIREMENT AGE]
[ ] Age [INSERT NORMAL RETIREMENT AGE] or the [INSERT ANNIVERSARY DATE] of
the day you commenced participation in the plan.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS EARLY RETIREMENT]:
[ ] If you elect Early Retirement, attainment of your Early Retirement
Date, which is the first day of the month coincident with or next following the
date you reach age [INSERT EARLY RETIREMENT AGE] and complete [INSERT NUMBER OF
YEARS] Years of Service.
2. Timing of Distributions. You will begin receiving benefit distributions in
accordance with the following:
Generally, benefit distributions will commence not later than 60 days after
the end of the Plan Year in which you become eligible to receive benefits.
In the event of your death, your spouse, if you are married, will generally
be entitled to receive your benefit distribution. If you are unmarried, or if
your spouse has given written consent, your designated Beneficiary will receive
your benefit distribution. If you have no spouse or designated Beneficiary,
your benefit distribution will go to your estate.
If you so elect, you may defer commencement of the distribution of your
benefit beyond the date you first become eligible to receive that distribution,
to a date which you may specify. The date you specify must not be later than
the April 1 following the close of your taxable year in which you attain age 70
1/2.
If you attained age 70 1/2 before January 1, 1988, special rules apply to
your distributions.
If you wish to receive benefit distributions before attaining age 59 1/2,
you may be subject to a penalty tax, and you must notify the Plan Administrator
in writing that you are aware of the consequences of this tax.
3. Form of Distribution. If you are married, your benefit will automatically
be distributed in the form of a joint and survivor annuity, unless you elect
otherwise and your spouse consents in writing to one of the forms below. If you
are unmarried, your benefit will automatically be distributed in the form of a
life annuity, unless you elect any of the other distribution options listed
below.
In a lump sum payment of cash, or a lump sum payment that includes an
in-kind distribution of all mutual fund shares credited to your account.
In substantially equal monthly, quarterly, or annual installment payments
of cash or distributions in kind of the mutual fund shares credited to your
account, over a period of years not to exceed your life expectancy or the joint
and survivor life expectancies of you and your Beneficiary.
In the form of an annuity, which is a level payment that you receive at a
fixed interval over a specified period of time. If you are married, the annuity
will automatically take the form of a joint and survivor annuity, unless you
elect otherwise, and your spouse consents in writing, as described above. A
joint and survivor annuity is an annuity paid over the lives of
<PAGE>
both you and your spouse. If your spouse survives you, the annuity payment your
spouse will receive will be at least 50 percent of the annuity payment you
received or would have received.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PROVIDES FOR THIS FORM OF
DISTRIBUTION]:
[ ] In monthly, quarterly, or annual installment payments of cash, or the
distribution of shares in kind, so that the amount you receive each Plan Year is
equal to the amount in your account at the beginning of that Plan Year divided
by the joint and survivor life expectancy of you and your Beneficiary for that
Plan Year. Your joint and survivor life expectancy will be recalculated each
Plan Year so that benefit payments will continue through your life and that of
your Beneficiary.
4. Direct Rollovers
All benefits paid under the Plan (whether to a participant or a
beneficiary) will be subject to income tax withholding. A payment from the Plan
that is eligible for "rollover" can be taken in two ways. The payment can be
either (1) paid in a "direct rollover;" or (2) paid directly to you. A rollover
is a payment of Plan benefits to an individual retirement arrangement (IRA) or
to another employer plan. This choice will affect the tax you owe.
If you choose a direct rollover:
Y the payment will not be taxed in the current year and no income tax
will be withheld;
Y the payment will be made directly to the IRA or to another employer
plan that accepts rollovers;
Y the payment will be taxed later when it is withdrawn from the IRA or
the employer plan.
If you choose to receive Plan benefits directly:
Y You will receive only 80% of the payment because the Plan
administrator is required to withhold 20% of the payment and send it to the
Internal Revenue Service as income tax withholding to be credited against your
taxes;
Y The payment will be taxed in the current year unless it is rolled
over. You might be able to use special tax rules that could reduce the tax that
is owed. However, if you receive the payment before age 59 1/2, an additional
10% tax may have to be paid.
Y Within 60 days of receiving the payment it can be rolled over by
paying it to an IRA or to another employer plan that accepts rollovers. The
amount rolled over will be taxed until it is withdrawn from the IRA or employer
plan.
Y If you want to roll over 100% of the payment to an IRA or an employer
plan, other money must be found to replace the 20% that was withheld. If only
the 80% that is received is rolled over, you will be taxed on the 20% that was
withheld and that is not rolled over.
I. Investment of Plan Assets
All contributions made to the Plan are kept in the Trust. A separate
account, including all of the subaccounts described in the section on
Participant Accounts, is maintained for you within that Trust. The assets of
the Trust are invested as follows:
[ ] You [INSERT MAY OR MUST] direct the Plan Administrator to invest the
amounts in the following subaccount in specified investments offered by the
Sponsor (check all boxes that apply):
<PAGE>
[ ] The amounts in your Nondeductible Voluntary Contribution Subaccount.
[ ] The amounts in your Profit Sharing Contribution Subaccount.
[ ] The amounts in your Trustee Transfer and Rollover Subaccounts.
[ ] [CHECK THIS BOX IF YOUR PLAN PERMITS WITHDRAWALS]:
J. Withdrawals
You may make the following types of withdrawals from your account (Check
all boxes that apply):
[ ] If you have made Voluntary Employee Contributions to the Plan, you
will be permitted to withdraw the amounts in your Nondeductible Voluntary
Contribution Subaccount. If you are married, your spouse must consent to the
withdrawal.
[ ] In the event of an imminent and heavy financial need due to the
purchase or renovation of a primary residence, the educational, medical or
personal expenses of you or a member of your immediate family, or other
hardship, you will be permitted to make a hardship withdrawal of amounts
credited to your Profit Sharing Contribution Subaccount.
All hardship withdrawals are subject to approval by the Plan Administrator.
Such withdrawals can only be made after prior withdrawal of all amounts in your
Nondeductible Voluntary Contribution Subaccount, and after exhausting all other
reasonable sources of funds. If you are married, your spouse must consent to
any withdrawals.
[ ] [CHECK THIS BOX IF PLAN LOANS ARE
PERMITTED]:
K. Loans.
This Plan contains provisions that permit you to borrow (with the consent
of your spouse) from the Plan part of your vested interest in your account.
Such a loan will not be made, however, if the total of all outstanding loans to
you from all pension and profit sharing plans of the Employer exceed the lesser
of $50,000 (taking into account the highest principal balance of any loan
outstanding at any time during the preceding 12 months) or one-half of the value
of your vested interest in your account.
The Plan Administrator will set the terms of all loans. The maximum
payment term for any loan will generally be five years. The interest rate will
be determined by the Plan Administrator. Your account will be security for the
loan.
III. Claims Procedure
You or your Beneficiary may file a written claim for benefits under this Plan
with the Plan Administrator at any time. If your claim is denied to any extent
by the Plan Administrator, a written notification must be sent to you within 90
days. If you choose to appeal the decision, a request for review must be made
in writing to the Plan Administrator within 60 days of receipt of written
notification of the denial. Within 60 days after the appeal is filed, or within
120 days, if there are special circumstances involved, the Plan Administrator
will issue a written decision.
IV. Changes to the Plan
A. Amendment of the Plan
<PAGE>
The Employer, together with the Sponsor, reserves the right to amend the
Plan at any time. You will be kept informed of any material amendments to the
Plan by updates to this Summary Plan Description.
B. Termination of the Plan
The Employer intends to continue this Plan indefinitely. However, the
Employer reserves the right to terminate the Plan at any time. If a termination
takes place, or if the Employer discontinues making contributions to the Plan,
you will have a 100 percent vested and nonforfeitable interest in all of the
amounts in your account. These amounts may be distributed to you at that time,
or may be distributed in accordance with the benefit distribution rules.
C. Merger, Consolidation or Transfer of the Plan
In the event of the merger, consolidation or transfer of assets or
liabilities of the Plan to any other plan, your benefits will not be decreased
from what they would have been prior to such an event.
V. General Information
Name of Plan: [INSERT NAME OF EMPLOYER] Profit Sharing Plan
Employer: [INSERT NAME, ADDRESS AND TELEPHONE NUMBER OF EMPLOYER]
Type of Plan: Profit Sharing Plan
Type of
Administration: Trusteed
Employer's
Fiscal Year: [INSERT EMPLOYERS FISCAL YEAR]
Plan Year End: [INSERT PLAN YEAR END]
Plan Administrator: [INSERT NAME, ADDRESS AND TELEPHONE NUMBER OF PLAN
ADMINISTRATOR]
Trustees: [INSERT NAME, TITLE, ADDRESS AND PHONE NUMBER OF PRINCIPAL PLACE
OF BUSINESS OF EACH TRUSTEE]
Agent for Service
of Legal Process: [INSERT NAME AND ADDRESS OF PERSON DESIGNATED AS AGENT FOR
SERVICE OF LEGAL PROCESS]
Employer
Identification Number: [INSERT IN]
Plan Number: [INSERT PLAN NUMBER]
Also, a complete list of the employers and employee organizations sponsoring the
Plan may be obtained by participants and beneficiaries upon written request to
the Plan administrator, and is available for examination by participants and
beneficiaries, as required by Labor Reg. 1.2520.104-b1 and 2520.104b-30.
VI. Non-Application of PBGC Guarantees
Because this Plan is a defined contribution plan, the benefits you will receive
are exempt from and not insured by the Pension Benefit Guaranty Corporation.
VII. Special Rights Under ERISA
<PAGE>
As a participant in the [INSERT NAME OF EMPLOYER] Profit Sharing Plan, you are
entitled to certain rights and protections under the Employee Retirement Income
Security Act of 1974 (ERISA). ERISA provides that all Plan Participants shall
be entitled to:
Examine, without charge, at the Plan Administrator's office and at other
specified locations, all Plan documents, including insurance contracts,
affecting the individual making the request, and copies of all documents filed
by the Plan with the U.S. Department of Labor, such as detailed annual reports
and Plan descriptions.
Obtain copies of all Plan documents and other Plan information upon written
request to the Plan Administrator. The Plan Administrator may make a reasonable
charge for the copies.
Receive a summary of the Plan's annual financial report. The Plan
Administrator is required by law to furnish each Participant with a copy of this
summary annual report.
Obtain a statement of the total value of your account under the Plan and
your vested (nonforfeitable) portion of this account. This statement must be
requested in writing and is not required to be given more than once a year. The
Plan will provide the statement free of charge.
In addition to creating rights for Plan Participants, ERISA imposes duties upon
the people who are responsible for the operation of the Plan. These people who
operate your plan, called fiduciaries of the Plan, have a duty to do so
prudently and in the interest of you and other Plan Participants and
Beneficiaries. No one, including your Employer, or any other person, may fire
you or otherwise discriminate against you in any way to prevent you from
obtaining a benefit under this Plan or exercising your rights under ERISA. If
your claim for a benefit is denied in whole or in part you must receive a
written explanation of the reason for the denial. You have the right to have
the Plan review and reconsider your claim.
Under ERISA, there are steps you can take to enforce the above rights. For
instance, if you request materials from the Plan and do not receive them within
30 days, you may file suit in a federal court. In such a case, the court may
require the Plan Administrator to provide the materials and pay you up to $100 a
day until you receive the materials unless the materials were not sent because
of reasons beyond the control of the Plan Administrator. If you have a claim
for benefits which is denied or ignored, in whole or in part, you may file suit
in a state or federal court. If it should happen that Plan fiduciaries misuse
the plan's money, or if you are discriminated against for asserting your rights,
you may seek assistance from the U.S. Department of Labor, or you may file suit
in a federal court. The court will decide who should pay court costs and legal
fees. If you lose, the court may order you to pay these costs and fees, for
example, if it finds your claim is frivolous.
<PAGE>
MODEL SUMMARY PLAN DESCRIPTION OF THE [INSERT NAME OF EMPLOYER] MONEY PURCHASE
PENSION PLAN
Instructions for Preparing the Model Summary Plan Description of the Prototype
Money Purchase Pension Plan
Each employer who adopts the Prototype Money Purchase Pension Plan is required
by Department of Labor regulations to provide employees with a summary plan
description. A summary plan description is intended to provide employees with
the information they need to properly understand their rights under such a
retirement plan.
The summary plan description distributed to employees must accurately reflect
the provisions of the Plan, in accordance with the choices made in the Adoption
Agreement. The model summary plan description was designed to assist in
producing such a document.
The model summary plan description contains several sections where the employer
must choose which language is appropriate, or whether language should be
included in the summary plan description at all. These decisions should be made
by looking at the Adoption Agreement and determining which language in the
spaces provided. Employers may then wish to have the summary plan description
retyped to delete those provisions which do not apply to the Plan.
Remember, the Summary Plan Description must be provided to each participant
within 90 days of commencing participation and to the Department of Labor within
120 days of the adoption of the Plan.
The address is:
Administrator of Pension and Welfare Benefit Programs
U.S. Department of Labor
200 Constitution Avenue N.W.
Washington, D.C. 20216
I. Introduction
[INSERT NAME OF EMPLOYER] (the Employer) is pleased to be able to provide you
with the [INSERT NAME OF EMPLOYER] Money Purchase Pension Plan (the Plan or the
Pension Plan). The Plan is effective as of [INSERT EFFECTIVE DATE].
The Plan is a defined contribution plan, to which the Employer makes
contributions to an account held in your name. With this type of plan, the
retirement benefit you receive will depend on the investment performance of the
amounts that are in your account. The Plan is designed to provide retirement
income to employees who remain with the Employer until retirement and to those
who have a vested interest in their account when they terminate their employment
with the Employer.
<PAGE>
Only the main features of the Plan are explained in this Summary Plan
Description. Any questions which are not answered here should be referred to
[INSERT NAME OF DEPARTMENT OR PERSONNEL RESPONSIBLE FOR PARTICIPANT
INFORMATION]. If there is any inconsistency between the Plan as described in
this Summary Plan Description and the Plan document itself, the terms of the
Plan document will govern. Copies of the Plan document and the Trust Agreement
are available for your inspection during regular working hours.
II. Description of
Plan Benefits and Requirements
A. Terms With Special Meanings
Certain words and terms used in this Summary have special meanings. Many
of these terms are defined in this section, while others are explained in the
text of the Summary. To assist you in identifying these terms within the text,
they are capitalized.
1. Beneficiary. Your designated Beneficiary is the person you name to receive
your benefit distribution in the event of your death. If you are married, you
will need written consent from your spouse to name someone other than your
spouse as your Beneficiary.
2. Break in Service. A Break in Service occurs if you complete less than 501
Hours of Service with the Employer during a Plan Year.
3. Compensation. Compensation is the total compensation paid to you by the
Employer during any portion of a Plan Year during which you were a Plan
Participant. If you are self-employed, your Compensation is your earned income
less your deductible contributions to any qualified retirement plans.
4. Hours of Service. Each hour for which you are paid or entitled to be paid
by the Employer. In addition, uncompensated authorized leaves of absence that
do not exceed two years, military leave while your reemployment rights are
protected by law, and absences from work for maternity or paternity reasons may
be credited as Hours of Service for the purpose of determining whether you had a
Break in Service.
5. Participant. A Participant is an employee who has met the requirements for
participating in this Plan, and whose account has been neither completely
forfeited nor distributed.
6. Plan Year. The Plan Year is the 12-month period ending on the date shown
in section V of this Summary.
7. Sponsor. The Sponsor is the organization which has made this Plan
available to the Employer.
8. Trust. The Trust is a fund maintained by the Trustee for the investment of
Plan assets, including the amount in your account.
9. Year of Service. A Year of Service is the applicable 12-month period
during which you complete [INSERT NUMBER OF HOURS] or more Hours of Service.
For eligibility purposes, the applicable 12-month period is your first year of
employment or any Plan Year. For vesting purposes, the applicable 12-month
period is the Plan Year.
B. Participation
You will be eligible to participate in the Plan after you have met the
following eligibility requirements (check all boxes that apply):
[ ] You have reached age [INSERT AGE].
<PAGE>
[ ] You have completed [INSERT NUMBER OF YEARS] Year(s) of Service.
[ ] You are not a member of a collective bargaining unit.
[ ] You are not a nonresident alien.
The first entry date, or date in which you can first participate in the
Plan if you meet these requirements, is [INSERT EFFECTIVE DATE]. Thereafter,
the entry date(s) will be [INSERT DATES OF THE FIRST DAY OF THE PLAN YEAR AND
THE FIRST DAY OF THE SEVENTH MONTH OF THE PLAN YEAR] of each Plan Year.
Once you become a Participant, you will remain a Participant as long as you
do not incur a Break in Service. If you do incur a Break in Service, and are
later reemployed by the Employer, you will be reinstated as a Participant and
any previous Hours of Service will be reinstated as of the date of your
reemployment.
C. Individual Accounts
A separate account will be maintained for you within the Plan. This
account will be further divided into subaccounts, which will be credited with
the different types of contributions that are described in the next section.
The subaccounts that will be maintained for you are as follows:
1. Money Purchase Pension Contribution Subaccount. This subaccount will be
credited with your share of Employer Money Purchase Pension Contributions,
distributions from this subaccount, and the earnings and losses attributable to
this subaccount.
2. Trustee Transfer and Rollover Subaccounts. These subaccounts will be
credited with any rollover contributions or transfer contributions you may make
to the Plan, any distributions from the subaccount, and the earnings and losses
attributable to the subaccount.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
[ ] 3. Nondeductible Voluntary Contribution Subaccount. This subaccount
will be credited with your Voluntary Employee Contributions, any distributions
from this subaccount, and the earnings and losses attributable to this
subaccount.
D. Contributions
The Employer will make, or you will be permitted to make, the following
types of contributions. These contributions will be allocated to the
appropriate subaccounts within your account.
1. Employer Money Purchase Pension Contributions. The Employer will make
Money Purchase Pension Contributions to the Plan each Plan Year in accordance
with a formula based on your Compensation. This formula is given in the section
on Allocations.
2. Rollover Contributions and Direct Transfers. If you have participated in
other pension or profit sharing plans, you will be permitted to make a rollover
contribution to the Plan of certain amounts you may receive from those other
plans.
You will also be permitted, with the approval of the Plan Administrator, to
authorize a direct transfer to the Plan of amounts that are attributable to your
participation in other pension or profit sharing plans.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
[ ] 3. Voluntary Employee Contributions. To increase your retirement
benefits from this Plan, you may choose to make voluntary contributions to the
Plan of up to [INSERT MAXIMUM VOLUNTARY EMPLOYEE CONTRIBUTION PERCENTAGE] of
your
<PAGE>
Compensation. Such contributions will not be permitted, however, for Plan Years
beginning after [THE PLAN YEAR IN WHICH THE PLAN IS ADOPTED]. The minimum
contribution you must make if you choose to make a voluntary contribution is as
follows (check one box):
[ ] The minimum voluntary contribution is [INSERT MINIMUM VOLUNTARY
CONTRIBUTION PERCENTAGE] of your Compensation.
[ ] There is no minimum voluntary contribution.
E. Allocations
1. Eligibility for Allocations. Each Plan Year the Employer will make a Money
Purchase Pension Contribution to the Plan in accordance with the formula based
on your Compensation. Your account will be allocated a contribution
[ ] Unless you terminate your employment during the Plan Year with not
more than [INSERT HOURS OF SERVICE REQUIREMENT] Hours of Service and you are not
an employee as of the last day of the Plan Year. (You will receive an
allocation, however, if you die, retire or become disabled during the Plan
Year).
Under some circumstances, special minimum allocation rules may result in
your receiving an allocation, even if you do not meet any of the requirements
set forth above.
2. Amount of Allocation. If you are eligible, your account will be credited
with a Money Purchase Pension Contribution as follows:
The Employer will make a contribution on your behalf equal to [INSERT
CONTRIBUTION PERCENTAGE] of your Compensation.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN IS INTEGRATED WITH SOCIAL SECURITY]:
[ ] The Employer will make a contribution equal to _______% of your
Compensation up to the Plan's Integration Level, plus _______% of your
Compensation in excess of the Plan's Integration Level.
The Plan's Integration Level is equal to (check one box):
[ ] The taxable wage base, which is the annual earnings subject to Social
Security (FICA) tax.
[ ] A dollar amount equal to [INSERT DOLLAR AMOUNT].
[ ] A percentage of the taxable wage base equal to ______% of the annual
earnings subject to Social Security (FICA) tax.
For example, suppose that the Plan's taxable wage base is equal to $51,300,
and that your Compensation during a Plan Year totaled $61,300. You would
receive an allocation of [INSERT CONTRIBUTION PERCENTAGE] of your first $51,300
in Compensation, and [INSERT EXCESS CONTRIBUTION PERCENTAGE] on the remainder of
$10,000.
Under some circumstances, special minimum allocation rules may cause you to
receive a larger allocation than you normally would. The amount that can be
allocated to your account in any Plan Year is limited by rules applying to all
qualified plans.
F. Vesting
Vesting refers to the nonforfeitable interest you have in each of your
subaccounts. In other words, your vested interest in your account is the amount
you will receive when your account is distributed to you.
You will always have a 100 percent vested and nonforfeitable interest in
the amounts you have in your:
<PAGE>
[ ] Trustee transfer and rollover subaccounts.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
[ ] Nondeductible Voluntary Contribution Subaccount.
You will earn a vested interest in your Money Purchase Pension Contribution
Subaccount in accordance with the following (check one box):
[ ] You will always have a 100 percent vested and nonforfeitable interest
in your Money Purchase Pension Contribution Subaccount.
[ ] You will have a 100 percent vested and nonforfeitable interest in your
Money Purchase Pension Contribution Subaccount in the event of any of the
following:
You reach your retirement date.
You die or become disabled.
Otherwise, you will earn a vested interest in your Money Purchase Pension
Contribution Subaccount in accordance with the following schedule (check one
box):
[ ] Years of Service Vested Percentage
1 year 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
For example, if you are employed for six years, you will be entitled to the
entire amount in your Money Purchase Pension Contribution Subaccount. However,
if you terminate employment with the Employer after only four years, even though
you return to employment with the Employer six years later, you will be entitled
to receive only 60 percent of that amount.
[ ] You will be 100 percent vested after three years of service. If you
terminate employment prior to three years you will not have any vested amount in
your Money Purchase Pension Contribution Subaccount.
Any portion of your Money Purchase Pension Contribution Subaccount in which
you do not have a vested interest will be forfeited by you as of the last day of
the Plan Year in which your fifth consecutive Break in Service occurs.
G. Forfeitures (check one box)
[ ] You have a 100 percent vested and nonforfeitable interest in the
amounts in your account at all times. You will therefore not be subject to
forfeitures.
[ ] Forfeitures occur when you terminate employment before becoming fully
vested in your account, as explained in the section on Vesting. Effective for
the first Plan Year beginning after 1984, any portion of your account that is
not vested will be forfeited as of the last day of the Plan Year in which your
fifth consecutive Break in Service occurs. Forfeited amounts will not be
reinstated, even if you return to service with the Employer. Such forfeitures
either will be (check one box):
[ ] Used by the Employer as a credit against its future contributions to
the Plan; or
[ ] Reallocated among the accounts of remaining Participants in proportion
to their pay.
H. Distribution of Benefits.
<PAGE>
1. Eligibility for Distribution. You will be entitled to receive a
distribution of the vested amounts in your account upon occurrence of any of the
following:
Your termination of employment with the Employer for any reason.
Your total and permanent disability.
Your death.
Termination of the Plan.
Your attainment of normal retirement age, which is (check one box):
[ ] Age [INSERT NORMAL RETIREMENT AGE].
[ ] Age [INSERT NORMAL RETIREMENT AGE] or the [INSERT ANNIVERSARY DATE] of
the day you commenced participation in the Plan.
[CHECK THE FOLLOWING IF YOUR PLAN PERMITS EARLY RETIREMENT]:
[ ] If you elect early retirement, attainment of your early retirement
date, which is the first day of the month coincident with or next following the
date you reach age [INSERT EARLY RETIREMENT AGE] and complete [INSERT NUMBER OF
YEARS] Years of Service.
2. Timing of Distributions. You will begin receiving benefit distributions in
accordance with the following:
Generally, benefit distributions will commence not later than 60 days after
the end of the Plan Year in which you become eligible to receive benefits.
In the event of your death, your spouse, if you are married, will generally
be entitled to receive your benefit distribution. If you are unmarried, or if
your spouse has given written consent, your designated Beneficiary will receive
your benefit distribution. If you have no spouse or designated Beneficiary,
your benefit distribution will go to your estate.
If you so elect, you may defer commencement of the distribution of your
benefit beyond the date you first become eligible to receive that distribution,
to a date which you may specify. The date you specify must not be later than
the April 1 following the close of your taxable year in which you attain age 70
1/2.
If you attained age 70 1/2 before January 1, 1988, special rules apply to
your distributions.
If you wish to receive benefit distributions before attaining age 59 1/2,
you may be subject to a penalty tax, and you must notify the Plan Administrator
in writing that you are aware of the consequences of this tax.
3. Form of Distribution. If you are married, your benefit will automatically
be distributed in the form of a joint and survivor annuity, unless you elect
otherwise and your spouse consents in writing to one of the forms below. If you
are unmarried, your benefit will automatically be distributed in the form of a
life annuity, unless you elect any of the other distribution options listed
below.
In a lump sum payment of cash, or a lump sum payment that includes an
in-kind distribution of all mutual fund shares credited to your account.
In substantially equal monthly, quarterly, or annual installment payments
of cash or distributions in kind of the mutual fund shares credited to your
account, over a period of years not to exceed your life expectancy or the joint
and survivor life expectancies of you and your Beneficiary.
<PAGE>
In the form of an annuity, which is a level payment that you receive at a
fixed interval over a specified period of time. If you are married, the annuity
will automatically take the form of a joint and survivor annuity, unless you
elect otherwise, and your spouse consents in writing, as described above. A
joint and survivor annuity is an annuity paid over the lives of both you and
your spouse. If your spouse survives you, the annuity payment your spouse will
receive will be at least 50 percent of the annuity payment you received or would
have received.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PROVIDES THIS FORM OF DISTRIBUTION]:
[ ] In monthly, quarterly, or annual installment payments of cash, or the
distribution of shares in kind, so that the amount you receive each Plan Year is
equal to the amount in your account at the beginning of that Plan Year divided
by the joint and survivor life expectancy of you and your Beneficiary for that
Plan Year. Your joint and survivor life expectancy will be recalculated each
Plan Year so that benefit payments will continue through your life and that of
your Beneficiary.
4. Direct Rollovers
All benefits paid under the Plan (whether to a participant or a
beneficiary) will be subject to income tax withholding. A payment from the Plan
that is eligible for "rollover" can be taken in two ways. The payment can be
either (1) paid in a "direct rollover;" or (2) paid directly to you. A rollover
is a payment of Plan benefits to an individual retirement arrangement (IRA) or
to another employer plan. This choice will affect the tax you owe.
If you choose a direct rollover:
Y the payment will not be taxed in the current year and no income tax
will be withheld;
Y the payment will be made directly to the IRA or to another employer
plan that accepts rollovers;
Y the payment will be taxed later when it is withdrawn from the IRA or
the employer plan.
If you choose to receive Plan benefits directly:
Y You will receive only 80% of the payment because the Plan
administrator is required to withhold 20% of the payment and send it to the
Internal Revenue Service as income tax withholding to be credited against your
taxes;
Y The payment will be taxed in the current year unless it is rolled
over. You might be able to use special tax rules that could reduce the tax that
is owed. However, if you receive the payment before age 59 1/2, an additional
10% tax may have to be paid.
Y Within 60 days of receiving the payment it can be rolled over by
paying it to an IRA or to another employer plan that accepts rollovers. The
amount rolled over will be taxed until it is withdrawn from the IRA or employer
plan.
Y If you want to roll over 100% of the payment to an IRA or an employer
plan, other money must be found to replace the 20% that was withheld. If only
the 80% that is received is rolled over, you will be taxed on the 20% that was
withheld and that is not rolled over.
I. Investment of Plan Assets
<PAGE>
All contributions made to the Plan are kept in the Trust. A separate
account, including all of the subaccounts described in the section on
Participant accounts, is maintained for you within that Trust. The assets of
the Trust are invested as follows:
[ ] You [INSERT may or must] direct the Plan Administrator to invest the
amounts in the following subaccount in specified investments offered by the
Sponsor (check all that apply):
[ ] The amounts in your Nondeductible Voluntary Contribution Subaccount.
[ ] The amounts in your Money Purchase Pension Contribution Subaccount.
[ ] The amounts in your trustee transfer and rollover subaccounts.
[ ] [CHECK THIS BOX IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
J. Withdrawals
If you have made Voluntary Employee Contributions to the Plan, you will be
permitted to withdraw the amounts in your Nondeductible Voluntary Contribution
Subaccount. If you are married, your spouse must consent to the withdrawal.
[ ] [CHECK THIS BOX IF PLAN LOANS ARE
PERMITTED]
K. Loans
The Plan contains provisions that permit you to borrow from the Plan part
of your vested interest in your account. Such a loan will not be made, however,
if the total of all outstanding loans to you from all pension and profit sharing
plans of the Employer exceed the lesser of $50,000 (taking into account the
highest principal balance of any loan outstanding at any time during the
preceding 12 months) or one-half of the value of your vested interest in your
account.
The Plan Administrator will set the terms of all loans. The maximum
payment term for any loan will generally be five years.
III. Claims Procedure
You or your Beneficiary may file a written claim for benefits under this Plan
with the Plan Administrator at any time. If your claim is denied to any extent
by the Plan Administrator, a written notification must be sent to you within 90
days. If you choose to appeal the decision, a request for review must be made
in writing to the Plan Administrator within 60 days of receipt of written
notification of the denial. Within 60 days after the appeal is filed, or within
120 days, if there are special circumstances involved, the Plan Administrator
will issue a written decision.
IV. Changes to the Plan
A. Amendment of the Plan
The Employer, together with the Sponsor, reserves the right to amend the
Plan at any time. You will be kept informed of any material amendments to the
Plan by updates to this Summary Plan Description.
B. Termination of the Plan
<PAGE>
The Employer intends to continue this Plan indefinitely. However, the
Employer reserves the right to terminate the Plan at any time. If a termination
takes place, or if the Employer discontinues making contributions to the Plan,
you will have a 100 percent vested and nonforfeitable interest in all of the
amounts in your account. These amounts may be distributed to you at that time,
or may be distributed in accordance with the benefit distribution rules.
C. Merger, Consolidation or Transfer of the Plan
In the event of the merger, consolidation or transfer of assets or
liabilities of the Plan to any other plan, your benefits will not be decreased
from what they would have been prior to such an event.
V. General Information
Name of Plan: [INSERT NAME OF EMPLOYER] Money Purchase Pension Plan
Employer: [INSERT NAME, ADDRESS AND TELEPHONE NUMBER OF EMPLOYER]
Type of Plan: Money Purchase Pension Plan
Type of
Administration: Trusteed
Employer's Fiscal
Year: [INSERT EMPLOYERS FISCAL YEAR]
Plan Year End: [INSERT PLAN YEAR END]
Plan Administrator: [INSERT NAME, ADDRESS AND TELEPHONE NUMBER OF PLAN
ADMINISTRATOR]
Trustees: [INSERT NAME, TITLE, ADDRESS AND PHONE NUMBER OF PRINCIPAL PLACE
OF BUSINESS OF EACH TRUSTEE]
Agent for Service of
Legal Process: [INSERT NAME AND ADDRESS OF PERSON DESIGNATED AS AGENT FOR
SERVICE OF LEGAL PROCESS]
Employer
Identification
Number: [INSERT IN]
Plan Number: [INSERT PLAN NUMBER]
Also, a complete list of the employers and employee organizations sponsoring the
Plan may be obtained by participants and beneficiaries upon written request to
the Plan administrator, and is available for examination by participants and
beneficiaries, as required by Labor Reg. 2520.104b-1 and 2520.104b-30.
VI. Non-Application of PBGC Guarantees
Because this Plan is a defined contribution plan, the benefits you will receive
are exempt from and not insured by the Pension Benefit Guaranty Corporation.
VII. Special Rights Under ERISA
As a participant in the [INSERT NAME OF EMPLOYER] Money Purchase Pension Plan,
you are entitled to certain rights and protections under the Employee Retirement
Income Security Act of 1974 (ERISA). ERISA provides that all Plan Participants
shall be entitled to:
<PAGE>
Examine, without charge, at the Plan Administrator's office and at other
specified locations, all Plan documents, including insurance contracts,
affecting the individual making the request, and copies of all documents filed
by the Plan with the U.S. Department of Labor, such as detailed annual reports
and Plan descriptions.
Obtain copies of all Plan documents and other Plan information upon written
request to the Plan Administrator. The Plan Administrator may make a reasonable
charge for the copies.
Receive a summary of the Plan's annual financial report. The Plan
Administrator is required by law to furnish each Participant with a copy of this
summary annual report.
Obtain a statement of the total value of your account under the Plan and
your vested (nonforfeitable) portion of this account. This statement must be
requested in writing and is not required to be given more than once a year. The
Plan will provide the statement free of charge.
In addition to creating rights for Plan Participants, ERISA imposes duties upon
the people who are responsible for the operation of the Plan. These people who
operate your plan, called fiduciaries of the Plan, have a duty to do so
prudently and in the interest of you and other Plan Participants and
Beneficiaries. No one, including your Employer, or any other person, may fire
you or otherwise discriminate against you in any way to prevent you from
obtaining a benefit under this Plan or exercising your rights under ERISA. If
your claim for a benefit is denied in whole or in part you must receive a
written explanation of the reason for the denial. You have the right to have
the Plan review and reconsider your claim.
Under ERISA, there are steps you can take to enforce the above rights. For
instance, if you request materials from the Plan and do not receive them within
30 days, you may file suit in a federal court. In such a case, the court may
require the Plan Administrator to provide the materials and pay you up to $100 a
day until you receive the materials unless the materials were not sent because
of reasons beyond the control of the Plan Administrator. If you have a claim
for benefits which is denied or ignored, in whole or in part, you may file suit
in a state or federal court. If it should happen that Plan fiduciaries misuse
the plan's money, or if you are discriminated against for asserting your rights,
you may seek assistance from the U.S. Department of Labor, or you may file suit
in a federal court. The court will decide who should pay court costs and legal
fees. If you lose, the court may order you to pay these costs and fees, for
example, if it finds your claim is frivolous. If you have any questions about
your Plan, you should contact the Plan Administrator. If you have any questions
about this statement or about your rights under ERISA, you should contact the
nearest Area Office of the U.S. Labor-Management Services Administration,
Department of Labor.
<PAGE>
[LOGO]
Attached are the replacement pages and forms corresponding to amended or
revised sections of the Retirement Plan Packet. The updated sections are
underlined in the Table of Contents.
Columbia Trust Company
<PAGE>
[LOGO]
NOTICE - PLAN DOCUMENT UPDATES
This folder contains information pertaining to updates to the Columbia
Prototype Retirement Plan. New laws and regulations and other issues require
changes to the text and forms in the Retirement Plan Packet (booklet) which
accompanies this folder. Importantly, the Plan was amended June 30, 1994 to
comply with new laws regarding compensation limits and direct rollovers. In
the revised Table of Contents, updated sections are underlined.
We suggest that you read through all of the materials carefully, noting
any questions. Please pay special attention to the discussion titled "Death
of a Trustee and Plan Administrator" which explains Columbia's constraints in
making distributions to beneficiaries. We strongly suggest that you not
establish a plan until you have reviewed your situation fully with a tax
advisor familiar with both your business and with retirement plans in general.
Bolded items in the Table of Contents should be completed and returned to
Columbia once you have established your plan.
If you cover employees under your plan, you should also have the
booklet titled "Employers Booklet - Notice to Employees." In that case, there
are also updates in this folder for the Employers Booklet.
We appreciate your interest in Columbia Funds. Please call us at
222-3606 in Portland or 1-800-547-1707 nationwide if you have any questions
about the attached materials.
Columbia Trust Company
<PAGE>
The Columbia Retirement Plan
Prototype Paired Defined Contribution Plans
Table of Contents
INTRODUCTION
GENERAL CONSIDERATIONS
TAX-QUALIFIED STATUS OF PROTOTYPE PLANS
PROCEDURES
PROCEDURES FOR ESTABLISHING OR AMENDING A PROTOTYPE PLAN
PROCEDURES FOR TRANSFERRING ASSETS BETWEEN TRUSTS
PLAN-TO-PLAN TRANSFER FORM
PROCEDURES FOR MAKING PLAN CONTRIBUTIONS
CONTRIBUTION SCHEDULE
ADMINISTRATION
NOTICE OF GENERAL ADMINISTRATIVE RESPONSIBILITIES
Including: FORM 5500 REPORTING
DISTRIBUTIONS
DEATH OF A TRUSTEE AND PLAN ADMINISTRATOR
BENEFICIARY DESIGNATION
JOINT AND SURVIVOR ANNUITY
ADOPTION AGREEMENTS
COMPLETING THE ADOPTION AGREEMENTS
PROVISION-BY-PROVISION EXPLANATION AND INSTRUCTIONS
PROFIT SHARING ADOPTION AGREEMENT
MONEY PURCHASE PENSION ADOPTION AGREEMENT
COLUMBIA ACCOUNT AGREEMENT
TELEPHONE EXCHANGE AUTHORIZATION
PLAN AND TRUST
BASIC PLAN DOCUMENT
PLAN AMENDMENT
TRUST AGREEMENT
- ------------------------------------------------------------------
Complete and mail to Columbia Trust Company
P.O. Box 1350
Portland, Oregon 97207-1350
<PAGE>
[LOGO] The Columbia Retirement Plan
INTRODUCTION
INTRODUCTION
INTRODUCTION
INTRODUCTION
- --------------------------------------------------------------------
Questions? Call 1-800-547-1707; in Portland 222-3606
<PAGE>
General Considerations
Under defined contribution plans, contributions are made on behalf of each
participant. The plan administrator is required to maintain a separate
bookkeeping account for each participant. This may be accomplished most
conveniently by setting up a separate mutual fund account for each
participant. However, a separate mutual fund account is not required by law.
The sum of the contributions to the participant's account, as adjusted by
investment gains or losses, comprises the participant's retirement income.
The employers obligation to contribute is determined by the terms of the
plan. The amounts the employer contributes will not increase or decrease on
the basis of investment performance.
Profit Sharing Plan
Under a profit sharing plan, which is one type of defined contribution plan,
the amount and allocation of contributions each year may be based on a
specified formula, or made in amounts determined by the employer in its sole
discretion.
Money Purchase Pension Plan
Under a money purchase pension plan, which is also a type of defined
contribution plan, an amount equal to a specified percentage of each
participant's annual compensation is contributed to the participant's
account. These contributions are required; they are not subject to the
discretion of the employer. Failure to make the required contribution
without approval of the IRS (by obtaining a waiver of the minimum funding
requirements) may result in the imposition of excise taxes.
Overall Limitations
The maximum annual amount that can be allocated to any employee's account
under all defined contribution plans of an employer is limited to the lesser
of 25 percent of compensation or $30,000 (the $30,000 limit may be increased
to reflect changes in the cost of living after 1994).
Special Rules for Self-Employed Contributions
The limits are calculated differently for a self-employed person.
Contributions are based on a percentage of a self-employed individual's
earned income after making the contribution on his own behalf (earned income
is reduced by the amount of the deductible contribution) and after one-half
of his social security taxes (earned income is reduced by the deduction
allowed for one-half of self-employment social security taxes.)
Because of these adjustments, calculating the contributions for self-employed
individuals can be difficult. The following example illustrates one method of
determining that limit. Assume the self-employed individual wishes to
contribute 15% of compensation for himself and his other employees for 1994.
Assume further that his net profit from self-employment in that business is
$150,000 for that year. First, the employer would calculate his gross
compensation ($150,000) less one-half of his self-employment taxes ($5,932),
which is $144,068. (Self-employment taxes equal 12.40% of his social
security wages ($60,600) plus 2.90% of his Medicare wages ($150,000)).
Second, he would multiply this adjusted compensation of $144,068 by 13.0435%
to determine his contribution, which is $18,791. Third, this
<PAGE>
contribution is then also deducted from gross compensation ($150,000 -
($5,932 + $18,791)) to produce his actual compensation of $125,277.
It is this compensation amount that is used to determine whether the overall
limit is satisfied. That is, the contribution cannot exceed the lesser of
25% of compensation (as calculated above) or $30,000. If compensation is
less than $120,000 then the 25% limit applies but if compensation equals or
exceeds $120,000, then the $30,000 limit applies.
Compensation Limitations
The amount of compensation that is counted is also limited. For 1994 the
limit is $150,000. The limit may increase in future years due to
cost-of-living increases. Increases will only be made in increments of
$10,000.
This compensation limit applies whenever any calculation involving
compensation is made. For example, in calculating contributions and
deduction limits, only compensation up to this limit may be used.
Deduction Limitations
Separate limits are imposed on deductions for plan contributions. Deductions
for contributions to all of an Employers defined contribution plans are
limited to 25 percent of the total compensation paid to all participants
during that year. Of this, 15 percent of the total compensation paid to all
plan participants during a year can generally be deducted as a contribution
to a profit sharing plan.
The rules concerning deductions for contributions on behalf of self-employed
individuals are generally the same as those that apply to common law
employees. However, if contributions to a profit sharing plan on behalf of a
self-employed individual would exceed 13.0435 percent of earned income
(before plan contributions but after one-half of self-employment taxes), or
if contributions to all defined contribution plans on behalf of a
self-employed individual would exceed 20 percent of earned income (before
plan contributions), a tax advisor should be consulted to ensure that
contributions will be deductible and that the plan(s) will retain
tax-qualified status.
Combination of Plans
Adopting both the profit sharing and money purchase pension plans permits an
employer to maximize the amount of its contributions while retaining
flexibility as to the amount and timing of each years contribution. Thus, a
profit sharing plan provides flexibility due to the discretionary
contribution formula. The 15 percent deduction limit, however, will not
permit an employer to maximize deductible contributions. Conversely, the
money purchase plan by itself permits the employer to make the maximum
deductible contribution (25 percent of compensation) on behalf of employees.
However, to obtain this deduction under a money purchase pension plan alone,
the employer must commit itself to that contribution rate in every year,
regardless of the employers profit situation.
Combining the two types of plans permits the employer to maximize
contributions without committing itself to that level on an ongoing basis.
This is often achieved by contributing 10 percent of compensation to the
money purchase pension plan and 15 percent of compensation to a discretionary
profit sharing plan.
<PAGE>
Tax Qualified Status of Prototype Plans
Columbia Trust Company has received opinion letters from the Internal Revenue
Service that its prototype paired plans qualify for special tax treatment.
(Money Purchase Pension Plan Letter Serial No.: D244627a; Profit Sharing Plan
Letter Serial No.: D244626a). Because these plans contain provisions
regarding coverage, eligibility, vesting schedules, and contribution limits
which are designed to meet tax qualification requirements, the employer
meeting the conditions described below can rely on the sponsors opinion
letter as to the tax-qualified status of its plans and need not obtain an
individual determination letter.
To rely on the sponsors favorable opinion letter, the employer must provide
that the plan(s) will:
(1) cover all employees, including employees of Affiliated Employers,
except:
(a) those who have not met the minimum age and service requirements for
participation;
(b) certain union employees; and
(c) certain nonresident aliens;
(2) not favor Key Employees as to eligibility to participate;
(3) vest employees accounts at least as rapidly as one of the Top-Heavy
vesting schedules;
and
(4) require the employer to contribute a uniform percentage of
compensation (in making this determination, the plan may consider benefits
provided under the Social Security Act). If the employer has maintained, now
maintains, or later adopts a qualified plan in addition to these prototype
plans (other than plans being amended by adoption of one or both of these
plans), it will not be able to rely on the sponsors opinion letter and will
be required to apply for a separate determination letter.
<PAGE>
[LOGO] The Columbia Retirement Plan
PROCEDURES
PROCEDURES
PROCEDURES
PROCEDURES
________________________________________________________________
Questions? Call 1-800-547-1707; in Portland 222-3606
<PAGE>
Procedures for
Establishing or Amending
a Prototype Plan
There are a number of steps that an employer must take to establish or amend
a prototype plan. For an employer establishing a new plan, the adoption
agreement must be completed and executed prior to the end of the employer's
taxable year. These steps are set out below:
Plan Documents. The employer should study the provisions of the prototype
plan document, the trust agreement, and the applicable adoption agreements
carefully. Consult with a tax advisor or legal counsel before completing the
adoption agreement.
Complete the Adoption Agreement(s). The employer must complete an adoption
agreement. To select alternative or optional plan features and complete the
adoption agreement(s), see the Provision-by-Provision Instructions for
Completing Adoption Agreement. The completed adoption agreement must be
dated and signed by the employer and sent to the plan sponsor, Columbia Trust
Company, at P.O. Box 1350, Portland, OR 97207-1350.
Adopt the Plan(s). A corporate employer should adopt a resolution
authorizing the adoption and implementation of the plan(s). A sole
proprietor should execute the plan documents and a partnership should adopt
the plan using the procedures set forth in its partnership agreement (or in
state law) for executing legal documents.
Appoint the Plan Trustee. The employer must name one or more trustees to
oversee the investment of plan assets. The trustees may be individuals or
institutions with trust powers. A corporate employer is not permitted to
serve as trustee. The trustees should acknowledge their acceptance of their
duties and obligations by signing the Adoption Agreement at ARTICLE XVI of
the Profit Sharing Adoption Agreement and/or ARTICLE XV of the Money Purchase
Pension Adoption Agreement or in a separate written document. If the
employer is a sole proprietorship, more than one individual should be
appointed. See the next section for Death of a Trustee or Plan Administrator.
Appoint the Plan Administrator. The employer, or the trustees appointed by
the employer, must name an administrator to manage the recordkeeping and
reporting activities regarding the plan(s). The plan administrator may be
the employer, an officer or committee of officers of the employer, or an
external administrative agent. A corporate employer can be the plan
administrator. See the next section for Notice of General Administrative
Responsibilities.
Establish the Trust. The trustees appointed by the employer should open a
trust account with the sponsor. Columbia Trust Company will establish
individual accounts for each plan participant and provide them with periodic
reports. If assets from an existing plan are to be transferred into the
trust, see the following page, Procedures for Transferring Assets Between
Trusts.
Communicate the Plan to Employees. After you have adopted the plan(s), you
will need to communicate the adoption and principal provisions of the plan(s)
to your employees. Models of Notice to Interested parties and a Summary Plan
Description are in a separate employer's Booklet. Call Columbia if you have
employees and you did not receive this booklet with your Retirement Plan
packet.
Consult a Professional. Retirement Plans are complex! Study the agreements
and provisions carefully. Consult with your tax advisor or legal counsel
before you take any action to establish your Plan.
<PAGE>
PROCEDURES FOR TRANSFERRING ASSETS BETWEEN TRUSTS
If you currently maintain another prototype plan, the adoption of the
Columbia prototype plan(s) constitutes an amendment of the existing plan.
The newly amended prototype plan provisions must not decrease the rights of
participants under the existing plan. For example, if the participant's
accounts are 100 percent vested under the existing plan, these accounts must
be 100 percent vested under the new plan.
In addition, the assets of the existing plan must be transferred to the
Columbia prototype plan. The following steps should be taken:
Notify Trustee. Inform the trustee or custodian of the prior plan that the
plan assets are to be transferred to the newly amended prototype plan. You
can use the notice of Appointment of Successor Trustee following these
Procedures. Send the notice directly to the existing Trustee/custodian of
your plan.
Transfer Prior Plan Assets. Request a final accounting of the prior plan.
The prior Trustee/custodian should prepare an accounting of the account names
and balances, liquidate the assets of the plan, and transfer them directly to
your Columbia Retirement Plan.
Instruct Columbia. Instruct Columbia how to invest the assets upon receipt.
Use the Contribution Schedule included in the Adoption Agreement section of
this packet.
Note that the successor trustee is yourself. Columbia Trust Company is only
the prototype sponsor of the plan.
PROCEDURES FOR MAKING PLAN CONTRIBUTIONS
Section XI in the Adoption Agreements for the plan(s) allow you to designate
who will have investment authority under the plan(s) and the extent of such
authority.
Select Investment Authority. The employer must determine whether plan
contributions are to be invested at the instruction of:
a. the employer via the plan administrator
b. the trustee; or
c. each participant.
Determine Extent of Authority. The employer may wish to limit the authority
designated above. If the employer delegates investment decisions to the
trustee, the trustee must be informed as to whether decisions may be made
among unlimited options or whether decisions must be made among certain
designated investment options. If the employer elects to permit participants
to make investment decisions, then the employer must designate whether the
participant may direct the investment of employer contributions or employee
contributions or both.
Schedule of Participant Designations. If participants are permitted to
direct investments of contributions to their individual accounts, then the
plan administrator must prepare a schedule indicating the investment
selections available to the participants. A Columbia Contribution Schedule
is included in this packet. Investment instructions must accompany each
contribution, listing participant name, account number (if known), dollar
amount to be invested in each Columbia Fund and the source of the
contribution. New accounts can be established at the time of investment,
however, information such as participant social security number and birthdate
must be included.
<PAGE>
[LOGO] COLUMBIA TRUST COMPANY
NOTICE OF APPOINTMENT OF SUCCESSOR TRUSTEE
To: ____________________________________
Name of Custodian/Trustee
____________________________________
Address
____________________________________
City/State Zip
Your institution is presently serving as Trustee/Custodian for the plan
maintained by the undersigned employer. The employer has adopted the
prototype retirement plan sponsored by Columbia Trust Company as an amendment
and restatement of the Plan.
Your institution is hereby asked to relinquish its position as the
Trustee/Custodian of the plan. You are hereby directed to liquidate the
assets of the Plan and to remit the proceeds in cash payable to the fund
indicated by the employer:
__ Columbia Growth Fund __ Columbia Common Stock Fund
__ Columbia Special Fund __ Columbia Balanced Fund
__ Columbia Daily Income Company __ Columbia International Stock Fund
__ Columbia Fixed Income Securities Fund __ Columbia High Yield Fund
__ Columbia U.S. Government Securities Fund __ Columbia Real Estate Equity Fund
and mail to : Columbia Trust Company
Attn: Retirement Plans
P.O. Box 1350
Portland, OR 97207
for deposit to the account established by the successor trustee(s).
With the transfer, please furnish the following information: The account
balance of each participant and the source of the contributions, that is,
employer or rollover.
________________________________ ____________________________________
Date Print Name of Employer
________________________________ ____________________________________
Phone Signature of Employer
*** OVER ***
1301 SW 5TH AVENUE PORTLAND, OR 97201 (503) 222-3606 1-800-547-1707 MAILING
ADDRESS PO BOX 1350 PORTLAND, OR 97207
<PAGE>
ACCEPTANCE BY SUCCESSOR TRUSTEE(S)
The undersigned hereby acknowledges acceptance of appointment as successor
Trustee(s) of the ________________________________ Plan, sponsored by Columbia
(Name of Employer)
Trust Company, and agree to accept the transfer of the Plan's assets and to
hold such assets in accordance with the terms and provisions of the Plan
Trust.
_____________________________________________ _____________________________
Trustee's Signature Date
_____________________________________________ _____________________________
Trustee's Signature Date
_____________________________________________ _____________________________
Trustee's Signature Date
Columbia Trust Company is the only Prototype Sponsor of this plan. The IRS
determination letter number is D244626a for the Profit Sharing Plan and
D244627a for the Money Purchase Plan.
If there are any questions the Trustee(s) cannot answer concerning this
transfer, you may direct your questions to the Retirement Plans department of
Columbia at (503)222-3600 within Oregon, or 1-800-547-1037 outside of Oregon.
<PAGE>
[LOGO] CONTRIBUTION
SCHEDULE
Send to: Columbia Trust Company, PO Box 1350, Portland, OR 97207
EMPLOYER
CONTRIBUTIONS TRANSFER
Profit Sharing Subaccount
Money Purchase Subaccount Transfer subaccount
Account # Amount Funds
Account # Amount Funds Amount Funds
Check here if Participant is an Owner-Employee
1. ________________________________ ___
Participant's Name
_________________________ ___/___/___
Social Security # BirthDate
2. ________________________________ ___
Participant's Name
_________________________ ___/___/___
Social Security # BirthDate
3. ________________________________ ___
Participant's Name
_________________________ ___/___/___
Social Security # BirthDate
4. ________________________________ ___
Participant's Name
_________________________ ___/___/___
Social Security # BirthDate
5. ________________________________ ___
Participant's Name
_________________________ ___/___/___
Social Security # BirthDate
6. ________________________________ ___
Participant's Name
<PAGE>
_________________________ ___/___/___
Social Security # BirthDate
Make a separate check payable to each Fund of your choice for investment:
Columbia Daily Income Company (CDIC) Columbia Balanced Fund (CBF)
Columbia Common Stock Fund (CCSF)
Columbia U.S. Government Securities Fund (CUSG) Columbia Real Estate Fund (CREF)
Columbia Growth Fund (CGF)
Columbia Fixed Income Securities Fund (CFIS)
Columbia International Stock Fund (CISF)
Columbia High Yield Fund (CHYF)
Columbia Special Fund (CSF)
Make check for Maintenance Charges payable to Columbia Trust Company
Maintenance charges are as follows:
a) $100.00 initial charge for opening the Employer's master account. (Paid
one time only)
b) $50.00 annual fee for maintaining Employer's master account.
Initial charge and first annual fee must accompany Adoption Agreement(s)
<PAGE>
Notice of General
Administrative Responsibilities
The plan administrator is responsible for the administration and
recordkeeping under the plan. The plan administrator may be the trustee, the
employer (including a corporate employer), an individual, or a committee of
two or more individuals. Among its duties, the plan administrator must
comply with many reporting and disclosure requirements. If you have
employees, these duties are significantly increased. See the employers
Booklet-Notices to Employees for an expanded list of administrative
responsibilities. The following list, which is not exhaustive, identifies
the primary areas of administrative responsibility.
Record Keeping
Maintain Columbia's confirmations of account activity and Quarterly
statements. Keep beneficiary designations current. Monitor the Joint and
Survivor Annuity election.
Accounting
Account for yearly contributions allocated to the accounts, as well as
investment gains or losses. The plan administrator must also account for
amounts rolled over or transferred from other tax-qualified plans.
Investment Selection
Designate the Columbia fund or funds and the amount for each contribution.
See the Contribution Schedule in the Adoption Agreement section.
Form 5500
Reporting Requirements
As the administrator of a defined contribution plan, you are required to file
an annual return/report of your plan. The report must be filed with the IRS
within seven months of your plans year end. If you terminate your plan
during the year, your filing deadline is seven months from the date of
termination. There are penalties for failure to file.
The appropriate 5500 Form depends upon your plan size. Form 5500-EZ is the
newer annual return for use by most one-participant plans. As of 1989
filing, 5500-EZ filers with less than $100,000 in aggregate plan balances are
exempted from filing.
Plans with 2-99 participants must file Form 5500-C/R regardless of the plan
balance. In the plans first year of existence, and every third year
thereafter, fill out the complete form. For the other years, complete only
the registration portion of the form. The entire form must be completed for
the year in which your plan terminates, regardless of where you are in the
3-year cycle.
All forms are available through the IRS or through your accountant. If you
have any questions regarding which form to use for your plan, please consult
the IRS or your tax advisor.
Distributions
Distributions must be authorized in writing by the Plan's trustee(s) only. A
Columbia Retirement Plan Distribution form can be used for that authorization.
<PAGE>
As of January 1, 1993, distributions from retirement plans are subject to
mandatory withholding at a rate of 20% as a pre-payment of federal income tax
(currently, Oregon residents may elect whether or not to have 8% state tax
withholding). Columbia Trust Company can do this withholding. Different
withholding rates may apply to lump-sum distributions and to periodic
distributions. You can elect to have additional amounts withheld. The IRS
Form W4-P may need to be completed if any portion of the distribution is not
an eligible rollover amount. Call Columbia for the Distribution Form and
Form W4-P. Taxable distributions from qualified plans are eligible rollover
distributions to an individual retirement account or annuity (IRA), another
qualified plan or a section 403(b) annuity. Eligible rollover distributions
that are directly rolled over avoid the mandatory 20% withholding. Eligible
rollover distributions exclude:
Required Minimum Distributions (age 70-1/2)
Distributions from an annuity
Equal payments spanning 10 years or more
After-tax contributions
If you are under 59-1/2 years of age, the distribution is subject to a 10%
penalty. Exceptions to the penalty are distributions which are:
Made to a beneficiary after the death of a participant
Due to a total and permanent disability
A series of substantially equal periodic payments which begin after
separation from service
Made to participants over age 55 and separating from service
Medical expenses
Made to alternate payees specified in a Qualified Domestic Relations
Order i.e. divorce
Distributions that are directly rolled over are also exempted from the 10%
penalty. If you choose to have your distribution paid to you, you will
receive only 80% of the distribution since 20% must be withheld for federal
income taxes. If you want to roll over the distribution to an IRA or another
employers plan, you must do so within 60 days of receiving the distribution.
You can roll over up to 100% of the distribution, however, you will need to
find other money to replace the 20% that was withheld. If you roll over only
80%, you will be taxed on the 20% withheld and not rolled over. Federal law
requires participants reaching age 70-1/2 to begin receiving a minimum
distribution from the plan each year. Distributions must begin by April 1
following the year the participant reaches 70-1/2. The minimum amount is
calculated by dividing the previous year-end balance by the applicable life
expectancy. Your life expectancy will depend on who your listed beneficiary
is, and locating the expectancy on the IRS Life Expectancy tables. Required
Minimum Distributions cannot be Rolled Over to an IRA. Failure to make a
minimum distribution subjects you to a 50% IRS penalty tax. Distributions
from your retirement plan (excludes plan-to-plan transfer of assets) are
reportable to the IRS. You will receive a Form 1099R in the January following
the distribution. Because of tax consequences and options available to you,
we urge you to consult your tax advisor for your best option. We also
suggest these IRS Publications for more information:
Publ. 560 Self-Employed Retirement Plans
Publ. 575 Pension and Annuity Income
<PAGE>
Publ. 505 Tax Withholding and Estimated Tax
Death of a Trustee or Plan Administrator
Depending on the organization of your company, you may have appointed one
individual (yourself) as the plan administrator and trustee of the plan. In
this situation, your death may complicate the distribution of your plan
assets to an intended beneficiary.
Under the terms of the plan, the plan administrator is responsible for the
management and administration of the plan. The plan administrator is also
responsible for instructing the trustee regarding distributions from the
plan. Further, Columbia is authorized to accept distribution instructions
signed only by the trustee under the plan. The employer (that is, your
company) is the only entity that can appoint the plan administrator and
trustee. Please note that Columbia does not fulfill either of these duties.
If you decide to fill all three capacities (employer, plan administrator and
trustee), then upon your death no one is automatically available to give
Columbia instructions on distributions. Your company will need to appoint a
successor trustee in order to distribute plan assets to your beneficiaries.
That appointment may be more difficult to accomplish if your company is a
sole proprietorship.
To address this issue, you may consider appointing a co-trustee who could
continue to give distribution instructions to Columbia in the event of your
death. The co-trustees signature must be on the Adoption Agreement. Note
that Columbia will not accept appointment as co-trustee.
If you elect not to appoint a co-trustee, then your representatives will need
to provide Columbia with any of the following to effect a distribution:
1. Appointment of Trustee - If your company is a corporation or a
partnership, a successor trustee may be appointed with the appropriate
corporate action (e.g. by the board of directors). Acceptable evidence of
that appointment must be provided to Columbia.
2. Letters of Testamentary - If you are a sole proprietorship, the
personal representative of your estate, acting as a successor-in-interest to
your company, will need to appoint a successor plan administrator and trustee
of your plan. This procedure involves the probate of your estate and
requires that you provide Columbia with letters of testamentary.
3. A Fidelity/Indemnity Bond - In lieu of the appointment of a new
trustee by the corporation or a personal representative, you could provide
Columbia with a surety bond that indemnifies Columbia against claims by any
other parties where Columbia makes a distribution to a beneficiary without a
trustees authorizing signature. This type of bond can be obtained from a
surety company for a fee. Specific options should be discussed with your
legal and/or tax advisor before taking any action with regard to this plan.
<PAGE>
[LOGO] The Columbia Retirement Plan
ADMINISTRATION
ADMINISTRATION
ADMINISTRATION
ADMINISTRATION
________________________________________________________________
Questions? Call 1-800-547-1707; in Portland 222-3606
<PAGE>
RETIREMENT PLAN PARTICIPANT
DISTRIBUTION ELECTION FORM
(the Plan)
Participant's Name:
Mailing Address:
Social Sec. No.: Marital Status: married unmarried
I request that my interest under the Plan be paid to me in the following form at
the time indicated below. I understand that if my accounts exceed $3,500, my
benefit may remain in the Plan until I request payment in one of the forms
listed below or until I reach normal retirement age under the Plan. I also
understand that the benefit will be paid in the form of an annuity after I reach
normal retirement age if no earlier distribution election form has been
received.
(NOTE: Please refer to the Special Tax Notice Regarding Plan Payments and
consider the tax consequences of your selection.)
1) A Direct Rollover to: an IRA OR to a new employer's Plan.
name of IRA or new employer Plan
address
2) Paid directly to me as follows:
a) Lump sum distribution* of
cash only. OR
in-kind, with the mutual fund shares credited to my account.
* (Mandatory Federal tax withholding of 20% applies to eligible rollover amounts
that you elect to have paid directly to you instead. Refer to Special Tax
Notice.)
b) Installments
in cash OR
in kind, with the mutual fund shares credited to my account,
Paid
monthly OR
quarterly OR
annually
as follows:
(Section 2b Installments continued)
Over a period of years (not to exceed applicable life expectancy of recipient
and beneficiary.)
Over life expectancy of me and, if applicable, my beneficiary. Under this
option, life expectancy will be recalculated annually, and the amount you
receive each year will be the total account balance at the start of the year,
divided by the life expectancy of you and, if applicable, your beneficiary.
3) In the form of an annuity contract as follows:
Straight life annuity. (If you are married, attach Spouse's Consent.)
<PAGE>
Life Annuity with a 50 percent survivor annuity for my spouse should I
predecease my spouse.
Other annuity (describe):
Participant's Signature Date
FOR MARRIED PARTICIPANTS: If you are married and choose a form of benefit other
than a life annuity starting at your normal retirement age with at least a 50
percent continuation annuity for your spouse, you must have your spouse's
consent as provided on the attached Spouse's Consent Form.
RECEIPT OF SPECIAL TAX NOTICE: By signing the above, you acknowledge receipt of
the "Special Tax Notice Regarding Plan Payments" provided by the Plan
Administrator.
(Note to Plan Administrator: This distribution election form should be
accompanied by an election regarding withholding of income tax and/or IRS Form
W-4P for any distribution that is not an eligible rollover distribution.)
<PAGE>
SPOUSE'S CONSENT TO ELECTION OF A
FORM OF BENEFIT WITHOUT A SPOUSE'S ANNUITY
I declare that I am the participant's spouse. I consent to the election of
the form and time of benefit payment set out on the attached distribution
election form. I acknowledge that this election will have the effect of causing
the participant's benefit under the Plan to be paid with no guarantee of a
continued benefit to me after the participant's death.
Spouse's Signature Date
The spouse's consent must be witnessed by a notary public (Alternative 1)
or by a plan representative (Alternative 2).
Alternative 1
STATE OF )
) ss.
County of )
This instrument was signed before me on .
199 by .
Notary Public for
My commission expires
Alternative 2
I declare that I am a plan representative and this instrument was signed
before me on , 199 by .
Signature of Plan Representative Date
<PAGE>
Amendment to the
Investment Company Institute
Prototype Money Purchase Pension and
Profit Sharing Plan
Basic Document #01
FIRST
The Plan is hereby amended by the word-for-word adoption of the model language
contained in Revenue Procedure 93-12, for distributions made on or after January
1, 1993, as follows:
Notwithstanding any provision of the Plan to the contrary that would otherwise
limit a Distributee's election under this provision, a Distributee may elect, at
the time and in the manner prescribed by the Plan Administrator, to have any
portion of an Eligible Rollover Distribution paid directly to an Eligible
Retirement Plan specified by the Distributee in a Direct Rollover.
Definitions
(a) Eligible Rollover Distribution. An Eligible Rollover Distribution is any
distribution of all or any portion of the balance to the credit of the
Distributee, except that an Eligible Rollover Distribution does not include:
any distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or life
expectancy) of the Distributee or the joint lives (or joint life expectancies)
of the Distributee and the Distributee's designated Beneficiary, or for a
specified period of ten (10) years or more; any distribution to the extent such
distribution is required under section 401(a)(9) of the Code; and the portion of
any distribution that is not includable in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to employer
securities).
(b) Eligible Retirement Plan. An Eligible Retirement Plan is an individual
retirement account described in section 408(a) of the Code, an individual
retirement annuity described in section 408(b) of the Code, an annuity plan
described in section 403(a) of the Code, or a qualified trust described in
section 401(a) of the Code, that accepts the Distributee's Eligible Rollover
Distribution. However, in the case of an Eligible Rollover Distribution to the
surviving spouse, an Eligible Retirement Plan is an individual retirement
account or individual retirement annuity.
(c) Distributee. A Distributee includes an Employee or former Employee. In
addition, the Employee's or former Employee's surviving spouse and the
Employee's or former Employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in section 414(p)
of the Code, are Distributees with regard to the interest of the spouse or
former spouse.
(d) Direct Rollover. A Direct Rollover is a payment by the Plan to the
Eligible Retirement Plan specified by the Distributee.
SECOND
The Plan is hereby amended by the word-for-word adoption of the model language
contained in Revenue Procedure 94-13 as follows:
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1,
<PAGE>
1994, the annual Compensation of each Employee taken into account under the Plan
shall not exceed the OBRA O93 Annual Compensation Limit. The OBRA O93 Annual
Compensation Limit is $150,000 as adjusted by the Commissioner for increases in
the cost-of-living in accordance with section 401(a)(17)(B) of the Internal
Revenue Code. The cost-of-living adjustment in effect for a calendar year
applies to any period, not exceeding 12 months, over which Compensation is
determined (Determination Period) beginning in such calendar year. If a
Determination Period consists of fewer than 12 months, the OBRA O93 Annual
Compensation Limit will be multiplied by a fraction, the numerator of which is
the number of months in the Determination Period, and the denominator of which
is 12.
For Plan Years beginning on or after January, 1994, any reference in this Plan
to the limitation under section 401(a)(17) of the Code shall mean the OBRA O93
Annual Compensation Limit set forth in this provision.
If Compensation for any prior Determination Period is taken into account in
determining an Employee's benefits accruing in the current Plan year, the
Compensation for that prior Determination Period is subject to the OBRA O93
Annual Compensation Limit in effect for that prior Determination Period. For
this purpose, for Determination Period beginning before the first day of the
first Plan Year beginning on or after January 1, 1994, the OBRA O93 Annual
Compensation Limit is $150,000.
<PAGE>
TRUSTEE'S AUTHORIZATION
[LOGO] COLUMBIA TRUST COMPANY
PROTOTYPE RETIREMENT PLAN TRUSTEE DISTRIBUTION FORM
NOTE - The Plan Administrator should have a completed Participant Beneficiary
Designation and distribution Election Form. A Form W-4P might be necessary if
any part of the distribution is not an eligible rollover amount. Send this
form (and a copy of the W-4P if applicable) to Columbia, and keep all other
forms in the Plan Administrator's permanent file.
Plan Name:
-----------------------------------------------------------------------
Master Account Number:
----------------------------------------------------------
Participant's Account Number:
---------------------------------------------------
Name:
--------------------------------------------------------------------------
Social Security #: - - Age:
----------- ------------ ---------- -----------------
(for plan administrator) Married? Yes * No
--- ---
* If yes, Spousal consent is required on Participant Beneficiary Designation and
Distribution Election Form if the participant's vested account balance is
greater than $3,500.
To: Columbia Trust Company,
Liquidate ALL or PART $ or shares from the;
----- ----- ------------ ------------
The participant is % vested. If not 100% vested, include instructions
---------
for non-vested portion of the distribution on the back of this form.
(Check all appropriate boxes)
Columbia Daily Income Company Columbia Common Stock Fund, Inc.
- -- --
Columbia Growth Fund, Inc. Columbia Balanced Fund, Inc.
- -- --
Columbia Fixed Income Securities Fund, Inc. Columbia International Stock
- -- -- Fund, Inc.
<PAGE>
Columbia Special Fund, Inc. Columbia High Yeild Fund, Inc.
- -- --
Columbia U.S. Government Securities Fund Columbia Real Estate Equity
- -- -- Fund, Inc.
portion of the Participant's:
Profit-Sharing Account Money Purchase Account
- --- ---
Other (specify):
- ---
- ----------------------------------------------------------------------
for the following reason (death, termination, hardship, etc.):
- --------------------------------------------------------------------------------
- ----------------------------------------------------
Is this distribution: (complete a Form W-4P for withholding elections)
a Required Minimum Distribution (Age 70-1/2+)
- ---
One in a series of Equal Payments spanning 10 years or more
- ---
(Over)
Note: Rules regarding distributions from qualified plans have been in effect
since January 1, 1993. Answer the following questions carefully.
Is this a Direct Rollover?
YES NO
- --- ---
to an IRA Eligible Rollover distributions paid directly
- --- to the participant are subject to an
automatic 20% withholding as a prepayment of
federal income taxes.
- --- to qualified plan
Federal Withholding is Mandatory
INSTRUCTIONS FOR DISTRIBUTION:
Make check payable to:
------------------------------------------------------
And mail to this address:
------------------------------------------------------
<PAGE>
------------------------------------------------------
------------------------------------------------------
- - and/or
Special Instructions: ------------------------------------------------------
(include instructions for
non-vested portion) ------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
MAINTENANCE FEE - Check One (unless you have paid this year's fee or this is not
a liquidating distribution)
I have enclosed a $50 I authorize Columbia to withhold
- ---check for this year's -OR- ---$50 from this distribution for
maintenance fee. this year's maintenance fee.
- ------------------------------------------------------------------------------
Trustee's Signature Date Daytime Phone Number
- ------------------------------------------------------------------------------
Trustee's Signature Date Daytime Phone Number
- ------------------------------------------------------------------------------
Trustee's Signature Date Daytime Phone Number
NOTE - all trustees of the plan must sign this form, use additional space as
required.
<PAGE>
1996 Form W-4P Department of the Treasury
Internal Revenue Service
- --------------------------------------------------------------------------------
What is Form W-4P? This form is for recipients of income from annuity,
pension, and certain other deferred compensation plans to tell payers
whether income tax is to be withheld and on what basis. Your options depend
on whether the payment is periodic, nonperiodic, or an eligible rollover
distribution as explained on page 3.
You also can use this form to choose (a) to have no income tax withheld
from the payment (except for eligible rollover distributions or payments to
U.S. citizens delivered outside the United States or its possessions) or
(b) to have an additional amount of tax withheld.
What Do I Need To Do? Complete lines A through F of the worksheet. If you
want no tax to be withheld, you can skip the worksheet below and go
directly to the form at the bottom of this page.
Sign This Form.--Form W-4P is not considered valid unless you sign it.
Other Income? If you have a large amount of income from other sources not
subject to withholding (such as interest, dividends, or taxable social
security), you should consider making estimated tax payments using Form
1040-ES, Estimated Tax for Individuals. Call 1-800-829-3676 for copies of
Form 1040-ES, and Pub. 505, Tax Withholding and Estimated Tax.
When Should I file? File as soon as possible to avoid underwithholding
problems.
Multiple Pensions? More Than One Income? To figure the number of allowances
you may claim, combine allowances and income subject to withholding from
all sources on one worksheet. You can file a Form W-4P with each pension
payer, but do not claim the same allowances more than once. Your
withholding will usually be more accurate if you claim all allowances on
the Form W-4P for the largest source of income subject to withholding.
Caution: At the time this form was printed, Congress was
considering legislation that would allow you to claim additional
withholding allowances. See Pub. 553, Highlights of 1995 Tax Law
Changes.
- --------------------------------------------------------------------------------
Personal Allowances Worksheet
- --------------------------------------------------------------------------------
A Enter "1" for yourself if no one else can claim you as a dependent .... A
---
<PAGE>
B Enter "1" if: -- You are single and have only one pension; or
-- You are married, have only one pension, and your
spouse has no income subject to withholding; or .... B
-- Your income from a second pension or a job, ---
or your spouse's pension or wages (or the total
of all) is $1,000 or less.
C Enter "1" for your spouse. You may choose to enter -0- if you are
married and have either a spouse who has income subject to withholding
or you have more than one source of income subject to withholding.
(This may help you avoid having too little tax withheld.) ............. C
---
D Enter number of dependents (other than your spouse or yourself)
you will claim on your return.......................................... D
---
E Enter "1" if you will file as a head of household on your tax return... E
---
F Add lines A through E and enter total here............................. F
---
For accuracy, do all worksheets that apply.
- -- If you plan to itemize or claim other deductions and want to reduce your
withholding, use the Deductions and Adjustments Worksheet on page 2.
Caution: At the time this form was printed, Congress was considering
legislation that would allow you to claim additional withholding
allowances. See Pub. 553, Highlights of 1995 Tax Law Changes.
- -- If you have more than one source of income subject to withholding or a
spouse with income subject to withholding AND your combined earnings
from all sources exceed $30,000 ($50,000 if married filing jointly), use
the Multiple Pensions/More Than One Income Worksheet on page 2 if you
want to avoid having too little tax withheld.
- -- If neither situation applies, stop here and enter the number from line F
above on line 2 of Form W-4P below.
- --------------------------------------------------------------------------------
........ Cut here and give the certificate to the payer of your pension ........
or annuity. Keep the top portion for your records.
Form W-4P OMB No. 1545-0415
Department of the Treasury
Internal Revenue Service 1996
Withholding Certificate for Pension or Annuity Payments
<PAGE>
- --------------------------------------------------------------------------------
Type or print your full name Your social security number
- --------------------------------------------------------------------------------
Home address (number and street or rural route) Claim or identification
number (if any) of your
- ------------------------------------------------------- pension or annuity
City or town, state, and ZIP code contract
- --------------------------------------------------------------------------------
Complete the following applicable lines:
1 I elect not to have income tax withheld from my pension or
annuity. (Do not complete lines 2 or 3.)...................... / /
2 I want my withholding from each periodic pension or annuity
payment to be figured using the number of allowances and
marital status shown. (You may designate a dollar amount
on line 3.)...................................................
---------------
Enter number of
allowances.)
Marital status: / / Single / / Married / / Married, but
withhold at higher
Single rate
3 I want the following additional amount withheld from each
pension or annuity payment. Note: For periodic payments,
you cannot enter an amount here without entering the number
(including zero) of allowances on line 2).....................$
--------------
- --------------------------------------------------------------------------------
Your signature Date
- --------------------------------------------------------------------------------
Cat No. 10225T
Form W-4P (1996) Page 2
- --------------------------------------------------------------------------------
Deductions and Adjustments Worksheet
- --------------------------------------------------------------------------------
NOTE: Complete only if you plan to itemize deductions or claim adjustments to
income on your 1996 return.
1. Enter an estimate of your 1996 itemized deductions. These
include qualifying home mortgage interest, charitable
contributions, state and local taxes (but not sales taxes),
<PAGE>
medical expenses in excess of 7.5% of your income, and
miscellaneous deductions in excess of 2% of your income. (For
1996, you may have to reduce your itemized deductions if your
income is over $117,950 ($58,975 if married filing
separately). Get Pub. 919 for details)....................... 1 $
-----------
2. Enter: $6,700 if married filing jointly or qualifying widow(er)
$5,900 if head of household
$4,000 if single
$3,350 if married filing separately.................. 2 $
-----------
3. Subtract line 2 from line 1. If line 2 is greater than
line 1, enter -0-............................................ 3 $
-----------
4. Enter estimate of your 1996 adjustments to income. These
include alimony paid and deductible IRA contributions........ 4 $
-----------
5. Add lines 3 and 4 and enter the total........................ 5 $
-----------
6. Enter an estimate of your 1996 income not subject to
withholding (such as dividends or interest income)........... 6 $
-----------
7. Subtract line 6 from line 5. Enter the result,
but not less than zero....................................... 7 $
-----------
8. Divide the amount on line 7 by $2,500 and enter the result
here. Drop any fraction..................................... 8
------------
9. Enter the number from Personal Allowances Worksheet,
line F, on page 1............................................ 9
------------
10. Add lines 8 and 9 and enter the total here. If you plan
to use the Multiple Pensions/More Than One Income Worksheet,
also enter this total on line 1 below. Otherwise stop here
and enter this total on Form W-4P, line 2, on page 1.........10
------------
- --------------------------------------------------------------------------------
Multiple Pensions/More Than One Income Worksheet
- --------------------------------------------------------------------------------
NOTE: Complete only if you plan to itemize deductions or claim adjustments to
income on your 1996 return.
1. Enter the number from line F on page 1 (or from line 10
above if you used the Deductions and Adjustments Worksheet).. 1
------------
2. Find the number in Table 1 below that applies to the
<PAGE>
LOWEST paying pension or job and enter it here............... 2
------------
3. If line 1 is GREATER THAN OR EQUAL TO line 2, subtract line 2
from line 1. Enter the result here (if zero, enter -0-) and on
Form W-4P, line 2, page 1. Do not use the result of this
worksheet.................................................... 3
------------
4. If line 1 is LESS THAN line 2, enter -0- on Form W-4P,
line 2, page 1, and enter the number from line 2 of this
worksheet here............................................... 4
------------
5. Enter the number from line 1 of this worksheet............... 5
------------
6. Subtract line 5 from line 4 and enter the result here........ 6
------------
7. Find the amount in Table 2 below that applies to the HIGHEST
paying pension or job and enter it here...................... 7 $
-----------
8. Multiply line 7 by line 6 and enter the result here.......... 8 $
-----------
9. Divide line 8 by the number of pay periods in each year. (For
example, divide by 12 if you are paid every month.) Enter the
result here and on Form W-4P, line 3, page 1. This is the
additional amount to be withheld from each payment........... 9 $
<TABLE> -----------
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Table 1: Multiple Pensions/More Than One Income Worksheet
- ---------------------------------------------------------------------------------------------------------
Married Filing Jointly All Others
- ---------------------------------------------------------------------------------------------------------
If amounts from Enter on If amounts from Enter on If amounts from Enter on
LOWEST paying line 2 above LOWEST paying line 2 above LOWEST paying line 2 above
pension or job pension or job pension or job
is -- is -- is--
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
0 - $3,000.........0 39,001 - 50,000......... 9 0 - $4,000.........0
3,001 - 6,000.........1 50,001 - 55,000.........10 4,001 - 10,000.........1
6,001 - 11,000.........2 55,001 - 60,000.........11 10,001 - 20,000.........2
11,001 - 16,000.........3 60,001 - 70,000.........12 14,001 - 30,000.........3
16,001 - 21,000.........4 70,001 - 80,000.........13 19,001 - 40,000.........4
<PAGE>
21,001 - 27,000.........5 80,001 - 90,000.........14 23,001 - 50,000.........5
27,001 - 31,000.........6 90,001 and over.........15 45,001 - 60,000.........6
31,001 - 34,000.........7 60,001 - 70,000.........7
34,001 - 39,000.........8 70,001 and over.........8
- ---------------------------------------------------------------------------------------------------------
Table 2: Multiple Pensions/More Than One Income Worksheet
- ---------------------------------------------------------------------------------------------------------
Married Filing Jointly All Others
- ---------------------------------------------------------------------------------------------------------
If amounts from Enter on If amounts from Enter on
HIGHEST paying line 7 above HIGHEST paying line 7 above
pension or job pension or job
is -- is--
- ---------------------------------------------------------------------------------------------------------
0 - $50,000.......$ 380 0 - $30,000........$ 380
50,001 - 100,000....... 710 30,001 - 60,000........ 710
100,001 - 130,000....... 790 60,001 - 120,000........ 790
130,001 - 240,000....... 920 110,001 - 240,000........ 920
240,001 and over........ 1,010 240,001 and over......... 1,010
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Form W-4P (1996) Page 3
- --------------------------------------------------------------------------------
Paperwork Reduction Act Notice.--We ask for the information on this form to
carry out the Internal Revenue laws of the United States. The Internal Revenue
Code requires this information under sections 3405 and 6109 and their
regulations. Failure to provide this information may result in inaccurate
withholding on your payment(s).
The time needed to complete this form will vary depending on individual
circumstances. The estimated average time is:
Recordkeeping. . . . . . . . . . . . . . . . . . . . 40 min.
Learning about the law or the form . . . . . . . . . 20 min.
Preparing the form . . . . . . . . . . . . . . . . . 49 min.
If you have comments concerning the accuracy of these time estimates or
suggestions for making this form simpler, we would be happy to hear from you.
You can write to the Tax Forms Committee, Western Area Distribution Center,
<PAGE>
Rancho Cordova, CA 95743-0001. DO NOT send the tax form to this address.
Instead, give it to your payer.
- --------------------------------------------------------------------------------
Withholding From Pensions and Annuities
Generally, withholding applies to payments made from pension, profit-sharing,
stock bonus, annuity, and certain deferred compensation plans; from individual
retirement arrangements (IRAs); and from commercial annuities. The method and
rate of withholding depends on the kind of payment you receive. Also, because
your tax situation may change from year to year, you may want to refigure your
withholding each year.
You can change the amount of tax to be withheld by using lines 2 and 3 of
Form W-4P. You can also exempt the payments from withholding by using line
1 of Form W-4P. This exemption from withholding does not apply to eligible
rollover distributions (discussed later). Also, the exemption does not
apply to certain recipients who have payments delivered outside the United
States or its possessions. See Exemption From Withholding--Payments Outside
the United States later.
Caution: There are penalties for not paying enough tax during the year,
either through withholding or estimated tax payments. New retirees,
especially, should see Pub. 505. It explains the estimated tax requirements
and penalties in detail. You may be able to avoid quarterly estimated tax
payments by having enough tax withheld from your pension or annuity using
Form W-4P.
Periodic payments from any plan noted earlier are treated as wages for the
purpose of withholding. A periodic payment is one that is includable in
your income for tax purposes. You must receive the payment in installments
at regular intervals over a period of more than 1 full year from the
starting date of the pension or annuity. The intervals can be annual,
quarterly, monthly, etc.
Unless you tell your payer otherwise, tax must be withheld on periodic
payments as if you are married and claiming three withholding allowances.
This means that tax will be withheld if your pension or annuity is more
than $1,173 a month (or $14,075 a year).
There are some kinds of periodic payments for which you cannot use Form
W-4P since they are already defined a wages subject to income tax
withholding. Retirement pay for service in the U.S. Armed Forces generally
falls into this category. Certain nonqualified deferred compensation plans
and state and local deferred compensation plans described in section 457
also fall into this category. Your payer should be able to tell you whether
<PAGE>
Form W-4P will apply. Social security payments are not subject to
withholding but may be includable in income.
For periodic payments, your certificate stays in effect until you change or
revoke it. Your payer must notify you each year of your right to elect to
have no tax withheld or to revoke your election.
Nonperiodic payments will have income tax withheld at a flat 10% rate (but
see Eligible rollover distribution below).
Distributions from an IRA that are payable on demand are treated as
nonperiodic payments. You can elect to have no income tax withheld from a
nonperiodic payment by filing Form W-4P with the payer and checking the box
on line 1. Generally, your election to have not tax withheld will apply to
any later payment from the same plan. You cannot use line 2 for nonperiodic
payments. But you may use line 3 to specify that an additional amount be
withheld.
Eligible rollover distribution. You do not have the option of claiming
exemption from withholding for eligible rollover distributions from
qualified pension or annuity plans (e.g., 401(k) pension plans) or
tax-sheltered annuity plans. See Pub. 505 for more details. Tax will be
withheld from an eligible rollover distribution at a flat 20% rate, unless
you elect to have more withheld by filing a Form W-4P with the plan
administrator. However, no tax will be withheld if the entire distribution
is transferred by the plan administrator in a direct rollover to an IRA or
qualified pension or tax-sheltered annuity plan. Since you are no longer
entitled to claim exemption from withholding on eligible rollover
distributions from such plans, do not file Form W-4P with your plan
administrator unless you choose to have more than 20% withheld.
Exemption From Withholding--Payment Outside the United States
The election to be exempt from income tax withholding does not apply to any
periodic payment or nonperiodic distribution made to a U.S. citizen or
resident alien that is delivered outside the United States or its possessions.
Other recipients who have these payments delivered outside the United
States or its possessions can elect exemption only if an individual
certifies to the payer that the individual is not (1) a U.S. citizen or
resident alien or (2) an individual to whom section 877 of the Internal
Revenue Code applies (concerning expatriation to avoid tax). The
certification must be made in a statement to the payer under the penalties
of perjury. A nonresident alien who elects exemption from withholding under
section 3405 is subject to withholding under section 1441.
<PAGE>
Revoking the Exemption From Withholding
If you want to revoke your previously filed exemption from withholding for
periodic payments, file another Form W-4P with the payer. If you want tax
withheld at the rate set by law (married with three allowances), write
"Revoked" by the checkbox on line 1 of the form. If you want tax withheld
at any different rate, complete line 2 on the form.
If you want to revoke your previously filed exemption for nonperiodic
payments, write "Revoked" by the checkbox on line 1 and file Form W-4P with
the payer.
Statement of Income Tax Withheld From Your Pension or Annuity
By January 31 of next year, you will receive a statement from your payer
showing the total amount of your pension or annuity payments and the total
income tax withheld during the year.
<PAGE>
[LOGO]
Attached are the replacement pages and forms corresponding to amended or revised
sections of the Employers Booklet - Notice to Employees. The updated sections
are underlined in the Table of Contents.
Columbia Trust Company
<PAGE>
The Columbia Retirement Plan
Employer's Booklet
Notice to Employees
Table of Contents
This Employer's Booklet contains specific information for retirement
plans covering employees. Although some information is duplicated here, this
booklet should be used in conjunction with the Columbia Retirement Plan packet.
PROCEDURES AND
GENERAL ADMINISTRATIVE RESPONSIBILITIES
Including: REPORTING REQUIREMENTS
DISTRIBUTIONS
SPECIAL TAX NOTICE REGARDING PLAN PAYMENTS
SUMMARY PLAN DESCRIPTIONS
INSTRUCTIONS FOR PREPARING MODEL SUMMARY PLAN DESCRIPTION FOR PROFIT SHARING
PLAN
MODEL SUMMARY PLAN DESCRIPTION FOR PROFIT SHARING PLAN
INSTRUCTIONS FOR PREPARING MODEL SUMMARY PLAN DESCRIPTION FOR MONEY PURCHASE
PENSION PLAN
MODEL SUMMARY PLAN DESCRIPTION FOR MONEY PURCHASE PENSION PLAN
ADMINISTRATIVE FORMS
NOTICE TO INTERESTED PARTIES
PARTICIPANT LOANS
BENEFICIARY DESIGNATIONS
JOINT SURVIVOR ANNUITY
DOMESTIC RELATIONS ORDERS
PARTICIPANT DISTRIBUTION ELECTION FORM
<PAGE>
[LOGO] The Columbia Retirement Plan
PROCEDURES & ADMINISTRATION
PROCEDURES & ADMINISTRATION
PROCEDURES & ADMINISTRATION
PROCEDURES & ADMINISTRATION
________________________________________________________________
Questions? Call 1-800-547-1707; in Portland 222-3606
<PAGE>
PROCEDURES
Employers have special responsibilities when employees are covered under a
retirement plan. Once the Adoption Agreements have been completed and the
Trustees and Plan Administrator appointed, these additional procedures should be
followed.
Communicate the Plan to Employees.
After the employer has adopted the plan(s), the employer should communicate the
adoption and principal provisions of the plan(s) to employees.
The adoption can be communicated by posting or delivering a Notice to Interested
Parties to current employees, former employees who are eligible for benefits,
and beneficiaries of deceased employees. If the plan is a new plan, only
current employees need be notified. The employer or the plan administrator must
post the notice between 9 and 23 days after the employer has adopted the plan
and between 6 and 20 days after adoption if the notice is mailed to employees.
Model notices and instructions for completing them are in the Administrative
Forms section of this booklet.
The principal plan provisions can be communicated to employees by providing
participants with a copy of the summary plan description. See the Summary Plan
Description Procedure.
Bonding and Insurance.
If a plan covers common law employees, the plan administrator, any individual
trustees, and any person who handles funds or property belonging to the plan
must be covered by a surety bond equal to 10 percent of the plan assets as of
the beginning of the plan year (but not less than $1,000 nor more than
$500,000). For example, an employee who signs checks transferring assets to the
trustee should be bonded. This bond normally may be obtained from an insurance
company at a minimal cost. A bond is not required if the plan only covers the
individual and/or spouse who are the sole owners of the proprietorship or
corporation.
The employer may also wish to obtain fiduciary liability insurance covering the
plan administrator and any individual trustees. Fiduciary liability insurance
must be paid for by the employer unless it permits recovery against individual
fiduciaries. It may not be paid from plan assets. Fiduciary liability
insurance is not required by law, however.
Prepare the Summary Plan Descriptions(s).
The employer must inform each participant under the plan(s) of his rights under
the plan(s) in a manner that is understandable to the participants. To do this,
the employer should complete the Model Summary Plan Description in the Summary
Plan Description Section according to the instructions provided. The plan
administrator should provide a copy of the completed description within 90 days
after participation begins, to each new participant under the plan. In
addition, a copy of the summary plan description must be filed with the
Department of Labor by the plan administrator within 120 days after adoption of
the plan.
Consult a Professional.
<PAGE>
Once again, because of the many statutory and regulatory requirements imposed on
tax-qualified plans, all actions taken with respect to establishing such a plan
should be reviewed by a tax advisor or legal counsel.
<PAGE>
General Administrative Responsibilities
The plan administrator is responsible for the administration and recordkeeping
under the plan. The plan administrator may be the trustee, the employer
(including a corporate employer), an individual, or a committee of two or more
individuals. Among its duties, the plan administrator must comply with many
reporting and disclosure requirements. These requirements apply to
communications to government agencies and to plan participants. The following
list, which is not exhaustive, identifies the primary areas of administrative
responsibility.
Record Keeping
The plan administrator must compile the employee data necessary to credit
employees with service for eligibility and vesting purposes. The plan
administrator should also have each participant designate a beneficiary. If the
participant is married, the participant cannot designate a beneficiary other
than his or her spouse without the spouse's consent. If the participant marries
or remarries after designating a beneficiary, the new spouse must consent to any
beneficiary (other than that spouse) who has been named by the participant. See
the Beneficiary Designation Form in the Administrative Forms section of this
booklet.
Accounting
The plan administrator must collect all contributions from the employer and from
employees. Also, the plan administrator must establish an individual account
for each participant and account separately for the employer contributions
allocated to the accounts, as well as for investment gains or losses. The plan
administrator must also account for amounts rolled over or transferred from
other tax-qualified plans.
Investment Selection
The plan administrator must record the participant's instructions directing the
investment of contributions.
Notices
The Plan administrator must provide participants with a number of notices. For
example, the plan administrator must notify participants of any benefits that
will be forfeited in the event of the participant's death. The plan
administrator must also notify participants of the receipt of any court order
requiring the plan to pay out any part of the participant's account to or on
behalf of the participant's former spouse or as child support. See Notice of
Domestic Relations Order in the Administrative Forms section of this booklet.
The plan administrator must also provide participants with a general notice of
the participant's ability to elect not to receive annuity benefits in the form
of a Joint and Survivor Annuity and to elect not to have a Preretirement
Survivor Annuity paid to the participant's surviving spouse. This notice can be
permanently posted in the locations customarily used to inform employees of
labor-management relations matters. Specific information on the effect of a
Joint and Survivor Annuity or Preretirement Survivor Annuity must also be
provided to participants who request it. See the Administrative Forms section
of this booklet for Explanation of Joint and Survivor Annuity and Specific
Information About Joint and Survivor Annuity.
Reporting
The plan administrator is responsible for submitting a number of reports or
statements to government agencies or to plan participants. The plan
administrator must provide a summary plan description to each participant within
90 days of commencing participation and to the Department of Labor within 120
days of adoption of the Plan. A summary plan description and instructions for
completing it are located in the next sections. If there are significant
changes in the plan, the plan administrator must provide participants and the
Department of Labor with a statement of material modifications. Columbia Trust
Company will inform the plan administrator of significant changes in the plan
and will provide model statements of material modifications if required.
<PAGE>
An annual report must be filed with the Internal Revenue Service. Form 5500 is
used for plans with 100 or more employees and Form 5500-C/R for plans with less
than 100 employees. A summary annual report and a benefit statement must be
provided to participants each year.
Distributions
The plan administrator must determine which employees are entitled to receive
distributions of benefits under the plan. With respect to such distributions,
the plan administrator must distribute and collect any participant elections
concerning the time or manner of distribution. A Participant Distribution
Election Form is provided in the Administrative Forms section of the Employer's
Booklet, including elections and waivers as required by the Retirement Equity
Act of 1984 and the Unemployment Compensation Act of 1992.
Distributions must be authorized in writing by the plan's trustee(s) only. A
Prototype Retirement Plan Trustee Distribution Form can be used for that
authorization.
As of January 1, 1993, distributions from retirement plans are subject to
mandatory withholding at a rate of 20% as a pre-payment of federal income tax
(currently, Oregon residents may elect whether or not to have 8% state tax
withholding). Columbia Trust Company can do this withholding. Different
withholding rates may apply to lump-sum distributions and to periodic
distributions. You can elect to have additional amounts withheld. The IRS
Form W-4P may need to be completed if any portion of the distribution is not an
eligible rollover amount. Call Columbia for the Distribution Form and Form
W-4P.
Taxable distributions from qualified plans are eligible rollover distributions
to an individual retirement account or annuity (IRA), another qualified plan or
a section 403(b) annuity. Eligible rollover distributions that are directly
rolled over avoid the mandatory 20% withholding. Eligible rollover
distributions exclude:
- - Required Minimum Distributions (age 70 -1/2)
- - Distributions from an annuity
- - Equal payments spanning 10 years or more
- - After-tax contributions
Distributions from this retirement plan are reportable to the IRS. The employer
will receive participant Form 1099Rs from Columbia Trust Company in the January
following the distribution unless Columbia notifies the employer of a
circumstance in which it is not able to do so.
Generally, distributions will be made to a participant due to separation from
service or retirement (and possibly, termination of the plan.) If the
participant is under 59-1/2 years of age, the distribution is subject to a 10%
penalty. Exceptions to the penalty are distributions which are:
Made to a beneficiary after the death of a participant
Due to total and permanent disability
A series of substantially equal periodic payments_which begin after
separation from service
Made to participants over age 55 and separating from service
Medical expenses
Made to alternate payees specified in a Qualified Domestic Relations order
i.e. divorce
Distributions that are directly rolled over are also exempted from the 10%
penalty. The plan administrator must inform participants of their options by
providing a written explanation of the direct rollover options and related tax
rules. Give the Special Tax Notice Regarding Plan Payments on the following
page to the participant. The notice must be provided within "a reasonable
period of time" before making a distribution to the participant. Generally,
that period is no less than 30 days and no more than 90 days prior to the
distribution. However, if the participant makes an affirmative election to make
or not make a direct rollover, the 30-day requirement is waived.
Refer to the Special Tax Notice for a discussion on rollover options for
distributions that are paid directly to the participant.
<PAGE>
Please Note
The attached form is a model explanation, prepared by the IRS, of some of the
consequences of plan rollover rules, the direct rollover option, the mandatory
and voluntary income tax withholding rules, the special tax treatment of lump
sum distributions, the special tax treatment of distributions of employer stock
and other matters.
The IRS permits this model explanation to be "customized" by omitting any
portions of it that are not applicable to a plan. For example, the explanation
of the special tax treatment of employer stock might be omitted by plans that do
not invest in or distribute employer stock. In addition, alternative
explanations may be substituted for all or any portion of the model explanation.
Any alterations must, however, comply with the requirements of section 402(f) of
the Internal Revenue Code.
<PAGE>
Special Tax Notice Regarding Plan Payments
This notice contains important information you will need before you decide how
to receive your benefits from [Name of Plan] (the "Plan").
Summary
A payment from the Plan that is eligible for "rollover" can be taken in two
ways. You can have all or any portion of your payment either 1) PAID IN A
"DIRECT ROLLOVER" or 2) PAID TO YOU. A rollover is a payment of your Plan
benefits to your individual retirement arrangement (IRA) or to another employer
plan. This choice will affect the tax you owe.
If You Choose a Direct Rollover
1. Your payment will not be taxed in the current year and no income tax will
be withheld.
2. Your payment will be made directly to your IRA or, if you choose, to
another employer plan that accepts your rollover.
3. Your payment will be taxed later when you take it out of the IRA or the
employer plan.
If You Choose to Have Your Plan Benefits Paid To You
1. You will receive only 80% of the payment, because the Plan administrator is
required to withhold 20% of the payment and send it to the IRS as income tax
withholding to be credited against your taxes.
2. Your payment will be taxed in the current year unless you roll it over.
You may be able to use special tax rules that could reduce the tax you owe.
However, if you receive the payment before age 59-1/2, you also may have to pay
an additional 10% tax.
3. You can roll over the payment by paying it to your IRA or to another
employer plan that accepts your rollover within 60 days of receiving the
payment. The amount rolled over will not be taxed until you take it out of the
IRA or employer plan.
4. If you want to roll over 100% of the payment to an IRA or an employer plan,
you must find other money to replace the 20% that was withheld. If you roll
over only the 80% that you received, you will be taxed on the 20% that was
withheld and that is not rolled over.
Special Notice
The Plan administrator must provide this Special Tax Notice to you within a
reasonable time before an "eligible rollover distribution," as described herein,
is made. Under IRS regulations, this Special Tax Notice must generally be given
no more than 90 days and no less than 30 days before the distribution or
transfer. However, the 30-day requirement no longer applies once you
affirmatively elect to make or not make a direct rollover. You have the right
to wait the full 30 days before making a decision, if you wish to do so.
More Information Page
I. Payments That Can and Cannot be
Rolled Over [ ]
II. Direct Rollover [ ]
III. Payment to You [ ]
IV. Surviving Spouses, Alternate Payees,
<PAGE>
and Other Beneficiaries [ ]
I. Payments That Can and Cannot Be Rolled Over
Payments from the Plan may be "eligible rollover distributions." This means
that they can be rolled over to an IRA or to another employer plan that accepts
rollovers. Your Plan administrator should be able to tell you what portion of
your payment is an eligible rollover distribution. The following types of
payments cannot be rolled over:
Non-taxable Payments. In general, only the "taxable portion" of your payment is
an eligible rollover distribution. If you have made "after-tax" employee
contributions to the Plan, these contributions will be non-taxable when they are
paid to you, and they cannot be rolled over. (After-tax employee contributions
generally are contributions you made from your own pay that were already taxed.)
Payments Spread Over Long Periods. You cannot roll over a payment if it is part
of a series of equal (or almost equal) payments that are made at least once a
year and that will last for
1. your lifetime (or your life expectancy), or
2. your lifetime and your beneficiary's lifetime (or life expectancies), or
3. a period of ten years or more.
Required Minimum Payments. Beginning in the year you reach age 70-1/2, a
certain portion of your payment cannot be rolled over because it is a "required
minimum payment" that must be paid to you.
II. Direct Rollover
You can choose a direct rollover of all or any portion of your payment that is
an "eligible rollover distribution," as described above. In a direct rollover,
the eligible rollover distribution is paid directly from the Plan to an IRA or
another employer plan that accepts rollovers. If you choose a direct rollover,
you are not taxed on a payment until you later take it out of the IRA or the
employer plan.
Direct Rollover to an IRA. You can open an IRA to receive the direct rollover.
(The term "IRA", as used in this notice, includes individual retirement accounts
and individual retirement annuities.) If you choose to have your payment made
directly into an IRA, contact an IRA sponsor (usually a financial institution)
to find out how to have your payment made in a direct rollover to an IRA at that
institution. If you are unsure of how to invest your money, you can temporarily
establish an IRA to receive the payment. However, in choosing an IRA, you may
wish to consider whether the IRA you choose will allow you to move all or part
of your payment to another IRA at a later date, without penalties or other
limitations. See IRS Publication 590, Individual Retirement Arrangements, for
more information on IRAs (including limits on how often you can roll over
between IRAs).
Direct Rollover to a Plan. If you are employed by a new employer that has a
plan, and you want a direct rollover to that plan, ask the administrator of that
plan whether it will accept a rollover. If your new employer's plan does not
accept a rollover, you can choose a direct rollover to an IRA.
Direct Rollover of a Series of Payments. If you receive eligible rollover
distributions that are paid in a series for less than ten years, your choice to
make or not make a direct rollover for a payment will apply to all later
payments in the series until you change your election. You are free to change
your election for any later payment in the series.
<PAGE>
III Payment Paid to You
If you have the payment made to you, it is subject to 20% income tax
withholding. The payment is taxed in the year you receive it unless, within 60
days, you roll it over to an IRA or another plan that accepts rollovers. If you
do not roll it over, special tax rules may apply.
Income Tax Withholding:
Mandatory Withholding. If any portion of the payment to you is an eligible
rollover distribution, the Plan is required by law to withhold 20% of that
amount. This amount is sent to the IRS as income tax withholding. For example,
if your eligible rollover distribution is $10,000, only $8,000 will be paid to
you because the Plan must withhold $2,000 as income tax. However, when you
prepare your income tax return for the year, you will report the full $10,000 as
a payment from the Plan. You will report the $2,000 as tax withheld, and it
will be credited against any income tax you owe for the year.
Voluntary Withholding. If any portion of your payment is not an eligible
rollover distribution but is taxable, the mandatory withholding rules described
above do not apply. In this case, you may elect not to have withholding apply
to that portion. To elect out of withholding, ask the Plan administrator for
the election form and related information.
Sixty-Day Rollover Option. If you have an eligible rollover distribution paid
to you, you can still decide to roll over all or part of it to an IRA or another
employer plan that accepts rollovers. If you decide to roll over, you must make
the rollover within 60 days after you receive the payment. The portion of your
payment that is rolled over will not be taxed until you take it out of the IRA
or the employer plan.
You can roll over up to 100% of the eligible rollover distribution, including an
amount equal to the 20% that was withheld. If you choose to roll over 100%, you
must find other money within the 60-day period to contribute to the IRA or the
employer plan to replace the 20% that was withheld. On the other hand, if you
roll over only the 80% that you received, you will be taxed on the 20% that was
withheld.
Example: Your eligible rollover distribution is $10,000, and you choose to have
it paid to you. You will receive $8,000, and $2,000 will be sent to the IRS as
income tax withholding. Within 60 days after receiving the $8,000, you may roll
over the entire $10,000 to an IRA or employer plan. To do this, you roll over
the $8,000 you received from the Plan, and you will have to find $2,000 from
other sources (your savings, a loan, etc.). In this case, the entire $10,000 is
not taxed until you take it out of the IRA or employer plan. If you roll over
the entire $10,000, when you file your income tax return you may get a refund of
the $2,000 withheld...
If, on the other hand, you roll over only $8,000, the $2,000 you did not roll
over is taxed in the year it was withheld. When you file your income tax return
you may get a refund of part of the $2,000 withheld. (However, any refund is
likely to be larger if you roll over the entire $10,000.)
Additional 10% Tax If You Are Under Age 59-1/2. If you receive a payment before
you reach age 59-1/2 and you do not roll it over, then, in addition to the
regular income tax, you may have to pay an extra tax equal to 10% of the taxable
portion of the payment. The additional 10% tax does not apply to your payment
if it is (1) paid to you because you separate from service with your employer
during or after the year you reach age 55, (2) paid because you retire due to
disability, (3) paid to you as equal (or almost equal) payments over your life
or
<PAGE>
life expectancy (or your and your beneficiary's lives or life expectancies), or
(4) used to pay certain medial expenses. See IRS Form 5329 for more information
on the additional 10% tax.
Special Tax Treatment. If your eligible rollover distribution is not rolled
over, it will be taxed in the year you receive it. However, if it qualifies as
a "lump sum distribution," it may be eligible for special tax treatment. A lump
sum distribution is a payment, within one year, of your entire balance under the
Plan (and certain other similar plans of the employer) that is payable to you
because you have reached age 59-1/2 or have separated from service with your
employer (or, in the case of a self-employed individual, because you have
reached age 59-1/2 or have become disabled). For a payment to qualify as a lump
sum distribution, you must have been a participant in the Plan for at least 5
years. The special tax treatment for lump sum distributions is described below.
Five-Year Averaging. If you receive a lump sum distribution after you are age
59-1/2, you may be able to make a one-time election to figure the tax on the
payment by using "5-year averaging." Five-year averaging often reduces the tax
you owe because it treats the payment much as if it were paid over 5 years.
Ten-Year Averaging If You Were Born Before January 1, 1936. If you receive a
lump sum distribution and you were born before January 1, 1936, you can make a
one-time election to figure the tax on the payment by using "10-year averaging"
(using 1986 tax rates) instead of 5-year averaging (using current tax rates).
Like the 5-year averaging rules, 10-year averaging often reduces the tax you
owe.
Capital Gain Treatment If You Were Born Before January 1, 1936. In addition, if
you receive a lump sum distribution and you were born before January 1, 1936,
you may elect to have the part of your payment that is attributable to your
pre-1974 participation in the Plan (if any) taxed as long-term capital gain at a
rate of 20%.
There are other limits on the special tax treatment for lump sum distributions.
For example, you can generally elect this special tax treatment only once in
your lifetime, and the election applies to all lump sum distributions that you
receive in that same year. If you have previously rolled over a payment from
the Plan (or certain other similar plans of the employer), you cannot use this
special tax treatment for later payments from the Plan. If you roll over your
payment to an IRA, you will not be able to use this special tax treatment for
later payments from the IRA. Also, if you roll over only a portion of your
payment to an IRA, this special tax treatment is not available for the rest of
the payment. Additional restrictions are described in IRS Form 4972, which has
more information on lump sum distributions and how you elect the special tax
treatment.
Employer Stock or Securities. There is a special rule for a payment from the
Plan that includes employer stock (or other employer securities). To use this
special rule, (1) the payment must qualify as a lump sum distribution, as
described above (or would qualify except that you do not yet have 5 years of
participation in the Plan), or (2) the employer stock included in the payment
must be attributable to "after-tax" employee contributions, if any. Under this
special rule, you may have the option of not paying tax on the "net unrealized
appreciation" of the stock until you sell the stock. Net unrealized
appreciation generally is the increase in the value of the employer stock while
it was held by the Plan. For example, if employer stock was contributed to your
plan account when the stock was worth $1,000 but the stock was worth $1,200 when
you received it, you would not have to pay tax on the $200 increase in value
until you later sold the stock.
<PAGE>
You may instead elect not to have the special rule apply to the net unrealized
appreciation. In this case, your net unrealized appreciation will be taxed in
the year you receive the stock, unless you roll over the stock. The stock
(including any net unrealized appreciation) can be rolled over to an IRA or
another employer plan either in a direct rollover or a rollover that you make
yourself.
If you receive employer stock in a payment that qualifies as a lump sum
distribution, the special tax treatment for lump sum distributions described
above (such as 5-year averaging) also may apply. See IRS Form 4972 for
additional information on these rules.
IV. Surviving Spouses, Alternate Payees, and Other Beneficiaries
In general, the rules summarized above that apply to payments to employees also
apply to payments to surviving spouses of employees and to spouses or former
spouses who are "alternate payees." You are an alternate payee if your interest
in the Plan results from a "qualified domestic relations order," which is an
order issued by a court, usually in connection with a divorce or legal
separation. Some of the rules summarized above also apply to a deceased
employee's beneficiary who is not a spouse. However, there are some exceptions
for payments to surviving spouses, alternate payees, and other beneficiaries
that should be mentioned.
If you are a surviving spouse, you may choose to have an eligible rollover
distribution paid in a direct rollover to an IRA or paid to you. If you have
the payment paid to you, you can keep it or roll it over yourself to an IRA, but
you cannot roll it over to an employer plan. If you are an alternate payee,
you have the same choices as the employee. Thus, you can have the payment paid
as a direct rollover or paid to you. If you have it paid to you, you can keep
it or roll it over yourself to an IRA or to another employer plan that accepts
rollovers. If you are a beneficiary other than the surviving spouse, you cannot
choose a direct rollover, and you cannot roll over the payment yourself.
If you are a surviving spouse, an alternate payee, or another beneficiary, your
payment is not subject to the additional 10% tax described in section III above,
even if you are younger than age 59-1/2.
If you are a surviving spouse, an alternate payee, or another beneficiary, you
may be able to use the special tax treatment for lump sum distributions and the
special rule for payments that include employer stock, as described in section
III above. If you receive a payment because of the employee's death, you may be
able to treat the payment as a lump sum distribution if the employee met the
appropriate age requirements, whether or not the employee had 5 years of
participation in the Plan.
<PAGE>
MODEL SUMMARY PLAN DESCRIPTION OF THE [INSERT NAME OF EMPLOYER] PROFIT SHARING
PLAN
Instructions for Preparing the Model Summary Plan Description of the Prototype
Profit Sharing Plan
Each Employer who adopts the Prototype Profit Sharing Plan is required by
Department of Labor regulations to provide employees with a summary plan
description. A summary plan description is intended to provide employees with
the information they need to properly understand their rights under such a
retirement plan.
The Summary Plan Description you distribute to your employees must accurately
reflect the provisions of your particular Plan, in accordance with the choices
you have made in your Adoption Agreement. This Model Summary Plan Description
was designed to assist you in producing such a document.
You will notice that the Model Summary Plan Description contains several
sections where you must choose which language is appropriate, or whether
language should be included in your Summary Plan Description at all. You should
make these decisions by looking at your Adoption Agreement and determining which
language, if any, is appropriate. We have included instructions wherever
possible to help you make these decisions. Once you have made your choices, you
need simply to check off the appropriate language in the space provided. You
may then wish to have your Summary Plan Description retyped to delete those
provisions which do not apply to your Plan.
Remember, the Summary Plan Description must be provided to each participant
within 90 days of commencing participation and to the Department of Labor within
120 days of the adoption of the Plan.
The address is:
Administrator of Pension and Welfare Benefit Programs
U.S. Department of Labor
200 Constitution Avenue N.W.
Washington, D.C. 20216
I. Introduction
[INSERT NAME OF EMPLOYER] (the Employer) is pleased to be able to provide you
with the [INSERT NAME OF EMPLOYER] Profit Sharing Plan (the Plan or the Profit
Sharing Plan). The Plan is effective as of [INSERT EFFECTIVE DATE].
The Plan is a defined contribution plan, to which the Employer makes
contributions to an account held in your name. With this type of plan, the
retirement benefit you receive will depend on the investment performance of the
amounts that are in your account. The Plan is designed to provide retirement
income to employees who remain with the Employer until
<PAGE>
retirement and to those who have a vested interest in their account when they
terminate their employment with the Employer.
Only the main features of the Plan are explained in this Summary Plan
Description. Any questions which are not answered here should be referred to
[INSERT NAME OF DEPARTMENT OR PERSONNEL RESPONSIBLE FOR PARTICIPANT
INFORMATION]. If there is any inconsistency between the Plan as described in
this Summary Plan Description and the Plan document itself, the terms of the
Plan document will govern. Copies of the Plan document and the Trust Agreement
are available for your inspection during regular working hours.
II. Description of
Plan Benefits and
Requirements
A. Terms With Special Meanings
Certain words and terms used in this Summary have special meanings. Many
of these terms are defined in this section, while others are explained in the
text of the Summary. To assist you in identifying these terms within the text,
they are capitalized.
1. Beneficiary. Your designated Beneficiary is the person you name to
receive your benefit distribution in the event of your death. If you are
married, you will need written consent from your spouse to name someone other
than your spouse as your Beneficiary.
2. Break in Service. A Break in Service occurs if you complete less than 501
Hours of Service with the Employer during a Plan Year.
3. Compensation. Compensation is the total compensation paid to you by the
Employer during any portion of a Plan Year during which you were a Plan
Participant. If you are self-employed, your Compensation is your earned income
less your deductible contributions to any qualified retirement plans.
4. Hours of Service. Each hour for which you are paid or entitled to be paid
by the Employer. In addition, uncompensated authorized leaves of absence that
do not exceed two years, military leave while your reemployment rights are
protected by law, and absences from work for maternity or paternity reasons may
be credited as Hours of Service for the purpose of determining whether you had a
Break in Service.
5. Participant. A Participant is an employee who has met the requirements for
participating in this Plan, and whose account has been neither completely
forfeited nor distributed.
6. Plan Year. The Plan Year is the 12-month period ending on the date shown
in section V of this Summary.
7. Sponsor. The Sponsor is the organization which has made this Plan
available to the Employer.
8. Trust. The Trust is a fund maintained by the Trustee for the investment of
Plan assets, including the amount in your account.
9. Year of Service. A Year of Service is the applicable 12-month period
during which you complete [INSERT NUMBER OF HOURS] or more Hours of Service.
For eligibility purposes, the applicable 12-month period is your first year of
employment or any Plan Year. For vesting purposes, the applicable 12-month
period is the Plan Year.
B. Participation
<PAGE>
You will be eligible to participate in the Plan after you have met the
following eligibility requirements (Check all that apply):
[ ] You have reached age [INSERT AGE].
[ ] You have completed [INSERT NUMBER OF YEARS] Year(s) of Service.
[ ] You are not a member of a collective bargaining unit.
[ ] You are not a nonresident alien.
The first entry date, or date in which you can first participate in the
Plan if you meet these requirements, is [INSERT EFFECTIVE DATE]. Thereafter,
the entry date(s) will be [INSERT DATES OF THE FIRST DAY OF THE PLAN YEAR AND
THE FIRST DAY OF THE SEVENTH MONTH OF THE PLAN YEAR] of each year.
Once you become a Participant, you will remain a Participant as long as you
do not incur a Break in Service. If you do incur a Break in Service, and are
later reemployed by the Employer, you will be reinstated as a Participant and
any previous Hours of Service will be reinstated as of the date of your
reemployment.
C. Individual Accounts
A separate account will be maintained for you within the Plan. This
account will be further divided into subaccounts, which will be credited with
the different types of contributions that are described in the next section.
The subaccounts that will be maintained for you are as follows:
1. Profit Sharing Contribution Subaccount. This subaccount will be credited
with your share of Employer Profit Sharing Contributions, forfeitures (if any),
distributions from this subaccount, and the earnings and losses attributable to
this subaccount.
2. Trustee Transfer and Rollover Subaccounts. These subaccounts will be
credited with any rollover contributions or transfer contributions you may make
to the Plan, any distributions from this subaccount, and the earnings and losses
attributable to this subaccount.
3. Nondeductible Voluntary Contribution Subaccount. This subaccount will be
credited with your Voluntary Employee Contributions, any distributions from this
subaccount, and the earnings and losses attributable to this subaccount.
D. Contributions
[ ] Employer Profit Sharing Contributions. The Employer will make Profit
Sharing Contributions to the Plan each Plan Year in accordance with the
following contribution formula (Check one box)
[ ] Contributions will be made in an amount to be determined each year by
the Employer.
[ ] Contributions will be made in an amount equal to [INSERT CONTRIBUTION
PERCENTAGE] of each Participant's Compensation, plus any discretionary amount
the Employer may choose to contribute.
[ ] Rollover Contributions and Direct Transfers. If you have participated
in other pension or profit sharing plans, you will be permitted to make a
rollover contribution to the Plan of certain amounts you may receive from those
other plans. You will also be permitted, with the approval of the Plan
Administrator, to authorize a direct transfer to the Plan of amounts that are
attributable to your participation in other pension or profit sharing plans.
CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS:
<PAGE>
[ ] Voluntary Employee Contributions. To increase your retirement
benefits from this Plan, you may choose to make voluntary contributions to the
Plan of up to [INSERT MAXIMUM VOLUNTARY EMPLOYEE CONTRIBUTION PERCENTAGE] of
your compensation. Such contributions will not be permitted, however, for Plan
Years beginning after [THE PLAN YEAR IN WHICH THE PLAN IS ADOPTED]. The minimum
contribution you must make if you choose to make a voluntary contribution is as
follows (Check one box):
[ ] The minimum voluntary contribution is [INSERT MINIMUM VOLUNTARY
CONTRIBUTION PERCENTAGE] of your Compensation.
[ ] There is no minimum voluntary contribution.
E. Allocations.
Eligibility for Allocations. Each Plan Year the Employer will make a
Profit Sharing Contribution to the Plan in accordance with the formula described
in the previous section. Your account will be allocated a share of that
contribution.
[ ] Unless you terminate your employment during the Plan year with not
more than [INSERT HOURS OF SERVICE REQUIREMENT] Hours of Service and you are not
an employee as of the last day of the Plan Year. (You will receive an
allocation, however, if you die, retire or become disabled during the Plan
Year).
Under some circumstances, special minimum allocation rules may result in
your receiving an allocation even if you do not meet any of the requirements set
forth above.
Amount of Allocation. If you are eligible, your account will be credited
with a portion of the Profit Sharing Contribution (and any forfeitures) as
follows (check one box):
[ ] Your account will be credited with a portion of the Profit Sharing
Contribution that is equal to the ratio of your Compensation to the Compensation
of all Participants for such year.
For example, if your Compensation for a Plan Year was $10,000 and the total
Compensation of all Participants was $100,000, your account would be credited
with $10,000/$100,000=1/10 of the total contribution made by the Employer for
that Plan Year.
[CHOOSE IF YOUR PLAN IS INTEGRATED WITH SOCIAL SECURITY AND YOU HAVE NOT
ADOPTED THE MONEY PURCHASE PENSION PLAN]
[ ] Profit Sharing Contributions will be allocated to eligible
Participants in four steps as follows:
Step One: Your account will be credited with a portion of the Profit
Sharing Contribution that is equal to the ratio of your Compensation to the
Compensation of all Participants for such year (just as if the Plan were not
integrated with Social Security), but only up to a maximum of three percent of
each Participant's Compensation.
Step Two: Your account will be credited with a portion of the balance of
the Profit Sharing Contribution (after the allocation in Step One) that is equal
to the ratio of your Compensation in excess of the Plan's Integration Level to
the Compensation in excess of the Plan's Integration Level of all Participants
for such year, but only up to a maximum of three percent of any Participant's
Compensation in excess of the Plan's Integration Level.
For example, if the Plan's Integration Level were $51,300 and your
Compensation were $61,300, your Compensation in excess of the Integration Level
would be $10,000. If the total Compensation in excess of the Integration Level
of all Participants were $70,000, your account would be credited with
$10,000/$70,000=1/7 of the total allocation made under Step
<PAGE>
Two (but only up to a maximum of three percent of your Compensation in excess of
the plan's Integration Level, or $300).
Step Three: Your account will be credited with a portion of the balance of
the Profit Sharing Contribution (after the allocations in Step One and Step Two)
that is equal to the ratio that the sum of your Compensation plus your
Compensation in excess of the Plan's Integration Level bears to the sum of all
Participant's Compensation plus their Compensation in excess of the Plan's
Integration Level for such year, up to a maximum of the Maximum Profit Sharing
Disparity Rate.
The Maximum Profit Sharing Disparity Rate is 2.7 percent if the Integration
Level equals the annual earnings subject to Social Security (FICA) tax (the
taxable wage base). If the Integration Level is lower (see below), then the
Maximum Profit Sharing Disparity Rate is determined by the following formula:
If the Integration is:
The Applicable
More Than But Not More Than Percentage Is:
$0 X * 2.7%
X of TWB 80% of TWB 1.3%
80% of TWB Y ** 2.4%
* X=The greater of $10,000 or 20% of the Taxable Wage Base.
** Y=Any amount more than 80% of the Taxable Wage Base but less than 100% of
the Taxable Wage Base.
TWB means the Taxable Wage Base.
For example, if the Maximum Profit Sharing Disparity Rate is 2.7 percent,
your Compensation is $61,300, the Plan's Integration Level is $51,300, the total
Compensation of all Participants is $700,000 and the Compensation of all
Participants that is in excess of the Plan's Integration Level is $70,000, then
the ratio applied under Step Three would be:
(61,300 + 10,000)/(700,000 + 70,000) = 9.25%
However, this exceeds the Maximum Profit Sharing Disparity Rate, so 2.7
percent is applicable instead.
Step Four: Your account will be credited with a portion of the balance of
the Profit Sharing Contribution (after the allocations in Step One, Step Two and
Step Three) that is equal to the ratio of your Compensation to the Compensation
of all Participants for such year.
[CHOOSE IF YOUR PLAN IS INTEGRATED WITH SOCIAL SECURITY AND YOU HAVE
ADOPTED THE MONEY PURCHASE PENSION PLAN]:
[ ] Profit Sharing Contributions will be allocated to eligible
Participants in two steps as follows:
Step One: Your account will be credited with a portion of the Profit
Sharing Contribution that is equal to the ratio that the sum of your
Compensation plus your Compensation in excess of the Plan's Integration Level
bears to the sum of all Participant's Compensation plus their Compensation in
excess of the Plan's Integration level for such year,
<PAGE>
up to a maximum that does not exceed the lesser of two amounts. The first is
the percentage determined by dividing the allocation by your Compensation up to
the Plan's Integration Level. The second is the Maximum Disparity Rate.
The Maximum Disparity Rate is 5.7 percent if the Integration Level equals
the annual earnings subject to Social Security (FICA) tax (the taxable wage
base). If the Integration Level is lower (see below), then the Maximum
Disparity Rate is determined by the following formula:
If the Integration is:
The Applicable
More Than But Not More Than Percentage Is:
$0 X * 5.7%
X of TWB 80% of TWB 4.3%
80% of TWB Y ** 5.4%
* X=The greater of $10,000 or 20% of the Taxable Wage Base.
** Y=Any amount more than 80% of the Taxable Wage Base but less than 100%
of the Taxable Wage Base. TWB means the Taxable Wage Base.
For example, if the Maximum Disparity Rate is 5.7 percent, your
Compensation is $61,300, the Plan's Integration Level is $51,300, the total
Compensation of all Participants is $700,000 and the Compensation of all
Participants that is in excess of the Plan's Integration Level is $70,000, then
the ratio applied under Step One would be:
(61,300 + 10,000)/(700,000 + 70,000) = 9.25%
However, this exceeds the Maximum Disparity Rate, so 5.7 percent is
applicable instead. (This assumes the allocation as a percentage of your
Compensation up to the Plan's Integration Level would exceed 5.7 percent).
Step Two: Your account will be credited with a portion of the balance of
the Profit Sharing Contribution (after the allocation in Step One) that is equal
to the ratio of your Compensation to the Compensation of all Participants for
such year.
The Plan's Integration Level is equal to (check one box):
[ ] The taxable wage base, which is the annual earnings subject to Social
Security (FICA) tax.
[ ] A dollar amount equal to [INSERT DOLLAR AMOUNT].
[ ] A percentage of the taxable wage base equal to _______% of the annual
earnings subject to Social Security (FICA) tax.
Under some circumstances, special minimum allocation rules may result in
your receiving a larger allocation than you normally would. The amount that can
be allocated to your Account in any Plan Year, including forfeitures (if any),
is limited by rules applying to all qualified plans.
F. Vesting.
Vesting refers to the nonforfeitable interest you have in each of your
subaccounts. In other words, your vested interest in your account is the amount
you will receive when your account is distributed to you.
<PAGE>
You will always have a 100 percent vested and nonforfeitable interest in
the amounts you have in your:
[ ] Trustee Transfer and Rollover Subaccounts.
[CHECK THE FOLLOWING ITEM ONLY IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
[ ] Nondeductible Voluntary Contribution Subaccount.
You will earn a vested interest in your Profit Sharing Contribution
Subaccount in accordance with the following (check one box):
[ ] You will always have a 100 percent vested and nonforfeitable interest
in your Profit Sharing Contribution Subaccount.
[ ] You will have a 100 percent vested and nonforfeitable interest in your
Profit Sharing Contribution Subaccount in the event of any of the following:
You reach your retirement date.
You die or become disabled.
Otherwise, you will earn a vested interest in your Profit Sharing
Contribution Subaccount in accordance with the following schedule (check one
box):
[ ] Years of Service Vested Percentage
1 year 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
For example, if you are employed for six years, you will be entitled to the
entire amount in your Profit Sharing Contribution Subaccount. However, if you
terminate employment with the Employer after only four years, even though you
return to employment with the Employer six years later, you will be entitled to
receive only 60 percent of that amount.
[ ] You will be 100 percent vested after three years of service. If you
terminate employment prior to three years you will not have any vested interest
in your Profit Sharing Contribution Subaccount.
G. Forfeitures. (Check one box)
[ ] You have a 100 percent vested and nonforfeitable interest in the
amounts in your account at all times. Your account therefore will not be
subject to forfeitures.
[ ] Forfeitures occur when you terminate employment before becoming fully
vested in your account, as explained in the section on Vesting. Effective for
the first Plan Year beginning after 1984, any portion of your Account that is
not vested will be forfeited as of the last day of the Plan Year in which your
fifth consecutive Break in Service occurs. Forfeited amounts will not be
reinstated, even if you return to service with the Employer. Such forfeitures
will be allocated among the Accounts of other Participants in the same manner as
Profit Sharing Contributions.
H. Distribution of Benefits.
1. Eligibility for Distribution. You will be entitled to receive a
distribution of the vested amounts in your account upon occurrence of any of the
following:
Your termination of employment with the Employer for any reason.
<PAGE>
Your total and permanent disability.
Your death.
Termination of the Plan.
Your attainment of normal retirement age, which is (check one box):
[ ] Age [INSERT NORMAL RETIREMENT AGE]
[ ] Age [INSERT NORMAL RETIREMENT AGE] or the [INSERT ANNIVERSARY DATE] of
the day you commenced participation in the plan.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS EARLY RETIREMENT]:
[ ] If you elect Early Retirement, attainment of your Early Retirement
Date, which is the first day of the month coincident with or next following the
date you reach age [INSERT EARLY RETIREMENT AGE] and complete [INSERT NUMBER OF
YEARS] Years of Service.
2. Timing of Distributions. You will begin receiving benefit distributions in
accordance with the following:
Generally, benefit distributions will commence not later than 60 days after
the end of the Plan Year in which you become eligible to receive benefits.
In the event of your death, your spouse, if you are married, will generally
be entitled to receive your benefit distribution. If you are unmarried, or if
your spouse has given written consent, your designated Beneficiary will receive
your benefit distribution. If you have no spouse or designated Beneficiary,
your benefit distribution will go to your estate.
If you so elect, you may defer commencement of the distribution of your
benefit beyond the date you first become eligible to receive that distribution,
to a date which you may specify. The date you specify must not be later than
the April 1 following the close of your taxable year in which you attain age
70-1/2.
If you attained age 70-1/2 before January 1, 1988, special rules apply to
your distributions.
If you wish to receive benefit distributions before attaining age 59-1/2,
you may be subject to a penalty tax, and you must notify the Plan Administrator
in writing that you are aware of the consequences of this tax.
3. Form of Distribution. If you are married, your benefit will automatically
be distributed in the form of a joint and survivor annuity, unless you elect
otherwise and your spouse consents in writing to one of the forms below. If you
are unmarried, your benefit will automatically be distributed in the form of a
life annuity, unless you elect any of the other distribution options listed
below.
In a lump sum payment of cash, or a lump sum payment that includes an
in-kind distribution of all mutual fund shares credited to your account.
In substantially equal monthly, quarterly, or annual installment payments
of cash or distributions in kind of the mutual fund shares credited to your
account, over a period of years not to exceed your life expectancy or the joint
and survivor life expectancies of you and your Beneficiary.
In the form of an annuity, which is a level payment that you receive at a
fixed interval over a specified period of time. If you are married, the annuity
will automatically take the form of a joint and survivor annuity, unless you
elect otherwise, and your spouse consents in writing, as described above. A
joint and survivor annuity is an annuity paid over the lives of
<PAGE>
both you and your spouse. If your spouse survives you, the annuity payment your
spouse will receive will be at least 50 percent of the annuity payment you
received or would have received.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PROVIDES FOR THIS FORM OF
DISTRIBUTION]:
[ ] In monthly, quarterly, or annual installment payments of cash, or the
distribution of shares in kind, so that the amount you receive each Plan Year is
equal to the amount in your account at the beginning of that Plan Year divided
by the joint and survivor life expectancy of you and your Beneficiary for that
Plan Year. Your joint and survivor life expectancy will be recalculated each
Plan Year so that benefit payments will continue through your life and that of
your Beneficiary.
4. Direct Rollovers
All benefits paid under the Plan (whether to a participant or a
beneficiary) will be subject to income tax withholding. A payment from the Plan
that is eligible for "rollover" can be taken in two ways. The payment can be
either (1) paid in a "direct rollover;" or (2) paid directly to you. A rollover
is a payment of Plan benefits to an individual retirement arrangement (IRA) or
to another employer plan. This choice will affect the tax you owe.
If you choose a direct rollover:
the payment will not be taxed in the current year and no income tax
will be withheld;
the payment will be made directly to the IRA or to another employer
plan that accepts rollovers;
the payment will be taxed later when it is withdrawn from the IRA or
the employer plan.
If you choose to receive Plan benefits directly:
You will receive only 80% of the payment because the Plan
administrator is required to withhold 20% of the payment and send it to the
Internal Revenue Service as income tax withholding to be credited against your
taxes;
The payment will be taxed in the current year unless it is rolled
over. You might be able to use special tax rules that could reduce the tax that
is owed. However, if you receive the payment before age 59-1/2, an additional
10% tax may have to be paid.
Within 60 days of receiving the payment it can be rolled over by
paying it to an IRA or to another employer plan that accepts rollovers. The
amount rolled over will be taxed until it is withdrawn from the IRA or employer
plan.
If you want to roll over 100% of the payment to an IRA or an employer
plan, other money must be found to replace the 20% that was withheld. If only
the 80% that is received is rolled over, you will be taxed on the 20% that was
withheld and that is not rolled over.
I. Investment of Plan Assets
All contributions made to the Plan are kept in the Trust. A separate
account, including all of the subaccounts described in the section on
Participant Accounts, is maintained for you within that Trust. The assets of
the Trust are invested as follows:
[ ] You [INSERT MAY OR MUST] direct the Plan Administrator to invest the
amounts in the following subaccount in specified investments offered by the
Sponsor (check all boxes that apply):
<PAGE>
[ ] The amounts in your Nondeductible Voluntary Contribution Subaccount.
[ ] The amounts in your Profit Sharing Contribution Subaccount.
[ ] The amounts in your Trustee Transfer and Rollover Subaccounts.
[ ] [CHECK THIS BOX IF YOUR PLAN PERMITS WITHDRAWALS]:
J. Withdrawals
You may make the following types of withdrawals from your account (Check
all boxes that apply):
[ ] If you have made Voluntary Employee Contributions to the Plan, you
will be permitted to withdraw the amounts in your Nondeductible Voluntary
Contribution Subaccount. If you are married, your spouse must consent to the
withdrawal.
[ ] In the event of an imminent and heavy financial need due to the
purchase or renovation of a primary residence, the educational, medical or
personal expenses of you or a member of your immediate family, or other
hardship, you will be permitted to make a hardship withdrawal of amounts
credited to your Profit Sharing Contribution Subaccount.
All hardship withdrawals are subject to approval by the Plan Administrator.
Such withdrawals can only be made after prior withdrawal of all amounts in your
Nondeductible Voluntary Contribution Subaccount, and after exhausting all other
reasonable sources of funds. If you are married, your spouse must consent to
any withdrawals.
[ ] [CHECK THIS BOX IF PLAN LOANS ARE
PERMITTED]:
K. Loans.
This Plan contains provisions that permit you to borrow (with the consent
of your spouse) from the Plan part of your vested interest in your account.
Such a loan will not be made, however, if the total of all outstanding loans to
you from all pension and profit sharing plans of the Employer exceed the lesser
of $50,000 (taking into account the highest principal balance of any loan
outstanding at any time during the preceding 12 months) or one-half of the value
of your vested interest in your account.
The Plan Administrator will set the terms of all loans. The maximum
payment term for any loan will generally be five years. The interest rate will
be determined by the Plan Administrator. Your account will be security for the
loan.
III. Claims Procedure
You or your Beneficiary may file a written claim for benefits under this Plan
with the Plan Administrator at any time. If your claim is denied to any extent
by the Plan Administrator, a written notification must be sent to you within 90
days. If you choose to appeal the decision, a request for review must be made
in writing to the Plan Administrator within 60 days of receipt of written
notification of the denial. Within 60 days after the appeal is filed, or within
120 days, if there are special circumstances involved, the Plan Administrator
will issue a written decision.
IV. Changes to the Plan
A. Amendment of the Plan
<PAGE>
The Employer, together with the Sponsor, reserves the right to amend the
Plan at any time. You will be kept informed of any material amendments to the
Plan by updates to this Summary Plan Description.
B. Termination of the Plan
The Employer intends to continue this Plan indefinitely. However, the
Employer reserves the right to terminate the Plan at any time. If a termination
takes place, or if the Employer discontinues making contributions to the Plan,
you will have a 100 percent vested and nonforfeitable interest in all of the
amounts in your account. These amounts may be distributed to you at that time,
or may be distributed in accordance with the benefit distribution rules.
C. Merger, Consolidation or Transfer of the Plan
In the event of the merger, consolidation or transfer of assets or
liabilities of the Plan to any other plan, your benefits will not be decreased
from what they would have been prior to such an event.
V. General Information
Name of Plan: [INSERT NAME OF EMPLOYER] Profit Sharing Plan
Employer: [INSERT NAME, ADDRESS AND TELEPHONE NUMBER OF EMPLOYER]
Type of Plan: Profit Sharing Plan
Type of
Administration: Trusteed
Employer's
Fiscal Year: [INSERT EMPLOYERS FISCAL YEAR]
Plan Year End: [INSERT PLAN YEAR END]
Plan Administrator: [INSERT NAME, ADDRESS AND TELEPHONE NUMBER OF PLAN
ADMINISTRATOR]
Trustees: [INSERT NAME, TITLE, ADDRESS AND PHONE NUMBER OF PRINCIPAL PLACE
OF BUSINESS OF EACH TRUSTEE]
Agent for Service
of Legal Process: [INSERT NAME AND ADDRESS OF PERSON DESIGNATED AS AGENT FOR
SERVICE OF LEGAL PROCESS]
Employer
Identification Number: [INSERT IN]
Plan Number: [INSERT PLAN NUMBER]
Also, a complete list of the employers and employee organizations sponsoring the
Plan may be obtained by participants and beneficiaries upon written request to
the Plan administrator, and is available for examination by participants and
beneficiaries, as required by Labor Reg. 1.2520.104-b1 and 2520.104b-30.
VI. Non-Application of PBGC Guarantees
Because this Plan is a defined contribution plan, the benefits you will receive
are exempt from and not insured by the Pension Benefit Guaranty Corporation.
VII. Special Rights Under ERISA
<PAGE>
As a participant in the [INSERT NAME OF EMPLOYER] Profit Sharing Plan, you are
entitled to certain rights and protections under the Employee Retirement Income
Security Act of 1974 (ERISA). ERISA provides that all Plan Participants shall
be entitled to:
Examine, without charge, at the Plan Administrator's office and at other
specified locations, all Plan documents, including insurance contracts,
affecting the individual making the request, and copies of all documents filed
by the Plan with the U.S. Department of Labor, such as detailed annual reports
and Plan descriptions.
Obtain copies of all Plan documents and other Plan information upon written
request to the Plan Administrator. The Plan Administrator may make a reasonable
charge for the copies.
Receive a summary of the Plan's annual financial report. The Plan
Administrator is required by law to furnish each Participant with a copy of this
summary annual report.
Obtain a statement of the total value of your account under the Plan and
your vested (nonforfeitable) portion of this account. This statement must be
requested in writing and is not required to be given more than once a year. The
Plan will provide the statement free of charge.
In addition to creating rights for Plan Participants, ERISA imposes duties upon
the people who are responsible for the operation of the Plan. These people who
operate your plan, called fiduciaries of the Plan, have a duty to do so
prudently and in the interest of you and other Plan Participants and
Beneficiaries. No one, including your Employer, or any other person, may fire
you or otherwise discriminate against you in any way to prevent you from
obtaining a benefit under this Plan or exercising your rights under ERISA. If
your claim for a benefit is denied in whole or in part you must receive a
written explanation of the reason for the denial. You have the right to have
the Plan review and reconsider your claim.
Under ERISA, there are steps you can take to enforce the above rights. For
instance, if you request materials from the Plan and do not receive them within
30 days, you may file suit in a federal court. In such a case, the court may
require the Plan Administrator to provide the materials and pay you up to $100 a
day until you receive the materials unless the materials were not sent because
of reasons beyond the control of the Plan Administrator. If you have a claim
for benefits which is denied or ignored, in whole or in part, you may file suit
in a state or federal court. If it should happen that Plan fiduciaries misuse
the plan's money, or if you are discriminated against for asserting your rights,
you may seek assistance from the U.S. Department of Labor, or you may file suit
in a federal court. The court will decide who should pay court costs and legal
fees. If you lose, the court may order you to pay these costs and fees, for
example, if it finds your claim is frivolous.
<PAGE>
MODEL SUMMARY PLAN DESCRIPTION OF THE [INSERT NAME OF EMPLOYER] MONEY PURCHASE
PENSION PLAN
Instructions for Preparing the Model Summary Plan Description of the Prototype
Money Purchase Pension Plan
Each employer who adopts the Prototype Money Purchase Pension Plan is required
by Department of Labor regulations to provide employees with a summary plan
description. A summary plan description is intended to provide employees with
the information they need to properly understand their rights under such a
retirement plan.
The summary plan description distributed to employees must accurately reflect
the provisions of the Plan, in accordance with the choices made in the Adoption
Agreement. The model summary plan description was designed to assist in
producing such a document.
The model summary plan description contains several sections where the employer
must choose which language is appropriate, or whether language should be
included in the summary plan description at all. These decisions should be made
by looking at the Adoption Agreement and determining which language in the
spaces provided. Employers may then wish to have the summary plan description
retyped to delete those provisions which do not apply to the Plan.
Remember, the Summary Plan Description must be provided to each participant
within 90 days of commencing participation and to the Department of Labor within
120 days of the adoption of the Plan.
The address is:
Administrator of Pension and Welfare Benefit Programs
U.S. Department of Labor
200 Constitution Avenue N.W.
Washington, D.C. 20216
I. Introduction
[INSERT NAME OF EMPLOYER] (the Employer) is pleased to be able to provide you
with the [INSERT NAME OF EMPLOYER] Money Purchase Pension Plan (the Plan or the
Pension Plan). The Plan is effective as of [INSERT EFFECTIVE DATE].
The Plan is a defined contribution plan, to which the Employer makes
contributions to an account held in your name. With this type of plan, the
retirement benefit you receive will depend on the investment performance of the
amounts that are in your account. The Plan is designed to provide retirement
income to employees who remain with the Employer until retirement and to those
who have a vested interest in their account when they terminate their employment
with the Employer.
<PAGE>
Only the main features of the Plan are explained in this Summary Plan
Description. Any questions which are not answered here should be referred to
[INSERT NAME OF DEPARTMENT OR PERSONNEL RESPONSIBLE FOR PARTICIPANT
INFORMATION]. If there is any inconsistency between the Plan as described in
this Summary Plan Description and the Plan document itself, the terms of the
Plan document will govern. Copies of the Plan document and the Trust Agreement
are available for your inspection during regular working hours.
II. Description of
Plan Benefits and Requirements
A. Terms With Special Meanings
Certain words and terms used in this Summary have special meanings. Many
of these terms are defined in this section, while others are explained in the
text of the Summary. To assist you in identifying these terms within the text,
they are capitalized.
1. Beneficiary. Your designated Beneficiary is the person you name to receive
your benefit distribution in the event of your death. If you are married, you
will need written consent from your spouse to name someone other than your
spouse as your Beneficiary.
2. Break in Service. A Break in Service occurs if you complete less than 501
Hours of Service with the Employer during a Plan Year.
3. Compensation. Compensation is the total compensation paid to you by the
Employer during any portion of a Plan Year during which you were a Plan
Participant. If you are self-employed, your Compensation is your earned income
less your deductible contributions to any qualified retirement plans.
4. Hours of Service. Each hour for which you are paid or entitled to be paid
by the Employer. In addition, uncompensated authorized leaves of absence that
do not exceed two years, military leave while your reemployment rights are
protected by law, and absences from work for maternity or paternity reasons may
be credited as Hours of Service for the purpose of determining whether you had a
Break in Service.
5. Participant. A Participant is an employee who has met the requirements for
participating in this Plan, and whose account has been neither completely
forfeited nor distributed.
6. Plan Year. The Plan Year is the 12-month period ending on the date shown
in section V of this Summary.
7. Sponsor. The Sponsor is the organization which has made this Plan
available to the Employer.
8. Trust. The Trust is a fund maintained by the Trustee for the investment of
Plan assets, including the amount in your account.
9. Year of Service. A Year of Service is the applicable 12-month period
during which you complete [INSERT NUMBER OF HOURS] or more Hours of Service.
For eligibility purposes, the applicable 12-month period is your first year of
employment or any Plan Year. For vesting purposes, the applicable 12-month
period is the Plan Year.
B. Participation
You will be eligible to participate in the Plan after you have met the
following eligibility requirements (check all boxes that apply):
[ ] You have reached age [INSERT AGE].
<PAGE>
[ ] You have completed [INSERT NUMBER OF YEARS] Year(s) of Service.
[ ] You are not a member of a collective bargaining unit.
[ ] You are not a nonresident alien.
The first entry date, or date in which you can first participate in the
Plan if you meet these requirements, is [INSERT EFFECTIVE DATE]. Thereafter,
the entry date(s) will be [INSERT DATES OF THE FIRST DAY OF THE PLAN YEAR AND
THE FIRST DAY OF THE SEVENTH MONTH OF THE PLAN YEAR] of each Plan Year.
Once you become a Participant, you will remain a Participant as long as you
do not incur a Break in Service. If you do incur a Break in Service, and are
later reemployed by the Employer, you will be reinstated as a Participant and
any previous Hours of Service will be reinstated as of the date of your
reemployment.
C. Individual Accounts
A separate account will be maintained for you within the Plan. This
account will be further divided into subaccounts, which will be credited with
the different types of contributions that are described in the next section.
The subaccounts that will be maintained for you are as follows:
1. Money Purchase Pension Contribution Subaccount. This subaccount will be
credited with your share of Employer Money Purchase Pension Contributions,
distributions from this subaccount, and the earnings and losses attributable to
this subaccount.
2. Trustee Transfer and Rollover Subaccounts. These subaccounts will be
credited with any rollover contributions or transfer contributions you may make
to the Plan, any distributions from the subaccount, and the earnings and losses
attributable to the subaccount.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
[ ] 3. Nondeductible Voluntary Contribution Subaccount. This subaccount
will be credited with your Voluntary Employee Contributions, any distributions
from this subaccount, and the earnings and losses attributable to this
subaccount.
D. Contributions
The Employer will make, or you will be permitted to make, the following
types of contributions. These contributions will be allocated to the
appropriate subaccounts within your account.
1. Employer Money Purchase Pension Contributions. The Employer will make
Money Purchase Pension Contributions to the Plan each Plan Year in accordance
with a formula based on your Compensation. This formula is given in the section
on Allocations.
2. Rollover Contributions and Direct Transfers. If you have participated in
other pension or profit sharing plans, you will be permitted to make a rollover
contribution to the Plan of certain amounts you may receive from those other
plans.
You will also be permitted, with the approval of the Plan Administrator, to
authorize a direct transfer to the Plan of amounts that are attributable to your
participation in other pension or profit sharing plans.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
[ ] 3. Voluntary Employee Contributions. To increase your retirement
benefits from this Plan, you may choose to make voluntary contributions to the
Plan of up to [INSERT MAXIMUM VOLUNTARY EMPLOYEE CONTRIBUTION PERCENTAGE] of
your
<PAGE>
Compensation. Such contributions will not be permitted, however, for Plan Years
beginning after [THE PLAN YEAR IN WHICH THE PLAN IS ADOPTED]. The minimum
contribution you must make if you choose to make a voluntary contribution is as
follows (check one box):
[ ] The minimum voluntary contribution is [INSERT MINIMUM VOLUNTARY
CONTRIBUTION PERCENTAGE] of your Compensation.
[ ] There is no minimum voluntary contribution.
E. Allocations
1. Eligibility for Allocations. Each Plan Year the Employer will make a Money
Purchase Pension Contribution to the Plan in accordance with the formula based
on your Compensation. Your account will be allocated a contribution
[ ] Unless you terminate your employment during the Plan Year with not
more than [INSERT HOURS OF SERVICE REQUIREMENT] Hours of Service and you are not
an employee as of the last day of the Plan Year. (You will receive an
allocation, however, if you die, retire or become disabled during the Plan
Year).
Under some circumstances, special minimum allocation rules may result in
your receiving an allocation, even if you do not meet any of the requirements
set forth above.
2. Amount of Allocation. If you are eligible, your account will be credited
with a Money Purchase Pension Contribution as follows:
The Employer will make a contribution on your behalf equal to [INSERT
CONTRIBUTION PERCENTAGE] of your Compensation.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN IS INTEGRATED WITH SOCIAL SECURITY]:
[ ] The Employer will make a contribution equal to _______% of your
Compensation up to the Plan's Integration Level, plus _______% of your
Compensation in excess of the Plan's Integration Level.
The Plan's Integration Level is equal to (check one box):
[ ] The taxable wage base, which is the annual earnings subject to Social
Security (FICA) tax.
[ ] A dollar amount equal to [INSERT DOLLAR AMOUNT].
[ ] A percentage of the taxable wage base equal to ______% of the annual
earnings subject to Social Security (FICA) tax.
For example, suppose that the Plan's taxable wage base is equal to $51,300,
and that your Compensation during a Plan Year totaled $61,300. You would
receive an allocation of [INSERT CONTRIBUTION PERCENTAGE] of your first $51,300
in Compensation, and [INSERT EXCESS CONTRIBUTION PERCENTAGE] on the remainder of
$10,000.
Under some circumstances, special minimum allocation rules may cause you to
receive a larger allocation than you normally would. The amount that can be
allocated to your account in any Plan Year is limited by rules applying to all
qualified plans.
F. Vesting
Vesting refers to the nonforfeitable interest you have in each of your
subaccounts. In other words, your vested interest in your account is the amount
you will receive when your account is distributed to you.
You will always have a 100 percent vested and nonforfeitable interest in
the amounts you have in your:
<PAGE>
[ ] Trustee transfer and rollover subaccounts.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
[ ] Nondeductible Voluntary Contribution Subaccount.
You will earn a vested interest in your Money Purchase Pension Contribution
Subaccount in accordance with the following (check one box):
[ ] You will always have a 100 percent vested and nonforfeitable interest
in your Money Purchase Pension Contribution Subaccount.
[ ] You will have a 100 percent vested and nonforfeitable interest in your
Money Purchase Pension Contribution Subaccount in the event of any of the
following:
You reach your retirement date.
You die or become disabled.
Otherwise, you will earn a vested interest in your Money Purchase Pension
Contribution Subaccount in accordance with the following schedule (check one
box):
[ ] Years of Service Vested Percentage
1 year 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
For example, if you are employed for six years, you will be entitled to the
entire amount in your Money Purchase Pension Contribution Subaccount. However,
if you terminate employment with the Employer after only four years, even though
you return to employment with the Employer six years later, you will be entitled
to receive only 60 percent of that amount.
[ ] You will be 100 percent vested after three years of service. If you
terminate employment prior to three years you will not have any vested amount in
your Money Purchase Pension Contribution Subaccount.
Any portion of your Money Purchase Pension Contribution Subaccount in which
you do not have a vested interest will be forfeited by you as of the last day of
the Plan Year in which your fifth consecutive Break in Service occurs.
G. Forfeitures (check one box)
[ ] You have a 100 percent vested and nonforfeitable interest in the
amounts in your account at all times. You will therefore not be subject to
forfeitures.
[ ] Forfeitures occur when you terminate employment before becoming fully
vested in your account, as explained in the section on Vesting. Effective for
the first Plan Year beginning after 1984, any portion of your account that is
not vested will be forfeited as of the last day of the Plan Year in which your
fifth consecutive Break in Service occurs. Forfeited amounts will not be
reinstated, even if you return to service with the Employer. Such forfeitures
either will be (check one box):
[ ] Used by the Employer as a credit against its future contributions to
the Plan; or
[ ] Reallocated among the accounts of remaining Participants in proportion
to their pay.
H. Distribution of Benefits.
<PAGE>
1. Eligibility for Distribution. You will be entitled to receive a
distribution of the vested amounts in your account upon occurrence of any of the
following:
Your termination of employment with the Employer for any reason.
Your total and permanent disability.
Your death.
Termination of the Plan.
Your attainment of normal retirement age, which is (check one box):
[ ] Age [INSERT NORMAL RETIREMENT AGE].
[ ] Age [INSERT NORMAL RETIREMENT AGE] or the [INSERT ANNIVERSARY DATE] of
the day you commenced participation in the Plan.
[CHECK THE FOLLOWING IF YOUR PLAN PERMITS EARLY RETIREMENT]:
[ ] If you elect early retirement, attainment of your early retirement
date, which is the first day of the month coincident with or next following the
date you reach age [INSERT EARLY RETIREMENT AGE] and complete [INSERT NUMBER OF
YEARS] Years of Service.
2. Timing of Distributions. You will begin receiving benefit distributions in
accordance with the following:
Generally, benefit distributions will commence not later than 60 days after
the end of the Plan Year in which you become eligible to receive benefits.
In the event of your death, your spouse, if you are married, will generally
be entitled to receive your benefit distribution. If you are unmarried, or if
your spouse has given written consent, your designated Beneficiary will receive
your benefit distribution. If you have no spouse or designated Beneficiary,
your benefit distribution will go to your estate.
If you so elect, you may defer commencement of the distribution of your
benefit beyond the date you first become eligible to receive that distribution,
to a date which you may specify. The date you specify must not be later than
the April 1 following the close of your taxable year in which you attain age
70-1/2.
If you attained age 70-1/2 before January 1, 1988, special rules apply to
your distributions.
If you wish to receive benefit distributions before attaining age 59-1/2,
you may be subject to a penalty tax, and you must notify the Plan Administrator
in writing that you are aware of the consequences of this tax.
3. Form of Distribution. If you are married, your benefit will automatically
be distributed in the form of a joint and survivor annuity, unless you elect
otherwise and your spouse consents in writing to one of the forms below. If you
are unmarried, your benefit will automatically be distributed in the form of a
life annuity, unless you elect any of the other distribution options listed
below.
In a lump sum payment of cash, or a lump sum payment that includes an
in-kind distribution of all mutual fund shares credited to your account.
In substantially equal monthly, quarterly, or annual installment payments
of cash or distributions in kind of the mutual fund shares credited to your
account, over a period of years not to exceed your life expectancy or the joint
and survivor life expectancies of you and your Beneficiary.
<PAGE>
In the form of an annuity, which is a level payment that you receive at a
fixed interval over a specified period of time. If you are married, the annuity
will automatically take the form of a joint and survivor annuity, unless you
elect otherwise, and your spouse consents in writing, as described above. A
joint and survivor annuity is an annuity paid over the lives of both you and
your spouse. If your spouse survives you, the annuity payment your spouse will
receive will be at least 50 percent of the annuity payment you received or would
have received.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PROVIDES THIS FORM OF DISTRIBUTION]:
[ ] In monthly, quarterly, or annual installment payments of cash, or the
distribution of shares in kind, so that the amount you receive each Plan Year is
equal to the amount in your account at the beginning of that Plan Year divided
by the joint and survivor life expectancy of you and your Beneficiary for that
Plan Year. Your joint and survivor life expectancy will be recalculated each
Plan Year so that benefit payments will continue through your life and that of
your Beneficiary.
4. Direct Rollovers
All benefits paid under the Plan (whether to a participant or a
beneficiary) will be subject to income tax withholding. A payment from the Plan
that is eligible for "rollover" can be taken in two ways. The payment can be
either (1) paid in a "direct rollover;" or (2) paid directly to you. A rollover
is a payment of Plan benefits to an individual retirement arrangement (IRA) or
to another employer plan. This choice will affect the tax you owe.
If you choose a direct rollover:
the payment will not be taxed in the current year and no income tax
will be withheld;
the payment will be made directly to the IRA or to another employer
plan that accepts rollovers;
the payment will be taxed later when it is withdrawn from the IRA or
the employer plan.
If you choose to receive Plan benefits directly:
You will receive only 80% of the payment because the Plan
administrator is required to withhold 20% of the payment and send it to the
Internal Revenue Service as income tax withholding to be credited against your
taxes;
The payment will be taxed in the current year unless it is rolled
over. You might be able to use special tax rules that could reduce the tax that
is owed. However, if you receive the payment before age 59-1/2, an additional
10% tax may have to be paid.
Within 60 days of receiving the payment it can be rolled over by
paying it to an IRA or to another employer plan that accepts rollovers. The
amount rolled over will be taxed until it is withdrawn from the IRA or employer
plan.
If you want to roll over 100% of the payment to an IRA or an employer
plan, other money must be found to replace the 20% that was withheld. If only
the 80% that is received is rolled over, you will be taxed on the 20% that was
withheld and that is not rolled over.
I. Investment of Plan Assets
<PAGE>
All contributions made to the Plan are kept in the Trust. A separate
account, including all of the subaccounts described in the section on
Participant accounts, is maintained for you within that Trust. The assets of
the Trust are invested as follows:
[ ] You [INSERT may or must] direct the Plan Administrator to invest the
amounts in the following subaccount in specified investments offered by the
Sponsor (check all that apply):
[ ] The amounts in your Nondeductible Voluntary Contribution Subaccount.
[ ] The amounts in your Money Purchase Pension Contribution Subaccount.
[ ] The amounts in your trustee transfer and rollover subaccounts.
[ ] [CHECK THIS BOX IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
J. Withdrawals
If you have made Voluntary Employee Contributions to the Plan, you will be
permitted to withdraw the amounts in your Nondeductible Voluntary Contribution
Subaccount. If you are married, your spouse must consent to the withdrawal.
[ ] [CHECK THIS BOX IF PLAN LOANS ARE
PERMITTED]
K. Loans
The Plan contains provisions that permit you to borrow from the Plan part
of your vested interest in your account. Such a loan will not be made, however,
if the total of all outstanding loans to you from all pension and profit sharing
plans of the Employer exceed the lesser of $50,000 (taking into account the
highest principal balance of any loan outstanding at any time during the
preceding 12 months) or one-half of the value of your vested interest in your
account.
The Plan Administrator will set the terms of all loans. The maximum
payment term for any loan will generally be five years.
III. Claims Procedure
You or your Beneficiary may file a written claim for benefits under this Plan
with the Plan Administrator at any time. If your claim is denied to any extent
by the Plan Administrator, a written notification must be sent to you within 90
days. If you choose to appeal the decision, a request for review must be made
in writing to the Plan Administrator within 60 days of receipt of written
notification of the denial. Within 60 days after the appeal is filed, or within
120 days, if there are special circumstances involved, the Plan Administrator
will issue a written decision.
IV. Changes to the Plan
A. Amendment of the Plan
The Employer, together with the Sponsor, reserves the right to amend the
Plan at any time. You will be kept informed of any material amendments to the
Plan by updates to this Summary Plan Description.
B. Termination of the Plan
<PAGE>
The Employer intends to continue this Plan indefinitely. However, the
Employer reserves the right to terminate the Plan at any time. If a termination
takes place, or if the Employer discontinues making contributions to the Plan,
you will have a 100 percent vested and nonforfeitable interest in all of the
amounts in your account. These amounts may be distributed to you at that time,
or may be distributed in accordance with the benefit distribution rules.
C. Merger, Consolidation or Transfer of the Plan
In the event of the merger, consolidation or transfer of assets or
liabilities of the Plan to any other plan, your benefits will not be decreased
from what they would have been prior to such an event.
V. General Information
Name of Plan: [INSERT NAME OF EMPLOYER] Money Purchase Pension Plan
Employer: [INSERT NAME, ADDRESS AND TELEPHONE NUMBER OF EMPLOYER]
Type of Plan: Money Purchase Pension Plan
Type of
Administration: Trusteed
Employer's Fiscal
Year: [INSERT EMPLOYERS FISCAL YEAR]
Plan Year End: [INSERT PLAN YEAR END]
Plan Administrator: [INSERT NAME, ADDRESS AND TELEPHONE NUMBER OF PLAN
ADMINISTRATOR]
Trustees: [INSERT NAME, TITLE, ADDRESS AND PHONE NUMBER OF PRINCIPAL PLACE
OF BUSINESS OF EACH TRUSTEE]
Agent for Service of
Legal Process: [INSERT NAME AND ADDRESS OF PERSON DESIGNATED AS AGENT FOR
SERVICE OF LEGAL PROCESS]
Employer
Identification
Number: [INSERT IN]
Plan Number: [INSERT PLAN NUMBER]
Also, a complete list of the employers and employee organizations sponsoring the
Plan may be obtained by participants and beneficiaries upon written request to
the Plan administrator, and is available for examination by participants and
beneficiaries, as required by Labor Reg. 2520.104b-1 and 2520.104b-30.
VI. Non-Application of PBGC Guarantees
Because this Plan is a defined contribution plan, the benefits you will receive
are exempt from and not insured by the Pension Benefit Guaranty Corporation.
VII. Special Rights Under ERISA
As a participant in the [INSERT NAME OF EMPLOYER] Money Purchase Pension Plan,
you are entitled to certain rights and protections under the Employee Retirement
Income Security Act of 1974 (ERISA). ERISA provides that all Plan Participants
shall be entitled to:
<PAGE>
Examine, without charge, at the Plan Administrator's office and at other
specified locations, all Plan documents, including insurance contracts,
affecting the individual making the request, and copies of all documents filed
by the Plan with the U.S. Department of Labor, such as detailed annual reports
and Plan descriptions.
Obtain copies of all Plan documents and other Plan information upon written
request to the Plan Administrator. The Plan Administrator may make a reasonable
charge for the copies.
Receive a summary of the Plan's annual financial report. The Plan
Administrator is required by law to furnish each Participant with a copy of this
summary annual report.
Obtain a statement of the total value of your account under the Plan and
your vested (nonforfeitable) portion of this account. This statement must be
requested in writing and is not required to be given more than once a year. The
Plan will provide the statement free of charge.
In addition to creating rights for Plan Participants, ERISA imposes duties upon
the people who are responsible for the operation of the Plan. These people who
operate your plan, called fiduciaries of the Plan, have a duty to do so
prudently and in the interest of you and other Plan Participants and
Beneficiaries. No one, including your Employer, or any other person, may fire
you or otherwise discriminate against you in any way to prevent you from
obtaining a benefit under this Plan or exercising your rights under ERISA. If
your claim for a benefit is denied in whole or in part you must receive a
written explanation of the reason for the denial. You have the right to have
the Plan review and reconsider your claim.
Under ERISA, there are steps you can take to enforce the above rights. For
instance, if you request materials from the Plan and do not receive them within
30 days, you may file suit in a federal court. In such a case, the court may
require the Plan Administrator to provide the materials and pay you up to $100 a
day until you receive the materials unless the materials were not sent because
of reasons beyond the control of the Plan Administrator. If you have a claim
for benefits which is denied or ignored, in whole or in part, you may file suit
in a state or federal court. If it should happen that Plan fiduciaries misuse
the plan's money, or if you are discriminated against for asserting your rights,
you may seek assistance from the U.S. Department of Labor, or you may file suit
in a federal court. The court will decide who should pay court costs and legal
fees. If you lose, the court may order you to pay these costs and fees, for
example, if it finds your claim is frivolous. If you have any questions about
your Plan, you should contact the Plan Administrator. If you have any questions
about this statement or about your rights under ERISA, you should contact the
nearest Area Office of the U.S. Labor-Management Services Administration,
Department of Labor.
<PAGE>
PROTOTYPE MONEY PURCHASE PENSION AND PROFIT SHARING PLAN BASIC DOCUMENT
ARTICLE 1
General
1.1 Purpose. The Employer hereby establishes this Plan to provide
retirement, death and disability benefits for eligible employees and their
Beneficiaries. This Plan is a standardized prototype paired defined
contribution plan and is designed to permit adoption of profit sharing
provisions, money purchase pension provisions, or both. The provisions
herein and the selections made by the Employer by execution of the money
purchase pension or profit sharing Adoption Agreement or Agreements, shall
constitute the Plan. It is intended that the Plan and Trust qualify under
sections 401 and 501 of the Internal Revenue Code of 1986, as amended and
that it comply with the provisions of the Employee Retirement Income Security
Act of 1974, as amended.
1.2 Trust. The Employer has simultaneously adopted a Trust to receive, invest,
and distribute funds in accordance with the Plan.
ARTICLE 2
Definitions
2.1 Account. The aggregate of the individual bookkeeping subaccounts
established for each Participant, as provided in section 5.1.
2.2 Adoption Agreement. The written agreement or agreements of the Employer
and the Trustee by which the Employer establishes this Plan and adopts the
Trust Agreement forming a part hereof, as the same may be amended from time
to time. The Adoption Agreement contains all the options that may be
selected by the Employer. The information set forth in the Adoption
Agreement executed by the Employer shall be deemed to be a part of this Plan
as if set forth in full herein.
2.3 Affiliated Employers. The Employer and any corporation which is a
member of a controlled group of corporations (as defined in section 414(b) of
the Code) which includes the Employer, any trade or business (whether or not
incorporated) which is under common control (as defined in section 414(c) of
the Code) with the Employer, or any service organization (whether or not
incorporated) which is a member of an affiliated service group (as defined in
sections 414(m) and (o) of the Code) which includes the Employer.
2.4 Beneficiary. The person or persons (natural or otherwise) designated by
a Participant in accordance with section 11.6 to receive any undistributed
amounts credited to the Participant's Account under the Plan at the time of
the Participant's death.
2.5 Break in Service. An Eligibility Computation Period or Vesting
Computation Period in which an Employee fails to complete more than five
hundred (500) Hours of Service.
2.6 Code. The Internal Revenue Code of 1986, as amended from time to time,
or any successor statute.
2.7 Compensation.
(a) Compensation will mean all of each Participant's W-2 earnings.
(b) For any self-employed individual covered under the Plan, Compensation
will mean Earned Income.
<PAGE>
(c) Compensation shall include only that Compensation that is actually paid
to the Participant during the Plan Year.
(d) Notwithstanding the above, if elected by the Employer in the Adoption
Agreement, Compensation shall include any amount which is contributed by the
Employer pursuant to a salary reduction agreement and which is not includable
in the gross income of the Employee under sections 125, 402(a)(8), 402(h) or
403(b) of the Code. The effective date of this subsection shall be elected by
the Employer in the Adoption Agreement.
(e) The annual Compensation of each Participant taken into account under
the Plan for any year shall not exceed two hundred thousand dollars ($200,000),
as adjusted by the Secretary at the same time and in the same manner as under
section 415(d) of the Code. In determining the Compensation of a Participant
for purposes of this limitation, the rules of section 414(q)(6) of the Code
shall apply, except in applying such rules, the term family shall include
only the Spouse of the Participant and any lineal descendants of the
Participant who have not attained age nineteen (19) before the close of the
year. If, as a result of the application of such rules, the adjusted two
hundred thousand dollar ($200,000) limitation is exceeded, then (except for
purposes of determining the portion of Compensation up to the Integration
Level to the extent this Plan provides for permitted disparity), the
limitation shall be prorated among the affected individuals in proportion to
each such individual's Compensation as determined under this section prior to
the application of this limitation.
(f) The effective date of this subsection shall be the first Plan Year
beginning on or after January 1, 1989.
2.8 Custodian. The custodian, if any, designated in the Adoption Agreement.
2.9 Determination Date. With respect to any Plan Year subsequent to the first
Plan Year, the last day of the preceding Plan Year. For the first Plan Year of
the Plan, the last day of that Plan Year.
2.10 Early Retirement Date. The first day of the month coincident with or
next following the date upon which the Participant satisfies the early
retirement age and service requirements in the Adoption Agreement; provided,
however, such requirements may not be less than age fifty-five (55), nor more
than fifteen (15) Years of Service.
2.11 Earned Income. The net earnings from self-employment in the trade or
business with respect to which the Plan is established, for which personal
services of the individual are a material income-producing factor. Net
earnings will be determined without regard to items not included in gross
income and the deductions allocable to such items. Net earnings are reduced
by contributions to a qualified plan to the extent deductible under section
404 of the Code. Net earnings shall be determined with regard to the
deduction allowed to the Employer by section 164(f) of the Code for taxable
years beginning after December 31, 1989.
2.12 Effective Date. The first day of the first Plan Year for which the Plan
is effective as specified in the Adoption Agreement.
2.13 Eligibility Computation Period. For purposes of determining Years of
Service and Breaks in Service for eligibility to participate, the initial
Eligibility Computation Period shall be the twelve (12) consecutive month
period beginning with the day the Employee first performs an hour of service
for the Employer (employment commencement date). The succeeding twelve (12)
consecutive month periods commence with the first anniversary of the
Employee's employment commencement date.
<PAGE>
2.14 Employee. Any person, including a Self-Employed Individual, who is
employed by the Employer maintaining the Plan or any other employer required
to be aggregated with such Employer under sections 414(b), (c), (m) or (o) of
the Code. The term Employee shall also include any Leased Employee deemed to
be an Employee of any Employer described above as provided in sections 414(n)
or (o) of the Code.
2.15 Employer. The corporation, proprietorship, partnership or other
organization that adopts the Plan by execution of an Adoption Agreement.
2.16 Employer Contributions. The contribution of the Employer to the Plan
and Trust as set forth in section 4.1 and the Adoption Agreement.
2.17 Entry Dates. The Effective Date shall be the first Entry Date.
Thereafter, the Entry Dates shall be the first day of each Plan Year and the
first day of the seventh month of each Plan Year.
2.18 ERISA. The Employee Retirement Income Security Act of 1974, as amended.
2.19 Hour of Service.
(a) Each hour for which an Employee is paid, or entitled to payment, for
the performance of duties for the Employer. These hours shall be credited to
the Employee only for the computation period or periods in which the duties
are performed; and
(b) Each hour for which an Employee is paid, or entitled to payment, by
the Employer on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has terminated)
due to vacation, holiday, illness, incapacity (including disability), layoff,
jury duty, military duty, or leave of absence. No more than five hundred one
(501) Hours of Service shall be credited under this paragraph to an Employee
on account of any single, continuous period during which the Employee performs
no duties (whether or not such period occurs in a single computation period).
Hours under this paragraph will be calculated and credited pursuant to section
2503.200b-2 of the Department of Labor regulations which are incorporated
herein by this reference.
(c) Each hour for which back pay, irrespective of mitigation of damages,
is either awarded or agreed to by the Employer. The same Hours of Service
shall not be credited both under paragraph (a) or paragraph (b), as the case
may be, and under this paragraph (c). These hours shall be credited to the
Employee for the computation period or periods to which the award or agreement
pertains rather than the computation period in which the award, agreement, or
payment is made.
(d) Solely for purposes of determining whether an Employee has a Break
in Service, Hours of Service shall also include an uncompensated authorized
leave of absence not in excess of two (2) years, or military leave while the
Employee's reemployment rights are protected by law or such additional or
other periods as granted by the Employer as military leave (credited on the
basis of forty (40) Hours of Service per each week or eight (8) Hours of
Service per working day), provided the Employee returns to employment at the
end of his leave of absence or within ninety (90) days of the end of his
military leave, whichever is applicable.
(e) Hours of Service will be credited for employment with other members
of an affiliated service group (under section 414(m)), a controlled group of
corporations (under section 414(b)), or a group of trades or businesses under
common control (under section 414(c)) of which the adopting Employer is a
member, and any other entity required to be aggregated with the Employer
pursuant to section 414(o) and the regulations thereunder. Hours of
<PAGE>
Service will also be credited for any individual considered an Employee for
purposes of this Plan under section 414(n) or section 414(o) and the
regulations thereunder.
(f) Solely for purposes of determining whether an Employee has a Break
in Service, Hours of Service shall also include absence from work for
maternity or paternity reasons, if the absence begins on or after the first
day of the first Plan Year beginning after 1984. During this absence, the
Employee shall be credited with the Hours of Service which would have been
credited but for the absence, if such hours cannot be determined with eight
(8) hours per day. An absence from work for maternity or paternity reasons
means an absence:
(i) by reason or the pregnancy of an Employee;
(ii) by reason of the birth of a child of the Employee;
(iii) by reason of the placement of a child with the Employee in connection
with adoption; or
(iv) for purposes of caring for such a child for a period immediately
following such birth or placement.
These Hours of Service shall be credited in the computation period
following the computation period in which the absence begins, except as
necessary to prevent a Break in Service in the computation period in which
the absence begins. However, no more than five hundred one (501) Hours of
Service will be credited for purposes of any such maternity or paternity
absence from work.
(g) The Employer may elect to compute Hours of Service by the use of one
of the service equivalencies in the Adoption Agreement. Only one method may
be selected. If selected, the service equivalency must be applied to all
Employees covered under the Plan.
(h) If the Employer amends the method of crediting service from the
elapsed time method described in section 1.410(a)-7 of the Treasury
regulations to the Hours of Service computation method by the adoption of
this Plan, or an Employee transfers from a plan under which service is
determined on the basis of elapsed time, the following rules shall apply for
purposes of determining the Employee's service under this Plan up to the time
of amendment or transfer:
(i) the Employee shall receive credit, as of the date of amendment or
transfer, for a number of Years of Service equal to the number of one (1)
year periods of service credited to the Employee as of the date of the
amendment or transfer; and
(ii) the Employee shall receive credit in the applicable computation period
which includes the date of amendment or transfer, for a number of Hours of
Service determined by applying the weekly service equivalency specified in
paragraph (g) to any fractional part of a year credited to the Employee under
this paragraph
(h) as of the date of amendment or transfer. The use of the weekly service
equivalency shall apply to all Employees who formerly were credited with
service under the elapsed time method.
2.20 Integration Level. The Taxable Wage Base or such lesser amount elected
by the Employer in the Adoption Agreement.
2.21 Key Employee.
(a) Any Employee or former Employee (and the Beneficiaries of such
Employee) who at any time during the determination period was an officer of
the Employer if such Individual's annual Compensation exceeds fifty percent
(50%) of the dollar limitation under section 415(b)(1)(A) of the Code; an
owner (or considered an owner under section 318 of the Code) of one of the
ten (10) largest interests in the Employer if such Individual's Compensation
exceeds
<PAGE>
one hundred percent (100%) of the dollar limitation under section 415(c)(1)(A)
of the Code; a Five Percent (5%) Owner of the Employer; or a one percent (1%)
owner of the Employer who has annual Compensation of more than one hundred
fifty thousand dollars ($150,000).
(b) For purposes of this section, annual Compensation means compensation
as defined in section 415(c)(3) of the Code, but including amounts contributed
by the Employer pursuant to a salary reduction agreement which are excludable
from the Employee's gross income under sections 125, 402(a)(8), 402(h) or 403(b)
of the Code.
(c) For purposes of this section, determination period is the Plan Year
containing the Determination Date and the four (4) preceding Plan Years. 2.22
Leased Employee.
(a) Any person (other than an Employee of any of the Affiliated Employers)
who, pursuant to an agreement between any of the Affiliated Employers and any
other person (Leasing organization), has performed service for any of the
Affiliated Employers (or for any of the Affiliated Employers and related
persons determined in accordance with section 414(n)(6) of the Code) on a
substantially full-time basis for a period of at least one (1) year and such
services are of a type historically performed by employees in the Affiliated
Employer's business field. Contributions or benefits provided a Leased
Employee by the leasing organization which are attributable to services
performed for the Affiliated Employer shall be treated as provided by the
Affiliated Employer.
(b) A Leased Employee shall not be considered an Employee of an Affiliated
Employer if:
(i) such employee is covered by a money purchase pension plan providing:
(1) a nonintegrated employer contribution rate of at least ten percent
(10%) of compensation (as defined in section 415(c)(3) of the Code), but
including amounts contributed pursuant to a salary reduction agreement which
are excludable from the employee's gross income under sections 125, 402(a)(8),
402(h) or 403(b) of the Code;
(2) immediate participation; and
(3) full and immediate vesting.
and
(ii) Leased Employees do not constitute more than twenty percent (20%) of
the Affiliated Employer's non-Highly-Compensated workforce.
(c) The determination of whether a person is a Leased Employee will be
made pursuant to section 414(n) of the Code.
2.23 Maximum Disparity Rate. The lesser of:
(a) five and seven-tenths percent (5.7%);
(b) the applicable percentage determined in accordance with the table
below: If the Integration Level is
* XE=The greater of $10,000 or 20% of the Taxable Wage Base.
YE=Any amount more than 80% of the Taxable Wage Base but less than 100%
of the Taxable Wage Base.
TWB means the Taxable Wage Base.
If the Integration Level used is equal to the Taxable Wage Base, the
applicable percentage is five and seven-tenths percent (5.7%).
2.24 Maximum Profit Sharing Disparity Rate. The lesser of:
<PAGE>
(a) two and seven-tenths percent (2.7%);
(b) the applicable percentage determined in accordance with the table that
follows (top of next column):
If the Integration Level is
* XE=The greater of $10,000 or 20% of the Taxable Wage Base.
YE=Any amount more than 80% of the Taxable Wage Base but less than 100%
of the Taxable Wage Base.
TWB means the Taxable Wage Base.
If the Integration Level used is equal to the Taxable Wage Base, the
applicable percentage is two and seven-tenths percent (2.7%).
2.25 Non-Key Employee. Any Employee or former Employee who is not a Key
Employee. In addition, any Beneficiary of a Non-Key Employee shall be
treated as a Non-Key Employee.
2.26 Normal Retirement Age. The age selected in the Adoption Agreement, but
not less than age fifty-five (55). If the Employer enforces a mandatory
retirement age, the Normal Retirement Age is the lesser of that mandatory age
or the age specified in the Adoption Agreement.
2.27 Owner-Employee. An individual who is a sole proprietor, or who is a
partner owning more than ten percent (10%) of either the capital or profits
interest of a partnership.
2.28 Participant. A person who has met the eligibility requirements of
section 3.1 and whose Account hereunder has been neither completely forfeited
nor completely distributed.
2.29 Plan. The prototype paired defined contribution profit sharing and
money purchase pension plan provided under this basic plan document. References
to the Plan shall refer to the profit sharing provisions, the money purchase
pension provisions, or both, as the context may require.
2.30 Plan Administrator. The person, persons or entity appointed by the
Employer pursuant to ARTICLE 15 to manage and administer the Plan.
2.31 Plan Year. The twelve (12) consecutive month period designated by the
Employer in the Adoption Agreement.
2.32 Self-Employed Individual. An individual who has Earned Income for the
taxable year from the trade or business for which the Plan is established, or
an individual who would have had Earned Income for the taxable year but for
the fact that the trade or business had no net profits for the taxable year.
2.33 Shares. Shares of stock in any regulated investment company registered
under the Investment Company Act of 1940 that are made available for
investment purposes as an investment option under this Plan.
2.34 Sponsor. The sponsor designated in the Adoption Agreement which has
made this Plan available to the Employer.
2.35 Taxable Wage Base. The maximum amount of earnings which may be
considered wages for a year under section 3121(a)(1) of the Code in effect as
of the beginning of the Plan Year.
2.36 Total and Permanent Disability. The inability of the Participant to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment, which condition, in the opinion
of a physician chosen by the Plan
<PAGE>
Administrator, can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than twelve (12) months.
2.37 Trust. The fund maintained by the Trustee for the investment of Plan
assets in accordance with the terms and conditions of the Trust Agreement.
2.38 Trust Agreement. The agreement between the Employer and the Trustee
under which the assets of the Plan are held, administered, and managed. The
provisions of the Trust Agreement shall be considered an integral part of
this Plan as if set forth fully herein.
2.39 Trustee. The individual or corporate Trustee or Trustees under the
Trust Agreement as they may be constituted from time to time.
2.40 Valuation Date. The last day of each Plan Year and such other dates as
may be determined by the Plan Administrator, as provided in section 5.6 for
valuing the Trust assets.
2.41 Vesting Computation Period. The Plan Year.
2.42 Year of Service. An Eligibility Computation Period, Vesting Computation
Period, or Plan Year, whichever is applicable, during which an Employee has
completed at least one thousand (1,000) Hours of Service (whether or not
continuous). The Employer may, in the Adoption Agreement, specify a fewer
number of hours.
ARTICLE 3
Eligibility and
Years of Service
3.1 Eligibility Requirements.
(a) Each Employee of the Affiliated Employers shall become a Participant
in the Plan as of the first Entry Date after the date on which the Employee has
satisfied the minimum age and service requirements specified in the Adoption
Agreement.
(b) The Employer may elect in the Adoption Agreement to exclude from
participation:
(i) Employees included in a unit of employees covered by a collective
bargaining agreement between the Employer and Employee representatives, if
retirement benefits were the subject of good faith bargaining. For this
purpose, the term Employee representatives does not include any organization
more than half of whose members are Employees who are owners, officers, or
executives of the Employer; and
(ii) nonresident aliens who receive no earned income from the Employer
which constitutes income from sources within the United States.
3.2 Participation and Service. Upon Reemployment. Upon the reemployment of
any Employee, the following rules shall determine his eligibility to participate
in the Plan and his credit for prior service.
(a) Participation. If the reemployed Employee was a Participant in the
Plan during his prior period of employment, he shall be eligible upon
reemployment to resume participation in the Plan. If the reemployed Employee
was not a Participant in the Plan, he shall be considered a new Employee and
required to meet the requirements of section 3.1 in order to be eligible to
participate in the Plan, subject to the reinstatement of credit for prior
service under paragraph (b) below.
(b) Credit for Prior Service. In the case of any Employee who is
reemployed before or after incurring a Break in Service, any Hour of Service
and Year of Service credited to the
<PAGE>
Employee at the end of his prior period of employment shall be reinstated as
of the date of his reemployment.
3.3 Predecessor Employers. If specified in the Adoption Agreement, Years of
Service with a predecessor employer will be treated as service for the Employer
for eligibility purposes; provided, however, if the Employer maintains the plan
of a predecessor employer, Years of Service with such employer will be treated
as service with the Employer without regard to any election.
ARTICLE 4
Contributions
4.1 Employer Contributions.
(a) Money Purchase Pension Contributions. For each Plan Year, the
Employer shall contribute to the Trust an amount equal to such uniform
percentage of Compensation of each eligible Participant as may be determined
by the Employer in accordance with the money purchase pension contribution
formula specified in the Adoption Agreement. Subject to the limitations of
section 5.4, the money purchase pension contribution formula may be integrated
with Social Security, as set forth in the Adoption Agreement.
(b) Profit Sharing Contribution. For each Plan Year, the Employer shall
contribute to the Trust an amount as may be determined by the Employer in
accordance with the profit sharing formula set forth in the Adoption Agreement.
(c) Eligible Participants. Subject to the Minimum Allocation rules of
section 5.2 and the exclusions specified in this section, each Participant
shall be eligible to share in the Employer Contribution. An Employer may
elect in the Adoption Agreement that Participants who terminate employment
during the Plan Year with not more than five hundred (500) Hours of Service
and who are not Employees as of the last day of the Plan Year (other than
Participants who die, retire or become totally and Permanently Disabled
during the Plan Year) shall not be eligible to share in the Employer
Contribution. An Employer may further elect in the Adoption Agreement to
allocate a contribution on behalf of a Participant who completes fewer than
five hundred (500) Hours of Service and is otherwise ineligible to share in
the Employer Contribution. If the Employer fails to specify in the Adoption
Agreement the number of Hours of Service required to share in the Employer
Contribution, the number shall be five hundred (500) Hours of Service.
(d) Contribution Limitation. In no event shall any Employer
Contribution exceed the maximum amount deductible from the Employer's income
under section 404 of the Code, or the maximum limitations under section 415
of the Code provided in ARTICLE 6. 4.2 Payment. All Employer Contributions
to the Trust for any Plan Year shall be made either in one lump-sum or in
installments in U.S. currency, by check, or in Shares within the time
prescribed by law, including extensions granted by the Internal Revenue
Service, for filing the Employer's federal income tax return for the taxable
year with or within which such Plan Year ends. All employer Contributions to
the Trust for a money purchase pension plan for any Plan Year shall be made
within the time prescribed by regulations under section 412(c) (10) of the
Code.
4.3 Nondeductible Voluntary Contributions by Participants.
<PAGE>
(a) This Plan will not accept nondeductible Employee contributions for
Plan Years beginning after the Plan Year in which this Plan is adopted by the
Employer. Employee contributions made with respect to Plan years beginning
after December 31, 1986 will be limited so as to meet the nondiscrimination
test of section 401(m).
(b) A separate account shall be maintained by the Trustee for the
nondeductible Employee contributions of each Participant.
(c) Employee contributions and earnings thereon shall be fully vested
and nonforfeitable at all times.
(d) The provisions of this section shall apply to Employee contributions
made prior to the first Plan Year after the Plan Year in which the Employer
adopts this Plan. 4.4 Rollovers.
(a) Subject to the approval of the Plan Administrator, a participant who
has participated in any other qualified plan described in section 401(a) of
the Code or in a qualified annuity plan described in section 403(a) of the
Code shall be permitted to make a rollover contribution in the form of cash
to the Trustee of an amount received by the Participant that is attributable
to participation in such other plan (reduced by any nondeductible voluntary
contributions he made to the plan), provided that the rollover contribution
complies with all requirements of sections 402(a)(5) or 403(a)(4) of the
Code, whichever is applicable.
(b) Before approving such a Participant rollover, the Plan Administrator
may request from the Participant or the Employer any documents which the Plan
Administrator, in its discretion, deems necessary for such rollover.
(c) Any rollover contribution to the Trust shall be credited to the
Participant's rollover subaccount established under section 5.1 and separately
accounted for.
4.5 Direct Transfers.
(a) The Plan shall accept a transfer of assets directly from another
plan qualified under sections 401(a) or 403(a) of the Code only if the Plan
Administrator, in its sole discretion, agrees to accept such a transfer. In
determining whether to accept such a transfer the Plan Administrator shall
consider the administrative inconvenience engendered by such a transfer and
any risks to the continued qualification of the Plan under section 401(a) of
the Code. Acceptance of any such transfer shall not preclude the Plan
Administrator from refusing any subsequent such transfers.
(b) Any transfer of assets accepted under this section shall be credited
to the Participant's direct transfer subaccount and shall be separately
accounted for at all times and shall remain subject to the provisions of the
transferor plan (as it existed at the time of such transfer) to the extent
required by section 411(d)(6) of the Code (including, but not limited to, any
rights to Qualified Joint and Survivor Annuities and qualified preretirement
survivor annuities) as if such provisions were part of the Plan. In all
other respects, however, such transferred assets will be subject to the
provisions of the Plan.
(c) Assets accepted under this section shall be fully vested and
nonforfeitable.
(d) Before approving such a direct transfer, the Plan Administrator may
request from the Participant or the Employer (or the prior employer) any
documents the Plan Administrator, in its discretion, deems necessary for such
direct transfer.
ARTICLE 5
<PAGE>
Allocations
5.1 Individual Accounts. The Plan Administrator shall establish and
maintain an Account in the name of each Participant. The Account shall
contain the following subaccounts:
(a) A money purchase pension contribution subaccount to which shall be
credited each such Participant's share of (i) Employer Contributions under
section 4.1(a); (ii) the net earnings or net losses on the investment of the
assets of the Trust; (iii) distributions; and (iv) dividends, capital gain
distributions and other earnings received on any Shares credited to the
Participant's subaccount;
(b) A profit sharing contribution subaccount to which shall be credited
each such Participant's share of (i) Employer Contributions under section
4.1(b); (ii) forfeitures; (iii) the net earnings or net losses on the
investment of the assets of the trust; (iv) distributions; and (v) dividends,
capital gain distributions and other earnings received on any Shares credited
to the Participant's subaccount;
(c) A nondeductible voluntary contribution subaccount to which shall be
credited (i)Nondeductible voluntary contributions by the Participant under
section 4.3; (ii)The net earnings or net losses on the investment of the
assets of the Trust; (iii)Distributions; and (iv)Dividends, capital gain
distributions and other earnings received on any Shares credited to the
Participant's subaccount;
(d) A direct transfer subaccount to which shall be credited
(i)Contributions to the Trust accepted under section 4.5(a); (ii)The net
earnings or net losses on the investment of the assets of the Trust;
(iii)Distributions; and (iv)Dividends, capital gain distributions and other
earnings received on any Shares credited to the Participant's subaccount;
(e) A rollover subaccount to which shall be credited (i)Contributions to
the Trust accepted under section 4.4(a); (ii)The net earnings or net losses
on the investment of the assets of the Trust; (iii)Distributions; and
(iv)Dividends, capital gain distributions and other earnings received on any
Shares credited to the Participant's subaccount.
5.2 Minimum Allocation.
(a) Except as otherwise provided in this section, the Employer
Contributions and forfeitures allocated on behalf of any Participant who is
not a Key Employee shall not be less than the lesser of three percent (3%) of
such Participant's Compensation or in the case where the Employer has no
defined benefit plan which designates this Plan to satisfy section 401 of the
Code, the largest percentage of Employer Contributions and forfeitures, as a
percentage of the first two hundred thousand dollars ($200,000) of the Key
Employee's Compensation, allocated on behalf of any Key Employee for that
year. The minimum allocation is determined without regard to any Social
Security contribution. This minimum allocation shall be made even though,
under other Plan provisions, the Participant would not otherwise be entitled
to receive an allocation, or would have received a lesser allocation for the
year because of (i)The Participant's failure to complete one thousand (1,000)
Hours of Service (or any equivalent provided in the Plan); or (ii)The
Participant's failure to make mandatory Employee contributions to the Plan;
or (iii)Compensation less than a stated amount. For purposes of this
subsection, all defined contribution plans required to be included in an
aggregation group under section 416(g)(2)(A)(i) shall be treated as a single
plan.
(b) For purposes of computing the minimum allocation, Compensation shall
mean Compensation as defined in section 6.5(b) of the Plan.
<PAGE>
(c) The provision in subsection (a) above shall not apply to any
Participant who was not employed by the Employer on the last day of the Plan
Year.
(d) The provision in subsection (a) above shall not apply to any
Participant to the extent the Participant is covered under any other plan or
plans of the Employer and the Employer has provided in the Adoption Agreement
that the minimum allocation or benefit requirement applicable to top-heavy
plans will be met in the other plan or plans.
(e) The minimum allocation required (to the extent required to be
nonforfeitable under section 416(b)) may not be forfeited under section
411(a)(3)(B) or 411(a)(3)(D). 5.3 Allocation of Employer Contributions and
Forfeitures.
(a) All money purchase pension contributions for a given Plan Year shall
be allocated to the Account of the Participant for whom such contribution was
made. Any forfeiture from a Participant's money purchase pension contribution
subaccount arising under the Plan for a given Plan Year shall be applied as
specified in the Adoption Agreement, either: (i) to reduce the Employer
Contribution in that year, or if in excess of the Employer Contribution for
such Plan Year, the excess amounts shall be used to reduce the Employer
Contribution in the next succeeding Plan Year or Years or (ii) to be added to
the Employer Contributions and allocated accordingly.
(b) All profit sharing contributions and forfeitures from a Participant's
profit sharing contribution subaccount will be allocated to the Account of each
Participant in the ratio that such Participant's Compensation bears to the
Compensation of all Participants. However, if the profit sharing contribution
formula selected in the Adoption Agreement is integrated with Social Security,
profit sharing contributions for the Plan Year plus any forfeitures will be
allocated to Participant's Accounts as follows:
(i) Step One. Contributions and forfeitures will be allocated to each
participant's Account in the ratio that each participant's total Compensation
bears to all Participant's total Compensation, but not in excess of three
percent (3%) of each Participant's Compensation. (Step One is not applicable
if the Employer enters into the money purchase pension Adoption Agreement).
(ii) Step Two. Any contributions and forfeitures remaining after the
allocation in Step One (if any) will be allocated to each Participant's
Account in the ratio that each Participant's Compensation for the Plan Year
in excess of the Integration Level bears to the excess Compensation of all
Participants, but not in excess of three percent (3%). (Step Two is not
applicable if the Employer enters into the money purchase pension Adoption
Agreement).
(iii) Step Three. Any contributions and forfeitures remaining after the
allocation in Step Two (if any) will be allocated to each Participant's
Account in the ratio that the sum of each Participant's total Compensation
and Compensation in excess of the Integration Level bears to the sum of all
Participants total Compensation and Compensation in excess of the Integration
Level, but not in excess of whichever of the following is applicable:
(1) if the Employer has not adopted the money purchase pension Adoption
Agreement, then the Maximum Profit Sharing Disparity Rate; or
(2) if the Employer has adopted the money purchase pension Adoption
Agreement, then the lesser of:
(2.a) the percentage of each Participant's Compensation for the Plan Year
up to the Integration Level determined by dividing the allocation by such
Compensation (the base contribution percentage); or
<PAGE>
(2.b) the Maximum Disparity Rate.
(iv) Step Four. Any remaining contributions or forfeitures will be
allocated to each Participant's Account in the ratio that each Participant's
total Compensation for the Plan Year bears to all Participants total
Compensation for that year.
(c) Notwithstanding anything in (a) or (b) above to the contrary,
forfeitures arising under a Participant's money purchase pension contribution
subaccount will only be used to reduce the contributions of the Participant's
Employer who adopted this Plan, and forfeitures arising under a Participant's
profit sharing contribution subaccount will be reallocated only for the
benefit of Employees of the Participant's Employer who adopted this Plan.
5.4 Coordination of Social Security Integration. If the Employer maintains
plans involving integration with Social Security other than this Plan, and if
any Participant is eligible to participate in more than one of such plans,
all such plans will be considered to be integrated if the extent of the
integration of all such plans does not exceed one hundred percent (100%).
For purposes of the preceding sentence, the extent of integration of a plan
is the ratio (expressed as a percentage) which the actual benefits, benefit
rate, offset rate, or Employer Contribution rate under the plan bears to the
integration limitation applicable to such plan. If the Employer enters into
both the money purchase pension Adoption Agreement and the profit sharing
Adoption Agreement under this Plan, integration with Social Security may only
be selected in one Adoption Agreement.
5.5 Withdrawals and Distributions. Any distribution to a Participant or his
Beneficiary, any amount transferred from a Participant's Account directly to
the Trustee of any other qualified plan described in section 401(a) of the
Code or to a qualified annuity plan described in section 403(a) of the Code,
or any withdrawal by a Participant shall be charged to the appropriate
subaccount(s) of the Participant as of the date of the distribution or the
withdrawal.
5.6 Determination of Value of Trust Fund and of Net Earnings or Losses. As
of each Valuation Date the Trustee shall determine for the period then ended
the sum of the net earnings or losses of the Trust (excluding with respect to
Shares and other assets specifically allocated to a specific Participant's
subaccount, (i) dividends and capital gain distributions from Shares, (ii)
receipts or income attributable to insurance policies, (iii) income gains
and/or losses attributable to a Participant's loans made pursuant to ARTICLE
13 or to any other assets) which shall reflect accrued but unpaid interest,
dividends, gains, or losses realized from the sale, exchange or collection of
assets, other income received, appreciation in the fair market value of
assets, depreciation in the fair market value of assets, administration
expenses, and taxes and other expenses paid. Gains or losses realized and
adjustments for appreciation or depreciation in fair market value shall be
computed with respect to the difference between such value as of the
preceding Valuation Date or date of purchase, whichever is applicable, and
the value as of the date of disposition or the current Valuation Date,
whichever is applicable.
5.7 Allocation of Net Earnings or Losses.
(a) As of each Valuation Date the net earnings or losses of the Trust
(excluding with respect to Shares and other assets specifically allocated to a
specific Participant's subaccount, (i) dividends and capital gain distributions
from Shares, (ii) dividends or credits attributable to insurance policies,
(iii) income gains and/or losses attributable to a Participant's loans made
pursuant to ARTICLE 13 or to any other assets, all of which shall be allocated
to such Participant's subaccount) for the valuation period then ending shall be
allocated to the Accounts of all Participants (or Beneficiaries) having credits
in the fund both on such date and
<PAGE>
at the beginning of such valuation period. Such allocation shall be made by
the application of a fraction, the numerator of which is the value of the
Account of a specific Participant (or Beneficiary) as of the immediately
preceding Valuation Date, reduced by any distributions therefrom since such
preceding Valuation Date, and the denominator of which is the total value of
all such Accounts as of the preceding Valuation Date, reduced by any
distributions therefrom since such preceding Valuation Date.
(b) To the extent that Shares and other assets are specifically allocated
to a specific Participant's subaccount: (i) dividends and capital gain
distributions from Shares; (ii) dividends or credits attributable to
insurance policies; and (iii) income gains and/or losses attributable to a
Participant's loans made pursuant to ARTICLE 13 or to any other assets, all
shall be allocated to such Participant's subaccount.
5.8 Responsibilities of the Plan Administrator. The Plan Administrator
shall maintain accurate records with respect to the contributions made by or
on behalf of Participants under the Plan, and shall furnish the Trustee with
written instructions directing the Trustee to allocate all Plan contributions
to the Trust among the separate Accounts of Participants in accordance with
section 5.1 above. In making any such allocation, the Trustee shall be fully
entitled to rely on the instructions furnished by the Plan Administrator, and
shall be under no duty to make any inquiry or investigation with respect
thereto.
ARTICLE 6
Limitations on Allocations
6.1 Employers Who Do Not Maintain Other Qualified Plans.
(a) If the Participant does not participate in, and has never
participated in another qualified plan or a welfare benefit fund, as defined
in section 419(e) of the Code, maintained by the Employer, or an individual
medical account, as defined in section 415(l)(2) of the Code, maintained by
the Employer, which provides an Annual Addition as defined in section 6.5(a),
the amount of Annual Additions that may be credited to the Participant's
Account for any Limitation Year will not exceed the lesser of the Maximum
Permissible Amount or any other limitation contained in this Plan. If the
Employer Contribution that would otherwise be contributed or allocated to the
Participant's Account would cause the Annual Additions for the Limitation
Year to exceed the Maximum Permissible Amount, the amount contributed or
allocated will be reduced so that the Annual Additions for the Limitation
Year will equal the Maximum Permissible Amount.
(b) Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible Amount
for a Participant on the basis of a reasonable estimation of the Participant's
Compensation for the Limitation Year, uniformly determined for all Participants
similarly situated.
(c) As soon as is administratively feasible after the end of the Limitation
Year, the Maximum Permissible Amount for the Limitation Year will be determined
on the basis of the Participant's actual Compensation for the Limitation Year.
(d) If, pursuant to subsection (c) or as a result of the allocation of
forfeitures, there is an Excess Amount the excess will be disposed of as
follows:
(i) Any nondeductible voluntary Employee contributions, to the extent
they would reduce the Excess Amount, will be returned to the Participant;
<PAGE>
(ii) If after the application of paragraph(i) an Excess Amount still
exists, and the Participant is covered by the Plan at the end of the
Limitation Year, the Excess Amount in the Participant's Account will be used
to reduce Employer Contributions (including any allocation of forfeitures)
for such Participant in the next Limitation Year, and each succeeding
Limitation Year if necessary;
(iii) If after the application of paragraph(i) an Excess Amount still
exists, and the Participant is not covered by the Plan at the end of the
Limitation Year, the Excess Amount will be held unallocated in a suspense
account. The suspense account will be applied to reduce future Employer
Contributions (including allocation of any forfeitures) for all remaining
Participants in the next Limitation Year, and each succeeding Limitation Year
if necessary;
(iv) If a suspense account is in existence at any time during the
Limitation Year pursuant to this section, it will not participate in the
allocation of the Trust's investment gains and losses. If a suspense account
is in existence at any time during a particular Limitation Year, all amounts
in the suspense account must be allocated and reallocated to participant's
Accounts before any Employer or any Employee contributions may be made to the
Plan for that Limitation Year. Excess amounts may not be distributed to
Participants or former Participants.
6.2 Employers Who Maintain Other Qualified Master or Prototype Defined
Contribution Plans.
(a) This section applies if, in addition to this Plan, the Participant
is covered under another qualified master of prototype defined contribution
plan maintained by the Employer, a welfare benefit fund, as defined in
section 419(e) of the Code maintained by the Employer or an individual
medical account, as defined in section 415(1)(2) of the Code, maintained by
the Employer which provides an Annual Addition as defined in Section 6.5(a),
during any Limitation Year. The Annual Additions that may be credited to a
Participant's Account under this Plan for any such Limitation Year will not
exceed the Maximum Permissible Amount reduced by the Annual Additions
credited to a Participant's Account under the other plans and welfare benefit
funds for the same Limitation Year. If the Annual Additions with respect to
the Participant under other defined contribution plans and welfare benefit
funds maintained by the Employer are less than the Maximum Permissible Amount
and the Employer Contribution that would otherwise be contributed or
allocated to the Participant's Account under this Plan would cause the Annual
Additions for the Limitation Year to exceed this limitation, the amount
contributed or allocated will be reduced so that the Annual Additions under
all such plans and funds for the Limitation Year will equal the Maximum
Permissible Amount. If the Annual Additions with respect to the Participant
under such other defined contribution plans and welfare benefit funds in the
aggregate are equal to or greater than the Maximum Permissible Amount, no
amount will be contributed or allocated to the Participant's Account under
this Plan for the Limitation Year.
(b) Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible Amount
for a Participant in the manner described in section 6.1(b).
(c) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the Limitation Year will
be determined on the basis of the Participant's actual Compensation for the
Limitation Year.
<PAGE>
(d) If, pursuant to section 6.2(c), or as a result of the allocation of
forfeitures, a Participant's Annual Additions under this Plan and such other
plans would result in an Excess Amount for a Limitation Year, the Excess
Amount will be deemed to consist of the Annual Additions last allocated,
except that Annual Additions attributable to a welfare benefit fund or
individual medical account will be deemed to have been allocated first
regardless of the actual allocation date.
(e) If an Excess Amount was allocated to a Participant on an allocation
date of this Plan which coincides with an allocation date of another plan,
the Excess Amount attributed to this Plan will be the product of:
(i) the total Excess Amount allocated as of such date, times
(ii) the ratio of (1) the Annual Additions allocated to the Participant
for the Limitation Year as of such date under this Plan to (2)The total
Annual Additions allocated to the Participant for the Limitation Year as of
such date under this and all the other qualified master or prototype defined
contribution plans.
(f) Any Excess Amount attributed to this Plan will be disposed of in the
manner described in Section 6.1(d).
6.3 Employers Who, In Addition to this Plan, Maintain Other Qualified Plans
Which Are Defined Contribution Plans Other than Master or Prototype Plans.
If the Participant is covered under another qualified defined contribution
plan maintained by the Employer which is not a Master or Prototype Plan,
Annual Additions which may be credited to the Participant's Account under
this Plan for any Limitation Year will be limited in accordance with Section
6.2 as though the other plan were a Master or Prototype Plan unless the
Employer provides other limitations in the Adoption Agreement.
6.4 Employers Who, In Addition to This Plan, Maintain A Qualified Defined
Benefit Plan. If the Employer maintains, or at any time maintained, a
qualified defined benefit plan covering any Participant in this Plan, the sum
of the Participant's Defined Benefit Fraction and Defined Contribution
Fraction will not exceed 1.0 in any Limitation Year. The Annual Additions
which may be credited to the Participant's Account under this Plan for any
Limitation Year will be limited in accordance with the Adoption Agreement.
6.5 Definitions. Unless otherwise expressly provided herein, for purposes
of this ARTICLE only, the following definitions and rules of interpretation
shall apply:
(a) Annual Additions. The sum of the following amounts credited to a
Participant's Account for the Limitation Year:
(i) Employer Contributions;
(ii) Employee Contributions;
(iii) forfeitures; and
(iv) amounts allocated after March 31, 1984 to an individual medical
account, as defined in section 415(l)(2) of the Code, which is part of a
pension or annuity plan maintained by the Employer, are treated as Annual
Additions to a defined contribution plan. Also, amounts derived from
contributions paid or accrued after December 31,1985, in taxable years ending
after such date, which are attributable to post-retirement medical benefits
allocated to the separate account of a key employee, as defined in section
419A(d)(3) of the Code, under a welfare benefit fund, as defined in section
419(e) of the Code, maintained by the Employer, are treated as Annual
Additions to a defined contribution plan.
<PAGE>
For this purpose, any Excess Amount applied under sections 6.1(d) or
6.2(f) in the Limitation Year to reduce Employer Contributions will be
considered Annual Additions for such Limitation Year.
(b) Compensation. A Participant's earned income, wages, salaries, and
fees for professional services and other amounts received for personal
services actually rendered in the course of employment with the Employer
maintaining the Plan (including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips and bonuses), and excluding the
following:
(i) Employer contributions to a plan of deferred compensation which are
not includable in the Employee's gross income for the taxable year in which
contributed, or Employer Contributions under a simplified employee pension
plan to the extent such contributions are excluded from the Employer's gross
income, or any distributions from a plan of deferred compensation;
(ii) Amounts realized from the exercise of a nonqualified stock option,
or when restricted stock (or property) held by the Employee either becomes
freely transferable or is no longer subject to a substantial risk of
forfeiture;
(iii) Amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option; and
(iv) Other amounts which received special tax benefits, or contributions
made by the Employer (whether or not under a salary reduction agreement)
towards the purchase of an annuity described in section 403(b) or the Code
(whether or not the amounts are actually excludable from the gross income of
the Employee).
For purposes of applying the limitations of this ARTICLE,
Compensation for a Limitation Year is the Compensation actually paid or
includable in gross income during such year.
Notwithstanding the preceding sentence, Compensation for a
Participant in a defined contribution plan who is Totally and Permanently
Disabled (as defined in section 22(e)(3) of the Code) is the Compensation such
Participant would have received for the Limitation Year if the Participant had
been paid at the rate of Compensation paid immediately before becoming
permanently and totally disabled; such imputed Compensation for the disabled
Participant may be taken into account only if the Participant is not a
Highly-Compensated Employee (as defined in section 414(q) of the Code), and
contributions made on behalf of such Participant are nonforfeitable when made.
(c) Defined Benefit Fraction. A fraction, the numerator of which is the
sum of the Participant's Projected Annual Benefits under all the defined
benefit plans (whether or not terminated) maintained by the Employer, and the
denominator of which is the lesser of one hundred percent (100%) of the
dollar limitation determined for the Limitation Year under sections 415(b)
and (d) of the Code or one hundred forty percent (140%) of highest average
compensation, including any adjustments under section 415(b) of the Code.
Notwithstanding the above, if the Participant was a Participant as
of the first day of the first Limitation Year beginning after December 31,
1986, in one or more defined benefit plans maintained by the Employer which
were in existence on May 6, 1986, the denominator of this fraction will not
be less than one hundred twenty-five percent (125%) of the sum of the annual
benefits under such plans which the Participant had accrued as of the close
of the last Limitation Year beginning before January 1, 1987, disregarding
any changes in the terms and
<PAGE>
conditions of the Plan after May 5, 1986. The preceding sentence applies
only if the defined benefit plans individually and in the aggregate satisfied
the requirements of section 415 of the Code for all Limitation Years
beginning before January 1, 1987.
(d) Defined Contribution Dollar Limitation. Thirty thousand dollars
($30,000) or, if greater, one-fourth (1/4) of the defined benefit dollar
limitation set forth in section 415(b)(1) of the Code as in effect for the
Limitation Year.
(e) Defined Contribution Fraction. A fraction, the numerator of which
is the sum of the Annual Additions to the Participant's Account under all the
defined contribution plans (whether or not terminated) maintained by the
Employer for the current and all prior Limitation Years (including the Annual
Additions attributable to the Participant's nondeductible voluntary
contributions to all defined benefit plans, whether or not terminated,
maintained by the Employer, and the Annual Additions attributable to all
welfare benefit funds, as defined in Section 419(e) of the Code and
individual medical accounts, as defined in section 415(l)(2) of the Code,
maintained by the Employer), and the denominator of which is the sum of the
maximum aggregate amounts for the current and all prior Limitation Years of
service with the Employer (regardless of whether a defined contribution plan
was maintained by the Employer). The maximum aggregate amount in any
Limitation Year is the lesser of one hundred percent (100%) of the dollar
limitation in effect under Section 415(c)(1)(A) of the Code or thirty-five
percent (35%) of the Participant's Compensation for such year.
If the Participant was a Participant as of the end of the first day
of the first Limitation Year beginning after December 31, 1986, in one or
more defined contribution plans maintained by the Employer which were in
existence on May 6, 1986, the numerator of this fraction will be adjusted if
the sum of this fraction and the Defined Benefit Fraction would otherwise
exceed 1.0 under the terms of this Plan. Under the adjustment, an amount
equal to the product of (1)The excess of the sum of the fractions over 1.0
times (2) the denominator of this fraction, will be permanently subtracted
from the numerator of this fraction. The adjustment is calculated using the
fractions as they would be computed as of the end of the last Limitation Year
beginning before January 1, 1987, and disregarding any changes in the terms
and conditions of the Plan made after May 5, 1986, but using the section 415
limitation applicable to the first Limitation Year beginning on or after
January 1, 1987. The Annual Addition for any Limitation Year beginning
before January 1, 1987, shall not be recomputed to treat all Employee
contributions as Annual Additions.
(f) Employer. For purposes of this ARTICLE, Employer shall mean the
employer that adopts this Plan, and all members of a controlled group of
corporations (as defined in section 414(b) of the Code as modified by section
415(h) of the Code), all commonly controlled trades or businesses (as defined
in section 414(c) of the Code as modified by section 415(h) of the Code), or
affiliated service groups (as defined in section 414(m) of the Code) of which
the adopting Employer is a part and any other entity required to be aggregated
with the Employer pursuant to regulations under section 414(o) of the Code.
(g) Excess Amount. The excess of the Participant's Annual Addition for
the Limitation Year over the Maximum Permissible Amount.
(h) Highest Average Compensation. The average compensation for the three
consecutive Plan Years that produce the highest average.
(i) Limitation Year. A Plan Year, or the twelve (12) consecutive month
period elected by the Employer in the Adoption Agreement. All qualified
plans maintained by the Employer
<PAGE>
must use the same Limitation Year. If the Limitation Year is amended to a
different twelve (12) consecutive month period, the new Limitation Year must
begin on a date within the Limitation Year in which the amendment is made.
(j) Master or Prototype Plan. A plan the form of which is the subject
of a favorable opinion letter from the Internal Revenue Service.
(k) Maximum Permissible Amount. The maximum Annual Addition that may be
contributed or allocated to a Participant's Account under the Plan for any
Limitation Year shall not exceed the lesser of:
(i) the Defined Contribution Dollar Limitation;
or
(ii) twenty-five percent (25%) of the Participant's Compensation for the
Limitation Year.
The Compensation limitation referred to in subsection (b) shall not
apply to any contribution for medical benefits (within the meaning of section
401(h) or section 419A(f)(2) of the Code) which is otherwise treated as an
Annual Addition under section 415(l)(1) or section 419A(d)(2) of the Code.
If a short Limitation Year is created because of an amendment
changing the Limitation Year to a different twelve (12) consecutive month
period, the Maximum Permissible Amount will not exceed the Defined
Contribution Dollar Limitation multiplied by the following fraction:
Number of Months in
the Short Limitation Year
(l) Projected Annual Benefit. The annual retirement benefit (adjusted
to an actuarially equivalent straight life annuity if such benefit is expressed
in a form other than a straight life annuity or Qualified Joint and Survivor
Annuity) to which the Participant would be entitled under the terms of the Plan
assuming:
(i) the Participant will continue employment until Normal Retirement Age
under the Plan (or current age, if later), and
(ii) the Participant's Compensation for the current Limitation Year and
all other relevant factors used to determine benefits under the Plan will
remain constant for all future Limitation Years.
ARTICLE 7
Trust Fund
7.1 Receipt of Contributions by Trustee. All contributions to the Trust
that are received by the Trustee, together with any earnings thereon, shall
be held, managed and administered by the Trustee named in the Adoption
Agreement in accordance with the terms and conditions of the Trust Agreement
and the Plan. The Trustee may use a Custodian designated by the Sponsor to
perform recordkeeping and custodial functions. The Trustee shall be subject
to the proper directions of the Employer or the Plan Administrator made in
accordance with the terms of the Plan and ERISA.
7.2 Investment Responsibility.
(a) If the Employer elects in the Adoption Agreement to exercise
investment authority and responsibility, the selection of the investments in
which assets of the Trust are invested
<PAGE>
shall be the responsibility of the Plan Administrator and each Participant
will have a ratable interest in all assets of the Trust.
(b) If the Adoption Agreement so provides and the Employer elects to
permit each Participant or Beneficiary to select the investments in his
Account, no person, including the Trustee and the Plan Administrator, shall
be liable for any loss or for any breach of fiduciary duty which results from
such Participant's or Beneficiary's exercise of control.
(c) If the Adoption Agreement so provides and the Employer elects to
permit each Participant or Beneficiary to select the investments in his
Account, the Employer or the Plan Administrator must complete a schedule of
Participant designations.
(d) If Participants and Beneficiaries are permitted to select the
investment in their Accounts, all investment related expenses, including
administrative fees charged by brokerage houses, will be charged against the
Accounts of the Participants.
(e) The Plan Administrator may at any time change the selection of
investments in which the assets of the Trust are invested, or subject to such
reasonable restrictions as may be imposed by the Sponsor for administrative
convenience, may submit an amended schedule of Participant designations.
Such amended documents may provide for a variance in the percentages of
contributions to any particular investment or a request that Shares in the
Trust be reinvested in whole or in part in other Shares.
7.3 Investment Limitations. The Sponsor may impose reasonable investment
limitations on the Employer and the Plan Administrator relating to the type
of permissible investments in the Trust or the minimum percentage of Trust
assets to be invested in Shares.
ARTICLE 8
Vesting
8.1 Nondeductible Voluntary Contributions and Earnings. The Participant's
nondeductible voluntary contribution subaccount shall be fully vested and
nonforfeitable at all times and no forfeitures will occur as a result of an
Employee's withdrawal of nondeductible voluntary contributions.
8.2 Rollovers, Transfers and Earnings. The Participant's rollover
subaccount and direct transfer subaccount shall be fully vested and
nonforfeitable at all times.
8.3 Employer Contributions and Earnings. Notwithstanding the vesting
schedule elected by the Employer in the Adoption Agreement, the Participant's
money purchase pension contribution subaccount and profit sharing
contribution subaccount shall be fully vested and nonforfeitable upon the
Participant's death, disability, attainment of Normal Retirement Age, or, if
the Adoption Agreement provides for an Early Retirement Date, attainment of
the required age and completion of the required service. In the absence of
any of the preceding events, the Participant's money purchase contribution
subaccount and his profit sharing contribution subaccount shall vest in
accordance with a minimum vesting schedule specified in the Adoption Agreement.
The schedule must be at least as favorable to Participants as either schedule(a)
or (b) below.
(a) Graduated vesting according to the following schedule:
Years Vested
of Service Percentage
<PAGE>
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
(b) Full one hundred percent (100%) vesting after three (3) Years of
Service.
8.4 Amendments to Vesting Schedule.
(a) If the Plan's vesting schedule is amended, or the Plan is amended in
any way that directly or indirectly affects the computation of the Participant's
nonforfeitable percentage or if the Plan is deemed amended by an automatic
change to or from a top-heavy vesting schedule, each Participant with at least
three (3) Years of Service with the Employer may elect, within a reasonable
period after the adoption of the amendment or change, to have the
nonforfeitable percentage computed under the Plan without regard to such
amendment or change. For any Participants who do not have at least one (1)
Hour of Service in any Plan Year beginning after December 31, 1988, the
preceding sentence shall be applied by substituting five (5) Years of Service
for three (3) Years of Service where such language appears.
(b) The period during which the election may be made shall commence with
the date the amendment is adopted or deemed to be made and shall end on the
latest of:
(i) sixty (60) days after the amendment is adopted
(ii) sixty (60) days after the amendment becomes effective; or
(iii) sixty (60) days after the Participant is issued written notice of
the amendment by the Employer or Plan Administrator.
(c) No amendment to the Plan shall be effective to the extent that it
has the effect of decreasing a Participant's accrued benefit.
Notwithstanding the preceding sentence, a Participant's Account balance may
be reduced to the extent permitted under section 412(c)(8) of the Code. For
purposes of this paragraph, a Plan amendment which has the effect of
decreasing a Participant's Account balance or eliminating an optional form of
benefit, with respect to benefits attributable to service before the
amendment shall be treated as reducing an accrued benefit. Furthermore, if
the vesting schedule of a Plan is amended, in the case of an Employee who is
a Participant as of the later of the date such amendment is adopted or the
date it becomes effective, the nonforfeitable percentage (determined as of
such date) of such Employee's right to his Employer-derived accrued benefit
will not be less than his percentage computed under the Plan without regard
to such amendment.
8.5 Determination of Years of Service. For purposes of determining the
vested and nonforfeitable percentage of the Participant's Employer
Contribution subaccounts, all of the Participant's Years of Service with the
Employer or an Affiliated Employer shall be taken into account. If specified
in the Adoption Agreement, Years of Service with a predecessor employer will
be treated as service for the Employer; provided, however, if the Employer
maintains the plan of a predecessor employer, Years of Service with such
predecessor employer will be treated as service with the Employer without
regard to any election.
8.6 Forfeiture of Nonvested Amounts.
<PAGE>
(a) For Plan Years beginning before 1985, any portion of a Participant's
Account that is not vested shall be forfeited by him as of the last day of
the Plan Year in which a Break in Service occurs. For Plan Years beginning
after 1984, any portion of a Participant's Account that is not vested shall
be forfeited by him as of the last day of the Plan Year in which his fifth
consecutive Break in Service occurs. Any amounts thus forfeited shall be
reallocated as provided in ARTICLE 5 and shall not be considered part of a
Participant's Account in computing his vested interest. The remaining portion
of the Participant's Account will be nonforfeitable.
(b) If a distribution is made at a time when a Participant has a vested
right to less than one hundred percent (100%) of the value of the Participant's
Account attributable to Employer Contributions and forfeitures, as determined
in accordance with the provisions of section 8.3, and the nonvested portion of
the Participant's Account has not yet been forfeited in accordance with
paragraph (a) above:
(i) a separate remainder subaccount shall be established for the
Participant's interest in the Plan as of the time of the distribution, and
(ii) at any relevant time the Participant's vested portion of the separate
remainder subaccount shall be equal to an amount (X) determined by the following
formula:
X = P(AB + (R x D)) - (R x D)
For purposes of applying the formula: P is the vested percentage at
the relevant time; AB is the Account balance at the relevant time; D is the
amount of the distribution; and R is the ratio of the Account balance at the
relevant time to the Account balance after distribution. 8.7 Reinstatement
of Benefit. If a benefit is forfeited because a Participant or Beneficiary
cannot be found, such benefit will be reinstated if a claim is made by the
Participant or Beneficiary.
ARTICLE 9
Joint and Survivor
Annuity Requirements
9.1 General. The provisions of this ARTICLE shall apply to any Participant
who is credited with at least one (1) Hour of Service with the Employer on or
after August 23, 1984, and such other Participants as provided in section 9.7.
9.2 Qualified Joint and Survivor Annuity. Unless an optional form of
benefit is selected pursuant to a Qualified Election within the ninety (90)
day period ending on the Annuity Starting Date, a married Participant's
Vested Account Balance will be paid in the form of a Qualified Joint and
Survivor Annuity and an unmarried Participant's Vested Account Balance will
be paid in the form of a life annuity. The Participant may elect to have
such annuity distributed upon attainment of the Earliest Retirement Age under
the Plan.
9.3 Qualified Preretirement Survivor Annuity. Unless an optional form of
benefit has been selected within the Election Period pursuant to a Qualified
Election, if a Participant dies before the Annuity Starting Date, then the
Participant's Vested Account Balance shall be applied toward the purchase of
an annuity for the life of the Surviving Spouse. The Surviving Spouse may
elect to have such annuity distributed within a reasonable period after the
Participant's death.
9.4 Definitions.
<PAGE>
(a) Election Period.
(i) The period which begins on the first day of the Plan Year in which
the Participant attains age thirty-five (35) and ends on the date of the
Participant's death. If a Participant separates from service prior to the
first day of the Plan Year in which age thirty-five (35) is attained, with
respect to the Account balance as of the date of separation, the Election
Period shall begin on the date of separation.
(ii) A Participant who has not yet attained age thirty-five (35) as of
the end of any current Plan Year may make a special Qualified Election to
waive the qualified preretirement survivor annuity for the period beginning
on the date of such election and ending on the first day of the Plan Year in
which the Participant will attain age thirty-five (35). Such election shall
not be valid unless the Participant receives a written explanation of the
qualified preretirement survivor annuity in such terms as are comparable to
the explanation required under section 9.5. Qualified preretirement survivor
annuity coverage will be automatically reinstated as of the first day of the
Plan Year in which the Participant attains age thirty-five (35). Any new
waiver on or after such date shall be subject to the full requirements of
this ARTICLE.
(b) Earliest Retirement Age. The earliest date on which, under the Plan,
the Participant could elect to receive retirement benefits.
(c) Qualified Election.
(i) A waiver of a Qualified Joint and Survivor Annuity or a qualified
preretirement survivor annuity. Any waiver of a Qualified Joint and Survivor
Annuity or a qualified preretirement survivor annuity shall not be effective
unless:
(1) the Participant's Spouse consents in writing to the election;
(2) the election designates a specific Beneficiary, including any class
of Beneficiaries or any contingent Beneficiaries, which may not be changed
without spousal consent (or the Spouse expressly permits designations by the
Participant without any further spousal consent);
(3) the Spouse's consent acknowledges the effect of the election; and
(4) the Spouse's consent is witnessed by a Plan representative or notary
public. Additionally, a Participant's waiver of the Qualified Joint and
Survivor Annuity shall not be effective unless the election designates a form
of benefit payment which may not be changed without spousal consent (or the
Spouse expressly permits designations by the participant without any further
spousal consent). If it is established to the satisfaction of a Plan
representative that there is no Spouse or that the Spouse cannot be located,
a waiver will be deemed a Qualified Election.
(ii) Any consent by a Spouse obtained under this provision (or
establishment that the consent of Spouse may not be obtained) shall be
effective only with respect to such Spouse. A consent that permits
designations by the Participant without any requirement of further consent by
such Spouse must acknowledge that the Spouse has the right to limit consent
to a specific Beneficiary, and a specific form of benefit where applicable,
and that the Spouse voluntarily elects to relinquish either or both of such
rights. A revocation of a prior waiver may be made by a Participant without
the consent of the Spouse at any time before the commencement of benefits.
The number of revocations shall not be limited. No consent obtained under
this provision shall be valid unless the Participant has received notice as
provided in section 9.5.
(d) Qualified Joint and Survivor Annuity. An immediate annuity for the
life of the Participant with a survivor annuity for the life of the Spouse
which equals fifty percent (50%)
<PAGE>
of the amount of the annuity which is payable during the joint lives of the
Participant and the Spouse and which is the amount of benefit which can be
purchased with the Participant's Vested Account Balance.
(e) Spouse (Surviving Spouse). The Spouse or Surviving Spouse of the
Participant, provided that a former spouse will be treated as the Spouse or
Surviving Spouse and a current Spouse will not be treated as the Spouse or
Surviving Spouse to the extent provided under a qualified domestic relations
order as described in section 414(p) of the Code.
(f) Annuity Starting Date. The first day of the first period for which
an amount is paid as an annuity or any other form.
(g) Vested Account Balance. The aggregate value of the Participant's
Vested Account Balances derived from Employer and Employee contributions
(including rollovers and direct transfers), whether vested before or upon death,
including the proceeds of insurance contracts if any, on the Participant's
life. The provisions of this ARTICLE shall apply to a Participant who is
vested in amounts attributable to Employer Contributions, Employee contributions
(or both) at the time of death or distribution. 9.5 Notice Requirements
(a) In the case of a Qualified Joint and Survivor Annuity, the Plan
Administrator shall no less than thirty (30) days and no more than ninety
(90) days prior to the Annuity Starting Date, provide each Participant a
written explanation of:
(i) the terms and conditions of a Qualified Joint and Survivor Annuity;
(ii) the Participant's right to make and the effect of an election to
waive the Qualified Joint and Survivor Annuity form of benefit;
(iii) the rights of a Participant's Spouse; and
(iv) the right to make, and the effect of, a revocation of a previous
election to waive the Qualified Joint and Survivor Annuity.
(b) In the case of a qualified preretirement survivor annuity as described
in section 9.3, the Plan Administrator shall provide each Participant within
the applicable period for such Participant a written explanation of the
qualified preretirement survivor annuity in such terms and in such manner as
would be comparable to the explanation provided for meeting the requirements
of subsection (a) applicable to a Qualified Joint and Survivor Annuity.
(c) The applicable period for a Participant is whichever of the following
periods ends last:
(i) the period beginning with the first day of the Plan Year in which
the Participant attains age thirty-two (32) and ending with the close of the
Plan Year preceding the Plan Year in which the Participant attains age
thirty-five (35);
(ii) a reasonable period ending after the individual becomes a Participant;
(iii) a reasonable period ending after subsection (e) ceases to apply to
the Participant;
(iv) a reasonable period ending after this ARTICLE first applies to the
Participant. Notwithstanding the foregoing, notice must be provided within a
reasonable period ending after separation from service in the case of a
Participant who separates from service before attaining age thirty-five (35).
(d) For purposes of applying subsection (c), a reasonable period ending
after the enumerated events described above in subsections (ii), (iii) and
(iv) is the end of the two-year period beginning one (1) year prior to the
date the applicable event occurs, and ending one (1) year after that date.
In the case of a Participant who separates from service before the Plan Year
in which age thirty-five (35) is attained, notice shall be provided within
the two (2) year
<PAGE>
period beginning one (1) year prior to separation and ending one (1) year
after separation. If such a participant thereafter returns to employment
with the Employer, the applicable period for such Participant shall be
redetermined.
(e) Notwithstanding the other requirements of this section, the
respective notices prescribed by this section need not be given to a
Participant if:
(i) the Plan fully subsidizes the cost of a Qualified Joint and Survivor
Annuity or qualified preretirement survivor annuity; and
(ii) the Plan does not allow the Participant to waive the Qualified Joint
and Survivor Annuity or qualified preretirement survivor annuity and does not
allow a married Participant to designate a nonspouse Beneficiary.
For purposes of this subsection, a plan fully subsidizes the costs
of a benefit if no increase in cost, or decrease in benefits to the
Participant may result from the participant's failure to elect another
benefit.
9.6 Safe Harbor Rules.
(a) This section shall apply to a Participant in a profit sharing plan,
and to any distribution, made on or after the first day of the first Plan
year beginning after December 31, 1988, from or under a separate account
attributable solely to accumulated deductible Employee contributions, as
defined in section 72(o)(5)(B) of the Code, and maintained on behalf of a
Participant in a money purchase pension plan (including a target benefit
plan) if the following conditions are satisfied:
(i) the Participant does not or cannot elect payments in the form of a
life annuity; and
(ii) on the death of a Participant, the Participant's Vested Account
Balance will be paid to the Participant's Surviving Spouse, but if there is
no Surviving Spouse, or if the Surviving Spouse has consented in a manner
conforming to a Qualified Election, then to the Participant's Designated
Beneficiary.
(b) The Surviving Spouse may elect to have distribution of the Vested
Account Balance commence within the ninety (90) day period following the date
of the Participant's death. The Account balance shall be adjusted for gains
or losses occurring after the Participant's death in accordance with the
provisions of the Plan governing the adjustment of Account balances for other
types of distributions.
(c) This section shall not be operative with respect to a Participant in
a profit sharing plan if the plan is a direct or indirect transferee of a
defined benefit plan, money purchase plan, a target benefit plan, stock
bonus, or profit sharing plan which is subject to the survivor annuity
requirements of sections 401(a)(11) and 417 of the Code. If this section is
operative, then the provisions of this ARTICLE, other than section 9.7, shall
be inoperative.
(d) The Participant may waive the spousal death benefit described in
this section at any time provided that no such waiver shall be effective
unless it satisfies the conditions of section 9.4(c) (other than the
notification requirement referred to therein) that would apply to the
Participant's waiver of the qualified preretirement survivor annuity.
(e) For purposes of this section, Vested Account Balance shall mean, in
the case of a money purchase pension plan or a target benefit plan, the
Participant's separate Account balance attributable solely to accumulated
deductible Employee contributions within the meaning of section 72(o)(5)(B)
of the Code. In the case of a profit sharing plan, Vested Account Balance
shall have the same meaning as provided in section 9.4(g).
9.7 Transitional Rules.
<PAGE>
(a) Any living Participant not receiving benefits on August 23, 1984,
who would otherwise not receive the benefits prescribed by the previous
sections of this ARTICLE must be given the opportunity to elect to have the
prior sections of this ARTICLE apply if such Participant is credited with at
least one (1) Hour of Service under this Plan or a predecessor plan in a Plan
Year beginning on or after January 1, 1976, and such Participant had at least
ten (10) years of vesting service when he or she separated from service.
(b) Any living Participant not receiving benefits on August 23, 1984,
who was credited with at least one (1) Hour of Service under this Plan or a
predecessor plan on or after September 2, 1974, and who is not otherwise
credited with any service in a Plan Year beginning on or after January 1,
1976, must be given the opportunity to have his or her benefits paid in
accordance with subsection (d).
(c) The respective opportunities to elect (as described in subsections
(a) and (b) above) must be afforded to the appropriate Participants during
the period commencing on August 23, 1984, and ending on the date benefits
would otherwise commence to said Participants.
(d) Any Participant who has elected pursuant to subsection (b) and any
Participant who does not elect under subsection (a) or who meets the
requirements of subsection (a) except that such Participant does not have at
least ten (10) years of vesting service when he or she separates from
service, shall have his or her benefits distributed in accordance with all of
the following requirements if benefits would have been payable in the form of
a life annuity:
(i) Automatic Joint and Survivor Annuity. If benefits in the form of a
life annuity become payable to a married Participant who:
(1) begins to receive payments under the Plan on or after Normal
Retirement Age; or
(2) dies on or after Normal Retirement Age while still working for the
Employer; or
(3) begins to receive payments on or after the qualified early
retirement age; or
(4) separates from service on or after attaining Normal Retirement Age
(or the qualified early retirement age) and after satisfying the eligibility
requirements for the payment of benefits under the Plan and thereafter dies
before beginning to receive such benefits;
then such benefits will be received under this Plan in the form of a
Qualified Joint and Survivor Annuity, unless the Participant has elected
otherwise during the Election Period. The Election Period must begin at
least six (6) months before the Participant attains qualified early retirement
age and end not more than ninety (90) days before the commencement of benefits.
Any election hereunder will be in writing and may be changed by the Participant
at any time.
(ii) Election of Early Survivor Annuity. A Participant who is employed
after attaining the qualified early retirement age will be given the
opportunity to elect, during the Election Period, to have a survivor annuity
payable on death. If the Participant elects the survivor annuity, payments
under such annuity must not be less than the payments which would have been
made to the Spouse under the Qualified Joint and Survivor Annuity if the
Participant had retired on the day before his or her death. Any election
under this provision will be in writing and may be changed by the Participant
at any time. The Election Period begins on the later of (1)The 90th day
before the Participant attains the qualified early retirement age; or (2)The
date on which participation begins, and ends on the date the Participant
terminates employment.
(e) The following terms shall have the meanings specified herein:
(i) Qualified Early Retirement Age. The latest of:
<PAGE>
(1) the earliest date, under the Plan, on which the Participant may elect to
receive retirement benefits;
(2) the first day of the 120th month beginning before the Participant
reaches Normal Retirement Age; or
(3) the date the Participant begins participation.
(ii) Qualified Joint and Survivor Annuity. An annuity for the life of the
Participant with a survivor annuity for the life of the Spouse as described
in section 9.4(d).
ARTICLE 10
Distribution Provisions
10.1 Vesting on Distribution Before Break in Service.
(a) If an Employee terminates service, and the value of the Employee's
Vested Account Balance derived from Employer and Employee contributions is
not greater than three thousand five hundred dollars ($3,500), the Employee
will receive a distribution of the value of the entire vested portion of such
Account balance and the nonvested portion will be treated as a forfeiture.
For purposes of this section, if the value of an Employee's Vested Account
Balance is zero, the Employee shall be deemed to have received a distribution
of such Vested Account Balance. A Participant's Vested Account Balance shall
not include accumulated deductible Employee contributions within the meaning
of section 72(o)(5)(B) of the Code for Plan Years beginning prior to January
1, 1989.
(b) If an Employee terminates service and elects, in accordance with
this ARTICLE, to receive the value of his Vested Account Balance, the
nonvested portion will be treated as a forfeiture. If the Employee elects to
have distributed less than the entire vested portion of the Account balance
derived from Employer Contributions, the part of the nonvested portion that
will be treated as a forfeiture is the total nonvested portion multiplied by
a fraction, the numerator of which is the amount of the distribution
attributable to Employer Contributions and the denominator of which is the
total value of the vested Employer derived Account balance.
(c) If an Employee receives a distribution pursuant to this section and
the Employee resumes employment covered under this Plan, the Employee's
Employer-derived Account balance will be restored to the amount on the date
of distribution if the Employee repays to the Plan the full amount of the
distribution attributable to Employer Contributions before the earlier of
five (5) years after the first date on which the Participant is subsequently
reemployed by the Employer, or the date the Participant incurs five (5)
consecutive one (1) year Breaks in Service following the date of the
distribution. If an Employee is deemed to receive a distribution pursuant to
this section, and the Employee resumes employment covered under this Plan
before the date the Participant incurs five (5) consecutive one (1) year
Breaks in Service, upon the reemployment of such Employee, the
Employer-derived Account balance of the Employee will be restored to the
amount on the date of such deemed distribution.
10.2 Restrictions on Immediate Distributions.
(a) If the value of a Participant's Vested Account Balance derived from
Employer and Employees contributions exceeds (or at the time of any prior
distribution exceeded) three thousand five hundred dollars ($3,500) and the
Account balance is immediately distributable,
<PAGE>
the Participant and the Participant's Spouse (or where either the Participant
or the Spouse has died, the survivor) must consent to any distribution of
such Account balance. The consent of the Participant and the Participant's
Spouse shall be obtained in writing within the ninety (90) day period ending
on the Annuity Starting Date. The Annuity Starting Date is the first day of
the first period for which an amount is paid as an annuity or any other form.
The Plan Administrator shall notify the Participant and the Participant's
Spouse of the right to defer any distribution until the Participant's Account
balance is no longer immediately distributable. Such notification shall
include a general description of the material features, and an explanation of
the relative values of, the optional forms of benefit available under the
Plan in a manner that would satisfy the notice requirements of section
417(a)(3), and shall be provided no less than thirty (30) days and no more
than ninety (90) days prior to the Annuity Starting Date.
(b) Notwithstanding the provisions of subsection (a), only the
Participant need consent to the commencement of a distribution in the form of
a Qualified Joint and Survivor Annuity while the Account balance is
immediately distributable. (Furthermore, if payment in the form of a
Qualified Joint and Survivor Annuity is not required with respect to the
Participant pursuant to section 9.6 of the Plan, only the Participant need
consent to the distribution of an Account balance that is immediately
distributable). Neither the consent of the Participant nor the Participant's
Spouse shall be required to the extent that a distribution is required to
satisfy section 401(a)(9) or section 415 of the Code. In addition, upon
termination of this Plan if the Plan does not offer an annuity option
(purchased from a commercial provider), the Participant's Account balance
may, without the Participant's consent, be distributed to the Participant or
transferred to another defined contribution plan (other than an employee
stock ownership plan as defined in section 4975(e) (7) of the Code) within
the same controlled group.
(c) An Account balance is immediately distributable if any part of the
Account balance could be distributed to the Participant (or Surviving Spouse)
before the Participant attains (or would have attained if not deceased) the
later of Normal Retirement Age or age sixty-two (62).
(d) For purposes of determining the applicability of the foregoing
consent requirements to distributions made before the first day of the first
Plan Year beginning after December 31, 1988, the Participant's Vested Account
Balance shall not include amounts attributable to accumulated deductible
Employee contributions within the meaning of section 72(o)(5)(B) of the Code.
10.3 Commencement of Benefits.
(a) Unless the Participant elects otherwise, distribution of benefits
will begin no later than the 60th day after the latest of the close of the
Plan Year in which:
(i) the Participant attains age sixty-five (65) (or Normal Retirement
Age, if earlier);
(ii) the 10th anniversary of the year in which the Participant commenced
participation in the Plan occurs; or
(iii) the Participant terminates service with the Employer.
(b) Notwithstanding the foregoing, the failure of a Participant and
Spouse to consent to a distribution while a benefit is immediately
distributable, within the meaning of section 10.2 of the Plan, shall be
deemed to be an election to defer commencement of payment of any benefit
sufficient to satisfy this section.
<PAGE>
10.4 Early Retirement With Age and Service Requirement. If a Participant
separates from service before satisfying the age requirement for early
retirement, but has satisfied the service requirement, the Participant will
be entitled to elect an early retirement benefit upon satisfaction of such
age requirement.
10.5 Nontransferability of Annuities. Any annuity contract distributed
herefrom must be nontransferable.
10.6 Conflicts With Annuity Contracts. The terms of any annuity contract
purchased and distributed by the Plan to a Participant or Spouse shall comply
with the requirements of this Plan.
ARTICLE 11
Timing and
Modes of Distribution
11.1 General Rules.
(a) Subject to ARTICLE 9, the requirements of this ARTICLE shall apply
to any distribution of a Participant's interest and will take precedence over
any inconsistent provisions of this Plan. Unless otherwise specified, the
provisions of this ARTICLE apply to calendar years beginning after December
31, 1984.
(b) All distributions required under this ARTICLE shall be determined
and made in accordance with the income tax regulations under section
401(a)(9) of the Code, including the minimum distribution incidental benefit
requirement of section 1.401(a)(9)-2 of the proposed regulations.
11.2 Required Beginning Date. The entire interest of a Participant must be
distributed or begin to be distributed no later than the Participant's
Required Beginning Date.
11.3 Limits on Distribution Periods. As of the first Distribution Calendar
Year, distributions, if not made in a single-sum, may only be made over one
of the following periods (or a combination thereof):
(a) the life of the Participant;
(b) the life of the Participant and a Designated Beneficiary;
(c) a period certain not extending beyond the Life Expectancy of the
Participant; or
(d) a period certain not extending beyond the joint and last survivor
expectancy of the Participant and a Designated Beneficiary
11.4 Determination of Amount to be Distributed Each Year.
(a) Individual Account.
(i) If a Participant's Benefit is to be distributed over (1)Ea. period
not extending beyond the Life Expectancy of the Participant or the joint life
and last survivor expectancy of the Participant and the Participant's
Designated Beneficiary or (2)Ea. period not extending beyond the Life
Expectancy of the Designated Beneficiary, the amount required to be
distributed for each calendar year, beginning with distributions for the
first Distribution Calendar Year, must at least equal the quotient obtained
by dividing the Participant's Benefit by the Applicable Life Expectancy.
(ii) For calendar years beginning before January 1, 1989, if the
Participant's Spouse is not the Designated Beneficiary, the method of
distribution selected must assure that at least fifty
<PAGE>
percent (50%) of the present value of the amount available for distribution
is paid within the Life Expectancy of the Participant.
(iii) For calendar years beginning after December 31, 1988, the amount to
be distributed each year, beginning with distributions for the first
Distribution Calendar Year shall not be less than the quotient obtained by
dividing the Participant's Benefit by the lesser of (1)The Applicable Life
Expectancy or (2)If the Participant's Spouse is not the Designated
Beneficiary, the applicable divisor determined from the table set forth in
Q&A-4 of section 1.401(a)(9)-2 of the proposed regulations. Distributions
after the death of the Participant shall be distributed using the Applicable
Life Expectancy in subsection (a)(i) above as the relevant divisor without
regard to proposed regulations section 1.401(a)(9)-2.
(iv) The minimum distribution required for the Participant's first
Distribution Calendar Year must be made on or before the Participant's
Required Beginning Date. The minimum distribution for other calendar years,
including the minimum distribution for the Distribution Calendar Year in
which the Employee's Required Beginning Date occurs, must be made on or
before December 31 of that Distribution Calendar Year.
(b) Other Forms. If the Participant's Benefit is distributed in the
form of an annuity purchased from an insurance company, distributions
thereunder shall be made in accordance with the requirements of section
401(a)(9) of the Code and the proposed regulations thereunder.
11.5 Death Distribution Provisions.
(a) Distribution Beginning Before Death. If the Participant dies after
distribution of his or her interest has begun, the remaining portion of such
interest will continue to be distributed at least as rapidly as under the
method of distribution being used prior to the Participant's death.
(b) Distribution Beginning After Death. If the Participant dies before
distribution of his or her interest begins, distribution of the Participant's
entire interest shall be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death except to the
extent that an election is made to receive distributions in accordance with
(i) or (ii) below:
(i) if any portion of the Participant's interest is payable to a
Designated Beneficiary, distributions may be made over the life or over a
period certain not greater than the Life Expectancy of the Designated
Beneficiary commencing on or before December 31 of the calendar year
immediately following the calendar year in which the Participant died;
(ii) if the Designated Beneficiary is the Participant's Surviving Spouse,
the date distributions are required to begin in accordance with (i) above
shall not be earlier than the later of (1)December 31 of the calendar year
immediately following the calendar year in which the Participant died and
(2)December 31 of the calendar year in which the Participant would have
attained age seventy and one-half (70E1/2).
(c) If the Participant has not made an election pursuant to this section
by the time of his or her death, the Participant's Designated Beneficiary
must elect the method of distribution no later than the earlier of
(1)December 31 of the calendar year in which distributions would be required
to begin under this section; or (2)December 31 of the calendar year which
contains the fifth anniversary of the date of death of the Participant. If
the Participant has no Designated Beneficiary, or if the Designated
Beneficiary does not elect a method of
<PAGE>
distribution, distribution of the Participant's entire interest must be
completed by December 31 of the calendar year containing the fifth
anniversary of the Participant's death.
(d) For purposes of subsection (b) above, if the Surviving Spouse dies
after the Participant, but before payments to such Spouse begin, the
provisions of subsection (b), with the exception of paragraph (ii) therein,
shall be applied as if the Surviving Spouse were the Participant.
(e) For purposes of this section, any amount paid to a child of the
Participant will be treated as if it had been paid to the Surviving Spouse if
the amount becomes payable to the Surviving Spouse when the child reaches the
age of majority.
(f) For the purposes of this section, distribution of a Participant's
interest is considered to begin on the Participant's Required Beginning Date
(or, if subsection (d) above is applicable, the date distribution is required
to begin to the Surviving Spouse pursuant to subsection (b) above). If
distribution in the form of an annuity described in section 11.4(b) above
irrevocably commences to the Participant before the Required Beginning Date,
the date distribution is considered to begin is the date distribution
actually commences.
11.6 Designation of Beneficiary. Subject to the rules of ARTICLE 9, a
Participant (or former Participant) may designate from time to time any
person or persons (who may be designated continentally or successively and
may be an entity other than a natural person) as his Beneficiary who will be
entitled to receive any undistributed amounts credited to the participant's
separate Account under the Plan at the time of the participant's death. Any
such Beneficiary designation by a Participant shall be made in writing in the
manner prescribed by the Plan Administrator, and shall be effective only when
filed with the Plan Administrator during the participant's lifetime. A
Participant may change or revoke his Beneficiary designation at any time in
the manner prescribed by the Plan Administrator. If any portion of the
participant's Account is invested in insurance pursuant to ARTICLE 14, the
Beneficiary of the benefits under the insurance policy shall be the person or
persons designated under the policy. If the Designated Beneficiary (or each
of the Designated Beneficiaries) predeceases the Participant, the
participant's Beneficiary designation shall be ineffective. If no
Beneficiary designation is in effect at the time of the Participant's death,
his Beneficiary shall be his estate.
11.7 Definitions.
(a) Applicable Life Expectancy. The Life expectancy (or joint and last
survivor expectancy) calculated using the attained age of the Participant (or
Designated Beneficiary) as of the Participant's (or Designated Beneficiary)
birthday in the applicable calendar year reduced by one (1) for each calendar
year which has elapsed since the date Life Expectancy was first calculated.
If Life Expectancy is being recalculated, the Applicable Life Expectancy
shall be the Life Expectancy as so recalculated. The applicable calendar
year shall be the first Distribution Calendar Year, and if Life Expectancy is
being recalculated such succeeding calendar year. If annuity payments
commence in accordance with section 11.4(b) before the Required Beginning
Date, the applicable calendar year is the year such payments commence. If
distribution is in the form of an immediate annuity purchased after the
participant's death with the participant's remaining interest, the applicable
calendar year is the year of purchase.
(b) Designated Beneficiary. The individual who is designated as the
Beneficiary under the Plan in accordance with section 401(a)(9) and the
proposed regulations thereunder.
(c) Distribution Calendar Year. A calendar year for which a minimum
distribution is required. For distributions beginning before the
participant's death, the first Distribution Calendar Year is the calendar
year immediately preceding the calendar year which contains
<PAGE>
the participant's Required Beginning Date. For distributions beginning after
the participant's death, the first Distribution Calendar Year is the calendar
year in which distributions are required to begin pursuant to section 11.5
above.
(d) Life Expectancy.
(i) Life Expectancy and joint and last survivor expectancy are computed
by use of the expected return multiples in Tables V and VI of section 1.72-9
of the income tax regulations.
(ii) Unless otherwise elected by the Participant (or Spouse, in the case
of distributions described in section 11.5(b)(ii) above) by the time
distributions are required to begin, life expectancies shall be recalculated
annually. Such election shall be irrevocable as to the Participant (or
Spouse) and shall apply to all subsequent years. The Life Expectancy of a
non-Spouse Beneficiary may not be recalculated.
(e) Participant's Benefit.
(i) The Account balance as of the last valuation date in the calendar
year immediately preceding the Distribution Calendar Year (valuation calendar
year) increased by the amount of any contributions or forfeitures allocated
to the Account balance as of dates in the valuation calendar year after the
valuation date and decreased by distributions made in the valuation calendar
year after the valuation date.
(ii) For purposes of subsection (i) above, if any portion of the minimum
distribution for the first Distribution Calendar Year is made in the second
Distribution Calendar Year on or before the Required Beginning Date, the
amount of the minimum distribution made in the second Distribution Calendar
Year shall be treated as if it had been made in the immediately preceding
Distribution Calendar Year.
(f) Required Beginning Date.
(i) General Rule. The Required Beginning Date of a Participant is the
first day of April of the calendar year following the calendar year in which
the Participant attains age seventy and one-half (70E1/2).
(ii) Transitional Rules. The Required Beginning Date of a Participant
who attains age seventy and one-half (70E1/2) before January 1, 1988, shall
be determined in accordance with (1) or (2) below:
(1) Non-Five-Percent Owners. The Required Beginning Date of a
Participant who is not a Five Percent (5%) Owner is the first day of April of
the calendar year following the calendar year in which the later of
retirement or attainment of age seventy and one-half (70E1/2) occurs.
(2) Five Percent Owners. The Required Beginning Date of a Participant
who is a Five Percent (5%) Owner during any year beginning after December 31,
1979, is the first day of April following the later of:
(2.a) the calendar year in which the Participant attains age seventy and
one-half (70E1/2); or
(2.b) the earlier of the calendar year with or within which ends the Plan
Year in which the Participant becomes a Five Percent (5%) Owner, or the
calendar year in which the Participant retires. The Required Beginning Date
of a Participant who is not a Five Percent (5%) Owner who attains age seventy
and one-half (70E1/2) during 1988 and who has not retired as of January 1,
1989, is April 1, 1990.
(iii) Five Percent Owner. A Participant is treated as a Five Percent (5%)
Owner for purposes of this section if such Participant is a Five Percent (5%)
Owner as defined in section 416(i) of the Code (determined in accordance with
section 416 but without regard to whether
<PAGE>
the Plan is top-heavy) at any time during the Plan Year ending with or within
the calendar year in which such owner attains age sixty-six and one-half
(66E1/2) or any subsequent year.
(iv) Once distributions have begun to a Five Percent (5%) Owner under
this section, they must continue to be distributed, even if the Participant
ceases to be a Five Percent (5%) Owner in a subsequent year.
11.8 Transitional Rule.
(a) Notwithstanding the other requirements of this ARTICLE and subject
to the requirements of ARTICLE 9, distribution on behalf of any Employee,
including a Five Percent (5%) Owner, may be made in accordance with all of
the following requirements (regardless of when such distribution commences):
(i) The distribution by the Trust is one which would not have
disqualified such trust under section 401(a)(9) of the Internal Revenue Code
as in effect prior to amendment by the Deficit Reduction Act of 1984.
(ii) The distribution is in accordance with a method of distribution
designated by the Employee whose interest in the Trust is being distributed
or, if the Employee is deceased, by a Beneficiary of such Employee.
(iii) Such designation was in writing, was signed by the Employee or the
Beneficiary, and was made before January 1, 1984.
(iv) The Employee had accrued a benefit under the Plan as of December 31,
1983.
(v) The method of distribution designated by the Employee or the
Beneficiary specifies the time at which distributions will be made, and in
the case of any distribution upon the Employee's death, the Beneficiaries of
the Employee listed in order of priority.
(b) A distribution upon death will not be covered by this transitional
rule unless the information in the designation contains the required
information described above with respect to the distributions to be made upon
the death of the Employee.
(c) For any distribution which commences before January 1, 1984, but
continues after December 31, 1983, the Employee, or the Beneficiary, to whom
such distribution is being made, will be presumed to have designated the
method of distribution under which the distribution is being made if the
method of distribution was specified in writing and the distribution
satisfies the requirements in subsections (a)(i) and (a)(v).
(d) If a designation is revoked, any subsequent distribution must
satisfy the requirements of section 401(a)(9) of the Code and the proposed
regulations thereunder. If a designation is revoked subsequent to the date
distributions are required to begin, the Trust must distribute by the end of
the calendar year following the calendar year in which the revocation occurs
the total amount not yet distributed which would have been required to have
been distributed to satisfy section 401(a)(9) of the Code and the regulations
thereunder but for the section 242(b)(2) election. For calendar years
beginning after December 31, 1988, such distributions must meet the minimum
distribution incidental benefit requirements in section 1.401(a)(9)-2 of the
proposed regulations. Any changes in the designation will be considered to
be a revocation of the designation. However, the mere substitution or
addition of another beneficiary (one not named in the designation) under the
designation will not be considered to be a revocation of the designation, so
long as such substitution or addition does not alter the period over which
distributions are to be made under the designation, directly or indirectly
(for example, by altering the relevant measuring life). In the case in which
an amount is
<PAGE>
transferred or rolled over from one plan to another plan, the rules in Q&A
J-2 and Q&A J-3 shall apply.
11.9 Optional Forms of Benefit.
(a) Except to the extent benefits are required to be paid in the form of
an automatic joint and survivor annuity under Article 9, any amount which a
Participant shall be entitled to receive under the Plan shall be distributed
in one or a combination of the following ways:
(i) in a lump-sum payment of cash, the amount of which shall be
determined by redeeming all Shares credited to the Participant's Account
under the Plan as of the date of distribution;
(ii) in a lump-sum payment including a distribution in kind of all Shares
credited to the Participant's Account under the Plan as of the date of
distribution;
(iii) in substantially equal monthly, quarterly, or annual installment
payments of cash, or the distribution of Shares in kind, over a period
certain not to exceed the Life Expectancy of the Participant or the joint and
last survivor Life Expectancy of the Participant and his Beneficiary,
determined in each case as of the earlier of: (1) the end of the Plan Year
in which occurs the event entitling the Participant to a distribution of
benefits, or (2) the date such installments commence;
(iv) if permitted by the Sponsor, in monthly, quarterly, or annual
installment payments of cash, or the distribution of Shares in kind, so that
the amount distributed in each Plan Year equals the quotient obtained by
dividing the Participant's Account at the beginning of that Plan Year by the
joint and last survivor Life Expectancy of the Participant and the
Beneficiary for that Plan Year. The Life Expectancy will be computed using
the recomputation method described in section 11.7(d). Unless the Spouse of
the retired Participant is the Beneficiary, the actuarial present value of
all expected payments to the retired Participant must be more than fifty
percent (50%) of the actuarial present value of payments to the retired
Participant and the Beneficiary; or
(v) by application of the Participant's vested Account to the purchase
of a nontransferable immediate or deferred annuity contract, on an individual
or group basis. Unless the Spouse of the retired Participant is the
Beneficiary, the actuarial present value of all expected payments to the
retired Participant must be more than fifty percent (50%) of the actuarial
present value of payments to the retired Participant and the Beneficiary.
(b) If the Participant fails to select a method of distribution, except
as may be required by ARTICLE 9, all amounts which he is entitled to receive
under the Plan shall be distributed to him in a lump-sum payment.
ARTICLE 12
Withdrawals
12.1 Withdrawal of Nondeductible Voluntary Contributions. Subject to the
Qualified Election requirements of ARTICLE 9 and section 12.3, any
Participant who has made nondeductible voluntary contributions may, upon
thirty (30) days notice in writing filed with the Plan Administrator, have
paid to him all or any portion of the fair market value of his nondeductible
voluntary contribution subaccount.
12.2 Hardship Withdrawals. If the Adoption Agreement so provides and the
Employer elects, this section applies only to the profit sharing contribution
subaccount and only if the
<PAGE>
profit sharing allocation formula selected in the Adoption Agreement is not
integrated with Social Security.
(a) Demonstration of Need. Subject to the Qualified Election
requirements of ARTICLE 9 and section 12.3, if a Participant establishes an
immediate and heavy financial need for funds because of a hardship resulting
from the purchase or renovation of a primary residence, the education of the
Participant or a member of his immediate family (including special
education), the medical or personal expenses of the Participant or a member
of his immediate family, or other demonstrable emergency as determined by the
Plan Administrator on a uniform and nondiscriminatory basis, the Participant
shall be permitted, subject to the limitations of subsection (b) below, to
make a hardship withdrawal of an amount credited to his profit sharing
contribution subaccount under the Plan.
(b) Amount of Hardship Withdrawal. The amount of any hardship
withdrawal by a Participant under subsection (a) above shall not exceed the
amount required to meet the immediate financial need created by the hardship
and not reasonably available from other resources of the Participant.
(c) Prior Withdrawal of Nondeductible Voluntary Participant
Contributions. A Participant shall not be permitted to make a hardship
withdrawal under subsection (a) above unless he has already withdrawn, in
accordance with section 12.1, any amount credited to his nondeductible
voluntary contributions subaccount.
12.3 Manner of Making Withdrawals. Any withdrawal by a Participant under
the Plan shall be made only after the Participant files a written request
with the Plan Administrator specifying the nature of the withdrawal (and the
reasons therefor, if a hardship withdrawal), and the amount of funds
requested to be withdrawn. Upon approving any withdrawal, the Plan
Administrator shall furnish the Trustee with written instructions directing
the Trustee to make the withdrawal in a lump-sum payment of cash to the
Participant. In making any withdrawal payment, the Trustee shall be fully
entitled to rely on the instructions furnished by the Plan Administrator, and
shall be under no duty to make any inquiry or investigation with respect
thereto. Unless section 9.6 is applicable, if the Participant is married,
his Spouse must consent to the withdrawal pursuant to a Qualified Election
(as defined in section 9.4(c)) within the ninety (90) day period ending on
the date of the withdrawal.
12.4 Limitations on Withdrawals. The Plan Administrator may prescribe
uniform and nondiscriminatory rules and procedures limiting the number of
times a Participant may make a withdrawal under the Plan during any Plan
Year, and the minimum amount a Participant may withdraw on any single
occasion.
ARTICLE 13
Loans
13.1 General Provisions.
(a) If the Adoption Agreement so provides and the Employer so elects,
loans shall be made available to any Participant or Beneficiary who is a
party-in-interest (as defined in section 3(14) of ERISA) on a reasonably
equivalent basis. A Participant or Beneficiary who is not a
party-in-interest (as defined in section 3(14) of ERISA) shall not be
eligible to receive a loan under this ARTICLE.
<PAGE>
(b) Loans shall not be made available to Highly Compensated Employees
(as defined in section 414(q) of the Code) in an amount greater than the
amount made available to other Employees.
(c) Loans must be adequately secured and bear a reasonable interest rate.
(d) No Participant loan shall exceed the present value of the
participant's Vested Account Balance.
(e) Unless section 9.6 is applicable, a Participant must obtain the
consent of his or her Spouse, if any, to use of the Account balance as
security for the loan. Spousal consent shall be obtained no earlier than the
beginning of the ninety (90) day period that ends on the date on which the
loan is to be so secured. The consent must be in writing, must acknowledge
the effect of the loan, and must be witnessed by a Plan representative or
notary public. Such consent shall thereafter be binding with respect to the
consenting Spouse or any subsequent Spouse with respect to that loan. A new
consent shall be required if the Account balance is used for renegotiation,
extension, renewal or other revision of the loan.
(f) In the event of default, foreclosure on the note and attachment of
security will not occur until a distributable event occurs under the Plan.
(g) Loans will not be made to any shareholder-employee or
Owner-Employee. For purposes of this requirement, a shareholder-employee
means an Employee or officer of an electing small business (subchapter S)
corporation who owns (or is considered as owning within the meaning of
section 318(a)(1) of the Code), on any day during the taxable year of such
corporation, more than five percent (5%) of the outstanding stock of the
corporation.
(h) If a valid spousal consent has been obtained in accordance with
subsection (e), then, notwithstanding any other provision of this Plan, the
portion of the participant's Vested Account Balance used as a security
interest held by the Plan by reason of a loan outstanding to the Participant
shall be taken into account for purposes of determining the amount of the
Account balance payable at the time of death or distribution, but only if the
reduction is used as repayment of the loan. If less than one hundred percent
(100%) of the Participant's Vested Account Balance (determined without regard
to the preceding sentence) is payable to the Surviving Spouse, then the
Account balance shall be adjusted by first reducing the Vested Account
Balance by the amount of the security used as repayment of the loan, and then
determining the benefit payable to the Surviving Spouse.
13.2 Administration of Loan Program.
(a) The Plan's loan program will be administered by the Plan
Administrator.
(b) Loan requests shall be made on a form prescribed by the Plan
Administrator and shall comply with section 13.4.
(c) Loan requests that comply with all the requirements of this ARTICLE
shall be approved by the Plan Administrator.
(d) The rate of interest to be charged on loans shall be determined
under section 13.5.
(e) The only collateral that may be used as security for a loan, and the
limitations and requirements applicable, are determined under section 13.6.
(f) The rules regarding defaults are set forth in section 13.9. 13.3
Amount of Loan. Loans to any Participant or Beneficiary will not be made to
the extent that such loan, when added to the outstanding balance of all other
loans to the Participant or Beneficiary, would exceed the lesser of:
<PAGE>
(a) fifty thousand dollars ($50,000) reduced by the excess (if any) of
the highest outstanding balance of loans during the one (1) year period
ending on the day before the loan is made, over the outstanding balance of
loans from the Plan on the date the loan is made; or
(b) one-half (1/2) the present value of the nonforfeitable accrued
benefit of the Participant.
(c) For the purpose of the above limitation, all loans from all plans of
the Employer and other members of a group of employers described in sections
414(b), 414(c) and 414(m) of the Code are aggregated.
13.4 Manner of Making Loans. A request by a Participant for a loan shall be
made in writing to the Plan Administrator and shall specify the amount of the
loan, and the subaccount(s) or Shares of the Participant from which the loan
should be made. The terms and conditions on which the Plan Administrator
shall approve loans under the Plan shall be applied on a uniform and
nondiscriminatory basis with respect to all Participants. If a Participant's
request for a loan is approved by the Plan Administrator, the Plan
Administrator shall furnish the Trustee with written instructions directing
the Trustee to make the loan in a lump-sum payment of cash to the
Participant. In making any loan payment under this ARTICLE, the Trustee
shall be fully entitled to rely on the instructions furnished by the Plan
Administrator and shall be under no duty to make any inquiry or investigation
with respect thereto.
13.5 Terms of Loan. Loans shall be made on such terms and subject to such
limitations as the Plan Administrator may prescribe. Furthermore, any loan
shall, by its terms, require that repayment (principal and interest) be
amortized in level payments, not less frequently than quarterly, over a
period not extending beyond five (5) years from the date of the loan, unless
such loan is used to acquire a dwelling unit which, within a reasonable time
(determined at the time the loan is made) will be used as the principal
residence of the Participant. The rate of interest to be charged shall be
determined by the Plan Administrator in accordance with the rates quoted by
representative financial institutions in the local area for similar loans.
13.6 Security for Loan. Any loan to a Participant under the Plan shall be
secured by the pledge of all the Participant's right, title, and interest in
the Trust. Such pledge shall be evidenced by the execution of a promissory
note by the Participant which shall provide that, in the event of any default
by the Participant on a loan repayment, the Plan Administrator shall be
authorized (to the extent permitted by law) to deduct the amount of the loan
outstanding and any unpaid interest due thereon from the Participant's wages
or salary to be thereafter paid by the Employer, and to take any and all
other actions necessary and appropriate to enforce collection of the unpaid
loan. An assignment or pledge of any portion of the Participant's interest
in the Plan and a loan, pledge, or assignment with respect to any insurance
contract purchased under the Plan, will be treated as a loan under this
section. In the event the value of the Participant's vested Account at any
time is less than one hundred twenty-five percent (125%) of the outstanding
loan balance, the Plan Administrator shall request additional collateral of
sufficient value to adequately secure the repayment of the loan. Failure to
provide such additional collateral upon a request of the Plan Administrator
shall constitute an event of default.
13.7 Segregated Investment. Loans shall be considered a Participant
directed investment and, for the limited purposes of allocating earnings and
losses pursuant to ARTICLE 5, shall not be considered a part of the common
fund under the Trust.
13.8 Repayment of Loan. The Plan Administrator shall have the sole
responsibility for ensuring that a Participant timely makes all loan
repayments, and for notifying the Trustee in
<PAGE>
the event of any default by the Participant on the loan. Each loan repayment
shall be paid to the Trustee and shall be accompanied by written instructions
from the Plan Administrator that identify the Participant on whose behalf the
loan repayment is being made.
13.9 Default on Loan.
(a) In the event of a termination of the Participant's employment with
the Affiliated Employers or a default by a Participant on a loan repayment,
all remaining payments on the loan shall be immediately due and payable. The
Employer shall, upon the direction of the Plan Administrator, to the extent
permitted by law, deduct the total amount of the loan outstanding and any
unpaid interest due thereon from the wages or salaries payable to the
Participant by the Employer in accordance with the Participant's promissory
note. In addition, the Plan Administrator shall take any and all other
actions necessary and appropriate to enforce collection of the unpaid loan.
However, attachment of the Participant's Account pledged as security will not
occur until a distributable event occurs under the Plan.
(b) For purposes of this section, the term default shall mean failure, by a
period of at least ten (10) days, to make any loan payment (whether principal
or interest or both) that is due and payable. Neither the Plan Administrator
nor any other fiduciary is required to give any written or oral notice of
default.
13.10 Unpaid Amounts. Upon the occurrence of a Participant's retirement or
death, or upon a Participant's fifth consecutive Break in Service or earlier
distribution, the unpaid balance of any loan, including any unpaid interest,
shall be deducted from any payment or distribution from the Trust to which
such Participant or his beneficiary may be entitled. If after charging the
Participant's Account with the unpaid balance of the loan, including any
unpaid interest, there still remains an unpaid balance of any such loan and
interest, then the remaining unpaid balance of such loan and interest shall
be charged against any property pledged as security with respect to such loan.
ARTICLE 14
Insurance
(Not available in the Columbia Retirement Plan)
14.1 Insurance. If the Adoption Agreement so provides and the Employer
elects to allocate or permit Participants to allocate a portion of their
Accounts to purchase life insurance, the ensuing subsections of this ARTICLE
shall apply.
14.2 Policies. The Plan Administrator shall instruct the Trustee to procure
one or more life insurance policies on the participant's life, the terms of
which shall conform to the requirements of the Plan and the Code. The
policies and the companies which write them shall be subject to the approval
of the Plan Administrator and the Trustee. The Trustee shall procure and
hold such policies in its name or the name of the nominee. The Trustee shall
be the sole owner of all contracts purchased hereunder, and it shall be so
designated in each policy and application therefor.
14.3 Beneficiary. The Participant shall have the right to name the
Beneficiary and to choose the benefit option under the policy for the
Beneficiary. The Trustee shall designate the Beneficiary of all such policies
in accordance with the written directions of the Plan Administrator and the
policy terms. Such designations may be outlined in the original application
as forwarded to the issuing company. However, the Plan Administrator shall
<PAGE>
have available and shall furnish the Participant with the necessary forms for
any Beneficiary designation or change of Beneficiary and it will keep a copy
of all executed designations as part of its records. Upon a participant's
death, the Plan Administrator will promptly furnish the Trustee a copy of the
last designation and shall authorize the Trustee to complete such forms as
the insurance company may require in order to effect the benefit option.
14.4 Payment of Premiums. Subject to the provisions of sections 7.3 and
14.5, premium payments to the insurer may be made only by the Trustee with
respect to any insurance policy purchased on behalf of a Participant and
shall constitute first an investment of a portion of the funds of the
Participant's Employer Contribution subaccounts up to the maximum amount of
such subaccounts permitted to be applied toward such premium payments, as in
section 14.5. If a participant's subaccounts lack sufficient assets to pay
premiums on a life insurance policy due on his behalf, the Trustee, at the
direction of the Plan Administrator, acting upon the request of the
Participant, shall borrow under the policy loan provisions, if any, the
amount necessary to pay such premiums, using the cash value of the insurance
as security, or the Trustee may liquidate assets held in the participant's
Account, in the same order, of sufficient value to pay such premiums. Any
loans shall be repaid by the application of earnings, contributions, or
forfeitures to the Account of the Participant insured by such policy. In the
absence of the Plan Administrator's direction to borrow or to liquidate
assets to pay premiums, the life insurance policy shall be put on a paid-up
basis or, if it has no cash value, canceled.
14.5 Limitation on Insurance Premiums. The Trustee shall not pay, nor shall
anyone on behalf of the Trustee pay, any life insurance premium for any
Participant out of the participant's Employer Contribution subaccounts unless
the amount of such payment, plus all premiums previously so paid on behalf of
the Participant, is less than fifty percent (50%) of the Employer
Contributions and forfeitures allocated to the participant's Employer
Contribution subaccounts as determined on the date such premium is paid with
respect to reserve life insurance policies and shall be less than twenty-five
percent (25%) thereof with respect to nonreserve (term) policies, or, if both
reserve life and term insurance are purchased on the life of any Participant,
the sum of the term insurance premium plus one-half (1/2) of the reserve life
premiums may not exceed twenty-five percent (25%) of the Employer
Contributions made on behalf of such Participant. For purposes of these
incidental insurance provisions, reserve life insurance contracts are
contracts with both nondecreasing death benefits and nonincreasing premiums.
Dividends received on life insurance policies shall be considered a reduction
of premiums paid in such computations.
If payment of premiums on a Participant's life insurance policy is prohibited
because of the limitation, the Trustee, as directed by the Plan
Administrator, shall permit the participant to maintain that part of the
coverage made available by the prohibited premiums, either by payment of the
amount of the prohibited premium by the Participant from sources other than
the Trust or by distributing the policy to the extent of the Participant's
vested interest to the Participant and eliminating it from the Trust.
Nothing contained in the foregoing provisions of section 14.4 and this
section shall be deemed to authorize the payment of any premium or premiums
for any Participant which would result in a failure to maintain any mandatory
investment in Shares required by the Sponsor in the Account or subaccounts of
any such Participant.
<PAGE>
14.6 Insurance Company. No insurance company which may issue any policies
for the purposes of this Plan shall be required to take or permit any action
contrary to the provisions of said policies, nor shall such insurance company
be deemed to be a party to, or responsible for the validity of, this Plan for
any purpose. No such insurance company shall be required to look into the
terms of this Plan or question any action of the Trustee hereunder, nor be
responsible to see that any action of the Trustee is authorized by the terms
of this Plan. Any such issuing insurance company shall be fully discharged
from any and all liability for any amount paid to the Trustee or paid in
accordance with the direction of the Trustee, as the case may be, or for any
change made or action taken by such insurance company upon such direction and
no such insurance company shall be obliged to see to the distribution or
further application of any monies paid by it. The certificate of the Trustee
signed by one of its trust officers, assistant secretary, or other authorized
representative thereof, may be received by any insurance company as
conclusive evidence of any of the matters mentioned in this Plan and any
insurance company shall be fully protected in taking or permitting any action
on the faith thereof and shall incur no liability or responsibility for so
doing.
14.7 Distribution of Policies. Upon a participant's death, the Trustee,
upon direction of the Plan Administrator, shall procure the payment of the
proceeds of any policy held by the Participant in accordance with its term
and this Plan. The Trustee shall be required to pay over all the proceeds of
any policy to the Participant's Designated Beneficiary in accordance with the
distribution provisions of this Plan. A Participant's Spouse will be the
Designated Beneficiary unless a Qualified Election has been made in
accordance with section 9.4(c) of the Plan. Under no circumstances shall the
Trust retain any part of the proceeds. Subject to the joint and survivor
annuity requirements of ARTICLE 9, the policies shall be converted or
distributed upon commencement of benefits in accordance with the provisions
of this section. Upon a Participant's retirement at or after his Normal
Retirement Age, unless there is a single sum distribution in which case any
policy shall be distributed, any such policy shall be converted to a paid-up
contract and delivered to the Participant but the Plan Administrator may,
with the participant's consent, direct that a portion or all of such cash
value of the policy be converted to provide retirement income as permitted
within the terms of the policy and this Plan. Upon a participant's
retirement due to Total and Permanent Disability, any such policy shall be
held for his account and assigned or delivered to the Participant in addition
to any other benefits provided by this Plan. Upon a participant's
termination of employment for reasons other than death, Total and Permanent
Disability, or retirement as stated above, to the extent of life insurance
purchased by Employer Contributions, he shall be entitled to a vested
interest in any policy held for his account as his interest is vested in the
remainder of his Employer Contribution subaccounts (exclusive of any such
policy). Whenever the Participant is entitled to one hundred percent (100%)
vesting, then such policy shall be assigned and delivered to the Participant
in accordance with its terms and the terms of the Plan. Whenever the
Participant is entitled to vesting of less than one hundred percent (100%),
then the Participant shall be entitled to a vested interest of the cash
surrender value of any such policy equal to his percent of vested interest in
his Employer Contribution subaccounts, exclusive of the policy, and one of
the following distribution procedures shall apply:
(a) If the nonvested portion of the cash surrender value of all policies
held for the participant's Account is less than the amount of his vested
termination benefit exclusive of the policies, then, such policy shall be
assigned to the Participant and the remainder of the
<PAGE>
participant's vested interest in the participant's Employer Contribution
subaccounts shall be reduced by the cash surrender value of the nonvested
portion of all policies, after which it shall be paid or distributed to the
Participant in accordance with the terms of the Plan; or
(b) If the nonvested portion of the cash surrender value of all policies
held for the Participant's Account exceeds the Participant's vested interest
in the Employer Contribution subaccount exclusive of such policies, the
Participant shall be given the opportunity to purchase such policies by
paying to the Trustee the amount of such excess within thirty (30) days after
notice to him of the amount to be paid. Upon receipt of such payment said
policy shall be assigned and delivered to the Participant to the full
satisfaction of all termination benefits under this Plan. Any such policy
not so purchased shall be surrendered by the Trustee for its cash value and
the proceeds thereof deposited in the Trust for reallocation pursuant to
ARTICLE 5.
It is the intention hereof that the total termination benefit of a
Participant whose interest is not fully vested shall be equal to the sum of
the vested percentage of his Employer Contribution subaccounts exclusive of
all such policies and the same percentage of the cash value of all such
policies held for his Account. To the extent possible under the foregoing
provisions, such total termination benefits shall be satisfied by the
transfer and delivery to the Participant of one or more such policies with
the balance, if any, to be paid in cash or in kind.
14.8 Policy Features. The Trustee shall arrange, where possible, that all
policies purchased for the benefit of a Participant shall have the same
dividend option which shall be on the premium reduction plan, and as nearly
as may be possible all policies issued under the Plan shall have the same
anniversary date. To the extent any dividends or credits earned on insurance
policies are not applied toward the next premiums due, they shall be
allocated to the participant's Employer Contribution subaccount in the same
manner as a participant's directed investment.
14.9 Changed Conditions. From time to time because of changed conditions,
the Trustee, acting at the direction of the Plan Administrator upon the
election of the Participant concerned, shall obtain an additional contract or
policy or make such change in the contracts or policies maintained by the
Trustee on the life of the Participant as may be required by such changed
conditions, within the limits permitted by the insurance company which issued
or is requested to issue a contract and the limits established by this Plan.
14.10 Conflicts. In the event of any conflict between the terms of the Plan
and the provisions of any contract issued hereunder, the terms of the Plan
shall control.
ARTICLE 15
Administration
15.1 Duties and Responsibilities of Fiduciaries; Allocation of Fiduciary
Responsibility. A fiduciary of the Plan shall have only those specific
powers, duties, responsibilities, and obligations as are explicitly given him
under the Plan and Trust Agreement. In general, the Employer shall have the
sole responsibility for making contributions to the Plan required under
ARTICLE 4; appointing the Trustee and the Plan Administrator; and determining
the funds available for investment under the Plan. The Plan Administrator
shall have the sole responsibility for the administration of the Plan, as
more fully described in section 15.2. It is intended that each fiduciary
shall be responsible only for the proper exercise of his own
<PAGE>
powers, duties, responsibilities, and obligations under the Plan and Trust
Agreement, and shall not be responsible for any act or failure to act of
another fiduciary. A fiduciary may serve in more than one fiduciary capacity
with respect to the Plan.
15.2 Powers and Responsibilities of the Plan Administrator.
(a) Administration of the Plan. The Plan Administrator shall have all
powers necessary to administer the Plan, including the power to construe and
interpret the Plan documents; to decide all questions relating to an
individual's eligibility to participate in the Plan; to determine the amount,
manner, and timing of any distribution of benefits or withdrawal under the
Plan; to approve and ensure the repayment of any loan to a Participant under
the Plan; to resolve any claim for benefits in accordance with section 15.7;
and to appoint or employ advisors, including legal counsel; to render advice
with respect to any of the Plan administrator's responsibilities under the
Plan. Any construction, interpretation, or application of the Plan by the
Plan Administrator shall be final, conclusive, and binding. All actions by
the Plan Administrator shall be taken pursuant to uniform standards applied
to all persons similarly situated. The Plan Administrator shall have no
power to add to, subtract from, or modify any of the terms of the Plan, or to
change or add to any benefits provided by the Plan, or to waive or fail to
apply any requirements of eligibility for a benefit under the Plan.
(b) Records and Reports. The Plan Administrator shall be responsible
for maintaining sufficient records to reflect the Eligibility Computation
Periods in which an Employee is credited with one or more Years of Service
for purposes of determining his eligibility to participate in the Plan, and
the Compensation of each Participant for purposes of determining the amount
of contributions that may be made by or on behalf of the Participant under
the Plan. The Plan Administrator shall be responsible for submitting all
required reports and notifications relating to the Plan to Participants or
their Beneficiaries, the Internal Revenue Service and the Department of Labor.
(c) Furnishing Trustee with Instructions. The Plan Administrator shall
be responsible for furnishing the Trustee with written instructions regarding
all contributions to the Trust, all distributions to Participants in
accordance with ARTICLE 10, all withdrawals by Participants in accordance
with ARTICLE 12, all loans to Participants in accordance with ARTICLE 13 and
all purchases of life insurance in accordance with ARTICLE 14. In addition,
the Plan Administrator shall be responsible for furnishing the Trustee with
any further information respecting the Plan which the Trustee may request for
the performance of its duties or for the purpose of making any returns to the
Internal Revenue Service or Department of Labor as may be required of the
Trustee.
(d) Rules and Decisions. The Plan Administrator may adopt such rules as
it deems necessary, desirable, or appropriate in the administration of the
Plan. All rules and decisions of the Plan Administrator shall be applied
uniformly and consistently to all Participants in similar circumstances.
When making a determination or calculation, the Plan Administrator shall be
entitled to rely upon information furnished by a Participant or Beneficiary,
the Employer, the legal counsel of the Employer, or the Trustee.
(e) Application and Forms for Benefits. The Plan Administrator may
require a Participant or Beneficiary to complete and file with it an
application for a benefit, and to furnish all pertinent information requested
by it. The Plan Administrator may rely upon all
<PAGE>
such information so furnished to it, including the participant's or
Beneficiary's current mailing address.
(f) Facility of Payment. Whenever, in the Plan Administrator's opinion,
a person entitled to receive a payment of a benefit or installment thereof is
under a legal disability or is incapacitated in any way so as to be unable to
manage his financial affairs, as determined by a court of competent
jurisdiction, it may direct the Trustee to make payments to such person or to
the legal representative or to a relative or friend of such person for that
person's benefit, or it may direct the Trustee to apply the payment for the
benefit of such person in such manner as it considers advisable.
15.3 Allocation of Duties and Responsibilities. The Plan Administrator may,
by written instrument, allocate among its members or employees any of its
duties and responsibilities not already allocated under the Plan or may
designate persons other than members or employees to carry out any of the
Plan Administrator's duties and responsibilities under the Plan. Any such
duties or responsibilities thus allocated must be described in the written
instrument. If a person other than an Employee of the Employer is so
designated, such person must acknowledge in writing his acceptance of the
duties and responsibilities allocated to him.
15.4 Appointment of the Plan Administrator. The Employer shall designate in
the Adoption Agreement the Plan Administrator who shall administer the
Employer's Plan. Such Plan Administrator may consist of an individual, a
committee of two or more individuals, whether or not, in either such case,
the individual or any of such individuals are Employees of the Employer, a
consulting firm or other independent agent, the Trustee (with its consent),
or the Employer itself. The Plan Administrator shall be charged with the
full power and the responsibility for administering the Plan in all its
details. If no Plan Administrator has been appointed by the Employer, or if
the person designated as Plan Administrator by the Employer is not serving as
such for any reason, the Employer shall be deemed to be the Plan
Administrator of the Plan. The Plan Administrator may be removed by the
Employer, or may resign by giving notice in writing to the Employer, and in
the event of the removal, resignation, or death, or other termination of
service by the Plan Administrator, the Employer shall, as soon as
practicable, appoint a successor Plan Administrator, such successor
thereafter to have all of the rights, privileges, duties, and obligations of
the predecessor Plan Administrator.
15.5 Expenses. The Employer shall pay all expenses authorized and incurred
by the Plan Administrator in the administration of the Plan except to the
extent such expenses are paid from the Trust.
15.6 Liabilities. The Plan Administrator and each person to whom duties and
responsibilities have been allocated pursuant to section 15.3 may be
indemnified and held harmless by the Employer with respect to any alleged
breach of responsibilities performed or to be performed hereunder. The
Employer and each Affiliated Employer shall indemnify and hold harmless the
Sponsor against all claims, liabilities, fines, and penalties, and all
expenses reasonably incurred by or imposed upon him (including, but not
limited to, reasonable attorney's fees) which arise as a result of actions or
failure to act in connection with the operation and administration of the
Plan.
15.7 Claims Procedure.
<PAGE>
(a) Filing a Claim. Any Participant or Beneficiary under the Plan may
file a written claim for a Plan benefit with the Plan Administrator or with a
person named by the Plan Administrator to receive claims under the Plan.
(b) Notice of Denial of Claim. In the event of a denial or limitation
of any benefit or payment due to or requested by any Participant or
Beneficiary under the Plan (claimant), claimant shall be given a written
notification containing specific reasons for the denial or limitation of his
benefit. The written notification shall contain specific reference to the
pertinent Plan provisions on which the denial or limitation of his benefit is
based. In addition, it shall contain a description of any other material or
information necessary for the claimant to perfect a claim, and an explanation
of why such material or information is necessary. The notification shall
further provide appropriate information as to the steps to be taken if the
claimant wishes to submit his claim for review. This written notification
shall be given to a claimant within ninety (90) days after receipt of his
claim by the Plan Administrator unless special circumstances require an
extension of time for processing the claim. If such an extension of time for
processing is required, written notice of the extension shall be furnished to
the claimant prior to the termination of said ninety (90) day period, and
such notice shall indicate the special circumstances which make the
postponement appropriate.
(c) Right of Review. In the event of a denial or limitation of his
benefit, the claimant or his duly authorized representative shall be
permitted to review pertinent documents and to submit to the Plan
Administrator issues and comments in writing. In addition, the claimant or
his duly authorized representative may make a written request for a full and
fair review of his claim and its denial by the Plan Administrator; provided,
however, that such written request must be received by the Plan Administrator
(or its delegate to receive such requests) within sixty (60) days after
receipt by the claimant of written notification of the denial or limitation
of the claim. The sixty (60) day requirement may be waived by the Plan
Administrator in appropriate cases.
(d) Decision on Review. A decision shall be rendered by the Plan
Administrator within sixty (60) days after the receipt of the request for
review, provided that where special circumstances require an extension of
time for processing the decision, it may be postponed on written notice to
the claimant (prior to the expiration of the initial sixty (60) day period)
for an additional sixty (60) days, but in no event shall the decision be
rendered more than one hundred twenty (120) days after the receipt of such
request for review. Any decision by the Plan Administrator shall be furnished
to the claimant in writing and shall set forth the specific reasons for the
decision and the specific Plan provisions on which the decision is based.
(e) Court Action. No Participant or Beneficiary shall have the right to
seek judicial review of a denial of benefits, or to bring any action in any
court to enforce a claim for benefits prior to filing a claim for benefits or
exhausting his rights to review under this section.
ARTICLE 16
Amendment, Termination and Merger
16.1 Sponsor's Power to Amend. The Sponsor may amend any part of the Plan.
For purposes of Sponsor's amendments, the mass submitter shall be recognized
as the agent of the
<PAGE>
Sponsor. If the Sponsor does not adopt the amendments made by the mass
submitter, it will no longer be identical to or a minor modifier of the mass
submitter plan.
16.2 Amendment by Adopting Employer.
(a) The Employer may:
(i) change the choice of options in the Adoption Agreement;
(ii) add overriding language in the Adoption Agreement when such language
is necessary to satisfy section 415 or section 416 of the Code because of the
required aggregation of multiple plans; and
(iii) add certain model amendments published by the Internal Revenue
Service which specifically provide that their adoption will not cause the
Plan to be treated as individually designed.
(b) An Employer that amends the Plan for any other reason, including a
waiver of the minimum funding requirement under section 412(d) of the Code,
will no longer participate in this prototype plan and will be considered to
have an individually designed plan.
16.3 Vesting Upon Plan Termination. In the event of the termination or
partial termination of the Plan, the Account balance of each affected
Participant will be nonforfeitable.
16.4 Vesting Upon Complete Discontinuance of Contributions. In the event of
a complete discontinuance of contributions under the Plan, the Account
balance of each affected Participant will be nonforfeitable.
16.5 Maintenance of Benefits Upon Merger. In the event of a merger or
consolidation with, or transfer of assets to any other plan, each Participant
will receive a benefit immediately after such merger, consolidation or
transfer (if the Plan then terminated) which is at least equal to the benefit
the Participant was entitled to immediately before such merger, consolidation
or transfer (if the Plan had been terminated).
16.6 Special Amendments. The Employer may from time to time make any
amendment to the Plan that may be necessary to satisfy section 415 or 416 of
the Code. Any such amendment will be adopted by the Employer by completing
overriding Plan language in the Adoption Agreement. In the event of such an
amendment, the Employer must obtain a separate determination letter from the
Internal Revenue Service to continue reliance on the Plan's qualified status.
ARTICLE 17
Miscellaneous
17.1 Exclusive Benefit of Participants and Beneficiaries.
(a) All assets of the Trust shall be retained for the exclusive benefit
of Participants and their Beneficiaries, and shall be used only to pay
benefits to such persons or to pay the fees and expenses of the Trust. The
assets of the Trust shall not revert to the benefit of the Employer, except
as otherwise specifically provided in section 17.1(b).
(b) To the extent permitted or required by ERISA and the Code,
contributions to the Trust under this Plan are subject to the following
conditions:
(i) If a contribution or any part thereof is made to the Trust by the
Employer under a mistake of fact, such contribution or part thereof shall be
returned to the Employer within one (1) year after the date the contribution
is made.
(ii) In the event the Plan is determined not to meet the initial
qualification requirements of section 401 of the Code, contributions made in
respect of any period for which such
<PAGE>
requirements are not met shall be returned to the Employer within one (1)
year after the Plan is determined not to meet such requirements, but only if
the application for the qualification is made by the time prescribed by law
for filing the Employer's return for the taxable year in which the Plan is
adopted, or such later date as the Secretary of the Treasury may prescribe.
(iii) Contributions to the Trust are specifically conditioned on their
deductibility under the Code and, to the extent a deduction is disallowed for
any such contribution, such amount shall be returned to the Employer within
one (1) year after the date of the disallowance of the deduction.
17.2 Nonguarantee of Employment. Nothing contained in this Plan shall be
construed as a contract of employment between the Employer and any Employee,
or as a right of any Employee to be continued in the employment of the
Employer, or as a limitation of the right of the Employer to discharge any of
its Employees, with or without cause.
17.3 Rights to Trust Assets. No Employee, Participant, or Beneficiary shall
have any right to, or interest in, any assets of the Trust upon termination
of employment or otherwise, except as provided under the Plan. All payments
of benefits under the Plan shall be made solely out of the assets of the
Trust.
17.4 Nonalienation of Benefits. No benefit or interest available hereunder
will be subject to assignment or alienation, either voluntarily or
involuntarily. The preceding sentence shall also apply to the creation,
assignment, or recognition of a right to any benefit payable with respect to
a Participant pursuant to a domestic relations order, unless such order is
determined to be a qualified domestic relations order, as defined in section
414(p) of the Code, or any domestic relations order entered before January 1,
1985.
17.5 Aggregation Rules.
(a) Except as provided in ARTICLE 6, all Employees of the Employer or
any Affiliated Employer will be treated as employed by a single employer.
(b) If this Plan provides contributions or benefits for one or more
Owner-Employees who control both the business for which this Plan is
established and one or more other trades or businesses, this Plan and the
plan established for other trades or businesses must, when looked at as a
single plan, satisfy sections 401(a) and (d) of the Code for the Employees of
this and all other trades or businesses.
(c) If the Plan provides contributions or benefits for one or more
Owner-Employees who control one or more other trades or businesses, the
employees of the other trades or businesses must be included in a plan which
satisfies sections 401(a) and (d) of the Code and which provides
contributions and benefits not less favorable than provided for
Owner-Employees under this Plan.
(d) If an individual is covered as an Owner-Employee under the plans of
two or more trades or businesses which are not controlled and the individual
controls a trade or business, then the contributions or benefits of the
employees under the plan of the trades or businesses which are controlled
must be as favorable as those provided for him under the most favorable plan
of the trade or business which is not controlled.
(e) For purposes of paragraphs (b), (c) and (d), an Owner-Employee, or
two or more Owner-Employees, will be considered to control a trade or
business if the Owner-Employee, or two or more Owner-Employees together:
(i) own the entire interest in an unincorporated trade or business; or
<PAGE>
(ii) in the case of a partnership, own more than fifty percent (50%) of
either the capital interest or the profits interest in the partnership.
For purposes of the preceding sentence, an Owner-Employee, or two or
more Owner-Employees shall be treated as owning an interest in a partnership
which is owned, directly or indirectly, by a partnership which such
Owner-Employee, or such two or more Owner-Employees, are considered to
control within the meaning of the preceding sentence.
17.6 Failure of Qualification. If the Employer's plan fails to attain or
retain qualification, such plan will no longer participate in this
master/prototype plan and will be considered an individually designed plan.
17.7 Applicable Law. Except to the extent otherwise required by ERISA, as
amended, this Plan shall be construed and enforced in accordance with the
laws of the state in which the Employer's principal place of business is
located, as specified in the Adoption Agreement.
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned constitutes and
appoints each of J. Jerry Inskeep, Jr., James F. Rippey, John A. Kemp and George
L. Hanseth as the undersigned's true and lawful attorney and agent, with full
power of substitution and resubstitution for and in the name, place and stead of
the undersigned, in any and all capacities, to sign the Registration Statement
on Form N-1A for the registration of shares of Columbia Small Cap Fund, Inc.,
and any and all amendments (including post-effective amendments) thereto, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto each
attorney and agent full power and authority to do any and all acts and things
necessary or advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and confirming all
that the attorney and agent, or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Dated: August 16, 1996
/s/ J. Jerry Inskeep, Jr.
--------------------------------
J. Jerry Inskeep, Jr.
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned constitutes and
appoints each of J. Jerry Inskeep, Jr., James F. Rippey, John A. Kemp and George
L. Hanseth as the undersigned's true and lawful attorney and agent, with full
power of substitution and resubstitution for and in the name, place and stead of
the undersigned, in any and all capacities, to sign the Registration Statement
on Form N-1A for the registration of shares of Columbia Small Cap Fund, Inc.,
and any and all amendments (including post-effective amendments) thereto, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto each
attorney and agent full power and authority to do any and all acts and things
necessary or advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and confirming all
that the attorney and agent, or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Dated: August 16, 1996
/s/ James C. George
--------------------------------
James C. George
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned constitutes and
appoints each of J. Jerry Inskeep, Jr., James F. Rippey, John A. Kemp and George
L. Hanseth as the undersigned's true and lawful attorney and agent, with full
power of substitution and resubstitution for and in the name, place and stead of
the undersigned, in any and all capacities, to sign the Registration Statement
on Form N-1A for the registration of shares of Columbia Small Cap Fund, Inc.,
and any and all amendments (including post-effective amendments) thereto, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto each
attorney and agent full power and authority to do any and all acts and things
necessary or advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and confirming all
that the attorney and agent, or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Dated: August 16, 1996
/s/ Thomas R. MacKenzie
--------------------------------
Thomas R. MacKenzie
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned constitutes and
appoints each of J. Jerry Inskeep, Jr., James F. Rippey, John A. Kemp and George
L. Hanseth as the undersigned's true and lawful attorney and agent, with full
power of substitution and resubstitution for and in the name, place and stead of
the undersigned, in any and all capacities, to sign the Registration Statement
on Form N-1A for the registration of shares of Columbia Small Cap Fund, Inc.,
and any and all amendments (including post-effective amendments) thereto, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto each
attorney and agent full power and authority to do any and all acts and things
necessary or advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and confirming all
that the attorney and agent, or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Dated: August 16, 1996
/s/ James F. Rippey
--------------------------------
James F. Rippey
