SEC. File Nos. 2-10760
811-32
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
Registration Statement
Under
the Securities Act of 1933
Post-Effective Amendment No. 81
and
Registration Statement
Under
The Investment Company Act of 1940
Amendment No. 24
FUNDAMENTAL INVESTORS, INC.
(Exact Name of Registrant as specified in charter)
One Market, Steuart Tower, Suite 1800
San Francisco, California 94105
(Address of principal executive offices)
Registrant's telephone number, including area code:
(415) 421-9360
JULIE F. WILLIAMS
One Market, Steuart Tower, Suite 1800
San Francisco, California 94105
(name and address of agent for service)
Copies to:
Robert E. Carlson, Esq.
Michael Glazer, Esq.
PAUL, HASTINGS, JANOFSKY & WALKER LLP
555 S. Flower Street
Los Angeles, California 90071-2371
(Counsel for the Registrant)
The Registrant has filed a declaration pursuant to rule 24f-2
registering an indefinite number of shares under the Securities Act of 1933.
The Registrant filed its 24f-2 notice for fiscal 1996 on February 25, 1997.
Approximate date of proposed public offering:
It is proposed that this filing become effective on March 1, 1997, pursuant to
paragraph (a) of rule 485.
<PAGE>
FUNDAMENTAL INVESTORS, INC.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
ITEM NUMBER OF PART "A" OF FORM N-1A CAPTIONS IN PROSPECTUS (PART "A")
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Expenses
3. Condensed Financial Information Financial Highlights; Investment Results
4. General Description of Registrant Investment Policies and Risks; Securities and Investment
Techniques; Multiple Portfolio Counselor System; Fund
Organization and Management
5. Management of the Fund Fund Organization and Management; Securities and
Investment Techniques; Multiple Portfolio Counselor System
6. Capital Stock and Other Securities Investment Policies and Risks; Securities and Investment
Techniques; Fund Organization and Management;
Dividends, Distributions and Taxes
7. Purchase of Securities Being Offered Purchasing Shares; Fund Organization and Management
8. Redemption or Repurchase Selling Shares
9. Legal Proceedings N/A
</TABLE>
<TABLE>
<CAPTION>
ITEM NUMBER OF PART "B" OF FORM N-1A CAPTIONS IN STATEMENT OF ADDITIONAL
INFORMATION (PART "B")
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Fund Organization and Management (Part "A")
13. Investment Objectives and Policies Description of Certain Securities and Investment Techniques;
Investment Restrictions
14. Management of the Registrant Fund Directors and Officers; Management
15. Control Persons and Principal Holder of Securities Fund Directors and Officers
16. Investment Advisory and Other Services Management
17. Brokerage Allocation and Other Practices Execution of Portfolio Transactions
18. Capital Stock and Other Securities Part "A"
19. Purchase, Redemption and Pricing of Securities Being Purchase of Shares; Redeeming Shares; Shareholder
Offered Account Services and Privileges; Redemption of Shares
20. Tax Status Dividends, Distributions and Federal Taxes
21. Underwriter Management -- Principal Underwriter
22. Calculation of Performance Data Investment Results
23. Financial Statements Financial Statements
</TABLE>
<TABLE>
<CAPTION>
ITEM IN PART "C"
<S> <C>
24. Financial Statements and Exhibits
25. Persons Controlled by or Under Common Control with Registrant
26. Number of Holders of Securities
27. Indemnification
28. Business and Other Connections of Investment Adviser
29. Principal Underwriters
30. Location of Accounts and Records
31. Management Services
32. Undertakings
Signature Page
</TABLE>
<PAGE>
[LOGO THE AMERICAN FUNDS GROUP(R)]
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Fundamental Investors(SM)
Prospectus
MARCH 1, 1997
<PAGE>
FUNDAMENTAL INVESTORS, INC.
One Market
Steuart Tower, Suite 1800
San Francisco, CA 94105
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TABLE OF CONTENTS
<TABLE>
<S> <C>
Expenses 3
.............................................................................
Financial Highlights 4
.............................................................................
Investment Policies and Risks 5
.............................................................................
Securities and Investment Techniques 5
.............................................................................
Multiple Portfolio Counselor System 8
.............................................................................
Investment Results 9
.............................................................................
Dividends, Distributions and Taxes 10
.............................................................................
Fund Organization and Management 11
.............................................................................
Shareholder Services 14
</TABLE>
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The investment objective of the fund is to increase its shareholders' capital
and income return over time. The fund strives to accomplish this objective by
investing primarily in a diversified portfolio of common stocks, or securities
convertible into common stocks.
This prospectus presents information you should know before investing in the
fund. You should keep it on file for future reference.
YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. YOUR INVESTMENT IN THE FUND IS NOT
A DEPOSIT OR OBLIGATION OF, OR INSURED OR GUARANTEED BY, ANY ENTITY OR PERSON
INCLUDING THE U.S. GOVERNMENT AND THE FEDERAL DEPOSIT INSURANCE CORPORATION.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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EXPENSES
The effect of the expenses described below is reflected in the fund's share
price or return.
You may pay certain shareholder transaction expenses when you buy or sell
shares of the fund. Fund operating expenses are paid out of the fund's assets
and are factored into its share price.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum sales charge on purchases
(as a percentage of offering price) 5.75%
</TABLE>
................................................................................
SALES CHARGES ARE REDUCED OR ELIMINATED FOR LARGER PURCHASES. There is no sales
charge on reinvested dividends, and no deferred sales charge or redemption or
exchange fees. A contingent deferred sales charge of 1% applies on certain
redemptions made within 12 months following purchases without a sales charge.
FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
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<S> <C>
Management fees 0.31%
...............................................................................
12b-1 expenses 0.22%/1/
...............................................................................
Other expenses 0.13%
................................................................................
Total fund operating expenses 0.66%
</TABLE>
/1/ 12b-1 expenses may not exceed 0.25% of the fund's average net assets
annually. Due to these distribution expenses, long-term shareholders may pay
more than the economic equivalent of the maximum front-end sales charge
permitted by the National Association of Securities Dealers, Inc.
EXAMPLES
Assuming a hypothetical annual return of 5% and shareholder transaction and
operating expenses as described above, for every $1,000 you invested, you would
pay the following total expenses over the following periods:
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<TABLE>
<S> <C>
One year $ 64
................................................................................
Three years $ 77
................................................................................
Five years $ 92
................................................................................
Ten years $135
</TABLE>
THESE EXAMPLES ARE NOT MEANT TO REPRESENT YOUR ACTUAL INVESTMENT RESULTS OR
EXPENSES, WHICH MAY VARY. YOUR EXPENSES WILL BE LESS IF YOU QUALIFY TO PURCHASE
SHARES AT A REDUCED OR NO SALES CHARGE.
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FUNDAMENTAL INVESTORS / PROSPECTUS 3
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FINANCIAL HIGHLIGHTS
The following information for the six years ended December 31, 1996 has been
audited by Deloitte & Touche llp, independent auditors, and for the four years
ended December 31, 1990 by KPMG Peat Marwick llp, independent auditors. This
table should be read together with the financial statements which are included
in the statement of additional information and annual report.
PER-SHARE DATA AND RATIOS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
..............
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $22.29 $17.50 $18.15 $17.52 $17.47 $14.32 $16.43 $14.60 $13.45 $14.21
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INCOME FROM
INVESTMENT
OPERATIONS:
Net investment
income .41 .41 .42 .44 .44 .41 .48 .58 .43 .39
............................................................................................................................
Net realized and
unrealized gain (loss)
on investments 4.00 5.46 (.18) 2.65 1.27 3.82 (1.52) 3.53 1.65 .20
............................................................................................................................
Total income (loss)
from investment
operations 4.41 5.87 .24 3.09 1.71 4.23 (1.04) 4.11 2.08 .59
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LESS DISTRIBUTIONS:
Dividends from
net investment
income (.40) (.40) (.44) (.43) (.42) (.40) (.49) (.62) (.47) (.40)
............................................................................................................................
Distributions from
net realized gains (1.76) (.68) (.45) (2.03) (1.24) (.68) (.58) (1.66) (.46) (.95)
............................................................................................................................
Total distributions (2.16) (1.08) (.89) (2.46) (1.66) (1.08) (1.07) (2.28) (.93) (1.35)
............................................................................................................................
Net asset value,
end of year $24.54 $22.29 $17.50 $18.15 $17.52 $17.47 $14.32 $16.43 $14.60 $13.45
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Total return/1/ 19.99% 34.21% 1.33% 18.16% 10.19% 30.34% (6.24)% 28.56% 15.95% 3.77%
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RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
year (in millions) $7,165 $4,754 $2,611 $1,979 $1,440 $1,156 $ 823 $ 758 $ 632 $ 610
............................................................................................................................
Ratio of expenses to
average net assets .66% .70% .68% .65% .65% .69% .70% .67% .68% .63%
............................................................................................................................
Ratio of net income
to average net assets 1.78% 2.08% 2.45% 2.43% 2.56% 2.50% 3.15% 3.40% 2.97% 2.42%
............................................................................................................................
Average
commissions paid per
share/2/ 5.69c 5.95c 6.02c 6.14c 7.53c 7.50c 7.76c 7.80c 7.47c 6.68c
............................................................................................................................
Portfolio turnover
rate 39.07% 25.47% 23.02% 29.22% 23.98% 17.07% 11.92% 18.59% 8.09% 12.40%
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</TABLE>
/1/ Calculated without deducting a sales charge. The maximum sales charge is
5.75% of the fund's offering price.
/2/ Brokerage commissions paid on portfolio transactions increase the cost of
securities purchased or reduce the proceeds of securities sold, and are not
separately reflected in the fund's statement of operations. Shares traded on
a principal basis (without commissions), such as most fixed-income
transactions, are excluded.
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4 FUNDAMENTAL INVESTORS / PROSPECTUS
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INVESTMENT POLICIES AND RISKS
The fund's investment objective is to increase its shareholders' capital and
income return over time.
The fund seeks to accomplish this objective by investing primarily in a
diversified portfolio of common stocks or securities convertible into common
stocks. The fund may also hold straight debt securities that are generally
rated in the top four quality categories by Standard & Poor's Corporation or
Moody's Investors Service, Inc. or unrated but determined to be of equivalent
quality by the fund's investment adviser, Capital Research and Management
Company. Additionally, the fund may hold cash or cash equivalents (such as
commercial paper, commercial bank obligations, and securities of the U.S.
Government, its agencies and instrumentalities), U.S. Government securities,
or nonconvertible preferred stocks. MORE INFORMATION ON THE FUND'S INVESTMENT
POLICIES IS CONTAINED IN ITS STATEMENT OF ADDITIONAL INFORMATION.
The fund's fundamental investment restrictions (described in the statement of
additional information) and objective may not be changed without shareholder
approval. All other investment practices may be changed by the fund's board of
directors.
ACHIEVEMENT OF THE FUND'S INVESTMENT OBJECTIVE CANNOT, OF COURSE, BE ASSURED
DUE TO THE RISK OF CAPITAL LOSS FROM FLUCTUATING PRICES INHERENT IN ANY
INVESTMENT IN SECURITIES.
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SECURITIES AND INVESTMENT TECHNIQUES
EQUITY SECURITIES
Equity securities represent an ownership position in a company. These
securities may include common stocks, preferred stocks, and securities with
equity conversion or purchase rights. The prices of equity securities fluctuate
based on changes in the financial condition of their issuers and on market and
economic conditions. The fund's results will be related to the overall market
for these securities.
DEBT SECURITIES
Bonds and other debt securities are used by issuers to borrow money. Issuers
pay investors interest and generally must repay the amount borrowed at
maturity. Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. The prices of
debt securities fluctuate depending on such factors as interest rates, credit
quality and maturity. In general their prices decline when interest rates rise
and vice versa.
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FUNDAMENTAL INVESTORS / PROSPECTUS 5
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The fund may invest up to 5% of its total assets in debt securities rated Ba
and BB or below by Moody's Investors Service, Inc. or Standard & Poor's
Corporation or in unrated securities that are determined to be of equivalent
quality. These securities are commonly known as "high-yield, high-risk" or
"junk" bonds. The market prices of these securities may fluctuate more than
higher quality securities and may decline significantly in periods of general
economic difficulty.
Capital Research and Management Company attempts to reduce the risks described
above through diversification of the portfolio and by credit analysis of each
issuer as well as by monitoring broad economic trends and corporate and
legislative developments.
U.S. GOVERNMENT SECURITIES
Securities guaranteed by the U.S. Government include: (1) direct obligations
of the U.S. Treasury (such as Treasury bills, notes and bonds) and (2) federal
agency obligations guaranteed as to principal and interest by the U.S.
Treasury.
Certain securities issued by U.S. Government instrumentalities and certain
federal agencies are neither direct obligations of, nor guaranteed by, the
Treasury. However, they generally involve federal sponsorship in one way or
another: some are backed by specific types of collateral; some are supported
by the issuer's right to borrow from the Treasury; some are supported by the
discretionary authority of the Treasury to purchase certain obligations of
the issuer; and others are supported only by the credit of the issuing
government agency or instrumentality.
INVESTING IN VARIOUS COUNTRIES
The fund may invest up to 15% of its assets in securities of issuers that are
domiciled outside the U.S. and not included in the Standard & Poor's 500
Composite Index (a broad measure of the U.S. stock market). Investing outside
the U.S. involves special risks, particularly in certain developing countries,
caused by, among other things, fluctuating currency values; different
accounting, auditing, and financial reporting regulations and practices in some
countries; changing local and regional economic, political and social
conditions; greater market volatility; differing securities market structures;
and various administrative difficulties such as delays in clearing and settling
portfolio transactions or in receiving payment of dividends. However, in the
opinion of Capital Research and Management Company, investing outside the U.S.
also can reduce certain portfolio risks due to greater diversification
opportunities.
CURRENCY TRANSACTIONS
The fund can purchase and sell currencies to facilitate securities transactions
and enter into forward currency contracts to hedge against changes in currency
exchange rates. While entering into forward currency transactions could
minimize the risk of loss due to a decline in the value of the hedged currency,
it could also limit any potential gain which might result from an increase in
the value of the currency. The fund will not generally attempt to protect
against all potential changes in exchange rates.
U.S. PRIVATE PLACEMENTS
Private placements may be either purchased from another institutional investor
that originally acquired the securities in a private placement or directly from
the issuers of the securities. Generally, securities acquired in such private
placements are subject to contractual restrictions on resale and may not be
resold except
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6 FUNDAMENTAL INVESTORS / PROSPECTUS
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<PAGE>
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pursuant to a registration statement under the Securities Act of 1933 or in
reliance upon an exemption from the registration requirements under the Act
(for example, private placements sold pursuant to Rule 144A). Accordingly, all
such private placements will be considered illiquid unless they have been
specifically determined to be liquid, taking into account factors such as the
frequency and volume of trading and the commitment of dealers to make markets,
under procedures which may be adopted by the fund's board of directors.
Additionally, investing in private placement securities could have the effect
of increasing the level of illiquidity of the fund's portfolio to the extent
that "qualified" institutional investors become, for a period of time,
uninterested in purchasing these securities. The fund will not invest more than
10% of its total assets in illiquid securities and no more than 5% in private
placements, excluding Rule 144A securities.
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FUNDAMENTAL INVESTORS / PROSPECTUS 7
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MULTIPLE PORTFOLIO COUNSELOR SYSTEM
The basic investment philosophy of Capital Research and Management Company is
to seek fundamental values at reasonable prices, using a system of multiple
portfolio counselors in managing mutual fund assets. Under this system the
portfolio of the fund is divided into segments which are managed by individual
counselors. Counselors decide how their respective segments will be invested
(within the limits provided by the fund's objective and policies and by Capital
Research and Management Company's investment committee). In addition, Capital
Research and Management Company's research professionals make investment
decisions with respect to a portion of the fund's portfolio. The primary
individual portfolio counselors for the fund are listed below.
<TABLE>
<CAPTION>
YEARS OF EXPERIENCE AS
INVESTMENT PROFESSIONAL
(APPROXIMATE)
...................................
YEARS OF EXPERIENCE
AS PORTFOLIO COUNSELOR WITH CAPITAL
PORTFOLIO COUNSELORS (AND RESEARCH PROFESSIONAL, RESEARCH AND
FOR IF APPLICABLE) FOR MANAGEMENT
FUNDAMENTAL FUNDAMENTAL INVESTORS, INC. COMPANY OR
INVESTORS, INC. PRIMARY TITLE(S) (APPROXIMATE) ITS AFFILIATES TOTAL YEARS
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<S> <C> <C> <C> <C>
JAMES E. President of the fund; 13 years (plus 5 years as 20 years 25 years
DRASDO Senior Vice President a research professional
and Director, prior to becoming a
Capital Research portfolio counselor for
and Management the fund)
Company
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GORDON Senior Vice President 6 years (plus 13 years as 26 years 26 years
CRAWFORD of the fund; Senior a research professional
Vice President prior to becoming a
and Director, portfolio counselor for
Capital Research the fund)
and Management
Company
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DINA N. Senior Vice President 4 years (plus 1 year as a 5 years 30 years
PERRY of the fund; Senior research professional
Vice President, prior to becoming a
Capital Research portfolio counselor for
and Management the fund)
Company
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</TABLE>
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8 FUNDAMENTAL INVESTORS / PROSPECTUS
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INVESTMENT RESULTS
The fund may from time to time compare investment results to various indices or
other mutual funds. Fund results may be calculated on a total return, yield
and/or distribution rate basis. Results calculated without a sales charge will
be higher.
X TOTAL RETURN is the change in value of an investment in the fund over a given
period, assuming reinvestment of any dividends and capital gain
distributions.
X YIELD is computed by dividing the net investment income per share earned by
the fund over a given period of time by the maximum offering price per share
on the last day of the period, according to a formula mandated by the
Securities and Exchange Commission. A yield calculated using this formula may
be different than the income actually paid to shareholders.
X DISTRIBUTION RATE reflects dividends that were paid by the fund. The
distribution rate is calculated by dividing the dividends paid over the last
12 months by the sum of the month-end price and the capital gain
distributions paid over the last 12 months.
INVESTMENT RESULTS
(FOR PERIODS ENDED DECEMBER 31, 1996)
<TABLE>
<CAPTION>
THE FUND THE FUND AT
AVERAGE ANNUAL AT NET MAXIMUM
TOTAL RETURNS: ASSET VALUE1 SALES CHARGE/1/,/2/ S&P 5003
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<S> <C> <C> <C>
One year 19.99% 13.08% 22.90%
................................................................................
Five years 16.26% 14.89% 15.18%
................................................................................
Ten years 14.92% 14.24% 15.26%
................................................................................
Lifetime 15.97% 15.60% 15.81%
</TABLE>
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Yield/1/,/2/: 1.59%
Distribution Rate/2/: 1.44%
/1/ These fund results were calculated according to a standard that is required
for all stock and bond funds.
/2/ The maximum sales charge has been deducted.
/3/ The Standard & Poor's 500 Index represents stocks. This index is unmanaged
and does not reflect sales charges, commissions or expenses.
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FUNDAMENTAL INVESTORS / PROSPECTUS 9
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Here are the fund's annual total returns calculated without a sales charge. This
information is being supplied on a calendar year basis.
[chart]
Year %
1987 3.77
1988 15.95
1989 28.56
1990 -6.24
1991 30.34
1992 10.19
1993 18.16
1994 1.33
1995 34.21
1996 19.99
[end chart]
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DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The fund pays dividends, which may fluctuate, four times a year (usually in
February, May, August and December). Capital gains, if any, are also usually
distributed in December. When a dividend or capital gain is distributed, the
net asset value per share is reduced by the amount of the payment.
FEDERAL TAXES
In any fiscal year in which the fund qualifies as a regulated investment
company and distributes to shareholders all of its net investment income and
net capital gains, the fund itself is relieved of federal income tax.
Generally, all dividends and capital gains are taxable whether they are
reinvested or received in cash -- unless you are exempt from taxation or
entitled to tax deferral. Early each year, you will be notified as to the
amount and federal tax status of all income distributions paid during the prior
year. Such distributions may also be subject to state or local taxes. The tax
treatment of redemptions from a retirement plan account may differ from
redemptions from an ordinary shareholder account.
YOU MUST PROVIDE THE FUND WITH A CERTIFIED CORRECT TAXPAYER IDENTIFICATION
NUMBER (GENERALLY YOUR SOCIAL SECURITY NUMBER) AND CERTIFY THAT YOU ARE NOT
SUBJECT TO BACKUP WITHHOLDING. IF YOU FAIL TO DO SO THE IRS CAN REQUIRE THE
FUND TO WITHHOLD 31% OF YOUR TAXABLE DISTRIBUTIONS AND REDEMPTIONS. Federal law
also requires the fund to withhold 30% or the applicable tax treaty rate from
dividends paid to certain nonresident alien, non-U.S. partnership and non-U.S.
corporation shareholder accounts.
This is a brief summary of some of the tax laws that affect your investment in
the fund. Please see the statement of additional information and your tax
adviser for further information.
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10 FUNDAMENTAL INVESTORS / PROSPECTUS
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FUND ORGANIZATION AND MANAGEMENT
FUND ORGANIZATION AND VOTING RIGHTS
The fund, an open-end, diversified management investment company, was organized
as a Delaware corporation in 1932 and reorganized as a Maryland corporation in
1990. All fund operations are supervised by the fund's board of directors who
meet periodically and perform duties required by applicable state and federal
laws. Members of the board who are not employed by Capital Research and
Management Company or its affiliates are paid certain fees for services
rendered to the fund as described in the statement of additional information.
They may elect to defer all or a portion of these fees through a deferred
compensation plan in effect for the fund. The fund does not hold annual
meetings of shareholders. However, significant corporate matters which require
shareholder approval, such as certain elections of board members or a change in
a fundamental investment policy, will be presented to shareholders at a meeting
called for such purpose. Shareholders have one vote per share owned. At the
request of the holders of at least 10% of the shares, the fund will hold a
meeting at which any member of the board could be removed by a majority vote.
THE INVESTMENT ADVISER
Capital Research and Management Company, a large and experienced investment
management organization founded in 1931, is the investment adviser to the fund
and other funds, including those in The American Funds Group. Capital Research
and Management Company, a wholly owned subsidiary of The Capital Group
Companies, Inc., is headquartered at 333 South Hope Street, Los Angeles, CA
90071. Capital Research and Management Company manages the investment portfolio
and business affairs of the fund. The management fee paid by the fund to
Capital Research and Management Company may not exceed 0.39% of the fund's
average net assets annually and declines at certain asset levels. The total
management fee paid by the fund, as a percentage of average net assets, for the
previous fiscal year is discussed earlier under "Expenses."
Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the May 9, 1994 report issued by the Investment Company
Institute's Advisory Group on Personal Investing. This policy has also been
incorporated into the fund's "code of ethics."
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FUNDAMENTAL INVESTORS / PROSPECTUS 11
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PLAN OF DISTRIBUTION
The fund has a Plan of Distribution or "12b-1 Plan" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the board and the expenses paid under the
Plan were incurred within the preceding 12 months and accrued while the Plan is
in effect. The 12b-1 fee paid by the fund, as a percentage of average net
assets, for the previous fiscal year is discussed earlier under "Expenses."
PORTFOLIO TRANSACTIONS
Orders for the fund's portfolio securities transactions are placed by Capital
Research and Management Company, which strives to obtain the best available
prices, taking into account the costs and quality of executions. Fixed-income
securities are generally traded on a "net" basis with a dealer acting as
principal for its own account without a stated commission, although the price
of the security usually includes a profit to the dealer. In underwritten
offerings, securities are usually purchased at a fixed price which includes an
amount of compensation to the dealer, generally referred to as a concession or
discount. On occasion, securities may be purchased directly from an issuer, in
which case no commissions or discounts are paid. In the over-the-counter
market, purchases and sales are transacted directly with principal market-
makers except in those circumstances where it appears better prices and
executions are available elsewhere.
Subject to the above policy, when two or more brokers are in a position to
offer comparable prices and executions, preference may be given to brokers who
have sold shares of the fund or have provided investment research, statistical,
and other related services for the benefit of the fund and/or other funds
served by Capital Research and Management Company.
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12 FUNDAMENTAL INVESTORS / PROSPECTUS
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PRINCIPAL UNDERWRITER AND TRANSFER AGENT
American Funds Distributors, Inc. and American Funds Service Company serve as
the principal underwriter and transfer agent for the fund, respectively. They
are headquartered at 333 South Hope Street, Los Angeles, CA 90071 and 135 South
State College Boulevard, Brea, CA 92821, respectively.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
[MAP OF THE UNITED STATES APPEAR HERE]
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FUNDAMENTAL INVESTORS / PROSPECTUS 13
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SHAREHOLDER SERVICES
The fund offers you a valuable array of services you can use to alter your
investment program as your needs and circumstances change. These services,
which are summarized below, are available only in states where they may be
legally offered and may be terminated or modified at any time upon 60 days'
written notice. A COMPLETE DESCRIPTION OF SHAREHOLDER SERVICES AND ACCOUNT
POLICIES IS CONTAINED IN THE FUND'S STATEMENT OF ADDITIONAL INFORMATION. In
addition, an easy-to-read guide to owning a fund in The American Funds Group
titled "Welcome to the Family" is sent to new shareholders and is available by
writing or calling American Funds Service Company.
THE SERVICES DESCRIBED MAY NOT BE AVAILABLE THROUGH SOME RETIREMENT PLANS. OR
ACCOUNTS HELD BY INVESTMENT DEALERS. IF YOU ARE INVESTING IN SUCH A MANNER
YOU SHOULD CONTACT YOUR PLAN ADMINISTRATOR/TRUSTEE OR DEALER ABOUT WHAT
SERVICES ARE AVAILABLE AND WITH QUESTIONS ABOUT YOUR ACCOUNT.
- --------------------------------------------------------------------------------
PURCHASING SHARES
HOW TO PURCHASE SHARES
Generally, you may open an account by contacting any investment dealer
authorized to sell the fund's shares. You may add to your account through your
dealer or directly through American Funds Service Company by mail, wire, or
bank debit. You may also establish or add to your account by exchanging shares
from any of your other accounts in The American Funds Group. The fund and
American Funds Distributors reserve the right to reject any purchase order.
Various purchase options are available as described below subject to certain
investment minimums and limitations described in the statement of additional
information and "Welcome to the Family."
X Automatic Investment Plan
You may invest monthly or quarterly through automatic withdrawals from your
bank account.
X Automatic Reinvestment
You may reinvest your dividends and capital gain distributions into the fund
(with no sales charge). This will be done automatically unless you elect to
have the dividends and/or capital gain distributions paid to you in cash.
- --------------------------------------------------------------------------------
14 FUNDAMENTAL INVESTORS / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
X Cross-Reinvestment
You may invest your dividends and capital gain distributions into any other
fund in The American Funds Group.
X Exchange Privilege
You may exchange your shares into other funds in The American Funds Group
generally with no sales charge. Exchanges of shares from the money market
funds that were initially purchased with no sales charge will generally be
subject to the appropriate sales charge. You may also elect to automatically
exchange shares among any of the funds in The American Funds Group. Exchange
requests may be made in writing, by telephone including American
FundsLine(R) (see below) or by fax. EXCHANGES HAVE THE SAME TAX CONSEQUENCES
AS ORDINARY SALES AND PURCHASES.
X Retirement Plans
You may invest in the fund through various retirement plans. For further
information contact your investment dealer or American Funds Distributors.
SHARE PRICE
The fund's share price, also called net asset value, is determined as of the
close of trading (normally 4:00 p.m., Eastern time) every day the New York
Stock Exchange is open. The fund calculates its net asset value per share,
generally using market prices, by dividing the total value of its assets after
subtracting liabilities by the number of its shares outstanding. Shares are
purchased at the offering price next determined after your investment is
received and accepted by American Funds Service Company. The offering price is
the net asset value plus a sales charge, if applicable.
SHARE CERTIFICATES
Shares are credited to your account and certificates are not issued unless you
request them by writing to American Funds Service Company.
INVESTMENT MINIMUMS
<TABLE>
- --------------------------------------------------------------
<S> <C>
To establish an account $250
For a retirement plan account $250
For a retirement plan account through payroll deduction $ 25
To add to an account $ 50
For a retirement plan account $ 25
</TABLE>
- --------------------------------------------------------------------------------
FUNDAMENTAL INVESTORS / PROSPECTUS 15
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
SALES CHARGES
A sales charge may apply, as described below, when purchasing shares. Sales
charges may be reduced for larger purchases as indicated below.
<TABLE>
<CAPTION>
SALES CHARGE AS A
PERCENTAGE OF
...................... DEALER
NET CONCESSION AS
OFFERING AMOUNT % OF OFFERING
INVESTMENT PRICE INVESTED PRICE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
................................................................................
$50,000 but less than $100,000 4.50% 4.71% 3.75%
................................................................................
$100,000 but less than $250,000 3.50% 3.63% 2.75%
................................................................................
$250,000 but less than $500,000 2.50% 2.56% 2.00%
................................................................................
$500,000 but less than $1 million 2.00% 2.04% 1.60%
................................................................................
$1 million or more and certain
other investments described below see below see below see below
</TABLE>
PURCHASES NOT SUBJECT TO SALES CHARGES
Investments of $1 million or more and investments made by employer-sponsored
defined contribution-type plans with 200 or more eligible employees are sold
with no initial sales charge. A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE
IMPOSED ON CERTAIN REDEMPTIONS MADE WITHIN ONE YEAR OF PURCHASE BY THESE
ACCOUNTS. A dealer concession of up to 1% may be paid by the fund from its Plan
of Distribution on these investments. Investments by retirement plans,
foundations or endowments with $50 million or more in assets may be made with
no sales charge and are not subject to a contingent deferred sales charge.
A dealer concession of up to 1% may be paid by American Funds Distributors on
these investments. Investments by certain individuals and entities including
employees and other associated persons of dealers authorized to sell shares of
the fund and Capital Research and Management Company and its affiliated
companies are not subject to a sales charge.
- --------------------------------------------------------------------------------
16 FUNDAMENTAL INVESTORS / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
ADDITIONAL DEALER COMPENSATION
In addition to the concessions listed, up to 0.25% of average net assets is
paid annually to qualified dealers for providing certain services pursuant to
the fund's Plan of Distribution. During 1997, American Funds Distributors will
also provide additional compensation to the top one hundred dealers who have
sold shares of funds in The American Funds Group based on the pro rata share of
a qualifying dealer's sales.
REDUCING YOUR SALES CHARGE
You and your immediate family may combine investments to reduce your costs. You
must let your investment dealer or American Funds Service Company know if you
qualify for a reduction in your sales charge using one or any combination of
the methods described below.
X Aggregation
Investments that may be aggregated include those made by you, your spouse
and your children under the age of 21, if all parties are purchasing shares
for their own account(s), including any business account solely "controlled
by," as well as any retirement plan or trust account solely for the benefit
of, these individuals. Investments made for multiple employee benefit plans
of a single employer or "affiliated" employers may be aggregated provided
they are not also aggregated with individual accounts. Finally, investments
made by a common trust fund or other diversified pooled account not
specifically formed for the purpose of accumulating fund shares may be
aggregated.
Purchases made for nominee or street name accounts will generally not be
aggregated with those made for other accounts unless qualified as described
above.
X Concurrent Purchases
You may combine concurrent purchases of two or more funds in The American
Funds Group, except direct purchases of the money market funds. Shares of
the money market funds purchased through an exchange, reinvestment or cross-
reinvestment from a fund having a sales charge do qualify.
X Right of Accumulation
You may take into account the current value of your existing holdings in The
American Funds Group to determine your sales charge. Direct purchases of the
money market funds are excluded.
- --------------------------------------------------------------------------------
FUNDAMENTAL INVESTORS / PROSPECTUS 17
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
X Statement of Intention
You may enter into a non-binding commitment to invest a certain amount
(which, at your request, may include purchases made during the previous 90
days) in non-money market fund shares over a 13-month period. A portion of
your account may be held in escrow to cover additional sales charges which
may be due if your total investments over the statement period are
insufficient to qualify for the applicable sales charge reduction.
- --------------------------------------------------------------------------------
SELLING SHARES
HOW TO SELL SHARES
You may sell (redeem) shares in your account by contacting your investment
dealer or American Funds Service Company. You may also use American
FundsLine(R) (see below). In addition, you may sell shares in amounts of $50 or
more automatically. If you sell shares through your investment dealer you may
be charged for this service. Shares held for you in your dealer's street name
must be sold through the dealer.
Shares are sold at the net asset value next determined after your request is
received in good order by American Funds Service Company. Sale requests may be
made in writing, by telephone, including American FundsLine(R) (see below), or
by fax. Sales by telephone or fax are limited to $10,000 in accounts registered
to individual(s) (including non-retirement trust accounts). In addition, checks
must be made payable to the registered shareholder(s) and mailed to an address
of record that has been used with the account for at least 10 days. Proceeds
will not be mailed until sufficient time has passed to provide reasonable
assurance that checks or drafts (including certified or cashier's checks) for
shares purchased have cleared (which may take up to 15 calendar days from the
purchase date). Except for delays relating to clearance of checks for share
purchases or in extraordinary circumstances (and as permissible under the
Investment Company Act of 1940), sale proceeds will be paid on or before the
seventh day following receipt and acceptance of an order. The fund may, with 60
days' written notice, close your account if due to a sale of shares the account
has a value of less than the minimum required initial investment.
Generally, written requests to sell shares must be signed by you and must
include any shares you wish to sell that are in certificate form. Your
signature must be guaranteed by a bank, savings association, credit union, or
member firm of a domestic stock exchange or the National Association of
Securities Dealers, Inc., that is an eligible guarantor institution. A
signature guarantee is not currently required for any sale of $50,000 or less
provided the check is made
- --------------------------------------------------------------------------------
18 FUNDAMENTAL INVESTORS / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
payable to the registered shareholder(s) and is mailed to the address of record
on the account, and provided the address has been used with the account for at
least 10 days. Additional documentation may be required for sales of shares
held in corporate, partnership or fiduciary accounts.
You may reinvest proceeds from a redemption or a dividend or capital gain
distribution without a sales charge in any fund in The American Fund Group
within 90 days after the date of the redemption or distribution. Reinvestment
will be at the next calculated net asset value after receipt and acceptance by
American Funds Service Company.
- --------------------------------------------------------------------------------
OTHER IMPORTANT THINGS TO REMEMBER
AMERICAN FUNDSLINE(R)
You may check your share balance, the price of your shares, or your most recent
account transactions, sell shares (up to $10,000 per fund, per account each
day), or exchange shares around the clock with American FundsLine(R). To use
this service, call 800/325-3590 from a TouchTone(TM) telephone.
TELEPHONE PURCHASES, SALES AND EXCHANGES
Unless you opt out of the telephone (including American FundsLine(R)) or fax
purchase, sale and/or exchange options (see below), you agree to hold the fund,
American Funds Service Company, any of its affiliates or mutual funds managed
by such affiliates, and each of their respective directors, trustees, officers,
employees and agents harmless from any losses, expenses, costs or liability
(including attorney fees) which may be incurred in connection with the exercise
of these privileges provided American Funds Service Company employs reasonable
procedures to confirm that the instructions received from any person with
appropriate account information are genuine. If reasonable procedures are not
employed, the fund may be liable for losses due to unauthorized or fraudulent
instructions.
Generally, all shareholders are automatically eligible to use these options.
However, you may elect to opt out of these options by writing American Funds
Service Company. (You may also reinstate them at any time by writing to
American Funds Service Company.)
ACCOUNT STATEMENTS
You will receive regular confirmation statements reflecting transactions in
your account. Purchases through automatic investment plans and certain
retirement plans will be confirmed at least quarterly.
- --------------------------------------------------------------------------------
FUNDAMENTAL INVESTORS / PROSPECTUS 19
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
NOTES
- --------------------------------------------------------------------------------
20 FUNDAMENTAL INVESTORS / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
NOTES
- --------------------------------------------------------------------------------
FUNDAMENTAL INVESTORS / PROSPECTUS 21
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
NOTES
- --------------------------------------------------------------------------------
22 FUNDAMENTAL INVESTORS / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
NOTES
- --------------------------------------------------------------------------------
FUNDAMENTAL INVESTORS / PROSPECTUS 23
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
<TABLE>
<CAPTION>
FOR SHAREHOLDER FOR DEALER FOR 24-HOUR
SERVICES SERVICES INFORMATION
<S> <C> <C>
American Funds American Funds American American Funds
Service Company Distributors FundsLine(R) Internet Web site
800/421-0180 ext.1 800/421-9900 ext.11 800/325-3590 http://www.americanfunds.com
</TABLE>
Telephone conversations may be recorded or monitored for
verification, recordkeeping and quality assurance purposes.
- --------------------------------------------------------------------------------
OTHER FUND INFORMATION
ANNUAL/SEMI-ANNUAL STATEMENT OF ADDITIONAL
REPORT TO SHAREHOLDERS INFORMATION (SAI)
Includes financial Contains more detailed
statements, detailed information on all aspects
performance information, of the fund, including the
portfolio holdings, a fund's financial statements.
statement from portfolio
management and the
independent auditors' report.
A current SAI has been filed
CODE OF ETHICS with the Securities and
Exchange Commission ("SEC").
Includes a description of the fund's It is incorporated by
personal investing policy. reference into this prospectus
and is available along with
other related materials on
the SEC's Internet Web site
at http://www.sec.gov.
To request a free copy of any of the documents above:
Call American Funds or Write to the Secretary of
Service Company 800/421-0180 the fund One Market Steuart
ext. 1 Tower, Suite 1800
San Francisco, CA 94105
- --------------------------------------------------------------------------------
This prospectus has been printed on recycled paper.
[LOGO]
- --------------------------------------------------------------------------------
24 FUNDAMENTAL INVESTORS / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
FUNDAMENTAL INVESTORS, INC.
Part B
Statement of Additional Information
MARCH 1, 1997
This document is not a prospectus but should be read in conjunction with the
current prospectus of Fundamental Investors, Inc. (the "fund" or "FI") dated
March 1, 1997. The prospectus may be obtained from your investment dealer or
financial planner or by writing to the fund at the following address:
Fundamental Investors, Inc.
Attention: Secretary
One Market
Steuart Tower, Suite 1800
San Francisco, CA 94105
Telephone: (415) 421-9360
Shareholders who purchase shares at net asset value through eligible retirement
plans should note that not all of the services or features described below may
be available to them, and they should contact their employer for details.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE NO.
<S> <C>
DESCRIPTION OF CERTAIN SECURITIES 1
CERTAIN RISK FACTORS RELATING TO HIGH-YIELD, HIGH-RISK BONDS 3
FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS 3
FUND OFFICERS AND DIRECTORS 6
MANAGEMENT 11
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES 13
PURCHASE OF SHARES 16
REDEEMING SHARES 24
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES 25
EXECUTION OF PORTFOLIO TRANSACTIONS 27
GENERAL INFORMATION 28
INVESTMENT RESULTS 39
DESCRIPTION OF BOND RATINGS 34
FINANCIAL STATEMENTS ATTACHED
</TABLE>
DESCRIPTION OF CERTAIN SECURITIES
THE DESCRIPTIONS BELOW ARE INTENDED TO SUPPLEMENT THE MATERIAL IN THE
PROSPECTUS UNDER "INVESTMENT POLICIES AND RISKS."
U.S. GOVERNMENT SECURITIES - From time to time, the fund may invest in U.S.
government securities. Securities guaranteed by the U.S. government include:
(1) direct obligations of the U.S. Treasury (such as Treasury bills, notes and
bonds) and (2) federal agency obligations guaranteed as to principal and
interest by the U.S. Treasury. In these securities, the payment of principal
and interest is unconditionally guaranteed by the U.S. Government, and thus
they are of the highest possible credit quality. Such securities are subject
to variations in market value due to fluctuations in interest rates, but, if
held to maturity, will be paid in full.
Certain securities issued by U.S. government instrumentalities and certain
federal agencies are neither direct obligations of, nor guaranteed by, the
Treasury. However, such securities generally involve federal sponsorship in
one way or another; some are backed by specific types of collateral; some are
supported by the issuer's right to borrow from the Treasury; some are supported
by the discretionary authority of the Treasury to purchase certain obligations
of the issuer; and others are supported only by the credit of the issuing
government agency or instrumentality. These agencies and instrumentalities
include, but are not limited to, Federal Land Banks, Farmers Home
Administration, Central Bank for Cooperatives, and Federal Intermediate Credit
Banks.
CASH EQUIVALENTS - The fund invests in various high-quality money market
instruments that mature, or may be redeemed or resold, in 13 months or less (25
months in the case of U.S. government securities). These include (1)
commercial paper (notes issued by corporations or governmental bodies), (2)
commercial bank obligations (for example, certificates of deposit and banker's
acceptances (time drafts on a commercial bank where the bank accepts an
irrevocable obligation to pay at maturity), (3) savings association and savings
bank obligations (for example, certificates of deposit issued by savings banks
or savings and loan associations), (4) securities of the U.S. government, its
agencies or instrumentalities that at purchase mature, or may be redeemed, in
one year or less, and (5) corporate bonds and notes. that at purchase mature,
or that may be redeemed, in one year or less.
CURRENCY TRANSACTIONS -- The fund has the ability to enter into forward
currency contracts to protect against changes in currency exchange rates. A
forward currency contract is an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. The fund intends to enter into forward currency contracts solely to
hedge into the U.S. dollar its exposure to other currencies. The fund will
segregate liquid assets which will be marked to market daily to meet its
forward contract commitments to the extent required by the Securities and
Exchange Commission.
Certain provisions of the Internal Revenue Code may affect the extent to which
the fund may enter into forward contracts. Such transactions may also affect,
for U.S. federal income tax purposes, the character and timing of income, gain
or loss recognized by the fund.
REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements, under
which it buys a security and obtains a simultaneous commitment from the seller
to repurchase the security at a specified time and price. The seller must
maintain with the fund's custodian collateral equal to at least 100% of the
repurchase price, including accrued interest, as monitored daily by Capital
Research and Management Company. If the seller under the repurchase agreement
defaults, the fund may incur a loss if the value of the collateral securing the
repurchase agreement has declined and may incur disposition costs in connection
with liquidating the collateral. If bankruptcy proceedings are commenced with
respect to the seller, liquidation of the collateral by the fund may be
delayed or limited. For purposes of Investment Restriction number five, under
"Investment Restrictions" below, repurchase agreements maturing in excess of
seven days are considered not readily marketable. The fund does not currently
intend (at least for the next 12 months) to invest in repurchase agreements.
CERTAIN RISK FACTORS RELATING TO HIGH-YIELD, HIGH-RISK BONDS
SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES - High-yield, high-risk bonds
can be sensitive to adverse economic changes and corporate developments.
During an economic downturn or substantial period of rising interest rates,
highly leveraged issuers may experience financial stress that would adversely
affect their ability to service their principal and interest payment
obligations, to meet projected business goals, and to obtain additional
financing. If the issuer of a bond defaulted on its obligations to pay
interest or principal or entered into bankruptcy proceedings, the fund may
incur losses or expenses in seeking recovery of amounts owed to it. In
addition, periods of economic uncertainty and changes can be expected to result
in increased volatility of market prices of high-yield, high-risk bonds.
PAYMENT EXPECTATIONS - High-yield, high-risk bonds, like other bonds, may
contain redemption or call provisions. If an issuer exercised these provisions
in a declining interest rate market, the fund would have to replace the
security with a lower yielding security, resulting in a decreased return for
investors. Conversely, a high-yield, high-risk bond's value will decrease in a
rising interest rate market, as it will with all bonds.
LIQUIDITY AND VALUATION - There may be little trading in the secondary market
for particular bonds, which may affect adversely the fund's ability to value
accurately or dispose of such bonds. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of high-yield, high-risk bonds, especially in a thin
market.
The fund's investment adviser, Capital Research and Management Company,
attempts to reduce the fund's risks through diversification of the portfolio by
credit analysis of each issuer as well as by monitoring broad economic trends
and corporate developments, but there can be no assurance that it will be
successful in doing so. The fund's investment policy with respect to investing
in high-yield, high-risk securities is a "non-fundamental" policy and thus, may
be changed by the board of directors at any time. It is contemplated that most
of the fund's common stock investments will be made in securities that are
listed on a stock exchange.
FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS
The fund has adopted certain fundamental policies and investment restrictions
for the protection of the fund's shareholders that may not be changed without
shareholder approval. (Approval requires the affirmative vote of 67% or more
of the voting securities present at a meeting of shareholders, provided more
than 50% of such securities are represented at the meeting or the vote of more
than 50% of the outstanding voting securities, whichever is less.)
The fund may not:
1. borrow money or securities;
2. buy securities "on margin";
3. effect "short sales" of securities;
4. mortgage, pledge or hypothecate securities;
5. lend money or securities (but the purchase of a portion of an issue of
publicly distributed debt securities is not considered the making of a loan);
6. invest in the securities of any issuer which, including predecessors, has
a record of less than three years continuous operation;
7. invest in the securities of any issuer if any officer or director of the
fund owns more than 1/2 of 1% of the securities of that issuer or if the fund's
officers and directors together own more than 5% of the securities of that
issuer;
8. invest any of its assets in the securities of any managed investment trust
or of any other managed investment company;
9. invest more than 5% of its total assets at the market value at the time of
investment in securities of any one issuer, or hold more than 10% of such
securities of any one issuer, but these limitations do not apply to obligations
of or guaranteed by the U.S.;
10. purchase or sell real estate;
11. purchase or sell commodities or commodity contracts;
12. act as underwriter of securities issued by other persons;
13. make investments in other companies for the purpose of exercising control
or management;
14. concentrate its investments in any one industry or group of industries,
but may invest up to 25% of its assets in any one industry.
Notwithstanding investment restriction number 8, the fund may invest in
securities of other investment companies if deemed advisable by its officers in
connection with the administration of a deferred compensation plan adopted by
Directors pursuant to an exemptive order granted by the Securities and Exchange
Commission.
For purposes of investment restriction number 14, the fund will not invest 25%
or more (rather than more than 25%) of its total assets in the securities of
issuers in the same industry.
Although not fundamental policies, the fund has further agreed that it will not
invest more than 5% of the value of the fund's assets in warrants, valued at
the lower of cost or market, with no more than 2% being unlisted on the New
York or American Stock Exchanges (warrants acquired by the fund in units or
attached to securities may be deemed to be without value); or invest in puts or
calls, or in oil, gas or other mineral exploration programs; or invest more
than 10% of the value of its total assets in securities which are not readily
marketable (including repurchase agreements maturing in more than seven days or
securities for which there is no active and substantial market). In addition,
in connection with investment restriction number 10 above, the fund has
undertaken to the State of Texas that it will not, as a matter of
non-fundamental policy, purchase or sell limited partnerships in real estate
(excluding securities of companies, such as real estate investment trusts,
which deal in real estate or interests therein).
No officer or director of the fund may sell portfolio securities to the fund or
buy portfolio securities from it.
FUND OFFICERS AND DIRECTORS
Directors and Director Compensation
(with their principal occupations during the past five years)#
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION PRINCIPAL OCCUPATION(S) DURING AGGREGATE TOTAL COMPENSATION TOTAL
WITH PAST 5 YEARS (POSITIONS WITHIN COMPENSATION FROM ALL FUNDS NUMBER OF
REGISTRANT THE ORGANIZATIONS LISTED MAY (INCLUDING MANAGED BY CAPITAL FUND BOARDS
HAVE CHANGED DURING THIS VOLUNTARILY RESEARCH AND ON WHICH
PERIOD) DEFERRED MANAGEMENT DIRECTOR
COMPENSATION/1/) COMPANY/2/ SERVES/2/
FROM FUND DURING
FISCAL YEAR ENDED
12/31/96
<S> <C> <C> <C> <C> <C>
Guilford C. Babcock Director Associate Professor of Finance, $12,800/3/ $26,000
1575 Circle Drive School of Business 2
San Marino, CA 91108 Administration,
Age: 65 University of Southern California
Charles H. Black Director Private investor and consultant; $12,800
525 Alma Real Drive former Executive Vice President $115,400 4
Pacific Palisades, CA 90272 and Director, KaiserSteel
Age: 70 Corporation
Martin Fenton, Jr. Director Chairman, Senior Resource $12,800/3/ $124,400
4350 Executive Drive Group 16
Suite 101 (management of senior living
San Diego, CA 92121-2116 centers)
Age: 61
Herbert Hoover III Director Private Investor $11,600 $61,700
1520 Circle Drive 14
San Marino, CA 91108
Age: 69
Gail L. Neale Director President, The Lovejoy $13,600/3/ $54,300
The Lovejoy Consulting Group, Inc. Consulting Group, Inc.; former 4
154 Prospect Parkway Executive Vice President,
Burlington, VT 05401 Salzburg Seminar; former
Age: 62 Director of Development and the
Capital Campaign, Hampshire
College; Special Advisor, The
Commonwealth Fund and Mount
Holyoke College
Kirk P. Pendleton Director President, Cairnwood, Inc. $13,600/3/ $60,394
Cairnwood, Inc. 5
75 James Way
Southampton, PA 18966
Age: 57
+ James W. Ratzlaff Director Director, American Funds
One Market, Steuart Service Company; Senior none/4/ none/4/ 8
Tower, Suite 1800 Partner, The Capital Group
San Francisco, CA 94105 Partners, L.P.
Age: 60
Henry E. Riggs Director President and Professor of $14,000/3/ $79,500
Kingston Hall 201 Engineering, Harvey Mudd 5
Harvey Mudd College College; former Thomas W.
Claremont, CA 91711 Ford Professor of Engineering
Age: 62 and Vice President of
Development, Stanford
University
+ R. Michael Shanahan Director Chairman of the Board and
333 South Hope Street Principal Executive Officer, none/4/ none/4/ 2
Los Angeles, CA 90071 Capital Research and
Age: 58 Management Company;
Director, The Capital Group
Companies, Inc.; Director,
Capital Group Research, Inc.
+ Walter P. Stern Chairman of Chairman, Capital Group
630 Fifth Avenue the Board International, Inc.; Vice none/4/ none/4/ 8
New York, NY 10111 Chairman, Capital Research
Age: 68 International; Capital
International, Inc.; Director,
Temple-Inland, Inc.
Charles Wolf, Jr. Director Dean, The RAND Graduate $13,600/3/ $54,300
The RAND Graduate School
1700 Main Street School; Director, International 4
Santa Monica, CA 90406 Economic Studies, The RAND
Age: 72 Corporation
</TABLE>
# Positions within the organizations listed may have changed during this
period.
+ Directors who are considered "interested persons as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), on the basis of their
affiliation with the fund's Investment Adviser, Capital Research and Management
Company.
/1/ Amounts may be deferred by eligible directors under a non-qualified
deferred compensation plan adopted by the Fund in 1993. Deferred amounts
accumulate at an earnings rate determined by the total return of one or more
funds in The American Funds Group as designated by the Director.
/2/ Capital Research and Management Company manages The American Funds Group
consisting of 28 funds: AMCAP Fund, Inc., American Balanced Fund, Inc.,
American High-Income Municipal Bond Fund, Inc., American High-Income Trust,
American Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash Management
Trust of America, Capital Income Builder, Inc., Capital World Growth and Income
Fund, Inc., Capital World Bond Fund, Inc., EuroPacific Growth Fund, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America,
Inc., Intermediate Bond Fund of America, The Investment Company of America,
Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New
Perspective Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of
America, Inc., The Tax-Exempt Fund of California, The Tax-Exempt Fund of
Maryland, The Tax-Exempt Fund of Virginia, The Tax-Exempt Money Fund of
America, The U. S. Treasury Money Fund of America, U.S. Government Securities
Fund and Washington Mutual Investors Fund, Inc. Capital Research and
Management Company also manages American Variable Insurance Series and Anchor
Pathway Fund which serves as the underlying investment vehicle for certain
variable insurance contracts; and Bond Portfolio for Endowments, Inc. and
Endowments, Inc. whose shares may be owned only by tax-exempt organizations.
/3/ Since the plan's adoption, the total amount of deferred compensation
accrued by the fund (plus earnings thereon) for participating Directors is as
follows: Guilford C. Babcock ($46,311), Martin Fenton, Jr. ($17,391), Gail L.
Neale ($39,018), Kirk P. Pendleton ($46,721), Henry E. Riggs ($51,862) and
Charles Wolf, Jr. ($48,957). Amounts deferred and accumulated earnings thereon
are not funded and are general unsecured liabilities of the fund until paid to
the Director.
/4/ James W. Ratzlaff, R. Michael Shanahan and Walter P. Stern are affiliated
with the Investment Adviser and, accordingly, receive no compensation from the
Fund.
OFFICERS
(with their principal occupations during the past five years)#
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NAME AND ADDRESS AGE POSITION(S) PRINCIPAL OCCUPATION(S)
HELD WITH DURING PAST 5 YEARS
REGISTRANT
James E. Drasdo 51 President Capital Research and
333 South Hope Street Management Company, Senior
Los Angeles, CA 90071 Vice President and Director
Gordon Crawford 50 Senior Vice Capital Research and
333 South Hope Street President Management Company, Senior
Los Angeles, CA 90071 Vice President and Director
Paul G. Haaga, Jr. 48 Executive Capital Research and
333 South Hope Street Vice Management Company, Senior
Los Angeles, CA 90071 President Vice President and Director
Dina N. Perry 51 Senior Vice Capital Research and
3000 K Street, N.W., President Management Company, Vice
Suite 230 President
Washington, D.C. 20007-5124
Julie F. Williams 48 Secretary Capital Research Company,
333 South Hope Street Vice President - Fund
Los Angeles, CA 90071 Business Management Group
Patrick F. Quan 38 Assistant Capital Research and
One Market, Steuart Tower, Secretary Management Company, Vice
Suite 1800 President - Fund Business
San Francisco, CA 94105 Management Group
Mary C. Hall 39 Treasurer Capital Research and
135 South State College Blvd. Management Company, Senior
Brea, CA 92821 Vice President - Fund
Business Management Group
Robert P. Simmer 35 Assistant Capital Research and
5300 Robin Hood Road Treasurer Management Company, Vice
Norfolk, VA 23513 President - Fund Business
Management Group
</TABLE>
# Positions within the organizations listed may have changed during this
period.
No compensation is paid by the fund to any officer or director who is a
director, officer or employee of the Investment Adviser or affiliated
companies. The compensation paid by the fund to directors who are not
affiliated with the Investment Adviser is $11,000 per annum, plus $800 for each
Board of Directors meeting attended, plus $400 for each meeting attended as a
member of a committee of the Board of Directors. No pension or retirement
benefits are accrued as part of fund expenses. The Directors may elect, on a
voluntary basis, to defer all or a portion of these fees through a deferred
compensation plan in effect for the fund. The fund also reimburses certain
expenses of the Directors who are not affiliated with the Investment Adviser.
As of February 1, 1997 the officers and directors of the fund and their
families, as a group, owned beneficially or of record less than 1% of the
outstanding shares of the fund.
MANAGEMENT
INVESTMENT ADVISER - The Investment Adviser, founded in 1931, maintains
research facilities in the U.S. and abroad (Los Angeles, San Francisco, New
York, Washington, D.C., London, Geneva, Singapore, Hong Kong and Tokyo), with a
staff of professionals, many of whom have a number of years of investment
experience. The Investment Adviser is located at 333 South Hope Street, Los
Angeles, CA 90071, and at 135 South State College Boulevard, Brea, CA 92821.
The Investment Adviser's professionals travel several million miles a year,
making more than 5,000 research visits in more than 50 countries around the
world. The Investment Adviser believes that it is able to attract and retain
quality personnel. The Investment Adviser is a wholly owned subsidiary of The
Capital Group Companies, Inc.
An affiliate of the Investment Adviser compiles indices for major stock markets
around the world and compiles and edits the Morgan Stanley Capital
International Perspective, providing financial and market information about
more than 2,400 companies around the world.
The Investment Adviser is responsible for more than $100 billion of stocks,
bonds and money market instruments and serves over five million investors of
all types throughout the world. These investors include privately owned
businesses and large corporations as well as schools, colleges, foundations and
other non-profit and tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and Service
Agreement (the Advisory Agreement) between the fund and the Investment Adviser,
dated December 1, 1991 and approved by shareholders on November 14, 1991, shall
be in effect until the close of business on March 31, 1998, and may be renewed
from year to year thereafter, provided that any such renewal has been
specifically approved at least annually by (i) the Board of Directors of the
fund, or by the vote of a majority (as defined in the 1940 Act) of the
outstanding voting securities of the fund, and (ii) the vote of a majority of
directors who are not parties to the Advisory Agreement or interested persons
(as defined in said Act) of any such party, cast in person, at a meeting called
for the purpose of voting on such approval. The Advisory Agreement also
provides that either party has the right to terminate it without penalty, upon
60 days' written notice to the other party, and that the Advisory Agreement
automatically terminates in the event of its assignment (as defined in said
Act).
The Investment Adviser, in addition to providing investment advisory services,
furnishes the services and pays the compensation and travel expenses of persons
to perform the executive, administrative, clerical and bookkeeping functions of
the fund, provides suitable office space, necessary small office equipment and
utilities, and provides general purpose accounting forms, supplies, and postage
used at the offices of the fund relating to the services furnished by the
Investment Adviser. The fund pays all expenses not specifically assumed by the
Investment Adviser as provided herein. Such expenses shall include, but shall
not be limited to, custodian, stock transfer and dividend disbursing fees and
expenses; costs of the designing, printing and mailing of reports,
prospectuses, proxy statements, and notices to its shareholders; taxes;
expenses of the issuance and redemption of shares of the fund (including stock
certificates, registration and qualification fees and expenses); expenses
pursuant to the fund's Plan of Distribution (described below); legal and
auditing expenses; compensation, fees, and expenses paid to directors;
association dues; costs of stationery and forms prepared exclusively for the
fund; and costs of assembling and storing shareholder account data.
The Advisory Agreement provides for an advisory fee reduction to the extent
that the fund's annual ordinary operating expenses exceed 1% of the average net
assets of the fund. Expenses which are not subject to this limitation are
interest, taxes, and extraordinary expenses. Expenditures, including costs
incurred in connection with the purchase or sale of portfolio securities, which
are capitalized in accordance with generally accepted accounting principles
applicable to investment companies, are accounted for as capital items and not
as expenses.
The management fee is based on an annual rate of 0.39% on the first $800
million of the fund's net assets, plus 0.336% on net assets over $800 million
to $1.8 billion, plus 0.30% on net assets over $1.8 billion to $3 billion, plus
0.276% on net assets over $3 billion. During the fiscal years ended December
31, 1996, 1995, and 1994, , the Investment Adviser received from the fund
advisory fees of $18,267,000, $11,787,000, and $7,967,000, respectively.
PRINCIPAL UNDERWRITER - American Funds Distributors, Inc. (the Principal
Underwriter) is the principal underwriter of the fund's shares. The fund has
adopted a Plan of Distribution (the Plan), pursuant to rule 12b-1 (see
"Principal Underwriter" in the prospectus). The Principal Underwriter receives
amounts payable pursuant to the Plan (described below) and commissions
consisting of that portion of the sales charge remaining after the discounts
which it allows to investment dealers. Commissions retained by the Principal
Underwriter on sales of fund shares during the fiscal year ended December 31,
1996, amounted to $7,993,000 after allowance of $40,389,000 to dealers. During
the fiscal years ended December 31, 1995 and 1994, the Principal Underwriter
retained $5,718,000 and $3,299,000, after allowance of $29,762,000 and
$16,822,000 to dealers, respectively.
As required by rule 12b-1, the Plan (together with the Principal Underwriting
Agreement) has been approved by the full Board of Directors, and separately by
a majority of the directors who are not "interested" persons of the fund and
who have no direct or indirect financial interest in the operation of the Plan
or the Principal Underwriting Agreement, and the Plan has been approved by the
vote of a majority of the outstanding voting securities of the fund. The
officers and directors who are "interested" persons of the fund may, due to
present or past affiliations with the Investment Adviser and related companies,
be considered to have a direct or indirect financial interest in the operation
of the Plan. Potential benefits of the plan to the fund include improved
shareholder services, savings to the fund in transfer agency costs, savings to
the fund in advisory fees and other expenses, benefits to the investment
process from growth or stability of assets and maintenance of a financially
healthy management organization. The selection and nomination of directors who
are not "interested persons" of the fund are committed to the discretion of the
directors who are not interested persons during the existence of the Plan. The
Plan is reviewed quarterly and must be renewed annually by the Board of
Directors.
Under the Plan the fund may expend up to 0.25% of its net assets annually to
finance any activity which is primarily intended to result in the sale of fund
shares, provided the fund's Board of Directors has approved the category of
expenses for which payment is being made. These include service fees for
qualified dealers and dealer commissions and wholesaler compensation on sales
of shares exceeding $1 million (including purchases by any employer-sponsored
403(b) plan or purchases by any defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code including a "401(k) plan with 200
or more eligible employees). Only expenses incurred during the preceding 12
months and accrued while the Plan is in effect may be paid by the fund. During
the year ended December 31, 1996, the fund paid or accrued $13,010,000 under
the Plan as compensation to dealers. As of December 31, 1996, distribution
expenses accrued and unpaid distribution expenses were $921,000.
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit commercial banks from engaging in the business of underwriting,
selling or distributing securities, but permit banks to make shares of mutual
funds available to their customers and to perform administrative and
shareholder servicing functions. However, judicial or administrative decisions
or interpretations of such laws, as well as changes in either federal or state
statutes or regulations relating to the permissible activities of banks or
their subsidiaries of affiliates, could prevent a bank from continuing to
perform all or a part of its servicing activities. If a bank were prohibited
from so acting, shareholder clients of such bank would be permitted to remain
shareholders of the fund and alternate means for continuing the servicing of
such shareholders would be sought. In such event, changes in the operation of
the fund might occur and shareholders serviced by such bank might no longer be
able to avail themselves of any automatic investment or other services then
being provided by such bank. It is not expected that shareholders would suffer
with adverse financial consequences as a result of any of these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and certain banks and financial
institutions may be required to be registered as dealers pursuant to state law.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
The fund intends to meet all the requirements and has elected the tax status of
a "regulated investment company" under the provisions of Subchapter M of the
Internal Revenue Code of 1986 (the Code). Under Subchapter M, if the fund
distributes within specified times at least 90% of its investment company
taxable income, it will be taxed only on that portion of such investment
company taxable income that it retains.
To qualify, the fund must (a) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, and
gains from the sale or other disposition of stock, securities, currencies or
other income derived with respect to its business of investing in such stock,
securities or currencies; (b) derive less than 30% of its gross income from the
gains or sale or other disposition of stock or securities held less than three
months; and (c) diversify its holdings so that, at the end of each fiscal
quarter, (I) at least 50% of the market value of the fund's assets is
represented by cash, cash items, U.S. Government securities, securities of
other regulated investment companies, and other securities (but such other
securities must be limited, in respect of any one issuer, to an amount not
greater than 5% of the fund's assets and 10% of the outstanding voting
securities of such issuer), and (ii) not more than 25% of the value of its
assets is invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies), or in two or more issuers which the fund controls and which are
engaged in the same or similar trades or businesses or related trades or
businesses.
Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (i) 98% of ordinary income (generally net investment income)
for the calendar year, (ii) 98% of capital gains (both long-term and
short-term) for the one-year period ending on October 31 (as though the
one-year period ending on October 31 were the regulated investment company's
taxable year), and (iii) the sum of any untaxed, undistributed net investment
income and net capital gains of the regulated investment company for prior
periods. The term "distributed amount" generally means the sum of (i) amounts
actually distributed by the fund from its current year's ordinary income and
capital gain net income and (ii) any amount on which the fund pays income tax
for the year. The fund intends to distribute net investment income and net
capital gains so as to minimize or avoid the excise tax liability.
The fund also intends to distribute to shareholders all of the excess of net
long-term capital gain over net short-term capital loss on sales of securities.
If the net asset value of shares of the fund should, by reason of a
distribution of realized capital gains, be reduced below a shareholder's cost,
such distribution would to that extent be a return of capital to that
shareholder even though taxable to the shareholder, and a sale of shares by a
shareholder at net asset value at that time would establish a capital loss for
federal tax purposes. In particular, investors should consider the tax
implications of purchasing shares just prior to a dividend or distribution
record date. Those investors purchasing shares just prior to such a date will
then receive a partial return of capital upon the dividend or distribution,
which will nevertheless be taxable to them as an ordinary or capital gains
dividend.
Corporate shareholders of the fund may be eligible for the dividends-received
deduction on the dividends (excluding the net capital gains dividends) paid by
the fund to the extent that the fund's income is derived from dividends (which,
if received directly, would qualify for such deduction) received from domestic
corporations. In order to quality for the dividends-received deduction, a
corporate shareholder must hold the fund shares paying the dividends upon which
the deduction is based for at least 46 days.
Dividends generally are taxable to shareholders at the time they are paid.
However, dividends declared in October, November and December and made payable
to shareholders of record in such a month are treated as paid and are thereby
taxable as of December 31, provided that the fund pays the dividend no later
than the end of January of the following year.
If a shareholder exchanges or otherwise disposes of shares of the fund within
90 days of having acquired such shares, and if, as a result of having acquired
those shares, the shareholder subsequently pays a reduced sales charge for
shares of the fund, or of a different fund, the sales charge previously
incurred in acquiring the fund's shares shall not be taken into account (to the
extent such previous sales charges do not exceed the reduction in sales
charges) for the purpose of determining the amount of gain or loss on the
exchange, but will be treated as having been incurred in the acquisition of
such other shares. Also, any loss realized on a redemption or exchange of
shares of a fund will be disallowed to the extent substantially identical
shares are reacquired within the 61-day period beginning 30 days before and
ending 30 days after the shares are disposed of.
The fund may be required to pay withholding and other taxes imposed by foreign
countries generally at rates from 10% to 40% which would reduce the fund's
investment income. Tax conventions between certain countries and the United
States may reduce or eliminate such taxes. It is not anticipated that
shareholders will be entitled to take a foreign tax credit or deduction for
such foreign taxes. Corporate shareholders of the fund will be eligible for
the dividends-received deduction on the dividends (excluding the net capital
gain dividends) paid by the fund to the extent the fund's income is derived
from dividends received from domestic corporations. In order to qualify for
the dividends-received deduction, a corporate shareholder must hold the fund
shares on which the dividends are paid for at least 46 days.
Under the Code, distributions of net investment income by the fund to a
shareholder who, as to the U.S., is a nonresident alien individual, nonresident
alien fiduciary of a trust or estate, foreign corporation or foreign
partnership (a "foreign shareholder") will be subject to U.S. withholding tax
(at a rate of 30% or lower treaty rate). Withholding will not apply if a
dividend paid by the fund to a non-U.S. shareholder is "effectively connected"
with a U.S. trade or business, in which case the reporting and withholding
requirements applicable to U.S. citizens, U.S. residents or domestic
corporations will apply. However, if the distribution is effectively connected
with the conduct of the non-U.S. shareholder's trade or business within the
U.S., the distribution would be included in the net income of the shareholder
and subject to U.S. income tax at the applicable marginal rate. Distributions
of capital gains not effectively connected with a U.S. trade or business are
not subject to the withholding, but if the non-U.S. shareholder was an
individual who was physically present in the U.S. during the tax year for more
than 182 days and such shareholder is nonetheless treated as a nonresident
alien, the distributions would be subject to a 30% tax.
As of the date of this statement of additional information, the maximum federal
individual stated tax rate applicable to ordinary income is 39.6% (effective
tax rates may be higher for some individuals due to phase out of exemptions and
elimination of deductions); the maximum individual tax rate applicable to net
capital gain is 28%; and the maximum corporate tax applicable to ordinary
income and net capital gain is 35%. However, to eliminate the benefit of
lower marginal corporate income tax rates, corporations which have income in
excess of $100,000 for a taxable year will be required to pay an additional
income tax liability of up to $11,700 and corporations which have taxable
income in excess of $15,000,000 for a taxable year will be required to pay an
additional amount of tax of up to $100,000. Naturally, the amount of tax
payable by an individual will be affected by a combination of tax law rules
covering, E.G., deductions, credits, deferrals, exemptions, sources of income
and other matters. Under the Code, an individual is entitled to establish an
IRA each year (prior to the tax return filing deadline for the year) whereby
earnings on investments are tax-deferred. In addition, in some cases, the IRA
contribution itself may be deductible.
The foregoing is limited to a summary of federal taxation and should not be
viewed as a comprehensive discussion of all provisions of the Code relevant to
investors. Dividends and capital gain distributions may also be subject to
state or local taxes. Investors are urged to consult their tax advisers with
specific reference to their own tax situations.
PURCHASE OF SHARES
<TABLE>
<CAPTION>
<S> <C> <C>
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
See "Investment Minimums $50 minimum (except where a lower
and Fund Numbers" for initial minimum is noted under "Investment
investment minimums. Minimums and Fund Numbers").
By contacting Visit any investment dealer Mail directly to your investment dealer's
your investment who is registered in the state address printed on your account
dealer where the purchase is made statement.
and who has a sales
agreement with American
Funds Distributors.
By mail Make your check payable to Fill out the account additions form at
the fund and mail to the the bottom of a recent account
address indicated on the statement, make your check payable to
account application. Please the fund, write your account number on
indicate an investment dealer your check, and mail the check and
on the account application. form in the envelope provided with your
account statement.
By telephone Please contact your Complete the "Investments by Phone"
investment dealer to open section on the account application or
account, then follow the American FundsLink Authorization
procedures for additional Form.
investments. Once you establish the privilege, you,
your financial advisor or any person
with your account information can call
American FundsLine(R) and make
investments by telephone (subject to
conditions noted in "Shareholder
Account Services and Privileges -
Telephone Redemptions and
Exchanges" below).
By wire Call 800/421-0180 to obtain Your bank should wire your additional
your account number(s), if investments in the same manner as
necessary. Please indicate described under "Initial Investment."
an investment dealer on the
account. Instruct your bank
to wire funds to:
Wells Fargo Bank
155 Fifth Street
Sixth Floor
San Francisco, CA 94106
(ABA #121000248)
For credit to the account of:
American Funds Service
Company
a/c #4600-076178
(fund name)
(your fund acct. no.)
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO REJECT ANY PURCHASE
ORDER.
</TABLE>
INVESTMENT MINIMUMS AND FUND NUMBERS - Here are the minimum initial investments
required by the funds in The American Funds Group along with fund numbers for
use with our automated phone line, American FundsLine(R) (see description
below):
<TABLE>
<CAPTION>
<S> <C> <C>
FUND MINIMUM FUND
INITIAL NUMBER
INVESTMENT
STOCK AND STOCK/BOND FUNDS
AMCAP Fund(R) $1,000 02
American Balanced Fund(R) 500 11
American Mutual Fund(R) 250 03
Capital Income Builder(R) 1,000 12
Capital World Growth and Income Fund(SM) 1,000 33
EuroPacific Growth Fund(R) 250 16
Fundamental Investors(SM) 250 10
The Growth Fund of America(R) 1,000 05
The Income Fund of America(R) 1,000 06
The Investment Company of America(R) 250 04
The New Economy Fund(R) 1,000 14
New Perspective Fund(R) 250 07
SMALLCAP World Fund(R) 1,000 35
Washington Mutual Investors Fund(SM) 250 01
BOND FUNDS
American High-Income Municipal Bond Fund(R) 1,000 40
American High-Income Trust(SM) 1,000 21
The Bond Fund of America(SM) 1,000 08
Capital World Bond Fund(R) 1,000 31
Intermediate Bond Fund of America(SM) 1,000 23
Limited Term Tax-Exempt Bond Fund of 1,000 43
America(SM)
The Tax-Exempt Bond Fund of America(R) 1,000 19
The Tax-Exempt Fund of California(R)* 1,000 20
The Tax-Exempt Fund of Maryland(R)* 1,000 24
The Tax-Exempt Fund of Virginia(R)* 1,000 25
U.S. Government Securities Fund(SM) 1,000 22
MONEY MARKET FUNDS
The Cash Management Trust of America(R) 2,500 09
The Tax-Exempt Money Fund of America(SM) 2,500 39
The U.S. Treasury Money Fund of America(SM) 2,500 49
___________
*Available only in certain states.
</TABLE>
For retirement plan investments, the minimum is $250, except that the money
market funds have a minimum of $1,000 for individual retirement accounts
(IRAs). Minimums are reduced to $50 for purchases through "Automatic
Investment Plans" (except for the money market funds) or to $25 for purchases
by retirement plans through payroll deductions and may be reduced or waived for
shareholders of other funds in The American Funds Group. TAX-EXEMPT FUNDS
SHOULD NOT SERVE AS RETIREMENT PLAN INVESTMENTS. The minimum is $50 for
additional investments (except as noted above).
DEALER COMMISSIONS - The sales charges you pay when purchasing the stock,
stock/bond, and bond funds of The American Funds Group are set forth below.
The money market funds of The American Funds Group are offered at net asset
value. (See "Investment Minimums and Fund Numbers" for a listing of the
funds.)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AMOUNT OF PURCHASE SALES CHARGE AS DEALER
AT THE OFFERING PRICE PERCENTAGE OF THE: CONCESSION
AS PERCENTAGE
OF THE
OFFERING
PRICE
NET AMOUNT OFFERING
INVESTED PRICE
STOCK AND STOCK/BOND FUNDS
Less than $50,000
6.10% 5.75% 5.00%
$50,000 but less than $100,000
4.71 4.50 3.75
BOND FUNDS
Less than $25,000
4.99 4.75 4.00
$25,000 but less than $50,000
4.71 4.50 3.75
$50,000 but less than $100,000
4.17 4.00 3.25
STOCK, STOCK/BOND, AND BOND
FUNDS
$100,000 but less than $250,000
3.63 3.50 2.75
$250,000 but less than $500,000
2.56 2.50 2.00
$500,000 but less than $1,000,000
2.04 2.00 1.60
$1,000,000 or more (see below)
none none
</TABLE>
Commissions of up to 1% will be paid to dealers who initiate and are
responsible for purchases of $1 million or more, for purchases by any
employer-sponsored 403(b) plan or purchases by any defined contribution
plan qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees, and for purchases made at
net asset value by certain retirement plans of organizations with collective
retirement plan assets of $100 million or more: 1.00% on amounts of $1 million
to $2 million, 0.80% on amounts over $2 million to $3 million, 0.50% on amounts
over $3 million to $50 million, 0.25% on amounts over $50 million to $100
million, and 0.15% on amounts over $100 million. The level of dealer
commissions will be determined based on sales made over a 12-month period
commencing from the date of the first sale at net asset value.
American Funds Distributors, at its expense (from a designated percentage of
its income), will, during calendar year 1997, provide additional compensation
to dealers. Currently these payments are limited to the top one hundred dealers
who have sold shares of the fund or other funds in The American Funds Group.
These payments will be based on a pro rata share of a qualifying dealer's
sales. American Funds Distributors will, on an annual basis, determine the
advisability of continuing these payments.
Any employer-sponsored 403(b) plan or defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code including a "401(k)" plan with 200
or more eligible employees or any other purchaser investing at least $1 million
in shares of the fund (or in combination with shares of other funds in The
American Funds Group other than the money market funds) may purchase shares at
net asset value; however, a contingent deferred sales charge of 1% is imposed
on certain redemptions made within twelve months of the purchase. (See
"Redeeming Shares--Contingent Deferred Sales Charge.") Investments by
retirement plans, foundations or endowments with $50 million or more in assets
may be made with no sales charge and are not subject to a contingent deferrred
sales charge.
Qualified dealers currently are paid a continuing service fee not to exceed
0.25% of average net assets (0.15% in the case of the money market funds)
annually in order to promote selling efforts and to compensate them for
providing certain services. These services include processing purchase and
redemption transactions, establishing shareholder accounts and providing
certain information and assistance with respect to the fund.
NET ASSET VALUE PURCHASES - The stock, stock/bond and bond funds may sell
shares at net asset value to: (1) current or retired directors, trustees,
officers and advisory board members of the funds managed by Capital Research
and Management Company, employees of Washington Management Corporation,
employees and partners of The Capital Group Companies, Inc. and its affiliated
companies, certain family members of the above persons, and trusts or plans
primarily for such persons; (2) current registered representatives, retired
registered representatives with respect to accounts established while active,
or full-time employees (and their spouses, parents, and children) of dealers
who have sales agreements with American Funds Distributors (or who clear
transactions through such dealers) and plans for such persons or the dealers;
(3) companies exchanging securities with the fund through a merger, acquisition
or exchange offer; (4) trustees or other fiduciaries purchasing shares for
certain retirement plans of organizations with retirement plan assets of $100
million or more; (5) insurance company separate accounts; (6) accounts managed
by subsidiaries of The Capital Group Companies, Inc.; and (7) The Capital Group
Companies, Inc., its affiliated companies and Washington Management
Corporation. Shares are offered at net asset value to these persons and
organizations due to anticipated economies in sales effort and expense.
STATEMENT OF INTENTION - The reduced sales charges and offering prices set
forth in the Prospectus apply to purchases of $50,000 or more made within a
13-month period subject to a statement of intention (the "Statement"). The
Statement is not a binding obligation to purchase the indicated amount. When a
shareholder elects to utilize a Statement in order to qualify for a reduced
sales charge, shares equal to 5% of the dollar amount specified in the
Statement will be held in escrow in the shareholder's account out of the
initial purchase (or subsequent purchases, if necessary) by the Transfer Agent.
All dividends and any capital gain distributions on shares held in escrow will
be credited to the shareholder's account in shares (or paid in cash, if
requested). If the intended investment is not completed within the specified
13-month period, the purchaser will remit to the Principal Underwriter the
difference between the sales charge actually paid and the sales charge which
would have been paid if the total of such purchases had been made at a single
time. If the difference is not paid within 45 days after written request by
the Principal Underwriter or the securities dealer, the appropriate number of
shares held in escrow will be redeemed to pay such difference. If the proceeds
from this redemption are inadequate, the purchaser will be liable to the
Principal Underwriter for the balance still outstanding. The Statement may be
revised upward at any time during the 13-month period, and such a revision will
be treated as a new Statement, except that the 13-month period during which the
purchase must be made will remain unchanged and there will be no retroactive
reduction of the sales charges paid on prior purchases. Existing holdings
eligible for rights of accumulation (see the prospectus and account
application) may be credited toward satisfying the Statement. During the
Statement period reinvested dividends and capital gain distributions,
investments in money market funds, and investments made under a right of
reinstatement will not be credited toward satisfying the Statement.
In the case of purchase orders by the trustees of certain retirement plans by
payroll deduction, the sales charge for the investments made during the
13-month period will be handled as follows: The regular monthly payroll
deduction investment will be multiplied by 13 and then multiplied by 1.5. The
current value of existing American Funds investments (other than money market
fund investments) and any rollovers or transfers reasonably anticipated to be
invested in non-money market American Funds during the 13-month period are
added to the figure determined above. The sum is the Statement amount and
applicable breakpoint level. On the first investment and all other investments
made pursuant to the Statement, a sales charge will be assessed according to
the sales charge breakpoint thus determined. There will be no retroactive
adjustments in sales charges on investments previously made during the 13-month
period.
Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms with their first purchase.
AGGREGATION - Sales charge discounts are available for certain aggregated
investments. Qualifying investments include those by you, your spouse and your
children under the age of 21, if all parties are purchasing shares for their
own account(s), which may include purchases through employee benefit plan(s)
such as an IRA, individual-type 403(b) plan or single-participant Keogh-type
plan or by a business solely controlled by these individuals (for example, the
individuals own the entire business) or by a trust (or other fiduciary
arrangement) solely for the benefit of these individuals. Individual purchases
by a trustee(s) or other fiduciary(ies) may also be aggregated if the
investments are (1) for a single trust estate or fiduciary account, including
an employee benefit plan other than those described above, or (2) made for two
or more employee benefit plans of a single employer or of affiliated employers
as defined in the Investment Company Act of 1940, again excluding employee
benefit plans described above, or (3) for a diversified common trust fund or
other diversified pooled account not specifically formed for the purpose of
accumulating fund shares. Purchases made for nominee or street name accounts
(securities held in the name of an investment dealer or another nominee such as
a bank trust department instead of the customer) may not be aggregated with
those made for other accounts and may not be aggregated with other nominee or
street name accounts unless otherwise qualified as described above.
PRICE OF SHARES - Purchases of shares are made at the offering price next
determined after the purchase order is received by the fund or American Funds
Service Company; this offering price is effective for orders received prior to
the time of determination of the net asset value and, in the case of orders
placed with dealers, accepted by the Principal Underwriter prior to its close
of business. In case of orders sent directly to the fund or American Funds
Service Company, an investment dealer MUST be indicated. The dealer is
responsible for promptly transmitting purchase orders to the Principal
Underwriter. Orders received by the investment dealer, the Transfer Agent, or
the fund after the time of the determination of the net asset value will be
entered at the next calculated offering price. Prices which appear in the
newspaper are not always indicative of prices at which you will be purchasing
and redeeming shares of the fund, since such prices generally reflect the
previous day's closing price whereas purchases and redemptions are made at the
next calculated price.
The price you pay for shares, the offering price, is based on the net asset
value per share which is calculated once daily at the close of trading
(currently 4:00 p.m., New York time) each day the New York Stock Exchange is
open. The New York Stock Exchange is currently closed on weekends and on the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving and Christmas Day. The net
asset value per share is determined as follows:
1. Portfolio securities, including ADRs and EDRs, which are traded on stock
exchanges, are valued at the last sale price on the exchange on which such
securities are traded, as of the close of business on the day the securities
are being valued or, lacking any sales, at the last available bid price. In
cases where securities are traded on more than one exchange, the securities are
valued on the exchange designated by or under the authority of the Board of
Directors as the primary market. Securities traded in the over-the-counter
market are valued at the last reported sale price in the over-the-counter
market prior to the time of valuation or, lacking any sales, at the last
reported bid price. Securities and assets for which market quotations are not
readily available (including restricted securities which are subject to
limitations as to their sale) are valued at fair value as determined in good
faith by or under the direction of the Board of Directors. U.S. Treasury bills
and other short-term obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities, with original or remaining maturities in
excess of 60 days are valued at the mean or representative quoted bid and asked
prices for such securities or, if such prices are not available, are valued at
the mean of representative quoted bid and asked prices for securities of
comparable maturity, quality and type. Short-term securities with 60 days or
less to maturity are amortized to maturity based on their cost if acquired
within 60 days of maturity or, if already held on the 60th day, based on the
value determined on the 61st day. Trading in securities on European and Far
Eastern securities exchanges and over-the-counter markets is normally completed
well before the close of the business day in New York. In addition, European
or Far Eastern securities trading may not take place on all business days in
New York. Furthermore, trading takes place in various non-U.S. markets on days
which are not business days in New York and on which the fund's net asset value
is not calculated. The calculation of net asset value may not take place
contemporaneously with the determination of the prices of portfolio securities
used in such calculation. Events affecting the values of portfolio securities
that occur between the time their prices are determined and the close of the
New York Stock Exchange will not be reflected in the fund's calculation of net
asset value unless the Board of Directors deems that the particular event would
materially affect net asset value, in which case an adjustment will be made.
Assets or liabilities initially expressed in terms of foreign currencies are
translated prior to the next determination of the net asset value of the fund's
shares, into U.S. dollars at the prevailing market rates. The fair value of
all other assets is added to the value of securities to arrive at the total
assets;
2. There are deducted from the total assets, thus determined, the
liabilities, including accruals of taxes and other expense items; and
3. The net assets so obtained are then divided by the total number of shares
outstanding (excluding treasury shares) and the result, rounded to the nearer
cent, is the net asset value per share.
Any purchase order may be rejected by the Principal Underwriter or the fund.
The Principal Underwriter will not knowingly sell shares directly or
indirectly, or through a unit investment trust to any other investment company,
person or entity, where, after the sale, such investment company, person, or
entity would own beneficially directly, indirectly, or though an investment
trust more than 3% of the outstanding shares of the fund without the consent of
a majority of the fund's Directors.
REDEEMING SHARES
<TABLE>
<CAPTION>
<S> <C>
Send a letter of instruction specifying the name of the fund,
By writing to American the number of shares or dollar amount to be sold, your
Funds Service Company (at name and account number. You should also enclose any
the appropriate address share certificates you wish to redeem. For redemptions
indicated under "Fund over $50,000 and for certain redemptions of $50,000 or less
Organization and (see below), your signature must be guaranteed by a bank,
Management - Principal savings association, credit union, or member firm of a
Underwriter and Transfer domestic stock exchange or the National Association of
Agent" in the prospectus) Securities Dealers, Inc. that is an eligible guarantor
institution. You should verify with the institution that it is an
eligible guarantor prior to signing. Additional documentation
may be required for redemption of shares held in corporate,
partnership or fiduciary accounts. Notarization by a Notary
Public is not an acceptable signature guarantee.
By contacting your If you redeem shares through your investment dealer, you
investment dealer may be charged for this service. SHARES HELD FOR YOU IN
YOUR INVESTMENT DEALER'S STREET NAME MUST BE REDEEMED
THROUGH THE DEALER.
You may have a You may use this option, provided the account is registered
redemption check sent to in the name of an individual(s), a UGMA/UTMA custodian,
you by using American or a non-retirement plan trust. These redemptions may not
FundsLine(R) or by exceed $10,000 per day, per fund account and the check
telephoning, faxing, or must be made payable to the shareholder(s) of record and
telegraphing American be sent to the address of record provided the address has
Funds Service Company been used with the account for at least 10 days. See "Fund
(subject to the conditions Organization and Management - Principal Underwriter and
noted in this section and in Transfer Agent" in the prospectus and "Exchange Privilege"
"Telephone Purchases, below for the appropriate telephone or fax number.
Sales and Exchanges" in
the prospectus)
In the case of the money Upon request (use the account application for the money
market funds, you may market funds) you may establish telephone redemption
have redemptions wired to privileges (which will enable you to have a redemption sent
your bank by telephoning to your bank account) and/or check writing privileges. If you
American Funds Service request check writing privileges, you will be provided with
Company ($1,000 or more) checks that you may use to draw against your account.
or by writing a check ($250 These checks may be made payable to anyone you
or more) designate and must be signed by the authorized number of
registered shareholders exactly as indicated on your
checking account signature card.
</TABLE>
A SIGNATURE GUARANTEE IS NOT CURRENTLY REQUIRED FOR ANY REDEMPTION OF $50,000
OR LESS PROVIDED THE REDEMPTION CHECK IS MADE PAYABLE TO THE REGISTERED
SHAREHOLDER(S) AND IS MAILED TO THE ADDRESS OF RECORD, PROVIDED THE ADDRESS HAS
BEEN USED WITH THE ACCOUNT FOR AT LEAST 10 DAYS.
CONTINGENT DEFERRED SALES CHARGE - A contingent deferred sales charge of 1%
applies to certain redemptions made within twelve months of purchase on
investments of $1 million or more and on any investment made with no initial
sales charge by any employer-sponsored 403(b) plan or defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees. The charge is 1% of the
lesser of the value of the shares redeemed (exclusive of reinvested dividends
and capital gain distributions) or the total cost of such shares. Shares held
for the longest period are assumed to be redeemed first for purposes of
calculating this charge. The charge is waived for exchanges (except if shares
acquired by exchange were then redeemed within 12 months of the initial
purchase); for distributions from qualified retirement plans and other employee
benefit plans; for redemptions resulting from participant-directed switches
among investment options within a participant-directed employer-sponsored
retirement plan; for distributions from 403(b) plans or IRAs due to death,
disability or attainment of age 591/2; for tax-free returns of excess
contributions to IRAs; for redemptions through certain automatic withdrawals
not exceeding 10% of the amount that would otherwise be subject to the charge;
and for redemptions in connection with loans made by qualified retirement
plans.
REDEMPTION OF SHARES - The Transfer Agent may redeem the shares of any
shareholder if the shares owned by such shareholder through redemptions, market
decline or otherwise, have a value of less than the minimum initial investment
amount required of new shareholders, (determined, for this purpose only as the
greater of the shareholder's cost or current net asset value of the shares,
including any shares acquired through reinvestment of income dividends and
capital gains distributions). Prior notice of at least 60 days will be given
to a shareholder before the involuntary redemption provision is made effective
with respect to the shareholder's account. The shareholder will have not less
than 30 days from the date of such notice within which to bring the account up
to the minimum determined as set forth above.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - The automatic investment plan enables shareholders
to make regular monthly or quarterly investments in shares through automatic
charges to their bank accounts. With shareholder authorization and bank
approval, the Transfer Agent will automatically charge the bank account for the
amount specified ($50 minimum), which will be automatically invested in shares
at the public offering price on or about the dates you select. Bank accounts
will be charged on the day or a few days before investments are credited,
depending on the bank's capabilities, and shareholders will receive a
confirmation statement at least quarterly. Participation in the plan will
begin within 30 days after receipt of the account application. If the
shareholder's bank account cannot be charged due to insufficient funds, a
stop-payment order or closing of the account, the plan may be terminated and
the related investment reversed. The shareholder may change the amount of the
investment or discontinue the plan at any time by writing to the Transfer
Agent.
AUTOMATIC REINVESTMENT - Dividends and capital gain distributions are
reinvested in additional shares at no sales charge unless you indicate
otherwise on the account application. You also may elect to have dividends
and/or capital gain distributions paid in cash by informing the fund, American
Funds Service Company or your investment dealer.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - A shareholder in one fund
may elect to cross-reinvest dividends or dividends and capital gain
distributions paid by that fund (the paying fund) into any other fund in The
American Funds Group (the receiving fund) subject to the following conditions:
(I) the aggregate value of the shareholder's account(s) in the paying fund(s)
must equal or exceed $5,000 (this condition is waived if the value of the
account in the receiving fund equals or exceeds that fund's minimum initial
investment requirement), (ii) as long as the value of the account in the
receiving fund is below that fund's minimum initial investment requirement,
dividends and capital gain distributions paid by the receiving fund must be
automatically reinvested in the receiving fund, and (iii) if this privilege is
discontinued with respect to a particular receiving fund, the value of the
account in that fund must equal or exceed the fund's minimum initial investment
requirement or the fund shall have the right, if the shareholder fails to
increase the value of the account to such minimum within 90 days after being
notified of the deficiency, automatically to redeem the account and send the
proceeds to the shareholder. These cross-reinvestments of dividends and
capital gain distributions will be at net asset value (without sales charge).
EXCHANGE PRIVILEGE - You may exchange shares into other funds in The American
Funds Group. Exchange purchases are subject to the minimum investment
requirements of the fund purchased and no sales charge generally applies.
However, exchanges of shares from the money market funds are subject to
applicable sales charges on the fund being purchased, unless the money market
fund shares were acquired by an exchange from a fund having a sales charge, or
by reinvestment or cross-reinvestment of dividends or capital gain
distributions.
You may exchange shares by writing to American Funds Service Company (see
"Redeeming Shares"), by contacting your investment dealer, by using American
FundsLine(R) (see "American FundsLine(R)" below), or by telephoning
800/421-0180 toll-free, faxing (see "Principal Underwriter and Transfer Agent"
in the prospectus for the appropriate fax numbers) or telegraphing American
Funds Service Company. (See "Telephone Redemptions and Exchanges" below.)
Shares held in corporate-type retirement plans for which Capital Guardian Trust
Company serves as trustee may not be exchanged by telephone, fax or telegraph.
Exchange redemptions and purchases are processed simultaneously at the share
prices next determined after the exchange order is received. (See "Purchase of
Shares--Price of Shares.") THESE TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS
ORDINARY SALES AND PURCHASES.
AUTOMATIC EXCHANGES - You may automatically exchange shares (in amounts of $50
or more) among any of the funds in The American Funds Group on any day (or
preceding business day if the day falls on a non-business day) of each month
you designate. You must either meet the minimum initial investment requirement
for the receiving fund OR the originating fund's balance must be at least
$5,000 and the receiving fund's minimum must be met within one year.
AUTOMATIC WITHDRAWALS - Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into a
shareholder account from which there are automatic withdrawals. Withdrawals of
amounts exceeding reinvested dividends and distributions and increases in share
value would reduce the aggregate value of the shareholder's account. The
Transfer Agent arranges for the redemption by the fund of sufficient shares,
deposited by the shareholder with the Transfer Agent, to provide the withdrawal
payment specified.
ACCOUNT STATEMENTS - Your account is opened in accordance with your
registration instructions. Transactions in the account, such as additional
investments and dividend reinvestments, will be reflected on regular
confirmation statements from American Funds Service Company. Purchases through
automatic investment plans and certain retirement plans will be confirmed at
least quarterly.
AMERICAN FUNDSLINE(R) - You may check your share balance, the price of your
shares, or your most recent account transaction, redeem shares (up to $10,000
per fund, per account each day), or exchange shares around the clock with
American FundsLine(R). To use this service, call 800/325-3590 from a TouchTonet
telephone. Redemptions and exchanges through American FundsLine(R) are subject
to the conditions noted above and in "Telephone Redemptions and Exchanges"
below. You will need your fund number (see the list of funds in The American
Funds Group under "Purchase of Shares--Investment Minimums and Fund Numbers"),
personal identification number (the last four digits of your Social Security
number or other tax identification number associated with your account) and
account number.
TELEPHONE REDEMPTIONS AND EXCHANGES - By using the telephone (including
American FundsLine(R)), fax or telegraph redemption and/or exchange options,
you agree to hold the fund, American Funds Service Company, any of its
affiliates or mutual funds managed by such affiliates, and each of their
respective directors, trustees, officers, employees and agents harmless from
any losses, expenses, costs or liability (including attorney fees) which may be
incurred in connection with the exercise of these privileges. Generally, all
shareholders are automatically eligible to use these options. However, you may
elect to opt out of these options by writing American Funds Service Company
(you may also reinstate them at any time by writing American Funds Service
Company). If American Funds Service Company does not employ reasonable
procedures to confirm that the instructions received from any person with
appropriate account information are genuine, the fund may be liable for losses
due to unauthorized or fraudulent instructions. In the event that shareholders
are unable to reach the fund by telephone because of technical difficulties,
market conditions, or a natural disaster, redemption and exchange requests may
be made in writing only.
EXECUTION OF PORTFOLIO TRANSACTIONS
Orders for the fund's portfolio securities transactions are placed by the
Investment Adviser. The Investment Adviser strives to obtain the best
available prices in its portfolio transactions taking into account the costs
and promptness of executions. When circumstances relating to a proposed
transaction indicate that a particular broker is in a position to obtain the
best price and execution, the order is placed with that broker. This may or may
not be a broker who has provided investment research, statistical, or other
related services to the Investment Adviser or has sold shares of the fund or
other funds served by the Investment Adviser. The fund does not consider that
it has an obligation to obtain the lowest available commission rate to the
exclusion of price, service and qualitative considerations.
There are occasions on which portfolio transactions for the fund may be
executed as part of concurrent authorizations to purchase or sell the same
security for other of the funds served by the Investment Adviser, or for trust
or other accounts served by affiliated companies of the Investment Adviser.
Although such concurrent authorizations potentially could be either
advantageous or disadvantageous to the fund, they are effected only when the
Investment Adviser believes that to do so is in the interest of the fund. When
such concurrent authorizations occur, the objective is to allocate the
executions in an equitable manner.
As of the end of the fund's most recent fiscal year, amounts held in certain
equity and debt securities of some of its regular brokers and dealers were as
follows:
Brokerage commissions paid on portfolio transactions during the years ended
December 31, 1996, 1995, and 1994 amounted to $6,066,000, $3,599,000 and
$2,079,000 respectively.
GENERAL INFORMATION
CUSTODIAN OF ASSETS - Securities and cash owned by the fund, including proceeds
from the sale of shares of the fund and of securities in the fund's portfolio,
are held by State Street Bank and Trust Company, 225 Franklin Street, Boston,
MA 02101, as Custodian. Non-U.S. securities may be held by the Custodian
pursuant to subcustodial arrangements in non-U.S. banks or foreign branches of
U.S. banks.
TRANSFER AGENT - American Funds Service Company, a wholly owned subsidiary of
the Investment Adviser, maintains the record of each shareholder's account,
processes purchases and redemptions of the fund's shares, acts as dividend and
capital gain distribution disbursing agent, and performs other related
shareholder service functions. American Funds Service Company was paid a fee
of $5,336,000 for the fiscal year ended December 31, 1996.
INDEPENDENT AUDITORS - Deloitte & Touche LLP, 1000 Wilshire Boulevard, Los
Angeles, CA 90017, serves as the fund's independent auditors providing audit
services, preparation of tax returns and review of certain documents to be
filed with the Securities and Exchange Commission. The financial statements
included in this Statement of Additional Information from the Annual Report,
have been so included in reliance on the report of Deloitte & Touche LLP given
on the authority of said firm as experts in auditing and accounting. The
selection of the company's independent auditor is reviewed and determined
annually by the Board of Directors.
REPORTS TO SHAREHOLDERS - The fund's fiscal year ends on December 31.
Shareholders are provided at least semi-annually with reports showing the
investment portfolio, financial statements and other information. The annual
financial statements are audited by the fund's independent auditors, Deloitte
& Touche LLP.
PERSONAL INVESTING POLICY - Capital Research and Management Company and its
affiliated companies have adopted a personal investing policy consistent with
Investment Company Institute guidelines. This policy includes: a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; pre-clearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; disclosure of personal
holdings by certain investment personnel prior to recommendation for purchase
for the fund; blackout periods on personal investing for certain investment
personnel; ban on short-term trading profits for investment personnel;
limitations on service as a director of publicly traded companies; and
disclosure of personal securities transactions.
REMOVAL OF DIRECTORS BY SHAREHOLDERS - At any meeting of shareholders, duly
called and at which a quorum is present, the shareholders may, by the
affirmative vote of the holders of a majority of the votes entitled to be cast
thereon, remove any director or directors from office and may elect a successor
or successors to fill any resulting vacancies for the unexpired terms of
removed directors. The fund has made an undertaking, at the request of the
staff of the Securities and Exchange Commission, to apply the provisions of
section 16(c) of the 1940 Act with respect to the removal of directors as
though the fund were a common-law trust. Accordingly, the directors of the
fund shall promptly call a meeting of shareholders for the purpose of voting
upon the question of removal of any director when requested in writing to do so
by the record holders of not less than 10% of the outstanding shares.
The financial statements including the investment portfolio and the report of
Independent Auditors contained in the Annual Report are included in this
Statement of Additional Information. The following information is not included
in the Annual Report:
<TABLE>
<CAPTION>
DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND
OFFERING PRICE PER SHARE--DECEMBER 31, 1996
<S> <C>
Net asset value and redemption price per share $24.54
(Net assets divided by shares outstanding)
Maximum offering price per share $26.04
(100/94.25 of net asset value per share which takes into
account the fund's current maximum sales charge)
</TABLE>
INVESTMENT RESULTS
The fund's yield is 1.59% based on a 30-day (or one month) period ended
December 31, 1996, computed by dividing the net investment income per share
earned during the period by the maximum offering price per share on the last
day of the period, according to the following formula:
YIELD = 2[(a-b/cd+1)/6/-1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
As of December 31, 1996, the fund's total return over the past twelve months
and average annual total returns over the past five and ten-year periods were
13.08%, 14.89% and 14.24%, respectively. The average annual total return (T)
is computed by using the value at the end of the period (ERV) of a hypothetical
initial investment of $1,000 (P) over a period of years (n) according to the
following formula as required by the Securities and Exchange Commission:
P(1+T)/n/ = ERV.
To calculate total return, an initial investment is divided by the offering
price (which includes the sales charge) as of the first day of the period in
order to determine the initial number of shares purchased. Subsequent
dividends and capital gain distributions are then reinvested at net asset value
on the reinvestment date determined by the Board of Directors. The sum of the
initial shares purchased and shares acquired through reinvestment is multiplied
by the net asset value per share as of the end of the period in order to
determine ending value. The difference between the ending value and the
initial investment divided by the initial investment converted to a percentage
equals total return. The resulting percentage indicates the positive or
negative investment results that an investor would have experienced from
reinvested dividends and capital gain distributions and changes in share price
during the period. Total return may be calculated for one year, five years,
ten years and for other periods of years. The average annual total return over
periods greater than one year also may be computed by utilizing ending values
as determined above.
The following assumptions will be reflected in computations made in accordance
with the formula stated above: (1) deduction of the maximum sales load of
5.75% from the $1,000 initial investment; (2) reinvestment of dividends and
distributions at net asset value on the reinvestment date determined by the
Board; and (3) a complete redemption at the end of any period illustrated.
The fund may also, at times, calculate total return based on net asset value
per share (rather than the offering price), in which case the figure would not
reflect the effect of any sales charges which would have been paid if shares
were purchased during the period reflected in the computation. Consequently,
total return calculated in this manner will be higher. These total returns may
be calculated over periods in addition to those described above.
The fund may also calculate a distribution rate on a taxable and tax equivalent
basis. The distribution rate is computed by dividing the dividends paid by the
fund over the last 12 months by the sum of the month-end net asset value or
maximum offering price and the capital gains paid over the last 12 months.
The distribution rate may differ from the yield.
The fund may include information on its investment results and/or comparisons
of its investment results to various unmanaged indices (such as The Dow Jones
Average of 30 Industrial Stocks and The Standard and Poor's 500 Stock Composite
Index) or results of other mutual funds or investment or savings vehicles in
advertisements or in reports furnished to present or prospective shareholders.
Total return for the unmanaged indices will be calculated assuming reinvestment
of dividends and interest, but will not reflect any deductions for advisory
fees, brokerage costs or administrative expenses.
The fund may refer to results compiled by organizations such as CDA Investment
Technologies, Ibbotson Associates, Lipper Analytical Services and Wiesenberger
Investment Companies Services and by the U.S. Department of Commerce.
Additionally, the fund may, from time to time, refer to results published in
various newspapers or periodicals, including BARRONS, FORBES, FORTUNE,
INSTITUTIONAL INVESTOR, KIPLINGER'S PERSONAL FINANCE MAGAZINE, MONEY, U.S. NEWS
AND WORLD REPORT and THE WALL STREET JOURNAL.
The fund may, from time to time, illustrate the benefits of tax-deferral by
comparing taxable investments to investments made through tax-deferred
retirement plans.
The fund may, from time to time, compare its investment results with the
Consumer Price Index, which is a measure of the average change in prices over
time in a fixed market basket of goods and services (E.G. food, clothing, and
fuels, transportation, and other goods and services that people buy for
day-to-day living).
The investment results for the fund set forth below were calculated as
described in the fund's prospectus. The fund's results will vary from time to
time depending upon market conditions, the composition of the fund's portfolio
and operating expenses of the fund, so that any investment results reported by
the fund should not be considered representative of what an investment in the
fund may earn in any future period. These factors and possible differences in
calculation methods should be considered when comparing the fund's investment
results with those published for other mutual funds, other investment vehicles
and unmanaged indices. The fund's results also should be considered relative
to the risks associated with the fund's investment objective and policies.
THE FUND VS. VARIOUS UNMANAGED INDICES
<TABLE>
<CAPTION>
PERIOD FI DJIA/1/ S&P 500/2/ AVERAGE
1/1 - 12/31 SAVINGS
ACCOUNT
/3/
<S> <C> <C> <C> <C>
1987 - 1996 +278% +366% +314% +67%
1986 - 1995 +285 +360 +299 +69
1985 - 1994 +273 +349 +282 +77
1984 - 1993 +290 +333 +301 +88
1983 - 1992 +316 +367 +346 +99
1982 - 1991 +406 +452 +404 +112
1981 - 1990 +284 +328 +267 +122
1980 - 1989 +396 +426 +402 +125
1979 - 1988 +345 +340 +352 +125
1978/#/ - 1987 +273 +265 +280 +118
</TABLE>
_____________
# From 7/31/78, the date Capital Research and Management Company became the
fund's Investment Adviser.
/1/ The Dow Jones Average of 30 Industrial Stocks is comprised of 30 industrial
companies such as General Motors and General Electric.
/2/ The Standard and Poor's 500 Stock Composite Index is comprised of
industrial, transportation, public utilities and financial stocks and
represents a large portion of the value of issues traded on the New York Stock
Exchange. Selected issues traded on the American Stock Exchange are also
included.
/3/ Based on figures supplied by the U.S. League of Savings Institutions and
the Federal Reserve Board which reflect all kinds of savings deposits,
including longer-term certificates. Savings accounts offer a guaranteed return
of principal, but no opportunity for capital growth. During a portion of the
period, the maximum rates paid on some savings deposits were fixed by law.
If you are considering the fund for an Individual Retirement Account...
<TABLE>
<CAPTION>
Here's how much you would have if you invested $2,000 a year in the fund
over the past 5 and 10 years and the period under CRMC management:
<S> <C> <C>
5 Years 10 Years Lifetime
(1/1/92 - 12/31/96) (1/1/87 - 12/31/96) (7/31/78 - 12/31/96)
$16,010 $47,294 $209,503
</TABLE>
See the difference time can make in an investment program
<TABLE>
<CAPTION>
If you had invested ...and taken all
$10,000 in the fund distributions in shares,
this many years ago... your investment would
have been worth this
much at December 31, 1996
| |
Number of Years Periods Value**
1/1-12/31
<S> <C> <C>
1 1996 $ 11,309
2 1995 - 1996 15,175
3 1994 - 1996 15,377
4 1993 - 1996 18,170
5 1992 - 1996 20,019
6 1991 - 1996 26,105
7 1990 - 1996 24,474
8 1989 - 1996 31,462
9 1988 - 1996 36,481
10 1987 - 1996 37,847
11 1986 - 1996 46,188
12 1985 - 1996 60,138
13 1984 - 1996 63,620
14 1983 - 1996 80,243
15 1982 - 1996 107,560
16 1981 - 1996 106,292
17 1980 - 1996 128,844
18 1979 - 1996 148,697
Lifetime* 1978 - 1996 144,351
</TABLE>
* From July 31, 1978, the date Capital Research and Management Company became
the fund's Investment Adviser.
** Results assume deduction of the maximum sales charge of 5.75% from the
initial purchase payment.
Illustration of a $10,000 investment in the fund
WITH DIVIDENDS REINVESTED AND CAPITAL GAIN DISTRIBUTIONS TAKEN IN SHARES
(For the period under CRMC management: July 31, 1978 - December 31, 1996)
<TABLE>
<CAPTION>
COST OF SHARES VALUE OF SHARES**
Fiscal Annual Dividends Total From From From Total
Year End Dividends (cumulative) Investment Initial Capital Gains Dividends Value
December 31 Cost Investment Reinvested Reinvested
<S> <C> <C> <C> <C> <C> <C> <C>
1978* $ 217 $ 217 $10,217 $ 8,947 -- $ 208 $ 9,155
1979 421 638 10,638 9,892 -- 664 10,556
1980 603 1,241 11,241 11,390 -- 1,417 12,807
1981 665 1,906 11,906 10,688 -- 1,966 12,654
1982 769 2,675 12,675 13,522 -- 3,435 16,957
1983 755 3,430 13,430 16,424 -- 4,965 21,389
1984 734 4,164 14,164 16,113 $841 5,667 22,621
1985 795 4,959 14,959 19,379 2,351 7,718 29,448
1986 894 5,853 15,853 19,177 8,262 8,502 35,941
1987 1,034 6,887 16,887 18,151 10,221 8,923 37,295
1988 1,328 8,215 18,215 19,703 12,464 11,079 43,246
1989 1,877 10,092 20,092 22,173 19,099 14,325 55,597
1990 1,678 11,770 21,770 19,325 18,712 14,093 52,130
1991 1,477 13,247 23,247 23,576 25,593 18,778 67,947
1992 1,655 14,902 24,902 23,644 30,728 20,499 74,871
1993 1,857 16,759 26,759 24,494 40,880 23,092 88,466
1994 2,171 18,930 28,930 23,617 41,632 24,392 89,641
1995 2,082 21,012 31,012 30,081 56,840 33,385 120,306
1996 2,188 23,200 33,200 33,117 72,223 39,011 144,351
</TABLE>
The dollar amount of capital gain distributions during the period was $50,406.
* From July 31, 1978, the date Capital Research and Management Company became
the fund's Investment Adviser.
** Results assume deduction of the maximum sales charge of 5.75% from the
initial purchase payment.
EXPERIENCE OF INVESTMENT ADVISER
Capital Research and Management Company manages nine common stock funds that
are at least 10 years old. In the rolling 10-year periods since January 1,
1967 (127 in all), those funds have had better total returns than the Standard
and Poor's 500 Stock Composite Index in 91 of the 127 periods.
Note that past results are not an indication of future investment results.
Also, the fund has different investment policies than the funds mentioned
above. These results are included solely for the purpose of informing
investors about the experience and history of Capital Research and Management
Company.
DESCRIPTION OF BOND RATINGS
CORPORATE DEBT SECURITIES
MOODY'S INVESTORS SERVICE, INC. rates the long-term debt securities issued by
various entities from "Aaa" to "C".
"Aaa -- Best quality. These securities carry the smallest degree of investment
risk and are generally referred to as "gilt edge." Interest payments are
protected by a large, or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues."
"Aa -- High quality by all standards. They are rated lower than the best bond
because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude, or there may be
other elements present which make the long-term risks appear somewhat greater."
"A -- Upper medium grade obligations. These bonds possess many favorable
investment attributes. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a susceptibility
to impairment sometime in the future."
"Baa -- Medium grade obligations. Interest payments and principal security
appear adequate for the present but certain protective elements may be lacking
or may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and, in fact, have
speculative characteristics as well."
"Ba -- Have speculative elements; future cannot be considered as well assured.
The protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Bonds in this class are characterized by uncertainty of position."
"B -- Generally lack characteristics of the desirable investment; assurance of
interest and principal payments or of maintenance of other terms of the
contract over any long period of time may be small."
"Caa -- Of poor standing. Issues may be in default or there may be present
elements of danger with respect to principal or interest."
"Ca -- Speculative in a high degree; often in default or have other marked
shortcomings."
"C -- Lowest rated class of bonds; can be regarded as having extremely poor
prospects of ever attaining any real investment standing."
STANDARD & POOR'S CORPORATION rates the long-term securities debt of various
entities in categories ranging from "AAA" to "D" according to quality.
"AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong."
"AA -- High grade. Very strong capacity to pay interest and repay principal.
Generally, these bonds differ from AAA issues only in a small degree."
"A -- Have a strong capacity to pay interest and repay principal, although they
are somewhat more susceptible to the adverse effects of change in circumstances
and economic conditions, than debt in higher rated categories."
"BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and repay principal than for debt in
higher rated categories."
"BB, B, CCC, CC, C -- Regarded, on balance, as predominantly speculative with
respect to capacity to pay interest and repay principal in accordance with the
terms of the obligation. BB indicates the lowest degree of speculation and C
the highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions."
"C1 -- Reserved for income bonds on which no interest is being paid."
"D -- In default and payment of interest and/or repayment of principal is in
arrears."
<PAGE>
<TABLE>
<S> <C> <C> <C>
FUNDAMENTAL INVESTORS, INC.
INVESTMENT PORTFOLIO - December 31, 1996
Percent
Of net
LARGEST EQUITY-TYPE HOLDINGS Assets
Atlantic Richfield 2.77%
Texas Instruments 2.24
Royal Dutch Petroleum/"Shell" Transport and Trading 1.53
Exxon 1.46
Pfizer 1.44
Time Warner 1.39
Seagram 1.33
AT&T 1.28
Intel 1.28
Walt Disney 1.25
Shares or Market Percent
EQUITY-TYPE SECURITIES Principal Value Of
(Common and Preferred Stocks and Amount (000) Net Assets
Convertible Debentures)
- ---------------------------------------------------- ---------- ---------- ----------
Energy Sources & Equipment- 15.14%
Atlantic Richfield Co. 1500000 $198,750 2.77%
Royal Dutch Petroleum Co. (New York Registered
Shares) (Netherlands) 612900 104653
"Shell" Transport and Trading Co., 1.53
PLC (New York Registered Shares) 50000 5119
(United Kingdom)
Exxon Corp. 1070000 104860 1.46
Murphy Oil Corp./1/ 1535000 74831 1.04
Baker Hughes Inc. 1950000 67275 .94
Halliburton Co. 1075000 64769 .90
Societe Nationale Elf Aquitaine (American Depositary Receipts)
(France) 1400000 63350 .88
Suncor Inc. (Canada) 1187000 49119 .69
Schlumberger Ltd. (Netherlands Antilles) 466700 46612 .65
Phillips Petroleum Co. 1050000 46462 .65
Western Atlas Inc./1/ 600000 42525 .60
Chevron Corp. 600000 39000 .54
Unocal Corp. 900000 36562 .52
Enterprise Oil PLC (United Kingdom) 3000000 33185 .46
Texaco Inc. 300000 29438 .41
British Petroleum Co. PLC (American Depositary
Receipts) (United Kingdom) 193370 27338 .38
Union Pacific Resources Group, Inc. 647421 18937 .26
TOTAL, Class B (American Depositary Receipts)
(France) 407013 16382 .24
Cyprus Amax Minerals Co., convertible preferred,
Series A 200000 10700 .15
Sun Co., Inc., Series A 146314 3676
Sun Co., Inc. 48186 1175 .07
Food & Household Products- 5.44%
Unilever NV (New York Registered Shares) (Netherlands) 405000 70976 .99
Colgate-Palmolive Co. 725000 66881 .93
Kellogg Co. 925000 60703 .85
General Mills, Inc. 775000 49116 .69
McCormick & Co. 1660000 39114 .55
Archer Daniels Midland Co. 1700000 37400 .52
H.J. Heinz Co. 1000000 35750 .50
CPC International Inc. 381100 29535 .41
Health & Personal Care- 5.35%
Pfizer Inc 1250000 103594 1.44
Merck & Co., Inc. 950000 75288 1.05
Johnson & Johnson 1340000 66665 .93
American Home Products Corp. 1000000 58625 .82
AB Astra, Class A (American Depositary Receipts)
(Sweden) 800000 39200 .55
Eli Lilly and Co. 300000 21900 .31
Kimberly-Clark Corp. 130000 12382 .17
Gillette Co. 75000 5831 .08
Electronic Components- 4.82%
Texas Instruments Inc. 2509128 159957 2.24
Intel Corp. 700000 91656 1.28
Motorola, Inc. 1300000 79787 1.11
Cirrus Logic, Inc. 6.00% convertible debentures 2003/2/ $15,000,000 13612 .19
Business & Public Services- 4.11%
Omnicom Group Inc. 1300000 59475 .83
Federal Express Corp./1/ 1300000 57850 .81
Shared Medical Systems Corp. 935000 46049 .64
Avery Dennison Corp. 1000000 35375 .49
Humana Inc./1/ 1800000 34425 .48
Browning-Ferris Industries, Inc. 1300000 34125 .48
United HealthCare Corp. 300000 13500 .19
Ecolab Inc. 300000 11288 .16
NCR Corp./1/ 75000 2503 .03
Banking- 4.03%
PNC Bank Corp. 1200000 45150 .63
Wells Fargo & Co. 166666 44958 .63
Fleet Financial Group, Inc. 900000 44887 .63
Norwest Corp. 1000000 43500 .61
CoreStates Financial Corp 830000 43056 .60
KeyCorp 450000 22725 .32
First Union Corp. 250000 18500 .26
Citicorp 150000 15450 .21
First Chicago NBD Corp. 200000 10750 .14
Chemicals- 3.86%
Mallinckrodt Inc. 1423000 62790 .88
Air Products and Chemicals, Inc. 775000 53572 .75
Engelhard Corp. 1900000 36337 .51
Imperial Chemical Industries PLC (American Depositary
Receipts) (United Kingdom) 500000 26000 .36
E.I. du Pont de Nemours and Co. 250000 23594 .33
Hoechst AG (Germany) 400000 18908 .26
Eastman Chemical Co. 300000 16575 .23
Witco Corp. 500000 15250 .21
Georgia Gulf Corp. 450000 12094 .17
IMC Global Inc. 300000 11738 .16
Telecommunications- 3.56%
AT&T Corp./1/ 2200000 91850 1.28
U S WEST Communications Group 2450000 79012 1.11
MCI Communications Corp. 600000 19613 .27
Bell Atlantic Corp. 300000 19425 .27
NYNEX Corp. 400000 19250 .27
Ameritech Corp. 259600 15738 .22
AirTouch Communications/1/ 250000 6312 .09
Pacific Telesis Group 100000 3675 .05
Forest Products & Paper- 3.50%
Weyerhaeuser Co. 1800000 85275 1.20
Union Camp Corp. 900000 42975 .60
Georgia-Pacific Corp. 400000 28800 .40
International Paper Co. 700000 28263 .39
Rayonier Inc. 675000 25903 .36
James River Corp. of Virginia 514300 17036 .24
Bowater Inc. 350000 13169 .18
Deltic Timber Corp./1/ /3/ 438571 9484 .13
Multi-Industry- 3.44%
AlliedSignal Inc. 900000 60300 .84
Textron Inc. 613500 57822 .81
CITIC Pacific Ltd. (Hong Kong) 8500000 49347 .69
U.S. Industries, Inc./1/ 1000000 34375 .48
Tenneco Inc./1/ 675000 30459 .42
Whitman Corp. 400000 9150 .13
Harsco Corp. 75000 5138 .07
Broadcasting & Publishing- 3.21%
Time Warner Inc. 2574000 96525
Time Warner Inc. 10.25% cumulative exchangeable 1.39
preferred, Series M 3145 3413
News Corp. Ltd. (American Depositary Receipts)
(Australia) 2200000 45925
News Corp. Ltd., preferred shares (American Depositary .91
Receipts) 1100000 19388
E.W. Scripps Co., Class A 700000 24500 .34
Comcast Corp., Class A, special stock 810784 14442 .20
Viacom Inc., Class B/1/ 305000 10637 .15
Tele-Communications, Inc., Series A, TCI Group/1/ 636115 8309 .12
Tele-Communications, Inc., Series A, Liberty Media Group/1/ 251003 7169 .10
Leisure & Tourism- 3.08%
Walt Disney Co. 1290085 89822 1.25
ITT Corp./1/ 1550000 67231 .94
McDonald's Corp. 1400000 63350 .89
Machinery & Engineering- 3.01%
Caterpillar Inc. 1000000 75250 1.05
Deere & Co. 1350000 54844 .77
Parker Hannifin Corp. 1150000 44562 .61
Cummins Engine Co., Inc./2/ 500000 23000 .32
Case Corp. 300000 16350 .23
Newport News Shipbuilding Inc./1/ 135000 2025 .03
Insurance- 2.82%
General Re Corp. 465000 73354 1.02
Aetna Inc. 450000 36000
Aetna Inc. 6.25% convertible preferred, Class C 50000 3969 .56
SAFECO Corp. 900000 35494 .50
CNA Financial Corp./1/ 320000 34240 .48
American International Group, Inc. 108750 11772 .16
Allstate Corp. 120000 6945 .10
Merchandising- 2.75%
Limited Inc. 4000000 73500 1.03
May Department Stores Co. 800000 37400 .52
Mercantile Stores Co., Inc. 725000 35797 .50
Sears, Roebuck and Co. 650000 29981 .42
Wal-Mart Stores, Inc. 450000 10294 .14
Toys "R" Us, Inc./1/ 342400 10272 .14
Data Processing & Reproduction- 2.62%
Hewlett-Packard Co. 1050000 52763 .74
International Business Machines Corp. 330000 49830 .70
Oracle Corp./1/ 600000 25050 .35
Dell Computer Corp./1/ 464836 24694 .34
Adobe Systems Inc. 625000 23359 .33
Tandem Computers Inc./1/ 850000 11688 .16
Aerospace & Military Technology- 1.88%
Raytheon Co. 925000 44516 .62
McDonnell Douglas Corp. 550000 35200 .49
Litton Industries, Inc./1/ 500000 23813 .33
Sundstrand Corp. 500000 21250 .31
Boeing Co. 90670 9645 .13
Utilities: Electric & Gas- 1.76%
DTE Energy Co. 1000000 32375 .45
Houston Industries Inc. 1350000 30544 .43
PanEnergy Corp 300000 13500 .19
Eastern Utilities Associates 640000 11120 .16
Florida Progress Corp. 300000 9675 .13
Edison International 450000 8944 .12
Long Island Lighting Co. 350000 7744 .11
Texas Utilities Co. 120800 4923 .07
Entergy Corp. 150000 4162 .06
El Paso Natural Gas Co. 62775 3170 .04
Beverages & Tobacco- 1.66%
Seagram Co. Ltd. (Canada) 2450000 94938 1.33
PepsiCo, Inc. 550000 16088 .22
Anheuser-Busch Companies, Inc. 200000 8000 .11
Electrical & Electronics- 1.58%
Nokia Corp., Class A (American Depositary Receipts)
(Finland) 1000000 57625 .81
Lucent Technologies Inc. 1198900 55449 .77
Recreation & Other Consumer Products- 1.56%
Duracell International Inc. 1200000 83850 1.17
Eastman Kodak Co. 350000 28087 .39
Industrial Components- 1.31%
Rockwell International Corp./1/ 635000 38656 .54
Goodyear Tire & Rubber Co. 700000 35962 .50
Dana Corp. 600000 19575 .27
Transportation: Airlines- 1.22%
AMR Corp./1/ 500000 44063 .61
Delta Air Lines, Inc. 610000 43234 .61
Metals: Nonferrous- 1.18%
Aluminum Co. of America 1150000 73312 1.02
Alumax Inc./1/ 250000 8344 .12
Inco Ltd. (Canada) 100000 3187 .04
Automobiles- 1.08%
General Motors Corp. 1100000 61325 .86
Ford Motor Co., Class A 505605 16116 .22
Transportation: Rail & Road- 1.07%
Union Pacific Corp. 764419 45961 .64
Conrail, Inc. 244954 24403 .34
Canadian National Railway System (Canada) 175000 6650 .09
Financial Services- 1.01%
Federal Home Loan Mortgage Corp. 350000 38544 .54
Federal National Mortgage Assn. 860000 32035 .45
Associates First Capital Corp., Class A 40000 1765 .02
Appliances & Household Durables- 1.01%
Philips Electronics NV (New York Registered Shares)
(Netherlands) 1741700 69668 1.01
Philips Electronics NV 58300 2364
Miscellaneous Materials & Commodities- 0.94%
Potash Corp. of Saskatchewan Inc. (Canada) 675000 57375 .80
TRINOVA Corp. 266700 9701 .14
Electronic Instruments- 0.59%
Tektronix, Inc. 825000 42281 .59
Metals: Steel- 0.40%
Allegheny Teledyne Inc. 1000000 23000 .32
Armco Inc., cumulative convertible preferred 124000 5363 .08
Miscellaneous
Other equity-type securities in initial period
of acquisition 308059 4.30
----------- -----------
TOTAL EQUITY-TYPE SECURITIES (cost: $5,107,564,000) 6684190 93.29
----------- -----------
Principal
Amount
(000)
Bonds & Notes
- -------------------------------------------------------- ---------- ---------- -----------
Industrials - 0.67%
Cablevision Systems Corp. 9.875% 2013 $14,000 13790 .19
Time Warner Inc. 10.15% 2012 6000 7196 .10
PriCellular Wireless Corp. 0%/12.25% 2003 /4/ 5000 4275 .06
J. Ray McDermott, SA 9.375% 2006 4000 4200 .06
Falcon Drilling Co., Inc.:
Series B, 8.875% 2003 2500 2550
Series B, 9.75% 2001 1500 1575 .06
Bell Cablemedia PLC 0%/11.95% 2004 /4/ 4000 3490 .05
MFS Communications Co., Inc. 0%/9.375% 2004 /4/ 4000 3470 .05
Forcenergy Inc. 9.50% 2006 2250 2346 .03
Abraxas Petroleum Corp. 11.50% 2004/2/ 2000 2135 .03
Texas Petrochemicals Corp. 11.125% 2006 1500 1612 .02
Cliffs Drilling Co., Series B 10.25% 2003 1500 1596 .02
---------- ----------
48235 .67
---------- ----------
Transportation- 0.20%
Delta Air Lines, Inc., Series 1993-A2, 10.50% 2016 /5/ 11500 14049 .20
---------- ----------
U.S. Treasury Obligations- 0.49%
6.875% 1997 20000 20072
6.375% 1997 15000 15077 .49
---------- ----------
35149 .49
---------- ----------
TOTAL BONDS & NOTES (cost: $93,273,000) 97433 1.36
---------- ----------
Short-Term Securities
- ----------------------------------------------------
CORPORATE SHORT-TERM NOTES-4.98%
IBM Credit Corp. 5.36%-5.49% due 1/14-1/28/97 $ 53,200 $ 53,007 0.74%
General Electric Capital Corp. 5.31%-6.50% due 1/2-2/3/97 53000 52889 .74
International Lease Finance Corp. 5.28%-5.30%
due 1/10-1/23/97 51000 50884 .71
National Rural Utilities Cooperative Finance Corp.
5.28%-5.31% due 1/10-1/22/97 49200 49109 .69
Ford Motor Credit Co. 5.32%-5.46% due 1/6-2/12/97 41500 41356 .58
Raytheon Co. 5.34%-5.39% due 1/13-1/17/97 37700 37617 .52
American Express Credit Corp. 5.32% due 1/3-1/7/97 30300 30284 .42
Gannett Co., Inc. 5.37% due 1/16/97 25300 25239 .35
Procter & Gamble Co. 5.28% due 1/9-1/24/97 16700 16662 .23
---------- ----------
357047 4.98
---------- ----------
FEDERAL AGENCY DISCOUNT NOTES-0.25%
Federal Home Loan Mortgage Corp. 5.295%-5.62%
due 1/23-1/30/97 17900 17838 .25
---------- ----------
TOTAL SHORT-TERM SECURITIES (cost: $374,887,000) 374885 5.23
---------- ----------
TOTAL INVESTMENT SECURITIES (cost: $5,575,724,000) 7156508 99.88
Excess of cash and receivables over payables 8865 .12
---------- ----------
NET ASSETS $7,165,373 100.00%
========== ==========
/1/ Non-income-producing securities.
/2/ Purchased in a private placement transaction;
resale to the public may require registration or sale
only to qualified institutional buyers.
/3/Represents a when-issued security.
/4/ Represents a step bond; coupon rate will increase at a later date.
/5/ Pass-through securities backed by a pool of mortgages
or other loans on which principal payments are
periodically made. Therefore, the effective maturity
is shorter than the stated maturity.
See Notes to Financial Statements
EQUITY-TYPE SECURITIES APPEARING IN
THE PORTFOLIO SINCE JUNE 30, 1996
Allegheny Teledyne
Bowater
Browning-Ferris Industries
Canadian National Railway System
Cirrus Logic
Comcast
Deltic Timber
El Paso Natural Gas
Elf Aquitaine
Engelhard
Enterprise Oil
International Paper
ITT
Kellogg
McCormick
McDonald's
McDonnell Douglas
NCR
Newport News Shipbuilding
PanEnergy
Raytheon
Shared Medical Systems
Societe Nationale Elf Aquitaine
Suncor
Union Pacific Resources
Witco
EQUITY-TYPE SECURITIES ELIMINATED FROM THE
PORTFOLIO SINCE JUNE 30, 1996
ALLTEL
Betz Laboratories
Bristol-Myers Squibb
Cemex
Chase Manhattan
Deutsche Bank
Digital Equipment
Dresser Industries
Fruit of the Loom
General Public Utilities
Interpublic Group of Companies
LIN Television
McKesson
Pacific Gas and Electric
Pharmacia & Upjohn
Siemens
Southern Pacific Rail
Tandy
TIG Holdings
Tribune
Walgreen
WMX Technologies
Xerox
</TABLE>
<TABLE>
<S> <C> <C>
Fundamental Investors, Inc.
Financial Statements
Statement of Assets and Liabilities (dollars in thousands)
at December 31, 1996
- ---------------------------------------- ------------ ------------
Assets:
Investment securities at market
(cost: $5,575,724) $7,156,508
Cash 112
Receivables for-
Sales of investments $ 11,060
Sales of fund's shares 13,127
Dividends and accrued interest 10,017 34,204
------------ ------------
7,190,824
Liabilities:
Payables for-
Purchases of investments 7,905
Repurchases of fund's shares 14,505
Management services 1,821
Accrued expenses 1,220 25,451
------------ ------------
Net Assets at December 31, 1996-
Equivalent to $24.54 per share on
291,977,471 shares of $1 par value
capital stock outstanding (authorized
capital stock-500,000,000 shares) $7,165,373
=============
Statement of Operations
for the Year Ended December 31, 1996 (dollars in thousands)
------------ ------------
Investment Income:
Income:
Dividends $ 119,649
Interest 25,526 $ 145,175
------------
Expenses:
Management services fee 18,267
Distribution expenses 13,010
Transfer agent fee 5,336
Reports to shareholders 214
Registration statement and prospectus 891
Postage, stationery and supplies 1,191
Directors' fees 105
Auditing and legal fees 49
Custodian fee 270
Taxes other than federal income tax 1
Other expenses 86 39,420
------------ ------------
Net investment income 105,755
------------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 528,775
Net increase in unrealized
appreciation on investments:
Beginning of year 1,104,466
End of year 1,580,787
Net unrealized appreciation ------------
on investments 476,321
Net realized gain and unrealized ------------
appreciation on investments 1,005,096
Net Increase in Net Assets Resulting ------------
from Operations $1,110,851
============
Statement of Changes in Net Assets (dollars in thousands)
- ---------------------------------------- ------------- -------------
Year Ended December 31
1996 1995
Operations: ------------- -------------
Net investment income $ 105,755 $ 75,570
Net realized gain on investments 528,775 145,011
Net unrealized appreciation
on investments 476,321 815,253
------------- -------------
Net increase in net assets
resulting from operations 1,110,851 1,035,834
------------- -------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (100,250) (71,173)
Distributions from net realized
gain on investments (470,174) (128,122)
------------- -------------
Total dividends and distributions (570,424) (199,295)
------------- -------------
Capital Share Transactions:
Proceeds from shares sold:
90,269,651 and 76,628,416
shares, respectively 2,123,860 1,553,921
Proceeds from shares issued in
reinvestment of net investment income
dividends and distributions of net
realized gain on investments:
21,801,000 and 8,766,797 shares,
respectively 534,260 181,420
Cost of shares repurchased:
33,388,411 and 21,343,594
shares, respectively (787,668) (428,456)
Net increase in net assets resulting ------------- -------------
from capital share transactions 1,870,452 1,306,885
------------- -------------
Total Increase in Net Assets 2,410,879 2,143,424
Net Assets:
Beginning of year 4,754,494 2,611,070
End of year (including undistributed ------------- -------------
net investment income: $15,128 and
$9,623, respectively) $7,165,373 $4,754,494
============= =============
See Notes to Financial Statements
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Fundamental Investors, Inc. (the "fund") is registered under the Investment
Company Act of 1940 as an open-end, diversified management investment company.
The fund seeks long-term growth of capital and income through investments in
common stocks. The following paragraphs summarize the significant accounting
policies consistently followed by the fund in the preparation of its financial
statements:
Equity-type securities traded on a national securities exchange (or reported
on the NASDAQ national market) and securities traded in the over-the-counter
market are stated at the last reported sales price on the day of valuation;
other securities, and securities for which no sale was reported on that date,
are stated at the last quoted bid price. Bonds and notes are valued at prices
obtained from a bond-pricing service provided by a major dealer in bonds, when
such prices are available; however, in circumstances where the investment
adviser deems it appropriate to do so, such securities will be valued at the
mean of their representative quoted bid and asked prices or, if such prices are
not available, at prices for securities of comparable maturity, quality, and
type. Short-term securities with original or remaining maturities in excess of
60 days are valued at the mean of their quoted bid and asked prices. Short-term
securities with 60 days or less to maturity are valued at amortized cost, which
approximates market value. Securities for which market quotations are not
readily available are valued at fair value by the Board of Directors or a
committee thereof.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. In the event
the fund purchases securities on a delayed delivery or "when-issued" basis, it
will segregate with its custodian liquid assets in an amount sufficient to meet
its payment obligations in those transactions. Realized gains and losses from
securities transactions are reported on an identified cost basis. Dividend and
interest income is reported on the accrual basis. Discounts on securities
purchased are amortized over the life of the respective securities. The fund
does not amortize premiums on securities purchased. Dividends and distributions
paid to shareholders are recorded on the ex-dividend date.
Investment securities and other assets and liabilities denominated in
non-U.S. currencies are recorded in the financial statements after translation
into U.S. dollars utilizing rates of exchange on the last business day of the
year. Purchases and sales of investment securities, income and expenses are
calculated using the prevailing exchange rate as accrued. The effects of
changes in foreign currency exchange rates on investment securities are
included with the net realized and unrealized gain or loss on investment
securities.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $270,000 includes $23,000 that was paid by these credits
rather than in cash.
2. It is the fund's policy to continue to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision is
required.
As of December 31, 1996, net unrealized appreciation on investments for book
and federal income tax purposes aggregated $1,580,784,000, of which
$1,650,239,000 related to appreciated securities and $69,455,000 related to
depreciated securities. There was no difference between book and tax realized
gains on securities transactions for the year ended December 31, 1996. The cost
of portfolio securities for book and federal income tax purposes was
$5,575,724,000 at December 31, 1996.
3. The fee of $18,267,000 for management services was paid pursuant to an
agreement with Capital Research and Management Company (CRMC), with which
certain officers and Directors of the fund are affiliated. The Investment
Advisory and Service Agreement provides for monthly fees, accrued daily, based
on an annual rate of 0.39% of the first $800 million of average net assets;
0.336% of such assets in excess of $800 million but not exceeding $1.8 billion;
0.30% of such assets in excess of $1.8 billion but not exceeding $3.0 billion;
and 0.276% of such assets in excess of $3.0 billion.
Pursuant to a Plan of Distribution, the fund may expend up to 0.25% of its
average net assets annually for any activities primarily intended to result in
sales of fund shares, provided the categories of expenses for which
reimbursement is made are approved by the fund's Board of Directors. Fund
expenses under the Plan include payments to dealers to compensate them for
their selling and servicing efforts. During the year ended December 31, 1996,
distribution expenses under the Plan were $13,010,000. As of December 31, 1996,
accrued and unpaid distribution expenses were $921,000.
American Funds Service Company (AFS), the transfer agent for the fund, was paid
a fee of $5,336,000. American Funds Distributors, Inc. (AFD), the principal
underwriter of the fund's shares, received $7,993,000 (after allowances to
dealers) as its portion of the sales charges paid by purchasers of the fund's
shares. Such sales charges are not an expense of the fund and, hence, are not
reflected in the accompanying statement of operations.
Directors who are unaffiliated with CRMC may elect to defer part or all of the
fees earned for services as members of the Board. Amounts deferred are not
funded and are general unsecured liabilities of the fund. As of December 31,
1996, aggregate amounts deferred and earnings thereon were $252,000.
CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both wholly
owned subsidiaries of CRMC. Certain Directors and officers of the fund are or
may be considered to be affiliated with CRMC, AFS and AFD. No such persons
received any remuneration directly from the fund.
4. As of December 31, 1996, accumulated undistributed net realized gain on
investments was $105,368,000 and additional paid-in capital was $5,172,113,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $3,537,440,000 and $2,206,198,000, respectively,
during the year ended December 31, 1996.
<TABLE>
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA AND RATIOS
Year ended December 31
--------- --------- --------- -------- --------
1996 1995 1994 1993 1992
--------- --------- --------- -------- --------
Net Asset Value, Beginning
of Year 22.29 17.5 18.15 17.52 17.47
--------- --------- --------- -------- --------
Income from Investment
Operations:
Net investment income .41 .41 .42 .44 .44
Net realized and unrealized
gain (loss) on investments 4.00 5.46 (.18) 2.65 1.27
Total income from --------- --------- --------- -------- --------
investment operations 4.41 5.87 .24 3.09 1.71
--------- --------- --------- -------- --------
Less Distributions:
Dividends from net investment
income (.40) (.40) (.44) (.43) (.42)
Distributions from net realized
gains (1.76) (.68) (.45) (2.03) (1.24)
--------- --------- --------- -------- --------
Total distributions (2.16) (1.08) (.89) (2.46) (1.66)
--------- --------- --------- -------- --------
Net Asset Value, End of Year 24.54 22.29 17.5 18.15 17.52
========= ========= ========= ======== ========
Total Return/1/ 19.99% 34.21% 1.33% 18.16% 10.19%
Ratios/Supplemental Data:
Net assets, end of year
(in millions) $7,165 $4,754 $2,611 $1,979 $1,440
Ratio of expenses to average
net assets .66% .70% .68% .65% .65%
Ratio of net income to
average net assets 1.78% 2.08% 2.45% 2.43% 2.56%
Average commissions paid
per share/2/ 5.69ce 5.95cents 6.02cents 6.14cents 7.53cents
Portfolio turnover rate 39.07% 25.47% 23.02% 29.22% 23.98%
/1/ Calculated without deducting a
sales charge. The maximum sales
charge is 5.75% of the fund's
offering price.
/2/ Brokerage commissions paid on
portfolio transactions increase the
cost of securities purchased or
reduce the proceeds of securities
sold, and are not separately
reflected in the fund's statement
operations. Shares traded on a
principal basis (without commission),
such as fixed-income transactions,
are excluded.
</TABLE>
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders of Fundamental Investors, Inc.:
We have audited the accompanying statement of assets and liabilities of
Fundamental Investors, Inc. (the "Fund"), including the schedule of portfolio
investments, as of December 31, 1996, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the per-share data and ratios for each
of the five years in the period then ended. These financial statements and
per-share data and ratios are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
per-share data and ratios based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and per-share data
and ratios are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996 by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other procedures. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and per-share data and ratios referred
to above present fairly, in all material respects, the financial position of
Fundamental Investors, Inc. as of December 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the per-share data and ratios for
each of the five years in the period then ended, in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Los Angeles, California
January 29, 1997
1996 TAX INFORMATION (UNAUDITED)
We are required to advise you within 60 days of the fund's fiscal year-end
regarding the federal tax status of distributions received by shareholders
during such fiscal year.
Corporate shareholders may exclude up to 70% of qualifying dividends received
during the year. For purposes of computing this exclusion, 53% of the dividends
paid by the fund from net investment income represents qualifying dividends.
Certain states may exempt from income taxation that portion of the dividends
paid from net investment income that was derived from direct U.S. Treasury
obligations. For purposes of computing this exclusion, two percent of the
dividends paid by the fund from net investment income was derived from interest
on direct U.S. Treasury obligations.
Dividends and distributions received by retirement plans such as IRAs,
Keogh-type plans, and 403(b) plans need not be reported as taxable income.
However, many plan retirement trusts may need this information for their annual
information reporting.
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS:
Included in Prospectus - Part A
Financial Highlights
Included in statement of additional information - Part B
Statement of Assets and Liabilities Per Share Data and Ratios
Statement of Operations Notes to Financial Statements
Statement of Changes in Net Assets Independent Auditors' Report
(B) EXHIBITS
1. Articles of Incorporation dated January 1, 1990 and Articles Supplementary
Increasing Authorized Stock as Authorized by Section 2-105(c) of the
Maryland Corporation Law dated August 19, 1996.
2. By-laws
3. None
4. Copy of specimen share certificate.
5. Copy of Investment Advisory and Service Agreement dated December 1,
1991.
6. Copy of Principal Underwriting Agreement dated May 1, 1990; form of Selling
Group Agreement, Supplemental Selling Group Agreement, Bank Selling Group
Agreement, Hold Harmless Agreement, and State Addendum to Selling Group
Agreement.
7. None
8. Copy of Custodian Contracts dated April 24, 1984 and Amendment to the
Custodian Contract dated September 20, 1995.
9. On file (see SEC file nos. 811-32 and 2-10760)
10. Not applicable to this filing
11. Consent of Independent Accountants
12. None
13. None
14. Copies of model plans
15. Copy of Plan of Distribution (12b-1) dated May 1, 1990.
16. On file (see SEC file nos. 811-32 and 2-10760)
17. EX-27 Financial data schedule
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
<TABLE>
<CAPTION>
As of December 31, 1996
<S> <C>
Title of Class Number of Record-Holders
Common Stock 377,490
($1.00 Par Value)
</TABLE>
ITEM 27. INDEMNIFICATION.
The registrant is a joint-insured under Investment Adviser/Mutual fund Errors
and Omissions Policies written by American International Surplus Lines
Insurance Company, Chubb Custom Insurance Company, and ICI Mutual Insurance
Company which insures its officers and directors against certain liabilities.
The fund's Articles of Incorporation state:
The Corporation shall indemnify (1) its directors and officers, whether
serving the Corporation or at its request any other entity, to the full extent
required or permitted by the General Laws of the State of Maryland now or
hereafter in force, including the advance of expenses under the procedures and
to the full extent permitted by law, and (2) its other employees and agents to
such extent as shall be authorized by the Board of Directors or the
Corporation's By-Laws and be permitted by law. The foregoing rights of
indemnification shall not be exclusive of any other rights to which those
seeking indemnification may be entitled. The Board of Directors may take such
action as is necessary to carry out these indemnification provisions and is
expressly empowered to adopt, approve and amend from time to time such by-laws,
resolutions or contracts implementing such provisions or such further
indemnification arrangements as may be permitted by law. No amendment of this
Charter of the Corporation shall limit or eliminate the right to
indemnification provided hereunder with respect to acts or omissions occurring
prior to such amendment or repeal. Nothing contained herein shall be construed
to authorize the Corporation to indemnify any director or officer of the
Corporation against any liability to the Corporation or to any holders of
securities of the Corporation to which he is subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. Any indemnification by the Corporation
shall be consistent with the requirements of law, including the Investment
Company Act of 1940.
To the fullest extent permitted by Maryland statutory and decisional law and
the 1940 Act, as amended or interpreted, no director or officer of the
Corporation shall be personally liable to the Corporation or its stockholders
for money damages; provided, however, that nothing herein shall be construed to
protect any director or officer of the Corporation against any liability to
which such director or officer would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. No amendment, modification or repeal of
this Article VIII shall adversely affect any right or protection of a director
or officer that exists at the time of such amendment, modification or repeal.
Section 2-418 (b) of The Annotated Code of Maryland states:
Permitted indemnification of director:
1. A corporation may indemnify any director made a party to any proceeding
by reason of service in that capacity unless it is established that:
(i) The act or omission of the director was material to the matter giving
rise to the proceeding; and
1. Was committed in bad faith; or
2. Was the result of active and deliberate dishonesty; or
(ii) The director actually received an improper personal benefit in money,
property, or services; or
(iii) In the case of any criminal proceeding, the director had reasonable
cause to believe that the act or omission was unlawful.
2. (i) Indemnification may be against judgments, penalties, fines,
settlements, and reasonable expenses actually incurred by the director in
connection with the proceeding.
(ii) However, if the proceeding was one by or in the right of the
corporation, indemnification may not be made in respect of any proceeding in
which the director shall have been adjudged to be liable to the corporation.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
None.
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) American Funds Distributors, Inc. is also the Principal Underwriter of
shares of: AMCAP Fund, Inc., American Balanced Fund, Inc., The American Funds
Income Series, The American Funds Tax-Exempt Series I, The American Funds
Tax-Exempt Series II, American High-Income Municipal Bond Fund, Inc., American
High-Income Trust, American Mutual Fund, Inc., The Bond Fund of America, Inc.,
Capital Income Builder, Inc., Capital World Bond Fund, Inc., Capital World
Growth and Income Fund, Inc., The Cash Management Trust of America, EuroPacific
Growth Fund, The Growth Fund of America, Inc., The Income Fund of America,
Inc., Intermediate Bond Fund of America, The Investment Company of America,
Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New
Perspective Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of
America, Inc., The Tax-Exempt Money Fund of America, The U.S. Treasury Money
Fund of America and Washington Mutual Investors Fund, Inc.
<TABLE>
<CAPTION>
(B) (1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
<S> <C> <C> <C>
B David L. Abzug Regional Vice President None
5657 Lemona Avenue
Van Nuys, CA 91411
John A. Agar Regional Vice President None
1501 N. University Drive, Suite 227A
Little Rock, AR 72207
Robert B. Aprison Regional Vice President None
2983 Bryn Wood Drive
Madison, WI 53711
S Richard Armstrong Assistant Vice President None
L William W. Bagnard Vice President None
Steven L. Barnes Vice President None
8000 Town Line Avenue South
Suite 204
Minneapolis, MN 55438
Michelle A. Bergeron Vice President None
4160 Gateswalk Drive
Smyrna, GA 30080
Joseph T. Blair Senior Vice President None
27 Drumlin Road
West Simsbury, CT 06092
John A. Blanchard Regional Vice President None
6421 Aberdeen Road
Mission Hills, KS 66208
Ian B. Bodell Senior Vice President None
3100 West End Avenue, Suite 870
Nashville, TN 37215
Michael L. Brethower Vice President None
108 Hagen Court
Georgetown, TX 78628
C. Alan Brown Regional Vice President None
4619 McPherson Avenue
St. Louis, MO 63108
L Daniel C. Brown Director, Sr. Vice President None
H J. Peter Burns Vice President None
Brian C. Casey Regional Vice President None
9508 Cable Drive
Kensington, MO 20895
Victor C. Cassato Vice President None
609 W. Littleton Blvd., Suite 310
Littleton, CO 80120
Christopher J. Cassin Senior Vice President None
111 W. Chicago Avenue, Suite G3
Hinsdale, IL 60521
Denise M. Cassin Regional Vice President None
1301 Stoney Creek Drive
San Ramon CA 94538
L Larry P. Clemmensen Director None
L Kevin G. Clifford Director, Senior Vice President None
Ruth M. Collier Vice President None
145 West 67th St. Ste. 12K
New York, NY 10023
Thomas E. Cournoyer Vice President None
2333 Granada Boulevard
Coral Gables, FL 33134
Douglas A. Critchell Vice President None
4116 Woodbine St.
Chevy Chase, MD 20815
L Carl D. Cutting Vice President None
Dan J. Delianedis Regional Vice President None
8689 Braxton Drive
Eden Prairie, MN 55347
Michael A. Dilella Vice President None
P.O. Box 661
Ramsey, NJ 07446
G. Michael Dill Sr. Vice President None
505 E. Main Street
Jenks, OK 74037
Kirk D. Dodge Regional Vice President None
3034 Parkridge Drive
Ann Arbor, MI 48103
Peter J. Doran Sr. Vice President None
1205 Franklin Avenue
Garden City, NY 11530
L Michael J. Downer Secretary None
Robert W. Durbin Vice President None
74 Sunny Lane
Tiffin, OH 44883
I Lloyd G. Edwards Vice President None
L Paul H. Fieberg Sr. Vice President None
John Fodor Regional Vice President None
15 Latisquama Road
Southborough, MA 01772
L Mark P. Freeman, Jr. Director, President None
Clyde E. Gardner Vice President None
Route 2, Box 3162
Osage Beach, MO 65065
B Evelyn K. Glassford Vice President None
Jeffrey J. Greiner Regional Vice President None
5898 Heather Glen Court
Dublin, OH 43017
David E. Harper Vice President None
R.D. 1, Box 210, Rte 519
Frenchtown, NJ 08825
Ronald R. Hulsey Regional Vice President None
6744 Avalon
Dallas, TX 75214
Robert S. Irish Regional Vice President None
1225 Vista Del Mar Drive
Delray Beach, FL 33843
L Robert L. Johansen Vice President, Controller None
Michael J. Johnston Chairman of the Board None
630 Fifth Ave., 36th Floor
New York, NY 10111-0121
V. John Kriss Sr. Vice President None
P.O. Box 274
Surfside, CA 90743
Arthur J. Levine Vice President None
12558 Highlands Place
Fishers, IN 46038
B Karl A. Lewis Assistant Vice President None
T. Blake Liberty Regional Vice President None
1940 Blake Street, Suite 303
Denver, CO 80202
L Susan G. Lindgren Vice President - Institutional None
Investment Services Division
S Stella Lopez Vice President None
LW Robert W. Lovelace Director None
Stephen A. Malbasa Regional Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Vice President None
5241 South Race Street
Littleton, CO 90121
L John C. Massar Sr. Vice President None
L E. Lee McClennahan Sr. Vice President None
Laurie B. McCurdy Regional Vice President None
3500 West Camino de Urania
Tuscon, AZ 85741
S John V. McLaughlin Senior Vice President None
Terry W. McNabb Vice President None
2002 Barrett Station Road
St. Louis, MO 63131
L R. William Melinat Vice President - Institutional None
Investment Services Division
David R. Murray Regional Vice President None
25701 S.E. 32nd Place
Issaquah, WA 98027
Stephen S. Nelson Vice President None
7215 Trevor Court
Charlotte, NC 28226
William E. Noe Regional Vice President None
304 River Oaks Road
Brentwood, TN 37027
Peter A. Nyhus Regional Vice President None
3084 Wilds Ridge Court
Prior Lake, MN 55372
Eric P. Olson Regional Vice President None
62 Park Drive
Glenview, IL 60025
Fredric Phillips Regional Vice President None
32 Ridge Avenue
Newton Centre, MA 02159
B Candance Pilgram Assistant Vice President None
Carl S. Platou Regional Vice President None
4021 96th Avenue, SE
Mercer Island, WA 98040
L John O. Post, Jr. Vice President None
Steven J. Reitman Vice President None
212 The Lane
Hinsdale, IL 60521
Brian A. Roberts Regional Vice President None
12025 Delmahoy Drive
Charlotte, NC 28277
George S. Ross Vice President None
55 Madison Avenue
Morristown, NJ 07962
L Julie D. Roth Vice President None
L James F. Rothenberg Director None
Douglas F. Rowe Regional Vice President None
30309 Oak Tree Drive
Georgetown, TX 78628
Christopher Rowey Regional Vice President None
9417 Beverlywood Street
Los Angeles, CA 90034
Dean B. Rydquist Vice President None
1080 Bay Pointe Crossing
Alpharetta, GA 30202
Richard R. Samson Vice President None
4604 Glencoe Avenue, No. 4
Marina del Rey, CA 90292
Joe D. Scarpitti Regional Vice President None
31465 St. Andrews
Westlake, OH 44145
L Daniel B. Seivert Assistant Vice President None
L R. Michael Shanahan Director Director
David W. Short Director, Senior Vice President None
1000 RIDC Plaza, Ste 212
Pittsburgh, PA 15238
William P. Simon, Jr. Vice President None
554 Canterbury Lane
Berwyn, PA 19312
L John C. Smith Vice President - None
Institutional Investment Services
Division
L Mary E. Smith Assistant Vice President - None
Institutional Investment
Service Division
Rodney G. Smith Vice President None
100 N. Central Expressway, Ste 1214
Richardson, TX 75080
Nicholas D. Spadaccini Regional Vice President None
855 Markley Woods Way
Cincinnati, OH 45230
Daniel S. Spradling Senior Vice President None
#4 West Fourth Avenue, Suite 406
San Mateo, CA 94402
Thomas A. Stout Regional Vice President None
12913 Kendale Lane
Bowie, MD 20715
Craig R. Strauser Regional Vice President None
17040 Summer Place
Lake Oswego, OR 97035
Francis N. Strazzeri Regional Vice President None
31641 Saddletree Drive
Westlake Village, CA 91361
S James P. Toomey Assistant Vice President None
I Christopher E. Trede Assistant Vice President None
George F. Truesdail Vice President None
400 Abbotsford Court
Charlotte, NC 28270
Scott W. Ursin-Smith Regional Vice President None
606 Glenwood Avenue
Mill Valley, CA 94941
L David M. Ward Assistant Vice President - None
Institutional Investment Services
Division
Thomas E. Warren Regional Vice President None
4001 Crockers Lake Blvd., #1012
Sarasota, FL 34238
L J. Kelly Webb Sr. Vice President, Treasurer None
Gregory J. Weimer Regional Vice President None
125 Surrey Drive
Canonsburg, PA 15317
B Timothy W. Weiss Director None
SF N. Dexter Williams Vice President None
Timothy J. Wilson Regional Vice President None
113 Farmview Place
Venetia, PA 15367
B Laura L. Wimberly Assistant Vice President None
H Marshall D. Wingo Sr. Vice President None
L Robert L. Winston Director, Sr. Vice President None
William Yost Regional Vice President None
9320 Overlook Trail
Eden Prairie, MN 55347
Janet M. Young Regional Vice President None
1616 Vermont
Houston, TX 77006
Scott D. Zambon Regional Vice President None
209 Robinson Drive
Tustin Ranch, CA 92782
</TABLE>
L Business Address, 333 South Hope Street, Los Angeles, CA 90071
LW Business Address, 11100 Santa Monica Boulevard, 15th Floor, Los Angeles, CA
90025
SF Business Address, One Market, Steuart Tower, Suite 1800, San Francisco, CA
94111
B Business Address, 135 South State College Boulevard, Brea, CA 928621
S Business Address, 8000 IH-10, Suite 1400, San Antonio, TX 78230
H Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
I Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
Accounts, books and other records required by Rules 31a-1 and 31a-2 under the
Investment Company Act of 1940, are maintained and held in the offices of the
registrant's investment adviser, Capital Research and Management Company, 333
South Hope Street, Los Angeles, California 90071, and/or 135 South State
College Boulevard, Brea, California 92621, and/or the offices of the
Registrant, Four Embarcadero Center (Suite 1800), San Francisco, California
94111.
The registrant's records covering shareholder accounts are maintained and kept
by the registrant's transfer agent, American Funds Service Company, 135 South
State College Boulevard, Brea, California 92821, 8000 IH-10, Suite 1400, San
Antonio, Texas 78230, 8332 Woodfield Crossing Boulevard, Indianapolis, Indiana
46240, and 5300 Robin Hood Road, Norfolk, VA 23513.
The registrant's records covering portfolio transactions are maintained and
kept by the registrant's custodian, State Street Bank and Trust Company, 225
Franklin Street, Boston, MA 02101.
ITEM 31. MANAGEMENT SERVICES.
None.
ITEM 32. UNDERTAKINGS
(c) As reflected in the prospectus, the registrant undertakes to provide 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.
<PAGE>
SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(a) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, and State of California, on the 26th
day of February, 1997.
FUNDAMENTAL INVESTORS, INC.
By: /s/ Walter P. Stern
(Walter P. Stern, Chairman of the Board)
Pursuant to the requirements of the Securities Act of 1933, this amendment to
Registration Statement has been signed below on February 26, 1997, by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <C>
(1) Principal Executive Officer:
/s/ Walter P. Stern Chairman of the Board
(Walter P. Stern)
(2) Principal Financial Officer and
Principal Accounting Officer:
/s/ Mary C. Hall Treasurer
(Mary C. Hall)
(3) Directors:
Guilford C. Babcock* Director
Charles H. Black* Director
Martin Fenton, Jr.* Director
Herbert Hoover III* Director
Gail L. Neale* Director
Kirk P. Pendleton* Director
James W. Ratzlaff* Director
Henry E. Riggs* Director
/s/ R. Michael Shanahan
(R. Michael Shanahan) Director
/s/ Walter P. Stern
(Walter P. Stern) Chairman of the Board
Charles Wolf, Jr.* Director
</TABLE>
*By /s/ Julie F. Williams
(Julie F. Williams, Attorney-in-Fact)
Counsel reports that the amendment does not contain disclosures that would
make the amendment ineligible for effectiveness under the provisions of rule
485(a).
/s/ Michael J. Downer
(Michael J. Downer)
FUNDAMENTAL INVESTORS, INC.
ARTICLES OF INCORPORATION
I.
The undersigned, Isabelle V. Lindskoog, whose mailing address is Four
Embarcadero Center, San Francisco, California 94111, being at least 18 years of
age, does hereby form a corporation under and by virtue of the General Laws of
the State of Maryland.
II.
NAME
The name of the corporation (hereinafter called the "Corporation") is:
Fundamental Investors, Inc.
III.
PURPOSES AND POWERS
The purpose or purposes for which the Corporation is formed and the business
or objects to be transacted, carried on and promoted by it are:
(a) To conduct and carry on the business of an open-end investment company
under the Investment Company Act of 1940.
(b) To hold, invest and reinvest its assets in securities and other
investments including holding part or all of its assets in cash, including
foreign currencies.
(c) To issue and sell shares of its capital stock in such amounts and on such
terms and conditions and for such purposes and for such amount or kind of
consideration (including, without limitation, securities) now or hereafter
permitted by law.
(d) To redeem, purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue or cancel (all without the vote or consent of the
shareholders of the Corporation) shares of its capital stock, in any manner and
to the extent now or hereafter permitted by law and by the Charter.
(e) To do any and all such acts or things and to exercise any and all such
further powers or rights as may be necessary, incidental, relative, conducive,
appropriate or desirable for the accomplishment, carrying out or attainment of
the purposes stated in this Article.
The foregoing enumerated purposes and objects shall be in no way limited or
restricted by reference to, or inference from, the terms of any other clause of
this or any other Article of the charter, and shall each be regarded as
independent; and they are intended to be and shall be construed as powers as
well as purposes and objects of the Corporation and shall be in addition to and
not in limitation of the general powers of corporations under the laws of the
State of Maryland.
IV.
PRINCIPAL OFFICE AND PLACE OF BUSINESS
The present address of the principal office of the Corporation in the State of
Maryland is c/o The Corporation Trust Company Incorporated, 32 South Street,
Baltimore, Maryland 21202.
V.
RESIDENT AGENT
The name and address of the Corporation's resident agent is The Corporation
Trust Company Incorporated, 32 South Street, Baltimore, Maryland 21202. Said
resident agent is a Maryland corporation.
VI.
CAPITAL STOCK
(a) The total number of shares of capital stock which the Corporation shall
have the authority to issue is One Hundred Fifty Million (150,000,000) shares
of the par value of $1.00 per share and of the aggregate par value of One
Hundred Fifty Million Dollars ($150,000,000). The Board of Directors of the
Corporation is hereby empowered to increase or decrease, from time to time, the
total number of shares of capital stock or the number of shares of capital
stock of any class or series that the Corporation shall have authority to issue
without any action by the shareholders.
(b) Any fractional share shall carry proportionately all the rights of a whole
share, excepting any right to receive a certificate evidencing such fractional
share, but including the right to vote and the right to receive dividends.
(c) All persons who shall acquire stock in the Corporation shall acquire the
same subject to the provisions of the charter and the By-Laws of the
Corporation.
(d) As used in the charter, a "series" of shares represent interests in the
same assets, liabilities, income, earnings and profits of the Corporation; each
"class" of shares of a series represents interests in the same underlying
assets, liabilities, income, earnings and profits, but may differ from other
classes of such series with respect to fees and expenses or such other matters
as shall be established by the Board of Directors. Initially, the shares of
capital stock of the Corporation shall be all of one class and series
designated as "common stock." The Board of Directors shall have authority to
classify and reclassify any authorized but unissued shares of capital stock
from time to time by setting or changing in any one or more respects the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications or terms or conditions of
redemption of the capital stock. Subject to the provisions of Section (e) of
this Article VI and applicable law, the power of the Board of Directors to
classify or reclassify any of the shares of capital stock shall include,
without limitation, authority to classify or reclassify any such stock into one
or more series of capital stock and to divide and classify shares of any series
into one or more classes of such series, by determining, fixing or altering one
or more of the following:
1. The distinctive designation of such class or series and the number of
shares to constitute such class or series; provided that, unless otherwise
prohibited by the terms of such class or series, the number of shares of any
class or series may be decreased by the Board of Directors in connection with
any classification or reclassification of unissued shares and the number of
shares of such class or series may be increased by the Board of Directors in
connection with any such classification or reclassification, and any shares of
any class or series which have been redeemed, purchased or otherwise acquired
by the Corporation shall remain part of the authorized capital stock and be
subject to classification and reclassification as provided herein.
2. Whether or not and, if so, the rates, amounts and times at which, and the
conditions under which, dividends shall be payable on shares of such class or
series;
3. Whether or not shares of such class or series shall have voting rights in
addition to any general voting rights provided by law and the charter of the
Corporation and, if so, the terms of such additional voting rights;
4. The rights of the holders of shares of such class or series upon the
liquidation, dissolution or winding up of the affairs of, or upon any
distribution of the assets of, the Corporation.
(e) Shares of capital stock of the Corporation shall have the following
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption:
1. Assets Belonging to a Series. All consideration received by the
Corporation for the issue or sale of stock of any series of capital stock,
together with all assets in which such consideration is invested and
reinvested, income, earnings, profits and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation thereof, and any funds
or payments derived from any reinvestment of such proceeds in whatever form the
same may be, shall irrevocably belong to the series of shares of capital stock
with respect to which such assets, payments or funds were received by the
Corporation for all purposes, subject only to the rights of creditors, and
shall be so handled upon the books of account of the Corporation. Such
consideration, assets, income, earnings, profits and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation thereof,
and any assets derived from any reinvestment of such proceeds in whatever form,
are herein referred to as "assets belonging to" such series. Any assets,
income, earnings, profits, and proceeds thereof, funds or payments which are
not readily attributable to any particular series shall be allocable among any
one or more of the series in such manner and on such basis as the Board of
Directors, in its sole discretion, shall deem fair and equitable.
2. Liabilities Belonging to a Series. The assets belonging to any series of
capital stock shall be charged with the liabilities in respect of such series
and shall also be charged with such series' share of the general liabilities of
the Corporation determined as hereinafter provided. The determination of the
Board of Directors shall be conclusive as to the amount of such liabilities,
including the amount of accrued expenses and reserves; as to any allocation of
the same to a given series; and as to whether the same are allocable to one or
more series. The liabilities so allocated to a series are herein referred to
as "liabilities belonging to" such series. Any liabilities which are not
readily attributable to any particular series shall be allocable among any one
or more of the series in such manner and on such basis as the Board of
Directors, in its sole discretion, shall deem fair and equitable.
3. Dividends and Distributions. Shares of each series of capital stock shall
be entitled to such dividends and distributions, in stock or in cash or both,
as may be declared from time to time by the Board of Directors, acting in its
sole discretion, with respect to such series, provided, however, that dividends
and distributions on shares of a series of capital stock shall be paid only out
of the lawfully available "assets belonging to" such series as such phrase is
defined in Section (e)(1) of this Article VI.
4. Liquidating Dividends and Distributions. In the event of the liquidation
or dissolution of the Corporation, shareholders of each series of capital stock
shall be entitled to receive, as a series, out of the assets of the Corporation
available for distribution to shareholders, but other than general assets not
belonging to any particular series of capital stock, the assets belonging to
such series; and the assets so distributable to the shareholders of any series
of capital stock shall be distributed among such shareholders in proportion to
the number of shares of such series held by them and recorded on the books of
the Corporation. In the event that there are any general assets not belonging
to any particular series of capital stock and available for distribution, such
distribution shall be made to the holders of stock of all series of capital
stock in proportion to the asset value of the respective series of capital
stock determined as hereinafter provided.
5. Voting. Each shareholder of each series of capital stock shall be entitled
to one vote for each share of capital stock, irrespective of the class, then
standing in his name on the books of the Corporation, and on any matter
submitted to a vote of shareholders, all shares of capital stock then issued
and outstanding and entitled to vote shall be voted in the aggregate and not by
series except that: (i) when expressly required by law, shares of capital
stock shall be voted by individual class or series and (ii) only shares of
capital stock of the respective series or class or classes affected by a matter
shall be entitled to vote on such matter. At all meetings of the shareholders,
the holders of one-third of the shares of capital stock of the Corporation
entitled to vote at the meeting, present in person or by proxy, shall
constitute a quorum for the transaction of any business, except as otherwise
provided by statute or by these Articles. In the absence of a quorum no
business may be transacted, except that the holders of a majority of the shares
of capital stock present in person or by proxy and entitled to vote may adjourn
the meeting from time to time, without notice other than announcement at the
meeting except as otherwise required by the charter or the By-Laws, until the
holders of the requisite amount of shares of capital stock shall be present.
At any such adjourned meeting at which a quorum may be present any business may
be transacted which might have been transacted at the meeting as originally
called. The absence from any meeting, in person or by proxy, of holders of the
number of shares of capital stock of the Corporation in excess of the quorum
which may be required by the laws of the State of Maryland, the Investment
Company Act of 1940, or other applicable statute, these Articles, or the
By-Laws, for action upon any given matter shall not prevent action at such
meeting upon any other matter or matters which may properly come before the
meeting, if there shall be present at the meeting, in person or by proxy,
holders of the number of shares of capital stock of the Corporation required
for action in respect of such other matter or matters.
6. Redemption. To the extent the Corporation has funds or other property
legally available therefor, each holder of shares of capital stock of the
Corporation shall be entitled to require the Corporation to redeem all or any
part of the shares standing in the name of such holder on the books of the
Corporation, at the redemption price of such shares as in effect from time to
time as may be determined by the Board of Directors of the Corporation in
accordance with the provisions hereof, subject to the right of the Board of
Directors of the Corporation to suspend the right of redemption of shares of
capital stock of the Corporation or postpone the date of payment of such
redemption price in accordance with provisions of applicable law. Without
limiting the generality of the foregoing, the Corporation shall, to the extent
permitted by applicable law, have the right at any time to redeem the shares
owned by any holder of capital stock of the Corporation if the value of such
shares in the account of such holder is less than the minimum initial
investment amount applicable to that account as set forth in the Corporation's
current registration statement under the Investment Company Act of 1940, and
subject to such further terms and conditions as the Board of Directors of the
Corporation may from time to time adopt. The redemption price of shares of
capital stock of the Corporation shall, except as otherwise provided in this
Section (e)(6), be the net asset value thereof as determined by, or pursuant to
methods approved by, the Board of Directors of the Corporation from time to
time in accordance with the provisions of applicable law, less such redemption
fee or other charge, if any, as may be specified in the Corporation's current
registration statement under the Investment Company Act of 1940 for that class
or series. Payment of the redemption price shall be made in cash by the
Corporation at such time and in such manner as may be determined from time to
time by the Board of Directors of the Corporation unless, in the opinion of the
Board of Directors, which shall be conclusive, conditions exist which make
payment wholly in cash unwise or undesirable; in such event the Corporation may
make payment wholly or partly by securities or other property included in the
assets belonging or allocable to the series of the shares redemption of which
is being sought, the value of which shall be determined as provided herein.
VII.
DIRECTORS
The number of directors of the Corporation shall be three (3), which number
may be, from time to time, increased or decreased pursuant to the By-Laws of
the Corporation, but shall never be less than the minimum number permitted by
the General Laws of the State of Maryland now or hereafter in force. The names
of the directors who will serve until the first shareholders meeting or until
their successors are elected and qualify are as follows:
Thomas E. Terry
Isabelle V. Lindskoog
Patrick F. Quan
VIII.
PROVISIONS FOR DEFINING, LIMITING AND REGULATING CERTAIN POWERS OF THE
CORPORATION AND OF THE DIRECTORS AND SHAREHOLDERS
The following provisions are hereby adopted for the purpose of defining,
limiting and regulating the powers of the Corporation and of the directors and
shareholders:
(a) No holder of any stock or any other securities of the Corporation, whether
now or hereafter authorized, shall have any preemptive right to subscribe for
or purchase any stock or any other securities of the Corporation other than
such, if any, as the Board of Directors, in its sole discretion, may determine
and at such price or prices and upon such other terms as the Board of
Directors, in its sole discretion, may fix; and any stock or other securities
which the Board of Directors may determine to offer for subscription may, as
the Board of Directors in its sole discretion shall determine, be offered to
the holders of any class, series or type of stock or other securities at the
time outstanding to the exclusion of the holders of any or all other classes,
series or types of stock or other securities at the time outstanding.
(b) The Board of Directors of the Corporation shall have power from time to
time and in its sole discretion to determine, in accordance with sound
accounting practice, what constitutes annual or other net income, profits,
earnings, surplus, or net assets; to fix and vary from time to time the amount
to be reserved as working capital, or determine that retained earnings or
surplus shall remain in the hands of the Corporation; to set apart out of any
funds of the Corporation such reserve or reserves in such amount or amounts and
for such proper purpose or purposes as it shall determine and to abolish any
such reserve or any part thereof; to distribute and pay distributions or
dividends in stock, cash or other securities or property, out of surplus or any
other funds or amounts legally available therefor, at such times and to the
shareholders of record on such dates as it may from time to time determine; and
to determine whether and to what extent and at what times and places and under
what conditions and regulations the books, accounts and documents of the
Corporation, or any of them, shall be open to the inspection of shareholders,
except as otherwise provided by statute or by the By-Laws, and, except as so
provided, no shareholder shall have any right to inspect any book, account or
document of the Corporation unless authorized so to do by resolution of the
Board of Directors.
(c) The Board of Directors of the Corporation may establish in its absolute
discretion the basis or method for determining the value of the assets
belonging to any series, and the net asset value of each share of capital stock
of each series and class for purposes of sales, redemptions, repurchases of
shares or otherwise.
(d) Any director or officer, individually, or any firm of which any director
or officer may be a member, or any corporation, trust or association of which
any director or officer may be an officer or director or in which any director
or officer may be directly or indirectly interested as the holder of any amount
of its capital stock or otherwise, may be a party to, or may be financially or
otherwise interested in, any contract or transaction of the Corporation; and
any such director or officer of the Corporation may be counted in determining
the existence of a quorum at the meeting of the Board of Directors of the
Corporation or a committee thereof which shall authorize any such contract or
transaction, and may vote thereat to authorize any such contract or
transaction, and such transaction or contract shall not as a result be void or
voidable provided either
(i) the fact of the common directorship or interest is disclosed or known to:
(a) the Board of Directors or the committee and the Board or committee
authorizes, approves, or ratifies the contract or transaction by the
affirmative vote of a majority of disinterested directors, even if the
disinterested directors constitute less than a quorum; or (b) the shareholders
entitled to vote, and the contract or transaction is authorized, approved, or
ratified by a majority of the votes cast by the shareholders entitled to vote
other than the votes of shares owned of record or beneficially by the
interested director or corporation, firm, or other entity; or
(ii) the contract or transaction is fair and reasonable to the Corporation.
In furtherance and not in limitation of the foregoing, the Board of Directors
of the Corporation is expressly authorized to contract for management services
of any nature, with respect to the conduct of the business of the Corporation
with any entity, person or company, incorporated or unincorporated, on such
terms as the Board of Directors may deem desirable. Any such contract may
provide for the rendition of management services of any nature with respect to
the conduct of the business of the Corporation, and for the management or
direction of the business and activities of the Corporation to such extent as
the Board of Directors may determine, whether or not the contract involves
delegation of functions usually or customarily performed by the Board of
Directors or officers of the Corporation or of a corporation organized under
the laws of Maryland. The Board of Directors is further expressly authorized
to contract with any person or company on such terms as the Board of Directors
may deem desirable for the distribution of shares of the Corporation and to
contract for other services, including, without limitation, services as
custodian of the Corporation's assets and as transfer agent for the
Corporation's shares, with any entity(ies), person(s) or company(ies),
incorporated or unincorporated, on such terms as the directors may deem
desirable. Any entity, person or company which enters into one or more of such
contracts may also perform similar or identical services for other investment
companies and other persons and entities without restriction by reason of the
relationship with the Corporation unless the contract expressly provides
otherwise.
(e) Any contract, transaction, or act of the Corporation or of the Board of
Directors which shall be ratified by a majority of a quorum of the shareholders
having voting powers at any annual meeting, or at any special meeting called
for such purpose, shall so far as permitted by law be as valid and as binding
as though ratified by every shareholder of the Corporation.
(f) Unless the By-Laws otherwise provide, any officer or employee of the
Corporation (other than a director) may be removed at any time with or without
cause by the Board of Directors or by any committee or superior officer upon
whom such power of removal may be conferred by the By-Laws or by authority of
the Board of Directors.
(g) Notwithstanding any provision of law requiring the authorization of any
action by a greater proportion than a majority of the total number of shares of
any series or class, or of all classes or series of capital stock, or by the
total number of such shares, such action shall be valid and effective if
authorized by the affirmative vote of the holders of a majority of the total
number of shares outstanding and entitled to vote thereon.
(h) The Corporation shall indemnify (1) its directors and officers, whether
serving the Corporation or at its request any other entity, to the full extent
required or permitted by the General Laws of the State of Maryland now or
hereafter in force, including the advance of expenses under the procedures and
to the full extent permitted by law, and (2) its other employees and agents to
such extent as shall be authorized by the Board of Directors or the
Corporation's By-Laws and be permitted by law. The foregoing rights of
indemnification shall not be exclusive of any other rights to which those
seeking indemnification may be entitled. The Board of Directors may take such
action as is necessary to carry out these indemnification provisions and is
expressly empowered to adopt, approve and amend from time to time such by-laws,
resolutions or contracts implementing such provisions or such further
indemnification arrangements as may be permitted by law. No amendment of this
Charter of the Corporation shall limit or eliminate the right to
indemnification provided hereunder with respect to acts or omissions occurring
prior to such amendment or repeal. Nothing contained herein shall be construed
to authorize the Corporation to indemnify any director or officer of the
Corporation against any liability to the Corporation or to any holders of
securities of the Corporation to which he is subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. Any indemnification by the Corporation
shall be consistent with the requirements of law, including the Investment
Company Act of 1940.
(i) To the fullest extent permitted by Maryland statutory and decisional law
and the 1940 Act, as amended or interpreted, no director or officer of the
Corporation shall be personally liable to the Corporation or its stockholders
for money damages; provided, however, that nothing herein shall be construed to
protect any director or officer of the Corporation against any liability to
which such director or officer would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. No amendment, modification or repeal of
this Article VIII shall adversely affect any right or protection of a director
or officer that exists at the time of such amendment, modification or repeal.
(j) In addition to the powers and authority hereinbefore, hereinafter or by
statute expressly conferred upon them, the Board of Directors may exercise all
such powers and do all such acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the express provisions of the laws of
Maryland, of the charter and of the By-Laws of the Corporation.
(k) The Corporation reserves the right from time to time to make any
amendments of its charter which may now or hereafter be authorized by law,
including any amendments changing the terms or contract rights, as expressly
set forth in its charter, of any of its outstanding stock by classification,
reclassification or otherwise but no such amendment which changes such terms or
contract rights of any of its outstanding stock shall be valid unless such
amendment shall have been authorized by not less than a majority of the
aggregate number of the votes entitled to be cast thereon, by a vote at a
meeting or in writing with or without a meeting.
(l) The Corporation shall not be required to hold an annual meeting of
shareholders in any year in which the laws of Maryland do not require that such
a meeting be held.
The enumeration and definition of particular powers of the Board of Directors
included in the foregoing shall in no way be limited or restricted by reference
to or inference from the terms of any other clause of this or any other Article
of the charter of the Corporation, or construed as or deemed by inference or
otherwise in any manner to exclude or limit any powers conferred upon the Board
of Directors under the General Laws of the State of Maryland now or hereafter
in force.
IX.
DURATION OF THE CORPORATION
The duration of the Corporation shall be perpetual.
IN WITNESS WHEREOF, I have signed these Articles of Incorporation,
acknowledging the same to be my act, on January 26, 1990.
Isabelle V. Lindskoog
WITNESS:
Patrick F. Quan
FUNDAMENTAL INVESTORS, INC.
ARTICLES SUPPLEMENTARY
INCREASING AUTHORIZED STOCK
AS AUTHORIZED BY SECTION 2-105(c) OF
THE MARYLAND GENERAL CORPORATION LAW
Fundamental Investors, Inc., a Maryland corporation (the "Corporation") having
its principal address at 32 South Street, Baltimore, Maryland 21202, hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: In accordance with Section 2-105(c) of the Maryland General Corporation
Law, the Board of Directors has increased the authorized Capital Stock of the
corporation to 500,000,000 shares of Common Stock (par value $1.00 per share).
SECOND: The Corporation is registered as an open-end investment company under
the Investment Company Act of 1940.
THIRD: (a) As of immediately before the increase the total number of shares
of stock of all classes which the Corporation has authority to issue is
300,000,000 shares of Common Stock (par value $1.00 per share).
(b) As increased the total number of shares of stock of all classes which
the Corporation has authority to issue is 500,000,000 shares of Common Stock
(par value $1.00 per share).
(c) The aggregate par value of all shares having a par value is $300,000,000
before the increase and $500,000,000 as increased.
IN WITNESS WHEREOF, Fundamental Investors, Inc., has caused these Articles
Supplementary to be signed and acknowledged in its name and on its behalf by
its Senior Vice President and its corporate seal to be hereto affixed and
attested by its Secretary on this 19th day of August, 1996.
ATTEST: FUNDAMENTAL INVESTORS, INC.
By By
Julie F. Williams Paul G. Haaga, Jr.
Secretary Senior Vice President
THE UNDERSIGNED, Senior Vice President of Fundamental Investors, Inc., who
executed on behalf of said Corporation the foregoing Articles Supplementary to
the Charter, of which this certificate is made a part, hereby acknowledges, in
the name and on behalf of said Corporation, the foregoing Articles
Supplementary to the Charter to be the corporate act of said Corporation, and
further certifies that, to the best of his knowledge, information and belief,
the matters and facts set forth therein with respect to the approval thereof
are true in all material respects under penalty of perjury.
Dated: August 19, 1996 By:
Paul G. Haaga, Jr.
Senior Vice President
FUNDAMENTAL INVESTORS, INC.
BY-LAWS
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FUNDAMENTAL INVESTORS, INC.
BY-LAWS
I N D E X
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Section and Title Page
<S> <C> <C>
Article I. SHAREHOLDERS
1.01 Annual Meetings 4
1.02 Special Meetings 4
1.03 Place of Meetings 4
1.04 Notice of Meetings 4
1.05 Quorum 5
1.06 Votes Required 5
1.07 Proxies 5
1.08 List of Shareholders 5
1.09 Voting 6
1.10 Action by Shareholders Other than at a Meeting 6
Article II. BOARD OF DIRECTORS
2.01 Powers 6
2.02 Number of Directors 6
2.03 Election of Directors 7
2.04 Regular Meetings 7
2.05 Special Meetings 7
2.06 Notice of Meetings 7
2.07 Quorum 8
2.08 Vacancies 8
2.09 Compensation and Expenses 8
2.10 Action by Directors Other than at a Meeting 8
2.11 Committees 9
2.12 Holding of Meetings by Conference Telephone Call 9
Article III. OFFICERS
3.01 Executive Officers 9
3.02 Chairman and Vice Chairman of the Board 10
3.03 President 10
3.04 Vice Presidents 10
3.05 Secretary and Assistant Secretaries 10
3.06 Treasurer and Assistant Treasurers 11
3.07 Subordinate Officers 11
3.08 Removal 11
Article IV. STOCK
4.01 Certificates 11
4.02 Transfers 12
4.03 Stock Ledgers 12
4.04 Record Dates 12
4.05 Replacement Certificates 12
Article V. GENERAL PROVISIONS
5.01 Dividends 13
5.02 Checks 13
5.03 Fiscal Year 13
5.04 Custodian 13
5.05 Seal 14
5.06 Representation of Shares 14
5.07 Prohibited Transactions 14
5.08 Bonds 14
5.09 Annual Statement of Affairs 14
Article VI. AMENDMENT OF BY-LAWS 16
</TABLE>
BY-LAWS
OF
FUNDAMENTAL INVESTORS, INC.
ARTICLE I.
SHAREHOLDERS
Section 1.01. Annual Meetings. The Corporation is not required to hold an
annual meeting in any year in which the election of directors is not required
to be acted upon under the Investment Company Act of 1940, as amended (the
"1940 Act"). If the election of directors is required to be acted upon under
the 1940 Act then such meeting (or the first such meeting in any year) shall be
designated as the annual meeting of stockholders for that year. If the 1940
Act requires the Corporation to hold a meeting of stockholders to elect
directors, the meeting shall, unless otherwise required by the 1940 Act, be
held no later than 120 days after the occurrence of the event requiring the
meeting. Except as the Charter or statute provides otherwise, any business may
be considered at an annual meeting without the purpose of the meeting having
been specified in the notice. Failure to hold an annual meeting does not
invalidate the Corporation's existence or affect any otherwise valid corporate
acts.
Section 1.02. Special Meetings. At any time in the interval between annual
meetings, special meetings of the shareholders may be called by the Chairman of
the Board or the President or by a majority of the Board or by shareholders
entitled to cast 10% in number of votes by vote at a meeting or in writing with
or without a meeting.
Section 1.03. Place of Meetings. Meetings of the shareholders for the
election of Directors shall be held at such place either within or without the
State of Maryland or elsewhere in the United States as shall be designated from
time to time by the Board of Directors and stated in the notice of the meeting.
Meetings of shareholders for any other purpose may be held at such time and
place, within the State of Maryland or elsewhere in the United States, as shall
be stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 1.04. Notice of Meetings. Not less than ten days nor more than
ninety days before the date of every shareholders' meeting, the Secretary shall
give to each shareholder entitled to vote at such meeting, written or printed
notice stating the time and place of the meeting and, if the meeting is a
special meeting or notice of the purpose is required by statute, the purpose or
purposes for which the meeting is called, either by mail or by presenting it to
the shareholder personally or by leaving it at the shareholder's residence or
usual place of business. If mailed, such notice shall be deemed to be given
when deposited in the United States mail addressed to the shareholder at his
post office address as it appears on the records of the Corporation, with
postage thereon prepaid. Notwithstanding the foregoing provision, a waiver of
notice in writing, signed by the person or persons entitled to such notice and
filed with the records of the meeting, whether before or after the holding
thereof, or actual attendance at the meeting in person or by proxy, shall be
deemed equivalent to the giving of such notice to such persons. Any meeting of
shareholders, annual or special, may adjourn from time to time to reconvene at
the same or some other place, and no notice need be given of any such adjourned
meeting other than by announcement at the meeting.
Section 1.05. Quorum. At any meeting of shareholders the presence in person
or by proxy of shareholders entitled to cast one third of the votes thereat
shall constitute a quorum; but this Section shall not affect any requirement
under statute or under the Articles for the vote necessary for the adoption of
any measure. In the absence of a quorum the shareholders present in person or
by proxy, by majority vote and without notice, may adjourn the meeting from
time to time until a quorum shall attend. At any such adjourned meeting at
which a quorum shall be present, any business may be transacted which might
have been transacted at the meeting as originally called.
Section 1.06. Votes Required. A majority of the votes cast at a meeting of
shareholders, duly called and at which a quorum is present, shall be sufficient
to take or authorize action upon any matter which may properly come before the
meeting, unless more than a majority of votes cast is required by statute or by
the Articles. Each outstanding share of stock shall be entitled to one vote on
each matter submitted to a vote at a meeting of shareholders and fractional
shares shall be entitled to corresponding fractions of one vote on such
matters, except that a plurality of all the votes cast at a meeting at which a
quorum is present is sufficient to elect a director.
Section 1.07. Proxies. A shareholder may vote the shares owned of record by
him either in person or by proxy executed in writing by the shareholder or by
the shareholder's duly authorized attorney-in-fact. No proxy shall be valid
after eleven months from its date, unless otherwise provided in the proxy.
Every proxy shall be in writing, subscribed by the shareholder or the
shareholder's duly authorized attorney, and dated, but need not be sealed,
witnessed or acknowledged.
Section 1.08. List of Shareholders. At each meeting of shareholders, a full,
true and complete list in alphabetical order of all shareholders entitled to
vote at such meeting, certifying the number and class or series of shares held
by each, shall be made available by the Secretary.
Section 1.09. Voting. In all elections for Directors every shareholder shall
have the right to vote, in person or by proxy, the shares owned of record by
the shareholder, for as many persons as there are Directors to be elected and
for whose election the shareholder has a right to vote. At all meetings of
shareholders, unless the voting is conducted by inspectors, the proxies and
ballots shall be received, and all questions regarding the qualification of
voters and the validity of proxies and the acceptance or rejection of votes
shall be decided by the chairman of the meeting. If demanded by shareholders,
present in person or by proxy, entitled to cast 10% in number of votes, or if
ordered by the chairman, the vote upon any election or question shall be taken
by ballot. Upon like demand or order, the voting shall be conducted by two
inspectors in which event the proxies and ballots shall be received, and all
questions regarding the qualification of voters and the validity of proxies and
the acceptance or rejection of votes shall be decided, by such inspectors.
Unless so demanded or ordered, no vote need be by ballot, and voting need not
be conducted by inspectors. Inspectors may be elected by the shareholders at
their annual meeting, to serve until the close of the next annual meeting and
their election may be held at the same time as the election of Directors. In
case of a failure to elect inspectors, or in case an inspector shall fail to
attend, or refuse or be unable to serve, the shareholders at any meeting may
choose an inspector or inspectors to act at such meeting, and in default of
such election the chairman of the meeting may appoint an inspector or
inspectors.
Section 1.10. Action by Shareholders Other than at a Meeting. Any action
required or permitted to be taken at any meeting of shareholders may be taken
without a meeting, if a consent in writing, setting forth such action, is
signed by all the shareholders entitled to vote on the subject matter thereof
and any other shareholders entitled to notice of a meeting of shareholders (but
not to vote thereat) have waived in writing any rights which they may have to
dissent from such action, and such consent and waiver are filed with the
records of the Corporation.
ARTICLE II
BOARD OF DIRECTORS
Section 2.01. Powers. The Board may exercise all the powers of the
Corporation, except such as are by statute or the charter or these By-Laws
conferred upon or reserved to the shareholders. The Board shall keep full and
fair accounts of its transactions.
Section 2.02. Number of Directors. The number of Directors shall be such
number as shall be fixed from time to time by vote of a majority of the
Directors; provided, however, that the number of Directors shall in no event
exceed fifteen nor be reduced to fewer than three. The tenure of office of a
Director shall not be affected by any decrease in the number of Directors made
by the Board.
Section 2.03. Election of Directors. Until the first annual meeting of
shareholders and until successors or additional Directors are duly elected and
qualify, the Board shall consist of the persons named as such in the charter.
At the first annual meeting of shareholders and at each annual meeting
thereafter, the shareholders shall elect Directors to hold office until the
next succeeding annual meeting and until their successors are elected and
qualify. At any meeting of shareholders, duly called and at which a quorum is
present, the shareholders may, by the affirmative vote of the holders of a
majority of the votes entitled to be cast thereon, remove any Director or
Directors from office and may elect a successor or successors to fill any
resulting vacancies for the unexpired terms of removed Directors.
Section 2.04. Regular Meetings. After each meeting of shareholders at which
a Board of Directors shall have been elected, the Board so elected shall meet
for the purpose of organization and the transaction of other business. No
notice of such first meeting shall be necessary if held immediately after the
adjournment, and at the site, of such meeting of shareholders. Other regular
meetings of the Board shall be held without notice on such dates and at such
places within or without the State of Maryland as may be designated from time
to time by the Board.
Section 2.05. Special Meetings. Special meetings of the Board may be called
at any time by the Chairman of the Board, the President or the Secretary of the
Corporation, or by a majority of the Board by vote at a meeting, or in writing
with or without a meeting. Such special meetings shall be held at such place
or places within or without the State of Maryland as may be designated from
time to time by the Board. In the absence of such designation such meetings
shall be held at such places as may be designated in the calls.
Section 2.06. Notice of Meetings. Except as provided in Section 2.04, notice
of the place, day and hour of all meetings shall be given to each Director two
days (or more) before the meeting, by delivering the same personally, or by
sending the same by telegraph, or by leaving the same at the Director's
residence or usual place of business, or, in the alternative, by mailing such
notice three days (or more) before the meeting, postage prepaid, and addressed
to the Director at the Director's last known business or residence post office
address, according to the records of the Corporation. Unless required by these
By-Laws or by resolution of the Board, no notice of any meeting of the Board
need state the business to be transacted thereat. No notice of any meeting of
the Board need be given to any Director who attends or, to any Director who in
writing executed and filed with the records of the meeting either before or
after the holding thereof, waives such notice. Any meeting of the Board,
regular or special, may adjourn from time to time to reconvene at the same or
some other place, and no notice need be given of any such adjourned meeting
other than by announcement at the adjourned meeting.
Section 2.07. Quorum. At all meetings of the Board, one-third of the
Directors (but in no event fewer than two Directors) shall constitute a quorum
for the transaction of business. Except in cases in which it is by statute, by
the charter or by these By-Laws otherwise provided, the vote of a majority of
such quorum at a duly constituted meeting shall be sufficient to elect and pass
any measure. In the absence of a quorum, the Directors present by majority
vote and without notice other than by announcement at the meeting may adjourn
the meeting from time to time until a quorum shall attend. At any such
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
noticed.
Section 2.08. Vacancies. Any vacancy occurring in the Board of Directors for
any cause other than by reason of an increase in the number of Directors may be
filled by a majority of the remaining members of the Board of Directors,
although such majority is less than a quorum. Any vacancy occurring by reason
of an increase in the number of Directors may be filled by action of a majority
of the entire Board of Directors; provided, in either case, that immediately
after filling such vacancy at least two-thirds of the Directors then holding
office shall have been elected to such office by the shareholders at an annual
or special meeting thereof. If at any time after the first annual meeting of
shareholders of the Corporation a majority of the Directors in office shall
consist of Directors elected by the Board of Directors, a meeting of the
shareholders shall be called forthwith for the purpose of electing the entire
Board of Directors, and the terms of office of the Directors then in office
shall terminate upon the election and qualification of such Board of Directors.
A Director elected by the Board of Directors or the shareholders to fill a
vacancy shall be elected to hold office until the next annual meeting of
shareholders and until his successor is elected and qualifies.
Section 2.09. Compensation and Expenses. Directors may, pursuant to
resolution of the Board, be paid fees for their services, which fees may
consist of an annual fee or retainer and/or a fixed fee for attendance at
meetings. In addition, Directors may in the same manner be reimbursed for
expenses incurred in connection with their attendance at meetings or otherwise
in performing their duties as Directors. Members of committees may be allowed
like compensation and reimbursement. Nothing herein contained shall preclude
any Director from serving the Corporation in any other capacity and receiving
compensation therefor.
Section 2.10. Action by Directors Other than at a Meeting. Any action
required or permitted to be taken at any meeting of the Board, or of any
committee thereof, may be taken without a meeting, if a written consent to such
action is signed by all members of the Board or of such committee, as the case
may be, and such written consent is filed with the minutes of proceedings of
the Board or committee.
Section 2.11. Committees. The Board may, by resolution passed by a majority
of the entire Board, designate one or more committees, each committee to
consist of two or more of the Directors. The Board may designate one or more
Directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. Any such committee, to
the extent provided in the resolution and by law, shall have and may exercise
the powers of the Board in the management of the business and affairs of the
Corporation, provided, however, that in the absence or disqualification of any
member of such committee or committees, the member or members thereof present
at any meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may appoint another member of the Board to act at the
meeting in the place of any such absent or disqualified member. Such committee
or committees shall have such name or names as may be determined from time to
time by resolution adopted by the Board. Each committee shall keep regular
minutes of its meetings and report the same to the Board when required.
Section 2.12. Holding of Meetings by Conference Telephone Call. At any
regular or special meeting of the Board or any committee thereof, members
thereof may participate in such meeting by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other. Participation in a meeting pursuant to this
section shall constitute presence in person at such meeting.
ARTICLE III
OFFICERS
Section 3.01. Executive Officers. The Board of Directors may choose
a Chairman of the Board and a Vice Chairman of the Board from among the
Directors, and shall choose a President, a Secretary and a Treasurer who need
not be Directors. The Board of Directors shall designate as principal
executive officer of the Corporation either the Chairman of the Board, the Vice
Chairman of the Board, or the President. The Board of Directors may choose an
Executive Vice President, one or more Senior Vice Presidents, one or more Vice
Presidents, one or more Assistant Secretaries and one or more Assistant
Treasurers, none of whom need be a Director. Any two or more of the
above-mentioned offices, except those of President and a Vice President, may be
held by the same person, but no officer shall execute, acknowledge or verify
any instrument in more than one capacity if such instrument be required by law,
by the charter, by the By-Laws or by resolution of the Board of Directors to be
executed by any two or more officers. Each such officer shall hold office
until his successor shall have been duly chosen and qualified, or until he
shall have resigned or shall have been removed. Any vacancy in any of the
above offices may be filled for the unexpired portion of the term of the Board
of Directors at any regular or special meeting.
Section 3.02. Chairman and Vice Chairman of the Board. The Chairman of the
Board, if one be elected, shall preside at all meetings of the Board of
Directors and of the shareholders at which he is present. He shall have and
may exercise such powers as are, from time to time, assigned to him by the
Board of Directors. The Vice Chairman of the Board, if one be elected, shall,
when present and in the absence of the Chairman of the Board, preside at all
meetings of the shareholders and Directors, and he shall perform such other
duties as may from time to time be assigned to him by the Board of Directors or
as may be required by law.
Section 3.03. President. In the absence of the Chairman or Vice Chairman of
the Board, the President shall preside at all meetings of the shareholders and
of the Board at which the President is present; and in general, shall perform
all duties incident to the office of a president of a Maryland Corporation, and
such other duties, as from time to time, may be assigned to him by the Board.
Section 3.04. Vice Presidents. The Vice President or Vice Presidents,
including any Executive or Senior Vice President(s), at the request of the
President or in the President's absence or during the President's inability or
refusal to act, shall perform the duties and exercise the functions of the
President, and when so acting shall have the powers of the President. If there
be more than one Vice President, the Board may determine which one or more of
the Vice Presidents shall perform any of such duties or exercise any of such
functions, or if such determination is not made by the Board, the President may
make such determination. The Vice President or Vice Presidents shall have such
other powers and perform such other duties as may be assigned by the Board, the
Chairman of the Board, or the President.
Section 3.05. Secretary and Assistant Secretaries. The Secretary shall keep
the minutes of the meetings of the shareholders, of the Board and of any
committees, in books provided for the purpose; shall see that all notices are
duly given in accordance with the provisions of these By-Laws or as required by
law; be custodian of the records of the Corporation; see that the corporate
seal is affixed to all documents the execution of which, on behalf of the
Corporation, under its seal, is duly authorized, and when so affixed may attest
the same; and in general perform all duties incident to the office of a
secretary of a Maryland Corporation, and such other duties as, from time to
time, may be assigned to him by the Board, the Chairman of the Board, or the
President.
The Assistant Secretary, or if there be more than one, the Assistant
Secretaries in the order determined by the Board, the President or the Chairman
of the Board, shall, in the absence of the Secretary or in the event of the
Secretary's inability or refusal to
act, perform the duties and exercise the powers of the Secretary and shall
perform such other duties and have such other powers as the Board may from time
to time prescribe.
Section 3.06. Treasurer and Assistant Treasurers. The Treasurer shall have
charge of and be responsible for all funds, securities, receipts and
disbursements of the Corporation, and shall deposit, or cause to be deposited
in the name of the Corporation, all moneys or other valuable effects in such
banks, trust companies or other depositories as shall, from time to time, be
selected by the Board in accordance with Section 5.04 of these By-Laws; render
to the President, the Chairman of the Board and to the Board, whenever
requested, an account of the financial condition of the Corporation; and in
general, perform all the duties incident to the office of a treasurer of a
corporation, such other duties as may be assigned to him by the Board, the
President or the Chairman of the Board.
The Assistant Treasurer, or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board, the President or the
Chairman of the Board shall, in the absence of the Treasurer or in the event of
the Treasurer's inability or refusal to act, perform the duties and exercise
the powers of the Treasurer and shall perform other duties and have such other
powers as the Board may from time to time prescribe.
Section 3.07. Subordinate Officers. The Board may from time to time appoint
such subordinate officers as it may deem desirable. Each such officer shall
hold office for such period and perform such duties as the Board, the President
or the Chairman of the Board may prescribe. The Board may, from time to time,
authorize any committee or officer to appoint and remove subordinate officers
and prescribe the duties thereof.
Section 3.08. Removal. Any officer or agent of the Corporation may
be removed by the Board whenever, in its judgment, the best interests of the
Corporation will be served thereby, but such removal shall be without prejudice
to the contractual rights, if any, of the person so removed.
ARTICLE IV
STOCK
Section 4.01. Certificates. Each shareholder shall be entitled to a
certificate or certificates which shall represent and certify the number of
shares of stock owned by him in the Corporation. Such certificate shall be
signed by the President, the Chairman of the Board or a Vice President and
countersigned by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer, and may be sealed with the seal of the Corporation. The
signatures may be either manual or facsimile signatures and the seal may be
either facsimile or any other form of seal. No certificates shall be issued
for fractional shares. Such certificates shall be in such form, not
inconsistent with law or with the charter, as shall be approved by the Board.
In case any officer of the Corporation who has signed any certificate ceases to
be an officer of the Corporation, whether because of death, resignation or
otherwise, before such certificate is issued, the certificate may nevertheless
be issued and delivered by the Corporation as if the officer had not ceased to
be such officer as of the date of its issue. Certificates need not be issued
except to shareholders who request such issuance in writing. A certificate is
valid and may be issued whether or not an officer who signed it is still an
officer when it is issued.
Section 4.02. Transfers. The Board of Directors shall have power and
authority to make such rules and regulations as it may deem necessary or
expedient concerning the issue, transfer and registration of certificates of
stock; and may appoint transfer agents and registrars thereof. The duties of
transfer agent and registrar, if any, may be combined.
Section 4.03. Stock Ledgers. A stock ledger, containing the names and
addresses of the shareholders of the Corporation and the number of shares of
each class held by them, respectively, shall be kept by the Transfer Agent of
the Corporation. The stock ledger may be in written form or in any other form
which can be converted within a reasonable time into written form for visual
inspection.
Section 4.04. Record Dates. The Board is hereby empowered to fix, in
advance, a date as the record date for the purpose of determining shareholders
entitled to notice of, or to vote at, any meeting of shareholders, or
shareholders entitled to receive payment of any dividend, capital gains
distribution or the allotment of any rights, or in order to make a
determination of shareholders for any other proper purpose. Such date in any
case shall be not more than ninety days, and in case of a meeting of
shareholders, not less than ten days, prior to the date on which the particular
action, requiring such determination of shareholders, is to be taken.
Section 4.05. Replacement Certificates. The Board of Directors may direct a
new stock certificate or certificates to be issued in place of any certificate
or certificates theretofore issued by the Corporation alleged to have been
lost, stolen or destroyed, upon such conditions as the Board shall determine.
When authorizing such issue of a new certificate or certificates, the Board of
Directors may, in it discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative to advertise the same in such manner
as it shall require and/or to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Corporation
with respect to the Certificate alleged to have been lost, stolen or destroyed.
ARTICLE V
GENERAL PROVISIONS
Section 5.01. Dividends. Dividends or distributions upon the capital stock
of the Corporation, subject to provisions of the charter, if any, may be
declared by the Board of Directors at any regular or special meeting, pursuant
to law. Dividends or distributions may be paid only in cash or in shares of
the capital stock, subject to the provisions of the Articles of Incorporation.
Before payment of any dividend or distribution there may be set aside out of
any funds of the Corporation available for dividends or distributions such sum
or sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends or distributions or for maintaining any property of the Corporation,
or for such other purpose as the Directors shall think conducive to the
interest of the Corporation, and the Directors may modify or abolish any such
reserve in the manner in which it was created.
Section 5.02. Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board may from time to time designate.
Section 5.03. Fiscal Year. The fiscal year of the Corporation shall be fixed
by resolution of the Board of Directors.
Section 5.04. Custodian. All securities and cash of the Corporation shall be
placed in the custody of a bank or trust company ("Custodian") having
(according to its last published report) not less than $2,000,000 aggregate
capital, surplus and undivided profits, provided such a Custodian can be found
ready and willing to act (or maintained in such other manner as is consistent
with Section 17(f) of the Investment Company Act of 1940 and the rules and
regulations promulgated thereunder.) The Corporation shall enter into a
written contract with the Custodian regarding the powers, duties and
compensation of the Custodian with respect to the cash and securities of the
Corporation held by the Board of Directors of the Corporation. The Corporation
shall upon the resignation or inability to serve of the Custodian use its best
efforts to obtain a successor custodian; require that the cash and securities
owned by the Corporation be delivered directly to the successor custodian; and
in the event that no successor custodian can be found, submit to the
shareholders, before permitting delivery of the cash and securities owned by
the Corporation to other than a successor custodian, the question whether or
not the Corporation shall be liquidated or shall function without a custodian.
Section 5.05. Seal. The Board of Directors may provide a suitable seal,
bearing the name of the Corporation, which shall be in the custody of the
Secretary. The Board of Directors may authorize one or more duplicate seals
and provide for the custody thereof.
Section 5.06. Representation of Shares. Any officer of the Corporation is
authorized to vote, represent and exercise for the Corporation any and all
rights incident to any shares of any corporation or other business enterprise
owned by the Corporation.
Section 5.07. Prohibited Transactions. No officer or director of the
Corporation or of its investment adviser shall deal for or on behalf of the
Corporation with himself, as principal or agent, or with any corporation or
partnership in which he has a financial interest. This prohibition shall not
prevent: (a) officers or directors of the Corporation from having a financial
interest in the Corporation, its principal underwriter or its investment
adviser; (b) the purchase of securities for the portfolio of the Corporation or
the sale of securities owned by the Corporation through a securities dealer,
one or more of whose partners, officers or directors is an officer or director
of the Corporation, provided such transactions are handled in the capacity of
broker only and provided commissions charged do not exceed customary brokerage
charges for such service; or (c) the employment of legal counsel, registrar,
transfer agent, dividend disbursing agent, or custodian having a partner,
officer or director who is an officer or director of the Corporation, provided
only customary fees are charged for services rendered to or for the benefit of
the Corporation.
Section 5.08. Bonds. The Board of Directors may require any officer, agent
or employee of the Corporation to give a bond to the Corporation, conditioned
upon the faithful discharge of his duties, with one or more sureties and in
such amount as may be satisfactory to the Board of Directors. The Board of
Directors shall, in any event, require the Corporation to provide and maintain
a bond issued by a reputable fidelity insurance company, against larceny and
embezzlement, covering each officer and employee of the Corporation who may
singly, or jointly with others, have access to securities or funds of the
Corporation, either directly or through authority to draw upon such funds, or
to direct generally the disposition of such securities, such bond or bonds to
be in such reasonable amount as a majority of the Board of Directors who are
not such officers or employees of the Corporation shall determine with due
consideration to the value of the aggregate assets of the Corporation to which
any such officer or employee may have access, or in any amount or upon such
terms as the Securities and Exchange Commission may prescribe by order, Rule or
Regulations.
Section 5.09. Annual Statement of Affairs. The President or the Controller
shall prepare annually a full and correct statement of the affairs of the
Corporation, to include a balance sheet and a financial statement of operations
for the preceding fiscal year. The statement of affairs shall be placed on
file at the Corporation's principal office within 120 days after the end of the
fiscal year.
ARTICLE VI
AMENDMENT OF BY-LAWS
These By-Laws of the Corporation may be altered, amended, added to or
repealed by majority vote of the shareholders or by majority vote of the entire
Board.
NUMBER SHARES
(Void)
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
FUNDAMENTAL INVESTORS, INC.
This Certifies that____________________is the owner of
*SEE REVERSE FOR CERTAIN ABBREVIATIONS
CUSIP 360802102
fully paid and nonassessable shares of the Capital Stock of Fundamental
Investors, Inc., each of the par value of One Dollar, transferable on the books
of the Corporation by the holder thereof in person or by duly authorized
attorney upon surrender of this certificate properly endorsed. This
certificate is not valid unless countersigned by the Transfer Agent.
Witness, the facsimile signatures of its duly authorized officers.
Dated:
/s/ Julie F. Williams /s/ Walter P. Stern
Secretary Chairman of the Board
COUNTERSIGNED
AMERICAN FUNDS SERVICE COMPANY
TRANSFER AGENT
BY
AUTHORIZED SIGNATURE
- -------------------------------------------------------------------------------
PLEASE DETACH AND DISCARD UNLESS CHANGES ARE REQUIRED
CERTIFICATE FUNDAMENTAL INVESTORS, INC.
NUMBER SHARES
ACCOUNT NO. ALPHA CODE DEALER NUMBER TRADE DATE
CHANGE NOTICE: IF THE ABOVE INFORMATION IS INCORRECT OR MISSING, PLEASE
PRINT THE CORRECT INFORMATION BELOW AND RETURN TO:
TAXPAYER I.D. NUMBER
EXPLANATION OF ABBREVIATIONS
* The following abbreviations, when used in the registration on the face of
this certificate, shall have the meanings assigned below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ADM --Administratrix FBO --For the TTEE --Trustee
--Administrator benefit of
COM --Community GDN --Guardian U/A --Under
PROP Property Agreement
CUST --Custodian JT TEN --Joint tenants UGMA/ --Gift to minors
with right (State) act in effect in
of survivorship the state
indicated
DTD --Dated LIFE --Life tenant UTMA/ (State) --Transfers to
TEN minors act in
effect in the
state indicated
EST --Estate TR --Trust U/W --Last will and
--Of Estate of testament
--Under last
will and
testament of
--Of will of
--Under the will
of
--Of the will of
ET AL --(and) Others TEN --Tenants in
COM common
EXEC --Executor TEN --Tenants by
--Executrix ENT the entireties
</TABLE>
Note: Abbreviations refer where appropriate to the singular or plural, male or
female. Other abbreviations may also be used, including U.S. Post Office
Department two-letter state abbreviations.
THE CORPORATION WILL FURNISH TO ANY SHAREHOLDER UPON REQUEST AND WITHOUT CHARGE
A FULL STATEMENT OF THE DESIGNATIONS, PREFERENCES, LIMITATIONS AND RELATIVE
RIGHTS OF THE SHARES OF EACH CLASS AUTHORIZED TO BE ISSUED. THE VARIATIONS IN
THE RELATIVE RIGHTS AND PREFERENCES BETWEEN THE SHARES OF EACH SERIES OF SHARES
OF THE CORPORATION SO FAR AS THE SAME HAVE BEEN FIXED AND DETERMINED, AND THE
AUTHORITY OF THE BOARD OF DIRECTORS TO FIX AND DETERMINE THE RELATIVE RIGHTS
AND PREFERENCES OF CLASSES AND SERIES OF THE SHARES OF THE CORPORATION. SUCH
REQUEST MAY BE MADE TO THE SECRETARY OF THE CORPORATION.
NOTE: AS STATED IN THE FUND'S ARTICLES OF INCORPORATION, THIS CERTIFICATE
REPRESENTING SHARES OF CAPITAL STOCK OF THE CORPORATION MAY BE REDEEMED WITHOUT
THE CONSENT OR APPROVAL OF THE SHAREHOLDER FOR THE THEN CURRENT NET ASSET VALUE
PER SHARE IF AT SUCH TIME THE SHAREHOLDER OWNS OF RECORD SHARES HAVING AN
AGGREGATE NET ASSET VALUE OF LESS THAN THE MINIMUM INITIAL INVESTMENT AMOUNT.
REQUIREMENTS: THE SIGNATURE(S) ON THIS ASSIGNMENT MUST CORRESPOND EXACTLY WITH
THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR.
SIGNATURE(S) MUST BE GUARANTEED BY AN "ELIGIBLE GUARANTOR" INCLUDING A BANK OR
SAVINGS AND LOAN ASSOCIATION THAT IS FEDERALLY INSURED OR A MEMBER FIRM OF THE
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. A NOTARY PUBLIC IS NOT AN
ACCEPTABLE GUARANTOR.
For value received, the undersigned hereby sell, assign, and transfer
shares of capital stock represented by this certificate to:
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
and do hereby irrevocably constitute and appoint
attorney to transfer the said stock on the books of the corporation with full
power of substitution.
Dated:
Owner
Signature of Co-Owner, if any
IMPORTANT: BEFORE SIGNING, PLEASE READ AND COMPLY WITH REQUIREMENTS PRINTED
ABOVE.
Signatures(s) guaranteed by:
INVESTMENT ADVISORY AND SERVICE AGREEMENT
AGREEMENT, made as of this 1st day of December, 1991, by and between
FUNDAMENTAL INVESTORS, INC., a Maryland corporation (the "Fund"), and CAPITAL
RESEARCH AND MANAGEMENT COMPANY, a Delaware corporation (the "Adviser").
1. The Fund hereby employs the Adviser to furnish advice to the Fund with
respect to the investment and reinvestment of the assets of the Fund. The
Adviser hereby accepts such employment and agrees to render the services and to
assume the obligations to the extent herein set forth, for the compensation
herein provided. The Adviser shall, for all purposes herein, be deemed an
independent contractor and not an agent of the Fund.
2. The Adviser agrees to provide supervision of the portfolio of the Fund
and to determine what securities or other property shall be purchased or sold
by the Fund, giving due consideration to the policies of the Fund as expressed
in the Fund's Articles of Incorporation, By-Laws, Registration Statement under
the Investment Company Act of 1940 (the "1940 Act"), Registration Statement
under the Securities Act of 1933, and prospectus as in use from time to time,
as well as to the factors affecting the Fund's status as a regulated investment
company under the Internal Revenue Code.
The Adviser shall provide adequate facilities and qualified personnel for the
placement of orders for the purchase, or other acquisition, and sale, or other
disposition, of portfolio securities for the Fund. With respect to such
transactions, the Adviser, subject to such directions as may be furnished from
time to time by the Board of Directors of the Fund, shall endeavor as the
primary objective to obtain the most favorable prices and executions of orders.
Subject to such primary objective, the Adviser may place orders with brokerage
firms which have sold shares of the Fund or which furnish statistical and other
information to the Adviser, taking into account the value and quality of the
brokerage services of such broker-dealers, including the availability and
quality of such statistical and other information. Receipt by the Adviser of
any such statistical and other information and services shall not be deemed to
give rise to any requirement for abatement of the advisory fee payable pursuant
to Section 5.
3. The Adviser shall furnish the services of persons to perform the
executive, administrative, clerical, and bookkeeping functions of the Fund,
including the daily determination of net asset value and offering price per
share. The Adviser shall pay the compensation and travel expenses of all such
persons, and they shall serve without additional compensation from the Fund.
The Adviser shall also, at its expense, provide the Fund with suitable office
space (which may be in the offices of the Adviser); all necessary small office
equipment and utilities; and general purpose accounting forms, supplies, and
postage used at the offices of the Fund.
4. The Fund shall pay all its expenses not assumed by the Adviser as
provided herein. Such expenses shall include, but shall not be limited to,
custodian, registrar, stock transfer and dividend disbursing fees and expenses;
costs of the designing, printing and mailing of reports, prospectuses, proxy
statements, and notices to its shareholders; taxes; expenses of the issuance
and redemption of shares of the Fund (including stock certificates,
registration and qualification fees and expenses); legal and auditing expenses;
compensation, fees, and expenses paid to directors; association dues; costs of
stationery and forms prepared exclusively for the Fund; and costs of assembling
and storing shareholder account data.
5. The Fund shall pay to the Investment Adviser on or before the tenth day
of each month, as compensation for the services rendered by the Investment
Adviser during the preceding month, a fee ("Investment Advisory fee") based on
the following annual rates:
.39% on the first $800 million of net assets
.336% on net assets from $800 million to $1.8 billion
.30% on net assets from $1.8 billion to $3.0 billion
.276% on net assets exceeding $3.0 billion
The Investment Advisory fee shall be accrued daily on the basis of the number
of calendar days in each year, by computing the net asset value of the Fund, in
the manner provided by its Articles of Incorporation, as at the close of the
New York Stock Exchange on each day on which said Exchange is open, and in the
case of days on which said Exchange shall not be open, as at the close of the
last preceding day on which said Exchange shall have been open.
Upon any termination of this Agreement on a day other than the last day of the
month in which termination occurs, the fee for such month of termination shall
be the amount accrued up to the time of termination.
6. The Adviser agrees to reduce the fee payable to it under this Agreement
by the amount by which the ordinary operating expenses of the Fund for any
fiscal year of the Fund, excluding interest, taxes and extraordinary expenses,
shall exceed one percent of the average net assets of the Fund determined
pursuant to Section 5. Costs incurred in connection with the purchase or sale
of portfolio securities, including brokerage fees and commissions, which are
capitalized in accordance with generally accepted accounting principles
applicable to investment companies, shall be accounted for as capital items and
not as expenses. Proper accruals shall be made by the Fund for any projected
reduction hereunder and corresponding amounts shall be withheld from the fees
paid by the Fund to the Adviser. Any additional reduction computed at the end
of the fiscal year shall be deducted from the fee for the last month of such
fiscal year, and any excess shall be paid to the Fund immediately after the
fiscal year end, and in any event prior to the publication of the Fund's annual
report, as a reduction of the fees previously paid during the fiscal year.
7. Nothing contained in this Agreement shall be construed to prohibit the
Adviser from performing investment advisory, management, or distribution
services for other investment companies and other persons or companies, or to
prohibit affiliates of the Adviser from engaging in such businesses or in other
related or unrelated businesses.
8. The Adviser agrees that neither it nor any of its officers or directors
will take any long or short position in the capital stock of the Fund, except
that it or they may purchase shares of such capital stock for investment at the
price at which such shares are available to the public at the moment of
purchase.
9. The Adviser shall have no liability to the Fund, or its shareholders, for
any error of judgment, mistake of law, or for any loss arising out of any
investment, or for any other act or omission in the performance of its
obligations to the Fund not involving willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties hereunder.
10. This Agreement shall continue in effect until the close of business on
March 31, 1993. It may thereafter be renewed from year to year by mutual
consent, provided that such renewal shall be specifically approved at least
annually by (i) the Board of Directors of the Fund, or by the vote of a
majority of the outstanding shares of the Fund, and (ii) a majority of those
directors who are not parties to this 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 approval. Such mutual consent to renewal
shall not be deemed to have been given unless evidenced by a writing signed by
both parties hereto.
11. This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Directors of the Fund or by the vote of a majority of
the outstanding shares of the Fund, on sixty days' written notice to the
Adviser, or by the Adviser on like notice to the Fund. This Agreement may not
be amended, transferred, assigned, sold, or in any manner hypothecated or
pledged, without the affirmative vote or written consent of the holders of a
majority of the outstanding shares of the Fund, and it shall automatically
terminate in the event of its assignment (as defined in the 1940 Act).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate originals by their officers thereunto duly authorized as
of the day and year first above written.
CAPITAL RESEARCH AND MANAGEMENT COMPANY
FUNDAMENTAL INVESTORS, INC.
By: ________________________________ By: ________________________________
Walter P. Stern, Paul G. Haaga, Jr.,
Chairman of the Board Senior Vice President
By: ________________________________ By: ________________________________
Isabelle V. Lindskoog, Thomas E. Terry,
Secretary Vice President and Secretary
PRINCIPAL UNDERWRITING AGREEMENT
This PRINCIPAL UNDERWRITING AGREEMENT, between FUNDAMENTAL INVESTORS, INC., a
Maryland corporation (the "Fund"), and AMERICAN FUNDS DISTRIBUTORS, INC., a
California corporation ("AFD");
W I T N E S S E T H:
WHEREAS, the Fund is registered under the Investment Company Act of 1940, as
amended to date (the "1940 Act"), as an open-end investment company and it is a
part of the business of the Fund, and affirmatively in the interest of the
Fund, to offer its shares for sale, either continuously, or from time to time
by means of such arrangements as are determined by its Directors to be
appropriate; and
WHEREAS, AFD is engaged in the business of promoting the distribution of
shares of investment companies through securities dealers; and
WHEREAS, the Fund and AFD wish to enter into an Agreement with each other to
promote the distribution of the Fund's shares;
NOW, THEREFORE, the parties agree as follows:
1. (a) AFD shall be the exclusive principal underwriter for the sale of shares
of the Fund, except as otherwise provided pursuant to the following subsection
(b). The terms "shares of Fund" or "shares" as used herein shall mean shares
of common stock issued by the Fund.
(b) The Fund may, upon sixty (60) days' written notice to AFD, from time to
time designate other principal underwriters of its shares with respect to areas
other than the North American continent, Hawaii, Puerto Rico, and such
countries or other jurisdictions as to which the Fund may have expressly waived
in writing its right to make such designation. In the event of such
designation, the right of AFD under this Agreement to sell shares in the areas
so designated shall terminate, but this Agreement shall remain otherwise in
full effect until terminated in accordance with the other provisions hereof.
2. In the sale of shares of the Fund, AFD shall act as agent of the Fund
except in any transaction in which AFD sells such shares as a dealer to the
public, in which event AFD shall act as principal for its own account.
3. The Fund shall sell shares only through AFD, except that the Fund may, to
the extent permitted by the 1940 Act and the rules and regulations promulgated
thereunder or pursuant thereto, at any time:
(a) issue shares to any corporation, association, trust, partnership or other
organization, or its, or their security holders, beneficiaries or members, in
connection with a merger, consolidation or reorganization to which the Fund is
a party, or in connection with the acquisition of all or substantially all the
property and assets of such corporation, association, trust, partnership or
other organization;
(b) issue shares at net asset value to the holders of shares of capital stock
or beneficial interest of other investment companies served as investment
adviser by any affiliated company or companies of The Capital Group, Inc., to
the extent of all or any portion of amounts received by such stockholders upon
redemption or repurchase of their shares by the other investment companies;
(c) issue shares at the net asset value to its shareholders in connection with
the reinvestment of dividends and other distributions made by the Fund;
(d) issue shares at net asset value to directors, officers, and employees of
the Fund, its Investment Adviser, any principal underwriter of the Fund, and
their affiliates, including any trust, pension, profit-sharing or other benefit
plan established for such persons, and to other persons as permitted by
applicable rules adopted by the Securities and Exchange Commission (the
"Commission") under the 1940 Act, as in effect from time to time, or pursuant
to any exemptive Order received by the Fund from the Commission pursuant to
Section 6(c) of the 1940 Act;
(e) issue shares at net asset value to the sponsor organization, custodian, or
depositary of a periodic or single payment plan, or similar plan for the
purchase of shares of the Fund, purchasing for such plan;
(f) issue shares in the course of any other transaction specifically provided
for in the Prospectus of the Fund (as defined in Section 5 hereof) or upon
obtaining the written consent of AFD thereto; and
(g) sell shares outside of the North American continent, Hawaii and Puerto
Rico through such other principal underwriter or principal underwriters as may
be designated from time to time by the Fund, pursuant to Section 1 hereof.
4. AFD shall devote its best efforts to the sale of shares of the Fund and
shares of any other mutual funds served as investment adviser by affiliated
companies of The Capital Group, Inc., for which AFD has been authorized to act
as a principal underwriter for the sale of shares. AFD shall maintain a sales
organization suited to the sale of shares of the Fund and shall use its best
efforts to effect such sales in countries as to which the Fund shall have
expressly waived in writing its right to designate another principal
underwriter pursuant to Section 1(b) hereof, and shall effect and maintain
appropriate qualification to do so in all those jurisdictions in which it sells
or offers shares for sale and in which qualification is required.
5. AFD shall offer and sell shares only to such dealers as are duly licensed
and qualified to sell shares of the Fund. Shares sold to dealers shall be for
resale by such dealers only at the public offering price set forth in the
effective Prospectus which is part of the Fund's Registration Statement in
effect under the Securities Act of 1933, as amended, at the time of such offer
or sale (herein the "Prospectus"). AFD may sell shares to dealers at such
discounts from said public offering price (or subject to such commissions) as
are set forth in the Prospectus, and/or in the Selling Group Agreement between
AFD and the dealer, but neither such discounts nor commissions shall exceed the
sales charge or discounts referred to in the Prospectus. AFD shall not without
the consent of the Fund sell or offer for sale any shares of the Fund other
than as principal underwriter under this Agreement.
6. In its sales to dealers, it shall be the responsibility of AFD to insure
that such dealers are appropriately qualified to transact business in
securities under applicable laws, rules and regulations promulgated by such
national, state, local, or other governmental or quasi-governmental authorities
as may in a particular instance have jurisdiction.
7. The applicable public offering price of shares shall be the price which is
equal to the net asset value per share plus such sales charge as may be
provided for in the Prospectus. Net asset value per share shall be determined
by the Fund in the manner and at the time or times set forth in and subject to
the provisions of the Prospectus of the Fund.
8. All orders for shares received by AFD shall, unless rejected by AFD or the
Fund, be accepted by AFD immediately upon receipt and confirmed at an offering
price determined in accordance with the provisions of the Prospectus and the
1940 Act, and applicable rules in effect thereunder. AFD shall not hold orders
subject to acceptance nor otherwise delay their execution. The provisions of
this Section shall not be construed to restrict the right of the Fund to
withhold shares from sale under Section 16 hereof.
9. The Fund or its transfer agent shall be promptly advised of all orders
received, and shall cause shares to be issued upon payment therefor in New York
or Los Angeles Clearing House Funds.
10. AFD shall adopt and follow procedures as approved by the officers of the
Fund for the confirmation of sales to dealers, the collection of amounts
payable by dealers on such sales, and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements of the
National Association of Securities Dealers, Inc. ("NASD"), as such requirements
may from time to time exist.
11. The compensation for the services of AFD as a principal underwriter under
this Agreement shall be (i) that part of the sales charge which is retained by
AFD after allowance of discounts to dealers as set forth in the effective
prospectus which is part of the Fund's Registration Statement in effect under
the Securities Act of 1933, as amended, and (ii) amounts payable to AFD as
reimbursement of expenses pursuant to the Fund's Plan of Distribution under
Rule 12b-1 under the 1940 Act, payable in arrears as of the 10th day following
each month-end.
12. The Fund agrees to use its best efforts to maintain its registration as a
diversified open-end management investment company under the 1940 Act.
13. The Fund agrees to use its best efforts to maintain an effective
Prospectus under the Securities Act of 1933, as amended, and warrants that such
Prospectus will contain all statements required by and will conform with the
requirements of such Securities Act of 1933 and the rules and regulations
thereunder, and that no part of any such Prospectus, at the time the
Registration Statement of which it is a part is ordered effective, will contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein not
misleading. AFD agrees and warrants that it will not in the sale of shares use
any Prospectus, advertising or sales literature not approved by the Fund or its
officers nor make any untrue statement of a material fact nor omit the stating
of a material fact necessary in order to make the statements made, in the light
of the circumstances under which they are made, not misleading. AFD agrees to
indemnify and hold the Fund harmless from any and all loss, expense, damage and
liability resulting from a breach of the agreements and warranties in this
Section contained, or from the use of any sales literature, information,
statistics or other aid or device employed in connection with the sale of
shares.
14. The expense of each printing of each Prospectus and each revision thereof
or addition thereto deemed necessary by the Fund's officers to meet the
requirements of applicable laws shall be divided between the Fund, AFD and any
other principal underwriter of the shares of the Fund as follows:
(a) the Fund shall pay the typesetting and make-ready charges;
(b) the printing charges shall be prorated between the Fund, AFD, and any
other principal underwriter(s) in accordance with the number of copies each
receives; and
(c) expenses incurred in connection with the foregoing, other than to meet the
requirements of the Securities Act of 1933, as amended, or other applicable
laws, shall be borne by AFD, except in the event such incremental expenses are
incurred at the request of any other principal underwriter(s) making the
request.
15. The Fund agrees to use its best efforts to qualify and maintain the
qualification of an appropriate number of its shares for sale under the
securities laws of such states as AFD and the Fund may approve. Any such
qualification may be withheld, terminated or withdrawn by the Fund at any time
in its discretion. The expense of qualification and maintenance of
qualification shall be borne by the Fund, but AFD shall furnish such
information and other material relating to its affairs and activities as may be
required by the Fund or its counsel in connection with such qualifications.
16. The Fund may withhold shares from sale in any state or country temporarily
or permanently if, in the opinion of its counsel such offer or sale would be
contrary to law or if the Directors or the President or any Vice President of
the Fund determines that such offer or sale is not in the best interest of the
Fund. The Fund will give prompt notice to AFD of any withholding by reason of
non-delivery of shares after a good faith confirmation by AFD of sales thereof
prior to receipt of notice of such withholding.
17. (a) This Agreement may be terminated by the Fund at any time, without
payment of any penalty, by vote of a majority of the Directors of the Fund who
are not "interested persons" of the Fund (as defined in the 1940 Act) and have
no direct or indirect financial interest in the operation of the Fund's Plan of
Distribution under rule 12b-1 under the 1940 Act or any agreement related to
such Plan (the "Qualified Directors") or by vote of a majority of the
outstanding voting securities of the Fund on sixty (60) days' written notice to
AFD.
(b) This Agreement may be terminated by either party upon five (5) days'
written notice to the other party in the event that the Commission has issued
an Order or obtained an injunction or other court order suspending
effectiveness of the Registration Statement covering the shares of the Fund.
(c) This Agreement may be terminated by the Fund, in the manner provided in
Section 17 (a) hereof, upon five (5) days' written notice to AFD provided
either of the following events has occurred:
(i) the NASD has expelled AFD or suspended its membership in that
organization;
(ii) the qualification, registration, license or right of AFD to sell shares
in a particular state has been suspended or cancelled by the State of
California or any other state in which sales of the shares of the Fund during
the most recent twelve-month period exceeded 10% of all shares of the Fund sold
by AFD during such period.
AFD shall inform the Fund promptly of the institution of any proceedings
against it by the Commission, the NASD, or any state regulatory authority.
18. This Agreement shall not be assignable by either party hereto and in the
event of assignment shall automatically terminate forthwith. The term
"assignment" shall have the meaning defined in the 1940 Act.
19. No provision of this Agreement shall protect or purport to protect AFD
against any liability to the Fund or holders of its shares for which AFD would
otherwise be liable by reason of willful misfeasance, bad faith, or gross
negligence.
20. This Agreement becomes effective on May 1, 1990. Unless sooner
terminated in accordance with the other provisions hereof, this Agreement shall
continue in effect until March 31, 1991, and shall continue in effect from year
to year thereafter, but only so long as such continuance is specifically
approved at least annually by (i) the vote of a majority of the Qualified
Directors of the Fund cast in person at a meeting called for the purpose of
voting on such approval, and (ii) the vote of either the Board of Directors of
the Fund or a majority (within the meaning of the 1940 Act) of the outstanding
voting securities of the Fund.
21. This Agreement shall be construed under and shall be governed by the laws
of the State of California, and the parties hereto agree that proper venue of
any action with respect hereto shall be Los Angeles County, California.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in duplicate original by their officers thereunder duly authorized as
of May 1, 1990.
AMERICAN FUNDS DISTRIBUTORS, INC. FUNDAMENTAL INVESTORS, INC.
By: By:
E. Graham Holloway, Chairman James W. Ratzlaff, President
By: By:
James R. Zukor, Secretary Isabelle V. Lindskoog, Secretary
American Funds Distributors(sm)
American Funds Distributors
333 South Hope Street
Los Angeles, California 90071
Telephone 800/421-9900; ext. 11
SELLING GROUP AGREEMENT
Gentlemen:
We have entered into principal underwriting agreements with each of the Funds
in The American Funds Group (hereafter called the "Companies") under which we
are appointed exclusive agent for the respective Companies for the sale of
their shares. As such agent we offer to sell to you as a member of a Selling
Group, shares of such of the Companies as are qualified for sale in your state,
on the terms set forth below. We are acting as an underwriter within the
meaning of Article 111, Section 26 of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc.
You are to offer and sell shares only at the regular public price currently
determined by the respective Companies in the manner described in their
offering Prospectuses. This Agreement on your part runs to us and to the
respective Companies and is for the benefit of and enforceable by each. The
offering Prospectuses and this Agreement set forth the terms applicable to
members of the Selling Group and all other representations or documents are
subordinate.
2. On sales of shares of Companies listed in Category I on the attached
Schedule A you will be paid dealer commissions as follows:
<TABLE>
<CAPTION>
SALES DEALER SALES
COMMISSION CHARGE
AS PERCENTAGE OF AS PERCENTAGE OF
THE OFFERING PRICE THE OFFERING PRICE
<S> <C> <C>
Less than $50,000 5.00% 5.75%
$50,000 but less than 3.75% 4.50%
$100,000
$100,000 but less than $250,000 2.75% 3.50%
$250,000 but less than $500,000 2.00% 2.50%
$500,000 but less than S1,000,000 1.60% 2.00%
$1,000,000 or more see below none
</TABLE>
If you initiate and are responsible for sales of shares a) amounting to $1
million or more or b) made at net asset value to retirement plans of
organizations with collective retirement plan assets of $100 million or more,
you will be paid a dealer commission of 1.00% on sales to $2 million, plus
0.80% on amounts over $2 million up to $3 million, plus 0.50% on amounts over
$3 million up to $50 million, plus 0.25% on amounts over $50 million up to $100
million, plus 0. 15% on amounts over $100 million. For each account of a
shareholder of the respective Companies (and accounts related by the fight of
accumulation), only such net asset value sales made over a 12 month period
(commencing from the date of the first such sale) will be considered for
purposes of determinin the level of dealer commissions to be paid during that
period with respect to such account(s). No dealer commissions are paid on any
other sales of shares at net asset value, except that commissions may be paid
to dealers on their sales of fund shares to accounts managed by affiliates of
The Capital Group, Inc. as set forth in this Agreement. Sales of shares of
Washington Mutual Investors Fund below $1 million made in connection with
certain accounts established prior to September 1, 1969 are subject to reduced
dealer commissions and sales charges as described in the Washington Mutual
Investors Fund Prospectus.
The schedule of sales charges above applies to single purchases, concurrent
purchases of two or more of the Companies (except those listed in Category 3 on
the attached Schedule A). and purchases made under a statement of intention and
pursuant to the right of accumulation. both of which are described in the
Prospectuses.
3. On sales of shares of Companies listed in Category 2 on the attached
Schedule A you will be paid the same dealer commissions indicated in paragraph
2 above except as follows:
<TABLE>
<CAPTION>
SALES DEALER SALES
COMMISSION CHARGE
AT PERCENTAGE OF AT PERCENTAGE OF
THE OFFERING PRICE THE OFFERING PRICE
<S> <C> <C>
Less than $25,000 4.00% 4.75%
$25,000 but less than $50,000 3.75% 4.50%
$50,000 but less than $100,000 3.25% 4.00%
</TABLE>
With respect to sales of shares of any tax-exempt fund, the commission schedule
for sales of shares to retirement plans of organizations with assets of $100
million or more is inapplicable.
4. On sales of shares of Companies listed in Category 3 on the attached
Schedule A no dealer commissions
will be paid.
5. We are also authorized to pay you continuing service fees with respect to
the shares of all the Companies to promote selling efforts and to compensate
you for providing certain services for your clients such as processing purchase
and redemption transactions, establishing shareholder accounts and providing
certain information and assistance with respect to the Companies, provided you
meet certain service-related criteria and have executed a "Supplemental Selling
Group Agreement" available from us upon request.
6. Any order by you for the purchase of shares of the respective Companies
through us shall be accepted at the time when it is received by us (or any
clearinghouse agency that we may designate from time to time), and at the
offering and sale price next determined, unless rejected by us or the
respective Companies. In addition to the right to reject any order, the
Companies have reserved the right to withhold shares from sale temporarily or
permanently. We will not accept any order from you which is placed on a
conditional basis or subject to any delay or contingency prior to execution.
The procedure relating to the handling of orders shall be subject to
instructions which we shall forward from time to time to all members of the
Selling Group. The shares purchased will be issued by the respective Companies
only against receipt of the purchase price, in collected New York or Los
Angeles Clearging House funds subject to deduction of all commissions on such
sale (reallowance of any commissions to which you are entitled on purchases at
net asset value will be paid through our direct purchase commission system).
If payment for the shares purchased is not received within seven days after the
date of confirmation the sale may be canceled forthwith, by us or by the
respective Companies, without any responsibility or liability on our part or on
the part of the Companies, and we and/or the respective Companies may hold you
responsible for any loss, expense, liability or damage, including loss of
profit suffered by us and/or the respective Companies resulting from your delay
or failure to make payment as aforesaid.
7. You are obliged to date and time stamp all orders received by you and
promptly to transmit all orders to us in time to provide for processing at the
price next determined after receipt by you, in accordance with the
Prospectuses. You are not to withhold placing with us orders received from any
customers for the purchase of shares so as to profit yourself as a result of
such withholding. You shall not purchase shares through us except for the
purpose of covering purchase orders already received by you, or for your bona
fide investment.
8. If any share is repurchased by any of the respective Companies or is
tendered thereto for redemption within seven business days after confirmation
by us of the original purchase order from you for such security you shall
forthwith refund to us the full commissions paid to vou on the original sale.
9. You shall not, if acting as principal, purchase any share of any of the
respective Companies from a record holder at a price lower than the net asset
value next determined by or for the respective Companies' shares. You shall,
however. be permitted to sell any shares for the account of a shareholder of
the respective
Companies at the net asset value currently quoted by or for the respective
Companies' shares, and may charge a fair service fee for handling the
transaction provided you disclose the fee to the record owner.
10. We shall furnish you without charge reasonable quantities of offering
Prospectuses, with any supplements currently in effect, and copies of current
shareholder reports of the respective Companies, and sales materials issued by
us from time to time. In the purchase of shares through us, you are entitled
to rely only on the information contained in the offering Prospectus(es). You
may not publish any advertisement or distribute sales literature or other
written material to the public which makes reference to us or any of the
Companies (except material which we furnished to you) without our prior written
approval.
11. This Agreement is in all respects subject to statements regarding the sale
and repurchase or redemption of shares made in the offering Prospectuses of the
respective Companies, and to the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., which shall control and override any
provision to the contrary in this Agreement.
12. You shall make available shares of the respective Companies only through
us. In no transaction (whether of purchase or sale) shall you have any
authority to act as agent for, partner of, or participant in a joint venture
with us or with the respective Companies or any other entity having, either a
Selling Group Agreement or other Agreement with us.
13. We act solely as agent for the Companies, and are not responsible for
qualifying the Companies or their shares for sale IN any jurisdiction. Upon
written request we will provide you with a list of the jurisdictions in which
the respective Companies or their shares are qualified for sale. We also are
not responsible for the issuance, form, validity, enforceability or value of
shares of the Companies.
14. You represent that you are a properly registered or licensed broker or
dealer under applicable federal and state securities laws and regulations and a
member in good standing of the National Association of Securities Dealers,
Inc., and agree to notify us immediately if you cease to be so registered or
licensed or a member in good standing of that Association. (The provisions of
the preceding sentence do not apply to a broker or dealer located in a foreign
country and doing business outside the jurisdiction of the United States.)
15. Either of us may cancel this Agreement at any time by written notice to the
other.
16. All communications to us should be sent to the above address. Any notice
to you shall be duly given if
mailed or telegraphed to you at the address specified by you below.
Execute this Agreement in duplicate and return one of the duplicate originals
to us for our file. This Agreement (I) may be amended by notification from us
and orders received following such notification shall be deemed to be an
acceptance of any such amendment and (ii) shall be construed in accordance with
the laws of the State of California.
Accepted: Very truly yours,
- ----------------
Firm AMERICAN FUNDS DISTRIBUTORS, INC.
By------------- By /s/ Mark Freeman
Officer or Partner
--------------
Print Name of Officer or Partner
Address:-----
Date:--------
(06/96)
SCHEDULE A
SEPTEMBER 26, 1994
(SUPERSEDES SCHEDULE A DATED
OCTOBER 5, 1993)
CATEGORY 1
AMCAP Fund
American Balanced Fund
American Mutual Fund
Capital Income Builder
Capital World Growth and Income Fund
EuroPacific Growth Fund
Fundamental Investors
Growth Fund of America
Income Fund of America
Investment Company of America
New Economy Fund
New Perspective Fund
SMALLCAP World Fund
Washington Mutual Investors Fund
CATEGORY 2
American High-Income Trust
American High-Income Municipal Bond Fund
Bond Fund of America
Capital World Bond Fund
Intermediate Bond Fund of America
Limited Term Tax-Exempt Bond Fund of America
Tax-Exempt Bond Fund of America
Tax-Exempt Fund of California
Tax-Exempt Fund of Maryland
Tax-Eempt Fund of Virginia
U.S. Government Securities Fund
CATEGORY 3
Cash Management Trust of America
Tax-Exempt Money Fund of America
U.S. Treasury Money Fund of America
American Funds Distributors(sm)
American Funds Distributors
333 South Hope Street
Los Angeles, California 90071
Telephone 800/421-9900; ext. 11
HOLD HARMLESS AGREEMENT
WHEREAS, (the "Employer") is eligible to establish a 403(b) custodial account
for its employees pursuant to Section 403(b)(7)(A) of the Internal Revenue Code
("Code"); and
WHEREAS, Section 403(b)(7) of the Code provides that amounts paid by an
eligible employer to a custodial account which satisfies the requirements of
Section 401(f)(2) of the Code shall be treated as amounts contributed by the
Employer for an annuity contract (as described in Section 403(b) of the Code)
for the employee if the amounts are to be paid to provide a retirement benefit
for that employee and are to be invested in shares of regulated investment
companies to be held in that custodial account; and
WHEREAS, the Employer desires to make available to its employees custodial
accounts eligible to comply with Section 403(b)(7) of the Code; and
WHEREAS, the Employer is willing to permit its employees to select AMCAP Fund,
Inc., American Balanced Fund, Inc., American High-Income Trust, American Mutual
Fund, Inc., The Bond Fund of America, Inc., Capital Income Builder, Inc.,
Capital World Bond Fund, Inc., Capital World Growth and Income Fund, Inc., The
Cash Management Trust of America, EuroPacific Growth Fund, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America,
Inc., Inter-mediate Bond Fund of America, The Investment Company of America,
The New Economy Fund, New Perspective Fund, Inc., SMALLCAP World Fund, Inc.,
U.S. Government Securities Fund, The U.S. Treasury Money Fund of America, and
Washington Mutual Investors Fund, Inc., each of which is a regulated investment
company advised by Capital Research and Management Company ("Investment
Companies"); and
WHEREAS, American Funds Distributors, Inc. is the principal underwriter for
each of the Investment Companies; and
WHEREAS, the Investment Companies are regulated investment companies within the
meaning of Sections 403(b)(7)(C) and 851(a) of the Code; and
WHEREAS, the Investment Companies are described as regulated investment
companies in their current Prospectuses declared effective under the Securities
Act of 1933; and
WHEREAS, the Investment Companies are authorized for sale in all 50 states; and
WHEREAS, Capital Guardian Trust Company, a bank, shall be the custodian, within
the meaning of Section 401(f)(2), of the custodial accounts; and
WHEREAS, the Investment Companies are offered to the public by independent
broker-dealers;
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. The Investment Companies are eligible investments for 403(b) custodial
accounts.
2. If any of such Investment Companies should no ton,,er be a regulated
investment company, or permitted to be offered for sale under the securities
laws of the United States or any state, American Funds Distributors, Inc. will
inform the Employer and such Investment Companies will immediately cease
accepting investments from the employees.
3. American Funds Distributors, Inc. shall comply with all pertinent written
directives regarding the solicitation of employees and the purchase of
investment company shares.
4. Capital Research and Management Company, the Investment Companies and
American Funds Distributors, Inc. are not and shall not be regarded as the
agent or employee of the Employer, of the Board of Education of the Employer,
or any Board member individually, or of any officer, agent or employee of any
of the foregoing, or of any legal successor of any of the foregoing, or of any
combination thereof.
Neither the Employer, the Board, any Board members individually, the officers,
agents and employees of any of the foregoing, the legal successors of any of
the foregoing, nor any combination thereof are or shall be regarded as the
agents or employees of Capital Research and Management Company, the Investment
Companies or American Funds Distributors, Inc.
5. Payments for the purchase of shares of the Investment Companies shall be
sent to Capital Guardian Trust Company, at the address indicated on the 403(b)
account application or to such other address as may be designated in writing to
the Employer.
6. Any notice to the Employer shall be in duplicate and sent to:
- -------------------------------------------------------------
- -------------------------------------------------------------
Notices to the Investment Companies or American Funds Distributors, Inc. shall
be sent to 135 South State College Boulevard, Brea, CA 92621, Attention: Dealer
Support Department.
7. American Funds Distributors, Inc. or any Investment Company reserves the
right upon 30 days' written notice to the Employer, to discontinue making such
shares available for purchase by the Employer or the employees of the Employer.
Such termination shall in no manner affect any rights of the Employer incurred
prior to such termination.
8. The Employer reserves the right upon 30 days' written notice to American
Funds Distributors, Inc. or any Investment Company, to terminate this agreement
or any other agreement in which this agreement might be or is incorporated, but
such termination shall in no manner affect any rights of the Employer incurred
prior to such termination.
9. No alteration or variation of the terms of this agreement shall be valid
unless made in writing and signed by the
parties hereto.
10. American Funds Distributors, Inc. hereby agrees to hold Employer harmless
for any loss sustained by Employer
by virtue of the breach of this agreement by American Funds Distributors, Inc.
11. This agreement supersedes and replaces any and all such agreements
heretofore executed by the parties.
AMERICAN FUNDS DISTRIBUTORS, INC.
Print Name of Employer
By /s/ Mark F. Freeman
By
Title
Date
[American Funds Distributors(SM) logo]
American Funds Distributors
- ------------------------------------------------------------------------------
- --------------------------------------
333 South Hope Street - Los Angeles, California 90071
Telephone 800/421-9900, ext. 11
BANK SELLING GROUP AGREEMENT
Gentlemen:
We have entered into principal underwriting agreements with each of the Funds
in The American Funds Group (hereafter called the "Companies") under which we
are appointed exclusive agent for the respective Companies for the sale of
their shares. You have indicated that you wish to act as agent for your
customers in connection with the purchase, sale and redemption of shares of
such Companies as are qualified for sale in your state. We agree to honor your
request, subject to the terms set forth below.
1. In placing orders for the purchase and sale of shares of the Companies,
you will be acting as agent for your customers. We shall execute transactions
for each of your customers only upon your authorization, at the regular public
price currently determined by the respective Companies in the manner described
in their offering Prospectuses. This Agreement on your part runs to us and to
the respective Companies and is for the benefit of and enforceable by each.
The offering Prospectuses and this Agreement set forth the terms applicable to
sales of shares of the Companies through you and all other representations or
documents are subordinate.
2. On each order for shares of Companies listed in Category 1 on the attached
Schedule A that is accepted by us, you will be entitled to receive the
applicable commission as set forth below:
<TABLE>
<CAPTION>
Purchases Commission as Sales Charge as
Percentage of Percentage of
Offering Price Offering Price
<S> <C> <C>
Less than $50,000 5.00% 5.75%
$50,000 but less than $100,000 3.75% 4.50%
$100,000 but less than $250,000 2.75% 3.50%
$250,000 but less than $500,000 2.00% 2.50%
$500,000 but less than $1,000,000 1.60% 2.00%
$1,000,000 or more see below none
</TABLE>
For purchases a) amounting to $1 million or more or b) made at net asset value
to retirement plans of organizations with collective retirement plan assets of
$100 million or more, you will be paid a commission of 1.00% on sales to $2
million, plus 0.80% on amounts over $2 million up to $3 million, plus 0.50% on
amounts over $3 million up to $50 million, plus 0.25% on amounts over $50
million up to $100 million, plus 0.15% on amounts over $100 million. For each
account of a shareholder of the respective Companies (and accounts related by
the right of accumulation), only such net asset value sales made over a 12
month period (commencing from the date of the first such sale) will be
considered for purposes of determining the level of commissions to be paid
during that period with respect to such account(s). No commissions are paid on
any other sales of shares at net asset value, except that commissions may be
paid on sales of fund shares to accounts managed by affiliates of The Capital
Group, Inc. as set forth in this agreement. Sales of shares of Washington
Mutual Investors Fund below $1 million made in connection with certain accounts
established before September 1, 1969 are subject to reduced commissions and
sales charges as described in the Washington Mutual Investors Fund Prospectus.
The schedule of sales charges above applies to single purchases, concurrent
purchases of two or more of the Companies (except those listed in Category 3 on
the attached Schedule A), and purchases made under a statement of intention and
pursuant to the right of accumulation, both of which are described in the
Prospectuses.
3. On sales of shares of Companies listed in Category 2 on the attached
Schedule A you will be paid the same commissions indicated in paragraph 2 above
except as follows:
<TABLE>
<CAPTION>
Purchases Commission as Sale
Percentage of Charge
Offering Price as Percentage of
Offering Price
<S> <C> <C>
Less than $25,000 4.00% 4.75%
$25,000 but less than $50,000 3.75% 4.50%
$50,000 but less than $100,000 3.25% 4.00%
</TABLE>
With respect to sales of shares of any tax-exempt fund, the commission
schedule for sales of shares to retirement plans of organizations with assets
of $100 million or more is inapplicable.
4. On sales of shares of Companies listed in Category 3 on the attached
Schedule A no commission will be paid.
5. We are also authorized to pay you continuing service fees with respect to
the shares of all the Companies to compensate you for providing certain
services for your clients such as processing purchase and redemption
transactions, establishing shareholder accounts and providing certain
information and assistance with respect to the Companies, provided you meet
certain service-related criteria and have executed a "Supplemental Selling
Group Agreement" available from us upon request.
6. Any order by you for the purchase of shares of the respective Companies
through us shall be accepted at the time when it is received by us (or any
clearinghouse agency that we may designate from time to time), and at the
offering and sale price next determined, unless rejected by us or the
respective Companies. In addition to the right to reject any order, the
Companies have reserved the right to withhold shares from sale temporarily or
permanently. We will not accept any order from you which is placed on a
conditional basis or subject to any delay or contingency prior to execution.
The procedure relating to the handling of orders shall be subject to
instructions which we shall forward from time to time to you. The shares
purchased will be issued by the respective Companies only against receipt of
the purchase price, in collected New York or Los Angeles Clearing House funds
subject to deduction of all commissions on such sale (reallowance of any
commissions to which you are entitled on purchases at net asset value will be
paid through our direct purchase commission system). If payment for the shares
purchased is not received within seven days after the date of confirmation the
sale may be cancelled forthwith, by us or by the respective Companies, without
any responsibility or liability on our part or on the part of the Companies,
and we and/or the respective Companies may hold you responsible for any loss,
expense, liability or damage, including loss of profit suffered by us and/or
the respective Companies resulting from your delay or failure to make payment
as aforesaid.
7. You are obliged to date and time stamp all orders received by you and
promptly to transmit all orders to us in time to provide for processing at the
price next determined after receipt by you, in accordance with the
Prospectuses. You are not to withhold placing with us orders received from any
customers for the purchase of shares so as to profit yourself as a result of
such withholding. You shall not purchase shares through us except for the
purpose of covering purchase orders already received by you, or for your bona
fide investment.
8. If any share is repurchased by any of the respective Companies or is
tendered thereto for redemption within seven business days after confirmation
by us of the original purchase order from you for such security you shall
forthwith refund to us the full commissions paid to you on the original sale.
9. You shall not, if acting as principal, purchase any share of any of the
respective Companies from a record holder at a price lower than the net asset
value next determined by or for the respective Companies' shares. You shall,
however, be permitted to sell any shares for the account of a shareholder of
the respective Companies at the net asset value currently quoted by or for the
respective Companies' shares, and may charge a fair service fee for handling
the transaction provided you disclose the fee to the record owner.
10. We shall furnish you without charge reasonable quantities of offering
Prospectuses, with any supplements currently in effect, and copies of current
shareholder reports of the respective Companies, and sales materials issued by
us from time to time. In the purchase of shares through us, you are entitled
to rely only on the information contained in the offering Prospectus(es). You
may not publish any advertisement or distribute sales literature or other
written material to the public which makes reference to us or any of the
Companies (except material which we furnished to you) without prior written
approval.
11. This Agreement is in all respects subject to statements regarding the
sale and repurchase or redemption of shares made in offering Prospectuses of
the respective Companies, which shall control and override any provision to the
contrary in this Agreement.
12. You shall make available shares of the respective Companies only through
us. In no transaction (whether of purchase or sale) shall you have any
authority to act as agent for, partner of, or participant in a joint venture
with us or with the respective Companies or any other entity having either a
Selling Group Agreement or other Agreement with us.
13. We act solely as agent for the Companies, and are not responsible for
qualifying the Companies or their shares for sale in any jurisdiction. Upon
written request we will provide you with a list of the jurisdictions in which
the respective Companies or their shares are qualified for sale. We also are
not responsible for the issuance, form, validity, enforceability or value of
shares of the Companies.
14. You represent that you are (a) properly registered or licensed broker or
dealer under applicable federal and state securities laws and regulations and a
member in good standing of the National Association of Securities Dealers,
Inc., or (b) a "bank" as defined in Section 3(a)(6) of the Securities Exchange
Act of 1934 (or other financial institution) and not otherwise required to
register as a broker or dealer under such Act or any state laws. You agree to
notify us immediately in writing if this representation ceases to be true. You
also agree that, if you are a bank or other financial institution as set forth
above, you will maintain adequate records with respect to your customers and
their transactions, and that such transactions will be without recourse against
you by your customers. We recognize that, in addition to applicable provisions
of state and federal securities laws, you may be subject to the provisions of
the Glass-Steagall Act and other laws governing, among other things, the
conduct of activities by federal and state chartered and supervised financial
institutions and their affiliated organizations. Because you will be the only
entity having a direct relationship with the customer in connection with
securities purchases hereunder, you will be responsible in that relationship
for insuring compliance with all laws and regulations, including those of all
applicable federal and state regulatory authorities and bodies having
jurisdiction over you or your customers to the extent applicable to securities
purchases hereunder.
15. Either of us may cancel this Agreement at any time by written notice to
the other.
16. All communications to us should be sent to the above address. Any notice
to you shall be duly given if mailed or telegraphed to you at the address
specified by you below.
Execute this Agreement in duplicate and return one of the duplicate originals
to us for our file. This Agreement (i) may be amended by notification from us
and orders received following such notification shall be deemed to be an
acceptance of any such amendment and (ii) shall be construed in accordance with
the laws of the State of California.
Very truly yours,
AMERICAN FUNDS DISTRIBUTORS, INC.
By: /s/ Mark Freeman
Accepted:
________________________________________
Firm
By _____________________________________
Officer or Partner
________________________________________
Print Name of Officer or Partner
Address: ________________________________
Date: __________________________________
SCHEDULE A
October 5, 1993
(supersedes Schedule A dated
February 1, 1991)
Category 1
AMCAP Fund
American Balanced Fund
American Mutual Fund
Capital Income Builder
Capital World Growth and Income Fund
EuroPacific Growth Fund
Fundamental Investors
Growth Fund of America
Income Fund of America
Investment Company of America
New Economy Fund
New Perspective Fund
SMALLCAP World Fund
Washington Mutual Investors Fund
Category 2
American High-Income Trust
Bond Fund of America
Capital World Bond Fund
Intermediate Bond Fund of America
Limited Term Tax-Exempt Bond Fund of America
Tax-Exempt Bond Fund of America
Tax-Exempt Fund of California
Tax-Exempt Fund of Maryland
Tax-Exempt Fund of Virginia
U.S. Government Securities Fund
Category 3
Cash Management Trust of America
Tax-Exempt Money Fund of America
U.S. Treasury Money Fund of America
[American Funds Distributors(SM) logo]
American Funds Distributors
- ------------------------------------------------------------------------------
- --------------------------------------
333 South Hope Street - Los Angeles, California 90071
Telephone 800/421-9900, ext. 11
SUPPLEMENTAL SELLING GROUP AGREEMENT
Gentlemen:
You have entered into a Selling Group Agreement with us with respect to each
of the Funds in The American Funds Group (hereafter called the Companies). We
are authorized to pay you certain service fees each quarter in connection with
your sales of shares of the Companies, subject to the terms set forth below
which will be revised by us from time-to-time. your participation in this
service fee program will be evaluated at specific time intervals. Initial
qualification does not assure continued participation and this Agreement may be
amended or terminated by us at any time as indicated below. The offering
Prospectuses and this Agreement set forth the terms applicable to service fees
and all other representations and documents are subordinate.
1. You have met the minimum aggregate assets requirement set forth on the
attached Schedule 1.
2. You agree to cooperate as requested with programs that we provide to
enhance shareholder service. You also agree to assume an active role in
providing shareholder services such as processing purchase and redemption
transactions, establishing shareholder accounts and providing certain
information and assistance with respect to the Companies. Redemption levels of
shareholder accounts assigned to you will be considered in evaluating your
continued participation in this service fee program.
3. You agree to support our marketing efforts by granting reasonable requests
for visits to your offices by our wholesalers and, to the extent applicable, by
including all Companies covered by this Agreement on your "approved" list.
4. You agree to assign an individual broker to each shareholder account on
your books and to reassign the account should that broker leave your firm. You
agree to instruct each such broker to regularly contact shareholders having
accounts so assigned.
5. You agree to pass through to your brokers a share of the service fees paid
to you pursuant to this Agreement.
6. You acknowledge that (i) all service fee payments are subject to the
limitations contained in each Company's Plan of Distribution and may be varied
or discontinued at any time, (ii) in order to receive a service fee for a
particular quarter, the fee must amount to at least $100, and (iii) with
respect to shares of the Companies listed in Categories A and B, no service
fees will be paid on shares sold at net asset value (except on shares
attributable to sales (i) amounting to $1 million or more, (ii) made to
retirement plans of organizations with collective retirement plan assets of
$100 million or more or (iii) made to accounts managed by affiliates of The
Capital Group, Inc. which you initiated and for which you were responsible).
7. On shares of Companies listed in Category A on the attached Schedule 2
you will be paid a service fee each quarter based on the aggregate net asset
value of each account assigned to you (including accounts entitled to the right
of accumulation) as of the last day of the quarter for which payment is being
made at the following annual rates:
ANNUAL SERVICE FEE RATE
All Shares Acquired Through
June 30, 1988 0.15%
All Shares Acquired After
June 30, 1988 0.25% (accrual
of fee commencing after
after such shares are
held 12 months)
8. On shares of Companies listed in Category B on the attached Schedule 2 you
will be paid a service fee each quarter based on the aggregate net asset value
of each account assigned to you (including accounts entitled to the right of
accumulation) as of the last day of the quarter for which payment is being made
at the following annual rates:
ANNUAL SERVICE FEE RATE
All Shares 0.25% (accrual of fee
commencing after such
shares are held 12
months
9. On shares of Companies listed in Category C on the attached Schedule 2 you
will be paid a service fee each quarter based on the aggregate net asset value
of each account assigned to you (including accounts entitled to the right of
accumulation) as of the last day of the quarter for which payment is being made
at the following annual rates:
ANNUAL SERVICE FEE RATE
All Shares 0.15% (accrual of fee
commencing after such
shares are held 12
months
10. Either of us may cancel this Agreement at any time by written notice to
the other.
11. All communications to us should be sent to the above address. Any notice
to you shall be duly given if mailed or telegraphed to you at the address
specified by you below.
Execute this Agreement in duplicate and return one of the duplicate originals
to us for our file. This Agreement (i) may be amended by notification from us
and orders received following such notification shall be deemed to be an
acceptance of any such amendment and (ii) shall be construed with the laws of
the State of California.
Very truly yours,
AMERICAN FUNDS DISTRIBUTORS, INC.
By: /s/ Mark Freeman
Accepted:
________________________________________
Firm
By _____________________________________
Officer or Partner
________________________________________
Print Name of Officer or Partner
Address: ________________________________
Date: __________________________________
SCHEDULE 1
SEPTEMBER 1, 1988
Your eligibility is conditioned on verification by us of accounts of shares of
the Companies assigned to you having an aggregate net asset value amounting to
at least $750,000.
---------------------
SCHEDULE 2
September 26, 1994
(supersedes Schedule 2 dated
October 5, 1993)
Category A
AMCAP Fund
American Balanced Fund
American Mutual Fund
Bond Fund of America
EuroPacific Growth Fund
Fundamental Investors
Growth Fund of America
Income Fund of America
Investment Company of America
New Economy Fund
New Perspective Fund
Tax-Exempt Bond Fund of America
Washington Mutual Investors Fund
Category B
American High-Income Municipal Bond Fund
American High-Income Trust
Capital Income Builder
Capital World Bond Fund
Capital World Growth and Income Fund
Intermediate Bond Fund of America
Limited Term Tax-Exempt Bond Fund of America
SMALLCAP World Fund
Tax-Exempt Fund of California
Tax-Exempt Fund of Maryland
Tax-Exempt Fund of Virginia
U.S. Government Securities Fund
Category C
Cash Management Trust of America
Tax-Exempt Money Fund of America
U.S. Treasury Money Fund of America
American Funds Distributors (SM)
AMERICAN FUNDS DISTRIBUTORS
333 South Hope Street - Los Angeles, California 90071
Telephone 800/421-9900, ext. 11
ADDENDUM TO SELLING GROUP AGREEMENT
FOR THE STATE OF___________________
This Addendum to the SELLING GROUP AGREEMENT ("Agreement") among AMERICAN
FUNDS DISTRIBUTORS, INC. ("AFD"), THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
("LNL"), and the broker-dealer firm identified below ("Dealer") is effective
upon execution by all parties.
AFD, LNL and Dealer hereby agree that LNL shall pay all compensation due any
agents of the Dealer for business transacted on behalf of LNL directly to, and
in the name of a compensation manager appointed by Dealer, such compensation
manager being a duly licensed insurance agent in the state referenced above.
Dealer shall appoint its compensation manager in writing, signed by an
officer or partner of Dealer who has the authority to bind Dealer. LNL shall
direct all pavments for business transacted by agents of Dealer to the named
compensation manager until such time as Dealer notifies LNL, in writing, that
another compensation manager has been appointed.
It is agreed that payment of compensation payable by LNL to the agents of
Dealer shall be the responsibility of the compensation manager and shall not be
the responsibility of LNL. Furthermore, Dealer represents and warrants that
all monies received from LNL shall be distributed by the compensation manager
only to duly licensed agents appointed with LNL in accordance with the
Agreement and all applicable laws of the above referenced state.
It is further agreed that Dealer shall indemnify and hold harmless LNL, AFD,
and any of their affiliates, their respective officers, directors, employees or
agents ("Indemnified Party") from any and all claims, and demands or causes of
action that arise out of the compensation manager's negligence, or failure to
properly perform the responsibilities set forth in this Addendum or the
Agreement. Dealer, at its own cost, shall defend any legal proceeding that may
be brought against an Indemnified Party on any such claim or demand in respect
to which such Indemnified Party is indemnified and held harmless hereunder, and
shall satisfy any judgment that may be rendered against such Indemnified Party
with respect to any such claim or demand. Dealer shall notify LNL and AFD
promptly upon receipt of any such claim or demand which it receives.
Dealer agrees that this Addendum constitutes written consent by Dealer to
allow LNL to pay the compensation to the compensation manager as required by
Rule 3060 of the Rules of the NASD.
Any party to this Addendum may cancel this Addendum at any time upon written
notice to all other parties, effective upon receipt.
Three originals of the Addendum should be executed. Two of the originals
should be returned to AFD.
In WITNESS WHEREOF, the undersigned have executed this Addendum to the
Selling Group Agreement on the date written below.
AMERICAN FUNDS DISTRIBUTORS, INC. THE LINCOLN NATIONAL LIFE
133 South Hope Street INSURANCE COMPANY
Los Angeles, CA 90071 1300 South Clinton Street
Fort Wayne, IN 46801
By_______________________________ By________________________
_________________________________
(Name of Broker-Dealer Firm)
By_______________________________
Print Name_______________________
Title____________________________
Date_____________________________
Please state the name and the tax identification number of the compensation
manager who is licensed in THE above referenced state with The Lincoln National
Life Insurance Company.
Compensation Manager ____________________________________
Print Name
____________________________________
Signature
Social Security No. ____________________________________
9/96
CUSTODIAN CONTRACT
Between
FUNDAMENTAL INVESTORS, INC.
and
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1. Employment of Custodian and Property to be Held By
It 1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian 1
2.1 Holding Securities 1
2.2 Delivery of Securities 1
2.3 Registration of Securities 3
2.4 Bank Accounts 3
2.5 Payments for Shares 3
2.6 Investment and Availability of Federal Funds 4
2.7 Collection of Income 4
2.8 Payment of Fund Monies 4
2.9 Liability for Payment in Advance of
Receipt of Securities Purchased 5
2.10 Payments for Repurchases or Redemptions 6
of Shares of the Fund
2.11 Appointment of Agents 6
2.12 Deposit of Fund Assets in Securities System 6
2.13 Deposit of Fund Assets in the Foreign Banks and
and Foreign Securities Depositories 7
2.14 Ownership Certificates for Tax Purposes 9
2.15 Proxies 9
2.16 Communications Relating to Fund
Portfolio Securities 9
2.17 Proper Instructions 10
2.18 Actions Permitted Without Express Authority 10
2.19 Evidence of Authority 10
3. Duties of Custodian With Respect to the Books
of Account and Calculation of Net Asset Value
and Net Income 10
4. Records 11
5. Opinion of Fund's Independent Accountant 11
6. Reports to Fund by Independent Public Accountants 11
7. Compensation of Custodian 11
8. Responsibility of Custodian 11
9. Effective Period, Termination and Amendment 12
10. Successor Custodian 13
11. Interpretive and Additional Provisions 13
12. Massachusetts Law to Apply 14
13. Prior Contracts 14
14. Notices 14
</TABLE>
CUSTODIAN CONTRACT
This Contract between Fundamental Investors, Inc., a corporation organized and
existing under the laws of Delaware, having its principal place of business at
Los Angeles, CA hereinafter called the "Fund", and State Street Bank and Trust
Company, a Massachusetts trust company, having its principal place of business
at 225 Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian",
WITNESSETH, that in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of its assets. The
Custodian agrees, subject to the terms of this Contract, to act as Custodian
for the Fund an in connection therewith hold all securities and cash received
by it, and all payments of income, payments of principal or capital
distributions received by it with respect to all securities owned by the Fund
from time to time, and the cash consideration received by the Fund for such new
or treasury shares of the common stock $1.00 par value ("Shares") of the Fund
as may be issued or sold from time to time. The Custodian shall not be
responsible for any property of the Fund held or received by the Fund and not
delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Section 2.17),
the Custodian shall from time to time employ one or more sub-custodians, but
only in accordance with an applicable vote by the Board of Directors of the
Fund, and provided that the Custodian shall have no more or less responsibility
or liability to the Fund on account of any actions or omissions of any
sub-custodian so employed than any such sub-custodian has to the Custodian.
2. Duties of the Custodian with Respect to Property of the Fund Held By the
Custodian
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of the Fund all non-cash property, including all securities owned
by the Fund, other than securities which are maintained pursuant to Section
2.12 in a clearing agency which acts as a securities depository or in a
book-entry system authorized by the U.S. Department of the Treasury,
collectively referred to herein as a "Securities System."
2.2 Delivery of Securities. The Custodian shall release and deliver securities
owned by the Fund held by the Custodian or in a Securities System account of
the Custodian only upon receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties, and only in the following
cases:
1) Upon sale of such securities for the account of the Fund and receipt of
payment therefor;
2) Upon the receipt of full payment in connection with any repurchase
agreement related to such securities entered into by the Fund;
3) In the case of a sale effected through a Securities System, in accordance
with the provisions of Section 2.12 hereof;
4) To the depository agent in connection with tender or other similar offers
for portfolio securities of the Fund;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any such case,
the cash or other consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of the Fund
or into the name of any nominee or nominees of the Custodian or into the name
or nominee name of any agent appointed pursuant to Section 2.11 or into the
name or nominee name of any sub-custodian appointed pursuant to Article 1; or
for exchange for a different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units; provided that,
in any such case, the new securities are to be delivered to the Custodian;
7) To the broker selling the same for examination in accordance with the
"street delivery" custom;
8) For exchange or conversion pursuant to any plan of merger, consolidation,
recapitalization, reorganization or readjustment of the securities of the
issuer of such securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement; provided that, in any
such case, the new securities and cash, if any, are to be delivered to the
Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities or the
surrender of interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new securities and cash, if
any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by the Fund,
but only against receipt of adequate collateral as agreed upon from time to
time by the Custodian and the Fund, which may be in the form of cash or
obligations issued by the United States government, its agencies or
instrumentalities, except that in connection with any loans for which
collateral is to be credited to the Custodian's account in the book-entry
system authorized by the U.S. Department of the Treasury, the Custodian will
not be held liable or responsible for the delivery of securities owned by the
Fund prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings by the Fund
requiring a pledge of assets by the Fund, but only against receipt of amounts
borrowed;
12) Upon receipt of instructions from the transfer agent ("Transfer Agent")
for the Fund, for delivery to such Transfer Agent or to the holders of shares
in connection with distributions in kind, as may be described from time to time
in the Fund's currently effective prospectus and statement of additional
information ("prospectus"), in satisfaction of requests by holders of Shares
for repurchase or redemption; and
13) For any other proper corporate purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of the Board
of Directors or of the Executive Committee signed by an officer of the Fund and
certified by the Secretary or an Assistant Secretary, specifying the securities
to be delivered, setting forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper corporate purpose, and naming the
person or persons to whom delivery of such securities shall be made.
2.3 Registration of Securities. Securities held by the Custodian (other than
bearer securities) shall be registered in the name of the Fund or in the name
of any nominee of the Fund or of any nominee of the Custodian which nominee
shall be assigned exclusively to the Fund, unless the Fund has authorized in
writing the appointment of a nominee to be used in common with other registered
investment companies having the same investment adviser as the Fund, or in the
name or nominee name of any agent appointed pursuant to Section 2.11 or in the
name or nominee name of any sub-custodian appointed pursuant to Article 1. All
securities accepted by the Custodian on behalf of the Fund under the terms of
this Contract shall be in "street name" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the name of the Fund, subject only to draft or order by
the Custodian acting pursuant to the terms of this Contract, and shall hold in
such account or accounts, subject to the provisions hereof, all cash received
by it from or for the account of the Fund, other than cash maintained by the
Fund in a bank account established and used in accordance with Rule 17f-3 under
the Investment Fund Act of 1940. Funds held by the Custodian for the Fund may
be deposited by it to its credit as Custodian in the Banking Department of the
Custodian or in such other banks or trust companies as it may in its discretion
deem necessary or desirable; provided, however, that every such bank or trust
company shall be qualified to act as a custodian under the Investment Fund Act
of 1940 and that each such bank or trust company and the funds to be deposited
with each such bank or trust company shall be approved by vote of a majority of
the Board of Directors of the Fund. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
2.5 Payments for Shares. The Custodian shall receive from the distributor for
the Fund's Shares or from the Transfer Agent of the Fund and deposit into the
Fund's account such payments as are received for Shares of the Fund issued or
sold from time to time by the Fund. The Custodian will provide timely
notification to the Fund and the Transfer Agent of any receipt by it of
payments for Shares of the Fund.
2.6 Investment and Availability of Federal Funds. Upon mutual agreement
between the Fund and the Custodian, the Custodian shall, upon the receipt of
Proper Instructions:
1) invest, in such instruments as may be set forth in such instructions on the
same day as received, all federal funds received prior to the time agreed upon
between the Custodian and the Fund; and
2) make federal funds available to the Fund as of specified times agreed upon
from time to time by the Fund and the Custodian in the amount of checks
received in payment for Shares of the Fund which are deposited into the Fund's
account.
2.7 Collection of Income. The Custodian shall collect on a timely basis all
income and other payments with respect to registered securities held hereunder
to which the Fund shall be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all income and other
payments with respect to bearer securities if, on the date of payment by the
issuer, such securities are held by the Custodian or its agent thereof and
shall credit such income, as collected, to the Fund's custodian account.
Without limiting the generality of the foregoing, the Custodian shall detach
and present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest when due on
securities held hereunder. Income due the Fund on securities loaned pursuant
to the provisions of Section 2.2 (10) shall be the responsibility of the Fund.
The Custodian will have no duty or responsibility in connection therewith,
other than to provide the Fund with such information or data as may be
necessary to assist the Fund in arranging for the timely delivery to the
Custodian of the income to which the Fund is properly entitled.
2.8 Payment of Fund Monies. Upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by the parties, the Custodian
shall pay out monies of the Fund in the following cases only:
1) Upon the purchase of securities for the account of the Fund but only (a)
against the delivery of such securities to the Custodian (or any bank, banking
firm or trust company doing business in the United States or abroad which is
qualified under the Investment Fund Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian as its agent for this
purpose) registered in the name of the Fund or in the name of a nominee of the
Custodian referred to in Section 2.3 hereof or in proper form for transfer; (b)
in the case of a purchase effected through a Securities System, in accordance
with the conditions set forth in Section 2.12 hereof; (c) in the case of
repurchase agreements entered into between the Fund and the Custodian, or
another bank (i) against delivery of the securities either in certificate form
or through an entry crediting the Custodian's account at the Federal Reserve
Bank with such securities or (ii) against delivery of the receipt evidencing
purchase by the Fund of securities owned by the Custodian along with written
evidence of the agreement by the Custodian to repurchase such securities from
the Fund;
2) In connection with conversion, exchange or surrender of securities owned by
the Fund as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Fund as set forth
in Section 2.10 hereof;
4) For the payment of any expense or liability incurred by the Fund, including
but not limited to the following payments for the account of the Fund:
interest, taxes, management, accounting, transfer agent and legal fees, and
operating expenses of the Fund whether or not such expenses are to be in whole
or part capitalized or treated as deferred expenses;
5) For the payment of any dividends declared pursuant to the governing
documents of the Fund;
6) For payment of the amount of dividends received in respect of securities
sold short;
7) For any other proper purpose, but only upon receipt of, in addition to
Proper Instructions, a certified copy of a resolution of the Board of Directors
or of the Executive Committee of the Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant Secretary, specifying the amount of
such payment, setting forth the purpose for which such payment is to be made,
declaring such purpose to be a proper purpose, and naming the person or persons
to whom such payment is to be made.
2.9 Liability for Payment in Advance of Receipt of Securities Purchased. In
any and every case where payment for purchase of securities for the account of
the Fund is made by the Custodian in advance of receipt of the securities
purchased in the absence of specific written instructions from the Fund to so
pay in advance, the Custodian shall be absolutely liable to the Fund for such
securities to the same extent as if the securities had been received by the
Custodian, except that in the case of repurchase agreements entered into by the
Fund with a bank which is a member of the Federal Reserve System, the Custodian
may transfer funds to the account of such bank prior to the receipt of written
evidence that the securities subject to such repurchase agreement have been
transferred by book-entry into a segregated non-proprietary account of the
Custodian maintained with the Federal Reserve Bank of Boston or of the
safe-keeping receipt, provided that such securities have in fact been so
transferred by book-entry.
2.10 Payments for Repurchases or Redemptions of Shares of the Fund. From such
funds as may be available for the purpose but subject to the limitations of the
Certificate of Incorporation and any applicable votes of the Board of Directors
of the Fund pursuant thereto, the Custodian shall, upon receipt of instructions
from the Transfer Agent, make funds available for payment to holders of Shares
who have delivered to the Transfer Agent a request for redemption or repurchase
of their Shares. In connection with the redemption or repurchase of Shares of
the Fund, the Custodian is authorized upon receipt of instructions from the
Transfer Agent to wire funds to or through a commercial bank designated by the
redeeming shareholders. In connection with the redemption or repurchase of
Shares of the Fund, the Custodian shall honor checks drawn on the Custodian by
a holder of Shares, which checks have been furnished by the Fund to the holder
of Shares, when presented to the Custodian in accordance with such procedures
and controls as are mutually agreed upon from time to time between the Fund and
the Custodian.
2.11 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust company
which is itself qualified under the Investment Fund Act of 1940, as amended, to
act as a custodian, as its agent to carry out such of the provisions of this
Article 2 as the Custodian may from time to time direct; provided, however,
that the appointment of any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
2.12 Deposit of Fund Assets in Securities Systems. The Custodian may deposit
and/or maintain securities owned by the Fund in a clearing agency registered
with the Securities and Exchange Commission under Section 17A of the Securities
Exchange Act of 1934, which acts as a securities depository, or in the
book-entry system authorized by the U.S. Department of the Treasury and certain
federal agencies, collectively referred to herein as "Securities System" in
accordance with applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to the following
provisions:
1) The Custodian may keep securities of the Fund in a Securities System
provided that such securities are represented in an account ("Account") of the
Custodian in the Securities System which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or otherwise for
customers;
2) The records of the Custodian with respect to securities of the Fund which
are maintained in a Securities System shall identify by book-entry those
securities belonging to the Fund;
3) The Custodian shall pay for securities purchased for the account of the
Fund upon (i) receipt of advice from the Securities System that such securities
have been transferred to the Account, and (ii) the making of an entry on the
records of the Custodian to reflect such payment and transfer for the account
of the Fund. The Custodian shall transfer securities sold for the account of
the Fund upon (i) receipt of advice from the Securities System that payment for
such securities has been transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such transfer and payment for
the account of the Fund. Copies of all advices from the Securities System of
transfers of securities for the account of the Fund shall identify the Fund, be
maintained for the Fund by the Custodian and be provided to the Fund at its
request. Upon request, the Custodian shall furnish the Fund confirmation of
each transfer to or from the account of the Fund in the form of a written
advice or notice and shall furnish to the Fund copies of daily transaction
sheets reflecting each day's transactions in the Securities System for the
account of the Fund.
4) The Custodian shall provide the Fund with any report obtained by the
Custodian on the Securities System's accounting system, internal accounting
control and procedures for safeguarding securities deposited in the Securities
System;
5) The Custodian shall have received the initial or annual certificate, as the
case may be, required by Article 9 hereof;
6) Anything to the contrary in this Contract notwithstanding, the Custodian
shall be responsible for the safekeeping of all securities and other property
delivered to it under this Contract and shall be liable to the Fund for any
loss or damage to the Fund resulting from use of the Securities System by
reason of any negligence, misfeasance or misconduct of the Custodian or any of
its agents or of any of its or their employees or from failure of the Custodian
or any such agent to enforce effectively such rights as it may have against the
Securities System; or any other person which the Custodian may have as a
consequence of any such loss or damage if and to the extent that the Fund has
not been made whole for any such loss or damage.
2.13 Deposit of Fund Assets in Foreign Banks and Foreign Securities
Depositories. Where the Custodian deposits, or causes or permits the deposit,
of securities and assets in certain foreign banks and foreign securities
depositories, the following shall apply:
1) The Custodian shall identify such securities on its books as belonging to
the Fund where such securities are shown on the Custodian's account on the
books of the foreign bank or securities depository.
2) Where securities are deposited by a foreign bank with a securities
depository, the Custodian shall cause the foreign bank to identify on its books
as belonging to the Custodian, as agent, the securities shown on the foreign
bank's account on the books of the securities depository.
3) All of the Fund's securities maintained abroad through the Custodian will be
subject only to the Custodian's instructions or those of the Custodian's
assets.
4) The Custodian will deposit securities in an account with a foreign bank
which includes only assets held for the Custodian for the Custodian's
customers.
5) The Custodian will supply periodically, as mutually agreed with the Fund,
statements in respect of securities, which would include identifications of the
foreign entities having custody of the securities and descriptions thereof. In
addition, the Custodian will send the Fund advices and notifications of any
transfers of securities to or from the Fund's account with the Custodian
indicating the then location of the securities.
6) The Custodian will authorize the holding of securities by a foreign bank or
securities depository only (a) to the extent that the securities are not
subject to any right, charge, security interest, lien or claim of any kind of
favor of the foreign entity except for their safe custody or administration and
(b) to the extent that beneficial ownership of such securities is freely
transferable without the payment of money or value other than for safe custody
or administration; provided, however, that the foregoing shall not apply to the
extent that any of the abovementioned rights, charges, etc., result from any
arrangements made by the Fund with any such foreign bank or securities
depository.
7) The Custodian shall exercise reasonable care in the performance of the
Custodian's duties, including the selection of foreign banks which may have
custody of securities, but the Custodian will not be required to maintain any
insurance for the benefit of the Fund whose securities may be so held.
8) The Custodian will indemnify and hold the Fund harmless from and against any
loss which shall occur as the result of the failure of a foreign bank or
securities depository holding the Fund's securities to exercise reasonable care
with respect to the safekeeping of such securities to the same extent that the
Custodian would be required to indemnify and hold the Fund harmless if the
Custodian were holding such securities in Boston.
9) Access shall be afforded to the Fund's independent public accountants to
such of the Custodian's records and, subject to restrictions under applicable
laws, of any foreign bank or securities depository in respect of the Fund's
securities as shall be required by the Fund's accountants in connection with
their examination of the books and records pertaining to the affairs of your
company. As you may reasonably request from time to time, the Custodian will
furnish its auditor's reports on their system of internal accounting controls
as they relate to the service, and the Custodian will use our best efforts to
obtain and furnish similar reports of each foreign bank and foreign securities
depository holding the Fund's securities.
10) If and when the proposed SEC Rule 17f-5 is adopted by the Commission, and
if any provisions of such Rule conflicts with any of the provisions herein, it
is understood and agreed that any such provision of Rule 17f-5 shall supersede
any such provision herein. Based on the provisions of Rule 17f-5, if and when
adopted, the Custodian may wish to reconsider the responsibility to the Fund
with respect to foreign securities held by the Custodian's foreign branches,
foreign banks, or foreign securities depositories.
2.14 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state tax
purposes in connection with receipt of income or other payments with respect to
securities of the Fund held by it and in connection with transfers of
securities.
2.15 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of the
Fund or a nominee of the Fund, all proxies, without indication of the manner in
which such proxies are to be voted, and shall promptly deliver to the Fund such
proxies, all proxy soliciting materials and all notices relating to such
securities.
2.16 Communications Relating to Fund Portfolio Securities. The Custodian shall
transmit promptly to the Fund all written information (including, without
limitation, pendency of calls and maturities of securities and expirations of
rights in connection therewith and notices of exercise of call and put options
written by the Fund and the maturity of futures contracts purchased or sold by
the Fund) received by the Custodian from issuers of the securities being held
for the Fund. With respect to tender or exchange offers, the Custodian shall
transmit promptly to the Fund all written information received by the Custodian
from issuers of the securities whose tender or exchange is sought and from the
party (or his agents) making the tender or exchange offer. If the Fund desires
to take action with respect to any tender offer, exchange offer or any other
similar transaction, the Fund shall notify the Custodian at least three
business days prior to the date on which the Custodian is to take such action.
2.17 Proper Instructions. Proper Instructions as used throughout this Article
2 means a writing signed or initialed by one or more person or persons as the
Board of Directors shall have from time to time authorized. Each such writing
shall set forth the specific transaction or type of transaction involved,
including a specific statement of the purpose for which such action is
requested. Oral instructions will be considered Proper Instructions if the
Custodian reasonably believes them to have been given by a person authorized to
give such instructions with respect to the transaction involved. The Fund
shall cause all oral instructions to be confirmed in writing. Upon receipt of
a certificate of the Secretary or an Assistant Secretary as to the
authorization by the Board of Directors of the Fund accompanied by a detailed
description of procedures approved by the Board of Directors, Proper
Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Board of Directors
and the Custodian are satisfied that such procedures afford adequate safeguards
for the Fund's assets.
2.18 Actions Permitted without Express Authority. The Custodian may in its
discretion, without express authority from the Fund:
1) make payments to itself or others for minor expenses of handling securities
or other similar items relating to its duties under this Contract, provided
that all such payments shall be accounted for to the Fund;
2) surrender securities in temporary form for securities in definitive form;
3) endorse for collection, in the name of the Fund, checks, drafts and other
negotiable instruments; and
4) in general, attend to all non-discretionary details in connection with the
sale, exchange, substitution, purchase, transfer and other dealings with the
securities and property of the Fund except as otherwise directed by the Board
of Directors of the Fund.
2.19 Evidence of Authority. The Custodian shall be protected in acting upon
any instructions, notice, request, consent, certificate or other instrument or
paper believed by it to be genuine and to have been properly executed by or on
behalf of the Fund. The Custodian may receive and accept a certified copy of a
vote of the Board of Directors of the Fund as conclusive evidence (a) of the
authority of any person to act in accordance with such vote or (b) of any
determination or of any action by the Board of Directors pursuant to the
Articles of Incorporation as described in such vote, and such vote may be
considered as in full force and effect until receipt by the Custodian of
written notice to the contrary.
3. Duties of Custodian with Respect to the Books of Account and Calculation of
Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Directors of the Fund to keep the
books of account of the Fund and/or compute the net asset value per share of
the outstanding shares of the Fund or, if directed in writing to do so by the
Fund, shall itself keep such books of account and/or compute such net asset
value per share. If so directed, the Custodian shall also calculate daily the
net income of the Fund as described in the Fund's currently effective
prospectus and shall advise the Fund and the Transfer Agent daily of the total
amounts of such net income and, if instructed in writing by an officer of the
Fund to do so, shall advise the Transfer Agent periodically of the division of
such net income among its various components. The calculations of the net
asset value per share and the daily income of the Fund shall be made at the
time or times described from time to time in the Fund's currently effective
prospectus.
4. Records
The Custodian shall create and maintain all records relating to its activities
and obligations under this Contract in such manner as will meet the obligations
of the Fund under the Investment Fund Act of 1940, with particular attention to
Section 31 thereof and Rules 31a-1 and 31a-2 thereunder applicable federal and
state tax laws and any other law or administrative rules or procedures which
may be applicable to the Fund. All such records shall be the property of the
Fund and shall at all times during the regular business hours of the Custodian
be open for inspection by duly authorized officers, employees or agents of the
Fund and employees and agents of the Securities and Exchange Commission. The
Custodian shall, at the Fund's request, supply the Fund with a tabulation of
securities owned by the Fund and held by the Custodian and shall, when
requested to do so by the Fund and for such compensation as shall be agreed
upon between the Fund and the Custodian, include certificate numbers in such
tabulations.
5. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund may from time to
time request, to obtain from year to year favorable opinions from the Fund's
independent accountants with respect to its activities hereunder in connection
with the preparation of the Fund's Form N-1A, and Form N-SAR or other annual
reports to the Securities and Exchange Commission and with respect to any other
requirements of such Commission.
6. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, at such times as the Fund may reasonably
require, with reports by independent public accountants on the accounting
system, internal accounting control and procedures for safeguarding securities
including securities deposited and/or maintained in a Securities System,
relating to the services provided by the Custodian under this Contract; such
reports, shall be of sufficient scope and in sufficient detail, as may
reasonably be required by the Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there are
no such inadequacies, the reports shall so state.
7. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund
and the Custodian.
8. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness
of any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties. The Custodian
shall be responsible for the safekeeping of all securities and other property
delivered to it and shall be held to the exercise of reasonable care in
carrying out the provisions of this Contract, but shall be kept indemnified by
and shall be without liability to the Fund for any action taken or omitted by
it in good faith without negligence. It shall be entitled to rely on and may
act upon advice of counsel (who may be counsel for the Fund) on all matters,
and shall be without liability for any action reasonably taken or omitted
pursuant to such advice. Notwithstanding the foregoing the responsibility of
the Custodian with respect to redemptions effected by check shall be in
accordance with a separate Agreement entered into between the Custodian and the
Fund.
If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned
to the Fund being liable for the payment of money or incurring liability of
some other form, the Fund, as a prerequisite to requiring the Custodian to take
such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian to advance cash or securities for any
purpose or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the Fund shall be
security therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of Fund
assets to the extent necessary to obtain reimbursement.
9. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid
to the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; provided, however that the
Custodian shall not act under Section 2.12 hereof in the absence of receipt of
an initial certificate of the Secretary or an Assistant Secretary that the
Board of Directors of the Fund has approved the initial use of a particular
Securities System as required by Rule 17f-4 under the Investment Fund Act of
1940, as amended and that the Custodian shall not act under Section 2.13 hereof
in the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Directors has approved the initial use of
the Direct Paper System; provided further, however, that the Fund shall not
amend or terminate this Contract in contravention of any applicable federal or
state regulations, or any provision of the Certificate of Incorporation, and
further provided, that the Fund may at any time by action of its Board of
Directors (i) substitute another bank or trust company for the Custodian by
giving notice as described above to the Custodian, or (ii) immediately
terminate this Contract in the event of the appointment of a conservator or
receiver for the Custodian by the Comptroller of the Currency or upon the
happening of a like event at the direction of an appropriate regulatory agency
or court of competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination and shall
likewise reimburse the Custodian for its costs, expenses and disbursements.
10. Successor Custodian
If a successor custodian shall be appointed by the Board of Directors of the
Fund, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
transfer, all securities then held by it hereunder and shall transfer to an
account of the successor custodian all of the Fund's securities held in a
Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of
Directors of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or
trust company, which is a "bank" as defined in the Investment Fund Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract and to
transfer to an account of such successor custodian all of the Fund's securities
held in any Securities System. Thereafter, such bank or trust company shall be
the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Directors to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
11. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and the Fund
may from time to time agree on such provisions interpretive of or in addition
to the provisions of this Contract as may in their joint opinion be consistent
with the general tenor of this Contract. Any such interpretive or additional
provisions shall be in a writing signed by both parties and shall be annexed
hereto, provided that no such interpretive or additional provisions shall
contravene any applicable federal or state regulations or any provision of the
Articles of Incorporation of the Fund. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment
of this Contract.
12. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted under
and in accordance with laws of the Commonwealth of Massachusetts.
13. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund and the Custodian relating to the custody of the
Fund's assets.
14. Notices
Any and all notices, requests, demands or other communications required or
permitted to be given hereunder shall be deemed to have been duly given when
personally delivered or mailed by first class certified or registered mail,
return receipt requested, addressed to the parties at the addresses set forth
below:
(1) If to the Custodian, to:
State Street Bank and Trust Company
P.O. Box 351
Boston, Mass. 02101
Attn: Custody and Shareholder Services Q5W
Capital Research and Management
(2) If to the Fund, to:
Fundamental Investors, Inc.
333 South Hope, 51st Floor
Los Angeles, California 90071
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 24th day of April, 1984 .
ATTEST FUNDAMENTAL INVESTORS, INC.
________________________ By ___________________________
Thomas E. Terry, Vice President
ATTEST STATE STREET BANK AND TRUST COMPANY
_______________________ By ___________________________
Vice President
<PAGE>
AMENDMENT TO THE CUSTODIAN CONTRACT
AGREEMENT made by and between State Street Bank and Trust Company (the
"Custodian") and Fundamental Investors, Inc. (the "Fund").
WHEREAS, the Custodian and the Fund are parties to a custodian contract dated
April 24, 1984 (the "Custodian Contract") governing the terms and conditions
under which the Custodian maintains custody of the securities and other assets
of the Fund; and
WHEREAS, the Custodian and the Fund desire to amend the Custodian Contract to
provide for the maintenance of the Fund's foreign securities, and cash
incidental to transactions in such securities, in the custody of certain
foreign banking institutions and foreign securities depositories acting as
sub-custodians in conformity with the requirements of Rule 17f-5 under the
Investment Company Act of 1940;
NOW THEREFORE, in consideration of the premises and covenants contained herein,
the Custodian and the Fund hereby amend the Custodian Contract by the addition
of the following terms and conditions:
1. Appointment of Foreign Sub-Custodians.
The Fund hereby authorizes and instructs the Custodian to employ as
sub-custodians for the Fund's securities and other assets maintained outside
the United States the foreign banking institutions and foreign securities
depositories designated on Schedule A hereto ("foreign sub-custodians"). Upon
receipt of "Proper Instructions", as defined in Section 2.17 of the Custodian
Contract, together with a certified resolution of the Fund's Board of
Directors, the Custodian and the Fund may agree to amend Schedule A hereto from
time to time to designate additional foreign banking institutions and foreign
securities depositories to act as sub-custodian. Upon receipt of Proper
Instructions, the Fund may instruct the Custodian to cease the employment of
any one or more such sub-custodians for maintaining custody of the Fund's
assets.
2. Assets to be Held.
The Custodian shall limit the securities and other assets maintained in the
custody of the foreign sub-custodians to: (a) "foreign securities", as defined
in paragraph (c)(1) of Rule 17f-5 under the Investment Company Act of 1940, and
(b) cash and cash equivalents in such amounts as the Custodian or the Fund may
determine to be reasonably necessary to effect the Fund's foreign securities
transactions. The Custodian shall identify on its books as belonging to the
Fund, the foreign securities of the Fund held by each foreign sub-custodian.
3. Foreign Securities Depositories.
Except as may otherwise be agreed upon in writing by the Custodian and the
Fund, assets of the Funds shall be maintained in foreign securities
depositories only through arrangements implemented by the foreign banking
institutions serving as sub-custodians pursuant to the terms hereof. Where
possible, such arrangements shall include entry into agreements containing the
provisions set forth in Section 5 hereof.
4. Holding Securities.
The Custodian may hold securities and other non-cash property for all of its
customers, including the Fund, with a Foreign Sub-custodian in a single account
that is identified as belonging to the Custodian for the benefit of its
customers, provided however, that (i) the records of the Custodian with respect
to securities and other non-cash property of the Fund which are maintained in
such account shall identify by book-entry those securities and other non-cash
property belonging to the Fund and (ii) the Custodian shall require that
securities and other non-cash property so held by the Foreign Sub-custodian be
held separately from any assets of the Foreign Sub-custodian or of others.
5. Agreements with Foreign Banking Institutions.
Each agreement with a foreign banking institution shall be substantially in
the form set forth in Exhibit 1 hereto and shall provide that: (a) the Fund's
assets will not be subject to any right, charge, security interest, lien or
claim of any kind in favor of the foreign banking institution or its creditors
or agent, except a claim of payment for their safe custody or administration;
(b) beneficial ownership of the Fund's assets will be freely transferable
without the payment of money or value other than for custody or administration;
(c) adequate records will be maintained by the Custodian identifying the assets
as belonging to the Fund; (d) officers of or auditors employed by, or other
representatives of the Custodian, including to the extent permitted under
applicable law the independent public accountants for the Fund, will be given
access to the books and records of the foreign banking
institution relating to its actions under its agreement with the Custodian;
and (e) assets of the Fund held by the foreign sub-custodian will be subject
only to the instructions of the Custodian or its agents.
6. Access of Independent Accountants of the Fund.
Upon request of the Fund, the Custodian will use its best efforts to arrange
for the independent accountants of the Fund to be afforded access to the books
and records of any foreign banking institution employed as a foreign
sub-custodian insofar as such books and records relate to the performance of
such foreign banking institution under its agreement with the Custodian.
7. Reports by Custodian.
The Custodian will supply to the Fund from time to time, as mutually agreed
upon, statements in respect of the securities and other assets of the Fund held
by foreign sub-custodians, including but not limited to an identification of
entities having possession of the Fund's securities and other assets and
advices or notifications of any transfers of securities to or from each
custodial account maintained by a foreign banking institution for the Custodian
on behalf of its customers indicating, as to securities acquired for the Fund,
the identity of the entity having physical possession of such securities.
8. Transactions in Foreign Custody Account.
(a) Except as otherwise provided in paragraph (b) of this Section 8, the
provision of Sections 2.2 and 2.7 of the Custodian Contract shall apply,
mutatis mutandis to the foreign securities of the Fund held outside the United
States by foreign sub-custodians.
(b) Notwithstanding any provision of the Custodian Contract to the contrary,
settlement and payment for securities received for the account of the Fund and
delivery of securities maintained for the account of the Fund may be effected
in accordance with the customary established securities trading or securities
processing practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivering securities to the
purchaser thereof or to a dealer therefor (or an agent for such purchaser or
dealer) against a receipt with the expectation of receiving later payment for
such securities from such purchaser or dealer.
(c) Securities maintained in the custody of a foreign sub-custodian may be
maintained in the name of such entity's nominee to the same extent as set forth
in Section 2.3 of the Custodian Contract, and the Fund agrees to hold any such
nominee harmless from any liability as a holder of record of such securities.
9. Liability of Foreign Sub-Custodians.
Each agreement pursuant to which the Custodian employs a foreign banking
institution as a foreign sub-custodian shall require the institution to
exercise reasonable care in the performance of its duties and to indemnify, and
hold harmless, the Custodian and the Fund from and against any loss, damage,
cost, expense, liability or claim arising out of or in connection with the
institution's performance of such obligations. At the election of the Fund, it
shall be entitled to be subrogated to the rights of the Custodian with respect
to any claims against a foreign banking institution as a consequence of any
such loss, damage, cost, expense, liability or claim if and to the extent that
the Fund has not been made whole for any such loss, damage, cost, expense,
liability or claim.
10. Liability of Custodian.
The Custodian shall be liable for the acts or omissions of a foreign banking
institution to the same extent as set forth with respect to sub-custodians
generally in the Custodian Contract and, regardless of whether assets are
maintained in the custody of a foreign banking institution, a foreign
securities depository or a branch of a U.S. bank as contemplated by paragraph
13 hereof, the Custodian shall not be liable for any loss, damage, cost,
expense, liability or claim resulting from nationalization, expropriation,
currency restrictions, or acts of war or terrorism or any loss where the
sub-custodian has otherwise exercised reasonable care. Notwithstanding the
foregoing provisions of this paragraph 10, in delegating custody duties to
State Street London Ltd., the Custodian shall not be relieved of any
responsibility to the Fund for any loss due to such delegation, except such
loss as may result from (a) political risk (including, but not limited to,
exchange control restrictions, confiscation, expropriation, nationalization,
insurrection, civil strife or armed hostilities) or (b) other losses (excluding
a bankruptcy or insolvency of State Street London Ltd. not caused by political
risk) due to Acts of God, nuclear incident or other losses under circumstances
where the Custodian and State Street London Ltd. have exercised reasonable
care.
11. Reimbursement for Advances.
If the Fund requires the Custodian to advance cash or securities for any
purpose including the purchase or sale of foreign exchange or of contracts for
foreign exchange, or in the event that the Custodian or its nominee shall incur
or be assessed any taxes, charges, expenses, assessments, claims or liabilities
in connection with the performance of this Contract, except such as may arise
from its or its nominee's own negligent action, negligent failure to act or
willful misconduct, any property at any time held for the account of the Fund
shall be security therefor and should the Fund fail to repay the Custodian
promptly, the Custodian shall be entitled to utilize available cash and to
dispose of such Fund assets to the extent necessary to obtain reimbursement.
12. Monitoring Responsibilities.
The Custodian shall furnish annually to the Fund, during the month of June,
information concerning the foreign sub-custodians employed by the Custodian.
Such information shall be similar in kind and scope to that furnished to the
Fund in connection with the initial approval of the Custodian Contract. In
addition, the Custodian will promptly inform the Fund in the event that the
Custodian learns of a material adverse change in the financial condition of a
foreign sub-custodian or any material loss of the assets of the Fund or in the
case of any foreign sub-custodian not the subject of an exemptive order from
the Securities and Exchange Commission is notified by such foreign
sub-custodian that there appears to be a substantial likelihood that its
shareholders' equity will decline below $200 million (U.S. dollars or the
equivalent thereof) or that its shareholders' equity has declined below $200
million (in each case computed in accordance with generally accepted U.S.
accounting principles).
13. Branches of U.S. Banks.
(a) Except as otherwise set forth in this amendment to the Custodian Contract,
the provisions hereof shall not apply where the custody of the Funds assets is
maintained in a foreign branch of a banking institution which is a "bank" as
defined by Section 2(a)(5) of the Investment Company Act of 1940 meeting the
qualification set forth in Section 26(a) of said Act. The appointment of any
such branch as a sub-custodian shall be governed by paragraph 1 of the
Custodian Contract.
(b) Cash held for the Fund in the United Kingdom shall be maintained in an
interest bearing account established for the Fund with the Custodian's London
branch, which account shall be subject to the direction of the Custodian, State
Street London Ltd. or both.
14. Tax Law.
The Custodian shall have no responsibility or liability for any obligations
now or hereafter imposed on the Fund or the Custodian as custodian of the Fund
by the tax law of the United States of America or any state or political
subdivision thereof. It shall be the responsibility of the Fund to notify the
Custodian of the obligations imposed on the Fund or the Custodian as custodian
of the Fund by the tax law of jurisdictions other than those mentioned in the
above sentence, including responsibility for withholding and other taxes,
assessments or other governmental charges, certifications and governmental
reporting. The sole responsibility of the Custodian with regard to such tax
law shall be to use reasonable efforts to assist the Fund with respect to any
claim for exemption or refund under the tax law of jurisdictions for which the
Fund has provided such information.
15. Applicability of Custodian Contract
Except as specifically superseded or modified herein, the terms and provisions
of the Custodian Contract shall continue to apply with full force and effect.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the day of , 1995.
ATTEST FUNDAMENTAL INVESTORS, INC.
_______________________________ By _______________________
Title _____________________
ATTEST STATE STREET BANK AND TRUST COMPANY
_______________________________ By________________________
Title_____________________
Schedule A
The following foreign banking institutions and foreign securities depositories
have been approved by the Board of Directors of Fundamental Investors, Inc. for
use as sub-custodians for the Fund's securities and other assets:
(Insert banks and securities depositories)
Certified:
________________________________
Fund's Authorized Officer
CONSENT OF INDEPENDENT AUDITORS
Fundamental Investors, Inc.:
We consent to (a) the use in this Post-Effective Amendment No. 81 to
Registration Statement No. 2-10760 on Form N-1A of our report dated January 29,
1997 appearing in the Financial Statements, which are included in Part B, the
Statement of Additional Information of such Registration Statement, (b) the
references to us under the heading "General Information" in such Statement of
Additional Information; and (c) the reference to us under the heading
"Financial Highlights" in the Prospectus, which is a part of such Registration
Statement.
Deloitte & Touche LLP
February 26, 1997
Los Angeles, California
[The American Funds Group (r)]
PROTOTYPE DEFINED CONTRIBUTION
PLAN AND TRUST
Sponsored By
American Funds Distributors, Inc.
Basic Plan Document #01
August 1990
Copyright 1989 THE McKAY HOCHMAN COMPANY, INC.
This document is copyrighted under the laws of the United States. Its use,
duplication or reproduction, including the use of electronic means, is
prohibited by law without the express consent of the author.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PARAGRAPH PAGE
<S> <C> <C>
ARTICLE I
DEFINITIONS
1.1 Adoption Agreement 4
1.2 Annual Additions 4
1.3 Annuity Starting Date 4
1.4 Applicable Calendar Year 4
1.5 Applicable Life Expectancy 4
1.6 Break In Service 4
1.7 Code 4
1.8 Compensation 4
1.9 Custodian 4
1.10 Defined Benefit Plan 4
1.11 Defined Benefit (Plan) Fraction 4
1.12 Defined Contribution Dollar
Limitation 5
1.13 Defined Contribution Plan 5
1.14 Defined Contribution (Plan)
Fraction 5
1.15 Designated Beneficiary 5
1.16 Disability 5
1.17 Distribution Calendar Year 5
1.18 Early Retirement Age 5
1.19 Earned Income 5
1.20 Effective Date 5
1.21 Election Period 5
1.22 Employee 5
1.23 Employer 5
1.24 Entry Date 5
1.25 Excess Amount 5
1.26 First Distribution Calendar Year 5
1.27 Fund 5
1.28 Highest Average Compensation 5
1.29 Hour Of Service 5
1.30 Key Employee 6
1.31 Leased Employee 6
1.32 Limitation Year 6
1.33 Mandatory Contribution 6
1.34 Master Or Prototype Plan 6
1.35 Maximum Permissible Amount 6
1.36 Net Profit 6
1.37 Normal Retirement Age 6
1.38 Owner-Employee 6
1.39 Paired Plans 6
1.40 Participant 6
1.41 Participant's Benefit 6
1.42 Permissive Aggregation Group 6
1.43 Plan 6
1.44 Plan Administrator 6
1.45 Plan Year 6
1.46 Present Value 6
1.47 Projected Annual Benefit 6
1.48 Qualified Deferred Compensation
Plan 6
1.49 Qualified Domestic Relations
Order 7
1.50 Qualified Early Retirement Age 7
1.51 Qualified Joint And Survivor
Annuity 7
1.52 Qualified Voluntary Contribution 7
1.53 Required Aggregation Group 7
1.54 Required Beginning Date 7
1.55 Rollover Contribution 7
1.56 Self-Employed Individual 7
1.57 Service 7
1.58 Shareholder Employee 7
1.59 Simplified Employee Pension Plan 7
1.60 Sponsor 7
1.61 Spouse (Surviving Spouse) 7
1.62 Super Top-Heavy Plan 7
1.63 Taxable Wage Base 7
1.64 Top-Heavy Determination Date 7
1.65 Top-Heavy Plan 7
1.66 Top-Heavy Ratio 7
1.67 Transfer Contribution 8
1.68 Trustee 8
1.69 Valuation Date 8
1.70 Vested Account Balance 8
1.71 Voluntary Contribution 8
1.72 Welfare Benefit Fund 8
1.73 Year Of Service 8
ARTICLE II
ELIGIBILITY REQUIREMENTS
2.1 Participation 8
2.2 Change In Classification Of
Employment 8
2.3 Computation Period 8
2.4 Employment Rights 8
2.5 Service With Controlled Groups 8
2.6 Owner-Employees 8
2.7 Leased Employees 8
ARTICLE III
EMPLOYER CONTRIBUTIONS
3.1 Amount 9
3.2 Expenses And Fees 9
3.3 Responsibility For 9
Contributions
3.4 Return Of Contributions 9
ARTICLE IV
EMPLOYEE CONTRIBUTIONS
4.1 Voluntary Contributions 9
4.2 Qualified Voluntary
Contributions 9
4.3 Rollover Contribution 9
4.4 Transfer Contribution 9
4.5 Employer Approval Of
Transfer Contributions 9
ARTICLE V
PARTICIPANT ACCOUNTS
5.1 Separate Accounts 9
5.2 Adjustments To Participant
Accounts 9
5.3 Allocating Employer
Contributions 9
5.4 Allocating Investment
Earnings And Losses 10
5.5 Participant Statements 10
ARTICLE V
RETIREMENT BENEFITS AND DISTRIBUTIONS
6.1 Normal Retirement Benefits 10
6.2 Early Retirement Benefits 10
6.3 Benefits On Termination
Of Employment 10
6.4 Restrictions On Immediate
Distributions 10
6.5 Normal Form Of Payment 11
6.6 Commencement Of Benefits 11
6.7 Claims Procedures 11
6.8 In-Service Withdrawals 11
6.9 Hardship Withdrawal 11
ARTICLE VII
DISTRIBUTION REQUIREMENTS
7.1 Joint And Survivor Annuity
Requirements 12
7.2 Minimum Distribution
Requirements 12
7.3 Limits On Distribution
Periods 12
7.4 Required Distributions On Or
After The Required Beginning
Date 12
7.5 Required Beginning Date 12
7.6 Transitional Rule 12
7.7 Designation Of Beneficiary
For Death Benefit 13
7.8 Nonexistence Of Beneficiary 13
7.9 Distribution Beginning
Before Death 13
7.10 Distribution Beginning After
Death 13
ARTICLE VIII
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1 Applicability Of Provisions 13
8.2 Payment Of Qualified Joint
And Survivor Annuity 13
8.3 Payment of Qualified Pre-
Retirement Survivor Annuity 13
8.4 Qualified Election 13
8.5 Notice Requirements For
Qualified Joint And Survivor
Annuity 14
8.6 Notice Requirements For
Qualified Pre-Retirement
Survivor Annuity 14
8.7 Special Safe-Harbor Exception
For Certain Profit-Sharing
Plans 14
8.8 Transitional Joint And
Survivor Annuity Rates 14
8.9 Automatic Joint And Survivor
Annuity And Early Survivor
Annuity 14
8.10 Annuity Contracts 15
ARTICLE IX
VESTING
9.1 Employee Contributions 15
9.2 Employer Contributions 15
9.3 Computation Period 15
9.4 Requalification Prior To Five
Consecutive One-Year Breaks
In Service 15
9.5 Requalification After Five
Consecutive One-Year Breaks
In Service 15
9.6 Calculating Vested Interest 15
9.7 Forfeitures 15
9.8 Amendment Of Vesting Schedule 15
9.9 Service With Controlled
Groups 15
ARTICLE X
LIMITATIONS ON ALLOCATIONS
10.1 Participation In This Plan
Only 15
10.2 Disposition Of Excess Annual
Additions 15
10.3 Participation In This Plan
And Another Prototype
Defined Contribution Plan,
Welfare Benefit Fund,
Individual Medical Account
Maintained By The Employer 16
10.4 Disposition Of Excess Annual
Additions Under Two Plans 16
10.5 Participation In This Plan
And Another Defined Contri-
bution Plan Which Is Not A
Master Or Prototype Plan 16
10.6 Participation In This Plan
And A Defined Benefit Plan 16
ARTICLE XI
ADMINISTRATION
11.1 Plan Administrator 16
11.2 Trustee 16
11.3 Administrative Fees And
Expenses 17
11.4 Division Of Duties And
Indemnification 17
ARTICLE XII
TRUST FUND
12.1 The Fund 17
12.2 Control Of Plan Assets 17
12.3 Exclusive Benefit Rules 17
12.4 Assignment And Alienation Of
Benefits 17
12.5 Determination Of Qualified
Domestic Relations Order
(QDRO) 17
ARTICLE XIII
INVESTMENTS
13.1 Fiduciary Standards 18
13.2 Funding Arrangement 18
13.3 Investment Alternatives Of
The Trustee 18
13.4 Employer Investment Direction 18
13.5 Employee Investment Direction 18
ARTICLE XIV
TOP-HEAVY PROVISIONS
14.1 Applicability Of Rules 18
14.2 Minimum Contribution 19
14.3 Minimum Vesting 19
14.4 Limitations On Allocations 19
ARTICLE XV
AMENDMENT AND TERMINATION
15.1 Amendment By Sponsor 19
15.2 Amendment By Employer 19
15.3 Termination 19
15.4 Qualification Of Employer's
Plan 19
15.5 Mergers And Consolidations 19
15.6 Resignation And Removal 20
15.7 Qualification Of Prototype 20
ARTICLE XVI
GOVERNING LAW 20
</TABLE>
PROTOTYPE DEFINED CONTRIBUTION PLAN AND TRUST
Sponsored By
AMERICAN FUNDS DISTRIBUTORS, INC.
The Sponsor hereby establishes the following Prototype Retirement Plan and
Trust for use by those of its customers who qualify and wish to adopt a
qualified retirement program. Any Plan and Trust established hereunder shall be
administered for the exclusive benefit of Participants and their beneficiaries
under the following terms and conditions:
ARTICLE I
DEFINITIONS
1.1 ADOPTION AGREEMENT The document attached to this Plan by which an
Employer elects to establish a qualified retirement plan and trust under the
terms of this Prototype Plan and Trust.
1.2 ANNUAL ADDITIONS The sum of the following amounts credited to a
Participant's account for the Limitation Year:
(a) Employer Contributions,
(b) Employee Contributions (under Article IV),
(c) forfeitures,
(d) amounts allocated after March 31, 1984 to an individual medical account,
as defined in Code Section 415(1)(2), which is part of a pension or annuity
plan maintained by the Employer (these amounts are treated as Annual Additions
to a Defined Contribution Plan though they arise under a Defined Benefit Plan),
and
(e) amounts derived from contributions paid or accrued after 1985, in taxable
years ending after 1985, which are either attributable to post-retirement
medical benefits, allocated to the account of a Key Employee, or a Welfare
Benefit Fund maintained by the Employer are also treated as Annual Additions to
a Defined Contribution Plan. For purposes of this paragraph, an Employee is a
Key Employee if he or she meets the requirements of paragraph 1.30 at any time
during the Plan Year or any preceding Plan Year. Welfare Benefit Fund is
defined at paragraph 1.72.
Excess amounts applied in a Limitation Year to reduce Employer contributions
will be considered Annual Additions for such Limitation Year, pursuant to the
provisions of Article X.
1.3 ANNUITY STARTING DATE The first day of the first period for which an
amount is paid as an annuity or any other form.
1.4 APPLICABLE CALENDAR YEAR The First Distribution Calendar Year, and in
the event of the recalculation of life expectancy, each succeeding calendar
year. If payments commence in accordance with paragraph 7.4(e) before the
Required Beginning Date, the Applicable Calendar Year is the year such payments
commence. If distribution is in the form of an immediate annuity purchased
after the Participant's death with the Participant's remaining interest, the
Applicable Calendar Year is the year of purchase.
1.5 APPLICABLE LIFE EXPECTANCY Used in determining the required minimum
distribution. The life expectancy (or joint and last survivor expectancy)
calculated using the attained age of the Participant (or Designated
Beneficiary) as of the Participant's (or Designated Beneficiary's) birthday in
the Applicable Calendar Year reduced by one for each calendar year which has
elapsed since the date life expectancy was first calculated. If life expectancy
is being recalculated, the Applicable Life Expectancy shall be the life
expectancy as so recalculated. The life expectancy of a non-Spouse Beneficiary
may not be recalculated.
1.6 BREAK IN SERVICE A 12-consecutive month period during which an Employee
fails to complete more than 500 Hours of Service.
1.7 CODE The Internal Revenue Code of 1986, including any amendments
thereto.
1.8 COMPENSATION The total wages or salary, overtime, commissions, bonuses,
and any other taxable remuneration earned while a Participant from the Employer
and actually paid during the applicable period (i.e., the Plan Year, Calendar
Year or taxable year ending with or within the Plan Year), as reflected on the
Participant's Form W-2. If the Employer fails to pick the applicable period in
Section (3)(b) of the Adoption Agreement, the Plan Year shall be used. In
Nonstandardized Adoption Agreements 003 and 004, the Employer may choose to
eliminate categories of Compensation which do not violate the provisions of
Code Sections 401(a)(4) and 414(s) and the regulations thereunder. Beginning
with 1989 Plan Years, the annual Compensation of each Participant which may be
taken into account under the Plan for any year shall not exceed $200,000, as
adjusted under Code Section 415(d). In determining the Compensation of a
Participant for purposes of this limitation, the rules of Code Section
414(q)(6) shall apply, except in applying such rules, the term "family" shall
include only the spouse of the Participant and any lineal descendants of the
Participant who have not attained age 19 before the end of the year. If, as a
result of the application of such rules, the adjusted $200,000 limitation is
exceeded, then (except for purposes of determining the portion of Compensation
up to the integration level if this Plan provides for permitted disparity), the
limitation shall be prorated among the affected individuals in proportion to
each such individual's Compensation as determined under this section prior to
the application of this limitation. Compensation shall not include deferred
compensation other than contributions through a salary reduction agreement to a
cash or deferred plan under Code Section 401(k), a Simplified Employee Pension
Plan under Code Section 402(h)(1)(B), a cafeteria plan under Code Section 125
or a tax-deferred annuity under Code Section 403(b). Unless elected otherwise
by the Employer in the Adoption Agreement, these deferred amounts will be
considered as Compensation for Plan purposes. When applicable to a
Self-Employed Individual, Compensation shall mean Earned Income.
For purposes of applying the limitations of Article X and Top-Heavy Minimums,
the definition is: a Participant's Earned Income, wages, salaries, and fees for
professional services and other amounts received for personal services actually
rendered in the course of employment with the Employer maintaining the Plan
(including, but not limited to, commissions paid salesmen, compensation for
services on the basis of a percentage of profits, commissions on insurance
premiums, tips and bonuses), and excluding the following:
(a) Employer contributions to a plan of deferred compensation which are not
includible in the Employee's gross income for the taxable year in which
contributed, or Employer contributions under a Simplified Employee Pension
Plan to the extent such contributions are deductible by the Employee, or any
distributions from a plan of deferred compensation,
(b) Amounts realized from the exercise of a non-qualified stock option, or
when restricted stock (or property) held by the Employee either becomes freely
transferable or is no longer subject to a substantial risk of forfeiture,
(c) Amounts realized from the sale, exchange or other disposition of stock
acquired under a qualified stock option; and
(d) other amounts which received special tax benefits, or contributions made
by the Employer (whether or not under a salary reduction agreement) towards the
purchase of an annuity described in Code Section 403(b) (whether or not the
amounts are actually excludable from the gross income of the Employee).
For purposes of applying the limitations of said Article, Compensation for a
Limitation Year is the Compensation actually paid or includible in gross income
during such Limitation Year.
1.9 CUSTODIAN The Trustee shall serve as Custodian.
1.10 DEFINED BENEFIT PLAN A Plan under which a Participant's benefit is
determined by a formula contained in the Plan and no individual accounts are
maintained for Participants.
1.11 DEFINED BENEFIT (PLAN) FRACTION A fraction, the numerator of which is
the sum of the Participant's Projected Annual Benefits under all the Defined
Benefit Plans (whether or not terminated) maintained by the Employer, and the
denominator of which is the lesser of 125 percent of the dollar limitation
determined for the Limitation Year under Code Sections 415(b) and (d) or 140
percent of the Highest Average Compensation, including any adjustments under
Code Section 415(b).
Transitional Rule: Notwithstanding the above, if the Participant was a
Participant as of the first day of the first Limitation Year beginning after
1986, in one or more Defined Benefit Plans maintained by the Employer which
were in existence on May 6, 1986, the denominator of this fraction will not be
less than 125 percent of the sum of the annual benefits under such plans which
the Participant had accrued as of the close of the last Limitation Year
beginning before 1987, disregarding any changes in the terms and conditions of
the plan after May 5, 1986. The preceding sentence applies only if the Defined
Benefit Plans individually and in the aggregate satisfied the requirements of
Section 415 for all Limitation Years beginning before 1987.
1.12 DEFINED CONTRIBUTION DOLLAR LIMITATION Thirty thousand dollars
($30,000) or if greater, one-fourth of the defined benefit dollar limitation
set forth in Code Section 415(b)(1) as in effect for the Limitation Year.
1.13 DEFINED CONTRIBUTION PLAN A Plan under which individual accounts are
maintained for each Participant to which all contributions, forfeitures,
investment income and gains or losses, and expenses are credited or deducted. A
Participant's benefit under such Plan is based solely on the fair market value
of his or her account balance.
1.14 DEFINED CONTRIBUTION (PLAN) FRACTION A Fraction, the numerator of which
is the sum of the Annual Additions to the Participant's account under all the
Defined Contribution Plans (whether or not terminated) maintained by the
Employer for the current and all prior Limitation Years (including the Annual
Additions attributable to the Participant's nondeductible Employee
contributions to all Defined Benefit Plans, whether or not terminated,
maintained by the Employer, and the Annual Additions attributable to all
Welfare Benefit Funds, as defined in paragraph 1.72 and individual medical
accounts, as defined in Code Section 415(1)(2), maintained by the Employer),
and the denominator of which is the sum of the maximum aggregate amounts for
the current and all prior Limitation Years of Service with the Employer
(regardless of whether a Defined Contribution Plan was maintained by the
Employer). The maximum aggregate amount in the Limitation Year is the lesser of
125 percent of the dollar limitation determined under Code Sections 415(b) and
(d) in effect under Code Section 415(c)(1)(A) or 35 percent of the
Participant's Compensation for such year.
Transitional Rule: If the Employee was a Participant as of the end of the first
day of the first Limitation Year beginning after 1986, in one or more Defined
Contribution Plans maintained by the Employer which were in existence on May 6,
1986, the numerator of this fraction will be adjusted if the sum of this
fraction and the Defined Benefit Fraction would otherwise exceed 1.0 under the
terms of this Plan. Under the adjustment, an amount equal to the product of (1)
the excess of the sum of the fractions over 1.0 times (2) the denominator of
this fraction will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as they would be
computed as of the end of the last Limitation Year beginning before 1987, and
disregarding any changes in the terms and conditions of the Plan made after May
6, 1986, but using the Section 415 limitation applicable to the first
Limitation Year beginning on or after January 1, 1987. The Annual Addition for
any Limitation Year beginning before 1987, shall not be re-computed to treat
all Employee Contributions as Annual Additions.
1.15 DESIGNATED BENEFICIARY The individual who is designated as the
beneficiary under the Plan in accordance with Code Section 401(a)(9) and the
regulations thereunder.
1.16 DISABILITY An illness or injury of a potentially permanent nature,
expected to last for a continuous period of not less than 12, months, certified
by a physician selected by or satisfactory to the Employer which prevents the
Employee from engaging in any occupation for wage or profit for which the
Employee is reasonably fitted by training, education or experience.
1.17 DISTRIBUTION CALENDAR YEAR A calendar year for which a minimum
distribution is required.
1.18 EARLY RETIREMENT AGE The age set by the Employer in the Adoption
Agreement (but not less than 55), which is the earliest age at which a
Participant may retire and receive his or her benefits under the Plan.
1.19 EARNED INCOME Net earnings from self-employment in the trade or
business with respect to which the Plan is established, determined without
regard to items not included in gross income and the deductions allocable to
such items, provided that personal services of the individual are a material
income-producing factor. Earned income shall be reduced by contributions made
by an Employer to a qualified plan to the extent deductible under Code Section
404. For tax years beginning after 1989, net earnings shall be determined
taking into account the deduction for one-half of self-employment taxes allowed
to the Employer under Code Section 164(f) to the extent deductible.
1.20 EFFECTIVE DATE The date on which the Employer's retirement plan or
amendment to such Plan becomes effective.
1.21 ELECTION PERIOD The period which begins on the first day of the Plan
Year in which the Participant attains age 35 and ends on the date of the
Participant's death. If a Participant separates from Service prior to the first
day of the Plan Year in which age 35 is attained, the Election Period shall
begin on the date of separation, with respect to the account balance as of the
date of separation.
1.22 EMPLOYEE Any person employed by the Employer (including Self-Employed
Individuals and partners), all Employees of a member of an affiliated service
group [as defined in Code Section 414(m)], Employees of a controlled group of
corporations [as defined in Section 414(b) of the Code], all Employees of any
incorporated or unincorporated trade or business which is under common control
[as defined in Section 414(c) of the Code], leased Employees [as defined in
Code Section 414(n)] and any Employee required to be aggregated by Code Section
414(o). All such Employees shall be treated as employed by a single Employer.
1.23 EMPLOYER The Self-Employed Individual, partnership, corporation or
other organization which adopts this Plan including any firm that succeeds the
Employer and adopts this Plan. For purposes of Article X, Limitations on
Allocations, Employer shall mean the Employer that adopts this Plan, and all
members of a controlled group of corporations [as defined in Code Section
414(b) as modified by Section 415(h)], all commonly controlled trades or
businesses [as defined in Section 414(c) as modified by Section 415(h)] or
affiliated service groups [as defined in Section 414(m)] of which the adopting
Employer is a part, and other entity required to be aggregated with the
Employer pursuant to regulations under Code Section 414(o).
1.24 ENTRY DATE The date on which an Employee commences participation in the
Plan as determined by the Employer in the Adoption Agreement. Unless the
Employer specifies otherwise in the Adoption Agreement, Entry into the Plan
shall be on the first day of the Plan Year or the first day of the seventh
month of the Plan Year coinciding with or following the date on which an
Employee meets the eligibility requirements.
1.25 EXCESS AMOUNT The excess of the Participant's Annual Additions for the
Limitation Year over the Maximum Permissible Amount.
1.26 FIRST DISTRIBUTION CALENDAR YEAR For distributions beginning before the
Participant's death, the First Distribution Calendar Year is the calendar year
immediately preceding the calendar year which contains the Participant's
Required Beginning Date. For distributions beginning after the Participant's
death, the First Distribution Calendar Year is the calendar year in which
distributions are required to begin pursuant to paragraph 7.10.
1.27 FUND All contributions received by the Trustee under this Plan and
Trust, investments thereof and earnings and appreciation thereon.
1.28 HIGHEST AVERAGE COMPENSATION The average Compensation for the three
consecutive Years of Service with the Employer that produces the highest
average. A Year of Service with the Employer is the 12-consecutive month period
defined in the Adoption Agreement.
1.29 HOUR OF SERVICE
(a) Each hour for which an Employee is paid, or entitled to payment, for the
performance of duties for the Employer. These hours shall be credited to the
Employee for the computation period in which the duties are performed; and
(b) Each hour for which an Employee is paid, or entitled to payment, by the
Employer on account of a period of time during which no duties are performed
(irrespective of whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability), layoff, jury
duty, military duty or leave of absence. No more than $01 Hours of Service
shall be credited under this paragraph for any single continuous period
(whether or not such period occurs in a single computation period). Hours under
this paragraph shall be calculated and credited pursuant to Section 2530.200b-2
of the Department of Labor Regulations which are incorporated herein by this
reference; and
(c) Each hour for which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by the Employer. The same Hours of Service shall
not be credited both under paragraph (a) or paragraph (b), as the case may
be, and under this paragraph (c). These hours shall be credited to the Employee
for the computation period or periods to which the award or agreement pertains
rather than the computation period in which the award, agreement or payment
is made.
(d) Hours of Service shall be credited for employment with the Employer and
with other members of an affiliated service group (as defined in Code
Section 414(m)], a controlled group of corporations (as defined in Code Section
414(b)1, or a group of trades or businesses under common control [as defined in
Code Section 414(c)1 of which the adopting Employer is a member, and any other
entity required to be aggregated with tile Employer pursuant to Code Section
414(o) and the regulations thereunder. Hours of Service shall also be credited
for any individual considered an Employee for purposes of this Plan under Code
Section 414(n) or Code Section 414(o) and the regulations thereunder.
(e) Solely for purposes of determining whether a Break in Service, as defined
in paragraph 1.6, for participation and vesting purposes has occurred in a
computation period, an individual who is absent from work for maternity or
paternity reasons shall receive credit for the Hours of Service which would
otherwise have been credited to such individual but for such absence, or in any
case in which such hours cannot be determined, 8 Hours of Service per day of
such absence. For purposes of this paragraph, an absence from work for
maternity or paternity reasons means an absence by reason of the pregnancy of
the individual, by reason of a birth of a child of the individual, by reason of
the placement of a child with the individual in connection with the adoption of
such child by such individual, or for purposes of caring for such child for a
period beginning immediately following such birth or placement. The Hours of
Service credited under this paragraph shall be credited in the computation
period in which the absence begins if the crediting is necessary to prevent a
Break in Service in that period, or in all other cases, in the following
computation period. No more than 501 hours will be credited under this
paragraph.
(f) Unless specified otherwise in the Adoption Agreement, Hours of Service
shall be determined on the basis of the actual hours for which an employee is
paid or entitled to payment. 1.30 Key? Employee Any Employee or former Employee
(and the beneficiaries of such employee) who at any time during the
determination period was an officer of the Employer if such individual's annual
compensation exceeds 50% of the dollar limitation under Code Section
415(b)(1)(A) (the defined benefit maximum annual benefit), an owner (or
considered an owner under Code Section 318) of on(: of the ten largest
interests in the employer if such individual's compensation exceeds 100% of the
dollar limitation under Code Section 415(c)(1){A), a 5% owner of the Employer,
or a 1% owner of the Employer who has an annual compensation of more than
$150,000. For purposes of determining who is a Key Employee, annual
compensation shall mean Compensation as defined for Article X, but including
amounts deferred through a salary reduction agreement to a cash or deferred
plan under Code Section 401(k), a Simplified Employee Pension Plan under Code
Section 402(h)(1) (B), a cafeteria plan under Code Section 125 or a
tax-deferred annuity under Code Section 403(b). The determination period is the
Plan Year containing the Determination Date and the four preceding Plan Years.
The determination of who is a Key Employee will be made in accordance with Code
Section 416(i)(1) and the regulations thereunder.
1.31 LEASED EMPLOYEE Any person (other than an Employee of the recipient)
who pursuant to an agreement between the recipient and any other person
("leasing organization") has performed services for the recipient [or for the
recipient and related persons determined in accordance with Code Section
414(n)(6)] on a substantially full-time basis for a period of at least one
year, and such services are of a type historically performed by Employees in
the business field of the recipient Employer.
1.32 LIMITATION YEAR The calendar year or such other 12-consecutive month
period designated by the Employer in the Adoption Agreement for purposes of
determining the maximum Annual Addition to a Participant's account. All
qualified plans maintained by the Employer must use the same Limitation Year.
If the Limitation Year is amended to a different 12-consecutive month period,
the new Limitation Year must begin on a date within the Limitation Year in
which the amendment is made.
1.33 MANDATORY CONTRIBUTION An Employee contribution which was not
tax-deductible when made and which was required for participation in the Plan.
These contributions may no longer be made to the Plan, for Plan Years beginning
after the Plan Year in which this Plan is adopted (or restated) by the
Employer.
1.34 MASTER OR PROTOTYPE PLAN A plan, the form of which is the subject of a
favorable opinion letter from the internal Revenue Service.
1.35 MAXIMUM PERMISSIBLE AMOUNT The maximum Annual Addition that may he
contributed or allocated to a Participant's account under tile plan for any
limitation Year shall not exceed the lesser of:
(a) tile Defined Contribution Dollar Limitation, or (b) 25% of the
Participant's Compensation for the Limitation Year. The compensation limitation
referred to in (b) shall not apply to any contribution for medical benefits
within tile meaning of Code Section 401(h) or Code Section 419A(f)(2)l which is
otherwise treated as an Annual Addition under Code Section 415([)(I) or
419(d)(2). [fa short Limitation Year is created because of an amendment
changing the Limitation Year to a different 12-consecutive month period, the
Maximum Permissible Amount will not exceed the Defined Contribution Dollar
Limitation multiplied by the following fraction: Number of months in the short
Limitation Year divided by 12.
1.36 NET PROFIT The current and accumulated operating earnings of the
Employer before Federal and State income taxes, excluding nonrecurring or
unusual items of income, and before contributions to this and any other
qualified plan of the Employer. Alternatively, the Employer may fix another
definition in the Adoption Agreement.
1.37 NORMAL RETIREMENT AGE The age set by the Employer in the Adoption
Agreement at which a Participant may retire and receive his or her benefits
under the Plan.
1.38 OWNER-EMPLOYEE A sole proprietor, or a partner owning more than 1096 of
either the capital or profits interest of the partnership.
1.39 PAIRED Plans Two or more Plans maintained by the Sponsor designed so
that a single or any combination of Plans adopted by an Employer will meet the
antidiscrimination rules, the contribution and benefit limitations, and the
Top-Heavy provisions of the Code.
1.40 PARTICIPANT Any Employee who has met the eligibility requirements and
is participating in the Plan.
1.41 PARTICIPANT'S BENEFIT The account balance as of the last Valuation Date
in the calendar year immediately preceding the Distribution Calendar Year
(valuation calendar year), increased by the amount of any contributions or
forfeitures allocated to the account balance as of the dates in the valuation
calendar year after the Valuation Date and decreased by distributions made in
the valuation calendar year after the Valuation Date. A special exception
exists for the second distribution Calendar Year. For purposes of this
paragraph, if any portion of the minimum distribution for the First
Distribution Calendar Year is made in the second Distribution Calendar Year on
or before the Required Beginning Date, the amount of the minimum distribution
made in the second distribution calendar year shall be treated as if it had
been made in the immediately preceding Distribution Calendar Year.
1.42 PERMISSIVE AGGREGATION GROUP Used for Top-Heavy testing purposes, it is
the Required Aggregation Group of plans plus any other plan or plans of the
Employer which, when considered as a group with the Required Aggregation Group,
would continue to satisfy the requirements of Code Sections 401(a)(4) and 410.
1.43 PLAN The Employer's retirement plan as embodied herein and in the
Adoption Agreement.
1.44 PLAN ADMINISTRATOR The Employer.
1.45 PLAN YEAR The 12-consecutive month period designated by the Employer
in the Adoption Agreement.
1.46 PRESENT VALUE When determining the Present Value of accrued benefits,
with respect to any Defined Benefit Plan maintained by the Employer for
Top-Heavy test and limitation on allocation purposes, interest and mortality
rates shall be determined in accordance with the provisions of the respective
plan. If applicable, interest and mortality assumptions will be specified in
Section 10 of Adoption Agreements 001 through 004 and Section 7 of Adoption
Agreements 005 and 006.
1.47 PROJECTED ANNUAL BENEFIT Used to test the maximum benefit which may be
obtained from a combination of retirement plans, it is the annual retirement
benefit (adjusted to an actuarial equivalent straight life annuity if such
benefit is expressed in a form other than a straight life annuity or Qualified
Joint and Survivor Annuity) to which the Participant would be entitled under
the terms of a Defined Benefit Plan or plans, assuming:
(a) the Participant will continue employment until Normal Retirement Age
under the plan (or current age, if later), and
(b) the Participant's Compensation for the current Limitation Year and all
other relevant factors used to determine benefits under the Plan will remain
constant for all future Limitation Years.
1.48 QUALIFIED DEFERRED COMPENSATION PLAN Any pension, profit-sharing, stock
bonus, or other plan which meets tire requirements of Code Section 401 and
includes a trust exempt from tax under Code Section 501(a) and any annuity plan
described in Code Section 403(a).
1.49 QUALIFIED DOMESTIC RELATIONS ORDER A QDRO is a signed Domestic
Relations Order issued by a State Court which creates, recognizes or assigns to
an alternate payee(s) the right to receive all or part of a Participant's Plan
benefit and which meets the requirements of Code Section 414([)). An alternate
payee is a Spouse, former Spouse, child, or other dependent who is treated as a
beneficiary under the Plan as a result of the QDRO.
1.50 QUALIFIED EARLY RETIREMENT AGE For purposes of paragraph 8.9, Qualified
Early Retirement Age is the latest of:
(a) the earliest date, under the Plan, on which the Participant may elect to
receive retirement benefits,
(b) the first day of the 120th month beginning before the Participant
reaches Normal Retirement Age, or
(c) the date the Participant begins participation.
1.51 QUALIFIED JOINT AND SURVIVOR ANNUITY An immediate annuity for the life
of the Participant with a survivor annuity for the life of the Participant's
Spouse which is at least 50% of but not more than the amount of the annuity
payable during the joint lives of the Participant and the Participant's Spouse.
The exact amount of the Survivor Annuity is to be specified by the Employer in
the Adoption Agreement. If not designated by the Employer, the Survivor Annuity
will be 50% of the amount paid to the Participant during his or her lifetime.
The Qualified Joint and Survivor Annuity will be the amount of benefit which
can be provided by the Participant's Vested Account Balance.
1.52 QUALIFIED VOLUNTARY CONTRIBUTION A tax-deductible voluntary Employee
contribution. These contributions may no longer be made to the Plan.
1.53 REQUIRED AGGREGATION GROUP Used for Top-Heavy testing purposes, it
consists of:
(a) each qualified plan of the Employer in which at least one Key Employee
participates or participated at any time during the determination period
(regardless of whether the plan has terminated), and(b) any other qualified
plan of the Employer which enables a plan described in (a) to meet the
requirements of Code Sections 401(a)(4) or 410.
1.54 REQUIRED BEGINNING DATE The date on which a Participant is required to
take his or her first minimum distribution under the Plan. The rules are set
forth at paragraph 7.5.
1.55 ROLLOVER CONTRIBUTION A contribution made by a Participant of an amount
distributed to such Participant from another Qualified Deferred Compensation
Plan in accordance with Code Sections 402(a)(5), (6), and (7).
1.56 SELF-EMPLOYED INDIVIDUAL An individual who has Earned In- come for the
taxable year from the trade or business for which the Plan is established
including an individual who would have had Earned Income but for the fact that
the trade or business had no Net Profits for the taxable year.
1.57 SERVICE The period of current or prior employment with the Employer. If
the Employer maintains a plan of a predecessor employer, Service for such
predecessor shall be treated as Service for the Employer.
1.58 SHAREHOLDER EMPLOYEE An Employee or Officer who owns lot is considered
as owning within the meaning of Code Section 318(a)(i)], on any day during the
taxable year of an electing small business (S Corporation) corporation, more
than 5% of such corporation's outstanding stock.
1.59 SIMPLIFIED EMPLOYEE PENSION PLAN An individual retirement ac- count
which meets the requirements of Code Section 408(k), and to which the Employer
makes contributions pursuant to a written formula. These plans are considered
for contribution limitation and Top-Heavy testing purposes.
1.60 SPONSOR American Funds Distributors, Inc.
1.61 SPOUSE (SURVIVING SPOUSE) The Spouse or Surviving Spouse of the
Participant, provided that a former Spouse will be treated as the Spouse or
Surviving Spouse and a current Spouse will not be treated as the Spouse or
Surviving Spouse to the extent provided under a Qualified Domestic Relations
Order as described in Section 414(p) of the Code.
1.62 SUPER TOP-HEAVY PLAN A Plan described at paragraph 1.65 hereof under
which the Top-Heavy Ratio {as defined at paragraph 1.66] exceeds 90%.
1.63 TAXABLE WAGE BASE For plans with an allocation formula which takes into
account the Employer's contribution under the Federal Insurance Contributions
Act (FICA), the maximum amount of earnings which may be considered wages for
such Plan Year under the Social Security Act {Code Section 3121(a)(1)1 or the
amount selected by the Employer in the Adoption Agreement.
1.64 TOP-HEAVY DETERMINATION DATE For any Plan Year subsequent to the first
Plan Year, the last day of the preceding Plan Year. For the first Plan Year,
the last day of that year.
1.65 TOP-HEAVY PLAN For any Plan Year beginning after 1983, the Employer's
Plan is top-heavy if any of the following conditions exist:
(a) If the Top-Heavy Ratio for the Employer's Plan exceeds 60% and this Plan
is not part of any Required Aggregation Group or Permissive Aggregation Group
of Plans.
(b) If the Employer's plan is a part of a Required Aggregation Group of
plans but not part of a Permissive Aggregation Group and the Top-Heavy Ratio
for the group of plans exceeds 60%.
(c) If the Employer's plan is a part of a Required Aggregation Group and
part of a Permissive Aggregation Group of plans and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds 60%.
1.66 TOP-HEAVY RATIO
(a) If the Employer maintains one or more Defined Contribution plans
(including any Simplified Employee Pension Plan) and the Employer has not
maintained any Defined Benefit Plan which during the 5-year period ending on
the Determination Date(s) has alone, or for the Required or Permissive
Aggregation Group as appropriate, is a fraction, (1) the numerator of which is
the sum of the account balances of all Key Employees as of the Determination
Date(s) [including any part of any account balance distributed in the 5-year
period ending on the Determination Date(s)], and
(2) the denominator of which is the sum of all account balances [including
any part of any account balance distributed tn the 5-year period ending on the
Determination Date(s)], both computed in accordance with Code Section 416 and
the regulations thereunder. Both the numerator and denominator of the
Top-Heavy Ratio are increased to reflect any contribution not actually made as
of the Determination Date, but which is required to be taken into account on
that date under Code Section 416 and the regulations thereunder.
(b) If the Employer maintains one or more Defined Contribution Plans
(including any Simplified Employee Pension Plan) and the Employer maintains or
has maintained one or more Defined Benefit Plans which during the 5-year
period ending on the Determination Date(s) has or has had any accrued benefits,
the Top-Heavy Ratio for any Required or Permissive Aggregation Group as
appropriate is a fraction, (1) the numerator of which is the sum of account
balances under the aggregated Defined Contribution Plan or Plans for all Key
Employees, determined in accordance with (a) above, and the Present Value of
accrued benefits under the aggregated Defined Benefit Plan or Plans for all Key
Employees as of the Determination Date(s), and (2) the denominator of which is
the sum of the account balances under the aggregated Defined Contribution Plan
or Plans for all Participants, determined in accordance with (a) above, and
the Present Value of accrued benefits under the Defined Benefit Plan or Plans
for all Participants as of the Determination Date(s), all determined in
accordance with Code Section 416 and the regulations thereunder.
The accrued benefits under a Defined Benefit Plan in both the numerator
and denominator of the Top-Heavy Ratio are increased for any distribution of an
accrued benefit made in the 5-year period ending on the Determination Date.
(c) For purposes of (a) and (b) above, the value of account balances and the
Present Value of accrued benefits will be determined as of the most recent
Valuation Date that falls within or ends with the 12-month period ending on the
Determination Date, except as provided in Code Section 416 and the regulations
thereunder for the first and second plan years of a Defined Benefit Plan. The
account balances and accrued benefits of a Participant (1) who is not a Key
Employee but who was a Key Employee in a prior year, or (2) who has not been
credited with at least one Hour of Service with any Employer maintaining the
Plan at any time during the 5-year period ending on the Determination Date,
will be disregarded. The calculation of the Top-Heavy Ratio, and tire extent to
which distributions, rollovers, and transfers are taken into account, will be
made in accordance with Code Section 416 and the regulations thereunder.
Qualified Voluntary Employee Contributions will not be taken into account for
purposes of computing the Top-Heavy Ratio. When aggregating plans, the value of
account balances and accrued benefits will be calculated with reference to the
Determination Dates that fall within the same calendar year. The accrued
benefit of a Participant other than a Key Employee shall be determined under
(1) the method, if any, that uniformly applies for accrual purposes under all
Defined Benefit Plans maintained by the Employer, or (2) if there is no such
method, as if such benefit accrued not more rapidly than the slowest accrual
rate permitted under the fractional rule of Code Section 411 (b)(1)(C).
1.67 TRANSFER CONTRIBUTION A non-taxable transfer of a Participant's benefit
directly from a Qualified Deferred Compensation Plan to this Plan.
1.68 TRUSTEE Capital Guardian Trust Company shall serve as Trustee.
1.69 VALUATION DATE The last day of the Plan Year or such other date as
agreed to by the Employer and the Trustee on which Participant accounts are
revalued in accordance with Article V hereof. For Top-Heavy purposes, the date
selected by the Employer as of which the Top-Heavy Ratio is calculated.
1.70 VESTED ACCOUNT BALANCE The aggregate value of the Participant's vested
account balances derived from Employer and Employee contributions (including
Rollovers), whether vested before or upon death, including the proceeds of
insurance contracts, if any, on the Participant's life. The provisions of
Article VIII shall apply to a Participant who is vested in amounts attributable
to Employer contributions, Employee contributions (or both) at the time of
death or distribution.
For purposes of paragraph 8.7, Vested Account Balance shall mean, in the case
of a money purchase pension plan, the Participant's separate account balance
attributable solely to Qualified Voluntary Contributions. For profit-sharing
plans the above definition shall apply.
1.71 VOLUNTARY CONTRIBUTION An Employee contribution which is not
tax-deductible and which is not required as a condition for participation in
the Plan. Such contributions are no longer permitted under this Prototype Plan,
for Plan Years beginning after the Plan Year in which this Plan is adopted (or
restated) by the Employer.
1.72 WELFARE BENEFIT FUND Any fund that is part of a plan of the Employer,
or has the effect of a plan, through which the Employer provides welfare
benefits to Employees or their beneficiaries. For these purposes, Welfare
Benefits means any benefit other than those with respect to which Code Section
83(h) (relating to transfers of property in connection with the performance of
services), Code Section 404 (relating to deductions for contributions to an
Employees' trust or annuity and Compensation under a deferred payment plan),
Code Section 404A (relating to certain foreign deferred compensation plans),
and the election under Code Section 463 (relating to the accrual of vacation
pay) apply. For purposes of this paragraph a "Fund" is any social club,
voluntary employee benefit association, supplemental unemployment benefit trust
or qualified group legal service organization described in Code Section
501(c)(7), (9), (17) or (20); any trust, corporation, or other organization not
exempt from income tax, or to the extent provided in regulations, any account
held for an Employer by any person.
1.73 YEAR OF SERVICE A 12-consecutive month period during which an Employee
is credited with not less than 1,000 (or such lesser number as specified by
the Employer in the Adoption Agreement) Hours of Service.
ARTICLE II ELIGIBILITY REQUIREMENTS
2. l PARTICIPATION Employees who meet the eligibility requirements in the
Adoption Agreement on the Effective Date of the Plan shall become Participants
as of the Effective Date of the Plan. If so elected in the Adoption Agreement,
all Employees employed on the Effective Date of the Plan may participate, even
if they have not satisfied the Plan's specified eligibility requirements. Other
Employees shall become Participants on the Entry Date specified in the Adoption
Agreement. Depending on the Plan's eligibility requirements, the entry date may
actually be earlier than the date on which the Employee satisfies the
eligibility requirements. The Employee must satisfy the eligibility
requirements specified in the Adoption Agreement and be employed on the Entry
Date to become a Participant in the Plan. In the event an Employee who is not a
member of the eligible class of Employees becomes a member of the eligible
class, such Employee shall participate immediately if such Employee has
satisfied the minimum age and service requirements and would have previously
become a Participant had he or she been in the eligible class. A former
Participant shall again become a Participant upon returning to the employ of
the Employer as of the next Entry Date.
2.2 CHANGE IN CLASSIFICATION OF EMPLOYMENT In the event a Participant
becomes ineligible to participate because he or she is no longer a member of an
eligible class of Employees, such Employee shall participate upon his or her
return to an eligible class of Employees.
2.3 COMPUTATION PERIOD To determine Years of Service and Breaks in Service
for purposes of eligibility, the 12-consecutive month period si~all commence on
the date on which an Employee first performs an Hour of Service for the
Employer and each anniversary thereof, such that the succeeding 12-consecutive
month period commences with the employee's first anniversary of employment and
so on.
2.4 EMPLOYMENT RIGHTS Participation in the Plan shall not confer upon a
Participant any employment rights, nor shall it interfere with the Employer's
right to terminate the employment of any Employee at any time.
2.5 SERVICE WITH CONTROLLED GROUPS All Years of Service with other members
of a controlled group of corporations [as defined in Code Section 414(b)],
trades or businesses under common control [as defined in Code Section 414(c)],
or members of an affiliated service group [as defined in Code Section 414(m)]
shall be credited for purposes of determining an Employee's eligibility to
participate.
2.6 OWNER-EMPLOYEES If this Plan provides contributions or benefits for one
or more Owner-Employees who control both the business for which this Plan is
established and one or more other trades or businesses, this Plan and the Plan
established for other trades or businesses must, when looked at as a single
Plan, satisfy Code Sections 401(a) and (d) for the Employees of this and all
other trades or businesses.
If the Plan provides contributions or benefits for one or more Owner- Employees
who control one or more other trades or businesses, the Employees of the other
trades or businesses must be included in a Plan which satisfies Code Sections
401(a) and (d) and which provides contributions and benefits not less favorable
than provided for Owner-Employees under this Plan.
If an individual is covered as an Owner-Employee under the plans of two or
more trades or businesses which are not controlled and the individual controls
a trade or business, then the contributions or benefits of the Employees under
the plan of the trades or businesses which are controlled must be as favorable
as those provided for him under the most favorable plan of the trade or
business which is not controlled.
For purposes of the preceding sentences, an Owner-Employee, or two or more
Owner-Employees, will be considered to control a trade or business if the
Owner-Employee, or two or more Owner-Employees together:
(a) own the entire interest in an unincorporated trade or business, or
(b) in the case of a partnership, own more than 50% of either the capital
interest or the profits interest in the partnership. For purposes of the
preceding sentence, an Owner-Employee, or two or more Owner-Employees shall be
treated as owning any interest in a partnership which is owned, directly or
indirectly, by a partnership which such Owner-Employee, or such two or more
Owner-Employees, are considered to control within the meaning of the preceding
sentence.
2.7 LEASED EMPLOYEES Any leased Employee shall be treated as an Employee
of the recipient Employer, however, contributions or benefits provided by the
leasing organization which are attributable to services performed for the
recipient Employer shall be treated as provided by the recipient Employer. A
leased Employee shall not be considered an Employee of the recipient if such
Employee is covered by a money purchase pension plan providing:
(a) a non-integrated Employer contribution rate of at least 10% of
Compensation, [as defined in Code Section 415(c)(3) but including amounts,
contributed by the Employer pursuant to a salary reduction agreement, which are
excludable from the Employee's gross income under a cafeteria plan covered by
Code Section 125, a cash or deferred profit-sharing plan under Section 401(k)
of the Code, a Simplified Employee Pension Plan under Code Section 402(h)(l)(B)
and a tax-sheltered annuity under Code Section 403(b)1,(b) immediate
participation, and
(c) full and immediate vesting. This exclusion is only available if Leased
Employees do not constitute more than twenty percent (20%) of the recipient's
non-highly compensated work force.
ARTICLE III
EMPLOYER CONTRIBUTIONS
3.1 AMOUNT The Employer intends to make periodic contributions to the Plan
in accordance with the formula or formulas selected in the Adoption Agreement.
However, the Employer's contribution for any Plan Year shall be subject to the
limitations on allocations contained in Article X.
3.2 EXPENSES AND FEES The Employer shall also be authorized to reimburse
the Fund for all expenses and fees incurred in the administration of the Plan
or Trust and paid out of the assets of the Fund. Such expenses shall include,
but shall not be limited to, fees for professional services, printing and
postage. Brokerage Commissions may not be reimbursed.
3.3 RESPONSIBILITY FOR CONTRIBUTIONS Neither the Trustee nor the Sponsor
shall be required to determine if the Employer has made a contribution or if
the amount contributed is in accordance with the Adoption Agreement or the
Code. The Employer shall have sole responsibility in this regard. The Trustee
shall be accountable solely for contributions actually received by it within
the limits of Article XI.
3.4 RETURN OF CONTRIBUTIONS Contributions made to the Fund by the Employer
shall be irrevocable except as provided below:
(a) Any contribution forwarded to the Trustee because of a mistake of fact,
provided that the contribution is returned to the Employer within one year of
the contribution.
(b) In the event that the Commissioner of Internal Revenue determines that
the Plan is not initially qualified under the Internal Revenue Code, any
contribution made incident to that initial qualification by the Employer must
be returned to the Employer within one year after the date the initial
qualification is denied, but only if the application for the qualification is
made by the time prescribed by law for filing the Employer's return for the
taxable year in which the Plan is adopted, or such later date as the Secretary
of the Treasury may prescribe.
(c) Contributions forwarded to the Trustee are presumed to be deductible and
are conditioned on their deductibility. Contributions which are determined to
not be deductible will be returned to the Employer.
ARTICLE IV
EMPLOYEE CONTRIBUTIONS
4.1 VOLUNTARY CONTRIBUTIONS An Employee may no longer make Voluntary
Contributions to the Plan established hereunder for Plan Years beginning after
the Plan Year in which this plan is adopted or restated by the Employer.
Employee Contributions for Plan Years beginning after 1986, together with any
matching contributions as defined in Code Section 401(m), will be limited so as
to meet the antidiscrimination test of Section 401(m). Voluntary and/or
Mandatory Contributions already made may stay in the Trust Fund.
4.2 QUALIFIED VOLUNTARY CONTRIBUTIONS A Participant may no longer make
Qualified Voluntary Contributions to the Plan. Amounts already contributed may
stay in the Trust Fund until distributed to the Participant. Such amounts will
be maintained in a separate account which will be nonforfeitable at all times.
The account will share in the gains and losses of the Trust in the same manner
as described at paragraph 5.4 of the Plan. No part of the Qualified Voluntary
Contribution account will be used to purchase life insurance. Subject to
Article VIII, Joint and Survivor Annuity Requirements (if applicable), the
Participant may withdraw any part of the Qualified Voluntary Contribution
account by making a written application to the Plan Administrator.
4.3 ROLLOVER CONTRIBUTION Unless provided otherwise in the Adoption
Agreement, a Participant may make a Rollover Contribution to any Defined
Contribution Plan established hereunder of all or any part of an amount
distributed or distributable to him or her from a Qualified Deferred
Compensation Plan provided:
(a) the amount distributed to the Participant is deposited to the Plan no
later than the sixtieth day after such distribution was received by the
Participant,
(b) the distribution from the Qualified Deferred Compensation Plan
constituted the Participant's entire interest in such Plan and was distributed
within one taxable year to the Participant:
(1) on account of separation from Service, a Plan termination, or in the
case of a profit-sharing or stock bonus plan, a complete discontinuance of
contributions under such plan within the meaning of Section 402(a)(6)(A) of the
Code, or
(2) in one or more distributions which constitute a qualified lump sum
distribution within the meaning of Code Section 402(e)(4)(A), determined
without reference to subparagraphs (B) and (H),
(c) the amount rolled over does not include any amounts contributed on an
after-tax basis by the Participant to the Qualified Deferred Compensation Plan.
Such Rollover Contribution may also be made through an Individual Retirement
Account qualified under Code Section 408 where the IRA was used as a conduit
from the Qualified Deferred Compensation Plan, the Rollover Contribution is
made in accordance with the rules provided under paragraph (a) through (c) and
the Rollover Contribution does not include any regular IRA contributions, or
earnings thereon, which the Participant may have made to the IRA. The Trustee
shall not be held responsible for determining the tax-free status of any
Rollover Contribution made under this Plan.
4.4 TRANSFER CONTRIBUTION Unless provided otherwise in the Adoption
Agreement a Participant may, subject to the provisions of paragraph 4.5, also
arrange for the direct transfer of his or her benefit from a Qualified Deferred
Compensation Plan to this Plan provided that the transfer is made in accordance
with paragraphs 4.3(b) and 4.3(c) hereof. For accounting and record keeping
purposes, Transfer Contributions shall be treated in the same manner as
Rollover Contributions.
4.5 EMPLOYER APPROVAL OF TRANSFER CONTRIBUTIONS The Employer maintaining a
safe-harbor Profit-Sharing Plan in accordance with the provisions of paragraph
8.7, acting in a nondiscriminatory manner, may in its sole discretion refuse to
allow Transfer Contributions to Its profit-sharing plan, if such contributions
are directly or indirectly being transferred from a defined benefit plan, a
money purchase pension plan (including a target benefit plan), a stock bonus
plan, or another profit-sharing plan which would otherwise provide for a life
annuity form of payment to the Participant.
ARTICLE V
PARTICIPANT ACCOUNTS
5.1 SEPARATE ACCOUNTS The Employer shall establish a separate bookkeeping
account for each Participant showing the total value of his or her interest in
the Fund. Each Participant's account shall be separated for bookkeeping
purposes into the following sub-accounts:
(a) Employer contributions.
(b) Mandatory Contributions (if previously accepted).
(c) Voluntary Contributions (if previously accepted), and additional amounts
including, if applicable, either repayments of loans previously defaulted on
and treated as "deemed distributions" [on which a tax report has been issued],
and amounts paid out upon a separation from service which have been included in
income and which are repaid after being re-hired by the Employer.
(d) Qualified Voluntary Contributions (if previously accepted).
(e) Rollover Contributions and Transfer Contributions.
5.2 ADJUSTMENTS TO PARTICIPANT ACCOUNTS As of each Valuation Date of the
Plan, the Employer shall add to each account:
(a) the Participant's share of the Employer's contribution and forfeitures
as determined in the Adoption Agreement,
(b) any Voluntary, Rollover or Transfer Contributions made by the
Participant,
(c) any repayment of amounts previously paid out to a Participant upon a
separation from Service and repaid by the Participant since the last Valuation
Date, and
(d) the Participant's proportionate share of any investment earnings and
increase in the fair market value of the Fund since the last Valuation Date, as
determined at paragraph 5.4.
The Employer shall deduct from each account:
(e) any withdrawals or payments made from the Participant's account since
the last Valuation Date, and
(f) the Participant's proportionate share of any decrease in the fair market
value of the Fund since the last Valuation Date, as determined at paragraph
5.4.
5.3 ALLOCATING EMPLOYER CONTRIBUTIONS The Employer's contribution shall be
allocated to Participants in accordance with the allocation formula selected by
the Employer in the Adoption Agreement, and the minimum contribution and
allocation requirements for Top-Heavy Plans. Beginning with the 1990 Plan Year
and thereafter, for plans on Standardized Adoption Agreements 001, 002, 005 and
006, Participants who are credited with more than 500 Hours of Service or are
employed on the last day of the Plan Year must receive a full allocation of
Employer contributions. In Nonstandardized Adoption Agreements 003 and 004,
Employer contributions shall be allocated to the accounts of participants
employed by the Employer on the last day of the Plan Year. In the case of a
non-Top-Heavy, Nonstandardized Plan, Participants must also have completed a
Year of Service unless otherwise specified in the Adoption Agreement. For
Nonstandardized Adoption Agreements 003 and 004, the Employer may only apply
the last day of the Plan Year and Year of Service requirements if the Plan
satisfies the requirements of Code Sections 401(a)(26) and 410(b) and the
regulations thereunder. If when applying the last day and Year of Service
requirements the Plan fails to satisfy the aforementioned requirements,
additional Participants will be eligible to receive an allocation of Employer
Contributions until the requirements are satisfied. Participants who are
credited with a Year of Service, but not employed at Plan Year end are the
first category of additional Participants eligible to receive an allocation. If
the requirements are still not satisfied, Participants credited with more than
500 Hours of Service and employed at Plan Year end are the next category of
Participants eligible to receive and allocation. Finally, if necessary to
satisfy the said requirements, any Participant credited with more than 500
Hours of Service will be eligible for an allocation of Employer Contributions.
5.4 ALLOCATING INVESTMENT EARNINGS AND LOSSES A Participant's share of
investment earnings and any increase or decrease in the fair market value of
the Fund shall be based on the proportionate value of all active accounts
(other than accounts with segregated investments) as of the last Valuation Date
less withdrawals since the last Valuation Date. If Employer contributions are
made monthly, quarterly, or on some other systematic basis, the adjusted value
of such accounts for allocation of investment income and gains or losses shall
include one-half the Employer contributions for such period. If contributions
are not made on a systematic basis, it is assumed that they are made at the end
of the valuation period and therefore will not receive an allocation of
investment earnings and gains or losses for such period. Account balances not
yet forfeited shall receive an allocation of earnings and/or losses. Accounts
with segregated investments shall receive only the income or loss on such
segregated investments.
5.5 PARTICIPANT STATEMENTS Upon completing the allocations described above
for the Valuation Date coinciding with the end of the Plan Year, the Employer
shall prepare a statement for each Participant showing the additions to and
subtractions from his or her account since the last such statement and the fair
market value of his or her account as of the current Valuation Date. Employers
so choosing may prepare Participant statements for each Valuation Date.
ARTICLE VI
RETIREMENT BENEFITS AND DISTRIBUTIONS
6.1 NORMAL RETIREMENT BENEFITS A Participant shall be entitled to receive
the balance held in his or her account from Employer contributions upon
reaching Normal Retirement Age or at such earlier dates as the provisions of
this Article VI may allow. If the Participant elects to continue working past
his or her Normal Retirement Age, he or she will continue as an active Plan
Participant. Unless the Employer elects otherwise in the Adoption Agreement,
distribution shall be made to such Participant at his or her request prior to
his or her actual retirement date. Settlement shall be made in the normal form,
or if elected, in one of the optional forms of payment provided below.
6.2 EARLY RETIREMENT BENEFITS If the Employer so provides in the Adoption
Agreement, an early retirement benefit will be available to individuals who
meet the age and Service requirements. An individual who meets the Early
Retirement Age requirements and separates from Service, will become fully
vested, regardless of any vesting schedule which otherwise might apply. If a
Participant separates from Service before satisfying the age requirement, but
after having satisfied the Service requirement, the Participant will be
entitled to elect an Early Retirement benefit upon satisfaction of the age
requirement.
6.3 BENEFITS ON TERMINATION OF EMPLOYMENT
(a) If a Participant terminates employment prior to Normal Retirement Age,
such Participant shall be entitled to receive the vested balance held in his or
her account payable at Normal Retirement Age in the normal form, or if elected,
in one of the optional forms of payment provided hereunder. If applicable, the
Early Retirement Benefit provisions may be elected. Unless provided otherwise
in the Adoption Agreement, a former Participant may make application to the
Employer requesting early payment of any deferred vested and nonforfeitable
benefit due.
(b) If a Participant terminates employment, and the value of that
Participant's vested account balance derived from Employer and Employee
contributions is not greater than $3,500, the Participant will receive a lump
sum distribution of the value of the entire vested portion of such account
balance and the non-vested portion will be treated as a forfeiture. For
purposes of this Article, if the value of a Participant's vested account
balance is zero, the Participant shall be deemed to have received a
distribution of such vested account balance. For Plan Years beginning prior to
1989, a Participant's Vested Account Balance shall not include Qualified
Voluntary Contributions. Notwithstanding the above, if the Employer maintains
or has maintained a policy of not distributing any amounts until the
Participant's Normal Retirement Age, the Employer can continue to uniformly
apply such policy.
(c) If a Participant terminates Service with a vested account balance
derived from Employer and Employee contributions in excess of $3,500, and
elects (with his or her Spouse's consent) to receive 100% of the value of his
or her vested account balance in a lump sum, the non-vested portion will be
treated as a forfeiture. Except as provided at paragraph 6.4(c), the
Participant (and his or her Spouse) must consent to any distribution, when the
vested account balance described above exceeds $3,500 or if at the time of any
prior distribution it exceeded $3,500. For purposes of this paragraph, for Plan
Years beginning prior to 1989, a Participant's Vested Account Balance shall not
include Qualified Voluntary Contributions.
(d) Distribution of less than 100% of the Participant's vested account
balance shall only be permitted if the Participant is fully vested upon
termination of employment.
(e) If a Participant who is not 100% vested receives or is deemed to receive
a distribution pursuant to subsection (a), (b) or (c) of this paragraph, and
such Participant's non-vested benefit is forfeited hereunder, and if such
Participant resumes employment covered under this Plan, the Participant shall
have the right to repay to the Plan the full amount of the distribution
attributable to Employer contributions on or before the earlier of the date
that the Participant incurs 5 consecutive 1-year Breaks in Service following
the date of distribution or five years after the first date on which the
Participant is subsequently reemployed. In such event, the Participant's
forfeiture shall be restored to his or her account as of the Valuation Date at
the end of the Plan Year following the date on which repayment of the
distribution is received. Restoration of the forfeiture amount shall be
accomplished in accordance with the procedure selected by the Employer in the
Adoption Agreement.
(f) A Participant shall also have the option, to postpone payment of his or
her Plan benefits until the first day of April following the calendar year in
which he or she attains age 70-1/2. Any balance of a Participant's account
resulting from his or her Employee contributions not previously withdrawn, if
any, may be withdrawn by the Participant immediately following separation from
Service.
(g) If a Participant ceases to be an active Employee as a result of a
Disability as defined at paragraph 1.16, such Participant shall be able to make
an application for a disability retirement benefit payment. The Participant's
account balance will be deemed "immediately distributable" as set forth in
paragraph 6.4, and will be fully vested pursuant to paragraph 9.2.
6.4 RESTRICTIONS ON IMMEDIATE DISTRIBUTIONS
(a) An account balance is immediately distributable if any part of the
account balance could be distributed to the Participant (or Surviving Spouse)
before the Participant attains tor would have attained if not deceased) the
later of the Normal Retirement Age or age 62.
(b) If the value of a Participant's vested account balance derived from
Employer and Employee Contributions exceeds (or at the time of any prior
distribution exceeded) $3,500, and the account balance is immediately
distributable, the Participant and his or her Spouse (or where either the
Participant or the Spouse has died, the survivor) must consent to any
distribution of such account balance. The consent of the Participant and the
Spouse shall be obtained in writing within the 90-day period ending on the
annuity starting date, which is the first day of the first period for which an
amount is paid as an annuity or any other form. The Plan Administrator shall
notify the Participant and the Participant's Spouse of the right to defer any
distribution until the later of the date on which the Participant attains (or
would have attained if not decreased) the Normal Retirement Age or age 62. Such
notification shall include a general description of the material features, and
an explanation of the relative values of the optional forms of benefit
available under the plan, in a manner that would satisfy the notice
requirements of Code Section 417(a)(3), and shall be provided no less than 30
days and no more than 90 days prior to the annuity starting date.
(c) Notwithstanding the foregoing, only the Participant need consent to the
commencement of a distribution in the form of a Qualified Joint and Survivor
Annuity while the account balance is immediately distributable. Furthermore,
if payment in the form of a Qualified Joint and Survivor Annuity is not
required with respect to the Participant pursuant to paragraph 8.7 of the Plan,
only the Participant need consent to the distribution of an account balance
that is immediately distributable. Neither the consent of the Participant nor
the Participant's Spouse shall be required to the extent that a distribution
is required to satisfy Code Section 401(a)(9) or Code Section 415. In
addition, upon termination of this Plan, if the Plan does not offer an annuity
option (purchased from a commercial provider), the Participant's account
balance may, without the Participant's consent, be distributed to the
Participant or transferred to another Defined Contribution Plan [other than an
employee stock ownership plan as defined in Code Section 4975(e)(7)] within
the same controlled group.
(d) For purposes of determining the applicability of the foregoing consent
requirements to distributions made before the first day of the first Plan Year
beginning after 1988, the Participant's vested account balance shall not
include amounts attributable to Qualified Voluntary Contributions.
6.5 NORMAL FORM OF PAYMENT The normal form of payment for a profit-
sharing plan satisfying the requirements of paragraph 8.7 hereof shall be a
lump sum with no option for annuity payments. For all other plans, the normal
form of payment hereunder shall be a Qualified Joint and Survivor Annuity as
provided under Article VIII. A Participant whose vested account balance derived
from Employer and Employee contributions exceed $3,500, or if at the time of
any prior distribution it exceeded $3,500, shall (with the consent of his or
her Spouse) have the right to receive his or her benefit in a lump sum or in
monthly, quarterly, semi- annual or annual payments from the Fund over any
period not extending beyond the life expectancy of the Participant and his or
her Beneficiary. For purposes of this paragraph, for Plan Years beginning prior
to 1989, a Participant's Vested Account Balance shall not include Qualified
Voluntary Contributions. The normal form of payment shall be automatic, unless
the Participant files a written request with the Employer prior to the date on
which the benefit is automatically payable, electing a lump sum or installment
payment option. No amendment to the Plan may eliminate one of the optional
distribution forms listed above.
6.6 COMMENCEMENT OF BENEFITS
(a) Unless the Participant elects otherwise, distribution of benefits will
begin no later than the 60th day after the close of the Plan Year in which the
latest of the following events occurs:
(1) the Participant attains age 65 (or normal retirement age if earlier),
(2) the 10th anniversary of the year in which the Participant commenced
participation in the Plan, or
(3) the Participant terminates Service with the Employer.
(b) Notwithstanding the foregoing, the failure of a Participant and Spouse
(if necessary) to consent to a distribution while a benefit is immediately
distributable, within the meaning of paragraph 6.4 hereof, shall be deemed an
election to defer commencement of payment of any benefit sufficient to satisfy
this paragraph.
(c) Unless the Employer provides otherwise in the Adoption Agreement,
distributions of benefits will be made within 60 days following the close of
the Plan Year during which a distribution is requested or otherwise becomes
payable.
6.7 CLAIMS PROCEDURES Upon retirement, death, or other severance of
employment, the Participant or his or her representative may make application
to the Employer requesting payment of benefits due and the manner of payment.
If no application for benefits is made, the Employer shall automatically pay
any vested benefit due hereunder in the normal form at the time prescribed at
paragraph 6.5. If an application for benefits is made, the Employer shall
accept, reject, or modify such request and shall notify the Participant in
writing setting forth the response of the Employer and in the case of a denial
or modification the Employer shall:
(a) state the specific reason or reasons for the denial,
(b) provide specific reference to pertinent Plan provisions on which the
denial is based,
(c) provide a description of any additional material or information necessary
for the Participant or his representative to perfect the claim and an
explanation of why such material or information is necessary, and
(d) explain the Plan's claim review procedure as contained in this paragraph.
In the event the request is rejected or modified, the Participant or his or her
representative may within 60 days following receipt by the Participant or
representative of such rejection or modification, submit a written request for
review by the Employer of its initial decision. Within 60 days following such
request for review, the Employer shall render its final decision in writing to
the Participant or representative stating specific reasons for such decision.
If the Participant or representative is not satisfied with the Employer's final
decision, the Participant or representative can institute an action in a
federal court of competent jurisdiction; for this purpose, process would be
served on the Employer.
6.8 IN-SERVICE WITHDRAWALS An Employee may withdraw all or any part of the
fair market value of his or her Mandatory Contributions, Voluntary
Contributions, Qualified Voluntary Contributions, Rollover Contributions, or
Transfer Contributions upon written request to the Employer. Such request shall
include the Participant's address, social security number, birthdate, and
amount of the withdrawal. If at the time a distribution of Qualified Voluntary
Contributions is received the Participant has not attained age 59-1/2 and is
not disabled, as defined at Code Section 22(e)(3), the Participant will be
subject to a federal income tax penalty, unless the distribution is rolled over
to a qualified plan or individual retirement plan within 60 days of the date of
distribution. A Participant may withdraw all or any part of the fair market
value of his or her pre-1987 Voluntary Contributions with or without
withdrawing the earnings attributable thereto. Post-1986 Voluntary
Contributions may only be withdrawn along with a portion of the earnings
thereon. The amount of the earnings to be withdrawn is determined by using the
formula: DA[1-(V + V + E)], where DA is the distribution amount, V is the
amount of Voluntary Contributions and V + E is the amount of Voluntary
Contributions plus the earnings attributable thereto. A Participant withdrawing
his or her other contributions prior to attaining age 59-1/2, will be subject
to a federal tax penalty to the extent that the withdrawn amounts are
includible in income. Unless the Employer provides otherwise in the Adoption
Agreement, any Participant in a profit-sharing plan who is 100% fully vested in
his or her Employer contributions may withdraw all or any part of the fair
market value of any of such contributions that have been in the account at
least two years, plus the investment earnings thereon, after attaining age
59-1/2 without separation from Service. Such distributions shall not be
eligible for redeposit to the Fund. A withdrawal under this paragraph shall not
prohibit such Participant from sharing in any future Employer Contribution he
or she would otherwise be eligible to share in. A request to withdraw amounts
pursuant to this paragraph must if applicable, be consented to by the
Participant's Spouse. The consent shall comply with the requirements of
paragraph 6.4 relating to immediate distributions.
6.9 HARDSHIP WITHDRAWAL If permitted by the Trustee and the Employer in the
Adoption Agreement, a Participant in a profit-sharing plan may request a
hardship withdrawal prior to attaining age 59-1/2. If the Participant has not
attained age 59-1/2, the Participant may be subject to a federal income tax
penalty. Such request shall be in writing to the Employer who shall have sole
authority to authorize a hardship withdrawal, pursuant to the rules below.
Hardship withdrawals are subject to the Spousal consent requirements contained
in Code Sections 411(a)(11) and 417. Only the following reasons are valid to
obtain hardship withdrawal:
(a) deductible medical expenses [within the meaning of Code Section 213(d)]
of the Participant, his or her Spouse, children and other dependents,
(b) the purchase (excluding mortgage payments) of the principal residence
for the Participant,
(c) payment of tuition for the next quarter or semester of post-secondary
education for the Participant, his or her Spouse, children or other dependents,
or
(d) the need to prevent eviction of the Employee from or a foreclosure on
the mortgage of, the Employee's principal residence. Furthermore, the
distribution may not be in excess of the amount of the immediate and heavy
financial need [(a) through (d)] above. The Participant must certify that other
assets are not available to meet the hardship.
If a distribution is made at a time when a Participant has a nonforfeitable
right to less than 100% of the account balance derived from Employer
contributions and the Participant may, by virtue of continuing Service,
increase the nonforfeitable percentage in the account:
(a) a separate account will be established for the Participant's interest in
the Plan as of the time of the distribution, and
(b) at any relevant time the Participant's nonforfeitable portion of the
separate account will be equal to an amount ("X") determined by the formula:
X = P[AB + (R X D)] - (R X D)
For purposes of applying the formula: "P" is the nonforfeitable percentage at
the relevant time, "AB" is the account balance at the relevant time, "D" is the
amount of the distribution and "R" is the ratio of the account balance at the
relevant time to the account balance after distribution.
ARTICLE VII
DISTRIBUTION REQUIREMENTS
7.1 JOINT AND SURVIVOR ANNUITY REQUIREMENTS All distributions made under
the terms of this Plan must comply with the provisions of Article VIII
including, if applicable, the safe harbor provisions thereunder.
7.2 MINIMUM DISTRIBUTION REQUIREMENTS All distributions required under
this Article shall be determined and made in accordance with the minimum
distribution requirements of Code Section 401(a)(9) and the regulations
thereunder, including the minimum distribution incidental benefit rules found
at Section 1.401(a)(9)-2 of the Regulations. The entire interest of a
Participant must be distributed, or begin to be distributed, no later than the
Participant's Required Beginning Date. Life expectancy and joint and last
survivor life expectancy are computed by using the expected return multiples
found in Tables V and VI of Section 1.72-9 of the Income Tax Regulations.
7.3 LIMITS ON DISTRIBUTION PERIODS As of the First Distribution Calendar
Year, distributions, if not made in a single-sum, may only be made over one of
the following periods (or a combination thereof):
(a) the life of the Participant,
(b) the life of the Participant and a Designated Beneficiary,
(c) a period certain not extending beyond the life expectancy of the
Participant, or
(d) a period certain not extending beyond the joint and last survivor
expectancy of the Participant and a Designated Beneficiary.
7.4 REQUIRED DISTRIBUTIONS ON OR AFTER THE REQUIRED BEGINNING DATE
(a) If a participant's account balance is to be distributed over (1) a
period not extending beyond the life expectancy of the Participant or the joint
life and last survivor expectancy of the Participant and the Participant's
Designated Beneficiary or (2) a period not extending beyond the life expectancy
of the Designated Beneficiary, the amount required to be distributed for each
calendar year, beginning with distributions for the First Distribution Calendar
Year, must at least equal the quotient obtained by dividing the Participant's
account balance by the Applicable Life Expectancy.
(b) For calendar years beginning before 1989, if the Participant's Spouse
is not the Designated Beneficiary, the method of distribution selected must
have required that at least 50% of the Present Value of the amount available
for distribution was to be paid within the life expectancy of the Participant.
(c) For calendar years beginning after 1988, the amount to be distributed
each year, beginning with distributions for the First Distribution Calendar
Year shall not be less than the quotient obtained by dividing the Participant's
benefit by the lesser of (1) the Applicable Life Expectancy or (2) if the
Participant's Spouse is not the Designated Beneficiary, the applicable divisor
determined from the table set forth in Q&A-4 of Section 1.401(a)(9)-2 of the
Income Tax Regulations. Distributions after the death of the Participant shall
be distributed using the Applicable Life Expectancy as the relevant divisor
without regard to Regulations Section 1.40l(a)(9)-2.
(d)The minimum distribution required for the Participant's First
Distribution Calendar Year must be made on or before the Participant's
Required Beginning Date. The minimum distribution for other calendar years,
including the minimum distribution for the Distribution Calendar Year in which
the Participant's Required Beginning Date occurs, must be made on or before
December 31 of that Distribution Calendar Year.
(e) If the Participant's benefit is distributed in the form of an annuity
purchased from an insurance company, distributions thereunder shall be made in
accordance with the requirements of Code Section 401(a)(9) and the Regulations
thereunder.
(f) For purposes of determining the amount of the required distribution for
each Distribution Calendar Year, the account balance to be used is the account
balance determined as of the last valuation preceding the Distribution Calendar
Year. This balance will be increased by the amount of any contributions or
forfeitures allocated to the account balance after the valuation date in such
preceding calendar year. Such balance will also be decreased by distributions
made after the Valuation Date in such preceding Calendar Year.
(g) For purposes of subparagraph 7.4(f), if any portion of the minimum
distribution for the First Distribution Calendar Year is made in the second
Distribution Calendar Year on or before the Required Beginning Date, the amount
of the minimum distribution made in the second Distribution Calendar Year
shall be treated as if it had been made in the immediately preceding
Distribution Calendar Year.
7.5 REQUIRED BEGINNING DATE
(a) General Rule. The Required Beginning Date of a Participant is the first
day of April of the calendar year following the calendar year in which the
Participant attains age 70-1/2.
(b) Transitional Rules. The Required Beginning Date of a Participant who
attained age 70-1/2 before 1988, shall be determined in accordance with (1) or
(2) below:
(1) Non-5-percent owners. The Required Beginning Date of a Participant
who is not a 5-percent owner is the first day of April of the calendar year
following the calendar year in which the later of retirement or attainment of
age 70-1/2 occurs. In the case of a Participant who is not a 5-percent owner
who attains age 70-1/2 during 1988 and who has not retired as of January 1,
1989, the Required Beginning Date is April 1, 1990.
(2) 5-percent owners. The Required Beginning Date of a Participant who is a
5-percent owner during any year beginning after 1979, is the first day of April
following the later of:
(I) the calendar year in which the Participant attains age 70-1/2, or
(ii) the earlier of the calendar year with or within which ends the plan
year in which the Participant becomes a 5-percent owner, or the calendar year
in which the Participant retires.
(c) A Participant is treated as a 5-percent owner for purposes of this
Paragraph if such Participant is a 5-percent owner as defined in Code Section
416(I) (determined in accordance with Section 416 but without regard to whether
the Plan is Top-Heavy) at any time during the Plan Year ending with or within
the calendar year in which such Owner attains age 66-1/2 or any subsequent Plan
Year.
(d) Once distributions have begun to a 5-percent owner under this paragraph,
they must continue to be distributed, even if the Participant ceases to be a
5-percent owner in a subsequent year.
7.6 TRANSITIONAL RULE
(a) Notwithstanding the other requirements of this Article and subject to
the requirements of Article VIII, Joint and Survivor Annuity Requirements,
distribution on behalf of any Employee, including a 5-percent owner, may be
made in accordance with all of the following requirements (regardless of when
such distribution commences):
(I) The distribution by the Trust is one which would not have disqualified
such Trust under Code Section 401(a)(9) as in effect prior to amendment by the
Deficit Reduction Act of 1984.
(ii) The distribution is in accordance with a method of distribution
designated by the Employee whose interest in the Trust is being distributed or,
if the Employee is deceased, by a beneficiary of such Employee.
(iii) Such designation was in writing, was signed by the Employee or the
beneficiary, and was made before 1984.
(iv) The Employee had accrued a benefit under the Plan as of December 31,
1983.
(v) The method of distribution designated by the Employee or the
beneficiary specifies the time at which distribution will commence, the period
over which distributions will be made, and in the case of any distribution upon
the Employee's death, the beneficiaries of the Employee listed in order of
priority.
(b) A distribution upon death will not be covered by this transitional rule
unless the information in the designation contains the required information
described above with respect to the distributions to be made upon the death of
the Employee.
(c) For any distribution which commences before 1984, but continues after
1983, the Employee, or the beneficiary, to whom such distribution is being
made, will be presumed to have designated the method of distribution under
which the distribution is being made if the method of distribution was
specified in writing and the distribution satisfies the requirements in
subparagraphs (a)(I) and (v) above.
(d) If a designation is revoked, any subsequent distribution must satisfy the
requirements of Code Section 401(a)(9) and the regulations thereunder. If a
designation is revoked subsequent to the date distributions are required to
begin, the Trust must distribute by the end of the calendar year following the
calendar year in which the revocation occurs the total amount not yet
distributed which would have been required to have been distributed to satisfy
Code Section 401(a)(9) and the regulations thereunder, but for the section
242(b)(2) election of the Tax Equity and Fiscal Responsibility Act of 1982. For
calendar years beginning after 1988, such distributions must meet the minimum
distribution incidental benefit requirements in section 1.401(a)(9)-2 of the
Income Tax Regulations. Any changes in the designation will be considered to be
a revocation of the designation. However, the mere substitution or addition of
another beneficiary (one not named in the designation) under the designation
will not be considered to be a revocation of the designation, so long as such
substitution or addition does not alter the period over which distributions are
to be made under the designation, directly or indirectly (for example, by
altering the relevant measuring life). In the case in which an amount is
transferred or rolled over from one plan to another plan, the rules in Q&A J-2
and Q&AJ-3 of the regulations shall apply.
7.7 DESIGNATION OF BENEFICIARY FOR DEATH BENEFIT Each Participant shall
file a written designation of beneficiary with the Employer upon qualifying for
participation under this Plan. Such designation shall remain in force until
revoked by the Participant by filing a new beneficiary form with the Employer.
The Participant may elect to have a portion of his or her account balance
invested in an insurance contract. If an insurance contract is purchased under
the Plan the Trustee must be named as Beneficiary under the terms of the
contract. However, the Participant shall designate a Beneficiary to receive the
proceeds of the contract after settlement is received by the Trustee. Under a
profit-sharing plan satisfying the requirements of paragraph 8.7, the
Designated Beneficiary shall be the Participant's Surviving Spouse, if any,
unless such Spouse properly consents otherwise.
7.8 NONEXISTENCE OF BENEFICIARY Any portion of the amount payable hereunder
which is undisposed of because of the Participant's or former Participant's
failure to designate a Beneficiary, or because all of the Designated
Beneficiaries predeceased the Participant, shall be paid to his or her Spouse.
If the Participant has no Spouse at the time of death, payment shall be made to
the personal representative of his or her estate in a lump sum.
7.9 DISTRIBUTION BEGINNING BEFORE DEATH If the Participant dies after
distribution of his or her interest has begun, the remaining portion of such
interest will continue to be distributed at least as rapidly as under the
method of distribution being used prior to the Participant's death.
7.10 DISTRIBUTION BEGINNING AFTER DEATH If the Participant dies before
distribution of his or her interest begins, distribution of the Participant's
entire interest shall be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death except to the
extent that an election is made to receive distributions in accordance with (a)
or (b) below:
(a) if any portion of the Participant's interest is payable to a Designated
Beneficiary, distributions may be made over the life or over a period certain
not greater than the life expectancy of the Designated Beneficiary commencing
on or before December 31 of the calendar year immediately following the
calendar year in which the Participant died;
(b) if the Designated Beneficiary is the Participant's surviving Spouse, the
date distributions are required to begin in accordance with (a) above shall not
be earlier than the later of (1) December 31 of the calendar year immediately
following the calendar year in which the participant died or (2) December 31 of
the calendar year in which the Participant would have attained age 70-1/2.
If the Participant has not made an election pursuant to this paragraph 7.10 by
the time of his or her death, the Participant's Designated Beneficiary must
elect the method of distribution no later than the earlier of (1) December 31
of the calendar year in which distributions would be required to begin under
this section, or (2) December 31 of the calendar year which contains the fifth
anniversary of the date of death of the participant. If the Participant has no
Designated Beneficiary, or if the Designated Beneficiary does not elect a
method of distribution, then distribution of the Participant's entire interest
must be completed by December 31 of the calendar year containing the fifth
anniversary of the Participant's death.
For purposes of this paragraph, if the Surviving Spouse dies after the
Participant, but before payments to such Spouse begin, the provisions of this
paragraph with the exception of paragraph (b) herein, shall be applied as if
the Surviving Spouse were the Participant. For the purposes of this paragraph
and paragraph 7.9 distribution of a Participant's interest is considered to
begin on the Participant's Required Beginning Date (or, if the preceding
sentence is applicable, the date distribution is required to begin to the
Surviving Spouse). If distribution in the form of an annuity described in
paragraph 7.4(e) irrevocably commences to the Participant before the Required
Beginning Date, the date distribution is considered to begin is the date
distribution actually commences.
For purposes of paragraph 7.9 and this paragraph, any amount paid to a child of
the Participant will be treated as if it had been paid to the Surviving Spouse
if the amount becomes payable to the Surviving Spouse when the child reaches
the age of majority.
ARTICLE VIII
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1 APPLICABILITY OF PROVISIONS The provisions of this Article shall apply
to any Participant who is credited with at least one Hour of Service with the
Employer on or after August 23, 1984 and such other Participants as provided in
paragraph 8.8.
8.2 PAYMENT OF QUALIFIED JOINT AND SURVIVOR ANNUITY Unless an optional form
of benefit is selected pursuant to a Qualified Election within the 90-day
period ending on the Annuity Starting Date, a married Participant's Vested
Account Balance will be paid in the form of a Qualified Joint and Survivor
Annuity and an unmarried Participant's Vested Account Balance will be paid in
the form of a life annuity. The Participant may elect to have such annuity
distributed upon attainment of the Early Retirement Age under the Plan.
8.3 PAYMENT OF QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY Unless an optional
form of benefit has been selected within the Election Period pursuant to a
Qualified Election, if a Participant dies before benefits have commenced then
the Participant's vested account balance shall be paid to the Surviving Spouse
in the form of a life annuity. The Surviving Spouse may elect to have such
annuity distributed within a reasonable period after the Participant's death.
A Participant who does not meet the age 35 requirement set forth in the
Election Period as of the end of any current Plan Year may make a special
qualified election to waive the qualified Pre-retirement Survivor Annuity for
the period beginning on the date of such election and ending on the first day
of the Plan Year in which the Participant will attain age 35. Such election
shall not be valid unless the Participant receives a written explanation of
the Qualified Pre-retirement Survivor Annuity in such terms as are comparable
to the explanation required under paragraph 8.4. Qualified Pre-retirement
Survivor Annuity coverage will be automatically reinstated as of the first day
of the Plan Year in which the Participant attains age 35. Any new waiver on or
after such date shall be subject to the full requirements of this Article.
8.4 QUALIFIED ELECTION A Qualified Election is an election to either waive
a Qualified Joint and Survivor Annuity or a qualified pre-retirement survivor
annuity. Any such election shall not be effective unless:
(a) the Participant's Spouse consents in writing to the election;
(b) the election designates a specific Beneficiary, including any class of
beneficiaries or any contingent beneficiaries, which may not be changed without
spousal consent (or the Spouse expressly permits designations by the
Participant without any further spousal consent);
(c) the Spouse's consent acknowledges the effect of the election; and
(d) the Spouse's consent is witnessed by a Plan representative or notary
public.
Additionally, a Participant's waiver of the Qualified Joint and Survivor
Annuity shall not be effective unless the election designates a form of benefit
payment which may not be changed without spousal consent (or the Spouse
expressly permits designations by the Participant without any further spousal
consent). If it is established to the satisfaction of the Plan Administrator
that there is no Spouse or that the Spouse cannot be located, a waiver will be
deemed a Qualified Election. Any consent by a Spouse obtained under this
provision (or establishment that the consent of a Spouse may not be obtained)
shall be effective only with respect to such Spouse. A consent that permits
designations by the Participant without any requirement of further consent by
such Spouse must acknowledge that the Spouse has the right to limit consent to
a specific beneficiary, and a specific form of benefit where applicable, and
that the Spouse voluntarily elects to relinquish either or both of such rights.
A revocation of a prior waiver may be made by a Participant without the consent
of the Spouse at any time before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under this provision
shall be valid unless the Participant has received notice as provided in
paragraphs 8.5 and 8.6 below.
8.5 NOTICE REQUIREMENTS FOR QUALIFIED JOINT AND SURVIVOR ANNUITY The Plan
Administrator shall provide each Participant a written explanation of:
(a) the terms and conditions of a Qualified Joint and Survivor Annuity;
(b) the Participant's right to make and the effect of an election to waive
the Qualified Joint and Survivor Annuity form of benefit;
(c) the rights of a Participant's Spouse; and
(d) the right to make, and the effect of, a revocation of a previous
election to waive the Qualified Joint and Survivor Annuity.
Such notice shall be provided not less than 30 days and no more than 90 days
prior to the Annuity Starting date.
8.6 NOTICE REQUIREMENTS FOR QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY The
Plan Administrator shall provide each Participant a written explanation of the
qualified pre-retirement survivor annuity in such terms and in such manner as
would be comparable to the explanation provided for meeting the requirements of
paragraph 8.5 applicable to a Qualified Joint and Survivor Annuity. Such
explanation shall be provided within whichever of the following periods ends
last:
(a) the period beginning with the first day of the Plan Year in which the
Participant attains age 32 and ending with the close of the Plan Year preceding
the Plan Year in which the Participant attains age 35;
(b) a reasonable period ending after the individual becomes a Participant;
(c) a reasonable period ending after this Article first applies to the
Participant. Notwithstanding the foregoing, notice must be provided within a
reasonable period ending after separation from Service in the case of a
Participant who separates from Service before attaining age 35.
For purposes of applying the preceding paragraph, a reasonable period ending
after the events described in (b) and (c) is the end of the two-year period
beginning one-year prior to the date the applicable event occurs, and ending
one-year after that date. In the case of a Participant who separates from
Service before the Plan Year in which age 35 is attained, notice shall be
provided within the two-year period beginning one year prior to separation and
ending one year after separation. If such a Participant subsequently returns to
employment with the Employer, the applicable period for such Participant shall
be re-determined.
8.7 SPECIAL SAFE-HARBOR EXCEPTION FOR CERTAIN PROFIT-SHARING PLANS
(a) This paragraph shall apply to a Participant in a profit-sharing plan,
and to any distribution made on or after the first day of the first plan year
beginning after 1988, from or under a separate account attributable solely to
Qualified Voluntary contributions, as maintained on behalf of a Participant in
a money purchase pension plan, (including a target benefit plan) if the
following conditions are satisfied:
(1) the Participant does not or cannot elect payments in the form of a
life annuity; and
(2) on the death of a Participant, the Participant's Vested Account
Balance will be paid to the Participant's Surviving Spouse, but if there is no
Surviving Spouse, or if the Surviving Spouse has consented in a manner
conforming to a Qualified Election, then to the Participant's Designated
Beneficiary.
The Surviving Spouse may elect to have distribution of the Vested Account
Balance commence within the 90-day period following the date of the
Participant's death. The account balance shall be adjusted for gains or losses
occurring after the Participant's death in accordance with the provisions of
the Plan governing the adjustment of account balances for other types of
distributions. These safe-harbor rules shall not be operative with respect to a
Participant in a profit-sharing plan if that plan is a direct or indirect
transferee of a Defined Benefit Plan, money purchase pension plan, a target
benefit plan,
stock bonus plan, or profit-sharing plan which is subject to the survivor
annuity requirements of Code Section 401(a)(11) and Code Section 417, and would
therefore have a Qualified Joint and Survivor Annuity as its normal form of
benefit.
(b) The Participant may waive the spousal death benefit described in this
paragraph at any time provided that no such waiver shall be effective unless it
satisfies the conditions (described in paragraph 8.4) that would apply to the
Participant's waiver of the qualified pre-retirement survivor annuity.
(c) If this paragraph 8.7 is operative, then all other provisions of this
Article other than paragraph 8.8 are inoperative.
8.8 TRANSITIONAL JOINT AND SURVIVOR ANNUITY RULES Special transition rules
apply to Participants who are not receiving benefits on August 23, 1984.
(a) Any living Participant not receiving benefits on August 23, 1984, who
would otherwise not receive the benefits prescribed by the previous paragraphs
of this Article, must be given the opportunity to elect to have the prior
paragraphs of this Article apply if such Participant is credited with at least
one Hour of Service under this Plan or a predecessor Plan in a Plan Year
beginning on or after January 1, 1976 and such Participant had at least 10
Years of Service for vesting purposes when he or she separated from Service.
(b) Any living Participant not receiving benefits on August 23, 1984, who
was credited with at least one Hour of Service under this Plan or a predecessor
Plan on or after September 2, 1974, and who is not otherwise credited with any
Service in a Plan Year beginning on or after January 1, 1976, must be given the
opportunity to have his or her benefits paid in accordance with paragraph 8.9.
(c) The respective opportunities to elect [as described in (a) and (b)
above] must be afforded to the appropriate Participants during the period
commencing on August 23, 1984 and ending on the date benefits would otherwise
commence to said Participants.
8.9 AUTOMATIC JOINT AND SURVIVING ANNUITY AND EARLY SURVIVOR ANNUITY Any
Participant who has elected pursuant to paragraph 8.8(b) and any Participant
who does not elect under paragraph 8.8(a) or who meets the requirements of
paragraph 8.8(a), except that such Participant does not have at least 10 years
of vesting Service when he or she separates from Service, shall have his or her
benefits distributed in accordance with all of the following requirements if
benefits would have been payable in the form of a life annuity.
(a) Automatic Joint and Survivor Annuity. If benefits in the form of a life
annuity become payable to a married Participant who:
(1) begins to receive payments under the Plan on or after Normal Retirement
Age, or
(2) dies on or after Normal Retirement Age while still working for the
Employer, or
(3) begins to receive payments on or after the Qualified Early Retirement
Age, or
(4) separates from Service on or after attaining Normal Retirement (or the
Qualified Early Retirement Age) and after satisfying the eligibility
requirements for the payment of benefits under the Plan and thereafter dies
before beginning to receive such benefits,
then such benefits will be received under this Plan in the form of a Qualified
Joint and Survivor Annuity, unless the Participant has elected otherwise during
the Election Period. The Election Period must begin at least 6 months before
the Participant attains Qualified Early Retirement Age and end not more than 90
days before the commencement of benefits. Any election hereunder will be in
writing and may be changed by the Participant at any time.
(b) Election of Early Survivor Annuity. A Participant who is employed after
attaining the Qualified Early Retirement Age will be given the opportunity to
elect, during the Election Period, to have a survivor annuity payable on death.
If the Participant elects the survivor annuity, payments under such annuity
must not be less than the payments which would have been made to the Spouse
under the Qualified Joint and Survivor Annuity if the Participant had retired
on the day before his or her death. Any election under this provision will be
in writing and may be changed by the Participant at any time. The Election
Period begins on the later of:
(1) the 90th day before the Participant attains the Qualified Early
Retirement Age, or
(2) the date on which participation begins, and ends on the date the
Participant terminates employment.
8.10 ANNUITY CONTRACTS Any annuity contract distributed herefrom must be
nontransferable. The terms of any annuity contract purchased and distributed by
the Plan to a Participant or Spouse shall comply with the requirements of this
Plan.
ARTICLE IX
VESTING
9.1 EMPLOYEE CONTRIBUTIONS A Participant shall always have a 100% vested
and nonforfeitable interest in his or her Mandatory Contributions, Voluntary
Contributions, Qualified Voluntary Contributions, Rollover Contributions, and
Transfer Contributions plus the earnings thereon. No forfeiture of Employer
related contributions (including any minimum contributions made under paragraph
14.2 hereof) will occur solely as a result of an Employee's withdrawal of any
Employee contributions.
9.2 EMPLOYER CONTRIBUTIONS A Participant shall acquire a vested and
nonforfeitable interest in his or her account attributable to Employer
contributions in accordance with the table selected in the Adoption Agreement,
provided that if a Participant is not already fully vested, he or she shall
become so upon attaining Normal Retirement Age, Early Retirement Age, on death
prior to normal retirement, on retirement due to Disability, or on termination
of the Plan.
9.3 COMPUTATION PERIOD The computation period for purposes of determining
Years of Service and Breaks in Service for purposes of computing a
Participant's nonforfeitable right to his or her account balance derived from
Employer contributions shall be determined by the Employer in the Adoption
Agreement. If the Employer provides for other than full and immediate vesting
and does not designate otherwise, the computation period shall be the Plan
Year. In the event a former Participant with no vested interest in his or her
Employer contribution account requalifies for participation in the Plan after
incurring a Break in Service, such Participant shall be credited for vesting
with all pre-break and post-break Service.
9.4 REQUALIFICATION PRIOR TO FIVE CONSECUTIVE ONE-YEAR BREAKS IN SERVICE In
Service The account balance of such Participant shall consist of any
undistributed amount in his or her account as of the date of re-employment plus
any future contributions added to such account plus the investment earnings on
the account. The vested account balance of such Participant shall be determined
by multiplying the Participant's account balance (adjusted to include any
distribution or redeposit made under paragraph 6.3 hereof) by such
Participant's vested percentage. All Service of the Participant, both prior to
and following the break, shall be counted when computing the Participant's
vested percentage.
9.5 REQUALIFICATION AFTER FIVE CONSECUTIVE ONE-YEAR BREAKS IN SERVICE If
such Participant is not fully vested upon re-employment, a new account shall be
established for such Participant to separate his or her deferred vested and
nonforfeitable account, if any, from the account to which new allocations will
be made. The Participant's deferred account to the extent remaining shall be
fully vested and shall continue to share in earnings and losses of the Fund.
When computing the Participant's vested portion of the new account, all
pre-break and post-break Service shall be counted. However, notwithstanding
this provision, no such former Participant who has had five consecutive
one-year Breaks in Service shall acquire a larger vested and nonforfeitable
interest in his or her prior account balance as a result of requalification
hereunder.
9.6 CALCULATING VESTED INTEREST A Participant's vested and nonforfeitable
interest shall be calculated by multiplying the fair market value of his or her
account attributable to Employer contributions on the Valuation Date preceding
distribution by the decimal equivalent of the vested percentage as of his or
her termination date. The amount attributable to Employer contributions for
purposes of the calculation includes amounts previously paid out pursuant to
paragraph 6.3 and not repaid. The Participant's vested and nonforfeitable
interest, once calculated above, shall be reduced to reflect those amounts
previously paid out and not repaid. The Participant's vested and nonforfeitable
interest so determined shall continue to share in the investment earnings and
any increase or decrease in the fair market value of the Fund up to the
Valuation Date preceding or coinciding with payment.
9.7 FORFEITURES Any balance in the account of a Participant who has
separated from Service to which he or she is not entitled under the foregoing
provisions, shall be forfeited and applied as provided in the Adoption
Agreement. If not specified otherwise in the Adoption Agreement, forfeitures
will be allocated to Participants in the same manner as the Employer's
contribution. A forfeiture may only occur if the Participant has received it
distribution from the Plan or if the Participant has incurred five consecutive
l-year Breaks in Service. Forfeitures shall inure only to the accounts of
Participants of the adopting Employee's plan. If not specified otherwise in the
Adoption Agreement, forfeitures shall be allocated at the end of the Plan Year
during which the former Participant incurs five consecutive one-year Breaks in
Service.
9.8 AMENDMENT OF VESTING SCHEDULE No amendment to the Plan shall have the
effect of decreasing a Participant's vested interest determined without regard
to such amendment as of the later of the date such amendment is adopted or the
date it becomes effective. Further, if the vesting schedule of the Plan is a
mended, or the Plan is amended in any way that directly or indirectly affects
the computation of any Participant's nonforfeitable percentage, or if the Plan
is deemed amended by an automatic change to or from a Top-Heavy vesting
schedule, each Participant with at least three Years of Service with the
Employer may elect, within a reasonable period after the adoption of the
amendment or change, to have his or her nonforfeitable percentage computed
under the Plan without regard to such amendment or change. For Participants who
do not have at least one Hour of Service in any Plan Year beginning after 1988,
the preceding sentence shall be applied by substituting "Five Years of Service"
for "Three Years of Service" where such language appears. The period during
which the election may be made shall commence with the date the amendment is
adopted or deemed to be made and shall end on the later of:
(a) 60 days after the amendment is adopted;
(b) 60 days after the amendment becomes effective; or
(c) 60 days after the Participant is issued written notice of the amendment
by the Employer or the Trustee. If the Trustee is asked to so notify, the Fund
will be charged for the costs thereof.
No amendment to the Plan shall be effective to the extent that it has the
effect of decreasing a Participant's accrued benefit. Notwithstanding the
preceding sentence, a Participant's account balance may be reduced to the
extent permitted under section 412(c)(8) of the Code (relating to financial
hardships). For purposes of this paragraph, a Plan amendment which has the
effect of decreasing a Participant's account balance or eliminating an optional
form of benefit, with respect to benefits attributable to service before the
amendment shall be treated as reducing an accrued benefit.
9.9 SERVICE WITH CONTROLLED GROUPS All Years of Service with other members
of a controlled group of corporations [as defined in Code Section 414(b)],
trades or businesses under common control [as defined in Code Section 414(c)],
or members of an affiliated service group [as defined in Code Section 414(m)]
shall be considered for purposes of determining a Participant's nonforfeitable
percentage.
ARTICLE X
LIMITATIONS ON ALLOCATIONS
10.1 PARTICIPATION IN THIS PLAN ONLY If the Participant does not participate
in, and has never participated in another qualified plan, a Welfare Benefit
Fund (as defined in paragraph 1.72) or an individual medical account, as
defined in Code Section 415(1)(2), maintained by the adopting Employer, which
provides an Annual Addition as defined in paragraph 1.2, the amount of Annual
Additions which may be credited to the Participant's account for any Limitation
Year will not exceed the lesser of the Maximum Permissible Amount or any other
limitation contained in this Plan. If the Employer contribution that would
otherwise be contributed or allocated to the Participant's account would cause
the Annual Additions for the Limitation Year to exceed the Maximum Permissible
Amount, the amount contributed or allocated will be reduced so that the Annual
Additions for the Limitation Year will equal the Maximum Permissible Amount.
Prior to determining the Participant's actual Compensation for the Limitation
Year, the Employer may determine the Maximum Permissible Amount for a
Participant on the basis of a reasonable estimation of the Participant's
Compensation for the Limitation Year, uniformly determined for all Participants
similarly situated. As soon as is administratively feasible after the end of
the Limitation Year, the Maximum Permissible Amount for the Limitation Year
will be determined on the basis of the Participant's actual Compensation for
the Limitation Year.
10.2 DISPOSITION OF EXCESS ANNUAL ADDITIONS If pursuant to paragraph 10.1
or as a result of the allocation of forfeitures, there is an Excess Amount, the
excess will be disposed of under one of the following methods as determined in
the Adoption Agreement. If no election is made in the Adoption Agreement then
method "(a)" below shall apply.
(a) Suspense Account Method
(1) Any nondeductible Employee Voluntary Contributions, to the extent they
would reduce the Excess Amount, will be returned to the Participant;
(2) If after the application of paragraph (1) an Excess Amount still
exists, and the Participant is covered by the Plan at the end of the Limitation
Year, the Excess Amount in the Participant's account will be used to reduce
Employer contributions (including any allocation of forfeitures) for such
Participant in the next Limitation Year, and each succeeding Limitation Year if
necessary;
(3) If after the application of paragraph (1) an Excess Amount still
exists, and the Participant is not covered by the Plan at the end of the
Limitation Year, the Excess Amount will be held unallocated in a suspense
account. The suspense account will be applied to reduce future Employer
contributions (including allocation of any forfeitures) for all remaining
Participants in the next Limitation Year, and each succeeding Limitation Year
if necessary;
(4) If a suspense account is in existence at any time during the Limitation
Year pursuant to this paragraph, it will not participate in the allocation of
investment gains and losses. If a suspense account is in existence at any time
during a particular Limitation Year, all amounts in the suspense account must
be allocated and reallocated to Participants' accounts before any Employer
contributions or any Voluntary contributions may be made to the Plan for that
Limitation. Year. Excess amounts may not be distributed to Participants or
former Participants.
(b) Spillover Method
(1) Any Excess Amount which would be allocated to the account of an
individual Participant under the Plan's allocation formula will be reallocated
to other Participants in the same manner as other Employer contributions. No
such reallocation shall be made to the extent that it will result in an Excess
Amount being created in such Participant's own account.
(2) To the extent that amounts cannot be reallocated under (1) above, the
suspense account provisions of (a) above will apply.
10.3 PARTICIPATION IN THIS PLAN AND ANOTHER MASTER AND PROTOTYPE DEFINED
CONTRIBUTION PLAN, WELFARE BENEFIT FUND OR INDIVIDUAL MEDICAL ACCOUNT
MAINTAINED BY THE EMPLOYER The Annual Additions which may be credited to a
Participant's account under this Plan for any Limitation Year will not exceed
the Maximum Permissible Amount reduced by the Annual Additions credited to a
Participant's account under the other Master or Prototype Defined Contribution
Plans, Welfare Benefit Funds, and individual medical accounts as defined in
Code Section 415(l)(2), maintained by the Employer, which provide an Annual
Addition as defined in paragraph 1.2, for the same Limitation Year. If the
Annual Additions, with respect to the Participant under other Defined
Contribution Plans and Welfare Benefit Funds maintained by the Employer, are
less than the Maximum Permissible Amount and the Employer contribution that
would otherwise be contributed or allocated to the Participant's account under
this Plan would cause the Annual Additions for the Limitation Year to exceed
this limitation, the amount contributed or allocated will be reduced so that
the Annual Additions under all such plans and funds for the Limitation Year
will equal the Maximum Permissible Amount. If the Annual Additions with respect
to the Participant under such other Defined Contribution Plans and Welfare
Benefit Funds in the aggregate are equal to or greater than the Maximum
Permissible Amount, no amount will be contributed or allocated to the
Participant's account under this Plan for the Limitation Year. Prior to
determining the Participant's actual Compensation for the Limitation Year, the
Employer may determine the Maximum Permissible Amount for a Participant in the
manner described in paragraph 10.1. As soon as administratively feasible after
the end of the Limitation Year, the Maximum Permissible Amount for the
Limitation Year will be determined on the basis of the Participant's actual
Compensation for the Limitation Year.
10.4 DISPOSITION OF EXCESS ANNUAL ADDITIONS UNDER TWO PLANS If, pursuant to
paragraph 10.3 or as a result of forfeitures, a Participant's Annual Additions
under this Plan and such other plans would result in an Excess Amount for a
Limitation Year, the Excess Amount will be deemed to consist of the Annual
Additions last allocated except that Annual Additions attributable to a Welfare
Benefit Fund or individual medical account as defined in Code Section
415(1)(2) will be deemed to have been allocated first regardless of the actual
allocation date. If an Excess Amount was allocated to a Participant on an
allocation date of this Plan which coincides with an allocation date of another
plan, the Excess Amount attributed to this Plan will be the product of:
(a) the total Excess Amount allocated as of such date, times
(b) the ratio of:
(1)the Annual Additions allocated to the Participant for the Limitation
Year as of such date under the Plan, to
(2) the total Annual Additions allocated to the Participant for the
Limitation Year as of such date under this and all the other qualified Master
or Prototype Defined Contribution Plans.
Any Excess Amount attributed to this Plan will be disposed of in the manner
described in paragraph 10.2.
10.5 PARTICIPATION IN THIS PLAN AND ANOTHER DEFINED CONTRIBUTION PLAN WHICH IS
NOT A MASTER OR PROTOTYPE PLAN If the Participant is covered under another
qualified Defined Contribution Plan maintained by the Employer which is not a
Master or Prototype Plan, Annual Additions which may be credited to the
Participant's account under this Plan for any Limitation Year will be limited
in accordance with paragraphs 10.3 and 10.4 as though the other plan was a
Master or Prototype Plan, unless the Employer provides other limitations in the
Adoption Agreement.
10.6 PARTICIPATION IN THIS PLAN AND A DEFINED BENEFIT PLAN If the Employer
maintains, or at any time maintained, a qualified Defined Benefit Plan (other
than Paired Plan #02001, #02002, #02003 or #02004) covering any Participant in
this Plan, the sum of the Participant's Defined Benefit Plan Fraction and
Defined Contribution Plan Fraction will not exceed 1.0 in any Limitation Year.
For any Plan Year during which the Plan is Top-Heavy, the Defined Benefit and
Defined Contribution Plan Fractions shall be calculated in accordance with Code
Section 416(h). The Annual Additions which may be credited to the Participant's
account under this Plan for any Limitation Year will be limited in accordance
with the Adoption Agreement.
ARTICLE XI
ADMINISTRATION
11.1 PLAN ADMINISTRATOR The Employer shall be the named fiduciary and Plan
Administrator. These duties shall include:
(a) appointing the Plan's attorney, accountant, actuary, or any other party
needed to administer the Plan,
(b) directing the Trustee with respect to payments from the Fund,
(c) communicating with Employees regarding their participation and benefits
under the Plan, including the administration of all claims procedures,
(d) filing any returns and reports with the Internal Revenue Service,
Department of Labor, or any other governmental agency,
(e) reviewing and approving any financial reports, investment reviews, or
other reports prepared by any party appointed by the Employer under paragraph
(a),
(f) establishing a funding policy and investment objectives consistent with
the purposes of the Plan and the Employee Retirement Income Security Act of
1974, and
(g) construing and resolving any question of Plan interpretation. The Plan
Administrator's interpretation of Plan provisions including eligibility and
benefits under the Plan is final, and unless it can be shown to be arbitrary
and capricious will not be subject to "de novo" review.
11.2 TRUSTEE The Trustee shall be responsible for the administration of
investments held in the Fund. These duties shall include:
(a) receiving contributions under the terms of the Plan,
(b) making distributions from the Fund in accordance with written
instructions received from an authorized representative of the Employer, and
(c) keeping accurate records reflecting its administration of the Fund and
making such records available to the Employer for review and audit. Within 90
days after each Plan Year, and within 90 days after its removal or resignation,
the Trustee shall file with the Employer an accounting of its administration of
the Fund during such year or from the end of the preceding Plan Year to the
date of removal or resignation. Such accounting shall include a statement of
cash receipts and disbursements since the date of its last accounting and shall
contain an asset list showing the fair market value of investments held in the
Fund as of the end of the Plan Year. The value of marketable investments shall
be determined using the most recent price quoted on a national securities
exchange or over the counter market. The value of non-marketable investments
shall be determined in the sole judgement of the Trustee which determination
shall be binding and conclusive. The value of investments in securities or
obligations of the Employer in which there is no market shall be determined in
the sole judgement of the Employer and the Trustee shall have no responsibility
with respect to the valuation of such assets. The Employer shall review the
Trustee's accounting and notify the Trustee in the event of its disapproval of
the report within 90 days, providing the Trustee with a written description of
the items in question. The Trustee shall have 60 days to provide the Employer
with a written explanation of the items in question. If the Employer again
disapproves, the Trustee shall the its accounting in a court of competent
jurisdiction for audit and adjudication.
(d) employing such agents, attorney's or other professionals as the Trustee
may deem necessary or advisable in the performance of its duties.
The Trustee's duties shall be limited to those described above. The Employer
shall be responsible for any other administrative duties required under the
Plan or hy applicable law.
11.3 ADMINISTRATIVE FEES AND EXPENSES All reasonable costs, charges and
expenses incurred by the Trustee in connection with the administration of the
Fund and all reasonable costs, charges and expenses incurred by the Plan
Administrator in connection with the administration of the Plan (including fees
for legal services rendered to the Trustee or Plan Administrator) may be paid
by the Employer, but if not paid by the Employer when due, shall be paid from
the Fund. Such reasonable compensation to the Trustee as may be agreed upon
from time to time between the Employer and the Trustee and such reasonable
compensation to the Plan Administrator as may be agreed upon from time to time
between the Employer and Plan Administrator may be paid by the Employer, but if
not paid by the Employer when due shall be paid by the Fund. The Trustee shall
have the right to liquidate trust assets to cover its fees. Notwithstanding the
foregoing, no compensation other than reimbursement for expenses shall be paid
to a Plan Administrator who is the Employer or a full-time Employee of the
Employer. In the event any part of the Trust becomes subject to tax, all taxes
incurred will be paid from the Fund unless the Plan Administrator advises the
Trustee not to pay such tax.
11.4 DIVISION OF DUTIES AND INDEMNIFICATION
(a) The Trustee shall have the authority and discretion to manage and govern
the Fund to the extent provided in this instrument, but does not guarantee the
Fund in any manner against investment loss or depreciation in asset value, or
guarantee the adequacy of the Fund to meet and discharge all or any liabilities
of the Plan.
(b) The Trustee shall not be liable for the making, retention or sale of any
investment or reinvestment made by it, as herein provided, or for any loss to,
or diminution of the Fund, or for any other loss or damage which may result
from the discharge of its duties hereunder except to the extent it is
judicially determined that the Trustee has failed to exercise the care, skill,
prudence and diligence under the circumstances then prevailing that a prudent
person acting in a like capacity and familiar with such matters would use in
the conduct of an enterprise of a like character and like aims.
(c) The Employer warrants that all directions issued to the Trustee by it or
the Plan Administrator will be in accordance with the terms of the Plan and not
contrary to the provisions of the Employee Retirement Income Security Act of
1974 and regulations issued thereunder.
(d) The Trustee shall not be answerable for any action taken pursuant to any
direction, consent, certificate, or other paper or document on the belief that
the same is genuine and signed by the proper person. All directions by the
Employer, Participant or the Plan Administrator shall be in writing. The
Employer shall deliver to the Trustee certificates evidencing the individual or
individuals authorized to act as set forth in the Adoption Agreement or as the
Employer may subsequently inform the Trustee in writing and shall deliver to
the Trustee specimens of their signatures.
(e) The duties and obligations of the Trustee shall be limited to those
expressly imposed upon it by this instrument or subsequently agreed upon by the
parties. Responsibility for administrative duties required under the Plan or
applicable law not expressly imposed upon or agreed to by the Trustee, shall
rest solely with the Employer.
(f) The Trustee shall be indemnified and saved harmless by the Employer from
and against any and all liability to which the Trustee may be subjected,
including all expenses reasonably incurred in its defense, for any action or
failure to act resulting from compliance with the instructions of the Employer,
the employees or agents of the Employer, the Plan Administrator, or any other
fiduciary to the Plan, and for any liability arising from the actions or
non-actions of any predecessor Trustee or fiduciary or other fiduciaries of the
Plan.
(g) The Trustee shall not be responsible in any way for the application of
any payments it is directed to make or for the adequacy of the Fund to meet and
discharge any and all liabilities under the Plan.
ARTICLE XII
TRUST FUND
12.1 THE FUND The Fund shall consist of all contributions made under Article
III and Article IV of the Plan and the investment thereof and earnings thereon.
All contributions and the earnings thereon less payments made under the terms
of the Plan, shall constitute the Fund. The Fund shall be administered as
provided herein.
12.2 CONTROL OF PLAN ASSETS The assets of the Fund or evidence of ownership
shall be held by the Trustee under the terms of the Plan and Trust. If the
assets represent amounts transferred from another trustee under a former Plan,
the Trustee named hereunder shall not be responsible for any actions of the
prior fiduciary including the review of the propriety of any investment under
the former plan, said review to be the responsibility of the Employer.
12.3 EXCLUSIVE BENEFIT RULES No part of the Fund shall be used for, or
diverted to, purposes other than for the exclusive benefit of Participants,
former Participants with a vested interest, and the Beneficiary or
Beneficiaries of deceased Participants having a vested interest in the Fund at
death.
12.4 ASSIGNMENT AND ALIENATION OF BENEFITS No right or claim to, or interest
in, any part of the Fund, or any payment therefrom, shall be assignable,
transferable, or subject to sale, mortgage, pledge, hypothecation, commutation,
anticipation, garnishment, attachment, execution, or levy of any kind, and the
Trustee shall not recognize any attempt to assign, transfer, sell, mortgage,
pledge, hypothecate, commute, or anticipate the same, except to the extent
required by law. The preceding sentence shall also apply to the creation,
assignment, or recognition of a right to any benefit payable with respect to a
Participant pursuant to a domestic relations order, unless such order is
determined to be a Qualified Domestic Relations Order, as defined in Code
Section 414(p), or any domestic relations order entered before January 1, 1985
which the Plan attorney and Plan Administrator deem to be qualified.
12.5 DETERMINATION OF QUALIFIED DOMESTIC RELATIONS ORDER (QDRO) A Qualified
Domestic Relations Order shall specifically state all of the following in order
to be deemed a QDRO:
(a) The name and last known mailing address (if any) of the Participant and
of each alternate payee covered by the Order. However, if the QDRO does not
specify the current mailing address of the alternate payee, but the Plan
Administrator has independent knowledge of that address, the QDRO will still be
valid.
(b) The dollar amount or percentage of the Participant's benefit to be paid
by the Plan to each alternate payee, or the manner in which the amount or
percentage will be determined.
(c) The number of payments or period for which the order applies.
(d) The specific plan (by name) to which the Order applies. The Order shall
not be deemed a QDRO if it requires the Plan to provide:
(e) any type or form of benefit, or any option not already provided for in
the Plan;
(f) increased benefits, or benefits in excess of the Participant's vested
rights;
(g) payment of a benefit earlier than allowed by the Plan's earliest
retirement provisions or in the case of a profit-sharing plan, prior to the
allowability of in-service withdrawals, or
(h) payment of benefits to an alternate payee which are required to be paid
to another alternate payee under another QDRO.
Promptly, upon receipt of a Domestic Relations Order which may or may not be
"Qualified", the Plan Administrator shall notify the Participant and any
alternate payee(s) named in the Order of such receipt, and include a copy of
this paragraph 12.5. The Plan Administrator shall then forward the Order to the
Plan's legal counsel for an opinion as to whether or not the Order is in fact
"Qualified" as defined in Code Section 414(p). Within a reasonable time after
receipt of the Order, not to exceed 60 days, the Plan's legal counsel shall
make a determination as to its "Qualified" status and the Participant and any
alternate payee(s) shall be promptly notified in writing of the determination.
If the "Qualified" status of the Order is in question, there will be a delay in
any payout to any payee including the Participant, until the status is
resolved. In such event, the Plan Administrator shall segregate the amount that
would have been payable to the alternate payee(s) if the Order had been deemed
a QDRO. If the Order is not Qualified, or the status is not resolved (for
example, it has been sent back to the Court for clarification or modification)
within 18 months beginning with the date the first payment would have to be
made under the Order, the Plan Administrator shalt pay the segregated amounts
plus interest to the person(s) who would have been entitled to the benefits bad
there been no Order. If a determination as to the Qualified status of the Order
is made after the 18-month period described above, then the Order shall only be
applied on a prospective basis. If the Order is determined to be a QDRO, the
Participant and alternate payee(s) shall again be notified promptly after such
determination. Once an Order is deemed a QDRO, the Plan Administrator shall pay
to the alternate payee(s) all the amounts due under the QDRO, including
segregated amounts plus interest which may have accrued during a dispute as to
the Order's qualification.
Unless specified otherwise in the Adoption Agreement, the earliest retirement
age with regard to the Participant against whom the order is entered shall be
the date the order is determined to be qualified. This will only allow payouts
to alternate payee(s) and not the Participant.
ARTICLE XIII
INVESTMENTS
13.1 FIDUCIARY STANDARDS The Trustee shall invest and reinvest income in the
same Fund in accordance with the investment instructions provided by the
Employer, provided that:
(a) such investments are prudent under the Employee Retirement Income
Security Act of 1974 and the regulations promulgated thereunder,
(b) such investments are sufficiently diversified or otherwise insured or
guaranteed to minimize the risk of large losses, and
(c) such investments are similar to those which would be purchased by
another professional money manager for a like plan with similar investment
objectives.
13.2 FUNDING ARRANGEMENT The Employer shall appoint Capital Guardian Trust
Company to serve as Trustee of the Fund. The Fund shall be invested in any of
the alternatives available to the Trustee under paragraph 13.3 herein.
13.3 INVESTMENT ALTERNATIVES OF THE TRUSTEE The Trustee shall implement and
invest assets in accordance with the Employer's investment instructions and the
Employee Retirement Income Security Act of 1974. In addition to powers given by
law, the Trustee may:
(a) invest the Fund in any form of property, including common and preferred
stocks, exchange traded put and call options, bonds, money market instruments,
mutual funds (including funds for which the Trustee or its affiliates serve as
investment advisor), savings accounts, certificates of deposit, Treasury bills,
insurance policies and contracts, or in any other property, real or personal,
having a ready market including securities issued by the Trustee and/or
affiliates of the Trustee. The Trustee may invest in its own deposits, and if
applicable those of affiliates, which bear a reasonable interest rate. No
portion of any Qualified Voluntary Contribution, or the earnings thereon, may
be invested in life insurance contracts or, as with any Participant-directed
investment, in tangible personal property characterized by the IRS as a
collectible,
(b) invest any assets of the Fund in a group or collective trust established
to permit the pooling of funds of separate pension and profit-sharing trusts,
provided the Internal Revenue Service has ruled such group or collective trust
to be qualified under Code Section 401(a) and exempt under Code Section 501(a)
(or the applicable corresponding provision of any other Revenue Act) or to any
other common, collective, or commingled trust fund which has been or may
hereafter be established and maintained by the Trustee and/or affiliates of the
Trustee. Such commingling of assets of the Fund with assets of other qualified
trusts is specifically authorized, and to the extent of the investment of the
Fund in such a group or collective trust, the terms of the instrument
establishing the group or collective trust shall be a part hereof as though set
forth herein,
(c) invest the Fund in the common stock, debt obligations, or any other
security issued by the Employer or by an affiliate of the Employer within the
limitations provided under Sections 406, 407, and 408 of the Employee
Retirement Income Security Act of 1974 and further provided that such
investment does not constitute a prohibited transaction under Code Section
4975. Any such investment in Employer securities shall only be made upon
written direction of the Employer who shall be solely responsible for
propriety of such investment,
(d) hold cash uninvested and deposit same with any banking or savings
institution, including its own banking department or the banking department of
an affiliate,
(e) join in or oppose the reorganization, recapitalization, consolidation,
sale or merger of corporations or properties, including those in which it is
interested as Trustee, upon such terms as it deems wise,
(f) hold investments in nominee or bearer form,
(g) pass proxies on to any investment manager or Participant which may have
directed the investment in the equity giving rise to the proxy, or to the
Employer.
(h) exercise all ownership rights with respect to assets held in the Fund.
13.4 EMPLOYER INVESTMENT DIRECTION If agreed upon by the Trustee and approved
by the Employer in the Adoption Agreement, the Employer shall have the right to
direct the Trustee with respect to investments of the Fund, may appoint an
investment manager (registered as an investment advisor under the Investment
Advisors Act of 1940) to direct investments, or may give the Trustee sole
investment management responsibility. The Employer may purchase and sell
interests in a registered investment company (i.e., mutual funds) for which the
Sponsor, its parent, affiliates, or successors, may serve as investment advisor
and receive compensation from the registered investment company for its
services as investment advisor. The Employer shall advise the Trustee in
writing regarding the retention of investment powers, the appointment of an
investment manager, or the delegation of investment powers to the Trustee. Any
investment directive under this Plan shall be made in writing by the Employer
or investment manager, as the case may be. The Trustee shall not be responsible
for the propriety of any directed investment made and shall not be required to
consult with or advise the Employer regarding the investment quality of any
directed investment held hereunder. While the Employer may direct the Trustee
with respect to Plan investments, the Employer may not:
(a) borrow from the Fund or pledge any of the assets of the Fund as security
for a loan,
(b) buy property or assets from or sell property or assets to the Fund,
(c) charge any fee for services rendered to the Fund, or
(d) receive any services from the Fund on a preferential basis.
13.5 EMPLOYEE INVESTMENT DIRECTION If agreed to by the Trustee and approved
by the Employer in the Adoption Agreement, Participants shall be given the
option to direct the investment of their personal contributions and their share
of the Employer's contribution among alternative investment funds established
as part of the overall Fund. Unless otherwise specified by the Employer in the
Adoption Agreement, such investment funds shall be restricted to funds
acceptable to the Trustee. If investments outside the Trustee's control are
allowed, Participants may not direct that investments be made in collectibles,
other than U.S. Government or State issued gold and silver coins. In this
connection, a Participant's right to direct the investment of any contribution
shall apply only to selection of the desired fund. The following rules shall
apply to the administration of such funds.
(a) At the time an Employee becomes eligible for the Plan, he or she shall
complete an investment designation form stating the percentage of his or her
contributions to be invested in the available funds.
(b) A Participant may change his or her election with respect to future
contributions by filing a new investment designation form with the Employer who
will deliver the instructions to the Trustee in accordance with the procedures
established by the Trustee.
(c) A Participant may elect to transfer all or part of his or her balance
from one investment fund to another by filing an investment designation form
with the Employer who will deliver the instructions to the Trustee in
accordance with the procedures established by the Trustee.
(d) The Employer shall be responsible when transmitting Employee and
Employer contributions to show the dollar amount to be credited to each
investment fund for each Employee.
(e) Except as otherwise provided in the Plan, neither the Trustee, nor the
Employer, nor any fiduciary of the Plan shall be liable to the Participant or
any of his or her beneficiaries for any loss resulting from action taken at the
direction of the Participant.
ARTICLE XIV
TOP-HEAVY PROVISIONS
14.1 APPLICABILITY OF RULES If the Plan is or becomes Top-Heavy in any Plan
Year beginning after 1983, the provisions of this Article will supersede any
conflicting provisions in the Plan or Adoption Agreement.
14.2 MINIMUM CONTRIBUTION Notwithstanding any other provision in the
Employer's Plan, for any Plan Year in which the Plan is Top-Heavy, the
aggregate Employer contributions and forfeitures allocated on behalf of any
Participant (without regard to any Social Security contribution) under this
Plan and any other Defined Contribution Plan of the Employer shall be
determined as follows:
(a) When the Employer maintains one Plan or a combination of Paired or
non-paired Defined Contribution Plans and no Defined Benefit Plans which are
Top-Heavy or Super Top-Heavy, the Employer will contribute the lesser of 3% of
such Participant's Compensation or the largest percentage of Employer
contributions and forfeitures, as a percentage of the first $200,000 of the
Key Employee's Compensation, allocated on behalf of any Key Employee for that
year.
(b) Minimum Top-Heavy Contributions for Paired Defined Contribution and
Defined Benefit Plans where the Plans are not Super Top-Heavy:
(1) If an Employee participates in Paired Defined Contribution Plan #01001
or #01002 and also participates in Paired Defined Benefit Plan #02001, #02002,
#02003 or #02004, the Employer shall provide a minimum non-integrated benefit
of 3% of the highest 5-consecutive year average Compensation for each non-Key
Employee who participates in such Defined Benefit Plan, not to exceed a
cumulative accrued benefit of 30%.
(2) If an Employee participates in Paired Defined Contribution Plan #01001
or #01002, but does not participate in Paired Defined Benefit Plan #02001,
#02002, #02003 or #02004, the Employer shall make a minimum non-integrated
allocation of Employer contributions and forfeitures (in the aggregate under
all Defined Contribution Plans) of 4% of each eligible Participant's Top-Heavy
Compensation.
(c) Minimum Top-Heavy Contributions for Paired Defined Contribution and
Defined Benefit Plans where the Plans are Super Top-Heavy:
(1) If an Employee participates in Defined Contribution Plan #01001 or
#01002 and in Paired Defined Benefit Plan #02001, #02002, #02003 or #02004, the
Employer shall provide a minimum non-integrated benefit of 2% of the highest
5-consecutive year average Compensation for each non-Key Employee who
participates in such Defined Benefit Plan, not to exceed a cumulative accrued
benefit of 20%.
(2) If an Employee participates in Defined Contribution Plan #01001 or
#01002, but does not participate in Paired Defined Benefit Plan #02001, #02002,
#02003 or #02004, the minimum contribution requirements at paragraph 14.2(b)(2)
shall apply except that the minimum non-integrated allocation percentage shall
be 3% instead of 4%.
(d) If the Employer maintains or maintained a Defined Benefit Plan which is
not paired, the provisions of the "Limitations on Allocations" section of the
Adoption Agreement shall apply.
Each Participant who is employed by the Employer on the last day of the Plan
Year shall be entitled to receive an allocation of the Employer's minimum
contribution for such Plan Year. The minimum allocation applies even though
under other Plan provisions the Participant would not otherwise be entitled to
receive an allocation, or would have received a lesser allocation for the year
because the Participant fails to make Mandatory Contributions to the Plan, the
Participant's Compensation is less than a stated amount, or the Participant
fails to complete 1,000 Hours of Service (or such lesser number designated by
the Employer in the Adoption Agreement during the Plan Year.) A Paired
profit-sharing plan designated to provide the minimum Top-Heavy contribution
must do so regardless of profits. Unless the Employer specifies otherwise in
the Adoption Agreement, the minimum Top-Heavy contribution will be allocated to
the accounts of all eligible Participants, even if they are Key Employees.
For purposes of computing the minimum allocation, Compensation shah mean
Compensation as defined in the second paragraph of paragraph 1.8 of the Plan.
The Top-Heavy minimum contribution does not apply to any Participant to the
extent the Participant is covered under any other plan(s) of the Employer and
the Employer has provided in the Adoption Agreement that the minimum allocation
or benefit requirements applicable to Top-Heavy Plans will be met in the other
plan(s).
14.3 MINIMUM VESTING For any Plan Year in which this Plan is Top-Heavy, the
minimum vesting schedule elected by the Employer in the Adoption Agreement will
automatically apply to the Plan. If the vesting schedule selected by the
Employer in the Adoption Agreement is less liberal than the allowable schedule,
the schedule will automatically be modified. If the vesting schedule under the
Employer's Plan shifts in or out of the Top-Heavy schedule for any Plan Year,
such shift is an amendment to the vesting schedule and the election in
paragraph 9.8 of the Plan applies. The minimum vesting schedule applies to all
benefits within the meaning of Section 411(a)(7) of the Code except those
attributable to Employee contributions, including benefits accrued before the
effective date of Section 416 of the Code and benefits accrued before the Plan
became Top-Heavy. Further, no reduction in vested benefits may occur in the
event the Plan's status as Top-Heavy changes for any Plan Year. However, this
paragraph does not apply to the account balances of any Employee who does not
have an Hour of Service after the Plan initially becomes Top-Heavy and such
Employee's account balance attributable to Employer contributions and
forfeitures will be determined without regard to this paragraph.
14.4 LIMITATIONS ON ALLOCATIONS In any Plan Year in which the Top-Heavy
Ratio exceeds 90% (i.e., the Plan becomes Super Top-Heavy), the denominators of
the Defined Benefit Fraction (as defined in paragraph 1.11) and Defined
Contribution Fraction (as defined in paragraph 1.14) shall be computed using
100% of the dollar limitation instead of 125%.
ARTICLE XV
AMENDMENT AND TERMINATION
15.1 AMENDMENT BY SPONSOR The Sponsor may amend any or all provisions of this
Plan and Trust at any time without obtaining the approval or consent of any
Employer which has adopted this Plan and Trust provided that no amendment shall
authorize or permit any part of the corpus or income of the Fund to be used for
or diverted to purposes other than for the exclusive benefit of Participants
and their beneficiaries, or eliminate an optional form of distribution. In the
case of a mass-submitted plan, the mass-submitter shall amend the Plan on
behalf of the Sponsor.
15.2 AMENDMENT BY EMPLOYER The Employer may amend any option in the Adoption
Agreement, and may include language as permitted in the Adoption Agreement,
(a) to satisfy Code Section 415, or
(b) to avoid duplication of minimums under Section 416 of the Code, because
of the required aggregation of multiple plans. The Employer may add certain
model amendments published by the Internal Revenue Service which specifically
provide that their adoption will not cause the Plan to be treated as
individually designed.
If the Employer amends the Plan and Trust other than as provided above,
including providing for a waiver of minimum funding under Code Section 412(d),
the Employer's Plan shall no longer participate in this Prototype Plan and will
be considered an individually designed plan for which the Employer must obtain
a separate determination letter.
15.3 TERMINATION Employers shall have the right to terminate their Plans
upon 60 days notice in writing to the Trustee. If the Plan is terminated,
partially terminated, or if there is a complete discontinuance of contributions
under a profit-sharing plan maintained by the Employer, all amounts credited to
the accounts of Participants shall vest and become nonforfeitable. In the event
of a partial termination, only those who separate from Service shall be fully
vested. In the event of termination, the Employer shall direct the Trustee with
respect to the distribution of accounts to or for the exclusive benefit of
Participants or their beneficiaries. The Trustee shall dispose of the Fund in
accordance with the written directions of the Plan Administrator, provided that
no liquidation of assets and payment of benefits, (or provision therefor),
shall actually be made by the Trustee until after it is established by the
Employer in a manner satisfactory to the Trustee, that the applicable
requirements, if any, of the Employee Retirement Income Security Act of 1974
and the Internal Revenue Code governing the termination of employee benefit
plans, have been or are being, complied with, or that appropriate
authorizations, waivers, exemptions, or variances have been, or are being
obtained.
15.4 QUALIFICATION OF EMPLOYER'S PLAN If the adopting Employer fails to
attain or retain Internal Revenue Service qualification, such Employer's Plan
shall no longer participate in this Prototype Plan and will be considered an
individually designed plan.
15.5 MERGERS AND CONSOLIDATIONS
(a) In the case of any merger or consolidation of the Employer's Plan with,
or transfer of assets or liabilities of the Employer's Plan to, any other plan,
Participants in the Employer's Plan shall be entitled to receive benefits
immediately after the merger, consolidation, or transfer which are equal to or
greater than the benefits they would have been entitled to receive immediately
before the merger, consolidation, or transfer if the Plan had then terminated.
(b) Any corporation into which the Trustee or any successor trustee may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Trustee or any successor trustee may
be a party, or any corporation to which all or substantially all the trust
business of the Trustee or any successor trustee may be transferred, shall be
the successor of such Trustee without the filing of any instrument or
performance of any further act, before any court.
15.6 RESIGNATION AND REMOVAL The Trustee may resign by written notice to the
Employer which shall be effective 60 days after delivery. The Employer may
discontinue its participation in this Prototype Plan and Trust effective upon
60 days written notice to the Sponsor. In such event the Employer shall, prior
to the effective date thereof, amend the Plan to eliminate any reference to
this Prototype Plan and Trust and appoint a successor trustee or custodian or
arrange for another funding agent. The Trustee shall deliver the Fund to its
successor on the effective date of the resignation or removal, or as soon
thereafter as practicable, provided that this shall not waive any lien the
Trustee may have upon the Fund for its compensation or expenses. If the
Employer fails to amend the Plan and appoint a successor trustee, custodian, or
other funding agent within the said 60 days, or such longer period as the
Trustee may specify in writing, the Plan shall be deemed individually designed
and the Employer deemed the successor trustee. The Employer must then obtain
its own determination letter.
15.7 QUALIFICATION OF PROTOTYPE The Sponsor intends that this Prototype Plan
will meet the requirements of the Code as a qualified Prototype Retirement Plan
and Trust. Should the Commissioner of Internal Revenue or any delegate of the
Commissioner at any time determine that the Plan and Trust fails to meet the
requirements of the Code, the Sponsor will amend the Plan and Trust to maintain
its qualified status.
ARTICLE XVI
GOVERNING LAW
Construction, validity and administration of the Prototype Plan and Trust, and
any Employer Plan and Trust as embodied in the Prototype document and
accompanying Adoption Agreement, shall be governed by Federal law to the extent
applicable and to the extent not applicable by the laws of the
State/Commonwealth in which the principal office of the Sponsor is located.
IRS OPINION LETTERS
Below are the Internal Revenue Service opinion letters approving the form of
the American Funds Prototype Defined Contribution Plan and Trust.
Internal Revenue Service
Plan Description: Prototype Non-standardized Profit Sharing Plan
FFN: 50370211902-001
Case: 9015079 EIN: 95-2769620
BPD: 02 Plan: 001
Letter Serial No: D351790a
AMERICAN FUNDS DISTRIBUTORS, INC.
333 SOUTH HOPE STREET
LOS ANGELES CA 90071
Department of the Treasury
Washington, DC 20224
Person to Contact: Mrs. Fleming
Telephone Number: (202) 566-6421
Refer Reply to: E:EP:Q:I
Date: 08/28/90
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit
of their employees. This opinion relates only to the acceptability of the form
of the plan under the Internal Revenue Code. It is not an opinion of the effect
of other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section 401
(a). Therefore, an employer adopting the form of the plan should apply for a
determination letter by filing an application with the Key District Director of
Internal Revenue Service on Form 5307, Short Form Application for Determination
for Employee Benefit Plan.
If you, the plan sponsor, have any questions concerning the IRS processing of
this case, please call the above telephone number. This number is only for use
of the plan sponsor. Individual participants and/or adopting employers with
questions concerning the plan should contact the plan sponsor. The plan's
adoption agreement must include the sponsor's address and telephone number for
inquiries by adopting employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial
Number and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
(signature)
Chief, Employee Plans Qualifications Branch
Internal Revenue Service Plan Description: Prototype Non-standardized Money
Purchase Pension Plan
FFN: 50370211902-002
Case: 9015080 EIN: 95-2769620
BPD: 02 Plan: 002
Letter Serial No: D351787a
AMERICAN FUNDS DISTRIBUTORS, INC..
333 SOUTH HOPE STREET
LOS ANGELES CA 90071
Department of the Treasury
Washington. DC 20224
Person to Contact: Mrs. Fleming
Telephone Number: (202) 566-6421
Refer Reply to: E:EP:Q:I
Date: 08/28/90
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit
of their employees. This opinion relates only to the acceptability of the form
of the plan under the Internal Revenue Code. It is not an opinion of the effect
of other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section 401
(a). Therefore, an employer adopting the form of the plan should apply for a
determination letter by filing an application with the Key District Director of
Internal Revenue Service on Form 5307, Short Form Application for Determination
for Employee Benefit Plan.
If you, the plan sponsor, have any questions concerning the IRS processing of
this case, please call the above telephone number. This number is only for use
of the plan sponsor. Individual participants and/or adopting employers with
questions concerning the plan should contact the plan sponsor. The plan's
adoption agreement must include the sponsor's address and telephone number for
inquiries by adopting employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial
Number and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
(signature)
Chief, Employee Plans Qualifications Branch
RETIRE-007-0991
Litho in USA I
PROTOTYPE PROFIT SHARING PLAN #003
NONSTANDARDIZED ADOPTION AGREEMENT
PROTOTYPE PROFIT-SHARING PLAN AND TRUST
Sponsored by
AMERICAN FUNDS DISTRIBUTORS, INC.
The Employer named below hereby establishes a Profit-Sharing Plan for eligible
Employees as provided in this Adoption Agreement and the accompanying Prototype
Plan and Trust Basic Plan Document #01.
1. EMPLOYER INFORMATION
NOTE: If multiple Employers are adopting the Plan, complete this section
based on the lead Employer. Additional Employers may adopt this Plan by
attaching executed signature pages on the back of the Employer's Adoption
Agreement.
(a) NAME AND ADDRESS:
(b) TELEPHONE NUMBER:
(c) FAX NUMBER:
(d) TAX ID NUMBER:
(e) 1. FORM OF BUSINESS:
(i) Sole Proprietorship
(ii) Partnership
(iii) Corporation
(iv) "S" Corporation (formerly known as Subchapter S)
(v) Other:
2. ARE YOU PART OF A CONTROLLED GROUP?
Yes ___ No ___ Not Sure ___
(f) NAME OF PLAN:
(g) THREE-DIGIT PLAN NUMBER FOR ANNUAL RETURN/REPORT:
(h) DATE OF ORGANIZATION: / /
month day year
2. EFFECTIVE DATE
(a) This is a new Plan having an effective date of
/ /
month day year
(b) This is an amended Plan. The effective date of the original Plan was
month / day / year
The effective date of the amended Plan is month / day / year with
the exception of Sections 6(d), 7(b), 7(c) and 11 herein which shall be
effective as of the first day of the 1989 Plan Year.
3. DEFINITIONS
(a) "COMPENSATION": Compensation shall be determined on the basis of the:
__ (i) Plan Year __(ii) Employer's Taxable Year
__ (iii) Calendar Year
Compensation __ shall __ shall not include Employer contributions made
pursuant to a Salary Savings Agreement which are not includable in the gross
income of the Employee for the reasons indicated in the definition of
Compensation at 1.8 of the Basic Plan Document #01.
If the Employer chooses a non-integrated allocation formula, Compensation
will exclude:
__ Overtime __ Bonuses __ Commissions __ Accrued Compensation
__ Other Taxable Remuneration (specify)
NOTE: Any exclusion of Compensation must satisfy the requirements of Section
1.401(a)(4) of the Income Tax Regulations and Code Section 414 (s) and the
regulations thereunder.
(b) "ENTRY DATE":
[ ] (i) The first day of the Plan Year during which an Employee meets the
eligibility requirements.
[ ] (ii) The first day of the Plan Year nearest the date on which an Employee
meets the eligibility requirements.
[ ] (iii) The first day of the month coinciding with or following the date on
which an Employee meets the eligibility requirements.
[ ] (iv) The earlier of the first day of the Plan Year or the first day of the
seventh month of the Plan Year coinciding with or following the date on which
an Employee meets the eligibility requirements.
[ ] (v) The first day of the Plan Year following the date on which the Employee
meets the eligibility requirements. If this election is made, the Service
requirement at 4(a)(ii) may not exceed 1/2 year and the age requirement at
4(b)(ii) herein may not exceed 20-1/2.
3. DEFINITIONS (continued)
(c) "HOURS OF SERVICE": Shall be determined on the basis of the method
selected below. Only one method may be selected. The method selected shall be
applied to all Employees covered under the Plan as follows:
[ ] (i) On the basis of actual hours for which an Employee is paid or entitled
to payment.
[ ] (ii) On the basis of days worked. An Employee shall be credited with ten
(10) Hours of Service if under paragraph 1.29 of the Basic Plan Document #01
such Employee would be credited with at least one (1) Hour of Service during
the day.
[ ] (iii) On the basis of weeks worked. An Employee shall be credited with
forty-five (45) Hours of Service if under paragraph 1.29 of the Basic Plan
Document #01 such Employee would be credited with at least one (1) Hour of
Service during the week.
[ ] (iv) On the basis of semi-monthly payroll periods. An Employee shall be
credited with ninety-five (95) Hours of Service if under paragraph 1.29 of the
Basic Plan Document #01 such Employee would be credited with at least one (1)
Hour of Service during the semi-monthly payroll period.
[ ] (v) On the basis of months worked. An Employee shall be credited with one
hundred ninety (190) Hours of Service if under paragraph 1.29 of the Basic Plan
Document #01 such Employee would be credited with at least one (1) Hour of
Service during the month.
(d) "LIMITATION YEAR": The 12-consecutive-month period commencing on ______
and ending on _____
(e) "NET PROFIT":
[ ] (i) Not applicable (profits will not be required for contributions to the
Plan)
[ ] (ii) As defined in paragraph 1.36 of the Basic Plan Document #01
[ ] (iii) Shall be defined as:
------------------------------------------------
------------------------------------------------
(Only use if definition in paragraph 1.36 of the Basic Plan Document #01
is to be superseded.)
(f) "PLAN YEAR": The 12-consecutive-month period commencing on and ending
on If applicable, the first Plan Year will be a shod Plan Year commencing on
and ending on Thereafter, the Plan Year shall be as above.
(g) "QUALIFIED EARLY RETIREMENT AGE": For purposes of making distributions
under the provisions of a Qualified Domestic Relations Order, the Plan's
Qualified Early Retirement Age with regard to the Participant against whom the
order is entered [ ] shall [ ] shall not be the date the order is determined to
be qualified. If "shall" is elected, this will only allow payout to the
alternate payee(s).
(h) "QUALIFIED JOINT AND SURVIVOR ANNUITY": The safe-harbor provisions of
paragraph 8.7 of the Basic Plan Document #01 [] are [] are not applicable. If
not applicable, the survivor annuity shall be __% (50%, 66-2/3%, 75% or 100%)
of the annuity payable during the lives of the Participant and Spouse. If no
answer is specified, 50% will be used.
(i) "TAXABLE WAGE BASE":
[ ] (i) Not applicable- Plan is not integrated with Social Security
[ ] (ii) The maximum earnings considered wages for such Plan Year under Code
Section 3121(a)
[ ] (iii) ___% (not more than 100%) of the amount considered wages for such
Plan Year under Code Section 3121 (a)
[ ] (iv) $______, provided that such amount is not in excess of the amount
determined under paragraph 3(i)(ii) above
[ ] (v) For the 1989 Plan Year $10,000. For all subsequent Plan Years, 20% of
the maximum earnings considered wages for such Plan Year under Code Section
3121 (a)
NOTE: Using less than the maximum may result in a change in the allocation
formula in Section 7 hereof.
(j) "VALUATION DATE(S)": Allocations to Participant Accounts will be done in
accordance with Article V of the Basic Plan Document #01:
[ ] (i) Daily [ ] (iii) Bimonthly [ ] (v) Semi-Annually
[ ] (ii) Monthly [ ] (iv) Quarterly [ ] (vi) Annually
(k) "YEAR OF SERVICE":
(i) For Eligibility Purposes: The 12-consecutive-month period during which an
Employee is credited with ___ [not more than 1,000] Hours of Service
(ii) For Allocation Accrual Purposes: The 12-consecutive-month period during
which an Employee is credited with ____ [not more than 1,000] Hours of Service
(iii) For Vesting Purposes: The 12-consecutive-month period during which an
Employee is credited with ___ [not more than 1,000] Hours of Service
4. ELIGIBILITY REQUIREMENTS
(a) SERVICE:
[ ] (i) The Plan shall have no service requirement.
[ ] (ii) The Plan shall cover only Employees having completed at least ____
[not more than three (3)] Years of Service. If three is specified, it will
automatically be deemed to be two (2) for all Plan Years beginning in 1989 and
later.
NOTE: If the eligibility period exceeds one (1) Year of Service, the vesting
provisions at Section 11 herein must be completed to provide a 100% vested and
nonforfeitable benefit upon participation. If the Year(s) of Service selected
is or includes a fractional year, an Employee will not be required to complete
any specified number of Hours of Service to receive credit for such fractional
year.
(b) AGE:
[ ] (i) The Plan shall have no minimum age requirement.
[ ] (ii) The Plan shall cover only Employees having attained age ___ [not more
than age 21].
(c) CLASSIFICATION: The Plan shall cover all Employees who have met the age
and service requirements with the following exceptions:
[ ] (i) No exceptions
[ ] (ii) The Plan shall exclude Employees included in a unit of Employees
covered by a collective bargaining agreement between the Employer and Employee
Representatives, if retirement benefits were the subject of good faith
bargaining. For this purpose, the term "Employee Representative" does not
include any organization more than half of whose members are Employees who are
owners, officers, or executives of the Employer.
[ ] (iii) The Plan shall exclude Employees who are nonresident aliens and who
receive no earned income from the Employer which constitutes income from
sources within the United States.
[ ] (iv) The Plan shall exclude from participation any nondiscriminatory
classification of Employees determined as follows:
- -------------------------------------------------------------
- -------------------------------------------------------------
(d) EMPLOYEES ON EFFECTIVE DATE:
[ ] (i) Employees employed on the Plan's Effective Date do not have to satisfy
the Service requirements specified above.
[ ] (ii) Employees employed on the Plan's Effective Date do not have to
satisfy the Age requirements specified above.
5. RETIREMENT AGES
(a) NORMAL RETIREMENT AGE: If the Employer imposes a requirement that
Employees retire upon reaching a specified age, the Normal Retirement Age
selected below may not exceed the Employer-imposed mandatory retirement age.
[ ] (i) Normal Retirement Age shall be _____ [not to exceed age 65].
[ ] (ii) Normal Retirement Age shall be the later of attaining age ____ [not to
exceed age 65] or the _____ [not to exceed the 5th] anniversary of the first
day of the first Plan Year in which the Participant commenced participation in
the Plan.
(b) EARLY RETIREMENT AGE:
[ ] (i) Not applicable
[ ] (ii) The Plan shall have an Early Retirement Age of __ [not less than 55]
and completion of __ Years of Service.
6. EMPLOYER CONTRIBUTIONS
[ ] (a) An amount fixed by appropriate action of the Employer as of the time
prescribed by law
[ ] (b) ___% of the Employer's Net Profit. (The allocation to any one
Participant shall not exceed the Maximum Permissible Amount.) ___% of
Compensation of eligible Participants for the Plan Year
[ ] ___% of each eligible Participant's Compensation plus ___% of Compensation
in excess of the Taxable Wage Base defined at Section 3(i) hereof. The
percentage on excess compensation may not exceed the lesser of (i) the amount
first specified in this paragraph or (ii) the greater of 5.7% or the
percentage rate of tax under Code Section 3111(a) as in effect on the first day
of the Plan Year attributable to the Old Age (OF) portion of the OASDI
provisions of the Social Security Act. If the Employer specifies a Taxable
Wage Base in Section 3(i) which is lower than the Taxable Wage Base for Social
Security purposes (SSTWB) in effect as of the first day of the Plan Year, the
percentage contributed with respect to excess Compensation must be adjusted.
If the Plan's Taxable Wage Base is greater than the larger of $10,000 or 20% of
the SSTWB but not more than 80% of the SSTWB, the excess percentage is 4.3%.
If the Plan's Taxable Wage Base is greater than 80% of the SSTWB but less than
100% of the SSTWB, the excess percentage is 5.4%.
NOTE: Employer contributions shall be subject to the limitations of Article X
of the Basic Plan Document #01. For this purpose, a contribution for a Plan
Year shall be limited for the Limitation Year which ends with or within such
Plan Year.
7. ALLOCATION OF EMPLOYER CONTRIBUTION
NOTE: The integrated allocation formulas below are for Plan Years beginning
in 1989 and later. The Employer's allocation for earlier years shall be as
specified in its Plan prior to Amendment for the Tax Reform Act of 1986.
[ ] (a) NON-INTEGRATED ALLOCATION FORMULA [See Minimum Contributions Under
Top-Heavy Plans at Section 7(e).] The Employer's contribution for any Plan Year
plus any forfeitures (only if they are reallocated to Participants under
Section 9), shall be allocated to the accounts of eligible Participants in
direct proportion to their respective Compensation for such Plan Year.
[ ] (b) INTEGRATED ALLOCATION FORMULA [See Minimum Contributions Under
Top-Heavy Plans at Section 7(e).] The Employer's contribution for the Plan Year
plus any forfeitures (only if they are reallocated to Participants under
Section 9) shall be allocated to the accounts of eligible Participants as
follows:
(i) First, to the extent contributions and forfeitures are sufficient, all
Participants will receive an allocation equal to 3% of their Compensation.
(ii) Next, any remaining Employer Contributions and forfeitures will be
allocated to Participants who have Compensation in excess of the Taxable Wage
Base (excess Compensation). Each such Participant will receive an allocation in
the ratio that his or her excess Compensation bears to the excess Compensation
of all Participants. Participants may only receive an allocation of 3% of
excess Compensation.
(iii) Next, any remaining Employer contributions and forfeitures will be
allocated to all Participants in the ratio that their Compensation plus excess
Compensation bears to the total Compensation plus excess Compensation of all
Participants. Participants may only receive an allocation of up to 2.7% of
their Compensation plus excess Compensation under this allocation method. If
the Taxable Wage Base as defined at Section 3(i) above is less than the maximum
but more than the greater of $10,000 or 20% of the maximum, then the 2.7% must
be reduced. If the amount specified is greater than 80% but less than 100% of
the maxi- mum Taxable Wage Base, the 2.7% must be reduced to 2.4%. If the
amount specified is greater than the greater of $10,000 or 20% of the maximum
Taxable Wage Base but not more than 80%, 2.7% must be reduced to 1.3%
NOTE: If the Plan is not Top-Heavy, subparagraphs (i) and (ii) above may be
disregarded and 5.7%, 5.4% or 4.3% may be substituted for 2.7%, 2.4% or 1.3%
where it appears in (iii) above.
(iv) Next, any remaining Employer contributions and forfeitures will be
allocated to all Participants (whether or not they received an allocation under
the preceding paragraphs) in the ratio that each Participant's Compensation
bears to all Participants' Compensation.
(c) ALTERNATIVE INTEGRATED ALLOCATION FORMULA [See Minimum Contributions Under
Top-Heavy Plans at Section 7(e).] The Employer's Contribution for any Plan
Year plus any forfeitures (only if they are reallocated under Section 9 below),
shall be allocated to the accounts of eligible Participants based on the
Contribution formula described in Section 6(d) above. If this allocation
formula is used for Top-Heavy Plans, the first blank may not be less than 3%.
NOTE: Only one plan maintained by the Employer may be integrated with Social
Security.
(d) ALLOCATION OF EXCESS AMOUNTS (ANNUAL ADDITIONS) In the event that the
allocation formula above results in an Excess Amount, such excess shall be:
[ ] (i) placed in a suspense account accruing no gains or losses for the
benefit of the Participant.
[ ] (ii) reallocated as additional Employer contributions to all other
Participants to the extent that they do not have an Excess Amount.
If no answer is specified, the suspense account method will be used.
(e) MINIMUM CONTRIBUTIONS UNDER TOP-HEAVY PLANS Notwithstanding any other
provision hereof, the Employer shall make a minimum contribution for each
eligible Participant with respect to any Plan Year for which the Plan is
Top-Heavy. The minimum contribution shall be determined in accordance with
paragraph 14.2 of Basic Plan Document #01 for:
[ ] (i) all eligible Participants.
[ ] (ii) only eligible non-Key Employees who are Participants.
8. ALLOCATIONS TO TERMINATED EMPLOYEES
[ ] (a) The Employer will not allocate Employer-related contributions to
Employees who terminate during a Plan Year unless required to satisfy the
requirements of Code Sections 401 (a)(26) and 410(b). (The requirements are
effective for 1989 and subsequent Plan Years.)
[ ] (b) The Employer will allocate Employer-related contributions to Employees
who terminate during the Plan Year as a result of:
[ ] (i) retirement. [ ] (ii) Disability. [ ] (iii) death.
[ ] (iv) other termination of employment provided that the Participant has
completed a Year of Service as defined for Allocation Accrual purposes.
[ ] (v) other termination of employment even though the Participant has not
completed a Year of Service.
9. ALLOCATION OF FORFEITURES
(a) ALLOCATION ALTERNATIVES:
[ ] (i) Forfeitures shall be allocated to Participants in the same manner as
the Employer's contribution.
[ ] (ii) Forfeitures shall be applied to reduce the Employer's contribution for
such Plan Year.
(b) DATE FOR REALLOCATION:
NOTE: If no distribution has been made to a former Participant, subsection
(i) will apply to such Participant even if the Employer elects (ii) or (iii)
below as its normal administrative policy.
[ ] (i) Forfeitures shall be reallocated at the end of the Plan Year during
which the former Participant incurs his or her fifth consecutive one-year Break
In Service.
[ ] (ii) Forfeitures will be reallocated immediately (as of the next Valuation
Date).
[ ] (iii) Forfeitures shall be reallocated at the end of the Plan Year during
which the former Participant incurs a one-year Break in Service.
(c) RESTORATION OF FORFEITURES: If amounts are forfeited prior to five
consecutive 1-year Breaks In Service, the funds for restoration of account
balances will be obtained from the following resources in the order indicated
(fill in the appropriate number):
[ ] (i) Current year's forfeitures
[ ] (ii) Additional Employer contribution
[ ] (iii) Income or gain to the Plan
10. LIMITATIONS ON ALLOCATIONS
[ ] This is the only Plan the Employer maintains or ever maintained;
therefore, this Section is not applicable.
[ ] The Employer does maintain or has maintained another Plan (including a
Welfare Benefit Fund or an individual medical account [as defined in Code
Section 415(i)(2)], under which amounts are treated as Annual Additions) and
has completed the proper sections below.
Complete (a), (b) and (c) only if you maintain or ever maintained another
qualified plan, including a Welfare Benefit Fund or an individual medical
account [as defined in Code Section 415(1)(2)], in which any Participant in
this Plan is (or was) a participant or could possibly become a participant.
(a) If the Participant is covered under another qualified Defined Contribution
Plan maintained by the Employer, other than a Master or Prototype Plan:
[ ] (i) The provisions of Article X of the Basic Plan Document #01 will apply
as if the other plan were a Master or Prototype Plan.
[ ] (ii) Attach provisions stating the method under which the plans will limit
total Annual Additions to the Maximum Permissible Amount and will properly
reduce any Excess Amounts in a manner that precludes Employer discretion.
(b) If a Participant is or ever has been a participant in a Defined Benefit
Plan maintained by the Employer: Attach provisions which will satisfy the 1.0
limitation of Code Section 415(e). Such language must preclude Employer
discretion. The Employer must also specify the interest and mortality
assumptions used in determining Present Value in the Defined Benefit Plan.
(c) The minimum contribution or benefit required under Code Section 416
relating to Top-Heavy Plans shall be satisfied by:
[ ] (i) this Plan.
[ ] (ii) -----------------------------------------------
- --------------------------------------------------------
(name of other qualified plan of the Employer)
[ ] (iii) Attach provisions stating the method under which the minimum
contribution and benefit provisions of Code Section 416 will be satisfied. If a
Defined Benefit Plan is or was maintained, an attachment must be provided
showing interest and mortality assumptions used in determining the Top-Heavy
Ratio.
11. VESTING
Each Participant shall acquire a vested and nonforfeitable percentage in his or
her account balance attributable to Employer contributions and the earnings
thereon under the procedures selected below except with respect to any Plan
Year during which the Plan is Top-Heavy, in which case the two-twenty vesting
schedule [option (iv)] shall automatically apply unless the Employer has
already elected a faster vesting schedule. If the Plan is switched to option
(b)(iv), because of its Top-Heavy status, that vesting schedule will remain in
effect even if the Plan later becomes non-Top-Heavy until the Employer executes
an amendment of this Adoption Agreement indicating otherwise.
(a) COMPUTATION PERIOD: The computation period for purposes of determining
Years of Service and Breaks in Service for purposes of computing a
Participant's nonforfeitable right to his or her account balance derived from
Employer contributions:
11. VESTING (continued)
[ ] (i) shall not be applicable since Participants are always fully vested.
[ ] (ii) shall commence on the first day of the Plan Year during which an
Employee first performs an Hour of Service for the Employer, and each
subsequent 12-consecutive-month period shall commence on the anniversary
thereof.
A Participant shall receive credit for a Year of Service if he or she completes
at least 1,000 Hours of Service [or if lesser, the number of hours specified at
3(k)(iii) of this Adoption Agreement] at any time during the
12-consecutive-month computation period. Consequently, a Year of Service may
be earned prior to the end of the 12-consecutive-month computation period and
the Participant need not be employed at the end of the 12-consecutive-month
computation period to receive credit for a Year of Service.
(b) VESTING SCHEDULES:
NOTE: The vesting schedules below only apply to a Participant who has at least
one Hour of Service during or after the 1989 Plan Year. If applicable,
Participants who separated from Service prior to the 1989 Plan Year will remain
under the vesting schedule as in effect in the Plan prior to amendment for the
Tax Reform Act of 1986.
[ ] (i) Full and immediate vesting
Years of Service
1 2 3 4 5 6 7
--------------------------------------------
[ ] (ii) ___% 100%
[ ] (iii) ___% ___% 100%
[ ] (iv) ___% 20% 40% 60% 80% 100%
[ ] (v) 10% 20% 30% 40% 60% 80% 100%
[ ] (vi) 10% 20% 30% 40% 60% 80% 100%
[ ] (vii) ___% ___% ___% ___% 100%
[ ] (viii)___% ___% ___% ___% ___% ___% 100%
NOTE: The percentages selected for schedule (viii) may not be less for any
year than the percentages shown at schedule (v).
(c) SERVICE DISREGARDED FOR INVESTING:
[ ] (i) Service prior to the Effective Date of this Plan or a predecessor plan
shall be disregarded when computing a Participant's vested and nonforfeitable
interest.
[ ] (ii)Service prior to a Participant having attained age 18 shall be
disregarded when computing a Participant's vested and nonforfeitable interest.
12. SERVICE WITH PREDECESSOR ORGANIZATION
For purposes of satisfying the Service requirements for eligibility, Hours of
Service shall include Service with the following predecessor organization(s)
(these hours will also be used for vesting purposes):
- --------------------------------------------------------------
- --------------------------------------------------------------
13. ROLLOVER/TRANSFER CONTRIBUTIONS
a) Rollover Contributions, as described at paragraph 4.3 of the Basic Plan
Document #01, [] shall [] shall not be permitted. If permitted, Employees []
may [] may not make Rollover Contributions prior to meeting the eligibility
requirements for participation in the Plan.
(b) Transfer Contributions, as described at paragraph 4.4 of the Basic Plan
Document #01 [] shall [] shall not be permitted. If permitted, Employees [] may
[] may not make Transfer Contributions prior to meeting the eligibility
requirements for participation in the Plan.
NOTE: Even if available, the Employer may refuse to accept such
contributions if its Plan meets the safe-harbor rules of paragraph 8.7 of the
Basic Plan Document #01.
14. HARDSHIP WITHDRAWALS
Hardship withdrawals, as provided for in paragraph 6.9 of the Basic Plan
Document #01 [ ] are [ ] are not Permitted.
15. EMPLOYER INVESTMENT DIRECTION
The Employer investment direction provisions, as set forth in paragraph 13.4 of
the Basic Plan Document #01, [] shall [] shall not be applicable.
16. EMPLOYEE INVESTMENT DIRECTION
The Employee investment direction provisions, as set forth in paragraph 13.5 of
the Basic Plan Document#01, [] shall [] shall not be applicable. If applicable,
Participants may direct their investments among funds acceptable to the
Trustee.
NOTE: To the extent that Employee investment direction was previously
allowed, it shall continue to be allowed on those amounts and the earnings
thereon.
17. EARLY PAYMENT OPTION
(a) A Participant who separates from Service prior to retirement, death or
Disability [] may [] may not make application to the Employer requesting an
early payment of his or her vested account balance.
(b) A Participant who has attained age 59-1/2 and who has not separated from
Service: [] may [] may not obtain a distribution of his or her vested Employer
contributions. Distribution can only be made if the Participant is 100% vested.
(c) A Participant who has attained the Plan's Normal Retirement Age and who
has not separated from Service [] may [] may not receive a distribution of
his or her vested account balance.
NOTE: If the Participant has had the right to withdraw his or her account
balance in the past, this right may not be taken away. Notwithstanding the
above, to the contrary, required minimum distributions will be paid. For timing
of distribution, see Section 18 below.
18. DISTRIBUTION OPTIONS
(a) TIMING OF DISTRIBUTIONS: In cases of termination for other than death,
Disability or retirement, benefits shall be paid:
[ ] (i) as soon as administratively feasible following the close of the Plan
Year during which a distribution is requested or is otherwise payable.
[ ] (ii) as soon as administratively feasible following the date on which a
distribution is requested or is otherwise payable.
[ ] (iii) as soon as administratively feasible after the close of the Plan
Year during which the Participant incurs a one-year Break in Service.
[ ] (iv) only after the Participant has achieved the Plan's Normal Retirement
Age, or Early Retirement Age, if applicable.
In cases of death, Disability or retirement, benefits shall be paid:
[ ] (v) as soon as administratively feasible following the close of the Plan
Year during which a distribution is requested or is otherwise payable.
[ ] (vi) as soon as administratively feasible following the date on which a
distribution is requested or is otherwise payable.
[ ] (vii) as soon as administratively feasible after the close of the Plan Year
during which the Participant incurs a one-year Break in Service.
[ ] (viii) only after the Participant has achieved the Plan's Normal Retirement
Age, or Early Retirement Age, if applicable.
(b) OPTIONAL FORMS OF PAYMENT:
[ ] (i) Lump sum
[ ] (ii) Installment payments
[ ] (iii) Life annuity*
[ ] (iv) Life annuity term certain*
Life annuity with payments guaranteed for a __ -year period (not to
exceed 20 years; specify all applicable)
[ ] (v) Joint and [ ]50% [ ] 66-2/3% [ ]75%
[ ] 100% survivor annuity* (specify all applicable)
[ ] (vi) Other form(s) as specified: ----------------------
-------------------------------------------------------
* Not available in Plan meeting provisions of paragraph 8.7 of Basic Plan
Document #01.
(c) RECALCULATION OF LIFE EXPECTANCY: In determining required distributions
under the Plan, Participants and/or their Spouse (Surviving Spouse) [ ]shall [
] shall not have the right to have their life expectancy recalculated annually.
If "shall": [ ] only the Participant shall be recalculated. [ ]both
the Participant and Spouse shall be recalculated.
[ ] who is recalculated shall be determined by the Participant.
19. SPONSOR CONTACT
Employers should direct questions concerning the language contained in and
qualification of the Prototype to:
NAME ----------------------------------------------------
TITLE ---------------------------------------------------
TELEPHONE NUMBER ( ) -----------------------------
In the event that the Sponsor amends, discontinues or abandons this Prototype
Plan, notification will be provided to the Employer's address provided on the
first page of this Agreement.
20. SIGNATURES
DUE TO THE SIGNIFICANT TAX RAMIFICATIONS, IT IS RECOMMENDED THAT BEFORE YOU
EXECUTE THIS ADOPTION AGREEMENT, YOU CONTACT YOUR ATTORNEY OR TAX ADVISER, IF
ANY.
(a) EMPLOYER: Name and address of Employer if different than specified in
Section 1 above.
- --------------------------------------------------------------
- --------------------------------------------------------------
The Employer has appointed the following individual(s) to act on behalf of the
Employer regarding all communications and requests between the Employer and the
Trustee, pursuant to the terms and conditions of the Plan. Unless otherwise
directed by the Employer in written directions to the Trustee, the Trustee may
act upon the instructions of any one of the persons listed below.
NAME(S) [please type or print]: SIGNATURE(S):
1. --------------------------- 1. ------------------------
- ------------------------------
Address
- ------------------------------
2. --------------------------- 2. ------------------------
- ------------------------------
Address
- ------------------------------
3. --------------------------- 3. ------------------------
- ------------------------------
Address
- ------------------------------
It is understood that the Employer, and no other party to this Adoption
Agreement, is responsible for all legal and tax aspects of this Plan and Trust.
The Employer will apply to the IRS for determination of the Plan's
qualification and will furnish the Trustee with a copy of the IRS' approval
letter. The Employer represents that it fully accepts and assumes all such
responsibility and that it has counsel in connection with the adoption of this
Plan and hereby agrees to abide by its terms and conditions.
The Employer hereby certifies that it has, by resolution, duly adopted the Plan
and Trust, pursuant to the terms of this Adoption Agreement, and that such
resolution is in full force and effect. The Employer shall ascertain that each
Participant shall have received the current prospectus of the Investment
Company that provides the investment media of this Plan.
The Employer may not rely on the opinion letter issued by the Internal Revenue
Service National Office with respect to the qualification of this Plan and
should apply to the appropriate Internal Revenue Service key district for a
determination letter in order to obtain reliance.
This Agreement and the corresponding provisions of the Plan and Trust Basic
Plan Document #01 were adopted by the Employer on the __ day of
_______________,19__
Signed for the Employer by:------------------------
(please type or print)
Title: ____________ Signature: ______________________
THE EMPLOYER UNDERSTANDS THAT ITS FAILURE TO PROPERLY COMPLETE THE ADOPTION
AGREEMENT MAY RESULT IN DISQUALIFICATION OF ITS PLAN.
Employer's Reliance: The adopting Employer may not rely on an opinion letter
issued by the National Office of the Internal Revenue Service as evidence that
the Plan is qualified under Code Section 401. In order to obtain reliance with
respect to Plan qualification, the Employer must apply to the appropriate Key
District Office for a determination letter.
This Adoption Agreement may only be used in conjunction with Basic Plan
Document #01.
(b) TRUSTEE: The assets of the Fund shall be invested in accordance with
paragraph 13.3 of the Basic Plan Document #01 as a Trust. As such, the
Employer's Plan as contained herein was accepted by Capital Guardian Trust
Company, the Trustee, on the __ day of ________, 19__.
Signed for the Trustee by: --------------------------
(Please type or print)
Title: ------------ Signature:-------------
PROTOTYPE MONEY PURCHASE PLAN #004
NONSTANDARDIZED ADOPTION AGREEMENT
PROTOTYPE MONEY PURCHASE PLAN AND TRUST
Sponsored by
AMERICAN FUNDS DISTRIBUTORS, INC.
The Employer named below hereby establishes a Money Purchase Pension Plan for
eligible Employees as provided in this Adoption Agreement and the accompanying
Prototype Plan and Trust Basic Plan Document #01.
1. EMPLOYER INFORMATION
NOTE: If multiple Employers are adopting the Plan, complete this section
based on the lead Employer. Additional Employers may adopt this Plan by
attaching executed signature pages on the back of the Employer's Adoption
Agreement.
(a) NAME AND ADDRESS:
(b) TELEPHONE NUMBER:
(c) FAX NUMBER:
(d) TAX ID NUMBER:
(e) 1. FORM OF BUSINESS:
(i) Sole Proprietorship
(ii) Partnership
(iii) Corporation
(iv) "S" Corporation (formerly known as Subchapter S)
(v) Other:
2. ARE YOU PART OF A CONTROLLED GROUP?
Yes ___ No ___ Not Sure ___
(f) NAME OF PLAN:
(g) THREE-DIGIT PLAN NUMBER FOR ANNUAL RETURN/REPORT:
(h) DATE OF ORGANIZATION: / /
month day year
2. EFFECTIVE DATE
(a) This is a new Plan having an effective date of
/ /
month day year
(b) This is an amended Plan. The effective date of the original Plan was
month / day / year
The effective date of the amended Plan is month / day / year with
the exception of Sections 6(d), 6(c) and 11 which shall be effective as of the
first day of the 1989 Plan Year.
3. DEFINITIONS
(a) "COMPENSATION": Compensation shall be determined on the basis of the:
__ (i) Plan Year __(ii) Employer's Taxable Year
__ (iii) Calendar Year
Compensation __ shall __ shall not include Employer contributions made
pursuant to a Salary Savings Agreement which are not includable in the gross
income of the Employee for the reasons indicated in the definition of
Compensation at 1.8 of the Basic Plan Document #01.
If the Employer chooses a non-integrated allocation formula, Compensation
will exclude:
__ Overtime __ Bonuses __ Commissions __ Accrued Compensation
__ Other Taxable Remuneration (specify)
NOTE: Any exclusion of Compensation must satisfy the requirements of Section
1.401(a)(4) of the Income Tax Regulations and Code Section 414 (s) and the
regulations thereunder.
(b) "ENTRY DATE":
[ ] (i) The first day of the Plan Year during which an Employee meets the
eligibility requirements.
[ ] (ii) The first day of the Plan Year nearest the date on which an Employee
meets the eligibility requirements.
[ ] (iii) The first day of the month coinciding with or following the date on
which an Employee meets the eligibility requirements.
[ ] (iv) The earlier of the first day of the Plan Year or the first day of the
seventh month of the Plan Year coinciding with or following the date on which
an Employee meets the eligibility requirements.
[ ] (v) The first day of the Plan Year following the date on which the Employee
meets the eligibility requirements. If this election is made, the Service
requirement at 4(a)(ii) may not exceed 1/2 year and the age requirement at
4(b)(ii) herein may not exceed 20-1/2.
3. DEFINITIONS (continued)
(c) "HOURS OF SERVICE": Shall be determined on the basis of the method
selected below. Only one method may be selected. The method selected shall be
applied to all Employees covered under the Plan as follows:
[ ] (i) On the basis of actual hours for which an Employee is paid or entitled
to payment.
[ ] (ii) On the basis of days worked. An Employee shall be credited with ten
(10) Hours of Service if under paragraph 1.29 of the Basic Plan Document #01
such Employee would be credited with at least one (1) Hour of Service during
the day.
[ ] (iii) On the basis of weeks worked. An Employee shall be credited with
forty-five (45) Hours of Service if under paragraph 1.29 of the Basic Plan
Document #01 such Employee would be credited with at least one (1) Hour of
Service during the week.
[ ] (iv) On the basis of semi-monthly payroll periods. An Employee shall be
credited with ninety-five (95) Hours of Service if under paragraph 1.29 of the
Basic Plan Document #01 such Employee would be credited with at least one (1)
Hour of Service during the semi-monthly payroll period.
[ ] (v) On the basis of months worked. An Employee shall be credited with one
hundred ninety (190) Hours of Service if under paragraph 1.29 of the Basic Plan
Document #01 such Employee would be credited with at least one (1) Hour of
Service during the month.
(d) "LIMITATION YEAR": The 12-consecutive-month period commencing on ______
and ending on _____
(e) "PLAN YEAR": The 12-consecutive-month period commencing on ___ and
ending on ___.
(f) "QUALIFIED EARLY RETIREMENT AGE": For purposes of making distributions
under the provisions of a Qualified Domestic Relations Order, the Plan's
Qualified Early Retirement Age with regard to the Participant against whom the
order is entered [ ] shall [ ] shall not be the date the order is determined to
be qualified. If "shall" is elected, this will only allow payout to the
alternate payee(s).
(g) "QUALIFIED JOINT AND SURVIVOR ANNUITY": The survivor annuity shall be __%
(50%, 66-1/3%, 75% or 100%) of the annuity payable during the lives of the
Participant and Spouse. If no answer is specified, 50% will be used.
(h) "TAXABLE WAGE BASE":
[ ] (i) Not applicable- Plan is not integrated with Social Security
[ ] (ii) The maximum earnings considered wages for such Plan Year under Code
Section 3121(a)
[ ] (iii) ___% (not more than 100%) of the amount considered wages for such
Plan Year under Code Section 3121 (a)
[ ] (iv) $______, provided that such amount is not in excess of the amount
determined under paragraph 3(h)(ii) above
[ ] (v) For the 1989 Plan Year $10,000. For all subsequent Plan Years, 20% of
the maximum earnings considered wages for such Plan Year under Code Section
3121 (a)
NOTE: Using less than the maximum may result in a change in the allocation
formula in Section 6 hereof.
(i) "VALUATION DATE(S)": Allocations to Participant Accounts will be done in
accordance with Article V of the Basic Plan Document #01:
[ ] (i) Daily [ ] (iii) Bimonthly [ ] (v) Semi-Annually
[ ] (ii) Monthly [ ] (iv) Quarterly [ ] (vi) Annually
(j) "YEAR OF SERVICE":
(i) For Eligibility Purposes: The 12-consecutive-month period during which an
Employee is credited with ___ [not more than 1,000] Hours of Service
(ii) For Allocation Accrual Purposes: The 12-consecutive-month period during
which an Employee is credited with ____ [not more than 1,000] Hours of Service
(iii) For Vesting Purposes: The 12-consecutive-month period during which an
Employee is credited with ___ [not more than 1,000] Hours of Service
4. ELIGIBILITY REQUIREMENTS
(a) SERVICE:
[ ] (i) The Plan shall have no service requirement.
[ ] (ii) The Plan shall cover only Employees having completed at least ____
[not more than three (3)] Years of Service. If three is specified, it will
automatically be deemed to be two (2) for all Plan Years beginning in 1989 and
later.
NOTE: If the eligibility period exceeds one (1) Year of Service, the vesting
provisions at Section 11 herein must be completed to provide a 100% vested and
nonforfeitable benefit upon participation. If the Year(s) of Service selected
is or includes a fractional year, an Employee will not be required to complete
any specified number of Hours of Service to receive credit for such fractional
year.
(b) AGE:
[ ] (i) The Plan shall have no minimum age requirement.
[ ] (ii) The Plan shall cover only Employees having attained age ___ [not more
than age 21].
(c) CLASSIFICATION: The Plan shall cover all Employees who have met the age
and service requirements with the following exceptions:
[ ] (i) No exceptions
[ ] (ii) The Plan shall exclude Employees included in a unit of Employees
covered by a collective bargaining agreement between the Employer and Employee
Representatives, if retirement benefits were the subject of good faith
bargaining. For this purpose, the term "Employee Representative" does not
include any organization more than half of whose members are Employees who are
owners, officers, or executives of the Employer.
[ ] (iii) The Plan shall exclude Employees who are nonresident aliens and who
receive no earned income from the Employer which constitutes income from
sources within the United States.
[ ] (iv) The Plan shall exclude from participation any nondiscriminatory
classification of Employees determined as follows:
- -------------------------------------------------------------
- -------------------------------------------------------------
(d) EMPLOYEES ON EFFECTIVE DATE:
[ ] (i) Employees employed on the Plan's Effective Date do not have to satisfy
the Service requirements specified above.
[ ] (ii) Employees employed on the Plan's Effective Date do not have to
satisfy the Age requirements specified above.
5. RETIREMENT AGES
(a) NORMAL RETIREMENT AGE: If the Employer imposes a requirement that
Employees retire upon reaching a specified age, the Normal Retirement Age
selected below may not exceed the Employer-imposed mandatory retirement age.
[ ] (i) Normal Retirement Age shall be _____ [not to exceed age 65].
[ ] (ii) Normal Retirement Age shall be the later of attaining age ____ [not to
exceed age 65] or the _____ [not to exceed the 5th] anniversary of the first
day of the first Plan Year in which the Participant commenced participation in
the Plan.
(b) EARLY RETIREMENT AGE:
[ ] (i) Not applicable
[ ] (ii) The Plan shall have an Early Retirement Age of __ [not less than 55]
and completion of __ Years of Service.
6. EMPLOYER CONTRIBUTION AND ALLOCATION FORMULA
NOTE: The integrated allocation formulas below are for Plan Years beginning
in 1989 and later. The Employer's allocation for earlier years shall be as
specified in its Plan prior to Amendment for the Tax Reform Act of 1986.
Employer Contributions will be allocated in accordance with the method selected
below. If in Section 9 herein, the Employer elects to allocate forfeitures,
they will be treated as additional Employer Contributions and allocated
accordingly.
[ ] (a) NON-INTEGRATED CONTRIBUTION AND ALLOCATION FORMULA [See Minimum
Contributions Under Top-Heavy Plans at Section 7.] The Employer shall
contribute and allocate to the account of each eligible Participant __% [not
more than 25%] of such Participant's Compensation, plus any forfeitures (only
if they are reallocated to Participants under Section 9), in such Plan Year.
[ ] (b) INTEGRATED CONTRIBUTION AND ALLOCATION FORMULA [See Minimum
Contributions Under Top-Heavy Plans at Section 7.1 The Employer shall
contribute ___% of each Participant's Compensation for the Plan Year.
Contributions plus any forfeitures (only if they are reallocated to
Participants under Section 9) will be allocated to each Participant's account
as follows:
(i) First, to the extent contributions and forfeitures are sufficient, all
Participants will receive an allocation equal to 3% of their Compensation.
6. EMPLOYER CONTRIBUTION AND ALLOCATION FORMULA (continued)
(ii) Next, any remaining Employer Contributions and forfeitures will be
allocated to Participants who have Compensation in excess of the Taxable Wage
Base (excess Compensation). Each such Participant will receive an allocation in
the ratio that his or her excess Compensation bears to the excess Compensation
of all Participants. Participants may only receive an allocation of 3% of
excess Compensation.
(iii)Next, any remaining Employer contributions and forfeitures will be
allocated to all Participants in the ratio that their Compensa- tion plus
excess Compensation bears to the total Compensation plus excess Compensation of
all Participants. Participants may only receive an allocation of up to 2.7% of
their Compensation plus excess Compensation under this allocation method. If
the Taxable Wage Base as defined at Section 3(h) above is less than the
maximum, but more than the greater of $10,000 or 20% of the maximum, then the
2.7% must be reduced. If the amount specified is greater than 80% but less than
100% of the maxi- mum Taxable Wage Base, the 2.7% must be reduced to 2.4%. If
the amount specified is greater than the greater of $10,000 or 20% of the
maximum Taxable Wage Base, but not more than 80%, 2.7% must be reduced to 1.3%.
NOTE: If the Plan is not Top-Heavy, subparagraphs (i) and (ii) above may be
disregarded and 5.7%, 5.4% or 4.3% may be substituted for 2.7%, 2.4% or 1.3%
where it appears in (iii) above.
(iv) Next, any remaining Employer contributions or forfeitures will be
allocated to all Participants (whether or not they receive an allocation under
the preceding paragraphs) in the ratio that each Participant's Compensation
bears to all Participants' Compensation.
[ ] (c) ALTERNATIVE INTEGRATED ALLOCATION FORMULA [See Minimum Contributions
Under Top-Heavy Plans at Section 7.] The Employer shall contribute and allocate
to the account of each eligible Participant __% of each eligible Participant's
Compensation plus __% of Compensation in excess of the Taxable Wage Base
defined at Section 3(h) hereof. The percentage on excess compensation may not
exceed the lesser of (i) the amount first specified in this paragraph or (ii)
the greater of 5.7% or the percentage rate of tax under Code Section 311l(a) as
in effect on the first day of the Plan Year attributable to the Old Age (OA)
portion of the OASDI provisions of the Social Security Act. If this allocation
formula is used for Top-Heavy Plans, the first blank may not be less than 3%.
If the Employer specifies a Taxable Wage Base in Section 3(h) which is lower
than the Taxable Wage Base for Social Security purposes (SSTWB) in effect as of
the first day of the Plan Year, the percentage contributed with respect to
excess Compensation must be adjusted. If the Plan's Taxable Wage Base is
greater than the larger of $10,000 or 20% of the SSTWB but not more than 80% of
the SSTWB, the excess percentage is 4.3%. If the Plan's Taxable Wage Base is
greater than 80% of the SSTWB but less than 100% of the SSTWB, the excess
percentage is 5.4%.
If forfeitures are reallocated pursuant to Section 9, they will be allocated
pro rata based on the Participant's Compensation as a percentage of the
Compensation of all Participants.
NOTE: Only one plan maintained by the Employer may be integrated with Social
Security.
(d) ALLOCATION OF EXCESS AMOUNTS (ANNUAL ADDITIONS) In the event that the
allocation formula above results in an Excess Amount, such excess shall be:
[ ] (i) placed in a suspense account accruing no gains or losses for the
benefit of the Participant.
[ ] (ii) reallocated as additional Employer contributions to all other
Participants to the extent that they do not have an Excess Amount. If no answer
is specified, the suspense account method will be used.
7. MINIMUM CONTRIBUTIONS UNDER TOP-HEAVY PLANS
Notwithstanding any other provision herein, the Employer shall make a minimum
contribution for each eligible Participant with respect to any Plan Year for
which the Plan is Top-Heavy. The minimum contribution shall be determined in
accordance with paragraph 14.2 of Basic Plan Document #01 for:
[ ] (a) all eligible Participants.
[ ] (b) only eligible non-Key Employees who are Participants.
8. ALLOCATIONS TO TERMINATED EMPLOYEES
[ ] (a) The Employer will not allocate Employer-related contributions to
Employees who terminate during a Plan Year unless required to satisfy the
requirements of Code Sections 401 (a)(26) and 410(b). (The requirements are
effective for 1989 and subsequent Plan Years.)
[ ] (b) The Employer will allocate Employer-related contributions to Employees
who terminate during the Plan Year as a result of:
[ ] (i) retirement. [ ] (ii) Disability. [ ] (iii) death.
[ ] (iv) other termination of employment provided that the Participant has
completed a Year of Service as defined for Allocation Accrual purposes.
[ ] (v) other termination of employment even though the Participant has not
completed a Year of Service.
9. ALLOCATION OF FORFEITURES
(a) ALLOCATION ALTERNATIVES:
[ ] (i) Forfeitures shall be allocated to Participants in the same manner as
the Employer's contribution.
[ ] (ii) Forfeitures shall be applied to reduce the Employer's contribution for
such Plan Year.
(b) DATE FOR REALLOCATION:
NOTE: If no distribution has been made to a former Participant, subsection
(i) will apply to such Participant even if the Employer elects (ii) or (iii)
below as its normal administrative policy.
[ ] (i) Forfeitures shall be reallocated at the end of the Plan Year during
which the former Participant incurs his or her fifth consecutive one-year Break
In Service.
[ ] (ii) Forfeitures will be reallocated immediately (as of the next Valuation
Date).
[ ] (iii) Forfeitures shall be reallocated at the end of the Plan Year during
which the former Participant incurs a one-year Break in Service.
(c) RESTORATION OF FORFEITURES: If amounts are forfeited prior to five
consecutive 1-year Breaks In Service, the funds for restoration of account
balances will be obtained from the following resources in the order indicated
(fill in the appropriate number):
[ ] (i) Current year's forfeitures
[ ] (ii) Additional Employer contribution
[ ] (iii) Income or gain to the Plan
10. LIMITATIONS ON ALLOCATIONS
[ ] This is the only Plan the Employer maintains or ever maintained;
therefore, this Section is not applicable.
[ ] The Employer does maintain or has maintained another Plan (including a
Welfare Benefit Fund or an individual medical account [as defined in Code
Section 415(1)(2)], under which amounts are treated as Annual Additions) and
has completed the proper sections below.
Complete (a), (b) and (c) only if you maintain or ever maintained another
qualified plan, including a Welfare Benefit Fund or an individual medical
account [as defined in Code Section 415(1)(2)], in which any Participant in
this Plan is (or was) a participant or could possibly become a participant.
(a) If the Participant is covered under another qualified Defined Contribution
Plan maintained by the Employer, other than a Master or Prototype Plan:
[ ] (i) The provisions of Article X of the Basic Plan Document #01 will apply
as if the other plan were a Master or Prototype Plan.
[ ] (ii) Attach provisions stating the method under which the plans will limit
total Annual Additions to the Maximum Permissible Amount and will properly
reduce any Excess Amounts in a manner that precludes Employer discretion.
(b) If a Participant is or ever has been a participant in a Defined Benefit
Plan maintained by the Employer: Attach provisions which will satisfy the 1.0
limitation of Code Section 415(e). Such language must preclude Employer
discretion. The Employer must also specify the interest and mortality
assumptions used in determining Present Value in the Defined Benefit Plan.
(c) The minimum contribution or benefit required under Code Section 416
relating to Top-Heavy Plans shall be satisfied by:
[ ] (i) this Plan.
[ ] (ii) -----------------------------------------------
- --------------------------------------------------------
(name of other qualified plan of the Employer)
[ ] (iii) Attach provisions stating the method under which the minimum
contribution and benefit provisions of Code Section 416 will be satisfied. If a
Defined Benefit Plan is or was maintained, an attachment must be provided
showing interest and mortality assumptions used in determining the Top-Heavy
Ratio.
11. VESTING
Each Participant shall acquire a vested and nonforfeitable percentage in his or
her account balance attributable to Employer contributions and the earnings
thereon under the procedures selected below except with respect to any Plan
Year during which the Plan is Top-Heavy, in which case the Two-twenty vesting
schedule [option (b)(iv)] shall automatically apply unless the Employer has
already elected a faster vesting schedule. If the Plan is switched to option
(b)(iv), because of its Top-Heavy status, that vesting schedule will remain in
effect even if the Plan later becomes non-Top-Heavy until the Employer executes
an amendment of this Adoption Agreement indicating otherwise.
(a) COMPUTATION PERIOD: The computation period for purposes of determining
Years of Service and Breaks in Service for purposes of computing a
Participant's nonforfeitable right to his or her account balance derived from
Employer contributions:
11. VESTING (continued)
[ ] (i) shall not be applicable since Participants are always fully vested.
[ ] (ii) shall commence on the first day of the Plan Year during which an
Employee first performs an Hour of Service for the Employer, and each
subsequent 12-consecutive-month period shall commence on the anniversary
thereof.
A Participant shall receive credit for a Year of Service if he or she completes
at least 1,000 Hours of Service [or if lesser, the number of hours specified at
3(j)(iii) of this Adoption Agreement] at any time during the
12-consecutive-month computation period. Consequently, a Year of Service may
be earned prior to the end of the 12-consecutive-month computation period and
the Participant need not be employed at the end of the 12-consecutive-month
computation period to receive credit for a Year of Service.
(b) VESTING SCHEDULES:
NOTE: The vesting schedules below only apply to a Participant who has at least
one Hour of Service during or after the 1989 Plan Year. If applicable,
Participants who separated from Service prior to the 1989 Plan Year will remain
under the vesting schedule as in effect in the Plan prior to amendment for the
Tax Reform Act of 1986.
[ ] (i) Full and immediate vesting
Years of Service
1 2 3 4 5 6 7
--------------------------------------------
[ ] (ii) ___% 100%
[ ] (iii) ___% ___% 100%
[ ] (iv) ___% 20% 40% 60% 80% 100%
[ ] (v) ___% ___ 30% 40% 60% 80% 100%
[ ] (vi) 10% 20% 30% 40% 60% 80% 100%
[ ] (vii) ___% ___% ___% ___% 100%
[ ] (viii)___% ___% ___% ___% ___% ___% 100%
NOTE: The percentages selected for schedule (viii) may not be less for any
year than the percentages shown at schedule (v).
(c) SERVICE DISREGARDED FOR INVESTING:
[ ] (i) Service prior to the Effective Date of this Plan or a predecessor plan
shall be disregarded when computing a Participant's vested and nonforfeitable
interest.
[ ] (ii)Service prior to a Participant having attained age 18 shall be
disregarded when computing a Participant's vested and nonforfeitable interest.
12. SERVICE WITH PREDECESSOR ORGANIZATION
For purposes of satisfying the Service requirements for eligibility, Hours of
Service shall include Service with the following predecessor organization(s)
(these hours will also be used for vesting purposes):
- --------------------------------------------------------------
- --------------------------------------------------------------
13. ROLLOVER/TRANSFER CONTRIBUTIONS
a) Rollover Contributions, as described at paragraph 4.3 of the Basic Plan
Document #01, [] shall [] shall not be permitted. If permitted, Employees []
may [] may not make Rollover Contributions prior to meeting the eligibility
requirements for participation in the Plan.
(b) Transfer Contributions, as described at paragraph 4.4 of the Basic Plan
Document #01 [] shall [] shall not be permitted. If permitted, Employees [] may
[] may not make Transfer Contributions prior to meeting the eligibility
requirements for participation in the Plan.
14. HARDSHIP WITHDRAWALS
Hardship withdrawals, as provided for in paragraph 6.9 of the Basic Plan
Document #01 are not Permitted.
15. EMPLOYER INVESTMENT DIRECTION
The Employer investment direction provisions, as set forth in paragraph 13.4 of
the Basic Plan Document #01, [] shall [] shall not be applicable.
16. EMPLOYEE INVESTMENT DIRECTION
The Employee investment direction provisions, as set forth in paragraph 13.5 of
the Basic Plan Document#01, [] shall [] shall not be applicable.
NOTE: To the extent that Employee investment direction was previously
allowed, it shall continue to be allowed on those amounts and the earnings
thereon.
17. EARLY PAYMENT OPTION
(a) A Participant who separates from Service prior to retirement, death or
Disability [] may [] may not make application to the Employer requesting an
early payment of his or her vested account balance.
(b) A Participant who has attained the Plan Normal Retirement Age and who has
not separated from Service: [] may [] may not receive a distribution of his or
her vested account balance.
NOTE: If the Participant has had the right to withdraw his or her account
balance in the past, this right may not be taken away. Notwithstanding the
above, to the contrary, required minimum distributions will be paid. For timing
of distribution, see Section 18 below.
18. DISTRIBUTION OPTIONS
(a) TIMING OF DISTRIBUTIONS: In cases of termination for other than death,
Disability or retirement, benefits shall be paid:
[ ] (i) as soon as administratively feasible following the close of the Plan
Year during which a distribution is requested or is otherwise payable.
[ ] (ii) as soon as administratively feasible following the date on which a
distribution is requested or is otherwise payable.
[ ] (iii) as soon as administratively feasible after the close of the Plan
Year during which the Participant incurs a one-year Break in Service.
[ ] (iv) only after the Participant has achieved the Plan's Normal Retirement
Age, or Early Retirement Age, if applicable.
In cases of death, Disability or retirement, benefits shall be paid:
[ ] (v) as soon as administratively feasible following the close of the Plan
Year during which a distribution is requested or is otherwise payable.
[ ] (vi) as soon as administratively feasible following the date on which a
distribution is requested or is otherwise payable.
[ ] (vii) as soon as administratively feasible after the close of the Plan Year
during which the Participant incurs a one-year Break in Service.
[ ] (viii) only after the Participant has achieved the Plan's Normal Retirement
Age, or Early Retirement Age, if applicable.
(b) OPTIONAL FORMS OF PAYMENT:
[ ] (i) Lump sum
[ ] (ii) Installment payments
[ ] (iii) Life annuity
[ ] (iv) Life annuity term certain
Life annuity with payments guaranteed for a __ -year period (not to
exceed 20 years; specify all applicable)
[ ] (v) Joint and [ ]50% [ ] 66-2/3% [ ]75%
[ ] 100% survivor annuity (specify all applicable)
[ ] (vi) Other form(s) as specified: ----------------------
-------------------------------------------------------
(c) RECALCULATION OF LIFE EXPECTANCY: In determining required distributions
under the Plan, Participants and/or their Spouse (Surviving Spouse) [ ]shall [
] shall not have the right to have their life expectancy recalculated annually.
If "shall": [ ] only the Participant shall be recalculated. [ ]both
the Participant and Spouse shall be recalculated.
[ ] who is recalculated shall be determined by the Participant.
19. SPONSOR CONTACT
Employers should direct questions concerning the language contained in and
qualification of the Prototype to:
NAME ----------------------------------------------------
TITLE ---------------------------------------------------
TELEPHONE NUMBER ( ) -----------------------------
In the event that the Sponsor amends, discontinues or abandons this Prototype
Plan, notification will be provided to the Employer's address provided on the
first page of this Agreement.
20. SIGNATURES
DUE TO THE SIGNIFICANT TAX RAMIFICATIONS, IT IS RECOMMENDED THAT BEFORE YOU
EXECUTE THIS ADOPTION AGREEMENT, YOU CONTACT YOUR ATTORNEY OR TAX ADVISER, IF
ANY.
(a) EMPLOYER: Name and address of Employer if different than specified in
Section 1 above.
- --------------------------------------------------------------
- --------------------------------------------------------------
The Employer has appointed the following individual(s) to act on behalf of the
Employer regarding all communications and requests between the Employer and the
Trustee, pursuant to the terms and conditions of the Plan. Unless otherwise
directed by the Employer in written directions to the Trustee, the Trustee may
act upon the instructions of any one of the persons listed below.
NAME(S) [please type or print]: SIGNATURE(S):
1. --------------------------- 1. ------------------------
- ------------------------------
Address
- ------------------------------
2. --------------------------- 2. ------------------------
- ------------------------------
Address
- ------------------------------
3. --------------------------- 3. ------------------------
- ------------------------------
Address
- ------------------------------
It is understood that the Employer, and no other party to this Adoption
Agreement, is responsible for all legal and tax aspects of this Plan and Trust.
The Employer will apply to the IRS for determination of the Plan's
qualification and will furnish the Trustee with a copy of the IRS' approval
letter. The Employer represents that it fully accepts and assumes all such
responsibility and that it has consulted its legal counsel in connection with
the adoption of this Plan and hereby agrees to abide by its terms and
conditions.
The Employer hereby certifies that it has, by resolution, duly adopted the Plan
and Trust, pursuant to the terms of this Adoption Agreement, and that such
resolution is in full force and effect. The Employer shall ascertain that each
Participant shall have received the current prospectus of the Investment
Company that provides the investment media of this Plan.
The Employer may not rely on the opinion letter issued by the Internal Revenue
Service National Office with respect to the qualification of this Plan and
should apply to the appropriate Internal Revenue Service key district for a
determination letter in order to obtain reliance.
This Agreement and the corresponding provisions of the Plan and Trust Basic
Plan Document #01 were adopted by the Employer on the __ day of
_______________,19__
Signed for the Employer by:------------------------
(please type or print)
Title: ____________ Signature: ______________________
THE EMPLOYER UNDERSTANDS THAT ITS FAILURE TO PROPERLY COMPLETE THE ADOPTION
AGREEMENT MAY RESULT IN DISQUALIFICATION OF ITS PLAN.
Employer's Reliance: The adopting Employer may not rely on an opinion letter
issued by the National Office of the Internal Revenue Service as evidence that
the Plan is qualified under Code Section 401. In order to obtain reliance with
respect to Plan qualification, the Employer must apply to the appropriate Key
District Office for a determination letter.
This Adoption Agreement may only be used in conjunction with Basic Plan
Document #01.
(b) TRUSTEE: The assets of the Fund shall be invested in accordance with
paragraph 13.3 of the Basic Plan Document #01 as a Trust. As such, the
Employer's Plan as contained herein was accepted by Capital Guardian Trust
Company, the Trustee, on the __ day of ________, 19__.
Signed for the Trustee by: --------------------------
(Please type or print)
Title: ------------ Signature:-------------
[The American Funds Group(r)]
Prototype Profit-Sharing Plan #005
PROTOTYPE PROFIT-SHARING PLAN ADOPTION AGREEMENT
Sponsored by American Funds Distributors, Inc.
The Employer named below hereby establishes a Profit-Sharing Plan for eligible
Employees as provided in this Adoption Agreement and the accompanying Prototype
Plan and Trust Basic Document #01. The Employer should contact an attorney or
tax adviser regarding tax ramifications before executing this Adoption
Agreement.
1. EMPLOYER AND PLAN INFORMATION
Employer's name
Address City State Zip
Telephone Number ( ) Tax I.D. Number
Form of Business: [ ] Sole Proprietor [ ] S Corporation
[ ] Partnership [ ] Corporation
Plan Year and Limitation Year: are the 12-consecutive-month periods commencing
on and ending on ______ and ending on _______.
Name of Plan Three-digit Plan Number
[ ] The Employer investment direction provisions of Plan Section 13.4 or
[ ] The Employee investment direction provisions of Plan Section 13.5 shall
apply.
2. EFFECTIVE DATE
[ ] (a) This is a new Plan having an effective date of _____.
[ ] (b)This is an amended Plan.
(I) The effective date of the original Plan was _____
(ii) The effective date of the amended Plan is _____ with the exception of
Sections 3(a), 6(b) and 8 herein which shall be effective as of the first day
of the 1989 Plan Year.
3. ELIGIBILITY REQUIREMENTS
Employees meeting the following Service and Age requirements shall be eligible
to participate in the Plan.
(a) SERVICE: __ [not more than two (2)] Years of Service. If the Years of
Service selected is or includes a fractional year, an Employee will not be
required to complete any specified number of Hours of Service to receive credit
for such fractional year.
(b) AGE: Attainment of age __ (no more than age 21).
(c) INITIAL PARTICIPANTS: Employees employed on the Plan's Effective Date [ ]
do [ ] do not have to satisfy the eligibility requirements specified above.
4. SERVICE WITH PREDECESSOR ORGANIZATION
Years of Service with the following predecessor organization(s) will be
included for purposes of eligibility:
5. RETIREMENT AGES
(a) Normal Retirement Age shall be 59-1/2.
(b) Early Retirement Age:
[X] Not applicable
[ ] The Plan shall have an Early Retirement Age of__
(not less than 55) and completion of ____ Years of
Service.
6. EMPLOYER CONTRIBUTION AND ALLOCATION FORMULA
For purposes of Employer Contributions allocations, this Plan shall always be
considered to be Top-Heavy. Employer Contributions shall be made without regard
to current or accumulated Net Profits. Contributions will be determined at the
sole discretion of the Employer and shall be allocated to each Participant as
follows:
[ ] (a) In direct proportion to each eligible Participant's respective
Compensation for such Plan Year.
[ ] (b) Integrated with Social Security at the current Taxable Wage Base:
(I) First, to the extent Employer Contributions are sufficient, all eligible
Participants will receive an allocation equal to 3% of their Compensation.
(ii) Next, any remaining Employer Contributions will be allocated to eligible
Participants who have Compensation in excess of the Taxable Wage Base (Excess
Compensation). Each such Participant will receive an allocation in the ratio
that his or her Excess Compensation bears to the Excess Compensation of all
eligible Participants. Such allocation shall not exceed 3% of each
Participant's Excess Compensation.
(iii) Next, any remaining Employer Contributions will be allocated to all
eligible Participants in the ratio that their total Compensation plus
Excess Compensation bears to the Compensation plus Excess Compensation of all
eligible Participants. Participants may only receive an allocation of up to
2.7% of their Compensation plus Excess Compensation.
(iv) Next, any remaining Employer Contributions will be allocated to all
eligible Participants in the ratio that each Participant's Compensation bears
to all eligible Participants' Compensation.
NOTE: Only one Plan maintained by the Employer may be integrated with Social
Security.
7. LIMITATIONS ON ALLOCATIONS
THIS SECTION IS NOT APPLICABLE IF THIS IS THE ONLY PLAN YOU MAINTAIN OR EVER
MAINTAINED. PLANS INCLUDE WELFARE BENEFIT FUNDS OR AN INDIVIDUAL MEDICAL
ACCOUNT [AS DEFINED UNDER CODE SECTION 415(1)(2)] UNDER WHICH AMOUNTS ARE
TREATED AS ANNUAL ADDITIONS.
Complete (a) if you maintain Paired Plan #01 006, The American Funds
Distributors, Inc. Prototype Money Purchase Pension Plan. Paragraphs (b), (c)
and (d) are only applicable if you maintain or ever maintained another
qualified plan other than a Paired Plan in which any Participant in this Plan
is (or was) a Participant or could possibly become a Participant.
(a) The minimum contribution required under paragraph 14.2 of Basic Plan
Document #01 relating to Top-Heavy Plans shall be made to [ ] this Plan or to [
] Paired Plan #01 006.
(b) If the Participant is covered under another qualified Defined Contribution
Plan maintained by the Employer, other than a Master or Prototype Plan, the
provisions of Article X of Basic Plan Document #01 will apply, as if the other
plan was a Master or Prototype Plan.
(c) If a Participant is or ever has been a Participant in a Defined Benefit
Plan, other than a Paired Plan, maintained by the Employer, attach
provisions which will satisfy the 1.0 limitation of Code Section 415(e). Such
language must preclude Employer discretion. The Employer must also specify the
interest and mortality assumptions used in determining present value in the
Defined Benefit Plan.
(d) The minimum contribution or benefit required under Code Section 416
relating to Top-Heavy Plans shall be satisfied by either: [ ] this Plan
[ ]
(Name of other qualified plan of the Employer)
If a Defined Benefit Plan is or was maintained, an attachment must be provided
showing interest and mortality assumptions used in determining the Top-Heavy
Ratio.
8. VESTING
Each Participant's account balance attributable to Employer contributions and
the earnings thereon shall be nonforfeitable and 100% vested at all times.
9. RECALCULATION
In determining required distributions under the Plan, Participants and/or their
Spouse (Surviving Spouse)
[ ] shall [ ] shall not
have the right to have their life expectancy recalculated annually. If life
expectancy is recalculated, it will follow the Employer's administrative
policy.
10. SPONSOR CONTACT
Employers should direct questions concerning the language contained in and the
qualification of the Prototype to:
American Funds Service Company, Retirement Services/Phone Number: 800/421-0180
In the event that the Sponsor amends, discontinues or abandons this Prototype
Plan, notification will be provided to the Employer's address indicated on the
first page of this Agreement.
11. SIGNATURES
(a) EMPLOYER -- I hereby adopt the Plan, appoint Capital Guardian Trust Company
as Trustee and direct that contributions to the Plan shall be invested in
accordance with the instructions provided by me. I have read the Plan and Trust
and the Adoption Agreement, agree to the terms and conditions set forth therein
and have consulted with an attorney about the effect of establishing the Plan.
I further agree to the deduction of the Trustee's fee (as set forth in the
instructions accompanying the Plan) and I understand that this fee will be
deducted on the day the Trust is accepted and will be charged to the account
each year. I authorize the redemption of shares for payment of any Trustee's
fees due and not paid. I also understand that I will not receive an executed
copy of this Adoption Agreement and that the receipt of the American Funds
Service Company confirmation statement will be the confirmation of the
acceptance of the Trust.
This Agreement and the corresponding provisions of the Basic Plan Document #01
were adopted by the Employer on the __ day of ____, 19__.
Signed for the Employer by (please print or type)
Title Signature
THE EMPLOYER UNDERSTANDS THAT ITS FAILURE TO PROPERLY COMPLETE THE ADOPTION
AGREEMENT MAY RESULT IN DISQUALIFICATION OF ITS PLAN.
EMPLOYER'S RELIANCE: An Employer who maintains, or has ever maintained or who
later adopts any Plan including, after December 31, 1985, a Welfare Benefit
Fund, as defined in Code Section 419(e), which provides post-retirement medical
benefits allocated to separate accounts for Key Employees, as defined in Code
Section 419A(d)(3) or an individual medical account, as defined in Code Section
415(l)(2) in addition to this Plan (other than Paired Plan #01 006) may not
rely on the opinion letter issued by the National Office of the Internal
Revenue Service as evidence that this Plan is qualified under Code Section 401.
If the Employer who adopts or maintains multiple Plans wishes to obtain
reliance that such Plan(s) are qualified, application for a determination
letter should be made to the appropriate Key District Director of Internal
Revenue. The Employer understands that its failure to properly complete the
Adoption Agreement may result in disqualification of its Plan.
(b) TRUSTEE -- The assets of the fund shall be invested in accordance with the
Employer's instructions and paragraph 13.3 of the Basic Plan Document #01 as a
Trust. As such, the Employer's Plan, as contained herein, was accepted by the
Trustee on the ___ day of __________,19__.
Signed for the Trustee by: Michael D. Beckman Title: Vice
President and Treasurer
Signature: (signature)
Lit. No. BASIC-003-0193
[The American Funds Group(r)]
Prototype Money Purchase Plan #006
PROTOTYPE MONEY PURCHASE PLAN ADOPTION AGREEMENT
Sponsored by American Funds Distributors, Inc.
The Employer named below hereby establishes a Money Purchase Plan for eligible
Employees as provided in this Adoption Agreement and the accompanying Prototype
Plan and Trust Basic Document #01. The Employer should contact an attorney or
tax adviser regarding tax ramifications before executing this Adoption
Agreement.
1. EMPLOYER AND PLAN INFORMATION
Employer's name
Address City State Zip
Telephone Number ( ) Tax I.D. Number
Form of Business: [ ] Sole Proprietor [ ] S Corporation
[ ] Partnership [ ] Corporation
Plan Year and Limitation Year: are the 12-consecutive-month periods commencing
on and ending on ______ and ending on _______.
Name of Plan Three-digit Plan Number
[ ] The Employer investment direction provisions of Plan Section 13.4 or
[ ] The Employee investment direction provisions of Plan Section 13.5 shall
apply.
2. EFFECTIVE DATE
[ ] (a) This is a new Plan having an effective date of _____.
[ ] (b)This is an amended Plan.
(I) The effective date of the original Plan was _____
(ii) The effective date of the amended Plan is _____ with the exception of
Sections 3(a), 6(b) and 8 herein which shall be effective as of the first day
of the 1989 Plan Year.
3. ELIGIBILITY REQUIREMENTS
Employees meeting the following Service and Age requirements shall be eligible
to participate in the Plan.
(a) SERVICE: __ [not more than two (2)] Years of Service. If the Years of
Service selected is or includes a fractional year, an Employee will not be
required to complete any specified number of Hours of Service to receive credit
for such fractional year.
(b) AGE: Attainment of age __ (no more than age 21).
(c) INITIAL PARTICIPANTS: Employees employed on the Plan's Effective Date [ ]
do [ ] do not have to satisfy the eligibility requirements specified above.
4. SERVICE WITH PREDECESSOR ORGANIZATION
Years of Service with the following predecessor organization(s) will be
included for purposes of eligibility:
5. RETIREMENT AGES
(a) Normal Retirement Age shall be 59-1/2.
(b) Early Retirement Age:
[X] Not applicable
[ ] The Plan shall have an Early Retirement Age of__
(not less than 55) and completion of ____ Years of
Service.
6. EMPLOYER CONTRIBUTION AND ALLOCATION FORMULA
For purposes of Employer Contributions allocations, this Plan shall always be
considered to be Top-Heavy. Each Plan Year the Employer shall contribute to
each eligible Participant ___% (not more than 25%) of such Participant's
Compensation. Contributions will be allocated as follows:
[ ] (a) Directly to the account of each eligible Particiapnt.
[ ] (b) Integrated with Social Security at the current Taxable Wage Base:
(I) First, to the extent Employer Contributions are sufficient, all eligible
Participants will receive an allocation equal to 3% of their Compensation.
(ii) Next, any remaining Employer Contributions will be allocated to eligible
Participants who have Compensation in excess of the Taxable Wage Base (Excess
Compensation). Each such Participant will receive an allocation in the ratio
that his or her Excess Compensation bears to the Excess Compensation of all
eligible Participants. Such allocation shall not exceed 3% of each
Participant's Excess Compensation.
(iii) Next, any remaining Employer Contributions will be allocated to all
eligible Participants in the ratio that their total Compensation plus
Excess Compensation bears to the Compensation plus Excess Compensation of all
eligible Participants. Participants may only receive an allocation of up to
2.7% of their Compensation plus Excess Compensation.
(iv) Next, any remaining Employer Contributions will be allocated to all
eligible Participants in the ratio that each Participant's Compensation bears
to all eligible Participants' Compensation.
NOTE: Only one Plan maintained by the Employer may be integrated with Social
Security.
7. LIMITATIONS ON ALLOCATIONS
THIS SECTION IS NOT APPLICABLE IF THIS IS THE ONLY PLAN YOU MAINTAIN OR EVER
MAINTAINED. PLANS INCLUDE WELFARE BENEFIT FUNDS OR AN INDIVIDUAL MEDICAL
ACCOUNT [AS DEFINED UNDER CODE SECTION 415(1)(2)] UNDER WHICH AMOUNTS ARE
TREATED AS ANNUAL ADDITIONS.
Complete (a) if you maintain Paired Plan #01 005, The American Funds
Distributors, Inc. Prototype Profit-Sharing Plan. Paragraphs (b), (c) and (d)
are only applicable if you maintain or ever maintained another qualified plan
other than a Paired Plan in which any Participant in this Plan is (or was) a
Participant or could possibly become a Participant.
(a) The minimum contribution required under paragraph 14.2 of Basic Plan
Document #01 relating to Top-Heavy Plans shall be made to [ ] this Plan or to [
] Paired Plan #01 005.
(b) If the Participant is covered under another qualified Defined Contribution
Plan maintained by the Employer, other than a Master or Prototype Plan, the
provisions of Article X of Basic Plan Document #01 will apply, as if the other
plan was a Master or Prototype Plan.
(c) If a Participant is or ever has been a Participant in a Defined Benefit
Plan, other than a Paired Plan, maintained by the Employer, attach provisions
which will satisfy the 1.0 limitation of Code Section 415(e). Such language
must preclude Employer discretion. The Employer must also specify the interest
and mortality assumptions used in determining present value in the Defined
Benefit Plan.
(d) The minimum contribution or benefit required under Code Section 416
relating to Top-Heavy Plans shall be satisfied by either: [ ] this Plan
[ ]
(Name of other qualified plan of the Employer)
If a Defined Benefit Plan is or was maintained, an attachment must be provided
showing interest and mortality assumptions used in determining the Top-Heavy
Ratio.
8. VESTING
Each Participant's account balance attributable to Employer contributions and
the earnings thereon shall be nonforfeitable and 100% vested at all times.
9. RECALCULATION
In determining required distributions under the Plan, Participants and/or their
Spouse (Surviving Spouse)
[ ] shall [ ] shall not
have the right to have their life expectancy recalculated annually. If life
expectancy is recalculated, it will follow the Employer's administrative
policy.
10. SPONSOR CONTACT
Employers should direct questions concerning the language contained in and the
qualification of the Prototype to:
American Funds Service Company, Retirement Services/Phone Number: 800/421-0180
In the event that the Sponsor amends, discontinues or abandons this Prototype
Plan, notification will be provided to the Employer's address indicated on the
first page of this Agreement.
11. SIGNATURES
(a) EMPLOYER -- I hereby adopt the Plan, appoint Capital Guardian Trust Company
as Trustee and direct that contributions to the Plan shall be invested in
accordance with the instructions provided by me. I have read the Plan and Trust
and the Adoption Agreement, agree to the terms and conditions set forth therein
and have consulted with an attorney about the effect of establishing the Plan.
I further agree to the deduction of the Trustee's fee (as set forth in the
instructions accompanying the Plan) and I understand that this fee will be
deducted on the day the Trust is accepted and will be charged to the account
each year. I authorize the redemption of shares for payment of any Trustee's
fees due and not paid. I also understand that I will not receive an executed
copy of this Adoption Agreement and that the receipt of the American Funds
Service Company confirmation statement will be the confirmation of the
acceptance of the Trust.
This Agreement and the corresponding provisions of the Basic Plan Document #01
were adopted by the Employer on the __ day of ____, 19__.
Signed for the Employer by (please print or type)
Title Signature
THE EMPLOYER UNDERSTANDS THAT ITS FAILURE TO PROPERLY COMPLETE THE ADOPTION
AGREEMENT MAY RESULT IN DISQUALIFICATION OF ITS PLAN.
EMPLOYER'S RELIANCE: An Employer who maintains, or has ever maintained or who
later adopts any Plan including, after December 31, 1985, a Welfare Benefit
Fund, as defined in Code Section 419(e), which provides post-retirement medical
benefits allocated to separate accounts for Key Employees, as defined in Code
Section 419A(d)(3) or an individual medical account, as defined in Code Section
415(l)(2) in addition to this Plan (other than Paired Plan #01 005) may not
rely on the opinion letter issued by the National Office of the Internal
Revenue Service as evidence that this Plan is qualified under Code Section 401.
If the Employer who adopts or maintains multiple Plans wishes to obtain
reliance that such Plan(s) are qualified, application for a determination
letter should be made to the appropriate Key District Director of Internal
Revenue. The Employer understands that its failure to properly complete the
Adoption Agreement may result in disqualification of its Plan.
(b) TRUSTEE -- The assets of the fund shall be invested in accordance with the
Employer's instructions and paragraph 13.3 of the Basic Plan Document #01 as a
Trust. As such, the Employer's Plan, as contained herein, was accepted by the
Trustee on the ___ day of __________,19__.
Signed for the Trustee by: Michael D. Beckman Title: Vice
President and Treasurer
Signature: (signature)
Lit. No. BASIC-003-0193
THE AMERICAN FUNDS GROUP (R)
PROTOTYPE CASH OR DEFERRED PROFIT-SHARING PLAN AND TRUST
Sponsored By American Funds Distributors, Inc.
Basic Plan Document #03
November 1993
Copyright 1993 THE McKAY HOCHMAN COMPANY, INC.
This document is copyrighted under the laws of the United States. Its use,
duplication or reproduction, including the use of electronic means, is
prohibited by law without the express consent of the author.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PARAGRAPH PAGE
<S> <C> <C>
ARTICLE I
DEFINITIONS
1.1 Actual Deferral Percentage 4
1.2 Adoption Agreement 4
1.3 Aggregate Limit 4
1.4 Allocation Date(s) 4
1.5 Annual Additions 4
1.6 Annuity Starting Date 4
1.7 Applicable Calendar Year 4
1.8 Applicable Life Expectancy 4
1.9 Average Contribution Percentage (ACP) 4
1.10 Average Deferral Percentage (ADP) 4
1.11 Break In Service 4
1.12 Code 4
1.13 Compensation 4
1.14 Contribution Percentage 5
1.15 Custodian 5
1.16 Defined Benefit Plan 5
1.17 Defined Benefit (Plan) Fraction 5
1.18 Defined Contribution Dollar Limitation 5
1.19 Defined Contribution Plan 5
1.20 Defined Contribution (Plan) Fraction 5
1.21 Designated Beneficiary 5
1.22 Disability 5
1.23 Distribution Calendar Year 6
1.24 Early Retirement Age 6
1.25 Earned Income 6
1.26 Effective Date 6
1.27 Election Period 6
1.28 Elective Deferral 6
1.29 Eligible Participant 6
1.30 Employee 6
1.31 Employer 6
1.32 Entry Date 6
1.33 Excess Aggregate Contributions 6
1.34 Excess Amount 6
1.35 Excess Contribution 6
1.36 Excess Elective Deferrals 6
1.37 Family Member 6
1.38 First Distribution Calendar Year 6
1.39 Fund 6
1.40 Hardship 6
1.41 Highest Average Compensation 6
1.42 Highly Compensated Employee 6
1.43 Hour Of Service 6
1.44 Key Employee 7
1.45 Leased Employee 7
1.46 Limitation Year 7
1.47 Master Or Prototype Plan 7
1.48 Matching Contribution 7
1.49 Maximum Permissible Amount 7
1.50 Net Profit 7
1.51 Normal Retirement Age 7
1.52 Owner-Employee 7
1.53 Paired Plans 7
1.54 Participant 7
1.55 Participant's Benefit 7
1.56 Permissive Aggregation Group 7
1.57 Plan 7
1.58 Plan Administrator 7
1.59 Plan Year 7
1.60 Present Value 7
1.61 Projected Annual Benefit 7
1.62 Qualified Deferred Compensation Plan 7
1.63 Qualified Domestic Relations Order 7
1.64 Qualified Early Retirement Age 8
1.65 Qualified Joint And Survivor Annuity 8
1.66 Qualified Matching Contribution 8
1.67 Qualified Non-Elective Contributions 8
1.68 Qualified Voluntary Contribution 8
1.69 Recordkeeper 8
1.70 Required Aggregation Group 8
1.71 Required Beginning Date 8
1.72 Rollover Contribution 8
1.73 Salary Savings Agreement 8
1.74 Self-Employed Individual 8
1.75 Service 8
1.76 Shareholder Employee 8
1.77 Simplified Employee Pension Plan 8
1.78 Sponsor 8
1.79 Spouse (Surviving Spouse) 8
1.80 Super Top-Heavy Plan 8
1.81 Taxable Wage Base 8
1.82 Top-Heavy Determination Date 8
1.83 Top-Heavy Plan 8
1.84 Top-Heavy Ratio 8
1.85 Top-Paid Group 9
1.86 Transfer Contribution 9
1.87 Trustee 9
1.88 Valuation Date 9
1.89 Vested Account Balance 9
1.90 Voluntary Contribution 9
1.91 Welfare Benefit Fund 9
1.92 Year Of Service 9
ARTICLE II
ELIGIBILITY REQUIREMENTS
2.1 Participation 9
2.2 Change In Classification Of Employment 9
2.3 Computation Period 9
2.4 Employment Rights 9
2.5 Service With Controlled Groups 9
2.6 Owner-Employees 9
2.7 Leased Employees 9
2.8 Thrift Plans 10
ARTICLE III
EMPLOYER CONTRIBUTIONS
3.1 Amount 10
3.2 Expenses And Fees 10
3.3 Responsibility For Contributions 10
3.4 Return Of Contributions 10
ARTICLE IV
EMPLOYEE CONTRIBUTIONS
4.1 Voluntary Contributions 10
4.2 Qualified Voluntary Contributions 10
4.3 Rollover Contribution 10
4.4 Transfer Contribution 10
4.5 Employer Approval Of Transfer Contributions 10
4.6 Elective Deferrals 10
4.7 Required Voluntary Contributions 11
4.8 Direct Rollover Of Benefits 11
ARTICLE V
PARTICIPANT ACCOUNTS
5.1 Separate Accounts 11
5.2 Adjustments To Participant Accounts 11
5.3 Allocating Employer Contributions 11
5.4 Allocating Investment Earnings And Losses 11
5.5 Participant Statements 11
ARTICLE IV
RETIREMENT BENEFITS AND DISTRIBUTIONS
6.1 Normal Retirement Benefits 11
6.2 Early Retirement Benefits 12
6.3 Benefits On Termination Of Employment 12
6.4 Restrictions On Immediate Distributions 12
6.5 Normal Form Of Payment 12
6.6 Commencement Of Benefits 12
6.7 Claims Procedures 12
6.8 In-Service Withdrawals 13
6.9 Hardship Withdrawal 13
ARTICLE VII
DISTRIBUTION REQUIREMENTS
7.1 Joint And Survivor Annuity Requirements 14
7.2 Minimum Distribution Requirements 14
7.3 Limits On Distribution Periods 14
7.4 Required Distributions On Or After The
Required Beginning Date 14
7.5 Required Beginning Date 14
7.6 Transitional Rule 14
7.7 Designation Of Beneficiary For Death Benefit 15
7.8 Nonexistence Of Beneficiary 15
7.9 Distribution Beginning Before Death 15
7.10 Distribution Beginning After Death 15
7.11 Distribution Of Excess Elective Deferrals 15
7.12 Distributions Of Excess Contributions 15
7.13 Distribution Of Excess Aggregate Contributions 15
ARTICLE VIII
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1 Applicability Of Provisions 16
8.2 Payment Of Qualified Joint And
Survivor Annuity 16
8.3 Payment Of Qualified Pre-Retirement
Survivor Annuity 16
8.4 Qualified Election 16
8.5 Notice Requirements For Qualified Joint
And Survivor Annuity 16
8.6 Notice Requirements For Qualified Pre-
Retirement Survivor Annuity 16
8.7 Special Safe-Harbor Exception For
Certain Profit-Sharing Plans 16
8.8 Transitional Joint And Survivor
Annuity Rules 16
8.9 Automatic Joint And Survivor Annuity
And Early Survivor Annuity 17
8.10 Annuity Contracts 17
ARTICLE IX
VESTING
9.1 Employee Contributions 17
9.2 Employer Contributions 17
9.3 Computation Period 17
9.4 Requalification Prior To Five Consecutive
One-Year Breaks In Service 17
9.5 Requalification After Five Consecutive
One-Year Breaks In Service 17
9.6 Calculating Vested Interest 17
9.7 Forfeitures 17
9.8 Amendment Of Vesting Schedule 17
9.9 Service With Controlled Groups 17
ARTICLE X
LIMITATIONS ON ALLOCATIONS AND
ANTIDISCRIMINATION TESTING
10.1 Participation In This Plan Only 17
10.2 Disposition Of Excess Annual Additions 18
10.3 Participation In This Plan And Another Qualified
Master And Prototype Defined Contribution Plan,
Welfare Benefit Fund, Individual Medical
Account Or Simplified Employee Pension Plan
Maintained By The Employer 18
10.4 Disposition Of Excess Annual Additions
Under Two Plans 18
10.5 Participation In This Plan And Another
Defined Contribution Plan Which Is Not
A Master Or Prototype Plan 18
10.6 Participation In This Plan And A Defined
Benefit Plan 18
10.7 Average Deferral Percentage (ADP) Test 18
10.8 Special Rules Renting To Application
Of ADP Test 18
10.9 Average Contribution Percentage (ACP) Test 19
10.10 Special Rules Relating To Application
Of ACP Test 19
ARTICLE XI
ADMINISTRATION
11.1 Plan Administrator 19
11.2 Trustee 20
11.3 Recordkeeper 20
11.4 Administrative Fees And Expenses 20
11.5 Division Of Duties And Indemnification 20
ARTICLE XII
TRUST FUND
12.1 The Fund 20
12.2 Control Of Plan Assets 20
12.3 Exclusive Benefit Rules 20
12.4 Assignment And Alienation Of Benefits 20
12.5 Determination Of Qualified Domestic
Relations order (QDRO) 20
ARTICLE XIII
INVESTMENTS
13.1 Fiduciary Standards 21
13.2 Funding Arrangement 21
13.3 Investment Alternatives of The Trustee 21
13.4 Participant Loans 21
13.5 Employer Investment Direction 22
13.6 Employee Investment Direction 22
13.7 Appointment Of Additional Trustee And
Allocation Of Responsibilities Thereto 22
ARTICLE XIV
TOP-HEAVY PROVISIONS
14.1 Applicability Of Rules 22
14.2 Minimum Contribution 22
14.3 Minimum Vesting 23
14.4 Limitations On Allocations 23
ARTICLE XV
AMENDMENT AND TERMINATION
15.1 Amendment By Sponsor 23
15.2 Amendment By Employer 23
15.3 Termination 23
15.4 Qualification Of Employer's Plan 23
15.5 Mergers And Consolidations 23
15.6 Resignation And Removal 23
15.7 Qualification Of Prototype 23
ARTICLE XVI
ELAPSED TIME RULES AND DEFINITIONS
16.1 Application 23
16.2 Hour Of Service 23
16.3 Service Or Period of Service 23
16.4 Year Of Service 23
16.5 Period Of Severance 23
16.6 Break In Service 23
16.7 Parental Leave 23
16.8 Computation Period 24
16.9 Allocating Employer Contributions 24
ARTICLE XVII
GOVERNING LAW 24
</TABLE>
PROTOTYPE CASH OR DEFERRED PROFIT-SHARING PLAN AND TRUST
Sponsored By
AMERICAN FUNDS DISTRIBUTORS, INC.
The Sponsor hereby establishes the following Prototype Plan and Trust for use
by those of its customers who qualify and wish to adopt a qualified retirement
program. Any Plan and Trust established hereunder shall be administered for the
exclusive benefit of Participants and their beneficiaries under the following
terms and conditions:
ARTICLE I
DEFINITIONS
1.1 ACTUAL DEFERRAL PERCENTAGE The ratio (expressed as a percentage and
calculated separately for each Participant) of:
(a) the amount of Employer contributions [as defined at (c) and (d)] actually
paid over to the Fund on behalf of such Participant for the Plan Year to
(b) the Participant's Compensation for such Plan Year. Unless otherwise
specified in the Adoption Agreement, Compensation will only include amounts for
the period during which the Employee was eligible to participate.
Employer contributions on behalf of any Participant shall include:
(c) any Elective Deferrals made pursuant to the Participant's deferral
election, including Excess Elective Deferrals, but excluding Elective Deferrals
that are either taken into account in the Contribution Percentage test
(provided the ADP test is satisfied both with and without exclusion of these
Elective Deferrals) or are returned as excess Annual Additions, and
(d) at the election of the Employer, Qualified Non-Elective Contributions
and Qualified Matching Contributions.
For purposes of computing Actual Deferral Percentages, an Employee who would be
a Participant but for the failure to make Elective Deferrals shall be treated
as a Participant on whose behalf no Elective Deferrals are made.
1.2 ADOPTION AGREEMENT The document included with this Plan by which an
Employer elects to establish a qualified retirement plan and trust under the
terms of this Prototype Plan and Trust.
1.3 AGGREGATE LIMIT The sum of:
(a) 125 percent of the greater of the ADP of the non-Highly Compensated
Employees for the Plan Year or the ACP of non-Highly Compensated Employees
under the Plan subject to Code Section 401(m) for the Plan Year beginning with
or within the Plan Year of the cash or deferred arrangement as described in
Code Section 401(k) or Code Section 402(h)(1)(B), and
(b) the lesser of 200% or two percent plus the lesser of such ADP or ACP.
Alternatively, the aggregate limit can be determined by substituting "the
lesser of 200% or two percent plus" for "125% of" in (a) above, and
substituting "125% of" for "the lesser of 200% or two percent plus" in (b)
above.
1.4 ALLOCATION DATE(S) The date or dates on which Participant's accounts are
adjusted in accordance with Article V.
1.5 ANNUAL ADDITIONS The sum of the following amounts credited to a
Participant's account for the Limitation Year:
(a) Employer contributions,
(b) Employee contributions (under Article IV),
(c) forfeitures,
(d) allocations under a Simplified Employee Pension Plan,
(e) amounts allocated after March 31, 1984 to an individual medical account
as defined in Code Section 415(1)(2), which is part of a pension or annuity
plan maintained by the Employer (these amounts are treated as Annual Additions
to a Defined Contribution Plan though they arise under a Defined Benefit Plan),
and
(f) amounts derived from contributions paid or accrued after 1985, in
taxable years ending after 1985, which are either attributable to
post-retirement medical benefits allocated to the account of a Key Employee or
to a Welfare Benefit Fund maintained by the Employer, are also treated as
Annual Additions to a Defined Contribution Plan. For purposes of this
paragraph, an Employee is a Key Employee if he or she meets the requirements of
paragraph 1.44 at any time during the Plan Year or any preceding Plan Year.
Welfare Benefit Fund is defined at paragraph 1.91.
Excess amounts applied in a Limitation Year to reduce Employer contributions
will be considered Annual Additions for such Limitation Year, pursuant to the
provisions of Article X.
1.6 ANNUITY STARTING DATE The first day of the first period for which an
amount is paid as an annuity or in any other form.
1.7 APPLICABLE CALENDAR YEAR The First Distribution Calendar Year, and in the
event of the recalculation of life expectancy, such succeeding calendar year.
If payments commence in accordance with paragraph 7.4(e) before the Required
Beginning Date, the Applicable Calendar Year is the year such payments
commence. If distribution is in the form of an immediate annuity purchased
after the Participant's death with the Participant's remaining interest, the
Applicable Calendar Year is the year of purchase.
1.8 APPLICABLE LIFE EXPECTANCY Used in determining the required minimum
distribution. The life expectancy (or joint and last survivor expectancy)
calculated using the attained age of the Participant (or Designated
Beneficiary) as of the Participant's (or Designated Beneficiary's) birthday in
the Applicable Calendar Year, reduced by one for each calendar year which has
elapsed since the date life expectancy was first calculated. If life expectancy
is being recalculated, the Applicable Life Expectancy shall be the life
expectancy as so recalculated. The life expectancy of a non-Spouse Beneficiary
may not be recalculated.
1.9 AVERAGE CONTRIBUTION PERCENTAGE (ACP) The average of the Contribution
Percentages for each Highly Compensated Employee and for each non-Highly
Compensated Employee.
1.10 AVERAGE DEFERRAL PERCENTAGE (ADP) The average of the Actual Deferral
Percentages for each Highly Compensated Employee and for each non-Highly
Compensated Employee.
1.11 BREAK IN SERVICE A 12-consecutive-month period during which an Employee
fails to complete more than 500 Hours of Service.
1.12 CODE The Internal Revenue Code of 1986, including any amendments.
1.13 COMPENSATION The Employer may select one of the following two
safe-harbor definitions of Compensation in the Adoption Agreement. Unless
otherwise specified in the Adoption Agreement, Compensation shall only include
amounts earned while a Participant if Plan Year is chosen as the determination
period.
(a) CODE SECTION 3401(a) WAGES. Compensation is defined as wages within the
meaning of Code Section 3401(a) for the purposes of Federal income tax
withholding at the source but determined without regard to any rules that limit
the remuneration included in wages based on the nature or location of the
employment or the services performed [such as the exception for agricultural
labor in Code Section 3401(a)(2)].
(b) CODE SECTION 415 COMPENSATION. Compensation is defined as Code Section
415 Compensation which is: a Participant's Earned Income, wages, salaries, and
fees for professional services and other amounts received (without regard to
whether or not an amount is paid in cash) for personal services actually
rendered in the course of employment with the Employer maintaining the Plan to
the extent that the amounts are includible in gross income [including, but not
limited to, commissions paid salesmen, Compensation for services on the basis
of a percentage of profits, commissions on insurance premiums, tips, bonuses,
fringe benefits and reimbursements or other expense allowances under a
nonaccountable plan (as described in Regulation 1.62-2(c)], and excluding the
following:
1. Employer contributions to a plan of deferred compensation which are not
includible in the Employee's gross income for the taxable year in which
contributed, or Employer contributions under a Simplified Employee Pension Plan
or any distributions from a plan of deferred compensation,
2. amounts realized from the exercise of a non-qualified stock option, or
when restricted stock (or property) held by the Employee either becomes freely
transferable or is no longer subject to a substantial risk of forfeiture,
3. amounts realized from the sale, exchange or other disposition of stock
acquired under a qualified stock option, and
4. other amounts which received special tax benefits, or contributions made
by the Employer (whether or not under a salary reduction agreement) towards the
purchase of an annuity contract described in Code Section 403(b) (whether or
not the contributions are actually excludible from the gross income of the
Employee).
For purposes of applying the limitations of Article X and Top-Heavy Minimums,
the definition of Compensation shall be Code Section 415 Compensation described
in this paragraph 1.13(b). Also, for purposes of applying the limitations of
Article X, Compensation for a Limitation Year is the Compensation actually paid
or made available during such Limitation Year. Notwithstanding the preceding
sentence, Compensation for a Participant in a defined contribution plan who is
permanently and totally disabled [as defined in Code Section 22(e)(3)] is the
Compensation such Participant would have received for the Limitation Year if
the Participant had been paid at the rate of Compensation paid immediately
before becoming permanently and totally disabled. Such imputed Compensation for
the disabled Participant may be taken into account only if the participant is
not a Highly Compensated Employee [as defined in Code Section 414(q)] and
contributions made on behalf of such Participant are nonforfeitable when made.
If the Employer fails to pick the determination period in Nonstandardized
Adoption Agreement#002, the Plan Year shall be used. Unless otherwise specified
by the Employer in the Adoption Agreement, Compensation shall be determined as
provided in Code Section 3401(a) [as defined in this paragraph 1.13(a)]. In
Nonstandardized Adoption Agreement#002, the Employer may choose to eliminate or
exclude categories of Compensation which do not violate the provisions of Code
Sections 401(a)(4), 414(s) the regulations thereunder and Revenue Procedure
89-65.
Beginning with 1989 Plan Years, the annual Compensation of each Participant
which may be taken into account for determining all benefits provided under the
Plan (including benefits under Article XIV) for any year shall not exceed the
limitation as imposed by Code Section 401(a)(17) and as adjusted under Code
Section 415(d). In determining the Compensation of a Participant for purposes
of this limitation, the rules of Code Section 414(q)(6) shall apply, except in
applying such rules, the term "family" shall include only the Spouse of the
Participant and any lineal descendants of the Participant who have not attained
age 19 before the end of the Plan Year. if, as a result of the application of
such rules the adjusted annual Compensation limitation, as imposed by Code
Section 401(a)(17), is exceeded, then (except for purposes of determining the
portion of Compensation up to the integration level if this Plan provides for
permitted disparity), the limitation shall be prorated among the affected
individuals in proportion to each such individual's Compensation as determined
under this section prior to the application of this limitation.
If a Plan has a Plan Year that contains fewer than 12 calendar months, then the
annual Compensation limit for that period is an amount equal to the limitation
as imposed by Code Section 401(a)(17) as adjusted for the calendar year in
which the Compensation period begins, multiplied by a fraction, the numerator
of which is the number of full months in the short Plan Year and the
denominator of which is 12. if Compensation for any prior Plan Year is taken
into account in determining an Employee's contributions or benefits for the
current year, the Compensation for such prior year is subject to the applicable
annual Compensation limit in effect for that prior year. For this purpose, for
years beginning before January 1, 1990, the applicable annual Compensation
limit is $200,000. For Plan Years beginning on or after January 1, 1994, the
annual Compensation of each Participant taken into account for determining all
benefits provided under the Plan for any Plan Year shall not exceed $150,000,
as adjusted for increases in the cost-of-living in accordance with Code Section
401(a)(17). The cost-of-living adjustment in effect for a calendar year applies
to any determination period beginning in such calendar year.
Compensation shall not include deferred Compensation other than contributions
through a salary reduction agreement to a cash or deferred plan under Code
Section 401(k), a Simplified Employee Pension Plan under Code Section
402(h)(1)(B), a cafeteria plan under Code Section 125 or a tax-deferred annuity
under Code Section 403(b). Unless elected otherwise by the Employer in the
Adoption Agreement, these deferred amounts will be considered as Compensation
for Plan purposes. These deferred amounts are not counted as Compensation for
purposes of Articles X and XIV. When applicable to a Self-Employed Individual,
Compensation shall mean Earned Income.
1.14 CONTRIBUTION PERCENTAGE The ratio (expressed as a percentage and
calculated separately for each Participant) of:
(a) the Participant's Contribution Percentage Amounts [as defined at
(c)-(f)] for the Plan Year, to
(b) the Participant's Compensation for the Plan Year. Unless otherwise
specified in the Adoption Agreement, Compensation will only include amounts for
the period during which the Employee was eligible to participate.
Contribution Percentage Amounts on behalf of any Participant shall include:
(c) the amount of Employee Voluntary Contributions, Matching
Contributions, and Qualified Matching Contributions (to the extent not taken
into account for purposes of the ADP test) made under the Plan on behalf of the
Participant for the Plan Year,
(d) forfeitures of Excess Aggregate Contributions or Matching Contributions
allocated to the Participant's account which shall be taken into account in the
year in which such forfeiture is allocated,
(e) at the election of the Employer, Qualified Non-Elective Contributions,
and
(f) the Employer also may elect to use Elective Deferrals in the Contribution
Percentage Amounts so long as the ADP test is met before the Elective Deferrals
are used in the ACP test and continues to be met following the exclusion of
those Elective Deferrals that are used to meet the ACP test.
Contribution Percentage Amounts shall not include Matching Contributions,
whether or not Qualified, that are forfeited either to correct Excess Aggregate
Contributions, or because the contributions to which they relate are Excess
Deferrals, Excess Contributions, or Excess Aggregate Contributions.
1.15 CUSTODIAN The Trustee shall serve as Custodian.
1.16 DEFINED BENEFIT PLAN A plan under which a Participant's benefit is
determined by a formula contained in the plan and no individual accounts are
maintained for Participants.
1.17 DEFINED BENEFIT (PLAN) FRACTION A fraction, the numerator of which is
the sum of the Participant's Projected Annual Benefits under all the Defined
Benefit Plans (whether or not terminated) maintained by the Employer, and the
denominator of which is the lesser of 125 percent of the dollar limitation
determined for the Limitation Year under Code Sections 415(b) and (d) or 140
percent of the Highest Average Compensation, including any adjustments under
Code Section 415(b).
Notwithstanding the above, if the Participant was a Participant as of the first
day of the first Limitation Year beginning after 1986, in one or more Defined
Benefit Plans maintained by the Employer which were in existence on May 6,
1986, the denominator of this fraction will not be less than 125 percent of the
sum of the annual benefits under such plans which the Participant had accrued
as of the dose of the last Limitation Year beginning before 1987, disregarding
any changes in the terms and conditions of the plan after May 5, 1986. The
preceding sentence applies only if the Defined Benefit Plans individually and
in the aggregate satisfied the requirements of Section 415 for all Limitation
Years beginning before 1987.
1.18 DEFINED CONTRIBUTION DOLLAR LIMITATION Thirty thousand dollars ($30,000)
or if greater, one-fourth of the defined benefit dollar limitation set forth in
Code Section 415(b)(1) as in effect for the Limitation Year.
1.19 DEFINED CONTRIBUTION PLAN A plan under which individual accounts are
maintained for each Participant to which all contributions, forfeitures,
investment income and gains or losses, and expenses are credited or deducted. A
Participant's benefit under such plan is based solely on the fair market value
of his or her account balance.
1.20 DEFINED CONTRIBUTION (PLAN) FRACTION A fraction, the numerator of which
is the sum of the Annual Additions to the Participant's account under all the
Defined Contribution Plans (whether or not terminated) maintained by the
Employer for the current and all prior Limitation Years (including the Annual
Additions attributable to the Participant's nondeductible Employee
contributions to all Defined Benefit Plans, whether or not terminated,
maintained by the Employer, and the Annual Additions attributable to all
Welfare Benefit Funds as defined in paragraph 1.91, individual medical accounts
as defined in Code Section 415(1)(2) and Simplified Employee Pension Plans as
defined in paragraph 1.77, maintained by the Employer), and the denominator of
which is the sum of the maximum aggregate amounts for the current and all prior
Limitation Years of service with the Employer (regardless of whether a Defined
Contribution Plan was maintained by the Employer). The maximum aggregate amount
in the Limitation Year is the lesser of 125 percent of the dollar limitation
determined under Code Sections 415(b) and (d) in effect under Code Section
415(c)(1)(A) or 35 percent of the Participant's Compensation for such year.
If the Employee was a Participant as of the end of the first day of the first
Limitation Year beginning after 1986, in one or more Defined Contribution Plans
maintained by the Employer which were in existence on May 6,1986, the numerator
of this fraction will be adjusted if the sum of this fraction and the Defined
Benefit Fraction would otherwise exceed 1.0 under the terms of this Plan. Under
the adjustment, an amount equal to the product of the excess of the sum of the
fractions over 1.0 multiplied by the denominator of this fraction, will be
permanently subtracted from the numerator of this fraction. The adjustment is
calculated using the fractions as they would be computed as of the end of the
last Limitation Year beginning before 1987, and disregarding any changes in the
terms and conditions of the Plan made after May 6, 1986, but using the Section
415 limitation applicable to the first Limitation Year beginning on or after
January 1,1987. The Annual Addition for any Limitation Year beginning before
1987, shall not be re-computed to treat all Employee Contributions as Annual
Additions.
1.21 DESIGNATED BENEFICIARY The individual who is designated as the
beneficiary of a Participant's account under the Plan in accordance with Code
Section 401(a)(9) and the regulations thereunder.
1.22 DISABILITY An illness or injury of a potentially permanent nature,
expected to last for a continuous period of not less than 12 months, certified
by a physician selected by or satisfactory to the Employer, which prevents the
Employee from engaging in any occupation for wage or profit for which the
Employee is reasonably fitted by training, education or experience.
1.23 DISTRIBUTION CALENDAR YEAR A calendar year for which a minimum
distribution is required.
1.24 EARLY RETIREMENT AGE The age set by the Employer in the Adoption
Agreement {but not less than 55), which is the earliest age at which a
Participant may retire and receive his or her benefits under the Plan.
1.25 EARNED INCOME Net earnings from self-employment in the trade or business
with respect to which the Plan is established, determined without regard to
items not included in gross income and the deductions allocable to such items,
provided that personal services of the individual are a material
income-producing factor. Earned Income shall be reduced by contributions made
by an Employer to a qualified plan to the extent deductible under Code Section
404. For tax years beginning after 1989, net earnings shall be determined
taking into account the deduction for one-half of self-employment taxes allowed
to the Employer under Code Section 164(f), to the extent deductible.
1.26 EFFECTIVE DATE The date on which the Employer's Plan or amendment to
such Plan becomes effective. For amendments reflecting statutory and regulatory
changes post Tax Reform Act of 1986, the Effective Date will be the earlier of
the date upon which such amendment is first administratively applied or the
first day of the Plan Year following the date of adoption of such amendment.
1.27 ELECTION PERIOD The period which begins on the first day of the Plan
Year in which the Participant attains age 35 and ends on the date of the
Participant's death. If a Participant separates from service prior to the first
day of the Plan Year in which age 35 is attained, the Election Period shall
begin on the date of separation, with respect to the account balance as of the
date of separation.
1.28 ELECTIVE DEFERRAL Employer contributions made to the Plan at the
election of the Participant, in lieu of cash Compensation. Elective Deferrals
shall also include contributions made pursuant to a Salary Savings Agreement or
other deferral mechanism, such as a cash option contribution. With respect to
any taxable year, a Participant's Elective Deferral is the sum of all Employer
contributions made on behalf of such Participant pursuant to an election to
defer under any qualified cash or deferred arrangement as described in Code
Section 401(k), any simplified employee pension cash or deferred arrangement as
described in Code Section 402(h)(1)(B), any eligible deferred compensation plan
under Code Section 457, any plan as described under Code Section 501(c)(18),
and any Employer contributions made on the behalf of a Participant for the
purchase of an annuity contract under Code Section 403(b) pursuant to a Salary
Savings Agreement. Elective Deferrals shall not include any deferrals properly
distributed as excess Annual Additions.
1.29 ELIGIBLE PARTICIPANT Any Employee who is eligible to make a Voluntary
Contribution or an Elective Deferral (if the Employer takes such contributions
into account in the calculation of the Contribution Percentage), or to receive
a Matching Contribution (including forfeitures) or a Qualified Matching
Contribution. If a Voluntary Contribution or Elective Deferral is required as a
condition of participation in the Plan, any Employee who would be a Participant
in the Plan if such Employee made such a contribution shall be treated as an
Eligible Participant even though no Voluntary Contributions or Elective
Deferrals are made.
1.30 EMPLOYEE Any person employed by the Employer (including Self-Employed
Individuals and partners), all Employees of a member of an affiliated service
group [as defined in Code Section 414(m)], all Employees of a controlled group
of corporations [as defined in Code Section 414(b)], all Employees of any
incorporated or unincorporated trade or business which is under common control
[as defined in Code Section 414(c)], leased Employees [as defined in Code
Section 414(n)] and any Employee required to be aggregated by Code Section
414(o). All such Employees shall be treated as employed by a single Employer.
1.31 EMPLOYER The Self-Employed Individual, partnership, corporation or other
organization which adopts this Plan including any firm that succeeds the
Employer and adopts this Plan. For purposes of Article X, Limitations on
Allocations, Employer shall mean the Employer that adopts this Plan, and all
members of a controlled group of corporations [as defined in Code Section
414(b) as modified by Code Section 415(h)], all commonly controlled trades or
businesses [as defined in Code Section 414(c) as modified by Code Section
415(h)] or affiliated service groups [as defined in Code Section 414(m)] of
which the adopting Employer is a part, and any other entity required to be
aggregated with the Employer pursuant to regulations under Code Section 414(o).
1.32 ENTRY DATE The date on which an Employee commences participation in the
Plan as determined by the Employer in the Adoption Agreement.
1.33 EXCESS AGGREGATE CONTRIBUTIONS The excess, with respect to any Plan
Year, of:
(a) the aggregate Contribution Percentage Amounts taken into account in
computing the numerator of the Contribution Percentage actually made on behalf
of Highly Compensated Employees for such Plan Year, over
(b) the maximum Contribution Percentage Amounts permitted by the ACP test
(determined by reducing contributions made on behalf of Highly Compensated
Employees in order of their Contribution Percentages beginning with the highest
of such percentages).
Such determination shall be made after first determining Excess Elective
Deferrals pursuant to paragraph 1.36 and then determining Excess Contributions
pursuant to paragraph 1.35.
1.34 EXCESS AMOUNT The excess of the Participant's Annual Additions for the
Limitation Year over the Maximum Permissible Amount.
1.35 EXCESS CONTRIBUTION With respect to any Plan Year, the excess of:
(a) the aggregate amount of Employer contributions actually taken into
account in computing the ADP of Highly Compensated Employees for such Plan
Year, over
(b) the maximum amount of such contributions permitted by the ADP test
(determined by reducing contributions made on behalf of Highly Compensated
Employees in order of the ADPs, beginning with the highest of such
percentages).
1.36 EXCESS ELECTIVE DEFERRALS Those Elective Deferrals that are includible in
a Participant's gross income under Code Section 402(g) to the extent such
Participant's Elective Deferrals for a taxable year exceed the dollar
limitation under such Code Section. Excess Elective Deferrals shall be treated
as Annual Additions under the Plan, unless such amounts are distributed no
later than the first April 15th following the close of the Participant's
taxable year.
1.37 FAMILY MEMBER The Employee's Spouse, any lineal descendants and
ascendants and the Spouse of such lineal descendants and ascendants. In the
event of repeal of the family aggregation rules under Code Section 414(q)(6),
all applications of such rules under this Plan will cease as of the effective
date of such repeal.
1.38 FIRST DISTRIBUTION CALENDAR YEAR For distributions beginning before the
Participant's death, the First Distribution Calendar Year is the calendar year
immediately preceding the calendar year which contains the Participant's
Required Beginning Date. For distributions beginning after the Participant's
death, the First Distribution Calendar Year is the calendar year in which
distributions are required to begin pursuant to paragraph 7.10.
1.39 FUND All contributions received by the Trustee under this Plan and
Trust, investments thereof and earnings and appreciation thereon.
1.40 HARDSHIP An immediate and heavy financial need of the Employee where
such Employee lacks other available resources.
1.41 HIGHEST AVERAGE COMPENSATION The average Compensation for the three
consecutive Years of Service with the Employer that produces the highest
average. A Year of Service with the Employer is the 12-consecutive-month period
defined in the Adoption Agreement, or, if not indicated in the Adoption
Agreement, as defined in paragraph 1.92.
1.42 HIGHLY COMPENSATED EMPLOYEE Any Employee who performs service for the
Employer during the determination year and who, during the immediate prior
year:
(a) received Compensation from the Employer in excess of $75,000 [as
adjusted pursuant to Code Section 415(d)], or
(b) received Compensation from the Employer in excess of $50,000 [as
adjusted pursuant to Code Section 415(d)] and was a member of the Top- Paid
Group for such year, or
(c) was an officer of the Employer and received Compensation during such
year that is greater than 50 percent of the dollar limitation in effect under
Code Section 415(b)(1)(A).
Notwithstanding (a), (b) and (c), an Employee who was not Highly Compensated
during the preceding Plan Year shall not be treated as a Highly Compensated
Employee with respect to the current Plan Year unless such Employee is a member
of the 100 Employees paid the greatest Compensation during the year for which
such determination is being made.
(d) Employees who are five percent (5%) Owners at any time during the
immediate prior year or determination year.
Highly Compensated Employee includes Highly Compensated active Employees and
Highly Compensated former Employees. At the election of the Employer, the
calendar year, ending with or within the current determination year, may be
treated as the immediate prior year. Such an election is made with respect to
all plans of the Employer.
1.43 HOUR OF SERVICE
(a) Each hour for which an Employee is paid, or entitled to payment, for the
performance of duties for the Employer. These hours shall be credited to the
Employee for the computation period in which the duties are performed, and
(b) each hour for which an Employee is paid, or entitled to payment, by the
Employer on account of a period of time during which no duties are performed
(irrespective of whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability), layoff, jury
duty, military duty or leave of absence. No more than 501 Hours of Service
shall be credited under this paragraph for any single continuous period
(whether or not such period occurs in a single computation period). Hours under
this paragraph shall be calculated and credited pursuant to Section 2530.200b-2
of the Department of Labor Regulations which are incorporated herein by this
reference, and
(c) each hour for which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by the Employer. The same Hours of Service shall
not be credited both under paragraph (a) or paragraph Co), as the case may be,
and under this paragraph (c). These hours shall be credited to the Employee for
the computation period or periods to which the award or agreement pertains
rather than the computation period in which the award, agreement or payment
is made.
(d) Hours of Service shall be credited for employment with the Employer and
with other members of an affiliated service group [as defined in Code Section
414(m)], a controlled group of corporations [as defined in Code Section
414(b)], or a group of trades or businesses under common control [as defined in
Code Section 414(c)] of which the adopting Employer is a member, and any other
entity required to be aggregated with the Employer pursuant to Code
Section 414(o) and the regulations thereunder. Hours of Service shall also be
credited for any individual considered an Employee for purposes of this Plan
under Code Section 414(n) or Code Section 414(o) and the regulations
thereunder.
(e) Solely for purposes of determining whether a Break in Service, as defined
in paragraph 1.11, for participation and vesting purposes has occurred in a
computation period, an individual who is absent from work for maternity or
paternity reasons shall receive credit for the Hours of Service which
would otherwise have been credited to such individual but for such absence, or
in any case in which such hours cannot be determined, 8 Hours of Service per
day of such absence. For purposes of this paragraph, an absence from work for
maternity or paternity reasons means an absence by reason of the pregnancy of
the individual, by reason of a birth of a child of the individual, by reason of
the placement of a child with the individual in connection with the adoption
of such child by such individual, or for purposes of caring for such child
for a period beginning immediately following such birth or placement. The Hours
of Service credited under this paragraph shall be credited in the computation
period in which the absence begins if the crediting is necessary to prevent a
Break in Service in that period, or in all other cases, in the following
computation period. No more than 501 hours will be credited under this
paragraph.
(f) Hours of Service shall be determined on the basis of the method indicated
in the Adoption Agreement.
1.44 KEY EMPLOYEE Any Employee or former Employee (and the beneficiaries of
such Employee) who at any time during the determination period was an officer
of the Employer if such individual's annual compensation exceeds 50% of the
dollar limitation under Code Section 415(b)(1)(A) (the defined benefit maximum
annual benefit), an owner (or considered an owner under Code Section 318) of
one of the ten largest interests in the employer if such individual's
compensation exceeds 100% of the dollar limitation under Code Section
415(c)(1)(A), a five-percent owner of the Employer, or a one-percent owner of
the Employer who has an annual compensation of more than $150,000. For purposes
of determining who is a Key Employee, annual compensation shall mean
Compensation as defined in paragraph 1.12(b), but including amounts deferred
through a salary reduction agreement to a cash or deferred plan under Code
Section 401(k), a Simplified Employee Pension Plan under Code Section 408(k), a
cafeteria plan under Code Section 125 or a tax-deferred annuity under Code
Section 403(b). The determination period is the Plan Year containing the
Determination Date and the four preceding Plan Years. The determination of who
is a Key Employee will be made in accordance with Code Section 416(0(1) and the
regulations thereunder.
1.45 LEASED EMPLOYEE Any person (other than an Employee of the recipient)
who, pursuant to an agreement between the recipient and any other person
("leasing organization"), has performed services for the recipient [or for the
recipient and related persons determined in accordance with Code Section
414(n)(6)] on a substantially full-time basis for a period of at least one
year, and such services are of a type historically performed by Employees in
the business field of the recipient Employer.
1.46 LIMITATION YEAR The calendar year or such other 12-consecutive-month
period designated by the Employer in the Adoption Agreement for purposes of
determining the maximum Annual Addition to a Participant's account. All
qualified plans maintained by the Employer must use the same Limitation Year.
If the Limitation Year is amended to a different 12-consecutive-month period,
the new Limitation Year must begin on a date within the Limitation Year in
which the amendment is made.
1.47 MASTER OR PROTOTYPE PLAN A plan, the form of which is the subject of a
favorable opinion letter from the Internal Revenue Service.
1.48 MATCHING CONTRIBUTION An Employer contribution made to this or any other
defined contribution plan on behalf of a Participant on account of an Employee
Voluntary Contribution made by such Participant, or on account of a
Participant's Elective Deferral under a plan maintained by the Employer.
1.49 MAXIMUM PERMISSIBLE AMOUNT The maximum Annual Addition that may be
contributed or allocated to a Participant's account under the Plan for any
Limitation Year shall not exceed the lesser of:
(a) the Defined Contribution Dollar Limitation, or
(b) 25% of the Participant's Compensation for the Limitation Year.
The compensation limitation referred to in Co) shall not apply to any
contribution for medical benefits [within the meaning of Code Section 401(h) or
Code Section 419A(f)(2)] which is otherwise treated as an Annual Addition under
Code Section 415(1)(1) or 419(d)(2). If a short Limitation Year is created
because of an amendment changing the Limitation Year to a different
12-consecutive-month period, the Maximum Permissible Amount will not exceed the
Defined Contribution Dollar Limitation multiplied by the following fraction:
number of months in the short Limitation Year divided by 12.
1.50 NET PROFIT The current and accumulated operating earnings of the
Employer before Federal and State income taxes, excluding nonrecurring or
unusual items of income, and before contributions to this and any other
qualified plan of the Employer.
1.51 NORMAL RETIREMENT AGE The age, set by the Employer in the Adoption
Agreement, at which a Participant may retire and receive his or her benefits
under the Plan.
1.52 OWNER-EMPLOYEE A sole proprietor, or a partner owning more than 10% of
either the capital or profits interest of the partnership.
1.53 PAIRED PLANS Two or more plans maintained by the Sponsor designed so
that a single or any combination of plans adopted by an Employer will meet the
antidiscrimination rules, the contribution and benefit limitations, and the
Top-Heavy provisions of the Code.
1.54 PARTICIPANT Any Employee who has met the eligibility requirements and is
participating in the Plan.
1.55 PARTICIPANT'S BENEFIT The account balance as of the last Valuation Date
in the calendar year immediately preceding the Distribution Calendar Year
(valuation calendar year) increased by the amount of any contributions or
forfeitures allocated to the account balance as of the dates in the valuation
calendar year after the Valuation Date and decreased by distributions made in
the valuation calendar year after the Valuation Date. A special exception
exists for the second distribution Calendar Year. For purposes of this
paragraph, if any portion of the minimum distribution for the First
Distribution Calendar Year is made in the second Distribution Calendar Year on
or before the Required Beginning Date, the amount of the minimum distribution
made in the second distribution calendar year shall be treated as if it had
been made in the immediately preceding Distribution Calendar Year.
1.56 PERMISSIVE AGGREGATION GROUP Used for Top-Heavy testing purposes, it is
the Required Aggregation Group of plans plus any other plan or plans of the
Employer which, when considered as a group with the Required Aggregation Group,
would continue to satisfy the requirements of Code Sections 401(a)(4) and 410.
1.57 PLAN The Employer's retirement plan as embodied herein and in the
Adoption Agreement.
1.58 PLAN ADMINISTRATOR The Employer.
1.59 PLAN YEAR The 12-consecutive-month period designated by the Employer in
the Adoption Agreement.
1.60 PRESENT VALUE Used for Top-Heavy test and determination purposes. When
determining the Present Value of accrued benefits with respect to any Defined
Benefit Plan maintained by the Employer, interest and mortality rates shall be
determined in accordance with the provisions of the respective plan. If
applicable, interest and mortality assumptions will be specified in the
Adoption Agreement.
1.61 PROJECTED ANNUAL BENEFIT Used to test the maximum benefit which may be
obtained from a combination of retirement plans, it is the annual retirement
benefit (adjusted to an actuarial equivalent straight life annuity if such
benefit is expressed in a form other than a straight life annuity or Qualified
Joint and Survivor Annuity) to which the Participant would be entitled under
the terms of a Defined Benefit Plan or plans, assuming:
(a) the Participant will continue employment until Normal Retirement Age
under the plan (or current age, if later), and
(b) the Participant's Compensation for the current Limitation Year and all
other relevant factors used to determine benefits under the plan will remain
constant for all future Limitation Years.
1.62 QUALIFIED DEFERRED COMPENSATION PLAN Any pension, profit-sharing, stock
bonus, or other plan which meets the requirements of Code Section 401 and
includes a trust exempt from tax under Code Section 501(a) or any annuity plan
described in Code Section 403(a).
An Eligible Retirement Plan is an individual retirement account (IRA) as
described in section 408(a) of the Code, an individual retirement annuity (IRA)
as described in section 408(b) of the Code, an annuity plan as described in
section 403(a) of the Code, or a qualified trust as described in section
401(a) of the Code, which accepts Eligible Rollover Distributions. However in
the case of an Eligible Rollover Distribution to a surviving Spouse, an
Eligible Retirement Plan is an individual retirement account or individual
retirement annuity.
1.63 QUALIFIED DOMESTIC RELATIONS ORDER A Qualified Domestic Relations Order
(QDRO) is a signed domestic relations order issued by a State Court which
creates, recognizes or assigns to an alienate payee(s) the right to receive all
or part of a Participant's Plan benefit and which meets the requirements of
Code Section 414(p). An alternate payee is a Spouse, former Spouse, child, or
other dependent who is treated as a beneficiary under the Plan as a result of
the QDRO.
1.64 QUALIFIED EARLY RETIREMENT AGE For purposes of paragraph 8.9, Qualified
Early Retirement Age is the latest of:
(a) the earliest date under the Plan on which the Participant may elect to
receive retirement benefits, or
(b) the first day of the 120th month beginning before the Participant
reaches Normal Retirement Age, or
(c) the date the Participant begins participation.
1.65 QUALIFIED JOINT AND SURVIVOR ANNUITY An immediate annuity for the life
of the Participant with a survivor annuity for the life of the Participant's
Spouse which is at least one-half of but not more than the amount of the
annuity payable during the joint lives of the Participant and the Participant's
Spouse. The exact amount of the Survivor Annuity is to be specified by the
Employer in the Adoption Agreement. If not designated by the Employer, the
Survivor Annuity will be one-half of the amount paid to the Participant during
his or her lifetime. The Qualified Joint and Survivor Annuity will be the
amount of benefit which can be provided by the Participant's Vested Account
Balance.
1.66 QUALIFIED MATCHING CONTRIBUTIONS Matching Contributions which, when made
are subject to the distribution and nonforfeitability requirements under Code
Section 401(k).
1.67 QUALIFIED NON-ELECTIVE CONTRIBUTIONS Contributions (other than Matching
Contributions or Qualified Matching Contributions) made by the Employer and
allocated to Participants' accounts that the Participants may not elect to
receive in cash until distributed from the Plan, that are nonforfeitable when
made, and that are distributable only in accordance with the distribution
provisions that are applicable to Elective Deferrals and Qualified Matching
Contributions.
1.68 QUALIFIED VOLUNTARY CONTRIBUTION A tax-deductible voluntary Employee
contribution. These contributions may no longer be made to the Plan.
1.69 RECORDKEEPER The person or entity retained by the Plan Administrator on
behalf of the Plan to provide specified administrative services to the Plan.
1.70 REQUIRED AGGREGATION GROUP Used for Top-Heavy testing purposes, it
consists of:
(a) each qualified plan of the Employer in which at least one Key Employee
participates Or participated at any time during the determination period
(regardless of whether the plan has terminated), and
(b) any other qualified plan of the Employer which enables a plan described
in (a) to meet the requirements of Code Sections 401(a)(4) or 410.
1.71 REQUIRED AGGREGATION DATE The date on which a Participant is required to
take his or her first minimum distribution under the Plan. The rules are set
forth at paragraph 7.5.
1.72 ROLLOVER CONTRIBUTION A contribution made by a Participant of an amount
distributed to such Participant from another Qualified Deferred Compensation
Plan in accordance with Code Sections 402(a)(5), (6), and (7).
An Eligible Rollover Distribution is any distribution of all or any portion of
the balance to the credit of the Participant except that an Eligible Rollover
Distribution does not include:
(a) any distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or life
expectancy) of the Participant or the joint lives (or joint life expectancies)
of the Participant and the Participant's Designated Beneficiary, or for a
specified period of ten years or more,
(b) any distribution to the extent such distribution is required under
section 401(a)(9) of the Code, and
(c) the portion of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized appreciation
with respect to employer securities).
A Direct Rollover is a payment by the plan to the Eligible Retirement Plan
specified by the Participant.
1.73 SALARY SAVINGS AGREEMENT An agreement between the Employer and a
participating Employee where the Employee authorizes the Employer to withhold a
specified percentage of his or her Compensation for deposit to the Plan on
behalf of such Employee.
1.74 SELF-EMPLOYED INDIVIDUAL An individual who has Earned Income for the
taxable year from the trade or business for which the Plan is established
including an individual who would have had Earned Income but for the fact that
the trade or business had no Net Profit for the taxable year.
1.75 SERVICE The period of current or prior employment with the Employer. If
the Employer maintains a plan of a predecessor employer, Service for such
predecessor shall be treated as Service for the Employer.
1.76 SHAREHOLDER EMPLOYEE An Employee or officer who owns [or is considered
as owning within the meaning of Code Section 318(a)(1)], on any day during the
taxable year of an electing small business corporation (S Corporation), more
than five-percent of such corporation's outstanding stock.
1.77 SIMPLIFIED EMPLOYEE PENSION PLAN An individual retirement account which
meets the requirements of Code Section 408(k), and to which the Employer makes
contributions pursuant to a written formula. These plans are considered for
contribution limitation and Top-Heavy testing purposes.
1.78 SPONSOR AMERICAN FUNDS DISTRIBUTORS, INC. or any successor(s) or
assign(s).
1.79 SPOUSE (SURVIVING SPOUSE) The Spouse or Surviving Spouse of the
Participant, provided that a former Spouse will be treated as the Spouse or
Surviving Spouse and a current Spouse will not be treated as the Spouse or
Surviving Spouse to the extent provided under a Qualified Domestic Relations
Order as described in Code Section 414(p).
1.80 SUPER TOP-HEAVY PLAN A Plan described at paragraph 1.83 under which the
Top-Heavy Ratio [as defined at paragraph 1.84] exceeds 90%.
1.81 TAXABLE WAGE BASE For plans with an allocation formula which takes into
account the Employer's contribution under the Federal Insurance Contributions
Act (FICA), the contribution and benefit base in effect under the Social
Security Act [Code Section 203] at the beginning of the Plan Year, or the
amount elected by the Employer in the Adoption Agreement.
1.82 TOP-HEAVY DETERMINATION DATE For any Plan Year subsequent to the first
Plan Year, the last day of the preceding Plan Year. For the first Plan Year of
the Plan, the last day of that year.
1.83 TOP-HEAVY PLAN For any Plan Year beginning after 1983, the Employer's
Plan is top-heavy if any of the following conditions exist:
(a) if the Top-Heavy Ratio for the Employer's Plan exceeds 60% and this Plan
is not part of any required Aggregation Group or Permissive Aggregation Group
of Plans.
(b) if the Employer's plan is a part of a Required Aggregation Group of plans
but not part of a Permissive Aggregation Group and the Top-Heavy Ratio for the
group of plans exceeds 60%.
(c) if the Employer's plan is a part of a Required Aggregation Group and part
of a Permissive Aggregation Group of plans and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds 60%.
1.84 TOP-HEAVY RATIO
(a) If the Employer maintains one or more Defined Contribution plans
(including any Simplified Employee Pension Plan) and the Employer has not
maintained any Defined Benefit Plan which during the five-year period ending on
the Determination Date(s) has or has had accrued benefits, the Top-Heavy Ratio
for this Plan alone, or for the Required or Permissive Aggregation Group as
appropriate, is a fraction,
(1) the numerator of which is the sum of the account balances of all Key
Employees as of the Determination Date(s) [including any part of any account
balance distributed in the 5-year period ending on the Determination Date(s)],
and
(2) the denominator of which is the sum of all account balances [including
any part of any account balance distributed in the five-year period ending on
the Determination Date(s)], both computed in accordance with Code Section 416
and the regulations thereunder.
Both the numerator and denominator of the Top-Heavy Ratio are increased to
reflect any contribution not actually made as of the Determination Date but
which is required to be taken into account on that date under Code Section 416
and the regulations thereunder.
(b) If the Employer maintains one or more Defined Contribution Plans
(including any Simplified Employee Pension Plan) and the Employer maintains or
has maintained one or more Defined Benefit Plans which during the five-year
period ending on the Determination Date(s) has or has had any accrued benefits,
the Top-Heavy Ratio for any Required or Permissive Aggregation Group, as
appropriate, is a fraction, the numerator of which is the sum of account
balances under the aggregated Defined Contribution Plan or Plans for all Key
Employees, determined in accordance with (a) above, and the Present Value of
accrued benefits under the aggregated Defined Benefit Plan or Plans for all Key
Employees as of the Determination Date(s), and the denominator of which is the
sum of the account balances under the aggregated Defined Contribution Plan or
Plans for all Participants, determined in accordance with (a) above, and the
Present Value of accrued benefits under the Defined Benefit Plan or Plans for
all Participants as of the Determination Date(s), all determined in accordance
with Code Section 416 and the regulations thereunder. The accrued benefits
under a Defined Benefit Plan in both the numerator and denominator of the
Top-Heavy Ratio are increased for any distribution of an accrued benefit made
in the five-year period ending on the Determination Date.
(c) For purposes of (a) and (b) above, the value of account balances and the
Present Value of accrued benefits will be determined as of the most recent
Valuation Date that falls within or ends with the 12-month period ending on the
Determination Date, except as provided in Code Section 416 and the regulations
thereunder for the first and second plan years of a Defined Benefit Plan. The
account balances and accrued benefits of a participant who is not a Key
Employee but who was a Key Employee in a prior year, or who has not been
credited with at least one hour of service with any Employer maintaining the
Plan at any time during the five-year period ending on the Determination Date,
will be disregarded. The calculation of the Top-Heavy Ratio, and the extent to
which distributions, rollovers, and transfers are taken into account will be
made in accordance with Code Section 416 and the regulations thereunder.
Qualified Voluntary Employee Contributions will not be taken into account for
purposes of computing the Top-Heavy Ratio. When aggregating plans, the value of
account balances and accrued benefits will be calculated with reference to the
Determination Dates that fall within the same calendar year. The accrued
benefit of a Participant other than a Key Employee shall be determined under
the method, if any, that uniformly applies for accrual purposes under all
Defined Benefit Plans maintained by the Employer, or if there is no such
method, as if such benefit accrued not more rapidly than the slowest accrual
rate permitted under the fractional rule of Code Section 41100)(1)(C).
1.85 TOP-PAID GROUP The group consisting of the top 20% of Employees when
ranked on the basis of Compensation paid during such year. For purposes of
determining the number of Employees in the group (but not who is in it), the
following Employees shall be excluded:
(a) Employees who have not completed 6 months of Service.
(b) Employees who normally work less than 17-1/2 hours per week.
(c) Employees who normally work during not more than 6 months during any
year.
(d) Employees who have not attained age 21.
(e) Employees included in a collective bargaining unit, covered by an
agreement between employee representatives and the Employer, where retirement
benefits were the subject of good faith bargaining and provided that 90% or
more of the Employer's Employees are covered by the agreement.
(f) Employees who are nonresident aliens and who receive no earned income
which constitutes income from sources within the United States.
1.86 TRANSFER CONTRIBUTION A non-taxable transfer of a Participant's benefit
directly from a Qualified Deferred Compensation Plan to this Plan.
1.87 TRUSTEE CAPITAL GUARDIAN TRUST COMPANY shall serve as Trustee.
1.88 VALUATION DATE The last day of the Plan Year or such other date as
determined by the Employer on which Participant accounts are revalued in
accordance with Article V hereof. For Top-Heavy purposes, the date selected by
the Employer as of which the Top-Heavy Ratio is calculated.
1.89 VESTED ACCOUNT BALANCE The aggregate value of the Participant's Vested
Account Balances derived from Employer and Employee contributions (including
Rollovers), whether vested before or upon death, including the proceeds of
insurance contracts, if any, on the Participant's life. The provisions of
Article VIII shall apply to a Participant who is vested in amounts attributable
to Employer contributions, Employee contributions (or both) at the time of
death or distribution.
1.90 VOLUNTARY CONTRIBUTION An Employee contribution made to the Plan by or
on behalf of a Participant that is included in the Participant's gross income
in the year in which made and that is maintained under a separate account to
which earnings and losses are allocated.
1.91 WELFARE BENEFIT FUND Any fund that is part of a plan of the Employer, or
has the effect of a plan, through which the Employer provides welfare benefits
to Employees or their beneficiaries. For these purposes, Welfare Benefit means
any benefit other than those with respect to which Code Section 83(h) (relating
to transfers of property in connection with the performance of services), Code
Section 404 (relating to deductions for contributions to an Employees' trust or
annuity and Compensation under a deferred payment plan), Code Section 404A
(relating to certain foreign deferred compensation plans) apply. A "Fund" is
any social club, voluntary employee benefit association, supplemental
unemployment benefit trust or qualified group legal service organization
described in Code Section 501(c)(7), (9), (17) or (20); any trust, corporation,
or other organization not exempt from income tax, or to the extent provided in
regulations, any account held for an Employer by any person.
1.92 YEAR OF SERVICE Unless otherwise elected in Nonstandardized Adoption
Agreement #002, or unless Elapsed Time is elected in either Adoption Agreement
#001 or #002, a 12-consecutive-month period during which an Employee is
credited with not less than 1,000 Hours of Service.
ARTICLE II
ELIGIBILITY REQUIREMENTS
2.1 PARTICIPATION Employees who meet the eligibility requirements in the
Adoption Agreement on the Effective Date of the Plan shall become Participants
as of the Effective Date of the Plan. If so elected in the Adoption Agreement,
all Employees employed on the Effective Date of the Plan may participate, even
ff they have not satisfied the Plan's specified eligibility requirements. Other
Employees, upon meeting the eligibility requirements, shall become Participants
on the Entry Date selected in the Adoption Agreement. The Employee must satisfy
the eligibility requirements specified in the Adoption Agreement and be
employed on the Entry Date to become a Participant in the Plan. In the event an
Employee who is not a member of the eligible class of Employees becomes a
member of the eligible class, such Employee shall participate immediately if
such Employee has satisfied the minimum age and service requirements and would
have previously become a Participant had he or she been in the eligible class.
A former Participant shall again become a Participant upon returning to the
employ of the Employer as of the next Entry Date. For this purpose,
Participant's Compensation and Service shall be considered from date of rehire.
2.2 CHANGE IN CLASSIFICATION OF EMPLOYMENT In the event a Participant becomes
ineligible to participate because he or she is no longer a member of an
eligible class of Employees, such Employee shall participate upon his or her
return to an eligible class of Employees.
2.3 COMPUTATION PERIOD To determine Years of Service and Breaks in Service
for purposes of eligibility, the 12-consecutive-month period shah commence on
the date on which an Employee first performs an Hour of Service for the
Employer and each anniversary thereof, such that the succeeding
12-consecutive-month period commences with the Employee's first anniversary of
employment and so on. If, however, the period so specified is one year or less,
the succeeding 12-consecutive-month period shall commence on the first day of
the Plan Year prior to the anniversary of the date he or she first performed an
Hour of Service regardless of whether the Employee is entitled to be credited
with 1,000 (or such lesser number as specified by the Employer in the Adoption
Agreement) Hours of Service during his or her first employment year.
2.4 EMPLOYMENT RIGHTS Participation in the Plan shall not confer upon a
Participant any employment rights, nor shall it interfere with the Employer's
right to terminate the employment of any Employee at any time.
2.5 SERVICE WITH CONTROLLED GROUPS All Years of Service with other members of
a controlled group of corporations [as defined in Code Section 414(b)], trades
or businesses under common control [as defined in Code Section 414(c)], or
members of an affiliated service group [as defined in Code Section 414(m)]
shall be credited for purposes of determining an Employee's eligibility to
participate.
2.6 OWNER-EMPLOYEES If this Plan provides contributions or benefits for one or
more Owner-Employees who control both the business for which this Plan is
established and one or more other trades or businesses, this Plan and the plan
established for other trades or businesses must, when looked at as a single
plan, satisfy Code Sections 401(a) and (d) for the Employees of this and all
other trades or businesses.
If the Plan provides contributions or benefits for one or more Owner-Employees
who control one or more other trades or businesses, the Employees of the other
trades or businesses must be included in a plan which satisfies Code Sections
401(a) and (d) and which provides contributions and benefits not less favorable
than provided for Owner-Employees under this Plan.
If an individual is covered as an Owner-Employee under the plans of two or more
trades or businesses which are not controlled, and the individual controls a
trade or business, then the contributions or benefits of the Employees under
the plan of the trades or businesses which are controlled must be as favorable
as those provided for him or her under the most favorable plan of the trade or
business which is not controlled.
For purposes of the preceding sentences, an Owner-Employee, or two or more
Owner-Employees, will be considered to control a trade or business if the
Owner-Employee, or two or more Owner-Employees together:
(a) own the entire interest in an unincorporated trade or business, or
(b) in the case of a partnership, own more than 50% of either the capital
interest or the profits interest in the partnership.
For purposes of the preceding sentence, an Owner-Employee, or two or more
Owner-Employees shall be treated as owning any interest in a partnership which
is owned, directly or indirectly, by a partnership which such Owner-Employee,
or such two or more Owner-Employees, are considered to control within the
meaning of the preceding sentence.
2.7 LEASED EMPLOYEES Any leased Employee shall be treated as an Employee of
the recipient Employer; however, contributions or benefits provided by the
leasing organization which are attributable to services performed for the
redpient Employer shall be treated as provided by the recipient Employer. A
leased Employee shall not be considered an Employee of the recipient if such
Employee is covered by a money purchase pension plan providing:
(a) a non-integrated Employer contribution rate of at least 10% of
Compensation, [as defined in Code Section 415(c)(3) but including amounts
contributed by the Employer pursuant to a salary reduction agreement, which are
excludable from tho Employee's gross income under a cafeteria plan covered by
Code Section 125, a cash or deferred profit- sharing plan under Section 401(k)
of the Code, a Simplified Employee Pension Plan under Code Section 402(h)(1)(B)
and a tax-sheltered annuity under Code Section 403(b)],
(b) immediate participation, and
(c) full and immediate vesting.
This exclusion is only available if Leased Employees do not constitute more
than twenty percent (20%) of the recipient's non-highly compensated work force.
2.8 THRIFT PLANS If the Employer makes an election in the Adoption Agreement
to require Voluntary Contributions to participate in this Plan, the Employer
shall notify each eligible Employee in writing of his or her eligibility for
participation at least 30 days prior to the appropriate Entry Date. The
Employee shall indicate his or her intention to join the Plan by authorizing
the Employer to withhold a percentage of his or her Compensation as provided in
the Plan. Such authorization shall be returned to the Employer at least 10 days
prior to the Employee's Entry Date. The Employee may decline participation by
so indicating on the enrollment form or by failure to return the enrollment
form to the Employer prior to the Employee's Entry Date. If the Employee
declines to participate, such Employee shall be given the opportunity to join
the Plan on the next Entry Date. The taking of a Hardship Withdrawal under the
provisions of paragraph 6.9 will impact the Participant's ability to make these
contributions.
ARTICLE III
EMPLOYER CONTRIBUTIONS
3.1 AMOUNT The Employer intends to make periodic contributions to the Plan in
accordance with the formula or formulas selected in the Adoption Agreement.
However, the Employer's contribution for any Plan Year shall be subject to the
limitations on allocations contained in Article X.
3.2 EXPENSES AND FEES The Employer shall also be authorized to reimburse the
Fund for all expenses and fees incurred in the administration of the Plan or
Trust and paid out of the assets of the Fund. Such expenses shall include, but
shall not be limited to, fees for professional services, recordkeeping
services, printing and postage. Brokerage commissions may not be reimbursed.
3.3 RESPONSIBILITY FOR CONTRIBUTIONS Neither the Trustee nor the Sponsor
shall be required to determine if the Employer has made a contribution or if
the amount contributed is in accordance with the Adoption Agreement or the
Code. The Employer shall have sole responsibility in this regard. The Trustee
shall be accountable solely for contributions actually received by it, within
the limits of Article XI.
3.4 RETURN OF CONTRIBUTIONS Contributions made to the Fund by the Employer
shall be irrevocable except as provided below:
(a) any contribution forwarded to the Trustee because of a mistake of fact,
provided that the contribution is returned to the Employer within one year of
the contribution.
(b) in the event that the Commissioner of Internal Revenue determines that
the Plan is not initially qualified under the Internal Revenue Code, any
contribution made incident to that initial qualification by the Employer must
be returned to the Employer within one year after the date the initial
qualification is denied, but only if the application for the qualification is
made by the time prescribed by law for filing the Employer's return for the
taxable year in which the Plan is adopted, or such later date as the Secretary
of the Treasury may prescribe.
(c) contributions forwarded to the Trustee are presumed to be deductible and
are conditioned on their deductibility. Contributions which are determined by
the Internal Revenue Service to not be deductible will be returned to the
Employer.
ARTICLE IV
EMPLOYEE CONTRIBUTIONS
4.1 VOLUNTARY CONTRIBUTIONS An Employee may make Voluntary Contributions to
the Plan established hereunder if so authorized by the Employer in a uniform
and nondiscretionary manner. Such contributions are subject to the limitations
on Annual Additions and are subject to antidiscrimination testing.
4.2 QUALIFIED VOLUNTARY CONTRIBUTIONS A Participant may no longer make
Qualified Voluntary Contributions to the Plan. Amounts already contributed my
remain in the Trust Fund until distributed to the Participant. Such amounts
will be maintained in a separate account which will be nonforfeitable at all
times. The account will share in the gains and losses of the Trust in the same
manner as described at paragraph 5.4 of the Plan. No part of the Qualified
Voluntary Contribution account will be used to purchase life insurance. Subject
to Article VIII, Joint and Survivor Annuity Requirements (if applicable), the
Participant may withdraw any part of the Qualified Voluntary Contribution
account by making a written application to the Plan Administrator.
4.3 ROLLOVER CONTRIBUTION Unless provided otherwise in the Adoption
Agreement, a Participant may make a Rollover Contribution to any Defined
Contribution Plan established hereunder of all or any part of an amount
distributed or distributable to him or her from a Qualified Deferred
Compensation Plan provided:
(a) the amount distributed to the Participant is deposited to the Plan no
later than the sixtieth day after such distribution was received by the
Participant,
(b) the amount distributed is not one of a series of substantially equal
periodic payments made for the life (or life expectancy) of the Participant or
the joint lives (or joint life expectancies) of the Participant and the
Participant's Designated Beneficiary, or for a specified period of ten years or
more,
(c) the amount distributed is not required under section 401(a)(9) of the
Code,
(d) if the amount distributed included property such property is rolled
over, or if sold the proceeds of such property may be rolled over,
(e) the amount distributed is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation with respect to
employer securities).
In addition, if the Adoption Agreement allows Rollover Contributions, the Plan
will also accept any Eligible Rollover Distribution (as defined at paragraph
1.72) directly to the Plan.
Rollover Contributions, which relate to distributions prior to January 1, 1993,
must be made in accordance with paragraphs (a) through (e) and additionally
meet the requirements of paragraph (f):
(f) The distribution from the Qualified Deferred Compensation plan
constituted the Participant's entire interest in such Plan and was distributed
within one taxable year to the Participant:
(1) on account of separation from Service, a plan termination, or in the
case of a profit-sharing or stock bonus plan, a complete discontinuance of
contributions under such plan within the meaning of Section 402(a)(6)(A) of the
Code, or
(2) in one or more distributions which constitute a qualified lump sum
distribution within the meaning of Code Section 402(e)(4)(A), determined
without reference to subparagraphs (B) and (H).
Such Rollover Contribution may also be made through an Individual Retirement
Account qualified under Code Section 408 where the IRA was used as a conduit
from the Qualified Deferred Compensation Plan, the Rollover Contribution is
made in accordance with the rules provided under paragraphs (a) through (e) and
the Rollover Contribution does not include any regular IRA contributions, or
earnings thereon, which the Participant may have made to the IRA. Rollover
Contributions which relate to distributions prior to January 1, 1993, may be
made through an IRA in accordance with paragraphs (a) through (f) and
additional requirements as provided in the previous sentence. The Trustee shall
not be held responsible for determining the tax-free status of any Rollover
Contribution made under this Plan.
4.4 TRANSFER CONTRIBUTION Unless provided otherwise in the Adoption Agreement
a Participant may, subject to the provisions of paragraph 4.5, also arrange for
the direct transfer of his or her benefit from a Qualified Deferred
Compensation Plan to this Plan. For accounting and record keeping purposes,
Transfer Contributions shall be treated in the same manner as Rollover
Contributions.
Notwithstanding the above, the Employer may refuse to accept such Transfer
Contributions.
4.5 EMPLOYER APPROVAL OF TRANSFER CONTRIBUTIONS The Employer, maintaining a
Safe-Harbor Profit-Sharing Plan in accordance with the provisions of paragraph
8.7, acting in a nondiscriminatory manner, may in its sole discretion refuse to
allow Transfer Contributions to its profit-sharing plan, if such contributions
are directly or indirectly being transferred from a defined benefit plan, a
money purchase pension plan (including a target benefit plan), a stock bonus
plan, or another profit-sharing plan which would otherwise provide for a life
annuity form of payment to the Participant.
4.6 ELECTIVE DEFERRALS A Participant may enter into a Salary Savings
Agreement with the Employer authorizing the Employer to withhold a portion of
such Participant's Compensation not to exceed $7,000 per calendar year as
adjusted under Code Section 415(d) or, if lesser, the percentage of
Compensation specified in the Adoption Agreement, and to deposit such amount to
the Plan. No Participant shall be permitted to have Elective Deferrals made
under this Plan or any other qualified plan maintained by the Employer, during
any taxable year, in excess of the dollar limitation contained in Code Section
402(g) in effect at the beginning of such taxable year. Thus, the $7,000 limit
may be reduced if a Participant contributes pre-tax contributions to qualified
plans of this or other Employers. Any such contribution shall be credited to
the Employee's Salary Savings Account. Unless otherwise specified in the
Adoption Agreement, a Participant may amend his or her Salary Savings Agreement
to increase, decrease or terminate the percentage on the first day of any month
after providing written notice to the Employer. The Employer may also amend or
terminate said agreement on written notice to the Participant. If a Participant
has not authorized the Employer to withhold at the maximum rate and desires to
increase the total withheld for a Plan Year, such Participant may authorize the
Employer upon 30 days notice to withhold a supplemental amount up to 100% of
his or her Compensation for one or more pay periods. In no event may the sum of
the amounts withheld under the Salary Savings Agreement plus the supplemental
withholding exceed 25% of a Participant's Compensation for a Plan Year.
Elective Deferrals shall be deposited in the Trust within 30 days after being
withheld from the Participant's pay.
4.7 REQUIRED VOLUNTARY CONTRIBUTIONS If the Employer makes a thrift election
in the Adoption Agreement, each eligible Participant shall be required to make
Voluntary Contributions to the Plan for credit to his or her account as
provided in the Adoption Agreement. Such Voluntary Contributions shall be
withheld from the Employee's Compensation and shall be transmitted by the
Employer to the Trustee as agreed between the Employer and Recordkeeper. A
Participant may discontinue participation or change his or her Voluntary
Contribution percentage by so advising the Employer at least 30 days prior to
the date on which such discontinuance or change is to be effective. If a
Participant discontinues his or her Voluntary Contributions, such Participant
may not again authorize Voluntary Contributions for a period of one year from
the date of discontinuance. A Participant may voluntarily change his or her
Voluntary Contribution percentage once during any Plan Year and may also agree
to have a reduction in his or her contribution, if required to satisfy the
requirements of the ACP test.
4.8 DIRECT ROLLOVER OF BENEFITS Notwithstanding any provision of the Plan to
the contrary that would otherwise limit a Participant's election under this
paragraph, for distributions made on or after January 1, 1993, a Participant
may elect, at the time and in the manner prescribed by the Plan Administrator,
to have any portion of an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan specified by the Participant in a Direct Rollover. Any
portion of a distribution which is not paid directly to an Eligible Retirement
Plan shall be distributed to the Participant. For purposes of this Paragraph, a
Surviving Spouse or a spouse or former spouse who is an alternate payee under a
Qualified Domestic Relations Order as defined in section 414(p) of the Code,
will be permitted to elect to have any Eligible Rollover Distribution paid
directly to an individual retirement account (IRA) or an individual retirement
annuity (IRA).
The plan provisions otherwise applicable to distributions continue to apply to
Rollover and Transfer Contributions.
ARTICLE V
PARTICIPANT ACCOUNTS
5.1 SEPARATE ACCOUNTS The Employer shall establish a separate bookkeeping
account tor each Participant showing the total value of his or her interest in
the Fund. Each Participant's account shall be separated for bookkeeping
purposes into the following sub-accounts:
(a) Employer contributions.
(1) Matching Contributions.
(2) Qualified Matching Contributions.
(3) Qualified Non-Elective Contributions.
(4) Discretionary Contributions.
(5) Elective Deferrals.
(b) Voluntary Contributions (and additional amounts including required
contributions and, if applicable, either repayments of loans previously
defaulted on and treated as "deemed distributions" on which a tax report has
been issued, and amounts paid out upon a separation from service which have
been included in income and which are repaid after being rehired by the
Employer).
(c) Qualified Voluntary Contributions (if the Plan previously accepted
these).
(d) Rollover Contributions and Transfer Contributions.
5.2 ADJUSTMENTS TO PARTICIPANT ACCOUNTS As of each Allocation Date of the
Plan, the Employer shall add to each account:
(a) the Participant's share of the Employer's contribution and forfeitures
as determined in the Adoption Agreement,
(b) any Elective Deferrals, Voluntary, Rollover or Transfer Contributions
made by the Participant,
(c) any repayment of amounts previously paid out to a Participant upon a
separation from Service and repaid by the Participant since the last Allocation
Date, and
(d) the Participant's proportionate share of any investment earnings and
increase in the fair market value of the Fund since the last Allocation Date,
as determined at paragraph 5.4.
The Employer shall deduct from each account:
(e) any withdrawals or payments made from the Participant's account since the
last Allocation Date, and
(f) the Participant's proportionate share of any decrease in the fair market
value of the Fund since the last Allocation Date, as determined at paragraph
5.4.
5.3 ALLOCATING EMPLOYER CONTRIBUTIONS The Employer's contribution shall be
allocated to Participants in accordance with the allocation formula selected by
the Employer in the Adoption Agreement, and the minimum contribution and
allocation requirements for Top-Heavy Plans. Beginning with the 1993 Plan Year
and thereafter, for plans on Standardized Adoption Agreement #001, Participants
who are credited with more than 500 Hours of Service or are employed on the
last day of the Plan Year must receive a full allocation of Employer
contributions. in Nonstandardized Adoption Agreement #002, Employer
contributions shall be allocated to the accounts of Participants employed by
the Employer on the last day of the Plan Year unless indicated otherwise in the
Adoption Agreement. In the case of a non-Top-Heavy, Nonstandardized Plan,
Participants must also have completed a Year of Service unless otherwise
specified in the Adoption Agreement. For Nonstandardized Adoption Agreement
#002, the Employer may only apply the last day of the Plan Year and Year of
Service requirements if the Plan satisfies the requirements of Code Sections
401(a)(26) and 410(b) and the regulations thereunder including the exception
for 401(k) plans. If, when applying the last day and Year of Service
requirements, the Plan fails to satisfy the aforementioned requirements,
additional Participants will be eligible to receive an allocation of Employer
contributions until the requirements are satisfied. Participants who are
credited with a Year of Service, but not employed at Plan Year end, are the
first category of additional Participants eligible to receive an allocation. If
the requirements are still not satisfied, Participants credited with more than
500 Hours of Service and employed at Plan Year end are the next category of
Participants eligible to receive an allocation. Finally, if necessary to
satisfy the said requirements, any Participant credited with more than 500
Hours of Service will be eligible for an allocation of Employer contributions.
The Service requirement is not applicable with respect to any Plan Year during
which the Employer's Plan is Top-Heavy.
5.4 ALLOCATING INVESTMENT EARNINGS AND LOSSES All Employer contributions will
be credited with an allocation of the actual investment earnings and gains and
losses from the actual date of deposit of each such contribution until the end
of the period. The actual investment earnings shall be credited to
Participants' accounts as of the Allocation Date following date of deposit.
Participants will share in the earnings of the investment fund(s) in which they
have monies as of the date such earnings are either credited or accrued.
Accounts with segregated investments shall receive only the income or loss on
such segregated investments. In no event shall the selection of a method of
allocating gains and losses be used to discriminate in favor of the Highly
Compensated Employees.
Alternatively, a Participant's share of the actual investment earnings shall be
based on the proportionate value of all active accounts (other than accounts
with segregated investments) as of the last Allocation Date less withdrawals
since the last Allocation Date. If Employer contributions are made monthly,
quarterly, or on some other systematic basis, the adjusted value of such
accounts for allocation of investment income and gains or losses shall include
one-half the Employer contributions for such period. If Employer contributions
are not made on a systematic basis, it is assumed that they are made at the end
of the Allocation period and therefore will not receive an allocation of
investment earnings and gains or losses for such period. Account balances not
yet forfeited shall receive an allocation of earnings and/or losses. Accounts
with segregated investments shall receive only the income or loss on such
segregated investments.
5.5 PARTICIPANT STATEMENTS Upon completing the allocations described above
for the Allocation Date coinciding with the end of the Plan Year, the Employer
shall prepare a statement for each Participant showing the additions to and
subtractions from his or her account since the last such statement and the fair
market value of his or her account as of the current Allocation Date. Employers
so choosing may prepare Participant statements for each quarterly Allocation
Date.
ARTICLE VI
RETIREMENT BENEFITS AND DISTRIBUTIONS
6.1 NORMAL RETIREMENT BENEFITS A Participant shall be entitled to receive the
balance held in his or her account from Employer contributions upon attaining
Normal Retirement Age or at such earlier dates as the provisions of this
Article VI may allow. If the Participant elects to continue working past his or
her Normal Retirement Age, he or she will continue as an active Participant and
no distribution shall be made to such Participant until his or her actual
retirement date unless the Employer elects otherwise in the Adoption Agreement,
or a minimum distribution is required by law. Settlement shall be made in the
normal form, or if elected, in one of the optional forms of payment provided
below.
6.2 EARLY RETIREMENT BENEFITS If the Employer so provides in the Adoption
Agreement, an Early Retirement benefit will be available to individuals who
meet the age and Service requirements. An individual who meets the Early
Retirement Age requirements and separates from Service will become fully
vested, regardless of any vesting schedule which otherwise might apply. If a
Participant separates from Service before satisfying the age requirements, but
after having satisfied the Service requirement, the Participant will be
entitled to elect an Early Retirement benefit upon satisfaction of the age
requirement.
6.3 BENEFITS ON TERMINATION OF EMPLOYMENT
(a) If a Participant terminates employment prior to Normal Retirement Age,
such Participant shall be entitled to receive the vested balance held in his or
her account payable at Normal Retirement Age in the normal form, or if elected,
in one of the optional forms of payment provided hereunder. If applicable, the
Early Retirement benefit provisions may be elected. Notwithstanding the
preceding sentence, a former Participant may, if allowed in the Adoption
Agreement, make application to the Employer requesting early payment of any
deferred vested and nonforfeitable benefit due.
(b) If a Participant terminates employment, and the value of that
Participant's Vested Account Balance derived from Employer and Employee
contributions is not greater than $3,500, in accordance with a consistent
policy followed for all Participants the Employer may or may not require the
Participant to receive a lump sum distribution of the value of the entire
vested portion of such account balance and the non-vested portion will be
treated as a forfeiture. The Employer shall continue to follow its consistent
policy, as may be established, regarding immediate cash-outs of Vested Account
Balances of $3,500 or less. For purposes of this Article, if the value of a
Participant's Vested Account Balance is zero, the Participant shall be deemed
to have received a distribution of such Vested Account Balance immediately
following termination. Likewise, if the Participant is reemployed prior to
incurring five consecutive one-year Breaks in Service he or she will be deemed
to have immediately repaid such distribution. For Plan Years beginning prior to
1989, a Participant's Vested Account Balance shall not include Qualified
Voluntary Contributions. Notwithstanding the above, if the Employer maintains
or has maintained a policy of not distributing any amounts until the
Participant's Normal Retirement Age, the Employer can continue to uniformly
apply such policy.
(c) If a Participant terminates employment with a Vested Account Balance
derived from Employer and Employee contributions in excess of $3,500, and
elects (with his or her Spouse's consent, if required) to receive 100% of the
value of his or her Vested Account Balance in a lump sum, the non- vested
portion will be treated as a forfeiture. The Participant (and his or her
Spouse, if required) must consent to any distribution, when the Vested Account
Balance described above exceeds $3,500 or-if at the time of any prior
distribution it exceeded $3,500. For purposes of this paragraph, for Plan Years
beginning prior to 1989, a Participant's Vested Account Balance shall not
include Qualified Voluntary Contributions.
(d) Distribution of less than 100% of the Participant's Vested Account
Balance shall only be permitted if the Participant is fully vested upon
termination of employment.
(e) If a Participant who is not 100% vested receives or is deemed to receive
a distribution pursuant to this paragraph and resumes employment covered under
this Plan, the Participant shall have the right to repay to the Plan the full
amount of the distribution attributable to Employer contributions on or before
the earlier of the date that the Participant incurs five consecutive one-year
Breaks in Service following the date of distribution or five years after the
first date on which the Participant is subsequently reemployed. In such event,
the Participant's account shall be restored to the value thereof at the time
the distribution was made and may further be increased by the Plan's income and
investment gains and/or losses on the undistributed amount from the date of
distribution to the date of repayment.
(f) A Participant shall also have the option to postpone payment of his or
her Plan benefits until the first day of April following the calendar year in
which he or she attains age 70-1/2. Any balance of a Participant's account
resulting from his or her Employee contributions not previously withdrawn, if
any, may be withdrawn by the Participant immediately following separation from
Service.
(g) If a Participant ceases to be an active Employee as a result of a
Disability as defined at paragraph 1.22, such Participant shall be able to make
an application for a disability retirement benefit payment. The Participant's
account balance will be deemed "immediately distributable" as set forth in
paragraph 6.4, and will be fully vested pursuant to paragraph 9.2.
6.4 RESTRICTIONS ON IMMEDIATE DISTRIBUTIONS
(a) An account balance is immediately distributable if any part of the
account balance could be distributed to the Participant (or Surviving Spouse)
before the Participant attains (or would have attained if not deceased) the
later of the Normal Retirement Age or age 62.
(b) If the value of a Participant's Vested Account Balance derived from
Employer and Employee contributions exceeds (or at the time of any prior
distribution exceeded) $3,500, and the account balance is immediately
distributable, the Participant and his or her Spouse (or where either the
Participant or the Spouse has died, the survivor) must consent to any
distribution of such account balance. The consent of the Participant and the
Spouse shall be obtained in writing within the 90-day period ending on the
annuity starting date, which is the first day of the first period for which an
amount is paid as an annuity or any other form. The Plan Administrator shall
notify the Participant and the Participant's Spouse of the right to defer any
distribution until the Participant's account balance is no longer immediately
distributable. Such notification shall include a general description of the
material features, and an explanation of the relative values of, the optional
forms of benefit available under the Plan in a manner that would satisfy the
notice requirements of Code Section 417(a)(3), and shall be provided no less
than 30 days and no more than 90 days prior to the annuity starting date.
(c) Notwithstanding the foregoing, only the Participant need consent to the
commencement of a distribution in the form of a Qualified Joint and Survivor
Annuity while the account balance is immediately distributable. Furthermore, if
payment in the form of a Qualified Joint and Survivor Annuity is not required
with respect to the Participant pursuant to paragraph 8.7 of the Plan, only the
Participant need consent to the distribution of an account balance that is
immediately distributable. Neither the consent of the Participant nor the
Participant's Spouse shall be required to the extent that a distribution is
required to satisfy Code Section 401(a)(9) or Code Section 415. In addition,
upon termination of this Plan if the Plan does not offer an annuity option
(purchased from a commercial provider), the Participant's account balance may,
without the Participant's consent, be distributed to the Participant or
transferred to another Defined Contribution Plan [other than an employee stock
ownership plan as defined in Code Section 4975(e)(7)] within the same
controlled group.
(d) For purposes of determining the applicability of the foregoing consent
requirements to distributions made before the first day of the first Plan Year
beginning after 1988, the Participant's Vested Account Balance shall not
include amounts attributable to Qualified Voluntary Contributions.
(e) If a distribution is one to which Code Sections 401(a)(11) and 417 do
not apply, such distribution may commence less than 30 days after the notice
required under Regulations Section 1.411(a)-11(c) is given, provided that:
(1) the Participant is clearly informed of his or her right to a period of
at least 30 days after receiving the notice to consider the decision of whether
or not to elect a distribution (and, if applicable, a particular distribution
option), and
(2) the Participant, after receiving the notice, affirmatively elects to
receive a distribution.
6.5 NORMAL FORM OF PAYMENT The normal form of payment for a profit-sharing
plan satisfying the requirements of paragraph 8.7 hereof shall be a lump sum
with no option for annuity payments. For all other plans, the normal form of
payment hereunder shall be a Qualified Joint and Survivor Annuity as provided
under Article VIII. A Participant whose Vested Account Balance derived from
Employer and Employee contributions exceeds $3,500, or if at the time of any
prior distribution it exceeded $3,500, shall (with the consent of his or her
Spouse) have the right to receive his or her benefit in a lump sum or in
monthly, quarterly, semi- annual or annual payments from the Fund over any
period not extending beyond the life expectancy of the Participant and his or
her Beneficiary. For purposes of this paragraph, for Plan Years prior to 1989,
a Participant's Vested Account Balance shall not include Qualified Voluntary
Contributions. The normal form of payment shall be automatic, unless the
Participant files a written request with the Employer prior to the date on
which the benefit is automatically payable, electing a lump sum or installment
payment option. No amendment to the Plan may eliminate one of the optional
distribution forms listed above.
6.6 COMMENCEMENT OF BENEFITS
(a) Unless the Participant elects otherwise, distribution of benefits will
begin no later than the 60th day after the close of the Plan Year in which the
latest of the following events occurs:
(1) the Participant attains age 65 (or normal retirement age if earlier),
(2) the 10th anniversary of the year in which the Participant commenced
participation in the Plan, or
(3) the Participant terminates Service with the Employer.
(4) Notwithstanding the foregoing, the failure of a Participant and Spouse
(if necessary) to consent to a distribution while a benefit is immediately
distributable within the meaning of paragraph 6.4 hereof, shall be deemed an
election to defer commencement of payment of any benefit sufficient to
satisfy this paragraph.
6.7 CLAIMS PROCEDURES Upon retirement, death, or other severance of
employment, the Participant or his or her representative may make application
to the Employer requesting payment of benefits due and the manner of payment.
If no application for benefits is made, the Employer shall automatically pay
any vested benefit due hereunder in the normal form at the time prescribed at
paragraph 6.6. If an application for benefits is made, the Employer shall
accept, reject, or modify such request and shall notify the Participant in
writing setting forth the response of the Employer and in the case of a denial
or modification the Employer shall:
(a) state the specific reason or reasons for the denial,
(b) provide specific reference to pertinent Plan provisions on which the
denial is based,
(c) provide a description of any additional material or information
necessary for the Participant or his representative to perfect the claim and an
explanation of why such material or information is necessary, and
(d) explain the Plan's claim review procedure as contained in this Plan.
In the event the request is rejected or modified, the Participant or his or her
representative may within 60 days following receipt by the Participant or
representative of such rejection or modification, submit a written request for
review by the Employer of its initial decision. Within 60 days following such
request for review, the Employer shall render its final decision in writing to
the Participant or representative stating specific reasons for such decision.
If the Participant or representative is not satisfied with the Employer's final
decision, the Participant or representative can institute an action in a
federal court of competent jurisdiction; for this purpose, process would be
served on the Employer.
6.8 IN-SERVICE WITHDRAWALS An Employee may withdraw all or any part of the
fair market value of his or her thrift Contributions, Voluntary Contributions,
Qualified Voluntary Contributions or Rollover Contributions, upon written
request to the Employer. Transfer Contributions which originate from a plan
meeting the safe-harbor provisions of paragraph 8.7, may also be withdrawn by
an Employee upon written request to the Employer. Transfer Contributions not
meeting the safe-harbor provisions may only be withdrawn upon retirement,
death, Disability, termination or termination of the Plan, and will be subject
to Spousal consent requirements contained in Code Sections 411(a)(11) and 417.
A request for an In- Service Withdrawal shall include the Employee's address,
social security number, birthrate, and amount of the withdrawal. If, at the
time a distribution of Qualified Voluntary Contributions is received, the
Participant has not attained age 59-1/2 and is not disabled as defined at Code
Section 22(e)(3), the Participant will be subject to a federal income tax
penalty, unless the distribution is rolled over to a qualified plan or
individual retirement plan within 60 days of the date of distribution. A
Participant may withdraw all or any part of the fair market value of his or her
pre- 1987 Voluntary Contributions with or without withdrawing the earnings
attributable thereto. Post-1986 Voluntary Contributions may only be withdrawn
along with a portion of the earnings thereon. The amount of the earnings to be
withdrawn is determined by using the formula: DA [1-(V/V+E)], where DA is the
distribution amount, V is the amount of Voluntary Contributions and V+E is the
amount of Voluntary Contributions plus the earnings attributable thereto. A
Participant withdrawing his or her other contributions prior to attaining age
59-1/2 will be subject to a federal tax penalty to the extent that the
withdrawn amounts are includible in income. The Employer may provide in the
Adoption Agreement, that certain actively employed Participants in a
profit-sharing plan be eligible to withdraw all or any part of the fair market
value of any of his or her vested Employer contributions plus the investment
earnings thereon. Such distributions shall not be eligible for redeposit to the
Fund. A withdrawal under this paragraph shall not prohibit such Participant
from sharing in any future Employer Contribution he or she would otherwise be
eligible to share in. A request to withdraw amounts pursuant to this paragraph
must if applicable, be consented to by the Participant's Spouse. The consent
shall comply with the requirements of paragraph 6.4 relating to immediate
distributions. Elective Deferrals, Qualified Non- Elective Contributions, and
Qualified Matching Contributions, and income allocable to each, are not
distributable to a Participant or his or her Beneficiary or Beneficiaries, in
accordance with such Participant's or Beneficiary's or Beneficiaries' election,
earlier than upon separation from Service, death, or Disability. Such amounts
may also be distributed upon:
(a) termination of the Plan without the establishment of another Defined
Contribution Plan other than an employee stock ownership plan [as defined in
Code Sections 4975(e) or 409] or a Simplified Employee Pension Plan [as defined
in Code Section 408(k)].
(b) the disposition by a corporation to an unrelated corporation of
substantially all of the assets [within the meaning of Code Section 409(d)(2)]
used in a trade or business of such corporation if such corporation continues
to maintain this Plan after the disposition, but only with respect to Employees
who continue employment with the corporation acquiring such assets.
(c) the disposition by a corporation to an unrelated entity of such
corporation's interest in a subsidiary [within the meaning of Code Section
409(d)(3)] if such corporation continues to maintain this Plan, but only with
respect to Employees who continue employment with such subsidiary.
(d) the attainment of age 59-1/2.
(e) on account of the Hardship withdrawal of the Participant as described
in paragraph 6.9.
All distributions that may be made pursuant to one or more of the foregoing
distributable events are subject to the Participant and Spousal consent
requirements, if applicable, contained in Code Sections 401(a)(11) and 417. In
addition, distributions after March 31, 1988 that are triggered by any of the
first three events enumerated above must be made in a lump sum.
6.9 HARDSHIP WITHDRAWAL If elected by the Employer in the Adoption Agreement,
a Participant may request a Hardship withdrawal, as provided in this section.
If the Participant has not attained age 59-1/2, the Participant may be subject
to a federal income tax penalty. Such request shall be in writing to the
Employer who shall have sole authority to authorize a Hardship withdrawal
pursuant to the rules below. Hardship withdrawals may include Elective
Deferrals regardless of when contributed and any earnings accrued and credited
thereon as of the last day of the Plan Year ending before July 1, 1989, and
Employer related contributions, including but not limited to Matching
Contributions plus the investment earnings thereon, to the extent vested.
Qualified Matching Contributions, Qualified Non- Elective Contributions and
Elective Deferrals reclassified as Voluntary Contributions plus the investment
earnings thereon are only available for Hardship withdrawal prior to age 59-1/2
to the extent that they were credited to the Participant's Account as of the
last day of the Plan Year ending prior to July 1, 1989. The Plan Administrator
may limit withdrawals to Elective Deferrals and the earnings thereon as
stipulated above. Hardship withdrawals are subject to the Spousal consent
requirements contained in Code Sections 401(a)(11) and 417. Only the following
reasons are valid to obtain Hardship withdrawal:
(a) expenses incurred or necessary for medical care, [described in Code
Section 213(d)] of the Participant, his or her Spouse, children and other
dependents,
(b) the purchase (excluding mortgage payments) of the principal residence
for the Participant,
(c) payment of tuition and related educational expenses for the next
twelve (12) months of post-secondary education for the Participant, his or her
Spouse, children or other dependents, or
(d) the need to prevent eviction of the Participant from or a foreclosure
on the mortgage of, the Participant's principal residence.
Furthermore, the following conditions must be met in order for a withdrawal to
be authorized:
(e) the Participant has obtained all distributions, other than hardship
distributions, and all nontaxable loans under all plans maintained by the
Employer,
(f) the Participant's Elective Deferrals and Voluntary Contributions will
be suspended for all plans maintained by the Employer (other than nondeferred
benefits under Code Section 125 plans) for twelve months after the receipt of
the Hardship distribution,
(g) the distribution is not in excess of the amount of the immediate and
heavy financial need [(a) through (d)] above, including amounts necessary to
pay any federal, state or local income taxes or penalties reasonably
anticipated to result from the distribution, and
(h) all plans maintained by the Employer provide that a Participant may
not make Elective Deferrals for the Participant's taxable year immediately
following the taxable year of the Hardship distribution in excess of the
applicable limit under Code Section 402(g) for such taxable year, less the
amount of such Participant's pre-tax contributions for the taxable year of the
Hardship distribution.
If a distribution is made at a time when a Participant has a nonforfeitable
right to less than 100% of the account balance derived from Employer
contributions and the Participant may increase the nonforfeitable percentage in
the account:
(a) A separate account will be established for the Participant's interest
in the Plan as of the time of the distribution, and
(b) At any relevant time the Participant's nonforfeitable portion of the
separate account will be equal to an amount ("X") determined by the formula:
X= P[AB+(R X D)]-(R X D)
For purposes of applying the formula: "P" is the nonforfeitable percentage at
the relevant time, "AB" is the account balance at the relevant time, "D" is the
amount of the distribution and "R" is the ratio of the account balance at the
relevant time to the account balance after distribution.
ARTICLE VII
DISTRIBUTION REQUIREMENTS
7.1 JOINT AND SURVIVOR ANNUITY REQUIREMENTS All distributions made under the
terms of this Plan must comply with the provisions of Article VIII including,
if applicable, the safe harbor provisions thereunder.
7.2 MINIMUM DISTRIBUTION REQUIREMENTS All distributions required under this
Article shall be determined and made in accordance with the minimum
distribution requirements of Code Section 401(a)(9) and the regulations
thereunder, including the minimum distribution incidental benefit rules found
at Regulations Section 1.401(a)(9)-2. The entire interest of a Participant must
be distributed or begin to be distributed no later than the Participant's
Required Beginning Date. Life expectancy and joint and last survivor life
expectancies are computed by using the expected return multiples found in
Tables V and VI of Regulations Section 1.72-9.
7.3 LIMITS ON DISTRIBUTION PERIODS As of the First Distribution Calendar Year,
distributions if not made in a single-sum, may only be made over one of the
following periods (or a combination thereof):
(a) the life of the Participant,
(b) the life of the Participant and a Designated Beneficiary,
(c) a period certain not extending beyond the life expectancy of the
Participant, or
(d) a period certain not extending beyond the joint and last survivor
expectancy of the Participant and a Designated Beneficiary.
(a) If a Participant's benefit is to be distributed over (l) a period not
extending beyond the life expectancy of the Participant or the joint life and
last survivor expectancy of the Participant and the Participant's Designated
Beneficiary or (2) a period not extending beyond the life expectancy of the
Designated Beneficiary, the amount required to be distributed for each
calendar year, beginning with distributions for the First Distribution Calendar
Year, must at least equal the quotient obtained by dividing the Participant's
benefit by the Applicable Life Expectancy.
(b) For calendar years beginning before 1989, if the Participant's Spouse
is not the Designated Beneficiary, the method of distribution selected must
have assured that at least 50% of the Present Value of the amount available for
distribution was to be paid within the life expectancy of the
Participant.
(c) For calendar years beginning after 1988, the amount to be distributed
each year beginning with distributions for the First Distribution Calendar
Year, shall not be less than the quotient obtained by dividing the
Participant's benefit by the lesser of (1) the Applicable Life Expectancy or
(2) if the Participant's Spouse is not the Designated Beneficiary, the
applicable divisor determined from the table set forth in Q&A-4 of Regulations
Section 1.401(a)(9)-2. Distributions after the death of the Participant shall
be distributed using the Applicable Life Expectancy as the relevant divisor
without regard to Regulations Section 1.401(a)(9)-2.
(d) The minimum distribution required for the Participant's First
Distribution Calendar Year must be made on or before the Participant's Required
Beginning Date. The minimum distribution for other calendar years, including
the minimum distribution for the Distribution Calendar Year in which the
Participant's Required Beginning Date occurs, must be made on or before
December 31 of that Distribution Calendar Year.
(e) If the Participant's benefit is distributed in the form of an annuity
purchased from an insurance company, distributions thereunder shall be made in
accordance with the requirements of Code Section 401(a)(9) and the Regulations
thereunder.
(f] For purposes of determining the amount of the required distribution
for each Distribution Calendar Year, the account balance to be used is the
account balance determined as of the last valuation preceding the Distribution
Calendar Year. This balance will be increased by the amount of any
contributions or forfeitures allocated to the account balance after the
valuation date in such preceding calendar year. Such balance will also be
decreased by distributions made after the Valuation Date in such preceding
Calendar Year.
(g) For purposes of subparagraph 7.4(f), if any portion of the minimum
distribution for the First Distribution Calendar Year is made in the second
Distribution Calendar Year on or before the Required Beginning Date, the amount
of the minimum distribution made in the second Distribution Calendar Year shah
be treated as if it had been made in the immediately preceding Distribution
Calendar Year.
7.5 REQUIRED BEGINNING DATE
(a) General Rule. The Required Beginning Date of a Participant is the
first day of April of the calendar year following the calendar year in which
the Participant attains age 70-1/2.
(b) Transitional Rules. The Required Beginning Date of a Participant who
attains age 70-1/2 before 1988, shall be determined in accordance with (1) or
(2) below:
(1) non-five-percent owners. The Required Beginning Date of a Participant
who is not a five-percent owner is the first day of April of the calendar year
following the calendar year in which the later of retirement or attainment of
age 70-1/2 occurs. In the case of a Participant who is not a five-percent owner
who attains age 70-1/2 during 1988 and who has not retired as of January 1,
1989, the Required Beginning Date is April 1, 1990.
(2) five-percent owners. The Required Beginning Date of a Participant who
is a five-percent owner during any year beginning after 1979, is the first day
of April following the later of:
(i) the calendar year in which the Participant attains age 70-1/2, or
(ii) the earlier of the calendar year with or within which ends the plan
year in which the Participant becomes a five-percent owner, or the calendar
year in which the Participant retires.
(c) A Participant is treated as a five-percent owner for purposes of this
paragraph if such Participant is a five-percent owner as defined in Code
Section 416(0 (determined in accordance with Code Section 416 but without
regard to whether the Plan is Top-Heavy) at any time during the Plan Year
ending with or within the calendar year in which such owner attains age 66-1/2
or any subsequent Plan Year.
(d) Once distributions have begun to a five-percent owner under this
paragraph, they must continue to be distributed even if the Participant ceases
to be a five-percent owner in a subsequent year.
7.6 TRANSITIONAL RULE
(a) Notwithstanding the other requirements of this Article and subject to
the requirements of Article VIII, Joint and Survivor Annuity Requirements,
distribution on behalf of any Employee, including a five-percent owner, may be
made in accordance with all of the following requirements (regardless of when
such distribution commences):
(1) the distribution by the Trust is one which would not have disqualified
such Trust under Code Section 401(a)(9) as in effect prior to amendment by the
Deficit Reduction Act of 1984,
(2) the distribution is in accordance with a method of distribution
designated by the Employee whose interest in the Trust is being distributed or,
if the Employee is deceased, by a beneficiary of such Employee,
(3) such designation was in writing, was signed by the Employee or the
beneficiary, and was made before 1984,
(4) the Employee had accrued a benefit under the Plan as of December 31,
1983,
(5) the method of distribution designated by the Employee or the
beneficiary specifies the time at which distribution will commence, the period
over which distributions will be made, and in the case of any distribution upon
the Employee's death, the beneficiaries of the Employee listed in order of
priority.
(b) A distribution upon death will not be covered by this transitional
rule unless the information in the designation contains the required
information described above with respect to the distributions to be made upon
the death of the Employee.
(c) For any distribution which commences before 1984, but continues after
1983, the Employee or the beneficiary to whom such distribution is being made,
will be presumed to have designated the method of distribution under which the
distribution is being made, if the method of distribution was specified in
writing and the distribution satisfies the requirements in subparagraphs (a}(1)
and (5) above.
(d) If a designation is revoked, any subsequent distribution must satisfy
the requirements of Code Section 401(a)(9) and the regulations thereunder. If a
designation is revoked subsequent to the date distributions are required to
begin, the Trust must distribute by the end of the calendar year following the
calendar year in which the revocation occurs the total amount not yet
distributed which would have been required to have been distributed to satisfy
Code Section 401(a)(9) and the regulations thereunder, but for the section
242(b)(2) election of the Tax Equity and Fiscal Responsibility Act of 1982. For
calendar years beginning after 1988, such distributions must meet the minimum
distribution incidental benefit requirements in section 1.401(a)(9)-2 of
the Income Tax Regulations. Any changes in the designation will be considered
to be a revocation of the designation. However, the mere substitution or
addition of another beneficiary (one not named in the designation) under the
designation will not be considered to be a revocation of the designation, so
long as such substitution or addition does not alter the period over which
distributions are to be made under the designation, directly or indirectly (for
example, by altering the relevant measuring life). In the case in which an
amount is transferred or rolled over from one plan to another plan, the rules
in Q&A J-2 and Q&A J-3 of the regulations shall apply.
7.7 DESIGNATION OF BENEFICIARY FOR DEATH BENEFIT Each Participant shall file
a written designation of beneficiary with the Employer upon qualifying for
participation in this Plan. Such designation shall remain in force until
revoked by the Participant by filing a new beneficiary form with the Employer.
Under a profit-sharing plan satisfying the requirements of paragraph 8.7, the
Designated Beneficiary shall be the Participant's Surviving Spouse, if any,
unless such Spouse properly consents otherwise.
7.8 NONEXISTENCE OF BENEFICIARY Any portion of the amount payable hereunder
which is not disposed of because of the Participant's or former Participant's
failure to designate a beneficiary, or because all of the Designated
Beneficiaries predeceased the Participant, shall be paid to his or her Spouse.
If the Participant had no Spouse at the time of death, payment shall be made to
the personal representative of his or her estate in a lump sum.
7.9 DISTRIBUTION BEGINNING BEFORE DEATH If the Participant dies after
distribution of his or her interest has begun, the remaining portion of such
interest will continue to be distributed at least as rapidly as under the
method of distribution being used prior to the Participant's death.
7.10 DISTRIBUTION BEGINNING AFTER DEATH If the Participant dies before
distribution of his or her interest begins, distribution of the Participant's
entire interest shall be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death, except to the
extent that an election is made to receive distributions in accordance with (a)
or (b) below:
(a) if any portion of the Participant's interest is payable to a
Designated Beneficiary, distributions may be made over the life or over a
period certain not greater than the life expectancy of the Designated
Beneficiary commencing on or before December 31 of the calendar year
immediately following the calendar year in which the Participant died;
(b) if the Designated Beneficiary is the Participant's Surviving Spouse,
the date distributions are required to begin in accordance with (a) above shall
not be earlier than the later of (1) December 31 of the calendar year
immediately following the calendar year in which the participant died or (2)
December 31 of the calendar year in which the Participant would have attained
age 70-1 / 2.
If the Participant has not made an election pursuant to this paragraph 7.10 by
the time of his or her death, the Participant's Designated Beneficiary must
elect the method of distribution no later than the earlier of (1) December 31
of the calendar year in which distributions would be required to begin under
this section, or (2) December 31 of the calendar year which contains the fifth
anniversary of the date of death of the participant. If the Participant has no
Designated Beneficiary, or if the Designated Beneficiary does not elect a
method of distribution, then distribution of the Participant's entire interest
must be completed by December 31 of the calendar year containing the fifth
anniversary of the Participant's death.
For purposes of this paragraph, if the Surviving Spouse dies after the
Participant but before payments to such Spouse begin, the provisions of this
paragraph with the exception of subparagraph (b) therein, shaft be applied as
if the Surviving Spouse were the Participant. For the purposes of this
paragraph and paragraph 7.9, distribution of a Participant's interest is
considered to begin on the Participant's Required Beginning Date (or, if the
preceding sentence is applicable, the date distribution is required to begin to
the Surviving Spouse). If distribution in the form of an annuity described in
paragraph 7.4(e) irrevocably commences to the Participant before the Required
Beginning Date, the date distribution is considered to begin is the date
distribution actually commences.
For purposes of paragraph 7.9 and this paragraph, if an amount is payable to
either a minor or an individual who has been declared incompetent, the benefits
shall be paid to the legally appointed guardian for the benefit of said minor
or incompetent individual, unless the court which appointed the guardian has
ordered otherwise.
7.11 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS
(a) Notwithstanding any other provision of the Plan, Excess Elective
Deferrals plus any income and minus any loss allocable thereto, shall be
distributed no later than April 15, 1988, and each April 15 thereafter, to
Participants to whose accounts Excess Elective Deferrals were allocated for the
preceding taxable year, and who claim Excess Elective Deferrals for such
taxable year. Excess Elective Deferrals shall be treated as Annual Additions
under the Plan unless such amounts are distributed no later than the first
April 15th following the close of the Participant's taxable year. A Participant
is deemed to notify the Plan Administrator of any Excess Elective
Deferrals that arise by taking into account only those Elective Deferrals made
to this Plan and any other plans of this Employer.
(b) Furthermore, a Participant who participates in another plan allowing
Elective Deferrals may assign to this Plan any Excess Elective Deferrals made
during a taxable year of the Participant, by notifying the Plan Administrator
of the amount of the Excess Elective Deferrals to be assigned. The
Participant's claim shall be in writing, shall be submitted to the Plan
Administrator not later than March 1 of each year, shall specify the amount of
the Participant's Excess Elective Deferrals for the preceding taxable year, and
shall be accompanied by the Participant's written statement that if such
amounts are not distributed, such Excess Elective Deferrals, when added to
amounts deferred under other plans or arrangements described in Code Sections
401(k), 408(k) [Simplified Employee Pensions], or 40~{b) [annuity programs
for public schools and charitable organizations] will exceed the $7,000 limit
as adjusted under Code Section 415(d) imposed on the Participant by Code
Section 402(g) for the year in which the deferral occurred.
(c) Excess Elective Deferrals shall be adjusted for any income or loss up
to the end of the taxable year during which such excess was deferred. Income or
loss will be calculated under the method used to calculate investment earnings
and losses elsewhere in the Plan.
(d) If the Participant receives a return of his or her Elective Deferrals,
the amount of such contributions which are returned must be brought into the
Participant's taxable income.
7.12 DISTRIBUTIONS OF EXCESS CONTRIBUTIONS
(a) Notwithstanding any other provision of this Plan, Excess Contributions
plus any income and minus any loss allocable thereto, shall be distributed no
later than the last day of each Plan Year to Participants to whose accounts
such Excess Contributions were allocated for the preceding Plan Year. If such
excess amounts are distributed more than 2-1/2 months after the last day of
the Plan Year in which such excess amounts arose, a ten (10) percent excise tax
will be imposed on the Employer maintaining the Plan with respect to such
amounts. Such distributions shall be made to Highly Compensated Employees on
the basis of the respective portions of the Excess Contributions attributable
to each of such Employees. Excess Contributions of Participants who are subject
to the Family Member aggregation rules shall be allocated among the Family
Members in proportion to the Elective Deferrals (and amounts treated as
Elective Deferrals) of each Family Member that is combined to determine the
ADP.
(b) Excess Contributions (including the amounts recharacterized) shall be
treated as Annual Additions under the Plan.
(c) Excess Contributions shall be adjusted for any income or loss up to
the end of the Plan Year. Income or loss will be calculated under the method
used to calculate investment earnings and losses elsewhere in the Plan.
(d) Excess Contributions shall be distributed from the Participant's
Elective Deferral account and Qualified Matching Contribution account (if
applicable) in proportion to the Participant's Elective Deferrals and Qualified
Matching Contributions (to the extent used in the ADP test) for the Plan Year.
Excess Contributions shall be distributed from the Participant's Qualified
Non-Elective Contribution account only to the extent that such Excess
Contributions exceed the balance in the Participant's Elective Deferral account
and Qualified Matching Contribution account.
7.13 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS
(a) Notwithstanding any other provision of this Plan, Excess Aggregate
Contributions plus any income and minus any loss allocable thereto, shall be
forfeited, if forfeitable, or if not forfeitable, distributed, no later than
the last day of each Plan Year to Participants to whose accounts such Excess
Aggregate Contributions were allocated for the preceding Plan Year. Excess
Aggregate Contributions of Participants who are subject to the Family Member
aggregation rules of Code Section 414(q)(6) shall be allocated among the Family
Members in proportion to the Employee and Matching Contributions (or amounts
treated as Matching Contributions) of each family member that is combined to
determine the ACP. If such Excess Aggregate Contributions are distributed more
than 2-1/2 months after the last day of the Plan Year in which such excess
amounts arose, a ten (10) percent excise tax will be imposed on the Employer
maintaining the Plan with respect to those amounts. Excess Aggregate
Contributions shall be treated as Annual Additions under the Plan.
(b) Excess Aggregate Contributions shall be adjusted for any income or
loss up to the end of the Plan Year. The income or loss allocable to Excess
Aggregate Contributions is the sum of income or loss for the Plan Year
allocable to the Participant's Voluntary Contribution account, Matching
Contribution account (ff any, and if all amounts therein are not used in the
ADP test) and, if applicable, Qualified Non-Elective Contribution account and
Elective Deferral account. Income or loss will be calculated under the method
used to calculate investment earnings and losses elsewhere in the Plan.
(c) Forfeitures of Excess Aggregate Contributions shall be applied to
reduce Employer contributions at the end of the Plan Year in which they occur.
(d) Excess Aggregate Contributions shall be forfeited if such amount is
not vested. If vested, such excess shall be distributed on a pro-rata basis
from the Participant's Voluntary Contribution account (and, if applicable, the
Participant's Qualified Non-Elective Contribution account, Matching
Contribution account, Qualified Matching Contribution account, and/or Elective
Deferral account).
ARTICLE VIII
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1 APPLICABILITY OF PROVISIONS The provisions of this Article shall apply to
any Participant who is credited with at least one Hour of Service with the
Employer on or after August 23,1984 and such other Participants as provided in
paragraph 8.8.
8.2 PAYMENT OF QUALIFIED JOINT AND SURVIVOR ANNUITY Unless an optional form of
benefit is selected pursuant to a Qualified Election within the 90-day period
ending on the Annuity Starting Date, a married Participant's Vested Account
Balance will be paid in the form of a Qualified Joint and Survivor Annuity and
an unmarried Participant's Vested Account Balance will be paid in the form of a
life annuity. The Participant may elect to have such annuity distributed upon
attainment of the Early Retirement Age under the Plan.
8.3 PAYMENT OF QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY Unless an optional
form of benefit has been selected within the Election Period pursuant to a
Qualified Election, if a Participant dies before benefits have commenced then
the Participant's Vested Account Balance shall be paid in the form of an
annuity for the life of the Surviving Spouse, such an annuity is a Qualified
Pre-Retirement Survivor Annuity. The Surviving Spouse may elect to have such
annuity distributed within a reasonable period after the Participant's death.
A Participant who does not meet the age 35 requirement set forth in the
Election Period as of the end of any current Plan Yea. may make a special
qualified election to waive the Qualified Pre-Retirement Survivor Annuity for
the period beginning on the date of such election and ending on the first day
of the Plan Year in which the Participant will attain age 35. Such election
shall not be valid unless the Participant receives a written explanation of the
Qualified Pre-Retirement Survivor Annuity in such terms as are comparable to
the explanation required under paragraph 8.5. Qualified Pre-Retirement Survivor
Annuity coverage will be automatically reinstated as of the first day of the
Plan Year in which the Participant attains age 35. Any new waiver on or after
such date shall be subject to the full requirements of this Article.
8.4 QUALIFIED ELECTION A Qualified Election is an election to either waive a
Qualified Joint and Survivor Annuity or a Qualified Pre-Retirement Survivor
Annuity. Any such election shall not be effective unless:
(a) the Participant's Spouse consents in writing to the election,
(b) the election designates a specific beneficiary, including any class of
beneficiaries or any contingent beneficiaries, which may not be changed without
spousal consent (or the Spouse expressly permits designations by the
Participant without any further spousal consent),
(c) the Spouse's consent acknowledges the effect of the election, and
(d) the Spouse's consent is witnessed by a Plan representative or notary
public.
Additionally, a Participant's waiver of the Qualified Joint and Survivor
Annuity shall not be effective unless the election designates a form of benefit
payment which may not be changed without Spousal consent (or the Spouse
expressly permits designations by the Participant without any further Spousal
consent). If it is established to the satisfaction of the Plan Administrator
that there is no Spouse or that the Spouse cannot be located, a waiver will be
deemed a Qualified Election. Any consent by a Spouse obtained under this
provision (or establishment that the consent of a Spouse may not be obtained)
shall be effective only with respect to such Spouse. A consent that permits
designations by the Participant without any requirement of further consent by
such Spouse must acknowledge that the Spouse has the right to limit consent to
a specific beneficiary, and a specific form of benefit where applicable, and
that the Spouse voluntarily elects to relinquish either or both of such rights.
A revocation of a prior waiver may be made by a Participant without the consent
of the Spouse at any time before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under this provision
shall be valid unless the Participant has received notice as provided in
paragraphs 8.5 and 8.6 below.
8.5 NOTICE REQUIREMENTS FOR QUALIFIED JOINT AND SURVIVOR ANNUITY In the case
of a Qualified Joint and Survivor Annuity, the Plan Administrator shall, no
less than 30 days and no more than 90 days prior to the Annuity Starting date,
provide each Participant a written explanation of:
(a) the terms and conditions of a Qualified Joint and Survivor
(b) the Participant's right to make and the effect of an election to waive
the Qualified Joint and Survivor Annuity form of benefit,
(c) the rights of a Participant's Spouse, and
(d) the right to make, and the effect of, a revocation of a previous
election to waive the Qualified Joint and Survivor Annuity.
8.6 NOTICE REQUIREMENTS FOR QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY In the
case of a Qualified Pre-Retirement Survivor Annuity as described in paragraph
8.3, the Plan Administrator shall provide each Participant within the
applicable period for such Participant a written explanation of the Qualified
Pre-Retirement Survivor Annuity in such terms and in such manner as would be
comparable to the explanation provided for meeting the requirements of
paragraph 8.5 applicable to a Qualified Joint and Survivor Annuity. The
applicable period for a Participant is whichever of the following periods ends
last:
(a) the period beginning with the first day of the Plan Year in which the
Participant attains age 32 and ending with the close of the Plan Year preceding
the Plan Year in which the Participant attains age 35,
(b) a reasonable period ending after the individual becomes a Participant,
(c) a reasonable period ending after this Article first applies to the
Participant. Notwithstanding the foregoing, notice must be provided within a
reasonable period ending after separation from Service in the case of a
Participant who separates from Service before attaining age 35.
For purposes of applying the preceding paragraph, a reasonable period ending
after the events described in (b) and (c) is the end of the two-year period
beginning one year prior to the date the applicable event occurs, and ending
one year after that date. In the case of a Participant who separates from
Service before the Plan Year in which age 35 is attained, notice shall be
provided within the two-year period beginning one year prior to separation and
ending one year after separation. If such a Participant subsequently returns to
employment with the Employer, the applicable period for such Participant shall
be redetermined.
8.7 SPECIAL SAFE-HARBOR EXCEPTION FOR CERTAIN PROFIT-SHARING PLAN
(a) This paragraph shall apply to a Participant in a profit-sharing plan,
and to any distribution, made on or after the first day of the first plan year
beginning after 1988, from or trader a separate account attributable solely to
Qualified Voluntary Contributions, as maintained on behalf of a
Participant in a money purchase pension plan (including a target benefit plan),
if the following conditions are satisfied:
(1) the Participant does not or cannot elect payments in the form of a
life annuity, and
(2) on the death of a Participant, the Participant's Vested Account
Balance will be paid to the Participant's Surviving Spouse, but if there is no
Surviving Spouse, or if the Surviving Spouse has consented in a manner
conforming to a Qualified Election, then to the Participant's Designated
Beneficiary.
The Surviving Spouse may elect to have distribution of the Vested Account
Balance commence within the 90-day period following the date of the
Participant's death. The account balance shall be adjusted for gains or losses
occurring after the Participant's death in accordance with the provisions of
the Plan governing the adjustment of account balances for other types of
distributions. These safe-harbor rules shall not be operative with
respect to a Participant in a profit-sharing plan if that plan is a direct or
indirect transferee of a Defined Benefit Plan, money purchase plan, a target
benefit plan, stock bonus plan, or profit-sharing plan which is subject to the
survivor annuity requirements of Code Section 401(a)(11) and Code Section 417,
and would therefore have a Qualified Joint and Survivor Annuity as its normal
form of benefit.
(b) The Participant may waive the spousal death benefit described in this
paragraph at any time provided that no such waiver shall be effective unless it
satisfies the conditions (described in paragraph 8.4) that would apply to the
Participant's waiver of the Qualified Pre-Retirement Survivor Annuity.
(c) If this paragraph 8.7 is operative, then all other provisions of this
Article other than paragraph 8.8 are inoperative.
8.8 TRANSITIONAL JOINT AND SURVIVOR ANNUITY RATES Special transition rules
apply to Participants who were not receiving benefits on August 23, 1984.
(a) Any living Participant not receiving benefits on August 23, 1984, who
would otherwise not receive the benefits prescribed by the previous paragraphs
of this Article, must be given the opportunity to elect to have the prior
paragraphs of this Article apply if such Participant is credited with at least
one Hour of Service under this Plan or a predecessor Plan in a Plan Year
beginning on or after January 1, 1976 and such Participant had at least 10
Years of Service for vesting purposes when he or she separated from Service.
(b) Any living Participant not receiving benefits on August 23,1984, who
was credited with at least one Hour of Service under this Plan or a predecessor
Plan on or after September 2,1974, and who is not otherwise credited with any
Service in a Plan Year beginning on or after January 1, 1976, must be given the
opportunity to have his or her benefits paid in accordance with paragraph
8.9.
(c) The respective opportunities to elect [as described in (a) and (b)
above] must be afforded to the appropriate Participants during the period
commencing on August 23, 1984 and ending on the date benefits would otherwise
commence to said Participants.
8.9 AUTOMATIC JOINT AND SURVIVOR ANNUITY AND EARLY SURVIVOR ANNUITY any
Participant who has elected pursuant to paragraph 8.8(b) and any Participant
who does not elect under paragraph 8.8(a) or who meets the requirements of
paragraph 8.8(a), except that such Participant does not have at least 10 years
of vesting Service when he or she separates from Service, shall have his or her
benefits distributed in accordance with all of the following requirements if
benefits would have been payable in the form of a life annuity.
(a) Automatic Joint and Survivor Annuity. If benefits in the form of a life
annuity become payable to a married Participant who:
(1) begins to receive payments under the Plan on or after Normal
Retirement Age, or
(2) dies on or after Normal Retirement Age while still working for the
Employer, or
(3) begins to receive payments on or after the Qualified Early Retirement
Age, or
(4) separates from Service on or after attaining Normal Retirement (or the
Qualified Early Retirement Age) and after satisfying the eligibility
requirements for the payment of benefits under the Plan and thereafter dies
before beginning to receive such benefits, then such benefits will be received
under this Plan in the form of a Qualified Joint and Survivor Annuity, unless
the Participant has elected otherwise during the Election Period. The Election
Period must begin at least 6 months before the Participant attains Qualified
Early Retirement Age and end not more than 90 days before the commencement
of benefits. Any election will be in writing and may be changed by the
Participant at any time.
(b) Election of Early Survivor Annuity. A Participant who is employed after
attaining the Qualified Early Retirement Age will be given the opportunity to
elect, during the Election Period, to have a survivor annuity payable on death.
If the Participant elects the survivor annuity, payments under such annuity
must not be less than the payments which would have been made to the Spouse
under the Qualified Joint and Survivor Annuity if the Participant had
retired on the day before his or her death. Any election under this provision
will be in writing and may be changed by the Participant at any time. The
Election Period begins on the later of:
(1) the 90th day before the Participant attains the Qualified Early
Retirement Age, or
(2) the date on which participation begins, and ends on the date the
Participant terminates employment.
8.10 annuity contracts Any annuity contract distributed under this Plan must be
nontransferable. The terms of any annuity contract purchased and distributed by
the Plan to a Participant or Spouse shall comply with the requirements of this
Plan.
ARTICLE IX
VESTING
9.1 EMPLOYEE CONTRIBUTIONS A Participant shall always have a 100% vested and
nonforfeitable interest in his or her Elective Deferrals, Voluntary
Contributions, Qualified Voluntary Contributions, Rollover Contributions, and
Transfer Contributions plus the earnings thereon. No forfeiture of Employer
related contributions (including any minimum contributions made under paragraph
14.2) will occur solely as a reset of an Employee's withdrawal of any Employee
contribution.
9.2 EMPLOYER CONTRIBUTIONS A Participant shall acquire a vested and
nonforfeitable interest in his or her account attributable to Employer
contributions in accordance with the table selected in the Adoption Agreement,
provided that if a Participant is not already fully vested, he or she shall
become so upon attaining Normal Retirement Age, Early Retirement Age, on death
prior to normal retirement, on retirement due to Disability, or on termination
of the Plan.
9.3 COMPUTATION PERIOD The computation period for purposes of determining
Years of Service and Breaks In Service for purposes of computing a
Participant's nonforfeitable right to his or her account balance derived from
Employer contributions shall be determined by the Employer in the Adoption
Agreement. In the event a former Participant with no vested interest in his or
her Employer contribution account requalifies for participation in the Plan
after incurring a Break in Service, such Participant shall be credited for
vesting with all pre-break and post-break Service.
9.4 REQUALIFICATION PRIOR TO FIVE CONSECUTIVE ONE-YEAR BREAKS IN SERVICE The
account balance of such Participant shall consist of any undistributed amount
in his or her account as of the day of re-employment plus any future
contributions added to such account plus the investment earnings on the
account. The vested account balance of such Participant shall be determined by
multiplying the Participant's account balance (adjusted to include any
distribution or redeposit made under paragraph 6.3) by such Participant's
vested percentage. All Service of the Participant, both prior to and following
the break, shall be counted when computing the Participant's vested percentage.
9.5 REQUALIFICATION AFTER FIVE CONSECUTIVE ONE-YEAR BREAKS IN SERVICE If such
Participant is not fully vested upon re-employment, a new account shall be
established for such Participant to separate his or her deferred vested and
nonforfeitable account, if any, from the account to which new allocations will
be made. The Participant's deferred account to the extent remaining shall be
fully vested and shall continue to share in earnings and losses of the Fund.
When computing the Participant's vested portion of the new account, all
pre-break and post-break Service shall be counted. However, notwithstanding
this provision, no such former Participant who has had five consecutive
one-year Breaks in Service shall acquire a larger vested and nonforfeitable
interest in his or her prior account balance as a result of requalification
hereunder.
9.6 CALCULATING VESTED INTEREST A Participant's vested and nonforfeitable
interest shall be calculated by multiplying the fair market value of his or her
account attributable to Employer contributions on the Valuation Date concurrent
with or preceding distribution by the decimal equivalent of the vested
percentage as of his or her termination date. The amount attributable to
Employer contributions for purposes of the calculation includes amounts
previously paid out pursuant to paragraph 6.3 and not repaid. The Participant's
vested and nonforfeitable interest, once calculated above, shall be reduced to
reflect those amounts previously paid out to the Participant and not repaid by
the Participant. The Participant's vested and nonforfeitable interest so
determined shall continue to share in the investment earnings and any increase
or decrease in the fair market value of the Fund up to the Valuation Date
preceding or coinciding with payment.
9.7 FORFEITURES Any balance in the account of a Participant who has separated
from Service to which he or she is not entitled under the foregoing provisions,
shall be forfeited and applied as provided in the Adoption Agreement. A
forfeiture may only occur if the Participant has received a distribution from
the Plan or if the Participant has incurred five consecutive one-year Breaks in
Service. For purposes of this paragraph, if the value of a Participant's vested
account balance is zero, the Participant shall be deemed to have received a
distribution of such Vested Account Balance. Furthermore, a Highly Compensated
Employee's Matching Contributions may be forfeited, even if vested, if the
contributions to which they relate are Excess Deferrals, Excess Contributions
or Excess Aggregate Contributions.
9.8 AMENDMENT OF VESTING SCHEDULE No amendment to the Plan shall have the
effect of decreasing a Participant's vested interest determined without regard
to such amendment as of the later of the date such amendment is adopted or the
date it becomes effective. Further, if the vesting schedule of the Plan is
amended, or the Plan is amended in any way that directly or indirectly affects
the computation of any Participant's nonforfeitable percentage or if the Plan
is deemed amended by an automatic change to or from a Top-Heavy vesting
schedule, each Participant with at least three Years of Service with the
Employer may elect, within a reasonable period after the adoption of the
amendment, to have his or her nonforfeitable percentage computed under the Plan
without regard to such amendment. For Participants who do not have at least one
Hour of Service in any Plan Year beginning after 1988, the preceding sentence
shall be applied by substituting "Five Years of Service" for "Three Years of
Service" where such language appears. The period during which the election may
be made shall commence with the date the amendment is adopted and shall end on
the later of:
(a) 60 days after the amendment is adopted,
(b) 60 days after the amendment becomes effective, or
(c) 60 days after the Participant is issued written notice of the
amendment by the Employer or the Trustee. If the Trustee is asked to so notify,
the Fund will be charged for the costs thereof.
No amendment to the Plan shall be effective to the extent that it has the
effect of decreasing a Participant's accrued benefit. Notwithstanding the
preceding sentence, a Participant's account balance may be reduced to the
extent permitted under section 412(c)(8) of the Code (relating to financial
hardships). For purposes of this paragraph, a Plan amendment which has the
effect of decreasing a Participant's account balance or eliminating an optional
form of benefit, with respect to benefits attributable to service before the
amendment, shall be treated as reducing an accrued benefit.
9.9 SERVICE WITH CONTROLLED GROUPS All Years of Service with other members of
a controlled group of corporations [as defined in Code Section 414(b)1, trades
or businesses under common control [as defined in Code Section 414(c)], or
members of an affiliated service group [as defined in Code Section 414(m)]
shall be considered for purposes of determining a Participant's nonforfeitable
percentage.
ARTICLE X
LIMITATIONS ON ALLOCATIONS AND ANTIDISCRIMINATION TESTING
10.1 PARTICIPATION IN THIS PLAN ONLY If the Participant does not participate in
and has never participated in another qualified plan, a Welfare Benefit Fund as
defined in paragraph 1.91, individual medical account as defined in Code
Section 415(l)(2), or a Simplified Employee Pension Plan (as defined in
paragraph 1.77) maintained by the adopting Employer, which provides an Annual
Addition as defined in paragraph 1.5, the amount of Annual Additions which may
be credited to the Participant's account for any Limitation Year will not
exceed the lesser of the Maximum Permissible Amount or any other limitation
contained in this Plan. If the Employer contribution that would otherwise be
contributed or allocated to the Participant's account would cause the Annual
Additions for the Limitation Year to exceed the Maximum Permissible Amount, the
amount contributed or allocated will be reduced so that the Annual Additions
for the Limitation Year will equal the Maximum Permissible Amount. Prior to
determining the Participant's actual Compensation for the Limitation Year, the
Employer may determine the Maximum Permissible Amount for a Participant on the
basis of a reasonable estimate of the Participant's Compensation for the
Limitation Year, uniformly determined for all Participants similarly situated.
As soon as is administratively feasible after the end of the Limitation Year,
the Maximum Permissible Amount for the Limitation Year will be determined on
the basis of the Participant's actual Compensation for the Limitation Year.
10.2 DISPOSITION OF EXCESS ANNUAL ADDITIONS If pursuant to paragraph 10.1 or as
a result of the allocation of forfeitures, there is an Excess Amount, the
excess will be disposed of under one of the following methods as determined in
the Adoption Agreement. If no election is made in the Adoption Agreement then
method "(a)" below shall apply.
(a) Suspense Account Method
(1) Any nondeductible Employee Voluntary, Required Voluntary Contributions
and unmatched Elective Deferrals to the extent they would reduce the Excess
Amount will be returned to the Participant. To the extent necessary to reduce
the Excess Amount, non-Highly Compensated Employees will have all Elective
Deferrals returned whether or not there was a corresponding match.
(2) If after the application of paragraph (1) an Excess Amount still
exists, and the Participant is covered by the Plan at the end of the Limitation
Year, the Excess Amount in the Participant's account will be used to reduce
Employer contributions (including any allocation of forfeitures) for
such Participant in the next Limitation Year, and each succeeding Limitation
Year if necessary.
(3) If after the application of paragraph (1) an Excess Amount still
exists, and the Participant is not covered by the Plan at the end of the
Limitation Year, the Excess Amount will be held unallocated in a suspense
account. The suspense account will be applied to reduce future Employer
contributions (including allocation of any forfeitures) for all remaining
Participants in the next Limitation Year, and each succeeding Limitation Year
if necessary.
(4) If a suspense account is in existence at any time during the
Limitation Year pursuant to this paragraph, it will not participate in the
allocation of investment gains and losses. If a suspense account is in
existence at any time during a particular Limitation Year, all amounts in the
suspense account must be allocated and reallocated to Participants' accounts
before any Employer Contributions or any Employee contributions may be
made to the Plan for that Limitation Year. Excess amounts may not be
distributed to Participants or former Participants.
(b) Spillover Method
(1) Any nondeductible Employee Voluntary, Required Voluntary Contributions
and unmatched Elective Deferrals to the extent they would reduce the Excess
Amount will be returned to the Participant. To the extent necessary to reduce
the Excess Amount, non-Highly Compensated Employees will have all Elective
Deferrals returned whether or not there was a corresponding match.
(2) Any Excess Amount which would be allocated to the account of an
individual Participant under the Plan's allocation formula will be reallocated
to other Participants in the same manner as other Employer contributions. No
such reallocation shall be made to the extent that it will result in an Excess
Amount being created in such Participant's own account.
(3) To the extent that amounts cannot be reallocated under (1) above, the
suspense account provisions of (a) above will apply.
10.3 PARTICIPATION IN THIS PLAN AND ANOTHER QUALIFIED MASTER AND PROTOTYPE
DEFINED CONTRIBUTION PLAN, WELFARE BENEFIT FUND, INDIVIDUAL MEDICAL ACCOUNT OR
SIMPLIFIED EMPLOYEE PENSION PLAN MAINTAINED BY THE EMPLOYER The Annual
Additions which may be credited to a Participant's account under this Plan for
any Limitation Year will not exceed the Maximum Permissible Amount reduced by
the Annual Additions credited to a Participant's account under the other
qualified Master or Prototype Defined Contribution Plans, Welfare Benefit
Funds, individual medical accounts as defined in Code Section 415(l)(2), and
Simplified Employee Pension Plans maintained by the Employer, which provide an
Annual Addition as defined in paragraph 1.5 for the same Limitation Year. If
the Annual Additions with respect to the Participant under other Defined
Contribution Plans, Welfare Benefit Funds, individual medical accounts and
Simplified Employee Pension Plans maintained by the Employer are less than the
Maximum Permissible Amount and the Employer contribution that would otherwise
be contributed or allocated to the Participant's account under this Plan would
cause the Annual Additions for the Limitation Year to exceed this limitation,
the amount contributed or allocated will be reduced so that the Annual
Additions under all such plans and funds for the Limitation Year will equal the
Maximum Permissible Amount. If the Annual Additions with respect to the
Participant under such other Defined Contribution Plans and Welfare Benefit
Funds in the aggregate are equal to or greater than the Maximum Permissible
Amount, no amount will be contributed or allocated to the Participant's account
under this Plan for the Limitation Year. Prior to determining the Participant's
actual Compensation for the Limitation Year, the Employer may determine the
Maximum Permissible Amount for a Participant in the manner described in
paragraph 10.1. As soon as administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the Limitation Year will be
determined on the basis of the Participant's actual Compensation for the
Limitation Year.
10.4 DISPOSITION OF EXCESS ANNUAL ADDITIONS UNDER TWO PLANS If, pursuant to
paragraph 10.3 or as a result of forfeitures, a Participant's Annual Additions
under this Plan and such other plans would result in an Excess Amount for a
Limitation Year, the Excess Amount will be deemed to consist of the Annual
Additions last allocated except that Annual Additions attributable to a
Simplified Employee Pension Plan will be deemed to have been allocated first
followed by Annual Additions to a Welfare Benefit Fund or individual medical
account as defined in Code Section 415(l)(2) will be deemed to have been
allocated next regardless of the actual allocation date. If an Excess Amount
was allocated to a Participant on an allocation date of this plan which
coincides with an allocation date of another plan, the Excess Amount attributed
to this Plan will be the product of:
(a) the total Excess Amount allocated as of such date, times
(b) the ratio of:
(1) the Annual Additions allocated to the Participant for the Limitation
Year as of such date under the Plan, to
(2) the total Annual Additions allocated to the Participant for the
Limitation Year as of such date under this and all the other qualified Master
or Prototype Defined Contribution Plans.
Any Excess Amount attributed to this Plan will be disposed of in the manner
described in paragraph 10.2.
10.5 PARTICIPATION IN THIS PLAN AND ANOTHER DEFINED CONTRIBUTION PLAN WHICH IS
NOT A MASTER OR PROTOTYPE PLAN If the Participant is covered under another
qualified Defined Contribution Plan maintained by the Employer which is not a
Master or Prototype Plan, Annual Additions which may be credited to the
Participant's account under this Plan for any Limitation Year will be limited
in accordance with paragraphs 10.3 and 10.4 as though the other plan were a
Master or Prototype Plan.
10.6 PARTICIPATION IN THIS PLAN AND A DEFINED BENEFIT PLAN If the Employer
maintains, or at any time maintained, a qualified Defined Benefit Plan covering
any Participant in this Plan, the sum of the Participant's Defined Benefit Plan
Fraction and Defined Contribution Plan Fraction will not exceed 1.0 in any
Limitation Year. For any Plan Year during which the Plan is Top-Heavy, the
Defined Benefit and Defined Contribution Plan Fractions shall be calculated in
accordance with Code Section 416(h). The Annual Additions which may be credited
to the Participant's account under this Plan for any Limitation Year will be
limited in accordance with the provisions set forth in the Adoption Agreement.
10.7 AVERAGE DEFERRAL PERCENTAGE (ADP) TEST With respect to any Plan Year, the
Average Deferral Percentage for Participants who are Highly Compensated
Employees and the Average Deferral Percentage for Participants who are non-
Highly Compensated Employees must satisfy one of the following tests:
(a) BASIC TEST - The Average Deferral Percentage for Participants who are
Highly Compensated Employees for the Plan Year is not more than 1.25 times the
Average Deferral Percentage for Participants who are non-Highly Compensated
Employees for the same Plan Year, or
(b) ALTERNATIVE TEST - The Average Deferral Percentage for Participants
who are Highly Compensated Employees for the Plan Year does not exceed the
Average Deferral Percentage for Participants who are non-Highly Compensated
Employees for the same Plan Year by more than two percentage points provided
that the Average Deferral Percentage for Participants who are Highly
Compensated Employees is not more than 2.0 times the Average Deferral
Percentage for Participants who are non- Highly Compensated Employees.
10.10 SPECIAL RULES RELATING TO APPLICATION OF ACP TEST
(a) The Actual Deferral Percentage for any Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to have Elective
Deferrals (and Qualified Non-Elective Contributions or Qualified Matching
Contributions, or both, if treated as Elective Deferrals for purposes of the
ADP test) allocated to his or her accounts under two or more arrangements
described in Code Section 401(k), that are maintained by the Employer, shall be
determined as ff such Elective Deferrals (and, ff applicable, such Qualified
Non-Elective Contributions or Qualified Matching Contributions, or both) were
made under a single arrangement. If a Highly Compensated Employee participates
in two or more cash or deferred arrangements that have different Plan Years,
all cash or deferred arrangements ending with or within the same calendar year
shall be
treated as a single arrangement. Notwithstanding the foregoing, certain plans
shall be treated as separate if mandatorily disaggregated under regulations
under Code Section 401(k).
(b) In the event that this Plan satisfies the requirements of Code
Sections 401(k), 401(a)(4), or 410(b) only if aggregated with one or more other
plans, or if one or more other plans satisfy the requirements of such Code
Sections only if aggregated with this Plan, then this Section shall be applied
by determining the Actual Deferral Percentage of Employees as if all such plans
were a single plan. For Plan Years beginning after 1989, plans may be
aggregated in order to satisfy Code Section 401(k) only if they have the same
Plan Year.
(c) For purposes of determining the Actual Deferral Percentage of a
Participant who is a Eve-percent owner or one of the ten most highly-paid
Highly Compensated Employees, the Elective Deferrals (and Qualified
Non-Elective Contributions or Qualified Matching Contributions, or both, if
treated as Elective Deferrals for purposes of the ADP test) and Compensation of
such Participant shall include the Elective Deferrals (and, if applicable,
Qualified Non-Elective Contributions and Qualified Matching Contributions,
or both) and Compensation for the Plan Year of Family Members as defined in
paragraph 1.37 of this Plan. Family Members, with respect to such Highly
Compensated Employees, shall be disregarded as separate Employees in
determining the ADP both for Participants who are non-Highly Compensated
Employees and for Participants who are Highly Compensated Employees. In the
event of repeal of the family aggregation rules under Code Section 414(q)(6),
all applications of such rules under this Plan will cease as of the
effective date of such repeal.
(d) For purposes of determining the ADP test, Elective Deferrals, Qualified
Non-Elective Contributions and Qualified Matching Contributions must be made
before the last day of the twelve-month period immediately following the Plan
Year to which contributions relate.
(e) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ADP test and the amount of Qualified Non-Elective
Contributions or Qualified Matching Contributions, or both, used in such test.
(f) The determination and treatment of the Actual Deferral Percentage
amounts of any Participant shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
10.9 AVERAGE CONTRIBUTION PERCENTAGE (ACP) TEST If the Employer makes Matching
Contributions or if the Plan allows Employees to make Voluntary Contributions
the Plan must meet additional nondiscrimination requirements provided under
Code Section 401(m). If Employee contributions (including any Elective
Deferrals recharacterized as Voluntary Contributions) are made pursuant to this
Plan, then in addition to the ADP test referenced in paragraph 10.7, the
Average Contribution Percentage test is also applicable. The Average
Contribution Percentage for Participants who are Highly Compensated Employees
for each Plan Year and the Average Contribution Percentage for Participants who
are non-Highly Compensated Employees for the same Plan Year must satisfy one of
the following tests:
(a) BASIC TEST - The Average Contribution Percentage for Participants who
are Highly Compensated Employees for the Plan Year shall not exceed the Average
Contribution Percentage for Participants who are non-Highly Compensated
Employees for the same Plan Year multiplied by 1.25; or
(b) ALTERNATIVE TEST - The Average Contribution Percentage for
Participants who are Highly Compensated Employees for the Plan Year shall not
exceed the Average Contribution Percentage for Participants who are non- Highly
Compensated Employees for the same Plan Year multiplied by two (2), provided
that the Average Contribution Percentage for Participants who are Highly
Compensated Employees does not exceed the Average Contribution Percentage for
Participants who are non-Highly Compensated Employees by more than two (2)
percentage points.
10.10 SPECIAL RULES RELATING TO APPLICATION OF ACP TEST
(a) If one or more Highly Compensated Employees participate in both a cash
or deferred arrangement and a plan subject to the ACP test maintained by the
Employer and the sum of the ADP and ACP of those Highly Compensated Employees
subject to either or both tests exceeds the Aggregate Limit, then the ADP or
ACP of those Highly Compensated Employees who also participate in a cash or
deferred arrangement will be reduced (beginning with such Highly Compensated
Employee whose ADP or ACP is the highest) as set forth in the Adoption
Agreement so that the limit is not exceeded. The amount by which each Highly
Compensated Employee's Contribution Percentage Amount is reduced shall
be treated as an Excess Aggregate Contribution. The ADP and ACP of the Highly
Compensated Employees are determined after any corrections required to meet the
ADP and ACP tests. Multiple use does not occur if both the ADP and ACP of the
Highly Compensated Employees does not exceed 1.25 multiplied by the ADP and ACP
of the non-Highly Compensated Employees.
(b) For purposes of this Article, the Contribution Percentage for any
Participant who is a Highly Compensated Employee and who is eligible to have
Contribution Percentage Amounts allocated to his or her account under two or
more plans described in Code Section 401(a) or arrangements described in Code
Section 4Ol(k) that are maintained by the Employer, shall be determined as if
the total of such Contribution Percentage Amounts was made under each plan.
If a Highly Compensated Employee participates in two or more cash or deferred
arrangements that have different plan years, all cash or deferred arrangements
ending with or within the same calendar year shall be treated as a single
arrangement. Notwithstanding the foregoing, certain plans shall be treated as
separate mandatorily disaggregated [under regulations under Code Section
401(k).
(c) In the event that this Plan satisfies the requirements of Code
Sections 401(a)(4), 401(m), or 410(b) only if aggregated with one or more other
plans, or if one or more other plans satisfy the requirements of such Code
Sections only if aggregated with this Plan, then this Section shall be applied
by determining the Contribution Percentage of Employees as ff all such plans
were a single plan. For plan years beginning after 1989, plans may be
aggregated in order to satisfy Code Section 401(m) only if the aggregated plans
have the same Plan Year.
(d) For purposes of determining the Contribution percentage of a
Participant who is a five-percent owner or one of the ten most highly paid
Highly Compensated Employees, the Contribution Percentage Amounts and
Compensation of such Participant shall include the Contribution Percentage
Amounts and Compensation for the Plan Year of Family Members as defined in
Paragraph 1.37 of this Plan. Family Members, with respect to Highly Compensated
Employees, shall be disregarded as separate Employees in determining the
Contribution Percentage both for Participants who are non-Highly Compensated
Employees and for Participants who are Highly Compensated Employees. In the
event of repeal of the family aggregation rules under Code Section 414(q)(6),
all applications of such rules under this Plan will cease as of the
effective date of such repeal.
(e) For purposes of determining the Contribution Percentage test, Employee
Contributions are considered to have been made in the Plan Year in which
contributed to the trust. Matching Contributions and Qualified Non-Elective
Contributions will be considered made for a Plan Year if made no later than the
end of the twelve month period beginning on the day after the close of the Plan
Year.
(f) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ACP test and the amount of Qualified Non-Elective
Contributions or Qualified Matching Contributions, or both, used in such test.
(g) The determination and treatment of the Contribution Percentage of any
Participant shall satisfy such other requirements as may be prescribed by the
Secretary of the Treasury.
(h) Qualified Matching Contributions and Qualified Non-Elective
Contributions used to satisfy the ADP test may not be used to satisfy the ACP
test.
ARTICLE XI
ADMINISTRATION
11.1 PLAN ADMINISTRATOR The Employer shall be the named fiduciary and Plan
Administrator. The Plan Administrator's duties shall include but are not
limited to:
(a) appointing the Plan's attorney, accountant, actuary, or any other party
needed to administer the Plan,
(b) directing the Trustee or Recordkeeper with respect to payments from the
Fund,
(c) communicating with Employees regarding their participation and benefits
under the Plan, including the administration of all claims procedures,
(d) filing any returns and reports with the Internal Revenue Service,
Department of Labor, or any other government agency,
(e) reviewing and approving any financial reports, investment reviews, or
other reports prepared by any party appointed by the Employer under paragraph
(a),
(f) ensuring that any and all Plan loans are in compliance with all
requirements of law, including but not limited to, the requirements of the
Internal Revenue Code and the regulations thereunder and the regulations of the
Department of Labor,
(g) obtaining a legal determination of the qualified status of all
Qualified Domestic Relations Orders and complying with all requirements of the
law with regard thereto, in accordance with paragraph 12.5,
(h) establishing a funding policy and investment objectives consistent
with the purposes of the Plan and the Employee Retirement Income Security Act
of 1974, and
(i) construing and resolving any question of Plan interpretation. The Plan
Administrator's interpretation of Plan provisions including eligibility and
benefits under the Plan is final, and unless it can be shown to be arbitrary
and capricious will not be subject to "de novo" review.
11.2 TRUSTEE The Trustee shall be responsible for the safekeeping of
investments held in the Fund and shall act solely as a directed Trustee. The
Trustee's duties shall include:
(a) receiving contributions under the terms of the Plan,
(b) making distributions from the Fund in accordance with written
instructions received from an authorized representative of the Employer,
including any Recordkeeper, and
(c) filing with the Employer, within 90 days after each Plan Year, and
within 90 days after its removal or resignation as Trustee, an accounting of
its safekeeping of the Fund during such year or from the end of the preceding
Plan Year to the date of removal or resignation. Such accounting shall include
a statement of cash receipts and disbursements since the date of its last
accounting and shall contain an asset list showing the fair market value of
investments held in the Fund as of the end of the Plan Year. The value of
marketable investments shall be determined using the most recent price quoted
on a national securities exchange or over the counter market. The value of
non-marketable investments shall be determined in the sole judgment of the
Trustee, which determination shall be binding and conclusive. The value of
investments in securities or obligations of the Employer in which there is no
market shall be determined in the sole judgement of the Employer, and the
Trustee shall have no responsibility with respect to the valuation of such
assets. The Employer shall review the Trust accounting and notify the Trustee
in the event of its disapproval of the report within 90 days, providing the
Trustee with a written description of the items in question. Upon expiration of
90 days after furnishing such Trust accounting to the Employer, the Trustee
shall be forever released and discharged from all liability and accountability
to anyone with respect to its acts, actions, duties, obligations or
responsibilities as shown in or reflected by such statement, except with
respect to any such acts or transactions as to which the Employer shall have
filed written objections with the Trustee within such 90-day period. The
Trustee shall have 60 days to provide the Employer with a written explanation
of the items in question. If the Employer again disapproves, the Trustee shall
file its accounting in a court of competent jurisdiction for audit and
adjudication.
(d) employing such agents, attorneys or other professionals as the Trustee
may deem necessary or advisable in the performance of its duties.
The Trustee's duties shall be limited to those described above. The Employer
shall be responsible for any other duties required under the Plan or by
applicable law.
11.3 RECORDKEEPER The Recordkeeper shall be responsible for maintaining Plan
administrative records. The Recordkeeper's duties shall include but are not
limited to:
(a) transmitting Employer directives, as agent of the Employer, to the
Trustee, (b) keeping accurate records reflecting the administration of the
Fund, (c) making such records available to the Employer for review and audit,
(d) accounting of any loans made to Participants, and (e) any and all duties
agreed upon between the Employer and Recordkeeper.
11.4 ADMINISTRATIVE FEES AND EXPENSES All reasonable costs, charges and
expenses incurred by the Trustee in connection with its duties hereunder, and
all reasonable costs, charges and expenses, including any recordkeeping fees
incurred by the Plan Administrator in connection with the administration of the
Plan (including fees for legal services rendered to the Trustee or Plan
Administrator) may be paid by the Employer, but if not paid by the Employer
when due, shall be paid from the Fund. Such reasonable compensation to the
Trustee as may be agreed upon from time to time between the Employer and the
Trustee and such reasonable compensation to the Plan Administrator as may be
agreed upon from time to time between the Employer and Plan Administrator may
be paid by the Employer, but if not paid by the Employer when due shall be paid
by the Fund. The Trustee shall have the right to liquidate trust assets to
cover its fees. Notwithstanding the foregoing, no compensation other than
reimbursement for expenses shall be paid to a Plan Administrator who is the
Employer or a full-time Employee of the Employer. In the event any part of the
Trust becomes subject to tax, all taxes incurred will be paid from the Fund
unless the Plan Administrator advises the Trustee not to pay such tax.
(a) The Trustee shall have no authority except pursuant to the Employer's
direction or that of any authorized agent of the Employer.
(b) The Trustee shall not be liable for the making, retention or sale of
any investment or reinvestment made by it, as herein provided, or for any loss
to, or diminution of the Fund, or for any other loss or damage which may result
from the discharge of its duties hereunder except to the extent it is
judicially determined that the Trustee has failed to exercise the care, skill,
prudence and diligence under the circumstances then prevailing that a prudent
person acting in a like capacity and familiar with such matters would use in
the conduct of an enterprise of a like character with like aims.
(c) The Employer warrants that all directions issued by it to the Trustee
or the Recordkeeper will be in accordance with the terms of the Plan and not
contrary to the provisions of the Employee Retirement Income Security Act of
1974 and regulations issued thereunder.
(d) Neither the Trustee nor the Recordkeeper shall be answerable for any
action taken pursuant to any direction, consent, certificate, or other paper or
document on the belief that the same is genuine and signed by the proper
person. All directions by the Employer, Participant, or the Plan Administrator
shall be in writing. The Employer shall deliver to the Trustee or Recordkeeper,
if any, certificates evidencing the individual or individuals authorized to act
as set forth in the Adoption Agreement or as the Employer may subsequently
inform the Trustee or Recordkeeper, if any, in writing and shall deliver to the
Trustee or Recordkeeper, if any, specimens of their signatures.
(e) The duties and obligations of the Trustee and the Recordkeeper shall
be limited to those expressly imposed upon it by this instrument or otherwise
agreed upon in writing. Responsibility for administrative duties required under
the Plan or applicable law not expressly imposed upon or agreed to by the
Trustee and the Recordkeeper, shall rest solely with the Employer.
(f) The Trustee shall be indemnified and saved harmless by the Employer
from and against any and all liability to which the Trustee may be subjected,
including all expenses reasonably incurred in its defense for any action or
failure to act resulting from compliance with the instructions of the Employer,
the employees or agents of the Employer, the Plan Administrator, the
Recordkeeper, or any other fiduciary to the Plan, and for any liability arising
from the actions or non-actions of any predecessor Trustee or fiduciary or
other fiduciaries of the Plan.
(g) Neither the Trustee nor the Recordkeeper shall be responsible in any
way for the application of any payments it is directed to make or for the
adequacy of the Fund to meet and discharge any and all liabilities under the
Plan.
ARTICLE XII
TRUST FUND
12.1 THE FUND The Fund shall consist of all contributions made under Article
III and Article IV of the Plan and the investment thereof and earnings thereon.
All contributions and the earnings thereon less payments made under the terms
of the Plan, shall constitute the Fund. The Fund shall be administered as
provided in this document.
12.2 CONTROL OF PLAN ASSETS The assets of the Fund or evidence of ownership
shall be held by the Trustee under the terms of the Plan and Trust. If the
assets represent amounts transferred from another trustee under a former plan,
the Trustee named hereunder shall not be responsible for any actions of the
prior fiduciary, including the review of the propriety of any investment under
the former plan. Any such review is to be the responsibility of the Employer.
12.3 EXCLUSIVE BENEFIT RULES No part of the Fund shall be used for, or diverted
to, purposes other than for the exclusive benefit of Participants, former
Participants with a vested interest, and the beneficiary or beneficiaries of
deceased Participants having a vested interest in the Fund at death.
12.4 ASSIGNMENT AND ALIENATION OF BENEFITS No right or claim to, or interest
in, any part of the Fund, or any payment from the Fund, shall be assignable,
transferable, or subject to sale, mortgage, pledge, hypothecation, commutation,
anticipation, garnishment, attachment, execution, or levy of any kind. Any
attempt to assign, transfer, sell, mortgage, pledge, hypothecate, commute, or
anticipate the same, except to the extent required by law, shall not be
recognized. The preceding sentences shall also apply to the creation,
assignment, or recognition of a right to any benefit payable with respect to a
Participant pursuant to a domestic relations order ("Order"), unless such order
is determined to be a qualified domestic relations order, as defined in Code
Section 414(p), or any Order entered before January 1, 1985 determined to be
qualified.
12.5 DETERMINATION OF QUALIFIED DOMESTIC RELATIONS ORDER (QDRO) An Order shall
specifically state all of the following to be deemed a Qualified Domestic
Relations Order ("QDRO"):
(a) the name and last known mailing address (if any) of the Participant
and of each alternate payee covered by the QDRO. However, if the QDRO does not
specify the current mailing address of the alternate payee, but the Plan
Administrator has independent knowledge of that address, the QDRO will still be
valid,
(b) the dollar amount or percentage of the Participant's benefit to be
paid by the Plan to each alternate payee, or the manner in which the amount or
percentage will be determined,
(c) the number of payments or period for which the order applies,
(d) the specific plan (by name) to which the Order applies.
The Order shall not be deemed a QDRO if it requires the Plan to provide:
(e) any type or form of benefit, or any option not already provided for in
the Plan,
(f) increased benefits, or benefits in excess of the Participant's vested
rights,
(g) payment of a benefit earlier than allowed by the Plan's earliest
retirement provisions or in the case of a profit-sharing plan, prior to the
allowability of in-service withdrawals, or
(h) payment of benefits to an alternate payee which are required to be
paid to another alternate payee under another QDRO.
Promptly, upon receipt of an Order which may or may not be qualified, the Plan
Administrator shall notify the Participant and any alternate payee(s) named in
the Order of such receipt, and include a copy of this paragraph 12.5. The Plan
Administrator shall then obtain a legal determination as to whether or not the
Order is in fact qualified as defined in Code Section 414(p). Within a
reasonable time after receipt of the Order, not to exceed 60 days, a legal
determination shall be made as to its qualified status and the Participant and
any alternate payee(s) shall be promptly notified in writing of the
determination.
If the qualified status of the Order is in question, there will be a delay in
any payout to any payee including the Participant, until the status is
resolved. In such event, the Plan Administrator shall segregate the amount that
would have been payable to the alternate payee(s) if the Order had been deemed
a QDRO. If the Order is not qualified, or the status is not resolved (for
example, it has been sent back to the Court for clarification or modification)
within 18 months beginning with the date the first payment would have to be
made under the Order, the Plan Administrator shall pay the segregated amounts
plus interest to the person(s) who would have been entitled to the benefits had
there been no Order. If a determination as to the qualified status of the Order
is made after the 18-month period described above, then the Order shall only be
applied on a prospective basis. If the Order is determined to be a QDRO, the
Participant and alternate payee(s) shall again be notified promptly after such
determination. Once an Order is deemed a QDRO, the Plan Administrator shall pay
to the alternate payee(s) all the amounts due under the QDRO, including
segregated amounts plus interest which may have accrued during a dispute as to
the Order's qualification.
Unless specified otherwise in the Adoption Agreement, the earliest retirement
age with respect to the Participant against whom the Order is entered shall be
the date the Order is determined to be qualified. This will only allow payments
to the alternate payee(s) and not the Participant.
ARTICLE Xiii
INVESTMENTS
13.1 FIDUCIARY STANDARDS The Trustee shall invest and reinvest principal and
income in the same Fund in accordance with the investment objectives
established by the Employer, provided that:
(a) such investments are prudent under the Employee Retirement Income
Security Act of 1974 and the regulations thereunder,
(b) such investments are sufficiently diversified or otherwise insured or
guaranteed to minimize the risk of large losses, and
(c) such investments are similar to those which would be purchased by
another professional money manager for a like plan with similar investment
objectives.
13.2 FUNDING ARRANGEMENT The Employer shall appoint Capital Guardian Trust
Comply to serve as Trustee of the Fund. The Fund shall be invested in any of
the alternatives available to the Trustee under paragraph 13.3 herein.
13.2 INVESTMENT ALTERNATIVES OF THE TRUSTEE The Trustee shall invest assets in
accordance with the Employer's investment instructions and the Employee
Retirement Income Security Act of 1974. In addition to powers given by law, the
Trustee may:
(a) invest the Fund in any form of property, including common and preferred
stocks, exchange traded put and call options, bonds, money market instruments,
mutual funds (including funds for which the Trustee or any of its affiliates
serve as investment advisor), savings accounts, certificates of deposit,
Treasury bills, insurance policies and group annuity or other contracts, or in
any other property, real or personal, having a ready market including
securities issued by the Trustee and/or affiliates of the Trustee; provided,
however, that the Trustee must consent to investments other than mutual funds
or insurance policies and contracts issued by an insurer acceptable to the
Trustee. The Trustee may invest in its own deposits and, if applicable, those
of affiliates, which bear a reasonable interest rate. No portion of any
Qualified Voluntary Contribution, or the earnings thereon, may be invested in
life insurance contracts or, as with any Participant-directed investment, in
tangible personal property characterized by the IRS as a collectible.
(b) invest any assets of the Fund in a group or collective trust
established to permit the pooling of funds of separate pension and
profit-sharing trusts, provided the Internal Revenue Service has ruled such
group or collective trust to be qualified under Code Section 401(a) and exempt
under Code Section 501(a) (or the applicable corresponding provision of any
other Revenue Act) or to any other common, collective, or commingled trust fund
which has been or may hereafter be established and maintained by the Trustee
and/or affiliates of the Trustee. Such commingling of assets of the Fund with
assets of other qualified trusts is specifically authorized, and to the extent
of the investment of the Fund in such a group or collective trust, the terms of
the instrument establishing the group or collective trust shall be a part
hereof as though set forth herein, (c) invest up to 100% of the Fund in the
common stock (Qualifying Employer Securities), debt obligations, or any other
security issued by the Employer or by an affiliate of the Employer within
the limitations provided under Sections 406, 407, and 408 of the Employee
Retirement Income Security Act of 1974 and further provided that such
investment does not constitute a prohibited transaction under Code Section
4975. Any such investment in Employer securities shall only be made upon
written direction of the Employer who shall be solely responsible for
propriety of such investment,
(d) hold cash uninvested and deposit same with any banking or savings
institution, including its own banking department or the banking department of
an affiliate,
(e) join in or oppose the reorganization, recapitalization, consolidation,
sale or merger of corporations or properties, including those in which it is
interested as Trustee, upon such terms as it deems wise,
(f) hold investments in nominee or bearer form,
(g) vote proxies and, if appropriate, pass them On to any investment
manager which may have directed the investment in the equity giving rise to the
proxy; however, with regard to registered investment company shares advised by
an affiliate of the Trustee, deliver to the Employer, and the Employer will in
turn deliver to the Participants, copies of any notices of shareholder
meetings, prospectuses, proxies and proxy information and such shareholder
reports which are received by the Trustee with respect to such investment
company shares. The Trustee shall not vote any of such shares except in
accordance with the written instructions of the Employer.
(h) exercise all ownership rights with respect to assets held in the Fund.
13.4 PARTICIPANT LOANS If agreed upon by the Trustee and permitted by the
Employer in the Adoption Agreement, a Participant may make application to the
Employer requesting a loan from the Fund. The Employer shall have the sole
right and responsibility of approving or disapproving Participant applications.
Loans shall be made available to all Participants on a reasonably equivalent
basis. Loans shall not be made available to Highly Compensated Employees [as
defined in Code Section 414(q)] in an amount greater than the amount made
available to other Employees. Any loan granted under the Plan shall be made
subject to the following rules:
(a) no loan, when aggregated with any outstanding Participant loan(s),
shall exceed the lesser of (i) $50,000 reduced by the excess, if any, of the
highest outstanding balance of loans during the one year period ending on the
day before the loan is made, over the outstanding balance of loans from the
Plan on the date the loan is made or (ii) one-half of the fair market value of
a Participant's Vested Account Balance built up from Employer contributions,
Voluntary Contributions, and Rollover Contributions. For the purpose of the
above limitation, all loans from all plans of the Employer and other members of
a group of employers described in Code Sections 414(b), 414(c), and 414(m) are
aggregated. An assignment or pledge of any portion of the Participant's
interest in the Plan will be treated as a loan under this paragraph.
(b) all applications must be made on forms provided by the Employer and
must be signed by the Participant.
(c) any loan shall bear interest at a rate reasonable at the time of
application, considering the purpose of the loan and the rate being charged by
representative commercial banks in the local area for a similar loan unless the
Employer sets forth a different method for determining loan interest rates in
its loan procedures. The loan agreement shall also provide that the
payment of principal and interest be amortized in level payments not less than
quarterly.
(d) the term of such loan shall not exceed five years except in the case
of a loan for the purpose of acquiring any house, apartment, condominium, or
mobile home (not used on a transient basis) which is used or is to be used
within a reasonable time as the principal residence of the Participant. The
term of such loan shall be determined by the Employer considering the maturity
dates quoted by representative commercial banks in the local area for a
similar loan.
(e) the principal and interest paid by a Participant on his or her loan
shall be credited to the Fund in the same manner as for any other Plan
investment. Loans are treated as segregated investments of the individual
Participants. This provision is not available if its election will result in
discrimination in operation of the Plan.
(f) if a Participant's loan application is approved by the Employer, such
Participant shall be required to sign a note, loan agreement, and assignment of
50% of his or her interest in the Fund as collateral for the loan. The
Participant, except in the case of a profit-sharing plan satisfying the
requirements of paragraph 8.7, must obtain the consent of his or her Spouse, if
any, within the 90-day period before the time his or her account balance is
used as security for the loan. A new consent is required if the account balance
is used for any renegotiation, extension, renewal or other revision of the
loan, including an increase in the amount thereof. The consent must be
written, must acknowledge the effect of the loan, and must be witnessed by a
Plan representative or notary public. Such consent shall subsequently be
binding with respect to the consenting Spouse or any subsequent Spouse.
(g) if a valid Spousal consent has been obtained, then, notwithstanding
any other provision of this Plan, the portion of the Participant's Vested
Account Balance used as a security interest held by the Plan by reason of a
loan outstanding to the Participant shall be taken into account for purposes of
determining the amount of the account balance payable at the time of death
or distribution, but only if the reduction is used as repayment of the loan. If
less than 100% of the Participant's Vested Account Balance (determined without
regard to the preceding sentence) is payable to the Surviving Spouse, then the
account balance shall be adjusted by first reducing the Vested Account Balance
by the amount of the security used as repayment of the loan, and then
determining the benefit payable to the Surviving Spouse.
(h) a Participant's loan shall immediately become due and payable if such
Participant terminates employment for any reason or fails to make a principal
and/or interest payment as provided in the loan agreement. If such Participant
terminates employment, the Employer shall immediately request payment of
principal and interest on the loan. If the Participant refuses payment
following termination, the Employer shall reduce the Participant's Vested
Account Balance by the remaining principal and interest on his or her loan. If
the Participant's Vested Account Balance is less than the amount due, the
Employer shall take whatever steps are necessary to collect the balance due
directly from the Participant. However, no foreclosure on the Participant's
note or attachment of the Participant's account balance will occur until a
distributable event occurs in the Plan.
(i) no loans will be made to Owner-Employees (as defined in paragraph
1.52) or Shareholder-Employees (as defined in paragraph 1.76), unless the
Employer obtains a prohibited transaction exemption from the Department of
Labor.
13.5 EMPLOYER INVESTMENT DIRECTION If elected by the Employer in the Adoption
Agreement, the Employer, or the Recordkeeper shall have the right to direct the
Trustee with respect to investments of the Fund or, the Employer may appoint an
investment manager (registered as an investment advisor under the Investment
Advisors Act of 1940) to direct investments. Such investments shall be
restricted to investments acceptable to the Trustee. The Employer may purchase
and sell interests in a registered investment company (i.e., mutual funds) for
which the Sponsor, its parent, affiliates, or successors, may serve as
investment advisor and for which the Sponsor receives compensation from the
registered investment company for its services as investment advisor. The
Employer shall advise the Trustee in writing regarding the retention of
investment powers or the appointment of an investment manager. Any investment
directly under this Plan shall be made in writing by the Employer or investment
manager, as the case may be. Such instructions regarding the delegation of
investment responsibility shall remain in force until revoked or amended in
writing. The Trustee shall not be responsible for the propriety of any
investment made at the direction of the Employer or Recordkeeper and shall not
be required to consult with or advise the Employer regarding the investment
quality of any investment held hereunder. If the Employer or Recordkeeper does
not issue investment directions, the Trustee shall invest the assets in cash,
cash-equivalents or a money market mutual fund advised by an affiliate of the
Trustee until the Employer designates an investment. While the Employer may
direct the Trustee or Recordkeeper with respect to Plan investments, the
Employer may not:
(a) borrow from the Fund or pledge any of the assets of the Fund as
security for a loan,
(b) buy property or assets from or sell property or assets to the Fund,
(c) charge any fee for services rendered to the Fund, or
(d) receive any services from the Fund on a preferential basis.
13.6 EMPLOYEE INVESTMENT DIRECTION If elected by the Employer in the Adoption
Agreement, Participants shall be given the option to direct the investment of
their personal contributions and their share of the Employer's contribution
among alternative investment funds established as part of the overall Fund.
Such investment funds shall be restricted to funds acceptable to the Trustee.
If investments outside the Trustee's control are allowed, Participants may not
direct that investments be made in collectibles. In this connection, a
Participant's right to direct the investment of any contribution shall apply
only to selection of the desired fund. The following rules shall apply to the
administration of such funds.
(a) At the time an Employee becomes eligible to participate in the Plan,
he or she shall complete an investment designation form stating the percentage
of his or her contributions to be invested in the selected funds.
(b) A Participant may change his or her election with respect to future
contributions by filing a new investment designation form with the Employer in
accordance with the procedures established by the Plan Administrator.
(c) A Participant may elect to transfer all or part of his or her balance
from one investment fund to another by filing an investment designation form
with the Employer in accordance with the procedures established by the Plan
Administrator.
(d) The Employer shall be responsible, when transmitting Employee and
Employer contributions, to show the dollar amount to be credited to each
investment fund for each Employee.
(e) Except as otherwise provided in the Plan, neither the Trustee, the
Employer, the Recordkeeper nor any fiduciary of the Plan shall be liable to the
Participant or any of his or her beneficiaries for any loss resulting from
action taken at the direction of the Participant.
13.7 APPOINTMENT OF ADDITIONAL TRUSTEE AND ALLOCATION OF RESPONSIBILITIES
THERETO If the Employer selects Qualifying Employer Securities or other
specific investments for which the Trustee is not serving as trustee, as an
investment of the Plan, then an additional trustee will be appointed by the
Employer to serve as trustee of the Qualifying Employer Securities or other
specific investments. In the event that an additional trustee is appointed for
the Plan to serve as the trustee of Qualifying Employer Securities or other
specific investments which are permitted by the Plan, but for which this
Trustee is not serving as trustee, this Trustee shall have no responsibilities
to these assets other than as set forth herein. The duties of the Trustee shall
be limited to the assets held in the Fund and the Trustee shall have no duties
with respect to assets held by any other person including, without limitation,
any other trustee for the Plan. Inversely, any other trustee of the Plan shall
have no duties with respect to assets held in the Fund by the Trustee.
ARTICLE XIV
TOP-HEAVY PROVISIONS
14.1 APPLICABILITY OF RULES If the Plan is or becomes Top-Heavy in any Plan
Year beginning after 1983, the provisions of this Article will supersede any
conflicting provisions in the Plan or Adoption Agreement.
14.2 MINIMUM CONTRIBUTION Notwithstanding any other provision in the Employer's
Plan, for any Plan Year in which the Plan is Top-Heavy or Super Top- Heavy, the
aggregate Employer contributions and forfeitures allocated on behalf of any
Participant (without regard to any Social Security contribution) under this
Plan and any other Defined Contribution Plan of the Employer shall be lesser of
three percent of such Participant's Compensation or the largest percentage of
Employer contributions and forfeitures, as a percentage of the Participant's
Compensation as imposed by Code Section 401(a)(17) and, as adjusted under Code
Section 415(d), of the Key Employee's Compensation, allocated on behalf of any
Key Employee for that year.
Each Participant who is employed by the Employer on the last day of the Plan
Year shall be entitled to receive an allocation of the Employer's minimum
contribution for such Plan Year. The minimum allocation applies even though
under other Plan pro- visions the Participant would not otherwise be entitled
to receive an allocation, or would have received a lesser allocation for the
year because the Participant fails to make Mandatory Contributions to the Plan,
the Participant's Compensation is less than a stated amount, or the Participant
fails to complete 1,000 Hours of Service (or such lesser number as may be
required in Section 3(k)(ii) of Adoption Agreement #002) during the Plan Year.
A Paired profit-sharing plan designated to provide the minimum Top-Heavy
contribution must do so regardless of profits. An Employer may make the minimum
Top-Heavy contribution available to all Participants or just non-Key Employees.
For purposes of computing the minimum allocation, Compensation shall mean
Compensation as defined in the second paragraph of paragraph 1.13 of the Plan.
The Top-Heavy minimum contribution does not apply to any Participant to the
extent the Participant is covered under any other plan(s) of the Employer and
the Employer has provided in the Adoption Agreement that the minimum allocation
or benefit requirements applicable to Top-Heavy Plans will be met in the other
plan(s).
If a Key Employee makes an Elective Deferral or has an allocation of Matching
Contributions made to his or her account, a Top-Heavy minimum will be required
for non-Key Employees who are Participants, however, neither Elective Deferrals
by nor Matching Contributions to non-Key Employees may be taken into account
for purposes of satisfying the Top-Heavy minimum contribution requirement.
14.3 MINIMUM VESTING For any Plan Year in which this Plan is Top-Heavy, the
minimum vesting schedule elected by the Employer in the Adoption Agreement will
automatically apply to the Plan. If the vesting schedule selected by the
Employer in the Adoption Agreement is less liberal than the allowable schedule,
the schedule will automatically be modified. If the vesting schedule under the
Employer's Plan shifts in or out of the Top-Heavy schedule for any Plan Year,
such shift is an amendment to the vesting schedule and the election in
paragraph 9.8 of the Plan applies. The minimum vesting schedule applies to all
accrued benefits within the meaning of Code Section 411(a)(7) except those
attributable to Employee contributions, including benefits accrued before the
effective date of Code Section 416 and benefits accrued before the Plan became
Top-Heavy. Further, no reduction in vested benefits may occur in the event the
Plan's status as Top-Heavy changes for any Plan Year. However, this paragraph
does not apply to the account balances of any Employee who does not have an
Hour of Service after the Plan initially becomes Top-Heavy and such Employee's
account balance attributable to Employer contributions and forfeitures will be
determined without regard to this paragraph.
14.4 LIMITATIONS ON ALLOCATIONS In any Plan Year in which the Top-Heavy Ratio
exceeds 90% (i.e., the Plan becomes Super Top-Heavy), the denominators of the
Defined Benefit Fraction (as defined in paragraph 1.17) and Defined
Contribution Fraction (as defined in paragraph 1.20) shall be computed using
100% of the dollar limitation instead of 125%.
ARTICLE XV
AMENDMENT AND TERMINATION
15.1 AMENDMENT BY SPONSOR The Sponsor may amend any or all provisions of this
Plan and Trust at any time without obtaining the approval or consent of any
Employer which has adopted this Plan and Trust provided that no amendment shall
authorize or permit any part of the corpus or income of the Fund to be used for
or diverted to purposes other than for the exclusive benefit of Participants
and their beneficiaries, or eliminate an optional form of distribution. In the
case of a mass-submitted plan, the mass-submitter shall amend the Plan on
behalf of the Sponsor.
15.2 AMENDMENT BY SPONSOR The Employer may amend any option in the Adoption
Agreement, and may include language as permitted in the Adoption Agreement,
(a) to satisfy Code Section 415, or
(b) to avoid duplication of minimums under Code Section 416
because of the required aggregation of multiple plans.
The Employer may add certain model amendments published by the Internal Revenue
Service which specifically provide that their adoption will not cause the Plan
to be treated as an individually designed plan for which the Employer must
obtain a separate determination letter. If the Employer amends the Plan and
Trust other than as provided above, the Employer's Plan shall no longer
participate in this Prototype Plan and will be considered an individually
designed plan.
15.3 TERMINATION Employers shall have the right to terminate their Plans upon
60 days notice in writing to the Trustee. If the Plan is terminated, partially
terminated, or if there is a complete discontinuance of contributions under a
profit- sharing plan maintained by the Employer, all amounts credited to the
accounts of Participants shall vest and become nonforfeitable. In the event of
a partial termination, only those who are affected by such partial termination
shall be fully vested. In the event of termination, the Employer or
Recordkeeper shall direct the Trustee with respect to the distribution of
accounts. The Trustee shall dispose of the Fund in accordance with the written
directions of the Plan Administrator or Recordkeeper, provided that no
liquidation of assets and payment of benefits, (or provision therefor), shall
actually be made by the Trustee until after it is established by the Employer
in a manner satisfactory to the Trustee, that the applicable requirements, if
any, of the Employee Retirement Income Security Act of 1974 and the Internal
Revenue Code governing the termination of employee benefit plans, have been or
are being, complied with, or that appropriate authorizations, waivers,
exemptions, or variances have been, or are being obtained.
15.4 QUALIFICATION OF EMPLOYER'S PLAN If the adopting Employer fails to attain
or retain Internal Revenue Service qualification, such Employer's Plan shall no
longer participate in this Prototype Plan and will be considered an
individually designed plan.
15.5 MERGERS AND CONSOLIDATIONS
(a) In the case of any merger or consolidation of the Employer's Plan
with, or transfer of assets or liabilities of the Employer's Plan to, any other
plan, Participants in the Employer's Plan shall be entitled to receive benefits
immediately after the merger, consolidation, or transfer which are equal
to or greater than the benefits they would have been entitled to receive
immediately before the merger, consolidation, or transfer if the Plan had then
terminated.
(b) Any corporation into which the Trustee or any successor trustee may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Trustee or any successor trustee may
be a party, or any corporation to which all or substantially all the trust
business of the Trustee or any successor trustee may be transferred,
shall be the successor of such Trustee without the filing of any instrument or
performance of any further act, before any court.
15.6 RESIGNATION AND REMOVAL The Trustee may resign by written notice to the
Employer which shall be effective 60 days after delivery. The Employer may
discontinue its participation in this Prototype Plan and Trust effective upon
60 days written notice to the Sponsor. In such event the Employer shall, prior
to the effective date thereof, amend the Plan to eliminate any reference to
this Prototype Plan and Trust and appoint a successor trustee or arrange for
another funding agent. The Trustee shall deliver the Fund to its successor on
the effective date of the resignation or removal, or as soon thereafter as
practicable, provided that this shall not waive any lien the Trustee may have
upon the Fund for its compensation or expenses. If the Employer fails to amend
the Plan and appoint a successor trustee, or other funding agent within the
said 60 days, or such longer period as the Trustee may specify in writing, the
Plan shall be deemed individually designed and the Employer shall be deemed the
successor trustee. The Employer must then obtain its own determination letter.
15.7 QUALIFICATION OF PROTOTYPE The Sponsor intends that this Prototype Plan
will meet the requirements of the Code as a qualified Prototype Retirement Plan
and Trust. Should the Commissioner of Internal Revenue or any delegate of the
Commissioner at any time determine that the Plan and Trust fails to meet the
requirements of the Code, the Sponsor will amend the Plan and Trust to maintain
its qualified status.
ARTICLE XVI
ELAPSED TIME RULES AND DEFINITIONS
16.1 APPLICATION If the Adoption Agreement specifies the Elapsed Time method of
determining Service, the rules and definitions provided in this Article XVI
shall supersede the corresponding provisions of the Plan to the extent provided
herein.
16.2 HOUR OF SERVICE In lieu of the provisions of paragraph 1.43(a), (b) and
(c), an Hour of Service shall mean an hour for which an Employee is paid or
entitled to payment for the performance of duties for the Employer.
16.3 SERVICE OR PERIOD In lieu of the provisions of paragraph 1.75, Service
shall mean the aggregate of all years and fractions of years of an Employee's
employment by the Employer. Fractions of a year shall be expressed In terms of
days. A Period of Service shall mean the period beginning on the date on which
the Employee first performs an Hour of Service upon employment or
reemployment, and ending on the date on which a Period of Severance begins. A
Period of Service shall also include any Periods of Severance of less than 12
consecutive months.
16.4 YEAR OF SERVICE In lieu of the provisions of paragraph 1.92, a Year of
Service shall mean a Period of Service of 12 months, whether or not
consecutive.
16.5 PERIOD OF SEVERANCE A Period of Severance shall mean a continuous period
during which the Employee is not employed by the Employer. A Period of
Severance shall begin on the earlier of:
(a) the date on which the Employee retires, dies, quits or is discharged,
or
(b) the first 12-month anniversary of the date on which the Employee is
first absent from employment for reasons other than retirement, death, quit or
discharge;
provided, however, that in the case of an Employee who is absent from
employment beyond the first 12-month anniversary of the first day of absence by
reason of Parental Leave, the Period of Severance shall begin on the second
12-month anniversary of the date of such absence. The period between the first
and second 12- month anniversaries of the first day of absence from employment
shall be neither a Period of Service nor a Period of Severance.
A Period of Severance shall end on the date on which the Employee again
performs an Hour of Service.
16.6 BREAK IN SERVICE In lieu of the provisions of paragraph 1.11, a Break in
Service shall mean a Period of Severance of 12 consecutive months.
16.7 PARENTAL LEAVE For purposes of paragraph 16.5 and in lieu of the
provisions of paragraph 1.43(e), Parental Leave shall mean any period during
which an individual is absent from employment,
(a) by reason of the pregnancy of the individual,
(b) by reason of the birth of a child of the individual,
(c) by reason of placement of a child with the individual in connection
with the adoption of such child by the individual, or
(d) for purposes of caring for such child for a period beginning
immediately following the birth or placement.
An absence from employment shall not be a Parental Leave unless the Employee
furnishes to the Employer such timely information as the Employer may
reasonably require in order to establish that the nature and period of absence
from employment meet the requirements of this paragraph 16.7. Nothing contained
in this Article XVI shall be construed to establish an Employer leave policy or
treat a Parental Leave as an authorized leave of absence.
16.8 COMPUTATION PERIOD In lieu of the provisions of paragraphs 2.3 and 9.3,
Years of Service and Breaks in Service shall be determined as provided below:
(a) all Periods of Service shall be aggregated so that a Year of Service
shall be completed as of the date that the Employee completes 12 months of
Service (30 days shall be considered to be one month in the case of aggregation
of fractional months), and
(b) all Breaks in Service shall be determined in accordance with paragraph
16.6.
16.9 ALLOCATING EMPLOYER CONTRIBUTIONS In lieu of the provisions of paragraph
5.3, the Employer's contribution shall be allocated to Participants in
accordance with the allocation formula selected by the Employer in the Adoption
Agreement and the minimum contribution and allocation requirements for
Top-Heavy Plans; provided, however, that each Participant shall share in
Employer contributions for the period beginning on the date on which the
Participant begins participation under the Plan and ending on the earlier of:
(a) the date on' which the Participant severs employment with the Employer,
or
(b) the date on which the Participant is no longer a member of an eligible
class of Employees.
ARTICLE XVII
GOVERNING LAW
Construction, validity and administration of the Prototype Plan and Trust, and
any Employer Plan and Trust as embodied in the Prototype document and
accompanying Adoption Agreement, shall be governed by Federal law to the extent
applicable and to the extent not applicable by the laws of the State in which
the principal office of the Sponsor is located.
IRS OPINION LETTERS
Below are the Internal Revenue Service opinion letters approving the form of
The American Funds Prototype Defined Contribution Plan and Trust.
INTERNAL REVENUE SERVICE Department of the Treasury
Plan Description: Prototype Standardized Profit Sharing Plan with CODA
FFN: 50270211903-001
Case: 9307908 EIN: 95-2769620 Washington, DC 20224
BPD: 03 Plan: 001
Letter Serial No: D261759a Person to Contact: Mr. Dua
Telephone Number: (202) 622-8380
AMERICAN FUNDS DISTRIBUTORS INC Refer Reply to: CP:E:EP:Q:3
333 SOUTH HOPE STREET Date: 01/26/94
LOS ANGELES, CA 90071
Dear Applicant:
In our Opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit
of their employees. This opinion relates only to the acceptability of the form
of the plea under the Internal Revenue Code. It is not an opinion of the effect
of other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Section in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plea is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). An employer who adopts this plan will he considered to have a plan
qualified under Code section 401 (a) provided all the terms of the plan are
followed, and the eligibility requirements and contribution or benefit
provisions are not more favorable for highly compensated employees than for
other employees. Except as stated below, the Key District Director will not
issue a determination letter with regard to this plan.
Our opinion does not apply to the form of the plan for purposes of Code section
401(a)(16) if: (1) an employer ever maintained another qualified plan for one
or more employees who are covered by this plan, other than a specified paired
plan within the meaning of section 7 of Rev. Proc. 89-9,1989-1 C.B. 780; or (2)
after December 31,1985, the employer maintains a welfare benefit fund defined
in Code section 419(e), which provides postretirement medical benefits
allocated to separate accounts for key employees as defined in Code section
419(d)(3).
An employer that has adopted a standardized plan may not rely on this opinion
letter with respect to: (1) whether any amendment or series of amendments to
the plan satisfies the nondiscrimination requirements of section 1.401
(a)(4)-5(a) of the regulations, except with respect to plan amendments granting
past service that meet the safe harbor described in section 1.401(a)(4)-5(a)(5)
and are not part of a pattern of amendments that significantly discriminates in
favor of highly compensated employees; or (2) whether the plan satisfies the
effective availability requirement of section 1.401 (a)(4)-4(c) of the
regulations with respect to any benefit, right or feature.
An employer that has adopted a standardized plan as an amendment to a plan
other than a standardized plan may not rely on this opinion letter with respect
to whether a benefit, right or other feature that is prospectively eliminated
satisfies the current availability requirements of section 1.401 (a)-4 of the
regulations.
The employer may request a determination (1) ea to whether the plan, considered
with all related qualified plans and, if appropriate, welfare benefit funds,
satisfies the requirements of Code section 401 (a)(16) as to limitations on
benefits and contributions in Code section 415; (2) regarding the
nondiscriminatory effect of grants of past service; and (3) with respect to
whether a prospectively eliminated benefit, right or feature satisfies the
current availability requirements.
Our opinion does not apply to the form of the plan for purposes of section
401(a) of the Code unless the terms of the plan, as adopted or amended, that
pertain to the requirements of sections 401(a)(4), 401 (a)(5), 401 (a)(17), 401
(l), 410(b) and 414(s) of the Code, as amended by the Tax Reform Act of 1986 or
subsequent legislation, (a) are made effective retroactively to the first day
of the first plan year beginning after December 31, 1988 (or such other date on
which these requirements first became effective with respect to this plan); or
(b) are made effective no later than the first day on which the employer is no
longer entitled, under regulations, to rely on a reasonable, good faith
interpretation of these requirements, and the prior provisions of the plan
constitute such an interpretation.
Because you submitted this plan for approval after March 31, 1991, the
continued, interim and extended reliance provisions of sections 13 and 17.03 of
Rev. Proc. 89-9, 1989-1 C.B. 780, are not applicable.
If you, the sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This number
is only for use of the sponsoring organization. Individual participants and/or
adopting employers with questions concerning the plan should contact the
sponsoring organization. The plan's adoption agreement must include the
sponsoring organization's address and telephone number for inquiries by
adopting employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial
Number and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely your,
(signature)
Chief, Employee Plans Qualifications Branch
INTERNAL REVENUE SERVICE Department of the Treasury
Plan Description: Prototype Non-standardized Profit Sharing Plan with CODA
FFN: 50370211903-002
Case: 9307909 EIN: 95-2769620 Washington, DC 20224 BPD: 03 Plan:
002
Letter Serial No: O361760a Person to Contact: Mr. Dua
Telephone Number: (202) 622-8380
AMERICAN FUNDS DISTRIBUTORS INC Refer Reply to: CP:E:EP:Q:3
333 SOUTH HOPE STREET Date: 01/26/94
LOS ANGELES, CA 90071
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit
of their employees. This opinion relates only to the acceptability of the form
of the plan under the Internal Revenue Code. It is not in opinion of the effect
of other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). Therefore, an employer adopting the form of the plan should apply for a
determination latter by filing an application with the Key District Director of
Internal Revenue Service on Form 5307, Short Form Application for Determination
for Employee Benefit Plan.
Because you submitted this plan for approval after March 31, 1991, the
continued, interim and extended reliance provisions of sections 13 and 17.03 of
Rev. Proc. 89-9,1989-1 C.B. 780, are not applicable.
If you, the sponsoring organization, have any questions concerning the IRS
processing of this case please call the above telephone number. This number is
only for use of the sponsoring organization. Individual participants and/or
adopting employers with questions concerning the plan should contact the
sponsoring organization. The plan's adoption agreement must include the
sponsoring organization's address and telephone number for inquiries by
adopting employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write please refer to the Letter Serial Number
and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
(signature)
Chief, Employee Plans Qualifications Branch
Litho un USA CLA
Lit. No. BASIC-010-0594
Prototype Cash or Deferred
Profit-Sharing Plan #001
STANDARDIZED ADOPTION AGREEMENT
PROTOTYPE CASH OR DEFERRED PROFIT-SHARING PLAN AND TRUST
Sponsored by
AMERICAN FUNDS DISTRIBUTORS, INC.
The Employer named below hereby establishes a Cash or Deferred Profit-Sharing
Plan for eligible Employees as provided in this Adoption Agreement and the
accompanying Basic Prototype Plan and Trust/Basic Plan Document #03 (the
"Plan"). If multiple Employers are adopting the Plan, complete Section 1 based
on the lead Employer. Additional Employers may adopt this Plan by attaching
executed signature pages to the back of the Employer's Adoption Agreement.
1. EMPLOYER INFORMATION
EMPLOYER'S NAME:
ADDRESS:
PRINCIPAL ADDRESS (if different):
TELEPHONE NUMBER: ( )
TAX ID NUMBER:
EMPLOYER'S FISCAL YEAR:
FORM OF BUSINESS:
[] Sole Proprietor
[] Partnership
[] "S" Corporation
[] Corporation
[] Other
MEMBER OF:
[] Controlled Group
[] Affiliated Service Group
[] Group of trades of businesses under common control
DATE OF INCORPORATION:
NAME OF PLAN:
THREE DIGIT PLAN NUMBER FOR ANNUAL RETURN/REPORT:
2. EFFECTIVE DATE
(a) This is a new Plan having an effective date of
(b) This is an amended Plan.
The effective date of the original plan was
The effective date of the amended Plan is
(c) If different from above, the Effective Date for the Plan's Elective
Deferral provisions shall be
3. DEFINITIONS
(a) "ALLOCATION DATE(S)" Allocations to Participant Accounts will be done in
accordance with Article V of the Plan:
[] (i) daily.
[] (ii)monthly.
[] (iii)quarterly.
[] (iv)semi-annually.
[] (v) annually.
(b) "COMPENSATION" Compensation shall be determined on the basis of the Plan
Year.
Compensation [] shall [] shall not include Employer contributions made
pursuant to a Salary Savings Agreement, for this Plan or any other plan, which
are not includable in the gross income of the Employee for the reasons
indicated in the definition of Compensation at paragraph 1.13 of the Plan.
Compensation [] shall [] shall not be limited to Compensation earned while
a Participant in the Plan.
Compensation shall be determined on the basis of the following safe-harbor
definition of Compensation in IRS Regulation Section 1.414(s)-1 (c):
[] (i) Code Section 3401(a)- W-2 income subject to income tax withholding.
[] (ii) Code Section 415- W-2 income, share of profits and other taxable
income.
(c) "ENTRY DATE"
[] (i) The first day of the Plan Year nearest the date on which an Employee
meets the eligibility requirements.
[] (ii) The earlier of the first day of the Plan Year or the first day of
the seventh month of the Plan Year coinciding with or following the date on
which an Employee meets the eligibility requirements.
[] (iii) The first day of the Plan Year following the date on which the
Employee meets the eligibility requirements. If this election is made, the
Service requirement at 4(a) may not exceed 1/2 year and the age requirement at
4(b) may not exceed 20-1/2.
[] (iv) The first day of the month or if earlier the first day of the Plan
Year coinciding with or following the date on which an Employee meets the
eligibility requirements.
[] (v) The first day of the Plan Year, or the first day of the fourth,
seventh or tenth month of the Plan Year coinciding with or following the date
on which an Employee meets the eligibility requirements.
(d) "HOURS OF SERVICE" shall be determined on the basis of the method selected
below. Only one method may be selected. The method selected shall be applied to
all Employees covered under the Plan as follows:
[] (i) on the basis of actual hours for which an Employee is paid or
entitled to payment.
[] (ii) on the basis of days worked.
An Employee shall be credited with ten (10) Hours of Service if under
paragraph 1.43 of the Plan such Employee would be credited with at least one
(1) Hour of Service during the day. [] (iii) on the basis of weeks worked.
An Employee shall be credited with forty-five (45) Hours of Service if
under paragraph 1.43 of the Plan such Employee would be credited with at least
one (1) Hour of Service during the week.
[] (iv) on the basis of semi-monthly payroll periods.
An Employee shall be credited with ninety-five (95) Hours of Service if
under paragraph 1.43 of the Plan such Employee would be credited with at least
one (1) Hour of Service during the semi-monthly payroll period.
[] (v) on the basis of months worked.
An Employee shall be credited with one-hundred-ninety (190) Hours of
Service if under paragraph 1.43 of the Plan such Employee would be credited
with at least one (1) Hour of Service during the month.
[] (vi) on the basis of Elapsed Time, as provided in Article XVI of the
Plan.
(e) "LIMITATION YEAR" The 12-consecutive-month period commencing
on___________and ending on___________________.
If applicable, the Limitation Year will be a short Limitation Year commencing
on_______________and ending on___________.
Thereafter, the Limitation Year shall end on the date last specified.
(f) "NET PROFIT"
[] (i) Not applicable. Profits will not be required for any contributions to
the Plan.
[] (ii) As defined in paragraph 1.50 of the Plan.
(g) "PLAN YEAR" The 12-consecutive-month period commencing on___________ and
ending on_____________.
If applicable, the Plan Year will be a short Plan Year commencing
on_______________and ending on_____________.
Thereafter, the Plan Year shall end on the date last specified.
(h) "QUALIFIED EARLY RETIREMENT AGE" For purposes of making distributions under
the provisions of a Qualified Domestic Relations Order, the Plan's Qualified
Early Retirement Age with regard to the Participant against whom the Order is
entered shall be the date the Order is determined to be qualified. This will
only allow payout to the alternate payee(s).
(i) "QUALIFIED JOINT AND SURVIVOR ANNUITY" The safe-harbor provisions of
paragraph 8.7 of the Plan [] are [] are not applicable. If not applicable, the
survivor annuity shall be_____% (50%, 66-2/3%, 75% or 100%) of the annuity
payable during the lives of the Participant and Spouse. If no answer is
specified, 50% will be used.
(j) "TAXABLE WAGE BASE" [paragraph 1.81]
[] (i) Not applicable - Plan is not integrated with Social Security.
[] (ii) The maximum earnings considered wages for such Plan Year under Code
Section 3121(a).
[] (iii) _____% (not more than 100%) of the amount considered wages for such
Plan Year under Code Section 3121(a).
[] (iv) $______, provided that such amount is not in excess of the amount
determined under subsection (ii) above.
[] (v) For the 1989 Plan Year $10,000. For all subsequent Plan Years, 20% of
the maximum earnings considered wages for such Plan Year under Code Section
3121(a).
4. ELIGIBILITY REQUIREMENTS
Employees meeting the following Service and Age requirements shall be eligible
to participate in the Plan:
(a) SERVICE:_________________[not more than one (1)] Year of Service. [A Year
of Service is a 12-consecutive-month period during which a Participant is
credited with 1,000 hours.] If the Year of Service selected is a fractional
year, an Employee will not be required to complete any specified number of
Hours of Service to receive credit for such fractional year.
(b) AGE: Attainment of age____ (not more than age 21).
(c) INITIAL PARTICIPANTS: Employees employed on the Plan's Effective Date [] do
[] do not have to satisfy the eligibility requirements specified above.
NOTE: Employees covered under the terms of a collective bargaining agreement
(the agreement should indicate that retirement benefits were the subject of
good faith bargaining and the agreement should benefit Employees of whom two
percent or less are professionals, as defined in Section 1.410(b)-9 of the
Regulations) between the Employer and Employee representatives (does not
include any organization more than half of whose members are Employees who are
owners, officers, or executives of the Employer) and nonresident aliens [within
the meaning of Section 770(b)(1)(B)] with no U.S. income [within the
meaning of Section 911(d)(2)] from the Employer which constitutes income from
sources within the United States [within the meaning of Section 86(a)(3)] are
excluded from Plan participation.
5. RETIREMENT AGES
If the Employer imposes a requirement that Employees retire upon reaching a
specified age, the Normal Retirement Age selected below may not exceed the
Employer-imposed mandatory retirement age.
(a) Normal Retirement Age shall be ____ (not to exceed age 65).
(b) Normal Retirement Age shall be the later of attaining age ____ (not to
exceed age 65) or the ____ (not to exceed the 5th) anniversary of the first day
of the first Plan Year in which the Participant commenced participation in the
Plan.
(c) Early Retirement Age:
[] (i) Not applicable.
[] (ii) The Plan shall have an Early Retirement Age _______ (not less than
55) and completion of ____Years of Service.
6. EMPLOYEE CONTRIBUTIONS
[] (a) Participants shall be permitted to make Elective Deferrals in any amount
from __ % up to __ % of their Compensation. Participants may amend their Salary
Savings Agreements to change the contribution percentage as provided below:
[] (i) on the first day of each month of the Plan Year.
[] (ii) on the first day of the Plan Year and on the first day of the fourth,
seventh, and tenth months of the Plan Year.
[] (iii) on the first day of the Plan Year and on the first day of the
seventh month of the Plan Year.
[] (b) Participants shall be required to make after-tax Voluntary Contributions
as follows (Thrift Savings Plan):
[] (i) in any amount from __ % up to_____% of Compensation.
[] (ii) a percentage determined by the Employee on his or her enrollment
form.
NOTE: Elective Deferrals may not be recharacterized as Voluntary Contributions
for purposes of the Average Deferral Percentage (ADP) Test. The ADP Test will
apply to contributions under (a) above. The Average Contribution Percentage
(ACP) Test will apply to contributions under (b) above, and may apply to (a).
7. EMPLOYER CONTRIBUTIONS AND ALLOCATION
The Employer shall make contributions to the Plan in accordance with the
formula or formulas selected below. The Employer's contribution shall be
subject to the limitations contained in Articles III and X of the Plan. For
this purpose, a contribution for a Plan Year shall be limited for the
Limitation Year which ends with or within such Plan Year. Also, the integrated
allocation formulas below are for Plan Years beginning in 1989 and later. The
Employer's allocation for earlier years shall be as specified in its Plan prior
to amendment for the Tax Reform Act of 1986.
[] (a) PROFITS REQUIREMENT:
Current or Accumulated Net Profits are not required unless otherwise
indicated below:
[] (i) Matching Contributions.
[] (ii) Qualified Non-Elective Contributions.
[] (iii) Discretionary contributions.
NOTE: Elective Deferrals can always be contributed regardless of profits.
Complete this Section in conjunction with Section 3(f).
[] (b) SALARY SAVINGS AGREEMENT:
The Employer shall contribute and allocate to each Participant's account an
amount equal to the amount withheld from the Compensation of such Participant
pursuant to his or her Salary Savings Agreement. If applicable, the maximum
percentage is specified in Section 6 above.
An Employee who has terminated his or her election under the Salary Savings
Agreement other than for hardship reasons may not make another Elective
Deferral:
[] (i) until the first day of the next Plan Year. [] (ii)
for a period of __month(s) (not to exceed 12 months).
(c) MATCHING CONTRIBUTION [See Sections (g) and (h)]:
[] (i) PERCENTAGE MATCH ON ELECTIVE DEFERRALS: The Employer shall
contribute and allocate to each eligible Participant's account an amount equal
to ______% of the amount contributed and allocated in accordance with Section
7(b) above. The Employer shall not match Participant Elective Deferrals as
provided above in excess of $________ or in excess of ______% of the
Participant's Compensation.
[] (ii) PERCENTAGE MATCH ON VOLUNTARY CONTRIBUTIONS: The Employer shall
contribute and allocate to each eligible Participant's account an amount equal
to ______% of the amount of Voluntary Contributions (if provided for under
Section 6(b) or 6(c) above) made in accordance with paragraphs 4.1 or 4.7 of
the Plan. The Employer shall not match Voluntary Contributions in excess of
$_________ or in excess of ____% of the Participant's Compensation.
[] (iii) DISCRETIONARY MATCH: The Employer shall contribute and allocate
to each eligible Participant's account a percentage of the Participant's
Elective Deferral contributed and allocated in accordance with Section 7(b)
above. The Employer shall set such percentage prior to the end of the Plan
Year. The Employer shall not match Participant Elective Deferrals in excess of
$______ or in excess of _____% of the Participant's Compensation.
[] (iv) QUALIFIED MATCH: Matching Contributions will be treated as
Qualified Matching Contributions to the extent specified below:
[] (A) all Matching Contributions.
[] (B) none.
[] (C) the amount necessary to meet:
[] the ADP Test,
[] the ACP Test,
[] both the ADP and ACP Tests.
[] (v) ELIGIBILITY FOR MATCHING CONTRIBUTIONS: Matching Contributions,
whether or not Qualified, will only be made on Employee contributions:
[] (A) not withdrawn prior to the end of the valuation period.
[] (B) not withdrawn prior to the end of the Plan Year.
[] (C) without regard to their withdrawal. [] (vi)
MATCHING CONTRIBUTION COMPUTATION PERIOD: The time period upon which Matching
Contributions will be based shall be: [] (A) weekly.
[] (B) bi-weekly.
[] (C) semi-monthly.
[] (D) monthly.
[] (E) quarterly.
[] (F) semi-annually.
[] (G) annually.
[] (d) QUALIFIED NON-ELECTIVE EMPLOYER CONTRIBUTION - [See Sections (g) and
(h)]:
These contributions are fully vested when contributed. The Employer shall have
the right to make an additional discretionary contribution which shall be
allocated to each eligible Employee in proportion to his or her Compensation as
a percentage of the Compensation of all eligible Employees. This part of the
Employer's contribution and the allocation thereof shall be unrelated to any
Employee contributions made hereunder. The amount of Qualified
Non-Elective Contributions taken into account for purposes of meeting the ADP
or ACP Test requirements is:
[] (i) all such Qualified Non-Elective Contributions.
[] (ii) none.
[] (iii) the amount necessary to meet:
[] the ADP Test,
[] the ACP Test,
[] both the ADP and ACP Tests.
Qualified Non-Elective Contributions will be allocated to: []
(iv) all Employees eligible to participate.
[] (v) only non-Highly Compensated Employees eligible to participate.
[] (e) ADDITIONAL EMPLOYER CONTRIBUTION OTHER THAN QUALIFIED NON-ELECTIVE
CONTRIBUTIONS- NON-INTEGRATED [See Sections (g) and (h)]:
The Employer shall have the right to make an additional discretionary
contribution which shall be allocated to each eligible Employee in proportion
to his or her Compensation as a percentage of the Compensation of all eligible
Employees. This part of the Employer's contribution and the allocation thereof
shall be unrelated to any Employee contributions made hereunder.
[] (f) ADDITIONAL EMPLOYER CONTRIBUTION - INTEGRATED ALLOCATION FORMULA [See
Sections (g) and (h)]:
The Employer shall have the right to make an additional discretionary
contribution. The Employer's contribution for the Plan Year plus any
forfeitures shall be allocated to the accounts of eligible Participants as
follows:
(i) First, to the extent contributions and forfeitures are sufficient, all
Participants will receive an allocation equal to 3% of their Compensation.
(ii) Next, any remaining Employer contributions and forfeitures will be
allocated to Participants who have Compensation in excess of the Taxable Wage
Base (excess Compensation). Each such Participant will receive an allocation in
the ratio that his or her excess Compensation bears to the excess Compensation
of all Participants. Participants may only receive an allocation of 3% of
excess Compensation.
(iii) Next, any remaining Employer contributions and forfeitures will be
allocated to all Participants in the ratio that their Compensation plus excess
Compensation bears to the total Compensation plus excess Compensation of all
Participants. Participants may only receive an allocation of up to 2.7% of
their Compensation plus excess Compensation, under this allocation method. If
the Taxable Wage Base defined at Section 3(j) is less than or equal to the
greater of $10,000 or 20% of the maximum, the 2.7% need not be reduced. If the
amount specified is greater than the greater of $10,000 or 20% of the maximum
Taxable Wage Base, but not more than 80%, 2.7% must be reduced to 1.3%. If the
amount specified is greater than 80% but less than 100% of the maximum Taxable
Wage Base, the 2.7% must be reduced to 2.4%.
NOTE: If the Plan is not Top-Heavy or if the Top-Heavy minimum contribution or
benefit is provided under another Plan [see Section 11 (c)(ii)] covering the
same Employees, subsections (i) and (ii) above may be disregarded and 5.7%,
4.3% or 5.4% may be substituted for 2.7%, 1.3% or 2.4% where it appears in
(iii) above.
(iv) Next, any remaining Employer contributions and forfeitures will be
allocated to all Participants (whether or not they received an allocation under
the preceding paragraphs) in the ratio that each Participant's Compensation
bears to all Participants' Compensation.
NOTE: Only one plan maintained by the Employer may be integrated with Social
Security.
[] (g) ALLOCATION OF EXCESS AMOUNTS (ANNUAL ADDITIONS):
In the event that the allocation formula above results in an Excess Amount,
such excess shall be distributed to the Participant to the extent such excess
does not exceed the Participant's Elective Deferrals, non-deductible Employee
Voluntary Contributions and Required Voluntary Contributions. To the extent the
Excess Amount exceeds the sum of the aforementioned Employee contributions,
such excess shall be:
[] (i) placed in a suspense account accruing no gains or losses for the
benefit of the Participant.
[] (ii) reallocated as additional Employer contributions to all other
Participants to the extent that they do not have any Excess Amount.
[] (h) MINIMUM EMPLOYER CONTRIBUTION UNDER TOP-HEAVY PLANS: For any Plan
Year during which the Plan is Top-Heavy, the sum of the contributions and
forfeitures as allocated to eligible Employees under Sections 7(e), 7(f) and 9
of this Adoption Agreement shall not be less than the amount required under
paragraph 14.2 of the Plan. Top-Heavy minimums will be allocated to:
[] (i) all eligible Participants.
[] (ii) only eligible non-Key Employees who are Participants.
[] (i) RETURN OF EXCESS CONTRIBUTIONS AND/OR EXCESS AGGREGATE CONTRIBUTIONS:
In the event that one or more Highly Compensated Employees is subject to
both the ADP and ACP tests and the sum of such tests exceeds the Aggregate
Limit, the limit will be satisfied by reducing the ADP and/or the ACP of the
affected Highly Compensated Employees.
8. ALLOCATIONS TO TERMINATED EMPLOYEES
(This option is not applicable if Hours of Service are determined on the basis
of Elapsed Time selected under Section 3(d)(vi) above.)
(a) For Plan Years beginning prior to 1993:
[] (i) the Employer will not allocate Employer-related contributions to any
Participant who terminates employment during the Plan Year.
[] (ii) the Employer will allocate Employer-related contributions to
Employees who terminate during the Plan Year as a result of:
[] (A) retirement.
[] (B) Disability.
[] (C) death.
[] (D) other termination provided that the Participant has completed a
Year of Service.
[] (E) other termination.
(b) For Plan Years beginning in 1993 and thereafter, the Employer will allocate
Employer-related contributions, except Matching Contributions, to any
Participant who is (i) credited with more than 500 Hours of Service, or (ii)
employed on the last day of the Plan Year without regard to the number of Hours
of Service. The Employer will also allocate Employer-related contributions to
any Participant who terminates during the Plan Year without accruing the
necessary Hours of Service if he or she terminates as a result of:
[] (i) retirement.
[] (ii) Disability.
[] (iii)death.
Matching Contributions will be allocated to each Participant without regard to
whether he or she is employed on the last day of the Plan Year and without
regard to his or her Hours of Service.
9. ALLOCATION OF FORFEITURES
NOTE: Forfeitures of Excess Aggregate Contributions shall be applied at the end
of the Plan Year in which they occur to reduce Employer contributions.
Subsections (a), (b) and (c) below apply to forfeitures of amounts other than
Excess Aggregate Contributions.
(a) ALLOCATION ALTERNATIVES:
Forfeitures shall be applied to reduce the Employer's contribution for
such Plan Year. If forfeitures were reallocated, pursuant to a prior document's
provisions, they will continue to be reallocated in the same manner until the
end of the Plan Year in which this Adoption Agreement is signed.
(b) DATE FOR REALLOCATION OF FORFEITURES:
NOTE: If no distribution has been made to a former Participant, subsection (i)
below will automatically apply to such Participant.
[] (i) Forfeitures shall be applied to reduce the Employer's contribution
at the end of the Plan Year during which the former Participant incurs his or
her fifth consecutive one-year Break in Service.
[] (ii) Forfeitures shall be applied to reduce the Employer's contribution
at the end of the next Plan Year during which the Participant has received
distribution of his or her vested interest.
(c) RESTORATION OF FORFEITURES: If amounts are forfeited prior to five
consecutive one-year Breaks in Service, the Funds for restoration of account
balances will be obtained from the following resources in the order indicated
(fill in the appropriate number):
___(i) current year's forfeitures.
___(ii) additional Employer contributions.
10. LIMITATIONS ON ALLOCATIONS
THIS SECTION IS NOT APPLICABLE IF THIS IS THE ONLY PLAN THE EMPLOYER MAINTAINS
OR EVER MAINTAINED. PLANS INCLUDE WELFARE BENEFIT FUNDS AS DESCRIBED IN CODE
SECTION 419(e) OR AN INDIVIDUAL MEDICAL ACCOUNT AS DEFINED UNDER CODE SECTION
415(l)(2) UNDER WHICH AMOUNTS ARE TREATED AS ANNUAL ADDITIONS.
[] (a) If the Participant is covered under another qualified Defined
Contribution Plan maintained by the Employer, other than a Master or Prototype
Plan, the provisions of Article X of the Plan will apply as if the other plan
were a Master or Prototype Plan.
[] (b) If a Participant is or ever has been a Participant in a Defined Benefit
Plan maintained by the Employer, attach provisions which will satisfy the 1.0
limitation of Code Section 415(e). Such language must preclude Employer
discretion. The Employer must also specify the interest and mortality
assumptions used in determining Present Value in the Defined Benefit Plan.
[] (c) The minimum contribution or benefit required under Code Section 416
relating to Top-Heavy Plans shall be satisfied by either:
[] this Plan or []___________________________(Name of other qualified plan of
the Employer). If a Defined Benefit Plan is or was maintained, an attachment
must be provided showing interest and mortality assumptions used in determining
the Top-Heavy Ratio.
11. VESTING
(a) COMPUTATION PERIOD: (This option is not applicable if Hours of Service are
determined on the basis of Elapsed Time selected under Section 3(d)(vi) above.)
The computation period for purposes of determining Years of Service and Breaks
in Service for purposes of computing a Participant's nonforfeitable right to
his or her account balance derived from Employer contributions:
[] (i) shall not be applicable since Participants are always fully vested.
[] (ii) shall commence on the first day of the Plan Year during which an
Employee first performs an Hour of Service for the Employer and each such
subsequent 12-consecutive-month period shall commence on the anniversary
thereof.
A Participant shall receive credit for a Year of Service if he or she completes
at least 1,000 Hours of Service at any time during the 12-consecutive-month
computation period. Consequently, a Year of Service may be earned prior to the
end of the 12-consecutive-month computation period and the Participant need not
be employed at the end of the 12-consecutive-month computation period to
receive credit for a Year of Service.
(b) VESTING SCHEDULES:
Contributions under Sections 6(a),(b),(c), 7(c)(iv) and (d) are always
fully vested.
NOTE: The vesting schedules below only apply to a Participant who has at least
one Hour of Service during or after the 1989 Plan Year. If applicable,
Participants who separated from Service prior to the 1989 Plan Year will remain
under the vesting schedule as in effect in the Plan prior to amendment for the
Tax Reform Act of 1986.
[ ] (i) Full and immediate Vesting.
Years of Service
1 2 3 4 5 6 7
--------------------------------------------
[ ] (ii) ___% 100%
[ ] (iii) ___% ___% 100%
[ ] (iv) ___% 20% 40% 60% 80% 100%
[ ] (v) ___% ___% 20% 40% 60% 80% 100%
[ ] (vi) 10% 20% 30% 40% 60% 80% 100%
[ ] (vii) ___% ___% ___% ___% 100%
[ ] (viii)___% ___% ___% ___% ___% ___% 100%
NOTE: The percentages selected for schedule (viii) may not be less for any
year than the percentages shown at schedule (v).
[] (A) All contributions other than those which are fully vested when
contributed will vest under schedule ____ above.
[] (B) All Matching Contributions will vest under schedule ____ above. All
other Employer contributions other than those which are fully vested when
contributed will vest under schedule ____ above.
(c) SERVICE DISREGARDED FOR VESTING:
[] (i) Not applicable. All Service shall be considered.
[] (ii) Service prior to the Effective Date of this Plan or a predecessor
plan shall be disregarded when computing a Participant's vested and
nonforfeitable interest.
[] (iii) Service prior to a Participant having attained age 18 shall be
disregarded when computing a Participant's vested and nonforfeitable interest.
(d) TOP-HEAVY VESTING:
Each Participant shall acquire a vested and nonforteitable percentage in
his or her account balance attributable to Employer contributions and the
earnings thereon under the procedures selected above except with respect to any
Plan Year during which the Plan is Top-Heavy, in which case the [] Two-twenty
vesting schedule [Section 11(b)(iv)] or [] Three-Year Cliff vesting schedule
[Section 11(b)(iii)] shall automatically apply unless the Employer has already
elected a faster vesting schedule. If the Plan is switched to Section 11
(b)(iii) or 11 (b)(iv) because of its Top-Heavy status, that vesting schedule
will remain in effect, even if the Plan later becomes non-Top-Heavy, until the
Employer executes an amendment of this Adoption Agreement indicating otherwise.
12. SERVICE WITH PREDECESSOR ORGANIZATION
For purposes of satisfying the Service requirements for Eligibility and
Vesting, Hours of Service shall include Service with the following predecessor
organization(s):
13. ROLLOVER/TRANSFER CONTRIBUTIONS
(a) Rollover Contributions, as described at paragraph 4.3 of the Plan, [] shall
[] shall not be permitted. If permitted, Employees [] may [] may not make
Rollover Contributions prior to meeting the eligibility requirements for
padicipation in the Plan.
(b) Transfer Contributions, as described at paragraph 4.4 of the Plan, [] shall
[] shall not be permitted. If permitted, Employees [] may [] may not make
Transfer Contributions prior to meeting the eligibility requirements for
participation in the Plan.
NOTE: Even if available, the Employer may refuse to accept such contributions
if its Plan meets the safe-harbor rules of paragraph 8.7 of the Plan.
14. HARDSHIP WITHDRAWALS Hardship withdrawals, as provided for in paragraph 6.9
of the Plan, [] are [] are not permitted.
15. PARTICIPANT LOANS Participant loans, as provided for in paragraph 13.4 of
the Plan, [] are [] are not permitted. If permitted, repayments of principal
and interest shall be repaid to the Participant's segregated account.
16. EMPLOYER INVESTMENT DIRECTION The Employer investment direction provisions,
as set forth in paragraph 13.5 of the Plan, [] shall [] shall not be
applicable.
17. EMPLOYEE INVESTMENT DIRECTION The Employee investment direction provisions,
as set forth in paragraph 13.6 of the Plan, [] shall [] shall not be
applicable.
NOTE: To the extent that Employee investment direction was previously allowed,
the Trustee shall have the right to either make the assets part of the general
Trust, or leave them as separately invested subject to the provisions of
paragraph 13.6 of the Plan.
18. EARLY PAYMENT OPTION A Participant who separates from Service prior to
retirement, death or Disability may make application to the Employer requesting
an early payment of his or her vested account balance. Amounts under $3,500 []
will [] will not be cashed out immediately.
(a) A Participant who has not separated from Service [] may [] may not obtain a
distribution of his or her vested Employer contributions. Distribution can only
be made if the Participant has completed five Years of Service.
(b) A Participant who has attained age 59-1/2 and has not separated from
Service [] may [] may not obtain a distribution of his or her vested Employer
contributions.
(c) A Participant who has attained the Plan's Normal Retirement Age and who has
not separated from Service [] may [] may not receive a distribution of his or
her vested account balance.
NOTE: If the Participant has had the right to withdraw his or her account
balance in the past, this right may not be taken away. Required minimum
distributions will be paid regardless of the option selected above. For timing
of distributions, see Section 19(a) below.
19. DISTRIBUTION OPTION
(a) TIMING OF DISTRIBUTIONS:
In cases of termination including death, Disability or retirement, benefits
shall be paid:
[] (i) as soon as administratively feasible following the close of the Plan
Year during which a distribution is requested or is otherwise payable.
[] (ii) as soon as administratively feasible following the date on which a
distribution is requested or is otherwise payable.
[] (iii) as soon as administratively feasible after the close of the Plan
Year during which the Participant incurs a one-year Break in Service.
(b) OPTIONAL FORMS OF PAYMENT:
[] (i) Lump Sum.
[] (ii) Installment Payments.
[] (iii) Other form(s) as previously provided (indicate all forms that
apply):
(c) RECALCULATION OF LIFE EXPECTANCY:
In determining required distributions under the Plan, a Participant and/or
Spouse (Surviving Spouse) [] shall [] shall not have the right to have their
life expectancy recalculated annually. If life expectancy is recalculated, it
will follow the Employer's administrative policy.
20. SPONSOR CONTACT Employers should direct questions concerning the language
contained in and the qualification of the Prototype to:
Capital Guardian Trust Company
Corporate Employee Benefits Department
Phone Number: 714/671-7000
In the event that the Sponsor amends, discontinues or abandons this Prototype
Plan, notification will be provided to the Employer at the address provided on
the first page of this Adoption Agreement.
21. SIGNATURES
DUE TO THE SIGNIFICANT TAX RAMIFICATIONS, THE SPONSOR RECOMMENDS THAT BEFORE
THE EMPLOYER EXECUTES THIS ADOPTION AGREEMENT, THE EMPLOYER CONTACT ITS
ATTORNEY OR TAX ADVISOR.
(a) EMPLOYER DELEGATE OR COMMITTEE APPOINTMENT:
The Employer has appointed the following individual(s) to act on behalf of
the Employer regarding all communications and requests between the Employer and
the Recordkeeper, pursuant to the terms and conditions of the Plan. Unless
otherwise directed by the Employer in written directions to the Recordkeeper,
the Recordkeeper may act upon the instructions of any one of the persons listed
below.
Name(s) (please type or print) Signature(s)
1.___________________________ 1.____________________________
Address______________________
_____________________________
2.___________________________ 2.____________________________
Address______________________
_____________________________
3.___________________________ 3.____________________________
Address______________________
_____________________________
(b) EMPLOYER:
Name and address of Employer if different than specified in Section 1
above.
The Employer hereby adopts the Plan, appoints Capital Guardian Trust
Company as Trustee and directs that contributions to the Plan shall be invested
in accordance with the instructions provided by it. The Employer has read the
Plan and Trust and Adoption Agreement, agrees to the terms and conditions set
forth therein and has consulted with an attorney about the effect of
establishing the Plan.
This agreement and the corresponding provisions of the Plan and Trust Basic
Plan Document #03 were adopted by the Employer the___________________ day
of __________________,19__.
Signed for the Employer by: _______________________
Title:_____________________________________________
Signature:_________________________________________
THE EMPLOYER UNDERSTANDS THAT ITS FAILURE TO PROPERLY COMPLETE THE ADOPTION
AGREEMENT MAY RESULT IN DISQUALIFICATION OF ITS PLAN.
Employer's Reliance: An Employer who has ever maintained or who later
adopts any plan (including a welfare benefit fund, as defined in Section 419(e)
of the Code, which provides post-retirement medical benefits allocated to
separate accounts for Key Employees, as defined in Section 419A(d)(3) of the
Code, or an individual medical account, as defined in Section 415(l)(2) of the
Code)in addition to this Plan may not rely on the opinion letter issued by the
National Office of the Internal Revenue Service as evidence that this Plan is
qualified under Section 401 of the Internal Revenue Code. If the employer who
adopts or maintains multiple plans wishes to obtain reliance that his or her
plan(s) are qualified, application for a determination letter should be made to
the appropriate Key District Director of Internal Revenue.
This Adoption Agreement may only be used in conjunction with Basic Plan
Document #03.
(c) TRUSTEE APPOINTMENT AND ACCEPTANCE:
The Employer hereby appoints Capital Guardian Trust Company to serve as
Trustee, and such Trustee hereby confirms acceptance of the appointment and
duties pursuant to the accompanying Plan and this Adoption Agreement.
Capital Guardian Trust Company hereby accepts appointment as Trustee
the________________ day of ________________, 19 __.
Signed for the Trustee by:______________________________________
Title:__________________________________________________________
Signature:______________________________________________________
NOTE: In accordance with paragraph 13.7 of Basic Plan Document #03 an
additional trustee may be appointed to govern Plan assets held outside the
Fund. If so, the additional trustee shall be appointed in a separate trust
agreement.
Litho in USA CGD/CLA/2982
(c)1996 American Funds Distributors, Inc.
Lit. No. RP401(k)-001-0696
Prototype Cash or Deferred
Profit-Sharing Plan #002
NONSTANDARDIZED ADOPTION AGREEMENT
PROTOTYPE CASH OR DEFERRED PROFIT-SHARING PLAN AND TRUST
Sponsored by
AMERICAN FUNDS DISTRIBUTORS, INC.
The Employer named below hereby establishes a Cash or Deferred Profit-Sharing
Plan for eligible Employees as provided in this Adoption Agreement and the
accompanying Basic Prototype Plan and Trust/Basic Plan Document #03 (the
"Plan"). If multiple Employers are adopting the Plan, complete Section 1 based
on the lead Employer. Additional Employers may adopt this Plan by attaching
executed signature pages to the back of the Employer's Adoption Agreement.
1. EMPLOYER INFORMATION
EMPLOYER'S NAME:
ADDRESS:
PRINCIPAL ADDRESS (if different):
TELEPHONE NUMBER: ( )
TAX ID NUMBER:
EMPLOYER'S FISCAL YEAR:
FORM OF BUSINESS:
[] Sole Proprietor
[] Partnership
[] "S" Corporation
[] Corporation
[] Other
MEMBER OF:
[] Controlled Group
[] Affiliated Service Group
[] Group of trades of businesses under common control
DATE OF INCORPORATION:
NAME OF PLAN:
THREE DIGIT PLAN NUMBER FOR ANNUAL RETURN/REPORT:
2. EFFECTIVE DATE
(a) This is a new Plan having an effective date of
(b) This is an amended Plan.
The effective date of the original plan was
The effective date of the amended Plan is
(c) If different from above, the Effective Date for the Plan's Elective
Deferral provisions shall be
3. DEFINITIONS
(a) "ALLOCATION DATE(S)" Allocations to Participant Accounts will be done in
accordance with Article V of the Plan:
[] (i) daily.
[] (ii)monthly.
[] (iii)quarterly.
[] (iv)semi-annually.
[] (v) annually.
(b) "COMPENSATION" Compensation shall be determined on the basis of the:
[] (i) Plan Year.
[] (ii) Employer's taxable year.
[] (iii) calendar year.
Compensation [] shall [] shall not include Employer contributions made
pursuant to a Salary Savings Agreement, for this Plan or any other plan, which
are not includable in the gross income of the Employee for the reasons
indicated in the definition of Compensation at paragraph 1.13 of the Plan.
Compensation [] shall [] shall not be limited to Compensation earned while
a Participant in the Plan. "Shall" may only be elected if Plan Year is chosen
as a computation period at 3(b).
Compensation shall be determined on the basis of the following safe-harbor
definition of Compensation in IRS Regulation Section 1.414(s)-1 (c):
[] (iv) Code Section 3401(a)- W-2 income subject to income tax
withholding.
[] (v) Code Section 415- W-2 income, share of profits and other taxable
income.
For purposes of the Plan, Compensation shall be limited to $_____, the maximum
amount which wil be considered for Plan purposes. [If an amount is specified,
it will limit the amount of contributions allowed on behalf of higher
compensated Employees. Completion of this section is not intended to
coordinate with the limitation on Compensation under Code Section 401(a)(17),
thus the amount should be less than such limitation as adjusted for
cost-of-living increases.]
Exclusions From Compensation:
[] (vi) overtime.
[] (vii) bonuses.
[] (viii) commissions.
[] (ix)_______________________
NOTE: Any exclusion of Compensation only applies to Employer discretionary
contributions under Section 7(e) and does not apply to any contribution which
is qualified or subject to antidiscrimination testing. Such exclusions must
also satisfy the requirements of Section 1.401(a)(4) of the Income Tax
Regulations and Code Section 414(s) and the regulations thereunder.
(c) "ENTRY DATE"
[] (i) The first day of the Plan Year nearest the date on which an Employee
meets the eligibility requirements.
[] (ii) The earlier of the first day of the Plan Year or the first day of
the seventh month of the Plan Year coinciding with or following the date on
which an Employee meets the eligibility requirements.
[] (iii) The first day of the Plan Year following the date on which the
Employee meets the eligibility requirements. If this election is made, the
Service requirement at 4(a)(ii) may not exceed 1/2 year and the age requirement
at 4(b)(ii) may not exceed 20-1/2.
[] (iv) The first day of the month or if earlier the first day of the Plan
Year coinciding with or following the date on which an Employee meets the
eligibility requirements.
[] (v) The first day of the Plan Year, or the first day of the fourth,
seventh or tenth month of the Plan Year coinciding with or following the date
on which an Employee meets the eligibility requirements.
(d) "HOURS OF SERVICE" shall be determined on the basis of the method selected
below. Only one method may be selected. The method selected shall be applied to
all Employees covered under the Plan as follows:
[] (i) on the basis of actual hours for which an Employee is paid or
entitled to payment.
[] (ii) on the basis of days worked.
An Employee shall be credited with ten (10) Hours of Service if under
paragraph 1.43 of the Plan such Employee would be credited with at least one
(1) Hour of Service during the day. [] (iii) on the basis of weeks worked.
An Employee shall be credited with forty-five (45) Hours of Service if
under paragraph 1.43 of the Plan such Employee would be credited with at least
one (1) Hour of Service during the week.
[] (iv) on the basis of semi-monthly payroll periods.
An Employee shall be credited with ninety-five (95) Hours of Service if
under paragraph 1.43 of the Plan such Employee would be credited with at least
one (1) Hour of Service during the semi-monthly payroll period.
[] (v) on the basis of months worked.
An Employee shall be credited with one-hundred-ninety (190) Hours of
Service if under paragraph 1.43 of the Plan such Employee would be credited
with at least one (1) Hour of Service during the month.
[] (vi) on the basis of Elapsed Time, as provided in Article XVI of the
Plan.
(e) "LIMITATION YEAR" The 12-consecutive-month period commencing
on___________and ending on___________________.
If applicable, the Limitation Year will be a short Limitation Year commencing
on_______________and ending on___________.
Thereafter, the Limitation Year shall end on the date last specified.
(f) "NET PROFIT"
[] (i) Not applicable. Profits will not be required for any contributions to
the Plan.
[] (ii) As defined in paragraph 1.50 of the Plan.
[] (iii) Shall be defined as:___________
(Use only if the definition in paragraph 1.50 of the Plan is
to be superseded.)
(g) "PLAN YEAR" The 12-consecutive-month period commencing on___________ and
ending on_____________.
If applicable, the Plan Year will be a short Plan Year commencing
on_______________and ending on_____________.
Thereafter, the Plan Year shall end on the date last specified.
(h) "QUALIFIED EARLY RETIREMENT AGE" For purposes of making distributions under
the provisions of a Qualified Domestic Relations Order, the Plan's Qualified
Early Retirement Age with regard to the Participant against whom the Order is
entered [] [] shall [] shall not be the date the Order is determined to be
qualified. If "shall" is elected, this will only allow payout to the alternate
payee(s).
(i) "QUALIFIED JOINT AND SURVIVOR ANNUITY" The safe-harbor provisions of
paragraph 8.7 of the Plan [] are [] are not applicable. If not applicable, the
survivor annuity shall be_____% (50%, 66-2/3%, 75% or 100%) of the annuity
payable during the lives of the Participant and Spouse. If no answer is
specified, 50% will be used.
(j) "TAXABLE WAGE BASE" [paragraph 1.81]
[] (i) Not applicable - Plan is not integrated with Social Security.
[] (ii) The maximum earnings considered wages for such Plan Year under Code
Section 3121(a).
[] (iii) _____% (not more than 100%) of the amount considered wages for such
Plan Year under Code Section 3121(a).
[] (iv) $______, provided that such amount is not in excess of the amount
determined under subsection (ii) above.
[] (v) For the 1989 Plan Year $10,000. For all subsequent Plan Years, 20% of
the maximum earnings considered wages for such Plan Year under Code Section
3121(a).
NOTE: Using less than the maximum at subsection (ii) may result in a change in
the allocation formula in Section 7(f) hereof.
(k) "YEAR OF SERVICE" (This option is not applicable if Hours of Service are
determined on the basis of Elapsed Time selected under Section 3(d)(vi) above.)
(i) For Eligibility Purposes: The 12-consecutive-month period during which an
Employee is credited with _______ (not more than 1,000) Hours of Service.
(ii) For Allocation Accrual Purposes: The 12-consecutive-month period during
which an Employee is credited with _______ (not more than 1,000) Hours of
Service.
(iii) For Vesting Purposes: The 12-consecutive-month period during which an
Employee is credited with _______ (not more than 1,000) Hours of Service.
4. ELIGIBILITY REQUIREMENTS
Employees meeting the following Service and Age requirements shall be eligible
to participate in the Plan unless excluded under Section 4(c) below.
(a) SERVICE:
[] (i) The Plan shall have no Service requirement.
[] (ii) The Plan shall cover only Employees having completed at least
_______ [not more than three (3)] Years of Service. If more than one (1) is
specified, for Plan Years beginning in 1989 and later, the answer will be
deemed to be one (1).
NOTE: If the eligibility period selected is less than one year, an Employee
will not be required to complete any specified number of Hours of Service to
receive credit for such period.
(b) AGE:
[] (i) The Plan shall have no minimum age requirement.
[] (ii) The Plan shall cover only Employees having attained age __________
(not more than age 21).
(c) CLASSIFICATION:
The Plan shall cover all Employees who have met the age and Service
requirements with the following exceptions:
[] (i) no exceptions.
[] (ii) the Plan shall exclude Employees included in a unit of Employees
covered by a collective bargaining agreement between the Employer and Employee
Representatives. If retirement benefits were the subject of good faith
bargainin and the agreement benefits Employees of whom two percent or less are
professionals, as defined in Section 1.410(b)-9 of the Regulations. For this
purpose, the term "Employee Representative" does not include any organization
more than half of whose members are Employees who are owners, officers, or
executives of the Employer.
[] (iii) the Plan shall exclude Employees who are nonresident aliens [within
the meaning of Section 7701(b)(1)(B)] and who receive no earned income [within
the meaning of Section 911(d)(2)] from the Employer which constitutes income
from sources within the United States [within the meaning of Section
861(a)(3)].
[] (iv) the Plan shall exclude from participation any nondiscriminatory
classification of Employees determined as follows:
(d) INITIAL PARTICIPANTS:
[] (i) Employees employed on the Plan's Effective Date will be required to
satisfy both the age and Service requirements specified above.
[] (ii) Employees employed on the Plan's Effective Date do not have to
satisfy the Service requirements specified above.
[] (iii) Employees employed on the Plan's Effective Date do not have to
satisfy the age requirements specified above.
5. RETIREMENT AGES
(a) NORMAL RETIREMENT AGE:
If the Employer imposes a requirement that Employees retire upon reaching a
specified age, the Normal Retirement Age selected below may not exceed the
Employer-imposed mandatory retirement age.
[] (i) Normal Retirement Age shall be ____ (not to exceed age 65).
[] (ii) Normal Retirement Age shall be the later of attaining age ____ (not
to exceed age 65) or the ____ (not to exceed the 5th) anniversary of the first
day of the first Plan Year in which the Participant commenced participation in
the Plan.
(b) Early Retirement Age:
[] (i) Not applicable.
[] (ii) The Plan shall have an Early Retirement Age _______ (not less than
55) and completion of ____Years of Service.
6. EMPLOYEE CONTRIBUTIONS
[] (a) Participants shall be permitted to make Elective Deferrals in any amount
from __ % up to __ % of their Compensation. If (a) is applicable, participants
may amend their Salary Savings Agreements to change the contribution percentage
as provided below:
[] (i) on the first day of each month of the Plan Year.
[] (ii) on the first day of the Plan Year and on the first day of the fourth,
seventh, and tenth months of the Plan Year.
[] (iii) on the first day of the Plan Year and on the first day of the
seventh month of the Plan Year.
[] (b) Participants shall be permitted to make after tax Voluntary
Contributions.
[] (c) Participants shall be required to make after tax Voluntary Contributions
as follows (Thrift Savings Plan):
[] (i) in any amount from __ % up to_____% of Compensation.
[] (ii) a percentage determined by the Employee on his or her enrollment
form.
NOTE: Elective Deferrals may not be recharacterized as Voluntary Contributions
for purposes of the Average Deferral Percentage (ADP) Test. The ADP Test will
apply to contributions under (a) above. The Average Contribution Percentage
(ACP) Test will apply to contributions under (b) and (c) above and may apply to
(a).
7. EMPLOYER CONTRIBUTIONS AND ALLOCATION
The Employer shall make contributions to the Plan in accordance with the
formula or formulas selected below. The Employer's contribution shall be
subject to the limitations contained in Articles III and X of the Plan. For
this purpose, a contribution for a Plan Year shall be limited for the
Limitation Year which ends with or within such Plan Year. Also, the integrated
allocation formulas below are for Plan Years beginning in 1989 and later. The
Employer's allocation for earlier years shall be as specified in its Plan prior
to amendment for the Tax Reform Act of 1986.
[] (a) PROFITS REQUIREMENT:
Current or Accumulated Net Profits are not required unless otherwise
indicated below:
[] (i) Matching Contributions.
[] (ii) Qualified Non-Elective Contributions.
[] (iii) Discretionary contributions.
NOTE: Elective Deferrals can always be contributed regardless of profits.
Complete this Section in conjunction with Section 3(f).
[] (b) SALARY SAVINGS AGREEMENT:
The Employer shall contribute and allocate to each Participant's account an
amount equal to the amount withheld from the Compensation of such Participant
pursuant to his or her Salary Savings Agreement. If applicable, the maximum
percentage is specified in Section 6 above.
An Employee who has terminated his or her election under the Salary Savings
Agreement other than for hardship reasons may not make another Elective
Deferral:
[] (i) until the first day of the next Plan Year. [] (ii)
for a period of __month(s) (not to exceed 12 months).
(c) MATCHING CONTRIBUTION [See Sections (g) and (h)]:
[] (i) PERCENTAGE MATCH ON ELECTIVE DEFERRALS: The Employer shall
contribute and allocate to each eligible Participant's account an amount equal
to ______% of the amount contributed and allocated in accordance with Section
7(b) above. The Employer shall not match Participant Elective Deferrals as
provided above in excess of $________ or in excess of ______% of the
Participant's Compensation.
[] (ii) PERCENTAGE MATCH ON VOLUNTARY CONTRIBUTIONS: The Employer shall
contribute and allocate to each eligible Participant's account an amount equal
to ______% of the amount of Voluntary Contributions (if provided for under
Section 6(b) or 6(c) above) made in accordance with paragraphs 4.1 or 4.7 of
the Plan. The Employer shall not match Voluntary Contributions in excess of
$_________ or in excess of ____% of the Participant's Compensation.
[] (iii) DISCRETIONARY MATCH: The Employer shall contribute and allocate
to each eligible Participant's account a percentage of the Participant's
Elective Deferral contributed and allocated in accordance with Section 7(b)
above. The Employer shall set such percentage prior to the end of the Plan
Year. The Employer shall not match Participant Elective Deferrals in excess of
$______ or in excess of _____% of the Participant's Compensation.
[] (iv) TIERED MATCH: The Employer shall contribute and allocate to each
Participant's account as amount equal to _____% of the first _______% of the
Participant's Compensation, to the extent deferred.
________% of the next _______% of the Participant's Compensation, to the extent
deferred.
________% of the next _______% of the Participant's Compensation, to the extent
deferred.
NOTE: Percentages specified in subsection (iv) above may not increase as the
percentage of Participant's contribution increases.
[] (v) QUALIFIED MATCH: Matching Contributions will be treated as
Qualified Matching Contributions to the extent specified below:
[] (A) all Matching Contributions.
[] (B) none.
[] (C) the amount necessary to meet:
[] the ADP Test,
[] the ACP Test,
[] both the ADP and ACP Tests.
[] (vi) ELIGIBILITY FOR MATCHING CONTRIBUTIONS: Matching Contributions,
whether or not Qualified, will only be made on Employee contributions:
[] (A) not withdrawn prior to the end of the valuation period.
[] (B) not withdrawn prior to the end of the Plan Year.
[] (C) without regard to their withdrawal. [] (vi)
MATCHING CONTRIBUTION COMPUTATION PERIOD: The time period upon which Matching
Contributions will be based shall be: [] (A) weekly.
[] (B) bi-weekly.
[] (C) semi-monthly.
[] (D) monthly.
[] (E) quarterly.
[] (F) semi-annually.
[] (G) annually.
[] (d) QUALIFIED NON-ELECTIVE EMPLOYER CONTRIBUTION - [See Sections (g) and
(h)]:
These contributions are fully vested when contributed. The Employer shall have
the right to make an additional discretionary contribution which shall be
allocated to each eligible Employee in proportion to his or her Compensation as
a percentage of the Compensation of all eligible Employees. This part of the
Employer's contribution and the allocation thereof shall be unrelated to any
Employee contributions made hereunder. The amount of Qualified
Non-Elective Contributions taken into account for purposes of meeting the ADP
or ACP Test requirements is:
[] (i) all such Qualified Non-Elective Contributions.
[] (ii) none.
[] (iii) the amount necessary to meet:
[] the ADP Test,
[] the ACP Test,
[] both the ADP and ACP Tests.
Qualified Non-Elective Contributions will be allocated to: []
(iv) all Employees eligible to participate.
[] (v) only non-Highly Compensated Employees eligible to participate.
[] (e) ADDITIONAL EMPLOYER CONTRIBUTION OTHER THAN QUALIFIED NON-ELECTIVE
CONTRIBUTIONS- Non-integrated [See Sections (g) and (h)]:
The Employer shall have the right to make an additional discretionary
contribution which shall be allocated to each eligible Employee in proportion
to his or her Compensation as a percentage of the Compensation of all eligible
Employees. This part of the Employer's contribution and the allocation thereof
shall be unrelated to any Employee contributions made hereunder.
[] (f) ADDITIONAL EMPLOYER CONTRIBUTION - Integrated Allocation Formula [See
Sections (g) and (h)]:
The Employer shall have the right to make an additional discretionary
contribution. The Employer's contribution for the Plan Year plus any
forfeitures shall be allocated to the accounts of eligible Participants as
follows:
(i) First, to the extent contributions and forfeitures are sufficient, all
Participants will receive an allocation equal to 3% of their Compensation.
(ii) Next, any remaining Employer contributions and forfeitures will be
allocated to Participants who have Compensation in excess of the Taxable Wage
Base (excess Compensation). Each such Participant will receive an allocation in
the ratio that his or her excess Compensation bears to the excess Compensation
of all Participants. Participants may only receive an allocation of 3% of
excess Compensation.
(iii) Next, any remaining Employer contributions and forfeitures will be
allocated to all Participants in the ratio that their Compensation plus excess
Compensation bears to the total Compensation plus excess Compensation of all
Participants. Participants may only receive an allocation of up to 2.7% of
their Compensation plus excess Compensation, under this allocation method. If
the Taxable Wage Base defined at Section 3(j) is less than or equal to the
greater of $10,000 or 20% of the maximum, the 2.7% need not be reduced. If the
amount specified is greater than the greater of $10,000 or 20% of the maximum
Taxable Wage Base, but not more than 80%, 2.7% must be reduced to 1.3%. If the
amount specified is greater than 80% but less than 100% of the maximum Taxable
Wage Base, the 2.7% must be reduced to 2.4%.
NOTE: If the Plan is not Top-Heavy or if the Top-Heavy minimum contribution or
benefit is provided under another Plan [see Section 11 (c)(ii)] covering the
same Employees, subsections (i) and (ii) above may be disregarded and 5.7%,
4.3% or 5.4% may be substituted for 2.7%, 1.3% or 2.4% where it appears in
(iii) above.
(iv) Next, any remaining Employer contributions and forfeitures will be
allocated to all Participants (whether or not they received an allocation under
the preceding paragraphs) in the ratio that each Participant's Compensation
bears to all Participants' Compensation.
NOTE: Only one plan maintained by the Employer may be integrated with Social
Security.
[] (g) ALLOCATION OF EXCESS AMOUNTS (ANNUAL ADDITIONS):
In the event that the allocation formula above results in an Excess Amount,
such excess shall be distributed to the Participant to the extent such excess
does not exceed the Participant's Elective Deferrals, non-deductible Employee
Voluntary Contributions and Required Voluntary Contributions. To the extent the
Excess Amount exceeds the sum of the aforementioned Employee contributions,
such excess shall be:
[] (i) placed in a suspense account accruing no gains or losses for the
benefit of the Participant.
[] (ii) reallocated as additional Employer contributions to all other
Participants to the extent that they do not have any Excess Amount.
[] (h) MINIMUM EMPLOYER CONTRIBUTION UNDER TOP-HEAVY PLANS: For any Plan
Year during which the Plan is Top-Heavy, the sum of the contributions and
forfeitures as allocated to eligible Employees under Sections 7(e), 7(f) and 9
of this Adoption Agreement shall not be less than the amount required under
paragraph 14.2 of the Plan. Top-Heavy minimums will be allocated to:
[] (i) all eligible Participants.
[] (ii) only eligible non-Key Employees who are Participants.
[] (i) RETURN OF EXCESS CONTRIBUTIONS AND/OR EXCESS AGGREGATE CONTRIBUTIONS:
In the event that one or more Highly Compensated Employees is subject to
both the ADP and ACP tests and the sum of such tests exceeds the Aggregate
Limit, the limit will be satisfied by reducing the ADP and/or the ACP of the
affected Highly Compensated Employees.
8. ALLOCATIONS TO TERMINATED EMPLOYEES
(This option is not applicable if Hours of Service are determined on the basis
of Elapsed Time selected under Section 3(d)(vi) above.)
[] (a) The Employer will not allocate Employer-related contributions to
Employees who terminate during a Plan Year, unless required to satisfy the
requirements of Code Section 401(a)(26) and 410(b). (These requirements are
effective for the 1993 Plan Year and for subsequent Plan Years.)
[] (b) The Employer will allocate Employer matching and other related
contributions as indicated below to Employees who terminate during the Plan
Year as a result of:
MATCHING OTHER
[] [] (i) retirement.
[] [] (ii) Disability.
[] [] (iii) death.
[] [] (iv) other termination of employment provided that
the Participant has completed a Year of Service
as defined for Allocation Accrual Purposes.
[] [] (v) other termination of employment even though
the Participant has not completed a Year of
Service.
[] [] (vi) termination of employment (for any reason)
provided that the Participant had completed a
Year of Service for Allocation Accrual Purposes.
9. ALLOCATION OF FORFEITURES
NOTE: Forfeitures of Excess Aggregate Contributions shall be applied at the end
of the Plan Year in which they occur to reduce Employer contributions.
Subsections (a), (b), (c) and (d) below apply to forfeitures of amounts other
than Excess Aggregate Contributions.
(a) ALLOCATION ALTERNATIVES:
If forfeitures are allocated to Particpants, such allocation shall be done in
the same manner as the Employer's contribution.
[] (i) Not applicable. All contributions are always fully vested.
[] (ii) Forfeitures shall be applied to reduce the Employer's contribution
for such Plan Year.
[] (iii) Forfeitures shall be allocated to Participants in the same manner
as the Employer's contribution.
(A) Amount attributable to Employer discretionary contributions and
Top-Heavy minimums will be allocated to:
[] all eligible Participants under the Plan.
[] only those Participants eligible for an allocation of matching
contributions in the current year.
(B) Amounts attributable to Employer Matching contributions will be
allocated to:
[] all eligible Participants.
[] only those Participants eligible for allocations of matching
contributions in the current year.
(b) REALLOCATION DATE FOR PLANS using daily valuations shall be the end of the
next Plan Year immediately following receipt of a cash out distribution.
(c) DATE FOR REALLOCATION (for Plans using other than daily valuations):
[] (i) Forfeitures shall be reallocated at the end of the Plan Year during
which the former Participant incurs his or her fifth consecutive one-year Break
in Service.
[] (ii) Forfeitures will be reallocated as of the next Valuation Date.
[] (iii) Forfeitures shall be reallocated at the end of the Plan Year
during which the former Employee incurs a one-year Break in Service.
[] (iv) Forfeitures will be reallocated as the Plan Year end.
(d) RESTORATION OF FORFEITURES:
If amounts are forfeited prior to five consecutive one-year Breaks in Service,
the Funds for restoration of account balances will be obtained from the
following resources in the order indicated (fill in the appropriate number):
___(i) current year's forfeitures.
___(ii) additional Employer contributions.
___(iii) income or gain to the Plan.
10. CASH OPTION
[] (a) The Employer may permit a Participant to elect to defer to the Plan an
amount not to exceed ____% of any Employer paid cash bonus made for such
Participant for any year. A Participant must file an election to defer such
contribution at least fifteen (15) days prior to the end of the Plan Year. If
the Employee fails to make such an election, the entire Employer paid cash
bonus to which the Pariticipant would be entitled shall be paid as cahs and not
to the Plan. Amounts deferred under this section shall be treated for all
purposes as Elective Deferrals. Notwithstanding the above, the election to
defer must be made before the bonus is made available to the Participant.
[] (b) Not applicable.
11. LIMITATIONS ON ALLOCATIONS
THIS SECTION IS NOT APPLICABLE IF THIS IS THE ONLY PLAN THE EMPLOYER MAINTAINS
OR EVER MAINTAINED. PLANS INCLUDE WELFARE BENEFIT FUNDS AS DESCRIBED IN CODE
SECTION 419(e) OR AN INDIVIDUAL MEDICAL ACCOUNT AS DEFINED UNDER CODE SECTION
415(l)(2) UNDER WHICH AMOUNTS ARE TREATED AS ANNUAL ADDITIONS.
[] (a) If the Participant is covered under another qualified Defined
Contribution Plan maintained by the Employer, other than a Master or Prototype
Plan
[] (i) the provisions of Article X of the Plan will apply, as if the other
plan were a Master or Prototype Plan.
[] (ii) Attach provisions stating the method under wich the plans will
limit total Annual Additoins to the Maximum Permissible Amount, and will
properly reduce any Excess Amounts, in a manner that precludes Employer
discretion.
[] (b) If a Participant is or ever has been a Participant in a Defined Benefit
Plan maintained by the Employer:
Attach provisions which will satisfy the 1.0 limitation of Code Section 415(e).
Such language must preclude Employer discretion. The Employer must also specify
the interest and mortality assumptions used in determining Present Value in the
Defined Benefit Plan.
[] (c) The minimum contribution or benefit required under Code Section 416
relating to Top-Heavy Plans shall be satisfied by either:
[] (i) this Plan.
[] (ii) ___________________________(Name of other qualified plan of the
Employer).
[] (iii) Attach provisions stating the method under which the minimum
contribution and benefit provisions of Code Section 416 will be satisfied. If a
Defined Benefit Plan is or was maintained, an attachment must be provided
showing interest and mortality assumptions used in determining the Top-Heavy
Ratio.
12. VESTING
(a) COMPUTATION PERIOD: (This option is not applicable if Hours of Service are
determined on the basis of Elapsed Time selected under Section 3(d)(vi) above.)
The computation period for purposes of determining Years of Service and Breaks
in Service for purposes of computing a Participant's nonforfeitable right to
his or her account balance derived from Employer contributions:
[] (i) shall not be applicable since Participants are always fully vested.
[] (ii) shall commence on the first day of the Plan Year during which an
Employee first performs an Hour of Service for the Employer and each such
subsequent 12-consecutive-month period shall commence on the anniversary
thereof.
A Participant shall receive credit for a Year of Service if he or she completes
at least 1,000 Hours of Service [or if lesser, the number of hours specified at
3(k)(iii) of this Adoption Agreement] at any time during the
12-consecutive-month computation period. Consequently, a Year of Service may be
earned prior to the end of the 12-consecutive-month computation period and the
Participant need not be employed at the end of the 12-consecutive-month
computation period to receive credit for a Year of Service.
(b) VESTING SCHEDULES:
Contributions under Sections 6(a),(b),(c), 7(c)(v) and (d) are always fully
vested.
NOTE: The vesting schedules below only apply to a Participant who has at least
one Hour of Service during or after the 1989 Plan Year. If applicable,
Participants who separated from Service prior to the 1989 Plan Year will remain
under the vesting schedule as in effect in the Plan prior to amendment for the
Tax Reform Act of 1986.
[ ] (i) Full and immediate Vesting.
Years of Service
1 2 3 4 5 6 7
--------------------------------------------
[ ] (ii) ___% 100%
[ ] (iii) ___% ___% 100%
[ ] (iv) ___% 20% 40% 60% 80% 100%
[ ] (v) ___% ___% 20% 40% 60% 80% 100%
[ ] (vi) 10% 20% 30% 40% 60% 80% 100%
[ ] (vii) ___% ___% ___% ___% 100%
[ ] (viii)___% ___% ___% ___% ___% ___% 100%
NOTE: The percentages selected for schedule (viii) may not be less for any
year than the percentages shown at schedule (v).
[] (A) All contributions other than those which are fully vested when
contributed will vest under schedule ____ above.
[] (B) All Matching Contributions will vest under schedule ____ above. All
other Employer contributions other than those which are fully vested when
contributed will vest under schedule ____ above.
(c) SERVICE DISREGARDED FOR VESTING:
[] (i) Not applicable. All Service shall be considered.
[] (ii) Service prior to the Effective Date of this Plan or a predecessor
plan shall be disregarded when computing a Participant's vested and
nonforfeitable interest.
[] (iii) Service prior to a Participant having attained age 18 shall be
disregarded when computing a Participant's vested and nonforfeitable interest.
(d) TOP-HEAVY VESTING:
Each Participant shall acquire a vested and nonforteitable percentage in
his or her account balance attributable to Employer contributions and the
earnings thereon under the procedures selected above except with respect to any
Plan Year during which the Plan is Top-Heavy, in which case the [] Two-twenty
vesting schedule [Section 12(b)(iv)] or [] Three-Year Cliff vesting schedule
[Section 12(b)(iii)] shall automatically apply unless the Employer has already
elected a faster vesting schedule. If the Plan is switched to Section 12
(b)(iii) or 12 (b)(iv) because of its Top-Heavy status, that vesting schedule
will remain in effect, even if the Plan later becomes non-Top-Heavy, until the
Employer executes an amendment of this Adoption Agreement indicating otherwise.
13. SERVICE WITH PREDECESSOR ORGANIZATION
For purposes of satisfying the Service requirements for Eligibility and
Vesting, Hours of Service shall include Service with the following predecessor
organization(s):
14. ROLLOVER/TRANSFER CONTRIBUTIONS
(a) Rollover Contributions, as described at paragraph 4.3 of the Plan, [] shall
[] shall not be permitted. If permitted, Employees [] may [] may not make
Rollover Contributions prior to meeting the eligibility requirements for
padicipation in the Plan.
(b) Transfer Contributions, as described at paragraph 4.4 of the Plan, [] shall
[] shall not be permitted. If permitted, Employees [] may [] may not make
Transfer Contributions prior to meeting the eligibility requirements for
participation in the Plan.
NOTE: Even if available, the Employer may refuse to accept such contributions
if its Plan meets the safe-harbor rules of paragraph 8.7 of the Plan.
15. HARDSHIP WITHDRAWALS Hardship withdrawals, as provided for in paragraph 6.9
of the Plan, [] are [] are not permitted.
16. PARTICIPANT LOANS Participant loans, as provided for in paragraph 13.4 of
the Plan, [] are [] are not permitted. If permitted, repayments of principal
and interest shall be repaid to the Participant's segregated account.
17. EMPLOYER INVESTMENT DIRECTION The Employer investment direction provisions,
as set forth in paragraph 13.5 of the Plan, [] shall [] shall not be
applicable.
18. EMPLOYEE INVESTMENT DIRECTION The Employee investment direction provisions,
as set forth in paragraph 13.6 of the Plan, [] shall [] shall not be
applicable.
NOTE: To the extent that Employee investment direction was previously allowed,
the Trustee shall have the right to either make the assets part of the general
Trust, or leave them as separately invested subject to the provisions of
paragraph 13.6 of the Plan.
19. EARLY PAYMENT OPTION
(a) A Participant who separates from Service prior to retirement, death or
Disability [] may [] may not make application to the Employer requesting an
early payment of his or her vested account balance. Amounts under $3,500 []
will [] will not be cashed out immediately.
(b) A Participant who has not separated from Service [] may [] may not obtain a
distribution of his or her vested Employer contributions. Distribution can only
be made if the Participant has completed five Years of Service.
(c) A Participant who has attained age 59-1/2 and has not separated from
Service [] may [] may not obtain a distribution of his or her vested Employer
contributions.
(d) A Participant who has attained the Plan's Normal Retirement Age and who has
not separated from Service [] may [] may not receive a distribution of his or
her vested account balance.
NOTE: If the Participant has had the right to withdraw his or her account
balance in the past, this right may not be taken away. Notwithstanding the
above to the contrary, required minimum distributions will be paid. For timing
of distributions, see Section 20(a) below.
20. DISTRIBUTION OPTION
(a) TIMING OF DISTRIBUTIONS:
In cases of termination for other than death, Disability or retirement,
benefits shall be paid:
[] (i) as soon as administratively feasible following the close of the
valuation period during which a distribution is requested or is otherwise
payable.
[] (ii) as soon as administratively feasible following the close of the
Plan Year during which a distribution is requested or is otherwise payable.
[] (iii) as soon as administratively feasible following the date on which a
distribution is requested or is otherwise payable.
[] (iv) as soon as administratively feasible after the close of the Plan
Year during which the Participant incurs a one-year Break in Service.
[] (v) only after the Participant has achieved the Plan's normal Retirement
Age, or Early Retirement Age, if applicable.
In cases of death, Disability or retirement, benefits shall be paid:
[](vi) as soon as administratively feasible following the cloase of the
valuation period during which a distribution is requested or is otherwise
payable.
[] (vii) as sson as administratively feasible following the cloase of the
Plan Year during which a distribution is requested or is otherwise payable.
[] (viii) as soon as administratively feasible following the date on which
a distribution is requested or is otherwise payable.
(b) OPTIONAL FORMS OF PAYMENT:
[] (i) Lump Sum.
[] (ii) Installment Payments.
[] (iii) Other form(s) as previously provided (indicate all forms that
apply):
(c) RECALCULATION OF LIFE EXPECTANCY:
In determining required distributions under the Plan, a Participant and/or
Spouse (Surviving Spouse) [] shall [] shall not have the right to have their
life expectancy recalculated annually.
If "shall",
[] only the Participant shall be recalculated.
[] both the Participant and Spouse shall be recalculated.
[] who is recalculated shall be determined by the Participant.
21. SPONSOR CONTACT Employers should direct questions concerning the language
contained in and the qualification of the Prototype to:
Capital Guardian Trust Company
Corporate Employee Benefits Department
Phone Number: 714/671-7000
In the event that the Sponsor amends, discontinues or abandons this Prototype
Plan, notification will be provided to the Employer at the address provided on
the first page of this Adoption Agreement.
22. SIGNATURES
DUE TO THE SIGNIFICANT TAX RAMIFICATIONS, THE SPONSOR RECOMMENDS THAT BEFORE
THE EMPLOYER EXECUTES THIS ADOPTION AGREEMENT, THE EMPLOYER CONTACT ITS
ATTORNEY OR TAX ADVISOR.
(a) EMPLOYER DELEGATE OR COMMITTEE APPOINTMENT:
The Employer has appointed the following individual(s) to act on behalf of
the Employer regarding all communications and requests between the Employer and
the Recordkeeper, pursuant to the terms and conditions of the Plan. Unless
otherwise directed by the Employer in written directions to the Recordkeeper,
the Recordkeeper may act upon the instructions of any one of the persons listed
below.
Name(s) (please type or print) Signature(s)
1.___________________________ 1.____________________________
Address______________________
_____________________________
2.___________________________ 2.____________________________
Address______________________
_____________________________
3.___________________________ 3.____________________________
Address______________________
_____________________________
(b) EMPLOYER:
Name and address of Employer if different than specified in Section 1
above.
The Employer hereby adopts the Plan, appoints Capital Guardian Trust
Company as Trustee and directs that contributions to the Plan shall be invested
in accordance with the instructions provided by it. The Employer has read the
Plan and Trust and Adoption Agreement, agrees to the terms and conditions set
forth therein and has consulted with an attorney about the effect of
establishing the Plan.
This agreement and the corresponding provisions of the Plan and Trust Basic
Plan Document #03 were adopted by the Employer the___________________ day
of __________________,19__.
Signed for the Employer by: _______________________
Title:_____________________________________________
Signature:_________________________________________
THE EMPLOYER UNDERSTANDS THAT ITS FAILURE TO PROPERLY COMPLETE THE ADOPTION
AGREEMENT MAY RESULT IN DISQUALIFICATION OF ITS PLAN.
Employer's Reliance: The adopting Employer may not rely on the opinion
letter issued by the National Office of the Internal Revenue Service as
evidence that the Plan is qualified under Section 401. In order to obtain
reliance with respect to Plan qualification, the Employer must apply to the
appropriate Key District Office for a determination letter.
This Adoption Agreement may only be used in conjunction with Basic Plan
Document #03.
(c) TRUSTEE APPOINTMENT AND ACCEPTANCE:
The Employer hereby appoints Capital Guardian Trust Company to serve as
Trustee, and such Trustee hereby confirms acceptance of the appointment and
duties pursuant to the accompanying Plan and this Adoption Agreement.
Signed for the Trustee by:______________________________________
Title:__________________________________________________________
Signature:______________________________________________________
NOTE: In accordance with paragraph 13.7 of Basic Plan Document #03 an
additional trustee may be appointed to govern Plan assets held outside the
Fund. If so, the additional trustee shall be appointed in a separate trust
agreement.
Litho in USA CGD/CLA/2982
(c)1996 American Funds Distributors, Inc.
Lit. No. RP401(k)-002-0696
SIMPLE INDIVIDUAL RETIREMENT TRUST ACCOUNT
DO NOT File
With the Internal
Revenue Service
Name of participant__________________________________________
Date of birth of participant_________________________________
Social security number _________________________________
Address of Participant _______________________________
Check if transfer SIMPLE IRA [ ]
Check if amendment [ ]
Name of trustee
CAPITAL GUARDIAN TRUST COMPANY
Address or principal place of business of trustee
333 S. HOPE STREET, LOS ANGELES, CA 90071
The participant whose name appears above is establishing a savings incentive
match plan for employees of small employers individual retirement account
(SIMPLE IRA) under sections 408(a) and 408(p) of the Internal Revenue Code to
provide for his or her retirement and for the support of his or her
beneficiaries after death.
The trustee named above has given the participant the disclosure statement
required under Regulations section 1.408-6.
The participant and the trustee make the following agreement:
ARTICLE I
The trustee will accept cash contributions made on behalf of the participant
by the participant's employer under the terms of a SIMPLE plan described in
section 408(p). In addition, the trustee will accept transfers or rollovers
from other SIMPLE IRAs of the participant. No other contributions will be
accepted by the trustee.
ARTICLE II
The participant's interest in the balance in the trust account is
nonforfeitable.
ARTICLE III
1. No part of the trust funds may be invested in life insurance contracts, nor
may the assets of the trust account be commingled with other property except in
a common trust fund or common investment fund (within the meaning of section
408(a)(5)).
2. No part of the trust funds may be invested in collectibles (within the
meaning of section 408(m)) except as otherwise permitted by section 408(m)(3),
which provides an exception for certain gold and silver coins and coins issued
under the laws of any state.
ARTICLE IV
1. Notwithstanding any provision of this agreement to the contrary, the
distribution of the participant's interest in the trust account shall be made
in accordance with the following requirements and shall otherwise comply with
section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section 1.401
(a)(9)-2, the provisions of which are herein incorporated by reference.
2. Unless otherwise elected by the time distributions are required to begin to
the participant under paragraph 3, or to the surviving spouse under paragraph
4, other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the participant
and the surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
3. The participant's entire interest in the trust account must be, or begin to
be, distributed by the participant's required beginning date (April 1 following
the calendar year end in which the participant reaches age 70~/2). By that
date, the participant may elect, in a manner acceptable to the trustee, to have
the balance in the trust account distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the life of the participant.
(c) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the joint and last survivor lives of the
participant and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period that
may not be longer than the participant's life expectancy.
(e) Equal or substantially equal annual payments over a specified period that
may not be longer than the joint life and last survivor expectancy of the
participant and his or her designated beneficiary.
4. If the participant dies before his or her entire interest is distributed to
him or her, the entire remaining interest will be distributed as follows:
(a) If the participant dies on or after distribution of his or her interest
has begun, distribution must continue to be made in accordance with paragraph
3.
(b) If the participant dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the participant
or, if the participant has not so elected, at the election of the beneficiary
or beneficiaries, either
(i) Be distributed by the December 31 of the year containing the fifth
anniversary of the participant's death, or
(ii) Be distributed in equal or substantially equal payments over the life or
life expectancy of the designated beneficiary or beneficiaries starting by
December 31 of the year following the year of the participant's death. If,
however, the beneficiary is the participant's surviving spouse, then this
distribution is not required to begin before December 31 of the year in which
the participant would have reached age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has irrevocably
commenced, distributions are treated as having begun on the participant's
required beginning date, even though payments may actually have been made
before that date.
(d} If the participant dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted in the
account.
5. In the case of a distribution over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment
for each year, divide the participant's entire interest in the trust account as
of the close of business on December 31 of the preceding year by the life
expectancy of the participant (or the joint life and last survivor expectancy
of the participant and the participant's designated beneficiary, or the life
expectancy of the designated beneficiary, whichever applies). In the case of
distributions under paragraph 3, determine the initial life expectancy (or
joint life and last survivor expectancy) using the attained ages of the
participant and designated beneficiary as of their birthdays in the year the
participant reaches age 70 1/2. In the case of a distribution in accordance
with paragraph 4(b)(ii), determine life expectancy using the attained age of
the designated beneficiary as of the beneficiary's birthday in the year
distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
ARTICLE V
1. The participant agrees to provide the trustee with information necessary
for the trustee to prepare any reports required under sections 408(i) and
4080(I)(2) and Regulations section 1.408-5 and 1.408-6.
2. The trustee agrees to submit reports to the Internal Revenue Service and
the participant as prescribed by the Internal Revenue Service.
3. The trustee also agrees to provide the participant's employer the summary
description described in section 408(I)(2) unless this SIMPLE IRA is a transfer
SIMPLE IRA.
ARTICLE VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with sections 408(a) and 408(p) and
related regulations will be invalid.
ARTICLE VII
This agreement will be amended from time to time to comply with the provisions
of the Code and related regulations. Other amendments may be made with the
consent of the persons whose signatures appear below.
ARTICLE VIII
SECTION I - ESTABLISHMENT OF ACCOUNT
By executing the American Funds SIMPLE IRA Application ("Application") the
Participant (as defined in IRS Form 5305-S) thereby establishes the Account,
which shall hold all assets deposited with the Trustee, for the exclusive
benefit of the Participant and the Participant's beneficiaries under the IRS
Form 5305-S trust provisions and the terms in this Article VIII Agreement
("Agreement").
SECTION 2 - INVESTMENT OF ACCOUNT ASSETS
Pursuant to the Participant's written instructions, or the written
instructions of the employer on behalf of the Participant under a payroll
deduction plan, each cash contribution to the Account shall be applied to the
purchase of shares of the Fund or Funds currently designated by the Participant
("Fund" or "Funds") at the applicable offering price in accordance with the
terms of such Fund's prospectus and/or to the purchase of the designated
annuity contract acceptable to the Trustee. If no Fund is designated, the
contribution will be invested in The Cash Management Trust of America until
such time as the Participant, or the employer on behalf of the Participant
shall designate a Fund. The Participant, or if the Participant is deceased, the
beneficiary, may from time to time change the designation of the Fund for
investment of Account assets hereunder and may instruct the Trustee to exercise
the exchange privilege set forth in the Fund's prospectus. All dividends and
capital gain distributions shall be reinvested in Fund shares unless directed
otherwise by the Participant if the Participant has reached age 59 1/2.
Dividends received from any annuity contract shall be applied to the purchase
of paid-up additions to such policy's cash value. No part of an Account shall
be invested in life insurance contracts. No annuity contract acquired by the
Trustee shall have a fixed premium. Any refund of premiums (other than those
attributable to excess contributions) will be applied, before the close of the
calendar year following the year of the refund, toward the payment of future
premiums or the purchase of additional benefits. No annuity contract shall be
transferable by the Participant.
Fund shares and annuity contracts acquired by the Trustee shall be owned by
and registered in the name of the Trustee or of its registered nominee. The
assets of the Account will not be commingled with other Trustee property and
the purchase of Fund shares shall not be considered commingling.
SECTION 3 - TRANSFER OF ACCOUNT ASSETS
If the Trustee is the designated financial institution of the Participant's
employer's SIMPLE IRA Plan, the Participant may transfer contributions (both
the Participant's deferrals and the Participant's employer's contributions) to
another financial institution, trustee or custodian without cost or penalty by
notifying Capital Guardian Trust Company when the Participant initially
establishes the Account, or at any other time, by using an applicable form
provided by the Trustee. These transfer requests will be processed without cost
or penalty provided the Participant (i) provides the dollar amount to be
transferred (the request may not be stated as a percent of the account
balance); (ii) the frequency of such transfer (e.g., monthly, quarterly,
annually); and (iii) prior to the transfer, the contributions (both salary
deferrals and employer's contribution) to be transferred, which are initially
received by the Trustee, may only be invested in The Cash Management Trust of
America ("CMTA"). If the contribution to be transferred (including existing
balances that may be transferred) was not invested in CMTA, but in another
investment for which a charge (either a sales charge, contingent deferred sales
charge, surrender charge or other charge) ("Charge") was imposed, the transfer
cannot be made without cost or penalty, and the Trustee is not obligated to
refund such charge. The election will continue in force until the Participant
revokes it.
If the Trustee is not the designated financial institution of the SIMPLE IRA
Plan, a transfer of contributions to another financial institution may be made
at any time, but such a transfer is not required to be without cost or penalty.
If the Participant's contribution was invested in a mutual fund subject to a
Charge, then the Charge will not be refunded.
SECTION 4 - DISTRIBUTION OF ACCOUNT ASSETS
The Trustee has no duty to determine a Participant's eligibility for
distribution or to commence distribution until receipt of written instructions
from the Participant satisfactory to the Trustee.
The Participant, or if the Participant is deceased, the beneficiary,
beneficiaries or legal representative of the Participant, shall notify the
Trustee, in writing. of any request for distribution and such notice shall set
forth the amount and the date distributions shall commence and the requested
method of distribution.
SECTION 5 - BENEFICIARY DESIGNATION
The Participant shall have the right to designate or change a beneficiary to
receive any benefit from the Account to which such Participant may be entitled
in the event of the Participant's death prior to complete distribution of the
Account. If no such designation is in effect at the time of the Participant's
death, the Participant's beneficiary shall be the Participant's estate. The
Participant may designate or change a beneficiary only by written notice to the
Trustee in a form acceptable to the Trustee, or other manner acceptable to the
Trustee, but the Trustee shall have no responsibility to determine the validity
of a beneficiary designation.
The designation or change will, upon recording by the Trustee, take effect as
of the time the written notice was signed, whether or not the Participant is
living at the time of recording but without liability as to any payment or
other settlement made by the Trustee before recording the designation or
change. Notwithstanding the foregoing, no such designation or change shall take
effect with respect to any annuity contract held in the Account until accepted
by the insurance company issuing such annuity contract. Payment by the Trustee
made in good faith to any person who claims to be entitled to such payment
pursuant to a designation by the Participant, the terms of the Account or
applicable law shall relieve the Trustee of any further liability for such
payment.
SECTION 6 - CONCERNING THE TRUSTEE
The Trustee, or its designated agent ("Agent"), is authorized to establish
share accumulation accounts and systematic withdrawal plans (as described in
the prospectus of the Fund, and as customarily entered into with other
shareholders of the Fund) for the purpose of receiving and investing the
contributions made hereunder and reinvesting income dividends and capital gain
distributions. Upon each contribution or redemption the Trustee shall furnish
to the Participant a statement of the Account, showing amounts invested or
redeemed and the number and price of such shares. The Trustee is authorized to
deposit certificates for shares with itself or the Agent for the purpose of
safekeeping or otherwise, or to permit shares to be credited to the Trustee.
The Trustee shall not be obligated to secure certificates for such shares, and
in its discretion may permit such shares to remain unissued. The Trustee is not
liable for any act or failure to act of such Agent.
The Trustee is authorized to sell or redeem shares and to surrender annuity
contracts at the direction of the Participant, the Participant's legal
representative or the designated beneficiary.
The Trustee shall furnish an annual calendar-year statement to the Participant
setting forth receipts, investments, disbursements, and other transactions.
Upon expiration of 45 days after forwarding such statement, the Trustee shall
be forever released and discharged from all liability and accountability to
anyone with respect to its acts, transactions, duties, obligations, or
responsibilities as shown in or reflected by such statement, except with
respect to any such acts or transactions as to which the Participant, or the
beneficiary of a deceased Participant, shall have filed written objections with
the Trustee within such 45-day period.
The Trustee shall furnish to the Participant, either directly or indirectly,
notices, prospectuses, financial statements, proxies, and proxy-soliciting
materials relating to all assets credited to the Account. Any notification to
the Participant provided for under this Agreement shall be effective if sent by
first-class mail to the Participant's last address of record. The Trustee shall
not vote any of the Fund shares held in the Account except in accordance with
prior written instructions of the Participant.
The Trustee shall file such reports relating to the Account with the
appropriate government agency as the Trustee is required to file by law. The
Participant shall furnish such information to the Trustee which is necessary to
complete such reports and shall be responsible for all other records and
reports which the Trustee has not agreed, in writing, to prepare.
The Trustee shall not be liable to the Participant or beneficiaries for any
depreciation or similar loss of assets or for the failure of the Account to
produce any or larger net earnings. The Trustee shall not be liable for any act
or failure to act of itself, its agents, employees, or attorneys, so long as it
exercises good faith, is not guilty of negligence or willful misconduct, and
has selected such agents, employees, and attorneys with reason- able diligence.
The Trustee shall have no responsibility for the determination or verification
of the premium rates for any annuity contract or the offering or redemption
prices or net asset values of Fund shares, and shall be entitled to rely for
such rates, prices and net asset values upon statements issued by or on behalf
of the respective insurance company or Fund. The Trustee shall have no duty to
inquire into the investment practices of the Fund; the Fund shall have the
exclusive right to control the investment of its assets in accordance with its
stated policies; and the investments shall not be restricted to securities of
the character now or hereafter authorized for trustees by law or rules of
court. The Trustee shall not be liable or responsible for any omissions,
mistakes, acts or failures to act of the Fund, the insurance company issuing
any annuity contract provided for herein, or their successors, assigns or
agents.
The Trustee shall not be responsible in any way for the purpose or propriety
of any distribution made pursuant to instructions satisfactory to the Trustee,
the collection of contributions provided for hereunder, or any action or
nonaction taken pursuant to the request of the Participant, beneficiary or
legal representative of the Participant. The Trustee shall have no duty to
determine whether contributions made to the Account satisfy the applicable
limits set forth in Article I of IRS Form 5305-S. The Trustee shall have no
obligation to give advice to anyone on the deductibility of any contributions
or the tax due, if any, on payments made hereunder or to determine the amount
of any excess contribution and the net income attributable thereto. It the
Participant has authorized telephone exchanges under the Application or other
form provided by the Trustee, the Trustee may make investment exchanges for
this Account or any other account with the same registration in accordance with
the instructions received from any person by telephone, telecopier or other
electronic means and shall have no obligation to question any instructions so
received or liability for the transactions it performs pursuant to such
instructions.
SECTION 7 - TRUSTEE FEE AND EXPENSES OF THE ACCOUNT
Any income taxes or other taxes of any kind whatsoever that may be levied or
assessed upon or in respect of the Account shall be paid from the assets of the
Account. The compensation of the Trustee, any transfer taxes incurred in
connection with the investment and reinvestment of the assets of the Account,
and all administrative expenses incurred by the Trustee in the performance of
its duties, including fees for legal ser- vices rendered to the Trustee, shall
either be deducted from contributions and charged to the Account, or shall be
paid by redeeming or surrendering the necessary assets credited to the Account,
unless otherwise paid by the Participant, but until paid shall constitute a
lien upon the assets of the Account.
The compensation of the Trustee shall be such fees as the Trustee shall advise
the Participant in writing. There may be additional charges for further
services requested of the Trustee.
SECTION 8 - AMENDMENT AND TERMINATION
The Participant, by establishing this Account, delegates to the Trustee the
power to amend, retroactively or prospectively, the Trust Agreement as
necessary to conform the Trust Agreement to the Code, other laws, or other
reasonable reason as determined in good faith by the Trustee, including the
power to appoint a successor trustee, and by doing so shall be deemed to have
consented to each such amendment or modification. No amendment shall be made
which would have the effect of allowing any part of the Account to be used for
any purpose other than for the exclusive benefit of the Participant or
Participant's beneficiary.
This Agreement may, at Trustee's option, terminate upon the transfer or
complete distribution of the Account, or at the discretion of the Trustee at
any time upon 30-days prior written notice to the Participant.
SECTION 9 - RESIGNATION OR REMOVAL OF THE TRUSTEE
The Trustee may resign at any time upon 30 days' prior written notice to the
Participant, and may be removed by the Participant at any time upon 30 days'
prior written notice to the Trustee. Upon such resignation or removal, the
Participant shall appoint a qualified successor to the Trustee, and at the
request of the Participant, the Trustee shall transfer and pay over to such
successor the assets of the Account or the proceeds from the sale of such
assets. The Trustee may, in its discretion, make an independent determination
as to such successor's qualified status. The Trustee is authorized, however, to
reserve such sum of money as it may deem advisable for payment of any liability
constituting a charge against the assets of the Account or against the Trustee,
with any balance remaining after the payment of all such items to be paid over
to such successor.
If, within 30 days after the Trustee's resignation or removal a qualified
successor has not been appointed, the Trustee shall distribute the assets in a
lump sum to the Participant.
SECTION 10 - MISCELLANEOUS
This Agreement shall bind and inure to the benefit of the representatives,
successors, and assigns of the Participant and the Trustee.
Neither the assets nor the benefits provided for hereunder shall be subject to
alienation, anticipation, assignment, garnishment, attachment, execution or
levy of any kind, and any attempt to cause such benefits to be so subjected
shall not be recognized. The Participant shall have no right to assign,
transfer or pledge any interest in the Account, and the Participant's interest
in the Account shall not be subject to any claims of creditors. However, to the
extent permitted by applicable law, the Trustee is authorized to redeem Fund
shares and forward the proceeds to any governmental agency which may place a
garnishment, levy, or other related action against the Account's assets.
In the event a distribution is payable to a minor, the Trustee may transfer
the proceeds to a custodian selected by the Trustee under the applicable
state's Uniform Gifts to Minors Act or Uniform Transfers to Minors Act.
The Account shall be construed in accordance with the laws of the state
wherein the Trustee is domiciled. In the case of any conflict between the
provisions of the Trust Agreement and the Application, the Trust Agreement
shall control.
Participant's signature ..................................
Date ......................................
(If an individual other than the participant signs this form for the
participant, indicate the individual's relationship to the participant.)
Trustee's signature /s/ Michael D. Beckman
Date ......................................
Witness............................................................
(use only if signature of the participant or the trustee is required to be
witnessed.)
GENERAL INSTRUCTIONS
Section references are to the Internal Revenue Code unless otherwise noted.
PURPOSE OF FORM
Form 5305-S is a model trust account agreement that meets the requirements of
sections 408(a) and 408(p) and has been automatically approved by the IRS. An
individual retirement account (IRA) is established after the form is fully
executed by both the individual (participant) and the trustee. This account
must be created in the United States for the exclusive benefit of the
participant or his or her beneficiaries.
Individuals may rely on regulations for the Tax Reform Act of 1986 to the
extent specified in those regulations.
Do not file Form 5305-S with the IRS. Instead, keep it for your records.
For more information on IRAs, including the required disclosures the trustee
must give the participant, get Pub. 590, Individual Retirement Arrangements
(IRAs).
DEFINITIONS
PARTICIPANT.--The participant is the person who establishes the trust account.
TRUSTEE.--The trustee must be a bank or savings and loan association, as
defined in section 408(n), or any person who has the approval of the IRS to act
as trustee.
TRANSFER SIMPLE IRA
This SIMPLE IRA is a "transfer SIMPLE IRA" if it is not the original recipient
of contributions under any SIMPLE plan. The summary description requirements of
section 408(I)(2) do not apply to transfer SIMPLE IRAs.
SPECIFIC INSTRUCTIONS
ARTICLE IV.--Distributions made under this article may be made in a single sum,
periodic payment, or a combination of both. The distribution option should be
reviewed in the year the participant reaches age 70 1/2 to ensure that the
requirements of section 408(a)(6) have been met.
ARTICLE VIII.--Article VIII and any that follow it may incorporate additional
provisions that are agreed to by the participant and trustee to complete the
agreement. They may include, for example, definitions, investment powers,
voting rights, exculpatory provisions, amendment and termination, removal of
the trustee, trustee's fees, state law requirements, beginning date of
distributions, accepting only cash, treatment of excess contributions,
prohibited transactions with the participant, etc. Use additional pages if
necessary and attach them to this form.
NOTE: Form 5305-S may be reproduced and reduced in size.
THE AMERICAN FUNDS
SIMPLE INDIVIDUAL RETIREMENT ACCOUNT DISCLOSURE STATEMENT
(TO BE USED WITH IRS FORM 5305-S)
You may revoke your SIMPLE Individual Retirement Account ("SIMPLE IRA") by
notice of revocation within seven days after the establishment of your account.
Your SIMPLE IRA is established and accepted on the date you execute the Form
5305-S SIMPLE Individual Retirement Account Application form. An oral notice of
revocation may be made by telephoning the Retirement Plan Services Department
at this number: 800-421-0180, ext. 3. Alternatively, you may mail your
revocation to Capital Guardian Trust Company, P.O. Box 4600, Brea, CA
92822-4600. The revocation will be considered given as of the postmark date.
Upon revocation the entire amount of your contribution will be returned to you
without adjustment for administrative expenses or fluctuations in market value.
The following is a brief summary of some of the financial and tax consequences
of establishing a SIMPLE IRA.
I. CONTRIBUTIONS TO THE TRUST ACCOUNT
1. LIMITATION ON AMOUNT OF CONTRIBUTIONS. Contributions to the SIMPLE IRA may
be either salary deferral contributions or employer contributions.
Contributions must be made in cash and cannot exceed the maximum amount allowed
under the Internal Revenue Code.
Contributions deferred by you from salary on a pre-tax basis made to your
SIMPLE IRA are limited to $6,000. In addition, your employer may either (i)
make a dollar-for-dollar match of up to 3% of your compensation or (ii) make a
nonelective contribution on your behalf, equal to 2% of your compensation
(compensation for this nonelective contribution is limited to $160,000). No
other contributions may be made to your SIMPLE IRA. Rollovers into your SIMPLE
IRA may only be made from another SIMPLE IRA.
2. EXCESS CONTRIBUTIONS. If contributions to your SIMPLE IRA for any taxable
year are greater than the maximum amount, the excess amount will be
subject to an annual 6% excise tax. However, this tax can be avoided if you
withdraw your excess contributions plus any earnings on the excess on or before
the due date, including extensions, for your federal tax return for the year in
which the excess contributions are made.
3. INVESTMENT OF CONTRIBUTIONS. Under the terms of the Trust Agreement, your
contributions will be invested by the Trustee, Capital Guardian Trust
Company, in accordance with your written instructions or the written
instructions of your employer on your behalf. These investment
instructions must direct the Trustee to invest your contributions to the SIMPLE
IRA in shares of the mutual fund you designate. If you fail to make such
designation, your contributions will be invested in The Cash Management Trust
of America until the Trustee receives from you a proper designation. No
part of your SIMPLE IRA will be invested in life insurance contracts.
Any dividends or refund of premiums received from any annuity contract held in
your SIMPLE IRA will be applied in the next year toward the payment of
future annuity premiums or to purchase additional benefits.
The Trust Agreement provides that your entire interest in the assets held in
your SIMPLE IRA is nonforfeitable at all times and that such assets will not
be commingled with other property.
4. TRANSFER OF CONTRIBUTIONS WITHOUT COST OR PENALTY. If Capital Guardian
Trust Company is the designated financial institution of your employer's
SIMPLE IRA Plan, you may transfer your contributions received by Capital
Guardian Trust Company (both your deferrals and your employer's contributions)
to another financial institution, trustee or custodian without cost or penalty
by notifying Capital Guardian Trust Company when you initially establish your
SIMPLE IRA account, or at any other time, by using Capital Guardian Trust
Company's SIMPLE Transfer Election Form. Capital Guardian Trust Company will
process this request without cost or penalty provided you meet the following
transfer requirements. All contributions to be transferred (including any prior
contributions) which are initially received by Capital Guardian Trust Company
must be invested only in The Cash Management Trust of America (CMTA), as other
funds may be subject to a sales charge that is not refundable. When requesting
a transfer, you must provide the dollar amount to be transferred (the request
may not be stated as a percent of the account balance) and the frequency of
such transfer (e.g. monthly, quarterly, annually). The election will
continue in force until you revoke it. If you elect not to invest in CMTA but
in an American Funds mutual fund for which a sales charge is applicable,
you may also transfer these contributions but the transfer cannot be made
without cost or penalty, since the sales charge will not be refunded.
If Capital Guardian Trust Company is not the designated financial institution
of your employer's SIMPLE IRA Plan, you may also transfer your contributions
to another financial institution at any time, but such a transfer is not
required to be without cost or penalty. To initiate such a transfer, contact
the new trustee or custodian to obtain the appropriate forms. Capital Guardian
Trust Company will complete a "trustee to trustee," or similar transfer, of all
or a portion of your SIMPLE IRA account balance upon receipt of the recipient
institution's acceptance of the SIMPLE IRA account. If your contribution was
invested in a mutual fund subject to a sales charge, then the sales charges
will not be refunded.
II, DISTRIBUTIONS FROM THE SIMPLE IRA
1. TAXATION OF DISTRIBUTIONS. Distributions from your SIMPLE IRA are taxed as
ordinary income. Provisions for 5- and 10-year income averaging and capital
gain treatment are not available for "lump sum distributions" from IRAs,
including SIMPLE IRAs.
2. PENALTY TAX ON PREMATURE DISTRIBUTIONS. Except in the case of death,
disability, certain rollovers, the return of excess contributions,
distributions for certain catastrophic medical expenses or after an extended
period of unemployment to cover health insurance premiums, or payments
made in substantially equal installments, any distribution made before you
reach age 59 1/2 will be subject to a penalty tax of 10% of the amount of the
distribution. However, the 10% penalty increases to 25% for those distributions
taken before you have participated in the SIMPLE for at least two years.
3. REQUIRED DISTRIBUTIONS. Your entire interest must be distributed beginning
April 1 of the calendar year following the year in which you reach age 70 1/2,
over the life expectancy of yourself, the life expectancies of yourself and
your designated beneficiary, or the life expectancy of your designated
beneficiary, whichever is applicable. Your entire account balance must be
distributed by the end of the final year of your life (or joint life)
expectancy(is).
4. PENALTY TAX FOR INSUFFICIENT DISTRIBUTIONS. Distributions of amounts less
than the minimum required to be distributed after the individual reaches
age 70 1/2 will be subject to a 50% penalty tax on the difference between the
amount required to be distributed and the amount actually distributed in that
year. The Internal Revenue Service (IRS) can waive the 50% penalty tax if the
insufficient distribution was due to reasonable error and steps are taken to
correct the underdistribution.
5. EXCISE TAX ON EXCESS DISTRIBUTIONS. A 15% excise tax is imposed on
distributions received in a taxable year from all retirement plans to the
extent the amounts exceed the greater of:-(1) $112,500, indexed for inflation,
or (2) $150,000. Upon death, the tax is imposed on the amount by which the
value of all retirement plan interests on the date of death exceed the present
value of $112,500, as indexed (or $150,000), received over life expectancy.
6. DISTRIBUTIONS UPON YOUR DEATH. If you die before your entire interest is
distributed, the remaining portion of your account must be distributed at least
as rapidly as under the distribution method in effect prior to death. If
distributions have not begun before death, they must be paid out in a five-year
period, with the following two exceptions: 1) benefits may be paid out over the
life expectancy of a nonspouse beneficiary, provided such benefits begin no
later than December 31 of the year following the year of death and 2) benefits
may be distributed to your surviving spouse over the life expectancy of the
spouse, provided that the distributions start no later than December 31 of the
year in which you would have reached age 70 1/2. Your spouse, as beneficiary,
may treat the SIMPLE IRA as his or her own by completing a new IRA application.
7. ESTATE AND GIFT TAXES. Upon your death, distributions from your SIMPLE IRA
are subject to federal estate taxes under Sec. 2039(a) of the Internal Revenue
Code unless the account is left to a surviving spouse in a form which qualifies
the bequest for the unlimited marital deduction. Any estate taxes will be
increased by 15% of a deceased account holder's excess accumulation upon the
date of death.
For gift tax purposes, beneficiary designations will not be treated as gifts.
8. ROLLOVERS OR TRUSTEE-TO-TRUSTEE TRANSFERS. The proceeds of your SIMPLE IRA
may be used as a rollover or a trustee-to-trustee transfer to another IRA
or annuity, after you have completed two years of participation in the SIMPLE,
or to another SIMPLE IRA if you have not completed two years of participation
in the SIMPLE. A rollover or trustee-to-trustee transfer from your SIMPLE IRA
into another IRA or annuity that is not a SIMPLE IRA or annuity, before you
complete the two years of participation, will not be considered a valid
rollover or tax-free transfer, but a distribution from your SIMPLE IRA and a
contribution to the other IRA or annuity that does not qualify as a rollover
contribution.
III. TAX STATUS OF TRUST ACCOUNT
1. TAX-EXEMPT STATUS. Generally, any contributions and earnings thereon held
in your SIMPLE IRA are exempt from federal income tax and will only be taxed
when distributed to you, unless the tax-exempt status of the plan is revoked.
Form 5305-S is an approved form released by the Internal Revenue Service to
meet the requirements of Sec. 408(p) of the Internal Revenue Code. Such
approval is a determination as to the SIMPLE IRA terms only and is not a
determination of the merits of the SIMPLE IRA as an investment.
2. LOSS OF EXEMPTION. The tax-exempt status of the SIMPLE IRA will be revoked
if you engage in any of the prohibited transactions listed in Sec. 4975(c)
of the Internal Revenue Code, such as borrowing money from the SIMPLE IRA. The
fair market value of the SIMPLE IRA will be includable in your taxable income
in the year in which such prohibited transaction takes place and may also be
subject to a 10% penalty tax.
In addition, the SIMPLE IRA will lose its tax-exempt status if you use all or
part of your interest in the SIMPLE IRA as security for a loan. Any portion
of the SIMPLE IRA used as security for a loan will be treated as a distribution
in the year in which such use occurs. If you are under age 59 1/2, the
amount of the loan will also be subject to a 10% (or 25%, as applicable) tax
penalty as a premature distribution.
IV. ADDITIONAL TAX INFORMATION
1. For years in which excess contributions have been made to your SIMPLE IRA,
or you received from your account premature distributions, or
underdistributions after reaching age 70 1/2, you are required to file with the
IRS Form 5329 "Return for Additional Taxes Attributable to Qualified
Retirement Plans (including IRAs), Annuities and Modified Endowment Contracts"
along with your individual tax return for that year.
2. Further information about your SIMPLE IRA can be obtained from any district
office of the IRS.
V. FINANCIAL INFORMATION
When calculating earnings on the account, reinvested dividends and capital
gain distributions are purchased at net asset value ("NAV") on the
reinvestment date. The number of shares in the account at the end of the period
is multiplied by the NAV per share at the end of the period to determine the
ending value. The difference between the ending value and the initial
investment equals the earnings for the period.
If $1,000 is invested in any fund other than The Cash Management Trust of
America, (CMTA) or The U.S. Treasury Money Fund of America (CTRS) and a reduced
sales charge is not available, the highest sales charge would be $57.50, or
5.75% of the contribution. See the prospectus of each fund for further details.
If $1000 is invested in CMTA or CTRS, no sales charge would be imposed. In
addition, there is a $10 annual trustee fee which may be paid by your employer
or deducted from your account. The future growth results of your investment in
mutual fund shares cannot be guaranteed or projected.
Printed on recycled paper
Litho in USA CGD/WPG/3277 $1997 American Funds Distributors, Inc.
Lit. No. RPSB-007-0197
FORM 5305-SIMPLE OMB No. 1545-1502
(October 1996) DO NOT File with
Department of the Treasury the Internal
Internal Revenue Service Revenue Service
SAVINGS INCENTIVE MATCH PLAN FOR
EMPLOYEES OF SMALL EMPLOYERS (SIMPLE)
(for Use With a Designated Financial Institution)
________________________________establishes the following SIMPLE
Name of Employer
plan under section 408(p) of the Internal Revenue Code and pursuant to the
instructions contained in this form.
ARTICLE I - EMPLOYEE ELIGIBILITY REQUIREMENTS (Complete appropriate box(es) and
blanks - see instructions.)
1. GENERAL ELIGIBILITY REQUIREMENTS. The Employer agrees to permit salary
reduction contributions to be made in each calendar year to the SIMPLE
individual retirement account or annuity established at the designated
financial institution (SIMPLE IRA) for each employee who meets the following
requirements (select either la or lb):
a [] FULL ELIGIBILITY. All employees are eligible.
b [] LIMITED ELIGIBILITY. Eligibility is limited to employees who are
described in both (i) and (ii) below:
(i) CURRENT COMPENSATION. Employees who are reasonably expected
to receive at least $___________ in compensation (not to exceed $5,000) for the
calendar year.
(ii) PRIOR COMPENSATION. Employees who have received at least
$____________ in compensation (not to exceed $5,000) during any _______
calendar year(s) (insert O, 1, or 2) preceding the calendar year.
2. EXCLUDABLE EMPLOYEES (OPTIONAL)
[] The Employer elects to exclude employees covered under a collective
bargaining agreement for which retirement benefits were the subject of good
faith bargaining.
ARTICLE II - SALARY REDUCTION AGREEMENTS (Complete the box and blank, if
appropriate - see instructions.)
1. SALARY REDUCTION ELECTION. An eligible employee may make a salary reduction
election to have his or her compensation for each pay period reduced by a
percentage. The total amount of the reduction in the employee's compensation
cannot exceed $6,000* for any calendar year.
2. TIMING OF SALARY REDUCTION ELECTIONS
a For a calendar year, an eligible employee may make or modify
a salary reduction election during the 60-day period
immediately preceding January 1 of that year. However, for
the year in which the employee becomes eligible to make
salary reduction contributions, the period during which the
employee may make or modify the election is a 60-day period
that includes either the date the employee becomes eligible
or the day before.
b In addition to the election periods in 2a, eligible employees
may make salary reduction elections or modify prior elections
__________________________________________ (If the Employer
chooses this option, insert a period or periods (e.g.
semi-annually, quarterly, monthly, or daily) that will apply
uniformly to all eligible employees.)
c No salary reduction election may apply to compensation that
an employee received, or had a right to immediately receive,
before execution of the salary reduction election.
d An employee may terminate a salary reduction election at any
time during the calendar year. [] If this box is checked, an
employee who terminates a salary reduction election not in
accordance with 2b may not resume salary reduction
contributions during the calendar year.
Article III - CONTRIBUTIONS (Complete the blank, if appropriate - see
instructions.)
1. SALARY REDUCTION CONTRIBUTIONS. The amount by which the employee agrees to
reduce his or her compensation will be contributed by the Employer to the
employee's SIMPLE IRA.
2. OTHER CONTRIBUTIONS
a MATCHING CONTRIBUTIONS
(i) For each calendar year, the Employer will contribute a matching
coniribution to each eligible employee's SIMPLE IRA equal to the employee's
salary reduction contributions up to a limit of 3% of the employee's
compensation for the calendar year.
(ii) The Employer may reduce the 3% limit for the calendar year in (i)
only if:
(1) The limit is not reduced below 1%; (2) The limit is not reduced
for more than 2 calendar years during the 5-year period ending with the
calendar year the reduction is effective; and (3) Each employee is notified of
the reduced limit within a reasonable period of time before the employees'
60-day election period for the calendar year (described in Article II, item
2a).
b NONELECTIVE CONTRIBUTIONS
(i) For any calendar year, instead of making matching contributions,
the Employer may make nonelective contributions equal to 2% of compensation for
the calendar year to the SIMPLE IRA of each eligible employee who has at least
$_____________ (not more than $5,000) in compensation for the calendar year. No
more than $160,000* in compensation can be taken into account in determining
the nonelective contribution for each eligible employee.
(ii) For any calendar year, the Employer may make 2% nonelective
contributions instead of matching contributions only if:
(1) Each eligible employee is notified that a 2% nonelective
contribution will be made instead of a matching contribution; and
(2) This notification is provided within a reasonable period of time
before the employees' 60-day election period for the calendar year (described
in Article II, item 2a).
3. TIME AND MANNER OF CONTRIBUTIONS
a The Employer will make the salary reduction contributions
(described in I above) to the designated financial
institution for the IRAs established under this SIMPLE plan
no later than 30 days after the end of the month in which the
money is withheld from the employee's pay. See instructions.
b The Employer will make the matching or nonelective
contributions (described in 2a and 2b above) to the
designated financial institution for the IRAs established
under this SIMPLE plan no later than the due date for filing
the Employer's tax return, including extensions, for the
taxable year that includes the last day of the calendar year
for which the contributions are made.
FOR PAPERWORK REDUCTION ACT NOTICE, SEE INSTRUCTIONS.
Cat. No. 23063F Form 5305-SIMPLE (10-96)
_________________________________________________________________
Form 5305-SIMPLE (10-96) Page 2
Article IV - OTHER REQUIREMENTS AND PROVISIONS
1. Contributions in General. The Employer will make no contributions to the
SIMPLE IRAs other than salary reduction contributions (described in Article
III, item 1) and matching or nonelective contributions (described in Article
III, items 2a and 2b).
2. VESTING REQUIREMENTS. All contributions made under this SIMPLE plan are
fully vested and nonforfeitable.
3. NO WITHDRAWAL RESTRICTIONS. The Employer may not require the employee to
retain any portion of the contributions in his or her SIMPLE IRA or otherwise
impose any withdrawal restrictions.
4. NO COST OR PENALTY FOR TRANSFERS. The Employer will not impose any cost or
penalty on a participant for the transfer of the participant's SIMPLE IRA
balance to another IRA.
5. AMENDMENTS TO THIS SIMPLE PLAN. This SIMPLE plan may not be amended except
to modify the entdes inserted in the blanks or boxes provided in Articles I,
II, III, VI, and VII.
6. EFFECTS OF WITHDRAWALS AND ROLLOVERS
a An amount withdrawn from the SIMPLE IRA is generally
includible in gross income. However, a SIMPLE IRA balance
may be rolled over or transferred on a tax-free basis to
another IRA designed solely to hold funds under a SIMPLE
plan. In addition, an individual may roll over or transfer
his or her SIMPLE IRA balance to any IRA on a tax-free
basis after a 2-year period has expired since the
individual first participated in a SIMPLE plan. Any
rollover or transfer must comply with the requirements
under section 408.
b If an individual withdraws an amount from a SIMPLE IRA
during the 2-year period beginning when the individual
first participated in a SIMPLE plan and the amount is
subject to the additional tax on early distributions under
section 72(t), this additional tax is increased from 10% to
25%.
Article V - DEFINITIONS
1. COMPENSATION
a General Definition of Compensation. Compensation means the
sum of the wages, tips, and other compensation from the
Employer subject to federal income tax withholding (as
described in section 6051(a)(3)) and the employee's salary
reduction contributions made under this plan, and, if
applicable, elective deferrals under a section 401(k) plan,
a SARSEP, or a section 403(b) annuity contract and
compensation deferred under a section 457 plan required to
be reported by the Employer on Form W-2 (as described in
section 6058(a)(8)).
b Compensation for Self-Employed Individuals. For
self-employed individuals, compensation means the net
earnings from self-employment determined under section
1402(a) prior to subtracting any contributions made
pursuant to this plan on behalf of the individual.
2. EMPLOYEE. Employee means a common-law employee of the Employer. The term
employee also includes a self-employed individual and a leased employee
described in section 414(n) but does not include a nonresident alien who
received no earned income from the Employer that constitutes income from
sources within the United States.
3. ELIGIBLE EMPLOYEE. An eligible employee means an employee who satisfies the
conditions in Article I, item 1 and is not excluded under Article I, item 2.
4. DESIGNATED FINANCIAL INSTITUTION. A designated financial institution is a
trustee, custodian, or insurance company (that issues annuity contracts) for
the SIMPLE plan that receives all contributions made pursuant to the SIMPLE
plan and deposits those contributions to the SIMPLE IRA of each eligible
employee.
Article VI - PROCEDURES FOR WITHDRAWAL
Capital Guardian Trust Company is the designated financial institution of the
Employer's SIMPLE IRA Plan. If an eligible employee participating in the plan
("Participant") wishes to transfer an existing investment or subsequent
contributions (both deferrals and Employer's contributions) received by Capital
Guardian Trust Company to another financial institution, trustee or custodian
without cost or penalty, the Participant may notify Capital Guardian Trust
Company when the Participant initially establishes a SIMPLE IRA account, or at
any other time, by using Capital Guardian Trust Company's SIMPLE Transfer
Election Form. Capital Guardian Trust Company will process this request without
cost or penalty provided certain transfer requirements are met:
- - Prior to the transfer, the existing investment or subsequent contributions
(both deferrals and Employer's contribution) that the Participant will transfer
may be invested only in The Cash Management Trust of America (CMTA), so that
the transfer may occur without cost or penalty. If the Participant elects not
to invest in CMTA but in an American Funds mutual fund for which a sales charge
is applicable, the Participant may also transfer these contributions, but the
transfer cannot be made without cost or penalty, since the sales charge will
not be refunded.
- - When requesting a transfer, the Participant must provide the dollar amount to
be transferred (the request may not be stated as a percent of the account
balance) and the frequency of such transfer (e.g., monthly, quarterly,
annually). The election will continue in force until the Participant revokes
it.
_________________________________________________________________
Form 5305-SIMPLE (10-96) Page 3
Article VII - EFFECTIVE DATE
This SIMPLE plan is effective_______________ .(See instructions.)
_________________________________ ______________________________
Name of Employer By: Signature Date
_________________________________ ______________________________
Address of Employer Name and title
The undersigned agrees to serve as designated financial institution, receiving
all contributions made pursuant to this SIMPLE plan and depositing those
contributions to the SIMPLE IRA of each eligible employee as soon as
practicable. Upon the request of any participant, the undersigned also agrees
to transfer the participant's balance in a SIMPLE IRA established under this
SIMPLE plan to another IRA without cost or penalty to the participant.
CAPITAL GUARDIAN TRUST COMPANY /s/Michael D. Beckman
______________________________ ________________________________
Name of designated By: Signature Date
financial institution
333 S. Hope Street Michael D. Beckman, Senior Vice President
Los Angeles, CA 90071 and Treasurer
_____________________ _________________________________________
Address Name and title
*This amount will be adjusted to reflect any annual cost-of-living increases
announced by the IRS.
Cut Here
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
MODEL NOTIFICATION TO ELIGIBLE EMPLOYEES
I. OPPORTUNITY TO PARTICIPATE IN THE SIMPLE PLAN
You are eligible to make salary reduction contributions to the SIMPLE plan.
This notice and the attached summary description provide you with information
that you should consider before you decide whether to start, continue, or
change your salary reduction agreement.
II. EMPLOYER CONTRIBUTION ELECTION
For the _____ calendar year, the employer elects to contribute to your
SIMPLE IRA (employer must select either (1), (2), or (3)):
[] (1) A matching contribution equal to your salary reduction contributions
up to a limit of 3% of your compensation for the year;
[] (2) A matching contribution equal to your salary reduction contributions
up to a limit of________% (employer must insert a number from 1 to 3 and
is subject to certain restrictions) of your compensation for the year; or
[] (3) A nonelective contribution equal to 2% of your compensation for the
year (limited to $160,000*) if you are an employee who makes at least $
________________ (employer must insert an amount that is $5,000 or less) in
compensation for the year.
III. ADMINISTRATIVE PROCEDURES
If you decide to start or change your salary reduction agreement, you must
complete the salary reduction agreement and return it
to__________________________________ (employer should designate a place or
individual)by __________________ (employer should insert a date that is not
less than 60 days after notice is given).
MODEL SALARY REDUCTION AGREEMENT
I. SALARY REDUCTION ELECTION
Subject to the requirements of the SIMPLE plan of ____________ (name of
employer) I authorize ____ % or
$__________________ (which equals _______% of my current rate of
pay) to be withheld from my pay for each pay period and contributed to my
SIMPLE IRA as a salary reduction contribution.
II. MAXIMUM SALARY REDUCTION
I understand that the total amount of my salary reduction contributions in
any calendar year cannot exceed $6,000.*
III. DATE SALARY REDUCTION BEGINS
I understand that my salary reduction contributions will start as soon as
permitted under the SIMPLE plan and as soon as administratively feasible or, if
later,_______________________ (Fill in the date you want the salary reduction
contributions to begin. The date must be after you sign this agreement.)
IV. DURATION OF ELECTION
This salary reduction agreement replaces any earlier agreement and will
remain in effect as long as I remain an eligible employee under the SIMPLE plan
or until I provide my employer with a request to end my salary reduction
contributions or provide a new salary reduction agreement as permitted under
this SIMPLE plan.
Signature of employee __________________________________
Date __________________________________
*This amount will be adjusted to reflect any annual cost-of-living increases
announced by the IRS.
Printed on recycled paper
Litho in USA CGD/WPG/3277
(c) 1997 American Funds Distributors, Inc.
Lit. No. RPSB-010-0297
[The American Funds Group(r)]
403(B) RETIREMENT PLAN AND CUSTODY AGREEMENT
TERMS AND CONDITIONS
ARTICLE I -- INTRODUCTION
This Agreement is intended to establish a Retirement Plan in accordance with
Sec. 403(b)(7) of the Code and shall be construed accordingly.
This Agreement shall take effect upon its execution by the Employer named on
the Application.
ARTICLE II -- Definitions As used in this Agreement, the following terms shall
have the meaning hereinafter set forth, unless a different meaning is plainly
required by the context:
1. "ACCOUNT" means the separate account(s) the Plan Administrator or the
Custodian, if separate sub-accounts are established by the Employer, maintains
for each Participant under the Plan.
2. "ACCOUNT BALANCE" means the value of the Participant's Account or
multiple Accounts as of any date.
3. "AGREEMENT" means the American Funds 403(b) Retirement Plan and Custody
Agreement.
4. "APPLICATION" means the accompanying instrument executed by the Employer
whereby the terms and conditions of the Agreement are adopted. The Application
is hereby made a part of the Agreement as if set forth herein.
5. "CODE" means the Internal Revenue Code of 1986, as amended.
6. "COMPENSATION" means the remuneration received by an Employee which is
includable in gross income for the taxable year of the Employee. For Plan Years
beginning on and after January 1, 1994, Compensation shall not exceed the
Omnibus Budget Reconciliation Act of 1993 (OBRA '93) annual compensation limit
of $150,000, as adjusted by the Commissioner for increases in the cost of
living in accordance with Sec. 401(a)(17)(B). The cost of living in effect for
a calendar year applies to any period, not exceeding 12 months, over which
Compensation is determined (determination period) beginning in such calendar
year. If a determination period consists of fewer than 12 months, the OBRA '93
annual compensation limit will be multiplied by a fraction, the numerator of
which is the number of months in the determination period, and the denominator
of which is 12. "Includable Compensation" means, for the Employee's Taxable
Year, the total Compensation paid to an Employee for services rendered to the
Employer which the Employee must include in gross income for his Taxable Year.
Includable Compensation specifically does not include any amount excludable
from the Employee's gross income under this Plan, or any other amount
excludable from the Employee's gross income for federal income tax purposes.
7. "CUSTODIAL ACCOUNT" means the custodial account established under the
terms of this Agreement pursuant to Code Sec. 403(b)(7) to hold Designated
Investment Company(ies) shares and/or cash.
8. "CUSTODIAN" means Capital Guardian Trust Company, or any successor
thereto.
9. "DESIGNATED INVESTMENT COMPANY(IES)" means one or more of the regulated
investment companies (as the term "Regulated Investment Company" is defined
pursuant to Sec. 403(b)(7)(C) of the Code) for which Capital Research and
Management Company or an affiliate serves as investment adviser.
10. "EFFECTIVE DATE" means the date on which the Employer's Plan or amendment
to such Plan becomes effective.
11. "ELECTIVE DEFERRAL" means any employer contributions made at the election
of the Employee to this Custodial Account or another plan. This includes any
employer contributions made on behalf of an Employee under Code Sec. 403(b)
pursuant to a salary reduction agreement and any contributions made on behalf
of an Employee pursuant to an election to defer compensation under any Sec.
401(k), Sec. 408(k), Sec. 457 or Sec. 403(b) plan.
12. "EMPLOYEE" means any employee of the Employer.
13. "EMPLOYER" is the Employer named in the Application. The Employer shall
be an organization described in Sec. 403(b)(1)(A) of the Code.
14. "EXCESS ELECTIVE DEFERRAL" means those Elective Deferrals that are
includable in an Employee's gross income under Code Sec. 402(g) to the extent
the Employee's Elective Deferrals for a taxable year exceed the dollar
limitation thereunder.
15. "HIGHLY COMPENSATED EMPLOYEE" means an Employee who, during the Plan Year
or during the preceding 12-month period:
(a) has Compensation in excess of $75,000 (as adjusted by the Commissioner of
Internal Revenue for the relevant year);
(b) 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
(c) has Compensation in excess of 50% of the dollar amount prescribed in
Code Sec. 415(b)(1)(A) and is an officer of the Employer.
If the Employee satisfies the definition in clause (a), (b) or (c) in the Plan
Year but does not satisfy clause (a), (b) or (c) during the preceding 12-month
period, the Employee is a Highly Compensated Employee only if he is one of the
100 most highly compensated Employees for the Plan Year. If no Employee
satisfies the Compensation requirement in clause (c) for the relevant year, the
Plan Administrator will treat the highest paid officer as satisfying clause (c)
for that year.
For purposes of this section 15, "Compensation" means Compensation as defined
in section 6 above, except Compensation must include "elective deferrals" (as
defined in section 11 above). The Plan Administrator 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, and the relevant Compensation, consistent with Code Sec.
414(q) and the regulations issued thereunder. 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 the Code, in a manner
consistent with applicable Treasury regulations, the Plan Administrator will
treat a Highly Compensated Employee and all family members (a spouse, a lineal
ascendent 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 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 the
family member is a highly Compensated Employee without family aggregation. In
the event of repeal of the family aggregation rules under Code Sec.
414(q)(6), all applications of such rules under this Plan will cease as of
the effective date of such repeal.
Highly Compensated Employee includes Highly Compensated active Employees and
Highly Compensated former Employees.
16. "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 Plan Administrator 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 Plan Administrator credits Hours of Service under this paragraph (b)
to the Employee for the computation period(s) to which the award or agreement
pertains rather than for the computation period in which the award, agreement
or payment is made; and
(c) each Hour of Service for nonperformance of duties as required to be
credited in accordance with Department of Labor regulations section
2530.200b-2(b).
17. "PARTICIPANT" is an Employee who is eligible to be and becomes a
Participant in accordance with the provisions of Article Ill.
18. "PLAN ADMINISTRATOR" shall be the Employer unless the Employer
designates another person to hold the position of Plan Administrator.
19. "PLAN ENTRY DATE" means the date an Employee commences participation in the
Plan with respect to Employer contributions, other than Elective Deferrals. The
Employer shall specify the Entry Date in the Application; if no date is
specified, Plan Entry Date will mean the first day of the Plan Year and the
first day of the seventh month of the Plan Year.
20."Plan Year" shall be the calendar year or such other 12-month period as
selected by the Employer in the Application.
21. "QUALIFIED DOMESTIC RELATIONS ORDER (QDRO)" shall mean a signed domestic
relations order issued by a State Court which creates, recognizes or assigns to
an alternate payee(s) the right to receive all or part of an Employee's
interest in his or her Custodial Account, and which meets the requirements of
Code Sec. 414(p). An alternate payee is a spouse, former spouse, child, or
other dependent who is treated as a beneficiary under the Account as a result
of the QDRO.
22. "SPONSOR" shall mean American Funds Distributors, Inc. or any successor
thereto.
23. "TAXABLE YEAR" means the taxable year of the Employee.
ARTICLE III -- PARTICIPATION IN PLAN
ELECTIVE DEFERRALS. Each Employee becomes eligible to make Elective Deferrals
on the Deferral Entry Date (if employed on that date) immediately following
his/her Employment Commencement Date. "Deferral Entry Date" means the Effective
Date and the first day of every month thereafter. "Employment Commencement
Date" means the date on which the Employee first performs an Hour of Service
for the Employer. For purposes of this section, an Employer may exclude:
(1) employees whose contributions under the Plan's maximum percentage would be
less than $200;
(2) nonresident aliens described in Code Sec. 410(b)(3)(C);
(3) employees who are students performing services described in Code Sec.
3121(b)(10); and
(4) students who normally work less than 20 hours per week.
EMPLOYER CONTRIBUTIONS. Employees who meet the eligibility requirements in the
Application on the Effective Date of the Plan shall become Participants on the
Effective Date of the Plan. If so elected in the Application, all Employees
employed on the Effective Date of the Plan may participate, even if they have
not satisfied the Plan's specified eligibility requirements. Other Employees,
upon meeting the eligibility requirements, shall become Participants in the
Plan on the Plan Entry Date selected in the Application, if employed on that
date.
CORRECTION OF ADMINISTRATIVE ERROR;, SPECIAL CONTRIBUTION. Notwithstanding
anything to the contrary herein, if the Employer determines that an error has
been made in crediting contributions to the Account of any Participant, the
Employer may make a special contribution to the Account of said Participant and
the Employer may take any other administrative action which it deems necessary
or appropriate to correct such error. If in any Plan Year, any Employee who
should be included as a Participant in the Plan is erroneously omitted and
discovery of such omission is not made until after a contribution for the year
has been made by the Employer, the Employer shall make a subsequent
contribution with respect to the omitted Employee in the amount (other than
salary deferrals which could have been made) which the said Employer would have
contributed with respect to the Employee had he not been omitted.
ARTICLE IV -- ESTABLISHMENT OF CUSTODIAL ACCOUNT
By executing the Application, the Employer shall open and maintain with the
Custodian a Custodial Account or Accounts in accordance with the provisions of
Sec. 403(b)(7) of the Code. Such Account(s) shall be used exclusively to hold
title to Designated Investment Company shares and/or cash for the benefit of
the Participants.
ARTICLE V -- RECEIPT AND INVESTMENT OF CONTRIBUTIONS
For each Plan Year, the Employer will contribute to the Custodial Account(s)
the amount by which the Participant has elected to reduce his/her Compensation
("Elective Deferrals") for the Plan Year under the salary reduction agreement
on file with the Employer. Elective Deferrals shall be deposited in the
Custodial Account(s) within 30 days after being withheld from the Participant's
pay.
In addition, the Employer will contribute to the Custodial Account(s) any of
the following amounts as selected by the Employer on the Application:
1. MATCHING CONTRIBUTIONS.
The Employer may contribute an amount equal to a percentage the Employer may
from time to time deem advisable of the Participant's Elective Deferrals.
Elective Deferrals do not include Elective Deferrals which are Excess
Elective Deferrals under section 2 of Article VI. For this purpose: (a) Excess
Elective Deferrals relate first to Elective Deferrals for the Plan Year not
otherwise eligible for a matching contribution; and (b) if the Plan Year is not
a calendar year, the Excess Elective Deferrals for a Plan Year are the last
deferrals made for a calendar year. The Employer will determine the amount of
its matching contributions by disregarding Participants not entitled to an
allocation of matching contributions.
2. DISCRETIONARY EMPLOYER CONTRIBUTIONS.
The amount the Employer may from time to time deem advisable. Discretionary
Employer Contributions may be made in addition to the Matching Contributions or
in lieu of the Matching Contributions, as selected by the Employer in the
Application. If the Employer elects to make both a matching contribution and a
discretionary additional contribution, the matching contribution will be made
first, up to the maximum amount specified in the Application. Employer
contributions in excess of the maximum match amount will be allocated to all
eligible Participants in proportion to his or her Compensation as a percentage
of the Compensation of all eligible Participants. All contributions shall be
accompanied by written instructions specifying the Custodial Account number(s)
to which they are to be credited and the Designated Investment Company shares
to be purchased.
The Employer contributes to this Plan on the condition its contribution is not
due to mistake of fact. The Custodian, 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.
Participants shall be given the option to direct the investments of their
Accounts among alternative investment funds established as part of the overall
Custodial Account on forms prescribed by the Employer. Pursuant to the
Employer's written instructions, the Custodian shall invest and reinvest
contributions credited to the Custodial Account(s) in Designated Investment
Company shares. The Account(s) shall be credited with the profits or losses of
the investment in such Account. The amount of each contribution credited to an
Account to be applied to the purchase of Designated Investment Company shares
shall be invested by the Custodian at the applicable offering price as
described in the Designated Investment Company's prospectus. The Custodian
shall have no discretionary investment responsibility and in no event be liable
to any person for following investment instructions given in the manner
provided herein.
The Participant shall be the beneficial owner of such Participant's interest in
an Account, and the Participant (or if the Participant is deceased, the
beneficiary) may be given the opportunity to direct the specific investment(s)
for the Participant's interest in accordance with the terms of this Agreement.
All dividends and capital gain distributions received on the Designated
Investment Company shares held in the Custodial Account(s) shall be reinvested
in such shares and shall be credited to the Custodial Account(s). If any
distribution on Designated Investment Company shares may be received at the
election of the shareholder in additional shares or in cash or other property,
the Custodian shall elect to receive it in additional shares.
Except as provided in Article IX, upon receipt of proper instructions from the
Employer, the Custodian shall sell, redeem, purchase or exchange shares held in
the Custodial Account, provided that the shares held in such Account shall be
limited to, and any subsequent investments arising within such Custodial
Account shall be invested solely in, shares of the Designated Investment
Companies.
ARTICLE VI -- LIMITS ON CONTRIBUTIONS
1. CODE SEC. 415 LIMITATIONS. Notwithstanding anything to the contrary
contained in this Agreement, the total contributions made on behalf of a
Participant for any year will not exceed the limits imposed by Code Sec. 415,
as they may be adjusted from time to time. The limits of Code Sec. 415 are
herein incorporated by reference.
For purposes of applying the Code Sec. 415 limitation, "Compensation" means
compensation as defined in Section 6, Article II except Compensation does not
include Elective Deferrals. The limitation year is the calendar year. If, in
any Taxable Year, the Employer contributes an amount which exceeds the
Employee's Code Sec. 415 limit, the Plan will not treat the excess contribution
as a contribution to a Sec. 403(b) Plan. however, in calculating the Employee's
exclusion allowance for future Taxable Years, the Plan treats the excess
contribution as an amount contributed by the Employer to a Sec. 403(b) Plan, to
the extent not returned to the Participant under the next paragraph.
Accordingly, for future Taxable Years the Employee must reduce his/her
exclusion allowance by the amount of any excess contribution under Code Sec.
415 made in prior Taxable Years.
Notwithstanding anything to the contrary contained in this Agreement, if, as a
result of a reasonable error in estimating a Participant's annual Compensation
or a reasonable error in determining the amount of Elective Deferrals that may
be made with respect to a Participant under the limits of this section 1, or
under other facts and circumstances to which Regulation 1.415-6(b)(6) shall
apply, the annual additions under this Plan for the Participant would cause the
limitations of this Section for the limitation year to be exceeded, the Plan
may distribute to the Participant any Elective Deferrals to the extent that
such return would reduce the excess amounts in such Participant's account.
Excess amounts attributable to Elective Deferrals under this Plan shall not be
deemed annual additions in that limitation year to the extent that such excess
amounts are distributed to the Participant. For purposes of this section,
"excess amounts" shall mean the annual additions credited to the Participant
that exceed the limitations of this section. Any excess amounts distributed to
the Participant under this section will be disregarded for purposes of Code
Sec. 402(g). Any Matching Contributions attributable to such returned Elective
Deferrals shall be forfeited. Such forfeiture shall be used to reduce Employer
contributions for the following Plan Year.
2. LIMITATIONS ON ELECTIVE DEFERRALS. The amount of Elective Deferrals for
any Taxable Year made to this Custodial Account and all other plans, contracts
or arrangements of the Participant shall not exceed the dollar limit in effect
under Code Sec. 402(g) at the beginning of such Taxable Year. In the event that
a Participant has Excess Elective Deferrals, he or she may designate Elective
Deferrals made during a Taxable Year to this Custodial Account as Excess
Elective Deferrals by notifying the Employer on or before March 1 of the amount
of Excess Elective Deferrals. Notwithstanding any other provision of this
Agreement, the Employer shall direct the Custodian to distribute Excess
Elective Deferrals, adjusted to reflect any credited investment experience up
to the date of distribution, no later than April 15 to any Participant who
designates Elective Deferrals as Excess Elective Deferrals for such Taxable
Year.
3. EXCLUSION ALLOWANCE LIMITATION. The exclusion allowance for an Employee
for any Taxable Year is an amount equal to the excess of:
(a) the amount determined by multiplying 20% of his/her Includable
Compensation by the number of Years of Service, over
(b) the aggregate of the amount contributed by the Employer to the Employee's
Account and excludable from the Employee's gross income for any prior Taxable
Year.
In computing the aggregate of amounts contributed by the Employer to the
Employee's Account under section the Employee will include:
(c) amounts excludable from the Employee's Compensation under Code Sec. 457(a)
for any prior Taxable Year taken into account as a Year of Service, and
(d) contributions made by the Employer to a qualified trust described in Code
Sec. 401(a) and exempt from tax under Code Sec. 501(a) for any prior Taxable
Year taken into account as a Year of Service.
For purposes of an Employee's exclusion allowance, "Year of Service" means each
Taxable Year during which the Employee is a full-time Employee for the entire
Taxable Year. The Employer will make its determination as to whether an
Employee is a full-time Employee in accordance with Treasury regulations. The
Employee will receive credit for a fraction of a Year of Service for each
Taxable Year during which he/she is a full-time Employee for part of a Taxable
Year, or for each Taxable Year during which he/she is a part-time Employee for
the entire Taxable Year or for a part of a Taxable Year. The Plan will compute
fractional Years of Service in a manner consistent with the applicable Treasury
regulations.
In no event may the exclusion allowance exceed the Code Sec. 415 limitation in
section 1 above.
4. SPECIAL ELECTIONS. An Employee of an educational organization, a hospital,
home health service agency, a health welfare service agency, a church, a
convention or association of churches, or an organization described in Code
Sec. 414(e)(3)(B)(ii) may elect to substitute one of the three alternative
exclusion allowances for the limitation described in section 3 above:
(a) For the Taxable Year in which an Employee separates from service, the
Employee calculates his exclusion allowance under section 3 above without
regard to the 25% limitation of the Plan. However, in determining this
limitation, the Employee may take into account only Years of Service for the
Employer and contributions made by the Employer during the period of Years
of Service (not exceeding 10) ending on the date of his or her separation from
service.
(b) For any Taxable Year, the Employee may elect to exclude the least of the
following amounts:
(i) 25% of Includable Compensation plus $4,000;
(ii) the amount of the exclusion allowance determined for the Taxable Year
under section 3 above;
(iii)$15,000.
(c) For any Taxable Year, the Employee may elect to exclude the lesser of
$30,000 or 25% of Includable Compensation.
(d) An election by an Employee to have any one of the alternative
exclusion allowances under this section 4 apply precludes an election to have
any other alternative exclusion allowance apply for future Taxable Years. Any
election made under this section 4 is irrevocable.
(e) For purposes of applying this section 4, the following definitions
will apply:
(i) An "educational organization" means an educational organization described
in Code Sec. 170(b)(1)(A)(ii).
(ii) A "home health service agency" means an organization described in Code
Sec. 501(c)(3) which is exempt from tax under Code Sec. 501(a) and which the
Secretary of Health, Education, and Welfare has determined is a home health
agency as defined in Sec. 1861(o) of the Social Security Act.
(iii)A "church" or a "convention or association of churches" has the same
meaning as prescribed by Code Sec. 414(c).
ARTICLE VII -- MATCHING CONTRIBUTIONS DISCRIMINATION TEST
PARTICIPANT MATCHING CONTRIBUTIONS -- SPECIAL DISCRIMINATION TEST. The Plan
Administrator must determine whether the Participant matching contributions
described in section 1 of Article V of the Plan satisfy either of the following
average contribution percentage ("ACP") tests:
1. the ACP for the Highly Compensated Group does not exceed 1.25 times the
ACP of the Nonhighly Compensated Group; or
2. the ACP for the Highly Compensated Group does not exceed the ACP for the
Nonhighly Compensated Group by more than two percentage points and the ACP for
the Highly Compensated Group is not more than twice the ACP for the Nonhighly
Compensated Group.
DEFINITIONS:
For purposes of applying this section, the following definitions apply:
3. "HIGHLY COMPENSATED EMPLOYEE" means an Eligible Employee who satisfies the
definition of Section 15 of Article II of the Plan.
4. "NONHIGHLY COMPENSATED EMPLOYEE" means an Eligible Employee who is not a
Highly Compensated Employee (as defined in section 15 of Article II of the
Plan) and who is not a family member treated as a Highly Compensated Employee.
5. "ELIGIBLE EMPLOYEE" means a Participant who is eligible to receive
matching contributions (or would be eligible if he made the type of
contributions necessary to receive an allocation of matching contributions.)
6. "HIGHLY COMPENSATED GROUP" means the group of Eligible Employees who are
Highly Compensated Employees for the Plan Year.
7. "NONHIGHLY COMPENSATED GROUP" means the group of Eligible Employees who
are Nonhighly Compensated Employees for the Plan Year.
8. "COMPENSATION" means, except as specifically provided in this section,
Compensation as defined in Code Sec. 414(s). The Plan may limit Compensation
taken into account to Compensation received only for that 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 was in effect.
9. "EXCESS AGGREGATE CONTRIBUTIONS" means the excess, if any, of the
aggregate contribution percentage amounts taken into account in computing the
numerator of the contribution percentage actually made on behalf of Highly
Compensated Employees over the maximum contribution percentage amounts
permitted by the ACP test. Such determination shall be made after first
determining Excess Elective Deferrals pursuant to Article VI, section 2.
Notwithstanding any other provision of this Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocable thereto,
distributed no later than the last day of the Plan Year to Participants to
whose accounts such Excess Aggregate Contributions were allocated for the
preceding Plan Year. If such Excess Aggregate Contributions are distributed
more than 2-1/2 months after the last day of the Plan Year in which such excess
amounts arose, a 10 percent excise tax will be imposed on the Employer
maintaining the Plan with respect to those amounts. Excess Aggregate
Contributions shall be treated as annual additions under the Plan. Excess
Aggregate Contributions shall be adjusted for any income or loss up to the end
of the Plan Year. Income or loss will be calculated under the method used to
calculate investment earnings and losses elsewhere in the Plan.
ARTICLE VIII -- NORMAL RETIREMENT AGE -- NONFORFEITABLE ACCOUNT
1. NORMAL RETIREMENT AGE. A Participant's Normal Retirement Age is 65 years
of age, unless an earlier age is specified in the Application.
2. NONFORFEITABLE ACCOUNT. The interest of any Participant in the balance of
his Account is at all times 100% vested and nonforfeitable.
ARTICLE IX -- PAYMENT OF BENEFITS
1. PAYMENT OF BENEFITS. The amount credited on behalf of an Participant to
the Custodial Account shall be distributed to the Participant or commence to be
distributed to the Participant in accordance with the Employer's written
instructions to the Custodian, provided that no amounts shall be distributed,
paid or made available to a Participant before the Participant dies, attains
age 59-1/2, separates from service with the Employer, becomes disabled (within
the meaning of the next paragraph) or encounters financial hardship. The
Custodian may require satisfactory evidence of eligibility for distribution.
Distributions may also be made pursuant to a QDRO. For purposes of making
distributions under the provisions of a QDRO, the qualified early retirement
age with regard to the Participant against whom the QDRO is entered shall be
the date the QDRO is determined to be qualified. This will only allow payout to
the alternate payee(s).
2. DISABILITY DISTRIBUTION. A Participant shall be considered to be
permanently disabled if he or she is unable to engage in any substantial
gainful activity because of any medically determinable physical or mental
impairment which can be expected to result in death or to be of long-continued
and indefinite duration. The Custodian shall not be required to make
distribution under this section until it has received appropriate medical
evidence to that effect.
3. HARDSHIP DISTRIBUTION. Any request for a distribution based on
"financial hardship" shall be accompanied by a supporting affidavit from
the Participant stating that the Participant has incurred a "financial
hardship" within the meaning of Sec. 403(b)(7)(A)(ii) of the Code and any
rules and regulations promulgated thereunder. The Custodian may
conclusively rely upon the statements in the Participant's affidavit. The
Participant's Elective Deferral contributions will be suspended for all plans
maintained by the Employer (other than nondeferred benefits under Code Sec. 128
plans) for twelve months after the receipt of the hardship distribution.
4. FORM OF DISTRIBUTION. The form of distribution shall be made in
accordance with the Participant's election as approved by the Employer and
filed with the Custodian and may be paid in cash or kind, in any one or more of
the following ways:
(a) a single sum payment;
(b) equal or substantially equal payments over the life of the Participant;
(c) equal or substantially equal payments over the lives of the Participant
and his or her designated beneficiary;
(d) equal or substantially equal payments over a specified period that may not
be longer than the Participant's life expectancy; or
(e) equal or substantially equal payments over a specified period that may not
be longer than the joint life and last survivor expectancy of the Participant
and his or her designated beneficiary.
5. MINIMUM DISTRIBUTION REQUIREMENTS. Distributions shall commence from
benefits accrued after December 31, 1986 (the "applicable amount") no later
than April 1 of the calendar year following the year in which the Participant
attains age 70-1/2 (the "required beginning date"). For each succeeding year, a
distribution must be made on or before December 31. By the required beginning
date the Participant may elect to have the applicable amount in the Account
distributed in a form described in section 4 above.
The minimum amount to be distributed each year (commencing with the required
beginning date and each year thereafter) must be at least an amount equal to
the quotient obtained by dividing the prior year-end value of the applicable
amount of the Custodial Account, expressed in either dollars or units, by the
life expectancy of the Participant or joint life and last survivor expectancy
of the Participant and the Participant's designated beneficiary, whichever is
applicable. For determining such life expectancy, the expected return
multiples in Sec. 1.72-9 of the Federal Income Tax Regulations, as
amended, shall be used.
If the Participant dies before his or her applicable amount is distributed or
before such distribution has been completed, then the amount credited to the
Custodial Account which accrued on or after January 1, 1987 shall be
distributed as follows:
(a) if the Participant dies after the distribution of his or her interest
has commenced, the remaining portion of such interest will continue to be
distributed at least as rapidly as under the method of distribution being used
prior to the Participant's death.
(b) if the Participant dies prior to the time benefit payments begin, any
portion of his or her interest payable to (or for the benefit of) a designated
beneficiary will be paid as follows:
(i) by December 31 of the year containing the fifth anniversary of the
Participant's death; or
(ii) in equal or substantially equal payments over the life or life expectancy
of the designated beneficiary or beneficiaries starting by December 31 of the
year following the year of the Participant's death. If, however, the
beneficiary is the Participant's surviving spouse, then this distribution is
not required to begin before December 31 of the year in which the
Participant would have reached age 70-1/2.
(C) unless otherwise elected by the Participant prior to the commencement of
distributions or, if applicable, by the surviving spouse where the Participant
dies before distributions have commenced, life expectancies of the Participant
or spouse beneficiary shall be recalculated annually for purposes of
distributions under Sec. 5(a) and Sec. 5(b). An election not to recalculate
shall be irrevocable and shall apply to all subsequent years. The life
expectancy of a non-spouse beneficiary shall not be recalculated.
(d) for purposes of this section, any amount paid to a child of the
Participant will be treated as if it had been paid to the surviving spouse if
the amount becomes payable to the surviving. spouse when the child reaches the
age of majority. An individual may satisfy the minimum distribution
requirements under Sec. 401(a)(9) of the Code by receiving a distribution from
one custodial account that is equal to the amount required to satisfy the
minimum distribution requirements for two or more custodial accounts. For this
purpose, the Employee of two or more custodial accounts may use the
'alternative method' described in Notice 88-38, 1988-1 C.B. 524, to satisfy the
minimum distribution requirements described above.
Notwithstanding any provision of this Agreement to the contrary, the
distribution of an individual's interest shall be made in accordance with the
minimum distribution requirements of Sec. 403(b)(10) of the Code and the
regulations thereunder, including the incidental death benefit provisions of
Sec. 1.401(a)(9)-2 of the proposed regulations, all of which are herein
incorporated by reference.
The Custodian has no duty to determine a Participant's eligibility for
distribution or to commence distribution until receipt of written instructions
from the Employer satisfactory to the Custodian.
The Employer shall notify the Custodian in writing of any request for
distributions and such notice shall set forth the amount and the date
distributions shall commence and the requested method of distribution.
6. DESIGNATION OF BENEFICIARY. A Participant shall have the right to
designate or change a beneficiary to receive any benefit from the Account to
which such Participant may be entitled in the event of the Participant's death
prior to complete distribution of the Account. If no such designation is in
effect at the time of the Participant's death, the Participant's beneficiary
shall be the Participant's estate. The Participant may designate or change a
beneficiary only by written notice to the Custodian in a form acceptable to the
Custodian, but the Custodian shall have no responsibility to determine the
validity of a beneficiary designation.
The designation or change will, upon recording by the Custodian, take effect as
of the time the written notice was signed, whether or not the Participant is
living at the time of recording but without liability as to any payment or
other settlement made by the Custodian before recording the designation or
change. If no such designation is in effect, or if the designation is
incomplete or ineffective then the Participant's beneficiary shall be the
Participant's estate. To the extent permitted by law, the Custodian shall not
be liable for any payment to a designated beneficiary or Participant's estate
made in good faith.
7. DIRECT ROLLOVER OF ELIGIBLE ROLLOVER DISTRIBUTIONS.
(a) This provision applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of this Agreement to the contrary that would
otherwise limit a distributee's election under this Agreement, a distributee
may elect, at the time and in the manner prescribed by law, to have any portion
of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover.
For purposes of this section, the following definitions apply:
(i) "ELIGIBLE ROLLOVER DISTRIBUTION" shall mean any distribution of all or any
portion of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any distribution that is one
of a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee or the
joint lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified period of ten years or
more; any distribution to the extent such distribution is required under Sec.
401(a)(9) of the Code; and the portion of any distribution that is not
includable in gross income.
(II) "ELIGIBLE RETIREMENT PLAN" shall mean an individual retirement account
described in Sec. 408(a) of the Code, an individual retirement annuity
described in Sec. 408(b) of the Code, an annuity plan described in Sec. 403(a)
of the Code, or a custodial account described in Sec. 403(b) of the Code,
that accepts the Employee's eligible rollover distribution. However, in the
ease of an eligible rollover distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or an individual retirement
annuity.
(iii)"DISTRIBUTEE" includes an Employee or former Employee. In addition, the
Employee's or former Employee's surviving spouse and the Employee's or former
Employee's spouse or former spouse who is an alternate payee under a QDRO, as
defined in Sec. 414(p) of the Code, are distributees with regard to the
interest of the spouse or former spouse.
(iv) "DIRECT ROLLOVER" shall mean a payment by the Custodian to the
eligible retirement plan specified by the distributee.
(b) For distributions on and after January 1, 1994, if such distribution is
one to which Sec. 401(a)(11) and Sec. 417 of the Code do not apply, such
distribution may commence less than 30 days after the notice required under
Sec. 1.411(a)-ll(c) of the Regulations is given, provided that:
(i) the distributee is informed that the distributee has a right to a period
of at least 30 days after receiving the notice to consider the decision of
whether or not to elect a distribution (and, if applicable, a particular
distribution option), and
(ii) the distributee, after receiving the notice, affirmatively elects a
distribution.
8. APPEAL PROCEDURE FOR DENIAL OF BENEFITS. A Participant or a beneficiary
("Claimant") may file with the Plan Administrator a written claim for benefits,
if the Claimant determines the distribution procedures of the Plan have not
provided him or her the proper nonforfeitable Account Balance. The Plan
Administrator 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 Plan Administrator 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 provisions on which the Plan
Administrator based its denial;
(c) A description of any additional material and information needed for the
Claimant to perfect his or her 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 Plan Administrator 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
or her failure to appeal the action of the Plan Administrator in writing within
the 75-day period will render the Plan Administrator's determination final,
binding and conclusive.
If the Claimant should appeal to the Plan Administrator the Claimant, or his or
her duly authorized representative, may submit in writing whatever issues and
comments Claimant or his or her duly authorized representative feels are
pertinent. The Claimant or his or her duly authorized representative, may
review pertinent Plan documents. The Plan Administrator 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 Plan
Administrator 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 Plan Administrator 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 clearly identify the
name of each member of the Plan Administrator and the name and address of the
Plan Administrator member to whom the Claimant may forward his appeal.
ARTICLE X -- OWNERSHIP OF SECURITIES
All securities in a form necessitating registration may be registered in the
name of the Custodian or its nominee, or in such other manner as may be
acceptable to the Custodian, and the Employee agrees to hold the Custodian or
any such nominee harmless from any liability as a holder of record. The
Custodian shall have the power in its reasonable discretion to leave any
securities or cash in its custody hereunder, for safekeeping or on deposit with
such banks, transfer agents, or other custodians as the Custodian may select,
provided that the entity with custody of the assets shall at all times identify
such assets as belonging to the Account, and provided, further, that such
entity must be qualified to act as a custodian under applicable law. Nothing
herein shall be construed to restrict the Custodian's authority not to require
the issuance of certificates when ownership of unissue shares of a Designated
Investment Company is permitted. The Custodian shall hold all assets delivered
to it, and all income attributable thereto, separate from its own assets,
identify them in its books and records as assets of the Account, and shall
invest, disburse, hold and otherwise dispose of such assets, and the proceeds
thereof, in accordance with this Agreement.
ARTICLE XI -- VOTING SECURITIES
The Custodian may deliver to the Employer copies of any notices of shareholder
meetings, prospectuses, proxies and proxy information and such shareholder
reports which are received by the Custodian with respect to Designated
Investment Company shares held in the Custodial Account. The Custodian shall
not vote any of such shares except in accordance with the written instructions
of the Employer.
ARTICLE XII -- AMENDMENT AND TERMINATION
The Employer, by the establishment of this Account, delegates to the Custodian
the power to make any retroactive or prospective modification of, or amendment
to, this Agreement which is necessary to conform the Agreement to, or satisfy
the conditions of, any law, governmental regulation or ruling, and any
prospective amendment which is desirable for the administration of this
Agreement, and by doing so shall be deemed to have consented to each such
amendment or modification. Notwithstanding the preceding sentence, no amendment
shall be made which would have the effect of allowing any part of the Account
to be used for any purpose other than for the exclusive benefit of the
Participant or beneficiary nor shall any amendment increase or decrease the
duties or liabilities of the Custodian without its consent. The Custodian has
no affirmative obligation to amend the Agreement for any purpose.
If the Employer adopts this Agreement as a continuation of a similar prior
agreement maintained by the Employer under Sec. 403(b) of the Code, such prior
agreement may be deemed to have been amended in its entirety if the Employer
requests such action in writing to the Custodian. Following acceptance of such
request, the Custodian shall accept from the prior custodian the cash proceeds
or designated shares of Designated Investment Company of such prior account and
all records pertaining thereto. If the Employer adopts another agreement
qualified and maintained under Sec. 403(b) of the Code, as a continuation of
this Agreement, such other agreement may be deemed to have entirely amended
this Agreement if the Employer requests such action in writing to the
Custodian. Following such request, the Custodian shall deliver to the successor
custodian all assets in the Account.
This Agreement shall terminate upon the complete distribution of all Accounts
to the Participant, beneficiaries, a successor custodian under an agreement or
program described in Sec. 403(b) of the Code, or to a trustee under an account
described in Sec. 408(a) of the Code. The Custodian shall have the right to
terminate this Agreement upon 60 days' prior written notice to the Employer. In
such event, upon expiration of such period, the Custodian shall distribute the
Account to such successor custodian as the Employer shall designate; provided,
however, that if such successor does not provide the Custodian with formal
notice of its willingness to accept such assets, or, if the Employer fails to
designate a successor custodian prior to the expiration of such period, then
the Custodian shall distribute the Account to the Employer.
ARTICLE XIII -- CONCERNING THE CUSTODIAN
The Custodian shall be under no duty to take any action other than as herein
specified with respect to the Custodial Account unless the Employer shall
furnish the Custodian with instructions in proper form and such instructions
shall have been specifically agreed to by the Custodian in writing. Unless
otherwise expressly mandated by law, the Custodian shall not be required to
defend or engage in any suit with respect to the Custodial Account unless the
Custodian shall have first agreed in writing to do so and shall have been fully
indemnified to the satisfaction of the Custodian. The Custodian may
conclusively rely upon and shall be protected in acting upon any written order
from the Employer permitted by this Agreement or any other notice, request,
consent, certificate or other instrument or paper reasonably believed by it to
be genuine and to have properly executed, and, so long as it acts reasonably in
good faith, in taking or omitting to take any other action. The Custodian may
retain assets in cash or cash balances pending receipt of proper investment
instructions and shall not be liable for interest on any such cash or cash
balances.
The Custodian shall have no responsibility for determining the amount of any
contribution to be made to the Account nor for the collection of such
contributions. Any reports or instructions prepared by or on behalf of the
Custodian for the Employer shall be solely for the convenience of the Employer.
The Employer shall be solely responsible for deter- mining and having the
Employer remit to the Custodian the correct amount of contribution.
The Employer shall have the sole authority to enforce this Agreement on behalf
of any and all persons having or claiming any interest in the Custodial Account
by virtue of this Agreement.
ARTICLE XIV -- REPORTS OF THE CUSTODIAN
The Custodian shall keep accurate and detailed records of all receipts,
investments, disbursements and other transactions required to be performed
hereunder. The Custodian shall file with the Employer statements reflecting the
receipts, disbursements and other transactions effected by it. Upon the
expiration of 45 days after furnishing such statement to the Employer, the
Custodian shall be forever released and dis- charged from all liability
(excluding negligence or intentional misconduct) and accountability to anyone
with respect to its acts, actions, duties, obligations or responsibilities as
shown in or reflected by such statement, except with respect to any such acts
or transactions as to which the Employer shall have filed written objections
with the Custodian within such 45-day period.
The Employee, the Employer and the Custodian shall furnish to one another such
information relevant to this Agreement and Custodial Account as may be required
under the Code and any regulations issued or forms adopted by the Treasury
Department thereunder.
The Custodian shall file with the Internal Revenue Service such returns and
other information concerning the Custodial Account as may be required of it
under the Code, and any regulations issued by the Treasury Department, but
shall not be required to prepare, file or provide any reports except as may be
expressly required in this Agreement.
ARTICLE XV -- RESIGNATION OR REMOVAL OF CUSTODIAN
The Custodian may resign as the Custodian under the Agreement at any time upon
60 days' notice in writing to the Employer and the Employer may remove the
Custodian at any time, upon written notice, provided however, to the extent
necessary, the Custodian shall continue to be authorized to complete and settle
any outstanding transactions in process prior to the Custodian receiving such
notice. Upon such resignation or removal the Employer shall appoint a qualified
successor and the Custodian shall file with the Employer a written report as
required by Article XIV. Should the Custodian resign as the custodian under the
Plan, the Sponsor shall appoint a qualified successor, upon giving 60 days'
prior notice in writing to each Employer.
Upon receipt by the Custodian of written acceptance of appointment by a
qualified successor to the Custodian (in the case of all resignations or
removals pursuant to this Article XV), the Custodian shall transfer and pay
over to such successor the assets of the Account. Following the notice of
removal of the Custodian, the Custodian shall act promptly to, and shall have a
reasonable period of time in which to settle the accounts prior to transferring
the Account assets after receipt by the Custodian of written acceptance of
appointment by a qualified successor Custodian. The Custodian is authorized,
however, to reserve such sum of money or property as it may deem advisable for
payment of all its fees, compensations, costs and expenses, or for payment of
any other liabilities constituting a charge on or against the Custodian, with
any balance of such reserve remaining after the payment of all such items to be
paid over to the successor. The successor to the Custodian shall not be
responsible for the acts, or the failures to act, of any predecessor custodian
and shall hold the assets paid over to it under terms similar to those of this
Agreement.
If within 30 days after the effective date of the Custodian's resignation or
removal a qualified successor to the Custodian has not been appointed or has
not accepted such appointment, the Custodian shall either appoint such
successor itself or terminate the agreement. Upon such termination the
Custodian shall distribute all assets in the Account to the Employer. The
Custodian shall not be required to see to the performance of any successor of
its duties hereunder.
ARTICLE XVI -- MISCELLANEOUS
1. NO DIVERSION. At no time shall it be possible for any part of the
assets of the Custodial Account to be used for or diverted to purposes other
than for the exclusive benefit of the Participant or the beneficiary except as
specifically provided for in this Agreement. The Participant's rights to the
assets of the Custodial Account shall be nonforfeitable at all times.
2. NOTICES. Any notice from the Custodian to the Employer or any other party
pursuant to this Agreement shall be effective if sent by first-class mail to
the last address on the Custodian's records. Any notice to the Custodian
pursuant to this Agreement shall be by first-class mail.
3. TRANSFERS. The Custodian may accept the transfer of cash from a
Participant's existing custodial account and/or existing annuity contract which
are/is established under Sec. 4(}3(b) of the Code to the Participant's
Custodial Account established under this Agreement, unless expressly prohibited
by the documents governing such custodial accounts and/or such annuity. The
Participant may also transfer cash or assets from this Custodial Account to
any other custodial account and/or annuity contract permitted under Sec. 403(b)
of the Code.
4. TERMINOLOGY. Any masculine terminology used in the Agreement shall include
the feminine.
5. INALIENABILITY OF BENEFITS. Notwithstanding anything to the contrary in
this Agreement the Participant shall not have the right to assign, transfer or
pledge his or her interest in the Account, and the Participant's interest in
the Account shall not he subject to any claims of creditors.
No benefit or interest available hereunder will be subject to assignment
or alienation, either voluntarily or involuntarily. The preceding sentence
shall also apply to the creation, assignment, or recognition of a right to any
benefit payment with respect to a Participant pursuant to a
domestic relations order, unless such order is a Qualified Domestic
Relations Order.
6. CONDITION OF AGREEMENT. The Participant shall took solely to the assets of
the Custodial Account for the payment of any benefit to which he is entitled
under the agreement.
7. NECESSITY OF QUALIFICATION. This Agreement is established with the intent
that it shall qualify under Sec. 403(b) of the Code and any amendments to that
section. Notwithstanding any other provisions contained in this Agreement, if
the Internal Revenue Service determines that because of some inadequacy in the
provisions of this original Agreement, it initially fails to so qualify, all of
the assets of the Custodial Account shall be distributed to the Employer or
transferred in accordance with section 3 of this Article XVI and the Agreement
shall be considered to be rescinded and of no force and effect unless such
inadequacy is removed by a retroactive amendment. The Sponsor forthwith shall
notify the Custodian in writing of any determination with respect to the
qualified status of the Agreement. The Employer understands the necessity of
seeking independent legal counsel with respect to the effect of establishing
this Agreement and further understands that the Agreement has not been approved
by the Internal Revenue Service and that, except as set forth in this
Agreement, neither the Custodian nor the Sponsor, nor anyone acting on behalf
of the Custodian or Sponsor, may make any representations as to the tax
qualifications or effect thereof.
8. CUSTODIAN ACCEPTANCE AND FEE SCHEDULE. The Custodian accepts appointment
as Custodian for the Custodial Account established pursuant to the Application
and will charge a setup fee in the year that the Account is established, and an
annual fee for maintenance of the Account for every year thereafter. The fee
with respect to the Employer's Account shall be charged to such Account. The
Custodian is empowered to redeem
Designated Investment Company shares held in the Account and to transfer to
itself the proceeds from such redemption and any cash held in the Account in
payment of its fees. The compensation of the Custodian shall be such fees as
the Custodian shall advise the Employer in writing. There may be additional
charges for further services requested of the Custodian.
9. CREDITOR REDEMPTION. Notwithstanding anything to the contrary in this
Custodial Agreement, including section 5 of this Article XVI, to the extent
permitted by applicable law, the Custodian, upon receipt of an order of
attachment, garnishment, levy, or other similar order from any court, the
Internal Revenue Service, any state taxing authority, or any other entity
lawfully entitled to issue such orders, against the Participant or Account
(individually and collectively "Order"), may redeem shares, with or without
notice, of the Designated Investment Company(ies) in the Account, and forward
the proceeds to satisfy such an Order. The Custodian may redeem the shares on a
pro rata basis in the Designated Investment Company(lea). Except as otherwise
provided by applicable law, the Custodian shall not be liable for any action
taken in good faith and in exercise of due care.
10. MISCELLANEOUS.
(a) INVESTMENTS. Notwithstanding any provisions of this Agreement to the
contrary, investments will be limited to those permitted under Sec. 403 of the
Code.
(b) COMPLIANCE. The parties intend that this Agreement be consistent with all
requirements of the Code. Notwithstanding anything to the contrary in this
Agreement, if any provision of this Agreement is determined not to comply with
any requirements of the Code, such provision shall be enforceable only to the
extent it is in compliance with such requirements and shall otherwise be
deemed to be inapplicable; provided, further, the Custodian shall perform all
duties to be performed by the Custodian pursuant to the Code.
(c) The Custodian shall exercise and discharge its powers and duties in the
following manner:
(i) by acting solely in the interest of the Participant and Participant's
beneficiaries;
(ii) by acting for the exclusive purpose of providing benefits to the
Participant and Participant's beneficiaries and defraying reasonable expenses
of administering the Account;
Except as provided in the Agreement, no part of the principal or income of an
Account shall be used for, or diverted to, purposes other than the exclusive
benefit of the Participant or Participant's beneficiaries or for the reasonable
expenses of administering the Account until all liabilities for benefits due
the Participant or Participant's beneficiaries have been satisfied.
(d) HEADINGS. The headings of the paragraphs and sections of this Agreement
are inserted for convenience only and shall not be deemed to constitute a part
of this Agreement.
11. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of California.
[The American Funds Group(r)]
EMPLOYER-SPONSORED 403(B) APPLICATION FORM
1. EMPLOYER INFORMATION
Employer name:
Address:
Employer tax I.D. number:
Employer contact:
Telephone number:
Plan name: Plan year: through
2. EFFECTIVE DATE
(SELECT ONE)
a. [] This is a new Plan with an effective date of
b. [] This is an amended Plan:
The effective date of the original plan was
The effective date of the amended Plan is
3. ELIGIBILITY REQUIREMENTS
(FOR EMPLOYER CONTRIBUTIONS ONLY: DOES NOT APPLY TO SALARY REDUCTION
CONTRIBUTIONS)
a. Age: [] No requirement
[] Minimum age ------ (not over 21)
b. Service: [] No requirement
[] Minimum service ----- (not more than one year)
c. Initial Participants:
[] Employees employed on the Plan's effective date must satisfy both age and
service requirements.
[] Employees employed on the Plan's effective date need not satisfy the age
requirement specified above.
[] Employees employed on the Plan effective date need not satisfy the service
requirement specified above.
4. ENTRY DATE
(SELECT ONE)
a. [] SEMI-ANNUALLY. After meeting Plan eligibility requirements, an Employee
may enter the Plan on the first day of the Plan Year or the first day of the
Plan Year's seventh month whichever falls sooner or on either, of those dates
should one coincide with the Employee's eligibility date.
b. [] QUARTERLY. After meeting Plan eligibility requirements, an Employee may
enter the Plan on the first day of the Plan Year or the first day of the
Plan Year's fourth, seventh or tenth month whichever falls sooner or on any
of those dates should one coincide with the Employee's eligibility date.
c. [] MONTHLY. After meeting Plan eligibility requirements, an Employee may
enter the Plan on the first day of the Plan Year or the first day of the month
whichever falls sooner or on either of those dates should one coincide with the
Employee's eligibility date.
5. NORMAL RETIREMENT AGE AND VESTING
Normal Retirement Age shall be __ (not less than age 59-1/2 and not to exceed
age 65). All Participants are 100% vested in the balance of their accounts at
all times.
6. DISCRETIONARY EMPLOYER CONTRIBUTIONS
a. [] Matching Contribution:
The Employer shall have the right to contribute and allocate to each
eligible Participant's account an amount equal to a percentage of the
Participant's elective deferral, as determined by the Employer. The Employer
shall not match Participant elective deferrals as provided above in excess of
$__ or in excess of ___% of the Participant's compensation.
h. [] Employer Contribution:
The Employer shall have the right to make a discretionary contribution
which shall be allocated to each eligible Participant in proportion to his or
her compensation as a percentage of the compensation of all eligible
Participants. This contribution and the allocation thereof shall be unrelated
to any Participant contributions made hereunder.
7. ACCOUNT SET-UP AND INVESTMENT INSTRUCTIONS
a. The Employer hereby instructs the Custodian (Capital Guardian Trust
Company) to establish:
1. [] One subaccount for each Participant
2. [] One omnibus account for the Plan (additional record keeping will be
required)
b. [] The enclosed check for $____ (payable to Capital Guardian Trust
Company) hall be invested in accordance with the attached Employer-Sponsored
403(b) Transmittal Form.
c. [] Transfer Request. One or more accounts are being established to
transfer assets from an existing 403(b) account. A Request for Transfer of
Assets is attached.
8. DEALER INFORMATION
FOR DEALER USE ONLY.
Dealer name (as it appears on Selling Group Agreement)
Address of home office
City State Zip Code
Authorized signature of dealer
Address of office serving account
City State Zip Code
Registered representative's name and number (exactly as it
appears on firm's registration)
Registered representative's telephone number ( )
9. CUSTODIAN FEE
The Custodian charges a one-time set-up fee to establish the account(s) and an
annual fee for maintenance of each Employee's account. Currently each fee is
$10.00 for each account. The annual maintenance fee will be deducted from each
account at the end of the year. The set-up fee will be deducted the month
following the date the account(s) are initially established unless the fee
accompanies this application.
10. AUTHORIZATION
The Employer named above hereby establishes an American Funds
Employer-Sponsored 403(b) Retirement Plan, appoints Capital Guardian Trust
Company as custodian of the accounts and directs that contributions be invested
in accordance with the attached Employer-Sponsored 403(b) Transmittal Form. A
current prospectus for each selected fund and a copy of the Summary Plan
Description have been received by each participating Employee. The Employer has
read The American Funds Employer-Sponsored 403(b) Retirement Plan and Custody
Agreement and completed the application, agrees to the terms and conditions set
forth therein and has consulted with legal counsel about the effect of
establishing this program. Participant loans are not permitted under the terms
of this Plan.
Employer:
By:
Authorized Signature
11. CUSTODIAN ACCEPTANCE
We accept appointment as custodian in accordance with the terms of The American
Funds Employer- Sponsored 403(b) Retirement Plan and Custody Agreement.
Capital Guardian Trust Company
PLEASE MAIL THIS FORM WITH THE TRANSMITTAL FORM TO THE APPROPRIATE REGIONAL
ADDRESS SHOWN TO THE RIGHT.
[map] Western Region
American Funds Service Company
P.O. Box 4600
Brea, California
92622-4600
[map] West Central Region
American Funds Service Company
P.O. Box 659522
San Antonio, Texas
78265-9522
[map] East Central Region
American Funds Service Company
P.O. Box 6164
Indianapolis, Indiana
46206-6164
[map] Eastern Region
American Funds Service Company
P.O. Box 2280
Norfolk. Virginia
23501-2280
403(b) RETIREMENT PLAN AND CUSTODY AGREEMENT
TERMS AND CONDITIONS
ARTICLE I - INTRODUCTION
This Agreement is intended to establish a Custodial Account in accordance with
section 403(b)(7) of the Code and shall be construed accordingly.
This Agreement shall take effect upon its execution by the Employee named on
the Application.
ARTICLE II - DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
hereinafter set forth, unless a different meaning is plainly required by the
context:
1. "Agreement" shall mean the American Funds 403(b} Retirement Plan and
Custody Agreement.
2. "Application" shall mean the accompanying instrument executed by the
Employee whereby the terms and conditions of the Agreement are adopted. The
Application is hereby made a part of the Agreement as if set forth herein.
3. "Code" shall mean the Internal Revenue Code of 1986, as amended.
4. "Compensation" shall mean the remuneration received by an Employee which
is includible in gross income for the taxable year of the Employee. For Plan
Years beginning on and after January 1, 1994, Compensation shall not exceed the
Omnibus Budget Reconciliation Act of 1993 (OBRA $93) annual compensation limit
of $150,000, as adjusted by the Commissioner for increases in the cost of
living in accordance with Sec. 401(a)(17)(B). The cost of living in effect for
a calendar year applies to any period, not exceeding 12 months, over which
Compensation is determined (determination period) beginning in such calendar
year. If a determination period consists of fewer than 12 months, the OBRA $93
annual compensation limit will be multiplied by a fraction, the numerator of
which is the number of months in the determination period, and the denominator
of which is 12.
5. "Custodial Account" or "Account" shall mean the account established under
Article III.
6. "Custodian" shall mean Capital Guardian Trust Company, or any successor
thereto.
7. "Designated Investment Company(ies)" shall mean one or more of the
regulated investment companies (as the term "Regulated Investment Company" is
defined pursuant to 403(b)(7)(C) of the Code) for which Capital Research and
Management Company or an affiliate serves as investment adviser.
8. "Elective Deferral" shall mean any employer contributions made at the
election of the Employee to this Custodial Account or another plan. This
includes any employer contributions made on behalf of any Employee under Code
403(b) pursuant to a salary reduction agreement and any contributions made on
behalf of an Employee pursuant to an election to defer compensation under any
401(k), 408(k), 457 or 403(b) plan.
9. "Employee" shall mean a person who performs services, directly or
indirectly, for an Employer, and who has entered into a salary reduction
agreement with the Employer pursuant to which the Employer will adjust the
Employee's Compensation by the amount specified in such agreement and forward
the amount to the Custodian for investment in accordance with this Agreement.
10. "Employer" shall mean the Employer named in the Application. The
Employer shall be an organization described in 403(b)(1)(A) of the Code.
11. "Excess Elective Deferral" shall mean those Elective Deferrals that are
includible in an Employee's gross income under Code 402(g) to the extent the
Employee's's Elective Deferrals for a taxable year exceed the dollar limitation
thereunder.
12. "Qualified Domestic Relations Order (QDRO)" shall mean a signed domestic
relations order issued by a State Court which creates, recognizes or assigns to
an alternate payee(s) the right to receive all or part of an Employee's
interest in his or her Custodial Account, and which meets the requirements of
Code 414(p). An alternate payee is a spouse, former spouse, child, or other
dependent who is treated as a beneficiary under the Account as a result of the
QDRO.
13. "Plan Year" shall be the calendar year.
14. "Sponsor" shall mean American Funds Distributors,"inc. or any successor
thereto.
ARTICLE III - ESTABLISHMENT OF CUSTODIAL ACCOUNT
By executing the Application, the Employee shall open and maintain with the
Custodian a Custodial Account in accordance with the provisions of 403(b)(7) of
the Code. Such Account shall be used exclusively to hold title to Designated
Investment Company shares cash for the benefit of the Employee. The Employee
shall be the beneficial owner of all assets held in or credited to said
Account.
ARTICLE IV- RECEIPT AND INVESTMENT OF CONTRIBUTIONS
For each plan year, the Employer will contribute to the Custodial Account the
amount by which the Employee has elected to reduce his/her compensation for the
plan year under the salary reduction agreement on file with the Employer. All
such contributions shall be accompanied by written instructions specifying the
Custodial Account number to which they are to be credited and the Designated
Investment Company shares to be purchased.
Pursuant to the Employee's written instructions, the Custodian shall invest and
reinvest contributions credited to the Custodial Account in Designated
Investment Company shares. The Account shall be credited with the profits or
losses of the investment in such Account. The amount of each contribution
credited to the Account to be applied to the purchase of Designated Investment
Company shares shall be invested by the Custodian at the applicable offering
price as described in the Designated Investment Company's prospectus. The
Custodian shall have no discretionary investment responsibility and in no event
be liable to any person for following investment instructions given in the
manner provided herein.
The Employee shall be the beneficial owner of such Employee's interest in the
Account, and the Employee (or if the Employee is deceased, the beneficiary)
shall have the right to direct the specific investment(s) the Employee's
interest in accordance with the terms of this Agreement.
All dividends and capital gain distributions received on the Designated
Investment Company shares held in the Account shall be reinvested in such
shares and shall be credited to the Account. The Custodian, in its discretion,
may establish a procedure to accept Employee direction to distribute dividends
and capital gains distributions if the Employee has attained age 59 1/2. If any
distribution on Designated Investment Company shares may be received at the
election of the shareholder in additional shares or in cash or other property,
the Custodian shall elect to receive it in additional shares.
Except as provided in Article VI, upon receipt of proper instructions from the
Employee, the Custodian shall sell, redeem, purchase or exchange shares held in
the Custodial Account, provided that the shares held in such Account shall be
limited to, and any subsequent investments arising within such Account shall be
invested solely in, shares of the Designated Investment Companies.
ARTICLE V - LIMITS ON CONTRIBUTIONS
1. CODE 415 LIMITATIONS. Notwithstanding anything to the contrary contained in
this Agreement, the total contributions made on behalf of an Employee for any
year will not exceed the limits imposed by Code 415, as they may be adjusted
from time to time. The limits of Code 415 are herein incorporated by reference.
If the limitations are exceeded because the Employee is also participating in
another plan required to be aggregated with this Custodial Account for the
purposes of Code 415, then the extent to which annual contributions under this
Custodial Account will be reduced, as compared with the extent to which annual
benefits or contributions under any other plans will be reduced, shall be
determined by the Employee.
2. LIMITATIONS ON ELECTIVE DEFERRALS. The amount of Elective Deferrals for any
taxable year made to this Custodial Account and all other plans, contracts or
arrangements of the Employee shall not exceed the dollar limit in effect under
Code 402(g) at the beginning of such taxable year. In the event that an
Employee has Excess Elective Deferrals, he or she may designate Elective
Deferrals made during a taxable year to this Custodial Account as Excess
Elective Deferrals by notifying the Custodian on or before March 1 of the
amount of Excess Elective Deferrals. Notwithstanding any other provision of
this Agreement, Excess Elective Deferrals, adjusted to reflect any credited
investment experience up to the date of distribution, will be distributed no
later than April 15 to any Employee who designates Elective Deferrals as Excess
Elective Deferrals for such taxable year.
3. EXCLUSION ALLOWANCE LIMITATION. The amount of contributions made to this
Custodial Account is subject to the limitations of Code 403(b), which arc
herein incorporated by reference.
ARTICLE VI - PAYMENT OF BENEFITS
1. PAYMENT OF BENEFITS. The amount credited on behalf of an Employee to the
Custodial Account shall be distributed to the Employee or commence to be
distributed to the Employee in accordance with the Employee's written
instructions to the Custodian, provided that no amounts shall be distributed,
paid or made available to an Employee before the Employee dies, attains 59 1/2,
separates from service with the Employer, becomes disabled (within the meaning
of the next paragraph) or encounters financial hardship. The Custodian may
require satisfactory evidence of eligibility for distribution. Distributions
may also be made pursuant to a QDRO. For purposes of making distributions under
the provisions of a QDRO, the qualified early retirement age with regard to the
Employee against whom the QDRO is entered shall be the date the QDRO is
determined to be qualified. This will only allow payout to the alternate
payee(s).
2. DISABILITY DISTRIBUTION. An Employee shall be considered to be permanently
disabled if he or she is unable to engage in any substantial gainful activity
because of any medically determinable physical or mental impairment which can
be expected to result in death or to be of long-continued and indefinite
duration. The Custodian shall not be required to make distribution under this
section until it has received appropriate medical evidence to that effect.
3. HARDSHIP DISTRIBUTION. Any request for a distribution based on "financial
hardship" shall be accompanied by a supporting affidavit from the Employee
stating that the Employee has incurred a "financial hardship" within the
meaning of 403(b)(7)(A)(ii) of the Code and any rules and regulations
promulgated thereunder. The Custodian may conclusively rely upon the statements
in the Employee's affidavit.
4. FORM OF DISTRIBUTION. The form of distribution shall be made in accordance
with the Employee's election filed with the Custodian and may be paid in cash
or kind, in any one or more of the following ways:
(a) a single stun payment;
(b) equal or substantially equal payments over the life of the Employee;
(c) equal or substantially equal payments over the lives of the Employee
and his or her designated beneficiary:
(d) equal or substantially equal payments over a specified period that may
not be longer than the Employee's life expectancy; or
(e) equal or substantially equal payments over a specified period that may
not be longer than the joint life and last survivor expectancy of the Employee
and his or her designated beneficiary.
5. MINIMUM DISTRIBUTION REQUIREMENTS. Distributions shall commence from
benefits accrued after December 31, 1986 (the "applicable amount") no later
than April 1 of the calendar year following the year in which the Employee
attains age 70 1/2 (the "required beginning date"). For each succeeding year, a
distribution must be made on or before December 31. By the required beginning
date the Employee may elect to have the applicable amount in the Account
distributed in a form described in Section 4 above.
The minimum amount to be distributed each year (commencing with the required
beginning date and each year thereafter) must be at least an amount equal to
the quotient obtained by dividing the prior year-end value of the applicable
amount of the Custodial Account, expressed in either dollars or units, by the
life expectancy of the Employee or joint life and last survivor expectancy of
the Employee and the Employee's designated beneficiary, whichever is
applicable. For determining such life expectancy, the expected return multiples
in Sec. 1.72-9 of the Federal Income Tax Regulations, as amended, shall be
used.
If the Employee dies before his or her applicable amount is distributed or
before such distribution has been completed, then the amount credited to the
Custodial Account which accrued on or after January 1, 1987 shall be
distributed as follows:
(a) if the Employee dies after the distribution of his or her interest has
commenced, the remaining portion of such interest will continue to be
distributed at least as rapidly as under the method of distribution being used
prior to the Employee's death.
(b) if the Employee dies prior to the time benefit payments begin, any
portion of his or her interest payable to (or for the benefit of) a designated
beneficiary will be paid as follows:
(i) by December 31 of the year containing the fifth anniversary of the
Employee's death; or
(ii) in equal or substantially equal payments over the life or life
expectancy of the designated beneficiary or beneficiaries starting by December
31 of the year following the year of the Employee's death. If, however, the
beneficiary is the Employee's surviving spouse, then this distribution is not
required to begin before December 31 of the year in which the Employee would
have reached age 70 1/2.
(c) unless otherwise elected by the Employee prior to the commencement of
distributions or, if applicable, by the surviving spouse where the Employee
dies before distributions have commenced, life expectancies of the Employee or
spouse beneficiary shall be recalculated annually for purposes of distributions
under Sec. 5(a) and 5(b). An election not to recalculate shall be irrevocable
and shall apply to all subsequent years. The life expectancy of a non-spouse
beneficiary shall not be recalculated.
(d) for purposes of this section, any amount paid to a child of the Employee
will be treated as if it had been paid to the surviving spouse if the amount
becomes payable to the surviving spouse when the child reaches the age of
majority.
An individual may satisfy the minimum distribution requirements under 401(a)(9)
of the Code by receiving a distribution from one custodial account that is
equal to the amount required to satisfy the minimum distribution requirements
for two or more custodial accounts. For this purpose, the Employee of two or
more custodial accounts may use the "alternative method" described in Notice
88-38, 1988-1 C.B. 524, to satisfy the minimum distribution requirements
described above.
Notwithstanding any provision of this Agreement to the contrary, the
distribution of au individual's interest shall be made in accordance with the
minimum distribution requirements of 403(b)(10) of the Code and the regulations
thereunder, including the incidental death benefit provisions of 1.401(a)(9)-2
of the proposed regulations, all of which are herein incorporated by reference.
The Custodian has no duty to determine an Employee's eligibility for
distribution or to commence distribution until receipt of written instructions
from the Employee satisfactory to the Custodian. The Employee, or if the
Employee is deceased, the beneficiary, beneficiaries or legal representative of
the Employee, shall notify the Custodian in writing of any request for
distributions and such notice shall set forth the amount and the date
distributions shall commence and the requested method of distribution.
6. DESIGNATION OF BENEFICIARY. An Employee shall have the right to designate
or change a beneficiary to receive any benefit from the Account to which such
Employee may be entitled in the event of the Employee's death prior to complete
distribution of the Account. If no such designation is in effect at the time of
the Employee's death, the Employee's beneficiary shall be the Employee's
estate. The Employee may designate or change a beneficiary only by written
notice to the Custodian in a form acceptable to the Custodian, but the
Custodian shall have no responsibility to determine the validity of a
beneficiary designation.
The designation or change will, upon recording by the Custodian, take effect as
of the time the written notice was signed, whether or not the Employee is
living at the time of recording but without liability as to any payment or
other settlement made by the Custodian before recording the designation or
change. Payment by the Custodian made in good faith to any person who claims to
be entitled to such payment pursuant to a designation by the Employee, the
terms of the Account or applicable law shall relieve the Custodian of any
further liability for such payment.
7. DIRECT ROLLOVER OF ELIGIBLE ROLLOVER DISTRIBUTIONS.
a) This provision applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of this Agreement to the contrary that would
otherwise limit a distributee's election under this Agreement, a distributee
may elect, at the time and in the manner prescribed by law, to have any portion
of an eligible rollover distribution paid directly to an eligible retirement
plan specified by the distributee in a direct rollover.
For purposes of this section, the following definitions apply:
(I) "Eligible rollover distribution" shall mean any distribution of all or
any portion of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any distribution that is one
of a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee or the
joint lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified period of 10 years or
more; any distribution to the extent such distribution is required under
401(a)(9) of the Code; and the portion of any distribution that is not
includible in gross income.
(ii) "Eligible retirement plan" shall mean an individual retirement
account described in 408(a) of the Code, an individual retirement annuity
described in 408(b) of the Code, an annuity plan described in 403(a) of the
Code, or a custodial account described in 403(b) of the Code, that accepts the
Employee's eligible rollover distribution. However, in the case of an eligible
rollover distribution to the surviving spouse, an eligible retirement plan is
an individual retirement account or an individual retirement annuity.
(iii) "Distributee" includes an Employee or former Employee. In addition,
the Employee's or former Employee's surviving spouse and the Employee's or
former Employee's spouse or former spouse who is alternate payee under a QDRO,
as defined in Sec. 414(p) of the Code, are distributees with regard to the
interest of the spouse or former spouse.
(iv) "Direct rollover" shall mean a payment by the Custodian to the
eligible retirement plan specified by the distributee.
(b) For distributions on and after January 1, 1994, if such distribution is
one to which 401(a)(11) and 417 of the Code do not apply, such distribution may
commence less than 30 days after the notice required under 1.411(a)-11(c) of
the Regulations is given, provided that:
(I) the distributee is informed that the distributee has a right to a
period of at least 30 days after receiving the notice to consider the decision
of whether or not to elect a distribution (and, if applicable, a particular
distribution option), and (ii) the distributee, after receiving the notice,
affirmatively elects a distribution.
ARTICLE VII - OWNERSHIP OF SECURITIES
All securities in a form necessitating registration may be registered in the
name of the Custodian or its nominee, or in such other manner as may be
acceptable to the Custodian, and the Employee agrees to hold the Custodian or
any such nominee harmless from any liability as a holder of record. The
Custodian shall have the power in its reasonable discretion to leave any
securities or cash in its custody hereunder, for safekeeping or on deposit with
such banks, transfer agents, or other custodians as the Custodian may select,
provided that the entity with custody of the assets shall at all times identify
such assets as belonging to the Account, and provided, further, that such
entity must be qualified to act as a custodian under applicable law. Nothing
herein shall be construed to restrict the Custodian's authority not to require
the issuance of certificates when ownership of unissued shares of a Designated
Investment Company is permitted. The Custodian shall hold all assets delivered
to it, and all income attributable thereto, separate from its own assets,
identify them in its books and records as assets of the Account, and shall
invest, disburse, hold and otherwise dispose of such assets, and the proceeds
thereof, in accordance with this Agreement.
ARTICLE VIII - VOTING SECURITIES
The Custodian shall deliver, or cause to be executed and delivered, to the
Employee or the Employee's beneficiary, all notices, prospectuses, financial
statements, proxies and proxy soliciting materials received by it relating to
Designated Investment Company shares held in the Employee's Custodian Account.
The Custodian shall vote the shares of any such Designated Investment Companies
in accordance with the written instructions of the Employee or the beneficiary
if the Employee is deceased.
ARTICLE IX - AMENDMENT AND TERMINATION
The Employee, by the establishment of this Account, delegates to the Custodian
the power to make any retroactive or prospective modification of, or amendment
to, this Agreement which is necessary to conform the Agreement to, or satisfy
the conditions of, any law, governmental regulation or ruling, and any
prospective amendment which is desirable for the administration of this
Agreement, and by doing so shall be deemed to have consented to each such
amendment or modification. Notwithstanding the preceding sentence, no
amendment shall be made which would have the effect of allowing any part of the
Account to be used for any purpose other than for the exclusive benefit of the
Employee or beneficiary nor shall any amendment increase or decrease the duties
or liabilities of the Custodian without its consent. The Custodian has no
affirmative obligation to amend the Agreement for any purpose.
If the Employee adopts this Agreement as a continuation of a similar prior
agreement maintained for the Employee under 403(b) of the Code, such prior
agreement may be deemed to have been amended in its entirety if the Employee
requests such action in writing to the Custodian. Following acceptance of such
request, the Custodian shall accept from the prior custodian the cash proceeds
or designated shares of Designated Investment Company of such prior account and
all records pertaining thereto. If the Employee adopts another agreement
qualified and maintained under 403(b) of the Code, as a continuation of this
Agreement, such other agreement may be deemed to have entirely amended this
Agreement if the Employee requests such action in writing to the Custodian.
Following such request, the Custodian shall deliver to the successor custodian
all assets in the Account.
This Agreement shall terminate upon the complete distribution of the Account to
the Employee, beneficiaries, a successor custodian under an agreement or
program described in 403(b) of the Code, or to a trustee under an account
described in 408(a) of the Code. The Custodian shall have the right to
terminate this Agreement upon 60 days' prior written notice to the Employee.
In such event, upon expiration of such period, the Custodian shall distribute
the Account to such successor custodian as the Employee shall designate;
provided, however, that if such successor does not provide the Custodian with
formal notice of its willingness to accept such assets, or, if the Employee
fails to designate a successor custodian prior to the expiration of such
period, then the Custodian shall distribute the Account to the Employee.
ARTICLE X - CONCERNING THE CUSTODIAN
The Custodian shall be under no duty to take any action other than as herein
specified with respect to the Custodial Account unless the Employee shall
furnish the Custodian with instructions in proper form and such instructions
shall have been specifically agreed to by the Custodian in writing. Unless
otherwise expressly mandated by law, the Custodian shall not be required to
defend or engage in any suit with respect to the Custodian Account unless the
Custodian shall have first agreed in writing to do so and shall have been fully
indemnified to the satisfaction of the Custodian. The Custodian may
conclusively rely upon and shall be protected in acting upon any written order
from the Employee permitted by this Agreement or any other notice, request,
consent, certificate or other instrument or paper reasonably believed by it to
be genuine and to have properly executed, and, so long as it acts reasonably in
good faith, in taking or omitting to take any other action. The Custodian may
retain assets in cash or cash balances pending receipt of proper investment
instructions and shall not be liable for interest on any such cash or cash
balances.
The Custodian shall have no responsibility for determining the amount of any
contribution to be made to the Account nor for the collection of such
contributions. Any reports or instructions prepared by or on behalf of the
Custodian for the Employee shall be solely for the convenience of the Employee.
The Employee shall be solely responsible for determining and having the
Employer remit to the Custodian the correct amount of contribution.
The Employee shall have the sole authority to enforce this Agreement on behalf
of any and all persons having or claiming any interest in the Custodian Account
by virtue of this Agreement.
ARTICLE XI - REPORTS OF THE CUSTODIAN
The Custodian shall keep accurate and detailed records of all receipts,
investments, disbursements and other transactions required to be performed
hereunder. The Custodian shall file with the Employee statements reflecting
the receipts, disbursements and other transactions effected by it. Upon the
expiration of 45 days after furnishing such statement to the Employee, the
Custodian shall be forever released and discharged from all liability
(excluding negligence or intentional misconduct) and accountability to anyone
with respect to its acts, actions, duties, obligations or responsibilities as
shown in or reflected by such statement, except with respect to any such acts
or transactions as to which the Employee shall have filed written objections
with the Custodian within such 45-day period.
The Employee, the Employer and the Custodian shall furnish to one another such
information relevant to this Agreement and Custodial Account as may be required
under the Code and any regulations issued or forms adopted by the Treasury
Department thereunder.
The Custodian shall file with the Internal Revenue Service such returns and
other information concerning the Custodial Account as may be required of it
under the Code, any regulations issued by the Treasury Department, but shall
not be required to prepare, file or provide any reports except as may be
expressly required in this Agreement.
ARTICLE XII - RESIGNATION OR REMOVAL OF CUSTODIAN
The Custodian may resign as the Custodian under the Agreement at any time upon
60 days' notice in writing to the Employee and the Employee may remove the
Custodian at any time, upon written notice, provided however, to the extent
necessary, the Custodian shall continue to be authorized to complete and settle
any outstanding transactions in process prior to the Custodian receiving such
notice. Upon such resignation or removal the Employee shall appoint a
qualified successor and the Custodian shall file with the Employee a written
report as required by Article XI. Should the Custodian resign as the custodian
under the Plan, the Sponsor shall appoint a qualified successor, upon giving 60
days' prior notice in writing to each Employee.
Upon receipt by the Custodian of written acceptance of appointment by a
qualified successor to the Custodian (in the case of all resignations or
removals pursuant to this Article XII), the Custodian shall transfer and pay
over to such successor the assets of the Account. Following the notice of
removal of the Custodian, the Custodian shall act promptly to, and shall have a
reasonable period of time in which to settle the accounts prior to transferring
the Account assets after receipt by the Custodian of written acceptance of
appointment by a qualified successor Custodian. The Custodian is authorized,
however, to reserve such sum of money or property as it may deem advisable for
payment of all its fees, compensations, costs and expenses, or for payment of
any other liabilities constituting a charge on or against the Custodian, with
any balance of such reserve remaining after the payment of all such items to be
paid over to the successor. The successor to the Custodian shall not be
responsible for the acts, or the failures to act, of any predecessor custodian
and shall hold the assets paid over to it under terms similar to those of this
Agreement.
If within 30 days after the effective date of the Custodian's resignation or
removal a qualified successor to the Custodian has not been appointed or has
not accepted such appointment, the Custodian shall either appoint such
successor itself or terminate the agreement. Upon such termination the
Custodian shall distribute all assets in the Account to the Employee or, if the
Employee is deceased, to the beneficiary. The Custodian shall not be required
to see to the performance of any successor of its duties hereunder.
ARTICLE XIII - MISCELLANEOUS
1. NO DIVERSION. At no time shall it be possible for any part of the assets
of the Custodial Account to be used for or diverted to purposes other than for
the exclusive benefit of the Employee or the beneficiary except as specifically
provided for in this Agreement. The Employee's rights to the assets of the
Custodian Account shall be nonforfeitable at all times.
2. NOTICES. Any notice from the Custodian to the Employee or any other party
pursuant to this Agreement shall be effective if sent by first-class mail to
the last address on the Custodian's records. Any notice to the Custodian
pursuant to this Agreement shall be by first-class mail.
3. TRANSFERS. The Custodian may accept the transfer of cash from the
Employee's existing custodial account and/or existing annuity contract which
are/is established under 403(b) of the Code to the Employee's Custodial Account
established under this Agreement, unless expressly prohibited by the documents
governing such custodial accounts and/or such annuity. The Employee may also
transfer cash or assets from this Custodial Account to any other custodial
account and/or annuity contract permitted under 403(b) of the Code.
4. TERMINOLOGY. Any masculine terminology used in the Agreement shall
include the feminine.
5. INALIENABILITY OF BENEFITS. The Employee shall not have the right to
assign, transfer or pledge his or her interest in the Account, and the
Employee's interest in the Account shall not be subject to any claims of
creditors.
No benefit or interest available hereunder will be subject to assignment or
alienation, either voluntarily or involuntarily. The preceding sentence shall
also apply to the creation, assignment, or recognition of a right to any
benefit payment with respect to an Employee pursuant to a domestic relations
order, unless such order is a Qualified Domestic Relations Order.
6. CONDITION OF AGREEMENT. The Employee shall look solely to the assets of
the Custodial Account for the payment of any benefit to which he is entitled
under the agreement.
7. NECESSITY OF QUALIFICATION. This Agreement is established with the intent
that it shall qualify under 403(b) of the Code and any amendments to that
Section. Notwithstanding any other provisions contained in this Agreement, if
the Internal Revenue Service determines that because of some inadequacy in the
provisions of this original Agreement, it initially fails to so qualify, all of
the assets of the Custodial Account shall be distributed to the Employee or
transferred in accordance with Section 3 of this Article XIII and the Agreement
shall be considered to be rescinded and of no force and effect unless such
inadequacy is removed by a retroactive amendment. The Sponsor forthwith shall
notify the Custodian in writing of any determination with respect to the
qualified status of the Agreement. The Employee understands the necessity of
seeking independent legal counsel with respect to the effect of establishing
this Agreement and further understands that the Agreement has not been approved
by the Internal Revenue Service and that, except as set forth in this
Agreement, neither the Custodian nor the Sponsor, nor anyone acting on behalf
of the Custodian or Sponsor, make any representations as to the tax
qualifications or effect thereof.
8. CUSTODIAN'S ACCEPTANCE AND FEE SCHEDULE.
The Custodian accepts appointment as Custodian for the Custodial Account
established pursuant to the Application and will charge a setup fee in the year
that the Account is established, and an annual fee for maintenance of the
Account for every year thereafter. The fee with respect to the Employee's
Account shall be charged to such Account. The Custodian is empowered to redeem
Designated Investment Company shares held in the Account and to transfer to
itself the proceeds from such redemption and any cash held in the Account in
payment of its fees. The compensation of the Custodian shall be such fees as
the Custodian shall advise the Employee in writing. There may be additional
charges for further services requested of the Custodian.
9. MISCELLANEOUS.
(a) Investments. Notwithstanding any provisions of this Agreement to the
contrary, investments will be limited to those permitted under Sec. 403 of the
Code.
(b) Compliance. The parties intend that this Agreement be consistent with all
requirements of the Code. Notwithstanding anything to the contrary in this
Agreement, if any provision of this Agreement is determined not to comply with
any requirements of the Code, such provision shall be enforceable only to the
extent it is in compliance with such requirements and shall otherwise be deemed
to be inapplicable; provided, further, the Custodian shall perform all duties
to be performed by the Custodian pursuant to the Code.
(c) The Custodian shall exercise and discharge its powers and duties in the
following manner:
(I) by acting solely in the interest of the Employee and Employee's
beneficiaries;
(ii) by acting for the exclusive purpose of providing benefits to the
Employee and Employee's beneficiaries and defraying reasonable expenses of
administering the Account;
(iii) except as provided in the Agreement, no part of the principal or
income of an Account shall be used for, or diverted to, purposes other than the
exclusive benefit of the Employee or Employee's beneficiaries or for the
reasonable expenses of administering the Account until all liabilities for
benefits due the Employee or Employee's beneficiaries have been satisfied.
10. GOVERNING LAW. This agreement shall be construed in accordance with the
laws of the State of California.
The American Funds Group (R)
403(b) Retirement Plan Application
(map)
Please mail this form to:
AMERICAN FUNDS SERVICE COMPANY
(refer to map and choose the appropriate regional address)
A. P.O. Box 4900, Brea, California 92622-4900
B. P.O. Box 659522, San Antonio, Texas 78265-9522
C. P.O. Box 6164, Indianapolis, lndiana 46206-6164
D. P.O. Box 2280, Norfolk, Virginia 23501-2280
1. EMPLOYEE INFORMATION
Employee name_______________________________________________
Street address______________________________________________
City_________________________State_____________Zip__________
Date of birth (Mo./Day/Yr.) ______________
Daytime phone number ( )______________
Social Security __________-_______-_______
2. EMPLOYER INFORMATION
You cannot use this form if employer contributions are made.
Employee name_______________________________________________
Street address______________________________________________
City_________________________State_____________Zip__________
Daytime phone number ( )______________
Social Security __________-_______-_______
3. FUND SELECTION
More than one fund may be selected if at least $25 is
allocated per month, per fund. IF THIS APPLICATION IS TO
CHANGE EXISTING INVESTMENT INSTRUCTIONS, YOU MUST ALSO
NOTIFY, YOUR EMPLOYER OF THE CHANGE(S).
PLEASE ALLOCATE MY MONTHLY INVESTMENTS AS SHOWN:
AMCAP Fund $______
American Balanced Fund ______
American High-Income Trust ______
American Mutual Fund ______
Bond Fund of America ______
Capital Income Builder ______
Capital World Bond Fund ______
Capital World Growth and Income Fund ______
Cash Management Trust of America ______
EuroPacific Growth Fund ______
Fundamental Investors ______
Growth Fund of America ______
Income Fund of America ______
Intermediate Bond Fund of America ______
Investment Company of America ______
New Economy Fund ______
New Perspective Fund ______
SMALLCAP World Fund ______
U.S. Government Securities Fund ______
U.S. Treasury Money Fund of America ______
Washington Mutual Investors Fund ______
[] NEW ACCOUNT
[] INVESTMENT CHANGE ONLY (To exchange existing assets, please call
800/421-0180.)
4. BENEFICIARY DESIGNATION
WARNING: This Beneficiary Designation may have important tax and/or legal
consequences. You are encouraged to consult with your own adviser before
completing this form. Neither the trustee nor any affiliate of the trustee
shall be liable for any claim, loss, damage or expense arising out of or in any
manner connected with a distribution pursuant to this completed Beneficiary
Designation. You should periodically review and update your Beneficiary
Designation.
I revoke all prior 403(b) Beneficiary Designations. Reserving the right to
revoke or change this Beneficiary Designation, I direct that all fund accounts
be distributed upon my death as follows:
PRIMARY BENEFICIARY(IES): IF YOU ARE MARRIED, SEE BELOW.*
Full legal name__________________________________________________
Relationship_____________ Date of birth______________ %__________
Full legal name__________________________________________________
Relationship_____________ Date of birth______________ %__________
(ATTACH ADDITIONAL SHEET IF NECESSARY)
If no Primary Beneficiary listed above survives me, I direct that all fund
accounts be distributed upon my death to the Contingent Beneficiary(ies) listed
bdow.
CONTINGENT BENEFICIARY(IES):
Full legal name_________________________________________________
Relationship_________________________Date of birth_______________
(ATTACH ADDITIONAL SHEET IF NECESSARY)
In the event no Primary Beneficiary or Contingent Beneficiary survives me, I
direct that all fund accounts be distributed upon my death to my estate.
TRUST BENEFICIARY: If you choose to name a trust as a Primary and/or Contingent
Beneficiary, please describe the trust by the name of the present trustee, the
name of the trust (if any) and the date of the trust. Example: "John Davis (or
his successor), as Trustee of the Davis Family Trust dated December 1, 1994."
NOTE: EXCEPT AS OTHERWISE PROVIDED ABOVE, EACH PRIMARY BENEFICIARY, SO
DESIGNATED SHALL RECEIVE AN EQUAL SHARE. IN THE EVENT A PRIMARY BENEFICIARY
DOES NOT SURVIVE YOU, SUCH PRIMARY BENEFICIARY'S SHARE SHALL BE DISTRIBUTED PRO
RATA TO THE SURVIVING PRIMARY BENEFICIARY(IES). IF ANY PRIMARY BENEFICIARY
SURVIVES YOU BUT FAILS TO SURVIVE DISTRIBUTION OF HIS OR HER ENTIRE SHARE, THEN
THE REMAINING PORTION OF SUCH PRIMARY BENEFICIARY'S SHARE SHALL BE DISTRIBUTED
TO SUCH PRIMARY BENEFICIARY'S ESTATE. ALL STATED PERCENTAGES MUST ADD UP TO
100%; IF NOT, DISTRIBUTIONS SHALL BE MADE PROPORTIONALLY BASED UPON THE
PERCENTAGES YOU STATE. THIS PARAGRAPH SHALL ALSO APPLY TO CONTINGENT
BENEFICIARIES.
*SPOUSAL CONSENT TO BENEFICIARY DESIGNATION:
If you are married and you designate a Primary Beneficiary other than your
spouse, this Beneficiary Designation may not be wholly effective under your
state law without the consent of your spouse. Please consult your own legal
adviser.
By his or her signature below, my spouse expressly consents to the above
designation of a Primary Beneficiary.
____________________________ _________________________ ________
Print Spouse's Name Spouse's Signature Date
Account Options
5. DEALER INFORMATION
To be completed by the investment dealer.
Dealer name (as it appears on Selling Group Agreement)
Address home office City State Zip
Authorized signature of dealer
Address of office serving account City State Zip
Registered representative's name and number (exactly as it appears on firm's
registration)
Registered representative's telephone number ( )
6. CROSS-REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
ALL DIVIDENDS WILL BE REINVESTED INTO THE FUND THAT PAYS THEM UNLESS OTHERWISE
INDICATED HERE:
[] Cross-reinvest into (name of fund)
ALL CAPITAL GAIN DISTRIBUTIONS WILL BE REINVESTED INTO THE FUND THAT PAYS THEM
UNLESS OTHERWISE INDICATED HERE:
[] Cross-reinvest into the same fund as shown for dividend
cross-reinvestment.
Cross-reinvestmcnt is available on investments qf $5,000 or
more, or when the minimum investment requirement of the
receiving fund has been met.
7. RIGHT OF ACCUMULATION
Attach separate sheet if necessary.
[] I own shares of more than one fund in The American Funds
Group, which may entitle me to a reduced sales charge. My
account numbers are:
[] The account registration of some of my shares differs.
Their account numbers are:
8. TELEPHONE EXCHANGE
Automatically applies if neither box is checked.
I hereby authorize and direct Amerierm Funds Service Company (AFS) to accept
and act upon telephone, fax, telex or telegraph instructions for exchanges
involving this account or any other account with the same registration. I
understand that AFS will act upon instructions from any person with account
information.
9. AUTOMATIC EXCHANGES
IMPORTANT: The account registrations for the originating and
receiving funds must be identical.
The mininmm investment requirement for the receiving fund must have already
been met OR the originating fund's balance must be at least $5,000 and the
receiving fund's minimum investment must be met within one year.
I hereby authorize automatic exchanges of $___________(exact dollars - $50
minimum) into (name of fund)____________ from (name of
fund)_________________________________ account number (if
known)___________________________
Please make exchanges on the 15th (or preceding business day) of these months:
[] January [] February [] March
[] April [] May [] June
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10. YOUR SIGNATURE
I hereby establish an American Funds 403(b) Retirement Plan account, appoint
Capital Guardian Trust Company as custodian, direct that contributions be
invested in accordance with section 3 above, and designate the individual(s) in
section 4 as my beneficiary(ies). I have read the prospectus(es), the Plan and
Custody Agreement and this application and agree to all their provisions. I
consent to a $10 setup fee and an annual maintenance fee (currently $10), as
specified in the Plan and Custody Agreement. I hold harmless and indenmify
American Funds Service Company, any of its affiliates or mutual funds managed
by such affiliates, and each of their respective directors, trustees, officers,
employees and agents from any losses, expenses, costs or liability (including
attorney's fees) which it may incur in connection with these instructions or
the exercise of the telephone exchange privilege. In addition, I authorize the
instructions in this application, and certify, under penalty of perjury, that
the Social Security number shown in section 1 is correct.
Signature__________________________________ Date_________
THE AMERICAN FUNDS INDIVIDUAL RETIREMENT ACCOUNT ("IRA")
Trust Agreement
Internal Revenue Service Letter Serial No.: D180055a
Please retain this important information for your records.
SECTION 1 - DEFINITIONS
As used in this trust agreement ("Agreement") and the related Application,
the following terms shall have the meaning set forth below unless a different
meaning is plainly required by the context:
(a) "Account" means the individual account established in accordance with
Code Sec. 408 and under this Agreement and which shall at all times be
nonforfeitable.
(b) "Application" means the accompanying instrument executed by the Owner
under which the Owner establishes the Account.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Compensation" means wages, salaries, professional fees, and other
amounts derived from or received for personal service actually rendered
(including, but not limited to, commissions paid salespersons, compensation for
services based on a percentage of profits, commissions on insurance premiums,
tips and bonuses) and includes earned income, as defined in Code Sec. 401(c)(2)
and any amount includable in gross income under Code Sec. 71 with respect to a
divorce or separation instrument described in subparagraph {A) of Code Sec.
71(b)(2). Compensation does not include amounts derived from or received as
earnings or profits from property (including, but not limited to, interest and
dividends), any amounts not includable in gross income, or any amount received
as a pension, annuity or as deferred compensation. Under the Rev. Proc. 91-18
"safe harbor," the Internal Revenue Service defines Compensation to be
amounts properly shown as "Wages, tips and other compensation" less amounts
properly shown as "Non-qualified plan" distributions on the Owner's Form W-2
Wage and Tax Statement.
(e) "Disabled" means disabled as defined in Code Sec. 72(m)(7).
(f) "Fund" means shares of one or more of the investment companies for
which the Trustee or its affiliates serves as investment adviser.
(g) "Owner" means the individual for whom the Account is established.
(h) "Rollover Contribution" means an amount contributed to the Account
which is derived from (i) all or any portion of an eligible rollover
distribution as defined in Code Sub-sec. 402(c)(4) and 403(b)(8)(A)(i) and the
regulations thereunder, or (it) all or any portion of a distribution from
another individual retirement account established under Code Sec. 408(a) or an
individual retirement annuity established under Code Sec. 408(b). Redemptions
of retirement bonds (under former Sub-sec. 405(d)(3) or 409(b)(3)(c) of the
Internal Revenue Code of 1954) qualify as Rollover Contributions but only to
the extent the proceeds from the redemption, including total accumulated
interest, exceed the basis of the bond. However, such contributions must be
paid into the Account not later than the 60th day following the receipt of such
distribution. Additionally, Rollover Contributions referred to in clause (i)
may be rolled over directly to the Account. If property other than money is
distributed from a plan qualified under Code Sec. 401(a), the Rollover
Contribution may consist of the property distributed, subject to the consent of
the Trustee. Alternatively, the property may be sold and its proceeds rolled
over. At no time within the one-year period ending on the date that a
distribution is received from another individual retirement plan may the Owner
roll over a distribution from the same individual retirement account into this
Account.
(i) "Trustee" means Capital Guardian Trust Company, or any successor
thereto.
SECTION 2 - ESTABLISHMENT OF ACCOUNT
By executing the Application, the Owner thereby establishes the Account, which
shall hold all assets deposited with the Trustee, for the exclusive benefit of
the Owner and the Owner's beneficiaries.
SECTION 3 - CONTRIBUTIONS AND TRANSFERS
The Trustee shall not accept contributions for any taxable year in excess of
the lesser of $2,000 or 100% of Compensation (or in the case of an Account
together with an account established by the Owner for a nonworking spouse, the
lesser of $2,250 or 100% of Compensation), except for contributions made in
accordance with the terms of a Simplified Employee Pension Plan (SEP), or for
contributions which the Owner has certified to the Trustee in writing to be
Rollover Contributions.
Rollover Contributions must be received by the Trustee in the form of cash,
Fund shares or any combination thereof. The Trustee may require that each
Rollover Contribution be accompanied by a properly completed transmittal form
provided by the Trustee.
No contribution may be made to the Account (other than Rollover Contributions
or employer contributions under a SEP) beginning with the calendar year in
which the Owner reaches age 70 1/2.
The Owner may transfer assets in any amount from another Code Sec. 408
individual retirement account, Sec. 403(a) annuity or (former) Sec. 405 bond.
If the Owner adopts another individual retirement account established under
Code Sec. 408, at the request of the Owner the Trustee shall deliver to such
successor the cash proceeds or designated Fund shares of the Account, The
Trustee may require satisfactory evidence of the qualified status of any
successor trustee or custodian.
SECTION 4 - INVESTMENT OF ACCOUNT ASSETS
Pursuant to the Owner's written instructions, or the written instructions of
the employer on behalf of the Owner under a payroll deduction plan, each cash
contribution to the Account shall be applied to the purchase of shares of the
Fund or Funds currently designated by the Owner at the applicable offering
price in accordance with the terms of such Fund's prospectus and/or to the
purchase of the designated annuity contract acceptable to the Trustee. If no
Fund is designated, the contribution wilt be invested in The Cash Management
Trust of America until such time as the Owner shall designate a Fund, The
Owner, or if the Owner is deceased, the beneficiary, may from time to time
change the designation of the Fund for investment of Account assets hereunder
and may instruct the Trustee to exercise the exchange privilege set forth in
the Fund's prospectus. All dividends and capital gain distributions shall be
reinvested in Fund shares unless directed otherwise by the Owner if the Owner
has reached age 59 1/2. Dividends received from any annuity contract shall be
applied to the purchase of paid-up additions to such policy's cash value. No
part of an Account shaft be invested in life insurance contracts, No annuity
contract acquired by the Trustee shall have a fixed premium. Any refund of
premiums (other than those attributable to excess contributions) will be
applied, before the close of the calendar year following the year of the
refund, toward the payment of future premiums or the purchase of additional
benefits. No annuity contract shall be transferable by the Owner.
Fund shares and annuity contracts acquired by the Trustee shall be owned by and
registered in the name of the Trustee or of its registered nominee. The assets
of the Account will not be commingled with other Trustee property and the
purchase of Fund shares shall not be considered commingling.
SECTION 5 - WITHDRAWAL OF ACCOUNT ASSETS
A distribution of all or part of the Account may be made to the Owner upon the
Owner's written request; however, tax penalties apply to all withdrawals other
than (i) payments made in substantially equal installments described in Sec.
6(a)(ii)-(v); (ii) the return of nondeductible contributions; or (iii) payments
made to an Owner who has reached age 59 1/2 or is Disabled.
If the Owner contributes, in any calendar year, an amount greater than that
which may be claimed as an allowable deduction under the Code, the Owner may
withdraw such excess together with any earnings thereon.
Such excess contributions may be withdrawn at any time prior to the day
prescribed by law (including extensions) for filing the Owner's federal tax
return for such year and shall not be subject to tax penalties. Any earnings on
the excess contribution must also be withdrawn and are includable in income in
the tax year in which the excess contribution was made. In addition, the
withdrawn earnings may be subject to a 10% penalty tax as a premature
distribution. Such amount shall, at the Owner's request, be distributed to the
Owner or redesignated as the Owner's contribution for the succeeding taxable
year. The Owner shall certify to the Trustee in writing the full amount of the
required withdrawal, including earnings thereon, or the number of shares
equivalent thereto to be withdrawn and the method of distribution. Failure to
withdraw such amounts will result in an annual tax penalty to the Owner.
Withdrawals prior to commencement of distributions pursuant to Sec. 6 of this
Agreement may be made only upon written notice by the Owner to the Trustee,
which notice shall state the amount of the withdrawal, the reason for the
withdrawal, and the method of distribution. The Trustee has no responsibility
to make any inquiry concerning the request for any withdrawal.
If the Owner should become Disabled, the Account may be distributed to the
Owner commencing as of the date of determination of such disability.
SECTION 6 - REQUIRED DISTRIBUTIONS
(a) The Owner's entire interest in the Account must be distributed, or begin to
be distributed, by the Owner's required beginning date, which is the April 1
following the calendar year in which the Owner reaches age 70 1/2. For each
succeeding year, a distribution must be made on or before December 31. By the
required beginning date the Owner may elect to have the balance in the Account
distributed in one of the following forms:
(i) a single sum payment;
(ii) equal or substantially equal payments over the life of the Owner;
(iii) equal or substantially equal payments over the lives of the Owner and
his or her designated beneficiary;
(iv) equal or substantially equal payments over a specified period that may
not be longer than the Owner's life expectancy; or
(v) equal or substantially equal payments over a specified period that may
not be longer than the joint life and last survivor expectancy of the Owner and
his or her designated beneficiary. Distributions under this section are
considered to have begun if the distributions are made on account of the Owner
reaching his or her required beginning date. If the Owner receives
distributions prior to the required beginning date and the Owner dies,
distributions will not be considered to have begun.
The minimum amount to be distributed each year (commencing with the required
beginning date and each year thereafter) must be at least an amount equal to
the quotient obtained by dividing the prior year-end value, expressed in either
dollars or units, by the life expectancy of the Owner, or joint life and last
survivor expectancy of the Owner and the Owner's designated beneficiary,
whichever is applicable. For determining such life expectancy, the expected
return multiples in Sec. 1.72-9 of the Federal Income Tax Regulations, as
amended, shall be used.
(b) If the Owner dies before his or her entire interest is distributed, the
entire remaining interest will be distributed as follows:
(i) If the Owner dies on or after distributions have begun under Sec.
6(a), the entire remaining interest must be distributed at least as rapidly as
provided under Sec. 6(a).
(ii) If the Owner dies before distributions have begun under Sec. 6(a),
the entire remaining interest must be distributed as elected by the Owner or,
if the Owner has not so elected, as elected by the beneficiary or
beneficiaries, as follows:
(A) by December 31st of the year containing the fifth anniversary of the
Owner's death; or
(B) in equal or substantially equal payments over the life or life
expectancy of the designated beneficiary or beneficiaries starting by December
31st of the year following the year of the Owner's death. If, however, the
beneficiary is the Owner's surviving spouse, then this distribution is not
required to begin before December 31st of the year in which the Owner would
have reached age 70 1/2
(c) Unless otherwise elected by the Owner prior to the commencement of
distributions under Sec. 6(a) or, if applicable, by the surviving spouse where
the Owner dies before distributions have commenced, life expectancies of an
Owner or spouse beneficiary shall be recalculated annually for purposes of
distributions under Sec. 6(a) and Sec. 6(b). An election not to recalculate
shall be irrevocable and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary shall not be recalculated.
(d) An individual may satisfy the minimum distribution requirements under
Sub-sec. 408(a)(6) and 408(b)(3) of the Code by receiving a distribution from
one IRA that is equal to the amount required to satisfy the minimum
distribution requirements for two or more IRAs. For this purpose, the Owner of
two or more IRAs may use the 'alternative method' described in Notice 88-38,
1988-1 C.B. 524, to satisfy the minimum distribution requirements described
above.
Notwithstanding any provision of this Agreement to the contrary, the
distribution of an individual's interest shall be made in accordance with the
minimum distribution requirements of Sec. 408(a)(6) or Sec. 408(b)(3) of the
Code and the regulations thereunder, including the incidental death benefit
provisions of Sec. 1.401 (a)(9)-2 of the proposed regulations, all of which are
herein incorporated by reference.
The Trustee has no duty to determine an Owner's eligibility for distribution or
to commence distribution until receipt of written instructions from the Owner
satisfactory to the Trustee.
The Owner, or if the Owner is deceased, the beneficiary, beneficiaries or legal
representative of the Owner, shall notify the Trustee, in writing, of any
request for distribution and such notice shall set forth the amount and the
date distributions shall commence and the requested method of distribution.
SECTION 7 - BENEFICIARY DESIGNATION
The Owner shall have the right to designate or change a beneficiary to receive
any benefit from the Account to which such Owner may be entitled in the event
of the Owner's death prior to complete distribution of the Account. If no such
designation is in effect at the time of the Owner's death, the Owner's
beneficiary shall be the Owner's estate. The Owner may designate or change a
beneficiary only by written notice to the Trustee in a form acceptable to the
Trustee, or other manner acceptable to the Trustee, but the Trustee shall have
no responsibility to determine the validity of a beneficiary designation.
The designation or change will, upon recording by the Trustee, take effect as
of the time the written notice was signed, whether or not the Owner is living
at the time of recording but without liability as to any payment or other
settlement made by the Trustee before recording the designation or change.
Notwithstanding the foregoing, no such designation or change shall take effect
with respect to any annuity contract held in the Account until accepted by the
insurance company issuing such annuity contract. Payment by the Trustee made in
good faith to any person who claims to be entitled to such payment pursuant to
a designation by the Owner, the terms of the Account or applicable law shall
relieve the Trustee of any further liability for such payment.
Upon the Owner's death, if the designated beneficiary is the Owner's surviving
spouse, the spouse may treat the Account as his or her own Account. This
election will be deemed to have been made if such surviving spouse makes a
regular IRA contribution to the Account, makes a rollover to or from such
Account, or fails to elect any of the above provisions.
SECTION 8 - CONCERNING THE TRUSTEE
The Trustee, or its designated agent ("Agent"), is authorized to establish
share accumulation accounts and systematic withdrawal plans (as described in
the prospectus of the Fund, and as customarily entered into with other
shareholders of the Fund) for the purpose of receiving and investing the
contributions made hereunder and reinvesting income dividends and capital gain
distributions. Upon each contribution or redemption the Trustee shall furnish
to the Owner a statement of the Account, showing amounts invested or redeemed
and the number and price of such shares. The Trustee is authorized to deposit
certificates for shares with itself or the Agent for the purpose of safekeeping
or otherwise, or to permit shares to be credited to the Trustee. The Trustee
shall not be obligated to secure certificates for such shares, and in its
discretion may permit such shares to remain unissued. The Trustee is not liable
for any act or failure to act of such Agent.
The Trustee is authorized to sell or redeem shares and to surrender annuity
contracts at the direction of the Owner, the Owner's legal representative or
the designated beneficiary, The Trustee shall furnish an annual
calendar-year statement to the Owner setting forth receipts, investments,
disbursements, and other transactions. Upon expiration of 45 days after
forwarding such statement, the Trustee shall be forever released and discharged
from all liability and accountability to anyone with respect to its acts,
transactions, duties, obligations, or responsibilities as shown in or reflected
by such statement, except with respect to any such acts or transactions as to
which the Owner, or the beneficiary of a deceased Owner, shall have filed
written objections with the Trustee within such 45-day period.
The Trustee shall furnish to the Owner, either directly or indirectly, notices,
prospectuses, financial statements, proxies, and proxy-soliciting materials
relating to all assets credited to the Account. Any notification to the Owner
provided for under this Agreement shall be effective if sent by first-class
mail to the Owner's last address of record. The Trustee shall not vote any of
the Fund shares held in the Account except in accordance with prior written
instructions of the Owner.
The Trustee shall file such reports relating to the Account with the
appropriate government agency as the Trustee is required to file by law. The
Owner shall furnish such information to the Trustee which is necessary to
complete such reports and shall be responsible for all other records and
reports which the Trustee has not agreed, in writing, to prepare.
The Trustee shall not be liable to the Owner or beneficiaries for any
depreciation or similar loss of assets or for the failure of the Account to
produce any or larger net earnings. The Trustee shall not be liable for any act
or failure to act of itself, its agents, employees, or attorneys, so long as it
exercises good faith, is not guilty of negligence or willful misconduct, and
has selected such agents, employees, and attorneys with reasonable diligence.
The Trustee shall have no responsibility for the determination or verification
of the premium rates for any annuity contract or the offering or redemption
prices or net asset values of Fund shares, and shall be entitled to rely for
such rates, prices and net asset values upon statements issued by or on behalf
of the respective insurance company or Fund. The Trustee shall have no duty to
inquire into the investment practices of the Fund; the Fund shall have the
exclusive right to control the investment of its assets in accordance with its
stated policies; and the investments shall not be restricted to securities of
the character now or hereafter authorized for trustees by law or rules of
court. The Trustee shall not be liable or responsible for any omissions,
mistakes, acts or failures to act of the Fund, the insurance company issuing
any annuity contract provided for herein, or their successors, assigns or
agents.
The Trustee shall not be responsible in any way for the purpose or propriety of
any distribution made pursuant to instructions satisfactory to the Trustee, the
collection of contributions provided for hereunder, or any action or nonaction
taken pursuant to the request of the Owner, beneficiary or legal representative
of the Owner. The Trustee shall have no duty to determine whether contributions
made to the Account satisfy the applicable limits set forth in Sec. 3 of this
Agreement, The Trustee shall have no obligation to give advice to anyone on the
deductibility of any contributions or the tax due, if any, on payments made
hereunder or to determine the amount of any excess contribution and the net
income attributable thereto, If the Owner has authorized telephone exchanges
under the Application or other form provided by the Trustee, the Trustee may
make investment exchanges for this Account or any other account with the same
registration in accordance with the instructions received from any person by
telephone, telecopier or other electronic means and shall have no obligation to
question any instructions so received or liability for the transactions it
performs pursuant to such instructions.
SECTION 9 - TRUSTEE FEE AND EXPENSES OF THE ACCOUNT
Any income taxes or other taxes of any kind whatsoever that may be levied or
assessed upon or in respect of the Account shall be paid from the assets of the
Account. The compensation of the Trustee, any transfer taxes incurred in
connection with the investment and reinvestment of the assets of the Account,
and all administrative expenses incurred by the Trustee in the performance of
its duties, including fees for legal services rendered to the Trustee, shall
either be deducted from contributions and charged to the Account, or shall be
paid by redeeming or surrendering the necessary assets credited to the Account,
unless otherwise paid by the Owner, but until paid shall constitute a lien upon
the assets of the Account.
The compensation of the Trustee shall be such fees as the Trustee shall advise
the Owner in writing, There may be additional charges for further services
requested of the Trustee.
SECTION 10 - AMENDMENT AND TERMINATION
The Owner, by establishing this Account, delegates to the Trustee the power to
amend, retroactively or prospectively, the Trust Agreement as necessary to
conform the Trust Agreement to the Code or other laws, including the power to
appoint a successor trustee, and by doing so shall be deemed to have consented
to each such amendment or modification. No amendment shall be made which would
have the effect of allowing any part of the Account to be used for any purpose
other than for the exclusive benefit of the Owner or Owner's beneficiary.
This Agreement shall terminate upon the transfer or complete distribution of
the Account, or at the discretion of the Trustee at any time upon 30 days'
prior written notice to the Owner.
SECTION 11 - RESIGNATION OR REMOVAL OF THE TRUSTEE
The Trustee may resign at any time upon 30 days' prior written notice to the
Owner, and may be removed by the Owner at any time upon 30 days' prior written
notice to the Trustee. Upon such resignation or removal, the Owner shall
appoint a qualified successor to the Trustee, and at the request of the Owner,
the Trustee shall transfer and pay over to such successor the assets of the
Account or the proceeds from the sale of such assets. The Trustee may, in its
discretion, make an independent determination as to such successor's qualified
status. The Trustee is authorized, however, to reserve such sum of money as it
may deem advisable for payment of any liability constituting a charge against
the assets of the Account or against the Trustee, with any balance remaining
after the payment of all such items to be paid over to such successor.
If, within 30 days after the Trustee's resignation or removal a qualified
successor has not been appointed, the Trustee shall distribute the assets in a
lump sum to the Owner.
SECTION 12 - MISCELLANEOUS
This Agreement shall bind and inure to the benefit of the representatives,
successors, and assigns of the Owner and the Trustee.
Neither the assets nor the benefits provided for hereunder shall be subject to
alienation, anticipation, assignment, garnishment, attachment, execution or
levy of any kind, and any attempt to cause such benefits to be so subjected
shall not be recognized. The Owner shall have no right to assign, transfer or
pledge any interest in the Account, and the Owner's interest in the Account
shall not be subject to any claims of creditors.
In the event a distribution is payable to a minor, the Trustee may transfer the
proceeds to a custodian selected by the Trustee under the applicable state's
Uniform Gifts to Minors Act or Uniform Transfers to Minors Act.
The Account shall be construed in accordance with the laws of the state wherein
the Trustee is domiciled. In the case of any conflict between the provisions of
the Trust Agreement and the Application, the Trust Agreement shall control.
THE AMERICAN FUNDS INDIVIDUAL RETIREMENT ACCOUNT DISCLOSURE STATEMENT
You may revoke your Individual Retirement Account ("IRA") by notice of
revocation within seven days after the establishment of your account. Your IRA
is established and accepted on the date you execute the American Funds
Individual Retirement Account Application form. An oral notice of revocation
may be made by telephoning the Retirement Plan Services Department at this
number: 800/421-0180, ext. 3. Alternatively, you may mail your revocation to
Capital Guardian Trust Company, P.O. Box 4600, Brea, CA 92822-4600. The
revocation will be considered given as of the postmark date. Upon revocation
the entire amount of your contribution will be returned to you without
adjustment for administrative expenses or fluctuations in market value. The
following is a brief summary of some of the financial and tax consequences of
establishing an IRA.
I. CONTRIBUTIONS TO THE TRUST ACCOUNT
1. LIMITATION ON AMOUNT OF CONTRIBUTIONS. Contributions to the IRA may be
either "rollover" contributions or regular cash contributions. Rollover
contributions, which may be of any amount, are contributions of eligible
distributions from a tax-qualified retirement plan or distributions from
another IRA. To qualify for rollover treatment you must make an appropriate
election to treat the contribution as a rollover contribution. Money or
property distributed to you must be reinvested within 60 days of receipt,
Eligible distributions from a tax-qualified retirement plan or 403(b) plan may
be directly rolled over to the IRA. Contributions which are not rollovers must
be made in cash and cannot exceed the maximum amount allowed under the internal
Revenue Code. This amount varies depending on whether you have established an
IRA for your non-employed spouse and whether the contribution to your IRA is
under a Simplified Employee Pension Plan ("SEP").
Contributions to all of your IRAs together cannot exceed $2,000 or 100% of
compensation, whichever is less, per year. However, if you have also
established an IRA for your non-employed spouse, this limit is increased to
$2,250 for both IRAs together. Although the contributions need not be divided
equally, you may not contribute more than $2,000 to either IRA for any year.
You may contribute to an IRA even if the deduction for the contribution is
reduced or eliminated as discussed in Sec. 2 of this Disclosure Statement if
you designate the contribution as a non-deductible contribution on your income
tax return. You may also contribute up to $2,000 to your non-employed spouse's
IRA if your employer is contributing to your IRA account under a SEP. If
contributions are being made to your IRA under your employer's SEP, the maximum
annual contribution limit to your IRA is increased to the lesser of $30,000 or
15% of your compensation (currently up to $22,500) in addition to personal IRA
contributions.
Personal contributions are not allowed for the taxable year in which you
reach age 70 1/2 or for any year thereafter.
2. DEDUCTIBILITY OF CONTRIBUTIONS. Cash contributions are deductible from
gross income whether or not you itemize your deductions and must be claimed on
Form 1040 or Form 1040A. The maximum amount deductible under a regular IRA is
the lesser of $2,000 or 100% of Compensation. This amount is increased to
$2,250 or 100% of Compensation if you contribute to your IRA and the IRA of
your non-working spouse, but you must file a joint return. If you are an active
participant in a qualified retirement plan, an annuity plan or contract, a SEP
or certain government plans, your contribution is not fully deductible if you
are single with adjusted gross income ("AGI") exceeding $25,000 or married
filing jointly with AGI exceeding $40,000. If you have income above these
levels, the deductible amount is reduced at the rate of $200 ($225 for a
spousal IRA) for each $1,000, so that no deduction is allowed if you are single
with AGI exceeding $35,000 or married filing jointly with AGI exceeding
$50,000. If this calculation results in a deductible amount of more than zero
but less than $200, you will still be permitted to deduct $200.
Rollover contributions, if properly made, are not included in your gross
income and therefore are not deductible from it.
3. EXCESS CONTRIBUTIONS. If your contributions for any taxable year are
greater than the maximum deductible amount, no deduction will be allowed for
the excess. The excess amount will also be subject to an annual 6% excise tax.
However, this tax can be avoided if you withdraw your excess contribution plus
any earnings on the excess on or before the due date, including extensions, for
your federal tax return for the year in which the excess contribution is made.
This does not apply to rollover amounts and designated nondeductible
contributions.
4. INVESTMENT OF CONTRIBUTIONS. Under the terms of the Trust Agreement,
your contributions will be invested by the Trustee, Capital Guardian Trust
Company, in accordance with your written instructions or the written
instructions of your employer on your behalf if you are a participant in a
payroll deduction plan. These investment instructions must direct the Trustee
to invest your contributions to the IRA in shares of the mutual fund you
designate. If you fail to make such designation, your contribution will be
invested in The Cash Management Trust of America until the Trustee receives
from you a proper designation. No part of your IRA will be invested in life
insurance contracts.
Any dividends or refund of premiums received from any annuity contract held in
your IRA will be applied in the next year toward the payment of future annuity
premiums or to purchase additional benefits.
The Trust Agreement provides that your entire interest in the assets held in
your IRA is nonforfeitable at all times and that such assets will not be
commingled with other property.
II. DISTRIBUTIONS FROM THE IRA
1. TAXATION OF DISTRIBUTIONS. Distributions from your IRA are taxed as
ordinary income except for the percentage that equals all nondeductible
contributions divided by the total withdrawals during the year plus the balance
in all your IRAs at the end of the year plus any outstanding relievers (amounts
distributed from an IRA within 60 days of the end of the year, which are rolled
over in the following year during the 60-day rollover period). Provisions for
5- and 10-year income averaging and capital gain treatment are not available
for "lump sum distributions."
2. PENALTY TAX ON PREMATURE DISTRIBUTIONS. Except in the case of death,
disability, relievers, the return of nondeductible contributions, or payments
made in substantially equal installments, any distribution made before you
reach age 59 1/2 will be subject to a penalty tax of 10% of the amount of the
distribution.
3. REQUIRED DISTRIBUTIONS. Your entire interest must be distributed
beginning April 1 of the calendar year following the year in which you reach
age 70 1/2, over the life expectancy of yourself, the life expectancies of
yourself and your designated beneficiary, or the life expectancy of your
designated beneficiary, whichever is applicable. Your entire account balance
must be distributed by the end of the final year of your life expectancy.
4. PENALTY TAX FOR INSUFFICIENT DISTRIBUTIONS. Distributions of amounts
less than the minimum required to be distributed after the individual reaches
age 70 1/2 will be subject to a 50% penalty tax on the difference between the
amount required to be distributed and the amount actually distributed in that
year. The Internal Revenue Service (IRS) can waive the 50% penalty tax if the
insufficient distribution was due to reasonable error and steps are taken to
correct the underdistribution.
5. EXCISE TAX ON EXCESS DISTRIBUTIONS. A 15% excise tax is imposed on
distributions received in a taxable year from all retirement plans to the
extent the amounts exceed the greater of: (1) $112,500, indexed for inflation,
or (2) $150,000. Upon death, the tax is imposed on the amount by which the
value of all retirement plan interests on the date of death exceed the present
value of $112,500, as indexed,(or $150,000) received over life expectancy.
6. DISTRIBUTIONS UPON YOUR DEATH. If you die before your entire interest
is distributed, the remaining portion of your account must be distributed at
least as rapidly as under the distribution method in effect prior to death. If
distributions have not begun before death, they must be paid out in a five-year
period, with the following two exceptions: 1) benefits may be paid out over the
life expectancy of a non-spouse beneficiary, provided such benefits begin no
later than December 31 of the year following the year of death and 2) benefits
may be distributed to your surviving spouse over the life expectancy of the
spouse, provided that the distributions start no later than December 31 of the
year in which you would have reached age 70 1/2. Your spouse, as beneficiary,
may treat the IRA as his or her own by making a contribution or by completing
a new Application.
7. ESTATE AND GIFT TAXES. Upon your death, distributions from your IRA are
subject to federal estate taxes under Sec. 2039(a) of the Internal Revenue Code
unless the account is left to a surviving spouse in a form which qualifies the
bequest for the unlimited marital deduction. Any estate taxes will be increased
by 15% of a deceased account holder's excess accumulation upon the date of
death.
For gift tax purposes, beneficiary designations will not be treated as gifts.
In addition, contributions to an IRA for a spouse who has no earned income will
qualify for the annual $10,000 exclusion as a present interest gift.
8. RELIEVERS. The proceeds of your IRA may be used as a rollover
contribution to another IRA or annuity. Relievers between the same two IRAs may
occur no more than once in a one-year period. Amounts which had originally been
rolled over into your IRA from an employer's qualified plan and which
have not been commingled with other assets can again be rolled over into
another employer's qualified plan which will accept such a rollover.
III. TAX STATUS OF TRUST ACCOUNT
1. TAX-EXEMPT STATUS. Generally, any contributions and earnings thereon
held in your IRA are exempt from federal income tax and will only be taxed when
distributed to you, unless the tax-exempt status of the plan is revoked. The
sponsor of your IRA has received a letter from the IRS approving the form of
the IRA. Such approval is a determination as to the IRA terms only and is not a
determination of the merits of the IRA as an investment.
2. LOSS OF EXEMPTION. The tax-exempt status of the IRA will be revoked if
you engage in any of the prohibited transactions listed in Sec. 4975(c) of the
Internal Revenue Code, such as borrowing money from the IRA. The fair market
value of the IRA will be includable in your taxable income in the year in which
such prohibited transaction takes place and may also be subject to a 10%
penalty tax.
In addition, the IRA will lose its tax-exempt status if you use all or
part of your interest in the IRA as security for a loan. Any portion of the IRA
used as security for a loan will be treated as a distribution in the year in
which such use occurs. If you are under age 59 1/2, the amount of the loan will
also be subject to a 10% tax penalty as a premature distribution.
IV. ADDITIONAL TAX INFORMATION
1. For years in which excess contributions have been made to your IRA, or
you received from your account premature distributions, or underdistributions
after reaching age 70 1/2, you are required to file with the IRS Form 5329
"Return for Additional Taxes Attributable to Qualified Retirement Plans
(including IRAs), Annuities and Modified Endowment Contracts" along with your
individual tax return for that year.
2. For years in which nondeductible contributions were made to your IRA,
Form 8606 "Nondeductible IRA Contributions, IRA Basis, and Nontaxable IRA
Distributions" must be filed with your tax return.
3. Further information about your IRA can be obtained from any district
office of the IRS.
V. FINANCIAL INFORMATION
To calculate earnings on the account, reinvested dividends and capital gain
distributions are purchased at net asset value ("NAV") on the reinvestment
date. The number of shares in the account at the end of the period is
multiplied by the NAV per share at the end of the period to determine the
ending value. The difference between the ending value and the initial
investment equals the earnings for the period.
If $1000 is invested in any fund other than The Cash Management Trust of
America ("CMTA"), or The U.S. Treasury Money Fund of America ("CTRS") and a
reduced sales charge is not available, the highest sales charge would be
$57.50, or 5.75% of the contribution. See the prospectus of each fund for
further details. If $1,000 is invested in CMTA or CTRS, no sales charge would
be imposed. In addition, there is a $10 annual trustee fee. The future growth
results of your investment in mutual fund shares cannot be guaranteed or
projected.
Litho in USA CGD/CG/3149
(c) 1996 American Funds Distributors, Inc.
Lit. No. IRA-001-1196
THE AMERICAN FUNDS GROUP (R)
IRA Application
Use the map at right to determine to which service center to mail this
application - along with your check payable to Capital Guardian Trust Company.
(If you live outside of the U.S., please mail to the Western Region Service
Center.)
WESTERN REGION
(map)
American Funds Service Company
P.O. Box 4600
Brea, California 92822-4600
WEST CENTRAL REGION
(map)
American Funds Service Company
P.O. Box 659521
San Antonio, Texas 78265-9521
EAST CENTRAL REGION
(map)
American Funds Service Company
P.O. Box 6164
Indianapolis, Indiana 46206-6164
EASTERN REGION
(map)
American Funds Service Company
P.O. Box 2560
Norfolk, Virginia 23501-2560
1. ACCOUNT REGISTRATION
Please type or print clearly.
_________________________________ Social Security____-____-_____
Name
_________________________________ Date of birth_____/_____/_____
Address mo. day yr.
_________________________________ Daytime phone number( )_______
City State Zip
You may qualify for a REDUCED SALES CHARGE if you already have accounts in The
American Funds Group. Please list any existing account numbers here:
2. TYPE OF IRA
Please check one box only. (Fill out a separate application
for each individual and/or type of account.)
Amount Tax Year
[] Regular Contributory) $_________19_____
[] Spousal*(requires a separate application) $_________19_____
[] Rollover#@(From a retirement plan
distribution or another IRA) $_________
[] Transfer@(from another IRA) $_________
[] SEP-IRA (attach SEP agreement - See
Section 9) $_________19_____
Setup Fee (will be deducted from your
account if not submitted separately) $ 10.00
Total amount enclosed $_________
3. FUND SELECTION
Minimum initial purchase requirement is $250 per fund or
$1,000 for The Cash Management Trust of America.
(Codes following fund names are for administrative use.)
AMCAP Fund (02) $______
American Balanced Fund (11) ______
American High-Income Trust (21) ______
American Mutual Fund (03) ______
The Bond Fund of America (08) ______
Capital Income Builder (12) ______
Capital World Bond Fund (31) ______
Capital World Growth and Income Fund (33) ______
The Cash Management Trust of America (09) ______
EuroPacific Growth Fund (16) ______
Fundamental Investors (10) ______
The Growth Fund of America (05) ______
The Income Fund of America (06) ______
Intermediate Bond Fund of America (23) ______
The Investment Company of America (04) ______
The New Economy Fund (14) ______
New Perspective Fund (07) ______
SMALLCAP World Fund (35) ______
U.S. Government Securities Fund (22) ______
The U.S. Treasury Money Fund of America (49) ______
Washington Mutual Investors Fund (01) ______
___________________________________ ______
4. STATEMENT OF INTENTION
Optional
I plan to invest over a 13-month period in shares of one or more of the funds
in The American Funds Group an aggregate amount of at least (please circle your
choice):
$25,000** $50,000 $100,000 $250,000 $500,000 $1,000,000 or above
See the appropriate prospectus and Statement of Additional information for
details.
**Applies only to bond funds.
5. TELEPHONE EXCHANGE
Terms of this privilege automatically apply unless you check
the box at right.
Unless the box below is checked, I hereby authorize and direct American Funds
Service Company to accept and act upon telephone, fax, telex or telegraph
instructions from ANY PERSON for exchanges involving this account or any other
account with the same registration. American Funds Service Company reserves the
right to cancel this privilege on 30 days' written notice to the investor's
address on the reverse of this form.
[] Check here if you DO NOT WISH TO AUTHORIZE the telephone exchange privilege.
6. DEALER INFORMATION
For dealer use only.
We authorize American Funds Service Company to act as our agent for this
account.
___________________________________ _________________________
Address of office servicing account Dealer name (as it appears
on Selling Group Agreement)
_________________________________ ___________________________
City State Zip Address of home office
_________________________________ ___________________________
Registered representative's name City State Zip
and no. (exactly as it appears on
firm's registration)
_________________________________ ______________________________
Registered representative's Authorized dealer's signature
phone no.
*Provided your spouse does not make a contribution to his or her own IRA, you
may set up a spousal IRA consisting of an account for your spouse as well as an
account for yourself. The maximum combined contribution to an IRA and a spousal
IRA is the lesser of $2,250 or 100% of compensation. You may allocate the
$2,250 in any way you wish to each account, as long as you do not credit more
than $2,000 to any one account.
# By establishing this Rollover IRA, I irrevocably elect to treat the
distribution from my previous plan as nontaxable and therefore I am not
eligible for any special tax treatment that may otherwise be available.
@ If I am over age 701/2, I understand that I must -- under IRS regulations --
receive a distribution from my previous retirement plan (or another retirement
plan I maintain) for this calendar year. This distribution will not be included
in any assets which are transferred or rolled over. Under my previous plan, my
designated beneficiary was _____________________ and his or her date of birth
is____/____/____. I further understand that the age of the older of the
previously designated beneficiary or the designated beneficiary under this plan
will be used to calculate required distributions from my American Funds IRA.
11/96
7. BENEFICIARY DESIGNATION
IMPORTANT: This Beneficiary Designation may have important
tax and/or legal consequences. You are encouraged to consult
with your own adviser before completing this form. Neither
the trustee nor any affiliate of the trustee shall be liable
for any claim, loss, damage or expense arising out of or in
any manner connected with a distribution pursuant to this
completed Beneficiary Designation. You should periodically
review and update your Beneficiary Designation.
If this is a beneficiary update to an existing IRA, please provide account
number _______________________________
I revoke all prior IRA Beneficiary Designations. Reserving the right to revoke
or change this Beneficiary Designation, I direct that all fund accounts be
distributed upon my death as follows:
PRIMARY BENEFICIARY(IES):
If you are married, see below.*
_________________________ ________________ _____________ ______
Full legal name Relationship Date of Birth %
_________________________ ________________ _____________ ______
Full legal name Relationship Date of Birth %
(Attach additional sheet if necessary)
If no Primary Beneficiary listed above survives me, I direct that all fund
accounts be distributed upon my death to the Contingent Beneficiary(ies) listed
below.
CONTINGENT BENEFICIARY(IES):
_________________________ _______________ _____________ ______
Full legal name Relationship Date of Birth %
(Attach additional sheet if necessary)
In the event no Primary Beneficiary or Contingent Beneficiary survives me, I
direct that all fund accounts be distributed upon my death to my estate.
NOTE: EXCEPT AS OTHERWISE PROVIDED ABOVE, EACH PRIMARY BENEFICIARY SO
DESIGNATED SHALL RECEIVE AN EQUAL SHARE. IN THE EVENT A PRIMARY BENEFICIARY
DOES NOT SURVIVE YOU, SUCH PRIMARY BENEFICIARY'S SHARE SHALL BE DISTRIBUTED PRO
RATA TO THE SURVIVING PRIMARY BENEFICIARY(IES). IF ANY PRIMARY BENEFICIARY
SURVIVES YOU BUT FAILS TO SURVIVE DISTRIBUTION OF HIS OR HER ENTIRE SHARE, THEN
THE REMAINING PORTION OF SUCH PRIMARY BENEFICIARY'S SHARE SHALL BE DISTRIBUTED
TO SUCH PRIMARY BENEFICIARY'S ESTATE. ALL STATED PERCENTAGES MUST ADD UP TO
100%; IF NOT, DISTRIBUTIONS SHALL BE MADE PROPORTIONALLY BASED UPON THE
PERCENTAGES YOU STATE. THIS PARAGRAPH SHALL ALSO APPLY TO CONTINGENT
BENEFICIARIES.
TRUST BENEFICIARY: If you choose to name a trust as a Primary and/or Contingent
Beneficiary, please describe the trust by the name of the present trustee, the
name of the trust (if any) and the date of the trust. Example: "John Davis (or
his successor), as Trustee of the Davis Family Trust dated December 1, 1994."
*SPOUSAL CONSENT TO BENEFICIARY DESIGNATION: If you are married and you
designate a Primary Beneficiary other than your spouse, this Beneficiary
Designation may not be wholly effective under your state law without the
consent of your spouse. Please consult your own legal adviser. By his or her
signature below, my spouse expressly consents to the above designation of a
Primary Beneficiary.
_____________________________ _________________________ _______
Print Spouse's Name Spouse's Signature Date
8. AUTOMATIC INVESTMENT PLAN
IMPORTANT: Attach an unsigned voided check (for checking
accounts) or a savings account deposit slip here.
I would like to establish an Automatic Investment Plan as described in the
prospectus. I agree to reimburse American Funds Service Company and/or American
Funds Distributors for any expenses or losses that they may incur in connection
with my plan, including any caused by my bank's failure to act in accordance
with my request. If my bank makes any erroneous payment or fails to make a
payment after shares are purchased on my behalf, any such purchase may be
canceled and I hereby authorize redemptions and/or deductions from my account
for that purpose.
Beginning ______/_______, please debit my bank account $________
month / year
($50 minimum) on a [] monthly [] quarterly basis to be invested in (name of
fund)________________ account number (if known) _______________________
[] This applies to my personal IRA
[] This applies to my SEP-IRA (available for single-participant plans only)
9. SEP-IRA -- SIMPLIFIED EMPLOYEE PENSION PLAN
Optional
Complete only if contributions are to be made by your employer under a
Simplified Employee Pension Plan.
IMPORTANT: Please attach a copy of the SEP Adoption Agreement that your
employer has signed.
__________________________________ (______)__________________
Name of employer Phone number
______________________________________________________________
Address of employer
__________________________________ ________________ _________
City State Zip
10. YOUR SIGNATURE
I hereby establish an American Funds IRA, appoint Capital Guardian Trust
Company as Trustee, and:
(1) acknowledge that I have received and read The American Funds Individual
Retirement Account Terms and Conditions, and the IRA Disclosure Statement;
(2) acknowledge that I have received and read the current prospectus(es) of
the fund(s) selected in Section 3;
(3) consent to the $10 setup fee specified in Section 2 and the annual trustee
fee (currently $10) specified in the Disclosure Statement;
(4) acknowledge that I am responsible for determining the deductibility of any
contributions to my account;
(5) agree to the conditions of the telephone exchange authorization on the
reverse of this form unless I check the box in Section 5, and agree to
indemnify and hold harmless American Funds Service Company, any of its
affiliates or mutual funds managed by such affiliates and each of their
respective directors, trustees, officers, employees and agents for any loss,
expense or cost arising from such instructions once this telephone exchange
privilege has been established;
(6) certify, under penalty of perjury, that my Social Security number shown on
this application is correct; and
(7) designate the Beneficiary(ies) listed in Section 7.
X_________________________________________________ __________
Signature of individual Date
PLAN AND CUSTODY AGREEMENT FOR THE AMERICAN FUNDS OPTIONAL RETIREMENT PROGRAM
[403(B)] FOR TEXAS INSTITUTIONS OF HIGHER EDUCATION
Terms and Conditions
ARTICLE I - INTRODUCTION
This Agreement is intended to establish a Custodial Account in accordance with
section 403(b)(7) of the Code and shall be construed accordingly. This
Agreement shall take effect upon its execution by the Employer named on the
Application.
ARTICLE II - DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
hereinafter set forth, unless a different meaning is plainly required by the
context:
1. "Agreement" shall mean the American Funds 403(b) Retirement Plan and
Custody Agreement.
2. "Application" shall mean the accompanying instrument executed by the
Employee whereby the terms and conditions of the Agreement are adopted. The
Application is hereby made a part of the Agreement as if set forth herein.
3. "Code" shall mean the Internal Revenue Code of 1986, as amended.
4. "Compensation" shall mean the remuneration received by an Employee which
is includible in gross income for the taxable year of the Employee. For Plan
Years beginning on and after January 1, 1994, Compensation shall not exceed
the Omnibus Budget Reconciliation Act of 1993 (OBRA '93) annual compensation
limit of $150,000, as adjusted by the Commissioner for increases in the cost of
living in accordance with Sec. 401(a)(17)(B). The cost of living in effect for
a calendar year applies to any period, not exceeding 12 months, over which
Compensation is determined (determination period) beginning in such calendar
year. If a determination period consists of fewer than 12 months, the OBRA '93
annual compensation limit will be multiplied by a fraction, the numerator of
which is the number of months in the determination period, and the denominator
of which is 12.
5. "Custodial Account" or "Account" shall mean the account established under
Article III.
6. "Custodian" shall mean Capital Guardian Trust Company, or any successor
thereto.
7. "Designated Investment Company(ies)" shall mean one or more of the
regulated investment companies (as the term "Regulated Investment Company" is
defined pursuant to Sec. 403(b)(7)(C) of the Code) for which Capital Research
and Management Company or an affiliate serves as investment adviser.
8. "Elective Deferral" shall mean any employer contributions made at the
election of the Employee to this Custodial Account or another plan. This
includes any employer contributions made on behalf of an Employee under Code
Sec. 403(b) pursuant to a salary reduction agreement and any contributions made
on behalf of an Employee pursuant to an election to defer compensation under
any 401 (k), 408(k), 457 or 403(b) plan.
9. "Employee" shall mean a person who performs services, directly or
indirectly, for an Employer, and a) who has entered into a salary reduction
agreement with the Employer pursuant to which the Employer will adjust the
Employee's Compensation by the amount specified in such agreement and forward
the amount to the Custodian for investment in accordance with this Agreement;
and b) on whose behalf a discretionary contribution is made by the Employer.
10. "Employer" shall mean the Employer named in the Application. The Employer
shall be an organization described in Sec. 403(b)(1)(A) of the Code.
11. "Excess Elective Deferral" shall mean those Elective Deferrals that are
includible in an Employee's gross income under Code Sec. 402(g) to the extent
the Employee's Elective Deferrals for a taxable year exceed the dollar
limitation thereunder.
12. "Plan Year" shall be the calendar year.
13. "Qualified Domestic Relations Order (QDRO)" shall mean a signed domestic
relations order issued by a state court which creates, recognizes or assigns to
an alternate payee(s) the right to receive all or part of an Employee's
interest in his or her Custodial Account, and which meets the requirements of
Code Sec. 414(p). An alternate payee is a spouse, former spouse, child, or
other dependent who is treated as a beneficiary under the Account as a result
of the QDRO.
14. "Sponsor" shall mean American Funds Distributors, Inc. or any successor
thereto.
ARTICLE III - ESTABLISHMENT OF CUSTODIAL ACCOUNT
By executing the Application, the Employee shall open and maintain with the
custodian a Custodial Account in accordance with the provisions of Sec.
403(b)(7) of the Code. Such Account shall be used exclusively to hold title to
Designated Investment Company shares and/or cash for the benefit of the
Employee. The Employee shall be the beneficial owner of all vested assets held
in or credited to said Account.
ARTICLE IV - RECEIPT AND INVESTMENT OF CONTRIBUTIONS
The Custodian shall accept in the Custodial Account such contributions on
behalf of the Employee as it may receive from time to time from the Employer.
All such contributions shall be accompanied by written instructions specifying
the Custodial Account number to which they are to be credited and the
Designated Investment Company shares to be purchased. Pursuant to the
Employee's written instructions, the Custodian shall invest and reinvest
contributions credited to the Custodial Account in Designated Investment
Company shares. The Account shall be credited with the profits or losses of the
investment in such Account. The amount of each contribution credited to the
Account to be applied to the purchase of Designated Investment Company shares
shall be invested by the Custodian at the applicable offering price as
described in the Designated Investment Company's prospectus. The Custodian
shall have no discretionary investment responsibility and in no event be liable
to any person for following investment instructions given in the manner
provided herein. The Employee shall be the beneficial owner of such Employee's
vested interest in the Account, and the Employee (or if the Employee is
deceased, the beneficiary) shall have the right to direct the specific
investment(s) for the Employee's vested interest in accordance with the terms
of this Agreement.
All dividends and capital gain distributions received on the Designated
Investment Company shares held in the Account shall be reinvested in such
shares and shall be credited to the Account. If any distribution on Designated
Investment Company shares may be received at the election of the shareholder in
additional shares or in cash or other property, the Custodian shall elect to
receive it in additional shares.
Except as provided in Article VI, upon receipt of proper instructions from the
Employee, the Custodian shall sell, redeem, purchase or exchange shares held in
the Custodial Account, provided that the shares held in such Account shall be
limited to, and any subsequent investments arising within such Account shall be
invested solely in, shares of the Designated Investment Companies.
Upon an Employee's termination of service with the Employer, no further
contributions may be made. However, if the Employee should be subsequently
employed by another ORP organization, contributions may continue to be made to
the Employee's ORP Custodial Account in accordance with the terms of the salary
reduction agreement entered into between the Employee and such organization.
ARTICLE V - LIMITS ON CONTRIBUTIONS
1. Code Sec. 415 Limitations. Notwithstanding anything to the contrary
contained in this Agreement, the total contributions made on behalf of an
Employee for any year will not exceed the limits imposed by Code Sec. 415, as
they may be adjusted from time to time. The limits of Code Sec. 415 are herein
incorporated by reference.
If the limitations are exceeded because the Employee is also participating in
another plan required to be aggregated with this Custodial Account for the
purposes of Code Sec. 415, then the extent to which annual contributions under
this Custodial Account will be reduced, as compared with the extent to which
annual benefits or contributions under any other plans will be reduced, shall
be determined by the Employee.
2. Limitations on Elective Deferrals. The amount of Elective Deferrals for
any taxable year made to this Custodial Account and all other plans, contracts
or arrangements of the Employee shall not exceed the dollar limit in effect
under Code Sec. 402(g) at the beginning of such taxable year. In the event that
an Employee has Excess Elective Deferrals, he or she may designate Elective
Deferrals made during a taxable year to this Custodial Account as Excess
Elective Deferrals by notifying the Custodian on or before March 1 of the
amount of Excess Elective Deferrals. Notwithstanding any other provision of
this Agreement, Excess Elective Deferrals, adjusted to reflect any credited
investment experience up to the date of distribution, will be distributed no
later than April 15 to any Employee who designates Elective Deferrals as Excess
Elective Deferrals for such taxable year.
3. Exclusion Allowance Limitation. The amount of contributions made to this
Custodial Account is subject to the limitations of Code Sec. 403(b), which are
herein incorporated by reference.
4. Corrections to Participant Accounts. If a Participant's Account is
credited with an incorrect amount of contributions or earnings to which such
Participant is entitled under the Plan, remedial action may be taken in
accordance with this paragraph. In such event, the Custodian is authorized, at
the written direction of the Employer, to adjust such Account balance to the
extent necessary to reflect the Account balance which would have existed had no
such error been made. Further, if necessary, the Employer may make additional
contributions to the Account of any affected Participant to place the affected
Participant's Account in the position that would have existed if the error had
not been made. The custodian shall not be liable for actions taken in good
faith compliance with Employer's instructions under this section. Any Account
adjustments or additional contributions made under this paragraph shall be made
on a uniform and nondiscriminatory basis.
ARTICLE VI - PAYMENT OF BENEFITS
1. Payment of Benefits. The amount credited on behalf of an Employee to the
Custodial Account shall be distributed to the Employee or commence to be
distributed to the Employee in accordance with the Employer's written
instructions to the Custodian, provided that no amounts shall be distributed,
paid or made available to an Employee before the Employee dies, attains age
70-1/2, separates from service with the Employer, or retires. The Custodian may
require satisfactory evidence of eligibility for distribution. Distributions
may also be made pursuant to a QDRO. For purposes of making distributions under
the provisions of a QDRO, the qualified early retirement age with regard to the
Employee against whom the QDRO is entered shall be the date the QDRO is
determined to be qualified. This will only allow payout to the alternate
payee(s).
2. Form of Distribution. The form of distribution shall be made in accordance
with the Employee's election filed with the Custodian and may be paid in cash
or kind, in any one or more of the following ways:
(a) a single sum payment;
(b) equal or substantially equal payments over the life of the Employee;
(c) equal or substantially equal payments over the lives of the Employee and
his or her designated beneficiary;
(d) equal or substantially equal payments over a specified period that may not
be longer than the Employee's life expectancy; or
(e) equal or substantially equal payments over a specified period that may not
be longer than the joint life and last survivor expectancy of the Employee and
his or her designated beneficiary.
3. Minimum Distribution Requirements. Distributions shall commence from
benefits accrued after December 31, 1986 (the "applicable amount") no later
than April 1 of the calendar year following the year in which the Employee
attains age 70-1/2 (the "required beginning date"). For each succeeding year, a
distribution must be made on or before December 31. By the required beginning
date the Employee may elect to have the applicable amount in the Account
distributed in a form described in Section 2 above.
The minimum amount to be distributed each year (commencing with the required
beginning date and each year thereafter) must be at least an amount equal to
the quotient obtained by dividing the prior year-end value of the applicable
amount of the Custodial Account, expressed in either dollars or units, by the
life expectancy of the Employee or joint life and last survivor expectancy of
the Employee and the Employee's designated beneficiary, whichever is
applicable. For determining such life expectancy, the expected return
multiples in Sec. 1.72-9 of the Federal Income Tax Regulations, as amended,
shall be used.
If the Employee dies before his or her applicable amount is distributed or
before such distribution has been completed, then the amount credited to the
Custodial Account which accrued on or after January 1, 1987 shall be
distributed as follows:
(a) if the Employee dies after the distribution of his or her interest has
commenced, the remaining portion of such interest will continue to be
distributed at least as rapidly as under the method of distribution being used
prior to the Employee's death.
(b) if the Employee dies prior to the time benefit payments begin, any portion
of his or her interest payable to (or for the benefit of) a designated
beneficiary will be paid as follows:
(i) by December 31 of the year containing the fifth anniversary of the
Employee's death; or
(ii) in equal or substantially equal payments over the life or life expectancy
of the designated beneficiary or beneficiaries starting by December 31 of the
year following the year of the Employee's death. If, however, the beneficiary
is the Employee's surviving spouse, then this distribution is not required to
begin before December 31 of the year in which the Employee would have reached
age 70-1/2.
(c) unless otherwise elected by the Employee prior to the commencement of
distributions or, if applicable, by the surviving spouse where the Employee
dies before distributions have commenced, life expectancies of the Employee or
spouse beneficiary shall be recalculated annually for purposes of distributions
under Sub-Sec. 3(a) and 3(b). An election not to recalculate shall be
irrevocable and shall apply to all subsequent years. The life expectancy of a
nonspouse beneficiary shall not be recalculated.
(d) for purposes of this section, any amount paid to a child of the Employee
will be treated as if it had been paid to the surviving spouse if the amount
becomes payable to the surviving spouse when the child reaches the age of
majority.
An individual may satisfy the minimum distribution requirements under Sec.
401(a)(9) of the Code by receiving a distribution from one custodial account
that is equal to the amount required to satisfy the minimum distribution
requirements for two or more custodial accounts. For this purpose, the Employee
of two or more custodial accounts may use the "alternative method" described in
Notice 88-38, 1988-1 C.B. 524, to satisfy the minimum distribution requirements
described above.
Notwithstanding any provision of this Agreement to the contrary, the
distribution of an individual's interest shall be made in accordance with the
minimum distribution requirements of Sec. 403(b)(10) of the Code and the
regulations thereunder, including the incidental death benefit provisions of
1.401(a)(9)-2 of the proposed regulations, all of which are herein incorporated
by reference.
The Custodian has no duty to determine an Employee's eligibility for
distribution or to commence distribution until receipt of written instructions
from the Employee satisfactory to the Custodian.
The Employee, or if the Employee is deceased, the beneficiary, beneficiaries or
legal representative of the Employee, shall notify the Custodian in writing of
any request for distributions and such notice shall set forth the amount and
the date distributions shall commence and the requested method of distribution.
4. Designation of Beneficiary. An Employee shall have the right to designate
or change a beneficiary to receive any benefit from the Account to which such
Employee may be entitled in the event of the Employee's death prior to complete
distribution of the Account. If no such designation is in effect at the time of
the Employee's death, the Employee's beneficiary shall be the Employee's
estate. The Employee may designate or change a beneficiary only by written
notice to the Custodian in a form acceptable to the Custodian, but the
Custodian shall have no responsibility to determine the validity of a
beneficiary designation.
The designation or change will, upon recording by the Custodian, take effect as
of the time the written notice was signed, whether or not the Employee is
living at the time of recording but without liability as to any payment or
other settlement made by the Custodian before recording the designation or
change. Payment by the Custodian made in good faith to any person who claims to
be entitled to such payment pursuant to a designation by the Employee, the
terms of the Account or applicable law shall relieve the Custodian of any
further liability for such payment.
5. Direct Rollover of Eligible Rollover Distributions.
(a) This provision applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of this Agreement to the contrary that would
otherwise limit a distributee's election under this Agreement, a distributee
may elect, at the time and in the manner prescribed by law, to have any portion
of an eligible rollover distribution paid directly to an eligible retirement
plan specified by the distributee in a direct rollover.
For purposes of this section, the following definitions apply:
(i) "Eligible rollover distribution" shall mean any distribution of all or any
portion of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any distribution that is one
of a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee or the
joint lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified period of 10 years or
more; any distribution to the extent such distribution is required under Sec.
401(a)(9) of the Code; and the portion of any distribution that is not
includible in gross income.
(ii) "Eligible retirement plan" shall mean an individual retirement account
described in Sec. 408(a) of the Code, an individual retirement annuity
described in Sec. 408(b) of the Code, an annuity plan described in Sec. 403(a)
of the Code, or a custodial account described in Sec. 403(b) of the Code, that
accepts the Employee's eligible rollover distribution. However, in the case of
an eligible rollover distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or an individual retirement
annuity.
(iii) "Distributee" includes an Employee or former Employee. In addition, the
Employee's or former Employee's surviving spouse and the Employee's or former
Employee's spouse or former spouse who is an alternate payee under a QDRO, as
defined in Sec. 414(p) of the Code, are distributees with regard to the
interest of the spouse or former spouse.
(iv) "Direct rollover" shall mean a payment by the Custodian to the eligible
retirement plan specified by the distributee.
(b) For distributions on and after January 1, 1994, if such distribution is
one to which Sub-Sec. 401 (a)(11) and 417 of the Code do not apply, such
distribution may commence less than 30 days after the notice required under
1.411 (a)-11 (c) of the Regulations is given, provided that:
(i) the distributee is informed that the distributee has a right to a period
of at least 30 days after receiving the notice to consider the decision of
whether or not to elect a distribution (and, if applicable, a particular
distribution option), and
(ii) the distributee, after receiving the notice, affirmatively elects a
distribution.
ARTICLE VII - OWNERSHIP OF SECURITIES
All securities in a form necessitating registration may be registered in the
name of the Custodian or its nominee, or in such other manner as may be
acceptable to the Custodian, and the Employee agrees to hold the Custodian or
any such nominee harmless from any liability as a holder of record. The
Custodian shall have the power in its reasonable discretion to leave any
securities or cash in its custody hereunder, for safekeeping or on deposit with
such banks, transfer agents, or other custodians as the Custodian may select,
provided that the entity with custody of the assets shall at all times identify
such assets as belonging to the Account, and provided, further, that such
entity must be qualified to act as a custodian under applicable law. Nothing
herein shall be construed to restrict the Custodian's authority not to require
the issuance of certificates when ownership of unissued shares of a Designated
Investment Company is permitted. The Custodian shall hold all assets delivered
to it, and all income attributable thereto, separate from its own assets,
identify them in its books and records as assets of the Account, and shall
invest, disburse, hold and otherwise dispose of such assets, and the proceeds
thereof, in accordance with this Agreement.
ARTICLE VIII - VOTING SECURITIES
The Custodian shall deliver, or cause to be executed and delivered, to the
Employee or the Employee's beneficiary, all notices, prospectuses, financial
statements, proxies and proxy soliciting materials received by it relating to
Designated Investment Company shares held in the Employee's Custodial Account.
The Custodian shall vote the shares of any such Designated Investment Companies
in accordance with the written instructions of the Employee or the beneficiary
if the Employee is deceased.
ARTICLE IX - AMENDMENT AND TERMINATION
The Employer, by the establishment of this Account, delegates to the Custodian
the power to make any retroactive or prospective modification of, or amendment
to, this Agreement which is necessary to conform the Agreement to, or satisfy
the conditions of, any law, governmental regulation or ruling, and any
prospective amendment which is desirable for the administration of this
Agreement, and by doing so shall be deemed to have con- sented to each such
amendment or modification. Notwithstanding the preceding sentence, no amendment
shall be made which would have the effect of allowing any part of the Account
to be used for any purpose other than for the exclusive benefit of the Employee
or beneficiary nor shall any amendment increase or decrease the duties or
liabilities of the Custodian without its consent. The Custodian has no
affirmative obligation to amend the Agreement for any purpose.
If the Employer adopts this Agreement as a continuation of a similar prior
agreement maintained for the Employee under Sec. 403(b) of the Code, such prior
agreement may be deemed to have been amended in its entirety if the Employer
requests such action in writing to the Custodian. Following acceptance of such
request, the Custodian shall accept from the prior custodian the cash proceeds
or designated shares of Designated Investment Company of such prior account and
all records pertaining thereto. If the Employer adopts another agreement
qualified and maintained under Sec. 403(b) of the Code, as a continuation of
this Agreement, such other agreement may be deemed to have entirely amended
this Agreement if the Employer requests such action in writing to the
Custodian. Following such request, the Custodian shall deliver to the successor
custodian all assets in the Account. This Agreement shall terminate upon the
complete distribution of the Account to the Employee, beneficiaries, a
successor custodian under an agreement or program described in Sec. 403(b) of
the Code, or to a trustee under an account described in Sec. 408(a) of the
Code. The Custodian shall have the right to terminate this Agreement upon 60
days' prior written notice to the Employee. In such event, upon expiration of
such period, the Custodian shall distribute the Account to such successor
custodian as the Employee shall designate; provided, however, that if such
successor does not provide the Custodian with formal notice of its willingness
to accept such assets, or, if the Employee fails to designate a successor
custodian prior to the expiration of such period, then the Custodian shall
distribute the Account to the Employee.
ARTICLE X - CONCERNING THE CUSTODIAN
The Custodian shall be under no duty to take any action other than as herein
specified with respect to the Custodial Account unless the Employee shall
furnish the Custodian with instructions in proper form and such instructions
shall have been specifically agreed to by the Custodian in writing. Unless
otherwise expressly mandated by law, the Custodian shall not be required to
defend or engage in any suit with respect to the Custodial Account unless the
Custodian shall have first agreed in writing to do so and shall have been fully
indemnified to the satisfaction of the Custodian. The Custodian may
conclusively rely upon and shall be protected in acting upon any written order
from the Employer or Employee permitted by this Agreement or any other notice,
request, consent, certificate or other instrument or paper rea- sonably
believed by it to be genuine and to have properly executed, and, so long as it
acts reasonably in good faith, in taking or omitting to take any other action.
The Custodian may retain assets in cash or cash balances pending receipt of
proper investment instructions and shall not be liable for interest on any such
cash or cash balances.
The Custodian shall have no responsibility for determining the amount of any
contribution to be made to the Account nor for the collection of such
contributions. Any reports or instructions prepared by or on behalf of the
Custodian for the Employee shall be solely for the convenience of the Employer.
The Employer shall be solely responsible for determining and remitting to the
Custodian the correct amount of contribution. The Employer shall have the sole
authority to enforce this Agreement on behalf of any and all persons having or
claiming any interest in the Custodial Account by virtue of this Agreement.
ARTICLE XI - REPORTS OF THE CUSTODIAN
The Custodian shall keep accurate and detailed records of all receipts,
investments, disbursements and other transactions required to be performed
hereunder. The Custodian shall file with the Employee statements reflecting the
receipts, disbursements and other transactions effected by it. Upon the
expiration of 45 days after furnishing such statement to the Employee, the
Custodian shall be forever released and discharged from all liability
(excluding negligence or intentional misconduct) and accountability to anyone
with respect to its acts, actions, duties, obligations or responsibilities as
shown in or reflected by such statement, except with respect to any such acts
or transactions as to which the Employee shall have filed written objections
with the Custodian within such 45-day period.
The Employee, the Employer, the Custodian, and the Sponsor shall furnish to one
another such information relevant to this Agreement and Custodial Account as
may be required under the Code and any regulations issued or forms adopted by
the Treasury Department thereunder.
The Custodian shall file with the Internal Revenue Service such returns and
other information concerning the Custodial Account as may be required of it
under the Code, and any regulations issued by the Treasury Department, but
shall not be required to prepare, file or provide any reports except as may be
expressly required in this Agreement.
ARTICLE XLL - RESIGNATION OR REMOVAL OF CUSTODIAN
The Custodian may resign as the Custodian under the Agreement at any time upon
60 days' notice in writing to the Employee and the Employee may remove the
Custodian at any time, upon written notice, provided however, to the extent
necessary, the Custodian shall continue to be authorized to complete and settle
any outstanding transactions in process prior to the Custodian receiving such
notice. Upon such resignation or removal the Employee shall appoint a qualified
successor and the Custodian shall file with the Employee a written report as
required by Article XI. Should the Custodian resign as the custodian under the
Plan, the Sponsor shall appoint a qualified successor, upon giving 60 days'
prior notice in writing to each Employee.
Upon receipt by the Custodian of written acceptance of appointment by a
qualified successor to the Custodian (in the case of all resignations or
removals pursuant to this Article XII), the Custodian shall transfer and pay
over to such successor the assets of the Account. Following the notice of
removal of the Custodian, the Custodian shall act promptly to, and shall have a
reasonable period of time in which to settle the accounts prior to transferring
the Account assets after receipt by the Custodian of written acceptance of
appointment by a qualified successor Custodian. The Custodian is authorized,
however, to reserve such sum of money or property as it may deem advisable for
payment of all its fees, compensations, costs and expenses, or for payment of
any other liabilities constituting a charge on or against the Custodian, with
any balance of such reserve remaining after the payment of all such items to be
paid over to the successor. The successor to the Custodian shall not be
responsible for the acts, or the failures to act, of any predecessor custodian
and shall hold the assets paid over to it under terms similar to those of this
Agreement.
If within 30 days after the effective date of the Custodian's resignation or
removal a qualified successor to the Custodian has not been appointed or has
not accepted such appointment, the Custodian shall either appoint such
successor itself or terminate the agreement. Upon such termination the
Custodian shall distribute all assets in the Account to the Employee or, if the
Employee is deceased, to the beneficiary. The Custodian shall not be required
to see to the performance of any successor of its duties hereunder.
ARTICLE XLLL - MISCELLANEOUS
1. No Diversion. At no time shall it be possible for any part of the assets
of the Custodial Account to be used for or diverted to purposes other than for
the exclusive benefit of the Employee or the beneficiary except as specifically
provided for in this Agreement.
2. Notices. Any notice from the Custodian to the Employee or any other party
pursuant to this Agreement shall be effective if sent by first-class mail to
the last address on the Custodian's records. Any notice to the Custodian
pursuant to this Agreement shall be by first-class mail.
3. Transfers. The Custodian may accept the transfer of cash from the
Employee's existing custodial account and/or existing annuity contract which
are/is established under Sec. 403(b) of the Code to the Employee's Custodial
Account established under this Agreement, unless expressly prohibited by the
documents governing such custodial accounts and/or such annuity. The Employee
may also transfer cash or assets from this Custodial Account to any other
custodial account and/or annuity contract permitted under Sec. 403(b) of the
Code.
4. Terminology. Any masculine terminology used in the Agreement shall include
the feminine.
5. Inalienability of Benefits. The Employee shall not have the right to
assign, transfer or pledge his or her interest in the Account, and the
Employee's interest in the Account shall not be subject to any claims of
creditors.
No benefit or interest available hereunder will be subject to assignment or
alienation, either voluntarily or involuntarily. The preceding sentence shall
also apply to the creation, assignment, or recognition of a right to any
benefit payment with respect to an Employee pursuant to a domestic relations
order, unless such order is a Qualified Domestic Relations Order.
6. Condition of Agreement. The Employee shall look solely to the assets of
the Custodial Account for the payment of any benefit to which he is entitled
under the agreement.
7. Necessity of Qualification. This Agreement is established with the intent
that it shall qualify under Sec. 403(b) of the Code and any amendments to that
Section. Notwithstanding any other provisions contained in this Agreement, if
the internal Revenue Service determines that because of some inadequacy in the
provisions of this original Agreement, it initially fails to so qualify, all of
the assets of the Custodial Account shall be distributed to the Employee or
transferred in accordance with Section 3 of this Article XIII and the
Agreement shall be considered to be rescinded and of no force and effect unless
such inadequacy is removed by a retroactive amendment. The Sponsor forthwith
shall notify the Custodian in writing of any determination with respect to the
qualified status of the Agreement. The Employee understands the necessity of
seeking independent legal counsel with respect to the effect of establishing
this Agreement and further understands that the Agreement has not been
approved by the Internal Revenue Service and that, except as set forth in this
Agreement, neither the Custodian nor the Sponsor, nor anyone acting on behalf
of the Custodian or Sponsor, make any representations as to the tax
qualifications or effect thereof.
8. Custodian's Acceptance and Fee Schedule. The Custodian accepts appointment
as Custodian for the Custodial Account established pursuant to the Application
and will charge a setup fee in the year that the Account is established, and an
annual fee for maintenance of the Account for every year thereafter. The fee
with respect to the Employee's Account shall be charged to such Account. The
Custodian is empowered to redeem Designated Investment Company shares held in
the Account and to transfer to itself the proceeds from such redemption and any
cash held in the Account in payment of its fees. The compensation of the
Custodian shall be such fees as the Custodian shall advise the Employee in
writing. There may be additional charges for further services requested of the
Custodian.
9. Miscellaneous.
(a) Investments. Notwithstanding any provisions of this Agreement to the
contrary, investments will be limited to those permitted under Sec. 403 of the
Code.
(b) Compliance. The parties intend that this Agreement be consistent with all
requirements of the Code. Notwithstanding anything to the contrary in this
Agreement, if any provision of this Agreement is determined not to comply with
any requirements of the Code, such provision shall be enforceable only to the
extent it is in compliance with such requirements and shall otherwise be deemed
to be inapplicable; provided, further, the Custodian shall perform all duties
to be performed by the Custodian pursuant to the Code.
(c) The Custodian shall exercise and discharge its powers and duties in the
following manner:
(i) by acting solely in the interest of the Employee and Employee's
beneficiaries;
(ii) by acting for the exclusive purpose of providing benefits to the Employee
and Employee's beneficiaries and defraying reasonable expenses of administering
the Account;
(iii) except as provided in the Agreement, no part of the principal or income
of an Account shall be used for, or diverted to, purposes other than the
exclusive benefit of the Employee or Employee's beneficiaries or for the
reasonable expenses of administering the Account until all liabilities for
benefits due the Employee or Employee's beneficiaries have been satisfied.
10. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of Texas.
ARTICLE XLV - OPTIONAL RETIREMENT PROGRAM
1. In General. Notwithstanding anything to the contrary herein, except
sections 6 and 7 of Article Xlll, this Article shall apply to contributions and
distributions under the Optional Retirement Program for Employees of Texas
Institutions of Higher Education (the "ORP").
2. ORP Contributions. All contributions under the ORP on behalf of an
Employee who has completed at least one year of participation (12 cumulative
months) in one or more optional retirement programs operating in one or more
Texas Institutions of Higher Education, and all salary reduction contributions
under the ORP made on behalf of an Employee shall be made by the State of Texas
directly to the Employee's Custodial Account.
Any other contributions under the ORP on behalf of an Employee shall be made by
the State of Texas to a separate account in The Cash Management Trust of
America. Upon receipt by Custodian of written instructions from the Employer
certifying that Employee has completed one year of participation and has
thereby become vested under the ORP, such contributions and any earnings
thereon shall be transferred to the Employee's Custodial Account. In the event
that the Employee does not become vested, upon receipt by Custodian of written
instructions from the Employer, such contributions shall be returned to the
Employer and any earnings thereon shall be disposed of as the Employer shall
direct.
For purposes of computing sales charges on investments in shares of Designated
Investment Companies, all such investments shall be treated as having been made
by the Employee.
3. ORP Distributions. The Employee (or beneficiary or alternate payee, if
applicable) shall be entitled to distributions of assets attributable to all
contributions to the Custodial Account under the ORP (whether by salary
reduction or otherwise) only upon one of the following events:
(a) the Employee's death,
(b) the Employee's retirement,
(c) the Employee's attainment of age 70-1/2,
(d) the Employee's termination of employment in all Texas Institutions of
Higher Education, or
(e) pursuant to a domestic relations order which meets the requirements of
Title 8, Chapter 804, Texas Government Code as a Qualified Domestic Relations
Order.
Distributions shall be made only upon receipt by Custodian of written
instructions from the Employer specifying that the Employee is entitled to such
distributions, and, in the case of assets attributable to State ORP
contributions, stating that the Employee is fully vested in such assets.
<PAGE>
[The American Funds Group(r)]
APPLICATION FOR OPTIONAL RETIREMENT PROGRAM [403(B)] FOR TEXAS INSTITUTIONS OF
HIGHER EDUCATION
Please mail this form to:
AMERICAN FUNDS SERVICE COMPANY P.O. Box
659522, San Antonio, TX 78265-9522
1. EMPLOYEE INFORMATION
Name of employee
Date of birth [ ] [ ] [ ]
Mo. Day Yr.
Street Address
City State Zip
Daytime phone ( )
Social Security
2. TEXAS INSTITUTION INFORMATION
Institution name
Phone
Street address
City State Zip
Authorized signature
3. INVESTMENT AND LIQUIDATION RESTRICTIONS
[] CHECK HERE IF THE EMPLOYEE NAMED IN SECTION I HAS NOT COMPLETED ONE YEAR
(12 CUMULATIVE MONTHS) PLUS ONE LIQUIDATION DAY OF PARTICIPATION IN ONE OR
MORE OPTIONAL RETIREMENT PROGRAMS MAINTAINED BY ONE OR MORE TEXAS INSTITUTIONS
RESTRICTIONS OF HIGHER EDUCATION. IF CHECKED, ALL STATE CONTRIBUTIONS
MUST BE MADE TO AND REMAIN IN THE CASH MANAGEMENT TRUST OF AMERICA UNTIL
RELEASED BY THE INSTITUTION NAMED IN SECTION 2 OR A SUCCESSOR INSTITUTION.
FURTHER, ALL ACCOUNTS ESTABLISHED FOR A PARTICIPANT UNDER THE OPTIONAL
RETIREMENT PROGRAM FOR TEXAS INSTITUTIONS OF HIGHER EDUCATION (ORP) WILL BE
SUBJECT TO THE FOLLOWING:
- - First, if for any reason a second year of ORP participation is not begun,
the total amount of the state of Texas' first- year contribution will be
returned to the appropriate institution of higher education upon its request.
- - Second, no benefits will be payable, through redemption of the account or
otherwise, unless the participant dies, attains age 70-1/2, accepts
retirement or terminates employment in all Texas Institutions of Higher
Education. The account may, however, be transferred to other carriers during
the period of ORP participation. Redemption of the account or other payment of
benefits is only permitted when the participant's request for withdrawal is
accompanied by a written statement from the employer certifying vesting status,
the termination date of employment, date of death or date of retirement. Any
instructions received from any participant under the ORP which do not include
the certification shall be promptly returned to the participant as an invalid
request.
By signing Section 12 of this application, the participant acknowledges and
agrees to these liquidation restrictions on accounts established under the ORP.
4. FUND SELECTION
More than one fund may be selected if at least $25 is allocated per month,
per fund. IF THIS APPLICATION IS TO CHANGE EXISTING INVESTMENT
INSTRUCTIONS, YOU MUST ALSO NOTIFY YOUR EMPLOYER OF THE CHANGE(S).
Please allocate my monthly investments as shown:
AMCAP Fund $
American Balanced Fund
American High-Income Trust
American Mutual Fund
Bond Fund of America
Capital Income Builder
Capital World Bond Fund
Capital World Growth and Income Fund
Cash Management Trust of America
EuroPacific Growth Fund
Fundamental Investors
Growth Fund of America
Income Fund of America
Intermediate Bond Fund of America
Investment Company of America
New Economy Fund
New Perspective Fund
SMALLCAP World Fund
U.S. Government Securities Fund
U.S. Treasury Money Fund of America
Washington Mutual Investors Fund
[] NEW ACCOUNT [] INVESTMENT CHANGE ONLY (To exchange existing assets, please
call 800/421-0180.)
5. BENEFICIARY DESIGNATION
Warning: This Beneficiary Designation may have important tax and/or legal
consequences. You are encouraged to consult with your own adviser before
completing this form. Neither the trustee nor any affiliate of the trustee
shall be liable for any claim, loss, damage or expense arising out of or in any
manner connected with a distribution pursuant to this completed Beneficiary
Designation. You should periodically review and update your Beneficiary
Designation.
I revoke all prior 403(b) Beneficiary Designations. Reserving the right to
revoke or change this Beneficiary Designation, I direct that all fund accounts
be distributed upon my death as follows:
PRIMARY BENEFICIARY(IES):
If you are married, see below. *
Full legal name Relationship Date of birth %
Full legal name Relationship Date of birth % (Attach additional
sheet if necessary)
If no Primary Beneficiary listed above survives me, I direct that all fund
accounts be distributed upon my death to the Contingent Beneficiary(ies) listed
below.
CONTINGENT BENEFICIARY(IES):
Full legal name Relationship Date of birth % (Attach additional
sheet if necessary)
In the event no Primary Beneficiary or Contingent Beneficiary survives me, I
direct that all fund accounts be distributed upon my death to my estate.
TRUST BENEFICIARY: If you choose to name a trust as a Primary and/or Contingent
Beneficiary, please describe the trust by the name of the present trustee, the
name of the trust (if any) and the date of the trust. Example: "John Davis (or
his successor), as Trustee of the Davis Family Trust dated December 1, 1994."
Note: Except as otherwise provided above, each Primary Beneficiary so
designated shall receive an equal share. In the event a Primary Beneficiary
does not survive you, such Primary Beneficiary's share shall be distributed pro
rata to the surviving Primary Beneficiary(ies). If any Primary Beneficiary
survives you but fails to survive distribution of his or her entire share, then
the remaining portion of such Primary Beneficiary's share shall be distributed
to such Primary Beneficiary's estate. All stated percentages must add up to
100%; if not, distributions shall be made proportionally based upon the
percentages you state. This paragraph shall also apply to Contingent
Beneficiaries.
*Spousal Consent to Beneficiary Designation:
If you are married and you designate a Primary Beneficiary other than your
spouse, this Beneficiary Designation may not be wholly effective under your
state law without the consent of your spouse. Please consult your own legal
adviser.
By his or her signature below, my spouse expressly consents to the above
designation of a Primary Beneficiary.
Print Spouse's Name Spouse's Signature Date
PLAN OF DISTRIBUTION
OF
FUNDAMENTAL INVESTORS, INC.
WHEREAS, Fundamental Investors, Inc. (the "Fund") is a Maryland corporation
which offers shares of common stock;
WHEREAS, American Funds Distributors, Inc. ("AFD") will serve as distributor
of the shares of common stock of the Fund, and the Fund and AFD are parties to
a Principal Underwriting Agreement (the "Agreement");
WHEREAS, the purpose of this Plan of Distribution (the "Plan") is to authorize
the Fund to bear expenses of distribution of its shares, including
reimbursement of AFD for its expenses in the promotion of the sale of shares of
the Fund, pursuant to the Agreement; and
WHEREAS, the Board of Directors of the Fund has determined that there is a
reasonable likelihood that this Plan will benefit the Fund and its
shareholders;
NOW, THEREFORE, the Fund adopts this Plan as follows:
1. The Fund may expend pursuant to this Plan amounts not to exceed .25 of 1%
of the average daily net assets of the Fund per annum.
2. Subject to the limit in paragraph 1, the Fund shall pay, or reimburse AFD
for, amounts expended to finance any activity which is primarily intended to
result in the sale of shares of the Fund including, but not limited to,
commissions or other payments to dealers and salaries and other expenses
relating to selling or servicing efforts; PROVIDED, (i) that the Board of
Directors of the Fund shall have approved categories of expenses for which
payment or reimbursement shall be made pursuant to this paragraph 2, and (ii)
that reimbursement shall be made in accordance with the terms of the Agreement.
3. This Plan shall not take effect until it has been approved by vote of a
majority of the outstanding voting securities of the Fund (as defined in the
Investment Company Act of 1940 (the "1940 Act")) and by the Board of Directors
as provided in paragraph 4.
4. This Plan shall not take effect until it has been approved, together with
any related agreement, by votes of the majority of both (i) the Board of
Directors of the Fund and (ii) those Directors of the Fund who are not
"interested persons" of the Fund (as defined in the 1940 Act) and have no
direct or indirect financial interest in the operation of this Plan or any
agreement related to it (the "Qualified Directors"), cast in person at a
meeting called for the purpose of voting on this Plan and/or such agreement.
5. At least quarterly, the Board of Directors shall be provided, by any person
authorized to direct the disposition of monies paid or payable by the Fund
pursuant to this Plan or any related agreement, and the Board shall review, a
written report of the amounts expended pursuant to the Plan and the purposes
for which such expenditures were made.
6. This Plan may be terminated as to the Fund at any time by vote of a
majority of the Qualified Directors, or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the Fund. Unless
sooner terminated in accordance with this provision, this Plan shall continue
in effect until March 31, 1991. It may thereafter be renewed from year to year
in the manner provided for in paragraph 4 hereof.
7. Any agreement related to this Plan shall be in writing, and shall provide:
A. that such agreement may be terminated as to the Fund at any time, without
payment of any penalty, by vote of a majority of the Qualified Directors or by
a vote of a majority of the outstanding voting securities (as defined in the
1940 Act) of the Fund, on not more than sixty (60) days' written notice to any
other party to the agreement; and
B. that such agreement shall terminate automatically in the event of its
assignment.
8. This Plan may not be amended to increase materially the maximum amount of
fee or other distribution expenses provided for in paragraph 1 hereof with
respect to the Fund unless such amendment is approved by the voting securities
of the Fund in the manner provided in paragraph 3 hereof, and no material
amendment to this Plan shall be made unless approved in the manner provided for
in paragraph 4 hereof.
9. While this Plan is in effect, the selection and nomination of Directors of
the Fund who are not "interested persons" of the Fund (as defined in the 1940
Act) shall be committed to the discretion of the Directors who are not
interested persons.
10. The Fund shall preserve copies of this Plan and any related agreement and
all reports made pursuant to paragraph 5 hereof for a period of not less than
six (6) years from the date of this Plan, or such agreement or reports, as the
case may be, the first two (2) years of which such records shall be stored in
an easily accessible place.
IN WITNESS WHEREOF, the Fund has caused this Plan to be executed by its
officers thereunto duly authorized, as of May 1, 1990.
FUNDAMENTAL INVESTORS, INC.
By
James W. Ratzlaff
(President)
By
Isabelle V. Lindskoog
(Secretary)
RENEWAL OF PLAN OF DISTRIBUTION
WHEREAS, Fundamental Investors, Inc. (the "Fund") adopted a Plan of
Distribution pursuant to rule 12b-1 under the Investment Company Act of 1940
(the "Plan") for the promotion of the sale of shares of common stock of this
Fund on certain terms and conditions and subject to certain provisions set
forth therein; and
WHEREAS, said Plan was approved by the vote of the holders of a majority of
the outstanding shares of common stock of the Fund at the Annual Meeting of
Shareholders April 24, 1990, and said Plan provides for year-to-year renewals,
upon certain specified conditions, and the renewal of said Plan has been
approved by the Board of Directors of the Fund on February 20, 1996.
NOW, THEREFORE:
1. The Plan of Distribution is hereby renewed for the additional period
beginning April 1, 1996 and ending at the close of business on March 31, 1997.
2. This Renewal shall be executed in several counterparts, each of which shall
be original.
FUNDAMENTAL INVESTORS, INC.
By /s/Walter P. Stern
Walter P. Stern, Chairman
By /s/Julie F. Williams
Julie F. Williams, Secretary
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