File No. 2-26125
As filed on ^ July 10, 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1933 X
---
Pre-Effective Amendment No. ----------
Post-Effective Amendment No. ^ 48 X
---
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
---
Amendment No. ^ 22 X
----------- ---
INVESCO CAPITAL APPRECIATION FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
7800 E. Union Avenue, Denver, Colorado 80237
(Address of Principal Executive Offices)
P.O. Box 173706, Denver, Colorado 80217-3706
(Mailing Address)
Registrant's Telephone Number, including Area Code: (303) 930-6300
Glen A. Payne, Esq.
7800 E. Union Avenue
Denver, Colorado 80237
(Name and Address of Agent for Service)
-------------------
Copies to:
Ronald M. Feiman, Esq.
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 W. 47th St.
New York, New York 10036
-------------------
Approximate Date of Proposed Public Offering: As soon as practicable
after this post-effective amendment becomes effective.
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)(1)
- --- on -----------------, pursuant to paragraph (a)(1)
X 75 days after filing pursuant to paragraph (a)(2)
- ---
- --- on -----------------, pursuant to paragraph (a)(2) 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.
Registrant has previously elected to register an indefinite number of shares of
its common stock pursuant to Rule 24f-2 under the Investment Company Act.
Registrant's Rule 24f-2 Notice for the fiscal year ended April 30, ^ 1998, will
be filed on or about ^ July 20, 1998.
Page 1 of 470
Exhibit index is located at page 108
<PAGE>
NOTE
This Post-Effective Amendment (Form N-1A) is being filed to add the INVESCO
Aggressive Growth ^ Fund to the Registrant, INVESCO Capital Appreciation Funds,
Inc. and does not affect the other two series of the Registrant: INVESCO
Dynamics Fund and INVESCO Growth & Income Fund.
<PAGE>
INVESCO CAPITAL APPRECIATION FUNDS, INC.
-----------------------------
CROSS-REFERENCE SHEET
Form N-1A
Item Caption
- ---------
Part A Prospectus
1....................... Cover Page
2....................... Annual Fund Expenses; Essential
Information
3....................... Fund Price and Performance
4....................... Investment Objective and Strategy;
Investment Policies and Risks; The
Fund and Its Management
5....................... The Fund and Its Management
5A...................... Not Applicable
6....................... Fund Services; Taxes, Dividends and
Capital Gain Distributions;
Additional Information
7....................... How to Buy Shares; Fund Price and
Performance; Fund Services; The
Fund and Its Management
8....................... Fund Services; How to Sell Shares
9....................... Not Applicable
Part B Statement of Additional Information
10....................... Cover Page
11....................... Table of Contents
12....................... The Funds and Their Management
-i-
<PAGE>
Form N-1A
Item Caption
- ---------
13....................... Investment Practices; Investment
Policies and Restrictions
14....................... The Funds and Their Management
15....................... The Funds and Their Management;
Additional Information
16....................... The Funds and Their Management;
Additional Information
17....................... Investment Practices; Investment
Policies and Restrictions
18....................... Additional Information
19....................... How Shares Can Be Purchased; How
Shares Are Valued; Services
Provided by the Fund; Tax-Deferred
Retirement Plans; How to Redeem
Shares
20....................... Dividends, Capital ^ Gains
Distributions and Taxes
21....................... How Shares Can Be Purchased
22....................... Performance Data
23....................... Additional Information
Part C Other Information
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
-ii-
<PAGE>
PROSPECTUS
September ---, 1998
INVESCO [Aggressive Growth] FUND
INVESCO [Aggressive Growth] Fund (the "Fund") is actively managed to seek
long-term capital appreciation through aggressive investment policies. The Fund
invests primarily in common stocks of issuers of all sizes. The Fund does have
the flexibility to invest in other types of securities.
The Fund is a series of INVESCO Capital Appreciation Funds, Inc. (the
"Company"), an open-end management investment company consisting of three
separate funds, each of which represents a separate portfolio of investments.
This Prospectus relates to shares of the INVESCO [Aggressive Growth] Fund.
Separate Prospectuses are available upon request from INVESCO Distributors, Inc.
("IDI") for the Company's other funds, INVESCO Dynamics Fund and INVESCO Growth
& Income Fund. Investors may purchase any or all of the funds. Additional funds
may be offered in the future.
This Prospectus provides you with the basic information you should know
before investing in the Fund. You should read it and keep it for future
reference. A Statement of Additional Information containing further information
about the Fund, dated September ---, 1998, has been filed with the Securities
and Exchange Commission and is incorporated by reference into this Prospectus.
To obtain a free copy, write to IDI, P.O. Box 173706, Denver, Colorado
80217-3706; call 1-800-525-8085; or visit our web site at
http://www.invesco.com.
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. SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER FINANCIAL INSTITUTION. THE SHARES
OF THE FUND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
Page
ESSENTIAL INFORMATION..........................................................7
ANNUAL FUND EXPENSES...........................................................8
INVESTMENT OBJECTIVE AND STRATEGY..............................................9
INVESTMENT POLICIES AND RISKS.................................................10
THE FUND AND ITS MANAGEMENT...................................................14
FUND PRICE AND PERFORMANCE....................................................16
HOW TO BUY SHARES.............................................................16
FUND SERVICES.................................................................22
HOW TO SELL SHARES............................................................23
TAXES, DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS...............................25
ADDITIONAL INFORMATION........................................................26
<PAGE>
ESSENTIAL INFORMATION
Investment Goal And Strategy. The INVESCO [Aggressive Growth] Fund is a
diversified open-end mutual fund that is actively managed to seek long-term
capital appreciation through aggressive investment policies. It invests
primarily in common stocks of issuers of all sizes, which may range from larger
well-established issuers to small emerging growth companies. The Fund also has
the flexibility to invest in other types of securities. There is no guarantee
that the Fund will meet its objective. See "Investment Objective and Strategy."
Designed For: Investors seeking long-term capital appreciation. While not
intended as a complete investment program, the Fund may be a valuable element of
your investment portfolio. You also may wish to consider the Fund as part of a
Uniform Gift/Transfer To Minors Act Account or systematic investing strategy.
The Fund may be a suitable investment option for many types of retirement
programs, including various Individual Retirement Accounts ("IRAs"), 401(k),
Profit Sharing, Money Purchase Pension, and 403(b) plans.
Time Horizon. Because the value of its holdings varies, the Fund's price
per share will fluctuate. Investors should consider this a medium-to long-term
investment.
Risks. The Fund uses an aggressive investment strategy, which at times may
include holdings in foreign securities and rapid portfolio turnover. The returns
on foreign investments may be influenced by currency fluctuations and other
risks of investing overseas. Rapid portfolio turnover may result in higher
brokerage commissions and the acceleration of taxable capital gains. These
policies make the Fund unsuitable for that portion of your savings dedicated to
preservation of capital over the short-term. See "Investment Objective And
Strategy" and "Investment Policies and Risks."
Organization and Management. The Fund is a series of INVESCO Capital
Appreciation Funds, Inc. (the "Company"), a diversified, managed, no-load mutual
fund. The Fund is owned by its shareholders. It employs INVESCO Funds Group,
Inc. ("IFG"), founded in 1932, to serve as investment adviser, administrator and
transfer agent. INVESCO Distributors, Inc. ("IDI"), founded in 1997 as a
wholly-owned subsidiary of IFG, is the Fund's distributor.
The Fund's investments are selected by members of INVESCO's Growth Team,
which is headed by Timothy J. Miller, C.F.A. See "The Fund And Its Management."
IFG and IDI are subsidiaries of AMVESCAP PLC, an international investment
management company that manages approximately [$192.2] billion in assets.
AMVESCAP PLC is based in London with money managers located in Europe, North
America and the Far East.
<PAGE>
This Fund offers all of the following services at no charge:
Telephone purchases
Telephone exchanges
Telephone redemptions
Automatic reinvestment of distributions
Regular investment plans, such as EasiVest (the Fund's
automatic monthly investment program), Direct Payroll
Purchase, and Automatic Monthly Exchange
Periodic withdrawal plans
See "How To Buy Shares" and "How To Sell Shares."
Minimum Initial Investment: $1,000, which is waived for regular
investment plans, including EasiVest and Direct Payroll Purchase, and certain
retirement plans.
Minimum Subsequent Investment: $50 (Minimums are lower for certain
retirement plans.)
ANNUAL FUND EXPENSES
The Fund is no-load; there are no fees to purchase, exchange or redeem
shares. The Fund is authorized to pay a Rule 12b-1 distribution fee of one
quarter of one percent of the Fund's average net assets each year. (See "How To
Buy Shares -- Distribution Expenses.")
Like any company, the Fund has operating expenses, such as portfolio
management, accounting, shareholder servicing, maintenance of shareholder
accounts, and other expenses. These expenses are paid from the Fund's assets.
Lower expenses therefore benefit investors by increasing the Fund's total
return. We calculate annual operating expenses as a percentage of the Fund's
estimated average net assets for the current fiscal year. To keep expenses
competitive, the adviser voluntarily reimburses the Fund for certain expenses in
excess of [1.50%] of the Fund's average net assets.
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee [0.75%]
12b-1 Fees 0.25%
Other Expenses (after expense limitation)(1) [0.50%]
Total Fund Operating Expenses (after expense
limitation)(1) [1.50%]
(1) Based on estimated expenses for the current fiscal year which may be more or
less than actual expenses. Actual expenses are not provided because the Fund did
not begin a public offering of the shares until September ---, 1998. If
necessary, certain Fund expenses will be absorbed voluntarily by IFG for at
least the first fiscal year of the Fund's operations in order to ensure that
expenses for the Fund will not exceed [1.50%] of the Fund's average net assets
<PAGE>
pursuant to an agreement among the Fund and IFG. If such voluntary expense
limit were not in effect, the Fund's "Other Expenses" and "Total Fund Operating
Expenses" for the fiscal year ending April 30, 1999 are estimated to be 1.18%
and 2.18%, respectively, of the Fund's average net assets. Actual expenses are
not provided because the Fund did not begin a public offering of its securities
until September ---, 1998.
Example
A shareholder would pay the following expenses on a $1,000 investment for
the periods shown, assuming a hypothetical 5% annual return and redemption at
the end of each time period. (Of course, actual operating expenses are paid from
the Fund's assets and are deducted from the amount of income available for
distribution to shareholders; they are not charged directly to shareholder
accounts.)
1 Year 3 Years
------ -------
$12.00 $37.00
The purpose of this table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly. THE EXAMPLE SHOULD
NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE PERFORMANCE, AND ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. For more information on the
Fund's expenses, see "The Fund and Its Management" and "How to Buy Shares
Distribution Expenses."
Because the Fund pays a distribution fee, investors who own Fund shares
for a long period of time may pay more than the economic equivalent of the
maximum front-end sales charge permitted for mutual funds by the National
Association of Securities Dealers, Inc.
INVESTMENT OBJECTIVE AND STRATEGY
The Fund seeks long-term capital appreciation through aggressive
investment policies. This investment objective is fundamental and may not be
changed without the approval of the Fund's shareholders. Normally, the Fund
seeks to achieve its objective through the aggressive investment of its assets
primarily in common stocks of issuers of all sizes, which may range from larger,
well-established issuers to smaller emerging growth companies. The Fund also has
the flexibility to invest in other types of securities, including preferred
stock, warrants, convertible securities and debt securities, when the adviser
perceives an opportunity for capital growth or increased dividends from such
securities. There is no guarantee that the Fund's investment objective will be
met.
The Fund's investment portfolio is actively managed. Because our strategy
highlights many short-term factors -- current information about a company,
investor interest, price movements of the company's securities and general
market and monetary conditions -- securities may be bought and sold relatively
<PAGE>
frequently as their suitability for the Fund's portfolio changes. The
Fund's portfolio turnover rate may be higher than many other mutual funds and
may exceed 200%; this turnover may result in greater brokerage commissions and
acceleration of capital gains which are taxable when distributed to
shareholders. The Statement of Additional Information includes an expanded
discussion of the Fund's portfolio turnover rate, its brokerage practices and
certain federal income tax matters.
When we believe market or economic conditions are adverse, the Fund may
assume a defensive position by temporarily investing up to 100% of its assets in
high-quality money market instruments, such as short-term U.S. government
obligations, commercial paper or repurchase agreements, seeking to protect its
assets until conditions stabilize.
INVESTMENT POLICIES AND RISKS
The Fund seeks long term capital appreciation by investing primarily in
common stocks of issuers of all sizes. The common stock in which the Fund
invests may be issued by issuers ranging from established, well-capitalized
("large cap") companies to newly formed small capitalization ("small cap")
companies. These securities may be traded on national, regional or foreign stock
exchanges or in the over-the-counter market. Small cap companies frequently have
limited operating histories, product lines and financial and managerial
resources, and may face intense competitive pressures from larger companies. The
market prices of small cap stocks may be more volatile than the stocks of larger
companies because they typically trade in lower volumes and because small cap
firms may be more vulnerable to changes in their earnings and prospects.
Although equity securities have a history of long-term growth in value, their
prices fluctuate based on changes in a company's financial condition and on
overall market and economic conditions.
Investors generally should expect to see the Fund's share price vary with
movements in the stock markets, changes in economic conditions and other
factors. The Fund invests in many different companies in a variety of securities
and industries; this diversification may help reduce the Fund's exposure to
investment and market risks but cannot eliminate these risks.
Small-Cap Stocks. The small-cap companies represented in the Fund's
investment portfolio (particularly those trading "over-the-counter") may be in
the early stages of development; have limited product lines, markets or
financial resources; and/or lack management depth. These factors may lead to
more intense competitive pressures on the companies, greater volatility in the
companies' earnings, and increased illiquidity and erratic price movements for
the securities of these companies, compared to larger-cap companies.
<PAGE>
Foreign Securities. Up to 25% of the Fund's total assets, measured at the
time of purchase, may be invested directly in foreign equity and debt
securities. Securities of Canadian issuers and American Depository Receipts
("ADRs") are not subject to this 25% limitation. ADRs are receipts representing
shares of a foreign corporation held by a U.S. bank. ADRs are denominated in
U.S. dollars and trade in the U.S. securities markets.
For U.S. investors, the returns on foreign securities are influenced not
only by the returns on the foreign investments themselves, but also by currency
fluctuations. When the U.S. dollar generally rises in relation to a foreign
currency, returns for a U.S. investor on foreign securities denominated in that
foreign currency may decrease. By contrast, in a period when the U.S. dollar
generally declines, those returns may increase.
Other aspects of international investing to consider include:
-less publicly available information than is generally available about U.S.
issuers;
-differences in accounting, auditing and financial reporting standards;
-generally higher commission rates on foreign portfolio transactions and
longer settlement periods;
-smaller trading volumes and generally lower liquidity of foreign stocks,
which may cause greater price volatility; and
-investment income on certain foreign securities may be subject to foreign
withholding taxes, which may reduce dividend income or capital gains payable to
shareholders.
There is also the possibility of expropriation or confiscatory taxation,
adverse changes in investment or exchange control regulations, political
instability, potential restrictions on the flow of international capital; and
the possibility the Fund may experience difficulties in pursuing legal remedies
and collecting judgments.
ADRs are subject to some of the same risks as direct investments in
foreign securities, including the risk that material information about the
issuer may not be disclosed in the United States and the risk that currency
fluctuations may adversely affect the value of the ADR.
Restricted and Rule 144A Securities. The Fund may invest up to 15% of its
total net assets, measured at the time of purchase, in securities which are
illiquid because they are subject to restrictions on their resale ("restricted
securities") or because, based upon the nature of the market for such
securities, they are not readily marketable. However, the Fund may purchase
certain securities that are not registered for sale to the general public but
that can be resold to institutional investors ("Rule 144A Securities"), if a
<PAGE>
liquid institutional trading market for the securities exists. The Fund's
board of directors has delegated to Fund Management the authority to determine
the liquidity of Rule 144A Securities pursuant to guidelines approved by the
board. In the event that a Rule 144A Security held by the Fund is subsequently
determined to be illiquid, the security may be sold as soon as that can be done
in an orderly fashion consistent with the best interests of the Fund's
shareholders. For more information concerning Rule 144A Securities, see
"Investment Policies And Restrictions" in the Statement of Additional
Information.
Repurchase Agreements. The Fund may invest money, for as short a time as
overnight, using repurchase agreements ("repos"). With a repo, the Fund buys a
debt instrument, agreeing simultaneously to sell it back to the prior owner at
an agreed-upon price and date. The Fund could incur costs or delays in seeking
to sell the instrument if the prior owner defaults on its repurchase obligation.
To reduce that risk, the securities that are the subject of the repurchase
agreement will be maintained with the Fund's custodian in an amount at least
equal to the repurchase price under the agreement (including accrued interest).
These agreements are entered into only with member banks of the Federal Reserve
System, registered broker-dealers, and registered U.S. government securities
dealers that are deemed creditworthy under standards established by the
Company's board of directors.
Options, Futures and Other Financial Instruments. The Fund may use various
types of financial instruments, some of which are derivatives, to attempt to
manage the risk of its investments or, in certain circumstances, for investment
(e.g., as a substitute for investing in securities). These financial instruments
include options, futures contracts, forward contracts, swaps, caps, floors and
collars (collectively, "Financial Instruments"). For descriptions and other
information on these Financial Instruments and strategies and their risk
considerations, see the Statement of Additional Information. Financial
Instruments may be used in an attempt to manage the Fund's foreign currency
exposure as well as other risks of the Fund's investments that can cause
fluctuation in its net asset value. The Fund may use Financial Instruments to
increase or decrease its exposure to changing security prices, interest rates,
currency exchange rates or other factors. The policies in this section do not
apply to other types of instruments sometimes referred to as derivatives, such
as indexed securities, mortgage-backed and other asset-backed securities, and
stripped interest and principal of debt.
The Fund's ability to use Financial Instruments may be limited by market
conditions, regulatory limits and tax considerations. The Fund might not use any
of these Financial Instruments, and there can be no assurance that any strategy
using a Financial Instrument will fully achieve its objective.
Subject to the further limitations stated in the Statement of Additional
Information, generally, the Fund is authorized to use any type of Financial
Instrument. However, as a non-fundamental policy, the Fund will only use a
<PAGE>
particular Financial Instrument (other than those related to foreign
currency) if the Fund is authorized to take a position in the type of asset to
which the return on, or value of, the Financial Instrument is primarily related.
Therefore, for example, if the Fund is authorized to invest in a particular type
of security (such as an equity security), it could take a position in an option
on an index relating to equity securities. With respect to foreign currency
Financial Instruments, as a non-fundamental policy the Fund will only use these
Financial Instruments if the Fund is authorized to invest in foreign securities.
In addition, the Fund presently has a non-fundamental policy to utilize only
exchange-traded Financial Instruments, other than forward currency contracts.
This policy would not, however, prevent the Fund from investing in a security,
such an indexed security, with an imbedded component, such as a cap or a floor.
Delayed Delivery or When-Issued Purchases. Debt securities may at times be
purchased or sold by the Fund with settlement taking place in the future. The
Fund may commit to invest up to 10% of its net assets in when-issued debt
securities. The payment obligation and the interest rate that will be received
on the securities generally are fixed at the time the Fund enters into the
commitment. When the Fund purchases a security on a when-issued or delayed
delivery basis, it immediately assumes the risk of ownership, including the risk
of price fluctuation. Between the date of purchase and the settlement date, the
value of a when-issued the security is subject to market fluctuations, and no
interest is payable to the Fund prior to the settlement date.
Year 2000 Computer Issue. Due to the fact that many computer systems in
use today cannot recognize the year 2000, but will, unless corrected, revert to
1900 or 1980 or cease to function at that time, the markets for securities in
which the Fund invests may be detrimentally affected by computer failures
throughout the financial services industry beginning January 1, 2000. Improperly
functioning trading systems may result in settlement problems and liquidity
issues. In addition, corporate and governmental data processing errors may
result in production issues for individual companies and overall economic
uncertainties. Earnings of individual issuers will be affected by remediation
costs, which may be substantial. The Fund's investments may be adversely
affected.
Securities Lending. The Fund may seek to earn additional income by lending
securities to qualified brokers, dealers, banks, or other financial
institutions, on a fully collateralized basis. For further information on this
policy, see "Investment Policies and Restrictions" in the Statement of
Additional Information.
For a further discussion of risks associated with an investment in the
Fund, see "Investment Policies and Restrictions" and "Investment Practices" in
the Statement of Additional Information.
<PAGE>
THE FUND AND ITS MANAGEMENT
The Company is a no-load mutual fund, registered with the Securities and
Exchange Commission as a diversified, open-end, management investment company.
It was incorporated as INVESCO Dynamics Fund, Inc. on February 17, 1967 under
the laws of Colorado and was reorganized as a Maryland corporation on July 1,
1993. On July 3, 1997, the name of the Company was changed to INVESCO Capital
Appreciation Funds, Inc.
The Company's board of directors has responsibility for overall
supervision of the Fund and reviews the services provided by the adviser. Under
an agreement with the Company, IFG, 7800 E. Union Avenue, Denver, Colorado
80237, serves as the Fund's investment adviser; it is primarily responsible for
providing the Fund with investment management and various administrative
services.
The Fund's investments are selected by members of INVESCO's Growth Team,
which is headed by Timothy J. Miller, C.F.A. Mr. Miller will call upon portfolio
managers from INVESCO's Growth Team for investment decisions based upon their
expertise in the various market capitalization groupings.
Timothy J. Miller, a Chartered Financial Analyst, has been the lead
portfolio manager of the Fund since its inception. Mr. Miller is also the lead
portfolio manager of INVESCO Dynamics Fund and INVESCO VIF - Dynamics Fund and
co-manages INVESCO Small Company Growth Fund, INVESCO Growth Fund, INVESCO VIF -
Growth Fund and INVESCO VIF - Small Company Growth Fund. Mr. Miller is also a
senior vice president of INVESCO Funds Group, Inc. Mr. Miller was previously an
analyst and portfolio manager with Mississippi Valley Advisors from 1979 to
1992. Mr. Miller received an M.B.A. from the University of Missouri-St. Louis
and a B.S.B.A. from St. Louis University.
IFG permits investment and other personnel to purchase and sell securities
for their own accounts, subject to a compliance policy governing personal
investing. This policy requires IFG personnel to conduct their personal
investment activities in a manner that IFG believes is not detrimental to the
Fund or IFG's other advisory clients. See the Statement of Additional
Information for more detailed information.
The Fund pays IFG a monthly management fee which is based upon a
percentage of the Fund's average net assets determined daily. The management fee
is computed at the annual rate of [0.75%] of the Fund's average net assets.
Under a Distribution Agreement effective September 30, 1997, IDI is the
Fund's distributor. IDI, established in 1997, is a registered broker-dealer that
acts as distributor for all retail funds advised by IFG.
<PAGE>
Under a Transfer Agency Agreement, IFG acts as registrar, transfer agent,
and dividend disbursing agent for the Fund. The Fund pays an annual fee of
$20.00 per shareholder account or, where applicable, per participant in an
omnibus account per year. Registered broker-dealers, third party administrators
of tax-qualified retirement plans and other entities, including affiliates of
IFG, may provide equivalent services to the Fund. In these cases, IFG may pay,
out of the fee it receives from the Fund, an annual sub-transfer agency or
recordkeeping fee to the third party.
In addition, under an Administrative Services Agreement, IFG handles
additional administrative, recordkeeping, and internal sub- accounting services
for the Fund.
The management and custodial services provided to the Fund by IFG and the
Funds' custodian, and the services provided to shareholders by IDI and IFG,
depend on the continued functioning of their computer systems. Many computer
systems in use today cannot recognize the year 2000, but will revert to 1900 or
1980 or will cease to function due to the manner in which dates were encoded and
are calculated. That failure could have a negative impact on the handling of the
Funds' securities trades, their share pricing and their account services. The
Funds and their service providers have been actively working on necessary
changes to their computer systems to deal with the year 2000 and expect that
their systems will be adapted before that date, but there can be no assurance
that they will be successful. Furthermore, services may be impaired at that time
as a result of the interaction of their systems with others' noncomplying
computer systems.
The Fund's expenses, which are accrued daily, are deducted from total
income before dividends are paid. If necessary, certain Fund expenses will be
absorbed voluntarily by IFG in order to ensure that the Fund's total operating
expenses will not exceed [1.50%] of the Fund's average net assets.
IFG places orders for the purchase and sale of portfolio securities with
brokers and dealers based upon IFG's evaluation of such brokers' and dealers'
financial responsibility coupled with their ability to effect transactions at
the best available prices. As discussed under "How to Buy Shares - Distribution
Expenses," the Fund may market its shares through intermediary brokers or
dealers that have entered into Dealer Agreements with IDI, as the Fund's
distributor. The Fund may place orders for portfolio transactions with qualified
broker-dealers that recommend the Fund, or sell shares of the Fund, to clients,
or act as agent in the purchase of Fund shares for clients, if IFG believes that
the quality of the execution of the transaction and level of commission are
comparable to those available from other qualified brokerage firms. For further
information, see "Investment Practices - Placement of Portfolio Brokerage" in
the Statement of Additional Information.
IFG and IDI are indirect wholly-owned subsidiaries of AMVESCAP PLC.
AMVESCAP PLC is a publicly-traded holding company that, through its
subsidiaries, engages in the business of investment management on an
international basis. INVESCO PLC changed its name to AMVESCO PLC on March 3,
<PAGE>
1997, and to AMVESCAP PLC on May 8, 1997, as a part of a merger between a
direct subsidiary of INVESCO PLC and A I M Management Group Inc., that created
one of the largest independent investment management businesses in the world.
IFG continues to operate under its existing name. AMVESCAP has approximately
[$192.2] billion in assets under management. IFG was established in 1932 and, as
of April 30, 1998, managed 14 mutual funds, consisting of 49 separate
portfolios, with combined assets of approximately $19.3 billion on behalf of
1,492,189 shareholders.
FUND PRICE AND PERFORMANCE
Determining Price. The value of your investment in the Fund will vary
daily. The price per share is also known as the Net Asset Value ("NAV"). IFG
prices the Fund every day that the New York Stock Exchange is open, as of the
close of regular trading (generally, 4:00 p.m., New York time). NAV is
calculated by adding together the current market value of all of the Fund's
assets, including accrued interest and dividends; subtracting liabilities,
including accrued expenses; and dividing that dollar amount by the total number
of Fund shares outstanding.
Performance Data. To keep shareholders and potential investors informed,
we will occasionally advertise the Fund's total return for one-, five-, and
ten-year periods (or since inception). Total return figures show the rate of
return on a $1,000 investment in the Fund, assuming reinvestment of all
dividends and capital gain distributions for the periods cited. Cumulative total
return shows the actual rate of return on an investment for the period cited;
average annual total return represents the average annual percentage change in
the value of an investment. Both cumulative and average annual total returns
tend to "smooth out" fluctuations in the Fund's investment results, because they
do not show the interim variations in performance over the periods cited.
When we quote mutual fund rankings published by Lipper Analytical
Services, Inc., we may compare the Fund to others in its category of Growth, as
well as to the broad-based Lipper general fund groupings. These rankings allow
you to compare the Fund to its peers. Other independent financial media also
produce performance- or service-related comparisons, which you may see in our
promotional materials. For more information see "Fund Performance" in the
Statement of Additional Information.
Performance figures are based on historical earnings and are not intended
to suggest future performance.
HOW TO BUY SHARES
The following chart shows several convenient ways to invest in the Fund.
Your new Fund shares will be priced at the NAV next determined after your order
is received in proper form. There is no charge to invest, exchange, or redeem
shares when you engage in transactions directly through IFG. However, if you
invest in the Fund through a securities broker, you may be charged a commission
<PAGE>
or transaction fee. IFG may from time to time make payments from its
revenues to securities dealers and other financial institutions that provide
distribution-related and/or administrative services for the Fund. For all new
accounts, please send a completed application form. Please specify which INVESCO
fund you wish to purchase.
IFG reserves the right to increase, reduce or waive the minimum investment
requirements in its sole discretion, where it determines this action is in the
best interests of the Fund. Further, IFG reserves the right in its sole
discretion to reject any order for the purchase of Fund shares (including
purchases by exchange) when, in its judgment, such rejection is in the Fund's
best interests.
Exchange Policy. You may exchange your shares in this Fund for those in
another INVESCO fund on the basis of their respective net asset values at the
time of the exchange. Before making any exchange, be sure to review the
prospectuses of the funds involved and consider their differences.
Please note these policies regarding exchanges of fund shares:
1) The fund accounts must be identically registered.
2) You may make up to four exchanges out of each fund during
each calendar year.
3) An exchange is the redemption of shares from one fund followed by
the purchase of shares in another. Therefore, any gain or loss
realized on the exchange is recognizable for federal income tax
purposes (unless, of course, your account is tax-deferred).
4) In order to prevent abuse of this policy to the disadvantage of
other shareholders, the Fund reserves the right to temporarily or
permanently terminate the exchange option of any shareholder who
requests more than four exchanges in a year, or at any time the Fund
determines the actions of the shareholder are detrimental to Fund
performance and shareholders. The Fund will determine whether to do
so based on a consideration of both the number of exchanges any
particular shareholder, or group of shareholders, has requested and
the time period over which those exchange requests have been made,
together with the level of expense to the Fund which will result
from effecting additional exchange requests. The Fund is intended to
be a long-term investment vehicle and is not designed to provide
investors the means of speculation on short-term market movements.
Notice of all such modifications or terminations will be given at
least 60 days prior to the effective date of the change in policy,
except in unusual circumstances (such as when redemptions of the
exchanged shares are suspended under Section 22(e) of the Investment
Company Act of 1940, or when sales ofthe fund into which you are
exchanging are temporarily suspended).
<PAGE>
HOW TO BUY SHARES
================================================================================
Method Investment Minimum Please Remember
- --------------------------------------------------------------------------------
By Check
MAIL to: $1,000 for regular If your check does
INVESCO Funds account; not clear, you will
Group, Inc. $250 for an IRA; be responsible for
P.O. Box 173706 $50 minimum for any related loss
Denver, CO 80217- each subsequent the Fund or IFG
3706. investment. incurs. If you are
You may send your already a
check by overnight shareholder in the
courier to: 7800 E. INVESCO funds, the
Union Ave., Denver, Fund may seek
CO 80237. reimbursement from
your existing
account(s) for any
loss incurred.
- --------------------------------------------------------------------------------
By Telephone or
Wire
Call 1-800-525-8085 $1,000. Payment must be
to request your received within 3
purchase. Then send business days, or
your check by the transaction may
overnight courier be canceled. If a
to our street purchase is
address: canceled due to
7800 E. Union Ave., nonpayment, you
Denver, CO 80237. will be responsible
Or you may transmit for any related
your payment by loss the Fund or
bank wire (call IFG IFG incurs. If you
for instructions). are already a
shareholder in the
INVESCO funds, the Fund
may seek reimbursement
from your existing
account(s) for any loss
incurred.
<PAGE>
- --------------------------------------------------------------------------------
With EasiVest or
Direct Payroll
Purchase
You may enroll on $50 per month for Like all regular
the fund EasiVest; $50 per investment plans,
application, or pay period for neither EasiVest
call us for the Direct Payroll nor Direct Payroll
correct form and Purchase. You may Purchase ensures a
more details. start or stop your profit or protects
Investing the same regular investment against loss in a
amount on a monthly plan at any time, falling market.
basis allows you to with two weeks' Because you'll
buy more shares notice to IFG. invest continually,
when prices are low regardless of
and fewer shares varying price
when prices are levels, consider
high. This your financial
"dollar-cost ability to keep
averaging" may help buying through low
offset market price levels. And
fluctuations. Over remember that you
a period of time, will lose money if
your average cost you redeem your
per share may be shares when the
less than the market value of all
actual average of your shares is
price per share. less than their
cost.
<PAGE>
- --------------------------------------------------------------------------------
By PAL
Your "Personal $1,000. Be sure to write
Account Line" is down the
available for confirmation number
subsequent provided by PAL.
purchases and Payment must be
exchanges 24 hours received within 3
a day. Simply call business days, or
1-800-424-8085. the transaction may
be canceled. If a
purchase is cancelled due
to nonpayment, you will
be responsible for any
related loss the Fund or
IFG incurs. If you are
already a shareholder in
the INVESCO funds, the
Fund may seek
reimbursement from your
existing account(s) for
any loss incurred.
- --------------------------------------------------------------------------------
By Exchange
Between this and $1,000 to open a See "Exchange
another of the new account; $50 Policy," page 17.
INVESCO funds. Call for written
1-800-525-8085 for requests to
prospectuses of purchase additional
other INVESCO shares for an
funds. You may also existing account.
establish an (The exchange
Automatic Monthly minimum is $250 for
Exchange service exchanges requested
between two INVESCO by telephone.)
funds; call IFG for
further details and
the correct form.
================================================================================
Distribution Expenses. The Fund is authorized under a Plan and Agreement
of Distribution pursuant to Rule 12b-1 under the Investment Company Act of 1940
(the "Plan") to use its assets to finance certain activities relating to the
distribution of its shares to investors. Under this Plan, monthly payments may
be made by Fund to IDI to permit IDI, at its discretion, to engage in certain
activities and provide certain services approved by the board of directors of
the Company in connection with the distribution of Fund's shares to investors.
These activities and services may include the payment of compensation (including
<PAGE>
incentive compensation and/or continuing compensation based on the amount
of customer assets maintained in the Fund) to securities dealers and other
financial institutions and organizations, which may include IFG and IDI
affiliated companies, to obtain various distribution-related and/or
administrative services for the Fund. Such services may include, among other
things, processing new shareholder account applications, preparing and
transmitting to the Fund's Transfer Agent computer processable tapes of all
transactions by customers, and serving as the primary source of information to
customers in answering questions concerning the Fund and their transactions with
the Funds.
In addition, other permissible activities and services include
advertising, the preparation, printing and distribution of sales literature,
printing and distribution of prospectuses to prospective investors, public
relations efforts and marketing programs to communicate with investors and
prospective investors and such other services and promotional activities for the
Fund as may from time to time be agreed upon by the Company and its board of
directors. These services and activities may be conducted by the staff of IFG,
IDI or their affiliates or by third parties.
Under the Plan, the Fund's payments to IDI are limited to an amount
computed at an annual rate of 0.25% of the Fund's average net assets. IDI is not
entitled to payment for overhead expenses under the Plan, but may be paid for
all or a portion of the compensation paid for salaries and other employee
benefits for the personnel of IFG or IDI whose primary responsibilities involve
marketing shares of the INVESCO Mutual Funds, including the Fund. Subject to
review by the Fund's directors, such payments are based on an allocation formula
designed to ensure that all such payments are appropriate.
Payments made by the Fund may not be used to finance directly the
distribution of shares of any other Fund of the Company or other mutual funds
advised by IFG. However, payments received by IDI which are not used to finance
the distribution of shares of the Fund become part of IDI's revenues and may be
used by IDI for activities that promote distribution of any of the mutual funds
advised by IFG. IDI may from time to time make additional payments from other
revenue sources to securities dealers, financial advisers and financial
institutions that provide distribution-related and/or administrative services to
the Fund. In this connection, the Plan authorizes any financing of distribution
which may result from IDI's use of its own resources, including profits from
fees received from the Fund, provided that such fees are legitimate and not
excessive.
Payments by the Fund under the Plan, for any month, may be made to
compensate IDI for permissible activities engaged in and services provided by
IDI during the rolling 12-month period in which that month falls, although the
period is expanded to 24 months for obligations incurred during the first 24
months of the Fund's operations. Any obligations incurred by IDI in excess of
<PAGE>
the limitations will not be paid by the Fund under the Plan, and will be
borne by IDI. No further payments will be made by the Fund under the Plan in the
event of its termination. For more information, see "How Shares Can Be Purchased
- - Distribution Plan" in the Statement of Additional Information.
FUND SERVICES
Shareholder Accounts. IFG will maintain a share account that reflects your
current holdings. Share certificates will be issued only upon specific request.
You will have greater flexibility to conduct transactions if you do not request
certificates.
Transaction Confirmations. You will receive detailed confirmations of
individual purchases, exchanges, and redemptions. If you choose certain
recurring transaction plans (for instance, EasiVest), your transactions will be
confirmed on your quarterly Investment Summary.
Investment Summaries. Each calendar quarter, shareholders receive a
written statement which consolidates and summarizes account activity and value
at the beginning and end of the period for each of their INVESCO funds.
Reinvestment of Distributions. Dividends and capital gain distributions
are automatically invested in additional Fund shares at the NAV on the
ex-dividend or ex-distribution date, unless you choose to have dividends and/or
capital gain distributions automatically reinvested in another INVESCO fund or
paid by check (minimum of $10.00).
Telephone Transactions. All shareholders may exchange and redeem Fund
shares by telephone, unless they expressly decline these privileges. By signing
the new account Application, a Telephone Transaction Authorization Form, or
otherwise using these privileges, the investor has agreed that, if the Fund has
followed reasonable procedures, such as recording telephone instructions and
sending written transaction confirmations, it will not be liable for following
telephone instructions that it believes to be genuine. As a result of this
policy, the investor may bear the risk of any loss due to unauthorized or
fraudulent instructions.
Retirement Plans and IRAs. Fund shares may be purchased for IRAs and many
types of tax-deferred retirement plans. IFG can supply you with information and
forms to establish or transfer your existing plan or account.
<PAGE>
HOW TO SELL SHARES
The following chart shows several convenient ways to redeem your Fund
shares. Shares of the Fund may be redeemed at any time at the current NAV next
determined after a request in proper form is received at the Fund's office. The
NAV at the time of the redemption may be more or less than the price you paid to
purchase your shares, depending primarily upon the Fund's investment
performance.
Please specify from which fund you wish to redeem shares. Shareholders
have a separate account for each fund in which they invest.
While the Fund will attempt to process telephone redemptions promptly,
there may be times -- particularly in periods of severe economic or market
disruption -- when you may experience delays in redeeming shares by phone.
HOW TO SELL SHARES
================================================================================
Method Minimum Redemption Please Remember
================================================================================
By Telephone
Call us toll-free $250 (or, if less, This option is not
at 1-800-525-8085. full liquidation of available for
the account) for a shares held in
redemption check; IRAs.
$1,000 for a wire
to bank of record.
The maximum amount
which may be
redeemed by telephone
is generally $25,000.
These telephone redemption
privileges may be modified
or terminated in the future
at IFG's discretion.
- --------------------------------------------------------------------------------
In Writing
Mail your request Any amount. The If the shares to be
to INVESCO Funds redemption request redeemed are
Group, Inc., P.O. must be signed by represented by
Box 173706, all registered stock certificates,
Denver, CO 80217- owners of the the certificates
3706. You may also account. Payment must be sent to
send your request will be mailed to IFG.
by overnight your address of
courier to 7800 E. record, or to a
Union Ave., Denver, designated bank.
CO 80237.
<PAGE>
- --------------------------------------------------------------------------------
By Exchange
Between this and $1,000 to open a See "Exchange
another of the new account; $50 Policy," page 17.
INVESCO funds. Call for written
1-800-525-8085 for requests to
prospectuses of purchase additional
other INVESCO shares for an
funds. You may also existing account.
establish an (The exchange
automatic monthly minimum is $250 for
exchange service exchanges requested
between two INVESCO by telephone.)
funds; call IFG for
further details and
the correct form.
- --------------------------------------------------------------------------------
Periodic Withdrawal
Plan
You may call us to $100 per payment on You must have at
request the a monthly or least $10,000 total
appropriate form quarterly basis. invested with the
and more The redemption INVESCO funds, with
information at 1- check may be made at least $5,000 of
800-525-8085. payable to any that total invested
party you in the fund from
designate. which withdrawals
will be made.
- --------------------------------------------------------------------------------
Payment To Third
Party
Mail your request Any amount. All registered
to INVESCO Funds owners of the
Group, Inc. account must sign
P.O. Box 173706 the request, with a
Denver, CO 80217- signature guarantee
3706. from an eligible
guarantor financial
institution, such as a
commercial bank or a
recognized national or
regional securities firm.
================================================================================
Payments of redemption proceeds will be mailed within seven days following
receipt of the redemption request in proper form. However, payment may be
postponed under unusual circumstances -- for instance, if normal trading is not
taking place on the New York Stock Exchange, or during an emergency as defined
by the Securities and Exchange Commission. If your shares were purchased by a
check which has not yet cleared, payment will be made promptly upon clearance of
the purchase check (which will take up to 15 days).
<PAGE>
If you participate in EasiVest, the Fund's automatic monthly investment
program, and redeem all of the shares in your account, we will terminate any
further EasiVest purchases unless you instruct us otherwise.
Because of the high relative costs of handling small accounts, should the
value of any shareholder's account fall below $250 as a result of shareholder
action, the Fund reserves the right to redeem all shares in such account, in
which case the account would be liquidated and the proceeds forwarded to the
shareholder. Prior to any such redemption, a shareholder will be notified and
given 60 days to increase the value of the account to $250 or more.
TAXES, DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Taxes. The Fund intends to distribute to shareholders all of its net
investment income, net capital gains and net gains from foreign currency
transactions, if any. Distribution of all net investment income to shareholders
allows the Fund to maintain its tax status as a regulated investment company.
The Fund does not expect to pay any federal income or excise taxes because of
its tax status as a regulated investment company.
Shareholders must include all dividends and other distributions in taxable
income for federal, state and local income tax purposes, unless the INVESCO fund
account generating the distribution is exempt from income taxes. Dividends and
other distributions are taxable whether they are received in cash or
automatically reinvested in shares of the Fund or another fund in the INVESCO
group.
Net realized capital gains of the Fund are classified as short-term and
long-term gains depending upon how long the Fund held the security that gave
rise to the gains. Short-term capital gains are included in income from
dividends and interest as ordinary income and are taxed at the taxpayer's
marginal tax rate. The Taxpayer Relief Act of 1997 (the "Tax Act"), enacted in
August 1997, changed the taxation of long-term capital gains by applying
different capital gains rates depending on the taxpayer's holding period and
marginal rate of federal income tax. Long-term gains realized on the sale of
securities held for more than one year but not for more than 18 months are
taxable at a rate of 28%. This category of long-term gains is often referred to
as "mid-term" gains but is technically termed "28% rate gains." Long-term gains
realized on the sale of securities held for more than 18 months are taxable at a
rate of 20%. At the end of each year, information regarding the tax status of
dividends and other distributions is provided to shareholders. Shareholders
should consult their tax adviser as to the effect of the Tax Act on
distributions of net capital gains by the Fund.
<PAGE>
Shareholders may realize capital gains or losses when they sell their
shares at more or less than the price originally paid. Capital gains on shares
held for more than one year will be long-term capital gain, in which event it
will be subject to federal income tax at the rates indicated above.
The Fund may be subject to withholding of foreign taxes on dividends or
interest it receives on foreign securities. Foreign taxes withheld will be
treated as an expense of the Fund.
Individuals and certain other non-corporate shareholders may be subject to
backup withholding of 31% on dividends, capital gains and other distributions
and redemption proceeds. You can avoid backup withholding on your account by
ensuring that we have a correct, certified tax identification number, unless you
are subject to backup withholding for other reasons.
We encourage you to consult a tax adviser with respect to these matters.
For further information see "Dividends, Other Distributions And Taxes" in the
Statement of Additional Information.
Dividends and Other Distributions. The Fund earns net investment income in
the form of interest and dividends on investments. Dividends paid by the Fund
will be based solely on the income earned by it. The Fund's policy is to
distribute substantially all of this income, less expenses, to shareholders on
an annual basis, at the discretion of the Company's board of directors.
Dividends are automatically reinvested in additional shares of the Fund at the
net asset value on the payable date unless otherwise requested.
In addition, the Fund realizes capital gains and losses when it sells
securities or derivatives for more or less than it paid. If total gains on sales
exceed total losses (including losses carried forward from previous years), the
Fund has a net realized capital gain. Net realized capital gains, if any,
together with gains, if any, realized on foreign currency transactions, are
distributed to shareholders at least annually, usually in December. Capital gain
distributions are automatically reinvested in additional shares of the Fund at
the net asset value on the payable date unless otherwise requested.
Dividends and other distributions are paid to shareholders who hold shares
on the record date of the distribution, regardless of how long the shares have
been held by the shareholder. The Fund's share price will then drop by the
amount of the distribution on the ex-dividend or ex-distribution date. If a
shareholder purchases shares immediately prior to the distribution, the
shareholder will, in effect, have "bought" the distribution by paying the full
purchase price, a portion of which is then returned in the form of a taxable
distribution.
ADDITIONAL INFORMATION
Voting Rights. All shares of the Company have equal voting rights based on
one vote for each share owned and a corresponding fractional vote for each
fractional share owned. The Company is not generally required and does not
expect to hold regular annual meetings of shareholders. However, when requested
<PAGE>
to do so in writing by the holders of 10% or more of the outstanding shares
of the Fund or as may be required by applicable law or the Company's Articles of
Incorporation or Bylaws, the board of directors will call special meetings of
shareholders. Directors may be removed by action of the holders of a majority of
the outstanding shares of the Company's funds. The Company will assist
shareholders in communicating with other shareholders as required by the
Investment Company Act of 1940.
Master/Feeder Option. As a matter of fundamental policy, the Company may,
in the future, seek to achieve the Fund's investment objective by investing all
of the Fund's assets in another investment company having substantially the same
fundamental investment objective, policies and limitations. It is expected that
any such investment company would be managed by IFG in substantially the same
manner as the Fund. If permitted by applicable law, any such investment may be
made in the sole discretion of the Company's board of directors without a vote
of the Fund's shareholders. However, shareholders will be given at least 30 days
prior notice of any such investment. Such an investment would be made only if
the board of directors determines it to be in the best interests of the Fund and
its shareholders based on potential cost savings, operational efficiencies or
other factors. No assurance can be given that costs would be materially reduced
if this option were implemented.
<PAGE>
INVESCO [Aggressive Growth] Fund
A no-load mutual fund seeking
long-term capital appreciation.
PROSPECTUS
September ---, 1998
INVESCO FUNDS
INVESCO Distributors, Inc.
Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
1-800-525-8085
PAL(R): 1-800-424-8085
http://www.invesco.com
In Denver, visit one of our
convenient Investor Centers:
Cherry Creek,
155-B Fillmore Street;
Denver Tech Center,
7800 East Union Avenue,
Lobby Level
In addition, all documents
filed by the Company with the
Securities and Exchange
Commission can be
located on a web site
maintained by the
Commission at
http://www.sec.gov.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
^ September ---, 1998
INVESCO CAPITAL APPRECIATION FUNDS, INC.
^
Address: Mailing Address:
7800 E. Union Avenue Post Office Box 173706
Denver, Colorado 80237 Denver, Colorado 80217-3706
Telephone:
In continental U.S., 1-800-525-8085
- --------------------------------------------------------------------------------
INVESCO Capital Appreciation Funds, Inc. (The "Company") is a diversified,
no-load management investment company currently consisting of ^ three portfolios
of investments, the INVESCO Dynamics Fund (the "Dynamics Fund"^), the INVESCO
Growth & Income Fund ("Growth & Income Fund") and the INVESCO [Aggressive
Growth] Fund ("[Aggressive Growth] Fund") (collectively, the "Funds"). INVESCO
Dynamics Fund seeks capital appreciation through aggressive investment policies.
The Growth & Income Fund seeks high total return through a combination of
capital appreciation and current income. The [Aggressive Growth] Fund seeks
long-term capital appreciation through aggressive investment policies.
The DYNAMICS FUND seeks to achieve its investment objective of providing
its shareholders appreciation of capital through aggressive investment policies
by investing its assets in a variety of securities which are believed to present
possibilities for capital enhancement. The Dynamics Fund normally invests
primarily in common stocks but may invest in other kinds of securities when
determined appropriate by management. The Dynamics Fund should not be considered
by investors seeking current income.
<PAGE>
The GROWTH AND INCOME FUND seeks to achieve its investment objectives of
providing its shareholders appreciation of capital and current income by
investing primarily in common stocks, preferred stocks and securities
convertible into common stocks of companies which offer growth of earnings and
the payment of current dividends. The Growth & Income Fund may also purchase
securities which do not pay current dividends but which offer prospects for
growth of capital and future income.
The [Aggressive Growth] Fund seeks to achieve its investment objective
long-term capital appreciation through aggressive investment policies by
investing primarily in common stocks of issuers of all sizes. The Fund also has
the flexibility to invest in other types of securities.
Additional funds may be offered in the future.
A Prospectus for the Dynamics Fund dated July 3, 1997 ^, a Prospectus for
the Growth & Income Fund dated June 30, 1998 and a Prospectus for the
[Aggressive Growth] Fund dated September ---, 1998,which provide the basic
information you should know before investing in the Funds, may be obtained
without charge from INVESCO Distributors, Inc., Post Office Box 173706, Denver,
Colorado 80217-3706. This Statement of Additional Information is not a
Prospectus, but contains information in addition to and more detailed than that
set forth in the Prospectuses. It is intended to provide additional information
regarding the activities and operations of the Funds, and should be read in
conjunction with the Prospectuses.
Investment Adviser: INVESCO FUNDS GROUP, INC.
Distributor: INVESCO DISTRIBUTORS, INC.
<PAGE>
TABLE OF CONTENTS
Page
INVESTMENT POLICIES AND RESTRICTIONS..........................................32
THE FUNDS AND THEIR MANAGEMENT................................................58
HOW SHARES CAN BE PURCHASED...................................................70
HOW SHARES ARE VALUED.........................................................73
FUND PERFORMANCE..............................................................75
SERVICES PROVIDED BY THE FUNDS................................................76
TAX-DEFERRED RETIREMENT PLANS.................................................77
HOW TO REDEEM SHARES..........................................................78
DIVIDENDS, ^ CAPITAL GAINS DISTRIBUTIONS, AND TAXES...........................78
INVESTMENT PRACTICES..........................................................82
ADDITIONAL INFORMATION........................................................85
APPENDIX A....................................................................88
<PAGE>
INVESTMENT POLICIES AND RESTRICTIONS
As discussed in each Fund's Prospectus in the section entitled "Investment
Objective and Policies," the Funds may invest in a variety of securities and
employ a broad range of investment techniques in seeking to achieve their
respective investment objectives. Such securities and techniques include the
following:
Types of Equity Securities
As described in the Prospectuses, equity securities which may be purchased
by the Funds consist of common, preferred and convertible preferred stocks, and
securities having equity characteristics such as rights, warrants and
convertible debt securities. Common stocks and preferred stocks represent equity
ownership interests in a corporation and participate in the corporation's
earnings through dividends which may be declared by the corporation. Unlike
common stocks, preferred stocks are entitled to stated dividends payable from
the corporation's earnings, which in some cases may be "cumulative" if prior
stated dividends have not been paid. Dividends payable on preferred stock have
priority over distributions to holders of common stock, and preferred stocks
generally have preferences on the distribution of assets in the event of the
corporation's liquidation. Preferred stocks may be "participating," which means
that they may be entitled to dividends in excess of the stated dividend in
certain cases. The rights of common and preferred stocks are generally
subordinate to rights associated with a corporation's debt securities. Rights
and warrants are securities which entitle the holder to purchase the securities
of a company (generally, its common stock) at a specified price during a
specified time period. Because of this feature, the values of rights and
warrants are affected by factors similar to those which determine the prices of
common stocks and exhibit similar (although often more volatile) behavior.
Rights and warrants may be purchased directly or acquired in connection with a
corporate reorganization or exchange offer.
Convertible securities which may be purchased by the Funds include
convertible debt obligations and convertible preferred stock. A convertible
security entitles the holder to exchange it for a fixed number of shares of
common stock (or other equity security), usually at a fixed price within a
specified period of time. Until conversion, the holder receives the interest
paid on a convertible bond or the dividend preference of a preferred stock.
Convertible securities have an "investment value" which is the theoretical
value determined by the yield they provide in comparison with similar securities
without the conversion feature. Investment value changes are based upon
prevailing interest rates and other factors. They also have a "conversion value"
which is their worth in market value if the securities were exchanged for their
underlying equity securities. Conversion value fluctuates directly with the
price of the underlying security. If conversion value is substantially below
<PAGE>
investment value, the price of the convertible security is governed
principally by its investment value. If the conversion value is near or above
investment value, the price of the convertible security generally will rise
above investment value and may represent a premium over conversion value due to
the combination of the convertible security's right to interest (or dividend
preference) and the possibility of capital appreciation from the conversion
feature. A convertible security's price, when price is influenced primarily by
its conversion value, generally will yield less than a senior non-convertible
security of comparable investment value. Convertible securities may be purchased
at varying price levels above their investment values or conversion values.
However, there is no assurance that any premium above investment value or
conversion value will be recovered because prices change and, as a result, the
ability to achieve capital appreciation through conversion may be eliminated.
Debt Securities. ^ When we assess an issuer's ability to meet its interest
rate obligations and repay its debt when due, we are referring to "credit risk."
Debt obligations are rated based on their estimated credit risk by independent
services such as Standard & Poor's, a division of ^ the McGraw-Hill Companies^
("S&P"), or Moody's Investor Services, Inc. ("Moody's"). "Market risk" for debt
securities principally refers to sensitivity to changes in interest rates. For
instance, when interest rates go up, the market value of a previously issued
bond generally declines; on the other hand, when interest rates go down, bond
prices generally increase.
The lower a bond's quality, the more it is subject to credit risk and
market risk and the more speculative it is. This is also true of most unrated
securities. The Growth & Income Fund may invest in issues rated below investment
grade quality (commonly called "junk bonds," and rated BB or lower by S&P or Ba
or lower by Moody's or, if unrated, are judged by the adviser to be of
equivalent quality). Such securities held by the Growth and Income Fund
generally will be subject to greater credit and market risks. These securities
include issues which are of poorer quality and may have some speculative
characteristics, according to the rating services. Investments in unrated
securities may not exceed 25% of a Fund's total assets and such Fund may not
invest more than 25% of its total assets in junk bonds. Never, under any
circumstances, is the Growth & Income Fund permitted to invest in bonds that are
in default or are rated CCC or below by S&P or Caa or below by Moody's or, if
unrated, are judged by IFG to be of equivalent quality. Bonds rated CCC or Caa
are predominantly speculative and may be in default or may have present elements
of danger with respect to the repayment of principal or interest. While the
adviser continuously monitors all of the debt securities in the Growth & Income
Fund's portfolio for the issuer's ability to make required principal and
interest payments and other quality factors, it may retain a bond whose rating
is changed to one below the minimum rating required for purchase of the
<PAGE>
security. The Growth & Income Fund is not required to sell immediately debt
securities that go into default, but may continue to hold such securities until
such time as Fund Management determines it is in the best interests of the Fund
to sell the securities.
The Growth & Income Fund's investments in debt securities may include
investments in zero coupon bonds, step-up bonds, mortgage-backed securities and
asset-backed securities. Zero coupon bonds ("zeros") make no periodic interest
payments. Instead, they are sold at a discount from their face value. The buyer
of the zero receives the rate of return by the gradual appreciation in the price
of the security, which is redeemed at face value at maturity. Step-up bonds
initially make no (or low) cash interest payments but begin paying interest (or
a higher rate of interest) at a fixed time after issuance of the bond. Being
extremely responsive to changes in interest rates, the market prices of both
zeros and step-up bonds may be more volatile than other bonds. The Growth &
Income Fund may be required to distribute income recognized on these bonds, even
though no cash interest payments may be received, which could reduce the amount
of cash available for investment by the Growth & Income Fund.
Mortgage-backed securities represent interests in pools of mortgages.
Asset-backed securities generally represent interests in pools of consumer
loans. Both usually are structured as pass-through securities. Interest and
principal payments ultimately depend on payment of the underlying loans,
although the securities may be supported, at least in part, by letters of credit
or other credit enhancements or, in the case of mortgage-backed securities,
guarantees by the U.S. government, its agencies or instrumentalities. The
underlying loans are subject to prepayments that may shorten the securities'
weighted average lives and may lower their returns. For more information on debt
securities, see "Investment Policies and Restrictions" in the Statement of
Additional Information.
Restricted/144A Securities. As discussed in the section of the ^ Funds'
Prospectuses entitled "Investment Policies And Risks," the Fund may invest in
restricted securities including restricted securities that can be resold to
institutional investors pursuant to Rule 144A under the Securities Act of 1933
("Rule 144A Securities"). (The Growth & Income Fund can invest in Rule 144A
Securities only.)
In recent years, a large institutional market has developed for Rule 144A
Securities. Institutional investors generally will not seek to sell these
instruments to the general public but instead will often depend on an efficient
institutional market in which Rule 144A Securities can readily be resold or on
an issuer's ability to honor a demand for repayment. Therefore, the fact that
there are contractual or legal restrictions on resale to the general public or
certain institutions is not dispositive of the liquidity of such investments.
<PAGE>
Rule 144A under the 1933 Act establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. Institutional markets for Rule 144A Securities
may provide both readily ascertainable values for Rule 144A Securities and the
ability to liquidate an investment in order to satisfy share redemption orders.
An insufficient number of qualified institutional buyers interested in
purchasing a Rule 144A Security held by a Fund could affect adversely the
marketability of such security, and the Fund might be unable to dispose of such
security promptly or at reasonable prices.
Repurchase Agreements. As discussed in the section of each Fund's
Prospectus entitled "Investment Policies And Risks," each Fund may invest in
repurchase agreements with respect to debt instruments eligible for investment
by a Fund with member banks of the Federal Reserve System, registered
broker-dealers and registered U.S. government securities dealers. A repurchase
agreement may be considered a loan collateralized by securities. The resale
price reflects an agreed-upon interest rate effective for the period the
instrument is held by a Fund and is unrelated to the interest rate on the
underlying instrument. In these transactions, the securities acquired by a Fund
(including accrued interest earned thereon) must have a total value at least
equal to the value of the repurchase agreement and are held as collateral by the
Funds' custodian bank until the repurchase agreement is completed.
The use of repurchase agreements involves certain risks. For example, if
the other party to the agreement defaults on its obligation to repurchase the
underlying security at a time when the value of the security has declined, the
Fund may incur a loss upon disposition of the security. If the other party to
the agreement becomes insolvent ^, the Fund may experience costs and delays in
realizing on the collateral. Finally, it is possible that the Fund may not be
able to substantiate its interest in the underlying security and may be deemed
an unsecured creditor of the other party to the agreement. While the Fund's
management acknowledges these risks, it is expected that the risks can be
minimized through careful monitoring procedures.
Lending of Securities. As described in the section of each Fund's
Prospectus entitled "Investment Policies And Risks," each Fund may lend its
portfolio securities to qualified brokers, dealers, banks or other financial
institutions, provided that such loans are callable at any time by the Fund and
are at all times secured by collateral consisting of cash, letters of credit, or
securities issued or guaranteed by the United States government or its agencies,
or any combination thereof, equal to at least the market value, determined
daily, of the loaned securities. The advantage of such loans is that the Fund
continues to have the benefits (and risks) of ownership of the loaned
securities, while at the same time receiving income from the borrower of the
securities. Loans will be made only to firms deemed by the adviser or
sub-adviser (under procedures established by the Company's board of directors)
to be creditworthy and when the amount of interest income to be received
justifies the inherent risks. A loan may be terminated by the borrower on one
<PAGE>
business day's notice, or by the Fund at any time. If at any time the
borrower fails to maintain the required amount of collateral (at least 100% of
the market value of the borrowed securities, plus accrued interest and
dividends), the Fund will require the deposit of additional collateral not later
than the business day following the day on which a collateral deficiency occurs
or the collateral appears inadequate. If the deficiency is not remedied by the
end of that period, the Fund will use the collateral to replace the securities
while holding the borrower liable for any excess of replacement cost over
collateral. Upon termination of the loan, the borrower is required to return the
securities to the Fund. Any gain or loss during the loan period would inure to
the Fund.
Futures and Options on Futures (Dynamics and Growth & Income Funds Only).
As described in the Fund's Prospectus, the Fund may enter into futures
contracts, and purchase and sell ("write") options to buy or sell futures
contracts. The Fund will comply with and adhere to all limitations in the manner
and extent to which it effects transactions in futures and options on such
futures currently imposed by the rules and policy guidelines of the Commodity
Futures Trading Commission as conditions for exemption of a mutual fund, or the
investment advisers thereto, from registration as a commodity pool operator. The
Fund will not, as to any positions, whether long, short or a combination
thereof, enter into futures and options thereon for which the aggregate initial
margins and premiums exceed 5% of the fair market value of its assets after
taking into account unrealized profits and losses on options it has entered
into. In the case of an option that is "in-the-money," as defined in the
Commodity Exchange Act (the "CEA"), the in-the-money amount may be excluded in
computing such 5%. (In general a call option on a future is "in-the-money" if
the value of the future exceeds the exercise ("strike") price of the call; a put
option on a future is "in-the-money" if the value of the future which is the
subject of the put is exceeded by the strike price of the put.) The Fund may use
futures and options thereon solely for bona fide hedging or for other
non-speculative purposes within the meaning and intent of the applicable
provisions of the CEA.
Unlike when the Fund purchases or sells a security, no price is paid or
received by the Fund upon the purchase or sale of a futures contract. Instead,
the Fund will be required to deposit in its segregated asset account an amount
of cash or qualifying securities (currently U.S. Treasury bills), currently in a
minimum amount of $15,000. This is called "initial margin." Such initial margin
is in the nature of a performance bond or good faith deposit on the contract.
However, since losses on open contracts are required to be reflected in cash in
the form of variation margin payments, the Fund may be required to make
additional payments during the term of the contracts to its broker. Such
payments would be required, for example, where, during the term of an interest
rate futures contract purchased by the Fund, there was a general increase in
interest rates, thereby making the Fund's portfolio securities less valuable. In
all instances involving the purchase of financial futures contracts by the Fund,
<PAGE>
an amount of cash together with such other securities as permitted by
applicable regulatory authorities to be utilized for such purpose, at least
equal to the market value of the futures contracts, will be deposited in a
segregated account with the Fund's custodian to collateralize the position. At
any time prior to the expiration of a futures contract, the Fund may elect to
close its position by taking an opposite position which will operate to
terminate the Fund's position in the futures contract. For a more complete
discussion of the risks involved in futures and options on futures and other
securities, refer to Appendix B ("Description of Futures, Options and Forward
Contracts").
Where futures are purchased to hedge against a possible increase in the
price of a security before the Fund is able in an orderly fashion to invest in
the security, it is possible that the market may decline instead. If the Fund,
as a result, concluded not to make the planned investment at that time because
of concern as to possible further market decline or for other reasons, the Fund
would realize a loss on the futures contract that is not offset by a reduction
in the price of securities purchased.
In addition to the possibility that there may be an imperfect correlation
or no correlation at all between movements in the futures contracts and the
portion of the portfolio being hedged, the price of futures may not correlate
perfectly with movements in the prices due to certain market distortions. All
participants in the futures market are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit requirements,
investors may close futures contracts through offsetting transactions which
could distort the normal relationship between underlying instruments and the
value of the futures contract. Moreover, the deposit requirements in the futures
market are less onerous than margin requirements in the securities market and
may therefore cause increased participation by speculators in the futures
market. Such increased participation may also cause temporary price distortions.
Due to the possibility of price distortion in the futures market and because of
the imperfect correlation between movements in the underlying instrument and
movements in the prices of futures contracts, the value of futures contracts as
a hedging device may be reduced.
In addition, if the Fund has insufficient available cash, it may at times
have to sell securities to meet variation margin requirements. Such sales may
have to be effected at a time when it may be disadvantageous to do so.
Options on Futures Contracts (Dynamics and Growth & Income Funds Only).
The Fund may buy and write options on futures contracts for hedging purposes;
options are also included in the types of instruments sometimes known as
derivatives. The purchase of a call option on a futures contract is similar in
some respects to the purchase of a call option on an individual security.
Depending on the pricing of the option compared to either the price of the
<PAGE>
futures contract upon which it is based or the price of the underlying
instrument, ownership of the option may or may not be less risky than ownership
of the futures contract or the underlying instrument. As with the purchase of
futures contracts, when the Fund is not fully invested it may buy a call option
on a futures contract to hedge against a market advance.
The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the security or foreign currency which is
deliverable under, or of the index comprising, the futures contract. If the
futures price at the expiration of the option is below the exercise price, the
Fund will retain the full amount of the option premium which provides a partial
hedge against any decline that may have occurred in the Fund's portfolio
holdings. The writing of a put option on a futures contract constitutes a
partial hedge against increasing prices of the security or foreign currency
which is deliverable under, or of the index comprising, the futures contract. If
the futures price at expiration of the option is higher than the exercise price,
the Fund will retain the full amount of the option premium which provides a
partial hedge against any increase in the price of securities which the Fund is
considering buying. If a call or put option which the Fund has written is
exercised, the Fund will incur a loss which will be reduced by the amount of the
premium it received. Depending on the degree of correlation between changes in
the value of its portfolio securities and changes in the value of the futures
positions, the Fund's losses from existing options on futures may to some extent
be reduced or increased by changes in the value of portfolio securities.
The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on portfolio securities. For
example, the Fund may buy a put option on a futures contract to hedge the Fund's
portfolio against the risk of falling prices.
The amount of risk the Fund assumes when it buys an option on a futures
contract is the premium paid for the option plus related transaction costs. In
addition to the correlation risks discussed above, the purchase of an option
also entails the risk that changes in the value of the underlying futures
contract will not be reflected fully in the value of the options bought.
Forward Foreign Currency Contracts (Dynamics and Growth & Income Funds Only).^
The Fund may enter into forward currency contracts, which are included in the
types of instruments sometimes known as derivatives, to purchase or sell foreign
currencies (i.e., non-U.S. currencies) as a hedge against possible variations in
foreign exchange rates. A forward foreign currency contract is an agreement
between the contracting parties to exchange an amount of currency at some future
time at an agreed upon rate. The rate can be higher or lower than the spot rate
between the currencies that are the subject of the contract. A forward contract
generally has no deposit requirement, and such transactions do not involve
commissions. By entering into a forward contract for the purchase or sale of the
<PAGE>
amount of foreign currency invested in a foreign security transaction, the
Fund can hedge against possible variations in the value of the dollar versus the
subject currency either between the date the foreign security is purchased or
sold and the date on which payment is made or received or during the time the
Fund holds the foreign security. Hedging against a decline in the value of a
currency in the foregoing manner does not eliminate fluctuations in the prices
of portfolio securities or prevent losses if the prices of such securities
decline. Furthermore, such hedging transactions preclude the opportunity for
gain if the value of the hedged currency should rise. The Fund will not
speculate in forward currency contracts. Although the Fund has not adopted any
limitations on its ability to use forward contracts as a hedge against
fluctuations in foreign exchange rates, the Fund does not attempt to hedge all
of its non-U.S. portfolio positions and will enter into such transactions only
to the extent, if any, deemed appropriate by its investment adviser or
sub-adviser. The Fund will not enter into forward contracts for a term of more
than one year.
^ Options, Futures and Other Financial Instruments and Their
Strategic Uses ([Aggressive Growth] Fund Only)
General. As discussed in the Prospectus, Fund Management may use various
types of financial instruments, some of which are derivatives, to attempt to
manage the risk of the Fund's investments or, in certain circumstances, for
investment (e.g., as a substitute for investing in securities). These financial
instruments include options, futures contracts (sometimes referred to as
"futures"), forward contracts, swaps, caps, floors and collars (collectively,
"Financial Instruments"). The policies in this section do not apply to other
types of instruments sometimes referred to as derivatives, such as indexed
securities, mortgage-backed and other asset-backed securities, and stripped
interest and principal of debt.
Generally, the Fund is authorized to use any type of Financial Instrument.
However, as a non-fundamental policy, the Fund will only use a particular
Financial Instrument (other than those related to foreign currency) if the Fund
is authorized to take a position in the type of asset to which the return on, or
value of, the Financial Instrument is primarily related. Therefore, for example,
if the Fund is authorized to invest in a particular type of security (such as an
equity security), it could take a position in an option on an index relating to
equity securities. With respect to foreign currency Financial Instruments, as a
non-fundamental policy the Fund will only use these Financial Instruments if the
Fund is authorized to invest in foreign securities. In addition, the Fund
presently has a non-fundamental policy to utilize only exchange-traded Financial
Instruments, other than forward currency contracts. This policy would not,
however, prevent the Fund from investing in a security, such as an indexed
security, with an imbedded component, such as a cap or a floor.
Hedging strategies can be broadly categorized as "short" hedges and "long"
or "anticipatory" hedges. A short hedge involves the use of a Financial
Instrument in order to partially or fully offset potential variations in the
<PAGE>
value of one or more investments held in the Fund's portfolio. A long or
anticipatory hedge involves the use of a Financial Instrument in order to
partially or fully offset potential increases in the acquisition cost of one or
more investments that the Fund intends to acquire. In an anticipatory hedge
transaction, the Fund does not already own a corresponding security. Rather, it
relates to a security or type of security that the Fund intends to acquire. If
the Fund does not eliminate the hedge by purchasing the security as anticipated,
the effect on the Fund's portfolio is the same as if a long position were
entered into. Financial Instruments may also be used, in certain circumstances,
for investment (e.g., as a substitute for investing in securities).
Financial Instruments on individual securities generally are used to
attempt to hedge against price movements in one or more particular securities
positions that the Fund already owns or intends to acquire. Financial
Instruments on indexes, in contrast, generally are used to attempt to hedge all
or a portion of a portfolio against price movements of the securities within a
market sector in which the Fund has invested or expects to invest.
The use of Financial Instruments is subject to applicable regulations of
the Securities and Exchange Commission ("SEC"), the several exchanges upon which
they are traded, and the Commodity Futures Trading Commission ("CFTC"). In
addition, the Fund's ability to use Financial Instruments will be limited by tax
considerations. See "Dividends, Capital Gains Distributions and Taxes."
In addition to the instruments and strategies described below, Fund
Management may use other similar or related techniques to the extent that they
are consistent with the Fund's investment objective[s] and permitted by the
Fund's investment limitations and applicable regulatory authorities. The Fund's
Prospectus or Statement of Additional Information ("SAI") will be supplemented
to the extent that new products or techniques become employed involving
materially different risks than those described below or in the Prospectus.
Special Risks. Financial Instruments and their use involve special
considerations and risks, certain of which are described below.
(1) If Fund Management employs a Financial Instrument that correlates
imperfectly with the Fund's investments, a loss could result,
regardless of whether or not the intent was to manage risk.
Financial Instruments may increase the volatility of the Fund. In
addition, these techniques could result in a loss if there is not a
liquid market to close out a position that the Fund has entered.
(2) There might be imperfect correlation between price movements of a
Financial Instrument and price movements of the investments being
hedged. For example, if the value of a Financial Instrument used in
<PAGE>
a short hedge increased by less than the decline in value of the
hedged investment, the hedge would not be fully successful. This
might be caused by certain kinds of trading activity that
distorts the normal price relationship between the security
being hedged and the Financial Instrument. Similarly, the
effectiveness of hedges using Financial Instruments on indexes
will depend on the degree of correlation between price
movements in the index and price movements in the
securities being hedged.
The Fund presently has a non-fundamental policy to utilize
only exchange-traded Financial Instruments, other than forward
currency contracts. Because there are a limited number of types of
exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match the Fund's current
or anticipated investments exactly. The Fund is authorized to use
options and futures contracts related to securities with issuers,
maturities or other characteristics different from the securities in
which it typically invests. This involves a risk that the options or
futures position will not track the performance of the Fund's
portfolio investments.
The direction of options and futures price movements can also
diverge from the direction of the movements of the prices of their
underlying instruments, even if the underlying instruments match the
Fund's investments well. Options and futures prices are affected by
such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instrument, and the time
remaining until expiration of the contract, which may not affect
security prices the same way. Imperfect correlation may also result
from differing levels of demand in the options and futures markets
and the securities markets, from structural differences in how
options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. The Fund may take
positions in options and futures contracts with a greater or lesser
face value than the securities it wishes to hedge or intends to
purchase in order to attempt to compensate for differences in
volatility between the contract and the securities, although this
may not be successful in all cases.
(3) If successful, the above-discussed hedging strategies can reduce
risk of loss by wholly or partially offsetting the negative effect
of unfavorable price movements of portfolio securities. However,
such strategies can also reduce opportunity for gain by offsetting
the positive effect of favorable price movements. For example, if
the Fund entered into a short hedge because Fund Management
projected a decline in the price of a security in the Fund's
<PAGE>
portfolio, and the price of that security increased instead, the
gain from that increase would likely be wholly or partially
offset by a decline in the value of the short position in
the Financial Instrument. Moreover, if the price of the Financial
Instrument declined by more than the increase in the price of the
security, the Fund could suffer a loss.
(4) The Fund's ability to close out a position in an exchange-traded
Financial Instrument prior to expiration or maturity depends on the
degree of liquidity of the market.
(5) As described below, the Fund is required to maintain assets as
"cover," maintain segregated accounts or make margin payments when
it takes positions in Financial Instruments involving obligations to
third parties (i.e., Financial Instruments other than purchased
options). If the Fund were unable to close out its positions in such
Financial Instruments, it might be required to continue to maintain
such assets or segregated accounts or make such payments until the
position expired. These requirements might impair the Fund's ability
to sell a portfolio security or make an investment at a time when it
would otherwise be favorable to do so, or require that the Fund sell
a portfolio security at a disadvantageous time.
Cover. Positions in Financial Instruments, other than purchased options,
expose the Fund to an obligation to another party. The Fund will not enter into
any such transactions unless it owns either (1) an offsetting ("covered")
position in securities, currencies or other options, futures contracts or
forward contracts, or (2) cash and liquid assets with a value, marked-to-market
daily, sufficient to cover its potential obligations to the extent not covered
as provided in (1) above. The Fund will comply with SEC guidelines regarding
cover for these instruments and will, if the guidelines so require, set aside
cash or liquid assets in a segregated account with its custodian in the
prescribed amount as determined daily.
Assets used as cover or held in a segregated account cannot be sold while
the position in the corresponding Financial Instrument is open unless they are
replaced with other appropriate assets. As a result, the commitment of a large
portion of the Fund's assets to cover or in segregated accounts could impede
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
<PAGE>
Options. The Fund may engage in certain strategies involving options to
attempt to manage the risk of its investments or, in certain circumstances, for
investment (e.g., as a substitute for investing in securities). A call option
gives the purchaser the right to buy, and obligates the writer to sell, the
underlying investment at the agreed-upon exercise price during the option
period. A put option gives the purchaser the right to sell, and obligates the
writer to buy, the underlying investment at the agreed-upon exercise price
during the option period. Purchasers of options pay an amount, known as a
premium, to the option writer in exchange for the right under the option
contract. See "Options on Indexes" below with regard to cash settlement of
option contracts on index values.
The purchase of call options can serve as a hedge against a price rise of
the underlier and the purchase of put options can serve as a hedge against a
price decline of the underlier. Writing call options can serve as a limited
short hedge because declines in the value of the hedged investment would be
offset to the extent of the premium received for writing the option. However, if
the security or currency appreciates to a price higher than the exercise price
of the call option, it can be expected that the option will be exercised and the
Fund will be obligated to sell the security or currency at less than its market
value.
Writing put options can serve as a limited long or anticipatory hedge
because increases in the value of the hedged investment would be offset to the
extent of the premium received for writing the option. However, if the security
or currency depreciates to a price lower than the exercise price of the put
option, it can be expected that the put option will be exercised and the Fund
will be obligated to purchase the security or currency at more than its market
value.
The value of an option position will reflect, among other things, the
current market value of the underlying investment, the time remaining until
expiration, the relationship of the exercise price to the market price of the
underlying investment, the price volatility of the underlying investment and
general market and interest rate conditions. Options that expire unexercised
have no value.
The Fund may effectively terminate its right or obligation under an option
by entering into a closing transaction. For example, the Fund may terminate its
obligation under a call or put option that it had written by purchasing an
identical call or put option; this is known as a closing purchase transaction.
Conversely, the Fund may terminate a position in a put or call option it had
purchased by writing an identical put or call option; this is known as a closing
sale transaction. Closing transactions permit the Fund to realize profits or
limit losses on an option position prior to its exercise or expiration.
<PAGE>
Risks of Options on Securities. Options embody the possibility of large
amounts of exposure, which will result in the Fund's net asset value being more
sensitive to changes in the value of the related investment.
The Fund's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. If the Fund is not able to
enter into an offsetting closing transaction on an option it has written, it
will be required to maintain the securities subject to the call or the liquid
assets underlying the put until a closing purchase transaction can be entered
into or the option expires. However, there can be no assurance that such a
market will exist at any particular time.
If the Fund were unable to effect a closing transaction for an option it
had purchased, it would have to exercise the option to realize any profit. The
inability to enter into a closing purchase transaction for a covered call option
written by the Fund could cause material losses because the Fund would be unable
to sell the investment used as cover for the written option until the option
expires or is exercised.
Options on Indexes. Puts and calls on indexes are similar to puts and
calls on securities or futures contracts except that all settlements are in cash
and changes in value depend on changes in the index in question. When the Fund
writes a call on an index, it receives a premium and agrees that, prior to the
expiration date, upon exercise of the call, the purchaser will receive from the
Fund an amount of cash equal to the positive difference between the closing
price of the index and the exercise price of the call times a specified multiple
("multiplier"), which determines the total dollar value for each point of such
difference. When the Fund buys a call on an index, it pays a premium and has the
same rights as to such call as are indicated above. When the Fund buys a put on
an index, it pays a premium and has the right, prior to the expiration date, to
require the seller of the put to deliver to the Fund an amount of cash equal to
the positive difference between the exercise price of the put and the closing
price of the index times the multiplier. When the Fund writes a put on an index,
it receives a premium and the purchaser of the put has the right, prior to the
expiration date, to require the Fund to deliver to it an amount of cash equal to
the positive difference between the exercise price of the put and the closing
level of the index times the multiplier.
The risks of purchasing and selling options on indexes may be greater than
options on securities. Because index options are settled in cash, when the Fund
writes a call on an index it cannot fulfill its potential settlement obligations
by delivering the underlying securities. The Fund can offset some of the risk of
writing a call index option by holding a diversified portfolio of securities
similar to those on which the underlying index is based. However, the Fund
cannot, as a practical matter, acquire and hold a portfolio containing exactly
the same securities as underlie the index and, as a result, bears a risk that
the value of the securities held will vary from the value of the index.
<PAGE>
Even if the Fund could assemble a portfolio that exactly reproduced the
composition of the underlying index, it still would not be fully covered from a
risk standpoint because of the "timing risk" inherent in writing index options.
When an index option is exercised, the amount of cash that the holder is
entitled to receive is determined by the difference between the exercise price
and the closing index level. As with other kinds of options, the Fund as the
call writer will not learn that the Fund has been assigned until the next
business day. The time lag between exercise and notice of assignment poses no
risk for the writer of a covered call on a specific underlying security, such as
common stock, because in that case the writer's obligation is to deliver the
underlying security, not to pay its value as of a moment in the past. In
contrast, the writer of an index call will be required to pay cash in an amount
based on the difference between the closing index value on the exercise date and
the exercise price. By the time it learns that it has been assigned, the index
may have declined. This "timing risk" is an inherent limitation on the ability
of index call writers to cover their risk exposure.
If the Fund has purchased an index option and exercises it before the
closing index value for that day is available, it runs the risk that the level
of the underlying index may subsequently change. If such a change causes the
exercised option to fall out-of-the-money, the Fund nevertheless will be
required to pay the difference between the closing index value and the exercise
price of the option (times the applicable multiplier) to the assigned writer.
Futures Contracts and Options on Futures Contracts. When the Fund
purchases or sells a futures contract, it incurs an obligation respectively to
take or make delivery of a specified amount of the obligation underlying the
contract at a specified time and price. When the Fund writes an option on a
futures contract, it becomes obligated to assume a position in the futures
contract at a specified exercise price at any time during the term of the
option. If the Fund writes a call, on exercise it assumes a short futures
position. If it writes a put, on exercise it assumes a long futures position.
The purchase of futures or call options on futures can serve as a long or
an anticipatory hedge, and the sale of futures or the purchase of put options on
futures can serve as a short hedge. Writing call options on futures contracts
can serve as a limited short hedge, using a strategy similar to that used for
writing call options on securities or indexes. Similarly, writing put options on
futures contracts can serve as a limited long or anticipatory hedge.
In addition, futures strategies can be used to manage the duration and
associated interest rate risk of the Fund's fixed-income portfolio. If Fund
Management wishes to shorten the duration of the Fund's fixed-income portfolio,
the Fund may sell an appropriate debt futures contract or a call option thereon,
<PAGE>
or purchase a put option on that futures contract. If Fund Management
wishes to lengthen the duration of the Fund's fixed-income portfolio, the Fund
may buy an appropriate debt futures contract or a call option thereon, or sell a
put option thereon.
At the inception of a futures contract, the Fund is required to deposit
"initial margin" in an amount generally equal to 10% or less of the contract
value. Initial margin must also be deposited when writing a call or put option
on a futures contract, in accordance with applicable exchange rules. Subsequent
"variation margin" payments are made to and from the futures broker daily as the
value of the futures or written option position varies, a process known as
"marking-to-market." Unlike margin in securities transactions, initial margin on
futures contracts and written options on futures contracts does not represent a
borrowing on margin, but rather is in the nature of a performance bond or
good-faith deposit that is returned to the Fund at the termination of the
transaction if all contractual obligations have been satisfied. Under certain
circumstances, such as periods of high volatility, the Fund may be required to
increase the level of initial margin payments. If the Fund has insufficient cash
to meet daily variation margin requirements, it might need to sell securities in
order to do so at a time when such sales are disadvantageous.
Purchasers and sellers of futures contracts and options on futures can
enter into offsetting closing transactions, similar to closing transactions on
options, by selling or purchasing, respectively, an instrument identical to the
instrument purchased or sold. Positions in futures and options on futures used
by the Fund may be closed only on an exchange or board of trade that provides a
market. However, there can be no assurance that a liquid market will exist for a
particular contract at a particular time. In such event, it may not be possible
to close a futures contract or options position.
Under certain circumstances, futures exchanges may establish daily limits
on the amount that the price of a futures contract or an option on a futures
contract can vary from the previous day's settlement price; once that limit is
reached, no trades may be made that day at a price beyond the limit. Daily price
limits do not limit potential losses because prices could move to the daily
limit for several consecutive days with little or no trading, thereby preventing
liquidation of unfavorable positions.
If the Fund were unable to liquidate a futures contract or an option on a
futures contract position due to the absence of a liquid market or the
imposition of price limits, it could incur substantial losses. The Fund would
continue to be subject to market risk with respect to the position. In addition,
except in the case of purchased options, the Fund would continue to be required
to make daily variation margin payments and might be required to continue to
maintain the position being hedged by the futures contract or option or to
continue to maintain cash or securities in a segregated account.
<PAGE>
To the extent that the Fund enters into futures contracts, options on
futures contracts and options on foreign currencies traded on a CFTC-regulated
exchange, in each case that is not for bona fide hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish these
positions (excluding the amount by which options are "in-the-money" at the time
of purchase) may not exceed 5% of the liquidation value of the Fund's portfolio,
after taking into account unrealized profits and unrealized losses on any
contracts the Fund has entered into. This policy does not limit to 5% the
percentage of the Fund's assets that are at risk in futures contracts, options
on futures contracts and currency options.
Risks of Futures Contracts and Options Thereon. The ordinary spreads at a
given time between prices in the cash and futures markets (including the options
on futures markets), due to differences in the natures of those markets, are
subject to the following factors. First, all participants in the futures market
are subject to margin deposit and maintenance requirements. Rather than meeting
additional margin deposit requirements, investors may close futures contracts
through offsetting transactions, which could distort the normal relationship
between the cash and futures markets. Second, the liquidity of the futures
market depends on participants entering into offsetting transactions rather than
making or taking delivery. To the extent participants decide to make or take
delivery, liquidity in the futures market could be reduced, thus producing
distortion. Due to the possibility of distortion, a hedge may not be successful.
Additionally, Fund Management may be incorrect in its expectations as to the
extent of various interest rate, currency exchange rate or stock market
movements or the time span within which the movements take place.
Index Futures. The risk of imperfect correlation between movements in the
price of index futures and movements in the price of the securities that are the
subject of a hedge increases as the composition of the Fund's portfolio diverges
from the index. The price of the index futures may move proportionately more
than or less than the price of the securities being hedged. If the price of the
index futures moves proportionately less than the price of the securities that
are the subject of the hedge, the hedge will not be fully effective. However, if
the price of the securities being hedged has moved in an unfavorable direction,
the Fund would be in a better position than if it had not hedged at all. If the
price of the securities being hedged has moved in a favorable direction, this
advantage will be partially offset by movement of the price of the futures
contract. If the price of the futures contract moves more than the price of the
securities, the Fund will experience either a loss or a gain on the futures
contract that will not be completely offset by movements in the price of the
securities that are the subject of the hedge.
<PAGE>
Where index futures are purchased in an anticipatory hedge, it is possible
that the market may decline instead. If the Fund then decides not to invest in
the securities at that time because of concern as to possible further market
decline or for other reasons, it will realize a loss on the futures contract
that is not offset by a reduction in the price of the securities it had
anticipated purchasing.
Foreign Currency Hedging Strategies--Special Considerations. The Fund may
use options and futures contracts on foreign currencies, as mentioned
previously, and forward currency contracts, as described below, to attempt to
hedge against movements in the values of the foreign currencies in which the
Fund's securities are denominated or, in certain circumstances, for investment
(e.g., as a substitute for investing in securities denominated in foreign
currency). Currency hedges can protect against price movements in a security
that the Fund owns or intends to acquire that are attributable to changes in the
value of the currency in which it is denominated.
The Fund might seek to hedge against changes in the value of a particular
currency when no Financial Instruments on that currency are available or such
Financial Instruments are more expensive than certain other Financial
Instruments. In such cases, the Fund may seek to hedge against price movements
in that currency by entering into transactions using Financial Instruments on
another currency or a basket of currencies, the value of which Fund Management
believes will have a high degree of positive correlation to the value of the
currency being hedged. The risk that movements in the price of the Financial
Instrument will not correlate perfectly with movements in the price of the
currency subject to the hedging transaction may be increased when this strategy
is used.
The value of Financial Instruments on foreign currencies depends on the
value of the underlying currency relative to the U.S. dollar. Because foreign
currency transactions occurring in the interbank market might involve
substantially larger amounts than those involved in the use of such Financial
Instruments, the Fund could be disadvantaged by having to deal in the odd lot
market (generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis. Quotation
information generally is representative of very large transactions in the
interbank market and thus might not reflect odd-lot transactions where rates
might be less favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Financial Instruments until they reopen.
<PAGE>
Settlement of hedging transactions involving foreign currencies might be
required to take place within the country issuing the underlying currency. Thus,
the Fund might be required to accept or make delivery of the underlying foreign
currency in accordance with any U.S. or foreign regulations regarding the
maintenance of foreign banking arrangements by U.S. residents and might be
required to pay any fees, taxes and charges associated with such delivery
assessed in the issuing country.
Forward Currency Contracts and Foreign Currency Deposits. The Fund may
enter into forward currency contracts to purchase or sell foreign currencies for
a fixed amount of U.S. dollars or another foreign currency. A forward currency
contract involves an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days (term) from the date of the
forward currency contract agreed upon by the parties, at a price set at the time
the forward currency contract is entered. Forward currency contracts are
negotiated directly between currency traders (usually large commercial banks)
and their customers.
Such transactions may serve as long or anticipatory hedges; for example,
the Fund may purchase a forward currency contract to lock in the U.S. dollar
price of a security denominated in a foreign currency that the Fund intends to
acquire. Forward currency contracts may also serve as short hedges; for example,
the Fund may sell a forward currency contract to lock in the U.S. dollar
equivalent of the proceeds from the anticipated sale of a security or a dividend
or interest payment denominated in a foreign currency.
The Fund may also use forward currency contracts to hedge against a
decline in the value of existing investments denominated in foreign currency.
Such a hedge would tend to offset both positive and negative currency
fluctuations, but would not offset changes in security values caused by other
factors. The Fund could also hedge the position by entering into a forward
currency contract to sell another currency expected to perform similarly to the
currency in which the Fund's existing investments are denominated. This type of
hedge could offer advantages in terms of cost, yield or efficiency, but may not
hedge currency exposure as effectively as a simple hedge against U.S. dollars.
This type of hedge may result in losses if the currency used to hedge does not
perform similarly to the currency in which the hedged securities are
denominated.
The Fund may also use forward currency contracts in one currency or a
basket of currencies to attempt to hedge against fluctuations in the value of
securities denominated in a different currency if Fund Management anticipates
that there will be a positive correlation between the two currencies.
The cost to the Fund of engaging in forward currency contracts varies with
factors such as the currency involved, the length of the contract period and the
market conditions then prevailing. Because forward currency contracts are
usually entered into on a principal basis, no fees or commissions are involved.
<PAGE>
When the Fund enters into a forward currency contract, it relies on the
counterparty to make or take delivery of the underlying currency at the maturity
of the contract. Failure by the counterparty to do so would result in the loss
of some or all of any expected benefit of the transaction.
As is the case with futures contracts, purchasers and sellers of forward
currency contracts can enter into offsetting closing transactions, similar to
closing transactions on futures contracts, by selling or purchasing,
respectively, an instrument identical to the instrument purchased or sold.
Secondary markets generally do not exist for forward currency contracts, with
the result that closing transactions generally can be made for forward currency
contracts only by negotiating directly with the counterparty. Thus, there can be
no assurance that the Fund will in fact be able to close out a forward currency
contract at a favorable price prior to maturity. In addition, in the event of
insolvency of the counterparty, the Fund might be unable to close out a forward
currency contract. In either event, the Fund would continue to be subject to
market risk with respect to the position, and would continue to be required to
maintain a position in securities denominated in the foreign currency or to
maintain cash or liquid assets in a segregated account.
The precise matching of forward currency contract amounts and the value of
the securities, dividends or interest payments involved generally will not be
possible because the value of such securities, dividends or interest payments,
measured in the foreign currency, will change after the forward currency
contract has been established. Thus, the Fund might need to purchase or sell
foreign currencies in the spot (cash) market to the extent such foreign
currencies are not covered by forward currency contracts. The projection of
short-term currency market movements is extremely difficult, and the successful
execution of a short-term hedging strategy is highly uncertain.
Forward currency contracts may substantially change the Fund's investment
exposure to changes in currency exchange rates and could result in losses to the
Fund if currencies do not perform as Fund Management anticipates. There is no
assurance that Fund Management's use of forward currency contracts will be
advantageous to the Fund or that it will hedge at an appropriate time.
The Fund may also purchase and sell foreign currency and invest in foreign
currency deposits. Currency conversion involves dealer spreads and other costs,
although commissions usually are not charged.
Combined Positions. The Fund may purchase and write options in combination
with each other, or in combination with futures or forward currency contracts,
to manage the risk and return characteristics of its overall position. For
example, the Fund may purchase a put option and write a call option on the same
underlying instrument, in order to construct a combined position whose risk and
return characteristics are similar to selling a futures contract.
<PAGE>
Another possible combined position would involve writing a call option at one
strike price and buying a call option at a lower price, in order to reduce the
risk of the written call option in the event of a substantial price increase.
Because combined options positions involve multiple trades, they result in
higher transaction costs.
Turnover. The Fund's options and futures activities may affect its
turnover rate and brokerage commission payments. The exercise of calls or puts
written by the Fund, and the sale or purchase of futures contracts, may cause it
to sell or purchase related investments, thus increasing its turnover rate. Once
the Fund has received an exercise notice on an option it has written, it cannot
effect a closing transaction in order to terminate its obligation under the
option and must deliver or receive the underlying securities at the exercise
price. The exercise of puts purchased by the Fund may also cause the sale of
related investments, also increasing turnover; although such exercise is within
the Fund's control, holding a protective put might cause it to sell the related
investments for reasons that would not exist in the absence of the put. The Fund
will pay a brokerage commission each time it buys or sells a put or call or
purchases or sells a futures contract. Such commissions may be higher than those
that would apply to direct purchases or sales.
Swaps, Caps, Floors and Collars. The Fund is authorized to enter into
swaps, caps, floors and collars. However, these instruments are not
exchange-traded and the Fund presently has a non-fundamental policy to utilize
only exchange-traded Financial Instruments.
Swaps involve the exchange by one party with another party of their
respective commitments to pay or receive cash flows, e.g., an exchange of
floating rate payments for fixed rate payments. The purchase of a cap or a floor
entitles the purchaser, to the extent that a specified index exceeds in the case
of a cap, or falls below in the case of a floor, a predetermined value, to
receive payments on a notional principal amount from the party selling such
instrument. A collar combines elements of buying a cap and selling a floor.
Illiquid Investments ([Aggressive Growth] Fund Only)
Illiquid investments are investments that cannot be sold or disposed of in
the ordinary course of business within seven days at approximately the prices at
which they are valued. Investments currently considered to be illiquid include:
(1) repurchase agreements not terminable within seven days; (2) securities for
which market quotations are not readily available; (3) bank deposits, unless
they are payable on demand or within seven days after demand; (4) non-government
stripped fixed-rate mortgage-backed securities; (5) direct debt instruments; and
<PAGE>
(6) restricted securities not determined to be liquid pursuant to
guidelines established by the Fund's board of directors. If through a change in
values, net assets, or other circumstances, the Fund were in a position where
more than 15% of its net assets were invested in illiquid securities, it would
seek to take appropriate steps to protect liquidity.
Investment Restrictions. As described in the section of the Prospectus
entitled "Investment Policies And Risks," each Fund operates under certain
investment restrictions. For purposes of the following limitations, all
percentage limitations apply immediately after a purchase or initial investment.
Any subsequent change in a particular percentage resulting from fluctuations in
value does not require elimination of any security from a Fund.
INVESCO Dynamics Fund
The following restrictions are fundamental and may not be changed with
respect to the INVESCO Dynamics Fund without prior approval of a majority of the
outstanding voting securities of the Fund, as defined in the Investment Company
Act of 1940, as amended (the "1940 Act"). Under these restrictions, the Dynamics
Fund may not:
(1) issue preference shares or create any funded debt;
(2) sell short or buy on margin;
(3) borrow money (in the event the board of directors should authorize
the borrowing of money for the purpose of exercising permissive
leverage) unless immediately thereafter the Fund's total net assets
equal at least 400% of all borrowings, except that the percentage
may be less than 400% if reduced because of changes in the value of
the Fund's investments, but it is required at all times to comply
with the provisions of the Investment Company Act of 1940 and to
maintain asset coverage of at least 300%. The Fund may borrow only
from banks;
(4) buy or sell real estate (however, the Fund may purchase securities
of companies investing in real estate), commodities or commodity
contracts;
(5) invest in securities of any other investment company except for a
purchase or acquisition in accordance with a plan of reorganization,
merger or consolidation;
(6) invest in any company for the purpose of exercising
control or management;
(7) purchase the securities of any company if as a result of such
purchase more than 10% of total assets would be invested in
securities that are illiquid because of the legal or contractual
restrictions on resale to which they are subject ("restricted
securities"), or because there are no readily available market
<PAGE>
quotations for such securities, or enter into a repurchase
agreement maturing in more than seven days, if as a result,
such repurchase agreements, together with illiquid securities,
would constitute more than 10% of total assets;
(8) purchase securities if the purchase would cause the Fund, at the
time, to have more than 5% of its total assets invested in the
securities of any one issuer or to own more than 10% of the voting
securities of any one issuer (except obligations issued or
guaranteed by the U.S.
Government);
(9) engage in the underwriting of any securities;
(10) make loans to any person, except through the purchase of debt
securities in accordance with the Fund's investment policies, or the
lending of portfolio securities to broker-dealers or other
institutional investors, or the entering into repurchase agreements
with member banks of the Federal Reserve System, registered
broker-dealers and registered government securities dealers. The
aggregate value of all portfolio securities loaned may not exceed
33-1/3% of the Fund's total net assets (taken at current value). No
more than 10% of the Fund's total net assets may be invested in
repurchase agreements maturing in more than seven days;
(11) purchase securities of any company in which any officer or director
of the Fund or its investment adviser owns more than 1/2 of 1% of
the outstanding securities, or in which all of the officers or
directors of the Fund and its investment supervisor, as a group, own
more than 5% of such securities; or
(12) invest more than 25% of the value of the Fund's assets in one
particular industry.
In applying restriction (7) above, the Fund also includes illiquid
securities (those which cannot be sold in the ordinary course of business within
seven days at approximately the valuation given to them by the Fund) among the
securities subject to the 10% of total assets limit. The board of directors has
delegated to the Fund's investment adviser the authority to determine that a
liquid market exists for securities eligible for resale pursuant to Rule 144A
under the 1933 Act, or any successor to such rule, and that such securities are
not subject to the Fund's 5% of total assets limitations on investing in
securities that are not readily marketable, discussed below. Under guidelines
established by the board of directors, the adviser will consider the following
factors, among others, in making this determination: (1) the unregistered nature
of a Rule 144A security; (2) the frequency of trades and quotes for the
<PAGE>
security; (3) the number of dealers willing to purchase or sell the
security and the number of other potential purchasers; (4) dealer undertakings
to make a market in the security; and (5) the nature of the security and the
nature of marketplace trades (e.g., the time needed to dispose of the security,
the method of soliciting offers and the mechanics of transfer). However, Rule
144A Securities are still subject to the Fund's 10% of total assets limitation
on investments in restricted securities (securities for which there are legal or
contractual restrictions on resale).
In applying restriction (12) above, the Fund uses a modified S&P industry
code classification schema which uses various sources to classify.
INVESCO Growth & Income Fund
The following restrictions are fundamental and may not be changed with
respect to the Growth & Income Fund without the prior approval of the holders of
a majority of the outstanding voting securities of the Fund, as defined in the
1940 Act. Under these restrictions, the Growth & Income Fund will not:
(1) issue preference shares or create any funded debt;
(2) sell short or buy on margin, except for the Fund's purchase or sale
of options or futures, or writing, purchasing or selling puts or
calls options;
(3) borrow money in excess of ^ 33 1/3% of the value of its total assets
and then only from banks, and when borrowing, it is a temporary
measure for emergency purposes;
^(4) invest in the securities of any other investment company except for
a purchase or acquisition in accordance with a plan of
reorganization, merger or consolidation;
^(5) with respect to 75% of its total assets, purchase securities if the
purchase would cause the Fund, at the time, to have more than 5% of
the value of its total assets invested in the securities of any one
company or to own more than 10% of the voting securities of any one
company (except obligations issued or guaranteed by the U.S.
Government);
^(6) make loans to any person, except through the purchase of debt
securities in accordance with the Fund's investment policies, or
the lending of portfolio securities to broker-dealers or other
institutional investors, or the entering into repurchase agreements
with member banks of the Federal Reserve System, registered broker-
dealers and registered government securities dealers. The aggregate
value of all portfolio securities loaned may not exceed 33-1/3% of
the Fund's total assets (taken at current value). No more than 10%
of the Fund's total assets may be invested in repurchase agreements
maturing in more than seven days;
<PAGE>
(7) buy or sell commodities, commodity contracts or real estate
(however, the Fund may purchase securities of companies investing in
real estate). This restriction shall not prevent the Fund from
purchasing or selling options on individual securities, security
indexes, and currencies, or financial futures or options on
financial futures, or undertaking forward foreign currency
contracts.
(8)^ invest in any company for the purpose of exercising control or
management;
^(9) buy other than readily marketable securities;
^(10) engage in the underwriting of any securities;
^(11) purchase securities of any company in which any officer or
director of the Fund or its investment adviser owns more than
1/2 of 1% of the outstanding securities, or in which all of
the officers and directors of the Fund and its investment
adviser, as a group, own more than 5% of such securities;
^(12) invest more than 25% of the value of the Fund's total
assets in one particular industry.
^ With respect to investment restriction (3) above, the Fund has no
intention of borrowing money for other than temporary cash flow purposes in the
foreseeable future unless unexpected developments make borrowing of money by the
Fund under this fundamental investment restriction desirable in order to allow ^
the Fund to meet its obligation (e.g., processing redemptions in a timely
manner).
With respect to investment restriction ^(9) above, the board of directors
has delegated to the Funds' investment adviser the authority to determine
whether a liquid market exists for securities eligible for resale pursuant to
Rule 144A under the Securities Act of 1933, or any successor to such rule, and
whether or not such securities are subject to restriction (9) above. Under
guidelines established by the board of directors, the adviser will consider the
following factors, among others, in making this determination: (1) the
unregistered nature of a Rule 144A security; (2) the frequency of trades and
quotes for the security; (3) the number of dealers willing to purchase or sell
the security and the number of other potential purchasers; (4) dealer
undertakings to make a market in the security; and (5) the nature of the
security and the nature of marketplace trades (e.g., the time needed to dispose
of the security, the method of soliciting offers and the mechanics of transfer).
In applying restriction ^(12) above, the Fund uses a modified S&P industry
code classification schema which uses various sources to classify.
<PAGE>
The following non-fundamental investment restrictions have been adopted by
the Fund. These investment restrictions may be changed by the directors at their
discretion, without shareholder approval:
(1) The Fund will not enter into any futures contracts, options on
futures, puts and calls if immediately thereafter the aggregate
margin deposits on all outstanding derivatives positions held by the
Fund and premiums paid on outstanding positions, after taking into
account unrealized profits and losses, would exceed 5% of the market
value of the total assets of the Fund.
(2) The Fund will not enter into any derivatives positions if the
aggregate net amount of the Fund's commitments under outstanding
derivatives positions of the Fund would exceed the market value of
the total assets of the Fund.
INVESCO [Aggressive Growth] Fund
The following restrictions are fundamental and may not be changed with
respect to the INVESCO [Aggressive Growth] Fund without the prior approval of a
majority of the outstanding voting securities of the Fund, as defined in the
1940 Act. The INVESCO [Aggressive Growth] Fund will not:
(1) purchase the securities of any issuer (other than securities issued
or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the Fund's
total assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(2) with respect to 75% of the Fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities,
or securities of other investment companies) if, as a result, (i)
more than 5% of the Fund's total assets would be invested in the
securities of that issuer, or (ii) the Fund would hold more than 10%
of the outstanding voting securities of that issuer;
(3) underwrite securities of other issuers, except insofar as it may be
deemed to be an underwriter under the Securities Act of 1933, as
amended, in connection with the disposition of the Fund's portfolio
securities;
(4) borrow money, except that the Fund may borrow money for temporary or
emergency purposes (not for leveraging or investing) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings).
<PAGE>
(5) issue senior securities, except as permitted under the
Investment Company Act of 1940;
(6) lend any security or make any loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to the purchase of debt securities or to
repurchase agreements;
(7) purchase or sell physical commodities; however, this policy shall
not prevent the Fund from purchasing and selling foreign currency,
futures contracts, options, forward contracts, swaps, caps, floors,
collars and other financial instruments;
(8) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the Fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(9) The Fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of
a single open-end management investment company managed by INVESCO
Funds Group, Inc. or an affiliate or successor thereof with
substantially the same fundamental investment objective, policies
and limitations as the Fund.
The Fund may, notwithstanding any other investment policy or limitation
(whether or not fundamental), invest all of its assets in the securities of a
single open-end management investment company with substantially the same
fundamental investment objectives, policies and limitations as the Fund.
In addition, INVESCO [Aggressive Growth] Fund has the following
non-fundamental policies, which may be changed without shareholder approval:
(a) The Fund may not sell securities short (unless it owns or has the
right to obtain securities equivalent in kind and amount to the
securities sold short) or purchase securities on margin, except that
(i) this policy does not prevent the Fund from entering into short
positions in foreign currency, futures contracts, options, forward
contracts, swaps, caps, floors, collars and other financial
instruments, (ii) the Fund may obtain such short-term credits as are
necessary for the clearance of transactions, and (iii) the Fund may
make margin payments in connection with futures contracts, options,
forward contracts, swaps, caps, floors, collars and other
financial instruments;
<PAGE>
(b) The Fund may borrow money only from a bank or by engaging in
reverse repurchase agreements with any party (reverse repurchase
agreements will be treated as borrowings for purposes of
fundamental limitation (4)). The Fund will not purchase any security
while borrowings represents more than 5% of its total assets are
outstanding.
(c) The Fund does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject
to legal or contractual restrictions on resale or because they
cannot be sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
THE FUNDS AND THEIR MANAGEMENT
The Company. The Company was incorporated as INVESCO Dynamics Fund, Inc.
on April 2, 1993, under the laws of Maryland. On July 1, 1993, the Company
assumed all of the assets and liabilities of Financial Dynamics Fund, Inc.
("FDF"), which was incorporated in Colorado on February 17, 1967. All financial
and other information about the Company for periods prior to July 1, 1993,
relates to FDF. The name of the Company was changed to INVESCO Capital
Appreciation Funds, Inc. on July 3, 1997.
The Investment Adviser. INVESCO Funds Group, Inc., a Delaware corporation
("IFG"), is employed as the Company's investment adviser. IFG was established in
1932 and also serves as an investment adviser to INVESCO Diversified Funds,
Inc., INVESCO Emerging Opportunity Funds, Inc., INVESCO Growth Fund, Inc.,
INVESCO Income Funds, Inc., INVESCO Industrial Income Fund, Inc., INVESCO
International Funds, Inc., INVESCO Money Market Funds, Inc., INVESCO Multiple
Asset Funds, Inc., INVESCO Specialty Funds, Inc., INVESCO Strategic Portfolios,
Inc., INVESCO Tax-Free Income Funds, Inc., INVESCO Value Trust, and INVESCO
Variable Investment Funds, Inc.
The Investment Sub-Adviser. Prior to February 3, 1998, Institutional Trust
Company ("ITC"), formerly INVESCO Trust Company, provided sub-advisory services
to the Dynamics Fund. Effective February 3, 1998, ITC no longer provides
sub-advisory service to this Fund and IFG provides such day-to-day portfolio
management services as the investment adviser to the Dynamics Fund. This change
in no way changes the basis upon which investment advice is provided to the
Dynamics Fund, the cost of those services to this Fund or the persons actually
performing the investment advisory and other services previously provided by
ITC.
The Distributor. Effective September 30, 1997 ^(upon inception, with
respect to the Growth & Income Fund^ and the [Aggressive Growth] Fund), INVESCO
Distributors, Inc. ("IDI") became the Funds' distributor. IDI, established in
1997, is a registered broker-dealer that acts as distributor for all retail
mutual funds advised by IFG. Prior to September 30, 1997, IFG served as the
Dynamics Fund's distributor.
<PAGE>
IFG and IDI are indirect wholly owned subsidiaries of AMVESCAP PLC, a
publicly-traded holding company that, through its subsidiaries, engages in the
business of investment management on an international basis. INVESCO PLC changed
its name to AMVESCO PLC on March 3, 1997 and to AMVESCAP PLC on May 8, 1997, as
part of a merger between a direct subsidiary of INVESCO PLC and A I M Management
Group Inc. that created one of the largest independent investment management
businesses in the world with approximately $192.2 billion in assets under
management. IFG was established in 1932 and as of ^ April 30, 1998, managed 14
mutual funds, consisting of ^ 49 separate portfolios, on behalf of ^ 1,492,189
shareholders.
AMVESCAP PLC's North American subsidiaries include the following:
--Institutional Trust Company (formerly, INVESCO Trust Company) of Denver,
Colorado, provides retirement account custodian and/or trust services for
individual retirement accounts (IRAs) and other retirement plan accounts. This
includes services such as recordkeeping, tax reporting and compliance. ITC acts
as trustee or custodian to these plans. ITC accepts contributions and provides,
through IFG, complete transfer agency functions: correspondence, subaccounting,
telephone communications and processing of distributions.
--INVESCO Capital Management, Inc. of Atlanta, Georgia, manages
institutional investment portfolios, consisting primarily of discretionary
employee benefit plans for corporations and state and local governments, and
endowment funds. INVESCO Capital Management, Inc. is the sole shareholder of
INVESCO Services, Inc., a registered broker-dealer whose primary business is the
distribution of shares of two registered investment companies.
--INVESCO Management & Research, Inc. of Boston, Massachusetts, primarily
manages pension and endowment accounts.
--PRIMCO Capital Management, Inc. of Louisville, Kentucky, specializes in
managing stable return investments, principally on behalf of Section 401(k)
retirement plans.
--INVESCO Realty Advisors of Dallas, Texas, is responsible for providing
advisory services in the U.S. real estate markets for AMVESCAP PLC's clients
worldwide. Clients include corporate pension plans and public pension funds as
well as endowment and foundation accounts.
--A I M Advisors, Inc. of Houston, Texas provides investment advisory and
administrative services for retail and institutional mutual funds.
--A I M Capital Management, Inc. of Houston, Texas provides investment
advisory services to individuals, corporations, pension plans and other private
investment advisory accounts and also serves as a sub-adviser to certain retail
and institutional mutual funds, one Canadian mutual fund and one portfolio of an
open-end registered investment company that is offered to separate accounts of
variable insurance companies.
<PAGE>
--A I M Distributors, Inc. and Fund Management Company of Houston, Texas
are registered broker-dealers that act as the principal underwriters for retail
and institutional mutual funds.
The corporate headquarters of AMVESCAP PLC are located at 11 Devonshire
Square, London, EC2M4YR, England.
As indicated in the Funds' Prospectuses, IFG permits investment and other
personnel to purchase and sell securities for their own accounts in accordance
with a compliance policy governing personal investing by directors, officers and
employees of IFG and its North American affiliates. The policy requires
officers, inside directors, investment and other personnel of IFG and its North
American affiliates to pre-clear all transactions in securities not otherwise
exempt under the policy. Requests for trading authority will be denied when,
among other reasons, the proposed personal transaction would be contrary to the
provisions of the policy or would be deemed to adversely affect any transaction
then known to be under consideration for or to have been effected on behalf of
any client account, including the Funds.
In addition to the pre-clearance requirement described above, the policy
subjects officers, inside directors, investment and other personnel of IFG and
its North American affiliates to various trading restrictions and reporting
obligations. All reportable transactions are reviewed for compliance with the
policy. The provisions of the policy are administered by and subject to
exceptions authorized by IFG.
Investment Advisory Agreement. IFG serves as investment adviser to the
Funds pursuant to an investment advisory agreement dated February 28, 1997 (the
"Agreement") with the Company which was approved by the board of directors on
November 6, 1996, by a vote cast in person by a majority of the directors of the
Company, including a majority of the directors who are not "interested persons"
of the Company or IFG at a meeting called for such purpose. Shareholders of the
Dynamics Fund approved the Agreement on January 31, 1997 for an initial term
expiring February 28, 1999. On May 13, 1998, this period was extended by the
Company's board of directors to May 15, 1999. With respect to the Growth &
Income Fund, the Agreement was approved by IFG on ^ May 13, 1998, for an initial
term expiring ^ May 15, 1999. With respect to the [Aggressive Growth] Fund, the
Agreement was approved by IFG on May 13, 1998, for an initial term expiring May
15, 1999. Thereafter, the Agreement may be continued from year to year as long
as each such continuance is specifically approved at least annually by the board
of directors of the Company, or by a vote of the holders of a majority, as
defined in the 1940 Act, of the outstanding shares of the ^ applicable Fund. Any
<PAGE>
such continuance also must be approved by a majority of the Company's
directors who are not parties to the Agreement or interested persons (as defined
in the 1940 Act) of any such party, cast in person at a meeting called for the
purpose of voting on such continuance. The Agreement may be terminated at any
time without penalty by either party upon sixty (60) days' written notice and
terminates automatically in the event of an assignment to the extent required by
the 1940 Act and the rules thereunder.
The Agreement provides that IFG shall manage the investment portfolios of
the Funds in conformity with each Fund's investment policies (either directly or
by delegation to a sub-adviser which may be a company affiliated with IFG).
Further, IFG shall perform all administrative, internal accounting (including
computation of net asset value), clerical, statistical, secretarial and all
other services necessary or incidental to the administration of the affairs of
the Funds excluding, however, those services that are the subject of separate
agreement between the Company and IFG or any affiliate thereof, including the
distribution and sale of each Fund's shares and provision of transfer agency,
dividend disbursing agency, and registrar services, and services furnished under
an Administrative Services Agreement with IFG discussed below. Services provided
under the Agreement include, but are not limited to: supplying the Company with
officers, clerical staff and other employees, if any, who are necessary in
connection with the Funds' operations; furnishing office space, facilities,
equipment, and supplies; providing personnel and facilities required to respond
to inquiries related to shareholder accounts; conducting periodic compliance
reviews of the Funds' operations; preparation and review of required documents,
reports and filings by IFG's in-house legal and accounting staff (including the
prospectus, statement of additional information, proxy statements, shareholder
reports, tax returns, reports to the SEC, and other corporate documents of the
Funds), except insofar as the assistance of independent accountants or attorneys
is necessary or desirable; supplying basic telephone service and other
utilities; and preparing and maintaining certain of the books and records
required to be prepared and maintained by the Funds under the 1940 Act. Expenses
not assumed by IFG are borne by the Funds.
As full compensation for its advisory services to the Company, IFG
receives a monthly fee. With respect to the Dynamics Fund, the fee is calculated
at the annual rate of 0.60% on the first $350 million of the Fund's average net
assets; 0.55% on the next $350 million of the Fund's average net assets; and
0.50% on the Fund's average net assets in excess of $700 million. With respect
to the Growth & Income Fund, the fee is calculated at the annual rate of ^ 0.75%
of the Fund's average net assets. With respect to the [Aggressive Growth] Fund,
the fee is calculated at the annual rate of [0.75%] of the Fund's average net
assets.
Administrative Services Agreement. IFG, either directly or through
affiliated companies, also provides certain administrative, sub-accounting, and
recordkeeping services to the ^ Funds pursuant to an Administrative Services
Agreement dated February 28, 1997 (the "Administrative Agreement"). The
Administrative Agreement was approved on November 6, 1996, by a vote cast in
<PAGE>
person by all of the directors of the Company, including all of the
directors who are not "interested persons" of the Company or IFG at a meeting
called for such purpose. The Administrative Agreement was for an initial term
expiring February 28, 1998 and has been extended by action of the board of
directors until May 15, 1999. The Administrative Agreement may be continued from
year to year as long as each such continuance is specifically approved by the
board of directors of the Company, including a majority of the directors who are
not parties to the Administrative Agreement or interested persons (as defined in
the Investment Company Act of 1940) of any such party, cast in person at a
meeting called for the purpose of voting on such continuance. The Administrative
Agreement may be terminated at any time without penalty by IFG on sixty (60)
days' written notice, or by the Company upon thirty (30) days' written notice,
and terminates automatically in the event of an assignment unless the Company's
board of directors approves such assignment.
The Administrative Agreement provides that IFG shall provide the following
services to the Funds: (A) such sub-accounting and recordkeeping services and
functions as are reasonably necessary for the operation of the Funds; and (B)
such sub-accounting, recordkeeping, and administrative services and functions,
which may be provided by affiliates of IFG, as are reasonably necessary for the
operation of Fund shareholder accounts maintained by certain retirement plans
and employee benefit plans for the benefit of participants in such plans.
As full compensation for services provided under the Administrative
Agreement, each Fund pays a monthly fee to IFG consisting of a base fee of
$10,000 per year, plus an additional incremental fee computed daily and paid
monthly at an annual rate of 0.015% per year of the average net assets of the
applicable Fund. During the fiscal years ended April 30, 1997, 1996 and 1995,
the Dynamics Fund paid IFG administrative services fees in the amount of
$130,696, $97,509 and $60,466, respectively. The Growth & Income Fund did not
pay IFG Administrative Services Fees as of April 30, 1997 as the Fund did not
commence operations until June 30, 1998. The [Aggressive Growth] Fund did not
pay IFG Administrative Services Fees as of April 30, 1997, as the Fund did not
commence operations until September --, 1998.
Transfer Agency Agreement. IFG also performs transfer agent, dividend
disbursing agent, and registrar services for the ^ Funds pursuant to a Transfer
Agency Agreement dated February 28, 1997 which was approved by the board of
directors of the Company, including a majority of the Company's directors who
are not parties to the Transfer Agency Agreement or "interested persons" of any
such party, on November 6, 1996, for an initial term expiring February 28, 1998
and has been extended by action of the board of directors until May 15, 1999.
Thereafter the Transfer Agency Agreement may be continued from year to year with
respect to a Fund as long as such continuance is specifically approved at least
annually by the board of directors of the Company, or by a vote of the holders
<PAGE>
of a majority of the outstanding shares of the Funds. Any such continuance
also must be approved by a majority of the Company's directors who are not
parties to the Transfer Agency Agreement or interested persons (as defined by
the 1940 Act) of any such party, cast in person at a meeting called for the
purpose of voting on such continuance. The Transfer Agency Agreement may be
terminated at any time without penalty by either party upon sixty (60) days'
written notice and terminates automatically in the event of assignment.
The Transfer Agency Agreement provides that the Funds shall pay to IFG an
annual fee of $20.00 per shareholder account, or, where applicable, per
participant in an omnibus account ^. This fee is paid monthly at 1/12 of the
annual fee and is based upon the actual number of shareholder accounts and
omnibus account participants in existence at any time during each month. For the
fiscal years ended April 30, 1997, 1996 and 1995, the Dynamics Fund paid IFG
transfer agency fees of $1,964,970, $1,108,321 and $838,096 (prior to the
voluntary absorption of certain Fund expenses by INVESCO), respectively. The
Growth & Income Fund did not pay IFG transfer agency fees as of April 30, 1997
as the Fund did not commence operations until June 30, 1998. The [Aggressive
Growth] Fund did not pay IFG transfer agency fees as of April 30, 1997, as the
Fund did not commence operations until September 30, 1998.
Officers and Directors of the Company. The overall direction and
supervision of the Company is the responsibility of the board of directors,
which has the primary duty of seeing that the general investment policies and
programs of each of the Funds are carried out and that the Funds are properly
administered. The officers of the Company, all of whom are officers and
employees of, and paid by IFG, are responsible for the day-to-day administration
of the Company and each of the Funds. The investment adviser for each Fund has
the primary responsibility for making investment decisions on behalf of that
Fund. These investment decisions are reviewed by the investment committee of
IFG.
All of the officers and directors of the Company hold comparable positions
with INVESCO Diversified Funds, Inc., INVESCO Emerging Opportunity Funds, Inc.,
INVESCO Growth Fund, Inc., INVESCO Income Funds, Inc., INVESCO Industrial Income
Fund, Inc., INVESCO International Funds, Inc., INVESCO Money Market Funds, Inc.,
INVESCO Multiple Asset Funds, Inc., INVESCO Specialty Funds, Inc., INVESCO
Strategic Portfolios, Inc., INVESCO Tax-Free Income Funds, Inc., and INVESCO
Variable Investment Funds, Inc. All of the directors of the Company also serve
as trustees of INVESCO Value Trust. In addition, all of the directors of the
Company, with the exception of Dan Hesser, are trustees of INVESCO Treasurer's
Series Trust. All of the officers of the Company also hold comparable positions
with INVESCO Value Trust. Set forth below is information with respect to each of
the Company's officers and directors. Unless otherwise indicated, the address of
the directors and officers is Post Office Box 173706, Denver, Colorado
80217-3706. Their affiliations represent their principal occupations during at
least the past five years.
<PAGE>
CHARLES W. BRADY,*+ Chairman of the Board. Chief Executive Officer and
Director of AMVESCAP PLC, London, England, and of various subsidiaries thereof;
Chairman of the Board of INVESCO Treasurer's Series Trust. Address: 1315
Peachtree Street, NE, Atlanta, Georgia. Born: May 11, 1935.
FRED A. DEERING,+# Vice Chairman of the Board. Vice Chairman of INVESCO
Treasurer's Series Trust. Trustee of INVESCO Global Health Sciences Fund.
Formerly, Chairman of the Executive Committee and Chairman of the Board of
Security Life of Denver Insurance Company, Denver, Colorado; Director of ING
America Life Insurance Company, Urbaine Life Insurance Company and Midwestern
United Life Insurance Company. Address: Security Life Center, 1290 Broadway,
Denver, Colorado. Born: January 12, 1928.
DAN J. HESSER,+* President, CEO and Director. Chairman of the Board^ of
INVESCO Funds Group, Inc. and INVESCO Distributors, Inc.^ President and Chief
Operating Officer of INVESCO Global Health Sciences Fund. Born: December 27,
1939.
VICTOR L. ANDREWS,** Director. Professor Emeritus, Chairman Emeritus and
Chairman of the CFO Roundtable of the Department of Finance at Georgia State
University, Atlanta, Georgia; President, Andrews Financial Associates, Inc.
(consulting firm); since October 1984, Director of the Center for the Study of
Regulated Industry of Georgia State University; formerly, member of the
faculties of the Harvard Business School and the Sloan School of Management of
MIT. Dr. Andrews is also a director of the Southeastern Thrift and Bank Fund,
Inc. and The Sheffield Funds, Inc. Address: ^ 34 Seawatch Drive, Atlanta,
Georgia. Born: June 23, 1930.
BOB R. BAKER,+** Director. President and Chief Executive Officer of AMC
Cancer Research Center, Denver, Colorado, since January 1989; until mid-December
1988, Vice Chairman of the Board of First Columbia Financial Corporation (a
financial institution), Englewood, Colorado. Formerly, Chairman of the Board and
Chief Executive Officer of First Columbia Financial Corporation. Address: 1775
Sherman Street, #1000, Denver, Colorado. Born: August 7, 1936.
LAWRENCE H. BUDNER,# Director. Trust Consultant; prior to June 30, 1987,
Senior Vice President and Senior Trust Officer of InterFirst Bank, Dallas,
Texas. Address: 7608 Glen Albens Circle, Dallas, Texas. Born: July 25, 1930.
DANIEL D. CHABRIS,+# Director. Financial Consultant; Assistant Treasurer of
Colt Industries Inc., New York, New York, from 1966 to 1988. Address: 19
Kingsbridge Way, Madison, Connecticut. Born: August 1, 1923.
WENDY L. GRAMM, Ph.D.,** Director. Self-employed (since 1993); Professor of
Economics and Public Administration, University of Texas at Arlington. Formerly,
Chairman, Commodity Futures Trading Commission from 1988 to 1993, administrator
for Information and Regulatory Affairs at the Office of Management and Budget
<PAGE>
from 1985 to 1988, Executive Director of the Presidential Task Force on
Regulatory Relief and Director of the Federal Trade Commission's Bureau of
Economics. Dr. Gramm is also a director of the Chicago Mercantile Exchange,
Enron Corporation, IBP, Inc., State Farm Insurance Company, State Farm Life
Insurance Company, Independent Women's Forum, International Republic Institute,
and the Republican Women's Federal Forum. Dr. Gramm is also a member of the
Board of Visitors, College of Business Administration, University of Iowa, and a
member of the Board of Visitors, Center for Study of Public Choice, George Mason
University. Address: 4201 Yuma Street, N.W., Washington, D.C. Born: January 10,
1945.
HUBERT L. HARRIS, JR.,* Director. Chairman (since 1996) and President
(January 1990 to May 1996) of INVESCO Services, Inc.; Chief Executive Officer of
INVESCO Individual Services Group; Chairman of the Board of Trustees of INVESCO
Global Health Sciences Fund. Member of the Executive Committee of the Alumni
Board of Trustees of Georgia Institute of Technology. Address: 1315 Peachtree
Street, NE, Atlanta, Georgia. Born: July 15, 1943.
KENNETH T. KING,# Director. Formerly, Chairman of the Board of The Capitol
Life Insurance Company, Providence Washington Insurance Company, and Director of
numerous subsidiaries thereof in the U.S. Formerly, Chairman of the Board of The
Providence Capitol Companies in the United Kingdom and Guernsey. Chairman of the
Board of the Symbion Corporation (a high technology company) until 1987.
Address: 4080 North Circulo Manzanillo, Tucson, Arizona. Born: November 16,
1925.
JOHN W. MCINTYRE,# Director. Retired. Formerly, Vice Chairman of the Board
of Directors of The Citizens and Southern Corporation and Chairman of the Board
and Chief Executive Officer of The Citizens and Southern Georgia Corp. and
Citizens and Southern National Bank. ^ Trustee of INVESCO Global Health Sciences
Fund and Gables Residential Trust. Address: 7 Piedmont Center, Suite 100,
Atlanta, GA. Born: September 14, 1930.
LARRY SOLL, Ph.D.,** Director. Retired. Formerly, Chairman of the Board
(1987 to 1994), Chief Executive Officer (1982 to 1989 and 1993 to 1994) and
President (1982 to 1989) of Synergen Corp. Director of Synergen since its
incorporation in 1982. Director of ISI Pharmaceuticals, Inc. Trustee of INVESCO
Global Health Sciences Fund. Address: 345 Poorman Road, Boulder, Colorado. Born:
April 26, 1942.
GLEN A. PAYNE, Secretary. Senior Vice President (since 1995), General
Counsel and Secretary of INVESCO Funds Group, Inc. and INVESCO Trust Company
(since 1989) and INVESCO Distributors, Inc. (since 1997); Vice President (May
1989 to April 1995), Secretary and General Counsel of INVESCO Funds Group, Inc.;
formerly, employee of a U.S. regulatory agency, Washington, D.C. (June 1973
through May 1989). Born: September 25, 1947.
<PAGE>
RONALD L. GROOMS, Treasurer. Senior Vice President and Treasurer of INVESCO
Funds Group, Inc. and INVESCO Trust Company (since 1988). Senior Vice President
and Treasurer of INVESCO Distributors, Inc. (since 1997). Born: October 1, 1946.
WILLIAM J. GALVIN, JR., Assistant Secretary. Senior Vice President of
INVESCO Funds Group, Inc. (since 1995) and of INVESCO Distributors, Inc. (since
1997) and Trust Officer of INVESCO Trust Company since July 1995 and formerly
(August 1992 to July 1995) Vice President of INVESCO Funds Group, Inc. and trust
officer of INVESCO Trust Company. Formerly, Vice President of 440 Financial
Group from June 1990 to August 1992 and Assistant Vice President of Putnam
Companies from November 1986 to June 1990. Born: August 21, 1956.
ALAN I. WATSON, Assistant Secretary. Vice President of INVESCO Funds Group,
Inc. (since 1984) and Trust Officer of INVESCO Trust Company. Born: September
14, 1941.
JUDY P. WIESE, Assistant Treasurer. Vice President of INVESCO Funds Group,
Inc. (since 1984) and of INVESCO Distributors, Inc. (since 1997) and Trust
Officer of INVESCO Trust Company. Born: February 3, 1948.
#Member of the audit committee of the Company's board of directors.
+Member of the executive committee of the Company's board of directors. On
occasion, the executive committee acts upon the current and ordinary business of
the Company between meetings of the board of directors. Except for certain
powers which, under applicable law, may only be exercised by the full board of
directors, the executive committee may exercise all powers and authority of the
board of directors in the management of the business of the Company. All
decisions are subsequently submitted for ratification by the board of Directors.
*These directors are "interested persons" of the Company as defined in the
Investment Company Act of 1940.
**Member of the management liaison committee of the Company's board of
directors.
As of ^ July 7, 1998, officers and directors of the Company, as a group,
beneficially owned less than 1% of the Company's outstanding shares and less
than ^ 3% of each Fund's outstanding shares.
Director Compensation
The following table sets forth, for the fiscal year ended April 30, 1997: the
compensation paid by the Company to its independent directors for services
rendered in their capacities as directors of the Company; the benefits accrued
as Company expenses with respect to the Defined Benefit Deferred
<PAGE>
Compensation Plan discussed below; and the estimated annual benefits to be
received by these directors upon retirement as a result of their service to the
Company. In addition, the table sets forth the total compensation paid by all of
the mutual funds distributed by INVESCO Funds Group, Inc. (including the
Company), INVESCO Advisor Funds, Inc., INVESCO Treasurer's Series Trust, and
INVESCO Global Health Sciences Fund (collectively, the "INVESCO Complex") to
these directors for services rendered in their capacities as directors or
trustees during the year ended December 31, 1996. As of December 31, 1996, there
were 49 funds in the INVESCO Complex. Dr. Soll became an independent director of
the Company effective May 15, 1997, and is not included in the following chart.
Dr. Gramm became an independent director of the Company effective July 29, 1997,
and is not included in the following chart.
Total
Compensa-
Benefits Estimated tion From
Aggregate Accrued Annual INVESCO
Name of Compensa- As Part Benefits Complex
Person, tion From of Company Upon Re- Paid To
Position Company(1) Expenses(2) tirement(3) Directors(1)
Fred A. Deering, $ 3,407 $ 1,634 $1,591 $ 98,850
Vice Chairman of
the Board
Victor L. Andrews 3,089 1,544 1,841 84,350
Bob R. Baker 3,245 1,378 2,468 84,850
Lawrence H. Budner 2,920 1,544 1,841 80,350
Daniel D. Chabris 3,245 1,762 1,309 84,850
A. D. Frazier, Jr.(4) 1,841 0 0 81,500
Kenneth T. King 2,413 1,696 1,443 71,350
John W. McIntyre 2,920 0 0 90,350
------- ------ ----- -------
Total $23,080 $9,558 10,493 $676,450
% of Net Assets 0.0030%6 0.0013%5 0.0044%6
(1)The vice chairman of the board, the chairmen of the audit, management
liaison and compensation committees, and the members of the executive and
valuation committees each receive compensation for serving in such capacities in
addition to the compensation paid to all independent directors.
(2)Represents estimated benefits accrued with respect to the Defined
Benefit Deferred Compensation Plan discussed below, and not compensation
deferred at the election of the directors.
<PAGE>
(3)These figures represent the Company's share of the estimated annual
benefits payable by the INVESCO Complex (excluding INVESCO Global Health
Sciences Fund, which does not participate in any retirement plan) upon the
directors' retirement, calculated using the current method of allocating
director compensation among the funds in the INVESCO Complex. These estimated
benefits assume retirement at age 72 and that the basic retainer payable to the
directors will be adjusted periodically for inflation, for increases in the
number of funds in the INVESCO Complex, and for other reasons during the period
in which retirement benefits are accrued on behalf of the respective directors.
This results in lower estimated benefits for directors who are closer to
retirement and higher estimated benefits for directors who are further from
retirement. With the exception of Messrs. Frazier and McIntyre, each of these
directors has served as a director/trustee of one or more of the funds in the
INVESCO Complex for the minimum five-year period required to be eligible to
participate in the Defined Benefit Deferred Compensation Plan.
(4)Effective February 28, 1997, Mr. Frazier resigned as a director of the
Company. Effective November 1, 1996, Mr. Frazier was employed by AMVESCAP PLC, a
company affiliated with INVESCO. Because it was possible that Mr. Frazier would
be employed with AMVESCAP PLC, he was deemed to be an "interested person" of the
Company and of the other funds in the INVESCO Complex effective May 1, 1996.
Effective November 1, 1996, Mr. Frazier no longer received any director's fees
or other compensation from the Company or other funds in the INVESCO Complex for
his service as a director.
(5)Totals as a percentage of the Company's net assets as of April 30, 1997.
(6)Total as a percentage of the net assets of the INVESCO Complex as of
December 31, 1996.
Messrs. Brady, Harris and Hesser, as "interested persons" of the Company,
the Fund and the other funds in the INVESCO Complex, receive compensation as
officers or employees of INVESCO or its affiliated companies, and do not receive
any director's fees or other compensation from the Company or the other funds in
the INVESCO Complex for their service as directors.
The boards of directors/trustees of the mutual funds managed by IFG and
INVESCO Treasurer's Series Trust have adopted a Defined Benefit Deferred
Compensation Plan for the non-interested directors and trustees of the funds.
Under this plan, each director or trustee who is not an interested person of the
funds (as defined in the 1940 Act) and who has served for at least five years (a
"qualified director") is entitled to receive, upon retiring from the boards at
the retirement age of 72 (or the retirement age of 73 or 74, if the retirement
date is extended by the boards for one or two years, but less than three years)
continuation of payment for one year (the "first year retirement benefit") of
<PAGE>
the annual basic retainer and annualized board meeting fees payable by the
funds to the qualified director at the time of his or her retirement (the "basic
retainer"). Commencing with any such director's second year of retirement, and
commencing with the first year of retirement of a director whose retirement has
been extended by the board for three years, a qualified director shall receive
quarterly payments at an annual rate equal to ^ 50% of the basic retainer and
annualized board meeting fees. These payments will continue for the remainder of
the qualified director's life or ten years, whichever is longer (the "reduced
retainer payments"). If a qualified director dies or becomes disabled after age
72 and before age 74 while still a director of the funds, the first year
retirement benefit and the reduced retainer payments will be made to him or her
or to his or her beneficiary or estate. If a qualified director becomes disabled
or dies either prior to age 72 or during his or her 74th year while still a
director of the funds, the director will not be entitled to receive the first
year retirement benefit; however, the ^ retainer payments will be made to his or
her beneficiary or estate. The plan is administered by a committee of three
directors who are also participants in the plan and one director who is not a
plan participant. The cost of the plan will be allocated among the IFG and
Treasurer's Series funds in a manner determined to be fair and equitable by the
committee. Although the Company is not making any payments to directors under
the plan as of the date of this Statement of Additional Information, it has
begun to accrue, as a current expense, a proportionate amount of the estimated
future cost of these benefits. The Company has no stock options or other pension
or retirement plans for management or other personnel and pays no salary or
compensation to any of its officers.
The independent directors have contributed to a deferred compensation
plan, pursuant to which they have deferred receipt of a portion of the
compensation which they would otherwise have been paid as directors of the
INVESCO and Treasurer's Series Funds. The deferred amounts are being invested in
the shares of all of the INVESCO and Treasurer's Series Funds. Each independent
director is, therefore, an indirect owner of shares of each INVESCO and
Treasurer's Series Fund.
The Company has an audit committee that is comprised of five of the
directors who are not interested persons of the Company. The committee meets
periodically with the Company's independent accountants and officers to review
accounting principles used by the Company, the adequacy of internal controls,
the responsibilities and fees of the independent accountants, and other matters.
The Company also has a management liaison committee which meets quarterly
with various management personnel of INVESCO in order (a) to facilitate better
understanding of management and operations of the Company, and (b) to review
legal and operational matters which have been assigned to the committee by the
board of directors, in furtherance of the board of directors' overall duty of
supervision.
<PAGE>
HOW SHARES CAN BE PURCHASED
The shares of each Fund are sold on a continuous basis at the net asset
value per share of the Fund next calculated after receipt of a purchase order in
good form. The net asset value per share for each Fund is computed separately
for each Fund and is determined once each day that the New York Stock Exchange
is open as of the close of regular trading on that Exchange, but may also be
computed at other times. See "How Shares Are Valued."
The Company has authorized one or more brokers to accept purchase orders
on the Funds' behalf. Such brokers are authorized to designate other
intermediaries to accept purchase orders on the Funds' behalf. The Funds will be
deemed to have received a purchase order when an authorized broker or, if
applicable, a broker's authorized designee, accepts the order. A purchase order
will be priced at a Fund's Net Asset Value next calculated after the order has
been accepted by an authorized broker or the broker's authorized designee.
IDI acts as the Funds' ^ distributor under a distribution agreement with
the Funds^ and bears all expense, including the costs of printing and
distribution of prospectuses incident to direct sales and distribution of Fund
shares on a no-load basis.
Distribution Plan. As discussed under "How to Buy Shares -Distribution
Expenses" in the Prospectus, the Company has adopted a Plan and Agreement of
Distribution (the "Plan") pursuant to Rule 12b-1 under the 1940 Act, which was
implemented on November 1, 1990. The Plan provides that each Fund may make
monthly payments to ^ IDI of amounts computed at an annual rate no greater than
0.25% of the Fund's average net assets to permit ^ IDI, at its discretion, to
engage in certain activities and provide services in connection with the
distribution of each Fund's shares to investors. Payment by a Fund under the
Plan, for any month, may be made to compensate ^ IDI for permissible activities
engaged in and services provided by ^ IDI during the rolling 12-month period in
which that month falls, although the period is extended to 24 months for
obligations incurred during the first 24 months of a Fund's operations. For the
fiscal year ended April 30, 1997, the Dynamics Fund made payments to IFG (the
predecessor of IDI as the distributor of Dynamics Fund shares) under the Plan in
the amount of $2,012,429. In addition, as of April 30, 1997, $153,027 of
additional distribution accruals had been incurred by the Dynamics Fund and will
be paid during the fiscal year ended April 30, 1998. As noted in the section of
each Fund's Prospectus entitled "How to Buy Shares-Distribution Expenses," one
type of expenditure is the payment of compensation to securities companies and
other financial institutions and organizations, which may include ^
IDI-affiliated companies, in order to obtain various distribution-related and/or
administrative services for the Funds. Each Fund is authorized by the Plan to
use its assets to finance the payments made to obtain those services. Payments
will be made by ^ IDI to broker-dealers who sell shares of the Funds and may be
made to banks, savings and loan associations and other depository institutions.
<PAGE>
Although the Glass-Steagall Act limits the ability of certain banks to act
as underwriters of mutual fund shares, the Company does not believe that these
limitations would affect the ability of such banks to enter into arrangements
with ^ IDI, but can give no assurance in this regard. However, to the extent it
is determined otherwise in the future, arrangements with banks might have to be
modified or terminated, and, in that case, the size of the Funds possibly could
decrease to the extent that the banks would no longer invest customer assets in
a particular Fund. Neither the Company nor its investment adviser will give any
preference to banks or other depository institutions which enter into such
arrangements when selecting investments to be made by each Fund.
For the fiscal year ended April 30, 1997, allocation of 12b-1 amounts paid
by the Dynamics Fund for the following categories of expenses were:
advertising--$406,171; sales literature, printing, and postage--$260,850; direct
mail--$85,518; public relations/promotion--$28,948; compensation to securities
dealers and other organizations--$950,063; and marketing personnel--$280,879.
There were no allocations made with respect to the Growth & Income Fund and
[Aggressive Growth] Fund as of April 30, 1997, as ^ those Funds did not commence
operations until June 30, 1998 and September --, 1998, respectively.
The nature and scope of services which are provided by securities dealers
and other organizations may vary by dealer but include, among other things,
processing new stockholder account applications, preparing and transmitting to
the Company's Transfer Agent computer-processable tapes of all Fund transactions
by customers, serving as the primary source of information to customers in
answering questions concerning each Fund, and assisting in other customer
transactions with each Fund.
The Plan was approved on April 21, 1993, at a meeting called for such
purpose, by a majority of the directors of the Company, including a majority of
the directors who neither are "interested persons" of the Company nor have any
financial interest in the operation of the Plan ^("independent directors").
Pursuant to authorization granted by the public shareholders of FDF on May 24,
1993, FDF, as the initial shareholder of the Fund, approved the Plan on June 24,
1993 for an initial term expiring April 30, 1994. The Plan has been continued by
action of the board of directors until May 15, 1999. With respect to the
Dynamics Fund, the board of directors, on February 4, 1997, approved amending
the Plan, effective January 1, 1997, to convert the Plan to a compensation type
Rule 12b-1 plan. This amendment of the Plan did not result in increasing the
amount of the Fund's payments thereunder. With respect to the Growth & Income
Fund, the Plan ^ was approved by action of the board of directors of the Company
for an initial period expiring May 15, 1999. With respect to the [Aggressive
Growth] Fund, the Plan was approved by action of the board of directors of the
Company for an initial period expiring May 15, 1999.
<PAGE>
The Plan provides that it shall continue in effect with respect to each
Fund for so long as such continuance is approved at least annually by the vote
of the board of directors of the Company cast in person at a meeting called for
the purpose of voting on such continuance. The Plan can also be terminated at
any time with respect to any Fund, without penalty, if a majority of the ^
independent directors, or shareholders of such Fund, vote to terminate the Plan.
The Company may, in its absolute discretion, suspend, discontinue or limit the
offering of its shares at any time. In determining whether any such action
should be taken, the board of directors intends to consider all relevant factors
including, without limitation, the size of the Funds, the investment climate for
any particular Fund, general market conditions, and the volume of sales and
redemptions of a ^ Fund's shares. The Plan may continue in effect and payments
may be made under the Plan following any such temporary suspension or limitation
of the offering of a Fund's shares; however, the Company is not contractually
obligated to continue the Plan for any particular period of time. Suspension of
the offering of a Fund's shares would not, of course, affect a shareholder's
ability to redeem his or her shares. So long as the Plan is in effect, the
selection and nomination of persons to serve as ^ independent directors of the
Company shall be committed to the ^ independent directors then in office at the
time of such selection or nomination. The Plan may not be amended to increase
materially the amount of a Fund's payments thereunder without approval of the
shareholders of such Fund, and all material amendments to the Plan must be
approved by the board of directors of the Company, including a majority of the ^
independent directors. Under the agreement implementing the Plan, ^ IDI or the
Funds, the latter by vote of a majority of the ^ independent directors or of the
holders of a majority of any Fund's outstanding voting securities, may terminate
such agreement without penalty upon 30 days' written notice to the other party.
No further payments will be made by any Fund under the Plan in the event of its
termination as to that Fund.
To the extent that the Plan constitutes a plan of distribution adopted
pursuant to Rule 12b-1 under the 1940 Act, it shall remain in effect as such, so
as to authorize the use of each Fund's assets in the amounts and for the
purposes set forth therein, notwithstanding the occurrence of an assignment, as
defined by the 1940 Act, and rules thereunder. To the extent it constitutes an
agreement pursuant to a plan, each Fund's obligation to make payments to ^ IDI
shall terminate automatically, in the event of such "assignment," in which event
the Funds may continue to make payments, pursuant to the Plan, to ^ IDI or
another organization only upon the approval of new arrangements, which may or
may not be with ^ IDI, regarding the use of the amounts authorized to be paid by
it under the Plan, by the directors, including a majority of the ^ independent
directors, by a vote cast in person at a meeting called for such purpose.
Information regarding the services rendered under the Plan and the amounts
paid therefor by each Fund are provided to, and reviewed by, the directors on a
quarterly basis. On an annual basis, the directors consider the continued
appropriateness of the Plan at the level of compensation provided therein.
<PAGE>
The only directors or interested persons, as that term is defined in
Section 2(a)(19) of the 1940 Act, of the Company who have a direct or indirect
financial interest in the operation of the Plan are the officers and directors
of the Company listed herein under the section entitled "The Funds And Their
Management-Officers and Directors of the Company," who are also officers either
of ^ IDI or companies affiliated with ^ IDI. The benefits which the Company
believes will be reasonably likely to flow to the Funds and their shareholders
under the Plan include the following:
(1) Enhanced marketing efforts, if successful, should result in an
increase in net assets through the sale of additional shares and
afford greater resources with which to pursue the investment
objectives of the Fund;
(2) The sale of additional shares reduces the likelihood that redemption
of shares will require the liquidation of securities of the Funds in
amounts and at times that are disadvantageous for investment
purposes;
(3) The positive effect which increased Fund assets will have on its
revenues could allow IFG:
(a) To have greater resources to make the financial commitments
necessary to improve the quality and level of each Fund's
shareholder services (in both systems and personnel),
(b) To increase the number and type of mutual funds available to
investors from IFG (and support them in their infancy), and
thereby expand the investment choices available to all
shareholders, and
(c) To acquire and retain talented employees who desire
to be associated with a growing organization; and
(4) Increased Fund assets may result in reducing each investor's share
of certain expenses through economies of scale (e.g. exceeding
established breakpoints in the advisory fee schedule and allocating
fixed expenses over a larger asset base), thereby partially
offsetting the costs of the plan.
HOW SHARES ARE VALUED
As described in the section of each Fund's Prospectus entitled "Fund Price
and Performance," the net asset value of shares of each Fund is computed once
each day that the New York Stock Exchange is open as of the close of regular
trading on that Exchange (generally 4:00 p.m., New York time) and applies to
purchase and redemption orders received prior to that time. Net asset value per
<PAGE>
share is also computed on any other day on which there is a sufficient
degree of trading in the securities held by a Fund that the current net asset
value per share might be materially affected by changes in the value of the
securities held, but only if on such day such Fund receives a request to
purchase or redeem shares. Net asset value per share is not calculated on days
the New York Stock Exchange is closed, such as federal holidays including New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving, and Christmas.
The net asset value per share of each Fund is calculated by dividing the
value of all securities held by a Fund and its other assets (including dividends
and interest accrued but not collected), less the Fund's liabilities (including
accrued expenses), by the number of outstanding shares of that Fund. Securities
traded on national securities exchanges, the NASDAQ National Market System, the
NASDAQ Small Cap market and foreign markets are valued at their last sale prices
on the exchanges or markets where such securities are primarily traded.
Securities traded in the over-the-counter market for which last sale prices are
not available, and listed securities for which no sales were reported on a
particular date, are valued at their highest closing bid prices (or, for debt
securities, yield equivalents thereof) obtained from one or more dealers making
markets for such securities. If market quotations are not readily available,
securities or other assets will be valued at their fair values as determined in
good faith by the board of directors or pursuant to procedures adopted by the
Company's board of directors. The above procedures may include the use of
valuations furnished by a pricing service which employs a matrix to determine
valuations for normal institutional-size trading units of debt securities. Prior
to utilizing a pricing service, the Company's board of directors reviews the
methods used by such service to assure itself that securities will be valued at
their fair values. The Company's board of directors also periodically monitors
the methods used by such pricing services. Debt securities with remaining
maturities of 60 days or less at the time of purchase normally are valued at
amortized cost.
The value of the securities held by the Funds and other assets used in
computing net asset value generally are determined as of the time regular
trading in such securities or assets is completed each day. Because regular
trading in most foreign securities markets is completed simultaneously with, or
prior to, the close of regular trading on the New York Stock Exchange, closing
prices for foreign securities usually are available for purposes of computing a
Fund's net asset value. However, in the event that the closing price of a
foreign security is not available in time to calculate a Fund's net asset value
on a particular day, the Company's board of directors has authorized the use of
<PAGE>
the market price for the security obtained from an approved pricing service
at an established time during the day which may be prior to the close of regular
trading in the security. The value of all assets and liabilities initially
expressed in foreign currencies will be converted into U.S. dollars at the spot
rate of such currencies against U.S. dollars provided by an approved pricing
service.
FUND PERFORMANCE
As discussed in the section of the Funds' Prospectuses entitled "Fund
Price and Performance," the Company advertises the total return performance of
the Funds. Average annual total return performance for the Dynamics Fund for the
one-, five-, and ten-year periods ended April 30, 1997, was (2.34%), 15.79% and
12.41%, respectively. Average annual total return performance for each of the
periods indicated was computed by finding the average annual compounded rates of
return that would equate the initial amount invested to the ending redeemable
value, according to the following formula:
P(1 + T)n = ERV
where: P = initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of initial payment
The average annual total return performance figures shown above were
determined by solving the above formula for "T" for each time period indicated.
In conjunction with performance reports, comparative data between the
Funds' performance for a given period and other types of investment vehicles,
including certificates of deposit, may be provided to prospective investors and
shareholders.
In conjunction with performance reports and/or analyses of shareholder
service for the Funds, comparative data between the Funds' performance for a
given period and recognized indices of investment results for the same period,
and/or assessments of the quality of shareholder service, may be provided to
shareholders. Such indices include indices provided by Dow Jones & Company,
Standard & Poor's, Lipper Analytical Services, Inc., Lehman Brothers, National
Association of Securities Dealers Automated Quotations, Frank Russell Company,
Value Line Investment Survey, the American Stock Exchange, Morgan Stanley
Capital International, Wilshire Associates, the Financial Times Stock Exchange,
the New York Stock Exchange, the Nikkei Stock Average and Deutcher Aktienindex,
all of which are unmanaged market indicators. In addition, rankings, ratings,
and comparisons of investment performance and/or assessments of the quality of
shareholder service made by independent sources may be used in advertisements,
sales literature or shareholder reports, including reprints of, or selections
from, editorials or articles about the Funds. These sources utilize information
compiled (i) internally; (ii) by Lipper Analytical Services, Inc.; or (iii) by
<PAGE>
other recognized analytical services. The Lipper Analytical Services, Inc.
mutual fund rankings and comparisons which may be used by the Funds in
performance reports will be drawn from the Capital Appreciation (Dynamics) ^,
Growth and Income (Growth & Income ^ Fund) and Growth ([Aggressive Growth] Fund)
mutual fund groupings, in addition to the broad-based Lipper general fund
groupings. Sources for Fund performance information and articles about the Funds
include, but are not limited to, the following:
American Association of Individual Investors' Journal
Banxquote
Barron's
Business Week
CDA Investment Technologies
CNBC
CNN
Consumer Digest
Financial Times
Financial World
Forbes
Fortune
Ibbotson Associates, Inc.
Institutional Investor
Investment Company Data, Inc.
Investor's Business Daily
Kiplinger's Personal Finance
Lipper Analytical Services, Inc.'s Mutual Fund
Performance Analysis
Money
Morningstar
Mutual Fund Forecaster
No-Load Analyst
No-Load Fund X
Personal Investor
Smart Money
The New York Times
The No-Load Fund Investor
U.S. News and World Report
United Mutual Fund Selector
USA Today
The Wall Street Journal
Wiesenberger Investment Companies Services
Working Woman
Worth
SERVICES PROVIDED BY THE FUNDS
Periodic Withdrawal Plan. As described in the section of the Funds'
Prospectuses entitled "How to Sell Shares," each Fund offers a Periodic
Withdrawal Plan. All dividends and distributions on shares owned by shareholders
participating in this Plan are reinvested in additional shares. Because
withdrawal payments represent the proceeds from sales of shares, the amount of
<PAGE>
shareholders' investments in a Fund will be reduced to the extent that
withdrawal payments exceed dividends and other distributions paid and
reinvested. Any gain or loss on such redemptions must be reported for tax
purposes. In each case, shares will be redeemed at the close of business on or
about the 20th day of each month preceding payment and payments will be mailed
within five business days thereafter.
The Periodic Withdrawal Plan involves the use of principal and is not a
guaranteed annuity. Payments under the Periodic Withdrawal Plan do not represent
income or a return on investment.
Participation in the Periodic Withdrawal Plan may be terminated at any
time by directing a written request to IFG. Upon termination, all future
dividends and capital gain distributions will be reinvested in additional shares
unless the shareholder requests otherwise.
Exchange Policy. As discussed in the section of the Funds' Prospectuses
entitled "How to Buy Shares - Exchange Policy," each Fund offers shareholders
the ability to exchange shares of a Fund for shares of certain other no-load
mutual funds advised by IFG. Exchange requests may be made either by telephone
or by written request to INVESCO Funds Group, Inc., using the telephone number
or address on the cover of this Statement of Additional Information. Exchanges
made by telephone must be in an amount of at least $250, if the exchange is
being made into an existing account of one of the INVESCO funds. All exchanges
that establish a new account must meet the fund's applicable minimum initial
investment requirements. Written exchange requests into an existing account have
no minimum requirements other than the fund's applicable minimum subsequent
investment requirements. Any gain or loss realized on an exchange is recognized
for federal income tax purposes. This policy is not an option or right to
purchase securities and is not available in any state or other jurisdiction
where the shares of the mutual fund into which transfer is to be made are not
qualified for sale, or when the net asset value of the shares presented for
exchange is less than the minimum dollar purchase required by the appropriate
prospectus.
TAX-DEFERRED RETIREMENT PLANS
As described in the section of the Funds' Prospectuses entitled "Fund
Services," shares of a Fund may be purchased as the investment medium for
various tax-deferred retirement plans. Persons who request information regarding
these plans from IFG will be provided with prototype documents and other
supporting information regarding the type of plan requested. Each of these plans
involves a long-term commitment of assets and is subject to possible regulatory
penalties for excess contributions, premature distributions or for insufficient
distributions after age 70-1/2. The legal and tax implications may vary
according to the circumstances of the individual investor. Therefore, the
investor is urged to consult with an attorney or tax adviser prior to the
establishment of such a plan.
<PAGE>
^
HOW TO REDEEM SHARES
Normally, payments for shares redeemed will be mailed within seven (7)
days following receipt of the required documents as described in the section of
the Funds' Prospectuses entitled "How to Sell Shares." The right of redemption
may be suspended and payment postponed when: (a) the New York Stock Exchange is
closed for other than customary weekends and holidays; (b) trading on that
exchange is restricted; (c) an emergency exists as a result of which disposal by
a Fund of securities owned by it is not reasonably practicable, or it is not
reasonably practicable for a Fund fairly to determine the value of its net
assets; or (d) the SEC by order so permits.
It is possible that in the future conditions may exist which would, in the
opinion of the Company's investment adviser, make it undesirable for a Fund to
pay for redeemed shares in cash. In such cases, the investment adviser may
authorize payment to be made in portfolio securities or other property of the
Fund. However, the Company is obligated under the 1940 Act to redeem for cash
all shares of a Fund presented for redemption by any one shareholder having a
value up to $250,000 (or 1% of the Fund's net assets if that is less) in any
90-day period. Securities delivered in payment of redemptions are selected
entirely by the investment adviser based on what is in the best interests of the
Fund and its shareholders, and are valued at the value assigned to them in
computing the Fund's net asset value per share. Shareholders receiving such
securities are likely to incur brokerage costs on their subsequent sales of the
securities.
DIVIDENDS, ^ CAPITAL GAINS DISTRIBUTIONS, AND TAXES
Each Fund intends to continue to conduct its business and satisfy the
applicable diversification of assets and source of income requirements to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). The Dynamics Fund so qualified in
the fiscal year ended April 30, 1997, and ^ all three Funds intend to qualify
during their current fiscal year. As a result, it is anticipated that neither
Fund will pay federal income or excise taxes and ^ all three Funds will be
accorded conduit or "pass through" treatment for federal income tax purposes.
Dividends paid by each Fund from net investment income as well as
distributions of net realized short-term capital gains and net realized gains
from certain foreign currency transactions are, for federal income tax purposes,
taxable as ordinary income to shareholders. After the end of each calendar year,
each Fund sends shareholders information regarding the amount and character of
dividends paid in the year.
Distributions by each Fund of net capital gain (the excess of net
long-term capital gain over net short term capital loss) are, for federal income
tax purposes, taxable to the shareholder as long-term capital gains regardless
<PAGE>
of how long a shareholder has held shares of the Fund. The Taxpayer Relief
Act of 1997 (the "Tax Act"), enacted in August 1997, changed the taxation of
long-term capital gains for individuals by applying different capital gains
rates depending on the taxpayer's holding period and marginal rate of federal
income tax. Long-term gains realized on the sale of securities held for more
than one year but not for more than 18 months are taxable at a rate of 28%. This
category of long-term gains is often referred to as "mid-term" gains but is
technically termed "28% rate gains." Long-term gains realized on the sale of
securities held for more than 18 months are taxable at a rate of 20%. At the end
of each year, information regarding the tax status of dividends and other
distributions is provided to shareholders. Shareholders should consult their tax
advisers as to the effect of the Tax Act on distributions by the Fund of net
capital gains.
All dividends and other distributions are regarded as taxable to the
investor, whether or not such dividends and distributions are reinvested in
additional shares of the Fund or another fund in the INVESCO group. The net
asset value of Fund shares reflects accrued net investment income and
undistributed realized capital and foreign currency gains; therefore, when a
distribution is made, the net asset value is reduced by the amount of the
distribution. If the net asset value of Fund shares were reduced below a
shareholder's cost as a result of a distribution, such distribution would be
taxable to the shareholder although a portion would be, in effect, a return of
invested capital. If shares are purchased shortly before a distribution, the
full price for the shares will be paid and some portion of the price may then be
returned to the shareholder as a taxable dividend or capital gain. However, the
net asset value per share will be reduced by the amount of the distribution,
which would reduce any gain (or increase any loss) for tax purposes on any
subsequent redemption of shares.
IFG may provide Fund shareholders with information concerning the average
cost basis of their shares in order to help them prepare their tax returns. This
information is intended as a convenience to shareholders, and will not be
reported to the Internal Revenue Service (the "IRS"). The IRS permits the use of
several methods to determine the cost basis of mutual fund shares. The cost
basis information provided by IFG will be computed using the single-category
average cost method, although neither IFG nor the Fund recommends any particular
method of determining cost basis. Other methods may result in different tax
consequences. If a shareholder has reported gains or losses for a Fund in past
years, the shareholder must continue to use the method previously used, unless
the shareholder applies to the IRS for permission to change the method.
If a Fund's shares are sold at a loss after being held for six months or
less, the loss will be treated as long-term, instead of short-term, capital loss
to the extent of any capital gain distributions received on those shares.
<PAGE>
Each Fund will be subject to a nondeductible 4% excise tax to the extent
it fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and net capital gains for the one-year period
ending on April 30 of that year, plus certain other amounts.
Dividends and interest received by a Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors. Foreign taxes withheld will be
treated as an expense of the ^ Fund. If more than 50% of the value of a Fund's
total assets at the close of any taxable year consists of securities of foreign
corporations, the Fund will be eligible to, and may, file an election with the
Internal Revenue Service that will enable its shareholders, in effect, to
receive the benefit of the foreign tax credit with respect to any foreign and
U.S. possessions income taxes paid by it. Each Fund will report to its
shareholders shortly after each taxable year their respective shares of the
Fund's income from sources within, and taxes paid to, foreign countries and U.S.
possessions if it makes this election.
Each Fund may invest in the stock of "passive foreign investment
companies" (PFICs"). A PFIC is a foreign corporation (other than a controlled
foreign corporation) that, in general, meets either of the following tests: (1)
at least 75% of its gross income is passive or (2) an average of at least 50% of
its assets produce, or are held for the production of, passive income. Under
certain circumstances, a Fund will be subject to federal income tax on a portion
of any "excess distribution" received on the stock of a PFIC or of any gain on
disposition of the stock (collectively "PFIC income"), plus interest thereon,
even if the Fund distributes the PFIC income as a taxable dividend to its
shareholders. The balance of the PFIC income will be included in such Fund's
investment company taxable income and, accordingly, will not be taxable to it to
the extent that income is distributed to its shareholders.
Each Portfolio may elect to "mark-to-market" its stock in any PFIC.
Marking-to-market, in this context, means including in ordinary income for each
taxable year the excess, if any, of the fair market value of the PFIC stock over
a Portfolio's adjusted tax basis therein as of the end of that year. Once the
election has been made, a Portfolio also will be allowed to deduct from ordinary
income the excess, if any, of its adjusted basis in PFIC stock over the fair
market value thereof as of the end of the year, but only to the extent of any
net mark-to-market gains with respect to that PFIC stock included by a Portfolio
for prior taxable years. A Portfolio's adjusted tax basis in each PFIC's stock
with respect to which it makes this election will be adjusted to reflect that
amounts of income included and deductions taken under the election.
<PAGE>
Gains or losses (1) from the disposition of foreign currencies, (2) from
the disposition of debt securities denominated in foreign currency that are
attributable to fluctuations in the value of the foreign currency between the
date of acquisition of each security and the date of disposition, and (3) that
are attributable to fluctuations in exchange rates that occur between the time a
Fund accrues interest, dividends or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time such Fund
actually collects the receivables or pays the liabilities, generally will be
treated as ordinary income or loss. These gains or losses may increase or
decrease the amount of the Fund's investment company taxable income to be
distributed to its shareholders.
Shareholders should consult their own tax advisers regarding specific
questions as to federal, state and local taxes. Dividends and capital gain
distributions will generally be subject to applicable state and local taxes.
Qualification as a regulated investment company under the Internal Revenue Code
of 1986, as amended, for income tax purposes does not entail government
supervision of management or investment policies.
<PAGE>
INVESTMENT PRACTICES
Leverage. The Company's charter permits each Fund to borrow from banks up
to 25% of the value of its net assets, excluding the proceeds of any such
borrowing (subject to its investment restrictions), for the purpose of
purchasing portfolio securities. This is a speculative technique commonly known
as leverage. Since the Dynamics Fund's inception, leverage has never been
employed, and it may not be employed by ^ any of the Funds without express
authorization of the Company's board of directors. Such authorization is not
presently contemplated. Should the leverage technique be employed at some future
date, it would be employed with the expectation that portfolio gains
attributable to the investment of borrowed monies will exceed the interest costs
on such monies. If this expectation were not realized and the market value of
securities so purchased declined, however, the impact of such market decline
would be increased by the amount of interest paid on such borrowings.
Portfolio Turnover. There are no fixed limitations regarding a Fund's
portfolio turnover. Since the Dynamics Fund started business, the rate of
portfolio turnover has fluctuated under constantly changing economic conditions
and market circumstances. Portfolio turnover rates for the Dynamics Fund for the
fiscal years ended April 30, 1997 and 1996 were 204% and 196%, respectively.
Securities initially satisfying the basic policies and objectives of a Fund may
be disposed of when they are no longer suitable. Brokerage costs to a Fund are
commensurate with the rate of portfolio activity. In computing the portfolio
turnover rate, all investments with maturities or expiration dates at the time
of acquisition of one year or less are excluded. Subject to this exclusion, the
turnover rate is calculated by dividing (A) the lesser of purchases or sales of
portfolio securities for the fiscal year by (B) the monthly average of the value
of portfolio securities owned by the Fund during the fiscal year.
Placement of Portfolio Brokerage. IFG, as the Funds' investment adviser,
places orders for the purchase and sale of securities with brokers and dealers
based upon IFG's evaluation of the financial responsibility of the brokers and
dealers, and considering the brokers' and dealers' ability to effect
transactions at the best available prices. IFG evaluates the overall
reasonableness of brokerage commissions paid by reviewing the quality of
executions obtained on the portfolio transactions of each Fund, viewed in terms
of the size of transactions, prevailing market conditions in the security
purchased or sold, and general economic and market conditions. In seeking to
ensure that the commissions charged the Funds are consistent with prevailing and
reasonable commissions, IFG also endeavors to monitor brokerage industry
practices with regard to the commissions charged by broker-dealers on
transactions effected for other comparable institutional investors. While IFG
seeks reasonably competitive rates, the Funds do not necessarily pay the lowest
commission or spread available.
<PAGE>
Consistent with the standard of seeking to obtain the best execution on
portfolio transactions, IFG may select brokers that provide research services to
effect such transactions. Research services consist of statistical and
analytical reports relating to issuers, industries, securities and economic
factors and trends, which may be of assistance or value to IFG in making
informed investment decisions. Research services prepared and furnished by
brokers through which the Fund effects securities transactions may be used by
IFG in servicing all of its accounts and not all such services may be used by
IFG in connection with the Funds.
In recognition of the value of the above-described brokerage and research
services provided by certain brokers, IFG, consistent with the standard of
seeking to obtain the best execution on portfolio transactions, may place orders
with such brokers for the execution of transactions for the Funds on which the
commissions are in excess of those which other brokers might have charged for
effecting the same transactions.
Portfolio transactions may be effected through qualified broker-dealers
that recommend the Funds to their clients, or that act as agent in the purchase
of a Fund's shares for their clients. When a number of brokers and dealers can
provide comparable best price and execution on a particular transaction, the
Company's adviser or sub-adviser may consider the sale of Fund shares by a
broker or dealer in selecting among qualified broker-dealers.
Certain financial institutions (including brokers who may sell shares of
the Funds, or affiliates of such brokers) are paid a fee (the "Services Fee")
for recordkeeping, shareholder communications and other services provided by the
brokers to investors purchasing shares of the Funds through no transaction fee
programs ("NTF Programs") offered by the financial institution or its affiliated
broker (an "NTF Program Sponsor"). The Services Fee is based on the average
daily value of the investments in each Fund made in the name of such NTF Program
Sponsor and held in omnibus accounts maintained on behalf of investors
participating in the NTF Program. With respect to certain NTF Programs, the
directors of the Company have authorized the Funds to apply dollars generated
from the Company's Plan and Agreement of Distribution pursuant to Rule 12b-1
under the 1940 Act (the "Plan") to pay the entire Services Fee, subject to the
maximum Rule 12b-1 fee permitted by the Plan. With respect to other NTF
Programs, the Company's directors have authorized the Funds to pay transfer
agency fees to IFG based on the number of investors who have beneficial
interests in the NTF Program Sponsor's omnibus accounts in the Funds. IFG, in
turn, pays these transfer agency fees to the NTF Program Sponsor as a
sub-transfer agency or recordkeeping fee in payment of all or a portion of the
Services Fee. In the event that the sub-transfer agency or recordkeeping fee is
insufficient to pay all of the Services Fee with respect to these NTF Programs,
<PAGE>
the directors of the Company have authorized the Company to apply dollars
generated from the Plan to pay the remainder of the Services Fee, subject to the
maximum Rule 12b-1 fee permitted by the Plan. IFG itself pays the portion of the
Fund's Services Fee, if any, that exceeds the sum of the sub-transfer agency or
recordkeeping fee and Rule 12b-1 fee. The Company's directors have further
authorized IFG to place a portion of the Funds' brokerage transactions with
certain NTF Program Sponsors or their affiliated brokers, if IFG reasonably
believes that, in effecting the Funds' transactions in portfolio securities, the
broker is able to provide the best execution of orders at the most favorable
prices. A portion of the commissions earned by such a broker from executing
portfolio transactions on behalf of the Funds may be credited by the NTF Program
Sponsor against its Services Fee. Such credit shall be applied first against any
sub-transfer agency or recordkeeping fee payable with respect to the Funds, and
second against any Rule 12b-1 fees used to pay a portion of the Services Fee, on
a basis which has resulted from negotiations between IFG or IDI and the NTF
Program Sponsor. Thus, the Funds pay sub-transfer agency or recordkeeping fees
to the NTF Program Sponsor in payment of the Services Fee only to the extent
that such fees are not offset by the Funds' credits. In the event that the
transfer agency fee paid by the Funds to IFG with respect to investors who have
beneficial interests in a particular NTF Program Sponsor's omnibus accounts in a
Fund exceeds the Services Fee applicable to the Fund, after application of
credits, IFG may carry forward the excess and apply it to future Services Fees
payable to that NTF Program Sponsor with respect to a Fund. The amount of excess
transfer agency fees carried forward will be reviewed for possible adjustment by
IFG prior to each fiscal year-end of the Funds. The Company's board of directors
has also authorized the Fund to pay to ^ IDI the full Rule 12b-1 fees
contemplated by the Plan as payment for expenses incurred by ^ IDI in engaging
in the activities and providing the services on behalf of the Funds contemplated
by the Plan, subject to the maximum Rule 12b-1 fee permitted by the Plan,
notwithstanding that credits have been applied to reduce the portion of the
12b-1 fee that would have been used to pay ^ IDI for payments to such NTF
Program Sponsor absent such credits.
The aggregate dollar amount of brokerage commissions paid by the Company
for the Dynamics Fund for the fiscal years ended April 30, 1997, 1996 and 1995,
were $5,707,197, $3,891,234 and $1,742,196, respectively. For the fiscal year
ended April 30, 1997, brokers providing research services received $2,699,291 in
commissions on portfolio transactions effected for the Dynamics Fund. The
aggregate dollar amount of such portfolio transactions was $1,591,210,810.
Commissions of $1,200 were allocated to certain brokers in recognition of their
sales of shares of the Dynamics Fund on portfolio transactions of such Fund
effected during the fiscal year ended April 30, 1997.
At April 30, 1997, the Dynamics Fund held debt securities of its regular
brokers or dealers, or their parents, as follows:
Value of Securities
Broker or Dealer at 4/30/97
---------------- -------------------
Lehman Brothers Holdings 10,163
Cigna Corp. 27,292
<PAGE>
Neither the Growth & Income Fund nor the [Aggressive Growth] Fund paid any
brokerage fees as of April 30, 1997, as those funds did not commence operations
until June 30, 1998 and September --, 1998, respectively.
IFG does not receive any brokerage commissions on portfolio transactions
effected on behalf of the Funds, and there is no affiliation between IFG or any
person affiliated with IFG or the Funds and any broker or dealer that executes
transactions for the Funds.
ADDITIONAL INFORMATION
Common Stock. The Company has ^ 400,000,000 authorized shares of common
stock with a par value of $0.01 per share. Of the Company's authorized shares, ^
200,000,000 shares have been allocated to ^ the Dynamics Fund, 100,000,000
shares have been allocated to the Growth & Income Fund and 100,000,000 shares
have been allocated to the [Aggressive Growth] Fund. As of June 30, 1998,
83,603,826 shares of the Dynamics Fund were outstanding. All shares issued and
outstanding are, and all shares offered hereby, when issued, will be, fully paid
and nonassessable. The board of directors has the authority to designate
additional classes of common stock without seeking the approval of shareholders
and may classify and reclassify any authorized but unissued shares.
Shares of each series represent the interests of the shareholders of such
series in a particular portfolio of investments of the Company. Each series of
the Company's shares is preferred over all other series with respect to the
assets specifically allocated to that series, and all income, earnings, profits
and proceeds from such assets, subject only to the rights of creditors, are
allocated to shares of that series. The assets of each series are segregated on
the books of account and are charged with the liabilities of that series and
with a share of the Company's general liabilities. The board of directors
determines those assets and liabilities deemed to be general assets or
liabilities of the Company, and those items are allocated among series in a
manner deemed by the board of directors to be fair and equitable. Generally,
such allocation will be made based upon the relative total net assets of each
series. In the unlikely event that a liability allocable to one series exceeds
the assets belonging to the series, all or a portion of such liability may have
to be borne by the holders of shares of the Company's other series.
All Fund shares, regardless of series, have equal voting rights. Voting
with respect to certain matters, such as ratification of independent accountants
or election of directors, will be by all series of the Company. When not all
series are affected by a matter to be voted upon, such as approval of an
investment advisory contract or change in a Fund's investment policies, only
<PAGE>
shareholders of the series affected by the matter may be entitled to vote.
Company shares have noncumulative voting rights, which means that the holders of
a majority of the shares voting for the election of directors of the Company can
elect 100% of the directors if they choose to do so. In such event, the holders
of the remaining shares voting for the election of directors will not be able to
elect any person or persons to the board of directors. After they have been
elected by shareholders, the directors will continue to serve until their
successors are elected and have qualified or they are removed from office, in
either case by a shareholder vote, or until death, resignation or retirement.
Directors may appoint their own successors, provided that always at least a
majority of the directors have been elected by the Company's shareholders. It is
the intention of the Company not to hold annual meetings of shareholders. The
directors will call annual or special meetings of shareholders for action by
shareholder vote as may be required by the 1940 Act or the Company's Articles of
Incorporation, or at their discretion.
Principal Shareholders. As of ^ June 30, 1998, the following ^ entities held
more than 5% of each of the Funds' outstanding equity securities.
Amount and Nature Class and Percent
Name and Address of Ownership of Class
- ---------------- ----------------- -----------------
Dynamics Fund
- -------------
Charles Schwab & Co. Inc. ^ 11,904,907.6790 14.23%
Special Custody Account
For The Exclusive Benefit
of Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
Growth & Income Fund
- --------------------
INVESCO Funds Group Inc 25,000.0000 17.90%
Attn: Sheila Wendland
P O Box 173706
Denver, CO 80217-3706
INVESCO Trust Co Cust 14,459.1250 10.35%
William J. Zechiel
IRA Plan 05/19/87
8001 DeVries Lane
LaPalma, CA 90623-2031
William J. Galvin, Jr. 10,000.0000 7.16%
9485 Princeton Circle
Highlands Ranch, CO 80126-4160
Nancy M. Hutchins 8,292.0490 5.94%
- -TOD Richard M. Hutchins
2618 Inwood Briar
San Antonio, TX 78248-1918
[Aggressive Growth] Fund
- ------------------------
N/A
<PAGE>
Independent Accountants. ^ PricewaterhouseCoopers LLP, 950 Seventeenth
Street, Denver, Colorado, has been selected as the independent accountants of
the Company. The independent accountants are responsible for auditing the
financial statements of the Company.
Custodian. State Street Bank and Trust Company, P.O. Box 351, Boston,
Massachusetts, has been designated as custodian of the cash and investment
securities of the Company. The bank is also responsible for, among other things,
receipt and delivery of the investment securities of the Company's Funds in
accordance with procedures and conditions specified in the custody agreement.
Under the contract with the Company, the custodian is authorized to establish
separate accounts in foreign countries and to cause foreign securities owned by
the Company to be held outside the United States in branches of U.S. Banks and,
to the extent permitted by applicable regulations, in certain foreign banks and
securities depositories.
Transfer Agent. The Company is provided with transfer agent, registrar, and
dividend disbursing agent services by INVESCO Funds Group, Inc., 7800 E. Union
Avenue, Denver, Colorado, pursuant to the Transfer Agency Agreement described
herein. Such services include the issuance, cancellation and transfer of shares
of the Funds, and the maintenance of records regarding the ownership of such
shares.
Reports to Shareholders. The Company's fiscal year ends on April 30. The
Company distributes reports at least semiannually to its shareholders. Financial
statements regarding the Company, audited by the independent accountants, are
sent to shareholders annually.
Legal Counsel. The firm of Kirkpatrick & Lockhart LLP, Washington, D.C., is
legal counsel for the Company. The firm of Moye, Giles, O'Keefe, Vermeire &
Gorrell, Denver, Colorado, acts as special counsel to the Company.
Financial Statements. The audited financial statements of the ^ Company and
the notes thereto for the fiscal year ended April 30, 1997, and the report of ^
PricewaterhouseCoopers LLP with respect to such financial statements, are
incorporated herein by reference from the Company's Annual Report to
Shareholders for the fiscal year ended April 30, 1997: Statement of Investment
Securities as of April 30, 1997; Statement of Assets and Liabilities as of April
30, 1997; Statement of Operations for the year ended April 30, 1997; Statement
of Changes in Net Assets for each of the two years in the period ended April 30,
1997; and Financial Highlights for each of the five years in the period ended
April 30, 1997.
^ Prospectuses. The Company will furnish, without charge, a copy of any
Fund's Prospectus upon request. Such requests should be made to the Company at
the mailing address or telephone number set forth on the first page of this
Statement of Additional Information.
Registration Statement. This Statement of Additional Information and the
related Prospectuses do not contain all of the information set forth in the
Registration Statement the Company has filed with the SEC. The complete
Registration Statement may be obtained from the SEC upon payment of the fee
prescribed by the rules and regulations of the SEC.
<PAGE>
APPENDIX A
DESCRIPTION OF FUTURES AND OPTIONS CONTRACTS
(Dynamics and Growth & Income Funds Only)
Options on Securities
An option on a security provides the purchaser, or "holder," with the
right, but not the obligation, to purchase, in the case of a "call" option, or
sell, in the case of a "put" option, the security or securities underlying the
option, for a fixed exercise price up to a stated expiration date. The holder
pays a non-refundable purchase price for the option, known as the "premium." The
maximum amount of risk the purchaser of the option assumes is equal to the
premium plus related transaction costs, although the entire amount may be lost.
The risk of the seller, or "writer," however, is potentially unlimited, unless
the option is "covered," which is generally accomplished through the writer's
ownership of the underlying security, in the case of a call option, or the
writer's segregation of an amount of cash or securities equal to the exercise
price, in the case of a put option. If the writer's obligation is not so
covered, it is subject to the risk of the full change in value of the underlying
security from the time the option is written until exercise.
Upon exercise of the option, the holder is required to pay the purchase
price of the underlying security, in the case of a call option, or to deliver
the security in return for the purchase price, in the case of a put option.
Conversely, the writer is required to deliver the security, in the case of a
call option, or to purchase the security, in the case of a put option. Options
on securities which have been purchased or written may be closed out prior to
exercise or expiration by entering into an offsetting transaction on the
exchange on which the initial position was established, subject to the
availability of a liquid secondary market.
Options on securities are traded on national securities exchanges, such as
the Chicago Board of Options Exchange, which are regulated by the Securities and
Exchange Commission. The Options Clearing Corporation ("OCC") guarantees the
performance of each party to an exchange-traded option, by in effect taking the
opposite side of each such option. A holder or writer may engage in transactions
in exchange-traded options on securities and options on indices of securities
only through a registered broker/dealer which is a member of the exchange on
which the option is traded.
An option position in an exchange-traded option may be closed out only on
an exchange which provides a secondary market for an option of the same series.
Although the Funds generally will purchase or write only those options for which
there appears to be an active secondary market, there is no assurance that a
liquid secondary market on an exchange will exist for any particular option at
any particular time. In such event it might not be possible to effect closing
<PAGE>
transactions in a particular option with the result that a Fund would have
to exercise the option in order to realize any profit. This would result in the
Fund incurring brokerage commissions upon the disposition of underlying
securities acquired through the exercise of a call option or upon the purchase
of underlying securities upon the exercise of a put option. If the Fund, as a
covered call option writer, is unable to effect a closing purchase transaction
in a secondary market, unless the Fund is required to deliver the securities
pursuant to the assignment of an exercise notice, it will not be able to sell
the underlying security until the option expires.
Reasons for the potential absence of a liquid secondary market on an
exchange include the following: (i) there may be insufficient trading interest
in certain options; (ii) restrictions may be imposed by an exchange on opening
transactions or closing transac tions or both; (iii) trading halts, suspensions
or other restric tions may be imposed with respect to particular classes or
series of options or underlying securities; (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v) the facilities
of an exchange or a clearing corporation may not at all times be adequate to
handle current trading volume; or (vi) one or more exchanges could, for economic
or other reasons, decide or be compelled at some future date to discontinue the
trading of options (or particular class or series of options) in which event the
secondary market on that exchange (or in the class or series of options) would
cease to exist, although outstanding options on that exchange which had been
issued by a clearing corporation as a result of trades on that exchange would
continue to be exercisable in accordance with their terms. There is no assurance
that higher than anticipated trading activity or other unforeseen events might
not, at a particular time, render certain of the facilities of any of the
clearing corporations inadequate and thereby result in the institution by an
exchange of special procedures which may interfere with the timely execution of
customers' orders. However, the OCC, based on forecasts provided by the U.S.
exchanges, believes that its facilities are adequate to handle the volume of
reasonably anticipated options transactions, and such exchanges have advised
such clearing corporation that they believe their facilities will also be
adequate to handle reasonably anticipated volume.
In addition, options on securities may be traded over-the-counter ("OTC")
through financial institutions dealing in such options as well as the underlying
instruments. OTC options are purchased from or sold (written) to dealers or
financial institu tions which have entered into direct agreements with the
Company on behalf of a Fund. With OTC options, such variables as expiration
date, exercise price and premium will be agreed upon between the Fund and the
transacting dealer, without the intermediation of a third party such as the OCC.
<PAGE>
If the transacting dealer fails to make or take delivery of the securities
underlying an option it has written, in accordance with the terms of that option
as written, the Fund would lose the premium paid for the option as well as any
anticipated benefit of the transaction. The Fund will engage in OTC option
transactions only with primary U.S. government securities dealers recognized by
the Federal Reserve Bank of New York.
Futures Contracts
A futures contract is a bilateral agreement providing for the purchase and
sale of a specified type and amount of a financial instrument or foreign
currency, or for the making and acceptance of a cash settlement, at a stated
time in the future, for a fixed price. By its terms, a futures contract provides
for a specified settlement date on which, in the case of the majority of
interest rate and foreign currency futures contracts, the fixed income
securities or currency underlying the contract are delivered by the seller and
paid for by the purchaser, or on which, in the case of stock index futures
contracts and certain interest rate and foreign currency futures contracts, the
difference between the price at which the contract was entered into and the
contract's closing value is settled between the purchaser and seller in cash.
Futures Contracts differ from options in that they are bilateral agreements,
with both the purchaser and the seller equally obligated to complete the
transaction. In addition, futures contracts call for settlement only on the
expiration date, and cannot be "exercised" at any other time during their term.
The purchase or sale of a futures contract also differs from the purchase
or sale of a security or the purchase of an option in that no purchase price is
paid or received. Instead, an amount of cash or cash equivalents, which varies
but may be as low as 5% or less of the value of the contract, must be deposited
with the broker as "initial margin." Subsequent payments to and from the broker,
referred to as "variation margin," are made on a daily basis as the value of the
index or instrument underlying the futures contract fluctuates, making positions
in the futures contract more or less valuable, a process known as "marking to
market."
A futures contract may be purchased or sold only on an exchange, known as
a "contract market," designated by the Commodity Futures Trading Commission for
the trading of such contract, and only through a registered futures commission
merchant which is a member of such contract market. A commission must be paid on
each completed purchase and sale transaction. The contract market clearing house
guarantees the performance of each party to a futures contract, by in effect
taking the opposite side of such contract. At any time prior to the expiration
of a futures contract, a trader may elect to close out its position by taking an
opposite position on the contract market on which the position was entered into,
subject to the availability of a secondary market, which will operate to
terminate the initial position. At that time, a final determination of variation
margin is made and any loss experienced by the trader is required to be paid to
the contract market clearing house while any profit due to the trader must be
delivered to it.
<PAGE>
Interest rate futures contracts currently are traded on a variety of fixed
income securities, including long-term U.S. Treasury bonds, Treasury notes,
Government National Mortgage Association modified pass-through mortgage-backed
securities, U.S. Treasury bills, bank certificates of deposit and commercial
paper. In addition, interest rate futures contracts include contracts on indices
of municipal securities. Foreign currency futures contracts currently are traded
on the British pound, Canadian dollar, Japanese yen, Swiss franc, West German
mark and on Eurodollar deposits.
Options on Futures Contracts
An option on a futures contract provides the holder with the right to
enter into a "long" position in the underlying futures contract, in the case of
a call option, or a "short" position in the underlying futures contract, in the
case of a put option, at a fixed exercise price to a stated expiration date.
Upon exercise of the option by the holder, the contract market clearing house
establishes a corresponding short position for the writer of the option, in the
case of a call option, or a corresponding long position, in the case of a put
option. In the event that an option is exercised, the parties will be subject to
all the risks associated with the trading of futures contracts, such as payment
of variation margin deposits. In addition, the writer of an option on a futures
contract, unlike the holder, is subject to initial and variation margin
requirements on the option position.
A position in an option on a futures contract may be terminated by the
purchaser or seller prior to expiration by effecting a closing purchase or sale
transaction, subject to the availability of a liquid secondary market, which is
the purchase or sale of an option of the same series (i.e., the same exercise
price and expiration date) as the option previously purchased or sold. The
difference between the premiums paid and received represents the trader's profit
or loss on the transaction.
An option, whether based on a futures contract, a stock index or a
security, becomes worthless to the holder when it expires. Upon exercise of an
option, the exchange or contract market clearing house assigns exercise notices
on a random basis to those of its members which have written options of the same
series and with the same expiration date. A brokerage firm receiving such
notices then assigns them on a random basis to those of its customers which have
written options of the same series and expiration date. A writer therefore has
no control over whether an option will be exercised against it, nor over the
time of such exercise.
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Page in
Prospectus
(1) Financial statements and schedules
included in Prospectus (Part A):
None.
Page in
Statement
of Addi-
tional In-
formation
(2) The following audited financial
statements of the Company and the
notes thereto with respect to the
Dynamics Fund for the fiscal year
ended April 30, 1997, and the report
of Price Waterhouse LLP with respect
to such financial statements, are
incorporated in the Statement of
Additional Information by reference
from the Company's Annual Report to
Shareholders for the fiscal year
ended April 30, 1997; Statement of
Investment Securities as of April
30, 1997; Statement of Assets and
Liabilities as of April 30, 1997;
Statement of Operations for the year
ended April 30, 1997; Statement of
Changes in Net Assets for each of
the two years in the period ended
April 30, 1997; and Financial
Highlights for each of the five
years in the period ended April 30,
1997.
(3) Financial statements and schedules
included in Part C:
None: Schedules have been
omitted as all information has
been presented in the financial
statements.
<PAGE>
(b) Exhibits:
(1) Articles of Incorporation (Charter)
filed April 2, ^ 1993.(2)
(a) Articles of Amendment to
Articles of Incorporation filed
June 26, ^ 1997.(3)
(b) Articles Supplementary to
Articles of Incorporation filed May 18, 1998.
(c) Form of Articles Supplementary
to Articles of Incorporation.
(2) Bylaws, as amended July 21, ^ 1993.(2)
(3) Not applicable.
(4) Not required to be filed on EDGAR.
(5) (a) Investment Advisory Agreement
between Registrant and INVESCO Funds
Group, Inc. dated February 28, ^
1997.(3)
(i) ^ Amendment to Investment
Advisory Agreement, dated ^
June 30, 1998.
(ii) Amendment to Investment
Advisory Agreement dated ----------, 1998.
(6) Distribution Agreement between
Registrant and INVESCO Funds Group,
Inc. dated February 28, ^ 1997.(3)
(b) Distribution Agreement, dated
September 30, 1997, between
Registrant and INVESCO Distributors,
^ Inc.(4)
(7) Defined Benefit Deferred
Compensation Plan for Non-Interested
Directors and ^ Trustees.
(8) Custody Agreement between Registrant
and State Street Bank and Trust
Company dated July 1, ^ 1993.(1)
(a) Amendment to Custody Agreement
dated October 25, ^ 1995.(3)
<PAGE>
(b) Data Access ^ Addendum.(4)
(c) Additional Fund Letter dated
April 15, ^ 1998.(4)
(d) Form of Additional Fund Letter
dated -----------, 1998.
(9) (a) Transfer Agency Agreement
between Registrant and INVESCO
Funds Group, Inc. dated
February 28, ^ 1997.(3)
(b) Administrative Services Agreement
between Registrant and INVESCO Funds Group, Inc.,
dated February 28, ^ 1997.(3)
(10) Opinion and consent of counsel as
to the legality of the
securities being registered,
indicating whether they
will, when sold, be legally issued,
fully paid and non-^assessable.(4)
(11) Consent of Independent Accountants.
(12) Not applicable.
(13) Not applicable.
(14) Copies of model plans used in the
establishment of retirement plans as
follows:
(a) Non-standardized Profit Sharing
Plan;
(b) Non-standardized Money Purchase
Pension Plan;
(c) Standardized Profit Sharing
Plan Adoption Agreement;
(d) Standardized Money Purchase
Pension Plan;
(e) Non-standardized 401(k) Plan
Adoption Agreement;
(f) Standardized 401(k) Paired
Profit Sharing Plan;
(g) Standardized Simplified Profit
Sharing Plan;
<PAGE>
^(h) Defined Contribution Master
Plan & Trust Agreement^.
(15) Amended Plan and Agreement of
Distribution dated January
1, 1997, adopted pursuant
to Rule 12b-1 under the
Investment Company Act of 1940.(3)
(16) Schedule for computation of
performance ^ data.(3)
(17) Financial Data Schedule for INVESCO
Dynamics Fund.
(18) Not Applicable.
- ---------------
(1)Previously filed on EDGAR with Post-Effective Amendment No. 44 to the
Registration Statement on June 22, 1993 and incorporated herein by reference.
(2)Previously filed on EDGAR with Post-Effective Amendment No. 45 to the
Registration Statement on August 27, 1996 and incorporated herein by reference.
(3)Previously filed on EDGAR with Post-Effective Amendment No. 46 to the
Registration Statement on June 30, 1997 and incorporated herein by reference.
(4)Previously filed on EDGAR with Post-Effective Amendment No. 47 to the
Registration Statement on April 16, 1998 and incorporated herein by reference.
Item 25. Persons Controlled by or Under Common Control with
Registrant
No person is presently controlled by or under common control with
Registrant.
<PAGE>
Item 26. Number of Holders of Securities
Title of Class Number of Record
--------------
Common Stock Holders as of
^ June 30, 1998
----------------
Dynamics Fund ^ 48,065
Growth & Income Fund 83
[Aggressive Growth] Fund 0
Item 27.Indemnification
Indemnification provisions for officers and directors of Registrant are
set forth in Article VII, Section 2 of the Articles of Incorporation, and are
hereby incorporated by reference. See Item 24(b)(1) above. Under these Articles,
officers and directors will be indemnified to the fullest extent permitted to
directors by the Maryland General Corporation Law, subject only to such
limitations as may be required by the Investment Company Act of 1940, and the
rules thereunder. Under the Investment Company Act of 1940, Fund directors and
officers cannot be protected against liability to the Company or its
shareholders to which they would be subject because of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties of their office. The
Company also intends to maintain liability insurance policies covering its
directors and officers.
Item 28. Business and Other Connections of Investment Adviser
See ^ "The Company and Its Management^" in the Prospectus and Statement
of Additional Information for information regarding the business of the
investment adviser^, IFG.
Following are the names and principal occupations of each director and
officer of the investment adviser, IFG. Certain of these persons hold positions
with IDI, a subsidiary of IFG, and, during the past two fiscal years, have held
positions with INVESCO Trust Company, another subsidiary of IFG.
<PAGE>
Position
with Principal Occupation and
Name Adviser Company Affiliation
---- --------- ------------------------
Dan J. Hesser Chairman Chairman
and INVESCO Funds Group, Inc.
Director 7800 East Union Avenue
Denver, CO 80237
Mark H. Williamson Officer & President & Chief
Director Executive Officer
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
William J. Galvin, Jr. Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Ronald L. Grooms Officer Senior Vice President &
Treasurer
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Gregory E. Hyde Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Daniel B. Leonard Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Charles P. Mayer Officer & Senior Vice President
Director INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Timothy J. Miller Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Donovan J. (Jerry) Paul Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
<PAGE>
Position
with Principal Occupation and
Name Adviser Company Affiliation
---- -------- ------------------------
Glen A. Payne Officer Senior Vice President,
Secretary & General
Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
John R. Schroer, II Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Ingeborg S. Cosby Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Elroy E. Frye, Jr. Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Linda J. Gieger Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
James S. Grabovac Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Mark D. Greenberg Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Gerard F. Hallaren, Jr. Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Richard R. Hinderlie Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
<PAGE>
Position
with Principal Occupation and
Name Adviser Company Affiliation
---- -------- -------------------------
Thomas M. Hurley Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Patricia F. Johnston Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
James F. Lummanick Officer Vice President &
Assistant General Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Thomas A. Mantone, Jr. Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Trent E. May Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Frederick R. (Fritz) Officer Vice President
Meyer INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Jeffrey G. Morris Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Laura M. Parsons Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Pamela J. Piro Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
<PAGE>
Position
with Principal Occupation and
Name Adviser Company Affiliation
---- -------- ------------------------
Gary L. Rulh Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
John S. Segner Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Terry B. Smith Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Alan I. Watson Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Judy P. Wiese Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Ronald C. Lively Officer Senior Regional Vice
President
INVESCO Funds Group, Inc.
17406 Brown Road
Odessa, FL 33556
Scott E. Stapley Officer Senior Regional Vice
President
INVESCO Funds Group, Inc.
1615 Arch Bay Drive
Newport Beach, CA 92660
David B. McElroy Officer Regional Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Ryland K. Pruett, Jr. Officer Regional Vice President
INVESCO Funds Group, Inc.
2337 Mirow Place
Charlotte, NC 28270
<PAGE>
Position
with Principal Occupation and
Name Adviser Company Affiliation
---- -------- -------------------------
Thomas H. Scanlan Officer Regional Vice President
INVESCO Funds Group, Inc.
12028 Edgepark Court
Potomac, MD 20854
Michael D. Legoski Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Stephen A. Moran Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Donald R. Paddack Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Kent T. Schmeckpeper Office Assistant Vice President
Account Relationship
Manager
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Tane' T. Tyler Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Jeraldine E. Kraus Officer Assistant Secretary
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Robert J. O'Connor Officer Chief Executive Officer
INVESCO Retirement Plan
Services
1201 Peachtree Street, NE
Atlanta, GA 30361
Scott P. Brogan Officer Senior Vice President
INVESCO Retirement Plan
Services
1201 Peachtree Street, NE
Atlanta, GA 30361
<PAGE>
Position
with Principal Occupation and
Name Adviser Company Affiliation
---- -------- ------------------------
Mark A. Cox Officer Senior Vice President
INVESCO Retirement Plan
Services
1201 Peachtree Street, NE
Atlanta, GA 30361
Joseph B. Jennings Officer Senior Vice President
INVESCO Retirement Plan
Services
1201 Peachtree Street, NE
Atlanta, GA 30361
Mark A. Jones Officer Senior Vice President
INVESCO Retirement Plan
Services
1201 Peachtree Street, NE
Atlanta, GA 30361
Barbara L. March Officer Senior Vice President
INVESCO Retirement Plan
Services
1201 Peachtree Street, NE
Atlanta, GA 30361
Robert D. (Toby) Officer Regional Vice President
Cromwell INVESCO Retirement Plan
Services
7800 East Union Avenue
Denver, CO 80237
Leo W. Cullen Officer Regional Vice President
INVESCO Retirement Plan
Services
101 Federal Street
Boston, MA 02110
Douglas P. Dohm Officer Regional Vice President
INVESCO Retirement Plan
Services
1201 Peachtree Street, NE
Atlanta, GA 30361
Rayane S. Clark Officer Vice President
INVESCO Retirement Plan
Services
1201 Peachtree Street, NE
Atlanta, GA 30361
<PAGE>
Position
with Principal Occupation and
Name Adviser Company Affiliation
---- -------- -------------------------
Frederick W. Braley Officer Chief Financial Officer &
Treasurer
INVESCO Retirement Plan
Services
1201 Peachtree Street, NE
Atlanta, GA 30361
Robert E. Starr Officer Secretary & General
Counsel
INVESCO Retirement Plan
Services
1201 Peachtree Street, NE
Atlanta, GA 30361
Item 29. Principal Underwriters
INVESCO Diversified Funds, Inc.
INVESCO Emerging Opportunity Funds, Inc.
INVESCO Growth Fund, Inc.
INVESCO Income Funds, Inc.
INVESCO Industrial Income Fund, Inc.
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Multiple Asset Funds, Inc.
INVESCO Specialty Funds, Inc.
INVESCO Strategic Portfolios, Inc.
INVESCO Tax-Free Income Funds, Inc.
INVESCO Value Trust
INVESCO Variable Investment Funds, Inc.
<PAGE>
(b)
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ------------------ ------------- -------------
William J. Galvin, Jr. Senior Vice Assistant
7800 E. Union Avenue President Secretary
Denver, CO 80237
Ronald L. Grooms Senior Vice Treasurer,
7800 E. Union Avenue President & Chief Fin'l
Denver, CO 80237 Treasurer Officer, and
Chief Acctg.
Off.
Hubert L. Harris, Jr. Director
1315 Peachtree St., N.E.
Atlanta, GA 30309
Dan J. Hesser Chairman of President,
7800 E. Union Avenue the Board & CEO & Dir.
Denver, CO 80237 Director
Gregory E. Hyde Vice President
7800 E. Union Avenue
Denver, CO 80237
Charles P. Mayer Director
7800 E. Union Avenue
Denver, CO 80237
Glen A. Payne Senior Vice Secretary
7800 E. Union Avenue President,
Denver, CO 80237 Secretary &
General Counsel
Judy P. Wiese Vice President Asst. Treas.
7800 E. Union Avenue
Denver, CO 80237
Mark H. Williamson President,
7800 E. Union Avenue Chief Executive
Denver, CO 80237 Officer &
Director
<PAGE>
(c) Not applicable.
Item 30. Location of Accounts and Records
Dan J. Hesser
7800 E. Union Avenue
Denver, CO 80237
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) The Registrant shall furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
(b) ^ If required, the Registrant hereby undertakes to file a
post-effective amendment containing reasonably current
financial statements for INVESCO ^ [Aggressive Growth] Fund
withing four to six months from the effective date of
Post-Effective Amendment No. 48.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant has duly caused this
post-effective amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Denver, County of Denver, and State of
Colorado, on the ^ 10th day of ^ July, 1998.
Attest: INVESCO Capital Appreciation
Funds, Inc.
/s/ Glen A. Payne /s/ Dan J. Hesser
- ------------------------------------ ------------------------------------
Glen A. Payne, Secretary Dan J. Hesser, President
Pursuant to the requirements of the Securities Act of 1933, this
post-effective amendment to Registrant's Registration Statement has been signed
by the following persons in the capacities indicated on this ^ 10th day of ^
July, 1998.
/s/ Dan J. Hesser /s/ Lawrence H. Budner
- ------------------------------------ ------------------------------------
Dan J. Hesser, President & Lawrence H. Budner, Director
Director, (Chief Executive Officer)
/s/ Ronald L. Grooms /s/ Daniel D. Chabris
- ------------------------------------ ------------------------------------
Ronald L. Grooms, Treasurer Daniel D. Chabris, Director
(Chief Financial and Accounting
Officer)
/s/ Victor L. Andrews /s/ Fred A. Deering
- ------------------------------------ ------------------------------------
Victor L. Andrews, Director Fred A. Deering, Director
/s/ Bob R. Baker /s/ Larry Soll
- ------------------------------------ ------------------------------------
Bob R. Baker, Director Larry Soll, Director
/s/ Hubert L. Harris, Jr. /s/ Kenneth T. King
- ------------------------------------ ------------------------------------
Hubert L. Harris, Jr., Director Kenneth T. King, Director
<PAGE>
/s/ Charles W. Brady /s/ John W. McIntyre
- ------------------------------------ ------------------------------------
Charles W. Brady, Director John W. McIntyre, Director
/s/ Wendy L. Gramm
- ------------------------------------
Wendy L. Gramm, Director
/s/ Glen A. Payne
By*--------------------------------- By*---------------------------------
Edward F. O'Keefe Glen A. Payne
Attorney in Fact Attorney in Fact
* Original Powers of Attorney authorizing Edward F. O'Keefe and Glen A. Payne,
and each of them, to execute this post-effective amendment to the Registration
Statement of the Registrant on behalf of the above-named directors and officers
of the Registrant (with the exception of Drs. Gramm and Soll) have been filed
with the Securities and Exchange Commission on June 15, 1993, June 22, 1994,
June 22, 1995 and June 30, 1997, respectively.
<PAGE>
Exhibit Index
Page in
Exhibit Number Registration Statement
- -------------- ----------------------
^ 1(b) 109
1(c) 111
5(a)(i) 113
5(a)(ii) 114
7 115
8(d) 122
11 123
14(a) 124
14(b) 162
14(c) 198
14(d) 231
14(e) 261
14(f) 315
14(g) 358
14(h) 367
17 470
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
INVESCO CAPITAL APPRECIATION FUNDS, INC.
INVESCO Capital Appreciation Funds, Inc., a corporation organized and
existing under the General Corporation Law of the State of Maryland, registered
as an open-end investment company under the Investment Company Act of 1940, and
having its registered office in Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: By a unanimous written consent resolution dated May 11, 1998, the
board of directors of the Corporation voted to allocate an additional one
hundred million (100,000,000) shares of common stock of the Corporation to one
of the currently existing funds known as INVESCO Dynamics Fund. INVESCO Dynamics
Fund is currently allocated one hundred million (100,000,000) shares of common
stock of the Corporation. After this reallocation, the INVESCO Dynamics Fund
shall have two hundred million (200,000,000) authorized shares. The aggregate
number of shares of stock of all series which the Corporation shall have the
authority to issue before and after this reallocation is three hundred million
(300,000,000) shares of Common Stock with a par value of $0.01 per share.
SECOND: Shares of each class have been duly classified by the board of
directors pursuant to authority and power contained in the Articles of
Incorporation of the Corporation.
THIRD: A description of the common stock so classified, including the
powers, preferences, participating, voting or other special rights and
qualifications, restrictions and limitations thereof, is as outlined in the
Articles of Incorporation of the Corporation.
FOURTH: The Corporation is registered as an open-end management investment
company under the Investment Company Act of 1940.
FIFTH: The undersigned, the President of the Corporation, who is executing
on behalf of the Corporation the foregoing Articles Supplementary, of which this
paragraph is a part, hereby acknowledges, in the name of and on behalf of the
Corporation, that the foregoing Articles Supplementary are the corporate act of
the Corporation and further verifies under oath that, to the best of his
knowledge, information and belief, the matters and facts set forth herein are
true in all material respects, under the penalties of perjury.
IN WITNESS WHEREOF, INVESCO Capital Appreciation Funds, Inc. has caused
these Articles Supplementary to be signed in its name and on its behalf by its
President and witnessed by its Assistant Secretary on the 11th day of May, 1998.
These Articles Supplementary shall be effective upon acceptance by the
Maryland State Department of Assessments and Taxation.
INVESCO CAPITAL APPRECIATION FUNDS, INC.
By: /s/ Dan J. Hesser
-----------------------------------
Dan J. Hesser, President
ATTEST:
By: /s/ William J. Galvin, Jr.
------------------------------
William J. Galvin, Jr.,
Assistant Secretary
<PAGE>
I, Beverly J. Stout, a notary public in and for the State of Colorado, do
hereby certify that Dan J. Hesser, personally known to me to be the person whose
name is subscribed to the foregoing Articles Supplementary, appeared before me
this date in person and acknowledged that he signed, sealed and delivered said
instrument as his full and voluntary act and deed for the uses and purposes
therein set forth.
Given my hand and official seal this 11th day of May, 1998.
/s/ Beverly J. Stout
------------------------------------
Notary Public
FORM OF
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
INVESCO CAPITAL APPRECIATION FUNDS, INC.
INVESCO Capital Appreciation Funds, Inc., a corporation organized and
existing under the General Corporation Law of the State of Maryland, registered
as an open-end investment company under the Investment Company Act of 1940, and
having its registered office in Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: By unanimous approval, at a meeting held on _____________, the
board of directors of the Corporation has created an additional class of shares
of common stock of the Corporation designated as the INVESCO Aggressive Growth
Fund, and has authorized 100,000,000 additional shares of stock to be allocated
to INVESCO Aggressive Growth Fund. The aggregate number of shares of stock of
all series which the Corporation shall have the authority to issue after
creation of a new series of Common Stock, is four hundred million (400,000,000)
shares of Common Stock. The newly designated series of common stock designated
as INVESCO Aggressive Growth Fund has a par value of $.01 per share.
SECOND: Shares of each class have been duly classified by the board of
directors pursuant to authority and power contained in the Articles of
Incorporation of the Corporation.
THIRD: A description of the common stock so classified, including the
powers, preferences, participating, voting or other special rights and
qualifications, restrictions and limitations thereof, is as outlined in the
Articles of Incorporation of the Corporation.
FOURTH: The Corporation is registered as an open-end management investment
company under the Investment Company Act of 1940.
FIFTH: The undersigned, the president of the Corporation, who is executing
on behalf of the Corporation the foregoing Articles Supplementary, of which this
paragraph is a part, hereby acknowledges, in the name of and on behalf of the
Corporation, that the foregoing Articles Supplementary are the corporate act of
the Corporation and further verifies under oath that, to the best of his
knowledge, information and belief, the matters and facts set forth herein are
true in all material respects, under the penalties of perjury.
IN WITNESS WHEREOF, INVESCO Capital Appreciation Funds, Inc. has caused
these Articles Supplementary to be signed in its name and on its behalf by its
president and witnessed by its secretary on the _____ day of ___________, 1998.
<PAGE>
These Articles Supplementary shall be effective upon acceptance by the
Maryland State Department of Assessments and Taxation.
INVESCO CAPITAL APPRECIATION FUNDS, INC.
By: ___________________________________
Dan J. Hesser, President
ATTEST:
By: ________________________
Glen A. Payne, Secretary
I, Ruth Christensen, a notary public in and for the City and County of
Denver, and State of Colorado, do hereby certify that Dan J. Hesser, personally
known to me to be the person whose name is subscribed to the foregoing Articles
Supplementary, appeared before me this date in person and acknowledged that he
signed, sealed and delivered said instrument as his full and voluntary act and
deed for the uses and purposes therein set forth.
Given my hand and official seal this _____ day of ____________, 1998.
------------------------------------
Notary Public
My Commission Expires: _________________
Amendment to Investment Advisory Agreement
This is an Amendment to the Investment Advisory Agreement made and entered
into between INVESCO Capital Appreciation Funds, Inc., a Maryland corporation
(the "Company") and INVESCO Funds Group, Inc., a Delaware corporation ("IFG"),
as of the 28th day of February, 1997 (the "Agreement").
WHEREAS, the Company desires to have IFG perform investment advisory,
statistical, research, and certain administrative and clerical services with
respect to management of the assets of the Company allocable to the INVESCO
Growth & Income Fund, and IFG is willing and able to perform such services on
the terms and conditions set forth in the Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in the Agreement, it is agreed that the terms and conditions of the
Agreement shall be applicable to the Company's assets allocable to the INVESCO
Growth & Income Fund, to the same extent as if the INVESCO Growth & Income Fund
were to be added to the definition of "Funds" as utilized in the Agreement, and
that INVESCO Growth & Income Fund shall pay IFG a fee for services provided to
them by IFG under the Agreement as follows: 0.60% on the first $350 million of
INVESCO Growth & Income Fund's average net assets as so determined, 0.55% of
INVESCO Growth & Income Fund's average net asset value for net assets in excess
of $350 million but not more than $700 million, and 0.50% of INVESCO Growth &
Income Fund's average net assets in excess of $700 million.
IN WITNESS WHEREOF, the parties have executed this Agreement on this 30th
day of June, 1998.
INVESCO CAPITAL APPRECIATION
FUNDS, INC.
By:/s/ Dan J. Hesser
--------------------------
Dan J. Hesser,
President
ATTEST:
/s/ Glen A. Payne
- ---------------------------
Glen A. Payne, Secretary
INVESCO FUNDS GROUP, INC.
By:/s/ Ronald L. Grooms
----------------------------
Ronald L. Grooms,
Senior Vice President
ATTEST:
/s/ Glen A. Payne
- ---------------------------
Glen A. Payne, Secretary
Form of
Amendment to Investment Advisory Agreement
This is an Amendment to the Investment Advisory Agreement made and entered
into between INVESCO Capital Appreciation Funds, Inc., a Maryland corporation
(the "Company") and INVESCO Funds Group, Inc., a Delaware corporation ("IFG"),
as of the 28th day of February, 1997 (the "Agreement").
WHEREAS, the Company desires to have IFG perform investment advisory,
statistical, research, and certain administrative and clerical services with
respect to management of the assets of the Company allocable to the INVESCO
Aggressive Growth Fund, and IFG is willing and able to perform such services on
the terms and conditions set forth in the Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in the Agreement, it is agreed that the terms and conditions of the
Agreement shall be applicable to the Company's assets allocable to the INVESCO
Aggressive Growth Fund, to the same extent as if the INVESCO Aggressive Growth
Fund were to be added to the definition of "Funds" as utilized in the Agreement,
and that INVESCO Aggressive Growth Fund shall pay IFG a fee for services
provided to them by IFG under the Agreement as follows: 0.75% on the INVESCO
Growth & Income Fund's average net assets.
IN WITNESS WHEREOF, the parties have executed this Agreement on this _____
day of __________, 1998.
INVESCO CAPITAL APPRECIATION
FUNDS, INC.
By:_______________________________
Dan J. Hesser,
President
ATTEST:
- ---------------------------
Glen A. Payne, Secretary
INVESCO FUNDS GROUP, INC.
By:________________________________
Ronald L. Grooms,
Senior Vice President
ATTEST:
- ---------------------------
Glen A. Payne, Secretary
FORM OF
DEFINED BENEFIT DEFERRED COMPENSATION PLAN
FOR NON-INTERESTED DIRECTORS AND TRUSTEES
The registered, open-end management investment companies referred to on
Schedule A as the Schedule may hereafter be revised by the addition and deletion
of investment companies (the "Funds") have adopted this Defined Benefit Deferred
Compensation Plan ("Plan") for the benefit of those directors and trustees of
the Funds who are not interested directors or trustees thereof as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended ("Independent
Directors").
1. Eligibility
Each Independent Director who has served as such ("Eligible Service") on
the boards of any of the Funds and their predecessor and successor entities, if
any, or as an Independent Director of the now-defunct investment management
company known as FG Series for an aggregate of at least five years at the time
of his Service Termination Date (as defined in paragraph 2) will be entitled to
receive benefits under the Plan. An Independent Director's period of Eligible
Service commences on the date of election to the board of directors or trustees
of any one or more of the Funds ("Board"). Hereafter, references in this Plan to
Independent Directors shall be deemed to include only those Directors who have
met the Eligible Service requirement for Plan participation.
2. Service Termination and Service Termination Date
a. Service Termination. Service Termination means termination of service
(other than by disability or death) of an Independent Director which results
from the Director's having reached his Service Termination Date.
b. Service Termination Date. An Independent Director's Service Termination
Date is normally the last day of the calendar quarter in which such Director's
seventy-second birthday occurs. A majority of the Board of a Fund may annually
extend a Director's Service Termination Date for a maximum period of three
years, through the date not later than the last day of the calendar quarter in
which such Director's seventy-fifth birthday occurs.
As used in this Plan unless otherwise stipulated, Service Termination Date
shall mean an Independent Director's normal
<PAGE>
Service Termination Date, or the Director's extended Service Termination Date,
whichever may be applicable to the Independent Director.
3. Defined Payments and Benefit
a. Payments. If an Independent Director's Service Termination Date occurs
on a date not later than the last day of the calendar quarter in which such
Director's seventy-fourth birthday occurs, the Independent Director will receive
four quarterly payments during the first twelve months subsequent to his Service
Termination Date (the "First Year Retirement Payments"), with each payment to be
equal to 50 percent of the annual basic retainer and annualized board meeting
fees payable by each Fund to the Independent Director on his Service Termination
Date (excluding any fees relating to chairing committees).
b. Benefit. Commencing with the first anniversary of the Service
Termination Date of any Independent Director who has received the First Year
Retirement Payments, and commencing as of the Service Termination Date of an
Independent Director whose Service Termination Date is subsequent to the date of
the last day of the calendar quarter in which such Director's seventy-fourth
birthday occurred, the Independent Director will receive, for the remainder of
his life, a benefit (the "Benefit"), payable quarterly, with each quarterly
payment to be equal to 50 percent of the annual basic retainer and annualized
board meeting fees payable by each Fund to the Independent Director on his
Service Termination Date (excluding any fees relating to chairing committees).
c. Death Provisions. If an Independent Director's service as a Director is
terminated because of his death subsequent to the last day of the calendar
quarter in which such Director's seventy-second birthday occurred and prior to
the last day of the calendar quarter in which such Director's seventy-fourth
birthday occurs, the designated beneficiary of the Independent Director shall
receive the First Year Retirement Payments and shall, commencing with the
quarter following the quarter in which the last First Year Retirement Payment is
made, receive the Benefit for a period of ten years, with quarterly payments to
be made to the designated beneficiary.
If an Independent Director's service as a Director is terminated because of
his death prior to the last day of the calendar quarter in which such Director's
seventy-second birthday
<PAGE>
occurs or subsequent to the last day of the calendar quarter in which such
Director's seventy-fourth birthday occurred, the designated beneficiary of the
Independent Director shall receive the Benefit for a period of ten years, with
quarterly payments to be made to the designated beneficiary commencing in the
first quarter following the Director's death.
d. Disability Provisions. If an Independent Director's service as a
Director is terminated because of his disability subsequent to the last day of
the calendar quarter in which such Director's seventy-second birthday occurred
and prior to the last day of the calendar quarter in which such Director's
seventy-fourth birthday occurs, the Independent Director shall receive the First
Year Retirement Payments and shall, commencing with the quarter following the
quarter in which the last First Year Retirement Payment is made, receive the
Benefit for the remainder of his life, with quarterly payments to be made to the
disabled Independent Director. If the disabled Independent Director should die
before the First Year Retirement Payments are completed and before forty
quarterly Benefit payments are made, such payments will continue to be made to
the Independent Director's designated beneficiary until the aggregate of the
First Year Retirement Payments and forty quarterly Benefit payments have been
made to the disabled Independent Director and the Director's designated
beneficiary.
If an Independent Director's service as a Director is terminated because of
his disability prior to the last day of the calendar quarter in which such
Director's seventy-second birthday occurs or subsequent to the last day of the
calendar quarter in which such Director's seventy-fourth birthday occurred, the
Independent Director shall receive the Benefit for the remainder of his life,
with quarterly payments to be made to the disabled Independent Director
commencing in the first quarter following the Director's termination for
disability. If the disabled Independent Director should die before forty
quarterly payments are made, payments will continue to be made to the
Independent Director's designated beneficiary until the aggregate of forty
quarterly payments has been made to the disabled Independent Director and the
Director's designated beneficiary.
e. Death of Independent Director and Beneficiary. If the Independent
Director and his designated beneficiary should die before the First Year
Retirement Payments and/or a total of forty quarterly Benefit payments are made,
the remaining value of the Independent Director's First Year Retirement Payments
<PAGE>
and/or Benefit shall be determined as of the date of the death of the
Independent Director's designated beneficiary and shall be paid to the estate of
the designated beneficiary in one lump sum or in periodic payments, with the
determinations with respect to the value of the First Year Retirement Payments
and/or Benefit and the method and frequency of payment to be made by the
Committee (as defined in paragraph 8.a.) in its sole discretion.
4. Designated Beneficiary
The beneficiary referred to in paragraph 3 may be designated or changed by
the Independent Director without the consent of any prior beneficiary on a form
provided by the Committee (as defined in paragraph 8.a.) and delivered to the
Committee before the Independent Director's death. If no such beneficiary shall
have been designated, or if no designated beneficiary shall survive the
Independent Director, the value or remaining value of the Independent Director's
First Year Retirement Payments and/or Benefit shall be determined as of the date
of the death of the Independent Director by the Committee and shall be paid as
promptly as possible in one lump sum to the Independent Director's estate.
5. Disability
An Independent Director shall be deemed to have become disabled for the
purposes of paragraph 3 if the Committee shall find on the basis of medical
evidence satisfactory to it that the Independent Director is disabled, mentally
or physically, as a result of an accident or illness, so as to be prevented from
performing each of the duties which are incumbent upon an Independent Director
in fulfilling his responsibilities as such.
6. Time of Payment
The First Year Retirement Payments and/or the Benefit for each year will be
paid in quarterly installments that are as nearly equal as possible.
7. Payment of First Year Retirement Payments and/or Benefit: Allocation of
Costs
Each Fund is responsible for the payment of the amount of the First Year
Retirement Payments and/or Benefit applicable to the Fund, as well as its
proportionate share of all expenses of administration of the Plan, including
<PAGE>
without limitation all accounting and legal fees and expenses and fees and
expenses of any Actuary. The obligations of each Fund to pay such First Year
Retirement Payments and/or Benefit and expenses will not be secured or funded in
any manner, and such obligations will not have any preference over the lawful
claims of each Fund's creditors and shareholders. To the extent that the First
Year Retirement Payments and/or Benefit is paid by more than one Fund, such
costs and expenses will be allocated among such Funds in a manner that is
determined by the Committee to be fair and equitable under the circumstances. To
the extent that one or more of such Funds consist of one or more separate
portfolios, such costs and expenses allocated to any such Fund will thereafter
be allocated among such portfolios by the Board of the Fund in a manner that is
determined by such Board to be fair and equitable under the circumstances.
8. Administration
a. The Committee. Any question involving entitlement to payments under or
the administration of the Plan will be referred to a four-person committee (the
"Committee") composed of three Independent Directors designated by all of the
Independent Directors of the Funds and one director of the Funds who is not an
Independent Director, designated by the non-Independent Directors. Except as
otherwise provided herein, the Committee will make all interpretations and
determinations necessary or desirable for the Plan's administration, and such
interpretations and determinations will be final and conclusive. Committee
members will be elected annually.
b. Powers of the Committee. The Committee will represent and act on behalf
of the Funds in respect of the Plan and, subject to the other provisions of the
Plan, the Committee may adopt, amend or repeal bylaws or other regulations
relating to the administration of the Plan, the conduct of the Committee's
affairs, its rights or powers, or the rights or powers of its members. The
Committee will report to the Independent Directors and to the Boards of the
Funds from time to time on its activities in respect of the Plan. The Committee
or persons designated by it will cause such records to be kept as may be
necessary for the administration of the Plan.
9. Miscellaneous Provisions
a. Rights Not Assignable. Other than as is specifically provided in
paragraph 3, the right to receive any payment under the Plan is not transferable
<PAGE>
or assignable, and nothing in the Plan shall create any benefit, cause of
action, right of sale, transfer, assignment, pledge, encumbrance, or other such
right in any heirs or the estate of any Independent Director.
b. Amendment, etc. The Committee, with the concurrence of the Board of any
Fund, may as to the specific Fund at any time amend or terminate the Plan or
waive any provision of the Plan; provided, however, that subject to the
limitations imposed by paragraph 7, no amendment, termination or waiver will
impair the rights of an Independent Director to receive the payments which would
have been made to such Independent Director had there been no such amendment,
termination, or waiver.
c. No Right to Reelection. Nothing in the Plan will create any obligation
on the part of the Board of any Fund to nominate any Independent Director for
reelection.
d. Consulting. Subsequent to his Service Termination Date, an Independent
Director may render such services for any Fund, for such compensation, as may be
agreed upon from time to time by such Independent Director and the Board of the
Fund which desires to procure such services.
e. Effectiveness. The Plan will be effective for all Independent Directors
who have Service Termination Dates occurring on and after October 20, 1993.
Periods of Eligible Service shall include periods commencing prior and
subsequent to such date. Upon its adoption by the Board of a Fund, the Plan will
become effective as to that Fund on the date when the Committee determines that
any regulatory approval or advice that may be necessary or appropriate in
connection with the Plan have been obtained.
Adopted October 20, 1993.
Amended October 19, 1994.
Amended May 1, 1996, effective July 1, 1996.
Amended May 14, 1998, effective July 14, 1998.
<PAGE>
SCHEDULE A
TO
DEFINED BENEFIT DEFERRED COMPENSATION PLAN
FOR NON-INTERESTED DIRECTORS AND TRUSTEES
INVESCO Diversified Funds, Inc.
INVESCO Capital Appreciation Funds, Inc.
INVESCO Emerging Opportunity Funds, Inc.
INVESCO Growth Fund, Inc.
INVESCO Income Funds, Inc.
INVESCO Industrial Income Fund, Inc.
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Multiple Asset Funds, Inc.
INVESCO Specialty Funds, Inc.
INVESCO Strategic Portfolios, Inc.
INVESCO Tax-Free Income Funds, Inc.
INVESCO Value Trust
INVESCO Variable Investment Funds, Inc.
INVESCO Treasurer's Series Trust
INVESCO FUNDS INVESCO FUNDS GROUP, INC.
7800 East Union Avenue
Denver, Colorado 80237
Post Office Box 173706
Denver, Colorado 80217-3706
Telephone: 303-930-6300
___________________, 1998
Mr. Christopher J. Meyers
Assistant Vice President
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, Massachusetts 02171
Re: INVESCO Capital Appreciation Funds, Inc.
Dear Chris:
This is to advise you that INVESCO Capital Appreciation Funds, Inc. (the
"Company") has established a new series of shares to be known as INVESCO
Aggressive Growth Fund. In accordance with the Additional Funds provision in
Paragraph 17 of the Custodian Contract dated October 20, 1993 between the
Company and State Street Bank and Trust Company, the Company hereby requests
that you act as Custodian for the new series under the terms of the Contract.
Please indicate your acceptance of the foregoing by executing two copies of this
Letter Agreement, returning one to the Company and retaining one copy for your
records.
Sincerely,
Glen A. Payne
Secretary
Agreed to this _____ day of __________, 1998.
STATE STREET BANK AND TRUST COMPANY
By: _______________________________________
Vice President
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Statement of
Additional Information constituting parts of this Post-Effective Amendment No.
48 to the registration statement on Form N-1A (the "Registration Statement") of
our report dated May 30, 1997, relating to the financial statements and
financial highlights appearing in the April 30, 1997 Annual Report to
Shareholders of the INVESCO Dynamics Fund, Inc., (now known as INVESCO Capital
Appreciation Funds, Inc.) which is also incorporated by reference into the
Registration Statement. We also consent to the references to us under the
headings "Independent Accountants" and "Financial Statements" in the Statement
of Additional Information.
/s/ Price Waterhouse LLP
- -------------------------
Price Waterhouse LLP
Denver, Colorado
July 6, 1998
Adoption Agreement #001
Letter Serial No. D346278a
Nonstandardized Profit Sharing Plan
Nonstandardized Profit Sharing Plan Features
- - Flexible Employer Contributions
- - Ability to exclude classifications of employees
- - May enforce last day requirement for employer contribution
- - Allows integrated contribution formula
Provided by:
The Financial Funds
Managed & Distributed by
INVESCO Funds Group, Inc.
Custodian:
INVESCO Trust Company
A Subsidiary of INVESCO MIM PLC
<PAGE>
Your Adoption Agreement and Basic Plan Document together constitute the rules
and parameters under which your retirement program will operate. Each section of
the Adoption Agreement requires the employer to make a selection. Whenever
possible (balancing complexity and space constraints) we have provided
instructions to the left of key selections. These instructions are intended to
assist you, the employer, in choosing the optional provisions for your
retirement program. They are not intended to substitute or replace competent
advice from your legal counsel or accountant. If further clarification is
necessary, contact your advisors or INVESCO Trust Company. We recommend that you
obtain the advice of your legal or tax advisor before you sign this Adoption
Agreement.
<PAGE>
ADOPTION AGREEMENT #001
NONSTANDARDIZED PROFIT SHARING PLAN
The undersigned, __________________________ ("Employer"), by executing this
Adoption Agreement, elects to become a participating Employer in the INVESCO
Trust Company Defined Contribution Master Plan (basic plan document #01) by
adopting the accompanying Plan and Trust in full as if the Employer were a
signatory to that Agreement. The employer makes the following elections granted
under the provisions of the Master Plan.
ARTICLE I
DEFINITIONS
1.02 TRUSTEE. The Trustee executing this Adoption Agreement is:
(Choose (a) or (b))
(a) A discretionary Trustee, See Section 10.03[A] of the Plan.
(b) A nondiscretionary Trustee. See Section 10.03[B] of the
Plan. [Note: The Employer may not elect Option (b) if a Custodian
executes the Adoption Agreement.]
1.03 PLAN. The name of the Plan as adopted by the Employer is:
_________________________________________________.
1.07 EMPLOYEE. The following Employees are not eligible to
participate in the Plan: (Choose (a) or at least one of (b)
through (g))
(a) No exclusions.
(b) Collective bargaining employees (as defined in Section 1.07 of the Plan).
[Note: If the Employer excludes union employees from the Plan, the Employer must
be able to provide evidence that retirement benefits were the subject of good
faith bargaining.]
(c) Nonresident aliens who do not receive any earned income (as defined in Code
ss.911(d)(2)) from the Employer which constitutes United States source income
(as defined in Code ss.861(a)(3)).
(d) Commission Salesmen.
(e) Any Employee compensated on a salaried basis.
(f) Any Employee compensated on an hourly basis.
(g) (Specify) ____________________________________________
Leased Employees. Any Leased Employee treated as an Employee
under Section 1.31 of the Plan, is: (Choose (h) or (i)
(h) Not eligible to participate in the Plan.
<PAGE>
(i) Eligible to participate in the Plan, unless excluded by reason of an
exclusion classification elected under this Adoption Agreement Section 1.07.
Related Employers. If any member of the Employer's related group (as defined in
Section 1.30 of the Plan) executes a Participation Agreement to this Adoption
Agreement, such member's Employees are eligible to participate in this Plan,
unless excluded by reason of an exclusion classification elected under this
Adoption Agreement Section 1.07. In addition: (Choose (j) or (k))
(j) No other related group member's Employees are eligible to participate in the
Plan.
(k) The following nonparticipating related group member's Employees are eligible
to participate in the Plan unless excluded by reason of an exclusion
classification elected under this Adoption Agreement Section
1.07:___________________________________________________________________________
________________________________________________________________________________
1.12 COMPENSATION
Treatment of elective contributions. (Choose (a) or (b)
(a) "Compensation" includes elective contributions made by the
Employer on the Employee's behalf.
(b) "Compensation" does not include elective contributions.
Modifications to Compensation definition. (Choose (c) or at least
one of (d) through (j))
(c) No modifications other than as elected under Options (a) or (b).
(d) The Plan excludes Compensation in excess of $___________.
(e) In lieu of the definition in Section 1.12 of the Plan, Compensation means
any earnings reportable as W-2 wages for Federal income tax withholding purposes
subject to any other election under this Adoption Agreement Section 1.12.
(f) The Plan excludes bonuses.
(g) The Plan excludes overtime.
(h) The Plan excludes Commissions.
(i) The Plan excludes Compensation from a related employer (as defined in
Section 1.30 of the Plan) that has not executed a Participation Agreement in
this Plan unless, pursuant to Adoption Agreement Section 1.07, the Employees of
that related employer are eligible to participate in this Plan.
<PAGE>
(j) (Specify) _____________________________________________.
If, for any Plan Year, the Plan uses permitted disparity in the contribution or
allocation formula elected under Article III, any election of Options (f), (g),
(h) or (j) is ineffective for such Plan Year with respect to any Nonhighly
Compensated Employee.
1.17 PLAN YEAR/LIMITATION YEAR.
Plan Year. Plan Year means: (Choose (a) or (b))
(a) The 12 consecutive month period ending every ___________.
(b) (Specify) ___________________________________________
Limitation Year. The Limitation year is: (Choose (C) or (d))
(c) The Plan Year.
(d) The 12 consecutive month period ending every __________.
1.18 EFFECTIVE DATE.
New Plan. The "Effective Date" of the Plan is _______________.
Restated Plan. The restated Effective Date is ______________.
This Plan is a substitution and amendment of an existing
retirement plan(s) originally established __________________.
(Note: See the Effective Date Addendum.)
1.27 HOUR OF SERVICE. The crediting method for Hours of Service
is: (Choose (a) or (b))
(a) The actual method.
(b) The ____________________________ equivalency method, except:
(1) No exceptions.
(2) The actual method applies for purposes of: (Choose at least
one)
(i) Participation under Article II.
(ii) Vesting under Article V.
(iii)Accrual of benefits under Section 3.06.
[Note: On the blank line, insert "daily," "weekly," "semi-monthly
payroll periods" or "monthly.")
1.29 SERVICE FOR PREDECESSOR EMPLOYER. In addition to the
predecessor service the Plan must credit by reason of Section
1.29 of the Plan, the Plan credits Service with the following
<PAGE>
predecessor employer(s): _______________________________________________________
_______________________________________________________________________________.
Service with the designated predecessor employer(s) applies:
(Choose at least one of (a) or (b); (C) is available only in
addition to (a) or (b))
(a) For purposes of participation under Article II.
(b) For purposes of vesting under Article V.
(c) Except the following Service: ____________________________.
[Note: If the Plan does not credit any predecessor service under
this provision, insert "N/A" in the first blank line. The
Employer may attach a schedule to this Adoption Agreement, in the
same format as this Section 1.29, designating additional
predecessor employers and the applicable service crediting
elections.]
1.31 LEASED EMPLOYEES. If a Leased Employee is a Participant in
the Plan and also participates in a Plan maintained by the
leasing organization: (Choose (a) or (b))
(a) The Advisory Committee will determine the Leased Employee's allocation of
Employer contributions under Article III without taking into account the Leased
Employee's allocation, if any, under the leasing organization's plan.
(b) The Advisory Committee will reduce a Leased Employee's allocation of
Employer contributions under this Plan by the Leased Employee's allocation under
the leasing organization's plan, but only to the extent that allocation is
attributable to the Leased Employee's service provided to the Employer. The
leasing organization's plan:
(1) Must be a money purchase plan which would satisfy the definition
under Section 1.31 of a safe harbor plan, irrespective of whether the
safe harbor exception applies.
(2) Must satisfy the features and, if a defined benefit plan, the
method of reduction described in an addendum to this Adoption
Agreement, numbered 1.31.
ARTICLE II
EMPLOYEE PARTICIPANTS
2.01 ELIGIBILITY.
Eligibility conditions. To become a Participant in the Plan, an Employee must
satisfy the following eligibility conditions:
(Choose (a) or (b) or both)
(a) Attainment of age _____________ (Specify age, not exceeding 21).
<PAGE>
(b) Service requirement. (Choose one of (1) through (4))
(1) One Year of Service.
(2) Two Years of Service, without an intervening Break in Service. See
Section 2.03(A) of the Plan.
(3) _____________ months (not exceeding 24) following the Employee's
Employment Commencement Date.
(4) One Hour of Service.
Plan Entry Date. "Plan Entry Date" means the Effective Date and:
(Choose (c), (d) or (e))
(c) Semi-annual Entry Dates. The first day of the Plan Year and the first day of
the seventh month of the Plan Year.
(d) The first day of the Plan Year.
(e) (Specify entry dates) ___________________________________.
Time of Participation. An Employee will become a Participant, unless excluded
under Adoption Agreement Section 1.07, on the Plan Entry Date (if employed on
that date):
(f) immediately following
(g) immediately preceding
(h) nearest __________________________________________ the date the
Employer completes the eligibility conditions described in Options (a) and (b)
of this Adoption Agreement Section 2.01. [Note: The Employer must coordinate the
selection of (f), (g) or (h) with the "Plan Entry Date" selection in (c), (d) or
(e). Unless otherwise excluded under Section 1.07, the Employee must become a
Participant by the earlier of: (1) the first day of the Plan Year beginning
after the date the Employee completes the age and service requirements of Code
ss.410(a); or (2) 6 months after the date the Employee completes those
requirements.]
Dual eligibility. The eligibility conditions of this Section 2.01
apply to: (Choose (I) or (j))
(i) All Employees of the Employer, except: (Choose (1) or (2))
(1) No exceptions.
(2) Employees who are Participants in the Plan as of the Effective
Date.
(j) Solely to an Employee employed by the Employer after ____________. If
<PAGE>
If the Employee was employed by the Employer on or before the specified date,
the Employee will become a Participant: (Choose (1), (2) or (3))
(1) On the latest of the Effective Date, his Employment Commencement
Date or the date he attains age ___________ (not to exceed 21).
(2) Under the eligibility conditions in effect under the Plan prior to
the restated Effective Date. [For restated plans only]
(3) (Specify) _____________________________________.
2.02 YEAR OF SERVICE - PARTICIPATION.
Hours of Service. An Employee must complete: (Choose (a) or (b))
(a) 1,000 Hours of Service
(b) ____________________ Hours of Service
during an eligibility computation period to receive credit
for a Year of Service. [Note: The Hours of Service
requirement may not exceed 1,000.]
Eligibility computation period. After the initial eligibility computation period
described in Section 2.02 of the Plan, the Plan measures the eligibility
computation period as: (Choose (c) or (d))
(c) The 12 consecutive month period beginning with each anniversary
of an Employee's Employment Commencement Date.
(d) The Plan Year, beginning with the Plan Year which includes the
first anniversary of the Employee's Employment Commencement Date.
2.03 BREAK IN SERVICE - PARTICIPATION. The Break in Service rule
described in Section 2.03(B) of the Plan: (Choose (a) or (b))
(a) Does not apply to the Employer's Plan.
(b) Applies to the Employer's Plan.
2.06 ELECTION NOT TO PARTICIPATE. The Plan: (Choose (a) or (b))
(a) Does not permit an eligible Employee or a Participant to elect not to
participate.
(b) Does permit an eligible Employee or a Participant to elect not to
participate in accordance with Section 2.06 and with the following rules:
(Complete (1), (2), (3) and (4))
(1) An election is effective for Plan Year if filed no later than
_________________________.
<PAGE>
(2) An election not to participate must be effective for at least
___________________ Plan Year(s).
(3) Following a re-election to participate, the Employee or
Participant:
(i) May not again elect not to participate for any subsequent
Plan Year.
(ii) May again elect not to participate, but not earlier than
the __________ Plan Year following the Plan Year in which the
re-election first was effective.
(Specify) ____________________________________________ [Insert "N/A" if
no other rules apply].
ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES
3.01 AMOUNT. The amount of the Employer's annual contribution to the Trust will
equal: (Choose (a), (b), (c), (d) or (e))
(a) The amount (or additional amount) the Employer may from time to time
deem advisable.
(b) The amount (or additional amount) the Employer may from time to time
deem advisable, separately determined for each of the following classifications
of Participants: (Choose (1) or (2))
(1) Nonhighly Compensated Employees and Highly Compensated Employees.
(2) (Specify classifications) _________________________________________
_______________________________________________________________________
Under this Option (b), the Advisory Committee will allocate the amount
contributed for each Participant classification in accordance with Adoption
Agreement Section 3.04, as if the Participants in that classification were the
only Participants in the Plan.
(c) _________% of the Compensation of all Participants under the
Plan, determined for the Employer's taxable year for which it
makes the contribution. [Note: The percentage selected may not
exceed 15%.]
(d) _________% of Net Profits but not more than $___________.
(e) This Plan is a frozen Plan effective ____________________. The Employer will
not contribute to the Plan with respect to any period following the stated date.
<PAGE>
Net Profits. The Employer: (Choose (f) or (g))
(f) Need not have Net Profits to make its annual contribution under this Plan.
(g) Must have current or accumulated Net Profits exceeding $____________ to make
the contributions described in Option _______.
The term "Net Profits" means the Employer's net income or profits for any
taxable year determined by the Employer upon the basis of its books of account
in accordance with generally accepted accounting practices consistently applied
without any deductions for Federal and state taxes upon income or for
contributions made by the Employer under this Plan or under any other employee
benefit plan the Employer maintains. If more than one member of a related group
(as defined in Section 1.30) execute this Adoption Agreement, each participating
member separately will determine Net Profits. "Net Profits" include both current
and accumulated Net Profits. The term "Net Profits" specifically excludes ______
_______________________________________________________________________________.
[Note: Enter "N/A" if no exclusions apply.
3.04 CONTRIBUTION ALLOCATION.
Method of Allocation. Subject to any restoration allocation required under
Section 5.04, the Advisory Committee will allocate and credit each annual
Employer contribution (and Participant forfeitures, if any) to the Account of
each Participant who satisfies the conditions of Section 3.06, in accordance
with the allocation method selected under this Section 3.04. If the Employer
elects Option (a)(2) or Option (d), for the first 3% of Compensation allocated
to all Participants, "Compensation" does not include any exclusion of elective
contributions), and the Advisory Committee must take into account the
Participant's Compensation for the entire Plan Year. (Choose an allocation
method under (a), (b), (c) or (d); (e) is mandatory of the Employer elects (b),
(c) or (d); (f) is optional in addition to any other election.)
(a) Nonintegrated Allocation Formula. (Choose (1) or (2))
(1) The Advisory Committee will allocate the annual Employer
contributions (and Participant forfeitures) in the same ratio that each
Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year.
(2) The Advisory Committee will allocate the annual Employer
contributions (and Participant forfeitures) in the same ratio that each
Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year. For purposes of
this Option (2), "Participant" means, in addition to a participant who
<PAGE>
satisfies the requirements of Section 3.06 for the Plan Year, any other
Participant entitled to a top heavy minimum allocation under Section
3.04(B), but such Participant's allocation will not exceed 3% of his
Compensation for the Plan Year.
(b) Two-Tiered Integrated Allocation Formula - Maximum Disparity. First, the
Advisory Committee will allocate the annual Employer contributions (and
Participant forfeitures) in the same ratio that each Participant's Compensation
plus Excess Compensation for the Plan Year bears to the total Compensation plus
Excess Compensation of all Participants for the Plan Year. The allocation under
this paragraph, as a percentage of each Participant's Compensation plus Excess
Compensation, must not exceed the applicable percentage (5.7%, 5.4% or 4.3%)
listed under the Maximum Disparity Table following Option (e).
The Advisory Committee then will allocate any remaining Employer contributions
(and Participant forfeitures) in the same ratio that each Participant's
Compensation for the Plan Year bears to the total Compensation of all
Participants for the Plan Year.
(c) Three-Tiered Integrated Allocation Formula. First, the Advisory Committee
will allocate the annual Employer contributions (and Participant forfeitures) in
the same ratio that each Participant's Compensation for the plan Year bears to
the total Compensation of all Participants for the Plan Year. The allocation
under this paragraph, as a percentage of each Participant's Compensation may not
exceed the applicable percentage (5.7%, 5.4% or 4.3%) listed under the Maximum
Disparity Table following Option (e). Solely for purposes of the allocation in
this first paragraph, "Participant" means, in addition to a Participant who
satisfies the requirements of Section 3.06 for the Plan Year. (Choose (1) or
(2))
(1) No other Participant.
(2) Any other Participant entitled to a top heavy minimum allocation
under Section 3.04(B), but such Participant's allocation under this
Option (c) will not exceed 3% of his Compensation for the Plan Year.
As a second tier allocation, the Advisory Committee will allocate the annual
Employer contributions (and Participant forfeitures) in the same ratio that each
Participant's Excess Compensation for the Plan Year bears to the total Excess
Compensation of all Participants for the Plan Year. The allocation under this
paragraph, as a percentage of each Participant's Excess Compensation, may not
exceed the allocation percentage in the first paragraph.
Finally, the Advisory Committee will allocate any remaining annual Employer
contributions (and Participant forfeitures) in the same ratio that each
Participant's Compensation for the Plan Year bears to the total Compensation of
all Participants for the Plan Year.
<PAGE>
(d) Four-Tiered Integrated Allocation Formula. First, the Advisory Committee
will allocate the annual Employer contributions (and Participant forfeitures) in
the same ratio that each Participant's Compensation for the Plan Year bears to
the total Compensation of all Participants for the Plan Year, but not exceeding
3% of each Participant's Compensation. Solely for purposes of this first tier
allocation, a "Participant" means, in addition to any Participant who satisfies
the requirements of Section 3.06 for the Plan Year, any other Participant
entitled to a top heavy minimum allocation under Section 3.04(B) of the Plan.
As a second tier allocation, the Advisory Committee will allocate the annual
Employer contributions (and Participant forfeitures) in the same ratio that each
Participant's Excess Compensation for the Plan Year bears to the total Excess
Compensation of all Participants for the Plan Year, but not exceeding 3% of each
Participant's Excess Compensation.
As a third tier allocation, the Advisory Committee will allocate the annual
Employer contributions (and Participant forfeitures) in the same ratio that each
Participant's Compensation plus Excess Compensation for the Plan Year bears to
the total Compensation plus Excess Compensation of all Participants for the Plan
Year. The allocation under this paragraph, as a percentage of each Participant's
Compensation plus Excess Compensation, must not exceed the applicable percentage
(2.7%, 2.4% or 1.3%) listed under the Maximum Disparity Table following Option
(e).
The Advisory Committee then will allocate any remaining Employer contributions
(and Participant forfeitures) in the same ratio that each Participant's
Compensation for the Plan Year bears to the total Compensation of all
Participants for the Plan Year.
(e) Excess Compensation. For purposes of Option (b), (c) or (d), "Excess
Compensation" means Compensation in excess of the following Integration Level:
(Choose (1) or (2))
(1) ______% (not exceeding 100%) of the taxable wage base, as
determined under Section 230 of the Social Security Act, in effect on
the first day of the Plan Year: (Choose any combination of (I) and (ii)
or choose (iii))
(i) Rounded to ________ (but not exceeding the taxable
wage base).
(ii) But not greater than $_____________.
(iii)Without any further adjustment or limitation.
(2) $_______________ [Note: Not exceeding the taxable wage base for the
Plan Year in which this Adoption Agreement first is effective.]
<PAGE>
Maximum Disparity Table. For purpose of Options (b), (c) and (d),
the applicable percentage is:
Integration Level Applicable Applicable
(as percentage of Percentages for Percentages
taxable wage base) Option (b) or Option (c) for Option (d)
100% 5.7% 2.7%
More than 80% but
less than 100% 5.4% 2.4%
More than 20% (but
not less than $10,001)
and not more than 80% 4.3% 1.3%
20% (or $10,000, if
greater) or less 5.7% 2.7%
(f) Allocation offset. The Advisory Committee will reduce a Participant's
allocation otherwise made under this Section 3.04 by the Participant's
allocation under the following qualified plan(s) maintained by the Employer:
________________________.
The Advisory Committee will determine this allocation reduction:
(Choose (1) or (2))
(1) By treating the term "Employer contribution" as including all
amounts paid or accrued by the Employer during the plan Year to the
qualified plan(s) referenced under this Option (f). If a Participant
under this Plan also participates in that other plan, the Advisory
Committee will treat the amount the Employer contributes for or during
a Plan Year on behalf of a particular Participant under such other plan
as an amount allocated under this Plan to that Participant's Account
for that Plan Year. The Advisory committee will make the computation of
allocation required under the immediately preceding sentence before
making any allocation required by this Section 3.04.
(2) In accordance with the formula provided in an addendum to this
Adoption Agreement, numbered 3.04(f).
Top Heavy Minimum Allocation - Method of Compliance. If a Participant's
allocation under this Section 3.04 is less than the top heavy minimum allocation
to which he is entitled under Section 3.04(B): (Choose (g) or (h))
(g) The Employer will make any necessary additional contribution to the
Participant's Account, as described in Section e.04(B)(7)(a) of the Plan.
<PAGE>
(h) The Employer will satisfy the top heavy minimum allocation under the
following plan(s) it maintains: ___________________. However, the Employer will
make any necessary additional contribution to satisfy the top heavy minimum
allocation for an Employee covered only under this Plan and not under the other
plan(s) designated in this Option (h). See Section 3.04(B)(7)(b) of the Plan.
If the Employer maintains another plan, the Employer may provide in an addendum
to this Adoption Agreement, numbered Section 3.04, any modifications to the Plan
necessary to satisfy the top heavy requirements under Code 416.
Related employers. If two or more related employers (as defined in Section 1.30)
contribute to this Plan, the Advisory Committee must allocate all Employer
contributions and forfeitures to each Participant in the Plan, in accordance
with the elections in this Adoption Agreement Section 3.04: (Choose i) or (j))
(i) Without regard to which contributing related group member employs the
Participant.
(j) Only to the Participants directly employed by the contributing Employer. If
a Participant receives Compensation from more than one contributing Employer,
the Advisory Committee will determine the allocations under this Adoption
Agreement Section 3.04 by prorating among the participating Employers the
Participant's Compensation and, if applicable, the Participant's Integration
Level under Option (e).
3.05 FORFEITURE ALLOCATION. Subject to any restoration allocation required under
Sections 5.04 or 9.14, the Advisory Committee will allocate a Participant
forfeiture in accordance with Section 3.04: (Choose (a) or (b); (c) and (d) are
optional in addition to (a) or (b))
(a) As an Employer contribution for the Plan Year in which the forfeiture
occurs, as if the Participant forfeiture were an additional Employer
contribution for that Plan Year.
(b) To reduce the Employer contribution for the Plan Year: (Choose (1) or (2))
(1) in which the forfeiture occurs.
(2) immediately following the Plan Year in which the forfeiture occurs.
(c) First to reduce the Plan's ordinary and necessary administrative expenses
for the Plan Year and then will allocate any remaining forfeitures in the manner
described in Option (a) or in Option (b), whichever applies.
<PAGE>
3.06 ACCRUAL OF BENEFIT.
Compensation Taken Into Account. For the Plan Year in which the Employee first
becomes a Participant, the Advisory Committee will determine the allocation
under Adoption Agreement Section 3.04 by taking into account: (Choose (a) or
(b))
(a) The Employee's Compensation for the entire Plan Year.
(b) The Employee's Compensation only for the portion of the Plan Year in
which the Employee actually is a Participant in the Plan.
Accrual Requirements. Subject to the suspension of accrual requirements of
Section 3.06(E) of the Plan, to receive an allocation of Employer contributions
and Participant forfeitures, if any, for the Plan Year, a Participant must
satisfy the conditions described in the following elections: (Choose (c) or at
least one of (d) through (f))
(c) Safe Harbor rule. If the Participant is employed by the Employer on the last
day of the Plan Year, the Participant must complete at least one Hour of Service
for that Plan Year. If the Participant is not employed by the Employer on the
last day of the Plan Year, the Participant must complete at least 501 Hours of
Service during the Plan Year.
(d) Hours of Service condition. The Participant must complete the following
minimum number of Hours of Service for the Plan Year: (Choose at least one of (1
through (4))
(1) 1,000 Hours of Service.
(2) (Specify, but the number of Hours of Service may not exceed 1,000)
______________.
(3) No Hour of Service requirement if the Participant terminates
employment during the Plan Year on account of:
(Choose (i) through (iii)
(i) Death.
(ii) Disability.
(iii) Attainment of Normal Retirement Age in the current Plan
Year or in a prior Plan Year.
(4) _________ Hours of Service (not exceeding 1,000) if the Participant
terminates employment with the Employer during the Plan Year, subject
to any election in Option (3).
(e) Employment conditions. The Participant must be employed by the Employer on
the last day of the Plan year, irrespective of whether he satisfies any Hours of
Service condition under Option (d), unless his employment terminates because of:
(Choose (1) or at least one of (2) through (4))
<PAGE>
(1) No exceptions.
(2) Death.
(3) Disability.
(4) Attainment of Normal Retirement Age in the current Plan Year or in
a prior Plan Year.
(f) (Specify other conditions, if applicable): ________________.
Suspension of Accrual Requirements. The suspension of accrual
requirements of Section 3.06(E) of the Plan: (Choose (g), (h) or
(i))
(g) Applies to the Employer's Plan.
(h) Does not apply to the Employer's Plan.
(i) Applies in modified form to the Employer's Plan, as described in an addendum
to this Adoption Agreement, numbered Section 3.06(E).
3.15 MORE THAN ONE PLAN LIMITATION. If the provisions of Section 3.15 apply, the
Excess Amount attributed to this Plan equals:
(Choose (a), (b) or (c))
(a) The product of:
(i) the total Excess Amount allocated as of such date (including any
amount which the Advisory Committee would have allocated but for the
limitations of Code ss.415) times
(ii) the ratio of (1) the amount allocated to the Participant as of
such date under this Plan divided by (2) the total amount allocated as
of such date under all qualified defined contribution plans (determined
without regard to the limitations of Code ss.415).
(b) The total Excess Amount.
(c) None of the Excess Amount.
3.18 DEFINED BENEFIT PLAN LIMITATION.
Application of limitation. The limitation under Section 3.18 of the Plan:
(Choose (a) or (b))
(a) Does not apply to the Employer's Plan because the Employer does not maintain
and never has maintained a defined benefit plan covering any Participant in this
Plan.
(b) Applies to the Employer's Plan. To the extent necessary to satisfy the
limitation under Section 3.18, the Employer will reduce: (Choose (1) or (2))
<PAGE>
(1) The Participant's projected annual benefit under the defined
benefit plan under which the Participant participates.
(2) Its contribution or allocation on behalf of the Participant to the
defined contribution plan under which the Participant participates and
then, if necessary, the Participant's projected annual benefit under
the defined benefit plan under which the Participant participates.
[Note: If the Employer selects (a), the remaining options in this Section 3.18
do not apply to the Employer's Plan.]
Coordination with top heavy minimum allocation. The Advisory Committee will
apply the top heavy minimum allocation provisions of Section 3.04(B) of the Plan
with the following modifications:
(Choose (c) or at least one of (d) or (e))
(c) No modifications.
(d) For Non-Key Employees participating only in this Plan, the top heavy minimum
allocation is the minimum allocation described in Section 3.04(B) determined by
substituting _____% (not less than 4%) for "3%", except: (Choose (1) or (2))
(1) No exceptions.
(2) Plan Years in which the top heavy ratio exceeds 90%.
(e) For Non-Key Employees also participating in the defined benefit plan, the
top heavy minimum is: (Choose (1) or (2))
(1) 5% of Compensation (as determined under Section 3.04(B)
of the Plan) irrespective of the contribution rate of any
Key Employee, except: (Choose (i) or (ii))
(i) No exceptions.
(ii) Substituting "7 1/2%" for "5%" if the top heavy ratio
does not exceed 90%.
(2) 0%. [Note: The employer may not select this Option (2)
unless the defined benefit plan satisfies the top heavy
minimum benefit requirements of Code 416 for these Non-Key
Employees.]
Actuarial Assumptions for Top Heavy Calculation. To determine the top heavy
ratio, the Advisory Committee will use the following interest rate and mortality
assumptions to value accrued benefits under a defined benefit plan:
___________________________.
<PAGE>
If the elections under this Section 3.18 are not appropriate to satisfy the
limitations of Section 3.18, or the top heavy requirements under Code 416, the
Employer must provide the appropriate provisions in an addendum to this Adoption
Agreement.
ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT
5.01 NORMAL RETIREMENT. Normal Retirement Age under the Plan is:
(Choose (a) or (b))
(a) ____________ [State age, but may not exceed age 65].
(b) The later of the date the Participant attains _______ years of age or the
__________________ anniversary of the first day of the Plan Year in which the
Participant commenced participation in the Plan. [The age selected may not
exceed age 65 and the anniversary selected may not exceed the 5th.]
5.02 PARTICIPANT DEATH OR DISABILITY. The 100% vesting rule under Section 5.02
of the Plan: (Choose (a) or choose one or both of (b) and (c))
(a) Does not apply.
(b) Applies to death.
(c) Applies to disability.
5.03 VESTING SCHEDULE. The Employer elects the following vesting schedule:
(Choose (a) or (b); (C) and (d) are available only in addition to (b))
(a) Immediate vesting, 100% Nonforfeitable at all times. [Note: The
Employer must elect Option (a) if the eligibility conditions under Adoption
Agreement Section 2.01(b) require 2 years of service or more than 12 months of
employment.]
(b) Graduated Vesting Schedules.
Top Heavy Schedule Non Top Heavy Schedule
(Mandatory) (Optional)
Year of Nonforfeitable Year of Nonforfeitable
Service Percentage Service Percentage
Less than 1 ________ Less than 1 ________
1 ________ 1 ________
2 ________ 2 ________
3 ________ 3 ________
<PAGE>
4 ________ 4 ________
5 ________ 5 ________
6 or more 100% 6 ________
7 or more ________
(c) Minimum vesting. A Participant's Nonforfeitable Accrued Benefit will never
be less than the lesser of $__________ or his entire Accrued Benefit, even if
the application of the graduated vesting schedule under Option (b) would result
in a smaller Nonforfeitable Accrued Benefit.
[Note: Under Option (b), the Employer must complete a Top Heavy Schedule which
satisfies Code ss.416. The Employer, at its option, may complete a Non Top Heavy
Schedule. The Non Top Heavy Schedule must satisfy Code ss.411(a)(2). Also see
Section 7.05 of the Plan.]
(d) The Top Heavy Schedule under Option (b) applies: (Choose (1)
or (2))
(1) Only in a Plan Year for which the Plan is top heavy.
(2) In the Plan Year for which the Plan first is top heavy
and then is all subsequent Plan Years. [Note: The Employer
may not elect Option (d) unless it has completed a Non Top
Heavy Schedule.]
Life Insurance Investments. The Participant's Accrued Benefit attributable to
insurance contracts purchased on his behalf under Article XI is: (Choose (e) or
(f))
(e) Subject to the vesting election under Options (a), or (b).
(f) 100% Nonforfeitable at all times, irrespective of the vesting election under
Option (b).
5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/RESTORATION OF
FORFEITED ACCRUED BENEFIT. The deemed cash-out rule described in Section 5.04(C)
of the Plan: (Choose (a) or (b))
(a) Does not apply.
(b) Will apply to determine the timing of forfeitures for 0% vested
Participants.
5.06 YEAR OF SERVICE - VESTING.
Vesting computation period. The Plan measures a Year of Service on the basis of
the following 12 consecutive month periods:
(Choose (a) or (b))
(a) Plan Years.
(b) Employment Years. An Employment Year is the 12 consecutive month period
measured from the Employee's Employment Commencement Date and each
<PAGE>
successive 12 consecutive month period measured from each anniversary of that
Employment Commencement Date.
Hours of Service. The minimum number of Hours of Service an Employee must
complete during a vesting computation period to receive credit for a Year of
Service is: (Choose (c) or (d))
(c) 1,000 Hours of Service.
(d) ___________ Hours of Service. [Note: The Hours of Service requirement
may not exceed 1,000.]
5.08 INCLUDED YEARS OF SERVICE - VESTING. The Employer specifically excludes the
following Years of Service: (Choose (a) or at least one of (b) through (e))
(a) None other than as specified in Section 5.08(a) of the Plan.
(b) Any Year of Service before the Participant attained the age
of _______________. [Note: The age selected may not exceed age 18.]
(c) Any Year of Service during the period the Employer did not maintain this
Plan or a predecessor plan.
(d) Any Year of Service before a Break in Service if the number of consecutive
Breaks in Service equals or exceeds the greater of 5 or the aggregate number of
the Years of Service prior to the Break. This exception applies only if the
Participant is 0% vested in his Accrued Benefit derived from Employer
contributions at the time he has a Bread in Service. Furthermore, the aggregate
number of Years of Service before a Break in Service do not include any Years of
Service no required to be taken into account under this exception by reason of
any prior Break in Service.
(e) Any Year of Service earned prior to the effective date of ERISA if the Plan
would have disregarded that Year of Service on account of an Employee's
Separation from Service under a Plan provision in effect and adopted before
January 1, 1974.
ARTICLE VI
TIME AND METHOD OF PAYMENTS OF BENEFITS
Code ss.411(d)(6) Protected Benefits. The elections under this Article VI may
not eliminate Code ss.411(d)(6) protected benefits. To the extent the elections
would eliminate a Code ss.411(d)(6) protected benefit, see Section 13.02 of the
Plan. Furthermore, if the elections liberalize the optional forms of benefit
under the Plan, the more liberal options apply on the later of the adoption date
or the Effective Date of this Adoption Agreement.
<PAGE>
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT.
Distribution date. A distribution date under the Plan means
_______________________________________________________________________________.
[Note: The Employer must specify the appropriate date(s). The specified
distribution dates primarily establish annuity starting dates and the notice and
consent periods prescribed by the Plan. The Plan allows the Trustee an
administratively practicable period of time to make the actual distribution
relating to a particular distribution date.]
Nonforfeitable Accrued Benefit Not Exceeding $3,500. Subject to the limitations
of Section 6.01(A)(1), the distribution date for distribution of a
Nonforfeitable Accrued Benefit not exceeding $3,500 is: (Choose (a), (b), (c),
(d) or (e))
(a) ______________ of the _____________ Plan Year beginning after the
Participant's Separation from Service.
(b) _________________ following the Participant's Separation from Service.
(c) _________________ of the Plan Year after the Participant incurs
___________________ Break(s) in Service (as defined in Article V).
(d) _________________ following the Participant's attainment of Normal
Retirement Age, but not earlier than _________ days following his Separation
from Service.
(e) (Specify) _________________________________________________.
Nonforfeitable Accrued Benefit Exceeds $3,500. See the elections
under Section 6.03.
Disability. The distribution date, subject to Section 6.01(A)(3), is: (Choose
(f), (g) or (h))
(f) _________________ after the Participant terminates employment because of
disability.
(g) The same as if the Participant had terminated employment without disability.
(h) (Specify) ________________________________________________.
Hardship. (Choose (i) or (j))
(i) The Plan does not permit a hardship distribution to a Participant who has
separated from Service.
(j) The Plan permits a hardship distribution to a Participant who has separated
from Service in accordance with the hardship distribution policy. State in:
(Choose (1) or (2))
(1) Section 6.01(A)(4) of the Plan.
<PAGE>
(2) The addendum to this Adoption Agreement, numbered Section 6.01, in
lieu of the policy stated in Section 6.01(A)(4) of the Plan.
Default on a Loan. If a Participant or Beneficiary defaults on a loan made
pursuant to a loan policy adopted by the Advisory Committee pursuant to Section
9.04, the Plan: (Choose (k), (l) or (m))
(k) Treats the default as a distributable event. The Trustee, at the time of the
default, will reduce the Participant's Nonforfeitable Accrued Benefit by the
lesser of the amount in default (plus accrued interest) or the Plan's security
interest in that Nonforfeitable Accrued Benefit.
(l) Does not treat the default as a distributable event. When an otherwise
distributable event first occurs pursuant to Section 6.01 or Section 6.03 of the
Plan, the Trustee will reduce the Participant's Nonforfeitable Accrued Benefit
by the lesser of the amount in default (plus accrued interest) of the Plan's
security interest in that Nonforfeitable Accrued Benefit.
(m) (Specify) ________________________________________________.
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. The Advisory Committee will apply
Section 6.02 of the Plan with the following modifications: (Choose (a) or at
least one of (b) (c), (d) and (e))
(a) No modifications.
(b) Except as required under Section 6.01 of the Plan, a lump sum
distribution is not available: ____________________________.
(c) An installment distribution: (Choose (1) or at least one of (2) or (3))
(1) Is not available under the Plan.
(2) May not exceed the lesser of _________________ years of the maximum
period permitted under Section 6.02.
(3) (Specify) ____________________________________________.
(d) The Plan permits the following annuity options: _______________________
Any Participant who elects a life annuity option is subject to the requirements
of Sections 6.04(A), (B), (C) and (D) of the Plan. See Section 6.04(E). [Note:
The Employer may specify additional annuity options in an addendum to this
Adoption Agreement, numbered 6.02(d).]
(e) If the Plan invests in qualifying Employer securities, as described in
Section 10.03(F), a Participant eligible to elect distribution under Section
6.03 may elect to receive that distribution in Employer securities only in
accordance with the provision of the addendum to this Adoption Agreement,
numbered 6.02(e).
<PAGE>
6.03 BENEFIT PAYMENT ELECTIONS.
Participant Elections After Separation from Service. A Participant who is
eligible to make distribution elections under Section 6.03 of the Plan may elect
to commence distribution of his Nonforfeitable Accrued Benefit: (Choose at least
one of (a) through (c))
(a) As of any distribution date, but no earlier than __________ of
the _________________________________ Plan Year beginning after the
Participant's Separation from Service.
(b) As of the following date(s): (Choose at least one of Options (1) through
(6))
(1) Any distribution date after the close of the Plan Year in which the
Participant attains Normal Retirement Age.
(2) Any distribution date following his Separation from Service.
(3) Any distribution date in the ________________________ Plan Year(s)
beginning after his Separation from Service.
(4) Any distribution date in the Plan Year after the Participant incurs
________ Break(s) in Service (as defined in Article V).
(5) Any distribution date following attainment of age ___________ and
completion of at least ____________ Years of Service (as defined in
Article V).
(6) (Specify) ___________________________________________.
(c) (Specify) ________________________________________________.
Participant Elections Prior to Separation from Service. Subject to the
restrictions of Article VI, the following distribution options apply under the
Employer's Plan prior to a Participant's Separation from Service. (Choose (d) or
at least one of (e) through (h))
(d) No distribution options prior to Separation from Service.
(e) Attainment of Specified Age. Until he retires, the Participant
has a continuing election to receive all or any portion of his Nonforfeitable
Accrued Benefit after he attains: (Choose (1) or (2))
(1) Normal Retirement Age.
<PAGE>
(2) _______________ years of age and is at least _________%
vested in his Accrued Benefit. [Note: If the percentage is
less than 100%, see the special vesting formula in Section
5.03.]
(f) After a Participant has participated in the Plan for a period of not less
than _______ years and he is 100% vested in his Accrued Benefit, until he
retires, the Participant has a continuing election to receive all or any portion
of his Accrued Benefit. [Note: The number in the blank space may not be less
than 5.]
(g) Hardship. A Participant may elect a hardship distribution prior to his
Separation from Service in accordance with the hardship distribution policy:
(Choose (1) or (2))
(1) Under Section 6.01(A)(4) of the Plan. In no event may a
Participant receive a hardship distribution under this
Option (g) before he is at least _________________$ vested
in his Accrued Benefit. [Note: If the percentage in the
blank is less than 100%, see the special vesting formula in
Section 5.03.]
(2) Provided in the addendum to this Adoption Agreement, numbered
Section 6.03.
(h) (Specify) _____________________________________________.
[Note: The Employer may use an addendum, numbered 6.03, to provide additional
language authorized by Options (b)(6), (c), (g)(2) or (h) of this Adoption
Agreement Section 6.03.]
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES. The annuity
distribution requirements of Section 6.04: (Choose (a) or (b))
(a) Apply only to a Participant described in Section 6.04(E) of the
Plan (relating to the profit sharing exception to the joint and survivor
requirements).
(b) Apply to all Participants.
ARTICLE IX
ADVISORY COMMITTEE - DUTIES WITH RESPECT
TO PARTICIPANTS' ACCOUNTS
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. If a distribution (other than a
distribution from a segregated Account) occurs more than 90 days after the most
recent valuation date, the distribution will include interest at: (Choose (a),
(b) or (c))
(a) __________% per annum. [Note: The percentage may equal 0%.]
<PAGE>
(b) The 90 day Treasury bill rate in effect at the beginning of the
current valuation period.
(c) (Specify) ________________________________________________.
ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES
10.03 INVESTMENT POWERS. Pursuant to Section 10.03[F] of the Plan, the
aggregate investments in qualifying Employer securities and in qualifying
Employer real property: (Choose (a) or (b))
(a) May not exceed 10% of Plan assets.
(b) May not exceed ______________% of Plan assets. [Note: the
percentage may not exceed 100%.]
10.14 VALUATION OF TRUST. In addition to each Accounting Date, the Trustee must
value the Trust Fund on the following valuation date(s): (Choose (a) or (b))
(a) No other mandatory valuation dates.
(b) (Specify) ________________________________________________.
EFFECTIVE DATE ADDENDUM
(Restated Plans Only)
The Employer must complete this addendum only if the restated Effective Date
specified in Adoption Agreement Section 1.18 is different than the restated
effective date for at least one of the provisions listed in this addendum. In
lieu of the restated Effective Date in Adoption Agreement Section 1.18, the
following special effective dates apply: (Choose whichever elections apply)
(a) Compensation definition. The Compensation definition of Section 1.12
(other than the $200,000 limitation) is effective for Plan Years beginning after
_____________________________. [Note: May not be effective later than the first
day of the first Plan Year beginning after the Employer executes this Adoption
Agreement to restate the Plan for the Tax Reform Act of 1986, if applicable.]
(b) Eligibility conditions. The eligibility conditions specified in
Adoption Agreement Section 2.01 are effective for Plan Years beginning after
_______________________.
(c) Suspension of Years of Service. The suspension of Years of Service
rule elected under Adoption Agreement Section 2.03 is effective for Plan Years
beginning after _____________________.
<PAGE>
(d) Contribution/allocation formula. The contribution formula elected under
Adoption Agreement Section 3.01 and the method of allocation elected under
Adoption Agreement Section 3.04 is effective for Plan Years beginning after
_____________________.
(e) Accrual requirements. The accrual requirements of Section 3.06 are
effective for Plan Years beginning after ______________.
(f) Employment condition. The employment condition of Section 3.06 is
effective for Plan Years beginning after ______________.
(g) Elimination of Net Profits. The requirement for the Employer not to
have net profits to contribute to this Plan is effective for Plan Years
beginning after ________________. [Note: The date specified may not be earlier
than December 31, 1985.]
(h) Vesting Schedule. The vesting schedule elected under Adoption
Agreement Section 5.03 is effective for Plan Years beginning after
_______________.
(i) (Specify) ________________________________________________.
For Plan Years prior to the special Effective Date, the terms of the Plan prior
to its restatement under this Adoption Agreement will control for purposes of
the designated provisions. A special Effective Date may not result in the delay
of a Plan provision beyond the permissible Effective Date under any applicable
law requirements.
Execution Page
The Trustee (and Custodian, if applicable), by executing this Adoption
Agreement, accepts its position and agrees to all of the obligations,
responsibilities and duties imposed upon the Trustee (or Custodian) under the
Master Plan and Trust. The Employer hereby agrees to the provisions of this Plan
and Trust, and in witness of its agreement, the Employer by its duly authorized
officers, has executed this Adoption Agreement, and the Trustee (and Custodian,
if applicable) signified its acceptance, on this ___________ day of
________________, 19________.
Name and EIN of Employer: _____________________________________
Signed: _______________________________________________________
Name(s) of Trustee: ___________________________________________
_______________________________________________________________
Signed: _______________________________________________________
_______________________________________________________________
Name of Custodian: ____________________________________________
<PAGE>
Signed: _______________________________________________________
[Note: A Trustee is mandatory, but a Custodian is optional. See Section 10.03 of
the Plan.]
Plan Number. The 3-digit plan number the Employer assigns to this Plan for ERISA
reporting purposes (Form 5500 Series) is: ____________________.
Use of Adoption Agreement. Failure to complete properly the elections in this
Adoption Agreement may result in disqualification of the Employer's Plan. The
3-digit number assigned to this Adoption Agreement (see page 1) is solely for
the Master Plan Sponsor's recordkeeping purposes and does not necessarily
correspond to the plan number the Employer designated in the prior paragraph.
Master Plan Sponsor. The Master Plan Sponsor identified on the first page of the
basic plan document will notify all adopting employers of any amendment of this
Master Plan or of any abandonment or discontinuance by the Master Plan Sponsor
of its maintenance of this Master Plan. For inquiries regarding the adoption of
the Master Plan, the Master Plan Sponsor's intended meaning of any plan
provisions or the effect of the opinion letter issued to the Master Plan
Sponsor, please contact the Master Plan Sponsor at the following address and
telephone number: INVESCO Trust Company, 7800 E. Union Ave., Denver, Colorado,
(303 779-0731).
Reliance on Opinion Letter. The Employer may not rely on the Master Plan
Sponsor's opinion letter covering this Adoption Agreement. For reliance on the
Plan's qualification, the Employer must obtain a determination letter from the
applicable IRS Key District office.
PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)
The undersigned Employer, by executing this Participation Agreement, elects to
become a Participating Employer in the Plan identified in Section 1.03 of the
accompanying Adoption Agreement, as if the Participating Employer were a
signatory to that Agreement. The Participating Employer accepts, and agrees to
be bound by, all of the elections granted under the provisions of the Master
Plan as made by, the Signatory Employer to the Execution Page of the Adoption
Agreement.
1. The Effective Date of the undersigned Employer's participation in the
designated Plan is ___________________.
2. The undersigned Employer's adoption of this Plan constitutes:
(a) The adoption of a new plan by the Participating Employer.
<PAGE>
(b) The adoption of an amendment and restatement of a plan currently
maintained by the Employer, identified as _________________________,
and having an original effective date of __________________________.
Dated this ___________ day of ______________________, 19______.
Name of Participating Employer: _______________________________
Signed: _______________________________________________________
Participating Employer's EIN: _________________________________
Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.
Name of Signatory Employer: ___________________________________
Accepted: _____________________________________________________
[Date]
Signed: _______________________________________________________
Name(s) of Trustee: ___________________________________________
Accepted: _____________________________________________________
[Date]
Signed: _______________________________________________________
[Note: Each Participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for important Master
Plan information.]
NS PSP AA Instructions
Complete the first blank in the paragraph by writing in the business' name in
its entirety.
1.02 Trustee
Option (a) should be chosen when the employer will be the trustee, INVESCO Trust
Company would then act as Custodian. If option (b) is chosen, INVESCO Trust
Company will charge an annual trust fee. Note: See Trustee Comments on page 17
for further explaination of Non-discretionary Trustee.
1.03 Plan
Enter the plan name. Example: ABC Inc. Profit Sharing Plan.
<PAGE>
1.07 Employee
If you want the plan to cover all types of employees, select option (a). If you
want to exclude from the plan any group(s) of employees, select any combination
of (b) or (g).
Leased Employees
You may exclude leased employees from participation (option h). However, the
plan must satisfy the coverage rules of Code Section 410(b) and 401(a)(26),
consult your legal or financial counsel.
Related Employers
You may exclude related employers from participating in the plan (option j).
However, the plan must satisfy the coverage rules of Code Section 410(b) and
401(a)(26), consult your legal or financial counsel.
1.12 Compensation
Treatment of elective contributions - Choose option (a) if you prefer to "add
back" employee elective contributions to compensation for purposes of allocating
employer contributions, forfeitures and for non-discrimination testing.
Modifications to Compensation - You must choose option (C) or any combination of
(d) through (j). Any exclusion of compensation may result in unallowable
discrimination. Your accountant may want to test for any discriminatory effect
of excluding any type of compensation.
1.17 Plan Year
You must define the "plan year." Usually it will follow the business tax year.
Limitation Year - You must define the "limitation year" (12 month period for
testing allocations to each employee's account). For administrative convenience
it should match the plan year.
1.18 Effective Date
New Plan - Enter the first day of your plan year (usually January 1) and the
year.
Restated Plan - Effective date - If you are amending for the Tax Reform Act of
1986 enter: January 1, 1987. If you are amending for another reason, enter the
first day of your tax year, example: January 1, 1990. Original established date
- - Enter the original effective date of your plan from your prior Adoption
Agreement.
<PAGE>
1.27 Hours of Service
Choose which method you wish to use for counting hours worked by an employee to
accrue benefits. Option (b), the equivalency method, is explained in Section
1.27 of the plan. Option (a) is usually chosen.
1.29 Service for Predecessor Employer
Under this option, you may elect to count service for a predecessor employer
when you are not maintaining the plan of the predecessor employer. (Used
primarily in the event of a merger or acquisition.)
1.31 Leased Employees
The law requires you to state how your plan would treat a leased employee who
could become a participant, even if you don't intend to ever lease employees.
Choose option (a) covering the employee without regard to the leasing company's
plan or option (b) the reduction method. Usually Option (b)(1) is chosen.
2.01 Eligibility
a. An employee must attain this age to become a participant (cannot
exceed age 21).
b. Pick how long (service) an employee must work to become a
participant.
Plan Entry - Choose when employees enter the plan for purposes of contributions
and benefit accrual. Normally, option (c), semi-annual entry dates, is chosen.
Time of Participation - Choose which plan entry date (before or after) an
employee who meets the eligibility requirements will enter the plan. Normally,
option (f) is chosen.
Dual Eligibility - This section allows you to grandfather into the plan current
employees who have not met the eligibility requirements and apply the
eligibility requirements to newly hired employees. Restated plans usually chose
(i)(2).
2.02 Year of Service
Option (b) should only be chosen if you wish to require less than 1000 hours to
be worked by an employee for eligibility, contributions and vesting. Usually
Option (a) is chosen.
Eligibility Computation Period - Choose whether to measure subsequent
eligibility periods on the employee's anniversary or the plan year. Option (d)
Plan Year is chosen for administrative convenience.
<PAGE>
2.03 Break In Service
This option may impose a complicated re-entry date for employees who have
terminated or whose hours were severely cut back. Option (a) is chosen for
administrative convenience.
2.06 Election Not to Participate
This option allows employees and participants to elect out of participation.
However, these employees are considered when performing all non-discrimination
tests. Option (a) is chosen for administrative convenience.
3.01 Contributions and Forfeitures
Option (a) provides for a discretionary formula. Option (b) allows the employer
to determine the contribution separately for different catagories of
participants. Options (c) and (d) allow the employer to choose a fixed
contribution formula.
Net Profits - An employer may require net profits to make its contribution or
may disregard profits to determine the contribution. If the employer selects
option (g), it must also complete the three blanks.
3.04 Contribution Allocation
Allocation formula. The primary allocation formulas are in Options (a), (b), (c)
and (d). Option (a) is a Nonintegrated formula and allocates the employer
contribution proportionate to total compensation. Options (b), (c) and (d) are
alternatives for integrated plans. Usually option (a)(2) is chosen for non
integrated plans.
The two-tiered formula under Option (b) maximizes the disparity permitted under
the integration rules. Accordingly, the allocation in the first tier results in
an equal allocation percentage based on total compensation and based on excess
compensation. This equal allocation percentage may not exceed the maximum
disparity percentage (5.7%, 5.4%, or 4.3%) described in he second column of the
Maximum Disparity Table. After completion of the first tier allocation, the
second step allocates the remaining contribution proportionate to total
compensation, in the same manner as the nonintegrated formula.
Under the three-tiered formula under Option (c), the plan: (i) first allocates
based on total compensation, but the allocation percentage may not exceed the
maximum disparity percentage determined under the second column of the Maximum
Disparity Table; (ii) then allocates based on excess compensation, but the
allocation percentage may not exceed the maximum disparity percentage determined
under the second column of the Maximum Disparity Table; and (iii) completes the
allocation on the basis of total compensation.
<PAGE>
The four-tier allocation under Option (d) is a hybrid of Options (b) and (c).
The sole purpose of Option (d) is to use the first tier to satisfy the 3% top
heavy minimum, then use a progression of three additional tiers to make maximum
use of the permitted disparity rules. The second tier allocates solely on the
basis of excess compensation, with a maximum allocation under the second tier
equal to 3% of each participant's excess compensation. The third tier is the
same as the first tier under Option (b). The fourth tier is a prorata allocation
based on total compensation.
3.05 Forfeiture Allocation
Choose the method of allocating (dividing up) forfeitures of terminated
non-vested participant balances. Option (a) allocates forfeitures as an extra
discretionary contribution. Option (b) allocates forfeitures to reduce employer
contributions. Option (c) allows you to allocate forfeitures to reduce the
plan's administrative expense.
3.06 Compensation Taken Into Account
If you wish to count a participant's full year's compensation (even if he or she
entered during the year), for contributions choose option (a), if not, choose
option (b).
Accrual Requirements - Specify the service requirements a participant must
satisfy to receive an allocation. You may specify an hours of service
requirement, waive the service requirement for specific contributions and/or
require the participant to be employed on the last day to receive a
contribution.
Suspension of Accrual Requirements
This section allows you to suspend some or all of the accrual requirements found
in Section 3.06(E) of the plan for participants to receive allocations. This
would apply in plan years when a plan may not satisfy coverage and participation
requirements. For administrative convenience choose option (g).
3.15 More than One Plan
This section only applies if you (the employer) maintain another defined
contribution plan (e.g.: profit sharing, money purchase, 401(k) or target
benefit) that covers at least one participant in this plan.
3.18 Defined Benefit Limitation
Check option (a) if you have never maintained a defined benefit plan for any
participants in this plan. If you have or are currently maintaining a defined
benefit under option (b), choose which plan's benefit would be reduced if a
participant's total allocations for a year were to exceed the allowable limit.
<PAGE>
5.01 Normal Retirement Age
Choose what age you (the employer) want the participants to be 100% vested in
their benefits, if still employed (normal retirement age).
5.02 Vesting Death/Disability
You may choose to allow 100% vesting to participants that terminate from service
because of death option (b) or disability option (c).
5.03 Vesting Schedule
Choose what vesting schedule(s) you want to apply to employer discretionary
contributions and matching contributions. If you choose option (b), you must at
a minimum complete the top-heavy vesting schedule. Remember, if the eligibility
requirements are more than one year, option (a) must be chosen.
Complete the Top Heavy Schedule based upon the following:
Year of Service
1
2 (not less than 20%)
3 (not less than 40%)
4 (not less than 60%)
5 (not less than 80%)
6 (not less than 100%)
Optional: Complete the Non Top Heavy Schedule based upon the
following:
Years of Service
1
2 3 (not less than 20%) 4 (not less than 40%) 5 (not less than 60%) 6 (not less
than 80%) 7 (not less than 100%)
5.04 Cash-Out Rule
If option (b) is chosen, the plan treats a 0% vested terminated participant as
having received a distribution, allowing for forfeitures to be reallocated to
active participants.
5.06 Years of Service
Choose what measuring period the plan should use to determine years of service
for vesting, employee's anniversary year or plan year. For ease of
administration choose option (a).
<PAGE>
5.08 Prior Years of Service
By choosing options (b) through (e) you (the employer) may exclude some prior
years of service for purposes of vesting.
Article 6
The Employer must establish a specific distribution policy for the plan. Treas.
Reg. 1.411(d)-4 prohibits the Employer, the advisory committee or any third
party to retain discretion over when or in what form to pay the participant's
benefit. Under a restated plan, the elections under Article VI, to the extent
they differ from previous plan provisions regarding optional forms of benefit,
may not eliminate an optional form of benefit with respect to the account
balance accrued as of the date the Employer executes the restated adoption
agreement (or, if later, the effective date of that restated adoption
agreement). An optional form of benefits includes the form of payment (e.g.,
lump sum or installments), the timing of payment (e.g., immediately after
separation form service, following a break in service, after attaining normal
retirement age) and the medium of payment (e.g., right to elect distribution in
Employer securities, right to elect distribution in the form of an annuity
contract).
With this in mind, if you are restating an existing plan, pay close attention to
the distribution features under that document and your administrative practice
of distributions. In all cases, try to mirror or liberalize those distribution
features when restating onto this document.
6.01 Distribution Date
A distribution date establishes a predetermined "target" date in a plan year
when the plan will offer distributions. The actual distribution may occur later
than a distribution date as long as the actual distribution is within an
administratively reasonable period of time" from the distribution date. Typical
distribution dates for 401(k) plans are semi-annual dates or quarterly dates.
Nonforfeitable Accrued Benefit Not Exceeding #3500
When a separate participants vested balance does not exceed $3500, the plan
allows the employer to separately establish the timing of these distributions,
separate from the distribution dates. When you complete this section, you need
to balance two concerns: 1) will the timing of the distribution cause the
participant to consider it a "severance benefit" and therefore encourage
separation from service and 2) the administrative concerns of carrying a
non-active account in the plan.
Disability - The plan allows you (the employer) to establish a different target
payout date for disability distributions in options (f) and (h).
<PAGE>
Hardship - This option states whether or not the plan would allow a separated
participant to receive a hardship distribution, prior to receiving a total
distribution of his/her vested account balance.
Default on a Loan - This election does not create a loan policy. You (the
employer) must elect the timing of the plan's foreclosure if a participant's
loan were to be defaulted upon even if you do not intend to offer loans in your
plan.
6.02 Method of Payment
You may choose the standard forms of payment if this is a brand new plan and not
a restatement. Elect any one or combination of options (b) through (e). If no
modifications are necessary, elect option (a).
6.03 Participant Elections After Separation From Service
You must choose when an employee who has separated from service, with a vested
benefit greater than $3500, may elect to commence distributions. This election
will be tied directly to the "distribution date" definition earlier.
Participant Elections Prior to Separation from Service
The following distribution elections apply to employer discretionary account
regardless of vested account balances, prior to employment separation. If you
prefer not to allow any distribution options from these accounts prior to
separation, select option (d).
6.04 Annuity Distributions
the law requires distributions to certain participants to be in the form of
commercial insurance annuities, unless consented to and waived by both the
participant and his or her spouse. Participants that are subject to this
requirement are identified in section 6.04(E) of the Plan. For administrative
convenience choose option (a). If you are restating a plan that was subject to
the joint and survivor annuity rules, you must select Option (b).
9.10 Value of Benefit
This option allows the employer to add interest to a participant's balance, if a
distribution occurs more than 90 days after the most recent plan valuation. You
do not have to provide an interest addition under this section and may complete
option (a) with 0%.
<PAGE>
10.03 Investment Powers
Complete this section if you (the employer) wish to allow the plan to invest in
qualifying employer securities, you should consult your legal counsel. The term
"qualifying employer securities" has a specific meaning under ERISA and may not
include all securities.
10.14 Valuation of Trust
You may use this option to specify mandatory valuation dates, in addition to the
accounting date. Normally, option (a) is chosen.
Instructions for Effective Date Addendum
You must complete the effective date addendum only if the effective dates of any
of the listed items (a) through (j) have an effective date other than your
restated effective date in adoption agreement section 1.18. Since some
provisions in the Tax Reform Act of 1986 were not effective until 1988 or 1989
the few provisions (if any) that have later effective dates must specify when
they are effective.
a. Compensation definition may not be later than the first day of your
1991 plan year.
b. Eligibility conditions may not be later than the first day of your
1989 plan year.
c. Suspension of years of service may not be earlier than the first day of
your 1990 plan year.
d. Contribution/allocation formula may not be earlier than the first day
of your 1989 plan year.
e. Accrual requirements may not be earlier than the first day of your 1989
plan year.
f. Employment condition may not be earlier than the first day of your 1991
plan year.
g. Elimination of Net Profits may not be earlier than December 31, 1985.
h. Vesting schedule may not be later than the first day of your 1989 plan
year.
i. Allocation of Earnings may not be earlier than the first day of the
1990 plan year.
Execution Page
The Employer must complete the date on which it executes the adoption agreement
and must execute the signature for the Employer. The execution page provides two
lines above the signature line to print or type the name of the Employer and the
<PAGE>
Employer's EIN. If the Employer is a sole proprietorship, the individual sole
proprietor should execute as Employer. If the Employer is a corporation or a
partnership, an officer or a partner, as applicable, should execute the adoption
agreement on behalf of the Employer.
Trustee.
If you selected option (a) of Section 1.02, then the employer will be the
Trustee. An individual must sign as trustee for the employer. INVESCO Trust
Company will then act as custodian.
If you choose to have INVESCO Trust Company act as "Trustee" then option (b) of
Section 1.02 must be chosen. INVESCO does charge an annual fee for this service.
INVESCO Trust company will only serve as a non-discretionary trustee, this means
that there is a person who is the "Named Fiduciary." The Named Fiduciary gives
direction to a non-discretionary trustee, and the non-discretionary trustee
accepts all directions from the Named Fiduciary. The Named Fiduciary is either
the President of the Corporation, the managing partner of the partnership or the
self-employed individual of a sole-proprietorship. The Named Fiduciary is
responsible for selecting plan investment.
The execution page also includes a signature line for the Custodian, if any.
Leave the Custodian lines blank if INVESCO Trust Company will act as custodian.
Plan number. This paragraph designates the number the Employer assigns to the
plan for reporting (Form 5500) purposes. If this is the first plan the Employer
ever maintained, the number must be 001. The Employer's plan number does not
necessarily correspond to the 3-digit adoption agreement number specified at the
top of the first page of the adoption agreement. Consult your Counsel if unsure
what 3-digit plan number to use.
Instructions for the Participation Agreement
This adoption agreement includes a Participation Agreement under which a related
group member of the signatory Employer to the execution page may participate in
the same plan with that Employer. Each related group member wishing to become a
participating Employer should execute a separate Participation Agreement. See
Section 1.30 of the Plan for the definition of related Employers.
Thus, it is possible to exclude the employees of related group members not
participating in the plan. If an Employer is a member of a related group, it
should consider whether the inclusion of other related group members' employees
is necessary to satisfy the coverage requirements of Code ss.410(b) or the
minimum participation requirement of Code ss.401(a)(26). If the Employer
determines inclusion of the employees of a related group member is necessary to
maintain qualification of the plan, the Employer may take one of two approaches:
<PAGE>
(1) have the related group member execute a Participation Agreement; or (2)
elect in Adoption Agreement Section 1.07 to include the employees of that
related group member. Under approach (1), the participation of the related group
member will result in the automatic inclusion of the employees of that related
group member, without having to specify their inclusion in Adoption Agreement
Section 1.07. In addition, the related group member, under approach (1), has the
authority to contribute tot he plan and, in the event another participating
related group member makes a contribution on behalf of that related group
member's employees, the Participation Agreement will ensure the deductibility of
that contribution (assuming the contribution does not exceed the deduction
limits of Code ss.404). The addendum instructions to the appropriate adoption
agreement explain the effect on the allocation of Employer contributions when
related group members maintain a single nonstandardized plan. Under approach
(2), the plan will retain its qualified status, but contributions the Employer
makes on behalf of a nonparticipating related group member's employees may not
be deductible (even if otherwise within the limitations of Code ss.404),
resulting in an excise tax to the contributing Employer.
Unrelated Employers. The Master Plan does not allow the participation in a
single plan of unrelated Employers (i.e., Employers that do not satisfy the
related group definition in Section 1.30 of the plan).
legal\adop-agr\nspspaa.001
Adoption Agreement #002
Letter Serial No. D346279a
Nonstandardized Money Purchase Pension Plan
Nonstandardized Money Purchase Pension Plan Features - Maximum employer
contributions - Ability to exclude classifications of employees - May enforce
last-day requirement for employer contribution - Allows integrated contribution
formula
Provided by:
The Financial Funds
Managed & Distributed by
INVESCO Funds Group, Inc.
Custodian:
INVESCO Trust Company
A Subsidiary of INVESCO MIM PLC
<PAGE>
Your Adoption Agreement and Basic Plan Document together constitute the rules
and parameters under which your retirement program will operate. Each section of
the Adoption Agreement requires the employer to make a selection. Whenever
possible (balancing complexity and space constraints) we have provided
instructions to the left of key selections. These instructions are intended to
assist you, the employer, in choosing the optional provisions for your
retirement program. They are not intended to substitute or replace competent
advice from your legal counsel or accountant. If further clarification is
necessary, contact your advisors or INVESCO Trust Company. We recommend that you
obtain the advice of your legal or tax advisor before you sign this Adoption
Agreement.
<PAGE>
ADOPTION AGREEMENT #002
NONSTANDARDIZED MONEY PURCHASE PLAN
The undersigned, _______________________________________ ("Employer"), by
executing this Adoption Agreement, elects to become a participating Employer in
the INVESCO Trust company Defined Contribution Master Plan (basic plan document
#01) by adopting the accompanying Plan and Trust in full as if the Employer were
a signatory to that Agreement. The employer makes the following elections
granted under the provisions of the Master Plan.
ARTICLE I
DEFINITIONS
1.02 TRUSTEE. The Trustee executing this Adoption Agreement is:
(Choose (a) or (b))
(a) A discretionary Trustee, See Section 10.03[A] of the Plan.
(b) A nondiscretionary Trustee. See Section 10.03[B] of the
Plan. [Note: The Employer may not elect Option (b) if a Custodian
executes the Adoption Agreement.]
1.03 PLAN. The name of the Plan as adopted by the Employer is
- ---------------------------------------------------------------.
1.07 EMPLOYEE. The following Employees are not eligible to
participate in the Plan: (Choose (a) or at least one of (b)
through (g))
(a) No exclusions.
(b) Collective bargaining employees (as defined in Section 1.07 of the
Plan). [Note: If the Employer excludes union employees from the Plan, the
Employer must be able to provide evidence that retirement benefits were the
subject of good faith bargaining.]
(c) Nonresident aliens who do not receive any earned income (as defined in
Code ss.911(d)(2)) from the Employer which constitutes United States source
income (as defined in Code ss.911(d)(2)) from the Employer which constitutes
United States source income (as defined in Code ss.861(a)(3)).
(d) Commission Salesmen.
(e) Any Employee compensated on a salaried basis.
(f) Any Employee compensated on an hourly basis.
(g) (Specify)
Leased Employees. Any Leased Employee treated as an Employee
under Section 1.31 of the Plan, is: (Choose (h) or (i))
<PAGE>
(h) Not eligible to participate in the Plan.
(i) Eligible to participate in the Plan, unless excluded by reason
of an exclusion classification elected under this Adoption Agreement Section
1.07.
Related Employers. If any member of the Employer's related group (as defined in
Section 1.30 of the Plan) executes a Participation Agreement to this Adoption
Agreement, such member's Employees are eligible to participate in this Plan,
unless excluded by reason of an exclusion classification elected under this
Adoption Agreement Section 1.07. In addition: (Choose (j) or (k))
(j) No other related group member's Employees are eligible to participate
in the Plan.
(k) The following nonparticipating related group member's Employees are
eligible to participate in the Plan unless excluded by reason of an exclusion
classification elected under this Adoption Agreement Section 1.07:
_______________________________
1.12 COMPENSATION
Treatment of elective contributions. (Choose (a) or (b))
(a) "Compensation" includes elective contributions made by the
Employer on the Employee's behalf.
(b) "Compensation" does not include elective contributions.
Modifications to Compensation definition. (Choose (c) or at least
one of (d) through (j))
(c) No modifications other than as elected under Options (a) or (b).
(d) The plan excludes Compensation in excess of $_____________.
(e) In lieu of the definition in Section 1.12 of the Plan, Compensation
means any earnings reportable as W-2 wages for Federal income tax withholding
purposes, subject to any other election under this Adoption Agreement Section
1.12.
(f) The Plan excludes bonuses.
(g) The Plan excludes overtime.
(h) The Plan excludes Commissions.
(i) The Plan excludes Compensation from a related employer (as defined in
Section 1.30 of the Plan) that has not executed a Participation Agreement in
this Plan unless, pursuant to Adoption Agreement section 1.07, the Employees of
that related employer are eligible to participate in this Plan.
<PAGE>
(j) (Specify) _______________________________________________.
If, for any Plan Year, the Plan uses permitted disparity in the contribution or
allocation formula elected under Article III, any election of Options (f), (g),
(h) or (j) is ineffective for such Plan Year with respect to any Nonhighly
Compensated Employee.
1.17 PLAN YEAR/LIMITATION YEAR.
Plan Year. Plan Year means: (Choose (a) or (b))
(a) The 12 consecutive month period ending every _____________.
(b) (Specify) ________________________________________________.
Limitation Year. The Limitation Year is: (Choose (c) or (d))
(c) The Plan Year.
(d) The 12 consecutive month period ending every ______________.
1.18 EFFECTIVE DATE.
New Plan. The "Effective Date" of the Plan is __________________.
Restated Plan. The restated Effective Date is _________________.
This Plan is a substitution and amendment of an existing retirement plan(s)
originally established _____________________.
(Note: See the Effective Date Addendum.)
1.27 HOUR OF SERVICE. The crediting method for Hours of Service
is: (Choose (a) or (b))
(a) The actual method.
(b) The ___________________________ equivalency method, except:
(1) No exceptions.
(2) The actual method applies for purposes of: (Choose at least
one)
(i) Participation under Article II.
(ii) Vesting under Article V.
(iii)Accrual of benefits under Section 3.06.
[Note: On the blank line, insert "daily," "weekly," "semi-monthly
payroll periods" or "monthly."]
<PAGE>
1.29 SERVICE FOR PREDECESSOR EMPLOYER. In addition to the
predecessor service the Plan must credit by reason of Section
1.29 of the Plan, the Plan credits Service with the following
predecessor employer(s): _____________________________________
______________________________________________________________.
Service with the designated predecessor employer(s) applies:
(Choose at least one of (a) or (b); (c) is available only in
addition to (a) or (b))
(a) For purposes of participation under Article II.
(b) For purposes of vesting under Article V.
(c) Except the following Service: ____________________________.
[Note: If the Plan does not credit any predecessor service under this provision,
insert "N/A" in the first blank line. The Employer may attach a schedule to this
Adoption Agreement, in the same format as this Section 1.29, designating
additional predecessor employers and the applicable service crediting
elections.]
1.31 LEASED EMPLOYEES. If a Leased Employee is a Participant in the Plan and
also participates in a plan maintained by the leasing organization: (Choose (a)
or (b))
(a) The Advisory Committee will determine the Leased Employee's
allocation of Employer contributions under Article III without taking into
account the Leased Employee's allocation, if any, under the leasing
organization's plan.
(b) The Advisory committee will reduce a Leased Employee's
allocation of Employer contributions under this Plan by the Leased Employee's
allocation under the leasing organization's plan, but only to the extent that
allocation is attributable to the Leased Employee's service provided to the
Employer. The leasing organization's plan:
(1) Must be a money purchase plan which would satisfy the
definition under Section 1.31 of a safe harbor plan, irrespective of
whether the safe harbor exception applies.
(2) Must satisfy the features and, if a defined benefit plan,
the method of reduction described in an addendum to this
Adoption Agreement, numbered 1.31.
ARTICLE II
EMPLOYEE PARTICIPANTS
2.01 ELIGIBILITY.
Eligibility conditions. To become a Participant in the Plan, an Employee must
satisfy the following eligibility conditions:
(Choose (a) or (b) or both)
<PAGE>
(a) Attainment of age ___________________ (specify age, not exceeding 21).
(b) Service requirement. (Choose one of (1) through (4))
(1) One Year of Service.
(2) Two Years of Service, without an intervening Break in
Service. See Section 2.03(A) of the Plan.
(3) ________________ months (not exceeding 24) following the
Employee's Employment Commencement Date.
(4) One Hour of Service.
Plan Entry Date. "Plan Entry Date" means the Effective Date and:
(Choose (c), (d) or (e))
(c) Semi-annual Entry Dates. The first day of the Plan Year and the first
day of the seventh month of the Plan Year.
(d) The first day of the Plan Year.
(e) (Specify entry dates) ____________________________________.
Time of Participation. An Employee will become a Participant,
unless excluded under Adoption Agreement Section 1.07, on the
Plan Entry Date (if employed on that date): (Choose (f), (g) or
(h))
(f) immediately following
(g) immediately preceding
(h) nearest __________________________________________________
the date the Employee completes the eligibility conditions
described in Options (a) and (b) of this Adoption Agreement
Section 2.01. [Note: The Employer must coordinate the selection
of (f), (g) or (h) with the "Plan Entry Date" selection in (c),
(d) or (e). Unless otherwise excluded under Section 1.07, the
Employee must become a Participant by the earlier of: 91) the
first day of the Plan Year beginning after the date the Employee
completes the age and service requirements of Code ss.410(a); or
(2) 6 months after the date the Employee completes those
requirements.]
Dual eligibility. The eligibility conditions of this Section 2.01
apply to: (Choose (i) or (j))
(i) All Employees of the Employer, except: (Choose (1) or (2))
(1) No exceptions.
(2) Employees who are Participants in the Plan as of the
Effective Date.
<PAGE>
(j) Solely to an Employee employed by the Employer after ________________.
If the Employee was employed by the Employer on or before the specified date,
the Employee will become a Participant: (Choose (1), (2) or (3))
(1) On the latest of the Effective Date, his Employment
Commencement Date or the date he attains age ___________ (not to exceed
21).
(2) Under the eligibility conditions in effect under the Plan
prior to the restated Effective Date. [For restated plans only]
(3) (Specify) ____________________________________________.
2.02 YEAR OF SERVICE - PARTICIPATION.
Hours of Service. An Employee must complete: (Choose (a) or (b))
(a) 1,000 Hours of Service
(b) ___________ Hours of Service during an eligibility
computation period to receive credit for a Year of Service.
[Note: The Hours of Service requirement may not exceed 1,000.]
Eligibility computation period. After the initial eligibility
computation period described in Section 2.02 of the Plan, the
Plan measures the eligibility computation period as: (Choose (c)
or (d))
(c) The 12 consecutive month period beginning with each anniversary
of an Employee's Employment Commencement Date.
(d) The Plan Year, beginning with the Plan Year which includes the
first anniversary of the Employee's Employment Commencement Date.
2.03 BREAK IN SERVICE - PARTICIPATION. The Break in Service rule
described in Section 2.03(B) of the plan: (Choose (a) or (b))
(a) Does not apply to the Employer's Plan.
(b) Applies to the Employer's Plan.
2.06 ELECTION NOT TO PARTICIPATE. The Plan: (Choose (a) or (b))
(a) Does not permit an eligible Employee or a Participant to
elect not to participate.
(b) Does permit an eligible Employee or a Participant to elect not
to participate in accordance with Section 2.06 and with the following
rules: (Complete (1), (2) (3) and (4))
<PAGE>
(1) An election is effective for Plan Year if filed no later
than ________________.
(2) An election not to participate must be effective for at
least ___________________ Plan Year(s).
(3) Following a re-election to participate, the Employee
or Participant:
(i) May not again elect not to participate for any
subsequent Plan Year.
(ii) May again elect not to participate, but not earlier
than the ___________ Plan Year following the Plan Year in
which the re-election first was effective.
(4) (Specify) ____________________________________________
[Insert "N/A" if no other rules apply].
ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES
3.01 AMOUNT. The amount of the Employer's annual contribution to the Trust will
equal: (Choose (a), (b), (c), (d) or (e); (f) is mandatory if the Employer
elects (b) or (c), or Adoption Agreement Section 3.04(b)(2))
(a) Nonintegrated Contribution Formula. ___________% of each Participant's
Compensation for the Plan Year.
(b) Integrated Contribution Formula. (Complete both percentages) _____% of
each Participant's Compensation for the Plan Year in excess of the Integration
Level. [Note: The second percentage may not exceed the lesser of the first
percentage or the applicable percentage described in the Maximum Disparity
Table.]
(c) Step-rate Integrated Contribution Formula. (Complete both
percentages) ___________% of each Participant's Compensation for the Plan Year
which does not exceed the Integration Level, plus __________________% of each
Participant's Compensation for the Plan Year in excess of the Integration Level.
[Note: The difference between the second percentage and the first percentage may
not exceed the lesser of the first percentage or the applicable percentage
described in the Maximum Disparity Table.]
(d) Flat Contribution Formula. (Choose (1), (2) or (3); (4) is
optional only in addition to (2) or (3))
(1) $_____________, subject to the limitations of Part 2 of
Article III of the Plan.
(2) For each Participant, $_______________ for each
________________________________________________________.
<PAGE>
(3) For each Participant, _________% of Compensation for each
_____________________________________________________.
(4) The contribution on behalf of any Participant: (Choose
(i) or (iii)
(i) May not exceed _____________________________.
(ii) May not be less than _______________________.
(e) Frozen Plan Formula. This Plan is a frozen Plan effective ________________.
The Employer will not contribute to the Plan with respect to any period
following that stated date.
(f) Integration Level. The Integration Level under the Plan is:
(Choose (1) or (2))
(1) __________% (not exceeding 100%) of the taxable wage base, as
determined under Section 230 of the Social Security Act in effect on
the first day of the Plan Year. (Choose any combination of (i) and (ii)
or choose (iii))
(i) Rounded to _____________ (but not exceeding the
taxable wage base).
(ii) But not greater than $_________________.
(iii)Without any further adjustment or limitation.
(2) $______________ [Note: Not exceeding the taxable wage base for the
Plan Year in which this Adoption Agreement first is effective.
Maximum Disparity Table. For purposes of Options (b) and (c) and
Adoption Agreement Section 3.04(b)(2), the applicable percentage
is:
Integration Level (as Applicable
percentage of taxable wage base) Percentage
100% 5.7%
More than 80% but less than 100% 5.4%
More than 20% (but not less than
$10,001) and not more than 80% 4.3%
20% (or $10,000, if greater) or less 5.7%
Application of contribution formula. The Employer will determine its
contribution under Options (a), (b), (c) or (d) by taking into account only the
Participants who satisfy the conditions under Section 3.06 for an allocation of
Employer contributions and only the Participant's Compensation taken into
<PAGE>
account under Section 3.06. The Employer contribution on behalf of a Participant
may not exceed the Participant's annual additions limitation described in Part 2
of Article III, even if the contribution formula otherwise would require a
larger contribution. The Employer will reduce its contribution for a Plan Year
if an allocation offset elected by the Employer under Section 3.04 requires
reduction of that contribution.
Coordination with defined benefit plan. If the Employer maintains a defined
benefit plan under which at least one Participant in this Plan participates, the
Employer will determine its contribution under Options (a), (b), (c) or (d) by
reducing the total contribution, if necessary, to equal the maximum deductible
amount under Code ss.404(a)(7). If the Employer must reduce its contribution,
the Employer determines its contribution with respect to each Participant by
adjusting each percentage under Options (a), (b), (c) or (d) by the same ratio
as the reduced total Employer contribution for the Plan Year bears to the total
Employer contribution determined without application of Code ss.404(a)(7). The
Employer may modify this paragraph by attaching an addendum to this Adoption
Agreement, numbered 3.01, setting forth the modified provision.
Related Employers. Unless obligated by the joint and several liability
provisions of the Code or of ERISA, a related group member, as defined in
Section 1.30 of the Plan, may not contribute to this Plan unless it executes a
Participation Agreement, even if its Employees are Participants in the Plan. The
signatory Employer and any Participating Employer(s) will satisfy the annual
contribution under this Section 3.01 as agreed upon by those Employers. A
Participating Employer may attach a schedule to this Adoption Agreement, in the
same format as this Section 3.01 and Section 3.04, designating separate
contribution and allocation formulas. If a Participating Employer attaches a
separate contribution/allocation schedule, the contributions, and attributable
Participant forfeitures, made by that Participating Employer are allocable only
to the Employees of that Participating Employer. If a Participant receives
Compensation from more than one contributing Employer and that Participant is
subject to two or more contribution/allocation formulas, the Advisory Committee
will apply the contribution/allocation formulas, the Advisory Committee will
apply the contribution/allocation formulas by prorating among the separate
formulas the Participant's Compensation and any integration level applicable to
the Participant.
3.04 CONTRIBUTION ALLOCATION
Method of Allocation. (Choose (a) or (b); (c) is optional to (a)
or (b))
(a) Incorporation of Contribution Formula. Subject to any restoration allocation
required under Section 5.04, the Advisory Committee will allocate and credit
<PAGE>
each annual Employer contribution to the account of each Participant who
satisfies the conditions of Section 3.06, in accordance with the contribution
formula adopted by the Employer under Adoption Agreement Section 3.01. [Note:
The Employer must elect this Option (a) if it elects Adoption Agreement Section
3.01(b), (c), (d)(2) or (d)(3). The Employer may not elect this Option (a) with
Adoption Agreement Section 3.01(d)(1).]
(b) Allocation Formula Different From Contribution Formula. (Choose (1) or (2))
[Note: The Employer must elect this Option (b) if it elected Adoption Agreement
Section 3.01(d)(1). The Employer may not elect this Option (b) if it elected
Adoption Agreement Section 3.01(b), (c), (d)(2) or (d)(3).
(1) Nonintegrated Allocation Formula. The Advisory Committee will
allocate the annual Employer contributions in the same ratio that each
Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year.
(2) Two-Tiered Integrated Allocation Formula - Maximum Disparity.
First, the Advisory Committee will allocate the annual Employer
contributions in the same ratio that each Participant's Compensation
plus Excess Compensation for the Plan Year bears to the total
Compensation plus Excess Compensation of all Participants for the Plan
Year. The allocation under this paragraph, as a percentage of each
Participant's Compensation plus Excess Compensation, must not exceed
the applicable percentage (5.6% or 4.3%) listed under the Maximum
Disparity Table in Adoption Agreement Section 3.01. A Participant's
"Excess Compensation" is his Compensation for the Plan Year in excess
of the Integration Level elected under Adoption Agreement Section
3.01(f).
The Advisory Committee then will allocate any remaining Employer
contributions in the same ratio that each Participant's Compensation
for the Plan Year bears to the total Compensation of all Participants
for the Plan Year.
(c) Allocation offset. The Advisory Committee will reduce a Participant's
allocation otherwise made under this Section 3.04 by the Participant's
allocation under the following qualified plan(s) maintained by the Employer:
________________________________________________________________________________
_______________________________________________________________________________.
(1) By treating the term "Employer contribution" as including all
amounts paid or accrued by the Employer during the Plan Year to the
qualified plan(s) referenced under this Option (c). If a Participant
under this Plan also participates in that other plan, the Advisory
Committee will treat the amount the Employer contributes for or during
a Plan Year on behalf of a Particular Participant under such other plan
as an amount allocated under this Plan to that Participant's Account
<PAGE>
for that Plan Year. The Advisory Committee will make the computation
of allocation required under the immediately preceding sentence before
making any allocation required by this Section 3.04.
(2) In accordance with the formula provided in an addendum to this
Adoption Agreement, numbered 3.04(c).
Top Heavy Minimum Allocation - Method of Compliance. If a
Participant's allocation under this Section 3.04 is less than the top
heavy minimum allocation to which he is entitled under Section
3.04(B): (Choose (d) or (e))
(d) the Employer will make any necessary additional contribution to the
Participant's Account, as described in Section 3.04(B)(7)(a) of the Plan.
(e) The Employer will satisfy the top heavy minimum allocation under the
following plan(s) it maintains: ______________________. However, the Employer
will make any necessary additional contribution to satisfy the top heavy minimum
allocation for an Employee covered only under this Plan and not under the other
plan(s) designated in this Option (e). See Section 3.04(B)(7)(b) of the Plan.
If the Employer maintains another plan, the Employer may provide in an addendum
to this Adoption Agreement, numbered Section 3.04, any modifications to the Plan
necessary to satisfy the top heavy requirements under Code ss.416.
3.05 FORFEITURE ALLOCATION. Subject to any restoration allocation required under
Sections 5.04 or 9.14, the Advisory Committee will allocate a Participant
forfeiture: (Choose (a) or (b); (c) is optional in addition to (a) or (b))
(a) Reduction of Employer contribution. In accordance with Section 3.04, to
reduce the Employer contribution for the Plan Year: (Choose (1) or (2))
(1) in which the forfeiture occurs.
(2) immediately following the plan Year in which the forfeiture occurs.
(b) Increased allocation. In addition to the Employer contribution for the Plan
Year in which the forfeiture occurs. The Advisory Committee will allocate the
Participant forfeitures for a Plan Year to the Account of each Participant who
satisfies the conditions of Section 3.06: (Choose (1) or (2))
(1) in the same ratio that such Participant's Compensation for the Plan
Year bears to the total Compensation of all Participants for the Plan
Year.
<PAGE>
(2) as an Employer contribution for the Plan Year, in accordance with
Option (b) of Adoption Agreement Section 3.04, as if the Participant
forfeiture were an additional Employer contribution for that Plan
Year.
(c) First to reduce the Plan's ordinary and necessary administrative
expenses for the Plan Year, and then will allocate any remaining
forfeitures in the manner described in Option (a) or in Option (b),
whichever applies.
3.06 ACCRUAL OF BENEFIT.
Compensation Taken Into Account. For the Plan Year in which the
Employee first becomes a Participant, the Advisory Committee will
determine the contribution/allocation under Adoption Agreement
Sections 3.01 and 3.04 by taking into account: (Choose (a) or
(b))
(a) The Employee's Compensation for the entire Plan Year.
(b) The Employee's Compensation for the portion of the Plan Year in which the
Employee actually is a Participant in the Plan.
Accrual Requirements. Subject to the suspension of accrual requirements of
Section 3.06(E) of the Plan, to receive an allocation of Employer contributions
and Participant forfeitures, if any, for the Plan Year, a Participant must
satisfy the conditions described in the following elections: (Choose (c), or at
least one of (d) through (f)
(c) Safe harbor rule. If the Participant is employed by the Employer on the last
day of the Plan Year, the Participant must complete at least one Hour of Service
for that Plan Year. If the Participant is not employed by the Employer on the
last day of the Plan Year, the Participant must complete at least 501 Hours of
Service during the Plan Year.
(d) Hours of Service condition. The Participant must complete the following
minimum number of Hours of Service for the Plan Year: (Choose at least one of
(1) through (4))
(1) 1,000 Hours of Service.
(2) (Specify, but the number of Hours of Service may not exceed 1,000)
_____________________________________.
(3) No Hour of Service requirement if the Participant terminates
employment during the Plan Year on account of: (Choose at least one of
(i) through iii))
(i) Death.
(ii) Disability.
(iii)Attainment of Normal Retirement Age in the current
Plan Year or in a prior Plan Year.
<PAGE>
(4) _________________ Hours of Service (not exceeding 1,000) if the
Participant terminates employment with the Employer during the Plan
Year, subject to any election in Option (3).
(e) Employment condition. The Participant must be employed by the Employer on
the last day of the Plan Year, irrespective of whether he satisfies any Hours of
Service condition under Option (c), unless his employment terminates because of:
(Choose (1) or at least one of (2) through (4))
(1) No exceptions.
(2) Death.
(3) Disability.
(4) Attainment of Normal Retiement Age in the current Plan Year or in a
prior Plan Year.
(f) (Specify other conditions, if applicable):
_____________________________________________________.
Suspension of Accrual Requirements. The suspension of accrual requirements of
Section 3.06(E) of the Plan: (Choose (g), (h) or (i))
(g) Applies to the Employer's Plan.
(h) Does not apply to the Employer's Plan.
(i) Applies in modified form to the Employer's Plan, as described in an addendum
to this Adoption Agreement, numbered Section 3.06(E).
3.15 MORE THAN ONE PLAN LIMITATION. If the provisions of Section 3.15 apply, the
Excess Amount attributed to this Plan equals:
(Choose (a), (b) or (c))
(a) The product of:
(i) the total Excess Amount allocated as of such date (including
any amount which the Advisory Committee would have allocated
but for the limitations of Code ss.415, times
(ii) the ratio of (1) the amount allocated to the Participant as of
such date under this Plan divided by (2) the total amount
allocated as of such date under all qualified defined
contribution plans (determined without regard to the
limitations of Code ss.415).
<PAGE>
(b) The total Excess Amount.
(c) None of the Excess Amount.
3.18 DEFINED BENEFIT PLAN LIMITATION.
Application of limitation. The limitation under Section 3.18 of
the Plan: (Choose (a) or (b))
(a) Does not apply to the Employer's Plan because the Employer does not maintain
and never has maintained a defined benefit plan covering any Participant in this
Plan.
(b) Applies to the Employer's Plan. To the extent necessary to satisfy the
limitation under Section 3.18, the Employer will reduce: (Choose (1) or (2))
(1) The Participant's projected annual benefit under the defined
benefit plan under which the Participant participates.
(2) Its contribution or allocation on behalf of the Participant to the
defined contribution plan under which the Participant participates and
then, if necessary, the Participant's projected annual benefit under
the defined benefit plan under which the Participant participates.
[Note: If the Employer selects (a), the remaining options in this Section 3.18
do not apply to the Employer's Plan.]
Coordination with top heavy minimum allocation. The Advisory Committee will
apply the top heavy minimum allocation provisions of Section 3.04(B) of the Plan
with the following modifications:
(Choose (c) or at least one of (d) and (e))
(c) No modifications.
(d) For Non-Key Employees participating only in this Plan, the top heavy minimum
allocation is the minimum allocation described in Section 3.04(B) determined by
substituting _________% (not less than 4%) for "3%", except: (Choose (i) or
(ii))
(i) No exceptions.
(ii) Plan Years in which the top heavy ratio exceeds 90%.
(e) For Non-Key Employees also participating in the defined benefit plan, the
top heavy minimum is: (Choose (1) or (2))
(1) 5% of Compensation (as determined under Section 3.04(B)
of the Plan) irrespective of the contribution rate of any
Key Employee, except: (Choose (i) or (ii))
(i) No exceptions.
<PAGE>
(ii) Substituting "7 1/2%" for "5%" if the top heavy ratio
does not exceed 90%.
(2) 0%. [Note: The employer may not select this Option (2)
unless the defined benefit plan satisfies the top heavy
minimum benefit requirements of Code ss.416 for these Non-Key
Employees.]
Actuarial Assumptions for Top Heavy Calculation. To determine the top heavy
ratio, the Advisory Committee will use the following interest rate and mortality
assumptions to value accrued benefits under a defined benefit plan:
_______________________________________________________________________________.
If the elections under this Section 3.18 are not appropriate to satisfy the
limitations of Section 3.18, or the top heavy requirements under Code ss.416,
the Employer must provide the appropriate provisions in an addendum to this
Adoption Agreement.
ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING
5.01 NORMAL RETIREMENT. Normal Retirement Age under the Plan is:
(Choose (a) or (b))
(a) ____________________ [State age, but may not exceed age 65.]
(b) The later of the date the Participant attains __________ years of age or the
_________ anniversary of the first day of the Plan Year in which the Participant
commenced participation in the Plan. [The age selected may not exceed age 65 and
the anniversary selected may not exceed the 5th.]
5.02 PARTICIPANT DEATH OR DISABILITY. The 100% vesting rule under Section 5.02
of the Plan: (Choose (a) or choose one or both of (b) and (c))
(a) Does not apply.
(b) Applies to death.
(c) Applies to disability.
5.03 VESTING SCHEDULE. The Employer elects the following vesting schedule:
(Choose (a) or (b); (c) and (d) are available only in addition to (b))
(a) Immediate vesting. 100% Nonforfeitable at all times. [Note: The Employer
must elect Option (a) if the eligibility conditions conditions under Adoption
Agreement Section 2.01(b) require 2 years of service or more than 12 months of
employment.]
<PAGE>
(b) Graduated Vesting Schedules.
Top Heavy Schedule Non Top Heavy Schedule
(Mandatory) (Optional)
Years of Nonforfeitable Years of Nonforfeitable
Service Percentage Service Percentage
Less than 1 _______ Less than 1 _______
1 _______ 1 _______
2 _______ 2 _______
3 _______ 3 _______
4 _______ 4 _______
5 _______ 5 _______
6 or more _______ 6 _______
7 or more _______
(c) Minimum vesting. A Participant's Nonforfeitable Accrued Benefit will never
be less than the lesser of $__________ or his entire Accrued Benefit, even if
the application of the graduated vesting schedule under Option (b) would result
in a small Nonforfeitable Accrued Benefit.
[Note: Under Option (b), the Employer must complete a Top Heavy Schedule which
satisfies Code ss.416. The Employer, at its option, may complete a Non Top Heavy
Schedule. The Non Top Heavy Schedule must satisfy Code ss.411(a)(2). Also see
Section 7.05 of the Plan.]
(d) The Top Heavy Schedule under Option (b) applies: (Choose (1) or (2))
(1) Only in a Plan Year for which the Plan is top heavy.
(2) In the Plan Year for which the Plan first is top heavy
and then in all subsequent Plan Years. [Note: The Employer
may not elect Option (d) unless it has completed a Non Top
Heavy Schedule.]
Life Insurance Investments. The Participant's Accrued Benefit attributable to
insurance contracts purchased on his behalf under Article XI is: (Choose (e) or
(f))
(e) Subject to the vesting election under Options (a) or (b).
(f) 100% Nonforfeitable at all times, irrespective of the vesting election under
Option (b).
5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/RESTORATION OF
FORFEITED ACCRUED BENEFIT. The deemed cash-out rule described in Section 5.04(C)
of the Plan: (Choose (a) or (b))
(a) Does not apply.
(b) Will apply to determine the timing of forfeitures for 0% vested
Participants.
<PAGE>
5.06 YEAR OF SERVICE - VESTING.
Vesting computation period. The Plan measures a Year of Service on the basis of
the following 12 consecutive month periods:
(Choose (a) or (b))
(a) Plan Years.
(b) Employment Years. An Employment Year is the 12 consecutive month period
measured from the Employee's Employment Commencement Date and each successive 12
consecutive month period measured from each anniversary of that Employment
Commencement Date.
Hours of Service. The minimum number of Hours of Service an Employee must
complete during a vesting computation period to receive credit for a Year of
Service is: (Choose (c) or (d))
(c) 1,000 Hours of Service.
(d) __________ Hours of Service. [Note: The Hours of Service
requirement may not exceed 1,000.]
5.08 INCLUDED YEARS OF SERVICE - VESTING. The Employer
specifically excludes the following Years of Service: (Choose (a)
or at least one of (b) through (e))
(a) None other than as specified in Section 5.08(a) of the Plan.
(b) Any Year of Service before the Participant attained the age
of _________________. [Note: The age selected may not exceed age
18.]
(c) Any Year of Service during the period the Employer did not maintain this
Plan or a predecessor plan.
(d) Any Year of Service before a Break in Service if the number of consecutive
Breaks in Service equals or exceeds the greater of 5 or the aggregate number of
the Years of Service prior to the Break. This exception applies only if the
Participant is 0% vested in his Accrued Benefit derived from Employer
contributions at the time he has a Bread in Service. Furthermore, the aggregate
number of Years of Service before a Break in Service do not include any Years of
Service not required to be taken into account under this exception by reason of
any prior Break in Service.
(e) Any Year of Service earned prior to the effective date of ERISA if the Plan
would have disregarded that Year of Service on account of an Employee's
Separation from Service under a Plan provision in effect and adopted before
January 1, 1974.
<PAGE>
ARTICLE VI
TIME AND METHOD OF PAYMENTS OF BENEFITS
Code ss.(d)(6) Protected Benefits. The elections under this Article VI may not
eliminate Code ss.411(d)(6) protected benefits. To the extent the elections
would eliminate a Code ss.411(d)(6) protected benefit, see Section 13.02 of the
Plan. Furthermore, if the elections liberalize the optional forms of benefit
under the Plan, the more liberal options apply on the later of the adoption date
or the Effective Date of this Adoption Agreement.
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT.
Distribution date. A distribution date under the Plan means
___________________________________________________________.
[Note: The Employer must specify the appropriate date(s). The specified
distribution dates primarily establish annuity starting dates and the notice and
consent periods prescribed by the Plan. The Plan allows the Trustee an
administratively practicable period of time to make the actual distribution
relating to a particular distribution date.]
Nonforfeitable Accrued Benefit Not Exceeding $3,500. Subject to the limitations
of Section 6.01(A)(1), the distribution date for distribution of a
Nonforfeitable Accrued Benefit not exceeding $3,500 is: (Choose (a), (b), (c),
(d) or (e))
(a) _________________ of the ______________ Plan Year beginning after the
Participant's Separation from Service.
(b) _________________ following the Participant's Separation from Service.
(c) ___________________ of the Plan Year after the Participant incurs
___________________ Break(s) in Service (as defined in Article V).
(d) ____________________ following the Participant's attainment of Normal
Retirement Age, but not earlier than _____________ days following his Separation
from Service.
(e) (Specify) ______________________________________________.
Nonforfeitable Accrued Benefit Exceeds $3,500. See the elections
under Section 6.03.
Disability. The distribution date, subject to Section 6.01(A)(3),
is: (Choose (f), (g) or (h))
(f) ______________________________________ after the Participant terminates
employment because of disability.
(g) The same as if the Participant had terminated employment without disability.
(h) (Specify) ______________________________________________.
<PAGE>
Hardship. (Choose (i) or (j)
(i) The Plan does not permit a hardship distribution to a Participant who has
separated from Service.
(j) The Plan permits a hardship distribution to a Participant who has separated
from Service in accordance with the hardship distribution policy stated in:
(Choose (1) or (2))
(1) Section 6.01(A)(4) of the Plan.
(2) The addendum to this Adoption Agreement, numbered Section 6.01, in
lieu of the policy stated in Section 6.01(A)(4) of the Plan.
Default on a Loan. If a Participant or Beneficiary defaults on a loan made
pursuant to a loan policy adopted by the Advisory Committee pursuant to Section
9.04, the Plan: (Choose (k), (l) or (m))
(k) Treats the default as a distributable event only if the Participant has
incurred a Separation from Service or has attained Normal Retirement Age. If
either condition applies, the Trustee, at the time of the default or, if later,
at the time either condition first occurs, will reduce the Participant's
nonforfeitable Accrued Benefit by the lesser of the amount in default (plus
accrued interest) or the Plan's security interest in that Nonforfeitable Accrued
Benefit.
(l) Does not treat the default as a distributable event. When an otherwise
distributable event first occurs pursuant to Section 6.01 or Section 6.03 of the
Plan, the Trustee will reduce the Participant's Nonforfeitable Accrued Benefit
by the lesser of the amount in default (plus accrued interest) or the Plan's
security interest in that Nonforfeitable Accrued Benefit.
(m) (Specify) _______________________________________________.
[Note: Option (m) may not treat default as a distributable event
earlier than the Participant's Separation from Service unless the
Participant has attained Normal Retirement Age.]
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. The Advisory Committee will apply
Section 6.02 of the Plan with the following modifications: (Choose (a) or at
least one of (b), (c) and (d))
(a) No modifications.
(b) Except as required under Section 6.01 of the Plan, a lump sum distribution
is not available: _________________________.
(c) An installment distribution: (Choose (1) or at least one of (2) or (3))
(1) Is not available under the Plan.
<PAGE>
(2) May not exceed the lesser of ________________ years or the maximum
period permitted under Section 6.02.
(3) (Specify) ___________________________________________.
(d) The Plan permits the following annuity options: ___________.
[Note: The Employer may specify additional annuity options in an
addendum to this Adoption Agreement, numbered 6.02(d).]
6.03 BENEFIT PAYMENT ELECTIONS.
Participant Elections After Separation from Service. A Participant who is
eligible to make distribution elections under Section 6.03 of the Plan may elect
to commence distribution of his Nonforfeitable Accrued Benefit: (Choose at least
one of (a) through (c))
(a) As of any distribution date, but not earlier than ________________ of the
______________ Plan Year beginning after the Participant's Separation from
Service.
(b) As of the following date(s): (Choose at least one of Options (1) through
(6))
(1) Any distribution date after the close of the Plan Year in which the
Participant attains Normal Retirement Age.
(2) Any distribution date following his Separation from Service.
(3) Any distribution date in the _________________ Plan Year(s)
beginning after his Separation from Service.
(4) Any distribution date in the Plan Year after the Participant incurs
__________________ Break(s) in Service
(as defined in Article V).
(5) Any distribution date following attainment of age ________________
and completion of at least _____________ Years of Service (as defined
in Article V).
(6) (Specify) _________________________________________.
(c) (Specify) ______________________________________________.
Participant Elections Prior to Separation from Service. Subject to the
restrictions of Article VI, the following distribution options apply under the
Employer's Plan prior to a Participant's Separation from Service. (Choose (d) or
at least one of (e) and (f)
(d) No distribution options prior to Separation from Service.
<PAGE>
(e) Attainment of Normal Retirement Age. Until he retires, the Participant has a
continuing election to receive all or any portion of his Nonforfeitable Accrued
Benefit after he attains Normal Retirement Age.
(f) Specify) ____________________________________. [Note: Option (f) may not
permit in service distributions prior to attainment of Normal Retirement Age.]
ARTICLE IX
ADVISORY COMMITTEE - DUTIES WITH RESPECT TO PARTICI-
PANTS' ACCOUNTS
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. If a distribution (other than a
distribution from a segregated Account) occurs more than 90 days after the most
recent valuation date, the distribution will include interest at: (Choose (a),
(b) or (c))
(a) _________________% per annum. [Note: The percentage may equal 0%.)
(b) The 90 day Treasury bill rate in effect at the beginning of the current
valuation period.
(c) (Specify) _________________________________________________.
ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES
10.14 VALUATION OF TRUST. In addition to each Accounting Date, the Trustee must
value the Trust Fund on the following valuation date(s): (Choose (a) or (b))
(a) No other mandatory valuation dates.
(b) (Specify) _____________________________________________.
EFFECTIVE DATE ADDENDUM
(Restated Plans Only)
The Employer must complete this addendum only if the restated Effective Date
specified in Adoption Agreement Section 1.18 is different than the restated
effective date for at least one of the provisions listed in this addendum. In
lieu of the restated Effective Date in Adoption Agreement Section 1.18, the
following special effective dates apply: (Choose whichever elections apply)
(a) Compensation definition. The Compensation definition of Section 1.12 (other
than the $200,000 limitation) is effective for Plan Years beginning after
____________________________. [Note: May not be effective later than the first
day of the first Plan Year beginning after the Employer executes this Adoption
Agreement to restate the Plan for the Tax Reform Act of 1986, if applicable.]
<PAGE>
(b) Eligibility conditions. the eligibility conditions specified in Adoption
Agreement Section 2.01 are effective for Plan Years beginning after
______________________________.
(c) Suspension of Years of Service. The suspension of Years of Service rule
elected under Adoption Agreement Section 2.03 is effective for Plan Years
beginning ___________________________.
(d) Contribution/allocation formula. The contribution formula elected under
Adoption Agreement Section 3.01 and the method of allocation elected under
Adoption Agreement Section 3.04 is effective for Plan Years beginning after
______________________________________.
(e) Reallocation of Forfeitures. The reallocation of forfeitures under Section
3.05 applies to Plan Years beginning after ________________________________.
[Note: The date specified may not be earlier than December 31, 1985.]
(f) Accrual requirements. The accrual requirements of Section 3.06 are effective
for Plan Years beginning after _____________________________.
(g) Employment condition. The employment condition of Section 3.06 is effective
for Plan Years beginning after _____________________________.
(h) Vesting Schedule. The vesting schedule elected under Adoption Agreement
Section 5.03 is effective for Plan Years beginning after
______________________________.
(i) (Specify) ______________________________________________.
For Plan Years prior to the special Effective Date, the terms of the Plan prior
to its restatement under this Adoption Agreement will control for purposes of
the designated provisions. A special Effective Date may not result in the delay
of a Plan provision beyond the permissible Effective Date under any applicable
law requirements.
Execution Page
The Trustee (and Custodian, if applicable), by executing this Adoption
Agreement, accepts its position and agrees to all of the obligations,
responsibilities and duties imposed upon the Trustee (or Custodian) under the
Master Plan and Trust. The Employer hereby agrees to the provisions of this Plan
and Trust, and in witness of its agreement, the Employer by its duly authorized
officers, has executed this Adoption Agreement, and the Trustee (and Custodian,
if applicable) signified its acceptance on this _______________ day of
______________________, 19_____.
<PAGE>
Name and EIN of Employer: ____________________________________
Signed: ______________________________________________________
Name(s) of Trustee: __________________________________________
______________________________________________________________
Signed: ______________________________________________________
______________________________________________________________
Name of Custodian: ___________________________________________
Signed: ______________________________________________________
[Note: A Trustee is mandatory, but a Custodian is optional. See
Section 10.03 of the Plan.]
Plan Number. The 3-digit plan number the Employer assigns to this Plan for ERISA
reporting purposes (Form 5500 Series) is: ____________.
Use of Adoption Agreement. Failure to complete properly the elections in this
Adoption Agreement may result in disqualification of the Employer's Plan. The
3-digit number assigned to this Adoption Agreement (see page 1) is solely for
the Master Plan Sponsor's recordkeeping purposes and does not necessarily
correspond to the plan number the Employer designated in the prior paragraph.
Master Plan Sponsor. The Master Plan Sponsor identified on the first page of the
basic plan document will notify all adopting employees of any amendment of this
Master Plan of any abandonment or discontinuance by the Master Plan Sponsor of
its maintenance of this Master Plan. For inquiries regarding the adoption of the
Master Plan, the Master Plan Sponsor's intended meaning of any plan provisions
or the effect of the opinion letter issued to the Master Plan Sponsor, please
contact the Master Plan Sponsor, please contact the Master Plan Sponsor at the
following address and telephone number: INVESCO Trust Company, 7800 E. Union
Ave., Denver, Colorado (303) 799-0731.
Reliance on Opinion Letter. The Employer may not rely on the Master Plan
Sponsor's opinion letter covering this Adoption Agreement. For reliance on the
Plan's qualification, the Employer must obtain a determination letter from the
applicable IRS Key District Office.
<PAGE>
PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)
The undersigned Employer, by executing this Participation Agreement, elects to
become a Participating Employer in the Plan identified in Section 1.03 of the
accompanying Adoption Agreement, as if the Participating Employer were a
signatory to that Agreement. The Participating Employer accepts, and agrees to
be bound by, all of the elections granted under the provisions of the Adoption
Agreement.
1. The Effective Date of the undersigned Employer's participation in the
designated Plan is: __________________________.
2. The undersigned Employer's adoption of this Plan constitutes:
(a) The adoption of a new plan by the Participating Employer.
(b) The adoption of an amendment and restatement of a plan currently
maintained by the Employer, identified as __________________, and
having an original effective date of
--------------------.
Dated this ________ day of _____________________, 19_________.
Name of Participating Employer: ________________________________
Signed: ________________________________________________________
Participating Employer's EIN:___________________________________
Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.
Name of Signatory Employer: ____________________________________
Accepted: ______________________________________________________
[Date]
Signed: ________________________________________________________
Name(s) of Trustee: ____________________________________________
Accepted: ______________________________________________________
[Date]
Signed: ________________________________________________________
[note: Each Participating Employer must execute a separate
Participation Agreement. See the Execution Page of the Adoption
Agreement for important Master Plan information.]
<PAGE>
NS MP AA Instructions
Complete the first blank in the paragraph by writing in the business' name in
its entirety.
1.02 Trustee
Option (a) should be chosen when the employer will be the trustee. INVESCO Trust
Company would then act as Custodian. If option (b) is chosen, INVESCO Trust
Company will charge an annual trust fee. Note: See Trustee Comments on page 16
for further explaination of Non-discretionary Trustee.
1.03 Plan
Enter the plan name. Example: ABC Inc. Money Purchase Pension Plan.
1.07 Employee
If you want the plan to cover all types of employees, select option (a). If you
want to exclude from the plan any group(s) of employees, select any combination
of (b) through (g). When a retirement plan excludes employees in options (d)
through (g) from participation, the plan is subject to a minimum coverage test
to maintain its "tax qualified" status. Your accounting firm should be notified
to perform the test annually.
Leased Employees
You may exclude leased employees from participation (option h). However, the
plan must satisfy the coverage rules of Code Section 410(b) and 401(a)(25),
consult your legal or financial counsel.
Related Employers
You may exclude related employers from participating in the plan (option j).
However, the plan must satisfy the coverage rules of Code Section 410(b) and
401(a)(26), consult your legal or financial counsel.
1.12 Compensation
Treatment of elective contributions - Choose option (a) if you prefer to "add
back" employee elective 401(k), contributions to compensation for purposes of
allocating employer contributions, forfeitures and for non-discrimination
testing.
Modifications to Compensation
Modifications to Compensation - You must choose option (C) or any combination of
(d) through (j). Any exclusion of compensation may result in unallowable
discrimination, your accountant may want to test for any discriminatory effect
of excluding any type of compensation.
<PAGE>
1.17 Plan Year
You must define the "plan year," usually it will follow the business tax year.
Limitation Year - You must define the "limitation year" (12 month period for
testing allocations to each employee's account), for administrative convenience
it should match the plan year.
1.18 Effective Date
New Plan - Enter the first day of your plan year (usually January 1) and the
year.
Restated Plan - Effective date - if you are amending for the Tax Reform Act of
1986 enter: January 1, 1987. If you are amending for another reason, enter the
first day of your tax year, example: January 1, 1990. Original established date
- - Enter the original effective date of your plan from your prior Adoption
Agreement.
1.27 Hours of Service
Choose which method you wish to use for counting hours worked by an employee to
accrue benefits. Option (b), the equivalency method, is explained in Section
1.27 of the plan. Option (a) is usually chosen.
1.29 Service for Predecessor Employer
Under this option, you may elect to count service for a predecessor employer
when you are not maintaining the plan of the predecessor employer. (Used
primarily in the event of a merger or acquisition.)
1.31 Leased Employees
The law requires you to state how your plan would treat a leased employee who
could become a participant, even if you don't intend to ever lease employees.
Choose option (a) covering the employee without regard to the leasing company's
plan or option (b) the reduction method. Usually Option (b)(1) is chosen.
2.01 Eligibility
a. An employee must attain this age to become a participant (cannot exceed
age 21).
b. Pick how long (service) an employee must work to become a
participant.
<PAGE>
Plan Entry - Choose when employees enter the plan for purposes of contributions
and benefit accrual. Normally, option (c), semi- annual entry dates, is chosen.
Time of Participation - Choose which plan entry date (before or after) an
employee who meets the eligibility requirements will enter the plan. Normally,
option (f) is chosen.
Dual Eligibility - This section allows you to include the plan current employees
who have not met the eligibility requirements and apply the eligibility
requirements to newly hired employees.
Restated plans usually chose (i)(2).
2.02 Years of Service
Option (b) should only be chosen if you wish to require less than 1000 hours to
be worked by an employee for eligibility. Usually Option (a) is chosen.
Eligibility Computation Period - Choose whether to measure subsequent
eligibility periods on the employee's anniversary or the plan year. Option (d)
is chosen for administrative convenience.
2.03 Break In Service
This option may impose a complicated re-entry date for employees who have
termination or whose hours were severely cut back. Option (a) is chosen for
administrative convenience.
2.06 Election Not To Participate
this option allows employees and participants to elect out of participation.
However, these employees are considered when performing all non-discrimination
tests. Option (a) is chosen for administrative convenience.
3.01 Contributions and Forfeitures
Amount - The employer must select a definite contribution formula under a money
purchase pension plan. Options (a) and (d) are nonintegrated formulas, options
(b) and (c) are integrated formulas.
Option (d) allows the employer to choose a fixed amount for the contribution
regardless of compensation (options (d)(1) or (d)(2). Alternatively, the
employer may choose a fixed percentage of compensation, based upon units of
time, (option (d)(3)). The employer may choose optoin (d)(4) only in addition to
options (d)(2) or (d)(3). Option (d)(4) allows the employer to establish both a
maximum and/or a minimum contribution.
Options (b) and (c) are two approaches to allowing permitted disparity in he
contribution formula. Option (b) applies the first percentage to a participant's
total compensation. Option (C) applies the first percentage only to compensation
not exceeding an integration level.
<PAGE>
3.04 Contribution Allocation
There are two approaches for allocating (dividing up) the contribution to
participants. Option (a) mirrors the contribution formula chosen in Section
3.01. Option (a) must be chosen if the employer chose either integrated
contribution formula 3.01(a) or (b) of if the employer chose 3.01(d)(2) or
(d)(3).
Option (b) allows the employer to take a "profit sharing" approach to allocating
the contribution if the employer chose a fixed percentage or amount in Section
3.01. Under option (b) the employer has the choice of pro-rate (nonintegrated)
or a two-tiered integrated formula.
Option (c) is available only in addition to options (a) and (b). Option (c)
reduces a participant's allocation under this plan by an amount accrued under
the employer's other specified plan.
3.05 Forfeiture Allocation
Choose the method of allocating (dividing up) forfeitures of terminated
non-vested participant balances. Option (a) allocates forfeitures to reduce
employer contributions. Option (b) allocates forfeitures to increase employer
allocations.
3.06 Compensation Taken Into Account
If you wish to count a participant's full year's compensation (even if he or she
entered during the year), for contributions choose option (a), if not, choose
Option (b).
Accrual Requirements - Specify the service requirements a participant must
satisfy to receive an allocation. You may specify an hours of service
requirement, waive the service requirement for specific contributions and/or
require the participant to be employed on the last day to receive a
contribution.
Suspension of Accrual Requirements
This section allows you to suspend some or all of the accrual requirements found
in Section 3.06(E) of the plan for participants to receive allocations. This
would apply in plan years when a plan may not satisfy coverage and participation
requirements. For administrative convenience choose option (g).
3.15 More Than One Plan
This section only applies if you (the employer) maintain another defined
contribution plan (e.g.: profit sharing, money purchase, 401(k) or target
benefit) that covers at least one participant in this plan.
<PAGE>
3.18 Defined Benefit Limitation
Check option (a) if you have never maintained a defined benefit plan for any
participants in this plan. If you have or are currently maintaining a defined
benefit under option (b), choose which plan's benefit would be reduced if a
participant's total allocations for a year were to exceed the allowable limit.
5.01 Normal Retirement Age
Choose what age you (the employer) want the participants to be 100% vested in
their benefits, if still employed (normal retirement age).
5.02 Vesting: Death/Disability
You may choose to allow 100% vesting to participants that terminate from service
because of death, option (b) or disability, option (c).
5.03 Vesting Schedule
Choose what vesting schedule(s) you want to apply to employer discretionary
contributions and matching contributions. If you choose option (b), you must at
a minimum complete the top-heavy vesting schedule. Remember, if the eligibility
requirements are more than one year, option (a) must be chosen.
Complete the Top Heavy Schedule based upon the following:
Years of Service
1
2 (not less than 20%)
3 (not less than 40%)
4 (not less than 60%)
5 (not less than 80%)
6 (not less than 100%)
Optional: Complete the Non Top Heavy Schedule based upon the
following:
Years of Service or
1 1 0%
2 2 0
3 (not less than 20%) 3 0
4 (not less than 40% 4 0
5 (not less than 60%) 5 100
6 (not less than 80%)
7 (not less than 100%)
<PAGE>
5.04 Cash-Out Rule
If option (b) is chosen, the plan treats a 0% vested terminated participant has
having received a distribution, allowing for forfeitures to be reallocated to
active participants.
5.06 Years of Service
Choose what measuring period the plan should use to determine years of service
for vesting, employee's anniversary year or plan year. For ease of
administration choose option (a).
5.08 Prior Years of Service - Vesting
By choosing options (b) through (e) you (the employer) may exclude some prior
years of service for purposes of vesting.
Article 6
The employer must establish a specific distribution policy for the plan. Treas.
Reg. 1.411(d)-4 prohibits the Employer, the advisory committee or any third
party to retain discretion over when or in what form to pay the participant's
benefit (Option Forms of Benefit). Under a restated plan, the elections under
Article VI, to the extent they differ from previous plan provisions regarding
optional forms of benefit, may not eliminate an optional form of benefit with
respect to the account balance accrued as of the date the Employer executes the
restated adoption agreement (or, if later, the effective date of that restated
adoption agreement). An optional form of benefit includes the form of payment
(e.g., lump sum or installments), the timing of payment (e.g., immediately after
separation from service, following a break in service, after attaining normal
retirement age) and the medium of payment (e.g., right to elect distribution in
Employer securities, right to elect distribution in the form of an annuity
contract).
With this in mind, if you are restating an existing plan, pay close attention to
the distribution features under that document and your administrative practice
of distributions. In all cases, try to mirror or liberalize those distribution
features when restating onto this document.
6.01 Distribution Date
A distribution date establishes a predetermined "target" date in a plan year
when the plan will offer distributions. The actual distribution may occur later
than a distribution date as long as the actual distribution is within an
"administratively reasonable period of time" from the distribution date. A
typical distribution date for money purchase plans would be 60 days after the
plan year end.
Nonforfeitable Accrued Benefit Not Exceeding $3500.
<PAGE>
When a separated participants vested balance does not exceed $3500, the plan
allows the employer to separately establish the timing of these distributions,
separate from the distribution dates. When you complete this section, you need
to balance two concerns: 1) will the timing of the distribution cause the
participant to consider it a "severance benefit" and therefore encourage
separation from service and 2) the administrative concerns of carrying a
non-active account in the plan. Usually an employer chooses Option (a) and
writes in "the first distribution date" of the "first" plan year beginning after
the Participant's separation from service.
Disability - The plan allows you (the employer) to establish a different target
payout date for disability distributions in options (f) and (h). Usually an
employer chooses Option (g).
Hardship - This option states whether or not the plan would allow a separated
participant to receive a hardship distribution, prior to receiving a total
distribution of his/her vested account balance.
Default on a Loan - This election does not create a loan policy. You (the
employer) must elect the timing of the plan's foreclosure if a participant's
loan were to be defaulted upon even if you do not intend to offer loans in your
plan.
6.02 Method of Payment
Money purchase pension plans require payouts to be in the form of a commercial
annuity unless properly waived. The employer may in options (b) and (c), if this
is a new plan, limit the alternative method of payment. Caution: an employer
cannot eliminate a prior method of payment by restating the plan onto this
document.
6.03 Participant Elections after Separation from Service
You must choose when an employee who has separated from service, with a vested
benefit greater than $3500, may elect to commence distributions. This election
will be tied directly to the "distribution date" definition earlier.
Participant Elections Prior to Separation from Service
The following distribution elections apply to employer discretionary account
regardless of vested account balances, prior to employment separation. If you
prefer not to allow any distribution options from these accounts prior to
separation, select option (d).
9.10 Value of Benefit
This option allows the employer to add interest to a participant's balance, if a
distribution occurs more than 90 days after the most recent plan valuation. You
do not have to provide an interest addition under this section and may complete
option (a) with 0%.
<PAGE>
10.14 Valuation of Trust
You may use this option to specify mandatory valuation dates, in addition to the
accounting date. Normally, option (a) is chosen.
Instructions for Effective Date Addendum
You must complete the effective date addendum only if the effective dates of any
of the listed items (a) through (j) have an effective date other than your
restated effective date in adoption agreement section 1.18. Since some
provisions in the Tax Reform Act of 1986 were not effective until 1988 or 1989
the few provisions (if any) that have later effective dates must specify when
they are effective.
a. Compensation definition may not be later than the first day of your 1991 plan
year.
b. Eligibility conditions may not be later than the first day of your 1989 plan
year.
c. Suspension of years of service may not be earlier than the first day of your
1990 plan year.
d. Contribution/allocation formula may not be earlier than the first day of your
1989 plan year.
e. Reallocation of forfeitures may not be earlier than December 31, 1985.
f. Accrual requirements may not be earlier than the first day of your 1989 plan
year.
g. Employment condition may not be earlier than the first day of your 1991 plan
year.
h. Vesting schedule may not be later than the first day of your 1989 plan year.
i. Allocation of Earnings may not be earlier than the first day of the 1990 plan
year.
Execution Page
The Employer must complete the date on which it executes the adoption agreement
and must execute the signature for the Employer. The execution page provides two
lines above the signature line to print or type the name of the Employer and the
Employer's EIN. If the Employer is a sole proprietorship, the individual sole
proprietor should execute as Employer. If the Employer is a corporation or a
partnership, an officer or a partner, as applicable, should execute the adoption
agreement on behalf of the Employer.
<PAGE>
Trustee
If you selected option (a) of Section 1.02, then the employer will be the
Trustee. An individual must sign as trustee for the employer. INVESCO Trust
Company will then act as custodian.
If you choose to have INVESCO Trust Company act as "Trustee" then option (b) of
Section 1.02 must be chosen. INVESCO does charge an annual fee for this service.
INVESCO Trust Company will only serve as a non-discretionary trustee, this means
that there is a person who is the "Named Fiduciary." The Named Fiduciary gives
direction to a non-discretionary trustee, and the non-discretionary trustee
accepts all directions from the Named Fiduciary. The Named Fiduciary is either
the President of the Corporation, the managing partner of the partnership or the
self-employed individual of a sole-proprietorship. The Named Fiduciary is
responsible for selecting plan investment.
The execution page also includes a signature line for the Custodian, if any.
Leave the Custodian lines blank if INVESCO Trust Company will act as custodian.
Plan number. This paragraph designates the number the Employer assigns to the
plan for reporting (Form 5500) purposes. If this is the first plan the Employer
ever maintained, the number must be 001. The Employer's plan number does not
correspond to the 3- digit adoption agreement number specified at the top of the
first page of the adoption agreement. Consult your Counsel if unsure what
3-digit plan number to use.
Instructions for the Participation Agreement
This adoption agreement includes a Participation Agreement under which a related
group member of the signatory Employer to the execution page may participate in
the same plan with that Employer. Each related group member wishing to become a
participating Employer should execute a separate Participation Agreement. See
Section 1.30 of the Plan for the definition of related Employers.
Thus, it is possible to exclude the employees of related group members not
participating in the plan. If an Employer is a member of a related group, it
should consider whether the inclusion of other related group members' employees
is necessary to satisfy the coverage requirements of Code ss.410(b) or the
minimum participation requirement of Code ss.401(a)(26). If the Employer
determines inclusion of the employees of a related group member is necessary to
maintain qualification of the plan, the Employer may take one of two approaches:
(1) have the related group member execute a Participation Agreement; or (2)
elect in Adoption Agreement Section 1.07 to include the employees of that
<PAGE>
related group member. Under approach (1), the participation of the related group
member will result in the automatic inclusion of the employees of that related
group member, without having to specify their inclusion in Adoption Agreement
Section 1.07. In addition, the related group member, under approach (1), has the
authority to contribute to the plan and, in the event another participating
related group member makes a contribution on behalf of that related group
member's employees, the Participation Agreement will ensure the deductibility of
that contribution (assuming the contribution does not exceed the deduction
limits of Code ss.404). Additional instructions to the appropriate adoption
agreement explain the effect on the allocation of Employer contributions when
related group members maintain a single nonstandardized plan. Please contact us.
Under approach (2), the plan will retain its qualified status, but contributions
the Employer makes on behalf of a nonparticipating related group member's
employees may not be deductible (even if otherwise within the limitations of
Code ss.404), resulting in an excise tax to the contributing Employer.
Unrelated Employers. The Master Plan does not allow the participation in a
single plan of unrelated Employers (i.e., Employers that do not satisfy the
related group definition in Section 1.30 of the Plan).
legal\adop-agr\nsmpaa.002
Adoption Agreement #003
Letter Serial No. D246280a
Standardized Profit Sharing Plan Adoption Agreement
Features of Standardized Profit Sharing Plan
- - Allows for integration of contributions with Social Security
- - Incorporates top-heavy vesting schedule
- - May be paired with INVESCO Money Purchase Pension Plans
Provided by:
The Financial Funds
Managed & Distributed by
INVESCO Funds Group, Inc.
Custodian:
INVESCO Trust Company
A Subsidiary of INVESCO MIM PLC
<PAGE>
Your Adoption Agreement and Basic Plan Document together constitute the rules
and parameters under which your retirement program will operate. Each section of
the Adoption Agreement requires the employer to make a selection. Whenever
possible (balancing complexity and space constraints) we have provided
instructions to the left of key selections. These instructions are intended to
assist you, the employer, in choosing the optional provisions for your
retirement program. They are not intended to substitute or replace competent
advice from your legal counsel or accountant. If further clarification is
necessary, contact your advisors or INVESCO Trust Company. We recommend that you
obtain the advice of your legal or tax advisor before you sign this Adoption
Agreement.
<PAGE>
ADOPTION AGREEMENT #003
STANDARDIZED PROFIT SHARING PLAN
(PAIRED PROFIT SHARING PLAN)
The undersigned, --------------------------------------------- ("Employer"), by
executing this Adoption Agreement, elects to become a participating Employer in
the INVESCO Trust Company Defined Contribution Master Plan (basic plan document
#01) by adopting the accompanying Plan and Trust in full as if the Employer were
a signatory to that Agreement. The employer makes the following elections
granted under the provisions of the Master Plan.
ARTICLE I
DEFINITIONS
1.02 trustee. The Trustee executing this Adoption Agreement is: (Choose (a)
or (b))
(a) A discretionary Trustee, See Section 10.03[A] of the Plan.
(b) A nondiscretionary Trustee. See Section 10.03[B] of the Plan. [Note:
The Employer may not elect Option (b) if a Custodian executes the Adoption
Agreement.]
1.03 PLAN. The name of the Plan as adopted by the Employer is
- -------------------------------------------------------------.
1.07 EMPLOYEE. The following Employees are not eligible to participate in
the Plan: (Choose (a) or at least one of (b) or (c))
(a) No exclusions.
(b) Collective bargaining employees (as defined in Section 1.07 of the
Plan). [Note: If the Employer excludes union employees from the Plan, the
Employer must be able to provide evidence that retirement benefits were the
subject of good faith bargaining.]
(c) Nonresident aliens who do not receive any earned income (as defined in Code
ss.911(d)(2) from the Employer which constitutes United States source income (as
defined in Code ss.861(a)(3)).
Related Employers/Leased Employees. An Employee of any member of the
Employer's related group (as defined in Section 1.30 of the Plan), and any
Leased Employee treated as an Employee under Section 1.31 of the Plan, is
eligible to participate in the Plan, unless excluded by reason of Options (b) or
(c). [Note: A related group member may not contribute to this Plan unless it
executes a Participation Agreement, even if its Employees are Participants in
the Plan.]
<PAGE>
1.12 COMPENSATION
Treatment of elective contributions. (Choose (a) or (b))
(a) "Compensation" includes elective contributions made by the Employer on
the Employee's behalf.
(b) "Compensation" does not include elective contributions.
Modifications to Compensation definition. (Choose (c) or at least one of
(d) and (e))
(c) No modifications other than as elected under Options (a) or
(b).
(d) The Plan excludes Compensation in excess of $-----------------.
(e) In lieu of the definition in Section 1.12 of the Plan, Compensation means
any earnings reportable as W-2 wages for Federal income tax withholding
purposes, subject to any other election under this Adoption Agreement Section
1.12.
1.17 PLAN YEAR/LIMITATION YEAR.
Plan Year. Plan Year means: (Choose (a) or (b))
(a) The 12 consecutive month period ending every ---------------.
(b) (Specify) --------------------------------------------------.
Limitation Year. The Limitation Year is: (Choose (c) or (d))
(c) The Plan Year.
(d) The 12 consecutive month period ending every ---------------.
1.18 EFFECTIVE DATE.
New Plan. The "Effective Date" of the Plan is ------------------.
Restated Plan. The restated Effective Date is ------------------.
This Plan is a substitution and amendment of an existing
retirement plan(s) originally established ----------------------.
(Note: See the Effective Date Addendum.)
1.27 HOUR OF SERVICE. The crediting method for Hours of Service
is: (Choose (a) or (b))
(a) The actual method.
(b) The ------------------------ equivalency method, except:
(1) No exceptions.
(2) The actual method applies for purposes of: (Choose at
least one)
<PAGE>
(i) Participation under Article II.
(ii) Vesting under Article V.
(iii)Accrual of benefits under Section 3.06.
[Note: On the blank line, insert "daily," "weekly," "semi-monthly payroll
periods" or "monthly."]
1.29 SERVICE FOR PREDECESSOR EMPLOYER. In addition tot he predecessor
service the Plan must credit by reason of Section 1.29 of the Plan, the Plan
credits Service with the following predecessor employer(s):
- -------------------------. Service with the designated predecessor employer(s)
applies: (Choose at least one of (a) or (b))
(a) For purposes of participation under Article II.
(b) For purposes of vesting under Article V.
[Note: If the Plan does not credit any predecessor service under this
provision, insert "N/A" in the first blank line. The Employer may attach a
schedule to this Adoption Agreement, in the same format as this Section 1.29,
designating additional predecessor employers and the applicable service
crediting elections.]
1.31 LEASED EMPLOYEES.
If a Leased Employee participates in a save harbor money purchase plan (as
described in Section 1.31) maintained by the leasing organization, but the
Employer is not eligible for the safe harbor plan exception: (Choose (a) or (b))
(a) The Advisory Committee will determine the Leased Employee's allocation of
Employer contributions under Article III without taking into account the Leased
Employee's allocation under the safe harbor plan.
(b) The Advisory Committee will reduce the Leased Employee's allocation of
Employer contributions under this Plan by the Leased Employee's allocation under
the safe harbor plan, but only to the extent that allocation is attributable to
the Leased Employee's service provided to the Employer. [Note: The Employer may
not elect Option (b) if a Paired Plan or any other plan of the Employer makes a
similar reduction for the same plan of the leasing organization.]
ARTICLE II
EMPLOYEE PARTICIPANTS
2.01 ELIGIBILITY.
Eligibility conditions. To become a Participant in the Plan, an Employee must
satisfy the following eligibility conditions:
<PAGE>
(Choose (a) or (b) or both)
(a) Attainment of age -------------------- (specify age, not exceeding 21).
(b) Service requirement. (Choose one of (1) through (4))
(1) One Year of Service.
(2) Two Years of Service, without an intervening Break in
Service. See Section 2.03(A) of the Plan.
(3) ------------months (not exceeding 24) following the Employee's
Employment Commencement Date.
(4) One Hour of Service.
Plan Entry Date. "Plan Entry Date" means the Effective Date and: (Choose
(c), (d) or (e))
(c) Semi-annual Entry Dates. The first day of the Plan year and the first
day of the seventh month of the Plan Year.
(d) The first day of the Plan Year.
(e) (Specify entry dates) -------------------------------.
Time of Participation. An Employee will become a Participant, unless
excluded under Adoption Agreement Section 1.07, on the Plan Entry Date (if
employed on that date): (Choose (f), (g) or (h))
(f) immediately following
(g) immediately preceding
(h) nearest the date the Employer completes the eligibility conditions described
in Options (a) and (b) of this Adoption Agreement Section 2.01. [Note: The
Employer must coordinate the selection of (f), (g) or (h) with the "Plan Entry
Date" selection in (c), (d) of (e). Unless otherwise excluded under Section
1.07, the Employee must become a Participant by the earlier of: (1) the first
day of the Plan Year beginning after the date the Employee completes the age and
service requirements of Code ss.410(a); or (2) 6 months after the date the
Employee completes those requirements.]
Dual eligibility. The eligibility conditions of this Section 2.01 apply to:
(Choose (i) or (j))
(I) All Employees of the Employer, except: (Choose (1) or (2))
(1) No exceptions
<PAGE>
(2) Employees who are Participants in the Plan as of the
Effective Date.
(j) Solely to an Employee employed by the Employer after ----------------------.
If the Employee was employed by the specified date, the Employee will become a
Participant: (Choose (1) or (2))
(1) On the latest of the Effective Date, his Employment Commencement Date
or the date he attains age ------------------- (not to exceed 21).
(2) Under the eligibility conditions in effect under the
Plan prior to the restated Effective Date. [For restated
plans only]
2.02 YEAR OF SERVICE - PARTICIPATION.
Hours of Service. An Employee must complete: (Choose (a) or (b))
(a) 1,000 Hours of Service
(b) ------------------------ Hours of Service during an eligibility computation
period to receive credit for a Year of Service. [Note: The Hours of Service
requirement may not exceed 1,000.
Eligibility computation period. After the initial eligibility computation
period described in Section 2.02 of the Plan, the Plan measures the eligibility
computation period as: (Choose (c) or (d))
(c) The 12 consecutive month period beginning with each anniversary of an
Employee's Employment Commencement Date.
(d) The Plan year, beginning with the Plan Year which includes the first
anniversary of the Employee's Employment Commencement Date.
2.03 BREAK IN SERVICE - PARTICIPATION.
The Break in Service rule described in Section 2.03(B) of the Plan: (Choose
(a) or (b))
(a) Does not apply to the Employer's Plan.
(b) Applies to the Employer's Plan.
ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES
3.01 AMOUNT.
The amount of the Employer's annual contribution to the Trust will equal:
(Choose (a), (b), (c) or (d))
(a) The amount (or additional amount) the Employer may from time to time deem
advisable.
<PAGE>
(b) -----------------% of the Compensation of all Participants under the Plan,
determined for the Employer's taxable year for which it makes the contribution,
[Note: The percentage selected may not exceed 15%.]
(c) ----------------% of Net Profits but not more than $--------------.
(d) This Plan is a frozen Plan effective ---------------. The Employer will not
contribute to the Plan with respect to any period following the stated date.
Net Profits. The Employer: (Choose (e) or (f))
(e) Need not have Net Profits to make its annual contribution under this Plan.
(f) Must have current or accumulated Net Profits exceeding
$----------------- to make the contributions described in Option
- ------------------.
The term "Net Profits" means the Employer's net income or profits for any
taxable year determined by the Employer upon the basis of its books of account
in accordance with generally accepted accounting practices consistently applied
without any deductions for Federal and state taxes upon income or for
contributions made by the Employer under this Plan or under any other employee
benefit plan the Employer maintains. If more than one member of a related group
(as defined in Section 1.30) execute this Adoption Agreement, each participating
member separately will determine Net Profits. "Net Profits" includes both
current and accumulated net profits. The term "net Profits" specifically
excludes:
- ---------------------------------------------------------------.
[Note: Enter "N/A" if no exclusions apply.]
3.04 CONTRIBUTION ALLOCATION.
Method of Allocation. Subject to any restoration allocation required under
Section 5.04, the Advisory Committee will allocate and credit each annual
Employer contribution (and Participant forfeitures, if any) to the Account of
each Participant who satisfies the conditions of Section 3.06, in accordance
with the allocation method selected under this Section 3.04. (Choose an
allocation method under (a), (b), (c) or (d); (e) is mandatory if the Employer
elects (b), (c) or (d))
(a) Nonintegrated Allocation Formula. The Advisory Committee will allocate the
annual Employer contributions (and Participant forfeitures) in the same ratio
that each Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year.
<PAGE>
(b) Two-Tiered Integrated Allocation Formula - Maximum Disparity. First,
the Advisory Committee will allocate the annual Employer contributions (and
Participant forfeitures) in the same ratio that each Participant's Compensation
plus Excess Compensation for the Plan Year bears to the total Compensation plus
Excess Compensation of all Participants for the Plan Year. The allocation under
this paragraph, as a percentage of each Participant's Compensation plus Excess
Compensation, must not exceed the applicable percentage (5.7%, 5.4% or 4.3%)
listed under the Maximum Disparity Table following Option (e).
The Advisory Committee then will allocate any remaining Employer contributions
(and Participant forfeitures) in the same ratio that each Participant's
Compensation for the Plan Year bears to the total Compensation of all
Participants for the Plan Year.
(c) Three-Tiered Integrated Allocation Formula. First, the Advisory Committee
will allocate the annual Employer contributions (and Participant forfeitures) in
the same ratio that each Participant's Compensation for the Plan Year bears to
the total Compensation of all Participants for the Plan Year. The allocation
under this paragraph, as a percentage of each Participant's Compensation must
not exceed the applicable percentage (5.7%, 5.4% or 4.3%) listed under the
Maximum Disparity Table following Option (e).
As a second tier allocation, the Advisory Committee will allocate the annual
Employer contributions (and Participant forfeitures) in the same ratio that each
Participant's Excess Compensation for the Plan Year bears to the total Excess
Compensation of all Participants for the Plan Year. The allocation under this
paragraph, as a percentage of each Participant's Excess Compensation, may not
exceed the allocation percentage in the first paragraph.
Finally, the advisory Committee will allocate any remaining annual Employer
contributions (and Participant forfeitures) in the same ratio that each
Participant's Compensation for the Plan Year bears to the total Compensation of
all Participants for the Plan Year.
(d) Four-Tiered Integrated Allocation Formula. First, the Advisory Committee
will allocate the annual Employer contributions (and Participant forfeitures) in
the same ratio that each Participant's Compensation for the Plan Year bears to
the total Compensation of all Participants for the Plan Year, but not exceeding
3% of each Participant's Compensation.
As a second tier allocation, the Advisory Committee will allocate the annual
Employer contributions (and Participant forfeitures) in the same ratio that each
Participant's Excess Compensation for the Plan Year bears to the total Excess
Compensation of all Participants for the Plan Year, but not exceeding 3% of each
Participant's Excess Compensation.
<PAGE>
As a third tier allocation, the Advisory Committee will allocate the annual
Employer contributions (and Participant forfeitures) in the same ratio that each
Participant's Compensation plus Excess Compensation for the Plan Year bears to
the total Compensation plus Excess Compensation of all Participants for the Plan
year. The allocation under this paragraph, as a percentage of each Participant's
Compensation plus Excess Compensation, must not exceed the applicable percentage
(2.7%, 2.4% or 1.3%) listed under the Maximum Disparity Table following Option
(e).
The Advisory Committee then will allocate any remaining Employer contributions
(and Participant forfeitures) in the same ratio that each Participant's
Compensation for the Plan Year bears to the total Compensation of all
Participants for the Plan Year.
(e) Excess Compensation. For purposes of Option (b), (c) or (d), "Excess
Compensation" means Compensation in excess of the following Integration Level:
(Choose (1) or (2))
(1) -------% (not exceeding 100%) of the taxable wage base, as determined
under Section 230 of the Social Security Act, in effect on the first day
of the Plan Year: (Choose any combination of (i) and (ii) or choose (iii))
(i) Rounded to ------------------------- (but not exceeding
the taxable wage base).
(ii) But not greater than $----------------.
(iii) Without any further adjustment or limitation.
(2) $------------------. [Note: Not exceeding the taxable
wage base for the Plan Year in which this Adoption Agreement
first is effective.]
Maximum Disparity Table. For purposes of Options (b), (c) and
(d), the applicable percentage is:
Integration Level Applicable Percentages Applicable
(as percentage of for Option (b) or Percentages
taxable wage base) Option (c) For Option (d)
- --------------------------------------------------------------------------------
100% 5.7% 2.7%
More than 80% but
less than 100% 5.4% 2.4%
More than 20%
(but not less than
$10,001) and not
more than 80% 4.3% 1.3%
20% (or $10,000, if
greater) or less 5.7% 2.7%
<PAGE>
Top Heavy Minimum Allocation - Eligible Participant. A Participant is
entitled to the top heavy minimum allocation in Section 3.04(B) of the Plan if
he is employed by the Employer on the last day of the Plan Year, unless: (Choose
(f) or (g))
(f) No exceptions.
(g) The Participant is a Key Employee for the Plan Year.
[Note: If the Employer selects this Option (g), it will have to determine
for each Plan Year who are the Key Employees under the Plan.]
Top Heavy Minimum Allocation - Method of Compliance. If a
Participant's allocation under this Section 3.04 is less than the
top heavy minimum allocation to which he is entitled under
Section 3.04(B): (Choose (h) or (i))
(h) The Employer will make any necessary additional contribution to the
Participant's Account, as described in Section 3.04(B)(7)(a) of the Plan.
(i) The Employer will satisfy the top heavy minimum allocation under the Paired
Pension Plan the Employer also maintains under this Master Plan. However, the
Employer will make any necessary additional contribution to satisfy the top
heavy minimum allocation for an Employee covered only under this Plan and not
under the Paired Pension Plan. See Section 3.04(B)(7)(b) of the Plan.
If the Employer maintains another plan which is not a Paired Pension Plan
offered under this Master Plan, the Employer may provide in an addendum to this
Adoption Agreement, numbered Section 3.04, any modifications to the Plan
necessary to satisfy the top heavy requirements under Code ss.416.
Related employers. If two or more related employers (as defined in Section 1.30)
contribute to this Plan, the Advisory Committee must allocate all Employer
contributions and forfeitures to each Participant in the Plan, in accordance
with the elections in this Adoption Agreement Section 3.04, without regard to
which contributing related group member employs the Participant. A Participant's
Compensation includes Compensation from all related employers, irrespective of
which related employers are contributing to the Plan.
3.05 FORFEITURE ALLOCATION.
Subject to any restoration allocation required under Sections 5.04 or 9.14,
the Advisory Committee will allocate a Participant forfeiture in accordance with
Section 3.04: (Choose (a) or (b); (c) is optional in addition to (a) or (b))
(a) As an Employer contribution for the Plan Year in which the forfeiture
occurs, as if the Participant forfeiture were an additional Employer
contribution for that Plan Year.
<PAGE>
(b) To reduce the Employer contribution for the Plan Year:
(Choose (1) or (2))
(1) in which the forfeiture occurs.
(2) immediately following the Plan Year in which the
forfeiture occurs.
(c) First to reduce the Plan's ordinary and necessary administrative expenses
for the Plan Year and then will allocate any remaining forfeitures in the manner
described in Option (a) or in Option (b), whichever applies.
3.06 ACCRUAL OF BENEFIT.
Compensation Taken Into Account. For the Plan Year in which the
Employee first becomes a Participant, the Advisory Committee will
determine the allocation under Adoption Agreement Section 3.04 by
taking into account: (Choose (a) or (b))
(a) The Employee's Compensation for the entire Plan Year.
(b) The Employee's Compensation only for the portion of the Plan Year in which
the Employee actually is a Participant in the Plan, except (Choose (1) or (2))
(1) No exceptions.
(2) For purposes of the first 3% of Compensation allocated to all
Participants under Options (a), (c) or (d) of Adoption Agreement Section
3.04, whichever applies, the Advisory Committee will take into account the
Employee's
Compensation for the entire Plan Year.
Accrual Requirements. To receive an allocation of Employer contributions and
Participant forfeitures, if any, for the Plan year, a Participant must satisfy
the accrual requirements of this paragraph. If the Participant is employed by
the Employer on the last day of the Plan Year, the Participant must complete at
least one hour of Service for that Plan Year. If the Participant terminates
employment with the Employer during the Plan year, the Participant must complete
at least ------------- Hours of Service (not exceeding 501) during the Plan
Year, except: (Choose (C) or (d))
(c) No exceptions.
(d) No Hour of Service requirement if the Participant terminates
employment during the Plan Year on account of: (Choose at least
one of (1), (2) and (3))
(1) Death.
(2) Disability.
<PAGE>
(3) Attainment of Normal Retirement Age in the current Plan Year or in a
prior Plan Year.
3.15 MORE THAN ONE PLAN LIMITATION.
If the provisions of Section 3.15 apply, the Excess Amount attributed to
this Plan equals: (Choose (a), (b) or (c))
(a) The product of:
(i) the total Excess Amount allocated as of such date (including any
amount which the Advisory Committee would have allocated but for the
limitations of Code ss.415), times
(ii) the ratio of (1) the amount allocated to the Participant as of such
date under this Plan divided by (2) the total amount allocated as of such
date under all qualified defined contribution plans (determined without
regard to the limitations of Code ss.415).
(b) The total Excess Amount.
(c) None of the Excess Amount.
[Note: If the Employer adopts Paired Plans available under this Master
Plan, the Employer must coordinate its elections under Section 3.15 of each
Adoption Agreement.]
3.18 DEFINED BENEFIT PLAN LIMITATION.
Application of limitation. The limitation under Section 3.18 of
the Plan: (Choose (a) or (b))
(a) Does not apply to the Employer's Plan because the Employer does not maintain
and never has maintained a defined benefit plan covering any Participant in this
Plan.
(b) Applies to the Employer's Plan. To the extent necessary to satisfy the
limitation under Section 3.18, the Employer will reduce: (Choose (1) or (2))
(1) The Participant's projected annual benefit under the defined benefit
plan under which the Participant participates.
(2) Its contribution or allocation on behalf of the Participant to the
defined contribution plan under which the Participant participates and
then, if necessary, the Participant's projected annual benefit under the
defined benefit plan under which the Participant participates.
[Note: If the Employer selects (a), the remaining options in this Section
3.18 do not apply to the Employer's Plan.]
Override of 100% Limitation. The Employer elects: (Choose (c) or 9d))
<PAGE>
(c) To apply the 100% limitation described in Section 3.19(1) of the Plan
in all Limitation Years. [Note: This election will avoid having to calculate the
Plan's top heavy ratio for any year.]
(d) Not to apply the 100% limitation for Limitation Years in which the Plan's
top heavy ratio (as determined under Section 1.33 of the Plan) does not exceed
90%, but only if the defined benefit plan satisfies the extra minimum benefit
requirements of Code ss.415(h)(2) (and the applicable Treasury regulations)
after taking into account the Employer's election under Options (e), (f), (g) or
(h) of this Section 3.18. To determine the top heavy ratio, the Advisory
Committee will use the following interest rate and mortality assumptions to
value accrued benefits under a defined benefit plan:
- ---------------------------------------. [Note: This election will require the
Advisory Committee to calculate the Plan's top heavy ratio.]
Coordination with top heavy minimum allocation. The Advisory Committee will
apply the top heavy minimum allocation provisions of Section 3.04(B) of the Plan
with the following modifications:
(Choose (e), (f), (g) or (h))
(e) No modifications.
(f) By substituting 4% for 3% in Paragraph 9b) of Section 3.04(B)(1) of the
Plan, but only for any Plan Year in which Option (d) applies to override the
100% limitation.
(g) By increasing the top heavy minimum allocation to 5% for any Plan Year in
which the 100% limitation applies, and to 7 1/2% for any Plan Year in which
Option (d) applies to override the 100% limitation. The increased percentage
under this Option (g) applies irrespective of whether the highest Participant
contribution rate for the Plan Year is less than that increased percentage.
(h) By eliminating the top heavy minimum allocation. [Note: The Employer
may not select this Option (h) if the defined benefit plan does not guarantee
the top heavy minimum benefit under Code ss.416 for every Participant in this
Plan who is a Non-Key Employee.]
If the elections under this Section 3.18 are not appropriate to satisfy the
limitations of Section 3.18, or the top heavy requirements under Code ss.416,
the Employer must provide the appropriate provisions in an addendum to this
Adoption Agreement.
<PAGE>
ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING
5.01 NORMAL RETIREMENT.
Normal Retirement Age under the Plan is: (Choose (a) or (b))
(a) ---------------------------------- [State age, but may not exceed age
65].
(b) The later of the date the Participant attains -------- years of age or the
- -----------nniversary of the first day of the Plan Year in which the Participant
commenced participation in the Plan. [The age selected may not exceed age 65 and
the anniversary selected may not exceed the 5th.]
5.02 PARTICIPANT DEATH OR DISABILITY.
The 100% vesting rule under Section 5.02 of the Plan: (Choose (a) or choose
one or both of (b) and (c))
(a) Does not apply.
(b) Applies to death.
(c) Applies to disability.
5.03 VESTING SCHEDULE.
The Employer elects the following vesting schedule: (Choose (a) or (b); (c)
is available only in addition to (b))
(a) Immediate vesting. 100% Nonforfeitable at all times.
[Note: The Employer must elect Option (a) if the eligibility conditions
under Adoption Agreement Section 2.01(b) require 2 years of service or more than
12 months of employment.]
(b) Graduated Vesting Schedules. (Choose (1), (2) or (3))
(1) 6-year graded (2) 3-year cliff (3) Modified Top
Year of Nonforfeitable Year of Nonforfeitable Year of Nonforfeitable
Service Percentage Service Percentage Service Percentage
- --------------------------------------------------------------------------------
Less Less Less
than 2 0% than 3 0% than 1 ------
2 20% 3 or more 100% 1 ------
3 40% 2 ------
4 60% 3 ------
5 80% 4 ------
6 or more 100% 5 ------
6 or more 100%
[Note: Under Option (b)(3), the vesting schedule must satisfy the
top heavy requirements of Code ss.416.]
<PAGE>
(c) Minimum vesting. A Participant's Nonforfeitable Accrued Benefit will never
be less than the lesser of $------------- or his entire Accrued Benefit, even if
the application of the graduated vesting schedule under Option (b) would result
in a smaller Nonforfeitable Accrued Benefit.
5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/RESTORATION OF
FORFEITED ACCRUED BENEFIT.
The deemed cash-out rule described in Section 4.04(C) of the Plan: (Choose
(a) or (b))
(a) Does not apply.
(b) Will apply to determine the timing of forfeitures for 0%
vested Participants.
5.06 YEAR OF SERVICE - VESTING.
Vesting computation period. The Plan measures a Year of Service on the basis of
the following 12 consecutive month periods:
(Choose (a) or (b))
(a) Plan Years.
(b) Employment Years. An Employment Year is the 12 consecutive month period
measured from the Employee's Employment Commencement Date and each successive 12
consecutive month period measured from each anniversary of that Employment
Commencement Date.
Hours of Service. The minimum number of Hours of Service an Employee must
complete during a vesting computation period to receive credit for a Year of
Service is: (choose (c) or (d))
(c) 1,000 Hours of Service.
(d) ----------- Hours of Service. [Note: The Hours of Service
requirement may not exceed 1,000.]
5.08 INCLUDED YEARS OF SERVICE - VESTING.
The Employer specifically excludes the following Years of Service: (Choose
(a) or at least one of (b), (c) and (d))
(a) None other than as specified in Section 5.08(a) of the Plan.
(b) Any Year of Service before the Participant attained the age of
- --------------------. [Note: The age selected may not exceed age 18.]
(c) Any Year of Service during the period the Employer did not maintain this
Plan or a predecessor plan.
(
<PAGE>
d) Any Year of Service before a Break in Service if the number of
consecutive Breaks in Service equals or exceeds the greater of 5 or the
aggregate number of the Years of Service prior to the Break. This exception
applies only if the Participant is 0% vested in his Accrued Benefit derived from
Employer contributions at the time he has a Break in Service. Furthermore, the
aggregate number of Years of Service before a Break in Service do not include
any Years of Service not required to be taken into account under this exception
by reason of any prior Break in Service.
ARTICLE VI
TIME AND METHOD OF PAYMENTS OF BENEFITS
Code ss.411(d)(6) Protected Benefits. The elections under this Article VI may
not eliminate Code ss.411(d)(6) protected benefit, see Section 13.02 of the
Plan. Furthermore, if the elections liberalize the optional forms of benefit
under the Plan, the more liberal options apply on the later of the adoption ate
or the Effective Date of this Adoption Agreement.
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT.
Distribution date. A distribution date under the Plan means
- --------------------------------------------------------------.
[Note: The Employer must specify the appropriate date(s). The specified
distribution dates primarily establish annuity starting dates and the notice and
consent periods prescribed by the Plan. The Plan allows the Trustee an
administratively practicable period of time to make the actual distribution
relating to a particular distribution date.]
Nonforfeitable Accrued Benefit Not Exceeding $3,500. Subject to the
limitations of Section 6.01(A)(1), the distribution date for distribution of a
Nonforfeitable Accrued Benefit not exceeding $3,500 is: (Choose (a), (b), (c) or
(d))
(a) ---------- of the ---------------- Plan Year beginning after the
Participant's Separation from Service.
(b) ------------------ following the Participant's Separation from
Service.
(c) ------------------------ of the Plan Year after the Participant incurs
- ---------------------------- Break(s) in Service (as defined in Article V).
(d) following the Participant's attainment of Normal Retirement Age, but
not earlier than --------------- days following his Separation from Service.
Nonforfeitable Accrued Benefit Exceeds $3,500. See the elections under
Section 6.03.
Disability. The distribution date, subject to the limitations of Section
6.01(A)(3), is: (Choose (e) or (f))
<PAGE>
(e) ------------------ after the Participant terminates employment because of
disability.
(f) The same as if the Participant had terminated employment without
disability.
Hardship. (Choose (g) or (h))
(g) The Plan does not permit a hardship distribution to a Participant who has
separated from Service.
(h) The Plan permits a hardship distribution to a Participant who has separated
from Service in accordance with the hardship distribution policy stated in
Section 6.01(A)(4) of the Plan.
Default on a Loan. If a Participant or Beneficiary defaults on a loan made
pursuant to a loan policy adopted by the Advisory Committee pursuant to Section
9.04, the Plan: (Choose (i) or (j))
(i) Treats the default as a distributable event. The Trustee, at the time of the
default, will reduce the Participant's Nonforfeitable Accrued Benefit by the
lesser of the amount in default (plus accrued interest) or the Plan's security
interest in that Nonforfeitable Accrued Benefit.
(j) Does not treat the default as a distributable event. When an otherwise
distributable event first occurs pursuant to Section 6.01 or Section 6.03 of the
Plan, the Trustee will reduce the Participant's Nonforfeitable Accrued Benefit
by the lesser of the amount in default (plus accrued interest) or the Plan's
security interest in that Nonforfeitable Accrued Benefit.
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT.
The Advisory Committee will apply Section 6.02 of the Plan with the
following modifications: (Choose (a) or (b))
(a) No modifications.
(b) The Plan permits the following annuity options:
- ----------------------------------------------------------------.
Any Participant who elects a life annuity option is subject to the
requirements of Sections 6.04(A), (B), (C) and (D) of the Plan. See Section
6.04(E). [Note: The Employer may specify additional annuity options in an
addendum to this Adoption Agreement, numbered 6.02(b).]
6.03 BENEFIT PAYMENT ELECTIONS.
Participant Elections After Separation from Service. A Participant who is
eligible to make distribution elections under Section 6.03 of the Plan may elect
to commence distribution of his Nonforfeitable Accrued Benefit: (Choose (a) or
(b))
<PAGE>
(a) As of any distribution date, but not earlier than -------------- of the
- -------- Plan Year beginning after the Participant's Separation from Service.
(b) As of the following date(s): (Choose at least one of Options
(1) and (5))
(1) As of any distribution date after the close of the Plan Year in which
the Participant attains Normal Retirement Age.
(2) Any distribution date following his Separation from
Service.
(3) Any distribution date in the -------------- Plan Year(s) beginning
after his Separation from Service.
(4) Any distribution date in the Plan Year after the Participant incurs
------------ Break(s) in Service (as defined in Article V).
(5) Any distribution date following attainment of age --------- and
completion of at least --------- Years of Service (as defined in Article
V).
Participant Elections Prior to Separation from Service. Subject to the
restrictions of Article VI, the following distribution options apply under the
Employer's Plan prior to a Participant's Separation from Service. (Choose (c) or
at least one of (d) through (f))
(c) No distribution options prior to Separation from Service.
(d) Attainment of Specified Age. Until he retires, the Participant has a
continuing election to receive all or any portion of his Nonforfeitable Accrued
Benefit after he attains: (Choose (1) or (2))
(1) Normal Retirement Age.
(2) ------------------- years of age and is at least ----------%
vested in his Accrued Benefit. [Note: If the percentage is
less than 100%, see the special vesting formula in Section
5.03.]
(e) After a Participant has participated in the Plan for a period of not
less than ------------ years and he is 100% vested in his Accrued Benefit, until
he retires, the Participant has a continuing election to receive all or any
portion of his Accrued Benefit. [Note: The number in the blank space may not be
less than 5.]
(f) Hardship. A Participant may elect a hardship distribution prior to his
Separation from Service in accordance with the hardship distribution policy
under Section 6.01(A)(4) of the Plan. In no event may a Participant receive a
<PAGE>
hardship distribution under this Option (f) before he is at least
- ---------% vested in his Accrued Benefit. [Note: If the percentage in the
blank space is less than 100%, see the special vesting formula in Section 5.03.]
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES.
The annuity distribution requirements of Section 6.04: (Choose
(a) or (b))
(a) Apply only to a Participant described in Section 6.04(E) of the Plan
(relating to the profit sharing exception to the joint and survivor
requirements).
(b) Apply to all Participants.
ARTICLE IX
ADVISORY COMMITTEE - DUTIES WITH RESPECT TO
PARTICIPANTS' ACCOUNTS
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT.
If a distribution (other than a distribution from a segregated Account)
occurs more than 90 days after the most recent valuation date, the distribution
will include interest at: (Choose (a) or (b))
(a) --------------% per annum. [Note: The percentage may equal 0%.]
(b) The 90 day Treasury bill rate in effect at the beginning of the current
valuation period.
ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES
10.14 VALUATION OF TRUST.
In addition to each Accounting Date, the trustee must value the Trust Fund
on the following valuation date(s): (Choose (a) or (b))
(a) No other mandatory valuation dates.
(b) (Specify) -------------------------------------------.
EFFECTIVE DATE ADDENDUM
(Restated Plans Only)
The Employer must complete this addendum only if the restated Effective Date
specified in Adoption Agreement Section 1.18 is different than the restated
effective date for at least one of the provisions listed in this addendum. In
lieu of the restated Effective Date in Adoption Agreement Section 1.18, the
following special effective dates apply: (Choose whichever elections apply)
<PAGE>
(a) Compensation definition. The Compensation definition of Section 1.12
(other than the $200,000 limitation) is effective for Plan Years beginning after
- ----------. [Note: May not be effective later than the first day of the first
Plan Year beginning after the Employer executes this Adoption Agreement to
restate the Plan for the Tax Reform Act of 1986, if applicable.]
(b) Eligibility conditions. The eligibility conditions specified in Adoption
Agreement Section 2.01 are effective for Plan Years beginning after
- -------------.
(c) Suspension of Years of Service. The suspension of Years of Service rule
elected under Adoption Agreement Section 2.03 is effective for Plan Years
beginning after -------------------.
(d) Contribution/allocation formula. The contribution formula elected under
Adoption Agreement Section 3.01 and the method of allocation elected under
Adoption Agreement Section 3.04 is effective for Plan Years beginning after
- -------------------.
(e) Accrual requirements. The accrual requirements of Section 3.06 are
effective for Plan Years beginning after ----------. [Note: If the effective
date is later than Plan Years beginning after December 31, 1989, the accrual
requirements in the Plan prior to its restatement may not be more restrictive
for post-1989 Plan Years than the requirements permitted under Adoption
Agreement Section 3.06.]
(f) Elimination of Net Profits. The requirement for the Employer not to
have net profits to contribute to this Plan is effective for Plan Years
beginning after ---------------------------. [Note: The date specified may
not be earlier than December 31, 1985.]
(g) Vesting Schedule. The vesting schedule elected under Adoption Agreement
Section 5.03 is effective for Plan Years beginning after ---------------------.
For Plan Years prior to the special Effective Date, the terms of the Plan prior
to its restatement under this Adoption Agreement will control for purposes of
the designated provisions. A special Effective Date may not result in the delay
of a Plan provision beyond the permissible Effective Date under any applicable
law requirements.
Execution Page
The Trustee (and custodian, if applicable), by executing this Adoption
Agreement, accepts its position and agrees to all of the obligations,
responsibilities and duties imposed upon the Trustee (or Custodian) under the
Master Plan and Trust. The Employer hereby agrees to the provisions of this Plan
<PAGE>
and Trust, and in witness of its agreement, the Employer by its duly
authorized officers, has executed this Adoption Agreement, and the Trustee (and
Custodian, if applicable) signified its acceptance, on this ---------- day of
- -----------------, 19----.
Name and EIN of Employer: --------------------------------------
Signed: --------------------------------------------------------
Name(s) of Trustee: --------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Signed: ---------------------------------------------------------
- -----------------------------------------------------------------
Name of Custodian: ----------------------------------------------
Signed: ---------------------------------------------------------
[Note: A Trustee is mandatory, but a Custodian is optional. See
Section 10.03 of the Plan.]
Use of Adoption Agreement. Failure to complete properly the elections in this
Adoption Agreement may result in disqualification of the Employer's Plan. The
3-digit number assigned to this Adoption Agreement (see page 1) is solely for
the Master Plan Sponsor's recordkeeping purposes and does not necessarily
correspond to the plan number the Employer designated in the prior paragraph.
The Master Plan Sponsor offers the following Paired Pension Plan(s) with this
Paired Profit Sharing Plan, identified by 3-digit adoption agreement number:
- -----------------------------------------------------------------
Master Plan Sponsor. The Master Plan Sponsor identified on the first page of the
basic plan document will notify all adopting employers of an amendment of this
Master Plan or of any abandonment or discontinuance by the Master Plan Sponsor
of its maintenance of this Master Plan. For inquiries regarding the adoption of
the Master Plan, the Master Plan Sponsor's intended meaning of any plan
provisions or the effect of the opinion letter issued to the Master Plan
Sponsor, please contact the Master Plan Sponsor at the following address and
telephone number: 7800 E. Union Ave., Denver, Colorado 80201, (303) 779- 0731.
Reliance on Opinion Letter. If the Employer does not maintain (and has never
maintained) any other plan other than this Plan and a Paired Pension Plan, it
may rely on the Master Plan Sponsor's opinion letter covering this Plan for
purposes of plan qualification. For this purpose, the Employer has not
maintained
<PAGE>
another plan if this Plan, or the Paired Pension Plan, amended and restated that
prior plan and the prior plan was the same type of plan as the restated plan. If
the Employer maintains or has maintained another plan other than a Paired
Pension Plan, including a welfare benefit fund, as defined in Code ss.419(e),
which provides post-retirement medical benefits for key employees (as defined in
Code ss.419A(d)(3)), or an individual medical account (as defined in Code
ss.415(1)(2)), the Employer may not rely on this Plan's qualified status unless
it obtains a determination letter from the applicable IRS Key District office.
PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)
The undersigned Employer, by executing this Participation Agreement, elects to
become a Participating Employer in the Plan identified in Section 1.03 of the
accompanying Adoption Agreement, as if the Participating Employer were a
signatory to that Agreement. The Participating Employer accepts, and agrees to
be bound by, all of the elections granted under the provisions of the Master
Plan as made by, --------------------------------------------
- --------------------------------------------------- the Signatory Employer to
the Execution Page of the Adoption Agreement.
1. The Effective Date of the undersigned Employer's
participation in the designated Plan is -------------------------------.
2. The undersigned Employer's adoption of this Plan
constitutes:
(a) The adoption of a new plan by the Participating Employer.
(b) The adoption of an amendment and restatement of a plan currently maintained
by the Employer, identified as ------------------------------------- and having
an original effective date of ---------------------------------------.
Dated this ---------------- day of ------------------, 19------.
Name of Participating Employer: ----------------------------------
Signed: ----------------------------------------------------------
Participating Employer's EIN: -------------------------------------
Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.
Name of Signatory Employer: -------------------------------------
Signed: --------------------------------------------------
Accepted:--------------------------------------------------
[Date]
<PAGE>
Name(s) of Trustee: --------------------------------------------
Signed: --------------------------------------------------
Accepted: ------------------------------------------------
[Date]
[Note: Each Participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for important Master
Plan information.]
STN PSP AA Instructions
Complete the first blank in the paragraph by writing in the business' name in
its entirety.
1.02 Trustee
Option (a) should be chosen when the employer will be the trustee, INVESCO Trust
Company would then act as Custodian. If option (b) is chosen, INVESCO Trust
Company will be the Trustee and will charge an annual trust fee. Note: See
Trustee Comments on page 14 for further explaination of Non-discretionary
Trustee.
1.03 Plan
Enter the plan name. Example: ABC Inc. Profit Sharing Plan.
1.07 Employee
If you want the plan to cover all employees, select option (a). If you want to
exclude from the plan any group(s) of employees, select any combination of (b)
or (c).
Related Employers/Leased Employers
You may not exclude leased employees or related employers from participation
unless they are excluded under options (b) or (c) of Section 1.07.
1.12 Compensation
Treatment of elective contributions
Choose option (a) if you prefer to "add back" employee elective 401(k)
contributions to compensation for purposes of allocating employer contributions,
forfeitures and for non-discrimination testing.
<PAGE>
Modifications to Compensation - You must choose option (c) or any
combination of (d) or (e). Any exclusion of compensation may result in
unallowable discrimination.
1.17 Plan Year
You must define the "plan year," usually it will follow the business tax year.
Limitation Year - You must define the "limitation year" (12 month period for
testing allocations to each employee's account), for administrative convenience
it should match the plan year.
1.18 Effective Date
New Plan - Enter the first day of your plan year (usually January
1) and the year.
Restated Plan 0 Effective date - If you are amending for the Tax Reform Act of
1986 enter: January 1, 1987. If you are amending for another reason, enter the
first day of your tax year, example: January 1, 1990. Originally established
date - Enter the original effective date of your plan from your prior Adoption
Agreement.
1.27 Hours of Service
Choose which method you wish to use for counting hours worked by an
employee to accrue benefits. Option (b), the equivalency method, is explained in
Section 1.27 of the plan. Usually Option (a) is chosen.
1.29 Service for Predecessor Employer
Under this option, you may elect to count service for a predecessor employer
when you are not maintaining the plan of the predecessor employer. (Used
primarily in the event of a merger or acquisition.)
1.31 Leased Employees
The law requires you to state how your plan would treat a leased employee who
could become a participant, even if you don't intend to ever lease employees.
Choose option (a) covering the employee without regard to the leasing company's
plan or option (b) the reduction method. Usually Option (b) is chosen.
2.01 Eligibility
a. An employee must attain this age to become a participant (cannot exceed
age 21).
b. Pick how long (service) an employee must work to become a participant.
<PAGE>
Plan Entry - Choose when employees enter the plan for purposes of contributions
and benefit accrual. Normally, option (c), semi-annual entry dates, is chosen.
Time of Participation - Choose which plan entry date (before or after) an
employee who meets the eligibility requirements will enter the plan. Normally,
option (f) is chosen.
Dual Eligibility - This section allows you to include in the plan current
employees who have not met the eligibility requirements and apply the
eligibility requirements to newly hired employees.
Restated plans usually choose (i)(2).
2.02 Years of Service
Option (b) should only be chosen if you wish to require less than 1000
hours to be worked by an employee for eligibility. Usually Option (a) is chosen.
Eligibility Computation Period - Choose whether to measure subsequent
eligibility periods on the employee's anniversary (Option (c) or the plan year
(Option (d)). Option (d) is chosen for administrative convenience.
2.03 Break in Service
This option may impose a complicated re-entry date for employees who have
terminated or whose hours were severely cut back. Option (a) is chosen for
administrative convenience.
Article III
3.01 Amount
Option (a) provides for a discreationary formula. Option (b) allows the employer
to determine the contribution separately for different catagoaries of
participants. Options (c) and (d) allow the employer to choose a fixed
contribution formula.
Net Profits - An employer may require net profits to make it's contribution or
may disregard profits to determine the contribution. If the employer selects
Option (f) it must also complete the two blanks.
3.04 Contribution Allocation
Allocation formula. The primary allocation formulas are in Options (a), (b), (c)
and (d). Option (a) is a nonintegrated formula and allocates the employer
contribution proportionate to total compensation. Options (b), (c) and (d) are
alternatives for integrated plans. Usually option (a) is chosen for
non-integrated plans.
<PAGE>
The two-tiered formula under Option (b) maximizes the disparity permitted under
the integration rules. Accordingly, the allocation in the first tier results in
an equal allocation percentage based on total compensation and based on excess
compensation. This equal allocation percentage may not exceed the maximum
disparity percentage (5.7%, 5.4% or 4.3%) described in the second column of the
Maximum Disparity Table. After completion of the first tier allocation, the
second step allocates the remaining contribution proportionate to total
compensation, in the same manner as the nonintegrated formula.
Under the three-tiered formula of Option (c), the plan: (i) first allocates
based on total compensation, but the allocation percentage may not exceed the
maximum disparity percentage determined under the second column of the Maximum
Disparity Table; (ii) then allocates based on excess compensation, but the
allocation percentage may not exceed the maximum disparity percentage determined
under the second column of the Maximum Disparity Table; and (iii) completes the
allocation on the basis of total compensation.
The four-tiered allocation under Option (d) is a hybrid of Options (b) and (c).
The sole purpose of Option (d) is to use the first tier to satisfy the 3% top
heavy minimum, then use a progression of three additional tiers to make maximum
use of the permitted disparity rules. The second tier allocates solely on the
basis of excess compensation, with a maximum allocation under the second tier
equal to 3% of each participant's excess compensation. The third tier is the
same as the first tier under Option (c). The fourth tier is a prorata allocation
based on total compensation.
3.05 Forfeiture Allocation
Choose the method of allocating (dividing up) forfeitures of terminated
non-vested participant balances. Option (a) allocates forfeitures as an extra
discretionary contribution. Option (b) allocates forfeitures to reduce employer
contributions. Option (c) allows you to allocate separately forfeitures after
taking into account the plan's administrative expenses.
3.06 Compensation Taken Into Account
If you wish to count a participant's full year's compensation (even if he or she
entered during the year), for contributions choose option (a), if not, choose
option (b).
Accrual Requirements - Specify the service requirements a participant must
satisfy to receive an allocation. You may specify an hours of service
requirement, no greater than 501 hours. Standardized plans have relaxed
contribution requirements. A participant will receive an employer contribution
and forfeitures if they meet either of the two requirements below.
<PAGE>
Requirement #1
If the Participant was employed on the last day of the plan year and worked for
at least one hour during the plan year, or
Requirement #2
If the Participant terminates employment during the plan year after working at
least 501 hours for the employer.
3.15 More Than One Plan
This section only applies if you (the employer) maintain another defined
contribution plan (e.g.: profit sharing, money purchase, 401(k) or target
benefit) that covers at least one participant in this plan.
3.18 Defined Benefit Limitation
Check option (a) if you have never maintained a defined benefit plan for any
participants in this plan. If you have or are currently maintaining a defined
benefit plan. Choose under option (b), which plan's benefit would be reduced if
a participant's total allocations for a year were to exceed the allowable limit.
5.01 Normal Retirement Age
Choose what age you (the employer) want the participants to be 100% vested in
their benefits, if still employed (normal retirement age).
5.02 Vesting Death/Disability
You may choose to allow 100% vesting for participants that terminate from
service because of death option (b) or disability option (c).
5.03 Vesting Schedule
Choose what vesting schedule(s) you want to apply to employer discretionary
contributions and matching contributions. If you choose option (b), you must at
a minimum complete the top-heavy vesting schedule. Remember, if the eligibility
requirements are more than one year, option (a) must be chosen.
Complete the Modified Top Heavy schedule based upon the following:
Years of Service
1
2 (not less than 20%)
3 (not less than 40%)
4 (not less than 60%)
<PAGE>
5 (not less than 80%)
6 (not less than 100%)
5.04 Cash-Out Rule
If option (b) is chosen, the plan treats a 0% vested terminated participant as
having received a distribution, allowing for forfeitures to be reallocated to
active participants.
5.06 Years of Service
Choose what measuring period the plan should use to determine years of service
for vesting, employee's anniversary year or plan year. For ease of
administration choose option (a).
5.08 Prior Years of Service
By choosing options (b) through (d) you (the employer) may exclude some prior
years of service for purposes of vesting.
Article VI
The Employer must establish a specific distribution policy for the plan. Treas.
Reg. 1.411(d)-4 prohibits the Employer, the advisory committee or any third
party to retain discretion over when or in what form to pay the participant's
benefit (Optional Forms of Benefit). Under a restated plan, the elections under
Article VI, to the extent they differ from previous plan provisions regarding
optional forms of benefit, may not eliminate an optional form of benefit with
respect to the account balance accrued as of the date the Employer executes the
restated adoption agreement (or, if later, the effective date of that restated
adoption agreement). An option form of benefit includes the form of payment
(e.g., lump sum or installments), the timing of payment (e.g., immediately after
separation form service, following a break in service, after attaining normal
retirement age) and the medium of payment (e.g. right to elect distribution in
Employer securities, right to elect distribution in the form of an annuity
contract).
With this in mind, if you are restating an existing plan, pay close attention to
the distribution features under that document and your administrative practice
of distributions. In all cases, try to mirror or liberalize those distribution
features when restating onto this document.
6.01 Distribution Date
A distribution date establishes a predetermined "target" date in a plan year
when the plan will offer distributions. The actual distribution may occur later
than a distribution date as long as the actual distribution is within an
<PAGE>
"administratively reasonable period of time" from the distribution date. A
typical distribution date for a Profit Sharing plan is 90 days after the plan
year end.
Nonforfeitable Accrued Benefit Not Exceeding $3,500
When a separated participant's vested balance does not exceed $3,500, the plan
allows the employer to separately establish the timing of these distributions,
separate from the distribution dates. When you complete this section, you need
to balance two concerns: 1) will the timing of the distribution cause the
participant to consider it a "severance benefit" an therefore encourage
separation from service and 2) the administrative concerns of carrying a
non-active account in the plan.
Disability - The plan allows you (the employer) to establish a different target
payout date for disability distributions in options (e) and (f).
Hardship - This option states whether or not the plan would allow a separated
participant to receive a hardship distribution, prior to receiving a total
distribution of his/her vested account balance.
Default on a Loan - This election does not create a loan policy. You (the
employer) must elect the timing of the plan's foreclosure if a participant's
loan were to be defaulted upon even if you do not intend to offer loans in your
plan.
6.02 Method of Payment
You may choose the standard forms of payment if this is a brand new plan and not
a restatment. If the plan is not subject to the annuity requirements of Section
6.04, usually option (a) is chosen. If you choose to allow annuities, option (b)
special waivers and consent rules apply to all distributions.
6.03 Participant Elections After Separation from Service
You must choose when an employee who has separated from service, with a vested
benefit greater than $3,500, may elect to commence distributions. This election
will be tied directly tot he "distribution date" defined earlier.
Participant Elections Prior to Separation from Service
The following distribution elections apply to employer contributions regardless
of vested account balances, prior to employment separation. If you prefer not to
allow any distribution options from these accounts prior to separation, select
option (c).
<PAGE>
6.04 Annuity Distributions
The law requires distributions to certain participants to be in the form of
commercial insurance annuities, unless consented to and waived by both the
participant and his or her spouse. Participants subject to this requirement are
identified in section 6.04(E) of the Plan. For administrative convenience,
choose option (a). If you are restating a plan that was subject to the joint and
survivor annuity rules you must select Option (b).
9.10 Value of Benefit
This option allows the employer to add interest to a participant's balance, if a
distribution occurs more than 90 days after the most recent plan valuation. You
do not have to provide an interest addition under this section and may complete
option (a) with 0%.
10.14 Valuation of Trust
You may use this option to specify mandatory valuation dates, in addition to the
accounting date. Normally option (a) is chosen.
Instructions for Effective Date Addendum
You must complete the effective date addendum only if the effective dates of any
of the listed items (a) through (g) have an effective date other than your
restated effective date in Adoption Agreement Section 1.18. Some provisions in
the Tax Reform Act of 1986 were not effective until 1988 or 1989. The few
provisions, if any, that have later effective dates must specify when they are
effective.
a. Compensation definition may not be later than the first day of your 1991
plan year.
b. Eligibility conditions may not be later than the first day of your 1989
plan year.
c. Suspension of years of service may not be earlier than the first day of
your 1990 plan year.
d. Contribution/allocation formula may not be earlier than the first day of
your 1989 plan year.
e. Accrual requirements may not be earlier than the first day of your 1989
plan year.
f. Elimination of Net Profits may not be earlier than December 31, 1985.
g. Vesting schedule may not be later than the first day of your 1989 plan
year.
<PAGE>
Execution Page
The Employer must complete the date on which it executes the adoption agreement
and must execute the signature for the Employer. The execution page provides one
line above the signature line to print or type the name of the Employer and the
Employer's EIN. If the Employer is a sole proprietorship, he or she should
execute as Employer. If the Employer is a corporation or a partnership, an
officer or a partner, as applicable, should execute the adoption agreement on
behalf of the Employer.
Trustee
If you selected option (a) of Section 1.02 then the employer will be the
Trustee. An individual must sign as trustee for the employer. INVESCO Trust
Company will then act as Custodian.
If you choose to have INVESCO Trust Company act as "Trustee" then option (b) of
Section 1.02 must be chosen. INVESCO does charge an annual fee for this service.
INVESCO Trust Company will only serve as a non-discretionary trustee, this means
that there is a person who is the "Named Fiduciary." The Named Fiduciary gives
direction to a non-discretionary trustee, and the non- discretionary trustee
accepts all directions from the Named Fiduciary. The Named Fiduciary is either
the President of the Corporation, the managing partner of the partnership or the
self-employed individual of a sole proprietorship. The Named Fiduciary is
responsible for selecting plan investments.
The execution page also includes a signature line for the Custodian, if any.
Leave the Custodian lines blank if INVESCO Trust Company will act as custodian.
Plan number. This paragraph designates the number the Employer assigns to the
plan for reporting (Form 5500) purposes. If this is the first plan the Employer
ever maintained, the number must be 001. The Employer's plan number does not
correspond to the 3- digit adoption agreement number specified at the top of the
first page of the adoption agreement. Consult your Counsel if you are unsure
what 3-digit plan number to use.
Instructions for the Participation Agreement
This adoption agreement includes a Participation Agreement under which a related
group member of the signatory Employer to the execution page may participate in
the same plan with that Employer. Each related group member wishing to become a
participating Employer should execute a separate Participation Agreement. See
Section 1.30 of the Plan for the definition of related Employers.
Thus, it is possible to exclude the employees of related group members not
participating in the plan. If an Employer is a member of a related group, it
should consider whether the inclusion of other related group members' employees
<PAGE>
is necessary to satisfy the coverage requirements of Code ss.410(b) or the
minimum participation requirement of Code ss.401(a)(26). If the Employer
determines inclusion of the employees of a related group member is necessary to
maintain qualification of the plan, he Employer may take one or two approaches:
(1) have the related group member execute a Participation Agreement; or (2)
elect in Adoption Agreement Section 1.07 to include the employees of that
related group member. Under approach (1), the participation of the related group
member will result in the automatic inclusion of the employees of that related
group member, without having to specify their inclusion in Adoption Agreement
Section 1.07. In addition, the related group member, under approach (1), has the
authority to contribute to the plan and, in the event another participating
related group member makes a contribution on behalf of that related group
member's employees, the Participation Agreement will ensure the deductibility of
that contribution (assuming the contribution does not exceed the deduction
limits of Code ss.404). Additional instructions to the appropriate adoption
agreement explain the effect on the allocation of Employer contributions when
related group members maintain a single nonstandardized plan. Please contact us.
Under approach (2), the plan will retain its qualified status, but contributions
the Employer makes on behalf of a nonparticipating related group member's
employees may not be deductible (even if otherwise within the limitations of
Code ss.404), resulting in an excise tax to the contributing Employer.
Unrelated Employers. The Master Plan does not allow the participation in a
single plan of unrelated Employers (i.e., Employers that do not satisfy the
related group definition in Section 1.30 of the Plan).
legal\adop-agr\stnpspaa.003
Adoption Agreement #004
Letter Serial No. D246281a
Standardized Money Purchase Pension Plan
Standardized Money Purchase Pension Features
- - Allows for integration of contributions with Social Security
- - Allows for top-heavy vesting schedule
- - May be paired with INVESCO Profit Sharing Plans
Provided by:
The Financial Funds
Managed & Distributed by
INVESCO Funds Group, Inc.
Custodian:
INVESCO Trust Company
A Subsidiary of INVESCO MIM PLC
<PAGE>
Your Adoption Agreement and Basic Plan Document together constitute the rules
and parameters under which your retirement progrma will operate. Each section of
the Adoption Agreemetn requires the employer to make a selection. Whenever
possible (balancing complexity and space constraints) we have provided
instructions to the left of key selections. These instructions are intended to
assist you, the employer, in choosing the optional provisions for your
retirement program. They are not intended to substitute or replace completent
advice from your legal counsel or accountant. If further clarification is
necessary, contact your advisors or INVESCO Trust Company. We recommend that you
obtain the advice of your legal or tax advisor before you sign this Adoption
Agreement.
<PAGE>
ADOPTION AGREEMENT #004
STANDARDIZED MONEY PURCHASE PLAN
(PAIRED PENSION PLAN)
The undersigned, -------------------------------------------- ("Employer"), by
executing this Adoption Agreement, elects to become a participating Employer in
the INVESCO Trust Company Defined Contribution Master Plan (basic plan document
#01) by adopting the accompanying Plan and Trust in full as if the Employer were
a signatory to that Agreement. The employer makes the following elections
granted under the provisions of the Master Plan.
ARTICLE I
DEFINITIONS
1.02 Trustee.
The Trustee executing this Adoption Agreement is: (Choose (a) or (b))
(a) A discretionary Trustee, See Section 10.03[A] of the Plan.
(b) A nondiscretionary Trustee. See Section 10.03[B] of the Plan. [Note:
The Employer may not elect Option (b) if a Custodian executes the Adoption
Agreement.]
1.03 PLAN.
The name of the Plan as adopted by the Employer is
- -------------------------------------------------------------.
1.07 EMPLOYEE.
The following Employees are not eligible to participate in the Plan:
(Choose (a) or at least one of (b) or (c))
(a) No exclusions.
(b) Collective bargaining employees (as defined in Section 1.07 of the
Plan).
[Note: If the Employer excludes union employees from the Plan, the Employer
must be able to provide evidence that retirement benefits were the subject of
good faith bargaining.]
(c) Nonresident aliens who do not receive any earned income (as defined in Code
ss.911(d)(2) from the Employer which constitutes United States source income (as
defined in Code ss.861(a)(3)).
Related Employers/Leased Employees. An Employee of any member of the
Employer's related group (as defined in Section 1.30 of the Plan), and any
Leased Employee treated as an Employee under Section 1.31 of the Plan, is
eligible to participate in the Plan, unless excluded by reason of Options (b) or
(c).
[Note: A related group member may not contribute to this Plan unless it
executes a Participation Agreement, even if its Employees are Participants in
the Plan.]
<PAGE>
1.12 COMPENSATION
Treatment of elective contributions. (Choose (a) or (b))
(a) "Compensation" includes elective contributions made by the
Employer on the Employee's behalf.
(b) "Compensation" does not include elective contributions.
Modifications to Compensation definition. (Choose (c) or at least
one of (d) and (e))
(c) No modifications other than as elected under Options (a) or
(b).
(d) The Plan excludes Compensation in excess of $--------------.
(e) In lieu of the definition in Section 1.12 of the Plan, Compensation means
any earnings reportable as W-2 wages for Federal income tax withholding
purposes, subject to any other election under this Adoption Agreement Section
1.12.
1.17 PLAN YEAR/LIMITATION YEAR.
Plan Year. Plan Year means: (Choose (a) or (b))
(a) The 12 consecutive month period ending every --------------.
(b) (Specify) -------------------------------------------------.
Limitation Year. The Limitation Year is: (Choose (c) or (d))
(c) The Plan Year.
(d) The 12 consecutive month period ending every --------------.
1.18 EFFECTIVE DATE.
New Plan. The "Effective Date" of the Plan is -------------------.
Restated Plan. The restated Effective Date is -------------------. This
Plan is a substitution and amendment of an existing retirement plan(s)
originally established -----------------------. (Note: See the Effective Date
Addendum.)
1.27 HOUR OF SERVICE.
The crediting method for Hours of Service is: (Choose (a) or (b))
(a) The actual method.
(b) The ----------------------- equivalency method, except:
(1) No exceptions.
<PAGE>
(2) The actual method applies for purposes of: (Choose at
least one)
(i) Participation under Article II.
(ii) Vesting under Article V.
(iii) Accrual of benefits under Section 3.06.
[Note: On the blank line, insert "daily," "weekly," "semi-monthly payroll
periods" or "monthly."]
1.29 SERVICE FOR PREDECESSOR EMPLOYER.
In addition to the predecessor service the Plan must credit by reason of
Section 1.29 of the Plan, the Plan credits Service with the following
predecessor employer(s): --------------------------. Service with the designated
predecessor employer(s) applies: (Choose at least one of (a) or (b))
(a) For purposes of participation under Article II.
(b) For purposes of vesting under Article V.
[Note: If the Plan does not credit any predecessor service under this
provision, insert "N/A" in the first blank line. The Employer may attach a
schedule to this Adoption Agreement, in the same format as this Section 1.29,
designating additional predecessor employers and the applicable service
crediting elections.]
1.31 LEASED EMPLOYEES.
If a Leased Employee participates in a save harbor money purchase plan (as
described in Section 1.31) maintained by the leasing organization, but the
Employer is not eligible for the safe harbor plan exception: (Choose (a) or (b))
(a) The Advisory Committee will determine the Leased Employee's allocation of
Employer contributions under Article III without taking into account the Leased
Employee's allocation under the safe harbor plan.
(b) The Advisory Committee will reduce the Leased Employee's allocation of
Employer contributions under this Plan by the Leased Employee's allocation under
the safe harbor plan, but only to the extent that allocation is attributable to
the Leased Employee's service provided to the Employer. [Note: The Employer may
not elect Option (b) if a Paired Plan or any other plan of the Employer makes a
similar reduction for the same plan of the leasing organization.]
ARTICLE II
EMPLOYEE PARTICIPANTS
<PAGE>
2.01 ELIGIBILITY.
Eligibility conditions. To become a Participant in the Plan, an Employee must
satisfy the following eligibility conditions:
(Choose (a) or (b) or both)
(a) Attainment of age -------------------- (specify age, not exceeding 21).
(b) Service requirement. (Choose one of (1) through (4))
(1) One Year of Service.
(2) Two Years of Service, without an intervening Break in
Service. See Section 2.03(A) of the Plan.
(3) --------- months (not exceeding 24) following the Employee's
Employment Commencement Date.
(4) One Hour of Service.
Plan Entry Date. "Plan Entry Date" means the Effective Date and:
(Choose (c), (d) or (e))
(c) Semi-annual Entry Dates. The first day of the Plan year and the first
day of the seventh month of the Plan Year.
(d) The first day of the Plan Year.
(e) (Specify entry dates) --------------------------------.
Time of Participation. An Employee will become a Participant, unless
excluded under Adoption Agreement Section 1.07, on the Plan Entry Date (if
employed on that date): (Choose (f), (g) or (h))
(f) immediately following
(g) immediately preceding
(h) nearest the date the Employer completes the eligibility conditions described
in Options (a) and (b) of this Adoption Agreement Section 2.01. [Note: The
Employer must coordinate the selection of (f), (g) or (h) with the "Plan Entry
Date" selection in (c), (d) of (e). Unless otherwise excluded under Section
1.07, the Employee must become a Participant by the earlier of: (1) the first
day of the Plan Year beginning after the date the Employee completes the age and
service requirements of Code ss.410(a); or (2) 6 months after the date the
Employee completes those requirements.]
Dual eligibility. The eligibility conditions of this Section 2.01 apply to:
(Choose (i) or (j))
(i) All Employees of the Employer, except: (Choose (1) or (2))
<PAGE>
(1) No exceptions
(2) Employees who are Participants in the Plan as of the
Effective Date.
(j) Solely to an Employee employed by the Employer after ---------------------.
If the Employee was employed by the specified date, the Employee will become a
Participant: (Choose (1) or (2))
(1) On the latest of the Effective Date, his Employment Commencement Date
or the date he attains age --------------------- (not to exceed 21).
(2) Under the eligibility conditions in effect under the
Plan prior to the restated Effective Date. [For restated
plans only]
2.02 YEAR OF SERVICE - PARTICIPATION.
Hours of Service. An Employee must complete: (Choose (a) or (b))
(a) 1,000 Hours of Service
(b) ------------------------ Hours of Service during an eligibility computation
period to receive credit for a Year of Service. [Note: The Hours of Service
requirement may not exceed 1,000.
Eligibility computation period. After the initial eligibility computation
period described in Section 2.02 of the Plan, the Plan measures the eligibility
computation period as: (Choose (c) or (d))
(c) The 12 consecutive month period beginning with each anniversary of an
Employee's Employment Commencement Date.
(d) The Plan year, beginning with the Plan Year which includes the first
anniversary of the Employee's Employment Commencement Date.
2.03 BREAK IN SERVICE - PARTICIPATION.
The Break in Service rule described in Section 2.03(B) of the Plan: (Choose
(a) or (b))
(a) Does not apply to the Employer's Plan.
(b) Applies to the Employer's Plan.
ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES
3.01 AMOUNT.
The amount of the Employer's annual contribution to the Trust will equal:
(Choose (a), (b), (c) or (d); (e) is mandatory if the Employer elects (b) or
(c))
<PAGE>
(a) Nonintegrated Contribution Formula. ---------------% of each Participant's
Compensation for the Plan Year.
(b) Integrated Contribution Formula. (Complete both percentages)
- ---------% of each Participant's Compensation for the Plan Year plus
- ---------% of each Participant's Compensation for the Plan Year in excess of
the Integration Level.
[Note: The second percentage may not exceed the lesser of the first
percentage or the applicable percentage described in the Maximum Disparity
Table.]
(c) Step-rate Integrated Contribution Formula. (Complete both percentages)
- --------% of each Participant's Compensation for the Plan Year which does not
exceed the Integration Level, plus ---------% of each Participant's Compensation
for the Plan Year in excess of the Integration Level. [Note: The difference
between the second percentage and the first percentage may not exceed the lesser
of the first percentage or the applicable percentage described in the Maximum
Disparity Table.]
[Note: If the Employer maintains Paired Plans, the Employer may not elect
Option (b) or Option (c) if the Paired Plan uses an integrated formula.]
(d) Frozen Plan Formula. This Plan is a frozen Plan effective
- -----------------------------. The Employer will not contribute to the Plan with
respet to any period following that stated date.
(e) Integration Level. The Integration Level under the Plan is:
(Choose (1) or (2))
(1) ------% (not exceeding 100%) of the taxable wage base, as determined
under Section 230 of the Social Security Act, in effect on the first day
of the Plan Year: (Choose any combination of (i) and (ii) or choose (iii))
(i) Rounded to -------------------- (but not exceeding
the taxable wage base).
(ii) But not greater than $----------------------.
(iii)Without any further adjustment or limitation.
(2) $------------- [Note: Not esceeding the taxable wage
base for the Plan Year in which this Adoption Agreement
first is effective.]
Maximum Disparity Table. For purposes of Options (b) and (c), the
applicable percentage is:
<PAGE>
Inegration Level (as Applicable
percentage of taxable wage base) Percentage
-----------------------------------------------------------
100% 5.7%
More than 80% but less than 100% 5.4%
More than 20% (but not less than $10,001)
and not more than 80% 4.3%
20% (or $10,000, if greater) or less 5.7%
Application of contribution formula. The Employer will determine its
contribution under Options (a), (b) or (c) by taking into account only the
Participants who satisfy the conditions under Section 3.06 for an allocation of
Employer contributions and only the Participant's Compensation taken into
account under Section 3.06. The Empoyer contribution on behalf of a Participant
may not exceed the Participant's annual additions limitation described in Part 2
of Article III, even if the contribution formula otherwise would require a
larger contribution.
Coordination with defined benefit plan. If the Employer maintains a defined
benefit plan under which at least one Participant in this Plan participates, the
Employer will determine its contribuion under Options (a), (b) or (c) by
reducign the total contibution, if necessary to equal the maximum deductible
amount under Code ss.404(a)(7). If the Employer must reduce its contribution,
the Employer determines its contibution with respect to each Participant by
adjusting each percentage under Options (a), (b) or (c) by the same ratio as the
reduced total Employer contribution for the Plan Year bears to the total
Employer contribution determined without applciation of Code ss.404(a)(7).
Related Employers. Unless obligated by the joint and several liability
provisions of the code or of ERISA, a related group member, as defined in
Section 1.30 of the Plan, may not contribute tot his Plan unless it executes a
Participation Agreement, even if its Employees are Participants in the Plan. The
signatory Employer and any Participaing Employer(s) will satisfy the annual
contribution under this Section 3.01 as agreed upon by those Employers.
3.04 CONTRIBUTION ALLOCATION.
Method of Allocation. Subject to any restoration allocation required under
Section .04, the Advisory Committee will allocate and credit each annual
Employer contribution to the Account of each Participant who satisfies the
conditions of Section 3.06, in accordance with the contribution formula adopted
by the Employer under Adoption Agreement Section 3.01.
Top Heavy Minimum Allocation - Eligible Participant. A Participant is
entitled to the top heavy minimum allocation in Section 3.04(B) of the Plan if
he is employed by the Employer on the last day of the Plan Year, unless: (Choose
(a) or (b))
(a) No exceptions.
<PAGE>
(b) The Participant is a Key Employee for the Plan Year. [Note: If the
Employer selects this Option (b), it will need to identify the Key Employees
under the Plan.]
Top Heavy Minimum Allocation - Method of Compliance. If a Participant's
allocation under thsi Section 3.04 is less than the top heavy minimum allocation
to which he is entitled under Section 3.04(B): (Choose (c) or (d))
(c) The employer will make any necessary additional contribution to the
Participant's Account, as described in Section 3.04(B)(7)(a) of the Plan.
(d) The Employer will satisfy the top heavy minimum allocation under the Paired
Profit Sharing Plan the Employer also maintains under this Master Plan. However,
the Employer will make any necessary additional contribution to satisfy the top
heavy minimum allocation for an Employee covered only under this Plan and not
under the Paired Profit Sharing Plan. See Section 3.04(B)(7)(b) of the Plan.
If the Employer maintains another plan which is not a Paired Profit Sharing Plan
offered under thsi Master Plan, the Employer may provide in an addendum to this
Adoption Agreement, numbered Section 3.04, any modifications to the Plan
necessary to satisfy the top heavy requirements under Code ss.416.
3.05 FORFEITURE ALLOCATION.
Subject to any restoration allocation required under Sections 5.04 or 9.14,
the Advisory Committee will allocate a Participant forfeiture: (Choose (a) or
(b); (c) is optional in addition to (a) or (b))
(a) Reduction of Employer contribution. In accordance with Section 3.04, to
reduce the Employer contribution for the Plan Year: (Choose (1) or (2))
(1) in which the forfeiture occurs.
(2) immediately following the Plan Year in which the
forfeiture occurs.
(b) Increased allocation. In addition to the Employer contribution for the Plan
Year in which the forfeiure occurs. The Advisory Committee will allocate the
Participant forfeitures for a Plan Year to the Account of each Participant who
satisfies the conditions of Section 3.06, in the same ratio that such
Participant's Compensation for the Plan Year bears to the total Compensation of
all Participants for the Plan Year.
(c) First to reduce the Plan's ordinary and necessary administrative expenses
for the Plan Year and then will allocate any remaining forfeitures in the manner
described in Option (a) or in Option (b), whichever applies.
<PAGE>
3.06 ACCRUAL OF BENEFIT.
Compensation taken into account. For the Plan Year in which the Employee first
becomes a Participant, the Advisory committee will detemine the contribution
under Section 3.01, and, if applicable, the allocation under Option (b) of
Section 3.05, by taking into account: (Choose (a) or (b))
(a) The Employee's Compensation for the entire Plan Year.
(b) The Employee's Compensation only for the portion of the Plan Year in which
the Employee actually is a Participant in the Plan.
Accrual Requirements. To receive an allocation of Employer contributions and
Participant forfeitures, if any, for the Plan year, a Participant must satisfy
the accrual requirements of this paragraph. If the Participant is employed by
the Employer on the last day of the Plan Year, the Participant must complete at
least one hour of Service for that Plan Year. If the Participant terminates
employment with the Employer during the Plan year, the Participant must complete
at least ------------- Hours of Service (not exceeding 501) during the Plan
Year, except: (Choose (c) or (d))
(c) No exceptions.
(d) No Hour of Service requirement if the Participant terminates employment
during the Plan Year on account of: (Choose at least one of (1), (2) and (3))
(1) Death.
(2) Disability.
(3) Attainment of Normal Retirement Age in the current Plan Year or in a
prior Plan Year.
3.15 MORE THAN ONE PLAN LIMITATION.
If the provisions of Section 3.15 apply, the Excess Amount attributed to
this Plan equals: (Choose (a), (b) or (c))
(a) The product of:
(i) the total Excess Amount allocated as of such date (including any
amount which the Advisory Committee would have allocated but for the
limitations of Code ss.415), times
(ii) the ratio of (1) the amount allocated to the Participant as of such
date under this Plan divided by (2) the total amount allocated as of such
date under all qualified defined contribution plans (determined without
regard to the limitations of Code ss.415).
(b) The total Excess Amount.
<PAGE>
(c) None of the Excess Amount.
[Note: If the Employer adopts Paired Plans available under this Master
Plan, the Employer must coordinate its elections under Section 3.15 of each
Adoption Agreement.]
3.18 DEFINED BENEFIT PLAN LIMITATION.
Application of limitation. The limitation under Section 3.18 of the Plan:
(Choose (a) or (b))
(a) Does not apply to the Employer's Plan because the Employer does not maintain
and never has maintained a defined benefit plan covering any Participant in this
Plan.
(b) Applies to the Employer's Plan. To the extent necessary to satisfy the
limitation under Section 3.18, the Employer will reduce: (Choose (1) or (2))
(1) The Participant's projected annual benefit under the defined benefit
plan under which the Participant participates.
(2) Its contribution or allocation on behalf of the Participant to the
defined contribution plan under which the Participant participates and
then, if necessary, the Participant's projected annual benefit under the
defined benefit plan under which the Participant participates.
[Note: If the Employer selects (a), the remaining options in this Section
3.18 do not apply to the Employer's Plan.]
Override of 100% Limitation. The Employer elects: (Choose (c) or 9d))
c) To apply the 100% limitation described in Section 3.19(1) of the Plan
in all Limitation Years.
[Note: This election will avoid having to calculate the Plan's top heavy
ratio for any year.]
(d) Not to apply the 100% limitation for Limitation Years in which the
Plan's top heavy ratio (as determined under Section 1.33 of the Plan) does not
exceed 90%, but only if the defined benefit plan satisfies the extra minimum
benefit requirements of Code ss.416(h)(2) (and the applicable Treasury
regulations) after taking into account the Employer's election under Options
(e), (f), (g) or (h) of this Section 3.18. To determine the top heavy ratio, the
Advisory Committee will use the following interest rate and mortality
assumptions to value accrued benefits under a defined benefit plan:
- -------------------------.
[Note: This election will require the Advisory Committee to calculate the
Plan's top heavy ratio.]
<PAGE>
Coordination with top heavy minimum allocation. The Advisory Committee will
apply the top heavy minimum allocation provisions of Section 3.04(B) of the Plan
with the following modifications: (Choose (e), (f), (g) or (h))
(e) No modifications.
(f) By substituting 4% for 3% in Paragraph 9b) of Section 3.04(B)(1) of the
Plan, but only for any Plan Year in which Option (d) applies to override the
100% limitation.
(g) By increasing the top heavy minimum allocation to 5% for any Plan Year in
which the 100% limitation applies, and to 7 1/2% for any Plan Year in which
Option (d) applies to override the 100% limitation. The increased percentage
under this Option (g) applies irrespective of whether the highest Participant
contribution rate for the Plan Year is less than that increased percentage.
(h) By eliminating the top heavy minimum allocation.
[Note: The Employer may not select this Option (h) if the defined benefit
plan does not guarantee the top heavy minimum benefit under Code ss.416 for
every Participant in this Plan who is a Non-Key Employee.]
If the elections under this Section 3.18 are not appropriate to satisfy the
limitations of Section 3.18, or the top heavy requirements under Code ss.416,
the Employer must provide the appropriate provisions in an addendum to this
Adoption Agreement.
ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING
5.01 NORMAL RETIREMENT.
Normal Retirement Age under the Plan is: (Choose (a) or (b))
(a) ------------------------------- [State age, but may not exceed age
65].
(b) The later of the date the Participant attains ---------(------) years of
age or the --------(---------) anniversary of the first day of the Plan Year in
which the Participant commenced participation in the Plan. [The age selected may
not exceed age 65 and the anniversary selected may not exceed the 5th.]
5.02 PARTICIPANT DEATH OR DISABILITY.
The 100% vesting rule under Section 5.02 of the Plan: (Choose (a) or choose
one or both of (b) and (c))
(a) Does not apply.
<PAGE>
(b) Applies to death.
(c) Applies to disability.
5.03 VESTING SCHEDULE.
The Employer elects the following vesting schedule: (Choose (a) or (b); (c)
is available only in addition to (b))
(a) Immediate vesting. 100% Nonforfeitable at all times.
[Note: The Employer must elect Option (a) if the eligibility conditions
under Adoption Agreement Section 2.01(b) require 2 years of service or more than
12 months of employment.]
(b) Graduated Vesting Schedules. (Choose (1), (2) or (3))
(1) 6-year graded (2) 3-year cliff (3) Modified Top
Heavy Schedule
Year of Nonforfeitable Year of Nonforfeitable Year of Nonforfeitable
Service Percentage Service Percentage Service Percentage
- --------------------------------------------------------------------------------
Less Less Less
than 2 0% than 3 0% than 1 ------
2 20% 3 or more 100% 1 ------
3 40% 2 ------
4 60% 3 ------
5 80% 4 ------
6 or more 100% 5 ------
6 or more 100%
[Note: Under Option (b)(3), the vesting schedule must satisfy the
top heavy requirements of Code ss.416.]
(c) Minimum vesting. A Participant's Nonforfeitable Accrued Benefit will never
be less than the lesser of $------------- or his entire Accrued Benefit, even if
the application of the graduated vesting schedule under Option (b) would result
in a smaller Nonforfeitable Accrued Benefit.
5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/RESTORATION OF
FORFEITED ACCRUED BENEFIT.
The deemed cash-out rule described in Section 4.04(C) of the Plan: (Choose
(a) or (b))
(a) Does not apply.
(b) Will apply to determine the timing of forfeitures for 0%
vested Participants.
5.06 YEAR OF SERVICE - VESTING.
Vesting computation period. The Plan measures a Year of Service on the basis of
the following 12 consecutive month periods:
(Choose (a) or (b))
<PAGE>
(a) Plan Years.
(b) Employment Years. An Employment Year is the 12 consecutive month period
measured from the Employee's Employment Commencement Date and each successive 12
consecutive month period measured from each anniversary of that Employment
Commencement Date.
Hours of Service. The minimum number of Hours of Service an Employee must
complete during a vesting computation period to receive credit for a Year of
Service is: (choose (c) or (d))
(c) 1,000 Hours of Service.
(d) ---------------- Hours of Service. [Note: The Hours of Service
requirement may not exceed 1,000.]
5.08 INCLUDED YEARS OF SERVICE - VESTING.
The Employer specifically excludes the following Years of Service: (Choose
(a) or at least one of (b), (c) and (d))
(a) None other than as specified in Section 5.08(a) of the Plan.
(b) Any Year of Service before the Participant attained the age of
- --------------------.
[Note: The age selected may not exceed age 18.]
(c) Any Year of Service during the period the Employer did not maintain this
Plan or a predecessor plan.
(d) Any Year of Service before a Break in Service if the number of consecutive
Breaks in Service equals or exceeds the greater of 5 or the aggregate number of
the Years of Service prior to the Break. This exception applies only if the
Participant is 0% vested in his Accrued Benefit derived from Employer
contributions at the time he has a Break in Service. Furthermore, the aggregate
number of Years of Service before a Break in Service do not include any Years of
Service not required to be taken into account under this exception by reason of
any prior Break in Service.
ARTICLE VI
TIME AND METHOD OF PAYMENTS OF BENEFITS
Code ss.411(d)(6) Protected Benefits. The election under this Article VI may not
eliminate Code ss.411(d)(6) protected benefits. To the extent the elections
would eliminate a Code ss.(d)(6) protected benefit, see Section 13.02 of the
Plan. Furthermore, if the elections liberalize the optional forms of benefit
under the Plan, the more liberal options apply on the later of the adoption date
or the Effective Date of this Adoption Agreement.
<PAGE>
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT.
Distribution date. A distribution date under the Plan means
- --------------------------------------------------------------.
[Note: The Employer must specify the appropriate date(s). The specified
distribution dates primarily establish annuity starting dates and the notice and
consent periods prescribed by the Plan. The Plan allows the Trustee an
administratively practicable period of time to make the actual distribution
relating to a particular distribution date.]
Nonforfeitable Accrued Benefit Not Exceeding $3,500. Subject to the
limitations of Section 6.01(A)(1), the distribution date for distribution of a
Nonforfeitable Accrued Benefit not exceeding $3,500 is: (Choose (a), (b), (c) or
(d))
(a) ----------- of the -------------- Plan Year beginning after the
Participant's Separation from Service.
(b) ---------------------- following the Participant's Separation from
Service.
(c) ------------------------- of the Plan Year after the Participant incurs
- -------------------- Break(s) in Service (as defined in Article V).
(d) ------------- following the Participant's attainment of Normal
Retirement Age, but not earlier than -------------- days following his
Separation from Service.
Nonforfeitable Accrued Benefit Exceeds $3,500. See the elections under
Section 6.03.
Disability. The distribution date, subject to the limitations of Section
6.01(A)(3), is: (Choose (e) or (f))
(e) ----------------- after the Participant terminates employment because
of disability.
(f) The same as if the Participant had terminated employment without
disability.
Hardship. (Choose (g) or (h))
(g) The Plan does not permit a hardship distribution to a Participant who has
separated from Service.
(h) The Plan permits a hardship distribution to a Participant who has separated
from Service in accordance with the hardship distribution policy stated in
Section 6.01(A)(4) of the Plan.
Default on a Loan. If a Participant or Beneficiary defaults on a loan made
pursuant to a loan policy adopted by the Advisory Committee pursuant to Section
9.04, the Plan: (Choose (i) or (j))
<PAGE>
(i) Treats the default as a distributable event only if the
Participant has incurred a Separation from Service or has attained Normal
Retirement Age. If either conditions applies, the Trustee, at the time of
the default or, if later, at the time either conditions first occurs, will
reduce the Participant's Nonforfeitable Accrued Benefit by the lesser of
the amount in default (plus accrued interest) or the Plan's security
interest in that Nonforfeitable Accrued Benefit.
(j) Does not treat the default as a distributable event. When an otherwise
distributable event first occurs pursuant to Section 6.01 or Setion 6.03
of the Plan, the Trustee will reduce the Participant's Nonforfeitable
Accrued Benefit by the lesser of the amount in default (plus accrued
interest) or the Plan's security interest in that Nonforfeitable Accrued
Benefit.
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT.
The Advisory Committee will apply Section 6.02 of the Plan with the
following modifications: (Choose (a) or (b))
(a) No modifications.
(b) The Plan permits the following annuity options:
- ----------------------------------------------------------------.
[Note: The Employer may specify additional annuity options in an
addendum to this Adoption Agreement, numbered 6.02(b).]
6.03 BENEFIT PAYMENT ELECTIONS.
Participant Elections After Separation from Service. A Participant who is
eligible to make distribution elections under Section 6.03 of the Plan may elect
to commence distribution of his Nonforfeitable Accrued Benefit: (Choose (a) or
(b))
(a) As of any distribution date, but not earlier than -------- of the --------
Plan Year beginning after the Participant's Separation from Service.
(b) As of the following date(s): (Choose at least one of Options
(1) through (5))
(1) Any distribution date after the close of the Plan Year in which the
Participant attains Normal Retirement Age.
(2) Any distribution date following his Separation from
Service.
(3) Any distribution date in the ----------------- Plan Year(s) beginning
after his Separation from Service.
(4) Any distribution date in the Plan Year after the
Participant incurs --------------------- Break(s) in Service (as
defined in Article V).
<PAGE>
(5) Any distribution date following attainment of age ----------- and
completion of at least -------- Years of Service (as defined in Article
V).
Participant Elections Prior to Separation from Service. Subject to the
restrictions of Article VI, the following distribution options apply under the
Employer's Plan prior to a Participant's Separation from Service. (Choose (c) or
(d))
(c) No distribution options prior to Separation from Service.
(d) Attainment of Normal Retirement Age. Until he retires, the Participant
has a continuing election to receive all or any portion of his Nonforfeitable
Accrued Benefit after he attains Normal Retirement Age.
ARTICLE IX
ADVISORY COMMITTEE - DUTIES WITH RESPECT TO
PARTICIPANTS' ACCOUNTS
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT.
If a distribution (other than a distribution from a segregated Account)
occurs more than 90 days after the most recent valuation date, the distribution
will include interest at: (Choose (a) or (b))
(a) --------------% per annum. [Note: The percentage may equal 0%.]
(b) The 90 day Treasury bill rate in effect at the beginning of the current
valuation period.
ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES
10.14 VALUATION OF TRUST.
In addition to each Accounting Date, the Trustee must value the Trust Fund
on the following valuation date(s): (Choose (a) or (b))
(a) No other mandatory valuation dates.
(b) (Specify) --------------------------------------.
EFFECTIVE DATE ADDENDUM
(Restated Plans Only)
The Employer must complete this addendum only if the restated Effective
Date specified in Adoption Agreement Section 1.18 is different than the restated
effective date for at least one of the provisions listed in this addendum. In
lieu of the restated Effective Date in Adoption Agreement Section 1.18, the
following special effective dates apply: (Choose whichever elections apply)
<PAGE>
(a) Compensation definition. The Compensation definition of Section 1.12
(other than the $200,000 limitation) is effective for Plan Years beginning after
- -----------------.
[Note: May not be effective later than the first day of the first Plan Year
beginning after the Employer executes this Adoption Agreement to restate the
Plan for the Tax Reform Act of 1986, if applicable.]
(b) Eligibility conditions. The eligibility conditions specified in Adoption
Agreement Section 2.01 are effective for Plan Years beginning after
- -------------------.
(c) Suspension of Years of Service. The suspension of Years of Service rule
elected under Adoption Agreement Section 2.03 is effective for Plan Years
beginning after --------------------.
(d) Contribution/allocation formula. The contribution formula elected under
Adoption Agreement Section 3.01 and the method of allocation elected under
Adoption Agreement Section 3.04 is effective for Plan Years beginning after
- ---------------------.
(e) Reallocation of Forfeitures. The reallocation of forfeitures under
Section 3.05 applies to Plan Years beginning after ------------------.
[Note: The date specified may not be earlier than December 31, 1985.]
(f) Accrual requirements.
The accrual requirements of Section 3.06 are effective for Plan Years
beginning after -----------------. [Note: If the effective date is later than
Plan Years beignning after December 31, 1989, the accrual requirements in the
Plan prior to its restatement may not be more restrictive for post- 1989 Plan
Years than the requirements permitted under Adoption Agreement Section 3.06.]
(g) Vesting schedule. The vesting schedule elected under Adoption Agreement
Section 5.03 is effective for Plan Years beginning after --------------------.
For Plan Years prior to the special Effective Date, the terms of the Plan prior
to its restatement under this Adoption Agreement will control for purposes of
the designated povisions. A special Effective Date may not result in the delay
of a Plan provisionbeyond the permissible Effective Date under any applicable
law requirements.
Execution Page
The Trustee (and custodian, if applicable), by executing this Adoption
Agreement, accepts its position and agrees to all of the obligations,
responsibilities and duties imposed upon the Trustee (or Custodian) under the
Master Plan and Trust. The Employer hereby agrees to the provisions of this Plan
<PAGE>
and Trust, and in witness of its agreement, the Employer by its duly
authorized officers, has executed this Adoption Agreement, and the Trustee (and
Custodian, if applicable) signified its acceptance, on this --------- day of
- -------------, 19---.
Name and EIN of Employer: ---------------------------------------
Signed: ---------------------------------------------------------
Name(s) of Trustee: ---------------------------------------------
- -----------------------------------------------------------------
Signed: ---------------------------------------------------------
- -----------------------------------------------------------------
Name of Custodian: ----------------------------------------------
Signed: ---------------------------------------------------------
[Note: A Trustee is mandatory, but a Custodian is optional. See
Section 10.03 of the Plan.]
Plan Number: The 3-digit plan number the Employer assigns to this
Plan for ERISA reporting purposes (Form 5500 Series) is:
- ------------------------.
Use of Adoption Agreement. Failure to complete properly the elections in this
Adoption Agreement may result in disqualification of the Employer's Plan. The
3-digit number assigned to this Adoption Agreement (see page 1) is solely for
the Master Plan Sponsor's recordkeeping purposes and does not necessarily
correspond to the plan number the Employer designated in the prior paragraph.
The Master Plan Sponsor offers the following Paired Pension Plan(s) with this
Paired Profit Sharing Plan, identified by 3-digit adoption agreement number: 003
and 009.
Master Plan Sponsor. The Master Plan Sponsor identified on the first page of the
basic plan document will notify all adopting employers of an amendment of this
Master Plan or of any abandonment or discontinuance by the Master Plan Sponsor
of its maintenance of this Master Plan. For inquiries regarding the adoption of
the Master Plan, the Master Plan Sponsor's intended meaning of any plan
provisions or the effect of the opinion letter issued to the Master Plan
Sponsor, please contact the Master Plan Sponsor at the following address and
telephone number: INVESCO Trust Company, 7800 E. Union Ave., Denver, Colorado
80201, (303) 779-0731.
<PAGE>
Reliance on Opinion Letter. If the Employer does not maintain (and has
never maintained) any other plan other than this Plan and a Paired Profit
Sharing Plan, it may rely on the Master Plan Sponsor's opinion letter covering
this Plan for purposes of plan qualification. For this purpose, the Employer has
not maintained another plan if this Plan, or the Paired Profit Sharing Plan,
amended and restated that prior plan and the prior plan was the same type of
plan as the restated plan. If the Employer maintains or has maintained another
plan other than a Paired Profit Sharing Plan, including a welfare benefit fund,
as defined in Code ss.419(e), which provides post-retirement medical benefits
for key employees (as defined in Code ss.419A(d)(3)), or an individual medical
account (as defined in Code ss.415(1)(2)), the Employer may not rely on this
Plan's qualified status unless it obtains a determination letter from the
applicable IRS Key District office.
PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)
The undersigned Employer, by executing this Participation Agreement, elects to
become a Participating Employer in the Plan identified in Section 1.03 of the
accompanying Adoption Agreement, as if the Participating Employer were a
signatory to that Agreement. The Participating Employer accepts, and agrees to
be bound by, all of the elections granted under the provisions of the Master
Plan as made by, ----------------------------------, the Signatory Employer to
the Execution Page of the Adoption Agreement.
1. The Effective Date of the undersigned Employer's participation in the
designated Plan is ---------------------------.
2. The undersigned Employer's adoption of this Plan constitutes:
(a) The adoption of a new plan by the Participating Employer.
(b) The adoption of an amendment and restatement of a plan currently
maintained by the Employer, identified as ------------------------------------
and having an original effective date of --------------------------------------.
Dated this ----------------- day of --------------, 19----.
Name of Participating Employer: ------------------------------------
Signed: ------------------------------------------------------------
Participating Employer's EIN: --------------------------------------
Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.
Name of Signatory Employer: ----------------------------------------
<PAGE>
Accepted: -------------------------------------------------
[Date]
Signed: ---------------------------------------------------
Name(s) of Trustee: ---------------------------------------
Accepted: -------------------------------------------------
[Date]
Signed: ---------------------------------------------------
[Note: Each Participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for important Master
Plan information.]
STD MP AA Instructions
Complete the first blank in the paragraph by writing in the business' name in
its entirety.
1.02 Trustee
Option (a) should be chosen when the employer will be the trustee, INVESCO Trust
Company would then act as Custodian. If option (b) is chosen, INVESCO Trust
Company will be the Trustee and will charge an annual trust fee. Note: See
Trustee Comments on page 14 for further explaination of Non-discretionary
Trustee.
1.03 Plan
Enter the plan name. Example: ABC Inc. Money Purchase Pension
Plan.
1.07 Employee
If you want the plan to cover all types of employees, select option (a). If you
want to exclude from the plan any group(s) of employees, select any combination
of (b) or (c).
Leased Employees
You may not exclude leased employees from participation unless they are excluded
under options (b) or (c) of Section 1.07.
Related Employers
You may not exclude related employers from participating in the plan unless they
are excluded under options (b) or (c) of Section 1.07.
<PAGE>
1.12 Compensation
Treatment of elective contributions - Choose option (a) if you prefer to "add
back" employee elective 401(k) contributions to compensation for purposes of
allocating employer contributions, and forfeitures.
Modification to Compensation
Modifications to Compensation - You must choose option (c) or any combination of
(d) or (e). Any exclusion of compensation may result in unallowable
discrimination.
1.17 Plan Year
You must define the "plan year," usually it will follow the business tax year.
Limitation Year - You must define the "limitation year" (12 month period for
testing allocations to each employee's account), for administrative convenience
it should match the plan year.
1.18 Effective Date
New Plan - Enter the first day of your plan year (usually January 1) and
the year.
Restated Plan - Effective date - If you are amending for the Tax Reform Act of
1986 enter: January 1, 1987. If you are amending for another reason, enter the
first day of your tax year, example: January 1, 1990. Originally established
date - Enter the original effective date of your plan from your prior Adoption
Agreement.
1.27 Hours of Service
Choose which method you wish to use for counting hours worked by an employee to
accrue benefits. Option (b), the equivalency method, is explained in Section
1.27 of the plan. Option (a) is usually chosen.
1.29 Service for Predecessor Employer
Under this option, you may elect to count service for a predecessor employer
when you are not maintaining the plan of the predecessor employer. (Used
primarily in the event of a merger or acquisition.)
1.31 Leased Employees
The law requires you to state how your plan would treat a leased employee who
could become a participant, even if you don't intend to ever lease employees.
Choose option (a) covering the employee without regard to the leasing company's
plan or option (b) the reduction method. Usually Option (b) is chosen.
<PAGE>
2.01 Eligibility
a. An employee must attain this age to become a participant (cannot exceed
age 21).
b. Pick how long (service) an employee must work to become a participant.
Plan Entry - Choose when employees enter the plan for purposes of contributions
and benefit accrual. Normally, option (c), semi-annual entry dates, is chosen.
Time of Participation - Choose which plan entry date (before or after) an
employee who meets the eligibility requirements will enter the plan. Normally,
option (f) is chosen.
Dual Eligibility - This section allows you to include in the plan current
employees who have not met the eligibility requirements and apply the
eligibility requirements to newly hired employees.
Restated plans usually chose (i)(2).
2.02 Years of Service
Option (b) should only be chosen if you wish to require less than 1000
hours to be worked by an employee for eligibility. Usually Option (a) is chosen.
Eligibility Computation Period - Choose whether to measure subsequent
eligibility periods on the employee's anniversary or the plan year. Option (d)
is chosen for administrative convenience.
2.03 Break in Service
This option may impose a complicated re-entry date for employees who have
terminated or whose hours were severely cut back. Option (a) is chosen for
administrative convenience.
3.01 Employer Contributions and Forfeitures
Amount - The employer must select a definite contribution formula under a money
purchase pension plan. Option (a) is a nonintegrated formula, options (b) and
(c) are integrated formulas.
Option (a) allows the employer to choose a fixed amount for the contribution
regardless of compensation.
Options (b) and (c) are two approaches to allowing permitted disparity in the
contribution formula. Option (b) applies the first percentage to a participant's
total compensation.
<PAGE>
3.04 Contribution Allocation
Contribution will be allocated (split up to participants) in the manner elected
to computate the contribution selected under Section 3.01.
3.05 Forfeiture Allocation
Choose the method of allocating (dividing up) forfeitures of terminated
non-vested participant balances. Option (a) allocates forfeitures as a reduction
in contributions. Option (b) allocates forfeitures as an additional employer
contribution.
3.06 Compensation Taken Into Account
If you wish to count a participant's full year's compensation (even if he or she
entered the plan during the year), for contributions choose option (a), if not,
choose option (b).
Accrual Requirements - Specify the service requirements a participant must
satisfy to receive an allocation. You may specify an hours of service
requirement, no greater than 501 hours. Standardized plans have relaxed
contribution requirements. A participant will receive an employer contribution
and forfeitures if they meet either of the two requirements below.
Requirement #1
If the Participant was employed on the last day of the plan year and worked for
at least one hour during the plan year, or
Requirement #2
If the Participant terminates employment during the plan year after working at
least 501 hours for the employer.
3.15 More Than One Plan
This section only applies if you (the employer) maintain another defined
contribution plan (e.g.: profit sharing, money purchase, 401(k) or target
benefit) that covers at least one participant in this plan.
3.18 Defined Benefit Plan Limitation
Check option (a) if you have never maintained a defined benefit plan for any
participants in this plan. If you have or are currently maintaining a defined
benefit under option (b), choose which plan's benefit would be reduced if a
participant's total allocations for a year were to exceed the allowable limit.
5.01 Normal Retirement Age
Choose what age you (the employer) want the participants to be 100% vested in
their benefits, if still employed (normal retirement age).
<PAGE>
5.02 Vesting Death/Disability
You may choose to allow 100% vesting for participants that terminate from
service because of death, option (b) or disability, option (c).
5.03 Vesting Schedule
Choose what vesting schedule(s) you want to apply to employer contributions. If
you choose option (b), you must at a minimum complete the top-heavy vesting
schedule. Remember, if the eligibility requirements are more than one year,
option (a) must be chosen.
Complete the Modified Top Heavy Schedule based upon the following:
Nonforfeitable Percentage
Years of Service
1
2 (not less than 20%)
3 (not less than 40%)
4 (not less than 60%)
5 (not less than 80%)
6 (not less than 100%)
5.04 Cash-Out Rule
If option (b) is chosen, the plan treats a 0% vested terminated participant as
having received a distribution, allowing for forfeitures to be reallocated to
active participants.
5.06 Years of Service
Choose what measuring period the plan should use to determine years of service
for vesting, employee's anniversary year or plan year. For ease of
administration choose Option (a).
5.08 Prior Years of Service
By choosing options (b) through (d) you (the employer) may exclude some prior
years of service for purposes of vesting.
Article 6
The Employer must establish a specific distribution policy for the plan.
Treas. Reg. 1.411(d)-4 prohibits the Employer, the advisory committee or any
third party to retain discretion over when or in what form to pay the
participant's benefit (Optional Forms of Benefit). Under a restated plan, the
elections under Article VI, to the extent they differ from previous plan
<PAGE>
provisions regarding optional forms of benefit, may not eliminate an
optional form of benefit with respect to the account balance accrued as of the
date the Employer executes the restated adoption agreement (or, if later, the
effective date of that restated adoption agreement). An option form of benefit
includes the form of payment (e.g., lump sum or installments), the timing of
payment (e.g., immediately after separation form service, following a break in
service, after attaining normal retirement age) and the medium of payment (e.g.
right to elect distribution in Employer securities, right to elect distribution
in the form of an annuity contract).
With this in mind, if you are restating an existing plan, pay close attention to
the distribution features under that document and your administrative practice
of distributions. In all cases, try to mirror or liberalize those distribution
features when restating onto this document.
6.01 Distribution Date
A distribution date establishes a predetermined "target" date in a plan year
when the plan will offer distributions. The actual distribution may occur later
than a distribution date as long as the actual distribution is within an
administratively reasonable period of time from the distribution date. Typical
distribution dates are annual dates such as March 1.
Nonforfeitable Accrued Benefit Not Exceeding $3,500
When a separated participant's vested balance does not exceed $3,500, the plan
allows the employer to separately establish the timing of these distributions,
separate from the distribution dates. When you complete this section, you need
to balance two concerns: 1) will the timing of the distribution cause the
participant to consider it a "severance benefit" and therefore encourage
separation from service and 2) the administrative concerns of carrying a
non-active account in the plan.
Disability - The plan allows you (the employer) to establish a different target
payout date for disability distributions in options (e) and (f).
Hardship - This option states whether or not the plan would allow a separated
participant to receive a hardship distribution, prior to receiving a total
distribution of his/her vested account balance.
Default on a Loan - This election does not create a loan policy. You (the
employer) must elect the timing of the plan's foreclosure if a participant's
loan were to be defaulted upon even if you do not intend to offer loans in your
plan.
<PAGE>
6.02 Method of Payment
Money purchase pension plans require payouts to be in the form of a
commercial annuity unless properly waived. The employer may in options (b) and
(c), (if this is a new plan), limit the alternative method of payment. Caution:
an employer cannot eliminate a prior method of payment by restating the plan
onto this document.
6.03 Participant Elections After Separation form Service
You must choose when an employee who has separated from service, with a vested
benefit greater than $3,500, may elect to commence distributions. This election
will be tied directly to the "distribution date" defined earlier.
9.10 Value of Benefit
This option allows the employer to add interest to a participant's balance, if a
distribution occurs more than 90 days after the most recent plan valuation. You
do not have to provide an interest addition under this section and may complete
option (a) with 0%.
10.14 Valuation of Trust
You may use this option to specify mandatory valuation dates, in addition to the
accounting date. Normally, option (a) is chosen.
Instructions for Effective Date Addendum
You must complete the effective date addendum only if the effective dates of any
of the listed items (a) through (g) have an effective date other than your
restated effective date in adoption agreement section 1.18. Some provisions in
the Tax Reform Act of 1986 were not effective until 1988 or 1989 the few
provisions (if any) that have later effective dates must specify when they are
effective.
a. Compensation definition may not be later than the first day of your 1991
plan year.
b. Eligibility conditions may not be later than the first day of your 1989
plan year.
c. Suspension of years of service may not be earlier than the first day of
your 1990 plan year.
d. Contribution/allocation formula may not be earlier than the first day of
your 1989 plan year.
e. Reallocation of Forfeitures may not be earlier than December 31, 1989.
f. Accrual requirements may not be earlier than the first day of your 1989
plan year.
<PAGE>
g. Vesting schedule may not be later than the first day of your 1989 plan
year.
Execution Page
The Employer must complete the date on which it executes the adoption agreement
and must execute the signature for the Employer. The execution page provides two
lines above the signature line to print or type the name of the Employer and the
Employer's EIN. If the Employer is a sole proprietorship, the individual sole
proprietor should execute as Employer. If the Employer is a corporation or a
partnership, an officer or a partner, as applicable, should execute the adoption
agreement on behalf of the Employer.
Trustee
If you selected option (a) of Section 1.02, then the employer will be the
Trustee. An individual must sign as trustee for the employer. INVESCO Trust
Company will then act as Custodian.
If you choose to have INVESCO Trust Company act as "Trustee" then option (b) of
Section 1.02 must be chosen. INVESCO does charge an annual fee for this service.
INVESCO Trust Company will only serve as a non-discretionary trustee, this means
that there is a person who is the "Named Fiduciary." The Named Fiduciary gives
direction to a non-discretionary trustee, and the non- discretionary trustee
accepts all directions from the Named Fiduciary. The Named Fiduciary is either
the President of the Corporation, the managing partner of the partnership or the
self-employed individual of a sole proprietorship. The Named Fiduciary is
responsible for selecting plan investments.
The execution page also includes a signature line for the Custodian, if any.
Leave the Custodian lines blank if INVESCO Trust Company will act as custodian.
Plan number. This paragraph designates the number the Employer assigns to the
plan for reporting (Form 5500) purposes. If this is the first plan the Employer
ever maintained, the number must be 001. The Employer's plan number does not
correspond to the 3- digit adoption agreement number specified at the top of the
first page of the adoption agreement. Consult your Counsel if you are unsure
what 3-digit plan number to use.
Instructions for the Participation Agreement
This adoption agreement includes a Participation Agreement under which a related
group member of the signatory Employer to the execution page may participate in
the same plan with that Employer. Each related group member wishing to become a
<PAGE>
participating Employer should execute a separate Participation Agreement.
See Section 1.30 of the Plan for the definition of related Employers.
Thus, it is possible to exclude the employees of related group members not
participating in the plan. If an Employer is a member of a related group, it
should consider whether the inclusion of other related group members' employees
is necessary to satisfy the coverage requirements of Code ss.410(b) or the
minimum participation requirement of Code ss.401(a)(26). If the Employer
determines inclusion of the employees of a related group member is necessary to
maintain qualification of the plan, the Employer may take one or two approaches:
(1) have the related group member execute a Participation Agreement; or (2)
elect in Adoption Agreement Section 1.07 to include the employees of that
related group member. Under approach (1), the participation of the related group
member will result in the automatic inclusion of the employees of that related
group member, without having to specify their inclusion in Adoption Agreement
Section 1.07. In addition, the related group member, under approach (1), has the
authority to contribute to the plan and, in the event another participating
related group member makes a contribution on behalf of that related group
member's employees, the Participation Agreement will ensure the deductibility of
that contribution (assuming the contribution does not exceed the deduction
limits of Code ss.404). Additional instructions to the appropriate adoption
agreement explain the effect on the allocation of Employer contributions when
related group members maintain a single nonstandardized plan. Please contact us.
Under approach (2), the plan will retain its qualified status, but contributions
the Employer makes on behalf of a nonparticipating related group member's
employees may not be deductible (even if otherwise within the limitations of
Code ss.404), resulting in an excise tax to the contributing Employer.
Unrelated Employers. The Master Plan does not allow the participation in a
single plan of unrelated Employers (i.e., Employers that do not satisfy the
related group definition in Section 1.30 of the Plan).
legal\adop-agr\stdmpaa.004
Adoption Agreement #005
D346282a
Nonstandardized 401(k) Plan Adoption Agreement
Nonstandardized 401(k) Plan Considerations
For: Businesses that want the ability of employee pre-tax
contributions.
Compensation: The employer may exclude certain types of
compensation.
Eligibility for Contributions: May require employees to work up
to 1,000 hours and be employed on the last day.
Investment Direction: May allow the employee to direct where
funds are invested.
Eligibility: The employer may exclude certain classifications or
groups of employees.
Provided by:
The Financial Funds
Custodian:
INVESCO Trust Company
A Subsidiary of INVESCO MIM PLC
<PAGE>
Your Adoption Agreement and Basic Plan Document together constitute the rules
and parameters under which your retirement program will operate. Each section of
the Adoption Agreement requires the employer to make a selection. Whenever
possible (balancing complexity and space constraints) we have provided
instructions to the left of key selections. These instructions are intended to
assist you, the employer, in choosing the optional provisions for your
retirement program. They are not intended to substitute or replace competent
advice from your legal counsel or accountant. If further clarification is
necessary, contact your advisors or INVESCO Trust Company. We recommend that you
obtain the advice of your legal or tax advisor before you sign this Adoption
Agreement.
<PAGE>
ADOPTION AGREEMENT #005
NONSTANDARDIZED CODE 401(k)
PROFIT SHARING PLAN
The undersigned, -------------------------------------------- ("Employer"), by
executing this Adoption Agreement, elects to become a participating Employer in
the INVESCO Trust Company Defined Contribution Master Plan (basic plan document
#01) by adopting the accompanying Plan and Trust in full as if the Employer were
a signatory to that Agreement. The employer makes the following elections
granted under the provisions of the Master Plan.
ARTICLE I
DEFINITIONS
1.02 TRUSTEE. The Trustee executing this Adoption Agreement is: (Choose (a)
or (b))
(a) A discretionary Trustee, See Section 10.03[A] of the Plan.
(b) A nondiscretionary Trustee. See Section 10.03[B] of the Plan. [Note:
The Employer may not elect Option (b) if a Custodian executes the Adoption
Agreement.]
1.03 PLAN. The name of the Plan as adopted by the Employer is
- -------------------------------------------------------------.
1.07 EMPLOYEE. The following Employees are not eligible to participate in
the Plan: (Choose (a) or at least one of (b) through (G))
(a) No exclusions.
(b) Collective bargaining employees (as defined in Section 1.07 of the
Plan). [Note: If the Employer excludes union employees from the Plan, the
Employer must be able to provide evidence that retirement benefits were the
subject of good faith bargaining.]
(c) Nonresident aliens who do not receive any earned income (as defined in
Code ss.911(d)(2) from the Employer which constitutes United States source
income (as defined in Code ss.861(a)(3)).
(d) Commission Salesmen.
(e) Any Employee compensated on a salaried basis.
(f) Any Employee compensated on an hourly basis.
(g) (Specify) -------------------------------------------------
- -----------------------------------------------------------------
<PAGE>
Leased Employees. Any Leased Employee treated as an Employee
under Section 1.31 of the Plan, is: (Choose (h) or (i))
(h) Not eligible to participate in the Plan.
(i) Eligible to participate in the Plan, unless excluded by reason of an
exclusion classification elected under this Adoption Agreement Section 1.07.
Related Employers. If any member of the Employer's related group (as defined in
Section 1.30 of the Plan) executes a Participation Agreement to this Adoption
Agreement, such member's Employees are eligible to participate in this Plan,
unless excluded by reason of an exclusion classification elected uner this
Adoption Agreement Section 1.07. In addition: (Choose (j) or (k))
(j) No other related group member's Employees are eligible to participate
in the Plan.
(k) The following nonparticipating related group member's Employees are
eligible to participate in the Plan unless excluded by reason of an exclusion
classification elected under this Adoption Agreement Section 1.07:
- ---------------------------------------
1.12 COMPENSATION
Treatment of elective contributions. (Choose (a) or (b))
(a) "Compensation" includes elective contributions made by the Employer on
the Employee's behalf.
(b) "Compensation" does not include elective contributions.
Modifications to Compensation definition. (Choose (c) or at least one of
(d) through (j))
(c) No modifications other than as elected under Options (a) or
(b).
(d) The Plan excludes Compensation in excess of $---------------.
(e) In lieu of the definition in Section 1.12 of the Plan, Compensation means
any earnings reportable as W-2 wages for Federal income tax withholding
purposes, subject to any other election under this Adoption Agreement Section
1.12.
(f) The Plan excludes bonuses.
(g) The Plan excludes overtime.
(h) The Plan excludes Commissions.
<PAGE>
(i) Compensation will not include Compensation from a related employer (as
defined in Section 1.30 of the Plan) that has not executed a Participation
Agreement in this Plan unless, pursuant to Adoption Agreement Section 1.07, the
Employees of that related employer are eligible to participate in this Plan.
(j) (Specify) ----------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
If, for any Plan Year, the Plan uses permitted disparity in the contribution or
allocation formula elected under Article III, any election of Options (f), (g),
(h) or (j) is ineffective for such Plan Year with respect to any Nonhighly
Compensated Employee.
Special definition for matching contributions. "Compensation" for purposes
of any matching contribution formula under Article III means: (Choose (k) or (l)
only if applicable)
(k) Compensation as defined in this Adoption Agreement Section
1.12.
(l) (Specify) ----------------------------------------------------------------
- --------------------------------------------------------------------------------
Special definition for salary reduction contributions. An Employee's salary
reduction agreement applies to his Compensation determined prior to the
reduction authorized by that salary reduction agreement, with the following
exceptions: (Choose (m) or at least one of (n) or (o), if applicable)
(m) No exceptions.
(n) If the Employee makes elective contributions to another plan maintained by
the Employer, the Advisory Committee will determine the amount of the Employee's
salary reduction contribution for the withholding period: (Choose (1) or (2))
(1) After the reduction for such period of elective
contributions to the other plan(s).
(2) Prior to the reduction for such period of elective
contributions to the other plan(s).
(o) (Specify) ----------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1.17 PLAN YEAR/LIMITATION YEAR.
Plan Year. Plan Year means: (Choose (a) or (b))
(a) The 12 consecutive month period ending every ---------------.
(b) (Specify) ----------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Limitation Year. The Limitation Year is: (Choose (c) or (d))
(c) The Plan Year.
(d) The 12 consecutive month period ending every ---------------.
1.18 EFFECTIVE DATE.
New Plan. The "Effective Date" of the Plan is -----------------.
Restated Plan. The restated Effective Date is -----------------.
This Plan is a substitution and amendment of an existing
retirement plan(s) originally established ---------------------.
(Note: See the Effective Date Addendum.)
1.27 HOUR OF SERVICE. The crediting method for Hours of Service is: (Choose
(a) or (b))
(a) The actual method.
(b) The ---------------------------- equivalency method, except:
(1) No exceptions.
(2) The actual method applies for purposes of: (Choose at
least one)
(i) Participation under Article II.
(ii) Vesting under Article V.
(iii)Accrual of benefits under Section 3.06.
[Note: On the blank line, insert "daily," "weekly," "semi-monthly payroll
periods" or "monthly."]
1.29 SERVICE FOR PREDECESSOR EMPLOYER. In addition to the predecessor
service the Plan must credit by reason of Section 1.29 of the Plan, the Plan
credits Service with the following predecessor employer(s):---------------------
- --------------------------------------------------------------------------------
Service with the designated predecessor employer(s) applies: (Choose at least
one of (a) or (b); (c) is available only in addition to (a) or (b))
(a) For purposes of participation under Article II.
(b) For purposes of vesting under Article V.
(c) Except the following Service: --------------------------/
[Note: If the Plan does not credit any predecessor service under this
provision, insert "N/A" in the first blank line. The Employer may attach a
schedule to this Adoption Agreement, in the same format as this Section 1.29,
designating additional predecessor employers and the applicable service
crediting elections.]
<PAGE>
1.31 LEASED EMPLOYEES. If a Leased Employee is a Participant in the Plan
and also participates in a plan maintained by the leasing organization: (Choose
(a) or (b))
(a) The Advisory Committee will determine the Leased Employee's allocation of
Employer contributions under Article III without taking into account the Leased
Employee's allocation, if any, under the leasing organization's plan.
(b) The Advisory Committee will reduce the Leased Employee's allocation of
Employer nonelective contributions (other than designated qualified nonelective
contributions) under this Plan by the Leased Employee's allocation under the
leasing organization's plan, but only to the extent that allocation is
attributable to the Leased Employee's service provided to the Employer. The
leasing organizationn's plan:
(1) Must be a money purchase plan which would satisfy the definition under
Section 1.31 of a safe harbor plan, irrespective of whether the safe
harbor exception applies.
(2) Must satisfy the features and, if a defined benefit plan, the method
of reduction described in an addendum to this Adoption Agreement, numbered
1.31.
ARTICLE II
EMPLOYEE PARTICIPANTS
2.01 ELIGIBILITY.
Eligibility conditions. To become a Participant in the Plan, an Employee
must satisfy the following eligibility conditions: (Choose (a) or (b) or both;
(c) is optional as an additional election)
(a) Attainment of age ------------------ (specify age, not exceeding 21).
(b) Service requirement. (Choose one of (1) through (3))
(1) One Year of Service.
(2) ---------- months (not exceeding 12) following the Employee's
Employment Commencement Date.
(3) One Hour of Service.
(c) Special requirements for non-401(k) portion of plan. (Make elections
under (1) and under (2))
<PAGE>
(1) The requirements of this Option (c) apply to
participation in: (Choose at least one of (i) through (iii))
(i) The allocation of Employer nonelective contributions and
Participant forfeitures.
(ii) The allocation of Employer matching contributions (including
forfeitures allocated as matching contributions).
(iii)The allocation of Employer qualified nonelective
contributions.
(2) For participation in the allocations described in (1),
the eligibility conditions are: (Choose at least one of (i)
through (iv))
(i) --------- (one or two) Year(s) of Service, without an
intervening Break in Service (as described in Section 2.03(A) of the
Plan) if the requirement is two Years of Service.
(ii) --------- months (not exceeding 24) following the Employee's
Employment Commencement Date.
(iii)One Hour of Service.
(iv) Attainment of age ----------------- (Specify age, not
exceeding 21).
Plan Entry Date. "Plan Entry Date" means the Effective Date and: (Choose
(d), (e) or (f))
(d) Semi-annual Entry Dates. The first day of the Plan Year and the first
day of the seventh month of the Plan Year.
(e) The first day of the Plan Year.
(f) (Specify entry dates) ----------------------------/
Time of Participation. An Employee will become a Participant (and, if
applicable, will participate int he allocations described in Option (c)(1)),
unless excluded under Adoption Agreement Section 1.07, on the Plan Entry Date
(if employed on that date): (Choose (g), (h) or (I))
(g) immediately following
(h) immediately preceding
(i) nearest --------------------------------------------- the date the
Employer completes the eligibility conditions described in Options (a) and (b)
(or in Option (c)(2) if applicable) of this Adoption Agreement Section 2.01.
<PAGE>
[Note: The Employer must coordinate the selection of (g), (h) or (i) with
the "Plan Entry Date" selection in (d), (e) or (f). Unless otherwise excluded
under Section 1.07, the Employee must become a Participant by the earlier of:
(1) the first day of the Plan Year beginning after the date the Employee
completes the age and service requirements of Code ss.410(a); or (2) 6 months
after the date the Employee completes those requirements.]
Dual eligibility. The eligibility conditions of this Section 2.01
apply to: (Choose (j) or (k))
(j) All Employees of the Employer, except: (Choose (1) or (2))
(1) No exceptions
(2) Employees who are Participants in the Plan as of the
Effective Date.
(k) Solely to an Employee employed by the Employer after ----------------.
If the Employee was employed by the Employer on or before the specified date,
the Employee will become a Participant: (Choose (1), (2) or (3))
(1) On the latest of the Effective Date, his Employment Commencement Date
or the date he attains age ----------------- (not to exceed 21).
(2) Under the eligibility conditions in effect under the Plan prior to the
restated Effective Date. If the restated Plan required more than one Year
of Service to participate, the eligibility conditions under this Option
(2) for participation in the Code 401(k) arrangement under this Plan is
one Year of Service for Plan Years beginning after December 31, 1988. [For
restated plans only]
(3) (Specify)
----------------------------------------------------------
----------------------------------------------------------/
2.02 YEAR OF SERVICE - PARTICIPATION.
Hours of Service. An Employee must complete: (Choose (a) or (b))
(a) 1,000 Hours of Service
(b) -------------- Hours of Service during an eligibility computation
period to receive credit for a Year of Service. [Note: The Hours of Service
requirement may not exceed 1,000.]
Eligibility computation period. After the initial eligibility computation
period described in Section 2.02 of the Plan, the Plan measures the eligibility
computation period as: (Choose (c) or (d))
<PAGE>
(c) The 12 consecutive month period beginning with each anniversary of an
Employee's Employment Commencement Date.
(d) The Plan Year, beginning with the Plan Year which includes the first
anniversary of the Employee's Employment Commencement Date.
2.03 BREAK IN SERVICE - PARTICIPATION. The Break in Service rule described
in Section 2.03(B) of the Plan: (Choose (a) or (b))
(a) Does not apply to the Employer's Plan.
(b) Applies to the Employer's Plan.
2.06 ELECTION NOT TO PARTICIPATE. The Plan: (Choose (a) or (b))
(a) Does not permit an eligible Employee or a Participant to elect not to
participate.
(b) Does permit an eligible Employee or a Participant to elect not to
participate in accordance with Section 2.06 and with the following rules:
(Complete (1), (2), (3) and (4))
(1) An election is effective for Plan Year if filed no later than
---------------------.
(2) An election not to participate must be effective for at least
------------- Plan Year(s).
(3) Following a re-election to participate, the Employee or
Participant:
(i) May not again elect not to participate for any
subsequent Plan Year.
(ii) May again elect not to participate, but not earlier than the
--------------------- Plan Year following the Plan Year in which
the re-election first was effective.
(4) (Specify) --------------------------------------------------------
[Insert "N/A" if no other rules apply].
ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES
3.01 AMOUNT.
Part I. [Options (a) through (g)] Amount of Employer's contribution. The
Employer's annual contribution to the Trust will equal the total amount of
deferral contributions, matching contributions, qualified nonelective
contributions and nonelective contributions, as determined under this Section
3.01.
<PAGE>
(Choose any combination of (a), (b), (c) and (d), or choose (e))
(a) Deferral contributions (Code 401(k) arrangement). (Choose
(1) or (2) or both)
(1) Salary reduction arrangement. The Employer must contribute the amount
by which the Participants have reduced their Compensation for the Plan
Year, pursuant to their salary reduction agreements on file with the
Advisory Committee. A reference in the Plan to salary reduction
contributions is a reference to these amounts.
(2) Cash or deferred arrangement. The Employer will contribute on behalf
of each Participant the portion of the Participant's proportionate share
of the cash or deferred contribution which he has not elected to receive
in cash. See Section 14.02 of the Plan. The Employer's cash or deferred
contribution is the amount the Employer may from time to time deem
advisable which the Employer designates as a cash or deferred contribution
prior to making that contribution to the Trust.
(b) Matching contributions. The Employer will make matching contributions in
accordance with the formula(s) elected in Part II of this Adoption Agreement
Section 3.01.
(c) Designated qualified nonelective contributions. The Employer, in its sole
discretion, may contribute an amount which it designates as a qualified
nonelective contribution.
(d) Nonelective contributions. (Choose any combination of (1)
through (4))
(1) Discretionary contribution. The amount (or additional
amount) the Employer may from time to time deem advisable.
(2) The amount (or additional amount) the Employer may from
time to time deem advisable, separately determined for each
of the following classifications of Participants: (Choose
(i) of (ii))
(i) Nonhighly Compensated Employees and Highly
Compensated Employees.
(ii) (Specify classifications) ------------------------------------
------------------------------------------------------.
Under this Option (2), the Advisory Committee will allocate the
amount contributed for each Participant classification in accordance
with Part II of Adoption Agreement Section 3.04, as if the
Participants in that classification were the only Participants in
the Plan.
<PAGE>
(3) ----------------% of the Compensation of all Participants under
the Plan, determined for the Employer's taxable year for
which it makes the contribution. [Note: The percentage
selected may not exceed 15%.]
(4) -----------% of Net Profits but not more than $--------------.
(e) Frozen Plan. This Plan is a frozen Plan effective
- ----------------------. The Employer will not contribute to the Plan with
respect to any period following the stated date.
Net Profits. The Employer: (Choose (f) or (g))
(f) Need not have Net Profits to make its annual contribution under this Plan.
(g) Must have current or accumulated Net Profits exceeding $------------ to
make the following contributions: (Choose at least one)
(1) Cash or deferred contributions described in Option
(a)(2).
(2) Matching contributions described in Option (b), except:
-----------------------------------------------------------.
(3) Qualified nonelective contributions described in Option
(c).
(4) Nonelective contributions described in Option (d).
The term "Net Profits" means the Employer's net income or profits for any
taxable year determined by the Employer upon the basis of its books of account
in accordance with generally accepted accounting practices consistently applied
without any deductions for Federal and state taxes upon income or for
contributions made by the Employer under this Plan or under any other employee
benefit plan the Employer maintains. The term "net Profits" specifically
excludes:
- ---------------------------------------------------------------.
[Note: Enter "N/A" if no exclusions apply.]
If the Employer requires Net Profits for matching contributions and the Employer
does not have sufficient Net Profits uner Option (g), it will reduce the
matching contribution under a fixed formula on a prorata basis for all
Participants. A Participant's share of the reduced contribution will bear the
same ratio as the matching contribution the Participant would have received if
Net Profits were sufficient bears to the total matching contribution all
Participants would have received if Net Profits were sufficient. If more than
one member of a related group (as defined in Section 1.30) execute this Adoption
<PAGE>
Agreement, each participating member will determine net Profits separately
but will not apply this reduction unless, after combining the separately
determined Net Profits, the aggregate Net Profits are insufficient to satisfy
the matching contribution liability. "Net Profits" includes both current and
accumulated Net Profits.
Part II. [Options (h) through (j)] Matching contribution formula. [Note: If
the Employer elected Option (b), complete Options (h), (i) and (j).]
(h) Amount of matching contributions. For each Plan Year, the Employer's
matching contribution is: (Choose any combination of (1), (2), (3), (4) and (5))
(1) An amount equal to -----------% of each Participant's eligible
contributions for the Plan Year.
(2) An amount equal to -----------% of each Participant's first tier of
eligible contributions for the Plan Year, plus the following matching
percentage(s) for the following subsequent tiers of eligible contributions
for the Plan Year: --------------------------------------.
(3) Discretionary formula.
(i) An amount (or additional amount) equal to a matching percentage
the Employer from time to time may deem advisable of the
Participant's eligible contributions for the Plan Year.
(ii) An amount (or additional amount) equal to a matching percentage
the Employer from time to time may deem advisable of each tier of
the Participant's eligible contributions for the Plan Year.
(4) An amount equal to the following percentage of each Participant's
eligible contributions for the Plan Year, based on the Participant's Years
of Service:
Number of Years of Service Matching Percentage
----------- ------------
----------- ------------
----------- ------------
----------- ------------
The Advisory Committee will apply this formula by determining
Years of Service as follows: -------------------------------------------------.
(5) A Participant's matching contribuitons may not: (Choose
(i) or (ii))
(i) Exceed -------------------------------------------.
(ii) Be less than -------------------------------------.
<PAGE>
Related Employers. If two or more related employers (as defined in Section
1.30) contribute to this Plan, the related employers may elect different
matching contribution formulas by attaching to the Adoption Agreement a
separately completd copy of this Part II. [Note: Separate matching contribution
formulas create separate current benefit structures that must satisfy the
minimum participation test of Code 401(a)(26).]
(i) Definition of eligible contributions. Subject to he requirements of
Option (j), the term "eligible contributions" means: (Choose any combination of
(1) through (3))
(1) Salary reduction contributions.
(2) Cash or deferred contributions (including any part of the
Participant's proportionate share of the cash or deferred contribution
which the Employer defers without the Participant's election).
(3) Participant mandatory contributions, as designated in Adoption
Agreement Section 4.01. See Section 14.04 of the Plan.
(j) Amount of eligible contributions taken into account. When determining a
Participant's eligible contributions taken into account under the matching
contributions formula(s), the following rules apply: (Choose any combination of
(1) through (4))
(1) The Advisory Committee will take into account all eligible
contributions credited for the Plan Year.
(2) The Advisory Committee will disregard eligible contributions
exceeding
(3) The Advisory Committee will treat as the first tier of eligible
contributions, an amount not exceeding:
-----------------------------.
The subsequent tiers of eligible contributions are:
- ---------------------------.
(4) (Specify)------------------------------------.
Part III. [Options (k) and (l). Special rules for Code ss.401(k)
Arrangement. (Choose (k) or (l), or both, as applicable)
(k) Salary Reduction Agreements. The following rules and
restrictions apply to an Employee's salary reduction agreement:
(Make a selection under (1), (2), (3) and (4))
(1) Limitation on amount. The Employee's salary reduction
contributions: (Choose (i) or at least one of (ii or (iii))
<PAGE>
(i) No maximum limitation other than as provided in
the Plan.
(ii) May not exceed ------------% of Compensation for the Plan Year,
subject to the annual additions limitation described in Part 2 of
Article III and the 402(g) limitation described in Section 14.07 of
the Plan.
(iii)Based on percentages of Compensation must equal at
least --------------------.
(2) An Employee may revoke, on a prospective basis, a
salary reduction agreement: (Choose (i), (ii), (iii) or
(iv))
(i) Once during any Plan Year but not later than
--------------------- of the Plan Year.
(ii) As of any Plan Entry Date.
(iii)As of the first day of any month.
(iv) (Specify, but must be at least once per Plan Year
-------------------------.
(3) an Employee who revokes his salary reduction agreemetn
may file a new salary reduction agreemetn with an effective
date: (Choose (i), (ii), (iii) or (iv))
(i) No earlier than the first day of the next Plan
Year.
(ii) As of any subsequent Plan Entry Date.
(iii)As of the first day of any month subsequent to the
month in which he revoked an Agreement.
(iv) (Specify, but must be at least once per Plan Year following the
Plan Year of revocation) ----------------------.
(4) A Participant may increase or may decrease, on a
prospective basis, his salary reduction percentage or dollar
amount: (Choose (i), (ii), (iii) or (iv))
(i) As of the beginning of each payroll period.
(ii) As of the first day of each month.
(iii)As of any Plan Entry Date.
(iv) (Specify, but must permit an increase or a
decrease at least once per Plan Year
-----------------------------------.
<PAGE>
(l) Cash or deferred contributions. For each Plan Year for which the Employer
makes a designated cash or deferred contribution, a Participant may elect to
receive directly in cash not more than the following portion (or, if less, the
402(g) limitation described in Section 14.07 of the Plan) of his proportionate
share of that cash or deferred contribution: (Choose (1) or (2))
(1) All or any portion.
(2) ----------------%.
3.04 CONTRIBUTION ALLOCATION. the Advisory Committee will allocate deferral
contributions, matching contributions, qualified nonelective contributions and
nonelective contributions in accordance with Section 14.06 and the elections
under this Adoption Agreement Section 3.04.
Part I. [Options (a) through (d)]. Special Accounting Elections. (Choose
whichever elections are applicable to the Employer's Plan)
(a) Matching Contribuitons Account. The Advisory Committee will allocate
matching contributions to a Participant's: (Choose (1) or (20; (3) is available
only in addition to (1))
(1) Regular Matching Contribution Account.
(2) Qualified Matching Contributions Account.
(3) Except, matching contributions under Option(s) ---------------------
of Adoption Agreement Section 3.01 are allocable to the Qualified Matching
Contributions Account.
(b) Special Allocation Dates for Salary Reduction Contributions. The
advisory Committee will allocate salary reduction contributions as of the
Accounting Date and as of the following additional allocation dates:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(c) Special Allocation Dates for Matching Contributions. The Advisory
Committee will allocate matching contributions as of the Accounting Date and as
of the following additional allocation dates:
- ----------------------------------------------------------.
(d) Designated Qualified Nonelective Contributions - Definition of
Participant. For purposes of allocating the designated qualified nonelective
contribution, "Participant" means: (Choose (1), (2) or (3))
(1) All Participants.
(2) Participants who are Nonhighly Compensated Employees
for the Plan Year.
<PAGE>
(3) (Specify) ----------------------------------------------------------
--------------------------------------------------------------------------
Part II. Method of Allocation - Nonelective Contribution. Subject to any
restoration allocation required under Section 5.04, the Advisory Committee will
allocate and credit each annual nonelective contribution (and Participant
forfeitures treated as nonelective contributions) to the Employer Contributions
Account of each Participant who satisfies the conditions of Section 3.06, in
accordance with the allocation method selected under this Section 3.04. If the
Employer elects Option (e)(2), Optoin (g)(2) or Option (h), for the first 3% of
Compensation allocated to all Participants, "Compensation" does not include an
exclusions elected under Adoptoin Agreement Section 1.12 (other than the
exclusion of elective contributions), and the Advisory Committee must take into
account the Participant's Compensation for the entire Plan Year. (Choose an
allocation method under (e), (f), (g) or (h); (I) is mandatory if the Employer
elects (f), (g) or (h); (j) is optional in addition to any other election.)
(e) Nonintegrated Allocation Formula. (Choose (1) or (2))
(1) The Advisory Committee will allocate the annual nonelective
contributions in the same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for the
Plan Year.
(2) The Advisory Committee will allocate the annual nonelective
contributions in the same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for the
Plan Year. For purposes of this Option (2), "Participant" means, in
addition to a Participant who satisfies the requirements of Section 3.06
for the Plan Year, any other Participant entitled to a top heavy minimum
allocation under Section 3.04(b), but such Participant's allocation will
not exceed 3% of his Compensation for the Plan Year.
(f) Two-Tiered Integrated Allocation Formula - Maximum Disparity. First, the
Advisory Committee will allocate the annual Employer nonelective contributions
in the same ratio that each Participant's Compensation plus Excess Compensation
of all Participants for the Plan Year bears to the total Compensation plus
Excess Compensation of all Participants for the Plan Year. The allocation under
this paragraph, as a percentage of each Participant's Compensation plus Excess
Compensation, must not exceed the applicable percentage (5.7%, 5.4% or 4.3%)
listed under the Maximum Disparity Table following Option (i).
The Advisory Committee then will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation for the
Plan Year bears to the total Compensation of all Participants for the Plan Year.
<PAGE>
(c) Three-Tiered Integrated Allocation Formula. First, the Advisory Committee
will allocate the annual Employer nonelective contributions in the same ratio
that each Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year. The allocation under this
paragraph, as a percentage of each Participant's Compensation may not exceed the
applicable percentage (5.7%, 5.4% or 4.3%) listed under the Maximum Disparity
Table following Option (I). Solely for purposes of the allocation in this first
paragraph, "Participant" means, in addition to a Participant who satisfies the
requirements of Section 3.06 for the Plan Year: (Choose (1) or (2))
(1) No other Participant.
(2) any other Participant entitled to a top heavy minimum allocation under
Section 3.04(B), but such Participant's allocation under this Option (g) will
not exceed 3% of his Compensation for the Plan Year.
As a second tier allocation, the Advisory Committee will allocate the
nonelective contributions in the same ratio that each Participant's Excess
Compensation for the Plan Year bears to the total Excess Compensation of all
Participants for the Plan Year. The allocation under this paragraph, as a
percentage of each Participant's Excess Compensation, may not exceed the
allocation percentage in the first paragraph.
Finally, the Advisory Committee will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation for the
Plan Year bears to the total Compensation of all Participants for the Plan Year.
(h) Four-Tiered Integrated Allocation Formula. First, the Advisory Committee
will allocate the annual Employer nonelective contributions in the same ratio
that each Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year, but not exceeding 3% of each
Participant's Compensation. Solely for purposes of this first tier allocation, a
"Participant" means, in addition to any Participant who satisfies the
requirements of Section 3.06 for the Plan Year, any other Participant entitled
to a top heavy minimum allocation under Sectoin 3.04(B) of the Plan.
As a second tier allocation, the Advisory Committee will allocate the
nonelective contributions in the same ratio that each Participant's Excess
Compensation for the Plan Year bears to the total Excess Compensation of all
Participants for the Plan Year, but not exceeding 3% of each Participant's
Excess Compensation.
As a third tier allocation, the Advisory Committee will allocate the annual
Employer contributions in the same ratio that each Participant's Compensation
plus Excess Compensation for the Plan Year bears to the total Compensation plus
<PAGE>
Excess Compensation of all Participants for the Plan year. The allocation
under this paragraph, as a percentage of each Participant's Compensation plus
Excess Compensation, must not exceed the applicable percentage (2.7%, 2.4% or
1.3%) listed under the Maximum Disparity Table following Option (i).
The Advisory Committee then will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation for the
Plan Year bears to the total Compensation of all Participants for the Plan Year.
(i) Excess Compensation. For purposes of Option (f), (g) or (h), "Excess
Compensation" means Compensation in excess of the following Integration Level:
(Choose (1) or (2))
(1) --------% (not exceeding 100%) of the taxable wage base, as determined
under Section 230 of the Social Security Act, in effect on the first day
of the Plan Year: (Choose any combination of (i) and (ii) or choose (iii))
(i) Rounded to ----------------------- (but not exceeding
the taxable wage base).
(ii) But not greater than $--------------------.
(iii)Without any further adjustment or limitation.
(2) $------------------. [Note: Not exceeding the taxable
wage base for the Plan Year in which this Adoption Agreement
first is effective.]
Maximum Disparity Table. For purposes of Options (f), (g) and
(h), the applicable percentage is:
Integration Level Applicable Percentages Applicable
(as percentage of for Option (f) or Percentages
taxable wage base) Option (g) For Option (h)
- --------------------------------------------------------------------------------
100% 5.7% 2.7%
More than 80% but
less than 100% 5.4% 2.4%
More than 20%
(but not less than
$10,001) and not
more than 80% 4.3% 1.3%
20% (or $10,000, if
greater) or less 5.7% 2.7%
<PAGE>
(j) Allocation offset. The Advisory Committee will reduce a Participant's
allocation otherwise made under Part II of this Section 3.04 by the
Participant's allocation under the following qualified plan(s) maintained by the
Employer: ----------------. The Advisory Committee will determine this
allocation reduction:
(Choose (1) or (2))
(1) By treating the term "nonelective contribution" as including all
amounts paid or accrued by the Employer during the Plan Year to the
qualified plan(s) referenced under this Option (j). If a Participant under
this Plan also participates in that other plan, the Advisory Committee
will treat the amount the Employer contributes for or during a Plan Year
on behalf of a particular Participant under such other plan as an amount
allocated under this Plan to that Participant's Account for that Plan
Year. The Advisory Committee will make the computation of allocation
required under the immediately preceding sentence before making any
allocation of nonelecive contributions under this Section 3.04.
(2) In accordance with the formula provided in an addendum to this
Adoption Agreement, numbered 3.04(j).
Top Heavy Minimum Allocation - Method of Compliance. If a Participant's
allocation under this Section 3.04 is less than the top heavy minimum allocation
to which he is entitled under Section 3.04(B): (Choose (k) or (l))
(k) The Employer will make any necessary additional contribution to the
Participant's Account, as described in Section 3.04(B)(7)(a) of the Plan.
(l) The Employer will satisfy the top heavy minimum allocation under the
following plan(s) it maintains: ---------------------. However, the Employer
will make any necessary additional contribution to satisfy the top heavy minimum
allocation for an Employee covered only under this Plan and not under the other
plan(s) designated in this Option (l). See Section 3.04(B)(7)(b) of the Plan.
If the Employer maintains another plan, the Employer may provide in an addendum
to this Adoption Agreement, numbered Section 3.04, any modifications to the Plan
necessary to satisfy the top heavy requirements under Code ss.416.
Related employers. If two or more related employers (as defined in Section 1.30)
contribute to this Plan, the Advisory Committee must allocate all Employer
nonelective contributions (and forfeitures treated as nonelective contributions)
to each Participant in the Plan, in accordance with the elections in this
Adoption Agreement Section 3.04: (Choose (m) or (n))
<PAGE>
(m) Without regard to which contributing related group member employes the
Participant.
(n) Only to the Participants directly employed by the contributing Employer. If
a Participant receives Compensation from more than one contributing Employer,
the Advisory Committee will determine the allocations under this Adoption
Agreement Section 3.04 by prorating among the participating Employers the
Participant's Compensation and, if applicable, the Participant's Integration
Level under Option (i).
3.05 FORFEITURE ALLOCATION. Subject to any restoration allocation required
under Sections 5.04 or 9.14, the Advisory Committee will allocate a Participant
forfeiture in accordance with Section 3.04: (Choose (a) or (b); (c) and (d) are
optional in addition to (a) or (b))
(a) As an Employer nonelective contribution for the Plan Year in which the
forfeiture occurs, as if the Participant forfeiture were an additional
nonelective contribution for that Plan Year.
(b) To reduce the Employer matching contributions and nonelective
contributions for the Plan Year: (Choose (1) or (2))
(1) in which the forfeiture occurs.
(2) immediately following the Plan Year in which the
forfeiture occurs.
(c) To the extent attributable to matching contributions:
(Choose (1), (2) or (3))
(1) In the manner elected under Options (a) or (b).
(2) First to reduce Employer matching contributions for the
Plan Year: (Choose (i) or (ii))
(i) in which the forfeiture occurs,
(ii) immediately following the Plan Year in which the forfeiture
occurs, then as elected in Options (a) or (b).
(3) As a discretionary matching contribution for the Plan Year in which
the forfeiture occurs, in lieu of the manner elected under Options (a) or
(b).
(d) First to reduce the Plan's ordinary and necessary administrative expenses
for the Plan Year and then will allocate any remaining forfeitures in the manner
described in Option (a), (b) or (c), whichever applies. If the Employer elects
Option (c), the forfeitures used to reduce Plan expenses: (Choose (1) or (2))
(1) relate proportionately to forfeitures described in
Option (c) and to forfeitures described in Options (a) or (b).
<PAGE>
(2) relate first to forfeitures described in Option
--------------.
Allocation of forfeited excess aggregate contributions. The Advisory Committee
will allocate any forfeited excess aggregate contributions (as described in
Section 14.09): (Choose (e), (f) or (g))
(e) To reduce Employer matching contributions for the Plan Year:
(Choose (1) or (2))
(1) in which the forfeiture occurs.
(2) immediately following the Plan Year in which the
forfeiture occurs.
(f) As Employer discretionary matching contributions for the Plan Year in which
forfeited, except the Advisory Committee will not allocate these forfeitures to
the Highly Compensated Employees who incurred the forfeitures.
(g) In accordance with Options (a) through (d), whichever applies, except the
Advisory Committee will not allocate these forfeitures under Option (a) or under
Option (c)(3) to the Highly Compensated Emplyees who incurred the forfeitures.
3.06 ACCRUAL OF BENEFIT.
Compensation taken into account. For the Plan Year in which the Employee first
becomes a Participant, the Advisory Committee will determine the allocation of
any cash or deferred contribution, designated qualified nonelective contribution
or nonelective contribution by taking into account: (Choose (a) or (b))
(a) The Employee's Compensation for the entire Plan Year.
(b) The Employee's Compensation only for the portion of the Plan Year in which
the Employee actually is a Participant in the Plan.
Accrual Requirements. Subject to the suspension of accrual requirements of
Section 3.06(E) of the Plan, to receive an allocation of cash or deferred
contributions, matching contributions, designated qualified nonelective
contributions, nonelective contributions and Participant forfeitures, if any,
for the Plan Year, a Participant must satisfy the conditions described in the
folloiwng elections: (Choose (c) or at least one of (d) through (f))
(c) Safe harbor rule. If the Participant is employed by the Employer on the
last day of the Plan Year, the Participant must complete at least one Hour of
Service for that Plan Year. If the Participant is not employed by the Employer
on the last day of the Plan Year, the Participant must complete at least 501
Hours of Service during the Plan Year.
<PAGE>
(d) Hours of Service condition. The Participant must complete the following
minimum number of Hours of Service during the Plan Year: (Choose at least one of
(1) through (5))
(1) 1,000 Hours of Service.
(2) (Specify, but the number of Hours of Service may not
exceed 1,000) --------------------------------------------.
(3) No Hour of Service requirement if the Participant terminates
employment during the Plan Year on account of:
(Choose (i), (ii) or (iii))
(i) Death.
(ii) Disability.
(iii)Attainment of Normal Retirement Age in the current Plan Year or
in a prior Plan Year.
(4) ------------ Hours of Service (not exceeding 1,000) if the Participant
terminates employment with the Employer during the Plan Year, subjet to
any election in Option (3).
(5) No Hour of Service requirement for an allocation of the
following contributions: -------------------------------------------------
--------------------------------------------------------------------------
(e) Employment conditions. The Participant must be employed by the Employer on
the last day of the Plan Year, irrespective of whether he satisfies any Hours of
Service condition under Option (d), with the following exceptions: (Choose (1)
or at least one of (2) through (5))
(1) No exceptions.
(2) Termination of employment because of death.
(3) Termination of employment because of disability.
(4) Termination of employment following attainment of
Normal Retirement Age.
(5) No employment conditions for the following
contributions: ---------------------------------.
(f) (Specify other conditions, if applicable): -------------------------------
- --------------------------------------------------------------------------------
Suspension of Accrual Requirements. The suspension of accrual requirements
of Section 3.06(E) of the Plan: (g), (h) or (I))
<PAGE>
(g) Applies to the Employer's Plan.
(h) Does not apply to the Employer's Plan.
(i) Applies in modified form to the Employer's Plan, as described in an addendum
to this Adoption Agreement, numbered Section 3.06(E).
Special accrual requirements for matching contributions. If the Plan allocates
matching contributions on two or more allocation dates for a Plan Year, the
Advisory Committee, unless otherwise specified in Option (1), will apply any
Hours of Service condition by dividing the required Hours of Service on a
prorata basis to the allocation periods included in that Plan Year. Furthermore,
a Participant who satisfies the conditions described in this Adoption Agreement
Section 3.06 will receive an allocation of matching contributions (and
forfeitures treated as matching contributions) only if the Participant satisfies
the following additional condition(s): (Choose (j) or at least one of (k) or
(l))
(j) No additional conditions.
(k) The Participant is not a Highly Compensated Employee for the Plan Year.
This Option (k) applies to: (Choose (1) or (2))
(1) All matching contributions.
(2) Matching contributions described in Option(s) --------- of Adoption
Agreement Section 3.01.
(l) (Specify) ----------------------------------------------------------------
- -------------------------------------------------------------------------------.
3.15 MORE THAN ONE PLAN LIMITATION. If the provisions of Section 3.15
apply, the Excess Amount attributed to this Plan equals: (Choose (a), (b) or
(c))
(a) The product of:
(i) the total Excess Amount allocated as of such date (including any
amount which the Advisory Committee would have allocated but for the
limitations of Code ss.415), times
(ii) the ratio of (1) the amount allocated to the Participant as of such
date under this Plan divided by (2) the total amount allocated as of such
date under all qualified defined contribution plans (determined without
regard to the limitations of Code ss.415).
(b) The total Excess Amount.
(c) None of the Excess Amount.
<PAGE>
3.18 DEFINED BENEFIT PLAN LIMITATION.
Application of limitation. The limitation under Section 3.18 of
the Plan: (Choose (a) or (b))
(a) Does not apply to the Employer's Plan because the Employer does not maintain
and never has maintained a defined benefit plan covering any Participant in this
Plan.
(b) Applies to the Employer's Plan. To the extent necessary to satisfy the
limitation under Section 3.18, the Employer will reduce: (Choose (1) or (2))
(1) The Participant's projected annual benefit under the defined benefit
plan under which the Participant participates.
(2) Its contribution or allocation on behalf of the Participant to the
defined contribution plan under which the Participant participates and
then, if necessary, the Participant's projected annual benefit under the
defined benefit plan under which the Participant participates.
[Note: If the Employer selects (a), the remaining options in this Section
3.18 do not apply to the Employer's Plan.]
Coordination with top heavy minimum allocation. The Advisory Committee will
apply the top heavy minimum allocation provisions of Section 3.04(B) of the Plan
with the following modifications:
(Choose (c), or at least one of (d) or (e))
(c) No modifications.
(d) For Non-Key Employees participating only in this Plan, the top heavy minimum
allocation is the minimum allocation described in Section 3.04(B) determined by
substituting ---------% (not less than 4%) for "3%", except: (Choose (i or (ii))
(i No exceptions.
(ii) Plan Years in which the top heavy ratio exceeds 90%.
(e) For Non-Key Employees also participating in the defined benefit plan,
the top heavy minimum is: (Choose (1) or (2))
(1) 5% of Compensation (as determined under Section 3.04(B)
of the Plan) irrespective of the contribution rate of any
Key Employee, except: (Choose (i) or (ii))
(i) No exceptions.
(ii) Substituting "7 1/2%" for "5%" if the top heavy ratio
does not exceed 90%.
<PAGE>
(2) 0%. [Note: The employer may not select this Option (2)
unless the defined benefit plan satisfies the top heavy
minimum benefit requirements of Code ss.416 for these Non-Key
Employees.]
Actuarial Assumptions for Top Heavy Calculation. To determine the top heavy
ratio, the Advisory Committee will use the following interest rate and mortality
assumptions to value accured benefits under a defined benefit plan:-------------
- -------------------------------------------------------------------------------.
If the elections under this Section 3.18 are not appropriate to satisfy the
limitations of Section 3.18, or the top heavy requirements under Code ss.416,
the Employer must provide the appropriate provisions in an addendum to this
Adoption Agreement.
ARTICLE IV
PARTICIPANT CONTRIBUTIONS
4.01 PARTICIPANT NONDEDUCTIBLE CONTRIBUTIONS. The Plan: (Choose (a) or (b);
(c) is available only with (b))
(a) Does not permit Participant nondeductible contributions.
(b) Permits Participant nondeductible contributions, pursuant to
Section 14.04 of the Plan.
(c) The following portion of the Participant's nondeductible contributions
for the Plan Year are mandatory contributions under Option (i)(3) of Adoption
Agreement Section 3.01: (Choose (1) or (2))
(1) The amount which is not less than: -------------------.
(2) The amount which is not greater than: ----------------.
Allocation dates: The Advisory Committee will allocate nondeductible
contributions for each Plan Year as of the Accounting Date and the following
additional allocation dates:
(Choose (d) or (e))
(d) No other allocation dates.
(e) (Specify) ----------------------------------------------------------------
- -------------------------------------------------------------------------------.
As of an allocation date, the Advisory Committee will credit all nondeductible
contributions made for the relevant allocation period. Unless otherwise
specified in (e), a nondeductible contribution relates to an allocation period
only if actually made to the Trust no later than 30 days after that allocation
period ends.
<PAGE>
4.05 PARTICIPANT CONTRIBUTION - WITHDRAWAL/DISTRIBUTION.
Subject to the restrictions of Article VI, the following distribution options
apply to a Participant's Mandatory Contributions Account, if any, prior to his
Separation from Service: (Choose (a) or at least one of (b) through (d))
(a) No distribution optoins prior to Separation from Service.
(b) The same distribution options applicable to the Deferral Contributions
Account prior to the Participant's Separation from Service, as elected in
Adoption Agreement Section 6.03.
(c) Until he retires, the Participant has a continuing election
to receive all or any portion of his Mandatory Contributions
Account if: (Choose (1) or at least one of (2) through (4))
(1) No conditions.
(2) The mandatory contributions have accumulated for at least
--------------- Plan Years since the Plan Year for which contributed.
(3) The Participant suspends making nondeductible
contributions for a period of months.
(4) (Specify)-----------------------------------------------------------
-------------------------------------------------------------------------.
(d) (Specify) ----------------------------------------------------------------
-------------------------------------------------------------------------.
ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING
5.01 NORMAL RETIREMENT. Normal Retirement Age under the Plan is: (Choose
(a) or (b))
(a) ----------------------- [State age, but may not exceed age
65].
(b) The later of the date the Participant attains --------- years of age or the
- --------- anniversary of the first day of the Plan Year in which the Participant
commenced participation in the Plan. [The age selected may not exceed age 65 and
the anniversary selected may not exceed the 5th.]
5.02 PARTICIPANT DEATH OR DISABILITY. The 100% vesting rule under Section
5.02 of the Plan: (Choose (a) or choose one or both of (b) and (c))
(a) Does not apply.
<PAGE>
(b) Applies to death.
(c) Applies to disability.
5.03 VESTING SCHEDULE.
Deferral Contributions Account/Qualified Matching Contributions
Account/Qualified Nonelective Contributions Account/Mandatory Contributions
Account. A Participant has a 100% Nonforfeitable interest at all times in his
Deferral Contributions account, his Qualified Matching Contributions Account,
his Qualified Nonelective Contributions Account and in his Mandatory
Contributions Account.
Regular Matching Contributions Account/Employer contributions Account. With
respect to a Participant's Regular Matching Contributions Account and Employer
Contributions Account, the Employer elects the following vesting schedule:
(Choose (a) or (b); (c) and (d) are available only as additional options)
(a) Immediate vesting. 100% Nonforfeitable at all times. [Note: The
Employer must election Option (a) if the eligibility conditions under Adoption
Agreement Section 2.01(c) require 2 year of service or more than 12 months of
employment.]
(b) Graduated Vesting Schedules.
Top Heavy Schedule Non Top Heavy Schedule
(Mandatory) (Optional)
Years of Nonforfeitable Years of Nonforfeitable
Service Percengage Service Percentage
- --------------------------------------------------------------------------------
Less than 1 ----- Less than 1 -----
1 ----- 1 -----
2 ----- 2 -----
3 ----- 3 -----
4 ----- 4 -----
5 ----- 5 -----
6 or more 100% 6 -----
7 or more -----
(c) Special vesting election for Regular Matching Contributions Account. In
lieu of the election under Options (a) or (b), the Employer elects the following
vesting schedule for a Participant's Regular Matching Contributions Account:
(Choose (1) or (2))
(1) 100% Nonforfeitable at all times.
(2) In accordance with the vesting schedule described in
the addendum to this Adoption Agreement, numbered 5.03(c).
[Note: If the Employer elects this Option (c)(2), the
addendum must designate the applicable vesting schedule(s)
using the same format as used in Option (b).]
<PAGE>
[Note: Under Options (b) and (c)(2), the Employer must complete a Top Heavy
Schedule which satisfies Code ss.411(a)(2). Also see Section 7.05 of the Plan.]
(d) The Top Heavy Schedule under Option (b) (and, if applicable,
under Option (c)(2)) applies: (Choose (1) or (2))
(1) Only in a Plan Year for which the Plan is top heavy.
(2) In the Plan Year for which the Plan first is top heavy
and then in all subsequent Plan Years. [Note: The Employer
may not elect Option (d) unless it has completed a Non Top
Heavy Schedule.]
Minimum Vesting. (Choose (e) or (f))
(e) The Plan does not apply a minimum vesting rule.
(f) A Participant's Nonforfeitable Accrued Benefit will never be less than the
lesser of $--------------- or his entire Accrued Benefit, even if the
application of a graduated vesting schedule under Options (b) or (c) would
result in a smaller Nonforfeitable Accrued Benefit.
Life Insurance Investments. The Participant's Accrued Benefit attributable
to insurance contracts purchased on his behalf under Article XI is: (Choose (g)
or (h))
(g) Subject to the vesting election under Options (a), (b), or
(c).
(h) 100% Nonforfeitable at all times, irrespective of the vesting election
under Options (b) or (c)(2).
5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/RESTORATION OF
FORFEITED ACCRUED BENEFIT. The deemed cash-out rule described in Section 5.04(C)
of the Plan: (Choose (a) or (b))
(a) Does not apply.
(b) Will apply to determine the timing of forfeitures for 0% vested
Participants. A Participant is not a 0% vested Participant if he has a Deferral
Contributions Account.
5.06 YEAR OF SERVICE - VESTING.
Vesting computation period. The Plan measures a Year of Service on the basis of
the following 12 consecutive month periods:
(Choose (a) or (b))
<PAGE>
(a) Plan Years.
(b) Employment Years. An Employment Year is the 12 consecutive month period
measured from the Employee's Employment Commencement Date and each successive 12
consecutive month period measured from each anniversary of that Employment
Commencement Date.
Hours of Service. The minimum number of Hours of Service an Employee must
complete during a vesting computation period to receive credit for a Year of
Service is: (choose (c) or (d))
(c) 1,000 Hours of Service.
(d) ------- Hours of Service. [Note: The Hours of Service
requirement may not exceed 1,000.]
5.08 INCLUDED YEARS OF SERVICE - VESTING. The Employer specifically
excludes the following Years of Service: (Choose (a) or at least one of (b)
through (e))
(a) None other than as specified in Section 5.08(a) of the Plan.
(b) Any Year of Service before the Participant attained the age of
- ------------------. [Note: The age selected may not exceed age 18.]
(c) Any Year of Service during the period the Employer did not maintain this
Plan or a predecessor plan.
(d) Any Year of Service before a Break in Service if the number of consecutive
Breaks in Service equals or exceeds the greater of 5 or the aggregate number of
the Years of Service prior to the Break. This exception applies only if the
Participant is 0% vested in his Accrued Benefit derived from Employer
contributions at the time he has a Break in Service. Furthermore, the aggregate
number of Years of Service before a Break in Service do not include any Years of
Service not required to be taken into account under this exception by reason of
any prior Break in Service.
(e) Any Year of Service earned prior to the effective date of ERISA if the Plan
would have disregarded that Year of Service on account of an Employee's
Separation from Service under a Plan provision in effect and adopted before
January 1, 1974.
ARTICLE VI
TIME AND METHOD OF PAYMENTS OF BENEFITS
Code ss.411(d)(6) Protected Benefits. The elections under this Article VI may
not eliminate Code ss.411(d)(6) protected benefit. To the extent the elections
would eliminate a Code ss.411(d)(6) protected benefit, see Section 13.02 of the
<PAGE>
Plan. Furthermore, if the elections liberalize the optional forms of
benefit under the Plan, the more liberal options apply on the later of the
adoption date or the Effective Date of this Adoption Agreement.
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT.
Distribution date. A distribution date under the Plan means
- --------------------------------------------------------------.
[Note: The Employer must specify the appropriate date(s). The specified
distribution dates primarily establish annuity starting dates and the notice and
consent periods prescribed by the Plan. The Plan allows the Trustee an
administratively practicable period of time to make the actual distribution
relating to a particular distribution date.]
Nonforfeitable Accrued Benefit Not Exceeding $3,500. Subject to the
limitations of Section 6.01(A)(1), the distribution date for distribution of a
Nonforfeitable Accrued Benefit not exceeding $3,500 is: (Choose (a), (b), (c) or
(d)or (e))
(a) ----------- of the -------------- Plan Year beginning after the
Participant's Separation from Service.
(b) ------------------------ following the Participant's Separation from
Service.
(c) --------------------------------- of the Plan Year after the
Participant incurs ---------------------- Break(s) in Service (as defined in
Article V).
(d) -------------- following the Participant's attainment of Normal Retirement
Age, but not earlier than --------------- days following his Separation from
Service.
(e) (Specify) ----------------------------------------------------------------
- -------------------------------------------------------------------------------.
Nonforfeitable Accrued Benefit Exceeds $3,500. See the elections under
Section 6.03.
Disability. The distribution date, subject to the limitations of Section
6.01(A)(3), is: (Choose (f), (g) or (h))
(e) -------------------- after the Participant terminates employment because of
disability.
(f) The same as if the Participant had terminated employment without
disability.
(h) (Specify)----------------------------------------------------------------
- -------------------------------------------------------------------------------.
Hardship. (Choose (i) or (j))
<PAGE>
(i) The Plan does not permit a hardship distribution to a Participant who
has separated from Service.
(h) The Plan permits a hardship distribution to a Participant who has separated
from Service in accordance with the hardship distribution policy stated in
(Choose (1), (2) or (3))
(1) Section 6.01(A)(4) of the Plan.
(2) Section 14.11 of the Plan.
(3) The addendum to this Adoption Agreement, numbered
Section 6.01.
Default on a Loan. If a Participant or Beneficiary defaults on a loan made
pursuant to a loan policy adopted by the Advisory Committee pursuant to Section
9.04, the Plan: (Choose (k), (l) or (m))
(k) Treats the default as a distributable event. the Trustee, at the time of the
default, will reduce the Participant's Nonforfeitable Accrued Benefit by the
lesser of the amount in default (plus accrued interest) or the Plan's security
interest in that Nonforfeitable Accrued Benefit. To the extent the loan is
attributable to the Participant's Deferral Contributions Account, Qualified
Matching Contributions Account or Qualified Nonelective Contributions Account,
the Trustee will not reduce the Participant's Nonforfeitable Accrued Benefit
unless the participant has separated from Service or unless the Participant has
attained age 59 1/2.
(l) Does not treat the default as a distributable event. When an otherwise
distributable event first occurs pursuant to Section 6.01 or Section 6.03 of the
Plan, the Trustee will reduce the Participant's Nonforfeitable Accrued Benefit
by the lesser of the amount in default (plus accrued interest) or the Plan's
security interest in that Nonforfeitable Accrued Benefit.
(m) (Specify) ----------------------------------------------------------------
- -------------------------------------------------------------------------------.
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. The Advisory Committee will
apply Section 6.02 of the Plan with the following modifications: (Choose (a) or
at least one of (b), (c), (d) and (e))
(a) No modifications.
(b) Except as required under Section 6.01 of the Plan, a lump sum
distribution is not available: -------------------------------------------------
- -------------------------------------------------------------------------------.
(c) An installment distribution: (Choose (1) or at least one of
(2) or (3))
<PAGE>
(1) Is not available under the Plan.
(2) May not exceed the lesser of ------------- years of the maximum
period permitted under Section 6.02.
(3) (Specify) ---------------------------------------------------------
-------------------------------------------------------------------------.
(d) The Plan permits the following annuity options: -------------------------
- ----------------------------------------------------------------.
Any Participant who elects a life annuity option is subject to the
requirements of Sections 6.04(A), (B), (C) and (D) of the Plan. See Section
6.04(E). [Note: The Employer may specify additional annuity options in an
addendum to this Adoption Agreement, numbered 6.02(d).]
6.03 BENEFIT PAYMENT ELECTIONS.
Participant Elections After Separation from Service. A Participant who is
eligible to make distribution elections under Section 6.03 of the Plan may elect
to commence distribution of his Nonforfeitable Accrued Benefit: (Choose at least
one of (a) through (c))
(a) As of any distribution date, but not earlier than ---------of the ---------
Plan Year beginning after the Participant's Separation from Service.
(b) As of the following date(s): (Choose at least one of Options (1)
through (6))
(1) Any distribution date after the close of the Plan Year in which the
Participant attains Normal Retirement Age.
(2) Any distribution date following his Separation from
Service.
(3) Any distribution date in the --------------- Plan Year(s) beginning
after his Separation from Service.
(4) Any distribution date in the Plan Year after the Participant incurs
------------ Break(s) in Service (as defined in Article V).
(5) Any distribution date following attainment of age ---------- and
completion of at least -------- Years of Service (as defined in Article
V).
(6) (Specify) ----------------------------------------------------------
-------------------------------------------------------------------------.
(c) (Specify) ----------------------------------------------------------------
-------------------------------------------------------------------------.
<PAGE>
The distribution events described in the election(s) made under Options (a), (b)
or (c) apply equally to all Accounts maintained for the Participant unless
otherwise specified in Option (c).
Participant Elections Prior to Separation from Service - Regular Matching
Contributions Account and Employer Contributions Account. Subject to the
restrictions of Article VI, the following distribution options apply to a
Participant's Regular Matching Contributions Account and Employer Contributions
Account prior to his Separation from Service: (Choose (d) or at least one of (e)
through (h))
(d) No distribution options prior to Separation from Service.
(e) Attainment of Specified Age. Until he retires, the Participant has a
continuing election to receive all or any portion of his Nonforfeitable interest
in these Accounts after he attains: (Choose (1) or (2))
(1) Normal Retirement Age.
(2) ----------- years of age and is at least -----------%
vested in these Accounts. [Note: If the percentage is less
than 100%, see the special vesting formula in Section 5.03.]
(f) After a Participant has participated in the Plan for a period of not
less than ---------- years and he is 100% vested in these Accounts, until he
retires, the Participant has a continuing election to receive all or any portion
of his Accounts. [Note: The number in the blank space may not be less than 5.]
(g) Hardship. A Participant may elect a hardship distribution prior to his
Separation from Service in accordance with the hardship distribution policy:
Choose (1), () or (3); (4) is available only as an additional option)
(1) Under Section 6.01(A)(4) of the Plan.
(2) Under Section 14.11 of the Plan.
(3) Provided in the addendum to this Adoption Agreement,
numbered Setion 6.03.
(4) In no event may a Participant receive a hardship
distribution before he is at least ---------% vested in
these Accounts. [Note: If the percentage in the blank is
less than 100%, see the special vesting formula in Section
5.03.]
(h) (Specify) ---------------------------------------------------------------
- -------------------------------------------------------------------------------.
[Note: The Employer may use an addendum, numbered 6.03, to provide
additional language authorized by Options (b)(6), (g)(3) or (h) of this Adoption
Agreement Section 6.03.]
<PAGE>
Participant Elections Prior to Separation from Service - Deferral Contributions
Account, Qualified Matching Contributions Account and Qualified Nonelective
Contributions Account. Subject to the restrictions of Article VI, the following
distribution options apply to a Participant's Deferral Contributions Account,
Qualified Matching Contributions Account and Qualified Nonelective Contributions
Account prior to his Separation from Service: (Choose (i) or at least one of (j)
through (l))
(i) No distribution options prior to Separation from Service.
(j) Until he retires, the Participant has a continuing election to receive all
or any portion of these Accounts after he attains:
(Choose (1) or (2))
(1) The later of Normal Retirement Age or age 59 1/2.
(2) Age --------------------- (at least 59 1/2).
(k) Hardship. A participant, prior to his separation from service, may elect a
hardship distribution from his Deferral Contributions Account in accordance with
the hardship distribution policy under Section 14.11 of the Plan.
(l) (Specify) ---------------------------------------------------.
[Note: Option (m) may not permit in service distributions prior to age 59
1/2, (other than hardship) and may not modify the hardship policy described in
Section 14.11.]
Sale of trade of business/subsidiary. If the employer sells substantially all of
the assets (within the meaning of Code 409(d)(2) used in a trade or business or
sells a subsidiary (within the meaning of Code 409(d)(3)), a Participant who
continues employment with he acquiring corporation is eligible for distribution
from his Deferral Contributions Account, Qualified Matching Contributions
Account and Qualified Nonelective Contributions Account: (Choose (m) or (n))
(m) Only as described in this Adoption Agreement Section 6.03 for distributions
prior to Separation from Service.
(n) As if he has a Separation from Service. After March 31, 1988, a distribution
authorized solely by reason of this Option (n) must constitute a lump sum
distribution, determined in a manner consistent with Code (k)(10) and the
applicable Treasury regulations.
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES. The
annuity distribution requirements of Section 6.04: (Choose (a) or (b))
<PAGE>
(a) Apply only to a Participant described in Section 6.04(E) of the Plan
(relating to the profit sharing exception to the joint and survivor
requirements).
(b) Apply to all Participants.
ARTICLE IX
ADVISORY COMMITTEE - DUTIES WITH RESPECT TO
PARTICIPANTS' ACCOUNTS
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. If a distribution (other than
a distribution from a segregated Account and other than a corrective
distribution described in Sections 14.07, 14.08, 14.09 or 14.10 of the Plan)
occurs more than 90 days after the most recent valuation date, the distribution
will include interest at: (Choose (a) or (b) (c))
(a) ---------------% per annum. [Note: The percentage may equal 0%.]
(b) The 90 day Treasury bill rate in effect at the beginning of the current
valuation period.
(c) (Specify) ----------------------------------------------------------------
- -------------------------------------------------------------------------------.
9.11 ALLOCATION AND DISTRIBUTION OF NET INCOME GAIN OR LOSS. Pursuant to
Section 14.12, to determine the allocation of net income, gain or loss:
(complete only those items, if any, which are applicable to the Employer's Plan)
(a) For salary reduction contributions, the Advisory Committee will:
(Choose (1), (2), (3), (4) or (5))
(1) Apply Section 9.11 without modification.
(2) Use the segregated account approach described in
Section 14.12.
(3) Use the weighted average method described in Section 14.12, based on a
-------------------------- weighting period.
(4) Treat as part of the relevant Account at the beginning
of the valuation period -----% of the salary reduction
contributions: (Choose (i) or (ii))
(i) made during that valuation period.
(ii) made by the following specified time: ----------
----------------------------------------------------.
(5) Apply the allocation method described in the addendum to this Adoption
Agreement numbered 9.11(a).
<PAGE>
(b) For matching contributions, the Advisory Committee will:
(Choose (1), (2), (3) or (4))
(1) Apply Section 9.11 without modification.
(2) Use the weighted average method described in Section 14.12, based on a
-------------------- weighting period.
(3) Treat as part of the relevant Account at the beginning of the
valuation period ---------% of the Matching contributions allocated during
the valuation period.
(4) Apply the allocation method described in the addendum to this Adoption
Agreement numbered 9.11(b).
(c) For Participant nondeductible contributions, the Advisory Committee
will: (Choose (1), (2), (3), (4) or (5))
(1) Apply Section 9.11 without modification.
(2) Use the segregated account approach described in
Section 14.12.
(3) Use the weighted average method described in Section 14.12, based on a
-------------------- weighting period.
(4) Treat as part of the relevant Account at the beginning
of the valuation period -------------% of the Participant
nondeductible contributions: (Choose (i) or (ii))
(i) made during that valuation period.
(ii) made by the following specified time: ---------------.
(5) Apply the allocation method described in the addendum to this Adoption
Agreement numbered 9.11(c).
ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES
10.03 INVESTMENT POWERS. Pursuant to Section 10.03(F) of the Plan, the
aggregate investments in qualifying Employer securities and in qualifying
Employer real property: (Choose (a) or (b))
(a) May not exceed 10% of Plan assets.
(b) May not exceed --------------% of Plan assets.
[Note: The percentage may not exceed 100%.]
10.14 VALUATION OF TRUST. In addition to each Accounting Date, the Trustee
must value the Trust Fund on the following valuation date(s): (Choose (a) or
(b))
<PAGE>
(a) No other mandatory valuation dates.
(b) (Specify) --------------------------------------------------------------
- -------------------------------------------------------------------------------.
EFFECTIVE DATE ADDENDUM
(Restated Plans Only)
The Employer must complete this addendum only if the restated Effective Date
specified in Adoption Agreement Section 1.18 is different than the restated
effective date for at least one of the provisions listed in this addendum. In
lieu of the restated Effective Date in Adoption Agreement Section 1.18, the
following special effective dates apply: (Choose whichever elections apply)
(a) Compensation definition. The Compensation definition of Section 1.12
(other than the $200,000 limitation) is effective for Plan Years beginning after
- -----------. [Note: May not be effective later than the first day of the first
Plan Year beginning after the Employer executes this Adoption Agreement to
restate the Plan for the Tax Reform Act of 1986, if applicable.]
(b) Eligibility conditions. the eligibility conditions specified in
Adoption Agreement Section 2.01 are effective for Plan Years beginning after
- -----------------.
(c) Suspension of Years of Service. The suspension of Years of Service rule
elected under Adoption Agreement Section 2.03 is effective for Plan Years
beginning after ------------------.
(d) Contribution/allocation formula. The contribution formula elected under
Adoption Agreement Section 3.01 and the method of allocation elected under
Adoption Agreement Section 3.04 is effective for Plan Years beginning after
- ------------------.
(e) Accrual requirements. The accrual requirements of Section 3.06 are
effective for Plan Years beginning after ----------------.
(f) Employment condition. The employment condition of Section 3.06 is
effective for Plan Years beginning after --------------.
(g) Elimination of Net Profits. The requirement for the Employer not to
have net profits to contribute to this Plan is effective for Plan Years
beginning after ------------------------------. [Note: The date specified may
not be earlier than December 31, 1985.]
(h) Vesting Schedule. The vesting schedule elected under Adoption Agreement
Section 5.03 is effective for Plan Years beginning after ----------------------.
(i) Allocation of Earnings. The special allocation provisions elected under
Adoption Agreement Section 9.11 are effective for Plan Years beginning after
- -------------------------------.
<PAGE>
(j) (Specify)-----------------------------------------------------------------
- -------------------------------------------------------------------------------.
For Plan Years prior to the special Effective Date, the terms of the Plan prior
to its restatement under this Adoption Agreement will control for purposes of
the designated provisions. A special Effective Date may not result in the delay
of a Plan provision beyond the permissible Effective Date under any applicable
law requirements.
Execution Page
The Trustee (and Custodian, if applicable), by executing this Adoption
Agreement, accepts its position and agrees to all of the obligations,
responsibilities and duties imposed upon the Trustee (or Custodian) under the
Master Plan and Trust. The Employer hereby agrees to the provisions of this Plan
and Trust, and in witness of its agreement, the Employer by its duly authorized
officers, has executed this Adoption Agreement, and the Trustee (and Custodian,
if applicable) signified its acceptance, on this ----------- day of
- ----------------, 19---.
Name and EIN of Employer: --------------------------------------------
Signed: --------------------------------------------------------------
Name(s) of Trustee: --------------------------------------------------
Signed: -------------------------------------------------------------
- ----------------------------------------------------------------------
Name of Custodian: ---------------------------------------------------
Signed: --------------------------------------------------------------
[Note: A Trustee is mandatory, but a Custodian is optional. See Section
10.03 of the Plan.]
Plan Number. The 3-digit plan number the Employer assigns to this
Plan for ERISA reporting purposes (Form 5500 Series) is:
- ------------------------------------------------.
Use of Adoption Agreement. Failure to complete properly the elections in this
Adoption Agreement may result in disqualification of the Employer's Plan. The
3-digit number assigned to this Adoption Agreement (see page 1) is solely for
the Master Plan Sponsor's recordkeeping purposes and does not necessarily
correspond to the plan number the Employer designated in the prior paragraph.
<PAGE>
Master Plan Sponsor. The Master Plan Sponsor identified on the first page of the
basic plan document will notify all adopting employers of an amendment of this
Master Plan or of any abandonment or discontinuance by the Master Plan Sponsor
of its maintenance of this Master Plan. For inquiries regarding the adoption of
the Master Plan, the Master Plan Sponsor's intended meaning of any plan
provisions or the effect of the opinion letter issued to the Master Plan Sponsor
at the following address and telephone number: INVESCO Trust Company, 7800 E.
Union Ave., Suite 900, Denver, Colorado (303) 779-0731.
Reliance on Opinion Letter. The Employer may not rely on the Master Plan
Sponsor's opinion letter covreing this Adoption Agreement. For reliance on the
Plan's qualification, the Employer must obtain a determination letter from the
applicable IRS Key District office.
PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)
The undersigned Employer, by executing this Participation Agreement, elects to
become a Participating Employer in the Plan identified in Section 1.03 of the
accompanying Adoption Agreement, as if the Participating Employer were a
signatory to that Agreement. The Participating Employer accepts, and agrees to
be bound by, all of the elections granted under the provisions of the Master
Plan as made by, -----------------------------------, the Signatory Employer to
the Execution Page of the Adoption Agreement.
1. The Effective Date of the undersigned Employer's
participation in the designated Plan is ------------------------------.
2. The undersigned Employer's adoption of this Plan
constitutes:
(a) The adoption of a new plan by the Participating Employer.
(b) The adoption of an amendment and restatement of a plan currently maintained
by the Employer, identified as ------------------------------------ and having
an original effective date of --------------------------------------.
Dated this -------------- day of ---------------------, 19-----.
Name of Participating Employer: -------------------------------------
Signed: -------------------------------------------------------------
Participating Employer's EIN: ---------------------------------------
<PAGE>
Acceptance by the Signatory Employer to the Execution Page of the
Adoption Agreement and by the Trustee.
Name of Signatory Employer: -------------------------------------
Accepted: -------------------------------------------------------
[Date]
Signed: ---------------------------------------------------------
Name(s) of Trustee: ---------------------------------------------
Accepted: -------------------------------------------------------
[Date]
Signed: ---------------------------------------------------------
[Note: Each Participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for important Master
Plan information.]
STN PSP AA Instructions
Complete the first blank in the paragraph by writing in the business' name in
its entirety.
1.02 Trustee
Option (a) should be chosen when the employer will be the trustee, INVESCO Trust
Company would then act as Custodian. If option (b) is chosen, INVESCO Trust
Company will be the Trustee and will charge an annual trust fee. Note: See
Trustee Comments on page 26 for further explaination of Non-discretionary
Trustee.
1.03 Plan
Enter the plan name. Example: ABC Inc. Employees 401(k) Plan.
1.07 Employee
If you want the plan to cover all employees, select option (a). If you want to
exclude from the plan any group(s) of employees, select any combination of (b)
through (g). When a retirement plan excludes employees in options (d) through
(g) from participation, the plan is subjet to a minimum coverage test to
maintain its "tax qualified" status. Your accounting firm should be notified to
perform the test annually.
Leased Employers
You may exclude leased employees from participation (option h). However, the
plan must satisfy the coverage rules of Code Section 401(b) and 401(a)(26),
consult your legal or financial counsel.
<PAGE>
Related Employers
You may exclude related employers from participating in the plan (option j).
However, the plan must satisfy the coverage rules of Code Section 410(b) and
401(a)(26), consult your legal or financial counsel.
1.12 Compensation
Treatment of elective contributions - Choose option (a) if you prefer to "add
back" employee elective 401(k) contributions to compensation for purposes of
allocating employer contributions, forfeitures and for non-discrimination
testing.
Modifications to Compensation
Modifications to Compensation - You must choose option (c) or any combination of
(d) through (j). Any exclusion of compensation may result in unallowable
discrimination, your accountant may want to test for any discriminatory effect
of excluding any type of compensation.
1.17 Plan Year
You must define the "plan year," usually it will follow the business tax year.
Limitation Year - You must define the "limitation year" (12 month period for
testing allocations to each employee's account), for administrative convenience
it should match the plan year.
1.18 Effective Date
New Plan - Enter the first day of your plan year (usually January
1) and the year.
Restated Plan - Effective date - If you are amending for the Tax Reform Act of
1986 enter: January 1, 1987. If you are amending for another reason, enter the
first day of your tax year, example: January 1, 1990. Originally established
date - Enter the original effective date of your plan from your prior Adoption
Agreement.
1.27 Hours of Service
Choose which method you wish to use for counting hours worked by an employee to
accrue benefits. Option (b), the equivalency method, is explained in Section
1.27 of the plan. Option (a) is usually chosen.
1.29 Service for Predecessor Employer
<PAGE>
Under this option, you may elect to count service for a predecessor
employer when you are not maintaining the plan of the predecessor employer.
(Used primarily in the event of a merger or acquisition.)
1.31 Leased Employees
The law requires you to state how your plan would treat a leased employee who
could become a participant, even if you don't intend to ever lease employees.
Choose option (a) covering the employee without regard to the leasing company's
plan or option (b) the reduction method. Usually Option (b)(1) is chosen.
2.01 Eligibility
a. An employee must attain this age to become a participant (cannot exceed
age 21).
b. Pick how long (service) an employee must work to become a participant.
c. You may choose to have more restrictive eligibility requirements apply to the
employer contributions under the plan. Choose the employer contribution affected
and the conditions which apply to those contributions. Choosing separate
eligibility conditions may cause your plan to be discriminatory, consult your
counsel.
Plan Entry - Choose when employees enter the plan for purposes of contributions
and benefit accrual. Normally, option (d), semi-annual entry dates, is chosen.
Time of Participation - Choose which plan entry date (before or after) an
employee who meets the eligibility requirements will enter the plan. Normally,
option (g) is chosen.
Dual Eligibility - This section allows you to grandfather into the plan current
employees who have not met the eligibility requirements and apply the
eligibility requirements to newly hired employees. Restated plans usually choose
(j)(1).
2.02 Years of Service
Option (b) should only be chosen if you wish to require less than 1000
hours to be worked by an employee for eligibility. Usually Option (a) is chosen.
Eligibility Computation Period - Choose whether to measure subsequent
eligibility periods on the employee's anniversary or the plan year. Option (d)
is chosen for administrative convenience.
2.03 Break in Service
This option may impose a complicated re-entry date for employees who have
terminated or whose hours were severely cut back. Option
<PAGE>
(a) is chosen for administrative convenience.
2.06
This option allows employees and participants to elect out of participation.
However, these employees are considered when performing all non-discrimination
tests. Option (a) is chosen for administrative convenience.
3.01 Contributions allowed
Section 3.01 of this Adoption Agreement consists of three parts. Part I defines
the types of contributions you authorize under the plan. Part II explains the
matching contribution formula, if any. Part III allows you to put limits on the
employee 401(k) contributions. You must complete Part I, but only complete Parts
II and III, if necessary.
Option (a) permits the election of either a salary reduction arrangement (Option
(a)(1), or a cash or deferred arrangement Option (a)(2). The Employer also may
elect both arrangements.
Option (b) authorizes matching contributions. If the Employer elects Option (b),
it must complete Part II to establish the matching contribution formula.
Option (c) authorizes the Employer to make qualified nonelective contributions
(QNCs"). The Employer will designate to the Trustee the amount of its
contributions consisting of QNCs.
The amount of QNCs is solely within the Employer's discretion. Any contribution
designated as QNCs is includible in the ADP test (see Section 14.08 of the Plan)
or in the ACP test (see Section 14.09 of the Plan). The advisory committee may
divide the QNCs between these two tests in any fashion it deems appropriate, but
may not use the same contributions in both tests. As a general rule, the
Employer will make a level of QNCs necessary to satisfy the applicable tests,
unless the Employer wishes to have excess contributions or excess aggregate
contributions distributed to the appropriate highly compensated employees, in
accordance with Sections 14.08 and 14.09.
Option (d) authorizes the Employer to make nonelective contributions in the same
manner it would under a regular profit sharing plan. The choices under Option
(d) are the same as the contribution formula options under the profit sharing
adoption agreements.
Part II Matching Contribution Formula
If the Employer elects Option (b), it must complete Part II, making a selection
under each option provided under Part II.
<PAGE>
The Plan permits matching contributions for salary reduction contributions,
cash or deferred contributions or participant mandatory contributions.
Therefore, the formulas offered under Option (h) refer to "eligible
contributions." The Employer will define eligible contributions under Options
(i) and (j).
Option (h) provides the formulas for determining the matching contribution. The
primary purpose of Option (h) is to establish the level of the matching
contribution (a fixed percentage or discretionary with the Employer) and to
permit the Employer to define a maximum or a minimum matching contribution. The
formula alone will not be sufficient to determine the Employer's actual matching
contribution on a participant's behalf. The characterization of eligible
contributions under Option (i) and any limitations on the amount of eligible
contributions taken into account, as provided under Option (j), are necessary
factors in computing the Employer's matching contribution.
Option (i) designates the character of the matching contributions. If the
Employer elects (i)(3), it also must elect Adoption Agreement Section 4.01(c).
If eligible contribuitons include salary reduction contributions or cash or
deferred contributions, the matching contribution formulas will not apply to
amounts characterized as excess deferrals under Section 14.07 of the Plan.
Option (j) establishes any limitations on the amount of eligible contributions
taken into account under Option (h).
Part III Salary Reduction Agreements
Under Option (k), the Employer must make selections from (1), 92), (3) and (4).
Under (1), Option (ii) prescribes a maximum deferral percentage, Option (iii)
prescribes a minimum deferral percentage and Option (i) prescribes no special
maximum limitation. The Employer may select both Options (ii) and (iii), or both
Options (i) and (iii), but Options (i) and (ii) are mutually exclusive. The
Employer may wish to consider a maximum percentage deferral under Option (ii) to
minimize the potential for Code 415 violations.
Under paragraphs (2) and (3), the Employer elects which restrictions apply to
the participant's right to revoke his/her salary reduction agreement. Under
paragraph (4), the Employer elects which restrictions apply to the participant's
right to increase or decrease his/her salary reduction percentage. The Employer
should consider the effect its elections have on plan administration.
3.04 Contribution Allocation
Part I - Matching Contributions. Select which account you want the matching
contributions to be allocated to. The Regular Matching Account is subject to a
vesting schedule. The Qualified Matching Account is always 100% vested and
contributions may be used to satisfy the deferral non-discrimination test.
<PAGE>
Qualified Non-elective Contributions. Choose which participants would
receive an extra contribution to help satisfy the non-discrimination test for
deferrals (QNEC). For administrative convenience opton (2) is chosen.
Part II - Method of Allocation. Choose the option for allocating the
discretionary employer contribution between all plan participants. You have
choices of non-integrated (pro-rata) or one of four integrated formulas.
Allocation formula. The primary allocation formulas are in Options (e), (f), (g)
and (h). Option (e) is a nonintegrated formula and allocates the employer
contribution proportionate to total compensation. Options (f), (g) and (h) are
alternatives for integrated plans. Usually option (e)(2) is chosen for non-
integrated plans.
The two-tiered formula under Option (f) maximizes the disparity permitted under
the integration rules. Accordingly, the allocation in the first tier results in
an equal allocation percentage based on total compensation and based on excess
compensation. This equal allocation percentage may not exceed the maximum
disparity percentage (5.7%, 5.4% or 4.3%) described in the second column of the
Maximum Disparity Table. After completion of the first tier allocation, the
second step allocates the remaining contribution proportionate to total
compensation, in the same manner as the nonintegrated formula.
Under the three-tiered formula under Option (g), the plan: (i) first allocates
based on total compensation, but the allocation percentage may not exceed the
maximum disparity percentage determined under the second column of the Maximum
Disparity Table; (ii) then allocates based on excess compensation, but the
allocation percentage may not exceed the maximum disparity percentage determined
under the second column of the Maximum Disparity Table; and (iii) completes the
allocation on the basis of total compensation.
The four-tiered allocation under Option (h) is a hybrid of Options (g) and (f).
The sole purpose of Option (h) is to use the first tier to satisfy the 3% top
heavy minimum, then use a progression of three additional tiers to make maximum
use of the permitted disparity rules. The second tier allocates solely on the
basis of excess compensation, with a maximum allocation under the second tier
equal to 3% of each participant's excess compensation. The third tier is the
same as the first tier under Option (g). The fourth tier is a prorata allocation
based on total compensation.
<PAGE>
3.05 Forfeiture Allocation
Choose the method of allocating (dividing up) forfeitures of terminated
non-vested participant balances. Option (a) allocates forfeitures as an extra
discretionary contribution. Option (b) allocates forfeitures to reduce employer
contributions. Options (c) and (d) allow you to allocate separately forfeitures
from matching contributions. Select from options (e), (f) and (g) to determine
how to allocate forfeitures from high paid employee's matching account when the
matching non-discrimination test is not satisfied.
3.06 Compensation Taken Into Account
If you wish to count a participant's full year's compensation (even if he or she
entered during the year), for contributions choose option (a), if not, choose
option (b).
Accrual Requirements - Specify the service requirements a participant must
satisfy to receive an allocation. You may specify an hours of service
requirement, waive the service requirement for specific contributions and/or
require the participant to be employed on the last day to receive a
contribution.
Suspension of Accrual Requirements - This section allows you to suspend some or
all of the accrual requirements found in Section 3.06(E) of the plan for
participants to receive allocations. This would apply in plan years when a plan
may not satisfy coverage and participation requirements. For administrative
convenience choose option (g).
3.15 More Than One Plan
This section only applies if you (the employer) maintain another defined
contribution plan (e.g.: profit sharing, money purchase, 401(k) or target
benefit) that covers at least one participant in this plan.
3.18 Defined Benefit Limitation
Check option (a) if you have never maintained a defined benefit plan for any
participants in this plan. If you have or are currently maintaining a defined
benefit plan under option (b), choose which plan's benefit would be reduced if a
participant's total allocations for a year were to exceed the allowable limit.
4.01 Participant Nondeductible Contributions
This section allows participants to contribute after-tax employee contributions.
These contributions are subject to a special nondiscrimination test. By checking
option (a) these contributions are not allowed.
4.05 Withdrawal Restriction
This section only applies if you checked option (c) of section
<PAGE>
4.01. It states whether or not there are restrictions on participants receiving
their after-tax contributions prior to separation from service.
5.01 Normal Retirement Age
Choose what age you (the employer) want the participants to be 100% vested in
their benefits, if still employed (normal retirement age).
5.02 Vesting Death/Disability
You may choose to allow 100% vesting for participants that terminate from
service because of death option (b) or disability option (c).
5.03 Vesting Schedule
Choose what vesting schedule(s) you want to apply to employer discretionary
contributions and matching contributions. If you choose option (b), you must at
a minimum complete the top-heavy vesting schedule. Remember, if the eligibility
requirements are more than one year, option (a) must be chosen.
Complete the Top Heavy Schedule based upon the following:
Years of Service
1
2 (not less than 20%)
3 (not less than 40%)
4 (not less than 60%)
5 (not less than 80%)
6 (not less than 100%)
Optional: Complete the Non Top Heavy Schedule based upon the
following:
Years of Service
1
2
3 (not less than 20%)
4 (not less than 40%
5 (not less than 60%)
6 (not less than 80%)
7 (not less than 100%)
5.04 Cash-Out Rule
If option (b) is chosen, the plan treats a 0% vested terminated participant as
having received a distribution, allowing for forfeitures to be reallocated to
active participants.
<PAGE>
5.06 Years of Service
Choose what measuring period the plan should use to determine years of service
for vesting, employee's anniversary year or plan year. For ease of
administration choose option (a).
5.08 Prior Years of Service
By choosing options (b) through (e) you (the employer) may exclude some prior
years of service for purposes of vesting.
Article 6
The Employer must establish a specific distribution policy for the plan. Treas.
Reg. 1.411(d)-4 prohibits the Employer, the advisory committee or any third
party to retain discretion over when or in what form to pay the participant's
benefit (Optional Forms of Benefit). Under a restated plan, the elections under
Article VI, to the extent they differ from previous plan provisions regarding
optional forms of benefit, may not eliminate an optional form of benefit with
respect to the account balance accrued as of the date the Employer executes the
restated adoption agreement (or, if later, the effective date of that restated
adoption agreement). An optional form of benefit includes the form of payment
(e.g., lump sum or installments), the timing of payment (e.g., immediately after
separation form service, following a break in service, after attaining normal
retirement age) and the medium of payment (e.g. right to elect distribution in
Employer securities, right to elect distribution in the form of an annuity
contract).
With this in mind, if you are restating an existing plan, pay close attention to
the distribution features under that document and your administrative practice
of distributions. In all cases, try to mirror or liberalize those distribution
features when restating onto this document.
6.01 Distribution Date
A distribution date establishes a predetermined "target" date in a plan year
when the plan will offer distributions. The actual distribution may occur later
than a distribution date as long as the actual distribution is within an
"administratively reasonable period of time" from the distribution date. Typical
distribution dates for 401(k)plans are semi-annual dates or quarterly dates.
Nonforfeitable Accrued Benefit Not Exceeding $3,500
When a separated participants vested balance does not exceed $3,500, the
plan allows the employer to separately establish the timing of these
distributions, separate from the distribution dates. When you complete this
section, you need to balance two concerns: 1) will the timing of the
distribution cause the participant to consider it a "severance benefit" and
therefore encourage separation from service, and 2) the administrative concerns
of carrying a non-active account in the plan.
<PAGE>
Disability - The plan allows you (the employer) to establish a different target
payout date for disability distributions in options (f) and (h).
Hardship - This option states whether or not the plan would allow a separated
participant to receive a hardship distribution, prior to receiving a total
distribution of his/her vested account balance.
Default on a Loan - This election does not create a loan policy. You (the
employer) must elect the timing of the plan's foreclosure if a participant's
loan were to be defaulted upon even if you do not intend to offer loans in you
plan.
6.02 Method of Payment
You may choose the standard forms of payment if this is a brand new plan and not
a restatment. Elect any one or combineation of options (b) through (e). If no
modifications are necessary, elect option (a).
6.03 Participant Elections After Separation from Service
You must choose when an employee who has separated from service, with a vested
benefit greater than $3,500, may elect to commence distributions. This election
will be tied directly to the "distribution date" defined earlier.
Participant Elections Prior to Separation from Service - Employer
Contributions
The following distribution elections apply to all participant's matching and
employer discretionary accounts regardless of vested account balances, prior to
employment separation. If you prefer not to allow any distribution options from
these accounts prior to separation, select option (d).
Participant Elections Prior Separation from Service
Deferrals, QMAC's and QNEC's - The following distribution elections apply to all
participant's deferral, qualified matching, and qualified non-elective
contributions accounts, prior to employment separation. If you prefer not to
allow any distribution options from these accounts prior to employment
separation, select option (I).
<PAGE>
6.04 Annuity Distributions
The law requires distributions to certain participants to be in the form of
commercial insurance annuities, unless consented to and waived by both the
participant and his or her spouse. Participants subject to this requirement are
identified in section 6.04(E) of the Plan. For administrative convenience,
choose option (a). If you are restating a plan that was subject to the joint and
survivor annuity rules you must select Option (b).
9.10 Value of Benefit
This option allows the employer to add interest to a participant's balance, if a
distribution occurs more than 90 days after the most recent plan valuation. You
do not have to provide an interest addition under this section and may complete
option (a) with 0%.
9.11 Allocation of Net Income/Loss
The following elections will state how current year contributions will share, if
at all, in net income, gains or losses of the trust. You must election option
(a) if your plan allows employee deferrals, option (b) if your plan includes a
matching contribution, or option (c) if the plan allows employee after tax
contributions. Only make the elections applicable to your plan.
Option (1) would not include contributions made since the last valuation date in
any earnings or loss calculation. The other choices are based upon a segregated
account approach or a weighted average approach, both are described in section
14.12 of the plan.
Usually option (3) daily weighting is chosen if INVESCO is your recordkeeper,
for 9.11(a)(b) and (c).
10.03 Investment Powers
Complete this section if you (the employer) wish to allow the plan to invest in
qualifying employer securities, you should consult your legal counsel. The term
"qualifying employer securities: has a specific meaning under ERISA and may not
include all securities.
10.14 Valuation of Trust
You may use this option to specify mandatory valuation dates, in addition to the
accounting date. Normally Option (a) is chosen.
Instructions for Effective Date Addendum
You must complete the effective date addendum only if the effective dates
of any of the listed items (a) through (j) have an effective date other than
your restated effective date in adoption agreement Section 1.18. Some some
provisions in the Tax Reform Act of 1986 were not effective until 1988 or 1989.
The few provisions (if any) that have later effective dates must specify when
they are effective.
<PAGE>
a. Compensation definition may not be later than the first day of your 1991
plan year.
b. Eligibility conditions may not be later than the first day of your 1989
plan year.
c. Suspension of years of service may not be earlier than the first day of
your 1990 plan year.
d. Contribution/allocation formula may not be earlier than the first day of
your 1989 plan year.
e. Accrual requirements may not be earlier than the first day of your 1989
plan year.
f. Employment condition may not be earlier than the first day of your 1991
plan year.
g. Elimination of Net Profits may not be earlier than December 31, 1985.
h. Vesting schedule may not be later than the first day of your 1989 plan
year.
i. Allocation of Earnings may not be earlier than the first day of the 1990
plan year.
Execution Page
The Employer must complete the date on which it executes the adoption agreement
and must execute the signature for the Employer. The execution page provides two
lines above the signature line to print or type the name of the Employer and the
Employer's EIN. If the Employer is a sole proprietorship, the individual sole
proprietor should execute as Employer. If the Employer is a corporation or a
partnership, an officer or a partner, as applicable, should execute the adoption
agreement on behalf of the Employer.
Trustee
If you selected option (a) of Section 1.02 then the employer will be the
Trustee. An individual must sign as trustee for the employer. INVESCO Trust
Company will then act as Custodian.
If you choose to have INVESCO Trust Company act as "Trustee" then option (b) of
Section 1.02 must be chosen. INVESCO does charge an annual fee for this service.
INVESCO Trust Company will only serve as a non-discretionary trustee, this means
that there is a person who is the "Named Fiduciary." The Named Fiduciary gives
direction to a non-discretionary trustee, and the non- discretionary trustee
<PAGE>
accepts all directions from the Named Fiduciary. The Named Fiduciary is
either the President of the Corporation, the managing partner of the partnership
or the self-employed individual of a sole proprietorship. The Named Fiduciary is
responsible for selecting plan investments.
The execution page also includes a signature line for the Custodian, if any.
Leave the Custodian lines blank if INVESCO Trust Company will act as custodian.
Plan number. This paragraph designates the number the Employer assigns to the
plan for reporting (Form 5500) purposes. If this is the first plan the Employer
ever maintained, the number must be 001. The Employer's plan number does not
correspond to the 3- digit adoption agreement number specified at the top of the
first page of the adoption agreement. Consult your Counsel if unsure what
3-digit plan number to use.
Instructions for the Participation Agreement
This adoption agreement includes a Participation Agreement under which a related
group member of the signatory Employer to the execution page may participate in
the same plan with that Employer. Each related group member wishing to become a
participating Employer should execute a separate Participation Agreement. See
Section 1.30 of the Plan for the definition of related Employers.
Thus, it is possible to exclude the employees of related group members not
participating in the plan. If an Employer is a member of a related group, it
should consider whether the inclusion of other related group members' employees
is necessary to satisfy the coverage requirements of Code ss.410(b) or the
minimum participation requirement of Code ss.401(a)(26). If the Employer
determines inclusion of the employees of a related group member is necessary to
maintain qualification of the plan, the Employer may take one of two approaches:
(1) have the related group member execute a Participation Agreement; or (2)
elect in Adoption Agreement Section 1.07 to include the employees of that
related group member. Under approach (1), the participation of the related group
member will result in the automatic inclusion of the employees of that related
group member, without having to specify their inclusion in Adoption Agreement
Section 1.07. In addition, the related group member, under approach (1), has the
authority to contribute to the plan and, in the event another participating
related group member makes a contribution on behalf of that related group
member's employees, the Participation Agreement will ensure the deductibility of
that contribution (assuming the contribution does not exceed the deduction
limits of Code ss.404). Additional instructions to the appropriate adoption
<PAGE>
agreement explain the effect on the allocation of Employer contributions
when related group members maintain a single nonstandardized plan. Please
contact us. Under approach (2), the plan will retain its qualified status, but
contributions the Employer makes on behalf of a nonparticipating related group
member's employees may not be deductible (even if otherwise within the
limitations of Code ss.404), resulting in an excise tax to the contributing
Employer.
Unrelated Employers. The Master Plan does not allow the participation in a
single plan of unrelated Employers (i.e., Employers that do not satisfy the
related group definition in Section 1.30 of the Plan).
legal\adop-agr\ns401kaa.005
ADOPTION AGREEMENT #006
STANDARDIZED CODE ss.401(k) PLAN
(PAIRED PROFIT SHARING PLAN)
The undersigned, -------------------------------------------- ("Employer"), by
executing this Adoption Agreement, elects to become a participating Employer in
the INVESCO Trust Company Defined Contribution Master Plan (basic plan document
#01) by adopting the accompanying Plan and Trust in full as if the Employer were
a signatory to that Agreement. The employer makes the following elections
granted under the provisions of the Master Plan.
ARTICLE I
DEFINITIONS
1.02 TRUSTEE. The Trustee executing this Adoption Agreement is:
(Choose (a) or (b))
(a) A discretionary Trustee, See Section 10.03[A] of the Plan.
(b) A nondiscretionary Trustee. See Section 10.03[B] of the Plan. [Note: The
Employer may not elect Option (b) if a Custodian executes the Adoption
Agreement.]
1.03 PLAN. The name of the Plan as adopted by the Employer is
- -------------------------------------------------------------.
1.07 EMPLOYEE. The following Employees are not eligible to participate in the
Plan:
(Choose (a) or at least one of (b) or (c))
(a) No exclusions.
(b) Collective bargaining employees (as defined in Section 1.07 of the Plan).
[Note: If the Employer excludes union employees from the Plan, the Employer must
be able to provide evidence that retirement benefits were the subject of good
faith bargaining.]
(c) Nonresident aliens who do not receive any earned income (as defined in Code
ss.911(d)(2) from the Employer which constitutes United States source income (as
defined in Code ss.861(a)(3)).
Related Employers/Leased Employees. An Employee of any member of the Employer's
related group (as defined in Section 1.30 of the Plan), and any Leased Employee
treated as an Employee under Section 1.31 of the Plan, is eligible to
participate in the Plan, unless excluded by reason of Options (b) or (c).
[Note: A related group member may not contribute to this Plan unless it
executes a Participation Agreement, even if its Employees are Participants
in the Plan.]
<PAGE>
1.12 COMPENSATION
Treatment of elective contributions. (Choose (a) or (b))
(a) "Compensation" includes elective contributions made by the Employer on
the Employee's behalf.
(b) "Compensation" does not include elective contributions.
Modifications to Compensation definition. (Choose (c) or at least one of
(d) and (e))
(c) No modifications other than as elected under Options (a) or (b).
(d) The Plan excludes Compensation in excess of $---------------.
(e) In lieu of the definition in Section 1.12 of the Plan, Compensation means
any earnings reportable as W-2 wages for Federal income tax withholding
purposes, subject to any other election under this Adoption Agreement Section
1.12.
Special definition for salary reduction contributions. An Employee's salary
reduction agreement applies to his Compensation determined prior to the
reduction authorized by that salary reduction agreement, with the following
exceptions: (Choose (f) or any combination of (g) and (h), if applicable)
(f) No exceptions.
(g) The dollar limitation described in Option (d) does not apply.
(h) If the Employee makes elective contributions to another plan maintained by
the Employer, the Advisory Committee will determine the amount of the Employee's
salary reduction contribution for the withholding period: (Choose (1) or (2))
(1) After the reduction for such period of elective
contributions to the other plan(s).
(2) Prior to the reduction for such period of elective
contributions to the other plan(s).
1.17 PLAN YEAR/LIMITATION YEAR.
Plan Year. Plan Year means: (Choose (a) or (b))
(a) The 12 consecutive month period ending every --------------.
(b) (Specify) -------------------------------------------------
- -----------------------------------------------------------------
<PAGE>
Limitation Year. The Limitation Year is: (Choose (c) or (d))
(c) The Plan Year.
(d) The 12 consecutive month period ending every ---------------.
1.18 EFFECTIVE DATE.
New Plan. The "Effective Date" of the Plan is ---------------.
Restated Plan. The restated Effective Date is ---------------.
This Plan is a substitution and amendment of an existing retirement plan(s)
originally established -------------------.
(Note: See the Effective Date Addendum.)
1.27 HOUR OF SERVICE. The crediting method for Hours of Service
is: (Choose (a) or (b))
(a) The actual method.
(b) The ------------------------- equivalency method, except:
(1) No exceptions.
(2) The actual method applies for purposes of: (Choose at
least one)
(i) Participation under Article II.
(ii) Vesting under Article V.
(iii)Accrual of benefits under Section 3.06.
[Note: On the blank line, insert "daily," "weekly," "semi-monthly payroll
periods" or "monthly."]
1.29 SERVICE FOR PREDECESSOR EMPLOYER. In addition to the predecessor service
the Plan must credit by reason of Section 1.29 of the Plan, the Plan credits
Service with the following predecessor employer(s): ---------------------------.
Service with the designated predecessor employer(s) applies:
(Choose at least one of (a) or (b))
(a) For purposes of participation under Article II.
(b) For purposes of vesting under Article V.
[Note: If the Plan does not credit any predecessor service under this
provision, insert "N/A" in the first blank line. The Employer may attach a
schedule to this Adoption Agreement, in the same format as this Section 1.29,
designating additional predecessor employers and the applicable service
crediting elections.]
<PAGE>
1.31 LEASED EMPLOYEES. If a Leased Employee is a Participant in a safe
harbor money purchase plan (as described in Section 1.31) maintained by the
leasing organization, but the Employer is not eligible for the safe harbor plan
exception: (Choose (a) or (b))
(a) The Advisory Committee will determine the Leased Employee's allocation of
Employer contributions under Article III without taking into account the Leased
Employee's allocation, under the safe harbor plan.
(b) The Advisory Committee will reduce the Leased Employee's allocation of
Employer nonelective contributions (other than designated qualified nonelective
contributions) under this Plan by the Leased Employee's allocation under the
safe harbor plan, but only to the extent that allocation is attributable to the
Leased Employee's service provided to the Employer. [Note: The Employer may not
elect Option (b) if a Paired Plan or any other plan of the Employer makes a
similar reduction for the same plan of the leasing organization.]
ARTICLE II
EMPLOYEE PARTICIPANTS
2.01 ELIGIBILITY.
Eligibility conditions. To become a Participant in the Plan, an Employee must
satisfy the following eligibility conditions:
(Choose (a) or (b) or both)
(a) Attainment of age -------------------- (specify age, not
exceeding 21).
(b) Service requirement. (Choose one of (1), (2) or (3))
(1) One Year of Service.
(2) ----------------- months (not exceeding 12) following the
Employee's Employment Commencement Date.
(3) One Hour of Service.
Plan Entry Date. "Plan Entry Date" means the Effective Date and:
(Choose (c), (d) or (e))
(c) Semi-annual Entry Dates. The first day of the Plan Year and the first
day of the seventh month of the Plan Year.
(d) The first day of the Plan Year.
(e) (Specify entry dates) ----------------------------------.
Time of Participation. An Employee will become a Participant, unless
exclued under Adoption Agreement Section 1.07, on the Plan
<PAGE>
Entry Date (if employed on that date): (Choose (f), (g) or (h))
(f) immediately following
(g) immediately preceding
(h) nearest the date the Employer completes the eligibility conditions described
in Options (a) and (b) of this Adoption Agreement Section 2.01. [Note: The
Employer must coordinate the selection of (f), (g) or (h) with the "Plan Entry
Date" selection in (c), (d) or (e). Unless otherwise excluded under Section
1.07, the Employee must become a Participant by the earlier of: (1) the first
day of the Plan Year beginning after the date the Employee completes the age and
service requirements of Code ss.410(a); or (2) 6 months after the date the
Employee completes those requirements.]
Dual eligibility. The eligibility conditions of this Section 2.01
apply to: (Choose (i) or (j))
(i) All Employees of the Employer, except: (Choose (1) or (2))
(1) No exceptions
(2) Employees who are Participants in the Plan as of the
Effective Date.
(j) Solely to an Employee employed by the Employer after ----------------------.
If the Employee was employed by the Employer on or before the specified date,
the Employee will become a Participant: (Choose (1) or (2))
(1) On the latest of the Effective Date, his Employment Commencement Date
or the date he attains age --------------------- (not to exceed 21).
(2) Under the eligibility conditions in effect under the Plan prior to the
restated Effective Date. If the restated Plan required more than one Year
of Service to participate, the eligibility conditions under this Option
(2) for participation in the Code ss.401(k) arrangement under this Plan is
one Year of Service for Plan Years beginning after December 31, 1988. [For
restated plans only]
2.02 YEAR OF SERVICE - PARTICIPATION.
Hours of Service. An Employee must complete: (Choose (a) or (b))
(a) 1,000 Hours of Service
(b) ---------------------- Hours of Service during an eligibility
computation period to receive credit for a Year of Service. [Note: The Hours of
Service requirement may not exceed 1,000.]
<PAGE>
Eligibility computation period. After the initial eligibility computation
period described in Section 2.02 of the Plan, the Plan measures the eligibility
computation period as: (Choose (c) or (d))
(c) The 12 consecutive month period beginning with each anniversary of an
Employee's Employment Commencement Date.
(d) The Plan Year, beginning with the Plan Year which includes the first
anniversary of the Employee's Employment Commencement Date.
2.03 BREAK IN SERVICE - PARTICIPATION. The Break in Service rule described
in Section 2.03(B) of the Plan: (Choose (a) or (b))
(a) Does not apply to the Employer's Plan.
(b) Applies to the Employer's Plan.
ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES
3.01 AMOUNT.
Part I. [Options (a) through (g)] Amount of Employer's contribution. The
Employer's annual contribution to the Trust will equal the total amount of
deferral contributions, matching contributions, qualified nonelective
contributions and nonelective contributions, as determined under this Section
3.01. (Choose any combination of (a), (b), (c) and (d), or choose (e))
(a) Deferral contributions (Code ss.401(k) arrangement). The Employer must
contribute the amount by which the Participants have reduced their Compensation
for the Plan Year, pursuant to their salary reduction agreements on file with
the Advisory Committee. A reference in the Plan to salary reduction
contributions is a reference to these amounts.
(b) Matching contributions. The Employer will make matching contributions in
accordance with the formula(s) elected in Part II of this Adoption Agreement
Section 3.01.
(c) Designated qualified nonelective contributions. The Employer, in its sole
discretion, may contribute an amount which it designates as a qualified
nonelective contribution.
(d) Nonelective contributions.
(1) Discretionary contribution. The amount (or additional amount) the
Employer may from time to time deem advisable.
<PAGE>
(2) ----------% of the Compensation of all Participants under the
Plan, determined for the Employer's taxable year for
which it makes the contribution. [Note: The percentage
selected may not exceed 15%.]
(3) --------% of Net Profits but not more than $----------.
(e) Frozen Plan. This Plan is a frozen Plan effective------------------------.
The Employer will not contribute to the Plan with respect to any period
following the stated date.
Net Profits. The Employer: (Choose (f) or (g))
(f) Need not have Net Profits to make its annual contribution under this Plan.
(g) Must have current or accumulated Net Profits exceeding $----------- to
make the following contributions: (Choose at least one of (1), (2) and (3))
(1) Matching contributions described in Option (b), except:
-----------------------------------------------------------.
(2) Qualified nonelective contributions described in Option
(c).
(3) Nonelective contributions described in Option --------.
The term "Net Profits" means the Employer's net income or profits for any
taxable year determined by the Employer upon the basis of its books of account
in accordance with generally accepted accounting practices consistently applied
without any deductions for Federal and state taxes upon income or for
contributions made by the Employer under this Plan or under any other employee
benefit plan the Employer maintains. The term "Net Profits" specifically
excludes:
- -------------------------------------------------------------------------------.
[Note: Enter "N/A" if no exclusions apply.]
If the Employer requires Net Profits for matching contributions and the Employer
does not have sufficient Net Profits uner Option (g), it will reduce the
matching contribution under a fixed formula on a pro rata basis for all
Participants. A Participant's share of the reduced contribution will bear the
same ratio as the matching contribution the Participant would have received if
Net Profits were sufficient bears to the total matching contribution all
Participants would have received if Net Profits were sufficient. If more than
one member of a related group (as defined in Section 1.30) execute this Adoption
Agreement, each participating member will determine net Profits separately but
will not apply this reduction unless, after combining the separately determined
Net Profits, the aggregate Net Profits are insufficient to satisfy the matching
contribution liability. "Net Profits" includes both current and accumulated Net
Profits.
Part II. [Options (h) and (i)] Matching contribution formula.
<PAGE>
[Note: If the Employer elected Option (b), complete Options (h)
and (i).]
(h) Amount of matching contributions. Subject to Option (i), for each Plan
Year, the Employer's matching contribution is: (Choose any combination of (1),
(2), (3) and (4))
(1) An amount equal to ----------% of each Participant's Salary
Recuction contributions for the Plan Year.
(2) An amount equal to ----------% of each Participant's first tier of
Salary Reduction contributions for the Plan Year, plus the following
matching percentage(s) for the following subsequent tiers of Salary
Reduction contributions for the Plan Year:
-------------------------------------------------.
(3) Discretionary formula.
(i) An amount (or additional amount) equal to a matching percentage
the Employer from time to time may deem advisable of the
Participant's salary reduction contributions for the Plan Year.
(ii) An amount (or additional amount) equal to a matching percentage
the Employer from time to time may deem advisable of each tier of
the Participant's Salary Reduction contributions for the Plan Year.
[Note: Under Options (2) and (3)(ii), the matching percentage for any
subsequent tier of salary reduction contributions may not exceed the matching
percentage for any prior tier.]
(4) A Participant's matching contributions may not:
(i) Exceed ---------------------------------------.
(ii) Be less than ---------------------------------.
(i) Amount of salary reduction contributions taken into account. When
determining a Participant's salry reduction contributions taken into account
under the matching contributions formula(s), the following rules apply: (Choose
any combination of (1) through (3))
(1) The Advisory Committee will take into account all eligible
contributions credited for the Plan Year.
(2) The Advisory Committee will disregard eligible contributions exceeding
------------------------------------.
(3) The Advisory Committee will treat as the first tier of Salary
Recuction contributions, an amount not exceeding:----------------------.
The subsequent tiers of eligible contributions are: -------------------.
<PAGE>
Part III. [Option (j). Special rules for Code ss.401(k) Arrangement.
(Choose (j), if applicable)
(j) Salary Reduction Agreements. The following rules and restrictions apply
to an Employee's salary reduction agreement: (Make a selection under (1), (2),
(3) and (4))
(1) Limitation on amount. The Employee's salary reduction
contributions: (Choose (i) or at least one of (ii) or (iii))
(i) No maximum limitation other than as provided in
the Plan.
(ii) May not exceed -----------% of Compensation for the Plan Year,
subject to the annual additions limitation described in Part 2 of
Article III and the 402(g) limitation described in Section 14.07 of
the Plan.
(iii)Based on percentages of Compensation must equal at
least -----------------.
(2) An Employee may revoke, on a prospective basis, a salary reduction
agreement: (Choose (i), (ii), (iii) or (iv))
(i) Once during any Plan Year but not later than
--------------- of the Plan Year.
(ii) As of any Plan Entry Date.
(iii)As of the first day of any month.
(iv) (Specify, but must be at least once per Plan Year
-------------------------.
(3) An Employee who revokes his salary reduction agreement may file a
new salary reduction agreement with an effective date: (Choose (i),
(ii), (iii) or (iv))
(i) No earlier than the first day of the next Plan
Year.
(ii) As of any subsequent Plan Entry Date.
(iii)As of the first day of any month subsequent to the
month in which he revoked an Agreement.
(iv) (Specify, but must be at least once per Plan Year following the
Plan Year of revocation) ---------------------.
<PAGE>
(4) A Participant may increase or may decrease, on a prospective basis,
his salary reduction percentage or dollar amount:
(Choose (i), (ii), (iii) or (iv))
(i) As of the beginning of each payroll period.
(ii) As of the first day of each month.
(iii)As of any Plan Entry Date.
(iv) (Specify, but must permit an increase or a
decrease at least once per Plan Year
-----------------------------------.
3.04 CONTRIBUTION ALLOCATION. the Advisory Committee will allocate deferral
contributions, matching contributions, qualified nonelective contributions and
nonelective contributions in accordance with Section 14.06 of the Plan and the
elections under this Adoption Agreement Section 3.04.
Part I. [Options (a) through (d)]. Special Accounting Elections. (Choose
whichever elections are applicable to the Employer's Plan)
(a) Matching Contribuitons Account. The Advisory Committee will allocate
matching contributions to a Participant's: (Choose (1) or (2); (3) is available
only in addition to (1))
(1) Regular Matching Contribution Account.
(2) Qualified Matching Contributions Account.
(3) Except, matching contributions under Option(s) --------------------
of Adoption Agreement Section 3.01 are allocable to the Qualified Matching
Contributions Account.
(b) Special Allocation Dates for Salary Reduction Contributions. The
Advisory Committee will allocate salary reduction contributions as of the
Accounting Date and as of the following additional allocation dates:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(c) Special Allocation Dates for Matching Contributions. The Advisory
Committee will allocate matching contributions as of the Accounting Date and as
of the following additional allocation dates:
- ---------------------------------------------------------.
(d) Designated Qualified Nonelective Contributions - Definition of
Participant. For purposes of allocating the designated qualified nonelective
contribution, "Participant" means: (Choose (1) or (2))
(1) All Participants.
(2) Participants who are Nonhighly Compensated Employees.
<PAGE>
Part II. Method of Allocation - Nonelective Contribution. Subject to any
restoration allocation required under Section 5.04, the Advisory Committee will
allocate and credit each annual nonelective contribution (and Participant
forfeitures treated as nonelective contributions) to the Employer Contributions
Account of each Participant who satisfies the conditions of Section 3.06, in
accordance with the allocation method selected under this Part II. (Choose an
allocation method under (e), (f), (g) or (h); (i) is mandatory if the Employer
elects (f), (g) or (h))
(e) Nonintegrated Allocation Formula. The Advisory Committee will allocate the
annual nonelective contributions in the same ratio that each Participant's
Compensation for the Plan Year bears to the total Compensation of all
Participants for the Plan Year.
(f) Two-Tiered Integrated Allocation Formula - Maximum Disparity. First, the
Advisory Committee will allocate the annual nonelective contributions in the
same ratio that each Participant's Compensation plus Excess Compensation for the
Plan Year bears to the total Compensation plus Excess Compensation of all
Participants for the Plan Year. The allocation under this paragraph, as a
percentage of each Participant's Compensation plus Excess Compensation, must not
exceed the applicable percentage (5.7%, 5.4% or 4.3%) listed under the Maximum
Disparity Table following Option (i). The Advisory Committee then will allocate
any remaining nonelective contributions in the same ratio that each
Participant's Compensation for the Plan Year bears to the total Compensation of
all Participants for the Plan Year.
(g) Three-Tiered Integrated Allocation Formula. First, the Advisory Committee
will allocate the annual Employer nonelective contributions in the same ratio
that each Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year. The allocation under this
paragraph, as a percentage of each Participant's Compensation may not exceed the
applicable percentage (5.7%, 5.4% or 4.3%) listed under the Maximum Disparity
Table following Option (I).
As a second tier allocation, the Advisory Committee will allocate the
nonelective contributions in the same ratio that each Participant's Excess
Compensation for the Plan Year bears to the total Excess Compensation of all
Participants for the Plan Year. The allocation under this paragraph, as a
percentage of each Participant's Excess Compensation, may not exceed the
allocation percentage in the first paragraph.
Finally, the Advisory Committee will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation for the
Plan Year bears to the total Compensation of all Participants for the Plan Year.
<PAGE>
(h) Fourth Tier Integrated Allocation Formula. First, the Advisory
Committee will allocate the annual nonelective contributions in the same ratio
that each Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year, but not exceeding 3% of each
Participant's Compensation.
As a second tier allocation, the Advisory Committee will allocate the
nonelective contributions in the same ratio that each Participant's Excess
Compensation for the Plan Year bears to the total Excess Compensation of all
Participants for the Plan Year, but not exceeding 3% of each Participant's
Excess Compensation.
As a third tier allocation, the Advisory Committee will allocate the annual
contributions in the same ratio that each Participant's Compensation plus Excess
Compensation for the Plan Year bears to the total Compensation plus Excess
Compensation of all Participants for the Plan Year. The allocation under this
paragraph, as a percentage of each Participant's Compensation plus Excess
Compensation, must not exceed the applicable percentage (2.7%, 2.4% or 1.3%)
listed under the Maximum Disparity Table following Option (i).
The Advisory Committee then will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation for the
Plan Year bears to the total Compensation of all Participants for the Plan Year.
(i) Excess Compensation. For purposes of Option (f), (g) or (h), "Excess
Compensation" means Compensation in excess of the following Integration Level:
(Choose (1) or (2))
(1) -------% (not exceeding 100%) of the taxable wage base, as determined
under Section 230 of the Social Security Act, in effect on the first day
of the Plan Year: (Choose any combination of (i) and (ii) or choose (iii))
(i) Rounded to --------------------- (but not exceeding
the taxable wage base).
(ii) But not greater than $-------------.
(iii)Without any further adjustment or limitation.
(2) $---------------------. [Note: Not exceeding the taxable
wage base for the Plan Year in which this Adoption Agreement
first is effective.]
Maximum Disparity Table. For purposes of Options (f), (g) and
(h), the applicable percentage is:
Integration Level Applicable Percentages Applicable
(as percentage of for Option (f) or Percentages
taxable wage base) Option (g) For Option (h)
<PAGE>
- --------------------------------------------------------------------------------
100% 5.7% 2.7%
More than 80% but
less than 100% 5.4% 2.4%
More than 20%
(but not less than
$10,001) and not
more than 80% 4.3% 1.3%
20% (or $10,000, if
greater) or less 5.7% 2.7%
Top Heavy Minimum Allocation - Application of Requirement. The Plan applies
the top heavy minimum allocation requirements of Section 3.04(B)(1): (Choose (j)
or (k))
(j) In all Plan years. A Participant is entitled to the top heavy minimum
allocation if he is employed by the Employer on the last day of the Plan Year,
unless: (Choose (1) or (2))
(1) No exceptions.
(2) The Participant is a Key Employee for the Plan Year.
[Note: If the Employer selects this Option (2), it will have
to determine for each Plan Year who are the Key Employees
under the Plan.]
(k) Only in Plan Years for which the Plan is top heavy. A Participant is
entitled to the top heavy minimum allocation if he is employed by the Employer
on the last day of the Plan Year, unless he is a Key Employee. [Note: Option (k)
will require the Advisory Committee to determine whether the Plan is top heavy
for a Plan Year.]
Top Heavy Minimum Allocation - Method of Compliance. If a Participant's
allocation under this Section 3.04 is less than the top heavy minimum allocation
to which he is entitled under Section 3.04(B): (Choose (l) or (m))
(l) The Employer will make any necessary additional contribution to the
Participant's Account, as described in Section 3.04(B)(7)(a) of the Plan.
(m) The Employer will satisfy the top heavy minimum allocation under the Paired
Pension Plan the Employer also maintains under this Master Plan. However, the
Employer will make any necessary additional contribution to satisfy the top
heavy minimum allocation for an Employee covered only under this Plan and not
under the Paired Pension Plan. See Section 3.04(B)(7)(b) of the Plan.
<PAGE>
If the Employer maintains another plan which is not a Paired Pension Plan
offered under this Master Plan, the Employer may provide in an addendum to this
Adoption Agreement, numbered Section 3.04, any modifications to the Plan
necessary to satisfy the top heavy requirements under Code ss.416.
Related employers. If two or more related employers (as defined in Section 1.30)
contribute to this Plan, the Advisory Committee must allocate all Employer
contributions and forfeitures to each Participant in the Plan, in accordance
with the elections in this Adoption Agreement Section 3.04, without regard to
which contributing relating group member employs the Participant. A
Participant's Compensation includes Compensatin from all related employers,
irrespective of which related employers are contributing to the Plan. The
signatory Employer and any Participating Employer(s) will satisfy any fixed
matching contribution formula under Adoption Agreement Section 3.01 as agreed by
those Employers.
3.05 FORFEITURE ALLOCATION. Subject to any restoration allocation required
under Sections 5.04 or 9.14, the Advisory Committee will allocate a Participant
forfeiture in accordance with Section 3.04: (Choose (a) or (b); (c) and (d) are
optional in addition to (a) or (b))
(a) As an Employer nonelective contribution for the Plan Year in which the
forfeiture occurs, as if the Participant forfeiture were an additional
nonelective contribution for that Plan Year.
(b) To reduce the Employer matching contributions and
nonelective contributions for the Plan Year: (Choose (1) or (2))
(1) in which the forfeiture occurs.
(2) immediately following the Plan Year in which the
forfeiture occurs.
(c) To the extent attributable to matching contributions:
(Choose (1), (2) or (3))
(1) In the manner elected under Options (a) or (b).
(2) First to reduce Employer matching contributions for the
Plan Year: (Choose (i) or (ii))
(i) in which the forfeiture occurs,
(ii) immediately following the Plan Year in which the forfeiture
occurs, then as elected in Options (a) or (b).
(3) As a discretionary matching contribution for the Plan Year in which
the forfeiture occurs, in lieu of the manner elected under Options (a) or
(b).
<PAGE>
(d) First to reduce the Plan's ordinary and necessary administrative expenses
for the Plan Year and then will allocate any remaining forfeitures in the manner
described in Options (a), (b) or (c), whichever applies. If the Employer elects
Option (c), the forfeitures used to reduce Plan expenses: (Choose (1) or (2))
(1) relate proportionately to forfeitures described in Option (c) and to
forfeitures described in Options (a) or (b).
(2) relate first to forfeitures described in Option
--------------.
Allocation of forfeited excess aggregate contributions. The Advisory Committee
will allocate any forfeited excess aggregate contributions (as described in
Section 14.09): (Choose (e), (f) or (g))
(e) To reduce Employer matching contributions for the Plan Year:
(Choose (1) or (2))
(1) in which the forfeiture occurs.
(2) immediately following the Plan Year in which the
forfeiture occurs.
(f) As Employer discretionary matching contributions for the Plan Year in which
forfeited, except the Advisory Committee will not allocate these forfeitures to
the Highly Compensated Employees who incurred the forfeitures.
(g) In accordance with Options (a) through (d), whichever applies, except the
Advisory Committee will not allocate these forfeitures under Option (a) or under
Option (c)(3) to the Highly Compensated Emplyees who incurred the forfeitures.
3.06 ACCRUAL OF BENEFIT.
Compensation taken into account. For the Plan Year in which the Employee first
becomes a Participant, the Advisory Committee will determine the allocation of
any designated qualified nonelective contribution or nonelective contribution by
taking into account:
(Choose (a) or (b))
(a) The Employee's Compensation for the entire Plan Year.
(b) The Employee's Compensation for the portion of the Plan Year in which
the Employee actually is a Participant in the Plan, except: (Choose (2) or (2))
(1) No exceptions.
<PAGE>
(2) For purposes of the first 3% of Compensation allocated
under Option (e), (g) or (h) of Adoption Agreement Section
3.04, whichever applies, the Advisory Committee will take into account the
Employee's Compensation for the entire Plan Year.
Accrual Requirements. To receive an allocation of designated qualified
nonelective contributions, nonelective contributiosn and Participant forfeitures
treated as nonelective contributions for the Plan Year, a Participant must
satisfy the accrual requirements of this paragraph. If the Participant is
employed by the Employer on the last day of the Plan Year, the Participant must
complete at least one Hour of Service for that Plan Year. If the Participant
terminates employment with the Employer during the Plan Year, the Participant
must complete at least --------- Hours of Service (not exceeding 501) during the
Plan Year, except: )Choose (c) or (d))
(c) No exceptions.
(d) No Hour of Service requirement if the Participant terminates employment
during the Plan Year on account of: (Choose at least one of (1), (2) and (3))
(1) Death.
(2) Disability.
(3) Attainment of Normal Retirement Age in the current Plan Year or in a
prior Plan Year.
Special accrual requirements for matching contributions. To receive an
allocation of matching contributions (for forfeitures applied to reduce matching
contributions) a Participant must satisfy the following condition(s): (Choose
(e) or any combination of (f), (g) and (h))
(e) No conditions other than making salary reduction contributions.
(f) The accrual requirements prescribed for an allocation of nonelective
contributions.
(g) The Participant does not revoke his salary reduction agreement effective
during the Plan Year.
(h) The Participant is not a Highly Compensated Employee for the Plan Year.
This Option (h) applies to: (Choose (1) or (2))
(1) All matching contributions.
(2) Matching contributions described in Option(s) ------------- of
Adoption Agreement Section 3.01.
3.15 MORE THAN ONE PLAN LIMITATION. If the provisions of Section 3.15
apply, the Excess Amount attributed to this Plan equals:
<PAGE>
(Choose (a), (b) or (c))
(a) The product of:
(i) the total Excess Amount allocated as of such date (including any
amount which the Advisory Committee would have allocated but for the
limitations of Code ss.415), times
(ii) the ratio of (1) the amount allocated to the Participant as of such
date under this Plan divided by (2) the total amount allocated as of such
date under all qualified defined contribution plans (determined without
regard to the limitations of Code ss.415).
(b) The total Excess Amount.
(c) None of the Excess Amount.
[Note: If the Employer adopts Paired Plans available under this
Master Plan, the Employer must coordinate its elections under
Section 3.15 of each Adoption Agreement.]
3.18 DEFINED BENEFIT PLAN LIMITATION.
Application of limitation. The limitation under Section 3.18 of
the Plan: (Choose (a) or (b))
(a) Does not apply to the Employer's Plan because the Employer does not maintain
and never has maintained a defined benefit plan covering any Participant in this
Plan.
(b) Applies to the Employer's Plan. To the extent necessary to satisfy the
limitation under Section 3.18, the Employer will reduce: (Choose (1) or (2))
(1) The Participant's projected annual benefit under the defined benefit
plan under which the Participant participates.
(2) Its contribution or allocation on behalf of the Participant to the
defined contribution plan under which the Participant participates and
then, if necessary, the Participant's projected annual benefit under the
defined benefit plan under which the Participant participates.
[Note: If the Employer selects (a), the remaining options in this Section
3.18 do not apply to the Employer's Plan.]
Override of 100% Limitation. The Employers elects: (Choose (c) or (d))
(c) To apply the 100% limitation described in Section 3.19(1) fo the Plan
in all Limitation Years. [Note: This election will avoid having to calculate the
Plan's top heavy ratio for any year, unless the Employer has elected Adoption
Agreement Section 3.04(k).]
<PAGE>
(d) Not to apply the 100% limitation for Limitation years in which the Plan's
top heavy ratio (as determined under Section 1.33 of the Plan) does not exceed
90%, but only if the defined benefit plan satisfies the extra minimum benefit
requirements of Code ss.416(h)(2) (and the applicable Treasury regulations)
after taking into account the Employer's election under Options (e), (f), (g) or
(h) of this Section 3.18. To determine the top heavy ratio, the Advisory
Committee will use the following interest rate and mortality assumptions to
value accrued benefits under a defined benefit plan. [Note: This election will
require the Advisory Committee to calculate the Plan's top heavy ratio.]
Coordination with top heavy minimum allocation. The Advisory Committee will
apply the top heavy minimum allocation provisions of Section 3.04(B) of the Plan
with the following modifications:
(Choose (e), (f), (g) or (h))
(e) No modifications.
(f) By substituting 4% for 3% in Paragraph (b) of Section 3.04(B)(1) or of
Section 3.04(B)(2) of the Plan, whichever applies, but only for any Plan Year in
which Option (d) applies to override the 100% limitation.
(g) By increasing the top heavy minimum allocation to 5% for any Plan Year in
which the 100% limitation applies, and to 7 1/2% for any Plan Year in which
Option (d) applies to override the 100% limitation. The increased percentage
under this Option (g) applies irrespective of whether the highest contribution
rate for the Plan Year is less than that increased percentage.
(h) By eliminating the top heavy minimum allocation. [Note: The Employer
may not select this Option (h) if the defined benefit plan does not guarantee
the top heavy minimum benefit under Code ss.416 for every Participant in this
Plan who is a Non-Key Employee.]
If the elections under this Section 3.18 are not appropriate to satisfy the
limitations of Section 3.18, or the top heavy requirements under Code ss.416,
the Employer must provide the appropriate provisions in an addendum to this
Adoption Agreement.
ARTICLE IV
PARTICIPANT CONTRIBUTIONS
4.01 PARTICIPANT NONDEDUCTIBLE CONTRIBUTIONS. The Plan: (Choose (a) or (b)
(a) Does not permit Participant nondeductible contributions.
(b) Permits Participant nondeductible contributions, pursuant to
Section 14.04 of the Plan.
<PAGE>
Allocation dates: The Advisory Committee will allocate nondeductible
contributions for each Plan Year as of the Accounting Date and the following
additional allocation dates:
(Choose (c) or (d))
(c) No other allocation dates.
(d) (Specify) ----------------------------------------------------------------
- ----------------------------------------------------------------.
As of an allocation date, the Advisory Committee will credit all nondeductible
contributions made for the relevant allocation period. Unless otherwise
specified in (d), a nondeductible contribution relates to an allocation period
only if actually made to the Trust no later than 30 days after that allocation
period ends.
ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING
5.01 NORMAL RETIREMENT. Normal Retirement Age under the Plan is:
(Choose (a) or (b))
(a) --------------------------- [State age, but may not exceed age
65].
(b) The later of the date the Participant attains --------(-------) years of age
or the ---------(--------) anniversary of the first day of the Plan Year in
which the Participant commenced participation in the Plan. [The age selected may
not exceed age 65 and the anniversary selected may not exceed the 5th.]
5.02 PARTICIPANT DEATH OR DISABILITY. The 100% vesting rule under Section
5.02 of the Plan: (Choose (a) or choose one or both of (b) and (c))
(a) Does not apply.
(b) Applies to death.
(c) Applies to disability.
5.03 VESTING SCHEDULE.
Deferral Contributions Account/Qualified Matching Contributions
Account/Qualified Nonelective Contributions Account. A Participant has a 100%
Nonforfeitable interest at all times in his Deferral Contributions account, his
Qualified Matching Contributions Account and in his Qualified Nonelective
Contributions Account.
<PAGE>
Regular Matching Contributions Account/Employer Contributions Account. With
respect to a Participant's Regular Matching Contributions Account and Employer
Contributions Account, the Employer elects the following vesting schedule:
(Choose (a) or (b); (c) and (d) are available only as additional options)
(a) Immediate vesting. 100% Nonforfeitable at all times.
(b) Graduated Vesting Schedules.
Top Heavy Schedule Non Top Heavy Schedule
(Mandatory) (Optional)
Years of Nonforfeitable Years of Nonforfeitable
Service Percengage Service Percentage
- --------------------------------------------------------------------------------
Less than 1 ----- Less than 1 -----
1 ----- 1 -----
2 ----- 2 -----
3 ----- 3 -----
4 ----- 4 -----
5 ----- 5 -----
6 or more 100% 6 -----
7 or more 100%
(c) Special vesting election for Regular Matching Contributions Account. In
lieu of the election under Options (a) or (b), the Employer elects the following
vesting schedule for a Participant's Regular Matching Contributions Account:
(Choose (1) or (2))
(1) 100% Nonforfeitable at all times.
(2) In accordance with the vesting schedule described in
the addendum to this Adoption Agreement, numbered 5.03(c).
[Note: If the Employer elects this Option (c)(2), the
addendum must designate the applicable vesting schedule(s)
using the same format as used in Option (b).]
[Note: Under Options (b) and (c)(2), the Employer must complete a Top Heavy
Schedule which satisfies Code ss.416. The Employer, at its option, may complete
a Non Top Heavy Schedule only if the Employer elected Adoption Agreement Section
3.04(k). The Non Top Heavy Schedule must satisfy Code 411(a)(2). Also see
Section 7.05 of the Plan.]
(d) The Top Heavy Schedule under Option (b) (and, if applicable, under
Option (c)(2)) applies: (Choose (1) or (2))
(1) Only in a Plan Year for which the Plan is top heavy.
(2) In the Plan Year for which the Plan first is top heavy
and then in all subsequent Plan Years. [Note: The Employer
may not elect Option (d) unless it has completed a Non Top
Heavy Schedule.]
<PAGE>
Minimum Vesting. (Choose (e) or (f))
(e) The Plan does not apply a minimum vesting rule.
(f) A Participant's Nonforfeitable Accrued Benefit will never be less than the
lesser of $-------------- or his entire Accrued Benefit, even if the
application of a graduated vesting schedule under Options (b) or (c) would
result in a smaller Nonforfeitable Accrued Benefit.
5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/RESTORATION OF
FORFEITED ACCRUED BENEFIT. The deemed cash-out rule described in Section 5.04(C)
of the Plan: (Choose (a) or (b))
(a) Does not apply.
(b) Will apply to determine the timing of forfeitures for 0% vested
Participants. A Participant is not a 0% vested Participant if he has a Deferral
Contributions Account.
5.06 YEAR OF SERVICE - VESTING.
Vesting computation period. The Plan measures a Year of Service on the basis of
the following 12 consecutive month periods:
(Choose (a) or (b))
(a) Plan Years.
(b) Employment Years. An Employment Year is the 12 consecutive month period
measured from the Employee's Employment Commencement Date and each successive 12
consecutive month period measured from each anniversary of that Employment
Commencement Date.
Hours of Service. The minimum number of Hours of Service an Employee must
complete during a vesting computation period to receive credit for a Year of
Service is: (choose (c) or (d))
(c) 1,000 Hours of Service.
(d) -------------- Hours of Service. [Note: The Hours of Service requirement
may not exceed 1,000.]
5.08 INCLUDED YEARS OF SERVICE - VESTING. The Employer specifically
excludes the following Years of Service: (Choose (a) or at least one of (b), (c)
and (d))
(a) None other than as specified in Section 5.08(a) of the Plan.
(b) Any Year of Service before the Participant attained the age of
- --------------------. [Note: The age selected may not exceed age 18.]
<PAGE>
(c) Any Year of Service during the period the Employer did not maintain this
Plan or a predecessor plan.
(d) Any Year of Service before a Break in Service if the number of consecutive
Breaks in Service equals or exceeds the greater of 5 or the aggregate number of
the Years of Service prior to the Break. This exception applies only if the
Participant is 0% vested in his Accrued Benefit derived from Employer
contributions at the time he has a Break in Service. Furthermore, the aggregate
number of Years of Service before a Break in Service do not include any Years of
Service not required to be taken into account under this exception by reason of
any prior Break in Service.
ARTICLE VI
TIME AND METHOD OF PAYMENTS OF BENEFITS
Code ss.411(d)(6) Protected Benefits. The elections under this Article VI may
not eliminate Code ss.411(d)(6) protected benefit. To the extent the elections
would eliminate a Code ss.411(d)(6) protected benefit, see Section 13.02 of the
Plan. Furthermore, if the elections liberalize the optional forms of benefit
under the Plan, the more liberal options apply on the later of the adoption date
or the Effective Date of this Adoption Agreement.
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT.
Distribution date. A distribution date under the Plan means
- --------------------------------------------------------------.
[Note: The [Employer must specify the appropriate date(s). The specified
distribution dates primarily establish annuity starting dates and the notice and
consent periods prescribed by the Plan. The Plan allows the Trustee an
administratively practicable period of time to make the actual distribution
relating to a particular distribution date.]
Nonforfeitable Accrued Benefit Not Exceeding $3,500. Subject to the
limitations of Section 6.01(A)(1), the distribution date for distribution of a
Nonforfeitable Accrued Benefit not exceeding $3,500 is: (Choose (a), (b), (c) or
(d))
(a) ---------- of the -------------- Plan Year beginning after the
Participant's Separation from Service.
(b) --------------------- following the Participant's Separation from Service.
(c) --------------------- of the Plan Year after the Participant incurs
- ------------------------- Break(s) in Service (as defined in Article V).
<PAGE>
(d) ----------------- following the Participant's attainment of Normal
Retirement Age, but not earlier than --------------- days following his
Separation from Service.
Nonforfeitable Accrued Benefit Exceeds $3,500. See the elections under
Section 6.03.
Disability. The distribution date, subject to the limitations of Section
6.01(A)(3), is: (Choose (e) or (f))
(e) ----------------- after the Participant terminates employment because
of disability.
(f) The same as if the Participant had terminated employment without
disability.
Hardship. (Choose (g) or (h))
(g) The Plan does not permit a hardship distribution to a Participant who has
separated from Service.
(h) The Plan permits a hardship distribution to a Participant who has separated
from Service in accordance with the hardship distribution policy stated in
(Choose (1) or (2))
(1) Section 6.01(A)(4) of the Plan.
(2) Section 14.11 of the Plan.
Default on a Loan. If a Participant or Beneficiary defaults on a loan made
pursuant to a loan policy adopted by the Advisory Committee pursuant to Section
9.04, the Plan: (Choose (i), (j))
(i) Treats the default as a distributable event. the Trustee, at the time of the
default, will reduce the Participant's Nonforfeitable Accrued Benefit by the
lesser of the amount in default (plus accrued interest) or the Plan's security
interest in that Nonforfeitable Accrued Benefit. To the extent the loan is
attributable to the Participant's Deferral Contributions Account, Qualified
Matching Contributions Account or Qualified Nonelective Contributions Account,
the Trustee will not reduce the Participant's Nonforfeitable Accrued Benefit
unless the Participant has separated from Service or unless the Participant has
attained age 59 1/2.
(j) Does not treat the default as a distributable event. When an otherwise
distributable event first occurs pursuant to Section 6.01 or Section 6.03 of the
Plan, the Trustee will reduce the Participant's Nonforfeitable Accrued Benefit
by the lesser of the amount in default (plus accrued interest) or the Plan's
security interest in that Nonforfeitable Accrued Benefit.
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. The Advisory Committee will
apply Section 6.02 of the Plan with the following modifications: (Choose (a) or
(b))
<PAGE>
(a) No modifications.
(b) The Plan permits the following annuity options: -------------------------
- ------------------------------------------------------------------.
Any Participant who elects a life annuity option is subject to the
requirements of Sections 6.04(A), (B), (C) and (D) of the Plan. See Section
6.04(E). [Note: The Employer may specify additional annuity options in an
addendum to this Adoption Agreement, numbered 6.02(b).]
6.03 BENEFIT PAYMENT ELECTIONS.
Participant Elections After Separation from Service. A Participant who is
eligible to make distribution elections under Section 6.03 of the Plan may elect
to commence distribution of his Nonforfeitable Accrued Benefit: (Choose (a) or
(b))
(a) As of any distribution date, but not earlier than -------- of the Plan Year
beginning after the Participant's Separation from Service.
(b) As of the following date(s): (Choose at least one of Options
(1) through (5))
(1) As of any distribution date after the close of the Plan Year in which
the Participant attains Normal Retirement Age.
(2) Any distribution date following his Separation from
Service.
(3) Any distribution date in the -------------- Plan Year(s) beginning
after his Separation from Service.
(4) Any distribution date in the Plan Year after the Participant incurs
---------------- Break(s) in Service (as defined in Article V).
(5) Any distribution date following attainment of age -------- and
completion of at least --------- Years of Service (as defined in Article
V).
The distribution events described in the election(s) made under Options (a) or
(b) apply equally to all Accounts maintained for the Participant.
Participant Elections Prior to Separation from Service - Regular Matching
Contributions Account and Employer Contributions Account. Subject to the
restrictions of Article VI, the following distribution options apply to a
Participant's Regular Matching Contributions Account and Employer Contributions
Account prior to his Separation from Service: (Choose (c) or at least one of (d)
through (f))
(c) No distribution options prior to Separation from Service.
<PAGE>
(d) Attainment of Specified Age. Until he retires, the Participant has a
continuing election to receive all or any portion of his Nonforfeitable interest
in these Accounts after he attains: (Choose (1) or (2))
(1) Normal Retirement Age.
(2) ----------- years of age and is at least --------------%
vested in these Accounts. [Note: If the percentage is less
than 100%, see the special vesting formula in Section 5.03.]
(e) After a Participant has participated in the Plan for a period of not
less than --------- years and he is 100% vested in these Accounts, until he
retires, the Participant has a continuing election to receive all or any portion
of the Accounts. [Note: The number in the blank space may not be less than 5.]
(f) Hardship. A Participant may elect a hardship distribution prior to his
Separation from Service in accordance with the hardship distribution policy:
Choose (1), or (2); (3) is available only as in addition to (1) or (2))
(1) Under Section 6.01(A)(4) of the Plan.
(2) Under Section 14.11 of the Plan.
(3) In no event may a Participant receive a hardship
distribution before he is at least -----------% vested in
these Accounts. [Note: If the percentage in the blank is
less than 100%, see the special vesting formula in Section
5.03.]
Participant Elections Prior to Separation from Service - Deferral Contributions
Account, Qualified Matching Contributions Account and Qualified Nonelective
Contributions Account. Subject to the restrictions of Article VI, the following
distribution options apply to a Participant's Deferral Contributions Account,
Qualified Matching Contributions Account and Qualified Nonelective Contributions
Account prior to his Separation from Service: (Choose (g) or at least one of (h)
or (i))
(g) No distribution options prior to Separation from Service.
(h) Until he retires, the Participant has a continuing election to receive all
or any portion of these Accounts after he attains:
(Choose (1) or (2))
(1) The later of Normal Retirement Age or age 59 1/2.
(2) Age --------------- (at least 59 1/2).
(i) Hardship. A participant, prior to his separation from service, may
elect a hardship distribution in accordance with the hardship distribution
policy under Section 14.11 of the Plan.
<PAGE>
Sale of trade of business/subsidiary. If the employer sells substantially all of
the assets (within the meaning of Code ss.409(d)(2) used in a trade or business
or sells a subsidiary (within the meaning of Code ss.409(d)(3)), a Participant
who continues employment with he acquiring corporation is eligible for
distribution from his Deferral Contributions Account, Qualified Matching
Contributions Account and Qualified Nonelective Contributions Account: (Choose
(j) or (k))
(j) Only as described in this Adoption Agreement Section 6.03 for distributions
prior to Separation from Service.
(k) As if he has a Separation from Service. After March 31, 1988, a distribution
authorized solely by reason of this Option (k) must constitute a lump sum
distribution, determined in a manner consistent with Code ss.(k)(10) and the
applicable Treasury regulations.
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES. The
annuity distribution requirements of Section 6.04: (Choose (a) or (b))
(a) Apply only to a Participant described in Section 6.04(E) of the Plan
(relating to the profit sharing exception to the joint and survivor
requirements).
(b) Apply to all Participants.
ARTICLE IX
ADVISORY COMMITTEE - DUTIES WITH RESPECT TO
PARTICIPANTS' ACCOUNTS
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. If a distribution (other than a
distribution from a segregated Account and other than a corrective distribution
described in Sections 14.07, 14.08, 14.09 or 14.10 of the Plan) occurs more than
90 days after the most recent valuation date, the distribution will include
interest at: (Choose (a) or (b))
(a) -----------------% per annum. [Note: The percentage may equal 0%.]
(b) The 90 day Treasury bill rate in effect at the beginning of the current
valuation period.
9.11 ALLOCATION AND DISTRIBUTION OF NET INCOME GAIN OR LOSS. Pursuant to
Section 14.12, to determine the allocation of net income, gain or loss:
(complete only those items, if any, which are applicable to the Employer's Plan)
(a) For salary reduction contributions, the Advisory Committee will:
(Choose (1), (2), (3) or (4))
<PAGE>
(1) Apply Section 9.11 without modification.
(2) Use the segregated account approach described in
Section 14.12.
(3) Use the weighted average method described in Section 14.12, based on a
------------------------ weighting period.
(4) Treat as part of the relevant Account at the beginning
of the valuation period -----% of the salary reduction
contributions: (Choose (i) or (ii))
(i) made during that valuation period.
(ii) made by the following specified time: --------.
(b) For matching contributions, the Advisory Committee will:
(Choose (1), (2) or (3))
(1) Apply Section 9.11 without modification.
(2) Use the weighted average method described in Section 14.12, based on a
----------------- weighting period.
(3) Treat as part of the relevant Account at the beginning of the
valuation period --------% of the Matching contributions allocated during
the valuation period.
(c) For Participant nondeductible contributions, the Advisory
Committee will: (Choose (1), (2), (3) or (4))
(1) Apply Section 9.11 without modification.
(2) Use the segregated account approach described in
Section 14.12.
(3) Use the weighted average method described in Section 14.12, based on a
--------------------- weighting period.
(4) Treat as part of the relevant Account at the beginning
of the valuation period ----------% of the Participant
nondeductible contributions: (Choose (i) or (ii))
(i) made during that valuation period.
(ii) made by the following specified time: ---------.
ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES
10.14 VALUATION OF TRUST. In addition to each Accounting Date, the Trustee
must value the Trust Fund on the following valuation date(s): (Choose (a) or
(b))
<PAGE>
(a) No other mandatory valuation dates.
(b) (Specify) ---------------------------------------------------------------
- --------------------------------------------------------------.
EFFECTIVE DATE ADDENDUM
(Restated Plans Only)
The Employer must complete this addendum only if the restated Effective Date
specified in Adoption Agreement Section 1.18 is different than the restated
effective date for at least one of the provisions listed in this addendum. In
lieu of the restated Effective Date in Adoption Agreement Section 1.18, the
following special effective dates apply: (Choose whichever elections apply)
(a) Compensation definition. The Compensation definition of Section 1.12
(other than the $200,000 limitation) is effective for Plan Years beginning after
- -------------------------------. [Note: May not be effective later than the
first day of the first Plan Year beginning after the Employer executes this
Adoption Agreement to restate the Plan for the Tax Reform Act of 1986, if
applicable.]
(b) Eligibility conditions. The eligibility conditions specified in
Adoption Agreement Section 2.01 are effective for Plan Years beginning after
- -------------------------.
(c) Suspension of Years of Service. The suspension of Years of Service rule
elected under Adoption Agreement Section 2.03 is effective for Plan Years
beginning after --------------------.
(d) Contribution/allocation formula. The contribution formula elected under
Adoption Agreement Section 3.01 and the method of allocation elected under
Adoption Agreement Section 3.04 is effective for Plan Years beginning after
- ----------------------.
(e) Accrual requirements. The accrual requirements of Section 3.06 are
effective for Plan Years beginning after ---------. [Note: If the effective
date is later than Plan Years beginning after December 31, 1989, the accrual
requirements in the Plan prior to its restatement may not be more restrictive
for post- 1989 Plan Years than the requirements permitted under Adoption
Agreement Section 3.06.]
(f) Elimination of Net Profits. The requirement for the Employer not to
have net profits to contribute to this Plan is effective for Plan Years
beginning after ------------------------------. [Note: The date specified may
not be earlier than December 31, 1985.]
(g) Vesting Schedule. The vesting schedule elected under Adoption Agreement
Section 5.03 is effective for Plan Years beginning after ---------------------.
<PAGE>
(h) Allocation of Earnings. The special allocation provisions elected under
Adoption Agreement Section 9.11 are effective for Plan Years beginning after
- ------------------------------.
For Plan Years prior to the special Effective Date, the terms of the Plan prior
to its restatement under this Adoption Agreement will control for purposes of
the designated provisions. A special Effective Date may not result in the delay
of a Plan provision beyond the permissible Effective Date under any applicable
law requirements.
Execution Page
The Trustee (and Custodian, if applicable), by executing this Adoption
Agreement, accepts its position and agrees to all of the obligations,
responsibilities and duties imposed upon the Trustee (or Custodian) under the
Master Plan and Trust. The Employer hereby agrees to the provisions of this Plan
and Trust, and in witness of its agreement, the Employer by its duly authorized
officers, has executed this Adoption Agreement, and the Trustee (and Custodian,
if applicable) signified its acceptance, on this -------- day of
- ---------------, 19---.
Name and EIN of Employer: ----------------------------------------------------
- -----------------------------------------------------------------.
Signed: -------------------------------------------------
Name(s) of Trustee: ---------------------------------------------
- -----------------------------------------------------------------
Signed: ---------------------------------------------------------
- -----------------------------------------------------------------
Name of Custodian: ----------------------------------------------
Signed: ---------------------------------------------------------
[Note: A Trustee is mandatory, but a Custodian is optional. See Section
10.03 of the Plan.]
Plan Number. The 3-digit plan number the Employer assigns to this
Plan for ERISA reporting purposes (Form 5500 Series) is:
- ------------------------------------------------.
Use of Adoption Agreement. Failure to complete properly the elections in this
Adoption Agreement may result in disqualification of the Employer's Plan. The
3-digit number assigned to this Adoption Agreement (see page 1) is solely for
the Master Plan Sponsor's recordkeeping purposes and does not necessarily
<PAGE>
correspond to the plan number the Employer designated in the prior
paragraph. The Master Plan Sponsor offers the following Paired Pension Plan(s)
with this Paired Profit Sharing Plan, identified by 3-digit adoption agreement
number: 004 and 010.
Master Plan Sponsor. The Master Plan Sponsor identified on the first page of the
basic plan document will notify all adopting employers of an amendment of this
Master Plan or of any abandonment or discontinuance by the Master Plan Sponsor
of its maintenance of this Master Plan. For inquiries regarding the adoption of
the Master Plan, the Master Plan Sponsor's intended meaning of any plan
provisions or the effect of the opinion letter issued to the Master Plan Sponsor
at the following address and telephone number: INVESCO Trust Company, 7800 E.
Union Ave., Denver, Colorado (303) 779-0731.
Reliance on Opinion Letter. If the Employer does not maintain (and has never
maintained) any other plan other than this Plan and a Paired Pensnion Plan, it
may rely on the Master Plan Sponsor's opinion letter covering this Plan for
purposes of plan qualification. For this purpose, the Employer has not
maintained another plan if this Plan, or the Paired Pension Plan, amended and
restated that prior plan and the prior plan was the same type of plan as the
restated plan. If the Employer maintains or has maintained another plan other
than a Paired Pension Plan, including a welfare benefit fund, as defined in Code
ss.491(e), which provides post-retirement medical benefits for key employees (as
defined in Code ss.419A(d)(3)), or an individual medical account (as defined in
Code ss.415(l)(2)), the Employer may not rely on this Plan's qualified status
unless it obtains a determination letter from the applicable IRS Key District
office.
PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)
The undersigned Employer, by executing this Participation Agreement, elects to
become a Participating Employer in the Plan identified in Section 1.03 of the
accompanying Adoption Agreement, as if the Participating Employer were a
signatory to that Agreement. The Participating Employer accepts, and agrees to
be bound by, all of the elections granted under the provisions of the Master
Plan as made by ------------------------------------, the Signatory Employer to
the Execution Page of the Adoption Agreement.
1. The Effective Date of the undersigned Employer's participation in the
designated Plan is --------------------------.
2. The undersigned Employer's adoption of this Plan
constitutes:
(a) The adoption of a new plan by the Participating Employer.
(b) The adoption of an amendment and restatement of a plan currently
maintained by the Employer, identified as ------------------------------ and
having an original effective date of ------------------------------------------.
<PAGE>
Dated this --------------- day of --------------------, 19-----
Name of Participating Employer: -------------------------------
Signed: -----------------------------------------------
Participating Employer's EIN: ---------------------------------
Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.
Name of Signatory Employer: -------------------------------------
Accepted: ------------------------------------------
[Date]
Signed: --------------------------------------------
Name(s) of Trustee: --------------------------------
Accepted: ------------------------------------------
[Date]
Signed: --------------------------------------------
[Note: Each Participating Employer must execute a separate
Participation Agreement. See the Execution Page of the Adoption
Agreement for important Master Plan information.]
Std 401(k) AA Instructions
Complete the first blank in the paragraph by writing in the business' name in
its entirety.
1.02 Trustee
Option (a) should be chosen when the employer will be the trustee, INVESCO Trust
Company would then act as Custodian. If option (b) is chosen, INVESCO Trust
Company will charge an annual trust fee. Note: See Trustee Comments on page 20
for further explaination of Non-discretionary Trustee.
1.03 Plan
Enter the plan name. Example: ABC Inc. Employees 401(k) Plan.
1.07 Employee
If you want the plan to cover all employees, select option (a). If you want
to exclude from the plan any group(s) of employees, select any combination of
(b) or (c).
<PAGE>
Leased Employers/Related Employers
You may not exclude leased employees or related employers from participation
unless they are excluded under options (b) or (c) of Section 1.07.
1.12 Compensation
Treatment of elective contributions - Choose option (a) if you prefer to "add
back" employee elective contributions to compensation for purposes of allocating
employer contributions, forfeitures and for non-discrimination testing.
Modifications to Compensation
Modifications to Compensation - You must choose option (c) or any combination of
(d) or (e).
1.17 Plan Year
You must define the "plan year," usually it will follow the business tax year.
Limitation Year - You must define the "limitation year" (12 month period for
testing allocations to each employee's account), for administrative convenience
it should match the plan year.
1.18 Effective Date
New Plan - Enter the first day of your plan year (usually January
1) and the year.
Restated Plan - Effective date - If you are amending for the Tax Reform Act of
1986 enter: January 1, 1987. If you are amending for another reason, enter the
first day of your tax year, example: January 1, 1990. Originally established
date - Enter the original effective date of your plan from your prior Adoption
Agreement.
1.27 Hours of Service
Choose which method you wish to use for counting hours worked by
an employee to accrue benefits. Option (b), the equivalency
method, is explained in Section 1.27 of the plan. Usually Option
(a) is chosen.
1.29 Service for Predecessor Employer
Under this option, you may elect to count service for a predecessor employer
when you are not maintaining the plan of the predecessor employer. (Used
primarily in the event of a merger or acquisition.)
<PAGE>
1.31 Leased Employees
The law requires you to state how your plan would treat a leased employee who
could become a participant, even if you don't intend to ever lease employees.
Choose option (a) covering the employee without regard to the leasing company's
plan or option (b) the reduction method. Usually Option (b) is chosen.
2.01 Eligibility
a. An employee must attain this age to become a participant
(cannot exceed age 21).
b. Pick how long (service) an employee must work to become a
participant.
Plan Entry - Choose when employees enter the plan for purposes of contributions
and benefit accrual. Normally, option (c), semi-annual entry dates, is chosen.
Time of Participation - Choose which plan entry date (before or after) an
employee who meets the eligibility requirements will enter the plan. Normally,
option (f) is chosen.
Dual Eligibility - This section allows you to include into the plan current
employees who have not met the eligibility requirements and apply the
eligibility requirements to newly hired employees. Restated plans usually choose
(i)(2).
2.02 Years of Service
Option (b) should only be chosen if you wish to require less than
1000 hours to be worked by an employee for eligibility. Usually
Option (a) is chosen.
Eligibility Computation Period - Choose whether to measure subsequent
eligibility periods on the employee's anniversary or the plan year. Option (d)
is chosen for administrative convenience.
2.03 Break-in Service
This option may impose a complicated re-entry date for employees who have
terminated or whose hours were severely cut back. Option (a) is chosen for
administrative convenience.
3.01 Contributions allowed
PART I - Employer Contributions
Section 3.01 of this Adoption Agreement consists of three parts. Part I
defines the types of contributions you authorize under the plan. Part II
explains the matching contribution formula, if any. Part III allows you to put
limits on the employee 401(k) contributions. You must complete Part I, but only
complete Parts II and III, if necessary.
<PAGE>
Option (a) authorizes salary reduction contributions.
Option (b) authorizes matching contributions. If the Employer elects Option (b),
it must complete Part II to establish the matching contribution formula.
Option (c) authorizes the Employer to make qualified nonelective contributions
(QNECs"). The Employer will designate to the Trustee the amount of its
contributions consisting of QNECs.
The amount of QNECs is solely within the Employer's discretion. Any contribution
designated as QNECs is includible in the ADP test (see Section 14.08 of the
Plan) or in the ACP test (see Section 14.09 of the Plan). The advisory committee
may divide the QNECs between these two tests in any fashion it deems
appropriate, but may not use the same contributions in both tests. As a general
rule, the Employer will make a level of QNECs necessary to satisfy the
applicable tests, unless the Employer wishes to have excess contributions or
excess aggregate contributions distributed to the appropriate highly compensated
employees, in accordance with Sections 14.08 and 14.09.
Option (d) authorizes the Employer to make nonelective contributions in the same
manner it would under a regular profit sharing plan. the choices under Option
(d) are the same as the contribution formula options under the profit sharing
adoption agreements.
Part II Matching Contribution Formula
If the Employer elects Option (b), it must complete Part II, making a selection
under each option provided under Part II.
The Plan permits matching contributions for salary reduction contributions. The
formulas offered under Option (h) refer to "salary reduction contributions." The
Employer will define salary reduction contributions under Option (i).
Option (h) provides the formulas for determining the matching contribution. The
primary purpose of Option (h) is to establish the level of the matching
contribution (a fixed percentage or discretionary with the Employer). The
formula alone will not be sufficient to determine the Employer's actual matching
contribution on a participant's behalf. Any limitations on the amount of salary
reduction contributions taken into account, as provided under Option (i), are
necessary factors in computing the Employer's matching contribution.
Option (i) establishes any limitation on the amount of eligible contributions
taken into account under Option (h).
<PAGE>
Part III Salary Reduction Agreements
Under Option (j), the Employer must make selections from (1), (2), (3) and (4).
Under (1), Option (ii) prescribes a maximum deferral percentage, Option (iii)
prescribes a minimum deferral percentage and Option (i) prescribes no special
maximum limitation. The Employer may select both Options (ii) and (iii), or both
Options (i) and (iii), but Options (i) and (ii) are mutually exclusive. The
Employer may wish to consider a maximum percentage deferral under Option (ii) to
minimize the potential for Code 415 violations.
Under paragraphs (2) and (3), the Employer elects which restrictions apply to
the participant's right to revoke his/her salary reduction agreement. Under
paragraph (4), the Employer elects which restrictions apply to the participant's
right to increase or decrease his/her salary reduction percentage. The Employer
should consider the effect its elections have on plan administration.
3.04 Contribution Allocation
Part I - Matching Contributions. Select which account you want the matching
contributions to be allocated to, the Regular Matching Account is subject to a
vesting schedule. The Qualified Matching Account is always 100% vested and
contributions may be used to satisfy the deferral non-discrimination test.
Qualified Non-elective Contributions.
Choose which participants would receive an extra contribution to help satisfy
the non-discrimination test for deferrals (QNEC). For administrative convenience
opton (2) is chosen.
Part II - Method of Allocation. Choose the option for allocating the
discretionary employer contribution between all plan participants. You have
choices of non-integrated (pro-rata) or one of four integrated formulas.
Allocation formula. The primary allocation formulas are in Options (e), (f), (g)
and (h). Option (e) is a nonintegrated formula and allocates the employer
contribution proportionate to total compensation. Options (f), (g) and (h) are
alternatives for integrated plans. Usually option (e) is chosen for
proportionate allocation plans.
The two-tiered formula under Option (f) maximizes the disparity permitted
under the integration rules. Accordingly, the allocation in the first tier
results in an equal allocation percentage based on total compensation and based
on excess compensation. This equal allocation percentage may not exceed the
maximum disparity percentage (5.7%, 5.4% or 4.3%) described in the second column
of the Maximum Disparity Table. After completion of the first tier allocation,
the second step allocates the remaining contribution proportionate to total
compensation, in the same manner as the nonintegrated formula.
<PAGE>
Under the three-tiered formula under Option (g), the plan: (i) first allocates
based on total compensation, but the allocation percentage may not exceed the
maximum disparity percentage determined under the second column of the Maximum
Disparity Table; (ii) then allocates based on excess compensation, but the
allocation percentage may not exceed the maximum disparity percentage determined
under the second column of the Maximum Disparity Table; and (iii) completes the
allocation on the basis of total compensation.
The four-tiered allocation under Option (h) is a hybrid of Options (g) and (f).
The sole purpose of Option (h) is to use the first tier to satisfy the 3% top
heavy minimum, then use a progression of three additional tiers to make maximum
use of the permitted disparity rules. The second tier allocates solely on the
basis of excess compensation, with a maximum allocation under the second tier
equal to 3% of each participant's excess compensation. The third tier is the
same as the first tier under Option (g). The fourth tier is a prorata allocation
based on total compensation.
3.05 Forfeiture Allocation
Choose the method of allocating (dividing up) forfeitures of terminated
non-vested participant balances. Option (a) allocates forfeitures as an extra
discretionary contribution. Option (b) allocates forfeitures to reduce employer
contributions. Options (c) and (d) allow you to allocate separately forfeitures
from matching contributions. Select from options (e), (f) and (g) to determine
how to allocate forfeitures from highly compensated employee's matching account
when the matching non-discrimination test is not satisfied.
3.06 Compensation Taken Into Account
If you wish to count a participant's full year's compensation (even if he or she
entered during the year), for contributions choose option (a), if not, choose
option (b).
Accrual Requirements - Specify the service requirements a participant must
satisfy to receive an allocation. You may specify an hours of service
requirement, no greater than 501 hours. Standardized plans have relaxed
contribution requirements. A participant will receive a contribution of QNECs,
forfeitures or profit sharing contributions if they meet either of the two
requirements below:
Requirement #1
If the Participant was employed on the last day of the plan year the participant
must have worked at least one hour for the employer.
<PAGE>
Requirement #2
If the Participant terminates employment during the year and the participant
terminated after earning at leats 501 hours of work with the employer that plan
year.
3.15 More Than One Plan
This section only applies if you (the employer) maintain another defined
contribution plan (e.g.: profit sharing, money purchase, 401(k) or target
benefit) that covers at least one participant in this plan.
3.18 Defined Benefit Limitation
Check option (a) if you have never maintained a defined benefit plan for any
participants in this plan. If you have or are currently maintaining a defined
benefit under option (b), choose which plan's benefit would be reduced if a
participant's total allocations for a year were to exceed the allowable limit.
4.01 Participant Nondeductible Contributions
This section allows participants to contribute after-tax employee contributions.
These contributions are subject to a special nondiscrimination test. By checking
option (a) these contributions are not allowed.
5.01 Normal Retirement Age
Choose what age you (the employer) want the participants to be 100% vested in
their benefits, if still employed (normal retirement age).
5.02 Vesting Death/Disability
You may choose to allow 100% vesting for participants that terminate from
service because of death option (b) or disability option (c).
5.03 Vesting Schedule
Choose what vesting schedule(s) you want to apply to employer discretionary
contributions and matching contributions. If you choose option (b), you must at
a minimum complete the top-heavy vesting schedule.
Complete the Top Heavy Schedule based upon the following:
Years of Service
1
2 (not less than 20%)
3 (not less than 40%)
<PAGE>
4 (not less than 60%)
5 (not less than 80%)
6 (not less than 100%)
Optional: Complete the Non Top Heavy Schedule based upon the
following:
Years of Service or
1 1 - 0%
2 2 - 0%
3 (not less than 20%) 3 - 0%
4 (not less than 40% 4 - 0%
5 (not less than 60%) 5 - 100%
6 (not less than 80%) 6 - 100%
7 (not less than 100%)
5.04 Cash-Out Rule
If option (b) is chosen, the plan treats a 0% vested terminated participant as
having received a distribution, allowing for forfeitures to be reallocated to
active participants.
5.06 Years of Service
Choose what measuring period the plan should use to determine years of service
for vesting, employee's anniversary year or plan year. For ease of
administration choose option (a).
5.08 Prior Years of Service
By choosing options (b) through (d) you (the employer) may exclude some prior
years of service for purposes of vesting.
Article 6
The Employer must establish a specific distribution policy for the plan. Treas.
Reg. 1.411(d)-4 prohibits the Employer, the advisory committee or any third
party to retain discretion over when or in what form to pay the participant's
benefit. Under a restated plan, the elections under Article VI, to the extent
they differ from previous plan provisions regarding optional forms of benefit,
may not eliminate an optional form of benefit with respect to the account
balance accrued as of the date the Employer executes the restated adoption
agreement (or, if later, the effective date of that restated adoption
agreement). An optional form of benefit includes the form of payment (e.g., lump
sum or installments), the timing of payment (e.g., immediately after separation
form service, following a break in service, after attaining normal retirement
age) and the medium of payment (e.g. right to elect distribution in Employer
securities, right to elect distribution in the form of an annuity contract).
<PAGE>
With this in mind, if you are restating an existing plan, pay close
attention to the distribution features under that document and your
administrative practice of distributions. In all cases, try to mirror or
liberalize those distribution features when restating onto this document.
6.01 Distribution Date
A distribution date establishes a predetermined "target" date in a plan year
when the plan will offer distributions. The actual distribution may occur later
than a distribution date as long as the actual distribution is within an
"administratively reasonable period of time" from the distribution date. Typical
distribution dates for 401(k)plans are semi-annual dates or quarterly dates.
Nonforfeitable Accrued Benefit Not Exceeding $3,500
When a separated participants vested balance does not exceed $3,500, the plan
allows the employer to separately establish the timing of these distributions,
separate from the distribution dates. When you complete this section, you need
to balance two concerns: 1) will the timing of the distribution cause the
participant to consider it a "severance benefit" and therefore encourage
separation from service and 2) the administrative concerns of carrying a
non-active account in the plan.
Disability - The plan allows you (the employer) to establish a different target
payout date for disability distributions in options (e) and (f).
Hardship - This option states whether or not the plan would allow a separated
participant to receive a hardship distribution, prior to receiving a total
distribution of his/her vested account balance.
Default on a Loan - This election does not create a loan policy. You (the
employer) must elect the timing of the plan's foreclosure if a participant's
loan were to be defaulted upon even if you do not intend to offer loans in you
plan.
6.02 Method of Payment
You may choose the standard forms of payment if this is a brand new plan and not
a restatment. If the plan is not subject to the annuity requirements of Section
6.04, usually option (a) is chosen. If you choose to allow annuities, special
waivers and consent rules apply to all distributions.
6.03 Participant Elections After Separation from Service
You must choose when an employee who has separated from service, with a vested
benefit greater than $3,500, may elect to commence distributions. This election
will be tied directly to the "distribution date" definition earlier.
<PAGE>
Participant Elections Prior to Separation from Service
The following distribution elections apply to all participant's matching and
employer discretionary account regardless of vested account balances, prior to
employment separation. If you prefer not to allow any distribution options from
these accounts prior to separation, select option (c).
Deferrals, QMAC's and QNEC's - The following distribution elections apply to all
participant's deferral qualified matching, and qualified non-elective
contributions accounts, prior to employment separation. If you prefer not to
allow any distribution options from these accounts prior to employment
separation, select option (g).
6.04 Annuity Distributions
The law requires distributions to certain participants to be in the form of
commercial insurance annuities, unless consented to and waived by both the
participant and his or her spouse. Participants subject to this requirement are
identified in section 6.04(E) of the Plan. For administrative convenience,
choose option (a). If you are restating a plan that was subject to the joint and
survivor annuity rules you must select Option (b).
9.10 Value of Benefit
This option allows the employer to add interest to a participant's balance, if a
distribution occurs more than 90 days after the most recent plan valuation. You
do not have to provide an interest addition under this section and may complete
option (a) with 0%.
9.11 Allocation of Net Income/Loss
The following elections will state how current year contributions will share, if
at all, in net income, gains or losses of the trust. You must election option
(a) if your plan allows employee deferrals, option (b) if your plan includes a
matching contribution, or option (c) if the plan allows employee after tax
contributions. Only make the elections applicable to your plan.
Option (1) would not include contributions made since the last valuation date in
any earnings or loss calculation. The other choices are based upon a segregated
account approach or a weighted average approach, both are described in section
14.12 of the plan.
Usually daily weighting is chosen if INVESCO Trust Company is your recordkeeper,
for 9.11(a)(3), (b)(2) and (c)(3).
<PAGE>
10.14 Valuation of Trust
You may use this option to specify mandatory valuation dates, in addition to the
accounting date. Normally Option (a) is chosen.
Instructions for Effective Date Addendum
You must complete the effective date addendum only if the effective dates of any
of the listed items (a) through (j) have an effective date other than your
restated effective date in adoption agreement Section 1.18. Since some
provisions in the Tax Reform Act of 1986 were not effective until 1988 or 1989
The few provisions (if any) that have later effective dates must specify when
they are effective.
a. Compensation definition may not be later than the first day of your 1991
plan year.
b. Eligibility conditions may not be later than the first day of your 1989
plan year.
c. Suspension of years of service may not be earlier than the first day of
your 1990 plan year.
d. Contribution/allocation formula may not be earlier than the first day of
your 1989 plan year.
e. Accrual requirements may not be earlier than the first day of your 1989
plan year.
f. Elimination of Net Profits may not be earlier than December 31, 1985.
g. Vesting schedule may not be later than the first day of your 1989 plan
year.
h. Allocation of Earnings may not be earlier than the first day of the 1990
plan year.
Execution Page
The Employer must complete the date on which it executes the adoption agreement
and must execute the signature for the Employer. The execution page provides two
lines above the signature line to print or type the name of the Employer and the
Employer's EIN. If the Employer is a sole proprietorship, the individual sole
proprietor should execute as Employer. If the Employer is a corporation or a
partnership, an officer or a partner, as applicable, should execute the adoption
agreement on behalf of the Employer.
Trustee
If you selected option (a) of Section 1.02, then the employer will be the
Trustee. An individual must sign as trustee for the employer. INVESCO Trust
Company will then act as Custodian.
<PAGE>
If you choose to have INVESCO Trust Company act as "Trustee" then option (b) of
Section 1.02 must be chosen. INVESCO does charge an annual fee for this service.
INVESCO Trust Company will only serve as a non-discretionary trustee, this means
that there is a person who is the "Named Fiduciary." The Named Fiduciary gives
direction to a non-discretionary trustee, and the non- discretionary trustee
accepts all directions from the Named Fiduciary. The Named Fiduciary is either
the President of the Corporation, the managing partner of the partnership or the
self-employed individual of a sole-proprietorship. The Named Fiduciary is
responsible for selecting plan investments.
The execution page also includes a signature line for the Custodian, if any.
Leave the Custodian lines blank if INVESCO Trust Company will act as custodian.
Plan number. This paragraph designates the number the Employer assigns to the
plan for reporting (Form 5500) purposes. If this is the first plan the Employer
ever maintained, the number must be 001. The Employer's plan number does not
correspond to the 3- digit adoption agreement number specified at the top of the
first page of the adoption agreement. Consult your Counsel if unsure what
3-digit plan number to use.
Instructions for the Participation Agreement
This adoption agreement includes a Participation Agreement under which a related
group member of the signatory Employer to the execution page may participate in
the same plan with that Employer. Each related group member wishing to become a
participating Employer should execute a separate Participation Agreement. See
Section 1.30 of the Plan for the definition of related Employers.
Thus, it is possible to exclude the employees of related group members not
participating in the plan. If an Employer is a member of a related group, it
should consider whether the inclusion of other related group members' employees
is necessary to satisfy the coverage requirements of Code 410(b) or the minimum
participation requirement of Code 401(a)(26). If the Employer determines
inclusion of the employees of a related group member is necessary to maintain
qualification of the plan, the Employer may take one of two approaches: (1) have
the related group member execute a Participation Agreement; or (2) elect in
Adoption Agreement Section 1.07 to include the employees of that related group
member. Under approach (1), the participation of the related group member will
result in the automatic inclusion of the employees of that related group member,
without having to specify their inclusion in Adoption Agreement Section 1.07. In
addition, the related group member, under approach (1), has the authority to
contribute to the plan and, in the event another participating related group
member makes a contribution on behalf of that related group member's employees,
the Participation Agreement will ensure the deductibility of that contribution
(assuming the contribution does not exceed the deduction limits of Code 404).
<PAGE>
The addendum instructions to the appropriate adoption agreement explain the
effect on the allocation of Employer contributions when related group members
maintain a single non-standardized plan. Under approach (2), the plan will
retain its qualified status, but contributions the Employer makes on behalf of a
nonparticipating related group member's employees may not be deductible (even if
otherwise within the limitations of Code 404), resulting in an excise tax to the
contributing Employer.
Unrelated Employers. The Master Plan does not allow the participation in a
single plan of unrelated Employers (i.e., Employers that do not satisfy the
related group definition in Section 1.30 of the Plan).
legal\adop-agr\st401kaa.006
Adoption Agreement #009
D246284a
Standardized Simplified Profit Sharing Plan
Paired Profit Sharing Plan
Basic Profit Sharing Plan Considerations
For: Corporate or self-employed employers who want the
flexibility of optional contributions.
Maximum Annual Contribution: 15% of compensation up to $30,000.
Eligibility: All employees age 21 or older who have worked for
the employer for 2 years.
Contribution: Optional.
Establishment Deadline: December 31, or the end of the employer's
fiscal year.
Contribution Deadline: April 15, or date for filing tax return.
Benefits: Contribution is tax-deductible; earnings are tax-
deferred.
Financial Programs
Investment Professionals Since 1932
Provided by:
Financial Programs, Inc.
And the Financial Group
of No-Load Mutual Funds
Custodian:
INVESCO Trust Company
A Subsidiary of INVESCO MIM PLC
<PAGE>
[Your Adoption Agreement and Plan document constitute the rules and parameters
under which your retirement program will operate.] These instructions are
intended to assist you, the employer, in choosing the option provisions for your
retirement plan. They are not intended to substitute or replace competent legal
advice from your attorney or accountant. If further clarification is necessary,
contact your counsel or INVESCO Trust Company.
The Standardized Simplified Profit Sharing Plan is designed to make
administration of your retirement plan as simple as possible. If you feel your
situation requires a more complex retirement plan offering additional options,
please call our toll-free number, 800/525-8085, and ask for "Retirement
Services."
Employer's Name -------------------------------------------------------------
Employer ID# ----------------------------------------------------------------
Address ---------------------------------------------------------------------
City, State -------------------------------- Zip -----------------
Telephone Number (----------)------------------------------
One Person Plan: ---- Yes ---- No
Date of Birth ---------------------------------------------
Contribution Frequency ------------------------------------
Instructions for Standardized Simplified Profit Sharing Plan
This Adoption Agreement is an important part of your retirement plan. Please
carefully read the instructions for each option. You may need to refer to the
Plan Document for definitions in the text.
Completes the first blank by putting in the business' name, or, if
self-employed, the owner's name.
1.03 Enter the plan name. Examples, ABC Profit Sharing Plan or John Smith Profit
Sharing Plan.
1.17 Enter the last day of your tax year (usually December 31).
1.18 New Plan - Enter the first day of your tax year, (usually January 1) and
the year.
Restated Plan - effective date - If you are amending for the Tax Reform
Act of 1986, enter: January 1, 1987. If you are amending for another
reason, enter the first day of your tax year, example: January 1, 1990.
<PAGE>
Original established date - Enter the original effective date of your plan
from your prior adoption agreement.
2.01 Eligibility
Restated Plan - Complete the eligibility requirements you originally
choose on your prior Adoption Agreement.
New Plan - Choose an age and/or service requirement applicable to the
owner and all employees.
6.01 Distribution Date
Select a "target date" for payouts from the plan due to separation from service,
death, disability or attainment of age 59 1/2. Usually this date is after the
plan has been valued (e.g.: March 1).
10.0 Provide your Federal tax identification number. Date and sign the Adoption
Agreement. Type the name(s) of trustees, (usually the owner and/or managers) and
sign the document as trustee.
Plan Number
If this is the first retirement plan for your business, enter 001; if the
second, enter 002.
Return your completed Adoption Agreement to INVESCO Trust Company for review and
processing. It will be examined for completeness. We will then sign as
custodian, and return the original document.
INVESCO TRUST COMPANY USE ONLY: Account Number ---------------------
<PAGE>
Adoption Agreement #009
Standardized Simplified Profit Sharing Plan
(Paired Profit Sharing Plan)
The undersigned,
- --------------------------------------------------------------------------------
("Employer"), by executing this Adoption Agreement, elects to become a
participating Employer in the INVESCO Trust Company Defined Contribution Master
Plan (basic plan document #01) by adopting the accompanying Plan and Trust in
full as if the Employer were a signatory to that Agreement. The Employer makes
the following elections granted under the provisions of the Plan.
1.02 TRUSTEE. The Trustee executing this Adoption Agreement is:
(Choose (a) or (b))
(a) A discretionary Trustee.
(b) A nondiscretionary Trustee. See Section 10.03.
1.03 PLAN. The name of the Plan as adopted by the Employer is
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
1.07 EMPLOYEE. The term "Employee" specifically includes all employees of the
Employer.
1.12 COMPENSATION. "Compensation" includes elective contributions and does not
exclude any items other than as specified in Section 1.12 of the Plan.
1.17 PLAN YEAR. Plan Year means the 12 consecutive month period
ending every---------------------------------------------------------.
The Limitation Year is the Plan Year.
1.18 EFFECTIVE DATE. New Plan. The "Effective Date" of the Plan
is ---------------------. Restated Plan. The restated Effective
Date is ---------------------------------------. This Plan is a
substitution and amendment of an existing retirement plan(s)
originally established ---------------------------------------.
1.27 HOUR OF SERVICE. The crediting method for Hours of Service is the monthly
equivalency method.
1.31 LEASED EMPLOYEES. The Advisory Committee will determine the Leased
Employee's allocation of Employer contributions under Article III without taking
into account the Leased Employee's allocation, if any, under the leasing
organization's plan.
2.01 ELIGIBILITY. To become a Participant in the Plan, an Employee must satisfy
the following eligibility conditions:
(Choose (a) or (b))
(a) Age ------ (not exceeding 21).
<PAGE>
(b) ------ (0, 1 or 2) Year(s) of Service without, in the case of 2 Years,
an intervening break in Service.
Plan Entry Date/Time of Participation. "Plan Entry Date" means the effective
date and the first day of the Plan Year. An Employee will become a Participant
on the Plan Entry Date (if employed on that date) nearest the date the Employee
completes the above eligibility conditions.
Dual Eligibility. The above eligibility conditions apply to:
(Choose (c) or (d))
(c) all Employees of the Employer without exception.
(d) Employees who are not Participants in the Plan as of the Effective Date.
2.02 YEAR OF SERVICE - PARTICIPATION. An Employee must complete 1,000 Hours of
Service during an eligibility computation period to receive credit for a Year of
Service. After the initial eligibility computation period described in Section
2.02 of the Plan, the Plan measures the eligibility computation period as the 12
consecutive month period beginning with each anniversary of an Employee's
Employment Commencement Date.
2.03 BREAK IN SERVICE - PARTICIPATION. The Break in Service rule described in
Section 2.03(B) of the Plan applies to the Employer's Plan.
3.01 AMOUNT. The amount of the Employer's annual contribution to the Trust will
equal the amount the Employer may from time to time deem advisable, irrespective
of whether the Employer has Net Profits. If the Employer is a member of a
related group (as defined in Section 1.30), it may not execute this Adoption
Agreement.
3.04 CONTRIBUTION ALLOCATION. The Advisory Committee will allocate the annual
Employer contributions (and Participant forfeitures) in the same ratio that each
Participant's Compensation for the Plan Year bears to the total Compensation of
all Participants for the Plan Year.
Top Heavy Minimum Allocation. The plan will satisfy the top heavy minimum
allocation requirement of Section 3.04(B) as follows: (1) if the Employer does
not maintain a Paired Pension Plan, the Employer will make any necessary
additional contribution to the Participant's Account, as described in Section
3.04(B)(7)(a) of the Plan; and (2) if the Employer maintains a Paired Pension
Plan, that Paired Pension Plan will guarantee the top heavy minimum allocation
and this Plan does not guarantee that minimum.
3.05 FORFEITURE ALLOCATION. Subject to any restoration allocation required under
Section 9.14, the Advisory Committee will allocate a Participant forfeiture, as
an Employer contribution for the Plan Year in which the forfeiture occurs, as if
the Participant forfeiture were an additional Employer contribution for that
Plan Year.
<PAGE>
3.06 ACCRUAL OF BENEFIT. For any Plan Year, the Advisory Committee will
determine the allocation under Section 3.04 by taking into account a
Participant's Compensation for the entire Plan Year. To receive an allocation of
Employer contributions (and Participant forfeitures), the Participant: (a) if he
is employed by the Employer on the last day after the Plan Year, must complete
at least one Hour of Service for that Plan Year, and (b) if he is not employed
by the Employer on the last day of the Plan Year, the Participant must complete
at least 501 Hours of Service during the Plan year, except there is no Hour of
Service requirement if the Participant terminates employment during the Plan
year on account of death, disability or attainment of Normal Retirement Age.
3.15 MORE THAN ONE PLAN LIMITATION. If the provisions of Section 3.15 apply, the
Excess Amount attributed to this Plan equals the produce of: (i) the total
Excess Amount allocated as of such date (including any amount which the Advisory
Committee would have allocated but for the limitations of Code Section 415);
times (ii) the ratio of (1) the amount allocated to the Participant as of such
date under this Plan, divided by (2) the total amount allocated as of such date
under all qualified defined contribution plans (determined without regard to the
limitations of Code Section 415).
3.18 DEFINED BENEFIT PLAN LIMITATION. The limitation under Section 3.18 of the
Plan does not apply to the Employer's Plan if the Employer does not maintain and
never has maintained a defined benefit plan covering any Participant in this
Plan. If the limitation under Section 3.18 does apply, the Employer will reduce
the Participant's projected annual benefit under the defined benefit plan under
which the Participant participates and will apply the 100% limitation described
in Section 3.19(1), unless the Employer provides an alternative compliance
method in an addendum to this Section 3.18.
5.01 NORMAL RETIREMENT. Normal Retirement Age under the Plan is age 59 1/2.
5.02 PARTICIPANT DEATH OR DISABILITY. The 100% vesting rule of Section 5.02
applies to death and to disability.
5.03 VESTING SCHEDULE. Subject to Section 9.14 of the Plan, a Participant's
Accrued Benefit is 100% Nonforfeitable at all times. The deemed cash-out rule
does not apply.
5.06 YEARS OF SERVICE - VESTING. An Employee receives credit for a Year of
Service for vesting purposes if he completes at least 1,000 Hours of Service
during a Plan Year.
<PAGE>
5.08 INCLUDED YEARS OF SERVICE - VESTING. The Employer specifically includes
all Years of Service.
[Note: If Section 6.01 or Section 6.03 liberalizes the optional forms of benefit
under the Plan, the more liberal options apply on the later of the adoption date
or the Effective Date of this Adoption Agreement.]
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT. A distribution date under the Plan
means
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
If a Participant's Nonforfeitable Accrued Benefit does not exceed $3,500, or if
the Participant separates from Service because of disability, the distribution
date, subject to the limitations of Section 6.01(A), is the first distribution
date following the Participant's Separation from Service. The Plan does not
permit a hardship distribution. If a Participant or Beneficiary defaults on a
loan made pursuant to a loan policy adopted by the Advisory Committee pursuant
to Section 9.04, the Plan treats the default as a distributable event. The
Trustee, at the time of the default, will reduce the Participant's
Nonforfeitable Accrued Benefit by the lesser of the amount in default (plus
accrued interest) of the Plan's security interest in that Nonforfeitable Accrued
Benefits.
6.03 BENEFIT PAYMENT ELECTIONS. A Participant who is eligible to make
distribution elections under Section 6.03 of the Plan may elect to commence
distribution of his Nonforfeitable Accrued Benefit as of any distribution date
following his Separation from Service. Furthermore, subject to the restrictions
of Article VI, until he retires, the Participant has a continuing election to
receive all or any portion of his Nonforfeitable Accrued Benefit after he
attains Normal Retirement Age.
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES. The annuity
distribution requirements of Section 6.04 apply only to a Participant described
in Section 6.04(E) of the Plan (relating to the profit sharing plan exception).
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. If a distribution (other than a
distribution from a segregated Account) occurs more than 90 days after the most
recent valuation date, the distribution will include interest at 0% per annum.
10.0 The Trustee (and Custodian, if applicable), by executing this Adoption
Agreement, accepts its position and agrees to all of the obligations,
responsibilities and duties imposed upon the Trustee (or Custodian) under the
Master Plan and Trust. The Employer hereby agrees to the provisions of this Plan
and Trust, and in witness of its agreement, the Employer by its duly authorized
<PAGE>
officers has executed this Adoption Agreement, and the Trustee (and Custodian,
if applicable) signified its acceptance, on this ----- day of---------------,
19-----.
Name and EIN of Employer: ---------------------------------------------------
Signed: ---------------------------------------------------------------------
Name(s) of Trustee: ---------------------------------------------------------
Signed: ---------------------------------------------------------------------
Signed: ---------------------------------------------------------------------
Name of Custodian: INVESCO Trust Company
Signed:----------------------------------------------------------------------
[Note: A Trustee is mandatory, but a Custodian is optional. See Section 10.03
of the Plan.]
Plan Number. The plan's 3-digit number assigned for ERISA reporting purposes
(Form 5500 Series) is: ------------------------------.
Use of Adoption Agreement. Failure to complete properly the elections in this
Adoption Agreement may result in disqualification of the Employer's Plan. The
3-digit number assigned to this Adoption Agreement (see page 1) is solely for
the Master Plan Sponsor's recordkeeping purposes and does not necessarily
correspond to the plan number the Employer designated in the prior paragraph.
The Master Plan Sponsor offers the following Paired Pension Plan(s) with this
Paired Profit Sharing Plan, identified by 3-digit adoption agreement number: 004
and 010.
Master Plan Sponsor. The Master Plan Sponsor identified on the first page of the
basic plan document will notify all adopting employers of any amendment of this
Master Plan or of any abandonment or discontinuance by the Master Plan Sponsor
of its maintenance of this Master Plan. For inquiries regarding the adoption of
the Master Plan, the Master Plan Sponsor's intended meaning of any plan
provisions or the effect of the opinion letter issued to the Master Plan
Sponsor, please contact the Master Plan Sponsor at the following address and
telephone number: INVESCO Trust Company, 7800 East Union Ave., Suite 800,
Denver, Colorado 80237, (303) 779-0731.
Reliance on Opinion Letter. If the Employer does not maintain (and has never
maintained) any other plan other than this Plan and a Paired Pension Plan, it
may rely on the Master Plan Sponsor's opinion letter covering this Plan for
purposes of plan qualification. For this purpose, the Employer has not
maintained another plan if this Plan, or the Paired Pension Plan , amended and
restated that prior plan and the prior plan was the same type of plan as the
<PAGE>
restated plan. If the Employer maintains or has maintained another plan
other than a Paired Pension Plan, including a welfare benefit fund, as defined
in Code Section 419(e), which provides post-retirement medical benefits for key
employees (as defined in Code Section 419A(d)(3)), or an individual medical
account (as defined in Code Section 415(1)(2)), the Employer may not rely on
this Plan's qualified status unless it obtains a determination letter from the
applicable IRS Key District office.
adop-agr\sspsp.009
THE FINANCIAL FUNDS
Defined Contribution
Master Plan
and Trust Agreement
Basic Plan Document #01
Provided by:
The Financial Funds
Managed & Distributed by
INVESCO Funds Group, Inc.
Custodian:
INVESCO Trust Company
A Subsidiary of INVESCO MIM PLC
<PAGE>
INVESCO TRUST COMPANY
DEFINED CONTRIBUTION
MASTER PLAN AND TRUST AGREEMENT
BASIC PLAN DOCUMENT #01
INVESCO Trust Company, Denver, Colorado, in its capacity as Master Plan
Sponsor, establishes this Master Plan intended to conform to and qualify under
ss.401 and ss.501 of the Internal Revenue Code of 1986, as amended. An Employer
establishes a Plan and Trust under this Master Plan by executing an Adoption
Agreement. If the Employer adopts this Plan as a restated Plan in substitution
for, and in amendment of, an existing plan, the provisions of this Plan, as a
restated Plan, apply solely to an Employee whose employment with the Employer
terminates on or after the restated Effective Date of the Employer's Plan. If an
Employee's employment with the Employer terminates prior to the restated
Effective Date, that Employee is entitled to benefits under the Plan as the Plan
existed on the date of the Employee's termination of employment.
ARTICLE I
DEFINITIONS
1.01 "Employer" means each employer who adopts this Plan by
executing an Adoption Agreement.
1.02 "Trustee" means the person or persons who as Trustee execute the
Employer's Adoption Agreement, or any successor in office who in writing accepts
the position of Trustee. The Employer must designate in its Adoption Agreement
whether the Trustee will administer the Trust as a discretionary Trustee or as a
nondiscretionary Trustee. If a person acts as a discretionary Trustee, the
Employer also may appoint a Custodian. See Article X. If the Master Plan Sponsor
is a bank, savings and loan, credit union or similar financial institution, a
person other than the Master Plan Sponsor (or its affiliate) may not serve as
Trustee or as Custodian of the Employer's Plan without the written consent of
the Master Plan Sponsor.
1.03 "Plan" means the retirement plan established or continued by the
Employer in the form of this Agreement, including the Adoption Agreement under
which the Employer has elected to participate in this Master Plan. The Employer
must designate the name of the Plan in its Adoption Agreement. An Employer may
execute more than one Adoption Agreement offered under this Master Plan, each of
which will constitute a separate Plan and Trust established or continued by that
Employer. The Plan and the Trust created by each adopting Employer is a separate
Plan and a separate Trust, independent from the plan and the trust of any other
employer adopting this Master Plan. All section references within the Plan are
Plan section references unless the context clearly indicates otherwise.
<PAGE>
1.04 "Adoption Agreement" means the document executed by each Employer
adopting this Master Plan. The terms of this Master Plan as modified by the
terms of an adopting Employer's Adoption Agreement constitute a separate Plan
and Trust to be construed as a single Agreement. Each elective provision of the
Adoption Agreement corresponds by section reference to the section of the Plan
which grants the election. Each Adoption Agreement offered under this Master
Plan is either a Nonstandardized Plan or a Standardized Plan, as identified in
the preamble to that Adoption Agreement. The provisions of this Master Plan
apply equally to Nonstandardized Plans and to Standardized Plans unless
otherwise specified.
1.05 "Plan Administrator" is the Employer unless the Employer
designates another person to hold the position of Plan Administrator. In
addition to his other duties, the Plan Administrator has full responsibility for
compliance with the reporting and disclosure rules under ERISA as respects this
Agreement.
1.06 "Advisory Committee" means the Employer's Advisory Committee as
from time to time constituted.
1.07 "Employee" means any employee (including a Self-Employed
Individual) of the Employer. The Employer must specify in its Adoption
Agreement any Employee, or class of Employees, not eligible to participate in
the Plan. If the Employer elects to exclude collective bargaining employees, the
exclusion applies to any employee of the Employer included in a unit of
employees covered by an agreement which the Secretary of Labor finds to be a
collective bargaining agreement between employee representatives and one or more
employers unless the collective bargaining agreement requires the employee to be
included within the Plan. The term "employee representatives" does not include
any organization more than half the members of which are owners, officers, or
executives of the Employer.
1.08 "Self-Employed Individual/Owner-Employee." "Self-Employed
Individual" means an individual who has Earned Income (or who would have
had Earned Income but for the fact that the trade or business did not have net
earnings) for the taxable year from the trade or business for which the Plan is
established. "Owner-Employee" means a Self-Employed Individual who is the sole
proprietor in the case of a sole proprietorship. If the Employer is a
partnership, "Owner-Employee" means a Self-Employed Individual who 3 is a
partner and owns more than 10% of either the capital or profits interest of the
partnership.
1.09 "Highly Compensated Employee" means an Employee who, during the
Plan Year or during the preceding 12-month period:
(a) is a more than 5% owner of the Employer (applying the
constructive ownership rules of Code ss.318, and applying the principles
of Code ss.318, for an unincorporated entity);
(b) has Compensation in excess of $75,000 (as adjusted by the
Commissioner of Internal Revenue for the relevant year);
(c) has Compensation in excess of $50,000 (as adjusted by the
Commissioner of Internal Revenue for the relevant year) and is part of the
top-paid 20% group of employees (based on Compensation for the relevant
year); or
<PAGE>
(d) has Compensation in excess of 50% of the dollar amount prescribed
in Code ss.415(b)(1)(A) (relating to defined benefit plans) and is an
officer of the employer.
If the Employee satisfies the definition in clause (b), (c) or (d) in the
Plan Year but does not satisfy clause (b), (c) or (d) during the preceding
12-month period and does not satisfy clause (a) in either period, the Employee
is a Highly Compensated Employee only if he is one of the 100 most highly
compensated Employees for the Plan Year. The number of officers taken into
account under clause (d) will not exceed the greater of 3 or 10% of the total
number (after application of the Code ss.414(q) exclusions) of Employees, but no
more than 50 officers. If no Employee satisfies the Compensation requirement in
clause (d) for the relevant year, the Advisory Committee will treat the highest
paid officer as satisfying clause (d) for that year.
For purposes of this Section 1.09, "Compensation" means Compensation as
defined in Section 1.12, except any exclusions from Compensation elected in the
Employer's Adoption Agreement Section 1.12 do not apply, and Compensation must
include "elective contributions" (as defined in Section 1.12). The Advisory
Committee must make the determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of the top paid 20%
group, the top 100 paid Employees, the number of officers includible in clause
(d) and the relevant Compensation, consistent with Code ss.414(q) and
regulations issued under that Code section. The Employer may make a calendar
year election to determine the Highly Compensated Employees for the Plan Year,
as prescribed by Treasury regulations. A calendar year election must apply to
all plans and arrangements of the Employer. For purposes of applying any
nondiscrimination test required under the Plan or under the Code, in a manner
consistent with applicable Treasury regulations, the Advisory Committee will
treat a Highly Compensated Employee and all family members (a spouse, a lineal
ascendant or descendant, or a spouse of a lineal ascendant or descendant) as a
single Highly Compensated Employee, but only if the Highly Compensated Employee
is a more than 5% owner or is one of the 10 Highly Compensated Employees with
the greatest Compensation for the Plan Year. This aggregation rule applies to a
family member even if that family member is a Highly Compensated Employee
without family aggregation.
The term "Highly Compensated Employee" also includes an former Employee
who separated from Service (or has a deemed Separation from Service, as
determined under Treasury regulations) prior to the Plan Year, performs no
Service for the Employer during the Plan Year, and was a Highly Compensated
Employee either for the separation year or any Plan Year ending on or after his
55th birthday. If the former Employee's Separation from Service occurred prior
to January 1, 1987, he is a Highly Compensated Employee only if he satisfied
clause (a) of this Section 1.09 or received Compensation in excess of $50,000
during: (1) the year of his Separation from Service (or the prior year); or (2)
any year ending after his 54th birthday.
1.10 "Participant" is an Employee who is eligible to be and becomes a
Participant in accordance with the provisions of Section 2.01.
1.11 "Beneficiary" is a person designated by a Participant who is or
may become entitled to a benefit under the Plan. A Beneficiary who becomes
entitled to a benefit under the Plan remains a Beneficiary under the Plan until
the Trustee has fully distributed his benefit to him. A Beneficiary's right to
(and the Plan Administrator's, the Advisory Committee's or a Trustee's duty to
provide to the Beneficiary) information or data concerning the Plan does not
arise until he first becomes entitled to receive a benefit under the Plan.
1.12 "Compensation" means, except a provided in the Employer's
Adoption Agreement, the Participant's Earned Income, wages, salaries, fees
for professional service 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). The Employer must elect in its Adoption Agreement
whether to include elective contributions in the definition of Compensation.
"Elective contributions" are amounts excludible from the Employee's gross income
under Code ss.125,402(a)(8), 402(h) or 403(b), and contributed by the Employer,
<PAGE>
at the Employee's election, to a Code ss.401(k) arrangement, a Simplified
Employee Pension, cafeteria plan or tax-sheltered annuity. The term
"Compensation" does not include:
(a) Employer contributions (other than "elective contributions," if
includible in the definition of Compensation under Section 1.12 of the
Employer's Adoption Agreement) to a plan of deferred compensation to the
extent the contributions are not included in the gross income of the
Employee for the taxable year in which contributed, on behalf of an
Employee to a Simplified Employee Pension Plan to the extent such
contributions are excludible from the Employee's gross income, and any
distributions from a plan of deferred compensation, regardless of whether
such amounts are includible in the gross income of the Employee when
distributed.
(b) Amounts realized from the exercise of a non-qualified stock
option, or when estricted stock (or property) held by an Employee either
becomes freely transferable or is no longer subject to a substantial risk
of forfeiture
(c) Amounts realized from the sale, exchange or other disposition of
stock acquired under a stock option described in Part II, Subchapter D,
Chapter 1 of the Code.
(d) Other amounts which receive special tax benefits, such as
premiums for group term life insurance (but only to the extent that the
premiums are not includible in the gross income of the Employee), or
contributions made by an Employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity contract
described in Code 403(b) (whether or not the contributions are excludible
from the gross income of the Employee), other than "elective
contributions," if elected in the Employer's Adoption Agreement.
Any reference in this Plan to Compensation is a reference to the
definition in this Section 1.12, unless the Plan reference specifies a
modification to this definition. The Advisory Committee will take into account
only Compensation actually paid for the relevant period. A Compensation payment
includes Compensation by the Employer through another person under the common
paymaster provisions in Code ss.3121 and 3306.
(A) Limitations on Compensation.
(1) Compensatio dollar limitation. For any Plan Year beginning after
December 31, 1988, the Advisory Committee must take into account only the first
$200,000 (or beginning January 1, 1990, such larger amount as the Commissioner
of Internal Revenue may prescribe) of any Participant's Compensation. For any
Plan Year beginning prior to January 1, 1989, this $200,000 limitation (but
<PAGE>
not the family aggregation requirement described in the next paragraph) applies
only if the Plan is top heavy for such Plan Year or operates as a deemed top
heavy plan for such Plan Year.
(2) Application of compensation limitation to certain family members.
The $200,000 Compensation limitation applies to the combined Compensation
of the Employee and of any family member aggregated with the Employee under
Section 1.09 who is either (I) the Employee's spouse; or (ii) the Employee's
lineal descendant under the age of 19. If, for a Plan Year, the combined
Compensation of the Employee and such family members who are Participants
entitled to an allocation for that Plan Year exceeds the $200,000 (or adjusted)
limitation. "Compensation" for each such Participant, for purposes of the
contribution and allocation provisions of Article III, means his Adjusted
Compensation. Adjusted Compensation is the amount which bears the same ratio to
the $200,000 (or adjusted) limitation as the affected Participant's Compensation
(without regard to the $200,000 Compensation limitation) bears to the combined
Compensation of all the affected Participants in the family unit. If the Plan
uses permitted disparity, the Advisory Committee must determine the integration
level of each affected family member Participant prior to the proration of the
$200,000 Compensation limitation, but the combined integration level of the
affected Participants may not exceed $200,000 (or the adjusted limitation). The
combined Excess Compensation of the affected Participants in the family unit may
not exceed $200,000 (or the adjusted limitation) minus the affected
Participants' combined integration level (as determined under the preceding
sentence). If the combined Excess Compensation exceeds this limitation, the
Advisory Committee will prorate the Excess Compensation limitation among the
affected Participants in the family unit in proportion to each such individual's
Adjusted Compensation minus his integration level. If the Employer's Plan is a
Nonstandardized Plan, the Employer may elect to use a different method in
determining the Adjusted Compensation of the affected Participants by specifying
that method in an addendum to the Adoption Agreement, numbered Section 1.12.
(B) Nondiscrimination. For purposes of determining whether the plan
discriminates in favor of Highly Compensated Employees, Compensation means
Compensation as defined in this Section 1.12, except: (1) the Employer may elect
to include or to exclude elective contributions, irrespective of the Employer's
election in its Adoption Agreement regarding elective contributions; and (2) the
Employer will not give effect to any elections made in the "modifications to
Compensation definition" section of Adoption Agreement Section 1.12. The
Employer's election described in clause (1) must be consistent and uniform with
respect to all Employees and all plans of the Employer for any particular Plan
Year. If the Employer's Plan is a Nonstandardized Plan, the Employer,
<PAGE>
irrespective of clause (2), may elect to exclude from this
nondiscrimination definition of Compensation any items of Compensation
excludible under Code ss.414(s) and the applicable Treasury regulations,
provided such adjusted definition conforms to the nondiscrimination requirements
of those regulations.
1.13 "Earned Income" means net earnings from self-employment in the
trade or business with respect to which the Employer has established the
Plan, provided personal services of the individual are a material income
producing factor. The Advisory Committee will determine net earnings without
regard to items excluded from gross income and the deductions allocable to those
items. The Advisory Committee will determine net earnings after the deduction
allowed to the Self-Employed Individual for all contributions made by the
Employer to a qualified plan and, for Plan Years beginning after December 31,
1989, the deduction allowed to the Self-Employed under Code ss.164(f) for
self-employment taxes.
1.14 "Account" means the separate account(s) which the Advisory
Committee or the Trustee maintains for a participant under the Employer's Plan.
1.15 "Accrued Benefit" means the amount standing in a Participant's
Account(s) as of any date derived from both Employer contributions and Employee
contributions, if any.
1.16 "Nonforfeitable" means a Participant's or Beneficiary's
unconditional claim, legally enforceable against the Plan, to be
Participant's Accrued Benefit.
1.17 "Plan Year" means the fiscal year of the Plan, the consecutive
month period specified in the Employer's Adoption Agreement. The Employer's
Adoption Agreement also must specify the "Limitation Year" applicable to the
limitations on allocations described in Article III. If the Employer maintains
Paired Plans, each Plan must have the same Plan Year.
1.18 "Effective Date" of this Plan is the date specified in the
Employer's Adoption Agreement.
1.19 "Plan Entry Date" means the date(s) specified in Section 2.01 of
the Employer's Adoption Agreement.
1.20 "Accounting Date" is the last day of an Employer's Plan Year.
Unless otherwise specified in the Plan, the Advisory Committee will make
all Plan allocations for a particular Plan Year as of the Accounting Date of
that Plan Year.
1.21 "Trust" means the separate Trust created under the Employer's
Plan.
<PAGE>
1.22 "Trust Fund" means all property of every kind held or acquired
by the Employer's Plan, other than incidental benefit insurance contracts.
1.23 "Nontransferable Annuity" means an annuity which by its terms
provides that it may not be sold, assigned, discounted, pledged as collateral
for a loan or security for the performance of an obligation or for any purpose
to any person other than the insurance company. If the Plan distributes an
annuity contract, the contract must be a Nontransferable Annuity.
1.24 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
1.25 "Code" means the Internal Revenue Code of 1986, as amended.
1.26 "Service" means any period of time the Employee is in the
employ of the Employer, including any period the Employee is on an unpaid leave
of absence authorized by the Employer under a uniform, nondiscriminatory policy
applicable to all Employees. "Separation from Service" means the Employee no
longer has an employment relationship with the Employer maintaining this Plan.
1.27 "Hour of Service" means:
(a) Each Hour of Service for which the Employer, either directly or
indirectly, pays an Employee, or for which the Employee is entitled to
payment, for the performance of duties.
The Advisory Committee credits Hours of Service under this paragraph (a)
to the Employee for the computation period in which the Employee performs
the duties, irrespective of when paid;
(b) Each Hour of Service for back pay, irrespective of mitigation of
damages, to which the Employer has agreed or for which the Employee has
received an award. The Advisory Committee credits Hours of Service under
this paragraph (b) to the Employee for the computation period(s) to which
the award or the agreement pertains rather than for the computation period
in which the award, agreement or payment is made; and
(c) Each Hour of Service for which the Employer, either directly or
indirectly, pays an Employee, or for which the Employee is entitled to
payment (irrespective of whether the employment relationship is
terminated), for reasons other than for the performance of duties during a
computation period, such as leave of absence, vacation, holiday, sick
leave, illness, incapacity (including disability), layoff, jury duty
<PAGE>
or military duty. The Advisory Committee will credit no more than 501
Hours of Service under this paragraph (c) to an Employee on account of any
single continuous period during which the Employee does not perform any
duties (whether or not such period occurs during a single computation
period). The Advisory Committee credits Hours of Service under this
paragraph (c) in accordance with the rules of paragraphs (b) and (c) of
Labor Reg. ss.530.200b-2, which the Plan, by this reference, specifically
incorporates in full within this paragraph (c). The Advisory Committee
will not credit an Hour of Service under more than one of the above
paragraphs. A computation period for purposes of this Section 1.27 is the
Plan Year, Year of Service period, Break in Service period or other
period, as determined under the Plan provision for which the Advisory
Committee is measuring an Employee's Hours of Service. The Advisory
Committee will resolve any ambiguity with respect to the crediting of an
Hour of Service in favor of the Employee.
(A) Method of crediting Hours of Service. The Employer must elect
in its Adoption Agreement the method the Advisory Committee will use in
crediting an Employee with Hours of Service. For purposes of the Plan, "actual"
method means the determination of Hours of Service from records of hours worked
and hours for which the employer makes payment or for which payment is due from
the Employer. If the employer elects to apply an "equivalency" method for each
equivalency period for which the Advisory Committee would credit the Employee
with at least one Hour of Service, the Advisory Committee will credit the
Employee with: (I) 10 Hours of Service for a daily equivalency; (ii) 45 Hours of
Service for a weekly equivalency; (iii) 95 Hours of Service for a semimonthly
payroll period equivalency; and (iv) 190 Hours of Service for a monthly
equivalency.
(B) Maternity/paternity leave. Solely for purposes of determining
whether the Employee incurs a Break in Service under any provision of this
Plan, the Advisory Committee must credit Hours of Service during an Employee's
unpaid absence period due to maternity or paternity leave. The Advisory
Committee considers an Employee on maternity or paternity leave if the
Employee's absence is due to he Employee's pregnancy, the birth of the
Employee's child, the placement with the Employee of an adopted child, or the
care of the Employee's child immediately following the child's birth or
placement. The Advisory Committee credits Hours of Service under this paragraph
on the basis of the number of Hours of Service the employee would receive if he
were paid during the absence period or, if the Advisory Committee cannot
determine the number of Hours of Service the Employee would receive, on the
basis of 9 hours per day during the absence period. The Advisory Committee will
credit only the number (not exceeding 501) of Hours of Service necessary to
<PAGE>
prevent an Employee's Break in Service. The Advisory Committee credits all
Hours of Service described in this paragraph to the computation period in which
the absence period begins or, if the Employee does not need these Hours of
Service to prevent a Break in Service in the computation period in which his
absence period begins, the Advisory Committee credits these Hours of Service to
the immediately following computation period.
1.28 "Disability" means the Participant, because of a physical or
mental disability, will be unable to perform the duties of his customary
position of employment (or is unable to engage in any substantial gainful
activity) for an indefinite period which the Advisory Committee considers will
be of long continued duration. A Participant also is disabled if he incurs the
permanent loss or loss of use of a member or function of the body, or is
permanently disfigures, and incurs a Separation from Service. The Plan considers
a Participant disabled on the date the Advisory Committee determines the
Participant satisfies the definition of disability. The Advisory Committee may
require a Participant to submit to a physical examination in order to confirm
disability. The Advisory Committee will apply the provisions of this Section
1.28 in a nondiscriminatory, consistent and uniform manner. If the Employer's
Plan is a Nonstandardized Plan, the Employer may provide an alternative
definition of disability in an addendum to its Adoption Agreement, numbered
Section 1.28.
1.29 SERVICE FOR PREDECESSOR EMPLOYER. If the Employer maintains the
plan of a predecessor employer, the Plan treats service of the employee
with the predecessor employer as service with the Employer. If the Employer does
not maintain the plan of a predecessor employer, the Plan does not credit
service with the predecessor employer, unless the Employer identifies the
predecessor in its Adoption Agreement and specifies the purposes for which the
Plan will credit service with that predecessor employer.
1.30 RELATED EMPLOYERS. A related group is a controlled group of
corporations (as defined in Code ss.414(b)), trades or businesses (whether or
not incorporated) which are under common control (as defined in Code ss.414(c))
or an affiliated service group (as defined in Code ss.414(m) or in Code
ss.414(o)). If the Employer is a member of a related group, the term "Employer"
includes the related group members for purposes of crediting Hours of Service,
determining Years of Service and Breaks in Service under Articles II and V,
applying the Participation Test and the Coverage Test under Section 3.06(E),
applying the limitations on allocations in Part 2 of Article III, applying the
top heavy rules and the minimum allocation requirements of Article III, the
definitions of Employee, Highly Compensated Employee, Compensation and Leased
Employee, and for any other purpose required by the applicable Code section or
by a Plan provision. However, an Employer may contribute to the Plan only by
<PAGE>
being a signatory to the Execution Page of the Adoption Agreement or to a
Participation Agreement to the Employer's Adoption Agreement. If one or more of
the Employer's related group members become Participating Employers by executing
a Participation Agreement to the Employer's Adoption Agreement, the term
"Employer" includes the participating related group members for all purposes of
the Plan, and "Plan Administrator" means the Employer that is the signatory to
the Execution Page of the Adoption Agreement.
If the Employer's Plan is a Standardized Plan, all Employees of the
Employer or of any member of the Employer's related group, are eligible to
participate in the Plan, irrespective of whether the related group member
directly employing the Employee is a Participating Employer. If the Employer's
Plan is a Nonstandardized Plan, the Employer must specify in Section 1.07 of its
Adoption Agreement, whether the Employees of related group members that are not
Participating Employers are eligible to participate in the Plan. Under a
Nonstandardized Plan, the Employer may elect to exclude from the definition of
"Compensation" for allocation purposes any Compensation received from a related
employer that has not executed a Participation Agreement and whose Employees are
not eligible to participate in the Plan.
1.31 LEASED EMPLOYEES. The Plan treats a Leased Employee as an
Employee of the Employer. A Leased Employee is an individual (who otherwise
is not an Employee of the Employer) who, pursuant to a leasing agreement between
the Employer (or for the Employer and any persons related to the Employer within
the meaning of Code ss.144(a)(3)) on a substantially full time basis for at
least one year and who performs services historically performed by employees in
the Employer's business field. If a Leased Employee is treated as an Employee by
reason of this Section 1.31 of the Plan, "Compensation" includes Compensation
from the leasing organization which is attributable to services performed for
the Employer.
(A) Safe harbor plan exception. The Plan does not treat a Leased
Employee as an Employee if the leasing organization covers the employee is
a safe harbor plan and, prior to application of this safe harbor plan exception,
20% or less of the Employer's Employees (other than Highly Compensated
Employees) are Leased Employees. A safe harbor plan is a money purchase pension
plan providing immediate participation, full and immediate vesting, and a
nonintegrated contribution formula equal to at least 10% of the employee's
compensation without regard to employment by the leasing organization on a
specified date. The safe harbor plan must determine the 10% contribution on the
basis of compensation as defined in Code ss.415(c)(3) plus elective
contributions (as defined in Section 1.12).
<PAGE>
(B) Other requirements. The Advisory Committee must apply this
Section 1.31 in a manner consistent with Code ss.414(n) and 414(o) and the
regulations issued under those Code sections. The Employer must specify in the
Adoption Agreement the manner in which the Plan will determine the allocation of
Employer contributions and Participant forfeitures on behalf of a Participant if
the Participant is a Leased Employee covered by a plan maintained by the leasing
organization.
1.32 SPECIAL RULES FOR OWNER-EMPLOYEES. The following special
provisions and restrictions apply to Owner-Employees:
(a) If the Plan provides contributions or benefits for an Owner-
Employee or for a group of Owner-Employees who controls the trade or
business with respect to which this Plan is established and the
Owner-Employee or Owner-Employees also control as Owner-Employees one or
more other trades or businesses, plans must exist or be established with
respect to all the controlled trades or businesses so that when the plans
are combined they form a single plan which atisfies the requirements of
Code ss.401(a) and Code ss.401(d) with respect to the employees of the
controlled trades or businesses.
(b) The Plan excludes an Owner-employee or group of Owner-Employees
if the Owner-Employee or group of Owner-Employees controls any other trade
or business, unless the employees of the other controlled trade or
business participate in a plan which satisfies the requirements of Code
ss.401(a) and Code ss.401(d). The other qualified plan must provide
contributions and benefits which are not less favorable than the
contributions and benefits provided for the Owner-Employee or group of
Owner-Employees under this Plan, or if an Owner-Employee is covered under
another qualified plan as an Owner-Employee, then the plan established
with respect to the trade or business he does control must provide
contributions or benefits as favorable as those provided under the most
favorable plan of the trade or business he does not control. If the
exclusion of this paragraph (b) applies and the Employer's Plan is a
Standardized Plan, the Employer may not participate or continue to
participate in this Master Plan and the Employer's Plan becomes an
individually-designed plan for purposes of qualification reliance.
(c) For purposes of paragraphs (a) and (b) of this Section 1.32, an
Owner-Employee or group of Owner-Employees controls a trade or business if
the Owner-Employee or Owner-Employees together (1) own the entire interest
in an unincorporated trade or business, or (2) in the case of a
partnership, own more than 50% of either the capital interest or the
profits interest in the partnership.
<PAGE>
1.33 DETERMINATION OF TOP HEAVY STATUS. If this Plan is the only
qualified plan maintained by the Employer, the Plan is top heavy for a Plan
Year if the top heavy ratio as of the Determination Date exceeds 60%. The top
heavy ratio is a fraction, the numerator of which is the sum of the present
value of Accrued Benefits of all Key Employees as of the Determination Date and
the denominator of which is a similar sum determined for all Employees. The
Advisory Committee must include in the top heavy ratio, as part of the present
value of Accrued Benefits, any contribution not made as of the Determination
Date but includible under Code ss.416 and the applicable Treasury regulations,
and distributions made within the Determination Period. The Advisory Committee
must calculate the top heavy ratio by disregarding the Accrued Benefit (and
distributions, if any, of the Accrued Benefit) of any Non-Key Employee who was
formerly a Key Employee, and by disregarding the Accrued Benefit (including
distributions, if any, of the Accrued Benefit) of an individual who has not
received credit for at least one Hour of Service with the Employer during the
Determination Period. The Advisory Committee must calculate the top heavy ratio,
including the extent to which it must take into account distributions, rollovers
and transfers, in accordance with Code ss.416 and the regulations under that
Code section.
If the Employer maintains other qualified plans (including a simplified
employee pension plan), or maintained another such plan which now is terminated,
this Plan is top heavy only if it is part of the Required Aggregation Group, and
the top heavy ratio for the Required Aggregation Group and for the Permissive
Aggregation Group, if any, each exceeds 60%. The Advisory Committee will
calculate the top heavy ratio in the same manner as required by the first
paragraph of this Section 1.33, taking into account all plans within the
Aggregation Group. To the extent the Advisory Committee must take into account
distributions to a Participant, the Advisory Committee must include
distributions from a terminated plan which would have been part of the Required
Aggregation Group if it were in existence on the Determination Date. The
Advisory Committee will calculate the present value of accrued benefits under
defined benefit plans or simplified employee pension plans included within the
group in accordance with the terms of those plans. Code ss.416 and the
regulations under that Code section. If a Participant in a defined benefit plan
is a Non-Key Employee, the Advisory Committee will determine his accrued benefit
under the accrual method, if any, which is applicable uniformly to all defined
benefit plans maintained by the Employer or, if there is no uniform method, in
accordance with the slowest accrual rate permitted under the fractional rule
accrual method described in Code ss.411(b)(1)(C). If the Employer maintains a
defined benefit plan, the Employer must specify in Adoption Agreement Section
3.18 the actuarial assumptions (interest and mortality only) the Advisory
Committee will use to calculate the present value of benefits from a defined
benefit plan. If an aggregated plan does not have a valuation date coinciding
<PAGE>
with the Determination Date, the Advisory Committee must value the Accrued
Benefits in the aggregated plan as of the most recent valuation date falling
within the twelve-month period ending on the Determination Date, except as Code
ss.416 and applicable Treasury regulations require for the first and second plan
year of a defined benefit plan. The Advisory Committee will calculate the top
heavy ratio with reference to the Determination Dates that fall within the same
calendar year.
(A) Standardized Plan. If the Employer's Plan is a Standardized
Plan, the Plan operates as a deemed top heavy plan in all Plan Years,
except, if the Standardized Plan includes a Code ss.401(k) arrangement, the
Employer may elect to apply the top heavy requirements only in Plan Years for
which the Plan actually is top heavy. Under a deemed top heavy plan, the
Advisory Committee need not determine whether the Plan actually is top heavy.
However, if the Employer, in Adoption Agreement Section 3.18, elects to override
the 100% limitation, the Advisory Committee will need to determine whether a
deemed top heavy Plan's top heavy ratio for a Plan Year exceeds 90%.
(B) Definitions. For purposes of applying the provisions of this
Section 1.33:
(1) "Key Employee" means, as of any Determination Date, any
Employee or former Employee (or Beneficiary of such Employee) who, for any
Plan Year in the Determination Period: (I) has Compensation in excess of
50% of the dollar amount prescribed in Code ss.415(b)(1)(A) (relating
to defined benefit plans) and is an officer of the Employer; (ii) has
Compensation in excess of the dollar amount prescribed in Code
ss.415(c)(1)(A) (relating to defined contribution plans) and is one of
the Employees owning the ten largest interests in the Employer; (iii)
is a more than 5% owner of the Employer; or (iv) is a more than 1%
owner of the employer and has Compensation of more than $150,000. The
constructive ownership rules of Code ss.318 (or the principles of that
section in the case of an unincorporated Employer,) will apply to
determine ownership in the Employer. The number of officers taken into
account under clause (I) will not exceed the greater of 3 or 10% of
the total number (after application of the Code ss.414(q) exclusions)
of Employees, but no more than 50 officers. The Advisory Committee
will make the determination of who is a Key Employee in accordance
with Code ss.416(I)(1) and the regulations under that Code section.
(2) "Non-Key Employee" is an employee who does not meet the
definition of Key Employee.
(3) "Compensation" means Compensation as determined under Section
1.09 for purposes of identifying Highly Compensated Employees.
<PAGE>
(4) "Required Aggregation Group" means: (I) each qualified plan of
the Employer in which at least one Key Employee participates at any time
during the Determination Period; and (ii) any other qualified plan of the
employer which enables a plan described in clause (I) to meet the
requirements of Code ss.401(a)(4) or of Code ss.410.
(5) "Permissive Aggregation Group" is the Required Aggregation Group
plus any other qualified plans maintained by the employer, but only if
such group would satisfy in the aggregate the requirements of Code ss.401
(a)(4) and of Code ss.410. The Advisory Committee will determine the
Permissive Aggregation Group.
(6) "Employer" means the Employer that adopts this Plan and any
related employers described in Section 1.30.
(7) "Determination Date" for any Plan Year is the Accounting Date of
the preceding Plan Year or, in the case of the first Plan Year of the
Plan, the Accounting Date of that Plan Year. The "Determination Period"
is the 5 year period ending on the Determination Date.
1.34 "Paired Plans" means the Employer has adopted two Standardized
Plan Adoption Agreements offered with this Master Plan, one Adoption
Agreement being a Paired Profit Sharing Plan and one Adoption Agreement being a
Paired Pension Plan. A Paired Profit Sharing Plan may include a Code ss.401(k)
arrangement. A Paired Pension Plan must be a money purchase pension plan or a
target benefit pension plan. Paired Plans must be the subject of a favorable
opinion letter issued by the National Office of the Internal Revenue Service.
This Master Plan does not pair any of its Standardized Plan Adoption Agreements
with Standardized Plan Adoption Agreements under a defined benefit master plan.
ARTICLE II
EMPLOYEE PARTICIPANTS
2.01 ELIGIBILITY. Each Employee becomes a Participant in the Plan in
accordance with the participation option selected by the Employer in its
Adoption Agreement. If this Plan is a restated Plan, each Employee who was a
Participant in the Plan on the day before the Effective Date continues as a
Participant in the Plan, irrespective of whether he satisfies the participation
conditions in the restated Plan, unless otherwise provided in the Employer's
Adoption Agreement.
<PAGE>
2.02 YEAR OF SERVICE - PARTICIPATION. For purposes of an Employee's
participation in the Plan under Adoption Agreement Section 2.01, the Plan takes
into account all of his Years of Service with the Employer, except as provided
in Section 2.03. "Year of Service" means an eligibility computation period
during which the Employee completes not less than the number of Hours of Service
specified in the Employer's Adoption Agreement. The initial eligibility
computation period is the first 12 consecutive month period measured from the
Employment Commencement Date. The Plan measures succeeding eligibility
computation periods in accordance with the option selected by the Employee in
its Adoption Agreement. If the Employer elects to measure subsequent periods on
a Plan Year basis, an Employee who receives credit for the required number of
Hours of Service during the initial eligibility computation period and during
the first applicable Plan Year will receive credit for two Years of Service
under Article II. "Employment Commencement Date" means the date on which the
Employee first performs an Hour of Service for the Employer. If the Employer
elects a service condition under Adoption Agreement Section 2.01 based on
months, the Plan does not apply any Hour of Service requirement after the
completion of the first Hour of Service.
2.03 BREAK IN SERVICE - PARTICIPATION. An Employee incurs a "Break in
Service" if during any consecutive month period he does not complete more than
500 Hours of Service with the Employer. The "12 consecutive month period" under
this Section 2.03 is the same 12 consecutive month period for which the Plan
measures "Years of Service" under Section 2.02.
(A) 2-year Eligibility. If the Employer elects a 2 years of service
condition for eligibility purposes under Adoption Agreement Section 2.01, the
Plan treats an Employee who incurs a one year Break in Service and who has never
become a Participant as a new Employee on the date he first performs an Hour of
Service for the Employer after the Break in Service.
(B) Suspension of Years of Service. The Employer must elect in its
Adoption Agreement whether a Participant will incur a suspension of Years of
Service after incurring a one year Break in Service. If this rule applies under
the Employer's Plan, the Plan disregards a Participant's Years of Service (as
defined in Section 2.02) earned prior to a Break in Service until the
Participant completes another Year of Service and the Plan suspends the
Participant's participation in the Plan. If the Participant completes a Year of
Service following his Break in Service, the Plan restores that Participant's
pre-Break Years of Service (and the Participant resumes active participation in
the Plan) retroactively to the first day of the computation period in which the
Participant earns the first post-Break Year of Service. The initial computation
period under this Section 2.03(B) is the 12 consecutive month period measured
from the date the Participant first receives credit for an Hour of Service
following the one year Break in Service period. The Plan measures any subsequent
periods, if necessary, in a manner consistent with the computation period
<PAGE>
selection in Adoption Agreement Section 2.02. This Section 2.03(B) does not
affect a Participant's vesting credit under Article V and, during a suspension
period, the Participant's Account continues to share fully in Trust Fund
allocations under Section 9.11. Furthermore, this Section 2.03(B) will not
result in the restoration of any Year of Service disregarded under the Break in
Service rule of Section 2.03(A).
2.04 PARTICIPATION UPON RE-EMPLOYMENT. A Participant whose employment
with the Employer terminates will re-enter the Plan as a Participant on the
date of his re-employment, subject to the Break in Service rule, if applicable,
under Section 2.03(B). An Employee who satisfies the Plan's eligibility
conditions but who terminates employment with the Employer prior to becoming a
Participant will become a Participant on the later of the Plan Entry Date on
which he would have entered the Plan had he not terminated employment or the
date of his re-employment, subject to the Break in Service rule, if applicable,
under Section 2.03(B). Any Employee who terminates employment prior to
satisfying the Plan's eligibility conditions becomes a Participant in accordance
with Adoption Agreement Section 2.01.
2.05 CHANGE IN EMPLOYEE STATUS. If a Participant has not ncurred a
Separation from Service but ceases to be eligible to participate in the Plan, by
reason of employment within an employment classification excluded by the
Employer under Adoption Agreement Section 1.07, the Advisory Committee must
treat the Participant as an Excluded Employee during the period such a
Participant is subject to the Adoption Agreement exclusion. The Advisory
Committee determines a Participant's sharing in the allocation of Employer
contributions and Participant forfeitures, if applicable, by disregarding his
Compensation paid by the Employer for services rendered in his capacity as an
Excluded Employee. However, during such period of exclusion, the Participant,
without regard to employment classification, continues to receive credit for
vesting under Article V for each included Year of Service and the Participant's
Account continues to share fully in Trust Fund allocations under Section 9.11.
If an Excluded Employee who is not a Participant becomes eligible to
participate in the Plan by reason of a change in employment classification, he
will participate in the Plan immediately if he has satisfied the eligibility
conditions of Section 2.01 and would have been a Participant had he not been an
Excluded Employee during his period of Service. Furthermore, the Plan takes into
account all of the Participant's included Years of Service with the Employer as
an Excluded Employee for purposes of vesting credit under Article V.
<PAGE>
2.06 ELECTION NOT TO PARTICIPATE. If the Employer's Plan is a
Standardized Plan, the Plan does not permit an otherwise eligible Employee
nor any Participant to elect not to participate in the Plan. If the Employer's
Plan is a Nonstandardized Plan, the Employer must specify in its Adoption
Agreement whether an Employee eligible to participate, or any present
Participant, may elect not to participate in the Plan. For an election to be
effective for a particular Plan Year, the Employee or Participant must file the
election in writing with the Plan Administrator not later than the time
specified in the Employer's Adoption Agreement. The employer may not make a
contribution under the Plan for the Employee or for the Participant for the Plan
Year for which the election is effective, nor for any succeeding Plan Year,
unless the Employee or Participant re-elects to participate in the Plan. After
an Employee's or Participant's election not to participate has been effective
for at least the minimum period prescribed by the Employer's Adoption Agreement,
the Employee or Participant may re-elect to participate in the Plan for any Plan
Year and subsequent Plan Years. An Employee or Participant may re-elect to
participate in the Plan by filing his election in writing with the Plan
Administrator not later than the time specified in the Employer's Adoption
Agreement. An Employee or Participant who re-elects to participate may again
elect not to participate only as permitted in the Employer's Adoption Agreement.
If an Employee is a Self- Employed Individual, the Employee's election (except
as permitted by Treasury regulations without creating a Code ss.401(k)
arrangement with respect to that Self-Employed Individual) must be effective no
later than the date the Employee first would become a Participant in the Plan
and the election is irrevocable. The Plan Administrator must furnish an Employee
or a Participant any form required for purposes of an election under this
Section 2.06. An election timely filed is effective for the entire Plan Year.
A Participant who elects not to participate may not receive a distribution
of his Accrued Benefit attributable either to Employer or to Participant
contributions except as provided under Article IV or under Article VI. However,
for each Plan year for which a Participant's election not to participate is
effective, the Participant's Account, if any, continues to share in Trust Fund
allocations under Article IX. Furthermore, the Employee or the Participant
receives vesting credit under Article V for each included Year of Service during
the period the election not to participate is effective.
ARTICLE III
EMPLOYER CONTRIBUTIONS
AND FORFEITURES
Part 1. Amount of Employer Contributions and Plan Allocations:
Sections 3.01 through 3.06.
3.01 AMOUNT. For each Plan Year, the Employer contributes to the trust
the amount determined by application of the contribution option selected by
the Employer in its Adoption Agreement. The Employer may not make a contribution
to the Trust for any Plan Year to the extent the contribution would exceed the
Participants' Maximum Permissible Amounts.
<PAGE>
The Employee contributes to this Plan on the condition its contribution is
not due to a mistake of fact and the Revenue Service will not disallow the
deduction for its contribution. The Trustee, upon written request from the
employer, must return to the Employer the amount of the Employer's contribution
made by the Employer by mistake of fact or the amount of the Employer's
contribution disallowed as a deduction under Code ss.404. The Trustee will not
return any portion of the Employer's contribution under the provisions of this
paragraph more than one year after:
(a) The Employer made the contribution by mistake of fact;
or
(b) The disallowance of the contribution as a deduction,
and then, only to the extent of the disallowance.
The Trustee will not increase the amount of the Employer contribution
returnable under this Section 3.01 for any earnings attributable to the
contribution, but the Trustee will decrease the Employer contribution returnable
for any losses attributable to it. The Trustee may require the Employer to
furnish it whatever evidence the Trustee deems necessary to enable the Trustee
to confirm the amount the Employer has requested be returned is properly
returnable under ERISA.
3.02 DETERMINATION OF CONTRIBUTION. The Employer, from its records,
determines the amount of any contributions to be made by it to the Trust under
the terms of the Plan.
3.03 TIME OF PAYMENT OF CONTRIBUTION. The Employer may pay its
contribution for each Plan Year in one or more installments without interest.
The Employer must make its contribution to the Plan within the time prescribed
by the Code or applicable Treasury regulations. Subject to the consent of the
Trustee, the Employer may make its contribution in property rather than in cash,
provided the contribution of property is not a prohibited transaction under the
Code of under ERISA.
3.04 CONTRIBUTION ALLOCATION.
(A) Method of Allocation. The Employer must specify in its Adoption
Agreement the manner of allocating each annual Employer contribution to this
Trust.
(B) Top Heavy Minimum Allocation. The Plan must comply with the
provisions of this Section 3.04(B), subject to the elections in the
Employer's Adoption Agreement.
<PAGE>
(1) Top Heavy Minimum Allocation Under Standardized Plan. Subject
to the Employer's election under Section 3.04(B)(3), the top heavy minimum
allocation requirement applies to a Standardized Plan for each Plan Year,
irrespective of whether the Plan is top heavy.
(a) Each Participant employed by the Employer on the last day of the
Plan Year will receive a top heavy minimum allocation for that Plan Year.
The Employer may elect in Section 3.04 of its Adoption Agreement to apply
this paragraph (a) only to a Participant who is a Non-Key Employee.
(b) Subject to any overriding elections in section 3.18 of the
Employer's Adoption Agreement, the top heavy minimum allocation is the
lesser of 3% of the Participant's Compensation for the Plan Year or the
highest contribution rate for the Plan Year made on behalf of any
Participant for the Plan Year. However, if the Employee participates in
Paired Plans, the top heavy minimum allocation is 3% of his Compensation.
If, under Adoption Agreement Section 3.04, the Employer elects to apply
paragraph (a) only to a Participant who is a Non-Key Employee, the
Advisory Committee will determine the "highest contribution rate"
described in the first sentence of this paragraph (b) by reference only to
the contribution rates of Participants who are Key Employees for the
Plan Year.
(2) Top Heavy Minimum Allocation Under Nonstandardized Plan. The top
heavy minimum allocation requirement applies to a Nonstandardized Plan only
in Plan Years for which the Plan is top heavy. Except as provided in the
Employer's Adoption Agreement, if the Plan is top heavy in any Plan Year:
(a) Each Non-Key Employee who is a Participant and is employed by the
Employer on the last day of the Plan Year will receive a top heavy minimum
allocation for that Plan Year, irrespective of whether he satisfies the
Hours of Service condition under Section 3.06 of the Employer's Adoption
Agreement; and
(b) The top heavy minimum allocation is the lesser of 3% of the
Non-Key Employee's Compensation for the Plan Year or the highest
contribution rate for the Plan Year made on behalf of any Key Employee.
However, if a defined benefit plan maintained by the Employer which
benefits a Key Employee depends on this Plan to satisfy the
antidiscrimination rules of Code ss.401(a)(4) or the coverage rules of
<PAGE>
Code ss.410 (or another plan benefiting the Key Employee so depends on such
defined benefit plan), the top heavy minimum allocation is 3% of the
Non-Key Employee's Compensation regardless of the contribution rate for the
Key Employees.
(3) Special Election for Standardized Code ss.401(k) Plan. If the
Employer's Plan is a Standardized Code ss.401(k) Plan, the Employer may elect in
Adoption Agreement Section 3.04 to apply the top heavy minimum allocation
requirements of Section 3.04(B)(1) only for Plan Years in which the Plan
actually is a top heavy plan.
(4) Special Definitions. For purposes of this Section 3.04(B), the
term "Participant" includes any Employee otherwise eligible to participate
in the Plan but who is not a Participant because of his Compensation level or
because of his failure to make elective deferrals under a Code ss.401(k)
arrangement or because of his failure to make mandatory contributions. For
purposes of sub- paragraph (1)(b) or (2)(b), "Compensation" means Compensation
as defined in Section 1.12, except Compensation does not include elective
contributions, irrespective of whether the Employer has elected to include these
amount sin Section 1.12 of its Adoption Agreement, any exclusion selected in
Section 1.12 of the Adoption Agreement (other than the exclusion of elective
contributions) does not apply and any modification to the definition of
Compensation in Section 3.06 does not apply.
(5) Determining Contribution Rates. For purposes of this Section
3.04(B), a Participant's contribution rate is the sum of all Employer
contributions (not including Employer contributions to Social security) and
forfeitures allocated to the Participant's Account for the Plan Year divided by
his Compensation for the entire Plan Year. However, for purposes of satisfying a
Participant's top heavy minimum allocation in Plan Years beginning after
December 31, 1998, the Participant's contribution rate does not include an
elective contributions under a Code ss.401(k) arrangement nor any Employer
matching contributions allocated on the basis of those elective contributions or
on the basis of employee contributions, except a Nonstandardized Plan may
include in the contribution rate any matching contributions not necessary to
satisfy the nondiscrimination requirements of Code ss.401(k) or of Code
ss.401(m).
If the Employee is a Participant in Paired Plans, the Advisory Committee
will consider the Paired Plans as a single Plan to determine a Participant's
contribution rate and to determine whether the Plans satisfy this top heavy
minimum allocation requirement. To determine a Participant's contribution rate
under a Nonstandardized Plan, the Advisory Committee must treat all qualified
top heavy defined contribution plans maintained by the Employer (or by any
related Employers described in Section 1.30) as a single plan.
<PAGE>
(b) No Allocations. If, for a Plan Year, there are no allocations of
Employer contributions or forfeitures for any Participant (for purposes of
Section 3.04(B)(1)(b)) or for any Key Employee (for purposes of Section
3.04(B)(2)(b)), the Plan does not require any top heavy minimum allocation for
the Plan Year, unless a top heavy minimum allocation applies because of the
maintenance by the Employer of more than one plan.
(7) Election of Method. The Employer must specify in its Adoption
Agreement the manner in which the Plan will satisfy the top heavy minimum
allocation requirement.
(a) If the Employer elects to make any necessary additional
contribution to this Plan, the Advisory Committee first will allocate the
Employer contributions (and Participant forfeitures, if any) for the Plan
Year in accordance with the provisions of Adoption Agreement Section 3.04.
The Employer then will contribute an additional amount for the Account of
any Participant entitled under this Section 3.04(B) to a top heavy minimum
allocation and whose contribution rate for the Plan Year, under this Plan
and any other plan aggregated under paragraph (5), is less than the top
heavy minimum allocation. The additional amount is the amount necessary to
increase the Participant's contribution rate to the top heavy minimum
allocation. The Advisory Committee will allocate the additional
contribution to the Account of the Participant on whose behalf the
Employer makes the contribution.
(b) If the Employer elects to guarantee the top heavy minimum
allocation under another plan, this Plan does not provide the top heavy
minimum allocation and the Advisory Committee will allocate the annual
Employer contributions (and Participant forfeitures) under the plan solely
in accordance with the allocation method selected under Adoption Agreement
Section 3.04.
3.05 FORFEITURE ALLOCATION. The amount of a Participant's Accrued
Benefit forfeited under the Plan is a Participant forfeiture. The Advisory
Committee will allocate Participant forfeitures in the manner specified by the
Employer in its Adoption Agreement. The Advisory Committee will continue to hold
the undistributed, non-vested portion of a terminated Participant's Accrued
Benefit in his Account solely for his benefit until a forfeiture occurs at the
time specified in Section 5.09 or if applicable, until the time specified in
Section 9.14. Except as provided under Section 5.04, a Participant will not
share in the allocation of a forfeiture of any portion of his Accrued Benefit.
3.06 ACCRUAL OF BENEFIT. The Advisory Committee will determine the
accrualof benefit (Employer contributions and Participant forfeitures) on the
basis of the Plan Year in accordance with the Employer's elections in its
Adoption Agreement.
<PAGE>
(A) Compensation Taken Into Account. The Employer must specify
in its Adoption Agreement the Compensation the Advisory Committee is to
take into account in allocating an Employer contribution to a Participant's
Account for the Plan Year in which the Employee first becomes a Participant. For
all other Plan Years, the Advisory Committee will take into account only the
Compensation determined for the portion of the Plan Year in which the Employee
actually is a Participant. The Advisory Committee must take into account the
Employee's entire Compensation for the Plan Year to determine whether the Plan
satisfies the top heavy minimum allocation requirement of Section 3.04(B). The
Employer, in an addendum to its Adoption Agreement numbered 3.06(A), may elect
to measure Compensation for the Plan Year for allocation purposes on the basis
of a specified period other than the Plan Year.
(B) Hours of Service Requirement. Subject to the applicable
minimum allocation requirement of Section 3.04, the Advisory Committee will
not allocate any portion of an Employer contribution for a Plan Year to any
Participant's Account if the Participant does not complete the applicable
minimum Hours of Service requirement specified in the Employer's Adoption
Agreement.
(C) Employment Requirement. If the Employer's Plan is a Standardized
Plan, a Participant who, during a particular Plan Year, completes the
accrual requirements of Adoption Agreement Section 3.06 will share in the
allocation of Employer contributions for that Plan Year without regard to
whether he is employed by the Employer on the Accounting Date of that Plan Year.
If the Employer's Plan is a Nonstandardized Plan, the Employer must specify in
its Adoption Agreement whether the Participant will accrue a benefit if he is
not employed by the Employer on the Accounting Date of the Plan Year. If the
Employer's Plan is a money purchase plan or a target benefit plan, whether
nonstandardized or Standardized, the Plan conditions benefit accrual on
employment with the Employer on the 1st day of the Plan Year for the Plan Year
in which the Employer terminates the Plan.
(D) Other Requirements. If the Employer's Adoption Agreement
includes options for other requirements affecting the Participant's accrual
of benefits under the Plan, the Advisory Committee will apply this Section 3.06
in accordance with the Employer's Adoption Agreement selections.
(E) Suspension of Accrual Requirements Under Nonstandardized Plan.
If the Employer's Plan is a Nonstandardized Plan, the Employer may elect in
its Adoption Agreement to suspend the accrual requirements elected under
Adoption Agreement Section 3.06 if, for any Plan Year beginning after December
31, 1989, the Plan fails to satisfy the Participation Test or the Coverage Test.
<PAGE>
A Plan satisfies the Participation Test if, on each day of the Plan Year, the
number of Employees who benefit under the Plan is at least equal to the lesser
of 50 or 40% of the total number of Includible Employees as of such day. A Plan
satisfies the Coverage Test if, on the last day of each quarter of the Plan
Year, the number of Nonhighly Compensated Employees who benefit under the Plan
si at least equal to 70% of the total number of Includible Nonhighly Compensated
Employees as of such day. "Includible" Employees are all Employees other than:
(1) those Employees excluded from participating in the Plan for the entire Plan
Year by reason of the collective bargaining unit exclusion or the nonresident
alien exclusion under Adoption Agreement Section 1.07 or by reason of the
participation requirements of Sections 2.01 and 2.03; and (2) any Employee who
incurs a Separation from Service during the Plan Year and fails to complete at
least 401 Hours of Service for the Plan Year. A "Nonhighly Compensated Employee"
is an Employee who is not a Highly Compensated Employee and who is not a family
member aggregated with a Highly Compensated Employee pursuant to Section 1.09 of
the Plan.
For purposes of the Participation Test and the Coverage Test, an Employee
is benefiting under the Plan on a particular date if, under Adoption Agreement
Section 3.04, he is entitled to an allocation for the Plan Year. Under the
Participation Test, when determining whether an Employee is entitled to an
allocation under Adoption Agreement Section 3.04, the Advisory Committee will
disregard any allocation required solely by reason of the top heavy minimum
allocation, unless the top heavy minimum allocation is the only allocation made
under the Plan for the Plan Year.
If this Section 3.06(E) applies for a Plan Year, the Advisory Committee
will suspend the accrual requirements for the Includible Employees who are
Participants, beginning first with the Includible Employee(s) employed with the
Employer on the last day of the Plan Year, then the Includible Employee(s) who
have the latest Separation from Service during the Plan Year, and continuing to
suspend in descending order the accrual requirements for each Includible
Employee who incurred an earlier Separation from Service date, until the Plan
satisfies both the Participation Test and the Coverage Test for the plan Year.
If two or more Includible Employees have a Separation from Service on the same
day, the Advisory Committee will suspend the accrual requirements for all such
Includible Employees irrespective of whether the Plan can satisfy the
Participation Test and the Coverage Test by accruing benefits for fewer than all
such Includible Employees. If the Plan suspends the accrual requirements for an
Includible Employee, that Employee will share in the allocation of Employer
contributions and Participant forfeitures, if any, without regard to the number
of Hours of Service he has earned for the Plan Year and without regard to
whether he is employed by the Employer on the last day of the Plan Year. If the
<PAGE>
Employer's Plan includes Employer matching contributions subject to Code
ss.401(m), this suspension of accrual requirements applies separately to the
Code ss.401(m) portion of the Plan, and the Advisory Committee will treat an
Employee as benefiting under that portion of the Plan if he is an Eligible
Employee for purposes of the Code ss.401(m) nondiscrimination test. The Employer
may modify the operation of this Section 3.06(E)k by electing appropriate
modifications in Section 3.06 of its Adoption Agreement.
Part 2. Limitations On Allocations: sections 3.07 through 3.19
[Note: Sections 3.07 through 3.10 apply only to Participants in this Plan
who do not participate, and who have never participated, in another qualified
plan or in a welfare benefit fund (as defined in Code ss.419(3)) maintained by
the Employer.]
3.07 The amount of Annual Additions which the Advisory Committee
may allocate under this Plan on a Participant's behalf for a Limitation
Year may not exceed the Maximum Permissible Amount. If the amount the Employer
otherwise would contribute to the Participant's Account would cause the Annual
Additions for the Limitation Year to exceed the Maximum Permissible Amount, the
Employer will reduce the amount of its contribution so the Annual Additions for
the Limitation Year will equal the Maximum Permissible Amount. If an allocation
of Employer contributions, pursuant to Section 3.04, would result in an Excess
Amount (other than an Excess Amount resulting from the circumstances described
in Section 3.10) to the Participant's Account, the Advisory Committee will
reallocate the Excess Amount to the remaining Participants who are eligible for
an allocation of Employer contributions for the Plan Year in which the
Limitation Year ends. The Advisory Committee will make this reallocation on the
basis of the allocation method under the Plan as if the Participant whose
Account otherwise would receive the Excess Amount is not eligible for an
allocation of Employer contributions.
3.08 Prior to the determination of the Participant's actual
Compensation for a Limitation Year, the Advisory Committee may determine
the Maximum Permissible Amount on the basis of the Participant's estimated
annual Compensation for such Limitation Year. The Advisory Committee must make
this determination on a reasonable and uniform basis for all Participants
similarly situated. The Advisory Committee must reduce any Employer
contributions (including any allocation of forfeitures) based on estimated
annual Compensation by any Excess Amounts carried over from prior years.
3.09 As soon as is administratively feasible after the end of
the Limitation Year, the Advisory Committee will determine the Maximum
Permissible Amount for such Limitation Year on the basis of the Participant's
actual Compensation for such Limitation Year.
<PAGE>
3.10 If, pursuant to Section 3.09, or because of the allocation
of forfeitures, there is an Excess Amount with respect to a Participant for
a Limitation Year, the Advisory Committee will dispose of such Excess Amount as
follows:
(a) The Advisory Committee will return any nondeductible voluntary
Employee contributions to the Participant to the extent the return would
reduce the Excess Amount.
(b) If, after the application of paragraph (a), an Excess Amount
still exists, and the Plan covers the Participant at the end of the
Limitation Year, then the Advisory Committee will use the Excess Amount(s)
to reduce future Employer contributions (including any allocation of
forfeitures) under the plan for the next Limitation Year and for each
succeeding Limitation Year, as is necessary, for the Participant. If the
Employer's Plan is a profit sharing plan, the Participant may elect to
limit his Compensation for allocation purposes to the extent necessary to
reduce his allocation for the Limitation Year to the Maximum Permissible
Amount and eliminate the Excess Amount.
(c) If, after the application of paragraph (a), an Excess Amount
still exists, and the Plan does not cover the Participant at the end of
the Limitation Year, then the Advisory Committee will hold the Excess
Amount unallocated in a suspense account. The Advisory Committee will
apply the suspense account to reduce Employer Contributions (including
allocation of forfeitures) for all remaining Participants in the next
Limitation Year, and in each succeeding Limitation Year if necessary.
Neither the Employer nor any Employee may contribute to the Plan for any
Limitation Year in which the Plan is unable to allocate fully a suspense
account maintained pursuant to this paragraph (c).
(d) The Advisory Committee will not distribute any Excess
Amount(s) to Participants or to former Participants.
[Note: Sections 3.11 through 3.16 apply only to Participants who, in
addition to this Plan, participate in one or more plans (including Paired
Plans), all of which are qualified Master or Prototype defined contribution
plans or welfare benefit funds (as defined in Code ss.419(e)) maintained by the
Employer during the Limitation Year.]
3.11 The amount of Annual Additions which the Advisory Committee may
allocate under this Plan on a Participant's behalf for a Limitation Year may not
exceed the Maximum Permissible Amount, reduced by the sum of any Annual
Additions allocated to the Participant's Accounts for the same Limitation Year
under this Plan and such other defined contribution plan. If the amount the
<PAGE>
Employer otherwise would contribute to the Participant's Account under this Plan
would cause the Annual Additions for the Limitation Year to exceed this
limitation, the Employer will reduce the amount of its contribution so the
Annual Additions under all such plans for the Limitation Year will equal the
Maximum Permissible Amount. If an allocation of Employer contributions, pursuant
to Section 3.04, would result in an Excess Amount (other than an Excess Amount
resulting from the circumstances described in Section 3.10) to the Participant's
Account, the Advisory Committee will reallocate the Excess Amount to the
remaining Participants who are eligible for an allocation of Employer
contributions for the Plan Year in which the Limitation Year ends. The Advisory
Committee will make this reallocation on the basis of the allocation method
under the Plan as if the Participant whose Account otherwise would receive the
Excess Amount is not eligible for an allocation of Employer contributions.
3.12 Prior to the determination of the Participant's actual
Compensation for the Limitation Year, the Advisory Committee may determine
the amounts referred to in 3.11 above on the basis of the Participant's
estimated annual Compensation for such Limitation year. The Advisory Committee
will make this determination on a reasonable and uniform basis for all
Participants similarly situated. The Advisory Committee must reduce any Employer
contribution (including allocation of forfeitures) based on estimated annual
Compensation by any Excess Amounts carried over from prior years.
3.13 As soon as is administratively feasible after the end of the
Limitation Year, the Advisory Committee will determine the amounts referred to
in 3.11 on the basis of the Participant's actual Compensation for such
Limitation Year.
3.14 If pursuant to Section 3.13, or because of the allocation of
forfeitures, a Participant's Annual Additions under this Plan and all such other
plans result in an Excess Amount, such Excess amount will consist of the Amounts
last allocated. The Advisory Committee will determine the Amounts last allocated
by treating the Annual Additions attributable to a welfare benefit fund as
allocated first, irrespective of the actual allocation date under the welfare
benefit fund.
3.15 The Employer must specify in its Adoption Agreement the Excess
amount attributed to this Plan, if the Advisory Committee allocates an
Excess Amount to a Participant on an allocation date of this Plan which
coincides with an allocation date of another plan.
3.16 The Advisory Committee will dispose of an Excess Amounts
attributed to this Plan as provided in Section 3.10.
<PAGE>
[Note: Section 3.17 applies only to Participants who, in addition to this
Plan, participate in one or more qualified plans which are qualified defined
contribution plans other than a Master or Prototype plan maintained by the
Employer during the Limitation Year.]
3.17 SPECIAL ALLOCATION LIMITATION. The amount of Annual Additions
which the Advisory Committee may allocate under this Plan on behalf of any
Participant are limited in accordance with the provisions of Section 3.11
through 3.16, as though the other plan were a Master or Prototype plan, unless
the Employer provides other limitations in an addendum to the Adoption
Agreement, numbered Section 3.17.
3.18 DEFINED BENEFIT PLAN LIMITATION. If the Employer maintains a
defined benefit plan, or has ever maintained a defined benefit plan which
the Employer has terminated, then the sum of the defined benefit plan fraction
and the defined contribution plan fraction for any Participant for any
Limitation Year must not exceed 1.0. The Employer must provide in Adoption
Agreement Section 3.18 the manner in which the plan will satisfy this
limitation. The Employer also must provide in its Adoption Agreement Section
3.18 the manner in which the plan will satisfy the top heavy requirements of
Code ss.416 after taking into account the existence (or prior maintenance) of
the defined benefit plan.
3.19 DEFINITIONS - ARTICLE III. For purposes of Article III, the
following terms mean:
(a) "Annual Addition" - The sum of the following amounts allocated on
behalf of a Participant for a Limitation Year, of (I) all Employer
contributions; (ii) all forfeitures; and (iii) all Employee contributions.
Except to the extent provided in Treasury regulations, Annual Additions
include excess contributions described in Code ss.401(k), excess
contributions described in Code ss.401(m) and excess deferrals described
in Code ss.402(g), irrespective of whether the plan distributes or
forfeits such excess amounts. Annual Additions also include Excess Amounts
reapplied to reduce Employer contributions under Section 3.10. Amounts
allocated after March 31, 1984, to an individual medical account (as
defined in Code 415(l)(2)) included as part of a defined benefit plan
maintained by the Employer are Annual Additions. Furthermore, Annual
Additions include contributions paid or accrued after December 31, 1985,
for taxable years ending after December 31, 1985, attributable to
post-retirement medical benefits allocated to the separate account of a
key employee (as defined in Code ss.419(d)(3)) under a welfare benefit fun
(as defined in Code ss.419(e)) maintained by the Employer.
<PAGE>
(b) "Compensation" - For purposes of applying the limitations of Part
2 of this Article III, "Compensation" means Compensation as defined in
Section 1.12, except Compensation does not include elective
contributions, irrespective of whether the Employer has elected to
include these amounts as Compensation under Section 1.12 of its
Adoption Agreement, and any exclusion selected in Section 1.12 of the
Adoption Agreement (other than the exclusion of elective
contributions) does not apply.
(c) "Employer" - the Employer that adopts this Plan and any related
employers described in Section 1.30. Solely for purposes of applying the
limitations of Part 2 of this Article III, the advisory Committee will
determine related employers described in Section 1.30 by modifying Code
ss.414(b) and (c) in accordance with Code ss.415(h).
(d) "Excess Amount" - The excess of the Participant's Annual
Additions for the Limitation Year over the Maximum Permissible Amount.
(e) "Limitation Year" - The period selected by the Employer under
Adoption Agreement Section 1.17. All qualified plans of the Employer must
use the same Limitation Year. If the Employer amends the Limitation Year
to a different 12 consecutive month period, the new Limitation Year must
begin on a date within the Limitation Year for which the Employer
makes the amendment, creating a short Limitation year.
(f) "Master or Prototype Plan" - A plan the form of which is the
subject of a favorable notification letter or a favorable opinion letter
from the Internal Revenue Service.
(g) "Maximum Permissible Amount" - The lesser of (I) $30,000 (or, if
greater, one-fourth of the defined benefit dollar limitation under Code
ss.415(b)(1)(A)), or (ii) 25% of the Participant's Compensation for the
Limitation Year. If there is a short Limitation Year because of a change
in Limitation Year, the Advisory Committee will multiply the $30,000 (or
adjusted) limitation by the following fraction:
Number of months in the short Limitation Year
---------------------------------------------
12
(h) "Defined contribution plan" - A retirement plan which provides
for an individual account for each participant and for benefits based
solely on the amount contributed to the participant's account, and
any income, expenses, gains and losses, and any forfeitures of
accounts of other participants which the plan may allocate to such
participant's account. The Advisory Committee must treat all defined
<PAGE>
contribution plans (whether or not terminated) maintained by the Employer
as a single plan. Solely for purposes of the limitations of Part 2 of
this Article III, the Advisory Committee will treat employee contributions
made to a defined benefit plan maintained by the Employer as a separate
defined contribution plan. The Advisory Committee also will treat as a
defined contribution plan an individual medical account (as defined in
Code ss.415(l)(2)) included as part of a defined benefit plan maintained
by the Employer and, for taxable years ending after December 31, 1985, a
welfare benefit fund under Code ss.419(e) maintained by the Employer
to the extent there are post-retirement medical benefits allocated to
the separate account of a key employee (as defined in Code
ss.419A(d)(3)).
(I) "Defined benefit plan" - A retirement plan which does not
provide for individual accounts for Employer contributions. The Advisory
Committee must treat all defined benefit plans (whether or not
terminated) maintained by the Employer as a single plan.
[Note: The definitions in paragraphs (j), (k) and (l) apply only if the
limitation described in Section 3.18 applies to the Employer's Plan.]
(j) "Defined benefit plan fraction" -
Projected annual benefit of the Participant under the defined
benefit plan(s)
--------------------------------------------------------------------------
The lesser of (I) 125% (subject to the "100% limitation" in
paragraph (l)) of the
dollar limitation in effect under Code ss.415(b)(l)(A) for the
Limitation Year,
or (ii) 140% of the Participant's average Compensation for his
high three (3) consecutive Years of Service
To determine the denominator of this fraction, the Advisory Committee will
make any adjustment required under Code ss.415(b) and will determine a
Year of Service, unless otherwise provided in an addendum to Adoption
Agreement Section 3.18, as a Plan Year in which the Employee completed at
least 1,000 Hours of Service. The "projected annual benefit" is the annual
retirement benefit (adjusted to an actuarially equivalent straight life
annuity if the plan expresses such benefit in a form other than a straight
life annuity or qualified joint and survivor annuity) of the Participant
under the terms of the defined benefit plan on the assumptions he
continues employment until his normal retirement age (or current age, if
later) as stated in the defined benefit plan, his compensation continues
at the same rate as in effect in the Limitation Year under consideration
until the date of his normal retirement age and all other relevant factors
used to determine benefits under the defined benefit plan remain constant
as of the current Limitation Year for all future Limitation Years.
<PAGE>
Current Accrued Benefit. If the Participant accrued benefits in one or
more defined benefit plans maintained by the Employer which were in
existence on May 6, 1986, the dollar limitation used in the denominator of
this fraction will not be less than the Participant's Current Accrued
Benefit. A Participant's Current Accrued Benefit is the sum of the annual
benefits under such defined benefit plans which the Participant had
accrued as of the end of the 1986 Limitation year (the last Limitation
Year beginning before January 1, 1987), determined without regard to any
change in the terms or conditions of the Plan made after May 5, 1986, and
without regard to any cost of living adjustment occurring after May 5,
1986. This Current Accrued Benefit rule applies only if the defined
benefit plans individually and in the aggregate satisfied the requirements
of Code ss.415 as in effect at the end of the 1986 Limitation Year.
(k) "Defined contribution plan fraction" -
The sum, as of the close of the Limitation Year, of the
Annual Additions to the Participant's Account under the
defined contribution plan(s)
--------------------------------------------------------------------------
The sum of the lesser of the following amounts
determined for the Limitation Year and for each prior
Year of Service with the Employer: (I) 125% (subject to
the "100% limitation" in paragraph (l) of the dollar
limitation in effect under Code ss.415(c)(l)(A) for
the Limitation year (determined without regard to
the special dollar limitations for employee stock ownership
plans), or (ii) 35% of the Participant's Compensation
for the Limitation Year.
For purposes of determining the defined contribution plan
fraction, the Advisory Committee will not recompute Annual Additions in
Limitation Years beginning prior to January 1, 1987, to treat all Employee
contributions as Annual Additions. If the Plan satisfied Code ss.415 for
Limitation Years beginning prior to January 1, 1987, the Advisory
Committee will redetermine the defined contribution plan fraction and the
defined benefit plan fraction as of the end of the 1986 Limitation Year,
in accordance with this Section 3.19. If the sum of the redetermined
fractions exceeds 1.0, the Advisory Committee will subtract permanently
from the numerator of the defined contribution plan fraction an amount
equal to the produce of (l) the excess of the sum of the fractions over
1.0, times (2) the denominator of the defined contribution plan fraction.
In making the adjustment, the Advisory Committee must disregard any
accrued benefit under the defined benefit plan which is in excess of the
Current Accrued Benefit. This Plan continues any transitional rules
<PAGE>
applicable to the determination of the defined contribution plan fraction
under the Employer's Plan as of the end of the 1986 Limitation Year.
(l) "100% limitation."If the 100% limitation applies, the Advisory
Committee must determine the denominator of the defined benefit plan
fraction and the denominator of the defined contribution plan fraction by
substituting 100% for 125%. If the Employer's Plan is a Standardized Plan,
the 100% limitation applies in all Limitation Years, subject to any
override provisions under Section 3.18 of the Employer's Adoption
Agreement. If the Employer overrides the 100% limitation under a
Standardized Plan, the Employer must specify in its Adoption Agreement the
manner in which the Plan satisfies the extra minimum benefit requirement
of Code ss.416(h) and the 100% limitation must continue to apply if the
Plan's top heavy ratio exceeds 90%. If the Employer's Plan is a
Nonstandardized Plan, the 100% limitation applies only if: (I) the Plan's
top heavy ratio exceeds 90%; or (ii) the plan's top heavy ratio is greater
than 60%, and the Employer does not elect in its Adoption Agreement
Section 3.18 to provide extra minimum benefits which satisfy Code
ss.416(h)(2).
ARTICLE IV
PARTICIPANT CONTRIBUTIONS
4.01 PARTICIPANT NONDEDUCTIBLE CONTRIBUTIONS. This Plan does not
permit Participant nondeductible contributions unless the Employer
maintains its Plan under a Code ss.401(k) Adoption Agreement. If the Employer
does not maintain its Plan under a Code ss.401(k) Adoption Agreement and, prior
to the adoption of this Master Plan, the Plan accepted Participant nondeductible
contributions for a Plan Year beginning after December 31, 1986, those
contributions must satisfy the requirements of Code ss.401(m). This Section 4.01
does not prohibit the Plan's acceptance of Participant nondeductible
contributions prior to the first Plan Year commencing after the Plan Year in
which the Employer adopts this Master Plan.
4.02 PARTICIPANT DEDUCTIBLE CONTRIBUTIONS, A qualified Plan may not
accept Participant deductible contributions after April 15, 1987. If the
Employer's Plan includes Participant deductible contributions ("DECs") made
prior to April 16, 1987, the Advisory Committee must maintain a separate
accounting for the Participant's Accrued Benefit attributable to DECs, including
DECs as part of the Participant's accrued Benefit for all purposes of the Plan,
except for purposes of determining the top heavy ratio under Section 1.33. The
Advisory Committee may not use DECs to purchase life insurance on the
Participant's behalf.
<PAGE>
4.03 PARTICIPANT ROLLOVER CONTRIBUTIONS. Any Participant, with the
Employer's written consent and after filing with the Trustee the form prescribed
by the Advisory Committee, may contribute cash or other property to the Trust
other than as a voluntary contribution if the contribution is a "rollover
contribution" which the Code permits an employee to transfer either directly or
indirectly from one qualified plan to another qualified plan. Before accepting a
rollover contribution, the Trustee may require an Employee to furnish
satisfactory evidence that the proposed transfer is in fact a "rollover
contribution" which the Code permits an employee to make to a qualified plan. A
rollover contribution is not an Annual Addition under Part 2 of Article III.
The Trustee will invest the rollover contribution in a segregated
investment Account for the Participant's sole benefit unless the Trustee (or the
Named Fiduciary, in the case of a nondiscretionary Trustee designation), in its
sole discretion, agrees to invest the rollover contribution as part of the Trust
Fund. The Trustee will not have any investment responsibility with respect to a
Participant's segregated rollover Account. The Participant, however, from time
to time, may direct the Trustee in writing as to the investment of his
segregated rollover Account in property, or property interest, of any kind,
real, personal or mixed; provided however, the Participant may not direct the
Trustee to make loans to his Employer. A Participant's segregated rollover
Account alone will bear any extraordinary expenses resulting from investments
made at the direction of the Participant. As of the Accounting Date (or other
valuation date) for each Plan Year, the Advisory Committee will allocate and
credit the net income (or net loss) from a Participant's segregated rollover
Account and the increase or decrease in the fair market value of the assets of a
segregated rollover Account solely to that Account. The Trustee is not liable
nor responsible for any loss resulting to any Beneficiary, nor to any
Participant, by reason of any sale or investment made or other action taken
pursuant to and in accordance with the direction of the Participant. In all
other respects, the Trustee will hold, administer and distribute a rollover
contribution in the same manner as any Employer contribution made to the Trust.
An eligible Employee, prior to satisfying the Plan's eligibility
conditions, may make a rollover contribution to the Trust to the same extent and
in the same manner as a Participant If an Employee makes a rollover contribution
to the Trust prior to satisfying the plan's eligibility conditions, the Advisory
Committee and Trustee must treat the Employee as a Participant for all purposes
of the plan except the Employee is not a participant for purposes of sharing in
Employer contributions or Participant forfeitures under the Plan until he
actually becomes a Participant in the Plan. If the Employee has a Separation
<PAGE>
from Service prior to becoming a Participant, the Trustee will distribute his
rollover contribution Account to him as if it were an Employer contribution
Account.
4.04 PARTICIPANT CONTRIBUTION - FORFEITABILITY. A Participant's
Accrued Benefit is, at all times, 100% Nonforfeitable to the extent the
value of his Accrued Benefit is derived from his Participant contributions
described in this Article IV.
4.05 PARTICIPANT CONTRIBUTION - WITHDRAWAL/DISTRIBUTION. A
Participant, by giving prior written notice to the Trustee, may withdraw
all or any part of the value of his Accrued Benefit derived from his Participant
contributions described in this Article IV. A distribution of Participant
contributions must comply with the joint and survivor requirements described in
Article VI, if those requirements apply to the Participant. A Participant my not
exercise his right to withdraw the value of his Accrued Benefit derived from his
Participant contributions more than once during any Plan Year. The Trustee, in
accordance with the direction of the advisory Committee, will distribute a
Participant's unwithdrawn Accrued Benefit attributable to his Participant
contributions in accordance with the provisions of Article VI applicable to the
distribution of the Participant's Nonforfeitable Accrued Benefit.
4.06 PARTICIPANT CONTRIBUTION - ACCRUED BENEFIT. The Advisory
Committee must maintain a separate Account(s) in the name of each
Participant to reflect the Participant's Accrued Benefit under the Plan derived
from his Participant contributions. A Participant's Accrued Benefit derived from
his Participant contributions as of any applicable date is the balance of his
separate Participant contribution Account(s).
ARTICLE V
TERMINATION OF SERVICE -
PARTICIPANT VESTING
5.01 NORMAL RETIREMENT AGE. The Employer must define Normal Retirement
Age in its Adoption Agreement. A Participant's Accrued Benefit derived from
Employer contribution is 100% Nonforfeitable upon and after his attaining Normal
Retirement Age (if employed by the Employer on or after that date).
5.02 PARTICIPANT DISABILITY OR DEATH. The Employer may elect in its
Adoption Agreement to provide a Participant's Accrued Benefit derived from
Employer contributions will be 100% Nonforfeitable if the Participant's
Separation from Service is a result of his death or his disability.
5.03 VESTING SCHEDULE. Except as provided in Sections 5.01 and 5.02,
for each Year of Service, a Participant's Nonforfeitable percentage of his
Accrued Benefit derived from Employer contributions equals the percentage in the
vesting schedule completed by the Employer in its Adoption Agreement.
<PAGE>
(A) Election of Special Vesting Formula. If the Trustee makes a
distribution (other than a cash-out distribution described in Section 5.04) to a
partially-vested Participant, and the Participant has not incurred a Forfeiture
Break in Service at the relevant time, the Advisory Committee will establish a
separate Account for the Participant's Accrued Benefit. At any relevant time
following the distribution, the Advisory Committee will determine the
Participant's Nonforfeitable Accrued Benefit derived from Employer contributions
in accordance with the following formula:
P(AB+(RxD))-(RxD).
To apply this formula, "P" is the Participant's current vesting percentage
at the relevant time, "AB" is the Participant's Employer- derived Accrued
Benefit at the relevant time, "R" is the ratio of "AB" to the Participant's
Employer-derived Accrued Benefit immediately following the earlier distribution
and "D" is the amount of the earlier distribution. If, under a restated Plan,
the Plan has made distribution to a partially-vested Participant prior to its
restated Effective date and is unable to apply the cash-out provisions of
Section 5.04 to that prior distribution, this special vesting formula also
applies to that Participant's remaining Account. The Employer, in an addendum to
its Adoption Agreement, numbered Section 5.03, may elect to modify this formula
to read as follows: P(AB+D)-D.
5.04 CASH-0UT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANT/
RESTORATION OF FORFEITED ACCRUED BENEFIT. If, pursuant to Article VI, a
partially-vested Participant receives a cash-out distribution before he incurs a
Forfeiture Break in Service (as defined in Section 5.08), the cash-out
distribution will result in an immediate forfeiture of the nonvested portion of
the Participant's Accrued Benefit derived from Employer contributions. See
Section 5.09. A partially-vested Participant is a Participant whose
Nonforfeitable Percentage determined under Section 5.03 is less than 100%. A
cash-out distribution is a distribution of the entire present value of the
Participant's Nonforfeitable Accrued Benefit.
(A) Restoration and Conditions upon Restoration. A partially-
vested Participant who is re-employed by the Employer after receiving a
cash-out distribution of the Nonforfeitable percentage of his Accrued Benefit
may repay the Trustee the amount of the cash-out distribution attributable to
Employer contributions, unless the Participant no longer has a right to
restoration by reason of the conditions of this Section 5.04(A). If a
partially-vested Participant makes the cash-out distribution repayment, the
Advisory Committee, subject to the conditions of this Section 5.04(A), must
restore his Accrued Benefit attributable to Employer contributions to the same
dollar amount as the dollar amount of his Accrued Benefit on the accounting
Date, or other valuation date, immediately preceding the date of the cash-our
<PAGE>
distribution, unadjusted for any gains or losses occurring subsequent to
that Accounting Date, or other valuation date. Restoration of the Participant's
Accrued Benefit includes restoration of all Code ss.411(d)(6) protected benefits
with respect to that restored Accrued Benefit, in accordance with applicable
Treasury regulations. The Advisory Committee will not restore a reemployed
Participant's Accrued Benefit under this paragraph if:
(1) 5 years have elapsed since the Participant's first re- employment
date with the Employer following the cash-out distribution; or
(2) The Participant incurred a Forfeiture Break in Service (as
defined in Section 5.08). This condition also applies if the
Participant makes repayment within the Plan Year in which he incurs the
Forfeiture Break in Service and that Forfeiture Break in Service would
result in a complete forfeiture of the amount the Advisory Committee
otherwise would restore.
(B) Time and Method of Restoration. If neither of the two conditions
preventing restoration of the Participant's Accrued Benefit applies, the
Advisory Committee will restore the Participant's Accrued Benefit as of the Plan
Year Accounting Date coincident with or immediately following the repayment. To
restore the Participant's Accrued Benefit, the advisory Committee, to the extent
necessary, will allocate to the Participant's Account:
(1) First, the amount, if any, of Participant forfeitures the
Advisory Committee would otherwise allocate under Section 3.05;
(2) Second, the amount, if any, of the Trust Fund net income or gain
for the Plan Year; and
(3) Third, the Employer contribution for the Plan Year to the extent
made under a discretionary formula.
In an addendum to its Adoption Agreement numbered 5.04(B), the Employer
may eliminate as a means of restoration any of the amounts described in clauses
(1), (2) and (3) or may change the order or priority of these amounts. To the
extent the amounts described in clauses (1), (2) and (3) are insufficient to
enable the Advisory Committee to make the required restoration, the Employer
must contribute, without regard to any requirement or condition of Section 3.01,
the additional amount necessary to enable the Advisory Committee to make the
required restoration. If, for a particular Plan Year, the Advisory Committee
must restore the Accrued Benefit of more than one re-employed Participant, then
the Advisory Committee will make the restoration allocations to each such
Participant's Account in the same proportion that a Participant's restored
amount for the Plan Year bears to the restored amount for the Plan Year of all
re-employed Participants.
<PAGE>
The Advisory Committee will not take into account any allocation under this
Section 5.04 in applying the limitation on allocations under Part 2 of Article
III.
(C) 0% Vested Participant. The Employer must specify in its
Adoption Agreement whether the deemed cash-out rule applies to a 0% vested
Participant. A 0% vested Participant is a Participant whose Accrued Benefit
derived from Employer contributions is entirely forfeitable at the time of his
Separation from Service. If the Participant's Account is not entitled to an
allocation of Employer contributions for the Plan Year in which he has a
Separation from Service, the Advisory Committee will apply the deemed cash-out
rule as if the 0% vested Participant received a cash-out distribution on the
date of the Participant's Separation from Service. If the Participant's Account
is entitled to an allocation of Employer contributions or Participant
forfeitures for the Plan Year in which he has a Separation from Service, the
Advisory Committee will apply the deemed cash-out rule as if the 0% vested
Participant received a cash-out distribution on the first day of the first Plan
Year beginning after his Separation from Service. For purposes of applying the
restoration provisions of this Section 5.04, the Advisory Committee will treat
the 0% vested Participant as repaying his cash-out "distribution" on the first
date of his re-employment with the Employer. If the deemed cash-out rule does
not apply to the Employer's Plan a 0% vested Participant will not incur a
forfeiture until he incurs a Forfeiture Break in Service.
5.05 SEGREGATED ACCOUNT FOR REPAID AMOUNT. Until the Advisory
Committee restores the Participant's Accrued Benefit, as described in
Section 5.04, the Trustee will invest the cash-out amount the Participant has
repaid in a segregated Account maintained solely for that Participant. The
Trustee must invest the amount in the Participant's segregated Account in
Federally insured interest bearing savings account(s) or time deposit(s) (or a
combination of both), or in other fixed income investments. Until commingled
with the balance of the Trust Fund on the date the Advisory Committee restores
the Participant's Accrued Benefit, the Participant's segregated Account remains
a part of the Trust, but it alone shares in any income it earns and it alone
bears any expense or loss it incurs. Unless the repayment qualifies as a
rollover contribution, the Advisory Committee will direct the Trustee to repay
to the Participant as soon as is administratively practicable the full amount of
the Participant's segregated Account if the Advisory Committee determines either
of the conditions of Section 5.04(A) prevents restoration as of the applicable
Accounting Date, notwithstanding the Participant's repayment.
5.06 YEAR OF SERVICE - VESTING. For purposes of vesting under
Section 5.03, Year of Service means any 12-consecutive month period
designated in the Employer's Adoption Agreement during which an Employee
completes not less than the number of Hours of Service (not exceeding 1,000)
specified in the Employer's Adoption Agreement. A Year of Service includes any
Year of Service earned prior to the Effective Date of the Plan, except as
provided in Section 5.08.
<PAGE>
5.07 BREAK IN SERVICE - VESTING. For purposes of this Article V, a
Participant incurs a "Break in Service" if during any vesting computation period
he does not complete more than 500 Hours of Service. If, pursuant to Section
5.06, the Plan does not require more than 500 Hours of Service to receive credit
for a Year of Service, a Participant incurs a Break in Service in a vesting
computation period in which he fails to complete a Year of Service.
5.08 INCLUDED YEARS OF SERVICE - VESTING. For purposes of determining
"Years of Service" under Section 5.06, the Plan takes into account all Years of
Service an Employee completes with the Employer except:
(a) For the sole purpose of determining a Participant's Non-
forfeitable percentage of his Accrued Benefit derived from Employer
contributions which accrued for his benefit prior to a Forfeiture Break
in Service, the Plan disregards any Year of Service after the
Participant first incurs a Forfeiture Break in Service. the Participant
incurs a Forfeiture Break in Service when he incurs 5 consecutive Breaks
in Service.
(b) The Plan disregards any Year of Service excluded under
the Employer's Adoption Agreement.
The Plan does not apply the Break in Service rule under Code
ss.411(a)(6)(B). Therefore, an Employee need not complete a Year of Service
after a Break in Service before the Plan takes into account the Employee's
otherwise includible Years of Service under this Article V.
5.09 FORFEITURE OCCURS. A Participant's forfeiture, if any, of his
Accrued Benefit derived from Employer contributions occurs under the Plan
on the earlier of:
(a) The last day of the vesting computation period in which the
Participant first incurs a Forfeiture Break in Service; or
(b) The date the Participant receives a cash-out distribution.
The Advisory Committee determines the percentage of a Participant's
Accrued Benefit forfeiture, if any, under this Section 5.09 solely by reference
to the vesting schedule of Section 5.03. A Participant does not forfeit any
portion of his Accrued Benefit for any other reason or cause except as expressly
provided by this Section 5.09 or as provided under Section 9.14.
<PAGE>
ARTICLE VI
TIME AND METHOD OF PAYMENT OF BENEFITS
6.01 TIME AND METHOD OF PAYMENT OF BENEFITS Unless, pursuant to
Section 6.03, the Participant or the Beneficiary elects in writing to a
different time or method of payment, the Advisory Committee will direct the
Trustee to commence distribution of a Participant's Nonforfeitable Accrued
Benefit in accordance with this Section 6.01. A Participant must consent, in
writing, to any distribution required under this Section 6.01 if the present
value of the Participant's Nonforfeitable Accrued Benefit, at the time of the
distribution to the Participant, exceeds $3,500 and the Participant has not
attained the later of Normal Retirement Age or age 62. Furthermore, the
Participant's spouse also must consent, in writing, to any distribution, for
which Section 6.04 requires the spouse's consent. For all purposes of this
Article VI, the term "annuity starting date" means the first day of the first
period for which the Plan pays an amount as an annuity or in any other form. A
distribution date under this Article VI, unless otherwise specified within the
Plan, is the date or dates the Employer specifies in the Adoption Agreement, or
as soon as administratively practicable following that distribution date. For
purposes of the consent requirements under this Article VI, if the present value
of the Participant's Nonforfeitable Accrued Benefit, at the time of any
distribution, exceeds $3,500, the Advisory Committee must treat that present
value as exceeding $3,500 for purposes of all subsequent Plan distributions to
the Participant.
(A) Separation from Service For a Reason Other Than Death.
(1) Participant's Nonforfeitable Accrued Benefit Not Exceeding
$3,500. If the Participant's Separation from Service is for nay reason
other than death, the Advisory Committee will direct the Trustee to distribute
the Participant's Nonforfeitable Accrued Benefit in a lump sum, on the
distribution date the Employer specifies in the Adoption Agreement, but in no
event later than the 60th day following the close of the Plan Year in which the
Participant attains Normal Retirement Age. If the Participant has attained
Normal Retirement Age at the time of his Separation from Service, the
distribution under this paragraph will occur no later than the 60th day
following the close of the Plan Year in which the Participant's Separation from
Service occurs.
(2) Participant's Nonforfeitable Accrued Benefit Exceeds $3,500.
If the Participant's Separation from Service is for any reason other than
death, the Advisory Committee will direct the Trustee to commence distribution
of the Participant's Nonforfeitable Accrued Benefit in a form and at the time
<PAGE>
elected by the Participant, pursuant to Section 6.03. In the absence of an
election by the Participant, the Advisory Committee will direct the Trustee to
distribute the Participant's Nonforfeitable Accrued Benefit in a lump sum (or,
if applicable, the normal annuity form of distribution required under Section
6.04), on the 60th day following the close of the Plan Year in which the latest
of the following events occurs: (a) the Participant attains Normal Retirement
Age; (b) the Participant attains age 62; or (c) the Participant's Separation
from Service.
(3) Disability. If the Participant's Separation from Service is
because of his disability, the Advisory Committee will direct the Trustee
to pay the Participant's Nonforfeitable Accrued Benefit in lump sum, on the
distribution date the Employer specifies in the Adoption Agreement, subject to
the notice and consent requirements of this Article VI and subject to the
applicable mandatory commencement dates described in Paragraphs (1) and (2).
(4) Hardship. Prior to the time at which the Participant may
receive distribution under Paragraphs (1), (2) or (3), the Participant may
request a distribution from his Nonforfeitable Accrued Benefit in an amount
necessary to satisfy a hardship, if the Employer elects in the Adoption
Agreement to permit hardship distributions. Unless the Employer elects otherwise
in the Adoption Agreement, a hardship distribution must be on account of any of
the following: (a) medical expenses; (b) the purchase (excluding mortgage
payments) of the Participant's principal residence; (c) post-secondary education
tuition, for the next semester or quarter, for the Participant or for the
Participant's spouse, children or dependents; (d) to prevent the eviction of the
Participant from his principal residence or the foreclosure on the mortgage of
the Participant's principal residence; (e) funeral expenses of the Participant's
family member; or (f) the Participant's disability. A partially-vested
Participant may not receive a hardship distribution described in this Paragraph
(A)(4) prior to incurring a Forfeiture Break in Service, unless the hardship
distribution is a cash-out distribution (as defined in Article V). The Advisory
Committee will direct the Trustee to make the hardship distribution as soon as
administratively practicable after the Participant makes a valid request for the
hardship distribution.
(B) Required Beginning Date. If any distribution commencement date
described under Paragraph (A) of this Section 6.01, either by Plan provision or
by Participant election (or nonelection), is later than the Participant's
Required Beginning Date, the Advisory Committee instead must direct the Trustee
to make distribution on the Participant's Required Beginning Date, subject to
the transitional election, if applicable, under Section 6.03(D). A Participant's
Required Beginning Date is the April 1 following the close of the calendar year
in which the Participant attains age 70 1/2. However, if the Participant, prior
<PAGE>
to incurring a Separation from Service, attained age 70 1/2 by January 1,
1988, and, for the five Plan Year period ending in the calendar year in which he
attained age 70 1/2 and for all subsequent years, the Participant was not a more
than 5% owner, the Required Beginning Date is the April 1 following the close of
the calendar year in which the Participant separates from Service or, if
earlier, the April 1 following the close of the calendar year in which the
Participant becomes a more than 5% owner. Furthermore, if a Participant who was
not a more than 5% owner attained age 70 1/2 during 1988 and did not incur a
Separation from Service prior to January 1, 1989, his Required Beginning Date is
April 1, 1990. A mandatory distribution at the Participant's Required Beginning
Date will be in lump sum (or, if applicable, the normal annuity form of
distribution required under Section 6.04) unless the Participant, pursuant to
the provisions of this Article VI, makes a valid election to receive an
alternative form of payment.
(C) Death of the Participant. The Advisory Committee will direct the
Trustee, in accordance with this Section 6.01(C), to distribute to the
Participant's Beneficiary the Participant's Non- forfeitable Accrued Benefit
remaining in the Trust at the time of the Participant's death. Subject tot he
requirements of Section 6.04, the Advisory Committee will determine the death
benefit by reducing the Participant's Nonforfeitable Accrued Benefit by any
security interest the Plan has against that Nonforfeitable Accrued Benefit by
reason of an outstanding Participant loan.
(1) Deceased Participant's Nonforfeitable Accrued Benefit Does Not
Exceed $3,500. The Advisory Committee, subject to the requirements of
Section 6.04, must direct the Trustee to distribute the deceased Participant's
Nonforfeitable Accrued Benefit in a single sum, as soon as administratively
practicable following the Participant's death or, if later, the date on which
the Advisory Committee receives notification of or otherwise confirms the
Participant's death.
(2) Deceased Participant's nonforfeitable Accrued Benefit Exceeds
$3,500. The Advisory Committee will direct the Trustee to distribute the
deceased Participant's Nonforfeitable Accrued Benefit at the time and in the
form elected by the Participant or, if applicable by the Beneficiary, as
permitted under this Article VI. In the absence of an election, subject to the
requirements of Section 6.04, the Advisory Committee will direct the Trustee to
distribute the Participant's undistributed Nonforfeitable Accrued Benefit in a
lump sum on the first distribution date following the close of the Plan Year in
which the Participant's death occurs or, if later, the first distribution date
following the date the Advisory Committee receives notification of or otherwise
confirms the Participant's death.
<PAGE>
If the death benefit is payable in full to the Participant's surviving
spouse, the surviving spouse, in addition to the distribution options provided
in this Section 6.01(C), may elect distribution at any time or in any form
(other than a joint and survivor annuity) this Article VI would permit for a
Participant.
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. Subject to the annuity
distribution requirements, if any, prescribed by Section 6.04, and any
restrictions prescribed by Section 6.03, a Participant or Beneficiary may elect
distribution under one, or any combination, of the following methods: (a) by
payment in a lump sum; or (b) by payment in monthly, quarterly or annual
installments over a fixed reasonable period of time, not exceeding the life
expectancy of the Participant, or the joint life and last survivor expectancy of
the Participant and his Beneficiary. The Employer may elect in its Adoption
Agreement to modify the methods of payment available under this Section 6.02.
The distribution options permitted under this Section 6.02 are available
only if the present value of the Participant Nonforfeitable Accrued Benefit, at
the time of the distribution to the Participant, exceeds $3,500. To facilitate
installment payments under this Article VI, the Advisory Committee may direct
the Trustee to segregate all or any part of the Participant's Accrued Benefit in
a separate Account. The Trustee will invest the Participant's segregated Account
in Federally insured interest bearing savings account(s) or time deposit(s) (or
a combination of both), or in other fixed income investments. A segregated
Account remains a part of the Trust, but it alone shares in any income it earns,
and it alone bears any expense or loss it incurs. A Participant or Beneficiary
may elect to receive an installment distribution in the form of a
Nontransferable Annuity Contract. Under an installment distribution, the
Participant or beneficiary, at any time, may elect to accelerate the payment of
all, or any portion, of the Participant's unpaid Nonforfeitable Accrued Benefit,
subject to the requirements of Section 6.04.
(A) Minimum Distribution Requirements for Participants. The
Advisory Committee may not direct the Trustee to distribute the
Participant's Nonforfeitable Accrued Benefit, nor may the Participant elect to
have the Trustee distribute his Nonforfeitable Accrued Benefit, under a method
of payment which, as of the Required Beginning Date, does not satisfy the
minimum distribution requirements under Code ss.401(a)(9) and the applicable
Treasury regulations. The minimum distribution for a calendar year equals the
Participant's Nonforfeitable Accrued Benefit as of the latest valuation date
preceding the beginning of the calendar year divided by the Participant's life
expectancy or, if applicable, the joint and last survivor expectancy of the
Participant and his designated Beneficiary (as determined under Article VIII,
subject to the requirements of the Code ss.(a)(9) regulations). The Advisory
<PAGE>
Committee will increase the Participant's Nonforfeitable Accrued Benefit,
as determined on the relevant valuation date, for contributions or forfeitures
allocated after the valuation date and by December 31 of the valuation calendar
year, and will decrease the valuation by distributions made after the valuation
date and by December 31 of the valuation calendar year. For purposes of this
valuation, the Advisory Committee will treat any portion of the minimum
distribution for the first distribution calendar year made after the close of
that year as a distribution occurring in that first distribution calendar year.
In computing a minimum distribution, the Advisory Committee must use the unisex
life expectancy multiples under Treas. Reg. ss.1.72-0. The Advisory Committee,
only upon the Participant's written request, will compute the minimum
distribution for a calendar year subsequent to the first calendar year for which
the Plan requires a minimum distribution by redetermining the applicable life
expectancy. However, the Advisory Committee may not redetermine the joint life
and last survivor expectancy of the Participant and a nonspouse designated
Beneficiary in a manner which takes into account any adjustment to a life
expectancy other than the Participant's life expectancy.
If the Participant's spouse is not his designated Beneficiary, a method of
payment to the Participant (whether by Participant election or by Advisory
Committee direction) may not provide more than incidental benefits to the
Beneficiary. For Plan Years beginning after December 31, 1988, the Plan must
satisfy the minimum distribution incidental benefit ("MDIB") requirement in the
treasury regulations issued under Code ss.401(a)(9) for distributions made on or
after the Participant's Required Beginning Date and before the Participant's
death. To satisfy the MDIB requirement, the Advisory Committee will compute the
minimum distribution required by this Section 6.02(A) by substituting the
applicable MDIB divisor for the applicable life expectancy factor, if the MDIB
divisor is a lesser number. Following the Participant's death, the Advisory
Committee will compute the minimum distribution required by this Section 6.02(A)
solely on the basis of the applicable life expectancy factor and will disregard
the MDIB factor. For Plan Years beginning prior to January 1, 1989, the Plan
satisfies the incidental benefits requirement if the distributions to the
Participant satisfied the MDIB requirement or if the present value of the
retirement benefits payable solely to the Participant is greater than 50% of the
present value of the total benefits payable to the Participant and his
Beneficiaries. The Advisory Committee must determine whether benefits to the
Beneficiary are incidental as of the date the Trustee is to commence payment of
the retirement benefits to the Participant, or as of any date the Trustee
redetermines the payment period to the Participant.
<PAGE>
The minimum distribution for the first distribution calendar year is due by
the Participant's Required Beginning Date. The minimum distribution for each
subsequent distribution calendar year, including the calendar year in which the
Participant's Required Beginning Date occurs, is due to by December 31 of that
year. If the Participant receives distribution in the form of a Nontransferable
Annuity Contract, the distribution satisfies this Section 6.01(A) if the
contract complies with the requirements of Code ss.401(a)(9) and the applicable
Treasury regulations.
(B) Minimum Distribution Requirements for Beneficiaries. The
method of distribution to the Participant's Beneficiary must satisfy Code
ss.401(a)(9) and the applicable Treasury regulations. If the Participant's death
occurs after his Required Beginning Date of, if earlier, the date the
Participant commences an irrevocable annuity pursuant to Section 6.04, the
method of payment to the Beneficiary must provide for completion of payment over
a period which does not exceed the payment period which had commenced for the
Participant. If the Participant's death occurs prior to his Required Beginning
Date, and the Participant had not commenced an irrevocable annuity pursuant to
Section 6.04, the method of payment to the Beneficiary, subject to Section 6.04,
must provide for completion of payment to the Beneficiary over a period not
exceeding: (I) 5 years after the date of the Participant's death; or (ii) if the
Beneficiary is a designated Beneficiary, the designated Beneficiary's life
expectancy. The Advisory Committee may not direct payment of the Participant's
Nonforfeitable Accrued Benefit over a period described in clause (ii) unless the
Trustee will commence payment to the designated Beneficiary no later than the
December 31 following the close of the calendar year in which the Participant's
death occurred or, if later, and the designated Beneficiary is the Participant's
surviving spouse, December 31 of the calendar year in which the Participant
would have attained age 70 1/2. If the Trustee will make distribution in
accordance with clause (ii), the minimum distribution for a calendar year equals
the Participant's Nonforfeitable Accrued Benefit as of the latest valuation date
preceding the beginning of the calendar year divided by the designated
Beneficiary's life expectancy. The Advisory Committee must use the unisex life
expectancy multiples under Treas. Reg. ss.1.72-9 for purposes of applying this
paragraph. The Advisory Committee, only upon the written request of the
Participant or of the Participant's surviving spouse, will recalculate the life
expectancy of the Participant's surviving spouse not more frequently than
annually, but may not recalculate the life expectancy of a nonspouse designated
Beneficiary after the Trustee commences payment to the designated Beneficiary.
The Advisory Committee will apply this paragraph by treating any amount paid to
the Participant's child, which becomes payable to the Participant's surviving
spouse upon the child's attaining the age of majority, as paid to the
Participant's surviving spouse. Upon the beneficiary's written request, the
Advisory Committee must direct the Trustee to accelerate payment of all, or
any portion, of the Participant's unpaid Accrued Benefit, as soon as
administratively practical following the effective date of that request.
<PAGE>
6.03 BENEFIT PAYMENT ELECTIONS. Not earlier than 90 days, but not
later than 30 days, before the Participant's annuity starting date, the
advisory Committee must provide a benefit notice to a Participant who is
eligible to make an election under this Section 6.03. The benefit notice must
explain the optional forms of benefit in the Plan, including the material
features and relative values of those options, and the Participant's right to
defer distribution until he attains the later of Normal Retirement Age or age
62.
If a Participant or Beneficiary makes an election prescribed by this
Section 6.03, the Advisory Committee will direct the Trustee to distribute the
Participant's Nonforfeitable Accrued Benefit in accordance with that election.
Any election under this Section 6.03 is subject to the requirements of Section
6.02 and of Section 6.04. The Participant or Beneficiary must make an election
under this Section 6.03 by filing his election with the advisory Committee at
any time before the Trustee otherwise would commence to pay a Participant's
Accrued Benefit in accordance with the requirements of Article VI.
(A) Participant Elections After Separation from Service. If the present
value of a Participant's Nonforfeitable Accrued Benefit exceeds $3,500, he may
elect to have the Trustee commence distribution as of any distribution date
permitted under the Employer's Adoption Agreement Section 6.03. The Participant
may reconsider an election at any time prior to the annuity starting date and
elect to commence distribution as of any other distribution date permitted under
the Employer's Adoption Agreement Section 6.03. If the Participant is
partially-vested in his Accrued Benefit, an election under this Paragraph (A) to
distribute prior to the Participant's incurring a Forfeiture Break in Service
(as defined in Section 5.08), must be in the form of a cash-out distribution (as
defined in Article V). A Participant may not receive a cash-out distribution if,
prior to the time the Trustee actually makes the cash-out distribution, the
Participant returns to employment with the Employer. Following his attainment of
Normal Retirement Age, a Participant who has separated from Service may elect
distribution as of any distribution date, irrespective of the elections under
Adoption Agreement Section 6.03.
(B) Participant Elections Prior to Separation from Service. The Employer
must specify in its Adoption Agreement the distribution election rights, if any,
a Participant has prior to his Separation from Service. A Participant must make
an election under this Section 6.03(B) on a form prescribed by the Advisory
Committee at any time during the Plan Year for which his election is to be
effective. In his written election, the Participant must specify the percentage
<PAGE>
or dollar amount he wishes the Trustee to distribute to him. The
Participant's election relates solely to the percentage or dollar amount
specified in his election form and his right to elect to receive an amount, if
any, for a particular Plan Year greater than the dollar amount or percentage
specified in his election form terminates on the Accounting Date. The Trustee
must make a distribution to a Participant in accordance with his election under
this Section 6.03(B) within the 90 day period (or as soon as administratively
practicable) after the Participant files his written election with the Trustee.
The Trustee will distribute the balance of the Participant's Accrued Benefit not
distributed pursuant to his election(s) in accordance with the other
distribution provisions of this Plan.
(C) Death Benefit Elections. If the present value of the
deceased Participant's Nonforfeiture Accrued Benefit exceeds $3,500, the
Participant's Beneficiary may elect to have the Trustee distribute the
Participant's Nonforfeitable Accrued Benefit in a form and within a period
permitted under Section 6.02. The Beneficiary's election is subject to any
restrictions designated in writing by the Participant and not revoked as of his
date of death.
(D) Transitional Elections. Notwithstanding the provisions of
Sections 6.01 and 6.02, if the Participant (or Beneficiary) signed a
written distribution designation prior to January 1, 1984, the Advisory
Committee must distribute the Participant's Nonforfeitable Accrued Benefit in
accordance with that designation, subject however, to the survivor requirements,
if applicable, of Sections 6.04, 6.05 and 6.06. This Section 6.03(D) does not
apply to a pre-1984 distribution designation, and the Advisory Committee will
not comply with that designation, if any of the following applies: (1) the
method of distribution would have disqualified the Plan under Code ss.401(a)(9)
as in effect on December 31, 1983; (2) the Participant did not have an Accrued
Benefit as of December 31, 1983; (3) the distribution designation does not
specify the timing and form of the distribution and the death Beneficiaries (in
order of priority); (4) the substitution of a Beneficiary modifies the payment
period of the distribution; or, (5) the Participant (or Beneficiary) modifies or
revokes the distribution designation. In the event of a revocation, the Plan
must distribute, no later than December 31 of the calendar year following the
year of revocation, the amount which the Participant would have received under
Section 6.02(A) if the distribution designation had not been in effect or, if
the Beneficiary revokes the distribution designation, the amount which the
Beneficiary would have received under Section 6.02(B) if the distribution
designation had not been in effect. The Advisory Committee will apply this
Section 6.03(D) to rollovers and transfers in accordance with Part J of the Code
ss.401(a)(9) Treasury regulations.
<PAGE>
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES.
(a) Joint and Survivor Annuity. The Advisory Committee must direct
the Trustee to distribute a married or unmarried Participant's
Nonforfeitable Accrued Benefit in the form of a qualified joint and survivor
annuity, unless the Participant makes a valid waiver election (described in
Section 6.05) within the 90 day period ending on the annuity starting date. If,
as of the annuity starting date, the Participant is married, a qualified joint
and survivor annuity is an immediate annuity which is purchasable with the
Participant's Nonforfeitable Accrued Benefit and which provides a life annuity
for the Participant and a survivor annuity payable for the remaining life of the
Participant's surviving spouse equal to 50% of the amount of the annuity payable
during the life of the Participant. If, as of the annuity starting date, the
Participant is not married, a qualified joint and survivor annuity is an
immediate life annuity for the Participant which is purchasable with the
Participant's Nonforfeitable Accrued Benefit. On or before the annuity starting
date, the Advisory Committee, without Participant or spousal consent, must
direct the Trustee to pay the Participant's Nonforfeitable Accrued Benefit in a
lump sum, in lieu of a qualified joint and survivor annuity, in accordance with
Section 6.01, if the Participant's Nonforfeitable Accrued Benefit is not grater
than $3,500. This Section 6.04(A) applies only to a Participant who has
completed at least one Hour of Service with the Employer after August 22, 1984.
(B) Preretirement Survivor Annuity. If a married Participant dies
prior to his annuity starting date, the Advisory Committee will direct the
Trustee to distribute a portion of the Participant's Nonforfeitable Accrued
Benefit to the Participant's surviving spouse in the form of a preretirement
survivor annuity, unless the Participant has a valid waiver election (as
described in Section 6.06) in effect, or unless the Participant and his spouse
were not married throughout the one year period ending on the date of his death.
A preretirement survivor annuity is an annuity which is purchasable with 50% of
the Participant's Nonforfeitable Accrued Benefit (determined as of the date of
the Participant's death) and which is payable for the life of the Participant's
surviving spouse. The value of the preretirement survivor annuity is
attributable to Employer contributions and to Employee contributions in the same
proportion as the Participant's Nonforfeitable Accrued Benefit is attributable
to those contributions. The portion of the Participant's Nonforfeitable Accrued
Benefit not payable under this paragraph is payable to the Participant's
Beneficiary, in accordance with the other provisions of this Article VI. If the
present value of the preretirement survivor annuity does not exceed $3,500, the
Advisory Committee, on or before the annuity starting date, must direct the
Trustee to make a lump sum distribution to the Participant's surviving spouse,
in lieu of a preretirement survivor annuity. This Section 6.04(B) applies only
<PAGE>
to a Participant who dies after August 22, 1984, and either (I) completes
at least one Hour of Service with the Employer after August 22, 1984, or (ii)
separated from Service with at least 10 Years of Service (as defined in Section
5.06) and completed at least one Hour of Service with the Employer in a Plan
Year beginning after December 31, 1975.
(C) Surviving Spouse Elections. If the present value of the
preretirement survivor annuity exceeds $3,500, the Participant's surviving
spouse may elect to have the Trustee commence payment of the preretirement
survivor annuity at any time following the date of the Participant's death, but
not later than the mandatory distribution periods described in Section 6.02, and
may elect any of the forms of payment described in Section 6.02, in lieu of the
preretirement survivor annuity. In the absence of an election by the surviving
spouse, the Advisory Committee must direct the Trustee to distribute the
preretirement survivor annuity on the first distribution date following the
close of the Plan Year in which the latest of the following events occurs: (I)
the Participant's death; (ii) the date the Advisory Committee receives
notification of or otherwise confirms the Participant's death; (iii) the date
the Participant would have attained Normal Retirement Age; or (iv) the date the
Participant would have attained age 62.
(D) Special Rules. If the Participant has in effect a valid
waiver election regarding the qualified joint and survivor annuity or the
preretirement survivor annuity, the Advisory Committee must direct the Trustee
to distribute the Participant's Nonforfeitable Accrued Benefit in accordance
with Sections 6.01, 6.02 and 6.03. The Advisory Committee will reduce the
Participant's Nonforfeitable Accrued Benefit by any security interest (pursuant
to any offset rights authorized by Section 10.03[E]) held by the Plan by reason
of a Participant loan to determine the value of the Participant's Nonforfeitable
Accrued Benefit distributable in the form of a qualified joint and survivor
annuity or preretirement survivor annuity, provided any post-August 18, 1985,
loan satisfied the spousal consent requirement described in Section 10.03[E] of
the Plan. For purposes of applying this Article VI, the Advisory Committee
treats a former spouse as the Participant's spouse or surviving spouse to the
extent provided under a qualified domestic relations order described in Section
6.07. The provisions of this Section 6.04, and of Sections 6.05 and 6.06, apply
separately to the portion of the Participant's Nonforfeitable Accrued Benefit
subject to the qualified domestic relations order and to the portion of the
Participant's Nonforfeitable Accrued Benefit not subject to that order.
(E) Profit Sharing Plan Election. If this Plan is a profit sharing
plan, the Employer must elect the extent to which the preceding provisions
of Section 6.04 apply. If the Employer elects to apply this Section 6.04 only to
<PAGE>
a Participant described in this Section 6.04(E), the preceding provisions of
this Section 6.04 apply only to the following Participants: (1) a Participant as
respects whom the Plan is a direct or indirect transferee from a plan subject to
the Code ss.417 requirements and the Plan received the transfer after December
31, 1984, unless the transfer is an elective transfer described in Section
13.06; (2) a Participant who elects a life annuity distribution (if Section 6.02
or Section 13.02 of the plan requires the Plan to provide a life annuity
distribution option); and (3) a Participant whose benefits under a defined
benefit plan maintained by the Employer are offset by benefits provided under
this Plan. If the Employer elects to apply this Section 6.04 to all
Participants, the preceding provisions of this Section 6.04 apply to all
Participants described in the first two paragraphs of this Section 6.04, without
regard to the limitations of this Section 6.04(E). Sections 6.05 and 6.06 only
apply to Participants to whom the preceding provisions of this Section 6.04
apply.
6.05 WAIVER ELECTION - QUALIFIED JOINT AND SURVIVOR ANNUITY. Not
earlier than 90 days, but not later than 30 days, before the Participant's
annuity starting date, the Advisory Committee must provide the Participant a
written explanation of the terms and conditions of the qualified joint and
survivor annuity, the Participant's right to make, and the effect of, an
election to waive the joint and survivor form of benefit, the rights of the
Participant's spouse regarding the waiver election and the Participant's right
to make, and the effect of, a revocation of a waiver election. The Plan does not
limit the number of times the Participant may revoke a waiver of the qualified
joint and survivor annuity or make a new waiver during the election period.
A married Participant's waiver election is not valid unless (a) the
Participant's spouse (to whom the survivor annuity is payable under the
qualified joint and survivor annuity), after the Participant has received the
written explanation described in this Section 6.05, has consented in writing to
the waiver election, the spouse's consent acknowledges the effect of the
election, and a notary public or the Plan Administrator (or his representative)
witnesses the spouse's consent, (b)the spouse consents to the alternate form of
payment designated by the Participant or to any change in that designated form
of payment, and (c) unless the spouse is the Participant's sole primary
Beneficiary, the spouse consents to the Participant's Beneficiary designation or
to any change in the Participant's Beneficiary designation. The spouse's consent
to a waiver of the qualified joint and survivor annuity is irrevocable, unless
the Participant revokes the waiver election. The spouse may execute a blanket
consent to any form of payment designation or to any Beneficiary designation
made by the Participant, if the spouse acknowledges the right to limit that
<PAGE>
consent to a specific designation but, in writing, waives that right. The
consent requirements of this Section 6.05 apply to a former spouse of the
Participant, to the extent required under a qualified domestic relations order
described in Section 6.07.
The Advisory Committee will accept as valid a waiver election which does
not satisfy the spousal consent requirements if the Advisory Committee
establishes the Participant does not have a spouse, the Advisory Committee is
not able to locate the Participant's spouse, the Participant is legally
separated or has been abandoned (within the meaning of State law) and the
Participant has a court order to that effect, or other circumstances exist under
which the Secretary of the Treasury will excuse the consent requirement. If the
Participant's spouse is legally incompetent to give consent, the spouse's legal
guardian (even if the guardian is the Participant) may give consent.
6.06 WAIVER ELECTION - PRERETIREMENT SURVIVOR ANNUITY. The
Advisory Committee must provide a written explanation of the preretirement
survivor annuity to each married Participant, within the following period which
ends last: (1) the period beginning on the first day of the Plan Year in which
the Participant attains age 32 and ending on the last day of the Plan Year in
which the Participant attains age 34; (2) a reasonable period after an Employee
becomes a Participant; (3) a reasonable period after the joint and survivor
rules become applicable to the Participant; or (4) a reasonable period after a
fully subsidized preretirement survivor annuity no longer satisfies the
requirements for a fully subsidized benefit. A reasonable period described in
clauses (2), (3) and (4) is the period beginning one year before and ending one
year after the applicable event. If the Participant separates from Service
before attaining age 35, clauses (1), (2), (3) and (4) do not apply and the
Advisory Committee must provide the written explanation within the period
beginning one year before and ending one year after the Separation from Service.
The written explanation must describe, in a manner consistent with Treasury
regulations, the terms and conditions of the preretirement survivor annuity
required under Section 6.05. The Plan does not limit the number of times the
Participant may revoke a waiver of the preretirement survivor annuity or make a
new waiver during the election period.
A Participant's waiver election of the preretirement survivor annuity is
not valid unless (a) the Participant makes the waiver election no earlier than
the first day of the Plan Year in which he attains age 35 and (b) the
Participant's spouse (to whom the preretirement survivor annuity is payable)
satisfies the consent requirements described in Section 6.05, except the spouse
need not consent to the form of benefit payable to the designated Beneficiary.
The spouse's consent to the waiver of the preretirement survivor annuity is
irrevocable, unless the Participant revokes the waiver election. Irrespective of
the time of election requirement described in clause (a), if the Participant
<PAGE>
separates from Service prior to the first day of the Plan Year in which he
attains age 35, the Advisory Committee will accept a waiver election as respects
the Participant's Accrued Benefit attributable to his Service prior to his
Separation from Service. Furthermore, if a Participant who has not separated
from Service makes a valid waiver election, except for the timing requirement of
clause (a), the Advisory Committee will accept that election as valid, but only
until the first day of the Plan Year in which the Participant attains age 35. A
waiver election described in this paragraph is not valid unless made after the
Participant has received the written explanation described in this Section 6.06.
6.07 DISTRIBUTIONS UNDER DOMESTIC RELATIONS ORDERS. Nothing
contained in this Plan prevents the Trustee, in accordance with the
direction of the Advisory Committee, from complying with the provisions of a
qualified domestic relations order (as defined in Code ss.414(0)). This Plan
specifically permits distribution to an alternate payee under a qualified
domestic relations order at any time, irrespective of whether the Participant
has attained his earliest retirement age (as defined under Code ss.414(p)) under
the Plan. A distribution to an alternate payee prior to the Participant's
attainment of earliest retirement age is available only if: (1) the order
specifies distribution at that time or permits an agreement between the Plan and
the alternate payee to authorize an earlier distribution; and (2) if the present
value of the alternate payee's benefits under the Plan exceeds $3,5000, and the
order requires, the alternate payee consents to any distribution occurring prior
to the Participant's attainment of earliest retirement age. The Employer, in an
addendum to its Adoption Agreement numbered 6.07, may elect to limit
distribution to an alternate payee only when the Participant has attained his
earliest retirement age under the Plan. Nothing in this Section 6.07 gives a
Participant a right to receive distribution at a time otherwise not permitted
under the Plan nor does it permit the alternate payee to receive a form of
payment not otherwise permitted under the Plan.
The Advisory Committee must establish reasonable procedures to determine
the qualified status of a domestic relations order. Upon receiving a domestic
relations order, the Advisory Committee promptly will notify the Participant and
any alternate payee named in the order, in writing, of the receipt of the order
and the plan's procedures for determining the qualified status of the order.
Within a reasonable period of time after receiving the domestic relations order,
the Advisory Committee must determine the qualified status of the order and must
notify the Participant and each alternate payee, in writing, of its
determination. The Advisory Committee must provide notice under this paragraph
by mailing to the individual's address specified in the domestic relations
order, or in a manner consistent with Department of Labor regulations.
<PAGE>
If any portion of the Participant's Nonforfeitable Accrued Benefit is
payable during he period the Advisory Committee is making its determination of
the qualified status of the domestic relations order, the Advisory Committee
must make a separate accounting of the amounts payable. If the Advisory
Committee determines the order is a qualified domestic relations order within 18
months of the date amounts first are payable following receipt of the order, the
Advisory Committee will direct the Trustee to distribute the payable amounts in
accordance with the order. If the Advisory Committee does not make its
determination of the qualified status of the order within the 18-month
determination period, the Advisory Committee will direct the Trustee to
distribute the payable amounts in the manner the Plan would distribute if the
order did not exist and will apply the order prospectively if the Advisory
Committee later determines the order is a qualified domestic relations order.
To the extent it is not inconsistent with the provisions of the qualified
domestic relations order, the advisory Committee may direct the Trustee to
invest any partitioned amount in a segregated subaccount or separate account and
to invest the account in Federally insured, interest-bearing savings account(s)
or time deposit(s) (or a combination of both), or in other fixed income
investments. A segregated subaccount remains a part of the Trust, but it alone
shares in any income it earns, and it alone bears any expense or loss it incurs.
The Trustee will make any payments or distributions required under this Section
6.07 by separate benefit checks or other separate distribution to the alternate
payee(s).
ARTICLE VII
EMPLOYER ADMINISTRATIVE PROVISIONS
7.01 INFORMATION TO COMMITTEE. The Employer must supply
current information to the Advisory Committee a to the name, date of birth,
date of employment, annual compensation, leaves of absence, Years of Service and
date of termination of employment of each Employee who is, or who will be
eligible to become, a Participant under the Plan, together with any other
information which the Advisory Committee considers necessary. The Employer's
records as to the current information the Employer furnishes to the Advisory
Committee are conclusive as to all persons.
7.02 NO LIABILITY. The Employer assumes no obligation or
responsibility to any of its Employees, Participants or Beneficiaries for
any act of, or failure to act, on the part of its Advisory Committee (unless the
Employer is the Advisory Committee), the Trustee, the Custodian, if any, or the
Plan Administrator (unless the Employer is the Plan Administrator).
<PAGE>
7.03 INDEMNITY OF CERTAIN FIDUCIARIES. The Employer indemnifies and
saves harmless the Plan Administrator and the members of the Advisory
Committee, and each of them, from and against any and all loss resulting from
liability to which the Plan Administrator and the Advisory Committee, or the
members of the Advisory Committee, may be subjected by reason of any act or
conduct (except willful misconduct or gross negligence) in their official
capacities in the administration of this Trust or Plan or both, including all
expenses reasonably incurred in their defense, in case the Employer fails to
provide such defense. The indemnification provisions of this Section 7.03 do not
relieve the Plan Administrator or any Advisory committee member from any
liability he may have under ERISA for breach of a fiduciary duty. Furthermore,
the Plan Administrator and the Advisory Committee members and the Employer may
execute a letter agreement further delineating the indemnification agreement of
this Section 7.03, provided the letter agreement must be consistent with and
does not violate ERISA. The indemnification provisions of this Section 7.03
extend to the Trustee (or to a Custodian, if any) solely to the extent provided
by a letter agreement executed by the Trustee (or Custodian) and the Employer.
7.04 EMPLOYER DIRECTION OF INVESTMENT. The Employer has the right
to direct the Trustee with respect to the investment and re- investment of
assets comprising the Trust Fund only if the Trustee consents in writing to
permit such direction. If the Trustee consents to Employer direction of
investment, the Trustee and the Employer must execute a letter agreement as a
part of this Plan containing such conditions, limitations and other provisions
they deem appropriate before the Trustee will follow any Employer direction as
respects the investment or re-investment of any part of the Trust Fund.
7.05 AMENDMENT TO VESTING SCHEDULE. Though the Employer reserves the
right to amend the vesting schedule at any time, the Advisory Committee
will not apply the amended vesting schedule to reduce the Nonforfeitable
percentage of any Participant's Accrued Benefit derived from Employer
contributions (determined as of the later of the date the Employer adopts the
amendment, or the date the amendment becomes effective) to a percentage less
than the Nonforfeitable percentage computed under the plan without regard to the
amendment. An amended vesting schedule will apply to a Participant only if the
Participant receives credit for at least one Hour of Service after the new
schedule becomes effective.
If the Employer makes a permissible amendment to the vesting schedule,
each Participant having at least 3 Years of Service with the Employer may elect
to have the percentage of his Nonforfeitable Accrued Benefit computed under the
Plan without regard to the amendment. For Plan Years beginning prior to January
1, 1989, the election described in the preceding sentence applies only to
Participants having at least 5 Years of Service with the Employer. The
<PAGE>
Participant must file his election with the Advisory Committee within 60
days of the latest of (a) the Employer's adoption of the amendment; (b) the
effective date of the amendment; or (c) his receipt of a copy of the amendment.
The Advisory Committee, as soon as practicable, must forward a true copy of any
amendment to the vesting schedule to each affected Participant, together with an
explanation of the effect of the amendment, the appropriate form upon which the
Participant may make an election to remain under the vesting schedule provided
under the Plan prior to the amendment and notice of the time within which the
Participant must make an election to remain under the prior vesting schedule.
The election described in this Section 7.05 does not apply to a Participant if
the amended vesting schedule provides for vesting at least as rapid at all times
as the vesting schedule in effect prior to the amendment. For purposes of this
Section 7.05, an amendment to the vesting schedule includes any Plan amendment
which directly or indirectly affects the computation of the Nonforfeitable
percentage of an Employee's rights to his Employer derived Accrued Benefit.
Furthermore, the Advisory Committee must treat any shift in the vesting
schedule, due to a change in the Plan's top heavy status, as an amendment to the
vesting schedule for purposes of this Section 7.05.
ARTICLE VIII
PARTICIPANT ADMINISTRATIVE PROVISIONS
8.01 BENEFICIARY DESIGNATION. Any Participant may from time to
time designate, in writing, any person or persons, contingently or
successively, to whom the Trustee will pay his Nonforfeitable Accrued Benefit
(including any life insurance proceeds payable to the Participant's Account) in
the event of his death and the Participant may designate the form and method of
payment. The Advisory Committee will prescribe the form for the written
designation of Beneficiary and, upon the Participant's filing the form with the
Advisory Committee, the form effectively revokes all designations filed prior to
that date by the same Participant.
(A) Coordination with survivor requirements. If the joint and
survivor requirements of Article VI apply to the Participant, this Section
8.01 does not impose any special spousal consent requirements on the
Participant's Beneficiary designation. However, in the absence of spousal
consent (as required by Article VI) to the Participant's Beneficiary
designation: (1) any waiver of the joint and survivor annuity or of the
preretirement survivor annuity is not valid; and (2) if the Participant dies
prior to his annuity starting date, the Participant's Beneficiary designation
will apply only to the portion of the death benefit which is not payable as a
preretirement survivor annuity. Regarding clause (2), if the Participant's
surviving spouse is a primary Beneficiary under the Participant's Beneficiary
designation, the Trustee will satisfy the spouse's interest in the Participant's
death benefit first from the portion which is payable as a preretirement
survivor annuity.
<PAGE>
(B) Profit sharing plan exception. If the Plan is a profit sharing
plan, the Beneficiary designation of a married Exempt Participant is not
valid unless the Participant's spouse consents (in a manner described in Section
6.05) to the Beneficiary designation. An "Exempt Participant" is a Participant
who is not subject to the joint and survivor requirements of Article VI. The
spousal consent requirement in this paragraph does not apply if the Exempt
Participant and his spouse are not married throughout the one year period ending
on the date of the Participant's death, or if the Participant's spouse is the
Participant's sole primary Beneficiary.
8.02 NO BENEFICIARY DESIGNATION/DEATH OF BENEFICIARY. If a
Participant fails to name a Beneficiary in accordance with Section 8.01, or
if the Beneficiary named by a Participant predeceases him, then the Trustee will
pay the Participant's Nonforfeitable Accrued Benefit in accordance with Section
6.02 in the following order of priority, unless the Employer specifies a
different order to priority in an addendum to its Adoption Agreement, to:
(a) The Participant's surviving spouse;
(b) The Participant's surviving children, including
adopted children, in equal shares;
(c) The Participant's surviving parents, in equal shares;
or
(d) The Participant's estate.
If the Beneficiary does not predecease the Participant, but dies prior to
distribution of the Participant's entire Nonforfeitable Accrued Benefit, the
Trustee will pay the remaining Nonforfeitable Accrued Benefit to the
Beneficiary's estate unless the Participant's Beneficiary designation provides
otherwise or unless the Employer provides otherwise in its Adoption Agreement.
If the Plan is a profit sharing plan, an the Plan includes Exempt Participants,
the Employer may not specify a different order of priority in the Adoption
Agreement unless the Participant's surviving spouse will be first in the
different order of priority. The Advisory Committee will direct the Trustee as
to the method and to whom the trustee will make payment under this Section 8.02.
8.03 PERSONAL DATA TO COMMITTEE. Each Participant and each Beneficiary
of a deceased Participant must furnish to the Advisory Committee such
evidence, data or information as the Advisory Committee considers necessary or
desirable for the purpose of administering the Plan. The provisions of this Plan
are effective for the benefit of each Participant upon the condition precedent
that each Participant will furnish promptly full, true and complete evidence,
data and information when requested by the Advisory Committee, provided the
Advisory Committee advises each Participant of the effect of his failure to
comply with its request.
<PAGE>
8.04 ADDRESS FOR NOTIFICATION. Each Participant and each Beneficiary
of a deceased Participant must file with the Advisory Committee from time
to time, in writing, his post office address and any change of post office
address. Any communication, statement or notice addressed to a Participant, or
Beneficiary, at his last post office address filed with the Advisory Committee,
or as shown on the records of the Employer, binds the Participant, or
Beneficiary, for all purposes of this Plan.
8.05 ASSIGNMENT OR ALIENATION. Subject to Code ss.414(p) relating to
qualified domestic relations orders, neither a Participant nor a Beneficiary may
anticipate, assign or alienate (either at law or in equity) any benefit provided
under the Plan, and the Trustee will not recognize any such anticipation,
assignment or alienation. Furthermore, a benefit under the Plan is not subject
to attachment, garnishment, levy, execution or other legal or equitable process.
8.06 NOTICE OF CHANGE IN TERMS. The Plan Administrator, within the
time prescribed by ERISA and the applicable regulations, must furnish all
Participants and Beneficiaries a summary description of any material amendment
to the Plan or notice of discontinuance of the Plan and all other information
required by ERISA to be furnished without charge.
8.07 LITIGATION AGAINST THE TRUST. A court of competent jurisdiction
may authorize any appropriate equitable relief to redress violations of
ERISA or to enforce any provisions of ERISA or the terms of the Plan. A
fiduciary may receive reimbursement of expenses properly and actually incurred
in the performance of his duties with the Plan.
8.08 INFORMATION AVAILABLE. Any Participant in the Plan or any
Beneficiary may examine copies of the Plan description, latest annual
report, any bargaining agreement, this Plan and Trust, contract or any other
instrument under which the Plan was established or is operated. The Plan
Administrator will maintain all of the items listed in this Section 8.08 in his
office, or in such other place or places as he may designate from time to time
in order to comply with the regulations issued under ERISA, for examination
during reasonable business hours. Upon the written request of a Participant or
Beneficiary the Plan Administrator must furnish him with a copy of any item
listed in this Section 8.08. The Plan Administrator may make a reasonable charge
to the requesting person for the copy so furnished.
<PAGE>
8.09 APPEAL PROCEDURE FOR DENIAL OF BENEFITS. A Participant
or a Beneficiary ("Claimant") may file with the Advisory Committee a
written claim for benefits, if the Participant or Beneficiary determines the
distribution procedures of the Plan have not provided him his proper
Nonforfeitable Accrued Benefit. The Advisory Committee must render a decision on
the claim within 60 days of the Claimant's written claim for benefits. The Plan
Administrator must provide adequate notice in writing to the Claimant whose
claim for benefits under the Plan the advisory Committee has denied. The Plan
Administrator's notice to the Claimant must set forth:
(a) The specific reason for the denial;
(b) Specific references to pertinent Plan provision on which the
Advisory Committee based its denial;
(c) A description of any additional material and information needed
for the Claimant to perfect his claim and an explanation of why the
material or information is needed; and
(d) That any appeal the Claimant wishes to make of the adverse
determination must be in writing to the Advisory Committee within 75 days
after receipt of the Plan Administrator's notice of denial of benefits,
The Plan Administrator's notice must further advise the Claimant that his
failure to appeal the action to the Advisory Committee in writing within
the 75-day period will render the Advisory Committee's determination
final, binding and conclusive.
If the Claimant should appeal to the Advisory Committee, he, or his duly
authorized representative, may submit, in writing, whatever issues and comments
he, or his duly authorized representative, feels are pertinent. The Claimant, or
his duly authorized representative, may review pertinent Plan documents. The
Advisory Committee will re-examine all facts related to the appeal and make a
final determination as to whether the denial of benefits is justified under the
circumstances. The Advisory Committee must advise the claimant of its decision
within 60 days of the Claimant's written request for review, unless special
circumstances (such as a hearing) would make the rendering of a decision within
the 60-day limit unfeasible, but in no event may the Advisory Committee render a
decision respecting a denial for a claim for benefits later than 120 days after
its receipt of a request for review.
The Plan Administrator's notice of denial of benefits must identify the
name of each member of the Advisory Committee and the name and address of the
Advisory Committee member to whom the Claimant may forward his appeal.
<PAGE>
8.10 PARTICIPANT DIRECTION OF INVESTMENT. A Participant has the
right to direct the Trustee with respect to the investment or re-investment
of the assets comprising the Participant's individual Account only if the
Trustee consents in writing to permit such direction. If the Trustee consents to
Participant direction of investment, the Trustee will accept direction from each
Participant on a written election form (or other written agreement), as a part
of this Plan, containing such conditions, limitations and other provisions the
parties deem appropriate. The Trustee or, with the Trustee's consent, the
Advisory Committee, may establish written procedures, incorporated specifically
as part of this Plan, relating to Participant direction of investment under this
Section 8.10. The Trustee will maintain a segregated investment Account to the
extent a Participant's Account is subject to Participant self- direction. The
Trustee is not liable for any loss, nor is the Trustee liable for any breach,
resulting from a Participant's direction of the investment of any part of his
directed Account.
The Advisory Committee, to the extent provided in a written loan policy
adopted under Section 9.04, will treat a loan made to a Participant as a
Participant direction of investment under this Section 8.10. To the extent of
the loan outstanding at any time, the borrowing Participant's Account alone
shares in any interest paid on the loan, and it alone bears any expense or loss
it incurs in connection with the loan. The Trustee may retain any principal or
interest paid on the borrowing Participant's loan in an interest bearing
segregated Account on behalf of the borrowing Participant until the Trustee (or
the Named Fiduciary, in the case of a nondiscretionary Trustee) deems it
appropriate to add the amount paid to the Participant's separate Account under
the Plan.
If the Trustee consents to Participant direction of investment of his
Account, the Plan treats any post-December 31, 1981, investment by a
Participant's directed Account in collectibles (as defined by Code ss.408(m)) as
a deemed distribution to the Participant for Federal income tax purposes.
ARTICLE IX
ADVISORY COMMITTEE -
DUTIES WITH RESPECT TO
PARTICIPANTS' ACCOUNTS
9.01 MEMBERS' COMPENSATION, EXPENSES. The Employer must appoint
an Advisory Committee to administer the Plan, the members of which may or
may not be Participants in the Plan, or which may be the Plan Administrator
acting alone. In the absence of an Advisory Committee appointment, the Plan
Administrator assumes the powers, duties and responsibilities of the Advisory
Committee. The members of the Advisory Committee will serve without compensation
for services as such, but the Employer will pay all expenses of the Advisory
Committee, except to the extent the Trust properly pays for such expenses,
pursuant to Article X.
<PAGE>
9.02 TERM. Each member of the Advisory Committee serves until the
appointment of his successor.
9.03 POWERS. In case of a vacancy in the membership of the Advisory
Committee, the remaining members of the Advisory Committee may exercise any and
all of the powers, authority, duties and discretion conferred upon the Advisory
Committee pending the filling of the vacancy.
9.04 GENERAL. The Advisory Committee has the following
powers and duties:
(a) To select a Secretary, who need not be a member of the
Advisory Committee;
(b) To determine the rights of eligibility of an Employee to
participate in the Plan, the value of a Participant's Accrued Benefit
and the Nonforfeitable percentage of each Participant's Accrued Benefit;
(c) To adopt rules of procedure and regulations necessary for the
proper and efficient administration of the Plan provided the rules are not
inconsistent with the terms of this Agreement;
(d) To construe and enforce the terms of the Plan and the
rules and regulations it adopts, including interpretation of
the Plan documents and documents related to the Plan's
operation;
(e) To direct the trustee as respects the crediting and distribution
of the Trust;
(f) To review and render decisions respecting a claim for (or denial
of a claim for) a benefit under the Plan;
(g) To furnish the Employer with information which the Employer may
require for tax or other purposes;
(h) To engage the service of agents whom it may deem advisable to
assist it with the performance of its duties;
(i) To engage the services of an Investment Manager or Managers (as
defined in ERISA ss.3(38)), each of whom will have full power and
authority to manage, acquire or dispose (or direct the Trustee with
respect to acquisition or disposition) of any Plan asset under its
control;
(j) To establish, in its sole discretion, a nondiscriminatory
policy (see Section 9.04(A)) which the Trustee must observe in making
loans if any, to Participants and Beneficiaries; and
<PAGE>
(k) To establish and maintain a funding standard account and to make
credits and charges to the account to the extent required by and in
accordance with the provisions of the Code.
The Advisory Committee must exercise all of its powers, duties and
discretion under the Plan in a uniform and nondiscriminatory manner.
(A) Loan policy. If the Advisory Committee adopts a loan policy,
pursuant to paragraph (j), the loan policy must be a written document and
must include: (1) the identity of the person or positions authorized to
administer the participant loan program; (2) a procedure for applying for the
loan; (3) the criteria for approving or denying a loan; (4) the limitations, if
any, on the types and amounts of loans available; (5) the procedure for
determining a reasonable rate of interest; (6) the types of collateral which may
secure the loan; and (7) the events constituting default and the steps the Plan
will take to preserve plan assets in the event of default. This Section 9.04
specifically incorporates a written loan policy as part of the Employer's Plan.
9.05 FUNDING POLICY. The Advisory Committee will review, not less
often than annually, all pertinent Employee information and Plan data in order
to establish the funding policy of the Plan and to determine the appropriate
methods of carrying out the Plan's objectives. The Advisory Committee must
communicate periodically, as it deems appropriate, to the Trustee and to any
Plan Investment Manager the Plan's short-term and long-term financial needs so
investment policy can be coordinated with Plan financial requirements.
9.06 MANNER OF ACTION. The decision of a majority of the members
appointed and qualified controls.
9.07 AUTHORIZED REPRESENTATIVE. The Advisory Committee may authorize
any one of its members, or its Secretary, to sign on its behalf any notices,
directions, applications, certificates, consents, approvals, waivers, letters or
other documents. The Advisory Committee must evidence this authority by an
instrument signed by all members and filed with the Trustee.
9.08 INTERESTED MEMBER. No member of the Advisory Committee may
decide or determine any matter concerning the distribution, nature or
method of settlement of his own benefits under the Plan, except in exercising an
election available to that member in his capacity as a Participant, unless the
Plan Administrator is acting alone in the capacity of the Advisory Committee.
<PAGE>
9.09 INDIVIDUAL ACCOUNTS. The Advisory Committee will maintain, or
direct the Trustee to maintain, a separate Account, or multiple Accounts,
in the name of each Participant to reflect the Participant's Accrued Benefit
under the Plan. If a Participant reenters the Plan subsequent to his having a
Forfeiture Break in Service, the Advisory Committee, or the Trustee, must
maintain a separate Account for the Participant's pre-Forfeiture Break in Serve
Accrued Benefit and a separate Account for his post- Forfeiture Break in Service
Accrued Benefit, unless the Participant's entire Accrued Benefit under the Plan
is 100% Nonforfeitable.
The Advisory Committee will make its allocations, or request the Trustee
to make its allocations, to the Accounts of the Participants in accordance with
the provisions of Section 9.11. The Advisory Committee may direct the Trustee to
maintain a temporary segregated investment Account in the name of a Participant
to prevent a distortion of income, gain or loss allocations under Section 9.11.
The Advisory Committee must maintain records of its activities.
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. The value of each
Participant's Accrued Benefit consists of that proportion of the net worth (at
fair market value) of the Employer's Trust Fund which the net credit balance in
his Account (exclusive of the cash value of incidental benefit insurance
contracts) bears to the total net credit balance in the accounts (exclusive of
the cash value of the incidental benefit insurance contracts) of all
Participants plus the cash surrender value of any incidental benefit insurance
contracts held by the Trustee on the Participant's life.
For purposes of a distribution under the Plan, the value of a
Participant's Accrued Benefit is its value as of the valuation date immediately
preceding the date of the distribution. Any distribution (other than a
distribution from a segregated Account) made to a Participant (or to his
Beneficiary) more than 90 days after the most recent valuation date may include
interest on the amount of the distribution as an expense of the Trust Fund. The
interest, if any, accrues from such valuation date to the date of the
distribution at the rate established in the Employer's Adoption Agreement.
9.11 ALLOCATION AND DISTRIBUTION OF NET INCOME GAIN OR LOSS. A
"valuation date" under this Plan is each Accounting Date and each interim
valuation date determined under Section 10.14. As of each valuation date the
Advisory Committee must adjust Accounts to reflect net income, gain or loss
since the last valuation date. The valuation period is the period beginning the
day after the lat valuation date and ending on the current valuation date.
<PAGE>
(A) Trust Fund Accounts. The allocation provisions of this
paragraph apply to all Participant Accounts other than segregated
investment Accounts. The Advisory Committee first will adjust the Participant
Accounts, as those Accounts stood at the beginning of the current valuation
period, by reducing the Accounts for any forfeitures arising under Section 5.09
or under Section 9.14, for amounts charged during the valuation period to the
Accounts in accordance with Section 9.13 (relating to distributions) and Section
11.01 (relating to insurance premiums), and for the cash value of incidental
benefit insurance contracts. The Advisory Committee then, subject to the
restoration allocation requirements of Section 5.04 or of Section 9.14, will
allocate the net income, gain or loss pro rate to the adjusted Participant
Accounts. The allocable net income, gain or loss is the net income (or net
loss), including the increase or decrease in the fair market value of assets,
since the last valuation date.
(B) Segregated investment Accounts. A segregated investment
Account receives all income it earns and bears all expense or loss it
incurs. The Advisory Committee will adopt uniform and nondiscriminatory
procedures for determining income or loss of a segregated investment Account in
a manner which reasonably reflects investment directions relating to pooled
investments and investment directions occurring during a valuation period. As of
the valuation date, the Advisory Committee must reduce a segregated Account for
any forfeiture arising under Section 5.09 after the Advisory Committee has made
all other allocations, changes or adjustments to the account for the Plan Year.
(C) Additional rules. An Excess Amount or suspense account
described in Part 2 of the Article III does not share in the allocation of
net income, gain or loss described in this Section 9.11. If the Employer
maintains its Plan under a Code ss.401(k) Adoption Agreement, the Employer may
specify in its Adoption Agreement alternate valuation provisions authorized by
that Adoption Agreement. This Section 9.11 applies solely to the allocation of
net income, gain or loss of the Trust. The Advisory Committee will allocate the
Employer contributions and Participant forfeitures, if any, in accordance with
Article III.
9.12 INDIVIDUAL STATEMENT. As soon as practicable after the
Accounting Date of each Plan Year, but within the time prescribed by ERISA
and the regulations under ERISA, the Plan Administrator will deliver to each
Participant (and to each Beneficiary) a statement reflecting the condition of
his Accrued Benefit in the Trust as of that date and such other information
ERISA requires be furnished the Participant or Beneficiary. No Participant,
except a member of the Advisory Committee, has the right to inspect the records
reflecting the Account of any other Participant.
<PAGE>
9.13 ACCOUNT CHARGED. The Advisory Committee will charge a
Participant's Account for all distributions made from that Account to the
Participant, to his Beneficiary or to an alternate payee. The Advisory Committee
also will charge a Participant's Account for any administrative expenses
incurred by the Plan directly related to that Account.
9.14 UNCLAIMED ACCOUNT PROCEDURE. The Plan does not require either
the Trustee or the Advisory Committee to search for, or to ascertain the
whereabouts of, any Participant or Beneficiary. At the time the Participant's or
Beneficiary's benefit becomes distributable under Article VI, the Advisory
Committee, by certified or registered mail addressed to his last known address
or record with the Advisory Committee or the Employer, must notify any
Participant, or Beneficiary, that he is entitled to a distribution under this
Plan. The notice must quote the provisions of this Section 9.14 and otherwise
must comply with the notice requirements of Article VI. If the Participant, or
Beneficiary, fails to claim his distributive share or make his whereabouts known
in writing to the Advisory Committee within 6 months from the date of mailing of
the notice, the Advisory Committee will treat the Participant's or Beneficiary's
unclaimed payable Accrued Benefit as forfeited and will reallocate the unclaimed
payable Accrued Benefit in accordance with Section 3.05. A forfeiture under this
paragraph will occur at the end of the notice period or, if later, the earliest
date applicable Treasury regulations would permit the forfeiture. Pending
forfeiture, the Advisory Committee, following the expiration of the notice
period, may direct the Trustee to segregate the Nonforfeitable Accrued Benefit
in a segregated Account and to invest that segregated Account in Federally
insured interest bearing savings accounts or time deposits (or in a combination
of both), or in other fixed income investments.
If a Participant or Beneficiary who has incurred a forfeiture of his
Accrued Benefit under the provisions of the first paragraph of this Section 9.14
makes a claim, at any time, for his forfeited Accrued Benefit, the advisory
Committee must restore the Participant's or Beneficiary's forfeited Accrued
Benefit to the same dollar amount as the dollar amount of the Accrued Benefit
forfeited, unadjusted for any gains or losses occurring subsequent to the date
of the forfeiture. The Advisory Committee will make the restoration during the
Plan Year in which the Participant or Beneficiary makes the claim, first from
the amount, if any, of Participant forfeitures the advisory Committee otherwise
would allocate for the Plan Year, then from the amount, if any, of Participant
forfeitures the Advisory Committee otherwise would allocate for the Plan Year,
then from the amount, if any, of the Trust Fund net income or gain fro the Plan
Year and then from the amount, or additional amount, the Employer contributes to
enable the Advisory Committee to make the required restoration. The Advisory
Committee must direct the Trustee to distribute the Participant's or
<PAGE>
Beneficiary's restored Accrued Benefit to him not later than 60 days after
the close of the Plan Year in which the Advisory Committee restores the
forfeited Accrued Benefit. The forfeiture provisions of this Section 9.14 apply
solely to the Participant's or to the Beneficiary's Accrued Benefit derived from
Employer contributions.
ARTICLE X
TRUSTEE AND CUSTODIAN,
POWERS AND DUTIES
10.01 ACCEPTANCE. The Trustee accepts the Trust created under he Plan
and agrees to perform the obligations imposed. The Trustee must provide
bond for the faithful performance of its duties under the Trust to the extent
required by ERISA.
10.02 RECEIPT OF CONTRIBUTIONS. The trustee is accountable to the
Employer for the funds contributed to it by the Employer, but does not have
any duty to see that the contributions received comply with the provisions of
the Plan. The Trustee is not obliged to collect any contributions from the
Employer, nor is obliged to see that funds deposited with it are deposited
according to the provisions of the Plan.
10.03 INVESTMENT POWERS.
(A) Discretionary Trustee Designation. If the Employer, in
Adoption Agreement Section 1.02, designates the Trustee to administer the
Trust as a discretionary Trustee, then the Trustee has full discretion and
authority with regard to the investment of the Trust Fund, except with respect
to a Plan assets under the control or direction of a properly appointed
Investment Manager or with respect to a Plan asset properly subject to Employer,
Participant or Advisory Committee direction of investment. The Trustee must
coordinate its investment policy with Plan financial needs as communicated to it
by the Advisory Committee. The Trustee is authorized and empowered, but not by
way of limitation, with the following powers, rights and duties:
(a) To invest any part or all of the trust Fund in any common or
preferred stocks, open-end or closed-end mutual funds, put and call
options traded on a national exchange, United States retirement plan
bonds, corporate bonds, debentures, convertible debentures, commercial
paper, U.S. Treasury bills, U.S. Treasury notes and other direct or
indirect obligations of the United States Government or its agencies,
improved or unimproved real estate situated in the United States,
limited partnerships, insurance contracts of any type, mortgages,
notes or other property of any kind, real or personal, to buy or sell
options on common stock on a nationally recognized exchange with or
without holding the underlying common stock, to buy and sell
commodities, commodity options and contracts for the future
delivery of commodities, and to make any other investments the Trustee
<PAGE>
deems appropriate, as a prudent man would do under like circumstances
with due regard for the purposes of this Plan. Any investment made or
retained by the Trustee in good faith is proper but must be of a kind
constituting a diversification considered by law suitable for trust
investments.
(b) To retain in cash so much of the Trust Fund as it may deem
advisable to satisfy liquidity needs of the Plan and to deposit any cash
held in the trust Fund in a bank account at reasonable interest.
(c) To invest, if the Trustee is a bank or similar financial
institution supervised by the United States or by a State, in any type
of deposit of the Trustee (or of a bank related to the Trustee within
the meaning of Code ss.414(b)) at a reasonable rate of interest or in
a common trust fund, as described in Code ss.584, or in a collective
investment fund, the provisions of which govern the investment of such
assets and which the Plan incorporates by this reference, which the
Trustee (or its affiliate, as defined in Code ss.1504) maintains
exclusively for the collective investment of money contributed by the
bank (or the affiliate) in its capacity as trustee and which conforms to
the rules of the Comptroller of the Currency.
(d) To manage, sell, contract to sell, grant options to purchase,
convey, exchange, transfer, abandon, improve, repair, insure, lease for
any term even though commencing in the future or extending beyond the
term of the trust, and otherwise deal with all property, real or
personal, in such manner, for such considerations and on such terms
and conditions as the Trustee decides.
(e) To credit and distribute the Trust as directed by the
Advisory Committee. The Trustee is not obliged to inquire as to whether
any payee or distributee is entitled to any payment or whether the
distribution is proper or within the terms of the Plan, or as to the
manner of making any payment or distribution. The Trustee is accountable
only to the Advisory Committee for any payment or distribution made by it
in good faith on the order or direction of the Advisory Committee.
(f) To borrow money, to assume indebtedness, extend mortgages and
encumber by mortgage or pledge.
(g) To compromise, contest, arbitrate or abandon claims and demands
in its discretion.
(h) To have with respect to the Trust all of the rights of an
individual owner, including the power to give proxies, to participate
in any voting trusts, mergers, consolidations or liquidations, and to
exercise or sell stock subscriptions or conversion rights.
<PAGE>
(i) To lease for oil, gas and other mineral purposes and to create
mineral severances by grant or reservation; to pool or unitize interest
in oil, gas and other minerals; and to enter into operating agreements
and to execute division and transfer orders.
(j) To hold any securities or other property in the name of the
Trustee or its nominee, with depositories or agent depositories or in
another form as it may deem best, with or without disclosing the trust
relationship.
(k) To perform any and all other acts in its judgment
necessary or appropriate for the proper and advantageous management,
investment and distribution of the Trust.
(l) To retain any funds or property subject to any dispute
without liability for the payment of interest, and to decline to make
payment or delivery of the funds or property until final adjudication
is made by a court of competent jurisdiction.
(m) To file all tax returns required of the Trustee.
(n) To furnish to the Employer, the Plan Administrator and the
Advisory Committee an annual statement of account showing the
condition of the Trust Fund and all investments, receipts,
disbursements and other transactions effected by the Trustee during
the Plan Year covered by the statement and also stating the assets of the
Trust held at the end of the Plan Year, which accounts are conclusive
on all persons, including the Employer, the Plan Administrator and the
Advisory Committee, except as to any act or transaction concerning
which the Employer, the Plan Administrator or the Advisory Committee
files with the Trustee written exceptions or objections within 90 days
after the receipt of the accounts or for which ERISA authorizes a longer
period within which to object.
(o) To begin, maintain or defend any litigation necessary in
connection with the administration of the Plan, except that the
Trustee is not obliged or required to do so unless indemnified to its
satisfaction.
(B) Nondiscretionary Trustee Designation/Appointment of Custodian.
If the Employer, in its Adoption Agreement Section 1.02, designates the
Trustee to administer the Trust as a nondiscretionary Trustee, then the Trustee
will not have any discretion or authority with regard to the investment of the
<PAGE>
Trust Fund, but must act solely as a directed trustee of the funds
contributed to it. A nondiscretionary Trustee, as directed trustee of the funds
held by it under the Employer's Plan, is authorized and empowered, by way of
limitation, with the following powers, rights and duties, each of which the
nondiscretionary Trustee exercises solely as directed trustee in accordance with
the written direction of the Named Fiduciary (except to the extent a Plan asset
is subject to the control and management of a properly appointed Investment
Manager or subject to Advisory Committee or Participant direction of
investment):
(a) To invest any part or all of the trust Fund in any common or
preferred stocks, open-end or closed-end mutual funds, put and call
options traded on a national exchange, United States retirement plan
bonds, corporate bonds, debentures, convertible debentures, commercial
paper, U.S. Treasury bills, U.S. Treasury notes and other direct or
indirect obligations of the United States Government or its agencies,
improved or unimproved real estate situated in the United States,
limited partnerships, insurance contracts of any type, mortgages,
notes or other property of any kind, real or personal, to buy or sell
options on common stock on a nationally recognized options exchange with
or without holding the underlying common stock, to buy and sell
commodities, commodity options and contracts for the future delivery of
commodities, and to make any other investments the Named Fiduciary deems
appropriate.
(b) To retain in cash so much of the Trust Fund as the Named
Fiduciary may direct in writing to satisfy liquidity needs of the Plan
and to deposit any cash held in the trust Fund in a bank account at
reasonable interest, including, specific authority to invest in any
type of deposit of the trustee (or of a bank related to the Trustee
within the meaning of Code ss.414(b)) at a reasonable rate of interest.
(c) To sell, contract to sell, grant options to purchase,
convey, exchange, transfer, abandon, improve, repair, insure, lease for
any term even though commencing in the future or extending beyond the
term of the Trust, and otherwise deal with all property, real or
personal, in such manner, for such considerations and on such terms
and conditions as the Named Fiduciary directs in writing.
(d) To credit and distribute the Trust as directed by the
Advisory Committee. The Trustee is not obliged to inquire as to whether
any payee or distributee is entitled to any payment or whether the
distribution is proper or within the terms of the Plan, or as to the
manner of making any payment of distribution. The Trustee is accountable
only to the Advisory Committee for any payment or distribution made by it
in good faith on the order or direction of the Advisory Committee.
<PAGE>
(e) To borrow money, to assume indebtedness, extend mortgages and
encumber by mortgage or pledge.
(f) To have with respect to the Trust all of the rights of an
individual owner, including the power to give proxies, to participate
in any voting trusts, mergers, consolidations or liquidations, and to
exercise or sell stock subscriptions or conversion rights, provided
the exercise of any such powers is in accordance with and at the
written direction of the Named Fiduciary.
(g) To lease for oil, gas and other mineral purposes and to create
mineral severances by grant or reservation; to pool or unitize interests
in oil, gas and other minerals; and to enter into operating agreements
and to execute division and transfer orders, provided the exercise of
any such powers is in accordance with and at the written direction of
the Named Fiduciary.
(h) To hold any securities or other property in the name of
the nondiscretionary Trustee or its nominee, with depositories or
agent depositories or in another form as the Name Fiduciary may deem
best, with or without disclosing the custodial relationship.
(i) To retain any funds or property subject to any dispute
without liability for the payment of interest, and to decline to make
payment or delivery of the funds or property until a court of competent
jurisdiction makes final adjudication.
(j) To file all tax returns required of the trustee.
(k) To furnish to the Named Fiduciary, the Employer, the Plan
Administrator and the Advisory Committee an annual statement of account
showing the condition of the Trust Fund and all investments, receipts,
disbursements and other transactions effected by he nondiscretionary
Trustee during the Plan Year covered by the statement and also stating the
assets of the Trust held at the end of the Plan Year, which accounts are
conclusive on all persons, including the Named Fiduciary, the Employer,
the Plan Administrator and the Advisory Committee, except as to any act or
transaction concerning which the Named Fiduciary, the Employer, the Plan
Administrator or the Advisory Committee files with the nondiscretionary
Trustee written exceptions or objections within 90 days after the receipt
of the accounts or for which ERISA authorizes a longer period within which
to object.
(l) To begin, maintain or defend any litigation necessary in
connection with the administration of the Plan, except that the Trustee is
not obliged or required to do so unless indemnified to its satisfaction.
<PAGE>
Appointment of Custodian. The Employer may appoint a Custodian under the
Plan, the acceptance by the Custodian indicated on the execution page of the
Employer's Adoption Agreement. If the employer appoints a Custodian, the
Employer's Plan must have a discretionary Trustee, as described in Section
10.03(A). A Custodian has the same powers, rights and duties as a
nondiscretionary Trustee, as described in this Section 10.03(B). The Custodian
accepts the terms of the Plan and Trust by executing the Employer's Adoption
Agreement. Any reference in the Plan to a Trustee also is a reference to a
Custodian where the context of the Plan dictates. A limitation of the Trustee's
liability by Plan provision also acts as a limitation of the Custodian's
liability. Any action taken by the Custodian at the discretionary Trustee's
direction satisfies any provision in the Plan referring to the Trustee's taking
that action.
Modification of Powers/Limited Responsibility. The Employer and the
Custodian or nondiscretionary Trustee, by letter agreement, may limit the powers
of the custodian or nondiscretionary Trustee to any combination of powers listed
within this Section 10.03(B). If there is a Custodian or a nondiscretionary
Trustee under the Employer's Plan, then the Employer, in adopting this Plan
acknowledges the Custodian or nondiscretionary Trustee has no discretion with
respect to the investment or re-investment of the Trust Fund and that the
Custodian or nondiscretionary Trustee is acting solely as custodian or as
directed trustee with respect to the assets comprising the Trust Fund.
(C) Limitation of Powers of Certain Custodians. If a Custodian is
a bank which, under its governing state law, does not possess trust powers,
then paragraphs (a), (c), (e), (f), (g) of Section 10.03(B), Section 10.16 and
Article XI do not apply to that bank and that bank only has the power and
authority to exercise the remaining powers, rights and duties under Section
10.03(B).
(D) Named Fiduciary/Limitation of Liability of Nondiscretionary
Trustee or Custodian. Under a nondiscretionary Trustee designation, the
Named Fiduciary under the Employer's Plan has the sole responsibility for the
management and control of the Employer's Trust Fund, except with respect to a
Plan asset under the control or direction of a properly appointed Investment
Manager or with respect to a Plan asset properly subject to Participant or
Advisory Committee direction of investment. If the Employer appoints a
Custodian, the Named Fiduciary is the discretionary Trustee. Under a
nondiscretionary Trustee designation, unless the Employer designates in writing
another person or persons to serve as Named Fiduciary, the Named Fiduciary under
the Plan is the president of a corporate Employer, the managing partner of a
<PAGE>
partnership Employer or the sole proprietor, as appropriate. The Named
Fiduciary will exercise its management and control of the Trust Fund through its
written direction to the nondiscretionary Trustee or to the Custodian, whichever
applies to the Employer's Plan.
The nondiscretionary Trustee or Custodian has no duty to review or to make
recommendations regarding investments made at the written direction of the Named
Fiduciary. The nondiscretionary Trustee or Custodian must retain any investment
obtained at the written direction of the Named Fiduciary to dispose of such
investment. The nondiscretionary Trustee or Custodian is not liable in any
manner or for any reason for making, retaining or disposing of any investment
pursuant to any written direction described in this paragraph. Furthermore, the
Employer agrees to indemnify and to hold the nondiscretionary Trustee or
Custodian harmless from any damages, costs or expenses, including reasonable
counsel fees, which the nondiscretionary Trustee or Custodian may incur as a
result of any claim asserted against the nondiscretionary Trustee, the custodian
or the Trust arising out of the nondiscretionary Trustee's or Custodian's
compliance with any written direction described in this paragraph.
(E) Participant Loans. This Section 10.03(E) specifically authorizes the
Trustee to make loans on a nondiscriminatory basis to a Participant or to a
Beneficiary in accordance with the loan policy established by the Advisory
Committee, provided: (1) the loan policy satisfies the requirements of Section
9.04; (2) loans are available to all Participants and Beneficiaries on a
reasonably equivalent basis and are not available in a greater amount for Highly
Compensated Employees than for other Employees; (3) any loan is adequately
secured and bears a reasonable rate of interest; (4) the loan provides for
repayment within a specified time; (5) the default provisions of the note
prohibit offset of the Participant's Nonforfeitable Accrued Benefit prior to the
time the Trustee otherwise would distribute the Participant's Nonforfeitable
Accrued Benefit; and (7) the loan otherwise conforms to the exemption provided
by Code ss.4975(d)(1). If the joint and survivor requirements of Article VI
apply to the Participant, the Participant may not pledge any portion of his
Accrued Benefit as security for a loan made after August 18, 1985, unless,
within the 90 day period ending on the date the pledge becomes effective, the
Participant's spouse, if any, consents (in a manner described in Section 6.05
other than the requirement relating to the consent of a subsequent spouse) to
the security or, by separate consent, to an increase in the amount of security.
If the employer is an unincorporated trade or business, a Participant who is an
Owner- Employee may not receive a loan from the Plan, unless he has obtained a
prohibited transaction exemption from the Department of Labor. If the Employer
is an "S Corporation," a Participant who is a shareholder-employee (an employee
or an officer) who, at any time during the Employer's taxable year, owns more
<PAGE>
than 5%, either directly or by attribution under Code ss.318(a)(1), of the
Employer's outstanding stock may not receive a loan from the Plan, unless he has
obtained a prohibited transaction exemption from the Department of Labor. If the
Employer is not an unincorporated trade or business nor an "S Corporation," this
Section 10.03(E) does not impose any restrictions on the class of Participants
eligible for a loan from the Plan.
(F) Investment in qualifying Employer securities and qualifying
Employer real property. The investment options in this Section 10.03(F)
include the ability to invest in qualifying Employer securities or qualifying
Employer real property, as defined in and as limited by ERISA. If the Employer's
Plan is a Nonstandardized profit sharing plan, it may elect in its Adoption
Agreement to permit the aggregate investments in qualifying Employer securities
and in qualifying Employer real property to exceed 10% of the value of Plan
assets.
10.04 RECORDS AND STATEMENTS. The records of the Trustee pertaining to
the Plan must be open to the inspection of the Plan Administrator, the
Advisory Committee and the Employer at all reasonable times and may be audited
from time to time by any person or persons as the Employer, Plan Administrator
or Advisory Committee may specify in writing. The Trustee must furnish the Plan
Administrator or Advisory Committee with whatever information relating to the
trust Fund the Plan Administrator or Advisory Committee considers necessary.
10.05 FEES AND EXPENSES FROM FUND. A Trustee or Custodian will
receive reasonable annual compensation as may be agreed upon from time to
time between the Employer and the Trustee or Custodian. No person who is
receiving full pay from the Employer may receive compensation for services as
Trustee or as Custodian. The Trustee will pay from the trust fund all fees and
expenses reasonably incurred by the Plan, to the extent such fees and expenses
are for the ordinary and necessary administration and operation of the Plan,
unless the Employer pays such fees and expenses. Any fee or expense paid,
directly or indirectly, by the Employer is not an Employer contribution to the
Plan, provided the fee or expense relates to the ordinary and necessary
administration of the Fund.
10.06 PARTIES TO LITIGATION. Except as otherwise provided by ERISA,
no Participant or Beneficiary is a necessary party or is required to
receive notice of process in any court proceeding involving the Plan, the Trust
Fund or any fiduciary of the Plan. Any final judgment entered in any proceeding
will be conclusive upon the employer, the Plan Administrator, the Advisory
Committee, the Trustee, Custodian, Participants and Beneficiaries.
<PAGE>
10.07 PROFESSIONAL AGENTS. The Trustee may employ and pay
from the Trust Fund reasonable compensation to agents, attorneys, accountants
and other persons to advise the Trustee as in its opinion may be necessary. The
Trustee may delegate to any agent, attorney, accountant or other person selected
by it any non-trustee power or duty vested in it by the Plan, and the Trustee
may act or refrain from acting on the advice or opinion of any agent, attorney,
accountant or other person so selected.
10.08 DISTRIBUTION OF CASH OR PROPERTY. The Trustee may make
distribution under the Plan in cash or property, or partly in each, at its
fair market value as determined by the Trustee. For purposes of a distribution
to a Participant or to a Participant's designated Beneficiary or surviving
spouse, "property" includes a Nontransferable Annuity Contract, provided the
contract satisfies the requirements of this Plan.
10.09 DISTRIBUTION DIRECTIONS. If no one claims a payment or
distribution made from the Trust, the Trustee must promptly notify the
Advisory Committee and then dispose of the payment in accordance with the
subsequent direction of the Advisory Committee.
10.10 THIRD PARTY/MULTIPLE TRUSTEES. No person dealing with the Trustee
is obligated to see to the proper application of any money paid or property
delivered to the Trustee, or to inquire whether the Trustee has acted pursuant
to any of the terms of the Plan. Each person dealing with the Trustee may act
upon any notice, request or representation in writing by the Trustee, or by the
Trustee's duly authorized agent, and is not liable to any person in so acting.
The certificate of the Trustee that it is acting in accordance with the Plan
will be conclusive in favor of any person relying on the certificate. If more
than two persons controls with respect to any decision regarding the
administration or investment of the Trust Fund or of any portion of the Trust
Fund with respect to which such persons act as Trustee. However, the signature
of only one Trustee is necessary to effect any transaction on behalf of the
Trust.
10.11 RESIGNATION. The Trustee or Custodian may resign its position at
any time by giving 30 days' written notice in advance to the Employer and
to the Advisory Committee. If the Employer fails to appoint a successor Trustee
within 60 days of its receipt of the trustee's written notice of resignation,
the Trustee will treat the employer as having appointed itself as Trustee and as
having filed its acceptance of appointment with the former Trustee. The
employer, in its sole discretion, may replace a Custodian. If the Employer does
not replace a Custodian, the discretionary Trustee will assume possession of
Plan assets held by the former Custodian.
<PAGE>
10.12 REMOVAL. The employer, by giving 30 days' written notice in
advance to the trustee, may remove any Trustee or Custodian. In the event
of the resignation or removal of a Trustee, the employer must appoint a
successor Trustee if it intends to continue the Plan. If two or more persons
hold the position of Trustee, in the event of the removal of one such person,
during any period the selection of a replacement is pending, or during any
period such person is unable to serve for any reason, the remaining person or
persons will act as the Trustee.
10.13 INTERIM DUTIES AND SUCCESSOR TRUSTEE. Each successor
Trustee succeeds to the title to the Trust vested in his predecessor by
accepting in writing his appointment as successor Trustee and by filing the
acceptance with the former Trustee and the advisory Committee without the
signing or filing of any further statement. The resigning or removed Trustee,
upon receipt of acceptance in writing of the Trust by the successor Trustee,
must execute all documents and do all acts necessary to vest the title of record
in any successor Trustee. Each successor Trustee has and enjoys all of the
powers, both discretionary and ministerial, conferred under this Agreement upon
his predecessor. A successor Trustee is not personally liable for any act or
failure to act of any predecessor Trustee, except as required under ERISA. With
the approval of the Employer and the Advisory Committee, a successor Trustee,
with respect to the Plan, may accept the account rendered and the property
delivered to it by a predecessor Trustee without incurring any liability or
responsibility for so doing.
10.14 VALUATION OF TRUST. The Trustee must value the Trust Fund as of
each Accounting Date to determine the fair market value of each
Participant's Accrued Benefit in the Trust. The Trustee also must value the
Trust Fund on such other valuation dates as directed in writing by the Advisory
Committee or as required by the Employer's Adoption Agreement.
10.15 LIMITATION ON LIABILITY - IF INVESTMENT MANAGER, ANCILLARY
TRUSTEE OR INDEPENDENT FIDUCIARY APPOINTED. The Trustee is not liable for
the acts or omissions of any Investment Manager the Advisory Committee may
appoint, nor is the Trustee under any obligation to invest or otherwise manage
any asset of the Plan which is subject tot he management of a properly appointed
Investment Manager. The Advisory Committee, the Trustee and any properly
appointed Investment Manager may execute a letter agreement as a part of this
Plan delineating the duties, responsibilities and liabilities of the Investment
Manager with respect to any part of the trust Fund under the control of the
Investment Manager.
The limitation on liability described in this Section 10.15 also applies
to the acts or omissions of any ancillary trustee or independent fiduciary
properly appointed under Section 10.17 of the Plan. However, if a discretionary
Trustee, pursuant to the delegation described in Section 10.17 of the Plan,
<PAGE>
appoints an ancillary trustee, the discretionary Trustee is responsible for
the periodic review of the ancillary trustee's actions and must exercise its
delegated authority in accordance with the terms of the Plan and in a manner
consistent with ERISA. The Employer, the discretionary Trustee and an ancillary
trustee may execute a letter agreement as a part of this Plan delineating any
indemnification agreement between the parties.
10.16 INVESTMENT IN GROUP TRUST FUND. The Employer, by adopting this
Plan, specifically authorizes the Trustee to invest all or any portion of
the assets comprising the Trust Fund in any group trust fund which at the time
of the investment provides for the pooling of the assets of plans qualified
under Code ss.401(a). This authorization applies solely to a group trust fund
exempt from taxation under Code ss.501(a) and the trust agreement of which
satisfies the requirements of Revenue Rule 81-100. The provisions of the group
trust fund agreement, as amended from time to time, are by this reference
incorporated within this Plan and Trust. The provisions of the group trust fund
will govern any investment of Plan assets in that fund. The Employer must
specify in an attachment to its adoption agreement the group trust fund(s) to
which this authorization applies. If the Trustee is acting as a nondiscretionary
Trustee, the investment in the group trust fund is available only in accordance
with a proper direction, by the Named Fiduciary, in accordance with Section
10.03(B). Pursuant to paragraph (c) of Section 10.03(A) of the Plan, a Trustee
has the authority to invest in certain common trust funds and collective
investment funds without the need for the authorizing addendum described in this
Section 10.16.
Furthermore, at the Employer's direction, the Trustee, for collective
investment purposes, may combine into one trust fund the Trust created under
this Plan with the Trust created under any other qualified retirement plan the
Employer maintains. However, the Trustee must maintain separate records of
account for the assets of each Trust in order to reflect properly each
Participant's Accrued Benefit under the plan(s) in which he is a Participant.
10.17 APPOINTMENT OF ANCILLARY TRUSTEE OR INDEPENDENT FIDUCIARY.
The employer, in writing, may appoint a person in any State to act as
ancillary trustee with respect to a designated portion of the Trust Fund,
subject to the consent required under Section 1.02 if the Master Plan Sponsor is
a financial institution. An ancillary trustee must acknowledge in writing its
acceptance of the terms and conditions of its appointment as ancillary trustee
and its fiduciary status under ERISA. The ancillary trustee has the rights,
powers, duties and discretion as the Employer may delegate, subject to any
limitations or directions specified in the instrument evidencing appointment of
the ancillary trustee and to the terms of the Plan or of ERISA. The investment
<PAGE>
powers delegated to the ancillary trustee may include any investment powers
delegated to the ancillary trustee may include any investment powers available
under Section 10.03 of the Plan including the right to invest any portion of the
assets of the Trust Fund in a common trust fund, as described in Code ss.584, or
in any collective investment fund, the provisions of which govern the investment
of such assets and which the Plan incorporates by this reference, but only if
the ancillary trustee is a bank or similar financial institution supervised by
the United States or by a State and the ancillary trustee (or its affiliate, as
defined in Code ss.1504) maintains the common trust fund or collective
investment fund exclusively for the collective investment of money contributed
by the ancillary trustee (or its affiliate) in a trustee capacity and which
conforms to the rules of the Comptroller of the currency. The Employer also may
appoint as an ancillary trustee, the trustee of any group trust fund designated
for investment pursuant to the provisions of Section 10.16 of the plan.
The ancillary trustee may resign its position at any time by providing at
least 30 days' advance written notice to the Employer, unless the Employer
waives this notice requirement. The employer, in writing, may remove an
ancillary trustee at any time. In the event of resignation or removal, the
Employer may appoint another ancillary trustee, return the assets to the control
and management of the Trustee or receive such assets in the capacity of
ancillary trustee. The Employer may delegate its responsibilities under this
Section 10.17 to a discretionary Trustee under the Plan, but not to a
nondiscretionary Trustee or to a Custodian, subject to the acceptance by the
discretionary Trustee of that delegation.
If the U.S. Department of Labor ("the Department") requires engagement of
an independent fiduciary to have control or management of all or a portion of
the Trust Fund, the Employer will appoint such independent fiduciary, as
directed by the Department. The independent fiduciary will have the duties,
responsibilities and powers prescribed by the Department and will exercise those
duties, responsibilities and powers in accordance with the terms, restrictions
and conditions established by the Department and, to the extent not inconsistent
with ERISA, the terms of the Plan. The independent fiduciary must accept its
appointment in writing and must acknowledge its status as a fiduciary of the
Plan.
ARTICLE XI
PROVISIONS RELATING TO
INSURANCE AND INSURANCE COMPANY
11.01 INSURANCE BENEFIT. The Employer may elect to provide incidental
life insurance benefits for insurable Participants who consent to life
insurance benefits by signing the appropriate insurance company application
form. The Trustee will not purchase any incidental life insurance benefit for
<PAGE>
any Participant prior to an allocation to the Participant's Account. At an
insured Participant's written direction, the Trustee will use all or any portion
of the Participant's nondeductible voluntary contributions, if any, to pay
insurance premiums covering the Participant's life. This Section 11.01 also
authorizes the purchase of life insurance, for the benefit of the Participant,
on the life of a family member of the Participant or on any person in whom the
Participant has an insurable interest. However, if the policy is on the joint
lives of the Participant and another person, the Trustee may not maintain that
policy if that other person predeceases the Participant.
The Employer will direct the Trustee as to the insurance company and
insurance agent through which the Trustee is to purchase the insurance
contracts, the amount of the coverage and the applicable dividend plan. Each
application for a policy, and the policies themselves, must designate the
Trustee as sole owner, with the right reserved to the Trustee to exercise any
right or option contained in the policies, subject to the terms and provisions
of this Agreement. The Trustee must be the named beneficiary for the Account of
the insured Participant. Proceeds of insurance contracts paid to the
Participant's Account under this Article XI are subject to the distribution
requirements of Article V and of Article VI. The Trustee will not retain any
such proceeds for the benefit of the Trust.
The Trustee will charge the premiums on any incidental benefit insurance
contract covering the life of a Participant against the Account of that
Participant. The Trustee will hold all incidental benefit insurance contracts
issued under the Plan as assets of the Trust created under the Plan.
(A) Incidental insurance benefits. The aggregate of life
insurance premiums paid for the benefit of a Participant, at all times, may
not exceed the following percentages of the aggregate of the Employer's
contributions allocated to any Participant's Account: (i) 49% in the case of the
purchase of ordinary life insurance contracts; or (ii) 25% in the case of the
purchase of term life insurance or universal life insurance contracts. If the
Trustee purchases a combination of ordinary life insurance contract(s) and term
life insurance or universal life insurance contract(s), then the sum of one-half
of the premiums paid for the ordinary life insurance contract(s) and the
premiums paid for the term life insurance or universal life insurance
contract(s) may not exceed 25% of the Employer contributions allocated to any
Participant's Account.
(B) Exception for certain profit sharing plans. If the Employer's
Plan is a profit sharing plan, the incidental insurance benefits
requirement does not apply to the Plan if the Plan purchases life insurance
benefits only from Employer contributions accumulated in the Participant's
Account for at least two years (measured from the allocation date).
<PAGE>
11.02 LIMITATION ON LIFE INSURANCE PROTECTION. The Trustee will not
continue any life insurance protection for any Participant beyond his annuity
starting date (as defined in Article VI). If the trustee holds any incidental
benefit insurance contract(s) for the benefit of a Participant when he
terminates his employment (other than by reason of death), the Trustee must
proceed as follows:
(a) If the entire cash value of the contract(s) is vested in the
terminating Participant, or if the contract(s) will have no cash value at
the end of the policy year in which termination of employment occurs, the
Trustee will transfer the contract(s) to the Participant endorsed so as to
vest in the transferee all right, title and interest to the contract(s),
free and clear of the Trust; subject however, to restrictions as to
surrender or payment of benefits as the issuing insurance company may
permit and as the Advisory Committee directs;
(b) If only part of the cash value of the contract(s) is vested in
the terminating Participant, the Trustee, to the extent the Participant's
interest in the cash value of the contract(s) is not vested, may adjust
the Participant's interest in the value of his Account attributable to
Trust assets other than incidental benefit insurance contracts and proceed
as in (a), or the Trustee must effect a loan from the issuing insurance
company on the sole security of the contract(s) for an amount equal to the
difference between the cash value of the contract(s) at the end of the
policy year in which termination of employment occurs and the amount of
the cash value that is vested in the terminating Participant, and the
Trustee must transfer the contract(s) endorsed so as to vest in the
transferee all right, title and interest to the contract(s), free and
clear of the Trust; subject however, to the restrictions as to surrender
or payment of benefits as the issuing insurance company may permit and the
Advisory Committee directs;
(c) If no part of the cash value of the contract(s) is vested in the
terminating Participant, the Trustee must surrender the contract(s) for
cash proceeds as may be available.
In accordance with the written direction of the Advisory Committee, the
Trustee will make any transfer of contract(s) under this Section 11.02 on the
Participant's annuity starting date (or as soon as administratively practicable
after that date). The Trustee may not transfer any contract under this Section
11.02 which contains a method of payment not specifically authorized by Article
<PAGE>
VI or which fails to comply with the joint and survivor annuity
requirements, if applicable, of Article VI. In this regard, the Trustee either
must convert such a contract to cash and distribute the cash instead of the
contract, of before making the transfer, require the issuing company to delete
the unauthorized method of payment option from the contract.
11.03 DEFINITIONS. For purposes of this Article XI:
(a) "Policy" means an ordinary life insurance contract or a term
life insurance contract issued by an insurer on the life of a Participant.
(b) "Issuing insurance company" is any life insurance company which
has issued a policy upon application by the Trustee under the terms of
this Agreement.
(c) "Contract" or "Contracts" means a policy of insurance. In the
event of any conflict between the provisions of this Plan and the terms
of any contract or policy of insurance issued in accordance with this
Article XI, the provisions of the Plan control.
(d) "Insurable Participant" means a Participant to whom an insurance
company, upon an application being submitted in accordance with the Plan,
will issue insurance coverage, either as a standard risk or as a risk in
an extra mortality classification.
11.04 DIVIDEND PLAN. The dividend plan is premium reduction nless the
Advisory Committee directs the Trustee to the contrary. The Trustee must use all
dividends for a contract to purchase insurance benefits or additional insurance
benefits for the Participant on whose life the insurance company has issued the
contract. Furthermore, the Trustee must arrange, where possible, for all
policies issued on the lives of Participants under the Plan to have the same
premium due date and all ordinary life insurance contracts to contain guaranteed
cash values with as uniform basic options as are possible to obtain. The term
"dividends" includes policy dividends, refunds of premiums and other credits.
11.05 INSURANCE COMPANY NOT A PARTY TO AGREEMENT. No insurance company,
solely in its capacity as an issuing insurance company, is a party to this
Agreement nor is the company responsible for its validity.
11.06 INSURANCE COMPANY NOT RESPONSIBLE FOR TRUSTEE'S ACTIONS. No
insurance company, solely in its capacity as an issuing insurance company, need
examine the terms of this Agreement nor is responsible for any action taken by
the Trustee.
<PAGE>
11.07 INSURANCE COMPANY RELIANCE ON TRUSTEE'S SIGNATURE. For
the purpose of making application to an insurance company and in the exercise of
any right or option contained in any policy, the insurance company may rely upon
the signature of the trustee and is saved harmless and completely discharged in
acting at the direction and authorization of the Trustee.
11.08 ACQUITTANCE. An insurance company is discharged from all
liability for any amount paid to the Trustee or paid in accordance with the
direction of the Trustee, and is not obliged to see to the distribution or
further application of any moneys it so pays.
11.09 DUTIES OF INSURANCE COMPANY. Each insurance company must keep
such records, make such identification of contracts, funds and accounts
within funds, and supply such information as may be necessary for the proper
administration of the Plan under which it is carrying insurance benefits.
Note: The provisions of this Article XI are not applicable, and the Plan
may not invest in insurance contracts, if a Custodian signatory to the Adoption
Agreement is a bank which has not acquired trust powers from its governing state
banking authority.
ARTICLE XII
MISCELLANEOUS
12.01 EVIDENCE. Anyone required to give evidence under the terms of
the Plan may do so by certificate, affidavit, document or other information
which the person to act in reliance may consider pertinent, reliable and
genuine, and to have been signed, made or presented by the proper party or
parties. The Advisory Committee and the Trustee are fully protected in acting
and relying upon any evidence described under the immediately preceding
sentence.
12.02 NO RESPONSIBILITY FOR EMPLOYER ACTION. Neither the trustee nor
the advisory Committee has any obligation or responsibility with respect to
any action required by the Plan to be taken by the Employer, any Participant or
eligible Employee, or for the failure of any of the above persons to act or make
any payment or contribution, or to otherwise provide any benefit contemplated
under this Plan. Furthermore, the Plan does not require the Trustee or the
Advisory Committee to collect any contribution required under the Plan, or to
determine the correctness of the amount of any Employer contribution. Neither
the Trustee nor the advisory Committee need inquire into or be responsible for
any action or failure to act on the part of the others, or on the part of any
other person who has any responsibility regarding the management, administration
or operation of the Plan, whether by the express terms of the Plan or by a
separate agreement authorized by the Plan or by the applicable provisions of
ERISA. Any action required of a corporate Employer must be by its Board of
Directors or its designate.
<PAGE>
12.03 FIDUCIARIES NOT INSURERS. The Trustee, the Advisory Committee,
the Plan Administrator and the Employer in no way guarantee the Trust Fund
from loss or depreciation. The Employer does not guarantee the payment of any
money which may be or becomes due to any person from the Trust Fund. The
liability of the Advisory Committee and the Trustee to make any payment from the
Trust Fund at any time and all times is limited to the then available assets of
the Trust.
12.04 WAIVER OF NOTICE. Any person entitled to notice under the Plan
may waiver the notice, unless the Code or Treasury regulations prescribe
the notice or ERISA specifically or impliedly prohibits such a waiver.
12.05 SUCCESSORS. The Plan is binding upon all persons entitled
to benefits under the plan, their respective heirs and legal
representatives, upon the Employer, its successors and assigns, and upon the
Trustee, the Advisory Committee, the Plan Administrator and their successors.
12.06 WORD USAGE. Words used in the masculine also apply to the
feminine where applicable, and wherever the context of the Employer's Plan
dictates, the plural includes the singular and the singular includes the plural.
12.07 STATE LAW. The law of the state of the Employer's principal place
of business (unless otherwise designated in an addendum to the Employer's
Adoption Agreement) will determine all questions arising with respect to the
provisions of this Agreement except to the extent superseded by Federal law.
12.08 EMPLOYER'S RIGHT TO PARTICIPATE. If the Employer's Plan fails
to qualify or to maintain qualification or if the Employer makes any
amendment or modification to a provision of this Plan (other than a proper
completion of an elective provision under the Adoption Agreement or the
attachment of an addendum authorized by the Plan or by the Adoption Agreement),
the Employer may no longer participate under this Master Plan. The Employer also
may not participate (or continue to participate) in this Master Plan if the
Trustee or Custodian (or a change in the trustee or Custodian) does not satisfy
the requirements of Section 1.02 of the Plan. If the Employer is not entitled to
participate under this Master Plan, the Employer's Plan is an
individually-designed plan and the reliance procedures specified in the
applicable Adoption Agreement no longer will apply.
<PAGE>
12.09 EMPLOYMENT NOT GUARANTEED. Nothing contained in this Plan, or
with respect to the establishment of the Trust, or any modification or
amendment to the Plan or Trust, or in the creation of any Account, or the
payment of any benefit, gives any Employee, Employee-Participant or any
Beneficiary any right to continue employment, any legal or equitable right
against the Employer, or Employee of the Employer, or against the Trustee, or
its agents or employees, or against the Plan Administrator, except as expressly
provided by the Plan, the Trust, ERISA or by a separate agreement.
ARTICLE XIII
EXCLUSIVE BENEFIT,
AMENDMENT, TERMINATION
13.01 EXCLUSIVE BENEFIT. Except as provided under Article III,
the Employer has no beneficial interest in any asset of the Trust and no
part of any asset in the Trust may ever revert to or be repaid to an Employer,
either directly or indirectly; nor, prior to the satisfaction of all liabilities
with respect to the Participants and their Beneficiaries under the Plan, may any
part of the corpus or income of the Trust Fund, or any asset of the Trust, be
(at any time) used for, or diverted to, purposes other than the exclusive
benefit of the Participants or their Beneficiaries. However, if the Commissioner
of Internal Revenue, upon the Employer's request for initial approval of this
Plan, determines the Trust created under the Plan is not a qualified trust
exempt from Federal income tax, then (and only then) the Trustee, upon written
notice from the Employer, will return the Employer's contributions (and
increment attributable to the contributions) to the Employer. The Trustee must
make the return of the Employer contribution under this Section 13.01 within one
year of a final disposition of the Employer's request for initial approval of
the Plan. The Employer's Plan and Trust will terminate upon the trustee's return
of the Employer's contributions.
13.02 AMENDMENT BY EMPLOYER. The employer has the right at
any time and from time to time:
(a) To amend the elective provisions of the Adoption Agreement in any
manner it deems necessary or advisable in order to qualify (or maintain
qualification of) this Plan and the Trust created under it under the
provisions of Code ss.401(a);
(b) To amend the Plan to allow the Plan to operate under
a waiver of the minimum funding requirement; and
(c) To amend this Agreement in any other manner.
No amendment may authorize or permit any of the trust Fund (other than the
part which is required to pay taxes and administration expenses) to be used for
or diverted to purposes other than for the exclusive benefit of the Participants
or their Beneficiaries or estates. No amendment may cause or permit any portion
<PAGE>
of the Trust Fund to revert to or become a property of the Employer. The
Employer also may not make any amendment which affects the rights, duties or
responsibilities of the Trustee, the Plan Administrator or the Advisory
committee without the written consent of the affected Trustee, the Plan
Administrator or the affected member of the Advisory Committee. The employer
must make all amendments in writing. Each amendment must state the date to which
it is either retroactively or prospectively effective. See Section 12.08 for the
effect of certain amendments adopted by the Employer.
(A) Code ss.411(d)(6) protected benefits. An amendment (including the
adoption of this Plan as a restatement of an existing plan) may not decrease a
Participant's Accrued Benefit, except to the extent permitted under Code
ss.412(c)(8), and may not reduce or eliminate Code ss.411(d)(6) protected
benefits determined immediately prior to the adoption date (or, if later, the
effective date) of the amendment. An amendment reduces or eliminates Code
ss.411(d)(6) protected benefits if the amendment has the effect of either (1)
eliminating or reducing an early retirement benefit or a retirement type subsidy
(as defined in Treasury regulations, eliminating an optional form of benefit.
The Advisory Committee must disregard an amendment to the extent application of
the amendment would fail to satisfy this paragraph. If the Advisory Committee
must disregard an amendment because the amendment would violate clause (1) or
clause (2), the Advisory Committee must maintain a schedule of the early
retirement option or other optional forms of benefit the Plan must continue for
the affected Participants.
13.03 AMENDMENT BY MASTER PLAN SPONSOR. The Master Plan Sponsor
(or PPD, as agent of the Master Plan Sponsor), without the Employer's
consent, may amend the Plan and Trust, from time to time, in order to conform
the Plan and Trust to any requirement for qualification of the Plan and Trust
under the Internal Revenue Code. The Master Plan Sponsor may not amend the Plan
in any manner which would modify any election made by the Employer under the
Plan without the Employer's written consent. Furthermore, the Master Plan
Sponsor may not amend the Plan in any manner which would violate the
proscription of Section 13.02. A Trustee does not have the power to amend the
Plan or Trust.
13.04 DISCONTINUANCE. The Employer has the right, at any time, to \
suspend or discontinue its contributions under the Plan, and to terminate,
at any time, this Plan and the Trust created under this Agreement. The Plan will
terminate upon the first to occur of the following:
(a) The date terminated by action of the Employer;
<PAGE>
(b) The dissolution or merger of the Employer, unless the
successor makes provision to continue the Plan, in which event the
successor must substitute itself as the Employer under this Plan. Any
termination of the Plan resulting from this paragraph (b) is not effective
until compliance with any applicable notice requirements under ERISA.
13.05 FULL VESTING ON TERMINATION. Upon either full or partial
termination of the Plan, or, if applicable, upon complete discontinuance of
profit sharing plan contributions to the Plan, an affected Participant's right
to his Accrued Benefit is 100% Nonforfeitable, irrespective of the
Nonforfeitable percentage which otherwise would apply under Article V.
13.06 MERGER/DIRECT TRANSFER. The trustee may not consent to, or
by a party to, any merger or consolidation with another plan, or to a
transfer of assets or liabilities to another plan, unless immediately after the
merger, consolidation or transfer, the surviving Plan provides each Participant
a benefit equal to or greater than the benefit each Participant would have
received had the Plan terminated immediately before the merger or consolidation
or transfer. The trustee possesses the specific authority to enter into merger
agreements or direct transfer of assets agreements with the trustees of other
retirement plans described in Code ss.401(a), including an elective transfer,
and to accept the direct transfer of plan assets, or to transfer plan assets, as
a party to any such agreement.
The Trustee may accept a direct transfer of plan assets on behalf of an
Employee prior to the date the Employee satisfies the Plan's eligibility
conditions. If the Trustee accepts such a direct transfer of plan assets, the
Advisory Committee and Trustee must treat the Employee as a Participant for all
purposes of the Plan except the Employee is not a Participant for purposes of
sharing in Employer contributions or Participant forfeitures under the Plan
until he actually becomes a Participant in the Plan.
(A) Elective transfers. The Trustee, after August 9, 1988, may not
consent to, or be a party to a merger, consolidation or transfer of assets
with a defined benefit plan, except with respect to an elective transfer, or
unless the transferred benefits are in the form of paid-up individual annuity
contracts guaranteeing the payment of the transferred benefits in accordance
with the terms of the transferor plan and in a manner consistent with the Code
and with ERISA. The Trustee will hold, administer and distribute the transferred
assets as a part of the trust Fund and the Trustee must maintain a separate
Employer contribution Account for the benefit of the Employee on whose behalf
the Trustee accepted the transfer in order to reflect the value of the
transferred assets. Unless a transfer of assets to this Plan is an elective
transfer, the Plan will preserve all Code ss.411(d)(6) protected benefits with
<PAGE>
respect to those transferred assets, in the manner described in Section
13.02. A transfer is an elective transfer if: (1) the transfer satisfies the
first paragraph of this Section 13.06; (2) the transfer is voluntary, under a
fully informed election by the Participant; (3) the Participant has an
alternative that retains his Code ss.411(d)(6) protected benefits (including an
option to leave his benefit in the transferor plan, if that plan is not
terminating); (4) the transfer satisfies the applicable spousal consent
requirements of the Code; (5) the transferor plan satisfies the joint and
survivor notice requirements of the Code, if the Participant's transferred
benefit is subject to those requirements; (6) the Participant has a right to
immediate distribution rom the transferor plan, in lieu of the elective
transfer; (7) the transferred benefit is at least the greater of the single sum
distribution provided by the transferor plan for which the Participant is
eligible or the present value of the Participant's accrued benefit under the
transferor plan payable at that plan"s normal retirement age; (8) the
Participant has a 100% Nonforfeitable interest in the transferred benefit; and
(9) the transfer otherwise satisfies applicable Treasury regulations. An
elective transfer may occur between qualified plans of any type. Any direct
transfer of assets from a defined benefit plan after August 9, 1988, which does
not satisfy the requirements of this paragraph will render the Employer's Plan
individually-designed. See Section 12.08.
(B) Distribution restrictions under Code ss.401(k). If the Plan
receives a direct transfer (by merger otherwise) of elective contributions
(or amounts treated as elective contributions) under a Plan with a Code
ss.401(k) arrangement, the distribution restrictions of Code ss.401(k)(2) and
(10) continue to apply to those transferred elective contributions.
13.07 TERMINATION.
(a) Procedure. Upon termination of the Plan, the distribution
provisions of Article VI remain operative, with the following exceptions:
(1) If the present value of the Participant's Nonforfeitable
Accrued Benefit does not exceed $3,500, the Advisory Committee will direct
the Trustee to distribute the Participant's Nonforfeitable Accrued Benefit to
him in lump sum as soon as administratively practicable after the Plan
terminates; and
(2) If the present value of the Participant's Nonforfeitable
Accrued Benefit exceeds $3,500, the Participant or the Beneficiary, in
addition to the distribution events permitted under Article VI, may elect to
have the Trustee commence distribution of his Nonforfeitable Accrued Benefit as
soon as administratively practicable after the Plan terminates.
<PAGE>
To liquidate the Trust, the Advisory committee will purchase a deferred
annuity contract for each Participant which protects the Participant's
distribution rights under the plan, if the Participant's Nonforfeitable Accrued
Benefit exceeds $3,500 and the Participant does not elect an immediate
distribution pursuant to
Paragraph (2).
If the Employer's Plan is a profit sharing plan, in lieu of the preceding
provisions of this Section 13.07 and the distribution provisions of Article VI,
the Advisory Committee will direct the Trustee to distribute each Participant's
Nonforfeitable Accrued Benefit, in lump sum, as soon as administratively
practicable after the termination of the Plan, irrespective of the present value
of the Participant's Nonforfeitable Accrued Benefit and whether the Participant
consents to that distribution. This paragraph does not apply if: (1) the Plan
provides an annuity option; or (2) as of the period between the Plan termination
date and the final distribution of assets, the Employer maintains any other
defined contribution plan (other than an ESOP). The Employer, in an addendum to
its Adoption Agreement numbered 13.07, may elect not to have this paragraph
apply.
The Trust will continue until the trustee in accordance with the direction
of the Advisory Committee has distributed all of the benefits under the Plan. On
each valuation date, the Advisory Committee will credit any part of a
Participant's Accrued Benefit retained in the trust with its proportionate share
of the Trust's income, expenses, gains and losses, both realized and unrealized.
Upon termination of the Plan, the amount, if any, in a suspense account under
Article III will revert to the Employer, subject to the conditions of the
treasury regulations permitting such a reversion. A resolution or amendment to
freeze all future benefit accrual but otherwise to continue maintenance of this
Plan, is not a termination for purposes of this Section 13.07.
(B) Distribution restrictions under Code ss.401(k). If the Employer's
Plan includes a Code ss.401(k) arrangement or if transferred assets
described in Section 13.06 are subject to the distribution restrictions of Code
ss.401(k)(2) and (10), the special distribution provisions of this Section 13.07
are subject to the restrictions of this paragraph. The portion of the
Participant's Nonforfeitable Accrued Benefit attributable to elective
contributions (or to amounts treated under the Code ss.401(k) arrangement as
elective contributions) is not distributable on account of Plan termination, as
described in this Section 13.07, unless: (a) the Participant otherwise is
entitled under the Plan to a distribution of that portion of his Nonforfeitable
Accrued Benefit; or (b) the Plan termination occurs without the establishment of
a successor plan. A successor plan under clause (b) is a defined contribution
plan (other than an ESOP) maintained by the Employer (or by a related employer)
<PAGE>
at the time of the termination of the Plan or within the period ending
twelve months after the final distribution of assets. A distribution made after
March 31, 1988, pursuant to clause (b), must be part of a lump sum distribution
to the Participant of his Nonforfeitable Accrued Benefit.
ARTICLE XIV
CODE ss.401(k) AND CODE ss.401(m) ARRANGEMENTS
14.01 APPLICATION. This Article XIV applies to an Employer's Plan
only if the Employer is maintaining the terms of the Code ss.401(k)
arrangement, if any, under the Plan. If the Employer's Plan is a Standardized
Plan, the Code ss.401(k) arrangement must be a salary reduction arrangement. If
the Employer's Plan is a Nonstandardized Plan, the Code ss.401(k) arrangement
may be a salary reduction arrangement or a cash or deferred arrangement.
(A) Salary Reduction Arrangement. If the Employer elects a
salary reduction arrangement, any Employee eligible to participate in the
Plan may file a salary reduction agreement with the Advisory Committee. The
salary reduction agreement may not be effective earlier than the following date
which occurs last: (i) the Employee's Plan Entry Date (or, in the case of a
reemployed Employee, his participation date under Article II); (ii) the
execution date of the employee's salary reduction agreement; (iii) the date the
Employer adopts the Code ss.401(k) arrangement by executing the Adoption
Agreement; or (iv) the effective date of the Code ss.401(k) arrangement, as
specified in the Employer's Adoption Agreement. Regarding clause (i), an
Employee subject to the Break in Service rule of Section 2.03(B) of the Plan may
not enter into a salary reduction agreement until the Employee has completed a
sufficient number of Hours of Service to receive credit for a Year of Service
(as defined in Section 2.02) following his reemployment commencement date. A
salary reduction agreement will apply only to Compensation which becomes
currently available to the Employee after the effective date of the salary
reduction agreement. The Employer will apply a reduction election to all
Compensation (and to increases in such Compensation) unless the Employee
specifies in his salary reduction agreement to limit the election to certain
Compensation. The Employer will specify in Adoption Agreement Section 3.01 the
rules and restrictions applicable to the Employees salary reduction agreements.
(B) Cash or deferred arrangement. If the Employer elects a
cash or deferred arrangement, a Participant may elect to make a cash
election against his proportionate share of the Employer's Cash or Deferred
Contribution, in accordance with the Employer's elections in Adoption Agreement
Section 3.01. A Participant's proportionate share of the Employer's Cash or
Deferred Contribution is the percentage of the total Cash or Deferred
Contribution which bears the same ratio that the Participant's Compensation for
<PAGE>
the Plan Year bears to the total Compensation of all Participants for the
Plan Year. For purposes of determining each Participant's proportionate share of
the Cash or Deferred Contribution, a Participant's Compensation is his
Compensation as determined under Section 1.12 of the Plan (as modified by
Section 3.06 for allocation purposes), excluding any effect the proportionate
share may have on the Participant's Compensation for the Plan Year. The Advisory
Committee will determine the proportionate share prior to the Employer's actual
contribution to the Trust, to provide the Participants the opportunity to file
cash elections. The Employer will pay directly to the Participant the portion of
his proportionate share the Participant has elected to receive in cash.
(C) Election not to participate. A Participant's or Employee's
election not to participate, pursuant to Section 2.06, includes his right
to enter into a salary reduction agreement or to share in the allocation of a
Cash or Deferred Contribution, unless the Participant or Employee limits the
effect of the election to the non-401(k) portions of the Plan.
14.03 DEFINITIONS. For purposes of this Article XIV:
(a) "Highly Compensated Employee" means an Eligible Employee who
satisfies the definition in Section 1.09 of the Plan. Family members
aggregated as a single Employee under Section 1.09 constitute a single
Highly Compensated Employee, whether a particular family member is
a Highly Compensated Employee or a Nonhighly Compensated Employee
without the application of family aggregation.
(b) "Nonhighly Compensated Employee" means an Eligible Employee who
is not a Highly Compensated Employee and who is not a family member
treated as a Highly Compensated Employee.
(c) "Eligible Employee" means, for purposes of the ADP test described
in Section 14.08, an Employee who is eligible to enter into a salary
reduction agreement for the Plan Year, irrespective of whether he actually
enters into such an agreement, and a Participant who is eligible for an
allocation of the Employer's Cash or Deferred Contribution for the Plan
Year. For purposes of the ACP test described in Section 14.09, an
"Eligible Employee" means a Participant who is eligible to receive an
allocation of matching contributions (or would be eligible if he made the
type of contributions necessary to receive an allocation of matching
contributions) and a Participant who is eligible to make nondeductible
contributions, irrespective of whether he actually makes nondeductible
contributions. An Employee continues to be an Eligible Employee during
a period the Plan suspends the Employee's right to make elective
deferrals or nondeductible contributions following a hardship
distribution.
<PAGE>
(d) "Highly Compensated Group" means the group of Eligible
Employees who are Highly Compensated Employees for the Plan
Year.
(f) "Compensation" means, except as specifically provided in this
Article XIV, Compensation as defined for nondiscrimination purposes
in Section 1.12(B) of the Plan. For Plan Years beginning prior to
the later of January 1, 1992, or 60 days after the Treasury issues
final regulations under Code ss.401(k) and ss.401(m), the Plan may limit
Compensation taken into account to Compensation received only for the
portion of the Plan Year in which the Employee was an Eligible
Employee and only for the portion of the Plan Year in which the
Plan or the Code ss.401(k) arrangement was in effect. For subsequent
Plan Years, Compensation must include Compensation for the entire Plan
Year, irrespective of whether the Plan or the Code ss.401(k) arrangement
was in effect for the entire Plan Year or whether the Employee begins,
resumes or ceases to be an Eligible Employee during the Plan Year.
(g) "Deferral contributions" are Salary Reduction Contributions
and Cash or Deferred Contributions the Employer contributes to the Trust
on behalf of an Eligible Employee, irrespective of whether, in the case
of Cash or Deferred Contributions, the contribution is at the
election of the Employee.
(h) "Elective deferrals" are all Salary Reduction Contributions
and that portion of any Cash or Deferred Contribution which the
Employer contributes to the Trust at the election of an Eligible
Employee. Any portion of a Cash or Deferred Contribution contributed
to the Trust because of the Employee's failure to make a cash election
is an elective deferral. However, any portion of a Cash or Deferred
Contribution over which the Employee does not have a cash election
is not an elective deferral. Elective deferrals do not include
amounts which have become currently available to the Employee prior
to the election nor amounts designated as nondeductible contributions
at the time of deferral or contribution.
(i) "Matching contributions" are contributions made by the
Employer on account of elective deferrals under a Code ss.401(k)
arrangement or on account of employee contributions. Matching
contributions also include Participant forfeitures allocated on account
of such elective deferrals or employee contributions.
(j) "Nonelective contributions" are contributions made by the
Employer which are not subject to a deferral election by an Employee and
which are not matching contributions.
<PAGE>
(k) "Qualified matching contributions" are matching contributions
which are 100% Nonforfeitable at all times and which are subject to the
distribution restrictions described in paragraph (m). Matching
contributions are not 100% Nonforfeitable at all times if the Employee has
a 100% Nonforfeitable interest because of his Years of Service taken into
account under a vesting schedule. Any matching contributions allocated to
a Participant's Qualified Matching Contributions Account under the Plan
automatically satisfy the definition of qualified matching contributions.
(l) "Qualified nonelective contributions" are nonelective
contributions which are 100% Nonforfeitable at all times and which are
subject to the distribution restrictions described in paragraph (m).
Nonelective contributions are not 100% Nonforfeitable at all times if the
Employee has a 100% Nonforfeitable interest because of his Years of
Service taken into account under a vesting schedule. Any nonelective
contributions allocated to a Participant's Qualified Nonelective
Contributions Account under the Plan automatically satisfy the
definition of qualified nonelective contributions.
(m) "Distribution restrictions" means the Employee may not receive a
distribution of the specified contributions (nor earnings on those
contributions) except in the event of (l) the Participant's death,
disability, termination of employment or attainment of age 59 1/2, (2)
financial hardship satisfying the requirements of Code ss.401(k) and the
applicable Treasury regulations, (3) a plan termination, without
establishment of a successor defined contribution plan (other than an
ESOP), (4) a sale of substantially all of the assets (within the meaning
of Code ss.409(d)(2)) used in a trade or business, but only to an employee
who continues employment with the corporation acquiring those assets, or
(5) a sale by a corporation of its interest in a subsidiary (within the
meaning of Code ss.409(d)(3)), but only to an employee who continues
employment with the subsidiary. For Plan Years beginning after December
31, 1988, a distribution on account of financial hardship, as described in
clause (2), may not include earnings on elective deferrals credited as of
a date later than December 31, 1988, and may not include qualified
matching contributions and qualified nonelective contributions, nor any
earnings on such contributions, irrespective of when credited. A
distribution described in clauses (3), (4) or (5), if made after March 31,
1988, must be a lump sum distribution, as required under Code
ss.401(k)(10).
(n) "Employee contributions" are contributions made by a Participant
on an after-tax basis, whether voluntary or mandatory, and designated, at
the time of contribution, as an employee (or nondeductible) contribution.
<PAGE>
Elective deferrals and deferral contributions are not employee
contributions. Participant nondeductible contributions, made pursuant
to Section 4.01 of the Plan, are employee contributions.
14.04 MATCHING CONTRIBUTIONS/EMPLOYEE CONTRIBUTIONS. The Employer may
elect in Adoption Agreement Section 3.01 to provide matching contributions. The
Employer also may elect in Adoption Agreement Section 4.01 to permit or to
require a Participant to make nondeductible contributions.
(A) Mandatory contributions. Any Participant nondeductible
contributions eligible for matching contributions are mandatory
contributions. The Advisory Committee will maintain a separate accounting,
pursuant to Section 4.06 of the Plan, to reflect the Participant's Accrued
Benefit derived from his mandatory contributions. The Employer, under Adoption
Agreement Section 4.05, may prescribe special distribution restrictions which
will apply to the Mandatory Contributions Account prior to the Participant's
Separation from Service. Following his Separation from Service, the general
distribution provisions of Article VI apply to the distribution of the
Participant's Mandatory Contributions Account.
14.05 TIME OF PAYMENT OF CONTRIBUTIONS. The Employer must make Salary
Reduction Contributions to the Trust within an administratively reasonable
period of time after withholding the corresponding Compensation from the
Participant. Furthermore, the Employer must make Salary Reduction Contributions,
Cash or Deferred Contributions, Employer matching contributions (including
qualified Employer matching contributions) and qualified Employer nonelective
contributions no later than the time prescribed by the Code or by applicable
Treasury regulations. Salary Reduction Contributions and Cash or Deferred
Contributions are Employer contributions for all purposes under this Plan,
except to the extent the Code or Treasury regulations prohibit the use of these
contributions to satisfy the qualification requirements of the Code.
14.06 SPECIAL LOCATION PROVISIONS--DEFERRAL CONTRIBUTIONS, MATCHING
CONTRIBUTIONS AND QUALIFIED NONELECTIVE CONTRIBUTIONS. To make allocations under
the Plan, the Advisory Committee must establish a Deferral Contributions
Account, a Qualified Matching Contributions Account, a Regular Matching
Contributions Account, a Qualified Nonelective Contributions Account and an
Employer Contributions Account for each Participant.
(A) Deferral contributions. The Advisory Committee will allocate to
each Participant's Deferral Contributions Account the amount of Deferral
Contributions the Employer makes to the Trust on behalf of the Participant. The
Advisory Committee will make this allocation as of the last day of each Plan
Year unless, in Adoption Agreement Section 3.04, the Employer elects more
frequent allocation dates for salary reduction contributions.
<PAGE>
(B) Matching contributions. The employer must specify in its
Adoption Agreement whether the Advisory Committee will allocate matching
contributions to the Qualified Matching Contributions Account or to the Regular
Matching Contributions Account of each Participant. The Advisory Committee will
make this allocation as of the last day of each Plan Year unless, in Adoption
Agreement Section 3.04, the Employer elects more frequent allocation dates for
matching contributions.
(1) To the extent the Employer makes matching contributions under a
fixed matching contribution formula, the Advisory Committee will allocate
the matching contribution to the Account of the Participant on whose
behalf the Employer makes that contribution. A fixed matching
contribution formula is a formula under which the Employer contributes
a certain percentage or dollar amount on behalf of a Participant based on
that Participant's deferral contributions or nondeductible contributions
eligible for a match, as specified in Section 3.01 of the Employer's
Adoption Agreement. The employer may contribute on a Participant's behalf
under a specific matching contribution formula only if the Participant
satisfies the accrual requirements for matching contributions specified in
Section 3.06 of the Employer's Adoption Agreement and only to the extent
the matching contribution does not exceed the Participant's annual
additions limitation in Part 2 of Article III.
(2) To the extent the Employer makes matching contributions under a
discretionary formula, the Advisory Committee will allocate the
discretionary matching contributions to the Account of each Participant
who satisfies the accrual requirements for matching contributions
specified in Section 3.06 of the Employer's Adoption Agreement. The
allocation of discretionary matching contributions to a Participant's
Account is in the same proportion that each Participant's eligible
contributions bear to the total eligible contributions of all
Participants. If the discretionary formula is a tiered formula, the
Advisory Committee will make this allocation separately with respect to
each tier of eligible contributions, allocating in such manner the amount
of the matching contributions made with respect to that tier. "Eligible
contributions" are the Participant's deferral contributions or
nondeductible contributions eligible for an allocation of matching
contributions, as specified in Section 3.01 of the Employer's Adoption
Agreement.
If the matching contribution formula applies both to deferral
contributions and to Participant nondeductible contributions, the matching
contributions apply first to deferral contributions. Furthermore, the matching
contribution formula does not apply to deferral contributions that are excess
<PAGE>
deferrals under Section 14.07. For this purpose: (a) excess deferrals
relate first to deferral contributions for the Plan Year not otherwise eligible
for a matching contribution; and (2) if the Plan Year is not a calendar year,
the excess deferrals for a Plan Year are the last elective deferrals made for a
calendar year.
(C) Qualified nonelective contributions. If the employer, at the
time of contribution, designates a contribution to be a qualified
nonelective contribution for the Plan Year, the Advisory Committee will allocate
that qualified nonelective contribution to the Qualified Nonelective
Contributions Account of each Participant eligible for an allocation of that
designated contribution, as specified in Section 3.04 of the Employer's Adoption
Agreement. The Advisory Committee will make the allocation to each eligible
Participant's Account in the same ratio that the Participant's Compensation for
the Plan Year bears to the total Compensation of all eligible Participants for
the Plan Year. The Advisory Committee will determine a Participant's
Compensation in accordance with the general definition of Compensation under
Section 1.12 of the Plan, as modified by the Employer in Sections 1.12 and 3.06
of its Adoption Agreement.
(D) Nonelective contributions. To the extent the Employer makes
nonelective contributions for the Plan Year which, at the time of contribution,
it does not designate as qualified nonelective contributions, the Advisory
Committee will allocate those contributions in accordance with the elections
under Section 3.04 of the Employer's Adoption Agreement. For purposes of the
special nondiscrimination tests described in Sections 14.08 and 14.09, the
Advisory Committee may treat nonelective contributions allocated under this
paragraph as qualified nonelective contributions, if the contributions otherwise
satisfy the definition of qualified nonelective contributions.
14.07 ANNUAL ELECTIVE DEFERRAL LIMITATION.
(A) Annual Elective Deferral Limitation. An Employee's elective
deferrals for a calendar year beginning after December 31, 1986, may not
exceed the 402(g) limitation. The 402(g) limitation is the greater of $7,000 or
the adjusted amount determined by the Secretary of the Treasury. If, pursuant to
a salary reduction agreement or pursuant to a cash or deferral election, the
Employer determines the Employee's elective deferrals to the Plan for a calendar
year would exceed the 402(g) limitation, the Employer will suspend the
Employee's salary reduction agreement, if any, until the following January 1 and
pay in cash the portion of a cash or deferral election which would result in the
Employee's elective deferrals for the calendar year exceeding the 402(g)
limitation. If the Advisory Committee determines an Employee's elective
deferrals already contributed to the Plan for a calendar year exceed the 402(g)
<PAGE>
limitation, the Advisory Committee will distribute the amount in excess of
the 402(g) limitation (the "excess deferral"), as adjusted for allocable income,
no later than April 15 of the following calendar year. If the Advisory Committee
distributes the excess deferral by the appropriate April 15, it may make the
distribution irrespective of any other provision under this Plan or under the
Code. The Advisory Committee will reduce the amount of excess deferrals for a
calendar year distributable to the Employee by the amount of excess
contributions (as determined in Section 14.08), if any, previously distributed
to the Employee for the Plan Year beginning in that calendar year.
If an Employee participates in another plan under which he makes elective
deferrals pursuant to a Code ss.401(k) arrangement, elective deferrals under a
Simplified Employee Pension, or salary reduction contributions to a
tax-sheltered annuity, irrespective of whether the Employer maintains the other
plan, he may provide the Advisory Committee a written claim for excess deferrals
made for a calendar year. The Employee must submit the claim no later than the
March 1 following the close of the particular calendar year and the claim must
specify the amount of the Employee's elective deferrals under this Plan which
are excess deferrals. If the Advisory Committee receives a timely claim, it will
distribute the excess deferral (as adjusted for allocable income) the Employee
has assigned to this Plan, in accordance with the distribution procedure
described in the immediately preceding paragraph.
(B) Allocable income. For purposes of making a distribution of
excess deferrals pursuant to this Section 14.07, allocable income means net
income or net loss allocable to the excess deferrals for the calendar year in
which the Employee made the excess deferral and for the "gap period" measured
from the beginning of the next calendar year to the date of the distribution. If
the distribution of the excess deferral occurs during the calendar year in which
the Employee made the excess deferral, the Advisory Committee will treat as a
"gap period" the period from the first day of that calendar year to the date of
the distribution. The Advisory Committee will determine allocable income in the
same manner as described in Section 14.08(F) for excess contributions, except
the numerator of the allocation fraction will be the amount of the Employee's
excess deferrals and the denominator of the allocation fraction will be the
Employee's Accrued Benefit attributable to his elective deferrals.
14.08 ACTUAL DEFERRAL PERCENTAGE ("ADP") TEST. For each Plan Year,
the Advisory Committee must determine whether the Plan's Code ss.401(k)
arrangement satisfies either of the following ADP tests:
(i) The average ADP for the Highly Compensated Group does
not exceed 1.25 times the average ADP of the Nonhighly
Compensated Group; or
<PAGE>
(ii) The average ADP for the Highly Compensated Group does not exceed
the average ADP for the Nonhighly Compensated Group by more than
two percentage points (or the lesser percentage permitted by the multiple
use limitation in Section 14.10) and the average ADP for the Highly
Compensated Group is not more than twice the average ADP for the
Non-highly Compensated Group.
(A) Calculation of ADP. The average ADP for a group is the average
of the separate ADPs calculated for each Eligible Employee who is a member
of that group. An Eligible Employee's ADP for a Plan Year is the ratio of the
Eligible Employee's deferral contributions for the Plan Year to the Employee's
Compensation for the Plan Year. For aggregated family members treated as a
single Highly Compensated Employee, the ADP of the family unit is the greater
of: (i) the ADP determined by combining the deferral contributions and
Compensation of the family members who are Highly Compensated Employees without
family aggregation; or (ii) the ADP determined by combining the deferral
contributions and Compensation of all aggregated family members. A Nonhighly
Compensated Employee's ADP doesn't include elective deferrals made to this Plan
or to any other Plan maintained by the Employer to the extent such elective
deferrals exceed the 402(g) limitation described in Section 14.07(A).
The Advisory Committee may determine (in a manner consistent with Treasury
regulations) the ADPs of the Eligible Employees by taking into account qualified
nonelective contributions or qualified matching contributions, or both, made to
this Plan or to any other qualified Plan maintained by the employer. The
Advisory Committee may not include qualified nonelective contributions in the
ADP test unless the allocation of nonelective contributions is nondiscriminatory
when the Advisory Committee takes into account all nonelective contributions
(including the qualified nonelective contributions) and also when the Advisory
Committee takes into account only the nonelective contributions not used in
either the ADP test described in this Section 14.09. For Plan Years beginning
after December 31, 1989, the Advisory Committee may not include in the ADP test
any qualified nonelective contributions or qualified matching contributions
under another qualified plan unless that plan has the same plan year as this
Plan. The Advisory Committee must maintain records to demonstrate compliance
with the ADP test, including the extent to which the Plan used qualified
nonelective contributions or qualified matching contributions to satisfy the
test.
(B) Special aggregation rule for Highly Compensated Employees.
To determine the ADP of any Highly Compensated Employee, the deferral
contributions taken into account must include any elective deferrals made by the
Highly Compensated Employee under any other Code ss.401(k) arrangement
<PAGE>
maintained by the Employer, unless the elective deferrals are to an ESOP.
If the plans containing the Code ss.401(k) arrangements have different plan
years, the Advisory Committee will determine the combined deferral contributions
on the basis of the plan years ending in the same calendar year.
(C) Aggregation of certain Code ss.401(k) arrangements. If the
Employer treats two plans as a unit for coverage or nondiscrimination
purposes, the Employer must combine the Code ss.401(k) arrangements under such
plans to determine whether either plan satisfies the ADP test. This aggregation
rule applies to the ADP determination for all Eligible Employees, irrespective
of whether an Eligible Employee is a Highly Compensated Employee or a nonhighly
Compensated Employee. The Advisory Committee also may elect to aggregate the
Code ss.401(k) arrangements under plans which the Employer does not treat as a
unit for coverage or nondiscrimination purposes. For Plan Years beginning after
December 31, 1989, an aggregation of Code ss.401(k) arrangements under this
paragraph does not apply to plans which have different plan years and, for Plan
Years beginning after December 31, 1988, the Advisory Committee may not
aggregate an ESOP )(or the ESOP portion of a plan) with a non-ESOP plan (or
non-ESOP portion of a plan).
(D) Characterization of excess contributions. If, pursuant to this
Section 14.08, the Advisory Committee has elected to include qualified
matching contributions in the average ADP, the Advisory Committee will treat
excess contributions as attributable proportionately to deferral contributions
and to qualified matching contributions allocated on the basis of those deferral
contributions. If the total amount of a Highly Compensated Employee's excess
contributions for the Plan Year exceeds his deferral contributions or qualified
matching contributions for the Plan Year, the Advisory Committee will treat the
remaining portion of his excess contributions as attributable to qualified
nonelective contributions. The Advisory Committee will reduce the amount of
excess contributions for a Plan Year distributable to a Highly Compensated
Employee by the amount of excess deferrals (as determined in Section 14.07), if
any, previously distributed to that Employee for the Employee's taxable year
ending in that Plan Year.
(E) Distribution of excess contributions. If the Advisory
Committee determines the Plan fails to satisfy the ADO test for a plan
Year, it must distribute the excess contributions, as adjusted for allocable
income, during the next Plan Year. However, the Employer will incur an excise
tax equal to 10% of the amount of excess contributions for a Plan Year not
distributed tot he appropriate Highly Compensated Employees during the first 2
1/2 months of that next Plan Year. The excess contributions are the amount of
deferral contributions made by the Highly compensated Employees with causes the
<PAGE>
Plan to fail to satisfy the ADP test. The Advisory Committee will
distribute to each Highly Compensated Employee his respective share of the
excess contributions. The Advisory Committee will determine the respective
shares of excess contributions by starting with the Highly Compensated
Employee(s) who has the greatest ADP of the Highly Compensated Employee(s) whose
ADP the Advisory Committee already has reduced), and continuing in this manner
until the average ADP for the Highly Compensated Group satisfies the ADP test.
If the Highly Compensated Employee si part of an aggregated family group, the
Advisory Committee, in accordance with the applicable Treasury regulations, will
determine each aggregated family member's allocable share of the excess
contributions assigned to the family unit.
(F) Allocable income. To determine the amount of the
corrective distribution required under this Section 14.08, the Advisory
Committee must calculate the allocable income for the Plan Year in which the
excess contributions arose and for the "gap period" measured from the beginning
of the next Plan Year to the date of the distribution. "Allocable income" means
net income or net loss. To calculate allocable income for the Plan Year, the
Advisory Committee: (1) first will determine the net income or net loss for the
Plan Year on the Highly Compensated Employee's Accrued Benefit attributable to
deferral contributions; and (2) then will multiply this net income or net loss
by the following fraction:
Amount of the Highly Compensated
Employee's excess contributions
--------------------------------------------------------
Accrued Benefit attributable to deferral contributions
The Accrued Benefit attributable to deferral contributions includes the
Accrued Benefit attributable to qualified matching contributions and qualified
nonelective contributions taken into account in the ADP test for the Plan Year
or for any prior Plan Year. For purposes of the denominator of the fraction, the
Advisory Committee will calculate the Accrued Benefit attributable to deferral
contributions as of the last day of the Plan Year (without regard to the net
income or net loss for the Plan Year on that Accrued Benefit).
To calculate allocable income for the "gap period," the Advisory Committee
will perform the same calculation as described in the preceding paragraph,
except in clause (1) the Advisory Committee will determine, as of the last day
of the month preceding the date of distribution, the net income or net loss for
the "gap period" and in clause (2) will calculate the Accrued Benefit
attributable to deferral contributions as of the day before the distribution. If
the Plan does not perform a valuation on the last day of the month preceding the
date of distribution, the Advisory Committee, in lieu of the calculation
described in this paragraph, will calculate allocable income for each month in
<PAGE>
the "gap period" as equal to 10% of the allocable income for the Plan Year.
Under this alternate calculation, the Advisory Committee will disregard the
month in which the distribution occurs, if the Plan makes the distribution no
later than the 15th day of that month.
14.09 NONDISCRIMINATION RULES FOR EMPLOYER MATCHING
CONTRIBUTIONS/PARTICIPANT NON-DEDUCTIBLE CONTRIBUTIONS. For Plan Years beginning
after December 31, 1986, the Advisory Committee must determine whether the
annual Employer matching contributions (other than qualified matching
contributions used in the ADP under Section 14.08), if any, and the Employee
contributions, if any, satisfy either of the following average contribution
percentage ("ACP") tests:
(i) The ACP for the Highly Compensated Group doe snot
exceed 1.25 times the ACP of the Nonhighly Compensated Group;
or
(ii) The ACP for the Highly Compensated Group does not exceed the ACP
for the Nonhighly Compensated Group by more than two percentage points
(or the lesser percentage permitted by the multiple use limitation
in Section 14.10) and the ACP for the Highly Compensated Group is not more
than twice the ACP for the Nonhighly Compensated Group.
(A) Calculation of ACP. The average contribution percentage for a
group is the average of the separate contribution percentages calculated
for each Eligible Employee who is a member of that group. An Eligible Employee's
contribution percentage for a Plan Year is the ratio of the Eligible Employee's
aggregate contributions for the Plan Year to the Employee's Compensation for the
Plan Year. "Aggregate contributions" are Employer matching contributions (other
than qualified matching contributions used in the ADP test under Section 14.08)
and employee contributions (as defined in Section 14.03). For aggregated family
members treated as a single Highly Compensated Employee, the contribution
percentage of the family unit is the greater of: (i) the contribution percentage
determined by combining the aggregate contributions and Compensation of the
family members who are Highly Compensated Employees without family aggregation;
or (ii) the contribution percentage determined by combining the aggregate
contributions and Compensation of all aggregated family members.
The Advisory Committee, in a manner consistent with Treasury regulations,
may determine the contribution percentages of the Eligible Employees by taking
into account qualified nonelective contributions (other than qualified
nonelective contributions used in the ADP test under Section 14.08) or elective
deferrals, or both, made to this Plan or to any other qualified Plan maintained
by the Employer. The Advisory Committee may not include qualified nonelective
<PAGE>
contributions in the ACP test unless the allocation of nonelective
contributions is nondiscriminatory when the Advisory Committee takes into
account all nonelective contributions (including the qualified nonelective
contributions) and also when the advisory Committee takes into account only the
nonelective contributions not used in either the ADP test described in Section
14.08 or the ACP test described in this Section 14.09. The Advisory Committee
may not include elective deferrals in the ACP test, unless the Plan which
includes the elective deferrals satisfies the ADP test both with and without the
elective deferrals included in this ACP test. For Plan Years beginning after
December 31, 1989, the Advisory Committee may not include in the ACP test any
qualified nonelective contributions or elective deferrals under another
qualified plan unless that plan has the same plan year as this Plan. The
Advisory Committee must maintain records to demonstrate compliance with the ACP
test, including the extent to which the Plan used qualified nonelective
contributions or elective deferrals to satisfy the test.
(B) Special aggregation rule for Highly Compensated Employees.
To determine the contribution percentage of any Highly Compensated
Employee, the aggregate contributions taken into account must include any
matching contributions (other than qualified matching contributions used in the
ADP test) and any Employee contributions made on his behalf to any other plan
maintained by the Employer, unless the other plan is an ESOP. If the plans have
different plan years, the Advisory Committee will determine the combined
aggregate contributions on the basis of the plan years ending in the same
calendar year.
(C) Aggregation of certain plans. If the Employer treats two plans
as a unit for coverage or nondiscrimination purposes, the Employer must
combine the plans to determine whether either plan satisfies the ACP test. This
aggregation rule applies to the contribution percentage determination for all
Eligible Employees, irrespective of whether an Eligible Employee is a Highly
Compensated Employee or a Nonhighly Compensated Employee. The Advisory Committee
also may elect to aggregate plans which the employer does not treat as a unit
for coverage or nondiscrimination purposes. For Plan Years beginning after
December 31, 1989, in aggregation of plans under this paragraph does not apply
to plans which have different plan years and, for Plan Years beginning after
December 31, 1988, the Advisory Committee may not aggregate an ESOP (or the ESOP
portion of a plan) with a non-ESOP plan (or non-ESOP portion of a plan).
(D) Distribution of excess aggregate contributions. The Advisory
Committee will determine excess aggregate contributions after determining
excess deferrals under Section 14.07 and excess contributions under Section
14.08. If the advisory Committee determines the Plan fails to satisfy the ACP
test for a plan Year, it must distribute the excess aggregate contributions, as
<PAGE>
adjusted for allocable income, during the next Plan Year. However, the
Employer will incur an excise tax equal to 10% of the amount of excess aggregate
contributions for a Plan Year not distributed to the appropriate Highly
Compensated Employees during the first 2 1/2 months of that next Plan Year. The
excess aggregate contributions are the amount of aggregate contributions
allocated on behalf of the Highly Compensated Employees which causes the Plan to
fail to satisfy the ACP test. The Advisory Committee will distribute to each
Highly Compensated Employee his respective share of the excess aggregate
contributions. The Advisory Committee will determine the respective shares of
excess aggregate contributions by starting with the Highly Compensated
Employee(s) who has the greatest contribution percentage, reducing his
contribution percentage to the next highest contribution percentage, then, if
necessary, reducing the contribution percentage of the Highly Compensated
Employee(s) at the next highest contribution percentage level (including the
contribution percentage of the Highly Compensated Employee(s) whose contribution
percentage the Advisory Committee already has reduced), and continuing in this
manner until the ACP for the Highly Compensated Group satisfies the ACP test. if
the Highly Compensated Employee is part of an aggregated family group, the
Advisory Committee, in accordance with the applicable Treasury regulations, will
determine each aggregated family member's allocable share of the excess
aggregate contributions assigned to the family unit.
(E) Allocable income. To determine the amount of the
corrective distribution required under this Section 14.09, the Advisory
Committee must calculate the allocable income for the Plan Year in which the
excess aggregate contributions arose and for the "gap period" measured from the
beginning of the next Plan Year to the date of the distribution. "Allocable
income" means net income or net loss. The Advisory Committee will determine
allocable income in the same manner as described in Section 14.08(F) for excess
contributions, except the numerator of the allocation fraction will be the
Highly Compensated Employee's excess aggregate contributions and the denominator
of the allocation fraction will be the Employee's Accrued Benefit attributable
to aggregate contributions and, if applicable, to qualified nonelective
contributions and elective deferrals included in the ACP test for the Plan Year
or for any prior Plan Year.
(F) Characterization of excess aggregate contributions. The
Advisory Committee will treat a Highly Compensated Employee's allocable
share of excess aggregate contributions in the following priority: (1) first as
attributable to his Employee contributions which are voluntary contributions, if
any; (2) then as matching contributions allocable with respect to excess
contributions determined under the ADP test described in Section 14.08; (3) then
on a pro rata basis to matching contributions and to the deferral contributions
<PAGE>
relating to those matching contributions which the Advisory Committee has
included in the ACP test; (4) then on a pro rata basis to Employee contributions
which are mandatory contributions, if any and to the matching contributions
allocated on the basis of those mandatory contributions; and (5) last to
qualified nonelective contributions used int he ACP test. To the extent the
Highly Compensated Employee's excess aggregate contributions are attributable to
matching contributions, and he is not 100% vested in his Accrued Benefit
attributable to matching contributions, the Advisory Committee will distribute
only the vested portion and forfeit the nonvested portion. The vested portion of
the Highly Compensated Employee's excess aggregate contributions attributable to
Employer matching contributions is the total amount of such excess aggregate
contributions (as adjusted for allocable income) multiplied by his vested
percentage (determined as of the last day of the Plan Year for which the
Employer made the matching contribution). The Employer will specify in Adoption
Agreement Section 3.05 the manner in which the Plan will allocate forfeited
excess aggregate contributions.
14.10 MULTIPLE USE LIMITATION. For Plan Years beginning after
December 31, 1988, if at least one Highly Compensated Employee is
includible in the ADP test under Section 14.08 and in the ACP test under Section
14.09, the sum of the Highly Compensated Group's ADP and ACP may not exceed the
multiple use limitation.
The multiple use limitation is the sum of (i) and (ii):
(i) 125% of the greater of: (a) the ADP of the Nonhighly Compensated
Group under the Code ss.401(k) arrangement; or (b) the ACP of the
Nonhighly Compensated Group for the Plan Year beginning with or within the
Plan Year of the Code ss.401(k) arrangement.
(ii) 2% plus the lesser of (i)(a) or (i)(b), but no more
than twice the lesser of (i)(a) or (i)(b).
For Plan Years beginning prior to the later of January 1, 1992, or 60 days
after the Treasury issues final regulations under Code ss.401(m), the Advisory
Committee, in lieu of determining the multiple use limitation as the sum of (i)
and (ii), may elect to determine the multiple use limitation as the sum of (iii)
and (iv):
(iii) 125% of the lesser of: (a) the ADP of the Nonhighly
Compensated Group under the Code ss.401(k) arrangement; or (b) the
ACP of the Nonhighly Compensated Group for the Plan Year beginning with or
within the Plan Year of the Code ss.401(k) arrangement.
(iv) 2% plus the greater of (iii)(a) or (iii)(b), but no
more than twice the greater of (iii)(a) or (iii)(b).
<PAGE>
The Advisory Committee will determine whether the Plan satisfies the
multiple use limitation after applying the ADP test under Section 14.08 and the
ACP test under Section 14.09 and after making any corrective distributions
required by those Sections. If, after applying this Section 14.10, the Advisory
Committee determines the Plan has failed to satisfy the multiple use limitation,
the Advisory Committee will correct the failure by treating the excess amount as
excess aggregate contributions under Section 14.09. This Section 14.10 does not
apply unless, prior to application of the multiple use limitation, the ADP and
the ACP of the Highly Compensated Group each exceeds 125% of the respective
percentages for the Nonhighly Compensated Group.
14.11 DISTRIBUTION RESTRICTIONS. The Employer must elect in Section
6.03 of the Adoption Agreement the distribution events permitted under the
Plan. The distribution events applicable to the Participant's Deferral
Contributions Account, Qualified Nonelective Contributions Account and Qualified
Matching Contributions Account must satisfy the distribution restrictions
described in paragraph (m) of Section 14.03.
(A) Hardship distributions from Deferral Contributions Account.
The Employer must elect in Adoption Agreement Section 6.03 whether a
Participant may receive hardship distributions from his Deferral Contributions
Account prior to the Participant's Separation from Service. Hardship
distributions from the Deferral Contributions Account must satisfy the
requirements of this Section 14.11. A hardship distribution option may not apply
to the Participant's Qualified Nonelective Contributions Account or Qualified
Matching Contributions Account.
(l) Definition of hardship. A hardship distribution under this
Section 14.11 must be on account of one or more of the following immediate
and heavy financial needs: (1) medical expenses described in Code ss.213(d)
incurred by the Participant, by the Participant's spouse, or by any of the
Participant's dependents; (2) the purchase (excluding mortgage payments) of a
principal residence for the Participant; (3) the payment of post-secondary
education tuition, for the next semester or for the next quarter, for the
Participant, for the Participant's spouse, or for any of the Participant's
dependents; or (4) to prevent the eviction of the Participant from his principal
residence or the foreclosure on the mortgage of the Participant's principal
residence.
(2) Restrictions. The following restrictions apply to a
Participant who receives a hardship distribution: (a) the Participant may
not make elective deferrals or employee contributions to the Plan for the
12-month period following the date of his hardship distribution; (b) the
distribution is not in excess of the amount of the immediate and heavy financial
need; (c) the Participant must have obtained all distributions, other than
<PAGE>
hardship distributions, and all nontaxable loans currently available under this
Plan and all other qualified plans maintained by the Employer; and (d) the
Participant agrees to limit elective deferrals under this Plan and under any
other qualified Plan maintained by the Employer, for the Participant's taxable
year immediately following the taxable year of the hardship distribution, to the
402(g) limitation (as described in Section 14.07), reduced by the amount of the
Participant's elective deferrals made in the taxable year of the hardship
distribution. The suspension of elective deferrals and employee contributions
described in clause (a) also must apply to all other qualified plans and to all
nonqualified plans of deferred compensation maintained by the Employer, other
than any mandatory employee contribution portion of a defined benefit plan,
including stock option, stock purchase and other similar plans, but not
including health or welfare benefit plans (other than the cash or deferred
arrangement portion of a cafeteria plan).
(3) Earnings. For Plan Years beginning after December 31, 1988, a
hardship distribution under this Section 14.11 may not include earnings on
an Employee's elective deferrals credited after December 31, 1988, and may not
include qualified matching contributions and qualified nonelective
contributions, nor any earnings on such contributions, irrespective of when
credited.
(B) Distributions after Separation from Service. Following the
Participant's Separation from Service, the distribution events applicable to the
Participant apply equally to all of the Participant's Accounts, except as
elected in Section 6.03 of the Employer's Adoption Agreement.
14.12 SPECIAL ALLOCATION RULES. If the Code ss.401(k) arrangement
provides for salary reduction contributions, if the Plan accepts Employee
contributions, pursuant to Adoption Agreement Section 4.01, or if the Plan
allocates matching contributions as of any date other than the last day of the
Plan Year, the Employer must elect in Adoption Agreement 9.11 whether any
special allocation provisions will apply under Section 9.11 of the Plan. For
purposes of the elections:
(a) A "segregated Account" direction means the Advisory Committee
will establish a segregated Account for the applicable contributions
made on the Participant's behalf during the Plan Year. The Trustee must
invest the segregated Account in Federally insured interest
bearing savings account(s) or time deposits, or a combination of
both, or in any other fixed income investments, unless otherwise
specified in the Employer's Adoption Agreement. As of the last day of
<PAGE>
each Plan Year (or, if earlier, an allocation date coinciding with a
valuation date described in Section 9.11), the Advisory Committee will
reallocate the segregate Account to the Participant's appropriate
Account in accordance with Section 3.04 or Section 4.06, whichever
applies to the contributions.
(b) A "weighted average allocation" method will treat a weighted
portion of the applicable contributions as if includible in the
Participant's Account as of the beginning of the valuation period. The
weighted portion is a fraction, the numerator of which is the number
of months in the valuation period, excluding each month in the valuation
period which begins prior to the contribution date of the applicable
contributions, and the denominator of which is the number of months in
the valuation period. The Employer may elect in its Adoption
Agreement to substitute a weighting period other than months for
purposes of this weighted average allocation.
Call toll-free:
800-525-8085
303/779-1233 in metro Denver
Ask for Retirement Services
The Financial Funds
Post Office Box 2040
Denver, Colorado 80201
adop-agr\mp&ta.01
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> INVESCO DYNAMICS FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 1101925522
<INVESTMENTS-AT-VALUE> 1355213630
<RECEIVABLES> 44355602
<ASSETS-OTHER> 89056
<OTHER-ITEMS-ASSETS> 4854005
<TOTAL-ASSETS> 1404512293
<PAYABLE-FOR-SECURITIES> 55449086
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8764363
<TOTAL-LIABILITIES> 64213449
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 973346710
<SHARES-COMMON-STOCK> 81696428
<SHARES-COMMON-PRIOR> 63412679
<ACCUMULATED-NII-CURRENT> (37999)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 113702025
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 253288108
<NET-ASSETS> 1340298844
<DIVIDEND-INCOME> 4606293
<INTEREST-INCOME> 2272468
<OTHER-INCOME> (71362)
<EXPENSES-NET> 11430972
<NET-INVESTMENT-INCOME> (4623573)
<REALIZED-GAINS-CURRENT> 220083978
<APPREC-INCREASE-CURRENT> 236377288
<NET-CHANGE-FROM-OPS> 456461266
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 133519730
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 88367135
<NUMBER-OF-SHARES-REDEEMED> 79868425
<SHARES-REINVESTED> 9785039
<NET-CHANGE-IN-ASSETS> 577903225
<ACCUMULATED-NII-PRIOR> (9165)
<ACCUMULATED-GAINS-PRIOR> 31744567
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5874212
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11550613
<AVERAGE-NET-ASSETS> 1068735602
<PER-SHARE-NAV-BEGIN> 12.02
<PER-SHARE-NII> (0.05)
<PER-SHARE-GAIN-APPREC> 6.39
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 1.95
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.41
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
