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Filed Pursuant to
Rule 424(b)(3)
Registration No. 333-69537
PROSPECTUS SUPPLEMENT
TO PROSPECTUS DATED MAY 10, 1999
NCRIC Group, Inc.
1115 30th Street, N.W.
Washington, D.C. 20007
(202) 969-1866
Participation Interests in
NCRIC, Inc. 401(k) Plan
and
Offering of up to 281,190 Shares of
NCRIC Group, Inc.
Common Stock
_____________________
In connection with NCRIC Group, Inc.'s subscription and community
offerings, participants in NCRIC, Inc.'s 401(k) plan may direct the trustees of
the 401(k) plan to invest some or all of their accounts in the 401(k) plan in
the common stock of NCRIC Group through the NCRIC Group Common Stock Fund.
Based upon the value of the 401(k) plan assets at March 31, 1999 and assuming a
purchase price of $7.00 per share, the trustees of the NCRIC, Inc. 401(k) plan
could purchase up to 281,190 shares of common stock in the offerings. This
prospectus supplement relates to the initial election of some of the
participants in the 401(k) plan to direct the trustees of their 401(k) plan to
invest all or a portion of their 401(k) plan accounts in NCRIC Group's common
stock at the time of NCRIC Group's offerings.
The attached prospectus dated May 10, 1999 of NCRIC Group and prospectus
supplement dated June 7, 1999 include detailed information regarding the common
stock and the financial condition, results of operations and business of NCRIC
Group. This prospectus supplement provides you with information regarding the
401(k) plan. You should read the prospectus supplements together with the
prospectus and keep them for future reference.
Please refer to risk factors beginning on page 8 of the prospectus. The
common stock is subject to investment risk, including the possible loss of the
amount invested.
Neither the Securities and Exchange Commission, the District of Columbia
Department of Insurance and Securities Regulation, nor any state securities
regulator has approved or disapproved these securities or determined if this
prospectus supplement is accurate or complete. Any representation to the
contrary is a criminal offense.
____________________
Sandler O'Neill & Partners, L.P.
____________________
The date of this prospectus supplement is June 17, 1999.
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TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
THE OFFERINGS..................................................... 3
Securities offered.............................................. 3
Election to purchase common stock in NCRIC Group's offerings.... 3
Value of participation interests................................ 4
Method of directing transfer.................................... 4
Time for directing transfer..................................... 4
Irrevocability of transfer direction............................ 4
Direction to purchase the common stock after the offerings...... 4
Purchase price of the common stock.............................. 5
Nature of a participant's interest in the common stock.......... 5
Voting and tender rights of common stock........................ 5
DESCRIPTION OF THE 401(k) PLAN.................................... 6
Introduction.................................................... 6
Eligibility and participation in NCRIC, Inc. 401(k) plan........ 6
Contributions under the 401(k) plan............................. 7
Limitations on contributions.................................... 7
Investment of contributions..................................... 9
Benefits under the 401(k) plan..................................11
Withdrawals and distributions from the 401(k) plan..............11
Administration of the 401(k) plan...............................12
Restrictions on resale..........................................15
SEC reporting and short-swing profit liability..................16
NCRIC, INC. 401(k) PLAN FINANCIAL STATEMENTS......................17
</TABLE>
No dealer, salesman or any other person has been authorized to give
any information or to make any representation other than as contained in the
prospectus or prospectus supplements in connection with the offerings, and, if
given or made, the other information or representation must not be relied upon
as having been authorized by NCRIC Group, Inc., the 401(k) plan or Sandler
O'Neill & Partners, L.P. This prospectus supplement does not constitute an
offer to sell or a solicitation of an offer to buy any of the offered securities
to any person in any jurisdiction in which the offer or solicitation is not
authorized or in which the person making the offer or solicitation is not
qualified to do so, or to any person to whom it is unlawful to make an offer or
solicitation in the jurisdiction. Neither the delivery of this prospectus
supplement nor any sale of shares shall under any circumstances create any
implication that there has been no change in the affairs of NCRIC Group, Inc. or
the 401(k) plan since the date of this prospectus supplement or any of the dates
as of which information is furnished in the prospectus or the prospectus
supplements.
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THE OFFERINGS
Securities offered
The securities offered in connection with this prospectus supplement are
participation interests in the 401(k) plan and shares of common stock of NCRIC
Group. The interests and shares offered under this prospectus supplement are
conditioned on the consummation of NCRIC Group's subscription offering.
Any shares purchased by the 401(k) plan in the offerings based on your
election will be subject to the conditions and restrictions otherwise applicable
to common stock purchased directly by you in the offerings. These restrictions
are described in the prospectus.
This prospectus supplement may be used only in connection with offers and
sales by NCRIC Group of interests and shares of common stock in accordance with
the 401(k) plan. No one may use this prospectus supplement to reoffer or resell
interests or shares of common stock acquired through the 401(k) plan.
Election to purchase common stock in NCRIC Group's offerings
In connection with NCRIC Group's subscription and community offerings,
NCRIC, Inc. is permitting you to direct the trustees of the 401(k) plan to
transfer all or part of the funds which represent your beneficial interest in
the assets of the 401(k) plan to the NCRIC Group Common Stock Fund. The
trustees of the 401(k) plan will use the amount, if any, of funds designated by
you to purchase common stock offered for sale in connection with NCRIC Group's
offerings in accordance with your direction. In the event that the subscription
offering is oversubscribed and some of your funds cannot be used to purchase
NCRIC Group common stock, the trustees will reallocate the amount not invested
in common stock to the other investment options you have selected in proportion
to the manner in which your investment options were liquidated to provide funds
to acquire NCRIC Group common stock. If you fail to direct the investment of
any of your account in the NCRIC Group Common Stock Fund, your account balance
will remain in the other investment options of the 401(k) plan.
Your ability to invest in the NCRIC Group Common Stock Fund is based on
your status as a participant in the 401(k) plan. If you are a current NCRIC,
Inc. employee and you fall into one of the subscription offering categories, you
have subscription rights to purchase shares of common stock in the subscription
offering, and you can use funds in the 401(k) plan account to pay for the common
stock for which you subscribe.
If any shares are sold in a community offering, you may use funds in the
401(k) plan account to purchase shares in that offering.
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Value of participation interests
As of March 31, 1999, the market value of the assets of NCRIC, Inc.'s
401(k) plan equaled $1,968,334. The plan administrator informed each
participant in the NCRIC, Inc. 401(k) plan of the value of his or her beneficial
interest in the 401(k) plan as of March 31, 1999. The value of 401(k) plan
assets represents the past contributions to the 401(k) plan made by NCRIC, Inc.
and by the participating employees of NCRIC, Inc., plus or minus earnings or
losses on the contributions, less previous withdrawals.
Method of directing transfer
With this prospectus supplement is an investment election form for you to
complete to direct a transfer to the NCRIC Group Common Stock Fund. If you wish
to transfer all or part (in multiples of 1%) or a dollar amount of your
beneficial interest in the other investment funds maintained within the 401(k)
plan to the NCRIC Group Common Stock Fund, you should complete the investment
election form. If you do not wish to make an election at this time, you do not
need to take any action.
Time for directing transfer
The deadline for submitting a direction to transfer amounts to the NCRIC
Group Common Stock Fund in connection with the subscription offering is 1:00
p.m., Eastern time, June 30, 1999. If any shares are sold in a community
offering, the community offering will expire on or before August 14, 1999,
unless extended. Amounts will not have to be transferred to the NCRIC Group
Common Stock Fund at the time the investment election form is returned, but will
be transferred at or before the closing. Participants should return the
investment election forms to Christina L. Culp, NCRIC Group, Inc., 1115 30th
Street, N.W., Washington, D.C. 20007.
Irrevocability of transfer direction
Your direction to transfer amounts from one of the other investment funds
in the 401(k) plan to purchase an interest in the NCRIC Group Common Stock Fund
in the offerings cannot be changed.
Direction to purchase the common stock after the offerings
After the offerings, you may direct the trustees of the 401(k) plan to
transfer a specific percentage (in multiples of 1%) or a dollar amount of the
net value of your interests in other investment funds maintained within the
trust fund to the NCRIC Group Common Stock Fund or to the other investment funds
available under the 401(k) plan. Alternatively, you may direct the trustees of
the 401(k) plan to transfer a specific percentage of your interest in the NCRIC
Group Common Stock Fund to another 401(k) plan investment fund. Finally, you
may direct the
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trustees to invest future contributions made to the 401(k) plan on your behalf
in the NCRIC Group Common Stock Fund. Following your initial election, you may
change the percentage of your interest in the 401(k) plan which is invested in
the NCRIC Group Common Stock Fund on the first day of any calendar quarter by
submitting an appropriate form to the plan administrator. You may obtain a form
from the Finance Department of NCRIC, Inc. Special restrictions may apply to
transfers directed by those participants who are officers, directors and
principal stockholders of NCRIC Group, who are subject to the provisions of
Section 16(b) of the Securities Exchange Act of 1934.
Purchase price of the common stock
The trustees will use the funds you elect to transfer to the NCRIC Group
Common Stock Fund in connection with the offerings to purchase shares of common
stock. The trustees will pay the same price for shares of common stock as all
other persons who purchase shares of the common stock in the offerings.
After the offerings, the trustees will acquire common stock in open market
transactions or from NCRIC Group. The prices paid by the trustees for shares of
common stock will not exceed "adequate consideration" as defined in the Employee
Retirement Income Security Act, the primary federal law governing retirement
plans. If the common stock is purchased in open market transactions, the
trustees will pay transaction fees associated with purchase, sale or transfer of
the common stock after the offerings.
Nature of a participant's interest in the common stock
The trustees will hold NCRIC Group common stock in the name of the 401(k)
plan. The trustees will allocate shares of common stock acquired at your
direction to your account under the 401(k) plan. Therefore, earnings relating
to your account will not be affected by the investment designations of other
participants in the 401(k) plan.
Voting and tender rights of common stock
The trustees generally will exercise voting and tender rights attributable
to all common stock held by the NCRIC Group Common Stock Fund as directed by
participants with interests in the NCRIC Group Common Stock Fund.
For each matter as to which holders of common stock have a right to vote,
each participant will be allocated a number of voting instruction rights
reflecting that participant's proportionate interest in the NCRIC Group Common
Stock Fund. The number of shares of common stock held in the NCRIC Group Common
Stock Fund that are voted in the affirmative and negative on each matter will be
proportionate to the number of voting instruction rights exercised in the
affirmative and negative.
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In the event of a tender offer for common stock, each participant will be
allotted a number of tender instruction rights reflecting that participant's
proportionate interest in the NCRIC Group Common Stock Fund. The percentage of
shares of common stock held in the NCRIC Group Common Stock Fund that will be
tendered will be the same as the percentage of the total number of tender
instruction rights that are exercised in favor of tendering. The remaining
shares of common stock held in the NCRIC Group Common Stock Fund will not be
tendered.
Participants may exercise their voting instruction rights and tender
instruction rights on a confidential basis.
DESCRIPTION OF THE 401(k) PLAN
Introduction
Effective June 1, 1999, NCRIC, Inc. amended its 401(k) plan. NCRIC, Inc.
intends that its 401(k) plan comply, in form and in operation, with all
applicable provisions of the Internal Revenue Code and the Employee Retirement
Income Security Act, most commonly referred to as "ERISA." As a 401(k) plan
participant, federal law provides you with various rights and protections.
However, your benefits under the 401(k) plan are not guaranteed by the Pension
Benefit Guaranty Corporation.
Applicable federal tax law imposes substantial restrictions on your ability
to withdraw amounts held under the 401(k) plan prior to your termination of
employment with NCRIC, Inc. Federal law may also impose an excise tax on
withdrawals made from the 401(k) plan prior to the time you reach age 59-1/2,
regardless of whether the withdrawal occurs during your employment with NCRIC,
Inc. or after termination of your employment with NCRIC, Inc.
Reference to full text of 401(k) plan. This prospectus supplement
summarizes various provisions of the 401(k) plan. NCRIC, Inc. qualifies these
summaries in their entirety by the full text of the 401(k) plan. You may obtain
copies of the 401(k) plan document by sending a request to: NCRIC, Inc. 401(k)
Plan Administrator, 1115 30th Street, N.W., Washington, D.C. 20007. You should
carefully read the full text of the 401(k) plan document to understand your
rights and obligations under the 401(k) plan.
Eligibility and participation in NCRIC, Inc. 401(k) plan
Any employee of NCRIC, Inc. may participate in the 401(k) plan as of the
first enrollment date following completion of three months of service and
attainment of age 21.
As of December 31, 1998, approximately 28 NCRIC, Inc. employees
participated in the 401(k) plan, 24 of whom requested deferral of a portion of
their salary.
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Contributions under the 401(k) plan
401(k) plan participant contributions. The 401(k) plan permits you to
annually defer, subject to dollar limitations described below, receipt of up to
15% of the compensation that your employer would otherwise pay to you. For
purposes of calculating your deferrals, the 401(k) plan considers compensation
to include your total pay reportable on Internal Revenue Service Form W-2 for
purposes of income tax withholding exclusive of reimbursements, expense
allowances and fringe benefits. However, by law, the 401(k) plan may not
consider more than $160,000 of compensation for purposes of determining
deferrals for 1999. You may modify the rate of your future contributions to the
401(k) plan by filing a new deferral agreement with the plan administrator at
least 15 days prior to the effective date of the modification. Modifications of
your rate of deferral take effect only on the January 1, April 1, July 1 or
October 1 following the date you file a deferral agreement.
Employer contributions. NCRIC, Inc. has discretion whether or not to make
matching contributions for you under the 401(k) plan. For 1998, NCRIC, Inc.
made contributions to the NCRIC, Inc. 401(k) plan equal to 9% of each
participant's compensation for the 401(k) plan year.
NCRIC, Inc. may also make special discretionary contributions which may
either be vested or nonvested depending upon whether or not NCRIC, Inc. wishes
to treat the contributions as supplemental salary reduction contributions or as
supplemental employer voluntary contributions. These contributions are not
required, but if any are made, the amount contributed will be determined each
year by NCRIC, Inc. in its sole discretion.
Limitations on contributions
Limitation on employee salary deferral. Although the 401(k) plan allows
you to defer receipt of up to 15% of your compensation each year, federal law
limits your total deferrals under the 401(k) plan and any similar plans to
$10,000 for 1999. The Internal Revenue Service will periodically increase this
annual limitation. Contributions in excess of this limitation will be included
in an affected participant's gross income for federal income tax purposes in the
year they are made. In addition, any excess deferral will again be subject to
federal income tax when distributed by the 401(k) plan to the participant,
unless the excess deferral, together with any income allocable to the excess
deferral, is distributed to the participant not later than the first April 15th
following the close of the taxable year in which the excess deferral is made.
Any income on the excess deferral that is distributed not later than that date
will be treated, for federal income tax purposes, as earned and received by the
participant in the taxable year in which the distribution is made.
Limitations on annual additions and benefits. Under the requirements of
the Internal Revenue Code, the 401(k) plan provides that the total amount of
contributions and forfeitures allocated to a participant during any plan year
may not exceed the lesser of 25% of the participant's compensation for the plan
year or $30,000. The 401(k) plan also limits annual additions to the extent
necessary to prevent the limitations set forth in the Internal Revenue Code
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for all of the qualified defined benefit plans and defined contribution plans
maintained by NCRIC, Inc. from being exceeded.
Limitation on 401(k) plan contributions for highly compensated employees.
Sections 401(k) and 401(m) of the Internal Revenue Code limit the amount of
compensation that may be deferred into the 401(k) plan in any plan year on
behalf of highly compensated employees, as defined, in relation to the amount of
compensation deferred into the 401(k) plan by or on behalf of all other
employees eligible to participate in the 401(k) plan.
In general, a highly compensated employee includes any employee who (1) was
a 5% owner of the employer at any time during the year or preceding year or (2)
had compensation for the preceding year in excess of $80,000 and, if the
employer so elects, was in the top 20% of employees by compensation for that
year. The dollar amount in the foregoing sentence is for 1999. This amount is
adjusted annually to reflect increases in the cost of living.
In order to prevent the disqualification of the 401(k) plan, any amount
contributed by highly compensated employees that exceeds the permitted average
deferral limitation in any plan year, together with any income allocable to the
average deferral limitation, may be distributed to those highly compensated
employees before the close of the following plan year or NCRIC, Inc. may make a
special discretionary contribution to the accounts of the non-highly compensated
employees. However, the employer will be subject to a 10% excise tax on any
excess contributions unless the excess contributions, together with any income
allocable to the excess contributions, either are recharacterized or are
distributed before the close of the first 2-1/2 months following the plan year
to which the excess contributions relate.
Top-heavy 401(k) plan requirements. If for any plan year the 401(k) plan
is a top-heavy plan, as defined, then the employer may be required to make
minimum contributions to the 401(k) plan on behalf of non-key employees, as
defined.
In general, the 401(k) plan will be regarded as a top-heavy plan for any
plan year if, as of the last day of the preceding plan year, the aggregate
balance of the accounts of participants who are key employees, as defined,
exceeds 60% of the aggregate balance of the accounts of all participants. Key
employees generally include any employee who, at any time during the plan year
or any of the four preceding plan years, is:
(1) an officer of the employer having annual compensation in excess of
$60,000 and who is in an administrative or policy-making capacity;
(2) one of the ten employees having annual compensation in excess of
$30,000 and owning, directly or indirectly, the largest interests
in the employer;
(3) a 5% owner of the employer; or
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(4) a 1% owner of the employer having annual compensation in excess of
$150,000.
Investment of contributions
As of the date of this prospectus supplement, the NCRIC, Inc. 401(k) plan
offers the following choices for your accounts under the 401(k) plan:
The Bond Fund of America. The Bond Fund of America seeks to provide as
high a level of current income as is consistent with the preservation of capital
by investing primarily in bonds. The fund has the flexibility to seek out the
best bond market values and invests at least 60% of its assets in securities
rated A or better by Moody's or Standard & Poor's bond rating services. In
addition, the fund can invest in lower rated, higher risk securities when
appropriate, as well as in non-U.S. bonds.
EuroPacific Growth Fund. EuroPacific Growth Fund seeks to achieve long-
term growth of capital by investing in securities of issuers domiciled outside
the U.S. which appear to offer above average growth potential. Normally, the
fund seeks to achieve this investment objective by investing primarily in equity
securities of issuers domiciled in Europe or the Pacific Basin.
The New Economy Fund. The New Economy Fund seeks long-term growth of
capital through investments in services and information industries in the U.S.
and around the world. Current income is a secondary consideration. In seeking
to achieve its objective, the fund invests principally in the equity securities
of companies that derive their revenue primarily from operations in the services
and information area of the global economy or that appear to have future
prospects tied importantly to that area of the economy. These companies range
from new, rapidly growing firms that are leading a technology-powered revolution
to seasoned corporations filling the basic needs of a growing and aging
population. The fund has the flexibility to invest up to 40% of its assets in
companies based outside the U.S.
New Perspective Fund. New Perspective Fund seeks long-term growth of
capital through investments in stocks in the U.S. and all over the world. In
seeking to meet these investment objectives, the fund normally invests on a
global basis in a diversified portfolio consisting primarily of common stocks of
established companies in major world markets, including the U.S. The fund tries
to provide long-term growth of capital by capitalizing on opportunities brought
about by changing global trade patterns and economic or political relationships.
Washington Mutual Investors Fund. Washington Mutual Investors Fund seeks
to produce income and to provide an opportunity for growth of principal
consistent with sound common stock investing. The fund strives to accomplish
this objective by investing primarily in a diversified portfolio of common
stocks, or securities convertible into common stocks, and only invests in
securities that meet the fund's strict "Eligible List" criteria, which
eliminates all but
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about 300 of the more than 2,700 companies currently traded on the New York
Stock Exchange. All securities must meet specific guidelines for return of
capital, financial strength and dividend payment. The fund does not invest in
companies that derive the majority of their revenues from tobacco or alcohol
products.
U.S. Government Securities Fund. U.S. Government Securities Fund seeks to
provide investors with a high level of current income consistent with prudent
investment risk and preservation of capital. It seeks to achieve this objective
by investing primarily in securities that are guaranteed by the "full faith and
credit" pledge of the U.S. Government.
AMCAP Fund. AMCAP Fund seeks to provide shareholders with long-term growth
of capital by investing in growing, profitable companies. The fund can invest
in companies of any size -- from recognized industry leaders to tomorrow's
potential up-and-comers. The fund emphasizes growth companies that have the
opportunity to provide strong, steady progress in earnings and dividends over
the years and invests much of its assets in the most dynamic sectors of the U.S.
economy, including rapidly growing industries as cellular telephones, computer
software and waste management.
The Cash Management Trust of America. The Cash Management Trust of America
seeks to provide income on cash reserves, while preserving capital and
maintaining liquidity, through high-quality money market instruments, which may
include commercial paper, commercial bank obligations, savings association
obligations, corporate bonds and notes, and securities of the U.S. Government,
its agencies or instrumentalities. The fund invests in short-term money market
instruments that mature in 13 months or less and emphasizes investments that are
deemed by the fund's managers to be of the highest credit quality.
Previous NCRIC, Inc. 401(k) fund performance. For 1998, 1997 and 1996, the
investment funds returned these annual percentages on investments:
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<CAPTION>
1998 1997 1996
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<S> <C> <C> <C>
The Bond Fund of America.............. 0.2% 9.2% 6.7%
EuroPacific Growth Fund............... (8.9) 9.2 18.6
The New Economy Fund.................. 21.4 28.9 12.9
New Perspective Fund.................. 21.1 15.0 17.3
Washington Mutual Investors Fund...... 12.5 33.3 20.2
U.S. Government Securities Fund....... (2.7) 8.4 2.8
AMCAP Fund............................ 22.6 30.6 14.2
The Cash Management Trust of America.. 5.1 5.1 4.9
</TABLE>
The NCRIC Group Common Stock Fund. In addition to the investment choices
described above, the 401(k) plan will provide the NCRIC Group Common Stock Fund
as an additional investment alternative. The NCRIC Group Common Stock Fund will
invest primarily in the common stock of NCRIC Group. As with the other
investments choices, you may direct
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the trustees of the 401(k) plan to invest all or a portion of your 401(k) plan
account balance in the NCRIC Group Common Stock Fund.
The trustees of the 401(k) plan will, to the extent practicable, use all
amounts held by it in the NCRIC Group Common Stock Fund, including any cash
dividends paid on the common stock held in the fund, to purchase shares of
common stock of NCRIC Group.
Benefits under the 401(k) plan
A participant, at all times, has a fully vested, nonforfeitable interest in
the contributions deducted from his or her salary, any special contributions
made by NCRIC, Inc. which are designated as supplemental salary reduction
contributions and the earnings on those amounts. A participant vests in his
matching contribution and any discretionary amount contributed by NCRIC, Inc.
under the 401(k) plan which is designated as a supplemental employer voluntary
contribution according to the following schedule:
<TABLE>
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
1....................... 0%
2....................... 25
3....................... 50
4....................... 75
5....................... 100
</TABLE>
Withdrawals and distributions from the 401(k) plan
Withdrawals prior to termination of employment. You may receive in-service
distributions from the 401(k) plan under limited circumstances in the form of
hardship distributions and loans. You can apply for a loan from the 401(k) plan
by contacting the Finance Department of NCRIC, Inc. All loans from the 401(k)
plan are repaid by payroll withholding. You cannot have more than one loan
outstanding at a time. You can apply for a minimum loan of $1,000 and a maximum
loan of the lesser of $50,000 or 50% of your total vested account balance. In
order to qualify for a hardship distribution, you must have an immediate and
substantial need to meet specific expenses and have no other reasonably
available resources to meet the financial need. If you qualify for a hardship
distribution, the trustees will make the distribution pro rata from the
investment funds in which you have invested your account balances. You may not
receive more than one hardship withdrawal in any calendar year.
Distribution upon retirement or disability. You may elect to receive your
benefits in the form of a lump sum payment from the 401(k) plan or in the form
of installment payments from the 401(k) plan.
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Distribution upon death. If you die prior to your benefits being paid from
the 401(k) plan, your benefits will be paid to your surviving spouse or
beneficiary under one or more of the forms available under the 401(k) plan.
Distribution upon termination for any other reason. If you terminate
employment for any reason other than retirement, disability or death and your
account balance exceeds $5,000, the trustees will make your distribution on your
normal retirement date, unless you request otherwise. If your account balance
does not exceed $5,000, the trustees will generally distribute your benefits to
you as soon as administratively practicable following termination of employment.
Nonalienation of benefits. Except for federal income tax withholding and
as provided in a qualified domestic relations order, benefits payable under the
401(k) plan are not subject to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or levy, either
voluntary or involuntary, and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, charge or otherwise dispose of any rights to
benefits payable under the 401(k) plan is void.
Administration of the 401(k) plan
Trustees. The board of directors of NCRIC, Inc. has appointed R. Ray Pate,
Jr., Rebecca B. Crunk and Christina L. Culp as trustees of the 401(k) plan. The
trustees receive, hold and invest the contributions to the 401(k) plan and
distribute them to participants and beneficiaries in accordance with the terms
of the 401(k) plan.
Reports to 401(k) plan participants. The plan administrator will furnish
you a statement at least quarterly showing:
(1) the balance in your account as of the end of that period;
(2) the amount of contributions allocated to your account for that
period; and
(3) the adjustments to your account to reflect earnings or losses.
Plan administrator. Currently, the plan administrator of the NCRIC, Inc.
401(k) plan is NCRIC, Inc. The plan administrator is responsible for the
administration of the 401(k) plan, interpretation of the provisions of the
401(k) plan, prescribing procedures for filing applications for benefits,
preparation and distribution of information explaining the 401(k) plan,
maintenance of 401(k) plan records, books of account and all other data
necessary for the proper administration of the 401(k) plan, and preparation and
filing of all returns and reports relating to the 401(k) plan which are required
to be filed with the U.S. Department of Labor and the Internal Revenue Service,
and for all disclosures required to be made to participants, beneficiaries and
others under ERISA.
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Additional Information. Additional information with respect to the 401(k)
plan and its administration may be obtained from Christina L. Culp at (202) 969-
1866, NCRIC Group, Inc., 1115 30th Street, N.W., Washington, D.C. 20007.
Participants may obtain from Ms. Culp, without charge, upon written or oral
request, copies of the documents (i) incorporated by reference in Item 3 of Part
II of the registration statement filed with the Commission with respect to the
401(k) plan (which include, among other things, NCRIC Group's prospectus filed
with the Commission on May 10, 1999 and quarterly report on Form 10-QSB for the
period ended March 31, 1999) and (ii) required to be delivered to employees
pursuant to Rule 428(b). The documents referred to in (i) are incorporated by
referenced in the Section 10(a) prospectus, which is deemed to be a part of the
registration statement.
Amendment and termination. NCRIC, Inc. intends to continue its 401(k) plan
indefinitely. Nevertheless, NCRIC, Inc. may terminate its 401(k) plan at any
time. If NCRIC, Inc. terminates the 401(k) plan in whole or in part, then
regardless of other provisions in the 401(k) plan, all participants affected by
the termination will become fully vested in their accounts. NCRIC, Inc.
reserves the right to make, from time to time, any amendments to the 401(k) plan
which do not cause any part of the trust to be used for, or diverted to, any
purpose other than the exclusive benefit of participants or their beneficiaries.
However, NCRIC, Inc. may amend the 401(k) plan as it determines necessary or
desirable, with or without retroactive effect, to comply with ERISA or the
Internal Revenue Code.
Federal income tax consequences. The following is a brief summary of
various federal income tax aspects of the 401(k) plan. You should not rely on
this survey as a complete or definitive description of the federal income tax
consequences relating to the 401(k) plan. Statutory provisions are subject to
change, as are their interpretations, and their application may vary in
individual circumstances. Finally, the consequences under applicable state and
local income tax laws may not be the same as under federal income tax laws. You
are urged to consult your tax advisor concerning any distribution from the
401(k) plan and transactions involving the 401(k) plan.
As a "qualified retirement 401(k) plan," the Internal Revenue Code affords
the 401(k) plan special tax treatment, including:
(1) the sponsoring employer is allowed an immediate tax deduction for
the amount contributed to the 401(k) plan each year;
(2) participants pay no current income tax on amounts contributed by
the employer on their behalf either in the form of salary
reduction contributions or employer discretionary contributions;
and
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(3) earnings of the 401(k) plan are tax-deferred, which permits the
tax-free accumulation of income and gains on investments.
NCRIC, Inc. will administer its 401(k) plan to comply in operation with the
requirements of the Internal Revenue Code as of the applicable effective date of
any change in the law. If NCRIC, Inc. receives from the Internal Revenue
Service an adverse determination letter regarding its tax-exempt status, all
participants would generally recognize income equal to their vested interest in
the 401(k) plan, the participants would not be permitted to transfer amounts
distributed from the 401(k) plan to an individual retirement account or to
another qualified retirement 401(k) plan, and the employer may be denied various
deductions taken relating to the 401(k) plan.
Lump sum distribution. A distribution from the 401(k) plan to a
participant or the beneficiary of a participant will qualify as a lump sum
distribution if it is made:
(1) within one taxable year;
(2) on account of the participant's death, disability or separation
from service, or after the participant attains age 59-1/2; and
(3) consists of the balance to the credit of the participant under the
401(k) plan and all other profit sharing or 401(k) plans, if any,
maintained by NCRIC, Inc.
The portion of any lump sum distribution required to be included in your taxable
income for federal income tax purposes consists of the entire amount of the lump
sum distribution less the amount of after-tax contributions, if any, you have
made to any other profit sharing or 401(k) plans maintained by NCRIC, Inc. which
is included in the distribution.
The common stock included in lump sum distribution. If a lump sum
distribution includes NCRIC Group common stock, the distribution generally will
be taxed in the manner described above, except that the total taxable amount
will be reduced by the amount of any net unrealized appreciation of the common
stock. The tax basis of the common stock for purposes of computing gain or loss
on its subsequent sale equals the value of the common stock at the time of
distribution less the amount of net unrealized appreciation. Any gain on a
subsequent sale or other taxable disposition of the common stock to the extent
of the amount of net unrealized appreciation at the time of distribution will
constitute long-term capital gain regardless of the holding period of the common
stock. Any gain on a subsequent sale or other taxable disposition of the common
stock in excess of the amount of net unrealized appreciation at the time of
distribution will be considered either short-term or long-term capital gain
depending upon the length of the holding period of the common stock. The
recipient of a distribution may elect to include the amount of any net
unrealized appreciation in the total taxable amount of the distribution to the
extent allowed by regulations issued by the Internal Revenue Service.
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Distributions: rollovers and direct transfers to another qualified 401(k)
plan or to an individual retirement account. You may roll over virtually all
distributions from the 401(k) plan to another qualified 401(k) plan or to an
individual retirement account without regard to whether the distribution is a
lump sum distribution or a partial distribution. You have the right to elect to
have the trustees transfer all or any portion of an eligible rollover
distribution directly to another qualified retirement 401(k) plan or qualified
individual retirement account. If you do not elect to have an eligible rollover
distribution transferred directly to another 401(k) plan or to an individual
retirement account, the distribution will be subject to a mandatory federal
withholding tax equal to 20% of the taxable distribution. An eligible rollover
distribution means any amount distributed from the 401(k) plan except:
(1) a distribution that is (a) one of a series of substantially equal
periodic payments -- not less frequently than annually -- made for
your life or the joint lives of you and your designated
beneficiary or (b) for a specified period of ten years or more;
(2) any amount required to be distributed under the minimum
distribution rules; and
(3) any other distributions excepted under applicable federal law.
We have provided you with a brief description of various federal income tax
aspects of the 401(k) plan which are of general application under the Internal
Revenue Code. It is not intended to be a complete or definitive description of
the federal income tax consequences of participating in or receiving
distributions from the 401(k) plan. Accordingly, you are urged to consult a tax
advisor concerning the federal, state and local tax consequences of
participating in and receiving distributions from the 401(k) plan.
Restrictions on resale
Any person receiving a distribution of shares of common stock under the
401(k) plan who is an "affiliate" of NCRIC Group under Rule 144 under the
Securities Act of 1933 may reoffer or resell those shares only in accordance
with a registration statement filed under the Securities Act or in accordance
with Rule 144 or some other exemption of the registration requirements of the
Securities Act.
An "affiliate" of NCRIC Group is someone who directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, NCRIC Group. Normally, directors, principal officers or
major shareholders of a corporation are "affiliates" of that corporation. In
general, the amount of NCRIC Group common stock which any affiliate may publicly
resell in accordance with Rule 144 in any three-month period may not exceed the
greater of 1% of the common stock then outstanding or the average weekly trading
volume reported on the Nasdaq SmallCap Market during the four calendar weeks
prior to the sale. Sales may be
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made only without solicitation and only at a time when NCRIC Group is current in
filing the reports required of it under the 1934 Act. Any person who may be an
"affiliate" of NCRIC Group should consult with counsel before transferring any
NCRIC Group common stock.
Persons who are not deemed to be "affiliates" of NCRIC Group at the time of
---
resale will be free to resell any shares of common stock distributed to them
under the 401(k) plan, either publicly or privately, without regard to the
registration and prospectus delivery requirements of the Securities Act or
compliance with the restrictions and conditions contained in the exemptive rules
under federal law.
SEC reporting and short-swing profit liability
Section 16 of the 1934 Act imposes reporting and liability requirements on
officers, directors and persons beneficially owning more than 10% of public
companies such as NCRIC Group.
Section 16(a) of the 1934 Act requires the filing of reports of beneficial
ownership. Within ten days of becoming a person subject to the reporting
requirements of Section 16(a), the person must file a Form 3 reporting initial
beneficial ownership with the Securities and Exchange Commission. Some changes
in beneficial ownership, such as purchases, sales, gifts and participation in
savings and retirement 401(k) plans must be reported periodically, either on a
Form 4 within ten days after the end of the month in which a change occurs, or
annually on a Form 5 within 45 days after the close of NCRIC Group's fiscal
year.
In addition to the reporting requirements described above, Section 16(b) of
the 1934 Act provides for the recovery by NCRIC Group of profits realized by any
officer, director or any person beneficially owning more than 10% of the
outstanding NCRIC Group common stock resulting from the purchase and sale or
sale and purchase of the common stock within any six-month period. The
Securities and Exchange Commission has adopted rules that exempt many
transactions involving the 401(k) plan from the "short-swing" profit recovery
provisions of Section 16(b). The exemptions generally involve restrictions upon
the timing of elections to buy or sell employer securities for the accounts of
persons subject to Section 16(b).
Except for distributions of NCRIC Group common stock due to death,
disability, retirement, termination of employment or under a qualified domestic
relations order, persons subject to Section 16(b) may be required to hold shares
of the common stock distributed from the 401(k) plan for six months following
the distribution.
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NCRIC, INC.
401(k) PLAN FINANCIAL STATEMENTS
(Prepared in accordance with the requirements of ERISA)
<TABLE>
<CAPTION>
At or For the
Year Ended December 31,
------------------------
1998 1997
------------ ----------
(unaudited)
<S> <C> <C>
Assets:
Cash.................................................................. $ 1,183 $ 149
Receivables........................................................... -- 128,298
Investments:
U.S. Government securities........................................ -- --
Corporate debt and equity instruments............................. -- --
Real estate and mortgages (other than to participants)............ -- --
Loans to participants:
Mortgages................................................. -- --
Other..................................................... -- --
Other............................................................. 1,805,670 346,521
------------ ----------
Total investments......................................... 1,805,670 346,521
Buildings and other property used in plan operations.................. -- --
Other assets.......................................................... -- --
------------ ----------
Total assets...................................................... 1,806,853 474,968
Liabilities:
Payables.............................................................. -- --
Acquisition indebtedness.............................................. -- --
Other liabilities..................................................... -- --
Total liabilities..................................................... -- --
------------ ----------
Net assets........................................................ $1,806,853 $474,968
============ ==========
Income:
Contributions received or receivable in cash from:
Employer(s)....................................................... $140,121 $128,298
Employees......................................................... 139,243 17,760
Other - rollover.................................................. 881,052 328,743
------------ ----------
Total..................................................... 1,160,416 474,801
Noncash contributions................................................. -- --
Earnings from investments............................................. 140,951 --
Net realized gain (loss) on sale or exchange of assets................ (9) --
Other income.......................................................... 41,105 167
------------ ----------
Total income...................................................... 1,342,463 474,968
------------ ----------
Expenses:
Distribution of benefits and payments to provide benefits:
Directly to participants or their beneficiaries................... 10,578 --
Other............................................................. -- --
------------ ----------
Total distribution of benefits and payments to provide benefits... 10,578 --
Administrative expense................................................ -- --
Other expenses........................................................ -- --
------------ ----------
Total expenses.................................................... 10,578 --
------------ ----------
Net income (loss)......................................... $1,331,885 $474,968
============ ==========
</TABLE>
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